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
HEALTH CARE
HOME FINANCE
INDUSTRIAL EQUIPMENT
INDUSTRIAL MATERIALS
INSURANCE
LEISURE
MEDICAL DELIVERY
MEDICAL EQUIPMENT AND SYSTEMS
MONEY MARKET
MULTIMEDIA
NATURAL GAS
NATURAL RESOURCES
PAPER AND FOREST PRODUCTS
PRECIOUS METALS AND MINERALS
REGIONAL BANKS
RETAILING
SOFTWARE AND COMPUTER SERVICES
TECHNOLOGY
TELECOMMUNICATIONS
TRANSPORTATION
UTILITIES GROWTH
ANNUAL REPORT
FOR THE YEAR ENDING
FEBRUARY 28, 1999
AND
PROSPECTUS
DATED APRIL 29,1999
(2_FIDELITY_LOGOS)(REGISTERED TRADEMARK)
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
PERFORMANCE OVERVIEW A-4
FUND UPDATES*
CONSUMER SECTOR A-6 CONSUMER INDUSTRIES
A-13 FOOD AND AGRICULTURE
A-19 LEISURE
A-25 MULTIMEDIA
A-30 RETAILING
CYCLICALS SECTOR A-35 AIR TRANSPORTATION
A-40 AUTOMOTIVE
A-45 CHEMICALS
A-50 CONSTRUCTION AND HOUSING
A-56 CYCLICAL INDUSTRIES
A-62 DEFENSE AND AEROSPACE
A-67 ENVIRONMENTAL SERVICES
A-72 INDUSTRIAL EQUIPMENT
A-78 INDUSTRIAL MATERIALS
A-84 PAPER AND FOREST PRODUCTS
A-89 TRANSPORTATION
FINANCIAL SERVICES SECTOR A-94 BROKERAGE AND INVESTMENT MANAGEMENT
A-100 FINANCIAL SERVICES
A-106 HOME FINANCE
A-112 INSURANCE
A-117 REGIONAL BANKS
HEALTH CARE SECTOR A-122 BIOTECHNOLOGY
A-128 HEALTH CARE
A-134 MEDICAL DELIVERY
A-139 MEDICAL EQUIPMENT AND SYSTEMS
NATURAL RESOURCES SECTOR A-144 ENERGY
A-150 ENERGY SERVICE
A-156 GOLD
A-162 NATURAL RESOURCES
A-168 PRECIOUS METALS AND MINERALS
</TABLE>
* FUND UPDATES FOR EACH SELECT PORTFOLIO INCLUDE: PERFORMANCE AND
INVESTMENT SUMMARY, MANAGER'S OVERVIEW, INVESTMENTS, AND FINANCIAL
STATEMENTS.
<TABLE>
<CAPTION>
<S> <C> <C>
TECHNOLOGY SECTOR A-174 BUSINESS SERVICES AND OUTSOURCING
A-180 COMPUTERS
A-186 DEVELOPING COMMUNICATIONS
A-192 ELECTRONICS
A-198 SOFTWARE AND COMPUTER SERVICES
A-204 TECHNOLOGY
UTILITIES SECTOR A-210 NATURAL GAS
A-215 TELECOMMUNICATIONS
A-221 UTILITIES GROWTH
A-226 MONEY MARKET
NOTES TO FINANCIAL STATEMENTS A-233 FOOTNOTES TO THE FINANCIAL
STATEMENTS
REPORT OF INDEPENDENT A-237 THE AUDITORS' OPINION.
ACCOUNTANTS
DISTRIBUTIONS A-238
FIDELITY SELECT PORTFOLIO P-1
PROSPECTUS
</TABLE>
Standard & Poor's, S&P and S&P 500 are registered service marks of The
McGraw-Hill Companies, Inc. and have been licensed for use by
Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
This report is printed on recycled paper using soy-based inks.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF EACH FUND'S
PORTFOLIO MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS
STATED ON THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF
FIDELITY OR ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER
CONDITIONS AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH
VIEWS. THESE VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND,
BECAUSE INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE
FUNDS. THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE
INVESTORS IN THE FUNDS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE
PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
PERFORMANCE OVERVIEW
DEAR SHAREHOLDER:
Predictable only for their volatility, U.S. equity markets overcame a
major correction to post impressive double-digit returns for the
12-month period ending February 28, 1999. For the period, the Standard
& Poor's 500 Index - a large-capitalization-oriented index based on
the performance of 500 widely held stocks - returned 19.74%, nearly
double its historical annual average return. The Dow Jones Industrial
Average - an index of 30 blue-chip stocks - had a 10.75% increase for
the 12-month period.
Of the 39 Select equity portfolios, 15 topped the S&P 500's return for
the past 12 months. Meanwhile, 20 beat their Goldman Sachs indexes -
which are designed to measure the performance of companies within the
Select portfolios' sector concentrations. In comparison, 10 Select
portfolios bested their S&P benchmark in the last reporting period six
months ago, while 14 topped their Goldman Sachs index. The
best-performing Select portfolio for the 12-month period was
Computers, with a gain of 66.43%. Energy Service - whose performance
tends to be closely linked to the price of oil - had the lowest
return, declining 50.57%.
The period began with the U.S. economy continuing to demonstrate its
strength. Low unemployment, tame inflation, strong consumer buying
patterns and low interest rates all sparked hopes of continued growth.
But while the equity market soared, concerns grew about the impact of
Asia's economic woes. Those fears soon became reality when Russia's
escalating economic and political difficulties culminated in a series
of loan defaults and a devaluation of the ruble. Investor reaction was
swift and extreme: Money began to pour out of stocks and the Dow
plunged 512.61 points on August 31 - erasing all previous gains for
the year.
Seeking a safe haven, investors found refuge in U.S. Treasuries. While
Treasury yields dropped to their lowest levels in three decades, new
fears loomed on the horizon. The specter of presidential impeachment
hearings recalled the 1970s bear market during the Watergate scandal.
Rumors of troubled hedge funds and their potential impact on the
nation's economy added to investor worries.
Faced with the possibility of a global economic crisis, the U.S.
Federal Reserve Board stepped in. To address the lack of confidence in
domestic and global equity markets, the Fed instituted a series of
three separate quarter-point interest-rate cuts. The first came on
September 29. Then, in a surprise move, the Fed slashed rates another
quarter-point on October 15, and the Dow responded with its
third-greatest single-day point gain ever. The third reduction - a
so-called "insurance" cut on November 17 - helped solidify the
confidence the stock market needed to support a fourth-quarter rally.
Technology stocks, particularly the high-flying Internet issues,
helped drive stock market performance to new heights. Strong holiday
sales also lifted confidence heading into the new year.
The stock market maintained its momentum in January. The S&P 500, Dow
and NASDAQ all reached record highs during the first month of 1999 -
this, despite concerns about the impact of Brazil's currency
devaluation. The markets slowed somewhat in February, principally in
anticipation that the Fed was considering a rate hike, and fears of a
slowdown in the technology sector.
The strength of the domestic economy during the 12-month period helped
the CONSUMER sector notch solid returns. Holdings in cable TV and
Internet stocks bolstered Multimedia and Leisure. Retailing and
Consumer Industries benefited from their domestic focus. Food &
Agriculture trailed its indexes due to the poor earnings of many
packaged-food companies.
CYCLICAL stocks - whose performance tends to mirror the ups and downs
of the economy - were hampered by weak international economies.
Despite the global exposure of many airlines, Air Transportation
notched a positive return. Transportation fell slightly, but beat its
Goldman Sachs index. Construction and Housing suffered due to
poor-performing new-home builder stocks. Automotive lagged due to the
poor performance of auto parts stocks. An unfavorable supply/demand
balance, created by weakness in Asia, detracted from Chemicals.
Satellite launch and orbit failures, along with failed mergers in the
sector, hurt Defense and Aerospace. The oversupply and slack demand
for global commodities impaired Industrial Materials, Paper and Forest
Products, and Industrial Equipment. The economically sensitive
Cyclical Industries and Environmental Services portfolios also were
dragged down by the international fiscal crisis.
Currency devaluations in Russia and Brazil, and Russia's loan
defaults, were particularly detrimental to the FINANCIAL SERVICES
sector. The resulting liquidity crunch prevented any of the Select
portfolios from topping the broad-based S&P 500. However, thanks to
strong stock picking, Insurance and Financial Services beat their
Goldman Sachs benchmark. Regional Banks, as well as Brokerage and
Investment Management, posted positive - albeit more modest - returns.
A sharp increase in loan prepayments and refinancings hurt Home
Finance.
Continuing their trend of recent vigorous performance, HEALTH CARE
stocks helped contribute to the broad market's overall success. The
strong pharmaceutical industry buoyed Health Care and Biotechnology.
An emphasis on large-cap cardiology stocks helped Medical Equipment
and Systems generate index-beating performance. The uncertain
profitability outlook for HMOs and concern over Medicare budget cuts
dragged down Medical Delivery.
The period's hardest-hit sector was NATURAL RESOURCES. Overproduction,
lack of demand and weak global economic growth contributed to poor
results nearly across the board. While the price of gold finally
stopped its slide, it was still too low for holdings in both the Gold
and the Precious Metals and Minerals portfolios to operate profitably.
The low price and oversupply of oil was the major detractor for
Natural Resources, Energy and Energy Service.
The TECHNOLOGY sector accounted for nine of the top-10 best-performing
stocks in the S&P 500 by the end of 1998. Computers, Developing
Communications and Technology each returned over 55%. Both the
Electronics and the Software and Computer Services portfolios returned
over 30%, yet they still trailed the Goldman Sachs index. A lack of
exposure to large hardware and software companies caused Business
Services and Outsourcing to lag the Goldman Sachs benchmark.
Telecommunication companies were among the few outperformers in the
UTILITIES sector. Overweighted positions in that industry helped
Utilities Growth and Telecommunications produce solid returns. Natural
Gas, on the other hand, struggled greatly because of plunging oil
prices and weak demand.
In the pages that follow, you'll find detailed summaries for each of
the Select funds. We hope that you find them informative and useful
for evaluating your investments. Thank you very much for your
continued interest in the Fidelity Select Portfolios.
Sincerely,
William R. Ebsworth
Group Leader, FMRCo Equity Research
Select Group Leader
CUMULATIVE TOTAL RETURNS
FOR THE YEAR ENDED FEBRUARY 28, 1999
Computers 66.43% Row: 1, Col: 1, Value: 66.43000000000001
Row: 1, Col: 2, Value: nil
Developing Communications 63.01% Row: 2, Col: 1, Value: 63.01
Row: 2, Col: 2, Value: 0.0
Technology 55.66% Row: 3, Col: 1, Value: 55.66
Row: 3, Col: 2, Value: 0.0
Leisure 37.54% Row: 4, Col: 1, Value: 37.54
Row: 4, Col: 2, Value: 0.0
Multimedia 36.68% Row: 5, Col: 1, Value: 36.68
Row: 5, Col: 2, Value: 0.0
Retailing 36.66% Row: 6, Col: 1, Value: 36.66
Row: 6, Col: 2, Value: 0.0
Electronics 35.30% Row: 7, Col: 1, Value: 35.3
Row: 7, Col: 2, Value: 0.0
Software & Computer Services 32.57% Row: 8, Col: 1, Value: 32.57
Row: 8, Col: 2, Value: 0.0
Utilities Growth 32.17% Row: 9, Col: 1, Value: 32.17
Row: 9, Col: 2, Value: 0.0
Health Care 27.20% Row: 10, Col: 1, Value: 27.2
Row: 10, Col: 2, Value: 0.0
Biotechnology 27.13% Row: 11, Col: 1, Value: 27.13
Row: 11, Col: 2, Value: 0.0
Business Services & Outsourcing 26.23% Row: 12, Col: 1, Value: 26.23
Row: 12, Col: 2, Value: 0.0
Telecommunications 22.21% Row: 13, Col: 1, Value: 22.21
Row: 13, Col: 2, Value: 0.0
Medical Equipment & Systems1 21.00% Row: 14, Col: 1, Value: 21.0
Row: 14, Col: 2, Value: 0.0
Consumer Industries 20.18% Row: 15, Col: 1, Value: 20.18
Row: 15, Col: 2, Value: 0.0
Row: 16, Col: 1, Value: 0.0
S&P 500 19.74% Row: 16, Col: 2, Value: 19.74
Insurance 9.84% Row: 17, Col: 1, Value: 9.84
Row: 17, Col: 2, Value: 0.0
Financial Services 8.42% Row: 18, Col: 1, Value: 8.42
Row: 18, Col: 2, Value: 0.0
Food & Agriculture 7.83% Row: 19, Col: 1, Value: 7.83
Row: 19, Col: 2, Value: 0.0
Brokerage & Investment Management 4.76% Row: 20, Col: 1, Value: 4.76
Row: 20, Col: 2, Value: 0.0
Air Transportation 4.11% Row: 21, Col: 1, Value: 4.11
Row: 21, Col: 2, Value: 0.0
Regional Banks 3.10% Row: 22, Col: 1, Value: 3.1
Row: 22, Col: 2, Value: 0.0
Industrial Equipment 1.00% Row: 23, Col: 1, Value: 1.0
Row: 23, Col: 2, Value: 0.0
Transportation -1.73% Row: 24, Col: 1, Value: -1.73
Row: 24, Col: 2, Value: 0.0
Construction & Housing -2.16% Row: 25, Col: 1, Value: -2.16
Row: 25, Col: 2, Value: 0.0
Cyclical Industries -4.96% Row: 26, Col: 1, Value: -4.96
Row: 26, Col: 2, Value: 0.0
Automotive -8.52% Row: 27, Col: 1, Value: -8.52
Row: 27, Col: 2, Value: 0.0
Defense & Aerospace -9.90% Row: 28, Col: 1, Value: -9.9
Row: 28, Col: 2, Value: 0.0
Precious Metals & Minerals -10.89% Row: 29, Col: 1, Value: -10.89
Row: 29, Col: 2, Value: 0.0
Gold -15.69% Row: 30, Col: 1, Value: -15.69
Row: 30, Col: 2, Value: 0.0
Paper & Forest -17.01% Row: 31, Col: 1, Value: -17.01
Row: 31, Col: 2, Value: 0.0
Industrial Materials -18.72% Row: 32, Col: 1, Value: -18.72
Row: 32, Col: 2, Value: 0.0
Home Finance -19.12% Row: 33, Col: 1, Value: -19.12
Row: 33, Col: 2, Value: 0.0
Natural Gas -19.17% Row: 34, Col: 1, Value: -19.17
Row: 34, Col: 2, Value: 0.0
Energy -22.00% Row: 35, Col: 1, Value: -22.0
Row: 35, Col: 2, Value: 0.0
Environmental Services -22.23% Row: 36, Col: 1, Value: -22.23
Row: 36, Col: 2, Value: 0.0
Chemicals -23.66% Row: 37, Col: 1, Value: -23.66
Row: 37, Col: 2, Value: 0.0
Natural Resources -24.57% Row: 38, Col: 1, Value: -24.57
Row: 38, Col: 2, Value: 0.0
Medical Delivery -29.47% Row: 39, Col: 1, Value: -29.47
Row: 39, Col: 2, Value: 0.0
Energy Service -50.57% Row: 40, Col: 1, Value: -50.57
Row: 40, Col: 2, Value: 0.0
Row: 41, Col: 1, Value: nil
Row: 41, Col: 2, Value: nil
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)), A MARKET CAPITALIZATION-WEIGHTED
INDEX OF COMMON STOCKS, 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 FEBRUARY 29, PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
1996
SELECT CONSUMER INDUSTRIES 20.18% 142.30% 344.37%
SELECT CONSUMER INDUSTRIES 16.50% 134.96% 330.97%
(LOAD ADJ.)
S&P 500 19.74% 194.91% 331.09%
GS Consumer Industries 16.26% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or since
the fund started on June 29, 1990. You can compare the fund's returns
to the performance of both the Standard & Poor's 500 Index - a market
capitalization-weighted 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 FEBRUARY 29, PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
1996
SELECT CONSUMER INDUSTRIES 20.18% 19.36% 18.78%
SELECT CONSUMER INDUSTRIES 16.50% 18.63% 18.36%
(LOAD ADJ.)
S&P 500 19.74% 24.15% 18.36%
GS Consumer Industries 16.26% 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 33410.05 33088.01
1998/09/30 33612.21 35207.63
1998/10/31 37709.28 38071.42
1998/11/30 39825.21 40378.93
1998/12/31 42711.33 42705.56
1999/01/31 43537.91 44491.51
1999/02/26 43097.00 43108.71
IMATRL PRASUN SHR__CHT 19990228 19990309 143604 R00000000000107
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Select Consumer Industries Portfolio on June 29,
1990, when the fund started, and the current 3.00% sales charge was
paid. As the chart shows, by February 28, 1999, the value of the
investment would have grown to $43,097 - a 330.97% 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 $43,109 - a 331.09%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Wal-Mart Stores, Inc. 6.7
Procter & Gamble Co. 4.6
Philip Morris Companies, Inc. 3.9
Home Depot, Inc. 3.1
McDonald's Corp. 2.7
CBS Corp. 2.3
Gillette Co. 2.2
Disney (Walt) Co. 2.2
Time Warner, Inc. 2.2
PepsiCo, Inc. 2.0
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
General Merchandise Stores 12.5%
Household Products 11.2%
Broadcasting 10.5%
Foods 7.5%
Retail & Wholesale,
Miscellaneous 6.4%
All Others 51.9%*
* INCLUDES SHORT-TERM INVESTMENTS
Row: 1, Col: 1, Value: 51.9
Row: 1, Col: 2, Value: 6.4
Row: 1, Col: 3, Value: 7.5
Row: 1, Col: 4, Value: 10.5
Row: 1, Col: 5, Value: 11.2
Row: 1, Col: 6, Value: 12.5
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. For the 12-month period that ended February 28, 1999, the fund
returned 20.18%. This compared favorably to the 19.74% return of the
Standard & Poor's 500 Index. The fund also outperformed 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 16.26% over the same period.
Q. WHAT WAS YOUR STRATEGY DURING THIS VOLATILE PERIOD?
A. I looked for opportunities to buy undervalued companies, as well as
companies that appeared to have the best business trends at the time.
In the beginning of August, I began to shift from retailing stocks to
multinational companies, because multinationals were cheap and
retailers were getting expensive. When the market plummeted in late
August, retailing took it on the chin, so as retail stocks got
cheaper, I added more to the portfolio. With the approach of the end
of the calendar year - the usual time for retail stock sell-offs - I
decided that conditions still looked positive after talking to the
management of many retailers. I pared back the fund's multinational
holdings and added even more retail stocks. This strategy worked well.
Within the consumer products area, I stayed focused on household
products and personal care during the year rather than on food,
beverage and tobacco. The first two groups tend to have higher sales
growth and better earnings growth over time, because it's much easier
to innovate in these areas.
Q. HOW MUCH OF AN IMPACT DID GLOBAL ECONOMIC PROBLEMS HAVE ON THE
FUND?
A. Among consumer stocks, I observed that generally if the majority
of a company's sales came from the U.S., and if it made its earnings
targets, its stock performed well. If the majority of sales came from
outside the U.S., then its stock did poorly, whether or not the
company made its earnings targets. So, multinational companies like
Coca-Cola, Gillette and Avon were punished, regardless of the impact
on their earnings from international economic problems.
Q. WHICH STOCKS PERFORMED WELL?
A. By their nature, retailers operate primarily in the U.S., so they
generally performed well during the period. Dayton Hudson - which owns
discounter Target Stores - Lowe's hardware stores and Saks all
performed strongly. Wal-Mart, the fund's top holding at the end of the
period, was a stellar performer, benefiting from its steadily
increasing market share and its growing earnings. Clorox acquired
First Brands, the maker of Glad Bag products, and its stock price
increased as a result. Clorox also performed well based on its
earnings and volume growth. Drug chains Walgreen and CVS did very
well, benefiting from steady earnings growth.
Q. WHICH STOCKS DISAPPOINTED?
A. As I mentioned earlier, Gillette, one of the fund's top holdings,
did poorly overall, recovering slightly toward the end of the period.
Gillette did have lower earnings, but it also had a great story - its
launch of the new Mach 3 razor. Although the launch was a huge
success, it could not offset the impact of the global economic crisis.
Coca-Cola was another disappointment. With the majority of its sales
outside the U.S., Coca-Cola had significant international exposure,
and its stock performed poorly. Avon was an even bigger
disappointment, because in spite of meeting earnings targets and
maintaining earnings estimates, its stock was extremely volatile,
simply because the majority of its business is outside the U.S.
Q. WHAT'S YOUR OUTLOOK, DOUG?
A. I'm always cautious. Consumer activity is very strong right now,
but the U.S. may not have absorbed the total impact of the world's
economic problems. It is possible that the U.S. economy simply cannot
strengthen much further without triggering wage inflation. Stocks have
become much more expensive without a corresponding decline in interest
rates to justify their higher price-to-earnings ratios. I'm continuing
to take a bottom-up approach, picking high-quality stocks rather than
betting on the direction of the economy. I'm also taking a long-term
view, waiting for opportunities to present themselves rather than
trying to predict the future or reacting emotionally to events in the
market. So far, that's proved to be a successful strategy for the
fund.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark)FUND FACTS
START DATE: June 29, 1990
FUND NUMBER: 517
TRADING SYMBOL: FSCPX
SIZE: as of February 28, 1999, more than
$82 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 FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.5%
SHARES VALUE (NOTE 1)
ADVERTISING - 1.8%
Interpublic Group of 4,000 $ 299,250
Companies, Inc.
Omnicom Group, Inc. 9,200 609,500
Outdoor Systems, Inc. (a) 9,875 275,883
Young & Rubicam, Inc. 6,600 249,150
1,433,783
AIR TRANSPORTATION - 0.3%
Viad Corp. 10,400 274,950
APPAREL STORES - 4.6%
Abercrombie & Fitch Co. Class 7,100 539,600
A (a)
AnnTaylor Stores Corp. (a) 10,700 404,594
Chicos Fas, Inc. (a) 5,500 135,438
Gap, Inc. 17,225 1,114,242
Limited, Inc. (The) 22,200 788,100
Ross Stores, Inc. 3,500 160,125
TJX Companies, Inc. 16,300 465,569
Wet Seal, Inc. Class A (a) 4,500 174,656
3,782,324
AUTOS, TIRES, & ACCESSORIES -
0.4%
Canadian Tire Corp. Ltd. 4,900 124,791
Series A
Pep Boys-Manny, Moe & Jack 8,700 158,775
283,566
BEVERAGES - 5.8%
Anheuser-Busch Companies, 17,200 1,319,025
Inc.
Celestial Seasonings, Inc. (a) 5,300 153,038
Coca-Cola Co. (The) 7,600 485,925
Coors (Adolph) Co. Class B 5,100 303,769
Golden State Vinters, Inc. 21,300 258,263
Class B (a)
PepsiCo, Inc. 42,600 1,602,825
Seagram Co. Ltd. 12,800 593,394
4,716,239
BROADCASTING - 10.5%
Cablevision Systems Corp. 5,000 325,000
Class A (a)
CBS Corp. 49,800 1,836,375
Chancellor Media Corp. (a) 4,100 179,375
Clear Channel Communications, 5,200 312,000
Inc. (a)
Comcast Corp.:
Class A 5,000 339,375
Class A (special) 5,900 418,531
Cox Communications, Inc. 8,700 615,525
Class A (a)
Jacor Communications, Inc. 8,300 578,925
Class A (a)
MediaOne Group, Inc. 17,900 975,550
Tele-Communications, Inc. 14,600 917,063
(TCI Group) Series A (a)
Time Warner, Inc. 27,502 1,773,879
USA Networks, Inc. (a) 7,100 282,225
8,553,823
SHARES VALUE (NOTE 1)
CONSUMER ELECTRONICS - 1.0%
Gemstar International Group 3,600 $ 230,400
Ltd. (a)
Newell Co. 14,400 612,000
842,400
DRUG STORES - 2.4%
CVS Corp. 16,854 893,262
Walgreen Co. 33,800 1,081,600
1,974,862
EDUCATIONAL SERVICES - 0.1%
Apollo Group, Inc. Class A (a) 2,400 72,150
ENTERTAINMENT - 5.8%
Carnival Corp. 7,300 324,850
Disney (Walt) Co. 51,300 1,805,119
King World Productions, Inc. 11,800 311,963
(a)
Royal Carribean Cruises Ltd. 2,400 79,200
Tele-Communications, Inc. 13,550 730,006
(Liberty Media Group) Series
A (a)
Viacom, Inc.:
Class A (a) 1,900 165,894
Class B (non-vtg.) (a) 14,900 1,316,788
4,733,820
FOODS - 7.5%
American Italian Pasta Co. 11,200 285,600
Class A (a)
Archer-Daniels-Midland Co. 5,670 85,759
Bestfoods 10,200 478,763
ConAgra, Inc. 12,000 361,500
Corn Products International, 4,050 95,175
Inc.
Dean Foods Co. 2,900 105,669
Earthgrains Co. 6,700 164,569
Flowers Industries, Inc. 2,900 70,688
Groupe Danone 900 225,142
Heinz (H.J.) Co. 15,800 860,113
Hershey Foods Corp. 3,100 192,975
Interstate Bakeries Corp. 6,500 156,000
Keebler Foods Co. (a) 9,700 378,300
Kellogg Co. 11,800 436,600
Nabisco Holdings Corp. Class A 8,500 377,188
Quaker Oats Co. 7,800 426,075
Ralston Purina Co. 6,100 164,319
Sanderson Farms, Inc. 7,800 115,050
Sara Lee Corp. 26,700 725,906
Tootsie Roll Industries, Inc. 3,600 165,600
Vlasic Foods International, 7,100 86,531
Inc. (a)
Wrigley (Wm.) Jr. Co. 1,700 158,100
6,115,622
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
GENERAL MERCHANDISE STORES -
12.5%
Consolidated Stores Corp. (a) 11,428 $ 287,843
Costco Companies, Inc. (a) 8,500 682,656
Dayton Hudson Corp. 24,800 1,551,550
Dollar Tree Stores, Inc. (a) 6,000 240,000
Federated Department Stores, 23,600 898,275
Inc. (a)
Nordstrom, Inc. 4,900 197,225
Saks, Inc. (a) 25,543 917,952
Wal-Mart Stores, Inc. 62,900 5,432,975
10,208,476
GROCERY STORES - 4.2%
Albertson's, Inc. 11,100 632,700
Kroger Co. (a) 7,800 504,563
Loblaw Companies Ltd. 6,600 170,712
Meyer (Fred), Inc. (a) 16,800 1,079,400
Safeway, Inc. (a) 17,400 1,004,850
3,392,225
HOME FURNISHINGS - 0.1%
Maxim Group, Inc. (a) 5,900 106,938
HOUSEHOLD PRODUCTS - 11.2%
Alberto-Culver Co. Class A 6,600 143,550
Avon Products, Inc. 18,800 782,550
Church & Dwight Co., Inc. 4,700 196,225
Clorox Co. 9,178 1,085,872
Gillette Co. 33,800 1,812,525
Procter & Gamble Co. 41,700 3,732,150
Unilever NV (NY shares) 18,900 1,369,069
9,121,941
LEISURE DURABLES & TOYS - 1.0%
Brunswick Corp. 2,200 46,888
Harley-Davidson, Inc. 4,700 271,719
Hasbro, Inc. 5,500 203,500
Mattel, Inc. 11,800 311,225
833,332
LODGING & GAMING - 1.0%
Circus Circus Enterprises, 11,400 195,225
Inc. (a)
Prime Hospitality Corp. (a) 23,900 244,975
Promus Hotel Corp. (a) 7,200 253,350
Sun International Hotels Ltd. 3,400 120,913
(a)
814,463
MEDICAL FACILITIES MANAGEMENT
- - 0.0%
Coram Healthcare Corp. 216 0
warrants 7/11/99 (a)
SHARES VALUE (NOTE 1)
PACKAGING & CONTAINERS - 0.7%
Corning, Inc. 6,700 $ 358,450
Tupperware Corp. 9,900 173,250
531,700
PAPER & FOREST PRODUCTS - 1.0%
Kimberly-Clark Corp. 17,900 845,775
PRINTING - 0.2%
Reynolds & Reynolds Co. Class 5,400 101,925
A
Valassis Communications, Inc. 1,100 52,800
(a)
154,725
PUBLISHING - 3.1%
American Greetings Corp. 2,500 59,219
Class A
Gannet, Inc. 7,800 495,300
Harcourt General, Inc. 6,100 279,456
Harte Hanks Communications, 4,700 121,613
Inc.
Knight-Ridder, Inc. 2,200 110,413
McGraw-Hill Companies, Inc. 4,700 514,356
Playboy Enterprises, Inc. 11,900 318,325
Class B (a)
Reader's Digest Association, 11,600 394,400
Inc. Class A (non-vtg.)
Tribune Co. 3,100 205,569
2,498,651
REAL ESTATE INVESTMENT TRUSTS
- - 0.3%
Starwood Hotels & Resorts 7,300 226,300
Worldwide, Inc.
RESTAURANTS - 4.5%
Brinker International, Inc. 2,800 81,025
(a)
CEC Entertainment, Inc. (a) 2,600 78,000
CKE Restaurants, Inc. 5,700 151,406
Marriott International, Inc. 7,500 270,000
Class A
McDonald's Corp. 25,700 2,184,500
Outback Steakhouse, Inc. (a) 5,600 245,700
Papa John's International, 2,000 86,500
Inc. (a)
Sizzler International, Inc. 29,900 63,538
(a)
Starbucks Corp. (a) 2,200 116,325
Tricon Global Restaurants, 6,700 415,400
Inc. (a)
3,692,394
RETAIL & WHOLESALE,
MISCELLANEOUS - 6.4%
Action Performance Companies, 5,700 204,488
Inc. (a)
Finish Line, Inc. Class A (a) 12,900 155,606
Home Depot, Inc. 41,800 2,494,938
Lowe's Companies, Inc. 18,700 1,109,144
Office Depot, Inc. (a) 21,200 756,575
Staples, Inc. (a) 10,275 302,149
Tandy Corp. 2,100 116,813
Williams-Sonoma, Inc. (a) 2,100 71,794
5,211,507
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SERVICES - 1.1%
ACNielsen Corp. (a) 10,900 $ 283,400
Cintas Corp. 2,800 198,100
Day Runner, Inc. (a) 2,500 34,063
Modis Professional Services, 7,800 106,763
Inc. (a)
Service Corp. International 6,000 92,250
ServiceMaster Co. 9,350 174,728
889,304
TEXTILES & APPAREL - 1.1%
Fruit of the Loom, Inc. Class 3,100 39,331
A (a)
Liz Claiborne, Inc. 4,700 158,331
Mohawk Industries, Inc. (a) 1,200 39,000
Pacific Sunwear of 4,850 138,225
California, Inc. (a)
Tommy Hilfiger (a) 3,900 269,344
VF Corp. 2,600 125,125
WestPoint Stevens, Inc. Class 3,400 86,700
A (a)
856,056
TOBACCO - 3.9%
Philip Morris Companies, Inc. 81,700 3,196,513
TOTAL COMMON STOCKS 75,363,839
(Cost $58,708,527)
CASH EQUIVALENTS - 7.5%
Taxable Central Cash Fund (b) 6,128,201 6,128,201
(Cost $6,128,201)
TOTAL INVESTMENT IN $ 81,492,040
SECURITIES - 100%
(Cost $64,836,728)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. 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 $109,279,094 and $115,562,379, respectively.
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 $17,657 for the
period.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $65,576,721. Net unrealized appreciation
aggregated $15,915,319, of which $17,581,133 related to appreciated
investment securities and $1,665,814 related to depreciated investment
securities.
The fund hereby designates approximately $697,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 29% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentage for use in preparing 1999 income tax returns.
CONSUMER INDUSTRIES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 81,492,040
value (cost $64,836,728) -
See accompanying schedule
Receivable for investments 814,718
sold
Receivable for fund shares 719,696
sold
Dividends receivable 43,182
Interest receivable 16,458
Redemption fees receivable 67
Other receivables 35,533
TOTAL ASSETS 83,121,694
LIABILITIES
Payable for investments $ 639,912
purchased
Payable for fund shares 143,891
redeemed
Accrued management fee 39,145
Other payables and accrued 54,646
expenses
TOTAL LIABILITIES 877,594
NET ASSETS $ 82,244,100
Net Assets consist of:
Paid in capital $ 63,406,467
Accumulated undistributed net 2,182,319
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 16,655,314
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 2,585,485 $ 82,244,100
shares outstanding
NET ASSET VALUE and $31.81
redemption price per share
($82,244,100 (divided by)
2,585,485 shares)
Maximum offering price per $32.79
share (100/97.00 of $31.81)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 658,885
Dividends
Interest 250,336
TOTAL INCOME 909,221
EXPENSES
Management fee $ 457,965
Transfer agent fees 441,855
Accounting fees and expenses 75,037
Non-interested trustees' 274
compensation
Custodian fees and expenses 17,783
Registration fees 21,053
Audit 17,180
Legal 531
Reports to shareholders 8,724
Total expenses before 1,040,402
reductions
Expense reductions (13,370) 1,027,032
NET INVESTMENT INCOME (LOSS) (117,811)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 2,848,102
Foreign currency transactions 981 2,849,083
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 10,439,472
Assets and liabilities in (37) 10,439,435
foreign currencies
NET GAIN (LOSS) 13,288,518
NET INCREASE (DECREASE) IN $ 13,170,707
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 342,823
charges paid to FDC
Sales charges - Retained by $ 339,350
FDC
Deferred sales charges $ 208
withheld by FDC
Exchange fees withheld by FSC $ 4,553
Expense reductions Directed $ 12,166
brokerage arrangements
Custodian credits 1,204
$ 13,370
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (117,811) $ (238,907)
income (loss)
Net realized gain (loss) 2,849,083 5,217,352
Change in net unrealized 10,439,435 4,912,453
appreciation (depreciation)
NET INCREASE (DECREASE) IN 13,170,707 9,890,898
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (2,388,067) (1,876,813)
from net realized gains
Share transactions Net 69,216,485 75,182,201
proceeds from sales of shares
Reinvestment of distributions 2,350,548 1,832,262
Cost of shares redeemed (72,339,516) (31,326,802)
NET INCREASE (DECREASE) IN (772,483) 45,687,661
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 81,867 58,220
TOTAL INCREASE (DECREASE) 10,092,024 53,759,966
IN NET ASSETS
NET ASSETS
Beginning of period 72,152,076 18,392,110
End of period $ 82,244,100 $ 72,152,076
OTHER INFORMATION
Shares
Sold 2,390,153 3,007,674
Issued in reinvestment of 82,715 74,511
distributions
Redeemed (2,529,261) (1,330,685)
Net increase (decrease) (56,393) 1,751,500
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 F 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 27.31 $ 20.66 $ 17.84 $ 13.91 $ 15.24
period
Income from Investment
Operations
Net investment income (loss) C (.04) (.22) (.22) .08 (.15)
Net realized and unrealized 5.41 8.34 2.93 3.97 (.60)
gain (loss)
Total from investment 5.37 8.12 2.71 4.05 (.75)
operations
Less Distributions
From net investment income - - - (.02) -
From net realized gain (.90) (1.52) - (.01) (.60)
In excess of net realized gain - - - (.20) -
Total distributions (.90) (1.52) - (.23) (.60)
Redemption fees added to paid .03 .05 .11 .11 .02
in capital
Net asset value, end of period $ 31.81 $ 27.31 $ 20.66 $ 17.84 $ 13.91
TOTAL RETURN A, B 20.18% 40.36% 15.81% 30.01% (4.59)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 82,244 $ 72,152 $ 18,392 $ 22,362 $ 20,501
(000 omitted)
Ratio of expenses to average 1.34% 2.01% 2.49% 1.53% D 2.49% D
net assets
Ratio of expenses to average 1.32% E 1.97% E 2.44% E 1.48% E 2.49%
net assets after expense
reductions
Ratio of net investment (.15)% (.90)% (1.13)% .46% (1.08)%
income (loss) to average net
assets
Portfolio turnover rate 150% 199% 340% 601% 190%
</TABLE>
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D DURING THE
PERIOD, FMR AGREED TO
REIMBURSE A PORTION OF THE
FUND'S EXPENSES OR EXPENSES
WERE LIMITED IN ACCORDANCE
WITH A STATE EXPENSE
LIMITATION. WITHOUT THIS
REIMBURSEMENT, THE FUND'S
EXPENSE RATIO WOULD HAVE
BEEN HIGHER. E FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. F FOR
THE YEAR ENDED FEBRUARY 29.
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 FEBRUARY 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1996
SELECT FOOD AND AGRICULTURE 7.83% 129.93% 435.61%
SELECT FOOD AND AGRICULTURE 4.52% 122.96% 419.46%
(LOAD ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Consumer Industries 16.26% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
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 FEBRUARY 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1996
SELECT FOOD AND AGRICULTURE 7.83% 18.12% 18.27%
SELECT FOOD AND AGRICULTURE 4.52% 17.39% 17.91%
(LOAD ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Consumer Industries 16.26% 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
1989/02/28 9700.00 10000.00
1989/03/31 10067.19 10233.00
1989/04/30 10587.38 10764.09
1989/05/31 11240.17 11200.04
1989/06/30 11461.02 11136.20
1989/07/31 12554.29 12141.80
1989/08/31 12360.75 12379.78
1989/09/30 12413.06 12329.02
1989/10/31 12287.52 12042.99
1989/11/30 12753.07 12288.66
1989/12/31 13045.22 12583.59
1990/01/31 12137.82 11739.23
1990/02/28 12311.46 11890.67
1990/03/31 12843.57 12205.77
1990/04/30 12793.16 11900.63
1990/05/31 13907.80 13060.94
1990/06/30 14358.95 12972.12
1990/07/31 14353.29 12930.61
1990/08/31 13306.22 11761.68
1990/09/30 12881.74 11188.89
1990/10/31 13187.37 11140.78
1990/11/30 13730.71 11860.47
1990/12/31 14261.95 12191.38
1991/01/31 14671.27 12722.92
1991/02/28 15776.44 13632.61
1991/03/31 16548.31 13962.52
1991/04/30 16296.86 13996.03
1991/05/31 16893.31 14600.66
1991/06/30 16197.29 13931.95
1991/07/31 16875.15 14581.18
1991/08/31 17547.06 14926.75
1991/09/30 17237.86 14677.48
1991/10/31 17243.81 14874.16
1991/11/30 17124.88 14274.73
1991/12/31 19123.80 15907.76
1992/01/31 18838.74 15611.87
1992/02/29 18733.39 15814.83
1992/03/31 18318.20 15506.44
1992/04/30 18107.50 15962.33
1992/05/31 18268.62 16040.54
1992/06/30 18068.88 15801.54
1992/07/31 18766.79 16447.82
1992/08/31 18683.55 16110.64
1992/09/30 18997.29 16300.75
1992/10/31 19202.19 16357.80
1992/11/30 19938.51 16915.60
1992/12/31 20276.20 17123.66
1993/01/31 20282.75 17267.50
1993/02/28 20230.31 17502.34
1993/03/31 20780.97 17871.64
1993/04/30 19974.08 17439.14
1993/05/31 20602.97 17906.51
1993/06/30 20397.90 17958.44
1993/07/31 20144.98 17886.61
1993/08/31 21108.82 18564.51
1993/09/30 21040.46 18421.56
1993/10/31 21833.41 18802.89
1993/11/30 21580.48 18624.26
1993/12/31 22064.04 18849.62
1994/01/31 22731.34 19490.50
1994/02/28 22595.01 18962.31
1994/03/31 21540.24 18135.55
1994/04/30 21299.56 18367.69
1994/05/31 21144.79 18668.92
1994/06/30 21306.93 18211.53
1994/07/31 22021.83 18808.87
1994/08/31 23422.14 19580.03
1994/09/30 23466.36 19100.32
1994/10/31 23908.57 19530.08
1994/11/30 23326.33 18818.79
1994/12/31 23408.61 19097.87
1995/01/31 24395.44 19593.08
1995/02/28 24885.04 20356.63
1995/03/31 25451.13 20957.35
1995/04/30 26007.40 21574.54
1995/05/31 26940.68 22436.88
1995/06/30 27578.42 22958.09
1995/07/31 27881.74 23719.38
1995/08/31 27835.07 23778.91
1995/09/30 30020.50 24782.38
1995/10/31 30067.17 24693.91
1995/11/30 31249.32 25777.97
1995/12/31 31985.24 26274.46
1996/01/31 33304.39 27168.84
1996/02/29 34322.25 27420.69
1996/03/31 33744.11 27684.75
1996/04/30 33128.99 28092.83
1996/05/31 34351.03 28817.34
1996/06/30 34384.52 28927.14
1996/07/31 33915.79 27649.13
1996/08/31 32836.04 28232.26
1996/09/30 33949.27 29821.17
1996/10/31 34577.03 30643.63
1996/11/30 36318.02 32959.99
1996/12/31 36255.11 32307.05
1997/01/31 37822.28 34325.59
1997/02/28 38986.72 34594.71
1997/03/31 37971.12 33173.21
1997/04/30 39477.60 35153.65
1997/05/31 40640.08 37293.80
1997/06/30 41990.06 38964.57
1997/07/31 43499.42 42064.98
1997/08/31 41493.20 39708.50
1997/09/30 43986.91 41883.33
1997/10/31 43199.42 40484.43
1997/11/30 46152.51 42358.45
1997/12/31 47253.51 43085.75
1998/01/31 45664.24 43562.28
1998/02/28 48181.40 46703.99
1998/03/31 50027.32 49095.70
1998/04/30 48760.67 49589.60
1998/05/31 49869.58 48737.16
1998/06/30 50915.73 50716.86
1998/07/31 49084.98 50176.72
1998/08/31 44314.57 42922.17
1998/09/30 46773.00 45671.77
1998/10/31 50936.65 49386.71
1998/11/30 52997.55 52380.04
1998/12/31 54666.56 55398.18
1999/01/31 52452.00 57714.93
1999/02/26 51946.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990309 144216 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Food and Agriculture Portfolio on February
28, 1989, and the current 3.00% sales charge was paid. As the chart
shows, by February 28, 1999, the value of the investment would have
grown to $51,946 - a 419.46% 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 $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Anheuser-Busch Companies, Inc. 7.4
McDonald's Corp. 6.9
PepsiCo, Inc. 5.8
Safeway, Inc. 5.7
Sara Lee Corp. 4.7
Philip Morris Companies, Inc. 4.3
Unilever NV (NY shares) 3.7
Heinz (H.J.) Co. 3.6
Kroger Co. 3.4
Coca-Cola Co. (The) 3.2
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Foods 35.1%
Beverages 19.3%
Grocery Stores 18.8%
Restaurants 8.9%
Household Products 5.3%
All Others 12.6%*
* INCLUDES SHORT-TERM INVESTMENTS
Row: 1, Col: 1, Value: 12.6
Row: 1, Col: 2, Value: 5.3
Row: 1, Col: 3, Value: 8.9
Row: 1, Col: 4, Value: 18.8
Row: 1, Col: 5, Value: 19.3
Row: 1, Col: 6, Value: 35.1
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 12 months that ended February 28, 1999, the fund posted a
total return of 7.83%, while the Standard & Poor's 500 Index returned
19.74% and the Goldman Sachs Consumer Industries Index - an index of
300 stocks designed to measure the performance of companies in the
consumer industries sector - returned 16.26% during the same 12-month
period.
Q. WHAT FACTORS AFFECTED THE FOOD AND AGRICULTURE SECTOR OVER THE PAST
YEAR?
A. It was a difficult period for most of the sector. The most
significant detractor to performance was the earnings shortfall
suffered by many packaged-foods companies. These earnings
disappointments were tied to the increased bargaining power grocery
store chains have developed through active consolidation. By creating
economies of scale - where growing to a certain size can lower costs -
the grocers have increased their leverage and helped force
packaged-food companies to sell their products to them at lower
prices. That deflation cut into food company earnings. In addition,
buying and eating trends among Americans have changed. Consumers are
buying more lower-priced, private-label or store-brand products and
are purchasing more prepared meals. These trends hurt food companies'
earnings at a time when, amid the volatile backdrop of the past year,
investors generally gravitate toward them; they generally post steady
earnings growth that arises from fairly constant demand for their
products. But earnings shortfalls dominated to the point where they
even hurt the share prices of some companies that met or exceeded
their earnings expectations.
Q. HOW DID THE OTHER GROUPS WITHIN THE SECTOR FARE?
A. They generally struggled as well. Beverage company stocks were
basically flat, including Coca-Cola, which was hurt by slowing
overseas sales. Tobacco companies, including Philip Morris, rebounded
when an agreement was reached with the states' attorneys general, but
started lagging again when a new round of civil litigation started.
Agricultural stocks were hurt by a deflationary environment. On the
positive side, beer stocks did well because of improved unit growth
and pricing power - the ability to sustain or raise prices without
sacrificing sales or market share.
Q. WHICH STOCKS WERE THE TOP CONTRIBUTORS TO THE FUND'S PERFORMANCE?
WHICH STOCKS DETRACTED?
A. Anheuser-Busch was a top performer, as this beer company enjoyed
the strong unit growth and pricing power I just talked about. Safeway
and Kroger also did well, as they bought up smaller supermarkets. As I
mentioned, large supermarket chains are strengthening through
consolidation, so I maintained a healthy weighting in that arena.
McDonald's improved its earnings by reducing costs in its U.S.
operations. In addition, the company's international business started
to generate free cash flow so that the company's overall cash flow
generation improved. Philip Morris, which I already mentioned, was a
net winner due to the tobacco settlement. On the negative side, Dole
Foods was hurt because Hurricane Mitch interrupted the banana market.
And Corn Products International proved to be one of the fund's worst
detractors. This is the kind of story that can confound stock market
investors from time to time. Stock prices generally follow a company's
earnings: When earnings improve or surprise on the upside, a stock
generally goes up, and vice versa. Corn Products International posted
one of the strongest growth rates in earnings among the stocks in the
fund. The company increased its earnings per share during the period,
yet the stock price fell over the past year. It's hard to pinpoint why
the stock didn't attract more investor interest. Perhaps it lagged
because it's a smaller-capitalization stock and investors focused more
on large-caps during the period, or maybe the company's story wasn't
as "sexy" as alternatives in the marketplace, such as Internet stocks.
The stock market doesn't always react logically.
Q. WHAT'S YOUR OUTLOOK?
A. Looking specifically at the packaged-food industry, these are
companies that could benefit from a round of consolidation. The
resulting larger companies would benefit from reduced costs and
economies of scale that would help them bargain for better pricing. As
it stands, there's too much competition and most of these firms have
been reluctant to consolidate. Looking at the overall sector, most
companies have improved their business plans. In addition, I think
investors have reset their expectations for the companies in the
sector, looking to see if they can match earnings projections that are
perhaps a bit more achievable. I believe the future looks better than
the recent past, but we'll have to see how it plays out.
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 OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark)FUND FACTS
START DATE: July 29, 1985
FUND NUMBER: 009
TRADING SYMBOL: FDFAX
SIZE: as of February 28, 1999, more than
$206 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 FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.7%
SHARES VALUE (NOTE 1)
AGRICULTURE - 0.4%
Delta & Pine Land Co. 10,100 $ 326,988
Pioneer Hi-Bred 21,300 499,219
International, Inc.
826,207
BEVERAGES - 19.3%
Anheuser-Busch Companies, 198,500 15,222,465
Inc.
Celestial Seasonings, Inc. (a) 24,400 704,550
Coca-Cola Bottling Co. 20,100 1,125,600
Consolidated
Coca-Cola Co. (The) 104,600 6,687,863
Coca-Cola Enterprises, Inc. 29,800 923,800
Coors (Adolph) Co. Class B 41,300 2,459,931
PepsiCo, Inc. 317,800 11,957,225
Whitman Corp. 38,000 722,000
39,803,434
CHEMICALS & PLASTICS - 0.5%
IMC Global, Inc. 46,700 931,081
FOODS - 35.1%
American Italian Pasta Co. 36,000 918,000
Class A (a)
Archer-Daniels-Midland Co. 181,259 2,741,542
Aurora Foods, Inc. (a) 28,400 459,725
Bestfoods 101,200 4,750,075
ConAgra, Inc. 191,400 5,765,925
Corn Products International, 147,375 3,463,313
Inc.
Dean Foods Co. 19,600 714,175
Dole Food, Inc. 24,100 759,150
Earthgrains Co. 29,300 719,681
Flowers Industries, Inc. 74,600 1,818,375
General Mills, Inc. 24,100 1,944,569
Groupe Danone 5,300 1,325,833
Heinz (H.J.) Co. 136,500 7,430,719
Hershey Foods Corp. 35,700 2,222,325
Hormel Foods Corp. 25,200 907,200
IBP, Inc. 35,300 794,250
International Home Foods, 26,600 415,625
Inc. (a)
Interstate Bakeries Corp. 34,900 837,600
Keebler Foods Co. (a) 61,300 2,390,700
McCormick & Co., Inc. 22,100 632,613
(non-vtg.)
Nabisco Holdings Corp. Class A 55,300 2,453,938
Nestle SA:
ADR (Reg.) 34,700 3,313,850
(Reg.) 956 1,806,952
Quaker Oats Co. 46,900 2,561,913
Ralston Purina Co. 111,800 3,011,613
Sanderson Farms, Inc. 46,900 691,775
Sara Lee Corp. 356,600 9,695,063
Smithfield Foods, Inc. (a) 22,500 591,328
Suiza Foods Corp. (a) 11,700 432,900
Sysco Corp. 135,600 3,830,700
Tootsie Roll Industries, Inc. 19,562 899,852
SHARES VALUE (NOTE 1)
Tyson Foods, Inc. 50,925 $ 1,043,963
United Biscuits Holdings PLC 54,555 158,725
Universal Foods Corp. 19,200 435,600
Vlasic Foods International, 20,000 243,750
Inc. (a)
Wrigley (Wm.) Jr. Co. 4,200 390,600
72,573,917
GROCERY STORES - 18.8%
Albertson's, Inc. 111,600 6,361,200
American Stores Co. 162,800 5,494,500
Hannaford Brothers Co. 40,500 1,903,500
Kroger Co. (a) 108,800 7,038,000
Meyer (Fred), Inc. (a) 83,500 5,364,875
Safeway, Inc. (a) 204,200 11,792,550
Supervalu, Inc. 39,800 957,688
38,912,313
HOLDING COMPANIES - 0.1%
Triarc Companies, Inc. Class 19,600 311,150
A (a)
HOUSEHOLD PRODUCTS - 5.3%
Unilever NV (NY shares) 105,800 7,663,888
Unilever PLC 326,900 3,187,251
10,851,139
RESTAURANTS - 8.9%
McDonald's Corp. 166,400 14,144,000
Outback Steakhouse, Inc. (a) 29,200 1,281,150
Tricon Global Restaurants, 46,100 2,858,200
Inc. (a)
18,283,350
TOBACCO - 4.3%
Philip Morris Companies, Inc. 227,600 8,904,850
TOTAL COMMON STOCKS 191,397,441
(Cost $157,237,335)
CASH EQUIVALENTS - 7.3%
Taxable Central Cash Fund (b) 15,157,520 15,157,520
(Cost $15,157,520)
TOTAL INVESTMENT IN $ 206,554,961
SECURITIES - 100%
(Cost $172,394,855)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $141,491,375 and $202,525,536, respectively.
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 $54,460 for the
period.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $172,928,466. Net unrealized appreciation
aggregated $33,626,495, of which $38,352,761 related to appreciated
investment securities and $4,726,266 related to depreciated investment
securities.
The fund hereby designates approximately $27,714,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 100% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentage for use in preparing 1999 income tax returns.
FOOD AND AGRICULTURE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 206,554,961
value (cost $172,394,855) -
See accompanying schedule
Receivable for fund shares 208,427
sold
Dividends receivable 214,122
Interest receivable 60,759
Redemption fees receivable 280
TOTAL ASSETS 207,038,549
LIABILITIES
Payable for fund shares $ 801,602
redeemed
Accrued management fee 101,113
Other payables and accrued 128,848
expenses
TOTAL LIABILITIES 1,031,563
NET ASSETS $ 206,006,986
Net Assets consist of:
Paid in capital $ 163,091,993
Undistributed net investment 490,066
income
Accumulated undistributed net 8,264,883
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 34,160,044
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 4,390,575 $ 206,006,986
shares outstanding
NET ASSET VALUE and $46.92
redemption price per share
($206,006,986 (divided by)
4,390,575 shares)
Maximum offering price per $48.37
share (100/97.00 of $46.92)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 3,016,334
Dividends
Interest (including income on 929,718
securities loaned of $39,045)
TOTAL INCOME 3,946,052
EXPENSES
Management fee $ 1,335,082
Transfer agent fees 1,340,677
Accounting and security 222,264
lending fees
Non-interested trustees' 796
compensation
Custodian fees and expenses 15,000
Registration fees 23,434
Audit 15,760
Legal 1,372
Reports to shareholders 34,266
Total expenses before 2,988,651
reductions
Expense reductions (62,961) 2,925,690
NET INVESTMENT INCOME 1,020,362
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 20,703,810
Foreign currency transactions (31,096) 20,672,714
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (4,236,124)
Assets and liabilities in (42) (4,236,166)
foreign currencies
NET GAIN (LOSS) 16,436,548
NET INCREASE (DECREASE) IN $ 17,456,910
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 373,556
charges paid to FDC
Sales charges - Retained by $ 371,478
FDC
Deferred sales charges $ 5,955
withheld by FDC
Exchange fees withheld by FSC $ 16,665
Expense reductions Directed $ 62,550
brokerage arrangements
Custodian credits 411
$ 62,961
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ 1,020,362 $ 1,795,355
income
Net realized gain (loss) 20,672,714 33,786,692
Change in net unrealized (4,236,166) 14,339,862
appreciation (depreciation)
NET INCREASE (DECREASE) IN 17,456,910 49,921,909
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (739,119) (2,133,491)
From net investment income
From net realized gain (25,615,738) (27,598,622)
TOTAL DISTRIBUTIONS (26,354,857) (29,732,113)
Share transactions Net 80,793,360 212,263,562
proceeds from sales of shares
Reinvestment of distributions 25,579,323 29,301,818
Cost of shares redeemed (142,182,438) (234,907,260)
NET INCREASE (DECREASE) IN (35,809,755) 6,658,120
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 148,005 296,205
TOTAL INCREASE (DECREASE) (44,559,697) 27,144,121
IN NET ASSETS
NET ASSETS
Beginning of period 250,566,683 223,422,562
End of period (including $ 206,006,986 $ 250,566,683
undistributed net investment
income of $490,066 and
$367,788, respectively)
OTHER INFORMATION
Shares
Sold 1,684,840 4,609,772
Issued in reinvestment of 536,693 675,395
distributions
Redeemed (2,964,307) (5,169,172)
Net increase (decrease) (742,774) 115,995
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 48.81 $ 44.53 $ 42.15 $ 32.53 $ 31.49
period
Income from Investment
Operations
Net investment income C .21 .33 .42 .37 .15
Net realized and unrealized 3.50 9.22 4.91 11.61 2.80
gain (loss)
Total from investment 3.71 9.55 5.33 11.98 2.95
operations
Less Distributions
From net investment income (.16) (.37) (.24) (.20) (.08)
From net realized gain (5.47) (4.95) (2.77) (2.20) (1.85)
Total distributions (5.63) (5.32) (3.01) (2.40) (1.93)
Redemption fees added to paid .03 .05 .06 .04 .02
in capital
Net asset value, end of period $ 46.92 $ 48.81 $ 44.53 $ 42.15 $ 32.53
TOTAL RETURN A, B 7.83% 23.58% 13.59% 37.92% 10.14%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 206,007 $ 250,567 $ 223,423 $ 301,102 $ 197,130
(000 omitted)
Ratio of expenses to average 1.31% 1.49% 1.52% 1.43% 1.70%
net assets
Ratio of expenses to average 1.29% D 1.48% D 1.50% D 1.42% D 1.68% D
net assets after expense
reductions
Ratio of net investment .45% .73% 1.01% .99% .49%
income to average net assets
Portfolio turnover rate 68% 74% 91% 124% 126%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME PER
SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES
OUTSTANDING DURING THE
PERIOD. D FMR OR THE FUND
HAS ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE
FUND'S EXPENSES. E FOR THE
YEAR ENDED FEBRUARY 29.
</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 FEBRUARY 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1996
SELECT LEISURE 37.54% 181.67% 480.93%
SELECT LEISURE (LOAD ADJ.) 33.34% 173.15% 463.43%
S&P 500 19.74% 194.91% 459.21%
GS Consumer Industries 16.26% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index- a market capitalization-weighted
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 FEBRUARY 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1996
SELECT LEISURE 37.54% 23.01% 19.24%
SELECT LEISURE (LOAD ADJ.) 33.34% 22.26% 18.87%
S&P 500 19.74% 24.15% 18.78%
GS Consumer Industries 16.26% 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
1989/02/28 9700.00 10000.00
1989/03/31 10155.45 10233.00
1989/04/30 10731.35 10764.09
1989/05/31 11265.85 11200.04
1989/06/30 11372.68 11136.20
1989/07/31 12327.05 12141.80
1989/08/31 12425.91 12379.78
1989/09/30 12505.76 12329.02
1989/10/31 11604.62 12042.99
1989/11/30 11741.50 12288.66
1989/12/31 11917.20 12583.59
1990/01/31 10471.96 11739.23
1990/02/28 10379.11 11890.67
1990/03/31 10459.85 12205.77
1990/04/30 10052.11 11900.63
1990/05/31 10883.73 13060.94
1990/06/30 10758.59 12972.12
1990/07/31 10387.18 12930.61
1990/08/31 9188.20 11761.68
1990/09/30 8316.21 11188.89
1990/10/31 8219.32 11140.78
1990/11/30 8873.31 11860.47
1990/12/31 9261.40 12191.38
1991/01/31 9779.32 12722.92
1991/02/28 10529.69 13632.61
1991/03/31 10705.05 13962.52
1991/04/30 10733.60 13996.03
1991/05/31 11104.70 14600.66
1991/06/30 10480.75 13931.95
1991/07/31 10982.36 14581.18
1991/08/31 11096.55 14926.75
1991/09/30 11382.02 14677.48
1991/10/31 11724.58 14874.16
1991/11/30 11161.80 14274.73
1991/12/31 12311.83 15907.76
1992/01/31 12589.14 15611.87
1992/02/29 13029.57 15814.83
1992/03/31 12764.50 15506.44
1992/04/30 12907.23 15962.33
1992/05/31 12984.71 16040.54
1992/06/30 12784.89 15801.54
1992/07/31 12846.06 16447.82
1992/08/31 12662.54 16110.64
1992/09/30 12911.31 16300.75
1992/10/31 13009.18 16357.80
1992/11/30 13894.13 16915.60
1992/12/31 14310.10 17123.66
1993/01/31 14664.90 17267.50
1993/02/28 14587.41 17502.34
1993/03/31 15345.94 17871.64
1993/04/30 15000.10 17439.14
1993/05/31 16077.60 17906.51
1993/06/30 16510.29 17958.44
1993/07/31 16951.47 17886.61
1993/08/31 18118.05 18564.51
1993/09/30 19021.62 18421.56
1993/10/31 20073.66 18802.89
1993/11/30 19327.05 18624.26
1993/12/31 19970.27 18849.62
1994/01/31 20177.84 19490.50
1994/02/28 20005.60 18962.31
1994/03/31 18795.55 18135.55
1994/04/30 18833.44 18367.69
1994/05/31 18634.12 18668.92
1994/06/30 17846.56 18211.53
1994/07/31 18536.89 18808.87
1994/08/31 19275.84 19580.03
1994/09/30 19270.98 19100.32
1994/10/31 19202.92 19530.08
1994/11/30 18381.32 18818.79
1994/12/31 18604.95 19097.87
1995/01/31 18945.26 19593.08
1995/02/28 19791.16 20356.63
1995/03/31 20311.34 20957.35
1995/04/30 20491.28 21574.54
1995/05/31 20887.79 22436.88
1995/06/30 21695.50 22958.09
1995/07/31 23203.22 23719.38
1995/08/31 23947.29 23778.91
1995/09/30 23986.45 24782.38
1995/10/31 22831.18 24693.91
1995/11/30 23575.25 25777.97
1995/12/31 23620.43 26274.46
1996/01/31 23970.53 27168.84
1996/02/29 25256.03 27420.69
1996/03/31 25381.84 27684.75
1996/04/30 26423.99 28092.83
1996/05/31 27508.22 28817.34
1996/06/30 27402.03 28927.14
1996/07/31 25434.77 27649.13
1996/08/31 26066.30 28232.26
1996/09/30 27334.97 29821.17
1996/10/31 26586.07 30643.63
1996/11/30 27340.56 32959.99
1996/12/31 26786.83 32307.05
1997/01/31 27979.03 34325.59
1997/02/28 27816.19 34594.71
1997/03/31 26786.83 33173.21
1997/04/30 27039.26 35153.65
1997/05/31 29574.00 37293.80
1997/06/30 30740.60 38964.57
1997/07/31 32310.30 42064.98
1997/08/31 31791.14 39708.50
1997/09/30 35297.02 41883.33
1997/10/31 34753.43 40484.43
1997/11/30 36152.11 42358.45
1997/12/31 37846.99 43085.75
1998/01/31 38050.86 43562.28
1998/02/28 40970.77 46703.99
1998/03/31 43831.49 49095.70
1998/04/30 44545.15 49589.60
1998/05/31 43435.22 48737.16
1998/06/30 46610.29 50716.86
1998/07/31 45951.06 50176.72
1998/08/31 37959.57 42922.17
1998/09/30 39486.56 45671.77
1998/10/31 42197.48 49386.71
1998/11/30 46038.51 52380.04
1998/12/31 52198.73 55398.18
1999/01/31 56647.80 57714.93
1999/02/26 56353.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990309 160436 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Leisure Portfolio on February 28, 1989,
and the current 3.00% sales charge was paid. As the chart shows, by
February 28, 1999, the value of the investment would have grown to
$56,343 - a 463.43% 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 $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
America Online, Inc. 5.8
Time Warner, Inc. 5.8
Disney (Walt) Co. 5.4
McDonald's Corp. 5.3
Microsoft Corp. 4.8
CBS Corp. 4.5
Anheuser-Busch Companies, Inc. 3.3
Tele-Communications, Inc. 3.1
(Liberty Media Group) Series A
Gap, Inc. 2.7
Comcast Corp. Class A (special) 2.5
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Broadcasting 25.9%
Entertainment 15.3%
Computer Services
& Software 12.8%
Restaurants 8.6%
Apparel Stores 6.4%
All Others 31.0%*
* INCLUDES SHORT-TERM INVESTMENTS
Row: 1, Col: 1, Value: 31.0
Row: 1, Col: 2, Value: 6.4
Row: 1, Col: 3, Value: 8.6
Row: 1, Col: 4, Value: 12.8
Row: 1, Col: 5, Value: 15.3
Row: 1, Col: 6, Value: 25.9
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. Very well. For the 12 months that ended February 28, 1999, the fund
returned 37.54%, outperforming the Standard & Poor's 500 Index's
return of 19.74%. 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 16.26% over the same 12-month period.
Q. WHAT ACCOUNTED FOR THE FUND'S EXCEPTIONALLY STRONG PERFORMANCE?
A. The fund's focus on entertainment companies, cable providers and
advertising companies - as well as its underweighting in gaming and
lodging companies - all contributed to strong performance during the
year. A healthy U.S. economy helped entertainment companies to thrive.
Many entertainment companies have reduced debt, grown their cash flows
and benefited from economies of scale. After the stock market dip in
the late summer and early fall, many of these companies got cheaper
and, with their fundamentals still strong, I bought more shares.
Furthermore, the fund's heavy concentration in cable companies helped
performance; cable providers continued to develop new revenue sources
during the year, posting strong returns. In general, they had an
outstanding year. Though future price increases may be muted on the
basic cable side, the advent of digital cable, telephony and online
services has boosted the growth rate for this industry. Advertising
companies benefited from increased ad budgets and consolidation within
the industry.
Q. WHICH STOCKS STOOD OUT IN THIS POSITIVE ENVIRONMENT?
A. Entertainment companies Time Warner - the fund's number-two holding
at the end of the period - and Viacom were both standouts during the
year, benefiting from the strength of their cable television networks
and their very solid film entertainment divisions. Cable providers
Comcast, TCI Group and Cox Communications all performed well,
reflecting the success cable systems achieved in offering a much
greater range of services to consumers. McDonald's had a great year.
The company did a terrific job in restructuring its operations and
developed a winning growth strategy that was reflected in its strong
stock performance. Reader's Digest was another success story . With a
new CEO in place for nearly a year, the leadership at Reader's Digest
identified a significant amount of cost cutting and articulated a
growth strategy for the future. The reinvigoration of this company was
made possible by using its considerable strengths, including its huge
customer database, to drive new growth initiatives.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Gaming and lodging stocks generally were disappointing, suffering
from a decline in demand. However, the fund had very little exposure
to these stocks. I did own a few - such as Harrah's - and have sold
them from the fund's portfolio. Starwood Hotels, which owns several
hotel chains, reflected this industry's sluggish performance as the
previously strong trend toward consolidation stalled during 1998.
Disney continued to disappoint as lower home-video sales, plus Asia's
weakness and its corresponding economic decline, hurt results.
However, with the launch of Disney's GO Network and further
substantial investment spending this year, the company is making a
good effort to position itself for a re-acceleration of growth.
Q. WHERE DO YOU SEE NEW OPPORTUNITIES?
A. With advertising trends positive, I think we may actually see an
acceleration in activity from increased "millennium spending" as the
Year 2000 approaches. Add to this an upcoming presidential campaign
and the 2000 Olympics, and we should see a very strong second half of
1999, while 2000 should be one of the biggest advertising years in
recent memory. Consequently, I'll be looking for companies that could
benefit from this phenomenon.
Q. WHAT'S YOUR OUTLOOK, JEFF?
A. I'm optimistic. At this point, the outlook for leisure stocks is
strong, reflecting a healthy U.S. economy and the domestic orientation
of most of the companies in this sector. As long as business
fundamentals remain attractive, I believe that there are ample
opportunities to identify good companies that are well-positioned for
the future, and to buy their stock 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 OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark)FUND FACTS
START DATE: May 8, 1984
FUND NUMBER: 062
TRADING SYMBOL: FDLSX
SIZE: as of February 28, 1999, more than
$346 million
MANAGER: Jeffrey Dorsey, since 1998;
manager, Fidelity Select Multimedia Portfolio,
since 1997; analyst, fixed-income securities,
1991-1997; joined Fidelity in 1991
LEISURE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.0%
SHARES VALUE (NOTE 1)
ADVERTISING - 5.7%
Interpublic Group of 62,300 $ 4,660,819
Companies, Inc.
Lamar Advertising Co. Class A 30,900 1,193,513
(a)
Omnicom Group, Inc. 73,100 4,842,875
Outdoor Systems, Inc. (a) 162,400 4,537,050
WPP Group PLC 235,400 1,864,090
WPP Group PLC sponsored ADR 22,600 1,799,525
Young & Rubicam, Inc. 24,400 921,100
19,818,972
APPAREL STORES - 6.4%
Abercrombie & Fitch Co. Class 53,615 4,074,740
A (a)
AnnTaylor Stores Corp. (a) 19,900 752,469
Gap, Inc. 145,500 9,412,031
Intimate Brands, Inc. Class A 25,600 1,006,400
Limited, Inc. (The) 70,900 2,516,950
Payless ShoeSource, Inc. (a) 20,600 1,130,425
TJX Companies, Inc. 80,600 2,302,138
Wet Seal, Inc. Class A (a) 24,600 954,788
22,149,941
BEVERAGES - 5.1%
Anheuser-Busch Companies, 148,600 11,395,763
Inc.
Seagram Co. Ltd. 136,600 6,332,630
17,728,393
BROADCASTING - 25.9%
Cablevision Systems Corp. 63,600 4,134,000
Class A (a)
CBS Corp. 425,117 15,676,189
Chancellor Media Corp. (a) 122,300 5,350,625
Clear Channel Communications, 101,824 6,109,440
Inc. (a)
Comcast Corp. Class A 120,400 8,540,875
(special)
Cox Communications, Inc. 117,800 8,334,350
Class A (a)
Infinity Broadcasting Corp. 14,500 344,375
Class A (a)
Jacor Communications, Inc. 50,700 3,536,325
Class A (a)
MediaOne Group, Inc. 96,100 5,237,450
PanAmSat Corp. (a) 49,200 1,765,050
TCA Cable TV, Inc. 7,700 339,763
Tele-Communications, Inc. 128,000 8,040,000
(TCI Group) Series A (a)
Time Warner, Inc. 310,061 19,998,935
USA Networks, Inc. (a) 38,700 1,538,325
Westwood One, Inc. (a) 12,400 302,250
89,247,952
COMPUTER SERVICES & SOFTWARE
- - 12.8%
America Online, Inc. 226,600 20,153,225
At Home Corp. Series A (a) 12,500 1,326,563
SHARES VALUE (NOTE 1)
CNET, Inc. (a) 2,900 $ 332,413
Electronic Arts, Inc. (a) 17,800 709,775
Lycos, Inc. (a) 35,200 3,084,400
Microsoft Corp. (a) 111,100 16,678,888
Modem Media . Poppe Tyson, 100 2,688
Inc. (a)
Sportsline USA, Inc. (a) 20,200 909,000
Yahoo!, Inc. (a) 6,100 936,350
44,133,302
COMPUTERS & OFFICE EQUIPMENT
- - 0.7%
Coinstar, Inc. (a) 151,100 2,379,825
CONSUMER ELECTRONICS - 0.1%
Fossil, Inc. (a) 5,100 160,650
ENTERTAINMENT - 15.3%
Carnival Corp. 24,800 1,103,600
Disney (Walt) Co. 530,256 18,658,383
Fox Entertainment Group, Inc. 12,000 312,000
(a)
IMAX Corp. (a) 87,000 1,555,014
King World Productions, Inc. 18,100 478,519
(a)
News Corp. Ltd.: ADR 43,700 1,239,988
sponsored ADR (ltd. vtg.) 101,900 2,674,875
Premier Parks, Inc. (a) 103,800 3,023,175
Royal Carribean Cruises Ltd. 48,200 1,590,600
SFX Entertainment, Inc. Class 18,100 1,106,363
A (a)
Tele-Communications, Inc.:
(Liberty Media Group) Series 200,700 10,812,713
A (a)
(TCI Ventures Group) Series A 87,800 2,430,963
(a)
Ticketmaster Online 200 7,225
CitySearch, Inc. (a)
Viacom, Inc. Class B 87,000 7,688,625
(non-vtg.) (a)
52,682,043
GENERAL MERCHANDISE STORES -
0.2%
Michaels Stores, Inc. (a) 13,800 236,325
Saks, Inc. (a) 13,600 488,750
725,075
HOUSEHOLD PRODUCTS - 1.0%
Avon Products, Inc. 81,500 3,392,438
LEASING & RENTAL - 0.0%
Hollywood Entertainment Corp. 5,000 137,188
(a)
LEISURE DURABLES & TOYS - 0.8%
Hasbro, Inc. 35,400 1,309,800
Mattel, Inc. 53,300 1,405,788
2,715,588
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
LODGING & GAMING - 0.5%
Promus Hotel Corp. (a) 17,600 $ 619,300
Sun International Hotels Ltd. 28,200 1,002,863
(a)
1,622,163
PRINTING - 0.9%
Donnelley (R.R.) & Sons Co. 36,000 1,233,000
Valassis Communications, Inc. 39,500 1,896,000
(a)
3,129,000
PUBLISHING - 5.5%
American Greetings Corp. 20,900 495,069
Class A
Harte Hanks Communications, 38,100 985,838
Inc.
McGraw-Hill Companies, Inc. 34,500 3,775,594
Meredith Corp. 70,300 2,372,625
Playboy Enterprises, Inc. 155,200 4,151,600
Class B (a)
Reader's Digest Association, 108,400 3,685,600
Inc. Class A (non-vtg.)
Tribune Co. 50,500 3,348,781
18,815,107
REAL ESTATE - 0.0%
ResortQuest International, 3,000 52,688
Inc. (a)
REAL ESTATE INVESTMENT TRUSTS
- - 0.6%
Starwood Hotels & Resorts 61,400 1,903,400
Worldwide, Inc.
RESTAURANTS - 8.6%
Brinker International, Inc. 33,800 978,088
(a)
CKE Restaurants, Inc. 16,560 439,875
McDonald's Corp. 214,400 18,224,000
Outback Steakhouse, Inc. (a) 19,700 864,338
Papa John's International, 10,000 432,500
Inc. (a)
PJ America, Inc. (a) 51,500 1,010,688
Starbucks Corp. (a) 60,400 3,193,650
Tricon Global Restaurants, 73,200 4,538,400
Inc. (a)
29,681,539
RETAIL & WHOLESALE,
MISCELLANEOUS - 0.7%
Action Performance Companies, 21,500 771,313
Inc. (a)
Barnes & Noble, Inc. (a) 21,500 635,594
Bed Bath & Beyond, Inc. (a) 37,200 1,095,075
Piercing Pagoda, Inc. (a) 1,300 13,325
2,515,307
SHARES VALUE (NOTE 1)
TEXTILES & APPAREL - 1.2%
Liz Claiborne, Inc. 21,300 $ 717,544
NIKE, Inc. Class B 65,300 3,501,713
4,219,257
TOTAL COMMON STOCKS 317,209,828
(Cost $216,394,086)
CASH EQUIVALENTS - 8.0%
Taxable Central Cash Fund (b) 27,721,242 27,721,242
(Cost $27,721,242)
TOTAL INVESTMENT IN $ 344,931,070
SECURITIES - 100%
(Cost $244,115,328)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. 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 $294,037,393 and $290,681,002, respectively.
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 $84,286 for the
period.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $245,469,507. Net unrealized appreciation
aggregated $99,461,563, of which $104,699,680 related to appreciated
investment securities and $5,238,117 related to depreciated investment
securities.
The fund hereby designates approximately $10,012,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 12% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentage for use in preparing 1999 income tax returns.
LEISURE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 344,931,070
value (cost $244,115,328) -
See accompanying schedule
Receivable for fund shares 2,232,887
sold
Dividends receivable 149,528
Interest receivable 101,730
Redemption fees receivable 282
Other receivables 49,491
TOTAL ASSETS 347,464,988
LIABILITIES
Payable for fund shares $ 986,552
redeemed
Accrued management fee 164,062
Other payables and accrued 175,006
expenses
TOTAL LIABILITIES 1,325,620
NET ASSETS $ 346,139,368
Net Assets consist of:
Paid in capital $ 231,932,004
Accumulated undistributed net 13,391,716
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 100,815,648
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 4,250,039 $ 346,139,368
shares outstanding
NET ASSET VALUE and $81.44
redemption price per share
($346,139,368 (divided by)
4,250,039 shares)
Maximum offering price per $83.96
share (100/97.00 of $81.44)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 1,278,268
Dividends
Interest 1,178,921
TOTAL INCOME 2,457,189
EXPENSES
Management fee $ 1,721,162
Transfer agent fees 1,556,159
Accounting fees and expenses 279,815
Non-interested trustees' 1,166
compensation
Custodian fees and expenses 14,784
Registration fees 56,416
Audit 22,874
Legal 1,948
Reports to shareholders 30,091
Total expenses before 3,684,415
reductions
Expense reductions (55,442) 3,628,973
NET INVESTMENT INCOME (LOSS) (1,171,784)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 22,616,844
Foreign currency transactions 7,211 22,624,055
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 65,006,125
Assets and liabilities in 34 65,006,159
foreign currencies
NET GAIN (LOSS) 87,630,214
NET INCREASE (DECREASE) IN $ 86,458,430
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 956,242
charges paid to FDC
Sales charges - Retained by $ 946,671
FDC
Deferred sales charges $ 10,919
withheld by FDC
Exchange fees withheld by FSC $ 18,008
Expense Reductions
Directed brokerage $ 53,531
arrangements
Custodian credits 1,911
$ 55,442
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (1,171,784) $ (652,887)
income (loss)
Net realized gain (loss) 22,624,055 27,572,262
Change in net unrealized 65,006,159 29,426,716
appreciation (depreciation)
NET INCREASE (DECREASE) IN 86,458,430 56,346,091
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (14,475,212) (19,896,472)
from net realized gains
Share transactions Net 283,063,939 221,739,781
proceeds from sales of shares
Reinvestment of distributions 14,128,858 19,641,349
Cost of shares redeemed (280,558,227) (118,975,901)
NET INCREASE (DECREASE) IN 16,634,570 122,405,229
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 323,063 210,283
TOTAL INCREASE (DECREASE) 88,940,851 159,065,131
IN NET ASSETS
NET ASSETS
Beginning of period 257,198,517 98,133,386
End of period $ 346,139,368 $ 257,198,517
OTHER INFORMATION
Shares
Sold 4,108,533 3,893,810
Issued in reinvestment of 211,513 374,739
distributions
Redeemed (4,198,228) (2,192,054)
Net increase (decrease) 121,818 2,076,495
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 F 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 62.30 $ 47.83 $ 46.17 $ 40.71 $ 45.30
period
Income from Investment
Operations
Net investment income (loss) C (.27) (.25) (.06) E (.21) (.21)
Net realized and unrealized 22.78 21.10 4.47 10.97 (.48)
gain (loss)
Total from investment 22.51 20.85 4.41 10.76 (.69)
operations
Less Distributions
From net realized gain (3.44) (6.46) (2.83) (5.32) (3.93)
Redemption fees added to paid .07 .08 .08 .02 .03
in capital
Net asset value, end of period $ 81.44 $ 62.30 $ 47.83 $ 46.17 $ 40.71
TOTAL RETURN A, B 37.54% 47.29% 10.14% 27.61% (1.07)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 346,139 $ 257,199 $ 98,133 $ 85,013 $ 69,569
(000 omitted)
Ratio of expenses to average 1.26% 1.44% 1.56% 1.64% 1.64%
net assets
Ratio of expenses to average 1.24% D 1.39% D 1.54% D 1.63% D 1.62% D
net assets after expense
reductions
Ratio of net investment (.40)% (.46)% (.12)% (.46)% (.52)%
income (loss) to average net
assets
Portfolio turnover rate 107% 209% 127% 141% 103%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE.
CNET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. E
INVESTMENT INCOME (LOSS) PER
SHARE REFLECTS A SPECIAL
DIVIDEND WHICH AMOUNTED TO
$.23 PER SHARE. F FOR THE
YEAR ENDED FEBRUARY 29.
</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 FEBRUARY 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1996
SELECT MULTIMEDIA 36.68% 168.24% 443.52%
SELECT MULTIMEDIA (LOAD ADJ.) 32.51% 160.12% 427.14%
S&P 500 19.74% 194.91% 459.21%
GS Consumer Industries 16.26% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
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 FEBRUARY 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1996
SELECT MULTIMEDIA 36.68% 21.82% 18.45%
SELECT MULTIMEDIA (LOAD ADJ.) 32.51% 21.07% 18.08%
S&P 500 19.74% 24.15% 18.78%
GS Consumer Industries 16.26% 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
1989/02/28 9700.00 10000.00
1989/03/31 10154.90 10233.00
1989/04/30 10837.24 10764.09
1989/05/31 11359.03 11200.04
1989/06/30 11591.62 11136.20
1989/07/31 12473.45 12141.80
1989/08/31 12459.99 12379.78
1989/09/30 12264.77 12329.02
1989/10/31 11436.80 12042.99
1989/11/30 11504.12 12288.66
1989/12/31 11508.99 12583.59
1990/01/31 9980.76 11739.23
1990/02/28 9728.68 11890.67
1990/03/31 9634.15 12205.77
1990/04/30 9177.26 11900.63
1990/05/31 10051.66 13060.94
1990/06/30 9965.00 12972.12
1990/07/31 9413.58 12930.61
1990/08/31 8192.57 11761.68
1990/09/30 7491.48 11188.89
1990/10/31 7168.50 11140.78
1990/11/30 7908.98 11860.47
1990/12/31 8491.92 12191.38
1991/01/31 8948.81 12722.92
1991/02/28 9610.52 13632.61
1991/03/31 9870.47 13962.52
1991/04/30 10209.20 13996.03
1991/05/31 10264.35 14600.66
1991/06/30 9452.97 13931.95
1991/07/31 9807.45 14581.18
1991/08/31 10114.68 14926.75
1991/09/30 10729.12 14677.48
1991/10/31 11272.66 14874.16
1991/11/30 10500.67 14274.73
1991/12/31 11705.92 15907.76
1992/01/31 12013.15 15611.87
1992/02/29 12682.73 15814.83
1992/03/31 12359.76 15506.44
1992/04/30 12548.81 15962.33
1992/05/31 12737.87 16040.54
1992/06/30 12785.14 15801.54
1992/07/31 12816.65 16447.82
1992/08/31 12643.34 16110.64
1992/09/30 12564.57 16300.75
1992/10/31 12769.38 16357.80
1992/11/30 13698.93 16915.60
1992/12/31 14222.47 17123.66
1993/01/31 14509.79 17267.50
1993/02/28 14573.64 17502.34
1993/03/31 15148.29 17871.64
1993/04/30 14756.55 17439.14
1993/05/31 15762.50 17906.51
1993/06/30 16257.36 17958.44
1993/07/31 16865.79 17886.61
1993/08/31 18301.69 18564.51
1993/09/30 18739.77 18421.56
1993/10/31 20143.22 18802.89
1993/11/30 18828.66 18624.26
1993/12/31 19629.92 18849.62
1994/01/31 19909.88 19490.50
1994/02/28 19654.62 18962.31
1994/03/31 18452.45 18135.55
1994/04/30 18461.41 18367.69
1994/05/31 19140.34 18668.92
1994/06/30 18712.52 18211.53
1994/07/31 19168.24 18808.87
1994/08/31 20321.50 19580.03
1994/09/30 20181.99 19100.32
1994/10/31 20637.71 19530.08
1994/11/30 19986.68 18818.79
1994/12/31 20415.81 19097.87
1995/01/31 20646.61 19593.08
1995/02/28 21492.86 20356.63
1995/03/31 22858.40 20957.35
1995/04/30 23387.31 21574.54
1995/05/31 23512.32 22436.88
1995/06/30 24416.27 22958.09
1995/07/31 25858.75 23719.38
1995/08/31 26676.15 23778.91
1995/09/30 27435.85 24782.38
1995/10/31 26628.07 24693.91
1995/11/30 27657.03 25777.97
1995/12/31 27290.40 26274.46
1996/01/31 27457.38 27168.84
1996/02/29 28365.32 27420.69
1996/03/31 27989.62 27684.75
1996/04/30 29292.62 28092.83
1996/05/31 30265.47 28817.34
1996/06/30 28864.99 28927.14
1996/07/31 26117.47 27649.13
1996/08/31 27090.33 28232.26
1996/09/30 28811.53 29821.17
1996/10/31 27999.04 30643.63
1996/11/30 28512.19 32959.99
1996/12/31 27583.37 32307.05
1997/01/31 27442.03 34325.59
1997/02/28 27083.24 34594.71
1997/03/31 25767.67 33173.21
1997/04/30 26343.06 35153.65
1997/05/31 28858.28 37293.80
1997/06/30 30750.26 38964.57
1997/07/31 32397.40 42064.98
1997/08/31 31763.03 39708.50
1997/09/30 34333.90 41883.33
1997/10/31 33232.10 40484.43
1997/11/30 34333.90 42358.45
1997/12/31 36114.40 43085.75
1998/01/31 36378.59 43562.28
1998/02/28 38572.56 46703.99
1998/03/31 41283.44 49095.70
1998/04/30 42257.79 49589.60
1998/05/31 41096.52 48737.16
1998/06/30 43883.56 50716.86
1998/07/31 44409.18 50176.72
1998/08/31 36891.52 42922.17
1998/09/30 38480.62 45671.77
1998/10/31 40815.37 49386.71
1998/11/30 43247.92 52380.04
1998/12/31 49005.34 55398.18
1999/01/31 53014.76 57714.93
1999/02/26 52714.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990310 115444 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Multimedia Portfolio on February 28, 1989
and the current 3.00% sales charge was paid. As the chart shows, by
February 28, 1999, the value of the investment would have grown to
$52,714 - a 427.14% 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 $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Comcast Corp. Class A (special) 6.2
CBS Corp. 5.8
Viacom, Inc. Class B (non-vtg.) 5.6
Time Warner, Inc. 5.3
Tele-Communications, Inc. 5.2
(TCI Group) Series A
Disney (Walt) Co. 5.0
Cox Communications, Inc. 4.2
Class A
MCI WorldCom, Inc. 4.0
Clear Channel Communications, 3.5
Inc.
AT&T Corp. 3.4
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Broadcasting 42.9%
Entertainment 18.8%
Publishing 8.5%
Advertising 7.7%
Telephone Services 7.4%
All Others 14.7%*
* INCLUDES SHORT-TERM INVESTMENTS
Row: 1, Col: 1, Value: 14.7
Row: 1, Col: 2, Value: 7.4
Row: 1, Col: 3, Value: 7.7
Row: 1, Col: 4, Value: 8.5
Row: 1, Col: 5, Value: 18.8
Row: 1, Col: 6, Value: 42.9
MULTIMEDIA PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Jeffrey Dorsey)
Jeffrey Dorsey,
Portfolio Manager
of Fidelity Select
Multimedia Portfolio
Q. HOW DID THE FUND PERFORM, JEFF?
A. Very well. For the 12 months that ended February 28, 1999, the fund
returned 36.68%, outperforming the Standard & Poor's 500 Index's
return of 19.74%. 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 16.26% over the same 12-month period.
Q. WHAT ACCOUNTED FOR THE FUND'S EXCEPTIONALLY STRONG PERFORMANCE?
A. The fund's focus on entertainment companies, cable providers and
advertising companies - as well as its underweighting in newspaper
publishers - all contributed to its strong performance during the
year. A healthy U.S. economy helped entertainment companies to thrive,
with many of these companies reducing debt, growing their cash flows
and benefiting from economies of scale. After the stock market dip in
the late summer and early fall, entertainment stocks got cheaper and,
with their business fundamentals still strong, I bought more shares.
Furthermore, the fund's heavy concentration in cable companies helped
performance; in general, cable providers had an outstanding year,
continuing to develop new revenue sources and posting strong returns.
Though future price increases may be muted on the basic cable side,
the advent of digital cable, telephony and online services has
boosted the overall growth rate for this industry. Advertising
companies benefited from increased ad budgets and consolidation within
their industry. As for newspapers, help-wanted advertising activity
continued to decline, based on an ongoing shift from print to radio
and online mediums.
Q. WHICH STOCKS STOOD OUT IN THIS POSITIVE ENVIRONMENT?
A. Entertainment companies Time Warner and Viacom were both standouts
during the year, benefiting from the strength of their cable
television networks and their very solid film entertainment divisions.
Comcast, a cable provider, performed well, reflecting the success
cable systems achieved in offering a much greater range of services to
consumers. Reader's Digest is another success story in the making.
With a new CEO in place for nearly a year, the leadership at Reader's
Digest identified a significant amount of cost cutting and articulated
a growth strategy for the future. The reinvigoration of this company
was made possible by using its considerable strengths, including its
huge customer database, to drive new growth initiatives.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Disney continued to disappoint as lower home-video sales, Asia's
economic weakness and declining demand hurt results. However, with the
launch of its GO Network and further substantial investment spending
this year, the company is making a good effort to position itself for
a re-acceleration of growth. Seagram is another company that
experienced difficulties resulting from disappointments in its
entertainment division and Asia's economic problems, but it has formed
the most powerful music company in the industry with its purchase of
Polygram. Seagram, too, is hoping to structure itself for substantial
profit growth through both cost cutting and top-line improvement at
its theme-park division.
Q. WHERE DO YOU SEE NEW OPPORTUNITIES?
A. With advertising trends positive, I think we may actually see an
acceleration in activity from increased "millennium spending" as the
Year 2000 approaches. Add to this an upcoming presidential campaign
and the 2000 Olympics, and we should see a very strong second half of
1999. In fact, 2000 should be one of the biggest advertising years in
recent memory. Consequently, I'll be looking for companies that will
benefit from this phenomenon.
Q. WHAT'S YOUR OUTLOOK, JEFF?
A. I'm optimistic. At this point, the outlook for multimedia stocks is
strong, reflecting a healthy U.S. economy and the domestic nature of
most of the companies in this sector. As long as business fundamentals
remain attractive, I believe that there are ample opportunities to
identify good companies that are well-positioned for the future. To
take advantage of the strong potential I'm seeing now in many
companies, I'll continue to build a more concentrated portfolio. Most
companies in this sector have one element in common: They're affected
by advertising activity. As long as the economy doesn't weaken
significantly and advertising activity remains strong, many of these
companies should benefit.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark)FUND FACTS
START DATE: June 30, 1986
FUND NUMBER: 503
TRADING SYMBOL: FBMPX
SIZE: as of February 28, 1999, more than
$159 million
MANAGER: Jeffrey Dorsey, since 1997;
manager, Fidelity Select Leisure Portfolio,
since 1998; analyst, fixed-income securities,
1991-1997; joined Fidelity in 1991
MULTIMEDIA PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 91.0%
SHARES VALUE (NOTE 1)
ADVERTISING - 7.7%
Interpublic Group of 55,300 $ 4,137,131
Companies, Inc.
Lamar Advertising Co. Class A 15,500 598,688
(a)
Omnicom Group, Inc. 67,000 4,438,750
Outdoor Systems, Inc. (a) 62,600 1,748,887
WPP Group PLC 172,700 1,367,580
12,291,036
BEVERAGES - 2.5%
Seagram Co. Ltd. 85,200 3,949,781
BROADCASTING - 42.9%
Cablevision Systems Corp. 61,500 3,997,500
Class A (a)
CBS Corp. 252,550 9,312,781
Chancellor Media Corp. (a) 55,500 2,428,125
Clear Channel Communications, 94,500 5,670,000
Inc. (a)
Comcast Corp. Class A 138,900 9,853,214
(special)
Cox Communications, Inc. 96,000 6,792,000
Class A (a)
E.W. Scripps Co. Class A 12,100 496,100
Infinity Broadcasting Corp. 6,000 142,500
Class A (a)
Jacor Communications, Inc. 39,900 2,783,025
Class A (a)
MediaOne Group, Inc. 91,100 4,964,950
Moviefone, Inc. Class A (a) 11,800 354,000
Nielsen Media Research, Inc. 29,700 582,863
(a)
PanAmSat Corp. (a) 60,900 2,184,788
TCA Cable TV, Inc. 2,100 92,663
Tele-Communications, Inc. 133,605 8,392,064
(TCI Group) Series A (a)
Time Warner, Inc. 130,947 8,446,082
USA Networks, Inc. (a) 47,600 1,892,100
Westwood One, Inc. (a) 9,900 241,313
68,626,068
COMPUTER SERVICES & SOFTWARE
- - 1.1%
America Online, Inc. 11,600 1,031,675
FactSet Research Systems, 5,850 243,872
Inc.
Modem Media Poppe Tyson, Inc. 100 2,688
(a)
Sportsline USA, Inc. (a) 11,400 513,000
1,791,235
ENTERTAINMENT - 18.8%
Disney (Walt) Co. 228,000 8,022,750
Fox Entertainment Group, Inc. 5,000 130,000
(a)
King World Productions, Inc. 24,000 634,500
(a)
News Corp. Ltd. ADR 34,600 981,775
Premier Parks, Inc. (a) 41,500 1,208,688
SFX Entertainment, Inc. Class 8,200 501,225
A (a)
Tele-Communications, Inc.:
(Liberty Media Group) Series 99,202 5,344,508
A (a)
(TCI Ventures Group) Series A 159,800 4,424,463
(a)
Ticketmaster Online 100 3,613
CitySearch, Inc. (a)
Viacom, Inc. Class B 100,600 8,890,525
(non-vtg.) (a)
30,142,047
PRINTING - 1.7%
Donnelley (R.R.) & Sons Co. 42,500 1,455,625
Valassis Communications, Inc. 26,200 1,257,600
(a)
2,713,225
SHARES VALUE (NOTE 1)
PUBLISHING - 8.5%
American Greetings Corp. 21,900 $ 518,756
Class A
Banta Corp. 11,400 242,963
Harte Hanks Communications, 48,300 1,249,763
Inc.
McGraw-Hill Companies, Inc. 32,100 3,512,944
Meredith Corp. 42,500 1,434,375
Playboy Enterprises, Inc. 52,100 1,393,675
Class B (a)
Reader's Digest Association, 66,800 2,271,200
Inc. Class A (non-vtg.)
Tribune Co. 44,200 2,931,013
13,554,689
SERVICES - 0.4%
ACNielsen Corp. (a) 8,800 228,800
Catalina Marketing Corp. (a) 5,600 360,500
589,300
TELEPHONE SERVICES - 7.4%
AT&T Corp. 66,800 5,485,950
MCI WorldCom, Inc. (a) 76,600 6,319,500
11,805,450
TOTAL COMMON STOCKS 145,462,831
(Cost $102,209,349)
CASH EQUIVALENTS - 9.0%
Taxable Central Cash Fund (b) 14,391,006 14,391,006
(Cost $14,391,006)
TOTAL INVESTMENT IN $ 159,853,837
SECURITIES - 100%
(Cost $116,600,355)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. 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 $135,513,128 and $132,504,769, respectively.
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 $41,770 for the
period.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $117,064,039. Net unrealized appreciation
aggregated $42,789,798, of which $44,808,607 related to appreciated
investment securities and $2,018,809 related to depreciated investment
securities.
The fund hereby designates approximately $5,431,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 19% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentage for use in preparing 1999 income tax returns.
MULTIMEDIA PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 159,853,837
value (cost $116,600,355) -
See accompanying schedule
Receivable for fund shares 579,849
sold
Dividends receivable 67,251
Interest receivable 45,921
Redemption fees receivable 1,385
Other receivables 18,276
TOTAL ASSETS 160,566,519
LIABILITIES
Payable for fund shares $ 666,421
redeemed
Accrued management fee 77,149
Other payables and accrued 93,421
expenses
TOTAL LIABILITIES 836,991
NET ASSETS $ 159,729,528
Net Assets consist of:
Paid in capital $ 113,715,452
Accumulated net investment (17,095)
loss
Accumulated undistributed net 2,777,697
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 43,253,474
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 3,703,786 $ 159,729,528
shares outstanding
NET ASSET VALUE and $43.13
redemption price per share
($159,729,528 (divided by)
3,703,786 shares)
Maximum offering price per $44.46
share (100/97.00 of $43.13)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 553,150
Dividends
Interest 496,822
TOTAL INCOME 1,049,972
EXPENSES
Management fee $ 768,461
Transfer agent fees 795,802
Accounting fees and expenses 124,969
Non-interested trustees' 452
compensation
Custodian fees and expenses 15,329
Registration fees 22,574
Audit 16,016
Legal 675
Reports to shareholders 17,970
Total expenses before 1,762,248
reductions
Expense reductions (31,187) 1,731,061
NET INVESTMENT INCOME (LOSS) (681,089)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 3,487,861
Foreign currency transactions 9,198 3,497,059
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 32,313,719
Assets and liabilities in (8) 32,313,711
foreign currencies
NET GAIN (LOSS) 35,810,770
NET INCREASE (DECREASE) IN $ 35,129,681
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 599,274
charges paid to FDC
Sales charges - Retained by $ 596,505
FDC
Deferred sales charges $ 1,687
withheld by FDC
Exchange fees withheld by FSC $ 10,110
Expense reductions Directed $ 30,211
brokerage arrangements
Custodian credits 976
$ 31,187
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (681,089) $ (345,513)
income (loss)
Net realized gain (loss) 3,497,059 11,157,423
Change in net unrealized 32,313,711 11,000,546
appreciation (depreciation)
NET INCREASE (DECREASE) IN 35,129,681 21,812,456
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (7,954,098) (2,764,701)
from net realized gains
Share transactions Net 158,099,619 123,445,992
proceeds from sales of shares
Reinvestment of distributions 7,877,838 2,725,416
Cost of shares redeemed (149,217,492) (84,022,531)
NET INCREASE (DECREASE) IN 16,759,965 42,148,877
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 309,134 117,385
TOTAL INCREASE (DECREASE) 44,244,682 61,314,017
IN NET ASSETS
NET ASSETS
Beginning of period 115,484,846 54,170,829
End of period (including $ 159,729,528 $ 115,484,846
accumulated net investment
loss of $17,095 and $1,536,
respectively)
OTHER INFORMATION
Shares
Sold 4,292,822 4,033,610
Issued in reinvestment of 230,819 101,335
distributions
Redeemed (4,259,349) (2,869,891)
Net increase (decrease) 264,292 1,265,054
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 F 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 33.58 $ 24.91 $ 27.18 $ 22.35 $ 23.87
period
Income from Investment
Operations
Net investment income (loss) C (.19) (.17) .35 D .02 (.01)
Net realized and unrealized 11.85 10.30 (1.58) 7.00 1.67
gain (loss)
Total from investment 11.66 10.13 (1.23) 7.02 1.66
operations
Less Distributions
From net investment income - - - (.02) -
From net realized gain (2.19) (1.52) (1.07) (2.19) (3.21)
Total distributions (2.19) (1.52) (1.07) (2.21) (3.21)
Redemption fees added to paid .08 .06 .03 .02 .03
in capital
Net asset value, end of period $ 43.13 $ 33.58 $ 24.91 $ 27.18 $ 22.35
TOTAL RETURN A, B 36.68% 42.42% (4.52)% 31.98% 9.35%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 159,730 $ 115,485 $ 54,171 $ 94,970 $ 38,157
(000 omitted)
Ratio of expenses to average 1.35% 1.75% 1.60% 1.56% 2.05%
net assets
Ratio of expenses to average 1.33% E 1.71% E 1.56% E 1.54% E 2.03% E
net assets after expense
reductions
Ratio of net investment (.52)% (.59)% 1.33% .08% (.07)%
income (loss) to average net
assets
Portfolio turnover rate 109% 219% 99% 223% 107%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE .
C NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D INVESTMENT
INCOME PER SHARE REFLECTS A
SPECIAL DIVIDEND WHICH
AMOUNTED TO $.49 PER SHARE.
E FMR OR THE FUND HAS
ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE
FUND'S EXPENSES. F FOR THE
YEAR ENDED FEBRUARY 29.
