FIDELITY
SELECT
PORTFOLIOS(REGISTERED TRADEMARK)
AIR TRANSPORTATION
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
GOLD (FORMERLY AMERICAN GOLD)
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
SEMIANNUAL REPORT
AUGUST 31, 1998
(2_FIDELITY_LOGOS)(registered trademark)
CONTENTS
PERFORMANCE 4
OVERVIEW
FUND UPDATES*
CONSUMER 6 CONSUMER INDUSTRIES
SECTOR 14 FOOD AND AGRICULTURE
20 LEISURE
27 MULTIMEDIA
33 RETAILING
CYCLICALS SECTOR 39 AIR TRANSPORTATION
44 AUTOMOTIVE
50 CHEMICALS
55 CONSTRUCTION AND
61 HOUSING
68 CYCLICAL INDUSTRIES
73 DEFENSE AND AEROSPACE
78 ENVIRONMENTAL SERVICES
84 INDUSTRIAL EQUIPMENT
90 INDUSTRIAL MATERIALS
95 PAPER AND FOREST
PRODUCTS
TRANSPORTATION
FINANCIAL 100 BROKERAGE AND
SERVICES SECTOR 106 INVESTMENT MANAGEMENT
112 FINANCIAL SERVICES
119 HOME FINANCE
124 INSURANCE
REGIONAL BANKS
HEALTH CARE 129 BIOTECHNOLOGY
SECTOR 135 HEALTH CARE
141 MEDICAL DELIVERY
147 MEDICAL EQUIPMENT AND
SYSTEMS
NATURAL 152 ENERGY
RESOURCES 158 ENERGY SERVICE
SECTOR 164 GOLD
170 NATURAL RESOURCES
176 PRECIOUS METALS AND
MINERALS
* FUND UPDATES FOR EACH SELECT PORTFOLIO INCLUDE: PERFORMANCE AND
INVESTMENT SUMMARY, MANAGER'S OVERVIEW, INVESTMENTS, AND FINANCIAL
STATEMENTS.
TECHNOLOGY 182 BUSINESS SERVICES AND
SECTOR 188 OUTSOURCING
194 COMPUTERS
200 DEVELOPING
206 COMMUNICATIONS
212 ELECTRONICS
SOFTWARE AND COMPUTER
SERVICES
TECHNOLOGY
UTILITIES SECTOR 218 NATURAL GAS
223 TELECOMMUNICATIONS
229 UTILITIES GROWTH
234 MONEY MARKET
NOTES TO 241 FOOTNOTES TO THE
FINANCIAL FINANCIAL STATEMENTS
STATEMENTS
PROXY VOTING 245
RESULTS
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.
DEAR SHAREHOLDER:
After holding up well through the first half of 1998, U.S. markets
generally peaked in late July. They sold off sharply in August on
concerns regarding the strength of U.S. political leadership in the
face of worsening economic crises abroad. Investors also began to
question whether global corporate earnings growth was sustainable in
light of deteriorating fundamentals in Asia, Russia and Latin America.
Largely as a result of these market declines in the final month of the
six-month period ending August 31, 1998, the Standard & Poor's 500
Index - a market-capitalization weighted index of 500 widely held U.S.
stocks - declined 8.1% for the period, while the Dow Jones Industrial
Average was down -11.08%.
Of the 39 Select equity portfolios, 10 topped the S&P 500's return for
the past six months. Beginning this period, the Select funds'
performance also is compared to seven Goldman Sachs Indexes, which are
designed to measure the performance of companies within broad sectors.
Overall, 14 Select portfolios outperformed their Goldman Sachs
benchmarks. I'll address these indexes in greater detail later in this
letter.
Throughout the six-month period, there were two constants: a growing
U.S. economy, supported by low interest rates, tame inflation and
near-record low unemployment; and ever-worsening Asian economies that
investors eyed warily. Early in the period, Asia's economic woes
seemed to have little impact on the U.S. stock market. That lasted
until about mid-June, when investor uncertainty over corporate
earnings reports and worldwide stock market volatility began to have a
tangible effect on the domestic equity market.
The month of August, however, proved most challenging. Weakened
economies and currency devaluations in emerging markets - particularly
in Russia and Latin America - contributed to a grim global outlook.
During the month, the Dow lost over 1,000 points, completing a nearly
20% freefall since its record high of 9337.97 on July 17, 1998. On
August 31, 1998, the Dow plunged 512.61 points - erasing all previous
gains for the year.
Against this backdrop, the CONSUMER sector produced the strongest
returns overall, with every Select portfolio in the sector beating its
Goldman Sachs benchmark. Retailing and Multimedia were the top
performers. Consumer Industries benefited from its large-cap stock
selections, while Leisure was strengthened by the strong cable and
Internet industries. Food and Agriculture had the toughest time, due
to falling prices in the packaged food industry.
The performance of CYCLICAL stocks - which tend to rise and fall in
tandem with the U.S. economy - reflected the market downturn.
Construction and Housing, Industrial Equipment and Cyclical Industries
were the top performers in the sector. Heavy exposure to Asian demand
and a series of satellite failures hurt Defense and Aerospace. Air
Transportation, Transportation and Environmental Services also
suffered due to worldwide economic tumult. Reduced demand for
virtually all global commodities hampered Paper and Forest Products
and Industrial Materials. Chemicals was hurt by a combination of
pessimistic earnings reports and Asian companies selling their
products at greatly reduced prices. Despite a mostly domestic focus,
Automotive was hurt by General Motors' Latin America exposure and
54-day labor strike.
The market's plunge in August hit most FINANCIAL SERVICES stocks.
Insurance was the best performer in the group, thanks to relatively
less exposure to Asia. However, the performance of Brokerage and
Investment Management reflected the unfavorable sales, trading and
investment banking environment. Signs that the global economy was
decelerating took its toll on Financial Services. A slowdown in merger
and acquisition activity hurt Regional Banks. Home Finance's
overweighting in mortgage-related shares proved detrimental to its
performance.
The HEALTH CARE sector registered mixed results. The Health Care
portfolio beat its benchmarks, as did Medical Equipment and Systems -
a new fund which commenced operations on April 28, 1998. However,
Biotechnology lagged due to disappointing corporate earnings in the
sector. Meanwhile, poor fundamental business conditions for the HMO
and hospital industries caused a negative return for Medical Delivery.
The Select funds in the NATURAL RESOURCES area struggled throughout
the period, as low prices and weak demand for oil detracted from the
performance of Energy Service, Natural Resources and Energy. Gold and
Precious Metals and Minerals continued to be plagued by weak gold
prices.
Despite a high degree of exposure in Asia, the Select funds in the
TECHNOLOGY sector fared relatively well. Strong economies in the U.S.
and Europe helped Computers and Business Services and Outsourcing.
However, investor concerns about Asian economies hurt performance for
Technology, Electronics and Developing Communications, as well as
Software and Computer Services.
The UTILITIES group as a whole lagged its benchmarks. Both the
Telecommunications and Utilities Growth portfolios were weighted more
toward the growth stocks that tend to suffer more in periods of
extreme downside volatility. A warmer-than-normal global climate and
an oversupply of natural gas detracted from the performance of Natural
Gas.
In an effort to provide Select Portfolio shareholders with a more
meaningful way to measure the performance of their sector-fund
investments, we have begun with this report to include Goldman Sachs'
new sector indexes as additional benchmarks for the funds. These
indexes supplement the existing benchmark for the funds, which is the
Standard & Poor's 500 Index.
While a comparison to the S&P 500 can illustrate how a sector fund is
performing relative to the broad stock market, these new sector
indexes will enable shareholders to compare the performance of their
funds with a more narrow basket of stocks within the industry in which
they're invested. Although the Goldman benchmarks are in most cases
much broader than the more narrowly focused Select Portfolios, we
believe these indexes will be of more value to shareholders when
evaluating sector-fund investments.
The indexes - and the number of stocks chosen to be representative of
their specific sector - are as follows:
Goldman Sachs Consumer Industries Index (300 stocks)
Goldman Sachs Cyclical Industries Index (277 stocks)
Goldman Sachs Financial Services Index (271 stocks)
Goldman Sachs Health Care Index (93 stocks)
Goldman Sachs Natural Resources Index (96 stocks)
Goldman Sachs Technology Index (190 stocks)
Goldman Sachs Utilities Index (136 stocks)
In the pages that follow, you'll find detailed summaries for each of
the Select portfolios. We hope that you find them informative and
useful for evaluating your investments.
Sincerely,
William R. Ebsworth
Group Leader, FMR Research
Select Group Leader
CUMULATIVE TOTAL RETURNS
FOR THE SIX MONTHS ENDED AUGUST 31, 1998
Row: 1, Col: 1, Value: -0.12
Row: 1, Col: 2, Value: nil
Row: 2, Col: 1, Value: -0.9
Row: 2, Col: 2, Value: 0.0
Row: 3, Col: 1, Value: -3.14
Row: 3, Col: 2, Value: 0.0
Row: 4, Col: 1, Value: -3.22
Row: 4, Col: 2, Value: 0.0
Row: 5, Col: 1, Value: -4.359999999999999
Row: 5, Col: 2, Value: 0.0
Row: 6, Col: 1, Value: -5.3
Row: 6, Col: 2, Value: 0.0
Row: 7, Col: 1, Value: -6.85
Row: 7, Col: 2, Value: 0.0
Row: 8, Col: 1, Value: -7.35
Row: 8, Col: 2, Value: 0.0
Row: 9, Col: 1, Value: -7.63
Row: 9, Col: 2, Value: 0.0
Row: 10, Col: 1, Value: -8.029999999999999
Row: 10, Col: 2, Value: 0.0
Row: 11, Col: 1, Value: 0.0
Row: 11, Col: 2, Value: -8.1
Row: 12, Col: 1, Value: -9.48
Row: 12, Col: 2, Value: 0.0
Row: 13, Col: 1, Value: -11.77
Row: 13, Col: 2, Value: 0.0
Row: 14, Col: 1, Value: -13.42
Row: 14, Col: 2, Value: 0.0
Row: 15, Col: 1, Value: -14.14
Row: 15, Col: 2, Value: 0.0
Row: 16, Col: 1, Value: -14.75
Row: 16, Col: 2, Value: 0.0
Row: 17, Col: 1, Value: -14.83
Row: 17, Col: 2, Value: 0.0
Row: 18, Col: 1, Value: -15.01
Row: 18, Col: 2, Value: 0.0
Row: 19, Col: 1, Value: -15.63
Row: 19, Col: 2, Value: 0.0
Row: 20, Col: 1, Value: -16.14
Row: 20, Col: 2, Value: 0.0
Row: 21, Col: 1, Value: -16.96
Row: 21, Col: 2, Value: 0.0
Row: 22, Col: 1, Value: -17.64
Row: 22, Col: 2, Value: 0.0
Row: 23, Col: 1, Value: -17.64
Row: 23, Col: 2, Value: 0.0
Row: 24, Col: 1, Value: -18.09
Row: 24, Col: 2, Value: 0.0
Row: 25, Col: 1, Value: -19.68
Row: 25, Col: 2, Value: 0.0
Row: 26, Col: 1, Value: -23.54
Row: 26, Col: 2, Value: 0.0
Row: 27, Col: 1, Value: -24.21
Row: 27, Col: 2, Value: 0.0
Row: 28, Col: 1, Value: -24.33
Row: 28, Col: 2, Value: 0.0
Row: 29, Col: 1, Value: -24.95
Row: 29, Col: 2, Value: 0.0
Row: 30, Col: 1, Value: -25.04
Row: 30, Col: 2, Value: 0.0
Row: 31, Col: 1, Value: -25.51
Row: 31, Col: 2, Value: 0.0
Row: 32, Col: 1, Value: -25.8
Row: 32, Col: 2, Value: 0.0
Row: 33, Col: 1, Value: -26.1
Row: 33, Col: 2, Value: 0.0
Row: 34, Col: 1, Value: -26.55
Row: 34, Col: 2, Value: 0.0
Row: 35, Col: 1, Value: -26.84
Row: 35, Col: 2, Value: 0.0
Row: 36, Col: 1, Value: -26.97
Row: 36, Col: 2, Value: 0.0
Row: 37, Col: 1, Value: -27.25
Row: 37, Col: 2, Value: 0.0
Row: 38, Col: 1, Value: -38.81
Row: 38, Col: 2, Value: 0.0
Row: 39, Col: 1, Value: -41.79000000000001
Row: 39, Col: 2, Value: 0.0
Row: 40, Col: 1, Value: -49.55
Row: 40, Col: 2, Value: 0.0
Row: 41, Col: 1, Value: nil
Row: 41, Col: 2, Value: nil
Health Care -0.12%Computers -0.90%Retailing -3.14%Utilities Growth
- -3.22%Multimedia -4.36%Medical Equipment and Systems 1
- -5.30%Consumer Industries -6.85%Leisure -7.35%Business Services &
Outsourcing -7.63%Food & Agriculture -8.03%S&P 500 -8.10%Insurance
- -9.48%Developing Communications -11.77%Technology
- -13.42%Telecommunications -14.14%Financial Services
- -14.75%Construction & Housing -14.83%Software & Computer Services
- -15.01%Industrial Equipment -15.63%Cyclical Industries
- -16.14%Biotechnology -16.96%Brokerage & Investment Management
- -17.64%Regional Banks -17.64%Air Transportation -18.09%Automotive
- -19.68%Energy -23.54%Natural Gas -24.21%Defense & Aerospace
- -24.33%Transportation -24.95%Electronics -25.04%Paper & Forest
- -25.51%Industrial Materials -25.80%Chemicals -26.10%Medical Delivery
- -26.55%Home Finance -26.84%Environmental Services -26.97%Natural
Resources -27.25%Precious Metals & Minerals -38.81%Gold
- -41.79%Energy Service -49.55%
1. RETURNS ARE FROM INCEPTION DATE APRIL 28, 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 6 PAST 1 PAST 5 LIFE OF
AUGUST 31, 1998 MONTHS YEAR YEARS FUND
SELECT CONSUMER INDUSTRIES -6.85% 15.49% 97.50% 244.43%
SELECT CONSUMER INDUSTRIES -9.71% 11.95% 91.51% 234.03%
(LOAD ADJ.)
S&P 500 -8.10% 8.10% 131.21% 230.88%
GS CONSUMER INDUSTRIES -8.66% 10.68% N/A N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or since the fund started on June 29, 1990. You can compare the
fund's returns to the performance of both the Standard & Poor's 500
Index - a widely recognized, unmanaged index of common stocks - and
the Goldman Sachs Consumer Industries Index - a market
capitalization-weighted index of 300 stocks designed to measure the
performance of companies in the consumer industries sector. These
benchmarks include reinvestment of dividends and capital gains, if
any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
AUGUST 31, 1998 YEAR YEARS FUND
SELECT CONSUMER INDUSTRIES 15.49% 14.58% 16.35%
SELECT CONSUMER INDUSTRIES 11.95% 13.88% 15.91%
(LOAD ADJ.)
S&P 500 8.10% 18.25% 15.78%
GS CONSUMER INDUSTRIES 10.68% N/A N/A
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.
(CHECKMARK) 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.
$10,000 OVER LIFE OF FUND
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
1998/02/28 35865.82 36003.35
1998/03/31 37888.28 37847.08
1998/04/30 37655.37 38227.82
1998/05/31 37857.53 37570.69
1998/06/30 39717.39 39096.81
1998/07/31 38976.14 38680.43
1998/08/31 33403.00 33088.01
IMATRL PRASUN SHR__CHT 19980831 19980917 164617 R00000000000101
$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 August 31, 1998, the value of the
investment would have grown to $33,403 - a 234.03% increase on the
initial investment - and includes the effect of a $7.50 trading fee.
For comparison, look at how the Standard & Poor's 500 Index did over
the same period. With dividends and capital gains, if any, reinvested,
the same $10,000 investment would have grown to $33,088 - a 230.88%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
PHILIP MORRIS COMPANIES, INC. 6.6
WAL-MART STORES, INC. 6.5
PROCTER & GAMBLE CO. 4.9
GILLETTE CO. 3.9
COCA-COLA CO. (THE) 3.3
HOME DEPOT, INC. 2.8
PEPSICO, INC. 2.5
MCDONALD'S CORP. 2.3
TIME WARNER, INC. 1.9
AVON PRODUCTS, INC. 1.7
TOP INDUSTRIES AS OF AUGUST 31, 1998
SOAPS & DETERGENTS 7.9%
GENERAL MERCHANDISE STORES 7.4%
COSMETICS 6.6%
TOBACCO MANUFACTURERS 6.6%
SOFT DRINKS 6.3%
ALL OTHERS 65.2%
ROW: 1, COL: 1, VALUE: 65.2
ROW: 1, COL: 2, VALUE: 6.3
ROW: 1, COL: 3, VALUE: 6.6
ROW: 1, COL: 4, VALUE: 6.6
ROW: 1, COL: 5, VALUE: 7.4
ROW: 1, COL: 6, VALUE: 7.9
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
CONSUMER INDUSTRIES PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(Photograph of Doug Chase)
Doug Chase,
Portfolio Manager
of Fidelity Select Consumer Industries Portfolio
Q. HOW DID THE FUND PERFORM, DOUG?
A. Relatively well. During the six- and 12-month periods that ended
August 31, 1998, the fund returned -6.85% and 15.49%, respectively.
This performance compares favorably with the Standard & Poor's 500
Index's returns of -8.10% and 8.10% during the same periods. Beginning
this period, the fund also compares itself to the Goldman Sachs
Consumer Industries Index - an index of 300 stocks designed to measure
the performance of companies in the consumer industries sector - which
returned -8.66% and 10.68% over the same six- and 12-month periods,
respectively.
Q. WHAT WAS YOUR STRATEGY DURING THE SIX-MONTH PERIOD?
A. I focused on increasing the number of large-cap stocks in the fund
because I believed that, in an environment of market uncertainty,
there could be a flight to quality among investors. Large-cap consumer
companies delivered more predictable earnings growth and were
undervalued at the prevailing interest rates. During the six-month
period, the best performers generally have been the large-cap
companies, so my strategy paid off. I also built up the fund's retail
industry holdings. Retailers have been more insulated from the turmoil
in Asia, since their core business is in the U.S. Their good
performance reflected the relative strength of the U.S. economy.
Q. WHICH STOCKS PERFORMED WELL?
A. Wal-Mart Stores, the fund's number-two holding, has been a terrific
stock because the company has been one of the best success stories in
retailing. Wal-Mart has invested in technology to track its
inventories closely and has focused on re-supplying its
fastest-selling items. The company's earnings estimates have increased
and its same-store sales -which compare sales growth for those stores
that have been in operation for at least 12 months -have been very
strong. Media companies Time Warner and Viacom performed well, with
focused management at the helm. Cable company MediaOne Group also had
strong performance. Cable operators have gained an advantage in the
battle for high-speed Internet access to the home, because cable
already allows high-speed two-way access that phone lines or
satellites do not.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. There were. Three of the fund's top holdings - Disney, Pepsi and
Gillette - all delivered lower-than-expected earnings reports during
the period. Disney-owned television network ABC has disappointed with
lower advertising revenues, and its creative content has come in below
expectations. Pepsi, which has been restructuring, is taking much
longer than expected to complete the process. Gillette was hurt by its
exposure to emerging markets. Many food companies, including Sara Lee
and Campbell Soup, also were disappointments. These companies were
hurt by limited pricing flexibility and minimal volume growth.
Q. THE FUND'S TOP 10 HOLDINGS ARE ALL LARGE-CAP STOCKS . . .
A. Yes, I've been building a more diversified portfolio since taking
over the fund last summer, adding more large-capitalization stocks to
the fund. In the current economic environment, I believe that
large-cap companies have an expanded competitive advantage due to
their size, so changing the mix to include large-caps has really paid
off.
Q. WHAT'S YOUR OUTLOOK AND STRATEGY FOR THE COMING MONTHS, DOUG?
A. I'm always cautious. Although the U.S. economy is strong and
unemployment is low, personal indebtedness is still high. The good
news is that interest rates continue to decline. When interest rates
go down, U.S. consumers tend to refinance their homes, their other
debt costs decline, they have more disposable income and they spend
more. That's good for consumer industries and for the fund. In the
coming months, I'll maintain the fund's diversified approach. The
challenge is in finding companies whose performance is relatively
good, and then buying their stock at attractive 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.
(checkmark)FUND FACTS
START DATE: June 29, 1990
FUND NUMBER: 517
TRADING SYMBOL: FSCPX
SIZE: as of August 31, 1998, more than
$66 million
MANAGER: Doug Chase, since 1997;
manager, Fidelity Select Automotive Portfolio,
1994-1997; Fidelity Select Industrial Materials
Portfolio, 1994-1997; joined Fidelity in 1993
CONSUMER INDUSTRIES PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 97.2%
SHARES VALUE (NOTE 1)
ADVERTISING - 1.9%
ADVERTISING - 0.2%
Outdoor Systems, Inc. (a) 6,175 $ 143,569
ADVERTISING AGENCIES - 1.7%
Interpublic Group of Companies, Inc. 8,400 478,800
Omnicom Group, Inc. 11,800 561,975
1,040,775
TOTAL ADVERTISING 1,184,344
AIR TRANSPORTATION - 0.4%
TRANSPORTATION SERVICES - 0.4%
Viad Corp. 11,500 238,625
APPAREL STORES - 3.4%
FAMILY CLOTHING STORES - 0.3%
Abercrombie & Fitch Co. Class A (a) 1,600 68,800
Stage Stores, Inc. (a) 14,900 155,519
224,319
GENERAL APPAREL STORES - 2.7%
Gap, Inc. 10,950 559,134
Limited, Inc. (The) 16,200 338,175
Saks Holdings, Inc. (a) 14,900 311,969
TJX Companies, Inc. 21,700 484,181
1,693,459
WOMEN'S CLOTHING STORES - 0.4%
AnnTaylor Stores Corp. (a) 6,000 145,875
Wet Seal, Inc. Class A (a) 4,500 103,500
249,375
TOTAL APPAREL STORES 2,167,153
AUTOS, TIRES, & ACCESSORIES - 0.2%
AUTO PARTS - RETAIL - 0.2%
Pep Boys-Manny, Moe & Jack 10,000 146,875
BEVERAGES - 8.8%
DISTILLED & BLENDED LIQUOR - 0.5%
Seagram Co. Ltd. 10,500 328,020
MALT BEVERAGE - 1.9%
Anheuser-Busch Companies, Inc. 16,200 747,225
Coors (Adolph) Co. Class B 10,700 441,375
1,188,600
SOFT DRINKS - 6.3%
Celestial Seasonings, Inc. 6,500 229,125
Coca-Cola Co. (The) 31,700 2,064,463
PepsiCo, Inc. 56,000 1,550,500
Whitman Corp. 7,300 113,150
3,957,238
WINE, BRANDY & BRANDY SPIRITS - 0.1%
Canadaigua Wine Co. Class A (a) 2,300 96,025
TOTAL BEVERAGES 5,569,883
BROADCASTING - 7.8%
CABLE TV OPERATORS - 4.3%
Comcast Corp. Class A 8,100 303,750
Comcast Corp. Class A special 9,400 351,325
Cox Communications, Inc. Class A (a) 10,700 449,400
MediaOne Group, Inc. (a) 9,400 385,400
Time Warner, Inc. 15,271 1,227,407
2,717,282
SHARES VALUE (NOTE 1)
RADIO BROADCASTING - 1.8%
Chancellor Media Corp. (a) 7,300 $ 260,519
Clear Channel Communications, Inc. (a) 11,300 508,500
Jacor Communications, Inc. Class A (a) 6,300 371,700
Radiomutuel, Inc. Class A (a) 1,900 14,536
1,155,255
TELEVISION BROADCASTING - 1.7%
CBS Corp. 35,100 912,600
Scripps (E.W.) Co. Class A 3,400 160,438
1,073,038
TOTAL BROADCASTING 4,945,575
BUILDING MATERIALS - 0.2%
HARDWARE - WHOLESALE - 0.2%
Richelieu Hardware Ltd. (a) 11,500 102,646
COMPUTER SERVICES & SOFTWARE - 0.2%
COMPUTER & SOFTWARE STORES - 0.1%
CompUSA, Inc. (a) 5,700 67,688
COMPUTER SERVICES - 0.1%
Computer Learning Centers, Inc. (a) 7,100 33,725
TOTAL COMPUTER SERVICES & SOFTWARE 101,413
CONSUMER ELECTRONICS - 0.5%
RADIOS, TELEVISIONS, STEREOS - 0.5%
Gemstar International Group Ltd. (a) 8,400 291,375
DRUG STORES - 2.9%
CVS Corp. 22,054 802,214
Rite Aid Corp. 9,700 351,019
Walgreen Co. 17,900 689,150
1,842,383
DRUGS & PHARMACEUTICALS - 0.3%
PHARMACEUTICAL PREPARATIONS - 0.3%
Rexall Sundown, Inc. (a) 9,300 169,725
EDUCATIONAL SERVICES - 0.3%
COLLEGES, UNIVERSITIES & PROFESSIONAL SCHOOLS - 0.3%
Apollo Group, Inc. Class A (a) 5,900 179,213
ENTERTAINMENT - 5.1%
CRUISES - 0.7%
Carnival Corp. 12,300 355,163
Royal Carribean Cruises Ltd. 2,900 70,325
425,488
MOTION PICTURE DISTRIBUTION - 0.8%
Viacom, Inc. Class B (non-vtg.) (a) 10,500 521,063
MOTION PICTURE PRODUCTION - 3.5%
Tele-Communications, Inc.
(Liberty Media Group), Series A (a) 14,250 465,797
Disney (Walt) Co. 39,300 1,078,294
King World Productions, Inc. (a) 30,100 632,100
2,176,191
RECREATIONAL SERVICES - 0.1%
Premier Parks, Inc. (a) 5,100 82,875
TOTAL ENTERTAINMENT 3,205,617
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FOODS - 6.6%
BAKERY PRODUCTS - 0.2%
Flowers Industries, Inc. 2,900 $ 51,656
Interstate Bakeries Corp. 2,300 59,944
111,600
CANDY - 0.3%
Hershey Foods Corp. 2,400 168,000
CANNED SPECIALTIES - 0.6%
Campbell Soup Co. 7,300 367,738
COOKIES & CRACKERS - 0.1%
Nabisco Holdings Corp. Class A 1,700 56,206
DAIRY - 0.3%
Dean Foods Co. 2,900 127,600
Groupe Danone 300 76,396
203,996
FOOD - 2.8%
Dole Food, Inc. 4,900 211,925
Heinz (H.J.) Co. 13,800 735,713
Kellogg Co. 3,700 112,850
Nestle SA ADR (Reg.) 800 74,600
Sara Lee Corp. 13,400 606,350
1,741,438
GRAIN MILL PRODUCTS - 1.4%
Archer-Daniels-Midland Co. 5,670 85,050
Corn Products International, Inc. (a) 3,850 91,197
Quaker Oats Co. 3,100 164,688
Ralston Purina Co. 21,700 570,981
911,916
MEAT & FISH - 0.2%
Tyson Foods, Inc. 9,700 158,838
PACKAGED & FROZEN FOODS - 0.7%
Bestfoods 9,300 466,744
TOTAL FOODS 4,186,476
GENERAL MERCHANDISE STORES - 12.3%
DEPARTMENT STORES - 3.8%
Federated Department Stores, Inc. (a) 20,200 879,963
Nordstrom, Inc. 4,000 119,750
Penny (J.C.) Co., Inc. 11,100 550,144
Proffitts, Inc. (a) 6,425 163,838
Sears, Roebuck & Co. 12,000 545,250
Stein Mart, Inc. (a) 12,000 106,500
2,365,445
GENERAL MERCHANDISE STORES - 7.4%
Dayton Hudson Corp. 17,000 612,000
Wal-Mart Stores, Inc. 69,500 4,083,125
4,695,125
VARIETY STORES - 1.1%
Consolidated Stores Corp. (a) 3,228 101,682
Costco Companies, Inc. (a) 6,500 305,906
Dollar Tree Stores (a) 9,300 269,700
677,288
TOTAL GENERAL MERCHANDISE STORES 7,737,858
GROCERY STORES - 3.7%
FOOD STORES - 0.3%
Whole Foods Market, Inc. (a) 4,200 173,775
SHARES VALUE (NOTE 1)
GROCERY - RETAIL - 3.4%
Albertson's, Inc. 7,300 $ 369,106
Hannaford Brothers Co. 2,900 120,531
Kroger Co. (The) (a) 8,600 387,000
Meyer (Fred), Inc. (a) 13,100 514,994
Safeway, Inc. (a) 19,500 767,813
2,159,444
TOTAL GROCERY STORES 2,333,219
HOLDING COMPANIES - 0.2%
HOLDING COMPANY OFFICES, NEC - 0.2%
Triarc Companies, Inc. Class A (a) 7,400 110,538
HOME FURNISHINGS - 0.1%
FURNITURE - 0.1%
Dorel Industries, Inc. Class B
(sub-vtg.) (a)(c) 4,000 55,850
HOUSEHOLD PRODUCTS - 14.9%
COSMETICS - 6.6%
Alberto-Culver Co. Class A 4,000 72,250
Avon Products, Inc. 17,200 1,081,450
Estee Lauder Companies, Inc. 3,100 182,513
Gillette Co. 60,000 2,467,500
International Flavors & Fragrances, Inc. 4,700 182,125
Revlon, Inc. Class A (a) 4,900 176,706
4,162,544
FABRICATED RUBBER PRODUCTS - 0.2%
Rubbermaid, Inc. 4,600 117,013
MANUFACTURED PRODUCTS - 0.2%
First Brands Corp. 8,000 159,500
SOAPS & DETERGENTS - 7.9%
Church & Dwight Co., Inc. 4,600 124,488
Clorox Co. 8,100 781,144
Dial Corp. 4,900 95,550
Procter & Gamble Co. 40,600 3,105,900
Unilever NV (NY Shares) 13,400 849,225
4,956,307
TOTAL HOUSEHOLD PRODUCTS 9,395,364
LEASING & RENTAL - 0.1%
TRUCK RENT & LEASE, NO DRIVER - 0.1%
Hertz Corp. Class A 1,300 49,075
LEISURE DURABLES & TOYS - 1.2%
MOTORCYCLES - 0.2%
Harley-Davidson, Inc. 5,100 157,144
TOYS & GAMES - 0.9%
Galoob (Lewis) Toys, Inc. (a) 10,900 80,388
Mattel, Inc. 14,400 466,200
546,588
TRAVEL TRAILERS AND CAMPERS - 0.1%
Brunswick Corp. 3,000 44,813
TOTAL LEISURE DURABLES & TOYS 748,545
LODGING & GAMING - 0.9%
HOTELS, MOTELS, & TOURIST COURTS - 0.6%
Promus Hotel Corp. (a) 8,600 264,450
Sun International Hotels Ltd. Ord. (a) 3,400 128,138
392,588
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
LODGING & GAMING - CONTINUED
RACING & GAMING - 0.3%
International Speedway Corp. Class A 5,400 $ 148,500
TOTAL LODGING & GAMING 541,088
MEDICAL FACILITIES MANAGEMENT - 0.0%
HOME HEALTH CARE AGENCIES - 0.0%
Coram Healthcare Corp.
warrants 7/11/99 (a) 216 0
PHOTOGRAPHIC EQUIPMENT - 1.0%
Eastman Kodak Co. 7,900 617,188
Polaroid Corp. 1,000 28,125
645,313
PRINTING - 0.3%
COMMERCIAL PRINTING, NEC - 0.2%
Donnelley (R.R.) & Sons Co. 3,700 134,125
Valassis Communications, Inc. (a) 1,100 32,794
166,919
MANIFOLD BUSINESS FORMS - 0.1%
Reynolds & Reynolds Co. Class A 3,900 49,238
TOTAL PRINTING 216,157
PUBLISHING - 3.4%
BOOK PUBLISHING & PRINTING - 0.9%
Harcourt General, Inc. 6,200 301,088
McGraw-Hill Companies, Inc. 2,900 221,125
Reader's Digest Association, Inc. (The)
Class A (non-vtg.) 2,700 52,988
575,201
GENERAL PUBLISHING - 0.1%
Applied Graphics Technologies, Inc. (a) 3,100 63,356
GREETING CARDS - 0.2%
American Greetings Corp. Class A 2,900 106,213
NEWSPAPERS - 1.6%
Gannett Co., Inc. 8,600 507,400
Harte Hanks Communications, Inc. 12,600 276,413
Tribune Co. 3,100 199,756
983,569
PERIODICALS - 0.6%
Meredith Corp. 4,900 164,456
Playboy Enterprises, Inc. Class B (a) 19,100 233,975
398,431
TOTAL PUBLISHING 2,126,770
REAL ESTATE - 0.2%
CEMETERY SUBDIVIDERS & DEVELOP - 0.2%
Stewart Enterprises, Inc. Class A 4,900 96,163
REAL ESTATE INVESTMENT TRUSTS - 0.2%
Starwood Hotels & Resorts 3,400 124,100
RESTAURANTS - 2.9%
Cracker Barrel Old Country Store, Inc. 2,100 51,319
Foodmaker, Inc. (a) 4,500 62,156
Logan's Roadhouse, Inc. (a) 100 1,663
McDonald's Corp. 26,200 1,468,838
Outback Steakhouse, Inc. (a) 3,900 117,244
Papa John's International, Inc. (a) 2,500 66,250
Starbucks Corp. (a) 2,600 82,063
1,849,533
SHARES VALUE (NOTE 1)
RETAIL & WHOLESALE, MISCELLANEOUS - 6.7%
BOOK STORES - RETAIL - 0.2%
Barnes & Noble, Inc. (a) 4,300 $ 116,369
BUILDING MATERIALS - RETAIL - 2.9%
Home Depot, Inc. 46,600 1,794,100
LUMBER & BUILDING MATERIALS - RETAIL - 1.1%
Lowe's Companies, Inc. 20,400 715,275
MAIL ORDER - 0.1%
Williams-Sonoma, Inc. (a) 2,100 53,550
MISCELLANEOUS DURABLE GOODS - WHOLESALE - 0.2%
Action Performance Companies, Inc. (a) 6,300 145,688
MUSIC, TV, & ELECTRONIC STORES - 1.3%
Best Buy Co., Inc. (a) 14,400 567,000
Circuit City Stores, Inc. - Circuit City Group 4,300 132,763
Tandy Corp. 2,500 136,406
836,169
RETAIL, GENERAL - 0.9%
Bed Bath & Beyond, Inc. (a) 3,700 66,831
Office Depot, Inc. (a) 7,900 201,450
Pier 1 Imports, Inc. 12,700 126,206
Staples, Inc. (a) 7,350 199,369
593,856
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 4,255,007
SERVICES - 1.6%
BUSINESS SERVICES - 0.4%
Robert Half International, Inc. (a) 3,100 148,800
Snyder Communications, Inc. (a) 3,400 102,425
251,225
CREDIT REPORTING AGENCIES - 0.2%
Dunn & Bradstreet Corp. 4,300 101,050
GENERAL SERVICES - 0.7%
Service Corp. International 13,600 460,700
MANAGEMENT SERVICES - 0.3%
ServiceMaster Co. 9,850 206,234
TOTAL SERVICES 1,019,209
TEXTILES & APPAREL - 2.3%
APPAREL - 0.8%
Fruit of the Loom, Inc. Class A (a) 3,100 69,556
Kellwood Co. 6,000 160,125
Liz Claiborne, Inc. 10,000 285,000
514,681
CARPETS & RUGS - 0.4%
Mohawk Industries, Inc. (a) 1,700 45,156
Shaw Industries, Inc. 15,700 237,463
282,619
FOOTWEAR - 0.3%
NIKE, Inc. Class B 4,600 159,563
MEN'S & BOYS' CLOTHING - 0.4%
Nautica Enterprises, Inc. (a) 7,700 148,706
Pacific Sunwear of California,Inc. (a) 5,550 101,288
249,994
TEXTILE MILL PRODUCTS - 0.4%
Unifi, Inc. 7,400 164,650
Westpoint Stevens, Inc. Class A (a) 3,400 100,725
265,375
TOTAL TEXTILES & APPAREL 1,472,232
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TOBACCO - 6.6%
TOBACCO MANUFACTURERS - 6.6%
Philip Morris Companies, Inc. 100,200 $ 4,164,546
TOTAL COMMON STOCKS
(Cost $63,182,544) 61,271,870
CASH EQUIVALENTS - 2.8%
Taxable Central Cash Fund (b)
(Cost $1,751,102) 1,751,102 1,751,102
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $64,933,646) $ 63,022,972
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.58%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(c) Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers.
At the period end, the value of these securities amounted to $55,850
or 0.1% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $72,005,846 and $73,634,057, 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 $10,408 for the
period (see Note 4 of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $64,951,099 Net unrealized depreciation
aggregated $1,928,127, of which $4,711,859 related to appreciated
investment securities and $6,639,986 related to depreciated investment
securities.
CONSUMER INDUSTRIES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31,
1998
(UNAUDITED)
ASSETS
INVESTMENT IN $ 63,022,972
SECURITIES, AT
VALUE
(COST
$64,933,646
) -
SEE
ACCOMPANYIN
G SCHEDULE
RECEIVABLE FOR 5,147,792
INVESTMENTS
SOLD
RECEIVABLE FOR 266,494
FUND SHARES
SOLD
DIVIDENDS 58,218
RECEIVABLE
INTEREST 16,866
RECEIVABLE
REDEMPTION FEES 1,321
RECEIVABLE
OTHER 10,390
RECEIVABLES
TOTAL ASSETS 68,524,053
LIABILITIES
PAYABLE FOR $ 65,325
INVESTMENTS
PURCHASED
PAYABLE FOR 1,520,785
FUND SHARES
REDEEMED
ACCRUED 39,390
MANAGEMENT
FEE
OTHER PAYABLES 66,850
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 1,692,350
NET ASSETS $ 66,831,703
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 66,278,879
ACCUMULATED (68,245)
NET INVESTMENT
LOSS
ACCUMULATED 2,531,743
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED (1,910,674)
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
NET ASSETS, FOR $ 66,831,703
2,695,604
SHARES
OUTSTANDING
NET ASSET $24.79
VALUE AND
REDEMPTION
PRICE PER
SHARE
($66,831,70
3 (DIVIDED BY)
2,695,604
SHARES)
MAXIMUM $25.56
OFFERING PRICE
PER SHARE
(100/97.00
OF $24.79)
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED AUGUST
31, 1998
(UNAUDITED)
INVESTMENT $ 338,872
INCOME
DIVIDENDS
INTEREST 133,950
TOTAL INCOME 472,822
EXPENSES
MANAGEMENT $ 235,504
FEE
TRANSFER AGENT 221,685
FEES
ACCOUNTING FEES 40,456
AND EXPENSES
NON-INTERESTED 135
TRUSTEES'
COMPENSATION
CUSTODIAN FEES 11,983
AND EXPENSES
REGISTRATION FEES 19,735
AUDIT 10,269
LEGAL 230
REPORTS TO 8,685
SHAREHOLDERS
TOTAL EXPENSES 548,682
BEFORE
REDUCTIONS
EXPENSE (7,615) 541,067
REDUCTIONS
NET INVESTMENT (68,245)
INCOME (LOSS)
REALIZED AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS) ON:
INVESTMENT 2,667,043
SECURITIES
FOREIGN (935) 2,666,108
CURRENCY
TRANSACTIONS
CHANGE IN NET
UNREALIZED
APPRECIATION
(DEPRECIATION)
ON:
INVESTMENT (8,126,514)
SECURITIES
ASSETS AND (39) (8,126,553)
LIABILITIES IN
FOREIGN
CURRENCIES
NET GAIN (LOSS) (5,460,445)
NET INCREASE $ (5,528,690)
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 173,776
INFORMATION
SALES CHARGES
PAID TO FDC
SALES CHARGES $ 172,846
- - RETAINED BY
FDC
DEFERRED SALES $ 113
CHARGES
WITHHELD
BY FDC
EXCHANGE FEES $ 12,533
WITHHELD BY
FSC
EXPENSE $ 7,019
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEMENTS
CUSTODIAN 596
CREDITS
$ 7,615
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED YEAR ENDED
(DECREASE) IN AUGUST 31, 1998 FEBRUARY 28,
NET ASSETS (UNAUDITED) 1998
OPERATIONS $ (68,245) $ (238,907)
NET
INVESTMENT
INCOME (LOSS)
NET REALIZED 2,666,108 5,217,352
GAIN (LOSS)
CHANGE IN NET (8,126,553) 4,912,453
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (5,528,690) 9,890,898
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
DISTRIBUTIONS TO (1,973,480) (1,876,813)
SHAREHOLDERS
FROM NET
REALIZED GAIN
SHARE 48,407,721 75,182,201
TRANSACTIONS
NET PROCEEDS
FROM SALES OF
SHARES
REINVESTMENT 1,947,423 1,832,262
OF
DISTRIBUTIONS
COST OF SHARES (48,227,152) (31,326,802)
REDEEMED
NET INCREASE 2,127,992 45,687,661
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION 53,805 58,220
FEES
TOTAL (5,320,373) 53,759,966
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
BEGINNING OF 72,152,076 18,392,110
PERIOD
END OF PERIOD $ 66,831,703 $ 72,152,076
(INCLUDING
ACCUMULATED
NET INVESTMENT
LOSS OF
$68,245 AND
$0,
RESPECTIVELY)
OTHER
INFORMATION
SHARES
SOLD 1,675,414 3,007,674
ISSUED IN 69,009 74,511
REINVESTMENT
OF
DISTRIBUTIONS
REDEEMED (1,690,697) (1,330,685)
NET INCREASE 53,726 1,751,500
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED YEAR ENDED YEARS ENDED
ENDED FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
AUGUST 31,
1998
SELECTED (UNAUDITED) 1998 1997 1996 1995 1994
PER-SHARE
DATA
NET ASSET VALUE, $ 27.31 $ 20.66 $ 17.84 $ 13.91 $ 15.24 $ 12.97
BEGINNING OF
PERIOD
INCOME FROM
INVESTMENT
OPERATIONS
NET (.02) (.22) (.22) .08 (.15) (.20)
INVESTMENT
INCOME (LOSS) D
NET REALIZED (1.78) 8.34 2.93 3.97 (.60) 3.84
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM (1.80) 8.12 2.71 4.05 (.75) 3.64
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIONS
FROM NET - - - (.02) - -
INVESTMENT
INCOME
FROM NET (.74) (1.52) - (.01) (.60) (1.40)
REALIZED GAIN
IN EXCESS OF - - - (.20) - -
NET REALIZED
GAIN
TOTAL (.74) (1.52) - (.23) (.60) (1.40)
DISTRIBUTIONS
REDEMPTION FEES .02 .05 .11 .11 .02 .03
ADDED TO PAID
IN CAPITAL
NET ASSET VALUE, $ 24.79 $ 27.31 $ 20.66 $ 17.84 $ 13.91 $ 15.24
END OF PERIOD
TOTAL RETURN B, C (6.85)% 40.36% 15.81% 30.01% (4.59)% 28.43%
RATIOS AND
SUPPLEMENTAL
DATA
NET ASSETS, END $ 66,832 $ 72,152 $ 18,392 $ 22,362 $ 20,501 $ 8,374
OF PERIOD
(000 OMITTED)
RATIO OF 1.34% A 2.01% 2.49% 1.53% E 2.49% E 2.48% E
EXPENSES TO
AVERAGE NET
ASSETS
RATIO OF 1.32% A, F 1.97% F 2.44% F 1.48% F 2.49% 2.48%
EXPENSES TO
AVERAGE NET
ASSETS AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.17)% A (.90)% (1.13)% .46% (1.08)% (1.34)%
INVESTMENT
INCOME (LOSS)
TO AVERAGE NET
ASSETS
PORTFOLIO 191% A 199% 340% 601% 190% 169%
TURNOVER RATE
AVERAGE $ .0260 $ .0273 $ .0355
COMMISSION
RATE G
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 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. F FMR OR
THE FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION
OF THE FUND'S EXPENSES
(SEE NOTE 8 OF NOTES TO
FINANCIAL STATEMENTS).
G FOR FISCAL YEARS BEGINNING
ON OR AFTER SEPTEMBER 1,
1995, A FUND IS REQUIRED
TO DISCLOSE ITS AVERAGE
COMMISSION RATE PER SHARE
FOR SECURITY TRADES ON
WHICH COMMISSIONS ARE
CHARGED. THIS AMOUNT
MAY VARY FROM PERIOD TO
PERIOD AND FUND TO FUND
DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS
MARKETS WHERE TRADING
PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
</TABLE>
FOOD AND AGRICULTURE PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 MONTHS YEAR YEARS YEARS
SELECT FOOD AND AGRICULTURE -8.03% 6.80% 109.93% 414.37%
SELECT FOOD AND AGRICULTURE (LOAD ADJ.) -10.86% 3.52% 103.56% 398.86%
S&P 500 -8.10% 8.10% 131.21% 382.74%
GS CONSUMER INDUSTRIES -8.66% 10.68% N/A N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks - and the Goldman Sachs
Consumer Industries Index - a market capitalization-weighted index of
300 stocks designed to measure the performance of companies in the
consumer industries sector. These benchmarks include reinvestment of
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 YEAR YEARS YEARS
SELECT FOOD AND AGRICULTURE 6.80% 15.99% 17.80%
SELECT FOOD AND AGRICULTURE 3.52% 15.28% 17.44%
(LOAD ADJ.)
S&P 500 8.10% 18.25% 17.05%
GS CONSUMER INDUSTRIES 10.68% N/A N/A
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.
(checkmark)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.
$10,000 OVER 10 YEARS
Food & Agriculture S&P 500
00009 SP001
1988/08/31 9700.00 10000.00
1988/09/30 10089.37 10426.00
1988/10/31 10558.91 10715.84
1988/11/30 10312.69 10562.61
1988/12/31 10576.68 10747.45
1989/01/31 11122.16 11534.17
1989/02/28 10921.20 11246.96
1989/03/31 11334.62 11509.02
1989/04/30 11920.30 12106.34
1989/05/31 12655.27 12596.64
1989/06/30 12903.93 12524.84
1989/07/31 14134.84 13655.84
1989/08/31 13916.92 13923.49
1989/09/30 13975.82 13866.40
1989/10/31 13834.47 13544.70
1989/11/30 14358.64 13821.02
1989/12/31 14687.56 14152.72
1990/01/31 13665.93 13203.07
1990/02/28 13861.43 13373.39
1990/03/31 14460.53 13727.79
1990/04/30 14403.78 13384.59
1990/05/31 15658.75 14689.59
1990/06/30 16166.69 14589.70
1990/07/31 16160.32 14543.01
1990/08/31 14981.43 13228.33
1990/09/30 14503.50 12584.11
1990/10/31 14847.61 12529.99
1990/11/30 15459.36 13339.43
1990/12/31 16057.48 13711.60
1991/01/31 16518.33 14309.43
1991/02/28 17762.64 15332.55
1991/03/31 18631.68 15703.60
1991/04/30 18348.58 15741.29
1991/05/31 19020.11 16421.31
1991/06/30 18236.47 15669.22
1991/07/31 18999.67 16399.40
1991/08/31 19756.17 16788.07
1991/09/30 19408.05 16507.71
1991/10/31 19414.74 16728.91
1991/11/30 19280.85 16054.73
1991/12/31 21531.42 17891.40
1992/01/31 21210.47 17558.62
1992/02/29 21091.86 17786.88
1992/03/31 20624.40 17440.03
1992/04/30 20387.17 17952.77
1992/05/31 20568.58 18040.74
1992/06/30 20343.69 17771.93
1992/07/31 21129.46 18498.80
1992/08/31 21035.75 18119.58
1992/09/30 21388.99 18333.39
1992/10/31 21619.67 18397.56
1992/11/30 22448.70 19024.91
1992/12/31 22828.90 19258.92
1993/01/31 22836.28 19420.70
1993/02/28 22777.23 19684.82
1993/03/31 23397.22 20100.17
1993/04/30 22488.75 19613.74
1993/05/31 23196.81 20139.39
1993/06/30 22965.92 20197.79
1993/07/31 22681.16 20117.00
1993/08/31 23766.34 20879.44
1993/09/30 23689.38 20718.67
1993/10/31 24582.16 21147.54
1993/11/30 24297.39 20946.64
1993/12/31 24841.82 21200.10
1994/01/31 25593.13 21920.90
1994/02/28 25439.64 21326.84
1994/03/31 24252.08 20396.99
1994/04/30 23981.10 20658.07
1994/05/31 23806.84 20996.87
1994/06/30 23989.40 20482.44
1994/07/31 24794.30 21154.27
1994/08/31 26370.91 22021.59
1994/09/30 26420.70 21482.06
1994/10/31 26918.58 21965.41
1994/11/30 26263.04 21165.43
1994/12/31 26355.67 21479.31
1995/01/31 27466.75 22036.27
1995/02/28 28017.98 22895.02
1995/03/31 28655.34 23570.66
1995/04/30 29281.64 24264.81
1995/05/31 30332.42 25234.68
1995/06/30 31050.45 25820.88
1995/07/31 31391.95 26677.10
1995/08/31 31339.41 26744.06
1995/09/30 33799.98 27872.66
1995/10/31 33852.52 27773.15
1995/11/30 35183.50 28992.39
1995/12/31 36012.07 29550.79
1996/01/31 37497.30 30556.70
1996/02/29 38643.30 30839.96
1996/03/31 37992.37 31136.95
1996/04/30 37299.82 31595.90
1996/05/31 38675.71 32410.76
1996/06/30 38713.41 32534.25
1996/07/31 38185.67 31096.88
1996/08/31 36969.98 31752.72
1996/09/30 38223.36 33539.76
1996/10/31 38930.16 34464.79
1996/11/30 40890.33 37069.98
1996/12/31 40819.50 36335.62
1997/01/31 42583.97 38605.87
1997/02/28 43895.01 38908.54
1997/03/31 42751.55 37309.79
1997/04/30 44447.69 39537.19
1997/05/31 45756.53 41944.21
1997/06/30 47276.47 43823.31
1997/07/31 48975.84 47310.33
1997/08/31 46717.04 44660.01
1997/09/30 49524.71 47106.04
1997/10/31 48638.08 45532.69
1997/11/30 51962.95 47640.40
1997/12/31 53202.56 48458.39
1998/01/31 51413.21 48994.34
1998/02/28 54247.27 52527.81
1998/03/31 56325.58 55217.76
1998/04/30 54899.47 55773.25
1998/05/31 56147.99 54814.51
1998/06/30 57325.84 57041.07
1998/07/31 55264.61 56433.58
1998/08/31 49886.00 48274.42
IMATRL PRASUN SHR__CHT 19980831 19980923 111432 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Food and Agriculture Portfolio on August
31, 1988, and the current 3.00% sales charge was paid. As the chart
shows, by August 31, 1998, the value of the investment would have
grown to $49,886 - a 398.86% increase on the initial investment - and
includes the effect of a $7.50 trading fee. For comparison - look at
how the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $48,274 - a 382.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
PHILIP MORRIS COMPANIES, INC. 8.2
MCDONALD'S CORP. 5.4
SARA LEE CORP. 4.7
ANHEUSER-BUSCH COMPANIES, INC. 4.6
SAFEWAY, INC. 4.5
CAMPBELL SOUP CO. 4.0
HEINZ (H.J.) CO. 3.9
COCA-COLA CO. (THE) 3.9
PEPSICO, INC. 3.9
UNILEVER NV (NY SHARES) 3.1
TOP INDUSTRIES AS OF AUGUST 31, 1998
FOOD 13.1%
GROCERY - RETAIL 12.5%
SOFT DRINKS 9.0%
TOBACCO MANUFACTURERS 8.2%
GRAIN MILL PRODUCTS 6.6%
ALL OTHERS 50.6%
ROW: 1, COL: 1, VALUE: 50.6
ROW: 1, COL: 2, VALUE: 6.6
ROW: 1, COL: 3, VALUE: 8.199999999999999
ROW: 1, COL: 4, VALUE: 9.0
ROW: 1, COL: 5, VALUE: 12.5
ROW: 1, COL: 6, VALUE: 13.1
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
FOOD AND AGRICULTURE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(Photograph of Scott Offen)
Scott Offen, Portfolio Manager
of Fidelity Select Food
and Agriculture Portfolio
Q. SCOTT, HOW DID THE FUND PERFORM?
A. For the six and 12 months that ended August 31, 1998, the fund had
total returns of -8.03% and 6.80%, respectively. During the same six-
and 12-month periods, the Standard & Poor's 500 Index returned -8.10%
and 8.10%, respectively. Beginning with this period, the fund also
compares itself to the Goldman Sachs Consumer Industries Index - an
index of 300 stocks designed to measure the performance of companies
in the consumer industries sector - which returned -8.66% and 10.68%
over the same six- and 12-month periods, respectively.
Q. WHAT FACTORS AFFECTED THE PERFORMANCE OF THE FOOD AND AGRICULTURE
SECTOR DURING THE PAST SIX MONTHS?
A. In periods of market volatility like we've seen during the past six
months, stocks in this sector generally perform better than other
sectors, because consumer nondurable companies such as food and
agriculture stocks tend to post steady earnings growth. Since stock
prices usually follow earnings, that stability is seen as a relatively
safe haven in unstable markets. Yet, as you can see, the performance
of the sector proved to be surprisingly disappointing, given the
volatility in the market. The main problem was competition and
deflation - falling prices - in the packaged food industry that cut
into company earnings. Food companies have been unable to raise prices
to bolster their earnings. Instead of buying the name brands produced
by these food companies, consumers have shifted toward buying
lower-priced, private-label or store-brand products, the quality of
which has improved dramatically. In addition, food companies, in an
attempt to meet ambitious earnings targets, recently cut back on their
marketing, advertising and product-development expenditures.
Unfortunately, as a result of these cut-backs, the food companies'
market position weakened.
Q. WHAT STRATEGY DID YOU PURSUE IN THIS INVESTING CLIMATE?
A. As it became more apparent that food companies would have a hard
time meeting earnings estimates, I increased the fund's holdings in
supermarket stocks. Retail supermarket chains are strengthening as the
industry consolidates. They have pushed their private-label products
because they offer a high profit margin, even though they're lower
priced. The fund's supermarket investments at the end of the period
included Safeway - one of the fund's largest holdings and one of the
top contributors to performance because it beat earnings estimates -
Albertson's, American Stores and Dominick's.
Q. HOW DID TOBACCO STOCKS FARE DURING THE SIX MONTHS?
A. In general, it was a good period for the stocks. Nearly every court
decision on the issue of tobacco company liability during the period
favored the industry. In addition, during the period judges dismissed
some of the suits brought by states' attorneys general, and Congress
and the president appeared to lack the political will to attack such a
divisive issue. Philip Morris - the fund's largest holding - proved to
be one of the fund's top contributors to performance over the period.
Q. WHICH INDIVIDUAL STOCKS WERE DISAPPOINTMENTS DURING THE PERIOD?
A. The stock price of Sara Lee - one of the fund's largest holdings -
fell and was the biggest disappointment. This was one of those
instances where it was hard to explain why there was a shift in
investor sentiment and a stock-price drop, because Sara Lee's
management appeared to do everything right and met earnings
expectations. PepsiCo, on the other hand, missed its earnings
estimates, leading to a price decline for that stock. Finally, Dole
Food was hurt when banana prices didn't rise as much as expected,
because banana producers moved more of the fruit into the U.S. market
after Russia devalued its currency, thereby depressing prices.
Q. WHAT'S YOUR OUTLOOK?
A. I'm more optimistic about the next six months. I believe the
companies have finally realized what to do to start improving their
earnings. I also think the earnings outlook for the market in general
is quite uncertain and unstable. Given that and the fact that we
should see some stability from companies in the sector, I hope the
performance will be better going forward.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
(checkmark) FUND FACTS
START DATE: July 29, 1985
FUND NUMBER: 009
TRADING SYMBOL: FDFAX
SIZE: as of August 31, 1998, more than
$191 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
FOOD AND AGRICULTURE PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 90.6%
SHARES VALUE (NOTE 1)
AGRICULTURE - 2.7%
CROPS - 2.6%
DEKALB Genetics Corp. Class B 26,200 $ 2,269,575
Delta & Pine Land Co. 14,100 605,419
Pioneer Hi-Bred International, Inc. 61,900 2,089,125
4,964,119
LIVESTOCK - 0.1%
Michael Foods, Inc. 8,200 202,950
TOTAL AGRICULTURE 5,167,069
BEVERAGES - 14.3%
MALT BEVERAGE - 5.3%
Anheuser-Busch Companies, Inc. 193,800 8,939,025
Coors (Adolph) Co. Class B 29,600 1,221,000
10,160,025
SOFT DRINKS - 9.0%
Celestial Seasonings, Inc. (a) 12,200 430,050
Coca-Cola Bottling Co. Consolidated 30,700 1,895,725
Coca-Cola Co. (The) 115,800 7,541,475
PepsiCo, Inc. 271,200 7,508,850
17,376,100
TOTAL BEVERAGES 27,536,125
CHEMICALS & PLASTICS - 0.5%
AGRICULTURAL CHEMICALS - 0.5%
IMC Global, Inc. 48,000 882,000
FOODS - 40.2%
BAKERY PRODUCTS - 1.9%
Earthgrains Co. 24,400 671,000
Flowers Industries, Inc. 106,100 1,889,906
Interstate Bakeries Corp. 35,900 935,644
Lance, Inc. 11,600 214,600
3,711,150
CANDY - 1.2%
Hershey Foods Corp. 33,800 2,366,000
CANNED SPECIALTIES - 4.0%
Campbell Soup Co. 154,300 7,772,863
COOKIES & CRACKERS - 1.1%
Keebler Foods Co. (a) 53,600 1,383,550
Nabisco Holdings Corp. Class A 15,100 499,244
United Biscuits Holdings PLC (a) 54,555 167,142
2,049,936
DAIRY - 2.5%
Dean Foods Co. 51,100 2,248,400
Groupe Danone 8,100 2,062,697
Suiza Foods Corp. (a) 11,700 565,988
4,877,085
FOOD - 13.1%
Chiquita Brands International, Inc. 19,900 222,631
Dole Food, Inc. 68,200 2,949,650
Heinz (H.J.) Co. 141,700 7,554,381
Nestle SA ADR (Reg.) 35,700 3,329,025
Nestle SA (Reg.) 956 1,714,089
Sara Lee Corp. 200,500 9,072,625
Universal Foods Corp. 19,200 405,600
25,248,001
SHARES VALUE (NOTE 1)
GENERAL FOOD PREPARATIONS - 1.9%
McCormick & Co., Inc. (non-vtg.) 29,200 $ 848,625
Sysco Corp. 139,400 2,814,138
3,662,763
GRAIN MILL PRODUCTS - 6.6%
Agribrands International, Inc. 8,400 244,650
Archer-Daniels-Midland Co. 186,359 2,795,385
Corn Products International, Inc. (a) 178,975 4,239,470
Quaker Oats Co. 66,600 3,538,125
Ralston Purina Co. 70,300 1,849,769
12,667,399
MEAT & FISH - 3.2%
ConAgra, Inc. 124,500 3,081,375
Hormel (George A) & Co. 25,900 713,869
IBP, Inc. 36,300 601,219
Smithfield Foods, Inc. (a) 11,300 206,225
Tyson Foods, Inc. 99,425 1,628,084
6,230,772
MISCELLANEOUS FOOD PREPS, KINDRED PRODUCTS - 0.5%
American Italian Pasta Co. Series A 34,400 862,150
PACKAGED & FROZEN FOODS - 2.7%
Bestfoods 101,300 5,083,994
POULTRY SLAUGHTER & PROCESSING - 1.0%
Pilgrims Pride Corp. 97,700 1,911,256
SUGAR & CANDIES - 0.5%
Sherwood Brands, Inc. warrants 5/6/03 50,000 15,625
Tootsie Roll Industries, Inc. 2,562 86,468
Wrigley (Wm.) Jr. Co. 10,000 775,000
877,093
TOTAL FOODS 77,320,462
GROCERY STORES - 12.8%
FOOD STORES - 0.3%
Whole Foods Market, Inc. (a) 13,800 570,975
GROCERY - RETAIL - 12.5%
Albertson's, Inc. 83,600 4,227,025
American Stores Co. 48,000 1,392,000
Dominick's Supermarkets, Inc. (a) 68,300 3,077,769
Hannaford Brothers Co. 18,700 777,219
Kroger Co. (The) (a) 86,300 3,883,500
Meyer (Fred), Inc. (a) 50,900 2,001,006
Safeway, Inc. (a) 221,600 8,725,500
24,084,019
TOTAL GROCERY STORES 24,654,994
HOLDING COMPANIES - 0.1%
HOLDING COMPANY OFFICES - 0.1%
Triarc Companies, Inc. Class A (a) 19,600 292,775
HOUSEHOLD PRODUCTS - 5.3%
SOAPS & DETERGENTS - 5.3%
Unilever NV (NY Shares) 93,400 5,919,225
Unilever PLC Ord. 500,100 4,377,995
10,297,220
RESTAURANTS - 5.4%
McDonald's Corp. 186,100 10,433,231
RETAIL & WHOLESALE, MISCELLANEOUS - 0.2%
MISCELLANEOUS NONDURABLE GOODS - WHOLESALE - 0.2%
AgriBioTech, Inc. (a) 48,400 417,448
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TOBACCO - 9.1%
CIGARETTES - 0.9%
RJR Nabisco Holdings Corp. 79,100 $ 1,715,482
TOBACCO MANUFACTURERS - 8.2%
Philip Morris Companies, Inc. 377,900 15,706,469
TOTAL TOBACCO 17,421,951
TOTAL COMMON STOCKS
(Cost $166,022,251) 174,423,275
CASH EQUIVALENTS - 9.4%
Taxable Central Cash Fund (b)
(Cost $18,013,592) 18,013,592 18,013,592
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $184,035,843) $ 192,436,867
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.58%. 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 $83,228,678 and $128,012,049, 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 $31,235 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the security lending program. At period end,
there were no loans outstanding (see Note 6 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $184,374,272. Net unrealized appreciation
aggregated $8,062,595, of which $18,265,548 related to appreciated
investment securities and $10,202,953 related to depreciated
investment securities.
FOOD AND AGRICULTURE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31,
1998
(UNAUDITED)
ASSETS
INVESTMENT IN $ 192,436,867
SECURITIES, AT
VALUE
(COST
$184,035,84
3) -
SEE
ACCOMPANYIN
G SCHEDULE
RECEIVABLE FOR 2,062,784
INVESTMENTS
SOLD
RECEIVABLE FOR 499,110
FUND SHARES
SOLD
DIVIDENDS 194,170
RECEIVABLE
INTEREST 79,060
RECEIVABLE
REDEMPTION FEES 905
RECEIVABLE
TOTAL ASSETS 195,272,896
LIABILITIES
PAYABLE FOR $ 887,472
INVESTMENTS
PURCHASED
PAYABLE FOR 2,261,809
FUND SHARES
REDEEMED
ACCRUED 104,052
MANAGEMENT
FEE
OTHER PAYABLES 152,899
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 3,406,232
NET ASSETS $ 191,866,664
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 170,285,030
UNDISTRIBUTED 579,986
NET INVESTMENT
INCOME
ACCUMULATED 12,601,277
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED 8,400,371
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
AND ASSETS
AND LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, FOR $ 191,866,664
4,529,595
SHARES
OUTSTANDING
NET ASSET $42.36
VALUE AND
REDEMPTION
PRICE PER
SHARE
($191,866,6
64 (DIVIDED BY)
4,529,595
SHARES)
MAXIMUM $43.67
OFFERING PRICE
PER SHARE
(100/97.00
OF $42.36)
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED AUGUST
31, 1998
(UNAUDITED)
INVESTMENT $ 1,599,927
INCOME
DIVIDENDS
INTEREST 531,220
(INCLUDING
INCOME ON
SECURITIES
LOANED OF
$33,247)
TOTAL INCOME 2,131,147
EXPENSES
MANAGEMENT $ 693,550
FEE
TRANSFER AGENT 692,661
FEES
ACCOUNTING AND 121,479
SECURITY
LENDING FEES
NON-INTERESTED 493
TRUSTEES'
COMPENSATION
CUSTODIAN FEES 9,424
AND EXPENSES
REGISTRATION FEES 20,543
AUDIT 14,599
LEGAL 759
REPORTS TO 34,063
SHAREHOLDERS
TOTAL EXPENSES 1,587,571
BEFORE
REDUCTIONS
EXPENSE (36,510) 1,551,061
REDUCTIONS
NET INVESTMENT 580,086
INCOME
REALIZED AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS) ON:
INVESTMENT 13,237,936
SECURITIES
FOREIGN (39,017) 13,198,919
CURRENCY
TRANSACTIONS
CHANGE IN NET
UNREALIZED
APPRECIATION
(DEPRECIATION)
ON:
INVESTMENT (29,995,206)
SECURITIES
ASSETS AND (633) (29,995,839)
LIABILITIES IN
FOREIGN
CURRENCIES
NET GAIN (LOSS) (16,796,920)
NET INCREASE $ (16,216,834)
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 222,708
INFORMATION
SALES CHARGES
PAID TO FDC
SALES CHARGES $ 220,928
- - RETAINED BY
FDC
DEFERRED SALES $ 3,734
CHARGES
WITHHELD
BY FDC
EXCHANGE FEES $ 26,618
WITHHELD BY
FSC
EXPENSE $ 36,212
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEMENTS
CUSTODIAN 298
CREDITS
$ 36,510
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED YEAR ENDED
(DECREASE) IN AUGUST 31, 1998 FEBRUARY 28,
NET ASSETS (UNAUDITED) 1998
OPERATIONS $ 580,086 $ 1,795,355
NET
INVESTMENT
INCOME
NET REALIZED 13,198,919 33,786,692
GAIN (LOSS)
CHANGE IN NET (29,995,839) 14,339,862
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (16,216,834) 49,921,909
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
DISTRIBUTIONS TO (240,018) (2,133,491)
SHAREHOLDERS
FROM NET
INVESTMENT
INCOME
FROM NET (13,774,848) (27,598,622)
REALIZED GAIN
TOTAL (14,014,866) (29,732,113)
DISTRIBUTIONS
SHARE 49,263,257 212,263,562
TRANSACTIONS
NET PROCEEDS
FROM SALES OF
SHARES
REINVESTMENT 13,747,568 29,301,818
OF
DISTRIBUTIONS
COST OF SHARES (91,568,948) (234,907,260)
REDEEMED
NET INCREASE (28,558,123) 6,658,120
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION 89,804 296,205
FEES
TOTAL (58,700,019) 27,144,121
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
BEGINNING OF 250,566,683 223,422,562
PERIOD
END OF PERIOD $ 191,866,664 $ 250,566,683
(INCLUDING
UNDISTRIBUTE
D NET
INVESTMENT
INCOME OF
$579,986
AND
$367,788,
RESPECTIVELY)
OTHER
INFORMATION
SHARES
SOLD 1,021,168 4,609,772
ISSUED IN 282,466 675,395
REINVESTMENT
OF
DISTRIBUTIONS
REDEEMED (1,907,388) (5,169,172)
NET INCREASE (603,754) 115,995
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED YEAR ENDED YEARS ENDED
ENDED FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
AUGUST 31,
1998
SELECTED (UNAUDITED) 1998 1997 1996 1995 1994
PER-SHARE
DATA
NET ASSET VALUE, $ 48.81 $ 44.53 $ 42.15 $ 32.53 $ 31.49 $ 30.86
BEGINNING OF
PERIOD
INCOME FROM
INVESTMENT
OPERATIONS
NET .12 .33 .42 .37 .15 .09
INVESTMENT
INCOME D
NET REALIZED (3.68) 9.22 4.91 11.61 2.80 3.29
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM (3.56) 9.55 5.33 11.98 2.95 3.38
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIONS
FROM NET (.05) (.37) (.24) (.20) (.08) (.06)
INVESTMENT
INCOME
FROM NET (2.86) (4.95) (2.77) (2.20) (1.85) (2.70)
REALIZED GAIN
TOTAL (2.91) (5.32) (3.01) (2.40) (1.93) (2.76)
DISTRIBUTIONS
REDEMPTION FEES .02 .05 .06 .04 .02 .01
ADDED TO PAID
IN CAPITAL
NET ASSET VALUE, $ 42.36 $ 48.81 $ 44.53 $ 42.15 $ 32.53 $ 31.49
END OF PERIOD
TOTAL RETURN B, C (8.03)% 23.58% 13.59% 37.92% 10.14% 11.69%
RATIOS AND
SUPPLEMENTAL
DATA
NET ASSETS, END $ 191,867 $ 250,567 $ 223,423 $ 301,102 $ 197,130 $ 95,010
OF PERIOD
(000 OMITTED)
RATIO OF 1.32% A 1.49% 1.52% 1.43% 1.70% 1.65%
EXPENSES TO
AVERAGE NET
ASSETS
RATIO OF 1.29% A, E 1.48% E 1.50% E 1.42% E 1.68% E 1.64% E
EXPENSES TO
AVERAGE NET
ASSETS AFTER
EXPENSE
REDUCTIONS
RATIO OF NET .48% A .73% 1.01% .99% .49% .29%
INVESTMENT
INCOME TO
AVERAGE NET
ASSETS
PORTFOLIO 76% A 74% 91% 124% 126% 96%
TURNOVER RATE
AVERAGE $ .0444 $ .0333 $ .0326
COMMISSION
RATE F
A ANNUALIZED B THE TOTAL
RETURNS WOULD HAVE BEEN
LOWER HAD CERTAIN
EXPENSES NOT BEEN
REDUCED DURING THE PERIODS
SHOWN (SEE NOTE 8 OF
NOTES TO FINANCIAL
STATEMENTS). C TOTAL
RETURNS DO NOT INCLUDE THE
ONE TIME SALES CHARGE AND
FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT
ANNUALIZED. D NET
INVESTMENT INCOME PER
SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES
OUTSTANDING DURING THE
PERIOD. E FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION
OF THE FUND'S EXPENSES
(SEE NOTE 8 OF NOTES TO
FINANCIAL
STATEMENTS). F FOR FISCAL
YEARS BEGINNING ON OR AFTER
SEPTEMBER 1, 1995, A
FUND IS REQUIRED TO DISCLOSE
ITS AVERAGE COMMISSION
RATE PER SHARE FOR SECURITY
TRADES ON WHICH
COMMISSIONS ARE CHARGED.
THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND
FUND TO FUND DEPENDING ON
THE MIX OF TRADES EXECUTED
IN VARIOUS MARKETS WHERE
TRADING PRACTICES AND
COMMISSION RATE STRUCTURES
MAY DIFFER.
</TABLE>
LEISURE PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 MONTHS YEAR YEARS YEARS
SELECT LEISURE -7.35% 19.40% 109.51% 355.50%
SELECT LEISURE -10.20% 15.75% 103.15% 341.76%
(LOAD ADJ.)
S&P 500 -8.10% 8.10% 131.21% 382.74%
GS CONSUMER INDUSTRIES -8.66% 10.68% N/A N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index- a widely
recognized, unmanaged index of common stocks - and the Goldman Sachs
Consumer Industries Index - a market capitalization-weighted index of
300 stocks designed to measure the performance of companies in the
consumer industries sector. These benchmarks include reinvestment of
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 YEAR YEARS YEARS
SELECT LEISURE 19.40% 15.94% 16.37%
SELECT LEISURE 15.75% 15.23% 16.02%
(LOAD ADJ.)
S&P 500 8.10% 18.25% 17.05%
GS CONSUMER INDUSTRIES 10.68% N/A N/A
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.
(checkmark) 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.
$10,000 OVER 10 YEARS
Leisure S&P 500
00062 SP001
1988/08/31 9700.00 10000.00
1988/09/30 10374.71 10426.00
1988/10/31 10374.71 10715.84
1988/11/30 9976.02 10562.61
1988/12/31 10571.86 10747.45
1989/01/31 11474.39 11534.17
1989/02/28 11290.38 11246.96
1989/03/31 11820.51 11509.02
1989/04/30 12490.83 12106.34
1989/05/31 13112.96 12596.64
1989/06/30 13237.30 12524.84
1989/07/31 14348.16 13655.84
1989/08/31 14463.23 13923.49
1989/09/30 14556.17 13866.40
1989/10/31 13507.27 13544.70
1989/11/30 13666.60 13821.02
1989/12/31 13871.11 14152.72
1990/01/31 12188.91 13203.07
1990/02/28 12080.83 13373.39
1990/03/31 12174.81 13727.79
1990/04/30 11700.22 13384.59
1990/05/31 12668.19 14689.59
1990/06/30 12522.53 14589.70
1990/07/31 12090.23 14543.01
1990/08/31 10694.66 13228.33
1990/09/30 9679.70 12584.11
1990/10/31 9566.93 12529.99
1990/11/30 10328.15 13339.43
1990/12/31 10779.86 13711.60
1991/01/31 11382.70 14309.43
1991/02/28 12256.10 15332.55
1991/03/31 12460.21 15703.60
1991/04/30 12493.44 15741.29
1991/05/31 12925.39 16421.31
1991/06/30 12199.14 15669.22
1991/07/31 12782.99 16399.40
1991/08/31 12915.90 16788.07
1991/09/30 13248.17 16507.71
1991/10/31 13646.90 16728.91
1991/11/30 12991.85 16054.73
1991/12/31 14330.43 17891.40
1992/01/31 14653.21 17558.62
1992/02/29 15165.86 17786.88
1992/03/31 14857.32 17440.03
1992/04/30 15023.46 17952.77
1992/05/31 15113.64 18040.74
1992/06/30 14881.05 17771.93
1992/07/31 14952.26 18498.80
1992/08/31 14738.65 18119.58
1992/09/30 15028.20 18333.39
1992/10/31 15142.13 18397.56
1992/11/30 16172.17 19024.91
1992/12/31 16656.34 19258.92
1993/01/31 17069.30 19420.70
1993/02/28 16979.12 19684.82
1993/03/31 17862.01 20100.17
1993/04/30 17459.47 19613.74
1993/05/31 18713.63 20139.39
1993/06/30 19217.26 20197.79
1993/07/31 19730.78 20117.00
1993/08/31 21088.63 20879.44
1993/09/30 22140.34 20718.67
1993/10/31 23364.88 21147.54
1993/11/30 22495.85 20946.64
1993/12/31 23244.53 21200.10
1994/01/31 23486.13 21920.90
1994/02/28 23285.65 21326.84
1994/03/31 21877.21 20396.99
1994/04/30 21921.31 20658.07
1994/05/31 21689.31 20996.87
1994/06/30 20772.62 20482.44
1994/07/31 21576.14 21154.27
1994/08/31 22436.24 22021.59
1994/09/30 22430.58 21482.06
1994/10/31 22351.36 21965.41
1994/11/30 21395.06 21165.43
1994/12/31 21655.36 21479.31
1995/01/31 22051.46 22036.27
1995/02/28 23036.05 22895.02
1995/03/31 23641.52 23570.66
1995/04/30 23850.96 24264.81
1995/05/31 24312.48 25234.68
1995/06/30 25252.62 25820.88
1995/07/31 27007.54 26677.10
1995/08/31 27873.61 26744.06
1995/09/30 27919.19 27872.66
1995/10/31 26574.51 27773.15
1995/11/30 27440.57 28992.39
1995/12/31 27493.16 29550.79
1996/01/31 27900.65 30556.70
1996/02/29 29396.92 30839.96
1996/03/31 29543.36 31136.95
1996/04/30 30756.38 31595.90
1996/05/31 32018.38 32410.76
1996/06/30 31894.78 32534.25
1996/07/31 29604.97 31096.88
1996/08/31 30340.05 31752.72
1996/09/30 31816.72 33539.76
1996/10/31 30945.03 34464.79
1996/11/30 31823.22 37069.98
1996/12/31 31178.70 36335.62
1997/01/31 32566.38 38605.87
1997/02/28 32376.84 38908.54
1997/03/31 31178.70 37309.79
1997/04/30 31472.53 39537.19
1997/05/31 34422.86 41944.21
1997/06/30 35780.72 43823.31
1997/07/31 37607.79 47310.33
1997/08/31 37003.51 44660.01
1997/09/30 41084.20 47106.04
1997/10/31 40451.48 45532.69
1997/11/30 42079.49 47640.40
1997/12/31 44052.26 48458.39
1998/01/31 44289.55 48994.34
1998/02/28 47688.19 52527.81
1998/03/31 51017.95 55217.76
1998/04/30 51848.62 55773.25
1998/05/31 50556.71 54814.51
1998/06/30 54252.36 57041.07
1998/07/31 53485.04 56433.58
1998/08/31 44176.00 48274.42
IMATRL PRASUN SHR__CHT 19980831 19980923 100939 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Leisure Portfolio on August 31, 1988, and
the current 3.00% sales charge was paid. As the chart shows, by August
31, 1998, the value of the investment would have grown to $44,176 - a
341.76% increase on the initial investment - and includes the effect
of a $7.50 trading fee. For comparison, look at how the Standard &
Poor's 500 Index did over the same period. With dividends and capital
gains, if any, reinvested, the same $10,000 investment would have
grown to $48,274 - a 382.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
MICROSOFT CORP. 5.6
TIME WARNER, INC. 5.3
CBS CORP. 4.9
MCDONALD'S CORP. 3.4
INTERPUBLIC GROUP OF COMPANIES, INC. 2.9
MEDIAONE GROUP, INC. 2.8
TELE-COMMUNICATIONS, INC. 2.6
(LIBERTY MEDIA GROUP), SERIES A
AMERICA ONLINE, INC. 2.3
DISNEY (WALT) CO. 2.2
GANNETT CO., INC. 2.1
TOP INDUSTRIES AS OF AUGUST 31, 1998
CABLE TV OPERATORS 14.4%
MOTION PICTURE PRODUCTION 8.8%
TELEVISION BROADCASTING 6.3%
PREPACKAGED COMPUTER
SOFTWARE 5.6%
ADVERTISING AGENCIES 5.4%
ALL OTHERS 59.5%
ROW: 1, COL: 1, VALUE: 59.5
ROW: 1, COL: 2, VALUE: 5.4
ROW: 1, COL: 3, VALUE: 5.6
ROW: 1, COL: 4, VALUE: 6.3
ROW: 1, COL: 5, VALUE: 8.800000000000001
ROW: 1, COL: 6, VALUE: 14.4
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
LEISURE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Jeffrey Dorsey)
Jeffrey Dorsey,
Portfolio Manager
of Fidelity Select
Leisure Portfolio
Q. HOW DID THE FUND PERFORM, JEFF?
A. For the six- and 12 -month periods ending August 31, 1998, the fund
had total returns of -7.35% and 19.40%, respectively. This compared
favorably with the Standard & Poor's 500 Index's returns of -8.10% and
8.10% for the same periods. Beginning this period, the fund also
compares itself to the Goldman Sachs Consumer Industries Index - an
index of 300 stocks designed to measure the performance of companies
in the consumer industries sector - which returned -8.66% and 10.68%
over the same six- and 12- month periods, respectively.
Q. WHAT WAS YOUR STRATEGY DURING THE PERIOD?
A. I focused on buying those stocks that would be less affected by the
continuing Asian crisis. That led me to increase the fund's weighting
in media, entertainment and cable companies, while reducing gaming. I
also reduced the fund's holdings in newspapers, restaurant and lodging
stocks, due to their weakening fundamentals, with the latter area
reacting very negatively to a potential economic downturn.
Additionally, I beefed up the fund's weighting in large-cap stocks,
which worked out well, given the marked underperformance of small-cap
stocks during the period.
Q. YOU'VE GOT SOME NEW TOP 10 HOLDINGS IN THE FUND: CBS, MCDONALD'S
AND INTERPUBLIC GROUP . . .
A. CBS is a company with great radio and outdoor advertising
businesses, and it's in the process of turning around its television
station operation, showing strong growth there. Investors have focused
myopically on the CBS television network operations, which contribute
negligible profit to the overall operations, while overlooking the
tremendous value in the company's other areas. McDonald's, another new
top 10 holding, went through a change in management earlier this year,
and has re-focused on cutting overhead, restructuring its operations
and developing new products. Interpublic, an ad agency, has shown
tremendous growth, which is complemented by its very vigorous
acquisition activity. Though this company has some exposure to Asian
and Latin American markets, it has managed that exposure quite well.
Q. WHICH STOCKS PERFORMED WELL?
A. The strongest performers included Time Warner, Viacom and America
Online. Time Warner and Viacom have been reducing debt, increasing
their cash flows and generally benefiting from economies of scale,
while focusing on returns of capital. As Americans spend more of their
leisure time on-line, America Online has reaped the benefits. It also
has one of the best brand names and business models in its industry.
Cable providers such as MediaOne also performed well, putting
significant resources into upgrading systems. Outdoor Systems, a
billboard advertising company, has benefited from strong advertising
activity and demonstrated some of the best growth characteristics in
the ad industry.
Q. WHICH STOCKS WERE DISAPPOINTMENTS?
A. As I mentioned earlier, although CBS had shown strong growth in its
broadcasting stations, investors continued their focus on its network
business, which performed poorly. Radio now accounts for over 65% of
CBS's cash flow. Disney did not meet Wall Street's earnings estimates
in June, as its exposure to Asian economies and the poor showing of
its ABC network continued to hurt performance. As the high-yield bond
market weakened, a number of highly leveraged companies were hurt in
the stock market. Chancellor Media's high debt levels were, therefore,
a deterrent to investors, given a potential economic downturn. In
recessions, investors would tend to shun companies with high debt
loads.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. We're seeing the latter stages of lengthy economic growth, and I
believe that there will be a downturn at some point. At this point,
the outlook for leisure stocks appears fairly positive from my
bottom-up, company-by-company perspective. Clearly, the international
scene is a concern, and if problems in that arena cause domestic
economic growth to falter, that could cause problems for leisure
companies. If the economy weakens, I will find ways to position the
fund more defensively. However, through varying conditions, my goal is
to find companies with strong growth, and then purchase their stocks
at a reasonable price.
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.
(checkmark)FUND FACTS
START DATE: MAY 8, 1984
FUND NUMBER: 062
TRADING SYMBOL: FDLSX
SIZE: AS OF AUGUST 31, 1998, MORE THAN
$239 MILLION
MANAGER: JEFFREY DORSEY, SINCE JANUARY 1998;
MANAGER, FIDELITY SELECT MULTIMEDIA PORTFOLIO,
SINCE 1997; ANALYST, FIXED-INCOME SECURITIES,
1991-1997; JOINED FIDELITY IN 1991
LEISURE PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 93.5%
SHARES VALUE (NOTE 1)
ADVERTISING - 7.5%
ADVERTISING - 1.7%
Outdoor Systems, Inc. (a) 169,700 $ 3,945,525
ADVERTISING AGENCIES - 5.4%
Interpublic Group of Companies, Inc. 120,400 6,862,800
Omnicom Group, Inc. 77,300 3,681,400
WPP Group PLC 232,100 1,198,597
WPP Group PLC ADR 22,800 1,239,750
Young & Rubicam, Inc. (a) 300 9,169
12,991,716
OUTDOOR ADVERTISING SERVICES - 0.4%
Lamar Advertising Co. Class A (a) 28,500 926,250
TOTAL ADVERTISING 17,863,491
APPAREL STORES - 4.4%
FAMILY CLOTHING STORES - 1.0%
Abercrombie & Fitch Co. Class A (a) 55,115 2,369,945
GENERAL APPAREL STORES - 3.1%
Gap, Inc. 78,200 3,993,088
Limited, Inc. (The) 74,100 1,546,838
TJX Companies, Inc. 84,200 1,878,713
7,418,639
SHOE STORES - 0.3%
Payless ShoeSource, Inc. (a) 19,000 781,375
TOTAL APPAREL STORES 10,569,959
BEVERAGES - 4.2%
DISTILLED & BLENDED LIQUOR - 1.4%
Seagram Co. Ltd. 104,800 3,273,956
MALT BEVERAGE - 2.8%
Anheuser-Busch Companies, Inc. 106,900 4,930,763
Coors (Adolph) Co. Class B 41,700 1,720,125
6,650,888
TOTAL BEVERAGES 9,924,844
BROADCASTING - 26.2%
CABLE TV OPERATORS - 14.4%
Cablevision Systems Corp. Class A (a) 10,200 345,525
Comcast Corp. Class A special 87,600 3,274,050
Cox Communications, Inc. Class A (a) 105,300 4,422,600
MediaOne Group, Inc. (a) 163,100 6,687,100
TCA Cable TV, Inc. 71,300 1,639,900
Tele-Communications, Inc. (TCI Group),
Series A (a) 129,800 4,283,400
Time Warner, Inc. 155,825 12,524,434
USA Networks, Inc. (a) 60,100 1,179,463
34,356,472
COMMUNICATIONS SERVICES, NEC - 0.4%
PanAmSat Corp. (a) 21,500 911,063
RADIO BROADCASTING - 5.1%
Chancellor Media Corp. (a) 124,100 4,428,819
Clear Channel Communications, Inc. (a) 103,324 4,649,580
Jacor Communications, Inc. Class A (a) 52,000 3,068,000
12,146,399
TELEVISION BROADCASTING - 6.3%
CBS Corp. 449,217 11,679,642
Scripps (EW) Co. Class A 16,400 773,875
SHARES VALUE (NOTE 1)
Sinclair Broadcast Group, Inc.
Class A (a) 116,300 $ 1,868,069
Young Broadcasting, Inc. Class A (a) 13,800 713,288
15,034,874
TOTAL BROADCASTING 62,448,808
COMPUTER SERVICES & SOFTWARE - 8.4%
COMPUTER RELATED SERVICES, NEC - 0.2%
CNET, Inc. (a) 10,400 405,600
COMPUTER SERVICES - 2.6%
America Online, Inc. 67,100 5,498,006
At Home Corp., Series A (a) 15,000 427,500
SportsLine USA, Inc. 19,600 389,550
6,315,056
PREPACKAGED COMPUTER SOFTWARE - 5.6%
Microsoft Corp. (a) 139,200 13,354,500
TOTAL COMPUTER SERVICES & SOFTWARE 20,075,156
ENTERTAINMENT - 14.8%
AMUSEMENT - 1.2%
SFX Entertainment, Inc. Class A (a) 88,200 2,767,275
AMUSEMENT & RECREATIONAL SERVICES - 0.7%
IMAX Corp. (a) 89,400 1,553,172
CRUISES - 1.8%
Carnival Corp. 81,900 2,364,863
Royal Carribean Cruises Ltd. 80,500 1,952,125
4,316,988
MOTION PICTURE DISTRIBUTION - 1.8%
Viacom, Inc. Class B (non-vtg.) (a) 88,300 4,381,888
MOTION PICTURE PRODUCTION - 8.8%
Disney (Walt) Co. 187,256 5,137,837
King World Productions, Inc. (a) 191,900 4,029,900
News Corp. Ltd.:
ADR 46,200 1,111,688
sponsored ADR (ltd. vtg.) 145,400 3,053,400
Tele-Communications, Inc. (a):
(Liberty Media Group), Series A 189,900 6,207,356
(TCI Ventures Group), Series A 85,600 1,423,100
20,963,281
RECREATIONAL SERVICES - 0.5%
Premier Parks, Inc. (a) 75,300 1,223,625
TOTAL ENTERTAINMENT 35,206,229
GENERAL MERCHANDISE STORES - 1.0%
DEPARTMENT STORES - 0.2%
Stein Mart, Inc. (a) 58,600 520,075
VARIETY STORES - 0.8%
Consolidated Stores Corp. (a) 28,500 897,750
Dollar Tree Stores (a) 26,500 768,500
Michaels Stores, Inc. (a) 13,400 314,900
1,981,150
TOTAL GENERAL MERCHANDISE STORES 2,501,225
HOME FURNISHINGS - 0.3%
FURNITURE - 0.3%
Stanley Furniture Co, Inc. (a) 33,500 670,000
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
HOUSEHOLD PRODUCTS - 1.5%
COSMETICS - 1.5%
Avon Products, Inc. 42,100 $ 2,647,038
Revlon, Inc. Class A (a) 28,100 1,013,356
3,660,394
LEASING & RENTAL - 0.6%
VIDEO TAPE RENTAL - 0.6%
Hollywood Entertainment Corp. 129,900 1,339,594
LEISURE DURABLES & TOYS - 1.7%
MOTORCYCLES - 0.7%
Harley-Davidson, Inc. 55,100 1,697,769
TOYS & GAMES - 1.0%
Mattel, Inc. 72,500 2,347,188
TOTAL LEISURE DURABLES & TOYS 4,044,957
LODGING & GAMING - 1.3%
HOTELS, MOTELS, & TOURIST COURTS - 1.3%
Harrah's Entertainment, Inc. (a) 74,300 1,072,706
Promus Hotel Corp. (a) 33,800 1,039,350
Sun International Hotels Ltd. Ord. (a) 27,100 1,021,331
3,133,387
PHOTOGRAPHIC EQUIPMENT - 1.7%
Eastman Kodak Co. 50,800 3,968,750
PRINTING - 1.1%
COMMERCIAL PRINTING, NEC - 1.1%
Donnelley (R.R.) & Sons Co. 37,700 1,366,625
Valassis Communications, Inc. (a) 41,200 1,228,275
2,594,900
PUBLISHING - 9.2%
BOOK PUBLISHING & PRINTING - 2.5%
Harcourt General, Inc. 48,200 2,340,713
McGraw-Hill Companies, Inc. 35,400 2,699,250
Reader's Digest Association, Inc.
(The) Class A (non-vtg.) 44,700 877,238
5,917,201
GENERAL PUBLISHING - 0.1%
R.H. Donnelley Corp. 10,980 144,799
GREETING CARDS - 0.2%
American Greetings Corp. Class A 16,400 600,650
NEWSPAPERS - 5.2%
Belo (A.H.) Corp. Class A 33,000 610,500
Gannett Co., Inc. 83,900 4,950,100
Harte Hanks Communications, Inc. 35,200 772,200
Times Mirror Co. Class A 68,200 3,900,188
Tribune Co. 33,300 2,145,769
12,378,757
PERIODICALS - 1.2%
Meredith Corp. 14,200 476,588
Playboy Enterprises, Inc. Class B (a) 187,600 2,298,100
2,774,688
TOTAL PUBLISHING 21,816,095
REAL ESTATE - 0.0%
REAL ESTATE AGENTS - 0.0%
ResortQuest International, Inc. (a) 2,900 33,350
SHARES VALUE (NOTE 1)
REAL ESTATE INVESTMENT TRUSTS - 0.6%
Starwood Hotels & Resorts 40,300 $ 1,470,950
RESTAURANTS - 5.4%
Cracker Barrel Old Country Store, Inc. 15,900 388,556
McDonald's Corp. 144,600 8,106,638
Papa John's International, Inc. (a) 10,000 265,000
PJ America, Inc. (a) 47,500 676,875
Starbucks Corp. (a) 110,200 3,478,188
12,915,257
RETAIL & WHOLESALE, MISCELLANEOUS - 1.1%
MISCELLANEOUS DURABLE GOODS - WHOLESALE - 0.6%
Action Performance Companies, Inc. (a) 55,900 1,292,688
MUSIC, TV, & ELECTRICAL STORES - 0.4%
Musicland Stores Corp. (a) 100,700 944,063
PAINT, VARNISH & SUPPLIES - WHOLESALE - 0.1%
Finish Line, Inc. Class A (a) 32,700 282,038
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 2,518,789
SERVICES - 0.7%
BUSINESS SERVICES - 0.2%
Snyder Communications, Inc. (a) 15,000 451,875
CREDIT REPORTING AGENCIES - 0.5%
Dunn & Bradstreet Corp. 50,800 1,193,800
TOTAL SERVICES 1,645,675
TEXTILES & APPAREL - 1.8%
APPAREL - 0.9%
Kellwood Co. 44,100 1,176,919
Warnaco Group, Inc. Class A 35,000 953,750
2,130,669
FOOTWEAR - 0.9%
NIKE, Inc. Class B 65,600 2,275,500
TOTAL TEXTILES & APPAREL 4,406,169
TOTAL COMMON STOCKS
(Cost $228,966,409) 222,807,979
CASH EQUIVALENTS - 6.5%
Taxable Central Cash Fund (b)
(Cost $15,478,861) 15,478,861 15,478,861
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $244,445,270) $ 238,286,840
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.58%. 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 $190,003,687 and $171,582,098, respectively (see Note 3 of
Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $48,644 for the
period (see Note 4 of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $244,619,230. Net unrealized depreciation
aggregated $6,332,390, of which $23,451,875 related to appreciated
investment securities and $29,784,265 related to depreciated
investment securities.
LEISURE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31,
1998
(UNAUDITED)
ASSETS
INVESTMENT IN $ 238,286,840
SECURITIES, AT
VALUE
(COST
$244,445,27
0) -
SEE
ACCOMPANYIN
G SCHEDULE
RECEIVABLE FOR 6,591,119
INVESTMENTS
SOLD
RECEIVABLE FOR 535,283
FUND SHARES
SOLD
DIVIDENDS 229,233
RECEIVABLE
INTEREST 62,448
RECEIVABLE
REDEMPTION FEES 6,563
RECEIVABLE
OTHER 49,491
RECEIVABLES
TOTAL ASSETS 245,760,977
LIABILITIES
PAYABLE TO $ 33,489
CUSTODIAN
BANK
PAYABLE FOR 5,847,190
FUND SHARES
REDEEMED
ACCRUED 145,449
MANAGEMENT
FEE
OTHER PAYABLES 182,491
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 6,208,619
NET ASSETS $ 239,552,358
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 226,383,509
ACCUMULATED (496,785)
NET INVESTMENT
LOSS
ACCUMULATED 19,825,129
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED (6,159,495)
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
AND ASSETS
AND LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, FOR $ 239,552,358
4,245,144
SHARES
OUTSTANDING
NET ASSET $56.43
VALUE AND
REDEMPTION
PRICE PER
SHARE
($239,552,3
58 (DIVIDED BY)
4,245,144
SHARES)
MAXIMUM $58.18
OFFERING PRICE
PER SHARE
(100/97.00
OF $56.43)
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED AUGUST
31, 1998
(UNAUDITED)
INVESTMENT $ 762,786
INCOME
DIVIDENDS
INTEREST 649,719
TOTAL INCOME 1,412,505
EXPENSES
MANAGEMENT $ 897,802
FEE
TRANSFER AGENT 792,750
FEES
ACCOUNTING FEES 153,221
AND EXPENSES
NON-INTERESTED 634
TRUSTEES'
COMPENSATION
CUSTODIAN FEES 7,236
AND EXPENSES
REGISTRATION FEES 52,553
AUDIT 13,296
LEGAL 868
REPORTS TO 29,889
SHAREHOLDERS
TOTAL EXPENSES 1,948,249
BEFORE
REDUCTIONS
EXPENSE (38,959) 1,909,290
REDUCTIONS
NET INVESTMENT (496,785)
INCOME (LOSS)
REALIZED AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS) ON:
INVESTMENT 20,123,970
SECURITIES
FOREIGN 6,098 20,130,068
CURRENCY
TRANSACTIONS
CHANGE IN NET
UNREALIZED
APPRECIATION
(DEPRECIATION)
ON:
INVESTMENT (41,968,047)
SECURITIES
ASSETS AND (937) (41,968,984)
LIABILITIES IN
FOREIGN
CURRENCIES
NET GAIN (LOSS) (21,838,916)
NET INCREASE $ (22,335,701)
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 671,150
INFORMATION
SALES CHARGES
PAID TO FDC
SALES CHARGES $ 662,403
- - RETAINED BY
FDC
DEFERRED SALES $ 4,945
CHARGES
WITHHELD
BY FDC
EXCHANGE FEES $ 39,975
WITHHELD BY
FSC
EXPENSE $ 37,661
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEMENTS
CUSTODIAN 1,298
CREDITS
$ 38,959
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED YEAR ENDED
(DECREASE) IN AUGUST 31, 1998 FEBRUARY 28,
NET ASSETS (UNAUDITED) 1998
OPERATIONS $ (496,785) $ (652,887)
NET
INVESTMENT
INCOME (LOSS)
NET REALIZED 20,130,068 27,572,262
GAIN (LOSS)
CHANGE IN NET (41,968,984) 29,426,716
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (22,335,701) 56,346,091
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
DISTRIBUTIONS TO (6,719,596) (19,896,472)
SHAREHOLDERS
FROM NET
REALIZED GAIN
SHARE 191,781,949 221,739,781
TRANSACTIONS
NET PROCEEDS
FROM SALES OF
SHARES
REINVESTMENT 6,637,059 19,641,349
OF
DISTRIBUTIONS
COST OF SHARES (187,217,388) (118,975,901)
REDEEMED
NET INCREASE 11,201,620 122,405,229
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION 207,518 210,283
FEES
TOTAL (17,646,159) 159,065,131
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
BEGINNING OF 257,198,517 98,133,386
PERIOD
END OF PERIOD $ 239,552,358 $ 257,198,517
(INCLUDING
ACCUMULATED
NET INVESTMENT
LOSS OF
$496,785
AND $0,
RESPECTIVELY)
OTHER
INFORMATION
SHARES
SOLD 2,835,432 3,893,810
ISSUED IN 99,912 374,739
REINVESTMENT
OF
DISTRIBUTIONS
REDEEMED (2,818,421) (2,192,054)
NET INCREASE 116,923 2,076,495
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED YEAR ENDED YEARS ENDED
ENDED FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
AUGUST 31,
1998
SELECTED (UNAUDITED) 1998 1997 1996 1995 1994
PER-SHARE
DATA
NET ASSET VALUE, $ 62.30 $ 47.83 $ 46.17 $ 40.71 $ 45.30 $ 35.77
BEGINNING OF
PERIOD
INCOME FROM
INVESTMENT
OPERATIONS
NET (.11) (.25) (.06) G (.21) (.21) (.29)
INVESTMENT
INCOME (LOSS) D
NET REALIZED (4.29) 21.10 4.47 10.97 (.48) 12.98
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM (4.40) 20.85 4.41 10.76 (.69) 12.69
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIONS
FROM NET (1.52) (6.46) (2.83) (5.32) (3.93) (3.26)
REALIZED GAIN
REDEMPTION FEES .05 .08 .08 .02 .03 .10
ADDED TO PAID
IN CAPITAL
NET ASSET VALUE, $ 56.43 $ 62.30 $ 47.83 $ 46.17 $ 40.71 $ 45.30
END OF PERIOD
TOTAL RETURN B, C (7.35)% 47.29% 10.14% 27.61% (1.07)% 37.14%
RATIOS AND
SUPPLEMENTAL
DATA
NET ASSETS, END $ 239,552 $ 257,199 $ 98,133 $ 85,013 $ 69,569 $ 105,833
OF PERIOD
(000 OMITTED)
RATIO OF 1.25% A 1.44% 1.56% 1.64% 1.64% 1.55%
EXPENSES TO
AVERAGE NET
ASSETS
RATIO OF 1.23% A, E 1.39% E 1.54% E 1.63% E 1.62% E 1.53% E
EXPENSES TO
AVERAGE NET
ASSETS AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.32)% A (.46)% (.12)% (.46)% (.52)% (.69)%
INVESTMENT
INCOME (LOSS)
TO AVERAGE NET
ASSETS
PORTFOLIO 123% A 209% 127% 141% 103% 170%
TURNOVER RATE
AVERAGE $ .0396 $ .0396 $ .0370
COMMISSION
RATE F
A ANNUALIZED B THE TOTAL
RETURNS WOULD HAVE
BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN
REDUCED DURING THE PERIODS
SHOWN (SEE NOTE 8 OF
NOTES TO FINANCIAL
STATEMENTS). C TOTAL
RETURNS DO NOT INCLUDE THE
ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN
ONE YEAR ARE NOT
ANNUALIZED. D NET
INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON
AVERAGE SHARES
OUTSTANDING DURING THE
PERIOD. E FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION
OF THE FUND'S EXPENSES
(SEE NOTE 8 OF NOTES TO
FINANCIAL
STATEMENTS). F FOR FISCAL
YEARS BEGINNING ON OR AFTER
SEPTEMBER 1, 1995, A
FUND IS REQUIRED TO DISCLOSE
ITS AVERAGE COMMISSION
RATE PER SHARE FOR SECURITY
TRADES ON WHICH
COMMISSIONS ARE CHARGED.
THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND
FUND TO FUND DEPENDING ON
THE MIX OF TRADES EXECUTED
IN VARIOUS MARKETS WHERE
TRADING PRACTICES AND
COMMISSION RATE STRUCTURES
MAY DIFFER. G INVESTMENT
INCOME (LOSS) PER SHARE
REFLECTS A SPECIAL DIVIDEND
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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 MONTHS YEAR YEARS YEARS
SELECT MULTIMEDIA -4.36% 16.15% 101.57% 381.51%
SELECT MULTIMEDIA -7.30% 12.59% 95.45% 366.99%
(LOAD ADJ.)
S&P 500 -8.10% 8.10% 131.21% 382.74%
GS CONSUMER INDUSTRIES -8.66% 10.68% N/A N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks - and the Goldman Sachs
Consumer Industries Index - a market capitalization-weighted index of
300 stocks designed to measure the performance of companies in the
consumer industries sector. These benchmarks include reinvestment of
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 YEAR YEARS YEARS
SELECT MULTIMEDIA 16.15% 15.05% 17.02%
SELECT MULTIMEDIA 12.59% 14.34% 16.66%
(LOAD ADJ.)
S&P 500 8.10% 18.25% 17.05%
GS CONSUMER INDUSTRIES 10.68% N/A N/A
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.
(checkmark) 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.
$10,000 OVER 10 YEARS
Multimedia S&P 500
00503 SP001
1988/08/31 9700.00 10000.00
1988/09/30 10310.37 10426.00
1988/10/31 10425.85 10715.84
1988/11/30 10343.37 10562.61
1988/12/31 10993.30 10747.45
1989/01/31 12306.06 11534.17
1989/02/28 12280.65 11246.96
1989/03/31 12856.57 11509.02
1989/04/30 13720.45 12106.34
1989/05/31 14381.07 12596.64
1989/06/30 14675.54 12524.84
1989/07/31 15791.97 13655.84
1989/08/31 15774.92 13923.49
1989/09/30 15527.78 13866.40
1989/10/31 14479.52 13544.70
1989/11/30 14564.75 13821.02
1989/12/31 14570.92 14152.72
1990/01/31 12636.11 13203.07
1990/02/28 12316.96 13373.39
1990/03/31 12197.28 13727.79
1990/04/30 11618.83 13384.59
1990/05/31 12725.86 14689.59
1990/06/30 12616.16 14589.70
1990/07/31 11918.03 14543.01
1990/08/31 10372.18 13228.33
1990/09/30 9484.56 12584.11
1990/10/31 9075.66 12529.99
1990/11/30 10013.14 13339.43
1990/12/31 10751.16 13711.60
1991/01/31 11329.61 14309.43
1991/02/28 12167.36 15332.55
1991/03/31 12496.48 15703.60
1991/04/30 12925.33 15741.29
1991/05/31 12995.14 16421.31
1991/06/30 11967.90 15669.22
1991/07/31 12416.69 16399.40
1991/08/31 12805.65 16788.07
1991/09/30 13583.56 16507.71
1991/10/31 14271.72 16728.91
1991/11/30 13294.34 16054.73
1991/12/31 14820.25 17891.40
1992/01/31 15209.20 17558.62
1992/02/29 16056.93 17786.88
1992/03/31 15648.03 17440.03
1992/04/30 15887.38 17952.77
1992/05/31 16126.74 18040.74
1992/06/30 16186.58 17771.93
1992/07/31 16226.47 18498.80
1992/08/31 16007.06 18119.58
1992/09/30 15907.33 18333.39
1992/10/31 16166.64 18397.56
1992/11/30 17343.48 19024.91
1992/12/31 18006.31 19258.92
1993/01/31 18370.07 19420.70
1993/02/28 18450.91 19684.82
1993/03/31 19178.44 20100.17
1993/04/30 18682.48 19613.74
1993/05/31 19956.05 20139.39
1993/06/30 20582.57 20197.79
1993/07/31 21352.88 20117.00
1993/08/31 23170.80 20879.44
1993/09/30 23725.42 20718.67
1993/10/31 25502.26 21147.54
1993/11/30 23837.96 20946.64
1993/12/31 24852.40 21200.10
1994/01/31 25206.83 21920.90
1994/02/28 24883.67 21326.84
1994/03/31 23361.67 20396.99
1994/04/30 23373.00 20658.07
1994/05/31 24232.56 20996.87
1994/06/30 23690.92 20482.44
1994/07/31 24267.89 21154.27
1994/08/31 25727.96 22021.59
1994/09/30 25551.34 21482.06
1994/10/31 26128.31 21965.41
1994/11/30 25304.07 21165.43
1994/12/31 25847.37 21479.31
1995/01/31 26139.57 22036.27
1995/02/28 27210.96 22895.02
1995/03/31 28939.80 23570.66
1995/04/30 29609.42 24264.81
1995/05/31 29767.70 25234.68
1995/06/30 30912.14 25820.88
1995/07/31 32738.38 26677.10
1995/08/31 33773.25 26744.06
1995/09/30 34735.07 27872.66
1995/10/31 33712.37 27773.15
1995/11/30 35015.09 28992.39
1995/12/31 34550.92 29550.79
1996/01/31 34762.32 30556.70
1996/02/29 35911.82 30839.96
1996/03/31 35436.17 31136.95
1996/04/30 37085.82 31595.90
1996/05/31 38317.50 32410.76
1996/06/30 36544.42 32534.25
1996/07/31 33065.93 31096.88
1996/08/31 34297.62 31752.72
1996/09/30 36476.75 33539.76
1996/10/31 35448.09 34464.79
1996/11/30 36097.77 37069.98
1996/12/31 34921.84 36335.62
1997/01/31 34742.89 38605.87
1997/02/28 34288.64 38908.54
1997/03/31 32623.08 37309.79
1997/04/30 33351.54 39537.19
1997/05/31 36535.93 41944.21
1997/06/30 38931.27 43823.31
1997/07/31 41016.62 47310.33
1997/08/31 40213.48 44660.01
1997/09/30 43468.32 47106.04
1997/10/31 42073.39 45532.69
1997/11/30 43468.32 47640.40
1997/12/31 45722.51 48458.39
1998/01/31 46056.99 48994.34
1998/02/28 48834.66 52527.81
1998/03/31 52266.76 55217.76
1998/04/30 53500.33 55773.25
1998/05/31 52030.11 54814.51
1998/06/30 55558.63 57041.07
1998/07/31 56224.09 56433.58
1998/08/31 46698.89 48274.42
IMATRL PRASUN SHR__CHT 19980831 19980903 151603 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Multimedia Portfolio on August 31, 1988
and the current 3.00% sales charge was paid. As the chart shows, by
August 31, 1998, the value of the investment would have grown to
$46,699 - a 366.99% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $48,274 - a 382.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
CBS CORP. 6.6
TIME WARNER, INC. 5.3
MEDIAONE GROUP, INC. 5.3
TELE-COMMUNICATIONS, INC. (TCI GROUP), SERIES A 4.1
INTERPUBLIC GROUP OF COMPANIES, INC. 3.8
VIACOM, INC. CLASS B (NON-VTG.) 3.8
CLEAR CHANNEL COMMUNICATIONS, INC. 3.1
TIMES MIRROR CO. CLASS A 3.0
TELE-COMMUNICATIONS, INC. 3.0
(LIBERTY MEDIA GROUP), SERIES A
COX COMMUNICATIONS, INC. CLASS A 2.9
TOP INDUSTRIES AS OF AUGUST 31, 1998
7.7
CABLE TV OPERATORS 23.8%
MOTION PICTURE PRODUCTION 9.9%
NEWSPAPERS 9.0%
TELEVISION BROADCASTING 8.7%
ADVERTISING AGENCIES 7.7%
ALL OTHERS 40.9%
ROW: 1, COL: 1, VALUE: 40.9
ROW: 1, COL: 2, VALUE: 7.7
ROW: 1, COL: 3, VALUE: 8.699999999999999
ROW: 1, COL: 4, VALUE: 9.0
ROW: 1, COL: 5, VALUE: 9.9
ROW: 1, COL: 6, VALUE: 23.8
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
MULTIMEDIA PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Jeffrey Dorsey)
Jeffrey Dorsey,
Portfolio Manager
of Fidelity Select
Multimedia Portfolio
Q. JEFF, HOW DID THE FUND PERFORM?
A. Relatively well. For the six months that ended on August 31, 1998,
the fund had a total return of -4.36%, outperforming the Standard &
Poor's 500 Index's return of -8.10%. For the 12 months that ended on
August 31, 1998, the fund returned 16.15%, also outperforming the S&P
500 index's return of 8.10%. Beginning this period, the fund also
compares itself to the Goldman Sachs Consumer Industries Index - an
index of 300 stocks designed to measure the performance of companies
in the consumer industries sector - which returned -8.66% and 10.68%
over the same six- and 12-month periods, respectively.
Q. WHAT WAS YOUR STRATEGY DURING THE SIX-MONTH PERIOD, AND HOW DID IT
AFFECT PERFORMANCE?
A. First, I continued to increase the fund's investments in cable
stocks. The spike upward in cable valuations during the period,
boosted by merger and acquisition activity, helped the fund's
performance. While I built up the fund's positions in cable, I trimmed
them in publishing and newspaper stocks, which delivered rather
sluggish performance during the most recent six-month period. I
decided to cut back on newspaper companies, believing their strong
performance in recent years was unsustainable, based on increasing
newsprint costs and declining help-wanted ad trends. Finally, the
addition of more large-capitalization stocks helped the fund.
Q. WHAT WAS BEHIND THE SUCCESS OF THE CABLE PROVIDERS?
A. Cable operators have been upgrading their systems to provide more
viewing choices and variety in programming for their customers. This
industry has done well since 1996, when deregulation was enacted, and
is now in a very strong position. I increased the fund's position in
cable stocks, including MediaOne and TCI Group earlier in the period,
and they've done well. When cable systems are fully upgraded, these
companies will be able to provide customers with Internet access
through cable at greater speeds, along with telephony. On the
programming side, cable networks have become very effective niche
players, giving them an advantage in attracting advertising, thereby
enabling them to raise advertising prices and increase revenues.
Q. WHICH STOCKS PERFORMED WELL?
A. The strongest performers included Time Warner and Viacom. These
entertainment companies have been reducing debt, growing their cash
flows at double-digit rates, benefiting from economies of scale and
focusing on returns of capital. Cable providers such as Cox
Communications and radio company advertiser Clear Channel
Communications also performed well.
Q. WHICH STOCKS PERFORMED POORLY?
A. My biggest disappointment was publisher Harcourt General. This
company has a very strong earnings record and is building up its core
business, yet the market has not recognized these achievements.
Harcourt has been growing rapidly in the "distance learning" business,
one of the big growth areas in education. CBS also disappointed
because the market has been focused solely on the network programming
end of its businesses, while its other businesses have performed well.
Q. WHAT'S YOUR OUTLOOK?
A. I'm still optimistic about media stocks, at least for the next six
months. We're seeing the latter stages of a long period of economic
growth and I believe there will be a downturn at some point. At this
point, the outlook for multimedia stocks appears strong, from my
bottom-up outlook. I anticipate continued strong advertising growth, a
positive factor for most companies held by the fund. Clearly, the
international scene is a concern and, if problems in that arena cause
domestic economic growth to falter significantly, that could cause
problems for the fund. Most of these companies are economically
sensitive and have one element in common: they're affected by
advertising activity. If the economy weakens, I will work to position
the fund more defensively. However, through varying economic
conditions, my goal is to find companies with strong growth and to
purchase their stocks at a reasonable price.
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.
(checkmark)FUND FACTS
START DATE: June 30, 1986
FUND NUMBER: 503
TRADING SYMBOL: FBMPX
SIZE: as of August 31, 1998, more than
$105 million
MANAGER: Jeffrey Dorsey, since 1997; manager,
Fidelity Select Leisure Portfolio, since January
1998; analyst, fixed-income securities,
1991-1997; joined Fidelity in 1991
MULTIMEDIA PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.1%
SHARES VALUE (NOTE 1)
ADVERTISING - 9.6%
ADVERTISING - 1.5%
Outdoor Systems, Inc. (a) 68,300 $ 1,587,975
ADVERTISING AGENCIES - 7.7%
ADVO, Inc. (a) 13,300 330,838
Interpublic Group of Companies, Inc. 71,000 4,047,000
Omnicom Group, Inc. 60,400 2,876,550
WPP Group PLC 171,100 883,577
Young & Rubicam, Inc. (a) 300 9,169
8,147,134
OUTDOOR ADVERTISING SERVICES - 0.4%
Lamar Advertising Co. Class A (a) 14,500 471,250
TOTAL ADVERTISING 10,206,359
BEVERAGES - 0.7%
DISTILLED & BLENDED LIQUOR - 0.7%
Seagram Co. Ltd. 24,000 749,761
BROADCASTING - 41.0%
CABLE TV OPERATORS - 23.8%
Adelphia Communications Class A (a) 6,000 207,000
Cablevision Systems Corp. Class A (a) 18,600 630,075
Comcast Corp. Class A special 72,300 2,702,213
Cox Communications, Inc. Class A (a) 73,300 3,078,600
MediaOne Group, Inc. (a) 136,300 5,588,300
TCA Cable TV, Inc. 100,500 2,311,500
Tele-Communications International, Inc.,
Series A (a) 11,900 246,925
Tele-Communications, Inc. (TCI Group),
Series A (a) 130,405 4,303,365
Time Warner, Inc. 69,537 5,589,036
USA Networks, Inc. (a) 29,900 586,788
25,243,802
COMMUNICATIONS SERVICES, NEC - 1.8%
CD Radio, Inc. (a) 6,000 90,750
MovieFone, Inc. Class A (a) 11,800 72,275
PanAmSat Corp. (a) 41,500 1,758,563
1,921,588
RADIO BROADCASTING - 6.7%
Chancellor Media Corp. (a) 45,300 1,616,644
Clear Channel Communications, Inc. (a) 72,800 3,276,000
Jacor Communications, Inc. Class A (a) 37,600 2,218,400
7,111,044
TELEVISION BROADCASTING - 8.7%
CBS Corp. 268,950 6,992,700
Nielsen Media Research 27,700 249,300
Scripps (EW) Co. Class A 27,900 1,316,531
Sinclair Broadcast Group, Inc. Class A (a) 21,200 340,525
Westwood One, Inc. (a) 9,900 191,194
Young Broadcasting, Inc. Class A (a) 3,600 186,075
9,276,325
TOTAL BROADCASTING 43,552,759
COMPUTER SERVICES & SOFTWARE - 0.1%
COMPUTER SERVICES - 0.1%
FactSet Research Systems, Inc. (a) 3,600 116,100
ELECTRICAL EQUIPMENT - 0.6%
TV & RADIO COMMUNICATION EQUIPMENT - 0.6%
Loral Space & Communications Ltd. (a) 42,700 677,863
SHARES VALUE (NOTE 1)
ENTERTAINMENT - 14.7%
AMUSEMENT - 0.4%
SFX Entertainment, Inc. Class A (a) 13,700 $ 429,838
MOTION PICTURE DISTRIBUTION - 3.8%
Viacom, Inc. Class B (non-vtg.) (a) 81,100 4,024,588
MOTION PICTURE PRODUCTION - 9.9%
Disney (Walt) Co. 84,700 2,323,956
King World Productions, Inc. (a) 69,700 1,463,700
News Corp. Ltd. ADR 32,000 770,000
Tele-Communications, Inc. (Liberty Media
Group), Series A (a) 97,100 3,173,956
Tele-Communications, Inc. (TCI Ventures
Group), Series A (a) 168,200 2,796,325
10,527,937
MOVIE THEATERS - 0.3%
Loews Cineplex Entertainment Corp. (a) 28,400 246,248
RECREATIONAL SERVICES - 0.3%
Premier Parks, Inc. (a) 19,900 323,375
TOTAL ENTERTAINMENT 15,551,986
PRINTING - 2.5%
COMMERCIAL PRINTING, LITHOGRAPHIC - 0.3%
Consolidated Graphics, Inc. (a) 7,000 350,438
COMMERCIAL PRINTING - 0.2%
Big Flower Holdings, Inc. (a) 7,500 158,438
COMMERCIAL PRINTING, NEC - 2.0%
Donnelley (R.R.) & Sons Co. 40,000 1,450,000
Valassis Communications, Inc. (a) 24,200 721,463
2,171,463
TOTAL PRINTING 2,680,339
PUBLISHING - 15.5%
BOOK PUBLISHING & PRINTING - 3.9%
Harcourt General, Inc. 27,600 1,340,325
McGraw-Hill Companies, Inc. 29,900 2,279,875
Reader's Digest Association, Inc. (The)
Class A (non-vtg.) 28,300 555,388
4,175,588
GENERAL PUBLISHING - 0.1%
R H Donnelley Corp 11,860 156,404
NEWSPAPERS - 9.0%
Belo (A.H.) Corp. Class A 35,700 660,450
Central Newspapers, Inc. Class A 11,000 682,000
Dow Jones & Co., Inc. 6,800 338,725
Gannett Co., Inc. 26,200 1,545,800
Harte Hanks Communicatons, Inc. 44,500 976,219
Times Mirror Co. Class A 56,500 3,231,094
Tribune Co. 32,300 2,081,331
9,515,619
PERIODICALS - 2.5%
Meredith Corp. 21,400 718,238
Playboy Enterprises, Inc. Class B (a) 154,400 1,891,400
2,609,638
TOTAL PUBLISHING 16,457,249
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SERVICES - 2.5%
BUSINESS SERVICES - 0.5%
Catalina Marketing Corp. (a) 5,200 $ 218,725
Snyder Communications, Inc. (a) 8,800 265,100
483,825
COMMERCIAL, ECONOMIC, SOCIOLOGICAL &
EDUCATIONAL RESEARCH - 0.5%
ACNielsen Corp. (a) 28,300 567,769
CREDIT REPORTING AGENCIES - 1.5%
Dunn & Bradstreet Corp. 69,300 1,628,550
TOTAL SERVICES 2,680,144
TELEPHONE SERVICES - 5.9%
AT&T Corp. 51,900 2,601,488
Qwest Communications International, Inc. (a) 16,224 405,600
Tel-Save Holdings, Inc. (a) 18,700 280,500
WorldCom, Inc. (a) 71,300 2,918,844
6,206,432
TOTAL COMMON STOCKS
(Cost $97,366,225) 98,878,992
CASH EQUIVALENTS - 6.9%
Taxable Central Cash Fund (b)
(Cost $7,354,396) 7,354,396 7,354,396
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $104,720,621) $ 106,233,388
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.58%. 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 $83,314,614 and $83,605,819, 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 $22,980 for the
period (see Note 4 of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $104,745,284. Net unrealized appreciation
aggregated $1,488,104, of which $10,696,194 related to appreciated
investment securities and $9,208,090 related to depreciated investment
securities.
MULTIMEDIA PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31,
1998
(UNAUDITED)
ASSETS
INVESTMENT IN $ 106,233,388
SECURITIES, AT
VALUE
(COST
$104,720,62
1) -
SEE
ACCOMPANYIN
G SCHEDULE
RECEIVABLE FOR 2,875,905
INVESTMENTS
SOLD
RECEIVABLE FOR 469,602
FUND SHARES
SOLD
DIVIDENDS 86,832
RECEIVABLE
INTEREST 25,183
RECEIVABLE
REDEMPTION FEES 6,722
RECEIVABLE
OTHER 10,560
RECEIVABLES
TOTAL ASSETS 109,708,192
LIABILITIES
PAYABLE TO $ 313,206
CUSTODIAN
BANK
PAYABLE FOR 3,324,251
FUND SHARES
REDEEMED
ACCRUED 68,720
MANAGEMENT
FEE
OTHER PAYABLES 101,959
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 3,808,136
NET ASSETS $ 105,900,056
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 102,823,992
ACCUMULATED (333,354)
NET INVESTMENT
LOSS
ACCUMULATED 1,896,681
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED 1,512,737
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
AND ASSETS
AND LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, FOR $ 105,900,056
3,508,477
SHARES
OUTSTANDING
NET ASSET $30.18
VALUE AND
REDEMPTION
PRICE PER
SHARE
($105,900,0
56 (DIVIDED BY)
3,508,477
SHARES)
MAXIMUM $31.11
OFFERING PRICE
PER SHARE
(100/97.00
OF $30.18)
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED AUGUST
31, 1998
(UNAUDITED)
INVESTMENT $ 311,311
INCOME
DIVIDENDS
INTEREST 273,486
TOTAL INCOME 584,797
EXPENSES
MANAGEMENT $ 401,890
FEE
TRANSFER AGENT 414,970
FEES
ACCOUNTING FEES 68,758
AND EXPENSES
NON-INTERESTED 231
TRUSTEES'
COMPENSATION
CUSTODIAN FEES 7,196
AND EXPENSES
REGISTRATION FEES 15,595
AUDIT 10,754
LEGAL 299
REPORTS TO 17,804
SHAREHOLDERS
TOTAL EXPENSES 937,497
BEFORE
REDUCTIONS
EXPENSE (20,882) 916,615
REDUCTIONS
NET INVESTMENT (331,818)
INCOME (LOSS)
REALIZED AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS) ON:
INVESTMENT 1,944,300
SECURITIES
FOREIGN 6,032 1,950,332
CURRENCY
TRANSACTIONS
CHANGE IN NET
UNREALIZED
APPRECIATION
(DEPRECIATION)
ON:
INVESTMENT (9,426,996)
SECURITIES
ASSETS AND (30) (9,427,026)
LIABILITIES IN
FOREIGN
CURRENCIES
NET GAIN (LOSS) (7,476,694)
NET INCREASE $ (7,808,512)
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 412,758
INFORMATION
SALES CHARGES
PAID TO FDC
SALES CHARGES $ 410,817
- - RETAINED BY
FDC
DEFERRED SALES $ 758
CHARGES
WITHHELD
BY FDC
EXCHANGE FEES $ 26,453
WITHHELD BY
FSC
EXPENSE $ 19,987
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEMENTS
CUSTODIAN 895
CREDITS
$ 20,882
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED YEAR ENDED
(DECREASE) IN AUGUST 31, 1998 FEBRUARY 28,
NET ASSETS (UNAUDITED) 1998
OPERATIONS $ (331,818) $ (345,513)
NET
INVESTMENT
INCOME (LOSS)
NET REALIZED 1,950,332 11,157,423
GAIN (LOSS)
CHANGE IN NET (9,427,026) 11,000,546
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (7,808,512) 21,812,456
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
DISTRIBUTIONS TO (7,953,921) (2,764,701)
SHAREHOLDERS
FROM NET
REALIZED GAINS
SHARE 106,099,418 123,445,992
TRANSACTIONS
NET PROCEEDS
FROM SALES OF
SHARES
REINVESTMENT 7,877,661 2,725,416
OF
DISTRIBUTIONS
COST OF SHARES (108,038,587) (84,022,531)
REDEEMED
NET INCREASE 5,938,492 42,148,877
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION 239,151 117,385
FEES
TOTAL (9,584,790) 61,314,017
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
BEGINNING OF 115,484,846 54,170,829
PERIOD
END OF PERIOD $ 105,900,056 $ 115,484,846
(INCLUDING
ACCUMULATE
D NET
INVESTMENT
LOSS OF
$333,354
AND
$1,536,
RESPECTIVELY)
OTHER
INFORMATION
SHARES
SOLD 2,957,985 4,033,610
ISSUED IN 230,813 101,335
REINVESTMENT
OF
DISTRIBUTIONS
REDEEMED (3,119,815) (2,869,891)
NET INCREASE 68,983 1,265,054
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED YEAR ENDED YEARS ENDED
ENDED FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
AUGUST 31,
1998
SELECTED (UNAUDITED) 1998 1997 1996 1995 1994
PER-SHARE
DATA
NET ASSET VALUE, $ 33.58 $ 24.91 $ 27.18 $ 22.35 $ 23.87 $ 18.26
BEGINNING OF
PERIOD
INCOME FROM
INVESTMENT
OPERATIONS
NET (.08) (.17) .35 E .02 (.01) (.10)
INVESTMENT
INCOME (LOSS) D
NET REALIZED (1.19) 10.30 (1.58) 7.00 1.67 6.28
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM (1.27) 10.13 (1.23) 7.02 1.66 6.18
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIONS
FROM NET - - - (.02) - -
INVESTMENT
INCOME
FROM NET (2.19) (1.52) (1.07) (2.19) (3.21) (.65)
REALIZED GAIN
TOTAL (2.19) (1.52) (1.07) (2.21) (3.21) (.65)
DISTRIBUTIONS
REDEMPTION FEES .06 .06 .03 .02 .03 .08
ADDED TO PAID
IN CAPITAL
NET ASSET VALUE, $ 30.18 $ 33.58 $ 24.91 $ 27.18 $ 22.35 $ 23.87
END OF PERIOD
TOTAL RETURN B, C (4.36)% 42.42% (4.52)% 31.98% 9.35% 34.86%
RATIOS AND
SUPPLEMENTAL
DATA
NET ASSETS, END $ 105,900 $ 115,485 $ 54,171 $ 94,970 $ 38,157 $ 49,177
OF PERIOD
(000 OMITTED)
RATIO OF 1.34% A 1.75% 1.60% 1.56% 2.05% 1.66%
EXPENSES TO
AVERAGE NET
ASSETS
RATIO OF 1.31% A, F 1.71% F 1.56% F 1.54% F 2.03% F 1.63% F
EXPENSES TO
AVERAGE NET
ASSETS AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.48)% A (.59)% 1.33% .08% (.07)% (.42)%
INVESTMENT
INCOME (LOSS)
TO AVERAGE NET
ASSETS
PORTFOLIO 133% A 219% 99% 223% 107% 340%
TURNOVER RATE
AVERAGE $ .0326 $ .0363 $ .0400
COMMISSION
RATE G
A ANNUALIZED B THE TOTAL
RETURNS WOULD HAVE BEEN
LOWER HAD CERTAIN
EXPENSES NOT BEEN
REDUCED DURING THE PERIODS
SHOWN (SEE NOTE 8 OF
NOTES TO FINANCIAL
STATEMENTS). C TOTAL
RETURNS DO NOT INCLUDE THE
ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN
ONE YEAR ARE NOT
ANNUALIZED. D NET
INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON
AVERAGE SHARES
OUTSTANDING DURING THE
PERIOD. E INVESTMENT
INCOME PER SHARE REFLECTS A
SPECIAL DIVIDEND WHICH
AMOUNTED TO $.49 PER
SHARE. F FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION
OF THE FUND'S EXPENSES
(SEE NOTE 8 OF NOTES TO
FINANCIAL
STATEMENTS). G 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 MONTHS YEAR YEARS YEARS
SELECT RETAILING -3.14% 20.62% 108.06% 499.29%
SELECT RETAILING -6.12% 16.93% 101.74% 481.24%
(LOAD ADJ.)
S&P 500 -8.10% 8.10% 131.21% 382.74%
GS CONSUMER INDUSTRIES -8.66% 10.68% N/A N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks - and the Goldman Sachs
Consumer Industries Index - a market capitalization-weighted index of
300 stocks designed to measure the performance of companies in the
consumer industries sector. These benchmarks include reinvestment of
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 YEAR YEARS YEARS
SELECT RETAILING 20.62% 15.78% 19.61%
SELECT RETAILING 16.93% 15.07% 19.24%
(LOAD ADJ.)
S&P 500 8.10% 18.25% 17.05%
GS CONSUMER INDUSTRIES 10.68% N/A N/A
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.
(checkmark)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.
