FIDELITY(REGISTERED TRADEMARK)
SELECT
PORTFOLIOS(REGISTERED TRADEMARK)
AIR TRANSPORTATION
AUTOMOTIVE
BANKING (FORMERLY REGIONAL BANKS)
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
RETAILING
SOFTWARE AND COMPUTER SERVICES
TECHNOLOGY
TELECOMMUNICATIONS
TRANSPORTATION
UTILITIES GROWTH
SEMIANNUAL REPORT
AUGUST 31, 1999
(2_FIDELITY_LOGOS)(registered trademark)
CONTENTS
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PERFORMANCE OVERVIEW 4
FUND UPDATES*
CONSUMER SECTOR 6 CONSUMER INDUSTRIES
13 FOOD AND AGRICULTURE
19 LEISURE
25 MULTIMEDIA
31 RETAILING
CYCLICALS SECTOR 36 AIR TRANSPORTATION
41 AUTOMOTIVE
47 CHEMICALS
52 CONSTRUCTION AND HOUSING
58 CYCLICAL INDUSTRIES
64 DEFENSE AND AEROSPACE
69 ENVIRONMENTAL SERVICES
74 INDUSTRIAL EQUIPMENT
80 INDUSTRIAL MATERIALS
86 PAPER AND FOREST PRODUCTS
91 TRANSPORTATION
FINANCIAL SERVICES SECTOR 96 BANKING
101 BROKERAGE AND INVESTMENT MANAGEMENT
107 FINANCIAL SERVICES
113 HOME FINANCE
119 INSURANCE
HEALTH CARE SECTOR 124 BIOTECHNOLOGY
130 HEALTH CARE
136 MEDICAL DELIVERY
141 MEDICAL EQUIPMENT AND SYSTEMS
NATURAL RESOURCES SECTOR 146 ENERGY
152 ENERGY SERVICE
158 GOLD
164 NATURAL RESOURCES
170 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>
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TECHNOLOGY SECTOR 176 BUSINESS SERVICES AND OUTSOURCING
182 COMPUTERS
189 DEVELOPING COMMUNICATIONS
195 ELECTRONICS
201 SOFTWARE AND COMPUTER SERVICES
207 TECHNOLOGY
UTILITIES SECTOR 214 NATURAL GAS
220 TELECOMMUNICATIONS
226 UTILITIES GROWTH
231 MONEY MARKET
NOTES TO FINANCIAL STATEMENTS 238 FOOTNOTES TO THE FINANCIAL
STATEMENTS
</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:
A rotation from large-cap growth stocks to value and cyclical shares,
two interest-rate hikes by the Federal Reserve Board and a significant
rebound in oil prices were three of the stories dominating financial
headlines during the six-month period ending August 31, 1999. In that
time, the Standard & Poor's 500 Index (S&P 500 (registered trademark))
- - a large-capitalization index based on the performance of 500 widely
held stocks - returned 7.32%. Reflecting the capitalization shift, the
Russell 2000 - a popular measure of small-cap stocks - outperformed
the S&P 500, returning 9.91%. For the same period, the Dow Jones
Industrial Average - an index of 30 blue-chip stocks - increased
17.24%. Meanwhile, the NASDAQ Composite Index, which measures the
performance of over-the-counter - predominantly technology - stocks,
returned 19.91%.
Of the 39 Select equity portfolios, 22 topped the S&P 500's six-month
return, while 24 of the 39 beat their respective Goldman Sachs index -
a market proxy that measures the performance of companies within the
Select portfolios' sector concentrations. The best-performing Select
portfolio for the period was Energy Service, which gained 83.80%.
Environmental Services posted the lowest return, falling 10.97%. Also,
effective August 2, 1999, Select Regional Banks Portfolio changed its
name to Select Banking Portfolio.
At the period's outset in March, a handful of large-cap growth stocks
- - particularly in the technology sector - continued to set the pace
for bullish equity market performance. By the beginning of the second
quarter, however, market conditions began to change. The global
economy began to improve, due in large part to the willingness of
central banks worldwide to adopt generally easier monetary policies.
This environment proved favorable for small- and mid-cap value stocks
and the economically sensitive cyclical stocks. Their relatively low
valuations proved quite compelling compared to their expensive,
large-cap growth counterparts. Consequently, a sharp rotation into
value and cyclical names dominated the second quarter of 1999. At the
same time, the price of oil began to surge. With OPEC's production
cuts and growing global demand, the price of oil jumped from
approximately $11 per barrel at the beginning of the six-month period
to around $22 per barrel at the end of August.
Late in the second quarter, fears of an overheating domestic economy -
and thus, inflation - caused the Federal Reserve Board to switch from
a neutral bias to one favoring a hike in the federal funds target
rate. That inclination became reality on June 30, as the Fed announced
a 0.25 percentage point increase. The Board hiked rates again by the
same amount on August 24. Although it immediately switched to a
neutral bias following each increase, the majority of market watchers
anticipated another jump in key short-term interest rates later in
1999.
Turning to individual sector performance for the six-month period
ending August 31, 1999, the CONSUMER sector was hampered by inflation
fears and rising interest rates. Despite still robust consumer demand,
stocks in the Retailing fund were particularly hard-hit as investors
anticipated an economic slowdown. Strong picks in broadcasting stocks
helped the Multimedia and Leisure portfolios outpace their Goldman
Sachs index. Earnings shortfalls and an inability to increase prices
hurt companies held by Food and Agriculture. Inflation and
interest-rate fears caused Consumer Industries to stumble slightly.
The healthy returns of CYCLICAL stocks mirrored the growth of an
improving global economy. Eight of the 11 Select cyclical portfolios
beat their Goldman Sachs benchmark, led by Paper and Forest Products,
which surged due to increased global consumption. Transportation
doubled the benchmark's return on the strength of said stock picking.
Higher base metal prices spurred the strong returns of Industrial
Materials. Chemicals and Cyclical Industries did very well, primarily
due to improved Asian demand. Larger military budgets worldwide
benefited many stocks in Defense and Aerospace. The improved overseas
economy and higher commodity prices led to index-beating performance
by Industrial Equipment. The strong showing of regional airline stocks
propelled Air Transportation to a solid return. But rising auto loan
and lease rates subdued Automotive's return, while Construction and
Housing suffered from the effects of interest-rate jitters on the
housing market. Difficulty in assimilating acquisitions in the solid
waste industry caused companies held in Environmental Services to fare
the worst in the group.
Rising interest rates took their toll on the FINANCIAL SERVICES
sector, despite the generally sound fundamentals of the group. The
newly named Banking Portfolio and Home Finance suffered subpar
performance in light of the Fed's more hostile monetary policy.
However, thanks to strong stock selection, Insurance, Financial
Services, and Brokerage and Investment Management all beat their
Goldman Sachs benchmark.
The HEALTH CARE sector encountered a host of challenges during the
period. Reduced Medicare reimbursements plagued Medical Delivery.
Pharmaceuticals fell out of favor during the market's shift from
growth to value, causing Health Care's return to fall. Biotechnology,
however, enjoyed exceptional returns on the heels of biotech R&D
breakthroughs. Medical Equipment and Systems also beat its benchmark,
helped by its lack of pharmaceuticals exposure.
The period's big sector winner was NATURAL RESOURCES. OPEC production
limitations, rebounding oil prices and increased demand were the main
factors that drove the performance of Natural Resources, Energy and
Energy Service, each returning in excess of 50%. However, the low
prices of gold left Gold and Precious Metals and Minerals with only
marginally positive returns.
The TECHNOLOGY sector continued its run of exceptional performance. A
boon in the semiconductor industry helped Electronics and Technology
record impressive returns. The strong performance of Internet stocks
boosted Computers. Developing Communications and Software and Computer
Services both had double-digit returns, but underperformed the Goldman
Sachs benchmark given the index's greater exposure to semiconductor
stocks. Business Services and Outsourcing also did well, but its focus
on services companies precluded it from owning the hardware and
software stocks which helped fuel the Goldman Sachs benchmark.
Within the UTILITIES sector, robust demand for data and wireless
communications helped Telecommunications, while Utilities Growth was
helped by investments in independent power producers. Both
outperformed their Goldman Sachs benchmark. Natural Gas also
outperformed the index as both the price of and demand for the
commodity greatly increased during the period.
In the pages that follow, you'll find detailed summaries for each of
the Select portfolios. We hope that you find them informative and
useful for evaluating your investments. Thank you very much for your
continued interest in the Fidelity Select Portfolios.
Sincerely,
William R. Ebsworth
Group Leader, FMR Research
Select Group Leader
<TABLE>
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CUMULATIVE TOTAL RETURNS
FOR THE SIX MONTHS ENDED AUGUST 31, 1999
Energy Service Row: 1, Col: 1, Value: 83.8 83.80%
Energy Row: 2, Col: 1, Value: 54.54 54.54%
Natural Resources Row: 3, Col: 1, Value: 52.98 52.98%
Natural Gas Row: 4, Col: 1, Value: 49.45 49.45%
Electronics Row: 5, Col: 1, Value: 44.66 44.66%
Technology Row: 6, Col: 1, Value: 36.44 36.44%
Biotechnology Row: 7, Col: 1, Value: 32.19000000000001 32.19%
Computers Row: 8, Col: 1, Value: 30.14 30.14%
Paper & Forest Products Row: 9, Col: 1, Value: 24.23 24.23%
Developing Communications Row: 10, Col: 1, Value: 22.58 22.58%
Industrial Equipment Row: 11, Col: 1, Value: 17.75 17.75%
Chemicals Row: 12, Col: 1, Value: 17.07 17.07%
Transportation Row: 13, Col: 1, Value: 16.99 16.99%
Telecommunications Row: 14, Col: 1, Value: 16.42 16.42%
Air Transportation Row: 15, Col: 1, Value: 14.86 14.86%
Defense & Aerospace Row: 16, Col: 1, Value: 13.92 13.92%
Industrial Materials Row: 17, Col: 1, Value: 12.84 12.84%
Cyclical Industries Row: 18, Col: 1, Value: 12.47 12.47%
Utilities Growth Row: 19, Col: 1, Value: 11.67 11.67%
Software & Computer Services Row: 20, Col: 1, Value: 11.04 11.04%
Medical Equipment & Systems Row: 21, Col: 1, Value: 9.51 9.51%
Business Services & Outsourcing Row: 22, Col: 1, Value: 8.529999999999999 8.53%
S&P 500 Row: 23, Col: 2, Value: 7.319999999999999 7.32%
Multimedia Row: 24, Col: 1, Value: 5.67 5.67%
Automotive Row: 25, Col: 1, Value: 3.31 3.31%
Leisure Row: 26, Col: 1, Value: 3.14 3.14%
Brokerage & Investment Management Row: 27, Col: 1, Value: 2.36 2.36%
Precious Metals & Minerals Row: 28, Col: 1, Value: 1.09 1.09%
Gold Row: 29, Col: 1, Value: 0.78 0.78%
Insurance -1.49% Row: 30, Col: 1, Value: -1.49
Health Care -2.02% Row: 31, Col: 1, Value: -2.02
Consumer Industries -2.06% Row: 32, Col: 1, Value: -2.06
Financial Services -2.84% Row: 33, Col: 1, Value: -2.84
Home Finance -4.84% Row: 34, Col: 1, Value: -4.84
Banking -4.87% Row: 35, Col: 1, Value: -4.87
Construction & Housing -5.68% Row: 36, Col: 1, Value: -5.68
Food & Agriculture -6.53% Row: 37, Col: 1, Value: -6.53
Medical Delivery -9.96% Row: 38, Col: 1, Value: -9.960000000000001
Retailing -10.67% Row: 39, Col: 1, Value: -10.67
Environmental Services -10.97% Row: 40, Col: 1, Value: -10.97
</TABLE>
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, 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.
<TABLE>
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CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
SELECT CONSUMER INDUSTRIES -2.06% 26.36% 147.66% 335.22%
SELECT CONSUMER INDUSTRIES -5.07% 22.49% 140.16% 322.09%
(LOAD ADJ.)
S&P 500 7.32% 39.82% 206.52% 362.65%
GS Consumer Industries -2.00% 24.74% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or since the fund started on June 29, 1990. You can compare the
fund's returns to the performance of both the Standard & Poor's 500
Index - a 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 AUGUST 31, 1999 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
SELECT CONSUMER INDUSTRIES 26.36% 19.89% 17.40%
SELECT CONSUMER INDUSTRIES 22.49% 19.15% 17.01%
(LOAD ADJ.)
S&P 500 39.82% 25.11% 18.19%
GS Consumer Industries 24.74% 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 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
1999/02/28 43104.29 43108.71
1999/03/31 43781.82 44833.49
1999/04/30 44389.79 46569.89
1999/05/31 43600.58 45470.38
1999/06/30 45386.69 47993.98
1999/07/31 43946.72 46495.61
1999/08/31 42209.00 46265.46
IMATRL PRASUN SHR__CHT 19990831 19990915 140414 R00000000000113
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Select Consumer Industries Portfolio on June 29,
1990, when the fund started, and the current 3.00% sales charge was
paid. As the chart shows, by August 31, 1999, the value of the
investment would have grown to $42,209 - a 322.09% 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 $46,265
- - a 362.65% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Procter & Gamble Co. 7.2
Wal-Mart Stores, Inc. 5.7
Philip Morris Companies, Inc. 5.3
Home Depot, Inc. 3.0
Time Warner, Inc. 2.4
McDonald's Corp. 2.2
Gillette Co. 2.0
Disney (Walt) Co. 1.9
AT&T Corp. (Liberty Media 1.8
Group) Class A
Clorox Co. 1.5
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Household Products 14.6%
Broadcasting 12.0%
General Merchandise Stores 9.7%
Foods 7.5%
Retail & Wholesale,
Miscellaneous 6.0%
All Others 50.2%*
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
Row: 1, Col: 1, Value: 50.2
Row: 1, Col: 2, Value: 6.0
Row: 1, Col: 3, Value: 7.5
Row: 1, Col: 4, Value: 9.699999999999999
Row: 1, Col: 5, Value: 12.0
Row: 1, Col: 6, Value: 14.6
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
CONSUMER INDUSTRIES PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
(photograph of Doug Chase)
(photograph of John Porter)
NOTE TO SHAREHOLDERS: On September 1, 1999, after the period covered
by this report, John Porter (right) became Portfolio Manager of
Fidelity Select Consumer Industries Portfolio. The following is an
interview with Doug Chase, who managed the fund during the period
covered by this report, with comments from John Porter on his outlook.
Q. HOW DID THE FUND PERFORM, DOUG?
D.C. During the six- and 12-month periods that ended August 31, 1999,
the fund returned -2.06% and 26.36%, respectively. This performance
was in line with 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 -2.00% and 24.74%
over the same six- and 12-month periods, respectively. The Standard
and Poor's 500 Index produced returns of 7.32% and 39.82%,
respectively, during those same periods.
Q. WHAT FACTORS SHAPED THE FUND'S PERFORMANCE DURING THE PERIOD?
D.C. Our deep bench of research analysts did a good job of identifying
the winners and losers within the consumer industries over the past
six months. Together, we were generally successful in picking the
right companies and moving money between consumer industry sectors on
a timely basis. Having a healthy underweighting in Coca-Cola proved
especially beneficial, as the company suffered from poor earnings
growth and a massive recall in Europe. Still, many consumer stocks
traded down during the period despite strong company fundamentals and
above-average domestic consumer spending levels. Much of their falloff
can be attributed to an increasingly uncertain economic environment,
marked by concerns about inflation and rising interest rates. This
backdrop, together with the fund's underweighting in several strong
office and computer product retailing names, weighed heavily on
performance for much of the period. Conversely, the fund benefited
from strong stock picking in household products and broadcasting
stocks.
Q. WHICH STOCKS PERFORMED WELL FOR THE FUND?
D.C. Wal-Mart soared due to strong sales growth fueled by robust
consumer demand and superior inventory and pricing. The Limited, also
benefiting from the sharp rise in consumer confidence, rallied around
improving sales, which resulted from a rotation in its product line to
a younger target audience. As majority owner of Intimate Brands,
operator of Victoria's Secret and Bath & Body Works, this stock also
was rewarded for strong performance within these businesses. CBS was a
particularly good performer, enjoying healthy returns in both its
radio and television divisions.
Q. WHICH STOCKS DETRACTED FROM PERFORMANCE?
D.C. Disney suffered from a host of problems, including a loss of
creative talent, higher costs associated with making animated films
and increased competition from other studios. Weak company-store sales
and declining revenues from home-video releases also pressured its
stock. The market continued to punish shares of Philip Morris for its
litigation troubles. Saks' earnings suffered after its buyout by
national retailer Proffitt's last September, as the joint concern
faced the challenges associated with combining the two operations.
Q. TURNING TO YOU, JOHN, WHAT'S YOUR OUTLOOK?
J.P. Facing the prospect of rising interest rates, the market is
saying that it thinks the U.S. economy is going to slow, which could
change consumer expenditure patterns dramatically. I'm comfortable
with the fund's current defensive positioning - underweighting the
more economically sensitive retailing stocks and overweighting
supermarkets and drug chains, which tend to be defensive. It's
important to keep in mind that if consumer spending continues to be
driven primarily by market gains, investors could be in for a bumpy
ride. The situation last fall proved how fast consumers could flee a
falling market. I'm not looking to change the fund's defensive
positioning until we see some semblance of order in the marketplace.
Until then, I will keep a close eye on relative valuations and rely on
Fidelity's research strength in picking the right stocks.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGERS ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE 3.
(checkmark)FUND FACTS
START DATE: June 29, 1990
FUND NUMBER: 517
TRADING SYMBOL: FSCPX
SIZE: as of August 31, 1999, more than $68
million
MANAGER: John Porter, since September 1999;
manager, Fidelity Advisor Consumer Industries
Fund, since September 1999; Fidelity Select
Software and Computer Services Portfolio,
1997-1999; Fidelity Select Medical Delivery
Portfolio, 1998-1999; Fidelity Select
Multimedia Portfolio, 1996-1997; joined
Fidelity in 1995
CONSUMER INDUSTRIES PORTFOLIO
INVESTMENTS AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 93.5%
SHARES VALUE (NOTE 1)
ADVERTISING - 1.3%
Interpublic Group of 7,600 $ 301,150
Companies, Inc.
Omnicom Group, Inc. 7,400 557,775
858,925
APPAREL STORES - 3.0%
Abercrombie & Fitch Co. Class 5,900 205,763
A (a)
American Eagle Outfitters, 2,500 98,125
Inc. (a)
AnnTaylor Stores Corp. (a) 4,700 155,688
Claire's Stores, Inc. 5,200 97,825
Gap, Inc. 13,337 521,810
Limited, Inc. (The) 10,501 397,725
Payless ShoeSource, Inc. (a) 2,700 134,663
TJX Companies, Inc. 11,100 320,513
Too, Inc. (a) 1,285 22,568
Venator Group, Inc. (a) 16,000 114,000
2,068,680
AUTOS, TIRES, & ACCESSORIES -
0.4%
AutoNation, Inc. (a) 23,300 301,444
BEVERAGES - 4.9%
Anheuser-Busch Companies, 7,200 554,400
Inc.
Canandaigua Wine, Inc. Class 5,300 306,738
A (a)
Celestial Seasonings, Inc. (a) 18,800 373,650
Coca-Cola Co. (The) 1,100 65,794
Coors (Adolph) Co. Class B 7,800 445,088
Golden State Vinters, Inc. 26,700 160,200
Class B (a)
PepsiCo, Inc. 19,000 648,375
Seagram Co. Ltd. 11,100 589,397
Whitman Corp. 11,100 185,231
3,328,873
BROADCASTING - 12.0%
AMFM, Inc. (a) 3,600 177,300
AT&T Corp. (Liberty Media 39,500 1,264,000
Group) Class A (a)
Cablevision Systems Corp. 3,500 245,000
Class A (a)
CBS Corp. (a) 21,500 1,010,500
Clear Channel Communications, 6,038 423,037
Inc. (a)
Comcast Corp.:
Class A 3,500 103,031
Class A (special) 15,900 518,738
Cox Communications, Inc. 16,400 609,875
Class A (a)
E.W. Scripps Co. Class A 2,100 100,800
EchoStar Communications Corp. 1,300 108,713
Class A (a)
Infinity Broadcasting Corp. 4,300 116,369
Class A
MediaOne Group, Inc. 14,800 973,100
Nielsen Media Research, Inc. 4,100 150,419
(a)
SHARES VALUE (NOTE 1)
Sinclair Broadcast Group, 7,800 $ 126,750
Inc. Class A (a)
Time Warner, Inc. 27,745 1,645,625
UnitedGlobalCom, Inc. (a) 2,200 161,150
USA Networks, Inc. (a) 10,900 489,138
8,223,545
BUILDING MATERIALS - 0.4%
Fortune Brands, Inc. 8,200 307,500
CELLULAR - 0.2%
Rogers Communications, Inc. 6,600 116,080
Class B (non-vtg.) (a)
COMPUTER SERVICES & SOFTWARE
- - 0.6%
At Home Corp. Series A (a) 4,800 192,600
Galileo International, Inc. 2,700 130,950
Sykes Enterprises, Inc. (a) 3,500 84,000
407,550
CONSUMER ELECTRONICS - 0.4%
Gemstar International Group 3,700 255,300
Ltd. (a)
DRUG STORES - 2.0%
CVS Corp. 19,054 794,314
Walgreen Co. 24,300 563,456
1,357,770
ENTERTAINMENT - 5.6%
Carnival Corp. 14,300 639,031
Disney (Walt) Co. 46,300 1,284,825
King World Productions, Inc. 8,200 312,625
(a)
Royal Carribean Cruises Ltd. 6,900 323,006
SFX Entertainment, Inc. Class 4,650 191,522
A (a)
Viacom, Inc.:
Class A (a) 2,800 118,475
Class B (non-vtg.) (a) 22,200 933,788
3,803,272
FOODS - 7.5%
American Italian Pasta Co. 11,700 327,600
Class A (a)
Archer-Daniels-Midland Co. 3,538 45,994
Aurora Foods, Inc. (a) 5,900 99,563
Bestfoods 7,000 343,875
Corn Products International, 14,550 473,784
Inc.
Dean Foods Co. 5,700 229,425
Earthgrains Co. 7,800 188,175
Flowers Industries, Inc. 10,700 169,194
General Mills, Inc. 3,900 326,625
Groupe Danone 700 173,375
Hormel Foods Corp. 3,500 140,875
IBP, Inc. 7,400 169,738
Interstate Bakeries Corp. 4,000 95,750
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FOODS - CONTINUED
Keebler Foods Co. (a) 25,100 $ 748,294
Kellogg Co. 6,600 234,713
Nabisco Holdings Corp. Class A 10,500 412,781
Quaker Oats Co. 6,400 427,600
Sara Lee Corp. 21,700 481,469
5,088,830
GENERAL MERCHANDISE STORES -
9.7%
Ames Department Stores, Inc. 3,800 111,625
(a)
Consolidated Stores Corp. (a) 10,728 172,989
Dayton Hudson Corp. 16,900 980,200
Dollar General Corp. 6,075 157,950
Dollar Tree Stores, Inc. (a) 1,500 49,500
Federated Department Stores, 10,700 492,200
Inc. (a)
Nordstrom, Inc. 5,500 155,719
Saks, Inc. (a) 28,543 479,879
Stein Mart, Inc. (a) 12,700 88,106
Wal-Mart Stores, Inc. 88,300 3,912,794
6,600,962
GROCERY STORES - 4.5%
Albertson's, Inc. 14,323 686,609
Fleming Companies, Inc. 15,800 190,588
Kroger Co. (a) 38,900 899,563
Safeway, Inc. (a) 20,500 954,531
U.S. Foodservice (a) 18,000 374,625
3,105,916
HOUSEHOLD PRODUCTS - 14.6%
Alberto-Culver Co. Class A 5,100 109,969
Avon Products, Inc. 18,900 829,238
Clorox Co. 23,156 1,047,809
Colgate-Palmolive Co. 14,800 791,800
Gillette Co. 29,400 1,370,775
Procter & Gamble Co. 49,500 4,912,862
Unilever NV 3,100 16,785
Unilever NV NY Shares 12,196 840,000
Yankee Candle Co., Inc. (a) 3,200 57,000
9,976,238
LEISURE DURABLES & TOYS - 0.8%
Harley-Davidson, Inc. 3,800 207,100
Hasbro, Inc. 11,050 270,034
Mattel, Inc. 3,300 70,331
547,465
LODGING & GAMING - 1.5%
Gtech Holdings Corp. (a) 6,800 171,700
Marriott International, Inc. 5,100 174,675
Class A
SHARES VALUE (NOTE 1)
Prime Hospitality Corp. (a) 16,300 $ 151,794
Promus Hotel Corp. (a) 8,200 238,313
Starwood Hotels & Resorts 5,200 123,825
Worldwide, Inc.
Sun International Hotels Ltd. 2,100 61,163
(a)
WMS Industries, Inc. (a) 11,200 121,800
1,043,270
PACKAGING & CONTAINERS - 1.3%
Corning, Inc. 6,300 418,950
Tupperware Corp. 19,800 446,738
865,688
PAPER & FOREST PRODUCTS - 0.6%
Kimberly-Clark Corp. 7,100 404,256
PRINTING - 0.2%
Donnelley (R.R.) & Sons Co. 4,000 125,500
PUBLISHING - 3.6%
Gannet, Inc. 7,500 509,531
Harcourt General, Inc. 1,900 83,244
Harte Hanks Communications, 3,300 74,044
Inc.
Knight-Ridder, Inc. 2,100 113,269
McGraw-Hill Companies, Inc. 7,700 397,994
Meredith Corp. 6,900 239,344
New York Times Co. (The) 5,400 210,938
Class A
Playboy Enterprises, Inc. 4,400 92,675
Class B (a)
Reader's Digest Association, 11,900 371,875
Inc. Class A (non-vtg.)
Tribune Co. 4,000 373,250
2,466,164
RESTAURANTS - 3.5%
CEC Entertainment, Inc. (a) 5,100 142,163
Foodmaker, Inc. (a) 4,300 99,169
McDonald's Corp. 35,900 1,485,363
Outback Steakhouse, Inc. (a) 8,400 248,850
Papa John's International, 2,000 79,500
Inc. (a)
Sizzler International, Inc. 20,700 51,750
(a)
Tricon Global Restaurants, 7,400 300,625
Inc. (a)
2,407,420
RETAIL & WHOLESALE,
MISCELLANEOUS - 6.0%
Action Performance Companies, 4,000 98,750
Inc. (a)
Bed Bath & Beyond, Inc. (a) 3,800 104,500
Circuit City Stores, Inc. - 15,600 670,800
Circuit City Group
Home Depot, Inc. 33,600 2,053,800
Lowe's Companies, Inc. 12,700 574,675
Office Depot, Inc. (a) 9,750 101,766
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
RETAIL & WHOLESALE,
MISCELLANEOUS - CONTINUED
PETsMART, Inc. (a) 34,600 $ 166,513
Staples, Inc. (a) 15,775 343,106
4,113,910
SERVICES - 2.9%
ACNielsen Corp. (a) 9,600 240,000
Block (H&R), Inc. 2,800 155,750
Cendant Corp. (a) 20,900 374,894
Modis Professional Services, 4,800 75,900
Inc. (a)
NCO Group, Inc. (a) 5,400 245,700
Profit Recovery Group 3,000 114,188
International, Inc. (a)
ServiceMaster Co. 6,350 104,775
Snyder Communications, Inc. 4,000 81,500
(a)
True North Communications 5,800 191,038
Viad Corp. 12,400 371,225
1,954,970
TEXTILES & APPAREL - 0.7%
Jones Apparel Group, Inc. (a) 5,100 132,281
Liz Claiborne, Inc. 3,600 132,300
NIKE, Inc. Class B 4,300 198,875
463,456
TOBACCO - 5.3%
Philip Morris Companies, Inc. 97,600 3,653,900
TOTAL COMMON STOCKS 63,846,884
(Cost $53,406,084)
CASH EQUIVALENTS - 7.6%
Central Cash Collateral Fund, 924,600 924,600
5.26% (b)
Taxable Central Cash Fund, 4,254,722 4,254,722
5.20% (b)
TOTAL CASH EQUIVALENTS 5,179,322
(Cost $5,179,322)
TOTAL INVESTMENT PORTFOLIO - 69,026,206
101.1% (Cost $58,585,406)
NET OTHER ASSETS - (1.1%) (723,253)
NET ASSETS - 100% $ 68,302,953
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $37,979,816 and $48,384,596, 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 $7,924 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $882,731. The fund received
cash collateral of $924,600 which was invested in the Central Cash
Collateral Fund.
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $59,147,036. Net unrealized appreciation
aggregated $9,879,170, of which $12,948,063 related to appreciated
investment securities and $3,068,893 related to depreciated investment
securities.
CONSUMER INDUSTRIES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 69,026,206
value (cost $58,585,406) -
See accompanying schedule
Receivable for fund shares 601,646
sold
Dividends receivable 40,023
Interest receivable 19,477
Redemption fees receivable 263
Other receivables 30,665
TOTAL ASSETS 69,718,280
LIABILITIES
Payable for investments $ 44,384
purchased
Payable for fund shares 366,453
redeemed
Accrued management fee 33,471
Other payables and accrued 46,419
expenses
Collateral on securities 924,600
loaned, at value
TOTAL LIABILITIES 1,415,327
NET ASSETS $ 68,302,953
Net Assets consist of:
Paid in capital $ 53,436,960
Undistributed net investment 40,813
income
Accumulated undistributed net 4,384,384
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 10,440,796
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 2,240,302 $ 68,302,953
shares outstanding
NET ASSET VALUE and $30.49
redemption price per share
($68,302,953 (divided by)
2,240,302 shares)
Maximum offering price per $31.43
share (100/97.00 of $30.49)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 319,095
Dividends
Special dividend from 91,055
Unilever NV NY Shares
Interest 123,254
Security lending 7,201
TOTAL INCOME 540,605
EXPENSES
Management fee $ 231,071
Transfer agent fees 209,684
Accounting and security 31,058
lending fees
Non-interested trustees' 117
compensation
Custodian fees and expenses 11,752
Registration fees 20,711
Audit 4,398
Legal 181
Total expenses before 508,972
reductions
Expense reductions (9,180) 499,792
NET INVESTMENT INCOME 40,813
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 5,102,337
Foreign currency transactions 755 5,103,092
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (6,214,512)
Assets and liabilities in (6) (6,214,518)
foreign currencies
NET GAIN (LOSS) (1,111,426)
NET INCREASE (DECREASE) IN $ (1,070,613)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 138,746
charges paid to FDC
Sales charges - Retained by $ 135,347
FDC
Deferred sales charges $ 109
withheld by FDC
Exchange fees withheld by FSC $ 1,988
Expense reductions Directed $ 9,135
brokerage arrangements
Custodian credits 45
$ 9,180
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ 40,813 $ (117,811)
income (loss)
Net realized gain (loss) 5,103,092 2,849,083
Change in net unrealized (6,214,518) 10,439,435
appreciation (depreciation)
NET INCREASE (DECREASE) IN (1,070,613) 13,170,707
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (1,807,115) (2,388,067)
from net realized gains
Share transactions Net 15,739,418 69,216,485
proceeds from sales of shares
Reinvestment of distributions 1,752,932 2,350,548
Cost of shares redeemed (28,583,044) (72,339,516)
NET INCREASE (DECREASE) IN (11,090,694) (772,483)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 27,275 81,867
TOTAL INCREASE (DECREASE) (13,941,147) 10,092,024
IN NET ASSETS
NET ASSETS
Beginning of period 82,244,100 72,152,076
End of period (including $ 68,302,953 $ 82,244,100
undistributed net investment
income of $40,813 and $0,
respectively)
OTHER INFORMATION
Shares
Sold 490,423 2,390,153
Issued in reinvestment of 53,804 82,715
distributions
Redeemed (889,410) (2,529,261)
Net increase (decrease) (345,183) (56,393)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 1997 1996 G 1995
Net asset value, beginning of $ 31.81 $ 27.31 $ 20.66 $ 17.84 $ 13.91 $ 15.24
period
Income from Investment
Operations
Net investment income (loss) D .02 H (.04) (.22) (.22) .08 (.15)
Net realized and unrealized (.64) 5.41 8.34 2.93 3.97 (.60)
gain (loss)
Total from investment (.62) 5.37 8.12 2.71 4.05 (.75)
operations
Less Distributions
From net investment income - - - - (.02) -
From net realized gain (.71) (.90) (1.52) - (.01) (.60)
In excess of net realized gain - - - - (.20) -
Total distributions (.71) (.90) (1.52) - (.23) (.60)
Redemption fees added to paid .01 .03 .05 .11 .11 .02
in capital
Net asset value, end of period $ 30.49 $ 31.81 $ 27.31 $ 20.66 $ 17.84 $ 13.91
TOTAL RETURN B, C (2.06)% 20.18% 40.36% 15.81% 30.01% (4.59)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 68,303 $ 82,244 $ 72,152 $ 18,392 $ 22,362 $ 20,501
(000 omitted)
Ratio of expenses to average 1.26% A 1.34% 2.01% 2.49% 1.53% E 2.49% E
net assets
Ratio of expenses to average 1.24% A, F 1.32% F 1.97% F 2.44% F 1.48% F 2.49%
net assets after expense
reductions
Ratio of net investment .10% A (.15)% (.90)% (1.13)% .46% (1.08)%
income (loss) to average net
assets
Portfolio turnover rate 102% A 150% 199% 340% 601% 190%
<?TABLE>
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 DURING THE PERIOD, FMR AGREED TO REIMBURSE A PORTION OF THE
FUND'S EXPENSES OR EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE BEEN HIGHER.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID
OR REDUCED A PORTION OF THE FUND'S EXPENSES.
G FOR THE YEAR ENDED FEBRUARY 29
H NET INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND FROM
UNILEVER NV NY SHARES WHICH AMOUNTED TO $.04 PER SHARE.
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.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT FOOD AND AGRICULTURE -6.53% 9.58% 107.33% 292.86%
SELECT FOOD AND AGRICULTURE -9.41% 6.22% 101.03% 281.00%
(LOAD ADJ.)
S&P 500 7.32% 39.82% 206.52% 384.79%
GS Consumer Industries -2.00% 24.74% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a 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 AUGUST 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT FOOD AND AGRICULTURE 9.58% 15.70% 14.66%
SELECT FOOD AND AGRICULTURE 6.22% 14.99% 14.31%
(LOAD ADJ.)
S&P 500 39.82% 25.11% 17.10%
GS Consumer Industries 24.74% 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
Food & Agriculture S&P 500
00009 SP001
1989/08/31 9700.00 10000.00
1989/09/30 9741.05 9959.00
1989/10/31 9642.53 9727.95
1989/11/30 10007.87 9926.40
1989/12/31 10237.13 10164.64
1990/01/31 9525.06 9482.59
1990/02/28 9661.32 9604.91
1990/03/31 10078.89 9859.44
1990/04/30 10039.33 9612.96
1990/05/31 10914.04 10550.22
1990/06/30 11268.07 10478.48
1990/07/31 11263.63 10444.95
1990/08/31 10441.95 9500.72
1990/09/30 10108.84 9038.04
1990/10/31 10348.68 8999.18
1990/11/30 10775.06 9580.52
1990/12/31 11191.95 9847.82
1991/01/31 11513.16 10277.18
1991/02/28 12380.44 11012.00
1991/03/31 12986.15 11278.49
1991/04/30 12788.84 11305.56
1991/05/31 13256.89 11793.96
1991/06/30 12710.69 11253.80
1991/07/31 13242.64 11778.23
1991/08/31 13769.92 12057.37
1991/09/30 13527.27 11856.01
1991/10/31 13531.94 12014.88
1991/11/30 13438.62 11530.68
1991/12/31 15007.25 12849.79
1992/01/31 14783.55 12610.79
1992/02/29 14700.88 12774.73
1992/03/31 14375.06 12525.62
1992/04/30 14209.72 12893.87
1992/05/31 14336.16 12957.05
1992/06/30 14179.41 12763.99
1992/07/31 14727.09 13286.04
1992/08/31 14661.77 13013.68
1992/09/30 14907.98 13167.24
1992/10/31 15068.76 13213.32
1992/11/30 15646.59 13663.90
1992/12/31 15911.58 13831.96
1993/01/31 15916.73 13948.15
1993/02/28 15875.57 14137.85
1993/03/31 16307.70 14436.15
1993/04/30 15674.50 14086.80
1993/05/31 16168.02 14464.33
1993/06/30 16007.09 14506.27
1993/07/31 15808.61 14448.25
1993/08/31 16564.98 14995.84
1993/09/30 16511.33 14880.37
1993/10/31 17133.59 15188.39
1993/11/30 16935.11 15044.10
1993/12/31 17314.58 15226.14
1994/01/31 17838.24 15743.82
1994/02/28 17731.25 15317.17
1994/03/31 16903.53 14649.34
1994/04/30 16714.66 14836.85
1994/05/31 16593.20 15080.17
1994/06/30 16720.44 14710.71
1994/07/31 17281.45 15193.22
1994/08/31 18380.34 15816.14
1994/09/30 18415.04 15428.65
1994/10/31 18762.06 15775.79
1994/11/30 18305.15 15201.24
1994/12/31 18369.72 15426.67
1995/01/31 19144.13 15826.69
1995/02/28 19528.33 16443.45
1995/03/31 19972.57 16928.70
1995/04/30 20409.10 17427.25
1995/05/31 21141.48 18123.82
1995/06/30 21641.95 18544.83
1995/07/31 21879.97 19159.78
1995/08/31 21843.35 19207.87
1995/09/30 23558.35 20018.44
1995/10/31 23594.97 19946.98
1995/11/30 24522.66 20822.65
1995/12/31 25100.17 21223.69
1996/01/31 26135.36 21946.15
1996/02/29 26934.11 22149.59
1996/03/31 26480.42 22362.89
1996/04/30 25997.72 22692.52
1996/05/31 26956.70 23277.76
1996/06/30 26982.98 23366.44
1996/07/31 26615.15 22334.12
1996/08/31 25767.82 22805.14
1996/09/30 26641.42 24088.62
1996/10/31 27134.05 24752.98
1996/11/30 28500.28 26624.06
1996/12/31 28450.91 26096.63
1997/01/31 29680.73 27727.15
1997/02/28 30594.52 27944.53
1997/03/31 29797.53 26796.29
1997/04/30 30979.73 28396.03
1997/05/31 31891.98 30124.78
1997/06/30 32951.37 31474.37
1997/07/31 34135.82 33978.79
1997/08/31 32561.46 32075.30
1997/09/30 34518.38 33832.06
1997/10/31 33900.40 32702.07
1997/11/30 36217.81 34215.85
1997/12/31 37081.81 34803.33
1998/01/31 35834.65 35188.26
1998/02/28 37809.97 37726.04
1998/03/31 39258.54 39657.99
1998/04/30 38264.55 40056.94
1998/05/31 39134.76 39368.37
1998/06/30 39955.71 40967.51
1998/07/31 38519.05 40531.21
1998/08/31 34775.51 34671.20
1998/09/30 36704.74 36892.24
1998/10/31 39972.13 39893.06
1998/11/30 41589.41 42310.97
1998/12/31 42899.15 44748.93
1999/01/31 41161.29 46620.33
1999/02/28 40770.27 45171.37
1999/03/31 39414.73 46978.68
1999/04/30 38908.00 48798.16
1999/05/31 38952.49 47646.04
1999/06/30 39424.05 50290.39
1999/07/31 39237.20 48720.33
1999/08/31 38100.00 48479.16
IMATRL PRASUN SHR__CHT 19990831 19990914 140555 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Food and Agriculture Portfolio on August
31, 1989, and the current 3.00% sales charge was paid. As the chart
shows, by August 31, 1999, the value of the investment would have
grown to $38,100 - a 281.00% increase on the initial investment - and
includes the effect of a $7.50 trading fee. For comparison - look at
how the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $48,479 - a 384.79% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
McDonald's Corp. 8.0
Anheuser-Busch Companies, Inc. 6.6
Safeway, Inc. 5.5
Unilever NV NY Shares 5.3
Philip Morris Companies, Inc. 5.1
Kroger Co. 4.4
PepsiCo, Inc. 4.3
Albertson's, Inc. 3.8
Keebler Foods Co. 3.5
Corn Products International, 3.3
Inc.
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Foods 40.0%
Beverages 17.7%
Grocery Stores 14.5%
Restaurants 10.0%
Tobacco 5.5%
All Others 12.3%*
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
Row: 1, Col: 1, Value: 12.3
Row: 1, Col: 2, Value: 5.5
Row: 1, Col: 3, Value: 10.0
Row: 1, Col: 4, Value: 14.5
Row: 1, Col: 5, Value: 17.7
Row: 1, Col: 6, Value: 40.0
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
FOOD AND AGRICULTURE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Scott Offen)
Scott Offen,
Portfolio Manager of
Fidelity Select Food
and Agriculture Portfolio
Q. HOW DID THE FUND PERFORM, SCOTT?
A. It was a difficult period for the fund. For the six and 12 months
ending August 31, 1999, the fund returned -6.53% and 9.58%,
respectively. During that same time, the Goldman Sachs Consumer
Industries Index - an index of 300 stocks designed to measure the
performance of companies in the consumer industries sector - returned
- -2.00% and 24.74%, respectively. The Standard & Poor's 500 Index
returned 7.32% and 39.82% during the same six- and 12-month periods.
Q. WHAT MARKET FACTORS DROVE THE WEAK PERFORMANCE OF THE FOOD AND
AGRICULTURE SECTOR?
A. The primary factors were slow or negative unit sales growth, little
or no pricing power - meaning the inability to sustain or raise prices
without sacrificing sales or market share - and widespread earnings
shortfalls, which resulted in generally pessimistic investor sentiment
across the sector. Adding to the negative environment, strength in
other sectors of the market resulted in further outflows of dollars
from the underperforming food and agriculture stocks.
Q. FOOD, BEVERAGE AND GROCERY STORE HOLDINGS REPRESENTED APPROXIMATELY
72% OF THE FUND'S NET ASSETS. CAN YOU TELL US HOW THESE INDUSTRIES
FARED?
A. Food companies had a difficult time because they had little to no
pricing power, which was especially damaging in this slow-growth
industry. Any price increases that companies did institute were
usually rolled-back into marketing initiatives to stimulate consumer
demand. Unit sales growth was also very low for companies in the food
sector, which resulted in lower earnings. In the beverage category,
this situation was clearly evident as the deflationary price
environment hurt sales results at Coca-Cola and PepsiCo. Despite
favorable business fundamentals in the grocery store chains, these
stocks also declined as consolidation in this sector was a
double-edged sword. Supermarket consolidation increased the chains'
leverage with packaged-food companies, forcing them to sell their
products to supermarkets at lower prices. On the other hand, though,
the pressure to lower prices created a deflationary environment, which
hurt earnings at many packaged-food companies. In turn, this trend
hurt stock prices for the entire food and agriculture sector.
Q. YOU MADE SOME CHANGES TO THE FUND'S TOP-10 HOLDINGS AND REDUCED THE
FUND'S HOLDINGS IN GROCERY STORES. WHAT WAS YOUR RATIONALE FOR THESE
CHANGES?
A. As certain grocery store and food stocks sold off quickly, it
presented some value opportunities for the fund. While I reduced the
fund's total exposure to supermarket chains, I increased the fund's
holdings in certain grocers, namely Kroger and Albertson's, and food
stocks, such as Keebler and Quaker Oats, because I believed they had
positive long-term growth prospects. Unfortunately, there weren't many
places to protect the fund from downside risk, as the majority of
stocks in the food and agriculture sector declined, including Kroger,
Albertson's and Safeway.
Q. WHICH STOCKS HELPED THE FUND'S RETURN?
A. I increased the fund's holdings in Corn Products International
during the period, which helped performance. This company refines corn
for a variety of food and industrial uses, including the production of
high-fructose corn syrup. As the price of corn declined during the
period, its stock price rallied as overhead costs decreased and
profits grew. Another top contributor to fund performance was Quaker
Oats. Sales in its hot cereal and sports drink franchises, which
include Gatorade, continued to produce strong results.
Q. WHAT'S YOUR OUTLOOK?
A. Consolidation in the grocery store sector has put pressure on the
packaged-foods industry to consolidate. Unfortunately, food companies
have not taken the logical steps to consolidate and cut costs out of
their businesses. While this scenario has been frustrating and it is
difficult to ascertain whether this trend will change, there are
top-quality companies in this industry that are at historically low
values. If the industry begins to take the necessary steps to cut
costs and increase its return on assets, we could start to see some
improvement in stock 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 3.
(checkmark)FUND FACTS
START DATE: July 29, 1985
FUND NUMBER: 009
TRADING SYMBOL: FDFAX
SIZE: as of August 31, 1999, more than
$154 million
MANAGER: Scott Offen, since 1996; manager,
several Fidelity Select Portfolios, 1988-1996;
joined Fidelity in 1985
FOOD AND AGRICULTURE PORTFOLIO
INVESTMENTS AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 93.5%
SHARES VALUE (NOTE 1)
BEVERAGES - 17.7%
Anheuser-Busch Companies, 132,800 $ 10,225,600
Inc.
Brown-Forman Corp. Class B 6,800 399,500
Canandaigua Wine, Inc. Class 8,200 474,575
A (a)
Celestial Seasonings, Inc. (a) 18,600 369,675
Coca-Cola Bottling Co. 19,100 1,100,638
Consolidated
Coca-Cola Co. (The) 75,700 4,527,806
Coca-Cola Enterprises, Inc. 29,800 847,438
Coors (Adolph) Co. Class B 37,100 2,117,019
PepsiCo, Inc. 193,200 6,592,950
Whitman Corp. 38,000 634,125
27,289,326
CHEMICALS & PLASTICS - 0.5%
IMC Global, Inc. 46,700 744,281
FOODS - 40.0%
American Italian Pasta Co. 65,100 1,822,800
Class A (a)
Archer-Daniels-Midland Co. 84,755 1,101,815
Aurora Foods, Inc. (a) 41,000 691,875
Bestfoods 78,200 3,841,575
ConAgra, Inc. 116,700 2,859,150
Corn Products International, 157,775 5,137,548
Inc.
Dean Foods Co. 39,300 1,581,825
Earthgrains Co. 48,800 1,177,300
Flowers Industries, Inc. 66,900 1,057,856
General Mills, Inc. 41,700 3,492,375
Groupe Danone 5,200 1,287,927
Heinz (H.J.) Co. 94,400 4,407,300
Hershey Foods Corp. 9,400 503,488
Hormel Foods Corp. 25,200 1,014,300
IBP, Inc. 35,300 809,694
International Home Foods, 26,600 532,000
Inc. (a)
Interstate Bakeries Corp. 35,900 859,356
Keebler Foods Co. (a) 179,100 5,339,419
Kellogg Co. 51,500 1,831,469
McCormick & Co., Inc. 22,100 707,200
(non-vtg.)
Nabisco Group Holdings Corp. 80,500 1,428,875
Nabisco Holdings Corp. Class A 52,800 2,075,700
Nestle SA:
ADR (Reg.) 31,100 3,067,238
(Reg.) 956 1,888,629
Quaker Oats Co. 61,400 4,102,288
Ralston Purina Co. 30,000 825,000
Sara Lee Corp. 142,700 3,166,156
Suiza Foods Corp. (a) 11,000 350,625
Sysco Corp. 121,700 3,970,463
Tootsie Roll Industries, Inc. 8,848 302,491
Universal Foods Corp. 19,200 405,600
61,639,337
SHARES VALUE (NOTE 1)
GROCERY STORES - 14.5%
Albertson's, Inc. 123,286 $ 5,910,023
Kroger Co. (a) 293,200 6,780,250
Safeway, Inc. (a) 180,300 8,395,219
SUPERVALU, Inc. 39,800 895,500
Whole Foods Market, Inc. (a) 8,800 316,250
22,297,242
HOUSEHOLD PRODUCTS - 5.3%
Unilever NV NY Shares 119,978 8,263,485
RESTAURANTS - 10.0%
McDonald's Corp. 298,500 12,350,434
Outback Steakhouse, Inc. (a) 40,400 1,196,850
Tricon Global Restaurants, 45,500 1,848,438
Inc. (a)
15,395,722
TOBACCO - 5.5%
Philip Morris Companies, Inc. 211,200 7,906,800
RJ Reynolds Tobacco Holdings, 19,066 523,123
Inc.
8,429,923
TOTAL COMMON STOCKS 144,059,316
(Cost $126,361,664)
CASH EQUIVALENTS - 9.0%
Central Cash Collateral Fund, 3,292,800 3,292,800
5.26% (b)
Taxable Central Cash Fund, 10,612,396 10,612,396
5.20% (b)
TOTAL CASH EQUIVALENTS 13,905,196
(Cost $13,905,196)
TOTAL INVESTMENT PORTFOLIO - 157,964,512
102.5%
(Cost $140,266,860)
NET OTHER ASSETS - (2.5%) (3,796,223)
NET ASSETS - 100% $ 154,168,289
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $28,576,457 and $62,625,300, 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 $4,491 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $3,105,694. The fund
received cash collateral of $3,292,800 which was invested in the
Central Cash Collateral Fund.
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $140,702,793. Net unrealized appreciation
aggregated $17,261,719, of which $21,536,820 related to appreciated
investment securities and $4,275,101 related to depreciated investment
securities.
FOOD AND AGRICULTURE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 157,964,512
value (cost $140,266,860) -
See accompanying schedule
Receivable for fund shares 65,931
sold
Dividends receivable 154,081
Interest receivable 35,293
Redemption fees receivable 232
Other receivables 825
TOTAL ASSETS 158,220,874
LIABILITIES
Payable for fund shares $ 583,197
redeemed
Accrued management fee 76,919
Other payables and accrued 99,669
expenses
Collateral on securities 3,292,800
loaned, at value
TOTAL LIABILITIES 4,052,585
NET ASSETS $ 154,168,289
Net Assets consist of:
Paid in capital $ 132,656,043
Undistributed net investment 1,207,183
income
Accumulated undistributed net 2,607,461
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 17,697,602
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 3,599,923 $ 154,168,289
shares outstanding
NET ASSET VALUE and $42.83
redemption price per share
($154,168,289 (divided by)
3,599,923 shares)
Maximum offering price per $44.15
share (100/97.00 of $42.83)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 1,048,572
Dividends
Special dividend from 993,960
Unilever NV NY Shares
Interest 257,851
Security lending 42,306
TOTAL INCOME 2,342,689
EXPENSES
Management fee $ 519,948
Transfer agent fees 529,914
Accounting and security 67,605
lending fees
Non-interested trustees' 173
compensation
Custodian fees and expenses 5,514
Registration fees 24,358
Audit 7,493
Legal 105
Total expenses before 1,155,110
reductions
Expense reductions (23,533) 1,131,577
NET INVESTMENT INCOME 1,211,112
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 3,173,172
Foreign currency transactions (5,027) 3,168,145
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (16,462,454)
Assets and liabilities in 12 (16,462,442)
foreign currencies
NET GAIN (LOSS) (13,294,297)
NET INCREASE (DECREASE) IN $ (12,083,185)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 87,476
charges paid to FDC
Sales charges - Retained by $ 87,470
FDC
Deferred sales charges $ 4,617
withheld by FDC
Exchange fees withheld by FSC $ 11,198
Expense reductions Directed $ 22,896
brokerage arrangements
Custodian credits 637
$ 23,533
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ 1,211,112 $ 1,020,362
income
Net realized gain (loss) 3,168,145 20,672,714
Change in net unrealized (16,462,442) (4,236,166)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (12,083,185) 17,456,910
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (252,465) (739,119)
From net investment income
From net realized gain (4,208,811) (25,615,738)
TOTAL DISTRIBUTIONS (4,461,276) (26,354,857)
Share transactions Net 15,063,474 80,793,360
proceeds from sales of shares
Reinvestment of distributions 4,282,978 25,579,323
Cost of shares redeemed (54,698,431) (142,182,438)
NET INCREASE (DECREASE) IN (35,351,979) (35,809,755)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 57,743 148,005
TOTAL INCREASE (DECREASE) (51,838,697) (44,559,697)
IN NET ASSETS
NET ASSETS
Beginning of period 206,006,986 250,566,683
End of period (including $ 154,168,289 $ 206,006,986
undistributed net investment
income of $1,207,183 and
$490,066, respectively)
OTHER INFORMATION
Shares
Sold 337,854 1,684,840
Issued in reinvestment of 96,727 536,693
distributions
Redeemed (1,225,233) (2,964,307)
Net increase (decrease) (790,652) (742,774)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 1997 1996 G
Net asset value, beginning of $ 46.92 $ 48.81 $ 44.53 $ 42.15 $ 32.53
period
Income from Investment
Operations
Net investment income D .30 E .21 .33 .42 .37
Net realized and unrealized (3.34) 3.50 9.22 4.91 11.61
gain (loss)
Total from investment (3.04) 3.71 9.55 5.33 11.98
operations
Less Distributions
From net investment income (.06) (.16) (.37) (.24) (.20)
From net realized gain (1.00) (5.47) (4.95) (2.77) (2.20)
Total distributions (1.06) (5.63) (5.32) (3.01) (2.40)
Redemption fees added to paid .01 .03 .05 .06 .04
in capital
Net asset value, end of period $ 42.83 $ 46.92 $ 48.81 $ 44.53 $ 42.15
TOTAL RETURN B, C (6.53)% 7.83% 23.58% 13.59% 37.92%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 154,168 $ 206,007 $ 250,567 $ 223,423 $ 301,102
(000 omitted)
Ratio of expenses to average 1.27% A 1.31% 1.49% 1.52% 1.43%
net assets
Ratio of expenses to average 1.25% A, F 1.29% F 1.48% F 1.50% F 1.42% F
net assets after expense
reductions
Ratio of net investment 1.33% A .45% .73% 1.01% .99%
income to average net assets
Portfolio turnover rate 34% A 68% 74% 91% 124%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28,
SELECTED PER-SHARE DATA 1995
Net asset value, beginning of $ 31.49
period
Income from Investment
Operations
Net investment income D .15
Net realized and unrealized 2.80
gain (loss)
Total from investment 2.95
operations
Less Distributions
From net investment income (.08)
From net realized gain (1.85)
Total distributions (1.93)
Redemption fees added to paid .02
in capital
Net asset value, end of period $ 32.53
TOTAL RETURN B, C 10.14%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 197,130
(000 omitted)
Ratio of expenses to average 1.70%
net assets
Ratio of expenses to average 1.68% F
net assets after expense
reductions
Ratio of net investment .49%
income to average net assets
Portfolio turnover rate 126%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS
OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
E NET INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND FROM
UNILEVER NV NY SHARES WHICH AMOUNTED TO $.25 PER SHARE.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
G FOR THE YEAR ENDED FEBRUARY 29
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT LEISURE 3.14% 53.10% 201.50% 367.71%
SELECT LEISURE (LOAD ADJ.) -0.03% 48.44% 192.39% 353.61%
S&P 500 7.32% 39.82% 206.52% 384.79%
GS Consumer Industries -2.00% 24.74% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index- a 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 AUGUST 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT LEISURE 53.10% 24.70% 16.68%
SELECT LEISURE (LOAD ADJ.) 48.44% 23.93% 16.32%
S&P 500 39.82% 25.11% 17.10%
GS Consumer Industries 24.74% 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
Leisure S&P 500
00062 SP001
1989/08/31 9700.00 10000.00
1989/09/30 9762.33 9959.00
1989/10/31 9058.87 9727.95
1989/11/30 9165.73 9926.40
1989/12/31 9302.89 10164.64
1990/01/31 8174.69 9482.59
1990/02/28 8102.21 9604.91
1990/03/31 8165.24 9859.44
1990/04/30 7846.95 9612.96
1990/05/31 8496.13 10550.22
1990/06/30 8398.44 10478.48
1990/07/31 8108.51 10444.95
1990/08/31 7172.55 9500.72
1990/09/30 6491.85 9038.04
1990/10/31 6416.22 8999.18
1990/11/30 6926.74 9580.52
1990/12/31 7229.69 9847.82
1991/01/31 7634.00 10277.18
1991/02/28 8219.76 11012.00
1991/03/31 8356.65 11278.49
1991/04/30 8378.93 11305.56
1991/05/31 8668.63 11793.96
1991/06/30 8181.55 11253.80
1991/07/31 8573.12 11778.23
1991/08/31 8662.26 12057.37
1991/09/30 8885.10 11856.01
1991/10/31 9152.52 12014.88
1991/11/30 8713.20 11530.68
1991/12/31 9610.94 12849.79
1992/01/31 9827.42 12610.79
1992/02/29 10171.23 12774.73
1992/03/31 9964.31 12525.62
1992/04/30 10075.73 12893.87
1992/05/31 10136.21 12957.05
1992/06/30 9980.22 12763.99
1992/07/31 10027.98 13286.04
1992/08/31 9884.72 13013.68
1992/09/30 10078.91 13167.24
1992/10/31 10155.32 13213.32
1992/11/30 10846.13 13663.90
1992/12/31 11170.85 13831.96
1993/01/31 11447.81 13948.15
1993/02/28 11387.32 14137.85
1993/03/31 11979.45 14436.15
1993/04/30 11709.48 14086.80
1993/05/31 12550.60 14464.33
1993/06/30 12888.37 14506.27
1993/07/31 13232.77 14448.25
1993/08/31 14143.43 14995.84
1993/09/30 14848.78 14880.37
1993/10/31 15670.04 15188.39
1993/11/30 15087.21 15044.10
1993/12/31 15589.33 15226.14
1994/01/31 15751.36 15743.82
1994/02/28 15616.91 15317.17
1994/03/31 14672.31 14649.34
1994/04/30 14701.89 14836.85
1994/05/31 14546.29 15080.17
1994/06/30 13931.50 14710.71
1994/07/31 14470.39 15193.22
1994/08/31 15047.23 15816.14
1994/09/30 15043.44 15428.65
1994/10/31 14990.31 15775.79
1994/11/30 14348.95 15201.24
1994/12/31 14523.52 15426.67
1995/01/31 14789.17 15826.69
1995/02/28 15449.51 16443.45
1995/03/31 15855.57 16928.70
1995/04/30 15996.04 17427.25
1995/05/31 16305.57 18123.82
1995/06/30 16936.08 18544.83
1995/07/31 18113.05 19159.78
1995/08/31 18693.89 19207.87
1995/09/30 18724.46 20018.44
1995/10/31 17822.63 19946.98
1995/11/30 18403.47 20822.65
1995/12/31 18438.74 21223.69
1996/01/31 18712.03 21946.15
1996/02/29 19715.53 22149.59
1996/03/31 19813.74 22362.89
1996/04/30 20627.27 22692.52
1996/05/31 21473.65 23277.76
1996/06/30 21390.76 23366.44
1996/07/31 19855.06 22334.12
1996/08/31 20348.05 22805.14
1996/09/30 21338.41 24088.62
1996/10/31 20753.79 24752.98
1996/11/30 21342.77 26624.06
1996/12/31 20910.51 26096.63
1997/01/31 21841.18 27727.15
1997/02/28 21714.06 27944.53
1997/03/31 20910.51 26796.29
1997/04/30 21107.57 28396.03
1997/05/31 23086.26 30124.78
1997/06/30 23996.93 31474.37
1997/07/31 25222.28 33978.79
1997/08/31 24817.01 32075.30
1997/09/30 27553.79 33832.06
1997/10/31 27129.45 32702.07
1997/11/30 28221.30 34215.85
1997/12/31 29544.37 34803.33
1998/01/31 29703.51 35188.26
1998/02/28 31982.87 37726.04
1998/03/31 34216.03 39657.99
1998/04/30 34773.13 40056.94
1998/05/31 33906.69 39368.37
1998/06/30 36385.23 40967.51
1998/07/31 35870.62 40531.21
1998/08/31 29632.25 34671.20
1998/09/30 30824.26 36892.24
1998/10/31 32940.48 39893.06
1998/11/30 35938.89 42310.97
1998/12/31 40747.72 44748.93
1999/01/31 44220.78 46620.33
1999/02/28 43988.53 45171.37
1999/03/31 47429.18 46978.68
1999/04/30 49246.60 48798.16
1999/05/31 47447.24 47646.04
1999/06/30 49520.89 50290.39
1999/07/31 47737.99 48720.33
1999/08/31 45361.00 48479.16
IMATRL PRASUN SHR__CHT 19990831 19990914 120211 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Leisure Portfolio on August 31, 1989, and
the current 3.00% sales charge was paid. As the chart shows, by August
31, 1999, the value of the investment would have grown to $45,361 - a
353.61% increase on the initial investment - and includes the effect
of a $7.50 trading fee. For comparison, look at how the Standard &
Poor's 500 Index did over the same period. With dividends and capital
gains, if any, reinvested, the same $10,000 investment would have
grown to $48,479 - a 384.79% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
Microsoft Corp. 6.0
CBS Corp. 5.6
Disney (Walt) Co. 5.2
Time Warner, Inc. 5.1
McDonald's Corp. 5.0
AT&T Corp. (Liberty Media 4.6
Group) Class A
AT&T Corp. 4.5
Anheuser-Busch Companies, Inc. 3.6
MediaOne Group, Inc. 3.5
Seagram Co. Ltd. 2.8
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Broadcasting 30.3%
Entertainment 10.7%
Computer Services
& Software 8.0%
Restaurants 7.5%
Beverages 6.8%
All Others 36.7%*
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
Row: 1, Col: 1, Value: 30.3
Row: 1, Col: 2, Value: 10.7
Row: 1, Col: 3, Value: 8.0
Row: 1, Col: 4, Value: 7.5
Row: 1, Col: 5, Value: 6.8
Row: 1, Col: 6, Value: 36.7
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
LEISURE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Jeffrey Dorsey)
Jeffrey Dorsey,
Portfolio Manager
of Fidelity Select
Leisure Portfolio
Q. HOW DID THE FUND PERFORM, JEFF?
A. For the six- and 12-month periods ending August 31, 1999, the fund
returned 3.14% and 53.10%, respectively. By comparison, the Standard &
Poor's 500 Index returned 7.32% and 39.82% for the same time periods.
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 -2.00%
and 24.74% for the same six- and 12-month periods, respectively.
Q. WHAT CONTRIBUTED TO THE FUND'S OUTPERFORMANCE OF THE GOLDMAN SACHS
INDEX DURING THE SIX-MONTH PERIOD?
A. The fund's focus on broadcasting helped boost its performance
relative to the Goldman Sachs index. In general, though, leisure
stocks' performance stalled somewhat in the past few months after a
very strong showing during the first part of 1999. Typically, leisure
stocks such as retailing, lodging, gaming and other industries are
fueled by consumers' disposable-income spending and tend to be
affected disproportionately whenever there's concern about the
possibility of renewed inflation and Federal Reserve Board
interest-rate tightening.
Q. BROADCASTING STOCKS ACCOUNTED FOR NEARLY 30% OF THE FUND'S HOLDINGS
. . .
A. And, generally, they performed well. CBS, which was hurt earlier in
the year when investors focused only on its network programming and
ignored the more successful aspects of its business, came back
strongly later in the period. CBS cash flows improved, its network
business did well and the company executed its business strategy
flawlessly. Tribune Co., a Chicago-based publisher/television station
operator, benefited from its stake in WB Network, which airs
programming that successfully targets 14-22 year-old viewers.
Tribune's earnings growth was very strong as a result of its WB
Network affiliation. Newspaper operations also picked up as newsprint
prices came down, but represented a declining percentage of Tribune's
profits as its television operations increased. Other broadcasters,
such as Clear Channel Communications, a radio and outdoor advertising
company, also benefited from robust advertising activity.
Q. WHICH OTHER STOCKS PERFORMED WELL?
A. The strongest performers included America Online, which posted
terrific growth, adding to its expanding subscriber base during the
period. I later sold the stock from the fund's portfolio because I
thought it was an opportune time to lock in profits. Microsoft
continued to be a stellar performer, executing all aspects of its
business strategy successfully. Liberty Media Group is a
conglomeration of media investments that has demonstrated phenomenal
success since going public several years ago. Liberty used the
tremendous amount of cash on its balance sheets to make attractive
acquisitions and tax-efficient investments. Gemstar, which owns
proprietary technology for an electronic television program guide and
has several valuable patents, emerged as a leader in digital
television.
Q. WHAT ABOUT DISAPPOINTMENTS?
A. Walt Disney continued to disappoint investors with its
deteriorating licensing and merchandising business. Disney's home
video business was also disappointing after the company decided to
slow down its library title releases. AT&T's performance reflected
investors' dimming view of the long-distance telephone business, and
while management tried to move the company further away from long
distance - instead focusing on local telephony and cable - AT&T was
hit by the shift in investor sentiment. Time Warner's performance was
hurt along with most cable stocks as municipalities fought the right
of cable companies to keep Internet access through their lines
proprietary.
Q. WHAT'S YOUR OUTLOOK, JEFF?
A. Overall, my outlook is positive. Most companies are seeing healthy
growth and costs haven't been much of a problem, so we should continue
to see double-digit cash flow growth through the rest of this year.
The issue that could change all of that is the future performance of
the bond market and further Fed actions, because if interest rates go
up it could slow the performance of many of these companies. In the
near term, though, they should do quite well operationally.
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 3.
(checkmark)FUND FACTS
START DATE: May 8, 1984
FUND NUMBER: 062
TRADING SYMBOL: FDLSX
SIZE: as of August 31, 1999, more than
$391 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 AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 94.9%
SHARES VALUE (NOTE 1)
ADVERTISING - 4.9%
Interpublic Group of 125,400 $ 4,968,975
Companies, Inc.
Lamar Advertising Co. Class A 37,300 1,557,275
(a)
Omnicom Group, Inc. 90,500 6,821,438
Outdoor Systems, Inc. (a) 121,400 3,922,738
WPP Group PLC 300 2,808
Young & Rubicam, Inc. 41,000 1,829,625
19,102,859
APPAREL STORES - 6.1%
Abercrombie & Fitch Co. Class 105,430 3,676,871
A (a)
American Eagle Outfitters, 20,200 792,850
Inc. (a)
AnnTaylor Stores Corp. (a) 26,000 861,250
Gap, Inc. 270,550 10,585,269
Limited, Inc. (The) 87,600 3,317,850
Payless ShoeSource, Inc. (a) 22,100 1,102,238
TJX Companies, Inc. 99,700 2,878,838
Too, Inc. (a) 10,871 190,922
Wet Seal, Inc. Class A (a) 30,600 466,650
23,872,738
BEVERAGES - 6.8%
Anheuser-Busch Companies, 184,000 14,168,000
Inc.
Coors (Adolph) Co. Class B 29,400 1,677,638
Seagram Co. Ltd. 203,300 10,794,992
26,640,630
BROADCASTING - 30.3%
AMFM, Inc. (a) 48,800 2,403,400
AT&T Corp. (Liberty Media 559,144 17,892,608
Group) Class A (a)
Cablevision Systems Corp. 78,700 5,509,000
Class A (a)
CBS Corp. (a) 463,417 21,780,599
Clear Channel Communications, 133,059 9,322,446
Inc. (a)
Comcast Corp. Class A 298,100 9,725,513
(special)
Cox Communications, Inc. 257,987 9,593,892
Class A (a)
E.W. Scripps Co. Class A 13,100 628,800
EchoStar Communications Corp. 12,500 1,045,313
Class A (a)
Hearst-Argyle Television, 3,400 86,063
Inc. (a)
Infinity Broadcasting Corp. 20,500 554,781
Class A
MediaOne Group, Inc. 206,400 13,570,800
PanAmSat Corp. (a) 300 11,081
SBS Broadcasting SA (a) 800 28,400
Sinclair Broadcast Group, 11,800 191,750
Inc. Class A (a)
Time Warner, Inc. 339,557 20,139,975
Univision Communications, 20,800 1,534,000
Inc. Class A (a)
SHARES VALUE (NOTE 1)
USA Networks, Inc. (a) 86,100 $ 3,863,738
Westwood One, Inc. (a) 17,200 660,050
118,542,209
COMPUTER SERVICES & SOFTWARE
- - 8.0%
At Home Corp. Series A (a) 96,900 3,888,113
Electronic Arts, Inc. (a) 24,600 1,688,175
Lycos, Inc. (a) 26,600 1,080,625
Microsoft Corp. (a) 252,700 23,390,532
MindSpring Enterprises, Inc. 20,200 589,588
(a)
Razorfish, Inc. (a) 100 2,800
Xoom.com, Inc. (a) 16,500 641,438
31,281,271
COMPUTERS & OFFICE EQUIPMENT
- - 1.1%
Coinstar, Inc. (a) 187,000 4,324,375
CONSUMER ELECTRONICS - 1.2%
Fossil, Inc. (a) 8,550 266,653
Gemstar International Group 65,400 4,512,600
Ltd. (a)
4,779,253
ENTERTAINMENT - 10.7%
Carmike Cinemas, Inc. Class A 700 9,450
(a)
Carnival Corp. 42,200 1,885,813
Disney (Walt) Co. 733,556 20,356,179
Fox Entertainment Group, Inc. 16,200 373,613
Hollywood Entertainment Corp. 6,500 88,156
(a)
King World Productions, Inc. 25,500 972,188
(a)
News Corp. Ltd. sponsored:
ADR 19,800 580,388
ADR (preferred ltd. vtg.) 16,200 428,288
Peace Arch Entertainment 10,000 46,901
Group, Inc. Class B (a)
Premier Parks, Inc. (a) 93,300 3,055,575
Royal Carribean Cruises Ltd. 73,700 3,450,081
SFX Entertainment, Inc. Class 32,850 1,353,009
A (a)
Viacom, Inc. Class B 219,400 9,228,513
(non-vtg.) (a)
41,828,154
GENERAL MERCHANDISE STORES -
0.4%
Consolidated Stores Corp. (a) 40,400 651,450
Michaels Stores, Inc. (a) 19,500 598,406
Saks, Inc. (a) 22,900 385,006
1,634,862
HOUSEHOLD PRODUCTS - 0.7%
Avon Products, Inc. 64,200 2,816,775
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
LEISURE DURABLES & TOYS - 0.8%
Hasbro, Inc. 64,550 $ 1,577,441
Mattel, Inc. 64,900 1,383,181
2,960,622
LODGING & GAMING - 1.7%
Marriott International, Inc. 90,100 3,085,925
Class A
Prime Hospitality Corp. (a) 52,500 488,906
Promus Hotel Corp. (a) 38,600 1,121,813
Starwood Hotels & Resorts 78,900 1,878,806
Worldwide, Inc.
Sun International Hotels Ltd. 100 2,913
(a)
6,578,363
PRINTING - 0.7%
Donnelley (R.R.) & Sons Co. 76,100 2,387,638
Valassis Communications, Inc. 6,800 297,500
(a)
2,685,138
PUBLISHING - 6.3%
Gannet, Inc. 64,800 4,402,350
Harcourt General, Inc. 18,300 801,769
Harte Hanks Communications, 53,700 1,204,894
Inc.
Knight-Ridder, Inc. 34,600 1,866,238
McGraw-Hill Companies, Inc. 65,300 3,375,194
Meredith Corp. 98,300 3,409,781
Playboy Enterprises, Inc. 99,400 2,093,613
Class B (a)
Reader's Digest Association, 109,200 3,412,500
Inc. Class A (non-vtg.)
Tribune Co. 45,700 4,264,381
24,830,720
RESTAURANTS - 7.5%
Brinker International, Inc. 41,100 986,400
(a)
CEC Entertainment, Inc. (a) 24,650 687,119
McDonald's Corp. 475,000 19,653,125
Outback Steakhouse, Inc. (a) 51,750 1,533,094
Papa John's International, 10,000 397,500
Inc. (a)
PJ America, Inc. (a) 56,900 1,088,213
Starbucks Corp. (a) 66,300 1,516,613
Tricon Global Restaurants, 89,000 3,615,625
Inc. (a)
29,477,689
RETAIL & WHOLESALE,
MISCELLANEOUS - 1.4%
Action Performance Companies, 30,300 748,031
Inc. (a)
Bed Bath & Beyond, Inc. (a) 45,300 1,245,750
Intimate Brands, Inc. Class A 32,835 1,266,200
Piercing Pagoda, Inc. (a) 1,300 18,363
Shop At Home, Inc. (a) 255,400 2,218,788
5,497,132
SHARES VALUE (NOTE 1)
SERVICES - 0.2%
True North Communications 30,400 $ 1,001,300
TELEPHONE SERVICES - 4.5%
AT&T Corp. 388,938 17,502,210
TEXTILES & APPAREL - 1.6%
Liz Claiborne, Inc. 23,200 852,600
NIKE, Inc. Class B 81,000 3,746,250
Pacific Sunwear of 22,900 532,425
California, Inc. (a)
Polo Ralph Lauren Corp. Class 29,600 573,500
A (a)
Stride Rite Corp. 1,500 13,031
Warnaco Group, Inc. Class A 22,400 492,800
6,210,606
TOTAL COMMON STOCKS 371,566,906
(Cost $296,328,638)
CASH EQUIVALENTS - 9.7%
Central Cash Collateral Fund, 5,275,400 5,275,400
5.26% (b)
Taxable Central Cash Fund, 32,712,514 32,712,514
5.20% (b)
TOTAL CASH EQUIVALENTS 37,987,914
(Cost $37,987,914)
TOTAL INVESTMENT PORTFOLIO - 409,554,820
104.6% (Cost $334,316,552)
NET OTHER ASSETS - (4.6%) (18,066,862)
NET ASSETS - 100% $ 391,487,958
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $270,081,878 and $231,593,455, 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 $32,303 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $5,051,844. The fund
received
cash collateral of $5,275,400 which was invested in the Central Cash
Collateral Fund.
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $336,548,023. Net unrealized appreciation
aggregated $73,006,797, of which $88,639,721 related to appreciated
investment securities and $15,632,924 related to depreciated
investment securities.
LEISURE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 409,554,820
value (cost $334,316,552) -
See accompanying schedule
Receivable for investments 51,451,638
sold
Receivable for fund shares 24,797,027
sold
Dividends receivable 195,394
Interest receivable 95,534
Redemption fees receivable 1,339
Other receivables 709,157
TOTAL ASSETS 486,804,909
LIABILITIES
Payable for investments $ 87,498,630
purchased
Payable for fund shares 2,167,147
redeemed
Accrued management fee 177,765
Other payables and accrued 198,009
expenses
Collateral on securities 5,275,400
loaned, at value
TOTAL LIABILITIES 95,316,951
NET ASSETS $ 391,487,958
Net Assets consist of:
Paid in capital $ 277,081,333
Accumulated net investment (939,974)
loss
Accumulated undistributed net 40,109,433
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 75,237,166
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 4,733,844 $ 391,487,958
shares outstanding
NET ASSET VALUE and $82.70
redemption price per share
($391,487,958 (divided by)
4,733,844 shares)
Maximum offering price per $85.26
share (100/97.00 of $82.70)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 771,329
Dividends
Interest 778,212
Security lending 2,593
TOTAL INCOME 1,552,134
EXPENSES
Management fee $ 1,269,224
Transfer agent fees 984,941
Accounting and security 163,802
lending fees
Non-interested trustees' 839
compensation
Custodian fees and expenses 12,395
Registration fees 89,891
Audit 7,605
Legal 470
Total expenses before 2,529,167
reductions
Expense reductions (37,059) 2,492,108
NET INVESTMENT INCOME (LOSS) (939,974)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 41,446,129
Foreign currency transactions 5,132 41,451,261
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (25,577,474)
Assets and liabilities in (1,008) (25,578,482)
foreign currencies
NET GAIN (LOSS) 15,872,779
NET INCREASE (DECREASE) IN $ 14,932,805
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 843,041
charges paid to FDC
Sales charges - Retained by $ 840,591
FDC
Deferred sales charges $ 6,685
withheld by FDC
Exchange fees withheld by FSC $ 14,400
Expense reductions Directed $ 29,694
brokerage arrangements
Custodian credits 7,365
$ 37,059
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ (939,974) $ (1,171,784)
income (loss)
Net realized gain (loss) 41,451,261 22,624,055
Change in net unrealized (25,578,482) 65,006,159
appreciation (depreciation)
NET INCREASE (DECREASE) IN 14,932,805 86,458,430
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (7,672,554) (14,475,212)
from net realized gains
Share transactions Net 281,076,667 283,063,939
proceeds from sales of shares
Reinvestment of distributions 7,427,293 14,128,858
Cost of shares redeemed (250,696,401) (280,558,227)
NET INCREASE (DECREASE) IN 37,807,559 16,634,570
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 280,780 323,063
TOTAL INCREASE (DECREASE) 45,348,590 88,940,851
IN NET ASSETS
NET ASSETS
Beginning of period 346,139,368 257,198,517
End of period (including $ 391,487,958 $ 346,139,368
accumulated net investment
loss of $939,974 and $0,
respectively)
OTHER INFORMATION
Shares
Sold 3,258,841 4,108,533
Issued in reinvestment of 85,459 211,513
distributions
Redeemed (2,860,495) (4,198,228)
Net increase (decrease) 483,805 121,818
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 1997 1996 G 1995
Net asset value, beginning of $ 81.44 $ 62.30 $ 47.83 $ 46.17 $ 40.71 $ 45.30
period
Income from Investment
Operations
Net investment income (loss) (.19) (.27) (.25) (.06) F (.21) (.21)
D
Net realized and unrealized 2.75 22.78 21.10 4.47 10.97 (.48)
gain (loss)
Total from investment 2.56 22.51 20.85 4.41 10.76 (.69)
operations
Less Distributions
From net realized gain (1.36) (3.44) (6.46) (2.83) (5.32) (3.93)
Redemption fees added to paid .06 .07 .08 .08 .02 .03
in capital
Net asset value, end of period $ 82.70 $ 81.44 $ 62.30 $ 47.83 $ 46.17 $ 40.71
TOTAL RETURN B, C 3.14% 37.54% 47.29% 10.14% 27.61% (1.07)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 391,488 $ 346,139 $ 257,199 $ 98,133 $ 85,013 $ 69,569
(000 omitted)
Ratio of expenses to average 1.14% A 1.26% 1.44% 1.56% 1.64% 1.64%
net assets
Ratio of expenses to average 1.13% A, E 1.24% E 1.39% E 1.54% E 1.63% E 1.62% E
net assets after expense
reductions
Ratio of net investment (.43)% A (.40)% (.46)% (.12)% (.46)% (.52)%
income (loss) to average net
assets
Portfolio turnover rate 116% A 107% 209% 127% 141% 103%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
F NET INVESTMENT INCOME (LOSS) PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.23 PER SHARE.