</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 FEBRUARY 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1996
SELECT RETAILING 36.66% 179.05% 662.19%
SELECT RETAILING (LOAD ADJ.) 32.49% 170.61% 639.25%
S&P 500 19.74% 194.91% 459.21%
GS Consumer Industries 16.26% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
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 FEBRUARY 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1996
SELECT RETAILING 36.66% 22.78% 22.52%
SELECT RETAILING (LOAD ADJ.) 32.49% 22.03% 22.15%
S&P 500 19.74% 24.15% 18.78%
GS Consumer Industries 16.26% 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
1989/02/28 9700.00 10000.00
1989/03/31 10163.31 10233.00
1989/04/30 10736.92 10764.09
1989/05/31 11479.68 11200.04
1989/06/30 11275.31 11136.20
1989/07/31 12184.61 12141.80
1989/08/31 12775.66 12379.78
1989/09/30 12745.35 12329.02
1989/10/31 12131.57 12042.99
1989/11/30 12207.34 12288.66
1989/12/31 12135.84 12583.59
1990/01/31 11188.01 11739.23
1990/02/28 11577.77 11890.67
1990/03/31 12525.60 12205.77
1990/04/30 12348.44 11900.63
1990/05/31 13996.08 13060.94
1990/06/30 13818.91 12972.12
1990/07/31 13251.98 12930.61
1990/08/31 11347.45 11761.68
1990/09/30 10080.72 11188.89
1990/10/31 9611.23 11140.78
1990/11/30 10922.26 11860.47
1990/12/31 11525.31 12191.38
1991/01/31 12644.10 12722.92
1991/02/28 13816.17 13632.61
1991/03/31 15254.61 13962.52
1991/04/30 15467.72 13996.03
1991/05/31 16755.21 14600.66
1991/06/30 16222.45 13931.95
1991/07/31 17261.33 14581.18
1991/08/31 18175.90 14926.75
1991/09/30 17980.55 14677.48
1991/10/31 17643.14 14874.16
1991/11/30 17305.73 14274.73
1991/12/31 19377.88 15907.76
1992/01/31 20452.40 15611.87
1992/02/29 21435.87 15814.83
1992/03/31 21007.88 15506.44
1992/04/30 20151.90 15962.33
1992/05/31 20570.78 16040.54
1992/06/30 19610.56 15801.54
1992/07/31 20482.98 16447.82
1992/08/31 20018.32 16110.64
1992/09/30 20615.74 16300.75
1992/10/31 22028.69 16357.80
1992/11/30 23697.67 16915.60
1992/12/31 23655.79 17123.66
1993/01/31 23819.00 17267.50
1993/02/28 22916.55 17502.34
1993/03/31 24683.05 17871.64
1993/04/30 23266.30 17439.14
1993/05/31 24555.05 17906.51
1993/06/30 23964.78 17958.44
1993/07/31 24082.83 17886.61
1993/08/31 25184.66 18564.51
1993/09/30 25952.01 18421.56
1993/10/31 26355.36 18802.89
1993/11/30 26611.14 18624.26
1993/12/31 26738.51 18849.62
1994/01/31 25547.29 19490.50
1994/02/28 26493.88 18962.31
1994/03/31 25940.82 18135.55
1994/04/30 26727.87 18367.69
1994/05/31 25409.03 18668.92
1994/06/30 25196.31 18211.53
1994/07/31 25621.74 18808.87
1994/08/31 27249.03 19580.03
1994/09/30 26717.24 19100.32
1994/10/31 26834.23 19530.08
1994/11/30 25898.28 18818.79
1994/12/31 25398.39 19097.87
1995/01/31 25196.31 19593.08
1995/02/28 25430.30 20356.63
1995/03/31 25717.47 20957.35
1995/04/30 24717.70 21574.54
1995/05/31 25153.77 22436.88
1995/06/30 26759.78 22958.09
1995/07/31 28397.70 23719.38
1995/08/31 28004.17 23778.91
1995/09/30 28844.40 24782.38
1995/10/31 27557.47 24693.91
1995/11/30 28940.13 25777.97
1995/12/31 28440.24 26274.46
1996/01/31 27610.65 27168.84
1996/02/29 29642.09 27420.69
1996/03/31 31843.71 27684.75
1996/04/30 33704.98 28092.83
1996/05/31 35321.63 28817.34
1996/06/30 34694.12 28927.14
1996/07/31 31375.73 27649.13
1996/08/31 34343.13 28232.26
1996/09/30 35576.89 29821.17
1996/10/31 34874.93 30643.63
1996/11/30 36215.04 32959.99
1996/12/31 34373.03 32307.05
1997/01/31 34213.11 34325.59
1997/02/28 35449.85 34594.71
1997/03/31 35897.64 33173.21
1997/04/30 36448.92 35153.65
1997/05/31 38140.46 37293.80
1997/06/30 40564.65 38964.57
1997/07/31 44949.72 42064.98
1997/08/31 43441.34 39708.50
1997/09/30 46253.39 41883.33
1997/10/31 45994.81 40484.43
1997/11/30 49345.57 42358.45
1997/12/31 48715.23 43085.75
1998/01/31 49558.50 43562.28
1998/02/28 54099.20 46703.99
1998/03/31 57818.25 49095.70
1998/04/30 57590.36 49589.60
1998/05/31 58587.08 48737.16
1998/06/30 61818.18 50716.86
1998/07/31 60098.58 50176.72
1998/08/31 52398.69 42922.17
1998/09/30 52683.46 45671.77
1998/10/31 57601.32 49386.71
1998/11/30 63263.97 52380.04
1998/12/31 71007.67 55398.18
1999/01/31 74085.43 57714.93
1999/02/26 73925.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990309 145048 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Retailing Portfolio on February 28, 1989,
and the current 3.00% sales charge was paid. As the chart shows, by
February 28, 1999, the value of the investment would have grown to
$73,925 - a 639.25% 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 $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Dayton Hudson Corp. 6.9
Safeway, Inc. 6.0
CVS Corp. 5.6
McDonald's Corp. 5.5
Wal-Mart Stores, Inc. 5.1
Home Depot, Inc. 5.1
Walgreen Co. 5.0
Gap, Inc. 5.0
Federated Department Stores, 4.5
Inc.
Lowe's Companies, Inc. 4.0
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
General Merchandise Stores 25.7%
Retail & Wholesale,
Miscellaneous 19.2%
Grocery Stores 15.9%
Apparel Stores 13.3%
Drug Stores 11.2%
All Others 14.7%*
* INCLUDES SHORT-TERM INVESTMENTS
Row: 1, Col: 1, Value: 14.7
Row: 1, Col: 2, Value: 11.2
Row: 1, Col: 3, Value: 13.3
Row: 1, Col: 4, Value: 15.9
Row: 1, Col: 5, Value: 19.2
Row: 1, Col: 6, Value: 25.7
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. I'm very pleased with the fund's performance. During the 12-month
period that ended February 28, 1999, the fund returned 36.66%. This
performance compares favorably with the Standard & Poor's 500 Index,
which returned 19.74% and 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 16.26%
during the same period.
Q. WHAT MARKET FACTORS ALLOWED THE FUND AND RETAIL STOCKS TO PERFORM
SO WELL DURING THE PERIOD?
A. The principle factor was the solid economy, which was characterized
by low interest rates, non-existent signs of inflation, low levels of
unemployment and rising household incomes leading to robust consumer
spending. All of these economic trends are very good for retail
stocks. In addition to the strong economy, managements at many retail
companies really began to run their businesses better over the last
couple of years. Today, instead of focusing on square footage
expansion, which led to over-capacity and saturated retail markets,
companies now concentrate on improving returns on invested capital
through increased scrutiny of capital expenditures and enhanced
inventory management. With more effective and efficient ways of
removing excess inventories and reducing costs, many retail companies
improved their business profitability and, subsequently, produced
stellar sales results. This led to increased returns on invested
capital and earnings growth. Stock prices rallied in light of these
solid business fundamentals and the favorable economic environment.
Q. DID ANY OTHER FACTORS CONTRIBUTE TO THE FUND'S SOLID RESULTS?
A. Individual stock picking and the fund's holdings across a wide
range of retail sectors helped performance. Overweighted positions in
home improvement stores, discount stores and specialty retailers, such
as Home Depot, Wal-Mart, Dayton Hudson, The Gap and Abercrombie &
Fitch, all provided a boost to total return. Each of these companies
produced strong performance results driven by a commitment to
effective cost reduction and inventory management. In addition, the
fund's focus on top-performing supermarket and drug store chains, such
as Safeway, CVS and Walgreen, also contributed to fund performance.
Q. DID INTERNET COMMERCE PLAY ANY ROLE IN THE PERFORMANCE OF THESE
STOCKS?
A. For certain companies. More specifically, specialty retailer The
Limited and discount wholesaler Costco benefited as valuations
increased due to the favorable prospects for growth on the Internet.
While the Internet provides an additional and convenient distribution
outlet for many companies and their customers, business and marketing
strategies are somewhat new in this arena and have yet to prove their
ability to produce significant earnings growth. Of course, I'll be
keeping a close eye on new developments to determine the Internet's
impact on more traditional retail sales.
Q. WERE THERE ANY DISAPPOINTMENTS DURING THE PERIOD?
A. There were a couple. While the share prices of Federated Department
Stores and Consolidated Stores recovered somewhat toward the end of
the period, stock performance of Federated suffered in the second half
of 1998 in response to lower-than-expected sales results. Shares of
Consolidated Stores were hurt as the company struggled to execute
certain business plans.
Q. WHAT'S YOUR OUTLOOK FOR RETAIL STOCKS OVER THE NEXT SIX MONTHS?
A. While the future for many retail stocks and the broader market
indexes lies in the hands of the economic environment to a large
extent, it is very difficult to predict where the economy and
financial markets may be headed over the next six months. A strong
argument can be made to say that the U.S. economy and consumer
spending will remain strong. On the other hand, many economists remain
cautious about the impact of persistent problems overseas. As a
result, I remain focused on extensive bottom-up, stock-by-stock
research to locate companies that can outperform others in the retail
industry, regardless of the economic environment and the general
direction of the 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 OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark)FUND FACTS
START DATE: December 16, 1985
FUND NUMBER: 046
TRADING SYMBOL: FSRPX
SIZE: as of February 28, 1999, more than
$337 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 FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 91.9%
SHARES VALUE (NOTE 1)
APPAREL STORES - 13.3%
Abercrombie & Fitch Co. Class 130,401 $ 9,910,476
A (a)
AnnTaylor Stores Corp. (a) 49,700 1,879,281
Gap, Inc. 267,125 17,279,648
Limited, Inc. (The) 179,200 6,361,600
Ross Stores, Inc. 41,100 1,880,325
TJX Companies, Inc. 310,400 8,865,800
46,177,130
DRUG STORES - 11.2%
CVS Corp. 366,274 19,412,522
Duane Reade, Inc. (a) 100 3,025
Rite Aid Corp. 50,700 2,097,713
Walgreen Co. 548,100 17,539,200
39,052,460
GENERAL MERCHANDISE STORES -
25.7%
Consolidated Stores Corp. (a) 90,758 2,285,967
Costco Companies, Inc. (a) 152,300 12,231,594
Dayton Hudson Corp. 387,600 24,249,222
Dollar Tree Stores, Inc. (a) 24,800 992,000
Federated Department Stores, 409,100 15,571,369
Inc. (a)
Nordstrom, Inc. 96,900 3,900,225
Saks, Inc. (a) 350,385 12,591,961
Wal-Mart Stores, Inc. 207,200 17,896,900
89,719,238
GROCERY STORES - 15.9%
Albertson's, Inc. 93,000 5,301,000
American Stores Co. 116,000 3,915,000
Kroger Co. (a) 157,700 10,201,219
Loblaw Companies Ltd. 145,200 3,755,671
Meyer (Fred), Inc. (a) 179,080 11,505,890
Safeway, Inc. (a) 361,174 20,857,799
55,536,579
RESTAURANTS - 6.6%
McDonald's Corp. 224,800 19,108,000
Starbucks Corp. (a) 29,500 1,559,813
Tricon Global Restaurants, 39,000 2,418,000
Inc. (a)
23,085,813
RETAIL & WHOLESALE,
MISCELLANEOUS - 19.2%
Barnes & Noble, Inc. (a) 38,800 1,147,025
Bed Bath & Beyond, Inc. (a) 95,100 2,799,506
Best Buy Co., Inc. (a) 64,400 5,973,100
Circuit City Stores, Inc. - 58,400 3,168,200
Circuit City Group
Home Depot, Inc. 298,500 17,816,719
Lowe's Companies, Inc. 233,100 13,825,744
Noodle Kidoodle, Inc. (a) 58,100 464,800
Office Depot, Inc. (a) 209,300 7,469,394
Staples, Inc. (a) 277,900 8,171,997
SHARES VALUE (NOTE 1)
Tandy Corp. 60,100 $ 3,343,063
Williams-Sonoma, Inc. (a) 75,200 2,570,900
66,750,448
TEXTILES & APPAREL - 0.0%
Liz Claiborne, Inc. 1,700 57,269
Polo Ralph Lauren Corp. Class 300 5,981
A (a)
63,250
TOTAL COMMON STOCKS 320,384,918
(Cost $219,758,753)
CASH EQUIVALENTS - 8.1%
Taxable Central Cash Fund (b) 28,256,826 28,256,826
(Cost $28,256,826)
TOTAL INVESTMENT IN $ 348,641,744
SECURITIES - 100%
(Cost $248,015,579)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. 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 $486,355,683 and $423,275,928, respectively.
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 $155,653 for the
period.
The fund participated in the interfund lending program as a borrower.
The maximum loan and average daily balances during the period for
which 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.
The fund participated in the bank borrowing program. The maximum loan
and average daily balances during the period for which loans were
outstanding amounted to $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.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $251,616,531. Net unrealized appreciation
aggregated $97,025,213, of which $100,236,719 related to appreciated
investment securities and $3,211,506 related to depreciated investment
securities.
The fund hereby designates approximately $3,435,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 100% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentage for use in preparing 1999 income tax returns.
RETAILING PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 348,641,744
value (cost $248,015,579) -
See accompanying schedule
Receivable for fund shares 2,120,505
sold
Dividends receivable 73,994
Interest receivable 70,783
Redemption fees receivable 8,315
Other receivables 235,410
TOTAL ASSETS 351,150,751
LIABILITIES
Payable for investments $ 2,357,631
purchased
Payable for fund shares 10,939,389
redeemed
Accrued management fee 164,791
Other payables and accrued 175,768
expenses
TOTAL LIABILITIES 13,637,579
NET ASSETS $ 337,513,172
Net Assets consist of:
Paid in capital $ 239,803,785
Accumulated undistributed net (2,916,778)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 100,626,165
(depreciation) on investments
NET ASSETS, for 5,000,251 $ 337,513,172
shares outstanding
NET ASSET VALUE and $67.50
redemption price per share
($337,513,172 (divided by)
5,000,251 shares)
Maximum offering price per $69.59
share (100/97.00 of $67.50)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 1,053,166
Dividends
Interest (including income on 981,331
securities loaned of $1,752)
TOTAL INCOME 2,034,497
EXPENSES
Management fee $ 1,658,052
Transfer agent fees 1,394,457
Accounting and security 268,988
lending fees
Non-interested trustees' 1,114
compensation
Custodian fees and expenses 16,538
Registration fees 109,094
Audit 21,635
Legal 2,333
Interest 36,893
Reports to shareholders 26,779
Miscellaneous 107
Total expenses before 3,535,990
reductions
Expense reductions (80,480) 3,455,510
NET INVESTMENT INCOME (LOSS) (1,421,013)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 378,538
Foreign currency transactions 3,370 381,908
Change in net unrealized 79,277,166
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 79,659,074
NET INCREASE (DECREASE) IN $ 78,238,061
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 1,568,122
charges paid to FDC
Sales charges - Retained by $ 1,565,474
FDC
Deferred sales charges $ 2,870
withheld by FDC
Exchange fees withheld by FSC $ 36,173
Expense reductions Directed $ 80,365
brokerage arrangements
Custodian credits 115
$ 80,480
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (1,421,013) $ (1,019,153)
income (loss)
Net realized gain (loss) 381,908 6,177,469
Change in net unrealized 79,277,166 16,637,718
appreciation (depreciation)
NET INCREASE (DECREASE) IN 78,238,061 21,796,034
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (1,977,498) (3,631,382)
From net realized gains
In excess of net realized (1,495,766) -
gain
TOTAL DISTRIBUTIONS (3,473,264) (3,631,382)
Share transactions Net 767,856,791 722,604,794
proceeds from sales of shares
Reinvestment of distributions 3,407,803 3,609,234
Cost of shares redeemed (702,182,873) (612,476,826)
NET INCREASE (DECREASE) IN 69,081,721 113,737,202
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 805,978 1,610,457
TOTAL INCREASE (DECREASE) 144,652,496 133,512,311
IN NET ASSETS
NET ASSETS
Beginning of period 192,860,676 59,348,365
End of period $ 337,513,172 $ 192,860,676
OTHER INFORMATION
Shares
Sold 13,691,594 17,451,277
Issued in reinvestment of 64,738 95,408
distributions
Redeemed (12,610,578) (15,477,247)
Net increase (decrease) 1,145,754 2,069,438
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 50.04 $ 33.25 $ 27.87 $ 23.91 $ 24.91
period
Income from Investment
Operations
Net investment income (loss) C (.28) (.27) (.13) (.14) (.18)
Net realized and unrealized 18.27 17.14 5.49 4.07 (.96)
gain (loss)
Total from investment 17.99 16.87 5.36 3.93 (1.14)
operations
Less Distributions
From net realized gain (.39) (.51) (.08) - -
In excess of net realized gain (.30) - - - -
Total distributions (.69) (.51) (.08) - -
Redemption fees added to paid .16 .43 .10 .03 .14
in capital
Net asset value, end of period $ 67.50 $ 50.04 $ 33.25 $ 27.87 $ 23.91
TOTAL RETURN A, B 36.66% 52.61% 19.59% 16.56% (4.01)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 337,513 $ 192,861 $ 59,348 $ 44,051 $ 31,090
(000 omitted)
Ratio of expenses to average 1.25% 1.63% 1.45% 1.94% 2.07%
net assets
Ratio of expenses to average 1.22% D 1.55% D 1.39% D 1.92% D 1.96% D
net assets after expense
reductions
Ratio of net investment (.50)% (.67)% (.39)% (.53)% (.74)%
income (loss) to average net
assets
Portfolio turnover rate 165% 308% 278% 235% 481%
</TABLE>
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. DFMR OR THE FUND
HAS ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE
FUND'S EXPENSES. E FOR THE
YEAR ENDED FEBRUARY 29.
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT AIR TRANSPORTATION 4.11% 93.22% 243.45%
SELECT AIR TRANSPORTATION 0.92% 87.35% 233.08%
(LOAD ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Cyclical Industries -4.79% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT AIR TRANSPORTATION 4.11% 14.08% 13.13%
SELECT AIR TRANSPORTATION 0.92% 13.38% 12.79%
(LOAD ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Cyclical Industries -4.79% 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
1989/02/28 9700.00 10000.00
1989/03/31 10185.90 10233.00
1989/04/30 10590.82 10764.09
1989/05/31 10860.76 11200.04
1989/06/30 10806.47 11136.20
1989/07/31 11567.36 12141.80
1989/08/31 12446.01 12379.78
1989/09/30 11956.87 12329.02
1989/10/31 11014.81 12042.99
1989/11/30 10906.11 12288.66
1989/12/31 11003.86 12583.59
1990/01/31 9871.38 11739.23
1990/02/28 10286.62 11890.67
1990/03/31 10824.55 12205.77
1990/04/30 10428.18 11900.63
1990/05/31 11154.85 13060.94
1990/06/30 11183.17 12972.12
1990/07/31 10843.42 12930.61
1990/08/31 9125.84 11761.68
1990/09/30 8210.43 11188.89
1990/10/31 8644.54 11140.78
1990/11/30 8512.42 11860.47
1990/12/31 9003.16 12191.38
1991/01/31 10069.57 12722.92
1991/02/28 11202.04 13632.61
1991/03/31 11154.85 13962.52
1991/04/30 10881.17 13996.03
1991/05/31 11522.91 14600.66
1991/06/30 11279.94 13931.95
1991/07/31 11626.72 14581.18
1991/08/31 11482.23 14926.75
1991/09/30 11096.92 14677.48
1991/10/31 11636.35 14874.16
1991/11/30 11116.18 14274.73
1991/12/31 12339.54 15907.76
1992/01/31 13052.36 15611.87
1992/02/29 13639.96 15814.83
1992/03/31 12840.44 15506.44
1992/04/30 12175.78 15962.33
1992/05/31 12339.54 16040.54
1992/06/30 11938.84 15801.54
1992/07/31 11870.23 16447.82
1992/08/31 11370.33 16110.64
1992/09/30 11742.80 16300.75
1992/10/31 12164.29 16357.80
1992/11/30 12458.35 16915.60
1992/12/31 13149.97 17123.66
1993/01/31 13268.89 17267.50
1993/02/28 13476.99 17502.34
1993/03/31 14963.42 17871.64
1993/04/30 15132.57 17439.14
1993/05/31 15997.01 17906.51
1993/06/30 14804.68 17958.44
1993/07/31 15311.42 17886.61
1993/08/31 16225.54 18564.51
1993/09/30 15897.65 18421.56
1993/10/31 16811.76 18802.89
1993/11/30 16851.51 18624.26
1993/12/31 17211.64 18849.62
1994/01/31 17876.33 19490.50
1994/02/28 17241.85 18962.31
1994/03/31 16244.80 18135.55
1994/04/30 16137.97 18367.69
1994/05/31 15463.33 18668.92
1994/06/30 14992.15 18211.53
1994/07/31 15773.88 18808.87
1994/08/31 16373.56 19580.03
1994/09/30 14542.38 19100.32
1994/10/31 14660.18 19530.08
1994/11/30 13685.69 18818.79
1994/12/31 13469.22 19097.87
1995/01/31 13902.66 19593.08
1995/02/28 15094.63 20356.63
1995/03/31 16069.87 20957.35
1995/04/30 17359.37 21574.54
1995/05/31 17641.10 22436.88
1995/06/30 19873.33 22958.09
1995/07/31 20545.17 23719.38
1995/08/31 19754.13 23778.91
1995/09/30 20480.15 24782.38
1995/10/31 20241.76 24693.91
1995/11/30 22853.25 25777.97
1995/12/31 21488.66 26274.46
1996/01/31 21001.29 27168.84
1996/02/29 23382.76 27420.69
1996/03/31 24579.04 27684.75
1996/04/30 23549.65 28092.83
1996/05/31 23773.83 28817.34
1996/06/30 23661.74 28927.14
1996/07/31 19783.50 27649.13
1996/08/31 19424.82 28232.26
1996/09/30 19189.44 29821.17
1996/10/31 19010.10 30643.63
1996/11/30 21330.31 32959.99
1996/12/31 21756.25 32307.05
1997/01/31 20904.38 34325.59
1997/02/28 19861.96 34594.71
1997/03/31 21083.72 33173.21
1997/04/30 22238.23 35153.65
1997/05/31 23785.04 37293.80
1997/06/30 24065.26 38964.57
1997/07/31 25511.19 42064.98
1997/08/31 24536.03 39708.50
1997/09/30 26542.40 41883.33
1997/10/31 26307.01 40484.43
1997/11/30 26979.54 42358.45
1997/12/31 28531.70 43085.75
1998/01/31 29615.78 43562.28
1998/02/28 31998.39 46703.99
1998/03/31 33439.86 49095.70
1998/04/30 34551.12 49589.60
1998/05/31 33110.99 48737.16
1998/06/30 35211.18 50716.86
1998/07/31 33339.01 50176.72
1998/08/31 26210.37 42922.17
1998/09/30 25802.33 45671.77
1998/10/31 28346.56 49386.71
1998/11/30 28958.62 52380.04
1998/12/31 30362.74 55398.18
1999/01/31 32486.93 57714.93
1999/02/26 33308.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990309 142758 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Air Transportation Portfolio on February
28, 1989, and the current 3.00% sales charge was paid. As the chart
shows, by February 28, 1999, the value of the investment would have
grown to $33,308 - a 233.08% 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 $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Continental Airlines, Inc. 8.0
Class B
Delta Air Lines, Inc. 5.5
Northwest Airlines Corp. 5.3
Class A
United Technologies Corp. 4.5
Cordant Technologies, Inc. 4.4
ASA Holdings, Inc. 4.4
AMR Corp. 4.3
Airborne Freight Corp. 4.3
Sabre Group Holdings, Inc. 4.3
Class A
Sundstrand Corp. 4.0
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Air Transportation 50.9%
Aerospace & Defense 25.1%
Trucking & Freight 9.5%
Computer Services
& Software 4.3%
Industrial Machinery
& Equipment 1.8%
All Others 8.4%*
* INCLUDES SHORT-TERM INVESTMENTS
Row: 1, Col: 1, Value: 8.4
Row: 1, Col: 2, Value: 1.8
Row: 1, Col: 3, Value: 4.3
Row: 1, Col: 4, Value: 9.5
Row: 1, Col: 5, Value: 25.1
Row: 1, Col: 6, Value: 50.9
AIR TRANSPORTATION PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Christopher Zepf)
NOTE TO SHAREHOLDERS: Christopher Zepf became Portfolio Manager of
Fidelity Select Air Transportation Portfolio on
October 30, 1998.
Q. HOW DID THE FUND PERFORM, CHRIS?
A. For the 12-month period that ended February 28, 1999, the fund
returned 4.11%. For the same 12-month period, the Standard & Poor's
500 Index returned 19.74%. For another comparison, the Goldman Sachs
Cyclical Industries Index - an index of 277 stocks designed to measure
the performance of companies in the cyclical industries sector -
returned -4.79%.
Q. THE PAST 12 MONTHS PROVED TO BE A FAIRLY TURBULENT TIME FOR AIRLINE
STOCKS. WHAT FACTORS INFLUENCED THEIR PERFORMANCE?
A. Airlines are cyclical - meaning, they are very sensitive to the
economy's ebbs and flows - and they performed according to shifting
expectations throughout the year. In the early months of the period,
airline stocks behaved fairly well based on investors' beliefs that
the U.S. economy would be resistant to problems in Southeast Asia and
Latin America. In July, airline stocks reversed course and began to
perform quite poorly based on fears that the U.S. economy was in
danger of slowing after all. Furthermore, weak airline traffic out of
the troubled Asia and Latin America regions hurt the international
operations of U.S. carriers. Another worry was the future growth in
industry capacity - which is expected to expand about 5% in 1999.
Investors worried that supply would outstrip demand. Over the past
several months of the period, however, airline stocks gained some
altitude on news that the U.S. economy was growing at a much
quicker-than-expected pace and that many of the troubled areas of the
world were doing a bit better than originally expected. The fact that
oil prices were low was another positive, since fuel is one of the
airlines' major expenditures.
Q. WHAT CHANGES HAVE YOU MADE SINCE TAKING OVER THE FUND?
A. I focused on finding stocks that I felt already had priced in the
possibility of a global recession. My reason for emphasizing those
stocks was that I felt they had limited downside if a recession were
to occur, and good potential for strong returns if the economy turned
out to be stronger than most observers believed. Specifically, I made
significant additions to the fund's holdings in America West, which
staged a major rebound after resolving its labor dispute with its
mechanics. Other airlines with most of their operations in the United
States also posted strong returns, including Southwest Airlines and
Atlantic Coast Airlines. I also added to the fund's holdings in
Continental Airlines, which I liked because it has grown at a faster
pace than the industry as a whole. That stock, too, posted decent
gains since I added to the fund's stake in it.
Q. WERE THERE ANY DISAPPOINTMENTS AMONG THE FUND'S AIRLINE HOLDINGS?
A. Yes, there were. Atlantic Southeast Airlines (ASA) lagged the
regional airline group, mostly due to operational and company-specific
issues. Delta, which already owned roughly 27% of ASA, recently
announced its intention to acquire the company.
Q. WHAT INVESTMENTS DID YOU CHOOSE OUTSIDE THE AIRLINE GROUP?
A. I added to the fund's stake in computer reservations provider Sabre
Group, which performed relatively well. The company is getting more
and more of the reservations business that airlines are increasingly
outsourcing. In addition, Travelocity - the company's Internet booking
and travel information service - continued to attract both new
customers and higher sales. Airborne Freight, which I bought in the
late fall when fears of a global recession were at their peak, and
thus had an attractive valuation, has performed well.
Q. WHAT'S YOUR OUTLOOK?
A. I think that capacity growth - which is measured in available seat
miles - will be an issue for airline stocks over the next two years.
In an environment where capacity outpaces demand, it will be difficult
for airlines to grow their earnings. However, if the U.S. economy
remains robust and oil prices remain low, airline stocks could
continue their recent strong 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 OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark)FUND FACTS
START DATE: December 16, 1985
FUND NUMBER: 034
TRADING SYMBOL: FSAIX
SIZE: as of February 28, 1999, more than
$65 million
MANAGER: Christopher Zepf, since October
1998; manager, Fidelity Select Transportation
Portfolio, since 1998; joined Fidelity in 1998
AIR TRANSPORTATION PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.9%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 25.1%
Boeing Co. 46,000 $ 1,635,875
Cordant Technologies, Inc. 75,600 2,943,675
Gulfstream Aerospace Corp. (a) 49,100 2,197,225
Howmet International, Inc. (a) 39,000 628,875
Kellstrom Industries, Inc. (a) 38,000 615,125
Lockheed Martin Corp. 70,000 2,638,125
Precision Castparts Corp. 13,400 497,475
Sundstrand Corp. 39,300 2,660,119
United Technologies Corp. 24,000 2,973,000
16,789,494
AIR TRANSPORTATION - 50.9%
Air Canada, Inc. (a) 75,001 303,426
Alaska Air Group, Inc. (a) 37,300 1,890,644
America West Holding Corp. 94,300 1,603,100
Class B (a)
AMR Corp. (a) 52,300 2,899,381
ASA Holdings, Inc. 87,600 2,940,075
Atlantic Coast Airlines 21,000 672,000
Holdings (a)
Atlas Air, Inc. (a) 21,450 646,181
British Airways PLC ADR 7,000 518,000
Comair Holdings, Inc. 56,850 2,138,981
Continental Airlines, Inc. 155,200 5,373,801
Class B (a)
Delta Air Lines, Inc. 60,000 3,648,750
Midwest Express Holdings, 70,400 1,892,000
Inc. (a)
Northwest Airlines Corp. 142,000 3,550,000
Class A (a)
Ryanair Holdings PLC 24,600 931,725
sponsored ADR (a)
SkyWest, Inc. 1,500 47,156
Southwest Airlines Co. 79,400 2,391,925
US Airways Group, Inc. (a) 53,800 2,548,775
33,995,920
AUTOS, TIRES, & ACCESSORIES -
0.5%
World Fuel Services Corp. 30,200 313,325
COMPUTER SERVICES & SOFTWARE
- - 4.3%
Sabre Group Holdings, Inc. 73,000 2,865,250
Class A (a)
DEFENSE ELECTRONICS - 0.8%
Litton Industries, Inc. (a) 10,000 561,250
INDUSTRIAL MACHINERY &
EQUIPMENT - 1.8%
AVTEAM, Inc. Class A (a) 252,300 1,198,425
TRUCKING & FREIGHT - 9.5%
Airborne Freight Corp. 73,800 2,878,200
Eagle USA Airfreight, Inc. (a) 35,000 1,010,625
Expeditors International of 11,100 516,844
Washington, Inc.
FDX Corp. (a) 20,000 1,910,000
6,315,669
TOTAL COMMON STOCKS 62,039,333
(Cost $54,824,623)
CASH EQUIVALENTS - 7.1%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund (b) 4,743,535 $ 4,743,535
(Cost $4,743,535)
TOTAL INVESTMENT IN $ 66,782,868
SECURITIES - 100%
(Cost $59,568,158)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. 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 $237,617,388 and $344,369,991, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $73,991 for the
period.
The fund participated in the bank borrowing program. The maximum loan
and average daily balance during the period for which the loan was
outstanding amounted to $3,008,000. The weighted average interest rate
was 5.94%.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $61,896,349. Net unrealized appreciation
aggregated $4,886,519, of which $6,246,428 related to appreciated
investment securities and $1,359,909 related to depreciated investment
securities.
The fund hereby designates approximately $804,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 18% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentage for use in preparing 1999 income tax returns.
AIR TRANSPORTATION PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 66,782,868
value (cost $59,568,158) -
See accompanying schedule
Foreign currency held at 318,434
value (cost $321,010)
Receivable for investments 1,775,553
sold
Receivable for fund shares 1,309,792
sold
Dividends receivable 42,072
Interest receivable 15,702
Redemption fees receivable 1,321
Other receivables 575
TOTAL ASSETS 70,246,317
LIABILITIES
Payable for investments $ 3,003,785
purchased
Payable for fund shares 1,221,159
redeemed
Accrued management fee 29,597
Other payables and accrued 42,365
expenses
TOTAL LIABILITIES 4,296,906
NET ASSETS $ 65,949,411
Net Assets consist of:
Paid in capital $ 49,213,691
Accumulated undistributed net 9,519,067
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 7,216,653
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 2,375,389 $ 65,949,411
shares outstanding
NET ASSET VALUE and $27.76
redemption price per share
($65,949,411 (divided by)
2,375,389 shares)
Maximum offering price per $28.62
share (100/97.00 of $27.76)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 379,217
Dividends
Interest 372,979
TOTAL INCOME 752,196
EXPENSES
Management fee $ 573,138
Transfer agent fees 575,180
Accounting fees and expenses 98,333
Non-interested trustees' 374
compensation
Custodian fees and expenses 18,252
Registration fees 17,710
Audit 20,919
Legal 638
Interest 496
Reports to shareholders 18,150
Total expenses before 1,323,190
reductions
Expense reductions (76,482) 1,246,708
NET INVESTMENT INCOME (LOSS) (494,512)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 10,288,875
Foreign currency transactions 5,295 10,294,170
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (7,872,698)
Assets and liabilities in 1,943 (7,870,755)
foreign currencies
NET GAIN (LOSS) 2,423,415
NET INCREASE (DECREASE) IN $ 1,928,903
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 432,957
charges paid to FDC
Sales charges - Retained by $ 423,538
FDC
Deferred sales charges $ 2,545
withheld by FDC
Exchange fees withheld by FSC $ 21,908
Expense reductions Directed $ 71,923
brokerage arrangements
Custodian credits 4,559
$ 76,482
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (494,512) $ (529,067)
income (loss)
Net realized gain (loss) 10,294,170 13,099,045
Change in net unrealized (7,870,755) 17,664,167
appreciation (depreciation)
NET INCREASE (DECREASE) IN 1,928,903 30,234,145
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (1,287,140) (3,545,132)
from net realized gains
Share transactions Net 234,828,394 317,061,095
proceeds from sales of shares
Reinvestment of distributions 1,276,230 3,512,172
Cost of shares redeemed (352,683,506) (202,499,252)
NET INCREASE (DECREASE) IN (116,578,882) 118,074,015
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 701,437 464,487
TOTAL INCREASE (DECREASE) (115,235,682) 145,227,515
IN NET ASSETS
NET ASSETS
Beginning of period 181,185,093 35,957,578
End of period 65,949,411 181,185,093
OTHER INFORMATION
Shares
Sold 8,676,907 13,782,585
Issued in reinvestment of 44,922 154,313
distributions
Redeemed (13,091,302) (9,221,113)
Net increase (decrease) (4,369,473) 4,715,785
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 F 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 26.86 $ 17.72 $ 21.11 $ 13.93 $ 17.12
period
Income from Investment
Operations
Net investment income (loss) C (.14) (.19) (.22) (.01) (.18)
Net realized and unrealized 1.06 10.59 (3.12) 7.47 (2.01)
gain (loss)
Total from investment .92 10.40 (3.34) 7.46 (2.19)
operations
Less Distributions
From net realized gain (.21) (1.43) (.07) (.46) (.92)
In excess of net realized gain - - (.20) - (.17)
Total distributions (.21) (1.43) (.27) (.46) (1.09)
Redemption fees added to paid .19 .17 .22 .18 .09
in capital
Net asset value, end of period $ 27.76 $ 26.86 $ 17.72 $ 21.11 $ 13.93
TOTAL RETURN A, B 4.11% 61.10% (15.06)% 54.91% (12.45)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 65,949 $ 181,185 $ 35,958 $ 75,359 $ 18,633
(000 omitted)
Ratio of expenses to average 1.35% 1.93% 1.89% 1.47% 2.50% D
net assets
Ratio of expenses to average 1.27% E 1.87% E 1.80% E 1.41% E 2.50%
net assets after expense
reductions
Ratio of net investment (.50)% (.84)% (1.10)% (.07)% (1.31)%
income (loss) to average net
assets
Portfolio turnover rate 260% 294% 469% 504% 200%
</TABLE>
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR AGREED TO
REIMBURSE A PORTION OF THE
FUND'S EXPENSES, OR EXPENSES
WERE LIMITED IN ACCORDANCE
WITH A STATE EXPENSE
LIMITATION. WITHOUT THIS
REIMBURSEMENT, THE FUND'S
EXPENSE RATIO WOULD HAVE
BEEN HIGHER. E FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. F FOR
THE YEAR ENDED FEBRUARY 29.
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT AUTOMOTIVE -8.52% 30.40% 229.42%
SELECT AUTOMOTIVE (LOAD ADJ.) -11.34% 26.41% 219.47%
S&P 500 19.74% 194.91% 459.21%
GS Cyclical Industries -4.79% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT AUTOMOTIVE -8.52% 5.45% 12.66%
SELECT AUTOMOTIVE (LOAD ADJ.) -11.34% 4.80% 12.32%
S&P 500 19.74% 24.15% 18.78%
GS Cyclical Industries -4.79% 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
1989/02/28 9700.00 10000.00
1989/03/31 9884.69 10233.00
1989/04/30 10326.32 10764.09
1989/05/31 10478.89 11200.04
1989/06/30 10294.21 11136.20
1989/07/31 10655.55 12141.80
1989/08/31 10759.93 12379.78
1989/09/30 10511.01 12329.02
1989/10/31 9635.76 12042.99
1989/11/30 9724.09 12288.66
1989/12/31 9755.09 12583.59
1990/01/31 9497.50 11739.23
1990/02/28 9780.02 11890.67
1990/03/31 10145.63 12205.77
1990/04/30 10112.39 11900.63
1990/05/31 10685.73 13060.94
1990/06/30 10877.08 12972.12
1990/07/31 10910.78 12930.61
1990/08/31 9343.67 11761.68
1990/09/30 8450.59 11188.89
1990/10/31 8282.08 11140.78
1990/11/30 8770.75 11860.47
1990/12/31 9099.33 12191.38
1991/01/31 9613.28 12722.92
1991/02/28 10396.83 13632.61
1991/03/31 10481.09 13962.52
1991/04/30 10599.04 13996.03
1991/05/31 11450.00 14600.66
1991/06/30 11424.72 13931.95
1991/07/31 11896.54 14581.18
1991/08/31 12284.10 14926.75
1991/09/30 11921.81 14677.48
1991/10/31 12233.55 14874.16
1991/11/30 11626.93 14274.73
1991/12/31 12495.69 15907.76
1992/01/31 13845.61 15611.87
1992/02/29 15239.94 15814.83
1992/03/31 15568.54 15506.44
1992/04/30 16563.22 15962.33
1992/05/31 16554.34 16040.54
1992/06/30 16455.85 15801.54
1992/07/31 16607.07 16447.82
1992/08/31 15575.24 16110.64
1992/09/30 15317.29 16300.75
1992/10/31 15957.73 16357.80
1992/11/30 16731.60 16915.60
1992/12/31 17695.72 17123.66
1993/01/31 18512.86 17267.50
1993/02/28 18785.25 17502.34
1993/03/31 19793.06 17871.64
1993/04/30 19678.70 17439.14
1993/05/31 20877.02 17906.51
1993/06/30 21242.13 17958.44
1993/07/31 21485.54 17886.61
1993/08/31 22234.50 18564.51
1993/09/30 22468.54 18421.56
1993/10/31 22946.00 18802.89
1993/11/30 22946.00 18624.26
1993/12/31 23957.28 18849.62
1994/01/31 25322.97 19490.50
1994/02/28 24505.48 18962.31
1994/03/31 22783.94 18135.55
1994/04/30 22320.66 18367.69
1994/05/31 21989.98 18668.92
1994/06/30 21707.93 18211.53
1994/07/31 22359.56 18808.87
1994/08/31 21989.98 19580.03
1994/09/30 21056.31 19100.32
1994/10/31 21455.06 19530.08
1994/11/30 20161.53 18818.79
1994/12/31 20902.03 19097.87
1995/01/31 20405.39 19593.08
1995/02/28 21420.26 20356.63
1995/03/31 21312.30 20957.35
1995/04/30 21247.52 21574.54
1995/05/31 21679.38 22436.88
1995/06/30 22219.21 22958.09
1995/07/31 23817.09 23719.38
1995/08/31 23601.16 23778.91
1995/09/30 23719.92 24782.38
1995/10/31 22618.68 24693.91
1995/11/30 23180.09 25777.97
1995/12/31 23709.12 26274.46
1996/01/31 23428.41 27168.84
1996/02/29 23590.36 27420.69
1996/03/31 25026.30 27684.75
1996/04/30 26290.70 28092.83
1996/05/31 26896.08 28817.34
1996/06/30 26582.58 28927.14
1996/07/31 25036.71 27649.13
1996/08/31 25674.51 28232.26
1996/09/30 25890.72 29821.17
1996/10/31 26009.63 30643.63
1996/11/30 27328.49 32959.99
1996/12/31 27519.42 32307.05
1997/01/31 28001.43 34325.59
1997/02/28 28449.82 34594.71
1997/03/31 27889.34 33173.21
1997/04/30 28512.51 35153.65
1997/05/31 30143.12 37293.80
1997/06/30 31051.61 38964.57
1997/07/31 32414.34 42064.98
1997/08/31 32169.75 39708.50
1997/09/30 33928.48 41883.33
1997/10/31 32367.75 40484.43
1997/11/30 32146.45 42358.45
1997/12/31 32136.75 43085.75
1998/01/31 32124.04 43562.28
1998/02/28 34931.25 46703.99
1998/03/31 37052.53 49095.70
1998/04/30 36881.67 49589.60
1998/05/31 36675.78 48737.16
1998/06/30 36113.02 50716.86
1998/07/31 34767.87 50176.72
1998/08/31 28055.88 42922.17
1998/09/30 28069.60 45671.77
1998/10/31 30608.91 49386.71
1998/11/30 32269.75 52380.04
1998/12/31 33724.70 55398.18
1999/01/31 34163.93 57714.93
1999/02/26 31947.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990309 142800 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Automotive Portfolio on February 28, 1989,
and the current 3.00% sales charge was paid. As the chart shows, by
February 28, 1999, the value of the investment would have grown to
$31,947 - a 219.47% 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 $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Federal-Mogul Corp. 8.4
Ford Motor Co. 7.3
TRW, Inc. 6.2
Danaher Corp. 6.0
DaimlerChrysler AG (Reg.) 5.5
Eaton Corp. 4.8
Honda Motor Co. Ltd. 4.7
AutoZone, Inc. 4.7
Johnson Controls, Inc. 4.6
General Motors Corp. 4.1
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Autos, Tires, & Accessories 92.9%
Iron & Steel 1.5%
Industrial Machinery
& Equipment 1.2%
Electronics 0.5%
Leisure Durables & Toys 0.4%
All Others 3.5%*
* INCLUDES SHORT-TERM INVESTMENTS
Row: 1, Col: 1, Value: 3.5
Row: 1, Col: 2, Value: 1.4
Row: 1, Col: 3, Value: 1.5
Row: 1, Col: 4, Value: 1.2
Row: 1, Col: 5, Value: 1.5
Row: 1, Col: 6, Value: 92.90000000000001
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 12 months that ended February 28, 1999, the fund returned
- -8.52%, while the Standard & Poor's 500 Index returned 19.74%. During
the same period, the Goldman Sachs Cyclical Industries Index - an
index of 277 stocks designed to measure the performance of companies
in the cyclical industries sector - generated a return of -4.79%.
Q. WHY DID THE FUND UNDERPERFORM ITS TWO BENCHMARKS OVER THE PAST 12
MONTHS?
A. Although it was a fairly good year for automakers, many auto-parts
makers and retailers hit a rough patch as a result of continued
softness in the after-market, or the market for replacement parts.
Longer-lasting vehicles caused a drop in the demand for replacement
parts - a trend that dragged down the performance of the entire
automotive industry during the period. Parts manufacturers also faced
pricing pressures as a result of sluggish sales in the after-market.
Q. SIX MONTHS AGO, YOU TALKED ABOUT THE DIFFICULT ENVIRONMENT FOR
CYCLICAL STOCKS. DID THAT SITUATION IMPROVE RECENTLY?
A. Somewhat. Fears of a slowdown in the economy continued to hurt
cyclical stocks from August through October. However, many of these
stocks rebounded in late October and early November when expectations
grew that the Federal Reserve Board would continue to lower the target
for interest rates. Generally, cyclical stocks - such as automakers -
do well when rates are coming down because consumers tend to have more
money. For instance, lower rates can prompt people to refinance their
mortgages, leaving them with more disposable income. Automotive sales
are heavily tied to the financial health of consumers. That said, even
the recent improvement in the economic landscape couldn't erase the
negative returns generated earlier in the year - or the pitfalls
encountered by the parts makers over the past few months.
Q. WHICH INDIVIDUAL HOLDINGS HELPED PERFORMANCE?
A. Big contributors on the auto manufacturing side were Ford Motor
Company and DaimlerChrysler. Ford was the best-performing stock in
this group during the period, because the company was offering the
right mix of products - such as its popular line of sport utility
vehicles (SUVs), which sold well. In addition, DaimlerChrysler reaped
the benefits of its merger, including cost-effectiveness and a
well-received product line. Auto dealerships, such as Group 1
Automotive and Sonic Automotive, were also positive contributors for
the fund. These companies have become more profitable over the past
few years through consolidation in the industry.
Q. WHICH STOCKS WERE DISAPPOINTING?
A. Breed Technologies, a maker of seat belts, air bags and other
safety equipment, was a big detractor from performance. Breed's
restructuring efforts hit a roadblock as the company continued to
struggle with the integration of several of its acquisitions. The fund
sold its position in Breed by the end of the period. In addition, some
auto-parts companies, such as Borg-Warner and Lear Corp., were unable
to offset high fixed costs and lower demand from automakers.
Q. FEDERAL-MOGUL CONTINUED TO BE THE FUND'S NO. 1 HOLDING,
REPRESENTING MORE THAN 8% OF THE PORTFOLIO AT THE END OF THE PERIOD.
WHAT DID YOU FIND ATTRACTIVE ABOUT THAT STOCK?
A. Federal-Mogul is one of the parts manufacturers that was able to
achieve success through an aggressive acquisition strategy. The
company's management team focused on generating strong returns, rather
than just on growing the business.
Q. WHAT'S YOUR OUTLOOK FOR THE AUTOMOTIVE INDUSTRY?
A. Low interest rates and low unemployment bode well for the financial
health of the average U.S. consumer - which is good news for
automakers. As a result, I'm not terribly concerned about sales
volumes in North America. However, I am concerned about pricing
pressures that may arise because some manufacturers aren't offering
competitive products in specific segments of the market, such as small
passenger cars, compact SUVs and small pick-up trucks. As a result,
some manufacturers may need to rely solely on price for its sales.
We're witnessing a similar situation in Europe as pricing pressures
are mounting in the market for smaller passenger cars. Overall, I
think the global economy is stable. Therefore, manufacturers with
competitive product lines and good management teams should continue to
thrive in this market. On the other hand, auto-parts makers may
continue to suffer as a result of increasing fixed costs and pricing
pressures from the automakers.
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 OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark)FUND FACTS
START DATE: June 30, 1986
FUND NUMBER: 502
TRADING SYMBOL: FSAVX
SIZE: as of February 28, 1999, more than
$64 million
MANAGER: Albert Grosman, since 1997; analyst,
automotive manufacturing, automotive parts, tire
and rental car industries, 1997- present; Latin
American steel, oil and cable industries,
1996-1997; joined Fidelity in 1996
AUTOMOTIVE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 96.8%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES -
92.9%
American Axle & Manufacturing 24,000 $ 352,500
Holdings, Inc. (a)
Arvin Industries, Inc. 27,200 986,000
AutoZone, Inc. (a) 86,200 3,017,000
Borg-Warner Automotive, Inc. 13,800 601,163
DaimlerChrysler AG (Reg.) 37,927 3,562,768
Dana Corp. 48,500 1,830,875
Danaher Corp. 80,200 3,869,650
Delphi Automotive Systems 4,000 73,750
Corp. (a)
Discount Auto Parts, Inc. (a) 27,300 585,244
Eaton Corp. 44,750 3,104,531
Federal-Mogul Corp. 110,500 5,435,217
Ford Motor Co. 79,500 4,715,344
General Motors Corp. 32,600 2,691,538
Gentex Corp. (a) 60,700 1,316,431
Goodyear Tire & Rubber Co. 30,500 1,410,625
Group 1 Automotive, Inc. (a) 27,600 695,175
Honda Motor Co. Ltd. 80,000 3,035,000
Johnson Controls, Inc. 48,150 2,961,225
Lear Corp. (a) 40,900 1,444,281
Magna International, Inc. 28,400 1,695,185
Class A
Mascotech, Inc. 26,300 397,788
Monro Muffler Brake, Inc. 5,095 42,671
Navistar International Corp. 43,100 1,853,300
(a)
Oshkosh Truck Co. Class B 3,900 131,625
Pep Boys-Manny, Moe & Jack 92,600 1,689,950
Renault SA 19,200 899,640
Republic Industries, Inc. (a) 45,800 561,050
Snap-On, Inc. 33,100 935,075
Sonic Automotive, Inc. (a) 20,000 322,500
SPX Corp. 45,600 2,604,900
Standard Motor Products, Inc. 17,000 364,438
Standard Products Co. 3,600 54,000
Superior Industries 10,000 247,500
International, Inc.
TBC Corp. (a) 18,000 102,375
Tower Automotive, Inc. (a) 64,400 1,199,450
TRW, Inc. 85,200 4,025,700
Volkswagen AG 12,200 786,854
Volvo AB ADR Class B 12,000 306,000
Wabash National Corp. 15,000 184,688
Wynn's International, Inc. 3,600 66,600
60,159,606
CHEMICALS & PLASTICS - 0.3%
Myers Industries, Inc. 9,200 179,400
ELECTRONICS - 0.5%
Stoneridge, Inc. (a) 19,300 326,894
INDUSTRIAL MACHINERY &
EQUIPMENT - 1.2%
Ballard Power Systems, Inc. 15,000 405,889
(a)
Mark IV Industries, Inc. 26,100 393,131
799,020
SHARES VALUE (NOTE 1)
IRON & STEEL - 1.5%
Linamar Corp. 40,100 $ 712,747
SPS Technologies, Inc. (a) 6,600 272,250
984,997
LEISURE DURABLES & TOYS - 0.4%
Coachmen Industries, Inc. 12,200 247,050
TOTAL COMMON STOCKS 62,696,967
(Cost $63,821,267)
CASH EQUIVALENTS - 3.2%
Taxable Central Cash Fund (b) 2,063,258 2,063,258
(Cost $2,063,258)
TOTAL INVESTMENT IN $ 64,760,225
SECURITIES - 100%
(Cost $65,884,525)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. 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 $95,113,946 and $55,240,463, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $23,803 for the
period.
Distribution of investments by country of issue, as a percentage of
total value of investments in securities, is as follows:
United States of America 82.4%
Germany 6.7
Japan 4.7
Canada 4.3
France 1.4
Others individually less than 0.5
1%
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $66,277,893. Net unrealized depreciation
aggregated $1,517,668, of which $5,404,600 related to appreciated
investment securities and $6,922,268 related to depreciated investment
securities.
The fund hereby designates approximately $978,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
At February 28, 1999, the fund had a capital loss carryforward of
approximately $1,009,000, all of which will expire on February 28,
2007.
The fund intends to elect to defer to its fiscal year ending February
29, 2000 approximately $3,193,000 of losses recognized during the
period November 1, 1998 to February 28,1999.
A total of 33% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentage for use in preparing 1999 income tax returns.
AUTOMOTIVE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 64,760,225
value (cost $65,884,525) -
See accompanying schedule
Receivable for fund shares 28,118
sold
Dividends receivable 119,989
Interest receivable 7,805
Redemption fees receivable 82
Other receivables 2,470
TOTAL ASSETS 64,918,689
LIABILITIES
Payable for fund shares $ 293,270
redeemed
Accrued management fee 34,070
Other payables and accrued 50,255
expenses
TOTAL LIABILITIES 377,595
NET ASSETS $ 64,541,094
Net Assets consist of:
Paid in capital $ 70,210,580
Undistributed net investment 47,401
income
Accumulated undistributed net (4,592,634)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (1,124,253)
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 2,772,595 $ 64,541,094
shares outstanding
NET ASSET VALUE and $23.28
redemption price per share
($64,541,094 (divided by)
2,772,595 shares)
Maximum offering price per $24.00
share (100/97.00 of $23.28)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 700,748
Dividends
Interest 225,135
TOTAL INCOME 925,883
EXPENSES
Management fee $ 357,296
Transfer agent fees 397,375
Accounting fees and expenses 67,412
Non-interested trustees' 160
compensation
Custodian fees and expenses 13,317
Registration fees 19,077
Audit 15,140
Legal 300
Reports to shareholders 6,518
Total expenses before 876,595
reductions
Expense reductions (19,721) 856,874
NET INVESTMENT INCOME 69,009
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (4,430,645)
Foreign currency transactions 307 (4,430,338)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (3,784,738)
Assets and liabilities in 105 (3,784,633)
foreign currencies
NET GAIN (LOSS) (8,214,971)
NET INCREASE (DECREASE) IN $ (8,145,962)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 151,425
charges paid to FDC
Sales charges - Retained by $ 151,425
FDC
Deferred sales charges $ 1,131
withheld by FDC
Exchange fees withheld by FSC $ 4,493
Expense reductions Directed $ 18,421
brokerage arrangements
Custodian credits 1,300
$ 19,721
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ 69,009 $ 108,611
income
Net realized gain (loss) (4,430,338) 12,457,463
Change in net unrealized (3,784,633) (2,220,824)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (8,145,962) 10,345,250
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (41,356) (202,512)
From net investment income
From net realized gain (2,674,498) (7,054,725)
TOTAL DISTRIBUTIONS (2,715,854) (7,257,237)
Share transactions Net 93,308,374 38,285,022
proceeds from sales of shares
Reinvestment of distributions 2,635,878 7,198,159
Cost of shares redeemed (53,084,232) (102,498,033)
NET INCREASE (DECREASE) IN 42,860,020 (57,014,852)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 53,948 69,215
TOTAL INCREASE (DECREASE) 32,052,152 (53,857,624)
IN NET ASSETS
NET ASSETS
Beginning of period 32,488,942 86,346,566
End of period (including $ 64,541,094 $ 32,488,942
undistributed net investment
income of $47,401 and
$52,621, respectively)
OTHER INFORMATION
Shares
Sold 3,661,058 1,443,301
Issued in reinvestment of 97,455 295,056
distributions
Redeemed (2,167,227) (3,958,616)
Net increase (decrease) 1,591,286 (2,220,259)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 27.50 $ 25.38 $ 21.85 $ 19.84 $ 25.48
period
Income from Investment
Operations
Net investment income C .03 .05 .13 .03 .08
Net realized and unrealized (2.09) 5.21 4.28 1.95 (3.46)
gain (loss)
Total from investment (2.06) 5.26 4.41 1.98 (3.38)
operations
Less Distributions
From net investment income (.01) (.08) (.17) - (.05)
From net realized gain (2.17) (3.09) (.75) - (2.26)
Total distributions (2.18) (3.17) (.92) - (2.31)
Redemption fees added to paid .02 .03 .04 .03 .05
in capital
Net asset value, end of period $ 23.28 $ 27.50 $ 25.38 $ 21.85 $ 19.84
TOTAL RETURN A, B (8.52)% 22.78% 20.60% 10.13% (12.59)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 64,541 $ 32,489 $ 86,347 $ 55,753 $ 60,075
(000 omitted)
Ratio of expenses to average 1.45% 1.60% 1.56% 1.81% 1.82%
net assets
Ratio of expenses to average 1.41% D 1.56% D 1.52% D 1.80% D 1.80% D
net assets after expense
reductions
Ratio of net investment .11% .17% .54% .13% .34%
income to average net assets
Portfolio turnover rate 96% 153% 175% 61% 63%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME PER
SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES
OUTSTANDING DURING THE
PERIOD. D FMR OR THE FUND
HAS ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE
FUND'S EXPENSES. E FOR THE
YEAR ENDED FEBRUARY 29.
</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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT CHEMICALS -23.66% 47.01% 187.59%
SELECT CHEMICALS (LOAD ADJ.) -26.02% 42.53% 178.89%
S&P 500 19.74% 194.91% 459.21%
GS Cyclical Industries -4.79% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT CHEMICALS -23.66% 8.01% 11.14%
SELECT CHEMICALS (LOAD ADJ.) -26.02% 7.34% 10.80%
S&P 500 19.74% 24.15% 18.78%
GS Cyclical Industries -4.79% 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
1989/02/28 9700.00 10000.00
1989/03/31 9806.08 10233.00
1989/04/30 10086.13 10764.09
1989/05/31 10319.51 11200.04
1989/06/30 10196.30 11136.20
1989/07/31 10846.04 12141.80
1989/08/31 11342.90 12379.78
1989/09/30 10939.47 12329.02
1989/10/31 10166.57 12042.99
1989/11/30 10383.15 12288.66
1989/12/31 10801.78 12583.59
1990/01/31 10032.14 11739.23
1990/02/28 10099.26 11890.67
1990/03/31 10399.06 12205.77
1990/04/30 10157.43 11900.63
1990/05/31 11043.41 13060.94
1990/06/30 11133.55 12972.12
1990/07/31 11170.38 12930.61
1990/08/31 9678.54 11761.68
1990/09/30 9199.68 11188.89
1990/10/31 9305.58 11140.78
1990/11/30 9927.18 11860.47
1990/12/31 10355.40 12191.38
1991/01/31 11050.67 12722.92
1991/02/28 11897.89 13632.61
1991/03/31 12183.36 13962.52
1991/04/30 12086.67 13996.03
1991/05/31 12924.68 14600.66
1991/06/30 12573.42 13931.95
1991/07/31 13179.43 14581.18
1991/08/31 13438.48 14926.75
1991/09/30 13336.71 14677.48
1991/10/31 13549.51 14874.16
1991/11/30 12874.11 14274.73
1991/12/31 14358.97 15907.76
1992/01/31 14634.73 15611.87
1992/02/29 15162.50 15814.83
1992/03/31 15053.14 15506.44
1992/04/30 15599.92 15962.33
1992/05/31 15509.59 16040.54
1992/06/30 15049.86 15801.54
1992/07/31 15524.75 16447.82
1992/08/31 14994.29 16110.64
1992/09/30 15009.45 16300.75
1992/10/31 14857.89 16357.80
1992/11/30 15307.51 16915.60
1992/12/31 15637.59 17123.66
1993/01/31 15621.51 17267.50
1993/02/28 15348.01 17502.34
1993/03/31 15712.67 17871.64
1993/04/30 16004.11 17439.14
1993/05/31 16246.43 17906.51
1993/06/30 15838.89 17958.44
1993/07/31 16081.21 17886.61
1993/08/31 16868.75 18564.51
1993/09/30 16334.55 18421.56
1993/10/31 16951.36 18802.89
1993/11/30 17078.03 18624.26
1993/12/31 17632.49 18849.62
1994/01/31 19004.97 19490.50
1994/02/28 18975.01 18962.31
1994/03/31 18405.64 18135.55
1994/04/30 19295.72 18367.69
1994/05/31 19760.31 18668.92
1994/06/30 19512.93 18211.53
1994/07/31 20393.85 18808.87
1994/08/31 21576.45 19580.03
1994/09/30 21419.58 19100.32
1994/10/31 21383.37 19530.08
1994/11/30 19706.01 18818.79
1994/12/31 20237.75 19097.87
1995/01/31 19708.90 19593.08
1995/02/28 20852.70 20356.63
1995/03/31 21492.24 20957.35
1995/04/30 21952.96 21574.54
1995/05/31 22171.56 22436.88
1995/06/30 22546.29 22958.09
1995/07/31 23614.27 23719.38
1995/08/31 23714.20 23778.91
1995/09/30 24088.93 24782.38
1995/10/31 22889.79 24693.91
1995/11/30 23889.07 25777.97
1995/12/31 24578.40 26274.46
1996/01/31 25708.14 27168.84
1996/02/29 26582.33 27420.69
1996/03/31 27866.73 27684.75
1996/04/30 28157.12 28092.83
1996/05/31 28096.21 28817.34
1996/06/30 27737.57 28927.14
1996/07/31 26614.26 27649.13
1996/08/31 27791.70 28232.26
1996/09/30 29023.28 29821.17
1996/10/31 29219.52 30643.63
1996/11/30 30295.46 32959.99
1996/12/31 29867.48 32307.05
1997/01/31 30334.94 34325.59
1997/02/28 30586.65 34594.71
1997/03/31 29601.38 33173.21
1997/04/30 30695.94 35153.65
1997/05/31 32207.70 37293.80
1997/06/30 33093.16 38964.57
1997/07/31 35742.34 42064.98
1997/08/31 35850.32 39708.50
1997/09/30 36073.49 41883.33
1997/10/31 34273.77 40484.43
1997/11/30 34468.14 42358.45
1997/12/31 34789.19 43085.75
1998/01/31 34287.65 43562.28
1998/02/28 36540.59 46703.99
1998/03/31 37885.99 49095.70
1998/04/30 38001.45 49589.60
1998/05/31 36513.91 48737.16
1998/06/30 33571.33 50716.86
1998/07/31 30718.18 50176.72
1998/08/31 27003.38 42922.17
1998/09/30 26873.32 45671.77
1998/10/31 27613.03 49386.71
1998/11/30 29604.55 52380.04
1998/12/31 29259.25 55398.18
1999/01/31 27635.73 57714.93
1999/02/26 27889.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990309 143208 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Chemicals Portfolio on February 28, 1989,
and the current 3.00% sales charge was paid. As the chart shows, by
February 28, 1999, the value of the investment would have grown to
$27,889 - a 178.89% 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 $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
du Pont (E.I.) de Nemours & Co. 9.2
Dow Chemical Co. 8.8
Minnesota Mining & 7.4
Manufacturing Co.
Praxair, Inc. 6.3
PPG Industries, Inc. 5.6
Avery Dennison Corp. 3.8
Monsanto Co. 3.4
Morton International, Inc. 3.3
Rohm & Haas Co. 3.2
Air Products & Chemicals, Inc. 3.2
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Chemicals & Plastics 66.8%
Consumer Durables 7.4%
Drugs & Pharmaceuticals 5.3%
Agriculture 5.2%
Building Materials 4.3%
All Others 11.0%*
* INCLUDES SHORT-TERM INVESTMENTS
Row: 1, Col: 1, Value: 11.0
Row: 1, Col: 2, Value: 4.3
Row: 1, Col: 3, Value: 5.2
Row: 1, Col: 4, Value: 5.3
Row: 1, Col: 5, Value: 7.4
Row: 1, Col: 6, Value: 66.8
CHEMICALS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Dylan J. Yolles)
NOTE TO SHAREHOLDERS:
Dylan J. Yolles became
Portfolio Manager of Fidelity Select Chemicals Portfolio on January 4,
1999.
Q. HOW DID THE FUND PERFORM, DYLAN?
A. For the 12 months that ended February 28, 1999, the fund had a
total return of -23.66%. During the same period, the Standard & Poor's
500 Index had a return of 19.74%, while the Goldman Sachs Cyclical
Industries Index - an index of 277 stocks designed to measure the
performance of companies in the cyclical industries sector - had a
return of -4.79%.
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
A. The chemical industry faced an unfavorable supply/demand balance
that lowered chemical prices, reduced profitability and caused a sharp
drop in its stock prices. A great deal of new production capacity in
the industry became operational in 1997 and 1998, increasing supply at
the very time that a worsening global economy caused a weakness in
demand, resulting in lower prices. Asia's economic problems put
pressure on U.S. companies in two ways: They had to compete
domestically against cheap imports from Asia, and they faced declining
export markets in that region of the world. Although the U.S. economy
grew, the most significant growth occurred in technology, rather than
basic industries. When the unfavorable supply/demand balance caused
earnings disappointments, the stock prices of chemical companies
corrected sharply.
Q. WERE THERE ANY BRIGHT SPOTS IN PERFORMANCE, AND WHERE WERE THE
BIGGEST DISAPPOINTMENTS?
A. Monsanto's basic agricultural business continued to do well, and
its Searle pharmaceutical division successfully introduced a new
anti-arthritis drug - Celebrex. The stock performance also was helped
by reports that Monsanto might be acquired by a larger company. In
general, we had disappointments among the small- and mid-cap specialty
companies, including Witco, Sealed Air and Cytec. Each of these
companies had its own problems, but the group as a whole was penalized
when analysts lowered growth expectations in light of disappointing
earnings. DuPont, the biggest company in the industry, was a major
disappointment as it failed to meet earnings expectations.
Q. WHAT CHANGES HAVE YOU MADE IN THE PORTFOLIO SINCE TAKING OVER THE
FUND IN JANUARY?
A. In general, I have given the fund a larger-cap bias. I believe that
in a relatively tough economic environment, the downside risk of
large-cap companies is more limited. These companies are much better
able to weather the storm, but still have the potential to do well in
a recovery. I increased the exposure to commodity companies, including
Dow Chemical and Union Carbide. Profit margins in commodities have
reached historical lows. In the past, this has been a good time to
begin buying the stocks, since stock performance should do better when
profit margins recover. I also added some higher-quality specialty
companies in the mid- to large-cap areas. Two examples are Morton
International, which was recently acquired by Rohm & Haas, and Avery
Dennison Corp., manufacturer of labels and adhesives. In addition, I
added industrial gas companies such as Praxair. These larger-cap
stocks were relatively inexpensive. Historically, they have shown good
earnings growth, and have had fairly stable earnings during economic
downturns.
Q. HOW WOULD YOU DESCRIBE YOUR INVESTMENT STYLE, DYLAN?
A. I look for companies with demonstrated records of financial
success, which usually are a combination of a high return on capital
and good earnings growth. I also like companies with good records of
adding new products and strong market positions. Finally, I balance
valuations relative to the company's fundamental outlook. I want to
make sure I am paying a reasonable price for the stock.
Q. WHAT IS YOUR OUTLOOK?
A. A lot depends on what happens in the global economy over the next
12 months. The chemical company stocks are cheap relative to the
overall market. If there is improvement in Asia and a bottom to the
recession in Latin America, I think that chemical stocks have the
potential to go up significantly and quickly. While few analysts are
optimistic about the near-term economic outlook, keep in mind that
this is a cyclical industry: The best time to buy cyclical companies
is when things have not gone well. Eventually, things will get better,
but you have to be patient.
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 OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark)FUND FACTS
START DATE: July 29, 1985
FUND NUMBER: 069
TRADING SYMBOL: FSCHX
SIZE: as of February 28, 1999, more than
$31 million
MANAGER: Dylan J. Yolles, since January 1999;
equity analyst, commodity and diversified
chemicals, since 1998; equity analyst, gaming
and lodging, 1997-1998; joined Fidelity in
1997
CHEMICALS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.2%
SHARES VALUE (NOTE 1)
AGRICULTURE - 5.2%
Delta & Pine Land Co. 22,000 $ 712,250
Pioneer Hi-Bred 40,900 958,594
International, Inc.
1,670,844
BUILDING MATERIALS - 4.3%
Owens-Corning 11,700 372,206
Sherwin-Williams Co. 41,500 998,594
1,370,800
CHEMICALS & PLASTICS - 66.8%
Agrium, Inc. 25,300 201,353
Air Products & Chemicals, 32,000 1,028,000
Inc.
Arch Chemicals, Inc. (a) 11,550 219,450
Avery Dennison Corp. 22,600 1,213,338
Borden Chemicals&Plastics 6,900 34,500
Ltd.
Cabot Corp. 14,500 365,219
Cytec Industries, Inc. (a) 18,800 504,075
Dow Chemical Co. 28,600 2,813,525
du Pont (E.I.) de Nemours & 57,400 2,945,335
Co.
Eastman Chemical Co. 16,100 759,719
Ferro Corp. 14,600 312,075
Geon Co. 8,300 189,344
Great Lakes Chemical Corp. 400 15,575
IMC Global, Inc. 30,200 602,113
Methanex Corp. (a) 38,100 162,982
Millennium Chemicals, Inc. 19,300 348,606
Minerals Technologies, Inc. 10,100 433,669
Monsanto Co. 24,000 1,093,500
Morton International, Inc. 29,100 1,051,238
Olin Corp. 23,100 293,081
Potash Corp. of Saskatchewan 7,400 420,354
PPG Industries, Inc. 34,400 1,790,950
Praxair, Inc. 57,600 2,012,400
Raychem Corp. 19,700 449,406
Rohm & Haas Co. 33,000 1,031,250
Union Carbide Corp. 19,000 836,000
Valspar Corp. 8,300 269,750
21,396,807
CONSUMER DURABLES - 7.4%
Minnesota Mining & 31,900 2,362,594
Manufacturing Co.
DRUGS & PHARMACEUTICALS - 5.3%
Cambrex Corp. 8,700 208,256
Chirex, Inc. (a) 10,300 215,013
Rhone-Poulenc SA sponsored 11,500 529,000
ADR Class A
Sigma-Aldrich Corp. 27,700 730,588
1,682,857
SHARES VALUE (NOTE 1)
ELECTRONIC INSTRUMENTS - 0.8%
Optical Coating Laboratories, 8,000 $ 256,000
Inc.
SERVICES - 2.8%
Ecolab, Inc. 22,500 897,188
TEXTILES & APPAREL - 0.6%
Polymer Group, Inc. (a) 19,500 196,219
TOTAL COMMON STOCKS 29,833,309
(Cost $31,457,897)
CASH EQUIVALENTS - 6.8%
Taxable Central Cash Fund (b) 2,189,378 2,189,378
(Cost $2,189,378)
TOTAL INVESTMENT IN $ 32,022,687
SECURITIES - 100%
(Cost $33,647,275)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $61,535,452 and $82,787,097, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $21,237 for the
period.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $34,170,646. Net unrealized depreciation
aggregated $2,147,959, of which $1,268,936 related to appreciated
investment securities and $3,416,895 related to depreciated investment
securities.
The fund hereby designates approximately $3,906,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
The fund intends to elect to defer its fiscal year ending February 29,
2000 approximately $1,740,000 of losses recognized during the period
November 1, 1998 to February 28, 1999.
A total of 34% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentages for use in preparing 1999 income tax returns.
CHEMICALS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 32,022,687
value (cost $33,647,275) -
See accompanying schedule
Receivable for investments 7,140
sold
Receivable for fund shares 19,812
sold
Dividends receivable 89,345
Interest receivable 11,964
Redemption fees receivable 128
Other receivables 2,035
TOTAL ASSETS 32,153,111
LIABILITIES
Payable to custodian bank $ 5,061
Payable for investments 3,700
purchased
Payable for fund shares 232,787
redeemed
Accrued management fee 16,196
Other payables and accrued 33,628
expenses
TOTAL LIABILITIES 291,372
NET ASSETS $ 31,861,739
Net Assets consist of:
Paid in capital $ 34,103,460
Undistributed net investment 159,886
income
Accumulated undistributed net (777,032)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (1,624,575)
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 1,024,331 $ 31,861,739
shares outstanding
NET ASSET VALUE and $31.10
redemption price per share
($31,861,739 (divided by)
1,024,331 shares)
Maximum offering price per $32.06
share (100/97.00 of $31.10)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 774,503
Dividends
Interest (including income on 149,011
securities loaned of $8,336)
TOTAL INCOME 923,514
EXPENSES
Management fee $ 276,652
Transfer agent fees 359,063
Accounting and security 62,653
lending fees
Non-interested trustees' 154
compensation
Custodian fees and expenses 7,794
Registration fees 17,086
Audit 13,240
Legal 319
Reports to shareholders 11,132
Total expenses before 748,093
reductions
Expense reductions (32,787) 715,306
NET INVESTMENT INCOME 208,208
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 2,554,482
Foreign currency transactions 3,597 2,558,079
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (15,018,197)
Assets and liabilities in 186 (15,018,011)
foreign currencies
NET GAIN (LOSS) (12,459,932)
NET INCREASE (DECREASE) IN $ (12,251,724)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 45,096
charges paid to FDC
Sales charges - Retained by $ 44,178
FDC
Deferred sales charges $ 7,081
withheld by FDC
Exchange fees withheld by FSC $ 7,718
Expense reductions Directed $ 32,355
brokerage arrangements
Custodian credits 432
$ 32,787
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ 208,208 $ (39,750)
income (loss)
Net realized gain (loss) 2,558,079 11,437,021
Change in net unrealized (15,018,011) 2,762,987
appreciation (depreciation)
NET INCREASE (DECREASE) IN (12,251,724) 14,160,258
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (51,919) -
From net investment income
From net realized gain (3,969,737) (6,539,426)
In excess of net realized (773,436) -
gain
TOTAL DISTRIBUTIONS (4,795,092) (6,539,426)
Share transactions Net 17,546,799 31,893,479
proceeds from sales of shares
Reinvestment of distributions 4,627,284 6,395,130
Cost of shares redeemed (42,678,413) (88,066,094)
NET INCREASE (DECREASE) IN (20,504,330) (49,777,485)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 63,464 96,792
TOTAL INCREASE (DECREASE) (37,487,682) (42,059,861)
IN NET ASSETS
NET ASSETS
Beginning of period 69,349,421 111,409,282
End of period (including $ 31,861,739 $ 69,349,421
undistributed net investment
income of $159,886 and $0,
respectively)
OTHER INFORMATION
Shares
Sold 503,657 706,740
Issued in reinvestment of 132,380 150,551
distributions
Redeemed (1,122,609) (1,965,911)
Net increase (decrease) (486,572) (1,108,620)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 45.90 $ 42.53 $ 39.53 $ 33.91 $ 31.66
period
Income from Investment
Operations
Net investment income (loss) .17 (.02) .28 .01 .36
C
Net realized and unrealized (10.77) 7.88 5.49 8.89 2.65
gain (loss)
Total from investment (10.60) 7.86 5.77 8.90 3.01
operations
Less Distributions
From net investment income (.05) - (.12) (.08) (.22)
From net realized gain (3.52) (4.54) (2.74) (3.22) (.60)
In excess of net realized gain (.68) - - - -
Total distributions (4.25) (4.54) (2.86) (3.30) (.82)
Redemption fees added to paid .05 .05 .09 .02 .06
in capital
Net asset value, end of period $ 31.10 $ 45.90 $ 42.53 $ 39.53 $ 33.91
TOTAL RETURN A, B (23.66)% 19.47% 15.06% 27.48% 9.90%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 31,862 $ 69,349 $ 111,409 $ 89,230 $ 97,511
(000 omitted)
Ratio of expenses to average 1.58% 1.68% 1.83% 1.99% 1.52%
net assets
Ratio of expenses to average 1.51% D 1.67% D 1.81% D 1.97% D 1.51% D
net assets after expense
reductions
Ratio of net investment .44% (.05)% .67% .04% 1.07%
income (loss) to average net
assets
Portfolio turnover rate 141% 31% 207% 87% 106%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. E FOR
THE YEAR ENDED FEBRUARY 29.
</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 five year and past 10 year
total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT CONSTRUCTION AND -2.16% 73.11% 294.62%
HOUSING
SELECT CONSTRUCTION AND -5.17% 67.84% 282.71%
HOUSING (LOAD ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Cyclical Industries -4.79% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT CONSTRUCTION AND -2.16% 11.60% 14.71%
HOUSING
SELECT CONSTRUCTION AND -5.17% 10.91% 14.36%
HOUSING (LOAD ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Cyclical Industries -4.79% 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
1989/02/28 9700.00 10000.00
1989/03/31 9946.27 10233.00
1989/04/30 10335.54 10764.09
1989/05/31 10700.98 11200.04
1989/06/30 10694.22 11136.20
1989/07/31 11128.12 12141.80
1989/08/31 11315.29 12379.78
1989/09/30 11519.47 12329.02
1989/10/31 10872.88 12042.99
1989/11/30 11034.53 12288.66
1989/12/31 10791.20 12583.59
1990/01/31 10110.51 11739.23
1990/02/28 10319.26 11890.67
1990/03/31 10900.11 12205.77
1990/04/30 10582.46 11900.63
1990/05/31 11562.65 13060.94
1990/06/30 11353.90 12972.12
1990/07/31 10761.70 12930.61
1990/08/31 9393.52 11761.68
1990/09/30 8423.54 11188.89
1990/10/31 8127.44 11140.78
1990/11/30 8913.63 11860.47
1990/12/31 9750.88 12191.38
1991/01/31 10608.55 12722.92
1991/02/28 11537.69 13632.61
1991/03/31 11823.58 13962.52
1991/04/30 12007.37 13996.03
1991/05/31 13201.98 14600.66
1991/06/30 12528.09 13931.95
1991/07/31 12854.83 14581.18
1991/08/31 13385.76 14926.75
1991/09/30 13089.66 14677.48
1991/10/31 12865.04 14874.16
1991/11/30 12221.78 14274.73
1991/12/31 13779.44 15907.76
1992/01/31 14803.81 15611.87
1992/02/29 15046.14 15814.83
1992/03/31 15035.12 15506.44
1992/04/30 15244.40 15962.33
1992/05/31 15729.05 16040.54
1992/06/30 14605.15 15801.54
1992/07/31 14869.69 16447.82
1992/08/31 14362.65 16110.64
1992/09/30 14550.03 16300.75
1992/10/31 15057.08 16357.80
1992/11/30 15927.88 16915.60
1992/12/31 16357.77 17123.66
1993/01/31 17041.18 17267.50
1993/02/28 17349.81 17502.34
1993/03/31 17757.65 17871.64
1993/04/30 17338.64 17439.14
1993/05/31 17526.14 17906.51
1993/06/30 17735.71 17958.44
1993/07/31 18342.34 17886.61
1993/08/31 19103.39 18564.51
1993/09/30 19721.05 18421.56
1993/10/31 20437.97 18802.89
1993/11/30 20118.11 18624.26
1993/12/31 21855.75 18849.62
1994/01/31 22569.77 19490.50
1994/02/28 22112.35 18962.31
1994/03/31 20818.19 18135.55
1994/04/30 20771.09 18367.69
1994/05/31 19671.97 18668.92
1994/06/30 19189.70 18211.53
1994/07/31 19739.26 18808.87
1994/08/31 20490.70 19580.03
1994/09/30 19346.72 19100.32
1994/10/31 18774.73 19530.08
1994/11/30 18012.08 18818.79
1994/12/31 18370.94 19097.87
1995/01/31 18451.57 19593.08
1995/02/28 19338.44 20356.63
1995/03/31 19683.98 20957.35
1995/04/30 19707.01 21574.54
1995/05/31 20674.51 22436.88
1995/06/30 20870.31 22958.09
1995/07/31 21837.81 23719.38
1995/08/31 21849.33 23778.91
1995/09/30 21722.63 24782.38
1995/10/31 21711.11 24693.91
1995/11/30 23047.18 25777.97
1995/12/31 23657.59 26274.46
1996/01/31 23609.43 27168.84
1996/02/29 23549.23 27420.69
1996/03/31 24355.88 27684.75
1996/04/30 24386.80 28092.83
1996/05/31 25189.24 28817.34
1996/06/30 25339.70 28927.14
1996/07/31 24273.95 27649.13
1996/08/31 25414.93 28232.26
1996/09/30 26794.13 29821.17
1996/10/31 26392.91 30643.63
1996/11/30 27596.58 32959.99
1996/12/31 26783.37 32307.05
1997/01/31 27050.06 34325.59
1997/02/28 27939.03 34594.71
1997/03/31 27138.96 33173.21
1997/04/30 27690.32 35153.65
1997/05/31 30340.31 37293.80
1997/06/30 30878.81 38964.57
1997/07/31 34124.00 42064.98
1997/08/31 34024.80 39708.50
1997/09/30 35101.80 41883.33
1997/10/31 33741.38 40484.43
1997/11/30 34492.44 42358.45
1997/12/31 34773.99 43085.75
1998/01/31 36025.73 43562.28
1998/02/28 39124.55 46703.99
1998/03/31 41139.55 49095.70
1998/04/30 41124.05 49589.60
1998/05/31 40404.99 48737.16
1998/06/30 40848.66 50716.86
1998/07/31 39379.95 50176.72
1998/08/31 33321.49 42922.17
1998/09/30 32939.01 45671.77
1998/10/31 36534.31 49386.71
1998/11/30 39364.65 52380.04
1998/12/31 42715.16 55398.18
1999/01/31 41980.80 57714.93
1999/02/26 38271.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990309 143221 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Construction and Housing Portfolio on
February, 28, 1989, and the current 3.00% sales charge was paid. As
the chart shows, by February 28, 1999, the value of the investment
would have grown to $38,271 - a 282.71% 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 $55,921 - a 459.21%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Lowe's Companies, Inc. 9.0
Danaher Corp. 8.6
Masco Corp. 6.7
Home Depot, Inc. 6.3
Fannie Mae 6.1
Black & Decker Corp. 5.4
Shaw Industries, Inc. 4.3
Leggett & Platt, Inc. 4.2
Lennar Corp. 4.1
Mohawk Industries, Inc. 4.0
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Building Materials 15.9%
Retail & Wholesale,
Miscellaneous 15.3%
Home Furnishings 9.7%
Construction 9.7%
Autos, Tires, & Accessories 8.6%
All Others 40.8%*
* INCLUDES SHORT-TERM INVESTMENTS
Row: 1, Col: 1, Value: 40.8
Row: 1, Col: 2, Value: 8.6
Row: 1, Col: 3, Value: 9.699999999999999
Row: 1, Col: 4, Value: 9.699999999999999
Row: 1, Col: 5, Value: 15.3
Row: 1, Col: 6, Value: 15.9
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 12 months that ended February 28, 1999, the fund returned
- -2.16%. For the same 12-month period, the Standard and Poor's 500
Index returned 19.74%, while the Goldman Sachs Cyclical Industries
Index - an index of 277 stocks designed to measure the performance of
companies in the cyclical industries sector - returned -4.79%. The
fund outperformed the Goldman Sachs index because the index contains
many cyclical industries, some of which had weaker performance than
housing and construction. In addition, the fund was underweighted in
construction and engineering stocks that suffered from weak overseas
economies and falling commodity prices.
Q. WHAT FACTORS INFLUENCED THE FUND'S PERFORMANCE DURING THE PAST
YEAR?
A. The biggest factor was the strong housing market, which expanded
for the eighth year in a row. Both housing starts and housing turnover
- - which measure new construction activity and sales of new and
existing homes, respectively - hit record levels in 1998. This trend
increased demand for construction materials, home furnishings and
appliances. However, many stock prices didn't reflect these positive
conditions because investors had been anticipating the housing
market's peak for several years and were reluctant to bid up prices.
Stocks in the construction and engineering sector performed poorly
because of declining economies in Asia and Latin America and
collapsing commodity prices. Reduced demand and weak pricing forced a
number of industries to cut back capital spending for large-scale
construction projects.
Q. DID YOU CHANGE THE FUND'S INVESTMENT STRATEGY DURING THE YEAR?
A. Yes, I made several strategic changes. First, I shifted assets away
from companies with significant ties to international economies and
into domestic companies that could benefit from the strong housing
market. Second, within the housing sector I emphasized companies with
growth characteristics independent of the housing market's strength.
Third, I increased the fund's exposure to high-quality mid- and
large-cap stocks that tend to perform better in unpredictable markets.
Q. WHAT HOLDINGS PERFORMED WELL DURING THE YEAR?
A. Maytag performed well. Maytag is a leading appliance producer that
successfully implemented a premium brand and product innovation
strategy. For example, Maytag introduced the "Neptune" class of
washing machines late in 1997. Despite the machine's $1,100 price tag
- - considerably higher than the $350 charge for an average washer -
sales exceeded expectations. Danaher Corp. also did well. Danaher
manufactures Sears' Craftsman tools as well as controls used in
manufacturing automation and environmental testing. By employing an
aggressive acquisition strategy, the company has generated a 10-year
record of consistent earnings growth, and traded at a
price-to-earnings ratio about twice the industry average. Home Depot's
stock price benefited from the company's increased market share of a
strong repair and remodeling market driven by booming home sales.
Q. WHAT ABOUT DISAPPOINTMENTS?
A. I had a positive outlook for Owens-Corning, the country's largest
fiberglass insulation manufacturer. Successive price increases and a
significant restructuring had positioned Owens-Corning for strong
earnings growth. However, the stock had disappointing performance
because the company settled an asbestos lawsuit for a
higher-than-expected sum. Although the settlement removed a great deal
of financial uncertainty, it significantly reduced potential upside in
the stock price. Another disappointing stock was Black & Decker, the
world's leading power-tool manufacturer. Despite a successful
restructuring that included divesting underperforming businesses,
weaker-than-expected revenue growth held the stock down.
Q. WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
A. I have a guarded outlook. The housing and construction industries
are cyclical and 1998 marks the eighth consecutive year of economic
expansion. The housing market's performance is tied to the strength of
the economy and the direction of interest rates, and some leading
indicators suggest that housing-related activity may slow down in
1999. Construction and engineering stocks with global exposure and
strong ties to capital spending may continue to suffer in the absence
of an interest-rate cut or signs of recovery in foreign economies. As
a result, I anticipate underweighting this sector in favor of
housing-market stocks. Within the housing sector, I am planning to
stick with medium- and large-cap companies that offer steady growth
and that are taking decisive steps to shield their earnings from a
weaker economy.
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 OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
NOTE TO SHAREHOLDERS: Effective April 30, 1999, Brian Hogan will
become manager of Select Construction & Housing Portfolio.
(checkmark)FUND FACTS
START DATE: September 29, 1986
FUND NUMBER: 511
TRADING SYMBOL: FSHOX
SIZE: as of February 28, 1999, more than
$51 million
MANAGER: Yolanda McGettigan, since 1997;
analyst, appliances, building materials,
home-building, engineering and construction
industries, since 1997; joined Fidelity in 1997
CONSTRUCTION AND HOUSING PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 98.0%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES -
8.6%
Danaher Corp. 88,600 $ 4,274,950
BUILDING MATERIALS - 15.9%
Carlisle Companies, Inc. 12,600 521,325
Elcor Corp. 15,800 497,700
Lafarge Corp. 15,800 503,625
Lone Star Industries, Inc. 3,300 108,900
Masco Corp. 125,800 3,302,250
Owens-Corning 12,400 394,475
Sherwin-Williams Co. 36,500 878,281
Southdown, Inc. 6,040 285,013
USG Corp. 11,900 596,488
Vulcan Materials Co. 5,900 795,025
7,883,082
CONSTRUCTION - 9.7%
Centex Corp. 27,500 1,012,344
Clayton Homes, Inc. 35,000 433,125
Jacobs Engineering Group, 7,000 276,938
Inc. (a)
Kaufman & Broad Home Corp. 45,000 1,012,500
Lennar Corp. 88,000 2,040,500
4,775,407
CONSUMER ELECTRONICS - 8.5%
Black & Decker Corp. 54,800 2,671,500
Maytag Corp. 27,300 1,530,506
4,202,006
CREDIT & OTHER FINANCE - 2.2%
Countrywide Credit 28,100 1,064,288
Industries, Inc.
FEDERAL SPONSORED CREDIT - 8.2%
Fannie Mae 43,600 3,052,000
Freddie Mac 17,400 1,024,425
4,076,425
HOME FURNISHINGS - 9.7%
Ethan Allen Interiors, Inc. 6,000 270,000
Furniture Brands 12,100 258,638
International, Inc. (a)
Knoll, Inc. (a) 13,600 260,100
Leggett & Platt, Inc. 98,200 2,056,063
Maxim Group, Inc. (a) 107,900 1,955,688
4,800,489
LEASING & RENTAL - 1.0%
United Rentals, Inc. (a) 15,900 511,781
LEISURE DURABLES & TOYS - 0.4%
Champion Enterprises, Inc. (a) 10,400 204,750
METALS & MINING - 1.1%
Martin Marietta Materials, 10,200 523,388
Inc.
SHARES VALUE (NOTE 1)
REAL ESTATE - 2.2%
Catellus Development Corp. (a) 25,600 $ 369,600
Rouse Co. (The) 30,500 712,938
1,082,538
REAL ESTATE INVESTMENT TRUSTS
- - 6.9%
Apartment Investment & 2,900 113,463
Management Co. Class A
Archstone Communities Trust 31,700 620,131
Equity Residential Properties 25,800 1,057,800
Trust (SBI)
Mack-Cali Realty Corp. 12,700 367,506
Post Properties, Inc. 8,800 314,050
Simon Property Group, Inc. 37,600 956,450
3,429,400
RETAIL & WHOLESALE,
MISCELLANEOUS - 15.3%
Home Depot, Inc. 52,200 3,115,688
Lowe's Companies, Inc. 74,700 4,430,639
7,546,327
TEXTILES & APPAREL - 8.3%
Mohawk Industries, Inc. (a) 60,550 1,967,875
Shaw Industries, Inc. 97,600 2,141,100
4,108,975
TOTAL COMMON STOCKS 48,483,806
(Cost $42,903,576)
CASH EQUIVALENTS - 2.0%
Taxable Central Cash Fund (b) 1,005,868 1,005,868
(Cost $1,005,868)
TOTAL INVESTMENT IN $ 49,489,674
SECURITIES - 100%
(Cost $43,909,444)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. 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 $168,374,456 and $172,267,058, respectively.
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 $51,030 for the
period.
The fund participated in the bank borrowing program. The maximum loan
and average daily balances during the period for which loans were
outstanding amounted to $5,939,000 and $4,311,750, respectively. The
weighted average interest rate was 5.08%.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $43,982,378. Net unrealized appreciation
aggregated $5,507,296, of which $7,013,824 related to appreciated
investment securities and $1,506,528 related to depreciated investment
securities.
The fund hereby designates approximately $749,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 100% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentage for use in preparing 1999 income tax returns.
CONSTRUCTION AND HOUSING PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 49,489,674
value (cost $43,909,444) -
See accompanying schedule
Receivable for investments 8,428,016
sold
Receivable for fund shares 78,061
sold
Dividends receivable 36,759
Interest receivable 6,729
Redemption fees receivable 3,944
Other receivables 7,253
TOTAL ASSETS 58,050,436
LIABILITIES
Payable for fund shares $ 6,305,383
redeemed
Accrued management fee 36,964
Other payables and accrued 56,464
expenses
TOTAL LIABILITIES 6,398,811
NET ASSETS $ 51,651,625
Net Assets consist of:
Paid in capital $ 45,398,583
Accumulated undistributed net 672,812
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 5,580,230
(depreciation) on investments
NET ASSETS, for 2,064,686 $ 51,651,625
shares outstanding
NET ASSET VALUE and $25.02
redemption price per share
($51,651,625 (divided by)
2,064,686 shares)
Maximum offering price per $25.79
share (100/97.00 of $25.02)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 638,925
Dividends
Interest (including income on 307,536
securities loaned of $7,398)
TOTAL INCOME 946,461
EXPENSES
Management fee $ 490,439
Transfer agent fees 535,294
Accounting and security 80,738
lending fees
Non-interested trustees' 287
compensation
Custodian fees and expenses 12,077
Registration fees 34,181
Audit 22,982
Legal 371
Interest 4,870
Reports to shareholders 7,258
Total expenses before 1,188,497
reductions
Expense reductions (46,765) 1,141,732
NET INVESTMENT INCOME (LOSS) (195,271)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 1,245,125
Foreign currency transactions (1,205) 1,243,920
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (58,045)
Assets and liabilities in 1 (58,044)
foreign currencies
NET GAIN (LOSS) 1,185,876
NET INCREASE (DECREASE) IN $ 990,605
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 451,157
charges paid to FDC
Sales charges - Retained by $ 449,854
FDC
Deferred sales charges $ 653
withheld by FDC
Exchange fees withheld by FSC $ 10,418
Expense reductions Directed $ 45,252
brokerage arrangements
Custodian credits 1,513
$ 46,765
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (195,271) $ (285,511)
income (loss)
Net realized gain (loss) 1,243,920 3,768,064
Change in net unrealized (58,044) 4,728,366
appreciation (depreciation)
NET INCREASE (DECREASE) IN 990,605 8,210,919
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders - (23,292)
From net investment income
From net realized gain (144,845) (4,419,906)
TOTAL DISTRIBUTIONS (144,845) (4,443,198)
Share transactions Net 137,817,090 96,959,375
proceeds from sales of shares
Reinvestment of distributions 142,901 4,390,230
Cost of shares redeemed (144,767,914) (78,323,951)
NET INCREASE (DECREASE) IN (6,807,923) 23,025,654
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 129,721 110,066
TOTAL INCREASE (DECREASE) (5,832,442) 26,903,441
IN NET ASSETS
NET ASSETS
Beginning of period 57,484,067 30,580,626
End of period $ 51,651,625 $ 57,484,067
OTHER INFORMATION
Shares
Sold 5,395,789 4,140,467
Issued in reinvestment of 5,303 222,821
distributions
Redeemed (5,579,107) (3,510,718)
Net increase (decrease) (178,015) 852,570
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 G 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 25.63 $ 22.00 $ 19.56 $ 16.79 $ 19.82
period
Income from Investment
Operations
Net investment income (loss) C (.06) (.25) .06 .07 (.02)
Net realized and unrealized (.53) F 7.67 3.38 3.55 (2.50)
gain (loss)
Total from investment (.59) 7.42 3.44 3.62 (2.52)
operations
Less Distributions
From net investment income - (.02) (.02) (.07) -
From net realized gain (.06) (3.87) (1.03) (.81) (.52)
Total distributions (.06) (3.89) (1.05) (.88) (.52)
Redemption fees added to paid .04 .10 .05 .03 .01
in capital
Net asset value, end of period $ 25.02 $ 25.63 $ 22.00 $ 19.56 $ 16.79
TOTAL RETURN A, B (2.16)% 40.04% 18.64% 21.77% (12.54)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 51,652 $ 57,484 $ 30,581 $ 42,668 $ 16,863
(000 omitted)
Ratio of expenses to average 1.43% 2.50% D 1.41% 1.43% 1.76%
net assets
Ratio of expenses to average 1.37% E 2.43% E 1.35% E 1.40% E 1.74% E
net assets after expense
reductions
Ratio of net investment (.23)% (1.10)% .27% .39% (.11)%
income (loss) to average net
assets
Portfolio turnover rate 226% 404% 270% 139% 45%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR AGREED TO
REIMBURSE A PORTION OF THE
FUND'S EXPENSED DURING THE
PERIOD. WITHOUT THIS
REIMBURSEMENT, THE FUND'S
EXPENSE RATIO WOULD HAVE
BEEN HIGHER. E FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. F THE
AMOUNT SHOWN FOR A SHARE
OUTSTANDING DOES NOT
CORRESPOND WITH THE
AGGREGATE NET GAIN ON
INVESTMENTS FOR THE PERIOD
DUE TO THE TIMING OF SALES
AND REPURCHASES OF FUND
SHARES IN RELATION TO
FLUCTUATING MARKET VALUES OF
THE INVESTMENTS OF THE FUND.
G FOR THE YEAR ENDED
FEBRUARY 29.
</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 FEBRUARY 28, PAST 1 YEAR LIFE OF FUND
1999
SELECT CYCLICAL INDUSTRIES -4.96% 19.53%
SELECT CYCLICAL INDUSTRIES -7.89% 15.87%
(LOAD ADJ.)
S&P 500 19.74% 60.71%
GS Cyclical Industries -4.79% 21.02%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year or since the fund
started on March 3, 1997. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a market
capitalization-weighted 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 FEBRUARY 28, PAST 1 YEAR LIFE OF FUND
1999
SELECT CYCLICAL INDUSTRIES -4.96% 9.37%
SELECT CYCLICAL INDUSTRIES -7.89% 7.67%
(LOAD ADJ.)
S&P 500 19.74% 26.89%
GS Cyclical Industries -4.79% 10.05%
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 10230.13 12335.21
1998/09/30 10301.38 13125.40
1998/10/31 11237.87 14193.02
1998/11/30 11594.14 15053.26
1998/12/31 12092.92 15920.63
1999/01/31 11858.80 16586.43
1999/02/26 11587.00 16070.92
IMATRL PRASUN SHR__CHT 19990228 19990322 094431 R00000000000027
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Select Cyclical Industries Portfolio on March 3,
1997, when the fund started, and the current 3.00% sales charge was
paid. As the chart shows, by February 28, 1999, the value of the
investment would have grown to $11,587 - a 15.87% 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 $16,071 - a 60.71%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
General Electric Co. 7.8
Textron, Inc. 7.1
Tyco International Ltd. 6.3
Ford Motor Co. 5.2
Waste Management, Inc. 3.7
DaimlerChrysler AG (Reg.) 3.5
Coltec Industries, Inc. 3.1
Emerson Electric Co. 2.9
du Pont (E.I.) de Nemours & Co. 2.6
Monsanto Co. 2.5
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Industrial Machinery
& Equipment 13.2%
Electrical Equipment 13.1%
Autos, Tires, & Accessories 12.0%
Aerospace & Defense 9.7%
Chemicals & Plastics 8.9%
All Others 43.1%*
* INCLUDES SHORT-TERM INVESTMENTS
Row: 1, Col: 1, Value: 43.1
Row: 1, Col: 2, Value: 8.9
Row: 1, Col: 3, Value: 9.699999999999999
Row: 1, Col: 4, Value: 12.02
Row: 1, Col: 5, Value: 13.1
Row: 1, Col: 6, Value: 13.2
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. For the 12 months that ended February 28, 1999, the fund had a
total return of -4.96%. In comparison, the Standard & Poor's 500 Index
returned 19.74% and the Goldman Sachs Cyclical Industries Index - an
index of 277 stocks designed to measure the performance of companies
in the cyclical industries sector - returned -4.79% during the same
12-month period.
Q. WHAT MARKET FACTORS INFLUENCED THE FUND'S PERFORMANCE? WHY DID THE
FUND LAG THE GOLDMAN SACHS INDEX DURING THE 12-MONTH PERIOD?
A. Cyclical industries turned in mixed results during the period. In
the third quarter of 1998, the fund produced negative returns as the
global economic crisis took hold of the U.S. stock market. In the
fourth quarter, the fund staged a turnaround, led by strong
performance from conglomerates such as Tyco International and General
Electric. Both companies managed to increase profits and earnings
during the period. However, the primary reason for the fund's
underperformance compared to the Goldman Sachs index was the
portfolio's asset underweighting in auto stocks. General Motors, Ford
and DaimlerChrysler all surged in response to record sales numbers. In
hindsight, I underestimated the potential of the auto stocks, given my
doubts about the strength of the U.S. economy.
Q. IN LIGHT OF THE DIFFICULT ENVIRONMENT FOR CYCLICAL STOCKS, WHAT
STRATEGY DID YOU PURSUE TO STABILIZE FUND PERFORMANCE?
A. I continued to concentrate a significant portion of fund assets in
conglomerates such as Tyco International and General Electric and
added conglomerates, including Textron and Pentair. While the U.S.
economy appeared relatively stable, the global economic situation was
less bright. Since cyclical stocks are highly dependent on solid
economic growth for their performance, I felt these companies offered
a diversity of strong revenue sources that could shield the portfolio
during difficult and uncertain periods.
Q. YOU MADE SOME CHANGES TO THE FUND'S TOP HOLDINGS DURING THE PERIOD
. . .
A. That's right. I sold off the fund's holdings in DEKALB after it was
acquired by Monsanto. The stock performed very well during the period,
so I felt it was prudent to lock in profits. Textron was added to the
fund's top holdings because I felt that its stock was undervalued,
considering its fundamental business outlook and its strong track
record of earnings growth.
Q. WHAT STOCKS HELPED PERFORMANCE?
A. Tyco International and General Electric were the biggest
contributors to total return. Tyco International stock rallied during
the period as it increased profits by acquiring a number of companies,
including an announced $11 billion bid for electric device maker AMP.
General Electric performed solidly in response to strong earnings
growth and a dividend increase. The stock surged from a 12-month low
of $72 on October 8, 1998, to close at $100 by the end of the period.
Q. WHAT STOCKS WERE THE MAIN DISAPPOINTMENTS?
A. While the fund's assets remained underweighted relative to the
Goldman Sachs index in industrial commodities such as chemicals and
paper, these sectors continued to lag. Prior to Stone Container's
merger with Jefferson Smurfit, the stock detracted significantly from
performance as the paper sector continued to languish in a poor
business environment with little ability to raise prices and increase
profit margins. Lackluster performance from chemical companies duPont
and Monsanto also detracted from total return.
Q. WHAT'S YOUR OUTLOOK, ALBERT?
A. I think the short-term environment remains difficult for cyclical
stocks. In the absence of a catalyst such as another interest-rate cut
or strong signs of a turnaround in Asia and the global economy,
industrial commodities and cyclical stocks could continue to struggle
in 1999. This is the primary reason for my defensive strategy of
allocating a significant portion of fund assets to conglomerates.