$10,000 OVER 10 YEARS
Retailing S&P 500
00046 SP001
1988/08/31 9700.00 10000.00
1988/09/30 10269.64 10426.00
1988/10/31 10486.27 10715.84
1988/11/30 10341.85 10562.61
1988/12/31 10394.05 10747.45
1989/01/31 10908.05 11534.17
1989/02/28 10761.19 11246.96
1989/03/31 11275.18 11509.02
1989/04/30 11911.55 12106.34
1989/05/31 12735.57 12596.64
1989/06/30 12508.85 12524.84
1989/07/31 13517.62 13655.84
1989/08/31 14173.33 13923.49
1989/09/30 14139.70 13866.40
1989/10/31 13458.78 13544.70
1989/11/30 13542.84 13821.02
1989/12/31 13463.52 14152.72
1990/01/31 12411.99 13203.07
1990/02/28 12844.39 13373.39
1990/03/31 13895.92 13727.79
1990/04/30 13699.37 13384.59
1990/05/31 15527.27 14689.59
1990/06/30 15330.72 14589.70
1990/07/31 14701.77 14543.01
1990/08/31 12588.88 13228.33
1990/09/30 11183.56 12584.11
1990/10/31 10662.71 12529.99
1990/11/30 12117.16 13339.43
1990/12/31 12786.20 13711.60
1991/01/31 14027.38 14309.43
1991/02/28 15327.67 15332.55
1991/03/31 16923.49 15703.60
1991/04/30 17159.90 15741.29
1991/05/31 18588.25 16421.31
1991/06/30 17997.21 15669.22
1991/07/31 19149.74 16399.40
1991/08/31 20164.36 16788.07
1991/09/30 19947.65 16507.71
1991/10/31 19573.32 16728.91
1991/11/30 19199.00 16054.73
1991/12/31 21497.84 17891.40
1992/01/31 22689.92 17558.62
1992/02/29 23780.98 17786.88
1992/03/31 23306.16 17440.03
1992/04/30 22356.54 17952.77
1992/05/31 22821.25 18040.74
1992/06/30 21755.98 17771.93
1992/07/31 22723.84 18498.80
1992/08/31 22208.35 18119.58
1992/09/30 22871.13 18333.39
1992/10/31 24438.65 18397.56
1992/11/30 26290.23 19024.91
1992/12/31 26243.76 19258.92
1993/01/31 26424.83 19420.70
1993/02/28 25423.64 19684.82
1993/03/31 27383.41 20100.17
1993/04/30 25811.66 19613.74
1993/05/31 27241.40 20139.39
1993/06/30 26586.56 20197.79
1993/07/31 26717.52 20117.00
1993/08/31 27939.90 20879.44
1993/09/30 28791.19 20718.67
1993/10/31 29238.66 21147.54
1993/11/30 29522.43 20946.64
1993/12/31 29663.73 21200.10
1994/01/31 28342.20 21920.90
1994/02/28 29392.35 21326.84
1994/03/31 28778.78 20396.99
1994/04/30 29651.93 20658.07
1994/05/31 28188.81 20996.87
1994/06/30 27952.82 20482.44
1994/07/31 28424.79 21154.27
1994/08/31 30230.10 22021.59
1994/09/30 29640.13 21482.06
1994/10/31 29769.93 21965.41
1994/11/30 28731.58 21165.43
1994/12/31 28177.01 21479.31
1995/01/31 27952.82 22036.27
1995/02/28 28212.40 22895.02
1995/03/31 28530.99 23570.66
1995/04/30 27421.84 24264.81
1995/05/31 27905.62 25234.68
1995/06/30 29687.33 25820.88
1995/07/31 31504.44 26677.10
1995/08/31 31067.86 26744.06
1995/09/30 32000.02 27872.66
1995/10/31 30572.29 27773.15
1995/11/30 32106.21 28992.39
1995/12/31 31551.64 29550.79
1996/01/31 30631.28 30556.70
1996/02/29 32884.97 30839.96
1996/03/31 35327.45 31136.95
1996/04/30 37392.35 31595.90
1996/05/31 39185.86 32410.76
1996/06/30 38489.70 32534.25
1996/07/31 34808.28 31096.88
1996/08/31 38100.31 31752.72
1996/09/30 39469.05 33539.76
1996/10/31 38690.29 34464.79
1996/11/30 40177.01 37069.98
1996/12/31 38133.48 36335.62
1997/01/31 37956.06 38605.87
1997/02/28 39328.11 38908.54
1997/03/31 39824.89 37309.79
1997/04/30 40436.48 39537.19
1997/05/31 42313.08 41944.21
1997/06/30 45002.47 43823.31
1997/07/31 49867.28 47310.33
1997/08/31 48193.88 44660.01
1997/09/30 51313.57 47106.04
1997/10/31 51026.70 45532.69
1997/11/30 54744.04 47640.40
1997/12/31 54044.73 48458.39
1998/01/31 54980.26 48994.34
1998/02/28 60017.72 52527.81
1998/03/31 64143.64 55217.76
1998/04/30 63890.82 55773.25
1998/05/31 64996.57 54814.51
1998/06/30 68581.17 57041.07
1998/07/31 66673.44 56433.58
1998/08/31 58124.00 48274.42
IMATRL PRASUN SHR__CHT 19980831 19980923 113232 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Retailing Portfolio on August 31, 1988,
and the current 3.00% sales charge was paid. As the chart shows, by
August 31, 1998, the value of the investment would have grown to
$58,124 - a 481.24% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $48,274 - a 382.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
FEDERATED DEPARTMENT STORES, INC. 8.6
WAL-MART STORES, INC. 6.7
CVS CORP. 6.5
HOME DEPOT, INC. 6.1
SAFEWAY, INC. 4.9
PROFFITTS, INC. 4.8
MCDONALD'S CORP. 4.7
GAP, INC. 4.2
DAYTON HUDSON CORP. 3.9
SEARS, ROEBUCK & CO. 3.6
TOP INDUSTRIES AS OF AUGUST 31, 1998
DEPARTMENT STORES 21.1%
DRUG STORES 12.2%
GROCERY-RETAIL 11.5%
GENERAL MERCHANDISE STORES 11.4%
GENERAL APPAREL STORES 9.0%
ALL OTHERS 34.8%
ROW: 1, COL: 1, VALUE: 34.8
ROW: 1, COL: 2, VALUE: 9.0
ROW: 1, COL: 3, VALUE: 11.4
ROW: 1, COL: 4, VALUE: 11.5
ROW: 1, COL: 5, VALUE: 12.2
ROW: 1, COL: 6, VALUE: 21.1
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
RETAILING PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Ramin Arani)
Ramin Arani,
Portfolio Manager
of Fidelity Select
Retailing Portfolio
Q. HOW DID THE FUND PERFORM, RAMIN?
A. During the six-month period ending August 31, 1998, the fund posted
a total return of -3.14% outperforming the Standard & Poor's 500
Index, which returned -8.10% for the same period. For the 12-month
period that ended August 31, 1998, the fund returned 20.62%, while the
S&P 500 returned 8.10%. Beginning this period, the fund also compares
itself to the Goldman Sachs Consumer Industries Index - an index of
300 stocks designed to measure the performance of companies in the
consumer industries sector - which returned -8.66% and 10.68% over the
same six- and 12-month periods, respectively.
Q. WHY DID THE FUND OUTPERFORM THE INDEXES?
A. Retail stocks performed relatively well even during the recent
market volatility for a number of reasons. First, the economy was
strong over the past year and solid consumer spending and product
demand were positives for the sector. More importantly, management at
many retail companies increasingly focused on improving return on
investment capital through enhanced inventory management and increased
scrutiny of capital expenditures. Earnings and stock prices benefited
as a result. Finally, the fund was overweighted in home-improvement
and discount stores such as Home Depot and Wal-Mart relative to the
indexes. Wal-Mart is probably the epitome of a retail company that has
increasingly focused on its returns, and its earnings growth has
accelerated. Home Depot's stock price also benefited from several
successful initiatives aimed at improving sales, earnings and returns
on investment capital.
Q. WERE THERE ANY OTHER FACTORS THAT CONTRIBUTED TO THE FUND'S
PERFORMANCE?
A. I have increased the fund's holdings in supermarket and drug store
chains. In the case of the supermarkets, we have started to see
increased consolidation activity. For example, Albertson's bought
American Stores, Safeway made a small acquisition, Dominick's
Supermarkets announced that it hired investment bankers to seek
strategic alliances and Fred Meyer made several acquisitions over the
past several months. Typically, those acquisitions end up helping
earnings because large cost savings can be realized through
consolidation. As far as the drug-store chains, their fundamental
business outlook appears positive and as a rule, they tend to be less
sensitive to economic cycles. These two factors have supported these
stocks during periods of concern about domestic economic growth.
Q. WHAT STOCKS OR SECTORS DETRACTED FROM PERFORMANCE?
A. Consolidated Stores made an acquisition, but it has taken longer
than expected to achieve benefits from that acquisition. J.C. Penney
is another holding that has struggled because of its inability to
execute on business initiatives and its overall market strategy.
Q. IN AUGUST, THE FUND WAS DOWN APPROXIMATELY 13%. IS THIS DECLINE A
FACTOR OF THE GENERAL MARKET DECLINE, WEAK INVESTOR CONFIDENCE OR POOR
FUNDAMENTALS FOR THE RETAIL SECTOR?
A. Toward the end of the period, there were many concerns and fears in
the market about both the sustainability of economic growth in the
U.S. and the impact of global economic difficulties on corporate
earnings. Clearly, this investor uncertainty has had a negative impact
on the overall market and the retail sector. The problem, however, is
that while there are many economic indicators I can analyze to get a
better idea of what consumer demand will look like in the months
ahead, these indicators will not tell us which companies will
outperform others in the sector. While the outlook for the economy and
consumer demand do have an impact on my investment decisions, I
continue to focus on bottom-up research before I purchase any holding
for the fund. Based on our research, I believe the fundamental
business outlook for many retail companies is strong, and I will
position the fund to benefit from those companies with solid growth
prospects.
Q. HOW DOES THE ENVIRONMENT LOOK FOR RETAIL STOCKS OVER THE NEXT SIX
MONTHS?
A. I would not be surprised if we continue to see volatility and weak
investor sentiment in the broader markets and the retail sector over
the short term. However, when macroeconomic concerns start to calm
down and investors return their focus to companies with strong growth
prospects, I believe retail companies can perform well and outperform
the broader markets.
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.
(checkmark)FUND FACTS
START DATE: DECEMBER 16, 1985
FUND NUMBER: 046
TRADING SYMBOL: FSRPX
SIZE: AS OF AUGUST 31, 1998, MORE THAN
$206 MILLION
MANAGER: RAMIN ARANI, SINCE 1997; EQUITY
RESEARCH ASSOCIATE, DEFENSE ELECTRONICS INDUSTRY
AND REAL ESTATE INVESTMENT TRUSTS, 1992-1996;
JOINED FIDELITY IN 1992
RETAILING PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 93.9%
SHARES VALUE (NOTE 1)
APPAREL STORES - 10.6%
FAMILY CLOTHING STORES - 1.1%
Abercrombie & Fitch Co. Class A (a) 44,201 $ 1,900,643
Stage Stores, Inc. (a) 33,800 352,788
2,253,431
GENERAL APPAREL STORES - 9.0%
Gap, Inc. 172,050 8,785,303
Limited, Inc. (The) 160,300 3,346,263
Saks Holdings, Inc. (a) 46,800 979,875
TJX Companies, Inc. 265,300 5,919,506
19,030,947
WOMEN'S CLOTHING STORES - 0.5%
AnnTaylor Stores Corp. (a) 42,900 1,043,006
TOTAL APPAREL STORES 22,327,384
COMPUTER SERVICES & SOFTWARE - 0.2%
COMPUTER & SOFTWARE STORES - 0.2%
CompUSA, Inc. (a) 38,700 459,563
DRUG STORES - 12.2%
CVS Corp. 378,674 13,774,267
Duane Reade, Inc. (a) 100 3,738
Rite Aid Corp. 124,500 4,505,344
Walgreen Co. 194,900 7,503,650
25,786,999
GENERAL MERCHANDISE STORES - 37.0%
DEPARTMENT STORES - 21.1%
Federated Department Stores, Inc. (a) 415,900 18,117,644
Nordstrom, Inc. 72,400 2,167,475
Penney (J.C.) Co., Inc. 129,200 6,403,475
Proffitts, Inc. (a) 398,229 10,154,840
Sears, Roebuck & Co. 169,200 7,688,025
44,531,459
GENERAL MERCHANDISE STORES - 11.4%
Dayton Hudson Corp. 227,200 8,179,200
Kmart Corp. (a) 138,800 1,769,700
Wal-Mart Stores, Inc. 241,500 14,188,125
24,137,025
VARIETY STORES - 4.5%
Consolidated Stores Corp. (a) 108,558 3,419,577
Costco Companies, Inc. (a) 107,800 5,073,338
Dollar Tree Stores, Inc. (a) 32,900 954,100
9,447,015
TOTAL GENERAL MERCHANDISE STORES 78,115,499
GROCERY STORES - 11.5%
GROCERY - RETAIL - 11.5%
Albertson's, Inc. 101,600 5,137,150
Dominick's Supermarkets, Inc. (a) 11,900 536,244
Kroger Co. (The) (a) 81,200 3,654,000
Meyer (Fred), Inc. (a) 116,380 4,575,189
Safeway, Inc. (a) 263,274 10,366,414
24,268,997
MEDICAL EQUIPMENT & SUPPLIES - 1.5%
DRUG DISTRIBUTORS - WHOLESALE - 1.5%
McKesson Corp. 42,800 3,210,000
RESTAURANTS - 5.1%
McDonald's Corp. 178,500 10,007,156
Starbucks Corp. (a) 22,600 713,313
10,720,469
SHARES VALUE (NOTE 1)
RETAIL & WHOLESALE, MISCELLANEOUS - 15.7%
BUILDING MATERIALS - RETAIL - 6.1%
Home Depot, Inc. 336,100 $ 12,939,845
LUMBER & BUILDING MATERIALS - RETAIL - 3.0%
Lowe's Companies, Inc. 183,700 6,440,981
MUSIC, TV, & ELECTRONIC STORES - 3.1%
Best Buy Co., Inc. (a) 64,000 2,520,000
Circuit City Stores, Inc. -
Circuit City Group 51,100 1,577,713
Tandy Corp. 43,600 2,378,925
6,476,638
RETAIL, GENERAL - 3.5%
Bed Bath & Beyond, Inc. (a) 79,800 1,441,388
Office Depot, Inc. (a) 115,400 2,942,700
Staples, Inc. (a) 107,300 2,910,513
7,294,601
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 33,152,065
TEXTILES & APPAREL - 0.1%
APPAREL - 0.1%
Liz Claiborne, Inc. 1,700 48,450
Polo Ralph Lauren Corp. Class A (a) 300 6,581
55,031
TOTAL COMMON STOCKS
(Cost $193,848,499) 198,096,007
CASH EQUIVALENTS - 6.1%
Taxable Central Cash Fund (b)
(Cost $12,946,124) 12,946,124 12,946,124
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $206,794,623) $ 211,042,131
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.58%. 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 $326,275,431 and $294,048,314, 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 $122,665 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the interfund lending program as a borrower.
The maximum loan and average daily loan balances during the period for
which the loans were outstanding amounted to $24,920,000 and
$21,329,714, respectively. The weighted average interest rate was
5.79%. Interest expense includes $24,017 paid under the interfund
lending program (see Note 5 of Notes to Financial Statements).
The fund participated in the security lending program. At 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 loan balances during the period for which loans were
outstanding amounted to $13,350,000 and $6,603,083, respectively. The
weighted average interest rate was 5.85%. Interest expense includes
$12,876 paid under the bank borrowing program (see Note 7 of Notes to
Financial Statements).
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $207,859,965. Net unrealized appreciation
aggregated $3,182,166, of which $22,784,707 related to appreciated
investment securities and $19,602,541 related to depreciated
investment securities.
RETAILING PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31,
1998
(UNAUDITED)
ASSETS
INVESTMENT IN $ 211,042,131
SECURITIES, AT
VALUE
(COST
$206,794,62
3) -
SEE
ACCOMPANYIN
G SCHEDULE
RECEIVABLE FOR 7,614,899
INVESTMENTS
SOLD
RECEIVABLE FOR 4,029,039
FUND SHARES
SOLD
DIVIDENDS 111,338
RECEIVABLE
INTEREST 19,803
RECEIVABLE
REDEMPTION FEES 25,765
RECEIVABLE
OTHER 41,306
RECEIVABLES
TOTAL ASSETS 222,884,281
LIABILITIES
PAYABLE FOR $ 15,674,651
FUND SHARES
REDEEMED
ACCRUED 125,791
MANAGEMENT
FEE
OTHER PAYABLES 164,130
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 15,964,572
NET ASSETS $ 206,919,709
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 199,886,208
ACCUMULATED (657,278)
NET INVESTMENT
LOSS
ACCUMULATED 3,443,271
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
NET UNREALIZED 4,247,508
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
NET ASSETS, FOR $ 206,919,709
4,325,221
SHARES
OUTSTANDING
NET ASSET $47.84
VALUE AND
REDEMPTION
PRICE PER
SHARE
($206,919,7
09 (DIVIDED BY)
4,325,221
SHARES)
MAXIMUM $49.32
OFFERING PRICE
PER SHARE
(100/97.00
OF $47.84)
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED AUGUST
31, 1998
(UNAUDITED)
INVESTMENT $ 651,135
INCOME
DIVIDENDS
INTEREST 492,316
(INCLUDING
INCOME ON
SECURITIES
LOANED OF
$719)
TOTAL INCOME 1,143,451
EXPENSES
MANAGEMENT $ 855,791
FEE
TRANSFER AGENT 673,346
FEES
ACCOUNTING AND 146,134
SECURITY
LENDING FEES
NON-INTERESTED 597
TRUSTEES'
COMPENSATION
CUSTODIAN FEES 10,418
AND EXPENSES
REGISTRATION FEES 96,876
AUDIT 12,779
LEGAL 772
INTEREST 36,893
REPORTS TO 26,454
SHAREHOLDERS
TOTAL EXPENSES 1,860,060
BEFORE
REDUCTIONS
EXPENSE (59,331) 1,800,729
REDUCTIONS
NET INVESTMENT (657,278)
INCOME (LOSS)
REALIZED AND 5,320,923
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON INVESTMENT
SECURITIES
CHANGE IN NET (17,101,491)
UNREALIZED
APPRECIATION
(DEPRECIATION)
ON INVESTMENT
SECURITIES
NET GAIN (LOSS) (11,780,568)
NET INCREASE $ (12,437,846)
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 787,511
INFORMATION
SALES CHARGES
PAID TO FDC
SALES CHARGES $ 784,938
- - RETAINED BY
FDC
DEFERRED SALES $ 1,203
CHARGES
WITHHELD
BY FDC
EXCHANGE FEES $ 103,410
WITHHELD BY
FSC
EXPENSE $ 59,325
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEMENTS
CUSTODIAN 6
CREDITS
$ 59,331
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED YEAR ENDED
(DECREASE) IN AUGUST 31, 1998 FEBRUARY 28,
NET ASSETS (UNAUDITED) 1998
OPERATIONS $ (657,278) $ (1,019,153)
NET
INVESTMENT
INCOME (LOSS)
NET REALIZED 5,320,923 6,177,469
GAIN (LOSS)
CHANGE IN NET (17,101,491) 16,637,718
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (12,437,846) 21,796,034
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
DISTRIBUTIONS TO (3,473,241) (3,631,382)
SHAREHOLDERS
FROM NET
REALIZED GAIN
SHARE 515,209,190 722,604,794
TRANSACTIONS
NET PROCEEDS
FROM SALES OF
SHARES
REINVESTMENT 3,407,781 3,609,234
OF
DISTRIBUTIONS
COST OF SHARES (489,222,759) (612,476,826)
REDEEMED
NET INCREASE 29,394,212 113,737,202
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION 575,908 1,610,457
FEES
TOTAL 14,059,033 133,512,311
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
BEGINNING OF 192,860,676 59,348,365
PERIOD
END OF PERIOD $ 206,919,709 $ 192,860,676
(INCLUDING
ACCUMULATED
NET INVESTMENT
LOSS OF
$657,278
AND $0,
RESPECTIVELY)
OTHER
INFORMATION
SHARES
SOLD 9,324,376 17,451,277
ISSUED IN 64,737 95,408
REINVESTMENT
OF
DISTRIBUTIONS
REDEEMED (8,918,389) (15,477,247)
NET INCREASE 470,724 2,069,438
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED YEAR ENDED YEARS ENDED
ENDED FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
AUGUST 31,
1998
SELECTED (UNAUDITED) 1998 1997 1996 1995 1994
PER-SHARE
DATA
NET ASSET VALUE, $ 50.04 $ 33.25 $ 27.87 $ 23.91 $ 24.91 $ 23.87
BEGINNING OF
PERIOD
INCOME FROM
INVESTMENT
OPERATIONS
NET (.12) (.27) (.13) (.14) (.18) (.22)
INVESTMENT
INCOME (LOSS) D
NET REALIZED (1.50) 17.14 5.49 4.07 (.96) 3.85
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM (1.62) 16.87 5.36 3.93 (1.14) 3.63
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIONS
FROM NET (.69) (.51) (.08) - - (2.63)
REALIZED GAIN
REDEMPTION FEES .11 .43 .10 .03 .14 .04
ADDED TO PAID
IN CAPITAL
NET ASSET VALUE, $ 47.84 $ 50.04 $ 33.25 $ 27.87 $ 23.91 $ 24.91
END OF PERIOD
TOTAL RETURN B, C (3.14)% 52.61% 19.59% 16.56% (4.01)% 15.61%
RATIOS AND
SUPPLEMENTAL
DATA
NET ASSETS, END $ 206,920 $ 192,861 $ 59,348 $ 44,051 $ 31,090 $ 52,790
OF PERIOD
(000 OMITTED)
RATIO OF 1.24% A 1.63% 1.45% 1.94% 2.07% 1.86%
EXPENSES TO
AVERAGE NET
ASSETS
RATIO OF 1.20% A, E 1.55% E 1.39% E 1.92% E 1.96% E 1.83% E
EXPENSES TO
AVERAGE NET
ASSETS AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.44)% A (.67)% (.39)% (.53)% (.74)% (.87)%
INVESTMENT
INCOME (LOSS)
TO AVERAGE NET
ASSETS
PORTFOLIO 235% A 308% 278% 235% 481% 154%
TURNOVER RATE
AVERAGE $ .0394 $ .0405 $ .0403
COMMISSION
RATE F
A ANNUALIZED B THE TOTAL
RETURNS WOULD HAVE BEEN
LOWER HAD CERTAIN
EXPENSES NOT BEEN
REDUCED DURING THE PERIODS
SHOWN (SEE NOTE 8 OF
NOTES TO FINANCIAL
STATEMENTS). C TOTAL
RETURNS DO NOT INCLUDE THE
ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN
ONE YEAR ARE NOT
ANNUALIZED. D NET
INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON
AVERAGE SHARES
OUTSTANDING DURING THE
PERIOD. E FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION
OF THE FUND'S EXPENSES
(SEE NOTE 8 OF NOTES TO
FINANCIAL
STATEMENTS). F FOR FISCAL
YEARS BEGINNING ON OR AFTER
SEPTEMBER 1, 1995, A
FUND IS REQUIRED TO DISCLOSE
ITS AVERAGE COMMISSION
RATE PER SHARE FOR SECURITY
TRADES ON WHICH
COMMISSIONS ARE CHARGED.
THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND
FUND TO FUND DEPENDING ON
THE MIX OF TRADES EXECUTED
IN VARIOUS MARKETS WHERE
TRADING PRACTICES AND
COMMISSION RATE STRUCTURES
MAY DIFFER.
</TABLE>
AIR TRANSPORTATION PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 MONTHS YEAR YEARS YEARS
SELECT AIR TRANSPORTATION -18.09% 6.82% 61.54% 232.14%
SELECT AIR TRANSPORTATION -20.62% 3.55% 56.62% 222.10%
(LOAD ADJ.)
S&P 500 -8.10% 8.10% 131.21% 382.74%
GS CYCLICAL INDUSTRIES -18.01% -10.45% N/A N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks - and the Goldman Sachs
Cyclical Industries Index - a market capitalization-weighted index of
277 stocks designed to measure the performance of companies in the
cyclical industries sector. These benchmarks include reinvestment of
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 YEAR YEARS YEARS
SELECT AIR TRANSPORTATION 6.82% 10.07% 12.75%
SELECT AIR TRANSPORTATION 3.55% 9.39% 12.41%
(LOAD ADJ.)
S&P 500 8.10% 18.25% 17.05%
GS CYCLICAL INDUSTRIES -10.45% N/A N/A
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.
(checkmark)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.
$10,000 OVER 10 YEARS
Air Transportation S&P 500
00034 SP001
1988/08/31 9700.00 10000.00
1988/09/30 10341.51 10426.00
1988/10/31 10540.59 10715.84
1988/11/30 10297.26 10562.61
1988/12/31 10706.50 10747.45
1989/01/31 11701.94 11534.17
1989/02/28 11923.15 11246.96
1989/03/31 12520.41 11509.02
1989/04/30 13018.13 12106.34
1989/05/31 13349.94 12596.64
1989/06/30 13283.21 12524.84
1989/07/31 14218.49 13655.84
1989/08/31 15298.52 13923.49
1989/09/30 14697.27 13866.40
1989/10/31 13539.30 13544.70
1989/11/30 13405.69 13821.02
1989/12/31 13525.84 14152.72
1990/01/31 12133.81 13203.07
1990/02/28 12644.22 13373.39
1990/03/31 13305.43 13727.79
1990/04/30 12818.22 13384.59
1990/05/31 13711.44 14689.59
1990/06/30 13746.24 14589.70
1990/07/31 13328.63 14543.01
1990/08/31 11217.40 13228.33
1990/09/30 10092.18 12584.11
1990/10/31 10625.79 12529.99
1990/11/30 10463.38 13339.43
1990/12/31 11066.59 13711.60
1991/01/31 12377.42 14309.43
1991/02/28 13769.44 15332.55
1991/03/31 13711.44 15703.60
1991/04/30 13375.03 15741.29
1991/05/31 14163.85 16421.31
1991/06/30 13865.19 15669.22
1991/07/31 14291.45 16399.40
1991/08/31 14113.84 16788.07
1991/09/30 13640.22 16507.71
1991/10/31 14303.29 16728.91
1991/11/30 13663.90 16054.73
1991/12/31 15167.64 17891.40
1992/01/31 16043.84 17558.62
1992/02/29 16766.11 17786.88
1992/03/31 15783.35 17440.03
1992/04/30 14966.36 17952.77
1992/05/31 15167.64 18040.74
1992/06/30 14675.11 17771.93
1992/07/31 14590.77 18498.80
1992/08/31 13976.30 18119.58
1992/09/30 14434.14 18333.39
1992/10/31 14952.23 18397.56
1992/11/30 15313.68 19024.91
1992/12/31 16163.82 19258.92
1993/01/31 16309.99 19420.70
1993/02/28 16565.79 19684.82
1993/03/31 18392.89 20100.17
1993/04/30 18600.81 19613.74
1993/05/31 19663.37 20139.39
1993/06/30 18197.78 20197.79
1993/07/31 18820.65 20117.00
1993/08/31 19944.27 20879.44
1993/09/30 19541.24 20718.67
1993/10/31 20664.86 21147.54
1993/11/30 20713.71 20946.64
1993/12/31 21156.38 21200.10
1994/01/31 21973.42 21920.90
1994/02/28 21193.52 21326.84
1994/03/31 19967.96 20396.99
1994/04/30 19836.64 20658.07
1994/05/31 19007.37 20996.87
1994/06/30 18428.20 20482.44
1994/07/31 19389.10 21154.27
1994/08/31 20126.23 22021.59
1994/09/30 17875.36 21482.06
1994/10/31 18020.15 21965.41
1994/11/30 16822.32 21165.43
1994/12/31 16556.24 21479.31
1995/01/31 17089.02 22036.27
1995/02/28 18554.17 22895.02
1995/03/31 19752.94 23570.66
1995/04/30 21337.97 24264.81
1995/05/31 21684.27 25234.68
1995/06/30 24428.11 25820.88
1995/07/31 25253.92 26677.10
1995/08/31 24281.59 26744.06
1995/09/30 25174.00 27872.66
1995/10/31 24880.97 27773.15
1995/11/30 28090.99 28992.39
1995/12/31 26413.65 29550.79
1996/01/31 25814.58 30556.70
1996/02/29 28741.86 30839.96
1996/03/31 30212.32 31136.95
1996/04/30 28947.01 31595.90
1996/05/31 29222.56 32410.76
1996/06/30 29084.79 32534.25
1996/07/31 24317.69 31096.88
1996/08/31 23876.80 31752.72
1996/09/30 23587.47 33539.76
1996/10/31 23367.03 34464.79
1996/11/30 26219.02 37069.98
1996/12/31 26742.57 36335.62
1997/01/31 25695.46 38605.87
1997/02/28 24414.14 38908.54
1997/03/31 25915.91 37309.79
1997/04/30 27335.01 39537.19
1997/05/31 29236.34 41944.21
1997/06/30 29580.78 43823.31
1997/07/31 31358.11 47310.33
1997/08/31 30159.45 44660.01
1997/09/30 32625.66 47106.04
1997/10/31 32336.33 45532.69
1997/11/30 33162.99 47640.40
1997/12/31 35070.89 48458.39
1998/01/31 36403.44 48994.34
1998/02/28 39332.11 52527.81
1998/03/31 41103.96 55217.76
1998/04/30 42469.91 55773.25
1998/05/31 40699.71 54814.51
1998/06/30 43281.25 57041.07
1998/07/31 40979.99 56433.58
1998/08/31 32210.00 48274.42
IMATRL PRASUN SHR__CHT 19980831 19981009 101002 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Air Transportation Portfolio on August 31,
1988, and the current 3.00% sales charge was paid. As the chart shows,
by August 31, 1998, the value of the investment would have grown to
$32,210 - a 222.10% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $48,274 - a 382.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
US AIRWAYS GROUP, INC. 7.4
ASA HOLDINGS, INC. 7.4
SOUTHWEST AIRLINES CO. 6.9
GULFSTREAM AEROSPACE CORP. 6.7
COMAIR HOLDINGS, INC. 6.7
ALASKA AIR GROUP. INC. 5.7
SUNDSTRAND CORP. 5.5
AMR CORP. 5.2
AMERICA WEST AIRLINES, INC. CLASS B WARRANTS 8/25/99 4.5
SKYWEST, INC. 4.4
TOP INDUSTRIES AS OF AUGUST 31, 1998
AIR TRANSPORTATION,
MAJOR NATIONAL 53.7%
AIR TRANSPORTATION,
REGIONAL 13.7%
AIRCRAFT 9.1%
AIRCRAFT & PARTS 5.5%
AIR COURIER SERVICES 4.0%
ALL OTHERS 14.0%
ROW: 1, COL: 1, VALUE: 14.0
ROW: 1, COL: 2, VALUE: 4.0
ROW: 1, COL: 3, VALUE: 5.5
ROW: 1, COL: 4, VALUE: 9.1
ROW: 1, COL: 5, VALUE: 13.7
ROW: 1, COL: 6, VALUE: 53.7
. *
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
AIR TRANSPORTATION PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Peter Saperstone)
Peter Saperstone,
Portfolio Manager
of Fidelity Select Air
Transportation Portfolio
Q. HOW DID THE FUND PERFORM, PETER?
A. For the six-month period that ended August 31, 1998, the fund
returned -18.09%. For the same six-month period, the Standard & Poor's
500 Index returned -8.10%. For the one-year period that ended August
31, 1998, the fund returned 6.82% and the Standard & Poor's 500 Index
returned 8.10%. Beginning this period, the fund also compares itself
to the Goldman Sachs Cyclical Industries Index - an index of 277
stocks designed to measure the performance of companies in the
cyclical industries sector - which returned -18.01% and -10.45% over
the same six- and 12-month periods, respectively.
Q. AS A GROUP, THE AIRLINES ARE EXPECTED TO POST A FOURTH CONSECUTIVE
YEAR OF RECORD PROFITS IN 1998. GIVEN THAT RECORD PROFITABILITY, WHY
WAS THERE SO MUCH TURBULENCE FOR THE AIRLINE INDUSTRY DURING THE PAST
SIX MONTHS?
A. After outpacing the market as a whole from the beginning of the
period through July 1998, airline stocks significantly lagged the S&P
500 index in August due to fears of a slowing U.S. economy. Airlines
are quite cyclical - meaning they are very sensitive to the economy's
ups and downs. As a result, a slowdown in economic growth can quickly
hurt the earnings for the group. In addition, the international
operations of U.S. carriers continued to be hurt by weak airline
traffic in Asia and Latin America. Finally, as I had anticipated
earlier in the year, the market recently began to discount next year's
acceleration in industry capacity - which is measured in available
seat miles. After seven years of capacity growth in the 1% to 2%
range, capacity will grow 5% to 6% in 1999 and will likely exceed
annual demand growth of 3% to 4%.
Q. DID YOU MAKE ANY STRATEGY SHIFTS IN RESPONSE TO THE MORE DIFFICULT
INVESTING ENVIRONMENT?
A. Given my concerns about industry fundamentals, I continued to
position the fund in areas I believed would be least impacted by the
acceleration in supply and slowing international demand. The fund's
largest positions continued to be airlines with 100% of their
operations in the United States - including Southwest, US Airways, ASA
Holdings, Comair, Atlantic Coast and Skywest. In my view, the U.S.
will experience the least amount of capacity increases and demand
should remain strong. On the other hand, I generally avoided air
carriers with a high percentage of international exposure - including
United and Northwest - and those that derive a large part of their
profits from markets where capacity is growing too fast - such as
Delta in the transatlantic market.
Q. GULFSTREAM AEROSPACE - WHICH WAS ONE OF THE FUND'S BIG WINNERS IN
1997 AND ONE OF ITS LARGEST HOLDINGS AT THE END OF THE MOST RECENT
SIX-MONTH PERIOD - ALSO EXPERIENCED TROUBLE DURING RECENT MONTHS . . .
A. That's true. The stock price of Gulfstream - which designs and
manufactures business jets for corporations, governments and
individuals - fell on growing investor fears that demand for the
company's products would decline in a slowing world economy. I
continued to hold onto Gulfstream because I believed the stock had
already discounted a 25% drop in order rates. The growth of the
business jet market - which is driven by share programs, and safety
and convenience issues - as well as the strong cash flow of the
company were other reasons why I continued to maintain the fund's
holdings in Gulfstream.
Q. WHAT'S YOUR OUTLOOK?
A. I remain cautious about airline stocks. While the industry is
financially stronger than during the prior business cycle, the group
typically underperforms the market when capacity grows faster than
demand. I believe that's exactly what will occur during the next 12 to
18 months. In addition, labor problems are beginning to arise -
evidenced by a recent Northwest pilots' strike and the America West
mechanics' work slowdown. In my opinion, continued labor problems
could put pressure on the airlines' costs.
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.
(checkmark)FUND FACTS
START DATE: December 16, 1985
FUND NUMBER: 034
TRADING SYMBOL: FSAIX
SIZE: as of August 31,1998, more than
$57 million
MANGER: Peter Saperstone, since 1997; manager,
Fidelity Select Defense and Aerospace Portfolio,
since 1997; Fidelity Select Construction and
Housing Portfolio, 1996-1997; equity analyst,
various industries, 1995-1996; joined Fidelity
in 1995
AIR TRANSPORTATION PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 99.8%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 19.7%
AIRCRAFT - 9.1%
Gulfstream Aerospace Corp. (a) 105,600 $ 3,709,200
Lockheed Martin Corp. 14,800 1,294,075
5,003,275
AIRCRAFT & PARTS - 5.5%
Sundstrand Corp. 67,200 3,061,800
AIRCRAFT ENGINES & PARTS - 1.3%
Kellstrom Industries, Inc. (a) 31,900 735,694
MISSILES & SPACE VEHICLES - 3.8%
Cordant Technologies, Inc. 59,500 2,119,688
TOTAL AEROSPACE & DEFENSE 10,920,457
AIR TRANSPORTATION - 68.0%
AIR TRANSPORTATION, MAJOR NATIONAL - 53.7%
AMR Corp. (a) 52,400 2,855,800
Air Canada, Inc. (a) 141,500 599,920
Alaska Air Group, Inc. (a) 81,200 3,161,725
America West Airlines, Inc.
Class B warrants 8/25/99 (a) 321,900 2,514,844
America West Holdings Corp. Class B (a) 55,600 1,080,725
ASA Holdings, Inc. 119,500 4,092,875
Atlantic Coast Airlines, Inc. (a) 63,700 1,441,213
Atlas Air, Inc. (a) 68,900 1,636,375
Continental Airlines, Inc. Class B (a) 33,100 1,365,375
Delta Air Lines, Inc. 16,300 1,662,600
Midway Airlines Corp. (a) 24,100 338,906
Ryanair Holdings PLC sponsored ADR (a) 35,100 1,035,450
Southwest Airlines Co. 214,200 3,815,438
US Airways Group, Inc. (a) 70,400 4,100,800
29,702,046
AIR TRANSPORTATION, REGIONAL - 13.7%
Comair Holdings, Inc. 144,750 3,682,078
Midwest Express Holdings, Inc. (a) 47,400 1,267,950
SkyWest, Inc. 116,900 2,454,900
Virgin Express Holdings
PLC sponsored ADR 21,900 143,719
7,548,647
TRANSPORTATION SERVICES - 0.6%
Travel Services International, Inc. (a) 16,200 352,350
TOTAL AIR TRANSPORTATION 37,603,043
COMPUTER SERVICES & SOFTWARE - 1.8%
COMPUTER SERVICES - 1.5%
Galileo International, Inc. 25,200 823,722
DATA PROCESSING - 0.3%
Sabre Group Holdings, Inc. Class A (a) 5,500 176,000
TOTAL COMPUTER SERVICES & SOFTWARE 999,722
ELECTRICAL EQUIPMENT - 2.6%
TV & RADIO COMMUNICATION EQUIPMENT - 2.6%
Loral Space & Communications Ltd. (a) 90,300 1,433,513
INDUSTRIAL MACHINERY & EQUIPMENT - 1.7%
MACHINERY - WHOLESALE - 1.7%
AVTEAM, Inc. Class A 140,400 912,600
SHARES VALUE (NOTE 1)
TRUCKING & FREIGHT - 6.0%
AIR COURIER SERVICES - 4.0%
Airborne Freight Corp. 23,500 $ 458,250
FDX Corp. (a) 34,800 1,742,175
2,200,425
FREIGHT FORWARDING - 2.0%
Air Express International Corp. 21,900 375,038
Expeditors International of Washington, Inc. 27,400 762,063
1,137,101
TOTAL TRUCKING & FREIGHT 3,337,526
TOTAL COMMON STOCKS
(Cost $63,756,838) 55,206,861
CASH EQUIVALENTS - 0.2%
Taxable Central Cash Fund (b)
(Cost $105,853) 105,853 105,853
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $63,862,691) $ 55,312,714
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.58%. 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 $151,634,119 and $250,927,964, 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 $245 for the
period (see Note 4 of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $63,865,056. Net unrealized depreciation
aggregated $8,552,342, of which $1,301,731 related to appreciated
investment securities and $9,854,073 related to depreciated investment
securities.
AIR TRANSPORTATION PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31,
1998
(UNAUDITED)
ASSETS
INVESTMENT IN $ 55,312,714
SECURITIES, AT
VALUE
(COST
$63,862,691
) -
SEE
ACCOMPANYIN
G SCHEDULE
RECEIVABLE FOR 5,544,699
INVESTMENTS
SOLD
RECEIVABLE FOR 2,309,737
FUND SHARES
SOLD
DIVIDENDS 46,902
RECEIVABLE
INTEREST 13,391
RECEIVABLE
REDEMPTION FEES 2,470
RECEIVABLE
OTHER 570
RECEIVABLES
TOTAL ASSETS 63,230,483
LIABILITIES
PAYABLE FOR $ 5,452,015
FUND SHARES
REDEEMED
ACCRUED 39,254
MANAGEMENT
FEE
OTHER PAYABLES 64,029
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 5,555,298
NET ASSETS $ 57,675,185
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 55,034,143
ACCUMULATED (290,775)
NET INVESTMENT
LOSS
ACCUMULATED 11,481,892
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED (8,550,075)
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
AND ASSETS
AND LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, FOR $ 57,675,185
2,641,008
SHARES
OUTSTANDING
NET ASSET $21.84
VALUE AND
REDEMPTION
PRICE PER
SHARE
($57,675,18
5 (DIVIDED BY)
2,641,008
SHARES)
MAXIMUM $22.52
OFFERING PRICE
PER SHARE
(100/97.00
OF $21.84)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED AUGUST 31, 1998 (UNAUDITED)
INVESTMENT INCOME $ 265,990
DIVIDENDS
INTEREST 252,028
TOTAL INCOME 518,018
EXPENSES
MANAGEMENT FEE $ 392,919
TRANSFER AGENT FEES 341,725
ACCOUNTING FEES AND EXPENSES 67,215
NON-INTERESTED TRUSTEES' COMPENSATION 255
CUSTODIAN FEES AND EXPENSES 11,862
REGISTRATION FEES 15,369
AUDIT 10,601
LEGAL 421
REPORTS TO SHAREHOLDERS 17,839
TOTAL EXPENSES BEFORE REDUCTIONS 858,206
EXPENSE REDUCTIONS (49,413) 808,793
NET INVESTMENT INCOME (LOSS) (290,775)
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 11,762,333
FOREIGN CURRENCY TRANSACTIONS 149 11,762,482
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES (23,637,385)
ASSETS AND LIABILITIES IN (98) (23,637,483)
FOREIGN CURRENCIES
NET GAIN (LOSS) (11,875,001)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (12,165,776)
OTHER INFORMATION $ 330,548
SALES CHARGES PAID TO FDC
SALES CHARGES - RETAINED BY FDC $ 321,881
DEFERRED SALES CHARGES WITHHELD $ 1,413
BY FDC
EXCHANGE FEES WITHHELD BY FSC $ 63,503
EXPENSE REDUCTIONS $ 44,877
DIRECTED BROKERAGE ARRANGEMENTS
CUSTODIAN CREDITS 4,536
$ 49,413
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED YEAR ENDED
(DECREASE) IN AUGUST 31, 1998 FEBRUARY 28,
NET ASSETS (UNAUDITED) 1998
OPERATIONS $ (290,775) $ (529,067)
NET
INVESTMENT
INCOME (LOSS)
NET REALIZED 11,762,482 13,099,045
GAIN (LOSS)
CHANGE IN NET (23,637,483) 17,664,167
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (12,165,776) 30,234,145
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
DISTRIBUTIONS TO (1,287,140) (3,545,132)
SHAREHOLDERS
FROM NET
REALIZED GAIN
SHARE 164,669,704 317,061,095
TRANSACTIONS
NET PROCEEDS
FROM SALES OF
SHARES
REINVESTMENT 1,276,229 3,512,172
OF
DISTRIBUTIONS
COST OF SHARES (276,506,400) (202,499,252)
REDEEMED
NET INCREASE (110,560,467) 118,074,015
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION 503,475 464,487
FEES
TOTAL (123,509,908) 145,227,515
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
BEGINNING OF 181,185,093 35,957,578
PERIOD
END OF PERIOD $ 57,675,185 $ 181,185,093
(INCLUDING
ACCUMULATED
NET INVESTMENT
LOSS OF
$290,775
AND $0,
RESPECTIVELY)
OTHER
INFORMATION
SHARES
SOLD 5,755,883 13,782,585
ISSUED IN 44,922 154,313
REINVESTMENT
OF
DISTRIBUTIONS
REDEEMED (9,904,659) (9,221,113)
NET INCREASE (4,103,854) 4,715,785
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED YEAR ENDED YEARS ENDED
ENDED FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
AUGUST 31,
1998
SELECTED (UNAUDITED) 1998 1997 1996 1995 1994
PER-SHARE
DATA
NET ASSET VALUE, $ 26.86 $ 17.72 $ 21.11 $ 13.93 $ 17.12 $ 13.60
BEGINNING OF
PERIOD
INCOME FROM
INVESTMENT
OPERATIONS
NET (.06) (.19) (.22) (.01) (.18) (.18)
INVESTMENT
INCOME (LOSS) D
NET REALIZED (4.86) 10.59 (3.12) 7.47 (2.01) 3.78
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM (4.92) 10.40 (3.34) 7.46 (2.19) 3.60
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIONS
FROM NET (.21) (1.43) (.07) (.46) (.92) (.22)
REALIZED GAIN
IN EXCESS OF - - (.20) - (.17) (.05)
NET REALIZED
GAIN
TOTAL (.21) (1.43) (.27) (.46) (1.09) (.27)
DISTRIBUTIONS
REDEMPTION FEES .11 .17 .22 .18 .09 .19
ADDED TO PAID
IN CAPITAL
NET ASSET VALUE, $ 21.84 $ 26.86 $ 17.72 $ 21.11 $ 13.93 $ 17.12
END OF PERIOD
TOTAL RETURN B, C (18.09)% 61.10% (15.06)% 54.91% (12.45)% 27.94%
RATIOS AND
SUPPLEMENTAL
DATA
NET ASSETS, END $ 57,675 $ 181,185 $ 35,958 $ 75,359 $ 18,633 $ 11,035
OF PERIOD
(000 OMITTED)
RATIO OF 1.26% A 1.93% 1.89% 1.47% 2.50% E 2.33%
EXPENSES TO
AVERAGE NET
ASSETS
RATIO OF 1.19% A, F 1.87% F 1.80% F 1.41% F 2.50% 2.31% F
EXPENSES TO
AVERAGE NET
ASSETS AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.43)% A (.84)% (1.10)% (.07)% (1.31)% (1.11)%
INVESTMENT
INCOME (LOSS)
TO AVERAGE NET
ASSETS
PORTFOLIO 248% A 294% 469% 504% 200% 171%
TURNOVER RATE
AVERAGE $ .0399 $ .0270 $ .0409
COMMISSION
RATE G
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
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 F FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID
OR REDUCED A PORTION OF THE
FUND'S EXPENSES (SEE NOTE
8 OF NOTES TO FINANCIAL
STATEMENTS). G FOR FISCAL
YEARS BEGINNING ON OR AFTER
SEPTEMBER 1, 1995, A FUND
IS REQUIRED TO DISCLOSE ITS
AVERAGE COMMISSION RATE
PER SHARE FOR SECURITY TRADES
ON WHICH COMMISSIONS ARE
CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD
AND FUND TO FUND DEPENDING
ON THE MIX OF TRADES
EXECUTED IN VARIOUS
MARKETS WHERE TRADING
PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
</TABLE>
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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 MONTHS YEAR YEARS YEARS
SELECT AUTOMOTIVE -19.68% -12.79% 26.18% 198.12%
SELECT AUTOMOTIVE -22.16% -15.48% 22.32% 189.10%
(LOAD ADJ.)
S&P 500 -8.10% 8.10% 131.21% 382.74%
GS CYCLICAL INDUSTRIES -18.01% -10.45% N/A N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks - and the Goldman Sachs
Cyclical Industries Index - a market capitalization-weighted index of
277 stocks designed to measure the performance of companies in the
cyclical industries sector. These benchmarks include reinvestment of
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 YEAR YEARS YEARS
SELECT AUTOMOTIVE -12.79% 4.76% 11.54%
SELECT AUTOMOTIVE -15.48% 4.11% 11.20%
(LOAD ADJ.)
S&P 500 8.10% 18.25% 17.05%
GS CYCLICAL INDUSTRIES -10.45% N/A N/A
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.
(checkmark)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.
$10,000 OVER 10 YEARS
Automotive S&P 500
00502 SP001
1988/08/31 9700.00 10000.00
1988/09/30 9741.38 10426.00
1988/10/31 9666.89 10715.84
1988/11/30 9459.98 10562.61
1988/12/31 9658.62 10747.45
1989/01/31 10105.55 11534.17
1989/02/28 9997.95 11246.96
1989/03/31 10188.31 11509.02
1989/04/30 10643.52 12106.34
1989/05/31 10800.77 12596.64
1989/06/30 10610.41 12524.84
1989/07/31 10982.85 13655.84
1989/08/31 11090.44 13923.49
1989/09/30 10833.87 13866.40
1989/10/31 9931.74 13544.70
1989/11/30 10022.78 13821.02
1989/12/31 10054.74 14152.72
1990/01/31 9789.24 13203.07
1990/02/28 10080.43 13373.39
1990/03/31 10457.27 13727.79
1990/04/30 10423.01 13384.59
1990/05/31 11013.96 14689.59
1990/06/30 11211.18 14589.70
1990/07/31 11245.92 14543.01
1990/08/31 9630.68 13228.33
1990/09/30 8710.16 12584.11
1990/10/31 8536.48 12529.99
1990/11/30 9040.16 13339.43
1990/12/31 9378.84 13711.60
1991/01/31 9908.57 14309.43
1991/02/28 10716.19 15332.55
1991/03/31 10803.03 15703.60
1991/04/30 10924.61 15741.29
1991/05/31 11801.70 16421.31
1991/06/30 11775.65 15669.22
1991/07/31 12261.96 16399.40
1991/08/31 12661.43 16788.07
1991/09/30 12288.01 16507.71
1991/10/31 12609.32 16728.91
1991/11/30 11984.07 16054.73
1991/12/31 12879.51 17891.40
1992/01/31 14270.90 17558.62
1992/02/29 15708.06 17786.88
1992/03/31 16046.75 17440.03
1992/04/30 17071.99 17952.77
1992/05/31 17062.84 18040.74
1992/06/30 16961.32 17771.93
1992/07/31 17117.18 18498.80
1992/08/31 16053.66 18119.58
1992/09/30 15787.78 18333.39
1992/10/31 16447.90 18397.56
1992/11/30 17245.54 19024.91
1992/12/31 18239.27 19258.92
1993/01/31 19081.52 19420.70
1993/02/28 19362.27 19684.82
1993/03/31 20401.04 20100.17
1993/04/30 20283.16 19613.74
1993/05/31 21518.29 20139.39
1993/06/30 21894.62 20197.79
1993/07/31 22145.51 20117.00
1993/08/31 22917.47 20879.44
1993/09/30 23158.70 20718.67
1993/10/31 23650.82 21147.54
1993/11/30 23650.82 20946.64
1993/12/31 24693.17 21200.10
1994/01/31 26100.81 21920.90
1994/02/28 25258.20 21326.84
1994/03/31 23483.79 20396.99
1994/04/30 23006.27 20658.07
1994/05/31 22665.44 20996.87
1994/06/30 22374.73 20482.44
1994/07/31 23046.37 21154.27
1994/08/31 22665.44 22021.59
1994/09/30 21703.09 21482.06
1994/10/31 22114.09 21965.41
1994/11/30 20780.83 21165.43
1994/12/31 21544.07 21479.31
1995/01/31 21032.18 22036.27
1995/02/28 22078.22 22895.02
1995/03/31 21966.94 23570.66
1995/04/30 21900.17 24264.81
1995/05/31 22345.30 25234.68
1995/06/30 22901.71 25820.88
1995/07/31 24548.67 26677.10
1995/08/31 24326.11 26744.06
1995/09/30 24448.52 27872.66
1995/10/31 23313.45 27773.15
1995/11/30 23892.11 28992.39
1995/12/31 24437.39 29550.79
1996/01/31 24148.06 30556.70
1996/02/29 24314.98 30839.96
1996/03/31 25795.02 31136.95
1996/04/30 27098.27 31595.90
1996/05/31 27722.24 32410.76
1996/06/30 27399.11 32534.25
1996/07/31 25805.75 31096.88
1996/08/31 26463.15 31752.72
1996/09/30 26686.00 33539.76
1996/10/31 26808.57 34464.79
1996/11/30 28167.94 37069.98
1996/12/31 28364.73 36335.62
1997/01/31 28861.55 38605.87
1997/02/28 29323.70 38908.54
1997/03/31 28746.01 37309.79
1997/04/30 29388.32 39537.19
1997/05/31 31069.02 41944.21
1997/06/30 32005.41 43823.31
1997/07/31 33410.00 47310.33
1997/08/31 33157.90 44660.01
1997/09/30 34970.66 47106.04
1997/10/31 33361.98 45532.69
1997/11/30 33133.89 47640.40
1997/12/31 33123.88 48458.39
1998/01/31 33110.79 48994.34
1998/02/28 36004.22 52527.81
1998/03/31 38190.66 55217.76
1998/04/30 38014.56 55773.25
1998/05/31 37802.34 54814.51
1998/06/30 37222.29 57041.07
1998/07/31 35835.83 56433.58
1998/08/31 28910.16 48274.42
IMATRL PRASUN SHR__CHT 19980831 19980909 085804 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Automotive Portfolio on August 31, 1988,
and the current 3.00% sales charge was paid. As the chart shows, by
August 31, 1998, the value of the investment would have grown to
$28,910 - a 189.10% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $48,274 - a 382.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
FEDERAL-MOGUL CORP. 10.0
FORD MOTOR CO. 8.6
TRW, INC. 5.5
GOODYEAR TIRE & RUBBER CO. 5.5
CHRYSLER CORP. 4.5
HONDA MOTOR CO. LTD. 4.5
LEAR CORP. 4.4
SPX CORP. 3.8
AUTOZONE, INC. 3.8
DANA CORP. 3.7
TOP INDUSTRIES AS OF AUGUST 31, 1998
AUTO & TRUCK PARTS 48.9%
MOTOR VEHICLES & CAR BODIES 26.7%
TIRES & INNER TUBES 5.7%
AUTO & HOME SUPPLY STORES 3.8%
AUTO PARTS - RETAIL 2.9%
ALL OTHERS 12.0%
ROW: 1, COL: 1, VALUE: 12.0
ROW: 1, COL: 2, VALUE: 2.9
ROW: 1, COL: 3, VALUE: 3.8
ROW: 1, COL: 4, VALUE: 5.7
ROW: 1, COL: 5, VALUE: 26.7
ROW: 1, COL: 6, VALUE: 48.9
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
AUTOMOTIVE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Albert Grosman)
Albert Grosman,
Portfolio Manager
of Fidelity Select
Automotive Portfolio
Q. HOW DID THE FUND PERFORM, ALBERT?
A. For the six- and 12-month periods that ended August 31, 1998, the
fund returned -19.68% and -12.79%, respectively. By comparison, the
Standard & Poor's 500 Index returned -8.10% and 8.10% for the same
periods. Beginning this period, the fund also compares itself to the
Goldman Sachs Cyclical Industries Index - an index of 277 stocks
designed to measure the performance of companies in the cyclical
industries sector - which returned -18.01% and -10.45% over the same
six- and 12-month periods, respectively.
Q. WHAT WAS THE INVESTING ENVIRONMENT LIKE DURING THE SIX-MONTH
PERIOD?
A. It was a very difficult one. With concerns that the economy could
be showing signs of an economic downturn, investors shied away from
cyclical stocks, including auto stocks. Investors also gave serious
consideration to the concern that the U.S. economy was being
negatively affected by economic problems in Asia, Russia and Latin
America. The auto industry is primarily a domestic one, but it most
definitely has a global element, with most suppliers and manufacturers
selling to global markets. Within the auto industry, there were
companies such as General Motors that had direct exposure to Latin
American markets. Finally, many auto-part suppliers with exposure to
General Motors were hurt because of the 54-day GM strike.
Q. WHAT STRATEGY DID YOU PURSUE WITHIN THIS DIFFICULT ENVIRONMENT?
A. I invested in companies that had effective management and good
longer-term planning and earnings prospects. As an example, I invested
in companies such as Federal-Mogul, a parts company that's been
growing through acquisitions and has a large exposure to the
after-market by selling parts for older vehicles that require more
service. I also added more auto dealers that sell used cars including
Sonic Automotive and Group 1. I believed that adding these auto
dealers could be a good defensive move for the fund, because if
consumer confidence is indeed eroding, the historical pattern has been
that buyers substitute used cars for new cars when making their
purchasing decisions.
Q. WHICH STOCKS PERFORMED WELL?
A. Ford was a strong contributor during the six-month period. Ford has
shown great foresight in planning its product line and mix for the
U.S. market, and its management has pursued aggressive cost-cutting
measures very effectively. Federal-Mogul, which I mentioned earlier,
makes engine parts for the Big Three auto makers, and its strong
management team has positioned the company well by making acquisitions
and expanding its market. Chrysler also performed well, due primarily
to its acquisition by Daimler Benz.
Q. WHICH STOCKS PERFORMED POORLY?
A. The worst disappointment was Breed Technologies, which makes seat
belts, air bags and other safety equipment. Breed is in the process of
integrating several companies it acquired earlier, and that process
has taken longer than expected. Borg-Warner also performed poorly.
This company manufactures four engine component product lines for the
Big Three auto makers and has relatively high fixed costs, so reduced
demand from Asia, combined with the GM strike, hit pretty hard. The
Asian crisis also had a very detrimental effect on the global tire
business, and Goodyear Tire's performance was hurt as a result. Asian
manufacturers' low-end tire prices declined because of currency
devaluation, and customers substituted Asian-made products for
Goodyear's generic product line.
Q. WHAT'S YOUR OUTLOOK, ALBERT?
A. Given the growing trends of outsourcing by auto manufacturers, new
safety component development and new environmentally friendly engine
technology, I will try to build the fund's exposure to companies that
could benefit from these long-term trends. In this cyclical industry,
I prefer to select companies whose management teams are focused on
returns throughout the economic cycle and are taking a long-term
outlook. I'll also try to build exposure to those companies that are
making active plans for the future and coming up with the next
technology, not just reacting to current demand and 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.
(checkmark)FUND FACTS
START DATE: June 30, 1986
FUND NUMBER: 502
TRADING SYMBOL: FSAVX
SIZE: as of August 31, 1998,
more than $63 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
AUTOMOTIVE PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 97.6%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.1%
AIRCRAFT EQUIPMENT - 0.1%
Simula, Inc. (a) 6,900 $ 62,963
AUTOS, TIRES, & ACCESSORIES - 90.8%
AUTO & HOME SUPPLY STORES - 3.8%
AutoZone, Inc. (a) 90,000 2,334,375
AUTO & TRUCK PARTS - 48.9%
Arvin Industries, Inc. 14,400 543,600
Borg-Warner Automotive, Inc. 53,400 2,162,700
Breed Technologies, Inc. 234,400 1,714,050
Dana Corp. 57,600 2,257,200
Danaher Corp. 28,000 1,015,000
Dura Automotive Systems, Inc. Class A (a) 11,500 253,000
Eaton Corp. 27,500 1,610,469
Federal-Mogul Corp. 115,300 6,154,138
Gentex Corp. (a) 55,200 638,250
Hayes Lemmerz International, Inc. (a) 23,100 687,225
ITT Industries, Inc. 17,100 515,138
Intermet Corp. 5,500 82,500
Johnson Controls, Inc. 46,500 1,990,781
Magna International, Inc. Class A 36,000 2,152,885
Mascotech, Inc. 27,400 479,500
SPX Corp. (a) 47,600 2,368,100
Safety Components International, Inc. (a) 21,100 205,725
Simpson Industries, Inc. 10,600 111,300
Standard Motor Products, Inc. 17,700 427,013
Standard Products Co. 3,600 91,800
TRW, Inc. 78,900 3,382,838
Tower Automotive, Inc. (a) 57,200 1,051,050
Wabash National Corp. 15,000 238,125
Wynn's International, Inc. 3,600 60,975
30,193,362
AUTO DEALERS, GAS STATIONS - RETAIL - 2.8%
Group 1 Automotive, Inc. (a) 37,600 446,500
Republic Industries, Inc. (a) 29,800 527,088
Sonic Automotive, Inc. (a) 40,000 737,500
1,711,088
AUTO PARTS - RETAIL - 2.9%
Discount Auto Parts, Inc. (a) 28,500 610,969
Monro Muffler Brake, Inc. 5,095 50,950
Pep Boys-Manny, Moe & Jack 78,600 1,154,438
1,816,357
MOTOR VEHICLES & CAR BODIES - 26.7%
Chrysler Corp. 62,300 2,780,138
Ford Motor Co. 120,500 5,302,000
Honda Motor Co. Ltd. 83,000 2,777,038
Lear Corp. (a) 66,500 2,697,406
Oshkosh Truck Corp. Class B 3,900 87,750
Renault SA Ord. 30,000 1,288,575
Volkswagen AG 22,200 1,516,466
16,449,373
TIRES & INNER TUBES - 5.7%
Goodyear Tire & Rubber Co. 68,800 3,371,200
Michelin SA (Compagnie Generale
des Etablissements) Class B 4,229 172,832
3,544,032
TOTAL AUTOS, TIRES, & ACCESSORIES 56,048,587
SHARES VALUE (NOTE 1)
BUILDING MATERIALS - 0.6%
GASKETS, HOSES, BELTS - 0.6%
Mark IV Industries, Inc. 27,200 $ 385,900
CHEMICALS & PLASTICS - 0.3%
PLASTICS, NEC - 0.3%
Myers Industries, Inc. 9,200 189,750
ELECTRICAL EQUIPMENT - 0.3%
MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT, SUPPLIES - 0.3%
Delco Remy International, Inc. Class A (a) 20,000 210,000
ELECTRONICS - 0.6%
ELECTRONICS & ELECTRONIC COMPONENTS - 0.6%
Stoneridge, Inc. 19,300 349,813
INDUSTRIAL MACHINERY & EQUIPMENT - 0.4%
PRIMARY BATTERIES, DRY & WET - 0.4%
Ballard Power Systems, Inc. (a) 15,000 251,036
IRON & STEEL - 1.3%
FABRICATED METAL PRODUCTS - 0.4%
SPS Technologies, Inc. (a) 6,600 275,550
METAL FORGINGS & STAMPINGS - 0.9%
Linamar Corp. 41,800 536,991
TOTAL IRON & STEEL 812,541
LEASING & RENTAL - 2.8%
AUTO RENTAL & LEASING - 1.2%
Avis Rent A Car, Inc. (a) 25,200 395,320
Budget Group, Inc. Class A (a) 18,000 306,000
701,320
TRUCK RENT & LEASE, NO DRIVER - 1.6%
Hertz Corp. Class A 26,700 1,007,925
TOTAL LEASING & RENTAL 1,709,245
LEISURE DURABLES & TOYS - 0.4%
MOTOR HOMES - 0.4%
Coachmen Industries, Inc. 12,200 227,988
TOTAL COMMON STOCKS
(Cost $75,400,363) 60,247,823
CASH EQUIVALENTS - 2.4%
Taxable Central Cash Fund (b)
(Cost $1,479,982) 1,479,982 1,479,982
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $76,880,345) $ 61,727,805
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.58%. 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 $76,307,370 and $29,401,100, 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 $15,803 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 85.9%
Canada 4.8
Japan 4.5
Germany 2.4
France 2.4
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $76,944,000. Net unrealized depreciation
aggregated $15,216,195, of which $804,954 related to appreciated
investment securities and $16,021,149 related to depreciated
investment securities.
AUTOMOTIVE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31,
1998
(UNAUDITED)
ASSETS
INVESTMENT IN $ 61,727,805
SECURITIES, AT
VALUE
(COST
$76,880,345
) -
SEE
ACCOMPANYIN
G SCHEDULE
FOREIGN 215
CURRENCY HELD
AT VALUE
(COST $222)
RECEIVABLE FOR 3,344,003
INVESTMENTS
SOLD
RECEIVABLE FOR 326,491
FUND SHARES
SOLD
DIVIDENDS 131,349
RECEIVABLE
INTEREST 19,827
RECEIVABLE
REDEMPTION FEES 678
RECEIVABLE
OTHER 2,470
RECEIVABLES
TOTAL ASSETS 65,552,838
LIABILITIES
PAYABLE FOR $ 1,011,150
INVESTMENTS
PURCHASED
PAYABLE FOR 1,201,832
FUND SHARES
REDEEMED
ACCRUED 37,731
MANAGEMENT
FEE
OTHER PAYABLES 62,179
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 2,312,892
NET ASSETS $ 63,239,946
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 78,410,440
UNDISTRIBUTED 43,604
NET INVESTMENT
INCOME
ACCUMULATED (62,077)
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED (15,152,021)
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
AND ASSETS
AND LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, FOR $ 63,239,946
3,094,598
SHARES
OUTSTANDING
NET ASSET $20.44
VALUE AND
REDEMPTION
PRICE PER
SHARE
($63,239,94
6 (DIVIDED BY)
3,094,598
SHARES)
MAXIMUM $21.07
OFFERING PRICE
PER SHARE
(100/97.00
OF $20.44)
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED AUGUST
31, 1998
(UNAUDITED)
INVESTMENT $ 321,345
INCOME
DIVIDENDS
INTEREST 116,191
TOTAL INCOME 437,536
EXPENSES
MANAGEMENT $ 146,411
FEE
TRANSFER AGENT 179,351
FEES
ACCOUNTING FEES 33,936
AND EXPENSES
NON-INTERESTED 160
TRUSTEES'
COMPENSATION
CUSTODIAN FEES 8,340
AND EXPENSES
REGISTRATION FEES 13,954
AUDIT 10,575
LEGAL 131
REPORTS TO 6,419
SHAREHOLDERS
TOTAL EXPENSES 399,277
BEFORE
REDUCTIONS
EXPENSE (10,790) 388,487
REDUCTIONS
NET INVESTMENT 49,049
INCOME
REALIZED AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS) ON:
INVESTMENT 115,664
SECURITIES
FOREIGN (2,288) 113,376
CURRENCY
TRANSACTIONS
CHANGE IN NET
UNREALIZED
APPRECIATION
(DEPRECIATION)
ON:
INVESTMENT (17,812,978)
SECURITIES
ASSETS AND 577 (17,812,401)
LIABILITIES IN
FOREIGN
CURRENCIES
NET GAIN (LOSS) (17,699,025)
NET INCREASE $ (17,649,976)
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 86,407
INFORMATION
SALES CHARGES
PAID TO FDC
SALES CHARGES $ 86,407
- - RETAINED BY
FDC
DEFERRED SALES $ 770
CHARGES
WITHHELD
BY FDC
EXCHANGE FEES $ 7,463
WITHHELD BY
FSC
EXPENSE $ 10,362
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEMENTS
CUSTODIAN 428
CREDITS
$ 10,790
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED YEAR ENDED
(DECREASE) IN AUGUST 31, 1998 FEBRUARY 28,
NET ASSETS (UNAUDITED) 1998
OPERATIONS $ 49,049 $ 108,611
NET
INVESTMENT
INCOME
NET REALIZED 113,376 12,457,463
GAIN (LOSS)
CHANGE IN NET (17,812,401) (2,220,824)
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (17,649,976) 10,345,250
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
DISTRIBUTIONS TO (24,886) (202,512)
SHAREHOLDERS
FROM NET
INVESTMENT
INCOME
FROM NET (2,687,961) (7,054,725)
REALIZED GAIN
TOTAL (2,712,847) (7,257,237)
DISTRIBUTIONS
SHARE 74,494,862 38,285,022
TRANSACTIONS
NET PROCEEDS
FROM SALES OF
SHARES
REINVESTMENT 2,639,778 7,198,159
OF
DISTRIBUTIONS
COST OF SHARES (26,047,987) (102,498,033)
REDEEMED
NET INCREASE 51,086,653 (57,014,852)
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION 27,174 69,215
FEES
TOTAL INCREASE 30,751,004 (53,857,624)
(DECREASE) IN
NET ASSETS
NET ASSETS
BEGINNING OF 32,488,942 86,346,566
PERIOD
END OF PERIOD $ 63,239,946 $ 32,488,942
(INCLUDING
UNDISTRIBUTE
D NET
INVESTMENT
INCOME OF
$43,604
AND
$52,621,
RESPECTIVELY)
OTHER
INFORMATION
SHARES
SOLD 2,829,266 1,443,301
ISSUED IN 97,604 295,056
REINVESTMENT
OF
DISTRIBUTIONS
REDEEMED (1,013,581) (3,958,616)
NET INCREASE 1,913,289 (2,220,259)
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED YEAR ENDED YEARS ENDED
ENDED FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
AUGUST 31,
1998
SELECTED (UNAUDITED) 1998 1997 1996 1995 1994
PER-SHARE
DATA
NET ASSET VALUE, $ 27.50 $ 25.38 $ 21.85 $ 19.84 $ 25.48 $ 20.69
BEGINNING OF
PERIOD
INCOME FROM
INVESTMENT
OPERATIONS
NET .03 .05 .13 .03 .08 .05
INVESTMENT
INCOME D
NET REALIZED (4.92) 5.21 4.28 1.95 (3.46) 6.00
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM (4.89) 5.26 4.41 1.98 (3.38) 6.05
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIONS
FROM NET (.02) (.08) (.17) - (.05) (.05)
INVESTMENT
INCOME
FROM NET (2.16) (3.09) (.75) - (2.26) (1.26)
REALIZED GAIN
TOTAL (2.18) (3.17) (.92) - (2.31) (1.31)
DISTRIBUTIONS
REDEMPTION FEES .01 .03 .04 .03 .05 .05
ADDED TO PAID
IN CAPITAL
NET ASSET VALUE, $ 20.44 $ 27.50 $ 25.38 $ 21.85 $ 19.84 $ 25.48
END OF PERIOD
TOTAL RETURN B, C (19.68)% 22.78% 20.60% 10.13% (12.59)% 30.45%
RATIOS AND
SUPPLEMENTAL
DATA
NET ASSETS, END $ 63,240 $ 32,489 $ 86,347 $ 55,753 $ 60,075 $ 228,698
OF PERIOD
(000 OMITTED)
RATIO OF 1.57% A 1.60% 1.56% 1.81% 1.82% 1.69%
EXPENSES TO
AVERAGE NET
ASSETS
RATIO OF 1.52% A, E 1.56% E 1.52% E 1.80% E 1.80% E 1.68% E
EXPENSES TO
AVERAGE NET
ASSETS AFTER
EXPENSE
REDUCTIONS
RATIO OF NET .19% A .17% .54% .13% .34% .22%
INVESTMENT
INCOME TO
AVERAGE NET
ASSETS
PORTFOLIO 121% A 153% 175% 61% 63% 64%
TURNOVER RATE
AVERAGE $ .0523 $ .0424 $ .0495
COMMISSION
RATE F
A ANNUALIZED B THE TOTAL
RETURNS WOULD HAVE BEEN
LOWER HAD CERTAIN
EXPENSES NOT BEEN
REDUCED DURING THE PERIODS
SHOWN (SEE NOTE 8 OF
NOTES TO FINANCIAL
STATEMENTS). C TOTAL
RETURNS DO NOT INCLUDE THE
ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN
ONE YEAR ARE NOT
ANNUALIZED. D NET
INVESTMENT INCOME PER
SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES
OUTSTANDING DURING THE
PERIOD. E FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION
OF THE FUND'S EXPENSES
(SEE NOTE 8 OF NOTES TO
FINANCIAL
STATEMENTS). F FOR
FISCAL YEARS BEGINNING ON
OR AFTER SEPTEMBER 1,
1995, A FUND IS REQUIRED
TO DISCLOSE ITS AVERAGE
COMMISSION RATE PER SHARE
FOR SECURITY TRADES ON
WHICH COMMISSIONS ARE
CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD
AND FUND TO FUND
DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS
MARKETS WHERE TRADING
PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
</TABLE>
CHEMICALS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 MONTHS YEAR YEARS YEARS
SELECT CHEMICALS -26.10% -24.68% 60.08% 204.64%
SELECT CHEMICALS -28.39% -27.01% 55.20% 195.43%
(LOAD ADJ.)
S&P 500 -8.10% 8.10% 131.21% 382.74%
GS CYCLICAL INDUSTRIES -18.01% -10.45% N/A N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks - and the Goldman Sachs
Cyclical Industries Index - a market capitalization-weighted index of
277 stocks designed to measure the performance of companies in the
cyclical industries sector. These benchmarks include reinvestment of
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 YEAR YEARS YEARS
SELECT CHEMICALS -24.68% 9.87% 11.78%
SELECT CHEMICALS -27.01% 9.19% 11.44%
(LOAD ADJ.)
S&P 500 8.10% 18.25% 17.05%
GS CYCLICAL INDUSTRIES -10.45% N/A N/A
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.
(checkmark)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.
$10,000 OVER 10 YEARS
Chemicals S&P 500
00069 SP001
1988/08/31 9700.00 10000.00
1988/09/30 9820.73 10426.00
1988/10/31 9973.96 10715.84
1988/11/30 9639.64 10562.61
1988/12/31 10076.11 10747.45
1989/01/31 10749.40 11534.17
1989/02/28 10614.74 11246.96
1989/03/31 10730.83 11509.02
1989/04/30 11037.29 12106.34
1989/05/31 11292.68 12596.64
1989/06/30 11157.84 12524.84
1989/07/31 11868.86 13655.84
1989/08/31 12412.58 13923.49
1989/09/30 11971.10 13866.40
1989/10/31 11125.31 13544.70
1989/11/30 11362.32 13821.02
1989/12/31 11820.42 14152.72
1990/01/31 10978.20 13203.07
1990/02/28 11051.65 13373.39
1990/03/31 11379.73 13727.79
1990/04/30 11115.31 13384.59
1990/05/31 12084.84 14689.59
1990/06/30 12183.48 14589.70
1990/07/31 12223.79 14543.01
1990/08/31 10591.26 13228.33
1990/09/30 10067.24 12584.11
1990/10/31 10183.13 12529.99
1990/11/30 10863.35 13339.43
1990/12/31 11331.95 13711.60
1991/01/31 12092.78 14309.43
1991/02/28 13019.90 15332.55
1991/03/31 13332.29 15703.60
1991/04/30 13226.48 15741.29
1991/05/31 14143.52 16421.31
1991/06/30 13759.14 15669.22
1991/07/31 14422.29 16399.40
1991/08/31 14705.78 16788.07
1991/09/30 14594.41 16507.71
1991/10/31 14827.27 16728.91
1991/11/30 14088.19 16054.73
1991/12/31 15713.07 17891.40
1992/01/31 16014.84 17558.62
1992/02/29 16592.37 17786.88
1992/03/31 16472.71 17440.03
1992/04/30 17071.05 17952.77
1992/05/31 16972.19 18040.74
1992/06/30 16469.12 17771.93
1992/07/31 16988.79 18498.80
1992/08/31 16408.30 18119.58
1992/09/30 16424.89 18333.39
1992/10/31 16259.04 18397.56
1992/11/30 16751.06 19024.91
1992/12/31 17112.27 19258.92
1993/01/31 17094.67 19420.70
1993/02/28 16795.38 19684.82
1993/03/31 17194.43 20100.17
1993/04/30 17513.35 19613.74
1993/05/31 17778.52 20139.39
1993/06/30 17332.55 20197.79
1993/07/31 17597.73 20117.00
1993/08/31 18459.53 20879.44
1993/09/30 17874.95 20718.67
1993/10/31 18549.93 21147.54
1993/11/30 18688.54 20946.64
1993/12/31 19295.30 21200.10
1994/01/31 20797.21 21920.90
1994/02/28 20764.42 21326.84
1994/03/31 20141.35 20396.99
1994/04/30 21115.37 20658.07
1994/05/31 21623.78 20996.87
1994/06/30 21353.07 20482.44
1994/07/31 22317.06 21154.27
1994/08/31 23611.19 22021.59
1994/09/30 23439.52 21482.06
1994/10/31 23399.90 21965.41
1994/11/30 21564.36 21165.43
1994/12/31 22146.25 21479.31
1995/01/31 21567.52 22036.27
1995/02/28 22819.18 22895.02
1995/03/31 23519.03 23570.66
1995/04/30 24023.20 24264.81
1995/05/31 24262.41 25234.68
1995/06/30 24672.48 25820.88
1995/07/31 25841.18 26677.10
1995/08/31 25950.53 26744.06
1995/09/30 26360.60 27872.66
1995/10/31 25048.38 27773.15
1995/11/30 26141.89 28992.39
1995/12/31 26896.23 29550.79
1996/01/31 28132.50 30556.70
1996/02/29 29089.14 30839.96
1996/03/31 30494.66 31136.95
1996/04/30 30812.43 31595.90
1996/05/31 30745.78 32410.76
1996/06/30 30353.32 32534.25
1996/07/31 29124.08 31096.88
1996/08/31 30412.56 31752.72
1996/09/30 31760.28 33539.76
1996/10/31 31975.02 34464.79
1996/11/30 33152.43 37069.98
1996/12/31 32684.08 36335.62
1997/01/31 33195.63 38605.87
1997/02/28 33471.08 38908.54
1997/03/31 32392.89 37309.79
1997/04/30 33590.67 39537.19
1997/05/31 35245.00 41944.21
1997/06/30 36213.96 43823.31
1997/07/31 39112.97 47310.33
1997/08/31 39231.13 44660.01
1997/09/30 39475.34 47106.04
1997/10/31 37505.91 45532.69
1997/11/30 37718.61 47640.40
1997/12/31 38069.93 48458.39
1998/01/31 37521.10 48994.34
1998/02/28 39986.50 52527.81
1998/03/31 41458.77 55217.76
1998/04/30 41585.12 55773.25
1998/05/31 39957.30 54814.51
1998/06/30 36737.23 57041.07
1998/07/31 33615.01 56433.58
1998/08/31 29543.00 48274.42
IMATRL PRASUN SHR__CHT 19980831 19980923 115156 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Chemicals Portfolio on August 31, 1988,
and the current 3.00% sales charge was paid. As the chart shows, by
August 31, 1998, the value of the investment would have grown to
$29,543 - a 195.43% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $48,274 - a 382.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
DU PONT (E.I.) DE NEMOURS & CO. 13.7
SEALED AIR CORP. 9.9
ICI (IMPERIAL CHEMICAL INDUSTRIES) PLC ADR CLASS L 6.6
WITCO CORP. 5.9
CYTEC INDUSTRIES, INC. 5.8
LYONDELL PETROCHEMICAL CO. 4.8
GREAT LAKES CHEMICAL CORP. 4.4
DOW CHEMICAL CO. 4.2
SPARTECH CORP. 4.1
CABOT CORP. 3.8
TOP INDUSTRIES AS OF AUGUST 31, 1998
CHEMICALS 48.4%
UNSUPPORTED PLASTICS FILM &
SHEET 13.0%
CHEMICALS, GENERAL 4.4%
PLASTICS & SYNTHETIC RESINS 4.1%
INORGANIC CHEMICALS 3.8%
ALL OTHERS 26.3%
ROW: 1, COL: 1, VALUE: 26.3
ROW: 1, COL: 2, VALUE: 3.8
ROW: 1, COL: 3, VALUE: 4.1
ROW: 1, COL: 4, VALUE: 4.4
ROW: 1, COL: 5, VALUE: 13.0
ROW: 1, COL: 6, VALUE: 48.4
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
CHEMICALS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Audra J. Barranco)
Audra J. Barranco,
Portfolio Manager
of Fidelity Select
Chemicals Portfolio
Q. HOW DID THE FUND PERFORM, AUDRA?
A. For the six months that ended August 31, 1998, the fund had a total
return of -26.10%. For the 12-month period, it returned -24.68%. For
the same six- and 12-month periods, the Standard & Poor's 500 Index
returned -8.10% and 8.10%, respectively. Beginning this period, the
fund also compares itself to the Goldman Sachs Cyclical Industries
Index - an index of 277 stocks designed to measure the performance of
companies in the cyclical industries sector - which returned -18.01%
and -10.45% over the same six- and 12-month periods, respectively.
Q. WHAT WERE THE KEY FACTORS BEHIND THE FUND'S PERFORMANCE?
A. The period started out in March with the fund continuing to perform
quite positively, but performance started to level off in April and
early May. Then, beginning in late May and early June, more than half
of the chemical companies started issuing pre-release warnings about
their earnings, saying that their profitability would be less than the
consensus estimates of analysts. It was then that the stock prices of
the chemical group plummeted, including companies that did not have
disappointing earnings. This correction late in the period affected
the entire group - specialty companies, diversified companies and
commodity chemical companies.
Q. WAS THE FINANCIAL CRISIS IN ASIA A SIGNIFICANT INFLUENCE?
A. The turmoil in Asia was a key factor for two reasons. Some
companies were directly affected because they sold their products in
Asia. Other companies were more indirectly affected because they
competed with Asian companies, which started selling their products at
substantially lower prices. This was partly because of the
devaluations of many Asian currencies and partly because of the
willingness of Asian companies to sell their products at any price.
With the profitability of many U.S. chemical companies severely hurt,
their stock prices fell sharply - much more sharply than the overall
market. Before the correction, chemical industry stocks were selling,
on a price-to-earnings basis, at a 10% to 25% discount to the overall
market. By August 31, they were selling at a 50% to 60% discount.
Q. WHAT TYPE OF STRATEGY DID YOU FOLLOW IN LIGHT OF THIS ENVIRONMENT?
A. My strategy has always been a stock-picking one, choosing companies
on a case-by-case basis, based upon their growth prospects, products
and managements. I don't focus on any particular sectors, although I
have tended to de-emphasize commodity companies. They have had very
little ability to control prices because of an excess of manufacturing
capacity. My strategy has remained the same but everything has slowed.
Before the correction, a company might have sales growth of about 15%
and earnings growth of 15% to 20%. Now, the same company might have
sales growth of 3% and earnings growth of 10%. My favorite companies
haven't really changed much, but the future is not as promising as it
was formerly.
Q. DID ANY COMPANIES DO WELL IN SPITE OF THIS OVERALL TREND?
A. Monsanto did extremely well, based on strong performance in both
its pharmaceutical division and its agricultural division, and it
outperformed the overall market. The stock was not in the portfolio at
the end of the period as I took profits twice, selling it, buying it
back, and then again selling the holding. Each time, the fund made
about a 20% profit. Another investment that had positive performance
during the six months was Uniroyal Technology.
Q. WHAT WERE THE DISAPPOINTMENTS?
A. As I indicated, the entire chemical group tended to get caught in a
general downdraft. As a result, the companies I liked that were major
holdings in the fund tended to hurt performance the most by virtue of
their relative weightings in the portfolio. These included Sealed Air
Corp., Cytec Industries, Witco Corp. and Imperial Chemical Industries.
Q. WHAT IS YOUR OUTLOOK?
A. Some chemical company stocks have become very cheap relative to the
overall market, and some still have decent growth prospects. At the
end of the period, the chemical group was trading at an historically
low price-to-earnings multiple compared with the overall market. I
don't know when, but I believe the gap between stock prices in the
chemical industry and in the broader market will narrow. Some chemical
companies now have faster earnings growth than the overall market.
However, the stock prices of virtually the entire industry came down
as a group, and I suspect they will recover as a group.
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.
(checkmark)FUND FACTS
START DATE: July 29, 1985
FUND NUMBER: 069
TRADING SYMBOL: FSCHX
SIZE: as of August 31, 1998, more than
$36 million
MANAGER: Audra J. Barranco, since 1997;
equity analyst, specialty and diversified chemicals
since 1996; joined Fidelity in 1996
CHEMICALS PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 87.1%
SHARES VALUE (NOTE 1)
ADVERTISING - 0.0%
GEOCITIES (a) 100 $ 1,806
CHEMICALS & PLASTICS - 78.8%
ADHESIVES & SEALANTS - 2.2%
Ferro Corp. 40,500 817,594
AGRICULTURAL CHEMICALS - 1.0%
Potash Corp. of Saskatchewan 7,400 377,431
CHEMICALS - 48.4%
Cabot Corp. 63,700 1,385,475
Crompton & Knowles Corp. 40,000 585,000
Cytec Industries, Inc. (a) 93,713 2,143,685
Dow Chemical Co. 20,000 1,560,000
du Pont (E.I.) de Nemours & Co. 87,200 5,030,350
ICI (Imperial Chemical Industries)
PLC ADR Class L 57,000 2,429,625
Lyondell Petrochemical Co. 81,600 1,759,500
NL Industries, Inc. 18,400 365,700
Olin Corp. 13,000 365,625
Witco Corp. 103,600 2,175,600
17,800,560
CHEMICALS, GENERAL - 4.4%
Great Lakes Chemical Corp. 41,300 1,615,863
INORGANIC CHEMICALS - 3.8%
Minerals Technologies, Inc. 7,200 261,450
Valspar Corp. 34,100 1,133,825
1,395,275
MISCELLANEOUS PLASTICS PRODUCTS - 3.1%
Uniroyal Technology Corp. (a) 115,000 1,121,250
ORGANIC CHEMICALS - 1.9%
International Specialty Products, Inc. (a) 45,400 695,188
PLASTICS & SYNTHETIC RESINS - 4.1%
Spartech Corp. 91,300 1,506,450
UNSUPPORTED PLASTICS FILM & SHEET - 9.9%
Sealed Air Corp. (a) 100,820 3,629,520
TOTAL CHEMICALS & PLASTICS 28,959,131
CONSUMER DURABLES - 0.8%
MANUFACTURING INDUSTRIES, NEC - 0.8%
Minnesota Mining & Manufacturing Co. 4,400 301,400
DRUGS & PHARMACEUTICALS - 1.6%
BIOTECHNOLOGY - 1.6%
Sigma Aldrich Corp. 21,200 588,300
ELECTRONIC INSTRUMENTS - 0.0%
SEMI-CONDUCTOR CAPITAL EQUIPMENT - 0.0%
Lam Research Corp. (a) 673 7,361
PACKAGING & CONTAINERS - 3.4%
GLASS CONTAINERS - 1.2%
Owens-Illinois, Inc. (a) 14,300 445,981
METAL CANS & CONTAINERS - 2.2%
Silgan Holdings, Inc. (a) 35,000 813,750
TOTAL PACKAGING & CONTAINERS 1,259,731
PRECIOUS METALS - 0.7%
GOLD ORES - 0.7%
Stillwater Mining Co. (a)(c) 15,300 268,748
PRINTING - 0.9%
PLATEMAKING, RELATED SERVICES - 0.9%
Schawk, Inc. Class A 21,000 311,063
SHARES VALUE (NOTE 1)
SERVICES - 0.9%
BUILDING MAINTENANCE - 0.9%
Ecolab, Inc. 12,200 $ 339,311
TOTAL COMMON STOCKS
(Cost $37,933,441) 32,036,851
CONVERTIBLE PREFERRED STOCKS - 3.1%
CHEMICALS & PLASTICS - 3.1%
UNSUPPORTED PLASTICS FILM & SHEET - 3.1%
Sealed Air Corp., Series A, $2.00
(Cost $1,093,615) 27,312 1,123,206
CASH EQUIVALENTS - 9.8%
Taxable Central Cash Fund (b)
(Cost $3,604,346) 3,604,346 3,604,346
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $42,631,402) $ 36,764,403
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.58%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(c) Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers.
At the period end, the value of these securities amounted to $268,748
or 0.7% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $21,757,169 and $38,568,056, 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 $6,907 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the security lending program. At period end,
there were no loans outstanding (see Note 6 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $42,631,402. Net unrealized depreciation
aggregated $5,866,999, of which $2,214,011 related to appreciated
investment securities and $8,081,010 related to depreciated investment
securities.
CHEMICALS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31,
1998
(UNAUDITED)
ASSETS
INVESTMENT IN $ 36,764,403
SECURITIES, AT
VALUE
(COST
$42,631,402
) -
SEE
ACCOMPANYIN
G SCHEDULE
RECEIVABLE FOR 14,672
FUND SHARES
SOLD
DIVIDENDS 118,534
RECEIVABLE
INTEREST 16,316
RECEIVABLE
REDEMPTION FEES 209
RECEIVABLE
OTHER 2,035
RECEIVABLES
TOTAL ASSETS 36,916,169
LIABILITIES
PAYABLE FOR $ 210,622
FUND SHARES
REDEEMED
ACCRUED 20,184
MANAGEMENT
FEE
OTHER PAYABLES 51,027
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 281,833
NET ASSETS $ 36,634,336
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 36,720,014
UNDISTRIBUTED 103,046
NET INVESTMENT
INCOME
ACCUMULATED 5,678,238
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED (5,866,962)
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
AND ASSETS
AND LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, FOR $ 36,634,336
1,102,698
SHARES
OUTSTANDING
NET ASSET $33.22
VALUE AND
REDEMPTION
PRICE PER
SHARE
($36,634,33
6 (DIVIDED BY)
1,102,698
SHARES)
MAXIMUM $34.25
OFFERING PRICE
PER SHARE
(100/97.00
OF $33.22)
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED AUGUST
31, 1998
(UNAUDITED)
INVESTMENT $ 450,967
INCOME
DIVIDENDS
INTEREST 80,391
(INCLUDING
INCOME ON
SECURITIES
LOANED OF
$8,336)
TOTAL INCOME 531,358
EXPENSES
MANAGEMENT $ 167,801
FEE
TRANSFER AGENT 195,823
FEES
ACCOUNTING AND 32,610
SECURITY
LENDING FEES
NON-INTERESTED 154
TRUSTEES'
COMPENSATION
CUSTODIAN FEES 4,424
AND EXPENSES
REGISTRATION FEES 14,734
AUDIT 10,716
LEGAL 198
REPORTS TO 11,043
SHAREHOLDERS
TOTAL EXPENSES 437,503
BEFORE
REDUCTIONS
EXPENSE (9,191) 428,312
REDUCTIONS
NET INVESTMENT 103,046
INCOME
REALIZED AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS) ON:
INVESTMENT 5,682,883
SECURITIES
FOREIGN 3,462 5,686,345
CURRENCY
TRANSACTIONS
CHANGE IN NET
UNREALIZED
APPRECIATION
(DEPRECIATION)
ON:
INVESTMENT (19,260,608)
SECURITIES
ASSETS AND 210 (19,260,398)
LIABILITIES
IN FOREIGN
CURRENCIES
NET GAIN (LOSS) (13,574,053)
NET INCREASE $ (13,471,007)
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 18,089
INFORMATION
SALES CHARGES
PAID TO FDC
SALES CHARGES $ 18,071
- - RETAINED BY
FDC
DEFERRED SALES $ 4,028
CHARGES
WITHHELD
BY FDC
EXCHANGE FEES $ 8,715
WITHHELD BY
FSC
EXPENSE $ 8,573
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEMENTS
CUSTODIAN 618
CREDITS
$ 9,191
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED YEAR ENDED
(DECREASE) IN AUGUST 31, 1998 FEBRUARY 28,
NET ASSETS (UNAUDITED) 1998
OPERATIONS $ 103,046 $ (39,750)
NET
INVESTMENT
INCOME (LOSS)
NET REALIZED 5,686,345 11,437,021
GAIN (LOSS)
CHANGE IN NET (19,260,398) 2,762,987
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (13,471,007) 14,160,258
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
DISTRIBUTIONS TO (1,419,765) (6,539,426)
SHAREHOLDERS
FROM NET
REALIZED GAIN
SHARE 3,192,013 31,893,479
TRANSACTIONS
NET PROCEEDS
FROM SALES OF
SHARES
REINVESTMENT 1,387,504 6,395,130
OF
DISTRIBUTIONS
COST OF SHARES (22,422,925) (88,066,094)
REDEEMED
NET INCREASE (17,843,408) (49,777,485)
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION 19,095 96,792
FEES
TOTAL INCREASE (32,715,085) (42,059,861)
(DECREASE) IN
NET ASSETS
NET ASSETS
BEGINNING OF 69,349,421 111,409,282
PERIOD
END OF PERIOD $ 36,634,336 $ 69,349,421
(INCLUDING
UNDISTRIBUTE
D NET
INVESTMENT
INCOME OF
$103,046
AND $0,
RESPECTIVELY)
OTHER
INFORMATION
SHARES
SOLD 72,901 706,740
ISSUED IN 29,235 150,551
REINVESTMENT
OF
DISTRIBUTIONS
REDEEMED (510,341) (1,965,911)
NET INCREASE (408,205) (1,108,620)
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED YEAR ENDED YEARS ENDED
ENDED FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
AUGUST 31,
1998
SELECTED (UNAUDITED) 1998 1997 1996 1995 1994
PER-SHARE
DATA
NET ASSET VALUE, $ 45.90 $ 42.53 $ 39.53 $ 33.91 $ 31.66 $ 28.62
BEGINNING OF
PERIOD
INCOME FROM
INVESTMENT
OPERATIONS
NET .08 (.02) .28 .01 .36 .29
INVESTMENT
INCOME (LOSS) D
NET REALIZED (11.77) 7.88 5.49 8.89 2.65 5.97
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM (11.69) 7.86 5.77 8.90 3.01 6.26
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIONS
FROM NET - - (.12) (.08) (.22) (.23)
INVESTMENT
INCOME
FROM NET (1.00) (4.54) E (2.74) (3.22) (.60) (3.05)
REALIZED GAIN
TOTAL (1.00) (4.54) (2.86) (3.30) (.82) (3.28)
DISTRIBUTIONS
REDEMPTION FEES .01 .05 .09 .02 .06 .06
ADDED TO PAID
IN CAPITAL
NET ASSET VALUE, $ 33.22 $ 45.90 $ 42.53 $ 39.53 $ 33.91 $ 31.66
END OF PERIOD
TOTAL RETURN B, C (26.10)% 19.47% 15.06% 27.48% 9.90% 23.63%
RATIOS AND
SUPPLEMENTAL
DATA
NET ASSETS, END $ 36,634 $ 69,349 $ 111,409 $ 89,230 $ 97,511 $ 62,217
OF PERIOD
(000 OMITTED)
RATIO OF 1.51% A 1.68% 1.83% 1.99% 1.52% 1.93%
EXPENSES TO
AVERAGE NET
ASSETS
RATIO OF 1.47% A, F 1.67% F 1.81% F 1.97% F 1.51% F 1.93%
EXPENSES TO
AVERAGE NET
ASSETS AFTER
EXPENSE
REDUCTIONS
RATIO OF NET .35% A (.05)% .67% .04% 1.07% .97%
INVESTMENT
INCOME (LOSS)
TO AVERAGE NET
ASSETS
PORTFOLIO 81% A 31% 207% 87% 106% 81%
TURNOVER RATE
AVERAGE $ .0471 $ .0399 $ .0458
COMMISSION
RATE G
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 THE AMOUNTS
SHOWN REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO
BOOK TO TAX DIFFERENCES.
F FMR OR THE FUND HAS
ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE
FUND'S EXPENSES (SEE NOTE
8 OF NOTES TO FINANCIAL
STATEMENTS). G FOR
FISCAL YEARS BEGINNING ON
OR AFTER SEPTEMBER 1,
1995, A FUND IS REQUIRED
TO DISCLOSE ITS AVERAGE
COMMISSION RATE PER SHARE
FOR SECURITY TRADES ON
WHICH COMMISSIONS ARE
CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD
AND FUND TO FUND
DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS
MARKETS WHERE TRADING
PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
</TABLE>
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 past one year, past five year
and past 10 year total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 MONTHS YEAR YEARS YEARS
SELECT CONSTRUCTION -14.83% -2.07% 74.43% 288.16%
AND HOUSING
SELECT CONSTRUCTION -17.46% -5.08% 69.12% 276.44%
AND HOUSING (LOAD ADJ.)
S&P 500 -8.10% 8.10% 131.21% 382.74%
GS CYCLICAL INDUSTRIES -18.01% -10.45% N/A N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks - and the Goldman Sachs
Cyclical Industries Index - a market capitalization-weighted index of
277 stocks designed to measure the performance of companies in the
cyclical industries sector. These benchmarks include reinvestment of
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 YEAR YEARS YEARS
SELECT CONSTRUCTION -2.07% 11.77% 14.53%
AND HOUSING
SELECT CONSTRUCTION -5.08% 11.08% 14.17%
AND HOUSING (LOAD ADJ.)
S&P 500 8.10% 18.25% 17.05%
GS CYCLICAL INDUSTRIES -10.45% N/A N/A
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.
(checkmark)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.
$10,000 OVER 10 YEARS
Construction & Housing S&P 500
00511 SP001
1988/08/31 9700.00 10000.00
1988/09/30 9996.58 10426.00
1988/10/31 10066.37 10715.84
1988/11/30 9944.24 10562.61
1988/12/31 10457.79 10747.45
1989/01/31 11095.13 11534.17
1989/02/28 10960.48 11246.96
1989/03/31 11238.76 11509.02
1989/04/30 11678.61 12106.34
1989/05/31 12091.54 12596.64
1989/06/30 12083.90 12524.84
1989/07/31 12574.18 13655.84
1989/08/31 12785.67 13923.49
1989/09/30 13016.39 13866.40
1989/10/31 12285.78 13544.70
1989/11/30 12468.43 13821.02
1989/12/31 12193.48 14152.72
1990/01/31 11424.34 13203.07
1990/02/28 11660.21 13373.39
1990/03/31 12316.54 13727.79
1990/04/30 11957.61 13384.59
1990/05/31 13065.17 14689.59
1990/06/30 12829.30 14589.70
1990/07/31 12160.15 14543.01
1990/08/31 10614.17 13228.33
1990/09/30 9518.14 12584.11
1990/10/31 9183.57 12529.99
1990/11/30 10071.93 13339.43
1990/12/31 11017.97 13711.60
1991/01/31 11987.09 14309.43
1991/02/28 13036.97 15332.55
1991/03/31 13360.01 15703.60
1991/04/30 13567.68 15741.29
1991/05/31 14917.53 16421.31
1991/06/30 14156.08 15669.22
1991/07/31 14525.26 16399.40
1991/08/31 15125.20 16788.07
1991/09/30 14790.62 16507.71
1991/10/31 14536.80 16728.91
1991/11/30 13809.96 16054.73
1991/12/31 15570.03 17891.40
1992/01/31 16727.52 17558.62
1992/02/29 17001.33 17786.88
1992/03/31 16988.88 17440.03
1992/04/30 17225.36 17952.77
1992/05/31 17772.99 18040.74
1992/06/30 16503.03 17771.93
1992/07/31 16801.96 18498.80
1992/08/31 16229.02 18119.58
1992/09/30 16440.76 18333.39
1992/10/31 17013.69 18397.56
1992/11/30 17997.65 19024.91
1992/12/31 18483.40 19258.92
1993/01/31 19255.62 19420.70
1993/02/28 19604.36 19684.82
1993/03/31 20065.20 20100.17
1993/04/30 19591.73 19613.74
1993/05/31 19803.60 20139.39
1993/06/30 20040.40 20197.79
1993/07/31 20725.86 20117.00
1993/08/31 21585.80 20879.44
1993/09/30 22283.73 20718.67
1993/10/31 23093.82 21147.54
1993/11/30 22732.39 20946.64
1993/12/31 24695.83 21200.10
1994/01/31 25502.63 21920.90
1994/02/28 24985.77 21326.84
1994/03/31 23523.44 20396.99
1994/04/30 23470.22 20658.07
1994/05/31 22228.27 20996.87
1994/06/30 21683.34 20482.44
1994/07/31 22304.31 21154.27
1994/08/31 23153.39 22021.59
1994/09/30 21860.76 21482.06
1994/10/31 21214.44 21965.41
1994/11/30 20352.68 21165.43
1994/12/31 20758.18 21479.31
1995/01/31 20849.28 22036.27
1995/02/28 21851.40 22895.02
1995/03/31 22241.84 23570.66
1995/04/30 22267.87 24264.81
1995/05/31 23361.09 25234.68
1995/06/30 23582.34 25820.88
1995/07/31 24675.56 26677.10
1995/08/31 24688.57 26744.06
1995/09/30 24545.41 27872.66
1995/10/31 24532.40 27773.15
1995/11/30 26042.08 28992.39
1995/12/31 26731.81 29550.79
1996/01/31 26677.39 30556.70
1996/02/29 26609.37 30839.96
1996/03/31 27520.84 31136.95
1996/04/30 27555.77 31595.90
1996/05/31 28462.49 32410.76
1996/06/30 28632.50 32534.25
1996/07/31 27428.27 31096.88
1996/08/31 28717.51 31752.72
1996/09/30 30275.93 33539.76
1996/10/31 29822.57 34464.79
1996/11/30 31182.65 37069.98
1996/12/31 30263.77 36335.62
1997/01/31 30565.12 38605.87
1997/02/28 31569.61 38908.54
1997/03/31 30665.57 37309.79
1997/04/30 31288.58 39537.19
1997/05/31 34282.93 41944.21
1997/06/30 34891.41 43823.31
1997/07/31 38558.29 47310.33
1997/08/31 38446.20 44660.01
1997/09/30 39663.15 47106.04
1997/10/31 38125.95 45532.69
1997/11/30 38974.61 47640.40
1997/12/31 39292.74 48458.39
1998/01/31 40707.14 48994.34
1998/02/28 44208.65 52527.81
1998/03/31 46485.49 55217.76
1998/04/30 46467.97 55773.25
1998/05/31 45655.47 54814.51
1998/06/30 46156.80 57041.07
1998/07/31 44497.23 56433.58
1998/08/31 37644.00 48274.42
IMATRL PRASUN SHR__CHT 19980831 19980918 161821 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Construction and Housing Portfolio on
August 31, 1988, and the current 3.00% sales charge was paid. As the
chart shows, by August 31, 1998, the value of the investment would
have grown to $37,644 - a 276.44% increase on the initial investment -
and includes the effect of a $7.50 trading fee. For comparison, look
at how the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $48,274 - a 382.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
OWENS CORNING 10.0
HOME DEPOT, INC. 7.4
LOWE'S COMPANIES, INC. 7.3
BLACK & DECKER CORP. 6.9
MASCO CORP. 6.2
LEGGETT & PLATT, INC. 3.3
FANNIE MAE 3.0
WHIRLPOOL CORP. 2.9
FREDDIE MAC 2.6
FLUOR CORP. 2.6
TOP INDUSTRIES AS OF AUGUST 31, 1998
APPLIANCES 12.5%
PAVING, ROOFING & SIDING 11.7%
BUILDING MATERIALS - RETAIL 7.4%
LUMBER & BUILDING MATERIALS -
RETAIL 7.3%
PLUMBING SUPPLIES 6.2%
ALL OTHERS 54.9%
ROW: 1, COL: 1, VALUE: 54.9
ROW: 1, COL: 2, VALUE: 6.2
ROW: 1, COL: 3, VALUE: 7.3
ROW: 1, COL: 4, VALUE: 7.4
ROW: 1, COL: 5, VALUE: 11.7
ROW: 1, COL: 6, VALUE: 12.5
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
CONSTRUCTION AND HOUSING PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Yolanda McGettigan)
Yolanda McGettigan,
Portfolio Manager of Fidelity Select Construction and Housing
Portfolio
Q. HOW DID THE FUND PERFORM, YOLANDA?
A. For the six- and 12-month periods that ended August 31, 1998, the
fund returned -14.83% and -2.07%, respectively. By comparison, the
Standard & Poor's 500 Index returned -8.10% and 8.10% for the same
periods. Beginning this period, the fund also compares itself to the
Goldman Sachs Cyclical Industries Index - an index of 277 stocks
designed to measure the performance of companies in the cyclical
industries sector - which returned -18.01% and -10.45% over the same
six- and 12-month periods, respectively.
Q. WHAT FACTORS INFLUENCED THE FUND'S PERFORMANCE?
A. The continuing Asian crisis - affecting one-third of the world's
gross domestic product - brought commodity prices to record lows. Many
companies in the construction and housing universe were directly
affected by commodity pricing, in particular the engineering and
construction companies. The dramatic declines in commodity prices have
led to capital spending cutbacks in such areas as mining and oil
refining. Additionally, the economic slowdown in the Pacific Rim
countries first affected many companies in the cyclicals sector, as
these companies tend to lead the country into and out of recession.
Q. HOW DID YOU MANAGE THE FUND IN THIS DIFFICULT ENVIRONMENT?
A. I reduced the fund's exposure to companies with considerable
international exposure, reallocating the fund's assets to focus more
on companies that derive the majority of their sales domestically.
Additionally, I concentrated on high-quality medium- and large-cap
companies, as these stocks tend to outperform in periods of
uncertainty.
Q. YOU'VE GOT SOME NEW TOP 10 HOLDINGS: OWENS CORNING, HOME DEPOT AND
LOWE'S, FOR INSTANCE. WHAT MADE THEM ATTRACTIVE?
A. Owens Corning is the largest insulation producer and one of the
largest roofing producers in the country. Because of industry-wide
price increases and a massive restructuring of the company, earnings
growth has been very strong. Home Depot has been exhibiting
above-average same store sales growth - which compares sales growth
for only those stores that have been in operation for at least 12
months - because of its large share of the repair and remodeling
market. It also has pursued ambitious expansion plans, opening stores
nationwide. Lowe's, another large retailer catering to the repair and
remodeling market, has opened new stores, simultaneously benefiting
from the trend toward "do-it-yourself" repair and remodeling.
Q. WHICH STOCKS PERFORMED WELL DURING THE PERIOD?
A. Home Depot performed well, reflecting its strong dual exposure to
the retailing and repair/remodeling markets. Greentree Financial,
which provides financing for manufactured-housing loans, was
attractively priced and, after I purchased the stock, the company was
acquired by Conseco, helping the fund's performance. Lone Star
Industries, a cement company, was the beneficiary of rising demand.
With recent federal legislation budgeting a 40% increase in
infrastructure spending, Lone Star was very well positioned.
Q. WHICH STOCKS WERE DISAPPOINTMENTS?
A. Owens Corning's performance was somewhat disappointing. Earnings at
the company have been expanding rapidly; however, concerns regarding a
possible recession has held back the stock price. Masco, another poor
performer, produces faucets and cabinets and is number one in its
market. After outperforming in 1997, Masco retreated somewhat in 1998
as it became associated in investors' minds with other more
economically sensitive companies in its sector. Black & Decker has
gone through a major restructuring after rising nearly 80% through the
first four months of 1998. The company gave back some of these gains
after investors took profits.
Q. WHAT'S YOUR OUTLOOK?
A. I'm cautious. The U.S. economy appears to be reacting to global
events, and the market has recently ignored positive signs for the
construction industry, including low interest rates and record-setting
housing starts. Given the amount of volatility in the marketplace and
the potential effects on the U.S. economy, I will probably take a more
defensive position and select the companies that are leaders in their
markets, have good relative growth, are gaining market share or
pricing power, or have some earnings component unrelated to the
direction the economy may take over the next six 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.
(checkmark)FUND FACTS
START DATE: September 29, 1986
FUND NUMBER: 511
TRADING SYMBOL: FSHOX
SIZE: as of August 31, 1998, more than
$61 million
MANAGER: Yolanda McGettigan, since December
1997; analyst, appliances, building materials,
home-building, engineering and construction
industries, since 1997; joined Fidelity in 1997
CONSTRUCTION AND HOUSING PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 89.2%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES - 1.5%
AUTO & TRUCK PARTS - 1.5%
Danaher Corp. 25,800 $ 935,250
BUILDING MATERIALS - 27.4%
ABRASIVES AND ASBESTOS - 1.1%
Johns-Manville Corp. 50,000 684,375
CEMENT - 4.4%
Lone Star Industries, Inc. 12,000 721,500
Southdown, Inc. 20,540 867,815
Vulcan Materials Co. 10,400 1,159,600
2,748,915
CONCRETE, GYPSUM, PLASTER - 3.0%
CalMat Co. 16,300 274,044
USG Corp. 36,400 1,565,200
1,839,244
FLOOR COVERINGS - 1.0%
Armstrong World Industries, Inc. 12,900 619,200
PAVING, ROOFING & SIDING - 11.7%
Elcor Corp. 46,500 1,081,125
Owens Corning 176,400 6,185,025
7,266,150
PLUMBING SUPPLIES - WHOLESALE - 6.2%
Masco Corp. 165,400 3,804,200
TOTAL BUILDING MATERIALS 16,962,084
CONSTRUCTION - 6.1%
GENERAL BUILDING - 0.6%
D.R. Horton, Inc. 25,000 400,000
MOBILE HOMES - 0.9%
Southern Energy Homes, Inc. (a) 62,100 543,375
OPERATIVE BUILDERS - 4.6%
Centex Corp. 40,000 1,415,000
Lennar Corp. 31,700 574,563
U.S. Home Corp. (a) 30,300 857,869
2,847,432
TOTAL CONSTRUCTION 3,790,807
CONSUMER ELECTRONICS - 12.5%
APPLIANCES - 12.5%
Black & Decker Corp. 102,400 4,262,400
Electrolux AB 51,500 794,895
Maytag Co. 19,700 849,563
Whirlpool Corp. 36,400 1,806,350
7,713,208
CREDIT & OTHER FINANCE - 1.2%
MORTGAGE BANKERS - 1.2%
Countrywide Credit Industries, Inc. 19,400 726,288
ENGINEERING - 2.6%
ARCHITECTS & ENGINEERS - 2.6%
Fluor Corp. 39,800 1,574,588
FEDERAL SPONSORED CREDIT - 5.5%
FEDERAL & FEDERALLY SPONSORED CREDIT AGENCIES - 5.5%
Freddie Mac 40,000 1,580,000
Fannie Mae 32,400 1,840,725
3,420,725
SHARES VALUE (NOTE 1)
HOME FURNISHINGS - 8.3%
FURNITURE - 4.5%
Furniture Brands International, Inc. (a) 31,100 $ 695,863
Leggett & Platt, Inc. 103,000 2,066,438
2,762,301
FURNITURE STORES - 0.7%
Heilig-Meyers Co. 35,000 398,125
METAL HOUSEHOLD FURNITURE - 0.2%
Winsloew Furniture, Inc. (a) 9,500 147,250
MISCELLANEOUS HOME FURNISHINGS - 0.0%
Restoration Hardware, Inc. 100 2,575
NON-WOOD OFFICE FURNITURE - 2.9%
Knoll, Inc. (a) 50,000 1,296,875
Miller (Herman), Inc. 25,400 520,700
1,817,575
TOTAL HOME FURNISHINGS 5,127,826
INDUSTRIAL MACHINERY & EQUIPMENT - 2.6%
ACCESSORIES & MEASURING CUTTING TOOLS - 1.7%
Stanley Works 26,900 1,059,188
CONSTRUCTION EQUIPMENT - 0.9%
Caterpillar, Inc. 13,400 565,313
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 1,624,501
LEISURE DURABLES & TOYS - 0.8%
MOTOR HOMES - 0.8%
Coachmen Industries, Inc. 27,900 521,381
METALS & MINING - 1.4%
NON-METALLIC MINERAL MINING - 1.4%
Martin Marietta Materials, Inc. 20,000 852,500
RETAIL & WHOLESALE, MISCELLANEOUS - 14.7%
BUILDING MATERIALS - RETAIL - 7.4%
Home Depot, Inc. 118,400 4,558,400
LUMBER & BUILDING MATERIALS - RETAIL - 7.3%
Lowe's Companies, Inc. 129,800 4,551,113
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 9,109,513
TEXTILES & APPAREL - 4.6%
CARPETS & RUGS - 4.6%
Interface, Inc. Class A 48,200 590,450
Mohawk Industries, Inc. (a) 29,550 784,916
Shaw Industries, Inc. 98,600 1,491,325
2,866,691
TOTAL COMMON STOCKS
(Cost $62,644,480) 55,225,362
CASH EQUIVALENTS - 10.8%
Taxable Central Cash Fund (b)
(Cost $6,694,091) 6,694,091 6,694,091
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $69,338,571) $ 61,919,453
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.58%. 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 $89,263,632 and $72,053,736, 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 $28,862 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the security lending program. At period end,
there were no loans outstanding (see Note 6 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $69,376,436. Net unrealized depreciation
aggregated $7,456,983, of which $1,934,413 related to appreciated
investment securities and $9,391,396 related to depreciated investment
securities.
The fund intends to elect to defer to its fiscal year ending February
28, 1999 approximately $480,000 of losses recognized during the period
November 1, 1997 to February 28, 1998.
CONSTRUCTION AND HOUSING PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31,
1998
(UNAUDITED)
ASSETS
INVESTMENT IN $ 61,919,453
SECURITIES, AT
VALUE
(COST
$69,338,571
) -
SEE
ACCOMPANYIN
G SCHEDULE
RECEIVABLE FOR 473,164
INVESTMENTS
SOLD
RECEIVABLE FOR 241,459
FUND SHARES
SOLD
DIVIDENDS 40,486
RECEIVABLE
INTEREST 10,804
RECEIVABLE
REDEMPTION FEES 1,591
RECEIVABLE
OTHER 1,253
RECEIVABLES
TOTAL ASSETS 62,688,210
LIABILITIES
PAYABLE FOR $ 1,565,437
FUND SHARES
REDEEMED
ACCRUED 36,226
MANAGEMENT
FEE
OTHER PAYABLES 56,717
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 1,658,380
NET ASSETS $ 61,029,830
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 69,235,498
ACCUMULATED (95,406)
NET INVESTMENT
LOSS
ACCUMULATED (691,144)
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED (7,419,118)
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
NET ASSETS, FOR $ 61,029,830
2,802,307
SHARES
OUTSTANDING
NET ASSET $21.78
VALUE AND
REDEMPTION
PRICE PER
SHARE
($61,029,83
0 (DIVIDED BY)
2,802,307
SHARES)
MAXIMUM $22.45
OFFERING PRICE
PER SHARE
(100/97.00
OF $21.78)
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED AUGUST
31, 1998
(UNAUDITED)
INVESTMENT $ 287,574
INCOME
DIVIDENDS
INTEREST 155,494
(INCLUDING
INCOME ON
SECURITIES
LOANED OF
$7,398)
TOTAL INCOME 443,068
EXPENSES
MANAGEMENT $ 227,036
FEE
TRANSFER AGENT 242,748
FEES
ACCOUNTING AND 39,421
SECURITY
LENDING FEES
NON-INTERESTED 124
TRUSTEES'
COMPENSATION
CUSTODIAN FEES 8,727
AND EXPENSES
REGISTRATION FEES 26,465
AUDIT 10,295
LEGAL 129
REPORTS TO 7,138
SHAREHOLDERS
TOTAL EXPENSES 562,083
BEFORE
REDUCTIONS
EXPENSE (23,609) 538,474
REDUCTIONS
NET INVESTMENT (95,406)
INCOME (LOSS)
REALIZED AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS) ON:
INVESTMENT (116,470)
SECURITIES
FOREIGN (2,361) (118,831)
CURRENCY
TRANSACTIONS
CHANGE IN NET
UNREALIZED
APPRECIATION
(DEPRECIATION)
ON:
INVESTMENT (13,057,393)
SECURITIES
ASSETS AND 1 (13,057,392)
LIABILITIES IN
FOREIGN
CURRENCIES
NET GAIN (LOSS) (13,176,223)
NET INCREASE $ (13,271,629)
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 244,729
INFORMATION
SALES CHARGES
PAID TO FDC
SALES CHARGES $ 244,729
- - RETAINED BY
FDC
DEFERRED SALES $ 248
CHARGES
WITHHELD
BY FDC
EXCHANGE FEES $ 21,345
WITHHELD BY
FSC
EXPENSE $ 22,238
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEMENTS
CUSTODIAL 1,371
CREDITS
$ 23,609
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED YEAR ENDED
(DECREASE) IN AUGUST 31, 1998 FEBRUARY 28,
NET ASSETS (UNAUDITED) 1998
OPERATIONS $ (95,406) $ (285,511)
NET
INVESTMENT
INCOME (LOSS)
NET REALIZED (118,831) 3,768,064
GAIN (LOSS)
CHANGE IN NET (13,057,392) 4,728,366
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (13,271,629) 8,210,919
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
DISTRIBUTIONS TO - (23,292)
SHAREHOLDERS
FROM NET
INVESTMENT
INCOME
FROM NET - (4,419,906)
REALIZED GAIN
IN EXCESS OF (144,845) -
NET REALIZED
GAIN
TOTAL (144,845) (4,443,198)
DISTRIBUTIONS
SHARE 80,086,142 96,959,375
TRANSACTIONS
NET PROCEEDS
FROM SALES OF
SHARES
REINVESTMENT 142,901 4,390,230
OF
DISTRIBUTIONS
COST OF SHARES (63,329,607) (78,323,951)
REDEEMED
NET INCREASE 16,899,436 23,025,654
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION 62,801 110,066
FEES
TOTAL 3,545,763 26,903,441
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
BEGINNING OF 57,484,067 30,580,626
PERIOD
END OF PERIOD $ 61,029,830 $ 57,484,067
(INCLUDING
ACCUMULATED
NET INVESTMENT
LOSS OF
$95,406 AND
$0,
RESPECTIVELY)
OTHER
INFORMATION
SHARES
SOLD 2,976,421 4,140,467
ISSUED IN 5,303 222,821
REINVESTMENT
OF
DISTRIBUTIONS
REDEEMED (2,422,118) (3,510,718)
NET INCREASE 559,606 852,570
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED YEAR ENDED YEARS ENDED
ENDED FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
AUGUST 31,
1998
SELECTED (UNAUDITED) 1998 1997 1996 1995 1994
PER-SHARE
DATA
NET ASSET VALUE, $ 25.63 $ 22.00 $ 19.56 $ 16.79 $ 19.82 $ 15.74
BEGINNING OF
PERIOD
INCOME FROM
INVESTMENT
OPERATIONS
NET (.03) (.25) .06 .07 (.02) .01
INVESTMENT
INCOME (LOSS) D
NET REALIZED (3.78) 7.67 3.38 3.55 (2.50) 4.26
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM (3.81) 7.42 3.44 3.62 (2.52) 4.27
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIONS
FROM NET - (.02) (.02) (.07) - -
INVESTMENT
INCOME
FROM NET - (3.87) (1.03) (.81) (.52) (.22)
REALIZED GAIN
IN EXCESS OF (.06) - - - - -
NET REALIZED
GAIN
TOTAL (.06) (3.89) (1.05) (.88) (.52) (.22)
DISTRIBUTIONS
REDEMPTION FEES .02 .10 .05 .03 .01 .03
ADDED TO PAID
IN CAPITAL
NET ASSET VALUE, $ 21.78 $ 25.63 $ 22.00 $ 19.56 $ 16.79 $ 19.82
END OF PERIOD
TOTAL RETURN B, C (14.83)% 40.04% 18.64% 21.77% (12.54)% 27.45%
RATIOS AND
SUPPLEMENTAL
DATA
NET ASSETS, END $ 61,030 $ 57,484 $ 30,581 $ 42,668 $ 16,863 $ 80,999
OF PERIOD
(000 OMITTED)
RATIO OF 1.43% A 2.50% E 1.41% 1.43% 1.76% 1.67%
EXPENSES TO
AVERAGE NET
ASSETS
RATIO OF 1.37% A, F 2.43% F 1.35% F 1.40% F 1.74% F 1.66% F
EXPENSES TO
AVERAGE NET
ASSETS AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.24)% A (1.10)% .27% .39% (.11)% .03%
INVESTMENT
INCOME (LOSS)
TO AVERAGE NET
ASSETS
PORTFOLIO 212% A 404% 270% 139% 45% 35%
TURNOVER RATE
AVERAGE $ .0419 $ .0342 $ .0410
COMMISSION
RATE G
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 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). F FMR OR
THE FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION
OF THE FUND'S EXPENSES
(SEE NOTE 8 OF NOTES TO
FINANCIAL
STATEMENTS). G FOR
FISCAL YEARS BEGINNING ON
OR AFTER SEPTEMBER 1,
1995, A FUND IS REQUIRED
TO DISCLOSE ITS AVERAGE
COMMISSION RATE PER SHARE
FOR SECURITY TRADES ON
WHICH COMMISSIONS ARE
CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD
AND FUND TO FUND
DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS
MARKETS WHERE TRADING
PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
</TABLE>
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 total returns would have been
lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 LIFE OF
AUGUST 31, 1998 MONTHS YEAR FUND
SELECT CYCLICAL INDUSTRIES -16.14% -11.07% 5.47%
SELECT CYCLICAL INDUSTRIES -18.73% -13.82% 2.23%
(LOAD ADJ.)
S&P 500 -8.10% 8.10% 23.35%
GS CYCLICAL INDUSTRIES -18.01% -10.45% 4.22%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year or since
the fund started on March 3, 1997. You can compare the fund's returns
to the performance of both the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks and the Goldman Sachs
Cyclical Industries Index - a market capitalization-weighted index of
277 stocks designed to measure the performance of companies in the
cyclical industries sector. These benchmarks include reinvestment of
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
AUGUST 31, 1998 YEAR FUND
SELECT CYCLICAL INDUSTRIES -11.07% 3.62%
SELECT CYCLICAL INDUSTRIES -13.82% 1.48%
(LOAD ADJ.)
S&P 500 8.10% 15.06%
GS CYCLICAL INDUSTRIES -10.45% 2.80%
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.
(checkmark)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.
$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
1998/02/28 12199.74 13422.05
1998/03/31 12846.62 14109.39
1998/04/30 12998.88 14251.33
1998/05/31 12795.29 14006.35
1998/06/30 12856.37 14575.29
1998/07/31 12133.64 14420.06
1998/08/31 10223.00 12335.21
IMATRL PRASUN SHR__CHT 19980831 19980921 161816 R00000000000021
$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 August 31, 1998, the value of the
investment would have grown to $10,223 - a 2.23% increase on the
initial investment - and includes the effect of a $7.50 trading fee.
For comparison, look at how the Standard & Poor's 500 Index did over
the same period. With dividends and capital gains, if any, reinvested,
the same $10,000 investment would have grown to $12,335 - a 23.35%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
GENERAL ELECTRIC CO. 8.9
DEKALB GENETICS CORP. CLASS B 8.5
TYCO INTERNATIONAL LTD. 6.7
FORD MOTOR CO. 5.5
AMERICAN STANDARD COMPANIES, INC. 3.2
WASTE MANAGEMENT, INC. 2.6
ALLIEDSIGNAL, INC. 2.5
COLTEC INDUSTRIES, INC. 2.4
XEROX CORP. 2.3
U.S. INDUSTRIES, INC. 2.3
TOP INDUSTRIES AS OF AUGUST 31, 1998
ELECTRICAL MACHINERY 12.8%
GENERAL INDUSTRIAL MACHINERY 9.7%
CROPS 8.5%
MOTOR VEHICLES & CAR BODIES 5.8%
PAPER 5.7%
ALL OTHERS 57.5%
ROW: 1, COL: 1, VALUE: 57.4
ROW: 1, COL: 2, VALUE: 5.7
ROW: 1, COL: 3, VALUE: 5.8
ROW: 1, COL: 4, VALUE: 8.5
ROW: 1, COL: 5, VALUE: 9.699999999999999
ROW: 1, COL: 6, VALUE: 12.9
% OF FUND'S INVESTMENTS
CYCLICAL INDUSTRIES PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(Photograph of Albert Ruback)
Albert Ruback,
Portfolio Manager
of Fidelity Select
Cyclical Industries Portfolio
Q. HOW DID THE FUND PERFORM, ALBERT?
A. During the six-month period ending August 31, 1998, the fund
returned -16.14%, underperforming the Standard & Poor's 500 Index,
which returned -8.10%. For the 12-month period, the fund posted a
total return of -11.07%. During the same 12-month period, the S&P 500
returned 8.10%. Beginning this period, the fund also compares itself
to the Goldman Sachs Cyclical Industries Index - an index of 277
stocks designed to measure the performance of companies in the
cyclical industries sector - which returned -18.01% and -10.45% over
the same six- and 12-month periods, respectively.
Q. WHAT FACTORS INFLUENCED THE FUND'S PERFORMANCE DURING THE PERIOD?
A. There were a couple of key factors that affected the fund's
performance. First, given its focus on cyclical industries, the fund
could not invest in the pharmaceutical, utility and technology stocks
that experienced strong rallies and investor support during the
period. Second, many of the cyclical industries in which the fund
invests, especially those with international exposure, such as
electrical components, industrial equipment, autos and basic
materials, turned in mixed results due to weakened product demand, an
inability to raise prices and declining commodity prices caused by the
ongoing Asian crisis.
Q. WHAT CHANGES DID YOU MAKE DURING THE PERIOD TO MINIMIZE RISKS AND
IMPROVE THE PERFORMANCE OF THE FUND?
A. I lowered the fund's investment in Lockheed Martin due to concerns
about the completion of its merger with Northrop Grumman, which has
since been canceled. I added to the fund's holdings of DEKALB Genetics
and it has done very well because it put itself up for sale, and I
felt there would be a competitive takeover bid that would cause the
stock price to rise. Waste Management was taken over by USA Waste
Management, which helped the stock's performance, and the company
seemed committed to improving operations. American Standard, the
fund's fifth-largest holding, is an example of a conglomerate with
little exposure to Asia. I increased the fund's holdings in this stock
because I believed the company was significantly undervalued, and its
air conditioning business unit stands to benefit from the warm summer
we've experienced. I don't see the Asian situation changing anytime
soon. As a result, I have focused on companies that cater more to the
domestic economy or that can benefit from declining commodity prices.
I avoided companies with a lot of exposure in Asia - those that
compete with Asia or that rely on Asia for demand growth. Diversified
companies, such as General Electric, for example, have little exposure
to Asia. Its focus on penetrating markets by adding services has been
very successful. Tyco International, another conglomerate, has done
well because of its aggressive acquisition program.
Q. WHAT STOCKS DETRACTED FROM FUND PERFORMANCE?
A. Paper stocks were a big disappointment for the fund. Fort James and
Stone Container are examples of companies I held after the
announcement of the Stone Container - Jefferson Smurfit Corp. merger.
However, expected price increases for paper have not occurred, and it
really hurt the sector's performance. While the fund did not have
significant exposure to railroad stocks, these companies did not
perform well for the fund. Even though the fundamental business
outlook for companies like Norfolk Southern and CSX are solid, their
stock prices were hurt because of acquisition costs and increased
spending to keep operations running smoothly pending their merger with
Conrail.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS, ALBERT?
A. I continue to be cautious about the U.S. economy. I believe we are
in a slow growth period, and I'm concerned that Asia will not hit
bottom for a while. This environment can cause continued pricing
pressures - the inability to increase prices - and reduced export
growth for U.S. corporations. Gross domestic product growth slowed
from 5.4% to 1.4% in the second quarter, and I think corporate
earnings will continue to come under some pressure in the last quarter
of this year and possibly into next year. Given these concerns, I will
focus on companies that have diversity of earnings sources and can
grow during difficult times.
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.