G FOR THE YEAR ENDED FEBRUARY 29
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT MULTIMEDIA 5.67% 51.02% 174.16% 347.13%
SELECT MULTIMEDIA (LOAD ADJ.) 2.43% 46.41% 165.86% 333.65%
S&P 500 7.32% 39.82% 206.52% 384.79%
GS Consumer Industries -2.00% 24.74% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a 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 AUGUST 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT MULTIMEDIA 51.02% 22.35% 16.16%
SELECT MULTIMEDIA (LOAD ADJ.) 46.41% 21.60% 15.80%
S&P 500 39.82% 25.11% 17.10%
GS Consumer Industries 24.74% 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
Multimedia S&P 500
00503 SP001
1989/08/31 9700.00 10000.00
1989/09/30 9548.03 9959.00
1989/10/31 8903.46 9727.95
1989/11/30 8955.86 9926.40
1989/12/31 8959.66 10164.64
1990/01/31 7769.94 9482.59
1990/02/28 7573.70 9604.91
1990/03/31 7500.11 9859.44
1990/04/30 7144.42 9612.96
1990/05/31 7825.13 10550.22
1990/06/30 7757.68 10478.48
1990/07/31 7328.40 10444.95
1990/08/31 6377.85 9500.72
1990/09/30 5832.05 9038.04
1990/10/31 5580.62 8999.18
1990/11/30 6157.08 9580.52
1990/12/31 6610.89 9847.82
1991/01/31 6966.58 10277.18
1991/02/28 7481.71 11012.00
1991/03/31 7684.08 11278.49
1991/04/30 7947.78 11305.56
1991/05/31 7990.71 11793.96
1991/06/30 7359.06 11253.80
1991/07/31 7635.02 11778.23
1991/08/31 7874.19 12057.37
1991/09/30 8352.53 11856.01
1991/10/31 8775.68 12014.88
1991/11/30 8174.69 11530.68
1991/12/31 9112.97 12849.79
1992/01/31 9352.14 12610.79
1992/02/29 9873.41 12774.73
1992/03/31 9621.97 12525.62
1992/04/30 9769.15 12893.87
1992/05/31 9916.33 12957.05
1992/06/30 9953.13 12763.99
1992/07/31 9977.66 13286.04
1992/08/31 9842.74 13013.68
1992/09/30 9781.42 13167.24
1992/10/31 9940.86 13213.32
1992/11/30 10664.50 13663.90
1992/12/31 11072.08 13831.96
1993/01/31 11295.76 13948.15
1993/02/28 11345.46 14137.85
1993/03/31 11792.82 14436.15
1993/04/30 11487.86 14086.80
1993/05/31 12270.98 14464.33
1993/06/30 12656.22 14506.27
1993/07/31 13129.88 14448.25
1993/08/31 14247.72 14995.84
1993/09/30 14588.76 14880.37
1993/10/31 15681.34 15188.39
1993/11/30 14657.96 15044.10
1993/12/31 15281.74 15226.14
1994/01/31 15499.68 15743.82
1994/02/28 15300.97 15317.17
1994/03/31 14365.09 14649.34
1994/04/30 14372.06 14836.85
1994/05/31 14900.60 15080.17
1994/06/30 14567.55 14710.71
1994/07/31 14922.32 15193.22
1994/08/31 15820.12 15816.14
1994/09/30 15711.52 15428.65
1994/10/31 16066.30 15775.79
1994/11/30 15559.47 15201.24
1994/12/31 15893.55 15426.67
1995/01/31 16073.22 15826.69
1995/02/28 16732.02 16443.45
1995/03/31 17795.08 16928.70
1995/04/30 18206.83 17427.25
1995/05/31 18304.16 18123.82
1995/06/30 19007.87 18544.83
1995/07/31 20130.83 19159.78
1995/08/31 20767.17 19207.87
1995/09/30 21358.59 20018.44
1995/10/31 20729.74 19946.98
1995/11/30 21530.78 20822.65
1995/12/31 21245.36 21223.69
1996/01/31 21375.35 21946.15
1996/02/29 22082.18 22149.59
1996/03/31 21789.70 22362.89
1996/04/30 22804.07 22692.52
1996/05/31 23561.43 23277.76
1996/06/30 22471.16 23366.44
1996/07/31 20332.24 22334.12
1996/08/31 21089.60 22805.14
1996/09/30 22429.55 24088.62
1996/10/31 21797.03 24752.98
1996/11/30 22196.52 26624.06
1996/12/31 21473.43 26096.63
1997/01/31 21363.40 27727.15
1997/02/28 21084.09 27944.53
1997/03/31 20059.93 26796.29
1997/04/30 20507.86 28396.03
1997/05/31 22465.94 30124.78
1997/06/30 23938.83 31474.37
1997/07/31 25221.12 33978.79
1997/08/31 24727.26 32075.30
1997/09/30 26728.67 33832.06
1997/10/31 25870.92 32702.07
1997/11/30 26728.67 34215.85
1997/12/31 28114.77 34803.33
1998/01/31 28320.44 35188.26
1998/02/28 30028.43 37726.04
1998/03/31 32138.83 39657.99
1998/04/30 32897.35 40056.94
1998/05/31 31993.31 39368.37
1998/06/30 34163.00 40967.51
1998/07/31 34572.19 40531.21
1998/08/31 28719.76 34671.20
1998/09/30 29956.86 36892.24
1998/10/31 31774.44 39893.06
1998/11/30 33668.16 42310.97
1998/12/31 38150.27 44748.93
1999/01/31 41271.57 46620.33
1999/02/28 41043.18 45171.37
1999/03/31 42489.63 46978.68
1999/04/30 44815.63 48798.16
1999/05/31 44112.98 47646.04
1999/06/30 46086.18 50290.39
1999/07/31 45287.27 48720.33
1999/08/31 43365.00 48479.16
IMATRL PRASUN SHR__CHT 19990831 19990909 154651 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Multimedia Portfolio on August 31, 1989
and the current 3.00% sales charge was paid. As the chart shows, by
August 31, 1999, the value of the investment would have grown to
$43,365 - a 333.65% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $48,479 - a 384.79% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
CBS Corp. 7.2
AT&T Corp. (Liberty Media 7.0
Group) Class A
Viacom, Inc. Class B (non-vtg.) 5.7
MediaOne Group, Inc. 5.5
Disney (Walt) Co. 5.4
Time Warner, Inc. 5.3
Seagram Co. Ltd. 5.2
Cox Communications, Inc. 4.8
Class A
Clear Channel Communications, 4.7
Inc.
Comcast Corp. Class A (special) 4.7
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS 7.7
Broadcasting 46.5%
Entertainment 13.2%
Publishing 10.8%
Advertising 8.1%
Beverages 5.2%
All Others 16.2%*
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
Row: 1, Col: 1, Value: 16.2
Row: 1, Col: 2, Value: 5.2
Row: 1, Col: 3, Value: 8.1
Row: 1, Col: 4, Value: 10.8
Row: 1, Col: 5, Value: 13.2
Row: 1, Col: 6, Value: 46.5
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
MULTIMEDIA PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Jeffrey Dorsey)
Jeffrey Dorsey,
Portfolio Manager of Fidelity Select Multimedia Portfolio
Q. HOW DID THE FUND PERFORM, JEFF?
A. For the six- and 12-month periods ending August 31, 1999, the fund
returned 5.67% and 51.02%, respectively. By comparison, the Standard &
Poor's 500 Index returned 7.32% and 39.82%, respectively, for the same
time periods. 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 -2.00% and 24.74%, respectively, for the six- and 12-month
periods.
Q. WHAT HELPED THE FUND OUTPERFORM THE GOLDMAN SACHS INDEX DURING THE
PERIOD?
A. Although multimedia stocks' performance did slow somewhat in the
past few months after a very strong showing during the first part of
1999, the fund's focus on broadcasting helped boost its performance
relative to the Goldman Sachs index. Multimedia stocks were affected
disproportionately - as they tend to be whenever there is concern
about the possibility of renewed inflation and Fed interest-rate
tightening - during the six-month period. However, the market calmed
somewhat toward the end of the period.
Q. BROADCASTING WAS BY FAR THE FUND'S BIGGEST EMPHASIS DURING THE
PERIOD. WHICH HOLDINGS STOOD OUT?
A. CBS, the fund's number-one holding at the end of the period, was
hurt earlier in the year when investors focused only on its network
programming and ignored the more successful aspects of its TV and
radio business. CBS came back strongly later in the period as its cash
flows improved, its TV network business made a nice recovery and the
company executed its business strategy flawlessly. Clear Channel
Communications, a radio and outdoor advertising company, posted
outstanding cash flow growth, benefiting from robust advertising
activity. Tribune Co., a Chicago-based publisher/television station
operator, benefited from its stake in WB Network, which airs
programming that successfully targets young viewers.
Q. WHICH OTHER STOCKS PERFORMED WELL?
A. The strongest performers included Liberty Media Group, a
conglomeration of media assets that has demonstrated phenomenal
success since going public several years ago. It has used innovative
methods to take stakes in media companies, and has made attractive
acquisitions and tax-efficient investments with the tremendous amount
of cash on its balance sheets. Seagram also did well. Seagram now owns
Polygram, making it the world's largest purveyor of recorded music
through its Universal Music subsidiary. Management merged the two
entities and cut costs significantly; meanwhile, Seagram's spirits
business bounced back nicely as demand from Asian countries increased.
Q. WHAT ABOUT DISAPPOINTMENTS?
A. Walt Disney's deteriorating licensing and merchandising business,
and its decision to slow down its library title releases, continued to
disappoint investors. I'm still holding some of the stock because it
appears cheap, and because management is finally starting to pay
attention to what is important to shareholders: return on invested
capital and generation of free cash flow. While AT&T's management
tried to move the company further away from long distance - instead
focusing on local telephony and cable - AT&T was hit by a shift in
sentiment among investors, whose dimming view of the long-distance
telephone business hurt the stock's performance. Fund holdings Time
Warner and Comcast also suffered, along with most cable stocks, as
municipalities challenged the right of cable companies to keep
Internet access through their lines proprietary. However, operational
performance continued to be better than expected among cable companies
during the period.
Q. WHAT'S YOUR OUTLOOK, JEFF?
A. I'm optimistic. Overall, advertising activity is robust and growth
should be strong through next year, though there continues to be some
uncertainty about whether growth can continue at this pace in 2001.
However, there are plenty of positive signs, including the success of
the "dot.com" companies, which are spending a growing percentage of
advertising dollars. The issue that could change all of this is the
future performance of the bond market and further Fed actions, because
if interest rates go up, it could slow the performance of many of
these companies. In the near term, however, they should do quite well
operationally.
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 3.
(checkmark)FUND FACTS
START DATE: June 30, 1986
FUND NUMBER: 503
TRADING SYMBOL: FBMPX
SIZE: as of August 31, 1999, more than
$183 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 AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 93.0%
SHARES VALUE (NOTE 1)
ADVERTISING - 8.1%
Interpublic Group of 115,700 $ 4,584,613
Companies, Inc.
Lamar Advertising Co. Class A 24,700 1,031,225
(a)
Omnicom Group, Inc. 82,700 6,233,513
Outdoor Systems, Inc. (a) 68,000 2,197,250
Young & Rubicam, Inc. 17,600 785,400
14,832,001
BEVERAGES - 5.2%
Seagram Co. Ltd. 181,200 9,621,508
BROADCASTING - 46.5%
AMFM, Inc. (a) 51,900 2,556,075
AT&T Corp. (Liberty Media 403,196 12,902,272
Group) Class A (a)
Cablevision Systems Corp. 60,000 4,200,000
Class A (a)
CBS Corp. (a) 283,550 13,326,806
Clear Channel Communications, 124,120 8,696,157
Inc. (a)
Comcast Corp. Class A 265,000 8,645,625
(special)
Cox Communications, Inc. 235,860 8,771,044
Class A (a)
E.W. Scripps Co. Class A 14,200 681,600
EchoStar Communications Corp. 14,400 1,204,200
Class A (a)
Hearst-Argyle Television, 4,900 124,031
Inc. (a)
Infinity Broadcasting Corp. 21,800 589,963
Class A
MediaOne Group, Inc. 153,700 10,105,775
Sinclair Broadcast Group, 19,000 308,750
Inc. Class A (a)
Time Warner, Inc. 164,944 9,783,241
Univision Communications, 3,500 258,125
Inc. Class A (a)
USA Networks, Inc. (a) 54,800 2,459,150
ValueVision International, 22,000 525,250
Inc. (a)
Westwood One, Inc. (a) 11,600 445,150
85,583,214
COMPUTER SERVICES & SOFTWARE
- - 0.4%
At Home Corp. Series A (a) 9,800 393,225
FactSet Research Systems, 6,850 317,241
Inc.
Razorfish, Inc. (a) 100 2,800
713,266
CONSUMER ELECTRONICS - 0.4%
Gemstar International Group 11,200 772,800
Ltd. (a)
ENTERTAINMENT - 13.2%
Disney (Walt) Co. 357,500 9,920,625
Fox Entertainment Group, Inc. 5,000 115,313
King World Productions, Inc. 25,000 953,125
(a)
News Corp. Ltd. sponsored ADR 39,200 1,149,050
Peace Arch Entertainment 10,000 46,901
Group, Inc. Class B (a)
Premier Parks, Inc. (a) 39,200 1,283,800
SHARES VALUE (NOTE 1)
SFX Entertainment, Inc. Class 9,100 $ 374,806
A (a)
Viacom, Inc. Class B 246,300 10,359,994
(non-vtg.) (a)
24,203,614
PRINTING - 1.3%
Donnelley (R.R.) & Sons Co. 58,200 1,826,025
Valassis Communications, Inc. 14,950 654,063
(a)
2,480,088
PUBLISHING - 10.8%
Gannet, Inc. 53,500 3,634,656
Harcourt General, Inc. 20,300 889,394
Harte Hanks Communications, 54,600 1,225,088
Inc.
Knight-Ridder, Inc. 27,200 1,467,100
McGraw-Hill Companies, Inc. 69,600 3,597,450
Meredith Corp. 49,800 1,727,438
Playboy Enterprises, Inc. 32,900 692,956
Class B (a)
Reader's Digest Association, 76,900 2,403,125
Inc. Class A (non-vtg.)
Tribune Co. 44,700 4,171,069
19,808,276
RETAIL & WHOLESALE,
MISCELLANEOUS - 0.6%
Shop At Home, Inc. (a) 128,700 1,118,081
SERVICES - 1.4%
True North Communications 77,000 2,536,188
TELEPHONE SERVICES - 5.1%
AT&T Corp. 182,005 8,190,225
MCI WorldCom, Inc. (a) 15,800 1,196,850
9,387,075
TOTAL COMMON STOCKS 171,056,111
(Cost $124,836,162)
CASH EQUIVALENTS - 8.5%
Central Cash Collateral Fund, 6,443,300 6,443,300
5.26% (b)
Taxable Central Cash Fund, 9,104,511 9,104,511
5.20% (b)
TOTAL CASH EQUIVALENTS 15,547,811
(Cost $15,547,811)
TOTAL INVESTMENT PORTFOLIO - 186,603,922
101.5% (Cost $140,383,973)
NET OTHER ASSETS - (1.5%) (2,695,908)
NET ASSETS - 100% $ 183,908,014
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $58,651,545 and $42,344,447, 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 $10,911 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $6,243,511. The fund
received cash collateral of $6,443,300 which was invested in the
Central Cash Collateral Fund.
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $140,790,841. Net unrealized appreciation
aggregated $45,813,081, of which $49,250,116 related to appreciated
investment securities and $3,437,035 related to depreciated investment
securities.
MULTIMEDIA PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 186,603,922
value (cost $140,383,973) -
See accompanying schedule
Receivable for investments 4,028,852
sold
Receivable for fund shares 443,331
sold
Dividends receivable 88,999
Interest receivable 57,460
Redemption fees receivable 234
Other receivables 9,010
TOTAL ASSETS 191,231,808
LIABILITIES
Payable for fund shares $ 681,112
redeemed
Accrued management fee 93,049
Other payables and accrued 106,333
expenses
Collateral on securities 6,443,300
loaned, at value
TOTAL LIABILITIES 7,323,794
NET ASSETS $ 183,908,014
Net Assets consist of:
Paid in capital $ 132,265,393
Accumulated net investment (462,726)
loss
Accumulated undistributed net 5,885,398
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 46,219,949
(depreciation) on investments
NET ASSETS, for 4,081,604 $ 183,908,014
shares outstanding
NET ASSET VALUE and $45.06
redemption price per share
($183,908,014 (divided by)
4,081,604 shares)
Maximum offering price per $46.45
share (100/97.00 of $45.06)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 338,336
Dividends
Interest 370,104
Security lending 2,939
TOTAL INCOME 711,379
EXPENSES
Management fee $ 573,025
Transfer agent fees 475,652
Accounting and security 74,250
lending fees
Non-interested trustees' 273
compensation
Custodian fees and expenses 6,165
Registration fees 40,549
Audit 7,462
Legal 152
Total expenses before 1,177,528
reductions
Expense reductions (20,518) 1,157,010
NET INVESTMENT INCOME (LOSS) (445,631)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 6,319,716
Foreign currency transactions 9,201 6,328,917
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 2,966,467
Assets and liabilities in 8 2,966,475
foreign currencies
NET GAIN (LOSS) 9,295,392
NET INCREASE (DECREASE) IN $ 8,849,761
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 280,344
charges paid to FDC
Sales charges - Retained by $ 278,805
FDC
Deferred sales charges $ 501
withheld by FDC
Exchange fees withheld by FSC $ 3,855
Expense reductions Directed $ 13,192
brokerage arrangements
Custodian credits 1,697
Transfer agent credits 5,629
$ 20,518
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ (445,631) $ (681,089)
income (loss)
Net realized gain (loss) 6,328,917 3,497,059
Change in net unrealized 2,966,475 32,313,711
appreciation (depreciation)
NET INCREASE (DECREASE) IN 8,849,761 35,129,681
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (2,312,059) (7,954,098)
from net realized gains
Share transactions Net 85,325,901 158,099,619
proceeds from sales of shares
Reinvestment of distributions 2,249,878 7,877,838
Cost of shares redeemed (70,023,339) (149,217,492)
NET INCREASE (DECREASE) IN 17,552,440 16,759,965
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 88,344 309,134
TOTAL INCREASE (DECREASE) 24,178,486 44,244,682
IN NET ASSETS
NET ASSETS
Beginning of period 159,729,528 115,484,846
End of period (including $ 183,908,014 $ 159,729,528
accumulated net investment
loss of $462,726 and
$17,095, respectively)
OTHER INFORMATION
Shares
Sold 1,852,882 4,292,822
Issued in reinvestment of 47,809 230,819
distributions
Redeemed (1,522,873) (4,259,349)
Net increase (decrease) 377,818 264,292
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 1997 1996 G 1995
Net asset value, beginning of $ 43.13 $ 33.58 $ 24.91 $ 27.18 $ 22.35 $ 23.87
period
Income from Investment
Operations
Net investment income (loss) D (.11) (.19) (.17) .35 e .02 (.01)
Net realized and unrealized 2.56 11.85 10.30 (1.58) 7.00 1.67
gain (loss)
Total from investment 2.45 11.66 10.13 (1.23) 7.02 1.66
operations
Less Distributions
From net investment income - - - - (.02) -
From net realized gain (.54) (2.19) (1.52) (1.07) (2.19) (3.21)
Total distributions (.54) (2.19) (1.52) (1.07) (2.21) (3.21)
Redemption fees added to paid .02 .08 .06 .03 .02 .03
in capital
Net asset value, end of period $ 45.06 $ 43.13 $ 33.58 $ 24.91 $ 27.18 $ 22.35
TOTAL RETURN B, C 5.67% 36.68% 42.42% (4.52)% 31.98% 9.35%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 183,908 $ 159,730 $ 115,485 $ 54,171 $ 94,970 $ 38,157
(000 omitted)
Ratio of expenses to average 1.18% A 1.35% 1.75% 1.60% 1.56% 2.05%
net assets
Ratio of expenses to average 1.16% A, F 1.33% F 1.71% F 1.56% F 1.54% F 2.03% F
net assets after expense
reductions
Ratio of net investment (.45)% A (.52)% (.59)% 1.33% .08% (.07)%
income (loss) to average net
assets
Portfolio turnover rate 47% a 109% 219% 99% 223% 107%
</TABLE>
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 NET INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.49 PER SHARE.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
G FOR THE YEAR ENDED FEBRUARY 29
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT RETAILING -10.67% 26.05% 142.38% 416.97%
SELECT RETAILING (LOAD ADJ.) -13.42% 22.19% 135.04% 401.39%
S&P 500 7.32% 39.82% 206.52% 384.79%
GS Consumer Industries -2.00% 24.74% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a 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 AUGUST 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT RETAILING 26.05% 19.37% 17.85%
SELECT RETAILING (LOAD ADJ.) 22.19% 18.64% 17.49%
S&P 500 39.82% 25.11% 17.10%
GS Consumer Industries 24.74% 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
Retailing S&P 500
00046 SP001
1989/08/31 9700.00 10000.00
1989/09/30 9676.99 9959.00
1989/10/31 9210.97 9727.95
1989/11/30 9268.51 9926.40
1989/12/31 9214.22 10164.64
1990/01/31 8494.57 9482.59
1990/02/28 8790.50 9604.91
1990/03/31 9510.15 9859.44
1990/04/30 9375.63 9612.96
1990/05/31 10626.61 10550.22
1990/06/30 10492.10 10478.48
1990/07/31 10061.65 10444.95
1990/08/31 8615.63 9500.72
1990/09/30 7653.85 9038.04
1990/10/31 7297.39 8999.18
1990/11/30 8292.79 9580.52
1990/12/31 8750.67 9847.82
1991/01/31 9600.12 10277.18
1991/02/28 10490.02 11012.00
1991/03/31 11582.16 11278.49
1991/04/30 11743.96 11305.56
1991/05/31 12721.50 11793.96
1991/06/30 12317.00 11253.80
1991/07/31 13105.78 11778.23
1991/08/31 13800.17 12057.37
1991/09/30 13651.85 11856.01
1991/10/31 13395.67 12014.88
1991/11/30 13139.49 11530.68
1991/12/31 14712.78 12849.79
1992/01/31 15528.62 12610.79
1992/02/29 16275.32 12774.73
1992/03/31 15950.37 12525.62
1992/04/30 15300.46 12893.87
1992/05/31 15618.50 12957.05
1992/06/30 14889.44 12763.99
1992/07/31 15551.84 13286.04
1992/08/31 15199.04 13013.68
1992/09/30 15652.64 13167.24
1992/10/31 16725.42 13213.32
1992/11/30 17992.61 13663.90
1992/12/31 17960.81 13831.96
1993/01/31 18084.73 13948.15
1993/02/28 17399.54 14137.85
1993/03/31 18740.77 14436.15
1993/04/30 17665.09 14086.80
1993/05/31 18643.58 14464.33
1993/06/30 18195.41 14506.27
1993/07/31 18285.05 14448.25
1993/08/31 19121.62 14995.84
1993/09/30 19704.23 14880.37
1993/10/31 20010.47 15188.39
1993/11/30 20204.68 15044.10
1993/12/31 20301.38 15226.14
1994/01/31 19396.95 15743.82
1994/02/28 20115.65 15317.17
1994/03/31 19695.73 14649.34
1994/04/30 20293.31 14836.85
1994/05/31 19291.97 15080.17
1994/06/30 19130.46 14710.71
1994/07/31 19453.47 15193.22
1994/08/31 20689.00 15816.14
1994/09/30 20285.23 15428.65
1994/10/31 20374.06 15775.79
1994/11/30 19663.43 15201.24
1994/12/31 19283.89 15426.67
1995/01/31 19130.46 15826.69
1995/02/28 19308.12 16443.45
1995/03/31 19526.15 16928.70
1995/04/30 18767.07 17427.25
1995/05/31 19098.16 18123.82
1995/06/30 20317.53 18544.83
1995/07/31 21561.14 19159.78
1995/08/31 21262.35 19207.87
1995/09/30 21900.30 20018.44
1995/10/31 20923.18 19946.98
1995/11/30 21972.98 20822.65
1995/12/31 21593.44 21223.69
1996/01/31 20963.56 21946.15
1996/02/29 22505.95 22149.59
1996/03/31 24177.54 22362.89
1996/04/30 25590.73 22692.52
1996/05/31 26818.18 23277.76
1996/06/30 26341.73 23366.44
1996/07/31 23822.23 22334.12
1996/08/31 26075.25 22805.14
1996/09/30 27011.99 24088.62
1996/10/31 26479.01 24752.98
1996/11/30 27496.51 26624.06
1996/12/31 26097.95 26096.63
1997/01/31 25976.52 27727.15
1997/02/28 26915.53 27944.53
1997/03/31 27255.52 26796.29
1997/04/30 27674.08 28396.03
1997/05/31 28958.39 30124.78
1997/06/30 30798.97 31474.37
1997/07/31 34128.37 33978.79
1997/08/31 32983.12 32075.30
1997/09/30 35118.19 33832.06
1997/10/31 34921.86 32702.07
1997/11/30 37465.94 34215.85
1997/12/31 36987.35 34803.33
1998/01/31 37627.61 35188.26
1998/02/28 41075.17 37726.04
1998/03/31 43898.88 39657.99
1998/04/30 43725.86 40056.94
1998/05/31 44482.62 39368.37
1998/06/30 46935.86 40967.51
1998/07/31 45630.23 40531.21
1998/08/31 39784.04 34671.20
1998/09/30 40000.26 36892.24
1998/10/31 43734.17 39893.06
1998/11/30 48033.58 42310.97
1998/12/31 53913.03 44748.93
1999/01/31 56249.85 46620.33
1999/02/28 56133.42 45171.37
1999/03/31 57081.45 46978.68
1999/04/30 56175.00 48798.16
1999/05/31 54470.21 47646.04
1999/06/30 58387.07 50290.39
1999/07/31 55700.99 48720.33
1999/08/31 50139.00 48479.16
IMATRL PRASUN SHR__CHT 19990831 19990914 120334 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Retailing Portfolio on August 31, 1989,
and the current 3.00% sales charge was paid. As the chart shows, by
August 31, 1999, the value of the investment would have grown to
$50,139 - a 401.39% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $48,479 - a 384.79% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
Safeway, Inc. 7.3
Home Depot, Inc. 7.2
Dayton Hudson Corp. 7.0
Wal-Mart Stores, Inc. 6.7
McDonald's Corp. 6.3
Kroger Co. 5.9
Walgreen Co. 5.7
Gap, Inc. 5.0
CVS Corp. 4.5
Federated Department Stores, 4.4
Inc.
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Retail & Wholesale,
Miscellaneous 27.0%
General Merchandise Stores 24.9%
Grocery Stores 14.6%
Drug Stores 10.2%
Apparel Stores 8.8%
All Others 14.5%*
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
Row: 1, Col: 1, Value: 14.5
Row: 1, Col: 2, Value: 8.800000000000001
Row: 1, Col: 3, Value: 10.2
Row: 1, Col: 4, Value: 14.6
Row: 1, Col: 5, Value: 24.9
Row: 1, Col: 6, Value: 27.0
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
RETAILING PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
(photograph of Ramin Arani)
(photograph of Steve Calhoun)
NOTE TO SHAREHOLDERS: On August 2, 1999, Steve Calhoun (right) became
Portfolio Manager of Fidelity Select Retailing Portfolio. The
following is an interview with Ramin Arani, who managed the fund
during most of the period covered by this report, with additional
comments from Steve Calhoun on his strategy and outlook.
Q. HOW DID THE FUND PERFORM, RAMIN?
R.A. It was a difficult environment for retailing stocks. During the
six-month period that ended August 31, 1999, the fund lost 10.67%.
This performance lagged the Goldman Sachs Consumer Industries Index -
an index of 300 stocks designed to measure the performance of
companies in the consumer industries sector - which lost 2.00% during
the same period. During the 12-month period that ended August 31,
1999, the fund's 26.05% return compares favorably to the 24.74% return
for the Goldman Sachs index. The Standard & Poor's 500 Index returned
7.32% and 39.82% during the same six- and 12-month periods.
Q. WHAT MARKET FACTORS INFLUENCED THE FUND'S PERFORMANCE AND WHAT
CAUSED THE FUND TO UNDERPERFORM THE GOLDMAN SACHS INDEX?
R.A. Despite positive business fundamentals and strong consumer
spending at many of the retailers the fund invests in, investors opted
to sell off retail stocks during the period. The sell-off was sparked
primarily by the changing economic landscape, characterized by
increasing interest rates, rising oil prices, concerns about potential
inflation and further interest-rate hikes by the Federal Reserve
Board. These economic trends, which were evident during the period,
are generally detrimental to consumer purchasing power and retail
stocks. In terms of the fund's performance relative to the Goldman
Sachs index, a much larger percentage of fund assets are concentrated
in general merchandise, apparel, retail and grocery stores compared to
the index. In light of the difficult environment for retailing stocks,
the fund's greater exposure to these industry groups caused the fund
to underperform the benchmark.
Q. WERE THERE ANY BRIGHT SPOTS FOR THE FUND?
R.A. Federated Department Stores, operator of Macy's and
Bloomingdale's, performed well as it lowered prices and reacted
quickly to fashion changes. Consumer electronics and computer
retailers, such as Best Buy, Tandy and Circuit City, also provided a
significant contribution to fund performance. This group performed
well as consumers continued to snap up electronics products, such as
DVD players and digital phones, to replace older technology.
Q. WHICH STOCKS WERE THE MAIN DETRACTORS?
R.A. Despite solid business fundamentals driven by consolidation and
cost-cutting initiatives, supermarket stocks, such as Safeway and
Kroger, detracted from performance. Generally, the fund's supermarket
holdings suffered amid sluggish sales, due to a deflationary price
environment and looming competition from big discount stores such as
Wal-Mart. In the department store sector, weak earnings results and a
deteriorating growth outlook hurt the group. Specifically, the fund's
holdings in Saks produced poor results after the company reported
lower earnings.
Q. TURNING TO YOU, STEVE, DID YOU MAKE ANY SIGNIFICANT CHANGES TO THE
FUND SINCE TAKING OVER?
S.C. I started to make some selective changes to the fund's holdings
and industry allocations given the changing market environment. For
example, I thought the department store sector had lost some of its
competitive edge relative to specialty retailers and apparel stores,
such as the Gap and the Limited. Nevertheless, certain department
stores, such as Federated, have carved out a niche by expanding their
Internet strategy and by upgrading their assortment of product lines.
This scenario shows us that regardless of the difficulties a certain
industry may experience, there are usually specific situations that
create opportunities for the fund.
Q. WHAT'S YOUR OUTLOOK, STEVE?
S.C. I'm somewhat cautious given the changing economic environment
that Ramin discussed. However, we've never run this fund by trying to
determine what the Fed's next move will be. Over the short and long
term, in spite of inflationary concerns and potentially higher
interest rates, there are compelling investment opportunities in most
of the industries where the fund invests. My focus is to search out
stocks that have the best potential to outperform the companies in
their industry.
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 3.
(checkmark)FUND FACTS
START DATE: December 16, 1985
FUND NUMBER: 046
TRADING SYMBOL: FSRPX
SIZE: as of August 31, 1999, more than
$141 million
MANAGER: Steve Calhoun, since August,
1999; director of associate research,
1997-1999; equity research associate,
1994-1997; joined Fidelity in 1994
RETAILING PORTFOLIO
INVESTMENTS AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 93.3%
SHARES VALUE (NOTE 1)
APPAREL STORES - 8.8%
Abercrombie & Fitch Co. Class 49,002 $ 1,708,945
A (a)
Gap, Inc. 182,087 7,124,154
Limited, Inc. (The) 90,100 3,412,538
Too, Inc. (a) 12,871 226,047
12,471,684
DRUG STORES - 10.2%
CVS Corp. 150,974 6,293,729
Duane Reade, Inc. (a) 100 3,150
Walgreen Co. 348,800 8,087,800
14,384,679
GENERAL MERCHANDISE STORES -
24.9%
BJ's Wholesale Club, Inc. (a) 101,800 2,875,850
Consolidated Stores Corp. (a) 97,358 1,569,898
Dayton Hudson Corp. 169,500 9,831,000
Dollar Tree Stores, Inc. (a) 10,000 330,000
Federated Department Stores, 135,900 6,251,400
Inc. (a)
Kohls Corp. (a) 20,000 1,425,000
Nordstrom, Inc. 94,500 2,675,531
Saks, Inc. (a) 43,385 729,410
Wal-Mart Stores, Inc. 211,500 9,372,094
35,060,183
GROCERY STORES - 14.6%
Kroger Co. (a) 358,960 8,300,950
Loblaw Companies Ltd. 82,600 2,047,705
Safeway, Inc. (a) 220,874 10,284,442
20,633,097
RESTAURANTS - 7.8%
CEC Entertainment, Inc. (a) 21,500 599,313
McDonald's Corp. 215,500 8,916,313
Outback Steakhouse, Inc. (a) 51,500 1,525,688
11,041,314
RETAIL & WHOLESALE,
MISCELLANEOUS - 27.0%
Bed Bath & Beyond, Inc. (a) 59,000 1,622,500
Best Buy Co., Inc. (a) 65,100 4,573,275
Circuit City Stores, Inc. - 52,200 2,244,600
Circuit City Group
Costco Wholesale Corp. 78,200 5,845,450
Home Depot, Inc. 166,300 10,165,088
Lowe's Companies, Inc. 134,700 6,095,175
Staples, Inc. (a) 183,900 3,999,825
Tandy Corp. 54,600 2,579,850
Williams-Sonoma, Inc. (a) 24,000 936,000
38,061,763
TOTAL COMMON STOCKS 131,652,720
(Cost $94,020,676)
CASH EQUIVALENTS - 8.2%
SHARES VALUE (NOTE 1)
Central Cash Collateral Fund, 824,315 $ 824,315
5.26% (b)
Taxable Central Cash Fund, 10,823,084 10,823,084
5.20% (b)
TOTAL CASH EQUIVALENTS 11,647,399
(Cost $11,647,399)
TOTAL INVESTMENT PORTFOLIO - 143,300,119
101.5% (Cost $105,668,075)
NET OTHER ASSETS - (1.5%) (2,153,970)
NET ASSETS - 100% $ 141,146,149
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $68,198,024 and $237,437,228, 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 $19,262 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $729,410. The fund received
cash collateral of $824,315 which was invested in the Central Cash
Collateral Fund.
The fund participated in the interfund lending program as a borrower.
The average daily loan balance during the period for which loans were
outstanding amounted to $25,416,000. The weighted average interest
rate was 4.73%. Interest expense includes $3,337 paid under the
interfund lending program.
The fund participated in the bank borrowing program. The average daily
loan balance during the period for which loans were outstanding
amounted to $11,488,000. The weighted average interest rate was 4.91%.
Interest expense includes $1,567 paid under the bank borrowing
program.
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $106,340,673. Net unrealized appreciation
aggregated $36,959,446, of which $39,957,952 related to appreciated
investment securities and $2,998,506 related to depreciated investment
securities.
RETAILING PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 143,300,119
value (cost $105,668,075) -
See accompanying schedule
Receivable for investments 6,212,480
sold
Receivable for fund shares 207,099
sold
Dividends receivable 55,568
Interest receivable 43,345
Redemption fees receivable 1,719
Other receivables 215,323
TOTAL ASSETS 150,035,653
LIABILITIES
Payable for investments $ 5,308,454
purchased
Payable for fund shares 2,568,747
redeemed
Accrued management fee 77,921
Other payables and accrued 110,067
expenses
Collateral on securities 824,315
loaned at value
TOTAL LIABILITIES 8,889,504
NET ASSETS $ 141,146,149
Net Assets consist of:
Paid in capital $ 64,077,868
Accumulated net investment (696,676)
loss
Accumulated undistributed net 40,132,913
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 37,632,044
(depreciation) on investments
NET ASSETS, for 2,340,844 $ 141,146,149
shares outstanding
NET ASSET VALUE and $60.30
redemption price per share
($141,146,149 (divided by)
2,340,844 shares)
Maximum offering price per $62.16
share (100/97.00 of $60.30)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 349,977
Dividends
Interest 362,116
Security lending 122
TOTAL INCOME 712,215
EXPENSES
Management fee $ 695,234
Transfer agent fees 603,436
Accounting and security 90,048
lending fees
Non-interested trustees' 463
compensation
Custodian fees and expenses 6,895
Registration fees 29,226
Audit 9,217
Legal 1,125
Interest 4,904
Total expenses before 1,440,548
reductions
Expense reductions (31,657) 1,408,891
NET INVESTMENT INCOME (LOSS) (696,676)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 43,501,126
Foreign currency transactions (2,671) 43,498,455
Change in net unrealized (62,994,121)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) (19,495,666)
NET INCREASE (DECREASE) IN $ (20,192,342)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 394,393
charges paid to FDC
Sales charges - Retained by $ 394,258
FDC
Deferred sales charges $ 1,966
withheld by FDC
Exchange fees withheld by FSC $ 16,103
Expense reductions Directed $ 30,171
brokerage arrangements
Custodian credits 1,486
$ 31,657
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ (696,676) $ (1,421,013)
income (loss)
Net realized gain (loss) 43,498,455 381,908
Change in net unrealized (62,994,121) 79,277,166
appreciation (depreciation)
NET INCREASE (DECREASE) IN (20,192,342) 78,238,061
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders - (1,977,498)
From net realized gain
In excess of net realized - (1,495,766)
gain
TOTAL DISTRIBUTIONS - (3,473,264)
Share transactions Net 117,221,796 767,856,791
proceeds from sales of shares
Reinvestment of distributions - 3,407,803
Cost of shares redeemed (293,687,372) (702,182,873)
NET INCREASE (DECREASE) IN (176,465,576) 69,081,721
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 290,895 805,978
TOTAL INCREASE (DECREASE) (196,367,023) 144,652,496
IN NET ASSETS
NET ASSETS
Beginning of period 337,513,172 192,860,676
End of period (including $ 141,146,149 $ 337,513,172
accumulated net investment
loss of $696,676 and $0,
respectively)
OTHER INFORMATION
Shares
Sold 1,695,821 13,691,594
Issued in reinvestment of - 64,738
distributions
Redeemed (4,355,228) (12,610,578)
Net increase (decrease) (2,659,407) 1,145,754
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 1997 1996 F 1995
Net asset value, beginning of $ 67.50 $ 50.04 $ 33.25 $ 27.87 $ 23.91 $ 24.91
period
Income from Investment
Operations
Net investment income (loss) D (.20) (.28) (.27) (.13) (.14) (.18)
Net realized and unrealized (7.08) 18.27 17.14 5.49 4.07 (.96)
gain (loss)
Total from investment (7.28) 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 .08 .16 .43 .10 .03 .14
in capital
Net asset value, end of period $ 60.30 $ 67.50 $ 50.04 $ 33.25 $ 27.87 $ 23.91
TOTAL RETURN B, C (10.67)% 36.66% 52.61% 19.59% 16.56% (4.01)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 141,146 $ 337,513 $ 192,861 $ 59,348 $ 44,051 $ 31,090
(000 omitted)
Ratio of expenses to average 1.18% A 1.25% 1.63% 1.45% 1.94% 2.07%
net assets
Ratio of expenses to average 1.15% A, E 1.22% E 1.55% E 1.39% E 1.92% E 1.96% E
net assets after expense
reductions
Ratio of net investment (.57)% A (.50)% (.67)% (.39)% (.53)% (.74)%
income (loss) to average net
assets
Portfolio turnover rate 61% A 165% 308% 278% 235% 481%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
F FOR 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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT AIR TRANSPORTATION 14.86% 45.99% 133.70% 207.45%
SELECT AIR TRANSPORTATION 11.34% 41.54% 126.62% 198.16%
(LOAD ADJ.)
S&P 500 7.32% 39.82% 206.52% 384.79%
GS Cyclical Industries 8.29% 25.75% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a 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 AUGUST 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT AIR TRANSPORTATION 45.99% 18.50% 11.89%
SELECT AIR TRANSPORTATION 41.54% 17.78% 11.54%
(LOAD ADJ.)
S&P 500 39.82% 25.11% 17.10%
GS Cyclical Industries 25.75% 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
1989/08/31 9700.00 10000.00
1989/09/30 9318.78 9959.00
1989/10/31 8584.57 9727.95
1989/11/30 8499.85 9926.40
1989/12/31 8576.03 10164.64
1990/01/31 7693.42 9482.59
1990/02/28 8017.05 9604.91
1990/03/31 8436.29 9859.44
1990/04/30 8127.37 9612.96
1990/05/31 8693.72 10550.22
1990/06/30 8715.78 10478.48
1990/07/31 8451.00 10444.95
1990/08/31 7112.37 9500.72
1990/09/30 6398.93 9038.04
1990/10/31 6737.26 8999.18
1990/11/30 6634.29 9580.52
1990/12/31 7016.75 9847.82
1991/01/31 7847.88 10277.18
1991/02/28 8730.49 11012.00
1991/03/31 8693.72 11278.49
1991/04/30 8480.42 11305.56
1991/05/31 8980.56 11793.96
1991/06/30 8791.20 11253.80
1991/07/31 9061.47 11778.23
1991/08/31 8948.86 12057.37
1991/09/30 8648.56 11856.01
1991/10/31 9068.98 12014.88
1991/11/30 8663.58 11530.68
1991/12/31 9617.02 12849.79
1992/01/31 10172.57 12610.79
1992/02/29 10630.52 12774.73
1992/03/31 10007.41 12525.62
1992/04/30 9489.39 12893.87
1992/05/31 9617.02 12957.05
1992/06/30 9304.73 12763.99
1992/07/31 9251.25 13286.04
1992/08/31 8861.65 13013.68
1992/09/30 9151.94 13167.24
1992/10/31 9480.43 13213.32
1992/11/30 9709.62 13663.90
1992/12/31 10248.64 13831.96
1993/01/31 10341.32 13948.15
1993/02/28 10503.51 14137.85
1993/03/31 11661.98 14436.15
1993/04/30 11793.81 14086.80
1993/05/31 12467.53 14464.33
1993/06/30 11538.27 14506.27
1993/07/31 11933.20 14448.25
1993/08/31 12645.63 14995.84
1993/09/30 12390.09 14880.37
1993/10/31 13102.52 15188.39
1993/11/30 13133.49 15044.10
1993/12/31 13414.17 15226.14
1994/01/31 13932.21 15743.82
1994/02/28 13437.71 15317.17
1994/03/31 12660.65 14649.34
1994/04/30 12577.39 14836.85
1994/05/31 12051.59 15080.17
1994/06/30 11684.37 14710.71
1994/07/31 12293.63 15193.22
1994/08/31 12761.00 15816.14
1994/09/30 11333.84 15428.65
1994/10/31 11425.65 15775.79
1994/11/30 10666.16 15201.24
1994/12/31 10497.45 15426.67
1995/01/31 10835.26 15826.69
1995/02/28 11764.24 16443.45
1995/03/31 12524.32 16928.70
1995/04/30 13529.30 17427.25
1995/05/31 13748.88 18123.82
1995/06/30 15488.60 18544.83
1995/07/31 16012.21 19159.78
1995/08/31 15395.70 19207.87
1995/09/30 15961.54 20018.44
1995/10/31 15775.74 19946.98
1995/11/30 17811.05 20822.65
1995/12/31 16747.53 21223.69
1996/01/31 16367.69 21946.15
1996/02/29 18223.73 22149.59
1996/03/31 19156.07 22362.89
1996/04/30 18353.80 22692.52
1996/05/31 18528.52 23277.76
1996/06/30 18441.16 23366.44
1996/07/31 15418.59 22334.12
1996/08/31 15139.05 22805.14
1996/09/30 14955.60 24088.62
1996/10/31 14815.83 24752.98
1996/11/30 16624.13 26624.06
1996/12/31 16956.08 26096.63
1997/01/31 16292.17 27727.15
1997/02/28 15479.74 27944.53
1997/03/31 16431.94 26796.29
1997/04/30 17331.72 28396.03
1997/05/31 18537.25 30124.78
1997/06/30 18755.65 31474.37
1997/07/31 19882.56 33978.79
1997/08/31 19122.55 32075.30
1997/09/30 20686.25 33832.06
1997/10/31 20502.80 32702.07
1997/11/30 21026.94 34215.85
1997/12/31 22236.64 34803.33
1998/01/31 23081.54 35188.26
1998/02/28 24938.46 37726.04
1998/03/31 26061.90 39657.99
1998/04/30 26927.97 40056.94
1998/05/31 25805.59 39368.37
1998/06/30 27442.40 40967.51
1998/07/31 25983.30 40531.21
1998/08/31 20427.47 34671.20
1998/09/30 20109.46 36892.24
1998/10/31 22092.35 39893.06
1998/11/30 22569.36 42310.97
1998/12/31 23663.69 44748.93
1999/01/31 25319.22 46620.33
1999/02/28 25964.59 45171.37
1999/03/31 27171.16 46978.68
1999/04/30 30042.73 48798.16
1999/05/31 29880.29 47646.04
1999/06/30 31189.40 50290.39
1999/07/31 31370.96 48720.33
1999/08/31 29816.00 48479.16
IMATRL PRASUN SHR__CHT 19990831 19990914 141048 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Air Transportation Portfolio on August 31,
1989, and the current 3.00% sales charge was paid. As the chart shows,
by August 31, 1999, the value of the investment would have grown to
$29,816 - a 198.16% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $48,479 - a 384.79% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
Atlantic Coast Airlines 10.6
Holdings
AMR Corp. 9.7
Sabre Group Holdings, Inc. 5.3
Class A
Northwest Airlines Corp. 5.3
Class A
SkyWest, Inc. 5.2
Lockheed Martin Corp. 5.1
Delta Air Lines, Inc. 5.1
United Technologies Corp. 4.5
Boeing Co. 4.4
America West Holding Corp. 4.1
Class B
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Air Transportation 55.0%
Aerospace & Defense 17.9%
Trucking & Freight 9.1%
Computer Services
& Software 5.3%
Ship Building & Repair 3.6%
All Other 9.1%*
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
Row: 1, Col: 1, Value: 9.1
Row: 1, Col: 2, Value: 3.6
Row: 1, Col: 3, Value: 5.3
Row: 1, Col: 4, Value: 9.1
Row: 1, Col: 5, Value: 17.9
Row: 1, Col: 6, Value: 55.0
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
AIR TRANSPORTATION PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Christopher Zepf)
Christopher Zepf,
Portfolio Manager
of Fidelity Select
Air Transportation Portfolio
Q. HOW DID THE FUND PERFORM, CHRIS?
A. For the six-month period that ended August 31, 1999, the fund
returned 14.86%. For the same six-month period, the Standard & Poor's
500 Index returned 7.32%. 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 8.29%. For the 12-month period that ended August 31, 1999,
the fund returned 45.99%. That compared to the 39.82% return for the
Standard & Poor's index and the 25.75% return for Goldman Sachs index
during the same 12-month period.
Q. WHAT FACTORS HELPED THE FUND OUTPACE BOTH THE STANDARD & POOR'S AND
GOLDMAN SACHS INDEXES DURING THE PAST SIX MONTHS?
A. Good security selection - which led to a smaller weighting in major
airline carriers and a larger weighting in regional airlines - was the
main factor. Throughout the past six months, the major airline
carriers came under growing pressure because the industry's increased
capacity growth - that is, the number of available airline seats -
outstripped demand growth, meaning the number of tickets sold. In
addition, the price of oil - which is a major cost component for the
airlines - jumped substantially during the period. My strategy was to
pare back the fund's holdings in major carriers in order to focus more
heavily on regional airlines.
Q. HOW DID THAT STRATEGY PAN OUT?
A. That strategy proved beneficial because the regional airline group
held up much better than their major airline counterparts over the
past six months. In contrast to the majors, the regionals typically
enjoy monopolistic-type holds on the smaller, niche-like markets they
fly rather than the head-to-head competition that characterizes the
major carriers. In addition, I emphasized major carriers who had used
various financial instruments to hedge their exposure to rising oil
prices, such as AMR, the parent company of American Airlines.
Q. WHICH HOLDINGS MADE THE BIGGEST CONTRIBUTION TO THE FUND'S
PERFORMANCE?
A. Regional airline holdings, including Atlantic Coast Airlines and
niche player America West, were some of the fund's top performers. In
addition, Northwest Airlines was a standout, benefiting from the
perception that signs of an economic rebound in Asia - which makes up
about one-quarter of Northwest's traffic - would help to improve the
company's business prospects. The fund also benefited from its
holdings in Gulfstream Aerospace, which was acquired by General
Dynamics on July 30, 1999, at a significant profit to the fund.
Computer reservations provider Sabre Holdings also was a winner, in
part boosted by a contract with USAir to handle that airline's
reservations. In addition, investors began to place a higher value on
Sabre's Travelocity.com business - which provides travel information
and airline tickets via the Internet.
Q. WHICH HOLDINGS DETRACTED FROM THE FUND'S PERFORMANCE DURING THE
PAST SIX MONTHS?
A. As I mentioned earlier, major airline carriers such as AMR and
Delta Airlines were the most significant detractors during the past
six months. Despite their recent lackluster performance, however, I
continued to maintain holdings in selected major carriers. For
example, AMR holds 82% of fast-growing Sabre and I believed that the
airline portion of the company was selling at a significant discount
to what I thought was its fair value. Other positives, in my view,
included the fact that the company is led by a strong management team
and has implemented an ongoing effort to buy back some of its shares.
Q. WHAT'S YOUR OUTLOOK?
A. A lot depends on the global economy. For air transport stocks to do
well, we'll likely need continued economic strength in the United
States and for Asia to continue on a path toward recovery. Although
capacity growth will continue to be an issue into next year, I believe
that many of the stocks that make up the sector are more attractively
valued than they were earlier in the year. To the extent that
investors recognize that value, the sector could be poised to do well.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE 3.
(checkmark)FUND FACTS
START DATE: December 16, 1985
FUND NUMBER: 034
TRADING SYMBOL: FSAIX
SIZE: as of August 31, 1999, more than
$50 million
MANAGER: Christopher Zepf, since 1998;
manager, Fidelity Select Transportation
Portfolio, since 1998; joined Fidelity in 1998
AIR TRANSPORTATION PORTFOLIO
INVESTMENTS AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 90.9%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 17.9%
Boeing Co. 49,400 $ 2,238,438
Cordant Technologies, Inc. 30,000 1,241,250
Howmet International, Inc. (a) 40,200 718,575
Lockheed Martin Corp. 69,500 2,571,500
United Technologies Corp. 34,000 2,248,250
9,018,013
AIR TRANSPORTATION - 55.0%
AirTran Holdings, Inc. (a) 47,900 264,947
Alaska Air Group, Inc. (a) 28,100 1,215,325
America West Holding Corp. 107,100 2,088,450
Class B (a)
AMR Corp. (a) 83,500 4,895,188
Atlantic Coast Airlines 267,900 5,324,510
Holdings (a)
Comair Holdings, Inc. 92,575 1,955,647
Continental Airlines, Inc. 35,700 1,457,006
Class B (a)
Delta Air Lines, Inc. 50,500 2,566,031
Mesaba Holdings, Inc. (a) 60,700 751,163
Northwest Airlines Corp. 89,900 2,652,050
Class A (a)
SkyWest, Inc. 131,400 2,644,425
Southwest Airlines Co. 114,350 1,908,216
27,722,958
COMPUTER SERVICES & SOFTWARE
- - 5.3%
Sabre Group Holdings, Inc. 47,600 2,665,600
Class A (a)
SHIP BUILDING & REPAIR - 3.6%
General Dynamics Corp. 28,400 1,789,200
TRUCKING & FREIGHT - 9.1%
Air Express International 37,300 911,519
Corp.
Airborne Freight Corp. 58,100 1,463,394
Eagle USA Airfreight, Inc. (a) 25,150 704,200
Expeditors International of 47,200 1,525,150
Washington, Inc.
4,604,263
TOTAL COMMON STOCKS 45,800,034
(Cost $40,207,437)
CONVERTIBLE PREFERRED STOCKS
- - 2.1%
OIL & GAS - 2.1%
Tesoro Petroleum Corp. 60,000 1,027,500
$1.1552 PIES (Cost $776,281)
CASH EQUIVALENTS - 3.3%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund, 1,658,624 $ 1,658,624
5.20% (b) (Cost $1,658,624)
TOTAL INVESTMENT PORTFOLIO - 48,486,158
96.3%
(Cost $42,642,342)
NET OTHER ASSETS - 3.7% 1,888,480
NET ASSETS - 100% $ 50,374,638
SECURITY TYPE ABBREVIATIONS
PIES - Premium Income Equity Securities
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $92,415,367 and $117,058,277, 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 $18,231 for the
period.
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $43,406,820. Net unrealized appreciation
aggregated $5,079,338, of which $7,117,275 related to appreciated
investment securities and $2,037,937 related to depreciated investment
securities.
AIR TRANSPORTATION PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 48,486,158
value (cost $42,642,342) -
See accompanying schedule
Receivable for investments 2,269,818
sold
Receivable for fund shares 27,290
sold
Dividends receivable 38,975
Interest receivable 17,134
Redemption fees receivable 232
Other receivables 575
TOTAL ASSETS 50,840,182
LIABILITIES
Payable for fund shares $ 395,694
redeemed
Accrued management fee 27,832
Other payables and accrued 42,018
expenses
TOTAL LIABILITIES 465,544
NET ASSETS $ 50,374,638
Net Assets consist of:
Paid in capital $ 36,234,292
Accumulated net investment (166,056)
loss
Accumulated undistributed net 8,462,523
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 5,843,879
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 1,614,104 $ 50,374,638
shares outstanding
NET ASSET VALUE and $31.21
redemption price per share
($50,374,638 (divided by)
1,614,104 shares)
Maximum offering price per $32.18
share (100/97.00 of $31.21)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 168,249
Dividends
Interest 123,014
TOTAL INCOME 291,263
EXPENSES
Management fee $ 208,372
Transfer agent fees 204,883
Accounting fees and expenses 30,838
Non-interested trustees' 104
compensation
Custodian fees and expenses 6,729
Registration fees 25,382
Audit 4,336
Legal 44
Total expenses before 480,688
reductions
Expense reductions (23,369) 457,319
NET INVESTMENT INCOME (LOSS) (166,056)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 10,802,006
Foreign currency transactions 1,122 10,803,128
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (1,370,894)
Assets and liabilities in (1,880) (1,372,774)
foreign currencies
NET GAIN (LOSS) 9,430,354
NET INCREASE (DECREASE) IN $ 9,264,298
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 93,135
charges paid to FDC
Sales charges - Retained by $ 90,549
FDC
Deferred sales charges $ 433
withheld by FDC
Exchange fees withheld by FSC $ 4,463
Expense reductions Directed $ 23,100
brokerage arrangements
Custodian credits 269
$ 23,369
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ (166,056) $ (494,512)
income (loss)
Net realized gain (loss) 10,803,128 10,294,170
Change in net unrealized (1,372,774) (7,870,755)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 9,264,298 1,928,903
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (1,461,646) (1,287,140)
from net realized gains
Share transactions Net 64,949,277 234,828,394
proceeds from sales of shares
Reinvestment of distributions 1,415,821 1,276,230
Cost of shares redeemed (89,901,207) (352,683,506)
NET INCREASE (DECREASE) IN (23,536,109) (116,578,882)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 158,684 701,437
TOTAL INCREASE (DECREASE) (15,574,773) (115,235,682)
IN NET ASSETS
NET ASSETS
Beginning of period 65,949,411 181,185,093
End of period (including $ 50,374,638 $ 65,949,411
accumulated net investment
loss of $166,056 and $0,
respectively)
OTHER INFORMATION
Shares
Sold 2,121,060 8,676,907
Issued in reinvestment of 49,400 44,922
distributions
Redeemed (2,931,745) (13,091,302)
Net increase (decrease) (761,285) (4,369,473)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 1997 1996 G 1995
Net asset value, beginning of $ 27.76 $ 26.86 $ 17.72 $ 21.11 $ 13.93 $ 17.12
period
Income from Investment
Operations
Net investment income (loss) D (.07) (.14) (.19) (.22) (.01) (.18)
Net realized and unrealized 4.07 1.06 10.59 (3.12) 7.47 (2.01)
gain (loss)
Total from investment 4.00 .92 10.40 (3.34) 7.46 (2.19)
operations
Less Distributions
From net realized gain (.62) (.21) (1.43) (.07) (.46) (.92)
In excess of net realized gain - - - (.20) - (.17)
Total distributions (.62) (.21) (1.43) (.27) (.46) (1.09)
Redemption fees added to paid .07 .19 .17 .22 .18 .09
in capital
Net asset value, end of period $ 31.21 $ 27.76 $ 26.86 $ 17.72 $ 21.11 $ 13.93
TOTAL RETURN B, C 14.86% 4.11% 61.10% (15.06)% 54.91% (12.45)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 50,375 $ 65,949 $ 181,185 $ 35,958 $ 75,359 $ 18,633
(000 omitted)
Ratio of expenses to average 1.33% A 1.35% 1.93% 1.89% 1.47% 2.50% E
net assets
Ratio of expenses to average 1.26% A, F 1.27% F 1.87% F 1.80% F 1.41% F 2.50%
net assets after expense
reductions
Ratio of net investment (.46)% A (.50)% (.84)% (1.10)% (.07)% (1.31)%
income (loss) to average net
assets
Portfolio turnover rate 288% A 260% 294% 469% 504% 200%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES,
OR EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE
LIMITATION. WITHOUT THIS REIMBURSEMENT, THE FUND'S
EXPENSE RATIO WOULD HAVE BEEN HIGHER.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
G 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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT AUTOMOTIVE 3.31% 17.66% 50.12% 206.80%
SELECT AUTOMOTIVE (LOAD ADJ.) 0.14% 14.06% 45.54% 197.52%
S&P 500 7.32% 39.82% 206.52% 384.79%
GS Cyclical Industries 8.29% 25.75% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a 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 AUGUST 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT AUTOMOTIVE 17.66% 8.46% 11.86%
SELECT AUTOMOTIVE (LOAD ADJ.) 14.06% 7.79% 11.52%
S&P 500 39.82% 25.11% 17.10%
GS Cyclical Industries 25.75% 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
1989/08/31 9700.00 10000.00
1989/09/30 9475.60 9959.00
1989/10/31 8686.57 9727.95
1989/11/30 8766.19 9926.40
1989/12/31 8794.14 10164.64
1990/01/31 8561.93 9482.59
1990/02/28 8816.61 9604.91
1990/03/31 9146.21 9859.44
1990/04/30 9116.24 9612.96
1990/05/31 9633.11 10550.22
1990/06/30 9805.60 10478.48
1990/07/31 9835.98 10444.95
1990/08/31 8423.25 9500.72
1990/09/30 7618.14 9038.04
1990/10/31 7466.23 8999.18
1990/11/30 7906.76 9580.52
1990/12/31 8202.98 9847.82
1991/01/31 8666.30 10277.18
1991/02/28 9372.67 11012.00
1991/03/31 9448.62 11278.49
1991/04/30 9554.96 11305.56
1991/05/31 10322.09 11793.96
1991/06/30 10299.30 11253.80
1991/07/31 10724.64 11778.23
1991/08/31 11074.03 12057.37
1991/09/30 10747.43 11856.01
1991/10/31 11028.45 12014.88
1991/11/30 10481.59 11530.68
1991/12/31 11264.77 12849.79
1992/01/31 12481.71 12610.79
1992/02/29 13738.69 12774.73
1992/03/31 14034.92 12525.62
1992/04/30 14931.62 12893.87
1992/05/31 14923.61 12957.05
1992/06/30 14834.83 12763.99
1992/07/31 14971.15 13286.04
1992/08/31 14040.96 13013.68
1992/09/30 13808.42 13167.24
1992/10/31 14385.77 13213.32
1992/11/30 15083.41 13663.90
1992/12/31 15952.56 13831.96
1993/01/31 16689.21 13948.15
1993/02/28 16934.76 14137.85
1993/03/31 17843.29 14436.15
1993/04/30 17740.20 14086.80
1993/05/31 18820.48 14464.33
1993/06/30 19149.63 14506.27
1993/07/31 19369.06 14448.25
1993/08/31 20044.23 14995.84
1993/09/30 20255.22 14880.37
1993/10/31 20685.65 15188.39
1993/11/30 20685.65 15044.10
1993/12/31 21597.31 15226.14
1994/01/31 22828.47 15743.82
1994/02/28 22091.50 15317.17
1994/03/31 20539.55 14649.34
1994/04/30 20121.91 14836.85
1994/05/31 19823.80 15080.17
1994/06/30 19569.54 14710.71
1994/07/31 20156.98 15193.22
1994/08/31 19823.80 15816.14
1994/09/30 18982.10 15428.65
1994/10/31 19341.58 15775.79
1994/11/30 18175.47 15201.24
1994/12/31 18843.03 15426.67
1995/01/31 18395.31 15826.69
1995/02/28 19310.21 16443.45
1995/03/31 19212.88 16928.70
1995/04/30 19154.48 17427.25
1995/05/31 19543.80 18123.82
1995/06/30 20030.45 18544.83
1995/07/31 21470.93 19159.78
1995/08/31 21276.27 19207.87
1995/09/30 21383.33 20018.44
1995/10/31 20390.57 19946.98
1995/11/30 20896.68 20822.65
1995/12/31 21373.60 21223.69
1996/01/31 21120.54 21946.15
1996/02/29 21266.53 22149.59
1996/03/31 22561.02 22362.89
1996/04/30 23700.87 22692.52
1996/05/31 24246.62 23277.76
1996/06/30 23964.00 23366.44
1996/07/31 22570.40 22334.12
1996/08/31 23145.38 22805.14
1996/09/30 23340.29 24088.62
1996/10/31 23447.49 24752.98
1996/11/30 24636.43 26624.06
1996/12/31 24808.56 26096.63
1997/01/31 25243.08 27727.15
1997/02/28 25647.30 27944.53
1997/03/31 25142.03 26796.29
1997/04/30 25703.81 28396.03
1997/05/31 27173.80 30124.78
1997/06/30 27992.79 31474.37
1997/07/31 29221.29 33978.79
1997/08/31 29000.79 32075.30
1997/09/30 30586.28 33832.06
1997/10/31 29179.29 32702.07
1997/11/30 28979.79 34215.85
1997/12/31 28971.04 34803.33
1998/01/31 28959.59 35188.26
1998/02/28 31490.26 37726.04
1998/03/31 33402.58 39657.99
1998/04/30 33248.55 40056.94
1998/05/31 33062.94 39368.37
1998/06/30 32555.62 40967.51
1998/07/31 31342.98 40531.21
1998/08/31 25292.16 34671.20
1998/09/30 25304.54 36892.24
1998/10/31 27593.70 39893.06
1998/11/30 29090.94 42310.97
1998/12/31 30402.56 44748.93
1999/01/31 30798.53 46620.33
1999/02/28 28806.34 45171.37
1999/03/31 28187.64 46978.68
1999/04/30 31330.60 48798.16
1999/05/31 31206.87 47646.04
1999/06/30 32184.40 50290.39
1999/07/31 30464.43 48720.33
1999/08/31 29752.00 48479.16
IMATRL PRASUN SHR__CHT 19990831 19990914 144425 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Automotive Portfolio on August 31, 1989,
and the current 3.00% sales charge was paid. As the chart shows, by
August 31, 1999, the value of the investment would have grown to
$29,752 - a 197.52% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $48,479 - a 384.79% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
Federal-Mogul Corp. 8.3
SPX Corp. 6.6
TRW, Inc. 5.9
Eaton Corp. 5.7
Ford Motor Co. 5.6
Danaher Corp. 5.6
Honda Motor Co. Ltd. 5.4
Johnson Controls, Inc. 5.1
Navistar International Corp. 4.1
AutoZone, Inc. 3.7
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Autos, Tires, & Accessories 88.6%
Consumer Durables 2.5%
Iron & Steel 1.9%
Industrial Machinery
& Equipment 1.2%
Electronics 0.5%
All Others 5.3%*
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
Row: 1, Col: 1, Value: 5.3
Row: 1, Col: 2, Value: 0.5
Row: 1, Col: 3, Value: 1.2
Row: 1, Col: 4, Value: 1.9
Row: 1, Col: 5, Value: 2.5
Row: 1, Col: 6, Value: 88.59999999999999
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
AUTOMOTIVE PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
(photograph of Albert Grosman)
(photograph of Douglas Nigen)
NOTE TO SHAREHOLDERS: On September 1, 1999, after the period covered
by this report, Douglas Nigen (right) became Portfolio Manager of
Fidelity Select Automotive Portfolio. The following is an interview
with Albert Grosman, who managed the fund during the period covered by
this report, with comments from Douglas Nigen on his outlook.
Q. HOW DID THE FUND PERFORM, ALBERT?
A.G. For the six months that ended August 31, 1999, the fund returned
3.31%. For the same period, the Standard & Poor's 500 Index returned
7.32%, 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 8.29%. For the year that ended
August 31, 1999, the fund returned 17.66%, while the S&P 500 and the
Goldman Sachs index returned 39.82% and 25.75%, respectively. The fund
underperformed the Goldman Sachs index because the index had a larger
exposure to commodity-oriented stocks that rallied strongly during
part of the period while automotive stocks remained relatively flat.
Q. WHAT FACTORS AFFECTED AUTOMOTIVE STOCKS DURING THE SIX-MONTH
PERIOD?
A.G. The biggest factor by far was the changing interest-rate
environment. Long-term interest rates rose throughout the period, as
investors feared that the strong domestic economy in concert with
improving overseas economies could rekindle inflation. Cyclical stocks
such as automobile manufacturers generally do not perform well when
interest rates are rising - auto loan and lease rates increase in
sympathy, automobile purchases become relatively more expensive and
many consumers postpone new purchases. As a result, auto manufacturers
offered consumers substantial incentives to keep sales volume up, and
this had a negative effect on earnings growth. Another factor was
continued weakness in the auto-replacement parts market. Domestic
vehicle quality has improved significantly over the past decade, which
has reduced demand for replacement parts.
Q. WHAT STRATEGY DID YOU PURSUE IN SUCH A CHALLENGING ENVIRONMENT?
A.G. I reduced the portfolio's exposure to auto manufacturers and
added holdings in companies with automobile-related businesses. For
example, I increased the fund's weighting in Danaher and Snap-On Tools
- - two companies that manufacture tools, equipment and controls used in
manufacturing automation. These stocks represent companies with more
diversified operations and less cyclical characteristics than those
that rely more heavily on automobile and parts manufacturing. I also
reduced the fund's investment in auto-parts stocks because - in
addition to reduced demand for replacement parts - vehicle
manufacturers are outsourcing more and more component manufacturing in
an effort to increase their own manufacturing efficiency. This
increases parts manufacturers' fixed costs, which in turn reduces
their margins and hurts their earnings.
Q. WHAT STOCKS PERFORMED WELL?
A.G. Several of the portfolio's top-10 holdings contributed to the
fund's total return. SPX Corp. - a diversified producer of industrial
products, vehicle components and auto aftermarket diagnostic tools -
performed very well. SPX profited from a successful acquisition
strategy that increased efficiency and significantly enhanced its
growth potential. Eaton and Navistar International also generated
strong returns. Both companies have large North American trucking
operations that benefited from increased demand for overnight
shipping.
Q. WERE THERE ANY DISAPPOINTMENTS?
A.G. The stocks that did poorly fell into two categories: domestic
automobile manufacturers and aftermarket parts manufacturers. Ford,
General Motors and DaimlerChrysler all had negative returns resulting
from the impact of higher interest rates that led to increased
incentives and deteriorating margins. Pep Boys and Autozone suffered
from the weak market for replacement parts that I discussed earlier.
Q. TURNING TO YOU DOUG, WHAT'S YOUR OUTLOOK FOR THE MONTHS AHEAD?
D.N. I am cautiously optimistic about the automotive group over the
next three to six months for several reasons. First, although I expect
vehicle volume to remain stable, I am concerned about pricing and
incentives. Second, I anticipate continuing consolidation by
auto-parts businesses. What remains to be seen is how quickly they can
cut costs and increase efficiency - both critical factors for their
stock prices. Lastly, the United Auto Workers' three-year national
contract with the major domestic auto producers expired in September.
At the time of this report, negotiations appeared to be starting
favorably, but their outcome and the final contract's impact on the
auto companies is still uncertain.
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 3.
(checkmark)FUND FACTS
START DATE: June 30, 1986
FUND NUMBER: 502
TRADING SYMBOL: FSAVX
SIZE: as of August 31, 1999, more than $19
million
MANAGER: Douglas Nigen, since September
1999; analyst, automotive manufacturing,
automotive parts, tire and rental car industries,
1999- present; specialty apparel industry,
1997-1999; joined Fidelity in 1997
AUTOMOTIVE PORTFOLIO
INVESTMENTS AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 95.2%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES -
88.6%
American Axle & Manufacturing 6,400 $ 100,000
Holdings, Inc. (a)
Arvin Industries, Inc. 7,600 271,700
AutoNation, Inc. (a) 13,300 172,069
AutoZone, Inc. (a) 30,200 719,138
Borg-Warner Automotive, Inc. 2,700 127,913
DaimlerChrysler AG (Reg.) 8,427 633,605
Dana Corp. 14,600 636,013
Danaher Corp. 18,500 1,086,875
Delphi Automotive Systems 6,924 129,825
Corp.
Discount Auto Parts, Inc. (a) 4,400 84,150
Dura Automotive Systems, Inc. 3,400 87,975
Class A (a)
Eaton Corp. 11,250 1,102,500
Federal-Mogul Corp. 35,100 1,601,433
Ford Motor Co. 20,900 1,089,413
General Motors Corp. 8,500 562,063
Gentex Corp. (a) 9,000 172,125
Goodyear Tire & Rubber Co. 7,400 415,325
Hayes Lemmerz International, 7,000 197,313
Inc. (a)
Honda Motor Co. Ltd. 26,000 1,044,320
Johnson Controls, Inc. 14,550 994,856
Lear Corp. (a) 9,100 365,706
Lithia Motors, Inc. (a) 9,600 194,400
Magna International, Inc. 8,800 436,905
Class A
Mascotech, Inc. 6,100 105,225
Monro Muffler Brake, Inc. (a) 3,395 23,128
Navistar International Corp. 16,300 792,588
(a)
Oshkosh Truck Co. Class B 3,600 121,050
Pep Boys-Manny, Moe & Jack 31,100 452,894
Sonic Automotive, Inc. (a) 12,200 147,163
SPX Corp. (a) 15,100 1,279,725
Standard Motor Products, Inc. 7,400 166,500
Tower Automotive, Inc. (a) 23,200 464,000
TRW, Inc. 20,800 1,133,600
Volkswagen AG 2,900 173,280
Wynn's International, Inc. 2,400 43,200
17,127,975
CONSUMER DURABLES - 2.5%
Snap-On, Inc. 14,400 486,900
ELECTRONICS - 0.5%
Stoneridge, Inc. (a) 5,900 106,200
INDUSTRIAL MACHINERY &
EQUIPMENT - 1.2%
Mark IV Industries, Inc. 11,300 223,881
SHARES VALUE (NOTE 1)
IRON & STEEL - 1.9%
Linamar Corp. 17,400 $ 254,151
SPS Technologies, Inc. (a) 3,000 117,563
371,714
LEISURE DURABLES & TOYS - 0.5%
Coachmen Industries, Inc. 5,600 88,550
TOTAL COMMON STOCKS 18,405,220
(Cost $16,571,784)
CASH EQUIVALENTS - 7.1%
Central Cash Collateral Fund, 401,500 401,500
5.26% (b)
Taxable Central Cash Fund, 970,461 970,461
5.20% (b)
TOTAL CASH EQUIVALENTS 1,371,961
(Cost $1,371,961)
TOTAL INVESTMENT PORTFOLIO - 19,777,181
102.3% (Cost $17,943,745)
NET OTHER ASSETS - (2.3%) $ (449,286)
NET ASSETS - 100% $ 19,327,895
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $1,794,438 and $46,339,377, 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 $4,817 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $409,713. The fund received
cash collateral of $401,500 which was invested in the Central Cash
Collateral Fund.
The fund participated in the bank borrowing program. The average daily
loan balance during the period for which loans were outstanding
amounted to $941,800. The weighted average interest rate was 5.58%.
Distribution of investments by country of issue, as a percentage of
net assets is as follows:
United States of America 86.8%
Japan 5.4
Germany 4.2
Canada 3.6
100.0%
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $18,046,033. Net unrealized appreciation
aggregated $1,731,148, of which $2,794,004 related to appreciated
investment securities and $1,062,856 related to depreciated investment
securities.
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 has elected 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.
AUTOMOTIVE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 19,777,181
value (cost $17,943,745) -
See accompanying schedule
Receivable for fund shares 167
sold
Dividends receivable 39,351
Interest receivable 4,434
Redemption fees receivable 59
Other receivables 139
TOTAL ASSETS 19,821,331
LIABILITIES
Payable for fund shares $ 49,795
redeemed
Accrued management fee 9,798
Other payables and accrued 32,343
expenses
Collateral on securities 401,500
loaned, at value
TOTAL LIABILITIES 493,436
NET ASSETS $ 19,327,895
Net Assets consist of:
Paid in capital $ 24,839,163
Accumulated net investment (55,827)
loss
Accumulated undistributed net (7,288,869)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 1,833,428
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 803,745 $ 19,327,895
shares outstanding
NET ASSET VALUE and $24.05
redemption price per share
($19,327,895 (divided by)
803,745 shares)
Maximum offering price per $24.79
share (100/97.00 of $24.05)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 174,736
Dividends
Interest 37,825
Security lending 139
TOTAL INCOME 212,700
EXPENSES
Management fee $ 91,437
Transfer agent fees 121,515
Accounting and security 30,325
lending fees
Non-interested trustees' 89
compensation
Custodian fees and expenses 6,655
Registration fees 19,140
Audit 4,167
Legal 23
Interest 730
Total expenses before 274,081
reductions
Expense reductions (5,554) 268,527
NET INVESTMENT INCOME (LOSS) (55,827)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (2,704,543)
Foreign currency transactions 8,308 (2,696,235)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 2,957,736
Assets and liabilities in (55) 2,957,681
foreign currencies
NET GAIN (LOSS) 261,446
NET INCREASE (DECREASE) IN $ 205,619
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 13,408
charges paid to FDC
Sales charges - Retained by $ 13,408
FDC
Deferred sales charges $ 215
withheld by FDC
Exchange fees withheld by FSC $ 6,510
Expense reductions Directed $ 5,554
brokerage arrangements
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ (55,827) $ 69,009
income (loss)
Net realized gain (loss) (2,696,235) (4,430,338)
Change in net unrealized 2,957,681 (3,784,633)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 205,619 (8,145,962)
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders - (41,356)
From net investment income
From net realized gain - (2,674,498)
TOTAL DISTRIBUTIONS - (2,715,854)
Share transactions Net 12,219,159 93,308,374
proceeds from sales of shares
Reinvestment of distributions - 2,635,878
Cost of shares redeemed (57,698,902) (53,084,232)
NET INCREASE (DECREASE) IN (45,479,743) 42,860,020
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 60,925 53,948
TOTAL INCREASE (DECREASE) (45,213,199) 32,052,152
IN NET ASSETS
NET ASSETS
Beginning of period 64,541,094 32,488,942
End of period (including $ 19,327,895 $ 64,541,094
undistributed net investment
income (loss) of $(55,827)
and $47,401, respectively)
OTHER INFORMATION
Shares
Sold 485,431 3,661,058
Issued in reinvestment of - 97,455
distributions
Redeemed (2,454,281) (2,167,227)
Net increase (decrease) (1,968,850) 1,591,286
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 1997 1996 F 1995
Net asset value, beginning of $ 23.28 $ 27.50 $ 25.38 $ 21.85 $ 19.84 $ 25.48
period
Income from Investment
Operations
Net investment income (loss) D (.04) .03 .05 .13 .03 .08
Net realized and unrealized .76 (2.09) 5.21 4.28 1.95 (3.46)
gain (loss)
Total from investment .72 (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 .05 .02 .03 .04 .03 .05
in capital
Net asset value, end of period $ 24.05 $ 23.28 $ 27.50 $ 25.38 $ 21.85 $ 19.84
TOTAL RETURN B, C 3.31% (8.52)% 22.78% 20.60% 10.13% (12.59)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 19,328 $ 64,541 $ 32,489 $ 86,347 $ 55,753 $ 60,075
(000 omitted)
Ratio of expenses to average 1.70% A 1.45% 1.60% 1.56% 1.81% 1.82%
net assets
Ratio of expenses to average 1.66% A, E 1.41% E 1.56% E 1.52% E 1.80% E 1.80% E
net assets after expense
reductions
Ratio of net investment (.35)% A .11% .17% .54% .13% .34%
income (loss) to average net
assets
Portfolio turnover rate 12% A 96% 153% 175% 61% 63%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
F FOR THE YEAR ENDED FEBRUARY 29
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT CHEMICALS 17.07% 20.94% 51.36% 187.92%
SELECT CHEMICALS (LOAD ADJ.) 13.49% 17.24% 46.75% 179.21%
S&P 500 7.32% 39.82% 206.52% 384.79%
GS Cyclical Industries 8.29% 25.75% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a 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 AUGUST 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT CHEMICALS 20.94% 8.64% 11.15%
SELECT CHEMICALS (LOAD ADJ.) 17.24% 7.97% 10.81%
S&P 500 39.82% 25.11% 17.10%
GS Cyclical Industries 25.75% 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
1989/08/31 9700.00 10000.00
1989/09/30 9355.00 9959.00
1989/10/31 8694.05 9727.95
1989/11/30 8879.26 9926.40
1989/12/31 9237.25 10164.64
1990/01/31 8579.09 9482.59
1990/02/28 8636.48 9604.91
1990/03/31 8892.86 9859.44
1990/04/30 8686.23 9612.96
1990/05/31 9443.88 10550.22
1990/06/30 9520.97 10478.48
1990/07/31 9552.47 10444.95
1990/08/31 8276.71 9500.72
1990/09/30 7867.20 9038.04
1990/10/31 7957.76 8999.18
1990/11/30 8489.33 9580.52
1990/12/31 8855.52 9847.82
1991/01/31 9450.09 10277.18
1991/02/28 10174.60 11012.00
1991/03/31 10418.73 11278.49
1991/04/30 10336.04 11305.56
1991/05/31 11052.67 11793.96
1991/06/30 10752.29 11253.80
1991/07/31 11270.52 11778.23
1991/08/31 11492.06 12057.37
1991/09/30 11405.03 11856.01
1991/10/31 11587.00 12014.88
1991/11/30 11009.43 11530.68
1991/12/31 12279.22 12849.79
1992/01/31 12515.04 12610.79
1992/02/29 12966.37 12774.73
1992/03/31 12872.85 12525.62
1992/04/30 13340.43 12893.87
1992/05/31 13263.18 12957.05
1992/06/30 12870.04 12763.99
1992/07/31 13276.15 13286.04
1992/08/31 12822.52 13013.68
1992/09/30 12835.48 13167.24
1992/10/31 12705.87 13213.32
1992/11/30 13090.38 13663.90
1992/12/31 13372.65 13831.96
1993/01/31 13358.89 13948.15
1993/02/28 13125.01 14137.85
1993/03/31 13436.85 14436.15
1993/04/30 13686.08 14086.80
1993/05/31 13893.30 14464.33
1993/06/30 13544.79 14506.27
1993/07/31 13752.01 14448.25
1993/08/31 14425.49 14995.84
1993/09/30 13968.65 14880.37
1993/10/31 14496.13 15188.39
1993/11/30 14604.45 15044.10
1993/12/31 15078.61 15226.14
1994/01/31 16252.30 15743.82
1994/02/28 16226.67 15317.17
1994/03/31 15739.77 14649.34
1994/04/30 16500.93 14836.85
1994/05/31 16898.24 15080.17
1994/06/30 16686.69 14710.71
1994/07/31 17440.01 15193.22
1994/08/31 18451.33 15816.14
1994/09/30 18317.17 15428.65
1994/10/31 18286.21 15775.79
1994/11/30 16851.80 15201.24
1994/12/31 17306.52 15426.67
1995/01/31 16854.27 15826.69
1995/02/28 17832.40 16443.45
1995/03/31 18379.31 16928.70
1995/04/30 18773.30 17427.25
1995/05/31 18960.23 18123.82
1995/06/30 19280.69 18544.83
1995/07/31 20193.98 19159.78
1995/08/31 20279.44 19207.87
1995/09/30 20599.89 20018.44
1995/10/31 19574.44 19946.98
1995/11/30 20428.98 20822.65
1995/12/31 21018.47 21223.69
1996/01/31 21984.58 21946.15
1996/02/29 22732.16 22149.59
1996/03/31 23830.52 22362.89
1996/04/30 24078.85 22692.52
1996/05/31 24026.77 23277.76
1996/06/30 23720.07 23366.44
1996/07/31 22759.46 22334.12
1996/08/31 23766.36 22805.14
1996/09/30 24819.56 24088.62
1996/10/31 24987.37 24752.98
1996/11/30 25907.47 26624.06
1996/12/31 25541.48 26096.63
1997/01/31 25941.24 27727.15
1997/02/28 26156.49 27944.53
1997/03/31 25313.92 26796.29
1997/04/30 26249.95 28396.03
1997/05/31 27542.75 30124.78
1997/06/30 28299.96 31474.37
1997/07/31 30565.43 33978.79
1997/08/31 30657.77 32075.30
1997/09/30 30848.61 33832.06
1997/10/31 29309.57 32702.07
1997/11/30 29475.79 34215.85
1997/12/31 29750.33 34803.33
1998/01/31 29321.44 35188.26
1998/02/28 31248.06 37726.04
1998/03/31 32398.59 39657.99
1998/04/30 32497.33 40056.94
1998/05/31 31225.24 39368.37
1998/06/30 28708.87 40967.51
1998/07/31 26268.97 40531.21
1998/08/31 23092.22 34671.20
1998/09/30 22981.00 36892.24
1998/10/31 23613.57 39893.06
1998/11/30 25316.64 42310.97
1998/12/31 25021.35 44748.93
1999/01/31 23632.98 46620.33
1999/02/28 23855.42 45171.37
1999/03/31 24676.17 46978.68
1999/04/30 29539.30 48798.16
1999/05/31 28242.98 47646.04
1999/06/30 28657.19 50290.39
1999/07/31 28219.97 48720.33
1999/08/31 27921.00 48479.16
IMATRL PRASUN SHR__CHT 19990831 19990914 121251 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Chemicals Portfolio on August 31, 1989,
and the current 3.00% sales charge was paid. As the chart shows, by
August 31, 1999, the value of the investment would have grown to
$27,921 - a 179.21% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $48,479 - a 384.79% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
Praxair, Inc. 6.3
PPG Industries, Inc. 4.9
Rhone-Poulenc SA sponsored 4.9
ADR Class A
Monsanto Co. 4.8
Rohm & Haas Co. 4.1
Union Carbide Corp. 3.6
Minnesota Mining & 3.6
Manufacturing Co.