These holdings can provide predictable earnings and the ability to
quickly cut costs in a weak economic environment.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark)FUND FACTS
START DATE: March 3, 1997
FUND NUMBER: 515
TRADING SYMBOL: FCYCF
SIZE: as of February 28, 1999, 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 FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.6%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 9.7%
Alliant Techsystems, Inc. (a) 100 $ 7,919
Gulfstream Aerospace Corp. (a) 500 22,375
Lockheed Martin Corp. 1,000 37,688
Sundstrand Corp. 100 6,769
Textron, Inc. 2,700 210,600
285,351
AIR TRANSPORTATION - 2.3%
America West Holding Corp. 600 10,200
Class B (a)
Southwest Airlines Co. 1,000 30,125
US Airways Group, Inc. (a) 600 28,425
68,750
AUTOS, TIRES, & ACCESSORIES -
12.0%
DaimlerChrysler AG (Reg.) 1,100 103,331
Danaher Corp. 250 12,063
Federal-Mogul Corp. 450 22,134
Ford Motor Co. 2,600 154,213
General Motors Corp. 600 49,538
SPX Corp. 250 14,281
355,560
BROADCASTING - 0.9%
PanAmSat Corp. (a) 700 25,113
BUILDING MATERIALS - 2.6%
Carlisle Companies, Inc. 300 12,413
Crane Co. 600 16,463
Masco Corp. 1,000 26,250
Owens-Corning 700 22,269
77,395
CHEMICALS & PLASTICS - 8.6%
du Pont (E.I.) de Nemours & 1,500 76,969
Co.
Ferro Corp. 550 11,756
Ivex Packaging Corp. (a) 1,500 22,688
Monsanto Co. 1,600 72,900
Nalco Chemical Co. 300 8,438
Potash Corp. of Saskatchewan 200 11,361
Sealed Air Corp. (a) 414 21,011
Solutia, Inc. 240 4,275
Spartech Corp. 500 11,813
Witco Corp. 800 13,550
254,761
COMPUTERS & OFFICE EQUIPMENT
- - 2.3%
Pitney Bowes, Inc. 400 25,275
Xerox Corp. 800 44,150
69,425
SHARES VALUE (NOTE 1)
CONSTRUCTION - 1.1%
Centex Corp. 300 $ 11,044
Kaufman & Broad Home Corp. 300 6,750
Lennar Corp. 300 6,956
Oakwood Homes Corp. 500 8,063
32,813
CONSUMER ELECTRONICS - 0.7%
Black & Decker Corp. 400 19,500
DEFENSE ELECTRONICS - 3.5%
Litton Industries, Inc. (a) 300 16,838
Raytheon Co.:
Class A 600 31,725
Class B 1,000 53,438
102,001
ELECTRICAL EQUIPMENT - 13.1%
Emerson Electric Co. 1,500 86,156
General Electric Co. 2,300 230,706
Honeywell, Inc. 1,000 69,938
386,800
ENGINEERING - 0.8%
EG & G, Inc. 900 23,850
HOME FURNISHINGS - 0.4%
Leggett & Platt, Inc. 600 12,563
INDUSTRIAL MACHINERY &
EQUIPMENT - 13.2%
Case Corp. 200 3,900
Caterpillar, Inc. 700 31,894
Coltec Industries, Inc. (a) 5,000 90,000
Illinois Tool Works, Inc. 700 48,125
Ingersoll-Rand Co. 650 30,875
Tyco International Ltd. 2,500 186,094
390,888
METALS & MINING - 1.5%
Alcoa, Inc. 848 34,344
Martin Marietta Materials, 200 10,263
Inc.
44,607
PACKAGING & CONTAINERS - 1.2%
Owens-Illinois, Inc. (a) 700 16,756
Silgan Holdings, Inc. (a) 800 17,750
34,506
PAPER & FOREST PRODUCTS - 6.2%
Bowater, Inc. 700 29,488
Champion International Corp. 500 18,500
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PAPER & FOREST PRODUCTS -
CONTINUED
Fort James Corp. 687 $ 20,524
Pentair, Inc. 300 11,363
Smurfit-Stone Container Corp. 2,970 53,646
(a)
Temple-Inland, Inc. 300 17,981
Union Camp Corp. 300 20,063
Willamette Industries, Inc. 300 10,931
182,496
POLLUTION CONTROL - 4.1%
Ogden Corp. 500 12,219
Waste Management, Inc. 2,245 109,724
121,943
RAILROADS - 3.7%
Bombardier, Inc. Class B 600 8,814
Burlington Northern Santa Fe 1,500 49,688
Corp.
Canadian National Railway Co. 300 14,485
Union Pacific Corp. 500 23,438
Wisconsin Central 1,000 13,750
Transportation Corp. (a)
110,175
SERVICES - 1.6%
Ecolab, Inc. 1,200 47,850
SHIP BUILDING & REPAIR - 1.8%
Avondale Industries, Inc. 700 21,613
General Dynamics Corp. 500 30,219
51,832
TEXTILES & APPAREL - 1.4%
Shaw Industries, Inc. 1,700 37,294
Unifi, Inc. 300 3,619
40,913
TRUCKING & FREIGHT - 0.9%
CNF Transportation, Inc. 200 8,450
Expeditors International of 200 9,313
Washington, Inc.
USFreightways Corp. 300 9,563
27,326
TOTAL COMMON STOCKS 2,766,418
(Cost $2,506,497)
CONVERTIBLE PREFERRED STOCKS
- - 0.3%
CHEMICALS & PLASTICS - 0.3%
Sealed Air Corp. Series A, 190 9,785
$2.00 (Cost $8,093)
CASH EQUIVALENTS - 6.1%
MATURITY AMOUNT VALUE (NOTE 1)
Investments in repurchase $ 29,011 $ 29,000
agreements (U.S. Treasury
obligations), in a joint
trading account at 4.74%,
dated 2/26/99 due 3/1/99
SHARES
Taxable Central Cash Fund (b) 149,752 149,752
TOTAL CASH EQUIVALENTS 178,752
(Cost $178,752)
TOTAL INVESTMENT IN $ 2,954,955
SECURITIES - 100%
(Cost $2,693,342)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. 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 $3,633,603 and $4,456,955, respectively.
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 $579 for the
period.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $2,693,963. Net unrealized appreciation
aggregated $260,992, of which $449,365 related to appreciated
investment securities and $188,373 related to depreciated investment
securities.
The fund hereby designates approximately $22,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 100% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentage for use in preparing 1999 income tax returns.
CYCLICAL INDUSTRIES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 2,954,955
value (including repurchase
agreements of $29,000) (cost
$2,693,342) - See
accompanying schedule
Cash 117
Receivable for investments 143,540
sold
Receivable for fund shares 5,619
sold
Dividends receivable 4,515
Interest receivable 328
Receivable from investment 1,565
adviser for expense
reductions
TOTAL ASSETS 3,110,639
LIABILITIES
Payable for investments $ 3,700
purchased
Other payables and accrued 19,955
expenses
TOTAL LIABILITIES 23,655
NET ASSETS $ 3,086,984
Net Assets consist of:
Paid in capital $ 2,807,386
Accumulated undistributed net 17,985
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 261,613
(depreciation) on investments
NET ASSETS, for 270,992 $ 3,086,984
shares outstanding
NET ASSET VALUE and $11.39
redemption price per share
($3,086,984 (divided by)
270,992 shares)
Maximum offering price per $11.74
share (100/97.00 of $11.39)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 41,330
Dividends
Interest 11,720
TOTAL INCOME 53,050
EXPENSES
Management fee $ 22,236
Transfer agent fees 28,977
Accounting fees and expenses 60,050
Non-interested trustees' 14
compensation
Custodian fees and expenses 8,160
Registration fees 12,920
Audit 17,333
Legal 21
Reports to shareholders 647
Miscellaneous 12
Total expenses before 150,370
reductions
Expense reductions (56,169) 94,201
NET INVESTMENT INCOME (LOSS) (41,151)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 21,503
Foreign currency transactions 195 21,698
Change in net unrealized (207,859)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) (186,161)
NET INCREASE (DECREASE) IN $ (227,312)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 16,210
charges paid to FDC
Sale charges - Retained by $ 16,210
FDC
Exchange fees withheld by FSC $ 698
Expense reductions Directed $ 521
brokerage arrangements
FMR reimbursement 55,648
$ 56,169
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 MARCH 3, 1997 (COMMENCEMENT
ASSETS OF OPERATIONS) TO FEBRUARY
28, 1998
Operations Net investment $ (41,151) $ (33,119)
income (loss)
Net realized gain (loss) 21,698 328,506
Change in net unrealized (207,859) 469,472
appreciation (depreciation)
NET INCREASE (DECREASE) IN (227,312) 764,859
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (29,887) (144,767)
from net realized gains
Share transactions Net 3,255,351 10,028,973
proceeds from sales of shares
Reinvestment of distributions 29,223 143,304
Cost of shares redeemed (3,913,851) (6,843,907)
NET INCREASE (DECREASE) IN (629,277) 3,328,370
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 8,220 16,778
TOTAL INCREASE (DECREASE) (878,256) 3,965,240
IN NET ASSETS
NET ASSETS
Beginning of period 3,965,240 -
End of period 3,086,984 3,965,240
OTHER INFORMATION
Shares
Sold 265,208 908,349
Issued in reinvestment of 2,305 13,087
distributions
Redeemed (325,171) (592,786)
Net increase (decrease) (57,658) 328,650
</TABLE>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 1999 1998 F
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 12.07 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.13) (.11)
Net realized and unrealized (.49) 2.59
gain (loss)
Total from investment (.62) 2.48
operations
Less Distributions
From net realized gain (.09) (.46)
Redemption fees added to paid .03 .05
in capital
Net asset value, end of period $ 11.39 $ 12.07
TOTAL RETURN B, C (4.96)% 25.77%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 3,087 $ 3,965
(000 omitted)
Ratio of expenses to average 2.50% E 2.50% A, E
net assets
Ratio of expenses to average 2.49% G 2.50% A
net assets after expense
reductions
Ratio of net investment (1.09)% (.93)% A
income (loss) to average net
assets
Portfolio turnover rate 103% 140% A
A ANNUALIZED BTHE 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 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 FOR THE
PERIOD MARCH 3, 1997
(COMMENCEMENT OF OPERATIONS)
TO FEBRUARY 28, 1998. 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.
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT DEFENSE AND AEROSPACE -9.90% 128.63% 292.88%
SELECT DEFENSE AND AEROSPACE -12.68% 121.70% 281.02%
(LOAD ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Cyclical Industries -4.79% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT DEFENSE AND AEROSPACE -9.90% 17.98% 14.66%
SELECT DEFENSE AND AEROSPACE -12.68% 17.26% 14.31%
(LOAD ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Cyclical Industries -4.79% 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
1989/02/28 9700.00 10000.00
1989/03/31 9898.13 10233.00
1989/04/30 10253.11 10764.09
1989/05/31 10434.72 11200.04
1989/06/30 10310.89 11136.20
1989/07/31 10979.57 12141.80
1989/08/31 11260.26 12379.78
1989/09/30 11053.87 12329.02
1989/10/31 10426.47 12042.99
1989/11/30 10030.21 12288.66
1989/12/31 10195.32 12583.59
1990/01/31 9617.45 11739.23
1990/02/28 9650.47 11890.67
1990/03/31 10244.85 12205.77
1990/04/30 9823.83 11900.63
1990/05/31 10550.30 13060.94
1990/06/30 10557.88 12972.12
1990/07/31 10134.24 12930.61
1990/08/31 9245.42 11761.68
1990/09/30 8946.37 11188.89
1990/10/31 8830.08 11140.78
1990/11/30 9303.56 11860.47
1990/12/31 9727.97 12191.38
1991/01/31 10586.56 12722.92
1991/02/28 10794.96 13632.61
1991/03/31 11628.55 13962.52
1991/04/30 11436.82 13996.03
1991/05/31 11970.32 14600.66
1991/06/30 11368.05 13931.95
1991/07/31 11861.95 14581.18
1991/08/31 11736.38 14926.75
1991/09/30 11460.13 14677.48
1991/10/31 12012.63 14874.16
1991/11/30 11468.51 14274.73
1991/12/31 12347.48 15907.76
1992/01/31 12305.62 15611.87
1992/02/29 12498.16 15814.83
1992/03/31 12247.02 15506.44
1992/04/30 12029.37 15962.33
1992/05/31 11426.65 16040.54
1992/06/30 10890.89 15801.54
1992/07/31 11309.45 16447.82
1992/08/31 11091.80 16110.64
1992/09/30 11250.85 16300.75
1992/10/31 11342.94 16357.80
1992/11/30 11736.38 16915.60
1992/12/31 12347.48 17123.66
1993/01/31 12715.81 17267.50
1993/02/28 12623.73 17502.34
1993/03/31 13293.42 17871.64
1993/04/30 13335.28 17439.14
1993/05/31 13745.46 17906.51
1993/06/30 14323.07 17958.44
1993/07/31 14909.06 17886.61
1993/08/31 14883.94 18564.51
1993/09/30 15269.02 18421.56
1993/10/31 15880.11 18802.89
1993/11/30 15411.33 18624.26
1993/12/31 15910.69 18849.62
1994/01/31 16668.34 19490.50
1994/02/28 16668.34 18962.31
1994/03/31 15997.78 18135.55
1994/04/30 16084.61 18367.69
1994/05/31 16137.63 18668.92
1994/06/30 15731.10 18211.53
1994/07/31 15960.88 18808.87
1994/08/31 16676.73 19580.03
1994/09/30 15837.15 19100.32
1994/10/31 16226.01 19530.08
1994/11/30 15589.70 18818.79
1994/12/31 16190.66 19097.87
1995/01/31 16181.82 19593.08
1995/02/28 17357.23 20356.63
1995/03/31 18099.60 20957.35
1995/04/30 19098.26 21574.54
1995/05/31 20273.67 22436.88
1995/06/30 21024.88 22958.09
1995/07/31 22182.62 23719.38
1995/08/31 22173.78 23778.91
1995/09/30 22792.42 24782.38
1995/10/31 21961.67 24693.91
1995/11/30 23543.62 25777.97
1995/12/31 23857.97 26274.46
1996/01/31 24284.85 27168.84
1996/02/29 25584.47 27420.69
1996/03/31 26172.61 27684.75
1996/04/30 27433.62 28092.83
1996/05/31 28459.45 28817.34
1996/06/30 27785.33 28927.14
1996/07/31 25909.53 27649.13
1996/08/31 27277.30 28232.26
1996/09/30 28615.76 29821.17
1996/10/31 28117.50 30643.63
1996/11/30 29651.36 32959.99
1996/12/31 29829.05 32307.05
1997/01/31 29183.71 34325.59
1997/02/28 29644.67 34594.71
1997/03/31 29450.05 33173.21
1997/04/30 30236.83 35153.65
1997/05/31 32657.02 37293.80
1997/06/30 33436.06 38964.57
1997/07/31 36531.41 42064.98
1997/08/31 38546.51 39708.50
1997/09/30 41153.67 41883.33
1997/10/31 38058.31 40484.43
1997/11/30 38131.02 42358.45
1997/12/31 36859.23 43085.75
1998/01/31 38626.76 43562.28
1998/02/28 42296.92 46703.99
1998/03/31 43467.77 49095.70
1998/04/30 44627.36 49589.60
1998/05/31 41734.01 48737.16
1998/06/30 41756.53 50716.86
1998/07/31 39921.45 50176.72
1998/08/31 32006.96 42922.17
1998/09/30 34134.75 45671.77
1998/10/31 37500.94 49386.71
1998/11/30 38390.34 52380.04
1998/12/31 38457.89 55398.18
1999/01/31 38390.34 57714.93
1999/02/26 38102.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990309 143614 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Defense and Aerospace Portfolio on
February 28, 1989, and the current 3.00% sales charge was paid. As the
chart shows, by February 28, 1999, the value of the investment would
have grown to $38,102 - a 281.02% 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 $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
28, 1999
% OF FUND'S INVESTMENTS
United Technologies Corp. 8.6
General Dynamics Corp. 8.1
Cordant Technologies, Inc. 7.5
Raytheon Co. Class A 6.2
General Motors Corp. Class H 5.3
Sundstrand Corp. 5.1
Gulfstream Aerospace Corp. 5.1
Litton Industries, Inc. 4.4
Boeing Co. 3.7
PanAmSat Corp. 3.2
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Aerospace & Defense 47.5%
Defense Electronics 13.6%
Ship Building & Repair 10.7%
Consumer Electronics 5.3%
Electrical Equipment 4.2%
All Others 18.7%*
* INCLUDES SHORT-TERM INVESTMENTS
Row: 1, Col: 1, Value: 18.7
Row: 1, Col: 2, Value: 4.2
Row: 1, Col: 3, Value: 5.3
Row: 1, Col: 4, Value: 10.7
Row: 1, Col: 5, Value: 13.6
Row: 1, Col: 6, Value: 47.5
DEFENSE AND AEROSPACE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Jeff Feingold)
NOTE TO SHAREHOLDERS: Jeff Feingold became Portfolio Manager of
Fidelity Select Defense
and Aerospace Portfolio on October 30, 1998.
Q. HOW DID THE FUND PERFORM, JEFF?
A. For the 12 months that ended February 28, 1999, the fund returned
- -9.90%. For the same 12 month period, the Standard & Poor's 500 Index
returned 19.74%, while the Goldman Sachs Cyclical Industries Index -
an index of 277 stocks designed to measure the performance of
companies in the cyclical industries sector - returned -4.79%. The
fund lagged the Goldman Sachs index because it had a greater
concentration in defense and aerospace stocks that underperformed
other industry sectors included in the more diversified Cyclical
Industries index.
Q. WHAT FACTORS INFLUENCED THE FUND'S RETURNS?
A. On the positive side, the government's 1999 budget proposal
features the first meaningful increase in defense spending since 1985,
although funds appropriated this year will take about 18 to 24 months
to convert to actual procurement spending. On the negative side, the
year's biggest proposed merger - between Lockheed Martin and Northrop
Grumman - was called off in response to regulatory concerns. While the
failed merger disappointed investors, both companies also delivered
earnings below expectations. At Lockheed, launch failures in its
commercial satellite division hurt earnings. Northrop had problems in
its airborne surveillance segment. Results were further weakened by an
industry-wide reduction in demand for commercial aircraft components,
particularly at Boeing.
Q. WHAT ABOUT AEROSPACE STOCKS? DID THEY FARE ANY BETTER?
A. Aerospace stocks suffered fallout from the Asian economic crisis,
as Asia's passenger traffic and demand for new aircraft declined.
Boeing - the world's largest aircraft manufacturer - saw its orders
peak two years ago, and expects production and deliveries to crest
this year. Component suppliers, whose earnings depend on aircraft
production levels, also had weak performance. For example, an
investment in Cordant Technologies, one of Boeing's largest suppliers
of fasteners, did poorly despite the healthy performance and good
growth prospects of some of the company's other business segments.
Q. WHAT STOCKS HELPED THE FUND'S PERFORMANCE?
A. Stocks with consistent and predictable earnings growth fared well.
For example, General Dynamics, a defense contractor with operations in
basic armaments, shipbuilding and electronics, downsized in the early
1990s to cope with defense cutbacks. Since then, it has generated
annual earnings growth that outpaced many of its peers. Another solid
performer was United Technologies Corp. Its business segments -
including Pratt & Whitney aircraft engines, Otis Elevator, and Carrier
heat and air conditioning systems - are market leaders offering
relatively predictable growth.
Q. WHAT ABOUT SATELLITE STOCKS?
A. The fund owns a number of satellite stocks, including COMSAT,
PanAmSat and Loral Space & Communications. However, I reduced the
fund's exposure to these companies for several reasons. First,
satellite companies have a relatively high degree of financial risk
because they must invest significant capital before they can expect to
break even on a cash-flow basis. Second, it is unclear which companies
have the most appropriate technology or business models. Both
satellite launch and in-orbit failures during the past year
demonstrated this risk. Finally, these stocks have significant price
volatility because their growth rates are unpredictable. During the
past year, the market has severely penalized satellite companies that
missed their earnings or revenue projections.
Q. WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
A. I am relatively optimistic about the defense industry. Over the
longer term, increased defense spending should improve the climate for
these stocks, especially as we approach the conversion of
appropriation into procurement. My outlook for aerospace stocks is
more cautious. It is difficult to see much good news over the next 12
months as production and delivery peak for the world's largest
manufacturers. Over the longer term, Asia's recovery will be critical
for the industry to regain momentum.
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 OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark)FUND FACTS
START DATE: May 8, 1984
FUND NUMBER: 067
TRADING SYMBOL: FSDAX
SIZE: as of February 28, 1999, more than
$28 million
MANAGER: Jeff Feingold, since 1998; equity
analyst, defense and aerospace industries,
since 1998; footwear industry, since 1997;
textile and apparel industries, 1997-1998;
joined Fidelity in 1997
DEFENSE AND AEROSPACE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.6%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 47.5%
AAR Corp. 12,300 $ 186,038
Alliant Techsystems, Inc. (a) 11,200 886,900
BE Aerospace, Inc. (a) 14,500 213,875
Boeing Co. 29,200 1,038,425
Cordant Technologies, Inc. 54,400 2,118,200
Goodrich (B.F.) Co. 14,500 494,813
Gulfstream Aerospace Corp. (a) 31,900 1,427,525
Howmet International, Inc. (a) 47,300 762,713
Lockheed Martin Corp. 22,600 851,738
Orbital Sciences Corp. (a) 25,800 712,725
Primex Technologies, Inc. 2,400 99,750
Rockwell International Corp. 15,100 671,006
Sundstrand Corp. 21,400 1,448,513
United Technologies Corp. 19,600 2,427,947
13,340,168
AUTOS, TIRES, & ACCESSORIES -
1.9%
TRW, Inc. 11,400 538,650
BROADCASTING - 3.2%
PanAmSat Corp. (a) 25,400 911,225
COMPUTER SERVICES & SOFTWARE
- - 1.3%
Titan Corp. (a) 67,500 379,688
CONSUMER ELECTRONICS - 5.3%
General Motors Corp. Class H 31,500 1,486,406
(a)
DEFENSE ELECTRONICS - 13.6%
Litton Industries, Inc. (a) 22,100 1,240,363
Northrop Grumman Corp. 13,600 847,450
Raytheon Co. Class A 32,952 1,742,337
3,830,150
ELECTRICAL EQUIPMENT - 4.2%
Harris Corp. 6,800 211,650
L-3 Communications Holdings, 5,000 214,375
Inc. (a)
Loral Space & Communications 41,800 752,400
Ltd. (a)
1,178,425
ELECTRONICS - 1.8%
Airport Systems 90,200 191,675
International, Inc. (a)
Conexant Systems, Inc. (a) 13,350 226,950
Maxwell Technologies, Inc. (a) 3,300 84,769
503,394
MEDICAL EQUIPMENT & SUPPLIES
- - 1.3%
Teleflex, Inc. 10,000 355,625
SHIP BUILDING & REPAIR - 10.7%
Avondale Industries, Inc. 7,300 225,388
SHARES VALUE (NOTE 1)
General Dynamics Corp. 37,600 $ 2,272,450
Newport News Shipbuilding, 17,500 506,406
Inc.
3,004,244
TELEPHONE SERVICES - 1.8%
COMSAT Corp. Series 1 16,900 494,325
TOTAL COMMON STOCKS 26,022,300
(Cost $23,593,542)
CASH EQUIVALENTS - 7.4%
Taxable Central Cash Fund (b) 2,078,393 2,078,393
(Cost $2,078,393)
TOTAL INVESTMENT IN $ 28,100,693
SECURITIES - 100%
(Cost $25,671,935)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. 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 $109,202,806 and $171,978,745, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $29,426 for the
period.
Transactions during the period with companies which are or were
affiliates are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PURCHASES SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Airport Systems International, Inc. $ - $ 715,850 $ - $ -
</TABLE>
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $26,299,141. Net unrealized appreciation
aggregated $1,801,552, of which $3,200,190 related to appreciated
investment securities and $1,398,638 related to depreciated investment
securities.
The fund hereby designates approximately $928,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
DEFENSE AND AEROSPACE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 28,100,693
value (cost $25,671,935) -
See accompanying schedule
Receivable for investments 943,519
sold
Receivable for fund shares 54,391
sold
Dividends receivable 39,904
Interest receivable 5,447
Redemption fees receivable 108
Other receivables 7,999
TOTAL ASSETS 29,152,061
LIABILITIES
Payable for investments $ 371,965
purchased
Payable for fund shares 233,739
redeemed
Accrued management fee 14,423
Other payables and accrued 35,102
expenses
TOTAL LIABILITIES 655,229
NET ASSETS $ 28,496,832
Net Assets consist of:
Paid in capital $ 23,289,679
Accumulated undistributed net 2,778,395
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 2,428,758
(depreciation) on investments
NET ASSETS, for 841,804 $ 28,496,832
shares outstanding
NET ASSET VALUE and $33.85
redemption price per share
($28,496,832 (divided by)
841,804 shares)
Maximum offering price per $34.90
share (100/97.00 of $33.85)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 304,878
Dividends
Interest 172,051
TOTAL INCOME 476,929
EXPENSES
Management fee $ 312,058
Transfer agent fees 346,580
Accounting fees and expenses 68,157
Non-interested trustees' 210
compensation
Custodian fees and expenses 12,152
Registration fees 21,406
Audit 16,243
Legal 413
Reports to shareholders 11,871
Miscellaneous 75
Total expenses before 789,165
reductions
Expense reductions (31,428) 757,737
NET INVESTMENT INCOME (LOSS) (280,808)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 3,589,524
(including realized loss of
$328,497 on sales of
investments in affiliated
issuers)
Foreign currency transactions (2,584) 3,586,940
Change in net unrealized (8,328,194)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) (4,741,254)
NET INCREASE (DECREASE) IN $ (5,022,062)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 127,643
charges paid to FDC
Sales charges - Retained by $ 125,494
FDC
Deferred sales charges $ 824
withheld by FDC
Exchange fees withheld by FSC $ 8,738
Expense reductions Directed $ 31,108
brokerage arrangements
Custodian credits 320
$ 31,428
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (280,808) $ (542,358)
income (loss)
Net realized gain (loss) 3,586,940 10,620,706
Change in net unrealized (8,328,194) 9,171,056
appreciation (depreciation)
NET INCREASE (DECREASE) IN (5,022,062) 19,249,404
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders - (4,691,578)
from net realized gain
Share transactions Net 47,399,132 173,648,929
proceeds from sales of shares
Reinvestment of distributions - 4,606,502
Cost of shares redeemed (115,799,880) (160,032,419)
NET INCREASE (DECREASE) IN (68,400,748) 18,223,012
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 115,021 221,243
TOTAL INCREASE (DECREASE) (73,307,789) 33,002,081
IN NET ASSETS
NET ASSETS
Beginning of period 101,804,621 68,802,540
End of period $ 28,496,832 $ 101,804,621
OTHER INFORMATION
Shares
Sold 1,280,563 4,923,503
Issued in reinvestment of - 149,545
distributions
Redeemed (3,148,373) (4,740,835)
Net increase (decrease) (1,867,810) 332,213
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 F 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 37.57 $ 28.94 $ 26.97 $ 19.64 $ 19.14
period
Income from Investment
Operations
Net investment income (loss) D (.19) (.29) (.11) (.05) (.06)
Net realized and unrealized (3.61) 11.84 4.18 9.09 .70
gain (loss)
Total from investment (3.80) 11.55 4.07 9.04 .64
operations
Less Distributions
From net realized gain - (3.04) (2.17) (1.82) (.27)
Redemption fees added to paid .08 .12 .07 .11 .13
in capital
Net asset value, end of period $ 33.85 $ 37.57 $ 28.94 $ 26.97 $ 19.64
TOTAL RETURN A, B (9.90)% 42.68% 15.87% 47.40% 4.13%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 28,497 $ 101,805 $ 68,803 $ 26,648 $ 4,985
(000 omitted)
Ratio of expenses to average 1.48% 1.77% 1.84% 1.77% C 2.49% C
net assets
Ratio of expenses to average 1.42% E 1.71% E 1.81% E 1.75% E 2.49%
net assets after expense
reductions
Ratio of net investment (.53)% (.85)% (.39)% (.20)% (.32)%
income (loss) to average net
assets
Portfolio turnover rate 221% 311% 219% 267% 146%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
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. 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
THE YEAR ENDED FEBRUARY 29.
</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 FEBRUARY 28, 1999 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
SELECT ENVIRONMENTAL SERVICES -22.23% 13.29% 45.55%
SELECT ENVIRONMENTAL -24.64% 9.82% 41.11%
SERVICES (LOAD ADJ.)
S&P 500 19.74% 194.91% 399.52%
GS Cyclical Industries -4.79% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or since
the fund started on June 29, 1989. You can compare the fund's returns
to the performance of both the Standard & Poor's 500 Index - a market
capitalization-weighted 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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
1999
SELECT ENVIRONMENTAL SERVICES -22.23% 2.53% 3.96%
SELECT ENVIRONMENTAL -24.64% 1.89% 3.62%
SERVICES (LOAD ADJ.)
S&P 500 19.74% 24.15% 18.09%
GS Cyclical Industries -4.79% 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 13257.12 38340.83
1998/09/30 14415.19 40796.95
1998/10/31 14724.00 44115.37
1998/11/30 13996.08 46789.20
1998/12/31 15101.98 49485.20
1999/01/31 14925.09 51554.67
1999/02/26 14118.03 49952.35
IMATRL PRASUN SHR__CHT 19990228 19990322 095822 R00000000000120
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Select Environmental Services Portfolio on June
29, 1989, when the fund started, and the current 3.00% sales charge
was paid. As the chart shows, by February 28, 1999, the value of the
investment would have grown to $14,111 - a 41.11% 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 $49,952 - a 399.52%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Waste Management, Inc. 13.7
Allied Waste Industries, Inc. 11.2
Browning-Ferris Industries, 6.2
Inc.
Superior Services, Inc. 5.5
Republic Services, Inc. Class A 5.1
IT Group, Inc. (The) 4.5
KTI, Inc. 4.0
Casella Waste Systems, Inc. 3.7
Class A
Thermo Electron Corp. 3.6
Safety-Kleen Corp. 3.6
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Pollution Control 70.9%
Electronic Instruments 9.3%
Industrial Machinery
& Equipment 6.7%
Electric Utility 4.0%
Water 2.4%
All Others 6.7%*
* INCLUDES SHORT-TERM INVESTMENTS
Row: 1, Col: 1, Value: 6.7
Row: 1, Col: 2, Value: 2.4
Row: 1, Col: 3, Value: 4.0
Row: 1, Col: 4, Value: 6.7
Row: 1, Col: 5, Value: 9.300000000000001
Row: 1, Col: 6, Value: 70.90000000000001
ENVIRONMENTAL SERVICES PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Subrata Ghose)
Subrata Ghose,
Portfolio Manager of
Fidelity Select Environmental Services Portfolio
Q. HOW DID THE FUND PERFORM, SUBRATA?
A. Overall, it was a tough period for environmental services stocks.
For the 12 months that ended February 28, 1999, the fund returned
- -22.23%. The Standard & Poor's 500 Index returned 19.74% during the
same period, while the Goldman Sachs Cyclical Industries Index - an
index of 277 stocks designed to measure the performance of companies
in the cyclical industries sector - fell 4.79%.
Q. WHAT FACTORS HURT PERFORMANCE?
A. The five major areas of investment for the fund are solid waste,
water purification, environmental consulting, hazardous waste and
thermal instrumentation. Water purification and thermal
instrumentation realize a good portion of their revenues from Asia,
and the slowdown in that region hurt badly. As we entered the period,
the sector was still smarting from the Asian economic turmoil. As
fears of a U.S. economic slowdown spread in the fall, environmental
services stocks, which are economically sensitive, hit their low
point. Since that time, we've seen a slight rebound in performance,
but nothing significant. Some groups have benefited from increased
merger and acquisition activity, and many companies seem more willing
to restructure their internal operations in an attempt to boost
stalling profitability.
Q. THE FUND'S TOP-FIVE HOLDINGS AT THE END OF THE PERIOD WERE ALL
SOLID WASTE-RELATED STOCKS. HOW DID THEY PERFORM?
A. Like the other groups, solid waste stocks struggled. The group
experienced dramatic changes over the past year, due mostly to the
consolidation of several large companies. For instance, Waste
Management and USA Waste merged operations, and there was much talk
about Allied Waste making a large acquisition. While consolidation is
generally beneficial, there was some uncertainty as to whether
companies of that size could integrate themselves smoothly. That being
said, solid waste stocks began to turn the corner during the second
half of the period. Waste Management - the fund's largest individual
stake and a key player in the solid waste field - reported strong
earnings in the third and fourth quarters of 1998.
Q. THE FUND ALSO HAD SOME EXPOSURE TO HAZARDOUS WASTE AND THERMAL
INSTRUMENTATION STOCKS AT THE CLOSE OF THE PERIOD. HOW DID THESE
GROUPS FARE?
A. A combination of excess capacity and weak pricing was disastrous
for hazardous waste stocks. Strict dumping regulations have limited
the volume of hazardous waste, but the incinerators that destroy the
waste were still populous. While some of the fund's investments in
this area - such as IT Group - worked well, I'm not overly optimistic
that the hazardous waste group can right its ship soon. Thermal
instrumentation companies, were also disappointing. Many of these
companies - which manufacture instruments designed to aid
environmental research - performed poorly due to their exposure to
Asia, weak U.S. capital equipment markets and a complex corporate
structure. As a result, the fund's investments in Thermo Electron and
Thermo Instruments detracted from overall performance. Fortunately,
Thermo Electron is undergoing a major restructuring of business units
and management. This could make for an interesting story down the
road.
Q. WHICH STOCKS PERFORMED WELL DURING THE PERIOD? WHICH DISAPPOINTED?
A. Two small-cap, solid waste companies - American Disposal and
Eastern Environmental - were acquired by other companies during the
period and this gave the fund a bit of a performance boost. U.S.
Filter Corp., a leader in the water purification area, also performed
well during the second half of the period as its exposure to
semiconductor companies helped. Semiconductor firms use highly
purified water in processing their chips and, when semiconductor
stocks rallied in December, demand picked up. Allied Waste, meanwhile,
was one of the fund's bigger disappointments as speculation over the
company's acquisition plans caused uncertainty.
Q. WHAT'S YOUR OUTLOOK?
A. The key phrase going forward is "long term." The sector has
undergone quite a bit of volatility recently, and at the close of the
period there was no single group that stood out over any other in
terms of offering good opportunities. That being said, my emphasis
will be on finding good stories that could play out nicely in the long
run. Solid waste fundamentals are definitely improving, albeit slowly.
The water filtration and thermal instrumentation groups could turn
around with pickups in the Asian and U.S. capital equipment markets.
When the sector does eventually turn around, my patience will
hopefully be rewarded.
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 OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark)FUND FACTS
START DATE: June 29, 1989
FUND NUMBER: 516
TRADING SYMBOL: FSLEX
SIZE: as of February 28, 1999, more than
$15 million
MANAGER: Subrata Ghose, since October 1998;
analyst, environmental services industry, 1997-
present; gas, electric and water industries,
1997-1998; joined Fidelity in 1995
ENVIRONMENTAL SERVICES PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 95.7%
SHARES VALUE (NOTE 1)
CHEMICALS & PLASTICS - 2.0%
Catalytica, Inc. (a) 22,000 $ 313,500
ELECTRIC UTILITY - 4.0%
KTI, Inc. (a) 35,000 630,000
ELECTRONIC INSTRUMENTS - 9.3%
Thermo Electron Corp. (a) 41,050 567,003
Thermo Instrument Systems, 13,200 195,525
Inc. (a)
Thermo Optek Corp. (a) 20,000 217,500
Thermoquest Corp. (a) 42,200 464,200
1,444,228
INDUSTRIAL MACHINERY &
EQUIPMENT - 6.7%
Ionics, Inc. (a) 7,200 200,700
Recovery Engineering, Inc. (a) 14,000 152,250
Thermo Fibertek, Inc. (a) 4,000 31,000
United States Filter Corp. (a) 21,800 535,463
Waterlink, Inc. (a) 29,600 131,350
1,050,763
METALS & MINING - 0.4%
IMCO Recycling, Inc. 5,000 62,813
POLLUTION CONTROL - 70.9%
Allied Waste Industries, Inc. 89,460 1,744,470
(a)
Browning-Ferris Industries, 30,900 973,350
Inc.
Calgon Carbon Corp. 9,100 54,031
Casella Waste Systems, Inc. 27,300 573,300
Class A (a)
Insituform Technologies, Inc. 20,200 300,475
Class A (a)
IT Group, Inc. (The) (a) 54,000 708,750
Ogden Corp. 22,100 540,069
Republic Services, Inc. Class 46,000 802,125
A (a)
Safety-Kleen Corp. (a) 40,150 559,591
Stericycle, Inc. (a) 23,000 291,813
Superior Services, Inc. (a) 42,900 862,022
Tetra Tech, Inc. (a) 23,750 452,734
U.S. Liquids, Inc. 6,000 136,125
Waste Connections, Inc. (a) 20,000 400,000
Waste Industries, Inc. (a) 39,700 535,950
Waste Management, Inc. 43,593 2,130,606
11,065,411
WATER - 2.4%
American Water Works, Inc. 5,000 151,250
E'Town Corp. 5,000 214,688
365,938
TOTAL COMMON STOCKS 14,932,653
(Cost $17,641,948)
CASH EQUIVALENTS - 4.3%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund (b) 677,744 $ 677,744
(Cost $677,744)
TOTAL INVESTMENT IN $ 15,610,397
SECURITIES - 100%
(Cost $18,319,692)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. 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 $23,763,535 and $27,829,701, respectively.
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 $14,545 for the
period.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $18,477,058. Net unrealized depreciation
aggregated $2,866,661, of which $574,854 related to appreciated
investment securities and $3,441,515 related to depreciated investment
securities.
The fund hereby designates approximately $169,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
The fund intends to elect to defer to its fiscal year ending February
29, 2000 approximately $845,000 of losses recognized during the period
November 1, 1998 to February 28, 1999.
ENVIRONMENTAL SERVICES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 15,610,397
value (cost $18,319,692) -
See accompanying schedule
Receivable for fund shares 3,580
sold
Interest receivable 3,311
Redemption fees receivable 16
TOTAL ASSETS 15,617,304
LIABILITIES
Payable for fund shares $ 41,663
redeemed
Accrued management fee 8,529
Other payables and accrued 33,551
expenses
TOTAL LIABILITIES 83,743
NET ASSETS $ 15,533,561
Net Assets consist of:
Paid in capital $ 19,113,474
Accumulated undistributed net (870,618)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (2,709,295)
(depreciation) on investments
NET ASSETS, for 1,216,736 $ 15,533,561
shares outstanding
NET ASSET VALUE and $12.77
redemption price per share
($15,533,561 (divided by)
1,216,736 shares)
Maximum offering price per $13.16
share (100/97.00 of $12.77)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 120,420
Dividends
Interest 72,918
TOTAL INCOME 193,338
EXPENSES
Management fee $ 122,145
Transfer agent fees 234,438
Accounting fees and expenses 57,141
Custodian fees and expenses 9,513
Registration fees 12,390
Audit 14,562
Legal 130
Reports to shareholders 8,386
Total expenses before 458,705
reductions
Expense reductions (8,619) 450,086
NET INVESTMENT INCOME (LOSS) (256,748)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (475,663)
Foreign currency transactions 1,449 (474,214)
Change in net unrealized (4,374,725)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) (4,848,939)
NET INCREASE (DECREASE) IN $ (5,105,687)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 29,658
charges paid to FDC
Sales charges - Retained by $ 28,390
FDC
Deferred sales charges $ 7,574
withheld by FDC
Exchange fees withheld by FSC $ 3,083
Expense reductions Directed $ 8,015
brokerage arrangements
Custodian credits 604
$ 8,619
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (256,748) $ (233,737)
income (loss)
Net realized gain (loss) (474,214) 491,329
Change in net unrealized (4,374,725) 2,816,729
appreciation (depreciation)
NET INCREASE (DECREASE) IN (5,105,687) 3,074,321
NET ASSETS RESULTING FROM
OPERATIONS
Distributions in excess of (40,246) -
net realized gains
Share transactions Net 10,454,030 19,043,654
proceeds from sales of shares
Reinvestment of distributions 38,642 -
Cost of shares redeemed (15,030,447) (29,500,558)
NET INCREASE (DECREASE) IN (4,537,775) (10,456,904)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 34,045 40,370
TOTAL INCREASE (DECREASE) (9,649,663) (7,342,213)
IN NET ASSETS
NET ASSETS
Beginning of period 25,183,224 32,525,437
End of period $ 15,533,561 $ 25,183,224
OTHER INFORMATION
Shares
Sold 712,286 1,183,759
Issued in reinvestment of 3,084 -
distributions
Redeemed (1,028,657) (1,896,214)
Net increase (decrease) (313,287) (712,455)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 16.46 $ 14.50 $ 12.42 $ 10.27 $ 11.93
period
Income from Investment
Operations
Net investment income (loss) c (.18) (.13) (.08) (.17) (.14)
Net realized and unrealized (3.50) 2.07 2.04 2.95 (1.53)
gain (loss)
Total from investment (3.68) 1.94 1.96 2.78 (1.67)
operations
Less Distributions
From net realized gain - - - (.65) -
In excess of net realized gain (.03) - (.02) - -
Total distributions (.03) - (.02) (.65) -
Redemption fees added to paid .02 .02 .14 .02 .01
in capital
Net asset value, end of period $ 12.77 $ 16.46 $ 14.50 $ 12.42 $ 10.27
TOTAL RETURN A, b (22.23)% 13.52% 16.93% 27.49% (13.91)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 15,534 $ 25,183 $ 32,525 $ 27,587 $ 31,270
(000 omitted)
Ratio of expenses to average 2.20% 2.23% 2.18% 2.36% 2.04%
net assets
Ratio of expenses to average 2.16% d 2.22% d 2.11% d 2.32% d 2.01% d
net assets after expense
reductions
Ratio of net investment (1.23)% (.84)% (.59)% (1.43)% (1.32)%
income (loss) to average net
assets
Portfolio turnover rate 123% 59% 252% 138% 82%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. E FOR
THE YEAR ENDED FEBRUARY 29.
</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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT INDUSTRIAL EQUIPMENT 1.00% 101.58% 324.90%
SELECT INDUSTRIAL EQUIPMENT -2.11% 95.46% 312.08%
(LOAD ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Cyclical Industries -4.79% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT INDUSTRIAL EQUIPMENT 1.00% 15.05% 15.57%
SELECT INDUSTRIAL EQUIPMENT -2.11% 14.34% 15.21%
(LOAD ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Cyclical Industries -4.79% 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
1989/02/28 9700.00 10000.00
1989/03/31 9843.21 10233.00
1989/04/30 10549.70 10764.09
1989/05/31 11122.54 11200.04
1989/06/30 10645.18 11136.20
1989/07/31 11323.03 12141.80
1989/08/31 11533.07 12379.78
1989/09/30 11370.77 12329.02
1989/10/31 10616.54 12042.99
1989/11/30 10912.50 12288.66
1989/12/31 11103.44 12583.59
1990/01/31 10731.10 11739.23
1990/02/28 11275.30 11890.67
1990/03/31 11943.60 12205.77
1990/04/30 11848.13 11900.63
1990/05/31 12946.06 13060.94
1990/06/30 12715.97 12972.12
1990/07/31 12475.68 12930.61
1990/08/31 10418.83 11761.68
1990/09/30 9005.94 11188.89
1990/10/31 8765.65 11140.78
1990/11/30 9054.00 11860.47
1990/12/31 9380.79 12191.38
1991/01/31 10380.38 12722.92
1991/02/28 11360.75 13632.61
1991/03/31 11264.63 13962.52
1991/04/30 11149.30 13996.03
1991/05/31 11620.26 14600.66
1991/06/30 11245.12 13931.95
1991/07/31 11341.31 14581.18
1991/08/31 11514.46 14926.75
1991/09/30 11783.81 14677.48
1991/10/31 11716.47 14874.16
1991/11/30 11158.54 14274.73
1991/12/31 11898.63 15907.76
1992/01/31 12966.21 15611.87
1992/02/29 13888.20 15814.83
1992/03/31 13480.58 15506.44
1992/04/30 13480.58 15962.33
1992/05/31 13587.34 16040.54
1992/06/30 12752.69 15801.54
1992/07/31 12869.15 16447.82
1992/08/31 12199.49 16110.64
1992/09/30 12451.83 16300.75
1992/10/31 12403.30 16357.80
1992/11/30 12995.32 16915.60
1992/12/31 13247.66 17123.66
1993/01/31 13868.79 17267.50
1993/02/28 14596.69 17502.34
1993/03/31 14858.73 17871.64
1993/04/30 15538.55 17439.14
1993/05/31 16315.47 17906.51
1993/06/30 16529.13 17958.44
1993/07/31 16762.21 17886.61
1993/08/31 17908.17 18564.51
1993/09/30 17704.23 18421.56
1993/10/31 18296.64 18802.89
1993/11/30 18277.22 18624.26
1993/12/31 18987.73 18849.62
1994/01/31 19880.57 19490.50
1994/02/28 20446.03 18962.31
1994/03/31 19265.50 18135.55
1994/04/30 19091.13 18367.69
1994/05/31 18700.90 18668.92
1994/06/30 17740.34 18211.53
1994/07/31 18580.83 18808.87
1994/08/31 19901.60 19580.03
1994/09/30 19961.64 19100.32
1994/10/31 20211.78 19530.08
1994/11/30 19231.21 18818.79
1994/12/31 19581.42 19097.87
1995/01/31 19471.35 19593.08
1995/02/28 20051.69 20356.63
1995/03/31 21712.66 20957.35
1995/04/30 22733.51 21574.54
1995/05/31 23193.99 22436.88
1995/06/30 24074.90 22958.09
1995/07/31 26337.24 23719.38
1995/08/31 25826.71 23778.91
1995/09/30 24645.49 24782.38
1995/10/31 24595.44 24693.91
1995/11/30 25436.31 25777.97
1995/12/31 25027.82 26274.46
1996/01/31 26033.30 27168.84
1996/02/29 27443.17 27420.69
1996/03/31 27639.89 27684.75
1996/04/30 28147.71 28092.83
1996/05/31 28352.26 28817.34
1996/06/30 28227.26 28927.14
1996/07/31 26818.17 27649.13
1996/08/31 27977.26 28232.26
1996/09/30 29306.80 29821.17
1996/10/31 29124.98 30643.63
1996/11/30 31488.62 32959.99
1996/12/31 31712.85 32307.05
1997/01/31 32845.00 34325.59
1997/02/28 32450.66 34594.71
1997/03/31 31140.42 33173.21
1997/04/30 32275.79 35153.65
1997/05/31 35142.29 37293.80
1997/06/30 37333.52 38964.57
1997/07/31 40020.87 42064.98
1997/08/31 39772.81 39708.50
1997/09/30 40820.19 41883.33
1997/10/31 37636.71 40484.43
1997/11/30 37567.80 42358.45
1997/12/31 37595.36 43085.75
1998/01/31 36918.11 43562.28
1998/02/28 40808.37 46703.99
1998/03/31 43611.88 49095.70
1998/04/30 44714.39 49589.60
1998/05/31 43139.38 48737.16
1998/06/30 42966.13 50716.86
1998/07/31 41406.88 50176.72
1998/08/31 34429.61 42922.17
1998/09/30 35469.11 45671.77
1998/10/31 39359.37 49386.71
1998/11/30 40792.62 52380.04
1998/12/31 42358.58 55398.18
1999/01/31 42766.97 57714.93
1999/02/26 41208.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990309 144528 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Industrial Equipment Portfolio on February
28, 1989, and the current 3.00% sales charge was paid. As the chart
shows, by February 28, 1999, the value of the investment would have
grown to $41,208 - a 312.08% 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 $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Tyco International Ltd. 10.1
Pitney Bowes, Inc. 8.5
General Electric Co. 8.3
Illinois Tool Works, Inc. 6.7
Emerson Electric Co. 5.7
Xerox Corp. 5.0
Applied Materials, Inc. 4.8
Ingersoll-Rand Co. 4.7
Caterpillar, Inc. 4.1
COMSAT Corp. Series 1 3.1
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Industrial Machinery
& Equipment 30.2%
Electrical Equipment 19.8%
Computers & Office
Equipment 13.9%
Electronic Instruments 7.3%
Telephone Services 3.8%
All Others 25.0%*
* INCLUDES SHORT-TERM INVESTMENTS
Row: 1, Col: 1, Value: 25.0
Row: 1, Col: 2, Value: 3.8
Row: 1, Col: 3, Value: 7.3
Row: 1, Col: 4, Value: 13.9
Row: 1, Col: 5, Value: 19.8
Row: 1, Col: 6, Value: 30.2
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 12 months that ended February 28, 1999, the fund returned
1.00%. For the same 12-month period, the Standard & Poor's 500 Index
returned 19.74%, while the Goldman Sachs Cyclical Industries Index -
an index of 277 stocks designed to measure the performance of
companies in the cyclical industries sector - returned -4.79%. The
fund outperformed the Goldman Sachs index due to the portfolio's
smaller exposure to stocks with strong ties to falling commodity
prices and its larger exposure to defensive, consumer-oriented stocks.
Q. WHAT FACTORS INFLUENCED THE FUND'S PERFORMANCE DURING THE PAST
YEAR?
A. The biggest factor was weak international economies, particularly
in Asia, Russia and Latin America. As conditions worsened, demand for
commodity-oriented products such as coal, paper and oil fell
significantly, resulting in capital spending cutbacks and reduced
equipment orders. Declining demand for agricultural products was
exacerbated by record crop yields in the U.S., driving commodity
prices to historically low levels and reducing demand for agricultural
equipment. In addition, because U.S. exports represent an important
component of revenue, declining currencies versus the dollar further
aggravated conditions. These factors all led to deteriorating earnings
growth and weak stock price performance for industrial and
agricultural companies.
Q. HOW DID YOU MANAGE THE FUND IN THIS DIFFICULT ENVIRONMENT?
A. I underweighted companies whose earnings were sensitive to falling
commodity prices and weak international economies. For example, the
fund had relatively small positions in agricultural and mining
equipment manufacturers and industrial component suppliers. In
addition, I significantly overweighted large-cap stocks that offered
investors good liquidity, expanding revenues and steady, predictable
earnings growth.
Q. WHICH OF THE FUND'S HOLDINGS REFLECTED YOUR STRATEGY?
A. Tyco International and Pitney Bowes - the fund's two largest
positions at the end of the period - were large-cap companies that
generated strong sales and predictable earnings growth. Both of these
stocks performed well throughout the year. Tyco diversified its
operations by establishing leadership positions in such businesses as
fire and security services - it owns ADT, the top U.S. provider of
security monitoring - and electronic components. These relatively
non-cyclical businesses offer good growth rates and high margins.
Pitney Bowes manufactures office equipment and is the world's largest
producer of postage meters. With a domestic market share in excess of
80%, the company recently benefited from U.S. Postal Service
regulations that are driving a major product transition. These
regulations eliminated older, mechanical postage meters in favor of
newer, more efficient electronic and digital meters.
Q. WHERE ELSE DID YOU FIND VALUE?
A. I increased the fund's holdings in semiconductor equipment stocks.
Excess inventories and falling prices hurt this sector earlier in the
year when many personal computer manufacturers scaled back production
and reduced semiconductor orders. However, after inventories were sold
down, pricing improved and these stocks recovered. For example, the
fund's performance benefited from an investment in Applied Materials -
the dominant producer of wafer-fabrication equipment used by
semiconductor manufacturers - when its stock price more than tripled
between October and February.
Q. WHAT STOCKS DETRACTED FROM PERFORMANCE?
A. Investments in Loral and Comsat, two satellite companies, performed
poorly. Both launch and in-orbit failures accentuated their lack of
earnings predictability. As a result, their stock prices fell sharply
despite a favorable deployment history and strong demand for satellite
services and capacity. Loral is no longer in the portfolio. Emerson
Electric - a large manufacturer of electrical products - weakened
significantly during the last part of the period. The stock performed
well throughout the fall of 1998 as the market rewarded its relatively
steady earnings growth. Ultimately, however, weak global economies and
falling commodity prices led to a deteriorating earnings outlook and
investors were disappointed.
Q. WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
A. I am modestly optimistic that conditions should improve for North
American industrial equipment manufacturers. Although I'm mindful of
weaknesses in Latin America and potentially slower growth in Europe, I
am encouraged by signs of economic recovery and stronger currencies in
some Asian countries, including Singapore and Korea. As confidence in
Asia's recovery increases, demand for industrial products should
improve. Looking ahead, I plan to maintain my focus on companies
offering steady growth and predictable earnings. However, I also plan
to increase the fund's exposure to companies that should be
performance leaders - such as component suppliers to the large
equipment manufacturers - when the industrial equipment cycle turns
around.
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 OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark)FUND FACTS
START DATE: September 29, 1986
FUND NUMBER: 510
TRADING SYMBOL: FSCGX
SIZE: as of February 28, 1999, more than
$31 million
MANAGER: Simon Wolf, since 1997; research
analyst, industrial and electrical equipment
industries, since 1997; joined Fidelity in 1996
INDUSTRIAL EQUIPMENT PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 89.6%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 2.8%
AlliedSignal, Inc. 10,000 $ 413,750
Cordant Technologies, Inc. 3,100 120,706
Textron, Inc. 5,000 390,000
924,456
BUILDING MATERIALS - 1.2%
American Standard Companies, 5,000 167,813
Inc. (a)
York International Corp. 6,000 217,500
385,313
CHEMICALS & PLASTICS - 0.9%
Tredegar Industries, Inc. 12,000 306,750
COMPUTERS & OFFICE EQUIPMENT
- - 13.9%
Neopost SA (a) 8,100 129,489
Pitney Bowes, Inc. 45,000 2,843,438
Xerox Corp. 30,000 1,655,625
4,628,552
ELECTRICAL EQUIPMENT - 19.8%
Baldor Electric Co. 11,866 226,937
Emerson Electric Co. 33,000 1,895,438
General Electric Co. 27,500 2,758,594
Genlyte Group, Inc. (a) 15,000 271,406
Honeywell, Inc. 13,000 909,188
Hubbell, Inc. Class B 9,000 335,250
SLI, Inc. (a) 9,000 201,375
6,598,188
ELECTRONIC INSTRUMENTS - 7.3%
Applied Materials, Inc. (a) 28,500 1,585,313
KLA-Tencor Corp. (a) 8,500 440,406
LAM Research Corp. (a) 3,500 103,469
Novellus Systems, Inc. (a) 1,850 109,266
Teradyne, Inc. (a) 4,000 190,500
2,428,954
ELECTRONICS - 1.2%
AMP, Inc. 7,500 398,906
ENERGY SERVICES - 1.1%
Halliburton Co. 13,000 367,250
ENTERTAINMENT - 1.3%
Tele-Communications, Inc. 15,000 415,313
(TCI Ventures Group) Series
A (a)
INDUSTRIAL MACHINERY &
EQUIPMENT - 30.2%
Caterpillar, Inc. 30,000 1,366,875
Cooper Industries, Inc. 6,000 262,500
Dover Corp. 9,900 336,600
SHARES VALUE (NOTE 1)
IDEX Corp. 5,000 $ 118,750
Illinois Tool Works, Inc. 32,500 2,234,375
Ingersoll-Rand Co. 33,000 1,567,500
Kaydon Corp. 4,500 137,250
Lindsay Manufacturing Co. 15,000 238,125
Manitowoc Co., Inc. 5,250 193,594
MSC Industrial Direct, Inc. 13,000 232,375
(a)
Tyco International Ltd. 45,000 3,349,682
10,037,626
LEASING & RENTAL - 0.6%
United Rentals, Inc. (a) 6,000 193,125
MEDICAL EQUIPMENT & SUPPLIES
- - 1.5%
Millipore Corp. 14,000 390,250
Pall Corp. 5,000 105,938
496,188
METALS & MINING - 1.3%
AFC Cable Systems, Inc. (a) 7,000 231,875
Superior Telecom, Inc. 7,500 212,344
444,219
OIL & GAS - 1.0%
Cooper Cameron Corp. (a) 100 2,313
Weatherford International, 20,000 340,000
Inc. (a)
342,313
PACKAGING & CONTAINERS - 0.7%
Owens-Illinois, Inc. (a) 10,000 239,375
RETAIL & WHOLESALE,
MISCELLANEOUS - 0.3%
IKON Office Solutions, Inc. 7,500 105,938
SERVICES - 0.7%
Ritchie Bros. Auctioneers, 7,500 235,313
Inc.
TELEPHONE SERVICES - 3.8%
COMSAT Corp. Series 1 35,000 1,023,750
MCI WorldCom, Inc. (a) 3,000 247,500
1,271,250
TOTAL COMMON STOCKS 29,819,029
(Cost $23,685,734)
CASH EQUIVALENTS - 10.4%
Taxable Central Cash Fund (b) 3,445,357 3,445,357
(Cost $3,445,357)
TOTAL INVESTMENT IN $ 33,264,386
SECURITIES - 100%
(Cost $27,131,091)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. 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 $32,425,269 and $43,857,749, respectively.
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 $8,504 for the
period.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $27,171,099. Net unrealized appreciation
aggregated $6,093,287 of which $7,322,018 related to appreciated
investment securities and $1,228,731 related to depreciated investment
securities.
The fund hereby designates approximately $1,939,000 as capital gain
dividend for the purpose of the dividend paid deduction.
INDUSTRIAL EQUIPMENT PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 33,264,386
value (cost $27,131,091) -
See accompanying schedule
Receivable for fund shares 3,336
sold
Dividends receivable 48,163
Interest receivable 6,368
Redemption fees receivable 112
Other receivables 8,150
TOTAL ASSETS 33,330,515
LIABILITIES
Payable to custodian bank $ 49,145
Payable for investments 363,454
purchased
Payable for fund shares 1,295,808
redeemed
Accrued management fee 16,224
Other payables and accrued 32,722
expenses
TOTAL LIABILITIES 1,757,353
NET ASSETS $ 31,573,162
Net Assets consist of:
Paid in capital $ 23,290,162
Accumulated undistributed net 2,149,705
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 6,133,295
(depreciation) on investments
NET ASSETS, for 1,251,395 $ 31,573,162
shares outstanding
NET ASSET VALUE and $25.23
redemption price per share
($31,573,162 (divided by)
1,251,395 shares)
Maximum offering price per $26.01
share (100/97.00 of $25.23)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 365,472
Dividends
Interest 164,210
TOTAL INCOME 529,682
EXPENSES
Management fee $ 249,535
Transfer agent fees 248,573
Accounting fees and expenses 60,400
Non-interested trustees' 158
compensation
Custodian fees and expenses 9,119
Registration fees 17,222
Audit 14,066
Legal 347
Reports to shareholders 6,504
Total expenses before 605,924
reductions
Expense reductions (6,761) 599,163
NET INVESTMENT INCOME (LOSS) (69,481)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 3,585,290
Foreign currency transactions 830 3,586,120
Change in net unrealized (3,320,873)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 265,247
NET INCREASE (DECREASE) IN $ 195,766
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 25,189
charges paid to FDC
Sales charges - Retained by $ 24,472
FDC
Deferred sales charges $ 1,074
withheld by FDC
Exchange fees withheld by FSC $ 4,058
Expense reductions Directed $ 6,560
brokerage arrangements
Custodian credits 201
$ 6,761
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (69,481) $ (190,412)
income (loss)
Net realized gain (loss) 3,586,120 9,532,487
Change in net unrealized (3,320,873) 4,204,137
appreciation (depreciation)
NET INCREASE (DECREASE) IN 195,766 13,546,212
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders - (59,949)
From net investment income
From net realized gain (1,273,263) (11,693,964)
TOTAL DISTRIBUTIONS (1,273,263) (11,753,913)
Share transactions Net 20,888,073 24,781,618
proceeds from sales of shares
Reinvestment of distributions 1,219,714 11,543,701
Cost of shares redeemed (39,935,425) (90,632,790)
NET INCREASE (DECREASE) IN (17,827,638) (54,307,471)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 50,582 60,604
TOTAL INCREASE (DECREASE) (18,854,553) (52,454,568)
IN NET ASSETS
NET ASSETS
Beginning of period 50,427,715 102,882,283
End of period $ 31,573,162 $ 50,427,715
OTHER INFORMATION
Shares
Sold 771,299 934,187
Issued in reinvestment of 49,301 497,967
distributions
Redeemed (1,515,112) (3,519,270)
Net increase (decrease) (694,512) (2,087,116)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 25.91 $ 25.51 $ 25.11 $ 20.04 $ 20.61
period
Income from Investment
Operations
Net investment income (loss) C (.04) (.08) .06 .04 .01
Net realized and unrealized .25 5.73 4.15 7.10 (.44)
gain (loss)
Total from investment .21 5.65 4.21 7.14 (.43)
operations
Less Distributions
From net investment income - (.02) (.04) (.05) (.01)
From net realized gain (.92) (5.26) (3.84) (2.05) (.16)
Total distributions (.92) (5.28) (3.88) (2.10) (.17)
Redemption fees added to paid .03 .03 .07 .03 .03
in capital
Net asset value, end of period $ 25.23 $ 25.91 $ 25.51 $ 25.11 $ 20.04
TOTAL RETURN A, B 1.00% 25.76% 18.25% 36.86% (1.93)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 31,573 $ 50,428 $ 102,882 $ 137,520 $ 109,968
(000 omitted)
Ratio of expenses to average 1.43% 1.67% 1.51% 1.54% 1.80%
net assets
Ratio of expenses to average 1.41% D 1.60% D 1.44% D 1.53% D 1.78% D
net assets after expense
reductions
Ratio of net investment (.16)% (.32)% .25% .19% .06%
income (loss) to average net
assets
Portfolio turnover rate 84% 115% 261% 115% 131%
</TABLE>
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. E FOR
THE YEAR ENDED FEBRUARY 29.
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT INDUSTRIAL MATERIALS -18.72% 19.16% 99.31%
SELECT INDUSTRIAL MATERIALS -21.23% 15.52% 93.26%
(LOAD ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Cyclical Industries -4.79% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT INDUSTRIAL MATERIALS -18.72% 3.57% 7.14%
SELECT INDUSTRIAL MATERIALS -21.23% 2.93% 6.81%
(LOAD ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Cyclical Industries -4.79% 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
1989/02/28 9700.00 10000.00
1989/03/31 9599.11 10233.00
1989/04/30 9894.58 10764.09
1989/05/31 10024.29 11200.04
1989/06/30 9440.56 11136.20
1989/07/31 10290.94 12141.80
1989/08/31 11112.48 12379.78
1989/09/30 10435.07 12329.02
1989/10/31 9577.49 12042.99
1989/11/30 9714.41 12288.66
1989/12/31 9988.26 12583.59
1990/01/31 9224.37 11739.23
1990/02/28 9382.91 11890.67
1990/03/31 9656.76 12205.77
1990/04/30 8957.73 11900.63
1990/05/31 9498.22 13060.94
1990/06/30 9397.42 12972.12
1990/07/31 9286.51 12930.61
1990/08/31 8214.42 11761.68
1990/09/30 7630.32 11188.89
1990/10/31 7541.60 11140.78
1990/11/30 7940.86 11860.47
1990/12/31 8273.57 12191.38
1991/01/31 8569.32 12722.92
1991/02/28 9197.79 13632.61
1991/03/31 9323.48 13962.52
1991/04/30 9338.27 13996.03
1991/05/31 10136.79 14600.66
1991/06/30 10025.85 13931.95
1991/07/31 10426.89 14581.18
1991/08/31 10671.96 14926.75
1991/09/30 10530.86 14677.48
1991/10/31 10983.88 14874.16
1991/11/30 10107.54 14274.73
1991/12/31 11236.38 15907.76
1992/01/31 11726.53 15611.87
1992/02/29 12298.38 15814.83
1992/03/31 12083.01 15506.44
1992/04/30 12714.27 15962.33
1992/05/31 12862.80 16040.54
1992/06/30 12550.58 15801.54
1992/07/31 12832.95 16447.82
1992/08/31 12023.00 16110.64
1992/09/30 11859.52 16300.75
1992/10/31 11993.27 16357.80
1992/11/30 12439.12 16915.60
1992/12/31 12626.18 17123.66
1993/01/31 12894.82 17267.50
1993/02/28 13014.22 17502.34
1993/03/31 13230.62 17871.64
1993/04/30 13036.60 17439.14
1993/05/31 13573.89 17906.51
1993/06/30 13610.95 17958.44
1993/07/31 13798.12 17886.61
1993/08/31 14157.49 18564.51
1993/09/30 13715.77 18421.56
1993/10/31 14524.34 18802.89
1993/11/30 14719.00 18624.26
1993/12/31 15325.42 18849.62
1994/01/31 16568.23 19490.50
1994/02/28 16223.84 18962.31
1994/03/31 15767.14 18135.55
1994/04/30 16358.95 18367.69
1994/05/31 16524.04 18668.92
1994/06/30 16351.44 18211.53
1994/07/31 16959.27 18808.87
1994/08/31 17874.77 19580.03
1994/09/30 17649.65 19100.32
1994/10/31 17417.02 19530.08
1994/11/30 16186.35 18818.79
1994/12/31 16581.17 19097.87
1995/01/31 16113.03 19593.08
1995/02/28 17464.59 20356.63
1995/03/31 17864.78 20957.35
1995/04/30 17947.51 21574.54
1995/05/31 17765.99 22436.88
1995/06/30 18560.13 22958.09
1995/07/31 20163.53 23719.38
1995/08/31 20110.59 23778.91
1995/09/30 19543.34 24782.38
1995/10/31 18408.86 24693.91
1995/11/30 20103.02 25777.97
1995/12/31 19132.99 26274.46
1996/01/31 19429.22 27168.84
1996/02/29 19801.40 27420.69
1996/03/31 20804.00 27684.75
1996/04/30 21291.50 28092.83
1996/05/31 21160.41 28817.34
1996/06/30 20458.66 28927.14
1996/07/31 19610.39 27649.13
1996/08/31 20674.58 28232.26
1996/09/30 21129.56 29821.17
1996/10/31 21083.29 30643.63
1996/11/30 21723.35 32959.99
1996/12/31 21814.22 32307.05
1997/01/31 21911.03 34325.59
1997/02/28 22314.40 34594.71
1997/03/31 20830.00 33173.21
1997/04/30 20886.68 35153.65
1997/05/31 22210.18 37293.80
1997/06/30 22140.06 38964.57
1997/07/31 24077.09 42064.98
1997/08/31 24173.51 39708.50
1997/09/30 24804.58 41883.33
1997/10/31 22885.07 40484.43
1997/11/30 22613.36 42358.45
1997/12/31 22196.91 43085.75
1998/01/31 22615.54 43562.28
1998/02/28 23785.81 46703.99
1998/03/31 24946.55 49095.70
1998/04/30 25174.90 49589.60
1998/05/31 23938.03 48737.16
1998/06/30 22739.23 50716.86
1998/07/31 21131.31 50176.72
1998/08/31 17649.07 42922.17
1998/09/30 17905.95 45671.77
1998/10/31 19209.42 49386.71
1998/11/30 19884.93 52380.04
1998/12/31 19751.73 55398.18
1999/01/31 19856.39 57714.93
1999/02/26 19326.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990309 144533 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Industrial Materials Portfolio on February
28, 1989, and the current 3.00% sales charge was paid. As the chart
shows, by February 28, 1999, the value of the investment would have
grown to $19,326 - a 93.26% 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 $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Kimberly-Clark Corp. 9.2
Minnesota Mining & 7.9
Manufacturing Co.
Monsanto Co. 6.8
du Pont (E.I.) de Nemours & Co. 6.7
Burlington Northern Santa Fe 5.6
Corp.
Alcoa, Inc. 4.4
Dow Chemical Co. 4.3
Getchell Gold Corp. 3.0
Union Pacific Corp. 2.5
International Paper Co. 2.3
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Chemicals & Plastics 25.2%
Paper & Forest Products 23.8%
Railroads 9.8%
Consumer Durables 7.9%
Metals & Mining 7.2%
All Others 26.1%*
* INCLUDES SHORT-TERM INVESTMENTS
Row: 1, Col: 1, Value: 26.1
Row: 1, Col: 2, Value: 7.2
Row: 1, Col: 3, Value: 7.9
Row: 1, Col: 4, Value: 9.800000000000001
Row: 1, Col: 5, Value: 23.8
Row: 1, Col: 6, Value: 25.2
INDUSTRIAL MATERIALS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Peter Hirsch)
Peter Hirsch,
Portfolio Manager
of Fidelity Select
Industrial Materials Portfolio
Q. HOW DID THE FUND PERFORM, PETER?
A. For the 12 months that ended February 28, 1999, the fund had a
total return of -18.72%, compared to 19.74% for the Standard & Poor's
500 Index. The Goldman Sachs Cyclical Industries Index, comprised of
277 stocks in the cyclical industries sector, had a return of -4.79%.
Q. WHY DID THE FUND TRAIL THE S&P 500 AND THE GOLDMAN SACHS INDEX?
A. The story hasn't changed much from six months ago. The fund's
performance depends heavily on the prices of global commodities such
as steel, paper, chemicals, plastics and non-ferrous metals. Ongoing
weak demand from Asia and Latin America kept commodity prices low,
thereby diminishing the profitability of most companies in the sector.
The S&P 500, on the other hand, is a broadly based index containing
the stocks of companies from a variety of sectors. With the exception
of the three-month period from mid-July through mid-October, the
general market was strong, enabling the S&P 500 to outperform the fund
by a considerable degree. The Goldman Sachs index, although closer in
composition than the S&P 500 to the universe of stocks in which the
fund can invest, nevertheless also contains stocks from industries
that are more insulated from weak overseas demand. Consequently, the
Goldman Sachs index performed better than the fund did.
Q. DID YOU MAKE ANY SIGNIFICANT CHANGES SINCE TAKING OVER THE FUND IN
SEPTEMBER 1998?
A. There were no major shifts in strategy. I tried to pick the best
stocks in each industry, particularly those with the ability to grow
their earnings and generate solid cash flow during difficult periods.
Q. WHAT STOCKS DID WELL FOR THE FUND DURING THE PERIOD?
A. Alcoa helped the fund's performance. The company was able to grow
its earnings through cost reductions and a variety of
productivity-enhancing programs. In addition, Alcoa made a number of
acquisitions that added to earnings. One of those acquisitions was
Alumax, another relatively strong performer during the period.
Getchell Gold also performed well. The stock surged higher on news of
a takeover bid by another gold mining company, Placer Dome.
Q. WHAT STOCKS DETRACTED FROM PERFORMANCE?
A. Cytec was one of the biggest detractors. A supplier to Boeing, the
company was adversely affected by the aerospace giant's plans to build
fewer planes in the year 2000. Owens-Illinois performed poorly in part
because of weakness in the economies of Latin America, where the
company does a fair amount of business. Ryerson Tull - a metal service
center/distributor - was another disappointment. The company's
business slowed in response to slackening demand for the products of
its customers in the heavy machinery manufacturing industry. Finally,
Kimberly-Clark detracted significantly from the fund's performance.
Although the stock suffered only a slight decline, Kimberly-Clark was
one of the fund's largest holdings during the period, so even a modest
decline was enough to put a noticeable dent in the fund's performance.
Q. WHAT'S YOUR OUTLOOK, PETER?
A. An improving outlook for the industrial materials sector depends to
a significant degree on a rebound in global demand for the commodities
used to produce those materials. Current prospects in that regard are
mixed. On the one hand, Japan's economy remains in a recession, and
Latin America may be in the early stages of contracting the "Asian
flu" - as the recent devaluation of the Brazilian currency suggests.
Furthermore, some European economies are weaker than they were six
months ago. China is still a question mark. A devaluation of the
Chinese yuan, which some analysts have been anticipating, could put
downward pressure on industrial materials prices. On the other hand,
some parts of Asia, such as South Korea, appear to be rebounding from
their economic doldrums. Another positive factor is the United States
economy, which continues to show surprising strength.
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 OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark)FUND FACTS
START DATE: September 29, 1986
FUND NUMBER: 509
TRADING SYMBOL: FSDPX
SIZE: as of February 28, 1999, 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 FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 94.2%
SHARES VALUE (NOTE 1)
BUILDING MATERIALS - 6.0%
Lafarge Corp. 1,820 $ 58,013
Masco Corp. 9,400 246,750
Owens-Corning 800 25,450
Sherwin-Williams Co. 4,300 103,469
Southdown, Inc. 3,900 184,031
USG Corp. 1,100 55,138
672,851
CHEMICALS & PLASTICS - 25.2%
Air Products & Chemicals, 900 28,913
Inc.
Avery Dennison Corp. 2,800 150,325
Cytec Industries, Inc. (a) 3,500 93,844
Dow Chemical Co. 4,900 482,038
du Pont (E.I.) de Nemours & 14,700 754,294
Co.
Ivex Packaging Corp. (a) 5,300 80,163
Monsanto Co. 16,800 765,450
Praxair, Inc. 5,500 192,156
Raychem Corp. 20 456
Sealed Air Corp. (a) 3,440 174,580
Union Carbide Corp. 1,700 74,800
Witco Corp. 1,600 27,100
2,824,119
CONSUMER DURABLES - 7.9%
Minnesota Mining & 12,000 888,750
Manufacturing Co.
DRUGS & PHARMACEUTICALS - 0.5%
Sigma-Aldrich Corp. 2,100 55,388
IRON & STEEL - 3.5%
AK Steel Holding Corp. 3,300 71,981
Allegheny Teledyne, Inc. 3,800 78,375
Nucor Corp. 2,500 111,406
Steel Dynamics, Inc. (a) 8,500 133,875
395,637
LEASING & RENTAL - 0.4%
Ryder Systems, Inc. 1,600 43,200
METALS & MINING - 7.2%
Alcoa, Inc. 12,282 497,421
Brush Wellman, Inc. 400 5,750
Cominco Ltd. 1,800 24,771
Falconbridge Ltd. 4,500 49,990
Kaiser Aluminum Corp. (a) 7,000 35,000
Phelps Dodge Corp. 1,400 67,900
Reynolds Metals Co. 1,500 64,125
Ryerson Tull, Inc. (a) 3,220 58,765
803,722
PACKAGING & CONTAINERS - 1.2%
Owens-Illinois, Inc. (a) 5,400 129,263
SHARES VALUE (NOTE 1)
PAPER & FOREST PRODUCTS - 23.8%
Boise Cascade Corp. 1,587 $ 49,296
Bowater, Inc. 1,600 67,400
Champion International Corp. 2,700 99,900
Consolidated Papers, Inc. 1,800 40,050
Fort James Corp. 5,500 164,313
Georgia-Pacific Corp. 2,900 212,425
International Paper Co. 6,100 256,200
Kimberly-Clark Corp. 21,700 1,025,319
Louisiana-Pacific Corp. 2,000 36,750
Mead Corp. 1,700 51,744
Potlatch Corp. 700 24,281
Smurfit-Stone Container Corp. 4,900 88,506
(a)
Temple-Inland, Inc. 1,400 83,913
Union Camp Corp. 1,600 107,000
Westvaco Corp. 2,300 51,463
Weyerhaeuser Co. 4,100 228,575
Willamette Industries, Inc. 2,000 72,875
2,660,010
PRECIOUS METALS - 6.4%
Barrick Gold Corp. 12,200 215,632
Euro-Nevada Mining Corp. Ltd. 2,000 28,916
Getchell Gold Corp. (a) 12,900 334,594
Kinross Gold Corp. (a) 6,100 13,593
Newmont Mining Corp. 6,150 106,088
Stillwater Mining Co. (a) 750 17,203
716,026
RAILROADS - 9.8%
Burlington Northern Santa Fe 18,900 626,063
Corp.
Canadian National Railway Co. 2,100 101,393
Kansas City Southern 1,900 88,825
Industries, Inc.
Union Pacific Corp. 6,100 285,938
1,102,219
TRUCKING & FREIGHT - 2.3%
CNF Transportation, Inc. 2,000 84,500
USFreightways Corp. 5,500 175,313
259,813
TOTAL COMMON STOCKS 10,550,998
(Cost $10,352,285)
CASH EQUIVALENTS - 5.8%
Taxable Central Cash Fund (b) 644,087 644,087
(Cost $644,087)
TOTAL INVESTMENT IN $ 11,195,085
SECURITIES - 100%
(Cost $10,996,372)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. 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 $12,528,232 and $20,188,827, respectively.
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 $3,612 for the
period.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $11,139,998. Net unrealized appreciation
aggregated $55,087, of which $762,001 related to appreciated
investment securities and $706,914 related to depreciated investment
securities.
At February 28, 1999, the fund had a capital loss carryforward of
approximately $840,000, all of which will expire on February 28, 2007.
The fund intends to elect to defer its fiscal year ending February 29,
2000 approximately $1,067,000 of losses recognized during the period
November 1, 1998 to February 28, 1999.
INDUSTRIAL MATERIALS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 11,195,085
value (cost $10,996,372) -
See accompanying schedule
Receivable for investments 5,922
sold
Receivable for fund shares 560
sold
Dividends receivable 22,038
Interest receivable 2,418
Redemption fees receivable 46
Other receivables 340
TOTAL ASSETS 11,226,409
LIABILITIES
Payable for fund shares $ 32,072
redeemed
Accrued management fee 5,616
Other payables and accrued 26,478
expenses
TOTAL LIABILITIES 64,166
NET ASSETS $ 11,162,243
Net Assets consist of:
Paid in capital $ 13,014,205
Accumulated undistributed net (2,050,672)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 198,710
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 549,189 $ 11,162,243
shares outstanding
NET ASSET VALUE and $20.32
redemption price per share
($11,162,243 (divided by)
549,189 shares)
Maximum offering price per $20.95
share (100/97.00 of $20.32)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 204,818
Dividends
Interest 39,996
TOTAL INCOME 244,814
EXPENSES
Management fee $ 94,263
Transfer agent fees 131,584
Accounting fees and expenses 60,350
Non-interested trustees' 62
compensation
Custodian fees and expenses 11,394
Registration fees 16,934
Audit 12,599
Legal 118
Reports to shareholders 6,245
Total expenses before 333,549
reductions
Expense reductions (4,865) 328,684
NET INVESTMENT INCOME (LOSS) (83,870)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (1,209,571)
Foreign currency transactions 764 (1,208,807)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (1,993,507)
Assets and liabilities in 30 (1,993,477)
foreign currencies
NET GAIN (LOSS) (3,202,284)
NET INCREASE (DECREASE) IN $ (3,286,154)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 12,710
charges paid to FDC
Sales charges - Retained by $ 12,337
FDC
Deferred sales charges $ 1,065
withheld by FDC
Exchange fees withheld by FSC $ 2,640
Expense reductions Directed $ 4,865
brokerage arrangements
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (83,870) $ (124,764)
income (loss)
Net realized gain (loss) (1,208,807) 3,017,681
Change in net unrealized (1,993,477) (1,210,871)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (3,286,154) 1,682,046
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders - (37,279)
From net investment income
From net realized gain - (4,304,754)
TOTAL DISTRIBUTIONS - (4,342,033)
Share transactions Net 9,957,438 15,807,574
proceeds from sales of shares
Reinvestment of distributions - 4,249,488
Cost of shares redeemed (18,118,847) (61,328,959)
NET INCREASE (DECREASE) IN (8,161,409) (41,271,897)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 27,986 51,834
TOTAL INCREASE (DECREASE) (11,419,577) (43,880,050)
IN NET ASSETS
NET ASSETS
Beginning of period 22,581,820 66,461,870
End of period $ 11,162,243 $ 22,581,820
OTHER INFORMATION
Shares
Sold 440,126 605,194
Issued in reinvestment of - 181,274
distributions
Redeemed (794,343) (2,285,848)
Net increase (decrease) (354,217) (1,499,380)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 25.00 $ 27.66 $ 26.07 $ 23.13 $ 21.67
period
Income from Investment
Operations
Net investment income (loss) C (.12) (.11) .06 .12 .17
Net realized and unrealized (4.60) 1.43 3.12 2.92 1.43
gain (loss)
Total from investment (4.72) 1.32 3.18 3.04 1.60
operations
Less Distributions
From net investment income - (.03) (.06) (.15) (.18)
From net realized gain - (4.00) (1.57) - -
Total distributions - (4.03) (1.63) (.15) (.18)
Redemption fees added to paid .04 .05 .04 .05 .04
in capital
Net asset value, end of period $ 20.32 $ 25.00 $ 27.66 $ 26.07 $ 23.13
TOTAL RETURN A, B (18.72)% 6.59% 12.69% 13.38% 7.65%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 11,162 $ 22,582 $ 66,462 $ 86,338 $ 183,454
(000 omitted)
Ratio of expenses to average 2.07% 1.98% 1.54% 1.64% 1.56%
net assets
Ratio of expenses to average 2.04% D 1.94% D 1.51% D 1.61% D 1.53% D
net assets after expense
reductions
Ratio of net investment (.52)% (.42)% .23% .49% .77%
income (loss) to average net
assets
Portfolio turnover rate 82% 118% 105% 138% 139%
</TABLE>
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE .
C NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. E FOR
THE YEAR ENDED FEBRUARY 29.
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT PAPER AND FOREST -17.01% 33.37% 133.44%
PRODUCTS
SELECT PAPER AND FOREST -19.57% 29.29% 126.36%
PRODUCTS (LOAD ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Cyclical Industries -4.79% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT PAPER AND FOREST -17.01% 5.93% 8.85%
PRODUCTS
SELECT PAPER AND FOREST -19.57% 5.27% 8.51%
PRODUCTS (LOAD ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Cyclical Industries -4.79% 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
1989/02/28 9700.00 10000.00
1989/03/31 9708.16 10233.00
1989/04/30 10058.96 10764.09
1989/05/31 10238.44 11200.04
1989/06/30 9585.79 11136.20
1989/07/31 10507.65 12141.80
1989/08/31 11258.20 12379.78
1989/09/30 10638.18 12329.02
1989/10/31 10156.85 12042.99
1989/11/30 10083.43 12288.66
1989/12/31 10299.39 12583.59
1990/01/31 9357.82 11739.23
1990/02/28 9448.68 11890.67
1990/03/31 9712.98 12205.77
1990/04/30 9085.27 11900.63
1990/05/31 9688.20 13060.94
1990/06/30 9456.94 12972.12
1990/07/31 9597.35 12930.61
1990/08/31 8449.30 11761.68
1990/09/30 7631.62 11188.89
1990/10/31 7392.10 11140.78
1990/11/30 8135.44 11860.47
1990/12/31 8743.40 12191.38
1991/01/31 9465.72 12722.92
1991/02/28 9919.27 13632.61
1991/03/31 10120.85 13962.52
1991/04/30 10616.39 13996.03
1991/05/31 11834.25 14600.66
1991/06/30 11531.89 13931.95
1991/07/31 11540.29 14581.18
1991/08/31 11599.08 14926.75
1991/09/30 11153.93 14677.48
1991/10/31 11573.88 14874.16
1991/11/30 10691.98 14274.73
1991/12/31 11783.07 15907.76
1992/01/31 12866.77 15611.87
1992/02/29 12926.98 15814.83
1992/03/31 13012.98 15506.44
1992/04/30 13219.40 15962.33
1992/05/31 12849.57 16040.54
1992/06/30 12764.20 15801.54
1992/07/31 12669.40 16447.82
1992/08/31 12160.90 16110.64
1992/09/30 12031.62 16300.75
1992/10/31 12617.69 16357.80
1992/11/30 13083.09 16915.60
1992/12/31 13203.52 17123.66
1993/01/31 13610.18 17267.50
1993/02/28 13913.01 17502.34
1993/03/31 13895.71 17871.64
1993/04/30 14527.82 17439.14
1993/05/31 14571.11 17906.51
1993/06/30 14259.43 17958.44
1993/07/31 14112.25 17886.61
1993/08/31 14493.19 18564.51
1993/09/30 13800.56 18421.56
1993/10/31 14337.35 18802.89
1993/11/30 15229.10 18624.26
1993/12/31 15653.34 18849.62
1994/01/31 17471.48 19490.50
1994/02/28 16977.98 18962.31
1994/03/31 15177.16 18135.55
1994/04/30 15160.20 18367.69
1994/05/31 15778.62 18668.92
1994/06/30 15619.59 18211.53
1994/07/31 16944.79 18808.87
1994/08/31 18835.39 19580.03
1994/09/30 19171.11 19100.32
1994/10/31 17978.44 19530.08
1994/11/30 17192.16 18818.79
1994/12/31 17866.46 19097.87
1995/01/31 17746.49 19593.08
1995/02/28 19509.14 20356.63
1995/03/31 19647.57 20957.35
1995/04/30 19728.81 21574.54
1995/05/31 20054.98 22436.88
1995/06/30 21872.23 22958.09
1995/07/31 22617.77 23719.38
1995/08/31 22599.13 23778.91
1995/09/30 22226.37 24782.38
1995/10/31 21900.19 24693.91
1995/11/30 22226.37 25777.97
1995/12/31 21781.85 26274.46
1996/01/31 22325.12 27168.84
1996/02/29 21300.09 27420.69
1996/03/31 22386.62 27684.75
1996/04/30 23365.44 28092.83
1996/05/31 22894.49 28817.34
1996/06/30 21610.09 28927.14
1996/07/31 21042.81 27649.13
1996/08/31 22220.18 28232.26
1996/09/30 23022.93 29821.17
1996/10/31 22980.12 30643.63
1996/11/30 23247.70 32959.99
1996/12/31 23320.94 32307.05
1997/01/31 23561.14 34325.59
1997/02/28 23615.73 34594.71
1997/03/31 22338.31 33173.21
1997/04/30 23006.86 35153.65
1997/05/31 25846.25 37293.80
1997/06/30 26048.26 38964.57
1997/07/31 28079.60 42064.98
1997/08/31 27978.59 39708.50
1997/09/30 28797.86 41883.33
1997/10/31 25992.15 40484.43
1997/11/30 26160.49 42358.45
1997/12/31 25501.98 43085.75
1998/01/31 26477.27 43562.28
1998/02/28 27283.99 46703.99
1998/03/31 27705.41 49095.70
1998/04/30 29196.88 49589.60
1998/05/31 27490.97 48737.16
1998/06/30 26251.42 50716.86
1998/07/31 23723.23 50176.72
1998/08/31 20323.68 42922.17
1998/09/30 20728.68 45671.77
1998/10/31 22054.14 49386.71
1998/11/30 23097.32 52380.04
1998/12/31 23490.05 55398.18
1999/01/31 22459.14 57714.93
1999/02/26 22636.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990310 115448 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Paper and Forest Products Portfolio on
February 28, 1989, and the current 3.00% sales charge was paid. As the
chart shows, by February 28, 1999, the value of the investment would
have grown to $22,636 - a 126.36% 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 $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Westvaco Corp. 10.5
Champion International Corp. 7.7
Consolidated Papers, Inc. 6.9
Union Camp Corp. 6.1
Smurfit-Stone Container Corp. 5.2
Georgia-Pacific Corp. (Timber 5.1
Group)
Kimberly-Clark Corp. 5.0
Mead Corp. 3.8
International Paper Co. 3.5
Bowater, Inc. 3.4
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Paper & Forest Products 85.9%
Packaging & Containers 3.3%
Chemicals & Plastics 1.8%
Building Materials 1.0%
All Others 8.0%*
* INCLUDES SHORT-TERM INVESTMENTS
Row: 1, Col: 1, Value: 8.0
Row: 1, Col: 2, Value: 1.0
Row: 1, Col: 3, Value: 1.8
Row: 1, Col: 4, Value: 3.3
Row: 1, Col: 5, Value: 85.90000000000001
PAPER AND FOREST PRODUCTS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Noah Eccles)
NOTE TO SHAREHOLDERS: Noah Eccles became Portfolio Manager of Fidelity
Select Paper and Forest Products Portfolio on January 4, 1999.
Q. HOW DID THE FUND PERFORM, NOAH?
A. It was a challenging year for paper stocks. For the 12 months that
ended February 28, 1999, the fund returned -17.01%. During that same
period, the Standard & Poor's 500 Index returned 19.74%, while the
Goldman Sachs Cyclical Industries Index - an index of 277 stocks
designed to measure the performance of companies in the cyclical
industries sector - fell 4.79%.
Q. WHAT FACTORS CONSPIRED TO MAKE IT A CHALLENGING ENVIRONMENT FOR THE
SECTOR?
A. Through the first half of the period, the paper industry was still
trying to recover from the ongoing economic problems in Asia.
Paper-company stocks generally rise and fall in step with paper
prices, and since Asia accounts for a significant portion of the
world's paper demand, the lack of demand from that region sent paper
prices spiraling downward. A poor pricing environment, combined with
overcapacity within the sector, caused many paper stocks to decline.
The second half of the period, however, brought better results as
capacity was reduced and the sector reacted favorably to International
Paper's acquisition of Union Camp.
Q. WHAT STOCKS HURT THE FUND THE MOST? WHICH HELPED?
A. Through the first half of the period, most stocks in the five major
paper grades - pulp, containerboard, uncoated free sheet, newsprint
and tissue - detracted from performance. Newsprint stocks such as
Bowater were particular laggards, as were tissue-related stocks such
as Fort James. In the second half of the period, companies with
exposure to building products - such as Georgia-Pacific and
Louisiana-Pacific - performed well due to warm weather trends, a low
interest-rate environment and strong housing starts. But the real
excitement involved containerboard companies. A merger between
Jefferson Smurfit and Stone Container, two of the larger
containerboard-related companies, reduced overall capacity and was met
with optimism. As a result, containerboard companies bounced back
quicker than those in the other grades, and the fund's holdings in
stocks such as Georgia-Pacific, Weyerhaeuser and the newly merged
company, Smurfit-Stone, benefited.
Q. DID THE GAP BETWEEN THE PERFORMANCE OF CONTAINERBOARD AND THE OTHER
GRADES CONCERN YOU?
A. It did, simply because past history tells us that when one paper
grade improves, the rest typically follow suit. The possibility exists
that the other grades will catch up to containerboard and building
products, but my feeling is that an across-the-board recovery will
happen later rather than sooner. As a result, I positioned the fund a
bit more defensively in the latter stages of the period. I chose to
de-emphasize some of the containerboard stocks that had risen
dramatically - which is why I sold Weyerhaeuser - and emphasize stocks
in the pulp, coated free sheet, uncoated free sheet and newsprint
categories that were within 10% of their downside valuations. My
thinking here was that the stocks in these areas had more room to grow
if the paper cycle works, and less downside if it doesn't.
Q. THE FUND'S LARGEST POSITION AT THE END OF THE PERIOD WAS ITS
INVESTMENT IN WESTVACO. WHAT'S YOUR SCOUTING REPORT ON THIS COMPANY?
A. Westvaco has strong exposure to both coated free sheet - which is
the glossy type of paper used in catalogs - and bleachboard, which is
used for folded paper products such as food takeout cartons and
cigarette boxes. I felt the company fit nicely into my defensive
strategy and I was attracted to its valuation. While Westvaco turned
in a fairly flat performance during the month since we increased our
holdings, I'm optimistic about its future.
Q. WHAT'S YOUR OUTLOOK?
A. Since I feel we may not see a broad recovery until at least 2000 or
later, I'll continue to take a defensive approach to the portfolio for
now. I'll also keep a close eye on Brazil and the evolving economic
problems there. Brazil is one of the world's larger paper exporters,
and the worry is that Brazil will start flooding the U.S. market with
excess product.
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 OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark)FUND FACTS
START DATE: June 30, 1986
FUND NUMBER: 506
TRADING SYMBOL: FSPFX
SIZE: as of February 28, 1999, more than
$10 million
MANAGER: Noah Eccles, since January 1999;
analyst, agricultural chemicals industry, 1997-
present; specialty chemicals and packing
industries, 1997-1998; joined Fidelity in 1997
PAPER AND FOREST PRODUCTS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.0%
SHARES VALUE (NOTE 1)
BUILDING MATERIALS - 1.0%
T.J. International, Inc. 4,400 $ 95,150
CHEMICALS & PLASTICS - 1.8%
Ivex Packaging Corp. (a) 11,800 178,475
PACKAGING & CONTAINERS - 3.3%
Sonoco Products Co. 13,100 320,950
PAPER & FOREST PRODUCTS - 85.9%
Abitibi-Consolidated, Inc. 25,300 202,192
Alliance Forest Products, 5,700 62,943
Inc. (a)
Boise Cascade Corp. 8,600 267,138
Bowater, Inc. 8,000 337,000
Champion International Corp. 20,400 754,800
Consolidated Papers, Inc. 30,400 676,400
Domtar, Inc. 23,300 139,077
Donohue, Inc. Class A (sub. 10,400 211,062
vtg.)
Fletcher Challenge Canada 2,500 23,213
Ltd.
Fort James Corp. 7,600 227,050
Georgia-Pacific Corp. (Timber 24,300 495,113
Group)
International Paper Co. 8,200 344,400
Kimberly-Clark Corp. 10,300 486,675
Louisiana-Pacific Corp. 11,800 216,825
Macmillan Bloedel Ltd. 16,700 167,244
Mead Corp. 12,300 374,381
Mercer International, Inc. 1,600 12,000
(SBI)
Plum Creek Timber Co. unit 6,400 170,000
Potlatch Corp. 3,800 131,813
Rayonier, Inc. 4,000 163,750
Smurfit (Jefferson) Group PLC 23,600 50,737
Smurfit-Stone Container Corp. 28,300 511,169
(a)
St. Laurent Paperboard, Inc. 7,500 58,446
(a)
Stora Enso Oyj 28,300 251,166
Svenska Cellulosa AB (SCA) 2,700 54,108
Class B
Tembec, Inc. Class A (a) 11,500 61,016
Temple-Inland, Inc. 3,600 215,775
Union Camp Corp. 9,000 601,875
UPM-Kymmene Corp. 5,400 140,800
Westvaco Corp. 46,000 1,029,249
8,437,417
TOTAL COMMON STOCKS 9,031,992
(Cost $9,031,301)
CASH EQUIVALENTS - 8.0%
Taxable Central Cash Fund (b) 786,687 786,687
(Cost $786,687)
TOTAL INVESTMENT IN $ 9,818,679
SECURITIES - 100%
(Cost $9,817,988)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. 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 $48,680,043 and $64,950,440, respectively.
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 $15,977 for the
period.
Distribution of investments by country of issue, as a percentage of
total value of investments in securities, is as follows:
United States of America 85.4%
Canada 9.5
Finland 4.0
Others (individually less 1.1
than 1%)
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $9,964,481. Net unrealized depreciation
aggregated $145,802, of which $437,901 related to appreciated
investment securities and $583,703 related to depreciated investment
securities.
The fund hereby designates approximately $181,000 as capital gain
dividend for the purpose of the dividend paid deduction.
At February 28, 1999, the fund had a capital loss carryforward of
approximately $2,903,000, all of which will expire on February 28,
2007.
The fund intends to elect to defer to its fiscal year ending February
29, 2000 approximately $463,000 of losses recognized during the period
November 1, 1998 to February 28, 1999.
A total of 100% of the dividends distributed during the fiscal year
qualifies for the dividend-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of this percentage
for use in preparing 1999 income tax returns.
PAPER AND FOREST PRODUCTS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 9,818,679
value (cost $9,817,988) -
See accompanying schedule
Receivable for investments 1,008,764
sold
Receivable for fund shares 29,470
sold
Dividends receivable 21,049
Interest receivable 3,024
Redemption fees receivable 62
TOTAL ASSETS 10,881,048
LIABILITIES
Payable for investments $ 562,680
purchased
Payable for fund shares 41,342
redeemed
Accrued management fee 5,053
Other payables and accrued 25,425
expenses
TOTAL LIABILITIES 634,500
NET ASSETS $ 10,246,548
Net Assets consist of:
Paid in capital $ 13,754,844
Undistributed net investment 4,129
income
Accumulated undistributed net (3,513,096)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 671
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 555,457 $ 10,246,548
shares outstanding
NET ASSET VALUE and $18.45
redemption price per share
($10,246,548 (divided by)
555,457 shares)
Maximum offering price per $19.02
share (100/97.00 of $18.45)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 249,426
Dividends
Interest 62,508
TOTAL INCOME 311,934
EXPENSES
Management fee $ 87,942
Transfer agent fees 139,644
Accounting fees and expenses 60,339
Non-interested trustees' 64
compensation
Custodian fees and expenses 14,884
Registration fees 18,940
Audit 17,079
Legal 94
Reports to shareholders 5,985
Total expenses before 344,971
reductions
Expense reductions (13,517) 331,454
NET INVESTMENT INCOME (LOSS) (19,520)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (2,774,252)
Foreign currency transactions (2,221) (2,776,473)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (1,268,266)
Assets and liabilities in 30 (1,268,236)
foreign currencies
NET GAIN (LOSS) (4,044,709)
NET INCREASE (DECREASE) IN $ (4,064,229)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 45,535
charges paid to FDC
Sales charges - Retained by $ 45,535
FDC
Deferred sales charges $ 737
withheld by FDC
Exchange fees withheld by FSC $ 3,038
Expense reductions Direct $ 13,487
brokerage arrangements
Custodian credits 30
$ 13,517
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (19,520) $ (121,775)
income (loss)
Net realized gain (loss) (2,776,473) 2,537,439
Change in net unrealized (1,268,236) 1,291,272
appreciation (depreciation)
NET INCREASE (DECREASE) IN (4,064,229) 3,706,936
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders
In excess of net investment - (31,544)
income
From net realized gain - (1,592,672)
In excess of net realized (317,946) -
gain
TOTAL DISTRIBUTIONS (317,946) (1,624,216)
Share transactions Net 24,142,684 71,567,372
proceeds from sales of shares
Reinvestment of distributions 312,733 1,584,087
Cost of shares redeemed (41,303,607) (63,467,979)
NET INCREASE (DECREASE) IN (16,848,190) 9,683,480
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 92,806 134,393
TOTAL INCREASE (DECREASE) (21,137,559) 11,900,593
IN NET ASSETS
NET ASSETS
Beginning of period 31,384,107 19,483,514
End of period (including $ 10,246,548 $ 31,384,107
undistributed net investment
income of $4,129 and
$31,081, respectively)
OTHER INFORMATION
Shares
Sold 1,074,182 3,117,317
Issued in reinvestment of 13,704 75,670
distributions
Redeemed (1,917,231) (2,708,921)
Net increase (decrease) (829,345) 484,066
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 22.66 $ 21.63 $ 20.78 $ 21.14 $ 19.61
period
Income from Investment
Operations
Net investment income (loss) C (.03) (.12) .01 .08 .01
Net realized and unrealized (3.87) 3.13 2.08 1.83 2.53
gain (loss)
Total from investment (3.90) 3.01 2.09 1.91 2.54
operations
Less Distributions
From net investment income - - (.03) (.08) -
In excess of net investment - (.04) (.07) - -
income
From net realized gain - (2.07) (1.25) (2.27) (1.17)
In excess of net realized gain (.44) - - - -
Total distributions (.44) (2.11) (1.35) (2.35) (1.17)
Redemption fees added to paid .13 .13 .11 .08 .16
in capital
Net asset value, end of period $ 18.45 $ 22.66 $ 21.63 $ 20.78 $ 21.14
TOTAL RETURN A, B (17.01)% 15.53% 10.87% 9.18% 14.91%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 10,247 $ 31,384 $ 19,484 $ 27,270 $ 94,219
(000 omitted)
Ratio of expenses to average 2.30% 2.18% 2.19% 1.91% 1.88%
net assets
Ratio of expenses to average 2.21% D 2.15% D 2.16% D 1.90% D 1.87% D
net assets after expense
reductions
Ratio of net investment (.13)% (.50)% .04% .34% .05%
income (loss) to average net
assets
Portfolio turnover rate 338% 235% 180% 78% 209%
</TABLE>
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. E FOR
THE YEAR ENDED FEBRUARY 29.