(checkmark)FUND FACTS
START DATE: March 3, 1997
FUND NUMBER: 515
TRADING SYMBOL: FCYCF
SIZE: as of August 31, 1998, more than
$3 million
MANAGER: Albert Ruback, since inception; manager,
Fidelity Select Energy Portfolio, 1994-1996;
Fidelity Select Industrial Equipment Portfolio,
1991-1994; Sector leader, cyclical industries,
since 1996; joined Fidelity in 1991
CYCLICAL INDUSTRIES PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 99.7%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 6.9%
AIRCRAFT - 2.0%
Gulfstream Aerospace Corp. (a) 500 $ 17,561
Lockheed Martin Corp. 500 43,719
61,280
AIRCRAFT & PARTS - 1.4%
Sundstrand Corp. 100 4,556
Textron, Inc. 600 37,650
42,206
AIRCRAFT ENGINES & PARTS - 2.5%
AlliedSignal, Inc. 2,200 75,488
MISSILES & SPACE VEHICLES - 1.0%
Alliant Techsystems, Inc. (a) 300 19,688
GenCorp, Inc. 500 10,500
30,188
TOTAL AEROSPACE & DEFENSE 209,162
AGRICULTURE - 8.5%
CROPS - 8.5%
DEKALB Genetics Corp. Class B 3,000 259,875
AIR TRANSPORTATION - 4.3%
AIR TRANSPORT, MAJOR NATIONAL - 4.3%
Alaska Air Group, Inc. (a) 1,000 38,938
America West Holdings Corp. Class B (a) 600 11,663
Continental Airlines, Inc. Class B (a) 700 28,875
Southwest Airlines Co. 1,000 17,813
US Airways Group, Inc. (a) 600 34,950
132,239
AUTOS, TIRES, & ACCESSORIES - 7.8%
AUTO & TRUCK PARTS - 1.4%
Breed Technologies, Inc. 500 3,656
Federal-Mogul Corp. 200 10,675
SPX Corp. (a) 250 12,438
TRW, Inc. 350 15,006
41,775
MOTOR VEHICLES & CAR BODIES - 5.8%
Ford Motor Co. 3,800 167,200
Lear Corp. (a) 200 8,113
175,313
TIRES & INNER TUBES - 0.6%
Goodyear Tire & Rubber Co. 400 19,600
TOTAL AUTOS, TIRES, & ACCESSORIES 236,688
BROADCASTING - 1.0%
COMMUNICATIONS SERVICES, NEC - 1.0%
PanAmSat Corp. (a) 700 29,663
BUILDING MATERIALS - 8.5%
AIRCONDITIONING EQUIPMENT - 3.2%
American Standard Companies, Inc. (a) 2,500 97,813
FLOOR COVERINGS - 0.5%
Armstrong World Industries, Inc. 300 14,400
GASKETS, HOSES, BELTS - 2.4%
Coltec Industries, Inc. (a) 5,000 71,875
LUMBER, PLYWOOD, MILLWORK - WHOLESALE - 0.5%
Crane Co. 400 16,100
PAVING, ROOFING & SIDING - 1.2%
Carlisle Companies, Inc. 300 11,363
Owens Corning 700 24,544
35,907
SHARES VALUE (NOTE 1)
PLUMBING SUPPLIES - WHOLESALE - 0.7%
Masco Corp. 1,000 $ 23,000
TOTAL BUILDING MATERIALS 259,095
CHEMICALS & PLASTICS - 4.6%
ADHESIVES & SEALANTS - 0.6%
Ferro Corp. 550 11,103
Nalco Chemical Co. 300 8,681
19,784
AGRICULTURAL CHEMICALS - 0.6%
IMC Global, Inc. 500 9,188
Potash Corp. of Saskatchewan 200 10,201
19,389
CHEMICALS - 1.3%
Cytec Industries, Inc. (a) 700 16,013
Lyondell Petrochemical Co. 300 6,469
Witco Corp. 800 16,800
39,282
PLASTICS & SYNTHETIC RESINS - 0.3%
Spartech Corp. 500 8,250
PLASTICS, NEC - 1.1%
Hanna (M.A.) Co. 800 9,950
Ivex Packaging Corp. 1,500 24,656
34,606
PLASTICS, RESINS & ELASTOMERS - 0.2%
Solutia, Inc. 240 5,385
UNSUPPORTED PLASTICS FILM & SHEET - 0.5%
Sealed Air Corp. (a) 414 14,904
TOTAL CHEMICALS & PLASTICS 141,600
COMPUTERS & OFFICE EQUIPMENT - 2.9%
OFFICE AUTOMATION - 2.9%
Pitney Bowes, Inc. 400 19,850
Xerox Corp. 800 70,250
90,100
CONSTRUCTION - 1.4%
MOBILE HOMES - 0.2%
Oakwood Homes Corp. 500 7,125
OPERATIVE BUILDERS - 1.2%
Centex Corp. 300 10,613
Kaufman & Broad Home Corp. 300 6,413
Lennar Corp. 300 5,438
U.S. Home Corp. (a) 500 14,156
36,620
TOTAL CONSTRUCTION 43,745
CONSUMER ELECTRONICS - 1.7%
APPLIANCES - 1.7%
Black & Decker Corp. 400 16,650
Whirlpool Corp. 700 34,738
51,388
DEFENSE ELECTRONICS - 1.1%
Litton Industries, Inc. (a) 300 14,400
Raytheon Co. Class B 400 18,250
32,650
ELECTRICAL EQUIPMENT - 12.8%
ELECTRICAL MACHINERY - 12.8%
Emerson Electric Co. 1,000 57,000
General Electric Co. 3,400 272,000
Honeywell, Inc. 1,000 62,500
391,500
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ELECTRONIC INSTRUMENTS - 0.5%
MEASURING INSTRUMENTS - 0.5%
Thermo Electron Corp. (a) 900 $ 14,625
ENGINEERING - 2.0%
ARCHITECTS & ENGINEERS - 2.0%
EG & G, Inc. 900 21,094
Fluor Corp. 1,000 39,563
60,657
HOLDING COMPANIES - 2.3%
HOLDING COMPANY OFFICES, NEC - 2.3%
U.S. Industries, Inc. 5,000 69,375
HOME FURNISHINGS - 0.4%
FURNITURE - 0.4%
Leggett & Platt, Inc. 600 12,038
INDUSTRIAL MACHINERY & EQUIPMENT - 10.7%
CONSTRUCTION EQUIPMENT - 1.0%
Caterpillar, Inc. 700 29,531
GENERAL INDUSTRIAL MACHINERY - 9.7%
Cooper Industries, Inc. 700 29,794
Illinois Tool Works, Inc. 700 33,906
Ingersoll-Rand Co. 650 25,838
Tyco International Ltd. 3,700 205,350
294,888
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 324,419
IRON & STEEL - 0.3%
IRON & STEEL BLAST FURNACES, MILLS - 0.1%
Inland Steel Industries, Inc. 185 3,503
IRON & STEEL FOUNDRIES - 0.2%
Dofasco, Inc. 500 4,941
TOTAL IRON & STEEL 8,444
METALS & MINING - 1.9%
METAL MINING - 0.3%
Phelps Dodge Corp. 200 8,950
NON-METALLIC MINERAL MINING - 0.3%
Martin Marietta Materials, Inc. 200 8,525
PRIMARY PRODUCTION OF ALUMINUM - 0.5%
Reynolds Metals Co. 300 14,381
PRIME NONFERROUS SMELTING - 0.8%
Aluminum Co. of America 424 25,387
TOTAL METALS & MINING 57,243
PACKAGING & CONTAINERS - 1.3%
GLASS CONTAINERS - 0.7%
Owens-Illinois, Inc. (a) 700 21,831
METAL CANS & CONTAINERS - 0.6%
Silgan Holdings, Inc. (a) 800 18,600
TOTAL PACKAGING & CONTAINERS 40,431
PAPER & FOREST PRODUCTS - 7.2%
PAPER - 5.7%
Champion International Corp. 500 16,500
Georgia-Pacific Corp. 500 21,438
International Paper Co. 800 29,600
Pentair, Inc. 300 8,363
Stone Container Corp. (a) 6,400 66,800
Temple-Inland, Inc. 300 13,444
Union Camp Corp. 300 11,119
Willamette Industries, Inc. 300 7,388
174,652
SHARES VALUE (NOTE 1)
PAPER MILLS - 1.5%
Bowater, Inc. 700 $ 26,469
Fort James Corp. 687 20,009
46,478
TOTAL PAPER & FOREST PRODUCTS 221,130
POLLUTION CONTROL - 3.6%
POLLUTION EQUIPMENT & DESIGN - 0.4%
Ogden Corp. 500 11,531
REFUSE SYSTEMS - 3.2%
Eastern Environmental Services, Inc. (a) 700 18,025
Waste Management, Inc. 1,797 79,293
97,318
TOTAL POLLUTION CONTROL 108,849
RAILROADS - 3.2%
RAILROAD EQUIPMENT - 0.2%
Bombardier, Inc. Class B 600 6,388
RAILROADS - 3.0%
CSX Corp. 800 30,200
Canadian National Railway Co. 700 31,597
Norfolk Southern Corp. 1,000 28,188
89,985
TOTAL RAILROADS 96,373
RETAIL & WHOLESALE, MISCELLANEOUS - 0.3%
MISCELLANEOUS NONDURABLE GOODS - WHOLESALE - 0.3%
AgriBioTech, Inc. (a) 1,000 8,625
SERVICES - 1.1%
BUILDING MAINTENANCE - 1.1%
Ecolab, Inc. 1,200 33,375
SHIP BUILDING & REPAIR - 1.8%
SHIP BUILDERS - 1.8%
Avondale Industries, Inc. 700 17,938
General Dynamics Corp. 500 23,781
Newport News Shipbuilding, Inc. 500 11,750
53,469
TEXTILES & APPAREL - 0.3%
COTTON MILLS - 0.1%
Galey & Lord, Inc. (a) 300 2,794
TEXTILE MILL PRODUCTS - 0.2%
Unifi, Inc. 300 6,675
TOTAL TEXTILES & APPAREL 9,469
TRUCKING & FREIGHT - 1.3%
AIR COURIER SERVICES - 0.2%
CNF Transportation, Inc. 200 6,250
FREIGHT FORWARDING - 0.3%
Air Express International Corp. 200 3,425
Expeditors International of
Washington, Inc. 200 5,563
8,988
TRUCKING, LOCAL & LONG DISTANCE - 0.4%
Werner Enterprises, Inc. 725 10,684
TRUCKING, LONG DISTANCE - 0.4%
USFreightways Corp. 300 6,731
Yellow Corp. (a) 500 5,969
12,700
TOTAL TRUCKING & FREIGHT 38,622
TOTAL COMMON STOCKS
(Cost $3,268,481) 3,034,849
CONVERTIBLE PREFERRED STOCKS - 0.3%
SHARES VALUE (NOTE 1)
CHEMICALS & PLASTICS - 0.3%
UNSUPPORTED PLASTICS FILM & SHEET - 0.3%
Sealed Air Corp., Series A, $2.00
(Cost $8,093) 190 $ 7,814
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $3,276,574) $ 3,042,663
LEGEND
(a) Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $1,983,673 and $2,114,233, 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 $224 for the
period (see Note 4 of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $3,277,196. Net unrealized depreciation
aggregated $234,533, of which $286,144 related to appreciated
investment securities and $520,677 related to depreciated investment
securities.
CYCLICAL INDUSTRIES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31,
1998
(UNAUDITED)
ASSETS
INVESTMENT IN $ 3,042,663
SECURITIES, AT
VALUE
(COST
$3,276,574)
- -
SEE
ACCOMPANYIN
G SCHEDULE
CASH 9,741
RECEIVABLE FOR 160,092
INVESTMENTS
SOLD
RECEIVABLE FOR 5,962
FUND SHARES
SOLD
DIVIDENDS 4,996
RECEIVABLE
INTEREST 33
RECEIVABLE
REDEMPTION FEES 19
RECEIVABLE
RECEIVABLE FROM 4,397
INVESTMENT
ADVISER FOR
EXPENSE
REDUCTIONS
TOTAL ASSETS 3,227,903
LIABILITIES
PAYABLE FOR $ 43,161
FUND SHARES
REDEEMED
OTHER PAYABLES 19,496
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 62,657
NET ASSETS $ 3,165,246
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 3,338,081
ACCUMULATED (26,271)
NET INVESTMENT
LOSS
ACCUMULATED 87,347
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED (233,911)
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
NET ASSETS, FOR $ 3,165,246
314,950
SHARES
OUTSTANDING
NET ASSET $10.05
VALUE,
OFFERING PRICE
AND
REDEMPTION
PRICE PER
SHARE
($3,165,246
(DIVIDED BY) 314,950
SHARES)
MAXIMUM $10.36
OFFERING PRICE
PER SHARE
(100/97.00
OF $10.05)
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED AUGUST
31, 1998
(UNAUDITED)
INVESTMENT $ 21,942
INCOME
DIVIDENDS
INTEREST 6,648
TOTAL INCOME 28,590
EXPENSES
MANAGEMENT $ 12,683
FEE
TRANSFER AGENT 15,655
FEES
ACCOUNTING FEES 30,046
AND EXPENSES
NON-INTERESTED 8
TRUSTEES'
COMPENSATION
CUSTODIAN FEES 5,351
AND EXPENSES
REGISTRATION FEES 6,103
AUDIT 9,681
LEGAL 11
REPORTS TO 647
SHAREHOLDERS
TOTAL EXPENSES 80,185
BEFORE
REDUCTIONS
EXPENSE (25,324) 54,861
REDUCTIONS
NET INVESTMENT (26,271)
INCOME (LOSS)
REALIZED AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS) ON:
INVESTMENT 90,696
SECURITIES
FOREIGN 170 90,866
CURRENCY
TRANSACTIONS
CHANGE IN NET (703,383)
UNREALIZED
APPRECIATION
(DEPRECIATION)
ON INVESTMENT
SECURITIES
NET GAIN (LOSS) (612,517)
NET INCREASE $ (638,788)
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 13,604
INFORMATION
SALES CHARGES
PAID TO FDC
SALES CHARGES $ 13,604
- - RETAINED BY
FDC
EXCHANGE FEES $ 1,253
WITHHELD BY
FSC
EXPENSE $ 51
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEMENTS
CUSTODIAN 3
CREDITS
FMR 25,270
REIMBURSEMEN
T
$ 25,324
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED MARCH 3, 1997
(DECREASE) IN AUGUST 31, 1998 (COMMENCEMENT
NET ASSETS (UNAUDITED) OF OPERATIONS) TO
FEBRUARY 28, 1998
OPERATIONS $ (26,271) $ (33,119)
NET
INVESTMENT
INCOME (LOSS)
NET REALIZED 90,866 328,506
GAIN (LOSS)
CHANGE IN NET (703,383) 469,472
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (638,788) 764,859
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
DISTRIBUTIONS TO (29,887) (144,767)
SHAREHOLDERS
FROM NET
REALIZED GAIN
SHARE 2,429,754 10,028,973
TRANSACTIONS
NET PROCEEDS
FROM SALES OF
SHARES
REINVESTMENT 29,223 143,304
OF
DISTRIBUTIONS
COST OF SHARES (2,595,642) (6,843,907)
REDEEMED
NET INCREASE (136,665) 3,328,370
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION 5,346 16,778
FEES
TOTAL (799,994) 3,965,240
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
BEGINNING OF 3,965,240 -
PERIOD
END OF PERIOD $ 3,165,246 $ 3,965,240
(INCLUDING
ACCUMULATED
NET INVESTMENT
LOSS OF
$26,271 AND
$0,
RESPECTIVELY)
OTHER
INFORMATION
SHARES
SOLD 191,683 908,349
ISSUED IN 2,305 13,087
REINVESTMENT
OF
DISTRIBUTIONS
REDEEMED (207,688) (592,786)
NET INCREASE (13,700) 328,650
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
SIX MONTHS YEAR ENDED
ENDED FEBRUARY 28,
AUGUST 31,
1998
SELECTED (UNAUDITED) 1998 E
PER-SHARE
DATA
NET ASSET VALUE, $ 12.07 $ 10.00
BEGINNING OF
PERIOD
INCOME FROM
INVESTMENT
OPERATIONS
NET (.08) (.11)
INVESTMENT
INCOME (LOSS) D
NET REALIZED (1.87) 2.59
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM (1.95) 2.48
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIONS
FROM NET (.09) (.46)
REALIZED GAIN
REDEMPTION FEES .02 .05
ADDED TO PAID
IN CAPITAL
NET ASSET VALUE, $ 10.05 $ 12.07
END OF PERIOD
TOTAL RETURN B, C (16.14)% 25.77%
RATIOS AND
SUPPLEMENTAL
DATA
NET ASSETS, END $ 3,165 $ 3,965
OF PERIOD
(000 OMITTED)
RATIO OF 2.50% A, F 2.50% A, F
EXPENSES TO
AVERAGE NET
ASSETS
RATIO OF NET (1.20)% A (.93)% A
INVESTMENT
INCOME (LOSS)
TO AVERAGE NET
ASSETS
PORTFOLIO 98% A 140% A
TURNOVER RATE
AVERAGE $ .0240 $ .0220
COMMISSION
RATE G
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 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 FOR THE PERIOD
MARCH 3, 1997 (COMMENCEMENT OF OPERATIONS) TO FEBRUARY 28,
1998. 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). G A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES
ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO
PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS
MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
</TABLE>
DEFENSE AND AEROSPACE PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 MONTHS YEAR YEARS YEARS
SELECT DEFENSE AND -24.33% -16.97% 115.04% 232.80%
AEROSPACE
SELECT DEFENSE AND -26.67% -19.53% 108.52% 222.74%
AEROSPACE (LOAD ADJ.)
S&P 500 -8.10% 8.10% 131.21% 382.74%
GS CYCLICAL INDUSTRIES -18.01% -10.45% N/A N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks - and the Goldman Sachs
Cyclical Industries Index - a market capitalization-weighted index of
277 stocks designed to measure the performance of companies in the
cyclical industries sector. These benchmarks include reinvestment of
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 YEAR YEARS YEARS
SELECT DEFENSE AND -16.97% 16.55% 12.78%
AEROSPACE
SELECT DEFENSE AND -19.53% 15.83% 12.43%
AEROSPACE (LOAD ADJ.)
S&P 500 8.10% 18.25% 17.05%
GS CYCLICAL INDUSTRIES -10.45% N/A N/A
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.
(checkmark)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.
$10,000 OVER 10 YEARS
Defense & Aerospace S&P 500
00067 SP001
1988/08/31 9700.00 10000.00
1988/09/30 9991.42 10426.00
1988/10/31 9974.76 10715.84
1988/11/30 9533.48 10562.61
1988/12/31 9450.21 10747.45
1989/01/31 9824.89 11534.17
1989/02/28 9783.26 11246.96
1989/03/31 9983.09 11509.02
1989/04/30 10341.12 12106.34
1989/05/31 10524.29 12596.64
1989/06/30 10399.40 12524.84
1989/07/31 11073.82 13655.84
1989/08/31 11356.91 13923.49
1989/09/30 11148.76 13866.40
1989/10/31 10515.97 13544.70
1989/11/30 10116.31 13821.02
1989/12/31 10282.83 14152.72
1990/01/31 9700.00 13203.07
1990/02/28 9733.30 13373.39
1990/03/31 10332.79 13727.79
1990/04/30 9908.15 13384.59
1990/05/31 10640.86 14689.59
1990/06/30 10648.51 14589.70
1990/07/31 10221.23 14543.01
1990/08/31 9324.78 13228.33
1990/09/30 9023.17 12584.11
1990/10/31 8905.87 12529.99
1990/11/30 9383.42 13339.43
1990/12/31 9811.47 13711.60
1991/01/31 10677.43 14309.43
1991/02/28 10887.62 15332.55
1991/03/31 11728.36 15703.60
1991/04/30 11534.99 15741.29
1991/05/31 12073.07 16421.31
1991/06/30 11465.63 15669.22
1991/07/31 11963.77 16399.40
1991/08/31 11837.12 16788.07
1991/09/30 11558.50 16507.71
1991/10/31 12115.74 16728.91
1991/11/30 11566.95 16054.73
1991/12/31 12453.47 17891.40
1992/01/31 12411.25 17558.62
1992/02/29 12605.44 17786.88
1992/03/31 12352.15 17440.03
1992/04/30 12132.63 17952.77
1992/05/31 11524.73 18040.74
1992/06/30 10984.38 17771.93
1992/07/31 11406.53 18498.80
1992/08/31 11187.01 18119.58
1992/09/30 11347.43 18333.39
1992/10/31 11440.30 18397.56
1992/11/30 11837.12 19024.91
1992/12/31 12453.47 19258.92
1993/01/31 12824.96 19420.70
1993/02/28 12732.09 19684.82
1993/03/31 13407.53 20100.17
1993/04/30 13449.74 19613.74
1993/05/31 13863.45 20139.39
1993/06/30 14446.02 20197.79
1993/07/31 15037.03 20117.00
1993/08/31 15011.70 20879.44
1993/09/30 15400.08 20718.67
1993/10/31 16016.42 21147.54
1993/11/30 15543.61 20946.64
1993/12/31 16047.26 21200.10
1994/01/31 16811.42 21920.90
1994/02/28 16811.42 21326.84
1994/03/31 16135.10 20396.99
1994/04/30 16222.67 20658.07
1994/05/31 16276.15 20996.87
1994/06/30 15866.13 20482.44
1994/07/31 16097.88 21154.27
1994/08/31 16819.88 22021.59
1994/09/30 15973.09 21482.06
1994/10/31 16365.29 21965.41
1994/11/30 15723.51 21165.43
1994/12/31 16329.63 21479.31
1995/01/31 16320.72 22036.27
1995/02/28 17506.22 22895.02
1995/03/31 18254.96 23570.66
1995/04/30 19262.19 24264.81
1995/05/31 20447.70 25234.68
1995/06/30 21205.35 25820.88
1995/07/31 22373.02 26677.10
1995/08/31 22364.11 26744.06
1995/09/30 22988.06 27872.66
1995/10/31 22150.19 27773.15
1995/11/30 23745.71 28992.39
1995/12/31 24062.75 29550.79
1996/01/31 24493.30 30556.70
1996/02/29 25804.08 30839.96
1996/03/31 26397.27 31136.95
1996/04/30 27669.10 31595.90
1996/05/31 28703.73 32410.76
1996/06/30 28023.83 32534.25
1996/07/31 26131.93 31096.88
1996/08/31 27511.44 31752.72
1996/09/30 28861.39 33539.76
1996/10/31 28358.85 34464.79
1996/11/30 29905.88 37069.98
1996/12/31 30085.10 36335.62
1997/01/31 29434.22 38605.87
1997/02/28 29899.13 38908.54
1997/03/31 29702.84 37309.79
1997/04/30 30496.38 39537.19
1997/05/31 32937.34 41944.21
1997/06/30 33723.06 43823.31
1997/07/31 36844.99 47310.33
1997/08/31 38877.38 44660.01
1997/09/30 41506.92 47106.04
1997/10/31 38384.99 45532.69
1997/11/30 38458.33 47640.40
1997/12/31 37175.62 48458.39
1998/01/31 38958.32 48994.34
1998/02/28 42659.99 52527.81
1998/03/31 43840.89 55217.76
1998/04/30 45010.43 55773.25
1998/05/31 42092.25 54814.51
1998/06/30 42114.96 57041.07
1998/07/31 40264.12 56433.58
1998/08/31 32274.20 48274.42
IMATRL PRASUN SHR__CHT 19980831 19980916 100328 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Defense and Aerospace Portfolio on August
31, 1988, and the current 3.00% sales charge was paid. As the chart
shows, by August 31, 1998, the value of the investment would have
grown to $32,274 - a 222.74% increase on the initial investment - and
includes the effect of a $7.50 trading fee. For comparison, look at
how the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $48,274 - a 382.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
GENERAL DYNAMICS CORP. 7.4
PANAMSAT CORP. 6.7
LORAL SPACE & COMMUNICATIONS LTD. 6.0
GULFSTREAM AEROSPACE CORP. 5.6
GENERAL MOTORS CORP. CLASS H 5.5
CORDANT TECHNOLOGIES, INC. 5.0
SUNDSTRAND CORP. 5.0
UNITED TECHNOLOGIES CORP. 4.9
RAYTHEON CO. CLASS A 4.8
PRIMEX TECHNOLOGIES, INC. 4.8
TOP INDUSTRIES AS OF AUGUST 31, 1998
SHIP BUILDERS 12.1%
MISSILES & SPACE VEHICLES 11.9%
DEFENSE ELECTRONICS 9.3%
TV & RADIO COMMUNICATION
EQUIPMENT 9.0%
COMMUNICATIONS SERVICES, NEC 8.4%
ALL OTHERS 49.3%
ROW: 1, COL: 1, VALUE: 49.2
ROW: 1, COL: 2, VALUE: 8.5
ROW: 1, COL: 3, VALUE: 9.0
ROW: 1, COL: 4, VALUE: 9.300000000000001
ROW: 1, COL: 5, VALUE: 11.9
ROW: 1, COL: 6, VALUE: 12.1
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
DEFENSE AND AEROSPACE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Peter Saperstone)
Peter Saperstone,
Portfolio Manager of
Fidelity Select Defense
and Aerospace Portfolio
Q. HOW DID THE FUND PERFORM, PETER?
A. It was a tough period for defense and aerospace stocks, and the
fund's performance reflects that. For the six-month period that ended
August 31, 1998, the fund returned -24.33%. For the same six-month
period, the Standard & Poor's 500 Index returned -8.10%. For the
one-year period that ended August 31, 1998, the fund returned -16.97%
and the Standard & Poor's 500 Index returned 8.10%. Beginning this
period, the fund also compares itself to the Goldman Sachs Cyclical
Industries Index - an index of 277 stocks designed to measure the
performance of companies in the cyclical industries sector - which
returned -18.01% and -10.45% over the same six- and 12-month periods,
respectively.
Q. WHY DID DEFENSE AND AEROSPACE STOCKS STRUGGLE DURING THE PAST SIX
MONTHS?
A. Each sector had individual reasons for performing poorly. Defense
stocks entered the period on a positive note that was due in large
part to optimism about increased defense spending. The U.S. for
example, is increasing defense spending in 1999 for the first time in
nearly 10 years. On the negative side, however, international defense
spending has slowed. In addition, the commercial segments of many
defense companies - which include engineering, construction and other
business lines - have been hurt by slowing global economic growth. As
a result of these developments, the fund's holdings in Lockheed Martin
and Raytheon suffered.
Q. TURNING TO AEROSPACE STOCKS, WHAT WAS BEHIND THEIR PROBLEMS?
A. With Asia accounting for about one-third of the world's aircraft
demand, the region's economic turmoil took its toll on the aerospace
industry as well. Investors stayed away from aerospace stocks because
of growing fears that the demand for commercial aircraft would peak in
1999. Since I had anticipated this peak going into the period, the
fund had a relatively light weighting in aerospace stocks.
Q. WHAT WERE THE BIGGEST DISAPPOINTMENTS FOR THE FUND DURING THE
PERIOD?
A. Satellite companies - including PanAmSat, Loral Space &
Communications, General Motors Corp. Class H (GM Hughes) and Orbital
Sciences - were the biggest drag on the fund's performance. The
group's underperformance was driven by a series of satellite launch
failures and in-orbit failures over recent months. Interestingly, the
industry has an historical 90% to 95% success rate in launches, and
similar in-orbit success. Although satellite companies continued to
experience strong demand for their services, it wasn't enough to calm
the uncertainty created by the string of launch and in-orbit failures.
Q. WERE THERE ANY BRIGHT SPOTS FOR THE FUND?
A. There were a couple. I sold Continental Airlines and US Airways
during a period when their prices were relatively strong and locked in
gains for the fund.
Q. WHAT'S YOUR OUTLOOK?
A. It's mixed. First off, I remain cautious about aerospace stocks. I
think they will begin to post disappointing earnings due to slowing
aircraft demand in 1999. As for defense stocks, I believe the cost
savings derived from consolidation is behind them. From here, I think
it will be tough for them to grow earnings more than revenue. I'm more
upbeat about long-term growth opportunities for satellite companies.
Demand for their services is expected to grow about 15% to 20% over
the next few years. Finally, I think that investors will set aside the
industry's recent string of failures, focusing instead on satellite
companies' longer-term success rate.
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.
(checkmark)FUND FACTS
START DATE: May 8, 1984
FUND NUMBER: 067
TRADING SYMBOL: FSDAX
SIZE: as of August 31, 1998, more than
$35 million
MANAGER: Peter Saperstone, since 1997; manager,
Fidelity Select Air Transportation Portfolio, since
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
DEFENSE AND AEROSPACE PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 95.9%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 36.4%
AIRCRAFT - 8.4%
Gulfstream Aerospace Corp. (a) 53,300 $ 1,872,163
Lockheed Martin Corp. 11,000 961,813
2,833,976
AIRCRAFT & PARTS - 5.0%
Sundstrand Corp. 36,700 1,672,144
AIRCRAFT ENGINES & PARTS - 5.4%
Kellstrom Industries, Inc. (a) 7,300 168,356
United Technologies Corp. 22,800 1,654,425
1,822,781
AIRCRAFT EQUIPMENT - 0.9%
BE Aerospace, Inc. (a) 14,200 295,538
MISSILES & SPACE VEHICLES - 11.9%
Alliant Techsystems, Inc. (a) 21,000 1,378,125
Cordant Technologies, Inc. 47,000 1,674,375
Orbital Sciences Corp. (a) 51,000 956,250
4,008,750
ORDNANCE - 4.8%
Primex Technologies, Inc. 43,900 1,613,325
TOTAL AEROSPACE & DEFENSE 12,246,514
AIR TRANSPORTATION - 2.4%
AIR TRANSPORT, MAJOR NATIONAL - 2.4%
Alaska Air Group, Inc. (a) 20,900 813,794
BROADCASTING - 8.4%
COMMUNICATIONS SERVICES, NEC - 8.4%
CD Radio, Inc. (a) 39,800 601,975
PanAmSat Corp. (a) 52,800 2,237,400
2,839,375
COMMUNICATIONS EQUIPMENT - 1.5%
TELEPHONE EQUIPMENT - 1.5%
Globalstar Telecommunications Ltd. (a) 37,100 493,894
COMPUTER SERVICES & SOFTWARE - 1.0%
COMPUTER SERVICES - 1.0%
Titan Corp. (a) 75,500 344,469
CONSUMER ELECTRONICS - 5.5%
RADIOS, TELEVISIONS, STEREOS - 5.5%
General Motors Corp. Class H 51,400 1,856,825
DEFENSE ELECTRONICS - 9.3%
Litton Industries, Inc. (a) 26,300 1,262,400
Raytheon Co. Class A 36,252 1,624,543
REMEC, Inc. (a) 29,600 240,500
3,127,443
ELECTRICAL EQUIPMENT - 9.0%
TV & RADIO COMMUNICATION EQUIPMENT - 9.0%
Loral Space & Communications Ltd. (a) 127,500 2,024,063
ViaSat, Inc. (a) 94,400 991,200
3,015,263
ELECTRONICS - 3.2%
ELECTRONIC CAPACITORS - 1.2%
Maxwell Technologies, Inc. (a) 21,300 410,025
ELECTRONIC PARTS - WHOLESALE - 2.0%
Airport Systems International, Inc. (a)(c) 180,200 653,225
TOTAL ELECTRONICS 1,063,250
SHARES VALUE (NOTE 1)
RAILROADS - 2.9%
RAILROAD EQUIPMENT - 2.9%
Bombardier, Inc. Class B 90,200 $ 960,370
SHIP BUILDING & REPAIR - 12.1%
SHIP BUILDERS - 12.1%
Avondale Industries, Inc. 46,300 1,186,438
General Dynamics Corp. 52,100 2,478,006
Newport News Shipbuilding, Inc. 16,400 385,400
4,049,844
TELEPHONE SERVICES - 4.2%
COMSAT Corp. Series 1 64,600 1,409,084
TOTAL COMMON STOCKS
(Cost $38,078,795) 32,220,125
CASH EQUIVALENTS - 4.1%
Taxable Central Cash Fund (b)
(Cost $1,375,241) 1,375,241 1,375,241
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $39,454,036) $ 33,595,366
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.58%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(c) Affiliated company (see Note 10 of Notes to Financial Statements)
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $84,084,392 and $134,263,359, 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 $22,396 for the
period (see Note 4 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
Airport Systems
International, Inc. $ - $ 317,725 $ - $ 653,225
Distribution of investments by country of issue, as a percentage of
total value of investment in securities, is as follows:
United States 89.6%
Bermuda 7.5
Canada 2.9
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $39,483,792. Net unrealized depreciation
aggregated $5,888,426, of which $943,881 related to appreciated
investment securities and $6,832,307 related to depreciated investment
securities.
DEFENSE AND AEROSPACE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31,
1998
(UNAUDITED)
ASSETS
INVESTMENT IN $ 33,595,366
SECURITIES, AT
VALUE
(COST
$39,454,036
) -
SEE
ACCOMPANYIN
G SCHEDULE
RECEIVABLE FOR 1,866,661
INVESTMENTS
SOLD
RECEIVABLE FOR 87,469
FUND SHARES
SOLD
DIVIDENDS 34,995
RECEIVABLE
INTEREST 12,870
RECEIVABLE
REDEMPTION FEES 442
RECEIVABLE
OTHER 7,999
RECEIVABLES
TOTAL ASSETS 35,605,802
LIABILITIES
PAYABLE FOR $ 535,713
FUND SHARES
REDEEMED
ACCRUED 21,195
MANAGEMENT
FEE
OTHER PAYABLES 46,682
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 603,590
NET ASSETS $ 35,002,212
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 36,135,157
ACCUMULATED (192,854)
NET INVESTMENT
LOSS
ACCUMULATED 4,918,736
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED (5,858,827)
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
AND ASSETS
AND LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, FOR $ 35,002,212
1,231,110
SHARES
OUTSTANDING
NET ASSET $28.43
VALUE AND
REDEMPTION
PRICE PER
SHARE
($35,002,21
2 (DIVIDED BY)
1,231,110
SHARES)
MAXIMUM $29.31
OFFERING PRICE
PER SHARE
(100/97.00
OF $28.43)
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED AUGUST
31, 1998
(UNAUDITED)
INVESTMENT $ 167,923
INCOME
DIVIDENDS
INTEREST 117,179
TOTAL INCOME 285,102
EXPENSES
MANAGEMENT $ 210,632
FEE
TRANSFER AGENT 203,769
FEES
ACCOUNTING FEES 38,114
AND EXPENSES
NON-INTERESTED 142
TRUSTEES'
COMPENSATION
CUSTODIAN FEES 7,576
AND EXPENSES
REGISTRATION FEES 19,162
AUDIT 10,423
LEGAL 238
REPORTS TO 11,710
SHAREHOLDERS
MISCELLANEOUS 75
TOTAL EXPENSES 501,841
BEFORE
REDUCTIONS
EXPENSE (23,885) 477,956
REDUCTIONS
NET INVESTMENT (192,854)
INCOME (LOSS)
REALIZED AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS) ON:
INVESTMENT 5,477,806
SECURITIES
(INCLUDING
REALIZED LOSS
OF $99,257
ON SALES
OF INVESTMENTS
IN AFFILIATED
ISSUERS)
FOREIGN (1,470) 5,476,336
CURRENCY
TRANSACTIONS
CHANGE IN NET
UNREALIZED
APPRECIATION
(DEPRECIATION)
ON:
INVESTMENT (16,615,622)
SECURITIES
ASSETS AND (157) (16,615,779)
LIABILITIES IN
FOREIGN
CURRENCIES
NET GAIN (LOSS) (11,139,443)
NET INCREASE $ (11,332,297)
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 106,402
INFORMATION
SALES CHARGES
PAID TO FDC
SALES CHARGES $ 104,253
- - RETAINED BY
FDC
DEFERRED SALES $ 522
CHARGES
WITHHELD
BY FDC
EXCHANGE FEES $ 22,958
WITHHELD BY
FSC
EXPENSE $ 23,662
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEMENTS
CUSTODIAN 223
CREDITS
$ 23,885
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED YEAR ENDED
(DECREASE) IN AUGUST 31, 1998 FEBRUARY 28,
NET ASSETS (UNAUDITED) 1998
OPERATIONS $ (192,854) $ (542,358)
NET
INVESTMENT
INCOME (LOSS)
NET REALIZED 5,476,336 10,620,706
GAIN (LOSS)
CHANGE IN NET (16,615,779) 9,171,056
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (11,332,297) 19,249,404
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
DISTRIBUTION TO - (4,691,578)
SHAREHOLDERS
FROM NET
REALIZED GAIN
SHARE 37,257,590 173,648,929
TRANSACTIONS
NET PROCEEDS
FROM SALES OF
SHARES
REINVESTMENT - 4,606,502
OF
DISTRIBUTIONS
COST OF SHARES (92,816,176) (160,032,419)
REDEEMED
NET INCREASE (55,558,586) 18,223,012
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION 88,474 221,243
FEES
TOTAL (66,802,409) 33,002,081
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
BEGINNING OF 101,804,621 68,802,540
PERIOD
END OF PERIOD $ 35,002,212 $ 101,804,621
(INCLUDING
ACCUMULATED
NET INVESTMENT
LOSS OF
$192,854
AND $0,
RESPECTIVELY)
OTHER
INFORMATION
SHARES
SOLD 971,770 4,923,503
ISSUED IN - 149,545
REINVESTMENT
OF
DISTRIBUTIONS
REDEEMED (2,450,274) (4,740,835)
NET INCREASE (1,478,504) 332,213
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
ENDED FEBRUARY 29,
AUGUST 31,
1998
SELECTED (UNAUDITED) 1998 1997 1996 1995 1994
PER-SHARE
DATA
NET ASSET VALUE, $ 37.57 $ 28.94 $ 26.97 $ 19.64 $ 19.14 $ 15.08
BEGINNING OF
PERIOD
INCOME FROM
INVESTMENT
OPERATIONS
NET (.10) (.29) (.11) (.05) (.06) .07
INVESTMENT
INCOME (LOSS) D
NET REALIZED (9.09) 11.84 4.18 9.09 .70 4.57
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM (9.19) 11.55 4.07 9.04 .64 4.64
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIONS
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)
DISTRIBUTIONS
REDEMPTION FEES .05 .12 .07 .11 .13 .14
ADDED TO PAID
IN CAPITAL
NET ASSET VALUE, $ 28.43 $ 37.57 $ 28.94 $ 26.97 $ 19.64 $ 19.14
END OF PERIOD
TOTAL RETURN B, C (24.33)% 42.68% 15.87% 47.40% 4.13% 32.04%
RATIOS AND
SUPPLEMENTAL
DATA
NET ASSETS, END $ 35,002 $ 101,805 $ 68,803 $ 26,648 $ 4,985 $ 11,136
OF PERIOD
(000 OMITTED)
RATIO OF 1.37% A 1.77% 1.84% 1.77% G 2.49% G 2.53% G
EXPENSES TO
AVERAGE NET
ASSETS
RATIO OF 1.31% A, E 1.71% E 1.81% E 1.75% E 2.49% 2.53%
EXPENSES TO
AVERAGE NET
ASSETS AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.53)% A (.85)% (.39)% (.20)% (.32)% .40%
INVESTMENT
INCOME (LOSS)
TO AVERAGE NET
ASSETS
PORTFOLIO 254% A 311% 219% 267% 146% 324%
TURNOVER RATE
AVERAGE $ .0372 $ .0320 $ .0335
COMMISSION
RATE F
A ANNUALIZED B THE TOTAL
RETURNS WOULD HAVE BEEN
LOWER HAD CERTAIN
EXPENSES NOT BEEN
REDUCED DURING THE PERIODS
SHOWN (SEE NOTE 8 OF
NOTES TO FINANCIAL
STATEMENTS). C TOTAL
RETURNS DO NOT INCLUDE THE
ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN
ONE YEAR ARE NOT
ANNUALIZED. D NET
INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON
AVERAGE SHARES
OUTSTANDING DURING THE
PERIOD. E FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION
OF THE FUND'S EXPENSES
(SEE NOTE 8 OF NOTES TO
FINANCIAL
STATEMENTS). F FOR FISCAL
YEARS BEGINNING ON OR AFTER
SEPTEMBER 1, 1995, A
FUND IS REQUIRED TO DISCLOSE
ITS AVERAGE COMMISSION
RATE PER SHARE FOR SECURITY
TRADES ON WHICH
COMMISSIONS ARE CHARGED.
THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND
FUND TO FUND DEPENDING ON
THE MIX OF TRADES EXECUTED
IN VARIOUS MARKETS WHERE
TRADING PRACTICES AND
COMMISSION RATE STRUCTURES
MAY DIFFER. G DURING THE
PERIOD, FMR AGREED TO
REIMBURSE A PORTION OF THE
FUND'S EXPENSES, OR
EXPENSES WERE LIMITED IN
ACCORDANCE WITH A STATE
EXPENSE LIMITATION.
WITHOUT THIS
REIMBURSEMENT, THE FUND'S
EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
</TABLE>
ENVIRONMENTAL SERVICES PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 LIFE OF
AUGUST 31, 1998 MONTHS YEAR YEARS FUND
SELECT ENVIRONMENTAL -26.97% -24.59% 14.85% 36.67%
SERVICES
SELECT ENVIRONMENTAL -29.24% -26.93% 11.33% 32.50%
SERVICES (LOAD ADJ.)
S&P 500 -8.10% 8.10% 131.21% 283.41%
GS CYCLICAL INDUSTRIES -18.01% -10.45% N/A N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or since the fund started on June 29, 1989. You can compare the
fund's returns to the performance of both the Standard & Poor's 500
Index - a widely recognized, unmanaged index of common stocks - and
the Goldman Sachs Cyclical Industries Index - a market
capitalization-weighted index of 277 stocks designed to measure the
performance of companies in the cyclical industries sector. These
benchmarks include reinvestment of dividends and capital gains, if
any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
AUGUST 31, 1998 YEAR YEARS FUND
SELECT ENVIRONMENTAL -24.59% 2.81% 3.46%
SERVICES
SELECT ENVIRONMENTAL -26.93% 2.17% 3.11%
SERVICES (LOAD ADJ.)
S&P 500 8.10% 18.25% 15.77%
GS CYCLICAL INDUSTRIES -10.45% N/A N/A
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.
(checkmark)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.
$10,000 OVER LIFE OF FUND
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
1998/02/28 18154.09 41718.99
1998/03/31 19091.57 43855.42
1998/04/30 19400.39 44296.61
1998/05/31 18308.50 43535.15
1998/06/30 17922.48 45303.55
1998/07/31 16477.65 44821.06
1998/08/31 13249.62 38340.83
IMATRL PRASUN SHR__CHT 19980831 19980909 154656 R00000000000114
$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 August 31, 1998, the value of the
investment would have grown to $13,250 - a 32.50% increase on the
initial investment - and includes the effect of a $7.50 trading fee.
For comparison, look at how the Standard & Poor's 500 Index did over
the same period. With dividends and capital gains, if any, reinvested,
the same $10,000 investment would have grown to $38,341 - a 283.41%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
BROWNING-FERRIS INDUSTRIES, INC. 6.4
OGDEN CORP. 6.0
FLUOR CORP. 5.9
WASTE MANAGEMENT, INC. 5.2
THERMO INSTRUMENT SYSTEMS, INC. 5.1
ALLIED WASTE INDUSTRIES, INC. 5.0
THERMO ELECTRON CORP. 4.9
SAFETY-KLEEN CORP. 4.5
EASTERN ENVIRONMENTAL SERVICES, INC. 4.4
UNITED STATES FILTER CORP. 4.2
TOP INDUSTRIES AS OF AUGUST 31, 1998
REFUSE SYSTEMS 31.5%
POLLUTION EQUIPMENT & DESIGN 14.1%
LABORATORY ANALYTICAL
INSTRUMENTS 7.1%
ARCHITECTS & ENGINEERS 5.9%
HAZARDOUS WASTE MANAGEMENT 5.6%
ALL OTHERS 35.8%
ROW: 1, COL: 1, VALUE: 35.8
ROW: 1, COL: 2, VALUE: 5.6
ROW: 1, COL: 3, VALUE: 5.9
ROW: 1, COL: 4, VALUE: 7.1
ROW: 1, COL: 5, VALUE: 14.1
ROW: 1, COL: 6, VALUE: 31.5
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ENVIRONMENTAL SERVICES PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
(photograph of Steven Buller)
(photograph of Subrata Ghose)
NOTE TO SHAREHOLDERS: The following is an interview with Steven Buller
(left), who managed Fidelity Select Environmental Services Portfolio
during the period covered by this report, with additional comments
from Subrata Ghose, who will become manager of the fund on October 1,
1998.
Q. HOW DID THE FUND PERFORM, STEVE?
S.B. It was a difficult period for environmental services stocks. For
the six months that ended August 31, 1998, the fund returned -26.97%.
This trailed the Standard & Poor's 500 Index, which returned -8.10%
during the same period. Also, beginning this period, the fund is
comparing its performance to that of the Goldman Sachs Cyclical
Industries Index - an index of 277 stocks designed to measure the
performance of companies in the cyclical industries sector - which
returned -18.01% for the six months that ended August 31, 1998. For
the 12 months that ended August 31, 1998, the fund returned -24.59%,
while the S&P 500 and Goldman Sachs index returned 8.10% and -10.45%,
respectively.
Q. WHAT FACTORS CAUSED THE FUND TO PERFORM AS IT DID?
S.B. Two of the largest sub-sectors of the environmental services
group - the solid waste and environmental instrumentation industries -
registered disappointing performances. While solid waste companies
typically have minimal international exposure, fears of a worldwide
recession toward the end of the period caused some of these stocks -
such as Waste Management and Allied Waste - to pull back some.
Environmental instrumentation companies - those that manufacture
instruments designed to aid environmental research, such as devices
for detecting hazardous material and measuring toxicity - performed
poorly due in large part to their exposure to Southeast Asia and a
strong U.S. dollar. Many of these companies derive close to 12% to 15%
of their yearly revenues from that part of the world, and continued
economic tumult in Asia hurt the fund's two largest instrumentation
holdings, Thermo Instrument and Thermo Electron. Together, these two
stocks accounted for approximately 10% of the fund's assets at the end
of the period. The fund's water filtration and purification-related
positions - including United States Filter Corp. - also were hurt by
the troubles in Asia.
Q. YOU BUMPED UP THE FUND'S EXPOSURE TO CONSTRUCTION-RELATED STOCKS.
WAS THERE A SPECIFIC REASON?
S.B. The fund's stake in Fluor - an environmental construction company
- - accounted for much of this increase. When someone wants to build a
water treatment facility, a company such as Fluor comes in and
provides construction and engineering services for the project. While
Fluor does have a high degree of business exposure to Asia, and thus
didn't perform well during the period, my research indicated that the
company's turnaround story with new management was on track.
Q. WHICH INDIVIDUAL POSITIONS PERFORMED WELL?
S.B. They were few and far between during the period, but good
performers included Allied Waste - which benefited from good earnings
growth and strong profit margins - and Eastern Environmental, which
was acquired by Waste Management during the period. I sold some of the
fund's stake in Allied Waste to lock in gains. In addition, KTI, Inc.,
a waste-to-energy plant, also produced positive results.
Q. TURNING TO YOU, SUBRATA, WHAT SORTS OF CHANGES WILL YOU MAKE TO THE
PORTFOLIO?
S.G. My approach will be similar to Steve's, but I may make some minor
adjustments. The solid waste group - I feel - consists of many good
growth companies with strong earnings power. However, with fears of a
global recession creeping up on investors, some of the solid waste
companies may be hurt. In a recession-free economy, I may look to some
of the smaller companies within this group, mostly because many offer
faster growth and may be merger candidates. If we do see signs of a
recession though, I may look to larger companies with strong cash
flows and those for which acquisitions account for a small portion of
this growth. In terms of the instrumentation and the water
purification and filtration companies, short-term business prospects
appear shaky due to business exposure to Asia. Some of these
companies, though, are restructuring and this could have positive
long-term effects.
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.
(checkmark)FUND FACTS
START DATE: June 29, 1989
FUND NUMBER: 516
TRADING SYMBOL: FSLEX
SIZE: as of August 31, 1998, more than
$16 million
MANAGER: Subrata Ghose, effective October 1,
1998; analyst, environmental services industry,
1997-present; gas, electric and water
industries,1997-1998; joined Fidelity in 1995
ENVIRONMENTAL SERVICES PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.9%
SHARES VALUE (NOTE 1)
BUILDING MATERIALS - 0.2%
AIR-CONDITIONING EQUIPMENT - 0.2%
Thermo Power Corp. (a) 4,700 $ 39,950
CHEMICALS & PLASTICS - 1.7%
CHEMICALS - 1.7%
Catalytica, Inc. 27,000 278,438
CONSTRUCTION - 3.8%
Jacobs Engineering Group, Inc. (a) 24,300 619,650
DRUGS & PHARMACEUTICALS - 1.4%
COMMERCIAL LABORATORY RESEARCH - 1.4%
Thermotrex Corp. (a) 15,000 223,125
ELECTRONIC INSTRUMENTS - 13.0%
INDUSTRIAL MEASUREMENT INSTRUMENTS - 1.0%
TSI, Inc. 10,000 80,000
Thermedics Detection, Inc. (a) 9,000 72,563
152,563
LABORATORY ANALYTICAL INSTRUMENTS - 7.1%
Thermo Instrument Systems, Inc. (a) 54,200 826,550
Thermoquest Corp. (a) 48,200 337,400
1,163,950
MEASURING INSTRUMENTS - 4.9%
Thermo Electron Corp. (a) 49,050 797,063
TOTAL ELECTRONIC INSTRUMENTS 2,113,576
ENERGY SERVICES - 2.0%
OIL & GAS SERVICES - 2.0%
Newpark Resources, Inc. (a) 58,700 333,856
ENGINEERING - 8.8%
ARCHITECTS & ENGINEERS - 5.9%
Fluor Corp. 24,300 961,369
SPECIAL CONTRACTORS - 2.9%
Foster Wheeler Corp. 37,800 465,413
TOTAL ENGINEERING 1,426,782
INDUSTRIAL MACHINERY & EQUIPMENT - 7.4%
GENERAL INDUSTRIAL MACHINERY - 4.9%
Osmonics, Inc. (a) 10,700 117,700
United States Filter Corp. (a) 37,800 680,400
798,100
SERVICE INDUSTRY MACHINERY, NEC - 2.1%
Ionics, Inc. (a) 14,200 348,788
VENDING & SERVICE MACHINERY - 0.4%
Waterlink, Inc. (a) 11,600 58,725
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 1,205,613
MEDICAL EQUIPMENT & SUPPLIES - 1.7%
MEDICAL TECHNOLOGY - 1.7%
Thermedics, Inc. (a) 30,500 282,125
METALS & MINING - 1.1%
SECONDARY NONFERROUS SMELTING - 1.1%
IMCO Recycling, Inc. 15,000 181,875
POLLUTION CONTROL - 51.2%
HAZARDOUS WASTE MANAGEMENT - 5.6%
International Technology Corp. (a) 8,000 46,000
Safety-Kleen Corp. (a) 250,600 736,138
Stericycle, Inc. (a) 9,000 138,375
920,513
SHARES VALUE (NOTE 1)
POLLUTION EQUIPMENT & DESIGN - 14.1%
Calgon Carbon Corp. 32,100 $ 198,619
Dames & Moore, Inc. 15,000 178,125
Flanders Corp. (a) 23,500 92,531
Instituform Technologies, Inc. (a) 25,200 311,850
Ogden Corp. 42,100 970,926
TETRA Technologies, Inc. (a) 12,000 152,250
Tetra Tech, Inc. 19,000 396,625
2,300,926
REFUSE SYSTEMS - 31.5%
Allied Waste Industries, Inc. (a) 43,300 822,700
American Disposal Services, Inc. (a) 21,400 627,288
Browning-Ferris Industries, Inc. 31,900 1,036,750
Casella Waste Systems, Inc. Class A 9,300 233,663
Eastern Environmental Services, Inc. (a) 27,900 718,425
Superior Services, Inc. (a) 25,900 644,263
Waste Industries, Inc. (a) 9,700 208,550
Waste Management, Inc. 19,112 843,317
5,134,956
TOTAL POLLUTION CONTROL 8,356,395
SERVICES - 0.6%
REPAIR SERVICES - 0.6%
American ECO Corp. (a) 33,800 90,507
TOTAL COMMON STOCKS
(Cost $21,613,142) 15,151,892
CASH EQUIVALENTS - 7.1%
Taxable Central Cash Fund (b)
(Cost $1,151,426) 1,151,426 1,151,426
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $22,764,568) $ 16,303,318
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.58%. 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 $12,643,001 and $15,419,306, 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 $6,734 for the
period (see Note 4 of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $22,908,439. Net unrealized depreciation
aggregated $6,605,121, of which $179,051 related to appreciated
investment securities and $6,784,172 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
AUGUST 31,
1998
(UNAUDITED)
ASSETS
INVESTMENT IN $ 16,303,318
SECURITIES, AT
VALUE
(COST
$22,764,568
) -
SEE
ACCOMPANYIN
G SCHEDULE
RECEIVABLE FOR 4,148
FUND SHARES
SOLD
DIVIDENDS 7,938
RECEIVABLE
INTEREST 4,393
RECEIVABLE
REDEMPTION FEES 75
RECEIVABLE
TOTAL ASSETS 16,319,872
LIABILITIES
PAYABLE TO $ 32,805
CUSTODIAN
BANK
PAYABLE FOR 130,142
FUND SHARES
REDEEMED
ACCRUED 9,493
MANAGEMENT
FEE
OTHER PAYABLES 40,066
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 212,506
NET ASSETS $ 16,107,366
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 20,853,269
ACCUMULATED (136,897)
NET INVESTMENT
LOSS
ACCUMULATED 1,852,244
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED (6,461,250)
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
NET ASSETS, FOR $ 16,107,366
1,340,231
SHARES
OUTSTANDING
NET ASSET $12.02
VALUE AND
REDEMPTION
PRICE PER
SHARE
($16,107,36
6 (DIVIDED BY)
1,340,231
SHARES)
MAXIMUM $12.39
OFFERING PRICE
PER SHARE
(100/97.00
OF $12.02)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED AUGUST 31, 1998 (UNAUDITED)
INVESTMENT INCOME $ 74,371
DIVIDENDS
INTEREST 46,349
TOTAL INCOME 120,720
EXPENSES
MANAGEMENT FEE $ 70,840
TRANSFER AGENT FEES 125,119
ACCOUNTING FEES AND EXPENSES 30,329
NON-INTERESTED TRUSTEES' COMPENSATION 92
CUSTODIAN FEES AND EXPENSES 4,888
REGISTRATION FEES 10,163
AUDIT 10,048
LEGAL 77
REPORTS TO SHAREHOLDERS 8,356
TOTAL EXPENSES BEFORE REDUCTIONS 259,912
EXPENSE REDUCTIONS (2,295) 257,617
NET INVESTMENT INCOME (LOSS) (136,897)
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 2,205,670
FOREIGN CURRENCY TRANSACTIONS 1,283 2,206,953
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) (8,126,680)
ON INVESTMENT SECURITIES
NET GAIN (LOSS) (5,919,727)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (6,056,624)
OTHER INFORMATION $ 13,208
SALES CHARGES PAID TO FDC
SALES CHARGES - RETAINED BY FDC $ 13,208
DEFERRED SALES CHARGES WITHHELD $ 3,656
BY FDC
EXCHANGE FEES WITHHELD BY FSC $ 4,178
EXPENSE REDUCTIONS $ 2,149
DIRECTED BROKERAGE ARRANGEMENTS
CUSTODIAN CREDITS 146
$ 2,295
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED YEAR ENDED
(DECREASE) IN AUGUST 31, 1998 FEBRUARY 28,
NET ASSETS (UNAUDITED) 1998
OPERATIONS $ (136,897) $ (233,737)
NET
INVESTMENT
INCOME (LOSS)
NET REALIZED 2,206,953 491,329
GAIN (LOSS)
CHANGE IN NET (8,126,680) 2,816,729
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (6,056,624) 3,074,321
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
SHARE 4,398,511 19,043,654
TRANSACTIONS
NET PROCEEDS
FROM SALES OF
SHARES
COST OF SHARES (7,433,286) (29,500,558)
REDEEMED
NET INCREASE (3,034,775) (10,456,904)
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION 15,541 40,370
FEES
TOTAL (9,075,858) (7,342,213)
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
BEGINNING OF 25,183,224 32,525,437
PERIOD
END OF PERIOD $ 16,107,366 $ 25,183,224
(INCLUDING
ACCUMULATED
NET INVESTMENT
LOSS OF
$136,897
AND $0,
RESPECTIVELY)
OTHER
INFORMATION
SHARES
SOLD 257,486 1,183,759
REDEEMED (447,278) (1,896,214)
NET INCREASE (189,792) (712,455)
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
ENDED FEBRUARY 29,
AUGUST 31,
1998
SELECTED (UNAUDITED) 1998 1997 1996 1995 1994
PER-SHARE
DATA
NET ASSET VALUE, $ 16.46 $ 14.50 $ 12.42 $ 10.27 $ 11.93 $ 11.36
BEGINNING OF
PERIOD
INCOME FROM
INVESTMENT
OPERATIONS
NET (.09) (.13) (.08) (.17) (.14) (.11)
INVESTMENT
INCOME (LOSS) D
NET REALIZED (4.36) 2.07 2.04 2.95 (1.53) .67
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM (4.45) 1.94 1.96 2.78 (1.67) .56
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIONS
FROM NET - - - (.65) - -
REALIZED GAIN
IN EXCESS OF - - (.02) - - -
NET REALIZED
GAIN
TOTAL - - (.02) (.65) - -
DISTRIBUTIONS
REDEMPTION FEES .01 .02 .14 .02 .01 .01
ADDED TO PAID
IN CAPITAL
NET ASSET VALUE, $ 12.02 $ 16.46 $ 14.50 $ 12.42 $ 10.27 $ 11.93
END OF PERIOD
TOTAL RETURN B, C (26.97)% 13.52% 16.93% 27.49% (13.91)% 5.02%
RATIOS AND
SUPPLEMENTAL
DATA
NET ASSETS, END $ 16,107 $ 25,183 $ 32,525 $ 27,587 $ 31,270 $ 65,956
OF PERIOD
(000 OMITTED)
RATIO OF 2.12% A 2.23% 2.18% 2.36% 2.04% 2.07%
EXPENSES TO
AVERAGE NET
ASSETS
RATIO OF 2.10% A, E 2.22% E 2.11% E 2.32% E 2.01% E 2.03% E
EXPENSES TO
AVERAGE NET
ASSETS AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (1.12)% A (.84)% (.59)% (1.43)% (1.32)% (1.02)%
INVESTMENT
INCOME (LOSS)
TO AVERAGE NET
ASSETS
PORTFOLIO 114% A 59% 252% 138% 82% 191%
TURNOVER RATE
AVERAGE $ .0356 $ .0313 $ .0348
COMMISSION
RATE F
A ANNUALIZED B THE TOTAL
RETURNS WOULD HAVE BEEN
LOWER HAD CERTAIN
EXPENSES NOT BEEN
REDUCED DURING THE PERIODS
SHOWN (SEE NOTE 8 OF
NOTES TO FINANCIAL
STATEMENTS). C TOTAL
RETURNS DO NOT INCLUDE THE
ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN
ONE YEAR ARE NOT
ANNUALIZED. D NET
INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON
AVERAGE SHARES
OUTSTANDING DURING THE
PERIOD. E FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION
OF THE FUND'S EXPENSES
(SEE NOTE 8 OF NOTES TO
FINANCIAL
STATEMENTS). F FOR FISCAL
YEARS BEGINNING ON OR AFTER
SEPTEMBER 1, 1995, A
FUND IS REQUIRED TO DISCLOSE
ITS AVERAGE COMMISSION
RATE PER SHARE FOR SECURITY
TRADES ON WHICH
COMMISSIONS ARE CHARGED.
THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND
FUND TO FUND DEPENDING ON
THE MIX OF TRADES EXECUTED
IN VARIOUS MARKETS WHERE
TRADING PRACTICES AND
COMMISSION RATE STRUCTURES
MAY DIFFER.
</TABLE>
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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 MONTHS YEAR YEARS YEARS
SELECT INDUSTRIAL EQUIPMENT -15.63% -13.43% 92.26% 273.70%
SELECT INDUSTRIAL EQUIPMENT -18.23% -16.10% 86.42% 262.42%
(LOAD ADJ.)
S&P 500 -8.10% 8.10% 131.21% 382.74%
GS CYCLICAL INDUSTRIES -18.01% -10.45% N/A N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks - and the Goldman Sachs
Cyclical Industries Index - a market capitalization-weighted index of
277 stocks designed to measure the performance of companies in the
cyclical industries sector. These benchmarks include reinvestment of
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 YEAR YEARS YEARS
SELECT INDUSTRIAL EQUIPMENT -13.43% 13.97% 14.09%
SELECT INDUSTRIAL EQUIPMENT -16.10% 13.27% 13.74%
(LOAD ADJ.)
S&P 500 8.10% 18.25% 17.05%
GS CYCLICAL INDUSTRIES -10.45% N/A N/A
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.
(checkmark) 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.
$10,000 OVER 10 YEARS
Industrial Equipment S&P 500
00510 SP001
1988/08/31 9700.00 10000.00
1988/09/30 9880.93 10426.00
1988/10/31 9720.10 10715.84
1988/11/30 9408.50 10562.61
1988/12/31 9911.09 10747.45
1989/01/31 10634.82 11534.17
1989/02/28 10212.64 11246.96
1989/03/31 10363.42 11509.02
1989/04/30 11107.25 12106.34
1989/05/31 11710.36 12596.64
1989/06/30 11207.77 12524.84
1989/07/31 11921.45 13655.84
1989/08/31 12142.59 13923.49
1989/09/30 11971.71 13866.40
1989/10/31 11177.62 13544.70
1989/11/30 11489.22 13821.02
1989/12/31 11690.26 14152.72
1990/01/31 11298.24 13203.07
1990/02/28 11871.19 13373.39
1990/03/31 12574.82 13727.79
1990/04/30 12474.30 13384.59
1990/05/31 13630.26 14689.59
1990/06/30 13388.00 14589.70
1990/07/31 13135.02 14543.01
1990/08/31 10969.46 13228.33
1990/09/30 9481.90 12584.11
1990/10/31 9228.92 12529.99
1990/11/30 9532.50 13339.43
1990/12/31 9876.56 13711.60
1991/01/31 10928.98 14309.43
1991/02/28 11961.16 15332.55
1991/03/31 11859.97 15703.60
1991/04/30 11738.53 15741.29
1991/05/31 12234.39 16421.31
1991/06/30 11839.42 15669.22
1991/07/31 11940.70 16399.40
1991/08/31 12123.00 16788.07
1991/09/30 12406.58 16507.71
1991/10/31 12335.68 16728.91
1991/11/30 11748.27 16054.73
1991/12/31 12527.47 17891.40
1992/01/31 13651.47 17558.62
1992/02/29 14622.19 17786.88
1992/03/31 14193.03 17440.03
1992/04/30 14193.03 17952.77
1992/05/31 14305.43 18040.74
1992/06/30 13426.67 17771.93
1992/07/31 13549.29 18498.80
1992/08/31 12844.23 18119.58
1992/09/30 13109.90 18333.39
1992/10/31 13058.81 18397.56
1992/11/30 13682.12 19024.91
1992/12/31 13947.79 19258.92
1993/01/31 14601.76 19420.70
1993/02/28 15368.12 19684.82
1993/03/31 15644.01 20100.17
1993/04/30 16359.75 19613.74
1993/05/31 17177.74 20139.39
1993/06/30 17402.69 20197.79
1993/07/31 17648.09 20117.00
1993/08/31 18854.62 20879.44
1993/09/30 18639.90 20718.67
1993/10/31 19263.61 21147.54
1993/11/30 19243.16 20946.64
1993/12/31 19991.22 21200.10
1994/01/31 20931.25 21920.90
1994/02/28 21526.60 21326.84
1994/03/31 20283.68 20396.99
1994/04/30 20100.09 20658.07
1994/05/31 19689.24 20996.87
1994/06/30 18677.92 20482.44
1994/07/31 19562.83 21154.27
1994/08/31 20953.40 22021.59
1994/09/30 21016.61 21482.06
1994/10/31 21279.97 21965.41
1994/11/30 20247.58 21165.43
1994/12/31 20616.29 21479.31
1995/01/31 20500.41 22036.27
1995/02/28 21111.42 22895.02
1995/03/31 22860.17 23570.66
1995/04/30 23934.97 24264.81
1995/05/31 24419.79 25234.68
1995/06/30 25347.25 25820.88
1995/07/31 27729.16 26677.10
1995/08/31 27191.65 26744.06
1995/09/30 25948.00 27872.66
1995/10/31 25895.30 27773.15
1995/11/30 26780.61 28992.39
1995/12/31 26350.53 29550.79
1996/01/31 27409.16 30556.70
1996/02/29 28893.53 30839.96
1996/03/31 29100.65 31136.95
1996/04/30 29635.31 31595.90
1996/05/31 29850.67 32410.76
1996/06/30 29719.06 32534.25
1996/07/31 28235.50 31096.88
1996/08/31 29455.85 31752.72
1996/09/30 30855.66 33539.76
1996/10/31 30664.23 34464.79
1996/11/30 33152.78 37069.98
1996/12/31 33388.87 36335.62
1997/01/31 34580.85 38605.87
1997/02/28 34165.66 38908.54
1997/03/31 32786.18 37309.79
1997/04/30 33981.55 39537.19
1997/05/31 36999.56 41944.21
1997/06/30 39306.59 43823.31
1997/07/31 42135.97 47310.33
1997/08/31 41874.79 44660.01
1997/09/30 42977.52 47106.04
1997/10/31 39625.80 45532.69
1997/11/30 39553.25 47640.40
1997/12/31 39582.27 48458.39
1998/01/31 38869.23 48994.34
1998/02/28 42965.09 52527.81
1998/03/31 45916.76 55217.76
1998/04/30 47077.53 55773.25
1998/05/31 45419.29 54814.51
1998/06/30 45236.88 57041.07
1998/07/31 43595.22 56433.58
1998/08/31 36242.00 48274.42
IMATRL PRASUN SHR__CHT 19980831 19980918 161518 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Industrial Equipment Portfolio on August
31, 1988, and the current 3.00% sales charge was paid. As the chart
shows, by August 31, 1998, the value of the investment would have
grown to $36,242 - a 262.42% increase on the initial investment - and
includes the effect of a $7.50 trading fee. For comparison, look at
how the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $48,274 - a 382.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
TYCO INTERNATIONAL LTD. 7.4
GENERAL ELECTRIC CO. 7.1
PITNEY BOWES, INC. 6.6
EMERSON ELECTRIC CO. 6.1
DEKALB GENETICS CORP. CLASS B 5.6
XEROX CORP. 3.9
HONEYWELL, INC. 3.8
INGERSOLL-RAND CO. 3.2
ILLINOIS TOOL WORKS, INC. 2.9
CATERPILLAR, INC. 2.5
TOP INDUSTRIES AS OF AUGUST 31, 1998
ROW: 1, COL: 1, VALUE: 42.8
ROW: 1, COL: 2, VALUE: 4.5
ROW: 1, COL: 3, VALUE: 6.6
ROW: 1, COL: 4, VALUE: 10.5
ROW: 1, COL: 5, VALUE: 16.7
ROW: 1, COL: 6, VALUE: 18.9
ELECTRICAL MACHINERY 18.9%
GENERAL INDUSTRIAL MACHINERY 16.7%
OFFICE AUTOMATION 10.5%
CROPS 6.6%
TELEPHONE SERVICES 4.5%
ALL OTHERS 42.8%
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
INDUSTRIAL EQUIPMENT PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Simon Wolf)
Simon Wolf,
Portfolio Manager of Fidelity Select Industrial Equipment Portfolio
Q. HOW DID THE FUND PERFORM, SIMON?
A. For the six months that ended on August 31, 1998, the fund had a
total return of -15.63%. For the 12-month period, it returned -13.43%.
For the same periods, the Standard & Poor's 500 Index returned -8.10%
and 8.10%, respectively. Beginning this period, the fund also compares
itself to the Goldman Sachs Cyclical Industries Index - an index of
277 stocks designed to measure the performance of companies in the
cyclical industries sector - which returned -18.01% and -10.45% over
the same six- and 12-month periods, respectively.
Q. WHAT WERE THE KEY FACTORS BEHIND THE FUND'S PERFORMANCE DURING THE
PAST SIX MONTHS?
A. Performance reflected the general uncertainty surrounding world
economic conditions that grew as the six-month period progressed. This
uncertainty caused cyclical stocks, especially machinery and
industrial equipment companies, to fall earlier and faster than the
overall market. The six-month period began on an optimistic note, as
companies reported good earnings for the first quarter of 1998. These
earnings reports led people to believe that the U.S. economy would be
shielded from the effects of the Asian economic crisis. In the ensuing
months, evidence mounted that the first quarter earnings were an
aberration, and that the second and third quarters would experience
more moderate growth. July and August saw a further deterioration as
investors speculated that the slow earnings growth in the second
quarter might be signaling an oncoming global economic depression.
Q. WHAT TYPES OF INDUSTRIAL EQUIPMENT COMPANIES WERE MOST AFFECTED BY
THE EVIDENCE OF A SLOWDOWN?
A. Companies involved in industrial production - the manufacturers of
valves, welding equipment, fasteners, pumps and so forth - were most
affected. Illinois Tool Works is an example of a fund investment that
was among the harder hit companies. Agricultural equipment stocks did
poorly as a fall-off in demand for agricultural products in Russia and
Asia coincided with bumper crops throughout the world. This drove
commodity prices to 10-year lows and lowered farm income, which
reduced agricultural equipment purchases. The fund did not own
significant positions in any of these stocks.
Q. WHAT COMPANIES HELPED OR HURT PERFORMANCE?
A. I tried to emphasize steady growth companies less affected by the
business cycle, and that helped somewhat. Among the relatively better
performers were growth companies such as Tyco International, Pitney
Bowes, and General Electric. I also focused on companies that I
believed had a more valuable franchise than reflected in the stock
prices. A good example is DEKALB Genetics Corp., an agricultural seed
company that is being purchased by Monsanto. United Rentals, an
equipment rental company that was acquiring smaller firms, also
performed well for the fund. Unfortunately, there were also
disappointments which included two satellite companies, Loral and
COMSAT. Satellite companies fell into disfavor after three
unsuccessful launch attempts highlighted the deployment risks
associated with these companies. I believe COMSAT was unduly
discounted given that all of its satellites have already been launched
successfully. Another disappointment was Honeywell, whose stock
suffered as slowing orders materialized in its process controls
businesses.
Q. WHAT IS YOUR OUTLOOK?
A. I believe it will be a very tough investment environment,
highlighted by continued volatility as investors sort out incremental
evidence about whether we are heading into a world recession or
whether we are just passing through a temporary slowdown. In this
environment, I intend to continue to focus on more defensive stocks,
which tend to be the steady growth companies. I will not ignore,
however, companies that I believe have very strong franchises or asset
values when compared to their current stock 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.
(checkmark)FUND FACTS
START DATE: September 29, 1986
FUND NUMBER: 510
TRADING SYMBOL: FSCGX
SIZE: as of August 31, 1998, more than
$33 million
MANAGER: Simon Wolf, since 1997; research
analyst, industrial and electrical equipment
industries, since 1997; joined Fidelity in 1996
INDUSTRIAL EQUIPMENT PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 94.3%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 1.9%
AIRCRAFT & PARTS - 0.9%
Textron, Inc. 5,000 $ 313,750
AIRCRAFT ENGINES & PARTS - 1.0%
AlliedSignal, Inc. 10,000 343,125
TOTAL AEROSPACE & DEFENSE 656,875
AGRICULTURE - 6.6%
CROPS - 6.6%
DEKALB Genetics Corp. Class B 22,000 1,905,750
Delta & Pine Land Co. 7,500 322,031
2,227,781
BROADCASTING - 2.2%
TELEVISION BROADCASTING - 2.2%
CBS Corp. 28,600 743,600
BUILDING MATERIALS - 2.6%
AIR-CONDITIONING EQUIPMENT - 1.8%
American Standard Companies, Inc. (a) 10,000 391,250
York International Corp. 6,000 207,750
599,000
PAVING, ROOFING & SIDING - 0.8%
Owens Corning 7,500 262,969
TOTAL BUILDING MATERIALS 861,969
CHEMICALS & PLASTICS - 3.6%
CHEMICALS - 1.6%
MacDermid, Inc. 13,000 360,750
Tredegar Industries, Inc. 12,000 193,500
554,250
PLASTICS, NEC - 2.0%
Ivex Packaging Corp. 40,100 659,144
TOTAL CHEMICALS & PLASTICS 1,213,394
COMPUTER SERVICES & SOFTWARE - 1.0%
PREPACKAGED COMPUTER SOFTWARE - 1.0%
ModaCAD, Inc. (a) 25,000 331,250
COMPUTERS & OFFICE EQUIPMENT - 10.5%
OFFICE AUTOMATION - 10.5%
Pitney Bowes, Inc. 45,000 2,233,125
Xerox Corp. 15,000 1,317,188
3,550,313
CONSUMER ELECTRONICS - 1.3%
APPLIANCES - 0.8%
Maytag Co. 6,000 258,750
WATCHES & CLOCKS - 0.5%
Movado Group, Inc. 10,000 178,125
TOTAL CONSUMER ELECTRONICS 436,875
ELECTRICAL EQUIPMENT - 26.7%
ELECTRICAL MACHINERY - 18.9%
Alcatel Alsthom Compagnie Generale
d'Electricite SA sponsored ADR 22,300 673,181
Emerson Electric Co. 36,000 2,052,000
General Electric Co. 30,000 2,400,000
Honeywell, Inc. 20,500 1,281,250
6,406,431
SHARES VALUE (NOTE 1)
ELECTRICAL TRANSMISSION EQUIPMENT - 0.4%
MagneTek, Inc. (a) 10,000 $ 130,000
ELECTRICAL, INDUSTRIAL APPARATUS - 1.7%
Baldor Electric Co. 11,866 243,995
Hubbell, Inc. Class B 9,000 321,750
565,745
MOTORS & GENERATORS - 2.3%
AMETEK, Inc. 40,000 780,000
TV & RADIO COMMUNICATION EQUIPMENT - 1.6%
Loral Space & Communications Ltd. (a) 35,000 555,625
WIRING & LIGHTING - 1.8%
Genlyte Group, Inc. (a) 15,000 255,000
SLI, Inc. (a) 25,000 343,750
598,750
TOTAL ELECTRICAL EQUIPMENT 9,036,551
ELECTRONIC INSTRUMENTS - 2.8%
INDUSTRIAL MEASUREMENT INSTRUMENTS - 0.7%
Elsag Bailey Process Automation NV (a) 10,000 213,125
SEMI-CONDUCTOR CAPITAL EQUIPMENT - 2.1%
Applied Materials, Inc. (a) 20,000 491,250
KLA-Tencor Corp. (a) 8,500 180,625
Novellus Systems, Inc. (a) 1,800 47,925
719,800
TOTAL ELECTRONIC INSTRUMENTS 932,925
ELECTRONICS - 0.5%
CONNECTORS - 0.5%
AMP, Inc. 5,000 178,438
ENERGY SERVICES - 0.8%
OIL & GAS SERVICES - 0.8%
Dresser Industries, Inc. 10,000 255,625
ENTERTAINMENT - 0.7%
MOTION PICTURE PRODUCTION - 0.7%
Tele-Communications, Inc.
(TCI Ventures Group), Series A (a) 15,000 249,375
INDUSTRIAL MACHINERY & EQUIPMENT - 23.2%
ACCESS & MEASURING CUTTING TOOLS - 0.8%
MSC Industrial Direct, Inc. (a) 13,000 273,813
BALL & ROLLER BEARINGS - 0.7%
Kaydon Corp. 9,000 243,563
CONSTRUCTION EQUIPMENT - 2.5%
Caterpillar, Inc. 20,000 843,750
FARM MACHINERY & EQUIPMENT - 1.9%
Deere & Co. 10,000 329,375
Lindsay Manufacturing Co. 15,000 301,875
631,250
GENERAL INDUSTRIAL MACHINERY - 16.7%
Cooper Industries, Inc. 13,600 578,850
Dover Corp. 9,900 269,775
Harnischfeger Industries, Inc. 7,500 120,469
Illinois Tool Works, Inc. 20,000 968,750
Ingersoll-Rand Co. 27,000 1,073,250
Manitowoc Co., Inc. 5,250 138,141
Tyco International Ltd. 45,000 2,497,500
5,646,735
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
PUMPING EQUIPMENT - 0.6%
IDEX Corp. 10,000 $ 210,000
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 7,849,111
LEASING & RENTAL - 0.3%
MISCELLANEOUS EQUIPMENT RENTAL & LEASING - 0.3%
United Rentals, Inc. 6,000 117,000
MEDICAL EQUIPMENT & SUPPLIES - 0.9%
MEDICAL TECHNOLOGY - 0.9%
Pall Corp. 15,000 307,500
METALS & MINING - 1.9%
NONFERROUS ROLLING & DRAWING - 1.4%
Superior Telecom, Inc. 13,000 495,625
NONFERROUS WIRE - 0.5%
AFC Cable Systems, Inc. (a) 7,000 162,094
TOTAL METALS & MINING 657,719
PACKAGING & CONTAINERS - 0.9%
GLASS CONTAINERS - 0.9%
Owens-Illinois, Inc. (a) 10,000 311,875
PRINTING - 1.1%
PLATEMAKING, RELATED SERVICES - 1.1%
Schawk, Inc. Class A 25,300 374,756
RETAIL & WHOLESALE, MISCELLANEOUS - 0.3%
MISCELLANEOUS NONDURABLE GOODS - WHOLESALE - 0.3%
AgriBioTech, Inc. (a) 10,000 86,250
SERVICES - 0.0%
BUSINESS SERVICES - 0.0%
Ritchie Brothers Auctioneers, Inc. (a) 100 2,363
TELEPHONE SERVICES - 4.5%
COMSAT Corp., Series 1 33,000 719,813
Qwest Communications
International, Inc. (a) 11,661 291,520
WorldCom, Inc. (a) 12,500 511,719
1,523,052
TOTAL COMMON STOCKS
(Cost $31,464,864) 31,904,597
CASH EQUIVALENTS - 5.7%
Taxable Central Cash Fund (b)
(Cost $1,932,613) 1,932,613 1,932,613
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $33,397,477) $ 33,837,210
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.58%. 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 $21,935,020 and $24,941,347, 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 $4,202 for the
period (see Note 4 of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $33,436,053. Net unrealized appreciation
aggregated $401,157, of which $4,158,533 related to appreciated
investment securities and $3,757,376 related to depreciated investment
securities.
INDUSTRIAL EQUIPMENT PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31,
1998
(UNAUDITED)
ASSETS
INVESTMENT IN $ 33,837,210
SECURITIES, AT
VALUE
(COST
$33,397,477
) -
SEE
ACCOMPANYIN
G SCHEDULE
CASH 20,372
RECEIVABLE FOR 2,869
FUND SHARES
SOLD
DIVIDENDS 46,995
RECEIVABLE
INTEREST 9,463
RECEIVABLE
REDEMPTION FEES 242
RECEIVABLE
OTHER 13,550
RECEIVABLES
TOTAL ASSETS 33,930,701
LIABILITIES
PAYABLE FOR $ 531,289
FUND SHARES
REDEEMED
ACCRUED 19,509
MANAGEMENT
FEE
OTHER PAYABLES 41,326
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 592,124
NET ASSETS $ 33,338,577
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 30,113,197
ACCUMULATED (59,462)
NET INVESTMENT
LOSS
ACCUMULATED 2,845,082
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED 439,760
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
AND ASSETS
AND LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, FOR $ 33,338,577
1,525,141
SHARES
OUTSTANDING
NET ASSET $21.86
VALUE AND
REDEMPTION
PRICE PER
SHARE
($33,338,57
7 (DIVIDED BY)
1,525,141
SHARES)
MAXIMUM $22.54
OFFERING PRICE
PER SHARE
(100/97.00
OF $21.86)
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED AUGUST
31, 1998
(UNAUDITED)
INVESTMENT $ 188,695
INCOME
DIVIDENDS
INTEREST 104,015
TOTAL INCOME 292,710
EXPENSES
MANAGEMENT $ 147,109
FEE
TRANSFER AGENT 139,441
FEES
ACCOUNTING FEES 30,359
AND EXPENSES
NON-INTERESTED 91
TRUSTEES'
COMPENSATION
CUSTODIAN FEES 5,310
AND EXPENSES
REGISTRATION FEES 15,464
AUDIT 10,386
LEGAL 184
REPORTS TO 6,450
SHAREHOLDERS
TOTAL EXPENSES 354,794
BEFORE
REDUCTIONS
EXPENSE (2,622) 352,172
REDUCTIONS
NET INVESTMENT (59,462)
INCOME (LOSS)
REALIZED AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS) ON:
INVESTMENT 2,938,267
SECURITIES
FOREIGN 486 2,938,753
CURRENCY
TRANSACTIONS
CHANGE IN NET
UNREALIZED
APPRECIATION
(DEPRECIATION)
ON:
INVESTMENT (9,014,435)
SECURITIES
ASSETS AND 27 (9,014,408)
LIABILITIES IN
FOREIGN
CURRENCIES
NET GAIN (LOSS) (6,075,655)
NET INCREASE $ (6,135,117)
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 17,879
INFORMATION
SALES CHARGES
PAID TO FDC
SALES CHARGES $ 17,162
- - RETAINED BY
FDC
DEFERRED SALES $ 521
CHARGES
WITHHELD
BY FDC
EXCHANGE FEES $ 8,670
WITHHELD BY
FSC
EXPENSE $ 2,416
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEMENTS
CUSTODIAN 206
CREDITS
$ 2,622
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED YEAR ENDED
(DECREASE) IN AUGUST 31, 1998 FEBRUARY 28,
NET ASSETS (UNAUDITED) 1998
OPERATIONS $ (59,462) $ (190,412)
NET
INVESTMENT
INCOME (LOSS)
NET REALIZED 2,938,753 9,532,487
GAIN (LOSS)
CHANGE IN NET (9,014,408) 4,204,137
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (6,135,117) 13,546,212
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
DISTRIBUTIONS TO - (59,949)
SHAREHOLDERS
FROM NET
INVESTMENT
INCOME
FROM NET - (11,693,964)
REALIZED GAIN
TOTAL - (11,753,913)
DISTRIBUTIONS
SHARE 15,279,048 24,781,618
TRANSACTIONS
NET PROCEEDS
FROM SALES OF
SHARES
REINVESTMENT - 11,543,701
OF
DISTRIBUTIONS
COST OF SHARES (26,256,445) (90,632,790)
REDEEMED
NET INCREASE (10,977,397) (54,307,471)
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION 23,376 60,604
FEES
TOTAL (17,089,138) (52,454,568)
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
BEGINNING OF 50,427,715 102,882,283
PERIOD
END OF PERIOD $ 33,338,577 $ 50,427,715
(INCLUDING
ACCUMULATED
NET INVESTMENT
LOSS OF
$59,462 AND
$0,
RESPECTIVELY)
OTHER
INFORMATION
SHARES
SOLD 544,961 934,187
ISSUED IN - 497,967
REINVESTMENT
OF
DISTRIBUTIONS
REDEEMED (965,727) (3,519,270)
NET INCREASE (420,766) (2,087,116)
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED YEAR ENDED YEARS ENDED
ENDED FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
AUGUST 31,
1998
SELECTED (UNAUDITED) 1998 1997 1996 1995 1994
PER-SHARE
DATA
NET ASSET VALUE, $ 25.91 $ 25.51 $ 25.11 $ 20.04 $ 20.61 $ 15.04
BEGINNING OF
PERIOD
INCOME FROM
INVESTMENT
OPERATIONS
NET (.03) (.08) .06 .04 .01 -
INVESTMENT
INCOME (LOSS) D
NET REALIZED (4.03) 5.73 4.15 7.10 (.44) 5.92
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM (4.06) 5.65 4.21 7.14 (.43) 5.92
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIONS
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)
DISTRIBUTIONS
REDEMPTION FEES .01 .03 .07 .03 .03 .06
ADDED TO PAID
IN CAPITAL
NET ASSET VALUE, $ 21.86 $ 25.91 $ 25.51 $ 25.11 $ 20.04 $ 20.61
END OF PERIOD
TOTAL RETURN B, C (15.63)% 25.76% 18.25% 36.86% (1.93)% 40.07%
RATIOS AND
SUPPLEMENTAL
DATA
NET ASSETS, END $ 33,339 $ 50,428 $ 102,882 $ 137,520 $ 109,968 $ 206,012
OF PERIOD
(000 OMITTED)
RATIO OF 1.39% A 1.67% 1.51% 1.54% 1.80% 1.69%
EXPENSES TO
AVERAGE NET
ASSETS
RATIO OF 1.38% A, E 1.60% E 1.44% E 1.53% E 1.78% E 1.68% E
EXPENSES TO
AVERAGE NET
ASSETS AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.23)% A (.32)% .25% .19% .06% .01%
INVESTMENT
INCOME (LOSS)
TO AVERAGE NET
ASSETS
PORTFOLIO 98% A 115% 261% 115% 131% 95%
TURNOVER RATE
AVERAGE $ .0420 $ .0386 $ .0401
COMMISSION
RATE F
A ANNUALIZED B THE TOTAL
RETURNS WOULD HAVE BEEN
LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE
PERIODS SHOWN (SEE NOTE 8
OF NOTES TO FINANCIAL
STATEMENTS). C TOTAL
RETURNS DO NOT INCLUDE THE
ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT
ANNUALIZED. D NET
INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING
DURING THE PERIOD. E FMR
OR THE FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID
OR REDUCED A PORTION OF THE
FUND'S EXPENSES (SEE NOTE
8 OF NOTES TO FINANCIAL
STATEMENTS). F FOR FISCAL
YEARS BEGINNING ON OR AFTER
SEPTEMBER 1, 1995, A FUND
IS REQUIRED TO DISCLOSE ITS
AVERAGE COMMISSION RATE
PER SHARE FOR SECURITY TRADES
ON WHICH COMMISSIONS ARE
CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD
AND FUND TO FUND DEPENDING
ON THE MIX OF TRADES
EXECUTED IN VARIOUS
MARKETS WHERE TRADING
PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
</TABLE>
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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 MONTHS YEAR YEARS YEARS
SELECT INDUSTRIAL MATERIALS -25.80% -26.99% 24.66% 92.08%
SELECT INDUSTRIAL MATERIALS -28.10% -29.25% 20.85% 86.25%
(LOAD ADJ.)
S&P 500 -8.10% 8.10% 131.21% 382.74%
GS CYCLICAL INDUSTRIES -18.01% -10.45% N/A N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks - and the Goldman Sachs
Cyclical Industries Index - a market capitalization-weighted index of
277 stocks designed to measure the performance of companies in the
cyclical industries sector. These benchmarks include reinvestment of
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 YEAR YEARS YEARS
SELECT INDUSTRIAL MATERIALS -26.99% 4.51% 6.75%
SELECT INDUSTRIAL MATERIALS -29.25% 3.86% 6.42%
(LOAD ADJ.)
S&P 500 8.10% 18.25% 17.05%
GS CYCLICAL INDUSTRIES -10.45% N/A N/A
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.
(checkmark)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.
$10,000 OVER 10 YEARS
Industrial Materials S&P 500
00509 SP001
1988/08/31 9700.00 10000.00
1988/09/30 9782.33 10426.00
1988/10/31 9602.70 10715.84
1988/11/30 9512.89 10562.61
1988/12/31 10095.74 10747.45
1989/01/31 10704.37 11534.17
1989/02/28 10240.29 11246.96
1989/03/31 10133.78 11509.02
1989/04/30 10445.70 12106.34
1989/05/31 10582.64 12596.64
1989/06/30 9966.40 12524.84
1989/07/31 10864.14 13655.84
1989/08/31 11731.44 13923.49
1989/09/30 11016.30 13866.40
1989/10/31 10110.95 13544.70
1989/11/30 10255.50 13821.02
1989/12/31 10544.60 14152.72
1990/01/31 9738.16 13203.07
1990/02/28 9905.54 13373.39
1990/03/31 10194.64 13727.79
1990/04/30 9456.67 13384.59
1990/05/31 10027.26 14689.59
1990/06/30 9920.85 14589.70
1990/07/31 9803.77 14543.01
1990/08/31 8671.96 13228.33
1990/09/30 8055.33 12584.11
1990/10/31 7961.66 12529.99
1990/11/30 8383.16 13339.43
1990/12/31 8734.41 13711.60
1991/01/31 9046.63 14309.43
1991/02/28 9710.10 15332.55
1991/03/31 9842.80 15703.60
1991/04/30 9858.41 15741.29
1991/05/31 10701.41 16421.31
1991/06/30 10584.29 15669.22
1991/07/31 11007.66 16399.40
1991/08/31 11266.39 16788.07
1991/09/30 11117.42 16507.71
1991/10/31 11595.68 16728.91
1991/11/30 10670.53 16054.73
1991/12/31 11862.24 17891.40
1992/01/31 12379.70 17558.62
1992/02/29 12983.40 17786.88
1992/03/31 12756.03 17440.03
1992/04/30 13422.45 17952.77
1992/05/31 13579.25 18040.74
1992/06/30 13249.65 17771.93
1992/07/31 13547.74 18498.80
1992/08/31 12692.67 18119.58
1992/09/30 12520.09 18333.39
1992/10/31 12661.30 18397.56
1992/11/30 13131.98 19024.91
1992/12/31 13329.45 19258.92
1993/01/31 13613.06 19420.70
1993/02/28 13739.10 19684.82
1993/03/31 13967.56 20100.17
1993/04/30 13762.74 19613.74
1993/05/31 14329.95 20139.39
1993/06/30 14369.08 20197.79
1993/07/31 14566.67 20117.00
1993/08/31 14946.06 20879.44
1993/09/30 14479.73 20718.67
1993/10/31 15333.34 21147.54
1993/11/30 15538.84 20946.64
1993/12/31 16179.05 21200.10
1994/01/31 17491.07 21920.90
1994/02/28 17127.50 21326.84
1994/03/31 16645.37 20396.99
1994/04/30 17270.13 20658.07
1994/05/31 17444.42 20996.87
1994/06/30 17262.21 20482.44
1994/07/31 17903.90 21154.27
1994/08/31 18870.39 22021.59
1994/09/30 18632.73 21482.06
1994/10/31 18387.15 21965.41
1994/11/30 17087.93 21165.43
1994/12/31 17504.74 21479.31
1995/01/31 17010.52 22036.27
1995/02/28 18437.37 22895.02
1995/03/31 18859.84 23570.66
1995/04/30 18947.18 24264.81
1995/05/31 18755.55 25234.68
1995/06/30 19593.92 25820.88
1995/07/31 21286.63 26677.10
1995/08/31 21230.74 26744.06
1995/09/30 20631.90 27872.66
1995/10/31 19434.23 27773.15
1995/11/30 21222.75 28992.39
1995/12/31 20198.70 29550.79
1996/01/31 20511.42 30556.70
1996/02/29 20904.33 30839.96
1996/03/31 21962.78 31136.95
1996/04/30 22477.43 31595.90
1996/05/31 22339.03 32410.76
1996/06/30 21598.20 32534.25
1996/07/31 20702.68 31096.88
1996/08/31 21826.15 31752.72
1996/09/30 22306.47 33539.76
1996/10/31 22257.62 34464.79
1996/11/30 22933.33 37069.98
1996/12/31 23029.27 36335.62
1997/01/31 23131.47 38605.87
1997/02/28 23557.30 38908.54
1997/03/31 21990.22 37309.79
1997/04/30 22050.06 39537.19
1997/05/31 23447.28 41944.21
1997/06/30 23373.25 43823.31
1997/07/31 25418.18 47310.33
1997/08/31 25519.96 44660.01
1997/09/30 26186.18 47106.04
1997/10/31 24159.76 45532.69
1997/11/30 23872.92 47640.40
1997/12/31 23433.28 48458.39
1998/01/31 23875.22 48994.34
1998/02/28 25110.67 52527.81
1998/03/31 26336.07 55217.76
1998/04/30 26577.13 55773.25
1998/05/31 25271.38 54814.51
1998/06/30 24005.80 57041.07
1998/07/31 22308.32 56433.58
1998/08/31 18625.00 48274.42
IMATRL PRASUN SHR__CHT 19980831 19980925 112925 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Industrial Materials Portfolio on August
31, 1988, and the current 3.00% sales charge was paid. As the chart
shows, by August 31, 1998, the value of the investment would have
grown to $18,625 - a 86.25% increase on the initial investment - and
includes the effect of a $7.50 trading fee. For comparison, look at
how the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $48,274 - a 382.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
MONSANTO CO. 8.4
DU PONT (E.I.) DE NEMOURS & CO. 6.3
KIMBERLY-CLARK CORP. 5.6
OWENS-ILLINOIS, INC. 5.2
RYERSON TULL, INC. CLASS A 4.8
ALUMINUM CO. OF AMERICA 4.3
CYTEC INDUSTRIES, INC. 4.2
BURLINGTON NORTHERN SANTA FE CORP. 3.9
MASCO CORP. 3.2
AIR PRODUCTS & CHEMICALS, INC. 2.8
TOP INDUSTRIES AS OF AUGUST 31, 1998
CHEMICALS 21.4%
RAILROADS 13.2%
PAPER 8.8%
GLASS CONTAINERS 5.2%
METALS SERVICE CENTERS -
WHOLESALE 4.8%
ALL OTHERS 46.6%
ROW: 1, COL: 1, VALUE: 46.6
ROW: 1, COL: 2, VALUE: 4.8
ROW: 1, COL: 3, VALUE: 5.2
ROW: 1, COL: 4, VALUE: 8.800000000000001
ROW: 1, COL: 5, VALUE: 13.2
ROW: 1, COL: 6, VALUE: 21.4
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
INDUSTRIAL MATERIALS PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
(photograph of Peter Hirsch)
(photograph of James Catudal)
NOTE TO SHAREHOLDERS: On September 1, 1998, after the end of the
period covered by this report,
Peter Hirsch (right) became Portfolio Manager of Fidelity Select
Industrial Materials Portfolio. The following is an interview with
James Catudal, who managed the fund during the period, and Peter
Hirsch, who adds his outlook.
Q. HOW DID THE FUND PERFORM, JIM?
J.C. For the six- and 12-month periods that ended August 31, 1998, the
fund had total returns of -25.80% and -26.99%, respectively. In
comparison, the Standard & Poor's 500 Index returned -8.10% and 8.10%,
respectively. Beginning this period, the fund also compares itself to
the Goldman Sachs Cyclical Industries Index - an index of 277 stocks
designed to measure the performance of companies in the cyclical
industries sector - which returned -18.01% and -10.45% over the same
periods, respectively.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S WEAK PERFORMANCE RELATIVE TO
THE INDEXES?
J.C. As a result of the slowdown in most Asian economies, there was
less demand for virtually all global commodities. Whether you're
talking about steel, paper, chemicals, plastics, copper, nickel or
precious metals, prices were weak. Consequently, the fund fared worse
than the broader market as reflected in the S&P 500. The Goldman Sachs
Cyclical Industries Index contains a mix of industrial materials
stocks and stocks from industries with a more domestic orientation,
such as automotive and industrial equipment manufacturing.
Domestically oriented stocks were more insulated from the deflationary
impact of the Asian crisis, enabling the Goldman Sachs Cyclical
Industries Index to outperform the fund.
Q. HOW DID YOU MANAGE THE FUND AGAINST THAT DIFFICULT BACKDROP?
J.C. I focused on companies with strong management and solid long-term
growth prospects that are poised to benefit when commodity prices turn
up again. In many cases, these were companies that make specialty
products whose price is not determined solely by commodity prices. In
addition, where possible, I tried to invest in companies with limited
Asian exposure.
Q. WHAT STOCKS PERFORMED WELL FOR THE FUND?
J.C. Monsanto - the fund's largest holding at the end of the period -
was one of the better performers. Investors responded positively to
the anticipated merger with American Home Products and Monsanto's
ongoing transformation from a chemical company to a life sciences
company that produces food ingredients, pharmaceuticals and
agricultural products. Alumax was bought by Aluminum Co. of America,
and the former's stock responded with some strength that helped
performance. Another relatively helpful stock was Inland Steel
Industries, which strengthened when the company sold its steel
business and used the proceeds to repurchase about half of its
outstanding shares.
Q. WHAT HOLDINGS HURT THE FUND'S PERFORMANCE?
J.C. Cytec Industries declined due to concerns about a slowdown in the
demand for the company's specialty chemicals from the aerospace
industry. Kimberly-Clark suffered because the company failed to meet
the sales and earnings targets it set for itself both in the U.S. and
Europe. Owens-Illinois was weak because of investors' concerns about
the company's exposure to Asia and other emerging markets, as well as
reduced demand for the glass and plastic packaging the company
manufactures.
Q. TURNING TO YOU, PETER, WHAT'S YOUR OUTLOOK?
P.H. A lot depends on the global economy. Asia, of course, is the
biggest concern because the region's economies are so weak and they
jointly consume up to one-third of the total supply of global
commodities that are produced by some of the companies in which the
fund invests. Russia and Latin America are other current problem
areas. On the other hand, most of the stocks that the fund holds have
been beaten down severely in the past year or so and have very
discounted valuations. Although it's difficult to say when we'll see
these stocks rebound, the fund is well positioned to benefit from any
meaningful upturn in demand for industrial commodities.
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.
(checkmark)FUND FACTS
START DATE: September 29, 1986
FUND NUMBER: 509
TRADING SYMBOL: FSDPX
SIZE: as of August 31, 1998, more than
$11 million
MANAGER: Peter Hirsch, since September 1998;
analyst, growth and income funds and steel
industries, 1995-1998; joined Fidelity in 1995
INDUSTRIAL MATERIALS PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.6%
SHARES VALUE (NOTE 1)
BUILDING MATERIALS - 6.6%
CEMENT - 1.0%
Lafarge Corp. 4,000 $ 114,250
PAINT & VARNISH - 1.9%
Sherwin-Williams Co. 9,700 231,584
PAVING, ROOFING & SIDING - 0.5%
Owens Corning 1,700 59,606
PLUMBING SUPPLIES - WHOLESALE - 3.2%
Masco Corp. 16,500 379,500
TOTAL BUILDING MATERIALS 784,940
CHEMICALS & PLASTICS - 28.0%
CHEMICALS - 21.4%
Cytec Industries, Inc. (a) 22,000 503,250
du Pont (E.I.) de Nemours & Co. 13,000 749,938
MacDermid, Inc. 3,000 83,250
Monsanto Co. 18,400 1,006,250
Raychem Corp. 2,420 70,180
Witco Corp. 6,300 132,300
2,545,168
CHEMICALS, GENERAL - 0.5%
W.R. Grace & Co. 5,000 64,375
INDUSTRIAL GASES - 4.2%
Air Products & Chemicals, Inc. 11,000 336,188
Praxair, Inc. 4,500 161,438
497,626
PLASTICS - 1.1%
Hanna (M.A.) Co. 4,700 58,456
Ivex Packaging Corp. 4,300 70,681
129,137
UNSUPPORTED PLASTICS FILM & SHEET - 0.8%
Sealed Air Corp. (a) 2,840 102,240
TOTAL CHEMICALS & PLASTICS 3,338,546
DRUGS & PHARMACEUTICALS - 0.8%
BIOTECHNOLOGY - 0.8%
Sigma Aldrich Corp. 3,500 97,125
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
CARBON & GRAPHITE PRODUCTS - 0.2%
UCAR International, Inc. (a) 1,500 27,188
IRON & STEEL - 3.8%
BLAST FURNACES - 1.9%
Allegheny Teledyne, Inc. 7,500 112,969
Steel Dynamics, Inc. (a) 9,500 105,688
218,657
IRON & STEEL BLAST FURNACES, MILLS - 1.9%
Inland Steel Industries, Inc. 2,220 42,041
Nucor Corp. 5,200 186,875
228,916
TOTAL IRON & STEEL 447,573
METALS & MINING - 12.4%
METAL MINING - 0.9%
Breakwater Resources Ltd. (a) 30,000 15,301
Phelps Dodge Corp. 2,000 89,500
104,801
METAL ORES - 0.5%
Falconbridge Ltd. 8,200 62,735
SHARES VALUE (NOTE 1)
METALS SERVICE CENTERS - WHOLESALE - 4.8%
Ryerson Tull, Inc. Class A (a) 34,300 $ 572,381
PRIMARY PRODUCTION OF ALUMINUM - 1.4%
Reynolds Metals Co. 3,500 167,781
PRIME NONFERROUS SMELTING - 4.8%
Aluminum Co. of America 8,541 511,392
Brush Wellman, Inc. 4,000 58,500
569,892
TOTAL METALS & MINING 1,477,590
PACKAGING & CONTAINERS - 8.0%
GLASS CONTAINERS - 5.2%
Owens-Illinois, Inc. (a) 20,000 623,750
METAL CANS & CONTAINERS - 2.8%
Silgan Holdings, Inc. (a) 14,100 327,825
TOTAL PACKAGING & CONTAINERS 951,575
PAPER & FOREST PRODUCTS - 16.7%
CONVERTED PAPER & PAPERBOARD - 1.2%
Boise Cascade Corp. 5,887 143,864
PAPER - 8.8%
Champion International Corp. 7,200 237,600
Georgia-Pacific Corp. 2,400 102,900
Kimberly-Clark Corp. 17,500 667,188
Stone Container Corp. (a) 3,500 36,531
1,044,219
PAPER MILLS - 3.4%
Bowater, Inc. 4,000 151,250
Fort James Corp. 8,700 253,388
404,638
PAPERBOARD MILLS - 3.3%
Jefferson Smurfit Corp. (a) 6,000 67,500
Mead Corp. 12,000 328,500
396,000
TOTAL PAPER & FOREST PRODUCTS 1,988,721
PRECIOUS METALS - 1.8%
GOLD & SILVER ORES - 0.8%
Getchell Gold Corp. (a) 10,500 94,500
GOLD ORES - 1.0%
Golden Knight Resources, Inc. (a) 20,300 5,824
Kinross Gold Corp. (a) 17,000 29,264
Newmont Gold Co. 2,000 29,750
Newmont Mining Corp. 4,000 54,750
119,588
TOTAL PRECIOUS METALS 214,088
RAILROADS - 13.2%
Burlington Northern Santa Fe Corp. 5,000 465,313
CSX Corp. 6,500 245,375
Canadian National Railway Co. 4,000 180,555
Kansas City Southern Industries, Inc. 10,000 328,750
Norfolk Southern Corp. 9,000 253,688
Wisconsin Central Transportation Corp. (a) 8,000 100,500
1,574,181
TEXTILES & APPAREL - 0.5%
TEXTILE MILL PRODUCTS - 0.5%
Unifi, Inc. 2,700 60,075
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TRUCKING & FREIGHT - 1.6%
TRUCKING, LOCAL & LONG DISTANCE - 0.7%
Heartland Express, Inc. (a) 5,300 $ 84,800
TRUCKING, LONG DISTANCE - 0.9%
USFreightways Corp. 4,500 100,969
TOTAL TRUCKING & FREIGHT 185,769
TOTAL COMMON STOCKS
(Cost $13,450,166) 11,147,371
CASH EQUIVALENTS - 6.4%
Taxable Central Cash Fund (b)
(Cost $765,283) 765,283 765,283
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $14,215,449) $ 11,912,654
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.58%. 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 $5,567,648 and $11,467,307, 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 $1,981 for the
period (see Note 4 of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $14,353,534. Net unrealized depreciation
aggregated $2,440,880, of which $596,053 related to appreciated
investment securities and $3,036,933 related to depreciated investment
securities.
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.
INDUSTRIAL MATERIALS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31,
1998
(UNAUDITED)
ASSETS
INVESTMENT IN $ 11,912,654
SECURITIES, AT
VALUE
(COST
$14,215,449
) -
SEE
ACCOMPANYIN
G SCHEDULE
RECEIVABLE FOR 5,977
FUND SHARES
SOLD
DIVIDENDS 15,054
RECEIVABLE
INTEREST 1,941
RECEIVABLE
REDEMPTION FEES 94
RECEIVABLE
OTHER 2,508
RECEIVABLES
TOTAL ASSETS 11,938,228
LIABILITIES
PAYABLE TO $ 11,899
CUSTODIAN
BANK
PAYABLE FOR 173,252
FUND SHARES
REDEEMED
ACCRUED 6,836
MANAGEMENT
FEE
OTHER PAYABLES 32,459
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 224,446
NET ASSETS $ 11,713,782
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 14,792,469
ACCUMULATED (60,691)
NET INVESTMENT
LOSS
ACCUMULATED (715,201)
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED (2,302,795)
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
NET ASSETS, FOR $ 11,713,782
631,394
SHARES
OUTSTANDING
NET ASSET $18.55
VALUE AND
REDEMPTION
PRICE PER
SHARE
($11,713,78
2 (DIVIDED BY) 631,394
SHARES)
MAXIMUM $19.12
OFFERING PRICE
PER SHARE
(100/97.00
OF $18.55)
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED AUGUST
31, 1998
(UNAUDITED)
INVESTMENT $ 114,354
INCOME
DIVIDENDS
INTEREST 22,272
TOTAL INCOME 136,626
EXPENSES
MANAGEMENT $ 58,178
FEE
TRANSFER AGENT 73,463
FEES
ACCOUNTING FEES 30,336
AND EXPENSES
NON-INTERESTED 39
TRUSTEES'
COMPENSATION
CUSTODIAN FEES 6,252
AND EXPENSES
REGISTRATION FEES 15,506
AUDIT 9,981
LEGAL 66
REPORTS TO 6,218
SHAREHOLDERS
TOTAL EXPENSES 200,039
BEFORE
REDUCTIONS
EXPENSE (2,722) 197,317
REDUCTIONS
NET INVESTMENT (60,691)
INCOME (LOSS)
REALIZED AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS) ON:
INVESTMENT 127,374
SECURITIES
FOREIGN 248 127,622
CURRENCY
TRANSACTIONS
CHANGE IN NET
UNREALIZED
APPRECIATION
(DEPRECIATION)
ON:
INVESTMENT (4,495,015)
SECURITIES
ASSETS AND 33 (4,494,982)
LIABILITIES IN
FOREIGN
CURRENCIES
NET GAIN (LOSS) (4,367,360)
NET INCREASE $ (4,428,051)
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 8,844
INFORMATION
SALES CHARGES
PAID TO FDC
SALES CHARGES $ 8,471
- - RETAINED BY
FDC
DEFERRED SALES $ 391
CHARGES
WITHHELD
BY FDC
EXCHANGE FEES $ 3,683
WITHHELD BY
FSC
EXPENSE $ 2,722
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEMENTS
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED YEAR ENDED
(DECREASE) IN AUGUST 31, 1998 FEBRUARY 28,
NET ASSETS (UNAUDITED) 1998
OPERATIONS $ (60,691) $ (124,764)
NET
INVESTMENT
INCOME (LOSS)
NET REALIZED 127,622 3,017,681
GAIN (LOSS)
CHANGE IN NET (4,494,982) (1,210,871)
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (4,428,051) 1,682,046
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
DISTRIBUTIONS TO - (37,279)
SHAREHOLDERS
FROM NET
INVESTMENT
INCOME
FROM NET - (4,304,754)
REALIZED GAIN
TOTAL - (4,342,033)
DISTRIBUTIONS
SHARE 4,594,367 15,807,574
TRANSACTIONS
NET PROCEEDS
FROM SALES OF
SHARES
REINVESTMENT - 4,249,488
OF
DISTRIBUTIONS
COST OF SHARES (11,049,317) (61,328,959)
REDEEMED
NET INCREASE (6,454,950) (41,271,897)
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION 14,963 51,834
FEES
TOTAL (10,868,038) (43,880,050)
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
BEGINNING OF 22,581,820 66,461,870
PERIOD
END OF PERIOD $ 11,713,782 $ 22,581,820
(INCLUDING
ACCUMULATED
NET INVESTMENT
LOSS OF
$60,691 AND
$0,
RESPECTIVELY)
OTHER
INFORMATION
SHARES
SOLD 177,192 605,194
ISSUED IN - 181,274
REINVESTMENT
OF
DISTRIBUTIONS
REDEEMED (449,204) (2,285,848)
NET INCREASE (272,012) (1,499,380)
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
ENDED FEBRUARY 29,
AUGUST 31,
1998
SELECTED (UNAUDITED) 1998 1997 1996 1995 1994
PER-SHARE
DATA
NET ASSET VALUE, $ 25.00 $ 27.66 $ 26.07 $ 23.13 $ 21.67 $ 17.44
BEGINNING OF
PERIOD
INCOME FROM
INVESTMENT
OPERATIONS
NET (.08) (.11) .06 .12 .17 .15
INVESTMENT
INCOME (LOSS) D
NET REALIZED (6.39) 1.43 3.12 2.92 1.43 4.07
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM (6.47) 1.32 3.18 3.04 1.60 4.22
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIONS
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)
DISTRIBUTIONS
REDEMPTION .02 .05 .04 .05 .04 .07
FEES ADDED TO
PAID IN
CAPITAL
NET ASSET VALUE, $ 18.55 $ 25.00 $ 27.66 $ 26.07 $ 23.13 $ 21.67
END OF PERIOD
TOTAL RETURN B, C (25.80)% 6.59% 12.69% 13.38% 7.65% 24.66%
RATIOS AND
SUPPLEMENTAL
DATA
NET ASSETS, END $ 11,714 $ 22,582 $ 66,462 $ 86,338 $ 183,454 $ 155,721
OF PERIOD
(000 OMITTED)
RATIO OF 1.98% A 1.98% 1.54% 1.64% 1.56% 2.10%
EXPENSES TO
AVERAGE NET
ASSETS
RATIO OF 1.96% A, E 1.94% E 1.51% E 1.61% E 1.53% E 2.08% E
EXPENSES TO
AVERAGE NET
ASSETS AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.60)% A (.42)% .23% .49% .77% .75%
INVESTMENT
INCOME (LOSS)
TO AVERAGE
NET ASSETS
PORTFOLIO 60% A 118% 105% 138% 139% 185%
TURNOVER RATE
AVERAGE $ .0283 $ .0214 $ .0242
COMMISSION
RATE F
A ANNUALIZED B THE TOTAL
RETURNS WOULD HAVE BEEN
LOWER HAD CERTAIN
EXPENSES NOT BEEN
REDUCED DURING THE PERIODS
SHOWN (SEE NOTE 8 OF
NOTES TO FINANCIAL
STATEMENTS). C TOTAL
RETURNS DO NOT INCLUDE THE
ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS
THAN ONE YEAR ARE NOT
ANNUALIZED. D NET
INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON
AVERAGE SHARES
OUTSTANDING DURING THE
PERIOD. E FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID
OR REDUCED A PORTION OF THE
FUND'S EXPENSES (SEE NOTE
8 OF NOTES TO FINANCIAL
STATEMENTS). F FOR FISCAL
YEARS BEGINNING ON OR AFTER
SEPTEMBER 1, 1995, A
FUND IS REQUIRED TO DISCLOSE
ITS AVERAGE COMMISSION
RATE PER SHARE FOR SECURITY
TRADES ON WHICH
COMMISSIONS ARE CHARGED.
THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND
FUND TO FUND DEPENDING ON
THE MIX OF TRADES EXECUTED
IN VARIOUS MARKETS WHERE
TRADING PRACTICES AND
COMMISSION RATE STRUCTURES
MAY DIFFER.
</TABLE>
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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 MONTHS YEAR YEARS YEARS
SELECT PAPER AND -25.51% -27.36% 40.23% 115.13%
FOREST PRODUCTS
SELECT PAPER AND -27.82% -29.61% 35.95% 108.60%
FOREST PRODUCTS
(LOAD ADJ.)
S&P 500 -8.10% 8.10% 131.21% 382.74%
GS CYCLICAL INDUSTRIES -18.01% -10.45% N/A N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks - and the Goldman Sachs
Cyclical Industries Index - a market capitalization-weighted index of
277 stocks designed to measure the performance of companies in the
cyclical industries sector. These benchmarks include reinvestment of
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 YEAR YEARS YEARS
SELECT PAPER AND -27.36% 7.00% 7.96%
FOREST PRODUCTS
SELECT PAPER AND -29.61% 6.33% 7.63%
FOREST PRODUCTS
(LOAD ADJ.)
S&P 500 8.10% 18.25% 17.05%
GS CYCLICAL INDUSTRIES -10.45% N/A N/A
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.
(checkmark)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.
$10,000 OVER 10 YEARS
Paper & Forest S&P 500
00506 SP001
1988/08/31 9700.00 10000.00
1988/09/30 9892.16 10426.00
1988/10/31 9674.94 10715.84
1988/11/30 9466.06 10562.61
1988/12/31 10160.51 10747.45
1989/01/31 10261.02 11534.17
1989/02/28 9959.47 11246.96
1989/03/31 9967.85 11509.02
1989/04/30 10328.03 12106.34
1989/05/31 10512.31 12596.64
1989/06/30 9842.20 12524.84
1989/07/31 10788.73 13655.84
1989/08/31 11559.36 13923.49
1989/09/30 10922.75 13866.40
1989/10/31 10428.55 13544.70
1989/11/30 10353.16 13821.02
1989/12/31 10574.90 14152.72
1990/01/31 9608.14 13203.07
1990/02/28 9701.43 13373.39
1990/03/31 9972.80 13727.79
1990/04/30 9328.30 13384.59
1990/05/31 9947.36 14689.59
1990/06/30 9709.91 14589.70
1990/07/31 9854.07 14543.01
1990/08/31 8675.32 13228.33
1990/09/30 7835.77 12584.11
1990/10/31 7589.84 12529.99
1990/11/30 8353.07 13339.43
1990/12/31 8977.29 13711.60
1991/01/31 9718.93 14309.43
1991/02/28 10184.61 15332.55
1991/03/31 10391.58 15703.60
1991/04/30 10900.38 15741.29
1991/05/31 12150.82 16421.31
1991/06/30 11840.36 15669.22
1991/07/31 11848.99 16399.40
1991/08/31 11909.35 16788.07
1991/09/30 11452.30 16507.71
1991/10/31 11883.48 16728.91
1991/11/30 10977.99 16054.73
1991/12/31 12098.27 17891.40
1992/01/31 13210.95 17558.62
1992/02/29 13272.77 17786.88
1992/03/31 13361.08 17440.03
1992/04/30 13573.02 17952.77
1992/05/31 13193.29 18040.74
1992/06/30 13105.64 17771.93
1992/07/31 13008.30 18498.80
1992/08/31 12486.20 18119.58
1992/09/30 12353.46 18333.39
1992/10/31 12955.21 18397.56
1992/11/30 13433.06 19024.91
1992/12/31 13556.71 19258.92
1993/01/31 13974.25 19420.70
1993/02/28 14285.18 19684.82
1993/03/31 14267.42 20100.17
1993/04/30 14916.44 19613.74
1993/05/31 14960.88 20139.39
1993/06/30 14640.87 20197.79
1993/07/31 14489.75 20117.00
1993/08/31 14880.88 20879.44
1993/09/30 14169.73 20718.67
1993/10/31 14720.87 21147.54
1993/11/30 15636.48 20946.64
1993/12/31 16072.06 21200.10
1994/01/31 17938.84 21920.90
1994/02/28 17432.14 21326.84
1994/03/31 15583.14 20396.99
1994/04/30 15565.73 20658.07
1994/05/31 16200.69 20996.87
1994/06/30 16037.42 20482.44
1994/07/31 17398.06 21154.27
1994/08/31 19339.24 22021.59
1994/09/30 19683.93 21482.06
1994/10/31 18459.36 21965.41
1994/11/30 17652.04 21165.43
1994/12/31 18344.38 21479.31
1995/01/31 18221.20 22036.27
1995/02/28 20031.01 22895.02
1995/03/31 20173.14 23570.66
1995/04/30 20256.55 24264.81
1995/05/31 20591.45 25234.68
1995/06/30 22457.31 25820.88
1995/07/31 23222.79 26677.10
1995/08/31 23203.66 26744.06
1995/09/30 22820.92 27872.66
1995/10/31 22486.02 27773.15
1995/11/30 22820.92 28992.39
1995/12/31 22364.51 29550.79
1996/01/31 22922.31 30556.70
1996/02/29 21869.86 30839.96
1996/03/31 22985.46 31136.95
1996/04/30 23990.46 31595.90
1996/05/31 23506.91 32410.76
1996/06/30 22188.15 32534.25
1996/07/31 21605.70 31096.88
1996/08/31 22814.56 31752.72
1996/09/30 23638.79 33539.76
1996/10/31 23594.83 34464.79
1996/11/30 23869.57 37069.98
1996/12/31 23944.77 36335.62
1997/01/31 24191.39 38605.87
1997/02/28 24247.44 38908.54
1997/03/31 22935.86 37309.79
1997/04/30 23622.29 39537.19
1997/05/31 26537.63 41944.21
1997/06/30 26745.05 43823.31
1997/07/31 28830.72 47310.33
1997/08/31 28727.01 44660.01
1997/09/30 29568.20 47106.04
1997/10/31 26687.43 45532.69
1997/11/30 26860.28 47640.40
1997/12/31 26184.15 48458.39
1998/01/31 27185.53 48994.34
1998/02/28 28013.83 52527.81
1998/03/31 28446.52 55217.76
1998/04/30 29977.89 55773.25
1998/05/31 28226.34 54814.51
1998/06/30 26953.64 57041.07
1998/07/31 24357.82 56433.58
1998/08/31 20859.83 48274.42
IMATRL PRASUN SHR__CHT 19980831 19980909 100803 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Paper and Forest Products Portfolio on
August 31, 1988, and the current 3.00% sales charge was paid. As the
chart shows, by August 31, 1998, the value of the investment would
have grown to $20,860 - a 108.60% increase on the initial investment -
and includes the effect of a $7.50 trading fee. For comparison, look
at how the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $48,274 - a 382.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
LOUISIANA-PACIFIC CORP. 11.8
UPM-KYMMENE CORP. 9.0
BOWATER, INC. 8.5
FORT JAMES CORP. 6.3
ENSO OY CLASS R 6.1
CHESAPEAKE CORP. 5.9
METSA-SERLA LTD. CLASS B 5.2
ASSI DOMAN AB FREE SHARES 4.3
DONOHUE, INC. (VTG.) 4.2
GEORGIA PACIFIC CORP. (TIMBER GROUP) 3.6
TOP INDUSTRIES AS OF AUGUST 31, 1998
PAPER MILLS 32.9%
PAPER 30.0%
LUMBER & WOOD 13.4%
FORESTRY 4.3%
OFFICE AUTOMATION 4.3%
ALL OTHERS 15.1%
ROW: 1, COL: 1, VALUE: 15.1
ROW: 1, COL: 2, VALUE: 4.3
ROW: 1, COL: 3, VALUE: 4.3
ROW: 1, COL: 4, VALUE: 13.4
ROW: 1, COL: 5, VALUE: 30.0
ROW: 1, COL: 6, VALUE: 32.9
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
PAPER AND FOREST PRODUCTS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Doug Lober)
Doug Lober,
Portfolio Manager of
Fidelity Select Paper &
Forest Products Portfolio
Q. HOW DID THE FUND PERFORM, DOUG?
A. For the six months that ended August 31, 1998, the fund returned
- -25.51%. This lagged the Standard & Poor's 500 Index, which returned
- -8.10% over the same time span. Beginning this period, the fund also
compares itself to the Goldman Sachs Cyclical Industries Index - an
index of 277 stocks designed to measure the performance of companies
in the cyclical industries sector - which returned -18.01% for the six
months that ended August 31. For the 12 months that ended August 31,
1998, the fund returned -27.36%, while the S&P 500 and Goldman Sachs
index returned 8.10% and -10.45%, respectively.
Q. WHAT FACTORS HURT THE FUND AND PAPER STOCKS IN GENERAL?
A. The escalating economic problems in Asia continued to be the
primary negative influence on the performance of paper stocks. Paper
is a global commodity. Asia accounts for over 30% of world demand, and
this demand has been growing at 7% a year versus only 2% for the rest
of the world. Economic turbulence throughout Asia has resulted in
slowing Asian demand for paper, and this slack in demand has put
pressure on paper prices throughout the world. In 1998, prices for
pulp - which is the building block for paper - have fallen as have
prices for printing and writing paper and cardboard boxes. This
across-the-board price decline resulted in weak share price
performance for all paper stocks.
Q. WAS THERE ONE SEGMENT OF THE MARKET THAT CAUGHT YOUR EYE?
A. Oriented strand board (OSB) - a building product that competes with
plywood - had the most favorable outlook. For several years, there was
significant capacity growth within the OSB market. This growth finally
began to slow during the period, creating a better OSB supply/demand
balance. In addition, housing starts in the United States have been
strong, and companies that specialize in OSB and other building
products have been the beneficiaries. Also, OSB is not exported to
Asia and has no import competition. The result was that OSB prices
rose sharply during the period. The fund benefited from this trend by
investing considerably in Louisiana-Pacific - the world's largest
producer of OSB. At the end of the period, Louisiana-Pacific was the
fund's largest single holding.
Q. EUROPEAN PAPER STOCKS ACCOUNT FOR A FEW OF THE FUND'S TOP HOLDINGS.
WHAT WAS YOUR ATTRACTION?
A. The fund has always held some European paper stocks, since Europe
accounts for one-third of the global paper sector and many excellent
paper companies are based there - particularly in Finland and Sweden.
The fund, in fact, held up to 25% of its assets in Europe during the
period for several reasons. First, the rate of consolidation is
occurring more quickly in Europe than in the U.S., and industry
consolidation typically gives companies a higher level of flexibility
in raising prices. Second, stock valuations are much cheaper in Europe
than in the U.S. And lastly, a strong U.S. dollar generally results in
European companies getting higher prices for their paper in their own
currencies, since most paper sales are indexed to U.S. dollars. Of
course, international investments typically carry more risks than
domestic investments.
Q. FORT JAMES, BOWATER AND JEFFERSON SMURFIT WERE THREE OF THE FUND'S
DISAPPOINTMENTS. WHAT HAPPENED WITH THESE STOCKS?
A. The weak performance of these three names typifies the stock
market's lack of differentiation among paper companies during the
period. Each of these companies operates in a completely different
paper segment from the other (tissue, newsprint and cardboard boxes,
respectively) and in my opinion, have better managements and higher
asset values than most other paper companies. Despite this, however,
all three stocks declined equally with each other and with most other
paper companies.
Q. DO YOU SEE A LIGHT AT THE END OF THE TUNNEL?
A. I see light as well as challenges. The valuations of paper stocks
are falling to historically low levels, which usually results in good
buying opportunities. Furthermore, the paper industry plans to add
only about 1.5% of new capacity per year over the next several years.
Reduced capacity growth should raise industry operating rates and lead
to better overall pricing for paper products. Asia and its impact on
demand remains the chief negative influence going forward. One final
factor that could change is that the stock market has not been
friendly to stock pickers in the paper sector over the past year. I
expect the market to start differentiating among companies again, and
this should play into Fidelity's stock-picking strengths.
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.
(checkmark)FUND FACTS
START DATE: June 30, 1986
FUND NUMBER: 506
TRADING SYMBOL: FSPFX
SIZE: as of August 31, 1998, more than $11 million
MANAGER: Doug Lober, since 1997; manager,
Fidelity Select Broadcast and Media Portfolio
and Fidelity Select Housing Portfolio, 1989;
analyst, various industries, 1986-1989;
joined Fidelity in 1986
PAPER AND FOREST PRODUCTS PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.4%
SHARES VALUE (NOTE 1)
BUILDING MATERIALS - 0.9%
STRUCTURAL METAL & WOOD PROD - 0.9%
T.J. International, Inc. 4,500 $ 94,219
COMPUTER SERVICES & SOFTWARE - 2.0%
PREPACKAGED COMPUTER SOFTWARE - 2.0%
Documentum, Inc. (a) 6,400 228,800
COMPUTERS & OFFICE EQUIPMENT - 4.3%
OFFICE AUTOMATION - 4.3%
Xerox Corp. 3,300 289,779
FileNET Corp. (a) 11,600 189,950
479,729
PAPER & FOREST PRODUCTS - 85.2%
CONVERTED PAPER & PAPERBOARD - 1.9%
Boise Cascade Corp. 8,600 210,163
FORESTRY - 4.3%
Assi Doman AB Free shares 21,800 487,765
LUMBER & WOOD - 13.4%
Louisiana-Pacific Corp. 70,000 1,321,250
Weyerhaeuser Co. 5,000 187,813
1,509,063
PAPER - 30.0%
Champion International Corp. 10,000 330,000
Chesapeake Corp. 20,100 658,275
Consolidated Papers, Inc. 5,000 125,313
Donohue, Inc. (vtg.) 28,000 477,526
Georgia Pacific Corp. (Timber Group) 20,000 402,500
International Paper Co. 100 3,700
Mercer International, Inc. (SBI) 6,100 40,794
Metsa-Serla Ltd. Class B 75,500 579,541
Smurfit (Jefferson) Group PLC 115,700 219,711
Stone Container Corp. (a) 25,400 265,113
Union Camp Corp. 500 18,531
Willamette Industries, Inc. 10,200 251,175
3,372,179
PAPER MILLS - 32.9%
Abitibi-Consolidated, Inc. 29,400 229,614
Alliance Forest Products, Inc. (a) 9,000 88,365
Bowater, Inc. 25,400 960,438
Enso OY Class R 81,300 689,512
Fort James Corp. 24,400 710,650
UPM-Kymmene Corp. 49,700 1,014,229
3,692,808
PAPERBOARD MILLS - 2.3%
Jefferson Smurfit Corp. (a) 18,700 210,375
St Laurent Paperboard, Inc. (a) 7,500 47,816
258,191
PULP MILLS - 0.4%
Tembec, Inc. Class A 11,500 49,123
TOTAL PAPER & FOREST PRODUCTS 9,579,292
TOTAL COMMON STOCKS
(Cost $13,381,689) 10,382,040
CASH EQUIVALENTS - 7.6%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund (b)
(Cost $857,079) 857,079 $ 857,079
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $14,238,768) $ 11,239,119
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.58%. 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 $36,331,873 and $50,087,163, 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 $11,018 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 65.1%
Finland 20.3
Canada 8.3
Sweden 4.3
Ireland 2.0
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $14,292,144. Net unrealized depreciation
aggregated $3,053,025, of which $17,010 related to appreciated
investment securities and $3,070,035 related to depreciated investment
securities.