Avery Dennison Corp. 3.6
Air Products & Chemicals, Inc. 3.5
Dow Chemical Co. 3.4
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Chemicals & Plastics 58.7%
Drugs & Pharmaceuticals 8.4%
Building Materials 5.2%
Consumer Durables 3.6%
Services 3.2%
All Others 20.9%*
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
Row: 1, Col: 1, Value: 20.9
Row: 1, Col: 2, Value: 3.2
Row: 1, Col: 3, Value: 3.6
Row: 1, Col: 4, Value: 5.2
Row: 1, Col: 5, Value: 8.4
Row: 1, Col: 6, Value: 58.7
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
CHEMICALS PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
(photograph of Dylan Yolles)(photograph of Jonathan Zang)
NOTE TO SHAREHOLDERS: On September 1, 1999, after the period covered
by this report, Jonathan Zang (right) became Portfolio Manager of
Fidelity Select Chemicals Portfolio. The following is an interview
with Dylan Yolles, who managed the fund during the period covered by
this report, with comments from Jonathan Zang on his investment style
and outlook.
Q. HOW DID THE FUND PERFORM, DYLAN?
D.Y. For the six months that ended August 31, 1999, the fund had a
total return of 17.07%. For the 12-month period ending August 31,
1999, it returned 20.94%. For the same six-and 12-month periods, the
Standard & Poor's 500 Index returned 7.32% and 39.82%, respectively,
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 returns of 8.29% and 25.75%,
respectively.
Q. WHAT FACTORS HELPED THE FUND OUTPERFORM THE GOLDMAN SACHS INDEX
DURING THE SIX-MONTH PERIOD?
D.Y. During the past six months, chemical company stocks tended to do
better than cyclical stocks in general, and some of the fund's larger
holdings were particularly good performers. The primary external
factor that helped the chemical industry was the perception that the
Asian economic crisis was over, and that world economies would
improve. Chemical companies met earnings expectations and investors
sensed that the industry was recovering. At the same time, companies
producing commodity chemicals enjoyed better prices for their
products, a result of low inventories and strong demand. The fund was
well-represented among commodity companies.
Q. WHAT WERE SOME OF THE PARTICULAR STOCKS THAT HELPED PERFORMANCE?
D.Y. DuPont was the biggest contributor to performance. I invested in
the company when the global economic outlook was not so bright because
I felt it had an attractive stock price that was not likely to go much
lower even if conditions worsened. However, when the world economy
began to improve, investors first started looking at the large-cap
companies such as DuPont. Praxair and Minnesota Mining & Manufacturing
(3M), two leaders in their industry segments, also benefited from the
improved environment. Dow Chemical, a leader in commodity chemicals,
was a strong performer as well. As conditions improved,
merger-and-acquisition activity also picked up. Four fund holdings
were takeover targets and supported performance. Pioneer Hi-Bred was
acquired by DuPont, Union Carbide was acquired by Dow, Raychem was
acquired by Tyco International, and Nalco, a water purification
company, received a takeover offer from a French firm, Suez Lyonnaise
des Eaux.
Q. WERE THERE ANY DISAPPOINTMENTS?
D.Y. Monsanto disappointed, even though the company's earnings were
good. The company was affected by doubts about the future of
genetically modified grains, where Monsanto is a leader. Moreover,
agricultural-related companies in general did poorly because of
excessive grain supplies and resulting low prices. IMC Global, a
manufacturer of fertilizers, was another disappointing
agriculture-related stock because of an industry-wide oversupply of
fertilizer.
Q. TURNING TO YOU, JONATHAN, HOW WOULD YOU DESCRIBE YOUR INVESTMENT
STYLE?
J.Z. I search for companies with the potential for earnings growth
exceeding market estimates or companies whose stock prices have been
unduly hurt by an issue I am confident is not going to be significant.
I want to make sure I invest in companies whose valuations make sense.
I prefer to own relatively few stocks. I would rather identify
companies in which I have a great deal of conviction, and own more of
them, than own a little of a lot of companies.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT FEW MONTHS?
J.Z. At least for now, it looks like economies in Europe, Latin
America and most of Asia are improving, while North America remains
strong. My outlook would change materially if interest rates were to
rise significantly, but I don't believe the Federal Reserve Board will
raise rates so much as to wipe out economic growth. In the absence of
a major setback in the North American economy, such as the fallout
from a significant correction in the market, I'm generally more
bullish than bearish.
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 3.
(checkmark)FUND FACTS
START DATE: July 29, 1985
FUND NUMBER: 069
TRADING SYMBOL: FSCHX
SIZE: as of August 31, 1999, more than
$38 million
MANAGER: Jonathan Zang, since September 1999;
equity analyst, electric and gas utilities and
independent power producers, 1997-1999;
joined Fidelity in 1997
CHEMICALS PORTFOLIO
INVESTMENTS AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 84.8%
SHARES VALUE (NOTE 1)
AGRICULTURE - 1.7%
Delta & Pine Land Co. 23,400 $ 662,513
BUILDING MATERIALS - 5.2%
Ferro Corp. 20,500 492,000
Owens-Corning 16,400 461,250
Sherwin-Williams Co. 42,600 1,038,375
1,991,625
CHEMICALS & PLASTICS - 58.7%
Agrium, Inc. 35,500 359,162
Air Products & Chemicals, 39,300 1,336,200
Inc.
Albemarle Corp. 5,100 88,294
Arch Chemicals, Inc. 15,150 298,266
Avery Dennison Corp. 25,100 1,377,363
Borden Chemicals & Plastics 8,500 42,500
Ltd. (common unit) (a)
Cabot Corp. 20,200 465,863
Crompton & Knowles Corp. 33,200 581,000
Cytec Industries, Inc. (a) 26,400 615,450
Dexter Corp. 3,000 109,313
Dow Chemical Co. 11,300 1,283,963
E.I. du Pont de Nemours and 7,237 458,645
Co.
Eastman Chemical Co. 22,600 1,049,488
Fuller (H.B.) Co. 3,922 236,301
Georgia Gulf Corp. 7,300 132,769
Great Lakes Chemical Corp. 5,300 218,294
IMC Global, Inc. 42,400 675,750
Lyondell Chemical Co. 6,300 91,744
Millennium Chemicals, Inc. 27,000 621,000
Minerals Technologies, Inc. 14,100 697,950
Monsanto Co. 44,600 1,831,388
Potash Corp. of Saskatchewan 16,900 943,229
PPG Industries, Inc. 31,000 1,861,938
Praxair, Inc. 50,800 2,387,595
Rohm & Haas Co. 42,243 1,578,832
Solutia, Inc. 5,600 112,000
Tredegar Industries, Inc. 37,700 819,975
Union Carbide Corp. 24,400 1,387,750
Valspar Corp. 11,700 424,856
Wellman, Inc. 8,000 134,500
Witco Corp. 9,900 160,256
22,381,634
COMPUTER SERVICES & SOFTWARE
- - 0.2%
Chemdex Corp. 3,200 86,400
CONSUMER DURABLES - 3.6%
Minnesota Mining & 14,600 1,379,700
Manufacturing Co.
DRUGS & PHARMACEUTICALS - 8.4%
Cambrex Corp. 12,200 327,875
Chirex, Inc. (a) 7,100 214,775
SHARES VALUE (NOTE 1)
Rhone-Poulenc SA sponsored 38,300 $ 1,859,944
ADR Class A
Sigma-Aldrich Corp. 25,300 815,925
3,218,519
METALS & MINING - 1.1%
Olin Corp. 28,400 402,925
OIL & GAS - 1.1%
Conoco, Inc. Class B 15,230 409,306
SERVICES - 3.2%
Ecolab, Inc. 32,400 1,217,025
TEXTILES & APPAREL - 1.6%
Polymer Group, Inc. (a) 43,100 603,400
TOTAL COMMON STOCKS 32,353,047
(Cost $31,725,929)
CASH EQUIVALENTS - 15.9%
Taxable Central Cash Fund, 6,071,180 6,071,180
5.20% (b) (Cost $6,071,180)
TOTAL INVESTMENT PORTFOLIO - 38,424,227
100.7% (Cost $37,797,109)
NET OTHER ASSETS - (0.7%) (264,434)
NET ASSETS - 100% $ 38,159,793
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $24,151,104 and $26,875,736, 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 $4,853 for the
period.
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $38,185,268. Net unrealized appreciation
aggregated $238,959, of which $2,755,039 related to appreciated
investment securities and $2,516,080 related to depreciated investment
securities.
The fund has elected to defer to its fiscal year ending February 29,
2000 approximately $1,740,000 of losses recognized during the period
November 1, 1998 to February 28, 1999.
CHEMICALS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 38,424,227
value (cost $37,797,109) -
See accompanying schedule
Receivable for investments 6,132
sold
Receivable for fund shares 7,032
sold
Dividends receivable 85,041
Interest receivable 15,182
Redemption fees receivable 118
Other receivables 249
TOTAL ASSETS 38,537,981
LIABILITIES
Payable for fund shares $ 320,842
redeemed
Accrued management fee 18,274
Other payables and accrued 39,072
expenses
TOTAL LIABILITIES 378,188
NET ASSETS $ 38,159,793
Net Assets consist of:
Paid in capital $ 36,705,309
Undistributed net investment 98,000
income
Accumulated undistributed net 729,366
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 627,118
(depreciation) on investments
NET ASSETS, for 1,047,934 $ 38,159,793
shares outstanding
NET ASSET VALUE and $36.41
redemption price per share
($38,159,793 (divided by)
1,047,934 shares)
Maximum offering price per $37.54
share (100/97.00 of $36.41)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 377,332
Dividends
Interest 79,530
Security lending 24
TOTAL INCOME 456,886
EXPENSES
Management fee $ 129,348
Transfer agent fees 165,360
Accounting and security 30,318
lending fees
Non-interested trustees' 121
compensation
Custodian fees and expenses 6,169
Registration fees 24,160
Audit 4,098
Legal 25
Total expenses before 359,599
reductions
Expense reductions (713) 358,886
NET INVESTMENT INCOME 98,000
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 2,992,666
Foreign currency transactions (322) 2,992,344
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 2,251,706
Assets and liabilities in (13) 2,251,693
foreign currencies
NET GAIN (LOSS) 5,244,037
NET INCREASE (DECREASE) IN $ 5,342,037
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 66,869
charges paid to FDC
Sales charges - Retained by $ 66,869
FDC
Deferred sales charges $ 2,301
withheld by FDC
Exchange fees withheld by FSC $ 3,375
Expense reductions Directed $ 713
brokerage arrangements
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ 98,000 $ 208,208
income
Net realized gain (loss) 2,992,344 2,558,079
Change in net unrealized 2,251,693 (15,018,011)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 5,342,037 (12,251,724)
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders - (51,919)
From net investment income
From net realized gain - (3,969,737)
In excess of net realized - (773,436)
gain
TOTAL DISTRIBUTIONS - (4,795,092)
Share transactions Net 45,876,917 17,546,799
proceeds from sales of shares
Reinvestment of distributions - 4,627,284
Cost of shares redeemed (45,013,972) (42,678,413)
NET INCREASE (DECREASE) IN 862,945 (20,504,330)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 93,072 63,464
TOTAL INCREASE (DECREASE) 6,298,054 (37,487,682)
IN NET ASSETS
NET ASSETS
Beginning of period 31,861,739 69,349,421
End of period (including $ 38,159,793 $ 31,861,739
undistributed net investment
income of $98,000 and
$159,886, respectively)
OTHER INFORMATION
Shares
Sold 1,237,723 503,657
Issued in reinvestment of - 132,380
distributions
Redeemed (1,214,120) (1,122,609)
Net increase (decrease) 23,603 (486,572)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 1997 1996 F 1995
Net asset value, beginning of $ 31.10 $ 45.90 $ 42.53 $ 39.53 $ 33.91 $ 31.66
period
Income from Investment
Operations
Net investment income (loss) D .08 .17 (.02) .28 .01 .36
Net realized and unrealized 5.15 (10.77) 7.88 5.49 8.89 2.65
gain (loss)
Total from investment 5.23 (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 .08 .05 .05 .09 .02 .06
in capital
Net asset value, end of period $ 36.41 $ 31.10 $ 45.90 $ 42.53 $ 39.53 $ 33.91
TOTAL RETURN B, C 17.07% (23.66)% 19.47% 15.06% 27.48% 9.90%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 38,160 $ 31,862 $ 69,349 $ 111,409 $ 89,230 $ 97,511
(000 omitted)
Ratio of expenses to average 1.60% A 1.58% 1.68% 1.83% 1.99% 1.52%
net assets
Ratio of expenses to average 1.60% A 1.51% E 1.67% E 1.81% E 1.97% E 1.51% E
net assets after expense
reductions
Ratio of net investment .44% A .44% (.05)% .67% .04% 1.07%
income (loss) to average net
assets
Portfolio turnover rate 122% A 141% 31% 207% 87% 106%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
F FOR THE YEAR ENDED FEBRUARY 29
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT CONSTRUCTION AND -5.68% 8.35% 76.20% 219.08%
HOUSING
SELECT CONSTRUCTION AND -8.58% 5.03% 70.84% 209.44%
HOUSING (LOAD ADJ.)
S&P 500 7.32% 39.82% 206.52% 384.79%
GS Cyclical Industries 8.29% 25.75% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a 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 AUGUST 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT CONSTRUCTION AND 8.35% 12.00% 12.30%
HOUSING
SELECT CONSTRUCTION AND 5.03% 11.31% 11.96%
HOUSING (LOAD ADJ.)
S&P 500 39.82% 25.11% 17.10%
GS Cyclical Industries 25.75% 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
1989/08/31 9700.00 10000.00
1989/09/30 9875.04 9959.00
1989/10/31 9320.75 9727.95
1989/11/30 9459.32 9926.40
1989/12/31 9250.73 10164.64
1990/01/31 8667.21 9482.59
1990/02/28 8846.16 9604.91
1990/03/31 9344.09 9859.44
1990/04/30 9071.78 9612.96
1990/05/31 9912.05 10550.22
1990/06/30 9733.11 10478.48
1990/07/31 9225.44 10444.95
1990/08/31 8052.57 9500.72
1990/09/30 7221.05 9038.04
1990/10/31 6967.22 8999.18
1990/11/30 7641.19 9580.52
1990/12/31 8358.92 9847.82
1991/01/31 9094.15 10277.18
1991/02/28 9890.66 11012.00
1991/03/31 10135.73 11278.49
1991/04/30 10293.28 11305.56
1991/05/31 11317.36 11793.96
1991/06/30 10739.68 11253.80
1991/07/31 11019.77 11778.23
1991/08/31 11474.91 12057.37
1991/09/30 11221.08 11856.01
1991/10/31 11028.52 12014.88
1991/11/30 10477.09 11530.68
1991/12/31 11812.39 12849.79
1992/01/31 12690.53 12610.79
1992/02/29 12898.26 12774.73
1992/03/31 12888.82 12525.62
1992/04/30 13068.23 12893.87
1992/05/31 13483.69 12957.05
1992/06/30 12520.23 12763.99
1992/07/31 12747.01 13286.04
1992/08/31 12312.34 13013.68
1992/09/30 12472.98 13167.24
1992/10/31 12907.64 13213.32
1992/11/30 13654.13 13663.90
1992/12/31 14022.65 13831.96
1993/01/31 14608.50 13948.15
1993/02/28 14873.08 14137.85
1993/03/31 15222.70 14436.15
1993/04/30 14863.50 14086.80
1993/05/31 15024.24 14464.33
1993/06/30 15203.89 14506.27
1993/07/31 15723.92 14448.25
1993/08/31 16376.33 14995.84
1993/09/30 16905.82 14880.37
1993/10/31 17520.40 15188.39
1993/11/30 17246.20 15044.10
1993/12/31 18735.79 15226.14
1994/01/31 19347.88 15743.82
1994/02/28 18955.76 15317.17
1994/03/31 17846.34 14649.34
1994/04/30 17805.96 14836.85
1994/05/31 16863.74 15080.17
1994/06/30 16450.32 14710.71
1994/07/31 16921.43 15193.22
1994/08/31 17565.60 15816.14
1994/09/30 16584.93 15428.65
1994/10/31 16094.59 15775.79
1994/11/30 15440.81 15201.24
1994/12/31 15748.44 15426.67
1995/01/31 15817.56 15826.69
1995/02/28 16577.83 16443.45
1995/03/31 16874.04 16928.70
1995/04/30 16893.79 17427.25
1995/05/31 17723.17 18123.82
1995/06/30 17891.02 18544.83
1995/07/31 18720.41 19159.78
1995/08/31 18730.28 19207.87
1995/09/30 18621.67 20018.44
1995/10/31 18611.80 19946.98
1995/11/30 19757.14 20822.65
1995/12/31 20280.41 21223.69
1996/01/31 20239.12 21946.15
1996/02/29 20187.52 22149.59
1996/03/31 20879.01 22362.89
1996/04/30 20905.52 22692.52
1996/05/31 21593.41 23277.76
1996/06/30 21722.39 23366.44
1996/07/31 20808.78 22334.12
1996/08/31 21786.88 22805.14
1996/09/30 22969.20 24088.62
1996/10/31 22625.25 24752.98
1996/11/30 23657.09 26624.06
1996/12/31 22959.97 26096.63
1997/01/31 23188.59 27727.15
1997/02/28 23950.66 27944.53
1997/03/31 23264.80 26796.29
1997/04/30 23737.45 28396.03
1997/05/31 26009.16 30124.78
1997/06/30 26470.78 31474.37
1997/07/31 29252.71 33978.79
1997/08/31 29167.67 32075.30
1997/09/30 30090.93 33832.06
1997/10/31 28924.71 32702.07
1997/11/30 29568.56 34215.85
1997/12/31 29809.91 34803.33
1998/01/31 30882.96 35188.26
1998/02/28 33539.42 37726.04
1998/03/31 35266.77 39657.99
1998/04/30 35253.48 40056.94
1998/05/31 34637.07 39368.37
1998/06/30 35017.41 40967.51
1998/07/31 33758.36 40531.21
1998/08/31 28564.76 34671.20
1998/09/30 28236.89 36892.24
1998/10/31 31318.94 39893.06
1998/11/30 33745.24 42310.97
1998/12/31 36617.46 44748.93
1999/01/31 35987.93 46620.33
1999/02/28 32814.07 45171.37
1999/03/31 32446.84 46978.68
1999/04/30 34506.64 48798.16
1999/05/31 33693.17 47646.04
1999/06/30 34414.79 50290.39
1999/07/31 33233.96 48720.33
1999/08/31 30944.00 48479.16
IMATRL PRASUN SHR__CHT 19990831 19990914 141327 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Construction and Housing Portfolio on
August 31, 1989, and the current 3.00% sales charge was paid. As the
chart shows, by August 31, 1999, the value of the investment would
have grown to $30,944 - a 209.44% increase on the initial investment -
and includes the effect of a $7.50 trading fee. For comparison, look
at how the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $48,479 - a 384.79% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
Masco Corp. 8.9
Home Depot, Inc. 6.6
Fannie Mae 6.1
Lowe's Companies, Inc. 5.8
Caterpillar, Inc. 5.7
Deere & Co. 4.5
Equity Residential Properties 3.1
Trust (SBI)
Maytag Corp. 3.1
Leggett & Platt, Inc. 3.1
Simon Property Group, Inc. 2.5
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Building Materials 19.6%
Retail & Wholesale,
Miscellaneous 12.4%
Industrial Machinery
& Equipment 12.0%
Real Estate Investment Trusts 11.8%
Federal Sponsored Credit 7.3%
All Others 36.9%*
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
Row: 1, Col: 1, Value: 36.9
Row: 1, Col: 2, Value: 7.3
Row: 1, Col: 3, Value: 11.8
Row: 1, Col: 4, Value: 12.0
Row: 1, Col: 5, Value: 12.4
Row: 1, Col: 6, Value: 19.6
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
CONSTRUCTION AND HOUSING PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Brian Hogan)
NOTE TO SHAREHOLDERS: Brian Hogan became
Portfolio Manager of
Fidelity Select Construction and Housing Portfolio on
April 30, 1999.
Q. HOW DID THE FUND PERFORM, BRIAN?
A. For the six months that ended August 31, 1999, the fund fell 5.68%.
For the same six-month period, the Standard & Poor's 500 Index
returned 7.32%, 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 8.29%. For the year that
ended August 31, 1999, the fund returned 8.35%, while the S&P 500 and
the Goldman Sachs Cyclical Industries Index returned 39.82% and
25.75%, respectively. The fund underperformed the Goldman Sachs index
because the index had a larger exposure to cyclical and
commodity-oriented stocks that rallied strongly during the first half
of the period.
Q. WHAT FACTORS INFLUENCED YOUR STRATEGY DURING THE PAST SIX MONTHS?
A. First, the Federal Reserve Board raised interest rates in both June
and August, following a six-month trend of rising mortgage rates. The
average rate for a 30-year conventional mortgage increased from 6.79%
in January to 8.02% in August. Since higher mortgage rates tend to
have a negative impact on the level of new and existing home sales,
higher rates are also negative for many industries involved in
construction and housing. Second, although the sector's fundamental
investment characteristics remained strong - existing home sales and
housing starts posted robust gains despite rising interest rates -
stock prices were weak as investors anticipated that higher rates
could end the housing market's eight-year expansion. These factors,
combined with the surprising strength in cyclical and
commodity-oriented stocks during the first half of the period, led me
to adopt a more diversified strategy. I reduced some positions in
areas that were closely tied to the housing market's strength - such
as building materials, home builders and carpet manufacturers - and
added holdings in cyclical industries that had been underrepresented
in the fund. For example, I added Fluor, a global engineering and
construction company, and Caterpillar and Deere, two top manufacturers
of construction and farming equipment.
Q. WHICH HOLDINGS BENEFITED PERFORMANCE?
A. One of the largest contributors to the fund's performance was
Danaher Corp., which manufactures the Sears' Craftsman line of tools.
It benefited from a strong repair and remodeling market. Home Depot,
the country's largest and fastest-growing home center, performed well
on the basis of well-executed expansion strategies and continued
market share gains. Masco - a diversified building materials company -
also posted solid performance. The stock benefited from Masco's close
alliance with Home Depot, a long track record of earnings gains and a
value-added product line that commanded a price premium.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Unfortunately, yes. Maxim Group, a commercial and retail carpet
distributor, performed poorly when it had difficulty integrating a
large retail floor-covering acquisition. The fund sold its Maxim
position before the period ended. Two other disappointments were Shaw
Industries and Owens-Corning, both relatively large holdings. Shaw - a
low-cost flooring producer with strong business fundamentals - fell
victim to the market's fear that higher interest rates could halt the
eight-year housing expansion. Owens-Corning, the country's leading
manufacturer of fiberglass insulation, suffered from
larger-than-expected settlement costs for asbestos litigation as well
as from interest-rate jitters. Although I expected both stocks to
perform well, they didn't live up to their potential over the period.
Q. WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
A. I have a cautious outlook. Typically, stocks in the construction
and housing industries - especially building materials stocks - have
not performed well in periods that follow interest-rate increases by
the Fed. Although higher interest rates have the potential to derail
the housing market's recent strong performance, I am optimistic that a
number of stocks may benefit from higher commodity prices,
strengthening economies overseas and increased levels of industrial
production domestically. As a result, I have increased the fund's
diversification by adding holdings in cyclical, commodity-oriented
sectors such as engineering and construction, and equipment and
machinery, and by reducing holdings in some building material and
carpet manufacturing 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 3.
(checkmark)FUND FACTS
START DATE: September 29, 1986
FUND NUMBER: 511
TRADING SYMBOL: FSHOX
SIZE: as of August 31, 1999, more than $13
million
MANAGER: Brian Hogan, since 1999; equity
analyst, various industries, since 1998; high-yield
analyst and portfolio manager, 1995-1998;
fixed-income analyst, 1994; joined Fidelity in
1994
CONSTRUCTION AND HOUSING PORTFOLIO
INVESTMENTS AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 95.6%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES -
1.0%
Danaher Corp. 2,450 $ 143,938
BUILDING MATERIALS - 19.6%
Armstrong World Industries, 1,500 72,844
Inc.
Elcor Corp. 3,750 72,188
Johns Manville Corp. 3,900 56,063
Lafarge Corp. 7,234 198,935
Lone Star Industries, Inc. 1,300 44,688
Masco Corp. 43,300 1,225,926
Owens-Corning 10,800 303,750
Sherwin-Williams Co. 5,400 131,625
Southdown, Inc. 3,840 193,920
USG Corp. 2,000 98,000
Vulcan Materials Co. 7,300 311,163
2,709,102
CONSTRUCTION - 6.0%
Centex Corp. 6,600 185,625
Clayton Homes, Inc. 14,500 137,750
D.R. Horton, Inc. 2,900 42,231
Granite Construction, Inc. 2,200 55,000
Jacobs Engineering Group, 2,500 82,500
Inc. (a)
Kaufman & Broad Home Corp. 5,100 104,231
Lennar Corp. 8,300 157,700
M/I Schottenstein Homes, Inc. 3,000 57,375
822,412
CONSUMER ELECTRONICS - 5.6%
Black & Decker Corp. 2,000 105,250
Maytag Corp. 6,800 425,850
Whirlpool Corp. 3,500 247,406
778,506
CREDIT & OTHER FINANCE - 1.6%
Countrywide Credit 6,755 217,004
Industries, Inc.
ENGINEERING - 1.8%
Fluor Corp. 6,000 248,250
FEDERAL SPONSORED CREDIT - 7.3%
Fannie Mae 13,600 844,900
Freddie Mac 3,100 159,650
1,004,550
HOME FURNISHINGS - 5.8%
Ethan Allen Interiors, Inc. 3,800 110,913
Furniture Brands 4,900 98,306
International, Inc. (a)
Knoll, Inc. (a) 4,200 112,350
SHARES VALUE (NOTE 1)
Leggett & Platt, Inc. 19,200 $ 424,800
Miller (Herman), Inc. 2,500 58,906
805,275
INDUSTRIAL MACHINERY &
EQUIPMENT - 12.0%
Case Corp. 5,000 246,875
Caterpillar, Inc. 14,000 792,750
Deere & Co. 16,000 622,000
1,661,625
LEASING & RENTAL - 1.2%
United Rentals, Inc. (a) 6,500 158,844
LEISURE DURABLES & TOYS - 0.3%
Champion Enterprises, Inc. (a) 4,400 37,400
METALS & MINING - 1.2%
Martin Marietta Materials, 3,500 159,688
Inc.
PACKAGING & CONTAINERS - 0.9%
Gaylord Container Corp. Class 15,800 129,363
A (a)
PAPER & FOREST PRODUCTS - 1.4%
Georgia-Pacific Corp. 2,500 103,438
Trex Co., Inc. (a) 4,400 91,575
195,013
POLLUTION CONTROL - 0.7%
IT Group, Inc. (The) (a) 8,200 97,888
REAL ESTATE - 1.5%
Catellus Development Corp. (a) 8,800 120,450
LNR Property Corp. 5,000 93,125
213,575
REAL ESTATE INVESTMENT TRUSTS
- - 11.8%
Apartment Investment & 4,400 180,400
Management Co. Class A
Archstone Communities Trust 9,000 192,375
Crescent Real Estate Equities 3,900 80,925
Co.
Equity Residential Properties 9,700 426,800
Trust (SBI)
Mack-Cali Realty Corp. 4,900 139,038
Post Properties, Inc. 2,300 94,013
Rouse Co. (The) 7,300 166,075
Simon Property Group, Inc. 13,900 354,450
1,634,076
RETAIL & WHOLESALE,
MISCELLANEOUS - 12.4%
Home Depot, Inc. 14,900 910,763
Lowe's Companies, Inc. 17,900 809,975
1,720,738
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TEXTILES & APPAREL - 3.5%
Mohawk Industries, Inc. (a) 8,850 $ 200,231
Shaw Industries, Inc. 13,900 278,000
478,231
TOTAL COMMON STOCKS 13,215,478
(Cost $12,372,252)
CASH EQUIVALENTS - 5.9%
Taxable Central Cash Fund, 815,698 815,698
5.20% (b) (Cost $815,698)
TOTAL INVESTMENT PORTFOLIO - 14,031,176
101.5%
(Cost $13,187,950)
NET OTHER ASSETS - (1.5%) (202,600)
NET ASSETS - 100% $ 13,828,576
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $3,904,570 and $38,482,964, 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 $5,251 for the
period.
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $13,226,972. Net unrealized appreciation
aggregated $804,204, of which $1,594,860 related to appreciated
investment securities and $790,656 related to depreciated investment
securities.
CONSTRUCTION AND HOUSING PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 14,031,176
value (cost $13,187,950) -
See accompanying schedule
Receivable for fund shares 16,302
sold
Dividends receivable 9,876
Interest receivable 1,845
Redemption fees receivable 105
Other receivables 8,704
TOTAL ASSETS 14,068,008
LIABILITIES
Payable to custodian bank $ 276
Payable for fund shares 199,813
redeemed
Accrued management fee 7,262
Other payables and accrued 32,081
expenses
TOTAL LIABILITIES 239,432
NET ASSETS $ 13,828,576
Net Assets consist of:
Paid in capital $ 9,068,202
Accumulated net investment (59,793)
loss
Accumulated undistributed net 3,976,941
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 843,226
(depreciation) on investments
NET ASSETS, for 586,183 $ 13,828,576
shares outstanding
NET ASSET VALUE and $23.59
redemption price per share
($13,828,576 (divided by)
586,183 shares)
Maximum offering price per $24.32
share (100/97.00 of $23.59)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 140,461
Dividends
Interest 23,243
TOTAL INCOME 163,704
EXPENSES
Management fee $ 60,319
Transfer agent fees 110,750
Accounting fees and expenses 30,315
Non-interested trustees' 46
compensation
Custodian fees and expenses 6,379
Registration fees 23,242
Audit 4,799
Legal 54
Total expenses before 235,904
reductions
Expense reductions (12,407) 223,497
NET INVESTMENT INCOME (LOSS) (59,793)
REALIZED AND UNREALIZED GAIN 4,047,070
(LOSS)
Net realized gain (loss) on
investment securities
Change in net unrealized (4,737,004)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) (689,934)
NET INCREASE (DECREASE) IN $ (749,727)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 13,312
charges paid to FDC
Sales charges - Retained by $ 13,312
FDC
Deferred sales charges $ 582
withheld by FDC
Exchange fees withheld by FSC $ 4,703
Expense reductions Directed $ 12,407
brokerage arrangements
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ (59,793) $ (195,271)
income (loss)
Net realized gain (loss) 4,047,070 1,243,920
Change in net unrealized (4,737,004) (58,044)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (749,727) 990,605
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (8,525) (144,845)
from net realized gains
Share transactions Net 4,691,647 137,817,090
proceeds from sales of shares
Reinvestment of distributions 8,092 142,901
Cost of shares redeemed (41,807,579) (144,767,914)
NET INCREASE (DECREASE) IN (37,107,840) (6,807,923)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 43,043 129,721
TOTAL INCREASE (DECREASE) (37,823,049) (5,832,442)
IN NET ASSETS
NET ASSETS
Beginning of period 51,651,625 57,484,067
End of period (including $ 13,828,576 $ 51,651,625
accumulated net investment
loss of $59,793 and $0,
respectively)
OTHER INFORMATION
Shares
Sold 177,997 5,395,789
Issued in reinvestment of 324 5,303
distributions
Redeemed (1,656,824) (5,579,107)
Net increase (decrease) (1,478,503) (178,015)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 1997 1996 G 1995
Net asset value, beginning of $ 25.02 $ 25.63 $ 22.00 $ 19.56 $ 16.79 $ 19.82
period
Income from Investment
Operations
Net investment income (loss) D (.08) (.06) (.25) .06 .07 (.02)
Net realized and unrealized (1.39) (.53) 7.67 3.38 3.55 (2.50)
gain (loss)
Total from investment (1.47) (.59) 7.42 3.44 3.62 (2.52)
operations
Less Distributions
From net investment income - - (.02) (.02) (.07) -
From net realized gain (.01) (.06) (3.87) (1.03) (.81) (.52)
Total distributions (.01) (.06) (3.89) (1.05) (.88) (.52)
Redemption fees added to paid .05 .04 .10 .05 .03 .01
in capital
Net asset value, end of period $ 23.59 $ 25.02 $ 25.63 $ 22.00 $ 19.56 $ 16.79
TOTAL RETURN B, C (5.68)% (2.16)% 40.04% 18.64% 21.77% (12.54)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 13,829 $ 51,652 $ 57,484 $ 30,581 $ 42,668 $ 16,863
(000 omitted)
Ratio of expenses to average 2.23% A 1.43% 2.50% E 1.41% 1.43% 1.76%
net assets
Ratio of expenses to average 2.12% A, F 1.37% F 2.43% F 1.35% F 1.40% F 1.74% F
net assets after expense
reductions
Ratio of net investment (.57)% A (.23)% (1.10)% .27% .39% (.11)%
income (loss) to average net
assets
Portfolio turnover rate 35% A 226% 404% 270% 139% 45%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES
DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S
EXPENSE RATIO WOULD HAVE BEEN HIGHER.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
G FOR THE YEAR ENDED FEBRUARY 29
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 AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND
SELECT CYCLICAL INDUSTRIES 12.47% 27.46% 34.43%
SELECT CYCLICAL INDUSTRIES 9.02% 23.57% 30.32%
(LOAD ADJ.)
S&P 500 7.32% 39.82% 72.48%
GS Cyclical Industries 8.29% 25.75% 31.05%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year or since
the fund started on March 3, 1997. You can compare the fund's returns
to the performance of both the Standard & Poor's 500 Index - a 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 AUGUST 31, 1999 PAST 1 YEAR LIFE OF FUND
SELECT CYCLICAL INDUSTRIES 27.46% 12.58%
SELECT CYCLICAL INDUSTRIES 23.57% 11.19%
(LOAD ADJ.)
S&P 500 39.82% 24.41%
GS Cyclical Industries 25.75% 11.44%
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
1999/02/28 11594.14 16070.92
1999/03/31 11706.11 16713.92
1999/04/30 13355.15 17361.25
1999/05/31 13121.03 16951.35
1999/06/30 13640.17 17892.15
1999/07/31 13334.79 17333.56
1999/08/31 13032.00 17247.76
IMATRL PRASUN SHR__CHT 19990831 19990914 141605 R00000000000033
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Select Cyclical Industries Portfolio on March 3,
1997, when the fund started, and the current 3.00% sales charge was
paid. As the chart shows, by August 31, 1999, the value of the
investment would have grown to $13,032 - a 30.32% 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 $17,248 - a 72.48%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
General Electric Co. 9.7
SPX Corp. 5.1
Textron, Inc. 4.9
General Dynamics Corp. 4.1
Fortune Brands, Inc. 3.6
Honeywell, Inc. 3.3
AlliedSignal, Inc. 3.2
Litton Industries, Inc. 3.0
EG & G, Inc. 2.8
Union Carbide Corp. 2.7
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Electrical Equipment 15.7%
Aerospace & Defense 10.9%
Chemicals & Plastics 8.6%
Autos, Tires, & Accessories 8.0%
Building Materials 8.0%
All Others 48.8%*
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
Row: 1, Col: 1, Value: 48.8
Row: 1, Col: 2, Value: 8.0
Row: 1, Col: 3, Value: 8.0
Row: 1, Col: 4, Value: 8.6
Row: 1, Col: 5, Value: 10.9
Row: 1, Col: 6, Value: 15.7
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
CYCLICAL INDUSTRIES PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Albert Ruback)
Albert Ruback,
Portfolio Manager
of Fidelity Select
Cyclical Industries Portfolio
Q. HOW DID THE FUND PERFORM, ALBERT?
A. The fund experienced a rebound in the second quarter of 1999, which
significantly improved performance during the six-month period. For
the six and 12 months ending August 31, 1999, the fund returned 12.47%
and 27.46%, respectively. In 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
8.29% and 25.75%, respectively. The Standard & Poor's 500 Index
returned 7.32% and 39.82% during the same six- and 12-month periods.
Q. WHAT DROVE THE RALLY IN THE SECOND QUARTER? WHAT FACTORS HELPED THE
FUND OUTPERFORM THE GOLDMAN SACHS INDEX DURING THE PERIOD?
A. The cyclical sector, which is predominantly made up of economically
sensitive stocks such as chemicals and plastics, suffered at the
beginning of the period as weak international markets led to a
slowdown in domestic manufacturing. This trend reversed itself in
April, as improving global economic conditions spurred investor
confidence in cyclical and value-oriented companies, leading to a
rally in chemicals, paper and aluminum stocks. While the fund
benefited from the rotation into cyclical stocks given its investment
objectives, much of the fund's outperformance of the Goldman Sachs
index came from strong stock selection and timely sector allocation
shifts into chemicals, non-ferrous metals and aerospace stocks.
Q. IN THE PREVIOUS REPORT, YOU TALKED ABOUT HAVING A MORE DEFENSIVE
STRATEGY GIVEN THE DOMESTIC INTEREST-RATE ENVIRONMENT AND WEAKNESS
OVERSEAS. WHAT CAUSED YOU TO CHANGE THIS STANCE?
A. I began to see signs that the global economic picture was
improving. Asia was recovering, certain European countries were
lowering interest rates last spring and other countries were coming
out of recessions. This environment generally leads to a cyclical
recovery and I started to position the fund to take advantage of this
cyclical up-trend. The stocks that generally react most favorably at
the beginning of an economic expansion are the commodities-based
companies, such as chemicals and metals.
Q. WERE THERE ANY OTHER FACTORS THAT HELPED THE FUND'S PERFORMANCE?
A. The fund's underweighted position in auto manufacturers relative to
the Goldman Sachs index was a significant contributor over the past
six months. Despite the record sales results auto companies racked up
over the past year, price incentives - due to fierce competition - ate
away at profit margins.
Q. WHICH STOCKS PRODUCED STRONG RESULTS?
A. Honeywell was a solid contributor to fund performance as the
company experienced accelerated growth and sales across many of its
divisions. In addition, investors generally viewed its merger with
AlliedSignal as a beneficial alliance. Shares of Fortune Brands
benefited from a change in management that became more focused on
cost-cutting initiatives and improving returns. SPX Corp., a global
automobile parts manufacturer, also was a strong corporate management
story, with encouraging cost-savings initiatives underway. Textron,
the biggest maker of commercial helicopters and mid-size business
jets, helped the fund after its shares rose on stronger profits.
Q. WHICH HOLDINGS HURT THE FUND'S PERFORMANCE?
A. Shares of US Airways fell in the second quarter because of costly
new labor contracts and lower ticket sales. In general, the major
airlines suffered and detracted from fund performance. As capacity
began to outstrip demand for seats, it forced price cuts, which
lowered profit margins. Waste Management hurt the fund's total return
after the company posted its biggest one-day loss ever when it warned
investors that second-quarter and full-year profits would fall below
estimates. The announcement was particularly damaging because the
company didn't provide any advanced warning of the earnings shortfall.
I have since sold both of these holdings.
Q. WHAT'S YOUR OUTLOOK, ALBERT?
A. I continue to think the global economy is improving. We see
evidence of Asia recovering - with South Korea rebounding dramatically
and strengthening in the Japanese stock market - as well as signs of
improvement in Europe. In addition, even if we see a slowdown in the
U.S., I don't think it's likely to short-circuit the global upturn
with overseas economies strengthening. As a result, if an environment
of sustained global economic growth continues, I'm optimistic that the
rally in cyclical stocks can continue.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE 3.
(checkmark)FUND FACTS
START DATE: March 3, 1997
FUND NUMBER: 515
TRADING SYMBOL: FCYIX
SIZE: as of August 31, 1999, more than
$7 million
MANAGER: Albert Ruback, since inception;
manager, Fidelity Select Energy Portfolio,
1994-1996; Fidelity Select Industrial
Equipment Portfolio, 1991-1994; sector
leader, cyclical industries, since 1996;
joined Fidelity in 1991
CYCLICAL INDUSTRIES PORTFOLIO
INVESTMENTS AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 99.4%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 10.9%
AlliedSignal, Inc. 3,700 $ 226,625
Boeing Co. 1,000 45,313
Howmet International, Inc. (a) 2,700 48,263
Lockheed Martin Corp. 1,800 66,600
Textron, Inc. 4,300 347,225
United Technologies Corp. 711 47,015
781,041
AIR TRANSPORTATION - 5.1%
AMR Corp. (a) 2,700 158,288
Atlantic Coast Airlines 3,000 59,625
Holdings (a)
Northwest Airlines Corp. 3,900 115,050
Class A (a)
Southwest Airlines Co. 1,800 30,037
363,000
AUTOS, TIRES, & ACCESSORIES -
8.0%
Danaher Corp. 750 44,063
Federal-Mogul Corp. 450 20,531
Ford Motor Co. 1,100 57,338
Navistar International Corp. 1,800 87,525
(a)
SPX Corp. (a) 4,250 360,188
569,645
BUILDING MATERIALS - 8.0%
American Standard Companies, 4,100 168,100
Inc. (a)
Carlisle Companies, Inc. 500 20,000
Ferro Corp. 950 22,800
Fortune Brands, Inc. 6,800 255,000
Masco Corp. 2,200 62,288
Owens-Corning 1,400 39,375
567,563
CHEMICALS & PLASTICS - 8.6%
Air Products & Chemicals, 1,200 40,800
Inc.
Dow Chemical Co. 1,200 136,350
E.I. du Pont de Nemours and 1,664 105,456
Co.
Ivex Packaging Corp. (a) 2,500 38,750
Potash Corp. of Saskatchewan 400 22,325
Sealed Air Corp. (a) 514 30,198
Spartech Corp. 900 25,031
Union Carbide Corp. 3,400 193,375
Witco Corp. 1,500 24,281
616,566
COMPUTERS & OFFICE EQUIPMENT
- - 0.3%
Pitney Bowes, Inc. 400 23,600
CONSTRUCTION - 0.2%
Centex Corp. 500 14,063
SHARES VALUE (NOTE 1)
CONSUMER DURABLES - 2.0%
Minnesota Mining & 1,500 $ 141,750
Manufacturing Co.
CONSUMER ELECTRONICS - 0.9%
Black & Decker Corp. 800 42,100
General Motors Corp. Class H 400 20,600
(a)
62,700
DEFENSE ELECTRONICS - 5.5%
Litton Industries, Inc. (a) 3,400 217,600
Raytheon Co.:
Class A 600 40,275
Class B 2,000 136,250
394,125
ELECTRICAL EQUIPMENT - 15.7%
Emerson Electric Co. 2,700 169,088
General Electric Co. 6,200 696,331
Honeywell, Inc. 2,100 238,350
Hubbell, Inc. Class B 500 19,406
1,123,175
ENGINEERING - 2.8%
EG & G, Inc. 6,200 197,238
HOME FURNISHINGS - 0.4%
Leggett & Platt, Inc. 1,400 30,975
INDUSTRIAL MACHINERY &
EQUIPMENT - 6.1%
Caterpillar, Inc. 2,100 118,913
Illinois Tool Works, Inc. 1,600 124,700
Ingersoll-Rand Co. 2,350 149,519
Parker-Hannifin Corp. 900 39,375
432,507
IRON & STEEL - 0.8%
Bethlehem Steel Corp. (a) 7,000 53,813
METALS & MINING - 3.7%
Alcoa, Inc. 1,648 106,399
Inco Ltd. 7,500 154,020
260,419
OIL & GAS - 1.3%
Conoco, Inc. Class B 3,498 94,009
PACKAGING & CONTAINERS - 1.6%
Ball Corp. 800 35,950
Owens-Illinois, Inc. (a) 2,200 54,450
Silgan Holdings, Inc. (a) 1,500 27,000
117,400
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PAPER & FOREST PRODUCTS - 5.1%
Bowater, Inc. 1,400 $ 75,075
Champion International Corp. 1,000 55,000
Fort James Corp. 887 28,606
International Paper Co. 1,442 67,864
Smurfit-Stone Container Corp. 4,470 94,708
(a)
Temple-Inland, Inc. 400 24,800
Willamette Industries, Inc. 400 15,850
361,903
POLLUTION CONTROL - 0.3%
Ogden Corp. 1,000 22,750
RAILROADS - 5.2%
Bombardier, Inc. Class B 2,200 34,271
Burlington Northern Santa Fe 6,300 182,700
Corp.
Canadian National Railway Co. 100 6,355
CSX Corp. 1,000 43,688
Union Pacific Corp. 2,100 102,244
369,258
SERVICES - 1.2%
Ecolab, Inc. 2,300 86,394
SHIP BUILDING & REPAIR - 4.1%
General Dynamics Corp. 4,700 296,100
TEXTILES & APPAREL - 0.9%
Shaw Industries, Inc. 3,300 66,000
TRUCKING & FREIGHT - 0.7%
Expeditors International of 800 25,850
Washington, Inc.
USFreightways Corp. 500 24,250
50,100
TOTAL COMMON STOCKS 7,096,094
(Cost $6,699,346)
CASH EQUIVALENTS - 8.2%
Central Cash Collateral Fund, 468,000 468,000
5.26% (b)
Taxable Central Cash Fund, 120,219 120,219
5.20% (b)
TOTAL CASH EQUIVALENTS 588,219
(Cost $588,219)
TOTAL INVESTMENT PORTFOLIO - 7,684,313
107.6%
(Cost $7,287,565)
NET OTHER ASSETS - (7.6%) (540,813)
NET ASSETS - 100% $ 7,143,500
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $9,201,225 and $5,225,303, 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 $983 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $449,250. The fund received
cash collateral of $468,000 which was invested in the Central Cash
Collateral Fund.
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $7,288,167. Net unrealized appreciation
aggregated $396,146, of which $760,778 related to appreciated
investment securities and $364,632 related to depreciated investment
securities.
CYCLICAL INDUSTRIES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 7,684,313
value (cost $7,287,565) -
See accompanying schedule
Receivable for fund shares 5,003
sold
Dividends receivable 9,826
Interest receivable 467
Redemption fees receivable 30
Other receivables 145
TOTAL ASSETS 7,699,784
LIABILITIES
Payable to custodian bank $ 4,066
Payable for fund shares 63,661
redeemed
Accrued management fee 2,462
Other payables and accrued 18,095
expenses
Collateral on securities 468,000
loaned, at value
TOTAL LIABILITIES 556,284
NET ASSETS $ 7,143,500
Net Assets consist of:
Paid in capital $ 6,578,849
Accumulated net investment (40,153)
loss
Accumulated undistributed net 208,056
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 396,748
(depreciation) on investments
NET ASSETS, for 557,760 $ 7,143,500
shares outstanding
NET ASSET VALUE and $12.81
redemption price per share
($7,143,500 (divided by)
557,760 shares)
Maximum offering price per $13.21
share (100/97.00 of $12.81)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 46,354
Dividends
Interest 8,300
Security lending 145
TOTAL INCOME 54,799
EXPENSES
Management fee $ 22,129
Transfer agent fees 27,815
Accounting and security 30,004
lending fees
Non-interested trustees' 10
compensation
Custodian fees and expenses 7,041
Registration fees 11,837
Audit 2,871
Legal 3
Miscellaneous 250
Total expenses before 101,960
reductions
Expense reductions (7,008) 94,952
NET INVESTMENT INCOME (LOSS) (40,153)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 208,834
Foreign currency transactions (156) 208,678
Change in net unrealized 135,135
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 343,813
NET INCREASE (DECREASE) IN $ 303,660
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 33,655
charges paid to FDC
Sales charges - Retained by $ 33,655
FDC
Exchange fees withheld by FSC $ 998
Expense reductions Directed $ 747
brokerage arrangements
FMR reimbursement 6,261
$ 7,008
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ (40,153) $ (41,151)
income (loss)
Net realized gain (loss) 208,678 21,698
Change in net unrealized 135,135 (207,859)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 303,660 (227,312)
NET ASSETS RESULTING FROM
OPERATIONS
From net realized gain - (29,887)
Share transactions Net 12,847,626 3,255,351
proceeds from sales of shares
Reinvestment of distributions - 29,223
Cost of shares redeemed (9,115,899) (3,913,851)
NET INCREASE (DECREASE) IN 3,731,727 (629,277)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 21,129 8,220
TOTAL INCREASE (DECREASE) 4,056,516 (878,256)
IN NET ASSETS
NET ASSETS
Beginning of period 3,086,984 3,965,240
End of period (including 7,143,500 3,086,984
accumulated net investment
loss of $40,153 and $0,
respectively)
OTHER INFORMATION
Shares
Sold 980,461 265,208
Issued in reinvestment of - 2,305
distributions
Redeemed (693,693) (325,171)
Net increase (decrease) 286,768 (57,658)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 E
Net asset value, beginning of $ 11.39 $ 12.07 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.07) (.13) (.11)
Net realized and unrealized 1.45 (.49) 2.59
gain (loss)
Total from investment 1.38 (.62) 2.48
operations
Less Distributions
From net realized gain - (.09) (.46)
Redemption fees added to paid .04 .03 .05
in capital
Net asset value, end of period $ 12.81 $ 11.39 $ 12.07
TOTAL RETURN B, C 12.47% (4.96)% 25.77%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 7,144 $ 3,087 $ 3,965
(000 omitted)
Ratio of expenses to average 2.50% A, F 2.50% F 2.50% A, F
net assets
Ratio of expenses to average 2.48% A, G 2.49% G 2.50% A
net assets after expense
reductions
Ratio of net investment (1.05)% A (1.09)% (.93)% A
income (loss) to average net
assets
Portfolio turnover rate 148% A 103% 140% A
</TABLE>
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.
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT DEFENSE AND AEROSPACE 13.92% 35.64% 160.33% 285.55%
SELECT DEFENSE AND AEROSPACE 10.43% 31.50% 152.44% 273.91%
(LOAD ADJ.)
S&P 500 7.32% 39.82% 206.52% 384.79%
GS Cyclical Industries 8.29% 25.75% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a 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 AUGUST 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT DEFENSE AND AEROSPACE 35.64% 21.09% 14.45%
SELECT DEFENSE AND AEROSPACE 31.50% 20.35% 14.10%
(LOAD ADJ.)
S&P 500 39.82% 25.11% 17.10%
GS Cyclical Industries 25.75% 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
1989/08/31 9700.00 10000.00
1989/09/30 9522.21 9959.00
1989/10/31 8981.74 9727.95
1989/11/30 8640.40 9926.40
1989/12/31 8782.62 10164.64
1990/01/31 8284.82 9482.59
1990/02/28 8313.27 9604.91
1990/03/31 8825.29 9859.44
1990/04/30 8462.61 9612.96
1990/05/31 9088.42 10550.22
1990/06/30 9094.95 10478.48
1990/07/31 8730.01 10444.95
1990/08/31 7964.34 9500.72
1990/09/30 7706.74 9038.04
1990/10/31 7606.56 8999.18
1990/11/30 8014.43 9580.52
1990/12/31 8380.03 9847.82
1991/01/31 9119.66 10277.18
1991/02/28 9299.18 11012.00
1991/03/31 10017.26 11278.49
1991/04/30 9852.10 11305.56
1991/05/31 10311.67 11793.96
1991/06/30 9792.86 11253.80
1991/07/31 10218.32 11778.23
1991/08/31 10110.15 12057.37
1991/09/30 9872.18 11856.01
1991/10/31 10348.12 12014.88
1991/11/30 9879.39 11530.68
1991/12/31 10636.57 12849.79
1992/01/31 10600.52 12610.79
1992/02/29 10766.38 12774.73
1992/03/31 10550.04 12525.62
1992/04/30 10362.55 12893.87
1992/05/31 9843.34 12957.05
1992/06/30 9381.82 12763.99
1992/07/31 9742.38 13286.04
1992/08/31 9554.89 13013.68
1992/09/30 9691.90 13167.24
1992/10/31 9771.23 13213.32
1992/11/30 10110.15 13663.90
1992/12/31 10636.57 13831.96
1993/01/31 10953.87 13948.15
1993/02/28 10874.54 14137.85
1993/03/31 11451.44 14436.15
1993/04/30 11487.50 14086.80
1993/05/31 11840.85 14464.33
1993/06/30 12338.43 14506.27
1993/07/31 12843.21 14448.25
1993/08/31 12821.58 14995.84
1993/09/30 13153.30 14880.37
1993/10/31 13679.72 15188.39
1993/11/30 13275.89 15044.10
1993/12/31 13706.06 15226.14
1994/01/31 14358.73 15743.82
1994/02/28 14358.73 15317.17
1994/03/31 13781.08 14649.34
1994/04/30 13855.87 14836.85
1994/05/31 13901.55 15080.17
1994/06/30 13551.35 14710.71
1994/07/31 13749.29 15193.22
1994/08/31 14365.95 15816.14
1994/09/30 13642.71 15428.65
1994/10/31 13977.68 15775.79
1994/11/30 13429.54 15201.24
1994/12/31 13947.23 15426.67
1995/01/31 13939.62 15826.69
1995/02/28 14952.16 16443.45
1995/03/31 15591.66 16928.70
1995/04/30 16451.95 17427.25
1995/05/31 17464.49 18123.82
1995/06/30 18111.61 18544.83
1995/07/31 19108.93 19159.78
1995/08/31 19101.31 19207.87
1995/09/30 19634.23 20018.44
1995/10/31 18918.60 19946.98
1995/11/30 20281.35 20822.65
1995/12/31 20552.13 21223.69
1996/01/31 20919.86 21946.15
1996/02/29 22039.40 22149.59
1996/03/31 22546.06 22362.89
1996/04/30 23632.33 22692.52
1996/05/31 24516.02 23277.76
1996/06/30 23935.31 23366.44
1996/07/31 22319.42 22334.12
1996/08/31 23497.67 22805.14
1996/09/30 24650.68 24088.62
1996/10/31 24221.46 24752.98
1996/11/30 25542.78 26624.06
1996/12/31 25695.85 26096.63
1997/01/31 25139.93 27727.15
1997/02/28 25537.02 27944.53
1997/03/31 25369.36 26796.29
1997/04/30 26047.12 28396.03
1997/05/31 28131.97 30124.78
1997/06/30 28803.05 31474.37
1997/07/31 31469.51 33978.79
1997/08/31 33205.39 32075.30
1997/09/30 35451.29 33832.06
1997/10/31 32784.84 32702.07
1997/11/30 32847.47 34215.85
1997/12/31 31751.90 34803.33
1998/01/31 33274.52 35188.26
1998/02/28 36436.13 37726.04
1998/03/31 37444.74 39657.99
1998/04/30 38443.66 40056.94
1998/05/31 35951.22 39368.37
1998/06/30 35970.62 40967.51
1998/07/31 34389.81 40531.21
1998/08/31 27571.98 34671.20
1998/09/30 29404.94 36892.24
1998/10/31 32304.70 39893.06
1998/11/30 33070.86 42310.97
1998/12/31 33129.05 44748.93
1999/01/31 33070.86 46620.33
1999/02/28 32828.40 45171.37
1999/03/31 33070.86 46978.68
1999/04/30 36745.29 48798.16
1999/05/31 37057.18 47646.04
1999/06/30 38811.60 50290.39
1999/07/31 38714.13 48720.33
1999/08/31 37391.00 48479.16
IMATRL PRASUN SHR__CHT 19990831 19990914 140615 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Defense and Aerospace Portfolio on August
31, 1989, and the current 3.00% sales charge was paid. As the chart
shows, by August 31, 1999, the value of the investment would have
grown to $37,391 - a 273.91% increase on the initial investment - and
includes the effect of a $7.50 trading fee. For comparison, look at
how the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $48,479 - a 384.79% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
General Dynamics Corp. 9.9
United Technologies Corp. 7.2
General Electric Co. 7.2
Raytheon Co. Class A 6.8
Boeing Co. 6.3
Howmet International, Inc. 5.3
Newport News Shipbuilding, Inc. 5.1
Textron, Inc. 5.0
Litton Industries, Inc. 4.8
Alliant Techsystems, Inc. 3.8
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Aerospace & Defense 46.0%
Ship Building & Repair 15.0%
Defense Electronics 11.6%
Electrical Equipment 10.8%
Air Transportation 8.8%
All Others 7.8%*
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
Row: 1, Col: 1, Value: 7.8
Row: 1, Col: 2, Value: 8.800000000000001
Row: 1, Col: 3, Value: 10.8
Row: 1, Col: 4, Value: 11.6
Row: 1, Col: 5, Value: 15.0
Row: 1, Col: 6, Value: 46.0
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
DEFENSE AND AEROSPACE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Jeff Feingold)
Jeff Feingold,
Portfolio Manager of
Fidelity Select Defense
and Aerospace Portfolio
Q. HOW DID THE FUND PERFORM, JEFF?
A. For the six months that ended August 31, 1999, the fund returned
13.92%. For the same six-month period, the Standard & Poor's 500 Index
returned 7.32%, 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 8.29%. For the 12-month
period that ended August 31, 1999, the fund returned 35.64%, while the
S&P 500 and the Goldman Sachs index returned 39.82% and 25.75%,
respectively. During the past six-month period, the fund outperformed
the Goldman Sachs index and the S&P 500 because the portfolio had a
higher concentration in defense-related stocks that performed well and
a smaller concentration in weaker aerospace stocks.
Q. WHAT FACTORS PLAYED IMPORTANT ROLES IN THE FUND'S PERFORMANCE?
A. Defense stocks continued to benefit from larger federal budget
appropriations in fiscal 1999, which represented the first significant
increase in over a decade. In addition, military action in Kosovo
boosted a number of defense stocks involved in armament and missile
production, such as Raytheon. Merger and acquisition activity played a
positive role when several of the fund's holdings were acquired at
premium prices, including Gulfstream Aerospace and Wyman Gordon. Many
aerospace stocks were negatively affected by peaking commercial
aircraft production and by continued performance problems for
satellite manufacturers.
Q. WHAT INVESTMENT STRATEGY DID YOU PURSUE DURING THE PAST SIX MONTHS?
A. Broadly speaking, I overweighted defense stocks that I expected to
benefit from increased appropriations and positive revenue trends, and
underweighted aerospace stocks that were pressured by a declining
business cycle. More specifically, I emphasized holdings in companies
where management demonstrated an ability to produce consistent,
predictable earnings growth. The portfolio's largest holdings
illustrate this strategy - they primarily are exceptionally
well-managed defense companies that have the potential to grow
earnings between 10% and 15% over the next several years.
Q. HOW DID THE FUND'S TOP HOLDINGS FARE?
A. Very well. Three of the portfolio's largest 10 positions -
Raytheon, Boeing and United Technologies - were among the top
performers. Raytheon profited from heightened expectations of strong
earnings resulting from successful deployment of its laser-guided
munitions in Kosovo and from earnings that met or exceeded analysts'
expectations. Boeing, best known for its commercial aircraft division,
performed well when its internal restructuring began to produce
results. A combination of layoffs and improved manufacturing
efficiency resulted in expanded margins and increased free cash flow.
In addition, Boeing derives about one-third of its revenue from
military aircraft and thus benefited somewhat from positive defense
industry conditions. United Technologies' stock benefited from
restructuring in all divisions, which should result in continued
margin expansion.
Q. WHAT STOCKS WERE DISAPPOINTING?
A. AMR Corp. (American Airlines) and SkyWest detracted from
performance. AMR struggled with the industry-wide problems of
declining passengers per plane and declining revenue per passenger.
SkyWest's financial performance was stable, but its association with
the weakening commercial airline market hurt the stock. Orbital
Sciences declined as a result of production problems with its
satellite equipment and lower-than-anticipated product demand. I sold
the stock during the period.
Q. WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
A. I am more optimistic about the defense industry than about the
aerospace industry. Defense stocks should continue to benefit from
increased budget appropriations, although they may be volatile over
the short term when Congress begins debating the fiscal year 2000
budget in October. Within the defense sector, I am particularly
bullish on shipbuilders, such as Newport News and General Dynamics,
because of the relatively long lead time from order to delivery - a
condition that leads to greater earnings predictability and fewer
negative earnings surprises. I expect that aerospace stocks will
remain under pressure as the delivery cycle winds down, creating a
difficult earnings environment for commercial aircraft manufacturers
and component suppliers.
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 3.
(checkmark)FUND FACTS
START DATE: May 8, 1984
FUND NUMBER: 067
TRADING SYMBOL: FSDAX
SIZE: as of August 31, 1999, more than $36
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 AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 99.6%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 46.0%
AAR Corp. 13,500 $ 288,563
Alliant Techsystems, Inc. (a) 19,100 1,394,300
BE Aerospace, Inc. (a) 15,900 275,269
Boeing Co. 50,600 2,292,813
Cordant Technologies, Inc. 30,900 1,278,488
Goodrich (B.F.) Co. 28,200 1,041,638
Howmet International, Inc. (a) 108,200 1,934,075
Lockheed Martin Corp. 36,000 1,332,000
Northrop Grumman Corp. 17,300 1,254,250
Precision Castparts Corp. 8,100 287,550
Primex Technologies, Inc. 5,200 108,550
Rockwell International Corp. 12,900 762,713
Textron, Inc. 22,600 1,824,950
United Technologies Corp. 39,500 2,611,938
16,687,097
AIR TRANSPORTATION - 8.8%
AMR Corp. (a) 20,500 1,201,813
Atlantic Coast Airlines 56,800 1,128,900
Holdings (a)
SkyWest, Inc. 43,500 875,438
3,206,151
BROADCASTING - 2.5%
PanAmSat Corp. (a) 24,200 893,888
COMPUTER SERVICES & SOFTWARE
- - 0.3%
Titan Corp. (a) 12,200 124,288
CONSUMER ELECTRONICS - 3.4%
General Motors Corp. Class H 24,100 1,241,150
(a)
DEFENSE ELECTRONICS - 11.6%
Litton Industries, Inc. (a) 27,400 1,753,600
Raytheon Co. Class A 36,452 2,446,841
4,200,441
ELECTRICAL EQUIPMENT - 10.8%
General Electric Co. 23,200 2,605,650
Harris Corp. 4,200 110,250
Loral Space & Communications 38,300 703,763
Ltd. (a)
Teleflex, Inc. 10,900 506,850
3,926,513
ELECTRONICS - 1.2%
Airport Systems 89,600 352,800
International, Inc. (a)
Maxwell Technologies, Inc. (a) 3,600 79,650
432,450
SHARES VALUE (NOTE 1)
SHIP BUILDING & REPAIR - 15.0%
General Dynamics Corp. 56,800 $ 3,578,394
Newport News Shipbuilding, 59,100 1,857,956
Inc.
5,436,350
TOTAL COMMON STOCKS 36,148,328
(Cost $32,507,994)
CASH EQUIVALENTS - 7.5%
Central Cash Collateral Fund, 2,714,400 2,714,400
5.26% (b) (Cost $2,714,400)
TOTAL INVESTMENT PORTFOLIO - 38,862,728
107.1% (Cost $35,222,394)
NET OTHER ASSETS - (7.1%) (2,572,145)
NET ASSETS - 100% $ 36,290,583
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $31,980,672 and $25,923,042, 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 $3,468 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $2,605,650. The fund
received
cash collateral of $2,714,400 which was invested in the Central Cash
Collateral Fund.
The fund participated in the bank borrowing program. The average daily
loan balance during the period for which loans were outstanding
amounted to $1,333,000. The weighted average interest rate was 5.21%.
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $35,538,080. Net unrealized appreciation
aggregated $3,324,648, of which $4,870,613 related to appreciated
investment securities and $1,545,965 related to depreciated investment
securities.
DEFENSE AND AEROSPACE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 38,862,728
value (cost $35,222,394) -
See accompanying schedule
Receivable for investments 1,196,344
sold
Receivable for fund shares 46,223
sold
Dividends receivable 46,670
Interest receivable 2,304
Redemption fees receivable 75
Other receivables 11,465
TOTAL ASSETS 40,165,809
LIABILITIES
Payable to custodian bank $ 67,483
Payable for fund shares 1,038,101
redeemed
Accrued management fee 19,755
Other payables and accrued 35,487
expenses
Collateral on securities 2,714,400
loaned, at value
TOTAL LIABILITIES 3,875,226
NET ASSETS $ 36,290,583
Net Assets consist of:
Paid in capital $ 30,506,144
Accumulated net investment (81,500)
loss
Accumulated undistributed net 2,225,605
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 3,640,334
(depreciation) on investments
NET ASSETS, for 945,792 $ 36,290,583
shares outstanding
NET ASSET VALUE and $38.37
redemption price per share
($36,290,583 (divided by)
945,792 shares)
Maximum offering price per $39.56
share (100/97.00 of $38.37)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 191,831
Dividends
Interest 46,832
Security lending 957
TOTAL INCOME 239,620
EXPENSES
Management fee $ 123,532
Transfer agent fees 138,627
Accounting and security 30,314
lending fees
Non-interested trustees' 58
compensation
Custodian fees and expenses 5,991
Registration fees 22,782
Audit 3,974
Legal 61
Interest 386
Total expenses before 325,725
reductions
Expense reductions (4,605) 321,120
NET INVESTMENT INCOME (LOSS) (81,500)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 2,856,822
Foreign currency transactions 189 2,857,011
Change in net unrealized 1,211,576
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 4,068,587
NET INCREASE (DECREASE) IN $ 3,987,087
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 137,495
charges paid to FDC
Sales charges - Retained by $ 136,948
FDC
Deferred sales charges $ 234
withheld by FDC
Exchange fees withheld by FSC $ 2,700
Expense reductions Directed $ 4,605
brokerage arrangements
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ (81,500) $ (280,808)
income (loss)
Net realized gain (loss) 2,857,011 3,586,940
Change in net unrealized 1,211,576 (8,328,194)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 3,987,087 (5,022,062)
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (131,190) -
from net realized gains
Share transactions Net 46,939,291 47,399,132
proceeds from sales of shares
Reinvestment of distributions 124,783 -
Cost of shares redeemed (43,197,673) (115,799,880)
NET INCREASE (DECREASE) IN 3,866,401 (68,400,748)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 71,453 115,021
TOTAL INCREASE (DECREASE) 7,793,751 (73,307,789)
IN NET ASSETS
NET ASSETS
Beginning of period 28,496,832 101,804,621
End of period (including $ 36,290,583 $ 28,496,832
accumulated net investment
loss of $81,500 and $0,
respectively)
OTHER INFORMATION
Shares
Sold 1,231,262 1,280,563
Issued in reinvestment of 3,676 -
distributions
Redeemed (1,130,950) (3,148,373)
Net increase (decrease) 103,988 (1,867,810)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 1997 1996 G 1995
Net asset value, beginning of $ 33.85 $ 37.57 $ 28.94 $ 26.97 $ 19.64 $ 19.14
period
Income from Investment
Operations
Net investment income (loss) D (.07) (.19) (.29) (.11) (.05) (.06)
Net realized and unrealized 4.70 (3.61) 11.84 4.18 9.09 .70
gain (loss)
Total from investment 4.63 (3.80) 11.55 4.07 9.04 .64
operations
Less Distributions
From net realized gain (.17) - (3.04) (2.17) (1.82) (.27)
Redemption fees added to paid .06 .08 .12 .07 .11 .13
in capital
Net asset value, end of period $ 38.37 $ 33.85 $ 37.57 $ 28.94 $ 26.97 $ 19.64
TOTAL RETURN B, C 13.92% (9.90)% 42.68% 15.87% 47.40% 4.13%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 36,291 $ 28,497 $ 101,805 $ 68,803 $ 26,648 $ 4,985
(000 omitted)
Ratio of expenses to average 1.52% A 1.48% 1.77% 1.84% 1.77% E 2.49% E
net assets
Ratio of expenses to average 1.50% A, F 1.42% F 1.71% F 1.81% F 1.75% F 2.49%
net assets after expense
reductions
Ratio of net investment (.38)% A (.53)% (.85)% (.39)% (.20)% (.32)%
income (loss) to average net
assets
Portfolio turnover rate 132% A 221% 311% 219% 267% 146%
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN. C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD. E FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES, OR EXPENSES
WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION. WITHOUT THIS REIMBURSEMENT, THE FUND'S
EXPENSE RATIO WOULD HAVE BEEN HIGHER. F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. G 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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT ENVIRONMENTAL SERVICES -10.97% -5.19% 10.09% 18.34%
SELECT ENVIRONMENTAL -13.71% -8.10% 6.72% 14.72%
SERVICES (LOAD ADJ.)
S&P 500 7.32% 39.82% 206.52% 384.79%
GS Cyclical Industries 8.29% 25.75% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a 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 AUGUST 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT ENVIRONMENTAL SERVICES -5.19% 1.94% 1.70%
SELECT ENVIRONMENTAL -8.10% 1.31% 1.38%
SERVICES (LOAD ADJ.)
S&P 500 39.82% 25.11% 17.10%
GS Cyclical Industries 25.75% 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
Environmental Services S&P 500
00516 SP001
1989/08/31 9700.00 10000.00
1989/09/30 10222.65 9959.00
1989/10/31 9992.33 9727.95
1989/11/30 10054.34 9926.40
1989/12/31 10382.32 10164.64
1990/01/31 9460.23 9482.59
1990/02/28 9646.42 9604.91
1990/03/31 10063.13 9859.44
1990/04/30 10116.33 9612.96
1990/05/31 11056.15 10550.22
1990/06/30 11401.93 10478.48
1990/07/31 11331.00 10444.95
1990/08/31 9921.28 9500.72
1990/09/30 9389.30 9038.04
1990/10/31 9256.31 8999.18
1990/11/30 9575.49 9580.52
1990/12/31 10125.20 9847.82
1991/01/31 11011.82 10277.18
1991/02/28 11517.19 11012.00
1991/03/31 11517.19 11278.49
1991/04/30 11481.73 11305.56
1991/05/31 11508.32 11793.96
1991/06/30 10639.44 11253.80
1991/07/31 10976.35 11778.23
1991/08/31 11171.41 12057.37
1991/09/30 10905.42 11856.01
1991/10/31 10497.58 12014.88
1991/11/30 9921.28 11530.68
1991/12/31 10900.96 12849.79
1992/01/31 11876.89 12610.79
1992/02/29 12005.79 12774.73
1992/03/31 10808.89 12525.62
1992/04/30 10486.65 12893.87
1992/05/31 10219.65 12957.05
1992/06/30 9673.23 12763.99
1992/07/31 9740.01 13286.04
1992/08/31 9539.67 13013.68
1992/09/30 9654.15 13167.24
1992/10/31 10112.05 13213.32
1992/11/30 10741.67 13663.90
1992/12/31 10751.21 13831.96
1993/01/31 10961.08 13948.15
1993/02/28 10837.07 14137.85
1993/03/31 10569.96 14436.15
1993/04/30 10350.54 14086.80
1993/05/31 10579.50 14464.33
1993/06/30 10445.94 14506.27
1993/07/31 10007.12 14448.25
1993/08/31 10541.34 14995.84
1993/09/30 10550.88 14880.37
1993/10/31 10846.61 15188.39
1993/11/30 10369.62 15044.10
1993/12/31 10684.43 15226.14
1994/01/31 11590.70 15743.82
1994/02/28 11380.83 15317.17
1994/03/31 10350.54 14649.34
1994/04/30 10522.26 14836.85
1994/05/31 10493.64 15080.17
1994/06/30 9864.02 14710.71
1994/07/31 10073.89 15193.22
1994/08/31 10426.86 15816.14
1994/09/30 10360.08 15428.65
1994/10/31 10007.12 15775.79
1994/11/30 9444.28 15201.24
1994/12/31 9663.69 15426.67
1995/01/31 9673.23 15826.69
1995/02/28 9797.24 16443.45
1995/03/31 10264.69 16928.70
1995/04/30 10999.24 17427.25
1995/05/31 11170.96 18123.82
1995/06/30 11628.86 18544.83
1995/07/31 12067.69 19159.78
1995/08/31 12239.40 19207.87
1995/09/30 12668.69 20018.44
1995/10/31 11771.96 19946.98
1995/11/30 12182.16 20822.65
1995/12/31 12188.88 21223.69
1996/01/31 12611.27 21946.15
1996/02/29 12490.59 22149.59
1996/03/31 13043.72 22362.89
1996/04/30 13476.80 22692.52
1996/05/31 14514.25 23277.76
1996/06/30 14252.37 23366.44
1996/07/31 12610.57 22334.12
1996/08/31 13406.29 22805.14
1996/09/30 13889.76 24088.62
1996/10/31 13748.75 24752.98
1996/11/30 14121.43 26624.06
1996/12/31 14091.21 26096.63
1997/01/31 14967.50 27727.15
1997/02/28 14604.90 27944.53
1997/03/31 13778.97 26796.29
1997/04/30 13698.39 28396.03
1997/05/31 14635.12 30124.78
1997/06/30 15450.98 31474.37
1997/07/31 15843.80 33978.79
1997/08/31 16055.32 32075.30
1997/09/30 17173.35 33832.06
1997/10/31 15924.38 32702.07
1997/11/30 15884.09 34215.85
1997/12/31 16609.29 34803.33
1998/01/31 15501.34 35188.26
1998/02/28 16579.08 37726.04
1998/03/31 17435.23 39657.99
1998/04/30 17717.25 40056.94
1998/05/31 16720.09 39368.37
1998/06/30 16367.56 40967.51
1998/07/31 15048.08 40531.21
1998/08/31 12106.96 34671.20
1998/09/30 13164.55 36892.24
1998/10/31 13446.58 39893.06
1998/11/30 12781.80 42310.97
1998/12/31 13791.76 44748.93
1999/01/31 13630.22 46620.33
1999/02/28 12893.18 45171.37
1999/03/31 12580.19 46978.68
1999/04/30 14267.91 48798.16
1999/05/31 14409.37 47646.04
1999/06/30 15288.48 50290.39
1999/07/31 13510.05 48720.33
1999/08/31 11472.00 48479.16
IMATRL PRASUN SHR__CHT 19990831 19990917 113843 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Environmental Services Portfolio on August
31, 1989, and the current 3.00% sales charge was paid. As the chart
shows, by August 31, 1999, the value of the investment would have
grown to $11,472 - a 14.72% increase on the initial investment - and
includes the effect of a $7.50 trading fee. For comparison, look at
how the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $48,479 - a 384.79% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
Allied Waste Industries, Inc. 6.4
Tetra Tech, Inc. 6.3
Ogden Corp. 6.2
Thermo Electron Corp. 6.2
Safety-Kleen Corp. 6.0
Thermo Instrument Systems, Inc. 5.5
Republic Services, Inc. Class A 5.5
Waste Connections, Inc. 4.7
Waste Management, Inc. 4.6
Azurix Corp. 4.5
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Pollution Control 56.2%
Electronic Instruments 12.4%
Industrial Machinery
& Equipment 5.2%
Water 4.9%
Retail & Wholesale,
Miscellaneous 3.8%
All Others 17.5%*
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
Row: 1, Col: 1, Value: 17.5
Row: 1, Col: 2, Value: 3.8
Row: 1, Col: 3, Value: 4.9
Row: 1, Col: 4, Value: 5.2
Row: 1, Col: 5, Value: 12.4
Row: 1, Col: 6, Value: 56.2
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
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. Unfortunately, the tough times continued for the environmental
sector. For the six-month period that ended August 31, 1999, the fund
returned -10.97%. The Standard & Poor's 500 Index returned 7.32% in
that time, 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 8.29%. For the 12 months
that ended August 31, 1999, the fund returned -5.19%, while the S&P
500 and Goldman Sachs indexes returned 39.82% and 25.75%,
respectively.