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT TRANSPORTATION -1.73% 73.66% 310.73%
SELECT TRANSPORTATION (LOAD -4.75% 68.38% 298.34%
ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Cyclical Industries -4.79% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT TRANSPORTATION -1.73% 11.67% 15.17%
SELECT TRANSPORTATION (LOAD -4.75% 10.98% 14.82%
ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Cyclical Industries -4.79% 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
1989/02/28 9700.00 10000.00
1989/03/31 9996.47 10233.00
1989/04/30 10330.96 10764.09
1989/05/31 10771.87 11200.04
1989/06/30 10705.46 11136.20
1989/07/31 11354.27 12141.80
1989/08/31 12092.30 12379.78
1989/09/30 11857.11 12329.02
1989/10/31 11102.86 12042.99
1989/11/30 11200.18 12288.66
1989/12/31 11359.63 12583.59
1990/01/31 10646.26 11739.23
1990/02/28 11142.91 11890.67
1990/03/31 11477.01 12205.77
1990/04/30 11043.58 11900.63
1990/05/31 11449.92 13060.94
1990/06/30 11323.88 12972.12
1990/07/31 11286.26 12930.61
1990/08/31 9630.94 11761.68
1990/09/30 8389.45 11188.89
1990/10/31 8257.78 11140.78
1990/11/30 8596.37 11860.47
1990/12/31 8906.74 12191.38
1991/01/31 9668.56 12722.92
1991/02/28 10609.08 13632.61
1991/03/31 10618.49 13962.52
1991/04/30 10590.27 13996.03
1991/05/31 11427.34 14600.66
1991/06/30 11332.46 13931.95
1991/07/31 12021.28 14581.18
1991/08/31 12238.30 14926.75
1991/09/30 12011.84 14677.48
1991/10/31 12898.81 14874.16
1991/11/30 12096.76 14274.73
1991/12/31 13729.17 15907.76
1992/01/31 13851.83 15611.87
1992/02/29 14597.26 15814.83
1992/03/31 14248.14 15506.44
1992/04/30 14616.14 15962.33
1992/05/31 14918.08 16040.54
1992/06/30 14276.45 15801.54
1992/07/31 14484.03 16447.82
1992/08/31 14049.98 16110.64
1992/09/30 14606.70 16300.75
1992/10/31 15229.47 16357.80
1992/11/30 16333.46 16915.60
1992/12/31 16995.67 17123.66
1993/01/31 17756.82 17267.50
1993/02/28 17997.68 17502.34
1993/03/31 19202.03 17871.64
1993/04/30 19154.16 17439.14
1993/05/31 19869.66 17906.51
1993/06/30 19927.68 17958.44
1993/07/31 19927.68 17886.61
1993/08/31 20295.10 18564.51
1993/09/30 20343.44 18421.56
1993/10/31 20768.87 18802.89
1993/11/30 20884.90 18624.26
1993/12/31 21978.16 18849.62
1994/01/31 22941.55 19490.50
1994/02/28 22941.55 18962.31
1994/03/31 22327.52 18135.55
1994/04/30 22744.75 18367.69
1994/05/31 22379.11 18668.92
1994/06/30 22357.61 18211.53
1994/07/31 23110.39 18808.87
1994/08/31 23798.65 19580.03
1994/09/30 23164.16 19100.32
1994/10/31 23508.29 19530.08
1994/11/30 22099.51 18818.79
1994/12/31 22827.92 19097.87
1995/01/31 22674.07 19593.08
1995/02/28 24295.34 20356.63
1995/03/31 24614.86 20957.35
1995/04/30 24981.72 21574.54
1995/05/31 24236.17 22436.88
1995/06/30 23975.82 22958.09
1995/07/31 26034.95 23719.38
1995/08/31 26011.28 23778.91
1995/09/30 25774.60 24782.38
1995/10/31 25455.08 24693.91
1995/11/30 26330.80 25777.97
1995/12/31 26290.50 26274.46
1996/01/31 26691.12 27168.84
1996/02/29 27442.27 27420.69
1996/03/31 28105.80 27684.75
1996/04/30 29026.51 28092.83
1996/05/31 29064.28 28817.34
1996/06/30 29202.74 28927.14
1996/07/31 27088.06 27649.13
1996/08/31 27113.23 28232.26
1996/09/30 27239.11 29821.17
1996/10/31 27025.12 30643.63
1996/11/30 28938.40 32959.99
1996/12/31 28789.02 32307.05
1997/01/31 28995.77 34325.59
1997/02/28 28724.42 34594.71
1997/03/31 29603.08 33173.21
1997/04/30 31134.33 35153.65
1997/05/31 33250.26 37293.80
1997/06/30 34249.08 38964.57
1997/07/31 36640.99 42064.98
1997/08/31 35905.02 39708.50
1997/09/30 39453.47 41883.33
1997/10/31 38126.08 40484.43
1997/11/30 37955.23 42358.45
1997/12/31 38039.63 43085.75
1998/01/31 38111.16 43562.28
1998/02/28 40543.18 46703.99
1998/03/31 42002.39 49095.70
1998/04/30 41392.24 49589.60
1998/05/31 39425.37 48737.16
1998/06/30 40350.09 50716.86
1998/07/31 36944.78 50176.72
1998/08/31 30427.70 42922.17
1998/09/30 30383.67 45671.77
1998/10/31 33612.85 49386.71
1998/11/30 35271.47 52380.04
1998/12/31 36388.47 55398.18
1999/01/31 39634.32 57714.93
1999/02/26 39834.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990309 145347 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Transportation Portfolio on February 28,
1989, and the current 3.00% sales charge was paid. As the chart shows,
by February 28, 1999, the value of the investment would have grown to
$39,834 - a 298.34% 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 $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Union Pacific Corp. 9.9
Burlington Northern Santa Fe 8.9
Corp.
Continental Airlines, Inc. 6.5
Class B
CSX Corp. 5.2
Delta Air Lines, Inc. 4.6
Southwest Airlines Co. 4.1
Eaton Corp. 3.5
Northwest Airlines Corp. 3.5
Class A
Navistar International Corp. 3.1
Kansas City Southern 3.1
Industries, Inc.
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Air Transportation 33.2%
Railroads 31.2%
Trucking & Freighting 14.3%
Autos, Tires & Accesories 10.0%
Leasing & Rental 2.4%
All Others 8.9%*
* INCLUDES SHORT-TERM INVESTMENTS
Row: 1, Col: 1, Value: 8.9
Row: 1, Col: 2, Value: 2.4
Row: 1, Col: 3, Value: 10.0
Row: 1, Col: 4, Value: 14.3
Row: 1, Col: 5, Value: 31.2
Row: 1, Col: 6, Value: 33.2
TRANSPORTATION PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Christopher Zepf)
Christopher Zepf,
Portfolio Manager
of Fidelity Select
Transportation Portfolio
Q. HOW DID THE FUND PERFORM, CHRIS?
A. For the 12-month period that ended February 28, 1999, the fund
returned -1.73%, while the Standard & Poor's 500 Index returned
19.74%. For another comparison, the Goldman Sachs Cyclical Industries
Index - an index of 277 stocks designed to measure the performance of
companies in the cyclical industries sector -
returned -4.79% for the same 12-month period.
Q. FOR TRANSPORTATION STOCKS, THE PAST YEAR WAS A TALE OF TWO HALVES -
ONE BAD, AND THE MORE RECENT ONE, GOOD. WHAT ACCOUNTED FOR THAT
TURNAROUND?
A. After getting off to a fairly strong start in the spring of 1998,
transportation stocks suffered a sharp sell-off beginning this past
summer. That's when investors were most worried that protracted and
expanding economic problems in Japan, Latin America, Russia and
Southeast Asia would further curtail worldwide economic growth and
potentially throw the U.S. into a recession. Of course, transportation
companies tend to do best during periods of economic growth because
they can grow earnings by raising prices and eliminating excess
capacity. More recently, however, the transportation industry has
staged a significant rebound as investors became less worried about a
global recession in light of the U.S. economy's faster-than-expected
growth. In addition, the price of oil - which is a major expense for
most transportation companies - fell to levels not seen in over a
decade.
Q. HOW DID YOU RESPOND TO THOSE CHANGING CONDITIONS?
A. Since taking over the fund this past September, I've made a number
of changes. I looked for stocks that I felt had a global recession
already factored into their prices. In my view, these stocks had good
upside potential if the economy strengthened, but only limited
downside if a recession occurred. One outgrowth of that strategy was
that I added to the fund's stake in airline stocks, many of which
performed quite well since I initiated positions in them or expanded
existing holdings. America West, for example, posted strong gains
after it settled its dispute with mechanics. Other domestically
oriented airlines, including Southwest Airlines and Atlantic Coast
Airlines, also performed well. The biggest addition was Continental
Airlines, which became the fund's third-largest holding by the end of
the period. I liked that airline because it was growing at a rate much
faster than the industry as a whole, mainly by expanding the use of
its under-utilized hubs at Newark and Houston airports.
Q. WHICH OF THE FUND'S HOLDINGS PROVED MOST DISAPPOINTING?
A. Union Pacific, the largest domestic railroad, with routes primarily
in the western United States, detracted from performance for the year
due to significant operational difficulties stemming from its
acquisition of Southern Pacific. I chose to add to the fund's stake in
Union Pacific in the fall because I felt that the market had too
severely punished the stock based on those problems. Since then, the
stock has recouped some of its losses when it became evident that the
company was enjoying a turnaround. I took a similar approach to
Burlington Northern, buying the stock in the fall when it was
relatively cheap. I liked it because it is the only major railroad
that isn't expected to face merger-related issues in 1999. It also has
a strong presence in the low-sulfur coal shipping business. That
market position is important because the Clean Air Act - which goes
into effect next year - should spur demand. Although it was up only
slightly for the one-year period, Burlington Northern has posted good
recent gains.
Q. WHAT'S YOUR OUTLOOK?
A. Transportation companies are cyclical, meaning their performance is
tied closely to the economy's ups and downs. As a result,
transportation stocks should perform in line with expectations about
the economy's potential strength or weakness. However, I'll try to
identify the strongest companies in the group, because I believe they
are better able to take advantage of robust economic periods and
manage their operations well during difficult economic 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 OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark)FUND FACTS
START DATE: September 29, 1986
FUND NUMBER: 512
TRADING SYMBOL: FSRFX
SIZE: as of February 28,1999, more than
$19 million
MANGER: Christopher Zepf, since September
1998; manager, Fidelity Select Air Transportation
Portfolio, since 1998; equity analyst, trucking
and rails industries, since 1998; joined Fidelity in
1998
TRANSPORTATION PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.1%
SHARES VALUE (NOTE 1)
AIR TRANSPORTATION - 33.2%
Air Canada, Inc. (a) 25,000 $ 101,141
Alaska Air Group, Inc. (a) 4,300 217,956
America West Holding Corp. 12,800 217,600
Class B (a)
AMR Corp. (a) 10,000 554,375
ASA Holdings, Inc. 5,700 191,306
Atlantic Coast Airlines 2,800 89,600
Holdings (a)
Atlas Air, Inc. (a) 5,000 150,625
Comair Holdings, Inc. 4,000 150,500
Continental Airlines, Inc. 37,500 1,298,438
Class B (a)
Delta Air Lines, Inc. 15,000 912,188
Midwest Express Holdings, 15,000 403,125
Inc. (a)
Northwest Airlines Corp. 27,500 687,500
Class A (a)
SkyWest, Inc. 12,400 389,825
Southwest Airlines Co. 27,150 817,894
US Airways Group, Inc. (a) 8,700 412,163
6,594,236
AUTOS, TIRES, & ACCESSORIES -
10.0%
Eaton Corp. 10,100 700,688
Meritor Automotive, Inc. 6,000 95,250
Navistar International Corp. 14,500 623,500
(a)
PACCAR, Inc. 7,000 293,125
Republic Industries, Inc. (a) 14,100 172,725
World Fuel Services Corp. 10,000 103,750
1,989,038
COMPUTER SERVICES & SOFTWARE
- - 0.9%
Sabre Group Holdings, Inc. 4,300 168,775
Class A (a)
LEASING & RENTAL - 2.4%
GATX Corp. 2,400 82,950
Ryder Systems, Inc. 14,700 396,900
479,850
RAILROADS - 31.2%
Burlington Northern Santa Fe 53,700 1,778,813
Corp.
Canadian National Railway Co. 12,600 608,357
CSX Corp. 26,500 1,040,125
Florida East Coast Industries 3,000 81,375
Kansas City Southern 13,100 612,425
Industries, Inc.
Railtex, Inc. (a) 11,500 125,063
Union Pacific Corp. 41,800 1,959,371
6,205,529
SHIPPING - 1.1%
Peninsular & Oriental Steam 4,400 51,735
Navigation Co.
Sea Containers Ltd. Class A 8,000 175,000
226,735
SHARES VALUE (NOTE 1)
TRUCKING & FREIGHT - 14.3%
Airborne Freight Corp. 4,000 $ 156,000
Circle International Group, 5,000 85,625
Inc.
CNF Transportation, Inc. 9,000 380,250
Consolidated Freightways 3,000 43,500
Corp. (a)
Eagle USA Airfreight, Inc. (a) 7,500 216,563
Expeditors International of 8,000 372,500
Washington, Inc.
FDX Corp. (a) 5,000 477,500
Hub Group, Inc. Class A (a) 5,000 97,500
Hunt (J.B.) Transport 16,000 376,000
Services, Inc.
M.S. Carriers, Inc. (a) 3,000 81,000
USFreightways Corp. 11,000 350,625
Werner Enterprises, Inc. 6,000 107,250
Yellow Corp. (a) 5,000 89,375
2,833,688
TOTAL COMMON STOCKS 18,497,851
(Cost $17,238,313)
CASH EQUIVALENTS - 6.9%
Taxable Central Cash Fund (b) 1,362,746 1,362,746
(Cost $1,362,746)
TOTAL INVESTMENT IN $ 19,860,597
SECURITIES - 100%
(Cost $18,601,059)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $44,073,749 and $86,107,016, respectively.
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 $12,152 for the
period.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $18,856,313. Net unrealized appreciation
aggregated $1,004,284, of which $1,322,101 related to appreciated
investment securities and $317,817 related to depreciated investment
securities.
The fund hereby designates approximately $1,324,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 8% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentage for use in preparing 1999 income tax returns.
TRANSPORTATION PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 19,860,597
value (cost $18,601,059) -
See accompanying schedule
Foreign currency held at 106,146
value (cost $106,458)
Receivable for investments 853,396
sold
Receivable for fund shares 160,369
sold
Dividends receivable 19,881
Interest receivable 4,626
Redemption fees receivable 324
Other receivables 2,032
TOTAL ASSETS 21,007,371
LIABILITIES
Payable for investments $ 1,051,206
purchased
Payable for fund shares 66,782
redeemed
Accrued management fee 9,122
Other payables and accrued 25,469
expenses
TOTAL LIABILITIES 1,152,579
NET ASSETS $ 19,854,792
Net Assets consist of:
Paid in capital $ 13,838,885
Accumulated undistributed net 4,755,211
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 1,260,696
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 793,001 $ 19,854,792
shares outstanding
NET ASSET VALUE and $25.04
redemption price per share
($19,854,792 (divided by)
793,001 shares)
Maximum offering price per $25.81
share (100/97.00 of $25.04)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 215,371
Dividends
Interest (including income on 83,138
securities loaned of $12,548)
TOTAL INCOME 298,509
EXPENSES
Management fee $ 142,306
Transfer agent fees 205,276
Accounting and security 62,228
lending fees
Non-interested trustees' 104
compensation
Custodian fees and expenses 13,182
Registration fees 24,256
Audit 20,404
Legal 228
Reports to shareholders 9,326
Total expenses before 477,310
reductions
Expense reductions (14,141) 463,169
NET INVESTMENT INCOME (LOSS) (164,660)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 6,231,096
Foreign currency transactions 4,268 6,235,364
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (6,048,799)
Assets and liabilities in 1,315 (6,047,484)
foreign currencies
NET GAIN (LOSS) 187,880
NET INCREASE (DECREASE) IN $ 23,220
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 94,851
charges paid to FDC
Sales charges - Retained by $ 93,190
FDC
Deferred sales charges $ 657
withheld by FDC
Exchange fees withheld by FSC $ 5,753
Expense reductions Directed $ 13,997
brokerage arrangements
Custodian credits 144
$ 14,141
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (164,660) $ (36,059)
income (loss)
Net realized gain (loss) 6,235,364 10,298,362
Change in net unrealized (6,047,484) 7,061,282
appreciation (depreciation)
NET INCREASE (DECREASE) IN 23,220 17,323,585
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (2,602,131) (4,986,487)
from net realized gains
Share transactions Net 28,194,142 152,644,299
proceeds from sales of shares
Reinvestment of distributions 2,518,945 4,933,755
Cost of shares redeemed (72,656,072) (114,694,116)
NET INCREASE (DECREASE) IN (41,942,985) 42,883,938
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 94,942 170,335
TOTAL INCREASE (DECREASE) (44,426,954) 55,391,371
IN NET ASSETS
NET ASSETS
Beginning of period 64,281,746 8,890,375
End of period $ 19,854,792 $ 64,281,746
OTHER INFORMATION
Shares
Sold 1,116,624 6,004,453
Issued in reinvestment of 97,938 182,560
distributions
Redeemed (2,690,132) (4,318,403)
Net increase (decrease) (1,475,570) 1,868,610
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 G 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 28.34 $ 22.23 $ 21.92 $ 20.53 $ 21.67
period
Income from Investment
Operations
Net investment income (loss) C (.18) (.02) (.13) (.09) D (.17)
Net realized and unrealized (.58) H 8.85 1.06 2.60 1.17
gain (loss)
Total from investment (.76) 8.83 .93 2.51 1.00
operations
Less Distributions
From net realized gain (2.64) (2.80) (.71) (1.22) (2.19)
Redemption fees added to paid .10 .08 .09 .10 .05
in capital
Net asset value, end of period $ 25.04 $ 28.34 $ 22.23 $ 21.92 $ 20.53
TOTAL RETURN A, B (1.73)% 41.15% 4.67% 12.95% 5.90%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 19,855 $ 64,282 $ 8,890 $ 11,445 $ 12,704
(000 omitted)
Ratio of expenses to average 1.96% 1.58% 2.50% E 2.47% E 2.37%
net assets
Ratio of expenses to average 1.90% F 1.54% F 2.48% F 2.44% F 2.36% F
net assets after expense
reductions
Ratio of net investment (.68)% (.06)% (.58)% (.43)% (.83)%
income (loss) to average net
assets
Portfolio turnover rate 182% 210% 148% 175% 178%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D INVESTMENT
INCOME PER SHARE REFLECTS A
SPECIAL DIVIDEND WHICH
AMOUNTED TO $.05 PER SHARE.
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 CLD
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. G FOR
THE YEAR ENDED FEBRUARY 29.
H THE AMOUNT SHOWN FOR A
SHARE OUTSTANDING DOES NOT
CORRESPOND WITH THE
AGGREGATE NET GAIN ON
INVESTMENTS FOR THE PERIOD
DUE TO THE TIMING OF SALES
AND REPURCHASES OF FUND
SHARES IN RELATION TO
FLUCTUATING MARKET VALUES OF
THE INVESTMENTS OF THE FUND.
</TABLE>
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT BROKERAGE AND 4.76% 170.19% 549.46%
INVESTMENT MANAGEMENT
SELECT BROKERAGE AND 1.55% 162.01% 529.90%
INVESTMENT MANAGEMENT (LOAD
ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Financial Services 4.74% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT BROKERAGE AND 4.76% 21.99% 20.57%
INVESTMENT MANAGEMENT
SELECT BROKERAGE AND 1.55% 21.24% 20.21%
INVESTMENT MANAGEMENT (LOAD
ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Financial Services 4.74% 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
1989/02/28 9700.00 10000.00
1989/03/31 9711.69 10233.00
1989/04/30 9805.18 10764.09
1989/05/31 10447.95 11200.04
1989/06/30 10154.20 11136.20
1989/07/31 11376.47 12141.80
1989/08/31 11658.53 12379.78
1989/09/30 11294.20 12329.02
1989/10/31 10377.50 12042.99
1989/11/30 10271.73 12288.66
1989/12/31 10024.01 12583.59
1990/01/31 9583.53 11739.23
1990/02/28 9904.96 11890.67
1990/03/31 10178.78 12205.77
1990/04/30 9488.29 11900.63
1990/05/31 10393.07 13060.94
1990/06/30 10380.87 12972.12
1990/07/31 10011.40 12930.61
1990/08/31 8652.71 11761.68
1990/09/30 7913.77 11188.89
1990/10/31 7425.12 11140.78
1990/11/30 7913.77 11860.47
1990/12/31 8402.42 12191.38
1991/01/31 9101.62 12722.92
1991/02/28 10005.76 13632.61
1991/03/31 11030.44 13962.52
1991/04/30 11187.16 13996.03
1991/05/31 11777.86 14600.66
1991/06/30 10993.63 13931.95
1991/07/31 11838.36 14581.18
1991/08/31 12103.85 14926.75
1991/09/30 12731.37 14677.48
1991/10/31 13576.10 14874.16
1991/11/30 12827.91 14274.73
1991/12/31 15313.84 15907.76
1992/01/31 15531.06 15611.87
1992/02/29 15434.52 15814.83
1992/03/31 15024.22 15506.44
1992/04/30 13853.66 15962.33
1992/05/31 13817.46 16040.54
1992/06/30 13491.63 15801.54
1992/07/31 14251.89 16447.82
1992/08/31 13841.59 16110.64
1992/09/30 13745.05 16300.75
1992/10/31 14360.50 16357.80
1992/11/30 15651.74 16915.60
1992/12/31 16098.24 17123.66
1993/01/31 17051.58 17267.50
1993/02/28 17160.19 17502.34
1993/03/31 18535.91 17871.64
1993/04/30 18475.54 17439.14
1993/05/31 19079.32 17906.51
1993/06/30 19984.98 17958.44
1993/07/31 20649.14 17886.61
1993/08/31 22279.33 18564.51
1993/09/30 22689.90 18421.56
1993/10/31 21953.29 18802.89
1993/11/30 21349.52 18624.26
1993/12/31 24038.72 18849.62
1994/01/31 24551.02 19490.50
1994/02/28 23316.25 18962.31
1994/03/31 20702.20 18135.55
1994/04/30 20531.43 18367.69
1994/05/31 21030.60 18668.92
1994/06/30 21831.89 18211.53
1994/07/31 21319.59 18808.87
1994/08/31 21477.22 19580.03
1994/09/30 20662.79 19100.32
1994/10/31 20649.66 19530.08
1994/11/30 19217.84 18818.79
1994/12/31 19887.77 19097.87
1995/01/31 19638.19 19593.08
1995/02/28 20373.80 20356.63
1995/03/31 20583.98 20957.35
1995/04/30 21207.59 21574.54
1995/05/31 22400.10 22436.88
1995/06/30 23660.36 22958.09
1995/07/31 24798.66 23719.38
1995/08/31 24568.29 23778.91
1995/09/30 26058.92 24782.38
1995/10/31 24608.94 24693.91
1995/11/30 25205.19 25777.97
1995/12/31 24580.14 26274.46
1996/01/31 26182.57 27168.84
1996/02/29 26454.41 27420.69
1996/03/31 27641.93 27684.75
1996/04/30 27810.16 28092.83
1996/05/31 28731.32 28817.34
1996/06/30 28643.59 28927.14
1996/07/31 26889.01 27649.13
1996/08/31 27912.51 28232.26
1996/09/30 29345.42 29821.17
1996/10/31 30383.55 30643.63
1996/11/30 33366.35 32959.99
1996/12/31 34327.95 32307.05
1997/01/31 36831.80 34325.59
1997/02/28 38165.21 34594.71
1997/03/31 34298.31 33173.21
1997/04/30 38008.79 35153.65
1997/05/31 40844.60 37293.80
1997/06/30 43220.15 38964.57
1997/07/31 47971.25 42064.98
1997/08/31 46501.38 39708.50
1997/09/30 53286.54 41883.33
1997/10/31 50539.81 40484.43
1997/11/30 52841.12 42358.45
1997/12/31 55719.53 43085.75
1998/01/31 53300.88 43562.28
1998/02/28 60133.55 46703.99
1998/03/31 63489.42 49095.70
1998/04/30 66257.45 49589.60
1998/05/31 64711.59 48737.16
1998/06/30 68170.63 50716.86
1998/07/31 68752.24 50176.72
1998/08/31 49528.55 42922.17
1998/09/30 45595.04 45671.77
1998/10/31 52130.48 49386.71
1998/11/30 58650.62 52380.04
1998/12/31 58880.20 55398.18
1999/01/31 64696.29 57714.93
1999/02/26 62990.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990309 142809 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Brokerage and Investment Management
Portfolio on February 28, 1989, and the current 3.00% sales charge was
paid. As the chart shows, by February 28, 1999, the value of the
investment would have grown to $62,990 - a 529.90% 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 $55,921 - a 459.21%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Bear Stearns Companies, Inc. 6.7
Lehman Brothers Holdings, Inc. 6.7
Merrill Lynch & Co., Inc. 6.2
Equitable Companies (The), Inc. 5.7
Morgan Stanley, Dean Witter & 4.7
Co.
PaineWebber Group, Inc. 4.5
Donaldson Lufkin & Jenrette, 4.1
Inc.
Citigroup, Inc. 4.0
Kansas City Southern 4.0
Industries, Inc.
Marsh & McLennan Companies, 3.8
Inc.
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Securities Industry 59.0%
Credit & Other Finance 14.1%
Insurance 10.8%
Banks 5.4%
Railroads 4.0%
All Others 6.7%*
* INCLUDES SHORT-TERM INVESTMENTS
Row: 1, Col: 1, Value: 6.7
Row: 1, Col: 2, Value: 4.0
Row: 1, Col: 3, Value: 5.4
Row: 1, Col: 4, Value: 10.8
Row: 1, Col: 5, Value: 14.1
Row: 1, Col: 6, Value: 59.0
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
(photograph of Peter Fruzzetti)
(photograph of Ted Grenstein)
NOTE TO SHAREHOLDERS: The following is an interview with Peter
Fruzzetti (left), who managed the Fidelity Select Brokerage and
Investment Management Portfolio for most of the period covered by this
report, and with Ted Orenstein (right), who became manager of the fund
on January 4, 1999.
Q. HOW DID THE FUND PERFORM, PETER?
P.F. For the 12-month period that ended on February 28, 1999, the fund
had a total return of 4.76%. This trailed the broad market as measured
by the Standard & Poor's 500 Index, which had a total return of 19.74%
for the same period, but is right in line with the total return of
4.74% for the Goldman Sachs Financial Services Index - an index of 271
stocks designed to measure the relative performance of companies in
the financial services sector.
Q. WHAT WERE THE MAJOR FACTORS AFFECTING THIS SOMEWHAT SLUGGISH
PERFORMANCE?
P.F. Probably the biggest factor affecting the entire financial
services sector has been the uncertainty in overseas financial
markets, beginning with Russia's default on its debt in mid-summer of
1998 and continuing through various currency crises, first in Asia,
then in Latin America. The brokerage and investment management
businesses are global in scope and, on the brokerage side especially -
where the business is highly leveraged - stock prices tend to be
extremely volatile during times of market uncertainty. So when
widespread global problems began last summer and world financial
markets began to slide, these deteriorating conditions had serious
repercussions for brokerage stocks. Furthermore, as U.S. investors
became more risk averse, fewer new securities were issued, which
limited brokers' underwriting profits. Interest-rate spreads also
widened significantly, resulting in lower earnings from sales and
trading. In the past few months, overall market conditions have
improved considerably, which has helped boost fund performance, but
the sector has not regained all of the ground it lost over the past
year.
Q. DID YOU MAKE ANY SIGNIFICANT CHANGES IN STRATEGY WITHIN THIS
DIFFICULT ENVIRONMENT?
P.F. Initially, as a play on uncertainty, my strategy was to position
the fund toward companies that have more stable earnings. Typically,
this means the investment management firms. Although their earnings
are often tied to the stock and bond markets, they tend to be more
stable because they are fee-based and less transaction-oriented. As it
happened, investment management stocks were hurt as badly as brokerage
stocks during this market turbulence. So in the early fall, the fund
was repositioned toward brokerage stocks that I felt would show more
explosive earnings growth in a period of volatility. This
opportunistic approach worked out pretty well.
Q. WHICH HOLDINGS HELPED PERFORMANCE?
P.F. As the market rebounded, I felt that large institutional
brokerage firms would likely be the first to recover. Indeed, such
firms as Merrill Lynch and Morgan Stanley came back quite a bit, as
did Lehman Brothers and Bear Stearns. PaineWebber performed well, as
did Equitable, whose activities are diversified among the brokerage,
asset management, life insurance and annuity businesses. The fund also
benefited from its investment in E Trade Group, the online retail
broker, which experienced tremendous growth, particularly in the
latter months of the period.
Q. WHICH WERE DISAPPOINTMENTS?
P.F. Some of the investment managers were underperformers. Franklin
Resources saw its growth slow, due mainly to the global nature of its
business. T. Rowe Price and Waddell & Reed also disappointed.
Q. TURNING TO YOU TED, WHAT'S YOUR OUTLOOK FOR THE INDUSTRY OVER THE
NEXT SIX MONTHS?
T.O. I'm fairly optimistic. I think there's room for further recovery
in many of the holdings. Given an environment of low interest rates
and narrowing spreads, combined with the significant deferral of
activity from last fall, the institutional brokerage stocks should
continue to perform well over the next six months. As investor
confidence and the pace of retail brokerage business increase, I
believe that trend also will have a positive impact on the regional
brokerage firms we hold. The investment management companies should
start to show better net sales and recovering earnings, which should
provide added benefit to the fund. In addition, there is a global
consolidation theme that continues to be played out in the life
insurance industry, and I believe the fund is positioned properly to
take advantage of that trend.
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 OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark)FUND FACTS
START DATE: July 29, 1985
FUND NUMBER: 068
TRADING SYMBOL: FSLBX
SIZE: as of February 28, 1999, more than
$482 million
MANAGER: Ted Orenstein, since January 1999;
equity analyst for securities brokerage
industry, 1998-1999; joined Fidelity in 1998
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 94.4%
SHARES VALUE (NOTE 1)
BANKS - 5.4%
Bank of Montreal 50,600 $ 2,089,037
Bank Sarasin & Compagnie 910 1,647,685
Class B (Reg.)
BankAmerica Corp. 25,464 1,663,118
Chase Manhattan Corp. 72,500 5,772,813
Credit Suisse Group (Reg.) 23,900 3,716,310
Julius Baer Holding AG 2,500 7,603,663
Morgan (JP) & Co., Inc. 10,000 1,114,375
Royal Bank of Canada 52,200 2,527,258
26,134,259
COMPUTER SERVICES & SOFTWARE
- - 0.6%
DST Systems, Inc. (a) 53,100 2,880,675
CREDIT & OTHER FINANCE - 14.1%
American Express Co. 84,300 9,146,550
Citigroup, Inc. 330,150 19,396,313
Equitable Companies (The), 406,500 27,464,156
Inc.
Investors Financial Services 6,207 360,006
Corp.
Perpetual PLC 16,500 998,469
Providian Financial Corp. 103,200 10,539,300
67,904,794
INSURANCE - 10.8%
AFLAC, Inc. 63,900 2,819,588
American Bankers Insurance 165,400 7,939,200
Group, Inc.
ARM Financial Group, Inc. 83,100 1,293,244
Class A
Hartford Life, Inc. Class A 133,500 7,743,000
Liberty Financial Companies, 140,200 3,145,738
Inc.
Marsh & McLennan Companies, 257,600 18,241,300
Inc.
Nationwide Financial 119,100 5,411,606
Services, Inc. Class A
Protective Life Corp. 31,400 1,083,300
Reinsurance Group of America, 24,800 1,598,050
Inc.
Torchmark Corp. 84,800 2,819,600
UICI (a) 12,400 285,200
52,379,826
RAILROADS - 4.0%
Kansas City Southern 411,400 19,232,950
Industries, Inc.
REAL ESTATE INVESTMENT TRUSTS
- - 0.1%
AMRESCO Capital Trust, Inc. 41,400 362,250
SAVINGS & LOANS - 0.4%
Dime Bancorp, Inc. 51,300 1,269,675
Washington Mutual, Inc. 18,900 756,000
2,025,675
SECURITIES INDUSTRY - 59.0%
Advest Group, Inc. (The) 208,900 4,151,888
Affiliated Managers Group, 91,400 2,376,400
Inc. (a)
SHARES VALUE (NOTE 1)
Bear Stearns Companies, Inc. 759,330 $ 32,508,809
Conning Corp. 500 8,000
Dain Rauscher Corp. 115,950 3,666,919
Donaldson Lufkin & Jenrette, 346,700 19,761,900
Inc.
E Trade Group, Inc. (a) 254,800 11,720,800
Eaton Vance Corp. 74,400 1,464,750
Edwards (A.G.), Inc. 493,700 16,076,106
Everen Capital Corp. 223,400 4,803,100
Federated Investors, Inc. 115,100 2,208,481
Class B
First Marathon, Inc. Class A 37,000 445,384
(non-vtg.)
Franklin Resources, Inc. 273,400 8,697,538
Hambrecht & Quist Group (a) 217,300 5,785,613
Investors Group, Inc. 804,600 11,686,391
Jefferies Group, Inc. 135,300 5,335,894
John Nuveen Co. Class A 162,500 6,418,750
Legg Mason, Inc. 241,032 6,824,219
Lehman Brothers Holdings, 612,400 32,457,200
Inc.
Mackenzie Financial Corp. 275,600 3,271,813
Merrill Lynch & Co., Inc. 390,400 29,963,200
Morgan Keegan, Inc. 139,425 2,300,513
Morgan Stanley, Dean Witter & 253,765 22,965,733
Co.
PaineWebber Group, Inc. 577,500 21,584,063
Phoenix Investment Partners 203,200 1,511,300
Ltd.
Pilgrim America Capital Corp. 57,100 1,284,750
(a)
Pioneer Group, Inc. 131,500 2,145,094
Price (T. Rowe) Associates, 325,300 10,023,306
Inc.
Raymond James Financial, Inc. 177,625 3,241,656
Southwest Securities Group, 50,567 1,456,962
Inc.
Stifel Financial Corp. 95,817 940,204
United Asset Management Corp. 45,000 1,020,938
Waddell & Reed Financial, Inc.:
Class A 328,636 6,203,004
Class B 48,161 893,989
285,204,667
TOTAL COMMON STOCKS 456,125,096
(Cost $349,978,241)
CASH EQUIVALENTS - 5.6%
Taxable Central Cash Fund (b) 27,012,968 27,012,968
(Cost $27,012,968)
TOTAL INVESTMENT IN $ 483,138,064
SECURITIES - 100%
(Cost $376,991,209)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. 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 $391,812,067 and $521,601,050, respectively.
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 $47,015 for the
period.
The fund participated in the bank borrowing program. The maximum loan
and average daily balances during the period for which loans were
outstanding amounted to $2,851,000 and $2,311,600, respectively. The
weighted average interest rate was 5.0%.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $377,770,273. Net unrealized appreciation
aggregated $105,367,791, of which $119,928,083 related to appreciated
investment securities and $14,560,292 related to depreciated
investment securities.
The fund hereby designates approximately $11,036,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 99% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of these percentages
for use in preparing 1999 income tax returns.
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 483,138,064
value (cost $376,991,209) -
See accompanying schedule
Receivable for investments 5,672,438
sold
Receivable for fund shares 634,807
sold
Dividends receivable 315,066
Interest receivable 23,840
Redemption fees receivable 6,692
TOTAL ASSETS 489,790,907
LIABILITIES
Payable for investments $ 2,450,967
purchased
Payable for fund shares 4,277,062
redeemed
Accrued management fee 241,603
Other payables and accrued 296,268
expenses
TOTAL LIABILITIES 7,265,900
NET ASSETS $ 482,525,007
Net Assets consist of:
Paid in capital $ 364,482,172
Undistributed net investment 1,842,357
income
Accumulated undistributed net 10,051,293
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 106,149,185
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 11,723,842 $ 482,525,007
shares outstanding
NET ASSET VALUE and $41.16
redemption price per share
($482,525,007 (divided by)
11,723,842 shares)
Maximum offering price per $42.43
share (100/97.00 of $41.16)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 8,442,201
Dividends
Interest 2,455,320
TOTAL INCOME 10,897,521
EXPENSES
Management fee $ 4,267,725
Transfer agent fees 4,027,741
Accounting fees and expenses 593,407
Non-interested trustees' 2,610
compensation
Custodian fees and expenses 49,280
Registration fees 103,404
Audit 34,276
Legal 3,931
Interest 1,608
Reports to shareholders 74,397
Miscellaneous 670
Total expenses before 9,159,049
reductions
Expense reductions (141,329) 9,017,720
NET INVESTMENT INCOME 1,879,801
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 11,015,878
Foreign currency transactions (146,465) 10,869,413
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (42,207,693)
Assets and liabilities in (1,183) (42,208,876)
foreign currencies
NET GAIN (LOSS) (31,339,463)
NET INCREASE (DECREASE) IN $ (29,459,662)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 4,817,568
charges paid to FDC
Sales charges - Retained by $ 4,806,902
FDC
Deferred sales charges $ 5,812
withheld by FDC
Exchange fees withheld by FSC $ 92,633
Expense reductions Directed $ 136,233
brokerage arrangements
Custodian credits 1,168
Transfer agent credits 3,928
$ 141,329
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ 1,879,801 $ 2,052,773
income
Net realized gain (loss) 10,869,413 24,237,839
Change in net unrealized (42,208,876) 128,112,104
appreciation (depreciation)
NET INCREASE (DECREASE) IN (29,459,662) 154,402,716
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (201,762) (1,439,025)
From net investment income
From net realized gain (10,471,038) (10,009,644)
TOTAL DISTRIBUTIONS (10,672,800) (11,448,669)
Share transactions Net 881,017,420 894,533,503
proceeds from sales of shares
Reinvestment of distributions 10,559,880 11,336,755
Cost of shares redeemed (1,046,567,449) (832,884,965)
NET INCREASE (DECREASE) IN (154,990,149) 72,985,293
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 1,580,230 1,340,868
TOTAL INCREASE (DECREASE) (193,542,381) 217,280,208
IN NET ASSETS
NET ASSETS
Beginning of period 676,067,388 458,787,180
End of period (including $ 482,525,007 $ 676,067,388
undistributed net investment
income of $1,842,357 and
$675,811, respectively)
OTHER INFORMATION
Shares
Sold 21,245,778 26,764,779
Issued in reinvestment of 249,064 321,841
distributions
Redeemed (26,767,460) (27,900,822)
Net increase (decrease) (5,272,618) (814,202)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 F 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 39.78 $ 25.76 $ 18.49 $ 15.51 $ 17.75
period
Income from Investment
Operations
Net investment income (loss) C .10 .16 .08 .09 (.03)
Net realized and unrealized 1.72 G 14.46 7.80 4.29 (2.25)
gain (loss)
Total from investment 1.82 14.62 7.88 4.38 (2.28)
operations
Less Distributions
From net investment income (.01) (.09) (.06) (.04) -
From net realized gain (.52) (.61) (.65) (1.09) -
In excess of net realized gain - - - (.35) -
Total distributions (.53) (.70) (.71) (1.48) -
Redemption fees added to paid .09 .10 .10 .08 .04
in capital
Net asset value, end of period $ 41.16 $ 39.78 $ 25.76 $ 18.49 $ 15.51
TOTAL RETURN A, B 4.76% 57.56% 44.27% 29.85% (12.62)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 482,525 $ 676,067 $ 458,787 $ 38,382 $ 27,346
(000 omitted)
Ratio of expenses to average 1.26% 1.33% 1.94% 1.64% D 2.54% D
net assets
Ratio of expenses to average 1.24% E 1.29% E 1.93% E 1.61% E 2.54%
net assets after expense
reductions
Ratio of net investment .26% .49% .37% .50% (.20)%
income (loss) to average net
assets
Portfolio turnover rate 59% 100% 16% 166% 139%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
BTOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE. CNET INVESTMENT
INCOME (LOSS) PER SHARE HAS
BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING
DURING THE PERIOD. DFMR
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. EFMR
OR THE FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. FFOR
THE YEAR ENDED FEBRUARY 29.
GTHE AMOUNT SHOWN FOR A
SHARE OUTSTANDING DOES NOT
CORRESPOND WITH THE
AGGREGATE NET LOSS ON
INVESTMENTS FOR THE PERIOD
DUE TO THE TIMING OF SALES
AND REPURCHASES OF FUND
SHARES IN RELATION TO
FLUCTUATING MARKET VALUES OF
THE INVESTMENTS OF THE FUND.
</TABLE>
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT FINANCIAL SERVICES 8.42% 201.90% 625.81%
SELECT FINANCIAL SERVICES 5.10% 192.77% 603.96%
(LOAD ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Financial Services 4.74% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT FINANCIAL SERVICES 8.42% 24.73% 21.92%
SELECT FINANCIAL SERVICES 5.10% 23.97% 21.55%
(LOAD ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Financial Services 4.74% 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
1989/02/28 9700.00 10000.00
1989/03/31 10409.17 10233.00
1989/04/30 10599.43 10764.09
1989/05/31 11263.62 11200.04
1989/06/30 11185.14 11136.20
1989/07/31 12080.37 12141.80
1989/08/31 12421.74 12379.78
1989/09/30 12679.51 12329.02
1989/10/31 11470.78 12042.99
1989/11/30 11314.02 12288.66
1989/12/31 11035.38 12583.59
1990/01/31 10103.76 11739.23
1990/02/28 10469.38 11890.67
1990/03/31 10307.66 12205.77
1990/04/30 9942.04 11900.63
1990/05/31 10817.42 13060.94
1990/06/30 10515.08 12972.12
1990/07/31 9840.09 12930.61
1990/08/31 8662.37 11761.68
1990/09/30 7372.16 11188.89
1990/10/31 6728.81 11140.78
1990/11/30 7678.01 11860.47
1990/12/31 8350.49 12191.38
1991/01/31 9109.30 12722.92
1991/02/28 10155.81 13632.61
1991/03/31 10641.30 13962.52
1991/04/30 10986.54 13996.03
1991/05/31 11828.06 14600.66
1991/06/30 10867.86 13931.95
1991/07/31 11727.37 14581.18
1991/08/31 12504.16 14926.75
1991/09/30 12428.63 14677.48
1991/10/31 12701.95 14874.16
1991/11/30 11759.73 14274.73
1991/12/31 13496.77 15907.76
1992/01/31 14169.06 15611.87
1992/02/29 15186.59 15814.83
1992/03/31 14844.99 15506.44
1992/04/30 15415.53 15962.33
1992/05/31 16076.92 16040.54
1992/06/30 16446.85 15801.54
1992/07/31 16917.18 16447.82
1992/08/31 15946.89 16110.64
1992/09/30 16443.14 16300.75
1992/10/31 17094.94 16357.80
1992/11/30 18380.03 16915.60
1992/12/31 19276.09 17123.66
1993/01/31 20491.95 17267.50
1993/02/28 21036.72 17502.34
1993/03/31 22138.10 17871.64
1993/04/30 21078.28 17439.14
1993/05/31 21086.27 17906.51
1993/06/30 21873.46 17958.44
1993/07/31 22460.86 17886.61
1993/08/31 23160.14 18564.51
1993/09/30 23695.58 18421.56
1993/10/31 23060.24 18802.89
1993/11/30 22033.30 18624.26
1993/12/31 22659.88 18849.62
1994/01/31 24198.15 19490.50
1994/02/28 23319.79 18962.31
1994/03/31 22254.84 18135.55
1994/04/30 23099.94 18367.69
1994/05/31 24085.94 18668.92
1994/06/30 23517.27 18211.53
1994/07/31 24338.18 18808.87
1994/08/31 25191.18 19580.03
1994/09/30 23292.56 19100.32
1994/10/31 23168.73 19530.08
1994/11/30 21701.20 18818.79
1994/12/31 21833.37 19097.87
1995/01/31 22962.51 19593.08
1995/02/28 24420.77 20356.63
1995/03/31 24851.16 20957.35
1995/04/30 25630.92 21574.54
1995/05/31 27053.73 22436.88
1995/06/30 27180.32 22958.09
1995/07/31 28091.73 23719.38
1995/08/31 29185.43 23778.91
1995/09/30 30851.28 24782.38
1995/10/31 30061.39 24693.91
1995/11/30 32086.75 25777.97
1995/12/31 32169.33 26274.46
1996/01/31 33673.39 27168.84
1996/02/29 33957.66 27420.69
1996/03/31 34360.81 27684.75
1996/04/30 33979.47 28092.83
1996/05/31 34769.07 28817.34
1996/06/30 35277.81 28927.14
1996/07/31 34509.40 27649.13
1996/08/31 35537.48 28232.26
1996/09/30 37895.69 29821.17
1996/10/31 40296.30 30643.63
1996/11/30 43756.78 32959.99
1996/12/31 42501.36 32307.05
1997/01/31 45031.80 34325.59
1997/02/28 46025.10 34594.71
1997/03/31 42567.95 33173.21
1997/04/30 46152.92 35153.65
1997/05/31 47668.04 37293.80
1997/06/30 50202.96 38964.57
1997/07/31 55826.39 42064.98
1997/08/31 52656.29 39708.50
1997/09/30 56030.34 41883.33
1997/10/31 55284.44 40484.43
1997/11/30 57155.03 42358.45
1997/12/31 60344.58 43085.75
1998/01/31 59697.00 43562.28
1998/02/28 64934.24 46703.99
1998/03/31 68455.08 49095.70
1998/04/30 69589.60 49589.60
1998/05/31 68287.69 48737.16
1998/06/30 71403.95 50716.86
1998/07/31 71632.48 50176.72
1998/08/31 55358.67 42922.17
1998/09/30 57304.60 45671.77
1998/10/31 63052.37 49386.71
1998/11/30 66667.24 52380.04
1998/12/31 68873.88 55398.18
1999/01/31 70165.75 57714.93
1999/02/26 70396.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990309 144213 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Financial Services Portfolio on February
28, 1989, and the current 3.00% sales charge was paid. As the chart
shows, by February 28, 1999, the value of the investment would have
grown to $70,396 - a 603.96% 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 $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Citigroup, Inc. 6.3
American International Group, 5.4
Inc.
Chase Manhattan Corp. 4.7
American Express Co. 4.7
Providian Financial Corp. 4.4
Wells Fargo & Co. 4.4
BankAmerica Corp. 4.4
Household International, Inc. 3.9
Bank One Corp. 3.8
Freddie Mac 3.5
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Banks 29.7%
Credit & Other Finance 27.2%
Insurance 19.8%
Federal Sponsored Credit 8.1%
Securities Industry 4.4%
All Others 10.8%*
* INCLUDES SHORT-TERM INVESTMENTS
Row: 1, Col: 1, Value: 10.8
Row: 1, Col: 2, Value: 4.4
Row: 1, Col: 3, Value: 8.1
Row: 1, Col: 4, Value: 19.8
Row: 1, Col: 5, Value: 27.2
Row: 1, Col: 6, Value: 29.7
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. The fund had a respectable year within the context of what happened
to financial services company stocks, although it trailed the overall
stock market. For the 12-month period that ended February 28, 1999,
the fund had a total return of 8.42%. The Goldman Sachs Financial
Services Index - an index of 271 stocks designed to measure the
performance of companies in the financial services sector - returned
4.74% during the same 12-month period, while the Standard & Poor's 500
Index had a return of 19.74%.
Q. WHAT FACTORS AFFECTED THE MARKET FOR FINANCIAL SERVICES STOCKS
DURING THE PAST 12 MONTHS?
A. Financial services stocks did not fare as well as stocks in
general. The 12-month period began with an escalation of global
economic turmoil, starting with Asia and moving into other markets,
including Eastern European countries and South America. The global
problems affected the quality of loans and the earnings growth of
financial companies. Market volatility and uncertainty were at their
highest in the late summer and early fall, following the Russian bond
default and currency devaluation in August. However, when the U.S.
Federal Reserve Board cut short-term interest rates three successive
times in the fall, the capital markets rebounded. Financial services
stocks, which had fallen more sharply than the market as a whole, at
first recovered more quickly, but have since lagged the market
slightly. At the end of the period, we saw more stability. The year
also witnessed an unusually large number of big-company mergers,
including Citicorp and Travelers, BankAmerica and NationsBank, First
Chicago and Bank One, and Norwest and Wells Fargo.
Q. WHAT WERE YOUR PRINCIPAL STRATEGIES DURING THE YEAR?
A. At the beginning of the 12-month period, the fund's portfolio was
diversified across large-cap, mid-cap and small-cap companies.
Small-cap and mid-cap companies performed well then, but became more
expensive on a price-to-earnings ratio basis. Late in the spring, I
moved more heavily into big-cap stocks. This worked well as large-cap
banks slowed their acquisitions of smaller banks and started merging
with each other. Throughout the year, I also focused on
consumer-oriented firms, including banks and companies emphasizing
consumer finance and credit card operations. The international
volatility also had an influence on strategy, as we shifted our
emphasis depending on relative valuations. In the spring, as Asia was
deteriorating, I de-emphasized companies with an international focus,
such as the large money-center banks. Then, as international events
unfolded, stocks with a foreign focus were penalized and became
unusually cheap. In November, I began increasing our exposure to these
companies, adding to positions in stocks such as Chase Manhattan and
Citigroup. For most of the period, I also concentrated on companies
with more predictable and sustainable earnings growth, such as life
insurance companies, including SunAmerica and AFLAC. At the end of the
fiscal year, the fund continued to have a big-cap bias, although we
did increase our emphasis on mid-cap banks as their relative
valuations became more attractive.
Q. WHAT STOCKS HELPED PERFORMANCE, AND WHAT WERE THE DISAPPOINTMENTS?
A. The biggest single contributor to performance was Providian
Financial Group, which increased both its credit card business and its
fee income. Another healthy performer was American Express, a holding
which illustrates the fund's consumer-oriented strategy. American
International Group (AIG), which successfully weathered the
international problems, helped, as did SunAmerica, which has done a
wonderful job selling variable and fixed-rate annuities. AIG acquired
SunAmerica in November. BankAmerica was a disappointment as it was
affected by the international turmoil even more than most people
expected. U.S. Bancorp failed to meet expectations, with disappointing
earnings growth the past two fiscal quarters. Also disappointing was a
smaller company, Ocwen Asset Investment, a commercial mortgage real
estate investment trust.
Q. WHAT IS YOUR OUTLOOK?
A. I still think the backdrop is positive for financial service
companies. I think the industry's average earnings growth during the
coming year may exceed overall market earnings growth. If that
happens, financial services stocks should outperform the market as a
whole. While I am somewhat optimistic, I am vigilant in tracking
international developments. If we continue to get erosion in
international markets, the U.S. economy will be affected, hurting
credit quality and the performance of financial services 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 OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark)FUND FACTS
START DATE: December 10, 1981
FUND NUMBER: 066
TRADING SYMBOL: FIDSX
SIZE: as of February 28, 1999, more than
$546 million
MANAGER: Robert Ewing, since 1998; manager,
Fidelity Advisor Financial Services Fund, since
1998; Fidelity Select Environmental Services
Portfolio, 1996-1997; Fidelity Select
Energy Service Portfolio, 1996-1998; joined
Fidelity in 1990
FINANCIAL SERVICES PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.1%
SHARES VALUE (NOTE 1)
BANKS - 29.7%
AmSouth Bancorp. 40,000 $ 1,880,000
Bank of New York Co., Inc. 425,936 14,881,139
Bank One Corp. 389,219 20,920,521
BankAmerica Corp. 366,879 23,961,785
Chase Manhattan Corp. 325,000 25,878,125
Comerica, Inc. 120,167 7,961,064
First Union Corp. 90,690 4,834,911
M&T Bank Corp. 6,000 2,854,500
Marshall & Ilsley Corp. 30,000 1,680,000
Mellon Bank Corp. 40,000 2,705,000
U.S. Bancorp 568,089 18,356,376
Wachovia Corp. 89,500 7,613,094
Wells Fargo & Co. 665,000 24,438,750
Zions Bancorp 90,000 5,760,000
163,725,265
CREDIT & OTHER FINANCE - 27.2%
American Express Co. 237,800 25,801,300
Associates First Capital 440,200 17,883,125
Corp. Class A
Citigroup, Inc. 587,000 34,486,246
Equitable Companies (The), 89,200 6,026,575
Inc.
Firstcity Financial Corp. (a) 100,300 1,209,869
Fleet Financial Group, Inc. 234,534 10,070,304
Household International, Inc. 529,746 21,520,931
MBNA Corp. 287,500 6,971,875
Metris Companies, Inc. 25,000 1,075,000
Providian Financial Corp. 239,700 24,479,363
149,524,588
FEDERAL SPONSORED CREDIT - 8.1%
Fannie Mae 230,000 16,100,000
Freddie Mac 329,600 19,405,200
SLM Holding Corp. 216,000 9,261,000
44,766,200
INSURANCE - 19.8%
ACE Ltd. 80,000 2,180,000
Aegon NV (Reg.) 36,940 3,864,848
AFLAC, Inc. 142,000 6,265,750
Allmerica Financial Corp. 31,200 1,665,300
Allstate Corp. 127,800 4,792,500
Ambac Financial Group, Inc. 65,000 3,640,000
American Bankers Insurance 75,000 3,600,000
Group, Inc.
American International Group, 259,050 29,515,509
Inc.
Berkshire Hathaway, Inc.:
Class A (a) 154 10,949,400
Class B (a) 7 16,653
Blanch E.W. Holdings, Inc. 35,000 1,942,500
CMAC Investments Corp. 75,000 3,098,438
Hartford Financial Services 170,000 9,190,625
Group, Inc.
SHARES VALUE (NOTE 1)
Hartford Life, Inc. Class A 25,000 $ 1,450,000
Marsh & McLennan Companies, 107,500 7,612,344
Inc.
MBIA, Inc. 52,400 3,225,875
Nationwide Financial 35,000 1,590,313
Services, Inc. Class A
PMI Group, Inc. 46,400 2,001,000
Progressive Corp. 17,500 2,248,750
Reliastar Financial Corp. 65,000 2,949,375
Torchmark Corp. 150,000 4,987,500
UICI (a) 100,000 2,300,000
109,086,680
REAL ESTATE INVESTMENT TRUSTS
- - 1.5%
Crescent Real Estate Equities 140,000 2,922,500
Co.
Duke Realty Investments, Inc. 50,000 1,090,625
Equity Office Properties Trust 50,000 1,287,500
Ocwen Asset Investment Corp. 369,000 1,914,188
Public Storage, Inc. 40,000 1,020,000
8,234,813
SAVINGS & LOANS - 2.4%
Charter One Financial, Inc. 75,000 2,160,938
Dime Bancorp, Inc. 60,000 1,485,000
Golden State Bancorp, Inc. 100,000 1,781,250
Golden State Bancorp, Inc. 50,000 253,125
litigation warrants 12/31/99
(a)
Washington Mutual, Inc. 188,880 7,555,200
13,235,513
SECURITIES INDUSTRY - 4.4%
Bear Stearns Companies, Inc. 57,750 2,472,422
E Trade Group, Inc. (a) 30,000 1,380,000
Investors Group, Inc. 200,000 2,904,895
Lehman Brothers Holdings, 125,600 6,656,800
Inc.
Morgan Stanley, Dean Witter & 70,000 6,335,000
Co.
Waddell & Reed Financial, Inc.:
Class A 178,535 3,369,848
Class B 36,735 681,893
23,800,858
TOTAL COMMON STOCKS 512,373,917
(Cost $374,372,608)
CASH EQUIVALENTS - 6.9%
Taxable Central Cash Fund (b) 37,949,707 37,949,707
(Cost $37,949,707)
TOTAL INVESTMENT IN $ 550,323,624
SECURITIES - 100%
(Cost $412,322,315)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. 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 $343,643,233 and $421,107,652, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $45,514 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $1,820,475. The fund
received cash collateral of $1,861,800.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $414,728,198. Net unrealized appreciation
aggregated $135,595,426, of which $147,529,914 related to appreciated
investment securities and $11,934,488 related to depreciated
investment securities.
The fund hereby designates approximately $62,832,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 51% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of this percentage
for use in preparing 1999 income tax returns.
FINANCIAL SERVICES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 550,323,624
value (cost $412,322,315) -
See accompanying schedule
Receivable for fund shares 1,408,735
sold
Dividends receivable 503,053
Interest receivable 120,798
Redemption fees receivable 5,946
TOTAL ASSETS 552,362,156
LIABILITIES
Payable for fund shares $ 2,951,093
redeemed
Accrued management fee 262,558
Other payables and accrued 287,194
expenses
Collateral on securities 1,861,800
loaned, at value
TOTAL LIABILITIES 5,362,645
NET ASSETS $ 546,999,511
Net Assets consist of:
Paid in capital $ 388,431,484
Undistributed net investment 3,679,892
income
Accumulated undistributed net 16,886,826
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 138,001,309
(depreciation) on investments
NET ASSETS, for 5,425,361 $ 546,999,511
shares outstanding
NET ASSET VALUE and $100.82
redemption price per share
($546,999,511 (divided by)
5,425,361 shares)
Maximum offering price per $103.94
share (100/97.00 of $100.82)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 8,663,505
Dividends
Interest (including income on 2,337,085
securities loaned of $5,426)
TOTAL INCOME 11,000,590
EXPENSES
Management fee $ 3,668,034
Transfer agent fees 3,122,127
Accounting and security 543,416
lending fees
Non-interested trustees' 2,407
compensation
Custodian fees and expenses 17,213
Registration fees 53,760
Audit 28,584
Legal 3,384
Reports to shareholders 62,257
Total expenses before 7,501,182
reductions
Expense reductions (106,101) 7,395,081
NET INVESTMENT INCOME 3,605,509
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 21,710,294
Foreign currency transactions 75,133 21,785,427
Change in net unrealized 9,159,238
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 30,944,665
NET INCREASE (DECREASE) IN $ 34,550,174
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 2,154,649
charges paid to FDC
Sales charges - Retained by $ 2,152,071
FDC
Deferred sales charges $ 13,596
withheld by FDC
Exchange fees withheld by FSC $ 52,705
Expense reductions Directed $ 104,171
brokerage arrangements
Custodian credits 1,684
Transfer agent credits 246
$ 106,101
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ 3,605,509 $ 3,633,948
income
Net realized gain (loss) 21,785,427 108,047,031
Change in net unrealized 9,159,238 47,345,052
appreciation (depreciation)
NET INCREASE (DECREASE) IN 34,550,174 159,026,031
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (1,162,919) (3,089,281)
From net investment income
From net realized gain (66,118,174) (50,526,464)
TOTAL DISTRIBUTIONS (67,281,093) (53,615,745)
Share transactions Net 389,871,130 474,752,061
proceeds from sales of shares
Reinvestment of distributions 66,001,479 52,640,022
Cost of shares redeemed (481,672,418) (455,053,591)
NET INCREASE (DECREASE) IN (25,799,809) 72,338,492
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 622,623 734,651
TOTAL INCREASE (DECREASE) (57,908,105) 178,483,429
IN NET ASSETS
NET ASSETS
Beginning of period 604,907,616 426,424,187
End of period (including $ 546,999,511 $ 604,907,616
undistributed net investment
income of $3,679,892 and
$1,378,882, respectively)
OTHER INFORMATION
Shares
Sold 3,952,203 5,332,883
Issued in reinvestment of 658,905 604,501
distributions
Redeemed (5,042,955) (5,221,709)
Net increase (decrease) (431,847) 715,675
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 103.28 $ 82.94 $ 65.70 $ 48.23 $ 51.24
period
Income from Investment
Operations
Net investment income C .56 .70 .74 1.03 .76
Net realized and unrealized 7.88 30.65 21.55 17.56 .87
gain (loss)
Total from investment 8.44 31.35 22.29 18.59 1.63
operations
Less Distributions
From net investment income (.19) (.64) (.63) (.37) (.79)
From net realized gain (10.81) (10.51) (4.56) (.91) (3.93)
Total distributions (11.00) (11.15) (5.19) (1.28) (4.72)
Redemption fees added to paid .10 .14 .14 .16 .08
in capital
Net asset value, end of period $ 100.82 $ 103.28 $ 82.94 $ 65.70 $ 48.23
TOTAL RETURN A, B 8.42% 41.08% 35.54% 39.05% 4.72%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 547,000 $ 604,908 $ 426,424 $ 270,466 $ 153,089
(000 omitted)
Ratio of expenses to average 1.20% 1.31% 1.45% 1.42% 1.56%
net assets
Ratio of expenses to average 1.18% D 1.29% D 1.43% D 1.41% D 1.54% D
net assets after expense
reductions
Ratio of net investment .58% .78% 1.03% 1.78% 1.52%
income to average net assets
Portfolio turnover rate 60% 84% 80% 125% 107%
</TABLE>
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME PER
SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES
OUTSTANDING DURING THE
PERIOD. D FMR OR THE FUND
HAS ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE
FUND'S EXPENSES. E FOR THE
YEAR ENDED FEBRUARY 29.
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT HOME FINANCE -19.12% 154.36% 622.25%
SELECT HOME FINANCE (LOAD -21.62% 146.66% 600.51%
ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Financial Services 4.74% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT HOME FINANCE -19.12% 20.53% 21.86%
SELECT HOME FINANCE (LOAD -21.62% 19.79% 21.49%
ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Financial Services 4.74% 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
1989/02/28 9700.00 10000.00
1989/03/31 9747.09 10233.00
1989/04/30 10246.21 10764.09
1989/05/31 10688.83 11200.04
1989/06/30 10903.98 11136.20
1989/07/31 11283.91 12141.80
1989/08/31 11977.28 12379.78
1989/09/30 12423.70 12329.02
1989/10/31 10875.49 12042.99
1989/11/30 10524.05 12288.66
1989/12/31 9575.08 12583.59
1990/01/31 8781.29 11739.23
1990/02/28 9108.73 11890.67
1990/03/31 9128.57 12205.77
1990/04/30 8910.28 11900.63
1990/05/31 9753.68 13060.94
1990/06/30 9654.46 12972.12
1990/07/31 8820.98 12930.61
1990/08/31 7927.97 11761.68
1990/09/30 7243.32 11188.89
1990/10/31 6697.59 11140.78
1990/11/30 7421.93 11860.47
1990/12/31 8130.87 12191.38
1991/01/31 8908.60 12722.92
1991/02/28 10120.65 13632.61
1991/03/31 10585.28 13962.52
1991/04/30 10948.89 13996.03
1991/05/31 11403.41 14600.66
1991/06/30 10767.08 13931.95
1991/07/31 11918.54 14581.18
1991/08/31 12373.06 14926.75
1991/09/30 12272.05 14677.48
1991/10/31 12059.94 14874.16
1991/11/30 11504.42 14274.73
1991/12/31 13383.86 15907.76
1992/01/31 14702.82 15611.87
1992/02/29 15663.93 15814.83
1992/03/31 15398.09 15506.44
1992/04/30 15725.27 15962.33
1992/05/31 17279.40 16040.54
1992/06/30 17301.04 15801.54
1992/07/31 18151.74 16447.82
1992/08/31 17167.80 16110.64
1992/09/30 17444.53 16300.75
1992/10/31 17772.52 16357.80
1992/11/30 19596.91 16915.60
1992/12/31 21126.79 17123.66
1993/01/31 22642.52 17267.50
1993/02/28 23026.65 17502.34
1993/03/31 23846.80 17871.64
1993/04/30 22555.15 17439.14
1993/05/31 22169.15 17906.51
1993/06/30 22722.07 17958.44
1993/07/31 24182.63 17886.61
1993/08/31 25455.40 18564.51
1993/09/30 27082.87 18421.56
1993/10/31 27291.52 18802.89
1993/11/30 26070.92 18624.26
1993/12/31 26893.35 18849.62
1994/01/31 28070.76 19490.50
1994/02/28 27542.57 18962.31
1994/03/31 27025.39 18135.55
1994/04/30 28070.28 18367.69
1994/05/31 29801.59 18668.92
1994/06/30 30297.89 18211.53
1994/07/31 30967.33 18808.87
1994/08/31 31971.49 19580.03
1994/09/30 30875.00 19100.32
1994/10/31 29028.27 19530.08
1994/11/30 27527.80 18818.79
1994/12/31 27614.38 19097.87
1995/01/31 28831.33 19593.08
1995/02/28 30967.47 20356.63
1995/03/31 30915.68 20957.35
1995/04/30 32533.96 21574.54
1995/05/31 34462.96 22436.88
1995/06/30 34825.45 22958.09
1995/07/31 36223.65 23719.38
1995/08/31 39563.79 23778.91
1995/09/30 40392.35 24782.38
1995/10/31 39654.41 24693.91
1995/11/30 41842.33 25777.97
1995/12/31 42385.70 26274.46
1996/01/31 43544.58 27168.84
1996/02/29 44357.13 27420.69
1996/03/31 45369.48 27684.75
1996/04/30 44790.24 28092.83
1996/05/31 45788.62 28817.34
1996/06/30 45993.76 28927.14
1996/07/31 46814.35 27649.13
1996/08/31 48742.72 28232.26
1996/09/30 51204.47 29821.17
1996/10/31 54801.37 30643.63
1996/11/30 58904.29 32959.99
1996/12/31 58015.82 32307.05
1997/01/31 61784.93 34325.59
1997/02/28 65426.03 34594.71
1997/03/31 59367.01 33173.21
1997/04/30 61146.40 35153.65
1997/05/31 65244.08 37293.80
1997/06/30 70813.88 38964.57
1997/07/31 77476.39 42064.98
1997/08/31 74274.14 39708.50
1997/09/30 80936.65 41883.33
1997/10/31 80299.23 40484.43
1997/11/30 80754.53 42358.45
1997/12/31 84557.77 43085.75
1998/01/31 79752.80 43562.28
1998/02/28 86619.36 46703.99
1998/03/31 92463.25 49095.70
1998/04/30 94642.35 49589.60
1998/05/31 91346.68 48737.16
1998/06/30 89765.43 50716.86
1998/07/31 86270.02 50176.72
1998/08/31 63366.77 42922.17
1998/09/30 66645.79 45671.77
1998/10/31 68443.43 49386.71
1998/11/30 72288.38 52380.04
1998/12/31 72038.71 55398.18
1999/01/31 71755.75 57714.93
1999/02/26 70051.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990307 162722 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Home Finance Portfolio on February 28,
1989, and the current 3.00% sales charge was paid. As the chart shows,
by February 28, 1999, the value of the investment would have grown to
$70,051 - a 600.51% 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 $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Washington Mutual, Inc. 13.1
Charter One Financial, Inc. 7.6
Dime Bancorp, Inc. 6.1
Astoria Financial Corp. 5.8
Freddie Mac 5.6
Greenpoint Financial Corp. 4.8
Peoples Heritage Financial 3.1
Group, Inc.
PMI Group, Inc. 3.0
Bank United Corp. Class A 2.6
Washington Federal, Inc. 2.4
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Savings & Loans 57.2%
Credit & Finance 12.6%
Banks 11.0%
Federal Sponsored Credit 7.6%
Insurance 5.6%
All Others 6.0%*
* INCLUDES SHORT-TERM INVESTMENTS
Row: 1, Col: 1, Value: 6.0
Row: 1, Col: 2, Value: 5.6
Row: 1, Col: 3, Value: 7.6
Row: 1, Col: 4, Value: 11.0
Row: 1, Col: 5, Value: 12.6
Row: 1, Col: 6, Value: 57.2
HOME FINANCE PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
(photograph of Robert Ewing)
(photograph of Victor Thay)
NOTE TO SHAREHOLDERS: The following is an interview with Robert Ewing
(left), Fidelity Financial Services Sector Leader, who addresses the
fund's 12-month performance under its previous portfolio manager; and
with Victor Thay (right), who became manager of the Fidelity Select
Home Finance Portfolio on March 30, 1999, after the end of the period
covered by this report.
Q. HOW DID THE FUND PERFORM, BOB?
B.E. It was a disappointing year. For the 12 months that ended
February 28, 1999, the fund had a total return of -19.12%, compared to
a gain of 19.74% for the broadly based Standard & Poor's 500 Index.
Moreover, the Goldman Sachs Financial Services Index - an index of 271
stocks designed to measure the performance of companies in the
financial services sector - had a return of 4.74% over the same
period.
Q. WHY WAS THE FUND'S PERFORMANCE SO WEAK COMPARED TO ITS BENCHMARKS?
B.E. Russia's currency devaluation and debt default, together with the
near-failure of a prominent hedge fund, created a severe credit crunch
that prompted a sharp selloff in virtually all sectors of the market -
particularly mortgage finance shares - in the late summer and early
fall of 1998. Subsequently, other segments of the Goldman Sachs index
and the S&P 500 enjoyed greater participation in the rally that took
place in the second half of the period. Another negative factor was
the fund's overweighting in small-capitalization stocks, which
underperformed large-cap shares during the selloff and ensuing
recovery.
Q. WHY DID MORTGAGE FINANCE SHARES LANGUISH WHILE OTHER STOCKS
RALLIED?
B.E. Investors were concerned about slower asset growth due to an
increase in refinancings and prepayments triggered by the overall
downward trend in interest rates. There was also concern that the
narrowing spread between short-term and long-term interest rates would
decrease profit margins for mortgage lenders. Furthermore, industry
consolidation, which had helped to fuel the outperformance of mortgage
finance stocks in the past, slowed in response to last fall's credit
crunch.
Q. WHAT ADJUSTMENTS DID THE FUND MAKE IN RESPONSE TO
THESE EVENTS?
B.E. The fund shifted some assets out of small-capitalization stocks
and into higher-quality, large-capitalization shares.
Q. WHAT STOCKS PERFORMED WELL FOR THE FUND?
B.E. Freddie Mac benefited from the refinancing wave and the shift
toward fixed-rate mortgages, where the company has a profitable niche.
The resulting stronger-than-expected portfolio and earnings growth
allowed Freddie Mac to buck the downward trend of most mortgage
finance stocks. Providian Financial, a credit card and consumer
finance company, was another strong holding. The company reported
faster-than-expected earnings growth and pursued an innovative
strategy of focusing on an underserved market segment.
Q. WHAT STOCKS DETRACTED FROM PERFORMANCE?
B.E. Sub-prime home equity lenders - firms that lend money to people
with less than prime credit histories - performed poorly. In that
category, FIRSTPLUS Financial, Aames Financial and ContiFinancial were
all hurt by last fall's liquidity crunch and by a higher-than-expected
increase in prepayments resulting from falling interest rates.
Small-capitalization savings and loan stocks also were weak, as fears
abounded of slower asset and earnings growth. Roslyn Bancorp was one
example.
Q. TURNING TO YOU, VICTOR, WHAT'S YOUR OUTLOOK FOR THE FUND?
V.T. There are several potential positives either already occurring or
on the near-term horizon. The first two months of 1999 saw mortgage
rates rise about one-half of a percent, resulting in a meaningful
slowdown in refinancings. In addition, the spread - or difference in
yield - between short-term and long-term interest rates widened
moderately, enabling lenders such as banks and savings and loans to
operate more profitably. Moreover, several high-profile thrifts that
have recently completed mergers will be eligible to buy back their
stock in the next few months, which should tend to support their stock
prices. Another positive is that industry consolidation is likely to
accelerate again as companies begin to look past the uncertainty of
January 1, 2000. Finally, a widely followed lawsuit against the
federal government is due to be settled in April. A settlement in
favor of the plaintiff - a large California savings and loan - would
set an important precedent for other thrifts. These factors, together
with an apparently strong economy and housing market, good credit
quality and other favorable economic fundamentals, should enable
mortgage finance companies to continue to grow their earnings at an
average rate above that of most S&P 500 firms. Given price-to-earnings
ratios for mortgage finance shares that have been averaging about half
of those of the typical S&P 500 stock, I believe mortgage finance
stocks represent excellent values with good growth potential.
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 OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark)FUND FACTS
START DATE: December 16, 1985
FUND NUMBER: 098
TRADING SYMBOL: FSVLX
SIZE: as of February 28, 1999, more than
$740 million
MANAGER: Victor Thay, since March 1999;
manager, Fidelity Select Natural Gas Portfolio,
since 1997; analyst, U.S. and Canadian
exploration and production industry,
1996-present; analyst, Canadian equities,
1995-1996; joined Fidelity in 1995
HOME FINANCE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 96.2%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES -
0.5%
Ugly Duckling Corp. 767,800 $ 3,982,962
BANKS - 11.0%
Acadiana Bancshares, Inc. (c) 121,100 2,179,800
Advanta Corp. 132,900 1,553,269
BankAmerica Corp. 189,217 12,358,235
Chase Manhattan Corp. 201,000 16,004,625
North Fork Bancorp, Inc. 617,024 13,574,528
Peoples Heritage Financial 1,346,175 22,884,975
Group, Inc.
R&G Financial Corp. Class B 72,700 1,354,038
SouthTrust Corp. 9,100 364,569
U.S. Bancorp 163,800 5,292,788
UnionBanCal Corp. 139,800 4,394,963
UST Corp. 81,640 1,709,338
81,671,128
CREDIT & OTHER FINANCE - 12.6%
Aames Financial Corp. 536,750 1,107,047
Allied Capital Corp. 29,200 514,650
Associates First Capital 105,100 4,269,688
Corp. Class A
BNC Mortgage, Inc. (a) 204,600 1,176,450
Citigroup, Inc. 23,700 1,392,375
Coast Federal Litigation 269,400 1,835,288
Contingent Payment Rights
Trust rights 12/31/00 (a)
ContiFinancial Corp. (a) 125,000 437,500
Countrywide Credit 96,603 3,658,839
Industries, Inc.
Delta Financial Corp. (a) 527,300 3,064,931
Doral Financial Corp. 86,100 1,630,519
Federal Agricultural Mortgage 119,400 5,074,500
Corp. Class C (a)
First Alliance Corp. (a) 595,250 2,157,781
FIRSTPLUS Financial Group, 987,600 1,357,950
Inc. (a)
Greenpoint Financial Corp. 1,162,700 35,680,356
Household International, Inc. 50,000 2,031,250
Imperial Credit Industries (a) 342,500 2,954,063
Life Financial Corp. (a) 326,400 1,264,800
Long Beach Financial Corp. (a) 916,200 8,703,900
New Century Financial Corp. 376,600 4,425,050
(a)
Providian Financial Corp. 76,900 7,853,413
Resource Bancshares Mortgage 248,775 3,482,850
Group, Inc.
United Companies Financial 115,300 50,444
Corp.
94,123,644
FEDERAL SPONSORED CREDIT - 7.6%
Fannie Mae 120,000 8,400,000
Freddie Mac 705,900 41,559,863
SLM Holding Corp. 152,000 6,517,000
56,476,863
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY &
EQUIPMENT - 0.1%
Linc Capital, Inc. (a) 68,400 $ 547,200
INSURANCE - 5.6%
CMAC Investments Corp. 216,600 8,948,288
Conseco, Inc. 47,823 1,431,701
MGIC Investment Corp. 272,800 9,292,250
PMI Group, Inc. 518,040 22,340,475
42,012,714
REAL ESTATE INVESTMENT TRUSTS
- - 1.6%
Impac Mortgage Holdings, Inc. 222,600 1,279,950
Imperial Credit Commercial 107,700 976,031
Mortgage Investment Corp.
Indymac Mortgage Holdings, 258,200 2,743,375
Inc.
Novastar Financial, Inc. 86,200 554,913
Ocwen Asset Investment Corp. 791,300 4,104,869
Thornburg Mortgage Asset 250,900 2,367,869
Corp.
12,027,007
SAVINGS & LOANS - 57.2%
Andover Bancorp, Inc. 87,150 2,614,500
Astoria Financial Corp. 958,800 43,445,625
Bank Plus Corp. (a) 278,600 1,218,875
Bank United Corp. Class A 494,200 19,520,900
Bay View Capital Corp. 261,003 5,203,747
Carver Bancorp, Inc. 99,800 698,600
Charter One Financial, Inc. 1,971,964 56,817,213
Citizens First Financial 172,000 2,644,500
Corp. (a)(c)
Commercial Federal Corp. 765,425 16,695,833
Dime Bancorp, Inc. 1,848,184 45,742,554
Dime Community Bancorp, Inc. 169,000 3,728,563
Downey Financial Corp. 24,662 500,947
First Bergen Bancorp 56,100 1,311,338
First Essex Bancorp, Inc. 49,100 804,013
First Federal Savings & Loan 52,300 1,287,888
Association (East Hartford,
Conn.)
First Washington Bancorp, 59,200 1,261,700
Inc.
FirstFed Financial Corp. (a) 357,100 6,048,381
Flagstar Bancorp, Inc. 246,200 6,893,600
GA Financial, Inc. 203,400 3,101,850
Golden State Bancorp, Inc. 1,010,092 17,992,264
Golden State Bancorp, Inc. 898,761 4,549,978
litigation warrants 12/31/99
(a)
Haven Bancorp, Inc. 263,400 3,720,525
HF Bancorp, Inc. (a) 113,200 1,952,700
ITLA Capital Corp. (a) 76,300 1,182,650
Ocwen Financial Corp. (a) 205,400 1,643,200
Peoples Bancorp, Inc. 366,800 3,576,300
PFF Bancorp, Inc. (a) 345,200 6,041,000
Provident Financial Holdings, 95,700 1,531,200
Inc. (a)
Quaker City Bancorp, Inc. (a) 83,825 1,252,136
Richmond County Financial 102,500 1,582,344
Corp.
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SAVINGS & LOANS - CONTINUED
Roslyn Bancorp, Inc. 316,315 $ 5,159,888
SGV Bancorp., Inc. (a)(c) 137,800 1,670,825
Sovereign Bancorp, Inc. 1,271,877 15,580,493
TCF Financial Corp. 708,700 17,053,094
Washington Federal, Inc. 803,470 18,078,075
Washington Mutual, Inc. 2,451,180 98,047,191
Webster Financial Corp. 188,400 5,757,975
Wilshire Financial Services 374,600 140,475
Group, Inc. (a)
Yonkers Financial Corp. 61,200 910,350
426,963,290
TOTAL COMMON STOCKS 717,804,808
(Cost $625,347,348)
CONVERTIBLE PREFERRED STOCKS
- - 0.2%
REAL ESTATE INVESTMENT TRUSTS
- - 0.2%
Walden Residential 80,000 1,730,000
Properties, Inc. Series B,
$2.29 (Cost $2,000,000)
CASH EQUIVALENTS - 3.6%
Taxable Central Cash Fund (b) 26,596,475 26,596,475
(Cost $26,596,475)
TOTAL INVESTMENT IN $ 746,131,283
SECURITIES - 100%
(Cost $653,943,823)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. 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
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $236,128,665 and $794,743,099, respectively.
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 $118,062 for the
period.
The fund participated in the bank borrowing program. The maximum loan
and average daily balances during the period for which loans were
outstanding amounted to $9,580,000 and $4,095,824, respectively. The
weighted average interest rate was 5.18%.
Transactions during the period with companies which are or were
affiliates are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PURCHASES SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Acadiana Bancshares, Inc. $ - $ 431,330 $ 66,924 $ 2,179,800
Carver Bancorp, Inc. - 311,715 6,990 -
Citizens First Financial Corp. - 29,498 - 2,644,500
First Alliance Corp. 2,556,250 237,188 - -
First Bergen Bancorp - 536,250 8,775 -
Life Financial Corp. 123,750 343,913 - -
Long Beach Financial Corp. 795,513 1,808,425 - -
R&G Financial Corp. Class B - 391,667 - -
RedFed Bancorp, Inc. - 1,771,875 - -
Redwood Trust, Inc. 888,284 3,012,247 207,599 -
SGV Bancorp., Inc. - 20,900 - 1,670,825
Ugly Duckling Corp. 778,735 10,748,373 128,203 -
TOTALS $ 5,142,532 $ 19,643,381 $ 418,491 $ 6,495,125
</TABLE>
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $656,861,339. Net unrealized appreciation
aggregated $89,269,944, of which $213,371,565 related to appreciated
investment securities and $124,101,621 related to depreciated
investment securities.
The fund hereby designates approximately $45,625,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 100% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentage for use in preparing 1999 income tax returns.
HOME FINANCE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 746,131,283
value (cost $653,943,823) -
See accompanying schedule
Receivable for investments 1,122,003
sold
Receivable for fund shares 312,111
sold
Dividends receivable 1,020,966
Interest receivable 77,051
Redemption fees receivable 4,211
Other receivables 7,329
TOTAL ASSETS 748,674,954
LIABILITIES
Payable for investments $ 1,355,000
purchased
Payable for fund shares 6,038,322
redeemed
Accrued management fee 378,339
Other payables and accrued 463,076
expenses
TOTAL LIABILITIES 8,234,737
NET ASSETS $ 740,440,217
Net Assets consist of:
Paid in capital $ 620,230,274
Undistributed net investment 7,800,879
income
Accumulated undistributed net 20,220,842
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 92,188,222
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 17,590,183 $ 740,440,217
shares outstanding
NET ASSET VALUE and $42.09
redemption price per share
($740,440,217 (divided by)
17,590,183 shares)
Maximum offering price per $43.39
share (100/97.00 of $42.09)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 21,826,996
Dividends (including $418,491
received from affiliated
issuers)
Interest 1,839,067
TOTAL INCOME 23,666,063
EXPENSES
Management fee $ 7,895,622
Transfer agent fees 7,065,489
Accounting fees and expenses 753,655
Non-interested trustees' 4,508
compensation
Custodian fees and expenses 63,138
Registration fees 64,138
Audit 41,149
Legal 8,350
Interest 10,024
Reports to shareholders 175,156
Total expenses before 16,081,229
reductions
Expense reductions (140,681) 15,940,548
NET INVESTMENT INCOME 7,725,515
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 22,593,970
(including realized gain
(loss) of $7,792,207 on
sales of investments in
affiliated issuers)
Foreign currency transactions (10,336) 22,583,634
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (316,656,889)
Assets and liabilities in (231) (316,657,120)
foreign currencies
NET GAIN (LOSS) (294,073,486)
NET INCREASE (DECREASE) IN $ (286,347,971)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 4,255,219
charges paid to FDC
Sales charges - Retained by $ 4,241,642
FDC
Deferred sales charges $ 13,199
withheld by FDC
Exchange fees withheld by FSC $ 159,788
EXPENSE REDUCTIONS Directed 119,026
brokerage arrangements
Custodian credits 12,536
Transfer agent credits 9,119
$ 140,681
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ 7,725,515 $ 8,926,749
income
Net realized gain (loss) 22,583,634 177,748,259
Change in net unrealized (316,657,120) 165,002,991
appreciation (depreciation)
NET INCREASE (DECREASE) IN (286,347,971) 351,677,999
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (2,223,405) (7,530,670)
From net investment income
From net realized gain (43,930,438) (153,895,241)
TOTAL DISTRIBUTIONS (46,153,843) (161,425,911)
Share transactions Net 655,146,906 1,194,996,073
proceeds from sales of shares
Reinvestment of distributions 45,331,306 158,982,280
Cost of shares redeemed (1,297,847,011) (1,054,168,696)
NET INCREASE (DECREASE) IN (597,368,799) 299,809,657
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 1,700,582 1,720,473
TOTAL INCREASE (DECREASE) (928,170,031) 491,782,218
IN NET ASSETS
NET ASSETS
Beginning of period 1,668,610,248 1,176,828,030
End of period (including $ 740,440,217 $ 1,668,610,248
undistributed net investment
income of $7,800,879 and
$4,200,147, respectively)
OTHER INFORMATION
Shares
Sold 13,208,817 24,323,664
Issued in reinvestment of 793,059 3,484,445
distributions
Redeemed (27,681,040) (22,121,347)
Net increase (decrease) (13,679,164) 5,686,762
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 53.36 $ 46.00 $ 33.30 $ 23.92 $ 25.03
period
Income from Investment
Operations
Net investment income c .28 .33 .53 .53 .20
Net realized and unrealized (10.16) 13.10 14.60 9.72 2.34
gain (loss)
Total from investment (9.88) 13.43 15.13 10.25 2.54
operations
Less Distributions
From net investment income (.07) (.29) (.32) (.19) (.12)
From net realized gain (1.38) (5.84) (2.16) (.73) (3.60)
Total distributions (1.45) (6.13) (2.48) (.92) (3.72)
Redemption fees added to paid .06 .06 .05 .05 .07
in capital
Net asset value, end of period $ 42.09 $ 53.36 $ 46.00 $ 33.30 $ 23.92
TOTAL RETURN a,b (19.12)% 32.39% 47.50% 43.24% 12.43%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 740,440 $ 1,668,610 $ 1,176,828 $ 617,035 $ 229,924
(000 omitted)
Ratio of expenses to average 1.19% 1.21% 1.38% 1.35% 1.47%
net assets
Ratio of expenses to average 1.18% d 1.19% d 1.34% d 1.32% d 1.45% d
net assets after expense
reductions
Ratio of net investment .57% .67% 1.41% 1.80% .80%
income to average net assets
Portfolio turnover rate 18% 54% 78% 81% 124%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME PER
SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES
OUTSTANDING DURING THE
PERIOD. D FMR OR THE FUND
HAS ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE
FUND'S EXPENSES. E FOR THE
YEAR ENDED FEBRUARY 29.
</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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT INSURANCE 9.84% 186.10% 476.22%
SELECT INSURANCE (LOAD ADJ.) 6.47% 177.44% 458.86%
S&P 500 19.74% 194.91% 459.21%
GS Financial Services 4.74% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT INSURANCE 9.84% 23.40% 19.14%
SELECT INSURANCE (LOAD ADJ.) 6.47% 22.64% 18.78%
S&P 500 19.74% 24.15% 18.78%
GS Financial Services 4.74% 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
1989/02/28 9700.00 10000.00
1989/03/31 9926.90 10233.00
1989/04/30 10251.04 10764.09
1989/05/31 10307.77 11200.04
1989/06/30 10534.57 11136.20
1989/07/31 11419.21 12141.80
1989/08/31 11768.20 12379.78
1989/09/30 11930.52 12329.02
1989/10/31 12320.09 12042.99
1989/11/30 12652.85 12288.66
1989/12/31 12342.05 12583.59
1990/01/31 11294.45 11739.23
1990/02/28 11613.64 11890.67
1990/03/31 11556.35 12205.77
1990/04/30 11155.31 11900.63
1990/05/31 12178.36 13060.94
1990/06/30 12211.10 12972.12
1990/07/31 12031.04 12930.61
1990/08/31 10778.83 11761.68
1990/09/30 9845.81 11188.89
1990/10/31 9452.96 11140.78
1990/11/30 10705.17 11860.47
1990/12/31 11130.76 12191.38
1991/01/31 11728.22 12722.92
1991/02/28 12914.95 13632.61
1991/03/31 13766.13 13962.52
1991/04/30 13692.47 13996.03
1991/05/31 14036.21 14600.66
1991/06/30 13163.67 13931.95
1991/07/31 13652.45 14581.18
1991/08/31 13569.60 14926.75
1991/09/30 13702.15 14677.48
1991/10/31 14116.36 14874.16
1991/11/30 13992.10 14274.73
1991/12/31 15213.56 15907.76
1992/01/31 15196.93 15611.87
1992/02/29 15604.29 15814.83
1992/03/31 15379.83 15506.44
1992/04/30 14989.10 15962.33
1992/05/31 15188.62 16040.54
1992/06/30 15506.38 15801.54
1992/07/31 16384.95 16447.82
1992/08/31 15904.90 16110.64
1992/09/30 16747.25 16300.75
1992/10/31 17462.79 16357.80
1992/11/30 18060.58 16915.60
1992/12/31 18636.79 17123.66
1993/01/31 19416.00 17267.50
1993/02/28 19782.69 17502.34
1993/03/31 20827.74 17871.64
1993/04/30 20332.14 17439.14
1993/05/31 19808.45 17906.51
1993/06/30 20019.76 17958.44
1993/07/31 20718.02 17886.61
1993/08/31 21774.59 18564.51
1993/09/30 21848.09 18421.56
1993/10/31 21214.15 18802.89
1993/11/30 19918.70 18624.26
1993/12/31 20160.62 18849.62
1994/01/31 20432.38 19490.50
1994/02/28 19536.58 18962.31
1994/03/31 18620.64 18135.55
1994/04/30 18821.95 18367.69
1994/05/31 19687.56 18668.92
1994/06/30 19576.84 18211.53
1994/07/31 19939.19 18808.87
1994/08/31 20482.71 19580.03
1994/09/30 20341.80 19100.32
1994/10/31 20090.16 19530.08
1994/11/30 19073.58 18818.79
1994/12/31 20090.16 19097.87
1995/01/31 20814.86 19593.08
1995/02/28 21448.97 20356.63
1995/03/31 21791.19 20957.35
1995/04/30 21992.51 21574.54
1995/05/31 22476.53 22436.88
1995/06/30 23182.38 22958.09
1995/07/31 23878.16 23719.38
1995/08/31 24573.93 23778.91
1995/09/30 25794.06 24782.38
1995/10/31 25017.61 24693.91
1995/11/30 26510.00 25777.97
1995/12/31 27083.48 26274.46
1996/01/31 27872.12 27168.84
1996/02/29 27778.72 27420.69
1996/03/31 27467.42 27684.75
1996/04/30 27126.73 28092.83
1996/05/31 27674.96 28817.34
1996/06/30 28170.47 28927.14
1996/07/31 27548.44 27649.13
1996/08/31 28708.15 28232.26
1996/09/30 30110.35 29821.17
1996/10/31 31691.78 30643.63
1996/11/30 33642.20 32959.99
1996/12/31 33504.01 32307.05
1997/01/31 34880.44 34325.59
1997/02/28 35634.20 34594.71
1997/03/31 33711.57 33173.21
1997/04/30 35701.13 35153.65
1997/05/31 38324.03 37293.80
1997/06/30 41130.18 38964.57
1997/07/31 44600.65 42064.98
1997/08/31 42298.46 39708.50
1997/09/30 45001.53 41883.33
1997/10/31 43810.34 40484.43
1997/11/30 44680.82 42358.45
1997/12/31 47733.48 43085.75
1998/01/31 47080.76 43562.28
1998/02/28 50888.31 46703.99
1998/03/31 53716.78 49095.70
1998/04/30 54041.37 49589.60
1998/05/31 53418.72 48737.16
1998/06/30 55779.62 50716.86
1998/07/31 54715.92 50176.72
1998/08/31 46063.59 42922.17
1998/09/30 49034.18 45671.77
1998/10/31 51096.73 49386.71
1998/11/30 54391.62 52380.04
1998/12/31 57431.95 55398.18
1999/01/31 56052.52 57714.93
1999/02/26 55886.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990312 110614 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Insurance Portfolio on February 28, 1989,
and the current 3.00% sales charge was paid. As the chart shows, by
February 28, 1999, the value of the investment would have grown to
$55,886 - a 458.86% 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 $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
American International Group, 6.5
Inc.
Marsh & McLennan Companies, 6.0
Inc.
AFLAC, Inc. 6.0
Citigroup, Inc. 4.9
Providian Financial Corp. 4.7
Allmerica Financial Corp. 4.7
Mutual Risk Management Ltd. 4.4
Ambac Financial Group, Inc. 4.3
Wellpoint Health Networks, Inc. 3.9
Enhance Financial Services 3.8
Group, Inc.
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Insurance 79.8%
Credit & Other Finance 9.6%
Medical Facilities Management 3.9%
Services 1.8%
All Others 4.9%*
* INCLUDES SHORT-TERM INVESTMENTS
Row: 1, Col: 1, Value: 4.9
Row: 1, Col: 2, Value: 1.8
Row: 1, Col: 3, Value: 3.9
Row: 1, Col: 4, Value: 9.6
Row: 1, Col: 5, Value: 79.8
INSURANCE PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
(photograph of Thomas Allen)
(photograph of Timothy Cohen)
NOTE TO SHAREHOLDERS: The following is an interview with Thomas Allen
(left), who managed Fidelity Select Insurance Portfolio for most of
the period covered by this report, and with Timothy Cohen (right), who
became manager of the fund on February 1, 1999.
Q. HOW DID THE FUND PERFORM, TOM?
T.A. It did pretty well relative to the financial services industry as
a whole, particularly in the second half of the period. But the entire
sector has been struggling just to keep pace with the broader market.
For the 12 months that ended February 28, 1999, the fund returned
9.84%. This compares favorably with the total return of 4.74% for the
Goldman Sachs Financial Services Index - an index of 271 stocks
designed to measure the relative performance of companies in the
financial services sector - but it is well below the 19.74% return of
the Standard and Poor's 500 Index over the same 12-month period.
Q. WHAT MAJOR FACTORS AFFECTED FUND PERFORMANCE?
T.A. Worries about financial collapse in emerging markets, combined
with fears of a deep worldwide recession, had a dampening effect on
the financial services industry as a whole, and insurance stocks were
by no means immune from these concerns. In addition, competitive
pricing pressures continued to hurt the insurance sector. However, the
fund rebounded from a disappointing first half, benefiting mainly from
continued consolidation activity in the industry and some quality-bias
shifts in the fund's holdings.
Q. YOU MADE CHANGES TO YOUR STRATEGY THEN?
T.A. There was no fundamental change in strategy. I continued to focus
on quality companies with good prospects for long-term revenue growth
and solid records of managing losses. But during the early fall of
1998, as I became more concerned about pricing pressures in the
property-casualty business, I began trimming the number of holdings in
the fund, narrowing the portfolio in favor of fewer, higher-quality
names.
Q. WAS IT THIS SUBTLE SHIFT THAT HELPED YOU BEAT THE FINANCIAL
SERVICES SECTOR AS A WHOLE?
T.A. To some degree, yes, I believe it was. As I mentioned earlier, it
was not a great year for financial services stocks. The quality bias I
emphasized during the year resulted in the fund owning a group of
stocks that either suffered less than the industry as a whole, or
benefited from better revenue growth and fewer losses.
Q. WHICH OF THE FUND'S HOLDINGS DID WELL?
T.A. Providian Financial, a credit card company spin-off of Providian
Insurance Company, did especially well, based on solid revenue growth,
excellent underwriting and loss management, and outstanding earnings
growth. The fund also benefited from the consummation of two large
acquisitions: the take-over of SunAmerica by American International
Group (AIG) in the life insurance sector and, in the insurance
brokerage sector, the acquisition of Sedgwick Group by Marsh &
McLennan Companies.
Q. WHICH STOCKS HURT PERFORMANCE?
T.A. MBIA, a municipal bond insurer, suffered a material loss during
the summer, which had a negative impact on fund performance.
Similarly, Capital Re, a bond re-insurer, was affected by MBIA's
difficulties and suffered its own unexpected loss during the period.
The investment in PAULA Financial also was disappointing. Not long
after this workers' compensation insurer launched an initial public
offering, the company announced it would take a charge against
earnings because of insufficient loss reserves. This event hurt the
stock price and the performance of the fund. I sold the fund's
positions in both PAULA Financial and Capital Re.
Q. TURNING TO YOU, TIM, HAVE YOU MADE ANY SIGNIFICANT CHANGES IN
STRATEGY SINCE TAKING OVER THE FUND IN EARLY FEBRUARY?
T.C. Tom and I have worked very closely to transition the fund. We've
tended to look at things in the same way, so I haven't really made
any major changes in how I intend to manage the fund going forward.
Q. WHAT IS YOUR OUTLOOK?
T.C. Like Tom, I'm somewhat cautious in my outlook, especially with
the property-casualty sector, which continues to suffer from excess
capital and a very tough pricing environment. I tend to look for
companies with a strong franchise or a sustainable competitive
advantage, which can be tough to find in the industry these days.
Still, the fund now holds some specialty insurance brokers that
dominate niche segments of the industry, as well as some life and bond
insurance companies that have built and sustained valuable brand names
in the marketplace. I believe these holdings should help the fund
achieve good relative performance in the near term.
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 OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark)FUND FACTS
START DATE: December 16, 1985
FUND NUMBER: 045
TRADING SYMBOL: FSPCX
SIZE: as of February 28, 1999, more than
$82 million
MANAGER: Timothy Cohen, since February 1999;
equity analyst, business and consumer services,
1996-1999; joined Fidelity in 1996
INSURANCE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 95.1%
SHARES VALUE (NOTE 1)
CREDIT & OTHER FINANCE - 9.6%
Citigroup, Inc. 69,799 $ 4,100,691
Providian Financial Corp. 38,250 3,906,281
8,006,972
INSURANCE - 79.8%
ACE Ltd. 74,100 2,019,225
AFLAC, Inc. 112,400 4,959,650
Allmerica Financial Corp. 72,673 3,878,921
Ambac Financial Group, Inc. 64,600 3,617,600
American Bankers Insurance 63,800 3,062,400
Group, Inc.
American International Group, 47,150 5,372,151
Inc.
Blanch E.W. Holdings, Inc. 48,200 2,675,100
CIGNA Corp. 10,900 855,650
CMAC Investments Corp. 57,400 2,371,338
Enhance Financial Services 134,200 3,178,863
Group, Inc.
Hartford Financial Services 41,100 2,221,969
Group, Inc.
Hartford Life, Inc. Class A 26,900 1,560,200
HIH Insurance Ltd. 23,616 31,922
Marsh & McLennan Companies, 70,700 5,006,444
Inc.
MBIA, Inc. 33,100 2,037,719
Mercury General Corp. 17,000 592,875
MGIC Investment Corp. 3,400 115,813
Mutual Risk Management Ltd. 99,800 3,648,938
Nationwide Financial 27,500 1,249,531
Services, Inc. Class A
Philadelphia Consolidated 52,300 1,124,450
Holding Corp. (a)
PMI Group, Inc. 19,200 828,000
Poe & Brown, Inc. 22,900 742,819
Progressive Corp. 12,200 1,567,700
Protective Life Corp. 67,000 2,311,500
Provident Companies, Inc. 11,000 360,250
Reinsurance Group of America, 36,700 2,364,856
Inc.
Reliastar Financial Corp. 23,738 1,077,112
RenaissanceRe Holdings Ltd. 34,800 1,183,200
Terra Nova (Bermuda) Holdings 67,000 1,599,625
Ltd. Class A
Torchmark Corp. 41,700 1,386,525
UICI (a) 27,800 639,400
UNUM Corp. 60,900 2,725,275
66,367,021
MEDICAL FACILITIES MANAGEMENT
- - 3.9%
Wellpoint Health Networks, 41,000 3,233,875
Inc. (a)
SERVICES - 1.8%
Service Corp. International 100,000 1,537,500
TOTAL COMMON STOCKS 79,145,368
(Cost $63,839,318)
CASH EQUIVALENTS - 4.9%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund (b) 4,076,031 $ 4,076,031
(Cost $4,076,031)
TOTAL INVESTMENT IN $ 83,221,399
SECURITIES - 100%
(Cost $67,915,349)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. 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 $74,970,161 and $123,193,029, respectively.
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 $17,412 for the
period.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $68,110,427. Net unrealized appreciation
aggregated $15,110,972, of which $17,419,133 related to appreciated
investment securities and $2,308,161 related to depreciated investment
securities.
The fund hereby designates approximately $7,184,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 12% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentage for use in preparing 1999 income tax returns.