PAPER AND FOREST PRODUCTS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31,
1998
(UNAUDITED)
ASSETS
INVESTMENT IN $ 11,239,119
SECURITIES, AT
VALUE
(COST
$14,238,768
) -
SEE
ACCOMPANYIN
G SCHEDULE
RECEIVABLE FOR 7,112
INVESTMENTS
SOLD
RECEIVABLE FOR 1,472
FUND SHARES
SOLD
DIVIDENDS 15,848
RECEIVABLE
INTEREST 4,432
RECEIVABLE
REDEMPTION FEES 197
RECEIVABLE
TOTAL ASSETS 11,268,180
LIABILITIES
PAYABLE TO $ 20,211
CUSTODIAN
BANK
PAYABLE FOR 164,434
FUND SHARES
REDEEMED
ACCRUED 6,205
MANAGEMENT
FEE
OTHER PAYABLES 30,628
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 221,478
NET ASSETS $ 11,046,702
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 15,735,096
UNDISTRIBUTED 25,390
NET INVESTMENT
INCOME
ACCUMULATED (1,714,102)
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED (2,999,682)
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
AND ASSETS
AND LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, FOR $ 11,046,702
667,224
SHARES
OUTSTANDING
NET ASSET $16.56
VALUE AND
REDEMPTION
PRICE PER
SHARE
($11,046,70
2 (DIVIDED BY) 667,224
SHARES)
MAXIMUM $17.07
OFFERING PRICE
PER SHARE
(100/97.00
OF $16.56)
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED AUGUST
31, 1998
(UNAUDITED)
INVESTMENT $ 151,938
INCOME
DIVIDENDS
INTEREST 38,265
TOTAL INCOME 190,203
EXPENSES
MANAGEMENT $ 54,866
FEE
TRANSFER AGENT 76,366
FEES
ACCOUNTING FEES 30,326
AND EXPENSES
NON-INTERESTED 43
TRUSTEES'
COMPENSATION
CUSTODIAN FEES 10,359
AND EXPENSES
REGISTRATION FEES 15,772
AUDIT 9,896
LEGAL 55
REPORTS TO 5,966
SHAREHOLDERS
TOTAL EXPENSES 203,649
BEFORE
REDUCTIONS
EXPENSE (7,755) 195,894
REDUCTIONS
NET INVESTMENT (5,691)
INCOME (LOSS)
REALIZED AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS) ON:
INVESTMENT (938,970)
SECURITIES
FOREIGN (3,217) (942,187)
CURRENCY
TRANSACTIONS
CHANGE IN NET
UNREALIZED
APPRECIATION
(DEPRECIATION)
ON:
INVESTMENT (4,268,606)
SECURITIES
ASSETS AND 17 (4,268,589)
LIABILITIES IN
FOREIGN
CURRENCIES
NET GAIN (LOSS) (5,210,776)
NET INCREASE $ (5,216,467)
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 34,554
INFORMATION
SALES CHARGES
PAID TO FDC
SALES CHARGES $ 34,554
- - RETAINED BY
FDC
DEFERRED SALES $ 205
CHARGES
WITHHELD
BY FDC
EXCHANGE FEES $ 8,738
WITHHELD BY
FSC
EXPENSE $ 7,747
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEMENTS
CUSTODIAN 8
CREDITS
$ 7,755
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED YEAR ENDED
(DECREASE) IN AUGUST 31, 1998 FEBRUARY 28,
NET ASSETS (UNAUDITED) 1998
OPERATIONS $ (5,691) $ (121,775)
NET INVESTMENT
INCOME (LOSS)
NET REALIZED (942,187) 2,537,439
GAIN (LOSS)
CHANGE IN NET (4,268,589) 1,291,272
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (5,216,467) 3,706,936
(DECREASE)
IN NET ASSETS
RESULTING
FROM
OPERATIONS
DISTRIBUTIONS TO - (31,544)
SHAREHOLDERS
IN EXCESS OF
NET INVESTMENT
INCOME
FROM NET - (1,592,672)
REALIZED GAIN
IN EXCESS OF (317,946) -
NET REALIZED
GAIN
TOTAL (317,946) (1,624,216)
DISTRIBUTIONS
SHARE 18,822,999 71,567,372
TRANSACTIONS
NET PROCEEDS
FROM SALES OF
SHARES
REINVESTMENT 312,733 1,584,087
OF DISTRIBUTIONS
COST OF SHARES (34,010,460) (63,467,979)
REDEEMED
NET INCREASE (14,874,728) 9,683,480
(DECREASE)
IN NET ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION 71,736 134,393
FEES
TOTAL (20,337,405) 11,900,593
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
BEGINNING OF 31,384,107 19,483,514
PERIOD
END OF PERIOD $ 11,046,702 $ 31,384,107
(INCLUDING
UNDISTRIBUTE
D NET
INVESTMENT
INCOME OF
$25,390
AND
$31,081,
RESPECTIVELY)
OTHER
INFORMATION
SHARES
SOLD 783,658 3,117,317
ISSUED IN 13,704 75,670
REINVESTMENT
OF DISTRIBUTIONS
REDEEMED (1,514,940) (2,708,921)
NET INCREASE (717,578) 484,066
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED YEAR ENDED YEARS ENDED
ENDED FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
AUGUST 31,
1998
SELECTED (UNAUDITED) 1998 1997 1996 1995 1994
PER-SHARE
DATA
NET ASSET VALUE, $ 22.66 $ 21.63 $ 20.78 $ 21.14 $ 19.61 $ 16.08
BEGINNING OF
PERIOD
INCOME FROM
INVESTMENT
OPERATIONS
NET (.01) (.12) .01 .08 .01 (.01)
INVESTMENT
INCOME (LOSS) D
NET REALIZED (5.74) 3.13 2.08 1.83 2.53 3.38
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM (5.75) 3.01 2.09 1.91 2.54 3.37
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIONS
FROM NET - - (.03) (.08) - (.01)
INVESTMENT
INCOME
IN EXCESS OF - (.04) (.07) - - -
NET INVESTMENT
INCOME
FROM NET - (2.07) (1.25) (2.27) (1.17) -
REALIZED GAIN
IN EXCESS OF (.44) - - - - -
NET REALIZED
GAIN
TOTAL (.44) (2.11) (1.35) (2.35) (1.17) (.01)
DISTRIBUTIONS
REDEMPTION FEES .09 .13 .11 .08 .16 .17
ADDED TO PAID
IN CAPITAL
NET ASSET VALUE, $ 16.56 $ 22.66 $ 21.63 $ 20.78 $ 21.14 $ 19.61
END OF PERIOD
TOTAL RETURN B, C (25.51)% 15.53% 10.87% 9.18% 14.91% 22.03%
RATIOS AND
SUPPLEMENTAL
DATA
NET ASSETS, END $ 11,047 $ 31,384 $ 19,484 $ 27,270 $ 94,219 $ 66,908
OF PERIOD
(000 OMITTED)
RATIO OF 2.15% A 2.18% 2.19% 1.91% 1.88% 2.08%
EXPENSES TO
AVERAGE NET
ASSETS
RATIO OF 2.07% A, E 2.15% E 2.16% E 1.90% E 1.87% E 2.07% E
EXPENSES TO
AVERAGE NET
ASSETS AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.06)% A (.50)% .04% .34% .05% (.08)%
INVESTMENT
INCOME (LOSS)
TO AVERAGE NET
ASSETS
PORTFOLIO 398% A 235% 180% 78% 209% 176%
TURNOVER RATE
AVERAGE $ .0321 $ .0320 $ .0306
COMMISSION
RATE F
A ANNUALIZED B THE TOTAL
RETURNS WOULD HAVE BEEN
LOWER HAD CERTAIN
EXPENSES NOT BEEN
REDUCED DURING THE PERIODS
SHOWN (SEE NOTE 8 OF
NOTES TO FINANCIAL
STATEMENTS). C TOTAL
RETURNS DO NOT INCLUDE THE
ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN
ONE YEAR ARE NOT
ANNUALIZED. D NET
INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON
AVERAGE SHARES
OUTSTANDING DURING THE
PERIOD. E FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION
OF THE FUND'S EXPENSES
(SEE NOTE 8 OF NOTES TO
FINANCIAL
STATEMENTS). F FOR FISCAL
YEARS BEGINNING ON OR AFTER
SEPTEMBER 1, 1995, A
FUND IS REQUIRED TO DISCLOSE
ITS AVERAGE COMMISSION
RATE PER SHARE FOR SECURITY
TRADES ON WHICH
COMMISSIONS ARE CHARGED.
THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND
FUND TO FUND DEPENDING ON
THE MIX OF TRADES EXECUTED
IN VARIOUS MARKETS WHERE
TRADING PRACTICES AND
COMMISSION RATE STRUCTURES
MAY DIFFER.
</TABLE>
TRANSPORTATION PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 MONTHS YEAR YEARS YEARS
SELECT TRANSPORTATION -24.95% -15.26% 49.93% 293.57%
SELECT TRANSPORTATION -27.27% -17.87% 45.36% 281.69%
(LOAD ADJ.)
S&P 500 -8.10% 8.10% 131.21% 382.74%
GS CYCLICAL INDUSTRIES -18.01% -10.45% N/A N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks - and the Goldman Sachs
Cyclical Industries Index - a market capitalization-weighted index of
277 stocks designed to measure the performance of companies in the
cyclical industries sector. These benchmarks include reinvestment of
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 YEAR YEARS YEARS
SELECT TRANSPORTATION -15.26% 8.44% 14.68%
SELECT TRANSPORTATION -17.87% 7.77% 14.33%
(LOAD ADJ.)
S&P 500 8.10% 18.25% 17.05%
GS CYCLICAL INDUSTRIES -10.45% N/A N/A
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.
(checkmark)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.
$10,000 OVER 10 YEARS
Transportation S&P 500
00512 SP001
1988/08/31 9700.00 10000.00
1988/09/30 10339.04 10426.00
1988/10/31 10672.86 10715.84
1988/11/30 10768.24 10562.61
1988/12/31 11092.53 10747.45
1989/01/31 12046.31 11534.17
1989/02/28 12170.30 11246.96
1989/03/31 12542.28 11509.02
1989/04/30 12961.95 12106.34
1989/05/31 13515.14 12596.64
1989/06/30 13431.82 12524.84
1989/07/31 14245.87 13655.84
1989/08/31 15171.86 13923.49
1989/09/30 14876.76 13866.40
1989/10/31 13930.43 13544.70
1989/11/30 14052.54 13821.02
1989/12/31 14252.59 14152.72
1990/01/31 13357.55 13203.07
1990/02/28 13980.68 13373.39
1990/03/31 14399.87 13727.79
1990/04/30 13856.05 13384.59
1990/05/31 14365.88 14689.59
1990/06/30 14207.74 14589.70
1990/07/31 14160.54 14543.01
1990/08/31 12083.66 13228.33
1990/09/30 10526.00 12584.11
1990/10/31 10360.79 12529.99
1990/11/30 10785.61 13339.43
1990/12/31 11175.03 13711.60
1991/01/31 12130.86 14309.43
1991/02/28 13310.91 15332.55
1991/03/31 13322.71 15703.60
1991/04/30 13287.31 15741.29
1991/05/31 14337.55 16421.31
1991/06/30 14218.50 15669.22
1991/07/31 15082.74 16399.40
1991/08/31 15355.04 16788.07
1991/09/30 15070.90 16507.71
1991/10/31 16183.76 16728.91
1991/11/30 15177.45 16054.73
1991/12/31 17225.58 17891.40
1992/01/31 17379.49 17558.62
1992/02/29 18314.76 17786.88
1992/03/31 17876.72 17440.03
1992/04/30 18338.44 17952.77
1992/05/31 18717.28 18040.74
1992/06/30 17912.24 17771.93
1992/07/31 18172.69 18498.80
1992/08/31 17628.10 18119.58
1992/09/30 18326.60 18333.39
1992/10/31 19107.96 18397.56
1992/11/30 20493.11 19024.91
1992/12/31 21323.97 19258.92
1993/01/31 22278.96 19420.70
1993/02/28 22581.17 19684.82
1993/03/31 24092.22 20100.17
1993/04/30 24032.16 19613.74
1993/05/31 24929.88 20139.39
1993/06/30 25002.67 20197.79
1993/07/31 25002.67 20117.00
1993/08/31 25463.66 20879.44
1993/09/30 25524.32 20718.67
1993/10/31 26058.09 21147.54
1993/11/30 26203.67 20946.64
1993/12/31 27575.35 21200.10
1994/01/31 28784.09 21920.90
1994/02/28 28784.09 21326.84
1994/03/31 28013.68 20396.99
1994/04/30 28537.17 20658.07
1994/05/31 28078.42 20996.87
1994/06/30 28051.43 20482.44
1994/07/31 28995.92 21154.27
1994/08/31 29859.46 22021.59
1994/09/30 29063.39 21482.06
1994/10/31 29495.16 21965.41
1994/11/30 27727.61 21165.43
1994/12/31 28641.51 21479.31
1995/01/31 28448.49 22036.27
1995/02/28 30482.65 22895.02
1995/03/31 30883.54 23570.66
1995/04/30 31343.82 24264.81
1995/05/31 30408.41 25234.68
1995/06/30 30081.76 25820.88
1995/07/31 32665.28 26677.10
1995/08/31 32635.59 26744.06
1995/09/30 32338.63 27872.66
1995/10/31 31937.74 27773.15
1995/11/30 33036.48 28992.39
1995/12/31 32985.92 29550.79
1996/01/31 33488.56 30556.70
1996/02/29 34431.02 30839.96
1996/03/31 35263.52 31136.95
1996/04/30 36418.71 31595.90
1996/05/31 36466.09 32410.76
1996/06/30 36639.82 32534.25
1996/07/31 33986.59 31096.88
1996/08/31 34018.17 31752.72
1996/09/30 34176.11 33539.76
1996/10/31 33907.62 34464.79
1996/11/30 36308.16 37069.98
1996/12/31 36120.74 36335.62
1997/01/31 36380.14 38605.87
1997/02/28 36039.68 38908.54
1997/03/31 37142.11 37309.79
1997/04/30 39063.33 39537.19
1997/05/31 41718.12 41944.21
1997/06/30 42971.31 43823.31
1997/07/31 45972.38 47310.33
1997/08/31 45048.97 44660.01
1997/09/30 49501.10 47106.04
1997/10/31 47835.68 45532.69
1997/11/30 47621.31 47640.40
1997/12/31 47727.21 48458.39
1998/01/31 47816.96 48994.34
1998/02/28 50868.34 52527.81
1998/03/31 52699.17 55217.76
1998/04/30 51933.63 55773.25
1998/05/31 49465.86 54814.51
1998/06/30 50626.08 57041.07
1998/07/31 46353.52 56433.58
1998/08/31 38169.00 48274.42
IMATRL PRASUN SHR__CHT 19980831 19980917 164558 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Transportation Portfolio on August 31,
1988, and the current 3.00% sales charge was paid. As the chart shows,
by August 31, 1998, the value of the investment would have grown to
$38,169 - a 281.69% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $48,274 - a 382.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
UNION PACIFIC CORP. 5.8
BURLINGTON NORTHERN SANTA FE CORP. 5.8
FDX CORP. 5.8
AMR CORP. 5.3
SOUTHWEST AIRLINES CO. 5.1
US AIRWAYS GROUP, INC. 5.1
CSX CORP. 4.6
DELTA AIR LINES, INC. 4.5
NORFOLK SOUTHERN CORP. 3.5
EATON CORP. 3.5
TOP INDUSTRIES AS OF AUGUST 31, 1998
ROW: 1, COL: 1, VALUE: 20.3
ROW: 1, COL: 2, VALUE: 2.6
ROW: 1, COL: 3, VALUE: 4.3
ROW: 1, COL: 4, VALUE: 9.699999999999999
ROW: 1, COL: 5, VALUE: 31.1
ROW: 1, COL: 6, VALUE: 32.0
AIR TRANSPORTATION,
MAJOR NATIONAL 32.0%
RAILROADS 31.1%
AIR COURIER SERVICES 9.7%
AUTO & TRUCK PARTS 4.3%
FREIGHT FORWARDING 2.6%
ALL OTHERS 20.3%
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
TRANSPORTATION PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Christopher Zepf)
NOTE TO SHAREHOLDERS: On September 1, 1998, after the end of the
period
covered by this report,
Christopher Zepf became
Portfolio Manager of Fidelity Select Transportation Portfolio.
Q. HOW DID THE FUND PERFORM, CHRIS?
A. For the six-month period that ended August 31, 1998, the fund
returned -24.95%. For the same six-month period, the Standard & Poor's
500 Index returned -8.10%. For the one-year period that ended August
31, 1998, the fund returned -15.26% and the S&P 500 returned 8.10%.
Beginning this period, the fund also compares itself to the Goldman
Sachs Cyclical Industries Index - an index of 277 stocks designed to
measure the performance of companies in the cyclical industries sector
- - which returned -18.01% and -10.45% over the same six- and 12-month
periods, respectively.
Q. WHY WAS THE PAST SIX-MONTH PERIOD SUCH A TOUGH TIME FOR
TRANSPORTATION STOCKS?
A. Much of the transportation sector's problems can be traced to the
economic weakness in Asia. These companies tend to do best when the
global economy is growing. That's when they are able to improve
earnings by raising prices and eliminating excess capacity. During the
early months of the period, that's exactly what happened and, as a
group, transportation stocks generally performed well. However,
transportation stocks suffered a sell-off in July and August when
problems in Asia worsened. Diminished Asian demand for transportation
services curtailed the group's ability to pass on price hikes and fill
excess capacity, to a much greater extent than most observers
predicted at the outbreak of the Asian crisis.
Q. WHICH OF THE FUND'S HOLDINGS PROVED MOST DISAPPOINTING?
A. Freight-forwarding companies were some of the fund's worst
performers during the past six months. These companies, including
Airborne Freight, Expeditors International and Air Express, don't own
the planes, trains and trucks used for transporting freight. Rather,
they are contracted to transport goods using existing carriers. As a
result, they don't have the high costs associated with the fixed
assets of other transportation companies. Thanks to continued strong
economies in the U.S. and Europe, freight-forwarding companies
actually held up pretty well from March through early July. However,
as the Asian demand for goods weakened precipitously,
freight-forwarding stocks suffered in late July and August.
Q. AT ROUGHLY 32% OF THE PORTFOLIO AT THE END OF THE PERIOD, AIR
TRANSPORTATION STOCKS ALSO HAD A ROUGH TIME . . .
A. Yes, they did, for a combination of reasons. First, major
international carriers suffered from slowing overseas demand caused by
the deepening recessions in Japan and other Asian countries. The
fund's investment in AMR - the holding company of American Airlines -
suffered as a result. But eventually the pain spread beyond
international carriers. Even regional airlines that limit their
operations to the United States - such as Alaska Air - posted pretty
good performance in the early months of the period, only to fall back
in the summer. That's when investors began to worry that increased
capacity over the next two years would potentially outstrip demand.
Capacity is expected to grow by 5% to 6% annually in 1999 and 2000, a
rate that is about twice as high as the historical annual rate.
Q. HOW DID RAILROADS AND TRUCKING COMPANIES FARE?
A. Many of the fund's railroad holdings - including Burlington
Northern Santa Fe, CSX and Union Pacific - suffered losses as they
experienced greater-than-expected difficulties in integrating
operations after a series of recent mergers. On the other hand, some
trucking companies - such as Swift Transportation - made modest
contributions to the fund's performance. Swift, a national truckload
carrier, saw rising revenues thanks to the expansion of the company's
fleet and rate increases.
Q. WHAT'S YOUR OUTLOOK?
A. If the U.S. economy continues to weaken in response to problems
overseas, the next six to 12 months could be a difficult period for
the transportation sector. I'll seek to position the fund in
fundamentally strong companies that have the financial resources to
build market share at the expense of weaker competitors. When choosing
stocks for the fund, one of the qualities I'll be looking for is
superior management across functions, from finance to operations to
marketing. Another quality I'll focus on finding is free cash flow,
which enables companies to acquire weaker competitors, repurchase
shares at depressed prices or invest in infrastructure, which should
help them capture more customers by offering superior service.
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.
(checkmark)FUND FACTS
START DATE: September 29, 1986
FUND NUMBER: 512
TRADING SYMBOL: FSRFX
SIZE: as of August 31,1998, more than $12 million
MANGER: Chris Zepf, beginning September
1998; joined Fidelity in 1998
TRANSPORTATION PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.2%
SHARES VALUE (NOTE 1)
AIR TRANSPORTATION - 33.9%
AIR TRANSPORTATION, MAJOR NATIONAL - 32.0%
AMR Corp. (a) 11,600 $ 632,200
Alaska Air Group, Inc. (a) 8,000 311,500
America West Holdings Corp. Class B (a) 6,400 124,400
ASA Holdings, Inc. 3,400 116,450
Atlantic Coast Airlines, Inc. (a) 2,500 56,563
Atlas Air, Inc. (a) 2,100 49,875
British Airways PLC ADR 1,600 117,600
Continental Airlines, Inc. Class B (a) 4,500 185,625
Delta Air Lines, Inc. 5,300 540,600
KLM Royal Dutch Airlines NV (NY Reg.) 6,400 196,800
Northwest Airlines Corp. Class A (a) 9,000 250,313
Southwest Airlines Co. 34,150 608,297
UAL Corp. (a) 700 42,219
US Airways Group, Inc. (a) 10,400 605,800
3,838,242
AIR TRANSPORTATION, REGIONAL - 1.9%
Comair Holdings, Inc. 6,900 175,519
SkyWest, Inc. 2,500 52,500
228,019
TOTAL AIR TRANSPORTATION 4,066,261
AUTOS, TIRES, & ACCESSORIES - 7.7%
AUTO & TRUCK PARTS - 4.3%
Cummins Engine Co., Inc. 1,600 65,100
Eaton Corp. 7,100 415,794
Wabash National Corp. 2,100 33,338
514,232
AUTO DEALERS, GAS STATIONS-RET - 0.9%
Republic Industries, Inc. (a) 6,000 106,125
MOTOR VEHICLES & CAR BODIES - 2.5%
Navistar International Corp. (a) 6,700 140,700
PACCAR, Inc. 3,900 159,900
300,600
TOTAL AUTOS, TIRES, & ACCESSORIES 920,957
LEASING & RENTAL - 3.2%
AUTO RENTAL & LEASING - 0.7%
Budget Group, Inc. Class A (a) 5,000 85,000
EQUIPMENT RENTAL & LEASING, NEC - 2.5%
GATX Corp. 4,400 145,200
Ryder Systems, Inc. 6,700 157,869
303,069
TOTAL LEASING & RENTAL 388,069
RAILROADS - 31.1%
Burlington Northern Santa Fe Corp. 7,500 697,969
CSX Corp. 14,500 547,375
Canadian Pacific Ltd. 15,300 290,198
Canadian National Railway Co. 9,200 415,276
Kansas City Southern Industries, Inc. 10,100 332,038
Norfolk Southern Corp. 15,000 422,813
Providence & Worcester Railroad Co. 18,600 241,800
Union Pacific Corp. 17,600 700,694
Wisconsin Central
Transportation Corp. (a) 6,700 84,169
3,732,332
SERVICES - 0.6%
BUS CHARTER SERVICE, NEC - 0.6%
Coach USA, Inc. (a) 2,600 68,413
SHARES VALUE (NOTE 1)
SHIPPING - 0.4%
Peninsular & Oriental Steam
Navigation Co. 4,400 $ 47,876
TRUCKING & FREIGHT - 15.3%
AIR COURIER SERVICES - 9.7%
Airborne Freight Corp. 4,500 87,750
CNF Transportation, Inc. 12,200 381,250
FDX Corp. (a) 13,900 695,869
1,164,869
FREIGHT FORWARDING - 2.6%
Air Express International Corp. 3,200 54,800
Circle International Group, Inc. 7,700 155,925
Expeditors International of
Washington, Inc. 3,800 105,688
316,413
TRUCKING, LOCAL & LONG DISTANCE - 1.0%
Swift Transportation Co., Inc. (a) 3,600 58,950
Werner Enterprises, Inc. 4,100 60,475
119,425
TRUCKING, LONG DISTANCE - 2.0%
Consolidated Freightways Corp. (a) 7,500 65,625
Covenant Transport, Inc. Class A (a) 4,000 50,500
Hunt (J.B.) Transport Services, Inc. 4,000 67,750
USFreightways Corp. 2,300 51,606
235,481
TOTAL TRUCKING & FREIGHT 1,836,188
TOTAL COMMON STOCKS
(Cost $11,603,915) 11,060,096
CASH EQUIVALENTS - 7.8%
Taxable Central Cash Fund (b)
(Cost $930,853) 930,853 930,853
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $12,534,768) $ 11,990,949
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.58%. 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 $13,989,292 and $59,835,315, 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 $3,734 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the security lending program. At period end,
there were no loans outstanding (see Note 6 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $12,572,388. Net unrealized depreciation
aggregated $581,439 of which $216,946 related to appreciated
investment securities and $798,385 related to depreciated investment
securities.
TRANSPORTATION PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31,
1998
(UNAUDITED)
ASSETS
INVESTMENT IN $ 11,990,949
SECURITIES, AT
VALUE
(COST
$12,534,768
) -
SEE
ACCOMPANYIN
G SCHEDULE
RECEIVABLE FOR 7,136,831
INVESTMENTS
SOLD
RECEIVABLE FOR 48,538
FUND SHARES
SOLD
DIVIDENDS 15,605
RECEIVABLE
INTEREST 2,895
RECEIVABLE
REDEMPTION FEES 390
RECEIVABLE
OTHER 800
RECEIVABLES
TOTAL ASSETS 19,196,008
LIABILITIES
PAYABLE FOR $ 6,219,575
INVESTMENTS
PURCHASED
PAYABLE FOR 481,495
FUND SHARES
REDEEMED
ACCRUED 7,330
MANAGEMENT
FEE
OTHER PAYABLES 28,219
AND ACCRUED
EXPENSES
TOTAL LIABILITIES 6,736,619
NET ASSETS $ 12,459,389
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 8,887,052
ACCUMULATED (92,898)
NET INVESTMENT
LOSS
ACCUMULATED 4,204,193
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED (538,958)
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
AND ASSETS
AND LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, FOR $ 12,459,389
601,123
SHARES
OUTSTANDING
NET ASSET $20.73
VALUE AND
REDEMPTION
PRICE PER
SHARE
($12,459,38
9 (DIVIDED BY) 601,123
SHARES)
MAXIMUM $21.37
OFFERING PRICE
PER SHARE
(100/97.00
OF $20.73)
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED AUGUST
31, 1998
(UNAUDITED)
INVESTMENT $ 149,611
INCOME
DIVIDENDS
INTEREST 58,102
(INCLUDING
INCOME ON
SECURITIES
LOANED OF
$12,548)
TOTAL INCOME 207,713
EXPENSES
MANAGEMENT $ 100,528
FEE
TRANSFER AGENT 125,740
FEES
ACCOUNTING AND 32,213
SECURITY
LENDING FEES
NON-INTERESTED 79
TRUSTEES'
COMPENSATION
CUSTODIAN FEES 7,026
AND EXPENSES
REGISTRATION FEES 22,824
AUDIT 10,626
LEGAL 177
REPORTS TO 9,257
SHAREHOLDERS
TOTAL EXPENSES 308,470
BEFORE
REDUCTIONS
EXPENSE (7,859) 300,611
REDUCTIONS
NET INVESTMENT (92,898)
INCOME (LOSS)
REALIZED AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS) ON:
INVESTMENT 4,409,455
SECURITIES
FOREIGN (172) 4,409,283
CURRENCY
TRANSACTIONS
CHANGE IN NET
UNREALIZED
APPRECIATION
(DEPRECIATION)
ON:
INVESTMENT (7,852,156)
SECURITIES
ASSETS AND 5,018 (7,847,138)
LIABILITIES IN
FOREIGN
CURRENCIES
NET GAIN (LOSS) (3,437,855)
NET INCREASE $ (3,530,753)
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 54,530
INFORMATION
SALES CHARGES
PAID TO FDC
SALES CHARGES $ 54,411
- - RETAINED BY
FDC
DEFERRED SALES $ 428
CHARGES
WITHHELD
BY FDC
EXCHANGE FEES $ 28,845
WITHHELD BY
FSC
EXPENSE $ 7,641
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEMENTS
CUSTODIAN 218
CREDITS
$ 7,859
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED YEAR ENDED
(DECREASE) IN AUGUST 31, 1998 FEBRUARY 28,
NET ASSETS (UNAUDITED) 1998
OPERATIONS $ (92,898) $ (36,059)
NET
INVESTMENT
INCOME (LOSS)
NET REALIZED 4,409,283 10,298,362
GAIN (LOSS)
CHANGE IN NET (7,847,138) 7,061,282
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (3,530,753) 17,323,585
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
DISTRIBUTIONS TO (1,492,528) (4,986,487)
SHAREHOLDERS
FROM NET
REALIZED GAIN
SHARE 10,719,560 152,644,299
TRANSACTIONS
NET PROCEEDS
FROM SALES OF
SHARES
REINVESTMENT 1,481,609 4,933,755
OF
DISTRIBUTIONS
COST OF SHARES (59,055,770) (114,694,116)
REDEEMED
NET INCREASE (46,854,601) 42,883,938
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION 55,525 170,335
FEES
TOTAL (51,822,357) 55,391,371
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
BEGINNING OF 64,281,746 8,890,375
PERIOD
END OF PERIOD $ 12,459,389 $ 64,281,746
(INCLUDING
ACCUMULATED
NET INVESTMENT
LOSS OF
$92,898 AND
$0,
RESPECTIVELY)
OTHER
INFORMATION
SHARES
SOLD 381,292 6,004,453
ISSUED IN 52,079 182,560
REINVESTMENT
OF
DISTRIBUTIONS
REDEEMED (2,100,819) (4,318,403)
NET INCREASE (1,667,448) 1,868,610
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED FEBRUARY 28, YEAR ENDED YEARS ENDED FEBRUARY 28,
ENDED FEBRUARY 29,
AUGUST 31,
1998
SELECTED (UNAUDITED) 1998 1997 1996 1995 1994
PER-SHARE
DATA
NET ASSET VALUE, $ 28.34 $ 22.23 $ 21.92 $ 20.53 $ 21.67 $ 18.68
BEGINNING OF
PERIOD
INCOME FROM
INVESTMENT
OPERATIONS
NET (.08) (.02) (.13) (.09) E (.17) (.20)
INVESTMENT
INCOME (LOSS) D
NET REALIZED (6.84) 8.85 1.06 2.60 1.17 5.07
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM (6.92) 8.83 .93 2.51 1.00 4.87
INVESTMENT
OPERATIONS
LESS (.74) (2.80) (.71) (1.22) (2.19) (1.96)
DISTRIBUTIONS
FROM NET
REALIZED GAIN
REDEMPTION FEES .05 .08 .09 .10 .05 .08
ADDED TO PAID
IN CAPITAL
NET ASSET VALUE, $ 20.73 $ 28.34 $ 22.23 $ 21.92 $ 20.53 $ 21.67
END OF PERIOD
TOTAL RETURN B, C (24.95)% 41.15% 4.67% 12.95% 5.90% 27.47%
RATIOS AND
SUPPLEMENTAL
DATA
NET ASSETS, END $ 12,459 $ 64,282 $ 8,890 $ 11,445 $ 12,704 $ 13,077
OF PERIOD
(000 OMITTED)
RATIO OF 1.77% A 1.58% 2.50% F 2.47% F 2.37% 2.40%
EXPENSES TO
AVERAGE NET
ASSETS
RATIO OF 1.72% A, G 1.54% G 2.48% G 2.44% G 2.36% G 2.39% G
EXPENSES TO
AVERAGE NET
ASSETS AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.53)% A (.06)% (.58)% (.43)% (.83)% (.96)%
INVESTMENT
INCOME (LOSS)
TO AVERAGE NET
ASSETS
PORTFOLIO 83% A 210% 148% 175% 178% 115%
TURNOVER RATE
AVERAGE $ .0342 $ .0337 $ .0313
COMMISSION
RATE H
A ANNUALIZED B T
HE TOTAL RETURNS WOULD
HAVE BEEN LOWER
HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING
THE PERIODS SHOWN (SEE
NOTE 8 OF NOTES TO
FINANCIAL
STATEMENTS). C TOTAL
RETURNS DO NOT INCLUDE THE
ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN
ONE YEAR ARE NOT
ANNUALIZED. D NET
INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON
AVERAGE SHARES
OUTSTANDING DURING THE
PERIOD. E INVESTMENT
INCOME PER SHARE REFLECTS A
SPECIAL DIVIDEND WHICH
AMOUNTED TO $.05 PER
SHARE. F 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 FMR OR
THE FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION
OF THE FUND'S EXPENSES
(SEE NOTE 8 OF NOTES TO
FINANCIAL
STATEMENTS). H FOR
FISCAL YEARS BEGINNING ON
OR AFTER SEPTEMBER 1,
1995, A FUND IS REQUIRED
TO DISCLOSE ITS AVERAGE
COMMISSION RATE PER SHARE
FOR SECURITY TRADES ON
WHICH COMMISSIONS ARE
CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD
AND FUND TO FUND
DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS
MARKETS WHERE TRADING
PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
</TABLE>
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 MONTHS YEAR YEARS YEARS
SELECT BROKERAGE AND -17.64% 6.51% 122.31% 472.66%
INVESTMENT MANAGEMENT
SELECT BROKERAGE AND -20.18% 3.24% 115.57% 455.41%
INVESTMENT MANAGEMENT
(LOAD ADJ.)
S&P 500 -8.10% 8.10% 131.21% 382.74%
GS Financial Services -15.98% 3.35% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks - and the Goldman Sachs
Financial Services Index - a market capitalization-weighted index of
271 stocks designed to measure the performance of companies in the
financial services sector. These benchmarks include reinvestment of
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 YEAR YEARS YEARS
SELECT BROKERAGE AND 6.51% 17.33% 19.07%
INVESTMENT MANAGEMENT
SELECT BROKERAGE AND 3.24% 16.60% 18.70%
INVESTMENT MANAGEMENT
(LOAD ADJ.)
S&P 500 8.10% 18.25% 17.05%
GS Financial Services 3.35% n/a n/a
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.
(checkmark)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.
$10,000 OVER 10 YEARS
Brokerage/Invt. Mgt S&P 500
00068 SP001
1988/08/31 9700.00 10000.00
1988/09/30 9946.39 10426.00
1988/10/31 9985.29 10715.84
1988/11/30 9764.84 10562.61
1988/12/31 9856.59 10747.45
1989/01/31 11141.09 11534.17
1989/02/28 10878.95 11246.96
1989/03/31 10892.06 11509.02
1989/04/30 10996.91 12106.34
1989/05/31 11717.81 12596.64
1989/06/30 11388.36 12524.84
1989/07/31 12759.18 13655.84
1989/08/31 13075.52 13923.49
1989/09/30 12666.91 13866.40
1989/10/31 11638.80 13544.70
1989/11/30 11520.17 13821.02
1989/12/31 11242.34 14152.72
1990/01/31 10748.32 13203.07
1990/02/28 11108.82 13373.39
1990/03/31 11415.92 13727.79
1990/04/30 10641.50 13384.59
1990/05/31 11656.25 14689.59
1990/06/30 11642.57 14589.70
1990/07/31 11228.20 14543.01
1990/08/31 9704.37 13228.33
1990/09/30 8875.62 12584.11
1990/10/31 8327.58 12529.99
1990/11/30 8875.62 13339.43
1990/12/31 9423.66 13711.60
1991/01/31 10207.84 14309.43
1991/02/28 11221.87 15332.55
1991/03/31 12371.09 15703.60
1991/04/30 12546.86 15741.29
1991/05/31 13209.35 16421.31
1991/06/30 12329.80 15669.22
1991/07/31 13277.21 16399.40
1991/08/31 13574.97 16788.07
1991/09/30 14278.75 16507.71
1991/10/31 15226.16 16728.91
1991/11/30 14387.03 16054.73
1991/12/31 17175.11 17891.40
1992/01/31 17418.72 17558.62
1992/02/29 17310.45 17786.88
1992/03/31 16850.28 17440.03
1992/04/30 15537.45 17952.77
1992/05/31 15496.84 18040.74
1992/06/30 15131.42 17771.93
1992/07/31 15984.08 18498.80
1992/08/31 15523.91 18119.58
1992/09/30 15415.64 18333.39
1992/10/31 16105.89 18397.56
1992/11/30 17554.07 19024.91
1992/12/31 18054.84 19258.92
1993/01/31 19124.05 19420.70
1993/02/28 19245.86 19684.82
1993/03/31 20788.78 20100.17
1993/04/30 20721.08 19613.74
1993/05/31 21398.24 20139.39
1993/06/30 22413.98 20197.79
1993/07/31 23158.86 20117.00
1993/08/31 24987.19 20879.44
1993/09/30 25447.66 20718.67
1993/10/31 24621.52 21147.54
1993/11/30 23944.36 20946.64
1993/12/31 26960.42 21200.10
1994/01/31 27534.98 21920.90
1994/02/28 26150.13 21326.84
1994/03/31 23218.37 20396.99
1994/04/30 23026.85 20658.07
1994/05/31 23586.68 20996.87
1994/06/30 24485.36 20482.44
1994/07/31 23910.79 21154.27
1994/08/31 24087.58 22021.59
1994/09/30 23174.17 21482.06
1994/10/31 23159.44 21965.41
1994/11/30 21553.60 21165.43
1994/12/31 22304.96 21479.31
1995/01/31 22025.04 22036.27
1995/02/28 22850.06 22895.02
1995/03/31 23085.78 23570.66
1995/04/30 23785.19 24264.81
1995/05/31 25122.63 25234.68
1995/06/30 26536.06 25820.88
1995/07/31 27812.71 26677.10
1995/08/31 27554.34 26744.06
1995/09/30 29226.15 27872.66
1995/10/31 27599.94 27773.15
1995/11/30 28268.66 28992.39
1995/12/31 27567.64 29550.79
1996/01/31 29364.83 30556.70
1996/02/29 29669.71 30839.96
1996/03/31 31001.56 31136.95
1996/04/30 31190.24 31595.90
1996/05/31 32223.36 32410.76
1996/06/30 32124.96 32534.25
1996/07/31 30157.12 31096.88
1996/08/31 31305.03 31752.72
1996/09/30 32912.10 33539.76
1996/10/31 34076.40 34464.79
1996/11/30 37421.73 37069.98
1996/12/31 38500.20 36335.62
1997/01/31 41308.37 38605.87
1997/02/28 42803.85 38908.54
1997/03/31 38466.97 37309.79
1997/04/30 42628.42 39537.19
1997/05/31 45808.90 41944.21
1997/06/30 48473.17 43823.31
1997/07/31 53801.73 47310.33
1997/08/31 52153.21 44660.01
1997/09/30 59763.04 47106.04
1997/10/31 56682.47 45532.69
1997/11/30 59263.49 47640.40
1997/12/31 62491.74 48458.39
1998/01/31 59779.13 48994.34
1998/02/28 67442.25 52527.81
1998/03/31 71206.00 55217.76
1998/04/30 74310.45 55773.25
1998/05/31 72576.71 54814.51
1998/06/30 76456.17 57041.07
1998/07/31 77108.46 56433.58
1998/08/31 55541.00 48274.42
IMATRL PRASUN SHR__CHT 19980831 19980925 112150 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Brokerage and Investment Management
Portfolio on August 31, 1988, and the current 3.00% sales charge was
paid. As the chart shows, by August 31, 1998, the value of the
investment would have grown to $55,541 - a 455.41% increase on the
initial investment - and includes the effect of a $7.50 trading fee.
For comparison, look at how the Standard & Poor's 500 Index did over
the same period. With dividends and capital gains, if any, reinvested,
the same $10,000 investment would have grown to $48,274 - a 382.74%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
PaineWebber Group, Inc. 6.2
Citicorp 5.6
Bear Stearns Companies, Inc. 5.5
Merrill Lynch & Co., Inc. 5.0
Morgan Stanley, Dean Witter, Discover and Co. 4.4
Lehman Brothers Holdings, Inc. 4.3
Edwards (A.G.), Inc. 3.6
Equitable Companies, Inc. 3.5
Kansas City Southern Industries, Inc. 2.9
Julius Baer Holding AG 2.9
TOP INDUSTRIES AS OF AUGUST 31, 1998
SECURITY & COMMODITY BROKERS 26.3%
SECURITY BROKERS & DEALERS 19.3%
INVESTMENT MANAGERS 9.5%
NATIONAL COMMERCIAL BANKS 6.8%
LIFE INSURANCE 5.8%
ALL OTHER 32.3%
ROW: 1, COL: 1, VALUE: 32.3
ROW: 1, COL: 2, VALUE: 5.8
ROW: 1, COL: 3, VALUE: 6.8
ROW: 1, COL: 4, VALUE: 9.5
ROW: 1, COL: 5, VALUE: 19.3
ROW: 1, COL: 6, VALUE: 26.3
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Peter Fruzzetti)
Peter Fruzzetti,
Portfolio Manager
of Fidelity Select
Brokerage and Investment Management Portfolio
Q. HOW DID THE FUND PERFORM, PETER?
A. For the six-month period that ended on August 31, 1998, the fund
had a total return of -17.64%. For the 12 months, it returned 6.51%.
For the same periods, the Standard & Poor's 500 Index returned -8.10%
and 8.10%, respectively. Beginning this period, the fund also compares
itself to the Goldman Sachs Financial Services Index - an index of 271
stocks designed to measure the performance of companies in the
financial services sector - which returned -15.98% and 3.35% over the
same six- and 12-month periods, respectively.
Q. WHY DID THE FUND TRAIL THE OVERALL STOCK MARKET DURING THE PAST SIX
MONTHS?
A. During most of the first half of 1998, fundamentals for the
brokerage firms and investment managers had been superb. Declining
interest rates helped to create a superior environment for the stock
market. With the stock market up, we saw trading volumes increase,
heavy underwriting volume and lots of merger and acquisition activity,
all of which helped to increase earnings and thus stock valuations.
During the summer of 1998, overall market sentiment changed. First,
stock markets throughout the world began to slide, much of which was
due to expectations of slowing growth. In some cases, concerns became
exacerbated because of deteriorating economic conditions in emerging
markets. With these concerns, both stock and bond prices declined as
investors became more risk-averse. Because most brokerage firms have
exposure in these areas, sales and trading results tend to be poor in
this environment.
Q. WHY WERE BROKERAGE FIRMS SO HARD HIT?
A. When stock and bond prices decline, brokerage firms often take
losses on trading positions. In addition, when the markets are more
uncertain, fewer deals are done, reducing the volumes of initial
public and secondary stock offerings and, consequently, limiting
underwriting profits.
Q. DID THE STOCK PRICES OF INVESTMENT MANAGERS DECLINE IN THE SAME
WAY?
A. Both sectors have seen depreciating stock prices, but prices of
investment management companies performed a little better than those
of brokerage firms. Although investment management earnings are often
tied to the stock and bond markets, their income is more fee-based,
and less transaction-oriented. This means their earnings tend to be
more stable than brokerage earnings, so it makes sense that their
stocks performed a little better.
Q. WHICH HOLDINGS HELPED PERFORMANCE?
A. Most financial stocks have been weak, although some life insurance
stocks performed better than most brokerage stocks. SunAmerica, ING,
AFLAC, Hartford Life and Nationwide are examples of life stocks that
helped fund performance. Also, Midland Walwyn, a Canadian brokerage
firm, was acquired by Merrill Lynch, and the fund benefited from a
healthy ownership position in the Canadian company.
Q. WHICH COMPANIES HURT PERFORMANCE?
A. During periods of uncertainty and market volatility, securities
brokers and investment managers tend to lag the market. As a result,
this group of stocks has not performed well. Most brokerage holdings
detracted from performance, and the list would include Merrill Lynch,
Morgan Stanley, Lehman Brothers and Travelers.
Q. WHAT IS YOUR OUTLOOK?
A. I am cautious. As I mentioned, the brokerage stocks tend to be
volatile when the markets are volatile. World financial markets
probably have more uncertainty than they did six months ago. While
cautious, I intend to take advantage of opportunities if valuations
become excessively discounted.
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.
(checkmark)FUND FACTS
START DATE: July 29, 1985
FUND NUMBER: 068
TRADING SYMBOL: FSLBX
SIZE: as of August 31, 1998, more than
$605 million
MANAGER: Peter Fruzzetti, since 1997; equity
analyst, insurance and health care industries,
1993-1996; equity analyst, insurance industry,
since 1996; joined Fidelity in 1993
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.8%
SHARES VALUE (NOTE 1)
BANKS - 14.0%
COMMERCIAL BANKS, NEC - 0.2%
Bank Sarasin & Compagnie Class B (Reg.) 1,110 $ 1,502,675
INTERNATIONAL BANKS - 2.9%
Julius Baer Holding AG 6,600 17,649,025
Toronto Dominion Bank 14,443 368,787
18,017,812
NATIONAL COMMERCIAL BANKS - 6.8%
BankAmerica Corp. 40,000 2,562,500
Citicorp 320,000 34,600,000
Providian Financial Corp. 73,400 4,711,363
41,873,863
STATE BANKS FEDERAL RESERVE - 4.1%
Bankers Trust New York Corp. 220,000 16,348,750
Credit Suisse Group (Reg.) 52,400 8,880,267
25,229,017
TOTAL BANKS 86,623,367
COMPUTER SERVICES & SOFTWARE - 2.0%
DATA PROCESSING - 0.6%
DST Systems, Inc. (a) 64,100 3,621,650
ELECTRONIC INFORMATION RETRIEVAL - 1.4%
E Trade Group, Inc. (a) 535,400 8,901,025
TOTAL COMPUTER SERVICES & SOFTWARE 12,522,675
CREDIT & OTHER FINANCE - 6.2%
FINANCIAL SERVICES - 5.5%
American Express Co. 90,000 7,020,000
Equitable Companies, Inc. 380,600 21,765,563
Investors Financial Services Corp. 7,507 389,426
Perpetual PLC 20,000 1,165,955
Power Corporation of Canada 200,000 3,570,290
33,911,234
MANAGEMENT & INVESTMENT OFFICES - 0.1%
Regent Pacific Group Ltd. 5,000,000 619,451
PERSONAL CREDIT INSTITUTIONS - 0.6%
Household International, Inc. 104,329 3,853,652
TOTAL CREDIT & OTHER FINANCE 38,384,337
FEDERAL SPONSORED CREDIT - 0.6%
FEDERAL & FEDERAL SPONSORED CREDIT AGENCIES - 0.6%
SLM Holding Corp. 100,000 3,587,500
INSURANCE - 9.6%
ACCIDENT & HEALTH INSURANCE - 0.0%
UICI (a) 15,000 227,813
INSURANCE BROKERS & SERVICES - 2.6%
Marsh & McLennan Companies, Inc. 333,000 16,150,500
INSURANCE CARRIERS - 1.0%
AFLAC, Inc. 240,000 6,030,000
LIFE INSURANCE - 5.8%
ARM Financial Group, Inc. Class A 100,400 1,455,800
Amerus Life Holdings, Inc. 15,500 412,688
Delphi Financial Group, Inc. Class A 20,808 868,734
Hartford Life, Inc. Class A 169,500 8,686,875
Liberty Financial Companies, Inc. 215,100 6,345,450
Life RE Corp. 14,300 1,283,425
SHARES VALUE (NOTE 1)
Nationwide Financial Services, Inc.
Class A 144,000 $ 6,435,000
Protective Life Corp. 38,000 1,173,250
Torchmark Corp. 250,000 8,937,500
35,598,722
PROPERTY-CASUALTY & REINSURANCE - 0.2%
Reinsurance Group of America, Inc. 30,000 1,500,000
TOTAL INSURANCE 59,507,035
RAILROADS - 2.9%
Kansas City Southern Industries, Inc. 548,900 18,045,088
REAL ESTATE INVESTMENT TRUSTS - 0.1%
AMRESCO Capital Trust, Inc. 50,000 537,500
SAVINGS & LOANS - 0.1%
SAVINGS BANKS, FEDERAL CHARTER - 0.1%
Dime Bancorp., Inc. 20,000 380,000
SECURITIES INDUSTRY - 57.3%
INVESTMENT ADVICE - 2.2%
Conning Corp. 500 6,938
NVEST L.P. 189,100 4,928,419
Phoenix Investment Partners Ltd. 245,600 1,627,100
Pilgrim America Capital Corp. (a) 69,000 1,224,750
United Asset Management Corp. 270,000 5,872,500
13,659,707
INVESTMENT MANAGERS - 9.5%
Eaton Vance Corp. 90,000 1,788,750
Franklin Resources, Inc. 427,900 13,799,775
Investors Group Inc. 979,600 10,929,551
John Nuveen Co. Class A 250,000 8,531,250
Mackenzie Financial Corp. 333,100 2,983,777
Pioneer Group, Inc. 340,000 6,098,750
Price (T. Rowe) Associates, Inc. 477,200 14,524,775
58,656,628
SECURITY & COMMODITY BROKERS - 26.3%
Advest Group, Inc. (The) 305,800 5,848,425
Bear Stearns Companies, Inc. 914,072 33,763,535
Daiwa Securities Co. Ltd. 2,430,000 7,726,881
Edwards (A.G.), Inc. 814,200 22,085,175
Fahnestock Viner Holdings, Inc. Class A 77,600 1,088,428
First Marathon Inc. Class A (non-vtg.) 44,700 534,348
Jefferies Group, Inc. 163,600 4,672,825
Legg Mason, Inc. 179,166 8,510,385
Merrill Lynch & Co., Inc. 465,100 30,696,600
Morgan Keegan, Inc. 157,925 2,803,169
Morgan Stanley, Dean Witter, Discover
and Co. 469,865 27,281,537
Nomura Securities Co. Ltd. 1,000,000 9,328,282
Raymond James Financial, Inc. 357,225 6,139,805
Southwest Securities Group, Inc. 82,467 1,334,935
Stifel Financial Corp. 110,250 1,054,266
162,868,596
SECURITY BROKERS & DEALERS - 19.3%
Dain Rauscher Corp. 188,350 7,004,266
Donaldson Lufkin & Jenrette, Inc. 479,000 16,765,000
Everen Capital Corp. 200,800 3,652,050
Hambrecht & Quist Group (a) 262,600 5,317,650
Lehman Brothers Holdings, Inc. 673,000 26,499,369
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SECURITIES INDUSTRY - CONTINUED
SECURITY BROKERS & DEALERS - CONTINUED
PaineWebber Group, Inc. 1,096,300 $ 38,096,425
Travelers Group, Inc. (The) 291,502 12,935,401
Waddell & Reed Financial, Inc. Class A 540,000 8,977,500
119,247,661
TOTAL SECURITIES INDUSTRY 354,432,592
TOTAL COMMON STOCKS
(Cost $608,509,864) 574,020,094
CASH EQUIVALENTS - 7.2%
Taxable Central Cash Fund (b)
(Cost $44,243,515) 44,243,515 44,243,515
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $652,753,379) $ 618,263,609
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.58%. 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 $331,603,936 and $221,737,301, 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 $18,544 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 89.4%
Switzerland 4.5
Canada 3.1
Japan 2.7
Others (individually less than 1%) 0.3
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $653,596,283. Net unrealized depreciation
aggregated $35,332,674, of which $63,541,539 related to appreciated
investment securities and $98,874,213 related to depreciated
investment securities.
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31,
1998
(UNAUDITED)
ASSETS
Investment in $ 618,263,609
securities, at
value
(cost
$652,753,37
9) -
See
accompanyin
g schedule
Receivable for 13,409,103
investments
sold
Receivable for 1,413,672
fund shares
sold
Dividends 384,144
receivable
Interest 169,560
receivable
Redemption fees 21,417
receivable
TOTAL ASSETS 633,661,505
LIABILITIES
Payable for $ 27,362,501
fund shares
redeemed
Accrued 419,200
management
fee
Other payables 507,252
and
accrued
expenses
TOTAL LIABILITIES 28,288,953
NET ASSETS $ 605,372,552
Net Assets
consist of:
Paid in capital $ 609,597,902
Undistributed 1,675,781
net investment
income
Accumulated 28,585,526
undistributed
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized (34,486,657)
appreciation
(depreciation)
on
investments
and assets
and liabilities
in
foreign
currencies
NET ASSETS, for $ 605,372,552
18,709,652
shares
outstanding
NET ASSET $32.36
VALUE and
redemption
price per
share
($605,372,5
52 (divided by)
18,709,652
shares)
Maximum $33.36
offering price
per share
(100/97.00
of $32.36)
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED AUGUST
31, 1998
(UNAUDITED)
INVESTMENT $ 5,098,319
INCOME
Dividends
Interest 1,625,724
TOTAL INCOME 6,724,043
EXPENSES
Management $ 2,664,159
fee
Transfer agent 2,237,908
fees
Accounting fees 352,542
and expenses
Non-interested 1,492
trustees'
compensation
Custodian fees 36,188
and expenses
Registration fees 135,407
Audit 20,069
Legal 2,005
Reports to 73,981
shareholders
Total expenses 5,523,751
before
reductions
Expense (61,509) 5,462,242
reductions
NET INVESTMENT 1,261,801
INCOME
REALIZED AND
UNREALIZED
GAIN (LOSS)
Net realized
gain (loss) on:
Investment 29,891,882
securities
Foreign (36,777) 29,855,105
currency
transactions
Change in net
unrealized
appreciation
(depreciation)
on:
Investment (182,844,318)
securities
Assets and (400) (182,844,718)
liabilities in
foreign
currencies
NET GAIN (LOSS) (152,989,613)
NET INCREASE $ (151,727,812)
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 4,169,362
INFORMATION
Sales charges
paid to FDC
Sales charges $ 4,163,450
- - Retained by
FDC
Deferred sales $ 2,849
charges
withheld
by FDC
Exchange fees $ 141,518
withheld by
FSC
Expense $ 58,777
reductions
Directed
brokerage
arrangements
Custodian 1,169
credits
Transfer 1,563
agent credits
$ 61,509
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED YEAR ENDED
(DECREASE) IN AUGUST 31, 1998 FEBRUARY 28,
NET ASSETS (UNAUDITED) 1998
Operations $ 1,261,801 $ 2,052,773
Net investment
income
Net realized 29,855,105 24,237,839
gain (loss)
Change in net (182,844,718) 128,112,104
unrealized
appreciation
(depreciation)
NET INCREASE (151,727,812) 154,402,716
(DECREASE)
IN NET ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (201,766) (1,439,025)
shareholders
From net
investment
income
From net (10,471,069) (10,009,644)
realized gain
TOTAL (10,672,835) (11,448,669)
DISTRIBUTIONS
Share 667,884,104 894,533,503
transactions
Net proceeds
from sales of
shares
Reinvestment 10,559,914 11,336,755
of distributions
Cost of shares (587,560,018) (832,884,965)
redeemed
NET INCREASE 90,884,000 72,985,293
(DECREASE)
IN NET ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
Redemption 821,811 1,340,868
fees
TOTAL (70,694,836) 217,280,208
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
Beginning of 676,067,388 458,787,180
period
End of period $ 605,372,552 $ 676,067,388
(including
undistribute
d net
investment
income of
$1,675,781
and
$675,811,
respectively)
OTHER
INFORMATION
Shares
Sold 15,298,302 26,764,779
Issued in 249,065 321,841
reinvestment
of distributions
Redeemed (13,834,175) (27,900,822)
Net increase 1,713,192 (814,202)
(decrease)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED YEAR ENDED YEARS ENDED
ENDED FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
AUGUST 31,
1998
SELECTED (UNAUDITED) 1998 1997 1996 1995 1994
PER-SHARE
DATA
Net asset $ 39.78 $ 25.76 $ 18.49 $ 15.51 $ 17.75 $ 14.22
value,
beginning
of period
Income from
Investment
Operation
s
Net .06 .16 .08 .09 (.03) (.02)
investment
income
(loss) D
Net (6.99) 14.46 7.80 4.29 (2.25) 4.95
realized
and
unrealized
gain (loss)
Total from (6.93) 14.62 7.88 4.38 (2.28) 4.93
investment
operations
Less
Distributio
ns
From net (.01) (.09) (.06) (.04) - (.01)
investment
income
From net (.52) (.61) (.65) (1.09) - (1.47)
realized
gain
In excess - - - (.35) - -
of net
realized
gain
Total (.53) (.70) (.71) (1.48) - (1.48)
distributio
ns
Redemption .04 .10 .10 .08 .04 .08
fees
added to
paid in
capital
Net asset $ 32.36 $ 39.78 $ 25.76 $ 18.49 $ 15.51 $ 17.75
value, end
of period
TOTAL (17.64)% 57.56% 44.27% 29.85% (12.62)% 35.87%
RETURN B, C
RATIOS AND
SUPPLEME
NTAL DATA
Net assets, $ 605,373 $ 676,067 $ 458,787 $ 38,382 $ 27,346 $ 59,810
end of
period
(000
omitted)
Ratio of 1.20% A 1.33% 1.94% 1.64% E 2.54% E 1.79%
expenses
to average
net assets
Ratio of 1.18% A, F 1.29% F 1.93% F 1.61% F 2.54% 1.77% F
expenses
to average
net assets
after
expense
reductions
Ratio of net .27% A .49% .37% .50% (.20)% (.14)%
investment
income
(loss) to
average
net assets
Portfolio 55% A 100% 16% 166% 139% 295%
turnover
rate
Average $ .0259 $ .0460 $ .0392
commissio
n rate G
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 TOT
AL 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
AGREED TO REIMBURSE
A PORTION OF THE
FUND'S EXPENSES, OR
EXPENSES WERE
LIMITED IN ACCORDANCE
WITH A STATE EXPENSE
LIMITATION. WITHOUT
THIS REIMBURSEMENT,
THE FUND'S EXPENSE
RATIO WOULD HAVE
BEEN HIGHER
. F FMR OR THE
FUND HAS ENTERED
INTO VARYING
ARRANGEMENTS WITH
THIRD PARTIES WHO
EITHER PAID OR
REDUCED A PORTION OF
THE FUND'S EXPENSES
(SEE NOTE 8 OF NOTES
TO FINANCIAL
STATEMENTS). G FO
R 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 MONTHS YEAR YEARS YEARS
SELECT FINANCIAL SERVICES -14.75% 5.13% 139.03% 488.67%
SELECT FINANCIAL SERVICES -17.38% 1.91% 131.78% 470.93%
(LOAD ADJ.)
S&P 500 -8.10% 8.10% 131.21% 382.74%
GS Financial Services -15.98% 3.35% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks - and the Goldman Sachs
Financial Services Index - a market capitalization-weighted index of
271 stocks designed to measure the performance of companies in the
financial services sector. These benchmarks include reinvestment of
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 YEAR YEARS YEARS
SELECT FINANCIAL SERVICES 5.13% 19.04% 19.40%
SELECT FINANCIAL SERVICES 1.91% 18.31% 19.03%
(LOAD ADJ.)
S&P 500 8.10% 18.25% 17.05%
GS Financial Services 3.35% n/a n/a
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.
(checkmark)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.
$10,000 OVER 10 YEARS
Financial Services S&P 500
00066 SP001
1988/08/31 9700.00 10000.00
1988/09/30 10102.00 10426.00
1988/10/31 10129.72 10715.84
1988/11/30 9710.40 10562.61
1988/12/31 9537.79 10747.45
1989/01/31 10026.63 11534.17
1989/02/28 10005.22 11246.96
1989/03/31 10736.70 11509.02
1989/04/30 10932.95 12106.34
1989/05/31 11618.05 12596.64
1989/06/30 11537.09 12524.84
1989/07/31 12460.49 13655.84
1989/08/31 12812.60 13923.49
1989/09/30 13078.48 13866.40
1989/10/31 11831.72 13544.70
1989/11/30 11670.03 13821.02
1989/12/31 11382.63 14152.72
1990/01/31 10421.68 13203.07
1990/02/28 10798.81 13373.39
1990/03/31 10632.00 13727.79
1990/04/30 10254.88 13384.59
1990/05/31 11157.80 14689.59
1990/06/30 10845.95 14589.70
1990/07/31 10149.72 14543.01
1990/08/31 8934.94 13228.33
1990/09/30 7604.13 12584.11
1990/10/31 6940.54 12529.99
1990/11/30 7919.61 13339.43
1990/12/31 8613.25 13711.60
1991/01/31 9395.93 14309.43
1991/02/28 10475.37 15332.55
1991/03/31 10976.14 15703.60
1991/04/30 11332.24 15741.29
1991/05/31 12200.25 16421.31
1991/06/30 11209.83 15669.22
1991/07/31 12096.38 16399.40
1991/08/31 12897.61 16788.07
1991/09/30 12819.72 16507.71
1991/10/31 13101.63 16728.91
1991/11/30 12129.77 16054.73
1991/12/31 13921.46 17891.40
1992/01/31 14614.91 17558.62
1992/02/29 15664.45 17786.88
1992/03/31 15312.10 17440.03
1992/04/30 15900.60 17952.77
1992/05/31 16582.80 18040.74
1992/06/30 16964.37 17771.93
1992/07/31 17449.50 18498.80
1992/08/31 16448.68 18119.58
1992/09/30 16960.55 18333.39
1992/10/31 17632.86 18397.56
1992/11/30 18958.38 19024.91
1992/12/31 19882.64 19258.92
1993/01/31 21136.75 19420.70
1993/02/28 21698.66 19684.82
1993/03/31 22834.70 20100.17
1993/04/30 21741.53 19613.74
1993/05/31 21749.78 20139.39
1993/06/30 22561.74 20197.79
1993/07/31 23167.61 20117.00
1993/08/31 23888.90 20879.44
1993/09/30 24441.19 20718.67
1993/10/31 23785.86 21147.54
1993/11/30 22726.60 20946.64
1993/12/31 23372.91 21200.10
1994/01/31 24959.58 21920.90
1994/02/28 24053.58 21326.84
1994/03/31 22955.11 20396.99
1994/04/30 23826.81 20658.07
1994/05/31 24843.84 20996.87
1994/06/30 24257.27 20482.44
1994/07/31 25104.01 21154.27
1994/08/31 25983.85 22021.59
1994/09/30 24025.48 21482.06
1994/10/31 23897.76 21965.41
1994/11/30 22384.05 21165.43
1994/12/31 22520.38 21479.31
1995/01/31 23685.05 22036.27
1995/02/28 25189.20 22895.02
1995/03/31 25633.13 23570.66
1995/04/30 26437.43 24264.81
1995/05/31 27905.01 25234.68
1995/06/30 28035.58 25820.88
1995/07/31 28975.67 26677.10
1995/08/31 30103.78 26744.06
1995/09/30 31822.06 27872.66
1995/10/31 31007.31 27773.15
1995/11/30 33096.40 28992.39
1995/12/31 33181.58 29550.79
1996/01/31 34732.97 30556.70
1996/02/29 35026.18 30839.96
1996/03/31 35442.02 31136.95
1996/04/30 35048.67 31595.90
1996/05/31 35863.12 32410.76
1996/06/30 36387.87 32534.25
1996/07/31 35595.28 31096.88
1996/08/31 36655.71 31752.72
1996/09/30 39088.12 33539.76
1996/10/31 41564.27 34464.79
1996/11/30 45133.64 37069.98
1996/12/31 43838.71 36335.62
1997/01/31 46448.77 38605.87
1997/02/28 47473.34 38908.54
1997/03/31 43907.40 37309.79
1997/04/30 47605.18 39537.19
1997/05/31 49167.97 41944.21
1997/06/30 51782.65 43823.31
1997/07/31 57583.03 47310.33
1997/08/31 54313.18 44660.01
1997/09/30 57793.41 47106.04
1997/10/31 57024.03 45532.69
1997/11/30 58953.48 47640.40
1997/12/31 62243.40 48458.39
1998/01/31 61575.44 48994.34
1998/02/28 66977.48 52527.81
1998/03/31 70609.10 55217.76
1998/04/30 71779.32 55773.25
1998/05/31 70436.45 54814.51
1998/06/30 73650.77 57041.07
1998/07/31 73886.48 56433.58
1998/08/31 57093.09 48274.42
IMATRL PRASUN SHR__CHT 19980831 19980916 100316 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Financial Services Portfolio on August 31,
1988, and the current 3.00% sales charge was paid. As the chart shows,
by August 31, 1998, the value of the investment would have grown to
$57,093 - a 470.93% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $48,274 - a 382.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
NationsBank Corp. 4.5
American Express Co. 4.4
American International Group, Inc. 4.4
U.S. Bancorp 4.2
Household International, Inc. 4.1
BankAmerica Corp. 3.8
Wells Fargo & Co. 3.5
Citicorp 3.3
Banc One Corp. 2.6
Fannie Mae 2.6
TOP INDUSTRIES AS OF AUGUST 31, 1998
NATIONAL COMMERCIAL BANKS 34.6%
PROPERTY-CASUALTY &
REINSURANCE 13.9%
PERSONAL CREDIT INSTITUTIONS 8.2%
FEDERAL & FEDERALLY SPONSORED
CREDIT AGENCIES 6.4%
FINANCIAL SERVICES 6.0%
ALL OTHERS 30.9%
ROW: 1, COL: 1, VALUE: 30.9
ROW: 1, COL: 2, VALUE: 6.0
ROW: 1, COL: 3, VALUE: 6.4
ROW: 1, COL: 4, VALUE: 8.199999999999999
ROW: 1, COL: 5, VALUE: 13.9
ROW: 1, COL: 6, VALUE: 34.6
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
FINANCIAL SERVICES PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Robert Ewing)
Robert Ewing,
Portfolio Manager
of Fidelity Select
Financial Services Portfolio
Q. HOW DID THE FUND PERFORM, BOB?
A. For the six months that ended August 31, 1998, the fund returned
- -14.75%. For the 12 months, it returned 5.13%. For the same periods,
the Standard & Poor's 500 Index returned -8.10% and 8.10%,
respectively. Beginning this period, the fund also compares itself to
the Goldman Sachs Financial Services Index - an index of 271 stocks
designed to measure the performance of companies in the financial
services sector - which returned -15.98% and 3.35% over the same six-
and 12-month periods, respectively.
Q. AFTER A PROLONGED PERIOD IN WHICH FINANCIAL SERVICES STOCKS DID
BETTER THAN THE OVERALL MARKET, THEY UNDERPERFORMED DURING THE PAST
SIX MONTHS. WHY?
A. There were two basic reasons. Financial services companies
traditionally are highly leveraged - they operate using a great deal
of borrowed money. Typically, owners' equity represents only a
relatively small portion of the value of operations. As a result,
financial services companies are more sensitive to market changes than
the overall market. The second factor is that financial services
companies have become much more a part of the global economy and much
more influenced by international events over the past 10 or 20 years.
Over the six months, we witnessed major problems in Russia, a
continuation of the problems in Asia and emerging problems in Latin
America. These global economic problems had a greater impact on the
U.S. financial services industry than on U.S. industry in general.
Q. IN LIGHT OF THESE CHALLENGES, WHAT STRATEGIES DID YOU EMPHASIZE?
A. Throughout the period, I emphasized companies that lent to U.S.
consumers, because consumer credit quality here has improved. I also
emphasized domestically oriented regional banks, like U.S. Bancorp and
Wells Fargo, with relatively little foreign exposure. At the same
time, I tried to de-emphasize money center banks with large foreign
involvement - companies such as Bankers Trust and J.P. Morgan. I also
tried to invest in financial companies that don't necessarily lend,
such as life insurance and annuity companies. An example would be
Torchmark. The final strategy was to look for companies trading at
very attractive stock valuations relative to their underlying value.
Lehman Brothers is a good example of a brokerage company that was
trading at book value.
Q. WHAT HOLDINGS HELPED PERFORMANCE?
A. Two of the top performers, Beneficial Corp. and Greentree
Financial, are consumer lenders. Beneficial and Greentree also were
acquired, which lifted their performance. SunAmerica was another
strong contributor, helped by its strong business in retirement
savings. AIG has recently announced that it would acquire SunAmerica.
Q. WHAT HOLDINGS HURT PERFORMANCE?
A. The performance of several large financial companies was hampered
due to their exposure to international problems. These included
American Express, Chase Manhattan, Travelers Group and BankAmerica.
Associates First Capital, a consumer-oriented company that also is
involved in commercial lending, did not perform well because of
investors' worries about its commercial loans.
Q. WHAT IS YOUR OUTLOOK?
A. This is a pivotal time. If investors think the world economy will
stabilize, they are likely to come to the conclusion that financial
services stocks have been over-discounted and will turn out to be
terrific stocks. On the other hand, if investors think the world
economy will continue to slip and that the U.S. economy will begin to
slow, then financial services will continue to be a volatile sector. I
plan to continue to emphasize consumer lenders and domestically
oriented regional banks, as well as companies that don't have a lot of
credit risk, such as life insurers. I also will try to find relatively
cheaper stocks, with lower price-to-earnings ratios, to reduce risk in
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.
(checkmark)FUND FACTS
START DATE: December 10, 1981
FUND NUMBER: 066
TRADING SYMBOL: FIDSX
SIZE: as of August 31, 1998, more than
$515 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 Service Portfolio,
1996-January 1998; joined Fidelity in 1990
FINANCIAL SERVICES PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 95.6%
SHARES VALUE (NOTE 1)
BANKS - 36.5%
INTERNATIONAL BANKS - 0.5%
Royal Bank of Canada 65,000 $ 2,451,227
NATIONAL COMMERCIAL BANKS - 34.6%
Banc One Corp. 352,719 13,403,322
Bank of New York Co., Inc. 470,936 11,390,765
BankAmerica Corp. 302,000 19,346,875
Chase Manhattan Corp. 250,000 13,250,000
Citicorp 157,000 16,975,625
Comerica, Inc. 175,167 9,152,476
First Union Corp. 90,690 4,398,465
Marshall & Ilsley Corp. 30,000 1,320,000
Mellon Bank Corp. 40,000 2,080,000
National City Corp. 85,500 5,023,125
NationsBank Corp. 400,400 22,822,800
Norwest Corp. 110,000 3,272,500
Providian Financial Corp. 101,800 6,534,288
U.S. Bancorp 620,489 21,174,187
Wachovia Corp. 89,500 6,561,469
Wells Fargo & Co. 63,000 17,758,125
Zions Bancorp 50,000 1,918,750
176,382,772
STATE BANKS FEDERAL RESERVE - 1.4%
Crestar Financial Corp. 20,000 1,010,000
Firstar Corp. 39,000 1,511,250
Northern Trust Corp. 90,000 5,017,500
7,538,750
TOTAL BANKS 186,372,749
CREDIT & OTHER FINANCE - 16.9%
BANK HOLDING COMPANY OFFICES - 1.9%
Fleet Financial Group, Inc. 149,767 9,819,099
FINANCIAL SERVICES - 6.0%
American Express Co. 287,300 22,409,400
Equitable Companies, Inc. 54,200 3,099,563
First Chicago NBD Corp. 75,000 4,753,125
30,262,088
MORTGAGE BANKERS - 0.8%
Aames Financial Corp. 100,000 650,000
Headlands Mortgage Co. (a) 75,000 1,040,625
Resource Bancshares Mortgage
Group, Inc. 155,000 2,441,250
4,131,875
PERSONAL CREDIT INSTITUTIONS - 8.2%
Associates First Capital Corp. Class A 210,100 12,422,163
Household International, Inc. 559,746 20,675,618
MBNA Corp. 315,000 7,402,500
Takefuji Corp. (c) 34,000 1,465,425
41,965,706
TOTAL CREDIT & OTHER FINANCE 86,178,768
FEDERAL SPONSORED CREDIT - 6.4%
FEDERAL & FEDERALLY SPONSORED CREDIT AGENCIES - 6.4%
Freddie Mac 314,600 12,426,700
Fannie Mae 235,000 13,350,938
SLM Holding Corp. 186,000 6,672,750
32,450,388
SHARES VALUE (NOTE 1)
INSURANCE - 24.4%
INSURANCE BROKERS & SERVICES - 1.2%
Marsh & McLennan Companies, Inc. 122,500 $ 5,941,250
INSURANCE CARRIERS - 4.3%
AFLAC, Inc. 382,000 9,597,750
AMBAC, Inc. 65,000 3,067,188
Blanch E.W. Holdings, Inc. 35,000 1,249,063
MBIA, Inc. 67,400 3,782,825
MGIC Investment Corp. 104,200 4,324,300
22,021,126
LIFE INSURANCE - 4.5%
Aon Corp. 97,500 6,099,844
Hartford Life, Inc. Class A 25,000 1,281,250
Nationwide Financial Services, Inc.
Class A 35,000 1,564,063
Reliastar Financial Corp. 25,000 981,250
SunAmerica, Inc. 110,000 6,813,125
Torchmark Corp. 180,000 6,435,000
23,174,532
PROPERTY-CASUALTY & REINSURANCE - 13.9%
ACE Ltd. 80,000 2,320,000
Aegon NV (Reg.) 36,940 3,158,370
Allstate Corp. 227,800 8,542,500
American International Group, Inc. 287,500 22,227,344
Capital Re Corp. 60,000 1,590,000
Chubb Corp. (The) 30,000 1,875,000
General Re Corp. 10,500 2,178,750
HCC Insurance Holdings, Inc. 150,000 2,803,125
Hartford Financial Services Group, Inc. 190,000 8,502,500
Old Republic International Corp. 60,000 1,338,750
PMI Group, Inc. 58,400 3,233,900
Progressive Corp. 55,000 5,359,063
RenaissanceRe Holdings Ltd. 125,000 5,234,375
Travelers Property Casualty Corp. Class A 75,000 2,470,313
70,833,990
SURETY INSURANCE - 0.5%
Amerin Corp. (a) 120,000 2,737,500
TOTAL INSURANCE 124,708,398
REAL ESTATE INVESTMENT TRUSTS - 1.6%
Crescent Real Estate Equities, Inc. 70,000 1,610,000
Duke Realty Investors, Inc. 50,000 1,037,500
Equity Office Properties Trust 50,000 1,134,375
Imperial Credit Commercial Mortgage
Investment Corp. 85,100 765,900
Ocwen Asset Investment Corp. 200,000 1,950,000
Public Storage, Inc. 40,000 935,000
Starwood Hotels & Resorts Trust 20,000 730,000
8,162,775
SAVINGS & LOANS - 2.6%
SAVINGS BANKS & SAVINGS & LOANS - 0.4%
Astoria Financial Corp. 25,000 900,000
Charter One Financial Corp. 50,000 1,150,000
2,050,000
SAVINGS BANKS, FEDERAL CHARTER - 2.2%
Ahmanson (H.F.) & Co. 41,000 2,185,813
Dime Bancorp., Inc. 135,000 2,565,000
Golden State Bancorp 125,000 1,984,375
Golden State Bancorp Litigation
Track warrants 1/1/01 (a) 50,000 225,000
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SAVINGS & LOANS - CONTINUED
SAVINGS BANKS, FEDERAL CHARTER - CONTINUED
Telebanc Financial Corp. (a) 1,800 $ 22,275
Washington Mutual, Inc. 130,000 4,160,000
11,142,463
TOTAL SAVINGS & LOANS 13,192,463
SECURITIES INDUSTRY - 7.2%
INVESTMENT MANAGERS - 0.7%
Investors Group Inc. 200,000 2,231,431
Pioneer Group, Inc. 75,000 1,345,313
3,576,744
SECURITY & COMMODITY BROKERS - 2.6%
Bear Stearns Companies, Inc. 185,000 6,833,438
Merrill Lynch & Co., Inc. 76,000 5,016,000
Nomura Securities Co. Ltd. 150,000 1,399,242
13,248,680
SECURITY BROKERS & DEALERS - 3.9%
Lehman Brothers Holdings, Inc. 110,600 4,354,869
Travelers Group, Inc. (The) 282,000 12,513,750
Waddell & Reed Financial, Inc. Class A 170,000 2,826,250
19,694,869
TOTAL SECURITIES INDUSTRY 36,520,293
TOTAL COMMON STOCKS
(Cost $494,100,377) 487,585,834
CASH EQUIVALENTS - 4.4%
Taxable Central Cash Fund (b)
(Cost $22,353,205) 22,353,205 22,353,205
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $516,453,582) $ 509,939,039
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.58%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(c) Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers.
At the period end, the value of these securities amounted to
$1,465,425 or 0.3% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $240,604,803 and $214,158,353, 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 $31,875 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the security lending program. At period end,
there were no loans outstanding (see Note 6 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $516,496,405. Net unrealized depreciation
aggregated $6,557,366, of which $56,926,487 related to appreciated
investment securities and $63,483,853 related to depreciated
investment securities.
FINANCIAL SERVICES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31,
1998
(UNAUDITED)
ASSETS
Investment in $ 509,939,039
securities, at
value
(cost
$516,453,58
2) -
See
accompanyin
g schedule
Receivable for 20,581,799
investments
sold
Receivable for 2,293,085
fund shares
sold
Dividends 535,614
receivable
Interest 183,355
receivable
Redemption fees 9,559
receivable
TOTAL ASSETS 533,542,451
LIABILITIES
Payable for $ 2,952,000
investments
purchased
Payable for 14,020,676
fund shares
redeemed
Accrued 316,972
management
fee
Other payables 363,574
and
accrued
expenses
TOTAL LIABILITIES 17,653,222
NET ASSETS $ 515,889,229
Net Assets
consist of:
Paid in capital $ 483,083,768
Undistributed 1,843,380
net investment
income
Accumulated 37,456,197
undistributed
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized (6,494,116)
appreciation
(depreciation)
on
investments
and assets
and liabilities
in
foreign
currencies
NET ASSETS, for $ 515,889,229
6,453,062
shares
outstanding
NET ASSET $79.94
VALUE and
redemption
price per
share
($515,889,2
29 (divided by)
6,453,062
shares)
Maximum $82.41
offering price
per share
(100/97.00
of $79.94)
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED AUGUST
31, 1998
(UNAUDITED)
INVESTMENT $ 4,532,605
INCOME
Dividends
Interest 1,331,358
(including
income on
securities
loaned of
$1,796)
TOTAL INCOME 5,863,963
EXPENSES
Management $ 2,010,972
fee
Transfer agent 1,612,555
fees
Accounting and 297,132
security
lending fees
Non-interested 1,329
trustees'
compensation
Custodian fees 10,355
and expenses
Registration fees 74,708
Audit 18,423
Legal 1,736
Reports to 62,024
shareholders
Total expenses 4,089,234
before
reductions
Expense (69,413) 4,019,821
reductions
NET INVESTMENT 1,844,142
INCOME
REALIZED AND
UNREALIZED
GAIN (LOSS)
Net realized
gain (loss) on:
Investment 37,527,194
securities
Foreign 19,235 37,546,429
currency
transactions
Change in net
unrealized
appreciation
(depreciation)
on:
Investment (135,356,614)
securities
Assets and 20,427 (135,336,187)
liabilities in
foreign
currencies
NET GAIN (LOSS) (97,789,758)
NET INCREASE $ (95,945,616)
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 1,576,268
INFORMATION
Sales charges
paid to FDC
Sales charges $ 1,575,034
- - Retained by
FDC
Deferred sales $ 6,835
charges
withheld
by FDC
Exchange fees $ 58,680
withheld by
FSC
Expense $ 67,246
reductions
Directed
brokerage
arrangements
Custodian 2,104
credits
Transfer 63
agent credits
$ 69,413
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED YEAR ENDED
(DECREASE) IN AUGUST 31, 1998 FEBRUARY 28,
NET ASSETS (UNAUDITED) 1998
Operations $ 1,844,142 $ 3,633,948
Net
investment
income
Net realized 37,546,429 108,047,031
gain (loss)
Change in net (135,336,187) 47,345,052
unrealized
appreciation
(depreciation)
NET INCREASE (95,945,616) 159,026,031
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (1,162,931) (3,089,281)
shareholders
From net
investment
income
From net (61,384,939) (50,526,464)
realized gain
TOTAL (62,547,870) (53,615,745)
DISTRIBUTIONS
Share 243,927,672 474,752,061
transactions
Net proceeds
from sales of
shares
Reinvestment 61,457,951 52,640,022
of
distributions
Cost of shares (236,208,147) (455,053,591)
redeemed
NET INCREASE 69,177,476 72,338,492
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
Redemption 297,623 734,651
fees
TOTAL (89,018,387) 178,483,429
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
Beginning of 604,907,616 426,424,187
period
End of period $ 515,889,229 $ 604,907,616
(including
undistribute
d net
investment
income of
$1,843,38
0 and
$1,378,88
2,
respectively)
OTHER
INFORMATION
Shares
Sold 2,355,109 5,332,883
Issued in 609,460 604,501
reinvestment
of
distributions
Redeemed (2,368,715) (5,221,709)
Net increase 595,854 715,675
(decrease)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED YEAR ENDED YEARS ENDED
ENDED FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
AUGUST 31,
1998
SELECTED (UNAUDITED) 1998 1997 1996 1995 1994
PER-SHARE
DATA
Net asset $ 103.28 $ 82.94 $ 65.70 $ 48.23 $ 51.24 $ 53.29
value,
beginning
of period
Income from
Investment
Operation
s
Net .28 .70 .74 1.03 .76 .29
investment
income D
Net (13.43) 30.65 21.55 17.56 .87 5.02
realized
and
unrealized
gain (loss)
Total from (13.15) 31.35 22.29 18.59 1.63 5.31
investment
operations
Less
Distributio
ns
From net (.19) (.64) (.63) (.37) (.79) (.20)
investment
income
From net (10.04) (10.51) (4.56) (.91) (3.93) (7.32)
realized
gain
Total (10.23) (11.15) (5.19) (1.28) (4.72) (7.52)
distributio
ns
Redemption .04 .14 .14 .16 .08 .16
fees
added to
paid in
capital
Net asset $ 79.94 $ 103.28 $ 82.94 $ 65.70 $ 48.23 $ 51.24
value, end
of period
TOTAL (14.75)% 41.08% 35.54% 39.05% 4.72% 10.85%
RETURN B, C
RATIOS AND
SUPPLEME
NTAL DATA
Net assets, $ 515,889 $ 604,908 $ 426,424 $ 270,466 $ 153,089 $ 116,195
end of
period
(000
omitted)
Ratio of 1.17% A 1.31% 1.45% 1.42% 1.56% 1.64%
expenses
to average
net assets
Ratio of 1.15% A, E 1.29% E 1.43% E 1.41% E 1.54% E 1.63% E
expenses
to average
net assets
after
expense
reductions
Ratio of net .53% A .78% 1.03% 1.78% 1.52% .53%
investment
income to
average
net assets
Portfolio 69% A 84% 80% 125% 107% 93%
turnover
rate
Average $ .0434 $ .0452 $ .0433
commissio
n rate F
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 TOT
AL RETURNS DO NOT
INCLUDE THE ONE TIME
SALES CHARGE AND FOR
PERIODS OF LESS THAN
ONE YEAR ARE NOT
ANNUALIZED. D NET
INVESTMENT INCOME
PER SHARE HAS BEEN
CALCULATED BASED ON
AVERAGE SHARES
OUTSTANDING DURING
THE PERIOD. E FMR
OR THE FUND HAS
ENTERED INTO VARYING
ARRANGEMENTS WITH
THIRD PARTIES WHO
EITHER PAID OR
REDUCED A PORTION OF
THE FUND'S EXPENSES
(SEE NOTE 8 OF NOTES
TO FINANCIAL
STATEMENTS). F FO
R 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 MONTHS YEAR YEARS YEARS
SELECT HOME FINANCE -26.84% -14.69% 148.93% 655.74%
SELECT HOME FINANCE -29.11% -17.32% 141.39% 633.00%
(LOAD ADJ.)
S&P 500 -8.10% 8.10% 131.21% 382.74%
GS Financial Services -15.98% 3.35% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks - and the Goldman Sachs
Financial Services Index - a market capitalization-weighted index of
271 stocks designed to measure the performance of companies in the
financial services sector. These benchmarks include reinvestment of
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 YEAR YEARS YEARS
SELECT HOME FINANCE -14.69% 20.01% 22.42%
SELECT HOME FINANCE -17.32% 19.27% 22.04%
(LOAD ADJ.)
S&P 500 8.10% 18.25% 17.05%
GS Financial Services 3.35% n/a n/a
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.
(checkmark)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.
$10,000 OVER 10 YEARS
Home Finance S&P 500
00098 SP001
1988/08/31 9700.00 10000.00
1988/09/30 10194.13 10426.00
1988/10/31 10484.16 10715.84
1988/11/30 9957.81 10562.61
1988/12/31 10132.12 10747.45
1989/01/31 10981.91 11534.17
1989/02/28 11221.60 11246.96
1989/03/31 11276.07 11509.02
1989/04/30 11853.49 12106.34
1989/05/31 12365.55 12596.64
1989/06/30 12614.45 12524.84
1989/07/31 13053.97 13655.84
1989/08/31 13856.11 13923.49
1989/09/30 14372.56 13866.40
1989/10/31 12581.48 13544.70
1989/11/30 12174.92 13821.02
1989/12/31 11077.08 14152.72
1990/01/31 10158.77 13203.07
1990/02/28 10537.57 13373.39
1990/03/31 10560.53 13727.79
1990/04/30 10308.00 13384.59
1990/05/31 11283.70 14689.59
1990/06/30 11168.91 14589.70
1990/07/31 10204.69 14543.01
1990/08/31 9171.59 13228.33
1990/09/30 8379.55 12584.11
1990/10/31 7748.22 12529.99
1990/11/30 8586.17 13339.43
1990/12/31 9406.32 13711.60
1991/01/31 10306.06 14309.43
1991/02/28 11708.24 15332.55
1991/03/31 12245.74 15703.60
1991/04/30 12666.40 15741.29
1991/05/31 13192.22 16421.31
1991/06/30 12456.07 15669.22
1991/07/31 13788.15 16399.40
1991/08/31 14313.97 16788.07
1991/09/30 14197.12 16507.71
1991/10/31 13951.73 16728.91
1991/11/30 13309.07 16054.73
1991/12/31 15483.33 17891.40
1992/01/31 17009.19 17558.62
1992/02/29 18121.06 17786.88
1992/03/31 17813.52 17440.03
1992/04/30 18192.03 17952.77
1992/05/31 19989.94 18040.74
1992/06/30 20014.98 17771.93
1992/07/31 20999.13 18498.80
1992/08/31 19860.84 18119.58
1992/09/30 20180.99 18333.39
1992/10/31 20560.42 18397.56
1992/11/30 22671.00 19024.91
1992/12/31 24440.87 19258.92
1993/01/31 26194.36 19420.70
1993/02/28 26638.74 19684.82
1993/03/31 27587.55 20100.17
1993/04/30 26093.28 19613.74
1993/05/31 25646.73 20139.39
1993/06/30 26286.39 20197.79
1993/07/31 27976.06 20117.00
1993/08/31 29448.48 20879.44
1993/09/30 31331.25 20718.67
1993/10/31 31572.63 21147.54
1993/11/30 30160.55 20946.64
1993/12/31 31112.00 21200.10
1994/01/31 32474.10 21920.90
1994/02/28 31863.06 21326.84
1994/03/31 31264.75 20396.99
1994/04/30 32473.55 20658.07
1994/05/31 34476.44 20996.87
1994/06/30 35050.60 20482.44
1994/07/31 35825.05 21154.27
1994/08/31 36986.73 22021.59
1994/09/30 35718.23 21482.06
1994/10/31 33581.81 21965.41
1994/11/30 31845.97 21165.43
1994/12/31 31946.14 21479.31
1995/01/31 33353.98 22036.27
1995/02/28 35825.20 22895.02
1995/03/31 35765.30 23570.66
1995/04/30 37637.43 24264.81
1995/05/31 39869.02 25234.68
1995/06/30 40288.38 25820.88
1995/07/31 41905.90 26677.10
1995/08/31 45769.99 26744.06
1995/09/30 46728.53 27872.66
1995/10/31 45874.83 27773.15
1995/11/30 48405.96 28992.39
1995/12/31 49034.57 29550.79
1996/01/31 50375.24 30556.70
1996/02/29 51315.24 30839.96
1996/03/31 52486.40 31136.95
1996/04/30 51816.30 31595.90
1996/05/31 52971.29 32410.76
1996/06/30 53208.61 32534.25
1996/07/31 54157.92 31096.88
1996/08/31 56388.79 31752.72
1996/09/30 59236.71 33539.76
1996/10/31 63397.83 34464.79
1996/11/30 68144.36 37069.98
1996/12/31 67116.52 36335.62
1997/01/31 71476.87 38605.87
1997/02/28 75689.14 38908.54
1997/03/31 68679.67 37309.79
1997/04/30 70738.19 39537.19
1997/05/31 75478.65 41944.21
1997/06/30 81922.16 43823.31
1997/07/31 89629.79 47310.33
1997/08/31 85925.21 44660.01
1997/09/30 93632.85 47106.04
1997/10/31 92895.44 45532.69
1997/11/30 93422.16 47640.40
1997/12/31 97822.00 48458.39
1998/01/31 92263.29 48994.34
1998/02/28 100206.99 52527.81
1998/03/31 106967.58 55217.76
1998/04/30 109488.51 55773.25
1998/05/31 105675.86 54814.51
1998/06/30 103846.56 57041.07
1998/07/31 99802.84 56433.58
1998/08/31 73306.85 48274.42
IMATRL PRASUN SHR__CHT 19980831 19980914 085516 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Home Finance Portfolio on August 31, 1988,
and the current 3.00% sales charge was paid. As the chart shows, by
August 31, 1998, the value of the investment would have grown to
$73,300 - a 633.00% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $48,274 - a 382.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
Washington Mutual, Inc. 5.9
Ahmanson (H.F.) & Co. 5.5
Charter One Financial Corp. 4.7
Dime Bancorp., Inc. 4.7
Greenpoint Financial Corp. 3.9
Freddie Mac 3.0
Astoria Financial Corp. 2.8
TCF Financial Corp. 2.8
Peoples Heritage Financial Group, Inc. 2.4
BankAmerica Corp. 2.3
TOP INDUSTRIES AS OF AUGUST 31, 1998
SAVINGS BANKS, FEDERAL CHARTER 32.1%
SAVINGS BANKS &
SAVINGS & LOANS 17.2%
NATIONAL COMMERCIAL BANKS 13.5%
MORTGAGE BANKERS 7.0%
BANK HOLDING COMPANY OFFICES 5.1%
ALL OTHERS 25.1%
ROW: 1, COL: 1, VALUE: 25.1
ROW: 1, COL: 2, VALUE: 5.1
ROW: 1, COL: 3, VALUE: 7.0
ROW: 1, COL: 4, VALUE: 13.5
ROW: 1, COL: 5, VALUE: 17.2
ROW: 1, COL: 6, VALUE: 32.1
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
HOME FINANCE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Bill Rubin)
Bill Rubin,
Portfolio Manager
of Fidelity Select
Home Finance Portfolio
Q. HOW DID THE FUND PERFORM, BILL?
A. For the six- and 12-month periods that ended August 31, 1998, the
fund had total returns of -26.84% and -14.69%, respectively. In
comparison, the Standard & Poor's 500 Index returned -8.10% and 8.10%,
respectively, over the same time periods. Beginning this period, the
fund also compares itself to the Goldman Sachs Financial Services
Index - an index of 271 stocks designed to measure the performance of
companies in the financial services sector - which returned -15.98%
and 3.35% over the same six- and 12-month periods, respectively.
Q. PRIOR TO THIS PERIOD, MORTGAGE FINANCE STOCKS ENJOYED A NICE RUN OF
STRONG PERFORMANCE. WHY THE SUDDEN TURNAROUND?
A. The market's plunge in August devastated virtually all sectors of
stocks, but financial services stocks were hit particularly hard,
causing the fund to underperform diversified indexes like the S&P 500.
The financial services sector was the victim of concern about exposure
to emerging markets - especially Russia - and the desire to take
profits on stocks that, as a group, have outperformed the overall
market over the past few years. Within the financial services sector,
mortgage-related shares - which comprise the majority of the fund's
investments - were generally under considerable pressure during the
period. Investors anticipated lower revenues than earlier expected for
mortgage institutions because of the higher rate of refinancings and
prepayments, as well as the narrower spread between short-term
interest rates, which represent mortgage lenders' cost of borrowing,
and the long-term interest rates on which their revenues depend.
Consequently, the fund's performance lagged even that of the
sector-specific Goldman Sachs index.
Q. WHAT STOCKS PERFORMED WELL DURING THE PERIOD?
A. Greentree Financial and Money Store shares rose in response to
acquisition bids by Conseco and First Union, respectively, which were
both looking to diversify further into the consumer finance area. Both
acquisitions subsequently transpired, resulting in the elimination of
Greentree and Money Store from the fund's holdings. Societe Generale,
a French-based bank that rode the wave of a strong European finance
sector, also helped performance, and I took profits on this position.
Q. WHAT STOCKS WERE DISAPPOINTING?
A. Dime Bancorp, formerly one of the fund's best performers and its
fourth-largest holding at the end of the period, hurt performance
most. Although the company continued to far exceed earnings estimates
during the period, it was caught in the wave of indiscriminate selling
that engulfed the market recently. Washington Mutual, the fund's
largest holding, also detracted from performance. The company's
earnings estimates slipped, primarily due to the temporarily higher
costs involved in assimilating Great Western - an acquisition that
virtually doubled the size of the company. Greenpoint Financial's
story parallels that of Dime Bancorp - the stock was hammered in spite
of a positive outlook and strong earnings growth that exceeded
analysts' estimates.
Q. WHAT'S YOUR OUTLOOK, BILL?
A. Going forward, a lot will depend on the strength of the U.S.
economy, the direction of interest rates and the level of refinancings
and prepayments. A moderately slower economy might relieve investors'
fears about inflation and allow short-term interest rates to drift
lower without disturbing long-term rates, enabling many mortgage
finance companies to reaccelerate their revenue growth. However,
anything worse than a moderate slowdown would be detrimental to
mortgage finance stocks. On the positive side, earnings-per-share
growth in the sector should average between 10% and 15% over the next
year. Meanwhile, the sector's average price-to-earnings (P/E) ratio -
an important measure of value - has fallen to about half of the S&P
500's P/E ratio. Residential mortgage credit quality remains
excellent. Moreover, year-to-date figures on the rate of mergers and
acquisitions in the industry - a potent positive influence on stock
prices over the past few years - have exceeded those covering the same
period of time in 1997. Therefore, despite the uncertain prospects for
the economy, I am relatively optimistic about prospects for the
mortgage finance sector over the next 12 to 18 months. My strategy
will remain one of owning stocks projected to have better-than-average
earnings growth and selling at a significant valuation discount to the
financial services sector and to the S&P 500.
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.
(checkmark)FUND FACTS
START DATE: December 16, 1985
FUND NUMBER: 098
TRADING SYMBOL: FSVLX
SIZE: as of August 31, 1998, more than
$1.0 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
HOME FINANCE PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 98.5%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES - 0.6%
AUTO DEALERS, GAS STATIONS - RETAIL - 0.6%
Ugly Duckling Corp. (a)(c) 1,367,500 $ 6,324,688
BANKS - 17.5%
NATIONAL COMMERCIAL BANKS - 13.5%
Advanta Corp. 132,900 1,503,431
BB&T Corp. 98,400 2,773,650
Banc One Corp. 98,620 3,747,560
Bank of New York Co., Inc. 577,200 13,961,025
BankAmerica Corp. 353,600 22,652,500
Chase Manhattan Corp. 363,900 19,286,700
Comerica, Inc. 44,300 2,314,675
First Tennessee National Corp. 88,600 2,109,788
HUBCO, Inc. 130,753 3,464,955
Norwest Corp. 157,500 4,685,625
Peoples Heritage Financial Group, Inc. 1,542,700 24,201,106
Providian Financial Corp. 100,900 6,476,519
SouthTrust Corp. 59,100 1,913,363
U.S. Bancorp 334,000 11,397,750
Union Planters Corp. 1,887 75,952
UnionBanCal Corp. 90,500 6,776,188
Vermont Financial Services Corp. 19,700 398,925
Wells Fargo & Co. 24,600 6,934,125
134,673,837
STATE BANKS FEDERAL RESERVE - 4.0%
Acadiana Bancshares, Inc. (c) 150,900 2,791,650
Crestar Financial Corp. 102,199 5,161,050
North Fork Bancorp., Inc. 1,066,424 20,262,056
R&G Financial Corp. Class B 286,500 4,404,938
T R Financial Corp. 201,100 4,160,256
UST Corp. 101,640 1,677,060
US Trust Corp. 22,200 1,332,000
39,789,010
TOTAL BANKS 174,462,847
CREDIT & OTHER FINANCE - 16.0%
BANK HOLDING COMPANY OFFICES - 5.1%
Fleet Financial Group, Inc. 189,100 12,397,869
Greenpoint Financial Corp. 1,536,500 38,700,594
51,098,463
BUSINESS CREDIT - 0.8%
Allied Capital Corp. 49,200 787,200
Coast Federal Litigation Contingent
Payment Rights Trust 12/31/00 (a) 269,400 2,710,838
Federal Agricultural Mortgage Corp.
Class C (non-vtg.) (a) 108,300 4,007,100
7,505,138
FINANCIAL SERVICES - 0.7%
ContiFinancial Corp. (a) 545,000 6,880,625
MORTGAGE BANKERS - 7.0%
Aames Financial Corp. 1,483,150 9,640,475
BNC Mortgage, Inc. (a) 214,600 1,314,425
Cityscape Financial Corp. (a) 2,010,900 110,600
Countrywide Credit Industries, Inc. 117,890 4,413,507
Delta Financial Corp. (a) 563,800 4,439,925
Doral Financial Corp. 196,900 2,953,500
First Alliance Mortgage Co. (a)(c) 729,250 5,469,375
Home Gold Financial, Inc. (a) 457,700 1,029,825
IMC Mortgage Co. (a) 1,010,500 6,820,875
Imperial Credit Industries (a) 366,200 4,989,475
SHARES VALUE (NOTE 1)
Life Financial Corp. (a)(c) 336,400 $ 2,060,450
Long Beach Financial Corp. (a)(c) 1,198,100 9,584,800
New Century Financial Corp. (a) 424,200 3,923,850
Resource Bancshares Mortgage
Group, Inc. 287,375 4,526,156
Southern Pacific Funding Corp. (a) 570,500 4,635,313
United Companies Financial Corp. 265,300 3,714,200
69,626,751
PERSONAL CREDIT INSTITUTIONS - 2.4%
Associates First Capital Corp. Class A 49,200 2,908,950
FIRSTPLUS Financial Group, Inc. (a) 937,600 21,330,400
24,239,350
TOTAL CREDIT & OTHER FINANCE 159,350,327
FEDERAL SPONSORED CREDIT - 3.8%
FEDERAL & FEDERALLY SPONSORED CREDIT AGENCIES - 3.8%
Freddie Mac 762,800 30,130,600
SLM Holding Corp. 196,900 7,063,788
37,194,388
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
INDUSTRIAL MACHINERY - WHOLESALE - 0.1%
Linc Capital, Inc. (a) 98,400 1,266,900
INSURANCE - 4.9%
INSURANCE CARRIERS - 0.7%
MGIC Investment Corp. 177,000 7,345,500
LIFE INSURANCE - 1.4%
Conseco, Inc. 509,123 14,064,523
PROPERTY-CASUALTY & REINSURANCE - 2.0%
PMI Group, Inc. 361,640 20,025,815
SURETY INSURANCE - 0.8%
CMAC Investments 190,800 7,345,800
TOTAL INSURANCE 48,781,638
REAL ESTATE INVESTMENT TRUSTS - 3.7%
Criimi Mae, Inc. 265,318 3,333,057
Imperial Credit Mortgage Holdings, Inc. 262,600 3,364,563
Imperial Credit Commercial Mortgage
Investment Corp. 147,700 1,329,300
Indymac Mortgage Holdings, Inc. 308,100 6,046,463
Novastar Financial, Inc. 126,200 1,885,113
Ocwen Asset Investment Corp. 863,000 8,414,250
Redwood Trust, Inc. (c) 704,519 10,039,396
Thornburg Mortgage Asset Corp. 300,300 2,402,400
36,814,542
SAVINGS & LOANS - 50.4%
SAVINGS BANKS & SAVINGS & LOANS - 17.2%
Andover Bancorp., Inc. 153,850 4,307,800
Astoria Financial Corp. 785,300 28,270,800
Bay View Capital, Inc. 305,103 5,186,751
Charter One Financial Corp. 2,044,844 47,031,412
Commercial Federal Corp. 984,525 21,659,550
First Federal Savings & Loan Association 67,300 1,749,800
First Essex Bancorp, Inc. 59,100 893,888
FirstFed Financial Corp. (a) 442,400 6,525,400
MAF Bancorp., Inc. 88,600 1,816,300
Sovereign Bancorp., Inc. 1,584,477 19,310,813
TCF Financial Corp. 1,258,100 27,756,831
Webster Financial Corp. 316,000 6,517,500
Westcorp, Inc. 54,100 500,425
171,527,270
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SAVINGS & LOANS - CONTINUED
SAVINGS BANKS, NO FEDERAL CHARTER - 1.1%
Downey Financial Corp. 49,662 $ 1,145,330
First Washington Bancorp, Inc. 94,200 1,825,125
ITLA Capital Corp. (a) 106,300 1,860,250
Richmond County Financial Corp. 102,500 1,217,188
SIS Bancorp., Inc. 137,000 4,589,500
10,637,393
SAVINGS BANKS, FEDERAL CHARTER - 32.1%
Ahmanson (H.F.) & Co. 1,034,529 55,153,327
Albank Financial Corp. 223,800 11,106,075
Bank Plus Corp. (a) 278,600 2,124,325
Bank United Corp. Class A 648,400 21,559,300
Carver Bancorp, Inc. (c) 139,800 1,450,425
Catskill Financial Corp. 78,800 1,063,800
Citizens First Financial Corp. (a)(c) 172,000 2,709,000
Coastal Bancorp, Inc. 14,800 222,000
D & N Financial Corp. 67,900 1,111,863
Dime Community Bancorp, Inc. 312,900 4,791,281
Dime Bancorp., Inc. 2,460,384 46,747,296
First Bergen Bancorp 86,100 1,399,125
First Defiance Financial Corp. 224,400 2,664,750
First Federal Bancshares of Arkansas, Inc. 12,300 233,700
First Palm Beach Bancorp, Inc. 19,700 591,000
Flagstar Bancorp, Inc. 383,900 8,589,763
GA Financial, Inc. 238,900 3,255,013
Golden State Bancorp 1,188,492 18,867,311
Golden State Bancorp Litigation
Track warrants 1/1/01 (a) 898,761 4,044,425
HF Bancorp, Inc. (a) 113,200 1,386,700
Haven Bancorp., Inc. 331,400 5,302,400
Long Island Bancorp., Inc. 418,000 15,675,000
Ocean Financial Corp. 289,100 4,011,263
Ocwen Financial Corp. (a) 265,400 4,047,350
PFF Bancorp, Inc. (a) 448,700 6,253,756
Peoples Bancorp., Inc. 492,200 3,430,019
Provident Financial Holdings, Inc. (a) 177,200 2,525,100
Quaker City Bancorp (a) 113,825 1,821,200
SGV Bancorp., Inc. (a)(c) 137,800 1,963,650
Washington Federal, Inc. 958,528 21,686,696
Washington Mutual, Inc. 1,832,072 58,626,304
Wilshire Financial Services
Group, Inc. (a) 424,600 4,299,075
Yonkers Financial Corp. 83,700 1,255,500
319,967,792
TOTAL SAVINGS & LOANS 502,132,455
SECURITIES INDUSTRY - 1.4%
SECURITY & COMMODITY BROKERS - 1.1%
Advest Group, Inc. (The) 99,300 1,899,101
Edwards (A.G.), Inc. 78,800 2,137,450
McDonald & Co. Investments, Inc. 161,100 4,480,594
Morgan Keegan, Inc. 123,100 2,185,025
10,702,170
SECURITY BROKERS & DEALERS - 0.3%
Travelers Group, Inc. (The) 78,800 3,496,750
TOTAL SECURITIES INDUSTRY 14,198,920
SHARES VALUE (NOTE 1)
SERVICES - 0.1%
MANAGEMENT CONSULTING SERVICES - 0.1%
AMRESCO, Inc. 69,900 $ 865,013
Firstmark Corp. (a) 101,800 82,713
947,726
TOTAL COMMON STOCKS
(Cost $1,036,064,264) 981,474,431
CONVERTIBLE PREFERRED STOCKS - 0.6%
REAL ESTATE INVESTMENT TRUSTS - 0.6%
Criimi Mae, Inc. $2.72 119,800 3,474,200
Walden Residential Properties, Inc.,
Series B, $2.29 80,000 2,200,000
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $5,920,750) 5,674,200
CASH EQUIVALENTS - 0.9%
Taxable Central Cash Fund (b)
(Cost $9,377,084) 9,377,084 9,377,084
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,051,362,098) $ 996,525,715
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.58%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(c) Affiliated company (see Note 10 of Notes to Financial Statements).
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $197,848,430 and $392,220,326, 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 $44,957 for the
period (see Note 4 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
Acadiana Bancshares, Inc. $ - $ 32,206 $ 33,726 $ 2,791,650
Carver Bancorp, Inc. - 21,769 6,990 1,450,425
Citizens First Financial Corp. - 29,498 - 2,709,000
Dime Financial Corp. - - - -
First Alliance Mortgage Co. 2,556,250 237,188 - 5,469,375
First Bergen Bancorp - 536,250 8,775 -
Life Financial Corp. 123,750 130,163 - 2,060,450
Long Beach Financial Corp. 795,513 769,725 - 9,584,800
R&G Financial Corp. Class B - 391,667 - -
RedFed Bancorp, Inc. - 1,771,875 - -
Redwood Trust, Inc. 888,284 1,898,825 207,599 10,039,396
SGV Bancorp., Inc. - 20,900 - 1,963,650
Ugly Duckling Corp. 778,735 2,320,750 - 6,324,688
TOTALS $ 5,142,532 $ 8,160,816 $ 257,090 $ 42,393,434
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $1,052,398,711. Net unrealized depreciation
aggregated $55,872,996, of which $146,714,442 related to appreciated
investment securities and $202,587,438 related to depreciated
investment securities.
HOME FINANCE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31,
1998
(UNAUDITED)
ASSETS
Investment in $ 996,525,715
securities, at
value
(cost
$1,051,362,
098) -
See
accompanyin
g schedule
Receivable for 35,866,927
investments
sold
Receivable for 962,131
fund shares
sold
Dividends 1,574,832
receivable
Interest 36,156
receivable
Redemption fees 9,979
receivable
Other 5,461
receivables
TOTAL ASSETS 1,034,981,201
LIABILITIES
Payable for $ 20,935,976
fund shares
redeemed
Accrued 657,373
management
fee
Other payables 743,981
and
accrued
expenses
TOTAL LIABILITIES 22,337,330
NET ASSETS $ 1,012,643,871
Net Assets
consist of:
Paid in capital $ 992,455,348
Undistributed 4,120,501
net investment
income
Accumulated 70,902,584
undistributed
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized (54,834,562)
appreciation
(depreciation)
on
investments
and assets
and liabilities
in
foreign
currencies
NET ASSETS, for $ 1,012,643,871
26,597,427
shares
outstanding
NET ASSET $38.07
VALUE and
redemption
price per
share
($1,012,643,
871 (divided by)
26,597,427
shares)
Maximum $39.25
offering price
per share
(100/97.00
of $38.07)
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED AUGUST
31, 1998
(UNAUDITED)
INVESTMENT $ 12,596,194
INCOME
Dividends
(including
$257,090
received from
affiliated
issuers)
Interest 1,405,988
TOTAL INCOME 14,002,182
EXPENSES
Management $ 5,026,610
fee
Transfer agent 4,002,213
fees
Accounting fees 402,021
and expenses
Non-interested 3,264
trustees'
compensation
Custodian fees 47,200
and expenses
Registration fees 40,234
Audit 36,312
Legal 4,791
Reports to 174,016
shareholders
Total expenses 9,736,661
before
reductions
Expense (65,366) 9,671,295
reductions
NET INVESTMENT 4,330,887
INCOME
REALIZED AND
UNREALIZED
GAIN (LOSS)
Net realized
gain (loss) on:
Investment 72,989,098
securities
(including
realized
loss of
$864,169 on
sales of
investments
on
affiliated
issuers)
Foreign (10,778) 72,978,320
currency
transactions
Change in net
unrealized
appreciation
(depreciation)
on:
Investment (463,680,732)
securities
Assets and 828 (463,679,904)
liabilities in
foreign
currencies
NET GAIN (LOSS) (390,701,584)
NET INCREASE $ (386,370,697)
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 3,601,600
INFORMATION
Sales charges
paid to FDC
Sales charges $ 3,588,148
- - Retained by
FDC
Deferred sales $ 6,418
charges
withheld
by FDC
Exchange fees $ 157,995
withheld by
FSC
Expense $ 49,009
reductions
Directed
brokerage
arrangements
Custodian 12,535
credits
Transfer 3,822
agent credits
$ 65,366
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED YEAR ENDED
(DECREASE) IN AUGUST 31, 1998 FEBRUARY 28,
NET ASSETS (UNAUDITED) 1998
Operations $ 4,330,887 $ 8,926,749
Net
investment
income
Net realized 72,978,320 177,748,259
gain (loss)
Change in net (463,679,904) 165,002,991
unrealized
appreciation
(depreciation)
NET INCREASE (386,370,697) 351,677,999
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (2,223,462) (7,530,670)
shareholders
From net
investment
income
From net (43,929,075) (153,895,241)
realized gain
TOTAL (46,152,537) (161,425,911)
DISTRIBUTIONS
Share 406,064,933 1,194,996,073
transactions
Net proceeds
from sales of
shares
Reinvestment 45,330,000 158,982,280
of
distributions
Cost of shares (675,743,144) (1,054,168,696)
redeemed
NET INCREASE (224,348,211) 299,809,657
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
Redemption 905,068 1,720,473
fees
TOTAL (655,966,377) 491,782,218
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
Beginning of 1,668,610,248 1,176,828,030
period
End of period $ 1,012,643,871 $ 1,668,610,248
(including
undistribute
d net
investment
income of
$4,120,50
1 and
$4,200,14
7,
respectively)
OTHER
INFORMATION
Shares
Sold 7,216,523 24,323,664
Issued in 793,035 3,484,445
reinvestment
of
distributions
Redeemed (12,681,478) (22,121,347)
Net increase (4,671,920) 5,686,762
(decrease)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED YEAR ENDED YEARS ENDED
ENDED FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
AUGUST 31,
1998
SELECTED (UNAUDITED) 1998 1997 1996 1995 1994
PER-SHARE
DATA
Net asset $ 53.36 $ 46.00 $ 33.30 $ 23.92 $ 25.03 $ 22.18
value,
beginning
of period
Income from
Investment
Operation
s
Net .14 .33 .53 .53 .20 .03
investment
income D
Net (14.01) 13.10 14.60 9.72 2.34 4.15
realized
and
unrealized
gain (loss)
Total from (13.87) 13.43 15.13 10.25 2.54 4.18
investment
operations
Less
Distributio
ns
From net (.07) (.29) (.32) (.19) (.12) (.01)
investment
income
From net (1.38) (5.84) (2.16) (.73) (3.60) (1.40)
realized
gain
Total (1.45) (6.13) (2.48) (.92) (3.72) (1.41)
distributio
ns
Redemption .03 .06 .05 .05 .07 .08
fees
added to
paid in
capital
Net asset $ 38.07 $ 53.36 $ 46.00 $ 33.30 $ 23.92 $ 25.03
value, end
of period
TOTAL (26.84)% 32.39% 47.50% 43.24% 12.43% 19.61%
RETURN B, C
RATIOS AND
SUPPLEME
NTAL DATA
Net assets, $ 1,012,644 $ 1,668,610 $ 1,176,828 $ 617,035 $ 229,924 $ 155,563
end of
period
(000
omitted)
Ratio of 1.12% A 1.21% 1.38% 1.35% 1.47% 1.58%
expenses
to average
net assets
Ratio of 1.11% A, E 1.19% E 1.34% E 1.32% E 1.45% E 1.58%
expenses
to average
net assets
after
expense
reductions
Ratio of net .50% A .67% 1.41% 1.80% .80% .11%
investment
income to
average
net assets
Portfolio 25% A 54% 78% 81% 124% 95%
turnover
rate
Average $ .0382 $ .0382 $ .0417
commissio
n rate F
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 TOT
AL RETURNS DO NOT
INCLUDE THE ONE TIME
SALES CHARGE AND FOR
PERIODS OF LESS THAN
ONE YEAR ARE NOT
ANNUALIZED. D NET
INVESTMENT INCOME
PER SHARE HAS BEEN
CALCULATED BASED ON
AVERAGE SHARES
OUTSTANDING DURING
THE PERIOD. E FMR
OR THE FUND HAS
ENTERED INTO VARYING
ARRANGEMENTS WITH
THIRD PARTIES WHO
EITHER PAID OR
REDUCED A PORTION OF
THE FUND'S EXPENSES
(SEE NOTE 8 OF NOTES
TO FINANCIAL
STATEMENTS). F FO
R 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 MONTHS YEAR YEARS YEARS
SELECT INSURANCE -9.48% 8.90% 111.55% 431.17%
SELECT INSURANCE -12.27% 5.56% 105.13% 415.17%
(LOAD ADJ.)
S&P 500 -8.10% 8.10% 131.21% 382.74%
GS Financial Services -15.98% 3.35% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks - and the Goldman Sachs
Financial Services Index - a market capitalization-weighted index of
271 stocks designed to measure the performance of companies in the
financial services sector. These benchmarks include reinvestment of
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 YEAR YEARS YEARS
SELECT INSURANCE 8.90% 16.17% 18.17%
SELECT INSURANCE 5.56% 15.45% 17.81%
(LOAD ADJ.)
S&P 500 8.10% 18.25% 17.05%
GS Financial Services 3.35% n/a n/a
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.
(checkmark)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.
$10,000 OVER 10 YEARS
Insurance S&P 500
00045 SP001
1988/08/31 9700.00 10000.00
1988/09/30 10032.62 10426.00
1988/10/31 9987.67 10715.84
1988/11/30 9771.92 10562.61
1988/12/31 10015.91 10747.45
1989/01/31 10777.30 11534.17
1989/02/28 10849.81 11246.96
1989/03/31 11103.61 11509.02
1989/04/30 11466.17 12106.34
1989/05/31 11529.62 12596.64
1989/06/30 11783.31 12524.84
1989/07/31 12772.82 13655.84
1989/08/31 13163.17 13923.49
1989/09/30 13344.73 13866.40
1989/10/31 13780.48 13544.70
1989/11/30 14152.68 13821.02
1989/12/31 13805.04 14152.72
1990/01/31 12633.26 13203.07
1990/02/28 12990.28 13373.39
1990/03/31 12926.20 13727.79
1990/04/30 12477.63 13384.59
1990/05/31 13621.95 14689.59
1990/06/30 13658.57 14589.70
1990/07/31 13457.17 14543.01
1990/08/31 12056.52 13228.33
1990/09/30 11012.90 12584.11
1990/10/31 10573.49 12529.99
1990/11/30 11974.13 13339.43
1990/12/31 12450.17 13711.60
1991/01/31 13118.45 14309.43
1991/02/28 14445.86 15332.55
1991/03/31 15397.93 15703.60
1991/04/30 15315.54 15741.29
1991/05/31 15700.03 16421.31
1991/06/30 14724.06 15669.22
1991/07/31 15270.77 16399.40
1991/08/31 15178.11 16788.07
1991/09/30 15326.37 16507.71
1991/10/31 15789.68 16728.91
1991/11/30 15650.68 16054.73
1991/12/31 17016.93 17891.40
1992/01/31 16998.34 17558.62
1992/02/29 17453.98 17786.88
1992/03/31 17202.91 17440.03
1992/04/30 16765.86 17952.77
1992/05/31 16989.04 18040.74
1992/06/30 17344.46 17771.93
1992/07/31 18327.18 18498.80
1992/08/31 17790.23 18119.58
1992/09/30 18732.42 18333.39
1992/10/31 19532.78 18397.56
1992/11/30 20201.43 19024.91
1992/12/31 20845.95 19258.92
1993/01/31 21717.52 19420.70
1993/02/28 22127.67 19684.82
1993/03/31 23296.60 20100.17
1993/04/30 22742.26 19613.74
1993/05/31 22156.49 20139.39
1993/06/30 22392.85 20197.79
1993/07/31 23173.88 20117.00
1993/08/31 24355.69 20879.44
1993/09/30 24437.91 20718.67
1993/10/31 23728.82 21147.54
1993/11/30 22279.81 20946.64
1993/12/31 22550.41 21200.10
1994/01/31 22854.38 21920.90
1994/02/28 21852.39 21326.84
1994/03/31 20827.88 20396.99
1994/04/30 21053.05 20658.07
1994/05/31 22021.26 20996.87
1994/06/30 21897.42 20482.44
1994/07/31 22302.72 21154.27
1994/08/31 22910.67 22021.59
1994/09/30 22753.05 21482.06
1994/10/31 22471.60 21965.41
1994/11/30 21334.51 21165.43
1994/12/31 22471.60 21479.31
1995/01/31 23282.20 22036.27
1995/02/28 23991.47 22895.02
1995/03/31 24374.25 23570.66
1995/04/30 24599.44 24264.81
1995/05/31 25140.83 25234.68
1995/06/30 25930.36 25820.88
1995/07/31 26708.61 26677.10
1995/08/31 27486.86 26744.06
1995/09/30 28851.61 27872.66
1995/10/31 27983.13 27773.15
1995/11/30 29652.42 28992.39
1995/12/31 30293.88 29550.79
1996/01/31 31176.00 30556.70
1996/02/29 31071.54 30839.96
1996/03/31 30723.33 31136.95
1996/04/30 30342.25 31595.90
1996/05/31 30955.47 32410.76
1996/06/30 31509.72 32534.25
1996/07/31 30813.96 31096.88
1996/08/31 32111.14 31752.72
1996/09/30 33679.55 33539.76
1996/10/31 35448.43 34464.79
1996/11/30 37630.06 37069.98
1996/12/31 37475.49 36335.62
1997/01/31 39015.07 38605.87
1997/02/28 39858.18 38908.54
1997/03/31 37707.65 37309.79
1997/04/30 39933.05 39537.19
1997/05/31 42866.85 41944.21
1997/06/30 46005.64 43823.31
1997/07/31 49887.48 47310.33
1997/08/31 47312.40 44660.01
1997/09/30 50335.88 47106.04
1997/10/31 49003.50 45532.69
1997/11/30 49977.16 47640.40
1997/12/31 53391.67 48458.39
1998/01/31 52661.58 48994.34
1998/02/28 56920.47 52527.81
1998/03/31 60084.22 55217.76
1998/04/30 60447.29 55773.25
1998/05/31 59750.82 54814.51
1998/06/30 62391.58 57041.07
1998/07/31 61201.79 56433.58
1998/08/31 51517.00 48274.42
IMATRL PRASUN SHR__CHT 19980831 19980918 161826 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Insurance Portfolio on August 31, 1988,
and the current 3.00% sales charge was paid. As the chart shows, by
August 31, 1998, the value of the investment would have grown to
$51,517 - a 415.17% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $48,274 - a 382.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
UNUM Corp. 6.1
Providian Financial Corp. 5.2
Progressive Corp. 4.8
American International Group, Inc. 4.4
AFLAC, Inc. 4.4
Marsh & McLennan Companies, Inc. 4.2
Aon Corp. 3.7
Allstate Corp. 3.6
Torchmark Corp. 3.4
Enhance Financial Services Group Corp. 3.1
TOP INDUSTRIES AS OF AUGUST 31, 1998
PROPERTY-CASUALTY &
REINSURANCE 43.6%
LIFE INSURANCE 18.9%
INSURANCE CARRIERS 11.8%
INSURANCE BROKERS & SERVICES 7.2%
NATIONAL COMMERCIAL BANKS 5.2%
ALL OTHERS 13.3%
ROW: 1, COL: 1, VALUE: 13.3
ROW: 1, COL: 2, VALUE: 5.2
ROW: 1, COL: 3, VALUE: 7.2
ROW: 1, COL: 4, VALUE: 11.8
ROW: 1, COL: 5, VALUE: 18.9
ROW: 1, COL: 6, VALUE: 43.6
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
INSURANCE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Thomas Allen)
Thomas Allen,
Portfolio Manager
of Fidelity Select
Insurance Portfolio
Q. HOW DID THE FUND PERFORM, TOM?
A. For the six-month period that ended on August 31, 1998, the fund
had a total return of -9.48%. For the 12-month period, it returned
8.90%. For the same periods, the Standard & Poor's 500 Index returned
- -8.10% and 8.10%, respectively. Beginning this period, the fund also
compares itself to the Goldman Sachs Financial Services Index - an
index of 271 stocks designed to measure the performance of companies
in the financial services sector - which returned -15.98% and 3.35%
over the same six- and 12-month periods, respectively.
Q. WHAT FACTORS AFFECTED PERFORMANCE DURING THE PAST SIX MONTHS?
A. I believe global economic problems negatively affected virtually
all financial stocks after a long stretch in which they outperformed
the market. Insurance company stocks, even those of companies with
good underlying fundamentals and healthy revenue and earnings growth,
were not impervious to this slump.
Q. WHAT WERE YOUR PRINCIPAL STRATEGIES?
A. In general, I emphasized those companies with relatively strong
outlooks for organic - or internally generated - revenue and earnings
growth as well as respectable balance sheets. I also looked for good
companies that may be acquisition candidates as the industry continues
to consolidate. Valuation always has been a consideration. This
strategy led me to emphasize the insurance brokerage and bond
insurance sectors.
Q. HOW HAVE YOU APPROACHED THE TWO LARGEST SECTORS OF THE INDUSTRY -
LIFE AND PROPERTY-CASUALTY?
A. I have been selective in the property-casualty and life insurance
sectors, although they are well represented in the fund. Life
insurance companies have been very interesting. I tried to find
companies with distinctive advantages, such as good distribution,
growing product lines and an ability to accumulate assets. This is a
segment that continues to experience solid earnings growth, although
not spectacular growth. Most life insurance companies tend to have
little or no exposure to the Asian crisis, and the group continues to
consolidate. Vigorous price competition has hurt the property-casualty
companies, particularly those selling commercial insurance. Price
competition has had less of an effect on the personal line
property-casualty companies, such as homeowners' and automobile
insurance companies.
Q. WHICH INVESTMENTS HELPED THE PERFORMANCE OF THE FUND?
A. Life insurance companies contributed the most, with some insurance
brokers helping. Life insurance companies that did well include
SunAmerica, which is subject to a pending acquisition by AIG, and
Hartford Life. The insurance brokerage sector has been under
consolidation and Sedgwick Group, which is subject to a pending
purchase by Marsh & McLennan Companies, helped performance. Brokers
don't take the underwriting risks of property-casualty companies on
their own balance sheets. As a result, they are partially insulated
from the swings in the property-casualty insurance cycle. They also
have good near-term prospects as a result of both organic - or
internally generated growth - and recent acquisition-driven earnings
growth. The fund sold its positions in SunAmerica and Sedgwick before
the end of the period, taking profits. Another company that helped
performance was Providian Financial, a credit card company that is a
spin-off of Providian Insurance Company. Providian Financial had good
revenue and earnings growth and a strong competitive position.
Q. WHICH HOLDINGS HURT PERFORMANCE?
A. Among the disappointments was MGIC Investment Corp., a high-quality
company in home finance, which came under pressure as the outlook for
growth in private mortgage insurance slowed. Another disappointment
was Progressive, an auto insurer. A slowdown in growth in some types
of automobile insurance premiums hurt Progressive's earnings growth.
The investment in PAULA Financial also was disappointing. Shortly
after an initial public offering, this company took a charge against
earnings because it had insufficient reserves against losses. At the
end of the period, PAULA still had an attractive franchise, but its
earnings outlook had slowed near-term.
Q. WHAT IS YOUR OUTLOOK?
A. I am cautious with respect to commercial property-casualty because
of the intense pricing pressure. The outlook is more favorable for the
rest of the insurance group, including life insurance companies and
insurance brokers. If we were to go into a recession, I believe the
steady growth of certain sectors in the insurance sector could drive
good relative performance.
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.
(checkmark)FUND FACTS
START DATE: December 16, 1985
FUND NUMBER: 045
TRADING SYMBOL: FSPCX
SIZE: as of August 31, 1998, more than
$91 million
MANAGER: Thomas Allen, since 1997; analyst,
property, casualty and multi-line insurance,
since 1995; joined Fidelity in 1995
INSURANCE PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 96.2%
SHARES VALUE (NOTE 1)
BANKS - 5.2%
NATIONAL COMMERCIAL BANKS - 5.2%
Providian Financial Corp. 72,700 $ 4,666,431
INSURANCE - 86.7%
ACCIDENT & HEALTH INSURANCE - 3.2%
Provident Companies, Inc. 26,000 936,000
UICI (a) 130,400 1,980,450
2,916,450
INSURANCE BROKERS & SERVICES - 7.2%
Marsh & McLennan Companies, Inc. 77,700 3,768,450
Mutual Risk Management Ltd. 71,700 2,151,000
Poe & Associates, Inc. 14,900 560,613
6,480,063
INSURANCE CARRIERS - 11.8%
AFLAC, Inc. 156,000 3,919,500
AMBAC, Inc. 47,000 2,217,813
Blanch E.W. Holdings, Inc. 27,600 984,975
MBIA, Inc. 19,900 1,116,888
MGIC Investment Corp. 56,400 2,340,600
10,579,776
LIFE INSURANCE - 18.9%
Aon Corp. 52,700 3,297,044
Hartford Life, Inc. Class A 29,600 1,517,000
Nationwide Financial Services, Inc.
Class A 30,200 1,349,563
Protective Life Corp. 43,200 1,333,800
Reliastar Financial Corp. 25,909 1,016,928
Torchmark Corp. 85,800 3,067,350
UNUM Corp. 123,900 5,451,600
17,033,285
MULTI-LINE INSURANCE - 1.8%
CIGNA Corp. 27,000 1,571,063
FAI Insurance Ltd. Ord. 141,700 36,298
1,607,361
PROPERTY-CASUALTY & REINSURANCE - 43.6%
ACE Ltd. 66,400 1,925,600
Allmerica Financial Corp. 6,373 379,990
Allstate Corp. 85,400 3,202,500
American International Group, Inc. 51,750 4,000,922
Capital Re Corp. 95,000 2,517,500
Cincinnati Financial Corp. 18,500 622,063
Enhance Financial Services Group Corp. 112,000 2,814,000
Executive Risk, Inc. 27,600 993,600
Fremont General Corp. 26,000 1,111,500
HCC Insurance Holdings, Inc. 129,600 2,421,900
HSB Group, Inc. 45,000 1,951,875
Hartford Financial Services Group, Inc. 34,200 1,530,450
Mercury General Corp. 18,600 680,063
NAC Re Corp. 5,000 235,938
Old Republic International Corp. 43,400 968,363
PAULA Financial 117,700 794,470
PMI Group, Inc. 21,000 1,162,875
Philadelphia Consolidated
Holding Corp. (a) 57,500 1,106,875
Progressive Corp. 44,100 4,296,994
Reinsurance Group of America, Inc. 40,300 2,015,000
RenaissanceRe Holdings Ltd. 38,200 1,599,625
Travelers Property Casualty Corp. Class A 32,500 1,070,469
Terra Nova (Bermuda) Holdings Ltd. 64,198 1,765,445
39,168,017
SHARES VALUE (NOTE 1)
SURETY INSURANCE - 0.2%
FPIC Insurance Group, Inc. (a) 7,500 $ 198,750
TOTAL INSURANCE 77,983,702
MEDICAL FACILITIES MANAGEMENT - 3.5%
HMOS & OUTPATIENT CARE - 3.5%
PacifiCare Health Systems, Inc.
Class A (a) 20,000 1,210,000
Wellpoint Health Networks, Inc. (a) 36,700 1,958,863
3,168,863
SECURITIES INDUSTRY - 0.8%
SECURITY BROKERS & DEALERS - 0.8%
Travelers Group, Inc. (The) 16,299 723,268
TOTAL COMMON STOCKS
(Cost $86,273,235) 86,542,264
CASH EQUIVALENTS - 3.8%
Taxable Central Cash Fund (b)
(Cost $3,418,556) 3,418,556 3,418,556
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $89,691,791) $ 89,960,820
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.58%. 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 $47,811,745 and $70,701,291, 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 $8,618 for the
period (see Note 4 of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $89,986,337. Net unrealized depreciation
aggregated $25,517, of which $8,472,158 related to appreciated
investment securities and $8,497,675 related to depreciated investment
securities.