Q. CAN YOU HIGHLIGHT THE PROBLEMS THAT CONTINUED TO PLAGUE THE SECTOR?
A. Solid waste stocks - which make up a sizable portion of the
portfolio - were a disaster as industry leaders such as Waste
Management and Republic Services encountered difficulty. Waste
Management was the victim of overly optimistic earnings forecasts that
were drawn up when the company merged with USA Waste a year ago. Waste
Management failed to meet those projections and, coupled with concerns
over its accounting process, the stock fell hard. Republic Services,
meanwhile, had problems integrating several smaller acquisitions it
had made and its stock also took a tumble. When problems hit two of
the bigger companies in any sector, it usually affects the whole
group. Over the past few months, it seems like bad news was followed
by more bad news.
Q. WATER FILTRATION AND PURIFICATION COMPANIES HAVE BEEN IN THE NEWS
OVER THE PAST SIX MONTHS, WITH MANY BEING ACQUIRED BY FOREIGN
COMPANIES . . .
A. Yes, that has been the big story in the water area. U.S. Filter,
which was the sector's largest company, was acquired by French
conglomerate Vivendi. Another French conglomerate, Suez Lyonnaise,
also made a splash in the U.S. market with its acquisitions of Nalco
and United Water Resources. These acquisitions were generally received
positively, primarily because the foreign buyers cited strong growth
potential as the reason behind their purchases. U.S. Filter, which was
performing quite poorly before being bought, is now a subsidiary of
Vivendi and is no longer a publicly traded stock. At the end of the
period, the fund did not own positions in Vivendi or Suez Lyonnaise.
Q. HOW DID HAZARDOUS WASTE AND THERMAL INSTRUMENTATION STOCKS PERFORM
DURING THE PERIOD?
A. Hazardous waste stocks were negatively affected by supply and
demand conditions. A situation of excess capacity- in the form of too
many incinerators - and not enough demand continued throughout the
period. What may help this sector, however, is the increased
consolidation activity we've seen over the past two years.
Safety-Kleen, one of the larger companies in the hazardous waste
arena, was acquired by Laidlaw and favorable synergies may result in
time. Thermal instrumentation stocks, on the other hand, began to show
a pulse after being down for so long due to lack of demand from Asia.
The fund's two largest positions in this area - Thermo Electron and
Thermo Instrument - displayed relatively positive bookings and
backlogs prospects and may be on the upswing.
Q. WHICH STOCKS PERFORMED WELL FOR THE FUND? WHICH OTHERS WERE
DISAPPOINTING?
A. Several companies that were acquired through mergers received
favorable stock boosts, mainly because the acquiring company paid a
premium. One such example was Superior Services, which was acquired by
Vivendi. Browning-Ferris also performed well after being bought by
Allied Waste. An additional disappointment was Casella Waste, which
fell on concerns that it wouldn't be able to integrate its acquisition
of KTI Inc. smoothly.
Q. WHAT'S YOUR OUTLOOK?
A. Overall, I can't see the news getting any more difficult for
environmental services stocks. If some of the big solid waste
companies implement stock buyback programs, look to reduce debt and
start hitting their earnings targets, investors may show renewed
interest. For the foreseeable future, though, I think most investors
will stay on the sidelines. Thermal instrumentation stocks may be the
group closest to bouncing back - with several restructuring efforts a
key part of their revival - and I may look for additional
opportunities there.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE 3.
(checkmark)FUND FACTS
START DATE: June 29, 1989
FUND NUMBER: 516
TRADING SYMBOL: FSLEX
SIZE: as of August 31, 1999, more than $12
million
MANAGER: Subrata Ghose, since 1998;
analyst, environmental services industry,
1997-present; gas, electric and water
industries, 1997-1998; joined Fidelity in
1995
ENVIRONMENTAL SERVICES PORTFOLIO
INVESTMENTS AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 92.2%
SHARES VALUE (NOTE 1)
BUILDING MATERIALS - 0.7%
American Standard Companies, 1,200 $ 49,200
Inc. (a)
York International Corp. 900 37,013
86,213
CONSTRUCTION - 0.4%
Jacobs Engineering Group, 1,600 52,800
Inc. (a)
DRUGS & PHARMACEUTICALS - 3.1%
Catalytica, Inc. (a) 24,800 389,050
ELECTRIC UTILITY - 2.0%
KTI, Inc. (a) 31,100 252,688
ELECTRICAL EQUIPMENT - 0.6%
General Electric Co. 700 78,619
ELECTRONIC INSTRUMENTS - 12.4%
Thermo Electron Corp. (a) 48,750 773,906
Thermo Instrument Systems, 62,200 691,975
Inc. (a)
Thermoquest Corp. (a) 5,600 58,100
Waters Corp. (a) 300 19,781
1,543,762
ENGINEERING - 0.4%
Fluor Corp. 1,200 49,650
INDUSTRIAL MACHINERY &
EQUIPMENT - 5.2%
Ionics, Inc. (a) 16,000 468,000
Thermo Fibertek, Inc. (a) 25,700 173,475
641,475
METALS & MINING - 2.1%
IMCO Recycling, Inc. 16,600 261,450
POLLUTION CONTROL - 56.2%
Allied Waste Industries, Inc. 62,160 792,537
(a)
Calgon Carbon Corp. 4,000 26,750
Casella Waste Systems, Inc. 23,200 394,400
Class A (a)
Insituform Technologies, Inc. 23,800 493,850
Class A (a)
IT Group, Inc. (The) (a) 41,100 490,631
Ogden Corp. 34,200 778,050
Republic Services, Inc. Class 63,100 686,213
A (a)
Safety-Kleen Corp. (a) 58,150 741,413
Stericycle, Inc. (a) 3,700 58,969
Tetra Tech, Inc. (a) 48,737 782,838
TETRA Technologies, Inc. (a) 9,400 97,525
U.S. Liquids, Inc. (a) 12,200 91,500
U.S. Plastic Lumber Co. (a) 6,000 63,750
Waste Connections, Inc. (a) 27,100 584,344
Waste Industries, Inc. (a) 22,800 342,000
Waste Management, Inc. 26,093 569,154
6,993,924
SHARES VALUE (NOTE 1)
RESTAURANTS - 0.4%
McDonald's Corp. 1,000 $ 41,375
RETAIL & WHOLESALE,
MISCELLANEOUS - 3.8%
Newpark Resources, Inc. (a) 52,900 476,100
WATER - 4.9%
American Water Works, Inc. 1,700 49,513
Azurix Corp. 29,800 553,163
602,676
TOTAL COMMON STOCKS 11,469,782
(Cost $16,114,732)
CASH EQUIVALENTS - 6.4%
Taxable Central Cash Fund, 800,855 800,855
5.20% (b) (Cost $800,855)
TOTAL INVESTMENT PORTFOLIO - 12,270,637
98.6% (Cost $16,915,587)
NET OTHER ASSETS - 1.4% 178,463
NET ASSETS - 100% $ 12,449,100
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $24,461,428 and $26,007,376, 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 $9,653 for the
period.
The fund participated in the bank borrowing program. The average daily
loan balance during the period for which loans were outstanding
amounted to $4,116,333. The weighted average interest rate was 5.34%.
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $17,496,947. Net unrealized depreciation
aggregated $5,226,310, of which $60,942 related to appreciated
investment securities and $5,287,252 related to depreciated investment
securities.
The fund has elected 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
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 12,270,637
value (cost $16,915,587) -
See accompanying schedule
Receivable for investments 1,022,422
sold
Receivable for fund shares 84,047
sold
Dividends receivable 49
Interest receivable 3,464
Redemption fees receivable 118
Other receivables 11
TOTAL ASSETS 13,380,748
LIABILITIES
Payable to custodian bank $ 10,576
Payable for investments 798,203
purchased
Payable for fund shares 91,585
redeemed
Accrued management fee 6,936
Other payables and accrued 24,348
expenses
TOTAL LIABILITIES 931,648
NET ASSETS $ 12,449,100
Net Assets consist of:
Paid in capital $ 18,224,105
Accumulated net investment (138,230)
loss
Accumulated undistributed net (991,825)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (4,644,950)
(depreciation) on investments
NET ASSETS, for 1,096,061 $ 12,449,100
shares outstanding
NET ASSET VALUE and $11.36
redemption price per share
($12,449,100 (divided by)
1,096,061 shares)
Maximum offering price per $11.71
share (100/97.00 of $11.36)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 35,390
Dividends
Interest 28,618
Security lending 11
TOTAL INCOME 64,019
EXPENSES
Management fee $ 54,321
Transfer agent fees 104,370
Accounting and security 30,301
lending fees
Non-interested trustees' 95
compensation
Custodian fees and expenses 5,681
Registration fees 17,064
Audit 3,598
Legal 10
Interest 1,833
Total expenses before 217,273
reductions
Expense reductions (15,024) 202,249
NET INVESTMENT INCOME (LOSS) (138,230)
REALIZED AND UNREALIZED GAIN 18,733
(LOSS)
Net realized gain (loss) on
investment securities
Change in net unrealized (1,935,655)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) (1,916,922)
NET INCREASE (DECREASE) IN $ (2,055,152)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 17,454
charges paid to FDC
Sales charges - Retained by $ 14,894
FDC
Deferred sales charges $ 3,510
withheld by FDC
Exchange fees withheld by FSC $ 3,503
Expense reductions Directed $ 15,024
brokerage arrangements
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ (138,230) $ (256,748)
income (loss)
Net realized gain (loss) 18,733 (474,214)
Change in net unrealized (1,935,655) (4,374,725)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (2,055,152) (5,105,687)
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (11,276) -
From net realized gain
In excess of net realized - (40,246)
gain
TOTAL DISTRIBUTIONS (11,276) (40,246)
Share transactions Net 20,304,471 10,454,030
proceeds from sales of shares
Reinvestment of distributions 10,779 38,642
Cost of shares redeemed (21,370,859) (15,030,447)
NET INCREASE (DECREASE) IN (1,055,609) (4,537,775)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 37,576 34,045
TOTAL INCREASE (DECREASE) (3,084,461) (9,649,663)
IN NET ASSETS
NET ASSETS
Beginning of period 15,533,561 25,183,224
End of period (including net $ 12,449,100 $ 15,533,561
investment loss of $138,230
and $0, respectively)
OTHER INFORMATION
Shares
Sold 1,403,226 712,286
Issued in reinvestment of 885 3,084
distributions
Redeemed (1,524,786) (1,028,657)
Net increase (decrease) (120,675) (313,287)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 1997 1996 F 1995
Net asset value, beginning of $ 12.77 $ 16.46 $ 14.50 $ 12.42 $ 10.27 $ 11.93
period
Income from Investment
Operations
Net investment income (loss) (.10) (.18) (.13) (.08) (.17) (.14)
D
Net realized and unrealized (1.33) (3.50) 2.07 2.04 2.95 (1.53)
gain (loss)
Total from investment (1.43) (3.68) 1.94 1.96 2.78 (1.67)
operations
Less Distributions
From net realized gain (.01) - - - (.65) -
In excess of net realized - (.03) - (.02) - -
gain
Total distributions (.01) (.03) - (.02) (.65) -
Redemption fees added to paid .03 .02 .02 .14 .02 .01
in capital
Net asset value, end of period $ 11.36 $ 12.77 $ 16.46 $ 14.50 $ 12.42 $ 10.27
TOTAL RETURN B, C (10.97)% (22.23)% 13.52% 16.93% 27.49% (13.91)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 12,449 $ 15,534 $ 25,183 $ 32,525 $ 27,587 $ 31,270
(000 omitted)
Ratio of expenses to average 2.30% A 2.20% 2.23% 2.18% 2.36% 2.04%
net assets
Ratio of expenses to average 2.14% A, E 2.16% E 2.22% E 2.11% E 2.32% E 2.01% E
net assets after expense
reductions
Ratio of net investment (1.46)% A (1.23)% (.84)% (.59)% (1.43)% (1.32)%
income (loss) to average net
assets
Portfolio turnover rate 278% A 123% 59% 252% 138% 82%
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN. C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. F FOR 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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT INDUSTRIAL EQUIPMENT 17.75% 40.95% 143.84% 320.78%
SELECT INDUSTRIAL EQUIPMENT 14.14% 36.65% 136.46% 308.08%
(LOAD ADJ.)
S&P 500 7.32% 39.82% 206.52% 384.79%
GS Cyclical Industries 8.29% 25.75% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a 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 AUGUST 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT INDUSTRIAL EQUIPMENT 40.95% 19.51% 15.45%
SELECT INDUSTRIAL EQUIPMENT 36.65% 18.78% 15.10%
(LOAD ADJ.)
S&P 500 39.82% 25.11% 17.10%
GS Cyclical Industries 25.75% 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
1989/08/31 9700.00 10000.00
1989/09/30 9563.49 9959.00
1989/10/31 8929.14 9727.95
1989/11/30 9178.06 9926.40
1989/12/31 9338.66 10164.64
1990/01/31 9025.50 9482.59
1990/02/28 9483.20 9604.91
1990/03/31 10045.28 9859.44
1990/04/30 9964.98 9612.96
1990/05/31 10888.41 10550.22
1990/06/30 10694.89 10478.48
1990/07/31 10492.79 10444.95
1990/08/31 8762.85 9500.72
1990/09/30 7574.53 9038.04
1990/10/31 7372.44 8999.18
1990/11/30 7614.95 9580.52
1990/12/31 7889.80 9847.82
1991/01/31 8730.52 10277.18
1991/02/28 9555.07 11012.00
1991/03/31 9474.23 11278.49
1991/04/30 9377.22 11305.56
1991/05/31 9773.33 11793.96
1991/06/30 9457.81 11253.80
1991/07/31 9538.72 11778.23
1991/08/31 9684.35 12057.37
1991/09/30 9910.88 11856.01
1991/10/31 9854.25 12014.88
1991/11/30 9385.00 11530.68
1991/12/31 10007.46 12849.79
1992/01/31 10905.35 12610.79
1992/02/29 11680.81 12774.73
1992/03/31 11337.97 12525.62
1992/04/30 11337.97 12893.87
1992/05/31 11427.76 12957.05
1992/06/30 10725.77 12763.99
1992/07/31 10823.73 13286.04
1992/08/31 10260.50 13013.68
1992/09/30 10472.73 13167.24
1992/10/31 10431.92 13213.32
1992/11/30 10929.84 13663.90
1992/12/31 11142.07 13831.96
1993/01/31 11664.48 13948.15
1993/02/28 12276.68 14137.85
1993/03/31 12497.08 14436.15
1993/04/30 13068.84 14086.80
1993/05/31 13722.29 14464.33
1993/06/30 13901.98 14506.27
1993/07/31 14098.02 14448.25
1993/08/31 15061.84 14995.84
1993/09/30 14890.31 14880.37
1993/10/31 15388.56 15188.39
1993/11/30 15372.23 15044.10
1993/12/31 15969.81 15226.14
1994/01/31 16720.74 15743.82
1994/02/28 17196.33 15317.17
1994/03/31 16203.43 14649.34
1994/04/30 16056.78 14836.85
1994/05/31 15728.57 15080.17
1994/06/30 14920.69 14710.71
1994/07/31 15627.59 15193.22
1994/08/31 16738.44 15816.14
1994/09/30 16788.93 15428.65
1994/10/31 16999.32 15775.79
1994/11/30 16174.60 15201.24
1994/12/31 16469.14 15426.67
1995/01/31 16376.57 15826.69
1995/02/28 16864.67 16443.45
1995/03/31 18261.64 16928.70
1995/04/30 19120.24 17427.25
1995/05/31 19507.53 18123.82
1995/06/30 20248.43 18544.83
1995/07/31 22151.19 19159.78
1995/08/31 21721.80 19207.87
1995/09/30 20728.33 20018.44
1995/10/31 20686.23 19946.98
1995/11/30 21393.45 20822.65
1995/12/31 21049.89 21223.69
1996/01/31 21895.56 21946.15
1996/02/29 23081.34 22149.59
1996/03/31 23246.80 22362.89
1996/04/30 23673.90 22692.52
1996/05/31 23845.94 23277.76
1996/06/30 23740.81 23366.44
1996/07/31 22555.68 22334.12
1996/08/31 23530.54 22805.14
1996/09/30 24648.77 24088.62
1996/10/31 24495.85 24752.98
1996/11/30 26483.81 26624.06
1996/12/31 26672.40 26096.63
1997/01/31 27624.60 27727.15
1997/02/28 27292.94 27944.53
1997/03/31 26190.95 26796.29
1997/04/30 27145.86 28396.03
1997/05/31 29556.76 30124.78
1997/06/30 31399.72 31474.37
1997/07/31 33659.94 33978.79
1997/08/31 33451.30 32075.30
1997/09/30 34332.21 33832.06
1997/10/31 31654.72 32702.07
1997/11/30 31596.76 34215.85
1997/12/31 31619.94 34803.33
1998/01/31 31050.33 35188.26
1998/02/28 34322.28 37726.04
1998/03/31 36680.19 39657.99
1998/04/30 37607.46 40056.94
1998/05/31 36282.79 39368.37
1998/06/30 36137.08 40967.51
1998/07/31 34825.65 40531.21
1998/08/31 28957.35 34671.20
1998/09/30 29831.63 36892.24
1998/10/31 33103.58 39893.06
1998/11/30 34309.03 42310.97
1998/12/31 35626.09 44748.93
1999/01/31 35969.57 46620.33
1999/02/28 34664.33 45171.37
1999/03/31 35103.99 46978.68
1999/04/30 40250.12 48798.16
1999/05/31 39783.57 47646.04
1999/06/30 42088.02 50290.39
1999/07/31 41480.10 48720.33
1999/08/31 40808.00 48479.16
IMATRL PRASUN SHR__CHT 19990831 19990914 141103 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Industrial Equipment Portfolio on August
31, 1989, and the current 3.00% sales charge was paid. As the chart
shows, by August 31, 1999, the value of the investment would have
grown to $40,808 - a 308.08% 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 $48,479 - a 384.79% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
Tyco International Ltd. 6.6
Pitney Bowes, Inc. 5.9
Emerson Electric Co. 5.3
General Electric Co. 5.1
AlliedSignal, Inc. 4.8
Caterpillar, Inc. 4.8
Illinois Tool Works, Inc. 4.7
Applied Materials, Inc. 4.5
Xerox Corp. 4.3
Ingersoll-Rand Co. 3.7
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Industrial Machinery
& Equipment 30.1%
Electrical Equipment 17.3%
Computers & Office
Equipment 10.2%
Aerospace & Defense 10.0%
Electronic Instruments 7.7%
All Others 24.7%*
* INCLUDES SHORT-TERM INVESTMENTS AND OTHER NET ASSETS.
Row: 1, Col: 1, Value: 24.7
Row: 1, Col: 2, Value: 7.7
Row: 1, Col: 3, Value: 10.0
Row: 1, Col: 4, Value: 10.2
Row: 1, Col: 5, Value: 17.3
Row: 1, Col: 6, Value: 30.1
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
INDUSTRIAL EQUIPMENT PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Simon Wolf)
Simon Wolf,
Portfolio Manager of
Fidelity Select Industrial
Equipment Portfolio
Q. HOW DID THE FUND PERFORM, SIMON?
A. For the six months that ended August 31, 1999, the fund returned
17.75%. For the same six-month period, the Standard & Poor's 500 Index
returned 7.32%, 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 8.29%. For the 12 months
that ended August 31, 1999, the fund returned 40.95%, while the S&P
500 and the Goldman Sachs Cyclical Industries Index returned 39.82%
and 25.75%, respectively. The fund outperformed both the Goldman Sachs
index and the S&P 500 because the portfolio had a higher concentration
in cyclical, commodity-related stocks that benefited from improving
global economies and recovering natural resources prices.
Q. WHAT FACTORS LED TO THE FUND'S STRONG PERFORMANCE DURING THE
PERIOD?
A. The biggest factor was the turnaround in international economies,
particularly in Asia. As conditions improved overseas, demand and
prices for commodities - such as oil, copper and paper - increased.
Higher commodity prices generally lead oil service, mining and
construction companies to increase their orders for industrial
equipment and machinery. In addition, many equipment companies have
significant international sales, so "global healing" provided
industrial equipment stocks with an added boost. A pick-up in
industrial production domestically, particularly in the technology
sector, also contributed to rising stock prices.
Q. DID YOU ALTER YOUR STRATEGY TO REFLECT THE CHANGING INVESTMENT
ENVIRONMENT?
A. Yes, I did. When the period began, I underweighted stocks that were
sensitive to commodity prices and international economies. However,
once the Asian markets showed signs of stabilizing and oil prices
began to recover, I shifted assets into more cyclical companies - such
as oil services and heavy equipment manufacturers - that stood to
benefit from recovering commodity prices and higher levels of capital
spending. For the most part, however, I maintained my bias toward
large-cap, highly liquid stocks because a disproportionately small
number of larger stocks led the market's advance.
Q. WHAT STOCKS WERE THE BIGGEST CONTRIBUTORS TO PERFORMANCE?
A. Three of the portfolio's largest positions - Caterpillar, Tyco
International and Ingersoll-Rand - generated large gains. Caterpillar
- - a manufacturer of earth-moving and construction machinery - was one
of the portfolio's largest beneficiaries of increased capital spending
overseas. Tyco is a diversified company that has been a core holding
based on good growth prospects and consistent earnings gains in both
strong and weak markets. Ingersoll-Rand has a multinational portfolio
of industrial businesses, including compact construction equipment,
architectural hardware and automotive parts. The stock benefited from
robust housing activity and strong truck sales throughout the period.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. There were several stocks that failed to live up to my
expectations. Pitney Bowes performed poorly when investors became
worried that Internet competition would erode the postage-meter
market. However, the company's business prospects remained attractive,
with accelerating revenues and expanding margins, and I believe the
stock was unduly discounted. Xerox underperformed due to disappointing
revenue growth. Although digital sales were strong, they were offset
by a faster-than-expected decline in analog sales. Xerox also suffered
from weakness in Latin American markets, unfavorable currency exchange
rates, and increased price and product competition. Grainger detracted
from performance due to a slower-than-anticipated recovery in its core
electrical products distribution business, problems implementing a new
business-enterprise software system and a disappointing contribution
from its Internet sales start-up.
Q. WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
A. I am cautiously optimistic that the manufacturing recovery will
continue. Industrial equipment stocks have staged a rally on
expectations of stronger earnings growth. Now we need to wait and see
if earnings can be sustained. In the meantime, I plan to maintain the
fund's exposure to large-cap, liquid stocks that I believe are
well-positioned to benefit from improving industrial and manufacturing
activity overseas as well as from increasing industrial production
domestically.
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 3.
(checkmark)FUND FACTS
START DATE: September 29, 1986
FUND NUMBER: 510
TRADING SYMBOL: FSCGX
SIZE: as of August 31, 1999, more than
$35 million
MANAGER: Simon Wolf, since 1997; research
analyst, industrial and electrical equipment
industries, since 1997; joined Fidelity in 1996
INDUSTRIAL EQUIPMENT PORTFOLIO
INVESTMENTS AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 94.6%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 10.0%
AlliedSignal, Inc. 28,400 $ 1,739,500
Rockwell International Corp. 14,400 851,400
Textron, Inc. 12,300 993,225
3,584,125
AUTOS, TIRES, & ACCESSORIES -
0.5%
Eaton Corp. 2,000 196,000
BUILDING MATERIALS - 1.6%
American Standard Companies, 6,200 254,200
Inc. (a)
Tecumseh Products Co. 500 26,500
Tecumseh Products Co. Class A 1,300 74,100
York International Corp. 5,000 205,625
560,425
CELLULAR - 1.1%
Mannesmann AG Sponsored ADR 2,700 410,400
COMMUNICATIONS EQUIPMENT - 0.9%
NEC Corp. ADR 3,800 305,900
COMPUTERS & OFFICE EQUIPMENT
- - 10.2%
Pitney Bowes, Inc. 35,800 2,112,200
Xerox Corp. 32,000 1,528,000
3,640,200
CONSTRUCTION - 0.3%
Granite Construction, Inc. 4,600 115,000
CONSUMER ELECTRONICS - 0.9%
Matsushita Electric 1,600 321,700
Industrial Co. Ltd. ADR
ELECTRICAL EQUIPMENT - 17.3%
Emerson Electric Co. 30,400 1,903,800
General Electric Co. 16,200 1,819,463
Grainger (W.W.), Inc. 6,300 274,444
Honeywell, Inc. 10,100 1,146,350
Hubbell, Inc. Class B 7,500 291,094
Roper Industries, Inc. 9,000 322,313
Siemens AG Sponsored ADR 5,000 426,875
6,184,339
ELECTRONIC INSTRUMENTS - 7.7%
Applied Materials, Inc. (a) 22,500 1,598,906
KLA-Tencor Corp. (a) 5,400 339,188
LAM Research Corp. (a) 3,495 197,249
Novellus Systems, Inc. (a) 3,050 164,509
Teradyne, Inc. (a) 6,900 469,631
2,769,483
SHARES VALUE (NOTE 1)
ENERGY SERVICES - 2.9%
Halliburton Co. 18,700 $ 867,213
Smith International, Inc. (a) 3,400 158,738
1,025,951
GAS - 0.8%
Williams Companies, Inc. 6,900 284,625
INDUSTRIAL MACHINERY &
EQUIPMENT - 30.1%
AGCO Corp. 3,600 37,125
Briggs & Stratton Corp. 1,800 109,575
Case Corp. 7,000 345,625
Caterpillar, Inc. 30,000 1,698,750
Cooper Industries, Inc. 7,000 363,125
Deere & Co. 16,800 653,100
Dover Corp. 8,300 321,106
Hardinge, Inc. 3,500 53,375
IDEX Corp. 4,100 121,206
Illinois Tool Works, Inc. 21,700 1,691,244
Ingersoll-Rand Co. 20,900 1,329,763
Kaydon Corp. 7,000 214,813
Kennametal, Inc. 5,132 135,998
Manitowoc Co., Inc. 2,800 103,775
Milacron, Inc. 7,300 131,400
MSC Industrial Direct, Inc. 23,700 226,631
(a)
New Holland NV 14,800 229,400
Parker-Hannifin Corp. 10,500 459,375
Terex Corp. (a) 5,900 158,563
Tyco International Ltd. 23,400 2,370,710
10,754,659
LEASING & RENTAL - 0.8%
United Rentals, Inc. (a) 11,200 273,700
MEDICAL EQUIPMENT & SUPPLIES
- - 1.5%
Millipore Corp. 11,700 441,675
Pall Corp. 4,100 81,488
523,163
METALS & MINING - 0.5%
AFC Cable Systems, Inc. (a) 4,000 172,000
OIL & GAS - 2.4%
Cooper Cameron Corp. (a) 400 16,650
Weatherford International, 24,000 855,000
Inc. (a)
871,650
PAPER & FOREST PRODUCTS - 0.6%
Trex Co., Inc. (a) 9,700 201,881
PHOTOGRAPHIC EQUIPMENT - 0.7%
Imation Corp. (a) 8,300 233,956
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
RETAIL & WHOLESALE,
MISCELLANEOUS - 0.2%
IKON Office Solutions, Inc. 6,200 $ 68,975
SERVICES - 1.3%
Ritchie Bros. Auctioneers, 12,500 456,250
Inc. (a)
TELEPHONE SERVICES - 2.3%
COMSAT Corp. Series 1 24,000 834,000
TOTAL COMMON STOCKS 33,788,382
(Cost $25,984,998)
CASH EQUIVALENTS - 10.7%
Central Cash Collateral Fund, 1,883,700 1,883,700
5.26% (b)
Taxable Central Cash Fund, 1,932,938 1,932,938
5.20% (b)
TOTAL CASH EQUIVALENTS 3,816,638
(Cost $3,816,638)
TOTAL INVESTMENT PORTFOLIO - 37,605,020
105.3% (Cost $29,801,636)
NET OTHER ASSETS - (5.3%) (1,877,669)
NET ASSETS - 100% $ 35,727,351
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $33,978,139 and $35,622,342, 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 $2,936 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $1,808,231. The fund
received cash collateral of $1,883,700 which was invested in the
Central Cash Collateral Fund.
The fund participated in the bank borrowing program. The average daily
loan balance during the period for which the loan was outstanding
amounted to $5,970,000. The weighted average interest rate was 5.29%.
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $29,870,881. Net unrealized appreciation
aggregated $7,734,139, of which $8,473,934 related to appreciated
investment securities and $739,795 related to depreciated investment
securities.
INDUSTRIAL EQUIPMENT PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 37,605,020
value (cost $29,801,636) -
See accompanying schedule
Cash 2,804
Receivable for investments 240,417
sold
Receivable for fund shares 39,695
sold
Dividends receivable 48,981
Interest receivable 7,856
Redemption fees receivable 147
Other receivables 906
TOTAL ASSETS 37,945,826
LIABILITIES
Payable for investments $ 172,444
purchased
Payable for fund shares 114,542
redeemed
Accrued management fee 17,850
Other payables and accrued 29,939
expenses
Collateral on securities 1,883,700
loaned, at value
TOTAL LIABILITIES 2,218,475
NET ASSETS $ 35,727,351
Net Assets consist of:
Paid in capital $ 23,984,556
Undistributed net investment 29,005
income
Accumulated undistributed net 3,910,406
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 7,803,384
(depreciation) on investments
NET ASSETS, for 1,237,354 $ 35,727,351
shares outstanding
NET ASSET VALUE and $28.87
redemption price per share
($35,727,351 (divided by)
1,237,354 shares)
Maximum offering price per $29.76
share (100/97.00 of $28.87)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 204,625
Dividends
Interest 106,059
Security lending 608
TOTAL INCOME 311,292
EXPENSES
Management fee $ 116,132
Transfer agent fees 105,479
Accounting and security 30,314
lending fees
Non-interested trustees' 56
compensation
Custodian fees and expenses 6,887
Registration fees 20,046
Audit 3,995
Legal 28
Interest 3,507
Total expenses before 286,444
reductions
Expense reductions (4,157) 282,287
NET INVESTMENT INCOME 29,005
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 3,943,464
Foreign currency transactions 568 3,944,032
Change in net unrealized 1,670,089
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 5,614,121
NET INCREASE (DECREASE) IN $ 5,643,126
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 36,499
charges paid to FDC
Sales charges - Retained by $ 36,499
FDC
Deferred sales charges $ 355
withheld by FDC
Exchange fees withheld by FSC $ 1,628
Expense reductions Directed $ 3,848
brokerage arrangements
Custodian credits 309
$ 4,157
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ 29,005 $ (69,481)
income (loss)
Net realized gain (loss) 3,944,032 3,586,120
Change in net unrealized 1,670,089 (3,320,873)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 5,643,126 195,766
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (855,037) (1,273,263)
from net realized gains
Share transactions Net 24,060,945 20,888,073
proceeds from sales of shares
Reinvestment of distributions 816,722 1,219,714
Cost of shares redeemed (25,551,553) (39,935,425)
NET INCREASE (DECREASE) IN (673,886) (17,827,638)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 39,986 50,582
TOTAL INCREASE (DECREASE) 4,154,189 (18,854,553)
IN NET ASSETS
NET ASSETS
Beginning of period 31,573,162 50,427,715
End of period (including $ 35,727,351 $ 31,573,162
undistributed net investment
income of $29,005 and $0,
respectively)
OTHER INFORMATION
Shares
Sold 835,619 771,299
Issued in reinvestment of 32,003 49,301
distributions
Redeemed (881,663) (1,515,112)
Net increase (decrease) (14,041) (694,512)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 1997 1996 F 1995
Net asset value, beginning of $ 25.23 $ 25.91 $ 25.51 $ 25.11 $ 20.04 $ 20.61
period
Income from Investment
Operations
Net investment income (loss) D .02 (.04) (.08) .06 .04 .01
Net realized and unrealized 4.33 .25 5.73 4.15 7.10 (.44)
gain (loss)
Total from investment 4.35 .21 5.65 4.21 7.14 (.43)
operations
Less Distributions
From net investment income - - (.02) (.04) (.05) (.01)
From net realized gain (.74) (.92) (5.26) (3.84) (2.05) (.16)
Total distributions (.74) (.92) (5.28) (3.88) (2.10) (.17)
Redemption fees added to paid .03 .03 .03 .07 .03 .03
in capital
Net asset value, end of period $ 28.87 $ 25.23 $ 25.91 $ 25.51 $ 25.11 $ 20.04
TOTAL RETURN B, C 17.75% 1.00% 25.76% 18.25% 36.86% (1.93)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 35,727 $ 31,573 $ 50,428 $ 102,882 $ 137,520 $ 109,968
(000 omitted)
Ratio of expenses to average 1.42% A 1.43% 1.67% 1.51% 1.54% 1.80%
net assets
Ratio of expenses to average 1.40% A, E 1.41% E 1.60% E 1.44% E 1.53% E 1.78% E
net assets after expense
reductions
Ratio of net investment .14% A (.16)% (.32)% .25% .19% .06%
income (loss) to average net
assets
Portfolio turnover rate 188% A 84% 115% 261% 115% 131%
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN. C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. F FOR THE YEAR ENDED FEBRUARY 29
</TABLE>
INDUSTRIAL MATERIALS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the past 10 year total returns would
have been lower.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT INDUSTRIAL MATERIALS 12.84% 23.61% 22.05% 96.32%
SELECT INDUSTRIAL MATERIALS 9.39% 19.83% 18.32% 90.36%
(LOAD ADJ.)
S&P 500 7.32% 39.82% 206.52% 384.79%
GS Cyclical Industries 8.29% 25.75% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a 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 AUGUST 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT INDUSTRIAL MATERIALS 23.61% 4.07% 6.98%
SELECT INDUSTRIAL MATERIALS 19.83% 3.42% 6.65%
(LOAD ADJ.)
S&P 500 39.82% 25.11% 17.10%
GS Cyclical Industries 25.75% 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
1989/08/31 9700.00 10000.00
1989/09/30 9108.69 9959.00
1989/10/31 8360.12 9727.95
1989/11/30 8479.64 9926.40
1989/12/31 8718.68 10164.64
1990/01/31 8051.88 9482.59
1990/02/28 8190.27 9604.91
1990/03/31 8429.31 9859.44
1990/04/30 7819.13 9612.96
1990/05/31 8290.92 10550.22
1990/06/30 8202.94 10478.48
1990/07/31 8106.13 10444.95
1990/08/31 7170.31 9500.72
1990/09/30 6660.45 9038.04
1990/10/31 6583.00 8999.18
1990/11/30 6931.51 9580.52
1990/12/31 7221.94 9847.82
1991/01/31 7480.10 10277.18
1991/02/28 8028.68 11012.00
1991/03/31 8138.40 11278.49
1991/04/30 8151.30 11305.56
1991/05/31 8848.33 11793.96
1991/06/30 8751.49 11253.80
1991/07/31 9101.55 11778.23
1991/08/31 9315.47 12057.37
1991/09/30 9192.31 11856.01
1991/10/31 9587.74 12014.88
1991/11/30 8822.80 11530.68
1991/12/31 9808.15 12849.79
1992/01/31 10236.00 12610.79
1992/02/29 10735.16 12774.73
1992/03/31 10547.17 12525.62
1992/04/30 11098.19 12893.87
1992/05/31 11227.84 12957.05
1992/06/30 10955.31 12763.99
1992/07/31 11201.79 13286.04
1992/08/31 10494.78 13013.68
1992/09/30 10352.08 13167.24
1992/10/31 10468.84 13213.32
1992/11/30 10858.01 13663.90
1992/12/31 11021.29 13831.96
1993/01/31 11255.79 13948.15
1993/02/28 11360.01 14137.85
1993/03/31 11548.91 14436.15
1993/04/30 11379.55 14086.80
1993/05/31 11848.54 14464.33
1993/06/30 11880.90 14506.27
1993/07/31 12044.28 14448.25
1993/08/31 12357.96 14995.84
1993/09/30 11972.39 14880.37
1993/10/31 12678.19 15188.39
1993/11/30 12848.10 15044.10
1993/12/31 13377.45 15226.14
1994/01/31 14462.28 15743.82
1994/02/28 14161.66 15317.17
1994/03/31 13763.02 14649.34
1994/04/30 14279.60 14836.85
1994/05/31 14423.70 15080.17
1994/06/30 14273.05 14710.71
1994/07/31 14803.62 15193.22
1994/08/31 15602.75 15816.14
1994/09/30 15406.25 15428.65
1994/10/31 15203.19 15775.79
1994/11/30 14128.94 15201.24
1994/12/31 14473.58 15426.67
1995/01/31 14064.94 15826.69
1995/02/28 15244.71 16443.45
1995/03/31 15594.03 16928.70
1995/04/30 15666.24 17427.25
1995/05/31 15507.80 18123.82
1995/06/30 16200.99 18544.83
1995/07/31 17600.59 19159.78
1995/08/31 17554.38 19207.87
1995/09/30 17059.24 20018.44
1995/10/31 16068.95 19946.98
1995/11/30 17547.77 20822.65
1995/12/31 16701.04 21223.69
1996/01/31 16959.62 21946.15
1996/02/29 17284.49 22149.59
1996/03/31 18159.65 22362.89
1996/04/30 18585.19 22692.52
1996/05/31 18470.76 23277.76
1996/06/30 17858.21 23366.44
1996/07/31 17117.76 22334.12
1996/08/31 18046.68 22805.14
1996/09/30 18443.83 24088.62
1996/10/31 18403.44 24752.98
1996/11/30 18962.14 26624.06
1996/12/31 19041.47 26096.63
1997/01/31 19125.97 27727.15
1997/02/28 19478.07 27944.53
1997/03/31 18182.35 26796.29
1997/04/30 18231.82 28396.03
1997/05/31 19387.09 30124.78
1997/06/30 19325.89 31474.37
1997/07/31 21016.71 33978.79
1997/08/31 21100.87 32075.30
1997/09/30 21651.72 33832.06
1997/10/31 19976.20 32702.07
1997/11/30 19739.03 34215.85
1997/12/31 19375.52 34803.33
1998/01/31 19740.94 35188.26
1998/02/28 20762.45 37726.04
1998/03/31 21775.65 39657.99
1998/04/30 21974.97 40056.94
1998/05/31 20895.33 39368.37
1998/06/30 19848.90 40967.51
1998/07/31 18445.36 40531.21
1998/08/31 15405.74 34671.20
1998/09/30 15629.97 36892.24
1998/10/31 16767.75 39893.06
1998/11/30 17357.41 42310.97
1998/12/31 17241.14 44748.93
1999/01/31 17332.49 46620.33
1999/02/28 16875.72 45171.37
1999/03/31 17257.75 46978.68
1999/04/30 20837.19 48798.16
1999/05/31 19491.79 47646.04
1999/06/30 20131.27 50290.39
1999/07/31 19724.33 48720.33
1999/08/31 19036.00 48479.16
IMATRL PRASUN SHR__CHT 19990831 19990914 121309 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Industrial Materials Portfolio on August
31, 1989, and the current 3.00% sales charge was paid. As the chart
shows, by August 31, 1999, the value of the investment would have
grown to $19,036 - a 90.36% 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 $48,479 - a 384.79% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
Minnesota Mining & 6.8
Manufacturing Co.
Alcoa, Inc. 5.8
Kimberly-Clark Corp. 5.5
E.I. du Pont de Nemours and Co. 5.3
Dow Chemical Co. 4.7
Monsanto Co. 4.1
International Paper Co. 3.6
Burlington Northern Santa Fe 3.4
Corp.
CSX Corp. 2.6
Union Pacific Corp. 2.4
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Chemicals & Plastics 27.1%
Paper & Forest Products 21.3%
Railroads 11.0%
Metals & Mining 10.2%
Consumer Durables 6.8%
All Others 23.6%*
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
Row: 1, Col: 1, Value: 23.6
Row: 1, Col: 2, Value: 6.8
Row: 1, Col: 3, Value: 10.2
Row: 1, Col: 4, Value: 11.0
Row: 1, Col: 5, Value: 21.3
Row: 1, Col: 6, Value: 27.1
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
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. It was a good period for the fund. For the six months that ended
August 31, 1999, the fund returned 12.84%. That bettered both the
7.32% return of the Standard & Poor's 500 Index and the 8.29% return
of the Goldman Sachs Cyclical Industries Index, an index of 277 stocks
designed to measure the performance of companies in the cyclical
industries sector. For the 12 months that ended August 31, 1999, the
fund returned 23.61%, versus 39.82% and 25.75%, respectively, for the
S&P 500 and the Goldman Sachs index.
Q. WHAT ACCOUNTED FOR THE FUND'S STRONG PERFORMANCE DURING THE
SIX-MONTH PERIOD?
A. The biggest influence was the powerful rally in cyclical stocks
that took place during April and the first half of May. This rally was
sparked by several factors, including a stronger-than-expected U.S.
economy and apparent turnarounds in a number of Asian economies.
Cyclical stocks generally do well in an environment of vigorous
economic growth, and these factors contributed to investors'
perception that we had that kind of environment. Although the cyclical
rally faded somewhat during the summer, many stocks held on to a
significant portion of their gains. In addition, base metals such as
copper, aluminum, zinc and nickel rallied strongly during the period,
boosting that portion of the fund's holdings. Although the broadly
based S&P 500 also advanced during the period, rising interest rates
hurt some sectors.
Q. HAVE THERE BEEN ANY NOTABLE SHIFTS IN THE SUBSECTORS IN WHICH THE
FUND INVESTS?
A. Not really. I try to keep subsector weightings pretty consistent.
At the end of the period, the fund's four biggest subsectors - as a
percentage of net assets - were chemicals and plastics, at 27.1%;
paper and forest products, 21.3%; railroads, 11.0%; and metals and
mining, 10.2%. Within each sub sector, I try to identify the most
attractive companies based on basic business prospects and valuations.
Q. WHAT STOCKS DID WELL FOR THE FUND?
A. Alcoa, the fund's second-largest holding at the end of the period,
was one of the strongest performers. The company continued to benefit
from an aggressive cost reduction program and recent acquisitions, as
well as from an increase in the aluminum price. Kimberly-Clark, also a
core holding, was helped by the general upturn in cyclical stocks.
Minnesota Mining & Manufacturing (3M), the fund's largest holding as
of the end of the period, responded to rebounding Asian demand for the
company's products as a result of the improved economic conditions
there. Another positive contributor was Reynolds Metals, which was
bought by Alcoa at a premium.
Q. WHAT STOCKS DETRACTED FROM PERFORMANCE?
A. One disappointment was Owens-Illinois, which was hurt by weak
demand in Latin America for its beverage containers. Monsanto also
underperformed. Although its earnings were on target, investors were
concerned that European demand for the company's genetically modified
seed products might be affected by negative perceptions.
Q. WHAT'S YOUR OUTLOOK, PETER?
A. Industrial materials stocks should do well if the current uptrend
in worldwide economic growth continues. At present, the U.S. economy
seems to be in relatively good shape. The main concern going forward
is whether the Federal Reserve Board's worries about inflation will
lead to further increases in interest rates, which could cause a
slowdown. Some countries in Asia - for example, South Korea -
genuinely seem to have improved. However, Japan, the economic linchpin
of Asia, is still a question mark. Although the Japanese economy
appears to be stabilizing, it's unclear how much of that has resulted
from government spending intended to jump-start the economy. Turning
to Europe, Germany, a concern earlier in the year, seems to be
improving. Overall, then, my outlook is cautiously optimistic.
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 3.
(checkmark)FUND FACTS
START DATE: September 29, 1986
FUND NUMBER: 509
TRADING SYMBOL: FSDPX
SIZE: as of August 31, 1999, more than
$14 million
MANAGER: Peter Hirsch, since 1998; analyst,
growth and income funds and steel industries,
1995-1998; joined Fidelity in 1995
INDUSTRIAL MATERIALS PORTFOLIO
INVESTMENTS AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 95.1%
SHARES VALUE (NOTE 1)
BUILDING MATERIALS - 5.1%
Ferro Corp. 1,000 $ 24,000
Lafarge Corp. 2,356 64,790
Masco Corp. 10,600 300,113
Owens-Corning 2,900 81,563
Sherwin-Williams Co. 600 14,625
Southdown, Inc. 1,900 95,950
USG Corp. 600 29,400
Vulcan Materials Co. 2,800 119,350
729,791
CHEMICALS & PLASTICS - 27.1%
Air Products & Chemicals, 2,000 68,000
Inc.
Avery Dennison Corp. 3,700 203,038
Crompton & Knowles Corp. 2,000 35,000
Cytec Industries, Inc. (a) 1,500 34,969
Dow Chemical Co. 5,900 670,388
E.I. du Pont de Nemours and 11,900 754,163
Co.
Eastman Chemical Co. 2,200 102,163
Engelhard Corp. 6,100 121,619
Fuller (H.B.) Co. 400 24,100
Great Lakes Chemical Corp. 1,100 45,306
Hanna (M.A.) Co. 1,400 19,163
Hercules, Inc. 3,200 104,200
Ivex Packaging Corp. (a) 2,800 43,400
Lyondell Chemical Co. 3,200 46,600
Minerals Technologies, Inc. 600 29,700
Monsanto Co. 14,200 583,088
PPG Industries, Inc. 4,400 264,275
Praxair, Inc. 5,500 258,500
Sealed Air Corp. (a) 3,440 202,100
Union Carbide Corp. 2,400 136,500
Valspar Corp. 2,100 76,256
Witco Corp. 2,700 43,706
3,866,234
CONSUMER DURABLES - 6.8%
Minnesota Mining & 10,200 963,893
Manufacturing Co.
INDUSTRIAL MACHINERY &
EQUIPMENT - 0.2%
UCAR International, Inc. (a) 1,300 31,688
IRON & STEEL - 4.7%
AK Steel Holding Corp. 4,600 96,600
Allegheny Teledyne, Inc. 10,300 192,481
Bethlehem Steel Corp. (a) 11,100 85,331
Nucor Corp. 2,000 93,125
Steel Dynamics, Inc. (a) 5,600 100,800
USX-U.S. Steel Group 2,400 64,800
Worthington Industries, Inc. 2,200 33,000
666,137
SHARES VALUE (NOTE 1)
LEASING & RENTAL - 0.7%
Ryder Systems, Inc. 4,600 $ 101,488
METALS & MINING - 10.2%
Alcoa, Inc. 12,782 825,238
Brush Wellman, Inc. 600 10,200
Cominco Ltd. 2,500 43,132
Falconbridge Ltd. 7,100 110,841
Inco Ltd. 7,700 158,127
Kaiser Aluminum Corp. (a) 600 5,363
Olin Corp. 2,600 36,888
Phelps Dodge Corp. 2,300 128,656
Reynolds Metals Co. 1,400 88,638
Ryerson Tull, Inc. 2,420 45,829
1,452,912
PACKAGING & CONTAINERS - 2.2%
Ball Corp. 700 31,456
Bemis Co., Inc. 1,900 72,081
Crown Cork & Seal Co., Inc. 2,700 71,719
Owens-Illinois, Inc. (a) 5,800 143,550
318,806
PAPER & FOREST PRODUCTS - 21.3%
Boise Cascade Corp. 1,687 61,365
Bowater, Inc. 1,600 85,800
Champion International Corp. 2,700 148,500
Chesapeake Corp. 500 16,906
Consolidated Papers, Inc. 2,900 77,213
Domtar, Inc. 4,800 52,422
Fort James Corp. 5,900 190,275
Georgia-Pacific Corp. 4,400 182,050
International Paper Co. 10,886 512,322
Kimberly-Clark Corp. 13,700 780,044
Louisiana-Pacific Corp. 100 1,850
Mead Corp. 3,200 119,400
Potlatch Corp. 800 30,900
Smurfit-Stone Container Corp. 7,200 152,550
(a)
Temple-Inland, Inc. 1,400 86,800
Westvaco Corp. 3,400 89,038
Weyerhaeuser Co. 5,900 331,875
Willamette Industries, Inc. 2,800 110,950
3,030,260
PRECIOUS METALS - 4.0%
Barrick Gold Corp. 12,500 241,206
Euro-Nevada Mining Corp. Ltd. 4,900 58,931
Kinross Gold Corp. (a) 13,500 28,945
Newmont Mining Corp. 5,750 117,516
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PRECIOUS METALS - CONTINUED
Placer Dome, Inc. 7,445 $ 77,318
Stillwater Mining Co. (a) 1,950 43,022
566,938
RAILROADS - 11.0%
Burlington Northern Santa Fe 16,900 490,100
Corp.
Canadian National Railway Co. 3,400 216,074
Canadian Pacific Ltd. 6,600 155,216
CSX Corp. 8,300 362,606
Union Pacific Corp. 7,100 345,681
1,569,677
SECURITIES INDUSTRY - 0.5%
Kansas City Southern 1,400 64,838
Industries, Inc.
TRUCKING & FREIGHT - 1.3%
CNF Transportation, Inc. 2,200 85,663
USFreightways Corp. 2,200 106,700
192,363
TOTAL COMMON STOCKS 13,555,025
(Cost $12,289,620)
CASH EQUIVALENTS - 9.5%
Taxable Central Cash Fund, 1,355,461 1,355,461
5.20% (b) (Cost $1,355,461)
TOTAL INVESTMENT PORTFOLIO - 14,910,486
104.6%
(Cost $13,645,081)
NET OTHER ASSETS - (4.6%) (660,851)
NET ASSETS - 100% $ 14,249,635
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $45,087,091 and $42,526,881, 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 $8,111 for the
period.
The fund participated in the bank borrowing program. The average daily
loan balance during the period for which loans were outstanding
amounted to $1,962,714. The weighted average interest rate was 5.32%.
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $13,722,778. Net unrealized appreciation
aggregated $1,187,708, of which $1,711,882 related to appreciated
investment securities and $524,174 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 29, 2007.
The fund has elected to defer to 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
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 14,910,486
value (cost $13,645,081) -
See accompanying schedule
Receivable for fund shares 45,526
sold
Dividends receivable 28,694
Interest receivable 7,550
Redemption fees receivable 259
Other receivables 1,380
TOTAL ASSETS 14,993,895
LIABILITIES
Payable to custodian bank $ 285
Payable for fund shares 708,666
redeemed
Accrued management fee 7,929
Other payables and accrued 27,380
expenses
TOTAL LIABILITIES 744,260
NET ASSETS $ 14,249,635
Net Assets consist of:
Paid in capital $ 15,627,508
Undistributed net investment 30,305
income
Accumulated undistributed net (2,673,579)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 1,265,401
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 621,348 $ 14,249,635
shares outstanding
NET ASSET VALUE and $22.93
redemption price per share
($14,249,635 (divided by)
621,348 shares)
Maximum offering price per $23.64
share (100/97.00 of $22.93)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 215,705
Dividends
Interest 40,155
Security lending 1,380
TOTAL INCOME 257,240
EXPENSES
Management fee $ 73,484
Transfer agent fees 85,120
Accounting and security 30,303
lending fees
Non-interested trustees' 35
compensation
Custodian fees and expenses 15,927
Registration fees 21,656
Audit 3,534
Legal 13
Interest 2,031
Total expenses before 232,103
reductions
Expense reductions (5,168) 226,935
NET INVESTMENT INCOME 30,305
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (622,876)
Foreign currency transactions (31) (622,907)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 1,066,692
Assets and liabilities in (1) 1,066,691
foreign currencies
NET GAIN (LOSS) 443,784
NET INCREASE (DECREASE) IN $ 474,089
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 41,607
charges paid to FDC
Sales charges - Retained by $ 41,607
FDC
Deferred sales charges $ 289
withheld by FDC
Exchange fees withheld by FSC $ 2,790
Expense reductions Directed $ 5,168
brokerage arrangements
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ 30,305 $ (83,870)
income (loss)
Net realized gain (loss) (622,907) (1,208,807)
Change in net unrealized 1,066,691 (1,993,477)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 474,089 (3,286,154)
NET ASSETS RESULTING FROM
OPERATIONS
Share transactions Net 57,571,279 9,957,438
proceeds from sales of shares
Cost of shares redeemed (55,092,521) (18,118,847)
NET INCREASE (DECREASE) IN 2,478,758 (8,161,409)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 134,545 27,986
TOTAL INCREASE (DECREASE) 3,087,392 (11,419,577)
IN NET ASSETS
NET ASSETS
Beginning of period 11,162,243 22,581,820
End of period (including $ 14,249,635 $ 11,162,243
undistributed net investment
income of $30,305 and $0,
respectively)
OTHER INFORMATION
Shares
Sold 2,353,254 440,126
Redeemed (2,281,095) (794,343)
Net increase (decrease) 72,159 (354,217)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 1997 1996 F 1995
Net asset value, beginning of $ 20.32 $ 25.00 $ 27.66 $ 26.07 $ 23.13 $ 21.67
period
Income from Investment
Operations
Net investment income (loss) D .03 (.12) (.11) .06 .12 .17
Net realized and unrealized 2.45 (4.60) 1.43 3.12 2.92 1.43
gain (loss)
Total from investment 2.48 (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 .13 .04 .05 .04 .05 .04
in capital
Net asset value, end of period $ 22.93 $ 20.32 $ 25.00 $ 27.66 $ 26.07 $ 23.13
TOTAL RETURN B, C 12.84% (18.72)% 6.59% 12.69% 13.38% 7.65%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 14,250 $ 11,162 $ 22,582 $ 66,462 $ 86,338 $ 183,454
(000 omitted)
Ratio of expenses to average 1.84% A 2.07% 1.98% 1.54% 1.64% 1.56%
net assets
Ratio of expenses to average 1.80% A, E 2.04% E 1.94% E 1.51% E 1.61% E 1.53% E
net assets after expense
reductions
Ratio of net investment .24% A (.52)% (.42)% .23% .49% .77%
income (loss) to average net
assets
Portfolio turnover rate 389% A 82% 118% 105% 138% 139%
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN. C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. F FOR THE YEAR ENDED FEBRUARY 29
</TABLE>
PAPER AND FOREST PRODUCTS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the past 10 year total returns would
have been lower.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT PAPER AND FOREST 24.23% 38.41% 49.34% 149.85%
PRODUCTS
SELECT PAPER AND FOREST 20.43% 34.18% 44.79% 142.29%
PRODUCTS (LOAD ADJ.)
S&P 500 7.32% 39.82% 206.52% 384.79%
GS Cyclical Industries 8.29% 25.75% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a 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 AUGUST 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT PAPER AND FOREST 38.41% 8.35% 9.59%
PRODUCTS
SELECT PAPER AND FOREST 34.18% 7.68% 9.25%
PRODUCTS (LOAD ADJ.)
S&P 500 39.82% 25.11% 17.10%
GS Cyclical Industries 25.75% 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 Products S&P 500
00506 SP001
1989/08/31 9700.00 10000.00
1989/09/30 9165.80 9959.00
1989/10/31 8751.09 9727.95
1989/11/30 8687.83 9926.40
1989/12/31 8873.89 10164.64
1990/01/31 8062.65 9482.59
1990/02/28 8140.93 9604.91
1990/03/31 8368.64 9859.44
1990/04/30 7827.81 9612.96
1990/05/31 8347.30 10550.22
1990/06/30 8148.04 10478.48
1990/07/31 8269.02 10444.95
1990/08/31 7279.87 9500.72
1990/09/30 6575.36 9038.04
1990/10/31 6368.99 8999.18
1990/11/30 7009.45 9580.52
1990/12/31 7533.27 9847.82
1991/01/31 8155.61 10277.18
1991/02/28 8546.39 11012.00
1991/03/31 8720.06 11278.49
1991/04/30 9147.02 11305.56
1991/05/31 10196.32 11793.96
1991/06/30 9935.81 11253.80
1991/07/31 9943.04 11778.23
1991/08/31 9993.70 12057.37
1991/09/30 9610.16 11856.01
1991/10/31 9971.99 12014.88
1991/11/30 9212.15 11530.68
1991/12/31 10152.23 12849.79
1992/01/31 11085.93 12610.79
1992/02/29 11137.81 12774.73
1992/03/31 11211.91 12525.62
1992/04/30 11389.76 12893.87
1992/05/31 11071.11 12957.05
1992/06/30 10997.56 12763.99
1992/07/31 10915.88 13286.04
1992/08/31 10477.76 13013.68
1992/09/30 10366.37 13167.24
1992/10/31 10871.33 13213.32
1992/11/30 11272.32 13663.90
1992/12/31 11376.07 13831.96
1993/01/31 11726.45 13948.15
1993/02/28 11987.37 14137.85
1993/03/31 11972.46 14436.15
1993/04/30 12517.09 14086.80
1993/05/31 12554.38 14464.33
1993/06/30 12285.84 14506.27
1993/07/31 12159.03 14448.25
1993/08/31 12487.25 14995.84
1993/09/30 11890.49 14880.37
1993/10/31 12352.98 15188.39
1993/11/30 13121.31 15044.10
1993/12/31 13486.82 15226.14
1994/01/31 15053.33 15743.82
1994/02/28 14628.13 15317.17
1994/03/31 13076.55 14649.34
1994/04/30 13061.94 14836.85
1994/05/31 13594.77 15080.17
1994/06/30 13457.75 14710.71
1994/07/31 14599.53 15193.22
1994/08/31 16228.47 15816.14
1994/09/30 16517.72 15428.65
1994/10/31 15490.12 15775.79
1994/11/30 14812.66 15201.24
1994/12/31 15393.64 15426.67
1995/01/31 15290.27 15826.69
1995/02/28 16808.96 16443.45
1995/03/31 16928.23 16928.70
1995/04/30 16998.23 17427.25
1995/05/31 17279.26 18123.82
1995/06/30 18844.99 18544.83
1995/07/31 19487.34 19159.78
1995/08/31 19471.28 19207.87
1995/09/30 19150.11 20018.44
1995/10/31 18869.08 19946.98
1995/11/30 19150.11 20822.65
1995/12/31 18767.12 21223.69
1996/01/31 19235.19 21946.15
1996/02/29 18352.03 22149.59
1996/03/31 19288.18 22362.89
1996/04/30 20131.53 22692.52
1996/05/31 19725.76 23277.76
1996/06/30 18619.13 23366.44
1996/07/31 18130.36 22334.12
1996/08/31 19144.78 22805.14
1996/09/30 19836.42 24088.62
1996/10/31 19799.54 24752.98
1996/11/30 20030.08 26624.06
1996/12/31 20093.19 26096.63
1997/01/31 20300.14 27727.15
1997/02/28 20347.17 27944.53
1997/03/31 19246.56 26796.29
1997/04/30 19822.58 28396.03
1997/05/31 22268.98 30124.78
1997/06/30 22443.03 31474.37
1997/07/31 24193.22 33978.79
1997/08/31 24106.19 32075.30
1997/09/30 24812.07 33832.06
1997/10/31 22394.68 32702.07
1997/11/30 22539.73 34215.85
1997/12/31 21972.36 34803.33
1998/01/31 22812.66 35188.26
1998/02/28 23507.72 37726.04
1998/03/31 23870.82 39657.99
1998/04/30 25155.86 40056.94
1998/05/31 23686.06 39368.37
1998/06/30 22618.07 40967.51
1998/07/31 20439.80 40531.21
1998/08/31 17510.76 34671.20
1998/09/30 17859.71 36892.24
1998/10/31 19001.72 39893.06
1998/11/30 19900.52 42310.97
1998/12/31 20238.89 44748.93
1999/01/31 19350.66 46620.33
1999/02/28 19509.27 45171.37
1999/03/31 20524.39 46978.68
1999/04/30 24669.45 48798.16
1999/05/31 24267.63 47646.04
1999/06/30 24595.43 50290.39
1999/07/31 24415.67 48720.33
1999/08/31 24229.00 48479.16
IMATRL PRASUN SHR__CHT 19990831 19990914 140634 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Paper and Forest Products Portfolio on
August 31, 1989, and the current 3.00% sales charge was paid. As the
chart shows, by August 31, 1999, the value of the investment would
have grown to $24,229 - a 142.29% increase on the initial investment -
and includes the effect of a $7.50 trading fee. For comparison, look
at how the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $48,479 - a 384.79% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
Smurfit-Stone Container Corp. 9.2
Gaylord Container Corp. Class A 8.5
Abitibi-Consolidated, Inc. 8.3
Champion International Corp. 7.9
Domtar, Inc. 7.9
Bowater, Inc. 6.5
Tembec, Inc. Class A 5.8
Pope & Talbot, Inc. 5.3
Boise Cascade Corp. 5.2
Plum Creek Timber Co., Inc. 5.1
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Paper & Forest Products 87.9%
Packaging & Containers 8.5%
Real Estate
Investment Trusts 5.1%
Tobacco 0.9%
Building Materials 0.3%
All Others (2.7%)*
* SHORT-TERM INVESTMENTS AND NET OTHER ASSETS ARE NOT INCLUDED IN
THE PIE CHART.
Row: 1, Col: 1, Value: 85.5
Row: 1, Col: 2, Value: 8.300000000000001
Row: 1, Col: 3, Value: 5.0
Row: 1, Col: 4, Value: 0.9
Row: 1, Col: 5, Value: 0.3
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
PAPER AND FOREST PRODUCTS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Noah Eccles)
Noah Eccles,
Portfolio Manager of
Fidelity Select Paper and Forest Products Portfolio
Q. HOW DID THE FUND PERFORM, NOAH?
A. Very well. For the six months that ended August 31, 1999, the fund
returned 24.23%. This topped the Standard & Poor's 500 Index, which
returned 7.32% in that time. The fund also outpaced the Goldman Sachs
Cyclical Industries Index - an index of 277 stocks designed to measure
the performance of companies in the cyclical industries sector - which
returned 8.29% during the period. For the 12 months that ended August
31, 1999, the fund returned 38.41%, while the S&P 500 and Goldman
Sachs indexes returned 39.82% and 25.75%, respectively.
Q. WHAT FACTORS PLAYED A KEY ROLE IN HELPING THE SECTOR AND THE FUND
PERFORM WELL DURING THE SIX-MONTH PERIOD?
A. Two of the most important drivers for this sector - operating rates
and pulp prices - were very favorable. I define operating rates as the
global consumption for paper products divided by available capacity.
Capacity expansion for 1999 and 2000 will be the lowest it has been in
30 years. In conjunction, shipments accelerated during the period as
customers began to re-stock inventories after significant de-stocking
last year. Specifically, we've seen a significant pickup in exports to
Asia as that region gradually recovers. This formula translated into
positive operating rates throughout the sector as well as higher pulp
prices. Pulp is the major paper grade and serves as the building block
for paper itself. Since paper prices tend to follow pulp prices pretty
closely, rising pulp prices helped many stocks.
Q. DID ANY OF THE OTHER PAPER GRADES YOU TRACK BENEFIT FROM INCREASED
PULP PRICES?
A. The coated and uncoated free sheet grades have more direct exposure
to pulp because pulp is a larger component of the cost involved in
making those types of paper. Coated and uncoated inventories decreased
minimally during the period, yet both experienced a 10% price
increase. Pulp prices are the biggest driver for these grades. The
other grades, meanwhile, were helped along by capacity reduction and
tighter inventories. The containerboard sector pushed through two
considerable price increases for linerboard, the material used in
assembling corrugated boxes, and the newsprint industry recently
announced a price jump effective October 1. Finally, operating margins
within the tissue area have been very competitive, and tissue is
typically the last grade to be helped by rising pulp prices. Tissue
margins shouldn't begin to turn until 2000.
Q. SIX MONTHS AGO, YOU WERE LOOKING TO ADD STOCKS THAT HAD BOTTOMED
OUT IN VALUATION YET COULD GROW IF THE PAPER CYCLE BLOSSOMED. HOW DID
THIS MOVE WORK OUT?
A. Even though the paper pricing cycle kicked in sooner than I
anticipated, this strategy paid off. For a three-week period in March
and early April, we experienced a significant cyclical rally. As a
result, fund assets rose quickly and it took some time to put the
money to use. In a rallying market, having a high cash level can be
frustrating. But this is where my defensive strategy came into play.
Relative to the rest of the paper group, the strong performance of
stocks such as Abitibi, Bowater, Champion International, Pope &
Talbot, Westvaco and Consolidated Papers more than offset the fact
that the fund had a higher cash position than I preferred.
Q. WE'VE TALKED ABOUT SOME STOCKS THAT PERFORMED WELL. WHAT ABOUT SOME
THAT DIDN'T?
A. The fund's timber-related positions were disappointing, as timber
prices stayed fairly flat. This hurt several names, including Crown
Pacific and Georgia-Pacific, neither of which were owned by the fund
at the end of the period. Gaylord Container - the fund's biggest
small-cap stock position - also performed poorly as small-cap stocks
in general trailed larger stocks during the period.
Q. WHAT'S YOUR OUTLOOK?
A. The future looks bright for the sector. Operating rates should be
increasing for another 12-24 months, as should commodity prices, both
good signs for stocks. The one worry I have concerns Y2K and
inventories. Companies may be loading up on supply before the end of
1999 and any drop-off in shipments due to Y2K could be a fly in the
ointment.
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 3.
(checkmark)FUND FACTS
START DATE: June 30, 1986
FUND NUMBER: 506
TRADING SYMBOL: FSPFX
SIZE: as of August 31, 1999, more than
$16 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 AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 102.7%
SHARES VALUE (NOTE 1)
BUILDING MATERIALS - 0.3%
T.J. International, Inc. 1,600 $ 46,600
INDUSTRIAL MACHINERY &
EQUIPMENT - 0.0%
Tenneco, Inc. 50 1,006
PACKAGING & CONTAINERS - 8.5%
Gaylord Container Corp. Class 168,100 1,376,319
A (a)
PAPER & FOREST PRODUCTS - 87.9%
Abitibi-Consolidated, Inc. 112,400 1,340,516
Alliance Forest Products, 5,700 70,080
Inc. (a)
Boise Cascade Corp. 23,000 836,625
Bowater, Inc. 19,600 1,051,050
Caraustar Industries, Inc. 1,800 40,838
Champion International Corp. 23,200 1,276,000
Consolidated Papers, Inc. 29,900 796,088
Domtar, Inc. 116,400 1,271,236
Donohue, Inc. Class A (sub. 33,300 538,824
vtg.)
Fletcher Challenge Canada 2,500 27,303
Ltd.
Glatfelter (P.H.) Co. 8,800 116,050
International Paper Co. 61 2,871
Jefferson Smurfit Group PLC 23,600 68,635
Jefferson Smurfit Group PLC 27,000 806,625
Sponsored ADR
Kimberly-Clark Corp. 500 28,469
Longview Fibre Co. 4,500 58,219
Mead Corp. 21,000 783,563
Pope & Talbot, Inc. 70,400 858,000
Potlatch Corp. 900 34,763
Rayonier, Inc. 900 37,350
Rock-Tenn Co. Class A 3,800 53,675
Smurfit-Stone Container Corp. 69,900 1,481,003
(a)
St. Laurent Paperboard, Inc. 5,000 64,657
(a)
Stora Enso Oyj 28,300 377,101
Svenska Cellulosa AB (SCA) 2,700 78,600
Class B
Tembec, Inc. Class A (a) 103,600 940,556
Temple-Inland, Inc. 100 6,200
UPM-Kymmene Corp. 5,400 187,028
Wausau-Mosinee Paper Corp. 9,500 130,625
Westvaco Corp. 31,100 814,431
14,176,981
REAL ESTATE INVESTMENT TRUSTS
- - 5.1%
Plum Creek Timber Co., Inc. 30,550 819,122
TOBACCO - 0.9%
Schweitzer-Mauduit 11,000 149,188
International, Inc.
TOTAL COMMON STOCKS 16,569,216
(Cost $15,842,685)
CASH EQUIVALENTS - 2.6%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund, 411,852 $ 411,852
5.20% (b) (Cost $411,852)
TOTAL INVESTMENT PORTFOLIO - 16,981,068
105.3%
(Cost $16,254,537)
NET OTHER ASSETS - (5.3%) (855,040)
NET ASSETS - 100% $ 16,126,028
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $47,621,378 and $42,675,768, 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 $12,261 for the
period.
Distribution of investments by country of issue, as a percentage of
net assets, is as follows:
United States of America 64.2%
Canada 26.4
Ireland 5.4
Finland 3.5
Others (individually less 0.5
than 1%)
100.0%
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $16,340,278. Net unrealized appreciation
aggregated $640,790, of which $1,114,655 related to appreciated
investment securities and $473,865 related to depreciated investment
securities.
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 has elected 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.
PAPER AND FOREST PRODUCTS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 16,981,068
value (cost $16,254,537) -
See accompanying schedule
Receivable for investments 175,500
sold
Receivable for fund shares 37,827
sold
Dividends receivable 10,196
Interest receivable 3,674
Redemption fees receivable 780
TOTAL ASSETS 17,209,045
LIABILITIES
Payable for fund shares $ 1,052,414
redeemed
Accrued management fee 8,778
Other payables and accrued 21,825
expenses
TOTAL LIABILITIES 1,083,017
NET ASSETS $ 16,126,028
Net Assets consist of:
Paid in capital $ 16,828,939
Undistributed net investment 216,755
income
Accumulated undistributed net (1,646,182)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 726,516
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 703,636 $ 16,126,028
shares outstanding
NET ASSET VALUE and $22.92
redemption price per share
($16,126,028 (divided by)
703,636 shares)
Maximum offering price per $23.63
share (100/97.00 of $22.92)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 320,889
Dividends
Interest 82,806
TOTAL INCOME 403,695
EXPENSES
Management fee $ 72,970
Transfer agent fees 84,868
Accounting fees and expenses 30,303
Non-interested trustees' 34
compensation
Custodian fees and expenses 5,697
Registration fees 18,429
Audit 4,900
Legal 12
Total expenses before 217,213
reductions
Expense reductions (26,144) 191,069
NET INVESTMENT INCOME 212,626
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 1,865,775
Foreign currency transactions 1,139 1,866,914
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 725,840
Assets and liabilities in 5 725,845
foreign currencies
NET GAIN (LOSS) 2,592,759
NET INCREASE (DECREASE) IN $ 2,805,385
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 57,943
charges paid to FDC
Sales charges - Retained by $ 57,943
FDC
Deferred sales charges $ 901
withheld by FDC
Exchange fees withheld by FSC $ 4,455
Expense reductions Directed $ 26,144
brokerage arrangements
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ 212,626 $ (19,520)
income (loss)
Net realized gain (loss) 1,866,914 (2,776,473)
Change in net unrealized 725,845 (1,268,236)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 2,805,385 (4,064,229)
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders - (317,946)
in excess of net realized
gain
Share transactions Net 56,799,449 24,142,684
proceeds from sales of shares
Reinvestment of distributions - 312,733
Cost of shares redeemed (53,838,106) (41,303,607)
NET INCREASE (DECREASE) IN 2,961,343 (16,848,190)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 112,752 92,806
TOTAL INCREASE (DECREASE) 5,879,480 (21,137,559)
IN NET ASSETS
NET ASSETS
Beginning of period 10,246,548 31,384,107
End of period (including $ 16,126,028 $ 10,246,548
undistributed net investment
income of $216,755 and
$4,129, respectively)
OTHER INFORMATION
Shares
Sold 2,457,856 1,074,182
Issued in reinvestment of - 13,704
distributions
Redeemed (2,309,677) (1,917,231)
Net increase (decrease) 148,179 (829,345)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 1997 1996 F
Net asset value, beginning of $ 18.45 $ 22.66 $ 21.63 $ 20.78 $ 21.14
period
Income from Investment
Operations
Net investment income (loss) D .20 (.03) (.12) .01 .08
Net realized and unrealized 4.17 (3.87) 3.13 2.08 1.83
gain (loss)
Total from investment 4.37 (3.90) 3.01 2.09 1.91
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)
In excess of net realized gain - (.44) - - -
Total distributions - (.44) (2.11) (1.35) (2.35)
Redemption fees added to paid .10 .13 .13 .11 .08
in capital
Net asset value, end of period $ 22.92 $ 18.45 $ 22.66 $ 21.63 $ 20.78
TOTAL RETURN B, C 24.23% (17.01)% 15.53% 10.87% 9.18%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 16,126 $ 10,247 $ 31,384 $ 19,484 $ 27,270
(000 omitted)
Ratio of expenses to average 1.73% A 2.30% 2.18% 2.19% 1.91%
net assets
Ratio of expenses to average 1.52% A, E 2.21% E 2.15% E 2.16% E 1.90% E
net assets after expense
reductions
Ratio of net investment 1.69% A (.13)% (.50)% .04% .34%
income (loss) to average net
assets
Portfolio turnover rate 406% A 338% 235% 180% 78%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28,
SELECTED PER-SHARE DATA 1995
Net asset value, beginning of $ 19.61
period
Income from Investment
Operations
Net investment income (loss) D .01
Net realized and unrealized 2.53
gain (loss)
Total from investment 2.54
operations
Less Distributions
From net investment income -
In excess of net investment -
income
From net realized gain (1.17)
In excess of net realized gain -
Total distributions (1.17)
Redemption fees added to paid .16
in capital
Net asset value, end of period $ 21.14
TOTAL RETURN B, C 14.91%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 94,219
(000 omitted)
Ratio of expenses to average 1.88%
net assets
Ratio of expenses to average 1.87% E
net assets after expense
reductions
Ratio of net investment .05%
income (loss) to average net
assets
Portfolio turnover rate 209%
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN. C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. F FOR THE YEAR ENDED FEBRUARY 29
</TABLE>
TRANSPORTATION PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the past five year and past 10 year
total returns would have been lower.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT TRANSPORTATION 16.99% 53.19% 95.86% 285.47%
SELECT TRANSPORTATION (LOAD 13.41% 48.52% 89.91% 273.83%
ADJ.)
S&P 500 7.32% 39.82% 206.52% 384.79%
GS Cyclical Industries 8.29% 25.75% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a 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 AUGUST 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT TRANSPORTATION 53.19% 14.39% 14.45%
SELECT TRANSPORTATION (LOAD 48.52% 13.69% 14.10%
ADJ.)
S&P 500 39.82% 25.11% 17.10%
GS Cyclical Industries 25.75% 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
1989/08/31 9700.00 10000.00
1989/09/30 9511.33 9959.00
1989/10/31 8906.30 9727.95
1989/11/30 8984.37 9926.40
1989/12/31 9112.27 10164.64
1990/01/31 8540.04 9482.59
1990/02/28 8938.43 9604.91
1990/03/31 9206.44 9859.44
1990/04/30 8858.75 9612.96
1990/05/31 9184.71 10550.22
1990/06/30 9083.60 10478.48
1990/07/31 9053.42 10444.95
1990/08/31 7725.59 9500.72
1990/09/30 6729.71 9038.04
1990/10/31 6624.09 8999.18
1990/11/30 6895.69 9580.52
1990/12/31 7144.66 9847.82
1991/01/31 7755.77 10277.18
1991/02/28 8510.22 11012.00
1991/03/31 8517.76 11278.49
1991/04/30 8495.13 11305.56
1991/05/31 9166.59 11793.96
1991/06/30 9090.48 11253.80
1991/07/31 9643.03 11778.23
1991/08/31 9817.11 12057.37
1991/09/30 9635.46 11856.01
1991/10/31 10346.95 12014.88
1991/11/30 9703.58 11530.68
1991/12/31 11013.03 12849.79
1992/01/31 11111.43 12610.79
1992/02/29 11709.39 12774.73
1992/03/31 11429.33 12525.62
1992/04/30 11724.53 12893.87
1992/05/31 11966.74 12957.05
1992/06/30 11452.04 12763.99
1992/07/31 11618.56 13286.04
1992/08/31 11270.38 13013.68
1992/09/30 11716.96 13167.24
1992/10/31 12216.52 13213.32
1992/11/30 13102.10 13663.90
1992/12/31 13633.30 13831.96
1993/01/31 14243.86 13948.15
1993/02/28 14437.08 14137.85
1993/03/31 15403.16 14436.15
1993/04/30 15364.76 14086.80
1993/05/31 15938.71 14464.33
1993/06/30 15985.25 14506.27
1993/07/31 15985.25 14448.25
1993/08/31 16279.98 14995.84
1993/09/30 16318.76 14880.37
1993/10/31 16660.03 15188.39
1993/11/30 16753.10 15044.10
1993/12/31 17630.07 15226.14
1994/01/31 18402.87 15743.82
1994/02/28 18402.87 15317.17
1994/03/31 17910.31 14649.34
1994/04/30 18245.00 14836.85
1994/05/31 17951.70 15080.17
1994/06/30 17934.45 14710.71
1994/07/31 18538.30 15193.22
1994/08/31 19090.40 15816.14
1994/09/30 18581.44 15428.65
1994/10/31 18857.48 15775.79
1994/11/30 17727.41 15201.24
1994/12/31 18311.71 15426.67
1995/01/31 18188.31 15826.69
1995/02/28 19488.83 16443.45
1995/03/31 19745.13 16928.70
1995/04/30 20039.41 17427.25
1995/05/31 19441.36 18123.82
1995/06/30 19232.52 18544.83
1995/07/31 20884.28 19159.78
1995/08/31 20865.29 19207.87
1995/09/30 20675.43 20018.44
1995/10/31 20419.13 19946.98
1995/11/30 21121.60 20822.65
1995/12/31 21089.27 21223.69
1996/01/31 21410.63 21946.15
1996/02/29 22013.18 22149.59
1996/03/31 22545.44 22362.89
1996/04/30 23284.00 22692.52
1996/05/31 23314.29 23277.76
1996/06/30 23425.36 23366.44
1996/07/31 21729.04 22334.12
1996/08/31 21749.24 22805.14
1996/09/30 21850.21 24088.62
1996/10/31 21678.56 24752.98
1996/11/30 23213.32 26624.06
1996/12/31 23093.50 26096.63
1997/01/31 23259.34 27727.15
1997/02/28 23041.67 27944.53
1997/03/31 23746.50 26796.29
1997/04/30 24974.81 28396.03
1997/05/31 26672.13 30124.78
1997/06/30 27473.35 31474.37
1997/07/31 29392.06 33978.79
1997/08/31 28801.69 32075.30
1997/09/30 31648.12 33832.06
1997/10/31 30583.34 32702.07
1997/11/30 30446.29 34215.85
1997/12/31 30514.00 34803.33
1998/01/31 30571.37 35188.26
1998/02/28 32522.25 37726.04
1998/03/31 33692.78 39657.99
1998/04/30 33203.33 40056.94
1998/05/31 31625.59 39368.37
1998/06/30 32367.36 40967.51
1998/07/31 29635.74 40531.21
1998/08/31 24407.98 34671.20
1998/09/30 24372.66 36892.24
1998/10/31 26962.99 39893.06
1998/11/30 28293.48 42310.97
1998/12/31 29189.50 44748.93
1999/01/31 31793.19 46620.33
1999/02/28 31959.12 45171.37
1999/03/31 33733.20 46978.68
1999/04/30 38511.99 48798.16
1999/05/31 38021.30 47646.04
1999/06/30 39857.88 50290.39
1999/07/31 39871.90 48720.33
1999/08/31 37383.00 48479.16
IMATRL PRASUN SHR__CHT 19990831 19990928 112910 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Transportation Portfolio on August 31,
1989, and the current 3.00% sales charge was paid. As the chart shows,
by August 31, 1999, the value of the investment would have grown to
$37,383 - a 273.83% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $48,479 - a 384.79% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
AMR Corp. 10.8
Burlington Northern Santa Fe 8.4
Corp.
Navistar International Corp. 8.1
Union Pacific Corp. 6.5
CSX Corp. 5.5
Canadian National Railway Co. 5.4
Eaton Corp. 5.3
Atlantic Coast Airlines 5.0
Holdings
Northwest Airlines Corp. 4.0
Class A
Kansas City Southern 3.9
Industries, Inc.