INSURANCE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 83,221,399
value (cost $67,915,349) -
See accompanying schedule
Receivable for fund shares 178,524
sold
Dividends receivable 63,039
Interest receivable 14,116
Redemption fees receivable 105
Other receivables 143
TOTAL ASSETS 83,477,326
LIABILITIES
Payable for fund shares $ 495,321
redeemed
Accrued management fee 41,014
Other payables and accrued 61,511
expenses
TOTAL LIABILITIES 597,846
NET ASSETS $ 82,879,480
Net Assets consist of:
Paid in capital $ 56,985,255
Accumulated undistributed net 10,588,175
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 15,306,050
(depreciation) on investments
NET ASSETS, for 1,966,938 $ 82,879,480
shares outstanding
NET ASSET VALUE and $42.14
redemption price per share
($82,879,480 (divided by)
1,966,938 shares)
Maximum offering price per $43.44
share (100/97.00 of $42.14)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 1,096,543
Dividends
Interest 235,419
TOTAL INCOME 1,331,962
EXPENSES
Management fee $ 645,431
Transfer agent fees 650,121
Accounting fees and expenses 106,572
Non-interested trustees' 410
compensation
Custodian fees and expenses 11,411
Registration fees 25,206
Audit 17,939
Legal 640
Reports to shareholders 7,812
Total expenses before 1,465,542
reductions
Expense reductions (27,236) 1,438,306
NET INVESTMENT INCOME (LOSS) (106,344)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 13,176,110
Foreign currency transactions 22,622 13,198,732
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (4,563,631)
Assets and liabilities in (53) (4,563,684)
foreign currencies
NET GAIN (LOSS) 8,635,048
NET INCREASE (DECREASE) IN $ 8,528,704
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 351,928
charges paid to FDC
Sales charges - Retained by $ 351,772
FDC
Deferred sales charges $ 1,491
withheld by FDC
Exchange fees withheld by FSC $ 11,648
Expense reductions Directed $ 26,812
brokerage arrangements
Custodian credits 424
$ 27,236
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (106,344) $ 25,471
income (loss)
Net realized gain (loss) 13,198,732 23,084,468
Change in net unrealized (4,563,684) 14,487,273
appreciation (depreciation)
NET INCREASE (DECREASE) IN 8,528,704 37,597,212
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (11,641,173) (6,676,096)
from net realized gains
Share transactions Net 64,911,861 244,332,955
proceeds from sales of shares
Reinvestment of distributions 11,462,296 6,593,993
Cost of shares redeemed (115,658,850) (199,288,742)
NET INCREASE (DECREASE) IN (39,284,693) 51,638,206
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 126,042 224,405
TOTAL INCREASE (DECREASE) (42,271,120) 82,783,727
IN NET ASSETS
NET ASSETS
Beginning of period 125,150,600 42,366,873
End of period (including $ 82,879,480 $ 125,150,600
undistributed net investment
income of $0 and $27,193,
respectively)
OTHER INFORMATION
Shares
Sold 1,540,455 6,761,043
Issued in reinvestment of 274,802 185,836
distributions
Redeemed (2,821,222) (5,272,969)
Net increase (decrease) (1,005,965) 1,673,910
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 42.10 $ 32.62 $ 26.77 $ 21.31 $ 19.41
period
Income from Investment
Operations
Net investment income (loss) C (.04) .01 .01 .06 .05
Net realized and unrealized 4.01 12.93 7.21 6.15 1.78
gain (loss)
Total from investment 3.97 12.94 7.22 6.21 1.83
operations
Less Distributions
From net investment income - - (.03) (.07) -
From net realized gain (3.98) (3.54) (1.45) (.72) -
Total distributions (3.98) (3.54) (1.48) (.79) -
Redemption fees added to paid .05 .08 .11 .04 .07
in capital
Net asset value, end of period $ 42.14 $ 42.10 $ 32.62 $ 26.77 $ 21.31
TOTAL RETURN A, B 9.84% 42.81% 28.28% 29.51% 9.79%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 82,879 $ 125,151 $ 42,367 $ 38,994 $ 21,838
(000 omitted)
Ratio of expenses to average 1.33% 1.45% 1.82% 1.77% 2.36%
net assets
Ratio of expenses to average 1.31% D 1.43% D 1.77% D 1.74% D 2.34% D
net assets after expense
reductions
Ratio of net investment (.10)% .02% .05% .26% .25%
income (loss) to average net
assets
Portfolio turnover rate 72% 157% 142% 164% 265%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. E FOR
THE YEAR ENDED FEBRUARY 29.
</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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT REGIONAL BANKS 3.10% 206.76% 704.00%
SELECT REGIONAL BANKS (LOAD -0.06% 197.48% 679.81%
ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Financial Services 4.74% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT REGIONAL BANKS 3.10% 25.13% 23.18%
SELECT REGIONAL BANKS (LOAD -0.06% 24.36% 22.80%
ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Financial Services 4.74% 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
1989/02/28 9700.00 10000.00
1989/03/31 10498.82 10233.00
1989/04/30 10774.61 10764.09
1989/05/31 11601.96 11200.04
1989/06/30 11408.98 11136.20
1989/07/31 12424.39 12141.80
1989/08/31 12730.93 12379.78
1989/09/30 12836.30 12329.02
1989/10/31 11648.47 12042.99
1989/11/30 11629.31 12288.66
1989/12/31 11381.39 12583.59
1990/01/31 10355.95 11739.23
1990/02/28 10782.37 11890.67
1990/03/31 10518.40 12205.77
1990/04/30 9919.38 11900.63
1990/05/31 10609.77 13060.94
1990/06/30 10193.50 12972.12
1990/07/31 9574.18 12930.61
1990/08/31 8680.72 11761.68
1990/09/30 7624.82 11188.89
1990/10/31 7401.46 11140.78
1990/11/30 8386.29 11860.47
1990/12/31 9028.94 12191.38
1991/01/31 9628.12 12722.92
1991/02/28 10444.23 13632.61
1991/03/31 11033.08 13962.52
1991/04/30 11776.88 13996.03
1991/05/31 12541.35 14600.66
1991/06/30 11797.54 13931.95
1991/07/31 12778.95 14581.18
1991/08/31 13698.37 14926.75
1991/09/30 13429.78 14677.48
1991/10/31 13987.63 14874.16
1991/11/30 13347.13 14274.73
1991/12/31 14969.35 15907.76
1992/01/31 15905.61 15611.87
1992/02/29 17190.25 15814.83
1992/03/31 16950.74 15506.44
1992/04/30 17941.44 15962.33
1992/05/31 18703.52 16040.54
1992/06/30 18890.14 15801.54
1992/07/31 18912.06 16447.82
1992/08/31 17904.00 16110.64
1992/09/30 18736.74 16300.75
1992/10/31 19536.61 16357.80
1992/11/30 21136.36 16915.60
1992/12/31 22232.84 17123.66
1993/01/31 23159.21 17267.50
1993/02/28 23879.72 17502.34
1993/03/31 24897.58 17871.64
1993/04/30 23615.84 17439.14
1993/05/31 23384.99 17906.51
1993/06/30 24689.29 17958.44
1993/07/31 24758.54 17886.61
1993/08/31 25104.81 18564.51
1993/09/30 25970.50 18421.56
1993/10/31 24573.86 18802.89
1993/11/30 23800.52 18624.26
1993/12/31 24716.81 18849.62
1994/01/31 26158.27 19490.50
1994/02/28 25423.40 18962.31
1994/03/31 24999.45 18135.55
1994/04/30 26324.18 18367.69
1994/05/31 27639.67 18668.92
1994/06/30 26953.33 18211.53
1994/07/31 27668.27 18808.87
1994/08/31 28383.21 19580.03
1994/09/30 26695.95 19100.32
1994/10/31 26581.56 19530.08
1994/11/30 24865.70 18818.79
1994/12/31 24770.74 19097.87
1995/01/31 26018.40 19593.08
1995/02/28 27403.01 20356.63
1995/03/31 27631.24 20957.35
1995/04/30 28315.94 21574.54
1995/05/31 30172.22 22436.88
1995/06/30 30552.60 22958.09
1995/07/31 31739.41 23719.38
1995/08/31 32926.21 23778.91
1995/09/30 34417.33 24782.38
1995/10/31 34249.96 24693.91
1995/11/30 36212.75 25777.97
1995/12/31 36355.45 26274.46
1996/01/31 37544.05 27168.84
1996/02/29 38621.72 27420.69
1996/03/31 39762.78 27684.75
1996/04/30 39423.22 28092.83
1996/05/31 40089.76 28817.34
1996/06/30 39780.87 28927.14
1996/07/31 39845.90 27649.13
1996/08/31 41861.77 28232.26
1996/09/30 43926.41 29821.17
1996/10/31 46738.87 30643.63
1996/11/30 50689.32 32959.99
1996/12/31 49402.16 32307.05
1997/01/31 53045.34 34325.59
1997/02/28 55356.06 34594.71
1997/03/31 51628.55 33173.21
1997/04/30 54428.47 35153.65
1997/05/31 56345.09 37293.80
1997/06/30 59550.75 38964.57
1997/07/31 65962.08 42064.98
1997/08/31 61959.24 39708.50
1997/09/30 66657.49 41883.33
1997/10/31 65673.74 40484.43
1997/11/30 68692.84 42358.45
1997/12/31 71908.51 43085.75
1998/01/31 69648.78 43562.28
1998/02/28 75639.70 46703.99
1998/03/31 79826.33 49095.70
1998/04/30 81170.59 49589.60
1998/05/31 78950.88 48737.16
1998/06/30 81010.77 50716.86
1998/07/31 81135.08 50176.72
1998/08/31 62294.12 42922.17
1998/09/30 67692.48 45671.77
1998/10/31 73854.41 49386.71
1998/11/30 76251.70 52380.04
1998/12/31 80427.01 55398.18
1999/01/31 78363.34 57714.93
1999/02/26 77981.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990307 170117 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Regional Banks Portfolio on February 28,
1989, and the current 3.00% sales charge was paid. As the chart shows,
by February 28, 1999, the value of the investment would have grown to
$77,981 - a 679.81% 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 $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
28, 1999
% OF FUND'S INVESTMENTS
Bank One Corp. 10.6
Bank of New York Co., Inc. 9.3
Fleet Financial Group, Inc. 8.2
Wells Fargo & Co. 7.9
U.S. Bancorp 7.5
Comerica, Inc. 5.9
BankAmerica Corp. 3.7
MBNA Corp. 3.3
Zions Bancorp 3.0
BB&T Corp. 2.9
TOP REGIONS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Midwest 28.4%
Northeast 14.4%
Southeast 14.1%
West 12.8%
Multi-regional 6.2%
All Others 24.1%*
* INCLUDES SHORT-TERM INVESTMENTS
Row: 1, Col: 1, Value: 24.1
Row: 1, Col: 2, Value: 6.2
Row: 1, Col: 3, Value: 12.8
Row: 1, Col: 4, Value: 14.1
Row: 1, Col: 5, Value: 14.4
Row: 1, Col: 6, Value: 28.4
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. Bank stocks were hard-pressed to realize positive returns over the
past year. Still, the fund managed to gain 3.10% during the 12-month
period ending February 28, 1999. For the same period, the Standard &
Poor's 500 Index returned 19.74%, while the Goldman Sachs Financial
Services Index - an index of 271 stocks designed to measure the
performance of companies in the financial services sector - returned
4.74%.
Q. CAN YOU RECAP FOR US THE MARKET CONDITIONS THAT INFLUENCED THE
FUND'S PERFORMANCE?
A. Sure. In the first half of 1998, market confidence was strong as
the U.S. economy continued its steady growth. In the third quarter,
however, Russia's loan defaults and currency devaluation caught
investors off guard, and they feared a chain reaction in emerging
markets. On the heels of Russia's bad news came the near-collapse of
Long-Term Capital Management, a highly leveraged hedge fund. The
subsequent liquidity crunch and aversion to risk resulted in depressed
valuations for bank stocks in light of this uncertain environment. To
address the lack of confidence and restore liquidity to the markets,
the Federal Reserve Board implemented three separate 0.25%
interest-rate cuts. Stocks rallied furiously in response during the
fourth quarter. To illustrate, the fund returned 25.19% for the
six-month period ending February 28, 1999.
Q. WHAT STRATEGY DID YOU EMPLOY TO TEMPER THE IMPACT OF THE MARKET'S
UNCERTAINTY ON THE FUND?
A. Throughout the period, the fund maintained a large-cap bias for
several reasons. First, at the beginning of the period, I felt many of
the smaller issues were priced at a premium in anticipation of
takeover bids. I anticipated a slowdown in consolidation, and
large-cap valuations were quite compelling comparatively. I also felt
larger issues would be better equipped to weather the market's
turbulence, and, in hindsight, this decision helped the performance of
the fund.
Q. BUT THERE WERE THREE SIGNIFICANT MERGERS DURING THE PERIOD,
CORRECT?
A. That's right, but those were cases where large banks merged with
other large banks, and they were announced very early in the period.
Banc One merged with First Chicago to form Bank One. Wells Fargo and
Norwest merged, creating Wells Fargo & Co., the nation's
seventh-largest bank. And BankAmerica joined forces with NationsBank,
resulting in BankAmerica Corp., one of the country's largest banks.
Q. WERE THESE MERGERS A POSITIVE FOR THE FUND?
A. The jury's still out. Typically, bank mergers result in significant
cost savings as they integrate their computer systems and reduce
headcount. However, banks are reluctant to do so right now given their
focus on testing for Y2K compliance, so the cost savings for some of
these large bank mergers have been delayed. I believe these cost
savings will come through and these mergers will prove to be winning
combinations. One immediate impact of the banks' consolidation was
that six positions in the fund became three very large positions.
Combined, those three holdings represented 22% of the fund at the end
of the period.
Q. WHAT SPECIFIC HOLDINGS HELPED THE FUND DURING THE PERIOD? WHICH
DIDN'T PERFORM AS YOU'D HOPED?
A. Bank of New York was a big contributor to performance. This bank
outperformed due to its strong securities-processing business, which
has higher returns and a higher growth rate than basic banking. Zions
Bancorp also performed very well, in large part due to a savvy
acquisition in California. Fleet Financial had a strong year thanks to
its high quality of earnings and its domestic focus. On the other
hand, U.S. Bancorp was a big detractor due to a significant slowdown
in revenue growth in the second half of 1998. Washington Mutual, a
thrift that experienced increased mortgage prepayments as interest
rates declined to very low levels, also hurt performance.
Q. WHAT IS YOUR OUTLOOK FOR THE FUND, CHRIS?
A. As is always the case with this sector, the key risk is
deterioration in credit quality. Banks are currently very well
reserved - meaning their reserve-to-loan ratios are stronger than they
were in the early 1990s - and credit quality remains stable. I will
continue to evaluate the fund's large-cap bias in light of relative
valuations and the potential for merger activity to resume after the
Year 2000 issue is resolved. Going forward, I think there is a good
possibility that bank stocks can perform well, given the current
favorable interest-rate and economic environment.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
NOTE TO SHAREHOLDERS: Effective April 30, 1999, Yolanda McGettigan
will become manager of Select Regional Banks Portfolio.
(checkmark)FUND FACTS
START DATE: June 30, 1986
FUND NUMBER: 507
TRADING SYMBOL: FSRBX
SIZE: as of February 28, 1999, more than
$925 million
MANAGER: Christine Schaulat, since 1998;
equity analyst, regional banks securities;
since 1997; joined Fidelity in 1997
REGIONAL BANKS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 96.9%
SHARES VALUE (NOTE 1)
BANKS - 76.7%
INTERNATIONAL - 0.8%
Bank of Nova Scotia 366,000 $ 7,561,281
MIDWEST - 28.4%
Bank One Corp. 1,802,426 96,880,396
Comerica, Inc. 803,850 53,255,063
Marshall & Ilsley Corp. 373,000 20,888,000
National City Corp. 223,909 15,645,641
Wells Fargo & Co. 1,956,760 71,910,930
258,580,030
MULTI-REGIONAL - 6.2%
BankAmerica Corp. 511,306 33,394,673
M&T Bank Corp. 47,000 22,360,250
55,754,923
NORTHEAST - 14.4%
Bank of New York Co., Inc. 2,429,696 84,887,504
Mellon Bank Corp. 251,000 16,973,875
North Fork Bancorp, Inc. 292,000 6,424,000
State Street Corp. 297,800 22,837,538
131,122,917
SOUTHEAST - 14.1%
AmSouth Bancorp. 345,000 16,215,000
BB&T Corp. 691,300 26,182,988
CCB Financial Corp. 102,300 5,313,206
Centura Banks, Inc. 79,500 5,088,000
Compass Bancshares, Inc. 150,000 5,493,750
First Tennessee National 379,400 14,440,913
Corp.
SouthTrust Corp. 318,400 12,755,900
SunTrust Banks, Inc. 341,147 23,176,674
Synovus Finanical Corp. 197,175 4,695,230
Wachovia Corp. 167,300 14,230,956
127,592,617
WEST - 12.8%
First Security Corp. 230,375 4,276,336
U.S. Bancorp 2,097,696 67,781,802
Westamerica Bancorp. 495,000 16,582,500
Zions Bancorp 427,300 27,347,200
115,987,838
TOTAL BANKS 696,599,606
CREDIT & OTHER FINANCE - 18.9%
FINANCIAL SERVICES - 3.6%
American Express Co. 183,100 19,866,350
Citigroup, Inc. 218,300 12,825,125
32,691,475
SHARES VALUE (NOTE 1)
OFFICES OF BANK HOLDING
COMPANIES - 8.2%
Fleet Financial Group, Inc. 1,730,934 $ 74,321,979
PERSONAL CREDIT INSTITUTIONS
- - 7.1%
Associates First Capital 327,400 13,300,625
Corp. Class A
Household International, Inc. 529,800 21,523,125
MBNA Corp. 1,239,000 30,045,750
64,869,500
TOTAL CREDIT & OTHER FINANCE 171,882,954
SAVINGS & LOANS - 1.3%
SAVINGS INSTITUTIONS,
FEDERALLY CHARTERED - 1.3%
Washington Mutual, Inc. 300,900 12,036,000
TOTAL COMMON STOCKS 880,518,560
(Cost $587,387,203)
CASH EQUIVALENTS - 3.1%
Taxable Central Cash Fund (a) 28,415,353 28,415,353
(Cost $28,415,353)
TOTAL INVESTMENT IN $ 908,933,913
SECURITIES - 100%
(Cost $615,802,556)
LEGEND
(a) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. 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 $251,064,881 and $629,554,774, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $16,496 for the
period.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $616,143,699. Net unrealized appreciation
aggregated $292,790,214, of which $298,995,475 related to appreciated
investment securities and $6,205,261 related to depreciated investment
securities.
The fund hereby designates approximately $104,480,000 as a capital
gain dividend for the purpose of the dividend paid deduction.
A total of 100% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentage for use in preparing 1999 income tax returns.
REGIONAL BANKS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 908,933,913
value (cost $615,802,556) -
See accompanying schedule
Receivable for investments 21,125,000
sold
Receivable for fund shares 504,425
sold
Dividends receivable 1,491,484
Interest receivable 83,183
Redemption fees receivable 2,551
Other receivables 2,230
TOTAL ASSETS 932,142,786
LIABILITIES
Payable for fund shares $ 5,362,194
redeemed
Accrued management fee 457,021
Other payables and accrued 495,033
expenses
TOTAL LIABILITIES 6,314,248
NET ASSETS $ 925,828,538
Net Assets consist of:
Paid in capital $ 549,096,464
Undistributed net investment 5,985,670
income
Accumulated undistributed net 77,615,047
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 293,131,357
(depreciation) on investments
NET ASSETS, for 22,271,826 $ 925,828,538
shares outstanding
NET ASSET VALUE and $41.57
redemption price per share
($925,828,538 (divided by)
22,271,826 shares)
Maximum offering price per $42.86
share (100/97.00 of $41.57)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 21,686,854
Dividends
Interest (including income on 4,138,978
securities loaned of $8,290)
TOTAL INCOME 25,825,832
EXPENSES
Management fee $ 7,314,180
Transfer agent fees 6,235,230
Accounting and security 777,255
lending fees
Non-interested trustees' 4,992
compensation
Custodian fees and expenses 27,299
Registration fees 57,637
Audit 47,084
Legal 7,133
Reports to shareholders 144,554
Total expenses before 14,615,364
reductions
Expense reductions (140,726) 14,474,638
NET INVESTMENT INCOME 11,351,194
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 135,351,703
Foreign currency transactions 140,683 135,492,386
Change in net unrealized (123,702,888)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 11,789,498
NET INCREASE (DECREASE) IN $ 23,140,692
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 3,590,683
charges paid to FDC
Sales charges - Retained by $ 3,579,211
FDC
Deferred sales charges $ 8,288
withheld by FDC
Exchange fees withheld by FSC $ 110,257
Expense reductions Directed $ 133,907
brokerage arrangements
Custodian credits 365
Transfer agent credits 6,454
$ 140,726
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ 11,351,194 $ 11,124,320
income
Net realized gain (loss) 135,492,386 58,722,862
Change in net unrealized (123,702,888) 242,816,882
appreciation (depreciation)
NET INCREASE (DECREASE) IN 23,140,692 312,664,064
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (7,938,530) (7,980,022)
From net investment income
From net realized gain (74,512,814) (35,012,104)
TOTAL DISTRIBUTIONS (82,451,344) (42,992,126)
Share transactions Net 506,783,832 1,093,335,837
proceeds from sales of shares
Reinvestment of distributions 79,475,689 42,239,518
Cost of shares redeemed (940,968,587) (905,908,084)
NET INCREASE (DECREASE) IN (354,709,066) 229,667,271
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 952,621 1,604,750
TOTAL INCREASE (DECREASE) (413,067,097) 500,943,959
IN NET ASSETS
NET ASSETS
Beginning of period 1,338,895,635 837,951,676
End of period (including $ 925,828,538 $ 1,338,895,635
undistributed net investment
income of $5,985,670 and
$3,805,982, respectively)
OTHER INFORMATION
Shares
Sold 11,696,257 29,339,423
Issued in reinvestment of 1,891,390 1,067,874
distributions
Redeemed (22,324,276) (24,927,202)
Net increase (decrease) (8,736,629) 5,480,095
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 43.18 $ 32.82 $ 24.37 $ 18.01 $ 17.99
period
Income from Investment
Operations
Net investment income C .39 .40 .37 .52 .37
Net realized and unrealized .91 11.41 9.70 6.78 .87
gain (loss)
Total from investment 1.30 11.81 10.07 7.30 1.24
operations
Less Distributions
From net investment income (.28) (.28) (.27) (.25) (.29)
From net realized gain (2.66) (1.23) (1.40) (.72) (.98)
Total distributions (2.94) (1.51) (1.67) (.97) (1.27)
Redemption fees added to paid .03 .06 .05 .03 .05
in capital
Net asset value, end of period $ 41.57 $ 43.18 $ 32.82 $ 24.37 $ 18.01
TOTAL RETURN A, B 3.10% 36.64% 43.33% 40.94% 7.79%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 925,829 $ 1,338,896 $ 837,952 $ 315,178 $ 164,603
(000 omitted)
Ratio of expenses to average 1.17% 1.25% 1.46% 1.41% 1.58%
net assets
Ratio of expenses to average 1.16% D 1.24% D 1.45% D 1.40% D 1.56% D
net assets after expense
reductions
Ratio of net investment .91% 1.07% 1.36% 2.42% 1.99%
income to average net assets
Portfolio turnover rate 22% 25% 43% 103% 106%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME PER
SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES
OUTSTANDING DURING THE
PERIOD. D FMR OR THE FUND
HAS ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE
FUND'S EXPENSES. E FOR THE
YEAR ENDED FEBRUARY 29.
</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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT BIOTECHNOLOGY 27.13% 107.57% 604.66%
SELECT BIOTECHNOLOGY (LOAD 23.25% 101.27% 583.45%
ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Health Care 23.88% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT BIOTECHNOLOGY 27.13% 15.73% 21.56%
SELECT BIOTECHNOLOGY (LOAD 23.25% 15.01% 21.19%
ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Health Care 23.88% 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
1989/02/28 9700.00 10000.00
1989/03/31 10414.83 10233.00
1989/04/30 10767.72 10764.09
1989/05/31 11256.34 11200.04
1989/06/30 10966.79 11136.20
1989/07/31 11980.22 12141.80
1989/08/31 12432.65 12379.78
1989/09/30 12957.46 12329.02
1989/10/31 13002.71 12042.99
1989/11/30 13409.89 12288.66
1989/12/31 13153.98 12583.59
1990/01/31 12169.73 11739.23
1990/02/28 13319.55 11890.67
1990/03/31 13880.67 12205.77
1990/04/30 14055.44 11900.63
1990/05/31 16033.14 13060.94
1990/06/30 17152.78 12972.12
1990/07/31 17199.29 12930.61
1990/08/31 16669.08 11761.68
1990/09/30 16297.00 11188.89
1990/10/31 16436.53 11140.78
1990/11/30 18427.15 11860.47
1990/12/31 18987.47 12191.38
1991/01/31 21168.07 12722.92
1991/02/28 24167.60 13632.61
1991/03/31 26662.44 13962.52
1991/04/30 25500.72 13996.03
1991/05/31 27119.51 14600.66
1991/06/30 25679.63 13931.95
1991/07/31 27991.40 14581.18
1991/08/31 29952.90 14926.75
1991/09/30 31504.09 14677.48
1991/10/31 34606.46 14874.16
1991/11/30 32294.69 14274.73
1991/12/31 37793.63 15907.76
1992/01/31 37036.10 15611.87
1992/02/29 34192.76 15814.83
1992/03/31 31598.46 15506.44
1992/04/30 28651.35 15962.33
1992/05/31 30706.03 16040.54
1992/06/30 30167.08 15801.54
1992/07/31 31744.07 16447.82
1992/08/31 29758.65 16110.64
1992/09/30 29656.54 16300.75
1992/10/31 31108.74 16357.80
1992/11/30 34171.96 16915.60
1992/12/31 33884.55 17123.66
1993/01/31 32143.21 17267.50
1993/02/28 26954.98 17502.34
1993/03/31 27360.49 17871.64
1993/04/30 28064.18 17439.14
1993/05/31 29877.09 17906.51
1993/06/30 30055.99 17958.44
1993/07/31 29066.05 17886.61
1993/08/31 30163.33 18564.51
1993/09/30 31403.74 18421.56
1993/10/31 33741.43 18802.89
1993/11/30 33479.03 18624.26
1993/12/31 34123.09 18849.62
1994/01/31 35291.93 19490.50
1994/02/28 32930.39 18962.31
1994/03/31 29602.76 18135.55
1994/04/30 29066.05 18367.69
1994/05/31 28577.04 18668.92
1994/06/30 27443.98 18211.53
1994/07/31 27515.54 18808.87
1994/08/31 30091.77 19580.03
1994/09/30 29996.36 19100.32
1994/10/31 28970.63 19530.08
1994/11/30 28433.92 18818.79
1994/12/31 27921.06 19097.87
1995/01/31 29173.39 19593.08
1995/02/28 30175.26 20356.63
1995/03/31 30664.27 20957.35
1995/04/30 31618.42 21574.54
1995/05/31 31904.67 22436.88
1995/06/30 33061.59 22958.09
1995/07/31 34540.53 23719.38
1995/08/31 35924.06 23778.91
1995/09/30 37534.21 24782.38
1995/10/31 37236.03 24693.91
1995/11/30 38476.44 25777.97
1995/12/31 41630.35 26274.46
1996/01/31 44092.56 27168.84
1996/02/29 43745.94 27420.69
1996/03/31 43052.70 27684.75
1996/04/30 43982.24 28092.83
1996/05/31 44495.51 28817.34
1996/06/30 41806.96 28927.14
1996/07/31 38739.57 27649.13
1996/08/31 40523.79 28232.26
1996/09/30 42894.60 29821.17
1996/10/31 41403.68 30643.63
1996/11/30 41648.09 32959.99
1996/12/31 43965.21 32307.05
1997/01/31 45980.22 34325.59
1997/02/28 46304.79 34594.71
1997/03/31 41530.96 33173.21
1997/04/30 39709.44 35153.65
1997/05/31 44757.60 37293.80
1997/06/30 45929.99 38964.57
1997/07/31 46205.85 42064.98
1997/08/31 46523.08 39708.50
1997/09/30 52647.08 41883.33
1997/10/31 50729.88 40484.43
1997/11/30 49833.35 42358.45
1997/12/31 50680.19 43085.75
1998/01/31 51100.71 43562.28
1998/02/28 53763.99 46703.99
1998/03/31 55960.03 49095.70
1998/04/30 53739.54 49589.60
1998/05/31 51904.70 48737.16
1998/06/30 51954.29 50716.86
1998/07/31 52797.33 50176.72
1998/08/31 44647.96 42922.17
1998/09/30 52119.59 45671.77
1998/10/31 55623.98 49386.71
1998/11/30 57855.55 52380.04
1998/12/31 65740.44 55398.18
1999/01/31 69575.44 57714.93
1999/02/26 68345.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990307 154002 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Biotechnology Portfolio on February 28,
1989, and the current 3.00% sales charge was paid. As the chart shows,
by February 28, 1999, the value of the investment would have grown to
$68,345 - a 583.45% 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 $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Amgen, Inc. 7.7
Biogen, Inc. 7.7
Genentech, Inc. (special) 6.2
Sepracor, Inc. 6.0
Merck & Co., Inc. 5.9
Medimmune, Inc. 5.6
Genzyme Corp. (General 5.0
Division)
Schering-Plough Corp. 4.6
Forest Laboratories, Inc. 4.3
Chiron Corp. 4.2
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Drugs & Pharmaceuticals 86.4%
Medical Equipment & Supplies 1.7%
Electronic Instruments 1.4%
Computer Services & Software 0.2%
All Others 10.3%*
Row: 1, Col: 1, Value: 10.3
Row: 1, Col: 2, Value: 1.2
Row: 1, Col: 3, Value: 2.4
Row: 1, Col: 4, Value: 2.7
Row: 1, Col: 5, Value: 83.40000000000001
* INCLUDES SHORT-TERM INVESTMENTS
BIOTECHNOLOGY PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Rajiv Kaul)
Rajiv Kaul,
Portfolio Manager
of Fidelity Select
Biotechnology Portfolio
Q. HOW DID THE FUND PERFORM, RAJIV?
A. For the 12 months that ended February 28, 1999, the fund posted a
total return of 27.13%. During the same period, the Standard & Poor's
500 Index returned 19.74%. The fund also compares its performance 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 23.88% during the same period.
Q. WHAT PRIMARY FACTORS CONTRIBUTED TO THE STRONG PERFORMANCE OF
BIOTECHNOLOGY STOCKS?
A. Following a difficult period of global market instability and
disappointing results during the summer and early fall of 1998, the
biotechnology sector and the broader market staged an enthusiastic
comeback during the last half of the period. During this six-month
stock market rally, the fund posted an impressive return of 53.09%.
Beyond the strong performance of the market, the fund's overweighted
positions in the biotechnology and pharmaceutical sectors, along with
significant holdings in companies such as Amgen, Biogen, Genentech,
Sepracor and Medimmune, contributed considerably to performance.
Profitable product pipelines, strong fundamental business outlooks and
robust sales during the period buoyed the stock prices of these
companies.
Q. YOU MENTIONED AMGEN, BIOGEN, MEDIMMUNE AND A FEW OTHER NAMES AS
MAJOR CONTRIBUTORS TO FUND PERFORMANCE. WHY DID THESE STOCKS PERFORM
SO WELL?
A. Amgen, maker of Epogen, one of the world's best-selling anemia
drugs, was one of the fund's best performers; its stock soared nearly
100% during the 12-month period. The share price responded favorably
after the company was awarded all rights to a new version of Epogen
following an arbitration battle with Johnson & Johnson. Biogen also
boosted total return as investors reacted positively to the company's
solid business outlook and the absence of any serious competitive
threats. Medimmune shares appreciated considerably as its new product
launches were successful and its lead products turned in solid sales
results.
Q. DID ANY OTHER MARKET FACTORS ADD TO THIS NOTABLE PERFORMANCE?
A. One of the primary reasons for the bullish performance is an aging
population with accelerating demand for biotechnology and health care
products. Along with increasing demand, many companies are developing
a wide range of innovative, effective and safe biotechnological
products, services and processes. This favorable business environment
translated into strong stock performance.
Q. YOU SIGNIFICANTLY INCREASED THE FUND'S EXPOSURE TO LARGE-CAP
BIOTECHNOLOGY STOCKS DURING THE PERIOD. WHAT WAS YOUR RATIONALE FOR
THIS DECISION, AND HOW DID THIS STRATEGY WORK OUT?
A. I liked the earnings growth potential I saw in new product launches
offered by the larger-cap biotechnology companies. In addition, the
lead products for many of these companies had encouraging outlooks
and, subsequently, produced record sales results. This strategy worked
out very well for the fund. As I mentioned, these stocks were the key
contributors to the fund's outperformance of the indexes.
Q. WERE THERE ANY DETRACTORS FROM FUND PERFORMANCE?
A. While the fund was underweighted in HMOs and health care service
providers, such as MedPartners and Beverly Enterprises, these stocks
still detracted from the fund's total return. The market continued to
push stock prices lower in this sector amid uncertainty about the
group's profitability and concerns about rising medical costs. Medical
device maker Cytyc also hurt performance. Its shares stumbled late in
the period due to concerns about future earnings growth.
Q. WHAT'S YOUR OUTLOOK, RAJIV?
A. I'm comfortable with the portfolio's asset allocation and feel that
the fund's holdings have strong long-term business fundamentals and
healthy outlooks. The companies in the fund have historically reliable
earnings growth, profitable product pipelines and their competitors
have high barriers to entry. As a result, I think these companies
should hold up well relative to the rest of the biotechnology sector,
regardless of which direction the market heads in the short term.
Similar to what I mentioned in the report six months ago, I will
continue to focus on larger-cap biotechnology companies with
established market dominance and predictable earnings strength. I
believe these types of holdings offer reduced downside risk in this
environment of high market valuations.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: December 16, 1985
FUND NUMBER: 042
TRADING SYMBOL: FBIOX
SIZE: as of February 28, 1999, more than
$741 million
MANAGER: Rajiv Kaul, since 1998; equity
research associate, health care industry,
1996-1998; joined Fidelity in 1996
BIOTECHNOLOGY PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 89.7%
SHARES VALUE (NOTE 1)
COMPUTER SERVICES & SOFTWARE
- - 0.2%
Affymetrix, Inc. (a) 40,000 $ 1,550,000
DRUGS & PHARMACEUTICALS - 86.4%
Alkermes, Inc. (a) 563,200 15,804,800
Allergan, Inc. 125,000 10,187,500
Alliance Pharmaceutical Corp. 737,500 1,843,750
(a)
Alpharma, Inc. Class A 190,000 7,196,250
ALZA Corp. Class A (a) 20,000 1,048,750
Amgen, Inc. (a) 487,600 60,889,045
Andrx Corp. (a) 156,700 10,636,013
Anesta Corp. (a) 113,700 2,252,681
Aviron (a) 200,000 4,287,500
AXYS Pharmaceuticals, Inc. (a) 703,900 3,255,538
Biochem Pharma, Inc. 1,031,300 25,307,136
Biogen, Inc. (a) 633,200 60,866,350
Cellegy Pharmaceuticals, Inc. 578,600 2,025,100
(a)(c)
Centocor, Inc. (a) 324,200 13,474,563
Chiron Corp. (a) 1,565,900 32,981,769
Creative Biomolecules, Inc. 325,500 874,781
(a)
CV Therapeutics, Inc. (a)(c) 787,000 4,820,375
Cytyc Corp. (a) 99,000 1,794,375
Elan Corp. PLC sponsored ADR 30,000 2,300,625
(a)
Forest Laboratories, Inc. (a) 684,800 33,854,800
GelTex Pharmaceuticals, Inc. 50,000 859,375
(a)
Genentech, Inc. (special) (a) 606,600 48,414,263
Genzyme Corp. (General 872,000 39,240,000
Division)
Gilead Sciences, Inc. (a) 418,700 17,271,375
ICN Pharmaceuticals, Inc. 1,500 32,813
IDEC Pharmaceuticals Corp. (a) 408,500 17,693,156
Immunex Corp. (a) 186,950 26,453,425
Inhale Therapeutic Systems, 69,700 1,916,750
Inc. (a)
Invitrogen Corp. (a) 30,000 450,000
LeukoSite, Inc. (a) 440,000 5,060,000
Ligand Pharmaceuticals, Inc. 400,000 3,925,000
Class B (a)
Lilly (Eli) & Co. 165,000 15,623,438
Magainin Pharmaceuticals, 230,000 934,375
Inc. (a)
Medimmune, Inc. (a) 798,300 43,906,500
Merck & Co., Inc. 566,600 46,319,550
Mylan Laboratories, Inc. 30,000 819,375
NeXstar Pharmeceuticals, Inc. 246,100 3,399,256
(a)
NPS Pharmaceuticals, Inc. (a) 345,000 2,544,375
Pfizer, Inc. 30,000 3,958,125
QLT PhotoTherapeutics, Inc. 161,900 6,302,912
(a)
Roberts Pharmaceutical Corp. 16,700 377,838
(a)
Schering-Plough Corp. 640,600 35,833,563
Scios, Inc. (a) 290,000 2,682,500
Sepracor, Inc. (a) 378,900 47,267,775
Sequus Pharmaceuticals, Inc. 64,000 1,308,000
(a)
Serologicals Corp. (a) 50,000 893,750
ViroPharma, Inc. (a) 357,700 2,973,381
SHARES VALUE (NOTE 1)
Warner-Lambert Co. 35,000 $ 2,417,188
Zonagen, Inc. (a) 175,000 4,834,375
679,414,134
ELECTRICAL EQUIPMENT - 0.0%
American Satellite Network 5,000 -
(ASN) warrants 6/30/99 (a)
ELECTRONIC INSTRUMENTS - 1.4%
Perkin-Elmer Corp. 112,270 10,637,583
MEDICAL EQUIPMENT & SUPPLIES
- - 1.7%
Cardinal Health, Inc. 68,804 4,966,789
Cygnus, Inc. (a) 64,800 372,600
Medtronic, Inc. 65,000 4,590,625
Osteotech, Inc. (a) 70,500 3,815,813
13,745,827
TOTAL COMMON STOCKS 705,347,544
(Cost $519,908,322)
CASH EQUIVALENTS - 10.3%
Taxable Central Cash Fund (b) 80,825,501 80,825,501
(Cost $80,825,501)
TOTAL INVESTMENT IN $ 786,173,045
SECURITIES - 100%
(Cost $600,733,823)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. 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
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $499,721,864 and $473,490,492, respectively.
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 $31,302 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $36,161,622. The fund
received cash collateral of $36,293,300.
Transactions during the period with companies which are or were
affiliates are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PURCHASES SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Alkermes, Inc. $ - $ - $ - $ -
CV Therapeutics, Inc. 791,700 170,625 - 4,820,375
Cellegy Pharmaceuticals, Inc. 315,038 225,000 - 2,025,100
Magainin Pharmaceuticals, Inc. 249,257 2,714,380 - -
ViroPharma, Inc. - 771,075 - -
TOTALS $ 1,355,995 $ 3,881,080 $ - $ 6,845,475
</TABLE>
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $601,690,691. Net unrealized appreciation
aggregated $184,482,354, of which $216,700,973 related to appreciated
investment securities and $32,218,619 related to depreciated
investment securities.
The fund hereby designates approximately $24,934,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 11% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentage for use in preparing 1999 income tax returns.
BIOTECHNOLOGY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 786,173,045
value (cost $600,733,823) -
See accompanying schedule
Cash 126,800
Receivable for investments 2,284,720
sold
Receivable for fund shares 1,345,985
sold
Dividends receivable 70,886
Interest receivable 263,683
Redemption fees receivable 1,210
Other receivables 36,520
TOTAL ASSETS 790,302,849
LIABILITIES
Payable for investments $ 10,416,729
purchased
Payable for fund shares 1,255,129
redeemed
Accrued management fee 364,555
Other payables and accrued 443,613
expenses
Collateral on securities 36,293,300
loaned, at value
TOTAL LIABILITIES 48,773,326
NET ASSETS $ 741,529,523
Net Assets consist of:
Paid in capital $ 553,672,039
Accumulated undistributed net 2,417,617
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 185,439,867
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 17,933,954 $ 741,529,523
shares outstanding
NET ASSET VALUE and $41.35
redemption price per share
($741,529,523 (divided by)
17,933,954 shares)
Maximum offering price per $42.63
share (100/97.00 of $41.35)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 1,104,719
Dividends
Interest (including income on 2,056,527
securities loaned of
$309,832)
TOTAL INCOME 3,161,246
EXPENSES
Management fee $ 3,390,377
Transfer agent fees 3,550,214
Accounting and security 536,521
lending fees
Non-interested trustees' 3,422
compensation
Custodian fees and expenses 22,172
Registration fees 62,626
Audit 18,459
Legal 3,487
Reports to shareholders 91,367
Total expenses before 7,678,645
reductions
Expense reductions (189,856) 7,488,789
NET INVESTMENT INCOME (LOSS) (4,327,543)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 2,588,579
(including realized loss
of $1,989,327 on sales of
investments in affiliated
issuers)
Foreign currency transactions (3,194) 2,585,385
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 152,854,489
Assets and liabilities in 645 152,855,134
foreign currencies
NET GAIN (LOSS) 155,440,519
NET INCREASE (DECREASE) IN $ 151,112,976
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 1,182,620
charges paid to FDC
Sales charges - Retained by $ 1,176,547
FDC
Deferred sales charges $ 23,624
withheld by FDC
Exchange fees withheld by FSC $ 33,195
Expense reductions Directed $ 178,555
brokerage arrangements
Custodian credits 4,105
Transfer agent credits 7,196
$ 189,856
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (4,327,543) $ (4,649,288)
income (loss)
Net realized gain (loss) 2,585,385 136,618,693
Change in net unrealized 152,855,134 (59,882,024)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 151,112,976 72,087,381
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (33,971,527) (74,816,933)
from net realized gain
Share transactions Net 320,529,357 370,670,921
proceeds from sales of shares
Reinvestment of distributions 33,062,818 72,734,215
Cost of shares redeemed (309,253,094) (536,988,307)
NET INCREASE (DECREASE) IN 44,339,081 (93,583,171)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 507,092 952,260
TOTAL INCREASE (DECREASE) 161,987,622 (95,360,463)
IN NET ASSETS
NET ASSETS
Beginning of period 579,541,901 674,902,364
End of period 741,529,523 579,541,901
OTHER INFORMATION
Shares
Sold 9,105,791 10,542,169
Issued in reinvestment of 970,436 2,304,448
distributions
Redeemed (8,928,498) (15,772,857)
Net increase (decrease) 1,147,729 (2,926,240)
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 F 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 34.52 $ 34.24 $ 36.60 $ 25.30 $ 27.61
period
Income from Investment
Operations
Net investment income (loss) C (.26) (.27) (.20) .11 (.06)
Net realized and unrealized 9.15 5.20 1.89 11.21 (2.26)
gain (loss)
Total from investment 8.89 4.93 1.69 11.32 (2.32)
operations
Less Distributions
From net investment income - - (.03) (.07) -
From net realized gain (2.09) (4.71) (4.06) - -
Total distributions (2.09) (4.71) (4.09) (.07) -
Redemption fees added to paid .03 .06 .04 .05 .01
in capital
Net asset value, end of period $ 41.35 $ 34.52 $ 34.24 $ 36.60 $ 25.30
TOTAL RETURN A, B 27.13% 16.11% 5.85% 44.97% (8.37)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 741,530 $ 579,542 $ 674,902 $ 1,096,864 $ 448,197
(000 omitted)
Ratio of expenses to average 1.34% 1.49% 1.57% 1.44% D 1.59%
net assets
Ratio of expenses to average 1.30% E 1.47% E 1.56% E 1.43% E 1.59%
net assets after expense
reductions
Ratio of net investment (.75)% (.81)% (.59)% .35% (.27)%
income (loss) to average net
assets
Portfolio turnover rate 86% 162% 41% 67% 77%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR AGREED TO
REIMBURSE A PORTION OF THE
FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS
REIMBURSEMENT, THE FUND'S
EXPENSE RATIO WOULD HAVE
BEEN HIGHER. 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
THE YEAR ENDED FEBRUARY 29.
</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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT HEALTH CARE 27.20% 283.18% 899.13%
SELECT HEALTH CARE (LOAD ADJ.) 23.31% 271.61% 869.08%
S&P 500 19.74% 194.91% 459.21%
GS Health Care 23.88% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years, or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT HEALTH CARE 27.20% 30.82% 25.88%
SELECT HEALTH CARE (LOAD ADJ.) 23.31% 30.02% 25.50%
S&P 500 19.74% 24.15% 18.78%
GS Health Care 23.88% 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
1989/02/28 9700.00 10000.00
1989/03/31 10211.52 10233.00
1989/04/30 10769.06 10764.09
1989/05/31 11104.66 11200.04
1989/06/30 10854.35 11136.20
1989/07/31 12198.85 12141.80
1989/08/31 12493.98 12379.78
1989/09/30 12584.16 12329.02
1989/10/31 12491.25 12042.99
1989/11/30 13029.59 12288.66
1989/12/31 13161.94 12583.59
1990/01/31 12406.75 11739.23
1990/02/28 12276.73 11890.67
1990/03/31 12766.36 12205.77
1990/04/30 12766.36 11900.63
1990/05/31 14522.95 13060.94
1990/06/30 15017.78 12972.12
1990/07/31 15225.12 12930.61
1990/08/31 14542.62 11761.68
1990/09/30 14104.91 11188.89
1990/10/31 14427.44 11140.78
1990/11/30 15962.33 11860.47
1990/12/31 16362.45 12191.38
1991/01/31 17977.69 12722.92
1991/02/28 20198.26 13632.61
1991/03/31 21998.81 13962.52
1991/04/30 21615.85 13996.03
1991/05/31 22789.45 14600.66
1991/06/30 21761.82 13931.95
1991/07/31 23687.41 14581.18
1991/08/31 24871.12 14926.75
1991/09/30 25372.30 14677.48
1991/10/31 27044.00 14874.16
1991/11/30 25566.84 14274.73
1991/12/31 30056.59 15907.76
1992/01/31 29070.44 15611.87
1992/02/29 27801.04 15814.83
1992/03/31 26105.00 15506.44
1992/04/30 24625.77 15962.33
1992/05/31 25132.84 16040.54
1992/06/30 24164.12 15801.54
1992/07/31 25617.74 16447.82
1992/08/31 24926.80 16110.64
1992/09/30 23201.33 16300.75
1992/10/31 23914.92 16357.80
1992/11/30 25225.07 16915.60
1992/12/31 24816.46 17123.66
1993/01/31 23483.65 17267.50
1993/02/28 20977.67 17502.34
1993/03/31 21556.28 17871.64
1993/04/30 21548.30 17439.14
1993/05/31 22410.23 17906.51
1993/06/30 22330.42 17958.44
1993/07/31 21604.16 17886.61
1993/08/31 22374.32 18564.51
1993/09/30 23072.64 18421.56
1993/10/31 24788.52 18802.89
1993/11/30 24704.72 18624.26
1993/12/31 25416.18 18849.62
1994/01/31 25919.55 19490.50
1994/02/28 25292.34 18962.31
1994/03/31 23642.40 18135.55
1994/04/30 24590.88 18367.69
1994/05/31 25979.72 18668.92
1994/06/30 25567.47 18211.53
1994/07/31 26079.78 18808.87
1994/08/31 29501.85 19580.03
1994/09/30 29713.98 19100.32
1994/10/31 30126.23 19530.08
1994/11/30 30778.62 18818.79
1994/12/31 30870.14 19097.87
1995/01/31 32505.21 19593.08
1995/02/28 33194.12 20356.63
1995/03/31 34096.68 20957.35
1995/04/30 34571.94 21574.54
1995/05/31 34905.04 22436.88
1995/06/30 36671.33 22958.09
1995/07/31 38770.72 23719.38
1995/08/31 39099.43 23778.91
1995/09/30 41290.86 24782.38
1995/10/31 41391.66 24693.91
1995/11/30 43136.04 25777.97
1995/12/31 45028.70 26274.46
1996/01/31 46639.34 27168.84
1996/02/29 46367.05 27420.69
1996/03/31 46528.58 27684.75
1996/04/30 46333.79 28092.83
1996/05/31 47174.32 28817.34
1996/06/30 47207.75 28927.14
1996/07/31 45364.33 27649.13
1996/08/31 46902.10 28232.26
1996/09/30 50130.47 29821.17
1996/10/31 49146.68 30643.63
1996/11/30 51787.64 32959.99
1996/12/31 51989.79 32307.05
1997/01/31 55128.80 34325.59
1997/02/28 55831.80 34594.71
1997/03/31 52769.09 33173.21
1997/04/30 55402.63 35153.65
1997/05/31 59622.17 37293.80
1997/06/30 64057.65 38964.57
1997/07/31 66450.47 42064.98
1997/08/31 61822.40 39708.50
1997/09/30 65656.76 41883.33
1997/10/31 65633.41 40484.43
1997/11/30 67471.80 42358.45
1997/12/31 68182.81 43085.75
1998/01/31 73088.87 43562.28
1998/02/28 76194.47 46703.99
1998/03/31 78905.19 49095.70
1998/04/30 80400.60 49589.60
1998/05/31 79918.66 48737.16
1998/06/30 84669.17 50716.86
1998/07/31 84923.90 50176.72
1998/08/31 76104.49 42922.17
1998/09/30 84930.79 45671.77
1998/10/31 87450.62 49386.71
1998/11/30 91182.18 52380.04
1998/12/31 96331.12 55398.18
1999/01/31 97415.79 57714.93
1999/02/26 96908.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990307 162407 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Health Care Portfolio on February 28,
1989, and the current 3.00% sales charge was paid. As the chart shows,
by February 28, 1999, the value of the investment would have grown to
$96,908 - an 869.08% 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 $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Lilly (Eli) & Co. 10.2
Merck & Co., Inc. 10.0
Warner-Lambert Co. 8.0
Schering-Plough Corp. 7.0
Johnson & Johnson 5.4
Medtronic, Inc. 4.7
Bristol-Myers Squibb Co. 4.5
Pfizer, Inc. 4.2
Abbott Laboratories 4.1
Amgen, Inc. 3.6
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Drugs & Pharmaceuticals 62.0%
Medical Equipment & Supplies 24.0%
Medical Facilities Management 3.7%
Drug Stores 2.1%
Computer Services & Software 1.2%
All Others 7.0%*
Row: 1, Col: 1, Value: 7.0
Row: 1, Col: 2, Value: 1.2
Row: 1, Col: 3, Value: 2.1
Row: 1, Col: 4, Value: 3.7
Row: 1, Col: 5, Value: 24.0
Row: 1, Col: 6, Value: 62.0
* INCLUDES SHORT-TERM 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 12 months that ended February 28, 1999, the fund returned
27.20%. During the same time period, the Standard & Poor's 500 Index
returned 19.74%. Fund performance also compared favorably 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 23.88% over the same 12-month period.
Q. WHAT WERE THE MAIN FACTORS CONTRIBUTING TO THE FUND'S STRONG
PERFORMANCE?
A. Drug stocks posted solid gains during most of the period due to
strong product pipelines, increased merger activity and robust
domestic sales. During periods of market weakness, I took the
opportunity to increase the fund's asset weightings in pharmaceuticals
and medical equipment. My strategy of overweighting these sectors
relative to the Goldman Sachs index worked out well. While the fund
was overweighted in pharmaceutical stocks relative to the benchmark
indexes, total return received the biggest boost from a number of top
holdings, such as Eli Lilly, Warner-Lambert and Schering-Plough.
Performance also was helped by the fund's underweighted position
relative to the Goldman Sachs benchmark in HMOs and hospitals, which
continued to struggle during the period.
Q. YOU MENTIONED ELI LILLY, WARNER-LAMBERT AND SCHERING-PLOUGH AS
MAJOR CONTRIBUTORS TO THE FUND'S PERFORMANCE.
WHAT WERE THE STORIES THERE?
A. These stocks performed very well. But first, I would like to talk
about a stock you didn't ask about - Amgen. While it was not as large
of a holding as the others you asked about, it provided a significant
boost to total return. I liked Amgen because it had some very
successful products and, at one point, traded at a significant
discount to other health care companies. The stock soared after an
arbitration panel gave the company all rights to a new version of
Epogen, a popular anemia drug. Concerning the other stocks you
mentioned, Eli Lilly rallied as the company kept generic drug
companies at bay by developing a new version of its blockbuster
anti-depressant drug, Prozac. Warner-Lambert shares appreciated as the
company reported increased earnings driven by the continued success of
its cholesterol treatment, Lipitor. Schering-Plough's stock continued
to benefit from upward earnings estimates and strong sales of its
major product, Claritin.
Q. WHAT WAS YOUR RATIONALE BEHIND THE DECISION TO SIGNIFICANTLY
INCREASE THE FUND'S HOLDINGS IN PHARMACEUTICAL
AND MEDICAL EQUIPMENT COMPANIES?
A. Similar to what I mentioned in the semiannual report six months
ago, I did not foresee any major changes in the market's favorable
growth outlook for these companies. As a result, I continued to take a
positive long-term view about their prospects. The major factors for
this bullish outlook were an aging population with increasing demand
for health care products and an increasing supply of innovative,
effective and safe new drugs. Most importantly, these companies
produced strong corporate earnings combined with a favorable business
outlook.
Q. WHAT STOCKS HURT TOTAL RETURN?
A. Monsanto, a diversified chemicals company, hurt fund performance
when its proposed merger with American Home Products fell apart. While
the fund was underweighted in HMOs and health care service providers,
such as Medpartners and Foundation Health Systems, this sector
continued to detract from the fund's total return as investors
remained uncertain about the groups' profitability outlook and rising
medical costs.
Q. WHAT'S YOUR OUTLOOK, BESO?
A. I still see a strong business cycle ahead for pharmaceutical
companies, especially those drug companies with dominant market
presence and a strong pipeline of profitable products. I will continue
to focus on the pharmaceutical companies because I believe they have
the best prospects for long-term, sustainable market growth. I also
like some of the companies that stand to benefit from the strong
pharmaceutical sector. For example, medical research and development
(R&D) companies could benefit from the robust R&D cycle and the
growing popularity of outsourcing drug research and development.
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 OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: July 14, 1981
FUND NUMBER: 063
TRADING SYMBOL: FSPHX
SIZE: as of February 28, 1999, more than
$3.1 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 FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 95.0%
SHARES VALUE (NOTE 1)
AGRICULTURE - 0.4%
Pioneer Hi-Bred 500,000 $ 11,718,750
International, Inc.
COMPUTER SERVICES & SOFTWARE
- - 1.2%
IMS Health, Inc. 800,000 28,400,000
Medical Manager Corp. (a) 54,900 1,537,200
Shared Medical Systems Corp. 175,400 8,945,400
38,882,600
DRUG STORES - 2.1%
CVS Corp. 107,154 5,679,162
Walgreen Co. 1,920,500 61,456,000
67,135,162
DRUGS & PHARMACEUTICALS - 62.0%
Allergan, Inc. 126,180 10,283,670
American Home Products Corp. 1,324,600 78,813,700
Amgen, Inc. (a) 909,800 113,611,275
Biogen, Inc. (a) 256,300 24,636,838
Bristol-Myers Squibb Co. 1,114,300 140,332,156
Centocor, Inc. (a) 8,500 353,281
Chiron Corp. (a) 321,800 6,777,913
Elan Corp. PLC sponsored ADR 297,020 22,777,721
(a)
Forest Laboratories, Inc. (a) 680,000 33,617,500
Genentech, Inc. (special) (a) 397,400 31,717,488
Genzyme Corp.:
(General Division) 477,600 21,492,000
(Molecular Oncology) (a) 27,315 104,138
Glaxo Wellcome PLC sponsored 572,500 36,675,781
ADR
Immunex Corp. (a) 72,500 10,258,750
Lilly (Eli) & Co. 3,406,812 322,582,508
Medimmune, Inc. (a) 172,800 9,504,000
Merck & Co., Inc. 3,864,800 315,947,400
Novartis AG (Reg.) 14,501 25,474,459
PAREXEL International Corp. 195,300 4,064,681
(a)
Pfizer, Inc. 991,400 130,802,838
Pharmacia & Upjohn, Inc. 232,000 12,644,000
QLT PhotoTherapeutics, Inc. 66,400 2,585,011
(a)
Quintiles Transnational Corp. 294,700 12,708,938
(a)
Rhone-Poulenc SA sponsored 152,300 7,005,800
ADR Class A
Roche Holding AG 2,350 29,801,313
participation certificates
Schering-Plough Corp. 3,939,800 220,382,563
Sepracor, Inc. (a) 70,100 8,744,975
SmithKline Beecham PLC 500,900 35,626,513
sponsored ADR
Takeda Chemical Industries 448,000 15,353,549
Ltd.
Warner-Lambert Co. 3,664,200 253,058,813
Watson Pharmaceuticals, Inc. 252,800 12,213,400
(a)
SHARES VALUE (NOTE 1)
XOMA Ltd. (a) 1,476 $ 4,133
Zonagen, Inc. (a) 259,100 7,157,638
1,957,114,743
ELECTRONIC INSTRUMENTS - 1.0%
Perkin-Elmer Corp. 119,900 11,360,525
Waters Corp. (a) 213,200 19,840,925
31,201,450
INSURANCE - 0.5%
Aetna, Inc. 900 66,656
CIGNA Corp. 211,800 16,626,300
16,692,956
MEDICAL EQUIPMENT & SUPPLIES
- - 24.0%
Abbott Laboratories 2,779,800 129,086,963
AmeriSource Health Corp. 383,000 28,581,375
Class A (a)
Bausch & Lomb, Inc. 124,300 7,496,844
Baxter International, Inc. 1,307,800 92,036,425
Becton, Dickinson & Co. 1,481,200 49,620,200
Biomet, Inc. 50,700 1,860,056
Boston Scientific Corp. (a) 742,536 19,677,204
Cardinal Health, Inc. 863,805 62,355,923
Guidant Corp. 728,720 41,537,040
Johnson & Johnson 2,003,900 171,082,963
Mallinckrodt, Inc. 7,200 222,750
Medtronic, Inc. 2,101,886 148,445,699
Omnicare, Inc. 9,200 220,225
Sybron International, Inc. (a) 239,700 5,887,631
758,111,298
MEDICAL FACILITIES MANAGEMENT
- - 3.7%
Concentra Managed Care, Inc. 277,200 2,945,250
(a)
Foundation Health Systems, 232,100 1,856,800
Inc. Class A (a)
Health Management Associates, 955,500 12,361,781
Inc. Class A (a)
HEALTHSOUTH Corp. (a) 713,200 8,290,950
Humana, Inc. (a) 260,600 4,560,500
Lincare Holdings, Inc. (a) 764,400 27,231,750
PacifiCare Health Systems, 8,800 635,800
Inc. Class B (a)
Tenet Healthcare Corp. (a) 52,800 1,039,500
Total Renal Care Holdings, 622,300 5,522,913
Inc. (a)
Trigon Healthcare, Inc. (a) 100,000 3,506,250
United HealthCare Corp. 347,300 17,126,231
Universal Health Services, 300,000 12,187,500
Inc. Class B (a)
Wellpoint Health Networks, 229,800 18,125,475
Inc. (a)
115,390,700
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SERVICES - 0.1%
Medpartners, Inc. (a) 326,000 $ 1,935,625
TOTAL COMMON STOCKS 2,998,183,284
(Cost $2,066,944,764)
CASH EQUIVALENTS - 5.0%
Taxable Central Cash Fund (b) 157,479,759 157,479,759
(Cost $157,479,759)
TOTAL INVESTMENT IN $ 3,155,663,043
SECURITIES - 100%
(Cost $2,224,424,523)
</TABLE>
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. 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 $2,023,455,625 and $1,543,188,343, respectively.
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 $244,159 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $13,395,137. The fund
received cash collateral of $13,304,800.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $2,224,754,689. Net unrealized appreciation
aggregated $930,908,354, of which $973,074,201 related to appreciated
investment securities and $42,165,847 related to depreciated
investment securities.
The fund hereby designates approximately $103,283,000 as a capital
gain dividend for the purpose of the dividend paid deduction.
A total of 65% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentage for use in preparing 1999 income tax returns.
HEALTH CARE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 3,155,663,043
value (cost $2,224,424,523)
- - See accompanying schedule
Receivable for investments 2,545,052
sold
Receivable for fund shares 6,544,577
sold
Dividends receivable 2,805,069
Interest receivable 807,435
Redemption fees receivable 5,071
Other receivables 181,348
TOTAL ASSETS 3,168,551,595
LIABILITIES
Payable for fund shares $ 6,553,547
redeemed
Accrued management fee 1,513,897
Other payables and accrued 1,354,795
expenses
Collateral on securities 13,304,800
loaned, at value
TOTAL LIABILITIES 22,727,039
NET ASSETS $ 3,145,824,556
Net Assets consist of:
Paid in capital $ 2,136,274,229
Undistributed net investment 1,027,364
income
Accumulated undistributed net 77,281,651
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 931,241,312
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 22,861,395 $ 3,145,824,556
shares outstanding
NET ASSET VALUE and $137.60
redemption price per share
($3,145,824,556 (divided by)
22,861,395 shares)
Maximum offering price per $141.86
share (100/97.00 of $137.60)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 19,172,514
Dividends
Interest (including income on 10,666,331
securities loaned of
$356,115)
TOTAL INCOME 29,838,845
EXPENSES
Management fee $ 14,851,440
Transfer agent fees 10,618,207
Accounting and security 978,835
lending fees
Non-interested trustees' 13,557
compensation
Custodian fees and expenses 77,520
Registration fees 149,900
Audit 69,969
Legal 14,375
Reports to shareholders 193,559
Total expenses before 26,967,362
reductions
Expense reductions (606,172) 26,361,190
NET INVESTMENT INCOME 3,477,655
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 141,328,826
Foreign currency transactions (312,020) 141,016,806
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 456,692,226
Assets and liabilities in 2,848 456,695,074
foreign currencies
NET GAIN (LOSS) 597,711,880
NET INCREASE (DECREASE) IN $ 601,189,535
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 10,991,959
charges paid to FDC
Sales charges - Retained by $ 10,970,853
FDC
Deferred sales charges $ 58,978
withheld by FDC
Exchange fees withheld by FSC $ 79,358
Expense reductions Directed $ 590,859
brokerage arrangements
Custodian credits 5,771
Transfer agent credits 9,542
$ 606,172
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ 3,477,655 $ 4,973,301
income
Net realized gain (loss) 141,016,806 304,829,057
Change in net unrealized 456,695,074 201,089,915
appreciation (depreciation)
NET INCREASE (DECREASE) IN 601,189,535 510,892,273
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (3,782,810) (3,399,542)
From net investment income
From net realized gain (121,803,514) (285,151,308)
TOTAL DISTRIBUTIONS (125,586,324) (288,550,850)
Share transactions Net 1,715,677,379 1,156,162,920
proceeds from sales of shares
Reinvestment of distributions 121,790,160 281,663,060
Cost of shares redeemed (1,393,295,000) (810,127,873)
NET INCREASE (DECREASE) IN 444,172,539 627,698,107
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 2,029,623 1,425,211
TOTAL INCREASE (DECREASE) 921,805,373 851,464,741
IN NET ASSETS
NET ASSETS
Beginning of period 2,224,019,183 1,372,554,442
End of period (including $ 3,145,824,556 $ 2,224,019,183
undistributed net investment
income of $1,027,364 and
$2,734,330, respectively)
OTHER INFORMATION
Shares
Sold 13,702,070 10,761,631
Issued in reinvestment of 985,706 2,916,990
distributions
Redeemed (11,362,310) (7,540,216)
Net increase (decrease) 3,325,466 6,138,405
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 113.84 $ 102.45 $ 100.47 $ 76.13 $ 63.31
period
Income from Investment
Operations
Net investment income C .17 .33 .52 .95 .75
Net realized and unrealized 29.85 31.94 18.01 28.85 18.38
gain (loss)
Total from investment 30.02 32.27 18.53 29.80 19.13
operations
Less Distributions
From net investment income (.19) (.25) (.65) (.59) (.62)
From net realized gain (6.17) (20.73) (15.95) (4.92) (5.74)
Total distributions (6.36) (20.98) (16.60) (5.51) (6.36)
Redemption fees added to paid .10 .10 .05 .05 .05
in capital
Net asset value, end of period $ 137.60 $ 113.84 $ 102.45 $ 100.47 $ 76.13
TOTAL RETURN A, B 27.20% 36.47% 20.41% 39.68% 31.24%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 3,145,825 $ 2,224,019 $ 1,372,554 $ 1,525,910 $ 943,141
(000 omitted)
Ratio of expenses to average 1.07% 1.20% 1.33% 1.31% 1.39%
net assets
Ratio of expenses to average 1.05% D 1.18% D 1.32% D 1.30% D 1.36% D
net assets after expense
reductions
Ratio of net investment .14% .31% .52% 1.06% 1.08%
income to average net assets
Portfolio turnover rate 66% 79% 59% 54% 151%
</TABLE>
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME PER
SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES
OUTSTANDING DURING THE
PERIOD. D FMR OR THE FUND
HAS ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE
FUND'S EXPENSES. E FOR THE
YEAR ENDED FEBRUARY 29.
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.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT MEDICAL DELIVERY -29.47% 52.56% 335.43%
SELECT MEDICAL DELIVERY (LOAD -31.66% 47.91% 322.30%
ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Health Care 23.88% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT MEDICAL DELIVERY -29.47% 8.81% 15.85%
SELECT MEDICAL DELIVERY -31.66% 8.14% 15.49%
(LOAD ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Health Care 23.88% 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
1989/02/28 9700.00 10000.00
1989/03/31 10232.72 10233.00
1989/04/30 10931.92 10764.09
1989/05/31 11497.94 11200.04
1989/06/30 11364.27 11136.20
1989/07/31 12654.15 12141.80
1989/08/31 13243.49 12379.78
1989/09/30 13610.44 12329.02
1989/10/31 13154.53 12042.99
1989/11/30 13766.11 12288.66
1989/12/31 13766.92 12583.59
1990/01/31 11740.02 11739.23
1990/02/28 12036.09 11890.67
1990/03/31 12594.05 12205.77
1990/04/30 12719.31 11900.63
1990/05/31 14518.46 13060.94
1990/06/30 15213.07 12972.12
1990/07/31 15270.00 12930.61
1990/08/31 14051.59 11761.68
1990/09/30 13117.85 11188.89
1990/10/31 12958.44 11140.78
1990/11/30 14757.59 11860.47
1990/12/31 16005.68 12191.38
1991/01/31 18585.35 12722.92
1991/02/28 19734.47 13632.61
1991/03/31 22665.92 13962.52
1991/04/30 21985.82 13996.03
1991/05/31 23803.32 14600.66
1991/06/30 21798.00 13931.95
1991/07/31 23985.14 14581.18
1991/08/31 24266.16 14926.75
1991/09/30 24486.10 14677.48
1991/10/31 25023.72 14874.16
1991/11/30 24327.26 14274.73
1991/12/31 28462.11 15907.76
1992/01/31 28487.12 15611.87
1992/02/29 27386.65 15814.83
1992/03/31 25573.38 15506.44
1992/04/30 24560.45 15962.33
1992/05/31 24310.34 16040.54
1992/06/30 23030.21 15801.54
1992/07/31 24340.76 16447.82
1992/08/31 24313.46 16110.64
1992/09/30 21460.28 16300.75
1992/10/31 22525.10 16357.80
1992/11/30 24736.66 16915.60
1992/12/31 24709.36 17123.66
1993/01/31 23453.41 17267.50
1993/02/28 19740.18 17502.34
1993/03/31 20177.03 17871.64
1993/04/30 19931.31 17439.14
1993/05/31 20545.63 17906.51
1993/06/30 20750.40 17958.44
1993/07/31 21269.16 17886.61
1993/08/31 21200.90 18564.51
1993/09/30 22948.30 18421.56
1993/10/31 24026.78 18802.89
1993/11/30 24422.67 18624.26
1993/12/31 26074.52 18849.62
1994/01/31 27535.23 19490.50
1994/02/28 27685.40 18962.31
1994/03/31 26306.59 18135.55
1994/04/30 27152.99 18367.69
1994/05/31 28067.65 18668.92
1994/06/30 26333.90 18211.53
1994/07/31 27507.93 18808.87
1994/08/31 30292.85 19580.03
1994/09/30 31371.33 19100.32
1994/10/31 32395.20 19530.08
1994/11/30 31002.74 18818.79
1994/12/31 31247.72 19097.87
1995/01/31 32619.36 19593.08
1995/02/28 33119.44 20356.63
1995/03/31 35219.77 20957.35
1995/04/30 34075.12 21574.54
1995/05/31 32957.43 22436.88
1995/06/30 33487.62 22958.09
1995/07/31 36869.34 23719.38
1995/08/31 37041.29 23778.91
1995/09/30 37815.07 24782.38
1995/10/31 37170.25 24693.91
1995/11/30 40279.71 25777.97
1995/12/31 41304.12 26274.46
1996/01/31 43525.59 27168.84
1996/02/29 44429.50 27420.69
1996/03/31 44858.48 27684.75
1996/04/30 45369.25 28092.83
1996/05/31 45273.43 28817.34
1996/06/30 44203.48 28927.14
1996/07/31 39412.64 27649.13
1996/08/31 43053.68 28232.26
1996/09/30 46135.78 29821.17
1996/10/31 42654.44 30643.63
1996/11/30 45065.83 32959.99
1996/12/31 45849.53 32307.05
1997/01/31 48018.79 34325.59
1997/02/28 49094.75 34594.71
1997/03/31 45988.36 33173.21
1997/04/30 47036.80 35153.65
1997/05/31 51398.33 37293.80
1997/06/30 51755.52 38964.57
1997/07/31 55083.07 42064.98
1997/08/31 53184.30 39708.50
1997/09/30 54763.47 41883.33
1997/10/31 52958.70 40484.43
1997/11/30 54218.28 42358.45
1997/12/31 55082.88 43085.75
1998/01/31 53475.86 43562.28
1998/02/28 59882.81 46703.99
1998/03/31 62293.35 49095.70
1998/04/30 63842.57 49589.60
1998/05/31 60831.96 48737.16
1998/06/30 61628.89 50716.86
1998/07/31 56869.47 50176.72
1998/08/31 43985.85 42922.17
1998/09/30 45446.88 45671.77
1998/10/31 48546.03 49386.71
1998/11/30 50405.53 52380.04
1998/12/31 51689.46 55398.18
1999/01/31 44317.90 57714.93
1999/02/26 42230.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990307 163817 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Medical Delivery Portfolio on February 28,
1989, and the current 3.00% sales charge was paid. As the chart shows,
by February 28, 1999, the value of the investment would have grown to
$42,230 - a 322.30% 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 $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Lincare Holdings, Inc. 14.6
Health Management Associates, 10.5
Inc. Class A
Wellpoint Health Networks, Inc. 9.1
Universal Health Services, 5.5
Inc. Class B
PacifiCare Health Systems, 5.5
Inc. Class B
Tenet Healthcare Corp. 4.8
HEALTHSOUTH Corp. 4.8
Humana, Inc. 3.9
Columbia/HCA Healthcare Corp. 3.0
Quorum Health Group, Inc. 2.9
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Medical Facilities Management 77.1%
Drugs & Pharmaceuticals 8.8%
Medical Equipment & Supplies 6.6%
Insurance 2.9%
Computer Services & Software 0.6%
All Others 4.0%*
Row: 1, Col: 1, Value: 4.0
Row: 1, Col: 2, Value: 1.6
Row: 1, Col: 3, Value: 2.9
Row: 1, Col: 4, Value: 6.6
Row: 1, Col: 5, Value: 8.800000000000001
Row: 1, Col: 6, Value: 76.09999999999999
* INCLUDES SHORT-TERM 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 12 months that ended February 28, 1999, the fund returned
- -29.47%. By comparison, the Standard & Poor's 500 Index and the
Goldman Sachs Health Care Index - an index of 93 stocks designed to
measure the performance of companies in the health care sector -
returned 19.74% and 23.88%, respectively.
Q. WHY DID THE FUND LAG THE GOLDMAN SACHS INDEX BY SUCH A WIDE MARGIN?
A. The fund's return obviously was disappointing as conditions across
all health care services continued to be very challenging. HMOs were
not able to find a solution to spiraling costs - particularly in the
pharmaceuticals area - or to pass those costs on to patients, making
their stocks unattractive to investors. The government's overhaul of
Medicare was probably the biggest negative factor affecting hospitals
and long-term care providers. Changes in the federal budget for 1998,
which reduced Medicare reimbursement, severely affected the revenues
of hospitals, long-term care facilities and the home health care
sector. Physician practice managers also struggled to create an
attractive long-term business model. Meanwhile, investors continued to
gravitate to pharmaceutical stocks - a significant part of the Goldman
Sachs index - where growth has been healthy and demand strong.
Q. WHAT DID YOU DO TO TRY TO ALLEVIATE THE SITUATION?
A. While the fund could not avoid being affected by the changes in
Medicare, I looked for opportunities to offset the negative trends
within the industry. For example, while the rising cost of
prescription drugs has hurt managed-care companies, pharmaceutical
stocks have performed well, so I increased the fund's investments in
that area, holding Eli Lilly, Merck, Pfizer and Bristol-Myers Squibb.
I've since sold Pfizer from the fund's portfolio to take profits for
the fund. I also bought stocks of companies that don't depend as much
on Medicare, and therefore shouldn't be as severely affected by the
changes. Examples include small hospitals that focus more on basic
medical services that are in less danger of being cut by Medicare. In
addition, I shifted the fund's HMO holdings to those companies with
little Medicare exposure.
Q. WHICH STOCKS PERFORMED WELL DURING THE PERIOD?
A. Wellpoint Health Networks did well, reflecting its success in
controlling costs and in increasing its membership. Drug makers Eli
Lilly, Merck, Pfizer and Bristol-Myers Squibb benefited from the
pharmaceutical industry's strong growth and rising prices. An aging
population demanding a wider range of more effective drugs helped
boost the industry. Lincare, a respiratory care company, performed
well as it continued to expand its market share through acquisitions
and did a good job managing its internal cost structure. Cardinal
Health, the country's second-largest hospital and pharmacy drug
distributor, performed well, reflecting increased demand and its
acquisition activities. Cardinal successfully employed its own
extensive sales and distribution system for efficient, cost-effective
product delivery.
Q. WHICH STOCKS WERE DISAPPOINTMENTS?
A. HEALTHSOUTH, United HealthCare and Columbia/HCA were all
disappointing stocks for the fund. Each experienced earnings
shortfalls at various times during the year. Foundation Health
Systems, a managed-care company, was hurt by rising costs and slow
membership growth, particularly on the Medicare side of its business.
Quorum Health Group, another managed-care company, was subject to a
government probe. Quorum also had disappointing performance in some of
its newly acquired hospitals, and its stock suffered as a result.
Q. WHAT'S YOUR OUTLOOK, JOHN?
A. Although I'm still cautious, the outlook for HMOs appears to be
improving, as recent data on pricing trends in 1999 look more
positive. It also appears that there is some movement by the federal
government to make the Medicare HMO formula more attractive. Though
hospital business trends became bleaker in late 1998 and early 1999 as
patient volumes slowed when this winter's cases of flu and other upper
respiratory diseases declined, the overall picture looks better for
hospitals. First, the changes in 1999 Medicare reimbursement have not
been nearly as onerous as they were in 1998. Second, the recent
slowdown in business trends was a cyclical event that should return to
normal. The silver lining is that there may now exist some good buying
opportunities. I'll try to find the companies with attractive relative
valuations that are likely to do well, should business trends improve.
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 OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: June 30, 1986
FUND NUMBER: 505
TRADING SYMBOL: FSHCX
SIZE: as of February 28, 1999, more than
$76 million
MANAGER: John Porter, since 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 FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 96.4%
SHARES VALUE (NOTE 1)
COMPUTER SERVICES & SOFTWARE
- - 0.6%
Shared Medical Systems Corp. 8,900 $ 453,900
DRUGS & PHARMACEUTICALS - 8.8%
Bristol-Myers Squibb Co. 5,100 642,281
Lilly (Eli) & Co. 22,500 2,130,469
Merck & Co., Inc. 19,000 1,553,250
Schering-Plough Corp. 7,500 419,531
Warner-Lambert Co. 26,200 1,809,438
6,554,969
INSURANCE - 2.9%
CIGNA Corp. 27,700 2,174,450
MEDICAL EQUIPMENT & SUPPLIES
- - 6.6%
Abbott Laboratories 10,600 492,238
Baxter International, Inc. 7,000 492,625
Boston Scientific Corp. (a) 9,500 251,750
Cardinal Health, Inc. 15,850 1,144,172
Guidant Corp. 8,200 467,400
Johnson & Johnson 6,000 512,250
McKesson HBOC, Inc. 1,744 118,592
Medtronic, Inc. 10,200 720,375
Omnicare, Inc. 20,000 478,750
St. Jude Medical, Inc. (a) 9,250 232,406
4,910,558
MEDICAL FACILITIES MANAGEMENT
- - 77.1%
Carematrix Corp. (a) 8,000 177,000
Columbia/HCA Healthcare Corp. 124,723 2,229,424
Coram Healthcare Corp. 9,740 0
warrants 7/11/99 (a)
Foundation Health Systems, 128,870 1,030,960
Inc. Class A (a)
HCR Manor Care, Inc. (a) 58,800 1,315,650
Health Management Associates, 607,717 7,862,339
Inc. Class A (a)
HEALTHSOUTH Corp. (a) 307,700 3,577,013
Humana, Inc. (a) 167,800 2,936,500
Lincare Holdings, Inc. (a) 306,100 10,904,809
NovaCare, Inc. (a) 40,000 85,000
Oxford Health Plans, Inc. (a) 21,100 399,581
PacifiCare Health Systems,
Inc.:
Class A (a) 4,500 296,438
Class B (a) 56,800 4,103,800
Pediatrix Medical Group (a) 13,400 413,725
Phycor, Inc. (a) 7,900 42,956
Physician Reliance Network, 48,300 437,719
Inc. (a)
Quorum Health Group, Inc. (a) 236,400 2,186,700
Renal Care Group, Inc. (a) 60,850 1,205,591
Sierra Health Services, Inc. 20,600 296,125
(a)
Tenet Healthcare Corp. (a) 183,100 3,604,781
Total Renal Care Holdings, 96,066 852,586
Inc. (a)
Trigon Healthcare, Inc. (a) 19,300 676,706
SHARES VALUE (NOTE 1)
United HealthCare Corp. 41,700 $ 2,056,331
Universal Health Services, 101,900 4,139,688
Inc. Class B (a)
Wellpoint Health Networks, 86,300 6,806,913
Inc. (a)
57,638,335
SERVICES - 0.4%
Magellan Health Services, 23,600 160,775
Inc. (a)
Medpartners, Inc. (a) 24,800 147,250
308,025
TOTAL COMMON STOCKS 72,040,237
(Cost $72,651,789)
CASH EQUIVALENTS - 3.6%
Taxable Central Cash Fund (b) 2,705,792 2,705,792
(Cost $2,705,792)
TOTAL INVESTMENT IN $ 74,746,029
SECURITIES - 100%
(Cost $75,357,581)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. 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 $91,251,954 and $106,080,592, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $23,772 for the
period.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $76,541,184. Net unrealized depreciation
aggregated $1,795,155, of which $11,240,396 related to appreciated
investment securities and $13,035,551 related to depreciated
investment securities.
The fund hereby designates approximately $6,804,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
At February 28, 1999, the fund had a capital loss carryforward of
approximately $10,988,000, all of which will expire on February 28,
2007.
The fund intends to elect to defer to its fiscal year ending February
29, 2000 approximately $18,134,000 of losses recognized during the
period November 1, 1998 to February 28,1999.
A total of 66% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of this percentage
for use in preparing 1999 income tax returns.
MEDICAL DELIVERY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 74,746,029
value (cost $75,357,581) -
See accompanying schedule
Receivable for investments 2,890,910
sold
Receivable for fund shares 45,593
sold
Dividends receivable 16,250
Interest receivable 16,589
Redemption fees receivable 277
Other receivables 37,310
TOTAL ASSETS 77,752,958
LIABILITIES
Payable for fund shares $ 791,042
redeemed
Accrued management fee 42,231
Other payables and accrued 77,405
expenses
TOTAL LIABILITIES 910,678
NET ASSETS $ 76,842,280
Net Assets consist of:
Paid in capital $ 107,722,467
Accumulated undistributed net (30,268,635)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (611,552)
(depreciation) on investments
NET ASSETS, for 4,028,359 $ 76,842,280
shares outstanding
NET ASSET VALUE and $19.08
redemption price per share
($76,842,280 (divided by)
4,028,359 shares)
Maximum offering price per $19.67
share (100/97.00 of $19.08)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 184,483
Dividends
Special dividend from 748,113
Vencor, Inc.
Interest (including income on 814,106
securities loaned of $27,838)
TOTAL INCOME 1,746,702
EXPENSES
Management fee $ 909,497
Transfer agent fees 1,031,055
Accounting and security 153,468
lending fees
Non-interested trustees' 197
compensation
Custodian fees and expenses 10,198
Registration fees 38,310
Audit 13,275
Legal 1,627
Reports to shareholders 24,315
Total expenses before 2,181,942
reductions
Expense reductions (45,006) 2,136,936
NET INVESTMENT INCOME (LOSS) (390,234)
REALIZED AND UNREALIZED GAIN (29,445,200)
(LOSS)
Net realized gain (loss) on
investment securities
Change in net unrealized (24,558,768)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) (54,003,968)
NET INCREASE (DECREASE) IN $ (54,394,202)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 324,894
charges paid to FDC
Sales charges - Retained by $ 324,831
FDC
Deferred sales charges $ 6,973
withheld by FDC
Exchange fees withheld by FSC $ 19,297
Expense reductions Directed $ 41,000
brokerage arrangements
Custodian credits 649
Transfer agent credits 3,357
$ 45,006
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (390,234) $ (1,403,143)
income (loss)
Net realized gain (loss) (29,445,200) 30,147,880
Change in net unrealized (24,558,768) (1,649,494)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (54,394,202) 27,095,243
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (7,388,637) (27,697,433)
From net realized gain
In excess of net realized (824,351) -
gain
TOTAL DISTRIBUTIONS (8,212,988) (27,697,433)
Share transactions Net 162,156,332 114,716,005
proceeds from sales of shares
Reinvestment of distributions 8,097,680 27,235,291
Cost of shares redeemed (186,595,554) (178,502,092)
NET INCREASE (DECREASE) IN (16,341,542) (36,550,796)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 248,569 310,663
TOTAL INCREASE (DECREASE) (78,700,163) (36,842,323)
IN NET ASSETS
NET ASSETS
Beginning of period 155,542,443 192,384,766
End of period $ 76,842,280 $ 155,542,443
OTHER INFORMATION
Shares
Sold 6,115,538 4,089,783
Issued in reinvestment of 283,433 1,085,517
distributions
Redeemed (7,863,246) (6,483,186)
Net increase (decrease) (1,464,275) (1,307,886)
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 28.32 $ 28.29 $ 29.00 $ 23.18 $ 20.28
period
Income from Investment
Operations
Net investment income (loss) C (.06) F (.24) (.23) (.03) .06
Net realized and unrealized (7.88) 5.45 2.92 7.72 3.74
gain (loss)
Total from investment (7.94) 5.21 2.69 7.69 3.80
operations
Less Distributions
From net investment income - - - - (.06)
From net realized gain (1.21) (5.23) (3.45) (1.91) (.89)
In excess of net realized gain (.13) - - - -
Total distributions (1.34) (5.23) (3.45) (1.91) (.95)
Redemption fees added to paid .04 .05 .05 .04 .05
in capital
Net asset value, end of period $ 19.08 $ 28.32 $ 28.29 $ 29.00 $ 23.18
TOTAL RETURN A, B (29.47)% 21.97% 10.50% 34.15% 19.63%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 76,842 $ 155,542 $ 192,385 $ 295,489 $ 299,570
(000 omitted)
Ratio of expenses to average 1.40% 1.57% 1.57% 1.65% 1.48%
net assets
Ratio of expenses to average 1.37% d 1.53% d 1.53% d 1.62% d 1.45% d
net assets after expense
reductions
Ratio of net investment (.25)% (.88)% (.84)% (.13)% .29%
income (loss) to average net
assets
Portfolio turnover rate 67% 109% 78% 132% 123%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. E FOR
THE YEAR ENDED FEBRUARY 29.
F NET INVESTMENT INCOME
(LOSS) PER SHARE REFLECTS A
SPECIAL DIVIDEND FROM
VENCOR, INC., WHICH AMOUNTED
TO $.12 PER SHARE.
</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.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED FEBRUARY 28, 1999 LIFE OF FUND
SELECT MEDICAL EQUIPMENT AND 21.00%
SYSTEMS
SELECT MEDICAL EQUIPMENT AND 17.30%
SYSTEMS (LOAD ADJ.)
S&P 500 15.54%
GS Health Care 19.32%
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 market
capitalization-weighted 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.
(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
Medical Equipment/Systems S&P 500
00354 SP001
1998/04/28 9700.00 10000.00
1998/04/30 9961.90 10246.17
1998/05/31 9816.40 10070.04
1998/06/30 10340.20 10479.08
1998/07/31 10543.90 10367.48
1998/08/31 9185.90 8868.55
1998/09/30 9874.60 9436.67
1998/10/31 10349.90 10204.25
1998/11/30 11067.70 10822.73
1998/12/31 11882.50 11446.33
1999/01/31 11872.80 11925.02
1999/02/26 11730.00 11554.39
IMATRL PRASUN SHR__CHT 19990228 19990315 135209 R00000000000014
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Select Medical Equipment and Systems Portfolio on
April 28, 1998, when the fund started, and the current 3.00% sales
charge was paid. As the chart shows, by February 28, 1999, the value
of the investment would have grown to $11,730 - a 17.30% 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 been $11,554 - a
15.54% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Baxter International, Inc. 7.2
Becton, Dickinson & Co. 6.7
Medtronic, Inc. 6.6
Guidant Corp. 6.1
Abbott Laboratories 5.9
Johnson & Johnson 5.7
Biomet, Inc. 5.0
Boston Scientific Corp. 4.5
Bausch & Lomb, Inc. 4.1
Allergan, Inc. 3.8
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Medical Equipment & Supplies 70.4%
Drugs & Pharmaceuticals 10.3%
Electronic Instruments 5.7%
Industrial Machinery & Equipment 1.0%
Household Products 0.4%
All Others 12.2%*
Row: 1, Col: 1, Value: 12.2
Row: 1, Col: 2, Value: 1.4
Row: 1, Col: 3, Value: 2.0
Row: 1, Col: 4, Value: 5.7
Row: 1, Col: 5, Value: 10.3
Row: 1, Col: 6, Value: 68.40000000000001
* INCLUDES SHORT-TERM 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. The fund did well on both an absolute and a relative basis. From
its inception on April 28, 1998, through February 28, 1999, the fund
returned 21.00%, compared to 15.54% for the Standard and Poor's 500
Index and 19.32% for the Goldman Sachs Health Care Index, an index of
93 stocks designed to measure the performance of companies in the
health care sector.
Q. WHAT ENABLED THE FUND TO BEAT BOTH OF ITS BENCHMARKS?
A. Medical device stocks performed well during the period due to
major, profitable product launches at many of the larger companies,
leading to faster earnings growth than that experienced by the typical
S&P 500 company. Superior earnings growth, combined with increased
industry consolidation and generally favorable business prospects,
contributed to the fund's strong performance. In addition, the fund's
overweighted position in large-cap cardiology stocks, which tend to
offer higher quality, faster growth and greater product
diversification than many of the smaller companies within the sector,
helped the fund outperform its benchmarks.
Q. WHAT SHIFTS IN STRATEGY DID YOU MAKE DURING THE PERIOD?
A. I increased the fund's exposure to the large-cap, diversified
cardiology companies I mentioned earlier, and sold more of the
small-cap, single-product companies. Because earnings for S&P 500
companies were slowing, I focused on medical device companies that
seemed capable of generating consistent revenue and earnings growth.
Medical device companies with diversified product portfolios tend to
have more consistent results than many of the smaller companies, which
tend to be more dependent on their ability to gain regulatory approval
for and successfully market a single product. As the year progressed,
investors became increasingly willing to pay higher premiums for
companies with solid growth prospects. In addition, I raised the
fund's weighting in orthopedic stocks. That decision was driven by an
improvement in the industry's basic business prospects following a
wave of consolidation that I believed would lead to more stable
pricing. Consolidation and the improved fundamental outlook boded well
for the prices of orthopedic shares.
Q. WHAT STOCKS CONTRIBUTED POSITIVELY TO THE FUND'S PERFORMANCE DURING
THE PERIOD?
A. Guidant, one of the fund's core holdings, was also one of the top
performers. The company has a leadership position in three key
segments of the cardiology market and reported strong earnings during
the period. Arterial Vascular Engineering was another star performer.
The company was acquired by Medtronic at a significant premium to the
stock's price. Sofamor/Danek Group, an orthopedic company specializing
in products for the spine, also performed well when it, too, was
acquired by Medtronic at a substantial premium.
Q. WHAT STOCKS WERE DISAPPOINTING?
A. The fund was hurt by its large position in Boston Scientific, which
suffered the double whammy of a Food and Drug Administration
(FDA)-mandated recall on a major new product and an apparently related
investigation by the Department of Justice. Another disappointment was
ESC Medical Systems, an Israel-based firm that manufactures lasers for
medical purposes. The company suffered a sharp decline in sales
concurrent with difficulties in integrating a recent acquisition.
Q. WHAT'S YOUR OUTLOOK, KERRY?
A. My outlook for the medical device industry remains positive. The
overall economic, demographic and regulatory environment appears
supportive of stable pricing and further healthy growth in the demand
for medical devices. I continue to favor larger, diversified companies
and remain cautious of single-product companies, particularly those
without proven success in the marketplace. One area that I am keeping
an eye on in 1999 is the discussion in Washington about Medicare
reform. Some topics being discussed - for example, the reimbursement
of pharmaceuticals - could lead to measures that negatively affect
some medical device stocks with pharmaceutical exposure. On the
positive side, accounting changes have been proposed by the Financial
Accounting Standards Board that could stimulate more short-term
consolidation in the industry, as participants attempt to complete
mergers and acquisitions before these new standards take effect.
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 OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: April 28, 1998
FUND NUMBER: 354
TRADING SYMBOL: FSMEX
SIZE: as of February 28, 1999, more than
$28 million
MANAGER: Kerry Nelson, since inception;
analyst, medical devices and automotive
industries; joined Fidelity in 1995
MEDICAL EQUIPMENT AND SYSTEMS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 88.0%
SHARES VALUE (NOTE 1)
DRUGS & PHARMACEUTICALS - 10.3%
Allergan, Inc. 14,050 $ 1,145,075
Biomatrix, Inc. (a) 2,000 139,000
Chiron Corp. (a) 33,000 695,063
Cytyc Corp. (a) 9,000 163,125
Lilly (Eli) & Co. 2,800 265,125
Merck & Co., Inc. 1,200 98,100
Pfizer, Inc. 500 65,969
Sepracor, Inc. (a) 1,000 124,750
Ventana Medical Systems, Inc. 15,300 265,838
(a)
Warner-Lambert Co. 1,500 103,594
3,065,639
ELECTRONIC INSTRUMENTS - 5.7%
Perkin-Elmer Corp. 8,740 828,115
Thermo Optek Corp. (a) 2,680 29,145
Waters Corp. (a) 9,160 852,453
1,709,713
HOUSEHOLD PRODUCTS - 0.4%
Safeskin Corp. (a) 5,290 122,993
INDUSTRIAL MACHINERY &
EQUIPMENT - 1.0%
Mettler-Toledo International, 11,310 289,112
Inc. (a)
MEDICAL EQUIPMENT & SUPPLIES
- - 70.4%
Abbott Laboratories 38,120 1,770,198
ADAC Laboratories (a) 5,000 89,375
Ballard Medical Products 4,700 112,506
Bard (C.R.), Inc. 14,630 824,766
Bausch & Lomb, Inc. 20,380 1,229,169
Baxter International, Inc. 30,460 2,143,619
Becton, Dickinson & Co. 59,960 2,008,660
Biomet, Inc. 41,110 1,508,223
Boston Scientific Corp. (a) 50,220 1,330,830
CONMED Corp. (a) 3,000 92,625
Cooper Companies, Inc. (a) 4,310 63,034
Dionex Corp. (a) 3,500 129,063
ESC Medical Systems Ltd. (a) 6,690 33,659
Guidant Corp. 31,820 1,813,740
Haemonetics Corp. (a) 5,600 93,450
Heartport, Inc. (a) 4,000 26,500
Hillenbrand Industries, Inc. 20,670 865,556
Johnson & Johnson 19,850 1,694,694
Mallinckrodt, Inc. 6,000 185,625
Medtronic, Inc. 27,808 1,963,940
Mentor Corp. 3,120 47,970
Ocular Sciences, Inc. (a) 11,900 291,550
Orthofix International NV (a) 8,170 114,380
Pall Corp. 2,900 61,444
Resmed, Inc. (a) 3,500 108,500
St. Jude Medical, Inc. (a) 18,000 452,250
Steris Corp. (a) 18,620 612,133
Stryker Corp. 12,540 592,515
Sybron International, Inc. (a) 27,060 664,661
Thoratec Laboratories Corp. 2,150 16,259
(a)
VISX, Inc. (a) 1,000 61,750
21,002,644
SHARES VALUE (NOTE 1)
MEDICAL FACILITIES MANAGEMENT
- - 0.2%
Cambridge Heart, Inc. (a) 7,800 $ 63,375
TOTAL COMMON STOCKS 26,253,476
(Cost $24,659,886)
CASH EQUIVALENTS - 12.0%
Taxable Central Cash Fund (b) 3,591,929 3,591,929
(Cost $3,591,929)
TOTAL INVESTMENT IN $ 29,845,405
SECURITIES - 100%
(Cost $28,251,815)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. 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 $33,765,122 and $10,391,732, respectively.
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 $3,290 for the
period.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $28,271,997. Net unrealized appreciation
aggregated $1,573,408, of which $2,853,110 related to appreciated
investment securities and $1,279,702 related to depreciated investment
securities.
MEDICAL EQUIPMENT AND SYSTEMS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 29,845,405
value (cost $28,251,815) -
See accompanying schedule
Receivable for investments 139,961
sold
Receivable for fund shares 155,198
sold
Dividends receivable 9,725
Interest receivable 12,234
Redemption fees receivable 30
TOTAL ASSETS 30,162,553
LIABILITIES
Payable for investments $ 1,492,114
purchased
Payable for fund shares 20,669
redeemed
Accrued management fee 12,967
Other payables and accrued 42,385
expenses
TOTAL LIABILITIES 1,568,135
NET ASSETS $ 28,594,418
Net Assets consist of:
Paid in capital $ 25,878,452
Accumulated undistributed net 1,122,376
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 1,593,590
(depreciation) on investments
NET ASSETS, for 2,364,036 $ 28,594,418
shares outstanding
NET ASSET VALUE and $12.10
redemption price per share
($28,594,418 (divided by)
2,364,036 shares)
Maximum offering price per $12.47
share (100/97.00 of $12.10)
STATEMENT OF OPERATIONS
APRIL 28, 1998 (COMMENCEMENT
OF OPERATIONS) TO FEBRUARY
28, 1999
INVESTMENT INCOME $ 77,548
Dividends
Interest 80,397
TOTAL INCOME 157,945
EXPENSES
Management fee $ 80,475
Transfer agent fees 107,471
Accounting fees and expenses 50,606
Non-interested trustees' 41
compensation
Custodian fees and expenses 9,620
Registration fees 54,577
Audit 20,376
Legal 41
Miscellaneous 278
Total expenses before 323,485
reductions
Expense reductions (1,420) 322,065
NET INVESTMENT INCOME (LOSS) (164,120)
REALIZED AND UNREALIZED GAIN 1,286,496
(LOSS)
Net realized gain (loss) on
investment securities
Change in net unrealized 1,593,590
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 2,880,086
NET INCREASE (DECREASE) IN $ 2,715,966
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 283,524
charges paid to FDC
Sales charges retained by FDC $ 283,524
Deferred sales charges $ 2,642
withheld by FDC
Exchange fees withheld by FSC $ 1,635
Expense Reductions
Direct brokerage $ 1,351
arrangements
Custodian credits 69
$ 1,420
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET APRIL 28, 1998 (COMMENCEMENT
ASSETS OF OPERATIONS) TO FEBRUARY
28, 1999
Operations Net investment $ (164,120)
income (loss)
Net realized gain (loss) 1,286,496
Change in net unrealized 1,593,590
appreciation (depreciation)
NET INCREASE (DECREASE) IN 2,715,966
NET ASSETS RESULTING FROM
OPERATIONS
Share transactions Net 45,365,490
proceeds from sales of shares
Cost of shares redeemed (19,529,306)
NET INCREASE (DECREASE) IN 25,836,184
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 42,268
TOTAL INCREASE (DECREASE) 28,594,418
IN NET ASSETS
NET ASSETS
Beginning of period -
End of period $ 28,594,418
OTHER INFORMATION
Shares
Sold 4,138,562
Redeemed (1,774,526)
Net increase (decrease) 2,364,036
FINANCIAL HIGHLIGHTS
YEAR ENDED FEBRUARY 28, 1999 F
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.11)
Net realized and unrealized 2.18
gain (loss)
Total from investment 2.07
operations
Redemption fees added to paid .03
in capital
Net asset value, end of period $ 12.10
TOTAL RETURN B, C 21.00%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 28,594
(000 omitted)
Ratio of expenses to average 2.39% A
net assets
Ratio of expenses to average 2.38% A, E
net assets after expense
reductions
Ratio of net investment (1.21)% A
income (loss) to average net
assets
Portfolio turnover rate 85% A
A ANNUALIZED B THE TOTAL
RETURN WOULD HAVE BEEN LOWER
HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE
PERIOD 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
THE PERIOD APRIL 28, 1998
(COMMENCEMENT OF OPERATIONS)
TO FEBRUARY 28, 1999.
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT ENERGY -22.00% 36.72% 108.70%
SELECT ENERGY (LOAD ADJ.) -24.41% 32.55% 102.37%
S&P 500 19.74% 194.91% 459.21%
GS Natural Resources -20.88% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT ENERGY -22.00% 6.46% 7.63%
SELECT ENERGY (LOAD ADJ.) -24.41% 5.80% 7.30%
S&P 500 19.74% 24.15% 18.78%
GS Natural Resources -20.88% 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
1989/02/28 9700.00 10000.00
1989/03/31 10259.76 10233.00
1989/04/30 10605.92 10764.09
1989/05/31 10731.13 11200.04
1989/06/30 10952.09 11136.20
1989/07/31 11408.73 12141.80
1989/08/31 11659.15 12379.78
1989/09/30 11843.28 12329.02
1989/10/31 11762.26 12042.99
1989/11/30 12204.18 12288.66
1989/12/31 13086.16 12583.59
1990/01/31 12501.89 11739.23
1990/02/28 12891.40 11890.67
1990/03/31 12898.89 12205.77
1990/04/30 12464.43 11900.63
1990/05/31 13220.99 13060.94
1990/06/30 12909.40 12972.12
1990/07/31 13788.68 12930.61
1990/08/31 14036.47 11761.68
1990/09/30 13996.50 11188.89
1990/10/31 13277.10 11140.78
1990/11/30 13133.21 11860.47
1990/12/31 12498.28 12191.38
1991/01/31 11688.74 12722.92
1991/02/28 12779.14 13632.61
1991/03/31 12605.67 13962.52
1991/04/30 12746.10 13996.03
1991/05/31 12820.44 14600.66
1991/06/30 12249.28 13931.95
1991/07/31 12878.30 14581.18
1991/08/31 13126.60 14926.75
1991/09/30 12994.17 14677.48
1991/10/31 13383.17 14874.16
1991/11/30 12389.98 14274.73
1991/12/31 12502.68 15907.76
1992/01/31 11833.64 15611.87
1992/02/29 11850.37 15814.83
1992/03/31 11507.48 15506.44
1992/04/30 12293.60 15962.33
1992/05/31 12879.01 16040.54
1992/06/30 12241.71 15801.54
1992/07/31 12568.71 16447.82
1992/08/31 12795.10 16110.64
1992/09/30 12870.56 16300.75
1992/10/31 12317.17 16357.80
1992/11/30 12032.09 16915.60
1992/12/31 12204.05 17123.66
1993/01/31 12664.26 17267.50
1993/02/28 13499.46 17502.34
1993/03/31 14189.77 17871.64
1993/04/30 14462.72 17439.14
1993/05/31 14897.63 17906.51
1993/06/30 15093.76 17958.44
1993/07/31 14982.90 17886.61
1993/08/31 16168.23 18564.51
1993/09/30 16074.43 18421.56
1993/10/31 15844.19 18802.89
1993/11/30 13925.49 18624.26
1993/12/31 14541.68 18849.62
1994/01/31 15320.54 19490.50
1994/02/28 14807.20 18962.31
1994/03/31 14090.29 18135.55
1994/04/30 15166.60 18367.69
1994/05/31 15327.10 18668.92
1994/06/30 15246.85 18211.53
1994/07/31 15478.68 18808.87
1994/08/31 15220.10 19580.03
1994/09/30 15104.19 19100.32
1994/10/31 15960.15 19530.08
1994/11/30 14979.36 18818.79
1994/12/31 14601.65 19097.87
1995/01/31 14252.02 19593.08
1995/02/28 14813.27 20356.63
1995/03/31 15622.94 20957.35
1995/04/30 16103.08 21574.54
1995/05/31 16518.58 22436.88
1995/06/30 16038.44 22958.09
1995/07/31 16417.01 23719.38
1995/08/31 16296.98 23778.91
1995/09/30 16306.21 24782.38
1995/10/31 15604.47 24693.91
1995/11/30 16500.11 25777.97
1995/12/31 17723.92 26274.46
1996/01/31 17997.76 27168.84
1996/02/29 17912.78 27420.69
1996/03/31 19112.00 27684.75
1996/04/30 20037.50 28092.83
1996/05/31 20244.58 28817.34
1996/06/30 20619.29 28927.14
1996/07/31 19692.36 27649.13
1996/08/31 20461.52 28232.26
1996/09/30 21546.23 29821.17
1996/10/31 22423.85 30643.63
1996/11/30 23666.33 32959.99
1996/12/31 23479.50 32307.05
1997/01/31 24015.65 34325.59
1997/02/28 21557.44 34594.71
1997/03/31 22154.29 33173.21
1997/04/30 21956.53 35153.65
1997/05/31 23955.48 37293.80
1997/06/30 24306.36 38964.57
1997/07/31 25901.26 42064.98
1997/08/31 26167.08 39708.50
1997/09/30 28091.60 41883.33
1997/10/31 27315.41 40484.43
1997/11/30 25741.77 42358.45
1997/12/31 25893.83 43085.75
1998/01/31 24510.37 43562.28
1998/02/28 25955.04 46703.99
1998/03/31 27191.58 49095.70
1998/04/30 27715.95 49589.60
1998/05/31 27042.38 48737.16
1998/06/30 26331.40 50716.86
1998/07/31 24161.02 50176.72
1998/08/31 19845.22 42922.17
1998/09/30 23237.99 45671.77
1998/10/31 23512.41 49386.71
1998/11/30 22689.16 52380.04
1998/12/31 22077.96 55398.18
1999/01/31 20568.68 57714.93
1999/02/26 20237.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990322 111032 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Energy Portfolio on February 28, 1989, and
the current 3.00% sales charge was paid. As the chart shows, by
February 28, 1999, the value of the investment would have grown to
$20,237 - a 102.37% 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 $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
BP Amoco PLC sponsored ADR 7.0
Mobil Corp. 6.2
USX-Marathon Group 5.6
Schlumberger Ltd. 5.3
Exxon Corp. 5.3
Enron Corp. 5.2
Chevron Corp. 3.5
Total SA sponsored ADR 3.5
Amerada Hess Corp. 3.3
Halliburton Co. 3.2
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Oil & Gas 63.0%
Energy Services 18.6%
Gas 5.6%
Chemicals & Plastics 3.9%
Electric Utility 2.3%
All Others 6.6%*
Row: 1, Col: 1, Value: 6.6
Row: 1, Col: 2, Value: 2.3
Row: 1, Col: 3, Value: 3.9
Row: 1, Col: 4, Value: 5.6
Row: 1, Col: 5, Value: 18.6
Row: 1, Col: 6, Value: 63.0
* INCLUDES SHORT-TERM INVESTMENTS
ENERGY PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Larry Rakers)
Larry Rakers,
Portfolio Manager
of Fidelity Select
Energy Portfolio
Q. HOW DID THE FUND PERFORM, LARRY?
A. For the 12 months that ended February 28, 1999, the fund returned
- -22.00%, while the Standard & Poor's 500 Index returned 19.74% during
the same period. The fund also compares its performance 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 -20.88% during the same 12-month period.