INSURANCE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31,
1998
(UNAUDITED)
ASSETS
Investment in $ 89,960,820
securities, at
value
(cost
$89,691,791
) -
See
accompanyin
g schedule
Receivable for 6,330,610
investments
sold
Receivable for 504,291
fund shares
sold
Dividends 116,577
receivable
Interest 13,153
receivable
Redemption fees 2,169
receivable
Other 83
receivables
TOTAL ASSETS 96,927,703
LIABILITIES
Payable for $ 3,466,023
investments
purchased
Payable for 2,060,424
fund shares
redeemed
Accrued 54,116
management
fee
Other payables 82,478
and
accrued
expenses
TOTAL LIABILITIES 5,663,041
NET ASSETS $ 91,264,662
Net Assets
consist of:
Paid in capital $ 81,108,646
Accumulated (5,064)
net investment
loss
Accumulated 9,875,582
undistributed
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized 285,498
appreciation
(depreciation)
on
investments
and assets
and liabilities
in
foreign
currencies
NET ASSETS, for $ 91,264,662
2,570,444
shares
outstanding
NET ASSET $35.51
VALUE and
redemption
price per
share
($91,264,66
2 (divided by)
2,570,444
shares)
Maximum $36.61
offering price
per share
(100/97.00
of $35.51)
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED AUGUST
31, 1998
(UNAUDITED)
INVESTMENT $ 679,059
INCOME
Dividends
Interest 144,549
TOTAL INCOME 823,608
EXPENSES
Management $ 372,391
fee
Transfer agent 353,639
fees
Accounting fees 63,734
and expenses
Non-interested 230
trustees'
compensation
Custodian fees 7,981
and expenses
Registration fees 22,420
Audit 11,413
Legal 353
Reports to 7,715
shareholders
Total expenses 839,876
before
reductions
Expense (11,204) 828,672
reductions
NET INVESTMENT (5,064)
INCOME (LOSS)
REALIZED AND
UNREALIZED
GAIN (LOSS)
Net realized
gain (loss) on:
Investment 10,276,705
securities
Foreign 5,548 10,282,253
currency
transactions
Change in net
unrealized
appreciation
(depreciation)
on:
Investment (19,600,652)
securities
Assets and 16,416 (19,584,236)
liabilities in
foreign
currencies
NET GAIN (LOSS) (9,301,983)
NET INCREASE $ (9,307,047)
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 273,758
INFORMATION
Sales charges
paid to FDC
Sales charges $ 273,624
- - Retained by
FDC
Deferred sales $ 748
charges
withheld
by FDC
Exchange fees $ 20,183
withheld by
FSC
Expense $ 10,799
reductions
Directed
brokerage
arrangements
Custodian 405
credits
$ 11,204
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED YEAR ENDED
(DECREASE) IN AUGUST 31, 1998 FEBRUARY 28,
NET ASSETS (UNAUDITED) 1998
Operations $ (5,064) $ 25,471
Net
investment
income (loss)
Net realized 10,282,253 23,084,468
gain (loss)
Change in net (19,584,236) 14,487,273
unrealized
appreciation
(depreciation)
NET INCREASE (9,307,047) 37,597,212
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (9,543,630) (6,676,096)
shareholders
from net
realized gain
Share 47,027,917 244,332,955
transactions
Net proceeds
from sales of
shares
Reinvestment 9,450,009 6,593,993
of
distributions
Cost of shares (71,584,738) (199,288,742)
redeemed
NET INCREASE (15,106,812) 51,638,206
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
Redemption 71,551 224,405
fees
TOTAL (33,885,938) 82,783,727
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
Beginning of 125,150,600 42,366,873
period
End of period $ 91,264,662 $ 125,150,600
(including
undistribute
d net
investment
income
(loss) of
$(5,064)
and
$27,193,
respectively)
OTHER
INFORMATION
Shares
Sold 1,089,793 6,761,043
Issued in 224,519 185,836
reinvestment
of
distributions
Redeemed (1,716,771) (5,272,969)
Net increase (402,459) 1,673,910
(decrease)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED YEAR ENDED YEARS ENDED
ENDED FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
AUGUST 31,
1998
SELECTED (UNAUDITED) 1998 1997 1996 1995 1994
PER-SHARE
DATA
Net asset $ 42.10 $ 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) D
Net (3.53) 12.93 7.21 6.15 1.78 (.24)
realized
and
unrealized
gain (loss)
Total from (3.53) 12.94 7.22 6.21 1.83 (.24)
investment
operations
Less
Distributio
ns
From net - - (.03) (.07) - (.01)
investment
income
From net (3.08) (3.54) (1.45) (.72) - (1.96)
realized
gain
Total (3.08) (3.54) (1.48) (.79) - (1.97)
distributio
ns
Redemption .02 .08 .11 .04 .07 .04
fees
added to
paid in
capital
Net asset $ 35.51 $ 42.10 $ 32.62 $ 26.77 $ 21.31 $ 19.41
value, end
of period
TOTAL (9.48)% 42.81% 28.28% 29.51% 9.79% (1.24)%
RETURN B, C
RATIOS AND
SUPPLEME
NTAL DATA
Net assets, $ 91,265 $ 125,151 $ 42,367 $ 38,994 $ 21,838 $ 18,419
end of
period
(000
omitted)
Ratio of 1.30% A 1.45% 1.82% 1.77% 2.36% 1.93%
expenses
to average
net assets
Ratio of 1.28% A, E 1.43% E 1.77% E 1.74% E 2.34% E 1.93%
expenses
to average
net assets
after
expense
reductions
Ratio of net (.01)% A .02% .05% .26% .25% (.02)%
investment
income
(loss) to
average
net assets
Portfolio 80% A 157% 142% 164% 265% 101%
turnover
rate
Average $ .0159 $ .0325 $ .0261
commissio
n rate F
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 TOT
AL 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 FO
R 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 MONTHS YEAR YEARS YEARS
SELECT REGIONAL BANKS -17.64% 0.54% 148.14% 626.13%
SELECT REGIONAL BANKS -20.19% -2.55% 140.62% 604.28%
(LOAD ADJ.)
S&P 500 -8.10% 8.10% 131.21% 382.74%
GS Financial Services -15.98% 3.35% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks - and the Goldman Sachs
Financial Services Index - a market capitalization-weighted index of
271 stocks designed to measure the performance of companies in the
financial services sector. These benchmarks include reinvestment of
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 YEAR YEARS YEARS
SELECT REGIONAL BANKS 0.54% 19.93% 21.93%
SELECT REGIONAL BANKS -2.55% 19.20% 21.56%
(LOAD ADJ.)
S&P 500 8.10% 18.25% 17.05%
GS Financial Services 3.35% n/a n/a
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.
(checkmark)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.
$10,000 OVER 10 YEARS
Regional Banks S&P 500
00507 SP001
1988/08/31 9700.00 10000.00
1988/09/30 10071.53 10426.00
1988/10/31 10192.03 10715.84
1988/11/30 9940.99 10562.61
1988/12/31 10161.19 10747.45
1989/01/31 10806.35 11534.17
1989/02/28 10967.64 11246.96
1989/03/31 11870.85 11509.02
1989/04/30 12182.68 12106.34
1989/05/31 13118.15 12596.64
1989/06/30 12899.96 12524.84
1989/07/31 14048.07 13655.84
1989/08/31 14394.66 13923.49
1989/09/30 14513.81 13866.40
1989/10/31 13170.74 13544.70
1989/11/30 13149.08 13821.02
1989/12/31 12868.76 14152.72
1990/01/31 11709.31 13203.07
1990/02/28 12191.46 13373.39
1990/03/31 11892.99 13727.79
1990/04/30 11215.68 13384.59
1990/05/31 11996.30 14689.59
1990/06/30 11525.64 14589.70
1990/07/31 10825.37 14543.01
1990/08/31 9815.16 13228.33
1990/09/30 8621.27 12584.11
1990/10/31 8368.71 12529.99
1990/11/30 9482.25 13339.43
1990/12/31 10208.88 13711.60
1991/01/31 10886.36 14309.43
1991/02/28 11809.13 15332.55
1991/03/31 12474.93 15703.60
1991/04/30 13315.93 15741.29
1991/05/31 14180.30 16421.31
1991/06/30 13339.30 15669.22
1991/07/31 14448.96 16399.40
1991/08/31 15488.53 16788.07
1991/09/30 15184.84 16507.71
1991/10/31 15815.59 16728.91
1991/11/30 15091.39 16054.73
1991/12/31 16925.61 17891.40
1992/01/31 17984.23 17558.62
1992/02/29 19436.75 17786.88
1992/03/31 19165.94 17440.03
1992/04/30 20286.11 17952.77
1992/05/31 21147.77 18040.74
1992/06/30 21358.79 17771.93
1992/07/31 21383.57 18498.80
1992/08/31 20243.77 18119.58
1992/09/30 21185.34 18333.39
1992/10/31 22089.74 18397.56
1992/11/30 23898.55 19024.91
1992/12/31 25138.32 19258.92
1993/01/31 26185.75 19420.70
1993/02/28 27000.42 19684.82
1993/03/31 28151.30 20100.17
1993/04/30 26702.06 19613.74
1993/05/31 26441.04 20139.39
1993/06/30 27915.79 20197.79
1993/07/31 27994.09 20117.00
1993/08/31 28385.62 20879.44
1993/09/30 29364.43 20718.67
1993/10/31 27785.28 21147.54
1993/11/30 26910.87 20946.64
1993/12/31 27946.90 21200.10
1994/01/31 29576.74 21920.90
1994/02/28 28745.84 21326.84
1994/03/31 28266.48 20396.99
1994/04/30 29764.34 20658.07
1994/05/31 31251.74 20996.87
1994/06/30 30475.70 20482.44
1994/07/31 31284.08 21154.27
1994/08/31 32092.45 22021.59
1994/09/30 30184.69 21482.06
1994/10/31 30055.35 21965.41
1994/11/30 28115.25 21165.43
1994/12/31 28007.88 21479.31
1995/01/31 29418.60 22036.27
1995/02/28 30984.15 22895.02
1995/03/31 31242.21 23570.66
1995/04/30 32016.38 24264.81
1995/05/31 34115.25 25234.68
1995/06/30 34545.35 25820.88
1995/07/31 35887.25 26677.10
1995/08/31 37229.15 26744.06
1995/09/30 38915.13 27872.66
1995/10/31 38725.89 27773.15
1995/11/30 40945.19 28992.39
1995/12/31 41106.53 29550.79
1996/01/31 42450.47 30556.70
1996/02/29 43668.97 30839.96
1996/03/31 44959.15 31136.95
1996/04/30 44575.21 31595.90
1996/05/31 45328.86 32410.76
1996/06/30 44979.61 32534.25
1996/07/31 45053.13 31096.88
1996/08/31 47332.44 31752.72
1996/09/30 49666.90 33539.76
1996/10/31 52846.90 34464.79
1996/11/30 57313.62 37069.98
1996/12/31 55858.25 36335.62
1997/01/31 59977.53 38605.87
1997/02/28 62590.23 38908.54
1997/03/31 58375.59 37309.79
1997/04/30 61541.42 39537.19
1997/05/31 63708.50 41944.21
1997/06/30 67333.10 43823.31
1997/07/31 74582.29 47310.33
1997/08/31 70056.34 44660.01
1997/09/30 75368.58 47106.04
1997/10/31 74256.27 45532.69
1997/11/30 77669.91 47640.40
1997/12/31 81305.82 48458.39
1998/01/31 78750.78 48994.34
1998/02/28 85524.62 52527.81
1998/03/31 90258.38 55217.76
1998/04/30 91778.31 55773.25
1998/05/31 89268.52 54814.51
1998/06/30 91597.61 57041.07
1998/07/31 91738.16 56433.58
1998/08/31 70427.49 48274.42
IMATRL PRASUN SHR__CHT 19980831 19980914 085643 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Regional Banks Portfolio on August 31,
1988, and the current 3.00% sales charge was paid. As the chart shows,
by August 31, 1998, the value of the investment would have grown to
$70,428 - a 604.28% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $48,274 - a 382.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
U.S. Bancorp 7.4
BankAmerica Corp. 7.3
Bank of New York Co., Inc. 6.1
Fleet Financial Group, Inc. 5.9
Wells Fargo & Co. 5.7
National City Corp. 5.6
American Express Co. 4.9
Banc One Corp. 4.8
First Chicago NBD Corp. 4.7
Comerica, Inc. 4.3
TOP REGIONS AS OF AUGUST 31, 1998
MIDWEST 24.2%
WEST 23.9%
NORTHEAST 10.5%
SOUTHEAST 7.6%
INTERNATIONAL 3.3%
ALL OTHERS 30.5%
ROW: 1, COL: 1, VALUE: 30.5
ROW: 1, COL: 2, VALUE: 3.3
ROW: 1, COL: 3, VALUE: 7.6
ROW: 1, COL: 4, VALUE: 10.5
ROW: 1, COL: 5, VALUE: 23.9
ROW: 1, COL: 6, VALUE: 24.2
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
REGIONAL BANKS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Christine Schaulat)
Christine Schaulat, Portfolio Manager of Fidelity Select Regional
Banks Portfolio
Q. HOW DID THE FUND PERFORM, CHRIS?
A. For the six-month period that ended on August 31, 1998, the fund
had a total return of -17.64%. For the year, it returned 0.54%. For
the same periods, the Standard & Poor's 500 Index returned -8.10% and
8.10%, respectively. Beginning this period, the fund also compares
itself to the Goldman Sachs Financial Services Index - an index of 271
stocks designed to measure the performance of companies in the
financial services sector - which returned -15.98% and 3.35% over the
same six- and 12-month periods, respectively.
Q. PRIOR TO THIS PERIOD, BANK STOCKS HAD ENJOYED A NICE RUN OF SOLID
PERFORMANCE. WHY THE SUDDEN TURNAROUND?
A. To your first point, bank stocks indeed performed well - for the
past three years in fact. Over the last six months, however, stocks in
general did poorly, particularly in August. The continued weakness of
emerging markets and fears of slowing global economic growth
contributed to a major correction in the stock market. Bank stocks in
particular were hit hard, due to fears of an economic slowdown, which
would curtail loan growth and put pressure on credit quality. There
were also concerns that consolidation - the merger-and-acquisition
activity - in the banking sector might be slowing.
Q. LET'S TALK ABOUT CONSOLIDATION FOR A BIT. WHAT DO YOU THINK LED TO
THE CONCERNS OF A SLOWDOWN IN MERGER ACTIVITY?
A. Consolidation had been a key contributor to the sector's strong
performance over the past few years. Some of the primary forces
driving bank mergers are the branch closing and technology cost
savings generated by consolidation. But I think the increasing focus
on the Year 2000 computer problem - the potential difficulty of
computer systems in adapting to calendar dates beginning on January 1,
2000 - prompted the market to anticipate a slowdown in merger
activity. Once the fears of technical glitches are overcome and banks
are more comfortable with their preparedness, I think you'll see an
increase in consolidation activity once again.
Q. WHAT SPECIFIC HOLDINGS HELPED THE FUND DURING THE PERIOD? WHICH
DIDN'T PERFORM AS YOU'D HOPED?
A. My emphasis on the larger regional banks, as opposed to the small-
and mid-sized banks, did help somewhat on a relative basis. When I
looked at such factors as price-to-earnings (P/E) ratios, I emphasized
the larger banks because they tended to be trading at a discount
compared to their smaller brethren. Some larger banks that helped
performance were Mellon Bank and BankBoston, the latter of which I
have since liquidated from the fund given its exposure to
emerging-market risk. On the other hand, I did own some small- and
mid-cap bank stocks, and they were very hard hit during the correction
in August. Also, BankAmerica, the fund's second-largest holding,
suffered given its exposure to emerging markets and trading
activities. Banc One took a hit in the period as well after posting
disappointing earnings in the second quarter.
Q. WHAT IS YOUR OUTLOOK FOR THE FUND, CHRIS?
A. Toward the end of the period, it appeared the Federal Reserve Board
was considering a reduction in interest rates. A decline in interest
rates would be positive for bank stocks, as the sector tends to
perform well in a declining-rate environment. However, the weakness in
the stock market of late has translated into less robust
market-sensitive revenues for banks. Market-sensitive revenues include
trading, asset management, brokerage, and investment banking revenues,
as well as venture capital and securities gains. These revenues and
gains are negatively impacted by less favorable markets. Should the
current lackluster equity market continue, those banks with a high
proportion of market-sensitive revenues will post slower earnings
growth. I remain cautious on this front; therefore, to minimize risk
to the fund, I have reduced its exposure to those banks with a high
degree of market-sensitive revenue.
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.
(checkmark)FUND FACTS
START DATE: June 30, 1986
FUND NUMBER: 507
TRADING SYMBOL: FSRBX
SIZE: as of August 31, 1998, more than
$979 million
MANAGER: Christine Schaulat, since January
1998; analyst, regional banks securities, since
1997; joined Fidelity in 1997
REGIONAL BANKS PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 97.0%
SHARES VALUE (NOTE 1)
BANKS - 73.6%
INTERNATIONAL - 3.3%
Allied Irish Banks PLC sponsored ADR 88,900 $ 6,889,750
Bank of Nova Scotia 366,000 6,020,274
Canadian Imperial Bank of Commerce 399,700 7,504,727
National Bank of Canada 300,000 3,882,690
Royal Bank of Canada 188,600 7,112,330
31,409,771
MID-ATLANTIC - 0.7%
Crestar Finanical Corp. 130,466 6,588,533
MIDWEST - 24.2%
Banc One Corp. 1,224,160 46,518,080
Comerica, Inc. 803,850 42,001,163
Marshall & Ilsley Corp. 373,000 16,412,000
National City Corp. 927,809 54,508,779
Northern Trust Corp. 193,500 10,787,625
Norwest Corp. 1,381,400 41,096,650
Star Banc Corp. 423,300 23,228,588
234,552,885
MONEY CENTER - 2.2%
Citicorp 198,700 21,484,438
MULTI-REGIONAL - 1.2%
M&T Bank Corp. 27,000 11,070,000
NORTHEAST - 10.5%
Bank of New York Co., Inc. 2,429,696 58,768,272
Mellon Bank Corp. 251,000 13,052,000
North Fork Bancorp, Inc. 742,800 14,113,200
State Street Corp. 297,800 15,504,213
101,437,685
SOUTHEAST - 7.6%
AmSouth Bancorp. 345,000 11,859,375
Compass Bancshares, Inc. 150,000 4,950,000
First Tennessee National Corp. 379,400 9,034,463
NationsBank Corp. 309,936 17,666,352
SunTrust Banks, Inc. 215,900 12,090,400
Synovus Finanical Corp. 197,175 3,586,120
Union Planters Corp. 66,200 2,664,550
Wachovia Corp. 165,000 12,096,563
73,947,823
WEST - 23.9%
BankAmerica Corp. 1,109,200 71,058,125
First Security Corp. 230,375 3,570,813
U.S. Bancorp 2,097,696 71,583,872
UnionBanCal Corp. 16,900 1,265,388
Wells Fargo & Co. 197,166 55,576,166
SHARES VALUE (NOTE 1)
Westamerica Bancorp. 495,000 $ 12,003,750
Zions Bancorp 427,300 16,397,638
231,455,752
TOTAL BANKS 711,946,887
CREDIT & OTHER FINANCE - 21.4%
FINANCIAL SERVICES - 9.6%
American Express Co. 611,400 47,689,200
First Chicago NBD Corp. 719,300 45,585,638
93,274,838
OFFICES OF BANK HOLDING COMPANIES - 5.9%
Fleet Financial Group, Inc. 865,467 56,742,180
PERSONAL CREDIT INSTITUTIONS - 5.9%
Associates First Capital Corp. 313,700 18,547,513
Household International, Inc. 529,800 19,569,488
MBNA Corp. 826,000 19,411,000
57,528,001
TOTAL CREDIT & OTHER FINANCE 207,545,019
SAVINGS & LOANS - 2.0%
SAVINGS INSTITUTIONS, FEDERALLY CHARTERED - 2.0%
Washington Mutual, Inc. 600,900 19,228,800
TOTAL COMMON STOCKS 938,720,706
(Cost $827,384,633)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CASH EQUIVALENTS - 3.0%
Taxable Central Cash Fund (a) 29,322,531 29,322,531
(Cost 29,322,531)
TOTAL INVESTMENT IN SECURITIES - 100% $ 968,043,237
(Cost $856,707,164)
</TABLE>
LEGEND
(a) At the period end, the seven-day yield on the Taxable Central Cash
Fund was 5.58%. 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 $150,682,253 and $238,538,340, 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 $9,622 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the security lending program. At period end,
there were no loans outstanding (see Note 6 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $857,048,306. Net unrealized appreciation
aggregated $110,994,931, of which $185,875,011 related to appreciated
investment securities and $74,880,080 related to depreciated
investment securities.
REGIONAL BANKS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31,
1998
(UNAUDITED)
ASSETS
INVESTMENT IN $ 968,043,237
SECURITIES, AT
VALUE
(COST
$856,707,16
4) -
SEE
ACCOMPANYIN
G SCHEDULE
RECEIVABLE FOR 34,239,994
INVESTMENTS
SOLD
RECEIVABLE FOR 1,664,879
FUND SHARES
SOLD
DIVIDENDS 1,371,752
RECEIVABLE
INTEREST 265,589
RECEIVABLE
REDEMPTION FEES 26,865
RECEIVABLE
TOTAL ASSETS 1,005,612,316
LIABILITIES
PAYABLE FOR $ 24,994,859
FUND SHARES
REDEEMED
ACCRUED 606,902
MANAGEMENT
FEE
OTHER PAYABLES 637,247
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 26,239,008
NET ASSETS $ 979,373,308
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 777,996,759
UNDISTRIBUTED 5,840,481
NET INVESTMENT
INCOME
ACCUMULATED 84,199,995
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED 111,336,073
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
NET ASSETS, FOR $ 979,373,308
27,919,175
SHARES
OUTSTANDING
NET ASSET $35.08
VALUE AND
REDEMPTION
PRICE PER
SHARE
($979,373,3
08 (DIVIDED BY)
27,919,175
SHARES)
MAXIMUM $36.16
OFFERING PRICE
PER SHARE
(100/97.00
OF $35.08)
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED AUGUST
31, 1998
(UNAUDITED)
INVESTMENT $ 11,320,881
INCOME
DIVIDENDS
INTEREST 2,624,126
(INCLUDING
INCOME ON
SECURITIES
LOANED OF
$8,290)
TOTAL INCOME 13,945,007
EXPENSES
MANAGEMENT $ 4,110,439
FEE
TRANSFER AGENT 3,319,661
FEES
ACCOUNTING AND 401,811
SECURITY
LENDING FEES
NON-INTERESTED 2,643
TRUSTEES'
COMPENSATION
CUSTODIAN FEES 16,494
AND EXPENSES
REGISTRATION FEES 42,323
AUDIT 31,304
LEGAL 3,837
REPORTS TO 143,476
SHAREHOLDERS
TOTAL EXPENSES 8,071,988
BEFORE
REDUCTIONS
EXPENSE (49,366) 8,022,622
REDUCTIONS
NET INVESTMENT 5,922,385
INCOME
REALIZED AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS) ON:
INVESTMENT 84,715,327
SECURITIES
FOREIGN (6,275) 84,709,052
CURRENCY
TRANSACTIONS
CHANGE IN NET (305,498,172)
UNREALIZED
APPRECIATION
(DEPRECIATION)
ON INVESTMENT
SECURITIES
NET GAIN (LOSS) (220,789,120)
NET INCREASE $ (214,866,735)
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 2,648,500
INFORMATION
SALES CHARGES
PAID TO FDC
SALES CHARGES $ 2,638,833
- - RETAINED BY
FDC
DEFERRED SALES $ 3,941
CHARGES
WITHHELD
BY FDC
EXCHANGE FEES $ 98,588
WITHHELD BY
FSC
EXPENSE $ 46,072
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEMENTS
CUSTODIAN 356
CREDITS
TRANSFER 2,938
AGENT CREDITS
$ 49,366
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED YEAR ENDED
(DECREASE) IN AUGUST 31, 1998 FEBRUARY 28,
NET ASSETS (UNAUDITED) 1998
OPERATIONS $ 5,922,385 $ 11,124,320
NET
INVESTMENT
INCOME
NET REALIZED 84,709,052 58,722,862
GAIN (LOSS)
CHANGE IN NET (305,498,172) 242,816,882
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (214,866,735) 312,664,064
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
DISTRIBUTIONS TO (2,514,227) (7,980,022)
SHAREHOLDERS
FROM NET
INVESTMENT
INCOME
FROM NET (17,285,215) (35,012,104)
REALIZED GAIN
TOTAL (19,799,442) (42,992,126)
DISTRIBUTIONS
SHARE 273,875,455 1,093,335,837
TRANSACTIONS
NET PROCEEDS
FROM SALES OF
SHARES
REINVESTMENT 19,449,078 42,239,518
OF
DISTRIBUTIONS
COST OF SHARES (418,569,597) (905,908,084)
REDEEMED
NET INCREASE (125,245,064) 229,667,271
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION 388,914 1,604,750
FEES
TOTAL (359,522,327) 500,943,959
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
BEGINNING OF 1,338,895,635 837,951,676
PERIOD
END OF PERIOD $ 979,373,308 $ 1,338,895,635
(INCLUDING
UNDISTRIBUTE
D NET
INVESTMENT
INCOME OF
$5,840,48
1 AND
$3,805,98
2,
RESPECTIVELY)
OTHER
INFORMATION
SHARES
SOLD 6,010,126 29,339,423
ISSUED IN 423,729 1,067,874
REINVESTMENT
OF
DISTRIBUTIONS
REDEEMED (9,523,135) (24,927,202)
NET INCREASE (3,089,280) 5,480,095
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED YEAR ENDED YEARS ENDED
ENDED FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
AUGUST 31,
1998
SELECTED (UNAUDITED) 1998 1997 1996 1995 1994
PER-SHARE
DATA
NET ASSET $ 43.18 $ 32.82 $ 24.37 $ 18.01 $ 17.99 $ 20.88
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET .19 .40 .37 .52 .37 .19
INVESTMENT
INCOME D
NET (7.67) 11.41 9.70 6.78 .87 .93
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM (7.48) 11.81 10.07 7.30 1.24 1.12
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET (.08) (.28) (.27) (.25) (.29) (.15)
INVESTMENT
INCOME
FROM NET (.55) (1.23) (1.40) (.72) (.98) (3.92)
REALIZED
GAIN
TOTAL (.63) (1.51) (1.67) (.97) (1.27) (4.07)
DISTRIBUTIO
NS
REDEMPTION .01 .06 .05 .03 .05 .06
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 35.08 $ 43.18 $ 32.82 $ 24.37 $ 18.01 $ 17.99
VALUE, END
OF PERIOD
TOTAL (17.64)% 36.64% 43.33% 40.94% 7.79% 6.46%
RETURN B, C
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 979,373 $ 1,338,896 $ 837,952 $ 315,178 $ 164,603 $ 97,429
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.13% A 1.25% 1.46% 1.41% 1.58% 1.62%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.13% A 1.24% E 1.45% E 1.40% E 1.56% E 1.60% E
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET .83% A 1.07% 1.36% 2.42% 1.99% .88%
INVESTMENT
INCOME TO
AVERAGE
NET ASSETS
PORTFOLIO 24% A 25% 43% 103% 106% 74%
TURNOVER
RATE
AVERAGE $ .0493 $ .0400 $ .0384
COMMISSIO
N RATE F
A ANNUALIZED B THE
TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD
CERTAIN EXPENSES NOT
BEEN REDUCED DURING
THE PERIODS
SHOWN. C TOTAL
RETURNS DO NOT
INCLUDE THE ONE TIME
SALES CHARGE AND FOR
PERIODS OF LESS THAN
ONE YEAR ARE NOT
ANNUALIZED.
D NET INVESTMENT
INCOME PER SHARE
HAS BEEN CALCULATED
BASED ON AVERAGE
SHARES OUTSTANDING
DURING THE
PERIOD. E FMR OR
THE FUND HAS ENTERED
INTO VARYING
ARRANGEMENTS WITH
THIRD PARTIES WHO
EITHER PAID OR
REDUCED A PORTION OF
THE FUND'S
EXPENSES. F FOR
FISCAL YEARS
BEGINNING ON OR AFTER
SEPTEMBER 1, 1995,
A FUND IS REQUIRED TO
DISCLOSE ITS AVERAGE
COMMISSION RATE PER
SHARE FOR SECURITY
TRADES ON WHICH
COMMISSIONS ARE
CHARGED. THIS
AMOUNT MAY VARY
FROM PERIOD TO PERIOD
AND FUND TO FUND
DEPENDING ON THE
MIX OF TRADES
EXECUTED IN VARIOUS
MARKETS WHERE
TRADING PRACTICES AND
COMMISSION RATE
STRUCTURES MAY DIFFER.
</TABLE>
BIOTECHNOLOGY PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 MONTHS YEAR YEARS YEARS
SELECT BIOTECHNOLOGY -16.96% -4.03% 48.02% 386.14%
SELECT BIOTECHNOLOGY -19.52% -6.98% 43.51% 371.48%
(LOAD ADJ.)
S&P 500 -8.10% 8.10% 131.21% 382.74%
GS HEALTH CARE -3.02% 20.24% N/A N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks - and the Goldman Sachs
Health Care Index - a market capitalization-weighted index of 93
stocks designed to measure the performance of companies in the health
care sector. These benchmarks include reinvestment of dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 YEAR YEARS YEARS
SELECT BIOTECHNOLOGY -4.03% 8.16% 17.13%
SELECT BIOTECHNOLOGY -6.98% 7.49% 16.77%
(LOAD ADJ.)
S&P 500 8.10% 18.25% 17.05%
GS HEALTH CARE 20.24% N/A N/A
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.
(checkmark)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.
$10,000 OVER 10 YEARS
Biotechnology S&P 500
00042 SP001
1988/08/31 9700.00 10000.00
1988/09/30 9900.69 10426.00
1988/10/31 9795.57 10715.84
1988/11/30 9336.85 10562.61
1988/12/31 9652.22 10747.45
1989/01/31 10321.18 11534.17
1989/02/28 10244.73 11246.96
1989/03/31 10999.70 11509.02
1989/04/30 11372.41 12106.34
1989/05/31 11888.47 12596.64
1989/06/30 11582.66 12524.84
1989/07/31 12653.00 13655.84
1989/08/31 13130.84 13923.49
1989/09/30 13685.12 13866.40
1989/10/31 13732.91 13544.70
1989/11/30 14162.96 13821.02
1989/12/31 13892.67 14152.72
1990/01/31 12853.15 13203.07
1990/02/28 14067.55 13373.39
1990/03/31 14660.17 13727.79
1990/04/30 14844.76 13384.59
1990/05/31 16933.52 14689.59
1990/06/30 18116.04 14589.70
1990/07/31 18165.16 14543.01
1990/08/31 17605.17 13228.33
1990/09/30 17212.20 12584.11
1990/10/31 17359.57 12529.99
1990/11/30 19461.97 13339.43
1990/12/31 20053.76 13711.60
1991/01/31 22356.82 14309.43
1991/02/28 25524.79 15332.55
1991/03/31 28159.74 15703.60
1991/04/30 26932.78 15741.29
1991/05/31 28642.48 16421.31
1991/06/30 27121.74 15669.22
1991/07/31 29563.33 16399.40
1991/08/31 31634.98 16788.07
1991/09/30 33273.28 16507.71
1991/10/31 36549.87 16728.91
1991/11/30 34108.28 16054.73
1991/12/31 39916.03 17891.40
1992/01/31 39115.96 17558.62
1992/02/29 36112.94 17786.88
1992/03/31 33372.96 17440.03
1992/04/30 30260.34 17952.77
1992/05/31 32430.41 18040.74
1992/06/30 31861.19 17771.93
1992/07/31 33526.75 18498.80
1992/08/31 31429.83 18119.58
1992/09/30 31321.98 18333.39
1992/10/31 32855.73 18397.56
1992/11/30 36090.98 19024.91
1992/12/31 35787.43 19258.92
1993/01/31 33948.30 19420.70
1993/02/28 28468.70 19684.82
1993/03/31 28896.99 20100.17
1993/04/30 29640.20 19613.74
1993/05/31 31554.91 20139.39
1993/06/30 31743.86 20197.79
1993/07/31 30698.33 20117.00
1993/08/31 31857.23 20879.44
1993/09/30 33167.30 20718.67
1993/10/31 35636.27 21147.54
1993/11/30 35359.14 20946.64
1993/12/31 36039.36 21200.10
1994/01/31 37273.85 21920.90
1994/02/28 34779.69 21326.84
1994/03/31 31265.19 20396.99
1994/04/30 30698.33 20658.07
1994/05/31 30181.86 20996.87
1994/06/30 28985.17 20482.44
1994/07/31 29060.75 21154.27
1994/08/31 31781.65 22021.59
1994/09/30 31680.88 21482.06
1994/10/31 30597.56 21965.41
1994/11/30 30030.70 21165.43
1994/12/31 29489.04 21479.31
1995/01/31 30811.70 22036.27
1995/02/28 31869.83 22895.02
1995/03/31 32386.30 23570.66
1995/04/30 33394.04 24264.81
1995/05/31 33696.36 25234.68
1995/06/30 34918.25 25820.88
1995/07/31 36480.25 26677.10
1995/08/31 37941.47 26744.06
1995/09/30 39642.04 27872.66
1995/10/31 39327.12 27773.15
1995/11/30 40637.18 28992.39
1995/12/31 43968.22 29550.79
1996/01/31 46568.69 30556.70
1996/02/29 46202.61 30839.96
1996/03/31 45470.43 31136.95
1996/04/30 46452.18 31595.90
1996/05/31 46994.27 32410.76
1996/06/30 44154.74 32534.25
1996/07/31 40915.09 31096.88
1996/08/31 42799.51 31752.72
1996/09/30 45303.46 33539.76
1996/10/31 43728.81 34464.79
1996/11/30 43986.95 37069.98
1996/12/31 46434.19 36335.62
1997/01/31 48562.37 38605.87
1997/02/28 48905.16 38908.54
1997/03/31 43863.24 37309.79
1997/04/30 41939.43 39537.19
1997/05/31 47271.08 41944.21
1997/06/30 48509.31 43823.31
1997/07/31 48800.66 47310.33
1997/08/31 49135.71 44660.01
1997/09/30 55603.61 47106.04
1997/10/31 53578.75 45532.69
1997/11/30 52631.87 47640.40
1997/12/31 53526.27 48458.39
1998/01/31 53970.41 48994.34
1998/02/28 56783.25 52527.81
1998/03/31 59102.61 55217.76
1998/04/30 56757.43 55773.25
1998/05/31 54819.54 54814.51
1998/06/30 54871.92 57041.07
1998/07/31 55762.30 56433.58
1998/08/31 47147.78 48274.42
IMATRL PRASUN SHR__CHT 19980831 19980903 134702 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Biotechnology Portfolio on August 31,
1988, and the current 3.00% sales charge was paid. As the chart shows,
by August 31, 1998, the value of the investment would have grown to
$47,148 - a 371.48% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $48,274 - a 382.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
GENENTECH, INC. SPECIAL 14.7
AMGEN, INC. 8.4
MERCK & CO., INC. 7.1
FOREST LABORATORIES, INC. 5.3
SCHERING-PLOUGH CORP. 5.2
BIOGEN, INC. 4.9
GENZYME CORP. 4.6
CHIRON CORP. 3.8
LILLY (ELI) & CO. 3.5
SEPRACOR, INC. 3.2
TOP INDUSTRIES AS OF AUGUST 31, 1998
BIOTECHNOLOGY 50.5%
DRUGS 26.2%
PHARMACEUTICAL PREPARATIONS 5.9%
MEDICAL TECHNOLOGY 2.1%
LAB ANALYTICAL INSTRUMENTS 1.7%
ALL OTHERS 13.6%
ROW: 1, COL: 1, VALUE: 13.6
ROW: 1, COL: 2, VALUE: 1.7
ROW: 1, COL: 3, VALUE: 2.1
ROW: 1, COL: 4, VALUE: 5.9
ROW: 1, COL: 5, VALUE: 26.2
ROW: 1, COL: 6, VALUE: 50.05
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
BIOTECHNOLOGY PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Rajiv Kaul)
NOTE TO SHAREHOLDERS: Rajiv Kaul became Portfolio Manager of Fidelity
Select Biotechnology Portfolio on June 1, 1998.
Q. HOW DID THE FUND PERFORM, RAJIV?
A. For the six-month period that ended August 31, 1998, the fund
returned -16.96%, underperforming the Standard & Poor's 500 Index,
which returned -8.10%. For the 12-month period that ended August 31,
1998, the fund returned -4.03%. During the same period, the S&P 500
returned 8.10%. Beginning this period, the fund also compares itself
to the Goldman Sachs Health Care Index - an index of 93 stocks
designed to measure the performance of companies in the health care
sector - which returned -3.02% and 20.24% over the same six- and
12-month periods, respectively.
Q. WHY DID THE FUND UNDERPERFORM THE INDEXES OVER THE PAST SIX-MONTH
PERIOD?
A. The environment for investing in biotechnology stocks over the past
six months has been difficult, with stock prices for this industry
declining about 20% during the period. Many new product launches were
big disappointments. With the long delays and enormous costs
associated with product development, earnings estimates have been cut
for many companies and stock prices have not performed well for the
entire sector. In addition, it is important to point out that given
the fund's focus on biotechnology companies, it cannot invest in the
pharmaceutical stocks to the same extent that the Goldman Sachs Health
Care index does; these stocks experienced strong rallies and investor
support during the period.
Q. IN SUCH A DIFFICULT ENVIRONMENT, WERE THERE ANY FACTORS OR
STRATEGIES THAT HELPED MINIMIZE RISKS TO THE FUND?
A. Given the industry's downturn, I think the fund's return over the
period was respectable and can be attributed primarily to stock
selection. To minimize risks and help performance, I reduced the
fund's exposure to smaller biotechnology companies and moved fund
assets to larger companies with stable revenues and earnings. The
larger companies have a better pipeline of new and existing products
and they look undervalued. I also focused on companies with minimal or
zero exposure to Asia. A third strategy I employed is to spend much of
my time visiting companies and talking with management, doctors and
competitors about products. By visiting as many companies as I can, I
get a better understanding of a company's competitive outlook, and it
helps me find those companies that may launch successful new products.
Q. WHAT STOCKS PERFORMED WELL FOR THE FUND?
A. Two of the fund's top-10 holdings, Amgen and Biogen, did well.
Sales and revenues for both of these companies improved, which
increased their stock prices. Amgen's lead product, Epogen - a drug
used to promote red blood cell growth - has started to produce
better-than-expected sales results because of positive changes for
reimbursement of Epogen by the Health Care Financing Administration.
Q. WERE THERE ANY INVESTMENT DECISIONS THAT HURT FUND PERFORMANCE OVER
THE PERIOD?
A. Aviron, one of the fund's larger holdings, has been a
disappointment. Investor concerns about whether Aviron's lead product
- - FluMist - a vaccine for influenza - will be accepted by the Food and
Drug Administration hurt the stock price. The fund also had some
exposure to long-term care nursing homes such as Beverly Enterprises;
its stock price suffered and detracted from fund performance due to
delays with Medicare payments.
Q. SINCE TAKING OVER THE FUND IN JUNE, YOU'VE MADE SOME SIGNIFICANT
CHANGES TO THE TOP HOLDINGS. WHY?
A. In this market environment of heightened investor uncertainty, I
increased the fund's holdings in large-cap biotechnology companies
with stronger earnings and inexpensive valuations, and reduced the
fund's holdings in smaller biotechnology companies with no earnings
that are in the early stages of product development. In addition, I
focused on pharmaceutical companies that have solid earnings outlooks
and strong product demand.
Q. WHAT'S YOUR OUTLOOK FOR THE INDUSTRY OVER THE NEXT SIX MONTHS,
RAJIV?
A. I think the sector may start to perform better for a number of
reasons. First, biotech companies are starting to introduce more new
products than ever before. Second, the stocks have been
underperforming for a while, so they look very cheap. Third, many
biotech companies have limited exposure to Asia and Eastern European
financial market problems. Finally, the demographics are favorable,
with baby boomers aging and starting to provide more demand for
biotechnology and health care products.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
(checkmark)FUND FACTS
START DATE: DECEMBER 16, 1985
FUND NUMBER: 042
TRADING SYMBOL: FBIOX
SIZE: AS OF AUGUST 31, 1998, MORE THAN
$420 MILLION
MANAGER: RAJIV KAUL, SINCE JUNE 1998; EQUITY
RESEARCH ASSOCIATE, HEALTH CARE INDUSTRY,
1996-1998; JOINED FIDELITY IN 1996
BIOTECHNOLOGY PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 89.4%
SHARES VALUE (NOTE 1)
DRUGS & PHARMACEUTICALS - 82.9%
BIOTECHNOLOGY - 50.5%
Alkermes, Inc. (a)(c) 1,083,200 $ 11,847,500
Amgen, Inc. (a) 587,600 35,770,150
Ariad Pharmaceuticals, Inc. (a) 130,300 301,319
Aviron (a) 550,000 11,928,125
Biogen, Inc. (a) 445,800 20,618,250
CV Therapeutics, Inc. (a)(c) 804,500 5,329,813
Cell Genesys, Inc. (a) 108,700 455,181
Chiron Corp. (a) 1,120,900 16,112,938
Creative Biomolecules, Inc. (a) 325,500 895,125
Cytyc Corp. (a) 129,000 1,032,000
Genentech, Inc. special (a) 946,600 62,475,600
Genzyme Corp. (a) 727,100 19,631,700
Hyseq, Inc. 112,400 590,100
LeukoSite, Inc. (a) 455,000 3,355,625
Magainin Pharmaceuticals, Inc. (a) 522,400 1,208,050
Medimmune, Inc. (a) 173,700 8,381,025
Molecular Biosystems, Inc. (a) 196,200 858,375
Sepracor, Inc. (a) 288,900 13,758,863
214,549,739
COMMERCIAL LABORATORY RESEARCH - 0.3%
Scios, Inc. (a) 225,000 1,068,750
DRUGS - 26.2%
Agouron Pharmaceuticals, Inc. (a) 97,500 1,876,875
Allergan, Inc. 20,000 945,000
Alliance Pharmaceutical Corp. (a) 737,500 2,535,156
Alteon, Inc. (a) 320,000 800,000
Anesta Corp. (a) 403,700 4,945,325
Barr Laboratories, Inc. (a) 2,100 53,813
Elan Corp. PLC ADR (a) 105,000 6,168,750
Forest Laboratories, Inc. (a) 684,800 22,427,200
Lilly (Eli) & Co. 225,000 14,737,500
Merck & Co., Inc. 260,800 30,236,500
Roberts Pharmaceutical Corp. (a) 16,700 285,988
Schering-Plough Corp. 252,800 22,151,600
Sequus Pharmaceuticals, Inc. (a) 64,000 392,000
Warner-Lambert Co. 60,000 3,915,000
111,470,707
PHARMACEUTICAL PREPARATIONS - 5.9%
Allergan Specialty Therapeutics, Inc.
Class A 151,500 1,467,654
Avant Immunotherapeutics, Inc. (a) 359,300 651,231
AXYS Pharmaceuticals, Inc. (a) 783,900 3,111,103
Cellegy Pharmaceuticals, Inc. (a)(c) 603,600 1,886,250
Inhale Therapeutic Systems (a) 119,700 2,603,475
Jones Pharma, Inc. 10,000 208,750
NPS Pharmaceuticals, Inc. (a) 395,000 2,567,500
NeXstar Pharmaceuticals, Inc. (a) 246,100 1,638,103
Theratech, Inc. (a) 72,000 432,000
ViroPharma, Inc. (a)(c) 599,100 10,334,475
24,900,541
TOTAL DRUGS & PHARMACEUTICALS 351,989,737
ELECTRICAL EQUIPMENT - 0.0%
TV & RADIO COMMUNICATION EQUIPMENT - 0.0%
American Satellite Network (ASN)
warrants 6/30/99 (a) 5,000 0
ELECTRONIC INSTRUMENTS - 1.7%
LAB ANALYTICAL INSTRUMENTS - 1.7%
Waters Corp. (a) 137,900 7,429,363
SHARES VALUE (NOTE 1)
MEDICAL EQUIPMENT & SUPPLIES - 4.1%
DRUG DISTRIBUTORS - WHOLESALE - 0.8%
Allegiance Corp. 123,400 $ 3,486,050
MEDICAL SUPPLIES & APPLIANCES - 0.8%
Cygnus, Inc. (a) 114,800 373,100
Resmed, Inc. (a) 14,800 547,600
Sofamor/Danek Group, Inc. (a) 30,000 2,503,125
3,423,825
MEDICAL TECHNOLOGY - 2.1%
Ballard Medical Products 334,300 6,205,444
Biomet, Inc. 45,000 1,209,375
Stryker Corp. 50,000 1,606,250
9,021,069
OPHTHALMIC GOODS - 0.4%
Wesley Jessen Visioncare, Inc. (a) 100,000 1,700,000
TOTAL MEDICAL EQUIPMENT & SUPPLIES 17,630,944
MEDICAL FACILITIES MANAGEMENT - 0.7%
MEDICAL SERVICES - 0.7%
Carematrix Corp. (a) 170,500 2,941,125
TOTAL COMMON STOCKS
(Cost $408,137,806) 379,991,169
CASH EQUIVALENTS - 10.6%
Taxable Central Cash Fund (b)
(Cost $44,849,457) 44,849,457 44,849,457
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $452,987,263) $ 424,840,626
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.58%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(c) Affiliated company (see Note 10 of Notes to Financial Statements).
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $146,694,749 and $205,376,755, 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 $6,774 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the security lending program. At period end,
the value of securities loaned and the value of the collateral
amounted to $4,857,675 and $5,796,000, 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
Alkermes, Inc. $ - $ - $ - $11,847,500
CV Therapeutics, Inc. 791,700 - - 5,329,813
Cellegy Pharmaceuticals ,
Inc. 315,038 - - 1,886,250
Magainin Pharmaceuticals,
Inc. 249,257 2,714,380 - -
ViroPharma, Inc. - - - 10,334,475
TOTALS $ 1,355,995 $ 2,714,380 $ - $29,398,038
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $453,051,506 Net unrealized depreciation
aggregated $28,210,880, of which $44,187,605 related to appreciated
investment securities and $72,398,485 related to depreciated
investment securities.
BIOTECHNOLOGY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31,
1998
(UNAUDITED)
ASSETS
INVESTMENT IN $ 424,840,626
SECURITIES, AT
VALUE
(COST
$452,987,26
3) -
SEE
ACCOMPANYIN
G SCHEDULE
RECEIVABLE FOR 3,453,759
INVESTMENTS
SOLD
RECEIVABLE FOR 515,352
FUND SHARES
SOLD
DIVIDENDS 47,600
RECEIVABLE
INTEREST 178,086
RECEIVABLE
REDEMPTION FEES 1,947
RECEIVABLE
OTHER 53,396
RECEIVABLES
TOTAL ASSETS 429,090,766
LIABILITIES
PAYABLE FOR $ 2,285,644
FUND SHARES
REDEEMED
ACCRUED 236,564
MANAGEMENT
FEE
OTHER PAYABLES 380,594
AND
ACCRUED
EXPENSES
COLLATERAL ON 5,796,000
SECURITIES
LOANED, AT
VALUE
TOTAL LIABILITIES 8,698,802
NET ASSETS $ 420,391,964
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 475,264,733
ACCUMULATED (2,287,048)
NET INVESTMENT
INCOME LOSS
ACCUMULATED (24,439,084)
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED (28,146,637)
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
NET ASSETS, FOR $ 420,391,964
15,565,787
SHARES
OUTSTANDING
NET ASSET $27.01
VALUE AND
REDEMPTION
PRICE PER
SHARE
($420,391,9
64 (DIVIDED BY)
15,565,787
SHARES)
MAXIMUM $27.85
OFFERING PRICE
PER SHARE
(100/97.00
OF $27.01)
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED AUGUST
31, 1998
(UNAUDITED)
INVESTMENT $ 456,412
INCOME
DIVIDENDS
INTEREST 828,568
(INCLUDING
INCOME ON
SECURITIES
LOANED OF
$151,644)
TOTAL INCOME 1,284,980
EXPENSES
MANAGEMENT $ 1,568,934
FEE
TRANSFER AGENT 1,701,161
FEES
ACCOUNTING AND 268,676
SECURITY
LENDING FEES
NON-INTERESTED 1,533
TRUSTEES'
COMPENSATION
CUSTODIAN FEES 10,382
AND EXPENSES
REGISTRATION FEES 25,199
AUDIT 18,459
LEGAL 1,761
REPORTS TO 90,815
SHAREHOLDERS
TOTAL EXPENSES 3,686,920
BEFORE
REDUCTIONS
EXPENSE (114,892) 3,572,028
REDUCTIONS
NET INVESTMENT (2,287,048)
INCOME (LOSS)
REALIZED AND (24,268,560)
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS) ON
INVESTMENT
SECURITIES
(INCLUDING
REALIZED LOSS
OF
$1,550,669
ON SALES OF
INVESTMENTS IN
AFFILIATED
ISSUERS)
CHANGE IN NET (60,731,370)
UNREALIZED
APPRECIATION
(DEPRECIATION)
ON INVESTMENT
SECURITIES
NET GAIN (LOSS) (84,999,930)
NET INCREASE $ (87,286,978)
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 439,192
INFORMATION
SALES CHARGES
PAID TO FDC
SALES CHARGES $ 438,007
- - RETAINED BY
FDC
DEFERRED SALES $ 14,237
CHARGES
WITHHELD
BY FDC
EXCHANGE FEES $ 47,288
WITHHELD BY
FSC
EXPENSE $ 111,245
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEMENTS
CUSTODIAN 2,658
CREDITS
TRANSFER 989
AGENT CREDITS
$ 114,892
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED YEAR ENDED
(DECREASE) IN AUGUST 31, 1998 FEBRUARY 28,
NET ASSETS (UNAUDITED) 1998
OPERATIONS $ (2,287,048) $ (4,649,288)
NET
INVESTMENT
INCOME (LOSS)
NET REALIZED (24,268,560) 136,618,693
GAIN (LOSS)
CHANGE IN NET (60,731,370) (59,882,024)
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (87,286,978) 72,087,381
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
DISTRIBUTIONS TO
SHAREHOLDERS
FROM NET (33,971,052) (74,816,933)
REALIZED GAIN
SHARE 63,968,226 370,670,921
TRANSACTIONS
NET PROCEEDS
FROM SALES OF
SHARES
REINVESTMENT 33,062,343 72,734,215
OF
DISTRIBUTIONS
COST OF SHARES (135,076,554) (536,988,307)
REDEEMED
NET INCREASE (38,045,985) (93,583,171)
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION 154,078 952,260
FEES
TOTAL (159,149,937) (95,360,463)
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
BEGINNING OF 579,541,901 674,902,364
PERIOD
END OF PERIOD $ 420,391,964 $ 579,541,901
(INCLUDING
ACCUMULATED
NET INVESTMENT
LOSS OF
$2,287,048
AND $0,
RESPECTIVELY)
OTHER
INFORMATION
SHARES
SOLD 1,957,911 10,542,169
ISSUED IN 970,422 2,304,448
REINVESTMENT
OF
DISTRIBUTIONS
REDEEMED (4,148,771) (15,772,857)
NET INCREASE (1,220,438) (2,926,240)
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED YEAR ENDED YEARS ENDED
ENDED FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
AUGUST 31,
1998
SELECTED (UNAUDITED) 1998 1997 1996 1995 1994
PER-SHARE
DATA
NET ASSET $ 34.52 $ 34.24 $ 36.60 $ 25.30 $ 27.61 $ 22.60
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET (.14) (.27) (.20) .11 (.06) (.18)
INVESTMENT
INCOME
(LOSS) E
NET (5.29) 5.20 1.89 11.21 (2.26) 5.15
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM (5.43) 4.93 1.69 11.32 (2.32) 4.97
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET - - (.03) (.07) - -
INVESTMENT
INCOME
FROM NET (2.09) (4.71) (4.06) - - -
REALIZED
GAIN
TOTAL (2.09) (4.71) (4.09) (.07) - -
DISTRIBUTIO
NS
REDEMPTION .01 .06 .04 .05 .01 .04
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 27.01 $ 34.52 $ 34.24 $ 36.60 $ 25.30 $ 27.61
VALUE, END
OF PERIOD
TOTAL (16.96)% 16.11% 5.85% 44.97% (8.37)% 22.17%
RETURN B, C, D
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 420,392 $ 579,542 $ 674,902 $ 1,096,864 $ 448,197 $ 481,146
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.36% A 1.49% 1.57% 1.44% F 1.59% 1.62%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.31% A, G 1.47% G 1.56% G 1.43% G 1.59% 1.61% G
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.84)% A (.81)% (.59)% .35% (.27)% (.69)%
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 57% A 162% 41% 67% 77% 51%
TURNOVER
RATE
AVERAGE $ .0452 $ .0454 $ .0376
COMMISSIO
N RATE H
A ANNUALIZED B TOT
AL RETURNS FOR PERIODS
OF LESS THAN ONE YEAR
ARE NOT
ANNUALIZED. C 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). D TO
TAL RETURNS DO NOT
INCLUDE THE ONE TIME
SALES CHARGE AND FOR
PERIODS OF LESS THAN
ONE YEAR ARE NOT
ANNUALIZED. E NET
INVESTMENT INCOME
(LOSS) PER SHARE HAS
BEEN CALCULATED
BASED ON AVERAGE
SHARES OUTSTANDING
DURING THE
PERIOD. 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. G FMR OR
THE FUND HAS ENTERED
INTO VARYING
ARRANGEMENTS WITH
THIRD PARTIES WHO
EITHER PAID OR
REDUCED A PORTION OF
THE FUND'S EXPENSES
(SEE NOTE 8 OF NOTES
TO FINANCIAL
STATEMENTS). H FO
R 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 MONTHS YEAR YEARS YEARS
SELECT HEALTH CARE -0.12% 23.10% 240.14% 748.85%
SELECT HEALTH CARE -3.19% 19.34% 229.87% 723.31%
(LOAD ADJ.)
S&P 500 -8.10% 8.10% 131.21% 382.74%
GS HEALTH CARE -3.02% 20.24% N/A N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years, or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks - and the Goldman Sachs
Health Care Index - a market capitalization-weighted index of 93
stocks designed to measure the performance of companies in the health
care sector. These benchmarks include reinvestment of dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 YEAR YEARS YEARS
SELECT HEALTH CARE 23.10% 27.74% 23.85%
SELECT HEALTH CARE 19.34% 26.96% 23.47%
(LOAD ADJ.)
S&P 500 8.10% 18.25% 17.05%
GS HEALTH CARE 20.24% N/A N/A
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.
(checkmark)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.
$10,000 OVER 10 YEARS
Health Care S&P 500
00063 SP001
1988/08/31 9700.00 10000.00
1988/09/30 10025.27 10426.00
1988/10/31 10150.15 10715.84
1988/11/30 9853.92 10562.61
1988/12/31 9993.80 10747.45
1989/01/31 10699.49 11534.17
1989/02/28 10494.52 11246.96
1989/03/31 11047.94 11509.02
1989/04/30 11651.14 12106.34
1989/05/31 12014.23 12596.64
1989/06/30 11743.42 12524.84
1989/07/31 13198.04 13655.84
1989/08/31 13517.35 13923.49
1989/09/30 13614.92 13866.40
1989/10/31 13514.40 13544.70
1989/11/30 14096.84 13821.02
1989/12/31 14240.02 14152.72
1990/01/31 13422.97 13203.07
1990/02/28 13282.31 13373.39
1990/03/31 13812.04 13727.79
1990/04/30 13812.04 13384.59
1990/05/31 15712.51 14689.59
1990/06/30 16247.87 14589.70
1990/07/31 16472.20 14543.01
1990/08/31 15733.80 13228.33
1990/09/30 15260.23 12584.11
1990/10/31 15609.17 12529.99
1990/11/30 17269.79 13339.43
1990/12/31 17702.68 13711.60
1991/01/31 19450.23 14309.43
1991/02/28 21852.68 15332.55
1991/03/31 23800.71 15703.60
1991/04/30 23386.38 15741.29
1991/05/31 24656.11 16421.31
1991/06/30 23544.31 15669.22
1991/07/31 25627.62 16399.40
1991/08/31 26908.29 16788.07
1991/09/30 27450.52 16507.71
1991/10/31 29259.15 16728.91
1991/11/30 27660.99 16054.73
1991/12/31 32518.50 17891.40
1992/01/31 31451.58 17558.62
1992/02/29 30078.19 17786.88
1992/03/31 28243.23 17440.03
1992/04/30 26642.85 17952.77
1992/05/31 27191.44 18040.74
1992/06/30 26143.38 17771.93
1992/07/31 27716.06 18498.80
1992/08/31 26968.53 18119.58
1992/09/30 25101.73 18333.39
1992/10/31 25873.77 18397.56
1992/11/30 27291.23 19024.91
1992/12/31 26849.15 19258.92
1993/01/31 25407.18 19420.70
1993/02/28 22695.93 19684.82
1993/03/31 23321.93 20100.17
1993/04/30 23313.30 19613.74
1993/05/31 24245.83 20139.39
1993/06/30 24159.48 20197.79
1993/07/31 23373.74 20117.00
1993/08/31 24206.97 20879.44
1993/09/30 24962.50 20718.67
1993/10/31 26818.93 21147.54
1993/11/30 26728.26 20946.64
1993/12/31 27498.00 21200.10
1994/01/31 28042.60 21920.90
1994/02/28 27364.01 21326.84
1994/03/31 25578.93 20396.99
1994/04/30 26605.09 20658.07
1994/05/31 28107.69 20996.87
1994/06/30 27661.68 20482.44
1994/07/31 28215.95 21154.27
1994/08/31 31918.32 22021.59
1994/09/30 32147.82 21482.06
1994/10/31 32593.84 21965.41
1994/11/30 33299.67 21165.43
1994/12/31 33398.69 21479.31
1995/01/31 35167.69 22036.27
1995/02/28 35913.02 22895.02
1995/03/31 36889.51 23570.66
1995/04/30 37403.70 24264.81
1995/05/31 37764.08 25234.68
1995/06/30 39675.04 25820.88
1995/07/31 41946.39 26677.10
1995/08/31 42302.03 26744.06
1995/09/30 44672.95 27872.66
1995/10/31 44782.01 27773.15
1995/11/30 46669.27 28992.39
1995/12/31 48716.96 29550.79
1996/01/31 50459.52 30556.70
1996/02/29 50164.94 30839.96
1996/03/31 50339.69 31136.95
1996/04/30 50128.95 31595.90
1996/05/31 51038.32 32410.76
1996/06/30 51074.49 32534.25
1996/07/31 49080.08 31096.88
1996/08/31 50743.81 31752.72
1996/09/30 54236.61 33539.76
1996/10/31 53172.24 34464.79
1996/11/30 56029.51 37069.98
1996/12/31 56248.23 36335.62
1997/01/31 59644.34 38605.87
1997/02/28 60404.93 38908.54
1997/03/31 57091.36 37309.79
1997/04/30 59940.61 39537.19
1997/05/31 64505.76 41944.21
1997/06/30 69304.55 43823.31
1997/07/31 71893.37 47310.33
1997/08/31 66886.21 44660.01
1997/09/30 71034.64 47106.04
1997/10/31 71009.38 45532.69
1997/11/30 72998.35 47640.40
1997/12/31 73767.60 48458.39
1998/01/31 79075.50 48994.34
1998/02/28 82435.49 52527.81
1998/03/31 85368.23 55217.76
1998/04/30 86986.13 55773.25
1998/05/31 86464.72 54814.51
1998/06/30 91604.34 57041.07
1998/07/31 91879.94 56433.58
1998/08/31 82330.63 48274.42
IMATRL PRASUN SHR__CHT 19980831 19980914 085356 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Health Care Portfolio on August 31, 1988,
and the current 3.00% sales charge was paid. As the chart shows, by
August 31, 1998, the value of the investment would have grown to
$82,331 - a 723.31% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $48,274 - a 382.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
WARNER-LAMBERT CO. 10.7
LILLY (ELI) & CO. 10.0
AMERICAN HOME PRODUCTS CORP. 9.3
MERCK & CO., INC. 7.5
SCHERING-PLOUGH CORP. 5.8
JOHNSON & JOHNSON 4.8
ABBOTT LABORATORIES 4.6
BRISTOL-MYERS SQUIBB CO. 3.9
MEDTRONIC, INC. 2.7
AMGEN, INC. 2.3
TOP INDUSTRIES AS OF AUGUST 31, 1998
DRUGS 51.2%
MEDICAL SUPPLIES &
APPLIANCES 14.8%
HOSPITALS 4.7%
BIOTECHNOLOGY 4.4%
DRUG DISTRIBUTORS -
WHOLESALE 3.7%
ALL OTHERS 21.2%
ROW: 1, COL: 1, VALUE: 21.2
ROW: 1, COL: 2, VALUE: 3.7
ROW: 1, COL: 3, VALUE: 4.4
ROW: 1, COL: 4, VALUE: 4.7
ROW: 1, COL: 5, VALUE: 14.8
ROW: 1, COL: 6, VALUE: 51.2
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
HEALTH CARE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Beso Sikharulidze)
Beso Sikharulidze,
Portfolio Manager
of Fidelity Select
Health Care Portfolio
Q. HOW DID THE FUND PERFORM, BESO?
A. For the six-month period ending August 31, 1998, the fund returned
- -0.12%, outperforming the Standard & Poor's 500 Index, which returned
- -8.10%. For the 12-month period that ended August 31, 1998, the fund
posted a total return of 23.10%. During the same 12-month period, the
S&P 500 returned 8.10%. Beginning this period, the fund also compares
itself to the Goldman Sachs Health Care Index - an index of 93 stocks
designed to measure the performance of companies in the health care
sector - which returned -3.02% and 20.24% over the same six- and
12-month periods, respectively.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE OVER THE PAST
SIX MONTHS?
A. I committed a significant percentage of fund assets to the major
pharmaceutical companies and to other companies that benefited from
the growing demand for pharmaceuticals, such as drug distributors and
drug-store chains. These companies performed very well for the fund.
In addition, many health care and drugs stocks have benefited from
investors' perception that these companies, especially those with
limited dependency on overseas markets for product demand, will
provide stable earnings and revenue growth during this period of
global market volatility.
Q. WHY DO PHARMACEUTICAL COMPANIES CONTINUE TO PERFORM THE BEST WITHIN
THE HEALTH CARE SECTOR?
A. Most importantly, all the key drivers for continued strong earnings
and sales growth have remained in place: an aging population with
increasing demand for pharmaceuticals, an increasing supply of
innovative new drugs with superior efficacy and safety, and corporate
earnings that have produced double-digit returns, which compare
favorably to other health care companies.
Q. MOST OF THE FUND'S TOP HOLDINGS HAVE NOT CHANGED SINCE THE LAST
REPORT. WHAT IS YOUR RATIONALE BEHIND THIS STRATEGY?
A. I didn't foresee any major changes in the market's outlook toward
drug companies, and my outlook remained positive. As a result, I
continued to take a long-term view on the pharmaceutical sector.
Maintaining the fund's top holdings is not an unusual strategy for me.
Whether I am looking at a drug company, medical device maker or
biotechnology company, I focus on the long-term profitability outlook
and the ability of the company to produce consistent results. In
addition, some of these companies have very short product life cycles,
and this can cause short-term volatility for these stocks. In this
environment, it becomes even more important to closely research and
determine which companies have the best technology and fundamental
business outlook over the next two to three years.
Q. WHAT INDIVIDUAL HOLDINGS CONTRIBUTED TO FUND PERFORMANCE?
A. Warner-Lambert and Schering-Plough did very well and contributed
significantly to the fund's strong performance. Warner-Lambert
benefited from having the strongest earnings growth within the
pharmaceutical sector. Strong sales of newly launched products, such
as its cholesterol-lowering drug Lipitor and its diabetes drug
Rezulin, resulted in upward revisions of Warner's earnings and
ultimately pushed the stock price higher. Schering-Plough's stock also
benefited from strong sales of its diverse product line and from its
upward earnings revisions.
Q. WERE THERE ANY DISAPPOINTMENTS DURING THE PERIOD?
A. Chiron did not perform well. While the company's fundamental
business outlook is strong and it has reported stable earnings and
revenue growth, the stock price has declined along with the general
market and the entire biotechnology sector. HMOs continued to detract
from fund performance. Unfortunately, many HMOs struggled to find
product and service strategies that will boost their growth and
earnings. I continued to hold HMOs such as Foundation Health Systems,
United HealthCare and Humana, which all seemed to be undervalued
considering their fundamental business outlooks and improving
commercial businesses. At the same time, these companies were
hard-pressed to improve profitability in their core Medicare patient
business, hurting stock performance for most of the sector.
Q. WHAT IS YOUR OUTLOOK FOR THE HEALTH CARE SECTOR, BESO?
A. Overall, I think the health care sector should continue to be
strong. Favorable demographics, combined with strong demand for drugs,
medical supplies and medical technology, should drive further
innovation. Strong management teams and a favorable regulatory
environment also should help to create an excellent opportunity for
health care stocks to outperform the broader market.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
(checkmark)FUND FACTS
START DATE: JULY 14, 1981
FUND NUMBER: 063
TRADING SYMBOL: FSPHX
SIZE: AS OF AUGUST 31, 1998, MORE THAN
$2.1 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
HEALTH CARE PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 92.2%
SHARES VALUE (NOTE 1)
AGRICULTURE - 0.4%
CROPS - 0.4%
Delta & Pine Land Co. 178,700 $ 7,672,931
Pioneer Hi-Bred International, Inc. 72,400 2,443,500
10,116,431
CHEMICALS & PLASTICS - 1.7%
CHEMICALS - 1.7%
Monsanto Co. 675,900 36,963,281
COMPUTER SERVICES & SOFTWARE - 0.4%
CAD/CAM/CAE - 0.4%
Shared Medical Systems Corp. 175,000 9,340,625
DRUG STORES - 3.3%
CVS Corp. 540,000 19,642,500
Rite Aid Corp. 400,000 14,475,000
Walgreen Co. 1,000,000 38,500,000
72,617,500
DRUGS & PHARMACEUTICALS - 56.3%
BIOTECHNOLOGY - 4.4%
Amgen, Inc. (a) 835,400 50,854,975
Biogen, Inc. (a) 237,500 10,984,375
Chiron Corp. (a) 321,800 4,625,875
Genentech, Inc. special (a) 397,400 26,228,400
Genzyme Corp. (a) 140,000 3,780,000
Medimmune, Inc. (a) 36,400 1,756,300
Xoma, Inc. (a)(c) 1,476 2,435
98,232,360
COMMERCIAL LABORATORY RESEARCH - 0.4%
Quintiles Transnational Corp. (a) 264,700 9,463,025
DRUGS - 51.2%
Allergan, Inc. 200,000 9,450,000
ALZA Corp. Class A 268,700 9,673,200
American Home Products Corp. 4,128,800 206,956,100
Barr Laboratories, Inc. (a) 11,090 284,181
Bristol-Myers Squibb Co. 884,400 86,560,650
Elan Corp. PLC ADR (a) 297,020 17,449,925
Forest Laboratories, Inc. (a) 680,000 22,270,000
Lilly (Eli) & Co. 3,406,812 223,146,186
Merck & Co., Inc. 1,432,400 166,068,875
Schering-Plough Corp. 1,477,100 129,430,888
SmithKline Beecham PLC ADR 112,300 6,387,063
Takeda Chemical Industries Ltd. 448,000 11,256,034
Warner-Lambert Co. 3,664,200 239,089,050
Watson Pharmaceuticals, Inc. (a) 252,800 11,391,800
1,139,413,952
PHARMACEUTICAL PREPARATIONS - 0.3%
Medicis Pharmaceutical Corp.
Class A (a) 200,000 6,550,000
TOTAL DRUGS & PHARMACEUTICALS 1,253,659,337
ELECTRONIC INSTRUMENTS - 0.5%
LAB ANALYTICAL INSTRUMENTS - 0.5%
Waters Corp. (a) 213,200 11,486,150
MEDICAL EQUIPMENT & SUPPLIES - 22.8%
DENTAL EQUIPMENT - 0.5%
Sybron International Corp. (a) 564,600 10,268,663
SHARES VALUE (NOTE 1)
DRUG DISTRIBUTORS - WHOLESALE - 3.7%
AmeriSource Health Corp. Class A (a) 133,500 $ 6,282,844
Cardinal Health, Inc. 395,270 34,586,125
McKesson Corp. 516,200 38,715,000
Zonagen, Inc. (a) 259,100 3,805,531
83,389,500
MEDICAL SUPPLIES & APPLIANCES - 14.8%
Abbott Laboratories 2,679,800 103,172,300
Becton, Dickinson & Co. 1,181,200 39,348,725
Boston Scientific Corp. (a) 577,968 40,024,284
Johnson & Johnson 1,534,600 105,887,400
Sofamor/Danek Group, Inc. (a) 400,500 33,416,719
Steris Corp. (a) 280,400 6,694,550
328,543,978
MEDICAL TECHNOLOGY - 3.2%
Medtronic, Inc. 1,182,400 60,745,800
St. Jude Medical, Inc. (a) 439,400 9,694,263
Stryker Corp. 36,400 1,169,350
71,609,413
X-RAY ELECTRO-MEDICAL APPARATUS - 0.6%
Guidant Corp. 230,460 14,230,905
TOTAL MEDICAL EQUIPMENT & SUPPLIES 508,042,459
MEDICAL FACILITIES MANAGEMENT - 6.8%
HOSPITALS - 4.7%
Columbia/HCA Healthcare Corp. 937,800 21,159,113
HEALTHSOUTH Corp. (a) 1,046,300 19,814,306
Health Management Associates, Inc.
Class A (a) 1,017,250 18,374,078
Tenet Healthcare Corp. (a) 1,292,200 33,354,913
Universal Health Services, Inc. Class B (a) 300,000 11,625,000
104,327,410
HMO'S & OUTPATIENT CARE - 1.9%
Foundation Health Systems, Inc.
Class A (a) 750,000 8,390,625
Humana, Inc. (a) 511,500 6,649,500
Trigon Healthcare, Inc. (a) 100,000 2,762,500
United HealthCare Corp. 500,000 18,062,500
Wellpoint Health Networks, Inc. (a) 114,500 6,111,438
41,976,563
MEDICAL SERVICES - 0.1%
Lincare Holdings, Inc. (a) 90,300 3,064,556
SKILLED NURSING CARE FACILITIES - 0.1%
Beverly Enterprises, Inc. 376,100 2,961,788
TOTAL MEDICAL FACILITIES MANAGEMENT 152,330,317
TOTAL COMMON STOCKS
(Cost $1,643,186,860) 2,054,556,100
CASH EQUIVALENTS - 7.8%
Taxable Central Cash Fund (b)
(Cost $172,973,917) 172,973,917 172,973,917
TOTAL INVESTMENT IN SECURITIES - 100.0%
(Cost $1,816,160,777) $2,227,530,017
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.58%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(c) Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers.
At the period end, the value of these securities amounted to $2,435 or
0.0% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $658,987,549 and $511,496,032, 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 $135,943 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the security lending program. At period end,
the value of securities loaned and the value of the collateral
amounted to $3,085,739 and $3,571,700, respectively (see Note 6 of
Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $1,816,883,083. Net unrealized appreciation
aggregated $410,646,934, of which $504,450,405 related to appreciated
investment securities and $93,803,471 related to depreciated
investment securities.
HEALTH CARE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31,
1998
(UNAUDITED)
ASSETS
INVESTMENT IN $ 2,227,530,017
SECURITIES, AT
VALUE
(COST
$1,816,160,
777) -
SEE
ACCOMPANYIN
G SCHEDULE
RECEIVABLE FOR 951,031
INVESTMENTS
SOLD
RECEIVABLE FOR 33,031,455
FUND SHARES
SOLD
DIVIDENDS 2,787,083
RECEIVABLE
INTEREST 469,980
RECEIVABLE
REDEMPTION FEES 354,014
RECEIVABLE
OTHER 185,106
RECEIVABLES
TOTAL ASSETS 2,265,308,686
LIABILITIES
PAYABLE FOR $ 30,513,682
INVESTMENTS
PURCHASED
PAYABLE FOR 64,996,920
FUND SHARES
REDEEMED
ACCRUED 1,158,370
MANAGEMENT
FEE
OTHER PAYABLES 1,008,312
AND
ACCRUED
EXPENSES
COLLATERAL ON 3,571,700
SECURITIES
LOANED,
AT VALUE
TOTAL LIABILITIES 101,248,984
NET ASSETS $ 2,164,059,702
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 1,702,626,574
UNDISTRIBUTED 2,047,054
NET INVESTMENT
INCOME
ACCUMULATED 48,015,002
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED 411,371,072
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
AND ASSETS
AND LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, FOR $ 2,164,059,702
19,577,132
SHARES
OUTSTANDING
NET ASSET $110.54
VALUE AND
REDEMPTION
PRICE PER
SHARE
($2,164,059,
702 (DIVIDED BY)
19,577,132
SHARES)
MAXIMUM $113.96
OFFERING PRICE
PER SHARE
(100/97.00
OF $110.54)
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED AUGUST
31, 1998
(UNAUDITED)
INVESTMENT $ 9,892,405
INCOME
DIVIDENDS
INTEREST 4,246,560
(INCLUDING
INCOME ON
SECURITIES
LOANED OF
$166,770)
TOTAL INCOME 14,138,965
EXPENSES
MANAGEMENT $ 6,736,046
FEE
TRANSFER AGENT 4,798,909
FEES
ACCOUNTING AND 412,122
SECURITY
LENDING FEES
NON-INTERESTED 5,442
TRUSTEES'
COMPENSATION
CUSTODIAN FEES 44,066
AND EXPENSES
REGISTRATION FEES 14,307
AUDIT 35,790
LEGAL 6,344
REPORTS TO 192,719
SHAREHOLDERS
TOTAL EXPENSES 12,245,745
BEFORE
REDUCTIONS
EXPENSE (153,880) 12,091,865
REDUCTIONS
NET INVESTMENT 2,047,100
INCOME
REALIZED AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS) ON:
INVESTMENT 50,346,687
SECURITIES
FOREIGN (306,305) 50,040,382
CURRENCY
TRANSACTIONS
CHANGE IN NET
UNREALIZED
APPRECIATION
(DEPRECIATION)
ON:
INVESTMENT (63,178,400)
SECURITIES
ASSETS AND 3,234 (63,175,166)
LIABILITIES IN
FOREIGN
CURRENCIES
NET GAIN (LOSS) (13,134,784)
NET INCREASE $ (11,087,684)
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 4,244,083
INFORMATION
SALES CHARGES
PAID TO FDC
SALES CHARGES $ 4,234,326
- - RETAINED BY
FDC
DEFERRED SALES $ 25,585
CHARGES
WITHHELD
BY FDC
EXCHANGE FEES $ 146,693
WITHHELD BY
FSC
EXPENSE $ 144,790
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEMENTS
CUSTODIAN 3,141
CREDITS
TRANSFER 5,949
AGENT CREDITS
$ 153,880
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED YEAR ENDED
(DECREASE) IN AUGUST 31, 1998 FEBRUARY 28,
NET ASSETS (UNAUDITED) 1998
OPERATIONS $ 2,047,100 $ 4,973,301
NET
INVESTMENT
INCOME
NET REALIZED 50,040,382 304,829,057
GAIN (LOSS)
CHANGE IN NET (63,175,166) 201,089,915
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (11,087,684) 510,892,273
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
DISTRIBUTIONS TO (1,644,584) (3,399,542)
SHAREHOLDERS
FROM NET
INVESTMENT
INCOME
FROM NET (59,794,768) (285,151,308)
REALIZED GAIN
TOTAL (61,439,352) (288,550,850)
DISTRIBUTIONS
SHARE 783,487,521 1,156,162,920
TRANSACTIONS
NET PROCEEDS
FROM SALES OF
SHARES
REINVESTMENT 60,165,171 281,663,060
OF
DISTRIBUTIONS
COST OF SHARES (832,066,595) (810,127,873)
REDEEMED
NET INCREASE 11,586,097 627,698,107
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION 981,458 1,425,211
FEES
TOTAL (59,959,481) 851,464,741
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
BEGINNING OF 2,224,019,183 1,372,554,442
PERIOD
END OF PERIOD $ 2,164,059,702 $ 2,224,019,183
(INCLUDING
UNDISTRIBUTE
D NET
INVESTMENT
INCOME OF
$2,047,05
4 AND
$2,734,33
0,
RESPECTIVELY)
OTHER
INFORMATION
SHARES
SOLD 6,500,723 10,761,631
ISSUED IN 512,787 2,916,990
REINVESTMENT
OF
DISTRIBUTIONS
REDEEMED (6,972,307) (7,540,216)
NET INCREASE 41,203 6,138,405
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED YEAR ENDED YEARS ENDED
ENDED FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
AUGUST 31,
1998
SELECTED (UNAUDITED) 1998 1997 1996 1995 1994
PER-SHARE
DATA
NET ASSET $ 113.84 $ 102.45 $ 100.47 $ 76.13 $ 63.31 $ 52.57
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET .11 .33 .52 .95 .75 .15
INVESTMENT
INCOME D
NET (.10) 31.94 18.01 28.85 18.38 10.61
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM .01 32.27 18.53 29.80 19.13 10.76
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET (.09) (.25) (.65) (.59) (.62) (.07)
INVESTMENT
INCOME
FROM NET (3.27) (20.73) (15.95) (4.92) (5.74) -
REALIZED
GAIN
TOTAL (3.36) (20.98) (16.60) (5.51) (6.36) (.07)
DISTRIBUTIO
NS
REDEMPTION .05 .10 .05 .05 .05 .05
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 110.54 $ 113.84 $ 102.45 $ 100.47 $ 76.13 $ 63.31
VALUE, END
OF PERIOD
TOTAL (0.12)% 36.47% 20.41% 39.68% 31.24% 20.57%
RETURN B, C
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 2,164,060 $ 2,224,019 $ 1,372,554 $ 1,525,910 $ 943,141 $ 522,890
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.05% A 1.20% 1.33% 1.31% 1.39% 1.59%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.03% A, E 1.18% E 1.32% E 1.30% E 1.36% E 1.55% E
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET .18% A .31% .52% 1.06% 1.08% .26%
INVESTMENT
INCOME TO
AVERAGE
NET ASSETS
PORTFOLIO 48% A 79% 59% 54% 151% 213%
TURNOVER
RATE
AVERAGE $ .0431 $ .0490 $ .0466
COMMISSIO
N RATE F
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 TOT
AL RETURNS DO NOT
INCLUDE THE ONE TIME
SALES CHARGE AND FOR
PERIODS OF LESS THAN
ONE YEAR ARE NOT
ANNUALIZED. D NET
INVESTMENT INCOME
PER SHARE HAS BEEN
CALCULATED BASED ON
AVERAGE SHARES
OUTSTANDING DURING
THE PERIOD. E FMR
OR THE FUND HAS
ENTERED INTO VARYING
ARRANGEMENTS WITH
THIRD PARTIES WHO
EITHER PAID OR
REDUCED A PORTION OF
THE FUND'S EXPENSES
(SEE NOTE 8 OF NOTES
TO FINANCIAL
STATEMENTS). F FO
R 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 MONTHS YEAR YEARS YEARS
SELECT MEDICAL DELIVERY -26.55% -17.30% 107.47% 447.41%
SELECT MEDICAL DELIVERY -28.82% -19.85% 101.17% 430.92%
(LOAD ADJ.)
S&P 500 -8.10% 8.10% 131.21% 382.74%
GS HEALTH CARE -3.02% 20.24% N/A N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of 93 common stocks - and the Goldman
Sachs Health Care Index - a market capitalization-weighted index of
stocks designed to measure the performance of companies in the health
care sector. These benchmarks include reinvestment of dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 YEAR YEARS YEARS
SELECT MEDICAL DELIVERY -17.30% 15.72% 18.53%
SELECT MEDICAL DELIVERY -19.85% 15.00% 18.17%
(LOAD ADJ.)
S&P 500 8.10% 18.25% 17.05%
GS HEALTH CARE 20.24% N/A N/A
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.
(checkmark)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.
$10,000 OVER 10 YEARS
Medical Delivery S&P 500
00505 SP001
1988/08/31 9700.00 10000.00
1988/09/30 10249.31 10426.00
1988/10/31 10517.27 10715.84
1988/11/30 10182.32 10562.61
1988/12/31 10517.27 10747.45
1989/01/31 11294.34 11534.17
1989/02/28 11709.67 11246.96
1989/03/31 12352.76 11509.02
1989/04/30 13196.82 12106.34
1989/05/31 13880.11 12596.64
1989/06/30 13718.75 12524.84
1989/07/31 15275.87 13655.84
1989/08/31 15987.31 13923.49
1989/09/30 16430.28 13866.40
1989/10/31 15879.92 13544.70
1989/11/30 16618.21 13821.02
1989/12/31 16619.18 14152.72
1990/01/31 14172.35 13203.07
1990/02/28 14529.75 13373.39
1990/03/31 15203.32 13727.79
1990/04/30 15354.52 13384.59
1990/05/31 17526.43 14689.59
1990/06/30 18364.95 14589.70
1990/07/31 18433.68 14543.01
1990/08/31 16962.83 13228.33
1990/09/30 15835.64 12584.11
1990/10/31 15643.20 12529.99
1990/11/30 17815.10 13339.43
1990/12/31 19321.77 13711.60
1991/01/31 22435.90 14309.43
1991/02/28 23823.11 15332.55
1991/03/31 27361.89 15703.60
1991/04/30 26540.89 15741.29
1991/05/31 28734.94 16421.31
1991/06/30 26314.17 15669.22
1991/07/31 28954.43 16399.40
1991/08/31 29293.68 16788.07
1991/09/30 29559.19 16507.71
1991/10/31 30208.19 16728.91
1991/11/30 29367.43 16054.73
1991/12/31 34358.95 17891.40
1992/01/31 34389.14 17558.62
1992/02/29 33060.68 17786.88
1992/03/31 30871.73 17440.03
1992/04/30 29648.94 17952.77
1992/05/31 29347.01 18040.74
1992/06/30 27801.67 17771.93
1992/07/31 29383.74 18498.80
1992/08/31 29350.78 18119.58
1992/09/30 25906.47 18333.39
1992/10/31 27191.91 18397.56
1992/11/30 29861.66 19024.91
1992/12/31 29828.70 19258.92
1993/01/31 28312.54 19420.70
1993/02/28 23830.00 19684.82
1993/03/31 24357.36 20100.17
1993/04/30 24060.72 19613.74
1993/05/31 24802.32 20139.39
1993/06/30 25049.52 20197.79
1993/07/31 25675.75 20117.00
1993/08/31 25593.35 20879.44
1993/09/30 27702.79 20718.67
1993/10/31 29004.70 21147.54
1993/11/30 29482.62 20946.64
1993/12/31 31476.69 21200.10
1994/01/31 33240.05 21920.90
1994/02/28 33421.33 21326.84
1994/03/31 31756.85 20396.99
1994/04/30 32778.61 20658.07
1994/05/31 33882.77 20996.87
1994/06/30 31789.81 20482.44
1994/07/31 33207.09 21154.27
1994/08/31 36569.00 22021.59
1994/09/30 37870.91 21482.06
1994/10/31 39106.91 21965.41
1994/11/30 37425.95 21165.43
1994/12/31 37721.70 21479.31
1995/01/31 39377.52 22036.27
1995/02/28 39981.20 22895.02
1995/03/31 42516.68 23570.66
1995/04/30 41134.88 24264.81
1995/05/31 39785.63 25234.68
1995/06/30 40425.66 25820.88
1995/07/31 44508.01 26677.10
1995/08/31 44715.59 26744.06
1995/09/30 45649.68 27872.66
1995/10/31 44871.27 27773.15
1995/11/30 48624.96 28992.39
1995/12/31 49861.60 29550.79
1996/01/31 52543.33 30556.70
1996/02/29 53634.51 30839.96
1996/03/31 54152.36 31136.95
1996/04/30 54768.95 31595.90
1996/05/31 54653.29 32410.76
1996/06/30 53361.66 32534.25
1996/07/31 47578.24 31096.88
1996/08/31 51973.64 31752.72
1996/09/30 55694.30 33539.76
1996/10/31 51491.68 34464.79
1996/11/30 54402.67 37069.98
1996/12/31 55348.74 36335.62
1997/01/31 57967.44 38605.87
1997/02/28 59266.31 38908.54
1997/03/31 55516.34 37309.79
1997/04/30 56782.00 39537.19
1997/05/31 62047.15 41944.21
1997/06/30 62478.35 43823.31
1997/07/31 66495.30 47310.33
1997/08/31 64203.15 44660.01
1997/09/30 66109.50 47106.04
1997/10/31 63930.81 45532.69
1997/11/30 65451.35 47640.40
1997/12/31 66495.08 48458.39
1998/01/31 64555.11 48994.34
1998/02/28 72289.47 52527.81
1998/03/31 75199.43 55217.76
1998/04/30 77069.62 55773.25
1998/05/31 73435.27 54814.51
1998/06/30 74397.31 57041.07
1998/07/31 68651.82 56433.58
1998/08/31 53092.00 48274.42
IMATRL PRASUN SHR__CHT 19980831 19980909 100253 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Medical Delivery Portfolio on August 31,
1988, and the current 3.00% sales charge was paid. As the chart shows,
by August 31, 1998, the value of the investment would have grown to
$53,092 - a 430.92% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $48,274 - a 382.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
HEALTH MANAGEMENT ASSOCIATES, INC. CLASS A 9.6
LINCARE HOLDINGS, INC. 8.3
HEALTHSOUTH CORP. 7.7
TENET HEALTHCARE CORP. 7.5
UNITED HEALTHCARE CORP. 5.1
COLUMBIA/HCA HEALTHCARE CORP. 5.0
WELLPOINT HEALTH NETWORKS, INC. 4.8
UNIVERSAL HEALTH SERVICES, INC. CLASS B 3.9
QUORUM HEALTH GROUP, INC. 3.8
PACIFICARE HEALTH SYSTEMS, INC. CLASS B 3.4
TOP INDUSTRIES AS OF AUGUST 31, 1998
HOSPITALS 38.0%
HMOS & OUTPATIENT CARE 21.6%
MEDICAL SERVICES 9.4%
DRUGS 4.8%
NURSING CARE &
NURSING HOMES 4.0%
ALL OTHERS 22.2%
ROW: 1, COL: 1, VALUE: 22.2
ROW: 1, COL: 2, VALUE: 4.0
ROW: 1, COL: 3, VALUE: 4.8
ROW: 1, COL: 4, VALUE: 9.4
ROW: 1, COL: 5, VALUE: 21.6
ROW: 1, COL: 6, VALUE: 38.0
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
MEDICAL DELIVERY PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of John Porter)
John Porter,
Portfolio Manager
of Fidelity Select
Medical Delivery Portfolio
Q. HOW DID THE FUND PERFORM, JOHN?
A. For the six-month period ending August 31, 1998, the fund returned
- -26.55%, while the Standard & Poor's 500 Index returned -8.10%. For
the 12-month period that ended August 31, 1998, the fund returned
- -17.30%. During the same period, the S&P 500 returned 8.10%. Beginning
this period, the fund also compares itself to the Goldman Sachs Health
Care Index - an index of 93 stocks designed to measure the performance
of companies in the health care sector - which returned -3.02% and
20.24% over the same six- and 12-month periods, respectively.
Q. WHY DID THE FUND UNDERPERFORM THE GOLDMAN SACHS INDEX?
A. The fund underperformed the index during the past year because the
fund's primary investment focus is on hospitals and managed-care
companies or HMOs. The HMO and hospital sectors were characterized by
a poor fundamental business outlook and the stocks performed very
poorly as a result. On the other hand, the Goldman Sachs Health Care
Index is dominated by the large-cap pharmaceutical stocks that
experienced solid investor support due to strong product demand and
growth prospects.
Q. WHY HAS THE MEDICAL DELIVERY SECTOR PERFORMED WORSE THAN OTHER
SECTORS WITHIN THE HEALTH CARE INDUSTRY?
A. Hospitals and HMOs both produced weak results. On the hospital
side, there were two bellwether stocks and fund holdings that
detracted from performance, Columbia/HCA Healthcare and Tenet
Healthcare. Columbia/HCA stock suffered due to concerns over an
on-going government investigation into its billing practices and other
aspects of its business dealings. More importantly, the business
trends for Columbia were disappointing; volume trends were below
expectations and expenses ran higher than projected. Tenet
Healthcare's earnings came in slightly below expectations causing its
stock, and hospital stocks in general, to decline even further.
Q. AND ON THE HMO SIDE?
A. On the HMO side, performance was even more disappointing. Stocks
for the entire industry declined approximately 35% to 40% during the
past year. Bellwether HMO stock and fund holding United HealthCare
reported earnings that were significantly below expectations, casting
a black cloud over the entire group.
Q. WHICH STOCKS PERFORMED WELL DURING THE PERIOD?
A. Lincare and Health Management Associates (HMA) were solid
performers. I felt HMA was one of the best-run hospital companies in
the business, with a lot of its growth coming from acquisitions of
rural and non-urban hospitals. Typically, these hospitals don't have
all the specialized services that people may need in these areas. Once
HMA acquires these hospitals, they add new and specialized services,
stopping the migration of patients to larger urban hospitals. Lincare
is a respiratory care company with a strong management team that
delivered a consistent growth strategy, expanded its market share
through acquisitions and managed its internal cost structure.
Q. WHAT CHANGES DID YOU MAKE TO THE PORTFOLIO TO MINIMIZE RISKS OR
IMPROVE THE PERFORMANCE OF THE FUND?
A. Since taking over the fund in January, 1998, I've tried to upgrade
the quality of the portfolio wherever possible. I've also tried to
take advantage of weakness in many parts of the sector. I've done so
by increasing the fund's holdings in companies where I felt stock
prices were beaten down to the point where they did not accurately
reflect a company's business and growth prospects.
Q. WHAT IS YOUR OUTLOOK, JOHN?
A. In terms of the HMOs, there are still two negative trends. First,
pharmaceutical costs have been much higher than expected and HMOs have
been unable to pass along these costs to patients. The second factor
is Medicare. The government has set very modest pricing growth at
approximately 2% per year, but cost trends are running closer to 5% to
6% for Medicare HMOs. I believe the outlook for hospital stocks is
brighter. We should start to see investor sentiment improve as
Columbia/HCA's government investigation problems are resolved and as
investors begin to take notice of many hospitals' improved earnings
outlooks.
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.
(checkmark)FUND FACTS
START DATE: JUNE 30, 1986
FUND NUMBER: 505
TRADING SYMBOL: FSHCX
SIZE: AS OF AUGUST 31, 1998, MORE THAN
$134 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
MEDICAL DELIVERY PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 93.0%
SHARES VALUE (NOTE 1)
COMPUTER SERVICES & SOFTWARE - 3.6%
COMPUTER SERVICES - 2.0%
HBO & Co. 131,200 $ 2,788,000
CAD/CAM/CAE - 1.6%
Shared Medical Systems Corp. 39,700 2,118,988
TOTAL COMPUTER SERVICES & SOFTWARE 4,906,988
DRUGS & PHARMACEUTICALS - 4.8%
DRUGS - 4.8%
Bristol-Myers Squibb Co. 6,800 665,550
Lilly (Eli) & Co. 35,000 2,292,500
Merck & Co., Inc. 7,300 846,344
Schering-Plough Corp. 5,000 438,125
Warner-Lambert Co. 35,000 2,283,750
6,526,269
INSURANCE - 1.8%
ACCIDENT & HEALTH INSURANCE - 0.3%
Aetna, Inc. 6,400 385,200
INSURANCE BROKERS & SERVICES - 0.8%
First Health Group Corp. (a) 56,600 1,142,613
LIFE INSURANCE - 0.2%
United Wisconsin Services, Inc. 13,100 196,500
MULTI-LINE INSURANCE - 0.5%
CIGNA Corp. 11,700 680,794
TOTAL INSURANCE 2,405,107
MEDICAL EQUIPMENT & SUPPLIES - 4.0%
DRUG DISTRIBUTORS - WHOLESALE - 0.9%
Cardinal Health, Inc. 14,100 1,233,750
MEDICAL SUPPLIES & APPLIANCES - 2.0%
Abbott Laboratories 20,800 800,800
Baxter International, Inc. 9,400 500,550
Boston Scientific Corp. (a) 10,000 692,500
Johnson & Johnson 10,000 690,000
2,683,850
MEDICAL TECHNOLOGY - 0.7%
Medtronic, Inc. 13,500 693,563
St. Jude Medical, Inc. (a) 12,350 272,472
966,035
OPHTHALMIC GOODS - 0.2%
Cooper Companies, Inc. (a) 14,200 284,888
X-RAY ELECTRO-MEDICAL APPARATUS - 0.2%
Guidant Corp. 5,500 339,625
TOTAL MEDICAL EQUIPMENT & SUPPLIES 5,508,148
MEDICAL FACILITIES MANAGEMENT - 78.4%
HOME HEALTH CARE AGENCIES - 0.4%
Alternative Living Services, Inc. (a) 30,000 532,500
Coram Healthcare Corp.
warrants 7/11/99 9,740 0
532,500
HOSPITALS - 38.0%
Columbia/HCA Healthcare Corp. 299,223 6,751,219
Health Management Associates, Inc.
Class A (a) 726,717 13,126,318
HEALTHSOUTH Corp. (a) 552,800 10,468,650
Magellan Health Services, Inc. (a) 44,800 467,600
SHARES VALUE (NOTE 1)
Quorum Health Group, Inc. (a) 275,100 $ 5,226,900
Tenet Healthcare Corp. (a) 398,200 10,278,538
Universal Health Services, Inc. Class B (a) 138,500 5,366,875
51,686,100
HMOS & OUTPATIENT CARE - 21.6%
Foundation Health Systems, Inc.
Class A (a) 409,870 4,585,421
Humana, Inc. (a) 268,400 3,489,200
Maxicare Health Plans, Inc. (a) 14,800 51,338
Mid-Atlantic Medical Services,Inc. (a) 42,900 238,631
Oxford Health Plans, Inc. (a) 28,100 172,113
PacifiCare Health Systems, Inc.
Class A (a) 5,900 356,950
PacifiCare Health Systems, Inc.
Class B (a) 73,100 4,605,300
Sierra Health Services, Inc. (a) 85,700 1,371,200
Trigon Healthcare, Inc. (a) 38,400 1,060,800
United HealthCare Corp. (a) 193,900 7,004,638
Wellpoint Health Networks, Inc. (a) 122,300 6,527,763
29,463,354
MEDICAL SERVICES - 9.4%
Carematrix Corp. (a) 49,300 850,425
Lincare Holdings, Inc. (a) 335,000 11,369,063
Physician Reliance Network, Inc. (a) 64,400 511,175
12,730,663
MISCELLANEOUS HEALTH & ALLIED SERVICES, NEC - 2.8%
Renal Care Group, Inc. (a) 81,150 1,638,216
Total Renal Care Holdings, Inc. (a) 117,966 2,241,354
3,879,570
NURSING CARE & NURSING HOMES - 4.0%
Genesis Health Ventures, Inc. (a) 38,100 452,438
Health Care & Retirement Corp. (a) 85,000 2,167,500
Integrated Health Services, Inc. 85,100 1,648,813
Manor Care, Inc. 50,000 1,200,000
5,468,751
NURSING, PERSONAL CARE FACILITIES - 0.6%
NovaCare, Inc. (a) 106,700 780,244
OFFICES OF MEDICAL DOCTORS - 0.1%
Coventry Health Care, Inc. (a) 20,600 92,700
SKILLED NURSING CARE FACILITIES - 0.2%
Mariner Post-Acute Network, Inc. (a) 43,800 312,075
SPECIALTY HOSPITAL EXCEPT PSYCHIATRIC - 0.5%
Pediatrix Medical Group (a) 17,800 693,088
SPECIALTY OUTPATIENT CLINICS - 0.8%
Phycor, Inc. (a) 87,900 609,806
Sun Healthcare Group (a) 55,200 483,000
1,092,806
TOTAL MEDICAL FACILITIES MANAGEMENT 106,731,851
SERVICES - 0.4%
MANAGEMENT SERVICES - 0.1%
Medpartners, Inc. (a) 76,100 190,250
SOCIAL SERVICES - 0.3%
Balanced Care Corp. 75,000 398,438
TOTAL SERVICES 588,688
TOTAL COMMON STOCKS
(Cost $154,477,077) 126,667,051
CASH EQUIVALENTS - 7.0%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund (b)
(Cost $9,514,776) 9,514,776 $ 9,514,776
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $163,991,853) $ 136,181,827
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.58%. 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 $76,053,544 and $38,292,398, 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 $17,906 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the security lending program. At period end,
the value of securities loaned and the value of the collateral
amounted to $323,050 and $364,000, respectively (see Note 6 of Notes
to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1988, the aggregate cost of investment securities for
income tax purposes was $164,290,423. Net unrealized depreciation
aggregated $28,108,596, of which $10,562,465 related to appreciated
investment securities and $38,671,061 related to depreciated
investment securities.
MEDICAL DELIVERY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31,
1998
(UNAUDITED)
ASSETS
INVESTMENT IN $ 136,181,827
SECURITIES, AT
VALUE
(COST
$163,991,85
3) -
SEE
ACCOMPANYIN
G SCHEDULE
RECEIVABLE FOR 302,239
FUND SHARES
SOLD
DIVIDENDS 21,153
RECEIVABLE
INTEREST 80,381
RECEIVABLE
REDEMPTION FEES 916
RECEIVABLE
OTHER 130,330
RECEIVABLES
TOTAL ASSETS 136,716,846
LIABILITIES
PAYABLE FOR $ 1,917,156
FUND SHARES
REDEEMED
ACCRUED 80,559
MANAGEMENT
FEE
OTHER PAYABLES 140,932
AND
ACCRUED
EXPENSES
COLLATERAL ON 364,000
SECURITIES
LOANED,
AT VALUE
TOTAL LIABILITIES 2,502,647
NET ASSETS $ 134,214,199
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 162,936,029
UNDISTRIBUTED 122,243
NET INVESTMENT
INCOME
ACCUMULATED (1,034,047)
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED (27,810,026)
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
NET ASSETS, FOR $ 134,214,199
6,753,625
SHARES
OUTSTANDING
NET ASSET $19.87
VALUE AND
REDEMPTION
PRICE PER
SHARE
($134,214,1
99 (DIVIDED BY)
6,753,625
SHARES)
MAXIMUM $20.48
OFFERING PRICE
PER SHARE
(100/97.00
OF $19.87)
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED AUGUST
31, 1998
(UNAUDITED)
INVESTMENT $ 91,357
INCOME
DIVIDENDS
SPECIAL 748,113
DIVIDEND FROM
VENTAS, INC.
INTEREST 498,585
(INCLUDING
INCOME ON
SECURITIES
LOANED OF
$25,031)
TOTAL INCOME 1,338,055
EXPENSES
MANAGEMENT $ 517,151
FEE
TRANSFER AGENT 534,064
FEES
ACCOUNTING AND 90,606
SECURITY
LENDING FEES
NON-INTERESTED 485
TRUSTEES'
COMPENSATION
CUSTODIAN FEES 5,882
AND EXPENSES
REGISTRATION FEES 45,607
AUDIT 11,895
LEGAL 818
REPORTS TO 24,113
SHAREHOLDERS
TOTAL EXPENSES 1,230,621
BEFORE
REDUCTIONS
EXPENSE (14,809) 1,215,812
REDUCTIONS
NET INVESTMENT 122,243
INCOME
REALIZED AND (209,696)
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON INVESTMENT
SECURITIES
CHANGE IN NET (51,757,242)
UNREALIZED
APPRECIATION
(DEPRECIATION)
ON INVESTMENT
SECURITIES
NET GAIN (LOSS) (51,966,938)
NET INCREASE $ (51,844,695)
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 213,942
INFORMATION
SALES CHARGES
PAID TO FDC
SALES CHARGES $ 213,879
- - RETAINED BY
FDC
DEFERRED SALES $ 2,287
CHARGES
WITHHELD
BY FDC
EXCHANGE FEES $ 23,558
WITHHELD BY
FSC
EXPENSE $ 12,760
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEMENTS
CUSTODIAN 529
CREDITS
TRANSFER 1,520
AGENT CREDITS
$ 14,809
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED YEAR ENDED
(DECREASE) IN AUGUST 31, 1998 FEBRUARY 28,
NET ASSETS (UNAUDITED) 1998
OPERATIONS $ 122,243 $ (1,403,143)
NET INVESTMENT
INCOME (LOSS)
NET REALIZED (209,696) 30,147,880
GAIN (LOSS)
CHANGE IN NET (51,757,242) (1,649,494)
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (51,844,695) 27,095,243
(DECREASE)
IN NET ASSETS
RESULTING
FROM
OPERATIONS
DISTRIBUTIONS TO (7,388,637) (27,697,433)
SHAREHOLDERS
FROM NET
REALIZED GAIN
IN EXCESS OF (824,351) -
NET REALIZED
GAIN
TOTAL (8,212,988) (27,697,433)
DISTRIBUTIONS
SHARE 126,829,619 114,716,005
TRANSACTIONS
NET PROCEEDS
FROM SALES OF
SHARES
REINVESTMENT 8,097,680 27,235,291
OF DISTRIBUTIONS
COST OF SHARES (96,315,410) (178,502,092)
REDEEMED
NET INCREASE 38,611,889 (36,550,796)
(DECREASE)
IN NET ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION 117,550 310,663
FEES
TOTAL (21,328,244) (36,842,323)
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
BEGINNING OF 155,542,443 192,384,766
PERIOD
END OF PERIOD $ 134,214,199 $ 155,542,443
(INCLUDING
UNDISTRIBUTE
D NET
INVESTMENT
INCOME OF
$122,243
AND $0,
RESPECTIVELY)
OTHER
INFORMATION
SHARES
SOLD 4,495,058 4,089,783
ISSUED IN 283,433 1,085,517
REINVESTMENT
OF DISTRIBUTIONS
REDEEMED (3,517,500) (6,483,186)
NET INCREASE 1,260,991 (1,307,886)
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED YEAR ENDED YEARS ENDED
ENDED FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
AUGUST 31,
1998
SELECTED (UNAUDITED) 1998 1997 1996 1995 1994
PER-SHARE
DATA
NET ASSET $ 28.32 $ 28.29 $ 29.00 $ 23.18 $ 20.28 $ 14.46
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET .02 E (.24) (.23) (.03) .06 (.10)
INVESTMENT
INCOME
(LOSS) D
NET (7.15) 5.45 2.92 7.72 3.74 5.84
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM (7.13) 5.21 2.69 7.69 3.80 5.74
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET - - - - (.06) -
INVESTMENT
INCOME
FROM NET (1.21) (5.23) (3.45) (1.91) (.89) -
REALIZED
GAIN
IN EXCESS (.13) - - - - -
OF NET
REALIZED
GAIN
TOTAL (1.34) (5.23) (3.45) (1.91) (.95) -
DISTRIBUTIO
NS
REDEMPTION .02 .05 .05 .04 .05 .08
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 19.87 $ 28.32 $ 28.29 $ 29.00 $ 23.18 $ 20.28
VALUE, END
OF PERIOD
TOTAL (26.55)% 21.97% 10.50% 34.15% 19.63% 40.25%
RETURN B, C
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 134,214 $ 155,542 $ 192,385 $ 295,489 $ 299,570 $ 188,553
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.37% A 1.57% 1.57% 1.65% 1.48% 1.82%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.35% A, F 1.53% F 1.53% F 1.62% F 1.45% F 1.79% F
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET .14% A (.88)% (.84)% (.13)% .29% (.57)%
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 48% A 109% 78% 132% 123% 164%
TURNOVER
RATE
AVERAGE $ .0452 $ .0422 $ .0434
COMMISSIO
N RATE G
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 TOT
AL 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 INVESTME
NT INCOME (LOSS) PER
SHARE REFLECTS A
SPECIAL DIVIDEND FROM
VENTAS, INC., WHICH
AMOUNTED TO $.02
PER SHARE. F FMR
OR THE FUND HAS
ENTERED INTO VARYING
ARRANGEMENTS WITH
THIRD PARTIES WHO
EITHER PAID OR
REDUCED A PORTION OF
THE FUND'S EXPENSES
(SEE NOTE 8 OF NOTES
TO FINANCIAL
STATEMENTS). G FO
R 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 EQUIPMENT AND SYSTEMS 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 returns would have
been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED LIFE OF
AUGUST 31, 1998 FUND
SELECT MEDICAL EQUIPMENT AND SYSTEMS -5.30%
SELECT MEDICAL EQUIPMENT AND SYSTEMS -8.21%
(LOAD ADJ.)
S&P 500 -11.31%
GS HEALTH CARE -6.60%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case the period since the fund
started on April 28, 1998. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks - and the Goldman Sachs
Health Care Index - a market capitalization-weighted index of 93
stocks designed to measure the performance of companies in the health
care sector. These benchmarks include reinvestment of dividends and
capital gains, if any, and exclude 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.
(checkmark)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.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
BOSTON SCIENTIFIC CORP. 7.6
GUIDANT CORP. 6.8
MEDTRONIC, INC. 6.7
JOHNSON & JOHNSON 6.5
ABBOTT LABORATORIES 6.1
BECTON, DICKINSON & CO. 5.9
SOFAMOR/DANEK GROUP, INC. 5.2
BIOMET, INC. 4.0
STRYKER CORP. 3.9
ARTERIAL VASCULAR ENGINEERING, INC. 3.5
TOP INDUSTRIES AS OF AUGUST 31, 1998
MEDICAL SUPPLIES & APPLIANCES 42.2%
MEDICAL TECHNOLOGY 25.7%
X-RAY ELECTRO-MEDICAL
APPARATUS 6.8%
DRUGS 4.4%
OPHTHALMIC GOODS 3.5%
ALL OTHERS 17.4%
ROW: 1, COL: 1, VALUE: 17.5
ROW: 1, COL: 2, VALUE: 3.5
ROW: 1, COL: 3, VALUE: 4.3
ROW: 1, COL: 4, VALUE: 6.8
ROW: 1, COL: 5, VALUE: 25.7
ROW: 1, COL: 6, VALUE: 42.2
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
MEDICAL EQUIPMENT AND SYSTEMS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Kerry Nelson)
Kerry Nelson,
Portfolio Manager
of Fidelity Select
Medical Equipment
and Systems Portfolio
Q. HOW DID THE FUND PERFORM, KERRY?
A. Since its inception on April 28, 1998, the fund returned -5.30%,
compared with a return of -11.31% for the Standard & Poor's 500 Index.
Beginning with this report, the fund also compares itself to the
Goldman Sachs Health Care Index - an index of 93 stocks designed to
measure the performance of companies in the health care sector - which
returned -6.60% from April 28, 1998, to August 31, 1998.
Q. WHY WAS THE FUND ABLE TO OUTPERFORM THOSE INDEXES DURING THIS
DIFFICULT PERIOD FOR THE STOCK MARKET?
A. There were a couple of reasons. Medical device stocks, like health
care stocks in general, tend to be more defensive in nature - that is,
they are less sensitive to economic cycles than many other industries.
People get sick whether the economy is up or down. Also, these stocks
have relatively low exposure to Asia and emerging markets, two areas
which experienced severe economic downturns in the period and were
significant factors in the U.S. market drop. However, in general,
medical device stocks do have significant exposure to Europe. For
example, the medical stocks I invest in, on average, derive 40% of
their sales from outside the United States, principally Europe. Europe
is indirectly affected by the economic slowdown in some of the
emerging markets. So while these stocks were protected from the
primary pressures on the market, they were not protected from the
secondary pressures, which is why many of them did decline, even if
not as much as the broader market.
Q. WHAT WAS YOUR STRATEGY GIVEN THESE UNFAVORABLE MARKET CONDITIONS?
A. I focused on companies with high earnings visibility and pared back
on companies that are heavily dependent upon developing new
technologies. I also increased my exposure to large-cap stocks within
the sector. I thought many were fairly valued before, but as the
market declined, they got cheaper and I bought more of them. I also
took advantage of indiscriminate selling in companies such as Guidant
and Sofamor Danek.
Q. WHAT COMPANIES HELPED PERFORMANCE?
A. Arterial Vascular Engineering was one of the better performers. The
stock rebounded dramatically after it announced excellent second
quarter results as well as the acquisition of Bard's cardiovascular
division, which helped broaden its product offering. Becton Dickinson
also performed well, reflecting the company's faster growth prospects
following acquisitions and a tighter focus on expense control.
Q. WHAT DISAPPOINTMENTS DID YOU HAVE?
A. The disappointments were in small positions in small-cap stocks,
which underperformed the market in general. However, for many of them,
the fundamental outlook for earnings growth did not change. The market
perceived them to have less visible growth prospects than their larger
brethren. Among the larger companies, Stryker Corp. was a
disappointment. It acquired a company called Howmedica, which will
dilute Stryker's earnings next year. The stock fell as a result.
Q. WHAT DO YOU LOOK FOR IN A STOCK?
A. I look for companies that have strong growth opportunities, either
because the markets they operate in are growing quickly or because
they have competitive advantages which will enable them to grow faster
than their competitors. These could be superior products, patent
positions or better distribution capabilities. I like to see high
market share in fast-growing industries. I try to sell a stock when
the market has already discounted most of the positive future events
that I can think of, or when there is a greater risk of an earnings
slowdown that does not appear to be reflected in the stock price
already. I will also sell when I see a deterioration in the quality of
earnings - for example, if a company is making money by selling off
its assets, extending its payment terms or cutting its research and
development budget - thereby stifling future growth prospects.
Q. WHAT IS YOUR OUTLOOK FOR THE NEXT SIX MONTHS, KERRY?
A. The medical device industry should remain an attractive area to
invest in. The regulatory environment in the U.S. continues to
improve. Government reimbursement rates are benign domestically,
although they pose a greater risk internationally. Currency
comparisons become easier based on today's exchange rates. This will
help companies with heavy European exposure because their foreign
sales will be translated into dollars at more favorable rates. New
product cycles should be an important growth driver for some of the
larger companies, but they are also likely to result in greater
volatility.
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.
(checkmark)FUND FACTS
START DATE: APRIL 28, 1998
FUND NUMBER: 354
TRADING SYMBOL: FSMEX
SIZE: AS OF AUGUST 31, 1998, MORE THAN
$14 MILLION
MANAGER: KERRY NELSON, SINCE INCEPTION; ANALYST,
MEDICAL DEVICES AND AUTOMOTIVE INDUSTRIES; JOINED
FIDELITY IN 1995
MEDICAL EQUIPMENT AND SYSTEMS PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 87.9%
SHARES VALUE (NOTE 1)
DRUGS & PHARMACEUTICALS - 4.4%
DRUGS - 4.4%
Allergan, Inc. 5,850 276,413
Lilly (Eli) & Co. 2,800 183,400
Merck & Co., Inc. 600 $ 69,558
Warner-Lambert Co. 1,600 104,400
633,771
ELECTRONIC INSTRUMENTS - 2.3%
LAB ANALYTICAL INSTRUMENTS - 1.5%
Thermo Optek Corp. 2,680 21,440
Waters Corp. (a) 3,560 191,795
213,235
MEASURING INSTRUMENTS - 0.8%
Perkin-Elmer Corp. 2,140 123,853
TOTAL ELECTRONIC INSTRUMENTS 337,088
HOUSEHOLD PRODUCTS - 1.2%
FABRICATED RUBBER PRODUCTS - 1.2%
Safeskin Corp. (a) 5,290 178,538
INDUSTRIAL MACHINERY & EQUIPMENT - 0.7%
MISCELLANEOUS INDUSTRIAL, COMMERCIAL, MACHINERY & EQUIPMENT - 0.7%
Mettler-Toledo International, Inc. 5,610 94,669
MEDICAL EQUIPMENT & SUPPLIES - 79.2%
DENTAL EQUIPMENT - 0.1%
Sybron International Corp. 1,060 19,279
MEDICAL, DENTAL, HOSPITAL EQUIPMENT - WHOLESALE - 0.9%
ESC Medical Systems Ltd. (a) 6,690 125,019
MEDICAL SUPPLIES & APPLIANCES - 42.2%
Abbott Laboratories 23,120 890,120
Bard (C.R.), Inc. 8,730 285,908
Baxter International, Inc. 8,860 471,795
Becton, Dickinson & Co. 25,760 858,130
Boston Scientific Corp. (a) 16,110 1,115,618
Depuy, Inc. 7,760 266,750
Hillenbrand Industries, Inc. 3,070 164,437
Johnson & Johnson 13,850 955,650
Orthofix International NV (a) 4,670 56,040
Sofamor/Danek Group, Inc. (a) 9,170 765,122
Steris Corp. (a) 13,120 313,240
Thermo Cardiosystems, Inc. (a) 1,110 16,650
6,159,460
MEDICAL TECHNOLOGY - 25.7%
Arterial Vascular Engineering, Inc. (a) 14,540 508,900
Ballard Medical Products 7,100 131,794
Biomet, Inc. 21,610 580,769
InControl, Inc. (a) 57,000 327,750
Medtronic, Inc. 18,920 972,015
Mentor Corp. 3,120 45,630
Pall Corp. 2,900 59,450
St. Jude Medical, Inc. (a) 10,700 236,069
Stryker Corp. 17,540 563,473
Thoratec Laboratories Corp. (a) 2,150 15,856
U.S. Surgical Corp. 7,870 314,308
3,756,014
OPHTHALMIC GOODS - 3.5%
Bausch & Lomb, Inc. 8,880 375,735
Cooper Companies, Inc. (a) 1,310 26,282
Wesley Jessen Visioncare, Inc. (a) 6,600 112,200
514,217
SHARES VALUE (NOTE 1)
X-RAY ELECTRO-MEDICAL APPARATUS - 6.8%
Guidant Corp. 15,960 $ 985,530
TOTAL MEDICAL EQUIPMENT & SUPPLIES 11,559,519
MEDICAL FACILITIES MANAGEMENT - 0.1%
MEDICAL LABORATORIES - 0.1%
Cambridge Heart, Inc. (a) 2,800 15,750
TOTAL COMMON STOCKS
(Cost $14,046,339) 12,819,335
CASH EQUIVALENTS - 12.1%
Taxable Central Cash Fund (b)
(Cost $1,771,399) 1,771,399 $ 1,771,399
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $15,817,738) $ 14,590,734
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.58%. 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 $16,732,720 and $2,551,652, 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 $498 for the
period (see Note 4 of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $15,817,738. Net unrealized depreciation
aggregated $1,227,004, of which $275,601 related to appreciated
investment securities and $1,502,605 related to depreciated investment
securities.
MEDICAL EQUIPMENT AND SYSTEMS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31,
1998
(UNAUDITED)
ASSETS
INVESTMENT IN $ 14,590,734
SECURITIES, AT
VALUE
(COST
$15,817,738
) -
SEE
ACCOMPANYIN
G SCHEDULE
RECEIVABLE FOR 458,863
FUND SHARES
SOLD
DIVIDENDS 7,988
RECEIVABLE
INTEREST 3,460
RECEIVABLE
REDEMPTION FEES 382
RECEIVABLE
PREPAID 19,219
EXPENSES
TOTAL ASSETS 15,080,646
LIABILITIES
PAYABLE FOR $ 604,610
INVESTMENTS
PURCHASED
PAYABLE FOR 359,700
FUND SHARES
REDEEMED
ACCRUED 9,058
MANAGEMENT
FEE
OTHER PAYABLES 39,496
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 1,012,864
NET ASSETS $ 14,067,782
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 15,482,896
ACCUMULATED (53,381)
NET INVESTMENT
LOSS
ACCUMULATED (134,729)
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED (1,227,004)
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
NET ASSETS, FOR $ 14,067,782
1,486,048
SHARES
OUTSTANDING
NET ASSET $9.47
VALUE AND
REDEMPTION
PRICE PER
SHARE
($14,067,78
2 (DIVIDED BY)
1,486,048
SHARES)
MAXIMUM $9.76
OFFERING PRICE
PER SHARE
(100/97.00
OF $9.47)
STATEMENT OF OPERATIONS
APRIL 28, 1998
(COMMENCEMENT
OF OPERATIONS) TO
AUGUST 31,
1998
(UNAUDITED)
INVESTMENT $ 24,083
INCOME
DIVIDENDS
INTEREST 25,980
TOTAL INCOME 50,063
EXPENSES
MANAGEMENT $ 23,823
FEE
TRANSFER AGENT 29,666
FEES
ACCOUNTING FEES 20,588
AND EXPENSES
NON-INTERESTED 9
TRUSTEES'
COMPENSATION
CUSTODIAN FEES 21,730
AND EXPENSES
REGISTRATION FEES 19,471
AUDIT 8,272
MISCELLANEOUS 250
TOTAL EXPENSES 123,809
BEFORE
REDUCTIONS
EXPENSE (20,365) 103,444
REDUCTIONS
NET INVESTMENT (53,381)
INCOME (LOSS)
REALIZED AND (134,729)
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS) ON
INVESTMENT
SECURITIES
CHANGE IN NET (1,227,004)
UNREALIZED
APPRECIATION
(DEPRECIATION)
ON INVESTMENT
SECURITIES
NET GAIN (LOSS) (1,361,733)
NET INCREASE $ (1,415,114)
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 130,180
INFORMATION
SALES CHARGES
PAID TO FDC
SALES CHARGES $ 130,180
- - RETAINED BY
FDC
DEFERRED SALES $ 0
CHARGES
WITHHELD
BY FDC
EXCHANGE FEES $ 2,078
WITHHELD BY
FSC
EXPENSE $ 65
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEMENTS
CUSTODIAN 13
CREDITS
FMR 20,287
REIMBURSEMEN
T
$ 20,365
STATEMENT OF CHANGES IN NET ASSETS
INCREASE APRIL 28, 1998
(DECREASE) IN (COMMENCEMENT
NET ASSETS OF OPERATIONS) TO
AUGUST 31, 1998
(UNAUDITED)
OPERATIONS $ (53,381)
NET
INVESTMENT
INCOME (LOSS)
NET REALIZED (134,729)
GAIN (LOSS)
CHANGE IN NET (1,227,004)
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (1,415,114)
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
SHARE 21,922,251
TRANSACTIONS
NET PROCEEDS
FROM SALES OF
SHARES
COST OF SHARES (6,457,768)
REDEEMED
NET INCREASE 15,464,483
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION 18,413
FEES
TOTAL 14,067,782
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
BEGINNING OF -
PERIOD
END OF PERIOD $ 14,067,782
(INCLUDING
ACCUMULATED
NET INVESTMENT
LOSS OF
$53,381)
OTHER
INFORMATION
SHARES
SOLD 2,094,024
REDEEMED (607,976)
NET INCREASE 1,486,048
(DECREASE)
<TABLE>
<CAPTION>
<S> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
APRIL 28, 1998
(COMMENCEMENT
OF OPERATIONS) TO
AUGUST 31, 1998
SELECTED (UNAUDITED)
PER-SHARE
DATA
NET ASSET VALUE, $ 10.00
BEGINNING OF
PERIOD
INCOME FROM
INVESTMENT
OPERATIONS
NET (.05)
INVESTMENT
INCOME (LOSS) D
NET REALIZED (.50)
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM (.55)
INVESTMENT
OPERATIONS
REDEMPTION .02
FEES ADDED TO
PAID IN
CAPITAL
NET ASSET VALUE, $ 9.47
END OF PERIOD
TOTAL RETURN B, C (5.30)%
RATIOS AND
SUPPLEMENTAL
DATA
NET ASSETS, END $ 14,068
OF PERIOD
(000 OMITTED)
RATIO OF 2.50% A, E
EXPENSES TO
AVERAGE NET
ASSETS
RATIO OF NET (1.29)% A
INVESTMENT
INCOME TO
AVERAGE NET
ASSETS
PORTFOLIO 72% A
TURNOVER RATE
AVERAGE $ .0165
COMMISSION
RATE F
A ANNUALIZED B THE
TOTAL RETURNS WOULD HAVE
BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN
REDUCED DURING THE PERIOD
SHOWN (SEE NOTE 8 OF
NOTES TO FINANCIAL
STATEMENTS). C TOTAL
RETURNS DO NOT INCLUDE THE
ONE TIME SALES CHARGE AND
FOR PERIODS 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 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). 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.
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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 MONTHS YEAR YEARS YEARS
SELECT ENERGY -23.54% -24.16% 22.74% 122.98%
SELECT ENERGY -25.91% -26.51% 18.99% 116.21%
(LOAD ADJ.)
S&P 500 -8.10% 8.10% 131.21% 382.74%
GS Natural Resources -24.09% -26.69% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks - and the Goldman Sachs
Natural Resources Index - a market capitalization-weighted index of 96
stocks designed to measure the performance of companies in the natural
resource sector. These benchmarks include reinvestment of dividends
and capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 YEAR YEARS YEARS
SELECT ENERGY -24.16% 4.18% 8.35%
SELECT ENERGY -26.51% 3.54% 8.02%
(LOAD ADJ.)
S&P 500 8.10% 18.25% 17.05%
GS Natural Resources -26.69% n/a n/a
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.
(checkmark)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.
$10,000 OVER 10 YEARS
Energy S&P 500
00060 SP001
1988/08/31 9700.00 10000.00
1988/09/30 9590.48 10426.00
1988/10/31 9676.53 10715.84
1988/11/30 9700.00 10562.61
1988/12/31 9985.70 10747.45
1989/01/31 10740.25 11534.17
1989/02/28 10571.68 11246.96
1989/03/31 11181.74 11509.02
1989/04/30 11559.01 12106.34
1989/05/31 11695.47 12596.64
1989/06/30 11936.29 12524.84
1989/07/31 12433.97 13655.84
1989/08/31 12706.89 13923.49
1989/09/30 12907.56 13866.40
1989/10/31 12819.27 13544.70
1989/11/30 13300.89 13821.02
1989/12/31 14262.13 14152.72
1990/01/31 13625.36 13203.07
1990/02/28 14049.87 13373.39
1990/03/31 14058.04 13727.79
1990/04/30 13584.54 13384.59
1990/05/31 14409.08 14689.59
1990/06/30 14069.49 14589.70
1990/07/31 15027.78 14543.01
1990/08/31 15297.85 13228.33
1990/09/30 15254.29 12584.11
1990/10/31 14470.23 12529.99
1990/11/30 14313.42 13339.43
1990/12/31 13621.43 13711.60
1991/01/31 12739.14 14309.43
1991/02/28 13927.53 15332.55
1991/03/31 13738.46 15703.60
1991/04/30 13891.51 15741.29
1991/05/31 13972.54 16421.31
1991/06/30 13350.05 15669.22
1991/07/31 14035.60 16399.40
1991/08/31 14306.20 16788.07
1991/09/30 14161.88 16507.71
1991/10/31 14585.83 16728.91
1991/11/30 13503.40 16054.73
1991/12/31 13626.22 17891.40
1992/01/31 12897.06 17558.62
1992/02/29 12915.29 17786.88
1992/03/31 12541.59 17440.03
1992/04/30 13398.36 17952.77
1992/05/31 14036.37 18040.74
1992/06/30 13341.80 17771.93
1992/07/31 13698.19 18498.80
1992/08/31 13944.92 18119.58
1992/09/30 14027.17 18333.39
1992/10/31 13424.04 18397.56
1992/11/30 13113.34 19024.91
1992/12/31 13300.76 19258.92
1993/01/31 13802.32 19420.70
1993/02/28 14712.57 19684.82
1993/03/31 15464.92 20100.17
1993/04/30 15762.40 19613.74
1993/05/31 16236.39 20139.39
1993/06/30 16450.15 20197.79
1993/07/31 16329.33 20117.00
1993/08/31 17621.17 20879.44
1993/09/30 17518.94 20718.67
1993/10/31 17268.01 21147.54
1993/11/30 15176.89 20946.64
1993/12/31 15848.45 21200.10
1994/01/31 16697.30 21920.90
1994/02/28 16137.83 21326.84
1994/03/31 15356.50 20396.99
1994/04/30 16529.54 20658.07
1994/05/31 16704.45 20996.87
1994/06/30 16616.99 20482.44
1994/07/31 16869.65 21154.27
1994/08/31 16587.84 22021.59
1994/09/30 16461.51 21482.06
1994/10/31 17394.40 21965.41
1994/11/30 16325.47 21165.43
1994/12/31 15913.82 21479.31
1995/01/31 15532.77 22036.27
1995/02/28 16144.45 22895.02
1995/03/31 17026.88 23570.66
1995/04/30 17550.17 24264.81
1995/05/31 18003.01 25234.68
1995/06/30 17479.72 25820.88
1995/07/31 17892.31 26677.10
1995/08/31 17761.49 26744.06
1995/09/30 17771.55 27872.66
1995/10/31 17006.75 27773.15
1995/11/30 17982.88 28992.39
1995/12/31 19316.67 29550.79
1996/01/31 19615.11 30556.70
1996/02/29 19522.49 30839.96
1996/03/31 20829.48 31136.95
1996/04/30 21838.15 31595.90
1996/05/31 22063.84 32410.76
1996/06/30 22472.23 32534.25
1996/07/31 21462.00 31096.88
1996/08/31 22300.27 31752.72
1996/09/30 23482.46 33539.76
1996/10/31 24438.95 34464.79
1996/11/30 25793.09 37069.98
1996/12/31 25589.46 36335.62
1997/01/31 26173.80 38605.87
1997/02/28 23494.68 38908.54
1997/03/31 24145.16 37309.79
1997/04/30 23929.63 39537.19
1997/05/31 26108.21 41944.21
1997/06/30 26490.62 43823.31
1997/07/31 28228.85 47310.33
1997/08/31 28518.56 44660.01
1997/09/30 30616.02 47106.04
1997/10/31 29770.08 45532.69
1997/11/30 28055.03 47640.40
1997/12/31 28220.75 48458.39
1998/01/31 26712.97 48994.34
1998/02/28 28287.46 52527.81
1998/03/31 29635.12 55217.76
1998/04/30 30206.62 55773.25
1998/05/31 29472.52 54814.51
1998/06/30 28697.64 57041.07
1998/07/31 26332.23 56433.58
1998/08/31 21621.00 48274.42
IMATRL PRASUN SHR__CHT 19980831 19980918 161527 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Energy Portfolio on August 31, 1988, and
the current 3.00% sales charge was paid. As the chart shows, by August
31, 1998, the value of the investment would have grown to $21,621 - a
116.21% increase on the initial investment - and includes the effect
of a $7.50 trading fee. For comparison, look at how the Standard &
Poor's 500 Index did over the same period. With dividends and capital
gains, if any, reinvested, the same $10,000 investment would have
grown to $48,274 - a 382.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
USX-Marathon Group 8.2
Total SA sponsored ADR 7.7
Amoco Corp. 6.2
du Pont (E.I.) de Nemours & Co. 5.8
Elf Aquitaine SA sponsored ADR 4.7
Texaco, Inc. 4.6
Chevron Corp. 4.4
Amerada Hess Corp. 3.2
Tosco Corp. 3.2
Mobil Corp. 2.4
TOP INDUSTRIES AS OF AUGUST 31, 1998
OIL & GAS EXPLORATION 34.1%
CRUDE PETROLEUM & GAS 25.0%
PETROLEUM REFINERS 11.5%
CHEMICALS 8.0%
OIL & GAS SERVICES 6.0%
ALL OTHERS 15.4%
ROW: 1, COL: 1, VALUE: 15.4
ROW: 1, COL: 2, VALUE: 6.0
ROW: 1, COL: 3, VALUE: 8.0
ROW: 1, COL: 4, VALUE: 11.5
ROW: 1, COL: 5, VALUE: 25.0
ROW: 1, COL: 6, VALUE: 34.1
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ENERGY PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Lawrence Rakers)
Lawrence Rakers,
Portfolio Manager
of Fidelity Select
Energy Portfolio
Q. HOW DID THE FUND PERFORM, LARRY?
A. For the six-month period ending August 31, 1998, the fund returned
- -23.54%, while the Standard & Poor's 500 Index returned -8.10%. For
the 12-month period that ended August 31, 1998, the fund returned
- -24.16%. During the same period, the S&P 500 returned 8.10%. Beginning
this period, the fund also compares itself to the Goldman Sachs
Natural Resources Index - an index of 96 stocks designed to measure
the performance of companies in the natural resources sector - which
returned -24.09% and -26.69% over the same six- and 12-month periods,
respectively.
Q. WHY DID THE FUND OUTPERFORM THE GOLDMAN SACHS INDEX DURING THE
PERIOD?
A. The fund outperformed the Goldman Sachs index for a couple of
reasons. First, unlike the Goldman Sachs index, the fund did not have
any exposure to gold and precious metals stocks. Gold stocks fell even
further than energy stocks during this period of drastically declining
commodity prices. Second, the fund was overweighted in the integrated
oil companies. These stocks benefited from well-diversified operations
and stable earnings growth relative to other sectors within the energy
industry.
Q. WHAT FACTORS CAUSED THE STEEP DECLINE IN ENERGY PRICES?
A. The primary factor was weak demand for oil and gas. We had one of
the warmest weather patterns in recent history in the U.S., Europe and
Asia. Also, financial instability in Asian and many other emerging
markets resulted in significantly reduced demand for energy in these
regions. Finally, OPEC raised oil production quotas at the start of
last winter, further multiplying the supply and demand imbalance.
Reduced demand, combined with a buildup of reserves and global
financial uncertainty, resulted in the price of a barrel of oil losing
about 40% of its value during the period.