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Railroads 33.1%
Air Transportation 32.2%
Autos, Tires & Accessories 15.7%
Trucking & Freight 7.6%
Securities Industry 3.9%
All Others 7.5%*
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
Row: 1, Col: 1, Value: 7.5
Row: 1, Col: 2, Value: 3.9
Row: 1, Col: 3, Value: 7.6
Row: 1, Col: 4, Value: 15.7
Row: 1, Col: 5, Value: 32.2
Row: 1, Col: 6, Value: 33.1
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
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 six-month period that ended August 31, 1999, the fund
returned 16.99%. For the same six-month period, the Standard & Poor's
500 Index returned 7.32%. 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 8.29%. For the 12-month period that ended August 31, 1999,
the fund returned 53.19%. That compared to the 39.82% return for the
Standard & Poor's index and the 25.75% return for Goldman Sachs index
during the same 12-month period.
Q. WHY DID THE FUND OUTPERFORM THE INDEXES?
A. Against a relatively weak environment for the transportation
industry, it really came down to owning the right stocks.
Transportation stocks are cyclical, meaning their performance is
closely linked to expectations about the economy's potential strength
or weakness. While the news on that front was encouraging - with the
United States experiencing continued strong economic growth and Asia
showing signs of a rebound - other factors weighed on transportation
stocks. In particular, the price of oil - which is a major expense for
most transportation companies - rose substantially during the period.
Q. WHICH STOCKS PERFORMED WELL FOR THE FUND?
A. Truck, bus and diesel engine manufacturer Navistar International
performed well, thanks to continued strong demand in key markets.
PACCAR, the second-largest truck manufacturer in the U.S., also
benefited from rising demand for heavy- and medium-duty trucks from
North America and Europe. Another helpful stock was railroad company
Union Pacific, which had come under pressure due to operational
problems before the period began. Later, however, it was clear that
the company had made the necessary adjustments and its earnings
surprised investors on the upside. That said, I pared back the fund's
stake in Union Pacific in the spring in response to its very quick
rise amid a cyclical stock rally.
Q. WHICH HOLDINGS DETRACTED FROM THE FUND'S PERFORMANCE DURING THE
PAST SIX MONTHS?
A. Railroad company Burlington Northern performed poorly when its
earnings came under pressure because of weak levels of coal, grain and
other freight shipments. But I continued to maintain the fund's
holdings in the company, in part because I believed it was poised to
benefit from increased demand for grain from Asia. The fund's holdings
in major airline carriers also were disappointing because capacity
began to overwhelm demand. Here, too, I held on to selected major
carriers so that I could maintain a level of diversification for the
portfolio and because many were more attractively valued than they
were at the beginning of the period. In particular, AMR, the parent
company of American Airlines, became the fund's largest holding by the
end of the period. It owns 82% of the fast-growing reservations
system, Sabre, and I believed that the airline portion of the company
was selling at a significant discount to what I felt was its fair
value.
Q. CAN YOU TELL US ABOUT SOME OF THE CHANGES YOU MADE DURING THE
PERIOD?
A. Sure. As I mentioned earlier, the spring rally in cyclical stocks
pushed some of the fund's holdings to highs that I felt were
unsustainable over the short term. So I sold some of the better
performers to lock in gains and find more attractively priced
alternatives. I added to the fund's stake in diversified manufacturer
Eaton Corporation, which performed well. I also added to Atlantic
Coast Airlines, which I was able to buy in early summer at roughly
half its spring price.
Q. WHAT FACTORS WILL SHAPE THE PERFORMANCE OF TRANSPORTATION STOCKS
OVER THE NEXT SIX MONTHS OR SO?
A. Across the sector, the price of fuel likely will be a major issue.
Throughout much of 1998, transportation companies got a boost from low
oil costs and then came under pressure when oil prices marched higher.
Another key will be the global economy. If the U.S. economy remains
strong and Asia continues on its current recovery path, transportation
stocks stand poised to benefit.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE 3.
(checkmark)FUND FACTS
START DATE: September 29, 1986
FUND NUMBER: 512
TRADING SYMBOL: FSRFX
SIZE: as of August 31, 1999, more than $20
million
MANAGER: Christopher Zepf, since 1998;
manager, Fidelity Select Air Transportation
Portfolio, since 1998; joined Fidelity in 1998
TRANSPORTATION PORTFOLIO
INVESTMENTS AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 95.8%
SHARES VALUE (NOTE 1)
AIR TRANSPORTATION - 32.2%
America West Holding Corp. 18,800 $ 366,600
Class B (a)
AMR Corp. (a) 38,000 2,227,747
Atlantic Coast Airlines 51,400 1,021,575
Holdings (a)
Comair Holdings, Inc. 8,500 179,563
Delta Air Lines, Inc. 14,000 711,375
Mesaba Holdings, Inc. (a) 2,500 30,938
Northwest Airlines Corp. 28,000 826,000
Class A (a)
SkyWest, Inc. 21,000 422,625
Southwest Airlines Co. 38,725 646,223
UAL Corp. (a) 3,000 194,438
6,627,084
AUTOS, TIRES, & ACCESSORIES -
15.7%
Eaton Corp. 11,100 1,087,800
Navistar International Corp. 34,400 1,672,700
(a)
PACCAR, Inc. 8,400 463,050
3,223,550
COMPUTER SERVICES & SOFTWARE
- - 1.7%
Sabre Group Holdings, Inc. 6,400 358,400
Class A (a)
LEASING & RENTAL - 1.1%
Ryder Systems, Inc. 10,700 236,069
RAILROADS - 33.1%
Burlington Northern Santa Fe 59,700 1,731,300
Corp.
Canadian National Railway Co. 17,600 1,118,499
Canadian Pacific Ltd. 32,000 752,563
CSX Corp. 26,000 1,135,875
MotivePower Industries, Inc. 60,000 742,500
(a)
Union Pacific Corp. 27,200 1,324,300
6,805,037
SECURITIES INDUSTRY - 3.9%
Kansas City Southern 17,100 791,944
Industries, Inc.
SHIPPING - 0.5%
Kirby Corp. (a) 5,000 100,000
TRUCKING & FREIGHT - 7.6%
Air Express International 5,000 122,188
Corp.
Airborne Freight Corp. 6,000 151,125
Circle International Group, 7,900 195,525
Inc.
CNF Transportation, Inc. 7,000 272,563
Consolidated Freightways 8,000 86,500
Corp. (a)
Eagle USA Airfreight, Inc. (a) 3,600 100,800
Expeditors International of 7,000 226,188
Washington, Inc.
Hunt (J.B.) Transport 5,000 74,063
Services, Inc.
SHARES VALUE (NOTE 1)
USFreightways Corp. 4,800 $ 232,800
Werner Enterprises, Inc. 5,000 105,781
1,567,533
TOTAL COMMON STOCKS 19,709,617
(Cost $18,979,027)
CASH EQUIVALENTS - 6.8%
Taxable Central Cash Fund, 1,399,483 1,399,483
5.20% (b) (Cost $1,399,483)
TOTAL INVESTMENT PORTFOLIO - 21,109,100
102.6%
(Cost $20,378,510)
NET OTHER ASSETS - (2.6%) (530,993)
NET ASSETS - 100% $ 20,578,107
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $48,861,220 and $50,725,200, 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 $6,961 for the
period.
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $20,495,745. Net unrealized appreciation
aggregated $613,355, of which $1,880,893 related to appreciated
investment securities and $1,267,538 related to depreciated investment
securities.
TRANSPORTATION PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 21,109,100
value (cost $20,378,510) -
See accompanying schedule
Receivable for investments 1,056,369
sold
Receivable for fund shares 131,807
sold
Dividends receivable 16,732
Interest receivable 5,651
Redemption fees receivable 582
TOTAL ASSETS 22,320,241
LIABILITIES
Payable for investments $ 356,804
purchased
Payable for fund shares 1,348,213
redeemed
Accrued management fee 12,250
Other payables and accrued 24,867
expenses
TOTAL LIABILITIES 1,742,134
NET ASSETS $ 20,578,107
Net Assets consist of:
Paid in capital $ 16,551,222
Accumulated net investment (49,855)
loss
Accumulated undistributed net 3,346,133
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 730,607
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 771,512 $ 20,578,107
shares outstanding
NET ASSET VALUE and $26.67
redemption price per share
($20,578,107 (divided by)
771,512 shares)
Maximum offering price per $27.49
share (100/97.00 of $26.67)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 118,646
Dividends
Interest 44,691
TOTAL INCOME 163,337
EXPENSES
Management fee $ 80,029
Transfer agent fees 82,624
Accounting fees and expenses 30,305
Non-interested trustees' 37
compensation
Custodian fees and expenses 8,872
Registration fees 19,717
Audit 3,701
Legal 17
Total expenses before 225,302
reductions
Expense reductions (12,110) 213,192
NET INVESTMENT INCOME (LOSS) (49,855)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 3,604,694
Foreign currency transactions 1,629 3,606,323
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (528,948)
Assets and liabilities in (1,141) (530,089)
foreign currencies
NET GAIN (LOSS) 3,076,234
NET INCREASE (DECREASE) IN $ 3,026,379
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 78,955
charges paid to FDC
Sales charges - Retained by $ 78,755
FDC
Deferred sales charges $ 154
withheld by FDC
Exchange fees withheld by FSC $ 1,935
Expense reductions Directed $ 12,053
brokerage arrangements
Custodian credits 57
$ 12,110
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ (49,855) $ (164,660)
income (loss)
Net realized gain (loss) 3,606,323 6,235,364
Change in net unrealized (530,089) (6,047,484)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 3,026,379 23,220
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (1,575,601) (2,602,131)
from net realized gains
Share transactions Net 34,574,749 28,194,142
proceeds from sales of shares
Reinvestment of distributions 1,519,459 2,518,945
Cost of shares redeemed (36,881,407) (72,656,072)
NET INCREASE (DECREASE) IN (787,199) (41,942,985)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 59,736 94,942
TOTAL INCREASE (DECREASE) 723,315 (44,426,954)
IN NET ASSETS
NET ASSETS
Beginning of period 19,854,792 64,281,746
End of period (including $ 20,578,107 $ 19,854,792
accumulated net investment
loss of $49,855 and $0,
respectively)
OTHER INFORMATION
Shares
Sold 1,264,381 1,116,624
Issued in reinvestment of 62,324 97,938
distributions
Redeemed (1,348,194) (2,690,132)
Net increase (decrease) (21,489) (1,475,570)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 1997 1996 I 1995
Net asset value, beginning of $ 25.04 $ 28.34 $ 22.23 $ 21.92 $ 20.53 $ 21.67
period
Income from Investment
Operations
Net investment income (loss) D (.05) (.18) (.02) (.13) (.09) E (.17)
Net realized and unrealized 4.02 (.58) F 8.85 1.06 2.60 1.17
gain (loss)
Total from investment 3.97 (.76) 8.83 .93 2.51 1.00
operations
Less Distributions
From net realized gain (2.40) (2.64) (2.80) (.71) (1.22) (2.19)
Redemption fees added to paid .06 .10 .08 .09 .10 .05
in capital
Net asset value, end of period $ 26.67 $ 25.04 $ 28.34 $ 22.23 $ 21.92 $ 20.53
TOTAL RETURN B, C 16.99% (1.73)% 41.15% 4.67% 12.95% 5.90%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 20,578 $ 19,855 $ 64,282 $ 8,890 $ 11,445 $ 12,704
(000 omitted)
Ratio of expenses to average 1.62% A 1.96% 1.58% 2.50% G 2.47% G 2.37%
net assets
Ratio of expenses to average 1.54% A, H 1.90% H 1.54% H 2.48% H 2.44% H 2.36% H
net assets after expense
reductions
Ratio of net investment (.36)% A (.68)% (.06)% (.58)% (.43)% (.83)%
income (loss) to average net
assets
Portfolio turnover rate 393% A 182% 210% 148% 175% 178%
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 NET INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.05 PER SHARE. 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 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. H FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. I FOR THE YEAR ENDED FEBRUARY 29
</TABLE>
BANKING 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 AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT BANKING -4.87% 19.09% 161.38% 482.73%
SELECT BANKING (LOAD ADJ.) -7.80% 15.45% 153.46% 465.18%
S&P 500 7.32% 39.82% 206.52% 384.79%
GS Financial Services -3.19% 20.67% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a 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 AUGUST 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT BANKING 19.09% 21.19% 19.27%
SELECT BANKING (LOAD ADJ.) 15.45% 20.44% 18.91%
S&P 500 39.82% 25.11% 17.10%
GS Financial Services 20.67% 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
BANKING S&P 500
00507 SP001
1989/08/31 9700.00 10000.00
1989/09/30 9780.29 9959.00
1989/10/31 8875.24 9727.95
1989/11/30 8860.65 9926.40
1989/12/31 8671.75 10164.64
1990/01/31 7890.45 9482.59
1990/02/28 8215.35 9604.91
1990/03/31 8014.22 9859.44
1990/04/30 7557.81 9612.96
1990/05/31 8083.84 10550.22
1990/06/30 7766.67 10478.48
1990/07/31 7294.79 10444.95
1990/08/31 6614.05 9500.72
1990/09/30 5809.53 9038.04
1990/10/31 5639.35 8999.18
1990/11/30 6389.71 9580.52
1990/12/31 6879.37 9847.82
1991/01/31 7335.89 10277.18
1991/02/28 7957.71 11012.00
1991/03/31 8406.37 11278.49
1991/04/30 8973.09 11305.56
1991/05/31 9555.55 11793.96
1991/06/30 8988.83 11253.80
1991/07/31 9736.59 11778.23
1991/08/31 10437.12 12057.37
1991/09/30 10232.47 11856.01
1991/10/31 10657.51 12014.88
1991/11/30 10169.50 11530.68
1991/12/31 11405.50 12849.79
1992/01/31 12118.86 12610.79
1992/02/29 13097.66 12774.73
1992/03/31 12915.18 12525.62
1992/04/30 13670.01 12893.87
1992/05/31 14250.66 12957.05
1992/06/30 14392.85 12763.99
1992/07/31 14409.55 13286.04
1992/08/31 13641.48 13013.68
1992/09/30 14275.97 13167.24
1992/10/31 14885.41 13213.32
1992/11/30 16104.30 13663.90
1992/12/31 16939.73 13831.96
1993/01/31 17645.55 13948.15
1993/02/28 18194.53 14137.85
1993/03/31 18970.06 14436.15
1993/04/30 17993.47 14086.80
1993/05/31 17817.58 14464.33
1993/06/30 18811.35 14506.27
1993/07/31 18864.12 14448.25
1993/08/31 19127.96 14995.84
1993/09/30 19787.54 14880.37
1993/10/31 18723.41 15188.39
1993/11/30 18134.18 15044.10
1993/12/31 18832.32 15226.14
1994/01/31 19930.61 15743.82
1994/02/28 19370.70 15317.17
1994/03/31 19047.67 14649.34
1994/04/30 20057.02 14836.85
1994/05/31 21059.33 15080.17
1994/06/30 20536.38 14710.71
1994/07/31 21081.11 15193.22
1994/08/31 21625.85 15816.14
1994/09/30 20340.28 15428.65
1994/10/31 20253.12 15775.79
1994/11/30 18945.77 15201.24
1994/12/31 18873.42 15426.67
1995/01/31 19824.04 15826.69
1995/02/28 20879.01 16443.45
1995/03/31 21052.90 16928.70
1995/04/30 21574.59 17427.25
1995/05/31 22988.93 18123.82
1995/06/30 23278.76 18544.83
1995/07/31 24183.01 19159.78
1995/08/31 25087.27 19207.87
1995/09/30 26223.38 20018.44
1995/10/31 26095.86 19946.98
1995/11/30 27591.36 20822.65
1995/12/31 27700.08 21223.69
1996/01/31 28605.71 21946.15
1996/02/29 29426.81 22149.59
1996/03/31 30296.21 22362.89
1996/04/30 30037.49 22692.52
1996/05/31 30545.34 23277.76
1996/06/30 30310.00 23366.44
1996/07/31 30359.54 22334.12
1996/08/31 31895.48 22805.14
1996/09/30 33468.58 24088.62
1996/10/31 35611.46 24752.98
1996/11/30 38621.40 26624.06
1996/12/31 37640.69 26096.63
1997/01/31 40416.51 27727.15
1997/02/28 42177.10 27944.53
1997/03/31 39337.02 26796.29
1997/04/30 41470.35 28396.03
1997/05/31 42930.66 30124.78
1997/06/30 45373.14 31474.37
1997/07/31 50258.08 33978.79
1997/08/31 47208.22 32075.30
1997/09/30 50787.93 33832.06
1997/10/31 50038.39 32702.07
1997/11/30 52338.71 34215.85
1997/12/31 54788.81 34803.33
1998/01/31 53067.07 35188.26
1998/02/28 57631.69 37726.04
1998/03/31 60821.58 39657.99
1998/04/30 61845.81 40056.94
1998/05/31 60154.56 39368.37
1998/06/30 61724.04 40967.51
1998/07/31 61818.75 40531.21
1998/08/31 47463.38 34671.20
1998/09/30 51576.51 36892.24
1998/10/31 56271.43 39893.06
1998/11/30 58097.99 42310.97
1998/12/31 61279.26 44748.93
1999/01/31 59706.90 46620.33
1999/02/28 59421.01 45171.37
1999/03/31 59363.84 46978.68
1999/04/30 65525.97 48798.16
1999/05/31 61198.79 47646.04
1999/06/30 63324.69 50290.39
1999/07/31 59510.13 48720.33
1999/08/31 56518.00 48479.16
IMATRL PRASUN SHR__CHT 19990831 19990924 102525 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Banking Portfolio on August 31, 1989, and
the current 3.00% sales charge was paid. As the chart shows, by August
31, 1999, the value of the investment would have grown to $56,518 - a
465.18% increase on the initial investment - and includes the effect
of a $7.50 trading fee. For comparison, look at how the Standard &
Poor's 500 Index did over the same period. With dividends and capital
gains, if any, reinvested, the same $10,000 investment would have
grown to $48,479 - a 384.79% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
Bank of New York Co., Inc. 9.7
Wells Fargo & Co. 6.2
Chase Manhattan Corp. 5.8
Mellon Bank Corp. 5.6
Fleet Financial Group, Inc. 5.0
Bank of America Corp. 4.3
Comerica, Inc. 4.0
Fifth Third Bancorp 3.9
SunTrust Banks, Inc. 3.4
Marshall & Ilsley Corp. 3.3
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Banks 78.9%
Credit & Other Finance 12.3%
Computer Services
& Software 0.8%
All Others 8.0%*
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
Row: 1, Col: 1, Value: 8.0
Row: 1, Col: 2, Value: 0.8
Row: 1, Col: 3, Value: 12.3
Row: 1, Col: 4, Value: 78.90000000000001
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
BANKING PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Yolanda McGettigan)
Yolanda McGettigan, Portfolio Manager
of Fidelity Select
Banking Portfolio
Q. HOW DID THE FUND PERFORM, YOLANDA?
A. It was a tough time for bank stocks. For the six months that ended
August 31, 1999, the fund returned -4.87%. Over the same period, the
Standard & Poor's 500 Index returned 7.32%, 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 -3.19%. For the 12 months that ended August 31, 1999, the
fund returned 19.09%, compared to 39.82% for the S&P 500 and 20.67%
for the Goldman Sachs index.
Q. WHAT FACTORS CONTRIBUTED TO THE SUBPAR PERFORMANCE OF BANK STOCKS
DURING THE PERIOD?
A. Federal Reserve Board monetary policy was the key culprit. The Fed
raised interest rates twice during the period - in June and again in
August - and bank stocks suffered. Typically, when interest rates
rise, so do concerns over credit and loan volumes, two of the bigger
drivers behind banks' earnings growth. Beyond that, the perception
that we were nearing the end of an extended economic growth cycle
seemed to persist among investors. In terms of the fund's relative
performance, the Goldman Sachs index may have included more companies
with capital markets exposure. Due to the stock market's steady
overall performance, companies with stock-market-related revenues -
such as Chase Manhattan and Citigroup - fared a bit better during the
period than those without stock market exposure.
Q. WHICH STOCKS PERFORMED WELL DURING THE PERIOD? WHICH DID NOT?
A. Bank of New York, the fund's largest holding at the end of the
period, performed well, as did positions in both American Express and
MBNA. Bank of New York benefited from solid revenue streams and its
exposure to the securities processing industry, while American Express
and MBNA - two of the leaders in the credit card arena - performed
nicely due to positive consumer credit trends. Disappointments, on the
other hand, included U.S. Bancorp and State Street. U.S. Bancorp
experienced slower-than-expected earnings growth during the period,
while State Street - also a victim of slower earnings growth - began
to show signs of an unfavorable revenue/expense balance.
Q. THE FUND'S NAME RECENTLY WAS CHANGED FROM REGIONAL BANKS PORTFOLIO
TO BANKING PORTFOLIO. WHAT PROMPTED THIS CHANGE?
A. The evolution of the industry, mainly. As the banking sector has
changed over time, fewer banks concentrate their activities within a
specific geographic region. With the consolidation of the industry,
banks are spreading their operations across multiple states and
regions within the U.S., blurring the distinction between regional and
non-regional banks.
Q. WHAT ARE YOUR MAIN CONCERNS SURROUNDING Y2K?
A. My concerns revolve more around potential investor behavior rather
than the banks' overall readiness for the event. For instance,
investors may opt for safer types of investments as the millennium
approaches. From a systems standpoint, everything I read and hear -
including encouraging remarks from the chairman of the Federal Reserve
Board - indicates that most banks are very well-prepared.
Q. WHAT'S YOUR OUTLOOK?
A. Overall, I'm cautious. I think there are still some fears out there
that the Fed may raise rates again in early October. Also, concerns
regarding the economic cycle won't vanish until we actually see hard
evidence that the cycle is ending. From a fundamental standpoint,
banks did well during this past period. But if interest-rate and
economic fears continue to outweigh fundamental performance, the
stocks may continue to struggle. Lastly, as we enter 2000, an
anticipated jump in merger and acquisition activity could give the
sector a boost.
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 3.
(checkmark)FUND FACTS
START DATE: June 30, 1986
FUND NUMBER: 507
TRADING SYMBOL: FSRBX
SIZE: as of August 31, 1999, more than
$652 million
MANAGER: Yolanda McGettigan, since April
1999; manager, Fidelity Select Construction &
Housing Portfolio, 1997-1999; analyst,
appliances, building materials, homebuilding,
engineering and construction industries,
1997-1999; banking industry, April
1999-present; joined Fidelity in 1997
BANKING PORTFOLIO
INVESTMENTS AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 92.0%
SHARES VALUE (NOTE 1)
BANKS - 78.9%
AmSouth Bancorp. 17,500 $ 382,813
Bank of America Corp. 461,306 27,909,013
Bank of New York Co., Inc. 1,764,896 63,095,029
Bank One Corp. 263,726 10,582,006
BankBoston Corp. 300,000 13,931,250
BB&T Corp. 301,300 10,093,550
CCB Financial Corp. 102,300 4,833,675
Centura Banks, Inc. 161,500 7,479,469
Chase Manhattan Corp. 450,000 37,659,375
Comerica, Inc. 503,850 26,231,691
Compass Bancshares, Inc. 193,000 5,126,563
Fifth Third Bancorp 380,000 25,175,000
First Security Corp. 230,375 4,996,258
First Tennessee National 229,400 7,340,800
Corp.
First Union Corp. 350,000 14,525,000
Firstmerit Corp. 280,000 7,358,750
KeyCorp 150,000 4,350,000
M&T Bank Corp. 28,700 13,316,800
Marshall & Ilsley Corp. 373,000 21,843,813
Mellon Bank Corp. 1,102,000 36,779,250
North Fork Bancorp, Inc. 242,000 4,386,250
Northern Trust Corp. 250,000 21,203,125
PNC Financial Corp. 200,000 10,462,500
SouthTrust Corp. 218,400 7,712,250
State Street Corp. 197,800 11,843,275
Summit Bancorp 190,000 6,341,250
SunTrust Banks, Inc. 341,147 21,940,016
Synovus Finanical Corp. 197,175 3,721,678
U.S. Bancorp 372,696 11,506,989
US Trust Corp. 150,000 12,468,750
Wachovia Corp. 87,300 6,842,138
Wells Fargo & Co. 1,016,760 40,479,758
Zions Bancorp 255,500 12,711,125
514,629,209
COMPUTER SERVICES & SOFTWARE
- - 0.8%
Online Resources & Comms 175,000 3,128,125
Corp. (a)
Sanchez Computer Associates, 50,000 2,237,500
Inc. (a)
5,365,625
CREDIT & OTHER FINANCE - 12.3%
American Express Co. 83,100 11,426,250
Associates First Capital 327,400 11,233,913
Corp. Class A
Citigroup, Inc. 327,450 14,551,059
Fleet Financial Group, Inc. 818,734 32,595,847
Household International, Inc. 279,800 10,562,450
80,369,519
TOTAL COMMON STOCKS 600,364,353
(Cost $465,917,706)
CASH EQUIVALENTS - 5.4%
SHARES VALUE (NOTE 1)
Central Cash Collateral Fund, 3,326,800 $ 3,326,800
5.26% (b)
Taxable Central Cash Fund, 32,180,808 32,180,808
5.20% (b)
TOTAL CASH EQUIVALENTS 35,507,608
(Cost $35,507,608)
TOTAL INVESTMENT PORTFOLIO - 635,871,961
97.4% (Cost $501,425,314)
NET OTHER ASSETS - 2.6% 16,905,505
NET ASSETS - 100% $ 652,777,466
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $280,566,208 and $530,969,599, 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 $6,412 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $3,316,150. The fund
received
cash collateral of $3,326,800 which was invested in the Central Cash
Collateral Fund.
The fund participated in the bank borrowing program. The average daily
loan balance during the period for which loans were outstanding
amounted to $2,914,250. The weighted average interest rate was 5.46%.
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $503,078,320. Net unrealized appreciation
aggregated $132,793,641, of which $152,717,433 related to appreciated
investment securities and $19,923,792 related to depreciated
investment securities.
BANKING PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 635,871,961
value (cost $501,425,314) -
See accompanying schedule
Receivable for investments 26,491,196
sold
Receivable for fund shares 188,249
sold
Dividends receivable 987,598
Interest receivable 89,166
Redemption fees receivable 1,806
Other receivables 3,584
TOTAL ASSETS 663,633,560
LIABILITIES
Payable for investments $ 3,229,844
purchased
Payable for fund shares 3,517,840
redeemed
Accrued management fee 337,050
Other payables and accrued 444,560
expenses
Collateral on securities 3,326,800
loaned, at value
TOTAL LIABILITIES 10,856,094
NET ASSETS $ 652,777,466
Net Assets consist of:
Paid in capital $ 386,556,197
Undistributed net investment 3,365,942
income
Accumulated undistributed net 128,408,680
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 134,446,647
(depreciation) on investments
NET ASSETS, for 17,412,330 $ 652,777,466
shares outstanding
NET ASSET VALUE and $37.49
redemption price per share
($652,777,466 (divided by)
17,412,330 shares)
Maximum offering price per $38.65
share (100/97.00 of $37.49)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 7,823,370
Dividends
Interest 543,519
Security lending 1,354
TOTAL INCOME 8,368,243
EXPENSES
Management fee $ 2,432,382
Transfer agent fees 2,280,654
Accounting and security 280,758
lending fees
Non-interested trustees' 809
compensation
Custodian fees and expenses 10,962
Registration fees 74,830
Audit 26,415
Legal 516
Interest 1,766
Total expenses before 5,109,092
reductions
Expense reductions (110,291) 4,998,801
NET INVESTMENT INCOME 3,369,442
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 128,933,894
Foreign currency transactions (10,972) 128,922,922
Change in net unrealized (158,684,710)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) (29,761,788)
NET INCREASE (DECREASE) IN $ (26,392,346)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 297,059
charges paid to FDC
Sales charges - Retained by $ 295,900
FDC
Deferred sales charges $ 5,736
withheld by FDC
Exchange fees withheld by FSC $ 50,003
Expense reductions Directed $ 109,897
brokerage arrangements
Transfer agent credits 394
$ 110,291
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ 3,369,442 $ 11,351,194
income
Net realized gain (loss) 128,922,922 135,492,386
Change in net unrealized (158,684,710) (123,702,888)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (26,392,346) 23,140,692
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (3,327,347) (7,938,530)
From net investment income
From net realized gain (43,463,275) (74,512,814)
TOTAL DISTRIBUTIONS (46,790,622) (82,451,344)
Share transactions Net 91,771,001 506,783,832
proceeds from sales of shares
Reinvestment of distributions 44,722,583 79,475,689
Cost of shares redeemed (336,743,016) (940,968,587)
NET INCREASE (DECREASE) IN (200,249,432) (354,709,066)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 381,328 952,621
TOTAL INCREASE (DECREASE) (273,051,072) (413,067,097)
IN NET ASSETS
NET ASSETS
Beginning of period 925,828,538 1,338,895,635
End of period (including $ 652,777,466 $ 925,828,538
undistributed net investment
income of $3,365,942 and
$5,985,670, respectively)
OTHER INFORMATION
Shares
Sold 2,159,905 11,696,257
Issued in reinvestment of 1,088,934 1,891,390
distributions
Redeemed (8,108,335) (22,324,276)
Net increase (decrease) (4,859,496) (8,736,629)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 1997 1996 F
Net asset value, beginning of $ 41.57 $ 43.18 $ 32.82 $ 24.37 $ 18.01
period
Income from Investment
Operations
Net investment income D .17 .39 .40 .37 .52
Net realized and unrealized (2.02) .91 11.41 9.70 6.78
gain (loss)
Total from investment (1.85) 1.30 11.81 10.07 7.30
operations
Less Distributions
From net investment income (.16) (.28) (.28) (.27) (.25)
From net realized gain (2.09) (2.66) (1.23) (1.40) (.72)
Total distributions (2.25) (2.94) (1.51) (1.67) (.97)
Redemption fees added to paid .02 .03 .06 .05 .03
in capital
Net asset value, end of period $ 37.49 $ 41.57 $ 43.18 $ 32.82 $ 24.37
TOTAL RETURN B, C (4.87)% 3.10% 36.64% 43.33% 40.94%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 652,777 $ 925,829 $ 1,338,896 $ 837,952 $ 315,178
(000 omitted)
Ratio of expenses to average 1.20% A 1.17% 1.25% 1.46% 1.41%
net assets
Ratio of expenses to average 1.18% A, E 1.16% E 1.24% E 1.45% E 1.40% E
net assets after expense
reductions
Ratio of net investment .79% A .91% 1.07% 1.36% 2.42%
income to average net assets
Portfolio turnover rate 70% A 22% 25% 43% 103%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28,
SELECTED PER-SHARE DATA 1995
Net asset value, beginning of $ 17.99
period
Income from Investment
Operations
Net investment income D .37
Net realized and unrealized .87
gain (loss)
Total from investment 1.24
operations
Less Distributions
From net investment income (.29)
From net realized gain (.98)
Total distributions (1.27)
Redemption fees added to paid .05
in capital
Net asset value, end of period $ 18.01
TOTAL RETURN B, C 7.79%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 164,603
(000 omitted)
Ratio of expenses to average 1.58%
net assets
Ratio of expenses to average 1.56% E
net assets after expense
reductions
Ratio of net investment 1.99%
income to average net assets
Portfolio turnover rate 106%
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN. C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. F FOR THE YEAR ENDED FEBRUARY 29
</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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT BROKERAGE AND 2.36% 30.19% 200.24% 453.09%
INVESTMENT MANAGEMENT
SELECT BROKERAGE AND -0.79% 26.21% 191.16% 436.43%
INVESTMENT MANAGEMENT (LOAD
ADJ.)
S&P 500 7.32% 39.82% 206.52% 384.79%
GS Financial Services -3.19% 20.67% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a 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 AUGUST 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT BROKERAGE AND 30.19% 24.59% 18.65%
INVESTMENT MANAGEMENT
SELECT BROKERAGE AND 26.21% 23.83% 18.29%
INVESTMENT MANAGEMENT (LOAD
ADJ.)
S&P 500 39.82% 25.11% 17.10%
GS Financial Services 20.67% 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
1989/08/31 9700.00 10000.00
1989/09/30 9396.88 9959.00
1989/10/31 8634.17 9727.95
1989/11/30 8546.17 9926.40
1989/12/31 8340.07 10164.64
1990/01/31 7973.58 9482.59
1990/02/28 8241.01 9604.91
1990/03/31 8468.83 9859.44
1990/04/30 7894.34 9612.96
1990/05/31 8647.12 10550.22
1990/06/30 8636.97 10478.48
1990/07/31 8329.57 10444.95
1990/08/31 7199.13 9500.72
1990/09/30 6584.33 9038.04
1990/10/31 6177.77 8999.18
1990/11/30 6584.33 9580.52
1990/12/31 6990.89 9847.82
1991/01/31 7572.63 10277.18
1991/02/28 8324.88 11012.00
1991/03/31 9177.43 11278.49
1991/04/30 9307.82 11305.56
1991/05/31 9799.28 11793.96
1991/06/30 9146.79 11253.80
1991/07/31 9849.62 11778.23
1991/08/31 10070.51 12057.37
1991/09/30 10592.61 11856.01
1991/10/31 11295.44 12014.88
1991/11/30 10672.93 11530.68
1991/12/31 12741.25 12849.79
1992/01/31 12921.98 12610.79
1992/02/29 12841.66 12774.73
1992/03/31 12500.28 12525.62
1992/04/30 11526.37 12893.87
1992/05/31 11496.24 12957.05
1992/06/30 11225.15 12763.99
1992/07/31 11857.70 13286.04
1992/08/31 11516.33 13013.68
1992/09/30 11436.00 13167.24
1992/10/31 11948.06 13213.32
1992/11/30 13022.38 13663.90
1992/12/31 13393.88 13831.96
1993/01/31 14187.07 13948.15
1993/02/28 14277.43 14137.85
1993/03/31 15422.04 14436.15
1993/04/30 15371.82 14086.80
1993/05/31 15874.16 14464.33
1993/06/30 16627.68 14506.27
1993/07/31 17180.26 14448.25
1993/08/31 18536.60 14995.84
1993/09/30 18878.20 14880.37
1993/10/31 18265.33 15188.39
1993/11/30 17762.99 15044.10
1993/12/31 20000.43 15226.14
1994/01/31 20426.67 15743.82
1994/02/28 19399.32 15317.17
1994/03/31 17224.41 14649.34
1994/04/30 17082.33 14836.85
1994/05/31 17497.64 15080.17
1994/06/30 18164.32 14710.71
1994/07/31 17738.09 15193.22
1994/08/31 17869.24 15816.14
1994/09/30 17191.63 15428.65
1994/10/31 17180.70 15775.79
1994/11/30 15989.41 15201.24
1994/12/31 16546.80 15426.67
1995/01/31 16339.15 15826.69
1995/02/28 16951.18 16443.45
1995/03/31 17126.05 16928.70
1995/04/30 17644.90 17427.25
1995/05/31 18637.08 18123.82
1995/06/30 19685.63 18544.83
1995/07/31 20632.70 19159.78
1995/08/31 20441.03 19207.87
1995/09/30 21681.25 20018.44
1995/10/31 20474.85 19946.98
1995/11/30 20970.94 20822.65
1995/12/31 20450.89 21223.69
1996/01/31 21784.13 21946.15
1996/02/29 22010.30 22149.59
1996/03/31 22998.33 22362.89
1996/04/30 23138.30 22692.52
1996/05/31 23904.71 23277.76
1996/06/30 23831.72 23366.44
1996/07/31 22371.89 22334.12
1996/08/31 23223.46 22805.14
1996/09/30 24415.65 24088.62
1996/10/31 25279.38 24752.98
1996/11/30 27761.09 26624.06
1996/12/31 28561.15 26096.63
1997/01/31 30644.38 27727.15
1997/02/28 31753.79 27944.53
1997/03/31 28536.50 26796.29
1997/04/30 31623.65 28396.03
1997/05/31 33983.07 30124.78
1997/06/30 35959.54 31474.37
1997/07/31 39912.50 33978.79
1997/08/31 38689.55 32075.30
1997/09/30 44334.87 33832.06
1997/10/31 42049.57 32702.07
1997/11/30 43964.28 34215.85
1997/12/31 46359.14 34803.33
1998/01/31 44346.80 35188.26
1998/02/28 50031.64 37726.04
1998/03/31 52823.76 39657.99
1998/04/30 55126.78 40056.94
1998/05/31 53840.62 39368.37
1998/06/30 56718.57 40967.51
1998/07/31 57202.47 40531.21
1998/08/31 41208.19 34671.20
1998/09/30 37935.48 36892.24
1998/10/31 43373.02 39893.06
1998/11/30 48797.83 42310.97
1998/12/31 48988.85 44748.93
1999/01/31 53827.88 46620.33
1999/02/28 52414.37 45171.37
1999/03/31 56565.75 46978.68
1999/04/30 60906.97 48798.16
1999/05/31 58993.19 47646.04
1999/06/30 60495.96 50290.39
1999/07/31 55756.46 48720.33
1999/08/31 53643.00 48479.16
IMATRL PRASUN SHR__CHT 19990831 19990914 140623 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Brokerage and Investment Management
Portfolio on August 31, 1989, and the current 3.00% sales charge was
paid. As the chart shows, by August 31, 1999, the value of the
investment would have grown to $53,643 - a 436.43% increase on the
initial investment - and includes the effect of a $7.50 trading fee.
For comparison, look at how the Standard & Poor's 500 Index did over
the same period. With dividends and capital gains, if any, reinvested,
the same $10,000 investment would have grown to $48,479 - a 384.79%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
Lehman Brothers Holdings, Inc. 7.3
Bear Stearns Companies, Inc. 7.0
Morgan Stanley Dean Witter & 5.8
Co.
Merrill Lynch & Co., Inc. 5.4
Schwab (Charles) Corp. 4.0
Citigroup, Inc. 4.0
Kansas City Southern 3.9
Industries, Inc.
Franklin Resources, Inc. 3.2
PaineWebber Group, Inc. 3.1
American Express Co. 2.9
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Securities Industry 62.8%
Credit & Other Finance 11.7%
Banks 7.3%
Insurance 6.5%
Computer Services
& Software 2.3%
All Others 9.4%*
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
Row: 1, Col: 1, Value: 9.4
Row: 1, Col: 2, Value: 2.3
Row: 1, Col: 3, Value: 6.5
Row: 1, Col: 4, Value: 7.3
Row: 1, Col: 5, Value: 11.7
Row: 1, Col: 6, Value: 62.8
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Ted Orenstein)
Ted Orenstein,
Portfolio Manager
of Fidelity Select
Brokerage and Investment Management Portfolio
Q. HOW DID THE FUND PERFORM, TED?
A. It did well on a relative basis against financial services stocks.
For the period that ended on August 31, 1999, the fund had a total
six-month return of 2.36% and a 12-month return of 30.19%. For the
same periods, the Goldman Sachs Financial Services Index - an index of
271 stocks designed to measure the performance of companies in the
financial services sector - showed returns of -3.19% and 20.67%,
respectively. The Standard & Poor's 500 Index returned 7.32% and
39.82% for the same six- and 12-month periods.
Q. WHAT FACTORS AFFECTED THE INVESTMENT ENVIRONMENT FOR FINANCIAL
SERVICES STOCKS DURING THE SIX-MONTH PERIOD?
A. Financial services stocks tend to react in anticipation of any
possibility of bad news, and concerns about the Federal Reserve
Board's interest-rate policy and Y2K had a dampening effect on the
market for these stocks during the period. In my opinion, these
concerns were overblown within a strong fundamental environment for
companies in the sector. The overall investment picture improved
significantly since the summer of 1998 when there was great
uncertainty in the overseas financial markets and spreads widened
largely because of hedge-fund problems at Long-Term Capital
Management. Many of the companies that I cover - particularly on the
brokerage side - had spectacular first and second quarters in 1999:
Their earnings exceeded estimates, they had strong deal flow going
forward and they had a healthy balance between U.S. and overseas
business operations. This enabled them to capitalize on the
extraordinary advisory and financing activity that took place in
Europe during the first half of this year.
Q. WHICH OF THE FUND'S HOLDINGS HELPED PERFORMANCE?
A. The fund was helped by many of the large-cap institutional
brokerage stocks - Morgan Stanley and Lehman Brothers, to name two.
Such firms operate high-margin businesses and tend to take part in a
great deal of the activity in the marketplace. On the back of improved
economic conditions in parts of Asia, such names as Daiwa Securities
and Nomura Securities also did quite well. Jefferies Group and Dain
Rauscher, two smaller-cap regional brokerages, rebounded from industry
difficulties in 1998 and were among the top performers in the group
during the period. Money center banks - especially Citigroup - also
helped returns.
Q. WHICH STOCKS WERE DISAPPOINTMENTS?
A. Investment managers as a group took in lower levels of assets
during the period and, while they generally performed adequately, many
did not do as well as I'd hoped. The life insurance segment also did
not do that well, mainly because there wasn't as much takeover
speculation as there had been in the past. Bear Stearns' performance
lagged expectations, due in large measure to the residual effects of
its recent litigation issues, which are now substantially behind them.
PaineWebber, which struggled with its Internet strategy, also did not
perform as well as I'd hoped.
Q. WHAT'S YOUR OUTLOOK FOR THE INDUSTRY, TED?
A. I'm cautiously optimistic. I think the industry's fundamentals are
quite good. My only real concern would be with accelerating inflation,
which could force interest rates higher and drive liquidity out of the
market. I believe Y2K concerns have already been priced into the
financial services stocks in many cases. So if inflation remains in
check, I would expect to see fairly strong performance from the
large-cap brokers in the third quarter, with perhaps a slight fall-off
in activity at year-end, followed by a good first quarter of 2000 as
activity resumes. I think investment management companies should see
stronger asset inflows - particularly if activity in the stock markets
becomes less robust - which should drive better performance and return
their stock prices to more typical valuations. I believe the
consolidation theme should continue in the life insurance sector, and
I think the fund is properly positioned to benefit from that trend.
I'm also keeping a close eye on international opportunities,
especially in Japan and Europe, where cross-border consolidation is
likely to have broad-ranging impact on the capital 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 3.
(checkmark)FUND FACTS
START DATE: July 29, 1985
FUND NUMBER: 068
TRADING SYMBOL: FSLBX
SIZE: as of August 31, 1999, more than
$452 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 AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 90.7%
SHARES VALUE (NOTE 1)
BANKS - 7.3%
Bank Sarasin & Compagnie 610 $ 1,086,191
Class B (Reg.)
Chase Manhattan Corp. 153,000 12,804,188
Credit Suisse Group (Reg.) 14,900 2,815,593
Deutsche Bank AG 1 68
J.P. Morgan & Co., Inc. 16,100 2,079,919
Julius Baer Holding AG 2,500 7,713,908
Toronto Dominion Bank 145,200 2,845,628
US Trust Corp. 45,900 3,815,438
33,160,933
COMPUTER SERVICES & SOFTWARE
- - 2.3%
DST Systems, Inc. (a) 155,400 10,334,100
CREDIT & OTHER FINANCE - 11.7%
American Express Co. 95,800 13,172,500
Citigroup, Inc. 399,025 17,731,673
Equitable Companies (The), 184,400 11,386,700
Inc.
Providian Financial Corp. 133,600 10,370,700
52,661,573
INSURANCE - 6.5%
AFLAC, Inc. 63,900 2,871,506
Ambac Financial Group, Inc. 10,700 565,094
American International Group, 31,125 2,884,898
Inc.
Hartford Life, Inc. Class A 81,200 3,527,125
Liberty Financial Companies, 94,500 2,433,375
Inc.
Marsh & McLennan Companies, 93,800 6,829,813
Inc.
Mutual Risk Management Ltd. 35,200 968,000
Nationwide Financial 119,100 4,347,150
Services, Inc. Class A
Protective Life Corp. 31,400 934,150
Reinsurance Group of America, 50 1,600
Inc.
Reliastar Financial Corp. 80,288 3,617,978
Torchmark Corp. 1 29
UICI (a) 19,000 499,938
29,480,656
REAL ESTATE INVESTMENT TRUSTS
- - 0.1%
AMRESCO Capital Trust, Inc. 41,400 388,125
SECURITIES INDUSTRY - 62.8%
Affiliated Managers Group, 150,400 4,013,800
Inc. (a)
Ameritrade Holding Corp. 41,700 849,638
Class A (a)
Bear Stearns Companies, Inc. 759,330 31,607,111
Dain Rauscher Corp. 134,450 6,672,081
Daiwa Securities Co. Ltd. 914,000 8,268,511
DLJdirect, Inc. 242,700 11,604,094
E*Trade Group, Inc. (a) 454,800 11,370,000
Eaton Vance Corp. 59,500 1,814,750
SHARES VALUE (NOTE 1)
Edwards (A.G.), Inc. 33,000 $ 829,125
Federated Investors, Inc. 284,000 5,218,500
Class B
Franklin Resources, Inc. 403,400 14,497,188
Goldman Sachs Group, Inc. 87,700 5,245,556
Hambrecht & Quist Group (a) 18,700 714,106
Investment Technology Group, 43,300 1,179,925
Inc.
Investors Group, Inc. 453,500 5,697,236
Jefferies Group, Inc. 290,400 7,187,400
John Nuveen Co. Class A 96,600 3,773,438
Kansas City Southern 377,900 17,501,494
Industries, Inc.
Knight/Trimark Group, Inc. 18,000 589,500
Class A (a)
Legg Mason, Inc. 118,432 4,522,622
Lehman Brothers Holdings, 612,400 32,916,495
Inc.
Mackenzie Financial Corp. 275,600 2,695,987
Merrill Lynch & Co., Inc. 325,800 24,312,825
Morgan Keegan, Inc. 73,625 1,247,023
Morgan Stanley Dean Witter & 303,665 26,058,253
Co.
Nomura Securities Co. Ltd. 241,000 3,531,015
PaineWebber Group, Inc. 358,800 14,082,900
Phoenix Investment Partners 203,200 1,752,600
Ltd.
Pilgrim Capital Corp. (a) 57,100 1,848,613
Pioneer Group, Inc. (a) 65,900 992,619
Price (T. Rowe) Associates, 54,400 1,683,000
Inc.
Raymond James Financial, Inc. 89,825 1,757,202
Schwab (Charles) Corp. 459,800 18,162,100
Southwest Securities Group, 9,313 314,314
Inc.
TD Waterhouse Group, Inc. (a) 7,000 105,438
United Asset Management Corp. 15,000 293,438
Waddell & Reed Financial, Inc.:
Class A 358,036 8,122,942
Class B 48,161 1,098,673
284,131,512
TOTAL COMMON STOCKS 410,156,899
(Cost $337,157,656)
CASH EQUIVALENTS - 10.4%
Central Cash Collateral Fund, 18,121,700 18,121,700
5.26% (b)
Taxable Central Cash Fund, 28,905,625 28,905,625
5.20% (b)
TOTAL CASH EQUIVALENTS 47,027,325
(Cost $47,027,325)
TOTAL INVESTMENT PORTFOLIO - 457,184,224
101.1% (Cost $384,184,981)
NET OTHER ASSETS - (1.1%) (4,869,432)
NET ASSETS - 100% $452,314,792
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $122,651,355 and $180,014,354, 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 $8,651 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $17,795,981. The fund
received
cash collateral of $18,121,700 which was invested in the Central Cash
Collateral Fund.
The fund participated in the interfund lending program as a lender.
The average daily loan balance during the period for which loans were
outstanding amounted to $25,416,000. The weighted average interest
rate was 4.73%. Interest earned from the interfund lending program
amounted to $3,337 and is included in interest income on the Statement
of Operations.
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $385,069,538. Net unrealized appreciation
aggregated $72,114,686, of which $93,567,205 related to appreciated
investment securities and $21,452,519 related to depreciated
investment securities.
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 457,184,224
value (cost $384,184,981) -
See accompanying schedule
Receivable for investments 3,147,382
sold
Receivable for fund shares 24,323,511
sold
Dividends receivable 293,730
Interest receivable 29,727
Redemption fees receivable 3,220
Other receivables 7,401
TOTAL ASSETS 484,989,195
LIABILITIES
Payable for investments $ 10,388,975
purchased
Payable for fund shares 3,672,071
redeemed
Accrued management fee 210,871
Other payables and accrued 280,786
expenses
Collateral on securities 18,121,700
loaned, at value
TOTAL LIABILITIES 32,674,403
NET ASSETS $ 452,314,792
Net Assets consist of:
Paid in capital $ 335,661,644
Distributions in excess of (59,691)
net investment income
Accumulated undistributed net 43,715,632
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 72,997,207
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 10,829,649 $ 452,314,792
shares outstanding
NET ASSET VALUE and $41.77
redemption price per share
($452,314,792 (divided by)
10,829,649 shares)
Maximum offering price per $43.06
share (100/97.00 of $41.77)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 2,535,690
Dividends
Interest 663,334
Security lending 7,401
TOTAL INCOME 3,206,425
EXPENSES
Management fee $ 1,511,625
Transfer agent fees 1,524,077
Accounting and security 192,413
lending fees
Non-interested trustees' 761
compensation
Custodian fees and expenses 16,095
Registration fees 55,240
Audit 13,633
Legal 310
Total expenses before 3,314,154
reductions
Expense reductions (20,933) 3,293,221
NET INVESTMENT INCOME (LOSS) (86,796)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 44,542,415
Foreign currency transactions 4,559 44,546,974
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (33,147,612)
Assets and liabilities in (4,366) (33,151,978)
foreign currencies
NET GAIN (LOSS) 11,394,996
NET INCREASE (DECREASE) IN $ 11,308,200
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 619,699
charges paid to FDC
Sales charges - Retained by $ 618,180
FDC
Deferred sales charges $ 1,400
withheld by FDC
Exchange fees withheld by FSC $ 26,948
Expense reductions Directed $ 20,807
brokerage arrangements
Custodian credits 126
$ 20,933
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ (86,796) $ 1,879,801
income (loss)
Net realized gain (loss) 44,546,974 10,869,413
Change in net unrealized (33,151,978) (42,208,876)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 11,308,200 (29,459,662)
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (594,460) (201,762)
From net investment income
From net realized gain (3,923,511) (10,471,038)
TOTAL DISTRIBUTIONS (4,517,971) (10,672,800)
Share transactions Net 229,707,365 881,017,420
proceeds from sales of shares
Reinvestment of distributions 4,369,616 10,559,880
Cost of shares redeemed (271,548,576) (1,046,567,449)
NET INCREASE (DECREASE) IN (37,471,595) (154,990,149)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 471,151 1,580,230
TOTAL INCREASE (DECREASE) (30,210,215) (193,542,381)
IN NET ASSETS
NET ASSETS
Beginning of period 482,525,007 676,067,388
End of period (including $ 452,314,792 $ 482,525,007
under (over) distribution of
net investment income of
$(59,691) and $1,842,357,
respectively)
OTHER INFORMATION
Shares
Sold 5,055,388 21,245,778
Issued in reinvestment of 99,196 249,064
distributions
Redeemed (6,048,777) (26,767,460)
Net increase (decrease) (894,193) (5,272,618)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 1997 1996 G 1995
Net asset value, beginning of $ 41.16 $ 39.78 $ 25.76 $ 18.49 $ 15.51 $ 17.75
period
Income from Investment
Operations
Net investment income (loss) D (.01) .10 .16 .08 .09 (.03)
Net realized and unrealized .96 1.72 14.46 7.80 4.29 (2.25)
gain (loss)
Total from investment .95 1.82 14.62 7.88 4.38 (2.28)
operations
Less Distributions
From net investment income (.05) (.01) (.09) (.06) (.04) -
From net realized gain (.33) (.52) (.61) (.65) (1.09) -
In excess of net realized gain - - - - (.35) -
Total distributions (.38) (.53) (.70) (.71) (1.48) -
Redemption fees added to paid .04 .09 .10 .10 .08 .04
in capital
Net asset value, end of period $ 41.77 $ 41.16 $ 39.78 $ 25.76 $ 18.49 $ 15.51
TOTAL RETURN B, C 2.36% 4.76% 57.56% 44.27% 29.85% (12.62)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 452,315 $ 482,525 $ 676,067 $ 458,787 $ 38,382 $ 27,346
(000 omitted)
Ratio of expenses to average 1.26% A 1.26% 1.33% 1.94% 1.64% E 2.54% E
net assets
Ratio of expenses to average 1.25% A, F 1.24% F 1.29% F 1.93% F 1.61% F 2.54%
net assets after expense
reductions
Ratio of net investment (.03)% A .26% .49% .37% .50% (.20)%
income (loss) to average net
assets
Portfolio turnover rate 50% A 59% 100% 16% 166% 139%
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN. C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD. E FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE BEEN HIGHER. F FMR OR THE
FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. G FOR THE YEAR ENDED FEBRUARY 29
</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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT FINANCIAL SERVICES -2.84% 23.56% 171.53% 450.66%
SELECT FINANCIAL SERVICES -5.83% 19.78% 163.31% 434.07%
(LOAD ADJ.)
S&P 500 7.32% 39.82% 206.52% 384.79%
GS Financial Services -3.19% 20.67% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a 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 AUGUST 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT FINANCIAL SERVICES 23.56% 22.11% 18.60%
SELECT FINANCIAL SERVICES 19.78% 21.37% 18.24%
(LOAD ADJ.)
S&P 500 39.82% 25.11% 17.10%
GS Financial Services 20.67% 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
1989/08/31 9700.00 10000.00
1989/09/30 9901.29 9959.00
1989/10/31 8957.40 9727.95
1989/11/30 8835.00 9926.40
1989/12/31 8617.41 10164.64
1990/01/31 7889.91 9482.59
1990/02/28 8175.42 9604.91
1990/03/31 8049.14 9859.44
1990/04/30 7763.63 9612.96
1990/05/31 8447.20 10550.22
1990/06/30 8211.11 10478.48
1990/07/31 7684.02 10444.95
1990/08/31 6764.35 9500.72
1990/09/30 5756.84 9038.04
1990/10/31 5254.45 8999.18
1990/11/30 5995.68 9580.52
1990/12/31 6520.81 9847.82
1991/01/31 7113.35 10277.18
1991/02/28 7930.56 11012.00
1991/03/31 8309.67 11278.49
1991/04/30 8579.27 11305.56
1991/05/31 9236.40 11793.96
1991/06/30 8486.60 11253.80
1991/07/31 9157.77 11778.23
1991/08/31 9764.36 12057.37
1991/09/30 9705.39 11856.01
1991/10/31 9918.81 12014.88
1991/11/30 9183.05 11530.68
1991/12/31 10539.48 12849.79
1992/01/31 11064.46 12610.79
1992/02/29 11859.04 12774.73
1992/03/31 11592.29 12525.62
1992/04/30 12037.82 12893.87
1992/05/31 12554.29 12957.05
1992/06/30 12843.16 12763.99
1992/07/31 13210.44 13286.04
1992/08/31 12452.75 13013.68
1992/09/30 12840.27 13167.24
1992/10/31 13349.26 13213.32
1992/11/30 14352.76 13663.90
1992/12/31 15052.49 13831.96
1993/01/31 16001.94 13948.15
1993/02/28 16427.34 14137.85
1993/03/31 17287.40 14436.15
1993/04/30 16459.80 14086.80
1993/05/31 16466.04 14464.33
1993/06/30 17080.75 14506.27
1993/07/31 17539.44 14448.25
1993/08/31 18085.50 14995.84
1993/09/30 18503.62 14880.37
1993/10/31 18007.49 15188.39
1993/11/30 17205.56 15044.10
1993/12/31 17694.86 15226.14
1994/01/31 18896.07 15743.82
1994/02/28 18210.17 15317.17
1994/03/31 17378.56 14649.34
1994/04/30 18038.49 14836.85
1994/05/31 18808.45 15080.17
1994/06/30 18364.38 14710.71
1994/07/31 19005.42 15193.22
1994/08/31 19671.52 15816.14
1994/09/30 18188.90 15428.65
1994/10/31 18092.21 15775.79
1994/11/30 16946.23 15201.24
1994/12/31 17049.44 15426.67
1995/01/31 17931.17 15826.69
1995/02/28 19069.91 16443.45
1995/03/31 19406.00 16928.70
1995/04/30 20014.91 17427.25
1995/05/31 21125.97 18123.82
1995/06/30 21224.82 18544.83
1995/07/31 21936.53 19159.78
1995/08/31 22790.58 19207.87
1995/09/30 24091.43 20018.44
1995/10/31 23474.61 19946.98
1995/11/30 25056.19 20822.65
1995/12/31 25120.68 21223.69
1996/01/31 26295.18 21946.15
1996/02/29 26517.17 22149.59
1996/03/31 26831.99 22362.89
1996/04/30 26534.20 22692.52
1996/05/31 27150.79 23277.76
1996/06/30 27548.06 23366.44
1996/07/31 26948.02 22334.12
1996/08/31 27750.83 22805.14
1996/09/30 29592.33 24088.62
1996/10/31 31466.94 24752.98
1996/11/30 34169.19 26624.06
1996/12/31 33188.85 26096.63
1997/01/31 35164.84 27727.15
1997/02/28 35940.50 27944.53
1997/03/31 33240.85 26796.29
1997/04/30 36040.31 28396.03
1997/05/31 37223.45 30124.78
1997/06/30 39202.94 31474.37
1997/07/31 43594.22 33978.79
1997/08/31 41118.72 32075.30
1997/09/30 43753.48 33832.06
1997/10/31 43171.01 32702.07
1997/11/30 44631.74 34215.85
1997/12/31 47122.43 34803.33
1998/01/31 46616.74 35188.26
1998/02/28 50706.44 37726.04
1998/03/31 53455.82 39657.99
1998/04/30 54341.76 40056.94
1998/05/31 53325.11 39368.37
1998/06/30 55758.57 40967.51
1998/07/31 55937.02 40531.21
1998/08/31 43228.98 34671.20
1998/09/30 44748.54 36892.24
1998/10/31 49236.91 39893.06
1998/11/30 52059.72 42310.97
1998/12/31 53782.86 44748.93
1999/01/31 54791.67 46620.33
1999/02/28 54977.07 45171.37
1999/03/31 56869.26 46978.68
1999/04/30 61224.98 48798.16
1999/05/31 57253.15 47646.04
1999/06/30 59533.07 50290.39
1999/07/31 56398.87 48720.33
1999/08/31 53407.00 48479.16
IMATRL PRASUN SHR__CHT 19990831 19990914 140804 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Financial Services Portfolio on August 31,
1989, and the current 3.00% sales charge was paid. As the chart shows,
by August 31, 1999, the value of the investment would have grown to
$53,407 - a 434.07% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $48,479 - a 384.79% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
Citigroup, Inc. 6.1
American International Group, 5.6
Inc.
Chase Manhattan Corp. 5.1
American Express Co. 4.6
Bank of America Corp. 4.5
Freddie Mac 3.9
Fannie Mae 3.9
Wells Fargo & Co. 3.9
Associates First Capital 3.4
Corp. Class A
Household International, Inc. 3.1
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Banks 29.2%
Credit & Other Finance 24.1%
Insurance 20.8%
Federal Sponsored Credit 8.9%
Securities Industry 7.6%
All Others 9.4%*
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
Row: 1, Col: 1, Value: 9.4
Row: 1, Col: 2, Value: 7.6
Row: 1, Col: 3, Value: 8.9
Row: 1, Col: 4, Value: 20.8
Row: 1, Col: 5, Value: 24.1
Row: 1, Col: 6, Value: 29.2
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
FINANCIAL SERVICES PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Robert Ewing)
Robert Ewing,
Portfolio Manager of
Fidelity Select Financial
Services Portfolio
Q. HOW DID THE FUND PERFORM, BOB?
A. For the six months that ended August 31, 1999, the fund returned
- -2.84%. For the 12 months ending August 31, 1999, it returned 23.56%.
For the same six-and 12-month periods, the Standard & Poor's 500 Index
returned 7.32% and 39.82%, respectively, while the Goldman Sachs
Financial Services Index - an index of 271 stocks designed to measure
the performance of companies in the financial services sector - had
returns of -3.19% and 20.67%, respectively.
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
A. As the period progressed, interest rates rose and investors became
increasingly nervous about the potential impact of higher interest
rates on financial services stocks. There is a long-standing,
historical relationship indicating that rising interest rates tend to
hurt financial services companies. Investor fears appeared to be
justified when the Federal Reserve Board raised short-term rates twice
near the end of the period. While the valuations of stocks fell as
investors anticipated more challenges for the industry, the
fundamental business characteristics of financial services companies
continued to be strong for the most part. In this challenging
environment, I think Fidelity's financial services analysts did a good
job in stock selection, enabling the fund to outperform the Goldman
Sachs benchmark.
Q. WHAT STRATEGIES DID YOU PURSUE?
A. Three primary themes stood out. First, we emphasized
consumer-oriented companies such as American Express, Associates First
Capital and Household International. Although we did trim our
consumer-related holdings somewhat, we maintained a major emphasis on
these companies because we believed consumer spending would continue
to be healthy and companies in businesses such as credit cards and
mortgages would do well. The second theme was to de-emphasize property
and casualty insurance companies. There simply is too much competition
in this industry, and companies have very little control or
flexibility in pricing. The third theme was to de-emphasize regional
"bricks-and-mortar" banks. We believed they would find it harder to
increase their revenues as the Internet became a larger factor in
financial services. We also maintained the fund's exposure to large
money-center banks such as Citigroup and Chase Manhattan that we had
built up before the period began, although we reduced the Chase
Manhattan holdings slightly.
Q. WHAT WERE SOME OF THE MAJOR CONTRIBUTORS TO PERFORMANCE?
A. American Express was a major contributor. It continued to
demonstrate its ability to accelerate revenue growth and finally grow
the number of its card-customer accounts, which had been flat. In my
opinion, of all the major companies in this group, American Express
has the best potential to use the Internet to help it grow faster. The
Internet creates opportunities for the company both because
transactions will be paid using cards, rather than cash or checks, and
because American Express can add new, Internet-based services. During
the six-month period, Citigroup and Chase Manhattan also performed
well.
Q. WHAT INVESTMENTS DISAPPOINTED YOU?
A. The rising interest-rate environment hurt the stock valuation of
Freddie Mac, even though its fundamentals remained strong and even
improved. Bank One was a somewhat different story. We were underweight
in Bank One relative to the Goldman Sachs benchmark, but the holding
nevertheless hurt performance in absolute terms. The company had a
very serious setback in its marketing and customer retention efforts
for credit cards, resulting in disappointing earnings.
Q. WHAT IS YOUR OUTLOOK?
A. Our general outlook is positive. The fundamentals of financial
services companies continue to be strong, and we believe this industry
should have better earnings growth than the overall market for the
remainder of 1999. These stocks tend to do well when they have
superior earnings growth. In addition, the poor performance of the
industry's stocks during July and August made the stocks even more
attractive on a valuation basis. While the potential impact of the
Year 2000 on computer systems is still a concern, I am beginning to
think that we have worried about it enough. As we approach the end of
the year, investor confidence may actually increase.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE 3.
(checkmark)FUND FACTS
START DATE: December 10, 1981
FUND NUMBER: 066
TRADING SYMBOL: FIDSX
SIZE: as of August 31,1999, more than
$476 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 AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 96.2%
SHARES VALUE (NOTE 1)
BANKS - 29.2%
Bank of America Corp. 354,079 $ 21,421,780
Bank of New York Co., Inc. 375,936 13,439,712
Bank One Corp. 215,519 8,647,700
Capital One Financial Corp. 20,000 755,000
Chase Manhattan Corp. 290,000 24,269,375
Comerica, Inc. 120,167 6,256,194
First Union Corp. 117,803 4,888,825
M&T Bank Corp. 6,000 2,784,000
Marshall & Ilsley Corp. 105,000 6,149,063
Mellon Bank Corp. 160,000 5,340,000
State Street Corp. 50,000 2,993,750
Synovus Finanical Corp. 30,000 566,250
Toronto Dominion Bank 80,000 1,567,839
U.S. Bancorp 433,089 13,371,623
Wachovia Corp. 74,500 5,838,938
Wells Fargo & Co. 460,000 18,313,750
Zions Bancorp 50,000 2,487,500
139,091,299
COMPUTER SERVICES & SOFTWARE
- - 0.1%
Security First Technologies 12,000 444,000
Corp. (a)
CREDIT & OTHER FINANCE - 24.1%
American Express Co. 160,300 22,041,250
Associates First Capital 475,200 16,305,300
Corp. Class A
Citigroup, Inc. 655,500 29,128,773
Equitable Companies (The), 67,600 4,174,300
Inc.
Fleet Financial Group, Inc. 234,534 9,337,385
Household International, Inc. 384,746 14,524,162
MBNA Corp. 172,500 4,258,594
Metris Companies, Inc. 50,000 1,378,125
Providian Financial Corp. 174,700 13,561,088
114,708,977
FEDERAL SPONSORED CREDIT - 8.9%
Fannie Mae 297,000 18,451,125
Freddie Mac 365,300 18,812,950
SLM Holding Corp. 116,000 5,125,750
42,389,825
INSURANCE - 20.8%
AFLAC, Inc. 142,000 6,381,125
Allmerica Financial Corp. 31,200 1,762,800
Allstate Corp. 27,800 912,188
Ambac Financial Group, Inc. 164,900 8,708,781
American International Group, 290,062 26,885,122
Inc.
Berkshire Hathaway, Inc.:
Class A (a) 204 13,096,800
Class B (a) 7 14,021
SHARES VALUE (NOTE 1)
Blanch E.W. Holdings, Inc. 35,000 $ 2,318,750
CIGNA Corp. 20,000 1,796,250
Hartford Financial Services 177,000 8,042,438
Group, Inc.
Hartford Life, Inc. Class A 25,000 1,085,938
Marsh & McLennan Companies, 87,500 6,371,094
Inc.
MBIA, Inc. 52,400 2,718,250
Mutual Risk Management Ltd. 15,000 412,500
Nationwide Financial 105,000 3,832,500
Services, Inc. Class A
PMI Group, Inc. 69,600 2,958,000
Progressive Corp. 10,000 1,020,000
Reliastar Financial Corp. 102,030 4,597,727
Travelers Property Casualty 50,000 1,775,000
Corp. Class A
UICI (a) 175,000 4,604,688
99,293,972
LODGING & GAMING - 0.5%
Starwood Hotels & Resorts 100,000 2,381,250
Worldwide, Inc.
REAL ESTATE INVESTMENT TRUSTS
- - 2.4%
Crescent Real Estate Equities 140,000 2,905,000
Co.
Duke Realty Investments, Inc. 50,000 1,121,875
Equity Office Properties Trust 50,000 1,278,125
Indymac Mortgage Holdings, 325,000 4,367,188
Inc.
Ocwen Asset Investment Corp. 140,100 604,181
Public Storage, Inc. 40,000 1,040,000
11,316,369
SAVINGS & LOANS - 2.3%
Charter One Financial, Inc. 55,000 1,287,344
Commercial Federal Corp. 150,000 3,487,500
Golden State Bancorp, Inc. (a) 75,000 1,504,688
Golden State Bancorp, Inc. 50,000 76,563
litigation warrants 12/31/99
(a)
Golden West Financial Corp. 15,000 1,362,188
Washington Mutual, Inc. 108,880 3,456,940
11,175,223
SECURITIES INDUSTRY - 7.6%
Bear Stearns Companies, Inc. 202,750 8,439,469
E*Trade Group, Inc. (a) 10,000 250,000
Investors Group, Inc. 200,000 2,512,563
Lehman Brothers Holdings, 115,600 6,213,500
Inc.
Morgan Stanley Dean Witter & 114,000 9,782,625
Co.
PaineWebber Group, Inc. 50,000 1,962,500
Schwab (Charles) Corp. 50,000 1,975,000
Waddell & Reed Financial, Inc.:
Class A 178,535 4,050,513
Class B 36,735 838,017
36,024,187
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SERVICES - 0.3%
CheckFree Holdings Corp. (a) 55,000 $ 1,608,750
InsWeb Corp. 300 9,600
1,618,350
TOTAL COMMON STOCKS 458,443,452
(Cost $364,895,555)
CASH EQUIVALENTS - 4.2%
Taxable Central Cash Fund, 20,092,016 20,092,016
5.20% (b) (Cost $20,092,016)
TOTAL INVESTMENT PORTFOLIO - 478,535,468
100.4% (Cost $384,987,571)
NET OTHER ASSETS - (0.4%) (1,901,501)
NET ASSETS - 100% $ 476,633,967
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $111,310,973 and $150,694,355, 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 $6,959 for the
period.
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $386,655,013. Net unrealized appreciation
aggregated $91,880,455, of which $110,063,540 related to appreciated
investment securities and $18,183,085 related to depreciated
investment securities.
FINANCIAL SERVICES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 478,535,468
value (cost $384,987,571) -
See accompanying schedule
Receivable for fund shares 1,159,057
sold
Dividends receivable 653,105
Interest receivable 114,723
Redemption fees receivable 2,699
TOTAL ASSETS 480,465,052
LIABILITIES
Payable for investments $ 809,280
purchased
Payable for fund shares 2,505,303
redeemed
Accrued management fee 245,428
Other payables and accrued 271,074
expenses
TOTAL LIABILITIES 3,831,085
NET ASSETS $ 476,633,967
Net Assets consist of:
Paid in capital $ 353,854,772
Undistributed net investment 1,733,381
income
Accumulated undistributed net 27,497,917
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 93,547,897
(depreciation) on investments
NET ASSETS, for 4,949,943 $ 476,633,967
shares outstanding
NET ASSET VALUE and $96.29
redemption price per share
($476,633,967 (divided by)
4,949,943 shares)
Maximum offering price per $99.27
share (100/97.00 of $96.29)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 4,221,569
Dividends
Interest 906,364
Security lending 5,125
TOTAL INCOME 5,133,058
EXPENSES
Management fee $ 1,687,702
Transfer agent fees 1,440,000
Accounting and security 210,562
lending fees
Non-interested trustees' 774
compensation
Custodian fees and expenses 8,164
Registration fees 52,354
Audit 13,016
Legal 338
Total expenses before 3,412,910
reductions
Expense reductions (39,623) 3,373,287
NET INVESTMENT INCOME 1,759,771
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 29,906,330
Foreign currency transactions (294) 29,906,036
Change in net unrealized (44,453,412)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) (14,547,376)
NET INCREASE (DECREASE) IN $ (12,787,605)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 546,108
charges paid to FDC
Sales charges - Retained by $ 533,301
FDC
Deferred sales charges $ 7,081
withheld by FDC
Exchange fees withheld by FSC $ 22,373
Expense reductions Directed $ 39,435
brokerage arrangements
Transfer agent credits 188
$ 39,623
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ 1,759,771 $ 3,605,509
income
Net realized gain (loss) 29,906,036 21,785,427
Change in net unrealized (44,453,412) 9,159,238
appreciation (depreciation)
NET INCREASE (DECREASE) IN (12,787,605) 34,550,174
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (1,683,714) (1,162,919)
From net investment income
From net realized gain (8,593,336) (66,118,174)
TOTAL DISTRIBUTIONS (10,277,050) (67,281,093)
Share transactions Net 183,865,962 389,871,130
proceeds from sales of shares
Reinvestment of distributions 9,858,240 66,001,479
Cost of shares redeemed (241,419,525) (481,672,418)
NET INCREASE (DECREASE) IN (47,695,323) (25,799,809)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 394,434 622,623
TOTAL INCREASE (DECREASE) (70,365,544) (57,908,105)
IN NET ASSETS
NET ASSETS
Beginning of period 546,999,511 604,907,616
End of period (including $ 476,633,967 $ 546,999,511
undistributed net investment
income of $1,733,381 and
$3,679,892, respectively)
OTHER INFORMATION
Shares
Sold 1,732,222 3,952,203
Issued in reinvestment of 96,272 658,905
distributions
Redeemed (2,303,912) (5,042,955)
Net increase (decrease) (475,418) (431,847)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 1997 1996 F
Net asset value, beginning of $ 100.82 $ 103.28 $ 82.94 $ 65.70 $ 48.23
period
Income from Investment
Operations
Net investment income D .32 .56 .70 .74 1.03
Net realized and unrealized (3.15) 7.88 30.65 21.55 17.56
gain (loss)
Total from investment (2.83) 8.44 31.35 22.29 18.59
operations
Less Distributions
From net investment income (.29) (.19) (.64) (.63) (.37)
From net realized gain (1.48) (10.81) (10.51) (4.56) (.91)
Total distributions (1.77) (11.00) (11.15) (5.19) (1.28)
Redemption fees added to paid .07 .10 .14 .14 .16
in capital
Net asset value, end of period $ 96.29 $ 100.82 $ 103.28 $ 82.94 $ 65.70
TOTAL RETURN B, C (2.84)% 8.42% 41.08% 35.54% 39.05%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 476,634 $ 547,000 $ 604,908 $ 426,424 $ 270,466
(000 omitted)
Ratio of expenses to average 1.16% A 1.20% 1.31% 1.45% 1.42%
net assets
Ratio of expenses to average 1.15% A, E 1.18% E 1.29% E 1.43% E 1.41% E
net assets after expense
reductions
Ratio of net investment .60% A .58% .78% 1.03% 1.78%
income to average net assets
Portfolio turnover rate 41% A 60% 84% 80% 125%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28,
SELECTED PER-SHARE DATA 1995
Net asset value, beginning of $ 51.24
period
Income from Investment
Operations
Net investment income D .76
Net realized and unrealized .87
gain (loss)
Total from investment 1.63
operations
Less Distributions
From net investment income (.79)
From net realized gain (3.93)
Total distributions (4.72)
Redemption fees added to paid .08
in capital
Net asset value, end of period $ 48.23
TOTAL RETURN B, C 4.72%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 153,089
(000 omitted)
Ratio of expenses to average 1.56%
net assets
Ratio of expenses to average 1.54% E
net assets after expense
reductions
Ratio of net investment 1.52%
income to average net assets
Portfolio turnover rate 107%
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN. C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. F FOR THE YEAR ENDED FEBRUARY 29
</TABLE>
HOME FINANCE PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the past 10 year total returns would
have been lower.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT HOME FINANCE -4.84% 5.21% 108.52% 456.61%
SELECT HOME FINANCE (LOAD -7.77% 1.98% 102.19% 439.84%
ADJ.)
S&P 500 7.32% 39.82% 206.52% 384.79%
GS Financial Services -3.19% 20.67% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a 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 AUGUST 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT HOME FINANCE 5.21% 15.83% 18.73%
SELECT HOME FINANCE (LOAD 1.98% 15.12% 18.37%
ADJ.)
S&P 500 39.82% 25.11% 17.10%
GS Financial Services 20.67% 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
1989/08/31 9700.00 10000.00
1989/09/30 10061.54 9959.00
1989/10/31 8807.69 9727.95
1989/11/30 8523.08 9926.40
1989/12/31 7754.53 10164.64
1990/01/31 7111.67 9482.59
1990/02/28 7376.85 9604.91
1990/03/31 7392.92 9859.44
1990/04/30 7216.14 9612.96
1990/05/31 7899.18 10550.22
1990/06/30 7818.82 10478.48
1990/07/31 7143.81 10444.95
1990/08/31 6420.59 9500.72
1990/09/30 5866.12 9038.04
1990/10/31 5424.16 8999.18
1990/11/30 6010.77 9580.52
1990/12/31 6584.91 9847.82
1991/01/31 7214.78 10277.18
1991/02/28 8196.38 11012.00
1991/03/31 8572.66 11278.49
1991/04/30 8867.14 11305.56
1991/05/31 9235.24 11793.96
1991/06/30 8719.90 11253.80
1991/07/31 9652.42 11778.23
1991/08/31 10020.52 12057.37
1991/09/30 9938.72 11856.01
1991/10/31 9766.94 12014.88
1991/11/30 9317.04 11530.68
1991/12/31 10839.14 12849.79
1992/01/31 11907.32 12610.79
1992/02/29 12685.69 12774.73
1992/03/31 12470.39 12525.62
1992/04/30 12735.37 12893.87
1992/05/31 13994.00 12957.05
1992/06/30 14011.53 12763.99
1992/07/31 14700.49 13286.04
1992/08/31 13903.62 13013.68
1992/09/30 14127.74 13167.24
1992/10/31 14393.36 13213.32
1992/11/30 15870.88 13663.90
1992/12/31 17109.88 13831.96
1993/01/31 18337.42 13948.15
1993/02/28 18648.51 14137.85
1993/03/31 19312.72 14436.15
1993/04/30 18266.66 14086.80
1993/05/31 17954.05 14464.33
1993/06/30 18401.84 14506.27
1993/07/31 19584.70 14448.25
1993/08/31 20615.47 14995.84
1993/09/30 21933.51 14880.37
1993/10/31 22102.49 15188.39
1993/11/30 21113.96 15044.10
1993/12/31 21780.02 15226.14
1994/01/31 22733.56 15743.82
1994/02/28 22305.80 15317.17
1994/03/31 21886.96 14649.34
1994/04/30 22733.17 14836.85
1994/05/31 24135.30 15080.17
1994/06/30 24537.25 14710.71
1994/07/31 25079.40 15193.22
1994/08/31 25892.64 15816.14
1994/09/30 25004.62 15428.65
1994/10/31 23509.02 15775.79
1994/11/30 22293.84 15201.24
1994/12/31 22363.96 15426.67
1995/01/31 23349.53 15826.69
1995/02/28 25079.51 16443.45
1995/03/31 25037.57 16928.70
1995/04/30 26348.16 17427.25
1995/05/31 27910.39 18123.82
1995/06/30 28203.96 18544.83
1995/07/31 29336.32 19159.78
1995/08/31 32041.38 19207.87
1995/09/30 32712.40 20018.44
1995/10/31 32114.77 19946.98
1995/11/30 33886.69 20822.65
1995/12/31 34326.75 21223.69
1996/01/31 35265.29 21946.15
1996/02/29 35923.34 22149.59
1996/03/31 36743.22 22362.89
1996/04/30 36274.11 22692.52
1996/05/31 37082.66 23277.76
1996/06/30 37248.80 23366.44
1996/07/31 37913.36 22334.12
1996/08/31 39475.09 22805.14
1996/09/30 41468.78 24088.62
1996/10/31 44381.79 24752.98
1996/11/30 47704.60 26624.06
1996/12/31 46985.06 26096.63
1997/01/31 50037.54 27727.15
1997/02/28 52986.34 27944.53
1997/03/31 48079.34 26796.29
1997/04/30 49520.41 28396.03
1997/05/31 52838.98 30124.78
1997/06/30 57349.78 31474.37
1997/07/31 62745.52 33978.79
1997/08/31 60152.12 32075.30
1997/09/30 65547.87 33832.06
1997/10/31 65031.65 32702.07
1997/11/30 65400.38 34215.85
1997/12/31 68480.50 34803.33
1998/01/31 64589.11 35188.26
1998/02/28 70150.11 37726.04
1998/03/31 74882.88 39657.99
1998/04/30 76647.66 40056.94
1998/05/31 73978.61 39368.37
1998/06/30 72698.00 40967.51
1998/07/31 69867.19 40531.21
1998/08/31 51318.61 34671.20
1998/09/30 53974.19 36892.24
1998/10/31 55430.03 39893.06
1998/11/30 58543.93 42310.97
1998/12/31 58341.73 44748.93
1999/01/31 58112.57 46620.33
1999/02/28 56737.60 45171.37
1999/03/31 57977.77 46978.68
1999/04/30 61326.13 48798.16
1999/05/31 59090.14 47646.04
1999/06/30 59049.23 50290.39
1999/07/31 57931.24 48720.33
1999/08/31 53984.00 48479.16
IMATRL PRASUN SHR__CHT 19990831 19990909 154440 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Home Finance Portfolio on August 31, 1989,
and the current 3.00% sales charge was paid. As the chart shows, by
August 31, 1999, the value of the investment would have grown to
$53,984 - a 439.84% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $48,479 - a 384.79% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
Fannie Mae 6.3
Freddie Mac 5.5
Golden West Financial Corp. 4.9
Wachovia Corp. 4.2
Peoples Heritage Financial 4.1
Group, Inc.