Q. WHAT MARKET FACTORS HURT PERFORMANCE AND WHAT CAUSED THE FUND TO
UNDERPERFORM THE GOLDMAN SACHS INDEX FOR THE PERIOD?
A. The major cause of poor performance was weak global economic
growth. Many international economies continued to languish in a mire
of political, financial and currency troubles. Over the past couple of
years, the global demand for oil has declined from approximately a 2%
annual growth rate to 0%. In this environment, even a slight increase
in the supply of oil is too much and, as a result, commodity prices
have tanked across the board. Regarding the fund's performance
relative to the Goldman Sachs index, the fund underperformed because I
allocated a larger percentage of assets to small and mid-cap
integrated oil companies and energy service companies compared to the
index. These are more sensitive to oil prices and underperformed the
larger integrated oil companies, such as Mobil and Exxon, in this
bearish environment.
Q. WHAT ABOUT THE ELECTRIC AND GAS UTILITIES SECTORS? IN COMPARISON TO
THE GOLDMAN SACHS INDEX, WHY WAS THE FUND UNDERWEIGHTED IN THESE AREAS
AND OVERWEIGHTED IN MORE AGGRESSIVE OIL COMPANIES?
A. Gas and electric stocks are defensive investments that I tend to
focus on when I am concerned about oil prices declining. However, I
believed there wasn't much room for oil prices to go lower and there
was a strong argument to say that prices were ready to go higher. In
hindsight, I was early in my prediction that oil prices were poised to
rebound. However, I am comfortable with the fund's asset allocation. I
believe for a number of reasons - which I will discuss in more detail
in my market outlook - that we are starting to see signs of impending
strength in oil prices. As a result, if we do see an increase in oil
prices, the smaller-cap integrated oil companies and energy service
companies - which are more sensitive to oil prices - should perform
better than electric and gas utilities, as well as the larger-cap
integrated oil companies.
Q. WERE THERE ANY BRIGHT SPOTS IN THIS DIFFICULT ENVIRONMENT?
A. The major oil stocks, such as BP Amoco, Mobil and Exxon, managed to
gain approximately 13% combined over the past year. All of these
stocks provided a boost to the fund's total return and rallied in
response to merger announcements. In comparison, the secondary energy
stocks - drillers, oil service and oil equipment - all posted
significant losses for the year.
Q. WHAT OTHER STOCKS DETRACTED FROM PERFORMANCE?
A. With the exception of the large integrated oil stocks, the energy
and energy service sectors experienced negative returns across the
board. With energy prices hitting 12-year lows, significant detractors
were USX-Marathon, Tosco, Weatherford International and Schlumberger.
As I mentioned earlier, the stock prices of these companies are even
more dependent on energy prices than the larger integrated oil
companies. When the prices of oil and natural gas drop below a certain
level, it no longer makes economic sense to explore for these fuels or
drill new wells. In this environment, business deteriorates for energy
service companies like Weatherford and Schlumberger. On the other
hand, if energy prices pick up, earnings can rise exponentially for
these companies.
Q. WHAT'S YOUR OUTLOOK, LARRY?
A. I'm starting to get excited about the outlook for oil stocks for
the first time in a while. The Organization of Petroleum Exporting
Countries (OPEC) is scheduled to meet on March 23, 1999. We started to
see a strong rebound in oil prices toward the end of the period as
investors anticipated that OPEC will reduce oil production. If this
trend continues, combined with a slight increase in demand, the fund
could perform well. In addition, for the first time in a while, we are
starting to see a response on the supply side to price movement. For
example, the typical oil company cut capital expenditures by 30%, cut
back on exploration, and the number of rigs drilling for oil and gas
fell to a 49-year low. As a result, oil and gas production may fall in
1999. If we get even a slight rebound in demand from Asia or Latin
America, I don't think it will take much for a squeeze on supply. This
scenario could be very good for the fund.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: July 14, 1981
FUND NUMBER: 060
TRADING SYMBOL: FSENX
SIZE: as of February 28, 1999, more than
$120 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, 1995-1997; joined Fidelity
in 1993
ENERGY PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.7%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES -
0.1%
Forest Oil Corp. (a) 10,000 $ 63,750
CHEMICALS & PLASTICS - 3.9%
Crompton & Knowles Corp. 61,600 1,139,600
du Pont (E.I.) de Nemours & 69,600 3,571,350
Co.
4,710,950
ELECTRIC UTILITY - 2.3%
AES Corp. (a) 62,000 2,305,625
Calenergy, Inc. (a) 16,700 468,644
2,774,269
ENERGY SERVICES - 18.6%
Baker Hughes, Inc. 135,650 2,441,700
BJ Services Co. (a) 151,100 2,124,844
Coflexip SA sponsored ADR 29,300 842,375
ENSCO International, Inc. 145,400 1,290,425
Global Industries Ltd. (a) 10,000 50,625
Global Marine, Inc. (a) 38,000 294,500
Halliburton Co. 135,400 3,825,050
Helmerich & Payne, Inc. 44,400 724,275
Marine Drilling Companies, 20,000 127,500
Inc. (a)
Nabors Industries, Inc. (a) 25,000 287,500
Noble Drilling Corp. (a) 105,800 1,309,275
Pool Energy Services Co. (a) 87,000 883,594
Rowan Companies, Inc. (a) 20,000 172,500
Ryan Energy Technologies, 32,900 50,186
Inc. (a)
Santa Fe International Corp. 17,300 231,388
Schlumberger Ltd. 131,880 6,404,423
Smith International, Inc. 47,600 1,157,275
UTI Energy Corp. (a) 27,000 156,938
22,374,373
ENGINEERING - 0.2%
Stolt Comex Seaway SA 13,800 91,425
Stolt Comex Seaway SA 20,000 117,500
sponsored ADR Class A
208,925
GAS - 5.6%
Dynegy, Inc. 11,000 132,000
Enron Corp. 96,800 6,292,000
Williams Companies, Inc. 10,000 370,000
6,794,000
OIL & GAS - 62.9%
Alberta Energy Co. Ltd. 23,000 493,467
Amerada Hess Corp. 87,200 3,956,700
SHARES VALUE (NOTE 1)
Anadarko Petroleum Corp. 25,900 $ 712,250
Apache Corp. 10,000 199,375
Berkley Petroleum Corp. (a) 38,800 211,009
BP Amoco PLC sponsored ADR 99,390 8,448,140
Burlington Resources, Inc. 2,825 91,459
Cabot Oil & Gas Corp. Class A 26,500 289,844
Canadian Natural Resources 72,600 1,003,920
Ltd. (a)
Chesapeake Energy Corp. 50,000 34,375
Chevron Corp. 54,600 4,197,375
Compagnie Generale de 25,800 212,850
Geophysique SA sponsored ADR
(a)
Conoco, Inc. Class A 15,000 304,688
Cooper Cameron Corp. (a) 14,800 342,250
Crestar Energy, Inc. (a) 49,500 334,859
Elf Aquitaine SA sponsored ADR 71,300 3,680,863
Eni Spa sponsored ADR 5,000 295,000
Enron Oil & Gas Co. 55,200 910,800
Exxon Corp. 95,500 6,356,719
Frontier Oil Corp. (a) 249,600 1,310,400
Gulf Canada Resources Ltd. (a) 93,000 221,429
Imperial Oil Ltd. 147,000 2,271,588
Louis Dreyfus Natural Gas 54,700 652,981
Corp. (a)
Magnum Hunter Resources, Inc. 60,200 154,263
(a)
Mallon Resources Corp. (a) 5,000 31,563
Mobil Corp. 88,900 7,395,369
Newfield Exploration Co. (a) 5,000 81,250
Noble Affiliates, Inc. 12,800 289,600
Ocean Energy, Inc. (a) 31,800 135,150
Oryx Energy Co. (a) 90,600 939,975
Paramount Resources Ltd. (c) 38,200 325,554
Penn West Petroleum Ltd. (a) 25,800 255,810
Petro-Canada 85,100 914,326
Plains Resources, Inc. (a) 96,400 891,700
Post Energy Corp. (a) 47,500 105,535
Ranger Oil Ltd. 40,000 111,686
Renaissance Energy Ltd. (a) 43,300 381,941
Rio Alto Exploration Ltd. (a) 101,700 900,448
Seagull Energy Corp. (a) 77,100 366,225
Shell Transport & Trading Co.
PLC:
ADR 83,100 2,789,044
(Reg.) 510,000 2,852,853
Snyder Oil Corp. 59,900 625,206
Stellarton Energy Corp. Class 100,000 79,586
A (a)
Suncor Energy, Inc. 44,800 1,311,792
Texaco, Inc. 80,600 3,752,938
Tosco Corp. 52,100 1,077,819
Total SA sponsored ADR 81,200 4,191,950
Ulster Petroleums Ltd. (a) 34,600 192,758
Ultramar Diamond Shamrock 29,100 574,725
Corp.
Union Pacific Resources 76,100 680,144
Group, Inc.
Upton Resources, Inc. (a) 59,700 55,432
USX-Marathon Group 325,400 6,731,713
Vastar Resources, Inc. 5,200 200,200
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
OIL & GAS - CONTINUED
Vintage Petroleum, Inc. 14,900 $ 66,119
Weatherford International, 28,425 483,225
Inc. (a)
75,478,240
SHIP BUILDING & REPAIR - 0.1%
Halter Marine Group, Inc. (a) 20,000 80,000
TOTAL COMMON STOCKS 112,484,507
(Cost $126,539,724)
CONVERTIBLE PREFERRED STOCKS
- - 0.1%
OIL & GAS - 0.1%
Chesapeake Energy Corp. $3.50 9,400 89,300
(Cost $91,438)
CASH EQUIVALENTS - 6.2%
Taxable Central Cash Fund (b) 7,421,818 7,421,818
(Cost $7,421,818)
TOTAL INVESTMENT IN $ 119,995,625
SECURITIES - 100%
(Cost $134,052,980)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. 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 $325,554 or 0.3%
of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $188,611,682 and $178,672,234, respectively.
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 $48,921 for the
period.
Distribution of investments by country of issue, as a percentage of
total value of investments in securities, is as follows:
United States of America 67.4%
United Kingdom 11.7
Canada 7.7
France 7.5
Netherlands Antilles 5.3
Others (individually less 0.4
than 1%)
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $137,186,700. Net unrealized depreciation
aggregated $17,191,075, of which $3,832,545 related to appreciated
investment securities and $21,023,620 related to depreciated
investment securities.
The fund hereby designates approximately $2,129,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
At February 28, 1999, the fund had a capital loss carryforward
of approximately $3,040,000 all of which will expire on
February 28, 2007.
The fund intends to elect to defer to its fiscal year ending February
29, 2000 approximately $6,117,000 of losses recognized during the
period November 1, 1998 to February 28, 1999
A total of 100% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of this percentage
for use in preparing 1999 income tax returns.
ENERGY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 119,995,625
value (cost $134,052,980) -
See accompanying schedule
Receivable for investments 7,140
sold
Receivable for fund shares 565,649
sold
Dividends receivable 452,490
Interest receivable 36,831
Redemption fees receivable 411
Other receivables 1,364
TOTAL ASSETS 121,059,510
LIABILITIES
Payable for investments $ 122,508
purchased
Payable for fund shares 779,716
redeemed
Accrued management fee 59,148
Other payables and accrued 93,662
expenses
TOTAL LIABILITIES 1,055,034
NET ASSETS $ 120,004,476
Net Assets consist of:
Paid in capital $ 145,525,094
Undistributed net investment 825,869
income
Accumulated undistributed net (12,289,132)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (14,057,355)
(depreciation) on investments
NET ASSETS, for 7,395,868 $ 120,004,476
shares outstanding
NET ASSET VALUE and $16.23
redemption price per share
($120,004,476 (divided by)
7,395,868 shares)
Maximum offering price per $16.73
share (100/97.00 of $16.23)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 2,450,558
Dividends
Interest (including income on 500,765
securities loaned of $5,546)
TOTAL INCOME 2,951,323
EXPENSES
Management fee $ 825,294
Transfer agent fees 989,327
Accounting and security 136,226
lending fees
Non-interested trustees' 332
compensation
Custodian fees and expenses 30,016
Registration fees 25,954
Audit 12,517
Legal 796
Reports to shareholders 24,787
Miscellaneous 1,374
Total expenses before 2,046,623
reductions
Expense reductions (56,099) 1,990,524
NET INVESTMENT INCOME 960,799
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (12,009,667)
Foreign currency transactions (88,526) (12,098,193)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (22,109,006)
Assets and liabilities in 28 (22,108,978)
foreign currencies
NET GAIN (LOSS) (34,207,171)
NET INCREASE (DECREASE) IN $ (33,246,372)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 570,198
charges paid to FDC
Sales charges - Retained by $ 567,585
FDC
Deferred sales charges $ 12,418
withheld by FDC
Exchange fees withheld by FSC $ 15,098
Expense reductions Directed $ 55,993
brokerage arrangements
Custodian credits 106
$ 56,099
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ 960,799 $ 899,143
income
Net realized gain (loss) (12,098,193) 35,228,064
Change in net unrealized (22,108,978) 1,070,352
appreciation (depreciation)
NET INCREASE (DECREASE) IN (33,246,372) 37,197,559
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (118,598) (711,215)
From net investment income
From net realized gain (2,920,602) (31,012,994)
TOTAL DISTRIBUTIONS (3,039,200) (31,724,209)
Share transactions Net 115,988,469 138,864,076
proceeds from sales of shares
Reinvestment of distributions 2,970,065 31,069,131
Cost of shares redeemed (109,891,379) (231,915,098)
NET INCREASE (DECREASE) IN 9,067,155 (61,981,891)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 199,403 267,473
TOTAL INCREASE (DECREASE) (27,019,014) (56,241,068)
IN NET ASSETS
NET ASSETS
Beginning of period 147,023,490 203,264,558
End of period (including $ 120,004,476 $ 147,023,490
undistributed net investment
income of $825,869 and
$431,333, respectively)
OTHER INFORMATION
Shares
Sold 5,995,866 5,967,396
Issued in reinvestment of 133,126 1,509,439
distributions
Redeemed (5,669,002) (10,078,784)
Net increase (decrease) 459,990 (2,601,949)
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 F 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 21.20 $ 21.31 $ 18.97 $ 16.10 $ 16.73
period
Income from Investment
Operations
Net investment income C .13 .11 .13 .18 .07
Net realized and unrealized (4.71) 3.93 3.59 3.13 (.11)
gain (loss)
Total from investment (4.58) 4.04 3.72 3.31 (.04)
operations
Less Distributions
From net investment income (.02) E (.09) (.13) (.11) (.08)
From net realized gain (.40) E (4.09) (1.31) (.36) (.54)
Total distributions (.42) (4.18) (1.44) (.47) (.62)
Redemption fees added to paid .03 .03 .06 .03 .03
in capital
Net asset value, end of period $ 16.23 $ 21.20 $ 21.31 $ 18.97 $ 16.10
TOTAL RETURN A, B (22.00)% 20.40% 20.35% 20.92% .04%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 120,004 $ 147,023 $ 203,265 $ 119,676 $ 96,023
(000 omitted)
Ratio of expenses to average 1.46% 1.58% 1.57% 1.63% 1.85%
net assets
Ratio of expenses to average 1.42% D 1.53% D 1.55% D 1.63% 1.85%
net assets after expense
reductions
Ratio of net investment .68% .47% .62% 1.04% .42%
income to average net assets
Portfolio turnover rate 138% 115% 87% 97% 106%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME PER
SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES
OUTSTANDING DURING THE
PERIOD. D FMR OR THE FUND
HAS ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE
FUND'S EXPENSES. E THE
AMOUNTS SHOWN REFLECT
CERTAIN RECLASSIFICATIONS
RELATED TO BOOK TO TAX
DIFFERENCES. F FOR THE YEAR
ENDED FEBRUARY 29.
</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.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT ENERGY SERVICE -50.57% 45.28% 111.18%
SELECT ENERGY SERVICE (LOAD -52.12% 40.85% 104.77%
ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Natural Resources -20.88% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of the
Standard & Poor's 500 Index - a market capitalization-weighted 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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT ENERGY SERVICE -50.57% 7.76% 7.76%
SELECT ENERGY SERVICE (LOAD -52.12% 7.09% 7.43%
ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Natural Resources -20.88% 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
1989/02/28 9700.00 10000.00
1989/03/31 10313.01 10233.00
1989/04/30 10805.82 10764.09
1989/05/31 10998.14 11200.04
1989/06/30 11358.74 11136.20
1989/07/31 11995.79 12141.80
1989/08/31 12560.72 12379.78
1989/09/30 12380.42 12329.02
1989/10/31 11767.41 12042.99
1989/11/30 12777.08 12288.66
1989/12/31 14411.77 12583.59
1990/01/31 13486.25 11739.23
1990/02/28 14760.35 11890.67
1990/03/31 15469.52 12205.77
1990/04/30 14652.17 11900.63
1990/05/31 17116.23 13060.94
1990/06/30 16238.79 12972.12
1990/07/31 17765.30 12930.61
1990/08/31 17452.79 11761.68
1990/09/30 17116.23 11188.89
1990/10/31 14964.68 11140.78
1990/11/30 15193.06 11860.47
1990/12/31 14664.69 12191.38
1991/01/31 14002.49 12722.92
1991/02/28 16253.97 13632.61
1991/03/31 14989.77 13962.52
1991/04/30 15062.01 13996.03
1991/05/31 15459.33 14600.66
1991/06/30 13436.61 13931.95
1991/07/31 14447.97 14581.18
1991/08/31 14291.45 14926.75
1991/09/30 12979.10 14677.48
1991/10/31 13171.73 14874.16
1991/11/30 11594.50 14274.73
1991/12/31 11221.26 15907.76
1992/01/31 11064.74 15611.87
1992/02/29 11293.50 15814.83
1992/03/31 10486.82 15506.44
1992/04/30 11353.70 15962.33
1992/05/31 12256.70 16040.54
1992/06/30 11546.34 15801.54
1992/07/31 12027.94 16447.82
1992/08/31 12641.98 16110.64
1992/09/30 13027.26 16300.75
1992/10/31 12353.02 16357.80
1992/11/30 12100.18 16915.60
1992/12/31 11606.54 17123.66
1993/01/31 12064.06 17267.50
1993/02/28 13256.01 17502.34
1993/03/31 14303.49 17871.64
1993/04/30 15074.53 17439.14
1993/05/31 15773.43 17906.51
1993/06/30 15689.08 17958.44
1993/07/31 15905.98 17886.61
1993/08/31 16460.28 18564.51
1993/09/30 15978.28 18421.56
1993/10/31 15749.33 18802.89
1993/11/30 14086.43 18624.26
1993/12/31 14038.86 18849.62
1994/01/31 14171.88 19490.50
1994/02/28 14099.32 18962.31
1994/03/31 13047.32 18135.55
1994/04/30 13729.48 18367.69
1994/05/31 14341.07 18668.92
1994/06/30 14777.92 18211.53
1994/07/31 15052.51 18808.87
1994/08/31 14453.40 19580.03
1994/09/30 15002.58 19100.32
1994/10/31 15601.69 19530.08
1994/11/30 14790.40 18818.79
1994/12/31 14118.52 19097.87
1995/01/31 14207.24 19593.08
1995/02/28 15170.44 20356.63
1995/03/31 16006.91 20957.35
1995/04/30 16982.78 21574.54
1995/05/31 17426.36 22436.88
1995/06/30 16830.70 22958.09
1995/07/31 17667.16 23719.38
1995/08/31 18376.89 23778.91
1995/09/30 18427.59 24782.38
1995/10/31 16830.70 24693.91
1995/11/30 17781.23 25777.97
1995/12/31 19889.33 26274.46
1996/01/31 20322.28 27168.84
1996/02/29 21109.46 27420.69
1996/03/31 22775.65 27684.75
1996/04/30 24488.43 28092.83
1996/05/31 24132.19 28817.34
1996/06/30 24184.97 28927.14
1996/07/31 22852.35 27649.13
1996/08/31 24303.72 28232.26
1996/09/30 25214.12 29821.17
1996/10/31 28024.48 30643.63
1996/11/30 29159.18 32959.99
1996/12/31 29651.81 32307.05
1997/01/31 31302.92 34325.59
1997/02/28 27918.82 34594.71
1997/03/31 29883.78 33173.21
1997/04/30 29538.34 35153.65
1997/05/31 33638.07 37293.80
1997/06/30 35840.05 38964.57
1997/07/31 41475.36 42064.98
1997/08/31 44416.16 39708.50
1997/09/30 49051.90 41883.33
1997/10/31 50920.68 40484.43
1997/11/30 44691.41 42358.45
1997/12/31 45033.34 43085.75
1998/01/31 38659.16 43562.28
1998/02/28 41439.55 46703.99
1998/03/31 44545.29 49095.70
1998/04/30 48213.30 49589.60
1998/05/31 45114.88 48737.16
1998/06/30 39231.01 50716.86
1998/07/31 30592.99 50176.72
1998/08/31 20906.52 42922.17
1998/09/30 25585.44 45671.77
1998/10/31 29309.81 49386.71
1998/11/30 22330.54 52380.04
1998/12/31 22643.51 55398.18
1999/01/31 21595.05 57714.93
1999/02/26 20477.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990309 144156 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Energy Service Portfolio on February 28,
1989, and the current 3.00% sales charge was paid. As the chart shows,
by February 28, 1999, the value of the investment would have grown to
$20,477 - a 104.77% 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 $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Halliburton Co. 8.7
Schlumberger Ltd. 7.0
Baker Hughes, Inc. 6.7
Cooper Cameron Corp. 6.0
Noble Drilling Corp. 5.7
Weatherford International, Inc. 5.0
Smith International, Inc. 5.0
BJ Services Co. 4.4
McDermott International, Inc. 4.0
Helmerich & Payne, Inc. 3.6
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Energy Services 76.2%
Oil & Gas 12.2%
Construction 2.7%
Engineering 1.7%
Services 0.4%
All Others 6.8%*
Row: 1, Col: 1, Value: 6.8
Row: 1, Col: 2, Value: 1.0
Row: 1, Col: 3, Value: 1.7
Row: 1, Col: 4, Value: 2.7
Row: 1, Col: 5, Value: 12.2
Row: 1, Col: 6, Value: 75.2
* INCLUDES SHORT-TERM 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. It was a very difficult period. For the 12 months that ended
February 28, 1999, the fund had a total return of -50.57%, compared to
19.74% for the Standard & Poor's 500 Index. The Goldman Sachs Natural
Resources Index - an index of 96 stocks designed to measure the
performance of companies in the natural resources sector - returned
- -20.88% during the same period.
Q. WHAT ACCOUNTED FOR THE FUND'S EXTREMELY WEAK PERFORMANCE VERSUS ITS
BENCHMARKS?
A. The basic business prospects - and, in turn, the stock prices - of
energy service companies depend to a considerable extent on the price
of oil, which continued to decline for most of the period, dipping
below $11 a barrel in December 1998. On the other hand, aside from a
rough stretch from mid-July through mid-October, the broader stock
market turned in another strong showing, enabling the S&P 500 to far
surpass the fund's performance. The Goldman Sachs index contains the
stocks of companies involved in the production of a wide variety of
natural resources, most of which performed better than oil did during
the period. In addition, energy service stocks are typically very
volatile and highly sensitive to the price of oil, whereas the Goldman
Sachs index also contains some less volatile components - for example,
the stocks of large integrated oil companies. These factors helped the
Goldman Sachs index to outperform the fund.
Q. HOW DID YOU MANAGE THE FUND DURING THIS DIFFICULT PERIOD?
A. I tried to focus on the stocks of companies that could weather the
downturn better than others. That meant seeking out the shares of
larger companies with strong balance sheets - many with leadership
positions in the sector - and avoiding the stocks of companies with
high financial leverage and low value-added products and services.
Secondarily, I emphasized the shares of companies with exposure to
the U.S. natural gas market, which was somewhat healthier than the oil
market. As the price of oil continued to grind lower, however, there
was virtually no segment of the energy service sector that was immune
to plunging stock prices. In the words of a song that was popular some
years ago, there was "nowhere to run, nowhere to hide."
Q. WHAT STOCKS HELPED THE FUND'S PERFORMANCE DURING THE PERIOD?
A. Unfortunately, there is nothing worth mentioning on the positive
side, as almost all energy service stocks underperformed during the
period.
Q. WHAT STOCKS WERE DISAPPOINTING?
A. Cooper Cameron, the fund's largest holding for most of the period,
was one of the biggest detractors from performance. A well-managed oil
field equipment company, Cooper Cameron was hurt by falling order
backlogs. Drilling companies were extremely poor performers, as day
rates for drill rigs fell sharply along with utilization. R&B Falcon,
Noble Drilling and Diamond Offshore Drilling were examples of drilling
stocks that detracted from performance. Even Halliburton, widely
considered to be a "blue chip" energy service holding, saw its stock
perform poorly during the period.
Q. WHAT'S YOUR OUTLOOK, JIM?
A. Despite sailing on rough seas recently, there may be some rays of
light on the horizon for energy service stocks. The Organization of
Petroleum Exporting Countries (OPEC) has a meeting scheduled for March
23, 1999, at which it will decide whether or not to reduce oil
production further. If additional cuts are made, oil prices could firm
up in short order. However, even if OPEC cannot agree on any
production cuts, low oil prices will eventually result in decreased
supplies, which should be supportive of higher prices. On the demand
side, Asia appears to be consuming more oil again, but that influence
is being offset to some extent by lower demand from Brazil and the
rest of Latin America. To sum up, the short-term outlook is uncertain,
and all eyes are on OPEC, but over the longer term, the oil market -
and energy service stocks in general - should see improvement
regardless of what OPEC does on March 23.
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 OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: December 16, 1985
FUND NUMBER: 043
TRADING SYMBOL: FSESX
SIZE: as of February 28, 1999, more than
$366 million
MANAGER: James Catudal, since 1998;
manager, Fidelity Select Industrial Materials
Portfolio, 1997-1998; research analyst,
North American non-ferrous metals
companies, since 1997; joined Fidelity in
1997
ENERGY SERVICE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 94.1%
SHARES VALUE (NOTE 1)
COMPUTER SERVICES & SOFTWARE
- - 0.1%
GeoScience Corp. (a) 20,000 $ 270,000
CONSTRUCTION - 2.7%
Bouygues Offshore SA 59,000 781,750
sponsored ADR
McDermott (J. Ray) SA (a) 449,900 9,307,306
10,089,056
ELECTRICAL EQUIPMENT - 0.3%
NQL Drilling Tools, Inc. 495,300 1,215,420
Class A (a)
ENERGY SERVICES - 76.2%
Atwood Oceanics, Inc. (a) 225,700 3,794,581
Baker Hughes, Inc. 1,370,936 24,676,848
BJ Services Co. (a) 1,153,176 16,216,538
CAL Dive International, Inc. 49,300 708,688
(a)
Carbo Ceramics, Inc. 61,000 976,000
Coflexip SA sponsored ADR 343,600 9,878,500
Daniel Industries, Inc. 341,800 3,631,625
Diamond Offshore Drilling, 596,500 12,340,094
Inc.
ENSCO International, Inc. 1,367,800 12,139,225
Global Industries Ltd. (a) 942,300 4,770,394
Global Marine, Inc. (a) 546,000 4,231,500
Halliburton Co. 1,137,167 32,124,962
Helmerich & Payne, Inc. 801,300 13,071,206
Input/Output, Inc. (a) 716,800 4,032,000
Marine Drilling Companies, 832,100 5,304,638
Inc. (a)
McDermott International, Inc. 737,500 14,703,906
Nabors Industries, Inc. (a) 937,700 10,783,550
Noble Drilling Corp. (a) 1,705,650 21,107,419
Oceaneering International, 517,600 5,176,000
Inc. (a)
Offshore Logistics, Inc. (a) 159,300 1,388,897
Parker Drilling Co. (a) 25,000 62,500
Pool Energy Services Co. (a) 325,600 3,306,875
R&B Falcon Corp. (a) 75,118 413,149
Rowan Companies, Inc. (a) 923,600 7,966,050
Ryan Energy Technologies, 397,200 605,889
Inc. (a)
Santa Fe International Corp. 338,300 4,524,763
Schlumberger Ltd. 532,245 25,847,148
SEACOR SMIT, Inc. (a) 128,900 5,075,438
Smith International, Inc. 754,600 18,346,213
Superior Energy Services, 50,000 137,500
Inc. (a)
Tidewater, Inc. 146,465 2,755,373
Transocean Offshore, Inc. 338,154 6,974,426
UTI Energy Corp. (a) 115,000 668,438
Varco International, Inc. (a) 292,500 2,266,875
280,007,208
ENGINEERING - 1.7%
Stolt Comex Seaway SA 669,500 4,435,438
Stolt Comex Seaway SA 302,900 1,779,538
sponsored ADR Class A
6,214,976
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY &
EQUIPMENT - 0.1%
Gardner Denver Machinery, 35,000 $ 446,250
Inc. (a)
METALS & MINING - 0.1%
Cameco Corp. 20,000 426,449
OIL & GAS - 12.2%
Compagnie Generale de 140,300 1,157,475
Geophysique SA sponsored ADR
(a)
Cooper Cameron Corp. (a) 946,276 21,882,633
Petroleum Geo-Services ASA 116,600 1,333,613
sponsored ADR (a)
Veritas DGC, Inc. (a) 190,500 1,797,844
Weatherford International, 1,090,940 18,545,980
Inc. (a)
44,717,545
SERVICES - 0.4%
Tuboscope, Inc. (a) 290,900 1,563,588
SHIP BUILDING & REPAIR - 0.3%
Dril-Quip, Inc. (a) 67,400 859,350
Halter Marine Group, Inc. (a) 70,000 280,000
1,139,350
TOTAL COMMON STOCKS 346,089,842
(Cost $567,053,337)
CASH EQUIVALENTS - 5.9%
Taxable Central Cash Fund (b) 21,633,087 21,633,087
(Cost $21,633,087)
TOTAL INVESTMENT IN $ 367,722,929
SECURITIES - 100%
(Cost $588,686,424)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. 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 $457,434,835 and $570,297,633, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $132,958 for the
period.
Distribution of investments by country of issue, as a percentage of
total value of investments in securities, is as follows:
United States of America 84.6%
Netherlands Antilles 7.0
France 3.2
Panama 2.5
Luxembourg 1.7
Others (individually less 1.0
than 1%)
total 100.0%
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $633,527,520. Net unrealized depreciation
aggregated $265,804,591, of which $2,654,891 related to appreciated
investment securities and $268,459,482 related to depreciated
investment securities.
The fund hereby designates approximately $34,268,000 as capital gain
dividend for the purpose of the dividend paid deduction.
At February 28, 1999, the fund had a capital loss carryforward of
approximately $85,150,000, all of which will expire on February 28,
2007.
The fund intends to elect to defer to its fiscal year ending February
29, 2000 approximately $56,642,000 of losses recognized during the
period November 1, 1998 to February 28, 1999.
A total of 11% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of this percentage
for use in preparing 1999 income tax returns.
ENERGY SERVICE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 367,722,929
value (cost $588,686,424) -
See accompanying schedule
Receivable for investments 1,215,887
sold
Receivable for fund shares 2,332,234
sold
Dividends receivable 395,147
Interest receivable 84,285
Redemption fees receivable 3,369
TOTAL ASSETS 371,753,851
LIABILITIES
Payable for investments $ 2,378,387
purchased
Payable for fund shares 2,012,857
redeemed
Accrued management fee 187,002
Other payables and accrued 279,233
expenses
TOTAL LIABILITIES 4,857,479
NET ASSETS $ 366,896,372
Net Assets consist of:
Paid in capital $ 774,492,783
Accumulated undistributed net (186,632,916)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (220,963,495)
(depreciation) on investments
NET ASSETS, for 28,022,490 $ 366,896,372
shares outstanding
NET ASSET VALUE and $13.09
redemption price per share
($366,896,372 (divided by)
28,022,490 shares)
Maximum offering price per $13.49
share (100/97.00 of $13.09)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 3,891,533
Dividends
Interest (including income on 1,782,191
securities loaned of
$218,074)
TOTAL INCOME 5,673,724
EXPENSES
Management fee $ 3,826,822
Transfer agent fees 4,328,274
Accounting and security 545,412
lending fees
Non-interested trustees' 2,014
compensation
Custodian fees and expenses 24,274
Registration fees 175,479
Audit 27,810
Legal 4,387
Reports to shareholders 124,072
Total expenses before 9,058,544
reductions
Expense reductions (217,151) 8,841,393
NET INVESTMENT INCOME (LOSS) (3,167,669)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (185,189,396)
Foreign currency transactions (1,446) (185,190,842)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (243,966,833)
Assets and liabilities in 168 (243,966,665)
foreign currencies
NET GAIN (LOSS) (429,157,507)
NET INCREASE (DECREASE) IN $ (432,325,176)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 3,272,526
charges paid to FDC
Sales charges - Retained by $ 3,265,721
FDC
Deferred sales charges $ 9,358
withheld by FDC
Exchange fees withheld by FSC $ 136,703
Expense reductions Directed $ 214,503
brokerage arrangements
Custodian credits 773
Transfer agent credits 1,875
$ 217,151
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (3,167,669) $ (3,364,496)
income (loss)
Net realized gain (loss) (185,190,842) 157,396,467
Change in net unrealized (243,966,665) 12,574,205
appreciation (depreciation)
NET INCREASE (DECREASE) IN (432,325,176) 166,606,176
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (54,767,354) (52,135,101)
from net realized gains
Share transactions Net 1,182,599,212 2,385,855,385
proceeds from sales of shares
Reinvestment of distributions 53,845,591 51,297,776
Cost of shares redeemed (1,305,871,677) (2,077,124,405)
NET INCREASE (DECREASE) IN (69,426,874) 360,028,756
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 4,414,000 4,998,236
TOTAL INCREASE (DECREASE) (552,105,404) 479,498,067
IN NET ASSETS
NET ASSETS
Beginning of period 919,001,776 439,503,709
End of period $ 366,896,372 $ 919,001,776
OTHER INFORMATION
Shares
Sold 53,434,483 81,787,357
Issued in reinvestment of 1,829,614 2,167,528
distributions
Redeemed (60,036,675) (72,645,359)
Net increase (decrease) (4,772,578) 11,309,526
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 F 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 28.02 $ 20.46 $ 16.09 $ 11.97 $ 11.66
period
Income from Investment
Operations
Net investment income (loss) C (.10) (.10) (.01) .08 D .02
Net realized and unrealized (13.26) 9.36 5.05 4.49 .67
gain (loss)
Total from investment (13.36) 9.26 5.04 4.57 .69
operations
Less Distributions
From net investment income - - - (.04) (.01)
In excess of net investment - - - - (.01)
income
From net realized gain (1.71) (1.85) (.79) (.48) (.35)
In excess of net realized gain - - - - (.13)
Total distributions (1.71) (1.85) (.79) (.52) (.50)
Redemption fees added to paid .14 .15 .12 .07 .12
in capital
Net asset value, end of period $ 13.09 $ 28.02 $ 20.46 $ 16.09 $ 11.97
TOTAL RETURN A, B (50.57)% 48.43% 32.26% 39.15% 7.60%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 366,896 $ 919,002 $ 439,504 $ 273,805 $ 63,794
(000 omitted)
Ratio of expenses to average 1.39% 1.25% 1.47% 1.59% 1.81%
net assets
Ratio of expenses to average 1.35% E 1.22% E 1.45% E 1.58% E 1.79% E
net assets after expense
reductions
Ratio of net investment (.49)% (.35)% (.07)% .60% .19%
income (loss) to average net
assets
Portfolio turnover rate 75% 78% 167% 223% 209%
</TABLE>
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D INVESTMENT
INCOME PER SHARE REFLECTS A
SPECIAL DIVIDEND WHICH
AMOUNTED TO $.02 PER SHARE.
E FMR OR THE FUND HAS
ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE
FUND'S EXPENSES. F FOR THE
YEAR ENDED FEBRUARY 29.
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT GOLD -15.69% -39.16% -11.85%
SELECT GOLD (LOAD ADJ.) -18.29% -41.06% -14.57%
S&P 500 19.74% 194.91% 459.21%
GS Natural Resources -20.88% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 index - a market capitalization-weighted
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT GOLD -15.69% -9.46% -1.25%
SELECT GOLD (LOAD ADJ.) -18.29% -10.03% -1.56%
S&P 500 19.74% 24.15% 18.78%
GS Natural Resources -20.88% 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
Gold S&P 500
00041 SP001
1989/02/28 9700.00 10000.00
1989/03/31 9358.89 10233.00
1989/04/30 8906.14 10764.09
1989/05/31 8583.63 11200.04
1989/06/30 9067.39 11136.20
1989/07/31 9160.42 12141.80
1989/08/31 9625.58 12379.78
1989/09/30 9681.39 12329.02
1989/10/31 9780.63 12042.99
1989/11/30 11027.24 12288.66
1989/12/31 10853.58 12583.59
1990/01/31 11331.14 11739.23
1990/02/28 11014.83 11890.67
1990/03/31 10586.89 12205.77
1990/04/30 9439.51 11900.63
1990/05/31 10270.59 13060.94
1990/06/30 9613.17 12972.12
1990/07/31 10282.99 12930.61
1990/08/31 10096.93 11761.68
1990/09/30 10090.73 11188.89
1990/10/31 8434.78 11140.78
1990/11/30 8329.35 11860.47
1990/12/31 8986.76 12191.38
1991/01/31 7740.15 12722.92
1991/02/28 8440.98 13632.61
1991/03/31 8409.97 13962.52
1991/04/30 8112.28 13996.03
1991/05/31 8391.37 14600.66
1991/06/30 8955.75 13931.95
1991/07/31 8856.52 14581.18
1991/08/31 8137.08 14926.75
1991/09/30 8000.64 14677.48
1991/10/31 8614.64 14874.16
1991/11/30 8596.04 14274.73
1991/12/31 8434.78 15907.76
1992/01/31 8639.45 15611.87
1992/02/29 8372.76 15814.83
1992/03/31 7802.17 15506.44
1992/04/30 7405.24 15962.33
1992/05/31 7932.42 16040.54
1992/06/30 8447.19 15801.54
1992/07/31 8980.56 16447.82
1992/08/31 8813.11 16110.64
1992/09/30 8763.49 16300.75
1992/10/31 8503.01 16357.80
1992/11/30 7783.57 16915.60
1992/12/31 8174.30 17123.66
1993/01/31 8019.25 17267.50
1993/02/28 8775.90 17502.34
1993/03/31 9762.02 17871.64
1993/04/30 10996.23 17439.14
1993/05/31 12218.03 17906.51
1993/06/30 12931.27 17958.44
1993/07/31 13960.81 17886.61
1993/08/31 13228.96 18564.51
1993/09/30 11827.30 18421.56
1993/10/31 13594.88 18802.89
1993/11/30 13607.29 18624.26
1993/12/31 14605.82 18849.62
1994/01/31 14612.02 19490.50
1994/02/28 14053.84 18962.31
1994/03/31 14394.95 18135.55
1994/04/30 13179.35 18367.69
1994/05/31 13749.94 18668.92
1994/06/30 13073.91 18211.53
1994/07/31 12881.65 18808.87
1994/08/31 13489.45 19580.03
1994/09/30 14667.84 19100.32
1994/10/31 13607.29 19530.08
1994/11/30 11994.76 18818.79
1994/12/31 12348.27 19097.87
1995/01/31 11058.25 19593.08
1995/02/28 11436.57 20356.63
1995/03/31 13191.75 20957.35
1995/04/30 13142.14 21574.54
1995/05/31 13415.03 22436.88
1995/06/30 13601.09 22958.09
1995/07/31 13967.01 23719.38
1995/08/31 13998.02 23778.91
1995/09/30 13991.82 24782.38
1995/10/31 12304.86 24693.91
1995/11/30 13446.04 25777.97
1995/12/31 13731.33 26274.46
1996/01/31 16168.73 27168.84
1996/02/29 16813.75 27420.69
1996/03/31 17216.88 27684.75
1996/04/30 17626.21 28092.83
1996/05/31 19548.85 28817.34
1996/06/30 16788.94 28927.14
1996/07/31 16478.84 27649.13
1996/08/31 18159.59 28232.26
1996/09/30 17824.68 29821.17
1996/10/31 17334.72 30643.63
1996/11/30 16590.47 32959.99
1996/12/31 16466.67 32307.05
1997/01/31 15764.75 34325.59
1997/02/28 17838.90 34594.71
1997/03/31 15005.92 33173.21
1997/04/30 14099.42 35153.65
1997/05/31 14908.35 37293.80
1997/06/30 13631.44 38964.57
1997/07/31 13417.51 42064.98
1997/08/31 13544.53 39708.50
1997/09/30 14701.10 41883.33
1997/10/31 12448.13 40484.43
1997/11/30 9513.26 42358.45
1997/12/31 9981.24 43085.75
1998/01/31 10536.12 43562.28
1998/02/28 10141.69 46703.99
1998/03/31 10803.54 49095.70
1998/04/30 11431.96 49589.60
1998/05/31 9820.79 48737.16
1998/06/30 8624.11 50716.86
1998/07/31 7989.00 50176.72
1998/08/31 5903.17 42922.17
1998/09/30 9145.57 45671.77
1998/10/31 8871.47 49386.71
1998/11/30 8684.28 52380.04
1998/12/31 9118.83 55398.18
1999/01/31 8864.78 57714.93
1999/02/26 8543.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990307 162024 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Gold Portfolio on February 28, 1989, and
the current 3.00% sales charge was paid. As the chart shows, by
February 28, 1999, the value of the investment would have been $8,543
- - a 14.57% 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 $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Getchell Gold Corp. 11.9
Meridian Gold, Inc. 10.8
Euro-Nevada Mining Corp. Ltd. 8.6
Barrick Gold Corp. 7.0
Normandy Mining Ltd. 6.7
Newmont Mining Corp. 4.8
Anglogold Ltd. 4.3
Stillwater Mining Co. 4.0
Compania de Minas 3.9
Buenaventura SA Class B
Franco Nevada Mining Corp. Ltd. 3.6
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Gold Ores 60.1%
Gold & Silver Ores 24.4%
Silver Ores 4.8%
Miscellaneous Nonmetallic Minerals 2.5%
Metal Mining Services 1.3%
All Others 6.9%*
Row: 1, Col: 1, Value: 6.9
Row: 1, Col: 2, Value: 1.3
Row: 1, Col: 3, Value: 2.5
Row: 1, Col: 4, Value: 4.8
Row: 1, Col: 5, Value: 24.4
Row: 1, Col: 6, Value: 60.1
* INCLUDES SHORT-TERM 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. The fund once again had a negative return but performed well
relative to the more meaningful of its two benchmarks. For the 12
months that ended February 28, 1999, the fund had a total return of
- -15.69%, while the Goldman Sachs Natural Resources Index - an index of
96 stocks designed to measure the performance of companies in the
natural resources sector - returned -20.88%. The Standard & Poor's 500
Index posted a return of 19.74% during the same period.
Q. WHY DID THE FUND OUTPERFORM THE GOLDMAN SACHS INDEX BUT LAG THE S&P
500?
A. As always, the price of gold played a major role in determining how
the fund performed. Following a difficult period of steadily falling
prices in 1997, gold stabilized in 1998 and ended the period
essentially where it began, around $290 per ounce. On the other hand,
the prices of some other commodities, such as copper and nickel,
continued to fall during the period. The Goldman Sachs index contains
the stocks of companies involved in the production of a wide variety
of natural resources, including copper and nickel. The weakness of
those commodities, together with the fund's favorable stock selection
process, helped the fund's performance relative to the Goldman Sachs
index. Although gold stabilized, it remained low by historical
standards, and many mining companies found it difficult to do business
profitably. Consequently, investors tended to favor stocks from other
sectors over precious metals shares, as evidenced by the fund's poor
showing against the S&P 500.
Q. WHAT WAS YOUR STRATEGY DURING THE PERIOD?
A. Reflecting the June 1, 1998, change in the fund's investment
policies allowing it to invest in precious metals mining companies
anywhere in the world, I pursued a strategy of broadening the fund's
exposure to companies in Australia and, to a lesser extent, South
Africa. Although foreign investments are commonly viewed as having
greater risk than domestic ones, this strategy enabled the fund to
purchase stocks that, in general, were more modestly valued and
performed better than their peers in the United States and Canada. In
addition, the fund maintained its overall emphasis on finding strong
companies with healthy balance sheets and the ability to add
meaningfully to production.
Q. WHAT STOCKS HELPED THE FUND'S PERFORMANCE?
A. Getchell Gold, the fund's largest holding for much of the period,
was also the holding that made the most positive contribution to
performance. The company received a takeover bid from competitor
Placer Dome at a price considerably above Getchell's market price,
which buoyed the stock. Stillwater Mining was another positive
contributor. The company, which produces platinum and palladium, was
helped by higher prices resulting from cutbacks in Russian exports of
those metals. A third helpful holding was Buenaventura. The company is
a major gold producer in Chile and co-owner, with Newmont Mining, of
one of the lowest-cost mines in the world.
Q. WHAT STOCKS WERE DETRIMENTAL TO PERFORMANCE?
A. Greenstone Resources was the holding that hurt performance most.
The stock performed poorly after the company reported disappointing
production numbers. TVX Gold reacted poorly when the company
encountered delays in starting production at some new mines in Greece.
Pioneer Group suffered from poor gold mining results in Ghana. The
fund did not hold these positions at the end of the period.
Q. WHAT'S YOUR OUTLOOK, GEORGE?
A. The Far East is traditionally a strong source of demand for gold
jewelry, so a recovery in that region, particularly in Japan, would be
favorable for the yellow metal. In addition, gold is traditionally
viewed as a hedge against inflation, so any upturn in the inflation
outlook - a real possibility with the U.S. economy growing faster
than expected and economic forces in Asia beginning to recover - would
help the outlook for gold. Another factor to consider is central bank
sales, which helped to drive gold prices lower for the past several
years. Now that the European Economic Community has officially
launched its currency, the euro, it seems likely that, while central
bank sales in Europe may continue on a smaller scale, they will no
longer occur at levels that will depress the price of gold. Although
these developments seem promising, the fund does not make bets on the
price of gold, but rather attempts to invest in companies that can
benefit regardless of the level of gold 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 OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: December 16, 1985
FUND NUMBER: 041
TRADING SYMBOL: FSAGX
SIZE: as of February 28, 1999, more than
$179 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
GOLD PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 94.7%
SHARES VALUE (NOTE 1)
AUSTRALIA - 10.3%
METALS & MINING - 1.0%
METAL MINING SERVICES - 1.0%
Acacia Resources Ltd. 1,360,755 $ 1,809,059
PRECIOUS METALS - 9.3%
GOLD & SILVER ORES - 7.2%
Normandy Mining Ltd. 14,388,954 12,278,425
Sons of Gwalia NL 307,210 896,627
13,175,052
GOLD ORES - 2.1%
Delta Gold NL 895,509 1,317,896
Lihir Gold Ltd. (a) 1,433,500 1,170,054
Resolute Ltd. 1,900,000 1,327,597
3,815,547
TOTAL PRECIOUS METALS 16,990,599
TOTAL AUSTRALIA 18,799,658
CANADA - 48.1%
METALS & MINING - 2.8%
METAL MINING SERVICES - 0.3%
Minefinders Corp. Ltd. (a) 297,600 325,667
Minefinders Corp. Ltd. (a)(c) 200,000 218,862
544,529
MISCELLANEOUS NONMETALLIC
MINERALS - 2.5%
Aber Resources Ltd. (a) 291,700 2,011,991
Camphor Ventures, Inc. (a) 14,100 6,827
DIA Metropolitan Minerals Ltd.:
Class A (sub-vtg.) (a) 50,650 520,676
Class B (multi-vtg.) (a) 172,400 2,000,929
4,540,423
TOTAL METALS & MINING 5,084,952
OIL & GAS - 0.4%
OIL & GAS FIELD EXPLORATION
SERVICES - 0.4%
Southwestern Gold Corp. (a) 227,500 829,851
PRECIOUS METALS - 44.9%
GOLD & SILVER ORES - 1.0%
Goldcorp, Inc. Class A (a) 221,100 1,319,737
Richmont Mines, Inc. (a) 187,300 434,773
1,754,510
GOLD ORES - 43.9%
Agnico-Eagle Mines Ltd. 447,800 2,465,009
Argentina Gold Corp. (a) 164,900 479,017
Barrick Gold Corp. 724,100 12,798,292
Cambior, Inc. 1,142,400 4,508,078
SHARES VALUE (NOTE 1)
Crown Resources Corp. (a) 307,700 $ 788,481
Euro-Nevada Mining Corp. Ltd. 1,096,400 15,851,917
Francisco Gold Corp. (a) 182,200 1,147,964
Francisco Gold Corp. (a)(c) 144,500 910,432
Franco Nevada Mining Corp. 424,600 6,561,334
Ltd.
Franco Nevada Mining Corp. 106,900 1,651,923
Ltd. (c)
Franco Nevada Mining Corp. 33,334 276,346
Ltd. Class B warrants
9/15/98 (a)(c)
Geomaque Explorations Ltd. (a) 678,100 535,176
Glamis Gold Ltd. (a) 125,300 216,063
High River Gold Mines Ltd. (a) 60,000 19,101
IAMGOLD, International 195,200 608,463
African Mining Gold Corp. (a)
IAMGOLD, International 60,000 187,027
African Mining Gold Corp.
(a)(c)
Kinross Gold Corp. (a) 573,100 1,277,103
Kinross Gold Corp. (a)(c) 320,000 713,092
Meridian Gold, Inc. (a) 3,519,700 19,841,789
Metallica Resources, Inc. 1,042,100 414,684
(a)(d)
Metallica Resources, Inc. 100,000 39,793
(a)(c)(d)
Mountain Province Mining, 874,900 1,740,748
Inc. (a)
Placer Dome, Inc. 455,400 4,983,486
Repadre Capital Corp. (a) 156,200 269,346
Repadre Capital Corp. (a)(c) 155,000 267,277
Rio Narcea Gold Mines Ltd. (a) 221,800 189,761
Teck Corp. Class B (sub-vtg.) 220,300 1,556,039
Vengold, Inc. (a) 315,000 96,100
Viceroy Resources Corp. (a) 130,000 146,571
80,540,412
TOTAL PRECIOUS METALS 82,294,922
TOTAL CANADA 88,209,725
GHANA - 1.5%
PRECIOUS METALS - 1.5%
GOLD ORES - 1.5%
Ashanti Goldfields Co. Ltd. 316,422 2,808,245
GDR
PERU - 4.8%
PRECIOUS METALS - 4.8%
SILVER ORES - 4.8%
Compania de Minas
Buenaventura SA:
Class B 1,041,419 7,121,962
Series A sponsored ADR 224,445 1,546,762
sponsored ADR Class B 11,700 157,219
8,825,943
SOUTH AFRICA - 5.0%
PRECIOUS METALS - 5.0%
GOLD & SILVER ORES - 4.3%
Anglogold Ltd. 219,200 8,002,779
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SOUTH AFRICA - CONTINUED
PRECIOUS METALS - CONTINUED
GOLD ORES - 0.7%
Gold Fields Ltd. 231,700 $ 1,242,670
TOTAL PRECIOUS METALS 9,245,449
UNITED STATES OF AMERICA -
25.0%
METALS & MINING - 0.8%
COPPER ORES - 0.8%
Freeport-McMoRan Copper & 152,500 1,439,219
Gold, Inc. Class B
PRECIOUS METALS - 23.8%
GOLD & SILVER ORES - 11.9%
Getchell Gold Corp. (a) 844,648 21,908,057
GOLD ORES - 11.9%
Battle Mountain Gold Co. 109,700 370,238
Homestake Mining Co. 425,006 3,904,743
Newmont Mining Corp. 510,565 8,807,246
Stillwater Mining Co. (a) 320,900 7,360,644
Stillwater Mining Co. (a)(c) 59,400 1,362,488
21,805,359
TOTAL PRECIOUS METALS 43,713,416
SERVICES - 0.4%
JEWELRY, PRECIOUS METAL - 0.4%
Lazare Kaplan International, 85,300 629,088
Inc. (a)
TOTAL UNITED STATES OF AMERICA 45,781,723
TOTAL COMMON STOCKS 173,670,743
(Cost $214,333,271)
CASH EQUIVALENTS - 5.3%
Taxable Central Cash Fund (b) 9,775,494 9,775,494
(Cost $9,775,494)
TOTAL INVESTMENT IN $ 183,446,237
SECURITIES - 100%
(Cost $224,108,765)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. 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
$5,627,240 or 3.1% of net assets.
(d) Affilliated Company
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $114,881,881 and $115,404,549, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $16,916 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $4,983,442. The fund
received cash collateral of $5,464,800.
The fund participated in the bank borrowing program. The maximum loan
and average daily balances during the period for which loans were
outstanding amounted to $5,749,000 and $3,319,000, respectively. The
weighted average interest rate was 5.21%.
Transactions during the period with companies which are or were
affiliates are as follows:
PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Mentor Exploration
& Development Co. Ltd. $ - $ 182,383 $ - $ -
Metallica Resources, Inc.- - - 454,477
TOTALS $ - $ 182,383 $ - $ 454,477
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $225,745,288. Net unrealized depreciation
aggregated $42,299,051, of which $21,822,102 related to appreciated
investment securities and $64,121,153 related to depreciated
investment securities.
At February 28, 1999 the fund had a capital loss carryforward of
approximately $52,460,000 of which $35,849,000 and $16,611,000 will
expire on February 28, 2006 and 2007, respectively.
The fund intends to defer to its fiscal year ending February 29, 2000
approximately $24,084,000 of losses recognized during the period
November 1, 1998 to February 28, 1999.
GOLD PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 183,446,237
value (cost $224,108,765) -
See accompanying schedule
Receivable for investments 5,195,313
sold
Receivable for fund shares 329,962
sold
Dividends receivable 507,752
Interest receivable 17,484
Redemption fees receivable 3,723
Other receivables 3,500
TOTAL ASSETS 189,503,971
LIABILITIES
Payable for investments $ 3,131,072
purchased
Payable for fund shares 1,024,503
redeemed
Accrued management fee 92,759
Other payables and accrued 171,510
expenses
Collateral on securities 5,464,800
loaned, at value
TOTAL LIABILITIES 9,884,644
NET ASSETS $ 179,619,327
Net Assets consist of:
Paid in capital $ 298,496,829
Accumulated net investment (35,591)
loss
Accumulated undistributed net (78,176,418)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (40,665,493)
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 14,044,991 $ 179,619,327
shares outstanding
NET ASSET VALUE and $12.79
redemption price per share
($179,619,327 (divided by)
14,044,991 shares)
Maximum offering price per $13.19
share (100/97.00 of $12.79)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 1,663,035
Dividends
Interest (including income on 288,508
securities loaned of $11,259)
TOTAL INCOME 1,951,543
EXPENSES
Management fee $ 1,216,228
Transfer agent fees 1,592,230
Accounting and security 199,767
lending fees
Non-interested trustees' 654
compensation
Custodian fees and expenses 96,242
Registration fees 70,643
Audit 15,879
Legal 1,155
Interest 6,342
Reports to shareholders 42,148
Total expenses before 3,241,288
reductions
Expense reductions (66,010) 3,175,278
NET INVESTMENT INCOME (LOSS) (1,223,735)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (31,983,550)
(including realized loss
$171,879 on sales of
investments in affiliated
issuers)
Foreign currency transactions (25,270) (32,008,820)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (3,271,556)
Assets and liabilities in (6,482) (3,278,038)
foreign currencies
NET GAIN (LOSS) (35,286,858)
NET INCREASE (DECREASE) IN $ (36,510,593)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 691,742
charges paid to FDC
Sales charges - Retained by $ 685,928
FDC
Deferred sales charges $ 19,578
withheld by FDC
Exchange fees withheld by FSC $ 32,157
Expense Reductions
Direct brokerage arrangements $ 65,602
Transfer agent credits 408
$ 66,010
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (1,223,735) $ (1,879,396)
income (loss)
Net realized gain (loss) (32,008,820) (42,330,692)
Change in net unrealized (3,278,038) (126,678,432)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (36,510,593) (170,888,520)
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders - (17,386,044)
from net realized gains
Share transactions Net 403,467,113 510,192,668
proceeds from sales of shares
Reinvestment of distributions - 17,026,797
Cost of shares redeemed (408,945,830) (549,713,586)
NET INCREASE (DECREASE) IN (5,478,717) (22,494,121)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 1,940,375 2,333,972
TOTAL INCREASE (DECREASE) (40,048,935) (208,434,713)
IN NET ASSETS
NET ASSETS
Beginning of period 219,668,262 428,102,975
End of period (including $ 179,619,327 $ 219,668,262
accumulated net investment
loss of $35,591 and
$2,671,127, respectively)
OTHER INFORMATION
Shares
Sold 29,231,688 26,655,922
Issued in reinvestment of - 755,071
distributions
Redeemed (29,663,500) (28,111,853)
Net increase (decrease) (431,812) (700,860)
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 15.17 $ 28.21 $ 27.11 $ 18.44 $ 22.66
period
Income from Investment
Operations
Net investment income (loss) C (.08) (.13) (.16) (.06) (.05)
Net realized and unrealized (2.43) (11.78) 1.60 8.62 (4.25)
gain (loss)
Total from investment (2.51) (11.91) 1.44 8.56 (4.30)
operations
Less Distributions
From net realized gain - (1.29) (.50) - -
Redemption fees added to paid .13 .16 .16 .11 .08
in capital
Net asset value, end of period $ 12.79 $ 15.17 $ 28.21 $ 27.11 $ 18.44
TOTAL RETURN A, B (15.69)% (43.15)% 6.10% 47.02% (18.62)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 179,619 $ 219,668 $ 428,103 $ 451,493 $ 278,197
(000 omitted)
Ratio of expenses to average 1.57% 1.55% 1.44% 1.39% 1.41%
net assets
Ratio of expenses to average 1.54% D 1.48% D 1.42% D 1.39% 1.41%
net assets after expense
reductions
Ratio of net investment (.59)% (.67)% (.59)% (.27)% (.22)%
income (loss) to average net
assets
Portfolio turnover rate 59% 89% 63% 56% 34%
</TABLE>
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. E FOR
THE YEAR ENDED FEBRUARY 29.
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 FEBRUARY 28, PAST 1 YEAR LIFE OF FUND
1999
SELECT NATURAL RESOURCES -24.57% -19.06%
SELECT NATURAL RESOURCES -26.91% -21.56%
(LOAD ADJ.)
S&P 500 19.74% 60.71%
GS Natural Resources -20.88% -7.26%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year or since the fund
started on March 3, 1997. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a market
capitalization-weighted 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 FEBRUARY 28, PAST 1 YEAR LIFE OF FUND
1999
SELECT NATURAL RESOURCES -24.57% -10.07%
SELECT NATURAL RESOURCES -26.91% -11.48%
(LOAD ADJ.)
S&P 500 19.74% 26.89%
GS Natural Resources -20.88% -3.72%
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 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 7572.48 12335.21
1998/09/30 9025.28 13125.40
1998/10/31 9065.08 14193.02
1998/11/30 8726.76 15053.26
1998/12/31 8617.30 15920.63
1999/01/31 8030.21 16586.43
1999/02/26 7844.00 16070.92
IMATRL PRASUN SHR__CHT 19990228 19990307 165520 R00000000000027
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Select Natural Resources Portfolio on March 3,
1997 when the fund started, and the current 3.00% sales charge was
paid. As the chart shows, by February 28, 1999, the value of the
investment would have been $7,844 - a 21.56% 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 $16,071 - a 60.71%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
28, 1999
% OF FUND'S INVESTMENTS
Mobil Corp. 8.2
USX-Marathon Group 6.0
BP Amoco PLC sponsored ADR 5.9
Elf Aquitaine SA sponsored ADR 5.2
Total SA sponsored ADR 5.1
Exxon Corp. 4.9
Schlumberger Ltd. 4.3
Halliburton Co. 3.8
Chevron Corp. 3.7
Amerada Hess Corp. 3.1
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Oil & Gas 63.5%
Energy Services 18.8%
Precious Metals 6.1%
Metals & Mining 4.4%
Gas 0.8%
All Others 6.4%*
Row: 1, Col: 1, Value: 6.4
Row: 1, Col: 2, Value: 1.8
Row: 1, Col: 3, Value: 4.4
Row: 1, Col: 4, Value: 6.1
Row: 1, Col: 5, Value: 18.8
Row: 1, Col: 6, Value: 62.5
* INCLUDES SHORT-TERM INVESTMENTS
NATURAL RESOURCES PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Larry Rakers)
Larry Rakers,
Portfolio Manager
Fidelity Select Natural
Resources Portfolio
Q. HOW DID THE FUND PERFORM, LARRY?
A. The natural resources sector continued to suffer during the period.
For the 12 months that ended February 28, 1999, the fund returned
- -24.57%. The Standard & Poor's 500 Index returned 19.74% during the
same period. The fund also compares its performance 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 -20.88% during the 12-month period.
Q. WHAT MARKET FACTORS HURT PERFORMANCE AND WHAT CAUSED THE FUND TO
UNDERPERFORM THE GOLDMAN SACHS INDEX FOR THE PERIOD?
A. The major cause of poor performance was weak global economic
growth. Many international economies continue to languish in a mire of
political, financial and currency troubles. Over the past couple of
years, the global demand for natural resources has declined from
approximately a 2% annual growth rate to 0%. In this environment, even
a slight increase in the supply of natural resources is too much, and,
as a result, commodity prices tanked across the board. Regarding the
fund's performance relative to the Goldman Sachs index, the fund
underperformed because I allocated a larger percentage of fund assets
to small and mid-cap integrated oil companies, energy service
companies and drillers compared to the index. These companies are more
sensitive to oil prices and underperformed the larger integrated oil
companies, such as Mobil and Exxon, in this bearish environment.
Q. WHY DID YOU OVERWEIGHT THE FUND IN MORE AGGRESSIVE OIL COMPANIES,
RELATIVE TO THE INDEX?
A. In hindsight, I was early in my prediction that oil prices were
poised to rebound. However, I am comfortable with the fund's asset
allocation. I believe for a number of reasons - which I will discuss
in more detail in my market outlook - that we are starting to see
signs of impending strength in oil prices. As a result, if we do see
an increase in oil prices, the smaller-cap integrated oil companies
and energy service companies - which are more sensitive to oil prices
- - should perform better than the larger-cap integrated oil companies,
such as Mobil, BP Amoco and Exxon.
Q. WERE THERE ANY BRIGHT SPOTS IN THIS DIFFICULT ENVIRONMENT?
A. The major oil stocks, such as BP Amoco, Mobil and Exxon, managed to
produce solid gains over the past year. All of these stocks provided a
boost to the fund's total return and rallied in response to merger
announcements. In comparison, the majority of secondary energy stocks
- - drillers, oil service and oil equipment - posted significant losses
for the year. Gold was the star of the metals group. The price of gold
was essentially flat during the past 12-month period, while prices for
most other commodities were down approximately 20% to 30% for the same
period.
Q. WHAT STOCKS DETRACTED FROM PERFORMANCE?
A. With the exception of the large integrated oil stocks and a select
group of precious-metals companies, the natural resources sector
experienced negative returns across the board. With energy prices
hitting 12-year lows, significant detractors were USX-Marathon, Tosco,
Weatherford International and Schlumberger. As I mentioned earlier,
the stock prices of these energy service companies are even more
dependent on energy prices than the larger integrated oil companies.
When the prices of oil and natural gas drop below a certain level, it
no longer makes economic sense to explore for these fuels or drill new
wells. In this environment, business deteriorates for energy service
companies such as Weatherford and Schlumberger, and their stock prices
suffer. On the other hand, if energy prices pick up, earnings can rise
exponentially for these companies.
Q. WHAT'S YOUR OUTLOOK, LARRY?
A. I'm starting to get excited about the outlook for natural resources
for the first time in a while. Look at oil, for instance, where we are
starting to see a response on the supply side to price movement. For
example, as oil prices declined, the typical oil company cut capital
expenditures by 30%, cut back on exploration, and the number of rigs
drilling for oil and gas fell to a 49-year low. As a result, oil and
gas production will most likely fall in 1999. In addition, some
base-metals mines have been closing worldwide. If we get even a slight
rebound in demand from Asia or Latin America, it will not take much
for a squeeze on supply. This situation could set the stage for an
increase in commodity prices, which ultimately could be good for the
fund.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: March 3, 1997
FUND NUMBER: 514
TRADING SYMBOL: FNATF
SIZE: as of February 28, 1999, more than
$5 million
MANAGER: Lawrence Rakers, since inception;
manager, Fidelity Select Energy Portfolio,
since 1997; Fidelity Select Paper and Forest
Products Portfolio, Fidelity Select Precious
Metals and Minerals Portfolio,1996-1997;
Fidelity Select American Gold Portfolio
1995-1997; joined Fidelity in 1993
NATURAL RESOURCES PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.7%
SHARES VALUE (NOTE 1)
ENERGY SERVICES - 18.8%
Baker Hughes, Inc. 5,290 $ 95,220
BJ Services Co. (a) 5,000 70,313
Carbo Ceramics, Inc. 200 3,200
Coflexip SA sponsored ADR 1,500 43,125
ENSCO International, Inc. 6,200 55,025
Global Marine, Inc. (a) 1,500 11,625
Halliburton Co. 7,000 197,750
Helmerich & Payne, Inc. 2,200 35,888
Marine Drilling Companies, 1,300 8,288
Inc. (a)
Nabors Industries, Inc. (a) 3,800 43,700
Noble Drilling Corp. (a) 5,300 65,588
Pool Energy Services Co. (a) 2,500 25,391
Santa Fe International Corp. 2,300 30,763
Schlumberger Ltd. 4,626 224,650
Smith International, Inc. 2,200 53,488
Transocean Offshore, Inc. 200 4,125
UTI Energy Corp. (a) 1,400 8,138
976,277
ENGINEERING - 0.2%
Stolt Comex Seaway SA 1,800 10,575
sponsored ADR Class A
GAS - 0.8%
Dynegy, Inc. 2,000 24,000
Williams Companies, Inc. 500 18,500
42,500
METALS & MINING - 4.4%
Alcoa, Inc. 3,800 153,900
Breakwater Resources Ltd. (a) 13,700 9,086
Cameco Corp. 800 17,058
Camphor Ventures, Inc. (a) 16,400 7,940
Cominco Ltd. 600 8,257
Cyprus Amax Minerals Co. 700 7,875
Freeport-McMoRan Copper & 400 3,700
Gold, Inc.
Inco Ltd. 1,100 13,788
Rio Algom Ltd. 700 7,289
228,893
OIL & GAS - 63.4%
Alberta Energy Co. Ltd. 1,000 21,455
Amerada Hess Corp. 3,600 163,350
Anadarko Petroleum Corp. 1,600 44,000
Apache Corp. 400 7,975
Berkley Petroleum Corp. (a) 1,000 5,438
BP Amoco PLC sponsored ADR 3,577 304,045
Burlington Resources, Inc. 557 18,033
Canadian Natural Resources 1,000 13,828
Ltd. (a)
SHARES VALUE (NOTE 1)
Chevron Corp. 2,500 $ 192,188
Compagnie Generale de 1,300 10,725
Geophysique SA sponsored ADR
(a)
Conoco, Inc. Class A 600 12,188
Cooper Cameron Corp. (a) 200 4,625
Crestar Energy, Inc. (a) 900 6,088
Elf Aquitaine SA sponsored ADR 5,200 268,450
Eni Spa sponsored ADR 100 5,900
Enron Oil & Gas Co. 2,100 34,650
Exxon Corp. 3,800 252,938
Frontier Oil Corp. (a) 18,700 98,175
Gulf Canada Resources Ltd. (a) 6,000 14,286
Imperial Oil Ltd. 5,700 88,082
Louis Dreyfus Natural Gas 1,600 19,100
Corp. (a)
Magnum Hunter Resources, Inc. 3,600 9,225
(a)
Mobil Corp. 5,100 424,248
Noble Affiliates, Inc. 700 15,838
Occidental Petroleum Corp. 200 3,013
Ocean Energy, Inc. (a) 1,000 4,250
Oryx Energy Co. (a) 5,300 54,988
Paramount Resources Ltd. (c) 1,400 11,931
Penn West Petroleum Ltd. (a) 500 4,958
Petro-Canada 3,400 36,530
Petrobras PN (Pfd. Reg.) 1 0
Phillips Petroleum Co. 200 7,738
Plains Resources, Inc. (a) 4,100 37,925
Renaissance Energy Ltd. (a) 600 5,292
Rio Alto Exploration Ltd. (a) 2,200 19,479
Seagull Energy Corp. (a) 3,100 14,725
Shell Transport & Trading Co.
PLC:
ADR 2,000 67,125
(Reg.) 10,000 55,938
Snyder Oil Corp. 500 5,219
Suncor Energy, Inc. 1,800 52,706
Tesoro Petroleum Corp. (a) 1,200 9,600
Texaco, Inc. 3,400 158,313
Tosco Corp. 2,000 41,375
Total SA sponsored ADR 5,100 263,288
Ulster Petroleums Ltd. (a) 1,700 9,471
Ultramar Diamond Shamrock 1,100 21,725
Corp.
Union Pacific Resources 3,300 29,494
Group, Inc.
USX-Marathon Group 15,000 310,313
Veritas DGC, Inc. (a) 300 2,831
Vintage Petroleum, Inc. 800 3,550
Weatherford International, 1,195 20,315
Inc. (a)
3,286,922
PRECIOUS METALS - 6.1%
Argentina Gold Corp. (a) 10,000 29,049
Getchell Gold Corp. (a) 4,200 108,938
Greenstone Resources Ltd. (a) 71,232 26,928
Greenstone Resources Ltd. 500 189
(a)(c)
Meridian Gold, Inc. (a) 10,600 59,756
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PRECIOUS METALS - CONTINUED
Mountain Province Mining, 1,500 $ 2,984
Inc. (a)
Pan American Silver Corp. (a) 1,700 9,527
Stillwater Mining Co. (a) 3,350 76,841
William Resources, Inc. 15,750 0
warrants 12/31/02 (a)(c)
314,212
TOTAL COMMON STOCKS 4,859,379
(Cost $5,603,913)
CONVERTIBLE PREFERRED STOCKS
- - 0.1%
OIL & GAS - 0.1%
Chesapeake Energy Corp. $3.50 600 5,700
(Cost $5,825)
CASH EQUIVALENTS - 6.2%
Taxable Central Cash Fund (b) 323,594 323,594
(Cost $323,594)
TOTAL INVESTMENT IN $ 5,188,673
SECURITIES - 100%
(Cost $5,933,332)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. 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 $12,120 or 0.2% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $9,348,795 and $9,820,624, respectively.
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 $2,189 for the
period.
Distribution of investments by country of issue, as a percentage of
total value of investments in securities, is as follows:
United States of America 66.5%
France 11.3
Canada 9.3
United Kingdom 8.3
Netherlands Antilles 4.3
Others (individually less 0.3
than 1%)
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $6,257,950. Net unrealized depreciation
aggregated $1,069,277, of which $148,481 related to appreciated
investment securities and $1,217,758 related to depreciated investment
securities.
At February 28, 1999, the fund had a capital loss carryforward of
approximately $563,000, all of which will expire on February 28, 2007.
The fund intends to elect to defer to its fiscal year ending February
29, 2000 approximately $345,000 of losses recognized during the period
November 1, 1998 to February 28, 1999.
NATURAL RESOURCES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 5,188,673
value (cost $5,933,332) -
See accompanying schedule
Receivable for investments 7,140
sold
Receivable for fund shares 5,460
sold
Dividends receivable 17,363
Interest receivable 1,399
Redemption fees receivable 191
Receivable from investment 479
adviser for expense
reductions
TOTAL ASSETS 5,220,705
LIABILITIES
Payable to custodian bank $ 23,647
Payable for investments 9,145
purchased
Payable for fund shares 30,673
redeemed
Other payables and accrued 23,094
expenses
TOTAL LIABILITIES 86,559
NET ASSETS $ 5,134,146
Net Assets consist of:
Paid in capital $ 7,111,468
Accumulated undistributed net (1,232,663)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (744,659)
(depreciation) on investments
NET ASSETS, for 650,739 $ 5,134,146
shares outstanding
NET ASSET VALUE and $7.89
redemption price per share
($5,134,146 (divided by)
650,739 shares)
Maximum offering price per $8.13
share (100/97.00 of $7.89)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 102,921
Dividends
Interest 23,193
TOTAL INCOME 126,114
EXPENSES
Management fee $ 38,307
Transfer agent fees 59,138
Accounting fees and expenses 60,054
Non-interested trustees' 24
compensation
Custodian fees and expenses 18,146
Registration fees 12,995
Audit 18,493
Legal 39
Reports to shareholders 1,416
Miscellaneous 239
Total expenses before 208,851
reductions
Expense reductions (47,499) 161,352
NET INVESTMENT INCOME (LOSS) (35,238)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (1,196,635)
Foreign currency transactions (9,554) (1,206,189)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (510,349)
Assets and liabilities in 29 (510,320)
foreign currencies
NET GAIN (LOSS) (1,716,509)
NET INCREASE (DECREASE) IN $ (1,751,747)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 24,488
charges paid to FDC
Sales charges - Retained by $ 24,488
FDC
Deferred sales charges $ 8
withheld by FDC
Exchange fees withheld by FSC $ 1,035
Expense reductions Directed $ 2,114
brokerage arrangements
Custodian credits 35
FMR reimbursement 45,350
$ 47,499
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 MARCH 3,1997 (COMMENCEMENT OF
ASSETS OPERATIONS) TO FEBRUARY 28,
1998
Operations Net investment $ (35,238) $ (55,268)
income (loss)
Net realized gain (loss) (1,206,189) 327,737
Change in net unrealized (510,320) (234,339)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (1,751,747) 38,130
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to - (189,236)
shareholders from net
realized gains
Share transactions Net 6,170,322 19,111,951
proceeds from sales of shares
Reinvestment of distributions - 187,981
Cost of shares redeemed (6,819,368) (11,661,561)
NET INCREASE (DECREASE) IN (649,046) 7,638,371
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 15,080 32,594
TOTAL INCREASE (DECREASE) (2,385,713) 7,519,859
IN NET ASSETS
NET ASSETS
Beginning of period 7,519,859 -
End of period (including $ 5,134,146 $ 7,519,859
accumulated net investment
loss of $0 and $908,
respectively)
OTHER INFORMATION
Shares
Sold 655,279 1,783,337
Issued in reinvestment of - 18,686
distributions
Redeemed (723,578) (1,082,985)
Net increase (decrease) (68,299) 719,038
</TABLE>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 1999 1998 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.46 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) d (.05) (.09)
Net realized and unrealized (2.54) .76
gain (loss)
Total from investment (2.59) .67
operations
Less Distributions
From net realized gain - (.26)
Redemption fees added to paid .02 .05
in capital
Net asset value, end of period $ 7.89 $ 10.46
TOTAL RETURN B, C (24.57)% 7.30%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 5,134 $ 7,520
(000 omitted)
Ratio of expenses to average 2.50% F 2.50% A, F
net assets
Ratio of expenses to average 2.47% G 2.48% A, G
net assets after expense
reductions
Ratio of net investment (.54)% (.86)% A
income (loss) to average net
assets
Portfolio turnover rate 155% 165% A
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 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. 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.
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT PRECIOUS METALS AND -10.89% -43.80% -16.07%
MINERALS
SELECT PRECIOUS METALS AND -13.64% -45.55% -18.66%
MINERALS (LOAD ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Natural Resources -20.88% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years, or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT PRECIOUS METALS AND -10.89% -10.88% -1.74%
MINERALS
SELECT PRECIOUS METALS AND -13.64% -11.45% -2.04%
MINERALS (LOAD ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Natural Resources -20.88% 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
1989/02/28 9700.00 10000.00
1989/03/31 9700.00 10233.00
1989/04/30 9259.46 10764.09
1989/05/31 8818.92 11200.04
1989/06/30 9512.36 11136.20
1989/07/31 9773.42 12141.80
1989/08/31 9969.22 12379.78
1989/09/30 10320.02 12329.02
1989/10/31 10311.86 12042.99
1989/11/30 11625.32 12288.66
1989/12/31 11924.86 12583.59
1990/01/31 12874.56 11739.23
1990/02/28 11767.96 11890.67
1990/03/31 11255.95 12205.77
1990/04/30 10099.80 11900.63
1990/05/31 10677.87 13060.94
1990/06/30 9901.60 12972.12
1990/07/31 10504.45 12930.61
1990/08/31 10611.81 11761.68
1990/09/30 10372.32 11188.89
1990/10/31 9207.91 11140.78
1990/11/30 9042.75 11860.47
1990/12/31 9411.87 12191.38
1991/01/31 8390.30 12722.92
1991/02/28 9143.92 13632.61
1991/03/31 8968.08 13962.52
1991/04/30 8942.96 13996.03
1991/05/31 9445.37 14600.66
1991/06/30 10065.01 13931.95
1991/07/31 10065.01 14581.18
1991/08/31 9009.94 14926.75
1991/09/30 9194.16 14677.48
1991/10/31 9813.81 14874.16
1991/11/30 10123.63 14274.73
1991/12/31 9556.58 15907.76
1992/01/31 9759.38 15611.87
1992/02/29 9252.40 15814.83
1992/03/31 8889.06 15506.44
1992/04/30 8365.18 15962.33
1992/05/31 8914.41 16040.54
1992/06/30 8964.70 15801.54
1992/07/31 9083.22 16447.82
1992/08/31 8676.88 16110.64
1992/09/30 8321.34 16300.75
1992/10/31 7788.03 16357.80
1992/11/30 7330.91 16915.60
1992/12/31 7466.94 17123.66
1993/01/31 7647.80 17267.50
1993/02/28 8491.82 17502.34
1993/03/31 9645.88 17871.64
1993/04/30 11204.72 17439.14
1993/05/31 12686.05 17906.51
1993/06/30 12892.75 17958.44
1993/07/31 14572.16 17886.61
1993/08/31 13108.06 18564.51
1993/09/30 12074.57 18421.56
1993/10/31 13788.43 18802.89
1993/11/30 13762.60 18624.26
1993/12/31 15801.85 18849.62
1994/01/31 15148.16 19490.50
1994/02/28 14485.75 18962.31
1994/03/31 14337.58 18135.55
1994/04/30 14338.16 18367.69
1994/05/31 14364.32 18668.92
1994/06/30 14652.13 18211.53
1994/07/31 15210.31 18808.87
1994/08/31 16291.78 19580.03
1994/09/30 17538.95 19100.32
1994/10/31 16858.68 19530.08
1994/11/30 15053.32 18818.79
1994/12/31 15621.55 19097.87
1995/01/31 12900.15 19593.08
1995/02/28 13492.14 20356.63
1995/03/31 14861.68 20957.35
1995/04/30 14985.38 21574.54
1995/05/31 14799.83 22436.88
1995/06/30 14976.54 22958.09
1995/07/31 15595.04 23719.38
1995/08/31 15807.10 23778.91
1995/09/30 15851.28 24782.38
1995/10/31 13872.08 24693.91
1995/11/30 14844.01 25777.97
1995/12/31 15099.90 26274.46
1996/01/31 18265.30 27168.84
1996/02/29 18584.50 27420.69
1996/03/31 18478.10 27684.75
1996/04/30 18896.45 28092.83
1996/05/31 19989.71 28817.34
1996/06/30 17207.68 28927.14
1996/07/31 16994.36 27649.13
1996/08/31 17918.74 28232.26
1996/09/30 17172.13 29821.17
1996/10/31 17029.91 30643.63
1996/11/30 16176.64 32959.99
1996/12/31 15918.88 32307.05
1997/01/31 15234.48 34325.59
1997/02/28 17421.00 34594.71
1997/03/31 14834.51 33173.21
1997/04/30 13847.92 35153.65
1997/05/31 14079.01 37293.80
1997/06/30 12621.33 38964.57
1997/07/31 12123.59 42064.98
1997/08/31 12185.81 39708.50
1997/09/30 12754.66 41883.33
1997/10/31 10612.59 40484.43
1997/11/30 8194.98 42358.45
1997/12/31 8772.72 43085.75
1998/01/31 9661.54 43562.28
1998/02/28 9137.14 46703.99
1998/03/31 9750.43 49095.70
1998/04/30 10692.58 49589.60
1998/05/31 9057.14 48737.16
1998/06/30 7715.01 50716.86
1998/07/31 7528.36 50176.72
1998/08/31 5590.72 42922.17
1998/09/30 8497.18 45671.77
1998/10/31 8497.18 49386.71
1998/11/30 8301.64 52380.04
1998/12/31 8781.60 55398.18
1999/01/31 8514.96 57714.93
1999/02/26 8134.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990307 165850 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Precious Metals and Minerals Portfolio on
February 28, 1989, and the current 3.00% sales charge was paid. As the
chart shows, by February 28, 1999, the value of the investment would
have been $8,134 - an 18.66% 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 $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
28, 1999
% OF FUND'S INVESTMENTS
Meridian Gold, Inc. 12.9
Normandy Mining Ltd. 12.6
Euro-Nevada Mining Corp. Ltd. 8.1
Getchell Gold Corp. 8.0
Delta Gold NL 4.9
Franco Nevada Mining Corp. Ltd. 4.7
Acacia Resources Ltd. 4.6
Stillwater Mining Co. 4.2
Anglogold Ltd. sponsored ADR 3.2
Lihir Gold Ltd. 2.8
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Gold Ores (Canada) 33.5%
Gold & Silver Ores (Australia) 13.8%
Gold Ores (Australia) 9.0%
Gold & Silver Ores (United States of America) 8.0%
Gold Ores (South Africa) 7.3%
All Others 28.4% *
Row: 1, Col: 1, Value: 28.4
Row: 1, Col: 2, Value: 7.3
Row: 1, Col: 3, Value: 8.0
Row: 1, Col: 4, Value: 9.0
Row: 1, Col: 5, Value: 13.8
Row: 1, Col: 6, Value: 33.5
* INCLUDES SHORT-TERM INVESTMENTS
PRECIOUS METALS AND MINERALS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
George Domolky,
Portfolio Manager of
Fidelity Select Precious
Metals and Minerals Portfolio
Q. HOW DID THE FUND PERFORM, GEORGE?
A. While the fund lost more ground on an absolute basis, its losses
were relatively small compared to those of some recent periods.
Moreover, the fund's performance compared favorably to that of its
most meaningful benchmark: the Goldman Sachs Natural Resources Index,
an index of 96 stocks designed to measure the performance of companies
in the natural resources sector. For the 12 months that ended February
28, 1999, the fund had a total return of -10.89%, while the Goldman
Sachs index returned -20.88%. The Standard & Poor's 500 Index posted a
return of 19.74% during the same period.
Q. WHY DID THE FUND BEAT THE GOLDMAN SACHS INDEX BUT TRAIL THE S&P
500?
A. The price of gold - the primary determinant of the fund's fortunes
- - was essentially the same at the end of the period as at the
beginning, a welcome relief from the relentlessly sinking gold prices
seen during most of 1997. In contrast, certain other components of the
Goldman Sachs index, such as companies in the copper and nickel
industries, had to cope with commodity prices that continued to fall
during the period. This downward pressure on the non-gold elements of
the Goldman Sachs index, together with the fund's favorable stock
selection process, helped the fund to outperform the index. However,
the level at which the price of gold stabilized - around $290 per
ounce - was too low for many mines to operate profitably. As a result,
investors tended to favor stocks from other sectors over precious
metals shares, as evidenced by the fund's poor showing against the S&P
500.
Q. WHAT OTHER FACTORS INFLUENCED THE FUND'S PERFORMANCE?
A. The decision to expand the fund's holdings of Australian gold
mining companies paid off. Although foreign investments are commonly
viewed as being riskier than domestic ones, Australian shares were
generally undervalued relative to their peers in Canada and the United
States, and outperformed them during the period. Moreover, I continued
to consolidate the fund's South African holdings in two of the
strongest candidates, Anglogold and Gold Fields. South African mining
companies tend to have higher cost structures than firms in other
countries, making them more sensitive to low gold prices.
Q. WHAT STOCKS PERFORMED WELL DURING THE PERIOD?
A. One of the fund's major holdings - Getchell Gold - received a
takeover bid at a substantial premium over its market price, causing
the stock to rise. Meridian Gold was another beneficial holding that
firmed on news of promising discoveries in Chile. Australian company
Delta Gold also helped the fund's performance and reflected my
decision to increase holdings Down Under. Another positive
contributor, Stillwater Mining, is a producer of platinum and
palladium that benefited from firmer prices in response to decreased
exports of those metals from Russia.
Q. WHAT HOLDINGS DISAPPOINTED YOU?
A. Greenstone Resources - no longer one of the fund's holdings -
reported disappointing production numbers, and the market responded in
predictable fashion by trimming the stock price. Franco Nevada
suffered from the perception that it's primarily a holding company at
a time when investors preferred to hold producers. TVX Gold was hurt
by a slow start of production at some new mines in Greece.
Q. WHAT'S YOUR OUTLOOK, GEORGE?
A. There are several important factors to watch for during the
remainder of 1999. One key to improving precious metals prices would
be a strengthening of the Far East economies, especially Japan. The
Far East is a traditionally strong source of demand for gold jewelry,
so a recovery in that region would be favorable for the yellow metal.
In view of gold's traditional role as a hedge against inflation, the
inflation outlook here in the United States is also important.
Although it has been dormant for quite some time, inflation could
become a concern if strengthening economic forces here and abroad
trigger a recovery in the price of oil and other commodities. Another
factor to consider is central bank sales, which helped to drive gold
prices lower for the past several years. Now that the European
Economic Community has officially launched its currency, the euro, it
seems likely that, while central bank sales in Europe may continue on
a smaller scale, they will no longer occur at levels that will depress
the price of gold. The investment case for gold also would be helped
if the U.S. stock market or the U.S. dollar were to falter to any
substantial degree.
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 OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: July 14, 1981
FUND NUMBER: 061
TRADING SYMBOL: FDPMX
SIZE: as of February 28, 1999, more than
$123 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 FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 96.4%
SHARES VALUE (NOTE 1)
AUSTRALIA - 27.5%
METALS & MINING - 4.7%
METAL MINING SERVICES - 4.6%
Acacia Resources Ltd. 4,339,253 $ 5,768,831
MISCELLANEOUS METAL ORES, NEC
- - 0.1%
Zimbabwe Platinum Mines Ltd. 738,508 162,113
(a)
TOTAL METALS & MINING 5,930,944
PRECIOUS METALS - 22.8%
GOLD & SILVER ORES - 13.8%
Normandy Mining Ltd. 18,595,066 15,867,598
Sons of Gwalia NL 526,902 1,537,823
17,405,421
GOLD ORES - 9.0%
Delta Gold NL 4,195,819 6,174,874
Lihir Gold Ltd. (a) 4,391,375 3,584,337
Resolute Ltd. 1,950,000 1,362,534
Ross Mining NL 452,197 229,285
11,351,030
TOTAL PRECIOUS METALS 28,756,451
TOTAL AUSTRALIA 34,687,395
CANADA - 36.3%
METALS & MINING - 1.1%
METAL MINING SERVICES - 0.1%
Minefinders Corp. Ltd. (a) 200,200 219,081
MISCELLANEOUS NONMETALLIC
MINERALS - 1.0%
Aber Resources Ltd. (a) 148,500 1,024,274
DIA Metropolitan Minerals 19,500 226,323
Ltd. Class B (multi-vtg.) (a)
1,250,597
TOTAL METALS & MINING 1,469,678
OIL & GAS - 0.4%
OIL & GAS FIELD EXPLORATION
SERVICES - 0.4%
Southwestern Gold Corp. (a) 135,000 492,439
PRECIOUS METALS - 34.8%
GOLD & SILVER ORES - 1.3%
Goldcorp, Inc. Class A (a) 266,400 1,590,131
GOLD ORES - 33.5%
Agnico-Eagle Mines Ltd. 152,000 836,716
Barrick Gold Corp. 5,000 88,374
Cambior, Inc. 213,000 840,529
Crown Resources Corp. (a) 81,900 209,869
Euro-Nevada Mining Corp. Ltd. 705,300 10,197,334
Francisco Gold Corp. (a) 43,500 274,075
Francisco Gold Corp. (a)(c) 54,500 343,381
Franco Nevada Mining Corp. 386,400 5,971,031
Ltd.
Franco Nevada Mining Corp. 80,200 1,239,329
Ltd. (c)
SHARES VALUE (NOTE 1)
Franco Nevada Mining Corp. 25,000 $ 207,256
Ltd. Class B warrants
9/15/98 (a)(c)
Geomaque Explorations Ltd. (a) 457,100 360,757
High River Gold Mines Ltd. (a) 60,000 19,101
IAMGOLD, International 69,800 217,575
African Mining Gold Corp. (a)
Kinross Gold Corp. (a) 300,000 668,524
Meridian Gold, Inc. (a) 2,889,400 16,288,564
Metallica Resources, Inc. (a) 448,700 178,552
Metallica Resources, Inc. 100,000 39,793
(a)(c)
Mountain Province Mining, 336,700 669,916
Inc. (a)
Placer Dome, Inc. 148,000 1,619,578
Repadre Capital Corp. (a) 181,200 312,455
Rio Narcea Gold Mines Ltd. (a) 1,168,000 999,284
Sutton Resources Ltd. (a) 51,000 402,507
Vengold, Inc. (a) 410,600 125,266
Viceroy Resources Corp. (a) 194,700 219,518
42,329,284
TOTAL PRECIOUS METALS 43,919,415
TOTAL CANADA 45,881,532
GHANA - 1.5%
PRECIOUS METALS - 1.5%
GOLD ORES - 1.5%
Ashanti Goldfields Co. Ltd. 215,773 1,914,985
GDR
PERU - 1.7%
PRECIOUS METALS - 1.7%
SILVER ORES - 1.7%
Compania de Minas 156,900 2,108,344
Buenaventura SA sponsored
ADR Class B
SOUTH AFRICA - 13.8%
HOLDING COMPANIES - 0.6%
OFFICES OF HOLDING COMPANIES,
NEC - 0.6%
Gencor Ltd. (Reg.) 342,000 784,524
METALS & MINING - 1.1%
MISCELLANEOUS METAL ORES, NEC
- - 0.8%
Anglo American Platinum Corp. 63,100 1,037,693
Ltd.
MISCELLANEOUS NONMETALLIC
MINERALS - 0.3%
De Beers Consolidated Mines 19,700 339,883
Ltd./ De Beers Centenary AG
unit
TOTAL METALS & MINING 1,377,576
PRECIOUS METALS - 12.1%
GOLD & SILVER ORES - 4.8%
Anglogold Ltd. 53,186 1,941,769
Anglogold Ltd. sponsored ADR 224,690 4,072,506
6,014,275
GOLD ORES - 7.3%
Anglo American Corp. of South 61,400 1,916,317
Africa Ltd.
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SOUTH AFRICA - CONTINUED
PRECIOUS METALS - CONTINUED
GOLD ORES - CONTINUED
Avgold Ltd. (a) 45,000 $ 21,082
De Beers Consolidated Mines 137,500 2,354,688
Ltd. ADR
Gold Fields Ltd. 631,336 3,386,027
Gold Fields of South Africa 85,600 135,516
Ltd.
Gold Fields of South Africa 73,700 110,550
Ltd. ADR
Harmony Gold Mining Co. Ltd. 165,700 738,794
Randfontein Estates Gold 52,463 25,425
Mining Co. warrants 7/1/02
(a)
Western Areas Gold Mining 215,000 574,815
Ltd. (a)
9,263,214
TOTAL PRECIOUS METALS 15,277,489
TOTAL SOUTH AFRICA 17,439,589
UNITED STATES OF AMERICA -
15.6%
METALS & MINING - 0.8%
COPPER ORES - 0.8%
Freeport-McMoRan Copper & 100,000 943,750
Gold, Inc. Class B
PRECIOUS METALS - 14.7%
GOLD & SILVER ORES - 8.0%
Getchell Gold Corp. (a) 391,700 10,159,719
GOLD ORES - 6.7%
Homestake Mining Co. 240,106 2,205,973
Homestake Mining Co. (ASTL) 22,900 201,217
Stillwater Mining Co. (a) 229,150 5,256,128
Stillwater Mining Co. (a)(c) 34,500 791,344
8,454,662
TOTAL PRECIOUS METALS 18,614,381
SERVICES - 0.1%
JEWELRY, PRECIOUS METAL - 0.1%
Lazare Kaplan International, 10,000 73,750
Inc. (a)
TOTAL UNITED STATES OF AMERICA 19,631,881
TOTAL COMMON STOCKS 121,663,726
(Cost $145,864,546)
CASH EQUIVALENTS - 3.6%
Taxable Central Cash Fund (b) 4,600,787 4,600,787
(Cost $4,600,787)
TOTAL INVESTMENT IN $ 126,264,513
SECURITIES - 100%
(Cost $150,465,333)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. 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 $2,621,103 or 2.1% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $75,666,319 and $94,287,029, respectively.
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 $11,498 for the
period.
The fund participated in the bank borrowing program. The maximum loan
and average daily balances during the period for which loans were
outstanding amounted to $3,755,000 and $2,353,182, respectively. The
weighted average interest rate was 5.05%.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $151,305,065. Net unrealized depreciation
aggregated $25,040,552, of which $17,051,472 related to appreciated
investment securities and $42,092,024 related to depreciated
investment securities.
At February 28, 1999, the fund had a capital loss carryforward of
approximately $77,793,000 of which $1,376,000, $55,694,000, and
$20,723,000 will expire on February 28, 2001, 2006, and 2007,
respectively.
The fund intends to defer to its fiscal year ending February 29, 2000
approximately $12,682,000 of losses recognized during the period
November 1, 1998 to February 28, 1999.
PRECIOUS METALS AND MINERALS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 126,264,513
value (cost $150,465,333) -
See accompanying schedule
Receivable for investments 403,856
sold
Receivable for fund shares 240,966
sold
Dividends receivable 649,189
Interest receivable 9,582
Redemption fees receivable 894
TOTAL ASSETS 127,569,000
LIABILITIES
Payable for investments $ 3,397,461
purchased
Payable for fund shares 528,773
redeemed
Accrued management fee 64,619
Other payables and accrued 139,019
expenses
TOTAL LIABILITIES 4,129,872
NET ASSETS $ 123,439,128
Net Assets consist of:
Paid in capital $ 238,968,188
Accumulated net investment (37,156)
loss
Accumulated undistributed net (91,281,851)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (24,210,053)
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 13,474,676 $ 123,439,128
shares outstanding
NET ASSET VALUE and $9.16
redemption price per share
($123,439,128 (divided by)
13,474,676 shares)
Maximum offering price per $9.44
share (100/97.00 of $9.16)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 2,262,380
Dividends
Interest (including income on 204,614
securities loaned of $3,486)
TOTAL INCOME 2,466,994
EXPENSES
Management fee $ 882,668
Transfer agent fees 1,431,323
Accounting and security 145,339
lending fees
Non-interested trustees' 441
compensation
Custodian fees and expenses 72,947
Registration fees 74,184
Audit 11,901
Legal 809
Interest 3,630
Reports to shareholders 40,820
Total expenses before 2,664,062
reductions
Expense reductions (54,750) 2,609,312
NET INVESTMENT INCOME (LOSS) (142,318)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (21,030,575)
Foreign currency transactions 23,252 (21,007,323)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 3,733,889
Assets and liabilities in (9,586) 3,724,303
foreign currencies
NET GAIN (LOSS) (17,283,020)
NET INCREASE (DECREASE) IN $ (17,425,338)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 418,114
charges paid to FDC
Sales charges - Retained by $ 414,477
FDC
Deferred sales charges $ 18,943
withheld by FDC
Exchange fees withheld by FSC $ 30,587
Expense reductions Directed $ 53,824
brokerage arrangements
Custodian credits 237
Transfer agent credits 689
$ 54,750
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (142,318) $ (511,682)
income (loss)
Net realized gain (loss) (21,007,323) (66,607,356)
Change in net unrealized 3,724,303 (65,517,001)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (17,425,338) (132,636,039)
NET ASSETS RESULTING FROM
OPERATIONS
Share transactions Net 415,102,396 372,321,003
proceeds from sales of shares
Cost of shares redeemed (442,648,944) (401,322,827)
NET INCREASE (DECREASE) IN (27,546,548) (29,001,824)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 2,450,806 2,011,726
TOTAL INCREASE (DECREASE) (42,521,080) (159,626,137)
IN NET ASSETS
NET ASSETS
Beginning of period 165,960,208 325,586,345
End of period (including $ 123,439,128 $ 165,960,208
accumulated net investment
loss of $37,156 and
$1,339,643, respectively)
OTHER INFORMATION
Shares
Sold 42,223,635 30,945,409
Redeemed (44,898,226) (31,406,772)
Net increase (decrease) (2,674,591) (461,363)
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.28 $ 19.60 $ 20.96 $ 15.27 $ 16.62
period
Income from Investment
Operations
Net investment income (loss) C (.01) (.04) (.01) .07 .17
Net realized and unrealized (1.27) (9.42) (1.42) 5.54 (1.42)
gain (loss)
Total from investment (1.28) (9.46) (1.43) 5.61 (1.25)
operations
Less Distributions
From net investment income - - (.04) (.06) (.18)
In excess of net investment - - (.01) - (.05)
income
Total distributions - - (.05) (.06) (.23)
Redemption fees added to paid .16 .14 .12 .14 .13
in capital
Net asset value, end of period $ 9.16 $ 10.28 $ 19.60 $ 20.96 $ 15.27
TOTAL RETURN A, B (10.89)% (47.55)% (6.26)% 37.74% (6.86)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 123,439 $ 165,960 $ 325,586 $ 467,196 $ 364,204
(000 omitted)
Ratio of expenses to average 1.78% 1.82% 1.62% 1.52% 1.46%
net assets
Ratio of expenses to average 1.74% D 1.76% D 1.61% D 1.52% 1.46%
net assets after expense
reductions
Ratio of net investment (.09)% (.26)% (.05)% .39% .99%
income (loss) to average net
assets
Portfolio turnover rate 53% 84% 54% 53% 43%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. E FOR
THE YEAR ENDED FEBRUARY 29.