Q. WHAT STOCKS HURT THE FUND'S PERFORMANCE?
A. Energy stocks were either flat or down across the entire industry.
However, energy service companies such as Schlumberger and exploration
companies such as Oryx Energy were among the hardest hit energy stocks
and detracted from fund performance. In general, the drilling,
exploration and service companies are more sensitive to declining oil
prices than the integrated oil companies that have more diversified
revenue streams. While these stocks did detract from fund performance,
the fund was fortunately underweighted in these sectors. The price of
one of the fund's larger holdings, Petrobras PN, a Brazilian oil
company, declined along with the majority of oil stocks; however, its
stock price came under additional pressure because of concerns about
the possible devaluation of the Brazilian currency and the steep
decline in Latin American stock markets. USX-Marathon detracted from
fund performance in part because it recently acquired Tarragon, a
Canadian oil and gas company, and the market did not like this
purchase. However, I believed the fundamental business outlook for USX
remained solid, and I took advantage of the lower price to increase
the fund's holdings.
Q. DESPITE THIS NEGATIVE ENVIRONMENT, WERE THERE ANY STRATEGIES OR
STOCK PICKS THAT WORKED OUT WELL FOR THE FUND?
A. As I mentioned earlier, the fund was overweighted in integrated oil
companies, which held up fairly well during the period. I held
companies such as Texaco, Exxon, British Petroleum and Chevron because
their balance sheets look good, and they are diversified organizations
that produce oil and gas, and also have refining and chemical
operations. As a result, the integrated oil companies tend to have
more stable earnings growth and offer higher dividend yields than most
stocks in the sector. In addition, valuations for these companies were
beaten down to the point where I didn't believe they accurately
reflected the sector's business and growth prospects.
Q. WHAT'S YOUR OUTLOOK FOR THE ENERGY SECTOR, LARRY?
A. I am modestly optimistic about the sector over the next six months.
OPEC recently announced cuts to oil production and we started to see
early signs of oil inventories falling, which should begin to help oil
prices. In addition, during the winter, demand picks up by about 3%,
and under normal circumstances, we consume more oil than we produce.
OPEC cuts, combined with the usual seasonal increase in demand, should
benefit energy 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.
(checkmark)FUND FACTS
START DATE: July 14, 1981
FUND NUMBER: 060
TRADING SYMBOL: FSENX
SIZE: as of August 31, 1998, more than
$109 million
MANAGER: Lawrence Rakers, since 1997; manager,
Fidelity Select Natural Resources Portfolio, since
1997; Fidelity Select Paper and Forest Products
Portfolio, Fidelity Select Precious Metals and Minerals
Portfolio, 1996-1997; Fidelity Select Gold Portfolio
(formerly known as Fidelity Select American Gold
Portfolio), 1995-1997; joined Fidelity in 1993
ENERGY PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 91.4%
SHARES VALUE (NOTE 1)
CHEMICALS & PLASTICS - 8.0%
CHEMICALS - 8.0%
Crompton & Knowles Corp. 30,000 $ 438,750
du Pont (E.I.) de Nemours & Co. 109,600 6,322,550
MacDermid, Inc. 45,000 1,248,750
Quaker State Corp. 25,000 314,063
Sasol, Ltd. 119,500 495,242
8,819,355
ELECTRIC UTILITY - 1.2%
ELECTRIC POWER - 1.2%
AES Corp. (a) 35,000 953,750
Calenergy, Inc. (a) 16,000 407,000
1,360,750
ENERGY SERVICES - 6.5%
DRILLING - 0.5%
Helmerich & Payne, Inc. 15,000 243,750
Ryan Energy Technologies, Inc. (a) 32,900 75,512
Transocean Offshore, Inc. 10,632 261,149
580,411
OIL & GAS SERVICES - 6.0%
BJ Services Co. (a) 60,000 757,500
Baker Hughes, Inc. 91,650 1,672,613
Coflexip sponsored ADR 37,000 1,160,875
Dresser Industries, Inc. 33,000 843,563
McDermott International, Inc. 21,000 421,313
Schlumberger Ltd. 30,000 1,314,375
Smith International, Inc. (a) 15,500 273,188
Varco International, Inc. (a) 15,000 106,875
6,550,302
TOTAL ENERGY SERVICES 7,130,713
ENGINEERING - 0.1%
ARCHITECTS & ENGINEERS - 0.1%
Stolt Comex Seaway SA Class A
sponsored ADR (a) 11,400 65,550
GAS - 1.5%
GAS TRANSMISSION - 1.5%
Enron Corp. 25,000 1,057,813
Williams Companies, Inc. 25,000 575,000
1,632,813
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
INDUSTRIAL MACHINERY - WHOLESALE - 0.1%
CE Franklin Ltd. (a) 19,600 59,356
OIL & GAS - 72.3%
CRUDE PETROLEUM & GAS - 25.0%
Anadarko Petroleum Corp. 25,100 721,625
Barrett Resources Corp. (a) 5,000 101,563
Burlington Resources, Inc. 2,825 83,514
Canadian Occidental Petroleum Ltd. 10,000 119,541
EEX Corp. (a) 10,000 44,375
ENI SPA sponsored ADR 16,700 845,438
Elf Aquitaine SA sponsored ADR 105,400 5,151,425
Enron Oil & Gas Co. 20,000 260,000
Louis Dreyfus Natural Gas Corp. (a) 21,800 246,613
Magnum Hunter Resources, Inc. (a) 38,300 119,688
Occidental Petroleum Corp. 130,900 2,421,650
Oryx Energy Co. (a) 35,000 435,313
Paramount Resources Ltd. (c) 45,200 315,269
Penn West Petroleum Ltd. (a) 25,000 219,158
SHARES VALUE (NOTE 1)
Petrobras PN (Pfd. Reg.) 17,500,000 $ 1,786,094
Plains Resources, Inc. (a) 99,400 1,528,275
Rio Alto Exploration Ltd. (a) 99,600 800,102
Stellarton Energy Corp. Class A (a) 50,000 51,004
Suncor Energy, Inc. 35,000 978,483
Total SA sponsored ADR 175,000 8,410,938
Ulster Petroleums Ltd. (a) 45,000 261,077
Upton Resources, Inc. (a) 59,700 60,899
Vastar Resources, Inc. 35,000 1,330,000
YPF Sociedad Anonima sponsored ADR
representing Class D shares 53,400 1,181,475
27,473,519
ENERGY COMPOSITE - 0.1%
Post Energy Corp. (a) 50,000 111,572
OIL & GAS EXPLORATION - 34.1%
Amerada Hess Corp. 72,200 3,546,825
Amoco Corp. 150,000 6,796,875
Berkley Petroleum Corp. (a) 20,000 105,196
Companie Generale de
Geophsique SA (a) 35,000 503,117
Chevron Corp. 65,600 4,858,500
Exxon Corp. 22,500 1,472,344
Kerr-McGee Corp. 10,000 386,250
Mobil Corp. 38,000 2,626,750
Petro-Canada 80,000 765,062
Phillips Petroleum Co. 60,000 2,448,750
Texaco, Inc. 90,600 5,033,963
USX-Marathon Group 345,400 8,980,400
37,524,032
OIL FIELD EQUIPMENT - 1.6%
Camco International, Inc. 16,000 804,000
Cooper Cameron Corp. (a) 14,400 306,000
EVI Weatherford, Inc. (a) 41,825 637,831
1,747,831
PETROLEUM REFINERS - 11.5%
British Petroleum Co. PLC ADR 19,234 1,406,486
Coastal Corp. (The) 47,200 1,227,200
Frontier Oil Corp. (a) 263,000 1,413,625
Imperial Oil Ltd. 100,500 1,409,627
Royal Dutch Petroleum Co.
(NY Registry Gilder 1.25) 16,700 663,825
Shell Canada Ltd. Class A 15,000 222,346
Shell Transport & Trading Co.
PLC ADR 42,700 1,331,706
Tesoro Petroleum Corp. (a) 31,700 408,138
Tosco Corp. 160,100 3,522,200
Ultramar Diamond Shamrock Corp. 25,200 582,750
Valero Energy Corp. 24,100 430,788
12,618,691
TOTAL OIL & GAS 79,475,645
RAILROADS - 1.0%
Canadian National Railway Co. 25,000 1,128,467
SERVICES - 0.3%
DETECTIVE, GUARD & ARMORED CAR - 0.3%
Pittston Co. (Brinks Group) 9,100 285,513
SHIP BUILDING & REPAIR - 0.4%
SHIP BUILDERS - 0.4%
Halter Marine Group, Inc. (a) 55,000 495,000
TOTAL COMMON STOCKS
(Cost $126,352,196) 100,453,162
CASH EQUIVALENTS - 8.6%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund (b)
(Cost $9,445,109) 9,445,109 $ 9,445,109
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $135,797,305) $ 109,898,271
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.58%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(c) Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers.
At the period end, the value of these securities amounted to $315,269
or 0.3% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $91,661,746 and $92,685,755, 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 $19,601 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the security lending program. At period end,
the value of securities loaned and the value of collateral amounted to
$1,087,015 and $1,162,500, 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 71.7%
France 13.9
Canada 6.1
United Kingdom 2.5
Brazil 1.6
Netherlands Antilles 1.2
Argentina 1.1
Others (individually less than 1%) 1.9
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $135,928,969. Net unrealized depreciation
aggregated $26,030,698, of which $2,325,429 related to appreciated
investment securities and $28,356,127 related to depreciated
investment securities.
ENERGY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31,
1998
(UNAUDITED)
ASSETS
Investment in $ 109,898,271
securities, at
value
(cost
$135,797,30
5) -
See
accompanyin
g schedule
Receivable for 3,011,364
investments
sold
Receivable for 787,428
fund shares
sold
Dividends 660,817
receivable
Interest 41,742
receivable
Redemption fees 1,285
receivable
TOTAL ASSETS 114,400,907
LIABILITIES
Payable for $ 2,430,099
investments
purchased
Payable for 786,767
fund shares
redeemed
Accrued 60,969
management
fee
Other payables 117,215
and
accrued
expenses
Collateral on 1,162,500
securities
loaned,
at value
TOTAL LIABILITIES 4,557,550
NET ASSETS $ 109,843,357
Net Assets
consist of:
Paid in capital $ 136,680,528
Undistributed 717,523
net investment
income
Accumulated (1,657,373)
undistributed
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized (25,897,321)
appreciation
(depreciation)
on
investments
and assets
and liabilities
in
foreign
currencies
NET ASSETS, for $ 109,843,357
6,902,034
shares
outstanding
NET ASSET $15.91
VALUE and
redemption
price per
share
($109,843,3
57 (divided by)
6,902,034
shares)
Maximum $16.40
offering price
per share
(100/97.00
of $15.91)
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED AUGUST
31, 1998
(UNAUDITED)
INVESTMENT $ 1,613,747
INCOME
Dividends
Interest 277,342
(including
income on
securities
loaned of
$5,480)
1,891,089
Less foreign (92,779)
taxes withheld
TOTAL INCOME 1,798,310
EXPENSES
Management $ 440,781
fee
Transfer agent 502,330
fees
Accounting and 75,724
security
lending fees
Non-interested 332
trustees'
compensation
Custodian fees 20,660
and expenses
Registration fees 23,190
Audit 12,159
Legal 429
Reports to 24,623
shareholders
Miscellaneous 178
Total expenses 1,100,406
before
reductions
Expense (19,620) 1,080,786
reductions
NET INVESTMENT 717,524
INCOME
REALIZED AND
UNREALIZED
GAIN (LOSS)
Net realized
gain (loss) on:
Investment (1,325,175)
securities
Foreign (6,334) (1,331,509)
currency
transactions
Change in net
unrealized
appreciation
(depreciation)
on:
Investment (33,950,685)
securities
Assets and 1,741 (33,948,944)
liabilities in
foreign
currencies
NET GAIN (LOSS) (35,280,453)
NET INCREASE $ (34,562,929)
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 283,189
INFORMATION
Sales charges
paid to FDC
Sales charges $ 282,643
- - Retained by
FDC
Deferred sales $ 6,547
charges
withheld
by FDC
Exchange fees $ 19,905
withheld by
FSC
Expense $ 19,285
reductions
Directed
brokerage
arrangements
Custodian 283
credits
Transfer 52
agent credits
$ 19,620
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED YEAR ENDED
(DECREASE) IN AUGUST 31, 1998 FEBRUARY 28,
NET ASSETS (UNAUDITED) 1998
Operations $ 717,524 $ 899,143
Net
investment
income
Net realized (1,331,509) 35,228,064
gain (loss)
Change in net (33,948,944) 1,070,352
unrealized
appreciation
(depreciation)
NET INCREASE (34,562,929) 37,197,559
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (72,194) (711,215)
shareholders
From net
investment
income
From net (2,641,142) (31,012,994)
realized gain
In excess of (325,864) -
net realized
gain
TOTAL (3,039,200) (31,724,209)
DISTRIBUTIONS
Share 52,011,188 138,864,076
transactions
Net proceeds
from sales of
shares
Reinvestment 2,970,065 31,069,131
of
distributions
Cost of shares (54,661,835) (231,915,098)
redeemed
NET INCREASE 319,418 (61,981,891)
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
Redemption 102,578 267,473
fees
TOTAL (37,180,133) (56,241,068)
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
Beginning of 147,023,490 203,264,558
period
End of period $ 109,843,357 $ 147,023,490
(including
undistribute
d net
investment
income of
$717,523
and
$431,333,
respectively)
OTHER
INFORMATION
Shares
Sold 2,432,406 5,967,396
Issued in 133,126 1,509,439
reinvestment
of
distributions
Redeemed (2,599,376) (10,078,784)
Net increase (33,844) (2,601,949)
(decrease)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED YEAR ENDED YEARS ENDED
ENDED FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
AUGUST 31,
1998
SELECTED (UNAUDITED) 1998 1997 1996 1995 1994
PER-SHARE
DATA
Net asset $ 21.20 $ 21.31 $ 18.97 $ 16.10 $ 16.73 $ 15.84
value,
beginning
of period
Income from
Investment
Operation
s
Net .10 .11 .13 .18 .07 .06
investment
income D
Net (4.98) 3.93 3.59 3.13 (.11) 1.35
realized
and
unrealized
gain (loss)
Total from (4.88) 4.04 3.72 3.31 (.04) 1.41
investment
operations
Less
Distributio
ns
From net (.01) (.09) (.13) (.11) (.08) (.03)
investment
income
From net (.36) (4.09) (1.31) (.36) (.54) (.57)
realized
gain
In excess (.05) - - - - -
of net
realized
gain
Total (.42) (4.18) (1.44) (.47) (.62) (.60)
distributio
ns
Redemption .01 .03 .06 .03 .03 .08
fees
added to
paid in
capital
Net asset $ 15.91 $ 21.20 $ 21.31 $ 18.97 $ 16.10 $ 16.73
value, end
of period
TOTAL (23.54)% 20.40% 20.35% 20.92% .04% 9.69%
RETURN B, C
RATIOS AND
SUPPLEME
NTAL DATA
Net assets, $ 109,843 $ 147,023 $ 203,265 $ 119,676 $ 96,023 $ 145,490
end of
period
(000
omitted)
Ratio of 1.44% A 1.58% 1.57% 1.63% 1.85% 1.67%
expenses
to
average
net assets
Ratio of 1.42% A, E 1.53% E 1.55% E 1.63% 1.85% 1.66% E
expenses
to average
net assets
after
expense
reductions
Ratio of net .94% A .47% .62% 1.04% .42% .37%
investment
income to
average
net assets
Portfolio 132% A 115% 87% 97% 106% 157%
turnover
rate
Average $ .0388 $ .0142 $ .0399
commissio
n rate F
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 TOT
AL RETURNS DO NOT
INCLUDE THE ONE TIME
SALES CHARGE AND FOR
PERIODS OF
LESS THAN ONE YEAR
ARE NOT
ANNUALIZED. D NET
INVESTMENT INCOME
PER SHARE HAS BEEN
CALCULATED BASED ON
AVERAGE SHARES
OUTSTANDING DURING
THE PERIOD. E FMR
OR THE FUND HAS
ENTERED INTO VARYING
ARRANGEMENTS WITH
THIRD PARTIES WHO
EITHER PAID
OR REDUCED A PORTION
OF THE FUNDS
EXPENSES (SEE NOTE
8 OF NOTES TO
FINANCIAL
STATEMENTS). F FO
R 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 MONTHS YEAR YEARS YEARS
SELECT ENERGY SERVICE -49.55% -52.93% 27.01% 114.20%
SELECT ENERGY SERVICE -51.14% -54.42% 23.13% 107.71%
(LOAD ADJ.)
S&P 500 -8.10% 8.10% 131.21% 382.74%
GS Natural Resources -24.09% -26.69% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. 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 - and the Goldman Sachs Natural
Resources Index - a market capitalization-weighted index of 96 stocks
designed to measure the performance of companies in the natural
resource sector. These benchmarks include reinvestment of dividends
and capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 YEAR YEARS YEARS
SELECT ENERGY SERVICE -52.93% 4.90% 7.92%
SELECT ENERGY SERVICE -54.42% 4.25% 7.58%
(LOAD ADJ.)
S&P 500 8.10% 18.25% 17.05%
GS Natural Resources -26.69% n/a n/a
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.
(checkmark)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.
$10,000 OVER 10 YEARS
Energy Service S&P 500
00043 SP001
1988/08/31 9700.00 10000.00
1988/09/30 9281.90 10426.00
1988/10/31 8971.31 10715.84
1988/11/30 8589.04 10562.61
1988/12/31 8983.25 10747.45
1989/01/31 9532.76 11534.17
1989/02/28 9640.27 11246.96
1989/03/31 10249.51 11509.02
1989/04/30 10739.29 12106.34
1989/05/31 10930.42 12596.64
1989/06/30 11288.79 12524.84
1989/07/31 11921.92 13655.84
1989/08/31 12483.37 13923.49
1989/09/30 12304.19 13866.40
1989/10/31 11694.95 13544.70
1989/11/30 12698.40 13821.02
1989/12/31 14323.03 14152.72
1990/01/31 13403.20 13203.07
1990/02/28 14669.46 13373.39
1990/03/31 15374.26 13727.79
1990/04/30 14561.95 13384.59
1990/05/31 17010.84 14689.59
1990/06/30 16138.79 14589.70
1990/07/31 17655.91 14543.01
1990/08/31 17345.32 13228.33
1990/09/30 17010.84 12584.11
1990/10/31 14872.54 12529.99
1990/11/30 15099.51 13339.43
1990/12/31 14574.39 13711.60
1991/01/31 13916.27 14309.43
1991/02/28 16153.88 15332.55
1991/03/31 14897.47 15703.60
1991/04/30 14969.26 15741.29
1991/05/31 15364.14 16421.31
1991/06/30 13353.88 15669.22
1991/07/31 14359.01 16399.40
1991/08/31 14203.45 16788.07
1991/09/30 12899.17 16507.71
1991/10/31 13090.63 16728.91
1991/11/30 11523.10 16054.73
1991/12/31 11152.16 17891.40
1992/01/31 10996.61 17558.62
1992/02/29 11223.96 17786.88
1992/03/31 10422.25 17440.03
1992/04/30 11283.79 17952.77
1992/05/31 12181.22 18040.74
1992/06/30 11475.24 17771.93
1992/07/31 11953.87 18498.80
1992/08/31 12564.13 18119.58
1992/09/30 12947.04 18333.39
1992/10/31 12276.95 18397.56
1992/11/30 12025.67 19024.91
1992/12/31 11535.07 19258.92
1993/01/31 11989.77 19420.70
1993/02/28 13174.39 19684.82
1993/03/31 14215.42 20100.17
1993/04/30 14981.71 19613.74
1993/05/31 15676.30 20139.39
1993/06/30 15592.47 20197.79
1993/07/31 15808.04 20117.00
1993/08/31 16358.92 20879.44
1993/09/30 15879.89 20718.67
1993/10/31 15652.35 21147.54
1993/11/30 13999.69 20946.64
1993/12/31 13952.42 21200.10
1994/01/31 14084.61 21920.90
1994/02/28 14012.51 21326.84
1994/03/31 12966.98 20396.99
1994/04/30 13644.94 20658.07
1994/05/31 14252.76 20996.87
1994/06/30 14686.92 20482.44
1994/07/31 14959.82 21154.27
1994/08/31 14364.40 22021.59
1994/09/30 14910.20 21482.06
1994/10/31 15505.62 21965.41
1994/11/30 14699.33 21165.43
1994/12/31 14031.59 21479.31
1995/01/31 14119.76 22036.27
1995/02/28 15077.03 22895.02
1995/03/31 15908.34 23570.66
1995/04/30 16878.21 24264.81
1995/05/31 17319.06 25234.68
1995/06/30 16727.06 25820.88
1995/07/31 17558.38 26677.10
1995/08/31 18263.73 26744.06
1995/09/30 18314.12 27872.66
1995/10/31 16727.06 27773.15
1995/11/30 17671.74 28992.39
1995/12/31 19766.86 29550.79
1996/01/31 20197.14 30556.70
1996/02/29 20979.47 30839.96
1996/03/31 22635.41 31136.95
1996/04/30 24337.64 31595.90
1996/05/31 23983.59 32410.76
1996/06/30 24036.05 32534.25
1996/07/31 22711.64 31096.88
1996/08/31 24154.06 31752.72
1996/09/30 25058.86 33539.76
1996/10/31 27851.92 34464.79
1996/11/30 28979.63 37069.98
1996/12/31 29469.22 36335.62
1997/01/31 31110.17 38605.87
1997/02/28 27746.91 38908.54
1997/03/31 29699.77 37309.79
1997/04/30 29356.45 39537.19
1997/05/31 33430.94 41944.21
1997/06/30 35619.36 43823.31
1997/07/31 41219.97 47310.33
1997/08/31 44142.66 44660.01
1997/09/30 48749.85 47106.04
1997/10/31 50607.13 45532.69
1997/11/30 44416.21 47640.40
1997/12/31 44756.04 48458.39
1998/01/31 38421.11 48994.34
1998/02/28 41184.38 52527.81
1998/03/31 44271.00 55217.76
1998/04/30 47916.42 55773.25
1998/05/31 44837.08 54814.51
1998/06/30 38989.44 57041.07
1998/07/31 30404.61 56433.58
1998/08/31 20771.00 48274.42
IMATRL PRASUN SHR__CHT 19980831 19980909 095143 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Energy Service Portfolio on August 31,
1988, and the current 3.00% sales charge was paid. As the chart shows,
by August 31, 1998, the value of the investment would have grown to
$20,771 - a 107.71% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $48,274 - a 382.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
Baker Hughes, Inc. 11.5
Halliburton Co. 5.4
Schlumberger Ltd. 5.2
Cooper Cameron Corp. 5.1
Transocean Offshore, Inc. 4.9
Coflexip sponsored ADR 4.6
EVI Weatherford, Inc. 4.3
Diamond Offshore Drilling, Inc. 4.2
Camco International, Inc. 4.2
McDermott (J. Ray) SA 3.9
TOP INDUSTRIES AS OF AUGUST 31, 1998
OIL & GAS SERVICES 44.7%
DRILLING 25.0%
OIL FIELD EQUIPMENT 13.6%
HEAVY CONSTRUCTION, NEC 3.9%
ARCHITECTS & ENGINEERS 2.3%
ALL OTHERS 10.5%
ROW: 1, COL: 1, VALUE: 10.6
ROW: 1, COL: 2, VALUE: 2.3
ROW: 1, COL: 3, VALUE: 3.9
ROW: 1, COL: 4, VALUE: 13.6
ROW: 1, COL: 5, VALUE: 25.0
ROW: 1, COL: 6, VALUE: 44.7
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ENERGY SERVICE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of James Catudal)
James Catudal,
Portfolio Manager
of Fidelity Select
Energy Service Portfolio
Q. HOW DID THE FUND PERFORM, JIM?
A. The fund's performance for the period was very weak. For the six-
and 12-month periods that ended August 31, 1998, the fund had total
returns of -49.55% and -52.93%, respectively. In comparison, the
Standard & Poor's 500 Index returned -8.10% and 8.10%, respectively,
over the same time periods. Beginning this period, the fund also
compares itself to the Goldman Sachs Natural Resources Index - an
index of 96 stocks designed to measure the performance of companies in
the natural resource sector - which returned -24.09% and -26.69% over
the same six- and 12-month periods, respectively.
Q. WHAT ACCOUNTED FOR THE FUND'S POOR PERFORMANCE RELATIVE TO ITS
BENCHMARKS?
A. The performance of energy service stocks depends primarily on the
exploration and production spending of oil companies. That spending is
driven, in turn, by the price of oil, which was extremely weak over
the period. In addition, the profits of energy service firms tend to
be more sensitive to changes in the price of oil than those of
exploration and production companies. Finally, the overall stock
market was extremely weak in August. All of these factors combined to
drive down sharply the prices of virtually all energy service stocks,
regardless of quality. The S&P 500, on the other hand, is a
diversified index that reflects the performance of stocks from a wide
variety of sectors. Overall, stocks were relatively strong for most of
the period, and the S&P 500's returns reflect that more favorable
environment. The Goldman Sachs index contains primarily stocks of
integrated oil companies, making its returns generally less volatile
than those of the fund.
Q. WHAT WAS YOUR STRATEGY DURING THE PERIOD?
A. I continued my strategy of positioning the fund in stocks that are
less sensitive to fluctuations in oil and gas prices. The categories
that were highlighted in the previous report - deep water drilling,
sub-sea construction and large integrated oil service companies -
continued to be the most promising in that regard.
Q. AT THE END OF THE PERIOD, BAKER HUGHES COMPRISED 11.5% OF THE
FUND'S INVESTMENTS. CAN YOU COMMENT ON WHY THE FUND HAD SUCH A LARGE
POSITION IN THAT STOCK?
A. During the period, Baker Hughes merged with Western Atlas. The
11.5% figure represents the fund's holdings in both companies.
Q. WHAT STOCKS PERFORMED WELL FOR THE FUND?
A. Royal Dutch Petroleum helped the fund's performance somewhat. The
company was a good example of how integrated oil companies did better
overall than pure energy service firms. In addition, I sold the stock
before it was hit with the steep declines affecting most other stocks
in the sector. Bouygues Offshore also bucked the downward trend. The
stock's performance reflected the relatively favorable business
prospects for offshore construction.
Q. WHAT STOCKS DETRACTED FROM THE FUND'S PERFORMANCE?
A. EVI Weatherford - the fund's seventh-largest holding at the end of
the period - was the biggest detractor. Unlike most of its
competitors, the company pre-announced disappointing financial results
for the third quarter. Although the results were in line with those of
other companies in this sector, investors reacted negatively to the
announcement. Cooper Cameron - another core holding - was swamped by
the wave of selling that engulfed the entire sector. Another poor
performer, BJ Services, saw prices weaken in its main line of business
- - pressure pumping.
Q. WHAT'S YOUR OUTLOOK, JIM?
A. There are some signs that oil prices may recover in the
not-too-distant future. Historically, oil prices have not remained
depressed for more than about six months, on average, and we are at
the upper limits of that range now. Furthermore, the Organization of
Petroleum Exporting Countries (OPEC) has recently been cutting back on
production in an attempt to boost the price of oil. The big unknown at
this point is demand. No one knows how long financial problems in
Asia, Russia and Latin America will slow demand in those markets. Of
course, weather is an important factor, too. A return to seasonably
cold winter temperatures would raise demand and support higher energy
prices. Although the short-term outlook is mixed due to low oil prices
and lower exploration and production spending by the oil companies, I
remain optimistic about the long-term prospects for the group.
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.
(checkmark)FUND FACTS
START DATE: December 16, 1985
FUND NUMBER: 043
TRADING SYMBOL: FSESX
SIZE: as of August 31, 1998, more than
$370 million
MANAGER: James Catudal, since January 1998;
manager, Select Industrial Materials Portfolio,
1997-1998; analyst, North American
non-ferrous metals companies; joined Fidelity in
1997
ENERGY SERVICE PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 94.2%
SHARES VALUE (NOTE 1)
CONSTRUCTION - 4.2%
HEAVY CONSTRUCTION, NEC - 3.9%
McDermott (J. Ray) SA (a) 519,100 $ 14,502,356
HIGHWAY & STREET CONSTRUCTION - 0.3%
Bouygues Offshore SA sponsored ADR 77,000 1,049,125
TOTAL CONSTRUCTION 15,551,481
ELECTRICAL EQUIPMENT - 0.5%
MOTORS & GENERATORS - 0.5%
NQL Drilling Tools, Inc. Class A (a) 613,300 1,915,952
ENERGY SERVICES - 69.7%
DRILLING - 25.0%
Atwood Oceanics, Inc. (a) 151,500 2,518,688
Diamond Offshore Drilling, Inc. 743,800 15,526,825
ENSCO International, Inc. 562,200 5,903,100
Global Marine, Inc. (a) 201,200 1,886,250
Helmerich & Payne, Inc. 510,600 8,297,250
Marine Drilling Companies, Inc. (a) 588,600 5,297,400
Nabors Industries, Inc. (a) 516,700 6,103,519
Noble Drilling Corp. 1,152,150 12,673,650
Parker Drilling Co. (a) 248,700 994,800
R&B Falcon Corp. (a) 1,052,518 9,472,662
Rowan Companies, Inc. (a) 471,400 4,360,450
Ryan Energy Technologies, Inc. (a) 417,200 957,552
Transocean Offshore, Inc. 738,754 18,145,645
92,137,791
OIL & GAS SERVICES - 44.7%
Baker Hughes, Inc. 2,323,636 42,406,354
BJ Services Co. (a) 918,776 11,599,547
Cal Dive International, Inc. (a) 50,300 647,613
Carbo Ceramics, Inc. 15,000 258,750
Coflexip sponsored ADR 540,400 16,955,050
Daniel Industries, Inc. 291,200 3,239,600
Dawson Geophysical Co. (a) 80,200 982,450
Dresser Industries, Inc. 348,300 8,903,419
Global Industries Ltd. (a) 735,400 6,894,375
Halliburton Co. 753,967 20,027,248
Input/Output, Inc. (a) 94,700 923,325
McDermott International, Inc. 701,600 14,075,850
Oceaneering International, Inc. (a) 463,300 4,314,481
Offshore Logistics, Inc. (a) 117,300 1,055,700
Pool Energy Services Co. (a) 280,700 1,999,988
Schlumberger Ltd. 439,600 19,259,975
Seacor Smit, Inc. (a) 88,200 3,042,900
Smith International, Inc. (a) 83,800 1,476,975
Superior Energy Services, Inc. (a) 205,500 712,828
Tidewater, Inc. 68,465 1,437,765
Varco International, Inc. (a) 712,700 5,077,988
165,292,181
TOTAL ENERGY SERVICES 257,429,972
ENGINEERING - 2.3%
ARCHITECTS & ENGINEERS - 2.3%
Stolt Comex Seaway SA Class A
sponsored ADR (a) 388,600 2,234,450
Stolt Comex Seaway SA 777,100 6,411,075
8,645,525
OIL & GAS - 15.6%
OIL & GAS EXPLORATION - 2.0%
Companie Generale de Geophsique SA (a) 181,300 2,606,188
SHARES VALUE (NOTE 1)
Petroleum Geo-Services AS
sponsored ADR (a) 154,900 $ 2,013,700
Veritas DGC, Inc. (a) 186,100 2,791,500
7,411,388
OIL FIELD EQUIPMENT - 13.6%
Camco International, Inc. 306,310 15,392,078
Cooper Cameron Corp. (a) 894,276 19,003,365
EVI Weatherford, Inc. (a) 1,037,640 15,824,010
50,219,453
TOTAL OIL & GAS 57,630,841
SERVICES - 0.8%
BUSINESS SERVICES - 0.8%
Tuboscope, Inc. (a) 335,700 3,084,244
SHIP BUILDING & REPAIR - 1.1%
SHIP BUILDERS - 1.1%
Dril-Quip, Inc. 86,300 1,062,569
Halter Marine Group, Inc. (a) 329,550 2,965,950
4,028,519
TOTAL COMMON STOCKS
(Cost $663,516,128) 348,286,534
CASH EQUIVALENTS - 5.8%
Taxable Central Cash Fund (b)
(Cost $21,460,792) 21,460,792 21,460,792
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $684,976,920) $ 369,747,326
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.58%. 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 $265,756,090 and $395,779,299, 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 $54,675 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the security lending program. At 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 81.7%
France 5.6
Netherlands 5.2
Panama 3.9
Luxembourg 2.3
Others (individually less then 1%) 1.3
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $685,331,086. Net unrealized depreciation
aggregated $315,583,760, of which $5,124,088 related to appreciated
investment securities and $320,707,848 related to depreciated
investment securities.
ENERGY SERVICE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31,
1998
(UNAUDITED)
ASSETS
Investment in $ 369,747,326
securities, at
value
(cost
$684,976,92
0) -
See
accompanyin
g schedule
Receivable for 3,938,691
investments
sold
Receivable for 3,178,137
fund shares
sold
Dividends 509,547
receivable
Interest 94,730
receivable
Redemption fees 9,292
receivable
TOTAL ASSETS 377,477,723
LIABILITIES
Payable for $ 5,910,219
fund shares
redeemed
Accrued 235,761
management
fee
Other payables 400,359
and
accrued
expenses
TOTAL LIABILITIES 6,546,339
NET ASSETS $ 370,931,384
Net Assets
consist of:
Paid in capital $ 761,412,057
Accumulated (1,867,848)
net investment
loss
Accumulated (73,383,231)
undistributed
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized (315,229,594)
appreciation
(depreciation)
on
investments
NET ASSETS, for $ 370,931,384
27,765,532
shares
outstanding
NET ASSET $13.36
VALUE and
redemption
price per
share
($370,931,3
84 (divided by)
27,765,532
shares)
Maximum $13.77
offering price
per share
(100/97.00
of $13.36)
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED AUGUST
31, 1998
(UNAUDITED)
INVESTMENT $ 2,332,081
INCOME
Dividends
Interest 1,175,564
(including
income on
securities
loaned of
$213,732)
TOTAL INCOME 3,507,645
EXPENSES
Management $ 2,491,841
fee
Transfer agent 2,414,407
fees
Accounting and 336,676
security
lending fees
Non-interested 1,690
trustees'
compensation
Custodian fees 19,355
and expenses
Registration fees 94,168
Audit 27,801
Legal 2,782
Reports to 123,155
shareholders
Total expenses 5,511,875
before
reductions
Expense (136,382) 5,375,493
reductions
NET INVESTMENT (1,867,848)
INCOME (LOSS)
REALIZED AND
UNREALIZED
GAIN (LOSS)
Net realized
gain (loss) on:
Investment (71,566,195)
securities
Foreign (30) (71,566,225)
currency
transactions
Change in net
unrealized
appreciation
(depreciation)
on:
Investment (338,232,932)
securities
Assets and 168 (338,232,764)
liabilities in
foreign
currencies
NET GAIN (LOSS) (409,798,989)
NET INCREASE $ (411,666,837)
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 1,965,395
INFORMATION
Sales charges
paid to FDC
Sales charges $ 1,960,115
- - Retained by
FDC
Deferred sales $ 5,942
charges
withheld
by FDC
Exchange fees $ 240,435
withheld by
FSC
Expense $ 134,939
reductions
Directed
brokerage
arrangements
Custodian 578
credits
Transfer 865
agent credits
$ 136,382
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED YEAR ENDED
(DECREASE) IN AUGUST 31, 1998 FEBRUARY 28,
NET ASSETS (UNAUDITED) 1998
Operations $ (1,867,848) $ (3,364,496)
Net
investment
income (loss)
Net realized (71,566,225) 157,396,467
gain (loss)
Change in net (338,232,764) 12,574,205
unrealized
appreciation
(depreciation)
NET INCREASE (411,666,837) 166,606,176
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions to (54,767,341) (52,135,101)
shareholders
from net
realized gain
Share 747,012,972 2,385,855,385
transactions
Net proceeds
from sales of
shares
Reinvestment 53,845,578 51,297,776
of
distributions
Cost of shares (885,298,400) (2,077,124,405)
redeemed
NET INCREASE (84,439,850) 360,028,756
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
Redemption 2,803,636 4,998,236
fees
TOTAL (548,070,392) 479,498,067
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
Beginning of 919,001,776 439,503,709
period
End of period $ 370,931,384 $ 919,001,776
(including
accumulated
net investment
loss of
$1,867,848
and $0,
respectively)
OTHER
INFORMATION
Shares
Sold 26,386,210 81,787,357
Issued in 1,829,615 2,167,528
reinvestment
of
distributions
Redeemed (33,245,361) (72,645,359)
Net increase (5,029,536) 11,309,526
(decrease)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED YEAR ENDED YEARS ENDED
ENDED FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
AUGUST 31,
1998
SELECTED (UNAUDITED) 1998 1997 1996 1995 1994
PER-SHARE
DATA
Net asset $ 28.02 $ 20.46 $ 16.09 $ 11.97 $ 11.66 $ 11.01
value,
beginning
of period
Income from
Investment
Operation
s
Net (.06) (.10) (.01) .08 E .02 .03
investment
income
(loss) D
Net (12.98) 9.36 5.05 4.49 .67 .51
realized
and
unrealized
gain (loss)
Total from (13.04) 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 (1.71) (1.85) (.79) (.48) (.35) -
realized
gain
In excess - - - - (.13) -
of net
realized
gain
Total (1.71) (1.85) (.79) (.52) (.50) (.05)
distributio
ns
Redemption .09 .15 .12 .07 .12 .16
fees
added to
paid in
capital
Net asset $ 13.36 $ 28.02 $ 20.46 $ 16.09 $ 11.97 $ 11.66
value, end
of period
TOTAL (49.55)% 48.43% 32.26% 39.15% 7.60% 6.36%
RETURN B, C
RATIOS AND
SUPPLEME
NTAL DATA
Net assets, $ 370,931 $ 919,002 $ 439,504 $ 273,805 $ 63,794 $ 40,857
end of
period
(000
omitted)
Ratio of 1.28% A 1.25% 1.47% 1.59% 1.81% 1.66%
expenses
to average
net assets
Ratio of 1.25% A, F 1.22% F 1.45% F 1.58% F 1.79% F 1.65% F
expenses
to average
net assets
after
expense
reductions
Ratio of net (.43)% A (.35)% (.07)% .60% .19% .23%
investment
income
(loss) to
average
net assets
Portfolio 68% A 78% 167% 223% 209% 137%
turnover
rate
Average $ .0455 $ .0395 $ .0374
commissio
n rate G
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 TOT
AL 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 INVESTMEN
T INCOME PER SHARE
REFLECTS A SPECIAL
DIVIDEND WHICH
AMOUNTED TO $.02
PER SHARE.
F FMR OR THE FUND
HAS ENTERED INTO
VARYING
ARRANGEMENTS WITH
THIRD PARTIES WHO
EITHER PAID OR
REDUCED A PORTION OF
THE FUND'S EXPENSES
(SEE NOTE 8 OF NOTES
TO FINANCIAL
STATEMENTS). G FO
R 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>
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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 MONTHS YEAR YEARS YEARS
SELECT GOLD -41.79% -56.42% -55.38% -36.76%
SELECT GOLD -43.61% -57.80% -56.79% -38.73%
(LOAD ADJ.)
S&P 500 -8.10% 8.10% 131.21% 382.74%
GS Natural Resources -24.09% -26.69% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 index - a widely
recognized, unmanaged index of common stocks - and the Goldman Sachs
Natural Resources Index - a market capitalization-weighted index of 96
stocks designed to measure the performance of companies in the natural
resource sector. These benchmarks include reinvestment of dividends
and capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 YEAR YEARS YEARS
SELECT GOLD -56.42% -14.90% -4.48%
SELECT GOLD -57.80% -15.45% -4.78%
(LOAD ADJ.)
S&P 500 8.10% 18.25% 17.05%
GS Natural Resources -26.69% n/a n/a
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.
(checkmark)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.
$10,000 OVER 10 YEARS
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
1998/02/28 10408.43 13422.05
1998/03/31 10826.36 14109.39
1998/04/30 11224.38 14251.33
1998/05/31 10627.34 14006.35
1998/06/30 10179.56 14575.29
1998/07/31 9363.60 14420.06
1998/08/31 7565.00 12335.21
IMATRL PRASUN SHR__CHT 19980831 19980916 155914 R00000000000021
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Gold Portfolio on August 31, 1988, and the
current 3.00% sales charge was paid. As the chart shows, by August 31,
1998, the value of the investment would have been $6,127 - a 38.73%
decrease on the initial investment - and includes the effect of a
$7.50 trading fee. For comparison, look at how the Standard & Poor's
500 Index did over the same period. With dividends and capital gains,
if any, reinvested, the same $10,000 investment would have grown to
$48,274 - a 382.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
Euro-Nevada Mining Corp. Ltd. 9.9
Meridian Gold, Inc. 8.7
Getchell Gold Corp. 8.4
Franco Nevada Mining Corp. Ltd. 6.3
Prime Resources Group, Inc. 5.8
Normandy Mining Ltd. 5.4
Stillwater Mining Co. 4.8
Placer Dome, Inc. 4.4
Homestake Mining Co. 4.3
Newmont Gold Co. 4.0
TOP INDUSTRIES AS OF AUGUST 31, 1998
GOLD ORES 70.1%
GOLD & SILVER ORES 15.6%
SILVER ORES 4.6%
MISCELLANEOUS
NONMETALLIC MINERALS 3.2%
INVESTMENT MANAGERS 3.1%
ALL OTHERS 3.4%
ROW: 1, COL: 1, VALUE: 3.3
ROW: 1, COL: 2, VALUE: 3.1
ROW: 1, COL: 3, VALUE: 3.3
ROW: 1, COL: 4, VALUE: 4.6
ROW: 1, COL: 5, VALUE: 15.6
ROW: 1, COL: 6, VALUE: 70.09999999999999
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
GOLD PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of George Domolky)
George Domolky,
Portfolio Manager
of Fidelity Select
Gold Portfolio
Q. HOW DID THE FUND PERFORM, GEORGE?
A. Not well at all. For the six- and 12-month periods that ended
August 31, 1998, the fund had total returns of -41.79% and -56.42%,
respectively. In comparison, the Standard & Poor's 500 Index returned
- -8.10% and 8.10%, respectively, over the same time periods. Beginning
this period, the fund also compares itself to the Goldman Sachs
Natural Resources Index - an index of 96 stocks designed to measure
the performance of companies in the natural resource sector - which
returned -24.09% and -26.69% over the same six- and 12-month periods,
respectively.
Q. WHAT ACCOUNTED FOR THE FUND'S POOR PERFORMANCE?
A. The primary factor influencing the performance of the fund is
typically the price of gold. Unfortunately, gold continued to weaken,
getting as low as $271 per ounce in August. Gold was weak for several
reasons. For one thing, the European Economic Community central bank
decided to hold 15% of its currency reserves in gold, which was
somewhat below expectations. Another contributing factor was the
ongoing currency crisis in Asia, where the region's weaker currencies
made gold more expensive, thereby reducing demand for gold jewelry.
Finally, the recent turmoil in Russia added to the gold market's
negative psychology, raising fears that Russia would sell gold to help
support its weakening currency, the ruble. The Goldman Sachs index,
though more similar to the fund in composition than the S&P 500,
includes the stocks of companies involved with not only gold and other
precious metals, but also copper, nickel, oil, gas, lumber and other
natural resources. This greater diversification enabled the Goldman
Sachs index to post a better return than the fund did.
Q. WHAT STRATEGY DID YOU EMPLOY IN SUCH A CHALLENGING ENVIRONMENT?
A. I continued to invest in selected United States and Canadian mining
companies with good cash flows and cost structures that allow them to
be profitable despite low commodity prices. In addition, the fund held
a few stocks of companies in South America, Australia and elsewhere.
Although foreign investments carry greater risk than U.S. investments,
their profit potential made these stocks attractive investments.
Finally, I continued to look for opportunities to diversify the fund's
holdings by investing in companies involved in the exploration and
production of diamonds, platinum, palladium and silver.
Q. WHAT HOLDINGS HELPED THE FUND'S PERFORMANCE?
A. Stillwater Mining, a major producer of platinum and palladium, held
its ground relatively well based on the company's established
production record and the surging price of palladium. Aluminum Company
of America, which had a slightly positive impact on performance, is
another example of a diversification effort that paid off well on a
relative basis. I subsequently sold this stock.
Q. WHAT HOLDINGS DISAPPOINTED YOU?
A. The stock of Getchell Gold, the fund's third-largest holding at the
end of the period, continued to weaken. Weaker gold prices resulted in
investors favoring established producers over exploration companies
like Getchell Gold. Newmont Gold also detracted from performance, as
the falling price of the yellow metal once again hurt this stock badly
because of the company's policy of not hedging its gold production.
Hedging - selling gold in the futures or forward markets for future
delivery - is used by many gold mining companies to help protect them
from falling prices. Greenstone Resources - another poorly performing
stock - ran into problems when the company reported production numbers
below the market's expectations.
Q. WHAT'S YOUR OUTLOOK, GEORGE?
A. You would have to go back to the late 1970s to find gold prices
lower than we have seen recently. However, in most parts of the world,
gold still acts as a currency of last resort. When the Far East
recovers from its present malaise, demand from that part of the world
should increase. Furthermore, central bank gold sales will likely
decrease in 1999, when we have passed the year-end cutoff point for
participating countries of the European Economic Community to adjust
their currency reserves prior to phasing in the region's new currency,
the euro. Another positive factor is the recent change in the fund's
charter - reflected in the deletion of "American" from the fund's name
on June 1, 1998 - that allows me to invest in high-quality precious
metals mining companies worldwide. Regardless of the supply and demand
considerations for gold, the fund should be well served by its
worldwide focus and its emphasis on strong companies with healthy
balance sheets and the capability to add meaningfully to production.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
FUND FACTS
START DATE: December 16, 1985
FUND NUMBER: 041
TRADING SYMBOL: FSAGX
SIZE: as of August 31, 1998, more than
$123 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)
GOLD PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 98.0%
SHARES VALUE (NOTE 1)
AUSTRALIA - 6.3%
METALS & MINING - 0.1%
METAL MINING SERVICES - 0.1%
Acacia Resources Ltd. 100,000 $ 89,372
PRECIOUS METALS - 6.2%
GOLD & SILVER ORES - 5.4%
Normandy Mining Ltd. 11,544,508 6,637,428
GOLD ORES - 0.8%
Delta Gold NL 200,000 183,299
Lihir Gold Ltd. (a) 400,000 357,489
Resolute Ltd. (a) 800,000 450,846
991,634
TOTAL PRECIOUS METALS 7,629,062
TOTAL AUSTRALIA 7,718,434
CANADA - 57.5%
METALS & MINING - 3.5%
METAL MINING - 0.1%
Morgain Minerals, Inc. (a) 295,000 58,304
Romarco Minerals, Inc. (a) 5,000 4,782
63,086
METAL MINING SERVICES - 0.2%
Minefinders Corp. Ltd. (a) 297,600 159,378
Minefinders Corp. Ltd. (a)(c) 200,000 107,109
266,487
MISCELLANEOUS NONMETALLIC MINERALS - 3.2%
Aber Resources Ltd. (a) 291,700 1,543,583
Archangel Diamond Corp. (a) 19,600 6,248
Camphor Ventures, Inc. (a) 14,100 5,843
DIA Metropolitan Minerals Ltd. (a):
Class A (sub-vtg.) 50,650 557,037
Class B (multi-vtg.) 172,400 1,857,545
3,970,256
TOTAL METALS & MINING 4,299,829
OIL & GAS - 0.4%
OIL & GAS FIELD EXPLORATION SERVICES - 0.4%
Southwestern Gold Corp. (a) 207,500 420,689
PRECIOUS METALS - 53.6%
GOLD & SILVER ORES - 0.9%
Goldcorp, Inc. Class A (a) 129,500 330,252
Mentor Exploration & Development 188,000 299,649
Co. Ltd. (d)
Richmont Mines, Inc. (a) 187,300 423,918
1,053,819
GOLD ORES - 52.7%
Agnico-Eagle Mines Ltd. 40,000 110,934
Argosy Mining Corp. (a) 55,000 6,312
SHARES VALUE (NOTE 1)
Argosy Mining Corp. (a)(c) 375,000 $ 43,035
Barrick Gold Corp. 4,100 53,194
Brazilian Resources, Inc. (a) 580,000 85,049
Cambior, Inc. 829,700 3,491,246
Canarc Resource Corp. (a) 530,000 40,548
Cathedral Gold Corp. (a) 79,000 7,555
Crown Resources Corp. (a) 307,700 846,175
Euro-Nevada Mining Corp. Ltd. 1,221,400 12,069,939
Francisco Gold Corp. (a) 182,200 929,295
Francisco Gold Corp. (a)(c) 144,500 737,010
Franco Nevada Mining Corp. Ltd. 565,500 7,679,407
Franco Nevada Mining Corp. Ltd. (c) 106,900 1,451,686
Franco Nevada Mining Corp. Ltd. 33,334 255,026
Class B warrants 9/15/98 (a)(c)
Geomaque Explorations Ltd. (a) 678,100 466,910
Golden Knight Resources, Inc. (a) 853,200 244,782
Golden Queen Mining Co. Ltd. (a) 120,800 46,210
Greenstone Resources Ltd. (a) 2,229,800 2,430,958
Greenstone Resources Ltd. (a)(c) 120,000 130,826
High River Gold Mines Ltd. (a) 60,000 14,919
Indochina Goldfields Ltd. (a) 20,000 12,113
Indochina Goldfields Ltd. (a)(c) 100,000 60,567
IAMGOLD International African Mining Gold Corp. (a) 175,200 277,014
IAMGOLD International African Mining Gold Corp. (a)(c) 60,000 94,868
Kinross Gold Corp. (a) 1,723,100 2,966,127
Kinross Gold Corp. (a)(c) 320,000 550,845
Meridian Gold, Inc. (a) 3,539,700 10,606,688
Metallica Resources, Inc. (a)(d) 1,042,100 478,363
Metallica Resources, Inc. (a)(c)(d) 100,000 45,904
Mountain Province Mining, Inc. (a) 874,900 1,115,588
Nevsun Resources Ltd. (a) 612,000 163,876
Oliver Gold Corp. (a) 273,800 19,202
Orvana Minerals Corp. (a) 3,600 2,295
Placer Dome, Inc. 675,400 5,361,001
Prime Resources Group, Inc. 1,161,900 7,074,367
Queenston Mining, Inc. (a) 254,000 71,253
Repadre Capital Corp. (a) 156,200 248,964
Repadre Capital Corp. (a)(c) 155,000 247,051
Rio Narcea Gold Mines Ltd. (a) 193,000 295,314
Samax Gold, Inc. (a) 75,000 248,645
Samax Gold, Inc. (a)(c) 240,000 795,665
Silver Standard Resources, Inc. (a) 170,000 109,468
Sudbury Contact Mines Ltd. (a) 114,800 36,595
Sutton Resources Ltd. (a) 81,700 190,121
Teck Corp. Class B (sub-vtg.) 86,000 507,172
TVI Pacific, Inc. (a) 1,917,000 61,109
TVI Pacific, Inc. (c) 96,000 3,060
TVX Gold, Inc. (a) 1,207,900 1,347,673
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
CANADA - CONTINUED
PRECIOUS METALS - CONTINUED
GOLD ORES - CONTINUED
Vengold, Inc. (a) 215,000 $ 130,220
Viceroy Resources Corp. (a) 130,000 165,763
64,427,907
TOTAL PRECIOUS METALS 65,481,726
TOTAL CANADA 70,202,244
FRANCE - 0.4%
PRECIOUS METALS - 0.4%
GOLD ORES - 0.4%
Guyanor Resources SA Class B (a) 493,440 475,036
GHANA - 1.6%
PRECIOUS METALS - 1.6%
GOLD ORES - 1.6%
Ashanti Goldfields Co. Ltd. GDR 316,422 1,977,638
MEXICO - 0.9%
PRECIOUS METALS - 0.9%
GOLD & SILVER ORES - 0.9%
Industrias Penoles SA 470,000 1,117,711
PERU - 4.6%
PRECIOUS METALS - 4.6%
SILVER ORES - 4.6%
Compania de Minas Buenaventura SA:
Series A sponsored ADR 274,445 1,116,448
Series T sponsored ADR 1,146,549 4,219,617
sponsored ADR Class B 41,700 317,963
5,654,028
UNITED STATES OF AMERICA - 26.7%
PRECIOUS METALS - 23.0%
GOLD & SILVER ORES - 8.4%
Getchell Gold Corp. (a) 1,139,648 10,256,832
GOLD ORES - 14.6%
Battle Mountain Gold Co. 36,000 110,250
Homestake Mining Co. 598,800 5,314,350
Newmont Gold Co. 328,000 4,879,000
Newmont Mining Corp. 70,440 964,148
Stillwater Mining Co. (a) 335,600 5,893,975
Stillwater Mining Co. (a)(c) 39,600 695,582
17,857,305
TOTAL PRECIOUS METALS 28,114,137
SECURITIES INDUSTRY - 3.1%
INVESTMENT MANAGERS - 3.1%
Pioneer Group, Inc. 207,500 3,722,031
SHARES VALUE (NOTE 1)
SERVICES - 0.6%
JEWELRY, PRECIOUS METAL - 0.6%
Lazare Kaplan International, Inc. (a) 85,300 $ 709,056
TOTAL UNITED STATES OF AMERICA 32,545,224
TOTAL COMMON STOCKS 119,690,315
(Cost $250,924,998)
</TABLE>
CASH EQUIVALENTS - 2.0%
Taxable Central Cash Fund (b) 2,484,808 2,484,808
(Cost 2,484,808)
TOTAL INVESTMENT IN SECURITIES - 100% $ 122,175,123
(Cost $253,409,806)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 5.58%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(c) Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in
transactions exempt from registration, normally to qualified
institutional buyers. At the period end, the value of these securities
amounted to $5,218,234 or 4.2% of net assets.
(d) Affiliated company (see Note 10 of Notes to Financial Statements).
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $29,745,387 and $28,133,128, 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 $2,880 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
affiliated are as follows:
PURCHASES SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Mentor Exploration & Development
Co. Ltd. $ - $ - $ - $ 299,649
Metallica Resources, Inc. - - - 524,267
TOTALS $ - $ - $ - $ 823,916
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $254,648,282. Net unrealized depreciation
aggregated $132,473,159, of which $5,944,069 related to appreciated
investment securities and $138,417,228 related to depreciated
investment securities.
At February 28, 1998, the fund had a capital loss carryforward of
approximately $35,849,000 all of 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
GOLD PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31,
1998
(UNAUDITED)
ASSETS
Investment in $ 122,175,123
securities, at
value
(cost
$253,409,80
6) -
See
accompanyin
g schedule
Receivable for 2,772,605
investments
sold
Receivable for 662,371
fund shares
sold
Dividends 267,616
receivable
Interest 15,513
receivable
Redemption fees 2,867
receivable
Other 3,500
receivables
TOTAL ASSETS 125,899,595
LIABILITIES
Payable for $ 2,086,659
fund shares
redeemed
Accrued 76,565
management
fee
Other payables 178,852
and
accrued
expenses
TOTAL LIABILITIES 2,342,076
NET ASSETS $ 123,557,519
Net Assets
consist of:
Paid in capital $ 300,943,298
Accumulated (3,368,524)
net investment
loss
Accumulated (42,779,829)
undistributed
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized (131,237,426)
appreciation
(depreciation)
on
investments
and assets
and liabilities
in
foreign
currencies
NET ASSETS, for $ 123,557,519
13,998,026
shares
outstanding
NET ASSET $8.83
VALUE and
redemption
price per
share
($123,557,5
19 (divided by)
13,998,026
shares)
Maximum $9.10
offering price
per share
(100/97.00
of $8.83)
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED AUGUST
31, 1998
(UNAUDITED)
INVESTMENT $ 792,460
INCOME
Dividends
Interest 142,907
(including
income on
securities
loaned of
$10,629)
TOTAL INCOME 935,367
EXPENSES
Management $ 604,110
fee
Transfer agent 801,919
fees
Accounting and 103,603
security
lending fees
Non-interested 517
trustees'
compensation
Custodian fees 56,858
and expenses
Registration fees 32,693
Audit 13,065
Legal 613
Reports to 42,061
shareholders
Miscellaneous 200
Total expenses 1,655,639
before
reductions
Expense (22,875) 1,632,764
reductions
NET INVESTMENT (697,397)
INCOME (LOSS)
REALIZED AND
UNREALIZED
GAIN (LOSS)
Net realized
gain (loss) on:
Investment 2,473,250
securities
Foreign (19,129) 2,454,121
currency
transactions
Change in net
unrealized
appreciation
(depreciation)
on:
Investment (93,843,711)
securities
Assets and (6,260) (93,849,971)
liabilities in
foreign
currencies
NET GAIN (LOSS) (91,395,850)
NET INCREASE $ (92,093,247)
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 314,117
INFORMATION
Sales charges
paid to FDC
Sales charges $ 310,413
- - Retained by
FDC
Deferred sales $ 10,596
charges
withheld
by FDC
Exchange fees $ 44,850
withheld by
FSC
Expense $ 22,821
reductions
Directed
brokerage
arrangements
Transfer 54
agent credits
$ 22,875
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED YEAR ENDED
(DECREASE) IN AUGUST 31, 1998 FEBRUARY 28,
NET ASSETS (UNAUDITED) 1998
Operations $ (697,397) $ (1,879,396)
Net
investment
income (loss)
Net realized 2,454,121 (42,330,692)
gain (loss)
Change in net (93,849,971) (126,678,432)
unrealized
appreciation
(depreciation)
NET INCREASE (92,093,247) (170,888,520)
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distributions - (17,386,044)
to
shareholders
from net
realized gain
Share 157,080,280 510,192,668
transactions
Net proceeds
from sales of
shares
Reinvestment - 17,026,797
of
distributions
Cost of shares (161,861,963) (549,713,586)
redeemed
NET INCREASE (4,781,683) (22,494,121)
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
Redemption 764,187 2,333,972
fees
TOTAL (96,110,743) (208,434,713)
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
Beginning of 219,668,262 428,102,975
period
End of period $ 123,557,519 $ 219,668,262
(including
accumulate
d net
investment
loss of
$3,368,52
4 and
$2,671,12
7,
respectively)
OTHER
INFORMATION
Shares
Sold 10,503,999 26,655,922
Issued in - 755,071
reinvestment
of
distributions
Redeemed (10,982,776) (28,111,853)
Net increase (478,777) (700,860)
(decrease)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED YEAR ENDED YEARS ENDED
ENDED FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
AUGUST 31,
1998
SELECTED (UNAUDITED) 1998 1997 1996 1995 1994
PER-SHARE
DATA
Net asset $ 15.17 $ 28.21 $ 27.11 $ 18.44 $ 22.66 $ 14.15
value,
beginning
of period
Income from
Investment
Operation
s
Net (.05) (.13) (.16) (.06) (.05) (.11)
investment
income
(loss) D
Net (6.34) (11.78) 1.60 8.62 (4.25) 8.44
realized
and
unrealized
gain (loss)
Total from (6.39) (11.91) 1.44 8.56 (4.30) 8.33
investment
operations
Less
Distributio
ns
From net - (1.29) (.50) - - -
realized
gain
Redemption .05 .16 .16 .11 .08 .18
fees
added to
paid in
capital
Net asset $ 8.83 $ 15.17 $ 28.21 $ 27.11 $ 18.44 $ 22.66
value, end
of period
TOTAL (41.79)% (43.15)% 6.10% 47.02% (18.62)% 60.14%
RETURN B, C
RATIOS AND
SUPPLEME
NTAL DATA
Net assets, $ 123,558 $ 219,668 $ 428,103 $ 451,493 $ 278,197 $ 347,406
end of
period
(000
omitted)
Ratio of 1.58% A 1.55% 1.44% 1.39% 1.41% 1.50%
expenses
to average
net assets
Ratio of 1.56% A, E 1.48% E 1.42% E 1.39% 1.41% 1.49% E
expenses
to average
net assets
after
expense
reductions
Ratio of net (.67)% A (.67)% (.59)% (.27)% (.22)% (.51)%
investment
income
(loss) to
average
net assets
Portfolio 29% A 89% 63% 56% 34% 39%
turnover
rate
Average $ .0193 $ .0193 $ .0270
commissio
n rate F
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 TOT
AL 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 FO
R 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 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 total returns would have been
lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 LIFE OF
AUGUST 31, 1998 MONTHS YEAR FUND
SELECT NATURAL RESOURCES -27.25% -31.04% -21.93%
SELECT NATURAL RESOURCES -29.50% -33.18% -24.35%
(LOAD ADJ.)
S&P 500 -8.10% 8.10% 23.35%
GS Natural Resources -24.09% -26.69% -11.03%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year or since
the fund started on March 3, 1997. You can compare the fund's returns
to the performance of both the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks - and the Goldman Sachs
Natural Resources Index - a market capitalization-weighted index of 96
stocks designed to measure the performance of companies in the natural
resource sector. These benchmarks include reinvestment of dividends
and capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
AUGUST 31, 1998 YEAR FUND
SELECT NATURAL RESOURCES -31.04% -15.25%
SELECT NATURAL RESOURCES -33.18% -17.02%
(LOAD ADJ.)
S&P 500 8.10% 15.06%
GS Natural Resources -26.69% -7.51%
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.
(checkmark)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.
$10,000 OVER LIFE OF FUND
Select Natural Resources S&P 500
$12,335
$7,565
$
$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 August 31, 1998, the value of the
investment would have been $7,565 - a 24.35% decrease on the initial
investment - and includes the effect of a $7.50 trading fee. For
comparison, look at how the Standard & Poor's 500 Index did over the
same period. With dividends and capital gains, if any, reinvested, the
same $10,000 investment would have grown to $12,335 - a 23.35%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
Total SA sponsored ADR 6.9
USX-Marathon Group 6.3
Elf Aquitaine SA sponsored ADR 5.5
Amoco Corp. 5.4
Chevron Corp. 4.5
Texaco, Inc. 4.2
Exxon Corp. 4.2
Tosco Corp. 3.6
Phillips Petroleum Co. 3.2
Amerada Hess Corp. 3.0
TOP INDUSTRIES AS OF AUGUST 31, 1998
ROW: 1, COL: 1, VALUE: 19.4
ROW: 1, COL: 2, VALUE: 2.0
ROW: 1, COL: 3, VALUE: 7.9
ROW: 1, COL: 4, VALUE: 12.1
ROW: 1, COL: 5, VALUE: 23.3
ROW: 1, COL: 6, VALUE: 35.3
OIL & GAS EXPLORATION 35.3%
CRUDE PETROLEUM & GAS 23.4%
PETROLEUM REFINERS 12.1%
OIL & GAS SERVICES 7.9%
OIL FIELD EQUIPMENT 2.0%
ALL OTHERS 19.3%
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
NATURAL RESOURCES PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Lawrence Rakers)
Lawrence Rakers,
Portfolio Manager
of Fidelity Select
Natural Resources Portfolio
Q. HOW DID THE FUND PERFORM, LARRY?
A. For the six months that ended August 31, 1998, the fund returned
- -27.25%, underperforming the Standard & Poor's 500 index, which
returned -8.10%. For the 12 months that ended August 31, 1998, the
fund returned -31.04%. During the same 12-month period, the S&P 500
returned 8.10%. Beginning this period, the fund also compares itself
to the Goldman Sachs Natural Resources index - an index of 96 stocks
designed to measure the performance of companies in the natural
resource sector - which returned -24.09% and -26.69% over the same
six- and 12-month periods, respectively.
Q. WHAT FACTORS HURT THE FUND'S PERFORMANCE DURING THE PERIOD?
A. The financial crisis in Asia and most recently in Russia have been
the primary causes for declining commodity prices. Most natural
resources commodities - with the exception of palladium, platinum and
silver - are down about 25% to 35% over the past year. Natural
resources stock prices move in close tandem with commodity prices, so
it has been a difficult environment for the fund. Historically, Asia
has represented about 40% of the annual increase in demand for most
commodities. Since demand for a typical commodity grows between 2% to
2 % each year, difficulties in Asia have resulted in a decline in
annual demand growth, causing a severe decline in commodity prices. In
addition, investor sentiment has been negative toward this sector,
causing further downward pressure on stock prices.
Q. WHAT FACTORS CAUSED THE STEEP DECLINE IN OIL PRICES?
A. With regard to oil, we had one of the warmest weather patterns in
recent history in the U.S., Europe and Asia, causing lower demand for
the commodity. Reduced demand, combined with financial instability in
Asian and emerging markets, resulted in the price of a barrel of oil
losing about 40% of its value during the period.
Q. IN LIGHT OF THE NEGATIVE ENVIRONMENT, WERE THERE ANY SPECIFIC
STRATEGIES YOU UTILIZED TO MINIMIZE RISKS TO THE FUND?
A. I increased the fund's holdings in energy stocks because there is a
possibility that OPEC will cut production, causing a rise in oil
prices and an appreciation in the price of energy stocks. I also
focused on integrated oil companies such as Texaco, Exxon,
USX-Marathon and Total SA. These companies' balance sheets looked
good, and they are diversified organizations that produce oil and gas,
and have refining and chemical operations. As a result, they tend to
have more stable earnings growth and offer higher dividend yields than
some of the non-integrated energy companies. More recently, I put
about 9% of the portfolio into energy service companies and drillers
such as Schlumberger. I believed these stocks could outperform other
natural resources stocks if oil prices rebound.
Q. WHAT STOCKS OR STRATEGIES HELPED THE FUND'S PERFORMANCE? WHAT WERE
THE DISAPPOINTMENTS?
A. There were a couple of factors that helped the fund's performance.
First, the fund was overweighted in integrated oil companies such as
Texaco, Exxon and British Petroleum relative to the rest of the
natural resources sector. The valuations and earnings of these
companies were more stable than most stocks in the sector. On the
negative side, while the fund had limited exposure to gold, just about
every gold stock in the fund performed poorly. The supply and demand
picture for gold indicates that we consume more than we mine, which
should be good for gold prices. However, it is difficult to predict
the direction of gold prices. The central banks of governments around
the world hold huge reserves of gold and many have been selling
recently, putting downward pressure on prices.
Q. WHAT'S YOUR OUTLOOK FOR THE NATURAL RESOURCES SECTOR?
A. The continued decline in commodity prices seems to be telling us
that Asia isn't getting better any time soon. Of course, no one really
knows how long it will take for Asia to rebound, so I will continue to
focus on individual stock selection and picking companies that I think
have the best business prospects and earnings outlooks. I believe the
natural resources sector is setting itself up for a great rally; the
only problem is that it is impossible to say exactly when it is going
to happen. Commodity prices have been beaten down for an extended
period and producers have responded by not adding to supply. We can
have a strong rally when demand picks up because commodity prices
would spike upward quickly during the lag time before supply
increases. In addition, when we start to see some global financial
stability - and assuming the U.S. and Europe continue to do well - we
may see signs of inflation. This sector traditionally has been a great
tool for hedging against a period of inflation.
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.
(checkmark)FUND FACTS
START DATE: March 3, 1997
FUND NUMBER: 514
TRADING SYMBOL: FNATF
SIZE: as of August 31, 1998, more than $4 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.
NATURAL RESOURCES PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 91.8%
SHARES VALUE (NOTE 1)
CHEMICALS & PLASTICS - 1.6%
CHEMICALS - 1.6%
du Pont (E.I.) de Nemours & Co. 800 $ 46,150
MacDermid, Inc. 400 11,100
Sasol, Ltd. 5,300 21,965
79,215
ENERGY SERVICES - 8.7%
DRILLING - 0.8%
Helmerich & Payne, Inc. 1,000 16,250
Nabors Industries, Inc. (a) 600 7,088
Transocean Offshore, Inc. 600 14,738
38,076
OIL & GAS SERVICES - 7.9%
BJ Services Co. (a) 2,300 29,038
Baker Hughes, Inc. 4,390 80,118
Coflexip sponsored ADR 1,400 43,925
Dresser Industries, Inc. 3,700 94,581
McDermott International, Inc. 1,100 22,069
Schlumberger Ltd. 2,100 92,006
Smith International, Inc. (a) 800 14,100
Varco International, Inc. (a) 2,600 18,525
394,362
TOTAL ENERGY SERVICES 432,438
ENGINEERING - 0.1%
ARCHITECTS & ENGINEERS - 0.1%
Stolt Comex Seaway SA Class A
sponsored ADR (a) 700 4,025
Stolt Comex Seaway SA 400 3,300
7,325
GAS - 0.1%
GAS DISTRIBUTION - 0.1%
MCN Energy Group, Inc. 400 7,025
METALS & MINING - 2.1%
METAL MINING - 0.2%
Breakwater Resources Ltd. (a) 13,700 6,988
Columbia Metals Ltd. (a) 20,100 897
7,885
MISCELLANEOUS NONMETAL MINERALS - 0.1%
Camphor Ventures, Inc. (a) 16,400 6,796
PRIME NONFERROUS SMELTING - 1.8%
Aluminum Co. of America 1,500 89,804
TOTAL METALS & MINING 104,485
OIL & GAS - 72.8%
CRUDE PETROLEUM & GAS - 23.4%
Anadarko Petroleum Corp. 1,600 46,000
Burlington Resources, Inc. 457 13,510
Canadian Occidental Petroleum Ltd. 400 4,782
EEX Corp. (a) 1,000 4,438
ENI Spa sponsored ADR 1,000 50,625
Elf Aquitaine SA sponsored ADR 5,600 273,700
Enron Oil & Gas Co. 400 5,200
Louis Dreyfus Natural Gas Corp. (a) 800 9,050
Magnum Hunter Resources, Inc. (a) 2,600 8,125
Occidental Petroleum Corp. 4,200 77,700
Oryx Energy Co. (a) 2,300 28,606
SHARES VALUE (NOTE 1)
Paramount Resources Ltd. (c) 2,600 $ 19,063
Penn West Petroleum Ltd. (a) 500 4,383
Petrobras PN (Pfd. Reg.) 727,800 74,281
Plains Resources, Inc. (a) 3,300 50,738
Rio Alto Exploration Ltd. (a) 2,300 18,476
Suncor Energy, Inc. 1,600 44,731
Total SA sponsored ADR 7,200 346,050
Ulster Petroleums Ltd. (a) 1,400 8,122
Vastar Resources, Inc. 800 30,400
Vintage Petroleum, Inc. 200 1,563
YPF Sociedad Anonima:
sponsored ADR Class D 1,500 33,188
Class D 500 11,202
1,163,933
OIL & GAS EXPLORATION - 35.3%
Amerada Hess Corp. 3,000 147,375
Amoco Corp. 5,900 267,344
Berkley Petroleum Corp. (a) 700 3,682
Chevron Corp. 3,000 222,188
Companie Generale de
Geophysique SA (a) 1,000 14,375
Exxon Corp. 3,200 209,400
Kerr-McGee Corp. 400 15,450
Mobil Corp. 2,100 145,163
Petro-Canada 5,200 49,729
Phillips Petroleum Co. 3,900 159,169
Texaco, Inc. 3,800 211,138
USX-Marathon Group 12,000 312,000
1,757,013
OIL FIELD EQUIPMENT - 2.0%
Camco International, Inc. 700 35,175
Cooper Cameron Corp. (a) 1,400 29,750
EVI Weatherford, Inc. (a) 2,395 36,524
101,449
PETROLEUM REFINERS - 12.1%
British Petroleum Co. PLC ADR 1,474 107,786
Coastal Corp. (The) 1,600 41,600
Frontier Oil Corp. (a) 16,300 87,613
Imperial Oil Ltd. 3,000 42,078
Royal Dutch Petroleum Co.
(NY Registry Gilder 1.25) 1,300 51,675
Shell Canada Ltd. Class A 800 11,858
Shell Transport & Trading Co.
PLC ADR 900 28,069
Tesoro Petroleum Corp. (a) 1,700 21,888
Tosco Corp. 8,200 180,400
Ultramar Diamond Shamrock Corp. 700 16,188
Valero Energy Corp. 700 12,513
601,668
TOTAL OIL & GAS 3,624,063
PACKAGING & CONTAINERS - 0.9%
GLASS CONTAINERS - 0.9%
Owens-Illinois, Inc. (a) 1,400 43,663
PRECIOUS METALS - 3.6%
GOLD & SILVER ORES - 1.7%
Getchell Gold Corp. (a) 7,500 67,500
Industrias Penoles SA 6,500 15,458
82,958
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PRECIOUS METALS - CONTINUED
GOLD ORES - 1.9%
Greenstone Resources Ltd. (a) 23,000 $ 25,075
Greenstone Resources Ltd. (a)(c) 1,500 1,635
Meridian Gold, Inc. (a) 8,400 25,171
Mountain Province Mining, Inc. (a) 1,500 1,913
Stillwater Mining Co. (a) 2,000 35,125
William Resources, Inc.
warrants 12/31/02 (a)(c) 15,750 -
William Resources, Inc. (a) 105,000 5,355
94,274
TOTAL PRECIOUS METALS 177,232
SHIP BUILDING & REPAIR - 0.3%
SHIP BUILDERS - 0.3%
Halter Marine Group, Inc. (a) 1,500 13,500
TRUCKING & FREIGHT - 1.6%
AIR COURIER SERVICES - 1.3%
CNF Transportation, Inc. 2,100 65,625
FREIGHT FORWARDING - 0.3%
Expeditors International of Washington, Inc. 600 16,688
TOTAL TRUCKING & FREIGHT 82,313
TOTAL COMMON STOCKS
(Cost $6,214,884) 4,571,259
CASH EQUIVALENTS - 8.2%
Taxable Central Cash Fund (b)
(Cost $410,114) 410,114 410,114
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $6,624,998) $ 4,981,373
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.58%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(c) Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers.
At the period end, the value of these securities amounted to $20,698
or 0.4% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $4,966,085 and $5,543,246, 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 $1,392 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 71.0%
France 13.6
Canada 5.6
United Kingdom 2.7
Netherlands Antilles 1.8
Brazil 1.5
Netherlands 1.0
Italy 1.0
Others (individually less than 1%) 1.8
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $6,631,435. Net unrealized depreciation
aggregated $1,650,062, of which $30,239 related to appreciated
investment securities and $1,680,301 related to depreciated investment
securities.
NATURAL RESOURCES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31,
1998
(UNAUDITED)
ASSETS
Investment in $ 4,981,373
securities, at
value
(cost
$6,624,998)
- -
See
accompanyin
g schedule
Receivable for 146,334
investments
sold
Receivable for 7,532
fund shares
sold
Dividends 23,466
receivable
Interest 2,003
receivable
Redemption fees 45
receivable
Receivable from 3,633
investment
adviser for
expense
reductions
TOTAL ASSETS 5,164,386
LIABILITIES
Payable to $ 19,728
custodian
bank
Payable for 145,348
investments
purchased
Payable for 36,686
fund shares
redeemed
Other payables 25,283
and
accrued
expenses
TOTAL LIABILITIES 227,045
NET ASSETS $ 4,937,341
Net Assets
consist of:
Paid in capital $ 7,117,613
Accumulated (14,913)
net investment
loss
Accumulated (522,523)
undistributed
net realized
gain (loss) on
investments
and foreign
currency
transactions
Net unrealized (1,642,836)
appreciation
(depreciation)
on
investments
and assets
and liabilities
in
foreign
currencies
NET ASSETS, for $ 4,937,341
648,653
shares
outstanding
NET ASSET $7.61
VALUE and
redemption
price per
share
($4,937,341
(divided by) 648,653
shares)
Maximum $7.85
offering price
per share
(100/97.00
of $7.61)
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED AUGUST
31, 1998
(UNAUDITED)
INVESTMENT $ 63,840
INCOME
Dividends
Interest 13,616
TOTAL INCOME 77,456
EXPENSES
Management $ 21,287
fee
Transfer agent 33,693
fees
Accounting fees 30,048
and expenses
Non-interested 14
trustees'
compensation
Custodian fees 12,476
and expenses
Registration fees 6,175
Audit 9,758
Legal 22
Reports to 1,412
shareholders
Miscellaneous 134
Total expenses 115,019
before
reductions
Expense (23,558) 91,461
reductions
NET INVESTMENT (14,005)
INCOME (LOSS)
REALIZED AND
UNREALIZED
GAIN (LOSS)
Net realized
gain (loss) on:
Investment (486,160)
securities
Foreign (334) (486,494)
currency
transactions
Change in net
unrealized
appreciation
(depreciation)
on:
Investment (1,409,315)
securities
Assets and 818 (1,408,497)
liabilities in
foreign
currencies
NET GAIN (LOSS) (1,894,991)
NET INCREASE $ (1,908,996)
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 11,601
INFORMATION
Sales charges
paid to FDC
Sales charges $ 11,601
- - Retained by
FDC
Deferred sales $ 8
charges
withheld
by FDC
Exchange fees $ 1,725
withheld by
FSC
Expense $ 759
reductions
Directed
brokerage
arrangements
Custodian 53
credits
FMR 22,746
reimbursemen
t
$ 23,558
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED MARCH 3, 1997
(DECREASE) IN AUGUST 31, 1998 (COMMENCEMENT
NET ASSETS (UNAUDITED) OF OPERATIONS) TO
FEBRUARY 28,
1998
Operations $ (14,005) $ (55,268)
Net
investment
income (loss)
Net realized (486,494) 327,737
gain (loss)
Change in net (1,408,497) (234,339)
unrealized
appreciation
(depreciation)
NET INCREASE (1,908,996) 38,130
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
Distribution to - (189,236)
shareholders
from net
realized gain
Share 2,675,683 19,111,951
transactions
Net proceeds
from sales of
shares
Reinvestment - 187,981
of
distributions
Cost of shares (3,356,284) (11,661,561)
redeemed
NET INCREASE (680,601) 7,638,371
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
Redemption 7,079 32,594
fees
TOTAL (2,582,518) 7,519,859
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
Beginning of 7,519,859 -
period
End of period $ 4,937,341 $ 7,519,859
(including
accumulate
d net
investment
loss of
$14,913
and $908,
respectively)
OTHER
INFORMATION
Shares
Sold 252,814 1,783,337
Issued in - 18,686
reinvestment
of
distributions
Redeemed (323,199) (1,082,985)
Net increase (70,385) 719,038
(decrease)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
SIX MONTHS MARCH 3,
ENDED 1997
AUGUST 31, (COMMENCEM
1998 ENT OF
OPERATIONS) TO
FEBRUARY 28,
SELECTED (UNAUDITED) 1998
PER-SHARE
DATA
Net asset $ 10.46 $ 10.00
value,
beginning
of period
Income from
Investment
Operation
s
Net (.02) (.09)
investment
income
(loss) D
Net (2.84) .76
realized
and
unrealized
gain (loss)
Total from (2.86) .67
investment
operations
Less
Distributio
ns
From net - (.26)
realized
gain
Redemption .01 .05
fees
added to
paid in
capital
Net asset $ 7.61 $ 10.46
value, end
of period
TOTAL (27.25)% 7.30%
RETURN B, C
RATIOS AND
SUPPLEME
NTAL DATA
Net assets, $ 4,937 $ 7,520
end of
period
(000
omitted)
Ratio of 2.50% A, E 2.50% A, E
expenses
to average
net assets
Ratio of 2.48% A, F 2.48% A, F
expenses
to average
net assets
after
expense
reductions
Ratio of net (.38)% A (.86)% A
investment
income
(loss) to
average
net assets
Portfolio 148% A 165% A
turnover
rate
Average $ .0213 $ .0111
commissio
n rate G
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 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 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). 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 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>
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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 MONTHS YEAR YEARS YEARS
SELECT PRECIOUS METALS -38.81% -54.12% -57.35% -40.48%
AND MINERALS
SELECT PRECIOUS METALS -40.72% -55.57% -58.70% -42.34%
AND MINERALS
(LOAD ADJ.)
S&P 500 -8.10% 8.10% 131.21% 382.74%
GS Natural Resources -24.09% -26.69% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years, or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks - and the Goldman Sachs
Natural Resources Index - a market capitalization-weighted index of 96
stocks designed to measure the performance of companies in the natural
resource sector. These benchmarks include reinvestment of dividends
and capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 YEAR YEARS YEARS
SELECT PRECIOUS METALS AND MINERALS -54.12% -15.67% -5.06%
SELECT PRECIOUS METALS AND MINERALS -55.57% -16.21% -5.36%
(LOAD ADJ.)
S&P 500 8.10% 18.25% 17.05%
GS Natural Resources -26.69% n/a n/a
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.
(checkmark)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.
$10,000 OVER 10 YEARS
Precious Metals&Minerals S&P 500
00061 SP001
1988/08/31 9700.00 10000.00
1988/09/30 9045.25 10426.00
1988/10/31 9376.67 10715.84
1988/11/30 9724.25 10562.61
1988/12/31 9318.15 10747.45
1989/01/31 9705.71 11534.17
1989/02/28 10017.43 11246.96
1989/03/31 10017.43 11509.02
1989/04/30 9562.48 12106.34
1989/05/31 9107.52 12596.64
1989/06/30 9823.66 12524.84
1989/07/31 10093.26 13655.84
1989/08/31 10295.46 13923.49
1989/09/30 10657.74 13866.40
1989/10/31 10649.32 13544.70
1989/11/30 12005.76 13821.02
1989/12/31 12315.11 14152.72
1990/01/31 13295.88 13203.07
1990/02/28 12153.07 13373.39
1990/03/31 11624.30 13727.79
1990/04/30 10430.32 13384.59
1990/05/31 11027.31 14689.59
1990/06/30 10225.63 14589.70
1990/07/31 10848.21 14543.01
1990/08/31 10959.08 13228.33
1990/09/30 10711.75 12584.11
1990/10/31 9509.24 12529.99
1990/11/30 9338.67 13339.43
1990/12/31 9719.88 13711.60
1991/01/31 8664.88 14309.43
1991/02/28 9443.16 15332.55
1991/03/31 9261.56 15703.60
1991/04/30 9235.62 15741.29
1991/05/31 9754.47 16421.31
1991/06/30 10394.39 15669.22
1991/07/31 10394.39 16399.40
1991/08/31 9304.80 16788.07
1991/09/30 9495.04 16507.71
1991/10/31 10134.96 16728.91
1991/11/30 10454.92 16054.73
1991/12/31 9869.33 17891.40
1992/01/31 10078.75 17558.62
1992/02/29 9555.18 17786.88
1992/03/31 9179.96 17440.03
1992/04/30 8638.93 17952.77
1992/05/31 9206.13 18040.74
1992/06/30 9258.07 17771.93
1992/07/31 9380.47 18498.80
1992/08/31 8960.84 18119.58
1992/09/30 8593.66 18333.39
1992/10/31 8042.90 18397.56
1992/11/30 7570.81 19024.91
1992/12/31 7711.30 19258.92
1993/01/31 7898.08 19420.70
1993/02/28 8769.71 19684.82
1993/03/31 9961.54 20100.17
1993/04/30 11571.39 19613.74
1993/05/31 13101.20 20139.39
1993/06/30 13314.66 20197.79
1993/07/31 15049.04 20117.00
1993/08/31 13537.02 20879.44
1993/09/30 12469.71 20718.67
1993/10/31 14239.66 21147.54
1993/11/30 14212.98 20946.64
1993/12/31 16318.97 21200.10
1994/01/31 15643.88 21920.90
1994/02/28 14959.80 21326.84
1994/03/31 14806.78 20396.99
1994/04/30 14807.38 20658.07
1994/05/31 14834.40 20996.87
1994/06/30 15131.63 20482.44
1994/07/31 15708.07 21154.27
1994/08/31 16824.93 22021.59
1994/09/30 18112.92 21482.06
1994/10/31 17410.38 21965.41
1994/11/30 15545.95 21165.43
1994/12/31 16132.77 21479.31
1995/01/31 13322.31 22036.27
1995/02/28 13933.67 22895.02
1995/03/31 15348.03 23570.66
1995/04/30 15475.78 24264.81
1995/05/31 15284.16 25234.68
1995/06/30 15466.65 25820.88
1995/07/31 16105.39 26677.10
1995/08/31 16324.39 26744.06
1995/09/30 16370.01 27872.66
1995/10/31 14326.04 27773.15
1995/11/30 15329.78 28992.39
1995/12/31 15594.05 29550.79
1996/01/31 18863.03 30556.70
1996/02/29 19192.68 30839.96
1996/03/31 19082.79 31136.95
1996/04/30 19514.84 31595.90
1996/05/31 20643.87 32410.76
1996/06/30 17770.80 32534.25
1996/07/31 17550.50 31096.88
1996/08/31 18505.13 31752.72
1996/09/30 17734.09 33539.76
1996/10/31 17587.22 34464.79
1996/11/30 16706.02 37069.98
1996/12/31 16439.83 36335.62
1997/01/31 15733.04 38605.87
1997/02/28 17991.10 38908.54
1997/03/31 15319.97 37309.79
1997/04/30 14301.09 39537.19
1997/05/31 14539.75 41944.21
1997/06/30 13034.37 43823.31
1997/07/31 12520.34 47310.33
1997/08/31 12584.59 44660.01
1997/09/30 13172.06 47106.04
1997/10/31 10959.89 45532.69
1997/11/30 8463.16 47640.40
1997/12/31 9059.81 48458.39
1998/01/31 9977.72 48994.34
1998/02/28 9436.15 52527.81
1998/03/31 10069.51 55217.76
1998/04/30 11042.50 55773.25
1998/05/31 9353.54 54814.51
1998/06/30 7967.49 57041.07
1998/07/31 7774.73 56433.58
1998/08/31 5766.18 48274.42
IMATRL PRASUN SHR__CHT 19980831 19980903 155559 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Precious Metals and Minerals Portfolio on
August 31, 1988, and the current 3.00% sales charge was paid. As the
chart shows, by August 31, 1998, the value of the investment would
have been $5,766 - a 42.34% decrease on the initial investment - and
includes the effect of a $7.50 trading fee. For comparison, look at
how the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $48,274 - a 382.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
Meridian Gold, Inc. 10.4
Normandy Mining Ltd. 10.2
Euro-Nevada Mining Corp. Ltd. 8.7
Getchell Gold Corp. 8.0
Franco Nevada Mining Corp. Ltd. 6.8
Anglogold Ltd. sponsored ADR 4.0
Anglogold Ltd. 3.7
Homestake Mining Co. 3.6
Prime Resources Group, Inc. 3.4
Lihir Gold Ltd. 3.3
TOP INDUSTRIES AS OF AUGUST 31, 1998
GOLD ORES 64.4%
GOLD & SILVER ORES 27.3%
METAL MINING SERVICES 2.7%
INVESTMENT MANAGERS 2.4%
SILVER ORES 1.4%
ALL OTHERS 1.8%
ROW: 1, COL: 1, VALUE: 1.8
ROW: 1, COL: 2, VALUE: 1.4
ROW: 1, COL: 3, VALUE: 2.4
ROW: 1, COL: 4, VALUE: 2.7
ROW: 1, COL: 5, VALUE: 27.3
ROW: 1, COL: 6, VALUE: 64.40000000000001
% OF FUND'S INVESTMENTS
PRECIOUS METALS AND MINERALS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of George Domolky)
George Domolky,
Portfolio Manager of
Fidelity Select Precious Metals and Minerals Portfolio
Q. HOW DID THE FUND PERFORM, GEORGE?
A. The fund's performance was extremely weak. For the six- and
12-month periods that ended August 31, 1998, the fund had total
returns of -38.81% and -54.12%, respectively. In comparison, the
Standard & Poor's 500 Index returned -8.10% and 8.10%, respectively,
over the same time periods. Beginning this period, the fund also
compares itself to the Goldman Sachs Natural Resources Index - an
index of 96 stocks designed to measure the performance of companies in
the natural resource sector - which returned -24.09% and -26.69% over
the same six- and 12-month periods, respectively.
Q. WHAT ACCOUNTED FOR THE FUND'S POOR PERFORMANCE?
A. The price of gold continued to weaken, touching the level of $271
per ounce in August. The current price level is a crucial one, because
many gold mines cannot produce gold profitably for less than
approximately $300 per ounce. The weakness was attributable to several
factors. For one thing, the European Economic Community central bank
decided to hold 15% of its currency reserves in gold, which was
somewhat below expectations. Adding to the downward pressure was the
ongoing currency crisis in Asia, where the region's weaker currencies
made gold more expensive, thereby reducing demand for gold jewelry. In
addition, the lack of inflation in North America led investors to
favor stocks, bonds and other assets. Finally, the recent turmoil in
Russia added to the negative psychology in the gold market, raising
fears that Russia would sell gold to help support its weakening
currency, the ruble. The Goldman Sachs index, though more similar to
the fund in composition than the S&P 500, includes the stocks of
companies involved with not only gold and other precious metals but
also copper, nickel, oil, gas, lumber and other natural resources.
This greater diversification enabled the Goldman Sachs index to post a
better return than the fund did.
Q. WHAT STRATEGY DID YOU EMPLOY IN SUCH A CHALLENGING ENVIRONMENT?
A. The fund continued its strategy of favoring Australian equities
over those of South Africa, based on my judgment that Australian
stocks offered good potential returns with a lower risk profile than
South African mining shares, which tend to be more volatile because of
their higher operating costs. In South Africa, the fund concentrated
on only the highest-quality companies. Of course, any foreign
investment should be viewed as carrying greater risk than U.S.
investments, but many of the best gold mining investment opportunities
lie outside United States borders.
Q. WHAT HOLDINGS HELPED THE FUND'S PERFORMANCE?
A. Plutonic Resources was the most positive contributor, strengthening
on news that the company would be acquired by Homestake Mining.
Homestake also rose in response to the takeover announcement, as well
as to the company's healthy production and cash flow. Stillwater
Mining, a major producer of platinum and palladium, had a slightly
positive influence on the fund's performance based on the company's
established production record and the surging price of palladium.
Q. WHAT HOLDINGS DISAPPOINTED YOU?
A. The stock of Getchell Gold, the fund's fourth-largest holding at
the end of the period, continued to weaken. Falling gold prices
generally result in investors favoring established producers over
exploration companies like Getchell Gold. Normandy Mining, an
Australian gold mining company, also suffered as Australian investors
fled the gold market. Greenstone Resources - another poorly performing
stock - ran into problems when the company reported production numbers
below the market's expectations.
Q. WHAT'S YOUR OUTLOOK, GEORGE?
A. Gold prices are close to their historic lows. It should not be
forgotten that in most parts of the world, gold still acts as a
currency of last resort. When the Far East recovers from its present
malaise, demand from that part of the world should increase.
Furthermore, central bank gold sales will likely decrease in 1999,
when we have passed the year-end cutoff point for participating
countries of the European Economic Community to adjust their currency
reserves prior to phasing in the region's new currency, the euro.
Nonetheless, it is impossible to predict where gold's price will go
from here. Regardless of the supply and demand considerations for
gold, the fund should be well served by its emphasis on strong
companies with healthy balance sheets and the capability to add
meaningfully to production.
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.
(checkmark)FUND FACTS
START DATE: July 14, 1981
FUND NUMBER: 061
TRADING SYMBOL: FDPMX
SIZE: as of August 31, 1998, more than
$92 million
MANAGER: George Domolky, since 1997;
manager, Fidelity Select Gold Portfolio, since
1997; Fidelity Canada Fund, 1987-1996;
Fidelity Select Food and Agriculture Portfolio,
1985-1987; joined Fidelity in 1981
PRECIOUS METALS AND MINERALS PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 100.0%
SHARES VALUE (NOTE 1)
AUSTRALIA - 22.7%
METALS & MINING - 2.6%
METAL MINING SERVICES - 2.6%
Acacia Resources Ltd. 2,600,000 $ 2,323,679
MISCELLANEOUS METAL ORES, NEC - 0.0%
Helix Resources NL (a) 150,000 17,931
TOTAL METALS & MINING 2,341,610
PRECIOUS METALS - 20.1%
GOLD & SILVER ORES - 10.4%
Normandy Mining Ltd. 16,119,375 9,267,714
Sons of Gwalia NL 77,264 171,400
9,439,114
GOLD ORES - 9.7%
Centaur Mining & Exploration Ltd. (a) 7,277,770 1,615,720
Delta Gold NL 2,325,190 2,131,019
Great Central Mines Ltd. 2,384,206 1,316,493
Great Central Mines Ltd. ADR 90,000 151,875
Leo Shield Exploration NL (a) 412,000 14,072
Lihir Gold Ltd. (a) 3,360,000 3,002,908
Resolute Ltd. (a) 950,000 535,380
Ross Mining NL 100,000 40,531
8,807,998
TOTAL PRECIOUS METALS 18,247,112
TOTAL AUSTRALIA 20,588,722
CANADA - 43.6%
METALS & MINING - 1.2%
METAL MINING - 0.0%
Lexacal Investment Corp. (a) 14,875 3,130
METAL MINING SERVICES - 0.1%
Minefinders Corp. Ltd. (a) 200,200 107,216
MISCELLANEOUS NONMETALLIC MINERALS - 1.1%
Aber Resources Ltd. (a) 148,500 785,814
Archangel Diamond Corp (a) 30,000 9,563
DIA Metropolitan Minerals Ltd. Class B (multi-vtg.) (a) 19,500 210,105
1,005,482
TOTAL METALS & MINING 1,115,828
OIL & GAS - 0.3%
CRUDE PETROLEUM & NATURAL GAS - 0.0%
Solomon Resources Ltd. (a) 200,000 14,026
OIL & GAS FIELD EXPLORATION SERVICES - 0.3%
Southwestern Gold Corp. (a) 135,000 273,701
TOTAL OIL & GAS 287,727
PRECIOUS METALS - 42.1%
GOLD & SILVER ORES - 0.7%
Goldcorp, Inc. Class A (a) 253,900 647,498
SHARES VALUE (NOTE 1)
GOLD ORES - 41.4%
Agnico-Eagle Mines Ltd. 152,000 $ 421,549
Argosy Mining Corp. (a) 169,200 19,417
Cambior, Inc. 213,000 896,270
Crown Resources Corp. (a) 81,900 225,225
Euro-Nevada Mining Corp. Ltd. 800,300 7,908,607
Francisco Gold Corp. (a) 43,500 221,868
Francisco Gold Corp. (a)(b) 54,500 277,973
Franco Nevada Mining Corp. Ltd. 454,000 6,165,253
Franco Nevada Mining Corp. Ltd. (b) 80,200 1,089,104
Franco Nevada Mining Corp. Ltd. 25,000 191,266
Class B warrants 9/15/98 (a)(b)
Geomaque Explorations Ltd. (a) 457,100 314,739
Golden Knight Resources, Inc. (a) 419,300 120,296
Greenstone Resources Ltd. (a) 651,300 710,056
Greenstone Resources Ltd. (a)(b) 80,000 87,217
High River Gold Mines Ltd. (a) 60,000 14,919
Indochina Goldfields Ltd. (a) 20,000 12,113
Indochina Goldfields Ltd. (a)(b) 70,000 42,397
IAMGOLD International African 69,800 110,363
Mining Gold Corp. (a)
Kinross Gold Corp. (a) 800,000 1,377,112
Meridian Gold, Inc. (a) 3,159,400 9,467,116
Metallica Resources, Inc. (a) 448,700 205,970
Metallica Resources, Inc. (a)(b) 100,000 45,904
Mountain Province Mining, Inc. (a) 336,700 429,327
Nevsun Resources Ltd. (a) 158,600 42,469
Orvana Minerals Corp. (a) 4,000 2,550
Prime Resources Group, Inc. 506,900 3,086,321
Repadre Capital Corp. (a) 181,200 288,811
Rio Narcea Gold Mines Ltd. (a) 1,118,000 1,710,679
Samax Gold, Inc. (a) 15,000 49,729
Sudbury Contact Mines Ltd. (a) 50,000 15,939
Sutton Resources Ltd. (a) 112,500 261,795
TVI Pacific, Inc. (a) 1,146,800 36,557
TVX Gold, Inc. (a) 1,069,500 1,193,258
Vengold, Inc. (a) 410,600 248,690
Viceroy Resources Corp. (a) 194,700 248,263
37,539,122
TOTAL PRECIOUS METALS 38,186,620
TOTAL CANADA 39,590,175
GHANA - 1.6%
PRECIOUS METALS - 1.6%
GOLD ORES - 1.6%
Ashanti Goldfields Co. Ltd. (Reg.) unit 225,773 1,411,081
MEXICO - 0.5%
PRECIOUS METALS - 0.5%
GOLD & SILVER ORES - 0.5%
Industrias Penoles SA 180,000 428,060
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PERU - 1.4%
PRECIOUS METALS - 1.4%
SILVER ORES - 1.4%
Compania de Minas Buenaventura SA sponsored ADR Class B 166,900 $ 1,272,613
SOUTH AFRICA - 12.4%
HOLDING COMPANIES - 0.3%
OFFICES OF HOLDING COMPANIES, NEC - 0.3%
Gencor Ltd. (Reg.) 165,000 236,800
PRECIOUS METALS - 12.1%
GOLD & SILVER ORES - 7.7%
Anglogold Ltd. 100,436 3,391,546
Anglogold Ltd. sponsored ADR 224,690 3,651,213
7,042,759
GOLD ORES - 4.4%
Anglo American Corp. of South 61,400 1,526,754
Africa Ltd.
De Beers Consolidated Mines ADR 37,500 431,250
Gold Fields of South Africa Ltd. 85,600 696,362
Gold Fields of South Africa Ltd. ADR 73,700 626,450
Randfontein Estates Gold Mining Co. warrants 7/1/02 (a) 52,463 20,051
Western Areas Gold Mining Ltd. (a) 345,564 678,929
3,979,796
TOTAL PRECIOUS METALS 11,022,555
TOTAL SOUTH AFRICA 11,259,355
UNITED KINGDOM - 0.0%
PRECIOUS METALS - 0.0%
GOLD ORES - 0.0%
Bakyrchik Gold PLC (a) 70,900 4,765
UNITED STATES OF AMERICA - 17.8%
PRECIOUS METALS - 15.3%
GOLD & SILVER ORES - 8.0%
Getchell Gold Corp. (a) 805,200 7,246,800
GOLD ORES - 7.3%
Battle Mountain Gold Co. 60,000 183,750
Homestake Mining Co. 372,900 3,290,237
Newmont Mining Corp. 110 1,506
Stillwater Mining Co. (a) 156,100 2,741,506
Stillwater Mining Co. (a)(b) 23,000 404,000
6,620,999
TOTAL PRECIOUS METALS 13,867,799
SECURITIES INDUSTRY - 2.4%
INVESTMENT MANAGERS - 2.4%
Pioneer Group, Inc. 122,100 2,190,169
SHARES VALUE (NOTE 1)
SERVICES - 0.1%
JEWELRY, PRECIOUS METAL - 0.1%
Lazare Kaplan International, Inc. (a) 10,000 $ 83,125
TOTAL UNITED STATES OF AMERICA 16,141,093
TOTAL INVESTMENT IN SECURITIES - 100% $ 90,695,864
(Cost $181,511,299)
</TABLE>
LEGEND
(a) Non-income producing
(b) 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
$2,137,861 or 2.3% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $30,891,962 and $35,377,986, 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 $3,914 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).
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $182,498,932. Net unrealized depreciation
aggregated $91,803,068, of which $5,246,993 related to appreciated
investment securities and $97,050,061 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
AUGUST 31,
1998
(UNAUDITED)
ASSETS
INVESTMENT IN $ 90,695,864
SECURITIES, AT
VALUE
(COST
$181,511,29
9) -
SEE
ACCOMPANYIN
G SCHEDULE
RECEIVABLE FOR 2,338,604
INVESTMENTS
SOLD
RECEIVABLE FOR 430,704
FUND SHARES
SOLD
DIVIDENDS 556,556
RECEIVABLE
INTEREST 12,638
RECEIVABLE
REDEMPTION FEES 1,658
RECEIVABLE
TOTAL ASSETS 94,036,024
LIABILITIES
PAYABLE TO $ 467,150
CUSTODIAN
BANK
PAYABLE FOR 1,260,092
FUND SHARES
REDEEMED
ACCRUED 57,892
MANAGEMENT
FEE
OTHER PAYABLES 172,238
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 1,957,372
NET ASSETS $ 92,078,652
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 254,134,874
ACCUMULATED (1,478,570)
NET INVESTMENT
LOSS
ACCUMULATED (69,756,250)
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED (90,821,402)
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
AND ASSETS
AND LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, FOR $ 92,078,652
14,649,210
SHARES
OUTSTANDING
NET ASSET $6.29
VALUE AND
REDEMPTION
PRICE PER
SHARE
($92,078,65
2 (DIVIDED BY)
14,649,210
SHARES)
MAXIMUM $6.48
OFFERING PRICE
PER SHARE
(100/97.00
OF $6.29)
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED AUGUST
31, 1998
(UNAUDITED)
INVESTMENT $ 1,140,320
INCOME
DIVIDENDS
INTEREST 110,391
(INCLUDING
INCOME ON
SECURITIES
LOANED OF
$3,486)
TOTAL INCOME 1,250,711
EXPENSES
MANAGEMENT $ 455,579
FEE
TRANSFER AGENT 737,553
FEES
ACCOUNTING AND 78,283
SECURITY
LENDING FEES
NON-INTERESTED 441
TRUSTEES'
COMPENSATION
CUSTODIAN FEES 46,525
AND EXPENSES
REGISTRATION FEES 50,974
AUDIT 11,901
LEGAL 435
REPORTS TO 40,632
SHAREHOLDERS
TOTAL EXPENSES 1,422,323
BEFORE
REDUCTIONS
EXPENSE (32,685) 1,389,638
REDUCTIONS
NET INVESTMENT (138,927)
INCOME (LOSS)
REALIZED AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS) ON:
INVESTMENT 481,494
SECURITIES
FOREIGN (18,936) 462,558
CURRENCY
TRANSACTIONS
CHANGE IN NET
UNREALIZED
APPRECIATION
(DEPRECIATION)
ON:
INVESTMENT (62,880,726)
SECURITIES
ASSETS AND (6,320) (62,887,046)
LIABILITIES IN
FOREIGN
CURRENCIES
NET GAIN (LOSS) (62,424,488)
NET INCREASE $ (62,563,415)
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 251,117
INFORMATION
SALES CHARGES
PAID TO FDC
SALES CHARGES $ 249,714
- - RETAINED BY
FDC
DEFERRED SALES $ 7,162
CHARGES
WITHHELD
BY FDC
EXCHANGE FEES $ 40,073
WITHHELD BY
FSC
EXPENSE $ 31,930
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEMENTS
CUSTODIAN 331
CREDITS
TRANSFER 424
AGENT CREDITS
$ 32,685
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED YEAR ENDED
(DECREASE) IN AUGUST 31, 1998 FEBRUARY 28,
NET ASSETS (UNAUDITED) 1998
OPERATIONS $ (138,927) $ (511,682)
NET
INVESTMENT
INCOME (LOSS)
NET REALIZED 462,558 (66,607,356)
GAIN (LOSS)
CHANGE IN NET (62,887,046) (65,517,001)
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (62,563,415) (132,636,039)
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
SHARE 221,207,326 372,321,003
TRANSACTIONS
NET PROCEEDS
FROM SALES OF
SHARES
COST OF SHARES (233,839,649) (401,322,827)
REDEEMED
NET INCREASE (12,632,323) (29,001,824)
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION 1,314,182 2,011,726
FEES
TOTAL (73,881,556) (159,626,137)
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
BEGINNING OF 165,960,208 325,586,345
PERIOD
END OF PERIOD $ 92,078,652 $ 165,960,208
(INCLUDING
ACCUMULATE
D NET
INVESTMENT
LOSS OF
$1,478,57
0 AND
$1,339,64
3,
RESPECTIVELY)
OTHER
INFORMATION
SHARES
SOLD 21,158,504 30,945,409
REDEEMED (22,658,561) (31,406,772)
NET INCREASE (1,500,057) (461,363)
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED YEAR ENDED YEARS ENDED
ENDED FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
AUGUST 31,
1998
SELECTED (UNAUDITED) 1998 1997 1996 1995 1994
PER-SHARE
DATA
NET ASSET $ 10.28 $ 19.60 $ 20.96 $ 15.27 $ 16.62 $ 9.86
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET (.01) (.04) (.01) .07 .17 .21
INVESTMENT
INCOME
(LOSS) D
NET (4.06) (9.42) (1.42) 5.54 (1.42) 6.48
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM (4.07) (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 .08 .14 .12 .14 .13 .28
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 6.29 $ 10.28 $ 19.60 $ 20.96 $ 15.27 $ 16.62
VALUE, END
OF PERIOD
TOTAL (38.81)% (47.55)% (6.26)% 37.74% (6.86)% 70.58%
RETURN B, C
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 92,079 $ 165,960 $ 325,586 $ 467,196 $ 364,204 $ 409,212
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.81% A 1.82% 1.62% 1.52% 1.46% 1.55%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.76% A, E 1.76% E 1.61% E 1.52% 1.46% 1.55%
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.18)% A (.26)% (.05)% .39% .99% 1.38%
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 41% A 84% 54% 53% 43% 73%
TURNOVER
RATE
AVERAGE $ .0182 $ .0096 $ .0141
COMMISSIO
N RATE F
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 TOT
AL 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 FO
R 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 PAST 6 LIFE OF
AUGUST 31, 1998 MONTHS FUND
SELECT BUSINESS SERVICES AND OUTSOURCING -7.63% 0.59%
SELECT BUSINESS SERVICES AND OUTSOURCING -10.48% -2.50%
(LOAD ADJ.)
S&P 500 -8.10% -4.10%
GS TECHNOLOGY -8.97% -4.03%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months or since the fund
started on February 4, 1998. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks - and the Goldman Sachs
Technology Index - a market capitalization-weighted index of 190
stocks designed to measure the performance of companies in the
technology sector. These benchmarks include reinvestment of dividends
and capital gains, if any, and exclude 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.
(checkmark)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.
$10,000 OVER LIFE OF FUND
Business Svcs/Outsourcing S&P 500
00353 SP001
1998/02/04 9700.00 10000.00
1998/02/28 10563.30 10435.43
1998/03/31 11339.30 10969.83
1998/04/30 11329.55 11080.19
1998/05/31 10950.93 10889.72
1998/06/30 11824.67 11332.06
1998/07/31 11620.80 11211.37
1998/08/31 9749.31 9590.43
IMATRL PRASUN SHR__CHT 19980831 19980914 084853 R00000000000010
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Select Business Services and Outsourcing
Portfolio on February 4, 1998, when the fund started, and the current
3.00% sales charge was paid. As the chart shows, by August 31, 1998,
the value of the investment would have been to $9,750 - a 2.50%
decrease on the initial investment - and includes the effect of a
$7.50 trading fee. For comparison, look at how the Standard & Poor's
500 Index did over the same period. With dividends and capital gains,
if any, reinvested, the same $10,000 investment would have been $9,590
- - a 4.10% decrease.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
IMS HEALTH, INC. 8.1
FIRST DATA CORP. 7.3
DST SYSTEMS, INC. 6.0
EQUIFAX, INC. 4.7
AFFILIATED COMPUTER SERVICES, INC. CLASS A 4.5
CERIDIAN CORP. 4.4
AUTOMATIC DATA PROCESSING, INC. 3.8
USCS INTERNATIONAL, INC. 3.7
NIELSEN MEDIA RESEARCH 3.3
SABRE GROUP HOLDINGS, INC. CLASS A 3.2
TOP INDUSTRIES AS OF AUGUST 31, 1998
% OF FUND'S INVESTMENTS
DATA PROCESSING 30.6%
COMPUTER SERVICES 28.9%
MANAGEMENT CONSULTING
SERVICES 10.8%
ADVERTISING AGENCIES 4.7%
FREIGHT FORWARDING 4.0%
ALL OTHERS 21.0%
ROW: 1, COL: 1, VALUE: 21.0
ROW: 1, COL: 2, VALUE: 4.0
ROW: 1, COL: 3, VALUE: 4.7
ROW: 1, COL: 4, VALUE: 10.8
ROW: 1, COL: 5, VALUE: 28.9
ROW: 1, COL: 6, VALUE: 30.6
*
* INCLUDES SHORT-TERM INVESTMENTS
BUSINESS SERVICES AND OUTSOURCING PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Michael Tarlowe)
Michael Tarlowe,
Portfolio Manager of
Select Business Services
and Outsourcing Portfolio
Q. MICHAEL, HOW DID THE FUND PERFORM?
A. For the six months that ended August 31, 1998, the fund had a total
return of -7.63%, while the Standard & Poor's 500 Index returned
- -8.10% during the same period. Beginning this period, the fund also
compares itself to the Goldman Sachs Technology Index - an index of
190 stocks designed to measure the performance of companies in the
technology sector - which returned -8.97% over the same six-month
period. Since its inception on February 4, 1998, the fund had a total
return of 0.59%, while the S&P 500 and the Goldman Sachs Technology
Index returned -4.10% and -4.03%, respectively.
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE OVER THE PAST SIX
MONTHS?
A. Like the broader market, the business services and outsourcing
sector saw a broad-based decline, especially toward the latter part of
the period. The cause of this downdraft was clear evidence of
weakening economies overseas, and the growing fear that companies with
business there were at risk of reporting disappointing earnings. In
addition, stock valuations in some sectors had been at very high
levels. The fund and the sector performed slightly better than the
market and the Goldman Sachs index because the companies in the sector
tend to have stable, recurring revenues and limited or no business in
Asia or other emerging markets. Nevertheless, there were isolated
instances of earnings disappointments for some companies, including
fund holdings First Data and Electronic Data Systems (EDS). These
companies suffered from individual internal issues as opposed to any
fundamental changes in the outlook for business services or
outsourcing companies.
Q. WHAT STRATEGY DID YOU PURSUE IN THIS ENVIRONMENT?
A. I looked to invest in companies with prospects for strong earnings
growth or improving business that were selling at appealing or
reasonable valuations. Among these investments were turnaround
situations or securities that I felt were underfollowed by the market
and thus selling at attractive valuations. Common characteristics for
my company selections included recurring revenues, a clear indication
of a strong near-term earnings outlook and solid cash flow.
Q. WHICH STOCKS PERFORMED WELL FOR THE FUND?
A. The best contributor by far was Cognizant, a market research firm
that split into two separate companies, Nielsen Media Research and IMS
Health. Cognizant exceeded earnings expectations and took aggressive
steps to enhance shareholder value as it announced its split into two
separate entities. DST Systems, a company that provides information
processing and software to the mutual fund industry, also worked out
well. It benefited from explosive growth in the mutual fund industry
and witnessed a turnaround in its international operation. Finally,
USCS International, which offers customer management software and
services to the global communications industry, was an underfollowed
stock whose valuation was extremely attractive because the market
punished the company after it announced it had lost its largest
customer. The fund took a position in the company believing it could
nevertheless continue to increase earnings, which in fact it was able
to do. As a result of this improvement, the company's share price
rose.
Q. WHAT WERE THE STORIES BEHIND THE DISAPPOINTING PERFORMANCES OF
FIRST DATA AND ELECTRONIC DATA SYSTEMS?
A. EDS - which offers a full range of information technology services
- - encountered some difficulties in its relationship with its largest
customer, General Motors. First Data, a provider of processing
services to credit card companies - experienced slower-than-expected
revenue growth and suffered from concerns that continued merger
activity among banks would hurt its business. In spite of these
problems, the fund still owned both stocks at the end of the period
based on their strong positions within their markets, appealing
valuations and what I thought were improving prospects at the end of
the period.
Q. WHAT'S YOUR OUTLOOK?
A. I'm optimistic. Stocks in the sector tend to outperform the overall
market during times of economic uncertainty because the companies
enjoy recurring revenues. In addition, their business tends to be
focused domestically. As such, if concerns about overseas economies
persist, one would expect these companies to be able to sustain or
increase their earnings. Even though many of the stocks in the sector
have held up better than the overall market over the past six months,
many of their stock prices are down from the highs they posted earlier
in the year, despite the fact that their fundamentals are unchanged or
in some instances even better than before. There are many interesting
opportunities given the market's decline and the continued demand for
outsourcing. As more and more companies look to outsource additional
functions, these companies should be the main beneficiaries.
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.
(checkmark)FUND FACTS
START DATE: FEBRUARY 4, 1998
FUND NUMBER: 353
TRADING SYMBOL: FBSOX
SIZE: AS OF AUGUST 31, 1998, MORE THAN
$51 MILLION
MANAGER: MICHAEL TARLOWE, SINCE INCEPTION;
ANALYST, TRANSPORTATION, TELECOMMUNICATIONS
EQUIPMENT, COMPUTER SERVICES AND INTERNET
SECURITIES, 1994-PRESENT; JOINED FIDELITY IN
1994
BUSINESS SERVICES AND OUTSOURCING PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 94.2%
SHARES VALUE (NOTE 1)
ADVERTISING - 6.2%
ADVERTISING - 0.5%
Outdoor Systems, Inc. (a) 12,000 $ 279,000
ADVERTISING AGENCIES - 4.7%
Interpublic Group of Companies, Inc. 19,300 1,100,100
Omnicom Group, Inc. 27,539 1,311,545
2,411,645
COMMERCIAL ART SERVICES - 0.2%
Getty Images, Inc. (a) 9,000 127,125
OUTDOOR ADVERTISING SERVICES - 0.8%
Lamar Advertising Co. Class A (a) 12,250 398,125
TOTAL ADVERTISING 3,215,895
AIR TRANSPORTATION - 0.5%
TRANSPORTATION SERVICES - 0.5%
Viad Corp. 12,600 261,450
BROADCASTING - 3.7%
COMMUNICATIONS SERVICES, NEC - 0.4%
MovieFone, Inc. Class A (a) 36,000 220,500
TELEVISION BROADCASTING - 3.3%
Nielsen Media Research 190,100 1,710,900
TOTAL BROADCASTING 1,931,400
COMPUTER SERVICES & SOFTWARE - 60.4%
COMPUTER FACILITIES MANAGEMENT - 0.3%
International Telecommunications Data
Systems, Inc. 6,500 127,563
COMPUTER SERVICES - 28.9%
Cambridge Technology Partners, Inc. (a) 41,000 1,332,500
Computer Management Sciences, Inc. (a) 23,500 399,500
Computer Sciences Corp. 25,200 1,425,375
Electronic Data Systems Corp. 24,500 820,750
Equifax, Inc. 68,500 2,440,313
Galileo International, Inc. 11,200 366,100
HBO & Co. 34,100 724,625
IntelliQuest Information Group, Inc. (a) 48,700 389,600
International Integration, Inc. (a) 16,700 258,850
Lycos, Inc. (a) 7,000 151,813
Paychex, Inc. 38,150 1,449,700
Pegasus Systems, Inc. 10,000 155,000
QRS Corp. (a) 17,700 480,113
SunGard Data Systems, Inc. (a) 20,600 652,763
Technology Solutions, Inc. (a) 83,100 950,456
USCS International, Inc. (a) 84,300 1,912,556
Wang Laboratories, Inc. (a) 52,200 1,017,900
14,927,914
CUSTOM COMPUTER PROGRAMMING SERVICES - 0.6%
Cotelligent Group, Inc. (a) 28,000 318,500
DATA PROCESSING - 30.6%
Affiliated Computer Services, Inc.
Class A (a) 71,800 2,346,963
Automatic Data Processing, Inc. 30,800 1,963,500
Ceridian Corp. (a) 47,000 2,279,500
DST Systems, Inc. (a) 54,500 3,079,250
First Data Corp. 181,000 3,744,438
Fiserv, Inc. (a) 18,550 723,450
Sabre Group Holdings, Inc. Class A (a) 51,000 1,632,000
15,769,101
SHARES VALUE (NOTE 1)
TOTAL COMPUTER SERVICES & SOFTWARE $ 31,143,078
ENGINEERING - 1.0%
ENGINEERING, ARCHITECTURE & RELATED SERVICES - 1.0%
Compass International Services Corp. 48,700 493,088
PRINTING - 0.6%
MANIFOLD BUSINESS FORMS - 0.6%
Reynolds & Reynolds Co. Class A 26,000 328,250
RETAIL & WHOLESALE, MISCELLANEOUS - 0.3%
MAIL ORDER - 0.3%
N2K, Inc. 17,000 148,750
SERVICES - 17.2%
BUSINESS SERVICES - 3.1%
ABR Information Services, Inc. (a) 38,900 564,050
Cintas Corp. 12,800 521,600
Robert Half International, Inc. (a) 11,400 547,200
1,632,850
COMMERCIAL, ECONOMIC, SOCIOLOGICAL &
EDUCATIONAL RESEARCH - 0.5%
ACNielsen Corp. (a) 12,900 258,806
CREDIT REPORTING AGENCIES - 1.6%
Dunn & Bradstreet Corp. 34,400 808,400
EMPLOYMENT AGENCIES - 0.7%
Lamalie Associates, Inc. (a) 59,500 353,276
MANAGEMENT CONSULTING SERVICES - 10.8%
Data Processing Resources Corp. (a) 6,000 150,000
Diamond Technology Partners, Inc.
Class A (a) 7,000 162,750
Forrester Research, Inc. (a) 4,700 145,700
IMS Health, Inc. 75,800 4,169,000
Market Facts, Inc. (a) 50,100 933,113
5,560,563
PERSONNEL SUPPLY SERVICES - 0.5%
Manpower, Inc. 13,300 270,988
TOTAL SERVICES 8,884,883
TEXTILES & APPAREL - 0.3%
COTTON MILLS - 0.3%
Galey & Lord, Inc. (a) 13,500 125,719
TRUCKING & FREIGHT - 4.0%
FREIGHT FORWARDING - 4.0%
Air Express International Corp. 51,200 876,800
Expeditors International of Washington, Inc. 37,400 1,040,188
Pittston Co. (Burlington Group) 17,600 139,700
2,056,688
TOTAL COMMON STOCKS
(Cost $56,001,367) 48,589,201
CASH EQUIVALENTS - 5.8%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund (b)
(Cost $2,996,495) 2,996,495 $ 2,996,495
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $58,997,862) $ 51,585,696
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.58%. 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 $75,226,500 and $33,907,890, 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 $9,358 for the
period (see Note 4 of Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $58,997,862. Net unrealized depreciation
aggregated $7,412,166, of which $1,600,054 related to appreciated
investment securities and $9,012,220 related to depreciated investment
securities.
BUSINESS SERVICES AND OUTSOURCING PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31,
1998
(UNAUDITED)
ASSETS
INVESTMENT IN $ 51,585,696
SECURITIES, AT
VALUE
(COST
$58,997,862
) -
SEE
ACCOMPANYIN
G SCHEDULE
RECEIVABLE FOR 2,301,180
INVESTMENTS
SOLD
RECEIVABLE FOR 124,189
FUND SHARES
SOLD
DIVIDENDS 29,390
RECEIVABLE
INTEREST 14,669
RECEIVABLE
REDEMPTION FEES 2,115
RECEIVABLE
PREPAID 9,284
EXPENSES
TOTAL ASSETS 54,066,523
LIABILITIES
PAYABLE FOR $ 373,889
INVESTMENTS
PURCHASED
PAYABLE FOR 1,979,050
FUND SHARES
REDEEMED
ACCRUED 31,495
MANAGEMENT
FEE
OTHER PAYABLES 69,829
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 2,454,263
NET ASSETS $ 51,612,260
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 58,631,740
ACCUMULATED (238,121)
NET INVESTMENT
LOSS
ACCUMULATED 630,807
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED (7,412,166)
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
NET ASSETS, FOR $ 51,612,260
5,134,811
SHARES
OUTSTANDING
NET ASSET $10.05
VALUE AND
REDEMPTION
PRICE PER
SHARE
($51,612,26
0 (DIVIDED BY)
5,134,811
SHARES)
MAXIMUM $10.36
OFFERING PRICE
PER SHARE
(100/97.00
OF $10.05)
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED AUGUST
31, 1998
(UNAUDITED)
INVESTMENT $ 90,264
INCOME
DIVIDENDS
INTEREST 122,124
TOTAL INCOME 212,388
EXPENSES
MANAGEMENT $ 158,470
FEE
TRANSFER AGENT 196,358
FEES
ACCOUNTING FEES 30,746
AND EXPENSES
NON-INTERESTED 72
TRUSTEES'
COMPENSATION
CUSTODIAN FEES 10,808
AND EXPENSES
REGISTRATION FEES 39,833
AUDIT 19,077
LEGAL 595
REPORTS TO 1,555
SHAREHOLDERS
MISCELLANEOUS 250
TOTAL EXPENSES 457,764
BEFORE
REDUCTIONS
EXPENSE (7,255) 450,509
REDUCTIONS
NET INVESTMENT (238,121)
INCOME (LOSS)
REALIZED AND 659,114
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON INVESTMENT
SECURITIES
CHANGE IN NET (8,038,196)
UNREALIZED
APPRECIATION
(DEPRECIATION)
ON INVESTMENT
SECURITIES
NET GAIN (LOSS) (7,379,082)
NET INCREASE $ (7,617,203)
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 520,027
INFORMATION
SALES CHARGES
PAID TO FDC
SALES CHARGES $ 520,027
- - RETAINED BY
FDC
DEFERRED SALES $ 63
CHARGES
WITHHELD
BY FDC
EXCHANGE FEES $ 10,680
WITHHELD BY
FSC
EXPENSE $ 7,011
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEMENTS
CUSTODIAN 244
CREDITS
$ 7,255
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED FEBRUARY 4, 1998
(DECREASE) IN AUGUST 31, 1998 (COMMENCEMENT
NET ASSETS (UNAUDITED) OF OPERATIONS) TO
FEBRUARY 28,
1998
OPERATIONS $ (238,121) $ (2,203)
NET
INVESTMENT
INCOME (LOSS)
NET REALIZED 659,114 16,708
GAIN (LOSS)
CHANGE IN NET (8,038,196) 626,030
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (7,617,203) 640,535
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
DISTRIBUTIONS TO (42,651) -
SHAREHOLDERS
FROM NET
REALIZED GAIN
SHARE 88,764,264 15,378,163
TRANSACTIONS
NET PROCEEDS
FROM SALES OF
SHARES
REINVESTMENT 42,504 -
OF
DISTRIBUTIONS
COST OF SHARES (45,533,319) (103,682)
REDEEMED
NET INCREASE 43,273,449 15,274,481
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION 83,509 140
FEES
TOTAL 35,697,104 15,915,156
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
BEGINNING OF 15,915,156 -
PERIOD
ENDING $ 51,612,260 $ 15,915,156
BALANCE
(INCLUDING
ACCUMULATED
NET INVESTMENT
LOSS OF
$238,121
AND $0,
RESPECTIVELY)
OTHER
INFORMATION
SHARES
SOLD 7,592,920 1,470,842
ISSUED IN 3,624 -
REINVESTMENT
OF
DISTRIBUTIONS
REDEEMED (3,922,753) (9,822)
NET INCREASE 3,673,791 1,461,020
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
SIX MONTHS FEBRUARY 4,
ENDED 1998
AUGUST 31, (COMMENCEMEN
1998 T
OF OPERATIONS)
TO FEBRUARY
28,
SELECTED (UNAUDITED) 1998
PER-SHARE
DATA
NET ASSET $ 10.89 $ 10.00
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET (.05) -
INVESTMENT
INCOME
(LOSS) D
NET (.80) .89
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM (.85) .89
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET (.01) -
REALIZED
GAIN
REDEMPTION .02 -
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 10.05 $ 10.89
VALUE, END
OF PERIOD
TOTAL (7.63)% 8.90%
RETURN B, C
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 51,612 $ 15,915
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.67% A 2.50% A, E
EXPENSES
TO
AVERAGE
NET ASSETS
RATIO OF 1.64% A, F 2.50% A
EXPENSES
TO
AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.87)% A (.49)% A
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 145% A 36% A
TURNOVER
RATE
AVERAGE $ .0351 $ .0153
COMMISSIO
N RATE G
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 TOT
AL 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
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). F F
MR 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 FO
R 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.
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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 MONTHS YEAR YEARS YEARS
SELECT COMPUTERS -0.90% -8.22% 217.13% 638.82%
SELECT COMPUTERS -3.95% -11.05% 207.55% 616.58%
(LOAD ADJ.)
S&P 500 -8.10% 8.10% 131.21% 382.74%
GS TECHNOLOGY -8.97% -3.28% N/A N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks - and the Goldman Sachs
Technology Index - a market capitalization-weighted index of 190
stocks designed to measure the performance of companies in the
technology sector. These benchmarks include reinvestment of dividends
and capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 YEAR YEARS YEARS
SELECT COMPUTERS -8.22% 25.96% 22.14%
SELECT COMPUTERS -11.05% 25.19% 21.77%
(LOAD ADJ.)
S&P 500 8.10% 18.25% 17.05%
GS TECHNOLOGY -3.28% N/A N/A
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.
(checkmark)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.