Charter One Financial, Inc. 4.1
Countrywide Credit 4.0
Industries, Inc.
Golden State Bancorp, Inc. 4.0
MGIC Investment Corp. 4.0
Washington Federal, Inc. 3.8
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Savings & Loans 42.9%
Banks 15.0%
Federal Sponsored Credit 11.8%
Insurance 11.2%
Credit & Other Finance 9.8%
All Others 9.3%*
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
Row: 1, Col: 1, Value: 9.300000000000001
Row: 1, Col: 2, Value: 9.800000000000001
Row: 1, Col: 3, Value: 11.2
Row: 1, Col: 4, Value: 11.8
Row: 1, Col: 5, Value: 15.0
Row: 1, Col: 6, Value: 42.9
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
HOME FINANCE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Victor Thay)
Victor Thay,
Portfolio Manager
of Fidelity Select
Home Finance Portfolio
Q. HOW DID THE FUND PERFORM, VICTOR?
A. It was a disappointing period for home finance stocks. For the
six-month period that ended August 31, 1999, the fund returned -4.84%,
compared to 7.32% for the Standard & Poor's 500 Index and -3.19% for
the Goldman Sachs Financial Services Index, an index of 271 stocks
designed to measure the performance of companies in the financial
services sector. For the 12 months that ended August 31, 1999, the
fund returned 5.21%, while the S&P 500 gained 39.82% and the Goldman
Sachs index returned 20.67%.
Q. WHY DID THE FUND UNDERPERFORM THE S&P 500 DURING THE PERIOD?
A. The fund includes mostly home finance stocks, whose performance
tends to depend on the relationship between long-term and short-term
interest rates. During the period, there was a relatively small
difference between the long-term rates that home finance companies
could charge for mortgages and the short-term rates that they had to
pay on certificates of deposit, savings accounts and the like. Another
factor holding back performance was homeowners' preference for
fixed-rate mortgages, which - because their rates do not rise with the
general level of interest rates - are more risky for home finance
companies than variable-rate mortgages. In contrast, most stocks in
the broadly based S&P 500 responded positively to the favorable
economic conditions during the period, which included solid economic
growth, low inflation and low - albeit rising - interest rates.
Q. WHY DID THE FUND ALSO UNDERPERFORM THE GOLDMAN SACHS INDEX?
A. The Goldman Sachs index includes stocks from a variety of financial
services subsectors - such as money center banks and brokerage firms -
that performed better than home finance stocks did during the period.
Q. HOW DO YOU CLASSIFY HOME FINANCE, OR SAVINGS AND LOAN, STOCKS?
A. I think of the current savings and loan (S&L) universe as being
divided into three categories. First, there are the traditional S&Ls
that are sticking to the business they know best: residential
mortgages. Then there are the savings and loans that made the decision
some years ago to become more like commercial banks and have made
considerable progress toward that goal. And finally, there are S&Ls
that are just starting to make that move. I'm interested in
well-managed companies in the first two categories. At this point in
the economic cycle, after so many years of good growth, I am skeptical
of the prospects for companies beginning to enter the commercial loan
business.
Q. WHAT STOCKS DID WELL FOR THE FUND?
A. MGIC Investment Corp., a mortgage insurance company, was one of the
best performers. After suffering from negative investor sentiment
connected with anticipated lower demand for mortgage insurance, the
stock recovered nicely. Golden State Bancorp, a savings and loan, also
helped performance. Its stock was beaten down excessively during the
liquidity crunch of last fall but rebounded in the spring, when
prospects for the economy improved and rumors circulated that the
company might be an acquisition target.
Q. WHAT STOCKS WERE DISAPPOINTING?
A. Dime Bancorp was a disappointment. Negative sentiment surrounded
one of the company's divisions, North American Mortgage Company, due
to the slowdown in refinancings over the past six months. Freddie Mac
also detracted from performance after entering into a price war with
another government-sponsored entity, Fannie Mae. Finally, two savings
and loans, Charter One and Peoples Heritage, were both in the middle
of acquisitions that caused investors to avoid the stocks.
Q. WHAT'S YOUR OUTLOOK, VICTOR?
A. The operating environment for home finance stocks is marginally
better than it was six months ago because of a slightly wider spread,
or difference, between short-term and long-term interest rates. In the
very short term, however, upside appreciation in most stocks might be
limited by rising interest rates. I will continue to focus on
companies with strong management and low cost structures, especially
those that have a sensible business plan for this stage of the
economic cycle. Late in an economic expansion, it's important to stick
with the stocks of companies that maintain high standards with respect
to the credit risks they are willing to take on. That's what I plan to
do.
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 3.
(checkmark)FUND FACTS
START DATE: December 16, 1985
FUND NUMBER: 098
TRADING SYMBOL: FSVLX
SIZE: as of August 31, 1999, more than
$467 million
MANAGER: Victor Thay, since March 1999;
manager, Fidelity Select Natural Gas Portfolio,
1997-1999; analyst, U.S. and Canadian
exploration and production industry,
1996-1999; analyst, Canadian equities,
1995-1996; joined Fidelity in 1995
HOME FINANCE PORTFOLIO
INVESTMENTS AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 93.1%
SHARES VALUE (NOTE 1)
BANKS - 15.0%
BankAtlantic Bancorp, Inc. 71,000 $ 514,750
BankAtlantic Bancorp, Inc. 10,650 67,228
(non-vtg.) Class A
Colonial Bancgroup, Inc. 442,500 5,475,938
Fifth Third Bancorp 100,000 6,625,000
North Fork Bancorp, Inc. 542,024 9,824,185
Peoples Heritage Financial 1,146,175 19,270,067
Group, Inc.
Seacoast Financial Services 210,700 2,344,038
Corp.
Wachovia Corp. 247,200 19,374,300
Wells Fargo & Co. 158,600 6,314,263
69,809,769
CREDIT & OTHER FINANCE - 9.8%
Coast Federal Litigation 269,400 353,588
Contingent Payment Rights
Trust rights 12/31/00 (a)
Countrywide Credit 583,367 18,740,665
Industries, Inc.
First Alliance Corp. (a) 300,500 901,500
Greenpoint Financial Corp. 256,500 6,636,938
Household International, Inc. 429,500 16,213,625
Triad Guaranty, Inc. (a) 89,800 1,751,100
WSFS Financial Corp. 94,000 1,374,750
45,972,166
FEDERAL SPONSORED CREDIT -
11.8%
Fannie Mae 471,600 29,298,146
Freddie Mac 502,100 25,858,151
55,156,297
INSURANCE - 11.2%
LandAmerica Financial Group, 127,900 2,957,688
Inc.
MGIC Investment Corp. 424,400 18,434,875
Old Republic International 364,000 5,642,000
Corp.
PMI Group, Inc. 301,110 12,797,175
Radian Group, Inc. 117,200 5,427,825
Stewart Information Services 88,100 1,833,581
Corp.
White Mountains Insurance 39,700 5,170,925
Group, Inc.
52,264,069
REAL ESTATE INVESTMENT TRUSTS
- - 2.4%
Imperial Credit Commercial 107,700 1,177,969
Mortgage Investment Corp.
Indymac Mortgage Holdings, 473,000 6,355,938
Inc.
Novastar Financial, Inc. 80,200 360,900
Ocwen Asset Investment Corp. 758,300 3,270,169
11,164,976
SAVINGS & LOANS - 42.9%
Astoria Financial Corp. 423,400 13,919,275
SHARES VALUE (NOTE 1)
Bank Plus Corp. (a) 278,600 $ 1,271,113
Bank United Corp. Class A 500 17,156
BankUnited Financial Corp. 50,000 478,125
Class A (a)
Bay View Capital Corp. 139,103 2,269,118
Charter One Financial, Inc. 810,764 18,976,945
Commercial Federal Corp. 349,225 8,119,481
Dime Bancorp, Inc. 751,684 13,812,194
Downey Financial Corp. 127,500 2,709,375
First Bell Bancorp, Inc. 71,000 1,184,813
First Federal Capital Corp. 141,900 2,226,056
First Federal Savings & Loan 52,300 1,464,400
Association East Hartford
First Washington Bancorp, 113,400 2,126,250
Inc.
FirstFed Financial Corp. (a) 201,600 3,074,400
Golden State Bancorp, Inc. (a) 929,092 18,639,908
Golden State Bancorp, Inc. 898,761 1,376,228
litigation warrants 12/31/99
(a)
Golden West Financial Corp. 251,300 22,821,181
Haven Bancorp, Inc. 86,200 1,422,300
ITLA Capital Corp. (a) 76,300 1,201,725
JSB Financial, Inc. 71,000 3,771,875
MAF Bancorp., Inc. 212,900 4,524,125
Quaker City Bancorp, Inc. (a) 83,825 1,445,981
Richmond County Financial 416,300 8,247,944
Corp.
Roslyn Bancorp, Inc. 246,015 4,182,255
SGV Bancorp., Inc. (a)(c) 114,300 2,514,600
Sovereign Bancorp, Inc. 151,400 1,518,731
St. Paul Bancorp, Inc. 120,200 2,614,350
TCF Financial Corp. 587,800 16,605,350
Washington Federal, Inc. 743,470 17,750,346
Washington Mutual, Inc. 429,980 13,651,865
Webster Financial Corp. 243,800 6,567,363
200,504,828
TOTAL COMMON STOCKS 434,872,105
(Cost $396,873,663)
CASH EQUIVALENTS - 7.4%
Taxable Central Cash Fund, 34,744,123 34,744,123
5.20% (b) (Cost $34,744,123)
TOTAL INVESTMENT PORTFOLIO - 469,616,228
100.5% (Cost $431,617,786)
NET OTHER ASSETS - (0.5%) (2,197,848)
NET ASSETS - 100% $ 467,418,380
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
(c) Affiliated company
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $339,738,433 and $604,432,370, 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 $59,247 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
Acadiana Bancshares, Inc. $ - $ 570,826 $ 15,743 $ -
Citizens First Financial Corp. - 768,875 - -
SGV Bancorp., Inc. - 223,250 - 2,514,600
TOTALS $ - $ 1,562,951 $ 15,743 $ 2,514,600
</TABLE>
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $432,934,361. Net unrealized appreciation
aggregated $36,681,867, of which $78,779,062 related to appreciated
investment securities and $42,097,195 related to depreciated
investment securities.
HOME FINANCE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 469,616,228
value (cost $431,617,786) -
See accompanying schedule
Receivable for investments 6,341,705
sold
Receivable for fund shares 56,516
sold
Dividends receivable 1,338,990
Interest receivable 156,055
Redemption fees receivable 9,148
Other receivables 7,822
TOTAL ASSETS 477,526,464
LIABILITIES
Payable for investments $ 3,423,494
purchased
Payable for fund shares 6,071,708
redeemed
Accrued management fee 246,572
Other payables and accrued 366,310
expenses
TOTAL LIABILITIES 10,108,084
NET ASSETS $ 467,418,380
Net Assets consist of:
Paid in capital $ 396,055,981
Undistributed net investment 2,142,754
income
Accumulated undistributed net 31,221,552
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 37,998,093
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 11,803,496 $ 467,418,380
shares outstanding
NET ASSET VALUE and $39.60
redemption price per share
($467,418,380 (divided by)
11,803,496 shares)
Maximum offering price per $40.82
share (100/97.00 of $39.60)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 4,923,603
Dividends (including $15,743
received from affiliated
issuers)
Special dividend from Ocwen 648,866
Asset Investment Corp.
Interest 805,601
TOTAL INCOME 6,378,070
EXPENSES
Management fee $ 1,821,337
Transfer agent fees 2,124,267
Accounting fees and expenses 222,864
Non-interested trustees' 952
compensation
Custodian fees and expenses 13,102
Registration fees 52,003
Audit 23,156
Legal 417
Total expenses before 4,258,098
reductions
Expense reductions (26,583) 4,231,515
NET INVESTMENT INCOME 2,146,555
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 34,220,251
(including realized gain of
$541,491 on sales of
investments in affiliated
issuers)
Foreign currency transactions (3,137) 34,217,114
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (54,189,018)
Assets and liabilities in (1,111) (54,190,129)
foreign currencies
NET GAIN (LOSS) (19,973,015)
NET INCREASE (DECREASE) IN $ (17,826,460)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 268,364
charges paid to FDC
Sales charges - Retained by $ 268,077
FDC
Deferred sales charges $ 6,308
withheld by FDC
Exchange fees withheld by FSC $ 58,416
Expense Reductions Directed $ 25,403
brokerage arrangements
Custodian credits 112
Transfer agent credits 1,068
$ 26,583
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ 2,146,555 $ 7,725,515
income
Net realized gain (loss) 34,217,114 22,583,634
Change in net unrealized (54,190,129) (316,657,120)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (17,826,460) (286,347,971)
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (1,867,268) (2,223,405)
From net investment income
From net realized gain (5,600,916) (43,930,438)
TOTAL DISTRIBUTIONS (7,468,184) (46,153,843)
Share transactions Net 79,457,646 655,146,906
proceeds from sales of shares
Reinvestment of distributions 7,089,429 45,331,306
Cost of shares redeemed (334,650,890) (1,297,847,011)
NET INCREASE (DECREASE) IN (248,103,815) (597,368,799)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 376,622 1,700,582
TOTAL INCREASE (DECREASE) (273,021,837) (928,170,031)
IN NET ASSETS
NET ASSETS
Beginning of period 740,440,217 1,668,610,248
End of period (including $ 467,418,380 $ 740,440,217
undistributed net investment
income of $2,142,754 and
$7,800,879, respectively)
OTHER INFORMATION
Shares
Sold 1,806,856 13,208,817
Issued in reinvestment of 168,756 793,059
distributions
Redeemed (7,762,299) (27,681,040)
Net increase (decrease) (5,786,687) (13,679,164)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 1997 1996 F
Net asset value, beginning of $ 42.09 $ 53.36 $ 46.00 $ 33.30 $ 23.92
period
Income from Investment
Operations
Net investment income D .15 G .28 .33 .53 .53
Net realized and unrealized (2.19) (10.16) 13.10 14.60 9.72
gain (loss)
Total from investment (2.04) (9.88) 13.43 15.13 10.25
operations
Less Distributions
From net investment income (.12) (.07) (.29) (.32) (.19)
From net realized gain (.36) (1.38) (5.84) (2.16) (.73)
Total distributions (.48) (1.45) (6.13) (2.48) (.92)
Redemption fees added to paid .03 .06 .06 .05 .05
in capital
Net asset value, end of period $ 39.60 $ 42.09 $ 53.36 $ 46.00 $ 33.30
TOTAL RETURN B, C (4.84)% (19.12)% 32.39% 47.50% 43.24%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 467,418 $ 740,440 $ 1,668,610 $ 1,176,828 $ 617,035
(000 omitted)
Ratio of expenses to average 1.34% A 1.19% 1.21% 1.38% 1.35%
net assets
Ratio of expenses to average 1.33% A, E 1.18% E 1.19% E 1.34% E 1.32% E
net assets after expense
reductions
Ratio of net investment .68% A .57% .67% 1.41% 1.80%
income to average net assets
Portfolio turnover rate 114% A 18% 54% 78% 81%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28,
SELECTED PER-SHARE DATA 1995
Net asset value, beginning of $ 25.03
period
Income from Investment
Operations
Net investment income D .20
Net realized and unrealized 2.34
gain (loss)
Total from investment 2.54
operations
Less Distributions
From net investment income (.12)
From net realized gain (3.60)
Total distributions (3.72)
Redemption fees added to paid .07
in capital
Net asset value, end of period $ 23.92
TOTAL RETURN B, C 12.43%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 229,924
(000 omitted)
Ratio of expenses to average 1.47%
net assets
Ratio of expenses to average 1.45% E
net assets after expense
reductions
Ratio of net investment .80%
income to average net assets
Portfolio turnover rate 124%
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN. C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. F FOR THE YEAR ENDED FEBRUARY 29
G NET INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND FROM OCWEN ASSET INVESTMENT CORP.,
WHICH AMOUNTED TO $.05 PER SHARE.
</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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT INSURANCE -1.49% 19.53% 168.81% 367.86%
SELECT INSURANCE (LOAD ADJ.) -4.52% 15.87% 160.67% 353.76%
S&P 500 7.32% 39.82% 206.52% 384.79%
GS Financial Services -3.19% 20.67% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a 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 AUGUST 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT INSURANCE 19.53% 21.87% 16.68%
SELECT INSURANCE (LOAD ADJ.) 15.87% 21.12% 16.33%
S&P 500 39.82% 25.11% 17.10%
GS Financial Services 20.67% 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
1989/08/31 9700.00 10000.00
1989/09/30 9833.79 9959.00
1989/10/31 10154.90 9727.95
1989/11/30 10429.17 9926.40
1989/12/31 10172.99 10164.64
1990/01/31 9309.50 9482.59
1990/02/28 9572.60 9604.91
1990/03/31 9525.38 9859.44
1990/04/30 9194.82 9612.96
1990/05/31 10038.07 10550.22
1990/06/30 10065.06 10478.48
1990/07/31 9916.64 10444.95
1990/08/31 8884.50 9500.72
1990/09/30 8115.46 9038.04
1990/10/31 7791.65 8999.18
1990/11/30 8823.79 9580.52
1990/12/31 9174.58 9847.82
1991/01/31 9667.04 10277.18
1991/02/28 10645.21 11012.00
1991/03/31 11346.80 11278.49
1991/04/30 11286.09 11305.56
1991/05/31 11569.42 11793.96
1991/06/30 10850.22 11253.80
1991/07/31 11253.10 11778.23
1991/08/31 11184.81 12057.37
1991/09/30 11294.07 11856.01
1991/10/31 11635.48 12014.88
1991/11/30 11533.06 11530.68
1991/12/31 12539.85 12849.79
1992/01/31 12526.15 12610.79
1992/02/29 12861.91 12774.73
1992/03/31 12676.90 12525.62
1992/04/30 12354.84 12893.87
1992/05/31 12519.30 12957.05
1992/06/30 12781.21 12763.99
1992/07/31 13505.38 13286.04
1992/08/31 13109.70 13013.68
1992/09/30 13804.00 13167.24
1992/10/31 14393.79 13213.32
1992/11/30 14886.52 13663.90
1992/12/31 15361.47 13831.96
1993/01/31 16003.73 13948.15
1993/02/28 16305.98 14137.85
1993/03/31 17167.37 14436.15
1993/04/30 16758.87 14086.80
1993/05/31 16327.21 14464.33
1993/06/30 16501.39 14506.27
1993/07/31 17076.93 14448.25
1993/08/31 17947.82 14995.84
1993/09/30 18008.40 14880.37
1993/10/31 17485.87 15188.39
1993/11/30 16418.09 15044.10
1993/12/31 16617.49 15226.14
1994/01/31 16841.49 15743.82
1994/02/28 16103.12 15317.17
1994/03/31 15348.16 14649.34
1994/04/30 15514.08 14836.85
1994/05/31 16227.57 15080.17
1994/06/30 16136.31 14710.71
1994/07/31 16434.97 15193.22
1994/08/31 16882.97 15816.14
1994/09/30 16766.83 15428.65
1994/10/31 16559.42 15775.79
1994/11/30 15721.49 15201.24
1994/12/31 16559.42 15426.67
1995/01/31 17156.75 15826.69
1995/02/28 17679.42 16443.45
1995/03/31 17961.49 16928.70
1995/04/30 18127.43 17427.25
1995/05/31 18526.39 18123.82
1995/06/30 19108.19 18544.83
1995/07/31 19681.69 19159.78
1995/08/31 20255.18 19207.87
1995/09/30 21260.88 20018.44
1995/10/31 20620.89 19946.98
1995/11/30 21851.00 20822.65
1995/12/31 22323.69 21223.69
1996/01/31 22973.73 21946.15
1996/02/29 22896.75 22149.59
1996/03/31 22640.16 22362.89
1996/04/30 22359.34 22692.52
1996/05/31 22811.22 23277.76
1996/06/30 23219.65 23366.44
1996/07/31 22706.94 22334.12
1996/08/31 23662.84 22805.14
1996/09/30 24818.61 24088.62
1996/10/31 26122.11 24752.98
1996/11/30 27729.75 26624.06
1996/12/31 27615.85 26096.63
1997/01/31 28750.38 27727.15
1997/02/28 29371.67 27944.53
1997/03/31 27786.93 26796.29
1997/04/30 29426.84 28396.03
1997/05/31 31588.77 30124.78
1997/06/30 33901.76 31474.37
1997/07/31 36762.31 33978.79
1997/08/31 34864.71 32075.30
1997/09/30 37092.73 33832.06
1997/10/31 36110.89 32702.07
1997/11/30 36828.39 34215.85
1997/12/31 39344.56 34803.33
1998/01/31 38806.55 35188.26
1998/02/28 41944.95 37726.04
1998/03/31 44276.33 39657.99
1998/04/30 44543.87 40056.94
1998/05/31 44030.64 39368.37
1998/06/30 45976.63 40967.51
1998/07/31 45099.87 40531.21
1998/08/31 37968.14 34671.20
1998/09/30 40416.67 36892.24
1998/10/31 42116.73 39893.06
1998/11/30 44832.56 42310.97
1998/12/31 47338.57 44748.93
1999/01/31 46201.57 46620.33
1999/02/28 46070.38 45171.37
1999/03/31 47797.74 46978.68
1999/04/30 50288.80 48798.16
1999/05/31 49787.47 47646.04
1999/06/30 49966.52 50290.39
1999/07/31 48283.46 48720.33
1999/08/31 45376.00 48479.16
IMATRL PRASUN SHR__CHT 19990831 19990914 141053 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Insurance Portfolio on August 31, 1989,
and the current 3.00% sales charge was paid. As the chart shows, by
August 31, 1999, the value of the investment would have grown to
$45,376 - a 353.76% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $48,479 - a 384.79% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
American International Group, 6.6
Inc.
CIGNA Corp. 5.9
Berkshire Hathaway, Inc. 5.8
Class A
Equitable Companies (The), Inc. 5.5
American General Corp. 4.9
AFLAC, Inc. 4.6
MBIA, Inc. 4.6
Allmerica Financial Corp. 4.6
Hartford Financial Services 4.1
Group, Inc.
Marsh & McLennan Companies, 3.2
Inc.
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Insurance 82.5%
Credit & Other Finance 8.1%
Medical Facilities Management 1.9%
Services 1.2%
All Others 6.3%*
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
Row: 1, Col: 1, Value: 6.3
Row: 1, Col: 2, Value: 1.2
Row: 1, Col: 3, Value: 1.9
Row: 1, Col: 4, Value: 8.1
Row: 1, Col: 5, Value: 82.5
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
INSURANCE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Timothy Cohen)
Timothy Cohen,
Portfolio Manager
of Fidelity Select
Insurance Portfolio
Q. HOW DID THE FUND PERFORM, TIM?
A. It was in line with the industry as a whole. For the period that
ended August 31, 1999, the fund had total returns of -1.49% for the
preceding six months and 19.53% for the preceding 12 months. This
compares with returns of -3.19% and 20.67% for the six-month and
12-month periods, respectively, 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.
The fund underperformed the broader market as measured by the Standard
and Poor's 500 Index, which had returns of 7.32% and 39.82% over the
same six- and 12-month periods, respectively.
Q. WHAT WERE THE MAJOR FACTORS AFFECTING THIS PERFORMANCE?
A. The overall investment backdrop for financial services was one of
rising interest rates, inflation worries and signs of a broad cyclical
recovery. These factors are not the best environment for the financial
sector as a whole, which helps to explain its relatively lackluster
performance versus the broader market. Specifically within the
insurance segment, the environment was one of continued price
competition and generally disappointing earnings from the
property-casualty companies.
Q. DID YOUR INVESTMENT STRATEGY CHANGE DURING THE PERIOD BASED ON THIS
ENVIRONMENT?
A. The way I positioned the fund didn't really change. I continued to
favor the health, life and specialty insurers over the
less-specialized, commodity-like players in the property-casualty
business. I moved the fund further away from the auto insurance
segment, where increased competition and inflation were leading to
declining margins. I continued to find opportunities in certain niche
segments of the property-casualty business, with particular emphasis
on such areas as bond insurance and specialty brokerage. I also found
strong growth in life and health insurance companies, based largely on
the growing demand for retirement and health care-related products
from an aging population.
Q. WHICH OF THE FUND'S HOLDINGS DID WELL?
A. Looking first at the life and health segment, where the fund was
overweighted, there were a number of quality names that helped
performance. CIGNA and AFLAC were top performers in this segment. So
too was American International Group (AIG), which expanded its
presence in life insurance with its recent acquisition of Sun America
and benefited from strong worldwide growth in life insurance. In the
brokerage area, E.W. Blanch, a broker specializing in re-insurance,
was a strong contributor to fund performance.
Q. WHICH STOCKS WERE DISAPPOINTMENTS?
A. Despite what I think is a fundamentally sound story based on their
business prospects, some of the bond insurers didn't do as well as I
would have liked. Municipal bond issuance is highly cyclical with
interest rates, so as rates rose in the period, bond issuance in the
U.S. declined, and this hurt the performance of such companies as MBIA
and Ambac Financial. Another disappointment came in the wake of the
merger of UNUM Corp. and Provident Companies, when a reserve
deficiency was discovered in the group disability business.
Unfortunately, a common risk among insurers is that loss reserves for
certain business lines sometimes prove insufficient due to poor
estimates or rising inflation. Fortunately, the fund avoided exposure
to various property-casualty stocks that were also affected by
reserve deficiency problems.
Q. WHAT IS YOUR OUTLOOK, TIM?
A. I continue to be somewhat cautious in my outlook for the insurance
sector. Uncertainty around the interest-rate environment is a big
factor in that view. If rates continue to rise, that trend will likely
continue to have a negative effect on the performance of the financial
services industry as a whole. Looking ahead, I'll continue to position
the fund in the best-quality companies in each of the insurance
segments. That means I'll likely continue to favor the life, health
and bond insurers over companies in the property-casualty business,
where I see a persistent environment of overcapacity and price
competition, as well as some potential exposure to Y2K liabilities.
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 3.
(checkmark)FUND FACTS
START DATE: December 16, 1985
FUND NUMBER: 045
TRADING SYMBOL: FSPCX
SIZE: as of August 31, 1999, more than
$60 million
MANAGER: Timothy Cohen, since February
1999; equity analyst, business and consumer
services, 1996-1998; joined Fidelity in
1996.
INSURANCE PORTFOLIO
INVESTMENTS AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 93.7%
SHARES VALUE (NOTE 1)
CREDIT & OTHER FINANCE - 8.1%
Citigroup, Inc. 35,748 $ 1,588,552
Equitable Companies (The), 53,400 3,297,450
Inc.
4,886,002
INSURANCE - 82.5%
Aetna, Inc. 10,000 777,500
AFLAC, Inc. 62,300 2,799,606
Allmerica Financial Corp. 48,573 2,744,375
Ambac Financial Group, Inc. 30,800 1,626,625
American General Corp. 41,500 2,946,500
American International Group, 42,637 3,951,913
Inc.
Berkshire Hathaway, Inc. 54 3,466,800
Class A (a)
Blanch E.W. Holdings, Inc. 27,800 1,841,750
CIGNA Corp. 39,400 3,538,613
Financial Security Assurance 4,300 215,269
Holdings Ltd.
Hartford Financial Services 54,500 2,476,344
Group, Inc.
Hartford Life, Inc. Class A 37,700 1,637,594
Horace Mann Educators Corp. 35,400 1,066,425
Jefferson-Pilot Corp. 18,900 1,261,575
Lincoln National Corp. 16,500 773,438
Marsh & McLennan Companies, 26,200 1,907,688
Inc.
MBIA, Inc. 53,200 2,759,750
MGIC Investment Corp. 26,800 1,164,125
Mutual Risk Management Ltd. 62,000 1,705,000
Nationwide Financial 41,700 1,522,050
Services, Inc. Class A
Philadelphia Consolidated 46,800 865,800
Holding Corp. (a)
PMI Group, Inc. 18,950 805,375
Protective Life Corp. 39,000 1,160,250
Reliastar Financial Corp. 21,876 985,787
RenaissanceRe Holdings Ltd. 21,600 780,300
Terra Nova (Bermuda) Holdings 15,100 483,200
Ltd. Class A
Torchmark Corp. 39,200 1,117,200
UICI (a) 34,200 899,888
UnumProvident Corp. 39,435 1,422,125
Xl Capital Ltd. 18,900 950,906
49,653,771
MEDICAL FACILITIES MANAGEMENT
- - 1.9%
Wellpoint Health Networks, 15,300 1,114,988
Inc. (a)
SERVICES - 1.2%
InsWeb Corp. 22,800 729,600
TOTAL COMMON STOCKS 56,384,361
(Cost $51,670,109)
CASH EQUIVALENTS - 8.6%
SHARES VALUE (NOTE 1)
Central Cash Collateral Fund, 1,351,400 $ 1,351,400
5.26% (b)
Taxable Central Cash Fund, 3,836,409 3,836,409
5.20% (b)
TOTAL CASH EQUIVALENTS 5,187,809
(Cost $5,187,809)
TOTAL INVESTMENT PORTFOLIO - 61,572,170
102.3% (Cost $56,857,918)
NET OTHER ASSETS - (2.3%) (1,388,490)
NET ASSETS - 100% $ 60,183,680
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $41,944,624 and $65,118,640, 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 $4,468 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $1,281,500. The fund
received cash collateral of $1,351,400 which was invested in the
Central Cash Collateral Fund.
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $56,899,312. Net unrealized appreciation
aggregated $4,672,858, of which $7,509,282 related to appreciated
investment securities and $2,836,424 related to depreciated investment
securities.
INSURANCE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 61,572,170
value (cost $56,857,918) -
See accompanying schedule
Receivable for fund shares 348,418
sold
Dividends receivable 72,283
Interest receivable 5,914
Redemption fees receivable 121
Other receivables 118
TOTAL ASSETS 61,999,024
LIABILITIES
Payable for fund shares $ 387,035
redeemed
Accrued management fee 30,954
Other payables and accrued 45,955
expenses
Collateral on securities 1,351,400
loaned, at value
TOTAL LIABILITIES 1,815,344
NET ASSETS $ 60,183,680
Net Assets consist of:
Paid in capital $ 44,729,674
Accumulated net investment (65,497)
loss
Accumulated undistributed net 10,805,251
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 4,714,252
(depreciation) on investments
NET ASSETS, for 1,582,974 $ 60,183,680
shares outstanding
NET ASSET VALUE and $38.02
redemption price per share
($60,183,680 (divided by)
1,582,974 shares)
Maximum offering price per $39.20
share (100/97.00 of $38.02)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 359,309
Dividends
Interest 76,346
Security lending 35
TOTAL INCOME 435,690
EXPENSES
Management fee $ 224,536
Transfer agent fees 231,492
Accounting and security 30,999
lending fees
Non-interested trustees' 116
compensation
Custodian fees and expenses 5,978
Registration fees 20,984
Audit 4,917
Legal 46
Total expenses before 519,068
reductions
Expense reductions (17,881) 501,187
NET INVESTMENT INCOME (LOSS) (65,497)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 11,004,806
Foreign currency transactions 25 11,004,831
Change in net unrealized (10,591,798)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 413,033
NET INCREASE (DECREASE) IN $ 347,536
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 55,391
charges paid to FDC
Sales charges - Retained by $ 54,277
FDC
Deferred sales charges $ 194
withheld by FDC
Exchange fees withheld by FSC $ 5,018
Expense reductions Directed $ 17,881
brokerage arrangements
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ (65,497) $ (106,344)
income (loss)
Net realized gain (loss) 11,004,831 13,198,732
Change in net unrealized (10,591,798) (4,563,684)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 347,536 8,528,704
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (6,906,129) (11,641,173)
from net realized gains
Share transactions Net 14,215,742 64,911,861
proceeds from sales of shares
Reinvestment of distributions 6,603,662 11,462,296
Cost of shares redeemed (36,991,670) (115,658,850)
NET INCREASE (DECREASE) IN (16,172,266) (39,284,693)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 35,059 126,042
TOTAL INCREASE (DECREASE) (22,695,800) (42,271,120)
IN NET ASSETS
NET ASSETS
Beginning of period 82,879,480 125,150,600
End of period (including $ 60,183,680 $ 82,879,480
accumulated net investment
loss of $65,497 and $0,
respectively)
OTHER INFORMATION
Shares
Sold 335,895 1,540,455
Issued in reinvestment of 166,129 274,802
distributions
Redeemed (885,988) (2,821,222)
Net increase (decrease) (383,964) (1,005,965)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 1997 1996 F 1995
Net asset value, beginning of $ 42.14 $ 42.10 $ 32.62 $ 26.77 $ 21.31 $ 19.41
period
Income from Investment
Operations
Net investment income (loss) D (.04) (.04) .01 .01 .06 .05
Net realized and unrealized (.45) G 4.01 12.93 7.21 6.15 1.78
gain (loss)
Total from investment (.49) 3.97 12.94 7.22 6.21 1.83
operations
Less Distributions
From net investment income - - - (.03) (.07) -
From net realized gain (3.65) (3.98) (3.54) (1.45) (.72) -
Total distributions (3.65) (3.98) (3.54) (1.48) (.79) -
Redemption fees added to paid .02 .05 .08 .11 .04 .07
in capital
Net asset value, end of period $ 38.02 $ 42.14 $ 42.10 $ 32.62 $ 26.77 $ 21.31
TOTAL RETURN B, C (1.49)% 9.84% 42.81% 28.28% 29.51% 9.79%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 60,184 $ 82,879 $ 125,151 $ 42,367 $ 38,994 $ 21,838
(000 omitted)
Ratio of expenses to average 1.32% A 1.33% 1.45% 1.82% 1.77% 2.36%
net assets
Ratio of expenses to average 1.28% A, E 1.31% E 1.43% E 1.77% E 1.74% E 2.34% E
net assets after expense
reductions
Ratio of net investment (.17)% A (.10)% .02% .05% .26% .25%
income (loss) to average net
assets
Portfolio turnover rate 115% A 72% 157% 142% 164% 265%
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN. C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. F FOR THE YEAR ENDED FEBRUARY 29
G 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>
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT BIOTECHNOLOGY 32.19% 102.37% 200.27% 626.76%
SELECT BIOTECHNOLOGY (LOAD 28.15% 96.23% 191.18% 604.88%
ADJ.)
S&P 500 7.32% 39.82% 206.52% 384.79%
GS Health Care -0.56% 27.04% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a 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 AUGUST 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT BIOTECHNOLOGY 102.37% 24.60% 21.94%
SELECT BIOTECHNOLOGY (LOAD 96.23% 23.83% 21.57%
ADJ.)
S&P 500 39.82% 25.11% 17.10%
GS Health Care 27.04% 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
1989/08/31 9700.00 10000.00
1989/09/30 10109.46 9959.00
1989/10/31 10144.76 9727.95
1989/11/30 10462.45 9926.40
1989/12/31 10262.78 10164.64
1990/01/31 9494.87 9482.59
1990/02/28 10391.97 9604.91
1990/03/31 10829.75 9859.44
1990/04/30 10966.11 9612.96
1990/05/31 12509.11 10550.22
1990/06/30 13382.66 10478.48
1990/07/31 13418.95 10444.95
1990/08/31 13005.28 9500.72
1990/09/30 12714.98 9038.04
1990/10/31 12823.84 8999.18
1990/11/30 14376.93 9580.52
1990/12/31 14814.09 9847.82
1991/01/31 16515.41 10277.18
1991/02/28 18855.65 11012.00
1991/03/31 20802.14 11278.49
1991/04/30 19895.76 11305.56
1991/05/31 21158.74 11793.96
1991/06/30 20035.35 11253.80
1991/07/31 21839.00 11778.23
1991/08/31 23369.37 12057.37
1991/09/30 24579.61 11856.01
1991/10/31 27000.09 12014.88
1991/11/30 25196.44 11530.68
1991/12/31 29486.73 12849.79
1992/01/31 28895.70 12610.79
1992/02/29 26677.32 12774.73
1992/03/31 24653.24 12525.62
1992/04/30 22353.89 12893.87
1992/05/31 23956.96 12957.05
1992/06/30 23536.47 12763.99
1992/07/31 24766.85 13286.04
1992/08/31 23217.81 13013.68
1992/09/30 23138.15 13167.24
1992/10/31 24271.16 13213.32
1992/11/30 26661.09 13663.90
1992/12/31 26436.85 13831.96
1993/01/31 25078.26 13948.15
1993/02/28 21030.37 14137.85
1993/03/31 21346.76 14436.15
1993/04/30 21895.78 14086.80
1993/05/31 23310.22 14464.33
1993/06/30 23449.80 14506.27
1993/07/31 22677.44 14448.25
1993/08/31 23533.55 14995.84
1993/09/30 24501.32 14880.37
1993/10/31 26325.19 15188.39
1993/11/30 26120.47 15044.10
1993/12/31 26622.96 15226.14
1994/01/31 27534.90 15743.82
1994/02/28 25692.42 15317.17
1994/03/31 23096.19 14649.34
1994/04/30 22677.44 14836.85
1994/05/31 22295.92 15080.17
1994/06/30 21411.90 14710.71
1994/07/31 21467.73 15193.22
1994/08/31 23477.71 15816.14
1994/09/30 23403.27 15428.65
1994/10/31 22603.00 15775.79
1994/11/30 22184.25 15201.24
1994/12/31 21784.12 15426.67
1995/01/31 22761.19 15826.69
1995/02/28 23542.85 16443.45
1995/03/31 23924.38 16928.70
1995/04/30 24668.81 17427.25
1995/05/31 24892.15 18123.82
1995/06/30 25794.78 18544.83
1995/07/31 26948.66 19159.78
1995/08/31 28028.09 19207.87
1995/09/30 29284.33 20018.44
1995/10/31 29051.69 19946.98
1995/11/30 30019.46 20822.65
1995/12/31 32480.16 21223.69
1996/01/31 34401.18 21946.15
1996/02/29 34130.75 22149.59
1996/03/31 33589.88 22362.89
1996/04/30 34315.11 22692.52
1996/05/31 34715.57 23277.76
1996/06/30 32617.95 23366.44
1996/07/31 30224.76 22334.12
1996/08/31 31616.81 22805.14
1996/09/30 33466.53 24088.62
1996/10/31 32303.31 24752.98
1996/11/30 32494.00 26624.06
1996/12/31 34301.82 26096.63
1997/01/31 35873.95 27727.15
1997/02/28 36127.17 27944.53
1997/03/31 32402.61 26796.29
1997/04/30 30981.46 28396.03
1997/05/31 34920.05 30124.78
1997/06/30 35834.75 31474.37
1997/07/31 36049.98 33978.79
1997/08/31 36297.48 32075.30
1997/09/30 41075.45 33832.06
1997/10/31 39579.65 32702.07
1997/11/30 38880.17 34215.85
1997/12/31 39540.88 34803.33
1998/01/31 39868.97 35188.26
1998/02/28 41946.87 37726.04
1998/03/31 43660.23 39657.99
1998/04/30 41927.80 40056.94
1998/05/31 40496.24 39368.37
1998/06/30 40534.93 40967.51
1998/07/31 41192.67 40531.21
1998/08/31 34834.51 34671.20
1998/09/30 40663.90 36892.24
1998/10/31 43398.04 39893.06
1998/11/30 45139.12 42310.97
1998/12/31 51290.94 44748.93
1999/01/31 54283.02 46620.33
1999/02/28 53328.65 45171.37
1999/03/31 55946.72 46978.68
1999/04/30 51471.69 48798.16
1999/05/31 53489.17 47646.04
1999/06/30 57860.38 50290.39
1999/07/31 63266.20 48720.33
1999/08/31 70488.00 48479.16
IMATRL PRASUN SHR__CHT 19990831 19990909 153942 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Biotechnology Portfolio on August 31,
1989, and the current 3.00% sales charge was paid. As the chart shows,
by August 31, 1999, the value of the investment would have grown to
$70,488 - a 604.88% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $48,479 - a 384.79% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
Amgen, Inc. 7.8
Medimmune, Inc. 7.1
Chiron Corp. 5.7
Biogen, Inc. 5.3
Immunex Corp. 5.1
IDEC Pharmaceuticals Corp. 5.0
Schering-Plough Corp. 4.8
Merck & Co., Inc. 4.8
Genzyme Corp. (General 4.7
Division)
Gilead Sciences, Inc. 3.8
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Drugs & Pharmaceuticals 89.2%
Computer Services
& Software 2.6%
Electronic Instruments 1.3%
Medical Facilities
Management 0.1%
Medical Equipment
& Supplies 0.1%
All Others 6.7%*
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
Row: 1, Col: 1, Value: 6.7
Row: 1, Col: 2, Value: 0.1
Row: 1, Col: 3, Value: 0.1
Row: 1, Col: 4, Value: 1.3
Row: 1, Col: 5, Value: 2.6
Row: 1, Col: 6, Value: 89.2
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S 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 six- and 12-month periods that ended August 31, 1999, the
fund posted a total return of 32.19% and 102.37%, respectively. During
the same periods, the Goldman Sachs Health Care Index - an index of 93
stocks designed to measure the performance of companies in the health
care sector - returned -0.56% and 27.04%, respectively. The fund also
compares its performance to the Standard & Poor's 500 Index, which
returned 7.32% and 39.82% during the same periods.
Q. WHAT WERE THE PRIMARY FACTORS CONTRIBUTING TO THE FUND'S STRONG
PERFORMANCE?
A. Biotechnology companies have begun to reap the rewards of their
drug research and development. Five years ago, investors bought
biotechnology stocks on the hopes and expectations of breakthrough
drugs; now, many of these companies are rolling out new drugs, or they
are much closer to releasing new products to the market. Beyond the
overall strength of the sector, the fund benefited from its focus on
companies with strong business fundamentals, including promising new
product launches, strong existing product pipelines and accelerating
earnings outlooks.
Q. GENOMICS IS CONSIDERED CENTRAL TO THE SUCCESS OF BIOTECHNOLOGY
COMPANIES. CAN YOU TELL US MORE ABOUT THIS NEW FIELD OF RESEARCH?
A. Essentially, genomics is the decoding of the human genome, or
genetic code, so that researchers can pinpoint the genetic differences
of specific diseases and develop targeted treatments. While it's still
too early to tell how great an impact genomics will have on the
industry, biotechnology and pharmaceutical companies do not want to be
caught behind in this new process of drug development. Genomics can be
crucial to a company's success because it has the potential to help
produce new drugs that can be very effective and profitable. Also, by
targeting specific diseases and treatments more quickly, it may reduce
the time spent in development, which saves money.
Q. IT SEEMS TRADITIONAL PHARMACEUTICAL COMPANIES AND BIOTECHNOLOGY
COMPANIES ARE BECOMING MORE AND MORE ALIKE. DOES THIS TREND HAVE ANY
EFFECT ON THE FUND'S STRATEGY?
A. After launching multiple product lines, mature biotechnology
companies, such as Amgen, are beginning to look more like large
pharmaceutical companies. At the same time, many large pharmaceutical
companies have made significant investments in biotechnology. While
the distinction between certain biotechnology and pharmaceutical
companies is blurring, I've recently reduced the fund's exposure to
traditional pharmaceutical stocks, but not because they look more like
biotechnology stocks. On the contrary, I see more growth potential in
certain biotechnology companies.
Q. WHICH STOCKS TURNED IN STRONG PERFORMANCE FOR THE FUND?
A. Medimmune was one of the fund's top performers after its shares
rallied in response to strong sales of its blockbuster drug, Synagis,
which is used in the prevention of respiratory disease. Immunex moved
into the fund's top-10 holdings during the period, and provided strong
performance due to the promising outlook for its lead drug, Enbrel, a
treatment for rheumatoid arthritis. IDEC Pharmaceuticals, a leader in
the development of targeted immunotherapies for cancer, also provided
a boost to the fund's total return. It has a new drug called Rituxan,
which exhibited robust sales results.
Q. WHICH HOLDINGS WERE DISAPPOINTMENTS DURING THE PERIOD?
A. Sepracor, Merck and Eli Lilly hurt fund performance. In general,
each of these companies have solid business fundamentals. However,
shares of Sepracor were hurt after the company's new product launch of
Xopenex, an asthma drug, was a disappointment. Merck and Eli Lilly
declined along with most of the pharmaceutical sector during the
period, as investors became increasingly concerned about pending
health care legislation and the potential loss of patent protection.
Q. WHAT'S YOUR OUTLOOK, RAJIV?
A. I'm optimistic about the short- and long-term growth prospects for
biotechnology stocks. The sector is generally characterized by strong
new product cycles, the benefits of consolidation and positive
earnings and revenue growth estimates. In addition, health care
legislation is not as much of a factor for biotechnology firms as for
pharmaceutical companies.
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 3.
(checkmark)FUND FACTS
START DATE: December 16, 1985
FUND NUMBER: 042
TRADING SYMBOL: FBIOX
SIZE: as of August 31, 1999, more than
$1.1 billion
MANAGER: Rajiv Kaul, since 1998; equity
research associate, health care industry,
1996-1998; joined Fidelity in 1996
BIOTECHNOLOGY PORTFOLIO
INVESTMENTS AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 93.3%
SHARES VALUE (NOTE 1)
COMPUTER SERVICES & SOFTWARE
- - 2.6%
Affymetrix, Inc. (a) 356,350 $ 30,512,469
DRUGS & PHARMACEUTICALS - 89.2%
Alkermes, Inc. (a) 323,200 11,998,800
Allergan, Inc. 164,900 16,469,388
Alliance Pharmaceutical Corp. 737,500 2,304,688
(a)
Alpharma, Inc. Class A 90,000 3,048,750
ALZA Corp. Class A. (a) 475,600 23,958,350
Amgen, Inc. (a) 1,086,700 90,399,850
Anesta Corp. (a) 125,000 1,437,500
Aviron (a) 317,600 8,912,650
AXYS Pharmaceuticals, Inc. (a) 335,600 1,405,325
Biochem Pharma, Inc. (a) 971,300 25,120,389
BioCryst Pharmaceuticals, 120,000 3,300,000
Inc. (a)
Biogen, Inc. (a) 800,200 61,415,350
BioMarin Pharmaceutical, Inc. 90,600 1,404,300
(a)
Cell Genesys, Inc. (a) 100,000 887,500
Cellegy Pharmaceuticals, Inc. 353,600 2,850,900
(a)
Centocor, Inc. (a) 651,900 39,032,513
Cephalon, Inc. (a) 594,400 11,256,450
Chiron Corp. (a) 2,055,200 66,023,300
COR Therapeutics, Inc. (a) 375,000 8,179,688
CV Therapeutics, Inc. (a)(c) 733,400 11,642,725
Elan Corp. PLC sponsored ADR 125,000 4,007,813
(a)
Enzo Biochem, Inc. (a) 160,000 3,690,000
Forest Laboratories, Inc. (a) 362,600 17,586,100
GelTex Pharmaceuticals, Inc. 195,000 2,632,500
(a)
Genentech, Inc. 167,300 27,479,025
Genzyme Corp. (General 976,100 55,088,644
Division)
Gilead Sciences, Inc. (a) 565,645 44,084,957
Guilford Pharmaceuticals, 35,000 472,500
Inc. (a)
Human Genome Sciences, Inc. 277,500 18,887,344
(a)
ICOS Corp. (a) 615,000 19,564,688
IDEC Pharmaceuticals Corp. (a) 454,240 57,716,870
Ilex Oncology, Inc. (a) 135,000 2,362,500
Imclone Systems, Inc. (a) 300,000 8,700,000
Immunex Corp. (a) 881,600 59,342,700
Inhale Therapeutic Systems, 181,000 5,961,688
Inc. (a)
LeukoSite, Inc. (a) 305,000 7,891,875
Ligand Pharmaceuticals, Inc. 335,000 2,261,250
Class B (a)
Lilly (Eli) & Co. 60,000 4,477,500
Liposome, Inc. (a) 200,000 3,943,750
Medco Research, Inc. (a) 61,920 1,416,420
Medimmune, Inc. (a) 798,300 82,374,581
Merck & Co., Inc. 837,600 56,276,250
Millennium Pharmaceuticals, 532,400 31,378,325
Inc. (a)
NPS Pharmaceuticals, Inc. (a) 345,000 2,328,750
QLT PhotoTherapeutics, Inc. 128,900 10,536,549
(a)
Sangstat Medical Corp. (a) 214,500 4,424,063
Schein Pharmaceutical, Inc. 213,000 2,955,375
(a)
Schering-Plough Corp. 1,075,600 56,536,225
Sepracor, Inc. (a) 448,800 33,603,900
Serologicals Corp. (a) 135,000 860,625
SHARES VALUE (NOTE 1)
Transkaryotic Therapies, Inc. 30,000 $ 1,181,250
(a)
U.S. Bioscience, Inc. (a) 319,600 3,695,375
Vertex Pharmaceuticals, Inc. 285,000 7,908,750
(a)
ViroPharma, Inc. (a) 218,100 3,789,488
Watson Pharmaceuticals, Inc. 80,000 2,870,000
(a)
XOMA Ltd. (a) 120,000 547,500
1,039,883,546
ELECTRONIC INSTRUMENTS - 1.3%
PE Corp. (Biosystems Group) 224,540 15,451,159
MEDICAL EQUIPMENT & SUPPLIES
- - 0.1%
Allscripts, Inc. 1,300 16,819
Cygnus, Inc. (a) 64,800 757,350
774,169
MEDICAL FACILITIES MANAGEMENT
- - 0.1%
Cryolife, Inc. (a) 110,000 1,560,625
TOTAL COMMON STOCKS 1,088,181,968
(Cost $703,685,318)
CASH EQUIVALENTS - 8.2%
Central Cash Collateral Fund, 26,280,800 26,280,800
5.26% (b)
Taxable Central Cash Fund, 68,967,353 68,967,353
5.20% (b)
TOTAL CASH EQUIVALENTS 95,248,153
(Cost $95,248,153)
TOTAL INVESTMENT PORTFOLIO - 1,183,430,121
101.5% (Cost $798,933,471)
NET OTHER ASSETS - (1.5%) (17,403,753)
NET ASSETS - 100% $ 1,166,026,368
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
(c) Affiliated company
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $483,399,071 and $348,157,007, 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 $3,063 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $25,556,806. The fund
received
cash collateral of $26,280,800 which was invested in the Central Cash
Collateral Fund.
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
CV Therapeutics, Inc. $ 1,112,287 $ 2,193,750 $ - $ 11,642,725
Cellegy Pharmaceuticals, Inc. - 608,231 - -
TOTALS $ 1,112,287 $ 2,801,981 $ - $ 11,642,725
</TABLE>
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $801,027,948. Net unrealized appreciation
aggregated $382,402,173, of which $403,662,410 related to appreciated
investment securities and $21,260,237 related to depreciated
investment securities.
BIOTECHNOLOGY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 1,183,430,121
value (cost $798,933,471) -
See accompanying schedule
Receivable for investments 6,699,597
sold
Receivable for fund shares 12,781,739
sold
Dividends receivable 79,058
Interest receivable 275,033
Redemption fees receivable 12,655
Other receivables 41,255
TOTAL ASSETS 1,203,319,458
LIABILITIES
Payable for investments $ 6,505,317
purchased
Payable for fund shares 3,518,545
redeemed
Accrued management fee 503,481
Other payables and accrued 484,947
expenses
Collateral on securities 26,280,800
loaned, at value
TOTAL LIABILITIES 37,293,090
NET ASSETS $ 1,166,026,368
Net Assets consist of:
Paid in capital $ 736,720,460
Accumulated net investment (2,708,813)
loss
Accumulated undistributed net 47,517,178
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 384,497,543
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 21,390,167 $ 1,166,026,368
shares outstanding
NET ASSET VALUE and $54.51
redemption price per share
($1,166,026,368 (divided by)
21,390,167 shares)
Maximum offering price per $56.20
share (100/97.00 of $54.51)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 693,795
Dividends
Interest 1,390,509
Security lending 109,092
TOTAL INCOME 2,193,396
EXPENSES
Management fee $ 2,410,374
Transfer agent fees 2,158,288
Accounting and security 284,663
lending fees
Non-interested trustees' 679
compensation
Custodian fees and expenses 20,590
Registration fees 47,902
Audit 13,224
Legal 572
Total expenses before 4,936,292
reductions
Expense reductions (34,083) 4,902,209
NET INVESTMENT INCOME (LOSS) (2,708,813)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 48,534,932
(including realized loss of
$1,532,357 on sales of
investments in affiliated
issuers)
Foreign currency transactions 29,528 48,564,460
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 199,057,428
Assets and liabilities in 248 199,057,676
foreign currencies
NET GAIN (LOSS) 247,622,136
NET INCREASE (DECREASE) IN $ 244,913,323
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 1,648,580
charges paid to FDC
Sales charges - Retained by $ 1,646,497
FDC
Deferred sales charges $ 7,587
withheld by FDC
Exchange fees withheld by FSC $ 12,675
Expense reductions Directed $ 31,299
brokerage arrangements
Custodian credits 1,815
Transfer agent credits 969
$ 34,083
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ (2,708,813) $ (4,327,543)
income (loss)
Net realized gain (loss) 48,564,460 2,585,385
Change in net unrealized 199,057,676 152,855,134
appreciation (depreciation)
NET INCREASE (DECREASE) IN 244,913,323 151,112,976
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (2,262,626) (33,971,527)
from net realized gains
Share transactions Net 399,730,582 320,529,357
proceeds from sales of shares
Reinvestment of distributions 2,159,395 33,062,818
Cost of shares redeemed (220,487,785) (309,253,094)
NET INCREASE (DECREASE) IN 181,402,192 44,339,081
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 443,956 507,092
TOTAL INCREASE (DECREASE) 424,496,845 161,987,622
IN NET ASSETS
NET ASSETS
Beginning of period 741,529,523 579,541,901
End of period (including $ 1,166,026,368 $ 741,529,523
accumulated net investment
loss of $2,708,813 and $0,
respectively)
OTHER INFORMATION
Shares
Sold 8,440,275 9,105,791
Issued in reinvestment of 49,802 970,436
distributions
Redeemed (5,033,864) (8,928,498)
Net increase (decrease) 3,456,213 1,147,729
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 1997 1996 G
Net asset value, beginning of $ 41.35 $ 34.52 $ 34.24 $ 36.60 $ 25.30
period
Income from Investment
Operations
Net investment income (loss) D (.15) (.26) (.27) (.20) .11
Net realized and unrealized 13.41 9.15 5.20 1.89 11.21
gain (loss)
Total from investment 13.26 8.89 4.93 1.69 11.32
operations
Less Distributions
From net investment income - - - (.03) (.07)
From net realized gain (.12) (2.09) (4.71) (4.06) -
Total distributions (.12) (2.09) (4.71) (4.09) (.07)
Redemption fees added to paid .02 .03 .06 .04 .05
in capital
Net asset value, end of period $ 54.51 $ 41.35 $ 34.52 $ 34.24 $ 36.60
TOTAL RETURN B, C 32.19% 27.13% 16.11% 5.85% 44.97%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,166,026 $ 741,530 $ 579,542 $ 674,902 $ 1,096,864
(000 omitted)
Ratio of expenses to average 1.17% A 1.34% 1.49% 1.57% 1.44% E
net assets
Ratio of expenses to average 1.16% A, F 1.30% F 1.47% F 1.56% F 1.43% F
net assets after expense
reductions
Ratio of net investment (.64)% A (.75)% (.81)% (.59)% .35%
income (loss) to average net
assets
Portfolio turnover rate 88% A 86% 162% 41% 67%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28,
SELECTED PER-SHARE DATA 1995
Net asset value, beginning of $ 27.61
period
Income from Investment
Operations
Net investment income (loss) D (.06)
Net realized and unrealized (2.26)
gain (loss)
Total from investment (2.32)
operations
Less Distributions
From net investment income -
From net realized gain -
Total distributions -
Redemption fees added to paid .01
in capital
Net asset value, end of period $ 25.30
TOTAL RETURN B, C (8.37)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 448,197
(000 omitted)
Ratio of expenses to average 1.59%
net assets
Ratio of expenses to average 1.59%
net assets after expense
reductions
Ratio of net investment (.27)%
income (loss) to average net
assets
Portfolio turnover rate 77%
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN. C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD. E FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE BEEN HIGHER. F FMR OR THE
FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. G 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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT HEALTH CARE -2.02% 24.77% 221.87% 660.03%
SELECT HEALTH CARE (LOAD ADJ.) -5.03% 20.96% 212.14% 637.16%
S&P 500 7.32% 39.82% 206.52% 384.79%
GS Health Care -0.56% 27.04% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years, or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a 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 AUGUST 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT HEALTH CARE 24.77% 26.34% 22.49%
SELECT HEALTH CARE (LOAD ADJ.) 20.96% 25.57% 22.11%
S&P 500 39.82% 25.11% 17.10%
GS Health Care 27.04% 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
1989/08/31 9700.00 10000.00
1989/09/30 9770.01 9959.00
1989/10/31 9697.88 9727.95
1989/11/30 10115.84 9926.40
1989/12/31 10218.58 10164.64
1990/01/31 9632.27 9482.59
1990/02/28 9531.33 9604.91
1990/03/31 9911.47 9859.44
1990/04/30 9911.47 9612.96
1990/05/31 11275.24 10550.22
1990/06/30 11659.41 10478.48
1990/07/31 11820.38 10444.95
1990/08/31 11290.51 9500.72
1990/09/30 10950.68 9038.04
1990/10/31 11201.08 8999.18
1990/11/30 12392.73 9580.52
1990/12/31 12703.37 9847.82
1991/01/31 13957.41 10277.18
1991/02/28 15681.40 11012.00
1991/03/31 17079.30 11278.49
1991/04/30 16781.98 11305.56
1991/05/31 17693.13 11793.96
1991/06/30 16895.30 11253.80
1991/07/31 18390.28 11778.23
1991/08/31 19309.29 12057.37
1991/09/30 19698.39 11856.01
1991/10/31 20996.26 12014.88
1991/11/30 19849.42 11530.68
1991/12/31 23335.15 12849.79
1992/01/31 22569.53 12610.79
1992/02/29 21584.00 12774.73
1992/03/31 20267.24 12525.62
1992/04/30 19118.81 12893.87
1992/05/31 19512.48 12957.05
1992/06/30 18760.39 12763.99
1992/07/31 19888.94 13286.04
1992/08/31 19352.51 13013.68
1992/09/30 18012.90 13167.24
1992/10/31 18566.92 13213.32
1992/11/30 19584.09 13663.90
1992/12/31 19266.85 13831.96
1993/01/31 18232.09 13948.15
1993/02/28 16286.51 14137.85
1993/03/31 16735.73 14436.15
1993/04/30 16729.53 14086.80
1993/05/31 17398.71 14464.33
1993/06/30 17336.75 14506.27
1993/07/31 16772.91 14448.25
1993/08/31 17370.83 14995.84
1993/09/30 17912.99 14880.37
1993/10/31 19245.16 15188.39
1993/11/30 19180.10 15044.10
1993/12/31 19732.46 15226.14
1994/01/31 20123.26 15743.82
1994/02/28 19636.31 15317.17
1994/03/31 18355.34 14649.34
1994/04/30 19091.71 14836.85
1994/05/31 20169.97 15080.17
1994/06/30 19849.91 14710.71
1994/07/31 20247.66 15193.22
1994/08/31 22904.46 15816.14
1994/09/30 23069.15 15428.65
1994/10/31 23389.21 15775.79
1994/11/30 23895.72 15201.24
1994/12/31 23966.77 15426.67
1995/01/31 25236.20 15826.69
1995/02/28 25771.05 16443.45
1995/03/31 26471.77 16928.70
1995/04/30 26840.75 17427.25
1995/05/31 27099.36 18123.82
1995/06/30 28470.66 18544.83
1995/07/31 30100.57 19159.78
1995/08/31 30355.77 19207.87
1995/09/30 32057.14 20018.44
1995/10/31 32135.40 19946.98
1995/11/30 33489.69 20822.65
1995/12/31 34959.10 21223.69
1996/01/31 36209.56 21946.15
1996/02/29 35998.17 22149.59
1996/03/31 36123.57 22362.89
1996/04/30 35972.34 22692.52
1996/05/31 36624.90 23277.76
1996/06/30 36650.86 23366.44
1996/07/31 35219.67 22334.12
1996/08/31 36413.56 22805.14
1996/09/30 38919.98 24088.62
1996/10/31 38156.19 24752.98
1996/11/30 40206.56 26624.06
1996/12/31 40363.51 26096.63
1997/01/31 42800.55 27727.15
1997/02/28 43346.35 27944.53
1997/03/31 40968.54 26796.29
1997/04/30 43013.15 28396.03
1997/05/31 46289.09 30124.78
1997/06/30 49732.68 31474.37
1997/07/31 51590.40 33978.79
1997/08/31 47997.29 32075.30
1997/09/30 50974.18 33832.06
1997/10/31 50956.06 32702.07
1997/11/30 52383.34 34215.85
1997/12/31 52935.34 34803.33
1998/01/31 56744.28 35188.26
1998/02/28 59155.39 37726.04
1998/03/31 61259.92 39657.99
1998/04/30 62420.91 40056.94
1998/05/31 62046.75 39368.37
1998/06/30 65734.92 40967.51
1998/07/31 65932.69 40531.21
1998/08/31 59085.53 34671.20
1998/09/30 65938.04 36892.24
1998/10/31 67894.37 39893.06
1998/11/30 70791.45 42310.97
1998/12/31 74788.96 44748.93
1999/01/31 75631.07 46620.33
1999/02/28 75242.82 45171.37
1999/03/31 76276.32 46978.68
1999/04/30 71794.79 48798.16
1999/05/31 70602.11 47646.04
1999/06/30 73856.90 50290.39
1999/07/31 71906.25 48720.33
1999/08/31 73716.00 48479.16
IMATRL PRASUN SHR__CHT 19990831 19990909 154435 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Health Care Portfolio on August 31, 1989,
and the current 3.00% sales charge was paid. As the chart shows, by
August 31, 1999, the value of the investment would have grown to
$73,716 - a 637.16% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $48,479 - a 384.79% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
Lilly (Eli) & Co. 8.4
Bristol-Myers Squibb Co. 7.8
Johnson & Johnson 6.3
Merck & Co., Inc. 5.9
Schering-Plough Corp. 5.8
Warner-Lambert Co. 5.7
Amgen, Inc. 4.8
Abbott Laboratories 4.7
Pfizer, Inc. 3.0
Medtronic, Inc. 3.0
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Drugs & Pharmaceuticals 55.4%
Medical Equipment
& Supplies 28.2%
Medical Facilities
Management 5.5%
Computer Services
& Software 1.6%
Drug Stores 1.1%
All Others 8.2%*
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
Row: 1, Col: 1, Value: 8.199999999999999
Row: 1, Col: 2, Value: 1.1
Row: 1, Col: 3, Value: 1.6
Row: 1, Col: 4, Value: 5.5
Row: 1, Col: 5, Value: 28.2
Row: 1, Col: 6, Value: 55.4
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
HEALTH CARE PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
(photograph of Beso Sikharulidze) (photograph of Ramin Arani)
NOTE TO SHAREHOLDERS: On August 2, 1999, Ramin Arani (right) became
Portfolio Manager of Fidelity Select Health Care Portfolio. The
following is an interview with Beso Sikharulidze, who managed the fund
during most of the period covered by this report, with comments from
Ramin Arani on his investment strategy and outlook.
Q. HOW DID THE FUND PERFORM, BESO?
B.S. The past six-month period was a difficult time for health care
stocks. For the six months that ended August 31, 1999, the fund posted
a loss of 2.02%. This performance lagged 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 -0.56%. During
the same period, the Standard & Poor's 500 Index returned 7.32%. For
the 12-month period that ended August 31, 1999, the fund returned
24.77%, while the Goldman Sachs Health Care Index and S&P 500 index
returned 27.04% and 39.82%, respectively.
Q. WHAT FACTORS CAUSED THE FUND TO UNDERPERFORM THE GOLDMAN SACHS
INDEX?
B.S. The fund's performance relative to the Goldman Sachs index was
hurt primarily because of an overweighted position in pharmaceutical
companies and an underweighted position in medical equipment
manufacturers. In hindsight, I underestimated the extent of investor
uncertainty with respect to large-cap drug companies, as they seemed
to ignore the strong pipelines of profitable drugs and favorable
long-term growth prospects.
Q. WHY DID INVESTORS SELL OFF HEALTH CARE STOCKS DURING THE PAST SIX
MONTHS?
B.S. Despite positive business fundamentals in the form of strong
corporate earnings driven by innovative new drugs and an aging
population with increasing demand for health care products, the market
favored cyclical, value and smaller-cap stocks during much of 1999.
Investors' concerns about the loss of patent protection and increased
competition for many popular drugs at the large pharmaceutical
companies were also major factors for the sell-off.
Q. WHICH STOCKS PERFORMED WELL FOR THE FUND?
B.S. Amgen, the largest biotechnology company in the U.S., performed
well on continued strong sales of its two main drugs, Epogen, the
company's blockbuster anemia drug, and Neupogen, its new cancer drug.
Shares of VISX, the leading manufacturer of lasers used in corrective
eye surgery, performed well on strong consumer demand. The fund's
holdings in Johnson & Johnson also contributed to total return as the
company's well-diversified line of medical products and surgical
supplies held up nicely during the market sell-off of health care
stocks in the second quarter.
Q. WHICH STOCKS TURNED OUT TO BE DISAPPOINTMENTS?
B.S. The large-cap drug companies, such as Eli Lilly, Merck and
Schering-Plough, hurt fund performance. Shares of these companies
faltered in the second quarter due to investor nervousness over high
valuations, a weakening product pipeline outlook and the possibility
that Medicare reform could lead to government-sanctioned price
controls. Another detractor was McKesson HBOC. While the fund's
position in this stock was not significant, it detracted from total
return before I could sell the remaining shares following the
discovery of accounting irregularities at its recently acquired HBO &
Co. division.
Q. TURNING TO YOU, RAMIN, DO YOU ANTICIPATE ANY MAJOR CHANGES TO THE
FUND'S INVESTMENT STRATEGY?
R.A. Not really. Similar to Beso's approach, I believe new product
innovation is the lifeblood of the industry and drives corporate
returns on investment because it leads directly to earnings. As a
result, my team of analysts and I will continue to closely examine
each company's product pipeline and business fundamentals. Of course,
we'll keep a close eye on external factors, such as Medicare reform
and patent protection, which can affect both the industry and
individual holdings.
Q. WHAT'S YOUR OUTLOOK?
R.A. While the short-term outlook for the sector could be choppy given
an uncertain U.S. interest-rate environment and the global economic
recovery, I'm optimistic that health care stocks won't remain in the
doldrums for very long. In light of favorable long-term prospects for
market growth, pharmaceutical and biotechnology companies in
particular should benefit from reasonable valuations, steady earnings
growth and promising multi-product pipelines.
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 3.
(checkmark)FUND FACTS
START DATE: July 14, 1981
FUND NUMBER: 063
TRADING SYMBOL: FSPHX
SIZE: as of August 31, 1999, more than $2.8
billion
MANAGER: Ramin Arani, since August 1999;
manager, Fidelity Select Retailing Portfolio
1997-1999; equity research associate,
1992-1996; joined Fidelity in 1992
HEALTH CARE PORTFOLIO
INVESTMENTS AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 94.7%
SHARES VALUE (NOTE 1)
AGRICULTURE - 0.3%
Pioneer Hi-Bred 224,100 $ 8,767,913
International, Inc.
COMPUTER SERVICES & SOFTWARE
- - 1.6%
Affymetrix, Inc. (a) 95,600 8,185,750
Healtheon Corp. (a) 63,700 2,153,856
IMS Health, Inc. 928,300 25,644,288
Shared Medical Systems Corp. 183,100 10,287,931
46,271,825
DRUG STORES - 1.1%
CVS Corp. 717,154 29,896,357
DRUGS & PHARMACEUTICALS - 55.4%
Allergan, Inc. 248,280 24,796,965
American Home Products Corp. 1,330,200 55,203,300
Amgen, Inc. (a) 1,648,100 137,101,319
Banyu Pharmaceutical Co. Ltd. 137,000 2,626,318
Biogen, Inc. (a) 540,600 41,491,050
Bristol-Myers Squibb Co. 3,138,800 220,893,050
Centocor, Inc. (a) 85,000 5,089,375
Cephalon, Inc. (a) 163,700 3,100,069
Chiron Corp. (a) 643,700 20,678,863
Forest Laboratories, Inc. (a) 554,400 26,888,400
Genentech, Inc. 59,500 9,772,875
Genzyme Corp. 250 1,625
Genzyme Corp. (General 438,700 24,759,131
Division)
Gilead Sciences, Inc. (a) 164,600 12,828,513
IDEC Pharmaceuticals Corp. (a) 11,300 1,435,806
Immunex Corp. (a) 464,400 31,259,925
Lilly (Eli) & Co. 3,221,152 240,378,462
Medicis Pharmaceutical Corp. 358,700 9,774,575
Class A (a)
Medimmune, Inc. (a) 194,100 20,028,694
Merck & Co., Inc. 2,497,900 167,827,656
Pfizer, Inc. 2,286,800 86,326,700
Pharmacia & Upjohn, Inc. 597,700 31,229,825
Quintiles Transnational Corp. 990,100 35,457,956
(a)
Schering-Plough Corp. 3,134,200 164,741,388
Sepracor, Inc. (a) 118,800 8,895,150
Shire Pharmaceuticals Group 97,900 2,447,500
PLC ADR (a)
Takeda Chemical Industries 212,000 10,644,028
Ltd.
Warner-Lambert Co. 2,471,600 163,743,500
Watson Pharmaceuticals, Inc. 217,800 7,813,575
(a)
Yamanouchi Pharmaceutical Co. 254,000 11,315,168
Ltd.
1,578,550,761
ELECTRONIC INSTRUMENTS - 0.7%
Beckman Coulter, Inc. 63,700 3,017,788
SHARES VALUE (NOTE 1)
PE Corp. (Biosystems Group) 104,100 $ 7,163,381
Waters Corp. (a) 140,600 9,270,813
19,451,982
INDUSTRIAL MACHINERY &
EQUIPMENT - 0.4%
Mettler-Toledo International, 465,800 12,401,925
Inc. (a)
INSURANCE - 1.0%
CIGNA Corp. 325,300 29,216,006
MEDICAL EQUIPMENT & SUPPLIES
- - 28.2%
Abbott Laboratories 3,056,000 132,554,000
Allscripts, Inc. 4,200 54,338
AmeriSource Health Corp. 667,300 17,224,681
Class A (a)
Bard (C.R.), Inc. 400 18,650
Baxter International, Inc. 1,025,900 68,799,419
Becton, Dickinson & Co. 914,400 25,717,500
Biomet, Inc. 735,600 26,297,700
Boston Scientific Corp. (a) 1,792,536 60,834,191
Cardinal Health, Inc. 1,120,505 71,432,194
Guidant Corp. 1,139,220 66,857,974
Johnson & Johnson 1,765,200 180,491,700
Mallinckrodt, Inc. 2,900 92,981
Medtronic, Inc. 1,102,386 86,261,705
Resmed, Inc. (a) 139,500 3,871,125
St. Jude Medical, Inc. (a) 302,000 10,947,500
Stryker Corp. 159,500 9,191,188
Sybron International, Inc. (a) 215,800 5,556,850
VISX, Inc. (a) 318,600 28,833,300
Xomed Surgical Products, Inc. 144,500 8,498,406
(a)
803,535,402
MEDICAL FACILITIES MANAGEMENT
- - 5.5%
Columbia/HCA Healthcare Corp. 2,415,400 59,479,225
Express Scripts, Inc. Class A 100,000 6,737,500
(a)
Health Management Associates, 727,700 5,821,600
Inc. Class A (a)
HEALTHSOUTH Corp. (a) 510,100 4,176,444
Lincare Holdings, Inc. 238,300 6,285,163
Trigon Healthcare, Inc. (a) 244,800 8,889,300
United HealthCare Corp. 761,800 46,326,963
Wellpoint Health Networks, 245,100 17,861,663
Inc. (a)
155,577,858
SERVICES - 0.5%
Gartner Group, Inc. Class B 137,664 2,822,112
(a)
Medpartners, Inc. (a) 1,533,300 10,733,100
13,555,212
TOTAL COMMON STOCKS 2,697,225,241
(Cost $1,972,555,574)
CASH EQUIVALENTS - 5.9%
SHARES VALUE (NOTE 1)
Central Cash Collateral Fund, 1,798,300 $ 1,798,300
5.26% (b)
Taxable Central Cash Fund, 166,539,508 166,539,508
5.20% (b)
TOTAL CASH EQUIVALENTS 168,337,808
(Cost $168,337,808)
TOTAL INVESTMENT PORTFOLIO - 2,865,563,049
100.6% (Cost $2,140,893,382)
NET OTHER ASSETS - (0.6%) (15,833,860)
NET ASSETS - 100% $ 2,849,729,189
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $1,205,759,030 and $1,438,049,395, 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 $90,995 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $1,767,794. The fund
received
cash collateral of $1,798,300 which was invested in the Central Cash
Collateral Fund.
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $2,143,981,279. Net unrealized appreciation
aggregated $721,581,770, of which $766,638,249 related to appreciated
investment securities and $45,056,479 related to depreciated
investment securities.
HEALTH CARE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 2,865,563,049
value (cost $2,140,893,382)
- - See accompanying schedule
Receivable for investments 2,141,833
sold
Receivable for fund shares 3,952,622
sold
Dividends receivable 2,830,518
Interest receivable 753,633
Redemption fees receivable 4,784
Other receivables 195,340
TOTAL ASSETS 2,875,441,779
LIABILITIES
Payable for investments $ 13,019,990
purchased
Payable for fund shares 8,404,206
redeemed
Accrued management fee 1,356,697
Other payables and accrued 1,133,397
expenses
Collateral on securities 1,798,300
loaned, at value
TOTAL LIABILITIES 25,712,590
NET ASSETS $ 2,849,729,189
Net Assets consist of:
Paid in capital $ 1,985,456,593
Undistributed net investment 1,978,856
income
Accumulated undistributed net 137,623,158
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 724,670,582
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 21,542,664 $ 2,849,729,189
shares outstanding
NET ASSET VALUE and $132.28
redemption price per share
($2,849,729,189 (divided by)
21,542,664 shares)
Maximum offering price per $136.37
share (100/97.00 of $132.28)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 13,578,244
Dividends
Interest 4,030,686
Security lending 115,846
TOTAL INCOME 17,724,776
EXPENSES
Management fee $ 8,702,356
Transfer agent fees 6,375,159
Accounting and security 861,719
lending fees
Non-interested trustees' 4,510
compensation
Custodian fees and expenses 58,794
Registration fees 95,466
Audit 46,239
Legal 2,473
Total expenses before 16,146,716
reductions
Expense reductions (400,808) 15,745,908
NET INVESTMENT INCOME 1,978,868
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 137,901,176
Foreign currency transactions (84,368) 137,816,808
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (206,568,217)
Assets and liabilities in (2,513) (206,570,730)
foreign currencies
NET GAIN (LOSS) (68,753,922)
NET INCREASE (DECREASE) IN $ (66,775,054)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 4,564,759
charges paid to FDC
Sales charges - Retained by $ 4,541,754
FDC
Deferred sales charges $ 28,106
withheld by FDC
Exchange fees withheld by FSC $ 74,175
Expense reductions Directed $ 394,843
brokerage arrangements
Custodian credits 1,571
Transfer agent credits 4,394
$ 400,808
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ 1,978,868 $ 3,477,655
income
Net realized gain (loss) 137,816,808 141,016,806
Change in net unrealized (206,570,730) 456,695,074
appreciation (depreciation)
NET INCREASE (DECREASE) IN (66,775,054) 601,189,535
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (687,260) (3,782,810)
From net investment income
From net realized gain (59,789,028) (121,803,514)
TOTAL DISTRIBUTIONS (60,476,288) (125,586,324)
Share transactions Net 427,142,594 1,715,677,379
proceeds from sales of shares
Reinvestment of distributions 58,065,061 121,790,160
Cost of shares redeemed (654,664,106) (1,393,295,000)
NET INCREASE (DECREASE) IN (169,456,451) 444,172,539
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 612,426 2,029,623
TOTAL INCREASE (DECREASE) (296,095,367) 921,805,373
IN NET ASSETS
NET ASSETS
Beginning of period 3,145,824,556 2,224,019,183
End of period (including $ 2,849,729,189 $ 3,145,824,556
undistributed net investment
income of $1,978,856 and
$1,027,364, respectively)
OTHER INFORMATION
Shares
Sold 3,185,441 13,702,070
Issued in reinvestment of 422,477 985,706
distributions
Redeemed (4,926,649) (11,362,310)
Net increase (decrease) (1,318,731) 3,325,466
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 1997 1996 F
Net asset value, beginning of $ 137.60 $ 113.84 $ 102.45 $ 100.47 $ 76.13
period
Income from Investment
Operations
Net investment income D .09 .17 .33 .52 .95
Net realized and unrealized (2.80) 29.85 31.94 18.01 28.85
gain (loss)
Total from investment (2.71) 30.02 32.27 18.53 29.80
operations
Less Distributions
From net investment income (.03) (.19) (.25) (.65) (.59)
From net realized gain (2.61) (6.17) (20.73) (15.95) (4.92)
Total distributions (2.64) (6.36) (20.98) (16.60) (5.51)
Redemption fees added to paid .03 .10 .10 .05 .05
in capital
Net asset value, end of period $ 132.28 $ 137.60 $ 113.84 $ 102.45 $ 100.47
TOTAL RETURN B, C (2.02)% 27.20% 36.47% 20.41% 39.68%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,849,729 $ 3,145,825 $ 2,224,019 $ 1,372,554 $ 1,525,910
(000 omitted)
Ratio of expenses to average 1.06% A 1.07% 1.20% 1.33% 1.31%
net assets
Ratio of expenses to average 1.04% A, E 1.05% E 1.18% E 1.32% E 1.30% E
net assets after expense
reductions
Ratio of net investment .13% A .14% .31% .52% 1.06%
income to average net assets
Portfolio turnover rate 84% A 66% 79% 59% 54%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28,
SELECTED PER-SHARE DATA 1995
Net asset value, beginning of $ 63.31
period
Income from Investment
Operations
Net investment income D .75
Net realized and unrealized 18.38
gain (loss)
Total from investment 19.13
operations
Less Distributions
From net investment income (.62)
From net realized gain (5.74)
Total distributions (6.36)
Redemption fees added to paid .05
in capital
Net asset value, end of period $ 76.13
TOTAL RETURN B, C 31.24%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 943,141
(000 omitted)
Ratio of expenses to average 1.39%
net assets
Ratio of expenses to average 1.36% E
net assets after expense
reductions
Ratio of net investment 1.08%
income to average net assets
Portfolio turnover rate 151%
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN. C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. F FOR THE YEAR ENDED FEBRUARY 29
</TABLE>
MEDICAL DELIVERY PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT MEDICAL DELIVERY -9.96% -13.54% 25.54% 187.17%
SELECT MEDICAL DELIVERY (LOAD -12.73% -16.20% 21.71% 178.48%
ADJ.)