</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 FEBRUARY 28, 1999 PAST 1 YEAR LIFE OF FUND
SELECT BUSINESS SERVICES AND 26.23% 37.47%
OUTSOURCING
SELECT BUSINESS SERVICES AND 22.37% 33.27%
OUTSOURCING (LOAD ADJ.)
S&P 500 19.74% 24.95%
GS Technology 48.15% 56.20%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year or since the fund
started on February 4, 1998. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a market
capitalization-weighted 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 FEBRUARY 28, 1999 PAST 1 YEAR LIFE OF FUND
SELECT BUSINESS SERVICES AND 26.23% 34.79%
OUTSOURCING
SELECT BUSINESS SERVICES AND 22.37% 30.92%
OUTSOURCING (LOAD ADJ.)
S&P 500 19.74% 23.24%
GS Technology 48.15% 51.95%
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
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 9756.81 9590.43
1998/09/30 10465.51 10204.80
1998/10/31 11387.80 11034.86
1998/11/30 11999.42 11703.68
1998/12/31 13275.56 12378.04
1999/01/31 13806.19 12895.69
1999/02/26 13327.00 12494.90
IMATRL PRASUN SHR__CHT 19990228 19990307 154325 R00000000000016
$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 February 28, 1999,
the value of the investment would have been $13,327 - a 33.27%
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 been
$12,495 - a 24.95% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
First Data Corp. 7.5
Automatic Data Processing, Inc. 5.9
IMS Health, Inc. 5.7
DST Systems, Inc. 5.1
Ceridian Corp. 4.6
Nielsen Media Research, Inc. 4.6
Affiliated Computer Services, 4.3
Inc. Class A
Sabre Group Holdings, Inc. 4.0
Class A
Computer Sciences Corp. 3.8
Equifax, Inc. 3.4
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Computer Services & Software 61.6%
Services 11.2%
Advertising 8.1%
Broadcasting 4.6%
Trucking & Freight 3.0%
All Others 11.5%*
Row: 1, Col: 1, Value: 11.5
Row: 1, Col: 2, Value: 3.0
Row: 1, Col: 3, Value: 4.6
Row: 1, Col: 4, Value: 8.1
Row: 1, Col: 5, Value: 11.2
Row: 1, Col: 6, Value: 61.6
* 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. HOW DID THE FUND PERFORM, MICHAEL?
A. For the 12 months that ended February 28, 1999, the fund posted a
total return of 26.23%. To compare, the Standard & Poor's 500 Index
returned 19.74% during the same 12-month period, and the Goldman Sachs
Technology Index - an index of 190 stocks designed to measure the
performance of companies in the technology sector - returned 48.15%.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE OVER THE PAST 12
MONTHS?
A. The fund - and the business services and outsourcing sector -
performed well relative to the S&P 500 because of the defensive nature
of many of the stocks; they tend to have stable revenue streams.
During the year, many investors were concerned that a weakened
domestic economy could result from continued financial problems in
Asia and currency devaluations in Latin America. Many stocks in the
fund did well because they had little or no business in these
countries, and enjoyed predictable revenues. Relative to the Goldman
Sachs Technology Index, the fund didn't own the large technology
hardware and software companies that dominate the index and drove the
technology sector over the past 12 months. Companies like Microsoft
and Intel posted very strong performance, but the fund generally
wouldn't own these product companies; it's focused on companies that
provide business-related services.
Q. DID YOUR STRATEGY CHANGE AS WE WORKED OUR WAY THROUGH THE TURMOIL
IN THE MARKETS IN THE LATTER HALF OF 1998?
A. No, it didn't. I continued to search for companies with strong
earnings-growth prospects or improving fundamentals, selling at
reasonable or attractive valuations. I looked for turnaround
situations or under-followed securities. Recurring revenues, strong
near-term earnings outlooks and strong cash flows were among the
common characteristics shared by many of the fund's holdings.
Q. WHICH STOCKS WERE STRONG CONTRIBUTORS TO THE FUND'S PERFORMANCE?
A. On the plus side, there was Nielsen Media Research, a company that
enjoys a virtual monopoly in the business of measuring television
audiences. The company split from Cognizant in July 1998. Because
Nielsen was so small when the split occurred, it received very little
coverage on Wall Street at that time. Recognizing the company's strong
market position and appreciating its stock's low valuation, I took a
large position in the stock for the fund. In time, the company saw its
share price rise as investors came to appreciate the company's
consistent earnings-growth potential. Ceridian, a data management
firm, sold off some of its businesses, better positioning itself to
produce superior earnings growth and strong cash flow. First Data was
a turnaround story, as this data management company's stock rebounded
from record lows. Finally, Affiliated Computer Services continued to
generate strong earnings growth and made some positive acquisitions to
its business-process outsourcing operations.
Q. WHICH STOCKS PROVED TO BE DISAPPOINTING?
A. On the downside, Technology Solutions and Cambridge Technology
Partners - two computer system integration companies - suffered from
disappointing near-term earnings growth because demand for their
services declined. However, the fund continued to own both securities
at the end of the period because their valuations were reasonable and
their prospects appeared favorable.
Q. WHAT'S YOUR OUTLOOK?
A. I'm very positive about the outlook for this sector over the next
six months. Companies in the sector appear poised to post earnings
growth in excess of the overall market, as measured by the S&P 500. In
addition, there should be continued possibilities for consolidation as
well as a pipeline of new stock offerings that could create new
investment opportunities for the fund. As I've said in the past, as
more and more companies look to outsource some of their functions, the
companies in the sector 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 OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: February 4, 1998
FUND NUMBER: 353
TRADING SYMBOL: FBSOX
SIZE: as of February 28, 1999, more than
$64 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 FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 91.0%
SHARES VALUE (NOTE 1)
ADVERTISING - 8.1%
Interpublic Group of 20,800 $ 1,556,100
Companies, Inc.
Lamar Advertising Co. Class A 17,250 666,281
(a)
Omnicom Group, Inc. 29,039 1,923,834
Outdoor Systems, Inc. (a) 24,000 670,500
Pharmaceutical Marketing 30,000 435,000
Services, Inc. (a)
5,251,715
AIR TRANSPORTATION - 0.6%
Viad Corp. 13,600 359,550
BROADCASTING - 4.6%
Nielsen Media Research, Inc. 150,600 2,955,525
(a)
COMPUTER SERVICES & SOFTWARE
- - 61.6%
Affiliated Computer Services, 60,200 2,784,250
Inc. Class A (a)
Automatic Data Processing, 96,100 3,819,975
Inc.
CACI International, Inc. 10,000 165,000
Class A (a)
Cambridge Technology 21,500 540,188
Partners, Inc. (a)
Ceridian Corp. (a) 41,500 2,972,438
Computer Sciences Corp. 37,200 2,478,450
Convergys Corp. (a) 16,500 285,656
Cotelligent, Inc. (a) 12,000 159,000
DST Systems, Inc. (a) 60,500 3,282,125
Electronic Data Systems Corp. 41,000 1,906,500
Equifax, Inc. 57,500 2,170,625
First Data Corp. 127,000 4,857,745
Fiserv, Inc. (a) 30,050 1,412,350
Fundtech Ltd. 8,500 177,438
Galileo International, Inc. 17,200 868,600
HNC Software, Inc. (a) 7,000 188,125
IMS Health, Inc. 103,600 3,677,800
IntelliQuest Information 38,700 420,863
Group, Inc. (a)
International Integration, 15,000 298,125
Inc. (a)
Paychex, Inc. 46,150 1,955,606
QRS Corp. (a) 6,700 333,744
Sabre Group Holdings, Inc. 65,500 2,570,875
Class A (a)
SunGard Data Systems, Inc. (a) 20,600 816,275
Technology Solutions, Inc. (a) 68,100 557,569
Wang Laboratories, Inc. (a) 47,200 1,126,900
39,826,222
INSURANCE - 0.2%
Scottish Annuity & Life Hold 15,800 156,025
(a)
LEASING & RENTAL - 0.5%
Caribiner International, Inc. 43,500 339,844
(a)
PRINTING - 0.6%
Reynolds & Reynolds Co. Class 21,000 396,375
A
SHARES VALUE (NOTE 1)
PUBLISHING - 0.3%
Harte Hanks Communications, 6,500 $ 168,188
Inc.
RESTAURANTS - 0.3%
Sodexho Marriott Services, 8,500 198,688
Inc. (a)
SERVICES - 11.2%
ABR Information Services, 7,900 139,238
Inc. (a)
ACNielsen Corp. (a) 15,900 413,400
Cintas Corp. 10,800 764,100
Compass International 47,000 384,813
Services Corp.
Data Processing Resources 15,000 285,000
Corp. (a)
Diamond Technology Partners, 16,000 397,000
Inc. Class A (a)
Dun & Bradstreet Corp. 36,400 1,246,700
Gartner Group, Inc. Class A 20,500 459,969
(a)
International Telecom Data 35,000 481,250
Systems, Inc.
Korn/Ferry International (a) 19,000 216,125
Lai Worldwide, Inc. (a) 59,500 438,813
Manpower, Inc. 13,300 318,369
Market Facts, Inc. (a) 34,100 801,350
Paymentech, Inc. (a) 11,000 210,375
Robert Half International, 18,900 680,400
Inc. (a)
7,236,902
TRUCKING & FREIGHT - 3.0%
Air Express International 38,200 670,888
Corp.
Expeditors International of 26,900 1,252,531
Washington, Inc.
1,923,419
TOTAL COMMON STOCKS 58,812,453
(Cost $51,042,144)
CASH EQUIVALENTS - 9.0%
Taxable Central Cash Fund (b) 5,813,720 5,813,720
(Cost $5,813,720)
TOTAL INVESTMENT IN $ 64,626,173
SECURITIES - 100%
(Cost $56,855,864)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. 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 $92,045,698 and $57,419,897, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $16,127 for the
period.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $57,599,238. Net unrealized appreciation
aggregated $7,026,935, of which $9,954,218 related to appreciated
investment securities and $2,927,283 related to depreciated investment
securities.
A total of 20% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of this percentage
for use in preparing 1999 income tax returns.
BUSINESS SERVICES AND OUTSOURCING PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 64,626,173
value (cost $56,855,864) -
See accompanying schedule
Receivable for fund shares 318,349
sold
Dividends receivable 25,757
Interest receivable 21,611
Redemption fees receivable 213
TOTAL ASSETS 64,992,103
LIABILITIES
Payable for investments $ 310,463
purchased
Payable for fund shares 459,005
redeemed
Accrued management fee 31,472
Other payables and accrued 68,552
expenses
TOTAL LIABILITIES 869,492
NET ASSETS $ 64,122,611
Net Assets consist of:
Paid in capital $ 55,174,965
Accumulated undistributed net 1,177,337
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 7,770,309
(depreciation) on investments
NET ASSETS, for 4,726,469 $ 64,122,611
shares outstanding
NET ASSET VALUE and $13.57
redemption price per share
($64,122,611 (divided by)
4,726,469 shares)
Maximum offering price per $13.99
share (100/97.00 of $13.57)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 181,268
Dividends
Interest 221,409
TOTAL INCOME 402,677
EXPENSES
Management fee $ 326,653
Transfer agent fees 421,635
Accounting fees and expenses 60,809
Non-interested trustees' 177
compensation
Custodian fees and expenses 13,013
Registration fees 64,318
Audit 30,659
Legal 745
Reports to shareholders 1,557
Miscellaneous 403
Total expenses before 919,969
reductions
Expense reductions (12,168) 907,801
NET INVESTMENT INCOME (LOSS) (505,124)
REALIZED AND UNREALIZED GAIN 2,392,697
(LOSS)
Net realized gain (loss) on
investment securities
Change in net unrealized 7,144,279
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 9,536,976
NET INCREASE (DECREASE) IN $ 9,031,852
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 661,865
charges paid to FDC
Sales charges - Retained by $ 661,865
FDC
Deferred sales charges $ 106
withheld by FDC
Exchange fees withheld by FSC $ 7,478
Expense reductions Directed $ 11,380
brokerage arrangements
Custodian credits 788
$ 12,168
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 FEBRUARY 4, 1998
ASSETS (COMMENCEMENT OF OPERATIONS)
TO FEBRUARY 28, 1998
Operations Net investment $ (505,124) $ (2,203)
income (loss)
Net realized gain (loss) 2,392,697 16,708
Change in net unrealized 7,144,279 626,030
appreciation (depreciation)
NET INCREASE (DECREASE) IN 9,031,852 640,535
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (724,580) -
from net realized gains
Share transactions Net 115,593,201 15,378,163
proceeds from sales of shares
Reinvestment of distributions 706,597 -
Cost of shares redeemed (76,520,490) (103,682)
NET INCREASE (DECREASE) IN 39,779,308 15,274,481
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 120,875 140
TOTAL INCREASE (DECREASE) 48,207,455 15,915,156
IN NET ASSETS
NET ASSETS
Beginning of period 15,915,156 -
End of period $ 64,122,611 $ 15,915,156
OTHER INFORMATION
Shares
Sold 9,724,396 1,470,842
Issued in reinvestment of 57,528 -
distributions
Redeemed (6,516,475) (9,822)
Net increase (decrease) 3,265,449 1,461,020
</TABLE>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 1999 1998E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.89 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.11) -
Net realized and unrealized 2.92 .89
gain (loss)
Total from investment 2.81 .89
operations
Less Distributions
From net realized gain (.16) -
Redemption fees added to paid .03 -
in capital
Net asset value, end of period $ 13.57 $ 10.89
TOTAL RETURN B, C 26.23% 8.90%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 64,123 $ 15,915
(000 omitted)
Ratio of expenses to average 1.66% 2.50% A, F
net assets
Ratio of expenses to average 1.64% G 2.50% A
net assets after expense
reductions
Ratio of net investment (.91)% (.49)% A
income (loss) to average net
assets
Portfolio turnover rate 115% 36% A
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 FOR THE PERIOD
FEBRUARY 4, 1998
(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. 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.
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT COMPUTERS 66.43% 330.57% 1,094.34%
SELECT COMPUTERS (LOAD ADJ.) 61.37% 317.58% 1,058.44%
S&P 500 19.74% 194.91% 459.21%
GS Technology 48.15% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT COMPUTERS 66.43% 33.91% 28.15%
SELECT COMPUTERS (LOAD ADJ.) 61.37% 33.09% 27.76%
S&P 500 19.74% 24.15% 18.78%
GS Technology 48.15% 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
1989/02/28 9700.00 10000.00
1989/03/31 9239.36 10233.00
1989/04/30 10275.80 10764.09
1989/05/31 11188.22 11200.04
1989/06/30 9859.45 11136.20
1989/07/31 10036.62 12141.80
1989/08/31 10187.21 12379.78
1989/09/30 10426.39 12329.02
1989/10/31 10080.91 12042.99
1989/11/30 9859.45 12288.66
1989/12/31 9965.75 12583.59
1990/01/31 9877.17 11739.23
1990/02/28 10771.87 11890.67
1990/03/31 11542.56 12205.77
1990/04/30 11232.51 11900.63
1990/05/31 12694.16 13060.94
1990/06/30 12924.47 12972.12
1990/07/31 12003.20 12930.61
1990/08/31 10098.63 11761.68
1990/09/30 9434.25 11188.89
1990/10/31 9788.58 11140.78
1990/11/30 11400.82 11860.47
1990/12/31 11800.12 12191.38
1991/01/31 13811.51 12722.92
1991/02/28 14705.46 13632.61
1991/03/31 15867.59 13962.52
1991/04/30 14839.55 13996.03
1991/05/31 15590.47 14600.66
1991/06/30 13467.57 13931.95
1991/07/31 14820.77 14581.18
1991/08/31 15741.31 14926.75
1991/09/30 14912.82 14677.48
1991/10/31 14618.25 14874.16
1991/11/30 13614.86 14274.73
1991/12/31 15428.33 15907.76
1992/01/31 17039.28 15611.87
1992/02/29 18208.37 15814.83
1992/03/31 16772.32 15506.44
1992/04/30 16229.20 15962.33
1992/05/31 16431.72 16040.54
1992/06/30 14848.39 15801.54
1992/07/31 15575.62 16447.82
1992/08/31 14682.69 16110.64
1992/09/30 15409.92 16300.75
1992/10/31 16625.04 16357.80
1992/11/30 17656.05 16915.60
1992/12/31 18815.93 17123.66
1993/01/31 19911.38 17267.50
1993/02/28 18548.98 17502.34
1993/03/31 18917.19 17871.64
1993/04/30 18379.92 17439.14
1993/05/31 20533.38 17906.51
1993/06/30 19711.67 17958.44
1993/07/31 20533.38 17886.61
1993/08/31 21751.78 18564.51
1993/09/30 22365.70 18421.56
1993/10/31 22365.70 18802.89
1993/11/30 23319.65 18624.26
1993/12/31 24247.70 18849.62
1994/01/31 25811.10 19490.50
1994/02/28 26906.48 18962.31
1994/03/31 26627.66 18135.55
1994/04/30 26458.37 18367.69
1994/05/31 26438.46 18668.92
1994/06/30 24267.62 18211.53
1994/07/31 25034.38 18808.87
1994/08/31 28031.73 19580.03
1994/09/30 27832.58 19100.32
1994/10/31 28878.16 19530.08
1994/11/30 29047.45 18818.79
1994/12/31 29206.78 19097.87
1995/01/31 28310.56 19593.08
1995/02/28 30541.15 20356.63
1995/03/31 32891.23 20957.35
1995/04/30 35504.54 21574.54
1995/05/31 37259.59 22436.88
1995/06/30 41334.55 22958.09
1995/07/31 46529.10 23719.38
1995/08/31 47568.02 23778.91
1995/09/30 50291.37 24782.38
1995/10/31 48465.72 24693.91
1995/11/30 47295.68 25777.97
1995/12/31 44344.76 26274.46
1996/01/31 44060.42 27168.84
1996/02/29 46664.92 27420.69
1996/03/31 42718.36 27684.75
1996/04/30 47413.86 28092.83
1996/05/31 49052.40 28817.34
1996/06/30 45486.85 28927.14
1996/07/31 42440.54 27649.13
1996/08/31 44275.25 28232.26
1996/09/30 49710.13 29821.17
1996/10/31 52329.49 30643.63
1996/11/30 59449.07 32959.99
1996/12/31 58365.85 32307.05
1997/01/31 65847.42 34325.59
1997/02/28 57850.29 34594.71
1997/03/31 53294.20 33173.21
1997/04/30 56201.20 35153.65
1997/05/31 60251.97 37293.80
1997/06/30 59859.96 38964.57
1997/07/31 73671.79 42064.98
1997/08/31 75161.43 39708.50
1997/09/30 77957.77 41883.33
1997/10/31 67007.61 40484.43
1997/11/30 65766.25 42358.45
1997/12/31 58425.32 43085.75
1998/01/31 63085.11 43562.28
1998/02/28 69608.82 46703.99
1998/03/31 68032.96 49095.70
1998/04/30 74539.72 49589.60
1998/05/31 69456.31 48737.16
1998/06/30 75641.13 50716.86
1998/07/31 79673.97 50176.72
1998/08/31 68981.86 42922.17
1998/09/30 82283.45 45671.77
1998/10/31 88095.48 49386.71
1998/11/30 97635.35 52380.04
1998/12/31 114732.55 55398.18
1999/01/31 132253.36 57714.93
1999/02/26 115844.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990309 143213 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Computers Portfolio on February 28, 1989,
and the current 3.00% sales charge was paid. As the chart shows, by
February 28, 1999, the value of the investment would have grown to
$115,844 - a 1,058.44% 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 $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
EMC Corp. 9.0
Texas Instruments, Inc. 6.8
Microsoft Corp. 5.3
Cisco Systems, Inc. 5.1
Micron Technology, Inc. 4.8
Applied Materials, Inc. 4.8
America Online, Inc. 4.5
Dell Computer Corp. 4.1
Compaq Computer Corp. 2.7
Intel Corp. 2.4
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Electronics 25.0%
Computers & Office Equipment 24.1%
Computer Services & Software 19.3%
Communications Equipment 7.1%
Electronic Instruments 7.0%
All Others 17.5%*
Row: 1, Col: 1, Value: 17.5
Row: 1, Col: 2, Value: 7.0
Row: 1, Col: 3, Value: 7.1
Row: 1, Col: 4, Value: 19.3
Row: 1, Col: 5, Value: 24.1
Row: 1, Col: 6, Value: 25.0
* INCLUDES SHORT-TERM INVESTMENTS
COMPUTERS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Mike Tempero)
Mike Tempero,
Portfolio Manager
of Fidelity Select
Computers Portfolio
Q. HOW DID THE FUND PERFORM, MIKE?
A. For the 12 months that ended February 28, 1999, the fund returned
66.43%. For the same 12-month period, the Standard & Poor's 500 Index
returned 19.74%, while the Goldman Sachs Technology Index - an index
of 190 stocks designed to measure the performance of companies in the
technology sector - returned 48.15%. The fund outperformed the Goldman
Sachs index due to the fund's smaller exposure to poorly performing
semiconductor stocks during the first half of the period.
Q. HOW WOULD YOU CHARACTERIZE THE INVESTMENT ENVIRONMENT OVER THE PAST
YEAR?
A. Firm computer demand helped the sector perform very well for most
of the year, although there were weak periods. During the late summer
and early fall, economic crises in emerging markets caused a broadly
based stock market decline. However, when the market rebounded in
October, computer and technology stocks led the rally, with some
prices doubling. Within the computer sector, semiconductor and
semiconductor equipment stock prices were soft for a large part of the
year. Excess inventories and falling prices hurt this segment when
many personal computer manufacturers scaled back production and
reduced semiconductor orders early in 1998. However, after inventories
sold down, continued demand helped improve semiconductor pricing and
these stocks recovered. In February 1999, several computer
manufacturers, including Compaq and Dell, announced that unit sales
were running below expectations. Computer stocks ended the period on a
weaker note amid concerns of slower revenue and earnings growth.
Q. YOU NOW HAVE SEMICONDUCTOR STOCKS IN YOUR TOP-10 HOLDINGS. WHAT LED
YOU TO SELECT THEM?
A. Although semiconductor stocks underperformed for much of the year,
these stocks appeared to bottom out in the fall as investors
anticipated improving business conditions. For example, Applied
Materials, Inc. did very well - its stock more than doubled between
October and February. Applied Materials dominates the market for
wafer-fabrication equipment used by semiconductor manufacturers and
counts Intel, the world's leading chip maker, as its largest customer.
I also added to positions in Texas Instruments and Micron Technology.
Texas Instruments is the leading producer of the digital signal
processors used in more than 85 million cellular phones; Micron is a
low-cost provider of semiconductor memory components.
Q. WHAT HOLDINGS INFLUENCED THE FUND'S STRONG PERFORMANCE?
A. EMC Corp., the fund's largest holding, performed extremely well.
EMC manufactures large-scale data storage units and is a prime
beneficiary of increased electronic data generation - every e-mail,
online transaction or file transfer needs safe warehousing. EMC
dominates the storage market largely because its units are compatible
with many types of mainframes, network servers and operating systems.
Dell Computer also did well. As the industry's low-cost leader in
personal computer manufacturing, Dell has prospered because it sells
PCs directly to consumers and assembles units only as orders are
received. Not only does this strategy keep inventories lean, it gives
Dell a competitive advantage. When component costs - such as
semiconductors - are falling, Dell can benefit from lower costs
immediately while other manufacturers are burdened with inventories of
more expensive components.
Q. WHAT STOCKS WERE DISAPPOINTING DURING THE PERIOD?
A. One stock that fell short of my expectations was Seagate
Technology. Seagate is the largest independent producer of computer
disk drives and specializes in high-end networking applications. I
believed Seagate's earnings growth would improve after reducing
built-up inventories during the fall. However, severe price
competition and expectations of lower demand in Seagate's high-end
market caused the stock to sell off sharply early in 1999. Most
disappointments, however, fell into the category of omission. For
example, after the market corrected, I was slow to buy more Cisco
Systems, the market leader in data networking routers. Cisco's shares
more than doubled from their low in October.
Q. WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
A. Computer stock performance in 1999 will rest on two critical
issues: consumer spending and corporate profitability. As long as
consumer confidence remains strong and corporate profits are
relatively stable, spending for computers and related products should
continue. I will be watching for new trends in the industry that could
shift spending patterns. For example, increased bandwidth that helps
speed up connections and reduces data log-jams between computers is
crucial for system upgrades. Consequently, companies that can provide
the means for greater bandwidth capacity may lead the next big wave in
the computing industry.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: July 29, 1985
FUND NUMBER: 007
TRADING SYMBOL: FDCPX
SIZE: as of February 28, 1999, more than
$1.8 billion
MANAGER: 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 FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 86.4%
SHARES VALUE (NOTE 1)
ADVERTISING - 0.2%
DoubleClick, Inc. (a) 50,000 $ 4,493,750
VerticalNet, Inc. (a) 300 12,375
4,506,125
BROADCASTING - 0.1%
Infinity Broadcasting Corp. 33,000 783,750
Class A (a)
COMMUNICATIONS EQUIPMENT - 7.1%
ADC Telecommunications, Inc. 550,000 22,275,000
(a)
Cisco Systems, Inc. (a) 1,039,500 101,676,094
OY Nokia AB sponsored ADR 125,000 16,953,125
140,904,219
COMPUTER SERVICES & SOFTWARE
- - 19.3%
AboveNet Communications, Inc. 500 15,625
(a)
Allaire Corp. (a) 400 19,500
America Online, Inc. 990,800 88,119,275
At Home Corp. Series A (a) 100,000 10,612,500
Aware, Inc. (a) 336,300 11,644,388
BMC Software, Inc. 200,000 8,175,000
Cambridge Technology 150,000 3,768,750
Partners, Inc. (a)
Computer Learning Centers, 22,800 98,325
Inc. (a)
Documentum, Inc. (a) 100,000 2,137,500
eBay, Inc. (a) 100,500 33,567,000
Electronics for Imaging, Inc. 615,400 21,500,538
(a)
Equifax, Inc. 300,000 11,325,000
IMS Health, Inc. 300,000 10,650,000
Inacom Corp. (a) 200,000 3,100,000
Inktomi Corp. (a) 50,000 3,106,250
Internet America, Inc. (a) 300 8,719
Intraware, Inc. 700 13,213
Microsoft Corp. (a) 700,000 105,087,500
Oracle Corp. (a) 200,000 11,175,000
Pacific Internet Ltd. (a) 200 5,975
pcOrder.com, Inc. (a) 400 18,850
Perot Systems Corp. (a) 400 17,375
Siebel Systems, Inc. (a) 704,000 30,976,000
VeriSign, Inc. (a) 50,000 4,900,000
Vignette Corp. (a) 100,700 5,462,975
Wang Laboratories, Inc. (a) 50,000 1,193,750
WebTrends Corp. (a) 1,000 25,125
Yahoo!, Inc. (a) 100,000 15,350,000
382,074,133
COMPUTERS & OFFICE EQUIPMENT
- - 24.1%
Advanced Digital Information 170,700 2,901,900
Corp. (a)
CDW Computer Centers, Inc. (a) 100,000 6,962,500
Compaq Computer Corp. 1,506,350 53,098,838
Dell Computer Corp. (a) 1,000,000 80,125,000
EMC Corp. (a) 1,729,000 177,006,371
SHARES VALUE (NOTE 1)
Ingram Micro, Inc. Class A (a) 50,000 $ 1,100,000
Insight Enterprises, Inc. (a) 286,875 6,669,844
International Business 204,000 34,680,000
Machines Corp.
Iomega Corp. (a) 200,000 1,212,500
Komag, Inc. (a) 100,000 700,000
Lexmark International Group, 250,000 25,796,875
Inc. Class A (a)
Micron Electronics, Inc. (a) 200,000 2,875,000
Network Appliance, Inc. (a) 150,000 6,300,000
Quantum Corp. (a) 247,000 4,060,063
Seagate Technology, Inc. (a) 500,000 14,468,750
Sun Microsystems, Inc. (a) 450,000 43,790,625
Symbol Technologies, Inc. 100,000 5,300,000
Tech Data Corp. (a) 200,000 3,400,000
Unisys Corp. (a) 200,000 5,962,500
476,410,766
CONSUMER ELECTRONICS - 1.0%
Sharp Corp. 1,968,000 19,142,747
DEFENSE ELECTRONICS - 0.1%
Alpha Industries, Inc. (a) 60,000 1,222,500
ELECTRONIC INSTRUMENTS - 7.0%
Advantest Corp. 105,100 7,954,229
Applied Materials, Inc. (a) 1,700,000 94,562,500
KLA-Tencor Corp. (a) 100,000 5,181,250
LAM Research Corp. (a) 62,400 1,844,700
Smart Modular Technologies, 650,000 10,440,625
Inc. (a)
Teradyne, Inc. (a) 400,000 19,050,000
139,033,304
ELECTRONICS - 25.0%
Altera Corp. (a) 300,000 14,587,500
Analog Devices, Inc. (a) 450,000 11,278,125
C-Cube Microsystems, Inc. (a) 72,300 1,355,625
Intel Corp. 400,000 47,975,000
Linear Technology Corp. 1,046,600 45,854,163
LSI Logic Corp. (a) 500,000 12,968,750
Microchip Technology, Inc. (a) 100,000 2,725,000
Micron Technology, Inc. (a) 1,655,000 95,369,375
Motorola, Inc. 630,000 44,257,500
PMC-Sierra, Inc. (a) 50,000 3,543,750
Rambus, Inc. (a) 75,300 5,473,369
Semtech Corp. (a) 470,000 14,276,250
Solectron Corp. (a) 173,200 7,739,875
Texas Instruments, Inc. 1,499,200 133,709,900
Tokyo Electron Ltd. 172,000 7,801,764
Xilinx, Inc. (a) 650,000 45,337,500
494,253,446
INDUSTRIAL MACHINERY &
EQUIPMENT - 0.6%
ASM Lithography Holding N V 300,000 11,887,500
(a)
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SERVICES - 0.0%
Corporate Executive Board Co. 1,200 $ 29,400
(a)
TELEPHONE SERVICES - 1.9%
MCI WorldCom, Inc. (a) 461,000 38,032,500
TOTAL COMMON STOCKS 1,708,280,390
(Cost $1,339,272,825)
CASH EQUIVALENTS - 13.6%
MATURITY AMOUNT
Investments in repurchase $ 4,474,771 4,473,000
agreements (U.S. Treasury
obligations), in a joint
trading account at 4.75%,
dated 2/26/99 due 3/1/99
SHARES
Taxable Central Cash Fund (b) 264,220,070 264,220,070
TOTAL CASH EQUIVALENTS 268,693,070
(Cost $268,693,070)
TOTAL INVESTMENT IN $ 1,976,973,460
SECURITIES - 100%
(Cost $1,607,965,895)
</TABLE>
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $1,827,516,954 and $1,247,515,427, respectively.
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 $217,026 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $18,833,331. The fund
received cash collateral of $18,038,100.
The fund participated in the interfund lending program as a lender.
The maximum loan and average daily balances during the period for
which loans were outstanding amounted to $37,166,000. The weighted
average interest rate was 5.87%. Interest earned from the interfund
lending program amounted to $6,055 and is included in interest income
on the Statement of Operations.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $1,612,250,580. Net unrealized appreciation
aggregated $364,722,880, of which $447,991,267 related to appreciated
investment securities and $83,268,387 related to depreciated
investment securities.
The fund hereby designates approximately $1,825,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
COMPUTERS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 1,976,973,460
value (including repurchase
agreements of $4,473,000)
(cost $1,607,965,895) - See
accompanying schedule
Cash 540
Receivable for investments 74,550,698
sold
Receivable for fund shares 12,196,853
sold
Dividends receivable 111,480
Interest receivable 847,493
Redemption fees receivable 6,719
Other receivables 82,279
TOTAL ASSETS 2,064,769,522
LIABILITIES
Payable for investments $ 205,491,186
purchased
Payable for fund shares 7,938,408
redeemed
Accrued management fee 946,369
Other payables and accrued 920,650
expenses
Collateral on securities 18,038,100
loaned, at value
TOTAL LIABILITIES 233,334,713
NET ASSETS $ 1,831,434,809
Net Assets consist of:
Paid in capital $ 1,363,112,573
Accumulated undistributed net 99,314,671
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 369,007,565
(depreciation) on investments
NET ASSETS, for 26,786,080 $ 1,831,434,809
shares outstanding
NET ASSET VALUE and $68.37
redemption price per share
($1,831,434,809 (divided by)
26,786,080 shares)
Maximum offering price per $70.48
share (100/97.00 of $68.37)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 1,207,978
Dividends
Interest (including income on 5,691,380
securities loaned of
$578,753)
TOTAL INCOME 6,899,358
EXPENSES
Management fee $ 6,013,190
Transfer agent fees 5,234,820
Accounting and security 764,075
lending fees
Non-interested trustees' 3,899
compensation
Custodian fees and expenses 37,728
Registration fees 380,098
Audit 42,206
Legal 5,276
Reports to shareholders 103,662
Total expenses before 12,584,954
reductions
Expense reductions (214,475) 12,370,479
NET INVESTMENT INCOME (LOSS) (5,471,121)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 193,009,783
Foreign currency transactions 24,748 193,034,531
Change in net unrealized 272,430,790
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 465,465,321
NET INCREASE (DECREASE) IN $ 459,994,200
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 9,062,985
charges paid to FDC
Sales charges - Retained by $ 9,053,383
FDC
Deferred sales charges $ 5,657
withheld by FDC
Exchange fees withheld by FSC $ 73,148
EXPENSE REDUCTIONS Directed $ 207,334
brokerage arrangements
Custodian credits 5,645
Transfer agent credits 1,496
$ 214,475
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (5,471,121) $ (4,376,259)
income (loss)
Net realized gain (loss) 193,034,531 89,255,411
Change in net unrealized 272,430,790 22,245,884
appreciation (depreciation)
NET INCREASE (DECREASE) IN 459,994,200 107,125,036
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders - (132,918,806)
From net realized gain
In excess of net realized - (34,413,012)
gain
TOTAL DISTRIBUTIONS - (167,331,818)
Share transactions Net 1,830,119,568 808,411,253
proceeds from sales of shares
Reinvestment of distributions - 165,233,207
Cost of shares redeemed (1,247,821,903) (733,889,159)
NET INCREASE (DECREASE) IN 582,297,665 239,755,301
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 3,678,254 1,629,692
TOTAL INCREASE (DECREASE) 1,045,970,119 181,178,211
IN NET ASSETS
NET ASSETS
Beginning of period 785,464,690 604,286,479
End of period $ 1,831,434,809 $ 785,464,690
OTHER INFORMATION
Shares
Sold 33,082,983 17,046,061
Issued in reinvestment of - 4,788,686
distributions
Redeemed (25,415,629) (15,239,529)
Net increase (decrease) 7,667,354 6,595,218
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 41.08 $ 48.25 $ 41.03 $ 30.67 $ 27.02
period
Income from Investment
Operations
Net investment income (loss) C (.29) (.32) (.36) (.23) (.31)
Net realized and unrealized 27.39 6.42 9.94 16.10 3.68
gain (loss)
Total from investment 27.10 6.10 9.58 15.87 3.37
operations
Less Distributions
From net realized gain - (10.64) (2.47) (5.61) -
In excess of net realized gain - (2.75) - - -
Total distributions - (13.39) (2.47) (5.61) -
Redemption fees added to paid .19 .12 .11 .10 .28
in capital
Net asset value, end of period $ 68.37 $ 41.08 $ 48.25 $ 41.03 $ 30.67
TOTAL RETURN A, B 66.43% 20.33% 23.97% 52.79% 13.51%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,831,435 $ 785,465 $ 604,286 $ 527,337 $ 215,014
(000 omitted)
Ratio of expenses to average 1.25% 1.40% 1.48% 1.40% 1.71%
net assets
Ratio of expenses to average 1.23% D 1.34% D 1.44% D 1.38% D 1.69% D
net assets after expense
reductions
Ratio of net investment (.54)% (.67)% (.83)% (.56)% (1.12)%
income (loss) to average net
assets
Portfolio turnover rate 133% 333% 255% 129% 189%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. E FOR
THE YEAR ENDED FEBRUARY 29.
</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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
1999
SELECT DEVELOPING 63.01% 193.13% 573.87%
COMMUNICATIONS
SELECT DEVELOPING 58.05% 184.27% 553.58%
COMMUNICATIONS (LOAD ADJ.)
S&P 500 19.74% 194.91% 331.09%
GS Technology 48.15% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or since
the fund started on June 29, 1990. You can compare the fund's returns
to the performance of both the Standard & Poor's 500 Index - a market
capitalization-weighted 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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
1999
SELECT DEVELOPING 63.01% 24.00% 24.62%
COMMUNICATIONS
SELECT DEVELOPING 58.05% 23.24% 24.19%
COMMUNICATIONS (LOAD ADJ.)
S&P 500 19.74% 24.15% 18.36%
GS Technology 48.15% 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 35379.51 33088.01
1998/09/30 40353.81 35207.63
1998/10/31 43789.88 38071.42
1998/11/30 50202.54 40378.93
1998/12/31 60091.22 42705.56
1999/01/31 70259.58 44491.51
1999/02/26 65358.00 43108.71
IMATRL PRASUN SHR__CHT 19990228 19990309 143851 R00000000000107
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Select Developing Communications Portfolio on
June 29, 1990, when the fund started, and the current 3.00% sales
charge was paid. As the chart shows, by February 28, 1999, the value
of the investment would have grown to $65,358 - a 553.58% 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 $43,109 -
a 331.09% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
28, 1999
% OF FUND'S INVESTMENTS
OY Nokia AB sponsored ADR 10.0
MCI WorldCom, Inc. 7.3
Motorola, Inc. 7.3
ADC Telecommunications, Inc. 5.0
Cisco Systems, Inc. 5.0
Cox Communications, Inc. 3.5
Class A
Aware, Inc. 3.1
Texas Instruments, Inc. 3.1
America Online, Inc. 3.0
Comcast Corp. Class A (special) 2.9
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Communications Equipment 28.6%
Telephone Services 14.8%
Broadcasting 12.0%
Computer Services & Software 11.3%
Electronics 10.5%
All Others 22.8%*
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
DEVELOPING COMMUNICATIONS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Andrew Kaplan)
Andrew Kaplan,
Portfolio Manager of Fidelity Select Developing Communications
Portfolio
Q. HOW DID THE FUND PERFORM, ANDY?
A. Very well. For the 12 months that ended February 28, 1999, the fund
returned 63.01%, while the Standard & Poor's 500 Index returned
19.74%. During the same period, the Goldman Sachs Technology Index -
an index of 190 stocks designed to measure the performance of
companies in the technology sector - returned 48.15%.
Q. HOW WAS THE FUND ABLE TO OUTPACE THE RETURNS OF BOTH BENCHMARKS
OVER THE PAST 12 MONTHS?
A. The incredible rebound of technology stocks over the last four
months of the period helped the fund generate robust returns.
Technology stocks hit a low point in early October when fears about an
economic slowdown peaked following financial turmoil in Asian and
Russian markets. However, when it became evident that the
international situation was not getting worse and, more importantly,
that U.S. economic growth was accelerating, investors returned to
technology stocks with a vengeance. Specifically, the fund
outperformed the Goldman Sachs Technology Index because of my focus on
large-capitalization stocks. I continued to believe that investors
would pay a premium for stocks that weren't at risk of reporting
disappointing earnings numbers - and these were mostly larger-cap
stocks. On top of that, I focused on Internet stocks - the industry
that enjoyed the most dramatic growth.
Q. WHICH INDIVIDUAL HOLDINGS PERFORMED PARTICULARLY WELL?
A. Some examples of the Internet stocks that did particularly well
were Yahoo!, America Online and Amazon.com. Another Internet play that
was successful was Aware, Inc., a company that provides high-speed
Internet access. Cisco Systems, a maker of networking equipment for
the Internet, also generated healthy returns. Looking to other areas,
wireless communications was one of the fastest growing areas of
technology. The promise of wireless is its increasing reach into
developing economies that have no access to wire-line phones. In
addition, as advances in technology cause service prices to fall,
wireless phones are becoming mass-market items rather than luxury
items. Nokia was one of my favorite wireless names. It rapidly
increased market share by commercializing and mass-producing devices
with the latest technologies.
Q. ARE YOU CONCERNED ABOUT THE INCREDIBLE RUN-UP IN INTERNET STOCKS?
A. Sure. After all, we've seen several years of appreciation all in a
few months. For instance, from early October through early January,
many Internet stocks appreciated as much as 400% to 500%. I'm always
concerned that there may be a correction after that kind of run-up. As
a result, I reduced the weighting of some of the Internet stocks that
enjoyed the most dramatic gains during the period, such as Yahoo! and
Amazon. However, I continued to make investments directly in Internet
companies, or indirectly through the service providers, because I
believe in the long-term growth of the sector.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. It was an extraordinary period because almost all of the fund's
large positions did well. In hindsight, I would have owned more cable
stocks. I was a little late in recognizing the potential of cable as a
means of accessing the Internet. Cable companies have been aggressive
in their introduction of cable modems and in providing high-speed
Internet service to the home. This strategy was a great catalyst for
growth and provided cable companies with a tremendous source of
ancillary revenue. By the end of the period, both Cox Communications
and Comcast were among the fund's top-10 holdings, but I believe I
could have done more sooner.
Q. WHAT'S YOUR OUTLOOK?
A. I continue to be bullish about technology and developing
communications, especially because - with the Internet - we're only in
the second inning. People are starting to realize that these business
models can make money and that the industry is far from mature. For
instance, we have barely captured 10% of the potential subscriber base
and we've only scratched the surface as far as ways to make money
through this medium. I will continue to look for the most aggressive
ways to capitalize on the future growth in that area. However, I am
more concerned about valuations than I was six months ago - and I'd be
foolish not to be - given the incredible run-up in the stocks. As a
result, I will continue to focus on stocks that I believe can deliver
strong earnings.
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 OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: June 29, 1990
FUND NUMBER: 518
TRADING SYMBOL: FSDCX
SIZE: as of February 28, 1999, more than
$612 million
MANAGER: Andrew Kaplan, since 1998;
manager, Fidelity Select Technology Portfolio,
since 1998; Fidelity Select Electronics
Portfolio, 1996-1998; joined Fidelity in 1995
DEVELOPING COMMUNICATIONS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.2%
SHARES VALUE (NOTE 1)
BROADCASTING - 12.0%
Cablevision Systems Corp. 1,000 $ 65,000
Class A (a)
CBS Corp. 74,600 2,750,875
Comcast Corp. Class A 250,000 17,734,375
(special)
Cox Communications, Inc. 300,000 21,225,000
Class A (a)
MediaOne Group, Inc. 300,000 16,350,000
Tele-Communications, Inc. 225,000 14,132,813
(TCI Group) Series A (a)
72,258,063
CELLULAR - 2.6%
AirTouch Communications, Inc. 88,500 8,059,031
(a)
Nextel Communications, Inc. 255,000 7,665,938
Class A (a)
15,724,969
COMMUNICATIONS EQUIPMENT -
28.6%
3Com Corp. (a) 25,000 785,938
ADC Telecommunications, Inc. 750,000 30,375,000
(a)
Ascend Communications, Inc. 153,600 11,817,600
(a)
Carrier Access Corp. (a) 200,000 7,900,000
Cisco Systems, Inc. (a) 307,500 30,077,344
Filtronic PLC 81,180 1,034,546
InterVoice, Inc. (a) 149,400 1,624,725
Level One Communications, 231,100 7,741,850
Inc. (a)
Newbridge Networks Corp. (a) 196,400 4,773,882
OY Nokia AB sponsored ADR 445,000 60,353,123
P-Com, Inc. (a) 800,000 5,075,000
Plantronics, Inc. (a) 20,400 1,234,200
Premisys Communications, Inc. 128,800 1,062,600
(a)
Tekelec (a) 700,000 8,487,500
172,343,308
COMPUTER SERVICES & SOFTWARE
- - 11.3%
Amazon.com, Inc. (a) 45,000 5,765,625
America Online, Inc. 200,000 17,787,500
Aware, Inc. (a) 545,000 18,870,625
eBay, Inc. (a) 20,000 6,680,000
Franklin Electronic 182,800 1,051,100
Publishers (a)
InterVU, Inc. (a) 65,000 1,332,500
Lycos, Inc. (a) 25,000 2,190,625
Siebel Systems, Inc. (a) 32,900 1,447,600
Yahoo!, Inc. (a) 83,400 12,801,900
67,927,475
COMPUTERS & OFFICE EQUIPMENT
- - 1.2%
Comverse Technology, Inc. (a) 103,100 7,397,425
DEFENSE ELECTRONICS - 1.6%
Alpha Industries, Inc. (a) 101,150 2,060,931
REMEC, Inc. (a) 450,000 7,734,375
9,795,306
SHARES VALUE (NOTE 1)
ELECTRICAL EQUIPMENT - 3.3%
Adtran, Inc. (a) 600,000 $ 12,300,000
ANTEC Corp. (a) 50,000 1,393,750
General Instrument Corp. (a) 178,600 5,224,050
Research in Motion Ltd. (a) 150,000 1,333,068
20,250,868
ELECTRONIC INSTRUMENTS - 3.1%
Aeroflex, Inc. (a) 300,000 4,031,250
Intest Corp. (a) 188,000 1,269,000
JDS Fitel, Inc. (a) 307,400 13,149,821
18,450,071
ELECTRONICS - 10.5%
Motorola, Inc. 625,000 43,906,250
Texas Instruments, Inc. 210,000 18,729,375
Vitesse Semiconductor Corp. 17,400 799,313
(a)
63,434,938
ENTERTAINMENT - 0.9%
Tele-Communications, Inc. 100,000 5,387,500
(Liberty Media Group) Series
A (a)
PACKAGING & CONTAINERS - 2.3%
Corning, Inc. 257,000 13,749,500
TELEPHONE SERVICES - 14.8%
Covad Communications Group, 300,700 12,178,350
Inc. (a)
MCI WorldCom, Inc. (a) 534,146 44,067,045
McLeodUSA, Inc. Class A (a) 50,000 1,925,000
Metromedia Fiber Network, 375,000 16,312,500
Inc. Class A (a)
Qwest Communications 131,689 8,090,643
International, Inc. (a)
WinStar Communications, Inc. 224,000 7,056,000
(a)
89,629,538
TOTAL COMMON STOCKS 556,348,961
(Cost $432,392,044)
CASH EQUIVALENTS - 7.8%
Taxable Central Cash Fund (b) 46,881,297 46,881,297
(Cost $46,881,297)
TOTAL INVESTMENT IN $ 603,230,258
SECURITIES - 100%
(Cost $479,273,341)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $1,067,740,674 and $863,840,247, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $91,601 for the
period.
Distribution of investments by country of issue, as a percentage of
total value of investments in securities, is as follows:
United States 86.6%
Finland 10.0
Canada 3.2
Others (individually less 0.2
than 1%)
TOTAL 100.0%
Transactions during the period with companies which are or were
affiliates are as follows:
PURCHASES SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Anicom, Inc. $ - $ 1,787,500 $ - $ -
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $482,807,908. Net unrealized appreciation
aggregated $120,422,350, of which $146,132,317 related to appreciated
investment securities and $25,709,967 related to depreciated
investment securities.
The fund hereby designates approximately $734,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 19% of the dividends distributed the fiscal year qualifies
for the dividends-received deductions for corporate shareholders
(unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentage for the use in preparing 1999 income tax returns.
DEVELOPING COMMUNICATIONS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 603,230,258
value (cost $479,273,341) -
See accompanying schedule
Receivable for investments 7,097,155
sold
Receivable for fund shares 11,595,475
sold
Dividends receivable 157,150
Interest receivable 150,223
Redemption fees receivable 3,362
Other receivables 453,068
TOTAL ASSETS 622,686,691
LIABILITIES
Payable for investments $ 7,781,817
purchased
Payable for fund shares 2,246,529
redeemed
Accrued management fee 311,449
Other payables and accrued 285,678
expenses
TOTAL LIABILITIES 10,625,473
NET ASSETS $ 612,061,218
Net Assets consist of:
Paid in capital $ 455,289,751
Accumulated undistributed net 32,812,995
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 123,958,472
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 18,703,523 $ 612,061,218
shares outstanding
NET ASSET VALUE and $32.72
redemption price per share
($612,061,218 (divided by)
18,703,523 shares)
Maximum offering price per $33.73
share (100/97.00 of $32.72)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 518,090
Dividends
Interest 1,648,201
TOTAL INCOME 2,166,291
EXPENSES
Management fee $ 1,854,817
Transfer agent fees 1,936,382
Accounting fees and expenses 287,287
Non-interested trustees' 1,386
compensation
Custodian fees and expenses 35,597
Registration fees 108,938
Audit 23,069
Legal 3,389
Reports to shareholders 43,296
Total expenses before 4,294,161
reductions
Expense reductions (130,962) 4,163,199
NET INVESTMENT INCOME (LOSS) (1,996,908)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 53,776,976
(including realized gain of
$159,311 on sale of
investments in affiliated
issuers)
Foreign currency transactions (45,749) 53,731,227
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 97,385,464
Assets and liabilities in 5,216 97,390,680
foreign currencies
NET GAIN (LOSS) 151,121,907
NET INCREASE (DECREASE) IN $ 149,124,999
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 1,740,638
charges paid to FDC
Sales charges - Retained by $ 1,737,968
FDC
Deferred sales charges $ 3,177
withheld by FDC
Exchange fees withheld by FSC $ 23,850
Expense reductions Directed $ 128,666
brokerage arrangements
Custodian credits 2,296
$ 130,962
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (1,996,908) $ (1,952,549)
income (loss)
Net realized gain (loss) 53,731,227 43,720,650
Change in net unrealized 97,390,680 15,846,999
appreciation (depreciation)
NET INCREASE (DECREASE) IN 149,124,999 57,615,100
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (820,226) (39,986,959)
from net realized gains
Share transactions Net 606,604,197 191,485,848
proceeds from sales of shares
Reinvestment of distributions 808,781 39,302,908
Cost of shares redeemed (383,100,933) (230,874,543)
NET INCREASE (DECREASE) IN 224,312,045 (85,787)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 1,088,615 453,709
TOTAL INCREASE (DECREASE) 373,705,433 17,996,063
IN NET ASSETS
NET ASSETS
Beginning of period 238,355,785 220,359,722
End of period $ 612,061,218 $ 238,355,785
OTHER INFORMATION
Shares
Sold 21,247,025 8,748,662
Issued in reinvestment of 39,007 2,281,074
distributions
Redeemed (14,419,633) (10,392,215)
Net increase (decrease) 6,866,399 637,521
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 20.14 $ 19.68 $ 19.42 $ 20.40 $ 19.65
period
Income from Investment
Operations
Net investment income (loss) C (.16) (.18) (.18) (.17) (.16)
Net realized and unrealized 12.72 4.95 .42 4.17 2.55
gain (loss)
Total from investment 12.56 4.77 .24 4.00 2.39
operations
Less Distributions
From net realized gain (.07) (4.35) - (5.00) (1.67)
Redemption fees added to paid .09 .04 .02 .02 .03
in capital
Net asset value, end of period $ 32.72 $ 20.14 $ 19.68 $ 19.42 $ 20.40
TOTAL RETURN A, B 63.01% 28.17% 1.34% 21.84% 13.63%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 612,061 $ 238,356 $ 220,360 $ 333,185 $ 254,426
(000 omitted)
Ratio of expenses to average 1.38% 1.61% 1.64% 1.53% 1.58%
net assets
Ratio of expenses to average 1.34% D 1.55% D 1.62% D 1.51% D 1.56% D
net assets after expense
reductions
Ratio of net investment (.64)% (.82)% (.86)% (.78)% (.83)%
income (loss) to average net
assets
Portfolio turnover rate 299% 383% 202% 249% 266%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE.
CNET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. E FOR
THE YEAR ENDED FEBRUARY 29.
</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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT ELECTRONICS 35.30% 337.85% 1,238.46%
SELECT ELECTRONICS (LOAD ADJ.) 31.16% 324.64% 1,198.23%
S&P 500 19.74% 194.91% 459.21%
GS Technology 48.15% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT ELECTRONICS 35.30% 34.36% 29.62%
SELECT ELECTRONICS (LOAD ADJ.) 31.16% 33.54% 29.22%
S&P 500 19.74% 24.15% 18.78%
GS Technology 48.15% 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
1989/02/28 9700.00 10000.00
1989/03/31 9629.09 10233.00
1989/04/30 10380.70 10764.09
1989/05/31 11373.39 11200.04
1989/06/30 10253.07 11136.20
1989/07/31 10366.52 12141.80
1989/08/31 10721.05 12379.78
1989/09/30 11018.86 12329.02
1989/10/31 10522.51 12042.99
1989/11/30 10550.88 12288.66
1989/12/31 10990.50 12583.59
1990/01/31 11359.21 11739.23
1990/02/28 12266.81 11890.67
1990/03/31 12862.43 12205.77
1990/04/30 12919.15 11900.63
1990/05/31 14819.44 13060.94
1990/06/30 15046.35 12972.12
1990/07/31 14337.28 12930.61
1990/08/31 12096.64 11761.68
1990/09/30 10267.25 11188.89
1990/10/31 9898.54 11140.78
1990/11/30 10919.59 11860.47
1990/12/31 11628.79 12191.38
1991/01/31 13247.45 12722.92
1991/02/28 14411.75 13632.61
1991/03/31 15178.49 13962.52
1991/04/30 15263.68 13996.03
1991/05/31 15760.64 14600.66
1991/06/30 13843.80 13931.95
1991/07/31 14795.12 14581.18
1991/08/31 15405.67 14926.75
1991/09/30 14227.17 14677.48
1991/10/31 14922.91 14874.16
1991/11/30 14014.19 14274.73
1991/12/31 15732.24 15907.76
1992/01/31 17592.28 15611.87
1992/02/29 18557.80 15814.83
1992/03/31 17095.32 15506.44
1992/04/30 16768.75 15962.33
1992/05/31 16797.15 16040.54
1992/06/30 15576.05 15801.54
1992/07/31 16399.58 16447.82
1992/08/31 16569.97 16110.64
1992/09/30 17166.32 16300.75
1992/10/31 18458.40 16357.80
1992/11/30 19665.30 16915.60
1992/12/31 20048.67 17123.66
1993/01/31 20730.21 17267.50
1993/02/28 20275.85 17502.34
1993/03/31 20985.79 17871.64
1993/04/30 20615.87 17439.14
1993/05/31 22684.59 17906.51
1993/06/30 23098.33 17958.44
1993/07/31 23754.62 17886.61
1993/08/31 25794.80 18564.51
1993/09/30 26222.81 18421.56
1993/10/31 25723.47 18802.89
1993/11/30 25523.73 18624.26
1993/12/31 26480.24 18849.62
1994/01/31 28309.35 19490.50
1994/02/28 29651.83 18962.31
1994/03/31 29332.99 18135.55
1994/04/30 29249.08 18367.69
1994/05/31 29165.18 18668.92
1994/06/30 27604.56 18211.53
1994/07/31 28175.11 18808.87
1994/08/31 30927.17 19580.03
1994/09/30 30037.79 19100.32
1994/10/31 31262.79 19530.08
1994/11/30 30860.05 18818.79
1994/12/31 31027.86 19097.87
1995/01/31 30138.47 19593.08
1995/02/28 33226.15 20356.63
1995/03/31 36649.45 20957.35
1995/04/30 40743.99 21574.54
1995/05/31 43714.21 22436.88
1995/06/30 49939.92 22958.09
1995/07/31 57407.41 23719.38
1995/08/31 58162.55 23778.91
1995/09/30 59202.97 24782.38
1995/10/31 57575.22 24693.91
1995/11/30 56132.06 25777.97
1995/12/31 52427.25 26274.46
1996/01/31 54199.26 27168.84
1996/02/29 57397.04 27420.69
1996/03/31 54036.32 27684.75
1996/04/30 60207.82 28092.83
1996/05/31 61796.53 28817.34
1996/06/30 56602.69 28927.14
1996/07/31 53873.37 27649.13
1996/08/31 56480.48 28232.26
1996/09/30 64098.11 29821.17
1996/10/31 64607.31 30643.63
1996/11/30 74302.48 32959.99
1996/12/31 74302.48 32307.05
1997/01/31 85912.25 34325.59
1997/02/28 77296.58 34594.71
1997/03/31 71919.43 33173.21
1997/04/30 78621.09 35153.65
1997/05/31 87259.78 37293.80
1997/06/30 86722.66 38964.57
1997/07/31 101784.43 42064.98
1997/08/31 105633.80 39708.50
1997/09/30 109550.31 41883.33
1997/10/31 93302.40 40484.43
1997/11/30 92630.99 42358.45
1997/12/31 84496.95 43085.75
1998/01/31 85868.21 43562.28
1998/02/28 95960.67 46703.99
1998/03/31 93218.15 49095.70
1998/04/30 97606.18 49589.60
1998/05/31 84551.80 48737.16
1998/06/30 86224.74 50716.86
1998/07/31 89844.86 50176.72
1998/08/31 71936.22 42922.17
1998/09/30 81452.76 45671.77
1998/10/31 97469.05 49386.71
1998/11/30 110797.69 52380.04
1998/12/31 127691.59 55398.18
1999/01/31 154074.61 57714.93
1999/02/26 129823.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990322 112556 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Electronics Portfolio on February 28,
1989, and the current 3.00% sales charge was paid. As the chart shows,
by February 28, 1999, the value of the investment would have grown to
$129,823 - an 1,198.23% 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 $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Texas Instruments, Inc. 9.9
Micron Technology, Inc. 9.3
Intel Corp. 6.7
Applied Materials, Inc. 5.6
Motorola, Inc. 4.9
KLA-Tencor Corp. 3.5
Xilinx, Inc. 3.2
Teradyne, Inc. 3.1
LAM Research Corp. 2.7
Cadence Design Systems, Inc. 2.6
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Electronics 55.6%
Electronic Instruments 17.8%
Computer Services & Software 5.2%
Computers & Office Equipment 4.0%
Industrial Machinery & Equipment 2.8%
All Others 14.6%*
Row: 1, Col: 1, Value: 14.6
Row: 1, Col: 2, Value: 2.8
Row: 1, Col: 3, Value: 4.0
Row: 1, Col: 4, Value: 5.2
Row: 1, Col: 5, Value: 17.8
Row: 1, Col: 6, Value: 55.6
* INCLUDES SHORT-TERM INVESTMENTS
ELECTRONICS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Matthew Grech)
Matthew Grech,
Portfolio Manager
of Fidelity Select
Electronics Portfolio
Q. HOW DID THE FUND PERFORM, MATT?
A. For the 12 months that ended February 28, 1999, the fund returned
35.30%, outperforming the 19.74% return of the Standard & Poor's 500
Index. 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 48.15% over the
same 12-month time period.
Q. WHAT WAS THE INVESTING ENVIRONMENT LIKE FOR ELECTRONICS STOCKS?
A. It was mixed. The first part of the year was a struggle because
personal computer (PC) inventories were high and slow to come down in
the aftermath of the Asian economic crisis and subsequent rapidly
declining demand. In October, the market improved overall, following
good news about the prospects for recovery in Korea and Taiwan, and,
to a lesser extent, Japan. Investors saw strong PC sales through the
holiday season and into January. In February, concerns re-emerged when
disappointing earnings announcements, which resulted in a correction,
dampened the market's euphoria. Throughout the year, investors
gravitated to large-cap companies across industries, while small-cap
stocks never really got off the ground. In this environment, the fund
performed very strongly during the October-January recovery, as
electronics stocks tended to do better relative to the rest of the
technology sector, but could not keep pace with the Goldman Sachs
index for the entire period, given the benchmark's exposure to
Internet stocks and other strong-performing, large-cap technology
issues.
Q. WHAT STRATEGY DID YOU USE TO MANAGE THE FUND IN THIS VOLATILE
ENVIRONMENT?
A. It generally was a stock picker's market, where the difference in
performance was made by individual stock selection - although some
industries did better than others. I beefed up on large-cap companies,
which continued to maintain their edge over smaller companies during
the period. Anticipating growing interest in manufacturing
outsourcing, I also bought electronics contract manufacturers, more
specifically telecommunications equipment manufacturers such as
Solectron, Jabil and Sanmina.
Q. WHICH STOCKS PERFORMED WELL DURING THE PAST 12 MONTHS?
A. PC makers Intel, Micron Technology, Teradyne and Texas Instruments
all did well as personal computer inventory wound down and demand
picked up. PMC-Sierra and Vitesse sell semiconductors to communication
companies, which use them in their equipment. They both performed
well, enjoying strong demand for their products. Sanmina, Solectron
and Jabil, all electronic contract manufacturers, benefited from the
growing outsourcing trend.
Q. WHICH STOCKS DISAPPOINTED?
A. Cadence Design, a leader in its industry and whose automated
electronic design product is used in the design of semiconductors,
did not do as well as I hoped. Cadence should have followed the
performance of semiconductor companies. Unfortunately, its recovery,
along with other design automation companies, was much slower than I
expected. Integrated Device Technology, a maker of standard random
access memory, tried to branch out, getting into the low-end
microprocessor game, and didn't reach expectations. Along with other
PC makers, Hewlett-Packard suffered from high inventories during the
first part of the period. Its problems in the corporate desktop market
prevented the company's full participation in the industry's recovery
in October, and its performance suffered. I sold both Hewlett-Packard
and Integrated Device Technology from the fund's portfolio.
Q. WHAT'S YOUR OUTLOOK, MATT?
A. Although some of the valuations for larger companies have risen so
high that it's hard for me to fathom a huge buying surge, I think the
demand for electronic goods and Internet-related technology will
enable continued growth. I'm also bullish on the business fundamentals
for the networking semiconductor market. Companies such as Lucent and
Nortel are just now starting to adopt outsourcing policies, which
could fuel future growth in this area. Hopefully, there will be
continued improvement in Asia, which could also drive demand
significantly. I'll continue to search for those companies that have
good business fundamentals and are selling at reasonable valuations.
Certain industries are growing faster than others, but then again,
there are a lot of places to invest in this sector, with plenty of
opportunities to discover new and growing businesses.
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 OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: July 29, 1985
FUND NUMBER: 008
TRADING SYMBOL: FSELX
SIZE: as of February 28, 1999, more than
$2.8 billion
MANAGER: Matthew Grech, since 1998; analyst,
semiconductor equipment, electronic distribution,
components, electronic design automation and
electronic contract manufacturing industries,
since 1996; joined Fidelity in 1996
ELECTRONICS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 89.3%
SHARES VALUE (NOTE 1)
CHEMICALS & PLASTICS - 0.0%
Atmi, Inc. (a) 20,000 $ 455,000
COMMUNICATIONS EQUIPMENT - 2.7%
ADC Telecommunications, Inc. 300,000 12,150,000
(a)
Cisco Systems, Inc. (a) 75,000 7,335,938
Jabil Circuit, Inc. (a) 1,070,000 34,908,750
OY Nokia AB sponsored ADR 190,000 25,768,750
80,163,438
COMPUTER SERVICES & SOFTWARE
- - 5.2%
America Online, Inc. 15,000 1,334,063
Aware, Inc. (a) 240,200 8,316,925
BMC Software, Inc. 200,000 8,175,000
Cadence Design Systems, Inc. 3,187,200 76,692,000
(a)
Cambridge Technology 325,000 8,165,625
Partners, Inc. (a)
Citrix Systems, Inc. (a) 18,300 1,411,388
i2 Technologies, Inc. (a) 31,800 793,013
J.D. Edwards & Co. (a) 150,000 2,371,875
Microsoft Corp. (a) 85,000 12,760,625
PeopleSoft, Inc. 300,000 5,662,500
Siebel Systems, Inc. (a) 630,600 27,746,400
153,429,414
COMPUTERS & OFFICE EQUIPMENT
- - 4.0%
Adaptec, Inc. (a) 700,000 13,956,250
Dell Computer Corp. (a) 200,000 16,025,000
EMC Corp. (a) 150,450 15,402,319
Quantum Corp. (a) 310,000 5,095,625
SCI Systems, Inc. (a) 2,150,500 66,531,094
Seagate Technology, Inc. (a) 50,000 1,446,875
118,457,163
DRUGS & PHARMACEUTICALS - 0.5%
Integrated Process Equipment 1,356,000 15,255,000
Corp. (a) (c)
ELECTRICAL EQUIPMENT - 0.3%
Research in Motion Ltd. (a) 1,000,800 8,894,230
ELECTRONIC INSTRUMENTS - 17.8%
Applied Materials, Inc. (a) 2,948,000 163,982,500
Credence Systems Corp. (a) 350,000 7,393,750
Helix Technology, Inc. 200,000 3,937,500
Keithley Instruments, Inc. 43,800 328,500
KLA-Tencor Corp. (a) 1,990,600 103,137,963
Kulicke & Soffa Industries, 150,000 3,806,250
Inc. (a)
LAM Research Corp. (a) (c) 2,703,227 79,914,148
Novellus Systems, Inc. (a) 1,202,900 71,046,281
Teradyne, Inc. (a) 1,922,600 91,563,825
525,110,717
SHARES VALUE (NOTE 1)
ELECTRONICS - 55.6%
Advanced Energy Industries, 439,000 $ 8,450,750
Inc. (a)
Altera Corp. (a) 1,179,600 57,358,050
Analog Devices, Inc. (a) 1,880,500 47,130,031
Arm Holdings PLC sponsored 100,000 11,550,000
ADR (a)
Conexant Systems, Inc. (a) 555,000 9,435,000
Dallas Semiconductor Corp. 184,400 6,523,150
DII Group, Inc. (a) 220,000 5,142,500
Etec Systems, Inc. (a) 765,300 33,912,356
Flextronics International (a) 50,000 1,884,375
Hadco Corp. (a) 200,000 6,375,000
Intel Corp. 1,654,000 198,376,625
Linear Technology Corp. 1,386,020 60,725,001
LSI Logic Corp. (a) 300,000 7,781,250
Maxim Integrated Products, 1,124,700 46,885,931
Inc. (a)
Methode Electronics, Inc. 684,000 7,182,000
Class A
Microchip Technology, Inc. (a) 1,226,050 33,409,863
Micron Technology, Inc. (a) 4,766,900 274,692,613
Molex, Inc. Class A 400,000 9,400,000
Motorola, Inc. 2,056,300 144,455,075
PCD, Inc. (a) 200,000 2,800,000
PMC-Sierra, Inc. (a) 769,600 54,545,400
Rambus, Inc. (a) 582,800 42,362,275
Sanmina Corp. (a) 1,420,700 74,231,575
Solectron Corp. (a) 999,600 44,669,625
Speedfam International, Inc. 887,000 14,469,188
(a) (c)
Texas Instruments, Inc. 3,267,000 291,375,559
Vitesse Semiconductor Corp. 1,149,700 52,814,344
(a)
Xilinx, Inc. (a) 1,339,400 93,423,150
1,641,360,686
INDUSTRIAL MACHINERY &
EQUIPMENT - 2.8%
ASM Lithography Holding NV (a) 1,136,600 45,037,775
Asyst Technologies, Inc. (a) 430,500 9,255,750
PRI Automation, Inc. 911,600 27,348,000
81,641,525
METALS & MINING - 0.3%
Cable Design Technology Corp. 575,000 7,439,063
(a)
TELEPHONE SERVICES - 0.1%
MCI WorldCom, Inc. (a) 15,000 1,237,500
TOTAL COMMON STOCKS 2,633,443,736
(Cost $1,943,153,648)
CASH EQUIVALENTS - 10.7%
Taxable Central Cash Fund (b) 316,780,214 316,780,214
(Cost $316,780,214)
TOTAL INVESTMENT IN $ 2,950,223,950
SECURITIES - 100%
(Cost $2,259,933,862)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. 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
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $3,418,222,442 and $3,789,829,078, respectively.
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 $363,022 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $29,074,800. The fund
received cash collateral of $30,800,000.
Transactions during the period with companies which are or were
affiliates are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PURCHASES SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Benchmarq Microelectronics, Inc. $ - $ 1,281,788 $ - $ -
Galileo Technology Ltd. 6,278,291 11,105,381 - -
Integrated Process Equipment Corp. 3,794,538 - - 15,255,000
LAM Research Corp. 1,350,343 - - 79,914,148
Speedfam International, Inc. 1,029,375 - - 14,469,188
3D Labs, Inc. Ltd. 1,556,811 4,035,636 - -
TOTALS $ 14,009,358 $ 16,422,805 $ - $ 109,638,336
</TABLE>
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $2,287,309,686. Net unrealized appreciation
aggregated $662,914,264, of which $741,259,879 related to appreciated
investment securities and $78,345,615 related to depreciated
investment securities.
At February 28, 1999, the fund had a capital loss carryforward of
approximately $102,009,000 all of which will expire on February 28,
2007.
ELECTRONICS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 2,950,223,950
value (cost $2,259,933,862)
- - See accompanying schedule
Receivable for investments 32,937,353
sold
Receivable for fund shares 16,645,802
sold
Dividends receivable 109,288
Interest receivable 937,990
Redemption fees receivable 20,215
Other receivables 39,058
TOTAL ASSETS 3,000,913,656
LIABILITIES
Payable for investments $ 69,895,831
purchased
Payable for fund shares 11,892,574
redeemed
Accrued management fee 1,568,022
Other payables and accrued 1,209,296
expenses
Collateral on securities 30,800,000
loaned, at value
TOTAL LIABILITIES 115,365,723
NET ASSETS $ 2,885,547,933
Net Assets consist of:
Paid in capital $ 2,324,616,439
Accumulated undistributed (129,350,532)
net realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 690,282,026
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 60,950,394 $ 2,885,547,933
shares outstanding
NET ASSET VALUE and $47.34
redemption price per share
($2,885,547,933 (divided by)
60,950,394 shares)
Maximum offering price per $48.80
share (100/97.00 of $47.34)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 2,816,769
Dividends
Interest (including income on 9,020,936
securities loaned of
$537,775)
TOTAL INCOME 11,837,705
EXPENSES
Management fee $ 13,375,808
Transfer agent fees 11,621,314
Accounting and security 981,827
lending fees
Non-interested trustees' 8,487
compensation
Custodian fees and expenses 93,428
Registration fees 143,459
Audit 75,536
Legal 12,666
Reports to shareholders 312,570
Total expenses before 26,625,095
reductions
Expense reductions (697,236) 25,927,859
NET INVESTMENT INCOME (LOSS) (14,090,154)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 220,511,771
(including realized loss of
$3,124,773 on sales of
investments in affiliated
issuers)
Foreign currency transactions (15,013) 220,496,758
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 431,156,460
Assets and liabilities in (5,126) 431,151,334
foreign currencies
NET GAIN (LOSS) 651,648,092
NET INCREASE (DECREASE) IN $ 637,557,938
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 7,287,169
charges paid to FDC
Sales charges - Retained by $ 7,252,407
FDC
Deferred sales charges $ 10,633
withheld by FDC
Exchange fees withheld by FSC $ 176,614
Expense reductions Directed $ 671,026
brokerage arrangements
Custodian credits 8,449
Transfer agent credits 17,761
$ 697,236
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (14,090,154) $ (10,090,302)
income (loss)
Net realized gain (loss) 220,496,758 286,758,046
Change in net unrealized 431,151,334 113,929,512
appreciation (depreciation)
NET INCREASE (DECREASE) IN 637,557,938 390,597,256
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders
From net realized gain - (424,271,823)
In excess of net realized - (145,162,086)
gain
TOTAL DISTRIBUTIONS - (569,433,909)
Share transactions Net 1,488,308,447 3,020,162,765
proceeds from sales of shares
Reinvestment of distributions - 559,329,509
Cost of shares redeemed (1,912,074,698) (2,481,381,434)
NET INCREASE (DECREASE) IN (423,766,251) 1,098,110,840
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 3,006,511 5,459,035
TOTAL INCREASE (DECREASE) 216,798,198 924,733,222
IN NET ASSETS
NET ASSETS
Beginning of period 2,668,749,735 1,744,016,513
End of period $ 2,885,547,933 $ 2,668,749,735
OTHER INFORMATION
Shares
Sold 36,527,830 75,772,884
Issued in reinvestment of - 17,854,821
distributions
Redeemed (51,847,162) (63,315,407)
Net increase (decrease) (15,319,332) 30,312,298
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 34.99 $ 37.95 $ 28.18 $ 19.80 $ 17.67
period
Income from Investment
Operations
Net investment income (loss) C (.23) (.17) (.17) (.08) (.18)
Net realized and unrealized 12.53 7.32 9.80 13.51 2.11
gain (loss)
Total from investment 12.30 7.15 9.63 13.43 1.93
operations
Less Distributions
From net realized gain - (7.60) - (5.25) -
In excess of net realized gain - (2.60) - - -
Total distributions - (10.20) - (5.25) -
Redemption fees added to paid .05 .09 .14 .20 .20
in capital
Net asset value, end of period $ 47.34 $ 34.99 $ 37.95 $ 28.18 $ 19.80
TOTAL RETURN A, B 35.30% 24.15% 34.67% 72.75% 12.05%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,885,548 $ 2,668,750 $ 1,744,017 $ 1,133,362 $ 216,433
(000 omitted)
Ratio of expenses to average 1.18% 1.18% 1.33% 1.25% 1.72%
net assets
Ratio of expenses to average 1.15% D 1.12% D 1.29% D 1.22% D 1.71% D
net assets after expense
reductions
Ratio of net investment (.62)% (.42)% (.54)% (.28)% (.98)%
income (loss) to average net
assets
Portfolio turnover rate 160% 435% 341% 366% 205%
</TABLE>
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE.
CNET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. E FOR
THE YEAR ENDED FEBRUARY 29.
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT SOFTWARE AND COMPUTER 32.57% 198.22% 803.33%
SERVICES
SELECT SOFTWARE AND COMPUTER 28.52% 189.20% 776.15%
SERVICES (LOAD ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Technology 48.15% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT SOFTWARE AND COMPUTER 32.57% 24.43% 24.62%
SERVICES
SELECT SOFTWARE AND COMPUTER 28.52% 23.66% 24.24%
SERVICES (LOAD ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Technology 48.15% 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
1989/02/28 9700.00 10000.00
1989/03/31 9462.77 10233.00
1989/04/30 10378.74 10764.09
1989/05/31 10754.35 11200.04
1989/06/30 9689.27 11136.20
1989/07/31 9403.29 12141.80
1989/08/31 9832.26 12379.78
1989/09/30 10029.72 12329.02
1989/10/31 10240.80 12042.99
1989/11/30 10540.40 12288.66
1989/12/31 10588.20 12583.59
1990/01/31 10211.79 11739.23
1990/02/28 10476.67 11890.67
1990/03/31 10894.90 12205.77
1990/04/30 10860.05 11900.63
1990/05/31 12226.26 13060.94
1990/06/30 12512.05 12972.12
1990/07/31 11368.89 12930.61
1990/08/31 9779.62 11761.68
1990/09/30 8657.37 11188.89
1990/10/31 8831.63 11140.78
1990/11/30 9967.82 11860.47
1990/12/31 10678.81 12191.38
1991/01/31 12247.18 12722.92
1991/02/28 13139.40 13632.61
1991/03/31 13885.24 13962.52
1991/04/30 13780.69 13996.03
1991/05/31 14031.62 14600.66
1991/06/30 13003.21 13931.95
1991/07/31 13801.99 14581.18
1991/08/31 14923.35 14926.75
1991/09/30 14431.80 14677.48
1991/10/31 15153.77 14874.16
1991/11/30 13494.77 14274.73
1991/12/31 15574.49 15907.76
1992/01/31 18074.40 15611.87
1992/02/29 18617.51 15814.83
1992/03/31 17722.98 15506.44
1992/04/30 17275.71 15962.33
1992/05/31 17547.26 16040.54
1992/06/30 16596.82 15801.54
1992/07/31 17770.90 16447.82
1992/08/31 16445.07 16110.64
1992/09/30 17635.12 16300.75
1992/10/31 19056.79 16357.80
1992/11/30 20718.07 16915.60
1992/12/31 21109.43 17123.66
1993/01/31 22195.65 17267.50
1993/02/28 22059.87 17502.34
1993/03/31 22531.10 17871.64
1993/04/30 22151.92 17439.14
1993/05/31 24650.33 17906.51
1993/06/30 25922.08 17958.44
1993/07/31 25137.38 17886.61
1993/08/31 26833.05 18564.51
1993/09/30 27374.22 18421.56
1993/10/31 27311.08 18802.89
1993/11/30 26634.62 18624.26
1993/12/31 28018.72 18849.62
1994/01/31 28995.06 19490.50
1994/02/28 29381.52 18962.31
1994/03/31 26228.78 18135.55
1994/04/30 26364.47 18367.69
1994/05/31 23725.97 18668.92
1994/06/30 21644.02 18211.53
1994/07/31 22705.61 18808.87
1994/08/31 25168.90 19580.03
1994/09/30 26312.94 19100.32
1994/10/31 27931.09 19530.08
1994/11/30 27292.08 18818.79
1994/12/31 28126.92 19097.87
1995/01/31 27663.12 19593.08
1995/02/28 29961.50 20356.63
1995/03/31 31672.41 20957.35
1995/04/30 32661.85 21574.54
1995/05/31 33548.23 22436.88
1995/06/30 36516.55 22958.09
1995/07/31 38722.18 23719.38
1995/08/31 38990.15 23778.91
1995/09/30 40597.99 24782.38
1995/10/31 41082.41 24693.91
1995/11/30 42247.06 25777.97
1995/12/31 41139.61 26274.46
1996/01/31 39561.78 27168.84
1996/02/29 41998.14 27420.69
1996/03/31 40930.78 27684.75
1996/04/30 45051.43 28092.83
1996/05/31 46622.29 28817.34
1996/06/30 44295.97 28927.14
1996/07/31 40890.44 27649.13
1996/08/31 41741.82 28232.26
1996/09/30 47197.87 29821.17
1996/10/31 47365.75 30643.63
1996/11/30 51119.04 32959.99
1996/12/31 50093.66 32307.05
1997/01/31 54114.30 34325.59
1997/02/28 48778.73 34594.71
1997/03/31 46275.31 33173.21
1997/04/30 48989.12 35153.65
1997/05/31 53137.06 37293.80
1997/06/30 53164.18 38964.57
1997/07/31 59589.42 42064.98
1997/08/31 59304.76 39708.50
1997/09/30 61161.85 41883.33
1997/10/31 58369.44 40484.43
1997/11/30 59657.20 42358.45
1997/12/31 57614.72 43085.75
1998/01/31 59197.70 43562.28
1998/02/28 66097.13 46703.99
1998/03/31 71607.71 49095.70
1998/04/30 70617.23 49589.60
1998/05/31 65099.79 48737.16
1998/06/30 73031.11 50716.86
1998/07/31 68743.10 50176.72
1998/08/31 56178.93 42922.17
1998/09/30 68548.19 45671.77
1998/10/31 66224.26 49386.71
1998/11/30 72431.38 52380.04
1998/12/31 83985.07 55398.18
1999/01/31 94191.59 57714.93
1999/02/26 87615.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990309 145051 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Software and Computer Services Portfolio
on February 28, 1989, and the current 3.00% sales charge was paid. As
the chart shows, by February 28, 1999, the value of the investment
would have grown to $87,615 - a 776.15% 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 $55,921 - a 459.21%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Microsoft Corp. 14.5
Oracle Corp. 13.2
Siebel Systems, Inc. 8.9
BMC Software, Inc. 6.2
Compuware Corp. 5.9
America Online, Inc. 4.7
Yahoo!, Inc. 3.9
Aspect Development, Inc. 2.7
Networks Associates, Inc. 2.6
Automatic Data Processing, Inc. 2.4
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Computer Services & Software 88.8%
Computers & Office Equipment 2.7%
Communications Equipment 0.8%
Securities Industry 0.5%
Electronics 0.2%
All Others 7.0%*
Row: 1, Col: 1, Value: 7.0
Row: 1, Col: 2, Value: 1.2
Row: 1, Col: 3, Value: 1.5
Row: 1, Col: 4, Value: 1.8
Row: 1, Col: 5, Value: 2.7
Row: 1, Col: 6, Value: 85.8
* INCLUDES SHORT-TERM INVESTMENTS
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of John Porter)
John Porter,
Portfolio Manager of
Fidelity Software and
Computer Services Portfolio
Q. HOW DID THE FUND PERFORM, JOHN?
A. For the 12 months that ended February 28, 1999, the fund returned
32.57%. This topped the 19.74% return of the Standard & Poor's 500
Index over the same 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 48.15% over the same 12-month period.
Q. WHY DID THE FUND TRAIL THE GOLDMAN SACHS INDEX?
A. It's important to understand that the fund invests primarily in
software and computer services, two sub-sectors of technology that are
not as cyclical as many other areas, while the broadly based Goldman
Sachs Technology Index covers the entire range of technology stocks.
Therefore, when there are prolonged periods of extraordinarily high
returns - positive or negative - the fund will typically produce a
more modest return.
Q. WHAT WAS YOUR INVESTMENT STRATEGY DURING THE YEAR?
A. In software, there has been a tendency for one clear leader to
emerge in each sub-sector over time. I tried to identify those
eventual "winners" as key investments for the fund, concentrating
investments in industry leaders. I also reduced the fund's exposure to
areas of technology that I believed were most susceptible to Year 2000
(Y2K) problems, such as the enterprise resource planning (ERP) sector.
The concern is that as we move closer to the Year 2000, companies are
increasing their technology budgets to fix the Y2K problem, rather
than spending on new applications that are designed to integrate and
manage internal operations more efficiently. ERP companies, such as
PeopleSoft and SAP, were vulnerable to this shift. Finally, I
increased the fund's exposure to Internet stocks. Although selected
Internet companies represented a significant percentage of the fund's
portfolio as of the end of the year, I wish I had invested in them
earlier.
Q. WHICH STOCKS PERFORMED WELL?
A. Microsoft, Siebel and Oracle were all standouts. Microsoft
continued to demonstrate good performance, reflecting terrific demand
for its Office suite of products. Microsoft's server products also
continued to improve following new product releases, helping the
company's revenue growth. Siebel, another strong performer, completed
a very successful merger with another company and enjoyed an 80%
revenue growth rate during 1998. Oracle enjoyed a strong improvement
in business trends from a disappointing 1997, as demand rebounded for
its database technology during 1998.
Q. WHICH STOCKS DISAPPOINTED?
A. Despite a cautious view of the ERP sector, I was not as aggressive
as I could have been in reducing the fund's exposure to these
companies. Examples include PeopleSoft, which had disappointing
earnings in the face of declining demand for its products. I sold this
stock from the fund's portfolio. J.D. Edwards, another ERP company and
a leader in offerings for small and medium-sized businesses, had
weaker business trends than expected, which was reflected in its poor
performance. I expected ERP demand to remain stronger for small and
medium-sized businesses than it actually was. Computer Associates was
another disappointment. The company experienced a slowdown in revenue
growth because customers, under budgetary pressures from Y2K, scaled
back purchases of its products.
Q. WHAT'S YOUR OUTLOOK, JOHN?
A. The only certainty in technology is volatility. Although some areas
of this sector have better potential for growth than others, there are
plenty of opportunities in this sector. Over the long term, I'm
confident about the prospects for both software and computer services
companies. Looking forward, technology should continue to grow as a
percentage of capital spending, and therefore should be an attractive
area for investment. In the short term, I think the greatest
uncertainty will be the potential impact of Y2K, and to what degree
and when any rebound from that event will occur.
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 OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: July 29, 1985
FUND NUMBER: 028
TRADING SYMBOL: FSCSX
SIZE: as of February 28, 1999, more than
$690 million
MANAGER: John Porter, since 1997; manager
Fidelity Select Medical Delivery Portfolio,
since 1998; Fidelity Select Multimedia
Portfolio, 1996-1997; joined Fidelity in 1995
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.1%
SHARES VALUE (NOTE 1)
COMMUNICATIONS EQUIPMENT - 0.8%
Cisco Systems, Inc. (a) 15,000 $ 1,467,188
OY Nokia AB sponsored ADR 30,000 4,068,750
5,535,938
COMPUTER SERVICES & SOFTWARE
- - 88.8%
Affiliated Computer Services, 130,000 6,012,500
Inc. Class A (a)
Amazon.com, Inc. (a) 52,000 6,662,500
America Online, Inc. 370,000 32,906,875
Aspect Development, Inc. (a) 630,000 19,215,000
At Home Corp. Series A (a) 55,000 5,836,875
Automatic Data Processing, 430,000 17,092,500
Inc.
BMC Software, Inc. 1,059,600 43,311,150
BroadVision, Inc. (a) 75,000 3,365,625
Cambridge Technology 30,000 753,750
Partners, Inc. (a)
Ceridian Corp. (a) 50,000 3,581,250
Check Point Software 75,000 2,878,125
Technologies Ltd. (a)
Citrix Systems, Inc. (a) 85,000 6,555,625
Clarify, Inc. (a) 190,000 5,153,750
CMGI, Inc. (a) 55,000 6,744,375
CNET, Inc. (a) 25,000 2,865,625
Computer Associates 239,250 10,048,500
International, Inc.
Computer Sciences Corp. 35,000 2,331,875
Computron Software, Inc. (a) 111 139
Compuware Corp. (a) 736,200 41,181,188
Documentum, Inc. (a) 140,000 2,992,500
eBay, Inc. (a) 15,000 5,010,000
Electronic Data Systems Corp. 24,100 1,120,650
Equifax, Inc. 130,000 4,907,500
Excite, Inc. (a) 20,000 2,050,000
First Data Corp. 340,000 13,005,000
Fiserv, Inc. (a) 45,000 2,115,000
Galileo International, Inc. 30,000 1,515,000
i2 Technologies, Inc. (a) 275,800 6,877,763
Industri-Matematik 378,400 1,324,400
International Corp. (a)
Informix Corp. (a) 200,000 1,750,000
Infoseek Corp. (a) 10,000 715,625
Inktomi Corp. (a) 31,000 1,925,875
J.D. Edwards & Co. (a) 475,000 7,510,938
Keane, Inc. (a) 60,000 1,856,250
Mercury Interactive Corp. (a) 50,000 3,240,625
Microsoft Corp. (a) 677,000 101,634,621
MindSpring Enterprises, Inc. 15,000 1,282,500
(a)
Netscape Communications Corp. 65,000 5,033,438
(a)
Network Solutions, Inc. Class 10,000 1,815,000
A (a)
Networks Associates, Inc. (a) 390,000 18,330,000
New Era of Networks, Inc. (a) 90,000 5,613,750
Oracle Corp. (a) 1,650,600 92,227,275
Platinum Technology, Inc. (a) 325,000 4,306,250
SHARES VALUE (NOTE 1)
Policy Management Systems 78,400 $ 2,866,500
Corp. (a)
RealNetworks, Inc. (a) 25,000 1,753,125
Sabre Group Holdings, Inc. 50,000 1,962,500
Class A (a)
Security Dynamics 30,000 555,000
Technologies, Inc. (a)
Siebel Systems, Inc. (a) 1,416,125 62,309,500
SunGard Data Systems, Inc. (a) 105,200 4,168,550
Technology Solutions, Inc. (a) 100,000 818,750
TSI International Software 50,000 2,509,375
Ltd. (a)
VeriSign, Inc. (a) 100,100 9,809,800
Vignette Corp. (a) 22,200 1,204,350
Whittman-Hart, Inc. (a) 40,000 1,252,500
Yahoo!, Inc. (a) 178,000 27,323,000
621,190,137
COMPUTERS & OFFICE EQUIPMENT
- - 2.7%
Compaq Computer Corp. 10,000 352,500
Gateway 2000, Inc. (a) 27,800 2,020,713
International Business 15,000 2,550,000
Machines Corp.
Sun Microsystems, Inc. (a) 140,000 13,623,750
Tech Data Corp. (a) 34,600 588,200
19,135,163
ELECTRONICS - 0.2%
Intel Corp. 12,000 1,439,250
SECURITIES INDUSTRY - 0.5%
E Trade Group, Inc. (a) 70,000 3,220,000
SERVICES - 0.1%
Computer Horizons Corp. (a) 61,300 915,669
TOTAL COMMON STOCKS 651,436,157
(Cost $428,862,544)
CASH EQUIVALENTS - 6.9%
Taxable Central Cash Fund (b) 48,513,650 48,513,650
(Cost $48,513,650)
TOTAL INVESTMENT IN $ 699,949,807
SECURITIES - 100%
(Cost $477,376,194)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. 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 $415,381,363 and $390,592,306, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $38,702 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $13,712,500. The fund
received cash collateral of $13,320,000.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $480,173,539. Net unrealized appreciation
aggregated $219,776,268, of which $245,569,259 related to appreciated
investment securities and $25,792,991 related to depreciated
investment securities.
The fund hereby designates approximately $18,816,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 37% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentage for use in preparing 1999 income tax returns.
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 699,949,807
value (cost $477,376,194) -
See accompanying schedule
Receivable for investments 4,435,292
sold
Receivable for fund shares 1,927,987
sold
Dividends receivable 19,095
Interest receivable 271,166
Redemption fees receivable 1,084
Other receivables 155,673
TOTAL ASSETS 706,760,104
LIABILITIES
Payable for fund shares $ 1,873,587
redeemed
Accrued management fee 342,417
Other payables and accrued 372,100
expenses
Collateral on securities 13,320,000
loaned, at value
TOTAL LIABILITIES 15,908,104
NET ASSETS $ 690,852,000
Net Assets consist of:
Paid in capital $ 439,147,038
Accumulated undistributed net 29,131,349
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 222,573,613
(depreciation) on investments
NET ASSETS, for 12,100,635 $ 690,852,000
shares outstanding
NET ASSET VALUE and $57.09
redemption price per share
($690,852,000 (divided by)
12,100,635 shares)
Maximum offering price per $58.86
share (100/97.00 of $57.09)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 533,478
Dividends
Interest (including income on 2,024,987
securities loaned of
$274,250)
TOTAL INCOME 2,558,465
EXPENSES
Management fee $ 3,378,317
Transfer agent fees 3,206,917
Accounting and security 525,575
lending fees
Non-interested trustees' 2,274
compensation
Custodian fees and expenses 20,319
Registration fees 77,590
Audit 25,754
Legal 3,206
Reports to shareholders 69,247
Total expenses before 7,309,199
reductions
Expense reductions (41,513) 7,267,686
NET INVESTMENT INCOME (LOSS) (4,709,221)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 46,872,115
Foreign currency transactions (2,002) 46,870,113
Change in net unrealized 110,443,885
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 157,313,998
NET INCREASE (DECREASE) IN $ 152,604,777
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 1,939,605
charges paid to FDC
Sales charges - Retained by $ 1,925,580
FDC
Deferred sales charges $ 4,793
withheld by FDC
Exchange fees withheld by FSC $ 31,838
Expense reductions Directed $ 39,450
brokerage arrangements
Custodian credits 836
Transfer agent credits 1,227
$ 41,513
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (4,709,221) $ (3,518,045)
income (loss)
Net realized gain (loss) 46,870,113 56,333,154
Change in net unrealized 110,443,885 76,776,311
appreciation (depreciation)
NET INCREASE (DECREASE) IN 152,604,777 129,591,420
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (15,509,477) (67,010,560)
from net realized gains
Share transactions Net 512,689,909 284,940,442
proceeds from sales of shares
Reinvestment of distributions 15,022,690 66,130,192
Cost of shares redeemed (478,286,707) (300,538,798)
NET INCREASE (DECREASE) IN 49,425,892 50,531,836
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 963,911 555,345
TOTAL INCREASE (DECREASE) 187,485,103 113,668,041
IN NET ASSETS
NET ASSETS
Beginning of period 503,366,897 389,698,856
End of period 690,852,000 503,366,897
OTHER INFORMATION
Shares
Sold 10,599,999 6,972,295
Issued in reinvestment of 314,660 1,737,307
distributions
Redeemed (10,186,951) (7,436,837)
Net increase (decrease) 727,708 1,272,765
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 44.26 $ 38.58 $ 36.20 $ 29.07 $ 28.89
period
Income from Investment
Operations
Net investment income (loss) C (.39) (.33) (.25) (.19) (.26)
Net realized and unrealized 14.46 12.57 5.87 11.85 .67
gain (loss)
Total from investment 14.07 12.24 5.62 11.66 .41
operations
Less Distributions
From net realized gain (1.32) (6.61) (3.31) (4.60) (.33)
Redemption fees added to paid .08 .05 .07 .07 .10
in capital
Net asset value, end of period $ 57.09 $ 44.26 $ 38.58 $ 36.20 $ 29.07
TOTAL RETURN A, B 32.57% 35.50% 16.14% 40.17% 1.97%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 690,852 $ 503,367 $ 389,699 $ 337,633 $ 236,445
(000 omitted)
Ratio of expenses to average 1.28% 1.44% 1.54% 1.48% 1.52%
net assets
Ratio of expenses to average 1.27% D 1.42% D 1.51% D 1.47% D 1.50% D
net assets after expense
reductions
Ratio of net investment (.82)% (.81)% (.66)% (.54)% (1.01)%
income (loss) to average net
assets
Portfolio turnover rate 72% 145% 279% 183% 164%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. E FOR
THE YEAR ENDED FEBRUARY 29.
</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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT TECHNOLOGY 55.66% 245.32% 919.90%
SELECT TECHNOLOGY (LOAD ADJ.) 50.91% 234.89% 889.23%
S&P 500 19.74% 194.91% 459.21%
GS Technology 48.15% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT TECHNOLOGY 55.66% 28.13% 26.14%
SELECT TECHNOLOGY (LOAD ADJ.) 50.91% 27.34% 25.76%
S&P 500 19.74% 24.15% 18.78%
GS Technology 48.15% 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
1989/02/28 9700.00 10000.00
1989/03/31 9522.12 10233.00
1989/04/30 10211.40 10764.09
1989/05/31 11045.21 11200.04
1989/06/30 10066.88 11136.20
1989/07/31 10244.76 12141.80
1989/08/31 10467.11 12379.78
1989/09/30 10717.25 12329.02
1989/10/31 10639.43 12042.99
1989/11/30 10667.22 12288.66
1989/12/31 10795.07 12583.59
1990/01/31 10572.72 11739.23
1990/02/28 11167.51 11890.67
1990/03/31 11690.03 12205.77
1990/04/30 11161.95 11900.63
1990/05/31 12601.66 13060.94
1990/06/30 12712.84 12972.12
1990/07/31 12034.67 12930.61
1990/08/31 10394.84 11761.68
1990/09/30 9511.00 11188.89
1990/10/31 9783.38 11140.78
1990/11/30 11250.89 11860.47
1990/12/31 11929.05 12191.38
1991/01/31 13941.32 12722.92
1991/02/28 14647.28 13632.61
1991/03/31 15820.17 13962.52
1991/04/30 15041.95 13996.03
1991/05/31 15875.76 14600.66
1991/06/30 14335.63 13931.95
1991/07/31 15922.89 14581.18
1991/08/31 16705.34 14926.75
1991/09/30 16789.17 14677.48
1991/10/31 17241.88 14874.16
1991/11/30 16677.39 14274.73
1991/12/31 18963.78 15907.76
1992/01/31 19684.99 15611.87
1992/02/29 19992.48 15814.83
1992/03/31 18404.71 15506.44
1992/04/30 18136.35 15962.33
1992/05/31 18315.26 16040.54
1992/06/30 17005.88 15801.54
1992/07/31 17872.34 16447.82
1992/08/31 16957.07 16110.64
1992/09/30 17786.92 16300.75
1992/10/31 18836.44 16357.80
1992/11/30 20361.90 16915.60
1992/12/31 20618.18 17123.66
1993/01/31 21246.67 17267.50
1993/02/28 21124.64 17502.34
1993/03/31 21399.22 17871.64
1993/04/30 21337.86 17439.14
1993/05/31 23490.54 17906.51
1993/06/30 24637.74 17958.44
1993/07/31 23983.16 17886.61
1993/08/31 25265.33 18564.51
1993/09/30 25656.72 18421.56
1993/10/31 25150.61 18802.89
1993/11/30 24907.67 18624.26
1993/12/31 26525.31 18849.62
1994/01/31 27860.82 19490.50
1994/02/28 28648.43 18962.31
1994/03/31 27682.75 18135.55
1994/04/30 27125.19 18367.69
1994/05/31 27167.95 18668.92
1994/06/30 24865.95 18211.53
1994/07/31 25828.09 18808.87
1994/08/31 28550.58 19580.03
1994/09/30 28408.04 19100.32
1994/10/31 29469.96 19530.08
1994/11/30 29063.72 18818.79
1994/12/31 29477.09 19097.87
1995/01/31 28329.65 19593.08
1995/02/28 29968.85 20356.63
1995/03/31 31793.35 20957.35
1995/04/30 34189.65 21574.54
1995/05/31 35512.26 22436.88
1995/06/30 38811.46 22958.09
1995/07/31 42735.22 23719.38
1995/08/31 44057.84 23778.91
1995/09/30 46085.85 24782.38
1995/10/31 45395.15 24693.91
1995/11/30 45160.02 25777.97
1995/12/31 42390.07 26274.46
1996/01/31 42819.67 27168.84
1996/02/29 45165.96 27420.69
1996/03/31 41671.32 27684.75
1996/04/30 45259.93 28092.83
1996/05/31 46487.45 28817.34
1996/06/30 43180.64 28927.14
1996/07/31 38571.14 27649.13
1996/08/31 40065.89 28232.26
1996/09/30 45201.47 29821.17
1996/10/31 44875.80 30643.63
1996/11/30 50412.21 32959.99
1996/12/31 49095.41 32307.05
1997/01/31 54906.09 34325.59
1997/02/28 50876.53 34594.71
1997/03/31 47508.27 33173.21
1997/04/30 50277.51 35153.65
1997/05/31 55621.65 37293.80
1997/06/30 56645.86 38964.57
1997/07/31 63135.89 42064.98
1997/08/31 64900.37 39708.50
1997/09/30 67516.67 41883.33
1997/10/31 57933.72 40484.43
1997/11/30 56919.66 42358.45
1997/12/31 54166.22 43085.75
1998/01/31 57108.99 43562.28
1998/02/28 63556.78 46703.99
1998/03/31 63784.07 49095.70
1998/04/30 66391.89 49589.60
1998/05/31 61403.53 48737.16
1998/06/30 66511.52 50716.86
1998/07/31 66690.96 50176.72
1998/08/31 55027.52 42922.17
1998/09/30 64633.41 45671.77
1998/10/31 69801.21 49386.71
1998/11/30 80806.71 52380.04
1998/12/31 94336.30 55398.18
1999/01/31 110677.08 57714.93
1999/02/26 98923.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990310 115456 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Technology Portfolio on February 28, 1989,
and the current 3.00% sales charge was paid. As the chart shows, by
February 28, 1999, the value of the investment would have grown to
$98,923 - an 889.23% 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 $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
OY Nokia AB sponsored ADR 8.5
Motorola, Inc. 6.3
Cisco Systems, Inc. 5.0
Microsoft Corp. 4.1
Texas Instruments, Inc. 3.9
ADC Telecommunications, Inc. 3.9
eBay, Inc. 3.7
Flextronics International 2.9
Xilinx, Inc. 2.8
America Online, Inc. 2.6
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Electronics 22.7%
Communications Equipment 22.7%
Computer Services & Software 18.5%
Computers & Office Equipment 9.4%
Electronic Instruments 4.7%
All Others 22.0% *
Row: 1, Col: 1, Value: 22.0
Row: 1, Col: 2, Value: 4.7
Row: 1, Col: 3, Value: 9.4
Row: 1, Col: 4, Value: 18.5
Row: 1, Col: 5, Value: 22.7
Row: 1, Col: 6, Value: 22.7
* INCLUDES SHORT-TERM INVESTMENTS
TECHNOLOGY PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Andrew Kaplan)
Andrew Kaplan,
Portfolio Manager
of Fidelity Select
Technology Portfolio
Q. HOW DID THE FUND PERFORM, ANDY?
A. Very well. For the 12 months that ended February 28, 1999, the fund
returned 55.66%, while the Standard & Poor's 500 Index returned
19.74%. During the same period, the Goldman Sachs Technology Index -
an index of 190 stocks designed to measure the performance of
companies in the technology sector - returned 48.15%.