$10,000 OVER 10 YEARS
Computers S&P 500
00007 SP001
1988/08/31 9700.00 10000.00
1988/09/30 9957.69 10426.00
1988/10/31 9157.02 10715.84
1988/11/30 9101.80 10562.61
1988/12/31 9690.80 10747.45
1989/01/31 10261.39 11534.17
1989/02/28 10077.32 11246.96
1989/03/31 9598.77 11509.02
1989/04/30 10675.52 12106.34
1989/05/31 11623.43 12596.64
1989/06/30 10242.98 12524.84
1989/07/31 10427.04 13655.84
1989/08/31 10583.49 13923.49
1989/09/30 10831.97 13866.40
1989/10/31 10473.06 13544.70
1989/11/30 10242.98 13821.02
1989/12/31 10353.42 14152.72
1990/01/31 10261.39 13203.07
1990/02/28 11190.89 13373.39
1990/03/31 11991.56 13727.79
1990/04/30 11669.45 13384.59
1990/05/31 13187.95 14689.59
1990/06/30 13427.23 14589.70
1990/07/31 12470.11 14543.01
1990/08/31 10491.46 13228.33
1990/09/30 9801.23 12584.11
1990/10/31 10169.35 12529.99
1990/11/30 11844.31 13339.43
1990/12/31 12259.14 13711.60
1991/01/31 14348.77 14309.43
1991/02/28 15277.49 15332.55
1991/03/31 16484.83 15703.60
1991/04/30 15416.80 15741.29
1991/05/31 16196.93 16421.31
1991/06/30 13991.45 15669.22
1991/07/31 15397.29 16399.40
1991/08/31 16353.64 16788.07
1991/09/30 15492.92 16507.71
1991/10/31 15186.89 16728.91
1991/11/30 14144.47 16054.73
1991/12/31 16028.48 17891.40
1992/01/31 17702.10 17558.62
1992/02/29 18916.67 17786.88
1992/03/31 17424.76 17440.03
1992/04/30 16860.51 17952.77
1992/05/31 17070.91 18040.74
1992/06/30 15425.98 17771.93
1992/07/31 16181.50 18498.80
1992/08/31 15253.84 18119.58
1992/09/30 16009.35 18333.39
1992/10/31 17271.74 18397.56
1992/11/30 18342.86 19024.91
1992/12/31 19547.86 19258.92
1993/01/31 20685.92 19420.70
1993/02/28 19270.52 19684.82
1993/03/31 19653.06 20100.17
1993/04/30 19094.89 19613.74
1993/05/31 21332.11 20139.39
1993/06/30 20478.44 20197.79
1993/07/31 21332.11 20117.00
1993/08/31 22597.91 20879.44
1993/09/30 23235.72 20718.67
1993/10/31 23235.72 21147.54
1993/11/30 24226.77 20946.64
1993/12/31 25190.92 21200.10
1994/01/31 26815.14 21920.90
1994/02/28 27953.13 21326.84
1994/03/31 27663.46 20396.99
1994/04/30 27487.59 20658.07
1994/05/31 27466.90 20996.87
1994/06/30 25211.61 20482.44
1994/07/31 26008.20 21154.27
1994/08/31 29122.15 22021.59
1994/09/30 28915.25 21482.06
1994/10/31 30001.51 21965.41
1994/11/30 30177.38 21165.43
1994/12/31 30342.90 21479.31
1995/01/31 29411.82 22036.27
1995/02/28 31729.18 22895.02
1995/03/31 34170.68 23570.66
1995/04/30 36885.65 24264.81
1995/05/31 38708.97 25234.68
1995/06/30 42942.44 25820.88
1995/07/31 48339.06 26677.10
1995/08/31 49418.38 26744.06
1995/09/30 52247.68 27872.66
1995/10/31 50351.00 27773.15
1995/11/30 49135.45 28992.39
1995/12/31 46069.74 29550.79
1996/01/31 45774.35 30556.70
1996/02/29 48480.16 30839.96
1996/03/31 44380.08 31136.95
1996/04/30 49258.23 31595.90
1996/05/31 50960.51 32410.76
1996/06/30 47256.26 32534.25
1996/07/31 44091.45 31096.88
1996/08/31 45997.53 31752.72
1996/09/30 51643.82 33539.76
1996/10/31 54365.08 34464.79
1996/11/30 61761.60 37069.98
1996/12/31 60636.24 36335.62
1997/01/31 68408.84 38605.87
1997/02/28 60100.63 38908.54
1997/03/31 55367.32 37309.79
1997/04/30 58387.39 39537.19
1997/05/31 62595.74 41944.21
1997/06/30 62188.48 43823.31
1997/07/31 76537.58 47310.33
1997/08/31 78085.16 44660.01
1997/09/30 80990.28 47106.04
1997/10/31 69614.17 45532.69
1997/11/30 68324.52 47640.40
1997/12/31 60698.03 48458.39
1998/01/31 65539.08 48994.34
1998/02/28 72316.56 52527.81
1998/03/31 70679.40 55217.76
1998/04/30 77439.28 55773.25
1998/05/31 72158.13 54814.51
1998/06/30 78583.53 57041.07
1998/07/31 82773.24 56433.58
1998/08/31 71657.72 48274.42
IMATRL PRASUN SHR__CHT 19980831 19980914 085115 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Computers Portfolio on August 31, 1988,
and the current 3.00% sales charge was paid. As the chart shows, by
August 31, 1998, the value of the investment would have grown to
$71,658 - a 616.58% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $48,274 - a 382.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
DELL COMPUTER CORP. 15.4
EMC CORP. 9.7
INTERNATIONAL BUSINESS MACHINES CORP. 5.4
CISCO SYSTEMS, INC. 5.2
MICROSOFT CORP. 4.9
COMPAQ COMPUTER CORP. 4.3
APPLE COMPUTER, INC. 3.0
LUCENT TECHNOLOGIES, INC. 2.7
QUANTUM CORP. 2.7
GATEWAY 2000, INC. 2.4
TOP INDUSTRIES AS OF AUGUST 31, 1998
ROW: 1, COL: 1, VALUE: 45.9
ROW: 1, COL: 2, VALUE: 5.8
ROW: 1, COL: 3, VALUE: 6.0
ROW: 1, COL: 4, VALUE: 8.199999999999999
ROW: 1, COL: 5, VALUE: 11.4
ROW: 1, COL: 6, VALUE: 22.7
MINI & MICRO COMPUTERS 22.7%
COMPUTER PERIPHERALS 11.4%
PREPACKAGED COMPUTER
SOFTWARE 8.2%
DATACOMMUNICATIONS
EQUIPMENT 6.0%
COMPUTERS & OFFICE EQUIPMENT 5.8%
ALL OTHERS 45.9%
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
COMPUTERS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Michael Tempero)
Michael Tempero,
Portfolio Manager
of Fidelity Select
Computers Portfolio
Q. HOW DID THE FUND PERFORM, MIKE?
A. For the six-month period that ended August 31, 1998, the fund
returned -0.90%. For the same six-month period, the Standard & Poor's
500 Index returned -8.10%. For the one-year period that ended August
31, 1998, the fund returned -8.22% and the Standard & Poor's 500 Index
returned 8.10%. Beginning this period, the fund also compares itself
to the Goldman Sachs Technology Index - an index of 190 stocks
designed to measure the performance of companies in the technology
sector - which returned -8.97% and -3.28% over the same six- and
12-month periods, respectively.
Q. HOW WOULD YOU DESCRIBE THE INVESTING BACKDROP FOR COMPUTERS DURING
THE PAST SIX MONTHS?
A. Given the economic turmoil and uncertainty that went on around the
world - particularly in Asia - many computer stocks performed well
relative to their technology counterparts. That's largely because the
demand for computers remained relatively firm in the U.S. and Europe,
which helped to offset declining sales in Asia. Although a relatively
favorable backdrop helped boost computer hardware stocks through the
spring, the stock market's summer sell-off acted as a drag on them.
But not all segments of the computer industry held up as well.
Semiconductor chip companies, for instance, were hard hit when they
suffered from a surplus of supply and falling chip prices.
Q. WHICH OF THE FUND'S HOLDINGS WERE STANDOUTS DURING THE PAST SIX
MONTHS?
A. Dell continued to post strong returns and was one of the fund's
best performers during the period. The company operates a very
efficient model for selling personal computers. What I mean by that is
that Dell often is able to under-price its competitors - including
Compaq, Hewlett- Packard and IBM - because it doesn't have to worry
about stockpiling a lot of inventory. One of the most pressing issues
that faces computer makers is predicting demand. By building computers
when orders come in, rather than producing them in advance and keeping
them in inventory, Dell more or less eliminates the costs associated
with forecasting demand incorrectly.
Q. ASIDE FROM PERSONAL COMPUTER STOCKS, WHERE DID OTHER WINNERS COME
FROM?
A. Telecommunications equipment giant Lucent Technologies was one of
the fund's - as well as the stock market's - best performers during
the past six months. Lucent, spun off from AT&T Corp. in 1996,
continued to grab business away from competitors. EMC Corp., which
develops and services computer storage and retrieval products, also
performed quite well. There was continued strong demand for its
products that help companies centralize computer storage. Finally,
Cisco Systems also performed quite well. The company, which provides
networking solutions through computing devices and computer networks,
benefited from the consolidation among networking companies.
Q. WERE THERE ANY DISAPPOINTMENTS DURING THE PERIOD?
A. Yes, there were, and Quantum was the biggest of them. The company
reported worse-than-expected financial results in the spring after
suffering from an oversupply of storage devices and industry price
cutting. Other disappointments included chip makers -such as Intel -
which were hurt by slowing demand and falling chip prices.
Q. WHAT'S YOUR OUTLOOK?
A. It's important to remember that computer companies are cyclical and
their performance usually mirrors the strength or weakness of the
economy as a whole. Computer stocks have performed relatively well
over the past several years primarily because businesses have
continually accelerated their capital spending. If Asia's problems
persist and continue to act as a drag on the global economy, I would
expect capital equipment spending to slow. That said, I believe that
over time there will be continued strong demand for computer products
designed to improve productivity and save money.
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.
(checkmark)FUND FACTS
START DATE: July 29, 1985
FUND NUMBER: 007
TRADING SYMBOL: FDCPX
SIZE: as of August 31, 1998, more than
$720 million
MANGER: Michael Tempero, since 1997; manager,
Fidelity Select Insurance Portfolio, 1995-1997;
Fidelity Select Natural Gas Portfolio, 1994-1995;
joined Fidelity in 1993
COMPUTERS PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 79.8%
SHARES VALUE (NOTE 1)
COMMUNICATIONS EQUIPMENT - 9.2%
DATACOMMUNICATIONS EQUIPMENT - 6.0%
Cisco Systems, Inc. (a) 493,000 $ 40,364,375
3Com Corp. (a) 275,000 6,514,063
46,878,438
TELEPHONE EQUIPMENT - 3.2%
Ascend Communications, Inc. (a) 100,000 3,518,750
Lucent Technologies, Inc. 300,000 21,262,500
24,781,250
TOTAL COMMUNICATIONS EQUIPMENT 71,659,688
COMPUTER SERVICES & SOFTWARE - 11.0%
COMPUTER & SOFTWARE STORES - 0.5%
Inacom Corp. (a) 200,000 3,850,000
COMPUTER RELATED SERVICES, NEC - 0.4%
CNET, Inc. 50,000 1,950,000
Security Dynamics Technologies, Inc. (a) 100,000 937,500
2,887,500
COMPUTER SERVICES - 1.9%
America Online, Inc. 100,000 8,193,750
Computer Learning Centers, Inc. (a) 276,600 1,313,850
SportsLine USA, Inc. 50,000 993,750
Yahoo, Inc. (a) 70,000 4,830,000
15,331,350
CUSTOM COMPUTER PROGRAMMING SERVICES - 0.0%
Entrust Technologies, Inc. (a) 800 10,600
PREPACKAGED COMPUTER SOFTWARE - 8.2%
Citrix Systems, Inc. (a) 188,000 10,833,500
Electronics for Imaging, Inc. (a) 415,400 6,075,225
Microsoft Corp. (a) 400,000 38,375,000
Siebel Systems, Inc. (a) 454,000 8,512,500
63,796,225
TOTAL COMPUTER SERVICES & SOFTWARE 85,875,675
COMPUTERS & OFFICE EQUIPMENT - 51.7%
COMPUTER EQUIPMENT - WHOLESALE - 2.1%
CDW Computer Centers, Inc. (a) 100,000 3,850,000
CHS Electronics, Inc. (a) 100,000 1,262,500
Ingram Micro, Inc. Class A (a) 50,000 2,250,000
Insight Enterprises, Inc. (a) 127,500 5,418,750
Tech Data Corp. (a) 100,000 3,781,250
16,562,500
COMPUTER PERIPHERALS - 11.4%
EMC Corp. (a) 1,679,000 75,869,813
Fore Systems, Inc. (a) 31,700 546,825
Lexmark International Group, Inc. (a) 200,000 12,112,500
88,529,138
COMPUTER STORAGE DEVICES - 3.4%
Advanced Digital Information Corp. (a) 170,700 1,162,894
Network Appliance, Inc. 100,000 4,168,750
Quantum Corp. (a) 1,847,000 21,125,063
26,456,707
COMPUTERS & OFFICE EQUIPMENT - 5.8%
Diebold, Inc. 150,000 3,281,250
International Business Machines Corp. 375,000 42,234,375
45,515,625
SHARES VALUE (NOTE 1)
ELECTRONIC COMPUTERS - 2.7%
Gateway 2000, Inc. (a) 400,000 $ 18,925,000
Micron Electronics, Inc. (a) 200,000 2,350,000
21,275,000
GRAPHICS WORKSTATIONS - 2.3%
Sun Microsystems, Inc. (a) 450,000 17,831,250
MAINFRAME COMPUTERS - 0.5%
Unisys Corp. (a) 200,000 3,587,500
MINI & MICRO COMPUTERS - 22.7%
Apple Computer, Inc. (a) 750,000 23,390,625
Compaq Computer Corp. 1,206,350 33,702,403
Dell Computer Corp. (a) 1,200,000 120,000,000
177,093,028
OFFICE AUTOMATION - 0.8%
Xerox Corp. 69,300 6,085,405
TOTAL COMPUTERS & OFFICE EQUIPMENT 402,936,153
ELECTRONIC INSTRUMENTS - 0.6%
ELECTRONIC EQUIPMENT - 0.5%
Smart Modular Technologies, Inc. (a) 250,000 3,812,500
SEMI-CONDUCTOR CAPITAL EQUIPMENT - 0.1%
Lam Research Corp. (a) 62,400 682,500
TOTAL ELECTRONIC INSTRUMENTS 4,495,000
ELECTRONICS - 5.2%
SEMICONDUCTORS - 5.2%
Intel Corp. 200,000 14,237,500
Micron Technology, Inc. (a) 320,000 7,280,000
Semtech Corp. (a) 174,000 2,784,000
Texas Instruments, Inc. 340,000 16,213,750
40,515,250
RETAIL & WHOLESALE, MISCELLANEOUS - 2.1%
MAIL ORDER - 0.6%
Amazon Com, Inc. (a) 56,400 4,723,500
MUSIC, TV, & ELECTRONIC STORES - 1.5%
Best Buy Co., Inc. (a) 300,000 11,812,500
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 16,536,000
TOTAL COMMON STOCKS
(Cost $559,565,197) 622,017,766
CASH EQUIVALENTS - 20.2%
Taxable Central Cash Fund (b)
(Cost $157,017,199) 157,017,199 157,017,199
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $716,582,396) $ 779,034,965
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.58%. 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 $411,058,398 and $416,139,348, 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 $70,905 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the security lending program. At period end,
the value of securities loaned and the value of the collateral
amounted to $17,922,150 and $23,182,400, respectively (see Note 6 of
Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $719,517,300. Net unrealized appreciation
aggregated $59,517,665, of which $150,031,886 related to appreciated
investment securities and $90,514,221 related to depreciated
investment securities.
The fund intends to elect to defer 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
AUGUST 31,
1998
(UNAUDITED)
ASSETS
INVESTMENT IN $ 779,034,965
SECURITIES, AT
VALUE
(COST
$716,582,39
6) -
SEE
ACCOMPANYIN
G SCHEDULE
RECEIVABLE FOR 13,844,107
INVESTMENTS
SOLD
RECEIVABLE FOR 9,435,072
FUND SHARES
SOLD
DIVIDENDS 99,500
RECEIVABLE
INTEREST 600,119
RECEIVABLE
REDEMPTION FEES 108,652
RECEIVABLE
OTHER 122,361
RECEIVABLES
TOTAL ASSETS 803,244,776
LIABILITIES
PAYABLE FOR $ 20,393,052
INVESTMENTS
PURCHASED
PAYABLE FOR 37,956,869
FUND SHARES
REDEEMED
ACCRUED 419,859
MANAGEMENT
FEE
OTHER PAYABLES 482,291
AND
ACCRUED
EXPENSES
COLLATERAL ON 23,182,400
SECURITIES
LOANED,
AT VALUE
TOTAL LIABILITIES 82,434,471
NET ASSETS $ 720,810,305
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 753,195,616
ACCUMULATED (2,295,937)
NET INVESTMENT
LOSS
ACCUMULATED (92,541,943)
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
NET UNREALIZED 62,452,569
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
NET ASSETS, FOR $ 720,810,305
17,705,204
SHARES
OUTSTANDING
NET ASSET $40.71
VALUE AND
REDEMPTION
PRICE PER
SHARE
($720,810,3
05 (DIVIDED BY)
17,705,204
SHARES)
MAXIMUM $41.97
OFFERING PRICE
PER SHARE
(100/97.00
OF $40.71)
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED AUGUST
31, 1998
(UNAUDITED)
INVESTMENT $ 535,917
INCOME
DIVIDENDS
INTEREST 1,858,699
(INCLUDING
INCOME ON
SECURITIES
LOANED OF
$279,915)
TOTAL INCOME 2,394,616
EXPENSES
MANAGEMENT $ 2,175,029
FEE
TRANSFER AGENT 2,086,023
FEES
ACCOUNTING AND 320,663
SECURITY
LENDING FEES
NON-INTERESTED 1,409
TRUSTEES'
COMPENSATION
CUSTODIAN FEES 19,296
AND EXPENSES
REGISTRATION FEES 37,134
AUDIT 18,755
LEGAL 1,977
REPORTS TO 103,140
SHAREHOLDERS
TOTAL EXPENSES 4,763,426
BEFORE
REDUCTIONS
EXPENSE (72,873) 4,690,553
REDUCTIONS
NET INVESTMENT (2,295,937)
INCOME (LOSS)
REALIZED AND (1,615,369)
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON INVESTMENT
SECURITIES
CHANGE IN NET (34,124,206)
UNREALIZED
APPRECIATION
(DEPRECIATION)
ON INVESTMENT
SECURITIES
NET GAIN (LOSS) (35,739,575)
NET INCREASE $ (38,035,512)
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 976,628
INFORMATION
SALES CHARGES
PAID TO FDC
SALES CHARGES $ 973,541
- - RETAINED BY
FDC
DEFERRED SALES $ 1,393
CHARGES
WITHHELD
BY FDC
EXCHANGE FEES $ 129,345
WITHHELD BY
FSC
EXPENSE $ 70,131
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEMENTS
CUSTODIAN 2,742
CREDITS
$ 72,873
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED YEAR ENDED
(DECREASE) IN AUGUST 31, 1998 FEBRUARY 28,
NET ASSETS (UNAUDITED) 1998
OPERATIONS $ (2,295,937) $ (4,376,259)
NET
INVESTMENT
INCOME (LOSS)
NET REALIZED (1,615,369) 89,255,411
GAIN (LOSS)
CHANGE IN NET (34,124,206) 22,245,884
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (38,035,512) 107,125,036
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
DISTRIBUTIONS TO - (132,918,806)
SHAREHOLDERS
FROM NET
REALIZED GAIN
IN EXCESS OF - (34,413,012)
NET REALIZED
GAIN
TOTAL - (167,331,818)
DISTRIBUTIONS
SHARE 533,395,613 808,411,253
TRANSACTIONS
NET PROCEEDS
FROM SALES OF
SHARES
REINVESTMENT - 165,233,207
OF
DISTRIBUTIONS
COST OF SHARES (561,604,675) (733,889,159)
REDEEMED
NET INCREASE (28,209,062) 239,755,301
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION 1,590,189 1,629,692
FEES
TOTAL (64,654,385) 181,178,211
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
BEGINNING OF 785,464,690 604,286,479
PERIOD
END OF PERIOD $ 720,810,305 $ 785,464,690
(INCLUDING
ACCUMULATED
NET INVESTMENT
LOSS OF
$2,295,937
AND $0,
RESPECTIVELY)
OTHER
INFORMATION
SHARES
SOLD 11,768,229 17,046,061
ISSUED IN - 4,788,686
REINVESTMENT
OF
DISTRIBUTIONS
REDEEMED (13,181,751) (15,239,529)
NET INCREASE (1,413,522) 6,595,218
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED YEAR ENDED YEARS ENDED
ENDED FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
AUGUST 31,
1998
SELECTED (UNAUDITED) 1998 1997 1996 1995 1994
PER-SHARE
DATA
NET ASSET $ 41.08 $ 48.25 $ 41.03 $ 30.67 $ 27.02 $ 20.15
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET (.14) (.32) (.36) (.23) (.31) (.21) E
INVESTMENT
INCOME
(LOSS) D
NET (.32) 6.42 9.94 16.10 3.68 8.66
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM (.46) 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)
DISTRIBUTION
S
REDEMPTION .09 .12 .11 .10 .28 .22
FEES ADDED
TO PAID IN
CAPITAL
NET ASSET $ 40.71 $ 41.08 $ 48.25 $ 41.03 $ 30.67 $ 27.02
VALUE, END
OF PERIOD
TOTAL (0.90)% 20.33% 23.97% 52.79% 13.51% 45.06%
RETURN B, C
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 720,810 $ 785,465 $ 604,286 $ 527,337 $ 215,014 $ 120,435
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.26% A 1.40% 1.48% 1.40% 1.71% 1.90%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.24% A, F 1.34% F 1.44% F 1.38% F 1.69% F 1.89% F
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.61)% A (.67)% (.83)% (.56)% (1.12)% (.91)%
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 120% A 333% 255% 129% 189% 145%
TURNOVER
RATE
AVERAGE $ .0431 $ .0444 $ .0432
COMMISSIO
N RATE G
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 TOT
AL 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 NET
INVESTMENT INCOME
(LOSS) PER SHARE
REFLECTS A SPECIAL
DIVIDEND WHICH
AMOUNTED TO $.07
PER SHARE. F FMR
OR THE FUND HAS
ENTERED INTO VARYING
ARRANGEMENTS WITH
THIRD PARTIES WHO
EITHER PAID OR
REDUCED A PORTION OF
THE FUND'S EXPENSES
(SEE NOTE 8 OF NOTES
TO FINANCIAL
STATEMENTS). G FOR
FISCAL YEARS BEGINNING
ON OR AFTER
SEPTEMBER 1, 1995,
A FUND IS REQUIRED TO
DISCLOSE ITS AVERAGE
COMMISSION RATE PER
SHARE FOR SECURITY
TRADES ON WHICH
COMMISSIONS ARE
CHARGED. THIS AMOUNT
MAY VARY FROM PERIOD
TO PERIOD AND FUND TO
FUND DEPENDING ON
THE MIX OF TRADES
EXECUTED IN VARIOUS
MARKETS WHERE
TRADING PRACTICES AND
COMMISSION RATE
STRUCTURES MAY DIFFER.
</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 6 PAST 1 PAST 5 LIFE OF
AUGUST 31, 1998 MONTHS YEAR YEARS FUND
SELECT DEVELOPING -11.77% -10.22% 65.92% 264.74%
COMMUNICATIONS
SELECT DEVELOPING -14.49% -12.99% 60.87% 253.72%
COMMUNICATIONS (LOAD ADJ.)
S&P 500 -8.10% 8.10% 131.21% 230.88%
GS TECHNOLOGY -8.97% -3.28% N/A N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or since the fund started on June 29, 1990. You can compare the
fund's returns to the performance of both the Standard & Poor's 500
Index - a widely recognized, unmanaged index of common stocks - and
the Goldman Sachs Technology Index - a market capitalization-weighted
index of 190 stocks designed to measure the performance of companies
in the technology sector. These benchmarks include reinvestment of
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
AUGUST 31, 1998 YEAR YEARS FUND
SELECT DEVELOPING -10.22% 10.66% 17.17%
COMMUNICATIONS
SELECT DEVELOPING -12.99% 9.97% 16.73%
COMMUNICATIONS (LOAD ADJ.)
S&P 500 8.10% 18.25% 15.78%
GS TECHNOLOGY -3.28% N/A N/A
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.
(checkmark)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.
$10,000 OVER LIFE OF FUND
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
1998/02/28 40098.61 36003.35
1998/03/31 41452.49 37847.08
1998/04/30 42391.48 38227.82
1998/05/31 40333.83 37570.69
1998/06/30 43290.45 39096.81
1998/07/31 44369.22 38680.43
1998/08/31 35372.01 33088.01
IMATRL PRASUN SHR__CHT 19980831 19980916 100517 R00000000000101
$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 August 31, 1998, the value of
the investment would have grown to $35,372 - a 253.72% increase on the
initial investment - and includes the effect of a $7.50 trading fee.
For comparison, look at how the Standard & Poor's 500 Index did over
the same period. With dividends and capital gains, if any, reinvested,
the same $10,000 investment would have grown to $33,088 - a 230.88%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
INTEL CORP. 9.7
ASCEND COMMUNICATIONS, INC. 7.7
CISCO SYSTEMS, INC. 6.5
OY NOKIA AB SPONSORED ADR CLASS A 6.1
ALCATEL ALSTHOM COMPAGNIE GENERALE D'ELECTRICITE SA 5.3
MEDIAONE GROUP, INC. 4.9
NORTHERN TELECOM LTD. 4.7
WORLDCOM, INC. 4.1
GENERAL INSTRUMENT CORP. 3.6
LUCENT TECHNOLOGIES, INC. 3.4
TOP INDUSTRIES AS OF AUGUST 31, 1998
TELEPHONE EQUIPMENT 25.7%
SEMICONDUCTORS 12.9%
TELEPHONE SERVICES 9.8%
CABLE TV OPERATORS 9.7%
DATACOMMUNICATIONS
EQUIPMENT 7.9%
ALL OTHERS 34.0%
ROW: 1, COL: 1, VALUE: 34.0
ROW: 1, COL: 2, VALUE: 7.9
ROW: 1, COL: 3, VALUE: 9.699999999999999
ROW: 1, COL: 4, VALUE: 9.800000000000001
ROW: 1, COL: 5, VALUE: 12.9
ROW: 1, COL: 6, VALUE: 25.7
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
DEVELOPING COMMUNICATIONS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Andrew Kaplan)
Andrew Kaplan, Portfolio Manager
of Select Developing Communications Portfolio
Q. HOW DID THE FUND PERFORM, ANDREW?
A. For the six and 12 months that ended August 31, 1998, the fund
returned -11.77% and -10.22%, respectively. During those same six- and
12-month periods, the Standard & Poor's 500 Index returned -8.10% and
8.10%, respectively. Beginning this period, the fund also compares
itself to the Goldman Sachs Technology Index - an index of 190 stocks
designed to measure the performance of companies in the technology
sector - which returned -8.97% and -3.28% over the same six- and
12-month periods, respectively.
Q. WHAT FACTORS AFFECTED PERFORMANCE?
A. There were a couple of important developments. First, investors
recognized that crises in Asia would likely have a broader impact than
expected on emerging economies worldwide. This reaction hurt the whole
U.S. stock market, but the developing communications sector suffered
in particular. Telecommunications equipment firms, cable equipment
suppliers and service providers that operate internationally
concentrate disproportionately on those emerging countries that do not
already have existing communications infrastructure. In addition, some
emerging communications companies that had attracted more speculative
investors - because they promised future, but not current, earnings
growth - were especially hard hit in the market downdraft.
Q. WHAT STRATEGIES DID YOU PURSUE IN THIS ENVIRONMENT?
A. I focused on market segments that I felt were least likely to be
hurt by these phenomena. For example, I was attracted to companies
involved with data networking, because the vast majority of their
sales is in developed economies. I also focused on companies that
enjoyed solid or growing market share, with Nokia, the Finnish
telecommunications giant, as a good example. Although concerns about a
possible spending slowdown hurt the company's wireless operations, it
benefited from the introduction of a new line of cellular handsets. In
addition, since Nokia was a dominant player in wireless communications
infrastructure in Europe - where growth was good - it was somewhat
insulated from emerging market issues.
Q. WHICH STOCKS DID WELL FOR THE FUND?
A. In addition to Nokia, I'd mention French-based Alcatel. This
formerly diversified company had been a poor performer, but was in the
midst of a turnaround brought on by new and improved management that
focused its operations on the company's core telecommunications
assets. Lucent, the former equipment division of AT&T, and Cisco
Systems, a networking company, also performed well, helped greatly by
their dominant positions in North America, where they profited from
the continued explosive growth of traffic on the Internet.
Q. WHICH STOCKS WERE DISAPPOINTMENTS?
A. I'd mention three. First, Northern Telecom, a telecommunications
equipment manufacturer, was hurt by its acquisition of Bay Networks.
The company thought the purchase would help sustain its growth, but
investors felt that it would instead increase the company's risk
profile. Brightpoint and Cellstar, two distributors of wireless
telecommunications equipment, were hurt because a large concentration
of their business was in emerging markets. I sold the fund's holdings
in these companies before the end of the period.
Q. WHAT'S YOUR OUTLOOK?
A. I'm more optimistic about developing communications than about the
technology sector as a whole. Companies in the developing
communications sector have a great opportunity to take advantage of
the emerging importance of the Internet and the transmission of data
over public networks; they are unfolding stories that are still in
their early chapters. These companies should be beneficiaries of the
fact that we will talk, work and play more and more over the Internet.
I'm looking for opportunities offered by the companies that are
best-positioned to take advantage of this trend, which should last for
many years to come.
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.
(checkmark)FUND FACTS
START DATE: June 29, 1990
FUND NUMBER: 518
TRADING SYMBOL: FSDCX
SIZE: as of August 31, 1998, more than
$205 million
MANAGER: Andrew Kaplan, since March 1998;
manager, Fidelity Select Technology Portfolio,
since July 1998; Fidelity Select Electronics
Portfolio, 1996-June 1998; joined Fidelity in
1995
DEVELOPING COMMUNICATIONS PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.1%
SHARES VALUE (NOTE 1)
BROADCASTING - 11.2%
CABLE TV OPERATORS - 9.7%
Comcast Corp. Class A special 150,000 $ 5,606,250
Cox Communications, Inc. Class A (a) 100,000 4,200,000
MediaOne Group, Inc. (a) 250,000 10,250,000
20,056,250
COMMUNICATIONS SERVICES, NEC - 1.5%
Metromedia Fiber Network, Inc. Class A 150,000 3,150,000
TOTAL BROADCASTING 23,206,250
CELLULAR - 5.3%
CELLULAR & COMMUNICATION SERVICES - 5.3%
AirTouch Communications, Inc. (a) 100,000 5,625,000
Nextel Communications, Inc. Class A (a) 200,000 3,612,500
SkyTel Communications, Inc. (a) 136,000 1,785,000
11,022,500
COMMUNICATIONS EQUIPMENT - 35.0%
DATACOMMUNICATIONS EQUIPMENT - 7.9%
Cisco Systems, Inc. (a) 165,000 13,509,375
3Com Corp. (a) 125,000 2,960,938
16,470,313
TELEPHONE EQUIPMENT - 25.7%
ADC Telecommunications, Inc. (a) 100,000 2,218,750
Ascend Communications, Inc. (a) 453,600 15,961,050
DSC Communications Corp. (a) 28,000 675,500
Filtronic PLC 73,800 557,945
Filtronic PLC rights 9/30/98 7,380 -
InterVoice, Inc. (a) 100,000 1,487,500
Lucent Technologies, Inc. 100,000 7,087,500
Newbridge Networks Corp. (a) 10,000 185,625
Northern Telecom Ltd. 205,480 9,858,062
Oy Nokia AB sponsored ADR Class A 190,000 12,694,375
Terayon Communication Systems (a) 276,500 2,661,313
53,387,620
TELEPHONE INTERCONNECT SYSTEMS - 1.4%
Intermedia Communications, Inc. (a) 116,600 2,900,425
TOTAL COMMUNICATIONS EQUIPMENT 72,758,358
COMPUTER SERVICES & SOFTWARE - 5.3%
COMPUTER SERVICES - 4.1%
America Online, Inc. 70,000 5,735,625
Yahoo, Inc. (a) 40,000 2,760,000
8,495,625
PREPACKAGED COMPUTER SOFTWARE - 1.2%
Avant! Corp. (a) 66,300 853,613
Siebel Systems, Inc. (a) 32,900 616,875
Verilink Corp. (a) 205,000 973,750
2,444,238
TOTAL COMPUTER SERVICES & SOFTWARE 10,939,863
COMPUTERS & OFFICE EQUIPMENT - 1.2%
MINI & MICRO COMPUTERS - 1.2%
Dell Computer Corp. (a) 25,000 2,500,000
ELECTRICAL EQUIPMENT - 9.4%
ELECTRICAL EQUIPMENT - WHOLESALE - 0.5%
Antec Corp. (a) 50,000 803,125
SHARES VALUE (NOTE 1)
ELECTRICAL MACHINERY - 5.3%
Alcatel Alsthom Compagnie
Generale d'Electricite SA 73,500 $ 11,093,906
TV & RADIO COMMUNICATION EQUIPMENT - 3.6%
General Instrument Corp. (a) 378,600 7,524,675
TOTAL ELECTRICAL EQUIPMENT 19,421,706
ELECTRONIC INSTRUMENTS - 1.0%
INDUSTRIAL MEASUREMENT INSTRUMENTS - 1.0%
JDS Fitel, Inc. (a) 157,400 2,157,539
ELECTRONICS - 12.9%
SEMICONDUCTORS - 12.9%
Altera Corp. (a) 50,000 1,456,250
Intel Corp. 281,700 20,053,519
Micrel, Inc. (a) 35,000 1,017,186
PMC-Sierra, Inc. (a) 55,500 1,696,219
Vitesse Semiconductor Corp. (a) 97,400 2,641,975
26,865,149
RETAIL & WHOLESALE, MISCELLANEOUS - 1.0%
MAIL ORDER - 1.0%
Amazon.com, Inc. (a) 25,000 2,093,750
TELEPHONE SERVICES - 9.8%
MCI Communications Corp. 140,000 7,000,000
McLeod USA, Inc. Class A (a) 50,000 1,450,000
Qwest Communications
International, Inc. (a) 131,689 3,292,225
WorldCom, Inc. (a) 210,000 8,596,875
20,339,100
TOTAL COMMON STOCKS
(Cost $207,987,200) 191,304,215
CASH EQUIVALENTS - 7.9%
Taxable Central Cash Fund (b)
(Cost $16,327,787) 16,327,787 16,327,787
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $224,314,987) $ 207,632,002
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.58%. 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 $590,765,144 and $570,642,187, 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 $54,701 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 82.4%
Finland 6.1
Canada 5.9
France 5.3
Others (individually less than 1%) 0.3
TOTAL 100.0%
Transactions during the period with companies which are or were
affiliates are as follows (see Note 10 of Notes to Financial
Statements):
PURCHASES SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Anicom, Inc. $ - $ 1,787,500 $ - $ -
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $225,299,161. Net unrealized depreciation
aggregated $17,667,159, of which $12,626,297 related to appreciated
investment securities and $30,293,456 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.
DEVELOPING COMMUNICATIONS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31,
1998
(UNAUDITED)
ASSETS
INVESTMENT IN $ 207,632,002
SECURITIES, AT
VALUE
(COST
$224,314,98
7) -
SEE
ACCOMPANYIN
G SCHEDULE
CASH 1,668,133
RECEIVABLE FOR 15,196,281
INVESTMENTS
SOLD
RECEIVABLE FOR 550,421
FUND SHARES
SOLD
DIVIDENDS 121,724
RECEIVABLE
INTEREST 115,550
RECEIVABLE
REDEMPTION FEES 9,041
RECEIVABLE
OTHER 271,590
RECEIVABLES
TOTAL ASSETS 225,564,742
LIABILITIES
PAYABLE FOR $ 11,873,210
INVESTMENTS
PURCHASED
PAYABLE FOR 8,293,311
FUND SHARES
REDEEMED
ACCRUED 131,296
MANAGEMENT
FEE
OTHER PAYABLES 188,132
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 20,485,949
NET ASSETS $ 205,078,793
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 228,175,817
ACCUMULATED (639,901)
NET INVESTMENT
LOSS
ACCUMULATED (5,776,444)
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED (16,680,679)
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
AND ASSETS
AND LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, FOR $ 205,078,793
11,581,376
SHARES
OUTSTANDING
NET ASSET $17.71
VALUE AND
REDEMPTION
PRICE PER
SHARE
($205,078,7
93 (DIVIDED BY)
11,581,376
SHARES)
MAXIMUM $18.26
OFFERING PRICE
PER SHARE
(100/97.00
OF $17.71)
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED AUGUST
31, 1998
(UNAUDITED)
INVESTMENT $ 365,561
INCOME
DIVIDENDS
INTEREST 747,418
TOTAL INCOME 1,112,979
EXPENSES
MANAGEMENT $ 732,979
FEE
TRANSFER AGENT 843,971
FEES
ACCOUNTING FEES 125,134
AND EXPENSES
NON-INTERESTED 569
TRUSTEES'
COMPENSATION
CUSTODIAN FEES 30,481
AND EXPENSES
REGISTRATION FEES 35,517
AUDIT 12,889
LEGAL 704
REPORTS TO 43,037
SHAREHOLDERS
TOTAL EXPENSES 1,825,281
BEFORE
REDUCTIONS
EXPENSE (72,401) 1,752,880
REDUCTIONS
NET INVESTMENT (639,901)
INCOME (LOSS)
REALIZED AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS) ON:
INVESTMENT 13,149,600
SECURITIES
(INCLUDING
REALIZED
GAIN OF
$159,311
ON SALE OF
INVESTMENTS IN
AFFILIATED
ISUERS)
FOREIGN (6,943) 13,142,657
CURRENCY
TRANSACTIONS
CHANGE IN NET
UNREALIZED
APPRECIATION
(DEPRECIATION)
ON:
INVESTMENT (43,254,438)
SECURITIES
ASSETS AND 5,967 (43,248,471)
LIABILITIES IN
FOREIGN
CURRENCIES
NET GAIN (LOSS) (30,105,814)
NET INCREASE $ (30,745,715)
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 260,834
INFORMATION
SALES CHARGES
PAID TO FDC
SALES CHARGES $ 259,806
- - RETAINED BY
FDC
DEFERRED SALES $ 1,690
CHARGES
WITHHELD
BY FDC
EXCHANGE FEES $ 31,920
WITHHELD BY
FSC
EXPENSE $ 72,119
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEMENTS
CUSTODIAN 282
CREDITS
$ 72,401
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED YEAR ENDED
(DECREASE) IN AUGUST 31, 1998 FEBRUARY 28,
NET ASSETS (UNAUDITED) 1998
OPERATIONS $ (639,901) $ (1,952,549)
NET
INVESTMENT
INCOME (LOSS)
NET REALIZED 13,142,657 43,720,650
GAIN (LOSS)
CHANGE IN NET (43,248,471) 15,846,999
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (30,745,715) 57,615,100
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
DISTRIBUTIONS TO (820,145) (39,986,959)
SHAREHOLDERS
FROM NET
REALIZED GAIN
SHARE 105,289,188 191,485,848
TRANSACTIONS
NET PROCEEDS
FROM SALES OF
SHARES
REINVESTMENT 808,700 39,302,908
OF
DISTRIBUTIONS
COST OF SHARES (108,048,371) (230,874,543)
REDEEMED
NET INCREASE (1,950,483) (85,787)
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION 239,351 453,709
FEES
TOTAL (33,276,992) 17,996,063
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
BEGINNING OF 238,355,785 220,359,722
PERIOD
END OF PERIOD $ 205,078,793 $ 238,355,785
(INCLUDING
ACCUMULATED
NET INVESTMENT
LOSS OF
$639,901
AND $0,
RESPECTIVELY)
OTHER
INFORMATION
SHARES
SOLD 4,822,742 8,748,662
ISSUED IN 39,003 2,281,074
REINVESTMENT
OF
DISTRIBUTIONS
REDEEMED (5,117,493) (10,392,215)
NET INCREASE (255,748) 637,521
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED YEAR ENDED YEARS ENDED
ENDED FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
AUGUST 31,
1998
SELECTED (UNAUDITED) 1998 1997 1996 1995 1994
PER-SHARE
DATA
NET ASSET $ 20.14 $ 19.68 $ 19.42 $ 20.40 $ 19.65 $ 16.44
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET (.05) (.18) (.18) (.17) (.16) (.16)
INVESTMENT
INCOME
(LOSS) D
NET (2.33) 4.95 .42 4.17 2.55 4.82
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM (2.38) 4.77 .24 4.00 2.39 4.66
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET (.07) (4.35) - (5.00) (1.67) (1.47)
REALIZED
GAIN
REDEMPTION .02 .04 .02 .02 .03 .02
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 17.71 $ 20.14 $ 19.68 $ 19.42 $ 20.40 $ 19.65
VALUE, END
OF PERIOD
TOTAL (11.77)% 28.17% 1.34% 21.84% 13.63% 30.24%
RETURN B, C
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 205,079 $ 238,356 $ 220,360 $ 333,185 $ 254,426 $ 222,109
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.44% A 1.61% 1.64% 1.53% 1.58% 1.56%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.38% A, E 1.55% E 1.62% E 1.51% E 1.56% E 1.56%
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.50)% A (.82)% (.86)% (.78)% (.83)% (.88)%
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 529% A 383% 202% 249% 266% 280%
TURNOVER
RATE
AVERAGE $ .0431 $ .0437 $ .0346
COMMISSIO
N RATE F
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 TOT
AL 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 FO
R 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 MONTHS YEAR YEARS YEARS
SELECT ELECTRONICS -25.04% -31.90% 178.88% 620.54%
SELECT ELECTRONICS -27.36% -34.02% 170.44% 598.85%
(LOAD ADJ.)
S&P 500 -8.10% 8.10% 131.21% 382.74%
GS TECHNOLOGY -8.97% -3.28% N/A N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks - and the Goldman Sachs
Technology Index - a market capitalization-weighted index of 190
stocks designed to measure the performance of companies in the
technology sector. These benchmarks include reinvestment of dividends
and capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 YEAR YEARS YEARS
SELECT ELECTRONICS -31.90% 22.77% 21.83%
SELECT ELECTRONICS -34.02% 22.02% 21.46%
(LOAD ADJ.)
S&P 500 8.10% 18.25% 17.05%
GS TECHNOLOGY -3.28% N/A N/A
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.
(checkmark)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.
$10,000 OVER 10 YEARS
Electronics S&P 500
00008 SP001
1988/08/31 9700.00 10000.00
1988/09/30 9851.56 10426.00
1988/10/31 9135.09 10715.84
1988/11/30 8680.40 10562.61
1988/12/31 9231.53 10747.45
1989/01/31 9562.22 11534.17
1989/02/28 9424.43 11246.96
1989/03/31 9355.54 11509.02
1989/04/30 10085.80 12106.34
1989/05/31 11050.28 12596.64
1989/06/30 9961.79 12524.84
1989/07/31 10072.02 13655.84
1989/08/31 10416.48 13923.49
1989/09/30 10705.82 13866.40
1989/10/31 10223.58 13544.70
1989/11/30 10251.14 13821.02
1989/12/31 10678.27 14152.72
1990/01/31 11036.51 13203.07
1990/02/28 11918.32 13373.39
1990/03/31 12497.02 13727.79
1990/04/30 12552.13 13384.59
1990/05/31 14398.44 14689.59
1990/06/30 14618.89 14589.70
1990/07/31 13929.97 14543.01
1990/08/31 11752.98 13228.33
1990/09/30 9975.57 12584.11
1990/10/31 9617.33 12529.99
1990/11/30 10609.38 13339.43
1990/12/31 11298.43 13711.60
1991/01/31 12871.11 14309.43
1991/02/28 14002.33 15332.55
1991/03/31 14747.28 15703.60
1991/04/30 14830.05 15741.29
1991/05/31 15312.89 16421.31
1991/06/30 13450.51 15669.22
1991/07/31 14374.81 16399.40
1991/08/31 14968.01 16788.07
1991/09/30 13822.99 16507.71
1991/10/31 14498.96 16728.91
1991/11/30 13616.06 16054.73
1991/12/31 15285.30 17891.40
1992/01/31 17092.50 17558.62
1992/02/29 18030.59 17786.88
1992/03/31 16609.66 17440.03
1992/04/30 16292.37 17952.77
1992/05/31 16319.96 18040.74
1992/06/30 15133.55 17771.93
1992/07/31 15933.69 18498.80
1992/08/31 16099.23 18119.58
1992/09/30 16678.64 18333.39
1992/10/31 17934.02 18397.56
1992/11/30 19106.63 19024.91
1992/12/31 19479.10 19258.92
1993/01/31 20141.28 19420.70
1993/02/28 19699.83 19684.82
1993/03/31 20389.60 20100.17
1993/04/30 20030.19 19613.74
1993/05/31 22040.14 20139.39
1993/06/30 22442.13 20197.79
1993/07/31 23079.77 20117.00
1993/08/31 25061.99 20879.44
1993/09/30 25477.85 20718.67
1993/10/31 24992.69 21147.54
1993/11/30 24798.62 20946.64
1993/12/31 25727.96 21200.10
1994/01/31 27505.11 21920.90
1994/02/28 28809.44 21326.84
1994/03/31 28499.67 20396.99
1994/04/30 28418.14 20658.07
1994/05/31 28336.62 20996.87
1994/06/30 26820.34 20482.44
1994/07/31 27374.68 21154.27
1994/08/31 30048.56 22021.59
1994/09/30 29184.44 21482.06
1994/10/31 30374.64 21965.41
1994/11/30 29983.34 21165.43
1994/12/31 30146.38 21479.31
1995/01/31 29282.26 22036.27
1995/02/28 32282.23 22895.02
1995/03/31 35608.28 23570.66
1995/04/30 39586.49 24264.81
1995/05/31 42472.33 25234.68
1995/06/30 48521.17 25820.88
1995/07/31 55776.52 26677.10
1995/08/31 56510.21 26744.06
1995/09/30 57521.06 27872.66
1995/10/31 55939.56 27773.15
1995/11/30 54537.40 28992.39
1995/12/31 50937.84 29550.79
1996/01/31 52659.51 30556.70
1996/02/29 55766.44 30839.96
1996/03/31 52501.20 31136.95
1996/04/30 58497.37 31595.90
1996/05/31 60040.94 32410.76
1996/06/30 54994.66 32534.25
1996/07/31 52342.88 31096.88
1996/08/31 54875.92 31752.72
1996/09/30 62277.14 33539.76
1996/10/31 62771.88 34464.79
1996/11/30 72191.62 37069.98
1996/12/31 72191.62 36335.62
1997/01/31 83471.56 38605.87
1997/02/28 75100.65 38908.54
1997/03/31 69876.26 37309.79
1997/04/30 76387.53 39537.19
1997/05/31 84780.81 41944.21
1997/06/30 84258.95 43823.31
1997/07/31 98892.83 47310.33
1997/08/31 102632.84 44660.01
1997/09/30 106438.08 47106.04
1997/10/31 90651.76 45532.69
1997/11/30 89999.43 47640.40
1997/12/31 82096.47 48458.39
1998/01/31 83428.77 48994.34
1998/02/28 93234.52 52527.81
1998/03/31 90569.91 55217.76
1998/04/30 94833.28 55773.25
1998/05/31 82149.76 54814.51
1998/06/30 83775.17 57041.07
1998/07/31 87292.45 56433.58
1998/08/31 69885.00 48274.42
IMATRL PRASUN SHR__CHT 19980831 19980921 161827 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Electronics Portfolio on August 31, 1988,
and the current 3.00% sales charge was paid. As the chart shows, by
August 31, 1998, the value of the investment would have grown to
$69,885 - a 598.85% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $48,274 - a 382.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
INTEL CORP. 11.2
TEXAS INSTRUMENTS, INC. 7.6
MICROSOFT CORP. 6.5
MICRON TECHNOLOGY, INC. 5.6
SOLECTRON CORP. 5.2
EMC CORP. 4.1
MOTOROLA, INC. 4.0
COMPAQ COMPUTER CORP. 3.6
SCI SYSTEMS, INC. 3.0
LINEAR TECHNOLOGY CORP. 2.2
TOP INDUSTRIES AS OF AUGUST 31, 1998
ROW: 1, COL: 1, VALUE: 26.8
ROW: 1, COL: 2, VALUE: 5.2
ROW: 1, COL: 3, VALUE: 6.4
ROW: 1, COL: 4, VALUE: 7.6
ROW: 1, COL: 5, VALUE: 9.6
ROW: 1, COL: 6, VALUE: 44.4
SEMICONDUCTORS 44.4%
PREPACKAGED COMPUTER
SOFTWARE 9.6%
COMPUTER PERIPHERALS 7.6%
ELECTRONICS & ELECTRONIC
COMPONENTS 6.4%
SEMI-CONDUCTOR CAPITAL
EQUIPMENT 5.2%
ALL OTHERS 26.8%
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
ELECTRONICS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Matthew Grech)
NOTE TO SHAREHOLDERS: Matthew Grech became Portfolio Manager of
Fidelity Select Electronics Portfolio on June 1, 1998.
Q. HOW DID THE FUND PERFORM, MATT?
A. For the six- and 12-month periods that ended August 31, 1998, the
fund returned -25.04% and -31.90%, respectively. By comparison, the
Standard & Poor's 500 Index returned -8.10% and 8.10% for the same
periods. Beginning this period, the fund also compares itself to the
Goldman Sachs Technology Index - an index of 190 stocks designed to
measure the performance of companies in the technology sector - which
returned -8.97% and -3.28% over the same six- and 12-month periods,
respectively.
Q. WHY DID THE FUND UNDERPERFORM THE MARKET AND THE GOLDMAN SACHS
INDEX BY SUCH A WIDE MARGIN?
A. When comparing the fund to the broader technology benchmark, it's
important to understand that electronics stocks are just a small
subset of the technology industry. It's also important for investors
to understand that electronics stocks are generally more volatile than
the broader technology index during industry downturns and upswings.
Since these companies are generally niche suppliers to the larger and
often more diversified computer, instrument and telecommunications
equipment makers, their businesses tend to get hit first and hardest
in an industry downturn. On the other hand, they also tend to recover
rapidly when business conditions improve for the broader industry.
It's also important to note that the Goldman Sachs index was helped
considerably by strong price gains from industry giants Dell,
Microsoft and Cisco, while being hurt by electronics companies, such
as Micron Technology, which are more typical to the fund's investing
universe.
Q. WHAT WAS YOUR STRATEGY WITHIN THIS DIFFICULT ENVIRONMENT?
A. I continued to identify and buy the companies best positioned to
survive industry downturns. First, I increased the fund's investments
in large-capitalization stocks, such as Cisco and Lucent, but still
not to the degree represented by the Goldman Sachs index. I added
Solectron and SCI Systems, contract manufacturers for electronics
companies, whose customers include Cisco and Hewlett Packard. I was
enthusiastic about the prospects for these contract manufacturing
companies, because semiconductor companies increasingly have been
outsourcing the manufacturing of semiconductor components. I also
added Micron Technology, which makes DRAM computer memory, to the top
10 holdings. As more memory is being put into new PCs, the prospects
for increasing demand could strengthen.
Q. WHICH STOCKS PERFORMED WELL?
A. Microsoft , Dell, Nokia and Citrix Systems all performed well,
benefiting from the relative insulation that larger companies enjoyed
during the period. Software companies, such as Microsoft, also fared
better than semiconductor and PC-related stocks during the period.
Dell's good performance reflected its success in adding market share.
Nokia, with its terrific product line, was able to gain a larger share
of the cellular phone market during the period, and performed well.
Q. WHICH STOCKS WERE DISAPPOINTMENTS?
A. Micron Technology and Intel were the fund's biggest detractors from
performance. As component sales lagged, both companies were hurt by
the decline of personal computer inventories during the period. Micron
also suffered through a significant decline in the price of DRAM. SCI
Systems' performance was hurt by a substantial decline in the pricing
of components, reducing its revenues and overall performance.
Q. WHAT'S YOUR OUTLOOK?
A. I'm relatively optimistic. Expectations for this industry have come
down to a much more reasonable level, creating an environment in which
companies may be surpassing expectations, rather than falling short,
as in the recent past. I will continue to look for the companies that
produce technology necessary for semiconductor production. These are
companies that you can't do without if you want to make a good PC or a
good telephone handset. Above all, I will look for companies with
financial strength, innovative research and development, low-cost
manufacturing, competitive product lines and strong management teams.
These are the companies that will be in a position to gain market
share throughout the downturn and consolidate their lead when the
industry recovers.
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.
(checkmark)FUND FACTS
START DATE: July 29, 1985
FUND NUMBER: 008
TRADING SYMBOL: FSELX
SIZE: as of August 31, 1998, more than
$1.4 billion
MANAGER: Matthew Grech, since June, 1998;
analyst covering semiconductor equipment,
electronic distribution, components, electronic
design automation and electronic contract
manufacturing industries, since 1996; joined
Fidelity in 1996
ELECTRONICS PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.2%
SHARES VALUE (NOTE 1)
COMMUNICATIONS EQUIPMENT - 7.2%
DATACOMMUNICATIONS EQUIPMENT - 4.0%
Cisco Systems, Inc. (a) 365,000 $ 29,884,375
Jabil Circuit, Inc. (a) 1,110,000 26,085,000
Level One Communications, Inc. (a) 300,875 5,246,508
61,215,883
TELEPHONE EQUIPMENT - 3.2%
Ascend Communications, Inc. (a) 504,000 17,734,500
Lucent Technologies, Inc. 51,000 3,614,625
Oy Nokia AB sponsored ADR Class A 400,000 26,725,000
48,074,125
TOTAL COMMUNICATIONS EQUIPMENT 109,290,008
COMPUTER SERVICES & SOFTWARE - 10.1%
CUSTOM COMPUTER PROGRAMMING SERVICES - 0.5%
ARM Holdings PLC sponsored ADR (a) 100,000 5,100,000
Saville Systems PLC sponsored ADR (a) 155,900 2,552,863
7,652,863
PREPACKAGED COMPUTER SOFTWARE - 9.6%
Citrix Systems, Inc. (a) 493,600 28,443,700
Microsoft Corp. (a) 1,030,000 98,815,620
Sapient Corp. 220,000 8,593,750
Siebel Systems, Inc. (a) 330,600 6,198,750
Wind River Systems, Inc. (a) 100,000 3,750,000
145,801,820
TOTAL COMPUTER SERVICES & SOFTWARE 153,454,683
COMPUTERS & OFFICE EQUIPMENT - 12.5%
COMPUTER PERIPHERALS - 7.6%
EMC Corp. (a) 1,400,400 63,280,575
Fore Systems, Inc. (a) 379,100 6,539,475
SCI Systems, Inc. (a) 2,005,500 46,001,156
115,821,206
MINI & MICRO COMPUTERS - 4.9%
Compaq Computer Corp. 1,949,700 54,469,744
Dell Computer Corp. (a) 200,000 20,000,000
74,469,744
TOTAL COMPUTERS & OFFICE EQUIPMENT 190,290,950
DEFENSE ELECTRONICS - 0.7%
Litton Industries, Inc. (a) 220,500 10,584,000
DRUGS & PHARMACEUTICALS - 0.2%
COMMERCIAL LABORATORY RESEARCH - 0.2%
Integrated Process Equipment Corp. (a) 718,300 3,950,650
ELECTRICAL EQUIPMENT - 0.7%
ELECTRICAL MACHINERY - 0.4%
Alcatel Alsthom Compagnie Generale
d'Electricite SA sponsored ADR 200,000 6,037,500
TV & RADIO COMMUNICATION EQUIPMENT - 0.3%
Loral Space & Communications Ltd. (a) 330,700 5,249,863
TOTAL ELECTRICAL EQUIPMENT 11,287,363
ELECTRONIC INSTRUMENTS - 6.1%
ELECTRONIC EQUIPMENT - 0.8%
Berg Electronics Corp. (a) 200,000 6,500,000
LTX Corp. (a) 513,500 1,155,375
Teradyne, Inc. (a) 200,000 3,475,000
Varian Associates, Inc. 17,600 599,500
11,729,875
SHARES VALUE (NOTE 1)
INDUSTRIAL MEASUREMENT INSTRUMENTS - 0.1%
JDS Fitel, Inc. (a) 126,100 $ 1,728,499
SEMI-CONDUCTOR CAPITAL EQUIPMENT - 5.2%
Applied Materials, Inc. (a) 628,000 15,425,250
KLA-Tencor Corp. (a) 1,302,500 27,678,125
Kulicke & Soffa Industries, Inc. (a) 150,000 1,940,625
Lam Research Corp. (a) 1,069,227 11,694,670
Novellus Systems, Inc. (a) 849,400 22,615,275
79,353,945
TOTAL ELECTRONIC INSTRUMENTS 92,812,319
ELECTRONICS - 53.3%
CONNECTORS - 2.2%
AMP, Inc. 650,000 23,196,875
Methode Electronics, Inc. Class A 584,000 7,008,000
PCD, Inc. (a) 200,000 3,050,000
33,254,875
ELECTRONICS & ELECTRONIC COMPONENTS - 6.4%
Advanced Energy Industries, Inc. (a) 139,000 868,750
Molex, Inc. 400,000 9,300,000
Sanmina Corp. (a) 261,600 8,076,900
Solectron Corp. (a) 1,929,800 79,724,863
97,970,513
PRINTED CIRCUIT BOARDS - 0.3%
DII Group, Inc. (a) 400,000 5,150,000
SEMICONDUCTORS - 44.4%
Altera Corp. (a) 552,800 16,100,300
Analog Devices, Inc. (a) 1,030,500 14,491,406
Applied Micro Circuits Corp. 955,000 18,145,000
Celestica, Inc. (sub-vtg.) (a) 26,300 356,312
Etec Systems, Inc. (a) 637,300 15,374,863
Intel Corp. 2,409,000 171,490,688
Lattice Semiconductor Corp. (a) 130,800 3,147,375
Linear Technology Corp. 727,610 34,197,670
Maxim Integrated Products, Inc. (a) 1,195,200 32,868,000
Microchip Technology, Inc. (a) 897,550 16,436,384
Micron Technology, Inc. (a) 3,755,300 85,433,075
Motorola, Inc. 1,419,100 61,109,994
PMC-Sierra, Inc. (a) 963,900 29,459,194
Texas Instruments, Inc. 2,423,800 115,584,963
Triquint Semiconductor, Inc. (a) 100,000 1,525,000
Vitesse Semiconductor Corp. (a) 1,238,100 33,583,463
Xilinx, Inc. (a) 904,400 27,584,200
676,887,887
TOTAL ELECTRONICS 813,263,275
INDUSTRIAL MACHINERY & EQUIPMENT - 1.0%
SPECIAL INDUSTRIAL MACHINERY, NEC - 1.0%
ASM Lithography Holding NV (a) 436,600 7,695,075
Gasonics International Corp. (a) 225,000 1,125,000
PRI Automation, Inc. 486,600 6,082,500
14,902,575
METALS & MINING - 0.4%
NONFERROUS WIRE - 0.4%
Cable Design Technology Corp. (a) 475,000 6,679,688
TOTAL COMMON STOCKS
(Cost $1,607,779,349) 1,406,515,511
CASH EQUIVALENTS - 7.8%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund (b)
(Cost $118,750,757) 118,750,757 $ 118,750,757
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,726,530,106) $1,525,266,268
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.58%. 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 $2,103,962,185 and $2,516,669,832, 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 $228,387 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the security lending program. At period end,
the value of securities loaned and the value of the collateral
amounted to $22,091,743 and $26,619,800, respectively (see Note 6 of
Notes to Financial Statements).
Transactions during the period with companies which are or were
affiliates are as follows (see Note 10 of Notes to Financial
Statements):
PURCHASES SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Benchmarq Microelectronics,
Inc. $ - $ 1,281,788 $ - $ -
Galileo Technology Ltd. 6,278,291 11,105,381 - -
3D Labs, Inc. Ltd. 1,556,810 4,035,636 - -
TOTALS $ 7,835,101 $ 16,422,805 $ - $ -
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $1,735,359,059. Net unrealized depreciation
aggregated $210,092,791, of which $97,532,247 related to appreciated
investment securities and $307,625,038 related to depreciated
investment securities.
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
AUGUST 31,
1998
(UNAUDITED)
ASSETS
INVESTMENT IN $ 1,525,266,268
SECURITIES, AT
VALUE
(COST
$1,726,530,
106) -
SEE
ACCOMPANYIN
G SCHEDULE
RECEIVABLE FOR 6,046,262
INVESTMENTS
SOLD
RECEIVABLE FOR 3,460,234
FUND SHARES
SOLD
DIVIDENDS 87,237
RECEIVABLE
INTEREST 564,447
RECEIVABLE
REDEMPTION FEES 46,121
RECEIVABLE
OTHER 54,183
RECEIVABLES
TOTAL ASSETS 1,535,524,752
LIABILITIES
PAYABLE FOR $ 3,744,566
INVESTMENTS
PURCHASED
PAYABLE FOR 30,118,581
FUND SHARES
REDEEMED
ACCRUED 913,890
MANAGEMENT
FEE
OTHER PAYABLES 1,022,934
AND
ACCRUED
EXPENSES
COLLATERAL ON 26,619,800
SECURITIES
LOANED,
AT VALUE
TOTAL LIABILITIES 62,419,771
NET ASSETS $ 1,473,104,981
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 2,104,463,986
ACCUMULATED (6,465,136)
NET INVESTMENT
LOSS
ACCUMULATED (423,636,782)
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS)
ON
INVESTMENTS
AND
FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED (201,257,087)
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
AND ASSETS
AND LIABILITIES
IN FOREIGN
CURRENCIES
NET ASSETS, FOR $ 1,473,104,981
56,160,729
SHARES
OUTSTANDING
NET ASSET $26.23
VALUE AND
REDEMPTION
PRICE PER
SHARE
($1,473,104,
981 (DIVIDED BY)
56,160,729
SHARES)
MAXIMUM $27.04
OFFERING PRICE
PER SHARE
(100/97.00
OF $26.23)
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED AUGUST
31, 1998
(UNAUDITED)
INVESTMENT $ 1,327,567
INCOME
DIVIDENDS
INTEREST 4,600,235
(INCLUDING
INCOME ON
SECURITIES
LOANED OF
$304,739)
TOTAL INCOME 5,927,802
EXPENSES
MANAGEMENT $ 6,281,940
FEE
TRANSFER AGENT 5,753,591
FEES
ACCOUNTING AND 414,569
SECURITY
LENDING FEES
NON-INTERESTED 4,227
TRUSTEES'
COMPENSATION
CUSTODIAN FEES 66,769
AND EXPENSES
REGISTRATION FEES 51,795
AUDIT 46,544
LEGAL 6,988
REPORTS TO 310,724
SHAREHOLDERS
TOTAL EXPENSES 12,937,147
BEFORE
REDUCTIONS
EXPENSE (544,209) 12,392,938
REDUCTIONS
NET INVESTMENT (6,465,136)
INCOME (LOSS)
REALIZED AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS) ON:
INVESTMENT (73,761,516)
SECURITIES
(INCLUDING
REALIZED
GAIN (LOSS) OF
$(3,124,77
3) ON SALES OF
INVESTMENTS
IN AFFILIATED
ISSUERS)
FOREIGN (14,901) (73,776,417)
CURRENCY
TRANSACTIONS
CHANGE IN NET
UNREALIZED
APPRECIATION
(DEPRECIATION)
ON:
INVESTMENT (460,397,466)
SECURITIES
ASSETS AND 9,687 (460,387,779)
LIABILITIES IN
FOREIGN
CURRENCIES
NET GAIN (LOSS) (534,164,196)
NET INCREASE $ (540,629,332)
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 2,265,143
INFORMATION
SALES CHARGES
PAID TO FDC
SALES CHARGES $ 2,261,758
- - RETAINED BY
FDC
DEFERRED SALES $ 6,305
CHARGES
WITHHELD
BY FDC
EXCHANGE FEES $ 302,775
WITHHELD BY
FSC
EXPENSE $ 530,916
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEMENTS
CUSTODIAN 4,640
CREDITS
TRANSFER 8,653
AGENT CREDITS
$ 544,209
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED YEAR ENDED
(DECREASE) IN AUGUST 31, 1998 FEBRUARY 28,
NET ASSETS (UNAUDITED) 1998
OPERATIONS $ (6,465,136) $ (10,090,302)
NET
INVESTMENT
INCOME (LOSS)
NET REALIZED (73,776,417) 286,758,046
GAIN (LOSS)
CHANGE IN NET (460,387,779) 113,929,512
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (540,629,332) 390,597,256
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
FROM NET - (424,271,823)
REALIZED GAIN
IN EXCESS OF - (145,162,086)
NET REALIZED
GAIN
TOTAL - (569,433,909)
DISTRIBUTIONS
SHARE 356,875,239 3,020,162,765
TRANSACTIONS
NET PROCEEDS
FROM SALES OF
SHARES
REINVESTMENT - 559,329,509
OF
DISTRIBUTIONS
COST OF SHARES (1,013,169,897) (2,481,381,434)
REDEEMED
NET INCREASE (656,294,658) 1,098,110,840
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION 1,279,236 5,459,035
FEES
TOTAL (1,195,644,754) 924,733,222
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
BEGINNING OF 2,668,749,735 1,744,016,513
PERIOD
END OF PERIOD $ 1,473,104,981 $ 2,668,749,735
(INCLUDING
ACCUMULATED
NET INVESTMENT
LOSS OF
$6,465,136
AND $0,
RESPECTIVELY)
OTHER
INFORMATION
SHARES
SOLD 10,803,700 75,772,884
ISSUED IN - 17,854,821
REINVESTMENT
OF
DISTRIBUTIONS
REDEEMED (30,912,697) (63,315,407)
NET INCREASE (20,108,997) 30,312,298
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED YEAR ENDED YEARS ENDED
ENDED FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
AUGUST 31,
1998
SELECTED (UNAUDITED) 1998 1997 1996 1995 1994
PER-SHARE
DATA
NET ASSET $ 34.99 $ 37.95 $ 28.18 $ 19.80 $ 17.67 $ 14.28
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET (.10) (.17) (.17) (.08) (.18) (.09)
INVESTMENT
INCOME
(LOSS) D
NET (8.68) 7.32 9.80 13.51 2.11 6.09
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM (8.78) 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 .02 .09 .14 .20 .20 .14
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 26.23 $ 34.99 $ 37.95 $ 28.18 $ 19.80 $ 17.67
VALUE, END
OF PERIOD
TOTAL (25.04)% 24.15% 34.67% 72.75% 12.05% 46.24%
RETURN B, C
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 1,473,105 $ 2,668,750 $ 1,744,017 $ 1,133,362 $ 216,433 $ 110,993
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.19% A 1.18% 1.33% 1.25% 1.72% 1.67%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.14% A, E 1.12% E 1.29%E 1.22%E 1.71%E 1.67%
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.59)% A (.42)% (.54)% (.28)% (.98)% (.52)%
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 210% A 435% 341% 366% 205% 163%
TURNOVER
RATE
AVERAGE $ .0439 $ .0442 $ .0421
COMMISSIO
N RATE F
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 TOT
AL 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 FO
R 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 MONTHS YEAR YEARS YEARS
SELECT SOFTWARE AND -15.01% -5.27% 109.36% 539.56%
COMPUTER SERVICES
SELECT SOFTWARE AND -17.63% -8.19% 103.01% 520.30%
COMPUTER SERVICES
(LOAD ADJ.)
S&P 500 -8.10% 8.10% 131.21% 382.74%
GS TECHNOLOGY -8.97% -3.28% N/A N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks - and the Goldman Sachs
Technology Index - a market capitalization-weighted index of 190
stocks designed to measure the performance of companies in the
technology sector. These benchmarks include reinvestment of dividends
and capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 YEAR YEARS YEARS
SELECT SOFTWARE AND -5.27% 15.93% 20.39%
COMPUTER SERVICES
SELECT SOFTWARE AND -8.19% 15.21% 20.02%
COMPUTER SERVICES
(LOAD ADJ.)
S&P 500 8.10% 18.25% 17.05%
GS TECHNOLOGY -3.28% N/A N/A
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.
(checkmark)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.
$10,000 OVER 10 YEARS
Software/Computer Svcs S&P 500
00028 SP001
1988/08/31 9700.00 10000.00
1988/09/30 10325.81 10426.00
1988/10/31 9780.05 10715.84
1988/11/30 9634.51 10562.61
1988/12/31 10434.96 10747.45
1989/01/31 11213.58 11534.17
1989/02/28 10711.48 11246.96
1989/03/31 10449.51 11509.02
1989/04/30 11460.99 12106.34
1989/05/31 11875.77 12596.64
1989/06/30 10699.63 12524.84
1989/07/31 10383.83 13655.84
1989/08/31 10857.53 13923.49
1989/09/30 11075.58 13866.40
1989/10/31 11308.67 13544.70
1989/11/30 11639.51 13821.02
1989/12/31 11692.29 14152.72
1990/01/31 11276.63 13203.07
1990/02/28 11569.13 13373.39
1990/03/31 12030.97 13727.79
1990/04/30 11992.49 13384.59
1990/05/31 13501.17 14689.59
1990/06/30 13816.76 14589.70
1990/07/31 12554.40 14543.01
1990/08/31 10799.40 13228.33
1990/09/30 9560.12 12584.11
1990/10/31 9752.56 12529.99
1990/11/30 11007.23 13339.43
1990/12/31 11792.36 13711.60
1991/01/31 13524.26 14309.43
1991/02/28 14509.53 15332.55
1991/03/31 15333.14 15703.60
1991/04/30 15217.68 15741.29
1991/05/31 15494.79 16421.31
1991/06/30 14359.13 15669.22
1991/07/31 15241.21 16399.40
1991/08/31 16479.50 16788.07
1991/09/30 15936.69 16507.71
1991/10/31 16733.94 16728.91
1991/11/30 14901.95 16054.73
1991/12/31 17198.54 17891.40
1992/01/31 19959.13 17558.62
1992/02/29 20558.87 17786.88
1992/03/31 19571.06 17440.03
1992/04/30 19077.15 17952.77
1992/05/31 19377.02 18040.74
1992/06/30 18327.47 17771.93
1992/07/31 19623.98 18498.80
1992/08/31 18159.90 18119.58
1992/09/30 19474.04 18333.39
1992/10/31 21043.96 18397.56
1992/11/30 22878.47 19024.91
1992/12/31 23310.64 19258.92
1993/01/31 24510.13 19420.70
1993/02/28 24360.19 19684.82
1993/03/31 24880.56 20100.17
1993/04/30 24461.84 19613.74
1993/05/31 27220.77 20139.39
1993/06/30 28625.13 20197.79
1993/07/31 27758.61 20117.00
1993/08/31 29631.09 20879.44
1993/09/30 30228.70 20718.67
1993/10/31 30158.98 21147.54
1993/11/30 29411.97 20946.64
1993/12/31 30940.41 21200.10
1994/01/31 32018.55 21920.90
1994/02/28 32445.31 21326.84
1994/03/31 28963.81 20396.99
1994/04/30 29113.66 20658.07
1994/05/31 26200.02 20996.87
1994/06/30 23900.97 20482.44
1994/07/31 25073.26 21154.27
1994/08/31 27793.41 22021.59
1994/09/30 29056.75 21482.06
1994/10/31 30843.63 21965.41
1994/11/30 30137.99 21165.43
1994/12/31 31059.88 21479.31
1995/01/31 30547.72 22036.27
1995/02/28 33085.77 22895.02
1995/03/31 34975.09 23570.66
1995/04/30 36067.70 24264.81
1995/05/31 37046.50 25234.68
1995/06/30 40324.35 25820.88
1995/07/31 42759.97 26677.10
1995/08/31 43055.89 26744.06
1995/09/30 44831.39 27872.66
1995/10/31 45366.32 27773.15
1995/11/30 46652.42 28992.39
1995/12/31 45429.49 29550.79
1996/01/31 43687.13 30556.70
1996/02/29 46377.54 30839.96
1996/03/31 45198.88 31136.95
1996/04/30 49749.21 31595.90
1996/05/31 51483.88 32410.76
1996/06/30 48914.98 32534.25
1996/07/31 45154.33 31096.88
1996/08/31 46094.49 31752.72
1996/09/30 52119.48 33539.76
1996/10/31 52304.87 34464.79
1996/11/30 56449.53 37069.98
1996/12/31 55317.22 36335.62
1997/01/31 59757.12 38605.87
1997/02/28 53865.18 38908.54
1997/03/31 51100.72 37309.79
1997/04/30 54097.51 39537.19
1997/05/31 58677.99 41944.21
1997/06/30 58707.93 43823.31
1997/07/31 65803.17 47310.33
1997/08/31 65488.83 44660.01
1997/09/30 67539.56 47106.04
1997/10/31 64455.97 45532.69
1997/11/30 65878.02 47640.40
1997/12/31 63622.55 48458.39
1998/01/31 65370.61 48994.34
1998/02/28 72989.48 52527.81
1998/03/31 79074.69 55217.76
1998/04/30 77980.91 55773.25
1998/05/31 71888.14 54814.51
1998/06/30 80646.50 57041.07
1998/07/31 75911.36 56433.58
1998/08/31 62030.00 48274.42
IMATRL PRASUN SHR__CHT 19980831 19980924 145619 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Software and Computer Services Portfolio
on August 31, 1988, and the current 3.00% sales charge was paid. As
the chart shows, by August 31, 1998, the value of the investment would
have grown to $62,030 - a 520.30% increase on the initial investment -
and includes the effect of a $7.50 trading fee. For comparison, look
at how the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $48,274 - a 382.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
MICROSOFT CORP. 14.9
BMC SOFTWARE, INC. 8.8
ORACLE CORP. 7.5
PEOPLESOFT, INC. 6.5
SIEBEL SYSTEMS, INC. 5.2
COMPUWARE CORP. 5.0
AUTOMATIC DATA PROCESSING, INC. 4.0
COMPUTER ASSOCIATES INTERNATIONAL, INC. 4.0
DELL COMPUTER CORP. 3.4
AMERICA ONLINE, INC. 2.5
TOP INDUSTRIES AS OF AUGUST 31, 1998
ROW: 1, COL: 1, VALUE: 12.7
ROW: 1, COL: 2, VALUE: 2.5
ROW: 1, COL: 3, VALUE: 3.6
ROW: 1, COL: 4, VALUE: 7.3
ROW: 1, COL: 5, VALUE: 10.4
ROW: 1, COL: 6, VALUE: 63.5
PREPACKAGED COMPUTER
SOFTWARE 63.5%
COMPUTER SERVICES 10.4%
DATA PROCESSING 7.7%
MINI & MICRO COMPUTERS 3.6%
COMPUTERS & OFFICE EQUIPMENT 2.5%
ALL OTHERS 12.3%
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of John Porter)
John Porter,
Portfolio Manager of
Fidelity Select Software and
Computer Services Portfolio
Q. HOW DID THE FUND PERFORM, JOHN?
A. For the six- and 12-month periods that ended August 31, 1998, the
fund returned -15.01% and -5.27%, respectively. By comparison, the
Standard & Poor's 500 Index returned -8.10% and 8.10% for the same
time periods. Beginning this period, the fund also compares itself to
the Goldman Sachs Technology Index - an index of 190 stocks designed
to measure the performance of companies in the technology sector -
which returned -8.97% and -3.28% over the same six- and 12-month
periods, respectively.
Q. WHY DID THE FUND UNDERPERFORM THE MARKET AND THE TECHNOLOGY INDEX?
A. It's important to understand that software and computer services
stocks are a small subset of the technology industry. As with any
comparison between a narrow group of stocks and a broader group, there
will usually be greater volatility in the narrow group. Software and
computer services stocks are generally more volatile than the broader
technology index during industry downturns and upswings.
Q. WHAT WERE THE PRIMARY CONCERNS DRIVING THE INDUSTRY'S PERFORMANCE
DURING THE PERIOD?
A. The main issue that caused investors concern was the much-discussed
"Year 2000" (Y2K) problem. Many computer systems have 2-digit date
fields, so there could be severe problems with older computer systems,
which unless corrected might misunderstand the year 2000 as 1900, for
instance. The concern is that as we move closer to this date,
companies will shift an increasing percentage of their technology
budgets to fix the Y2K problem, rather than spending for new
applications. Two of the larger software companies, Oracle and
Computer Associates, have blamed a slowdown in software sales on the
shifting of resources to Y2K fixes. The concern, which could manifest
itself in lower earnings, is that other large-enterprise software
companies, such as PeopleSoft, SAP and others, could see a substantial
slowdown in revenue growth because of this shift.
Q. WHAT WAS YOUR STRATEGY WITHIN THIS ENVIRONMENT?
A. The Year 2000 issue was a difficult one to respond to. I bought
more computer service companies that could benefit from the very
strong demand for services to help fix and update computer systems. In
addition, I bought stock in software companies that sell tools that
help fix Y2K problems, such as Compuware.
Q. WHICH STOCKS PERFORMED WELL?
A. Microsoft, BMC Software and Compuware all performed well. These
companies demonstrated accelerating revenue growth, and the stock
market rewarded them with higher valuations. Microsoft had very
attractive revenue growth, due in part to its recent release of
Windows 98, its newest major desktop operating system. BMC Software
benefited from sales of its software that helps organizations manage
the vast amount of data stored in databases and improve the
performance of new enterprise applications. Compuware, a leader in
application development and maintenance software, with a very
successful services organization, performed well. Dell Computer
successfully added market share during the period, helping its
performance.
Q. WHICH STOCKS WERE DISAPPOINTMENTS?
A. Computer Associates, Oracle and Siebel Systems performed poorly.
Siebel's stock declined approximately 30% in the six months ending
August 31, because investors were cautious about Siebel's recent
acquisition of Scopus. Computer Associates, whose revenue and profit
growth have been good, suffered after it made cautionary statements
about a slowdown in revenues over the next few quarters. The company
anticipated a slowdown, due primarily to customer reluctance to commit
to large software purchases at a point in time when Y2K costs were
high and economic uncertainty prevails. Oracle's stock declined over
growing concern about a slowdown in core database sales, as well as
modest customer demand for its applications.
Q. WHAT'S YOUR OUTLOOK?
A. Although short-term performance is hard to predict, I believe that
both software and computer services will be extremely attractive
segments of the market over the longer term. I will continue to follow
my basic investing philosophy of looking for the best opportunities
for the fund. Technology should continue to be an ever-growing part of
the economy and, as a consequence, there will continue to be very
attractive investment opportunities in both the software and computer
service industries.
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.
(checkmark)FUND FACTS
START DATE: July 29, 1985
FUND NUMBER: 028
TRADING SYMBOL: FSCSX
SIZE: as of August 31, 1998, more than
$437 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
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.2%
SHARES VALUE (NOTE 1)
COMMUNICATIONS EQUIPMENT - 0.9%
DATACOMMUNICATIONS EQUIPMENT - 0.6%
Cisco Systems, Inc. (a) 30,000 $ 2,456,250
TELEPHONE EQUIPMENT - 0.3%
Oy Nokia AB sponsored ADR Class A 20,800 1,389,700
TOTAL COMMUNICATIONS EQUIPMENT 3,845,950
COMPUTER SERVICES & SOFTWARE - 80.7%
COMPUTER RELATED SERVICES, NEC - 0.5%
Security Dynamics Technologies, Inc. (a) 230,000 2,156,250
COMPUTER SERVICES - 10.4%
America Online, Inc. 135,000 11,061,563
Cambridge Technology Partners, Inc. (a) 130,000 4,225,000
Computer Sciences Corp. 60,000 3,393,750
Electronic Data Systems Corp. 124,100 4,157,350
Equifax, Inc. 140,000 4,987,500
Galileo International, Inc. 30,000 980,625
HBO & Co. 360,000 7,650,000
Paychex, Inc. 53,437 2,030,606
SunGard Data Systems, Inc. (a) 105,200 3,333,525
Technology Solutions, Inc. (a) 150,000 1,715,625
Yahoo, Inc. (a) 26,000 1,794,000
45,329,544
CUSTOM COMPUTER PROGRAMMING SERVICES - 0.6%
Keane, Inc. (a) 60,000 2,520,000
CAD/CAM/CAE - 0.2%
BroadVision, Inc. (a) 61,000 1,139,938
DATA PROCESSING - 7.7%
Affiliated Computer Services, Inc.
Class A (a) 100,000 3,268,750
Automatic Data Processing, Inc. 275,000 17,531,250
First Data Corp. 440,000 9,102,500
Fiserv, Inc. (a) 55,000 2,145,000
Sabre Group Holdings, Inc. Class A (a) 50,000 1,600,000
33,647,500
PREPACKAGED COMPUTER SOFTWARE - 61.3%
Aspect Development, Inc. (a) 200,000 5,825,000
BMC Software, Inc. 909,600 38,487,450
BEA Systems, Inc. (a) 340,000 5,185,000
Business Objects SA sponsored ADR (a) 69,000 612,375
Check Point Software
Technologies Ltd. (a) 100,000 1,812,500
Citrix Systems, Inc. (a) 85,000 4,898,125
Computer Associates International, Inc. 639,250 17,259,750
Compuware Corp. (a) 476,200 21,637,338
Deltek Systems, Inc. (a) 50,000 825,000
HNC Software, Inc. (a) 50,000 1,815,625
Industrial-Matematik
International Corp. (a) 378,400 2,270,400
i2 Technologies, Inc. (a) 100,800 1,423,800
J.D. Edwards & Co. 100,000 4,050,000
Manugistics Group, Inc. (a) 258,800 3,671,725
Mercury Interactive Group Corp. (a) 50,000 1,681,250
Microsoft Corp. (a) 677,000 64,949,688
Networks Associates, Inc. (a) 60,000 1,935,000
New Era of Networks, Inc. (a) 34,000 973,250
Oracle Corp. (a) 1,650,600 32,908,838
PeopleSoft, Inc. (a) 1,002,000 28,181,250
SHARES VALUE (NOTE 1)
Policy Management
Systems Corp. (a) 78,400 $ 3,273,200
Siebel Systems, Inc. (a) 1,219,625 22,867,969
Systems Software Associates, Inc. (a) 200,000 900,000
267,444,533
TOTAL COMPUTER SERVICES & SOFTWARE 352,237,765
COMPUTERS & OFFICE EQUIPMENT - 8.2%
COMPUTER EQUIPMENT - WHOLESALE - 0.4%
Tech Data Corp. (a) 44,600 1,686,438
COMPUTERS & OFFICE EQUIPMENT - 2.5%
International Business Machines Corp. 95,000 10,699,375
ELECTRONIC COMPUTERS - 1.1%
Gateway 2000, Inc. (a) 97,800 4,627,163
GRAPHICS WORKSTATIONS - 0.6%
Sun Microsystems, Inc. (a) 70,000 2,773,750
MINI & MICRO COMPUTERS - 3.6%
Compaq Computer Corp. 27,500 768,281
Dell Computer Corp. (a) 150,000 15,000,000
15,768,281
TOTAL COMPUTERS & OFFICE EQUIPMENT 35,555,007
ELECTRICAL EQUIPMENT - 0.1%
ELECTRICAL MACHINERY - 0.1%
Philips Electronics NV 9,400 563,413
ELECTRONICS - 1.5%
SEMICONDUCTORS - 1.5%
Intel Corp. 92,000 6,549,250
RETAIL & WHOLESALE, MISCELLANEOUS - 0.1%
MAIL ORDER - 0.1%
Amazon.com, Inc. (a) 5,600 469,000
SERVICES - 0.7%
MANAGEMENT CONSULTING SERVICES - 0.4%
IMS Health, Inc. 30,000 1,650,000
PERSONNEL SUPPLY SERVICES - 0.3%
Computer Horizons Corp. (a) 61,300 1,432,888
TOTAL SERVICES 3,082,888
TOTAL COMMON STOCKS
(Cost $391,753,534) 402,303,273
NONCONVERTIBLE PREFERRED STOCKS - 2.2%
COMPUTER SERVICES & SOFTWARE - 2.2%
PREPACKAGED COMPUTER SOFTWARE - 2.2%
SAP AG Systeme Anwendungen Produkte in
der Datenverarbeitung
(Cost $4,584,921) 18,000 9,761,594
CASH EQUIVALENTS - 5.6%
Taxable Central Cash Fund (b)
(Cost $24,197,912) 24,197,912 24,197,912
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $420,536,367) $ 436,262,779
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.58%. 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 $207,962,154 and $180,181,527, 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 $30,859 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the security lending program. At period end,
the value of securities loaned and the value of the collateral
amounted to $6,273,500 and $7,228,000, respectively (see Note 6 of
Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $423,234,536. Net unrealized appreciation
aggregated $13,028,243, of which $91,706,444 related to appreciated
investment securities and $78,678,201 related to depreciated
investment securities.
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31,
1998
(UNAUDITED)
ASSETS
INVESTMENT IN $ 436,262,779
SECURITIES, AT
VALUE
(COST
$420,536,36
7) -
SEE
ACCOMPANYIN
G SCHEDULE
RECEIVABLE FOR 13,720,501
INVESTMENTS
SOLD
RECEIVABLE FOR 1,517,611
FUND SHARES
SOLD
DIVIDENDS 66,150
RECEIVABLE
INTEREST 105,146
RECEIVABLE
REDEMPTION FEES 10,457
RECEIVABLE
OTHER 9,999
RECEIVABLES
TOTAL ASSETS 451,692,643
LIABILITIES
PAYABLE FOR $ 6,748,553
FUND SHARES
REDEEMED
ACCRUED 263,671
MANAGEMENT
FEE
OTHER PAYABLES 369,607
AND
ACCRUED
EXPENSES
COLLATERAL ON 7,228,000
SECURITIES
LOANED,
AT VALUE
TOTAL LIABILITIES 14,609,831
NET ASSETS $ 437,082,812
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 415,531,483
ACCUMULATED (2,360,131)
NET INVESTMENT
LOSS
ACCUMULATED 8,185,048
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED 15,726,412
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
NET ASSETS, FOR $ 437,082,812
11,665,833
SHARES
OUTSTANDING
NET ASSET $37.47
VALUE AND
REDEMPTION
PRICE PER
SHARE
($437,082,8
12 (DIVIDED BY)
11,665,833
SHARES)
MAXIMUM $38.63
OFFERING PRICE
PER SHARE
(100/97.00
OF $37.47)
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED AUGUST
31, 1998
(UNAUDITED)
INVESTMENT $ 345,621
INCOME
DIVIDENDS
INTEREST 950,628
(INCLUDING
INCOME ON
SECURITIES
LOANED OF
$75,031)
TOTAL INCOME 1,296,249
EXPENSES
MANAGEMENT $ 1,664,019
FEE
TRANSFER AGENT 1,566,634
FEES
ACCOUNTING AND 271,672
SECURITY
LENDING FEES
NON-INTERESTED 1,262
TRUSTEES'
COMPENSATION
CUSTODIAN FEES 11,599
AND EXPENSES
REGISTRATION FEES 67,697
AUDIT 16,458
LEGAL 1,576
REPORTS TO 68,893
SHAREHOLDERS
TOTAL EXPENSES 3,669,810
BEFORE
REDUCTIONS
EXPENSE (13,430) 3,656,380
REDUCTIONS
NET INVESTMENT (2,360,131)
INCOME (LOSS)
REALIZED AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS) ON:
INVESTMENT 11,356,457
SECURITIES
FOREIGN (143) 11,356,314
CURRENCY
TRANSACTIONS
CHANGE IN NET (96,403,316)
UNREALIZED
APPRECIATION
(DEPRECIATION)
ON INVESTMENT
SECURITIES
NET GAIN (LOSS) (85,047,002)
NET INCREASE $ (87,407,133)
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 981,446
INFORMATION
SALES CHARGES
PAID TO FDC
SALES CHARGES $ 971,479
- - RETAINED BY
FDC
DEFERRED SALES $ 2,678
CHARGES
WITHHELD
BY FDC
EXCHANGE FEES $ 70,313
WITHHELD BY
FSC
EXPENSE $ 12,196
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEMENTS
CUSTODIAN 213
CREDITS
TRANSFER 1,021
AGENT CREDITS
$ 13,430
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED YEAR ENDED
(DECREASE) IN AUGUST 31, 1998 FEBRUARY 28,
NET ASSETS (UNAUDITED) 1998
OPERATIONS $ (2,360,131) $ (3,518,045)
NET
INVESTMENT
INCOME (LOSS)
NET REALIZED 11,356,314 56,333,154
GAIN (LOSS)
CHANGE IN NET (96,403,316) 76,776,311
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (87,407,133) 129,591,420
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
DISTRIBUTIONS TO (2,298,100) (67,010,560)
SHAREHOLDERS
FROM NET
REALIZED GAIN
SHARE 328,697,929 284,940,442
TRANSACTIONS
NET PROCEEDS
FROM SALES OF
SHARES
REINVESTMENT 2,271,098 66,130,192
OF
DISTRIBUTIONS
COST OF SHARES (308,114,855) (300,538,798)
REDEEMED
NET INCREASE 22,854,172 50,531,836
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION 566,976 555,345
FEES
TOTAL (66,284,085) 113,668,041
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
BEGINNING OF 503,366,897 389,698,856
PERIOD
END OF PERIOD $ 437,082,812 $ 503,366,897
(INCLUDING
ACCUMULATED
NET INVESTMENT
LOSS OF
$2,360,131
AND $0,
RESPECTIVELY)
OTHER
INFORMATION
SHARES
SOLD 6,967,590 6,972,295
ISSUED IN 47,395 1,737,307
REINVESTMENT
OF
DISTRIBUTIONS
REDEEMED (6,722,079) (7,436,837)
NET INCREASE 292,906 1,272,765
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED YEAR ENDED YEARS ENDED
ENDED FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
AUGUST 31,
1998
SELECTED (UNAUDITED) 1998 1997 1996 1995 1994
PER-SHARE
DATA
NET ASSET $ 44.26 $ 38.58 $ 36.20 $ 29.07 $ 28.89 $ 27.62
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET (.19) (.33) (.25) (.19) (.26) (.34)
INVESTMENT
INCOME
(LOSS) D
NET (6.46) 12.57 5.87 11.85 .67 7.92
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM (6.65) 12.24 5.62 11.66 .41 7.58
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET (.19) (6.61) (3.31) (4.60) (.33) (6.48)
REALIZED
GAIN
REDEMPTION .05 .05 .07 .07 .10 .17
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 37.47 $ 44.26 $ 38.58 $ 36.20 $ 29.07 $ 28.89
VALUE, END
OF PERIOD
TOTAL (15.01)% 35.50% 16.14% 40.17% 1.97% 33.19%
RETURN B, C
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 437,083 $ 503,367 $ 389,699 $ 337,633 $ 236,445 $ 178,034
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.27% A 1.44% 1.54% 1.48% 1.52% 1.57%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.27% A 1.42% E 1.51% E 1.47% E 1.50% E 1.57%
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.82)% A (.81)% (.66)% (.54)% (1.01)% (1.19)%
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 69% A 145% 279% 183% 164% 376%
TURNOVER
RATE
AVERAGE $ .0395 $ .0366 $ .0427
COMMISSIO
N RATE F
A ANNUALIZED B THE
TOTAL RETURNS WOULD
HAVE BEEN LOWER
HAD CERTAIN EXPENSES
NOT BEEN REDUCED
DURING THE PERIODS
SHOWN. 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. 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>
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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 MONTHS YEAR YEARS YEARS
SELECT TECHNOLOGY -13.42% -15.21% 117.80% 508.81%
SELECT TECHNOLOGY -16.09% -17.83% 111.19% 490.47%
(LOAD ADJ.)
S&P 500 -8.10% 8.10% 131.21% 382.74%
GS TECHNOLOGY -8.97% -3.28% N/A N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks - and the Goldman Sachs
Technology Index - a market capitalization-weighted index of 190
stocks designed to measure the performance of companies in the
technology sector. These benchmarks include reinvestment of dividends
and capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 YEAR YEARS YEARS
SELECT TECHNOLOGY -15.21% 16.85% 19.80%
SELECT TECHNOLOGY -17.83% 16.13% 19.43%
(LOAD ADJ.)
S&P 500 8.10% 18.25% 17.05%
GS TECHNOLOGY -3.28% N/A N/A
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.
(checkmark)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.
$10,000 OVER 10 YEARS
Technology S&P 500
00064 SP001
1988/08/31 9700.00 10000.00
1988/09/30 9962.48 10426.00
1988/10/31 9550.86 10715.84
1988/11/30 9264.51 10562.61
1988/12/31 9902.83 10747.45
1989/01/31 10702.21 11534.17
1989/02/28 10409.90 11246.96
1989/03/31 10219.00 11509.02
1989/04/30 10958.73 12106.34
1989/05/31 11853.57 12596.64
1989/06/30 10803.63 12524.84
1989/07/31 10994.53 13655.84
1989/08/31 11233.15 13923.49
1989/09/30 11501.60 13866.40
1989/10/31 11418.08 13544.70
1989/11/30 11447.91 13821.02
1989/12/31 11585.12 14152.72
1990/01/31 11346.49 13203.07
1990/02/28 11984.81 13373.39
1990/03/31 12545.57 13727.79
1990/04/30 11978.84 13384.59
1990/05/31 13523.92 14689.59
1990/06/30 13643.23 14589.70
1990/07/31 12915.44 14543.01
1990/08/31 11155.60 13228.33
1990/09/30 10207.07 12584.11
1990/10/31 10499.38 12529.99
1990/11/30 12074.29 13339.43
1990/12/31 12802.09 13711.60
1991/01/31 14961.62 14309.43
1991/02/28 15719.25 15332.55
1991/03/31 16977.98 15703.60
1991/04/30 16142.80 15741.29
1991/05/31 17037.64 16421.31
1991/06/30 15384.79 15669.22
1991/07/31 17088.21 16399.40
1991/08/31 17927.93 16788.07
1991/09/30 18017.90 16507.71
1991/10/31 18503.74 16728.91
1991/11/30 17897.94 16054.73
1991/12/31 20351.66 17891.40
1992/01/31 21125.65 17558.62
1992/02/29 21455.64 17786.88
1992/03/31 19751.67 17440.03
1992/04/30 19463.68 17952.77
1992/05/31 19655.67 18040.74
1992/06/30 18250.47 17771.93
1992/07/31 19180.35 18498.80
1992/08/31 18198.08 18119.58
1992/09/30 19088.67 18333.39
1992/10/31 20215.00 18397.56
1992/11/30 21852.10 19024.91
1992/12/31 22127.14 19258.92
1993/01/31 22801.63 19420.70
1993/02/28 22670.66 19684.82
1993/03/31 22965.34 20100.17
1993/04/30 22899.49 19613.74
1993/05/31 25209.72 20139.39
1993/06/30 26440.87 20197.79
1993/07/31 25738.39 20117.00
1993/08/31 27114.39 20879.44
1993/09/30 27534.43 20718.67
1993/10/31 26991.27 21147.54
1993/11/30 26730.56 20946.64
1993/12/31 28466.58 21200.10
1994/01/31 29899.84 21920.90
1994/02/28 30745.09 21326.84
1994/03/31 29708.74 20396.99
1994/04/30 29110.37 20658.07
1994/05/31 29156.26 20996.87
1994/06/30 26685.78 20482.44
1994/07/31 27718.33 21154.27
1994/08/31 30640.08 22021.59
1994/09/30 30487.11 21482.06
1994/10/31 31626.74 21965.41
1994/11/30 31190.77 21165.43
1994/12/31 31634.39 21479.31
1995/01/31 30402.97 22036.27
1995/02/28 32162.14 22895.02
1995/03/31 34120.17 23570.66
1995/04/30 36691.84 24264.81
1995/05/31 38111.26 25234.68
1995/06/30 41651.90 25820.88
1995/07/31 45862.83 26677.10
1995/08/31 47282.24 26744.06
1995/09/30 49458.68 27872.66
1995/10/31 48717.43 27773.15
1995/11/30 48465.09 28992.39
1995/12/31 45492.42 29550.79
1996/01/31 45953.46 30556.70
1996/02/29 48471.46 30839.96
1996/03/31 44721.06 31136.95
1996/04/30 48572.31 31595.90
1996/05/31 49889.67 32410.76
1996/06/30 46340.85 32534.25
1996/07/31 41394.00 31096.88
1996/08/31 42998.14 31752.72
1996/09/30 48509.57 33539.76
1996/10/31 48160.07 34464.79
1996/11/30 54101.66 37069.98
1996/12/31 52688.49 36335.62
1997/01/31 58924.44 38605.87
1997/02/28 54599.97 38908.54
1997/03/31 50985.20 37309.79
1997/04/30 53957.10 39537.19
1997/05/31 59692.36 41944.21
1997/06/30 60791.53 43823.31
1997/07/31 67756.54 47310.33
1997/08/31 69650.15 44660.01
1997/09/30 72457.93 47106.04
1997/10/31 62173.65 45532.69
1997/11/30 61085.36 47640.40
1997/12/31 58130.41 48458.39
1998/01/31 61288.56 48994.34
1998/02/28 68208.23 52527.81
1998/03/31 68452.15 55217.76
1998/04/30 71250.83 55773.25
1998/05/31 65897.39 54814.51
1998/06/30 71379.21 57041.07
1998/07/31 71571.78 56433.58
1998/08/31 59047.25 48274.42
IMATRL PRASUN SHR__CHT 19980831 19980910 162239 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Technology Portfolio on August 31, 1988,
and the current 3.00% sales charge was paid. As the chart shows, by
August 31, 1998, the value of the investment would have grown to
$59,047 - a 490.47% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $48,274 - a 382.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
INTEL CORP. 11.6
MICROSOFT CORP. 10.3
OY NOKIA AB SPONSORED ADR CLASS A 5.8
ASCEND COMMUNICATIONS, INC. 5.0
CISCO SYSTEMS, INC. 5.0
EMC CORP. 4.5
LUCENT TECHNOLOGIES, INC. 3.2
SEAGATE TECHNOLOGY 3.0
INTERNATIONAL BUSINESS MACHINES CORP. 3.0
DELL COMPUTER CORP. 2.6
TOP INDUSTRIES AS OF AUGUST 31, 1998
ROW: 1, COL: 1, VALUE: 39.1
ROW: 1, COL: 2, VALUE: 5.3
ROW: 1, COL: 3, VALUE: 6.3
ROW: 1, COL: 4, VALUE: 15.2
ROW: 1, COL: 5, VALUE: 16.8
ROW: 1, COL: 6, VALUE: 17.3
TELEPHONE EQUIPMENT 17.3%
SEMICONDUCTORS 16.8%
PREPACKAGED COMPUTER
SOFTWARE 15.2%
DATACOMMUNICATIONS
EQUIPMENT 6.3%
COMPUTER PERIPHERALS 5.3%
ALL OTHER 39.1%
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
TECHNOLOGY PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
(photograph of Andrew Kaplan)
(photograph of Adam Hetnarski)
NOTE TO SHAREHOLDERS: Andrew Kaplan (right) became Portfolio Manager
of Fidelity Select Technology Portfolio on July 15, 1998. The
following is an interview with Adam Hetnarski, who managed the fund
during most of the period covered by this report, and Andrew Kaplan,
who discusses changes to the fund and his outlook.
Q. ADAM, HOW DID THE FUND PERFORM?
A.H. For the six-month and 12-month periods that ended August 31,
1998, the fund had total returns of -13.42% and -15.21%, respectively.
During those same periods, the Standard & Poor's 500 Index posted
returns of -8.10% and 8.10%, respectively. Beginning this period, the
fund also compares itself to the Goldman Sachs Technology Index - an
index of 190 stocks designed to measure the performance of companies
in the technology sector - which returned -8.97% and -3.28% over the
same six- and 12-month periods, respectively.
Q. WHY DID THE FUND TRAIL ITS TWO BENCHMARK INDEXES OVER THE PAST SIX
MONTHS?
A.H. The fund and the technology sector trailed the broad market - as
measured by the S&P 500 - due to concerns that the crisis in Asia
would stifle demand from that region. In addition, many companies
suffered from an inventory reduction by personal computer (PC)
manufacturers. Further, stocks in the sector had been selling at very
high multiples - a measure of how much an investor pays for a
company's earnings. When signs of weakness appeared in this sector,
stock prices fell. The fund trailed the Goldman Sachs index because
earlier in the period it didn't invest in larger-capitalization
companies such as IBM and Hewlett-Packard. These companies make up a
significant percentage of the Goldman Sachs index and fared well, even
when their earnings were not appealing. Finally, the index's Internet
stocks, an area where the fund was underweighted earlier in the
period, generally performed well.
Q. WHICH STOCKS PROVIDED STRONG PERFORMANCE FOR THE FUND?
A.H. Microsoft did extremely well and proved to be one of the
best-positioned large-capitalization stocks in the entire stock
market. The company benefited from product upgrades, among many other
factors. Dell Computer boasted an operational strategy that enabled it
to bring new products to market faster than competitors. HBO & Co. saw
its share price rise as the market came to appreciate its dominant
position in both the consulting and software sides of its health care
information services business.
Q. WHICH STOCKS WERE DISAPPOINTING?
A.H. I'd mention three. Intel and Seagate Technology suffered from
slower demand for PCs that caused them to revise their earnings
downward. Seagate, in particular, was hurt by an oversupply of disc
drives. The share price of Micron Technology also fell due to similar
production overcapacity problems in the memory semiconductors
industry.
Q. TURNING TO YOU, ANDY, WHAT CHANGES HAVE YOU MADE TO THE FUND SINCE
TAKING OVER?
A.K. First, I've tended to focus on higher-quality names that I felt
carried lower risk for earnings disappointments. The market
increasingly is paying a premium for these kinds of companies given
the uncertainty in Asia and other emerging markets, as well as due to
fears about a slowing domestic economy. Second, in the short term I'm
focusing on the PC industry, one of the poorer performers over the
past 12 to 18 months. I believe that we're moving into a period where
sales and profit margins will improve for both PC component suppliers
and the computer companies themselves.
Q. WHAT'S YOUR OUTLOOK, ANDY?
A.K. I am cautiously optimistic. On the one hand, we no longer have
Asia and some of the other emerging markets supporting the high rates
of growth we saw in technology for most of the past decade. Therefore,
the sector will be relying more on the continued health of established
economies in North America and Europe. As long as global economic
growth rates don't fall precipitously, technology shares should do
fine, because continued innovation, new products and other factors
drive healthy demand for the products. I would caution that technology
has proven to be extremely cyclical: The rate of growth in technology
has moved in conjunction with the rate of growth in the worldwide
economy, albeit at a more pronounced level. As a result, any further
slowdown in global economic growth caused by currency dislocations or
other factors should have a negative impact on the technology sector.
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.
(checkmark)FUND FACTS
START DATE: JULY 14, 1981
FUND NUMBER: 064
TRADING SYMBOL: FSPTX
SIZE: AS OF AUGUST 31, 1998, MORE THAN
$496 MILLION
MANAGER: ANDREW KAPLAN, SINCE JULY 1998;
MANAGER, FIDELITY SELECT DEVELOPING
COMMUNICATIONS PORTFOLIO, SINCE MARCH 1998;
FIDELITY SELECT ELECTRONICS PORTFOLIO, 1996-JUNE
1998; JOINED FIDELITY IN 1995
TECHNOLOGY PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 88.1%
SHARES VALUE (NOTE 1)
ADVERTISING - 0.0%
GeoCities (a) 400 $ 7,225
24/7 Media, Inc. (a) 500 3,375
10,600
APPLIANCE STORES - 0.2%
ELECTRIC APPLIANCES - WHOLESALE - 0.2%
Cellstar Corp. (a) 158,500 1,050,063
COMMUNICATIONS EQUIPMENT - 23.6%
DATACOMMUNICATIONS EQUIPMENT - 6.3%
Cisco Systems, Inc. (a) 305,150 24,984,156
3Com Corp. (a) 105,000 2,487,188
Xircom, Inc. (a) 246,700 3,854,688
31,326,032
TELEPHONE EQUIPMENT - 17.3%
Ascend Communications, Inc. (a) 711,700 25,042,944
Com21, Inc. (a) 25,000 265,625
DSC Communications Corp. (a) 120,900 2,916,713
InterVoice, Inc. (a) 100,000 1,487,500
Lucent Technologies, Inc. 226,100 16,024,838
Oy Nokia AB sponsored ADR Class A 427,200 28,542,300
Northern Telecom Ltd. 240,820 11,553,526
85,833,446
TOTAL COMMUNICATIONS EQUIPMENT 117,159,478
COMPUTER SERVICES & SOFTWARE - 19.7%
COMPUTER & SOFTWARE STORES - 0.2%
Inacom Corp. (a) 60,300 1,160,775
COMPUTER FACILITIES MANAGEMENT - 0.4%
International Telecommunications Data
Systems, Inc. 86,400 1,695,600
COMPUTER SERVICES - 2.3%
America Online, Inc. 75,000 6,145,313
Broadcast.com, Inc. (a) 100 3,788
Cambridge Technology Partners, Inc. (a) 93,500 3,038,750
Technology Solutions, Inc. (a) 35,550 406,603
Yahoo, Inc. (a) 25,000 1,725,000
11,319,454
CUSTOM COMPUTER PROGRAMMING SERVICES - 0.4%
Entrust Technologies, Inc. (a) 1,200 15,900
Saville Systems PLC
sponsored ADR (a) 109,500 1,793,063
1,808,963
DATA PROCESSING - 1.2%
Affiliated Computer Services, Inc.
Class A (a) 66,500 2,173,719
First Data Corp. 187,400 3,876,838
6,050,557
PREPACKAGED COMPUTER SOFTWARE - 15.2%
Autodesk, Inc. 150,000 3,506,250
BMC Software, Inc. 46,100 1,950,606
BindView Development Corp. (a) 4,000 39,000
Citrix Systems, Inc. (a) 36,800 2,120,600
Computer Associates International, Inc. 73,300 1,979,100
Compuware Corp. (a) 122,500 5,566,094
i2 Technologies, Inc. (a) 3,600 50,850
Microsoft Corp. (a) 533,540 51,186,494
MicroProse, Inc. (a) 286,180 1,627,649
SHARES VALUE (NOTE 1)
Siebel Systems, Inc. (a) 102,580 $ 1,923,375
Wind River Systems, Inc. (a) 150,000 5,625,000
75,575,018
TOTAL COMPUTER SERVICES & SOFTWARE 97,610,367
COMPUTERS & OFFICE EQUIPMENT - 18.1%
COMPUTER EQUIPMENT - WHOLESALE - 0.9%
Ingram Micro, Inc. Class A (a) 94,300 4,243,500
COMPUTER PERIPHERALS - 5.3%
EMC Corp. (a) 492,800 22,268,400
Fore Systems, Inc. (a) 139,000 2,397,750
SCI Systems, Inc. (a) 60,700 1,392,306
Western Digital Corp. (a) 50,000 412,500
26,470,956
COMPUTER STORAGE DEVICES - 4.5%
Maxtor Corp. (a) 745,500 5,078,719
Quantum Corp. (a) 200,000 2,287,500
Seagate Technology (a) 850,000 14,875,000
22,241,219
COMPUTERS & OFFICE EQUIPMENT - 3.0%
International Business Machines Corp. 131,700 14,832,713
MINI & MICRO COMPUTERS - 4.4%
Apple Computer, Inc. (a) 106,900 3,333,944
Compaq Computer Corp. 215,700 6,026,119
Dell Computer Corp. (a) 126,500 12,650,000
22,010,063
TOTAL COMPUTERS & OFFICE EQUIPMENT 89,798,451
DRUGS & PHARMACEUTICALS - 0.0%
DRUGS - 0.0%
Barr Laboratories, Inc. (a) 2,000 51,250
ELECTRICAL EQUIPMENT - 4.0%
ELECTRICAL MACHINERY - 1.4%
Alcatel Alsthom Compagnie Generale
d'Electricite SA sponsored ADR 231,000 6,973,313
TV & RADIO COMMUNICATION EQUIPMENT - 2.6%
General Instrument Corp. (a) 597,400 11,873,325
Loral Space & Communications Ltd. (a) 67,900 1,077,913
12,951,238
TOTAL ELECTRICAL EQUIPMENT 19,924,551
ELECTRONIC INSTRUMENTS - 2.4%
ELECTRONIC EQUIPMENT - 1.8%
Smart Modular Technologies, Inc. (a) 250,000 3,812,500
Teradyne, Inc. (a) 300,000 5,212,500
9,025,000
SEMI-CONDUCTOR CAPITAL EQUIPMENT - 0.6%
KLA-Tencor Corp. (a) 130,300 2,768,875
Novellus Systems, Inc. (a) 6,200 165,075
2,933,950
TOTAL ELECTRONIC INSTRUMENTS 11,958,950
ELECTRONICS - 17.2%
ELECTRONICS & ELECTRONIC COMPONENTS - 0.4%
Solectron Corp. (a) 41,000 1,693,813
SEMICONDUCTORS - 16.8%
Altera Corp. (a) 350,000 10,193,750
Broadcom Corp. Class A 30,700 1,573,375
Intel Corp. 804,800 57,291,691
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ELECTRONICS - CONTINUED
SEMICONDUCTORS - CONTINUED
Lattice Semiconductor Corp. (a) 119,400 $ 2,873,063
Micron Technology, Inc. (a) 187,100 4,256,525
Semtech Corp. (a) 164,200 2,627,200
Vitesse Semiconductor Corp. (a) 115,000 3,119,375
Xilinx, Inc. (a) 50,000 1,525,000
83,459,979
TOTAL ELECTRONICS 85,153,792
METALS & MINING - 0.5%
NONFERROUS WIRE - 0.5%
AFC Cable Systems, Inc. (a) 107,500 2,489,297
RETAIL & WHOLESALE, MISCELLANEOUS - 2.0%
MAIL ORDER - 0.4%
Amazon.com, Inc. (a) 25,000 2,093,750
MUSIC, TV, & ELECTRIC STORES - 1.6%
Best Buy Co., Inc. (a) 194,000 7,638,750
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 9,732,500
SERVICES - 0.4%
BUSINESS SERVICES - 0.4%
Robert Half International, Inc. (a) 37,400 1,795,200
TOTAL COMMON STOCKS
(Cost $480,586,893) 436,734,499
CASH EQUIVALENTS - 11.9%
Taxable Central Cash Fund (b) 56,502,182 56,502,182
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.89%, dated
8/31/98 due 9/01/98 $ 2,696,441 2,696,000
TOTAL CASH EQUIVALENTS
(Cost $59,198,182) 59,198,182
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $539,785,075) $ 495,932,681
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.58%. 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 $910,498,269 and $982,612,890, 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 $141,629 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the security lending program. At period end,
the value of securities loaned and the value of the collateral
amounted to $15,697,747 and $18,385,500, 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 89.9%
Finland 5.8
Canada 2.3
France 1.4
Others (individually less than 1%) 0.6
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $540,113,923. Net unrealized depreciation
aggregated $44,181,242, of which $36,452,620 related to appreciated
investment securities and $80,633,862 related to depreciated
investment securities.
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.
TECHNOLOGY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31,
1998
(UNAUDITED)
ASSETS
INVESTMENT IN $ 495,932,681
SECURITIES, AT
VALUE
(INCLUDING
REPURCHASE
AGREEMENTS OF
$2,696,000)
(COST
$539,785,07
5) -
SEE
ACCOMPANYIN
G SCHEDULE
CASH 618
RECEIVABLE FOR 65,448,535
INVESTMENTS
SOLD
RECEIVABLE FOR 4,769,105
FUND SHARES
SOLD
DIVIDENDS 38,362
RECEIVABLE
INTEREST 296,888
RECEIVABLE
REDEMPTION FEES 39,737
RECEIVABLE
OTHER 121,992
RECEIVABLES
TOTAL ASSETS 566,647,918
LIABILITIES
PAYABLE FOR $ 39,185,648
INVESTMENTS
PURCHASED
PAYABLE FOR 11,459,691
FUND SHARES
REDEEMED
ACCRUED 299,183
MANAGEMENT
FEE
OTHER PAYABLES 395,764
AND
ACCRUED
EXPENSES
COLLATERAL ON 18,385,500
SECURITIES
LOANED,
AT VALUE
TOTAL LIABILITIES 69,725,786
NET ASSETS $ 496,922,132
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 552,035,882
ACCUMULATED (1,653,003)
NET INVESTMENT
LOSS
ACCUMULATED (9,608,353)
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED (43,852,394)
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
NET ASSETS, FOR $ 496,922,132
10,802,695
SHARES
OUTSTANDING
NET ASSET $46.00
VALUE AND
REDEMPTION
PRICE PER
SHARE
($496,922,1
32 (DIVIDED BY)
10,802,695
SHARES)
MAXIMUM $47.42
OFFERING PRICE
PER SHARE
(100/97.00
OF $46.00)
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED AUGUST
31, 1998
(UNAUDITED)
INVESTMENT $ 613,479
INCOME
DIVIDENDS
INTEREST 1,598,873
(INCLUDING
INCOME ON
SECURITIES
LOANED OF
$152,197)
TOTAL INCOME 2,212,352
EXPENSES
MANAGEMENT $ 1,829,872
FEE
TRANSFER AGENT 1,695,973
FEES
ACCOUNTING AND 287,115
SECURITY
LENDING FEES
NON-INTERESTED 1,392
TRUSTEES'
COMPENSATION
CUSTODIAN FEES 28,870
AND EXPENSES
REGISTRATION FEES 21,589
AUDIT 18,161
LEGAL 1,880
REPORTS TO 81,270
SHAREHOLDERS
TOTAL EXPENSES 3,966,122
BEFORE
REDUCTIONS
EXPENSE (100,767) 3,865,355
REDUCTIONS
NET INVESTMENT (1,653,003)
INCOME (LOSS)
REALIZED AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS) ON:
INVESTMENT 44,616,297
SECURITIES
FOREIGN 1,659 44,617,956
CURRENCY
TRANSACTIONS
CHANGE IN NET
UNREALIZED
APPRECIATION
(DEPRECIATION)
ON:
INVESTMENT (124,454,603)
SECURITIES
ASSETS AND 289 (124,454,314)
LIABILITIES IN
FOREIGN
CURRENCIES
NET GAIN (LOSS) (79,836,358)
NET INCREASE $ (81,489,361)
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 787,481
INFORMATION
SALES CHARGES
PAID TO FDC
SALES CHARGES $ 780,399
- - RETAINED BY
FDC
DEFERRED SALES $ 15,620
CHARGES
WITHHELD
BY FDC
EXCHANGE FEES $ 87,915
WITHHELD BY
FSC
EXPENSE $ 97,221
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEMENTS
CUSTODIAN 2,869
CREDITS
TRANSFER 677
AGENT CREDITS
$ 100,767
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED YEAR ENDED
(DECREASE) IN AUGUST 31, 1998 FEBRUARY 28,
NET ASSETS (UNAUDITED) 1998
OPERATIONS $ (1,653,003) $ (2,470,345)
NET INVESTMENT
INCOME (LOSS)
NET REALIZED 44,617,956 56,871,240
GAIN (LOSS)
CHANGE IN NET (124,454,314) 69,437,348
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (81,489,361) 123,838,243
(DECREASE)
IN NET ASSETS
RESULTING
FROM
OPERATIONS
DISTRIBUTIONS TO - (112,130,367)
SHAREHOLDERS
FROM NET
REALIZED GAIN
IN EXCESS OF - (29,870,994)
NET REALIZED
GAIN
TOTAL - (142,001,361)
DISTRIBUTIONS
SHARE 195,682,037 519,887,482
TRANSACTIONS
NET PROCEEDS
FROM SALES OF
SHARES
REINVESTMENT - 139,074,837
OF DISTRIBUTIONS
COST OF SHARES (309,762,843) (428,139,579)
REDEEMED
NET INCREASE (114,080,806) 230,822,740
(DECREASE)
IN NET ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION 567,873 820,601
FEES
TOTAL (195,002,294) 213,480,223
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
BEGINNING OF 691,924,426 478,444,203
PERIOD
END OF PERIOD $ 496,922,132 $ 691,924,426
(INCLUDING
ACCUMULATED
NET INVESTMENT
LOSS OF
$1,653,003
AND $0,
RESPECTIVELY)
OTHER
INFORMATION
SHARES
SOLD 3,572,325 9,533,953
ISSUED IN - 2,923,252
REINVESTMENT
OF DISTRIBUTIONS
REDEEMED (5,792,411) (7,726,118)
NET INCREASE (2,220,086) 4,731,087
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED YEAR ENDED YEARS ENDED
ENDED FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
AUGUST 31,
1998
SELECTED (UNAUDITED) 1998 1997 1996 1995 1994
PER-SHARE
DATA
NET ASSET $ 53.13 $ 57.70 $ 54.67 $ 42.05 $ 41.83 $ 34.62
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET (.14) (.25) (.39) (.28) (.39) (.24) E
INVESTMENT
INCOME
(LOSS) D
NET (7.04) 11.29 6.95 20.83 1.95 11.04
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM (7.18) 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)
DISTRIBUTION
S
REDEMPTION .05 .08 .15 .12 .16 .24
FEES ADDED
TO PAID IN
CAPITAL
NET ASSET $ 46.00 $ 53.13 $ 57.70 $ 54.67 $ 42.05 $ 41.83
VALUE, END
OF PERIOD
TOTAL (13.42)% 24.92% 12.64% 50.71% 4.61% 35.62%
RETURN B, C
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 496,922 $ 691,924 $ 478,444 $ 483,026 $ 229,761 $ 202,475
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.25% A 1.38% 1.49% 1.40% 1.57% 1.55%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.22% A, F 1.30% F 1.44% F 1.39% F 1.56% F 1.54% F
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.52)% A (.45)% (.72)% (.52)% (.98)% (.65)%
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 321% A 556% 549% 112% 102% 213%
TURNOVER
RATE
AVERAGE $ .0421 $ .0436 $ .0191
COMMISSIO
N RATE G
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 TOT
AL 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 INVESTME
NT INCOME (LOSS) PER
SHARE REFLECTS
DIVIDENDS RECEIVED IN
ARREARS WHICH
AMOUNTED TO $.03
PER SHARE. F FMR
OR THE FUND HAS
ENTERED INTO VARYING
ARRANGEMENTS WITH
THIRD PARTIES WHO
EITHER PAID OR
REDUCED A PORTION OF
THE FUND'S EXPENSES
(SEE NOTE 8 OF NOTES
TO FINANCIAL
STATEMENTS). G FOR
FISCAL YEARS BEGINNING
ON OR AFTER
SEPTEMBER 1, 1995,
A FUND IS REQUIRED TO
DISCLOSE ITS AVERAGE
COMMISSION RATE PER
SHARE FOR SECURITY
TRADES ON WHICH
COMMISSIONS ARE
CHARGED. THIS AMOUNT
MAY VARY FROM PERIOD
TO PERIOD AND FUND TO
FUND DEPENDING ON
THE MIX OF TRADES
EXECUTED IN VARIOUS
MARKETS WHERE
TRADING PRACTICES AND
COMMISSION RATE
STRUCTURES MAY DIFFER.
</TABLE>
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 6 PAST 1 PAST 5 LIFE OF
AUGUST 31, 1998 MONTHS YEAR YEARS FUND
SELECT NATURAL GAS -24.21% -29.14% -3.11% 7.55%
SELECT NATURAL GAS -26.55% -31.34% -6.09% 4.25%
(LOAD ADJ.)
S&P 500 -8.10% 8.10% 131.21% 144.31%
GS UTILITIES -0.48% 29.59% N/A N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or since the fund started on April 21, 1993. You can compare the
fund's returns to the performance of both the Standard & Poor's 500
Index - a widely recognized, unmanaged index of common stocks - and
the Goldman Sachs Utilities Index - a market capitalization-weighted
index of 136 stocks designed to measure the performance of companies
in the utilities sector. These benchmarks include reinvestment of
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
AUGUST 31, 1998 YEAR YEARS FUND
SELECT NATURAL GAS -29.14% -0.63% 1.37%
SELECT NATURAL GAS -31.34% -1.25% 0.78%
(LOAD ADJ.)
S&P 500 8.10% 18.25% 18.12%
GS UTILITIES 29.59% N/A N/A
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.
(checkmark)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.
$10,000 OVER LIFE OF FUND
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
1998/02/28 13763.83 26583.41
1998/03/31 14430.16 27944.75
1998/04/30 14825.79 28225.87
1998/05/31 14003.29 27740.67
1998/06/30 13930.41 28867.50
1998/07/31 12743.51 28560.06
1998/08/31 10424.69 24430.84
IMATRL PRASUN SHR__CHT 19980831 19980910 164229 R00000000000068
$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 August 31, 1998, the value of the investment would
have grown to $10,425 - a 4.25% increase on the initial investment -
and includes the effect of a $7.50 trading fee. For comparison, look
at how the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $24,431 - a 144.31% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
ENRON CORP. 7.4
COASTAL CORP. (THE) 7.2
VASTAR RESOURCES, INC. 6.7
WILLIAMS COMPANIES, INC. 5.8
ANADARKO PETROLEUM CORP. 5.4
BURLINGTON RESOURCES, INC. 4.3
SUNCOR ENERGY, INC. 3.3
PLAINS RESOURCES, INC. 3.1
PG&E CORP. 3.0
SEMPRA ENERGY 2.7
TOP INDUSTRIES AS OF AUGUST 31, 1998
CRUDE PETROLEUM & GAS 44.7%
GAS TRANSMISSION 18.6%
PETROLEUM REFINERS 8.4%
GAS DISTRIBUTION 6.2%
GAS TRANSMISSION &
DISTRIBUTION 3.7%
ALL OTHERS 18.4%
ROW: 1, COL: 1, VALUE: 18.4
ROW: 1, COL: 2, VALUE: 3.7
ROW: 1, COL: 3, VALUE: 6.2
ROW: 1, COL: 4, VALUE: 8.4
ROW: 1, COL: 5, VALUE: 18.6
ROW: 1, COL: 6, VALUE: 44.7
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
NATURAL GAS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Victor Thay)
Victor Thay,
Portfolio Manager
of Fidelity Select
Natural Gas Portfolio
Q. HOW DID THE FUND PERFORM, VICTOR?
A. It was a difficult period for the fund. For the six- and 12-month
periods that ended August 31, 1998, the fund had total returns of
- -24.21% and -29.14%, respectively. In comparison, the Standard &
Poor's 500 Index returned -8.10% and 8.10%, respectively, over the
same time periods. Beginning this period, the fund also compares
itself to the Goldman Sachs Utilities Index - an index of 136 stocks
designed to measure the performance of companies in the utilities
sector - which returned -0.48% and 29.59% over the same six- and
12-month periods, respectively.
Q. WHAT ACCOUNTED FOR THE FUND'S POOR PERFORMANCE RELATIVE TO ITS
BENCHMARKS?
A. The fund's performance depends primarily on the prices of natural
gas and oil, which were weak during the period. Unseasonably warm
weather last winter led to excess supplies of natural gas in the
summer months and depressed prices during the period. Furthermore,
industrial demand was low, and this was exacerbated by the General
Motors strike. In addition, demand for natural gas fell because of the
increased use of residual fuels - that is, some users substituted oil
for gas because of the lower cost of oil. Consequently, the fund fared
worse than the broader market as reflected in the S&P 500. While the
Goldman Sachs index does include gas utility stocks, it also contains
telecommunications and electric utility stocks, which did relatively
well during the period, enabling the index to outperform the fund by a
wide margin.
Q. WHAT WAS YOUR STRATEGY DURING THE PERIOD?
A. I cut back on the fund's holdings of exploration and production
companies because I felt that they would be hurt more by the ongoing
glut of natural gas supplies. Conversely, I built larger positions in
gas pipeline and distribution companies because those stocks tend to
benefit directly from low interest rates. In addition, I eliminated
the fund's holdings of drilling companies, because they are typically
more susceptible to initial cutbacks in exploration spending. Finally,
I diversified by building positions in certain electric utilities in
anticipation of the opportunities I see in the retail energy service
markets.
Q. WHAT STOCKS HELPED THE FUND'S PERFORMANCE?
A. Varco International, which builds and repairs drilling rigs, was
one of the fund's stronger performers. The stock benefited from one of
the cyclical surges in demand for the company's services. Another
helpful stock - Noble Drilling - resisted selling pressures better
than most of the fund's holdings. The economics of deep water drilling
make it profitable to use the services of companies like Noble even at
the recent low level of oil and gas prices. I subsequently sold both
Varco and Noble because I felt they had become fully valued. Duke
Energy and PG&E also were positive contributors to the fund's
performance. They are examples of companies that stand to benefit from
the deregulation of the electric utility industry.
Q. WHAT HOLDINGS WERE DETRIMENTAL TO THE FUND'S PERFORMANCE?
A. Williams Companies was the biggest detractor from performance. The
company had lower profit margins due to the relative difference, or
spread, between oil and gas prices. Vintage and Ocean Energy are oil
exploration and production companies that suffered because of the
cutbacks in exploration spending brought on by lower commodity prices.
Finally, Burlington Resources - a natural gas exploration and
production company - saw its stock price erode on fears that limits on
storage capacity for natural gas would be reached this fall, causing
further weakness in gas prices.
Q. WHAT'S YOUR OUTLOOK, VICTOR?
A. There are several developments that might lead to higher oil and
gas prices in the coming months. For one thing, the Organization of
Petroleum Exporting Countries (OPEC) seems to have reached a consensus
on reducing production, which should help support oil prices.
Historically, oil prices have not remained at the depressed levels
we've seen recently for more than six months or so. A return to
seasonably cold winter temperatures would also help spur demand in
both the gas and oil markets. However, demand from Asia is still weak,
and the currency problems in that region seem to be spreading to Latin
America and other emerging markets. For now, the fund's reduced
emphasis on exploration and production companies and increased focus
on the distribution and pipeline areas seems prudent.
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.
(checkmark)FUND FACTS
START DATE: April 21, 1993
FUND NUMBER: 513
TRADING SYMBOL: FSNGX
SIZE: as of August 31, 1998, more than
$38 million
MANAGER: Victor Thay, since 1997; analyst,
U.S. and Canadian exploration and production
industry, 1996-present; Canadian equities,
1995-1996; joined Fidelity in 1995
NATURAL GAS PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.7%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES - 0.6%
PETROLEUM - WHOLESALE - 0.6%
Dynegy, Inc. 25,000 $ 239,063
ELECTRIC UTILITY - 4.3%
ELECTRIC & OTHER SERVICES - 3.0%
PG&E Corp. 35,700 1,146,863
ELECTRIC POWER - 1.3%
Duke Energy Corp. 8,200 511,475
TOTAL ELECTRIC UTILITY 1,658,338
ENERGY SERVICES - 1.2%
OIL & GAS SERVICES - 1.2%
Baker Hughes, Inc. 9,180 167,535
McDermott International, Inc. 15,000 300,938
468,473
GAS - 28.5%
GAS DISTRIBUTION - 6.2%
Atmos Energy Corp. 20,000 567,500
Cascade Natural Gas Corp. 6,900 109,106
Indiana Energy, Inc. 3,900 111,881
MCN Energy Group, Inc. 16,100 282,756
National Fuel Gas Co. 2,500 102,813
New Jersey Resources Corp. 3,100 104,431
Northwest Natural Gas Co. 4,100 99,938
Sempra Energy (a) 40,301 1,025,157
2,403,582
GAS TRANSMISSION - 18.6%
Enron Corp. 67,100 2,839,160
El Paso Energy Corp. 40,800 1,012,350
Leviathan Gas Pipeline Partners L.P. 30,100 656,556
TransCanada PipeLines Ltd. 29,896 405,983
Williams Companies, Inc. 97,300 2,237,900
7,151,949
GAS TRANSMISSION & DISTRIBUTION - 3.7%
Columbia Energy Group 9,700 482,575
Consolidated Natural Gas Co. 9,200 403,075
Equitable Resources, Inc. 9,900 216,563
Midcoast Energy Resources, Inc. 17,930 327,223
1,429,436
TOTAL GAS 10,984,967
OIL & GAS - 59.1%
CRUDE PETROLEUM & GAS - 44.7%
Anadarko Petroleum Corp. 72,750 2,091,563
Apache Corp. 33,025 755,447
Barrett Resources Corp. (a) 12,500 253,906
Burlington Resources, Inc. 56,072 1,657,629
Elf Aquitaine SA sponsored ADR 20,300 992,163
Enron Oil & Gas Co. 22,200 288,600
Newfield Exploration Co. (a) 17,600 276,100
Noble Affiliates, Inc. 20,600 476,375
Ocean Energy, Inc. (a) 5,540 49,168
Oryx Energy Co. (a) 39,000 485,063
Paramount Resources Ltd. 59,400 435,512
Penn West Petroleum Ltd. (a) 36,700 321,725
Petrobras PN (Pfd. Reg.) 1,500,000 153,094
Plains Resources, Inc. (a) 78,900 1,213,088
Renaissance Energy Ltd. (a) 32,600 355,410
Rio Alto Exploration Ltd. (a) 82,000 658,719
Santa Fe Energy Resources, Inc. 43,300 324,750
SHARES VALUE (NOTE 1)
Suncor Energy, Inc. 46,000 $ 1,286,006
Swift Energy Co. (a) 25,000 220,313
Total SA sponsored ADR 11,000 528,688
Ulster Petroleums Ltd. (a) 119,400 692,726
Union Pacific Resources Group, Inc. 79,800 683,288
Vastar Resources, Inc. 68,400 2,599,200
Vintage Petroleum, Inc. 55,700 435,156
17,233,689
OIL & GAS EXPLORATION - 3.7%
Anderson Exploration Ltd. (a) 37,000 324,354
Berkley Petroleum Corp. (a) 30,000 157,794
Seagull Energy Corp. (a) 23,100 205,013
USX-Marathon Group 28,400 738,400
1,425,561
PETROLEUM REFINERS - 8.4%
British Petroleum Co. PLC ADR 6,500 475,313
Coastal Corp. (The) 106,400 2,766,400
3,241,713
PIPELINES, EXCEPT GAS - 2.3%
IPL Energy, Inc. 24,500 905,961
TOTAL OIL & GAS 22,806,924
TOTAL COMMON STOCKS
(Cost $43,635,371) 36,157,765
CASH EQUIVALENTS - 6.3%
Taxable Central Cash Fund (b)
(Cost $2,433,256) 2,433,256 2,433,256
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $46,068,627) $ 38,591,021
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.58%. 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 $26,207,641 and $33,877,785, 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 $6,712 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 80.1%
Canada 14.4
France 3.9
United Kingdom 1.2
Others (individually less than 1%) 0.4
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $46,199,959. Net unrealized depreciation
aggregated $7,608,938, of which $998,029 related to appreciated
investment securities and $8,606,967 related to depreciated investment
securities.