S&P 500 7.32% 39.82% 206.52% 384.79%
GS Health Care -0.56% 27.04% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a 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 AUGUST 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT MEDICAL DELIVERY -13.54% 4.65% 11.13%
SELECT MEDICAL DELIVERY -16.20% 4.01% 10.78%
(LOAD ADJ.)
S&P 500 39.82% 25.11% 17.10%
GS Health Care 27.04% 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
1989/08/31 9700.00 10000.00
1989/09/30 9968.77 9959.00
1989/10/31 9634.84 9727.95
1989/11/30 10082.79 9926.40
1989/12/31 10083.38 10164.64
1990/01/31 8598.81 9482.59
1990/02/28 8815.66 9604.91
1990/03/31 9224.33 9859.44
1990/04/30 9316.07 9612.96
1990/05/31 10633.83 10550.22
1990/06/30 11142.59 10478.48
1990/07/31 11184.29 10444.95
1990/08/31 10291.88 9500.72
1990/09/30 9607.98 9038.04
1990/10/31 9491.22 8999.18
1990/11/30 10808.98 9580.52
1990/12/31 11723.12 9847.82
1991/01/31 13612.56 10277.18
1991/02/28 14454.23 11012.00
1991/03/31 16601.32 11278.49
1991/04/30 16103.19 11305.56
1991/05/31 17434.39 11793.96
1991/06/30 15965.63 11253.80
1991/07/31 17567.56 11778.23
1991/08/31 17773.40 12057.37
1991/09/30 17934.48 11856.01
1991/10/31 18328.25 12014.88
1991/11/30 17818.14 11530.68
1991/12/31 20846.65 12849.79
1992/01/31 20864.97 12610.79
1992/02/29 20058.95 12774.73
1992/03/31 18730.85 12525.62
1992/04/30 17988.94 12893.87
1992/05/31 17805.75 12957.05
1992/06/30 16868.14 12763.99
1992/07/31 17828.04 13286.04
1992/08/31 17808.04 13013.68
1992/09/30 15718.27 13167.24
1992/10/31 16498.18 13213.32
1992/11/30 18118.00 13663.90
1992/12/31 18098.01 13831.96
1993/01/31 17178.11 13948.15
1993/02/28 14458.41 14137.85
1993/03/31 14778.37 14436.15
1993/04/30 14598.39 14086.80
1993/05/31 15048.34 14464.33
1993/06/30 15198.33 14506.27
1993/07/31 15578.28 14448.25
1993/08/31 15528.29 14995.84
1993/09/30 16808.15 14880.37
1993/10/31 17598.06 15188.39
1993/11/30 17888.03 15044.10
1993/12/31 19097.90 15226.14
1994/01/31 20167.78 15743.82
1994/02/28 20277.77 15317.17
1994/03/31 19267.88 14649.34
1994/04/30 19887.81 14836.85
1994/05/31 20557.74 15080.17
1994/06/30 19287.88 14710.71
1994/07/31 20147.78 15193.22
1994/08/31 22187.56 15816.14
1994/09/30 22977.47 15428.65
1994/10/31 23727.39 15775.79
1994/11/30 22707.50 15201.24
1994/12/31 22886.93 15426.67
1995/01/31 23891.57 15826.69
1995/02/28 24257.85 16443.45
1995/03/31 25796.20 16928.70
1995/04/30 24957.82 17427.25
1995/05/31 24139.19 18123.82
1995/06/30 24527.51 18544.83
1995/07/31 27004.40 19159.78
1995/08/31 27130.35 19207.87
1995/09/30 27697.09 20018.44
1995/10/31 27224.80 19946.98
1995/11/30 29502.28 20822.65
1995/12/31 30252.60 21223.69
1996/01/31 31879.68 21946.15
1996/02/29 32541.74 22149.59
1996/03/31 32855.93 22362.89
1996/04/30 33230.04 22692.52
1996/05/31 33159.86 23277.76
1996/06/30 32376.19 23366.44
1996/07/31 28867.21 22334.12
1996/08/31 31534.03 22805.14
1996/09/30 33791.48 24088.62
1996/10/31 31241.62 24752.98
1996/11/30 33007.80 26624.06
1996/12/31 33581.82 26096.63
1997/01/31 35170.66 27727.15
1997/02/28 35958.73 27944.53
1997/03/31 33683.50 26796.29
1997/04/30 34451.42 28396.03
1997/05/31 37645.95 30124.78
1997/06/30 37907.57 31474.37
1997/07/31 40344.78 33978.79
1997/08/31 38954.06 32075.30
1997/09/30 40110.70 33832.06
1997/10/31 38788.82 32702.07
1997/11/30 39711.38 34215.85
1997/12/31 40344.65 34803.33
1998/01/31 39167.61 35188.26
1998/02/28 43860.29 37726.04
1998/03/31 45625.85 39657.99
1998/04/30 46760.55 40056.94
1998/05/31 44555.48 39368.37
1998/06/30 45139.18 40967.51
1998/07/31 41653.21 40531.21
1998/08/31 32216.79 34671.20
1998/09/30 33286.90 36892.24
1998/10/31 35556.83 39893.06
1998/11/30 36918.79 42310.97
1998/12/31 37859.19 44748.93
1999/01/31 32460.00 46620.33
1999/02/28 30935.90 45171.37
1999/03/31 29719.87 46978.68
1999/04/30 32476.21 48798.16
1999/05/31 32070.87 47646.04
1999/06/30 31243.96 50290.39
1999/07/31 29476.66 48720.33
1999/08/31 27848.00 48479.16
IMATRL PRASUN SHR__CHT 19990831 19990914 120609 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Medical Delivery Portfolio on August 31,
1989, and the current 3.00% sales charge was paid. As the chart shows,
by August 31, 1999, the value of the investment would have grown to
$27,848 - a 178.48% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $48,479 - a 384.79% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
Lincare Holdings, Inc. 9.8
CIGNA Corp. 7.8
Columbia/HCA Healthcare Corp. 7.7
United HealthCare Corp. 7.3
Health Management Associates, 6.6
Inc. Class A
Wellpoint Health Networks, Inc. 6.6
Tenet Healthcare Corp. 5.1
Apria Healthcare Group, Inc. 3.8
Universal Health Services, 3.7
Inc. Class B
HEALTHSOUTH Corp. 3.4
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Medical Facilities
Management 64.8%
Insurance 10.7%
Drugs & Pharmaceuticals 7.7%
Medical Equipment
& Supplies 6.8%
Services 2.1%
All Others 7.9%*
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
Row: 1, Col: 1, Value: 7.9
Row: 1, Col: 2, Value: 2.1
Row: 1, Col: 3, Value: 6.8
Row: 1, Col: 4, Value: 7.7
Row: 1, Col: 5, Value: 10.7
Row: 1, Col: 6, Value: 64.8
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
MEDICAL DELIVERY PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
(photograph of John Porter) (photograph of Shep Perkins)
NOTE TO SHAREHOLDERS: On August 2, 1999, Shep Perkins (right) became
Portfolio Manager of Fidelity Select Medical Delivery Portfolio. The
following is an interview with John Porter, who managed the fund for
most of the period covered by this report, with comments from Shep
Perkins on his investment style and outlook.
Q. HOW DID THE FUND PERFORM, JOHN?
J.P. For the six- and 12-month periods ending August 31, 1999, the
fund returned -9.96% and -13.54%, respectively. By comparison, the
Standard & Poor's 500 Index returned 7.32% and 39.82%, respectively,
for the same periods. The fund also compares itself to the Goldman
Sachs Health Care Index - an index of 93 stocks designed to measure
the performance of companies in the health care sector - which
returned -0.56% and 27.04%, respectively, during the same six- and
12-month periods.
Q. WHY DID THE FUND UNDERPERFORM THE GOLDMAN SACHS INDEX?
J.P. The fund invests in a much narrower range of stocks than the
Goldman Sachs index, and medical delivery stocks continued to suffer
from changes in the federal budget, which reduced Medicare
reimbursements and severely affected the revenues of hospitals,
long-term care facilities and the home health care sector. Investors
continued to gravitate to other areas of the health care sector,
including biotechnology stocks - a significant part of the Goldman
Sachs index - where growth was healthy and demand strong.
Q. WHICH STOCKS PERFORMED WELL?
J.P. Strong performers included Columbia/HCA, which recovered nicely
as business fundamentals firmed up for the company. It also
successfully spun off two small hospital groups, leaving Columbia with
a stronger mix of hospitals. Meanwhile, concerns about an ongoing
federal investigation into aspects of its business dealings waned, and
the company continued to aggressively repurchase its stock. Foundation
Health Systems also did well after selling off some of its weakest
operations. A general strengthening of business fundamentals in the
HMO sector also boosted Foundation's performance. United HealthCare
posted strong earnings and also benefited from a strengthening of
sentiment regarding the HMO sector. CIGNA's performance surged as
investors recognized the lack of Medicare membership in its HMO
operations as a strong positive.
Q. WHICH STOCKS DISAPPOINTED?
J.P. Disappointments included Health Management Associates, Lincare
Holdings and HEALTHSOUTH. Health Management's performance was hurt by
missed earnings targets, reimbursement pressure from the government
and a lack of significant acquisitions over the past year. Lincare's
business remained strong, but its stock was weak due to investor
concern about California's and the Food and Drug Administration's
examination of certain areas of Lincare's operations. HEALTHSOUTH's
stock was very volatile, even though the company hit its earnings
targets. Investors were disappointed that the quality of earnings was
not as high as they hoped.
Q. SHEP, HOW WILL YOU MANAGE THE FUND GOING FORWARD?
S.P. The health care industry has compelling growth characteristics,
driven by an aging population and new technologies. I'll search out
those companies that can take advantage of these important trends. I
believe that there are plenty of opportunities to invest in companies
that have limited Medicare exposure and good business fundamentals,
and that are attractively valued. I'll also look for companies with
strong internal growth prospects and low cost structures in industries
with high barriers to entry, such as pharmacy benefit-management
companies, which help employers manage employees' pharmaceutical
costs, as well as health insurance companies.
Q. WHAT'S YOUR OUTLOOK, SHEP?
S.P. The largest customer for many companies in the medical delivery
industry is the U.S. government. Medicare reimbursement cuts have
plagued this industry during the past two years, and will continue to
create a difficult business environment over the next 12 to 24 months,
although to a lesser degree. I think some companies have been unfairly
hurt by the whole Medicare cloud, and I believe that they offer good
opportunities for improved future performance as the market recognizes
their real value. For now, I'm cautiously optimistic.
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 3.
(checkmark)FUND FACTS
START DATE: June 30, 1986
FUND NUMBER: 505
TRADING SYMBOL: FSHCX
SIZE: as of August 31, 1999, more than
$54 million
MANAGER: Shep Perkins, since August, 1999;
research analyst, health care services, 1997-
present; joined Fidelity in 1997
MEDICAL DELIVERY PORTFOLIO
INVESTMENTS AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 93.2%
SHARES VALUE (NOTE 1)
COMPUTER SERVICES & SOFTWARE
- - 1.1%
Healtheon Corp. (a) 1,800 $ 60,863
Shared Medical Systems Corp. 9,600 539,400
600,263
DRUGS & PHARMACEUTICALS - 7.7%
Amgen, Inc. (a) 6,500 540,719
Bristol-Myers Squibb Co. 12,800 900,800
Lilly (Eli) & Co. 9,000 671,625
Merck & Co., Inc. 4,500 302,344
Pfizer, Inc. 8,300 313,325
Schering-Plough Corp. 17,100 898,819
Warner-Lambert Co. 8,900 589,625
4,217,257
INSURANCE - 10.7%
CIGNA Corp. 47,600 4,275,075
First Health Group Corp. (a) 75,000 1,617,188
5,892,263
MEDICAL EQUIPMENT & SUPPLIES
- - 6.8%
Abbott Laboratories 13,200 572,550
Becton, Dickinson & Co. 20,600 579,375
Boston Scientific Corp. (a) 16,700 566,756
Cardinal Health, Inc. 18,150 1,157,063
Guidant Corp. 9,600 563,400
Johnson & Johnson 3,000 306,750
3,745,894
MEDICAL FACILITIES MANAGEMENT
- - 64.8%
Apria Healthcare Group, Inc. 124,500 2,100,938
(a)
Beverly Enterprises, Inc. (a) 105,700 528,500
Columbia/HCA Healthcare Corp. 171,923 4,233,604
Foundation Health Systems, 35,070 447,143
Inc. Class A (a)
HCR Manor Care, Inc. (a) 39,300 768,806
Health Management Associates, 455,617 3,644,936
Inc. Class A (a)
HEALTHSOUTH Corp. (a) 229,200 1,876,575
Lifepoint Hospitals, Inc. (a) 7,695 52,903
Lincare Holdings, Inc. 203,100 5,356,758
Oxford Health Plans, Inc. (a) 35,200 545,600
Pediatrix Medical Group (a) 4,900 73,194
Province Healthcare Co. (a) 24,100 379,575
Quorum Health Group, Inc. (a) 128,800 1,135,050
Renal Care Group, Inc. (a) 31,050 593,831
Tenet Healthcare Corp. (a) 159,200 2,776,050
Total Renal Care Holdings, 23,166 186,776
Inc. (a)
Triad Hospitals, Inc. (a) 7,695 86,088
Trigon Healthcare, Inc. (a) 25,000 907,813
United HealthCare Corp. 66,300 4,031,869
SHARES VALUE (NOTE 1)
Universal Health Services, 60,400 $ 2,015,850
Inc. Class B (a)
US Oncology, Inc. (a) 20,104 206,066
Wellpoint Health Networks, 49,400 3,600,025
Inc. (a)
35,547,950
SERVICES - 2.1%
Magellan Health Services, 10,300 93,988
Inc. (a)
Medpartners, Inc. (a) 146,700 1,026,900
1,120,888
TOTAL COMMON STOCKS 51,124,515
(Cost $51,772,465)
CASH EQUIVALENTS - 6.1%
Central Cash Collateral Fund, 57,600 57,600
5.26% (b)
Taxable Central Cash Fund, 3,282,679 3,282,679
5.20% (b)
TOTAL CASH EQUIVALENTS 3,340,279
(Cost $3,340,279)
TOTAL INVESTMENT PORTFOLIO - 54,464,794
99.3%
(Cost $55,112,744)
NET OTHER ASSETS - 0.7% 410,406
NET ASSETS - 100% $ 54,875,200
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $25,343,662 and $39,150,568, 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 $4,148 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $53,775. The fund received
cash collateral of $57,600 which was invested in the Central Cash
Collateral Fund.
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $55,964,379. Net unrealized depreciation
aggregated $1,499,585, of which $5,097,221 related to appreciated
investment securities and $6,596,806 related to depreciated investment
securities.
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 has elected 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.
MEDICAL DELIVERY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 54,464,794
value (cost $55,112,744) -
See accompanying schedule
Receivable for investments 833,925
sold
Receivable for fund shares 242,170
sold
Dividends receivable 11,162
Interest receivable 15,906
Redemption fees receivable 267
Other receivables 603
TOTAL ASSETS 55,568,827
LIABILITIES
Payable to custodian bank $ 12,028
Payable for investments 260,440
purchased
Payable for fund shares 271,512
redeemed
Accrued management fee 27,124
Other payables and accrued 64,923
expenses
Collateral on securities 57,600
loaned, at value
TOTAL LIABILITIES 693,627
NET ASSETS $ 54,875,200
Net Assets consist of:
Paid in capital $ 93,255,525
Accumulated net investment (391,322)
loss
Accumulated undistributed net (37,341,053)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (647,950)
(depreciation) on investments
NET ASSETS, for 3,194,665 $ 54,875,200
shares outstanding
NET ASSET VALUE and $17.18
redemption price per share
($54,875,200 (divided by)
3,194,665 shares)
Maximum offering price per $17.71
share (100/97.00 of $17.18)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 77,911
Dividends
Interest 124,219
Security lending 163
TOTAL INCOME 202,293
EXPENSES
Management fee $ 208,666
Transfer agent fees 327,382
Accounting and security 30,688
lending fees
Custodian fees and expenses 5,941
Registration fees 26,399
Audit 7,331
Legal 134
Total expenses before 606,541
reductions
Expense reductions (12,926) 593,615
NET INVESTMENT INCOME (LOSS) (391,322)
REALIZED AND UNREALIZED GAIN (7,072,418)
(LOSS)
Net realized gain (loss) on
investment securities
Change in net unrealized (36,398)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) (7,108,816)
NET INCREASE (DECREASE) IN $ (7,500,138)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 62,518
charges paid to FDC
Sales charges - Retained by $ 60,989
FDC
Deferred sales charges $ 2,862
withheld by FDC
Exchange fees withheld by FSC $ 10,583
Expense reductions Directed $ 11,679
brokerage arrangements
Transfer agent credits 1,247
$ 12,926
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ (391,322) $ (390,234)
income (loss)
Net realized gain (loss) (7,072,418) (29,445,200)
Change in net unrealized (36,398) (24,558,768)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (7,500,138) (54,394,202)
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders - (7,388,637)
From net realized gain
In excess of net realized - (824,351)
gain
TOTAL DISTRIBUTIONS - (8,212,988)
Share transactions Net 38,797,264 162,156,332
proceeds from sales of shares
Reinvestment of distributions - 8,097,680
Cost of shares redeemed (53,357,796) (186,595,554)
NET INCREASE (DECREASE) IN (14,560,532) (16,341,542)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 93,590 248,569
TOTAL INCREASE (DECREASE) (21,967,080) (78,700,163)
IN NET ASSETS
NET ASSETS
Beginning of period 76,842,280 155,542,443
End of period (including $ 54,875,200 $ 76,842,280
accumulated net investment
loss of $391,322 and $0,
respectively)
OTHER INFORMATION
Shares
Sold 1,972,458 6,115,538
Issued in reinvestment of - 283,433
distributions
Redeemed (2,806,152) (7,863,246)
Net increase (decrease) (833,694) (1,464,275)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 1997 1996 G
Net asset value, beginning of $ 19.08 $ 28.32 $ 28.29 $ 29.00 $ 23.18
period
Income from Investment
Operations
Net investment income (loss) D (.10) (.06) F (.24) (.23) (.03)
Net realized and unrealized (1.82) (7.88) 5.45 2.92 7.72
gain (loss)
Total from investment (1.92) (7.94) 5.21 2.69 7.69
operations
Less Distributions
From net investment income - - - - -
From net realized gain - (1.21) (5.23) (3.45) (1.91)
In excess of net realized gain - (.13) - - -
Total distributions - (1.34) (5.23) (3.45) (1.91)
Redemption fees added to paid .02 .04 .05 .05 .04
in capital
Net asset value, end of period $ 17.18 $ 19.08 $ 28.32 $ 28.29 $ 29.00
TOTAL RETURN B, C (9.96)% (29.47)% 21.97% 10.50% 34.15%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 54,875 $ 76,842 $ 155,542 $ 192,385 $ 295,489
(000 omitted)
Ratio of expenses to average 1.67% A 1.40% 1.57% 1.57% 1.65%
net assets
Ratio of expenses to average 1.63% A, E 1.37% E 1.53% E 1.53% E 1.62% E
net assets after expense
reductions
Ratio of net investment (1.08)% A (.25)% (.88)% (.84)% (.13)%
income (loss) to average net
assets
Portfolio turnover rate 77% A 67% 109% 78% 132%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28,
SELECTED PER-SHARE DATA 1995
Net asset value, beginning of $ 20.28
period
Income from Investment
Operations
Net investment income (loss) D .06
Net realized and unrealized 3.74
gain (loss)
Total from investment 3.80
operations
Less Distributions
From net investment income (.06)
From net realized gain (.89)
In excess of net realized gain -
Total distributions (.95)
Redemption fees added to paid .05
in capital
Net asset value, end of period $ 23.18
TOTAL RETURN B, C 19.63%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 299,570
(000 omitted)
Ratio of expenses to average 1.48%
net assets
Ratio of expenses to average 1.45% E
net assets after expense
reductions
Ratio of net investment .29%
income (loss) to average net
assets
Portfolio turnover rate 123%
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN. C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. F NET INVESTMENT INCOME
(LOSS) PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO $.12 PER SHARE. G FOR THE
YEAR ENDED FEBRUARY 29
</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 AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND
SELECT MEDICAL EQUIPMENT AND 9.51% 39.93% 32.51%
SYSTEMS
SELECT MEDICAL EQUIPMENT AND 6.16% 35.66% 28.46%
SYSTEMS (LOAD ADJ.)
S&P 500 7.32% 39.82% 24.00%
GS Health Care -0.56% 27.04% 18.66%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year or 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
PERIOD ENDED AUGUST 31, 1999 PAST 1 YEAR LIFE OF FUND
SELECT MEDICAL EQUIPMENT AND 39.93% 23.34%
SYSTEMS
SELECT MEDICAL EQUIPMENT AND 35.66% 20.52%
SYSTEMS (LOAD ADJ.)
S&P 500 39.82% 17.39%
GS Health Care 27.04% 13.60%
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
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
1999/02/28 11737.00 11554.39
1999/03/31 12445.10 12016.68
1999/04/30 12564.30 12482.09
1999/05/31 12464.50 12187.39
1999/06/30 12664.09 12863.79
1999/07/31 12733.95 12462.18
1999/08/31 12846.00 12400.49
IMATRL PRASUN SHR__CHT 19990831 19990909 154638 R00000000000020
$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 August 31, 1999, the value of
the investment would have grown to $12,846 - a 28.46% 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 been $12,400 - a 24.00%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
Boston Scientific Corp. 7.7
Abbott Laboratories 7.0
Guidant Corp. 6.6
Johnson & Johnson 6.5
PE Corp. (Biosystems Group) 6.1
Baxter International, Inc. 5.9
Allergan, Inc. 5.5
Becton, Dickinson & Co. 4.9
Medtronic, Inc. 4.7
Biomet, Inc. 4.6
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Medical Equipment & Supplies 68.1%
Drugs & Pharmaceuticals 14.0%
Electronic Instruments 9.4%
Industrial Machinery
& Equipment 0.8%
Computer Services
and Software 0.5%
All Others 7.2%*
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
Row: 1, Col: 1, Value: 7.2
Row: 1, Col: 2, Value: 0.5
Row: 1, Col: 3, Value: 0.8
Row: 1, Col: 4, Value: 9.4
Row: 1, Col: 5, Value: 14.0
Row: 1, Col: 6, Value: 68.09999999999999
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
MEDICAL EQUIPMENT AND SYSTEMS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Kerry Nelson)
Kerry Nelson, Portfolio Manager of Fidelity Select Medical Equipment
and Systems Portfolio
Q. HOW DID THE FUND PERFORM, KERRY?
A. It did well. For the six-month period that ended on August 31,
1999, the fund had a total return of 9.51%; for the 12 months ending
August 31, 1999, it returned 39.93%. This compares favorably with the
Standard & Poor's 500 Index, which returned 7.32% and 39.82% for the
same periods, respectively. The fund also outpaced 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
- -0.56% and 27.04% for the same six- and 12-month periods,
respectively.
Q. WHY DID THE FUND OUTPERFORM THE INDUSTRY INDEX?
A. The primary reason was that the Goldman Sachs index includes a lot
of large pharmaceutical companies, which had sluggish performance
during the period, while the fund owned relatively few of these
stocks. Large pharmaceuticals generally were down for a couple of
reasons: first, fears that the Federal government might play a larger
role in the Medicare payments system, which could eventually lead to
greater government control of pricing; and second, a slowdown in the
number of new product approvals by the Food and Drug Administration
(FDA), which would imply decelerating sales and earnings growth in the
future. The fund was more heavily weighted to medical device stocks,
which as a group were affected less by these factors than were the
pharmaceuticals. The fund also owned some biotechnology stocks, which
as a group demonstrated superior earnings growth.
Q. DID YOU ALTER YOUR INVESTMENT STRATEGY DURING THE PERIOD?
A. I increased the fund's exposure to companies in the field of
genomics, which is attracting a lot of new investment. Genomics is a
segment of the biotechnology industry that involves research into the
human genome, or genetic material. This research is often applied to
the development of new pharmaceutical products.
Q. WHICH COMPANIES HELPED PERFORMANCE?
A. Johnson & Johnson demonstrated accelerating sales and earnings
growth, particularly in its U.S. pharmaceutical business, after a very
difficult 1998. Boston Scientific, did well during most of the period.
A new management team inspired investor confidence, the company hit
earnings targets for two successive quarters, and a new medical device
received FDA approval, signaling an improved relationship with this
important regulatory agency. PE Corp. (BioSystems), an analytic
instrumentation company that benefited from the recent boom in
genomics, exceeded earnings estimates and made a nice contribution to
fund performance. Waters Corporation, a fast-growing analytical
instrumentation company, was another top performer.
Q. WHICH STOCKS DIDN'T DO AS WELL AS YOU HAD HOPED?
A. Abbott Laboratories, which derives nearly half of its profits from
pharmaceuticals, had less-than-expected sales growth as a result of
the unfavorable industry environment discussed earlier. The company
experienced some manufacturing problems with two of its major drugs,
and its new management team also made two acquisitions, that were
dilutive to earnings and drove some investors out of the stock.
Another disappointment was Becton, Dickinson & Co., a diversified
hospital supplier that is trying to grow its business more rapidly.
The company's overly optimistic earnings projections were not met,
largely because investment spending came ahead of sales growth. Sales
also suffered as a result of health care budgetary constraints in
Europe, where the company earns a substantial portion of its profits.
Q. LOOKING OUT OVER THE NEXT FEW MONTHS, KERRY, WHAT ARE YOUR
EXPECTATIONS?
A. I am more guarded in my outlook than in the past. While the
fundamentals for the sector seem relatively stable, I believe medical
technology stocks may underperform the broader market in the short
term. I think many companies in the sector will continue to do well,
but probably with not as much upside as we've seen in the recent past.
In the cardiology segment, for example, interventional devices have
been big growth drivers, but as market penetration continues to
increase, there may be more limited growth potential. I also believe
that the Medicare reform dialogue in Washington may continue to have a
psychologically chilling effect on the investment environment for the
health care group. Longer term, I believe medical equipment should
still be an area of promising investment opportunity.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE 3 .
(checkmark)FUND FACTS
START DATE: April 28, 1998
FUND NUMBER: 354
TRADING SYMBOL: FSMEX
SIZE: as of August 31, 1999, more than
$40 million
MANAGER: Kerry Nelson, since inception;
analyst, medical devices and automotive
industries; joined Fidelity in 1995
MEDICAL EQUIPMENT AND SYSTEMS PORTFOLIO
INVESTMENTS AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 93.3%
SHARES VALUE (NOTE 1)
COMPUTER SERVICES & SOFTWARE
- - 0.5%
Affymetrix, Inc. (a) 2,500 $ 214,063
DRUGS & PHARMACEUTICALS - 14.0%
Allergan, Inc. 22,050 2,202,244
Bausch & Lomb, Inc. 19,180 1,267,079
Chiron Corp. (a) 42,000 1,349,250
IDEXX Laboratories, Inc. (a) 8,000 136,000
Merck & Co., Inc. 1,200 80,625
PE Corp. (Celera Genomics 5,170 148,638
Group) (a)
Quintiles Transnational Corp. 11,500 411,844
(a)
Sepracor, Inc. (a) 1,000 74,875
5,670,555
ELECTRONIC INSTRUMENTS - 9.4%
PE Corp. (Biosystems Group) 35,680 2,455,230
Thermo Optek Corp. (a) 2,680 21,775
Waters Corp. (a) 20,120 1,326,663
3,803,668
HOUSEHOLD PRODUCTS - 0.1%
Safeskin Corp. (a) 5,290 41,989
INDUSTRIAL MACHINERY &
EQUIPMENT - 0.8%
Mettler-Toledo International, 11,310 301,129
Inc. (a)
INSURANCE - 0.4%
Aetna, Inc. 2,000 155,500
MEDICAL EQUIPMENT & SUPPLIES
- - 68.1%
Abbott Laboratories 65,120 2,824,580
Ballard Medical Products 4,700 115,150
Bard (C.R.), Inc. 14,630 682,124
Baxter International, Inc. 35,460 2,378,036
Becton, Dickinson & Co. 69,960 1,967,625
Biomet, Inc. 51,610 1,845,058
Boston Scientific Corp. (a) 91,720 3,112,744
Cardinal Health, Inc. 5,200 331,500
CardioThoracic Systems, Inc. 20,000 363,750
(a)
CONMED Corp. (a) 6,000 168,000
Cooper Companies, Inc. 4,310 103,171
Cyberonics, Inc. (a) 20,000 371,250
DENTSPLY International, Inc. 10,000 248,125
Dionex Corp. (a) 4,000 159,250
ESC Medical Systems Ltd. (a) 6,690 26,342
Guidant Corp. 45,820 2,689,061
Hillenbrand Industries, Inc. 20,670 589,095
Johnson & Johnson 25,850 2,643,163
Mallinckrodt, Inc. 6,000 192,375
Medtronic, Inc. 24,508 1,917,751
Mentor Corp. 3,120 72,930
Novoste Corp. (a) 16,900 370,744
Ocular Sciences, Inc. (a) 23,900 392,856
Orthofix International NV (a) 8,170 117,444
SHARES VALUE (NOTE 1)
Resmed, Inc. (a) 6,000 $ 166,500
St. Jude Medical, Inc. (a) 26,500 960,625
Stryker Corp. 21,040 1,212,430
Sybron International, Inc. (a) 42,060 1,083,045
VISX, Inc. (a) 4,500 407,250
27,511,974
TOTAL COMMON STOCKS 37,698,878
(Cost $34,570,835)
CASH EQUIVALENTS - 7.9%
Taxable Central Cash Fund, 3,186,008 3,186,008
5.20% (b) (Cost $3,186,008)
TOTAL INVESTMENT PORTFOLIO - 40,884,886
101.2%
(Cost $37,756,843)
NET OTHER ASSETS - (1.2%) (477,630)
NET ASSETS - 100% $ 40,407,256
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $17,057,658 and $8,581,536, 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 $1,513 for the
period.
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $37,767,173. Net unrealized appreciation
aggregated $3,117,713, of which $5,361,071 related to appreciated
investment securities and $2,243,358 related to depreciated investment
securities.
MEDICAL EQUIPMENT AND SYSTEMS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 40,884,886
value (cost $37,756,843) -
See accompanying schedule
Receivable for fund shares 105,674
sold
Dividends receivable 22,352
Interest receivable 11,556
Redemption fees receivable 191
TOTAL ASSETS 41,024,659
LIABILITIES
Payable for fund shares $ 556,594
redeemed
Accrued management fee 19,388
Other payables and accrued 41,421
expenses
TOTAL LIABILITIES 617,403
NET ASSETS $ 40,407,256
Net Assets consist of:
Paid in capital $ 35,995,649
Accumulated net investment (105,093)
loss
Accumulated undistributed net 1,388,657
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 3,128,043
(depreciation) on investments
NET ASSETS, for 3,137,111 $ 40,407,256
shares outstanding
NET ASSET VALUE and $12.88
redemption price per share
($40,407,256 (divided by)
3,137,111 shares)
Maximum offering price per $13.28
share (100/97.00 of $12.88)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 127,104
Dividends
Interest 73,705
TOTAL INCOME 200,809
EXPENSES
Management fee $ 109,423
Transfer agent fees 146,504
Accounting fees and expenses 30,302
Non-interested trustees' 50
compensation
Custodian fees and expenses 4,488
Registration fees 13,168
Audit 3,303
Legal 19
Total expenses before 307,257
reductions
Expense reductions (1,355) 305,902
NET INVESTMENT INCOME (LOSS) (105,093)
REALIZED AND UNREALIZED GAIN 1,434,827
(LOSS)
Net realized gain (loss) on
investment securities
Change in net unrealized 1,534,453
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 2,969,280
NET INCREASE (DECREASE) IN $ 2,864,187
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 214,138
charges paid to FDC
Sales charges - Retained by $ 212,593
FDC
Deferred sales charges $ 65
withheld by FDC
Exchange fees withheld by FSC $ 1,905
Expense Reductions Directed $ 1,170
brokerage arrangements
Custodian credits 185
$ 1,355
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, APRIL 28, 1998 (COMMENCEMENT
ASSETS 1999 (UNAUDITED) OF OPERATIONS) TO FEBRUARY
28, 1999
Operations Net investment $ (105,093) $ (164,120)
income (loss)
Net realized gain (loss) 1,434,827 1,286,496
Change in net unrealized 1,534,453 1,593,590
appreciation (depreciation)
NET INCREASE (DECREASE) IN 2,864,187 2,715,966
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (981,691) -
from net realized gains
Share transactions Net 24,674,154 45,365,490
proceeds from sales of shares
Reinvestment of distributions 956,509 -
Cost of shares redeemed (15,724,859) (19,529,306)
NET INCREASE (DECREASE) IN 9,905,804 25,836,184
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 24,538 42,268
TOTAL INCREASE (DECREASE) 11,812,838 28,594,418
IN NET ASSETS
NET ASSETS
Beginning of period 28,594,418 -
End of period (including $ 40,407,256 $ 28,594,418
accumulated net investment
loss of $105,093 and $0,
respectively)
OTHER INFORMATION
Shares
Sold 1,935,196 4,138,562
Issued in reinvestment of 76,582 -
distributions
Redeemed (1,238,703) (1,774,526)
Net increase (decrease) 773,075 2,364,036
</TABLE>
<TABLE>
<S> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 F
Net asset value, beginning of $ 12.10 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.04) (.11)
Net realized and unrealized 1.17 2.18
gain (loss)
Total from investment 1.13 2.07
operations
Less Distributions
From net realized gain (.36) -
Redemption fees added to paid .01 .03
in capital
Net asset value, end of period $ 12.88 $ 12.10
TOTAL RETURN B, C 9.51% 21.00%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 40,407 $ 28,594
(000 omitted)
Ratio of expenses to average 1.61% A 2.39% A
net assets
Ratio of expenses to average 1.60% A, E 2.38% A, E
net assets after expense
reductions
Ratio of net investment (.55)% A (1.21)% A
income (loss) to average net
assets
Portfolio turnover rate 50% A 85% 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 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.
</TABLE>
ENERGY PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT ENERGY 54.54% 57.65% 105.55% 168.33%
SELECT ENERGY (LOAD ADJ.) 49.83% 52.84% 99.31% 160.21%
S&P 500 7.32% 39.82% 206.52% 384.79%
GS Natural Resources 43.20% 49.26% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a 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
resources 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 AUGUST 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT ENERGY 57.65% 15.50% 10.37%
SELECT ENERGY (LOAD ADJ.) 52.84% 14.79% 10.04%
S&P 500 39.82% 25.11% 17.10%
GS Natural Resources 49.26% 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
Energy S&P 500
00060 SP001
1989/08/31 9700.00 10000.00
1989/09/30 9853.19 9959.00
1989/10/31 9785.79 9727.95
1989/11/30 10153.44 9926.40
1989/12/31 10887.22 10164.64
1990/01/31 10401.13 9482.59
1990/02/28 10725.19 9604.91
1990/03/31 10731.42 9859.44
1990/04/30 10369.97 9612.96
1990/05/31 10999.39 10550.22
1990/06/30 10740.16 10478.48
1990/07/31 11471.69 10444.95
1990/08/31 11677.85 9500.72
1990/09/30 11644.60 9038.04
1990/10/31 11046.07 8999.18
1990/11/30 10926.37 9580.52
1990/12/31 10398.13 9847.82
1991/01/31 9724.62 10277.18
1991/02/28 10631.79 11012.00
1991/03/31 10487.47 11278.49
1991/04/30 10604.30 11305.56
1991/05/31 10666.16 11793.96
1991/06/30 10190.97 11253.80
1991/07/31 10714.29 11778.23
1991/08/31 10920.86 12057.37
1991/09/30 10810.69 11856.01
1991/10/31 11134.32 12014.88
1991/11/30 10308.03 11530.68
1991/12/31 10401.79 12849.79
1992/01/31 9845.17 12610.79
1992/02/29 9859.09 12774.73
1992/03/31 9573.82 12525.62
1992/04/30 10227.84 12893.87
1992/05/31 10714.88 12957.05
1992/06/30 10184.67 12763.99
1992/07/31 10456.73 13286.04
1992/08/31 10645.07 13013.68
1992/09/30 10707.85 13167.24
1992/10/31 10247.45 13213.32
1992/11/30 10010.27 13663.90
1992/12/31 10153.34 13831.96
1993/01/31 10536.22 13948.15
1993/02/28 11231.07 14137.85
1993/03/31 11805.39 14436.15
1993/04/30 12032.47 14086.80
1993/05/31 12394.30 14464.33
1993/06/30 12557.48 14506.27
1993/07/31 12465.25 14448.25
1993/08/31 13451.40 14995.84
1993/09/30 13373.36 14880.37
1993/10/31 13181.80 15188.39
1993/11/30 11585.51 15044.10
1993/12/31 12098.16 15226.14
1994/01/31 12746.15 15743.82
1994/02/28 12319.07 15317.17
1994/03/31 11722.63 14649.34
1994/04/30 12618.08 14836.85
1994/05/31 12751.60 15080.17
1994/06/30 12684.84 14710.71
1994/07/31 12877.71 15193.22
1994/08/31 12662.59 15816.14
1994/09/30 12566.15 15428.65
1994/10/31 13278.28 15775.79
1994/11/30 12462.30 15201.24
1994/12/31 12148.06 15426.67
1995/01/31 11857.18 15826.69
1995/02/28 12324.12 16443.45
1995/03/31 12997.73 16928.70
1995/04/30 13397.19 17427.25
1995/05/31 13742.88 18123.82
1995/06/30 13343.42 18544.83
1995/07/31 13658.37 19159.78
1995/08/31 13558.51 19207.87
1995/09/30 13566.19 20018.44
1995/10/31 12982.37 19946.98
1995/11/30 13727.51 20822.65
1995/12/31 14745.68 21223.69
1996/01/31 14973.50 21946.15
1996/02/29 14902.80 22149.59
1996/03/31 15900.51 22362.89
1996/04/30 16670.49 22692.52
1996/05/31 16842.77 23277.76
1996/06/30 17154.52 23366.44
1996/07/31 16383.35 22334.12
1996/08/31 17023.26 22805.14
1996/09/30 17925.70 24088.62
1996/10/31 18655.85 24752.98
1996/11/30 19689.55 26624.06
1996/12/31 19534.11 26096.63
1997/01/31 19980.17 27727.15
1997/02/28 17935.03 27944.53
1997/03/31 18431.58 26796.29
1997/04/30 18267.06 28396.03
1997/05/31 19930.11 30124.78
1997/06/30 20222.03 31474.37
1997/07/31 21548.93 33978.79
1997/08/31 21770.09 32075.30
1997/09/30 23371.22 33832.06
1997/10/31 22725.46 32702.07
1997/11/30 21416.24 34215.85
1997/12/31 21542.75 34803.33
1998/01/31 20391.76 35188.26
1998/02/28 21593.67 37726.04
1998/03/31 22622.43 39657.99
1998/04/30 23058.69 40056.94
1998/05/31 22498.31 39368.37
1998/06/30 21906.79 40967.51
1998/07/31 20101.12 40531.21
1998/08/31 16510.52 34671.20
1998/09/30 19333.19 36892.24
1998/10/31 19561.49 39893.06
1998/11/30 18876.58 42310.97
1998/12/31 18368.08 44748.93
1999/01/31 17112.41 46620.33
1999/02/28 16842.60 45171.37
1999/03/31 20402.06 46978.68
1999/04/30 23896.60 48798.16
1999/05/31 23376.65 47646.04
1999/06/30 24614.12 50290.39
1999/07/31 25269.25 48720.33
1999/08/31 26021.00 48479.16
IMATRL PRASUN SHR__CHT 19990831 19990914 121304 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Energy Portfolio on August 31, 1989, and
the current 3.00% sales charge was paid. As the chart shows, by August
31, 1999, the value of the investment would have grown to $26,021 - a
160.21% increase on the initial investment - and includes the effect
of a $7.50 trading fee. For comparison, look at how the Standard &
Poor's 500 Index did over the same period. With dividends and capital
gains, if any, reinvested, the same $10,000 investment would have
grown to $48,479 - a 384.79% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
Mobil Corp. 5.3
Schlumberger Ltd. 4.5
Atlantic Richfield Co. 4.3
USX-Marathon Group 3.8
Texaco, Inc. 3.6
Halliburton Co. 3.0
Chevron Corp. 3.0
Amerada Hess Corp. 2.7
BJ Services Co. 2.2
Conoco, Inc. Class B 2.1
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Oil & Gas 61.0%
Energy Services 22.6%
Gas 4.8%
Chemicals & Plastics 3.0%
Electric Utility 2.6%
All Others 6.0%*
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
Row: 1, Col: 1, Value: 6.0
Row: 1, Col: 2, Value: 2.6
Row: 1, Col: 3, Value: 3.0
Row: 1, Col: 4, Value: 4.8
Row: 1, Col: 5, Value: 22.6
Row: 1, Col: 6, Value: 61.0
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
ENERGY PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
(photograph of Larry Rakers) (photograph of Scott Offen)
NOTE TO SHAREHOLDERS: On September 1, 1999, after the end of the
period covered by this report, Scott Offen (right) became Portfolio
Manager of Fidelity Select Energy Portfolio. The following is an
interview with Larry Rakers, who managed the fund during the period
covered by this report, with additional comments from Scott Offen on
his outlook.
Q. HOW DID THE FUND PERFORM, LARRY?
L.R. For the six- and 12-month periods that ended August 31, 1999, the
fund returned 54.54% and 57.65%, respectively. During the same
periods, the fund outpaced 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 43.20% and 49.26%,
respectively. The Standard & Poor's 500 Index returned 7.32% and
39.82% during the same six- and 12-month periods.
Q. WHAT FACTORS CAUSED THE FUND TO OUTPERFORM THE GOLDMAN SACHS INDEX?
L.R. My early prediction that oil prices were poised to rebound turned
out to be beneficial to the fund's relative performance. The fund's
more aggressive strategy worked well over the past six months as oil
prices rebounded. Specifically, I allocated a larger percentage of
assets to smaller integrated oil companies, such as USX-Marathon;
energy services companies, such as Halliburton; and drillers, such as
ENSCO International, which are more sensitive to price swings of oil.
In an environment of increasing oil prices, these companies normally
perform better than large integrated oil companies, such as Mobil and
Texaco.
Q. WHAT SPARKED THE DRAMATIC RALLY IN ENERGY STOCKS IN 1999?
L.R. First and foremost, we saw the price of oil rebound dramatically
during the period. Much of this increase was due to a favorable supply
and demand equation. On the supply side, OPEC announced a significant
production cutback in March. In addition, the private sector of the
oil industry significantly cut back on exploration and production
efforts as the price of oil continued to slide. On the demand side, we
experienced a rebound in Asia and stable global demand growth. This
was just enough to create a squeeze on supply, resulting in a recovery
in oil prices.
Q. THE FUND WAS UNDERWEIGHTED IN ELECTRIC AND GAS UTILITY STOCKS. DID
YOU PURSUE ANY OTHER STRATEGIES TO TAKE ADVANTAGE OF THE RECOVERY IN
OIL PRICES?
L.R. I saw better growth potential in energy service and in
exploration and production companies compared to electric and gas
utilities given my belief that oil prices were poised to rebound. As a
result, I aggressively positioned the fund to take advantage of
increasing oil prices toward the beginning of the year. Since then, I
made some adjustments to the portfolio; however, I didn't make a
significant shift in strategy because I believed many of the stocks in
the sector did not fully price in the increase in oil prices. As a
result, the fund's allocation of energy services and integrated oil
companies remained steady.
Q. WHICH STOCKS PERFORMED WELL FOR THE FUND?
L.R. USX-Marathon Group, Baker Hughes, BJ Services and Halliburton,
all significant holdings for the fund, were big contributors to total
return. USX-Marathon, an integrated oil company, and these leading
energy services companies benefited tremendously from the recovery in
oil prices.
Q. WHICH STOCKS HURT FUND PERFORMANCE?
L.R. Lyondell Chemical, a petrochemical producer, and EEX Corp., an
oil exploration and production company, detracted from the fund's
total return. Shares of Lyondell Chemical suffered after profit
margins declined for ethylene - one of Lyondell's primary
petrochemical products. EEX Corp. detracted from fund performance
after the company's drilling sites in the Gulf of Mexico came up short
of expectations.
Q. SCOTT, WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
S.O. While it is difficult to predict the strength of the global
economy, my feeling is that worldwide economic activity will remain
steady. There are a number of overseas economies recovering from
recessions, Asia seems to be turning the corner to recovery and Europe
looks stable. While U.S. economic growth is in question due to
potentially higher domestic interest rates, I don't think it will lead
to a global slowdown. Since energy prices are heavily dependent upon
global demand, I'm fairly optimistic about the outlook for energy
stocks.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGERS ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE 3.
(checkmark)FUND FACTS
START DATE: July 14, 1981
FUND NUMBER: 060
TRADING SYMBOL: FSENX
SIZE: as of August 31, 1999, more than
$243 million
MANAGER: Scott Offen, since September,
1999; manager, Fidelity Select Food and
Agriculture Portfolio, since 1996;
manager, several Fidelity Select portfolios,
1988-1996; joined Fidelity in 1985
ENERGY PORTFOLIO
INVESTMENTS AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 94.5%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES -
0.3%
Barrett Resources Corp. (a) 16,000 $ 577,000
CHEMICALS & PLASTICS - 3.0%
E.I. du Pont de Nemours and 67,357 4,268,750
Co.
Georgia Gulf Corp. 40,000 727,500
Lyondell Chemical Co. 108,500 1,580,031
NOVA Chemicals Corp. 35,000 763,317
7,339,598
ELECTRIC UTILITY - 2.6%
AES Corp. (a) 85,500 5,188,781
Calpine Corp. (a) 10,200 924,375
Illinova Corp. 5,700 181,688
6,294,844
ENERGY SERVICES - 22.6%
Atwood Oceanics, Inc. (a) 24,500 771,750
Baker Hughes, Inc. 127,550 4,336,700
BJ Services Co. (a) 154,100 5,277,925
Bonus Resource Services Corp. 35,000 77,387
(a)
ENSCO International, Inc. 184,400 3,930,025
Global Marine, Inc. (a) 79,000 1,402,250
Halliburton Co. 158,300 7,341,163
Helmerich & Payne, Inc. 57,600 1,587,600
Marine Drilling Companies, 126,500 2,008,188
Inc. (a)
McDermott International, Inc. 43,400 979,213
Nabors Industries, Inc. (a) 45,400 1,225,800
Noble Drilling Corp. (a) 153,500 3,779,938
Oceaneering International, 10,000 200,625
Inc. (a)
Peak Energy Services Ltd. (a) 225,000 407,035
Pool Energy Services Co. (a) 53,000 1,397,875
Precision Drilling Corp. 41,800 949,427
Class A (a)
Rowan Companies, Inc. (a) 29,000 540,125
Ryan Energy Technologies, 32,900 96,992
Inc. (a)
Schlumberger Ltd. 163,180 10,892,265
Smith International, Inc. (a) 66,200 3,090,713
Tesco Corp. (a) 15,000 103,518
Tidewater, Inc. 20,000 650,000
Tuboscope, Inc. (a) 177,600 2,586,300
Unit Corp. (a) 105,000 807,188
UTI Energy Corp. (a) 37,000 740,000
55,180,002
GAS - 4.8%
Dynegy, Inc. 7,500 176,250
Enron Corp. 120,000 5,025,000
K N Energy, Inc. 175,000 3,565,625
Ocean Energy, Inc. (a) 296,200 2,999,025
11,765,900
SHARES VALUE (NOTE 1)
LEASING & RENTAL - 0.1%
Superior Energy Services, 35,000 $ 218,750
Inc. (a)
METALS & MINING - 0.3%
Olin Corp. 47,500 673,906
OIL & GAS - 60.8%
Alberta Energy Co. Ltd. 51,000 1,571,859
Amerada Hess Corp. 105,200 6,528,975
Anadarko Petroleum Corp. 49,900 1,696,600
Anderson Exploration Ltd. (a) 15,800 227,605
Apache Corp. 88,400 4,022,200
Atlantic Richfield Co. 119,400 10,499,738
Basin Exploration, Inc. (a) 30,000 682,500
Bellator Exploration, Inc. (a) 120,000 132,663
Bellwether Exploration Co. (a) 20,000 87,500
Benton Oil & Gas Co. (a) 100,000 256,250
Bonavista Petroleum Ltd. (a) 25,000 305,695
British-Borneo Oil & Gas PLC 321,900 1,131,956
Cabot Oil & Gas Corp. Class A 73,400 1,399,188
Canada Occidental Petroleum 75,000 1,381,910
Ltd.
Canadian Hunter Exploration 52,000 844,891
Ltd.
Canadian Natural Resources 109,800 2,722,010
Ltd. (a)
Chesapeake Energy Corp. (a) 140,000 455,000
Chevron Corp. 78,200 7,213,950
Compton Petroleum Corp. (a) 125,000 234,506
Comstock Resources, Inc. (a) 94,700 437,988
Conoco, Inc. Class B 194,911 5,238,233
Cooper Cameron Corp. (a) 35,760 1,488,510
Crestar Energy, Inc. (a) 138,900 1,972,985
Denbury Resources, Inc. (a) 27,500 116,080
EEX Corp. (a) 120,000 570,000
Elf Aquitaine SA sponsored ADR 19,100 1,681,994
Enron Oil & Gas Co. 72,200 1,723,775
Ensign Resource Service 13,000 287,437
Group, Inc.
Exxon Corp. 58,200 4,590,525
Forest Oil Corp. (a) 52,000 776,750
Frontier Oil Corp. (a) 227,900 1,823,200
Imperial Oil Ltd. 12,000 252,462
Ionic Energy, Inc. (a) 35,000 87,940
Kerr-McGee Corp. 46,531 2,605,736
Louis Dreyfus Natural Gas 111,000 2,428,125
Corp. (a)
Magnum Hunter Resources, Inc. 65,200 248,575
Mallon Resources Corp. (a) 35,000 282,188
Meridian Resource Corp. (a) 10,000 47,500
Merit Energy Ltd. (a) 30,000 127,638
Mobil Corp. 127,300 13,032,335
Murphy Oil Corp. 17,000 862,750
Newfield Exploration Co. (a) 17,000 516,375
Noble Affiliates, Inc. 10,800 334,800
Novus Petroleum Ltd. (a) 160,152 161,882
Nuevo Energy Co. (a) 129,700 2,269,750
Occidental Petroleum Corp. 40,000 867,500
Penn West Petroleum Ltd. (a) 49,900 1,061,524
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
OIL & GAS - CONTINUED
Pennaco Energy, Inc. (a) 32,000 $ 372,000
Petro-Canada 186,000 2,797,789
Pioneer Natural Resources Co. 151,000 1,717,625
Plains Resources, Inc. (a) 108,000 2,065,500
Poco Petroleums Ltd. (a) 135,000 1,338,693
Pogo Producing Co. 16,000 334,000
Post Energy Corp. (a) 127,500 696,231
Premier Oil PLC (a) 1,750,000 639,269
Prima Energy Corp. (a) 7,500 162,656
Range Resources Corp. 120,000 660,000
Ranger Oil Ltd. (a) 187,500 854,271
Remington Oil & Gas Corp. 55,500 287,906
Renaissance Energy Ltd. (a) 8,300 127,906
Rio Alto Exploration Ltd. (a) 98,400 1,608,683
Santa Fe Snyder Corp. (a) 441,585 4,305,454
Shell Canada Ltd. Class A 17,000 361,072
Shell Transport & Trading Co. 333,900 2,681,633
PLC (Reg.)
St. Mary Land & Exploration 17,700 469,050
Co.
Stellarton Energy Corp. Class 200,000 335,008
A (a)
Storm Energy, Inc. 75,000 125,628
Suncor Energy, Inc. 50,000 2,061,977
Sunoco, Inc. 101,700 3,311,606
Swift Energy Co. (a) 105,000 1,325,625
Talisman Energy, Inc. (a) 30,000 880,402
Texaco, Inc. 139,100 8,832,850
Titan Exploration, Inc. (a) 121,200 666,600
Tosco Corp. 70,700 1,802,850
Ulster Petroleums Ltd. (a) 44,600 493,065
Ultramar Diamond Shamrock 68,000 1,776,500
Corp.
Union Pacific Resources 60,400 1,083,425
Group, Inc.
Upton Resources, Inc. (a) 269,700 487,900
USX-Marathon Group 298,000 9,275,250
Valero Energy Corp. 45,000 956,250
Vastar Resources, Inc. 7,800 519,675
Vintage Petroleum, Inc. 212,200 3,037,113
Weatherford International, 65,225 2,323,641
Inc. (a)
Wiser Oil Co. 70,000 205,625
148,270,281
TOTAL COMMON STOCKS 230,320,281
(Cost $182,001,919)
CONVERTIBLE PREFERRED STOCKS
- - 0.2%
OIL & GAS - 0.2%
Chesapeake Energy Corp. $3.50 15,000 431,250
(Cost $146,211)
CASH EQUIVALENTS - 4.4%
SHARES VALUE (NOTE 1)
Central Cash Collateral Fund, 82,800 $ 82,800
5.26% (b)
Taxable Central Cash Fund, 10,804,245 10,804,245
5.20% (b)
TOTAL CASH EQUIVALENTS 10,887,045
(Cost $10,887,045)
TOTAL INVESTMENT PORTFOLIO - 241,638,576
99.1% (Cost $193,035,175)
NET OTHER ASSETS - 0.9% 2,129,865
TOTAL NET ASSETS - 100% $ 243,768,441
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $154,726,808 and $112,403,927, 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 $36,299 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $67,275. The fund received
cash collateral of $82,800 which was invested in the Central Cash
Collateral Fund.
Distribution of investments by country of issue, as a percentage of
total net assets, is as follows:
United States of America 82.3%
Canada 10.5
Netherlands Antilles 4.5
United Kingdom 1.9
Others individually less than 0.8
1%
100.0%
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $195,496,079. Net unrealized appreciation
aggregated $46,142,497, of which $49,748,048 related to appreciated
investment securities and $3,605,551 related to depreciated investment
securities.
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 has elected to defer to its fiscal year ending February 29,
2000 approxiamtely $6,117,000 of losses recognized during the period
November 1, 1998 to February 28, 1999.
ENERGY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 241,638,576
value (cost $193,035,175) -
See accompanying schedule
Receivable for investments 3,031,236
sold
Receivable for fund shares 1,085,446
sold
Dividends receivable 667,951
Interest receivable 63,163
Redemption fees receivable 5,515
Other receivables 1,522
TOTAL ASSETS 246,493,409
LIABILITIES
Payable for fund shares $ 2,394,202
redeemed
Accrued management fee 116,359
Other payables and accrued 131,607
expenses
Collateral on securities 82,800
loaned, at value
TOTAL LIABILITIES 2,724,968
NET ASSETS $ 243,768,441
Net Assets consist of:
Paid in capital $ 193,834,016
Undistributed net investment 429,677
income
Accumulated undistributed net 901,510
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 48,603,238
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 9,738,436 $ 243,768,441
shares outstanding
NET ASSET VALUE and $25.03
redemption price per share
($243,768,441 (divided by)
9,738,436 shares)
Maximum offering price per $25.80
share (100/97.00 of $25.03)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 1,511,678
Dividends
Interest 298,082
Security lending 1,486
TOTAL INCOME 1,811,246
EXPENSES
Management fee $ 611,492
Transfer agent fees 621,950
Accounting and security 79,323
lending fees
Non-interested trustees' 539
compensation
Custodian fees and expenses 29,681
Registration fees 38,824
Audit 5,557
Legal 111
Total expenses before 1,387,477
reductions
Expense reductions (63,267) 1,324,210
NET INVESTMENT INCOME 487,036
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 13,194,087
Foreign currency transactions (3,445) 13,190,642
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 62,660,756
Assets and liabilities in (163) 62,660,593
foreign currencies
NET GAIN (LOSS) 75,851,235
NET INCREASE (DECREASE) IN $ 76,338,271
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 610,759
charges paid to FDC
Sales charges - Retained by $ 608,772
FDC
Deferred sales charges $ 4,037
withheld by FDC
Exchange fees withheld by FSC $ 8,205
Expense reductions Directed $ 63,114
brokerage arrangements
Custodian credits 153
$ 63,267
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ 487,036 $ 960,799
income
Net realized gain (loss) 13,190,642 (12,098,193)
Change in net unrealized 62,660,593 (22,108,978)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 76,338,271 (33,246,372)
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (365,381) (118,598)
From net investment income
From net realized gain - (2,920,602)
TOTAL DISTRIBUTIONS (365,381) (3,039,200)
Share transactions Net 159,216,384 115,988,469
proceeds from sales of shares
Reinvestment of distributions 348,543 2,970,065
Cost of shares redeemed (112,021,889) (109,891,379)
NET INCREASE (DECREASE) IN 47,543,038 9,067,155
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 248,037 199,403
TOTAL INCREASE (DECREASE) 123,763,965 (27,019,014)
IN NET ASSETS
NET ASSETS
Beginning of period 120,004,476 147,023,490
End of period (including $ 243,768,441 $ 120,004,476
undistributed net investment
income of $429,677 and
$825,869, respectively)
OTHER INFORMATION
Shares
Sold 7,317,421 5,995,866
Issued in reinvestment of 17,985 133,126
distributions
Redeemed (4,992,838) (5,669,002)
Net increase (decrease) 2,342,568 459,990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 1997 1996 F 1995
Net asset value, beginning of $ 16.23 $ 21.20 $ 21.31 $ 18.97 $ 16.10 $ 16.73
period
Income from Investment
Operations
Net investment income D .05 .13 .11 .13 .18 .07
Net realized and unrealized 8.76 (4.71) 3.93 3.59 3.13 (.11)
gain (loss)
Total from investment 8.81 (4.58) 4.04 3.72 3.31 (.04)
operations
Less Distributions
From net investment income (.04) (.02) (.09) (.13) (.11) (.08)
From net realized gain - (.40) (4.09) (1.31) (.36) (.54)
Total distributions (.04) (.42) (4.18) (1.44) (.47) (.62)
Redemption fees added to paid .03 .03 .03 .06 .03 .03
in capital
Net asset value, end of period $ 25.03 $ 16.23 $ 21.20 $ 21.31 $ 18.97 $ 16.10
TOTAL RETURN B, C 54.54% (22.00)% 20.40% 20.35% 20.92% .04%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 243,768 $ 120,004 $ 147,023 $ 203,265 $ 119,676 $ 96,023
(000 omitted)
Ratio of expenses to average 1.30% A 1.46% 1.58% 1.57% 1.63% 1.85%
net assets
Ratio of expenses to average 1.25% A, E 1.42% E 1.53% E 1.55% E 1.63% 1.85%
net assets after expense
reductions
Ratio of net investment .46% A .68% .47% .62% 1.04% .42%
income to average net assets
Portfolio turnover rate 114% A 138% 115% 87% 97% 106%
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN. C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. F FOR 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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT ENERGY SERVICE 83.80% 80.09% 160.50% 199.75%
SELECT ENERGY SERVICE (LOAD 78.22% 74.61% 152.61% 190.68%
ADJ.)
S&P 500 7.32% 39.82% 206.52% 384.79%
GS Natural Resources 43.20% 49.26% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of the Standard & Poor's 500 Index - a 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
resources 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 AUGUST 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT ENERGY SERVICE 80.09% 21.10% 11.60%
SELECT ENERGY SERVICE (LOAD 74.61% 20.36% 11.26%
ADJ.)
S&P 500 39.82% 25.11% 17.10%
GS Natural Resources 49.26% 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
Energy Service S&P 500
00043 SP001
1989/08/31 9700.00 10000.00
1989/09/30 9560.77 9959.00
1989/10/31 9087.37 9727.95
1989/11/30 9867.08 9926.40
1989/12/31 11129.47 10164.64
1990/01/31 10414.74 9482.59
1990/02/28 11398.66 9604.91
1990/03/31 11946.32 9859.44
1990/04/30 11315.12 9612.96
1990/05/31 13217.99 10550.22
1990/06/30 12540.38 10478.48
1990/07/31 13719.23 10444.95
1990/08/31 13477.89 9500.72
1990/09/30 13217.99 9038.04
1990/10/31 11556.46 8999.18
1990/11/30 11732.82 9580.52
1990/12/31 11324.79 9847.82
1991/01/31 10813.41 10277.18
1991/02/28 12552.11 11012.00
1991/03/31 11575.83 11278.49
1991/04/30 11631.62 11305.56
1991/05/31 11938.45 11793.96
1991/06/30 10376.41 11253.80
1991/07/31 11157.43 11778.23
1991/08/31 11036.56 12057.37
1991/09/30 10023.09 11856.01
1991/10/31 10171.86 12014.88
1991/11/30 8953.84 11530.68
1991/12/31 8665.60 12849.79
1992/01/31 8544.73 12610.79
1992/02/29 8721.39 12774.73
1992/03/31 8098.43 12525.62
1992/04/30 8767.88 12893.87
1992/05/31 9465.22 12957.05
1992/06/30 8916.65 12763.99
1992/07/31 9288.56 13286.04
1992/08/31 9762.75 13013.68
1992/09/30 10060.28 13167.24
1992/10/31 9539.60 13213.32
1992/11/30 9344.35 13663.90
1992/12/31 8963.14 13831.96
1993/01/31 9316.45 13948.15
1993/02/28 10236.94 14137.85
1993/03/31 11045.86 14436.15
1993/04/30 11641.29 14086.80
1993/05/31 12181.01 14464.33
1993/06/30 12115.87 14506.27
1993/07/31 12283.37 14448.25
1993/08/31 12711.43 14995.84
1993/09/30 12339.21 14880.37
1993/10/31 12162.40 15188.39
1993/11/30 10878.23 15044.10
1993/12/31 10841.50 15226.14
1994/01/31 10944.21 15743.82
1994/02/28 10888.19 15317.17
1994/03/31 10075.77 14649.34
1994/04/30 10602.58 14836.85
1994/05/31 11074.87 15080.17
1994/06/30 11412.23 14710.71
1994/07/31 11624.28 15193.22
1994/08/31 11161.62 15816.14
1994/09/30 11585.73 15428.65
1994/10/31 12048.38 15775.79
1994/11/30 11421.87 15201.24
1994/12/31 10903.01 15426.67
1995/01/31 10971.52 15826.69
1995/02/28 11715.35 16443.45
1995/03/31 12361.31 16928.70
1995/04/30 13114.93 17427.25
1995/05/31 13457.49 18123.82
1995/06/30 12997.49 18544.83
1995/07/31 13643.45 19159.78
1995/08/31 14191.53 19207.87
1995/09/30 14230.68 20018.44
1995/10/31 12997.49 19946.98
1995/11/30 13731.53 20822.65
1995/12/31 15359.51 21223.69
1996/01/31 15693.86 21946.15
1996/02/29 16301.75 22149.59
1996/03/31 17588.47 22362.89
1996/04/30 18911.16 22692.52
1996/05/31 18636.06 23277.76
1996/06/30 18676.81 23366.44
1996/07/31 17647.70 22334.12
1996/08/31 18768.52 22805.14
1996/09/30 19471.57 24088.62
1996/10/31 21641.87 24752.98
1996/11/30 22518.14 26624.06
1996/12/31 22898.57 26096.63
1997/01/31 24173.64 27727.15
1997/02/28 21560.28 27944.53
1997/03/31 23077.72 26796.29
1997/04/30 22810.95 28396.03
1997/05/31 25976.96 30124.78
1997/06/30 27677.43 31474.37
1997/07/31 32029.30 33978.79
1997/08/31 34300.33 32075.30
1997/09/30 37880.27 33832.06
1997/10/31 39323.43 32702.07
1997/11/30 34512.89 34215.85
1997/12/31 34776.94 34803.33
1998/01/31 29854.49 35188.26
1998/02/28 32001.64 37726.04
1998/03/31 34400.05 39657.99
1998/04/30 37232.67 40056.94
1998/05/31 34839.91 39368.37
1998/06/30 30296.10 40967.51
1998/07/31 23625.40 40531.21
1998/08/31 16145.03 34671.20
1998/09/30 19758.33 36892.24
1998/10/31 22634.46 39893.06
1998/11/30 17244.73 42310.97
1998/12/31 17486.42 44748.93
1999/01/31 16676.75 46620.33
1999/02/28 15818.75 45171.37
1999/03/31 22211.50 46978.68
1999/04/30 25897.31 48798.16
1999/05/31 25039.30 47646.04
1999/06/30 26888.24 50290.39
1999/07/31 27734.17 48720.33
1999/08/31 29068.00 48479.16
IMATRL PRASUN SHR__CHT 19990831 19990914 120610 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Energy Service Portfolio on August 31,
1989, and the current 3.00% sales charge was paid. As the chart shows,
by August 31, 1999, the value of the investment would have grown to
$29,068 - a 190.68% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $48,479 - a 384.79% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
Noble Drilling Corp. 7.0
BJ Services Co. 6.5
Smith International, Inc. 6.5
ENSCO International, Inc. 6.5
Schlumberger Ltd. 6.5
Weatherford International, Inc. 6.2
Halliburton Co. 5.9
Baker Hughes, Inc. 5.4
Nabors Industries, Inc. 5.0
Cooper Cameron Corp. 5.0
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Energy Services 80.2%
Oil & Gas 11.7%
Engineering 0.2%
Iron & Steel 0.2%
Ship Building & Repair 0.2%
All Others 7.5%*
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
Row: 1, Col: 1, Value: 7.5
Row: 1, Col: 2, Value: 0.2
Row: 1, Col: 3, Value: 0.2
Row: 1, Col: 4, Value: 0.2
Row: 1, Col: 5, Value: 11.7
Row: 1, Col: 6, Value: 80.2
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
ENERGY SERVICE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of James Catudal)
James Catudal,
Portfolio Manager
of Fidelity Select
Energy Service Portfolio
Q. HOW DID THE FUND PERFORM, JIM?
A. It was an exceptional period. For the six months that ended August
31, 1999, the fund returned 83.80%, compared to 7.32% for the Standard
& Poor's 500 Index and 43.20% for 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 August 31, 1999, the fund returned 80.09%, compared to 39.82%
and 49.26% for the S&P 500 and the Goldman Sachs index, respectively.
Q. WHAT ACCOUNTED FOR THE FUND'S EXTRAORDINARILY STRONG PERFORMANCE?
A. A significant improvement in both crude oil and natural gas prices
was the primary factor aiding the fund's performance. Crude oil, for
example, roughly doubled in price during the period as a result of
increased demand from Asia and the decision by the Organization of
Petroleum Exporting Countries (OPEC) to restrict production. Natural
gas also strengthened because lower prices in 1998 had caused reduced
drilling activity, which resulted in lower production. Higher energy
prices typically lead to more spending for exploration and production
(E&P), which directly benefits energy service companies. Although the
broadly based S&P 500 also showed a gain for the period, higher
interest rates limited returns in many sectors of the market. The
Goldman Sachs index benefited from higher energy prices but also
reflected subsectors of the natural resources area that were not as
strong as the energy component.
Q. WERE THERE ANY SIGNIFICANT SHIFTS IN THE FUND'S HOLDINGS?
A. During the first half of the period, I was more confident of the
prospects for natural gas than for oil. Consequently, I increased the
fund's holdings of companies with exposure to North American natural
gas drilling activity. However, as the period progressed and the rally
in oil prices continued, both oil- and gas-related stocks saw
significant gains.
Q. WHAT STOCKS DID WELL FOR THE FUND?
A. BJ Services, a pressure pumping company, was a key contributor. The
company has high exposure to the North American natural gas drilling
market, which has led the energy recovery. Investors also were
attracted to the stock because of efforts the company made to
strengthen itself through cost reductions and acquisitions made during
the recent downturn. Another strong performer was Baker Hughes, a
diversified energy service company. In that case, the stock price had
been driven down sharply when energy prices were weak, and it
responded with a comparable move up when oil and gas recovered. Noble
Drilling also helped performance. This well-managed company began to
see the benefits of converting six drilling rigs to the
semi-submersible type used in deep water drilling. In addition,
investors liked the fact that a sizable part of the company's
prospective earnings was secured by long-term contracts.
Q. WHAT STOCKS WERE DISAPPOINTING?
A. There is nothing worth mentioning on the negative side. Virtually
all of the fund's holdings made positive contributions to performance.
Q. WHAT'S YOUR OUTLOOK, JIM?
A. The outlook for energy service companies appears very favorable at
this juncture. Strong worldwide economic growth should continue to
support oil and gas prices and, in turn, healthy budgets for
exploration and production activities. Sharply higher interest rates
in the United States or another shock from one of the emerging
economies - for example, a currency devaluation - could reduce demand
for energy products and services. Right now, though, neither of those
possibilities seems likely to materialize in the near term. OPEC will
probably relax its restrictions on production at some point which
could increase oil price volatility. Given an environment of strong
and growing demand for crude oil and low supply growth due to reduced
E&P budgets, however, the market should be able to absorb the
increased OPEC supply.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE 3.
(checkmark)FUND FACTS
START DATE: December 16, 1985
FUND NUMBER: 043
TRADING SYMBOL: FSESX
SIZE: as of August 31, 1999, more than
$796 million
MANAGER: James Catudal, since 1998; manager,
Fidelity Select Industrial Materials Portfolio,
1997-
1998; analyst, North American non-ferrous
metals companies, since 1997; joined Fidelity in
1997
ENERGY SERVICE PORTFOLIO
INVESTMENTS AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 92.9%
SHARES VALUE (NOTE 1)
COMPUTER SERVICES & SOFTWARE
- - 0.1%
GeoScience Corp. (a) 79,000 $ 533,250
CONSTRUCTION - 0.0%
Bouygues Offshore SA 1,000 18,813
sponsored ADR
ELECTRICAL EQUIPMENT - 0.0%
NQL Drilling Tools, Inc. 90,300 468,894
Class A (a)
ENERGY SERVICES - 80.2%
Atwood Oceanics, Inc. (a) 195,700 6,164,550
Baker Hughes, Inc. 1,265,936 43,041,824
BJ Services Co. (a) 1,521,676 52,117,403
CAL Dive International, Inc. 100 3,763
(a)
Carbo Ceramics, Inc. 46,500 1,243,875
Coflexip SA sponsored ADR 198,600 8,986,650
Diamond Offshore Drilling, 416,500 15,931,125
Inc.
ENSCO International, Inc. 2,435,200 51,900,200
Global Industries Ltd. (a) 712,300 7,968,856
Global Marine, Inc. (a) 816,000 14,484,000
Halliburton Co. 1,013,167 46,985,620
Helmerich & Payne, Inc. 1,071,300 29,527,706
Input/Output, Inc. (a) 336,800 2,483,900
Lone Star Technologies, Inc. 355,000 7,100,000
(a)
Marine Drilling Companies, 1,257,100 19,956,463
Inc. (a)
McDermott International, Inc. 1,242,500 28,033,906
Nabors Industries, Inc. (a) 1,462,700 39,492,900
Noble Drilling Corp. (a) 2,277,450 56,082,199
Oceaneering International, 583,600 11,708,475
Inc. (a)
Offshore Logistics, Inc. (a) 172,300 2,013,756
Parker Drilling Co. (a) 180,000 900,000
Pool Energy Services Co. (a) 455,100 12,003,263
Precision Drilling Corp. 125,000 2,839,196
Class A (a)
Pride International, Inc. (a) 80,000 1,190,000
R&B Falcon Corp. (a) 100 1,288
Rowan Companies, Inc. (a) 1,088,600 20,275,175
Ryan Energy Technologies, 298,200 879,116
Inc. (a)
Santa Fe International Corp. 118,300 3,120,163
Schlumberger Ltd. 769,245 51,347,104
SEACOR SMIT, Inc. (a) 108,900 5,655,994
Smith International, Inc. (a) 1,113,800 52,000,538
Tidewater, Inc. 646,465 21,010,113
Transocean Offshore, Inc. 228,154 7,757,236
Tuboscope, Inc. (a) 610,900 8,896,231
UTI Energy Corp. (a) 170,000 3,400,000
Varco International, Inc. (a) 172,500 2,134,688
638,637,276
ENGINEERING - 0.2%
Stolt Comex Seaway SA (a) 139,500 1,778,625
INDUSTRIAL MACHINERY &
EQUIPMENT - 0.2%
Gardner Denver Machinery, 75,000 1,439,063
Inc. (a)
SHARES VALUE (NOTE 1)
IRON & STEEL - 0.2%
NS Group, Inc. (a) 120,000 $ 1,425,000
Prudential Steel Ltd. 35,000 298,995
1,723,995
LEASING & RENTAL - 0.1%
Hanover Compressor Co. (a) 900 32,344
Superior Energy Services, 125,000 781,250
Inc. (a)
813,594
OIL & GAS - 11.7%
Compagnie Generale de 42,300 507,600
Geophysique SA sponsored ADR
(a)
Cooper Cameron Corp. (a) 946,276 39,388,739
Dailey International, Inc. 285,000 279,300
(a)(c)
National-Oilwell, Inc. (a) 12,000 204,000
Petroleum Geo-Services ASA 126,600 2,587,388
sponsored ADR (a)
Veritas DGC, Inc. (a) 20,500 366,438
Weatherford International, 1,395,940 49,730,363
Inc. (a)
93,063,828
SHIP BUILDING & REPAIR - 0.2%
Dril-Quip, Inc. (a) 57,400 1,603,613
TOTAL COMMON STOCKS 740,080,951
(Cost $621,999,294)
CASH EQUIVALENTS - 7.2%
Taxable Central Cash Fund, 57,266,536 57,266,536
5.20% (b) (Cost $57,266,536)
TOTAL INVESTMENT PORTFOLIO - 797,347,487
100.1% (Cost $679,265,830)
NET OTHER ASSETS - (0.1%) (1,034,336)
NET ASSETS - 100% $ 796,313,151
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
(c) Affiliated company
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $331,932,802 and $278,869,443, 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 $69,674 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
Dailey International, Inc. $ - $ - $ - $ 279,300
</TABLE>
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $701,754,098. Net unrealized appreciation
aggregated $95,593,389, of which $151,367,435 related to appreciated
investment securities and $55,774,046 related to depreciated
investment securities.
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 has elected 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.