Q. WHAT FACTORS HELPED THE FUND OUTPACE THE RETURNS OF BOTH BENCHMARKS
OVER THE PAST 12 MONTHS?
A. The incredible rebound of technology stocks over the last four
months of the period helped the fund generate robust returns.
Technology stocks hit a low point in early October when fears about an
economic slowdown peaked following financial turmoil in both Russia
and Asia. However, when it became evident that the situation in Asia
was not getting worse and, more importantly, that U.S. economic growth
was accelerating, investors returned to technology stocks with a
vengeance. Specifically, the fund outperformed the Goldman Sachs
Technology Index because of my focus on large-capitalization stocks. I
continued to believe that investors would pay a premium for stocks
that weren't at risk of reporting disappointing earnings numbers - and
these were mostly larger-cap stocks. On top of that, I focused on
Internet stocks - the sector that has enjoyed the most dramatic
growth.
Q. WHICH INDIVIDUAL HOLDINGS PERFORMED PARTICULARLY WELL?
A. eBay, an online interactive auction site that debuted on Wall
Street with its successful initial public offering in September,
generated one of the biggest returns during the period. Another strong
performer was Cisco Systems, a maker of networking equipment for the
Internet. Looking to other areas, I anticipated a recovery of the
semiconductor market after a long period of excess supply. As a
result, I bought several semiconductor capital equipment stocks, such
as Applied Materials, ASM Lithography and Texas Instruments - all of
which did very well. I also tried to capitalize on the rapid growth of
the wireless communications sector by investing in Motorola. Wireless
phones, which are quickly becoming mass-market items as service prices
fall, have huge growth potential in developing economies that have no
access to wire-line phones. In addition, Motorola's management team
has implemented a restructuring plan that is focused on cutting costs
and improving returns.
Q. WHAT OTHER FACTORS HELPED PERFORMANCE?
A. I reduced the fund's weighting in personal computer (PC)
manufacturers in late 1998. This helped the fund because several PC
makers reported disappointing earnings in the latest quarter as a
result of slowing demand growth, and their stocks were punished.
Q. ARE YOU CONCERNED ABOUT THE INCREDIBLE RUN-UP IN INTERNET STOCKS?
A. Sure. After all, we've seen several years of appreciation all in a
few months. For instance, from early October through early January,
many Internet stocks appreciated as much as 400% to 500%. I'm always
concerned that there may be a correction after that kind of run-up. As
a result, I reduced the weighting of some of the Internet stocks that
enjoyed the most dramatic gains during the period, such as Yahoo! and
America Online. However, I continued to make investments directly in
Internet companies or indirectly through the service providers because
I believe in the long-term growth prospects of the sector.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. One big void was that the fund did not own any Sun Microsystems.
This stock generated huge returns during the period. I did not realize
the company's Internet tie-in quickly enough. Sun Microsystems makes
high-end servers that are now being used by Internet sites to store
data.
Q. WHAT'S YOUR OUTLOOK?
A. I continue to be bullish about technology, especially because -
with the Internet - we're only in the second inning. We have barely
captured 10% of the potential subscriber base and we've only scratched
the surface as far as ways to make money through this medium. I will
continue to look for the most aggressive ways to capitalize on the
future growth of the Internet. However, I am more concerned about
valuations than I was six months ago, so I plan to concentrate on
stocks that I believe can deliver strong earnings. In addition, I'm
somewhat more cautious about the semiconductor sector because of the
recent slowdown in PC demand growth, as well as the huge run-ups we've
seen in those stocks over the past few 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 OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: July 14, 1981
FUND NUMBER: 064
TRADING SYMBOL: FSPTX
SIZE: as of February 28, 1999, more than
$1.3 billion
MANAGER: Andrew Kaplan, since 1998; manager,
Fidelity Select Developing Communications
Portfolio, since 1998; Fidelity Select Electronics
Portfolio, 1996-1998; joined Fidelity in 1995
TECHNOLOGY PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 85.6%
SHARES VALUE (NOTE 1)
ADVERTISING - 0.0%
VerticalNet, Inc. (a) 400 $ 16,500
BROADCASTING - 1.0%
Comcast Corp. Class A 100,000 7,093,750
(special)
Cox Communications, Inc. 100,000 7,075,000
Class A (a)
14,168,750
COMMUNICATIONS EQUIPMENT -
22.7%
ADC Telecommunications, Inc. 1,300,000 52,650,000
(a)
Ascend Communications, Inc. 236,700 18,211,106
(a)
Cisco Systems, Inc. (a) 705,225 68,979,820
Jabil Circuit, Inc. (a) 400,000 13,050,000
Level One Communications, 259,400 8,689,900
Inc. (a)
Lucent Technologies, Inc. 141,100 14,330,469
OY Nokia AB sponsored ADR 861,000 116,773,121
P-Com, Inc. (a) 1,000,000 6,343,750
Premisys Communications, Inc. 374,700 3,091,275
(a)
Tekelec (a) 722,200 8,756,675
310,876,116
COMPUTER SERVICES & SOFTWARE
- - 18.5%
Amazon.com, Inc. (a) 65,000 8,328,125
America Online, Inc. 396,800 35,290,400
Aware, Inc. (a) 300,000 10,387,500
BMC Software, Inc. 250,000 10,218,750
Bottomline Technologies, Inc. 600 12,600
(a)
broadcast.com, Inc. (a) 200 16,763
Cadence Design Systems, Inc. 450,700 10,844,969
(a)
Cambridge Technology 200,000 5,025,000
Partners, Inc. (a)
Catapult Communications Corp. 300 3,019
(a)
Citrix Systems, Inc. (a) 111,800 8,622,575
Concur Technologies, Inc. (a) 700 21,700
eBay, Inc. (a) 150,000 50,100,000
Electronic Data Systems Corp. 100,000 4,650,000
GeoCities (a) 400 39,100
Healtheon Corp. (a) 2,900 78,300
i2 Technologies, Inc. (a) 3,600 89,775
Intraware, Inc. 1,000 18,875
Lycos, Inc. (a) 75,000 6,571,875
Microsoft Corp. (a) 378,540 56,828,318
Modem Media . Poppe Tyson, 200 5,375
Inc. (a)
Momentum Business 4,000 34,500
Applications Inc (a)
ONYX Software Corp. (a) 500 9,281
Oracle Corp. (a) 250,000 13,968,750
pcOrder.com, Inc. (a) 500 23,563
Perot Systems Corp. (a) 300 13,031
Prodigy Communications Corp. 1,500 58,313
(a)
SERENA Software, Inc. (a) 600 7,875
Siebel Systems, Inc. (a) 150,000 6,600,000
Symantec Corp. (a) 194,300 3,509,544
Vignette Corp. (a) 300 16,275
SHARES VALUE (NOTE 1)
WebTrends Corp. (a) 400 $ 10,050
Yahoo!, Inc. (a) 143,000 21,950,500
253,354,701
COMPUTERS & OFFICE EQUIPMENT
- - 9.4%
Adaptec, Inc. (a) 300,000 5,981,250
Dell Computer Corp. (a) 72,500 5,809,063
EMC Corp. (a) 304,000 31,122,000
Hewlett-Packard Co. 350,000 23,253,125
International Business 36,700 6,239,000
Machines Corp.
Lexmark International Group, 200,000 20,637,500
Inc. Class A (a)
Maxtor Corp. (a) 204,200 1,684,650
Network Appliance, Inc. (a) 300,000 12,600,000
SanDisk Corp. (a) 446,100 12,490,800
SCI Systems, Inc. (a) 281,700 8,715,094
128,532,482
DEFENSE ELECTRONICS - 0.6%
Alpha Industries, Inc. (a) 162,050 3,301,769
REMEC, Inc. (a) 300,000 5,156,250
8,458,019
DRUGS & PHARMACEUTICALS - 0.0%
Albany Molecular Research, 400 8,000
Inc. (a)
EDUCATIONAL SERVICES - 0.0%
Corinthian Colleges, Inc. (a) 6,800 152,150
ELECTRICAL EQUIPMENT - 2.3%
Adtran, Inc. (a) 410,000 8,405,000
General Instrument Corp. (a) 197,400 5,773,950
Philips Electronics NV (NY 250,000 17,406,250
shares)
31,585,200
ELECTRONIC INSTRUMENTS - 4.7%
Aeroflex, Inc. (a) 300,000 4,031,250
Applied Materials, Inc. (a) 450,000 25,031,250
JDS Fitel, Inc. (a) 200,000 8,555,511
KLA-Tencor Corp. (a) 130,300 6,751,169
Kulicke & Soffa Industries, 265,000 6,724,375
Inc. (a)
Novellus Systems, Inc. (a) 6,200 366,188
Smart Modular Technologies, 350,000 5,621,875
Inc. (a)
Teradyne, Inc. (a) 139,000 6,619,875
63,701,493
ELECTRONICS - 22.7%
Altera Corp. (a) 126,800 6,165,650
DII Group, Inc. (a) 400,000 9,350,000
Flextronics International (a) 1,042,800 39,300,525
Galileo Technology Ltd. (a) 200,000 4,100,000
Intel Corp. 154,800 18,566,325
Micron Technology, Inc. (a) 587,700 33,866,213
Motorola, Inc. 1,225,000 86,056,250
PMC-Sierra, Inc. (a) 5,000 354,375
Rambus, Inc. (a) 245,600 17,852,050
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ELECTRONICS - CONTINUED
Solectron Corp. (a) 82,000 $ 3,664,375
Texas Instruments, Inc. 600,000 53,512,500
Xilinx, Inc. (a) 550,000 38,362,500
311,150,763
ENTERTAINMENT - 0.2%
Ticketmaster Online 71,200 2,572,100
CitySearch, Inc. (a)
INDUSTRIAL MACHINERY &
EQUIPMENT - 3.0%
ASM Lithography Holding N V 800,000 31,700,000
(a)
PRI Automation, Inc. 300,000 9,000,000
40,700,000
SECURITIES INDUSTRY - 0.5%
E Trade Group, Inc. (a) 150,000 6,900,000
SERVICES - 0.0%
Corporate Executive Board Co. 900 22,050
(a)
TELEPHONE SERVICES - 0.0%
Covad Communications Group, 700 28,350
Inc. (a)
TOTAL COMMON STOCKS 1,172,226,674
(Cost $968,831,151)
CASH EQUIVALENTS - 14.4%
Taxable Central Cash Fund (b) 197,935,034 197,935,034
(Cost $197,935,034)
TOTAL INVESTMENT IN $ 1,370,161,708
SECURITIES - 100%
(Cost $1,166,766,185)
</TABLE>
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. 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 $2,662,982,813 and $2,417,743,979, respectively.
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 $323,190 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $54,358,127. The fund
received cash collateral of $52,357,000.
The fund participated in the interfund lending program as a lender.
The maximum loan and average daily balances during the period for
which loans were outstanding amounted to $35,121,000 and $26,026,833,
respectively. The weighted average interest rate was 5.28%. Interest
earned from the interfund lending program amounted to $22,897 and is
included in interest income on the Statement of Operations.
Distribution of investments by country of issue, as a percentage of
total value of investments in securities, is as follows:
United States of America 84.1%
Finland 8.5
Netherlands 3.6
Singapore 2.9
Others (individually less 0.9
than 1%)
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $1,178,964,874. Net unrealized appreciation
aggregated $191,196,834, of which $239,560,713 related to appreciated
investment securities and $48,363,879 related to depreciated
investment securities.
The fund hereby designates approximately $2,157,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
TECHNOLOGY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 1,370,161,708
value (cost $1,166,766,185)
- - See accompanying schedule
Cash 155,383
Receivable for investments 138,535,148
sold
Receivable for fund shares 10,739,703
sold
Dividends receivable 40,910
Interest receivable 672,196
Redemption fees receivable 9,311
Other receivables 290,210
TOTAL ASSETS 1,520,604,569
LIABILITIES
Payable for investments $ 94,033,397
purchased
Payable for fund shares 5,789,219
redeemed
Accrued management fee 686,134
Other payables and accrued 591,308
expenses
Collateral on securities 52,357,000
loaned, at value
TOTAL LIABILITIES 153,457,058
NET ASSETS $ 1,367,147,511
Net Assets consist of:
Paid in capital $ 1,006,589,737
Accumulated undistributed 157,162,251
net realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 203,395,523
(depreciation) on investments
NET ASSETS, for 16,531,732 $ 1,367,147,511
shares outstanding
NET ASSET VALUE and $82.70
redemption price per share
($1,367,147,511 (divided by)
16,531,732 shares)
Maximum offering price per $85.26
share (100/97.00 of $82.70)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 1,000,332
Dividends
Interest (including income on 3,971,800
securities loaned of
$474,304)
TOTAL INCOME 4,972,132
EXPENSES
Management fee $ 4,515,599
Transfer agent fees 3,907,220
Accounting and security 633,939
lending fees
Non-interested trustees' 3,322
compensation
Custodian fees and expenses 46,862
Registration fees 179,099
Audit 35,290
Legal 4,915
Reports to shareholders 81,822
Total expenses before 9,408,068
reductions
Expense reductions (338,456) 9,069,612
NET INVESTMENT INCOME (LOSS) (4,097,480)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 215,507,098
Foreign currency transactions (21,197) 215,485,901
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 122,793,314
Assets and liabilities in 289 122,793,603
foreign currencies
NET GAIN (LOSS) 338,279,504
NET INCREASE (DECREASE) IN $ 334,182,024
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 5,573,254
charges paid to FDC
Sales charges - Retained by $ 5,562,533
FDC
Deferred sales charges $ 32,321
withheld by FDC
Exchange fees withheld by FSC $ 46,395
Expense reductions Directed $ 331,286
brokerage arrangements
Custodian credits 5,356
Transfer agent credits 1,814
$ 338,456
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (4,097,480) $ (2,470,345)
income (loss)
Net realized gain (loss) 215,485,901 56,871,240
Change in net unrealized 122,793,603 69,437,348
appreciation (depreciation)
NET INCREASE (DECREASE) IN 334,182,024 123,838,243
NET ASSETS RESULTING FROM
OPERATIONS
Distribution to shareholders - (112,130,367)
From net realized gain
In excess of net realized - (29,870,994)
gain
TOTAL DISTRIBUTIONS - (142,001,361)
Share transactions Net 1,006,339,152 519,887,482
proceeds from sales of shares
Reinvestment of distributions - 139,074,837
Cost of shares redeemed (666,801,634) (428,139,579)
NET INCREASE (DECREASE) IN 339,537,518 230,822,740
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 1,503,543 820,601
TOTAL INCREASE (DECREASE) 675,223,085 213,480,223
IN NET ASSETS
NET ASSETS
Beginning of period 691,924,426 478,444,203
End of period $ 1,367,147,511 $ 691,924,426
OTHER INFORMATION
Shares
Sold 14,223,107 9,533,953
Issued in reinvestment of - 2,923,252
distributions
Redeemed (10,714,156) (7,726,118)
Net increase (decrease) 3,508,951 4,731,087
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 53.13 $ 57.70 $ 54.67 $ 42.05 $ 41.83
period
Income from Investment
Operations
Net investment income (loss) C (.34) (.25) (.39) (.28) (.39)
Net realized and unrealized 29.79 11.29 6.95 20.83 1.95
gain (loss)
Total from investment 29.45 11.04 6.56 20.55 1.56
operations
Less Distributions
From net realized gain - (12.39) (3.68) (8.05) (1.50)
In excess of net realized gain - (3.30) - - -
Total distributions - (15.69) (3.68) (8.05) (1.50)
Redemption fees added to paid .12 .08 .15 .12 .16
in capital
Net asset value, end of period $ 82.70 $ 53.13 $ 57.70 $ 54.67 $ 42.05
TOTAL RETURN A, B 55.66% 24.92% 12.64% 50.71% 4.61%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,367,148 $ 691,924 $ 478,444 $ 483,026 $ 229,761
(000 omitted)
Ratio of expenses to average 1.24% 1.38% 1.49% 1.40% 1.57%
net assets
Ratio of expenses to average 1.20% D 1.30% D 1.44% D 1.39% D 1.56% D
net assets after expense
reductions
Ratio of net investment (.54)% (.45)% (.72)% (.52)% (.98)%
income (loss) to average net
assets
Portfolio turnover rate 339% 556% 549% 112% 102%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE .
C NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. E FOR
THE YEAR ENDED FEBRUARY 29.
</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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
1999
SELECT NATURAL GAS -19.17% 19.27% 14.70%
SELECT NATURAL GAS (LOAD ADJ.) -21.66% 15.62% 11.19%
S&P 500 19.74% 194.91% 218.30%
GS Utilities 30.02% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or since
the fund started on April 21, 1993. You can compare the fund's returns
to the performance of both the Standard & Poor's 500 Index - a market
capitalization-weighted 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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
1999
SELECT NATURAL GAS -19.17% 3.59% 2.37%
SELECT NATURAL GAS (LOAD ADJ.) -21.66% 2.95% 1.83%
S&P 500 19.74% 24.15% 21.84%
GS Utilities 30.02% 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 10432.19 24430.84
1998/09/30 12691.46 25995.88
1998/10/31 12951.74 28110.39
1998/11/30 12066.77 29814.16
1998/12/31 12102.93 31532.05
1999/01/31 11251.94 32850.72
1999/02/26 11119.00 31829.72
IMATRL PRASUN SHR__CHT 19990228 19990309 145029 R00000000000074
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Select Natural Gas Portfolio on April 21, 1993,
when the fund started, and the current 3.00% sales charge was paid. As
the chart shows, by February 28, 1999, the value of the investment
would have grown to $11,119 - an 11.19% 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 $31,830 - a 218.30%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Enron Corp. 8.8
Coastal Corp. (The) 6.0
Vastar Resources, Inc. 5.3
Williams Companies, Inc. 5.3
BP Amoco PLC sponsored ADR 5.1
Anadarko Petroleum Corp. 4.5
Consolidated Natural Gas Co. 3.3
Columbia Gas System, Inc. 2.8
Enbridge, Inc. 2.7
El Paso Energy Corp. 2.5
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Oil & Gas 52.9%
Gas 31.5%
Energy Services 6.0%
Electric Utility 4.7%
All Others 4.9%
Row: 1, Col: 1, Value: 4.9
Row: 1, Col: 2, Value: 4.7
Row: 1, Col: 3, Value: 6.0
Row: 1, Col: 4, Value: 31.5
Row: 1, Col: 5, Value: 52.9
* INCLUDES SHORT-TERM 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 disappointing period. For the 12 months that ended
February 28, 1999, the fund had a total return of -19.17%, compared to
a gain of 19.74% for the Standard & Poor's 500 Index. The Goldman
Sachs Utilities Index - an index of 136 stocks designed to measure the
performance of companies in the utilities sector - turned in a stellar
return of 30.02%.
Q. WHY WAS THE FUND'S RETURN SO FAR BEHIND THOSE OF ITS BENCHMARKS?
A. Natural gas prices, on which the fund's performance depends to a
great extent, trended mainly downward during the period. Oil prices,
which also influence many of the fund's holdings, were even weaker
than gas prices. On the other hand, a number of other stock sectors
performed well except for a few months in the late summer and early
fall of 1998, accounting for the strong showing of the broadly based
S&P 500. The Goldman Sachs index contains a number of holdings that
are incompatible with the fund's primary focus on natural gas,
including significant positions in telecommunications, electric
utilities - even the Internet. In particular, the Goldman Sachs index
benefited from a large position in America Online, one of the
strongest stocks in a surging Internet group. Consequently, the fund
came up short against both of its benchmarks.
Q. WHY WERE OIL AND NATURAL GAS PRICES SO WEAK?
A. Poor global demand, especially from Southeast Asia, was one problem
affecting oil prices, as was the inability of the Organization of
Petroleum Exporting Countries (OPEC) to sufficiently restrict the
production of its member countries. On the natural gas side, the main
problem was uncooperative weather. The winter of 1997-98 was the
second-warmest winter on record, and so far the winter of 1998-99 has
been even warmer. Furthermore, low oil prices caused some users to
substitute oil for natural gas, thereby reducing demand for gas.
Q. WHAT WAS YOUR STRATEGY DURING THE PERIOD?
A. The fund's primary emphasis was on the stocks of exploration and
production (E&P) companies with solid balance sheets and the
capability to add meaningfully to reserves at a relatively low cost.
In the fall, I reduced the fund's E&P holdings slightly and increased
exposure to gas utilities and integrated pipeline companies to take
advantage of falling interest rates. In the fourth quarter of 1998, I
built up positions in drilling and energy service companies. My
rationale was that we had probably seen the worst of the oil and gas
price declines for this cycle, and these companies were well
positioned to benefit from a recovery in commodity prices.
Q. WHAT STOCKS CONTRIBUTED POSITIVELY TO THE FUND'S PERFORMANCE?
A. Enron, the fund's largest holding at the end of the period, was one
stock that helped performance. This diversified energy company
benefited from strong growth in its wholesale trading operations and
increased visibility in its retail energy services division.
Consolidated Natural Gas saw its stock price firm amid takeover
speculation.
Q. WHAT ABOUT DISAPPOINTING HOLDINGS?
A. Plains Resources, an oil-oriented E&P company, experienced weakness
in its stock price mainly because of declining oil prices. Ocean
Energy - no longer one of the fund's holdings - is another oil-based
E&P company whose balance sheet deteriorated over the period when the
company spent considerable sums on exploration but came up with no
significant finds. Burlington Resources, primarily a gas E&P company,
weakened when it failed to meet production expectations, and the cost
savings from a recent merger took longer than expected to materialize.
Q. WHAT'S YOUR OUTLOOK, VICTOR?
A. After considerable declines, both oil and gas prices are low enough
to force cutbacks in production, which should be supportive of higher
prices in the long run. Moreover, OPEC has scheduled a meeting for
March 23 to debate further cuts in oil production. There will probably
be adequate natural gas supplies for the first half of 1999, but
supplies may shrink later in the year, lending support to that market.
Furthermore, two recent high-profile unions - Dominion Resources
bought Consolidated Natural Gas and Sempra Energy purchased K N Energy
- - may stimulate further consolidation in the natural gas industry,
which could be a positive influence on stock prices. Therefore, while
I am cautious about the near-term prospects for natural gas stocks, I
am optimistic about the longer-term outlook.
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 OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: April 21, 1993
FUND NUMBER: 513
TRADING SYMBOL: FSNGX
SIZE: as of February 28, 1999, more than
$36 million
MANAGER: Victor Thay, since 1997; manager,
Fidelity Select Home Finance Portfolio,
since March 1999; analyst, U.S. and
Canadian exploration and production industry,
1996-present; Canadian equities,
1995-1996; joined Fidelity in 1995
NATURAL GAS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 95.1%
SHARES VALUE (NOTE 1)
ELECTRIC UTILITY - 4.7%
AES Corp. (a) 15,300 $ 568,969
CMS Energy Corp. 9,200 380,650
PG&E Corp. 24,800 781,200
1,730,819
ENERGY SERVICES - 6.0%
BJ Services Co. (a) 14,600 205,313
ENSCO International, Inc. 45,700 405,588
Halliburton Co. 10,700 302,275
Noble Drilling Corp. (a) 24,400 301,950
Pool Energy Services Co. (a) 34,100 346,328
Santa Fe International Corp. 21,800 291,575
Schlumberger Ltd. 7,600 369,075
2,222,104
GAS - 31.5%
Atmos Energy Corp. 19,700 472,800
Cascade Natural Gas Corp. 25,400 401,638
Columbia Gas System, Inc. 20,800 1,050,400
Consolidated Natural Gas Co. 22,250 1,222,359
Dynegy, Inc. 36,600 439,200
El Paso Energy Corp. 24,950 909,116
Enron Corp. 49,800 3,236,997
Equitable Resources, Inc. 8,600 222,525
K N Energy, Inc. 15,600 326,625
Midcoast Energy Resources, 3,710 82,548
Inc.
National Fuel Gas Co. 6,300 253,969
New Jersey Resources Corp. 5,700 199,144
Northwest Natural Gas Co. 14,400 352,350
ONEOK, Inc. 9,800 263,988
SEMCO Energy, Inc. 12,400 195,300
Transcanada Pipelines Ltd. 3,296 45,250
Williams Companies, Inc. 52,460 1,941,020
11,615,229
OIL & GAS - 52.9%
Anadarko Petroleum Corp. 59,950 1,648,625
Apache Corp. 33,225 662,423
BP Amoco PLC sponsored ADR 22,319 1,897,115
Burlington Resources, Inc. 24,672 798,756
Canadian Natural Resources 47,100 651,303
Ltd. (a)
Coastal Corp. (The) 69,170 2,213,440
Enbridge, Inc. 21,500 1,012,402
Enron Oil & Gas Co. 28,200 465,300
Newfield Exploration Co. (a) 29,800 484,250
Noble Affiliates, Inc. 29,000 656,125
Nuevo Energy Co. (a) 12,500 87,500
Oryx Energy Co. (a) 12,500 129,688
Paramount Resources Ltd. 54,700 466,173
Penn West Petroleum Ltd. (a) 75,600 749,582
Plains Resources, Inc. (a) 84,400 780,700
Renaissance Energy Ltd. (a) 60,500 533,658
Rio Alto Exploration Ltd. (a) 85,800 759,670
SHARES VALUE (NOTE 1)
Santa Fe Energy Resources, 89,300 $ 468,825
Inc. (a)
Seagull Energy Corp. (a) 92,700 440,325
Stone Energy Corp. (a) 21,500 520,031
Suncor Energy, Inc. 19,500 570,981
Ulster Petroleums Ltd. (a) 113,900 634,540
Union Pacific Resources 86,000 768,625
Group, Inc.
Vastar Resources, Inc. 50,700 1,951,950
Vintage Petroleum, Inc. 33,500 148,656
19,500,643
TOTAL COMMON STOCKS 35,068,795
(Cost $37,084,484)
CASH EQUIVALENTS - 4.9%
Taxable Central Cash Fund (b) 1,803,368 1,803,368
(Cost $1,803,368)
TOTAL INVESTMENT IN $ 36,872,163
SECURITIES - 100%
(Cost $38,887,852)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $51,708,839 and $63,353,313, respectively.
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 $13,630 for the
period.
The fund participated in the bank borrowing program. The maximum loan
and average daily balances during the period for which loans were
outstanding amounted to $2,590,000 and $1,717,000, respectively. The
weighted average interest rate was 5.7%.
Distribution of investments by country of issue, as a percentage of
total value of investments in securities, is as follows:
United States of America 79.3%
Canada 14.6
United Kingdom 5.1
Netherlands Antilles 1.0
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $39,375,928. Net unrealized depreciation
aggregated $2,503,765, of which $3,185,025 related to appreciated
investment securities and $5,688,790 related to depreciated investment
securities.
At February 28, 1999, the fund had a capital loss carryforward of
approximately $3,229,000, all of which will expire on February 28,
2007.
The fund intends to elect to defer to its fiscal year ending February
29, 2000 approximately $1,719,000 of losses recognized during the
period November 1, 1998 to February 28, 1999.
A total of 100% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of this percentage
for use in preparing 1999 income tax returns.
NATURAL GAS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 36,872,163
value (cost $38,887,852) -
See accompanying schedule
Receivable for fund shares 46,471
sold
Dividends receivable 43,421
Interest receivable 6,414
Redemption fees receivable 105
Other receivables 26
TOTAL ASSETS 36,968,600
LIABILITIES
Payable for fund shares $ 78,219
redeemed
Accrued management fee 18,520
Other payables and accrued 43,435
expenses
TOTAL LIABILITIES 140,174
NET ASSETS $ 36,828,426
Net Assets consist of:
Paid in capital $ 43,960,023
Undistributed net investment 319,683
income
Accumulated undistributed net (5,435,532)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (2,015,748)
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 3,478,063 $ 36,828,426
shares outstanding
NET ASSET VALUE and $10.59
redemption price per share
($36,828,426 (divided by)
3,478,063 shares)
Maximum offering price per $10.92
share (100/97.00 of $10.59)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 715,257
Dividends
Special dividend from 399,656
Transcanada Pipelines Ltd.
Interest 147,033
TOTAL INCOME 1,261,946
EXPENSES
Management fee $ 301,788
Transfer agent fees 393,852
Accounting fees and expenses 60,991
Non-interested trustees' 195
compensation
Custodian fees and expenses 14,741
Registration fees 14,687
Audit 10,733
Legal 306
Interest 548
Reports to shareholders 10,973
Miscellaneous 14
Total expenses before 808,828
reductions
Expense reductions (26,170) 782,658
NET INVESTMENT INCOME 479,288
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (5,298,288)
Foreign currency transactions (5,038) (5,303,326)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (4,576,884)
Assets and liabilities in (59) (4,576,943)
foreign currencies
NET GAIN (LOSS) (9,880,269)
NET INCREASE (DECREASE) IN $ (9,400,981)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 123,203
charges paid to FDC
Sales charges - Retained by $ 121,320
FDC
Deferred sales charges $ 982
withheld by FDC
Exchange fees withheld by FSC $ 7,478
Expense reductions Directed $ 25,878
brokerage arrangements
Custodian credits 176
Transfer agent credits 116
$ 26,170
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ 479,288 $ (306,523)
income (loss)
Net realized gain (loss) (5,303,326) 1,119,826
Change in net unrealized (4,576,943) 5,428,784
appreciation (depreciation)
NET INCREASE (DECREASE) IN (9,400,981) 6,242,087
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (375,571) -
From net investment income
From net realized gain - (1,875,328)
In excess of net realized - (210,862)
gain
TOTAL DISTRIBUTIONS (375,571) (2,086,190)
Share transactions Net 47,858,222 108,990,438
proceeds from sales of shares
Reinvestment of distributions 356,687 2,046,549
Cost of shares redeemed (61,599,489) (137,149,165)
NET INCREASE (DECREASE) IN (13,384,580) (26,112,178)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 123,693 255,983
TOTAL INCREASE (DECREASE) (23,037,439) (21,700,298)
IN NET ASSETS
NET ASSETS
Beginning of period 59,865,865 81,566,163
End of period (including $ 36,828,426 $ 59,865,865
undistributed net investment
income of $319,683 and
$297,648, respectively)
OTHER INFORMATION
Shares
Sold 3,845,626 8,021,019
Issued in reinvestment of 32,426 174,767
distributions
Redeemed (4,929,086) (10,189,472)
Net increase (decrease) (1,051,034) (1,993,686)
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 F 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 13.22 $ 12.50 $ 11.36 $ 8.98 $ 9.48
period
Income from Investment
Operations
Net investment income (loss) C .12 E (.05) (.06) .05 .03
Net realized and unrealized (2.68) 1.06 1.30 2.36 (.53)
gain (loss)
Total from investment (2.56) 1.01 1.24 2.41 (.50)
operations
Less Distributions
From net investment income (.10) - (.01) (.05) (.02)
From net realized gain - (.30) (.29) - -
In excess of net realized gain - (.03) - - -
Total distributions (.10) (.33) (.30) (.05) (.02)
Redemption fees added to paid .03 .04 .20 .02 .02
in capital
Net asset value, end of period $ 10.59 $ 13.22 $ 12.50 $ 11.36 $ 8.98
TOTAL RETURN A, B (19.17)% 8.74% 12.45% 27.10% (5.06)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 36,828 $ 59,866 $ 81,566 $ 60,228 $ 79,894
(000 omitted)
Ratio of expenses to average 1.57% 1.82% 1.70% 1.68% 1.70%
net assets
Ratio of expenses to average 1.52% D 1.78% D 1.66% D 1.67% D 1.66% D
net assets after expense
reductions
Ratio of net investment .93% (.37)% (.46)% .46% .30%
income (loss) to average net
assets
Portfolio turnover rate 107% 118% 283% 79% 177%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. E NET
INVESTMENT INCOME PER SHARE
REFLECTS A SPECIAL DIVIDEND
FROM TRANSCANADA PIPELINES
LTD. WHICH AMOUNTED TO $.10
PER SHARE. F FOR THE YEAR
ENDED FEBRUARY 29.
</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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT TELECOMMUNICATIONS 22.21% 162.32% 489.71%
SELECT TELECOMMUNICATIONS 18.47% 154.38% 471.95%
(LOAD ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Utilities 30.02% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT TELECOMMUNICATIONS 22.21% 21.27% 19.42%
SELECT TELECOMMUNICATIONS 18.47% 20.53% 19.05%
(LOAD ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Utilities 30.02% 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
1989/02/28 9700.00 10000.00
1989/03/31 10096.02 10233.00
1989/04/30 10859.42 10764.09
1989/05/31 11660.99 11200.04
1989/06/30 11376.12 11136.20
1989/07/31 12239.76 12141.80
1989/08/31 12532.44 12379.78
1989/09/30 12993.05 12329.02
1989/10/31 12532.44 12042.99
1989/11/30 12849.11 12288.66
1989/12/31 13483.69 12583.59
1990/01/31 12021.42 11739.23
1990/02/28 11976.66 11890.67
1990/03/31 12255.19 12205.77
1990/04/30 11534.00 11900.63
1990/05/31 12747.58 13060.94
1990/06/30 12493.93 12972.12
1990/07/31 11921.95 12930.61
1990/08/31 10534.29 11761.68
1990/09/30 9852.89 11188.89
1990/10/31 10196.08 11140.78
1990/11/30 10778.00 11860.47
1990/12/31 11272.83 12191.38
1991/01/31 11673.44 12722.92
1991/02/28 12063.90 13632.61
1991/03/31 12403.66 13962.52
1991/04/30 12667.35 13996.03
1991/05/31 12799.20 14600.66
1991/06/30 12266.74 13931.95
1991/07/31 12961.47 14581.18
1991/08/31 13346.87 14926.75
1991/09/30 13519.28 14677.48
1991/10/31 14051.74 14874.16
1991/11/30 13514.21 14274.73
1991/12/31 14750.69 15907.76
1992/01/31 14771.19 15611.87
1992/02/29 14955.63 15814.83
1992/03/31 14427.91 15506.44
1992/04/30 14971.01 15962.33
1992/05/31 14796.81 16040.54
1992/06/30 14453.16 15801.54
1992/07/31 15228.72 16447.82
1992/08/31 15048.96 16110.64
1992/09/30 15341.72 16300.75
1992/10/31 15495.80 16357.80
1992/11/30 16302.18 16915.60
1992/12/31 17010.22 17123.66
1993/01/31 16957.89 17267.50
1993/02/28 17889.24 17502.34
1993/03/31 18621.77 17871.64
1993/04/30 18661.05 17439.14
1993/05/31 19412.22 17906.51
1993/06/30 20249.23 17958.44
1993/07/31 20839.43 17886.61
1993/08/31 22411.51 18564.51
1993/09/30 22733.44 18421.56
1993/10/31 23388.02 18802.89
1993/11/30 21472.55 18624.26
1993/12/31 22064.91 18849.62
1994/01/31 22511.61 19490.50
1994/02/28 21806.29 18962.31
1994/03/31 21124.47 18135.55
1994/04/30 21501.52 18367.69
1994/05/31 21375.25 18668.92
1994/06/30 21357.22 18211.53
1994/07/31 22541.72 18808.87
1994/08/31 23197.11 19580.03
1994/09/30 22926.54 19100.32
1994/10/31 24020.86 19530.08
1994/11/30 22746.16 18818.79
1994/12/31 23017.92 19097.87
1995/01/31 23337.27 19593.08
1995/02/28 23546.08 20356.63
1995/03/31 23840.87 20957.35
1995/04/30 24581.85 21574.54
1995/05/31 25252.83 22436.88
1995/06/30 26469.38 22958.09
1995/07/31 28149.98 23719.38
1995/08/31 28984.01 23778.91
1995/09/30 29937.18 24782.38
1995/10/31 28683.00 24693.91
1995/11/30 29316.36 25777.97
1995/12/31 29844.14 26274.46
1996/01/31 30055.38 27168.84
1996/02/29 29619.70 27420.69
1996/03/31 29481.07 27684.75
1996/04/30 30857.50 28092.83
1996/05/31 31542.27 28817.34
1996/06/30 31863.25 28927.14
1996/07/31 29452.29 27649.13
1996/08/31 30065.73 28232.26
1996/09/30 30950.22 29821.17
1996/10/31 30336.78 30643.63
1996/11/30 31256.95 32959.99
1996/12/31 31455.63 32307.05
1997/01/31 31669.61 34325.59
1997/02/28 31944.73 34594.71
1997/03/31 29254.65 33173.21
1997/04/30 30169.91 35153.65
1997/05/31 34464.20 37293.80
1997/06/30 36364.05 38964.57
1997/07/31 37102.01 42064.98
1997/08/31 35288.52 39708.50
1997/09/30 39865.42 41883.33
1997/10/31 38899.80 40484.43
1997/11/30 40509.17 42358.45
1997/12/31 39579.96 43085.75
1998/01/31 42912.64 43562.28
1998/02/28 46806.61 46703.99
1998/03/31 50972.46 49095.70
1998/04/30 50771.60 49589.60
1998/05/31 48604.19 48737.16
1998/06/30 50464.55 50716.86
1998/07/31 52090.11 50176.72
1998/08/31 40187.41 42922.17
1998/09/30 42716.06 45671.77
1998/10/31 45777.53 49386.71
1998/11/30 48387.45 52380.04
1998/12/31 55823.77 55398.18
1999/01/31 60448.00 57714.93
1999/02/26 57195.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990307 170836 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Telecommunications Portfolio on February
28, 1989, and the current 3.00% sales charge was paid. As the chart
shows, by February 28, 1999, the value of the investment would have
grown to $57,195 - a 471.95% 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 $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
28, 1999
% OF FUND'S INVESTMENTS
MCI WorldCom, Inc. 14.0
Tele-Communications, Inc. 5.3
(TCI Group) Series A
Cisco Systems, Inc. 5.0
SBC Communications, Inc. 5.0
AirTouch Communications, Inc. 4.5
Bell Atlantic Corp. 4.2
Motorola, Inc. 3.8
OY Nokia AB sponsored ADR 3.4
Sprint Corp. (FON Group) 3.3
AT&T Corp. 3.1
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Telephone Services 56.1%
Communications Equipment 14.4%
Broadcasting 7.3%
Cellular 5.6%
Computer Services &
Software 5.4%
All Others 11.2%
Row: 1, Col: 1, Value: 11.2
Row: 1, Col: 2, Value: 5.4
Row: 1, Col: 3, Value: 5.6
Row: 1, Col: 4, Value: 7.3
Row: 1, Col: 5, Value: 14.4
Row: 1, Col: 6, Value: 56.1
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
* INCLUDES SHORT-TERM INVESTMENTS
TELECOMMUNICATIONS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Peter Saperstone)
NOTE TO SHAREHOLDERS:
Peter Saperstone became
Portfolio Manager of
Fidelity Select
Telecommunications Portfolio on
October 30, 1998.
Q. HOW DID THE FUND PERFORM, PETER?
A. It was a good year. For the 12 months that ended February 28, 1999,
the fund had a total return of 22.21%, besting the 19.74% return of
the Standard & Poor's 500 Index over the same period. Although the
fund outperformed the S&P 500, it trailed the 30.02% return of the
Goldman Sachs Utilities Index, an index of 136 stocks designed to
measure the performance of companies in the utilities sector.
Q. WHY DID THE FUND BEAT THE S&P 500 BUT TRAIL THE GOLDMAN SACHS
INDEX?
A. Telecommunications stocks in general fared well during the period,
reflecting dynamic growth in that sector recently. For the past
several years, the telecommunications market has grown at more than
twice the rate of the overall economy, which helps to explain why the
fund outperformed the broadly based S&P 500. Poor stock selection in a
few cases and a comparative underweighting of Internet stocks caused
the fund to trail the Goldman Sachs index. The stellar performance of
that index was attributable in part to a roughly 5% weighting in one
of the period's star performers, America Online.
Q. PETER, YOU TOOK OVER THE FUND ON OCTOBER 30, 1998.
CAN YOU COMMENT ON SOME OF THE CHANGES YOU'VE MADE?
A. Sure. I believe in restricting the fund's investments to those
stocks in which I have the most confidence. While fewer holdings tend
to increase short-term volatility in the fund's performance, my aim is
to enhance long-term returns by minimizing the diluting effects of
marginal holdings. Consequently, I reduced the number of holdings in
the fund from about 70 when I took over to approximately 50 as of the
end of the period. I also tended to favor large-capitalization stocks
over small-cap shares. Finally, I marginally increased the allocation
of Internet stocks, but the position is still less than the 7% or so
allocated to Internet shares in the Goldman Sachs index.
Q. WHAT STOCKS PERFORMED WELL FOR THE FUND DURING THE PERIOD?
A. MCI WorldCom helped performance because the stock did well and it
was the fund's largest holding for most of the period. The company
continued to attract investor interest because it was well positioned
to benefit from the fastest-growing segment of the industry - data
communications. Qwest Communications, in many ways a smaller version
of MCI WorldCom, also contributed positively to performance. The
company is building a national network designed to accommodate
state-of-the-art data communication. Another beneficial holding, Cisco
Systems, is a leading supplier of hardware for data and voice
networks.
Q. WHAT STOCKS TURNED IN DISAPPOINTING PERFORMANCES?
A. Tel-Save.com heads the list of disappointments. As the company made
the conversion to distributing long-distance calling services over the
Internet, it experienced lower earnings than investors expected.
Smartalk also hurt the fund's performance. The company suffered from
disappointing earnings attributable to more competition in its prepaid
calling card business. Another weak performer was World Access, which
found it harder to compete against larger rivals in the cellular
telecommunications industry. I sold the fund's holdings in both
Smartalk and World Access.
Q. WHAT'S YOUR OUTLOOK, PETER?
A. My outlook for the telecommunications sector remains positive. In
the short term, we should see overall revenues continue to grow at a
healthy rate, with the majority of that growth coming from the data
services segment of the industry. In the next year or two, the
regional Bell operating companies (RBOCs) are expected to enter the
long-distance market, and the lines between long-distance carriers and
local phone companies will blur further. As the market makes this
transition, there will be some confusion as investors attempt to sort
out the winners and losers. My own view is that the RBOCs may see
their earnings erode as they are forced to open up their local markets
as a prerequisite to participate in the long-distance market. Time
will tell, but I am confident that the fund remains well positioned to
benefit from the segments of the telecommunications sector currently
offering the highest growth potential.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: July 29, 1985
FUND NUMBER: 096
TRADING SYMBOL: FSTCX
SIZE: as of February 28, 1999, more than
$824 million
MANAGER: Peter Saperstone, since October
1998; manager, Fidelity Utilities Fund and
Fidelity Advisor Utilities Growth Fund, since
1998; Fidelity Select Air Transportation
Portfolio and Fidelity Select Defense and
Aerospace Portfolio, 1997-1998; Fidelity
Select Construction and Housing Portfolio,
1996-1997; joined Fidelity in 1995
TELECOMMUNICATIONS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 94.3%
SHARES VALUE (NOTE 1)
BROADCASTING - 7.3%
AlphaNet Telecom, Inc. (a)(c) 1,196,200 $ 8
American Tower Corp. Class A 43,700 1,171,706
(a)
Cablevision Systems Corp. 57,100 3,711,500
Class A (a)
MediaOne Group, Inc. 100,000 5,450,000
NTL, Inc. (a) 76,400 5,935,325
Tele-Communications, Inc. 689,934 43,336,479
(TCI Group) Series A (a)
59,605,018
CELLULAR - 5.6%
AirTouch Communications, Inc. 406,100 36,980,481
(a)
Nextel Communications, Inc. 117,200 3,523,325
Class A (a)
SkyTel Communications, Inc. 31,700 570,600
(a)
Telephone & Data Systems, 87,300 4,386,825
Inc.
45,461,231
COMMUNICATIONS EQUIPMENT -
14.4%
ADC Telecommunications, Inc. 261,900 10,606,950
(a)
Ascend Communications, Inc. 131,000 10,078,813
(a)
Cisco Systems, Inc. (a) 423,500 41,423,594
Intermedia Communications, 579,000 10,494,375
Inc. (a)
Lucent Technologies, Inc. 142,800 14,503,125
Newbridge Networks Corp. (a) 126,700 3,079,689
OY Nokia AB sponsored ADR 206,700 28,033,688
118,220,234
COMPUTER SERVICES & SOFTWARE
- - 5.4%
America Online, Inc. 229,000 20,366,688
Novell, Inc. (a) 159,100 3,082,563
Saville Systems PLC sponsored 163,100 3,251,806
ADR (a)
Yahoo!, Inc. (a) 113,500 17,422,250
44,123,307
COMPUTERS & OFFICE EQUIPMENT
- - 0.6%
Fore Systems, Inc. (a) 340,700 4,940,150
ELECTRICAL EQUIPMENT - 1.1%
ANTEC Corp. (a) 329,300 9,179,238
ELECTRONICS - 3.8%
Motorola, Inc. 445,000 31,261,250
TELEPHONE SERVICES - 56.1%
ALLTEL Corp. 335,300 20,076,088
Ameritech Corp. 259,100 16,938,663
AT&T Corp. 306,547 25,175,172
BCE, Inc. 298,300 12,087,896
Bell Atlantic Corp. 597,300 34,307,419
BellSouth Corp. 50,000 2,312,500
Cable & Wireless PLC ADR 87,300 3,541,106
Cincinnati Bell, Inc. 255,400 5,044,150
Commonwealth Telephone 289,100 9,359,613
Enterprises, Inc. (a)
COMSAT Corp. Series 1 229,600 6,715,800
SHARES VALUE (NOTE 1)
Covad Communications Group, 178,100 $ 7,213,050
Inc. (a)
Frontier Corp. 594,100 21,350,469
Global TeleSystems Group, 26,500 1,470,750
Inc. (a)
GTE Corp. 288,500 18,716,438
MCI WorldCom, Inc. (a) 1,383,003 114,097,743
McLeodUSA, Inc. Class A (a) 463,500 17,844,750
Metromedia Fiber Network, 320,500 13,941,750
Inc. Class A (a)
Nippon Telegraph & Telephone 464 3,811,777
Corp.
Qwest Communications 259,290 15,930,129
International, Inc. (a)
SBC Communications, Inc. 767,000 40,555,125
Sprint Corp. (FON Group) 313,000 26,859,313
Tel-Save.com, Inc. (a) 1,771,550 17,604,778
Telebras sponsored ADR 38,600 2,492,113
PFD-Holdr (a)
U.S. WEST, Inc. 286,500 15,274,031
WinStar Communications, Inc. 180,000 5,670,000
(a)
458,390,623
TOTAL COMMON STOCKS 771,181,051
(Cost $584,642,053)
CASH EQUIVALENTS - 5.7%
Taxable Central Cash Fund (b) 46,400,881 46,400,881
(Cost $46,400,881)
TOTAL INVESTMENT IN $ 817,581,932
SECURITIES - 100%
(Cost $631,042,934)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. 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.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $1,124,377,604 and $1,098,129,165, respectively.
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 $123,641 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $5,316,534. The fund
received cash collateral of $6,740,600.
The fund participated in the interfund lending program as a lender.
The maximum loan and average daily balances during the period for
which loans were outstanding amounted to $32,000,000 and $31,250,000
respectively. The weighted average interest rate was 5.47%. Interest
earned from the interfund lending program amounted to $18,984 and is
included in interest income on the Statement of Operations.
Transactions during the period with companies which are or were
affiliates are as follows:
PURCHASES SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Able Teccom Holdings Corp. $ 3,157,131 $ 6,930,054 $ - $ -
AlphaNet Telecom, Inc. 54,339 1,434,852 - 8
California Amplifier, Inc. 185,967 1,664,342 - -
SmarTalk TeleServices, Inc. 2,434,493 15,877,925 - -
Tel-Save.com, Inc. 2,648,830 30,187,740 - -
Titan Corp. 263,832 734,200 - -
Viatel, Inc. - 6,303,500 - -
TOTALS $ 8,744,592 $ 63,132,613 $ - $ 8
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $637,023,529. Net unrealized appreciation
aggregated $180,558,403, of which $216,260,764 related to appreciated
investment securities and $35,702,361 related to depreciated
investment securities.
The fund hereby designates approximately $32,933,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 9% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentage for the use in preparing 1999 income tax returns.
TELECOMMUNICATIONS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 817,581,932
value (cost $631,042,934) -
See accompanying schedule
Cash 1,243,094
Receivable for investments 55,727,870
sold
Receivable for fund shares 956,110
sold
Dividends receivable 596,315
Interest receivable 225,363
Redemption fees receivable 2,631
Other receivables 138,196
TOTAL ASSETS 876,471,511
LIABILITIES
Payable for investments $ 42,383,267
purchased
Payable for fund shares 2,314,454
redeemed
Accrued management fee 416,632
Other payables and accrued 441,245
expenses
Collateral on securities 6,740,600
loaned, at value
TOTAL LIABILITIES 52,296,198
NET ASSETS $ 824,175,313
Net Assets consist of:
Paid in capital $ 613,532,997
Accumulated undistributed net 24,099,612
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 186,542,704
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 13,326,238 $ 824,175,313
shares outstanding
NET ASSET VALUE and $61.85
redemption price per share
($824,175,313 (divided by)
13,326,238 shares)
Maximum offering price per $63.76
share (100/97.00 of $61.85)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 4,051,599
Dividends
Interest (including income on 4,826,969
securities loaned of
$2,420,214)
TOTAL INCOME 8,878,568
EXPENSES
Management fee $ 4,615,660
Transfer agent fees 4,327,726
Accounting and security 682,512
lending fees
Non-interested trustees' 3,153
compensation
Custodian fees and expenses 70,818
Registration fees 129,839
Audit 29,402
Legal 4,452
Reports to shareholders 79,448
Total expenses before 9,943,010
reductions
Expense reductions (189,988) 9,753,022
NET INVESTMENT INCOME (LOSS) (874,454)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 45,892,397
(including realized loss of
$27,541,180 on sales of
investments in affiliated
issuers)
Foreign currency transactions (56,189) 45,836,208
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 85,585,831
Assets and liabilities in 10,878 85,596,709
foreign currencies
NET GAIN (LOSS) 131,432,917
NET INCREASE (DECREASE) IN $ 130,558,463
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 3,594,841
charges paid to FDC
Sales charges - Retained by $ 3,578,078
FDC
Deferred sales charges $ 12,323
withheld by FDC
Exchange fees withheld by FSC $ 57,437
Expense reductions Directed $ 177,481
brokerage arrangements
Custodian credits 10,290
Transfer agent credits 2,217
$ 189,988
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (874,454) $ (2,208,196)
income (loss)
Net realized gain (loss) 45,836,208 89,769,920
Change in net unrealized 85,596,709 75,630,156
appreciation (depreciation)
NET INCREASE (DECREASE) IN 130,558,463 163,191,880
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (46,022,800) (57,660,802)
from net realized gains
Share transactions Net 863,829,740 394,333,392
proceeds from sales of shares
Reinvestment of distributions 44,998,804 56,532,142
Cost of shares redeemed (813,636,128) (302,046,680)
NET INCREASE (DECREASE) IN 95,192,416 148,818,854
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 997,935 564,136
TOTAL INCREASE (DECREASE) 180,726,014 254,914,068
IN NET ASSETS
NET ASSETS
Beginning of period 643,449,299 388,535,231
End of period $ 824,175,313 $ 643,449,299
OTHER INFORMATION
Shares
Sold 15,272,906 8,067,245
Issued in reinvestment of 813,871 1,266,807
distributions
Redeemed (14,817,799) (6,572,964)
Net increase (decrease) 1,268,978 2,761,088
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 F 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 53.37 $ 41.80 $ 44.87 $ 38.34 $ 37.10
period
Income from Investment
Operations
Net investment income (loss) C (.06) (.25) .12 D .51 .29
Net realized and unrealized 11.43 18.20 2.92 9.15 2.54
gain (loss)
Total from investment 11.37 17.95 3.04 9.66 2.83
operations
Less Distributions
From net investment income - - (.16) (.39) (.33)
From net realized gain (2.96) (6.44) (5.98) (2.75) (1.27)
Total distributions (2.96) (6.44) (6.14) (3.14) (1.60)
Redemption fees added to paid .07 .06 .03 .01 .01
in capital
Net asset value, end of period $ 61.85 $ 53.37 $ 41.80 $ 44.87 $ 38.34
TOTAL RETURN A, B 22.21% 46.52% 7.85% 25.79% 7.98%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 824,175 $ 643,449 $ 388,535 $ 468,300 $ 369,476
(000 omitted)
Ratio of expenses to average 1.27% 1.51% 1.51% 1.52% 1.56%
net assets
Ratio of expenses to average 1.25% E 1.48% E 1.47% E 1.52% 1.55% E
net assets after expense
reductions
Ratio of net investment (.11)% (.53)% .27% 1.17% .77%
income (loss) to average net
assets
Portfolio turnover rate 150% 157% 175% 89% 107%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D INVESTMENT
INCOME PER SHARE REFLECTS A
SPECIAL DIVIDEND WHICH
AMOUNTED TO $.07 PER SHARE.
E FMR OR THE FUND HAS
ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE
FUND'S EXPENSES. F FOR THE
YEAR ENDED FEBRUARY 29.
</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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT UTILITIES GROWTH 32.17% 168.13% 428.63%
SELECT UTILITIES GROWTH (LOAD 28.13% 160.01% 412.70%
ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Utilities 30.02% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT UTILITIES GROWTH 32.17% 21.81% 18.12%
SELECT UTILITIES GROWTH (LOAD 28.13% 21.06% 17.76%
ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Utilities 30.02% 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
1989/02/28 9700.00 10000.00
1989/03/31 9865.57 10233.00
1989/04/30 10373.06 10764.09
1989/05/31 10866.16 11200.04
1989/06/30 11140.62 11136.20
1989/07/31 11750.71 12141.80
1989/08/31 11802.48 12379.78
1989/09/30 11972.57 12329.02
1989/10/31 11917.10 12042.99
1989/11/30 12309.04 12288.66
1989/12/31 12959.80 12583.59
1990/01/31 12320.13 11739.23
1990/02/28 12297.95 11890.67
1990/03/31 12231.39 12205.77
1990/04/30 11721.13 11900.63
1990/05/31 12331.22 13060.94
1990/06/30 12477.35 12972.12
1990/07/31 12579.78 12930.61
1990/08/31 11889.33 11761.68
1990/09/30 11919.68 11188.89
1990/10/31 12530.46 11140.78
1990/11/30 12860.51 11860.47
1990/12/31 13031.67 12191.38
1991/01/31 12974.21 12722.92
1991/02/28 13533.48 13632.61
1991/03/31 13686.70 13962.52
1991/04/30 13625.41 13996.03
1991/05/31 13629.24 14600.66
1991/06/30 13463.91 13931.95
1991/07/31 13902.09 14581.18
1991/08/31 14220.76 14926.75
1991/09/30 14658.94 14677.48
1991/10/31 14862.09 14874.16
1991/11/30 15033.38 14274.73
1991/12/31 15771.97 15907.76
1992/01/31 15286.49 15611.87
1992/02/29 15174.45 15814.83
1992/03/31 15016.78 15506.44
1992/04/30 15427.57 15962.33
1992/05/31 15726.33 16040.54
1992/06/30 15908.25 15801.54
1992/07/31 16754.12 16447.82
1992/08/31 16745.53 16110.64
1992/09/30 16835.70 16300.75
1992/10/31 16831.40 16357.80
1992/11/30 16947.33 16915.60
1992/12/31 17442.59 17123.66
1993/01/31 17739.29 17267.50
1993/02/28 18651.88 17502.34
1993/03/31 19155.38 17871.64
1993/04/30 19050.69 17439.14
1993/05/31 19091.55 17906.51
1993/06/30 19822.52 17958.44
1993/07/31 20049.53 17886.61
1993/08/31 20921.25 18564.51
1993/09/30 20921.25 18421.56
1993/10/31 20707.86 18802.89
1993/11/30 19695.40 18624.26
1993/12/31 19630.71 18849.62
1994/01/31 20032.94 19490.50
1994/02/28 19124.01 18962.31
1994/03/31 18434.48 18135.55
1994/04/30 18964.76 18367.69
1994/05/31 18586.11 18668.92
1994/06/30 18527.44 18211.53
1994/07/31 19060.76 18808.87
1994/08/31 18986.10 19580.03
1994/09/30 18500.78 19100.32
1994/10/31 18735.44 19530.08
1994/11/30 18058.13 18818.79
1994/12/31 18175.94 19097.87
1995/01/31 18917.70 19593.08
1995/02/28 19164.96 20356.63
1995/03/31 19241.88 20957.35
1995/04/30 19912.61 21574.54
1995/05/31 20220.73 22436.88
1995/06/30 20418.81 22958.09
1995/07/31 20969.04 23719.38
1995/08/31 21502.75 23778.91
1995/09/30 22526.17 24782.38
1995/10/31 22746.26 24693.91
1995/11/30 23246.96 25777.97
1995/12/31 24426.55 26274.46
1996/01/31 24684.32 27168.84
1996/02/29 24112.74 27420.69
1996/03/31 23899.80 27684.75
1996/04/30 24864.78 28092.83
1996/05/31 24882.78 28817.34
1996/06/30 25266.70 28927.14
1996/07/31 24162.93 27649.13
1996/08/31 24168.93 28232.26
1996/09/30 24606.84 29821.17
1996/10/31 25638.62 30643.63
1996/11/30 26844.37 32959.99
1996/12/31 27202.85 32307.05
1997/01/31 28020.79 34325.59
1997/02/28 28485.53 34594.71
1997/03/31 26973.58 33173.21
1997/04/30 27938.99 35153.65
1997/05/31 29775.74 37293.80
1997/06/30 30684.59 38964.57
1997/07/31 31415.47 42064.98
1997/08/31 30004.54 39708.50
1997/09/30 32648.45 41883.33
1997/10/31 32737.43 40484.43
1997/11/30 34720.36 42358.45
1997/12/31 35446.84 43085.75
1998/01/31 36817.44 43562.28
1998/02/28 38797.18 46703.99
1998/03/31 41429.59 49095.70
1998/04/30 40600.94 49589.60
1998/05/31 40112.84 48737.16
1998/06/30 40142.42 50716.86
1998/07/31 41037.27 50176.72
1998/08/31 37546.62 42922.17
1998/09/30 41251.74 45671.77
1998/10/31 43854.93 49386.71
1998/11/30 45548.48 52380.04
1998/12/31 50744.47 55398.18
1999/01/31 52259.98 57714.93
1999/02/26 51270.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990309 145353 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Utilities Growth Portfolio on February 28,
1989, and the current 3.00% sales charge was paid. As the chart shows,
by February 28, 1999, the value of the investment would have grown to
$51,270 - a 412.70% 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
$55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
MCI WorldCom, Inc. 11.3
AT&T Corp. 8.1
Bell Atlantic Corp. 6.0
SBC Communications, Inc. 5.9
AES Corp. 5.2
PG&E Corp. 4.9
AirTouch Communications, Inc. 4.0
Ameritech Corp. 3.6
GTE Corp. 3.5
BellSouth Corp. 3.3
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Telephone Services 55.0%
Electric Utility 26.2%
Cellular 4.5%
Gas 4.2%
Broadcasting 1.7%
All Others 8.4%*
Row: 1, Col: 1, Value: 8.4
Row: 1, Col: 2, Value: 1.7
Row: 1, Col: 3, Value: 4.2
Row: 1, Col: 4, Value: 4.5
Row: 1, Col: 5, Value: 26.2
Row: 1, Col: 6, Value: 55.0
* INCLUDES SHORT-TERM INVESTMENTS
UTILITIES GROWTH PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Jonathan Zang)
Jonathan Zang,
Portfolio Manager
of Fidelity Select
Utilities Growth Portfolio
Q. HOW DID THE FUND PERFORM, JONATHAN?
A. The fund had a good year. For the 12 months that ended February 28,
1999, the fund's total return was 32.17%, compared to 19.74% for the
Standard & Poor's 500 Index. The Goldman Sachs Utilities Index - an
index of 136 stocks designed to measure the performance of companies
in the utilities sector - had a total return of 30.02%.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S STRONG PERFORMANCE AGAINST
ITS BENCHMARKS?
A. The fund's stock selection, especially in the area of long-distance
carriers, helped it outperform the S&P 500. Secondarily, the fund
significantly underweighted the regional Bell operating companies
(RBOCs) during the first half of 1998, when they underperformed the
S&P 500. Shortly after I took over the fund on July 1, 1998, I
substantially increased its holdings of RBOCs. That shift coincided
with renewed strength in the group, as the RBOCs outperformed the S&P
500 for most of the remainder of the period. With respect to the
Goldman Sachs index, the fund was helped by its heavier weighting of
telecommunications stocks and lighter emphasis on electric utilities.
Within the telecommunications sector, overweighting long distance
carriers and competitive local exchange carriers (CLECs) at the
expense of RBOCs was beneficial.
Q. CAN YOU REVIEW YOUR STRATEGY FOR ALLOCATING FUNDS AMONG THE
TELECOMMUNICATIONS, ELECTRIC AND GAS UTILITIES SEGMENTS OF THE FUND?
A. Sure. Telecommunications stocks typically make up the bulk of the
fund's holdings - 62.2% as of the end of the period. This is based on
my assessment of the superior growth potential of telecommunications
companies compared to electric and gas utilities. Electric utilities
and independent power producers accounted for 26.2% of the fund's
holdings at the end of the period. I use electric utilities, in part,
to adjust the risk profile of the fund as market conditions warrant.
For example, when the broader market dropped sharply last fall and
investors flocked to electric utilities for their "safe haven" status,
I took profits on some of the fund's holdings in the sector and
reinvested them in out-of-favor telecom stocks. Gas utilities and
integrated energy companies, on the other hand, are normally a very
small component of the fund - about 5%. They generally don't compare
favorably with opportunities I see in telecommunications and electric
utilities.
Q. WHAT STOCKS DID WELL FOR THE FUND?
A. MCI WorldCom, the fund's largest holding for much of the period,
was a key contributor. The company experienced strong growth in its
data communications business, as well as cost savings from the merger
of WorldCom and MCI. AT&T also performed well. I bought more AT&T
shares around the middle of 1998, after the stock had been driven down
on investor skepticism about the acquisition of cable company TCI
Group. AT&T rebounded strongly in December and January, as investors
reconsidered their initial misgivings.
Q. WHAT ABOUT HOLDINGS THAT FAILED TO MEET YOUR EXPECTATIONS?
A. Tel-Save.com was a disappointment. The former CEO tried to find a
buyer for the company, but no deal transpired. In addition, the
company's exclusive agreement to market long-distance telephone
services through America Online resulted in marketing costs that were
higher than anticipated. Intermedia Communications and e.spire
Communications are both CLECs that failed to execute their growth
strategies according to investors' expectations.
Q. WHAT'S YOUR OUTLOOK, JONATHAN?
A. I continue to see lots of opportunity in the utilities sector.
Deregulation in the United States and privatization abroad are two
powerful forces that are opening up markets worldwide, allowing
well-managed companies to reap the benefits. There are plenty of
opportunities in the stocks of domestic companies. I generally favor
participating in overseas markets indirectly, through U.S. firms with
foreign subsidiaries, rather than investing directly in foreign
companies, which generally entails higher risk. With the
telecommunications industry at a more advanced stage of deregulation,
I think that growth opportunities will continue to be better there
than in other utilities 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 OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: December 10, 1981
FUND NUMBER: 065
TRADING SYMBOL: FSUTX
SIZE: as of February 28, 1999, more than
$507 million
MANAGER: Jonathan Zang, since 1998;
analyst, utilities industry, 1997- present;
joined Fidelity in 1997
UTILITIES GROWTH PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.4%
SHARES VALUE (NOTE 1)
BROADCASTING - 1.7%
Tele-Communications, Inc. 139,500 $ 8,762,344
(TCI Group) Series A (a)
CELLULAR - 4.5%
AirTouch Communications, Inc. 225,200 20,507,275
(a)
Vodafone Group PLC sponsored 14,300 2,605,281
ADR
23,112,556
COMMUNICATIONS EQUIPMENT - 1.0%
Intermedia Communications, 279,700 5,069,563
Inc. (a)
ELECTRIC UTILITY - 26.2%
AES Corp. (a) 718,800 26,730,375
CMS Energy Corp. 350,200 14,489,525
Duke Energy Corp. 282,708 16,079,018
Entergy Corp. 403,200 11,390,400
Illinova Corp. 345,800 8,212,750
IPALCO Enterprises, Inc. 234,300 11,231,756
Montana Power Co. 84,900 5,168,288
NIPSCO Industries, Inc. 130,000 3,371,875
PECO Energy Co. 158,800 5,627,475
PG&E Corp. 793,500 24,995,250
Unicom Corp. 184,700 6,568,394
133,865,106
ENGINEERING - 0.2%
Stone & Webster, Inc. 40,000 1,070,000
GAS - 4.2%
Columbia Gas System, Inc. 39,700 2,004,850
Dynegy, Inc. 197,900 2,374,800
Enron Corp. 167,796 10,906,740
MDU Resources Group, Inc. 61,250 1,439,375
Williams Companies, Inc. 120,000 4,440,000
21,165,765
OIL & GAS - 0.6%
Coastal Corp. (The) 100,400 3,212,800
TELEPHONE SERVICES - 55.0%
ALLTEL Corp. 121,700 7,286,788
Ameritech Corp. 283,600 18,540,350
AT&T Corp. 503,483 41,348,541
Bell Atlantic Corp. 533,200 30,625,675
BellSouth Corp. 359,600 16,631,500
Cincinnati Bell, Inc. 214,900 4,244,275
e.spire Communications, Inc. 1,629,400 8,961,700
(a)
Frontier Corp. 100,000 3,593,750
Global TeleSystems Group, 10,600 588,300
Inc. (a)
GTE Corp. 275,100 17,847,113
MCI WorldCom, Inc. (a) 702,583 57,963,095
SHARES VALUE (NOTE 1)
McLeodUSA, Inc. Class A (a) 105,800 $ 4,073,300
Metromedia Fiber Network, 61,200 2,662,200
Inc. Class A (a)
Qwest Communications 210,133 12,910,046
International, Inc. (a)
SBC Communications, Inc. 567,644 30,014,177
Sprint Corp. (FON Group) 144,900 12,434,231
Tel-Save.com, Inc. (a) 799,600 7,946,025
Telebras sponsored ADR 14,800 955,525
PFD-Holdr (a)
WinStar Communications, Inc. 72,600 2,286,900
(a)
280,913,491
TOTAL COMMON STOCKS 477,171,625
(Cost $374,716,602)
CASH EQUIVALENTS - 6.6%
Taxable Central Cash Fund (b) 33,712,144 33,712,144
(Cost $33,712,144)
TOTAL INVESTMENT IN $ 510,883,769
SECURITIES - 100%
(Cost $408,428,746)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $442,537,597 and $465,480,084, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $23,956 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $3,443,324. The fund
received cash collateral of $3,563,400.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $409,446,753. Net unrealized appreciation
aggregated $101,437,016, of which $118,578,668 related to appreciated
investment securities and $17,141,652 related to depreciated
investment securities.
The fund hereby designates approximately $46,415,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 24% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of these percentages
for use in preparing 1999 income tax returns.
UTILITIES GROWTH PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 510,883,769
value (cost $408,428,746) -
See accompanying schedule
Receivable for investments 2,118,097
sold
Receivable for fund shares 1,070,924
sold
Dividends receivable 604,398
Interest receivable 128,172
Redemption fees receivable 2,152
Other receivables 123
TOTAL ASSETS 514,807,635
LIABILITIES
Payable for investments $ 1,572,415
purchased
Payable for fund shares 1,341,906
redeemed
Accrued management fee 249,727
Other payables and accrued 239,080
expenses
Collateral on securities 3,563,400
loaned, at value
TOTAL LIABILITIES 6,966,528
NET ASSETS $ 507,841,107
Net Assets consist of:
Paid in capital $ 355,427,419
Undistributed net investment 1,646,086
income
Accumulated undistributed net 48,312,566
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 102,455,036
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 8,247,065 $ 507,841,107
shares outstanding
NET ASSET VALUE and $61.58
redemption price per share
($507,841,107 (divided by)
8,247,065 shares)
Maximum offering price per $63.48
share (100/97.00 of $61.58)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 6,569,955
Dividends
Interest (including income on 1,295,447
securities loaned of
$275,553)
TOTAL INCOME 7,865,402
EXPENSES
Management fee $ 2,410,584
Transfer agent fees 1,894,258
Accounting and security 396,783
lending fees
Non-interested trustees' 2,041
compensation
Custodian fees and expenses 24,893
Registration fees 37,651
Audit 24,062
Legal 2,162
Reports to shareholders 41,649
Miscellaneous 1,999
Total expenses before 4,836,082
reductions
Expense reductions (104,758) 4,731,324
NET INVESTMENT INCOME 3,134,078
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 98,334,683
Foreign currency transactions (6,507) 98,328,176
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 19,577,907
Assets and liabilities in 13 19,577,920
foreign currencies
NET GAIN (LOSS) 117,906,096
NET INCREASE (DECREASE) IN $ 121,040,174
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 1,250,178
charges paid to FDC
Sales charges - Retained by $ 1,246,320
FDC
Deferred sales charges $ 21,580
withheld by FDC
Exchange fees withheld by FSC $ 20,948
Expense reductions Directed $ 94,853
brokerage arrangements
Custodian credits 8,956
Transfer agent credits 949
$ 104,758
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ 3,134,078 $ 3,040,458
income
Net realized gain (loss) 98,328,176 52,835,863
Change in net unrealized 19,577,920 34,220,552
appreciation (depreciation)
NET INCREASE (DECREASE) IN 121,040,174 90,096,873
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (1,845,471) (3,324,884)
From net investment income
From net realized gain (58,304,043) (43,053,193)
TOTAL DISTRIBUTIONS (60,149,514) (46,378,077)
Share transactions Net 311,901,481 235,594,493
proceeds from sales of shares
Reinvestment of distributions 57,497,817 45,039,264
Cost of shares redeemed (324,713,707) (179,495,059)
NET INCREASE (DECREASE) IN 44,685,591 101,138,698
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 337,629 225,357
TOTAL INCREASE (DECREASE) 105,913,880 145,082,851
IN NET ASSETS
NET ASSETS
Beginning of period 401,927,227 256,844,376
End of period (including $ 507,841,107 $ 401,927,227
undistributed net investment
income of $1,646,086 and
$677,487, respectively)
OTHER INFORMATION
Shares
Sold 5,410,133 4,622,639
Issued in reinvestment of 1,024,484 950,425
distributions
Redeemed (5,700,831) (3,646,680)
Net increase (decrease) 733,786 1,926,384
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 53.50 $ 45.97 $ 43.03 $ 34.88 $ 36.61
period
Income from Investment
Operations
Net investment income C .44 .54 .73 1.10 1.13
Net realized and unrealized 15.77 14.83 6.41 7.86 (1.17)
gain (loss)
Total from investment 16.21 15.37 7.14 8.96 (.04)
operations
Less Distributions
From net investment income (.25) (.58) (.70) (.84) (1.05)
From net realized gain (7.93) (7.30) (3.54) - (.67)
Total distributions (8.18) (7.88) (4.24) (.84) (1.72)
Redemption fees added to paid .05 .04 .04 .03 .03
in capital
Net asset value, end of period $ 61.58 $ 53.50 $ 45.97 $ 43.03 $ 34.88
TOTAL RETURN A, B 32.17% 36.20% 18.13% 25.82% .21%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 507,841 $ 401,927 $ 256,844 $ 266,768 $ 237,635
(000 omitted)
Ratio of expenses to average 1.18% 1.33% 1.47% 1.39% 1.43%
net assets
Ratio of expenses to average 1.16% D 1.30% D 1.46% D 1.38% D 1.42% D
net assets after expense
reductions
Ratio of net investment .77% 1.11% 1.73% 2.76% 3.24%
income to average net assets
Portfolio turnover rate 113% 78% 31% 65% 24%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME PER
SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES
OUTSTANDING DURING THE
PERIOD. D FMR OR THE FUND
HAS ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE
FUND'S EXPENSES. E FOR THE
YEAR ENDED FEBRUARY 29.
</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 FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT MONEY MARKET 5.08% 27.87% 67.31%
SELECT MONEY MARKET (LOAD ADJ.) 1.93% 24.03% 62.29%
All Taxable Money Market 4.93% 27.22% 66.07%
Funds Average
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be
$1,050 without including the effect of the 3% sales charge. To measure
how the fund's performance stacked up against its peers, you can
compare it to the all taxable money market funds average, which
reflects the performance of 916 taxable money market funds with
similar objectives tracked by IBC Financial Data, Inc. over the past
one year.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT MONEY MARKET 5.08% 5.04% 5.28%
SELECT MONEY MARKET (LOAD ADJ.) 1.93% 4.40% 4.96%
All Taxable Money Market 4.93% 4.93% 5.24%
Funds Average
AVERAGE ANNUAL TOTAL 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.
YIELDS
3/2/99 12/1/98 9/1/98 6/2/98 3/3/98
SELECT
MONEY MARKET 4.71% 4.71% 5.10% 5.00% 5.27%
All Taxable
Money Market
Funds Average 4.37% 4.57% 5.03% 5.02% 5.07%
3/3/99 12/2/98 9/2/98 6/3/98 2/25/98
MMDA 2.16% 2.32% 2.55% 2.51% 2.58%
Row: 1, Col: 1, Value: 4.71
Row: 1, Col: 2, Value: 4.37
Row: 1, Col: 3, Value: 2.16
Row: 2, Col: 1, Value: 4.71
Row: 2, Col: 2, Value: 4.57
Row: 2, Col: 3, Value: 2.32
Row: 3, Col: 1, Value: 5.1
Row: 3, Col: 2, Value: 5.03
Row: 3, Col: 3, Value: 2.55
Row: 4, Col: 1, Value: 5.0
Row: 4, Col: 2, Value: 5.02
Row: 4, Col: 3, Value: 2.51
Row: 5, Col: 1, Value: 5.270000000000001
Row: 5, Col: 2, Value: 5.07
Row: 5, Col: 3, Value: 2.58
6% -
4% -
2% -
0%
Money Market
All Taxable
Money Market
Funds Average
MMDA
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 Select Money
Market Portfolio
Q. WHAT WAS THE INVESTMENT ENVIRONMENT LIKE OVER THE PAST YEAR, JOHN?
A. At the beginning of the 12-month period ending February 28, 1999,
economic growth was strong in the U.S. but inflation remained benign.
Weakness abroad - especially in Asia - translated into cheaper imports
into the U.S. that helped stabilize inflation. However, when that
slowdown in growth overseas started to negatively affect U.S. economic
growth in the second quarter of 1998, market sentiment shifted. Market
observers revised downward their expectations for economic growth and
corporate profits. Then, problems in Russia in August 1998 sparked
declines in stock market indexes that had reached record highs earlier
in the third quarter, and caused the yield differential between U.S.
Treasuries and all other debt obligations to widen considerably.
Falling commodity prices and other issues caused several countries'
currencies to decline and their interest rates to climb. Fears arose
that these problems would start to erode U.S. economic growth and lead
to further problems in the capital markets, which were rocked in the
fall by the well-publicized problems encountered by several highly
leveraged hedge funds.
Q. WHAT WAS THE FEDERAL RESERVE BOARD'S ROLE AS THESE EVENTS
DEVELOPED?
A. Up until mid-July, it was commonly believed that the Fed might
raise the rate banks charge each other for overnight loans - the fed
funds rate - to slow growth and control inflation. The Fed maintained
a bias toward raising rates until its September meeting, when it cut
the fed funds rate from 5.50% to 5.25%. The Fed acted in an effort to
head off slower growth, at a time when we saw further deterioration in
the financial markets and growing liquidity problems in the
fixed-income markets. Acting out of character by making an
announcement between meetings of its Open Market Committee, the Fed
cut the fed funds rate to 5.00% on October 15. The Fed further reduced
that rate to 4.75% on November 17, marking the third reduction in that
rate in just seven weeks. These moves came in response to continued
deterioration in the fixed-income markets, and were an attempt on the
Fed's part to avoid a "credit crunch" - where lenders hold back from
lending to even the most creditworthy borrowers. The financial markets
have since rebounded and found stability, as witnessed by the muted
reaction to the recent currency crisis in Brazil.
Q. WHAT STRATEGY DID YOU PURSUE WITH THE FUND?
A. At the beginning of the period, the best opportunities were found
on either end of the maturity spectrum, so I pursued a "barbell
strategy" - focusing on investments with very short maturities on the
one hand, and one-year securities on the other. When the economic
outlook deteriorated and called for declining interest rates, I looked
for opportunities to maintain the fund's average maturity, shifting
investments from very short-term and one-year securities to those in
the three- to six-month range. Those maturities offered the most
attractive rates and were also appealing from a credit standpoint,
given the uncertainty in the market about different issuers' exposure
to hedge fund problems. The fund also took advantage of seasonally
high yields for short-term securities at the end of 1998, and has
since emphasized instruments in the two- to four-month range.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on February 28, 1999, was 4.76%,
compared to 5.26% one year ago. For the 12 months that ended February
28, 1999, the fund had a total return of 5.08%, compared to 4.93% for
the all taxable money market funds average, according to IBC Financial
Data, Inc.
Q. WHAT'S YOUR OUTLOOK?
A. Inflation continues to be relatively dormant. While domestic
consumption in the U.S. has been strong, it has not generated
increased prices in services and products where intense competition
has held pricing power in check. Assuming inflation remains benign,
the Fed is likely to keep its monetary policy unchanged over the near
term. The Fed continues to expect that economic growth will moderate,
a forecast it has had in place for the past year and a half. If
incoming data does not confirm this view, the Fed may move to increase
short-term rates in order to reduce inflationary pressures by negating
some of the economic stimulus it provided the economy last fall.
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 OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: August 30, 1985
FUND NUMBER: 085
TRADING SYMBOL: FSLXX
SIZE: as of February 28, 1999, more than
$1.1 billion
MANAGER: John Todd, since 1991; manager,
various Fidelity and Spartan taxable money
market funds; joined Fidelity in 1981
MONEY MARKET PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CERTIFICATES OF DEPOSIT - 22.9%
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT VALUE (NOTE 1)
PURCHASE
DOMESTIC CERTIFICATES OF
DEPOSIT - 1.8%
First Union National Bank of
North Carolina
3/9/99 5.42% $ 10,000,000 $ 10,000,000
4/12/99 5.44 10,000,000 10,000,000
20,000,000
LONDON BRANCH, EURODOLLAR,
DOMESTIC BANKS - 0.9%
NationsBank NA
3/2/99 5.50 10,000,000 10,000,000
LONDON BRANCH, EURODOLLAR,
FOREIGN BANKS - 4.2%
Abbey National Treasury
Services PLC
3/15/99 5.15 10,000,000 10,000,000
Bank of Scotland Treasury
Services
2/16/00 5.14 5,000,000 4,998,141
Barclays Bank PLC
3/25/99 5.50 11,000,000 11,000,274
Bayerische Hypo-und
Vereinsbank AG
5/12/99 4.89 5,000,000 5,000,000
Halifax PLC
8/31/99 4.98 5,000,000 5,000,000
Westdeutsche Landesbank
Girozentrale
5/17/99 4.90 10,000,000 10,000,000
45,998,415
NEW YORK BRANCH, YANKEE
DOLLAR, FOREIGN BANKS - 16.0%
ABN-AMRO Bank NV
6/7/99 5.76 5,000,000 4,999,229
Bank of Scotland Treasury
Services
4/2/99 4.88 (b) 5,000,000 4,997,500
Banque Nationale de Paris
3/17/99 5.32 10,000,000 10,000,000
Barclays Bank PLC
3/23/99 5.45 10,000,000 10,000,208
Bayerische Hypo-und
Vereinsbank AG
3/8/99 4.85 15,000,000 15,000,000
3/10/99 5.40 5,000,000 5,000,000
Credit Agricole Indosuez
4/30/99 5.87 5,000,000 4,999,528
Deutsche Bank AG
2/16/00 5.12 10,000,000 9,995,352
Landesbank Hessen-Thuringen
4/12/99 5.07 5,000,000 5,000,057
Lloyds Bank PLC
5/17/99 4.88 40,000,000 40,000,000
National Westminster Bank PLC
6/7/99 5.75 5,000,000 4,999,132
RaboBank Nederland Coop.
Central
6/4/99 5.75 10,000,000 9,998,255
9/2/99 5.00 5,000,000 5,000,000
Societe Generale, France
3/22/99 5.15 5,000,000 5,000,909
3/22/99 5.20 5,000,000 5,000,880
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT VALUE (NOTE 1)
PURCHASE
Swiss Bank Corp.
4/30/99 5.87% $ 5,000,000 $ 4,999,528
6/3/99 5.75 10,000,000 9,998,273
Toronto Dominion Bank
6/4/99 5.75 10,000,000 9,998,255
Westdeutsche Landesbank
Girozentrale
3/17/99 5.14 10,000,000 10,000,000
174,987,106
TOTAL CERTIFICATES OF DEPOSIT 250,985,521
COMMERCIAL PAPER - 51.0%
AVCO Financial Services, Inc.
3/15/99 5.15 9,000,000 8,982,220
Asset Securitization Coop.
Corp.
3/15/99 5.28 3,000,000 2,993,933
3/19/99 5.17 3,000,000 2,992,350
4/15/99 5.14 5,000,000 4,968,438
4/15/99 5.17 5,000,000 4,968,250
Associates Corp. of North
America
4/6/99 4.86 5,000,000 4,975,900
Associates First Capital Corp.
3/24/99 5.15 7,000,000 6,977,281
CIESCO L.P.
4/16/99 4.88 40,000,000 39,753,644
Centric Capital Corp.
3/22/99 4.89 5,000,000 4,985,796
5/14/99 4.90 5,000,000 4,950,153
Citibank Credit Card Master
Trust I (Dakota Certificate
Program)
5/13/99 4.89 25,000,000 24,755,146
5/14/99 4.90 5,000,000 4,950,256
Commonwealth Bank of Australia
3/4/99 4.86 10,000,000 9,995,975
8/10/99 4.92 4,000,000 3,913,600
8/16/99 4.95 5,000,000 4,887,300
Daimler-Chrysler North
America Corp.
4/20/99 5.14 8,260,000 8,202,065
4/26/99 5.07 5,000,000 4,961,267
5/20/99 4.91 12,000,000 11,870,667
5/26/99 4.90 14,000,000 13,838,129
Delaware Funding Corp.
3/9/99 5.21 30,396,000 30,361,213
3/16/99 4.91 2,325,000 2,320,253
Deutsche Bank Financial, Inc.
5/10/99 4.90 40,000,000 39,623,556
Dresdner US Finance, Inc.
3/10/99 5.16 5,000,000 4,993,625
Enterprise Funding Corp.
5/19/99 4.91 9,856,000 9,751,102
COMMERCIAL PAPER - CONTINUED
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT VALUE (NOTE 1)
PURCHASE
Falcon Asset Securitization
3/9/99 5.18% $ 25,355,000 $ 25,326,152
3/11/99 4.89 6,880,000 6,870,712
3/22/99 5.22 4,310,000 4,297,052
Ford Motor Credit Co.
3/5/99 5.18 30,000,000 29,982,967
4/29/99 4.87 10,000,000 9,921,333
General Electric Capital Corp.
7/26/99 4.93 30,000,000 29,409,550
General Motors Acceptance Corp.
5/19/99 4.90 5,000,000 4,946,894
Kitty Hawk Funding Corp.
3/12/99 4.88 1,399,000 1,396,927
4/15/99 4.90 25,000,000 24,848,125
Lehman Brothers Holdings, Inc.
3/9/99 5.15 3,000,000 2,996,587
3/17/99 5.16 3,000,000 2,993,173
MCI WorldCom, Inc.
3/26/99 5.54 2,000,000 1,992,431
3/30/99 5.02 3,000,000 2,987,917
5/5/99 5.02 2,000,000 1,982,125
National Australia Funding,
Inc.
3/10/99 5.41 10,000,000 9,986,825
Nationwide Building Society
5/11/99 4.91 41,500,000 41,103,041
New Center Asset Trust
3/8/99 5.17 5,000,000 4,995,042
4/22/99 4.87 25,000,000 24,826,125
Newport Funding Corp.
5/19/99 4.92 5,000,000 4,946,675
Nordbanken, North America, Inc.
3/1/99 5.26 5,000,000 5,000,000
3/10/99 5.15 2,000,000 1,997,460
Norddeutsche Landesbank
Girozentrale
8/5/99 4.91 10,000,000 9,791,103
Norfolk Southern Corp.
3/4/99 5.02 3,000,000 2,998,750
Preferred Receivables Funding
Corp.
3/3/99 5.21 5,000,000 4,998,569
3/5/99 5.23 6,800,000 6,796,094
3/16/99 4.91 5,000,000 4,989,854
4/15/99 4.86 1,670,000 1,659,959
Tyco International Group SA
3/25/99 5.04 5,000,000 4,983,333
UBS Finance (Delaware), Inc.
4/5/99 5.12 20,000,000 19,902,194
TOTAL COMMERCIAL PAPER 559,899,088
FEDERAL AGENCIES - 10.7%
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT VALUE (NOTE 1)
PURCHASE
FANNIE MAE - 3.2%
Discount Notes - 3.2%
5/13/99 4.81% $ 35,000,000 $ 34,662,527
FEDERAL HOME LOAN BANK - 4.3%
Discount Notes - 4.3%
5/12/99 4.81 48,000,000 47,543,998
FREDDIE MAC - 3.2%
Discount Notes - 3.2%
5/20/99 4.81 35,000,000 34,630,556
TOTAL FEDERAL AGENCIES 116,837,081
BANK NOTES - 7.3%
First Union National Bank of
North Carolina
3/1/99 4.99 (b) 10,000,000 10,000,000
3/1/99 5.50 15,000,000 15,000,000
NationsBank NA
3/17/99 5.30 10,000,000 10,000,000
4/13/99 5.05 20,000,000 20,000,000
9/8/99 5.01 25,000,000 25,000,000
TOTAL BANK NOTES 80,000,000
MASTER NOTES - 1.8%
Goldman Sachs Group L.P.
3/8/99 5.30 (b) 5,000,000 5,000,000
J.P. Morgan Securities, Inc.
3/5/99 4.91 (b) 15,000,000 15,000,000
TOTAL MASTER NOTES 20,000,000
MEDIUM-TERM NOTES - 5.0%
Bishops Gate Resources
Mortgage Trust
3/1/99 5.14 (b) 2,000,000 2,000,000
General Motors Acceptance Corp.
3/16/99 5.22 28,000,000 27,989,618
Goldman Sachs Group L.P.
4/7/99 5.26 (b)(c) 4,000,000 4,000,000
Merrill Lynch & Co., Inc.
3/4/99 5.21 (b) 5,000,000 4,999,745
Morgan Guaranty Trust Co., NY
3/29/99 4.89 (b) 10,000,000 9,997,208
Norwest Corp.
4/22/99 4.99 (b) 4,000,000 4,000,000
Premier Auto Trust
6/8/99 5.41 1,787,018 1,786,912
TOTAL MEDIUM-TERM NOTES 54,773,483
SHORT-TERM NOTES - 0.9%
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT VALUE (NOTE 1)
PURCHASE
Capital One Funding Corp.
(1998-B)
3/5/99 4.97% (b) $ 3,863,000 $ 3,863,000
SMM Trust (1998-I)
3/29/99 4.94 (a)(b) 2,000,000 2,000,000
Strategic Money Market Trust
(1998-B)
3/5/99 4.94 (a)(b) 4,000,000 4,000,000
TOTAL SHORT-TERM NOTES 9,863,000
</TABLE>
REPURCHASE AGREEMENTS - 0.4%
MATURITY AMOUNT
In a joint trading account $ 4,349,761 4,348,000
(U.S. Government
Obligations) dated 2/26/99
due 3/1/99 At 4.86%
TOTAL INVESTMENT IN $ 1,096,706,173
SECURITIES - 100%
Total Cost for Income Tax Purposes $ 1,096,706,173
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 $6,000,000 or 0.5% 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.
SECURITY ACQUISITION DATE COST
Goldman Sachs Group L.P. 12/7/98 $ 4,000,000
5.26%, 4/7/99
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 $4,000,000
and 0.4% of net assets.
MONEY MARKET PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 1,096,706,173
value (including repurchase
agreements of $4,348,000) -
See accompanying schedule
Receivable for fund shares 56,892,192
sold
Interest receivable 7,249,940
Prepaid expenses 46,521
TOTAL ASSETS 1,160,894,826
LIABILITIES
Payable to custodian bank $ 7,589
Payable for investments 9,997,500
purchased
Payable for fund shares 24,110,193
redeemed
Distributions payable 300,137
Accrued management fee 126,721
Other payables and accrued 179,124
expenses
TOTAL LIABILITIES 34,721,264
NET ASSETS $ 1,126,173,562
Net Assets consist of:
Paid in capital $ 1,126,173,562
NET ASSETS, for 1,126,106,672 $ 1,126,173,562
shares outstanding
NET ASSET VALUE, offering $1.00
price and redemption price
per share ($1,126,173,562
(divided by) 1,126,106,672
shares)
Maximum offering price per $1.03
share (100/97.00 of $1.00)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INTEREST INCOME $ 52,463,460
EXPENSES
Management fee $ 1,853,858
Transfer agent fees 2,010,926
Accounting fees and expenses 120,261
Non-interested trustees' 3,711
compensation
Custodian fees and expenses 19,989
Registration fees 599,928
Audit 35,570
Legal 5,015
Reports to shareholders 53,674
Miscellaneous 1,085
Total expenses before 4,704,017
reductions
Expense reductions (9,932) 4,694,085
NET INTEREST INCOME 47,769,375
NET REALIZED GAIN (LOSS) ON 54,995
INVESTMENTS
NET INCREASE IN NET ASSETS $ 47,824,370
RESULTING FROM OPERATIONS
OTHER INFORMATION Sales $ 1,708,692
charges paid to FDC
Sales charges - Retained by $ 1,671,903
FDC
Deferred sales charges $ 67,970
withheld by FDC
Expense reductions $ 4,200
Custodian credits
Transfer agent credits 5,732
$ 9,932
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net interest income $ 47,769,375 $ 41,842,077
Net realized gain (loss) 54,995 (6,232)
NET INCREASE (DECREASE) IN 47,824,370 41,835,845
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (47,769,375) (41,842,077)
from net interest income
Share transactions at net 6,779,151,867 7,445,369,611
asset value of $1.00 per
share Proceeds from sales of
shares
Reinvestment of 42,982,213 38,682,466
distributions from net
interest income
Cost of shares redeemed (6,280,934,055) (7,747,295,187)
NET INCREASE (DECREASE) IN 541,200,025 (263,243,110)
NET ASSETS AND SHARES
RESULTING FROM SHARE
TRANSACTIONS
TOTAL INCREASE (DECREASE) 541,255,020 (263,249,342)
IN NET ASSETS
NET ASSETS
Beginning of period 584,918,542 848,167,884
End of period $ 1,126,173,562 $ 584,918,542
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996C 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
period
Income from Investment .050 .051 .049 .054 .042
Operations Net interest
income
Less Distributions
From net interest income (.050) (.051) (.049) (.054) (.042)
Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
TOTAL RETURN A 5.08% 5.26% 5.02% 5.56% 4.28%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,126,174 $ 584,919 $ 848,168 $ 610,821 $ 573,144
(000 omitted)
Ratio of expenses to average .50% .56% .56% .59% .65%
net assets
Ratio of expenses to average .49% B .56% .56% .59% .65%
net assets after expense
reductions
Ratio of net interest income 5.03% 5.13% 4.92% 5.39% 4.19%
to average net assets
</TABLE>
A TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE.
B FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
C FOR THE YEAR ENDED FEBRUARY
29.
NOTES TO FINANCIAL STATEMENTS
For the period ended February 28, 1999
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. Purchase
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
and settlement date on purchases and sales of securities. The effects
of changes in foreign currency exchange rates on investments in
securities are included with the net realized and unrealized gain or
loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, each fund (except for
Medical Equipment and Systems Portfolio) is not subject to U.S.
federal income taxes to the extent that it distributes substantially
all of its taxable income for its fiscal year. 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.
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.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
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), market discount,
partnerships, non-taxable dividends, net operating losses, 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. 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.
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
4. FEES AND OTHER TRANSACTIONS WITH
AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
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 annual rate that ranged from .58% to .60% 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 annual rate of
.20% of the fund's average net assets. The income-based portion of
this fee was equal to $298,684 or an annual rate of .03% 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 funds' transfer, dividend disbursing and
shareholder servicing agent. FSC receives account fees and asset-based
fees that vary according to account size and type of account. FSC pays
for typesetting, printing and mailing of all shareholder reports,
except proxy statements.
ACCOUNTING AND SECURITY LENDING FEES. FSC maintains each fund's
accounting records and administers the security lending program. The
security lending fee is based on the number and duration of lending
transactions. The accounting fee is based on the level of average net
assets for the month plus out-of-pocket expenses.
MONEY MARKET INSURANCE. Pursuant to an Exemptive Order issued by the
SEC, the money market fund, along with other money market funds
advised by FMR or its affiliates, has entered into insurance
agreements with FIDFUNDS Mutual Limited (FIDFUNDS), an affiliated
mutual insurance company, effective January 1, 1999. FIDFUNDS provides
limited coverage for certain loss events including issuer default as
to payment of principal or interest and bankruptcy or insolvency of a
credit enhancement provider. The insurance does not cover losses
resulting from changes in interest rates, ratings downgrades or other
market conditions. The fund may be subject to a special assessment of
up to approximately 2.5 times the fund's annual gross premium if
covered losses exceed certain levels. During the period, the fund paid
premiums of $55,825 to FIDFUNDS which are being amortized over one
year.
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. SECURITY LENDING.
Certain 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. The market value of the loaned securities is determined at the
close of business of the fund and any additional required collateral
is delivered to the fund on the next business day. 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.
6. BANK BORROWINGS.
Each fund is permitted to have bank borrowings for temporary or
emergency purposes to fund shareholder redemptions. Each fund has
established borrowing arrangements with certain banks. The interest
rate on the borrowings is the bank's base rate, as revised from time
to time. Information regarding a fund's participation in the program
is included under the caption "Other Information" at the end of each
applicable fund's schedule of investments.
7. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse the funds' operating expenses
(excluding interest, taxes, brokerage commissions and extraordinary
expenses) above an annual rate of 2.50% of average
7. EXPENSE REDUCTIONS - CONTINUED
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 $55,648 for Cyclical Industries
Portfolio, and $45,350 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.
8. 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 38.7
Natural Resources 15.7
9. 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.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and the Shareholders of Fidelity Select Portfolios:
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
each of the forty funds constituting Fidelity Select Portfolios at
February 28, 1999, and the results of their operations, the changes in
their net assets and the financial highlights for the periods
indicated, in conformity with generally accepted accounting
principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the
responsibility of the Fidelity Select Portfolios' management; our
responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation
of securities at February 28, 1999 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion
expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 19, 1999
DISTRIBUTIONS
The Board of Trustees of Fidelity Select Portfolios voted to pay to
shareholders of record at the opening of business on record date, the
following distributions derived from capital gains realized from sales
of portfolio securities, and dividends derived from net investment
income for each of the following funds:
AMOUNTS PER SHARE
RECORD & CAPITAL
FUND EX-DATE PAY DATE DIVIDENDS GAINS
Air Transportation 4/1/99 4/5/99 $ - $ 0.62
Biotechnology 4/1/99 4/5/99 $ - $ 0.12
Brokerage and Investment Management 4/1/99 4/5/99 $ 0.05 $ 0.33
Business Services and Outsourcing 4/9/99 4/12/99 $ - $ 0.37
Computers 4/1/99 4/5/99 $ - $ 3.92
Construction and Housing 4/9/99 4/12/99 $ - $ 0.01
Consumer Industries 4/9/99 4/12/99 $ - $ 0.71
Defense and Aerospace 4/1/99 4/5/99 $ - $ 0.17
Developing Communications 4/9/99 4/12/99 $ - $ 1.14
Energy 4/1/99 4/5/99 $ 0.04 $ -
Environmental Services 4/9/99 4/12/99 $ - $ 0.01
Financial Services 4/1/99 4/5/99 $ 0.29 $ 1.48
Food and Agriculture 4/1/99 4/5/99 $ 0.06 $ 1.00
Health Care 4/1/99 4/5/99 $ 0.03 $ 2.61
Home Finance 4/9/99 4/12/99 $ 0.12 $ 0.36
Industrial Equipment 4/9/99 4/12/99 $ - $ 0.74
Insurance 4/9/99 4/12/99 $ - $ 3.65
Leisure 4/1/99 4/5/99 $ - $ 1.36
Medical Equipment and Systems 4/1/99 4/5/99 $ - $ 0.36
Multimedia 4/9/99 4/12/99 $ - $ 0.54
Natural Gas 4/9/99 4/12/99 $ 0.09 $ -
Regional Banks 4/9/99 4/12/99 $ 0.16 $ 2.09
Software and Computer Services 4/1/99 4/5/99 $ - $ 2.30
Technology 4/1/99 4/5/99 $ - $ 8.98
Telecommunications 4/1/99 4/5/99 $ - $ 1.38
Transportation 4/9/99 4/12/99 $ - $ 2.40
Utilities Growth 4/1/99 4/5/99 $ 0.12 $ 3.52
Each fund hereby designates 100% of the long-term capital gain
dividends distributed during the fiscal year as 20%-rate capital gain
dividends.
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
Matthew N. Karstetter, DEPUTY 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
Abigail P. Johnson
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
CUSTODIANS
Brown Brothers Harriman & Co.
Boston, MA
and
The Bank of New York
New York, NY
CORPORATE HEADQUARTERS
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
* INDEPENDENT TRUSTEES
FIDELITY SELECT PORTFOLIOS
CONSUMER SECTOR
Consumer Industries
Food and Agriculture
Leisure
Multimedia
Retailing
CYCLICALS SECTOR
Air Transportation
Automotive
Chemicals
Cyclical Industries
Construction and Housing
Defense and Aerospace
Environmental Services
Industrial Equipment
Industrial Materials
Paper and Forest Products
Transportation
FINANCIAL SERVICES SECTOR
Brokerage and Investment Management
Financial Services
Home Finance
Insurance
Regional Banks
HEALTH CARE SECTOR
Biotechnology
Health Care
Medical Delivery
Medical Equipment and Systems
NATURAL RESOURCES SECTOR
Energy
Energy Service
Gold
Natural Resources
Precious Metals and Minerals
TECHNOLOGY SECTOR
Business Services and Outsourcing
Computers
Developing Communications
Electronics
Software and Computer Services
Technology
UTILITIES SECTOR
Natural Gas
Telecommunications
Utilities Growth
Money Market
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0111
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
TouchTone Xpress (registered trademark)(automated graphic)
1-800-544-5555
(automated graphic) AUTOMATED LINE FOR QUICKEST SERVICE
(fidelity logo graphic)(registered trademark) BULK RATE
P.O. Box 193 U.S. Postage
Boston, MA 02101 PAID
(recycle logo) Printed on Recycled Paper
SEL-ANN0499 74113
1.701407.101