NATURAL GAS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31,
1998
(UNAUDITED)
ASSETS
INVESTMENT IN $ 38,591,021
SECURITIES, AT
VALUE
(COST
$46,068,627
) -
SEE
ACCOMPANYIN
G SCHEDULE
CASH 1,576
RECEIVABLE FOR 104,276
FUND SHARES
SOLD
DIVIDENDS 76,890
RECEIVABLE
INTEREST 11,660
RECEIVABLE
REDEMPTION FEES 901
RECEIVABLE
OTHER 26
RECEIVABLES
TOTAL ASSETS 38,786,350
LIABILITIES
PAYABLE FOR $ 504,441
FUND SHARES
REDEEMED
ACCRUED 21,806
MANAGEMENT
FEE
OTHER PAYABLES 54,781
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 581,028
NET ASSETS $ 38,205,322
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 47,914,586
UNDISTRIBUTED 717,055
NET INVESTMENT
INCOME
ACCUMULATED (2,948,482)
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED (7,477,837)
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
AND ASSETS
AND LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, FOR $ 38,205,322
3,811,619
SHARES
OUTSTANDING
NET ASSET $10.02
VALUE AND
REDEMPTION
PRICE PER
SHARE
($38,205,32
2 (DIVIDED BY)
3,811,619
SHARES)
MAXIMUM $10.33
OFFERING PRICE
PER SHARE
(100/97.00
OF $10.02)
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED AUGUST
31, 1998
(UNAUDITED)
INVESTMENT $ 757,260
INCOME
DIVIDENDS
INTEREST 83,502
TOTAL INCOME 840,762
EXPENSES
MANAGEMENT $ 161,252
FEE
TRANSFER AGENT 199,852
FEES
ACCOUNTING FEES 30,588
AND EXPENSES
NON-INTERESTED 105
TRUSTEES'
COMPENSATION
CUSTODIAN FEES 9,536
AND EXPENSES
REGISTRATION FEES 12,461
AUDIT 10,733
LEGAL 175
REPORTS TO 10,904
SHAREHOLDERS
MISCELLANEOUS 14
TOTAL EXPENSES 435,620
BEFORE
REDUCTIONS
EXPENSE (14,265) 421,355
REDUCTIONS
NET INVESTMENT 419,407
INCOME
REALIZED AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS) ON:
INVESTMENT (2,721,736)
SECURITIES
FOREIGN (12,855) (2,734,591)
CURRENCY
TRANSACTIONS
CHANGE IN NET
UNREALIZED
APPRECIATION
(DEPRECIATION)
ON:
INVESTMENT (10,038,801)
SECURITIES
ASSETS AND (231) (10,039,032)
LIABILITIES IN
FOREIGN
CURRENCIES
NET GAIN (LOSS) (12,773,623)
NET INCREASE $ (12,354,216)
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 65,763
INFORMATION
SALES CHARGES
PAID TO FDC
SALES CHARGES $ 65,763
- - RETAINED BY
FDC
DEFERRED SALES $ 417
CHARGES
WITHHELD
BY FDC
EXCHANGE FEES $ 10,568
WITHHELD BY
FSC
EXPENSE $ 14,121
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEMENTS
CUSTODIAN 144
CREDITS
$ 14,265
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED YEAR ENDED
(DECREASE) IN AUGUST 31, 1998 FEBRUARY 28,
NET ASSETS (UNAUDITED) 1998
OPERATIONS $ 419,407 $ (306,523)
NET INVESTMENT
INCOME (LOSS)
NET REALIZED (2,734,591) 1,119,826
GAIN (LOSS)
CHANGE IN NET (10,039,032) 5,428,784
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (12,354,216) 6,242,087
(DECREASE)
IN NET ASSETS
RESULTING
FROM
OPERATIONS
DISTRIBUTIONS TO - (1,875,328)
SHAREHOLDERS
FROM NET
REALIZED GAIN
IN EXCESS OF - (210,862)
NET REALIZED
GAIN
TOTAL - (2,086,190)
DISTRIBUTIONS
SHARE 15,830,686 108,990,438
TRANSACTIONS
NET PROCEEDS
FROM SALES OF
SHARES
REINVESTMENT - 2,046,549
OF DISTRIBUTIONS
COST OF SHARES (25,182,201) (137,149,165)
REDEEMED
NET INCREASE (9,351,515) (26,112,178)
(DECREASE)
IN NET ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION 45,188 255,983
FEES
TOTAL (21,660,543) (21,700,298)
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
BEGINNING OF 59,865,865 81,566,163
PERIOD
END OF PERIOD $ 38,205,322 $ 59,865,865
(INCLUDING
UNDISTRIBUTE
D NET
INVESTMENT
INCOME OF
$717,055
AND
$297,648,
RESPECTIVELY)
OTHER
INFORMATION
SHARES
SOLD 1,172,601 8,021,019
ISSUED IN - 174,767
REINVESTMENT
OF DISTRIBUTIONS
REDEEMED (1,890,079) (10,189,472)
NET INCREASE (717,478) (1,993,686)
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED YEAR ENDED YEAR ENDED APRIL 21, 1993
ENDED FEBRUARY 28, FEBRUARY 29, FEBRUARY 28, (COMMENCEMEN
AUGUST 31, T OF OPERATIONS)
1998 TO FEBRUARY
28,
SELECTED (UNAUDITED) 1998 1997 1996 1995 1994
PER-SHARE
DATA
NET ASSET $ 13.22 $ 12.50 $ 11.36 $ 8.98 $ 9.48 $ 10.00
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET .10 (.05) (.06) .05 .03 .02
INVESTMENT
INCOME
(LOSS) D
NET (3.31) 1.06 1.30 2.36 (.53) (.46)
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM (3.21) 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 .01 .04 .20 .02 .02 .05
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 10.02 $ 13.22 $ 12.50 $ 11.36 $ 8.98 $ 9.48
VALUE, END
OF PERIOD
TOTAL (24.21)% 8.74% 12.45% 27.10% (5.06)% (3.84)%
RETURN B, C
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 38,205 $ 59,866 $ 81,566 $ 60,228 $ 79,894 $ 63,073
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.56% A 1.82% 1.70% 1.68% 1.70% 1.94% A
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.51% A, E 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 1.50% A (.37)% (.46)% .46% .30% .17% A
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 101% A 118% 283% 79% 177% 44% A
TURNOVER
RATE
AVERAGE $ .0379 $ .0285 $ .0361
COMMISSIO
N RATE F
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 TOT
AL 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 FO
R 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.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 MONTHS YEAR YEARS YEARS
SELECT TELECOMMUNICATIONS -14.14% 13.88% 79.32% 408.18%
SELECT TELECOMMUNICATIONS -16.79% 10.39% 73.86% 392.86%
(LOAD ADJ.)
S&P 500 -8.10% 8.10% 131.21% 382.74%
GS UTILITIES -0.48% 29.59% N/A N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks - and the Goldman Sachs
Utilities Index - a market capitalization-weighted index of 136 stocks
designed to measure the performance of companies in the utilities
sector. These benchmarks include reinvestment of dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 YEAR YEARS YEARS
SELECT TELECOMMUNICATIONS 13.88% 12.39% 17.65%
SELECT TELECOMMUNICATIONS 10.39% 11.70% 17.29%
(LOAD ADJ.)
S&P 500 8.10% 18.25% 17.05%
GS UTILITIES 29.59% N/A N/A
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.
(checkmark)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.
$10,000 OVER 10 YEARS
Telecommunications S&P 500
00096 SP001
1988/08/31 9700.00 10000.00
1988/09/30 10297.91 10426.00
1988/10/31 10506.88 10715.84
1988/11/30 10599.76 10562.61
1988/12/31 10961.57 10747.45
1989/01/31 11851.13 11534.17
1989/02/28 11897.95 11246.96
1989/03/31 12383.70 11509.02
1989/04/30 13320.09 12106.34
1989/05/31 14303.29 12596.64
1989/06/30 13953.86 12524.84
1989/07/31 15013.21 13655.84
1989/08/31 15372.20 13923.49
1989/09/30 15937.19 13866.40
1989/10/31 15372.20 13544.70
1989/11/30 15760.63 13821.02
1989/12/31 16539.00 14152.72
1990/01/31 14745.39 13203.07
1990/02/28 14690.49 13373.39
1990/03/31 15032.13 13727.79
1990/04/30 14147.53 13384.59
1990/05/31 15636.10 14689.59
1990/06/30 15324.96 14589.70
1990/07/31 14623.38 14543.01
1990/08/31 12921.28 13228.33
1990/09/30 12085.49 12584.11
1990/10/31 12506.44 12529.99
1990/11/30 13220.22 13339.43
1990/12/31 13827.17 13711.60
1991/01/31 14318.56 14309.43
1991/02/28 14797.50 15332.55
1991/03/31 15214.24 15703.60
1991/04/30 15537.69 15741.29
1991/05/31 15699.41 16421.31
1991/06/30 15046.30 15669.22
1991/07/31 15898.45 16399.40
1991/08/31 16371.17 16788.07
1991/09/30 16582.65 16507.71
1991/10/31 17235.76 16728.91
1991/11/30 16576.43 16054.73
1991/12/31 18093.09 17891.40
1992/01/31 18118.23 17558.62
1992/02/29 18344.48 17786.88
1992/03/31 17697.17 17440.03
1992/04/30 18363.33 17952.77
1992/05/31 18149.66 18040.74
1992/06/30 17728.14 17771.93
1992/07/31 18679.44 18498.80
1992/08/31 18458.94 18119.58
1992/09/30 18818.04 18333.39
1992/10/31 19007.04 18397.56
1992/11/30 19996.14 19024.91
1992/12/31 20864.61 19258.92
1993/01/31 20800.43 19420.70
1993/02/28 21942.82 19684.82
1993/03/31 22841.32 20100.17
1993/04/30 22889.52 19613.74
1993/05/31 23810.89 20139.39
1993/06/30 24837.56 20197.79
1993/07/31 25561.50 20117.00
1993/08/31 27489.80 20879.44
1993/09/30 27884.67 20718.67
1993/10/31 28687.58 21147.54
1993/11/30 26338.08 20946.64
1993/12/31 27064.66 21200.10
1994/01/31 27612.58 21920.90
1994/02/28 26747.44 21326.84
1994/03/31 25911.13 20396.99
1994/04/30 26373.61 20658.07
1994/05/31 26218.73 20996.87
1994/06/30 26196.61 20482.44
1994/07/31 27649.52 21154.27
1994/08/31 28453.41 22021.59
1994/09/30 28121.53 21482.06
1994/10/31 29463.81 21965.41
1994/11/30 27900.27 21165.43
1994/12/31 28233.62 21479.31
1995/01/31 28625.33 22036.27
1995/02/28 28881.45 22895.02
1995/03/31 29243.04 23570.66
1995/04/30 30151.92 24264.81
1995/05/31 30974.94 25234.68
1995/06/30 32467.16 25820.88
1995/07/31 34528.56 26677.10
1995/08/31 35551.57 26744.06
1995/09/30 36720.73 27872.66
1995/10/31 35182.37 27773.15
1995/11/30 35959.24 28992.39
1995/12/31 36606.61 29550.79
1996/01/31 36865.71 30556.70
1996/02/29 36331.31 30839.96
1996/03/31 36161.27 31136.95
1996/04/30 37849.58 31595.90
1996/05/31 38689.52 32410.76
1996/06/30 39083.24 32534.25
1996/07/31 36125.97 31096.88
1996/08/31 36878.41 31752.72
1996/09/30 37963.32 33539.76
1996/10/31 37210.88 34464.79
1996/11/30 38339.55 37069.98
1996/12/31 38583.25 36335.62
1997/01/31 38845.72 38605.87
1997/02/28 39183.18 38908.54
1997/03/31 35883.54 37309.79
1997/04/30 37006.20 39537.19
1997/05/31 42273.54 41944.21
1997/06/30 44603.88 43823.31
1997/07/31 45509.06 47310.33
1997/08/31 43284.64 44660.01
1997/09/30 48898.64 47106.04
1997/10/31 47714.22 45532.69
1997/11/30 49688.26 47640.40
1997/12/31 48548.49 48458.39
1998/01/31 52636.34 48994.34
1998/02/28 57412.66 52527.81
1998/03/31 62522.46 55217.76
1998/04/30 62276.09 55773.25
1998/05/31 59617.56 54814.51
1998/06/30 61899.46 57041.07
1998/07/31 63893.36 56433.58
1998/08/31 49293.59 48274.42
IMATRL PRASUN SHR__CHT 19980831 19980917 100654 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Telecommunications Portfolio on August 31,
1988, and the current 3.00% sales charge was paid. As the chart shows,
by August 31, 1998, the value of the investment would have grown to
$49,286 - a 392.86% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $48,274 - a 382.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
MCI COMMUNICATIONS CORP. 9.9
WORLDCOM, INC. 8.5
AT&T CORP. 7.7
TEL-SAVE HOLDINGS, INC. 7.0
OY NOKIA AB SPONSORED ADR CLASS A 4.2
QWEST COMMUNICATIONS INTERNATIONAL, INC. 3.7
ALCATEL ALSTHOM COMPAGNIE GENERALE 3.6
D'ELECTRICITE SA
LUCENT TECHNOLOGIES, INC. 3.4
GLOBAL TELESYSTEMS GROUP, INC. 3.1
CISCO SYSTEMS, INC. 2.5
TOP INDUSTRIES AS OF AUGUST 31, 1998
ROW: 1, COL: 1, VALUE: 26.6
ROW: 1, COL: 2, VALUE: 3.6
ROW: 1, COL: 3, VALUE: 4.9
ROW: 1, COL: 4, VALUE: 5.8
ROW: 1, COL: 5, VALUE: 7.6
ROW: 1, COL: 6, VALUE: 51.5
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 51.5%
TELEPHONE EQUIPMENT 7.6%
CABLE TV OPERATORS 5.8%
CELLULAR & COMMUNICATION
SERVICES 4.9%
ELECTRICAL MACHINERY 3.6%
ALL OTHERS 26.6%
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
TELECOMMUNICATIONS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Nick Thakore)
Nick Thakore,
Portfolio Manager
of Fidelity Select
Telecommunications Portfolio
Q. HOW DID THE FUND PERFORM, NICK?
A. For the six- and 12-month periods that ended August 31, 1998, the
fund had total returns of -14.14% and 13.88%, respectively. In
comparison, the Standard & Poor's 500 Index returned -8.10% and 8.10%,
respectively, over the same time periods. Beginning this period, the
fund also compares itself to the Goldman Sachs Utilities Index - an
index of 136 stocks designed to measure the performance of companies
in the utilities sector - which returned -0.48% and 29.59% over the
same six- and 12-month periods, respectively.
Q. WHY DID THE FUND UNDERPERFORM BOTH THE S&P 500 AND THE GOLDMAN
SACHS INDEX DURING THE PERIOD?
A. The fund is comprised primarily of growth stocks in the
telecommunications sector. While stocks of that type generally perform
well in rising markets, they tend to be hurt badly by market
downdrafts of the sort we witnessed in August of this year. This was
evident in the fund's inability to keep pace with the S&P 500 over the
past six months. Likewise, the Goldman Sachs index contains mostly
conservative utility stocks that tend to lag growth stocks in a rising
market but hold their ground better when the market falls. The recent
market environment, with its extreme downside volatility, therefore
favored conservative issues over growth stocks, which explains the
superior performance of the Goldman Sachs index.
Q. WHAT STRATEGY DID YOU USE IN THIS VOLATILE ENVIRONMENT?
A. I continued to monitor the basic business prospects for the
companies I follow. Selling waves such as we witnessed recently tend
to capsize both good and bad stocks, so I looked for opportunities to
upgrade the portfolio with stocks that had better-than-expected growth
prospects and had sold down to attractive price levels.
Q. THE FUND'S TOP THREE HOLDINGS AT THE END OF THE PERIOD COMPRISED
OVER 25% OF THE PORTFOLIO. WAS THAT A CONSCIOUS DECISION?
A. Most of it was due to appreciation in the price of those stocks. In
AT&T's case, the acquisition of Teleport Communications made it appear
as though the fund increased its position when, in fact, the fund's
AT&T holdings at the end of the period reflect the value of its
positions in both AT&T and Teleport Communications.
Q. WHAT STOCKS DID WELL FOR THE FUND?
A. Viatel was the biggest contributor to the fund's return. Investors
were attracted to the stock based on the anticipated value of the
networks the company has been building in Europe. I took profits on a
large part of this position before the market weakened in August.
WorldCom has been one of the fund's core holdings for some time, and
the stock performed well again during the period. Earnings grew as
anticipated, and the company's merger with MCI was moving ahead
relatively smoothly. Alcatel, a French telecommunications equipment
company, benefited from strong earnings and the stock's comparatively
modest valuation.
Q. WHAT STOCKS FAILED TO PERFORM UP TO YOUR EXPECTATIONS?
A. Tel-Save was far and away the biggest detractor from the fund's
performance. The stock suffered when it appeared that the company
would be acquired but the deal subsequently fell through. Investors
also punished AT&T's stock in response to skepticism about the
viability of the company's planned acquisition of cable company TCI
Group. Nextel did poorly because of concerns about the U.S. wireless
industry, and also due to the difficulty of valuing a company that had
healthy revenues and cash flow but negligible earnings.
Q. WHAT'S YOUR OUTLOOK, NICK?
A. Although the market has inflicted a lot of pain on investors
recently, my overall outlook is more positive than it's been in quite
a while. Broad-based selling hysteria has created tremendous
opportunities to buy the stocks of many high-quality companies at very
attractive price-to-earnings multiples. It's important to realize that
although they are vulnerable to slowdowns in the U.S. economy, most
telecommunications stocks in the fund's portfolio have virtually no
exposure to emerging markets. There is therefore less risk of earnings
disruptions due to the financial turmoil in Asia, Russia and other
emerging markets. A greater inclination by the Federal Reserve Board
to lower short-term interest rates would help to hold off recessionary
forces. As long as the economy avoids outright recession, slower
economic growth with lower interest rates should be beneficial for the
stocks held by the fund and for the market overall.
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.
(checkmark)FUND FACTS
START DATE: JULY 29, 1985
FUND NUMBER: 096
TRADING SYMBOL: FSTCX
SIZE: AS OF AUGUST 31, 1998, MORE THAN
$636 MILLION
MANAGER: NICK THAKORE, SINCE 1996; MANAGER,
FIDELITY UTILITIES FUND, FIDELITY ADVISOR UTILITIES
GROWTH FUND AND FIDELITY SELECT UTILITIES GROWTH
PORTFOLIO, SINCE 1997; ANALYST, VARIOUS
INDUSTRIES, 1993-1996; JOINED FIDELITY IN 1993
TELECOMMUNICATIONS PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 86.8%
SHARES VALUE (NOTE 1)
BROADCASTING - 6.1%
CABLE TV OPERATORS - 3.7%
AlphaNet Telecom, Inc. (a) 394,100 $ 3,756,325
AlphaNet Telecom, Inc. warrants
9/30/98 (a) 824,000 7,618,257
Cable Michigan, Inc. (a) 24,275 904,244
Cox Communications, Inc. Class A (a) 150,800 6,333,600
RCN Corp. 221,200 3,076,063
Tele-Communications, Inc. (TCI Group),
Series A (a) 146,634 4,838,922
26,527,411
COMMUNICATIONS SERVICES, NEC - 1.9%
SmarTalk TeleServices, Inc. (a)(c) 2,165,000 13,666,563
TELEVISION BROADCASTING - 0.5%
NTL, Inc. (a) 96,000 3,834,000
TOTAL BROADCASTING 44,027,974
CELLULAR - 4.9%
CELLULAR & COMMUNICATION SERVICES - 4.9%
AirTouch Communications, Inc. (a) 98,400 5,535,000
Cellular Communications
International, Inc. (a) 260,600 13,811,800
Lightbridge, Inc. (a) 62,800 314,000
Nextel Communications, Inc. Class A (a) 790,700 14,282,019
SkyTel Communications, Inc. (a) 91,700 1,203,563
35,146,382
COMMUNICATIONS EQUIPMENT - 10.1%
DATACOMMUNICATIONS EQUIPMENT - 2.5%
Cisco Systems, Inc. (a) 218,600 17,897,875
TELEPHONE EQUIPMENT - 7.6%
Inter-Tel, Inc. 400 5,350
Lucent Technologies, Inc. 339,500 24,062,063
Oy Nokia AB sponsored ADR Class A 450,000 30,065,625
54,133,038
TELEPHONE INTERCONNECT SYSTEMS - 0.0%
Intermedia Communications, Inc. (a) 2,400 59,700
TOTAL COMMUNICATIONS EQUIPMENT 72,090,613
COMPUTER SERVICES & SOFTWARE - 3.2%
COMPUTER SERVICES - 2.0%
America Online, Inc. 71,900 5,891,306
Concentric Network Corp. 143,700 2,299,200
Electric Lightwave, Inc. Class A (a) 45,300 390,713
Titan Corp. (a) 1,318,200 6,014,288
14,595,507
CUSTOM COMPUTER PROGRAMMING SERVICES - 1.2%
Saville Systems PLC sponsored ADR (a) 500,000 8,187,500
TOTAL COMPUTER SERVICES & SOFTWARE 22,783,007
ELECTRICAL EQUIPMENT - 5.0%
ELECTRICAL MACHINERY - 3.6%
Alcatel Alsthom Compagnie Generale
d'Electricite SA 170,280 25,701,632
TV & RADIO COMMUNICATION EQUIPMENT - 1.4%
California Amplifier, Inc. (a)(c) 591,300 776,081
Loral Space & Communications Ltd. (a) 607,800 9,648,825
10,424,906
TOTAL ELECTRICAL EQUIPMENT 36,126,538
SHARES VALUE (NOTE 1)
ENTERTAINMENT - 1.1%
MOTION PICTURE PRODUCTION - 1.1%
Tele-Communications, Inc.
(TCI Ventures Group), Series A (a) 480,400 $ 7,986,650
ELECTRONICS - 3.2%
ELECTRONIC COMPONENTS & ACCESSORIES - 2.5%
World Access, Inc. (a) 927,800 17,744,175
ELECTRONICS & ELECTRONIC COMPONENTS - 0.7%
Alpine Group, Inc. (a) 378,000 5,386,500
TOTAL ELECTRONICS 23,130,675
ENGINEERING - 0.6%
Able Telcom Holdings Corp. (a)(c) 985,100 4,063,538
METALS & MINING - 1.1%
NONFERROUS ROLLING & DRAWING - 1.1%
Superior Telecom, Inc. 207,100 7,895,688
SERVICES - 0.0%
MANAGEMENT CONSULTING SERVICES - 0.0%
Hagler Bailly, Inc. (a) 300 5,813
TELEPHONE SERVICES - 51.5%
AT&T Corp. 1,101,047 55,189,981
Advanced Communications Group, Inc. 131,600 789,600
AMNEX, Inc. (a) 1,789,100 1,230,006
BCE, Inc. 375,000 12,097,545
Cincinnati Bell, Inc. 155,100 3,644,850
Commonwealth Telephone
Enterprises, Inc. 101,800 2,201,425
COMSAT Corp., Series 1 288,700 6,297,269
Equant NV (a) 3,700 150,008
France Telecom SA 3,200 225,867
GTE Corp. 336,400 16,820,000
Global Telesystems Group, Inc. (a) 703,000 22,496,000
ITC DeltaCom, Inc. 700 22,225
IXC Communications, Inc. 7,000 171,500
MCI Communications Corp. 1,414,100 70,705,000
Maritime Telegraph & Telephone
Co. Ltd. 17,100 362,496
McLeodUSA, Inc. Class A (a) 194,100 5,628,900
NewTel Enterprises Ltd. 30,800 711,827
NEXTLINK Communications, Inc.
Class A (a) 400 8,300
Qwest Communications
International, Inc. (a) 1,049,390 26,234,750
Southern New England
Telecommunications Corp. 170,000 11,018,125
STAR Telecommunications, Inc. (a) 321,825 3,379,163
Startec Global Communications Corp. 1,800 10,350
Tel-Save Holdings, Inc. (a)(c) 3,353,900 50,308,500
Telebras sponsored ADR (a) 148,500 10,664,156
Telegroup, Inc. (a) 308,300 1,387,350
U.S. LEC Corp. Class A 1,200 17,400
Viatel, Inc. (a) 805,700 6,546,313
WorldCom, Inc. (a) 1,496,805 61,275,455
369,594,361
TOTAL COMMON STOCKS
(Cost $665,237,031) 622,851,239
CONVERTIBLE PREFERRED STOCKS - 2.1%
SHARES VALUE (NOTE 1)
BROADCASTING - 2.1%
CABLE TV OPERATORS - 2.1%
MediaOne Group, Inc. $3.63 PIES (a)
(Cost $16,042,500) 276,000 $ 15,318,000
CASH EQUIVALENTS - 11.1%
Taxable Central Cash Fund (b)
(Cost $79,516,394) 79,516,394 79,516,394
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $760,795,925) $ 717,685,633
SECURITY TYPE ABBREVIATIONS
PIES - Premium Income Equity
Securities
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.58%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(c) Affiliated company (see Note 10 of Notes to Financial Statements).
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $524,256,253 and $382,713,313, 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 $51,271 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the security lending program. At period end,
the value of securities loaned and the value of the collateral
amounted to $63,253,165 and $77,324,200, 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
Able Telcom Holdings
Corp. $ 3,157,131 $ - $ - $ 4,063,538
California Amplifier,
Inc. 185,966 1,451,235 - 776,081
SmarTalk TeleServices,
Inc. 2,434,493 - - 13,666,563
Tel-Save Holdings, Inc. - - - 50,308,500
Titan Corp. 263,832 734,200 - -
Viatel, Inc. - 6,303,500 - -
TOTALS $ 6,041,422 $ 8,488,935 $ - $ 68,814,682
Distribution of investments by country of issue, as a percentage of
total value of investment in securities, is as follows:
United States 84.8%
Finland 4.2
France 3.6
Canada 3.4
Brazil 1.5
Bermuda 1.4
Ireland 1.1
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $761,196,181. Net unrealized depreciation
aggregated $43,510,548, of which $80,897,191 related to appreciated
investment securities and $124,407,739 related to depreciated
investment securities.
TELECOMMUNICATIONS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31,
1998
(UNAUDITED)
ASSETS
INVESTMENT IN $ 717,685,633
SECURITIES, AT
VALUE
(COST
$760,795,92
5) -
SEE
ACCOMPANYIN
G SCHEDULE
RECEIVABLE FOR 6,809,686
INVESTMENTS
SOLD
RECEIVABLE FOR 2,946,186
FUND SHARES
SOLD
DIVIDENDS 333,486
RECEIVABLE
INTEREST 562,711
RECEIVABLE
REDEMPTION FEES 17,806
RECEIVABLE
OTHER 64,421
RECEIVABLES
TOTAL ASSETS 728,419,929
LIABILITIES
PAYABLE FOR $ 13,204,422
FUND SHARES
REDEEMED
ACCRUED 391,615
MANAGEMENT
FEE
OTHER PAYABLES 697,490
AND
ACCRUED
EXPENSES
COLLATERAL ON 77,324,200
SECURITIES
LOANED,
AT VALUE
TOTAL LIABILITIES 91,617,727
NET ASSETS $ 636,802,202
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 657,313,595
ACCUMULATED (616,267)
NET INVESTMENT
LOSS
ACCUMULATED 23,210,950
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED (43,106,076)
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
AND ASSETS
AND LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, FOR $ 636,802,202
14,309,858
SHARES
OUTSTANDING
NET ASSET $44.50
VALUE AND
REDEMPTION
PRICE PER
SHARE
($636,802,2
02 (DIVIDED BY)
14,309,858
SHARES)
MAXIMUM $45.88
OFFERING PRICE
PER SHARE
(100/97.00
OF $44.50)
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED AUGUST
31, 1998
(UNAUDITED)
INVESTMENT $ 1,829,964
INCOME
DIVIDENDS
INTEREST 2,691,036
(INCLUDING
INCOME ON
SECURITIES
LOANED OF
$1,243,594)
TOTAL INCOME 4,521,000
EXPENSES
MANAGEMENT $ 2,434,477
FEE
TRANSFER AGENT 2,168,371
FEES
ACCOUNTING AND 352,944
SECURITY
LENDING FEES
NON-INTERESTED 1,972
TRUSTEES'
COMPENSATION
CUSTODIAN FEES 47,030
AND EXPENSES
REGISTRATION FEES 124,045
AUDIT 16,695
LEGAL 2,036
REPORTS TO 78,838
SHAREHOLDERS
TOTAL EXPENSES 5,226,408
BEFORE
REDUCTIONS
EXPENSE (89,141) 5,137,267
REDUCTIONS
NET INVESTMENT (616,267)
INCOME (LOSS)
REALIZED AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS) ON:
INVESTMENT 27,195,374
SECURITIES
(INCLUDING
REALIZED
GAIN OF
$1,397,225
ON SALES OF
INVESTMENTS IN
AFFILIATED
ISSUERS)
FOREIGN 22,033 27,217,407
CURRENCY
TRANSACTIONS
CHANGE IN NET
UNREALIZED
APPRECIATION
(DEPRECIATION)
ON:
INVESTMENT (144,063,459)
SECURITIES
ASSETS AND 11,388 (144,052,071)
LIABILITIES IN
FOREIGN
CURRENCIES
NET GAIN (LOSS) (116,834,664)
NET INCREASE $ (117,450,931)
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 2,661,647
INFORMATION
SALES CHARGES
PAID TO FDC
SALES CHARGES $ 2,649,809
- - RETAINED BY
FDC
DEFERRED SALES $ 5,783
CHARGES
WITHHELD
BY FDC
EXCHANGE FEES $ 120,338
WITHHELD BY
FSC
EXPENSE $ 83,760
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEMENTS
CUSTODIAN 5,381
CREDITS
$ 89,141
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED YEAR ENDED
(DECREASE) IN AUGUST 31, 1998 FEBRUARY 28,
NET ASSETS (UNAUDITED) 1998
OPERATIONS $ (616,267) $ (2,208,196)
NET
INVESTMENT
INCOME (LOSS)
NET REALIZED 27,217,407 89,769,920
GAIN (LOSS)
CHANGE IN NET (144,052,071) 75,630,156
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (117,450,931) 163,191,880
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
DISTRIBUTIONS TO (29,167,122) (57,660,802)
SHAREHOLDERS
FROM NET
REALIZED GAIN
SHARE 671,346,028 394,333,392
TRANSACTIONS
NET PROCEEDS
FROM SALES OF
SHARES
REINVESTMENT 28,756,284 56,532,142
OF
DISTRIBUTIONS
COST OF SHARES (560,769,610) (302,046,680)
REDEEMED
NET INCREASE 139,332,702 148,818,854
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION 638,254 564,136
FEES
TOTAL (6,647,097) 254,914,068
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
BEGINNING OF 643,449,299 388,535,231
PERIOD
END OF PERIOD $ 636,802,202 $ 643,449,299
(INCLUDING
ACCUMULATED
NET INVESTMENT
LOSS OF
$616,267
AND $0,
RESPECTIVELY)
OTHER
INFORMATION
SHARES
SOLD 11,862,814 8,067,245
ISSUED IN 505,739 1,266,807
REINVESTMENT
OF
DISTRIBUTIONS
REDEEMED (10,115,955) (6,572,964)
NET INCREASE 2,252,598 2,761,088
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED YEAR ENDED YEARS ENDED
ENDED FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
AUGUST 31,
1998
SELECTED (UNAUDITED) 1998 1997 1996 1995 1994
PER-SHARE
DATA
NET ASSET $ 53.37 $ 41.80 $ 44.87 $ 38.34 $ 37.10 $ 34.19
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET (.04) (.25) .12 G .51 .29 .25
INVESTMENT
INCOME
(LOSS) D
NET (7.18) 18.20 2.92 9.15 2.54 7.00
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM (7.22) 17.95 3.04 9.66 2.83 7.25
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET - - (.16) (.39) (.33) (.20)
INVESTMENT
INCOME
FROM NET (1.69) (6.44) (5.98) (2.75) (1.27) (4.18)
REALIZED
GAIN
TOTAL (1.69) (6.44) (6.14) (3.14) (1.60) (4.38)
DISTRIBUTIO
NS
REDEMPTION .04 .06 .03 .01 .01 .04
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 44.50 $ 53.37 $ 41.80 $ 44.87 $ 38.34 $ 37.10
VALUE, END
OF PERIOD
TOTAL (14.14)% 46.52% 7.85% 25.79% 7.98% 21.90%
RETURN B, C
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 636,802 $ 643,449 $ 388,535 $ 468,300 $ 369,476 $ 371,025
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.24% A 1.51% 1.51% 1.52% 1.56% 1.54%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.22% A, E 1.48% E 1.47% E 1.52% 1.55% E 1.53% E
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET (.15)% A (.53)% .27% 1.17% .77% .64%
INVESTMENT
INCOME
(LOSS) TO
AVERAGE
NET ASSETS
PORTFOLIO 100% A 157% 175% 89% 107% 241%
TURNOVER
RATE
AVERAGE $ .0397 $ .0065 $ .0321
COMMISSIO
N RATE F
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 TOT
AL RETURNS DO NOT
INCLUDE THE ONE TIME
SALES CHARGE AND FOR
PERIODS OF LESS THAN
ONE YEAR ARE NOT
ANNUALIZED. D NET
INVESTMENT INCOME
(LOSS) PER SHARE HAS
BEEN CALCULATED
BASED ON AVERAGE
SHARES OUTSTANDING
DURING THE
PERIOD. E FMR OR
THE FUND HAS ENTERED
INTO VARYING
ARRANGEMENTS WITH
THIRD PARTIES WHO
EITHER PAID OR
REDUCED A PORTION OF
THE FUND'S EXPENSES
(SEE NOTE 8 OF NOTES
TO FINANCIAL
STATEMENTS). F FOR
FISCAL YEARS BEGINNING
ON OR AFTER
SEPTEMBER 1, 1995,
A FUND IS REQUIRED TO
DISCLOSE ITS AVERAGE
COMMISSION RATE PER
SHARE FOR SECURITY
TRADES ON WHICH
COMMISSIONS ARE
CHARGED. THIS AMOUNT
MAY VARY FROM
PERIOD TO PERIOD AND
FUND TO FUND
DEPENDING ON THE
MIX OF TRADES
EXECUTED IN VARIOUS
MARKETS WHERE
TRADING PRACTICES AND
COMMISSION RATE
STRUCTURES MAY
DIFFER. G INVESTMEN
T INCOME PER SHARE
REFLECTS A SPECIAL
DIVIDEND WHICH
AMOUNTED TO $.07
PER SHARE.
</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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 MONTHS YEAR YEARS YEARS
SELECT UTILITIES GROWTH -3.22% 25.14% 79.47% 324.00%
SELECT UTILITIES GROWTH -6.20% 21.31% 74.01% 311.21%
(LOAD ADJ.)
S&P 500 -8.10% 8.10% 131.21% 382.74%
GS UTILITIES -0.48% 29.59% N/A N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks - and the Goldman Sachs
Utilities Index - a market capitalization-weighted index of 136 stocks
designed to measure the performance of companies in the utilities
sector. These benchmarks include reinvestment of dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 YEAR YEARS YEARS
SELECT UTILITIES GROWTH 25.14% 12.41% 15.54%
SELECT UTILITIES GROWTH 21.31% 11.72% 15.19%
(LOAD ADJ.)
S&P 500 8.10% 18.25% 17.05%
GS UTILITIES 29.59% N/A N/A
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.
(checkmark)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.
$10,000 OVER 10 YEARS
Utilities Growth S&P 500
00065 SP001
1988/08/31 9700.00 10000.00
1988/09/30 10037.93 10426.00
1988/10/31 10249.13 10715.84
1988/11/30 10229.93 10562.61
1988/12/31 10211.24 10747.45
1989/01/31 10692.23 11534.17
1989/02/28 10625.21 11246.96
1989/03/31 10806.57 11509.02
1989/04/30 11362.47 12106.34
1989/05/31 11902.60 12596.64
1989/06/30 12203.24 12524.84
1989/07/31 12871.53 13655.84
1989/08/31 12928.23 13923.49
1989/09/30 13114.54 13866.40
1989/10/31 13053.79 13544.70
1989/11/30 13483.11 13821.02
1989/12/31 14195.94 14152.72
1990/01/31 13495.26 13203.07
1990/02/28 13470.96 13373.39
1990/03/31 13398.05 13727.79
1990/04/30 12839.13 13384.59
1990/05/31 13507.41 14689.59
1990/06/30 13667.47 14589.70
1990/07/31 13779.67 14543.01
1990/08/31 13023.37 13228.33
1990/09/30 13056.61 12584.11
1990/10/31 13725.65 12529.99
1990/11/30 14087.18 13339.43
1990/12/31 14274.66 13711.60
1991/01/31 14211.72 14309.43
1991/02/28 14824.33 15332.55
1991/03/31 14992.17 15703.60
1991/04/30 14925.04 15741.29
1991/05/31 14929.23 16421.31
1991/06/30 14748.14 15669.22
1991/07/31 15228.10 16399.40
1991/08/31 15577.17 16788.07
1991/09/30 16057.14 16507.71
1991/10/31 16279.67 16728.91
1991/11/30 16467.30 16054.73
1991/12/31 17276.34 17891.40
1992/01/31 16744.55 17558.62
1992/02/29 16621.83 17786.88
1992/03/31 16449.11 17440.03
1992/04/30 16899.09 17952.77
1992/05/31 17226.34 18040.74
1992/06/30 17425.62 17771.93
1992/07/31 18352.17 18498.80
1992/08/31 18342.76 18119.58
1992/09/30 18441.53 18333.39
1992/10/31 18436.82 18397.56
1992/11/30 18563.81 19024.91
1992/12/31 19106.31 19258.92
1993/01/31 19431.31 19420.70
1993/02/28 20430.95 19684.82
1993/03/31 20982.47 20100.17
1993/04/30 20867.79 19613.74
1993/05/31 20912.55 20139.39
1993/06/30 21713.24 20197.79
1993/07/31 21961.91 20117.00
1993/08/31 22916.77 20879.44
1993/09/30 22916.77 20718.67
1993/10/31 22683.03 21147.54
1993/11/30 21573.99 20946.64
1993/12/31 21503.14 21200.10
1994/01/31 21943.73 21920.90
1994/02/28 20948.11 21326.84
1994/03/31 20192.81 20396.99
1994/04/30 20773.67 20658.07
1994/05/31 20358.90 20996.87
1994/06/30 20294.64 20482.44
1994/07/31 20878.82 21154.27
1994/08/31 20797.04 22021.59
1994/09/30 20265.43 21482.06
1994/10/31 20522.47 21965.41
1994/11/30 19780.55 21165.43
1994/12/31 19909.61 21479.31
1995/01/31 20722.12 22036.27
1995/02/28 20992.96 22895.02
1995/03/31 21077.22 23570.66
1995/04/30 21811.92 24264.81
1995/05/31 22149.44 25234.68
1995/06/30 22366.41 25820.88
1995/07/31 22969.12 26677.10
1995/08/31 23553.74 26744.06
1995/09/30 24674.77 27872.66
1995/10/31 24915.86 27773.15
1995/11/30 25464.32 28992.39
1995/12/31 26756.42 29550.79
1996/01/31 27038.77 30556.70
1996/02/29 26412.68 30839.96
1996/03/31 26179.43 31136.95
1996/04/30 27236.45 31595.90
1996/05/31 27256.16 32410.76
1996/06/30 27676.70 32534.25
1996/07/31 26467.65 31096.88
1996/08/31 26474.22 31752.72
1996/09/30 26953.90 33539.76
1996/10/31 28084.09 34464.79
1996/11/30 29404.85 37069.98
1996/12/31 29797.52 36335.62
1997/01/31 30693.49 38605.87
1997/02/28 31202.56 38908.54
1997/03/31 29546.38 37309.79
1997/04/30 30603.88 39537.19
1997/05/31 32615.83 41944.21
1997/06/30 33611.36 43823.31
1997/07/31 34411.96 47310.33
1997/08/31 32866.45 44660.01
1997/09/30 35762.54 47106.04
1997/10/31 35860.00 45532.69
1997/11/30 38032.07 47640.40
1997/12/31 38827.85 48458.39
1998/01/31 40329.17 48994.34
1998/02/28 42497.75 52527.81
1998/03/31 45381.24 55217.76
1998/04/30 44473.56 55773.25
1998/05/31 43938.90 54814.51
1998/06/30 43971.30 57041.07
1998/07/31 44951.51 56433.58
1998/08/31 41121.00 48274.42
IMATRL PRASUN SHR__CHT 19980831 19980918 161525 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Utilities Growth Portfolio on August 31,
1988, and the current 3.00% sales charge was paid. As the chart shows,
by August 31, 1998, the value of the investment would have grown to
$41,121 - a 311.21% 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
$48,274 - a 382.74% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1998
% OF FUND'S
INVESTMENTS
MCI COMMUNICATIONS CORP. 9.3
AT&T CORP. 9.1
BELL ATLANTIC CORP. 8.6
BELLSOUTH CORP. 6.6
DUKE ENERGY CORP. 5.3
AMERITECH CORP. 5.3
GTE CORP. 3.6
SOUTHERN NEW ENGLAND TELECOMMUNICATIONS CORP. 3.1
PG&E CORP. 3.0
COASTAL CORP. (THE) 2.3
TOP INDUSTRIES AS OF AUGUST 31, 1998
TELEPHONE SERVICES 54.8%
ELECTRIC POWER 13.9%
ELECTRIC & OTHER SERVICES 11.7%
CELLULAR & COMMUNICATION
SERVICES 3.4%
GAS TRANSMISSION 2.6%
ALL OTHERS 13.6%
ROW: 1, COL: 1, VALUE: 13.6
ROW: 1, COL: 2, VALUE: 2.6
ROW: 1, COL: 3, VALUE: 3.4
ROW: 1, COL: 4, VALUE: 11.7
ROW: 1, COL: 5, VALUE: 13.9
ROW: 1, COL: 6, VALUE: 54.8
*
* INCLUDES SHORT-TERM INVESTMENTS
% OF FUND'S INVESTMENTS
UTILITIES GROWTH PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Jonahan Zang)
NOTE TO SHAREHOLDERS:
Jonathan Zang became
Portfolio Manager of Fidelity Select Utilities Growth Portfolio on
July 1, 1998.
Q. HOW DID THE FUND PERFORM, JONATHAN?
A. For the six- and 12-month periods that ended August 31, 1998, the
fund had total returns of -3.22% and 25.14%, respectively. In
comparison, the Standard & Poor's 500 Index returned -8.10% and 8.10%,
respectively, over the same time periods. Beginning this period, the
fund also compares itself to the Goldman Sachs Utilities Index - an
index of 136 stocks designed to measure the performance of companies
in the utilities sector - which returned -0.48% and 29.59% over the
same six- and 12-month periods, respectively.
Q. WHY DID THE FUND UNDERPERFORM THE GOLDMAN SACHS INDEX BUT BEAT THE
S&P 500 DURING THE PERIOD?
A. The investment environment near the end of the period was similar
in many respects to what investors experienced in the fourth quarter
of 1997. There was a weak stock market, and investors favored
defensive holdings like utilities and U.S. Treasury bonds. This broad
interest in utilities helped to cushion the fund's losses as the stock
market fell, enabling the fund to outperform the S&P 500. The Goldman
Sachs index has an even more defensive orientation than the fund does,
with fewer growth-oriented stocks and more electric utilities and
regional Bell operating companies. Since the market favored a
defensive stance, the Goldman Sachs index was able to beat the fund's
performance during the period.
Q. WHAT STRATEGY DID YOU USE IN THIS ENVIRONMENT?
A. My strategy did not change much. I increased the fund's holdings of
electric utilities and slightly decreased its emphasis on growth
stocks. However, these were minor shifts of emphasis, not wholesale
changes. The fund is still invested primarily in growth-oriented
utility and telecommunications stocks.
Q. WHAT STOCKS PERFORMED WELL DURING THE PERIOD?
A. WorldCom was once again one of the fund's better performers.
Earnings grew as expected, and the company's merger with MCI was
moving ahead smoothly. In mid-September, WorldCom and MCI were
scheduled to begin trading as one stock, and I sold the fund's
WorldCom holdings near the end of the period to maintain adequate
diversification. Duke Energy was another stock that helped the fund's
performance. As a low-cost producer of electricity and one of the
leading providers of energy services to businesses and other large
consumers in the United States, Duke was positioned to do well as
markets for electric power open up. Investors also responded
positively to the company's strong earnings and the growth prospects
resulting from the successful integration of PanEnergy Corp., a gas
company. PECO Energy also made a positive contribution to the fund's
performance. The stock benefited from an unexpectedly favorable
settlement with the Public Utilities Commission in Pennsylvania.
Q. WHAT HOLDINGS DETRACTED FROM THE FUND'S PERFORMANCE?
A. Tel-Save led the list of stocks that hurt performance. The stock
declined when it appeared that the company would be acquired but the
deal subsequently fell through. AT&T was weak because of investors'
concern about the company's planned acquisition of cable company TCI
Group. Winstar Communications fell as the increased market volatility
caused investors to prefer the stocks of companies with more proven
and visible earnings. Finally, AES performed poorly on concerns about
the company's exposure to Latin America and Pakistan.
Q. WHAT'S YOUR OUTLOOK, JONATHAN?
A. In the short term, investors seem to be faced with two general
possibilities. On the one hand, the stock market could continue to be
dominated by concerns about Asia, Latin America and other emerging
markets. This would probably entail some further weakness in U.S.
stocks, including the kind of utility growth shares in which the fund
generally invests. On the other hand, there's the possibility that we
have seen the worst, and the markets will recover shortly. I frankly
don't know which of these scenarios will materialize. My approach to
managing the fund is intermediate to long term in nature. The
deflationary pressures from Asia and Latin America have not changed
the fact that the utilities sector is an exciting place to invest,
with many domestic markets either in the process of opening up or
about to open up. While I have made the slight adjustments I mentioned
earlier to guard against further weakness in the market, the fund is
still positioned to benefit strongly from the dynamic growth I foresee
in utility-related markets over the long term.
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.
(checkmark)FUND FACTS
START DATE: December 10, 1981
FUND NUMBER: 065
TRADING SYMBOL: FSUTX
SIZE: as of August 31, 1998, more than
$311 million
MANAGER: Jonathan Zang, since July 1998;
analyst, utilities industry, 1997-present;
joined Fidelity in 1997
UTILITIES GROWTH PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.7%
SHARES VALUE (NOTE 1)
CELLULAR - 3.4%
CELLULAR & COMMUNICATION SERVICES - 3.4%
AirTouch Communications, Inc. (a) 118,100 $ 6,643,125
Teleglobe, Inc. 100,000 2,429,072
Vodafone Group PLC sponsored ADR 14,400 1,809,000
10,881,197
COMMUNICATIONS EQUIPMENT - 1.0%
TELEPHONE INTERCONNECT SYSTEMS - 1.0%
Intermedia Communications, Inc. (a) 127,600 3,174,050
ELECTRIC UTILITY - 25.6%
ELECTRIC POWER - 13.9%
AES Corp. (a) 155,800 4,245,550
American Electric Power Co., Inc. 35,000 1,583,750
Duke Energy Corp. 274,108 17,097,487
Edison International 61,300 1,743,219
Entergy Corp. 253,300 7,298,206
FPL Group, Inc. 25,000 1,664,063
GPU, Inc. 47,300 1,776,706
IPALCO Enterprises, Inc. 99,600 4,382,400
Pinnacle West Capital Corp. 27,600 1,191,975
Unicom Corp. 97,600 3,477,000
44,460,356
ELECTRIC & OTHER SERVICES - 11.7%
CMS Energy Corp. 147,100 6,224,169
Houston Industries, Inc. 44,636 1,286,075
Illinova Corp. 283,400 7,315,263
LG&E Energy Corp. 8,300 212,688
Montana Power Co. 85,800 3,346,200
PECO Energy Co. 110,500 3,784,625
PG&E Corp. 294,200 9,451,175
PacifiCorp. 92,500 2,087,031
Utilicorp United, Inc. 4,053 139,575
Washington Water Power Co. 200,000 3,387,500
37,234,301
TOTAL ELECTRIC UTILITY 81,694,657
ENGINEERING - 0.4%
ARCHITECTS & ENGINEERS - 0.4%
Stone & Webster, Inc. 40,000 1,362,500
GAS - 4.5%
GAS DISTRIBUTION - 0.7%
MCN Energy Group, Inc. 32,400 569,025
Sempra Energy (a) 68,590 1,744,758
2,313,783
GAS TRANSMISSION - 2.6%
Enron Corp. 127,696 5,403,137
Williams Companies, Inc. 129,865 2,986,895
8,390,032
GAS TRANSMISSION & DISTRIBUTION - 0.6%
Columbia Energy Group 38,000 1,890,500
GAS & OTHER SERVICES - 0.6%
MDU Resources Group, Inc. 73,950 1,890,347
TOTAL GAS 14,484,662
HOLDING COMPANIES - 0.7%
HOLDING COMPANY OFFICES, NEC - 0.7%
CINergy Corp. 60,000 2,085,000
OIL & GAS - 2.3%
PETROLEUM REFINERS - 2.3%
Coastal Corp. (The) 286,600 7,451,600
SHARES VALUE (NOTE 1)
TELEPHONE SERVICES - 54.8%
AT&T Corp. 578,483 $ 28,996,460
Advanced Communications Group, Inc. 1,900 11,400
ALLTEL Corp. 49,000 2,211,125
Ameritech Corp. 361,600 17,040,400
AMNEX, Inc. (a) 470,700 323,606
Bell Atlantic Corp. 626,700 27,653,138
BellSouth Corp. 307,600 21,089,825
Cincinnati Bell, Inc. 88,300 2,075,050
E Spire Communications, Inc. (a) 177,100 2,789,325
GTE Corp. 233,000 11,650,000
MCI Communications Corp. 592,800 29,639,998
Maritime Telegraph & Telephone
Co., Ltd. 19,000 402,773
McLeodUSA, Inc. Class A (a) 66,500 1,928,500
New Tel Enterprises Ltd. 6,400 147,912
Qwest Communications
International, Inc. (a) 257,233 6,430,825
Southern New England
Telecommunications Corp. 152,200 9,864,463
Sprint Corp. 58,700 3,936,569
Tel-Save Holdings, Inc. (a) 478,100 7,171,500
Telecomunicacoes Brasileiras SA
sponsored ADR 7,000 494,813
Winstar Communications, Inc. (a) 66,700 1,217,275
175,074,957
TOTAL COMMON STOCKS
(Cost $288,362,019) 296,208,623
CASH EQUIVALENTS - 7.3%
Taxable Central Cash Fund (b)
(Cost $23,487,953) 23,487,953 23,487,953
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $311,849,972) $ 319,696,576
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.58%. 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 $223,391,774 and $299,851,777, respectively (see Note 3 of
Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $12,549 for the
period (see Note 4 of Notes to Financial Statements).
The fund participated in the security lending program. At period end,
the value of securities loaned and the value of the collateral
amounted to $7,518,050 and $8,044,400, respectively (see Note 6 of
Notes to Financial Statements).
INCOME TAX INFORMATION
At August 31, 1998, the aggregate cost of investment securities for
income tax purposes was $311,862,709 Net unrealized appreciation
aggregated $7,833,867, of which $26,548,147 related to appreciated
investment securities and $18,714,280 related to depreciated
investment securities.
UTILITIES GROWTH PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31,
1998
(UNAUDITED)
ASSETS
INVESTMENT IN $ 319,696,576
SECURITIES, AT
VALUE
(COST
$311,849,97
2) -
SEE
ACCOMPANYIN
G SCHEDULE
CASH 255,200
RECEIVABLE FOR 13,253,509
INVESTMENTS
SOLD
RECEIVABLE FOR 3,263,445
FUND SHARES
SOLD
DIVIDENDS 564,995
RECEIVABLE
INTEREST 100,644
RECEIVABLE
REDEMPTION FEES 2,888
RECEIVABLE
OTHER 473
RECEIVABLES
TOTAL ASSETS 337,137,730
LIABILITIES
PAYABLE FOR $ 14,498,152
INVESTMENTS
PURCHASED
PAYABLE FOR 3,055,551
FUND SHARES
REDEEMED
ACCRUED 161,637
MANAGEMENT
FEE
OTHER PAYABLES 203,297
AND
ACCRUED
EXPENSES
COLLATERAL ON 8,044,400
SECURITIES
LOANED,
AT VALUE
TOTAL LIABILITIES 25,963,037
NET ASSETS $ 311,174,693
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 236,557,135
UNDISTRIBUTED 1,304,207
NET INVESTMENT
INCOME
ACCUMULATED 65,464,520
UNDISTRIBUTED
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN
CURRENCY
TRANSACTIONS
NET UNREALIZED 7,848,831
APPRECIATION
(DEPRECIATION)
ON
INVESTMENTS
AND ASSETS
AND LIABILITIES
IN
FOREIGN
CURRENCIES
NET ASSETS, FOR $ 311,174,693
6,129,455
SHARES
OUTSTANDING
NET ASSET $50.77
VALUE AND
REDEMPTION
PRICE PER
SHARE
($311,174,6
93 (DIVIDED BY)
6,129,455
SHARES)
MAXIMUM $52.34
OFFERING PRICE
PER SHARE
(100/97.00
OF $50.77)
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED
AUGUST 31,
1998
(UNAUDITED)
INVESTMENT $ 3,024,336
INCOME
DIVIDENDS
INTEREST 448,329
(INCLUDING
INCOME ON
SECURITIES
LOANED OF
$50,103)
TOTAL 3,472,665
INCOME
EXPENSES
MANAGEMEN $ 1,095,748
T FEE
TRANSFER 874,270
AGENT FEES
ACCOUNTING 190,253
AND
SECURITY
LENDING
FEES
NON-INTEREST 1,103
ED
TRUSTEES'
COMPENSAT
ION
CUSTODIAN 15,941
FEES AND
EXPENSES
REGISTRATION 18,485
FEES
AUDIT 15,378
LEGAL 1,135
REPORTS TO 41,177
SHAREHOLD
ERS
MISCELLANEO 1,999
US
TOTAL 2,255,489
EXPENSES
BEFORE
REDUCTIONS
EXPENSE (61,499) 2,193,990
REDUCTIONS
NET 1,278,675
INVESTMEN
T INCOME
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS)
ON:
INVESTMENT 65,497,615
SECURITIES
FOREIGN 552 65,498,167
CURRENCY
TRANSACTIO
NS
CHANGE IN
NET
UNREALIZED
APPRECIATI
ON
(DEPRECIATI
ON) ON:
INVESTMENT (75,030,512)
SECURITIES
ASSETS AND 2,227 (75,028,285)
LIABILITIES
IN
FOREIGN
CURRENCIES
NET GAIN (9,530,118)
(LOSS)
NET INCREASE $ (8,251,443)
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
OTHER $ 396,810
INFORMATIO
N
SALES
CHARGES
PAID TO
FDC
SALES $ 394,484
CHARGES -
RETAINED
BY FDC
DEFERRED $ 14,329
SALES
CHARGES
WITHHELD
BY FDC
EXCHANGE $ 41,985
FEES
WITHHELD
BY FSC
EXPENSE $ 56,517
REDUCTIONS
DIRECTED
BROKERAGE
ARRANGEM
ENTS
CUSTODIA 4,982
N CREDITS
$ 61,499
STATEMENT OF CHANGES IN NET ASSETS
INCREASE SIX MONTHS ENDED YEAR ENDED
(DECREASE) IN AUGUST 31, 1998 FEBRUARY 28,
NET ASSETS (UNAUDITED) 1998
OPERATIONS $ 1,278,675 $ 3,040,458
NET
INVESTMENT
INCOME
NET REALIZED 65,498,167 52,835,863
GAIN (LOSS)
CHANGE IN NET (75,028,285) 34,220,552
UNREALIZED
APPRECIATION
(DEPRECIATION)
NET INCREASE (8,251,443) 90,096,873
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
DISTRIBUTIONS TO (389,192) (3,324,884)
SHAREHOLDERS
FROM NET
INVESTMENT
INCOME
FROM NET (8,356,675) (43,053,193)
REALIZED GAIN
TOTAL (8,745,867) (46,378,077)
DISTRIBUTIONS
SHARE 102,244,378 235,594,493
TRANSACTIONS
NET PROCEEDS
FROM SALES OF
SHARES
REINVESTMENT 8,538,089 45,039,264
OF
DISTRIBUTIONS
COST OF SHARES (184,664,057) (179,495,059)
REDEEMED
NET INCREASE (73,881,590) 101,138,698
(DECREASE)
IN NET
ASSETS
RESULTING
FROM SHARE
TRANSACTIONS
REDEMPTION 126,366 225,357
FEES
TOTAL (90,752,534) 145,082,851
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
BEGINNING OF 401,927,227 256,844,376
PERIOD
END OF PERIOD $ 311,174,693 $ 401,927,227
(INCLUDING
UNDISTRIBUTE
D NET
INVESTMENT
INCOME OF
$1,304,20
7 AND
$677,487,
RESPECTIVELY)
OTHER
INFORMATION
SHARES
SOLD 1,828,848 4,622,639
ISSUED IN 150,983 950,425
REINVESTMENT
OF
DISTRIBUTIONS
REDEEMED (3,363,655) (3,646,680)
NET INCREASE (1,383,824) 1,926,384
(DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED YEAR ENDED YEARS ENDED
ENDED FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
AUGUST 31,
1998
SELECTED (UNAUDITED) 1998 1997 1996 1995 1994
PER-SHARE
DATA
NET ASSET $ 53.50 $ 45.97 $ 43.03 $ 34.88 $ 36.61 $ 41.49
VALUE,
BEGINNING
OF PERIOD
INCOME FROM
INVESTMENT
OPERATION
S
NET .19 .54 .73 1.10 1.13 1.33
INVESTMENT
INCOME D
NET (1.82) 14.83 6.41 7.86 (1.17) (.16)
REALIZED
AND
UNREALIZED
GAIN (LOSS)
TOTAL FROM (1.63) 15.37 7.14 8.96 (.04) 1.17
INVESTMENT
OPERATIONS
LESS
DISTRIBUTIO
NS
FROM NET (.05) (.58) (.70) (.84) (1.05) (1.13)
INVESTMENT
INCOME
FROM NET (1.07) (7.30) (3.54) - (.67) (4.94)
REALIZED
GAIN
TOTAL (1.12) (7.88) (4.24) (.84) (1.72) (6.07)
DISTRIBUTIO
NS
REDEMPTION .02 .04 .04 .03 .03 .02
FEES
ADDED TO
PAID IN
CAPITAL
NET ASSET $ 50.77 $ 53.50 $ 45.97 $ 43.03 $ 34.88 $ 36.61
VALUE, END
OF PERIOD
TOTAL (3.22)% 36.20% 18.13% 25.82% .21% 2.53%
RETURN B, C
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 311,175 $ 401,927 $ 256,844 $ 266,768 $ 237,635 $ 250,522
END OF
PERIOD
(000
OMITTED)
RATIO OF 1.19% A 1.33% 1.47% 1.39% 1.43% 1.36%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF 1.15% A, E 1.30% E 1.46% E 1.38% E 1.42% E 1.35% E
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
RATIO OF NET .67% A 1.11% 1.73% 2.76% 3.24% 3.11%
INVESTMENT
INCOME TO
AVERAGE
NET ASSETS
PORTFOLIO 124% A 78% 31% 65% 24% 61%
TURNOVER
RATE
AVERAGE $ .0129 $ .0106 $ .0287
COMMISSIO
N RATE F
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 TOT
AL RETURNS DO NOT
INCLUDE THE ONE TIME
SALES CHARGE AND FOR
PERIODS OF LESS THAN
ONE YEAR ARE NOT
ANNUALIZED. D NET
INVESTMENT INCOME
PER SHARE HAS BEEN
CALCULATED BASED ON
AVERAGE SHARES
OUTSTANDING DURING
THE PERIOD. E FMR
OR THE FUND HAS
ENTERED INTO VARYING
ARRANGEMENTS WITH
THIRD PARTIES WHO
EITHER PAID OR
REDUCED A PORTION OF
THE FUND'S EXPENSES
(SEE NOTE 8 OF NOTES
TO FINANCIAL
STATEMENTS). F FO
R 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 6 PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 MONTHS YEAR YEARS YEARS
SELECT MONEY MARKET 2.57% 5.23% 26.36% 70.03%
SELECT MONEY MARKET -0.50% 2.07% 22.57% 64.93%
(LOAD ADJ.)
ALL TAXABLE 2.55% 5.15% 25.94% 67.64%
MONEY MARKET FUNDS AVERAGE
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. For example, if you 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
six months.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
AUGUST 31, 1998 YEAR YEARS YEARS
SELECT MONEY MARKET 5.23% 4.79% 5.45%
SELECT MONEY MARKET 2.07% 4.15% 5.13%
(LOAD ADJ.)
ALL TAXABLE 5.15% 4.72% 5.32%
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: 5.1
ROW: 1, COL: 2, VALUE: 5.03
ROW: 1, COL: 3, VALUE: 2.55
ROW: 2, COL: 1, VALUE: 5.0
ROW: 2, COL: 2, VALUE: 5.02
ROW: 2, COL: 3, VALUE: 2.51
ROW: 3, COL: 1, VALUE: 5.270000000000001
ROW: 3, COL: 2, VALUE: 5.07
ROW: 3, COL: 3, VALUE: 2.58
ROW: 4, COL: 1, VALUE: 5.45
ROW: 4, COL: 2, VALUE: 5.09
ROW: 4, COL: 3, VALUE: 2.62
ROW: 5, COL: 1, VALUE: 5.09
ROW: 5, COL: 2, VALUE: 5.05
ROW: 5, COL: 3, VALUE: 2.67
6% -
4% -
2% -
0%
MONEY MARKET
ALL TAXABLE
MONEY MARKET
FUNDS AVERAGE
MMDA
9/1/98 6/2/98 3/3/98 12/2/97 9/2/97
SELECT
MONEY MARKET 5.10% 5.00% 5.27% 5.45% 5.09%
All Taxable
Money Market
Funds Average 5.03% 5.02% 5.07% 5.09% 5.04%
9/2/98 6/3/98 2/25/98 12/3/97 9/3/97
MMDA 2.55% 2.51% 2.58% 2.62% 2.67%
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)
(checkmark)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.
MONEY MARKET PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of John Todd)
John Todd,
Portfolio Manager
of Fidelity Select
Money Market Portfolio
Q. JOHN, WHAT WAS THE INVESTMENT ENVIRONMENT LIKE OVER THE PAST SIX
MONTHS?
A. The overriding theme during the period was the money markets'
attempt to gauge what impact, if any, the continuing crisis in
Southeast Asia would have on the U.S. economy. The domestic economy
was exceptionally strong during the first quarter of the year, with
real GDP - gross domestic product adjusted for inflation - growing at
a 5.5% annual rate. In the second quarter, however, there was some
payback as inventories and trade reduced real GDP to 1.6%, even though
domestic consumption remained strong. Many felt that what we were
seeing was the impact, delayed as it may have been, from the Southeast
Asian crisis that started in the summer of 1997. Toward the end of the
period, corporate profit forecasts were being revised downward. Most
stock market indexes, such as the Standard & Poor's 500 Index and the
Dow Jones Industrial Average, were off sharply after hitting record
highs early in the third quarter. Russia's move to devalue its
currency and in essence default on its domestic debt was one factor
that sparked these declines. In addition, falling commodity prices
hurt Canada - one of the main trading partners of the U.S. - forcing
that country's central bank to raise interest rates to keep its
currency from continuing to drop in value. We saw similar currency
drops and interest rate hikes in Latin America, where the U.S. also
trades a great deal. Fears arose that this "Asian contagion" would
start to erode U.S. economic growth and lead to further problems in
both the economy and the capital markets.
Q. HOW DID THIS BACKDROP AFFECT MONETARY POLICY?
A. Up until mid-July, it was commonly believed that the Federal
Reserve Board might raise the rate banks charge each other for
overnight loans - the fed funds rate - to slow economic growth and
head off inflation. However, toward the end of the period, market
sentiment shifted as many felt struggling financial markets could help
slow the economy and make a rate increase unnecessary. In spite of
this backdrop, the Fed maintained a stated bias toward raising rates
during the entire period, because it was concerned that robust
consumption, low savings rates, a strong economy and an historically
low unemployment rate would combine to build inflationary pressures in
the economy.
Q. WHAT STRATEGY DID YOU PURSUE WITH THE FUND?
A. I maintained a neutral position until mid-July. At that point,
sentiment started to swing, with market observers shifting from
expecting a Fed rate increase to believing that such a move would be
unnecessary. Some market participants even started to predict that a
Fed rate decrease would be the next move. When sentiment shifted, I
became more aggressive with the positioning of the fund. I tried to
extend its average maturity by buying higher-yielding, longer-term
money market securities to lock in their attractive rates in
anticipation of interest-rate declines. If investors look at the
average maturity of the fund six months ago - 70 days - and compare it
to the end of the period - when it stood at 56 days - they might think
the opposite was happening. However, it should be noted that assets
came into the fund rapidly toward the end of the period as investors
sought the safe haven offered by a money market fund, making it
somewhat difficult to extend the average maturity quickly. Suffice it
to say that from mid-July on, I tried to be as aggressive with the
positioning of the fund as was prudent given the shareholder inflows
that were taking place at the time.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on August 31, 1998, was 5.16%, compared
to 5.26% six months ago. For the six months that ended August 31,
1998, the fund had a total return of 2.57%, compared to 2.55% for the
all taxable money markets average, according to IBC Financial Data,
Inc.
Q. WHAT'S YOUR OUTLOOK?
A. I believe that the Fed could very well lower interest rates in the
fall. Because of the turmoil in financial markets, it's also possible
that the Fed may lower the fed funds rate by a more dramatic .50%
instead of .25%. Some sort of bold move by the Fed may be needed to
calm global markets. The Fed is the largest and, by reputation, the
most important central bank in the world. In order to have some
impact, allay fears and address the global financial situation, the
Fed may decide it needs to do something dramatic. Much depends on how
global financial markets perform in the weeks ahead and how the U.S.
consumer responds to this developing financial turmoil, as well as
domestic political developments.
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.
(checkmark)FUND FACTS
START DATE: August 30, 1985
FUND NUMBER: 085
TRADING SYMBOL: FSLXX
SIZE: as of August 31, 1998, more than $1.4 billion
MANAGER: John Todd, since 1991; manager, various
Fidelity and Spartan taxable money market funds;
joined Fidelity in 1981
MONEY MARKET PORTFOLIO
INVESTMENTS AUGUST 31, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CERTIFICATES OF DEPOSIT - 28.4%
DUE DATE ANNUALIZED YIELD PRINCIPAL VALUE
AT TIME OF AMOUNT (NOTE 1)
PURCHASE
DOMESTIC CERTIFICATES OF DEPOSIT - 0.3%
WACHOVIA BANK, NA
9/17/98 5.50% (B) $ 5,000,000 $ 4,999,836
LONDON BRANCH, EURODOLLAR, DOMESTIC BANKS - 1.8%
NATIONSBANK, NA
9/14/98 5.55 5,000,000 5,000,000
2/16/99 5.60 10,000,000 10,000,000
3/2/99 5.50 10,000,000 10,000,000
25,000,000
LONDON BRANCH, EURODOLLAR, FOREIGN BANKS - 6.1%
BANK OF SCOTLAND TREASURY SERVICES
12/29/98 5.65 15,000,000 14,999,475
BARCLAYS BANK, PLC
10/30/98 5.62 7,000,000 6,999,698
BAYERISCHE VEREINSBANK AG
9/30/98 5.60 25,000,000 25,000,000
COMMERZBANK AG
9/28/98 5.55 5,000,000 5,000,000
DEUTSCHE BANK AG
9/28/98 5.55 20,000,000 20,000,000
HALIFAX, PLC
2/16/99 5.60 5,000,000 5,000,641
NORDDEUTSCHE LANDESBANK GIROZENTRALE
12/10/98 5.62 7,000,000 7,000,623
84,000,437
NEW YORK BRANCH, YANKEE DOLLAR, FOREIGN BANKS - 20.2%
ABN-AMRO BANK NV
6/7/99 5.76 5,000,000 4,997,804
BANK OF NOVA SCOTIA
10/2/98 5.62 4,000,000 4,000,085
BAYERISCHE LANDESBANK GIROZENTRALE
12/1/98 5.56 50,000,000 50,000,000
BAYERISCHE VEREINSBANK AG
12/18/98 5.60 15,000,000 15,009,112
CANADIAN IMPERIAL BANK OF COMMERCE
9/28/98 5.55 15,000,000 15,000,000
10/6/98 5.52 20,000,000 20,003,273
11/4/98 5.55 10,000,000 10,000,000
12/1/98 5.54 10,000,000 10,000,000
CREDIT AGRICOLE INDOSUEZ
10/19/98 5.97 5,000,000 4,999,560
4/30/99 5.87 5,000,000 4,998,104
CREDIT COMMUNALE DE BELGIQUE
12/21/98 5.62 25,000,000 25,000,000
DEUTSCHE BANK AG
10/26/98 6.00 15,000,000 14,998,704
DRESDNER BANK AG
9/16/98 5.55 10,000,000 10,000,000
DUE DATE ANNUALIZED YIELD PRINCIPAL VALUE
AT TIME OF AMOUNT (NOTE 1)
PURCHASE
NATIONAL WESTMINSTER BANK, PLC
6/7/99 5.75% $ 5,000,000 $ 4,997,529
RABOBANK NEDERLAND, COOP. CENTRAL
6/4/99 5.75% 10,000,000 9,994,929
ROYAL BANK OF CANADA
9/17/98 5.53 5,000,000 5,000,508
SOCIETE GENERALE, FRANCE
10/9/98 5.70 10,000,000 9,998,762
10/28/98 5.57 15,000,000 15,000,000
11/18/98 5.63 5,000,000 5,000,532
SWISS BANK CORP.
4/30/99 5.87 5,000,000 4,998,104
6/3/99 5.75 10,000,000 9,994,947
TORONTO-DOMINION BANK
6/4/99 5.75 10,000,000 9,994,929
WESTDEUTSCHE LANDESBANK GIROZENTRALE
9/28/98 5.55 5,000,000 5,000,000
2/8/99 5.63 10,000,000 10,000,000
278,986,882
TOTAL CERTIFICATES OF DEPOSIT 392,987,155
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
COMMERCIAL PAPER - 49.1%
ASPEN FUNDING CORP.
11/18/98 5.60 10,000,000 9,880,400
11/23/98 5.60 5,000,000 4,936,424
ASSET SECURITIZATION COOP. CORP.
12/8/98 5.59 10,000,000 9,850,278
ASSOCIATES CORP. OF NORTH AMERICA
9/3/98 5.60 5,000,000 4,998,464
9/22/98 5.60 5,000,000 4,983,958
ATLANTIC RICHFIELD CO.
9/14/98 5.62 5,000,000 4,989,997
BMW US CAPITAL CORP.
11/9/98 5.58 25,000,000 24,736,458
CIESCO L.P.
9/16/98 5.58 45,000,000 44,896,125
CITIBANK CREDIT CARD MASTER TRUST I (DAKOTA CERTIFICATE PROGRAM)
10/5/98 5.58 5,000,000 4,973,792
10/28/98 5.58 5,000,000 4,956,300
COMMERZBANK US FINANCE, INC.
9/14/98 5.56 15,000,000 14,970,046
CREGEM NORTH AMERICA, INC.
12/3/98 5.51 10,000,000 9,859,725
DELAWARE FUNDING CORP.
9/11/98 5.58 45,000,000 44,930,625
9/17/98 5.57 10,000,000 9,975,378
DEUTSCHE BANK FINANCIAL, INC.
11/12/98 5.59 22,000,000 21,757,560
COMMERCIAL PAPER - CONTINUED
DUE DATE ANNUALIZED YIELD PRINCIPAL VALUE
AT TIME OF AMOUNT (NOTE 1)
PURCHASE
DIAGEO CAPITAL, PLC
9/30/98 5.60% $ 5,000,000 $ 4,977,847
ENTERPRISE FUNDING CORP.
9/21/98 5.58 14,351,000 14,306,751
FINA OIL & CHEMICAL CO.
9/14/98 5.60 10,000,000 9,979,922
9/22/98 5.59 18,000,000 17,941,515
FLEET FUNDING CORP.
10/15/98 5.57 5,000,000 4,966,206
FORD MOTOR CREDIT CO.
9/16/98 5.56 25,000,000 24,942,500
GENERAL ELECTRIC CAPITAL CORP.
9/10/98 5.61 5,000,000 4,993,113
9/22/98 5.57 10,200,000 10,167,097
10/21/98 5.64 12,000,000 11,908,167
2/1/99 5.62 25,000,000 24,418,813
2/22/99 5.58 15,000,000 14,606,325
GENERAL ELECTRIC CAPITAL SERVICES, INC.
11/23/98 5.58 45,000,000 44,429,375
GENERAL MOTORS ACCEPTANCE CORP.
10/29/98 5.61 5,000,000 4,955,533
GENERALE DE BANQUE SA
2/17/99 5.61 10,000,000 9,744,153
GTE CORP.
9/8/98 5.60 12,000,000 11,986,980
HALIFAX, PLC
9/18/98 5.59 5,000,000 4,986,990
KITTY HAWK FUNDING CORP.
9/14/98 5.61 5,000,000 4,990,015
LEHMAN BROTHERS HOLDINGS, INC.
9/8/98 5.59 5,000,000 4,994,585
MERRILL LYNCH & CO., INC.
11/18/98 5.60 30,000,000 29,642,175
MONSANTO CO.
9/29/98 5.61 10,000,000 9,957,222
MORGAN (JP) & CO., INC.
9/28/98 5.60 10,000,000 9,958,750
NEW CENTER ASSET TRUST
9/21/98 5.56 5,000,000 4,984,639
NORFOLK SOUTHERN CORP.
9/14/98 5.72 2,000,000 1,995,883
PREFERRED RECEIVABLES FUNDING CORP.
10/20/98 5.58 5,000,000 4,962,365
SEARS ROEBUCK ACCEPTANCE CORP.
9/15/98 5.59 45,000,000 44,902,875
SOCIETE GENERALE NORTH AMERICA, INC.
9/15/98 5.58 10,000,000 9,978,494
DUE DATE ANNUALIZED YIELD PRINCIPAL VALUE
AT TIME OF AMOUNT (NOTE 1)
PURCHASE
TEXTRON, INC.
10/14/98 5.75% $ 3,600,000 $ 3,575,490
THREE RIVERS FUNDING CORP.
9/16/98 5.56 5,000,000 4,988,458
UBS FINANCE, INC.
9/14/98 5.55 25,000,000 24,950,167
UNIFUNDING, INC.
11/6/98 5.57 50,000,000 49,495,833
VEREINSBANK FINANCE, INC.
9/2/98 5.60 25,000,000 24,996,118
WESTPAC CAPITAL CORP.
9/21/98 5.59 5,000,000 4,984,750
TOTAL COMMERCIAL PAPER 679,364,636
</TABLE>
FEDERAL AGENCIES - 7.4%
FANNIE MAE - 6.3%
DISCOUNT NOTES - 6.3%
9/18/98 5.51 87,000,000 86,775,276
FREDDIE MAC - 1.1%
DISCOUNT NOTES - 1.1%
9/24/98 5.50 15,000,000 14,947,675
TOTAL FEDERAL AGENCIES 101,722,951
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
BANK NOTES - 2.9%
FIRST UNION NAT'L. BANK OF NORTH CAROLINA
9/1/98 5.66 (B) 10,000,000 10,000,000
3/1/99 5.50 15,000,000 15,000,000
NATIONSBANK, NA
10/19/98 5.54 5,000,000 5,000,000
12/22/98 5.54 5,000,000 5,003,892
PNC BANK, NA, PITTSBURGH
10/16/98 5.58 (B) 5,000,000 4,998,896
TOTAL BANK NOTES 40,002,788
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
MASTER NOTES - 1.7%
GOLDMAN SACHS GROUP LP (THE)
9/13/98 5.69 (B)(C) 10,000,000 10,000,000
J.P. MORGAN SECURITIES, INC.
9/8/98 5.63 (B) 13,000,000 13,000,000
TOTAL MASTER NOTES 23,000,000
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
MEDIUM-TERM NOTES - 1.2%
MERRILL LYNCH & CO.
9/1/98 5.63 (B) 3,000,000 2,999,973
9/4/98 5.62 (B) 5,000,000 4,999,258
MEDIUM-TERM NOTES - CONTINUED
DUE DATE ANNUALIZED YIELD PRINCIPAL VALUE
AT TIME OF AMOUNT (NOTE 1)
PURCHASE
MORGAN STANLEY, DEAN WITTER, DISCOVER, INC.
9/1/98 5.75% (B) $ 5,000,000 $ 5,000,000
NORWEST CORP.
10/22/98 5.71 (B) 4,000,000 4,000,000
TOTAL MEDIUM-TERM NOTES 16,999,231
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHORT-TERM NOTES - 3.0%
CAPITAL ONE FUNDING CORP. (1998-B)
9/8/98 5.61 (B) 4,000,000 4,000,000
LIQUID ASSET BACKED SECURITIES TRUST (1997-5)
9/17/98 5.63 (A)(B) 6,000,000 6,000,000
SMM TRUST (1997-P)
9/16/98 5.64 (A)(B) 2,000,000 2,000,000
SMM TRUST (1997-X)
9/14/98 5.65 (A)(B) 6,000,000 6,000,000
SMM TRUST (1998-I)
9/28/98 5.65 (A)(B) 2,000,000 2,000,000
STRATEGIC MONEY MARKET TRUST (1997-A)
9/23/98 5.69 (A)(B) 17,000,000 17,000,000
STRATEGIC MONEY MARKET TRUST (1998-B)
9/7/98 5.66 (A)(B) 4,000,000 4,000,000
TOTAL SHORT-TERM NOTES 41,000,000
</TABLE>
TIME DEPOSITS - 3.2%
RABOBANK NEDERLAND, COOP. CENTRAL
9/1/98 5.88 45,000,000 45,000,000
<TABLE>
<CAPTION>
<S> <C> <C> <C>
REPURCHASE AGREEMENTS - 3.1%
MATURITY
AMOUNT
IN A JOINT TRADING ACCOUNT $ 43,173,022 43,166,000
(U.S. GOVERNMENT OBLIGATIONS) DATED 8/31/98 DUE 9/1/98
AT 5.86%
</TABLE>
TOTAL INVESTMENTS $ 1,383,242,761
TOTAL COST FOR INCOME TAX PURPOSES - $1,383,242,761
LEGEND
(a) 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
$37,000,000 or 2.5% of net assets.
(b) 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.
(c) Restricted securities - Investment in securities not registered
under the Securities Act of 1933 (see Note 2 of Notes to Financial
Statements).
SECURITY ACQUISTION ACQUISITION
DATE COST
Goldman Sachs Group LP (The) 3/10/98 $ 10,000,000
5.69% 9/13/98
OTHER INFORMATION
The fund invested in securities that are not registered under the
Securities Act of 1933. These securities are subject to legal or
contractual restrictions on resale. At the end of the period,
restricted securities (excluding 144A issues) amounted to $10,000,000
and 0.7% of net assets (see Note 2 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
AUGUST 31,
1998
(UNAUDITED)
ASSETS
INVESTMENT IN $ 1,383,242,761
SECURITIES, AT
VALUE
(INCLUDING
REPURCHASE
AGREEMENTS OF
$43,166,000
) - SEE
ACCOMPANYIN
G SCHEDULE
RECEIVABLE FOR 187,815,592
FUND SHARES
SOLD
INTEREST 7,229,238
RECEIVABLE
TOTAL ASSETS 1,578,287,591
LIABILITIES
PAYABLE TO $ 961
CUSTODIAN
BANK
PAYABLE FOR 59,825,931
INVESTMENTS
PURCHASED
PAYABLE FOR 25,002,336
FUND SHARES
REDEEMED
DISTRIBUTIONS 149,546
PAYABLE
ACCRUED 212,729
MANAGEMENT
FEE
OTHER PAYABLES 306,442
AND
ACCRUED
EXPENSES
TOTAL LIABILITIES 85,497,945
NET ASSETS $ 1,492,789,646
NET ASSETS
CONSIST OF:
PAID IN CAPITAL $ 1,492,797,587
ACCUMULATED (7,941)
NET REALIZED
GAIN (LOSS) ON
INVESTMENTS
NET ASSETS, FOR $ 1,492,789,646
1,492,779,4
60 SHARES
OUTSTANDING
NET ASSET $1.00
VALUE,
OFFERING PRICE
AND
REDEMPTION
PRICE PER
SHARE
($1,492,789,
646 (DIVIDED BY)
1,492,779,4
60 SHARES)
MAXIMUM $1.03
OFFERING PRICE
PER SHARE
(100/97.00
OF $1.00)
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED AUGUST
31, 1998
(UNAUDITED)
INTEREST INCOME $ 24,661,761
EXPENSES
MANAGEMENT $ 884,131
FEE
TRANSFER AGENT 961,750
FEES
ACCOUNTING FEES 58,051
AND EXPENSES
CUSTODIAN FEES 4,704
AND EXPENSES
REGISTRATION FEES 288,244
AUDIT 21,100
REPORTS TO 53,339
SHAREHOLDERS
MISCELLANEOUS 17
TOTAL EXPENSES 2,271,336
BEFORE
REDUCTIONS
EXPENSE (2,008) 2,269,328
REDUCTIONS
NET INTEREST 22,392,433
INCOME
NET REALIZED (1,709)
GAIN (LOSS)
ON
INVESTMENTS
NET INCREASE IN $ 22,390,724
NET ASSETS
RESULTING FROM
OPERATIONS
OTHER $ 841,905
INFORMATION
SALES CHARGES
PAID TO FDC
SALES CHARGES $ 816,983
- - RETAINED BY
FDC
DEFERRED SALES $ 32,650
CHARGES
WITHHELD
BY FDC
EXPENSE $ 28
REDUCTIONS
CUSTODIAN
CREDITS
TRANSFER 1,980
AGENT CREDITS
$ 2,008
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED
AUGUST 31, 1998 FEBRUARY 28,
(UNAUDITED) 1998
INCREASE
(DECREASE) IN
NET ASSETS
OPERATIONS $ 22,392,433 $ 41,842,077
NET INTEREST
INCOME
NET REALIZED (1,709) (6,232)
GAIN (LOSS)
NET INCREASE 22,390,724 41,835,845
(DECREASE)
IN NET
ASSETS
RESULTING
FROM
OPERATIONS
DISTRIBUTIONS TO (22,392,433) (41,842,077)
SHAREHOLDERS
FROM NET
INTEREST
INCOME
SHARE 3,803,752,978 7,445,369,611
TRANSACTIONS AT
NET ASSET
VALUE OF
$1.00 PER
SHARE
PROCEEDS FROM
SALES OF
SHARES
REINVESTMENT 20,754,509 38,682,466
OF
DISTRIBUTIONS
FROM NET
INTEREST
INCOME
COST OF SHARES (2,916,634,674) (7,747,295,187)
REDEEMED
NET INCREASE 907,872,813 (263,243,110)
(DECREASE)
IN NET
ASSETS AND
SHARES
RESULTING
FROM SHARE
TRANSACTIONS
TOTAL 907,871,104 (263,249,342)
INCREASE
(DECREASE) IN
NET ASSETS
NET ASSETS
BEGINNING OF 584,918,542 848,167,884
PERIOD
END OF PERIOD $ 1,492,789,646 $ 584,918,542
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED YEAR ENDED YEARS ENDED
ENDED FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
AUGUST 31,
1998
SELECTED (UNAUDITED) 1998 1997 1996 1995 1994
PER-SHARE
DATA
NET ASSET $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
VALUE,
BEGINNING
OF PERIOD
INCOME FROM .025 .051 .049 .054 .042 .026
INVESTMENT
OPERATION
S
NET
INTEREST
INCOME
LESS
DISTRIBUTIO
NS
FROM NET (.025) (.051) (.049) (.054) (.042) (.026)
INTEREST
INCOME
NET ASSET $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
VALUE, END
OF PERIOD
TOTAL 2.57% 5.26% 5.02% 5.56% 4.28% 2.62%
RETURN B
RATIOS AND
SUPPLEME
NTAL DATA
NET ASSETS, $ 1,492,790 $ 584,919 $ 848,168 $ 610,821 $ 573,144 $ 518,657
END OF
PERIOD
(000
OMITTED)
RATIO OF .52% A .56% .56% .59% .65% .72%
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF NET 5.10% A 5.13% 4.92% 5.39% 4.19% 2.59%
INTEREST
INCOME TO
AVERAGE
NET ASSETS
</TABLE>
ANNUALIZED
TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS
OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AUGUST 31, 1998 (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Select Portfolios (the trust) is registered under the
Investment Company Act of 1940, as amended (the 1940 Act), as an
open-end management investment company organized as a Massachusetts
business trust. The trust has thirty-nine 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 Gold Portfolio (formerly American Gold Portfolio),
Precious Metals and Minerals Portfolio and Natural Resources Portfolio
may also invest in certain precious metals. The financial statements
have been prepared in conformity with generally accepted accounting
principles which require 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. Foreign securities are valued based on
quotations from the principal market in which such securities are
normally traded. If trading or events occurring in other markets after
the close of the principal market in which foreign securities are
traded, and before the close of business of the fund, are expected to
materially affect the value of those securities, then they are valued
at their fair value taking this trading or these events into account.
Fair value is determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
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. 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 foreign
currency contracts, disposition of foreign currencies, 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 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
Medical Equipment and Systems Portfolio) is not subject to income
taxes to the extent that it distributes substantially all of its
taxable income for the fiscal year. Each fund may be subject to
foreign taxes on income and gains on investments which are accrued
based upon each fund's understanding of the tax rules and regulations
that exist in the markets in which they invest. Each fund accrues such
taxes as applicable.
Medical Equipment and Systems Portfolio intends to qualify as a
regulated investment company under Subchapter M of the Internal
Revenue Code. By so qualifying, the fund will not be subject to income
taxes to the extent that it distributes substantially all of its
taxable income for the fiscal year. The schedules of investments
include information regarding income taxes under the caption "Income
Tax Information."
INVESTMENT INCOME:
EQUITY FUNDS. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend
date may have passed, are recorded as soon as the funds are informed
of the ex-dividend date. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the
securities received. Interest income is accrued as earned. Investment
income is recorded net of foreign taxes withheld where recovery of
such taxes is uncertain.
MONEY MARKET FUND. Interest income, which includes amortization of
premium and accretion of discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DEFERRED TRUSTEE COMPENSATION. Under a Deferred Compensation Plan (the
Plan) non-interested Trustees must defer receipt of a portion of, and
may elect to defer receipt of an additional portion of, their annual
compensation. Deferred amounts are treated as though equivalent dollar
amounts had been invested in shares of the fund or are invested in a
cross-section of other Fidelity funds. Deferred amounts remain in the
fund until distributed in accordance with the Plan.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses except for registering and qualifying
Business Services and Outsourcing Portfolio and Medical Equipment and
Systems Portfolio and shares of Business Services and Outsourcing
Portfolio and Medical Equipment and Systems Portfolio for distribution
under federal and state securities law. These expenses are borne by
Business Services and Outsourcing Portfolio and Medical Equipment and
Systems 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 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, distributions in excess of net
investment income, accumulated net investment loss and accumulated
undistributed net realized gain (loss) on investments and foreign
currency transactions may include temporary book and tax basis
differences that will reverse in a subsequent period. Any taxable
income or gain remaining at fiscal year end is distributed in the
following year.
TRADING (REDEMPTION) FEES. Shares redeemed (including exchanges) from
an equity fund are subject to trading fees. Shares held less than 30
days are subject to a trading fee equal to .75% of the net asset value
of shares redeemed. Shares held 30 days or more are subject to a
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), 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 financial 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. The annual individual fund fee rate
is .30%. 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.
For the period, the management fees were equivalent to an annualized
rate that ranged from .57% to .58% of average net assets for the
equity funds.
For the Money Market fund, FMR receives a monthly fee that is
calculated on the basis of a group fee rate plus a fixed individual
fund fee rate applied to the average net assets of the fund and an
income-based fee. The group fee rate is the weighted average of a
series of rates and is based on the monthly average net assets of all
the mutual funds advised by FMR. The rates ranged from .1100% to
.3700% for the period. The annual individual fund fee rate is .03%. 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
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 annualized rate of
.20% 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 the fund. FDC receives a sales
charge of up to 3% for selling shares of each fund. A portion of these
sales charges are reallowed to financial intermediaries. Prior to
October 12, 1990, FDC received a sales charge of up to 2% and a 1%
deferred sales charge. Shares purchased prior to October 12, 1990, are
subject to a 1% deferred sales charge upon redemption or exchange to
any other Fidelity Fund (other than Select funds). All deferred sales
charges are retained by FDC. The amounts received and retained by FDC
for sales charges and deferred sales charges are shown under the
caption "Other Information" on each fund's Statement of Operations.
TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an
affiliate of FMR, is the fund's 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. This collateral must be maintained at not less than 100%
of the market value of the loaned securities during the period of the
loan. Information regarding the value of securities loaned and the
value of collateral at period end is included 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
7. BANK BORROWINGS - CONTINUED
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 funds 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
the expenses by $25,270 for Cyclical Industries Portfolio, $20,287 for
Medical Equipment and Systems Portfolio and $22,746 for Natural
Resources 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 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 of the following
funds:
BENEFICIAL INTEREST
%
FUND OWNERSHIP
Cyclical Industries 33.3
Natural Resources 15.8
Medical Equipment & Systems 6.8
10. TRANSACTIONS WITH AFFILIATED COMPANIES.
An affiliated company is a company which the fund has ownership of at
least 5% of the voting securities. Information regarding transactions
with affiliated companies is included in "Other Information" at the
end of each applicable fund's schedule of investments.
PROXY VOTING RESULTS
A special meeting of the funds' shareholders was held on May 13, 1998.
The results of votes taken among shareholders on the proposals before
them are reported below. Each vote reported represents one dollar of
net asset value held on the record date for the meeting.
PROPOSAL 1
To elect as Trustees the following twelve nominees.
# OF % OF
VOTES CAST VOTES CAST
RALPH F. COX
AFFIRMATIVE 7,753,366,141.55 89.603
WITHHELD 899,674,808.29 10.397
TOTAL 8,653,040,949.84 100.000
PHYLLIS BURKE DAVIS
AFFIRMATIVE 7,746,305,162.73 89.521
WITHHELD 906,735,787.11 10.479
TOTAL 8,653,040,949.84 100.000
ROBERT M. GATES
AFFIRMATIVE 7,742,038,054.66 89.472
WITHHELD 911,002,895.18 10.528
TOTAL 8,653,040,949.84 100.000
EDWARD C. JOHNSON 3D
AFFIRMATIVE 7,748,393,016.65 89.545
WITHHELD 904,647,933.19 10.455
TOTAL 8,653,040,949.84 100.000
E. BRADLEY JONES
AFFIRMATIVE 7,739,328,874.43 89.441
WITHHELD 913,712,075.41 10.559
TOTAL 8,653,040,949.84 100.000
DONALD J. KIRK
AFFIRMATIVE 7,753,756,203.57 89.607
WITHHELD 899,284,746.27 10.393
TOTAL 8,653,040,949.84 100.000
# OF % OF
VOTES CAST VOTES CAST
PETER S. LYNCH
AFFIRMATIVE 7,756,709,375.68 89.641
WITHHELD 896,331,574.16 10.359
TOTAL 8,653,040,949.84 100.000
WILLIAM O. MCCOY
AFFIRMATIVE 7,755,387,388.40 89.626
WITHHELD 897,653,561.44 10.374
TOTAL 8,653,040,949.84 100.000
GERALD C. MCDONOUGH
AFFIRMATIVE 7,748,303,990.87 89.544
WITHHELD 904,736,958.97 10.456
TOTAL 8,653,040,949.84 100.000
MARVIN L. MANN
AFFIRMATIVE 7,753,481,007.38 89.604
WITHHELD 899,559,942.46 10.396
TOTAL 8,653,040,949.84 100.000
ROBERT C. POZEN
AFFIRMATIVE 7,754,099,035.87 89.611
WITHHELD 898,941,913.97 10.389
TOTAL 8,653,040,949.84 100.000
THOMAS R. WILLIAMS
AFFIRMATIVE 7,748,460,240.63 89.546
WITHHELD 904,580,709.21 10.454
TOTAL 8,653,040,949.84 100.000
PROPOSAL 2
To ratify the selection of Price Waterhouse LLP as independent
accountants of the funds.
AIR
TRANSPORTATION # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 92,216,747.46 79.246
AGAINST 1,098,105.50 .944
ABSTAIN 23,052,814.11 19.810
TOTAL 116,367,667.07 100.000
GOLD # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 100,658,258.82 93.608
AGAINST 3,207,332.75 2.982
ABSTAIN 3,666,307.38 3.410
TOTAL 107,531,898.95 100.000
AUTOMOTIVE # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 15,764,394.96 85.995
AGAINST 106,293.53 .579
ABSTAIN 2,461,160.17 13.426
TOTAL 18,331,848.66 100.000
BIOTECHNOLOGY # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 255,501,527.41 85.455
AGAINST 3,334,273.83 1.115
ABSTAIN 40,155,471.48 13.430
TOTAL 298,991,272.72 100.000
BROKERAGE AND # OF % OF
INVESTMENT
MANAGEMENT VOTES CAST VOTES CAST
AFFIRMATIVE 332,897,441.61 86.994
AGAINST 2,415,501.83 .632
ABSTAIN 47,352,768.76 12.374
TOTAL 382,665,712.20 100.000
BUSINESS
SERVICES # OF % OF
AND OUTSOURCING VOTES CAST VOTES CAST
AFFIRMATIVE 13,471,564.34 91.755
AGAINST 145,286.28 .990
ABSTAIN 1,065,255.47 7.255
TOTAL 14,682,106.09 100.000
CHEMICALS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 30,335,526.46 87.669
AGAINST 374,411.51 1.082
ABSTAIN 3,892,560.68 11.249
TOTAL 34,602,498.65 100.000
COMPUTERS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 280,957,525.89 83.394
AGAINST 5,060,937.96 1.502
ABSTAIN 50,885,565.57 15.104
TOTAL 336,904,029.42 100.000
CONSTRUCTION
AND HOUSING # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 27,955,641.16 88.748
AGAINST 224,504.31 .712
ABSTAIN 3,319,953.96 10.540
TOTAL 31,500,099.43 100.000
CONSUMER
INDUSTRIES # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 34,576,419.47 91.761
AGAINST 254,221.23 .674
ABSTAIN 2,850,473.76 7.565
TOTAL 37,681,114.46 100.000
CYCLICAL
INDUSTRIES # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 2,623,936.97 98.371
AGAINST 23,800.27 .892
ABSTAIN 19,653.99 .737
TOTAL 2,667,391.23 100.000
DEFENSE AND
AEROSPACE # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 51,303,510.55 85.627
AGAINST 248,060.18 .415
ABSTAIN 8,363,197.93 13.958
TOTAL 59,914,768.66 100.000
DEVELOPING
COMMUNICATIONS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 103,338,655.88 82.664
AGAINST 1,873,004.54 1.499
ABSTAIN 19,798,270.19 15.837
TOTAL 125,009,930.61 100.000
ELECTRONICS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 1,073,301,414.73 86.375
AGAINST 11,610,518.03 .935
ABSTAIN 157,688,873.06 12.690
TOTAL 1,242,600,805.82 100.000
ENERGY # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 65,318,190.73 89.829
AGAINST 722,166.98 .993
ABSTAIN 6,673,456.29 9.178
TOTAL 72,713,814.00 100.000
ENERGY SERVICE # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 389,301,747.22 89.646
AGAINST 5,049,219.11 1.162
ABSTAIN 39,916,621.54 9.192
TOTAL 434,267,587.87 100.000
ENVIRONMENTAL
SERVICES # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 11,516,154.03 84.961
AGAINST 83,510.25 .616
ABSTAIN 1,954,983.81 14.423
TOTAL 13,554,648.09 100.000
PROPOSAL 2 - CONTINUED
FINANCIAL
SERVICES # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 286,397,061.70 87.676
AGAINST 3,202,933.29 .980
ABSTAIN 37,055,266.64 11.344
TOTAL 326,655,261.63 100.000
FOOD AND
AGRICULTURE # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 114,630,036.79 93.589
AGAINST 1,473,148.26 1.202
ABSTAIN 6,379,834.83 5.209
TOTAL 122,483,019.88 100.000
HEALTH CARE # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 1,018,287,018.17 88.863
AGAINST 10,830,531.31 .945
ABSTAIN 116,791,591.73 10.192
TOTAL 1,145,909,141.21 100.000
HOME FINANCE # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 794,452,253.80 91.016
AGAINST 8,425,081.16 .965
ABSTAIN 69,996,650.50 8.019
TOTAL 872,873,985.46 100.000
INDUSTRIAL
EQUIPMENT # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 22,789,320.78 88.145
AGAINST 458,530.92 1.773
ABSTAIN 2,606,544.19 10.082
TOTAL 25,854,395.89 100.000
INDUSTRIAL
MATERIALS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 9,797,428.07 86.536
AGAINST 65,313.96 .577
ABSTAIN 1,459,033.90 12.887
TOTAL 11,321,775.93 100.000
INSURANCE # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 54,993.648.10 83.153
AGAINST 772,601.22 1.168
ABSTAIN 10,369,328.39 15.679
TOTAL 66,135,577.71 100.000
LEISURE # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 121,725,009.54 88.601
AGAINST 869,325.86 .633
ABSTAIN 14,791,538.63 10.766
TOTAL 137,385,874.03 100.000
MEDICAL
DELIVERY # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 86,648,605.64 86.518
AGAINST 775,574.17 .774
ABSTAIN 12,726,696.97 12.708
TOTAL 100,150,876.78 100.000
MULTIMEDIA # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 50,016,990.75 83.776
AGAINST 474,795.12 .795
ABSTAIN 9,211,354.32 15.429
TOTAL 59,703,140.19 100.000
NATURAL GAS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 27,697,874.05 95.278
AGAINST 509,131.26 1.751
ABSTAIN 863,631.27 2.971
TOTAL 29,070,636.58 100.000
NATURAL
RESOURCES # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 3,942,516.43 96.508
AGAINST 12,864.00 .315
ABSTAIN 129,774.79 3.177
TOTAL 4,085,155.22 100.000
PAPER AND
FOREST PRODUCTS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 8,284,781.48 86.533
AGAINST 168,888.35 1.764
ABSTAIN 1,120,492.68 11.703
TOTAL 9,574,162.51 100.000
PRECIOUS METALS
AND MINERALS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 71,772,062.04 89.963
AGAINST 1,852,041.14 2.322
ABSTAIN 6,155,007.12 7.715
TOTAL 79,779,110.30 100.000
REGIONAL BANKS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 625,203,572.47 89.389
AGAINST 6,870,168.47 .982
ABSTAIN 67,344,161.02 9.629
TOTAL 699,417,901.96 100.000
RETAILING # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 117,074,984.53 84.222
AGAINST 1,250,795.58 .899
ABSTAIN 20,682,596.04 14.879
TOTAL 139,008,376.15 100.000
SOFTWARE AND
COMPUTER
SERVICES # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 227,719,853.71 85.956
AGAINST 2,326,904.77 .878
ABSTAIN 34,879,127.77 13.166
TOTAL 264,925,886.25 100.000
TECHNOLOGY # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 279,451,674.57 86.672
AGAINST 3,383,068.55 1.050
ABSTAIN 39,588,275.36 12.278
TOTAL 322,423,018.48 100.000
PROPOSAL 2 - CONTINUED
TELECOM
MUNICATIONS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 321,155,321.56 86.856
AGAINST 3,388,906.87 .916
ABSTAIN 45,212,539.59 12.228
TOTAL 369,756,768.02 100.000
TRANSPORTATION # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 30,254,239.54 90.810
AGAINST 216,625.66 .650
ABSTAIN 2,845,126.52 8.540
TOTAL 33,315,991.72 100.000
UTILITIES
GROWTH # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 204,256,268.94 96.811
AGAINST 1,834,078.41 .869
ABSTAIN 4,894,199.40 2.320
TOTAL 210,984,546.75 100.000
MONEY MARKET # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 261,535,880.47 89.494
AGAINST 4,035,752.50 1.381
ABSTAIN 26,667,520.28 9.125
TOTAL 292,239,153.25 100.000
PROPOSAL 3
To authorize the Trustees to adopt an amended and restated Declaration
of Trust.
# OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 6,786,374,695.13 78.453
AGAINST 294,199,608.21 3.401
ABSTAIN 1,569,643,684.54 18.146
TOTAL 8,650,217,987.88 100.000
BROKER NON-VOTES 2,822,961.96
PROPOSAL 4
To approve an amended management contract for the fund that would
reduce the management fee payable to FMR by the fund as FMR's assets
under management increase.
AIR
TRANSPORTATION # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 88,331,761.87 75.907
AGAINST 3,638,300.83 3.127
ABSTAIN 24,397,604.37 20.966
TOTAL 116,367,667.07 100.000
GOLD # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 94,562,031.56 87.939
AGAINST 7,001,270.47 6.510
ABSTAIN 5,968,596.92 5.551
TOTAL 107,531,898.95 100.000
AUTOMOTIVE # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 15,187,888.15 82.850
AGAINST 417,351.75 2.276
ABSTAIN 2,726,608.76 14.874
TOTAL 18,331,848.66 100.000
BIOTECHNOLOGY # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 243,165,399.55 81.329
AGAINST 10,653,205.65 3.563
ABSTAIN 45,172,667.52 15.108
TOTAL 298,991,272.72 100.000
BROKERAGE AND # OF % OF
INVESTMENT
MANAGEMENT VOTES CAST VOTES CAST
AFFIRMATIVE 320,917,182.22 83.864
AGAINST 9,219,271.09 2.409
ABSTAIN 52,529,258.89 13.727
TOTAL 382,665,712.20 100.000
CHEMICALS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 28,702,652.80 82.950
AGAINST 1,300,869.72 3.759
ABSTAIN 4,598,976.13 13.291
TOTAL 34,602,498.65 100.000
COMPUTERS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 270,046,670.96 80.155
AGAINST 9,945,847.58 2.953
ABSTAIN 56,911,510.88 16.892
TOTAL 336,904,029.42 100.000
CONSTRUCTION
AND HOUSING # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 27,231,528.43 86.449
AGAINST 631,247.12 2.004
ABSTAIN 3,637,323.88 11.547
TOTAL 31,500,099.43 100.000
CONSUMER
INDUSTRIES # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 33,525,166.77 88.971
AGAINST 775,331.73 2.057
ABSTAIN 3,380,615.96 8.972
TOTAL 37,681,114.46 100.000
DEFENSE AND
AEROSPACE # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 48,375,726.48 80.741
AGAINST 775,125.89 1.294
ABSTAIN 10,763,916.29 17.965
TOTAL 59,914,768.66 100.000
DEVELOPING
COMMUNICATIONS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 98,263,849.25 78.605
AGAINST 4,603,812.97 3.683
ABSTAIN 22,142,268.39 17.712
TOTAL 125,009,930.61 100.000
PROPOSAL 4 - CONTINUED
ELECTRONICS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 1,027,191,955.49 82.665
AGAINST 159,261,934.39 12.817
ABSTAIN 56,146,915.94 4.518
TOTAL 1,242,600,805.82 100.000
ENERGY # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 61,972,377.11 85.228
AGAINST 2,732,124.18 3.757
ABSTAIN 8,009,312.71 11.015
TOTAL 72,713,814.00 100.000
ENERGY SERVICES # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 373,930,842.39 86.106
AGAINST 13,257,672.22 3.053
ABSTAIN 47,079,073.26 10.841
TOTAL 434,267,587.87 100.000
ENVIRONMENTAL
SERVICES # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 10,650,119.56 78.572
AGAINST 620,288.79 4.576
ABSTAIN 2,284,239.74 16.852
TOTAL 13,554,648.09 100.000
FINANCIAL
SERVICES # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 274,470,999.76 84.025
AGAINST 9,136,135.17 2.797
ABSTAIN 43,048,126.70 13.178
TOTAL 326,655,261.63 100.000
FOOD AND
AGRICULTURE # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 108,827,660.19 88.851
AGAINST 4,889,731.49 3.992
ABSTAIN 8,765,628.20 7.157
TOTAL 122,483,019.88 100.000
HEALTH CARE # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 965,997,795.25 84.300
AGAINST 38,385,460.85 3.349
ABSTAIN 141,525,885.11 12.351
TOTAL 1,145,909,141.21 100.000
HOME FINANCE # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 764,517,493.78 87.586
AGAINST 24,755,647.12 2.836
ABSTAIN 83,600,844.56 9.578
TOTAL 872,873,985.46 100.000
INDUSTRIAL
EQUIPMENT # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 21,894,772.32 84.685
AGAINST 1,028,514.47 3.978
ABSTAIN 2,931,109.10 11.337
TOTAL 25,854,395.89 100.000
INDUSTRIAL
MATERIALS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 9,137,601.28 80.708
AGAINST 330,541.69 2.920
ABSTAIN 1,853,632.96 16.372
TOTAL 11,321,775.93 100.000
INSURANCE # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 52,244,487.18 78.996
AGAINST 2,561,649.44 3.873
ABSTAIN 11,329,441.09 17.131
TOTAL 66,135,577.71 100.000
LEISURE # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 116,428,593.72 84.746
AGAINST 3,577,395.73 2.604
ABSTAIN 17,379,884.58 12.650
TOTAL 137,385,874.03 100.000
MEDICAL DELIVERY # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 81,962,329.21 81.839
AGAINST 2,623,293.47 2.619
ABSTAIN 15,565,254.10 15.542
TOTAL 100,150,876.78 100.000
MULTIMEDIA # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 48,725,744.24 81.613
AGAINST 1,121,199.57 1.878
ABSTAIN 9,856,196.38 16.509
TOTAL 59,703,140.19 100.000
NATURAL GAS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 26,276,232.63 90.388
AGAINST 1,388,331.25 4.775
ABSTAIN 1,406,072.70 4.837
TOTAL 29,070,636.58 100.000
PAPER AND
FOREST PRODUCTS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 7,678,987.09 80.205
AGAINST 590,477.99 6.168
ABSTAIN 1,304,697.43 13.627
TOTAL 9,574,162.51 100.000
PRECIOUS METALS
AND MINERALS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 68,061,941.03 85.313
AGAINST 3,879,330.91 4.863
ABSTAIN 7,837,838.36 9.824
TOTAL 79,779,110.30 100.000
REGIONAL BANKS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 595,015,797.25 85.073
AGAINST 25,116,085.51 3.591
ABSTAIN 79,286,019.20 11.336
TOTAL 699,417,901.96 100.000
PROPOSAL 4 - CONTINUED
RETAILING # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 113,355,144.06 81.546
AGAINST 3,772,282.91 2.713
ABSTAIN 21,880,949.18 15.741
TOTAL 139,008,376.15 100.000
SOFTWARE AND
COMPUTER
SERVICES # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 217,257,453.29 82.007
AGAINST 7,288,094.85 2.751
ABSTAIN 40,380,338.11 15.242
TOTAL 264,925,886.25 100.000
TECHNOLOGY # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 265,238,914.82 82.264
AGAINST 11,319,267.99 3.511
ABSTAIN 45,864,835.67 14.225
TOTAL 322,423,018.48 100.000
TELECOM
MUNICATIONS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 305,617,632.54 82.654
AGAINST 11,539,266.63 3.120
ABSTAIN 52,599,868.85 14.226
TOTAL 369,756,768.02 100.000
TRANSPORTATION # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 29,561,553.68 88.731
AGAINST 531,812.44 1.596
ABSTAIN 3,222,625.60 9.673
TOTAL 33,315,991.72 100.000
UTILITIES
GROWTH # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 193,578,103.90 91.750
AGAINST 7,910,897.28 3.749
ABSTAIN 9,495,545.57 4.501
TOTAL 210,984,546.75 100.000
PROPOSAL 5
To approve an amended management contract for Money Market Portfolio
that would reduce the management fee payable to FMR by the fund as
FMR's assets under management increases.
# OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 245,969,256.05 84.167
AGAINST 14,855,502.09 5.083
ABSTAIN 31,414,395.11 10.750
TOTAL 292,239,153.25 100.000
PROPOSAL 6
To approve a sub-advisory agreement with FMR U.K. to provide
investment advice and research services or investment management
services to Gold Portfolio.
# OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 94,533,376.31 87.912
AGAINST 6,907,643.32 6.424
ABSTAIN 6,090,879.32 5.664
TOTAL 107,531,898.95 100.000
PROPOSAL 7
To approve a sub-advisory agreement with FMR Far East to provide
investment advice and research services or investment management
services to Gold Portfolio.
# OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 93,962,009.35 87.381
AGAINST 7,425,017.12 6.905
ABSTAIN 6,144,872.48 5.714
TOTAL 107,531,898.95 100.000
PROPOSAL 8(A)
To make the current fundamental 80% investment policy non-fundamental.
AIR
TRANSPORTATION # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 81,784,924.28 70.281
AGAINST 5,319,581.91 4.572
ABSTAIN 29,263,160.88 25.147
TOTAL 116,367,667.07 100.000
AUTOMOTIVE # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 13,466,159.09 73.458
AGAINST 717,074.83 3.911
ABSTAIN 4,148,614.74 22.631
TOTAL 18,331,848.66 100.000
BIOTECHNOLOGY # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 206,872,261.15 69.190
AGAINST 20,801,262.41 6.957
ABSTAIN 71,317,749.16 23.853
TOTAL 298,991,272.72 100.000
BROKERAGE AND # OF % OF
INVESTMENT
MANAGEMENT VOTES CAST VOTES CAST
AFFIRMATIVE 287,126,658.10 75.033
AGAINST 16,642,056.34 4.349
ABSTAIN 78,896,997.76 20.618
TOTAL 382,665,712.20 100.000
PROPOSAL 8(A) - CONTINUED
CHEMICALS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 25,811,855.73 74.595
AGAINST 2,075,298.62 5.998
ABSTAIN 6,715,344.30 19.407
TOTAL 34,602,498.65 100.000
COMPUTERS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 233,020,603.48 69.165
AGAINST 18,070,433.52 5.364
ABSTAIN 85,812,992.42 25.471
TOTAL 336,904,029.42 100.000
CONSTRUCTION
AND HOUSING # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 24,597,948.32 78.088
AGAINST 1,358,442.62 4.313
ABSTAIN 5,543,708.49 17.599
TOTAL 31,500,099.43 100.000
CONSUMER
INDUSTRIES # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 31,815,790.92 84.434
AGAINST 1,784,168.80 4.735
ABSTAIN 4,081,154.74 10.831
TOTAL 37,681,114.46 100.000
DEFENSE AND
AEROSPACE # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 43,592,670.30 72.758
AGAINST 2,756,881.95 4.601
ABSTAIN 13,565,216.41 22.641
TOTAL 59,914,768.66 100.000
DEVELOPING
COMMUNICATIONS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 89,369,179.95 71.490
AGAINST 9,066,570.82 7.252
ABSTAIN 26,574,179.84 21.258
TOTAL 125,009,930.61 100.000
ELECTRONICS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 849,887,743.47 68.396
AGAINST 66,702,678.25 5.368
ABSTAIN 326,010,384.10 26.236
TOTAL 1,242,600,805.82 100.000
ENERGY # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 53,836,856.67 74.039
AGAINST 4,587,161.58 6.309
ABSTAIN 14,289,795.75 19.652
TOTAL 72,713,814.00 100.000
ENERGY SERVICE # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 319,031,333.55 73.464
AGAINST 24,563,860.42 5.657
ABSTAIN 90,672,393.90 20.879
TOTAL 434,267,587.87 100.000
ENVIRONMENTAL
SERVICES # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 9,540,393.55 70.385
AGAINST 970,739.08 7.161
ABSTAIN 3,043,515.46 22.454
TOTAL 13,554,648.09 100.000
FINANCIAL
SERVICES # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 237,974,716.59 72.852
AGAINST 16,993,069.53 5.202
ABSTAIN 71,687,475.51 21.946
TOTAL 326,655,261.63 100.000
FOOD AND
AGRICULTURE # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 90,763,679.36 74.103
AGAINST 10,466,684.76 8.545
ABSTAIN 21,252,655.76 17.352
TOTAL 122,483,019.88 100.000
HEALTH CARE # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 846,476,378.49 73.869
AGAINST 77,469,177.22 6.761
ABSTAIN 221,963,585.50 19.370
TOTAL 1,145,909,141.21 100.000
HOME FINANCE # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 774,515,006.98 88.732
AGAINST 51,010,191.82 5.844
ABSTAIN 47,348,786.66 5.424
TOTAL 872,873,985.46 100.000
INDUSTRIAL
EQUIPMENT # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 19,372,627.93 74.930
AGAINST 1,899,086.52 7.345
ABSTAIN 4,582,681.44 17.725
TOTAL 25,854,395.89 100.000
INDUSTRIAL
MATERIALS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 8,317,429.03 73.464
AGAINST 667,224.29 5.893
ABSTAIN 2,337,122.61 20.643
TOTAL 11,321,775.93 100.000
INSURANCE # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 47,264,401.23 71.466
AGAINST 4,256,851.68 6.436
ABSTAIN 14,614,324.80 22.098
TOTAL 66,135,577.71 100.000
LEISURE # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 107,419,653.59 78.188
AGAINST 6,810,070.15 4.957
ABSTAIN 23,156,150.29 16.855
TOTAL 137,385,874.03 100.000
PROPOSAL 8(A) - CONTINUED
MEDICAL DELIVERY # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 72,030,422.87 71.922
AGAINST 5,871,796.69 5.863
ABSTAIN 22,248,657.22 22.215
TOTAL 100,150,876.78 100.000
MULTIMEDIA # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 44,070,481.42 73.816
AGAINST 2,457,209.73 4.116
ABSTAIN 13,175,449.04 22.068
TOTAL 59,703,140.19 100.000
NATURAL GAS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 23,238,133.30 81.686
AGAINST 2,713,844.54 9.540
ABSTAIN 2,496,114.89 8.774
TOTAL 28,448,092.73 100.000
PAPER AND FOREST
PRODUCTS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 6,807,529.77 71.103
AGAINST 755,087.96 7.887
ABSTAIN 2,011,544.78 21.010
TOTAL 9,574,162.51 100.000
PRECIOUS METALS
AND MINERALS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 61,915,378.85 77.609
AGAINST 7,035,911.50 8.819
ABSTAIN 10,827,819.95 13.572
TOTAL 79,779,110.30 100.000
REGIONAL BANKS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 509,531,999.72 72.851
AGAINST 43,415,159.12 6.207
ABSTAIN 146,470,743.12 20.942
TOTAL 699,417,901.96 100.000
RETAILING # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 101,736,813.64 73.188
AGAINST 8,688,703.97 6.250
ABSTAIN 28,582,858.54 20.562
TOTAL 139,008,376.15 100.000
SOFTWARE AND
COMPUTER
SERVICES # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 183,474,192.17 69.255
AGAINST 17,133,042.08 6.467
ABSTAIN 64,318,652.00 24.278
TOTAL 264,925,886.25 100.000
TECHNOLOGY # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 234,384,763.25 72.695
AGAINST 18,668,800.59 5.790
ABSTAIN 69,369,454.64 21.515
TOTAL 322,423,018.48 100.000
TELECOM
MUNICATIONS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 263,026,500.28 71.135
AGAINST 22,933,470.98 6.202
ABSTAIN 83,796,796.76 22.663
TOTAL 369,756,768.02 100.000
TRANSPORTATION # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 27,344,653.49 82.077
AGAINST 1,851,919.24 5.558
ABSTAIN 4,119,418.99 12.365
TOTAL 33,315,991.72 100.000
UTILITIES GROWTH # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 165,163,998.30 79.046
AGAINST 15,012,167.39 7.184
ABSTAIN 28,771,245.55 13.770
TOTAL 208,947,411.24 100.000
BROKER NON-VOTES 2,037,135.51
MONEY MARKET # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 248,381,078.83 84.992
AGAINST 24,273,146.63 8.306
ABSTAIN 19,584,927.79 6.702
TOTAL 292,239,153.25 100.000
PROPOSAL 8(B)
To make the current fundamental 50% "principally engaged in" policy
non-fundamental and to approve changes to the policy.
AIR
TRANSPORTATION # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 81,530,381.50 70.063
AGAINST 5,138,916.34 4.416
ABSTAIN 29,698,369.23 25.521
TOTAL 116,367,667.07 100.000
AUTOMOTIVE # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 13,412,008.37 73.162
AGAINST 699,160.85 3.814
ABSTAIN 4,220,679.44 23.024
TOTAL 18,331,848.66 100.000
BIOTECHNOLOGY # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 206,654,832.40 69.117
AGAINST 20,268,828.77 6.779
ABSTAIN 72,067,611.55 24.104
TOTAL 298,991,272.72 100.000
BROKERAGE AND
INVESTMENT # OF % OF
MANAGEMENT VOTES CAST VOTES CAST
AFFIRMATIVE 286,613,628.30 74.899
AGAINST 16,460,169.61 4.302
ABSTAIN 79,591,914.29 20.799
TOTAL 382,665,712.20 100.000
PROPOSAL 8(B) - CONTINUED
CHEMICALS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 25,670,060.83 74.186
AGAINST 2,181,796.21 6.305
ABSTAIN 6,750,641.61 19.509
TOTAL 34,602,498.65 100.000
COMPUTERS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 232,733,200.95 69.080
AGAINST 18,081,604.16 5.367
ABSTAIN 86,089,224.31 25.553
TOTAL 336,904,029.42 100.000
CONSTRUCTION
AND HOUSING # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 24,627,901.30 78.184
AGAINST 1,335,940.23 4.241
ABSTAIN 5,536,257.90 17.575
TOTAL 31,500,099.43 100.000
CONSUMER
INDUSTRIES # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 31,777,298.19 84.332
AGAINST 1,766,548.59 4.688
ABSTAIN 4,137,267.68 10.980
TOTAL 37,681,114.46 100.000
DEFENSE AND
AEROSPACE # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 43,950,283.68 73.355
AGAINST 2,267,409.21 3.784
ABSTAIN 13,697,075.77 22.861
TOTAL 59,914,768.66 100.000
DEVELOPING
COMMUNICATIONS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 89,126,083.71 71.295
AGAINST 8,969,664.48 7.175
ABSTAIN 26,914,182.42 21.530
TOTAL 125,009,930.61 100.000
ELECTRONICS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 848,278,334.86 68.266
AGAINST 66,417,837.65 5.345
ABSTAIN 327,904,633.31 26.389
TOTAL 1,242,600,805.82 100.000
ENERGY # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 53,541,696.52 73.633
AGAINST 4,615,976.82 6.349
ABSTAIN 14,556,140.66 20.018
TOTAL 72,713,814.00 100.000
ENERGY SERVICE # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 318,683,225.00 73.384
AGAINST 24,710,561.01 5.690
ABSTAIN 90,873,801.86 20.926
TOTAL 434,267,587.87 100.000
ENVIRONMENTAL
SERVICES # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 9,487,363.06 69.993
AGAINST 928,144.36 6.848
ABSTAIN 3,139,140.67 23.159
TOTAL 13,554,648.09 100.000
FINANCIAL
SERVICES # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 237,544,867.93 72.720
AGAINST 16,881,253.75 5.168
ABSTAIN 72,229,139.95 22.112
TOTAL 326,655,261.63 100.000
FOOD AND
AGRICULTURE # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 90,580,759.83 73.954
AGAINST 10,273,520.03 8.387
ABSTAIN 21,628,740.02 17.659
TOTAL 122,483,019.88 100.000
HEALTH CARE # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 844,885,797.70 73.731
AGAINST 76,493,018.14 6.675
ABSTAIN 224,530,325.37 19.594
TOTAL 1,145,909,141.21 100.000
HOME FINANCE # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 770,542,942.77 88.277
AGAINST 52,646,972.97 6.031
ABSTAIN 49,684,069.72 5.692
TOTAL 872,873,985.46 100.000
INDUSTRIAL
EQUIPMENT # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 19,251,877.80 74.463
AGAINST 1,933,197.89 7.477
ABSTAIN 4,669,320.20 18.060
TOTAL 25,854,395.89 100.000
INDUSTRIAL
MATERIALS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 8,232,007.18 72.710
AGAINST 702,894.09 6.208
ABSTAIN 2,386,874.66 21.082
TOTAL 11,321,775.93 100.000
INSURANCE # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 47,047,682.49 71.138
AGAINST 4,362,994.52 6.597
ABSTAIN 14,724,900.70 22.265
TOTAL 66,135,577.71 100.000
LEISURE # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 107,136,143.37 77.982
AGAINST 6,886,559.76 5.012
ABSTAIN 23,363,170.90 17.006
TOTAL 137,385,874.03 100.000
PROPOSAL 8(B) - CONTINUED
MEDICAL DELIVERY # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 71,998,606.53 71.890
AGAINST 5,786,226.67 5.778
ABSTAIN 22,366,043.58 22.332
TOTAL 100,150,876.78 100.000
MULTIMEDIA # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 44,090,990.33 73.850
AGAINST 2,338,567.24 3.917
ABSTAIN 13,273,582.62 22.233
TOTAL 59,703,140.19 100.000
NATURAL GAS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 22,561,634.74 79.308
AGAINST 3,244,466.65 11.405
ABSTAIN 2,641,991.34 9.287
TOTAL 28,448,092.73 100.000
BROKER NON-VOTES 622,543.85
PAPER AND FOREST
PRODUCTS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 6,785,747.46 70.876
AGAINST 787,911.92 8.229
ABSTAIN 2,000,503.13 20.895
TOTAL 9,574,162.51 100.000
PRECIOUS METALS
AND MINERALS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 61,755,990.79 77.409
AGAINST 6,875,636.08 8.618
ABSTAIN 11,147,483.43 13.973
TOTAL 79,779,110.30 100.000
REGIONAL BANKS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 506,790,124.22 72.459
AGAINST 43,115,121.02 6.164
ABSTAIN 149,512,656.72 21.377
TOTAL 699,417,901.96 100.000
RETAILING # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 101,878,730.92 73.290
AGAINST 8,400,746.67 6.043
ABSTAIN 28,728,898.56 20.667
TOTAL 139,008,376.15 100.000
SOFTWARE AND
COMPUTER
SERVICES # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 183,018,168.69 69.083
AGAINST 16,797,493.24 6.340
ABSTAIN 65,110,224.32 24.577
TOTAL 264,925,886.25 100.000
TECHNOLOGY # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 234,250,871.23 72.653
AGAINST 18,749,417.22 5.815
ABSTAIN 69,422,730.03 21.532
TOTAL 322,423,018.48 100.000
TELECOM
MUNICATIONS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 262,506,222.42 70.994
AGAINST 22,939,814.78 6.204
ABSTAIN 84,310,730.82 22.802
TOTAL 369,756,768.02 100.000
TRANSPORTATION # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 27,341,630.62 82.068
AGAINST 1,842,657.52 5.530
ABSTAIN 4,131,703.58 12.402
TOTAL 33,315,991.72 100.000
UTILITIES GROWTH # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 164,013,231.16 78.495
AGAINST 15,355,539.10 7.349
ABSTAIN 29,578,640.98 14.156
TOTAL 208,947,411.24 100.000
BROKER NON-VOTES 2,037,135.51
PROPOSAL 9(A)
To make Gold Portfolio's current fundamental 80% investment policy
non-fundamental and to approve changes to the policy.
# OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 86,229,451.32 80.280
AGAINST 10,723,590.03 9.984
ABSTAIN 10,457,997.95 9.736
TOTAL 107,411,039.30 100.000
BROKER NON-VOTES 120,859.65
PROPOSAL 9(B)
To make Gold Portfolio's current fundamental 50% "principally engaged
in" policy non-fundamental and to approve changes to the policy.
# OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 86,023,158.35 80.088
AGAINST 10,562,068.28 9.833
ABSTAIN 10,825,812.67 10.079
TOTAL 107,411,039.30 100.000
BROKER NON-VOTES 120,859.65
PROPOSAL 10
To make the current fundamental 15% "principally engaged in" policy
non-fundamental.
BROKERAGE AND # OF % OF
INVESTMENT
MANAGEMENT VOTES CAST VOTES CAST
AFFIRMATIVE 286,979,193.01 74.995
AGAINST 15,543,614.23 4.062
ABSTAIN 80,142,904.96 20.943
TOTAL 382,665,712.20 100.000
PROPOSAL 10 - CONTINUED
FINANCIAL
SERVICES # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 238,353,584.93 72.968
AGAINST 16,479,829.93 5.045
ABSTAIN 71,821,846.77 21.987
TOTAL 326,655,261.63 100.000
PROPOSAL 11
To amend the fundamental investment limitations concerning
diversification.
FINANCIAL
SERVICES # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 241,126,964.55 73.817
AGAINST 15,889,907.00 4.864
ABSTAIN 69,638,390.08 21.319
TOTAL 326,655,261.63 100.000
HOME FINANCE # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 785,293,340.30 89.966
AGAINST 43,966,364.46 5.037
ABSTAIN 43,614,280.70 4.997
TOTAL 872,873,985.46 100.000
REGIONAL BANKS # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 514,983,172.04 73.630
AGAINST 41,205,954.33 5.892
ABSTAIN 143,228,775.59 20.478
TOTAL 699,417,901.96 100.000
MONEY MARKET # OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 250,939,184.95 85.868
AGAINST 23,838,890.03 8.157
ABSTAIN 17,461,078.27 5.975
TOTAL 292,239,153.25 100.000
MANAGING YOUR INVESTMENTS
Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a
day.
BY PHONE
Fidelity TouchTone Xpress(registered trademark) provides a single
toll-free number to access account balances, positions, quotes and
trading. It's easy to navigate the service, and on your first call,
the system will help you create a personal identification number (PIN)
for security.
(PHONE_GRAPHIC)TOUCHTONE XPRESS
1-800-544-5555
PRESS
1 For mutual fund and brokerage trading.
2 For quotes.*
3 For account balances and holdings.
4 To review orders and mutual fund activity.
5 To change your PIN.
*0 To speak to a Fidelity representative.
BY PC
Fidelity's Web site on the Internet provides a wide range of
information, including daily financial news, fund performance,
interactive planning tools and news about Fidelity products and
services.
(PHONE_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call Fidelity
at 1-800-544-7272 and we'll send you an America Online CD or disk with
up to 50 free hours of Web access.
(PHONE_GRAPHIC)
FIDELITY ON-LINE XPRESS+TM
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity
at 1-800-544-7272 or visit our Web site for more information on how to
manage your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD
AND RETURN WILL VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE
WILL ALSO VARY. THIS MEANS
THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS
NO ASSURANCE THAT MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE
$1 SHARE PRICE; AN
INVESTMENT IN A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE
U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN
SHARE PRICE,
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF ANY
SALES CHARGES.
TO WRITE FIDELITY
If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and
send you written confirmation upon completion of your request.
(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
2300 Litton Lane - KH1A
Hebron, KY 41048
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP61
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
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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
Stanley N. Griffith, 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
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Boston, MA
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Boston, MA
CUSTODIANS
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and
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CORPORATE HEADQUARTERS
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1-800-544-8888
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Fidelity
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(Recycle graphic) Printed on Recycled Paper
SEL-SANN-1098 62995
1.536823.101