ENERGY SERVICE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 797,347,487
value (cost $679,265,830) -
See accompanying schedule
Receivable for investments 8,357,556
sold
Receivable for fund shares 3,796,330
sold
Dividends receivable 582,608
Interest receivable 237,428
Redemption fees receivable 25,975
TOTAL ASSETS 810,347,384
LIABILITIES
Payable for investments $ 3,156,183
purchased
Payable for fund shares 10,067,431
redeemed
Accrued management fee 393,381
Other payables and accrued 417,238
expenses
TOTAL LIABILITIES 14,034,233
NET ASSETS $ 796,313,151
Net Assets consist of:
Paid in capital $ 864,226,989
Accumulated net investment (1,239,921)
loss
Accumulated undistributed net (184,755,810)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 118,081,893
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 33,097,001 $ 796,313,151
shares outstanding
NET ASSET VALUE and $24.06
redemption price per share
($796,313,151 (divided by)
33,097,001 shares)
Maximum offering price per $24.80
share (100/97.00 of $24.06)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 1,956,753
Dividends
Interest 1,221,854
Security lending 2,836
TOTAL INCOME 3,181,443
EXPENSES
Management fee $ 2,104,259
Transfer agent fees 2,056,569
Accounting and security 249,839
lending fees
Non-interested trustees' 1,044
compensation
Custodian fees and expenses 17,025
Registration fees 99,746
Audit 13,174
Legal 367
Total expenses before 4,542,023
reductions
Expense reductions (120,659) 4,421,364
NET INVESTMENT INCOME (LOSS) (1,239,921)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 1,882,599
Foreign currency transactions (5,493) 1,877,106
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 339,045,152
Assets and liabilities in 236 339,045,388
foreign currencies
NET GAIN (LOSS) 340,922,494
NET INCREASE (DECREASE) IN $ 339,682,573
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 1,784,256
charges paid to FDC
Sales charges - Retained by $ 1,777,258
FDC
Deferred sales charges $ 3,134
withheld by FDC
Exchange fees withheld by FSC $ 35,782
Expense reductions Directed $ 118,747
brokerage arrangements
Custodian credits 1,153
Transfer agent credits 759
$ 120,659
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ (1,239,921) $ (3,167,669)
income (loss)
Net realized gain (loss) 1,877,106 (185,190,842)
Change in net unrealized 339,045,388 (243,966,665)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 339,682,573 (432,325,176)
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders - (54,767,354)
from net realized gain
Share transactions Net 754,638,708 1,182,599,212
proceeds from sales of shares
Reinvestment of distributions - 53,845,591
Cost of shares redeemed (666,913,334) (1,305,871,677)
NET INCREASE (DECREASE) IN 87,725,374 (69,426,874)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 2,008,832 4,414,000
TOTAL INCREASE (DECREASE) 429,416,779 (552,105,404)
IN NET ASSETS
NET ASSETS
Beginning of period 366,896,372 919,001,776
End of period (including $ 796,313,151 $ 366,896,372
accumulated net investment
loss of $1,239,921 and $0,
respectively)
OTHER INFORMATION
Shares
Sold 38,335,822 53,434,483
Issued in reinvestment of - 1,829,614
distributions
Redeemed (33,261,311) (60,036,675)
Net increase (decrease) 5,074,511 (4,772,578)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 1997 1996 G 1995
Net asset value, beginning of $ 13.09 $ 28.02 $ 20.46 $ 16.09 $ 11.97 $ 11.66
period
Income from Investment
Operations
Net investment income (loss) (.04) (.10) (.10) (.01) .08 E .02
D
Net realized and unrealized 10.95 (13.26) 9.36 5.05 4.49 .67
gain (loss)
Total from investment 10.91 (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 - - - - - (.13)
gain
Total distributions - (1.71) (1.85) (.79) (.52) (.50)
Redemption fees added to paid .06 .14 .15 .12 .07 .12
in capital
Net asset value, end of period $ 24.06 $ 13.09 $ 28.02 $ 20.46 $ 16.09 $ 11.97
TOTAL RETURN B, C 83.80% (50.57)% 48.43% 32.26% 39.15% 7.60%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 796,313 $ 366,896 $ 919,002 $ 439,504 $ 273,805 $ 63,794
(000 omitted)
Ratio of expenses to average 1.24% A 1.39% 1.25% 1.47% 1.59% 1.81%
net assets
Ratio of expenses to average 1.21% A, F 1.35% F 1.22% F 1.45% F 1.58% F 1.79% F
net assets after expense
reductions
Ratio of net investment (.34)% A (.49)% (.35)% (.07)% .60% .19%
income (loss) to average net
assets
Portfolio turnover rate 83% A 75% 78% 167% 223% 209%
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 NET INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.02 PER SHARE. F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. G FOR THE YEAR ENDED FEBRUARY 29
</TABLE>
GOLD PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT GOLD 0.78% 45.98% -36.12% -10.47%
SELECT GOLD (LOAD ADJ.) -2.31% 41.53% -38.11% -13.23%
S&P 500 7.32% 39.82% 206.52% 384.79%
GS Natural Resources 43.20% 49.26% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 index - a 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
resources 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 AUGUST 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT GOLD 45.98% -8.57% -1.10%
SELECT GOLD (LOAD ADJ.) 41.53% -9.15% -1.41%
S&P 500 39.82% 25.11% 17.10%
GS Natural Resources 49.26% 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
GOLD S&P 500
00041 SP001
1989/08/31 9700.00 10000.00
1989/09/30 9756.25 9959.00
1989/10/31 9856.25 9727.95
1989/11/30 11112.50 9926.40
1989/12/31 10937.50 10164.64
1990/01/31 11418.75 9482.59
1990/02/28 11100.00 9604.91
1990/03/31 10668.75 9859.44
1990/04/30 9512.50 9612.96
1990/05/31 10350.00 10550.22
1990/06/30 9687.50 10478.48
1990/07/31 10362.50 10444.95
1990/08/31 10175.00 9500.72
1990/09/30 10168.75 9038.04
1990/10/31 8500.00 8999.18
1990/11/30 8393.75 9580.52
1990/12/31 9056.25 9847.82
1991/01/31 7800.00 10277.18
1991/02/28 8506.25 11012.00
1991/03/31 8475.00 11278.49
1991/04/30 8175.00 11305.56
1991/05/31 8456.25 11793.96
1991/06/30 9025.00 11253.80
1991/07/31 8925.00 11778.23
1991/08/31 8200.00 12057.37
1991/09/30 8062.50 11856.01
1991/10/31 8681.25 12014.88
1991/11/30 8662.50 11530.68
1991/12/31 8500.00 12849.79
1992/01/31 8706.25 12610.79
1992/02/29 8437.50 12774.73
1992/03/31 7862.50 12525.62
1992/04/30 7462.50 12893.87
1992/05/31 7993.75 12957.05
1992/06/30 8512.50 12763.99
1992/07/31 9050.00 13286.04
1992/08/31 8881.25 13013.68
1992/09/30 8831.25 13167.24
1992/10/31 8568.75 13213.32
1992/11/30 7843.75 13663.90
1992/12/31 8237.50 13831.96
1993/01/31 8081.25 13948.15
1993/02/28 8843.75 14137.85
1993/03/31 9837.50 14436.15
1993/04/30 11081.25 14086.80
1993/05/31 12312.50 14464.33
1993/06/30 13031.25 14506.27
1993/07/31 14068.75 14448.25
1993/08/31 13331.25 14995.84
1993/09/30 11918.75 14880.37
1993/10/31 13700.00 15188.39
1993/11/30 13712.50 15044.10
1993/12/31 14718.75 15226.14
1994/01/31 14725.00 15743.82
1994/02/28 14162.50 15317.17
1994/03/31 14506.25 14649.34
1994/04/30 13281.25 14836.85
1994/05/31 13856.25 15080.17
1994/06/30 13175.00 14710.71
1994/07/31 12981.25 15193.22
1994/08/31 13593.75 15816.14
1994/09/30 14781.25 15428.65
1994/10/31 13712.50 15775.79
1994/11/30 12087.50 15201.24
1994/12/31 12443.75 15426.67
1995/01/31 11143.75 15826.69
1995/02/28 11525.00 16443.45
1995/03/31 13293.75 16928.70
1995/04/30 13243.75 17427.25
1995/05/31 13518.75 18123.82
1995/06/30 13706.25 18544.83
1995/07/31 14075.00 19159.78
1995/08/31 14106.25 19207.87
1995/09/30 14100.00 20018.44
1995/10/31 12400.00 19946.98
1995/11/30 13550.00 20822.65
1995/12/31 13837.50 21223.69
1996/01/31 16293.75 21946.15
1996/02/29 16943.75 22149.59
1996/03/31 17350.00 22362.89
1996/04/30 17762.50 22692.52
1996/05/31 19700.00 23277.76
1996/06/30 16918.75 23366.44
1996/07/31 16606.25 22334.12
1996/08/31 18300.00 22805.14
1996/09/30 17962.50 24088.62
1996/10/31 17468.75 24752.98
1996/11/30 16718.75 26624.06
1996/12/31 16593.99 26096.63
1997/01/31 15886.64 27727.15
1997/02/28 17976.83 27944.53
1997/03/31 15121.94 26796.29
1997/04/30 14208.43 28396.03
1997/05/31 15023.62 30124.78
1997/06/30 13736.84 31474.37
1997/07/31 13521.25 33978.79
1997/08/31 13649.26 32075.30
1997/09/30 14814.77 33832.06
1997/10/31 12544.38 32702.07
1997/11/30 9586.82 34215.85
1997/12/31 10058.41 34803.33
1998/01/31 10617.59 35188.26
1998/02/28 10220.10 37726.04
1998/03/31 10887.07 39657.99
1998/04/30 11520.35 40056.94
1998/05/31 9896.72 39368.37
1998/06/30 8690.79 40967.51
1998/07/31 8050.77 40531.21
1998/08/31 5948.81 34671.20
1998/09/30 9216.28 36892.24
1998/10/31 8940.06 39893.06
1998/11/30 8751.42 42310.97
1998/12/31 9189.33 44748.93
1999/01/31 8933.33 46620.33
1999/02/28 8616.68 45171.37
1999/03/31 8630.16 46978.68
1999/04/30 9977.57 48798.16
1999/05/31 8441.52 47646.04
1999/06/30 8845.74 50290.39
1999/07/31 8320.25 48720.33
1999/08/31 8677.00 48479.16
IMATRL PRASUN SHR__CHT 19990831 19990909 154434 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Gold Portfolio on August 31, 1989, and the
current 3.00% sales charge was paid. As the chart shows, by August 31,
1999, the value of the investment would have been $8,677 - a 13.23%
decrease on the initial investment - and includes the effect of a
$7.50 trading fee. For comparison, look at how the Standard & Poor's
500 Index did over the same period. With dividends and capital gains,
if any, reinvested, the same $10,000 investment would have grown to
$48,479 - a 384.79% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
Meridian Gold, Inc. 10.6
Placer Dome, Inc. 9.3
Anglogold Ltd. 6.7
Freeport-McMoRan Copper & 5.9
Gold, Inc. Class B
Normandy Mining Ltd. 5.8
Barrick Gold Corp. 5.3
Euro-Nevada Mining Corp. Ltd. 4.9
Agnico-Eagle Mines Ltd. 4.9
Newmont Mining Corp. 4.9
Newcrest Mining Ltd. 4.5
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Gold Ores (Canada) 44.2%
Gold Ores (United States
of America) 8.9%
Gold Ores (Australia) 8.7%
Gold & Silver Ores
(South Africa) 8.5%
Gold & Silver Ores
(Australia) 6.7%
All Others 23.0%*
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
Row: 1, Col: 1, Value: 23.0
Row: 1, Col: 2, Value: 6.7
Row: 1, Col: 3, Value: 8.5
Row: 1, Col: 4, Value: 8.699999999999999
Row: 1, Col: 5, Value: 8.9
Row: 1, Col: 6, Value: 44.2
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
GOLD PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of George Domolky)
George Domolky,
Portfolio Manager
of Fidelity Select
Gold Portfolio
Q. HOW DID THE FUND PERFORM, GEORGE?
A. The fund's performance was disappointing relative to its
benchmarks, although it posted a small gain in spite of further
weakness in the price of gold. For the six months that ended August
31, 1999, the fund returned 0.78%, trailing the 7.32% gain in the
Standard & Poor's 500 Index and the 43.20% gain in 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 August 31, 1999, the fund returned 45.98%, beating
the 39.82% gain in the S&P 500 but coming up slightly short of the
49.26% gain in the Goldman Sachs index.
Q. WHY DID THE FUND UNDERPERFORM THE INDEXES BY SO MUCH DURING THE
SIX-MONTH PERIOD?
A. Selling pressure once again engulfed the gold market, this time in
response to the Bank of England's announcement in May of its intention
to sell off about 400 tons of gold over the next 18 months. That
announcement drove down the price of the yellow metal to around the
level of $250 per ounce in late August. While the Goldman Sachs index
contains precious metals stocks, it also contains the stocks of
companies that produce base metals such as copper, aluminum, zinc and
nickel. The prices of base metals advanced sharply during the period
as did energy prices, enabling the Goldman Sachs index to outpace the
fund's performance by a wide margin. The S&P 500 also performed well
because the environment for stocks in most sectors continued to be
favorable, with moderate growth in the U.S. economy and negligible
inflation.
Q. HOW DID DEMAND FOR GOLD FROM ASIA AFFECT THE MARKET?
A. The formerly depressed economies of Asia appeared to be recovering
much faster than most investors expected. Since the Asian jewelry
market uses a significant percentage of annual worldwide gold
production, this development undoubtedly prevented gold's price from
sliding even further than it did.
Q. WHAT STOCKS HELPED THE FUND'S PERFORMANCE?
A. Anglogold Ltd., the largest gold mining company in South Africa,
made a positive contribution to performance. The stock price was
supported by investors' confidence in the company's management and its
strategic approach to cost-cutting. Although foreign investments are
typically riskier than U.S.-based ones, I've tried to offset some of
that risk by seeking out companies with the best management,
healthiest cash flows and strongest balance sheets, as well as the
capability to add meaningfully to production. Anglogold is a good
example of that strategy. Newmont Mining also bucked the downtrend, as
investor interest in the stock remained high because of the company's
large reserve position. Finally, the price of Getchell Gold benefited
from the company's acquisition by Placer Dome.
Q. WHAT STOCKS DETRACTED FROM PERFORMANCE?
A. Euro-Nevada Mining Corp., which derives the bulk of its revenue
from gold royalties, was a disappointment. In the recent difficult
environment, investors became skeptical of the company's future
earnings stream. Normandy Mining, an Australian holding, was another
negative contributor to performance. Its decision to acquire TVX Gold
was not well received by investors. Also disappointing was Placer
Dome, which ran into trouble when investors judged that the company
paid too much for some recent acquisitions.
Q. WHAT'S YOUR OUTLOOK, GEORGE?
A. At the end of the period, the price of gold was close to a 20-year
low. With prices so low, many mines must cut back their budgets for
exploring and developing new properties. Over the long term, this
should have the effect of curtailing supply and supporting gold
prices. Other factors that could help gold would be a resurgence of
inflation in the Western world, a decline in the value of the U.S.
dollar and a reduction in central bank sales of gold. Regardless of
what gold does, however, my goal is to keep the fund invested in the
stocks of the highest-quality companies.
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 3.
(checkmark)FUND FACTS
START DATE: December 16, 1985
FUND NUMBER: 041
TRADING SYMBOL: FSAGX
SIZE: as of August 31, 1999, more than
$177 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 AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 98.1%
SHARES VALUE (NOTE 1)
AUSTRALIA - 17.5%
METALS & MINING - 2.1%
METAL MINING SERVICES - 2.1%
Acacia Resources Ltd. 3,060,755 $ 3,642,100
PRECIOUS METALS - 15.4%
GOLD & SILVER ORES - 6.7%
Normandy Mining Ltd. 14,355,416 10,285,943
Sons of Gwalia NL 635,235 1,584,927
11,870,870
GOLD ORES - 8.7%
Delta Gold NL 5,320,509 7,515,581
Newcrest Mining Ltd. (a) 3,335,062 7,894,342
15,409,923
TOTAL PRECIOUS METALS 27,280,793
TOTAL AUSTRALIA 30,922,893
CANADA - 49.8%
METALS & MINING - 2.1%
METAL MINING SERVICES - 0.1%
Minefinders Corp. Ltd. (a) 297,600 129,608
Minefinders Corp. Ltd. (a)(d) 200,000 87,102
216,710
MISCELLANEOUS NONMETALLIC
MINERALS - 2.0%
Camphor Ventures, Inc. (a) 14,100 6,235
DIA Metropolitan Minerals Ltd.:
Class A (sub-vtg.) (a) 50,650 755,084
Class B (multi-vtg.) (a) 177,900 2,801,106
3,562,425
TOTAL METALS & MINING 3,779,135
OIL & GAS - 0.4%
OIL & GAS FIELD EXPLORATION
SERVICES - 0.4%
Southwestern Gold Corp. (a) 227,500 670,687
PRECIOUS METALS - 47.3%
GOLD & SILVER ORES - 3.1%
Goldcorp, Inc. Class A (a) 1,056,200 5,236,771
Richmont Mines, Inc. (a) 198,600 294,074
5,530,845
GOLD ORES - 44.2%
Agnico-Eagle Mines Ltd. 1,427,500 8,608,040
Barrick Gold Corp. 485,500 9,368,442
Euro-Nevada Mining Corp. Ltd. 721,400 8,676,134
Francisco Gold Corp. (a) 191,200 980,020
Francisco Gold Corp. (d) 144,500 740,653
Franco Nevada Mining Corp. 369,600 5,819,497
Ltd.
Franco Nevada Mining Corp. 106,900 1,683,183
Ltd. (d)
SHARES VALUE (NOTE 1)
Franco Nevada Mining Corp. 33,334 $ 167,508
Ltd. Class B warrants
9/15/98 (a)(d)
Geomaque Explorations Ltd. (a) 678,100 227,169
Glamis Gold Ltd. (a) 897,600 1,683,940
High River Gold Mines Ltd. (a) 60,000 17,688
IAMGOLD, International 195,200 438,137
African Mining Gold Corp. (a)
IAMGOLD, International 60,000 134,673
African Mining Gold Corp. (d)
Meridian Gold, Inc. (a) 3,569,700 18,775,304
Metallica Resources, Inc. 1,042,100 363,077
(a)(c)
Metallica Resources, Inc. 100,000 34,841
(a)(c)(d)
Mountain Province Mining, 427,400 773,186
Inc. (a)
Placer Dome, Inc. 1,584,787 16,458,424
Repadre Capital Corp. (a) 301,200 435,908
Repadre Capital Corp. (a)(d) 155,000 224,322
Teck Corp. Class B (sub-vtg.) 300,300 2,605,618
Vengold, Inc. (a) 315,000 15,829
78,231,593
TOTAL PRECIOUS METALS 83,762,438
TOTAL CANADA 88,212,260
GHANA - 1.3%
PRECIOUS METALS - 1.3%
GOLD ORES - 1.3%
Ashanti Goldfields Co. Ltd. 319,902 2,319,290
GDR
GRAND CAYMAN ISLANDS - 0.1%
PRECIOUS METALS - 0.1%
SILVER ORES - 0.1%
Apex Silver Mines Ltd. (a) 14,800 190,550
PERU - 5.0%
PRECIOUS METALS - 5.0%
SILVER ORES - 5.0%
Compania de Minas
Buenaventura SA:
Class B 939,419 7,184,690
Series A sponsored ADR 224,445 1,722,523
8,907,213
SOUTH AFRICA - 8.9%
METALS & MINING - 0.4%
NON-METALLIC MINERALS, EXCEPT
FUELS - 0.4%
De Beers Consolidated Mines 25,000 679,688
Ltd. ADR
PRECIOUS METALS - 8.5%
GOLD & SILVER ORES - 8.5%
Anglogold Ltd. 236,500 11,851,228
Gold Fields Ltd. 919,135 3,171,254
15,022,482
TOTAL SOUTH AFRICA 15,702,170
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED KINGDOM - 0.3%
METALS & MINING - 0.3%
MISCELLANEOUS METAL ORES, NEC
- - 0.3%
Anglo American PLC (a) 10,000 $ 550,070
UNITED STATES OF AMERICA -
15.2%
METALS & MINING - 5.9%
COPPER ORES - 5.9%
Freeport-McMoRan Copper & 655,000 10,520,938
Gold, Inc. Class B
PRECIOUS METALS - 8.9%
GOLD ORES - 8.9%
Homestake Mining Co. 340,006 2,890,051
Newmont Mining Corp. 420,565 8,595,297
Stillwater Mining Co. (a) 136,000 3,000,500
Stillwater Mining Co. (d) 59,400 1,310,513
15,796,361
SERVICES - 0.4%
JEWELRY, PRECIOUS METAL - 0.4%
Lazare Kaplan International, 85,300 703,725
Inc. (a)
TOTAL UNITED STATES OF AMERICA 27,021,024
TOTAL COMMON STOCKS 173,825,470
(Cost $209,331,292)
CASH EQUIVALENTS - 0.4%
Taxable Central Cash Fund, 715,535 715,535
5.20% (b) (Cost $715,535)
TOTAL INVESTMENT PORTFOLIO - 174,541,005
98.5%
NET OTHER ASSETS - 1.5% 2,685,944
NET ASSETS - 100% $ 177,226,949
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
(c) Affiliated company
(d) 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
$4,382,795 or 2.5% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $55,375,308 and $55,366,426, 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 $9,904 for the
period.
Transactions during the period with companies which are or were
affiliates are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
AFFILIATE PURCHASE COST SALES COST DIVIDEND INCOME VALUE
Metallica Resources, Inc. $ - $ - $ - $ 397,918
</TABLE>
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $211,446,902. Net unrealized depreciation
aggregated $36,905,897, of which $14,504,368 related to appreciated
investment securities and $51,410,265 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 elect 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
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 174,541,005
value (cost $210,046,827) -
See accompanying schedule
Receivable for investments 917,463
sold
Receivable for fund shares 2,123,552
sold
Dividends receivable 726,592
Interest receivable 13,561
Redemption fees receivable 1,403
Other receivables 6,280
TOTAL ASSETS 178,329,856
LIABILITIES
Payable to custodian bank $ 7,124
Payable for investments 276,737
purchased
Payable for fund shares 588,581
redeemed
Accrued management fee 86,690
Other payables and accrued 143,775
expenses
TOTAL LIABILITIES 1,102,907
NET ASSETS $ 177,226,949
Net Assets consist of:
Paid in capital $ 295,022,663
Undistributed net investment 909,084
income
Accumulated undistributed net (83,209,442)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (35,495,356)
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 13,752,983 $ 177,226,949
shares outstanding
NET ASSET VALUE and $12.89
redemption price per share
($177,226,949 (divided by)
13,752,983 shares)
Maximum offering price per $13.29
share (100/97.00 of $12.89)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 1,289,681
Dividends
Special dividend from Gold 875,395
Fields Ltd.
Interest 67,090
Security lending 3,630
TOTAL INCOME 2,235,796
EXPENSES
Management fee $ 521,931
Transfer agent fees 699,555
Accounting and security 67,761
lending fees
Custodian fees and expenses 57,126
Registration fees 26,761
Audit 8,228
Legal 118
Total expenses before 1,381,480
reductions
Expense reductions (90,359) 1,291,121
NET INVESTMENT INCOME 944,675
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (5,010,862)
Foreign currency transactions (22,162) (5,033,024)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 5,156,706
Assets and liabilities in 13,431 5,170,137
foreign currencies
NET GAIN (LOSS) 137,113
NET INCREASE (DECREASE) IN $ 1,081,788
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 233,953
charges paid to FDC
Sales charges - Retained by $ 232,460
FDC
Deferred sales charges $ 10,047
withheld by FDC
Exchange fees withheld by FSC $ 10,988
Expense reductions Directed $ 90,359
brokerage arrangements
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ 944,675 $ (1,223,735)
income (loss)
Net realized gain (loss) (5,033,024) (32,008,820)
Change in net unrealized 5,170,137 (3,278,038)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 1,081,788 (36,510,593)
NET ASSETS RESULTING FROM
OPERATIONS
Share transactions Net 125,653,500 403,467,113
proceeds from sales of shares
Cost of shares redeemed (129,643,951) (408,945,830)
NET INCREASE (DECREASE) IN (3,990,451) (5,478,717)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 516,285 1,940,375
TOTAL INCREASE (DECREASE) (2,392,378) (40,048,935)
IN NET ASSETS
NET ASSETS
Beginning of period 179,619,327 219,668,262
End of period (including $ 177,226,949 $ 179,619,327
undistributed net investment
income (loss) of $909,084
and $(35,591), respectively)
OTHER INFORMATION
Shares
Sold 9,409,953 29,231,688
Redeemed (9,701,961) (29,663,500)
Net increase (decrease) (292,008) (431,812)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 1997 1996 F
Net asset value, beginning of $ 12.79 $ 15.17 $ 28.21 $ 27.11 $ 18.44
period
Income from Investment
Operations
Net investment income (loss) D .07 H (.08) (.13) (.16) (.06)
Net realized and unrealized (.01) G (2.43) (11.78) 1.60 8.62
gain (loss)
Total from investment .06 (2.51) (11.91) 1.44 8.56
operations
Less Distributions
From net realized gain - - (1.29) (.50) -
Redemption fees added to paid .04 .13 .16 .16 .11
in capital
Net asset value, end of period $ 12.89 $ 12.79 $ 15.17 $ 28.21 $ 27.11
TOTAL RETURN B, C 0.78% (15.69)% (43.15)% 6.10% 47.02%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 177,227 $ 179,619 $ 219,668 $ 428,103 $ 451,493
(000 omitted)
Ratio of expenses to average 1.52% A 1.57% 1.55% 1.44% 1.39%
net assets
Ratio of expenses to average 1.42% A, E 1.54% E 1.48% E 1.42% E 1.39%
net assets after expense
reductions
Ratio of net investment 1.04% A (.59)% (.67)% (.59)% (.27)%
income (loss) to average net
assets
Portfolio turnover rate 62% A 59% 89% 63% 56%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28,
SELECTED PER-SHARE DATA 1995
Net asset value, beginning of $ 22.66
period
Income from Investment
Operations
Net investment income (loss) D (.05)
Net realized and unrealized (4.25)
gain (loss)
Total from investment (4.30)
operations
Less Distributions
From net realized gain -
Redemption fees added to paid .08
in capital
Net asset value, end of period $ 18.44
TOTAL RETURN B, C (18.62)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 278,197
(000 omitted)
Ratio of expenses to average 1.41%
net assets
Ratio of expenses to average 1.41%
net assets after expense
reductions
Ratio of net investment (.22)%
income (loss) to average net
assets
Portfolio turnover rate 34%
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN. C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. F FOR THE YEAR ENDED FEBRUARY 29
G 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. H NET INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL
DIVIDEND FROM GOLD FIELDS LTD. WHICH AMOUNTED TO $.06 PER SHARE.
</TABLE>
NATURAL RESOURCES PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the past one year and life of fund
total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND
SELECT NATURAL RESOURCES 52.98% 58.61% 23.82%
SELECT NATURAL RESOURCES 48.32% 53.78% 20.03%
(LOAD ADJ.)
S&P 500 7.32% 39.82% 72.48%
GS Natural Resources 43.20% 49.26% 32.80%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year or since
the fund started on March 3, 1997. You can compare the fund's returns
to the performance of both the Standard & Poor's 500 Index - a 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 AUGUST 31, 1999 PAST 1 YEAR LIFE OF FUND
SELECT NATURAL RESOURCES 58.61% 8.94%
SELECT NATURAL RESOURCES 53.78% 7.59%
(LOAD ADJ.)
S&P 500 39.82% 24.41%
GS Natural Resources 49.26% 12.04%
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
1999/02/28 7851.10 16070.92
1999/03/31 9522.82 16713.92
1999/04/30 11154.73 17361.25
1999/05/31 10796.50 16951.35
1999/06/30 11423.40 17892.15
1999/07/31 11602.51 17333.56
1999/08/31 12003.00 17247.76
IMATRL PRASUN SHR__CHT 19990831 19990909 154654 R00000000000033
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Select Natural Resources Portfolio on March 3,
1997 when the fund started, and the current 3.00% sales charge was
paid. As the chart shows, by August 31, 1999, the value of the
investment would have been $12,003 - a 20.03% increase on the initial
investment - and includes the effect of a $7.50 trading fee. For
comparison, look at how the Standard & Poor's 500 Index did over the
same period. With dividends and capital gains, if any, reinvested, the
same $10,000 investment would have grown to $17,248 - a 72.48%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
Mobil Corp. 7.8
USX-Marathon Group 5.6
Schlumberger Ltd. 4.7
Halliburton Co. 3.9
Alcoa, Inc. 3.8
Texaco, Inc. 3.2
Chevron Corp. 3.2
Amerada Hess Corp. 3.0
Exxon Corp. 2.9
BJ Services Co. 2.2
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Oil & Gas 55.6%
Energy Services 23.4%
Metals & Mining 7.8%
Gas 2.9%
Precious Metals 2.3%
All Others 8.0%*
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
Row: 1, Col: 1, Value: 8.0
Row: 1, Col: 2, Value: 2.3
Row: 1, Col: 3, Value: 2.9
Row: 1, Col: 4, Value: 7.8
Row: 1, Col: 5, Value: 23.4
Row: 1, Col: 6, Value: 55.6
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
NATURAL RESOURCES PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
(photograph of Larry Rakers) (photograph of Scott Offen)
NOTE TO SHAREHOLDERS: On September 1, 1999, after the end of the
period covered by this report, Scott Offen (right) became Portfolio
Manager of Fidelity Select Natural Resources Portfolio. The following
is an interview with Larry Rakers, who managed the fund during the
period covered by this report, with comments from Scott Offen on his
outlook.
Q. HOW DID THE FUND PERFORM, LARRY?
L.R. For the six- and 12-month periods that ended August 31, 1999, the
fund returned 52.98% and 58.61%, respectively. During the same
periods, the fund outpaced 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 43.20% and 49.26%,
respectively. The Standard & Poor's 500 Index returned 7.32% and
39.82% during the same six- and 12-month periods.
Q. WHAT FACTORS HELPED THE FUND OUTPERFORM THE GOLDMAN SACHS INDEX?
L.R. My early prediction that oil prices and commodity prices were
poised to rebound turned out to be beneficial to the fund's relative
performance. The fund's more aggressive strategy worked well over the
past six months as oil prices rebounded. Specifically, I allocated a
larger percentage of assets to smaller integrated oil companies,
energy service companies and drillers, which are more sensitive to oil
prices. In an environment of increasing oil prices, these companies
performed better than the large integrated oil companies during the
period.
Q. WHAT SPARKED THE DRAMATIC RALLY IN NATURAL RESOURCES STOCKS IN
1999?
L.R. First we saw the price of oil rebound dramatically. Much of this
increase was due to a favorable supply and demand equation. On the
supply side, OPEC announced a significant production cutback in March.
In addition, the remainder of the oil industry significantly cut back
on exploration and production efforts as the price of oil continued to
slide. On the demand side, we experienced a rebound in Asia and stable
global demand. This created a squeeze on supply, resulting in a
recovery in most commodity prices, especially oil.
Q. DID YOU MAKE ANY CHANGES TO THE FUND'S STRATEGY TO TAKE ADVANTAGE
OF THE RECOVERY IN OIL PRICES?
L.R. I did make some minor adjustments to the portfolio. I did not,
however, make any significant changes to the fund's strategy because I
believed many of the stocks in the sector did not fully price in the
increase in oil prices. As a result, even if energy prices remained
stable, these stocks could have room to grow. While the fund's
allocation of energy services and integrated oil companies remained
steady, I started to look more closely at oil refiners and natural gas
companies, which appeared to be undervalued given their favorable
supply and demand outlook.
Q. WHICH STOCKS PERFORMED WELL FOR THE FUND?
L.R. USX-Marathon Group and Halliburton, two of the fund's top-10
holdings, were big contributors to fund performance. USX-Marathon, a
leading integrated oil company, and Halliburton, a leading oil
services company, benefited from the recovery in oil prices and the
group's sensitivity to the price swings of oil. In the metals and
mining group, Alcoa was a key contributor. Shares of Alcoa rallied
dramatically as global demand for commodities improved, and aluminum
was one of the hottest commodities.
Q. WHICH STOCKS HURT FUND PERFORMANCE?
L.R. Greenstone Resources was a disappointment for the fund. This gold
mining company ran into some operational problems and a deteriorating
business outlook. While the fund was underweighted in gold mining
companies, Placer Dome and Homestake Mining also detracted from total
return as weakness in gold prices hurt stock performance.
Q. SCOTT, WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
S.O. While it is difficult to predict the strength of the global
economy, my feeling is that worldwide economic activity will remain
steady. There are a number of overseas economies recovering from
recessions, Asia seems to be turning the corner to recovery and Europe
looks stable. While U.S. economic growth is in question due to
potentially higher domestic interest rates, I don't think it will lead
to a global slowdown. Since commodity prices are heavily dependent
upon global demand, I'm fairly optimistic about the outlook for
natural resources stocks.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGERS ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE 3.
(checkmark)FUND FACTS
START DATE: March 3, 1997
FUND NUMBER: 514
TRADING SYMBOL: FNATF
SIZE: as of August 31, 1999, more than $22
million
MANAGER: Scott Offen, since September 1999;
manager, Fidelity Select Food and Agriculture
Portfolio, since 1996; manager, several
Fidelity Select portfolios, 1988-1996;
joined Fidelity in 1985
NATURAL RESOURCES PORTFOLIO
INVESTMENTS AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 92.4%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES -
0.2%
Barrett Resources Corp. (a) 1,400 $ 50,488
ELECTRIC UTILITY - 0.2%
Calpine Corp. (a) 400 36,250
Illinova Corp. 400 12,750
49,000
ENERGY SERVICES - 23.4%
Baker Hughes, Inc. 11,490 390,660
BJ Services Co. (a) 14,100 482,925
Bonus Resource Services Corp. 8,400 18,573
(a)
ENSCO International, Inc. 18,800 400,675
Global Marine, Inc. (a) 9,200 163,300
Halliburton Co. 18,800 871,850
Helmerich & Payne, Inc. 6,300 173,644
Marine Drilling Companies, 10,000 158,750
Inc. (a)
McDermott International, Inc. 1,800 40,613
Nabors Industries, Inc. (a) 8,800 237,600
Noble Drilling Corp. (a) 16,500 406,313
Oceaneering International, 600 12,038
Inc. (a)
Precision Drilling Corp. 2,500 56,784
Class A (a)
Rowan Companies, Inc. (a) 2,000 37,250
Santa Fe International Corp. 4,200 110,775
Schlumberger Ltd. 15,726 1,049,711
Smith International, Inc. (a) 5,300 247,444
Tidewater, Inc. 2,400 78,000
Tuboscope, Inc. (a) 10,300 149,994
Unit Corp. (a) 4,100 31,519
UTI Energy Corp. (a) 4,100 82,000
5,200,418
GAS - 2.9%
Dynegy, Inc. 7,200 169,200
K N Energy, Inc. 10,600 215,975
Ocean Energy, Inc. (a) 25,700 260,213
645,388
LEASING & RENTAL - 0.1%
Superior Energy Services, 1,800 11,250
Inc. (a)
METALS & MINING - 7.8%
Alcan Aluminium Ltd. 900 29,608
Alcoa, Inc. 13,100 845,769
ASARCO, Inc. 600 12,525
Breakwater Resources Ltd. (a) 36,900 92,714
Camphor Ventures, Inc. (a) 16,400 7,252
Cominco Ltd. 3,600 62,111
Cyprus Amax Minerals Co. 6,800 115,175
Freeport-McMoRan Copper & 6,200 89,125
Gold, Inc.
Freeport-McMoRan Copper & 3,500 56,219
Gold, Inc. Class B
Inco Ltd. 7,900 162,234
Phelps Dodge Corp. 700 39,156
SHARES VALUE (NOTE 1)
Reynolds Metals Co. 3,300 $ 208,931
Rio Algom Ltd. 1,500 22,864
1,743,683
OIL & GAS - 55.5%
Alberta Energy Co. Ltd. 4,900 151,022
Amerada Hess Corp. 10,800 670,275
Anadarko Petroleum Corp. 6,600 224,400
Apache Corp. 6,800 309,400
Atlantic Richfield Co. 3,100 272,606
Basin Exploration, Inc. (a) 3,200 72,800
Bellator Exploration, Inc. (a) 9,800 10,834
Benton Oil & Gas Co. (a) 8,600 22,038
British-Borneo Oil & Gas PLC 23,300 81,934
Cabot Oil & Gas Corp. Class A 2,200 41,938
Canada Occidental Petroleum 6,400 117,923
Ltd.
Canadian Hunter Exploration 4,100 66,616
Ltd.
Canadian Natural Resources 5,600 138,827
Ltd. (a)
Chevron Corp. 7,800 719,550
Comstock Resources, Inc. (a) 3,000 13,875
Conoco, Inc. Class B 6,351 170,683
Cooper Cameron Corp. (a) 1,100 45,788
Crestar Energy, Inc. (a) 7,600 107,953
EEX Corp. (a) 4,300 20,425
Elf Aquitaine SA sponsored ADR 800 70,450
Encal Energy Ltd. (a) 3,500 18,760
Enron Oil & Gas Co. 5,800 138,475
Ensign Resource Service 1,200 26,533
Group, Inc.
Exxon Corp. 8,100 638,888
Forest Oil Corp. (a) 2,400 35,850
Frontier Oil Corp. (a) 50,700 405,600
Gulf Canada Resources Ltd. (a) 5,600 22,888
Imperial Oil Ltd. 3,800 79,946
Kerr-McGee Corp. 7,055 395,080
Louis Dreyfus Natural Gas 5,700 124,688
Corp. (a)
Magnum Hunter Resources, Inc. 11,900 45,369
Magnum Hunter Resources, Inc. 3,966 1,735
warrants 7/1/02 (a)
Mobil Corp. 17,000 1,740,369
Murphy Oil Corp. 1,100 55,825
Noble Affiliates, Inc. 900 27,900
Novus Petroleum Ltd. (a) 19,000 19,205
Nuevo Energy Co. (a) 9,200 161,000
Occidental Petroleum Corp. 1,000 21,688
Penn West Petroleum Ltd. (a) 1,800 38,291
Pennaco Energy, Inc. (a) 1,500 17,438
Petro-Canada 14,700 221,116
Petrobras PN (Pfd. Reg.) 1 0
Pioneer Natural Resources Co. 14,200 161,525
Plains Resources, Inc. (a) 12,100 231,413
Pogo Producing Co. 1,600 33,400
Premier Oil PLC (a) 117,300 42,849
Prima Energy Corp. (a) 1,200 26,025
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
OIL & GAS - CONTINUED
Range Resources Corp. 5,800 $ 31,900
Ranger Oil Ltd. (a) 4,400 20,047
Remington Oil & Gas Corp. 4,900 25,419
Rio Alto Exploration Ltd. (a) 6,600 107,899
Santa Fe Snyder Corp. (a) 29,985 292,354
Shell Transport & Trading Co. 8,000 64,250
PLC (Reg.)
St. Mary Land & Exploration 1,500 39,750
Co.
Suncor Energy, Inc. 5,800 239,189
Sunoco, Inc. 7,900 257,244
Swift Energy Co. (a) 6,000 75,750
Talisman Energy, Inc. (a) 5,100 149,668
Texaco, Inc. 11,400 723,900
Titan Exploration, Inc. (a) 5,800 31,900
Tosco Corp. 7,600 193,800
Ulster Petroleums Ltd. (a) 5,600 61,910
Ultramar Diamond Shamrock 3,400 88,825
Corp.
Union Pacific Resources 8,600 154,263
Group, Inc.
Upton Resources, Inc. (a) 7,600 13,749
USX-Marathon Group 40,000 1,245,000
Valero Energy Corp. 3,800 80,750
Vintage Petroleum, Inc. 14,900 213,256
Weatherford International, 4,495 160,134
Inc. (a)
Wiser Oil Co. 4,400 12,925
12,345,075
PRECIOUS METALS - 2.3%
Agnico-Eagle Mines Ltd. 1,900 11,457
Meridian Gold, Inc. (a) 10,600 55,752
Mountain Province Mining, 9,100 16,462
Inc. (a)
Newmont Mining Corp. 2,100 42,919
Pan American Silver Corp. (a) 2,400 12,704
Placer Dome, Inc. 18,400 191,089
Repadre Capital Corp. (a) 1,500 2,171
Stillwater Mining Co. (a) 8,150 179,809
William Resources, Inc. 15,750 0
warrants 2/15/03 (a)(c)
512,363
TOTAL COMMON STOCKS 20,557,665
(Cost $17,567,167)
CONVERTIBLE PREFERRED STOCKS
- - 0.1%
OIL & GAS - 0.1%
Chesapeake Energy Corp. $3.50 1,000 28,750
(Cost $9,692)
CASH EQUIVALENTS - 3.4%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund, 753,725 $ 753,725
5.20% (b) (Cost $753,725)
TOTAL INVESTMENT PORTFOLIO - 21,340,140
95.9%
(Cost $18,330,584)
NET OTHER ASSETS - 4.1% 921,802
NET ASSETS - 100% $ 22,261,942
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
(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 $0 or 0.0% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $21,696,176 and $10,196,082, 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 $3,638 for the
period.
Distribution of investments by country of issue, as a percentage of
net assets, is as follows:
United States of America 83.4%
Canada 10.6
Netherlands Antilles 4.7
Others (individually less 1.3
than 1%)
100.0%
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $18,564,138. Net unrealized appreciation
aggregated $2,776,002, of which $3,174,270 related to appreciated
investment securities and $398,268 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 has elected 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
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 21,340,140
value (cost $18,330,584) -
See accompanying schedule
Receivable for investments 1,059,466
sold
Receivable for fund shares 129,694
sold
Dividends receivable 41,665
Interest receivable 6,180
Redemption fees receivable 553
Other receivables 37
TOTAL ASSETS 22,577,735
LIABILITIES
Payable for investments $ 152,511
purchased
Payable for fund shares 125,349
redeemed
Accrued management fee 9,444
Other payables and accrued 28,489
expenses
TOTAL LIABILITIES 315,793
NET ASSETS $ 22,261,942
Net Assets consist of:
Paid in capital $ 20,038,853
Accumulated net investment (17,837)
loss
Accumulated undistributed net (768,723)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 3,009,649
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 1,844,064 $ 22,261,942
shares outstanding
NET ASSET VALUE and $12.07
redemption price per share
($22,261,942 (divided by)
1,844,064 shares)
Maximum offering price per $12.44
share (100/97.00 of $12.07)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 109,339
Dividends
Interest 25,978
Security lending 37
TOTAL INCOME 135,354
EXPENSES
Management fee $ 44,272
Transfer agent fees 45,676
Accounting and security 30,141
lending fees
Non-interested trustees' 18
compensation
Custodian fees and expenses 17,990
Registration fees 14,080
Audit 3,382
Miscellaneous 264
Total expenses before 155,823
reductions
Expense reductions (2,632) 153,191
NET INVESTMENT INCOME (LOSS) (17,837)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 467,027
Foreign currency transactions (3,087) 463,940
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 3,754,215
Assets and liabilities in 93 3,754,308
foreign currencies
NET GAIN (LOSS) 4,218,248
NET INCREASE (DECREASE) IN $ 4,200,411
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 46,993
charges paid to FDC
Sales charges - Retained by $ 46,993
FDC
Exchange fees withheld by FSC $ 855
Expense reductions Directed $ 2,632
brokerage arrangements
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ (17,837) $ (35,238)
income (loss)
Net realized gain (loss) 463,940 (1,206,189)
Change in net unrealized 3,754,308 (510,320)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 4,200,411 (1,751,747)
NET ASSETS RESULTING FROM
OPERATIONS
Share transactions Net 24,404,288 6,170,322
proceeds from sales of shares
Cost of shares redeemed (11,507,335) (6,819,368)
NET INCREASE (DECREASE) IN 12,896,953 (649,046)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 30,432 15,080
TOTAL INCREASE (DECREASE) 17,127,796 (2,385,713)
IN NET ASSETS
NET ASSETS
Beginning of period 5,134,146 7,519,859
End of period (including $ 22,261,942 $ 5,134,146
accumulated net investment
loss of $17,837 and $0,
respectively)
OTHER INFORMATION
Shares
Sold 2,241,433 655,279
Redeemed (1,048,108) (723,578)
Net increase (decrease) 1,193,325 (68,299)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 E
Net asset value, beginning of $ 7.89 $ 10.46 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.01) (.05) (.09)
Net realized and unrealized 4.17 (2.54) .76
gain (loss)
Total from investment 4.16 (2.59) .67
operations
Less Distributions
From net realized gain - - (.26)
Redemption fees added to paid .02 .02 .05
in capital
Net asset value, end of period $ 12.07 $ 7.89 $ 10.46
TOTAL RETURN B, C 52.98% (24.57)% 7.30%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 22,262 $ 5,134 $ 7,520
(000 omitted)
Ratio of expenses to average 2.03% A 2.50% F 2.50% A, F
net assets
Ratio of expenses to average 2.00% A, G 2.47% G 2.48% A, G
net assets after expense
reductions
Ratio of net investment (.23)% A (.54)% (.86)% A
income (loss) to average net
assets
Portfolio turnover rate 143% A 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.
</TABLE>
PRECIOUS METALS AND MINERALS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT PRECIOUS METALS AND 1.09% 47.22% -49.48% -17.44%
MINERALS
SELECT PRECIOUS METALS AND -2.01% 42.73% -51.07% -19.99%
MINERALS (LOAD ADJ.)
S&P 500 7.32% 39.82% 206.52% 384.79%
GS Natural Resources 43.20% 49.26% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years, or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a 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
resources 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 AUGUST 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT PRECIOUS METALS AND 47.22% -12.76% -1.90%
MINERALS
SELECT PRECIOUS METALS AND 42.73% -13.32% -2.21%
MINERALS (LOAD ADJ.)
S&P 500 39.82% 25.11% 17.10%
GS Natural Resources 49.26% 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
PRECIOUS METALS&MINERALS S&P 500
00061 SP001
1989/08/31 9700.00 10000.00
1989/09/30 10041.33 9959.00
1989/10/31 10033.39 9727.95
1989/11/30 11311.37 9926.40
1989/12/31 11602.83 10164.64
1990/01/31 12526.88 9482.59
1990/02/28 11450.16 9604.91
1990/03/31 10951.98 9859.44
1990/04/30 9827.05 9612.96
1990/05/31 10389.52 10550.22
1990/06/30 9634.21 10478.48
1990/07/31 10220.78 10444.95
1990/08/31 10325.24 9500.72
1990/09/30 10092.22 9038.04
1990/10/31 8959.25 8999.18
1990/11/30 8798.55 9580.52
1990/12/31 9157.71 9847.82
1991/01/31 8163.72 10277.18
1991/02/28 8896.99 11012.00
1991/03/31 8725.89 11278.49
1991/04/30 8701.45 11305.56
1991/05/31 9190.30 11793.96
1991/06/30 9793.21 11253.80
1991/07/31 9793.21 11778.23
1991/08/31 8766.63 12057.37
1991/09/30 8945.87 11856.01
1991/10/31 9548.78 12014.88
1991/11/30 9850.24 11530.68
1991/12/31 9298.51 12849.79
1992/01/31 9495.83 12610.79
1992/02/29 9002.54 12774.73
1992/03/31 8649.01 12525.62
1992/04/30 8139.28 12893.87
1992/05/31 8673.68 12957.05
1992/06/30 8722.61 12763.99
1992/07/31 8837.92 13286.04
1992/08/31 8442.57 13013.68
1992/09/30 8096.63 13167.24
1992/10/31 7577.72 13213.32
1992/11/30 7132.94 13663.90
1992/12/31 7265.30 13831.96
1993/01/31 7441.27 13948.15
1993/02/28 8262.49 14137.85
1993/03/31 9385.39 14436.15
1993/04/30 10902.14 14086.80
1993/05/31 12343.46 14464.33
1993/06/30 12544.58 14506.27
1993/07/31 14178.64 14448.25
1993/08/31 12754.07 14995.84
1993/09/30 11748.50 14880.37
1993/10/31 13416.08 15188.39
1993/11/30 13390.94 15044.10
1993/12/31 15375.12 15226.14
1994/01/31 14739.08 15743.82
1994/02/28 14094.57 15317.17
1994/03/31 13950.40 14649.34
1994/04/30 13950.96 14836.85
1994/05/31 13976.42 15080.17
1994/06/30 14256.45 14710.71
1994/07/31 14799.56 15193.22
1994/08/31 15851.82 15816.14
1994/09/30 17065.32 15428.65
1994/10/31 16403.41 15775.79
1994/11/30 14646.81 15201.24
1994/12/31 15199.69 15426.67
1995/01/31 12551.78 15826.69
1995/02/28 13127.79 16443.45
1995/03/31 14460.34 16928.70
1995/04/30 14580.70 17427.25
1995/05/31 14400.16 18123.82
1995/06/30 14572.10 18544.83
1995/07/31 15173.90 19159.78
1995/08/31 15380.23 19207.87
1995/09/30 15423.22 20018.44
1995/10/31 13497.46 19946.98
1995/11/30 14443.15 20822.65
1995/12/31 14692.13 21223.69
1996/01/31 17772.04 21946.15
1996/02/29 18082.62 22149.59
1996/03/31 17979.10 22362.89
1996/04/30 18386.15 22692.52
1996/05/31 19449.89 23277.76
1996/06/30 16742.99 23366.44
1996/07/31 16535.43 22334.12
1996/08/31 17434.85 22805.14
1996/09/30 16708.39 24088.62
1996/10/31 16570.02 24752.98
1996/11/30 15739.79 26624.06
1996/12/31 15488.99 26096.63
1997/01/31 14823.08 27727.15
1997/02/28 16950.55 27944.53
1997/03/31 14433.91 26796.29
1997/04/30 13473.95 28396.03
1997/05/31 13698.81 30124.78
1997/06/30 12280.50 31474.37
1997/07/31 11796.20 33978.79
1997/08/31 11856.73 32075.30
1997/09/30 12410.22 33832.06
1997/10/31 10326.00 32702.07
1997/11/30 7973.67 34215.85
1997/12/31 8535.81 34803.33
1998/01/31 9400.63 35188.26
1998/02/28 8890.39 37726.04
1998/03/31 9487.12 39657.99
1998/04/30 10403.83 40056.94
1998/05/31 8812.55 39368.37
1998/06/30 7506.67 40967.51
1998/07/31 7325.06 40531.21
1998/08/31 5439.74 34671.20
1998/09/30 8267.71 36892.24
1998/10/31 8267.71 39893.06
1998/11/30 8077.45 42310.97
1998/12/31 8544.46 44748.93
1999/01/31 8285.01 46620.33
1999/02/28 7921.79 45171.37
1999/03/31 7939.08 46978.68
1999/04/30 9072.00 48798.16
1999/05/31 7619.10 47646.04
1999/06/30 7895.84 50290.39
1999/07/31 7670.99 48720.33
1999/08/31 8001.00 48479.16
IMATRL PRASUN SHR__CHT 19990831 19990909 154852 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Precious Metals and Minerals Portfolio on
August 31, 1989, and the current 3.00% sales charge was paid. As the
chart shows, by August 31, 1999, the value of the investment would
have been $8,001 - a 19.99% decrease on the initial investment - and
includes the effect of a $7.50 trading fee. For comparison, look at
how the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $48,479 - a 384.79% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
Meridian Gold, Inc. 11.5
Normandy Mining Ltd. 7.3
Placer Dome, Inc. 6.1
Euro-Nevada Mining Corp. Ltd. 5.0
Delta Gold NL 5.0
Newmont Mining Corp. 4.9
Newcrest Mining Ltd. 4.8
Acacia Resources Ltd. 4.7
De Beers Consolidated Mines 4.6
Ltd. ADR
Freeport-McMoRan Copper & 4.5
Gold, Inc. Class B
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Gold Ores (Canada) 34.0%
Gold Ores (Australia) 9.9%
Gold & Silver Ores
(South Africa) 9.8%
Gold & Silver Ores
(Australia) 8.6%
Gold Ores (United States
of America) 6.7%
All Others 31.0%*
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
Row: 1, Col: 1, Value: 31.0
Row: 1, Col: 2, Value: 6.7
Row: 1, Col: 3, Value: 8.6
Row: 1, Col: 4, Value: 9.800000000000001
Row: 1, Col: 5, Value: 9.9
Row: 1, Col: 6, Value: 34.0
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
PRECIOUS METALS AND MINERALS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of George Domolky)
George Domolky,
Portfolio Manager of Fidelity Select Precious Metals and Minerals
Portfolio
Q. HOW DID THE FUND PERFORM, GEORGE?
A. The fund turned in a poor performance relative to its benchmarks,
although it managed a positive return despite ongoing weakness in the
price of gold. For the six months that ended August 31, 1999, the fund
returned 1.09%, trailing the 7.32% gain in the Standard & Poor's 500
Index and the 43.20% gain in 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 August 31, 1999, the fund returned 47.22%, beating the 39.82%
gain in the S&P 500 but coming up slightly short of the 49.26% gain in
the Goldman Sachs index.
Q. WHY DID THE FUND UNDERPERFORM THE GOLDMAN SACHS INDEX BY SO MUCH
DURING THE SIX-MONTH PERIOD?
A. During the past six months, the price of gold was again subject to
selling pressure, this time in response to the Bank of England's
announcement in May of its intention to sell off about 400 tons of
gold over the next 18 months. This event drove down the price of gold
by about $30, to around $250 per ounce in late August. The Goldman
Sachs index, on the other hand, comprises a broad selection of natural
resources stocks, including those of companies that produce base
metals such as copper, aluminum, zinc and nickel. The prices of base
metals advanced sharply during the period, as did energy prices, which
explains the stellar performance of the Goldman Sachs index.
Q. WERE THERE ANY POSITIVE DEVELOPMENTS IN GOLD'S SUPPLY/DEMAND
PICTURE?
A. Things began to look brighter on the demand side. As 1999
progressed, it became clearer that the formerly depressed economies of
Asia were recovering much faster than most investors expected. Since a
significant percentage of annual worldwide gold production is used by
the Asian jewelry market, this development undoubtedly prevented
gold's price from sliding even further than it did.
Q. WHAT STOCKS HELPED THE FUND'S PERFORMANCE?
A. De Beers Consolidated Mines Ltd. was one of the fund's strongest
stocks. The world's premier producer of diamonds, De Beers was helped
by the recovery of the Asian markets and continued strong demand for
diamonds in the U.S. Anglogold Ltd., the largest gold mining company
in South Africa, also made a positive contribution to performance. The
stock price was supported by investors' confidence in the company's
management and its strategic approach to cost-cutting. Although
foreign investments are typically riskier than U.S.-based ones, I've
tried to offset some of that risk by seeking out companies with the
best managements, healthiest cash flows and strongest balance sheets,
as well as the capability to add meaningfully to production. De Beers
and Anglogold are two good examples of that strategy.
Q. WHAT STOCKS DETRACTED FROM PERFORMANCE?
A. Normandy Mining, an Australian holding representing the fund's
second-largest position at the end of the period, was by far the most
negative contributor to performance. Its decision to acquire TVX Gold
was not well received by investors. The fund was also hurt by its
largest holding, Meridian Gold. Although there was no particularly
negative news about the company, investors grew less confident in the
earnings prospects for the company's new mine in Chile, which was in
its final pre-production phase.
Q. WHAT'S YOUR OUTLOOK, GEORGE?
A. In order for sentiment in the gold market to improve, we need to
see a decline in central bank selling. Other positive factors would be
a resurgence of inflation in the Western world and a decline in the
value of the U.S. dollar. With gold prices near a 20-year low and
production being curtailed because of low prices, any of those
developments could precipitate a strong recovery in the price of gold.
Regardless of what gold does, however, my goal is to keep the fund
invested in the stocks of the highest-quality companies.
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 3.
NOTE TO SHAREHOLDERS: On July 15, 1999, the fund's Board of Trustees
voted to present to shareholders a proposal to merge Select Precious
Metals and Minerals Portfolio into Select Gold Portfolio. In
anticipation of the merger, Select Precious Metals and Minerals
Portfolio will be closed to new investments at the close of business
on December 20, 1999. A special meeting of shareholders of Select
Precious Metals and Minerals Portfolio is scheduled to be held on
February 16, 2000. On or about December 20, 1999, shareholders will be
sent proxy materials asking them to vote on the proposal.
(checkmark)FUND FACTS
START DATE: July 14, 1981
FUND NUMBER: 061
TRADING SYMBOL: FDPMX
SIZE: as of August 31, 1999, more than
$131 million
MANAGER: George Domolky, since 1997;
manager, Fidelity Select Gold Portfolio, since
1997; Fidelity Canada Fund, 1987-1996;
Fidelity Select Food and Agriculture Portfolio,
1985-1987; joined Fidelity in 1981
PRECIOUS METALS AND MINERALS PORTFOLIO
INVESTMENTS AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 98.5%
SHARES VALUE (NOTE 1)
AUSTRALIA - 23.2%
METALS & MINING - 4.7%
METAL MINING SERVICES - 4.7%
Acacia Resources Ltd. 5,139,253 $ 6,115,377
PRECIOUS METALS - 18.5%
GOLD & SILVER ORES - 8.6%
Normandy Mining Ltd. 13,289,419 9,522,135
Sons of Gwalia NL 675,211 1,684,668
11,206,803
GOLD ORES - 9.9%
Delta Gold NL 4,645,819 6,562,535
Newcrest Mining Ltd. (a) 2,668,000 6,315,356
Ross Mining NL 452,197 138,861
13,016,752
TOTAL PRECIOUS METALS 24,223,555
TOTAL AUSTRALIA 30,338,932
CANADA - 36.7%
METALS & MINING - 0.4%
METAL MINING - 0.1%
Ivanhoe Mines Ltd. (a) 100,000 105,193
METAL MINING SERVICES - 0.0%
Minefinders Corp. Ltd. (a) 200,200 87,189
MISCELLANEOUS NONMETALLIC
MINERALS - 0.3%
DIA Metropolitan Minerals 22,500 354,271
Ltd. Class B (multi-vtg.) (a)
TOTAL METALS & MINING 546,653
OIL & GAS - 0.3%
OIL & GAS FIELD EXPLORATION
SERVICES - 0.3%
Southwestern Gold Corp. (a) 135,000 397,990
PRECIOUS METALS - 36.0%
GOLD & SILVER ORES - 2.0%
Goldcorp, Inc. Class A (a) 515,900 2,557,896
Richmont Mines, Inc. (a) 7,700 11,402
2,569,298
GOLD ORES - 34.0%
Agnico-Eagle Mines Ltd. 348,800 2,103,317
Barrick Gold Corp. 205,000 3,955,779
Claude Resources, Inc. (a) 500,500 486,248
Euro-Nevada Mining Corp. Ltd. 545,800 6,564,228
Francisco Gold Corp. (a) 53,500 274,221
Francisco Gold Corp. (c) 54,500 279,347
Franco Nevada Mining Corp. 281,400 4,430,754
Ltd.
Franco Nevada Mining Corp. 80,200 1,262,781
Ltd. (c)
Franco Nevada Mining Corp. 25,000 125,628
Ltd. Class B warrants
9/15/98 (a)(c)
SHARES VALUE (NOTE 1)
Geomaque Explorations Ltd. (a) 537,100 $ 179,933
Glamis Gold Ltd. (a) 240,000 450,251
High River Gold Mines Ltd. (a) 60,000 17,688
IAMGOLD, International 139,800 313,789
African Mining Gold Corp. (a)
Meridian Gold, Inc. (a) 2,853,100 15,006,251
Metallica Resources, Inc. (a) 448,700 156,331
Metallica Resources, Inc. 100,000 34,841
(a)(c)
Mountain Province Mining, 291,500 527,337
Inc. (a)
Placer Dome, Inc. 762,665 7,920,474
Repadre Capital Corp. (a) 274,800 397,701
Vengold, Inc. (a) 410,600 20,633
44,507,532
TOTAL PRECIOUS METALS 47,076,830
TOTAL CANADA 48,021,473
GHANA - 1.2%
PRECIOUS METALS - 1.2%
GOLD ORES - 1.2%
Ashanti Goldfields Co. Ltd. 218,146 1,581,559
GDR
PERU - 4.4%
PRECIOUS METALS - 4.4%
SILVER ORES - 4.4%
Compania de Minas
Buenaventura SA:
Class B 102,000 780,097
sponsored ADR Class B 327,600 5,036,850
5,816,947
SOUTH AFRICA - 17.9%
HOLDING COMPANIES - 0.9%
OFFICES OF HOLDING COMPANIES,
NEC - 0.9%
Gencor Ltd. (Reg.) 352,000 1,139,308
METALS & MINING - 6.1%
MISCELLANEOUS METAL ORES, NEC
- - 1.5%
Anglo American Platinum Corp. 80,800 1,837,299
Ltd.
Impala Platinum Holdings Ltd. 4,000 128,152
1,965,451
NON-METALLIC MINERALS, EXCEPT
FUELS - 4.6%
De Beers Consolidated Mines 222,500 6,049,219
Ltd. ADR
TOTAL METALS & MINING 8,014,670
PRECIOUS METALS - 10.9%
GOLD & SILVER ORES - 9.8%
Anglogold Ltd. 64,586 3,236,463
Anglogold Ltd. sponsored ADR 224,690 5,813,854
Gold Fields Ltd. 1,101,270 3,799,667
12,849,984
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SOUTH AFRICA - CONTINUED
PRECIOUS METALS - CONTINUED
GOLD ORES - 1.1%
Avgold Ltd. (a) 45,000 $ 23,659
Gold Fields of South Africa 85,600 164,548
Ltd.
Gold Fields of South Africa 73,700 138,188
Ltd. ADR
Harmony Gold Mining Co. Ltd. 165,700 680,605
Western Areas Gold Mining 169,500 473,425
Ltd. (a)
1,480,425
TOTAL PRECIOUS METALS 14,330,409
TOTAL SOUTH AFRICA 23,484,387
UNITED KINGDOM - 3.8%
METALS & MINING - 3.8%
MISCELLANEOUS METAL ORES, NEC
- - 3.8%
Anglo American PLC (a) 89,400 4,917,624
UNITED STATES OF AMERICA -
11.3%
METALS & MINING - 4.5%
COPPER ORES - 4.5%
Freeport-McMoRan Copper & 364,000 5,846,750
Gold, Inc. Class B
PRECIOUS METALS - 6.7%
GOLD ORES - 6.7%
Homestake Mining Co. 70,000 595,000
Newmont Mining Corp. 315,000 6,437,813
Stillwater Mining Co. (a) 44,150 974,059
Stillwater Mining Co. (c) 34,500 761,156
8,768,028
SERVICES - 0.1%
JEWELRY, PRECIOUS METAL - 0.1%
Lazare Kaplan International, 25,000 206,250
Inc. (a)
TOTAL UNITED STATES OF AMERICA 14,821,028
TOTAL COMMON STOCKS 128,981,950
(Cost $147,040,395)
CASH EQUIVALENTS - 1.4%
Central Cash Collateral Fund, 1,188,200 1,188,200
5.26% (b)
Taxable Central Cash Fund, 653,418 653,418
5.20% (b)
TOTAL CASH EQUIVALENTS 1,841,618
(Cost $1,841,618)
TOTAL INVESTMENT PORTFOLIO - 130,823,568
99.9% (Cost $148,882,013)
NET OTHER ASSETS - 0.1% 189,297
NET ASSETS - 100% $ 131,012,865
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
(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 $2,463,753 or
1.9% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $57,921,853 and $50,945,524, 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 $7,347 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $1,182,488. The fund
received cash collateral of $1,188,200 which was invested in the
Central Cash Collateral Fund.
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $149,784,576. Net unrealized depreciation
aggregated $18,961,008, of which $14,119,723 related to appreciated
investment securities and $33,080,731 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 has elected 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
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 130,823,568
value (cost $148,882,013) -
See accompanying schedule
Foreign currency held at 534,742
value (cost $534,742)
Receivable for investments 8,299
sold
Receivable for fund shares 1,074,223
sold
Dividends receivable 564,449
Interest receivable 12,101
Redemption fees receivable 1,743
Other receivables 2,148
TOTAL ASSETS 133,021,273
LIABILITIES
Payable for investments $ 106,750
purchased
Payable for fund shares 520,530
redeemed
Accrued management fee 64,178
Other payables and accrued 128,750
expenses
Collateral on securities 1,188,200
loaned, at value
TOTAL LIABILITIES 2,008,408
NET ASSETS $ 131,012,865
Net Assets consist of:
Paid in capital $ 244,657,417
Undistributed net investment 1,550,567
income
Accumulated undistributed net (97,130,941)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (18,064,178)
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 14,141,664 $ 131,012,865
shares outstanding
NET ASSET VALUE and $9.26
redemption price per share
($131,012,865 (divided by)
14,141,664 shares)
Maximum offering price per $9.55
share (100/97.00 of $9.26)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 1,326,905
Dividends
Special dividend from Gold 1,280,213
Fields Ltd.
Interest 48,770
Security lending 2,148
TOTAL INCOME 2,658,036
EXPENSES
Management fee $ 367,488
Transfer agent fees 618,861
Accounting and security 47,731
lending fees
Non-interested trustees' 87
compensation
Custodian fees and expenses 36,673
Registration fees 43,958
Audit 7,444
Legal 72
Total expenses before 1,122,314
reductions
Expense reductions (52,001) 1,070,313
NET INVESTMENT INCOME 1,587,723
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (5,800,478)
Foreign currency transactions (48,612) (5,849,090)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 6,142,375
Assets and liabilities in 3,500 6,145,875
foreign currencies
NET GAIN (LOSS) 296,785
NET INCREASE (DECREASE) IN $ 1,884,508
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 137,591
charges paid to FDC
Sales charges - Retained by $ 137,591
FDC
Deferred sales charges $ 6,986
withheld by FDC
Exchange fees withheld by FSC $ 10,673
Expense reductions Directed $ 52,001
brokerage arrangements
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ 1,587,723 $ (142,318)
income (loss)
Net realized gain (loss) (5,849,090) (21,007,323)
Change in net unrealized 6,145,875 3,724,303
appreciation (depreciation)
NET INCREASE (DECREASE) IN 1,884,508 (17,425,338)
NET ASSETS RESULTING FROM
OPERATIONS
Share transactions Net 112,796,705 415,102,396
proceeds from sales of shares
Cost of shares redeemed (107,637,901) (442,648,944)
NET INCREASE (DECREASE) IN 5,158,804 (27,546,548)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 530,425 2,450,806
TOTAL INCREASE (DECREASE) 7,573,737 (42,521,080)
IN NET ASSETS
NET ASSETS
Beginning of period 123,439,128 165,960,208
End of period (including $ 131,012,865 $ 123,439,128
undistributed net investment
income (loss) of $1,550,567
and $(37,156), respectively)
OTHER INFORMATION
Shares
Sold 11,838,732 42,223,635
Redeemed (11,171,744) (44,898,226)
Net increase (decrease) 666,988 (2,674,591)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 1997 1996 F
Net asset value, beginning of $ 9.16 $ 10.28 $ 19.60 $ 20.96 $ 15.27
period
Income from Investment
Operations
Net investment income (loss) D .12 H (.01) (.04) (.01) .07
Net realized and unrealized (.06) G (1.27) (9.42) (1.42) 5.54
gain (loss)
Total from investment .06 (1.28) (9.46) (1.43) 5.61
operations
Less Distributions
From net investment income - - - (.04) (.06)
In excess of net investment - - - (.01) -
income
Total distributions - - - (.05) (.06)
Redemption fees added to paid .04 .16 .14 .12 .14
in capital
Net asset value, end of period $ 9.26 $ 9.16 $ 10.28 $ 19.60 $ 20.96
TOTAL RETURN B, C 1.09% (10.89)% (47.55)% (6.26)% 37.74%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 131,013 $ 123,439 $ 165,960 $ 325,586 $ 467,196
(000 omitted)
Ratio of expenses to average 1.75% A 1.78% 1.82% 1.62% 1.52%
net assets
Ratio of expenses to average 1.67% A, E 1.74% E 1.76% E 1.61% E 1.52%
net assets after expense
reductions
Ratio of net investment 2.48% A (.09)% (.26)% (.05)% .39%
income (loss) to average net
assets
Portfolio turnover rate 81% A 53% 84% 54% 53%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28,
SELECTED PER-SHARE DATA 1995
Net asset value, beginning of $ 16.62
period
Income from Investment
Operations
Net investment income (loss) D .17
Net realized and unrealized (1.42)
gain (loss)
Total from investment (1.25)
operations
Less Distributions
From net investment income (.18)
In excess of net investment (.05)
income
Total distributions (.23)
Redemption fees added to paid .13
in capital
Net asset value, end of period $ 15.27
TOTAL RETURN B, C (6.86)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 364,204
(000 omitted)
Ratio of expenses to average 1.46%
net assets
Ratio of expenses to average 1.46%
net assets after expense
reductions
Ratio of net investment .99%
income (loss) to average net
assets
Portfolio turnover rate 43%
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN. C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. F FOR THE YEAR ENDED FEBRUARY 29
G 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. H NET INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL
DIVIDEND FROM GOLD FIELDS LTD. WHICH AMOUNTED TO $.09 PER SHARE.
</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 AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND
SELECT BUSINESS SERVICES AND 8.53% 48.33% 49.20%
OUTSOURCING
SELECT BUSINESS SERVICES AND 5.20% 43.80% 44.65%
OUTSOURCING (LOAD ADJ.)
S&P 500 7.32% 39.82% 34.10%
GS Technology 28.97% 109.92% 101.46%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year or since
the fund started on 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 AUGUST 31, 1999 PAST 1 YEAR LIFE OF FUND
SELECT BUSINESS SERVICES AND 48.33% 29.02%
OUTSOURCING
SELECT BUSINESS SERVICES AND 43.80% 26.51%
OUTSOURCING (LOAD ADJ.)
S&P 500 39.82% 20.55%
GS Technology 109.92% 56.23%
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
1999/02/28 13334.52 12494.90
1999/03/31 13737.41 12994.82
1999/04/30 14027.95 13498.11
1999/05/31 14068.32 13179.42
1999/06/30 15309.64 13910.87
1999/07/31 14815.13 13476.58
1999/08/31 14465.00 13409.87
IMATRL PRASUN SHR__CHT 19990831 19990909 153945 R00000000000022
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Select Business Services and Outsourcing
Portfolio on February 4, 1998, when the fund started, and the current
3.00% sales charge was paid. As the chart shows, by August 31, 1999,
the value of the investment would have been $14,465 - a 44.65%
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
$13,410 - a 34.10% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
DST Systems, Inc. 7.0
Computer Sciences Corp. 6.9
Automatic Data Processing, Inc. 6.8
First Data Corp. 5.4
Sabre Group Holdings, Inc. 5.3
Class A
IMS Health, Inc. 4.8
Galileo International, Inc. 4.1
Electronic Data Systems Corp. 4.1
Omnicom Group, Inc. 4.0
Affiliated Computer Services, 3.9
Inc. Class A
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Computer Services & Software 67.1%
Services 13.0%
Advertising 9.7%
Broadcasting 2.2%
Trucking & Freight 1.1%
All Others 6.9%*
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
Row: 1, Col: 1, Value: 6.9
Row: 1, Col: 2, Value: 1.1
Row: 1, Col: 3, Value: 2.2
Row: 1, Col: 4, Value: 9.699999999999999
Row: 1, Col: 5, Value: 13.0
Row: 1, Col: 6, Value: 67.09999999999999
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
BUSINESS SERVICES AND OUTSOURCING PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(Michael Tarlowe)
Michael Tarlowe, Portfolio Manager
of Fidelity Select
Business Services and
Outsourcing Portfolio
Q. HOW DID THE FUND PERFORM, MICHAEL?
A. For the six-month period that ended August 31, 1999, the fund
posted a total return of 8.53%. In comparison, the Standard and Poor's
500 Index returned 7.32% during the same six-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 28.97%. For the 12-month period that ended August 31, 1999,
the fund returned 48.33%, while the S&P 500 and Goldman Sachs indexes
returned 39.82% and 109.92%, respectively.
Q. WHAT FACTORS INFLUENCED THE FUND'S PERFORMANCE OVER THE SIX-MONTH
PERIOD?
A. The fund enjoyed positive relative performance versus the S&P 500,
mainly driven by strong stock selection and a healthy overweighting in
the computer services industry. Many companies in this area shined
during the period as investors grew increasingly enamored of their
favorable investment characteristics, namely robust earnings and cash
flow growth, as well as solid long-term outlooks. Also attractive was
the fact that these firms have long-term relationships with their
customers, which typically yield predictable recurring revenue
streams. The fund further benefited from successfully anticipating
increased consolidation activity among companies within the industry.
Relative to the Goldman Sachs Technology Index, the fund suffered by
not owning some of the large-cap hardware and software companies, such
as Cisco and Microsoft, that soared during the period, but which
aren't business-service providers.
Q. DID YOU MAKE ANY OTHER INDUSTRY BETS DURING THE PERIOD?
A. I did focus on other companies providing outsourcing services
outside of the technology industry, yet I maintained the fund's strong
technology bias throughout the period. We were successful in taking
advantage of opportunities within other industries where movement
toward outsourcing became even more pervasive.
Q. WHICH OF THE FUND'S HOLDINGS DID WELL?
A. Nielsen Media Research is an example of how the fund pursues good
businesses that are overlooked by the market and are selling at
attractive valuations. A leading provider of television audience
measurement and related services in the U.S. and Canada, Nielsen
powered fund performance as the market began to appreciate its
business along with its new Internet venture. In August, the firm
agreed to be acquired by VNU N.V. - a Netherlands-based international
publishing company - at a nice premium, which further benefited the
stock. The fund's position in First Data is reflective of how we look
for turnaround situations. The owner of Western Union, First Data is
the nation's largest credit card processor and rallied strongly on
improved earnings growth. DST Systems, which provides information
processing and computer software services and products primarily to
financial services organizations, soared as reported earnings exceeded
expectations. The stock was helped further by the cost efficiencies
gained by its acquisition of USCS International last December.
Q. WHICH STOCKS DISAPPOINTED?
A. Equifax, an information services provider helping businesses grant
credit as well as authorize and process credit card and check
transactions, suffered from disappointing earnings related to its
international operations. Ceridian, a firm that delivers products and
services to customers in the human resources, trucking and electronic
media markets, skidded as a result of its announcement to acquire ABR
Benefits Services, a move that weighed on earnings. IMS Health - a
provider of information solutions to the pharmaceutical and health
care industries - faltered as a result of the rotation away from
pharmaceutical stocks earlier in the period. IMS fell further amid the
uncertainty surrounding its spin-off of GartnerGroup during the
period.
Q. WHAT'S YOUR OUTLOOK, MICHAEL?
A. My outlook remains quite positive as the services sector and the
outsourcing trend continue to spread throughout the economy. I expect
the fund to continue to benefit from consolidation activity in the
months to come. I don't anticipate making any significant changes to
the portfolio in the near term. Although, as more and more businesses
realize their need to establish a Web presence, the fund may look to
take advantage of those companies best-positioned to provide such
services.
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 3.
(checkmark)FUND FACTS
START DATE: February 4, 1998
FUND NUMBER: 353
TRADING SYMBOL: FBSOX
SIZE: as of August 31, 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 AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 94.6%
SHARES VALUE (NOTE 1)
ADVERTISING - 9.7%
Interpublic Group of 57,000 $ 2,258,625
Companies, Inc.
Lamar Advertising Co. Class A 13,450 561,538
(a)
Omnicom Group, Inc. 34,039 2,565,690
Outdoor Systems, Inc. (a) 20,600 665,637
TMP Worldwide, Inc. (a) 3,938 218,067
6,269,557
BANKS - 0.2%
State Street Corp. 2,500 149,688
BROADCASTING - 2.2%
Nielsen Media Research, Inc. 38,300 1,405,131
(a)
COMPUTER SERVICES & SOFTWARE
- - 67.1%
Affiliated Computer Services, 58,700 2,509,425
Inc. Class A (a)
At Plan, Inc. 21,700 222,425
Automatic Data Processing, 112,300 4,414,794
Inc.
Bisys Group, Inc. (The) (a) 13,200 627,000
Cambridge Technology 18,900 258,694
Partners, Inc. (a)
Ceridian Corp. (a) 75,300 2,108,400
Computer Sciences Corp. (a) 64,500 4,462,594
DST Systems, Inc. (a) 67,500 4,488,744
Electronic Data Systems Corp. 46,800 2,626,650
Equifax, Inc. 58,000 1,769,000
First Data Corp. 79,300 3,489,200
Fiserv, Inc. (a) 56,375 1,737,055
Galileo International, Inc. 55,000 2,667,500
IMS Health, Inc. 111,000 3,066,375
International Integration, 18,800 432,400
Inc. (a)
International Network 5,000 265,938
Services (a)
National Data Corp. 18,300 699,975
Paychex, Inc. 84,425 2,485,261
Sabre Group Holdings, Inc. 60,900 3,410,400
Class A (a)
SunGard Data Systems, Inc. (a) 17,500 437,500
Technology Solutions, Inc. (a) 63,700 764,400
Viant Corp. (a) 6,100 231,800
43,175,530
PRINTING - 0.5%
Reynolds & Reynolds Co. Class 13,500 295,313
A
PUBLISHING - 0.5%
Harte Hanks Communications, 14,900 334,319
Inc.
RESTAURANTS - 0.3%
Sodexho Marriott Services, 14,100 199,163
Inc. (a)
SERVICES - 13.0%
ACNielsen Corp. (a) 27,900 697,500
Cintas Corp. 20,800 1,068,600
Convergys Corp. (a) 17,200 354,750
Diamond Technology Partners, 18,500 612,813
Inc. Class A (a)
SHARES VALUE (NOTE 1)
Dun & Bradstreet Corp. 40,100 $ 1,050,119
Forrester Research, Inc. (a) 16,000 536,000
Gartner Group, Inc.:
Class A 9,700 203,094
Class B (a) 62,483 1,280,902
International Telecom Data 38,700 304,763
Systems, Inc. (a)
Korn/Ferry International (a) 21,200 355,100
Manpower, Inc. 16,800 453,600
NFO Worldwide, Inc. (a) 16,500 216,563
NOVA Corp. (a) 11,500 299,000
Robert Half International, 17,100 448,875
Inc. (a)
True North Communications 6,000 197,625
Viad Corp. 10,800 323,325
8,402,629
TRUCKING & FREIGHT - 1.1%
Air Express International 12,500 305,469
Corp.
Circle International Group, 8,200 202,950
Inc.
Expeditors International of 5,300 171,256
Washington, Inc.
679,675
TOTAL COMMON STOCKS 60,911,005
(Cost $52,089,593)
CASH EQUIVALENTS - 9.0%
Central Cash Collateral Fund, 1,794,900 1,794,900
5.26% (b)
Taxable Central Cash Fund, 4,009,005 4,009,005
5.20%, (b)
TOTAL CASH EQUIVALENTS 5,803,905
(Cost $5,803,905)
TOTAL INVESTMENT PORTFOLIO - 66,714,910
103.6% (Cost $57,893,498)
NET OTHER ASSETS - (3.6%) (2,339,960)
NET ASSETS - 100% $ 64,374,950
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $20,052,136 and $22,984,571, 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 $3,297 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $1,765,950. The fund
received cash collateral of $1,794,900 which was invested in the
Central Cash Collateral Fund.
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $58,400,283. Net unrealized appreciation
aggregated $8,314,627, of which $11,205,845 related to appreciated
investment securities and $2,891,218 related to depreciated investment
securities.
BUSINESS SERVICES AND OUTSOURCING PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 66,714,910
value (cost $57,893,498) -
See accompanying schedule
Receivable for investments 144,745
sold
Receivable for fund shares 77,938
sold
Dividends receivable 30,560
Interest receivable 21,959
Redemption fees receivable 404
Other receivables 230
TOTAL ASSETS 66,990,746
LIABILITIES
Payable for fund shares $ 733,274
redeemed
Accrued management fee 32,319
Other payables and accrued 55,303
expenses
Collateral on securities 1,794,900
loaned, at value
TOTAL LIABILITIES 2,615,796
NET ASSETS $ 64,374,950
Net Assets consist of:
Paid in capital $ 52,591,091
Accumulated net investment (229,008)
loss
Accumulated undistributed net 3,191,455
realized gain (loss) on
investments
Net unrealized appreciation 8,821,412
(depreciation) on investments
NET ASSETS, for 4,488,470 $ 64,374,950
shares outstanding
NET ASSET VALUE and $14.34
redemption price per share
($64,374,950 (divided by)
4,488,470 shares)
Maximum offering price per $14.78
share (100/97.00 of $14.34)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 123,233
Dividends
Interest 127,930
Security lending 230
TOTAL INCOME 251,393
EXPENSES
Management fee $ 188,792
Transfer agent fees 245,734
Accounting and security 30,332
lending fees
Non-interested trustees' 92
compensation
Custodian fees and expenses 5,757
Registration fees 11,861
Audit 3,865
Legal 35
Total expenses before 486,468
reductions
Expense reductions (6,067) 480,401
NET INVESTMENT INCOME (LOSS) (229,008)
REALIZED AND UNREALIZED GAIN 3,979,884
(LOSS)
Net realized gain (loss) on
investment securities
Change in net unrealized 1,051,103
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 5,030,987
NET INCREASE (DECREASE) IN $ 4,801,979
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 183,907
charges paid to FDC
Sales charges - Retained by $ 183,907
FDC
Deferred sales charges $ 197
withheld by FDC
Exchange fees withheld by FSC $ 3,578
Expense reductions Directed $ 2,955
brokerage arrangements
Custodian credits 86
Transfer agent credits 3,026
$ 6,067
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ (229,008) $ (505,124)
income (loss)
Net realized gain (loss) 3,979,884 2,392,697
Change in net unrealized 1,051,103 7,144,279
appreciation (depreciation)
NET INCREASE (DECREASE) IN 4,801,979 9,031,852
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (1,673,661) (724,580)
from net realized gains
Share transactions Net 25,177,687 115,593,201
proceeds from sales of shares
Reinvestment of distributions 1,623,074 706,597
Cost of shares redeemed (29,709,592) (76,520,490)
NET INCREASE (DECREASE) IN (2,908,831) 39,779,308
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 32,852 120,875
TOTAL INCREASE (DECREASE) 252,339 48,207,455
IN NET ASSETS
NET ASSETS
Beginning of period 64,122,611 15,915,156
End of period (including $ 64,374,950 $ 64,122,611
accumulated net investment
loss of $229,008 and $0,
respectively)
OTHER INFORMATION
Shares
Sold 1,751,263 9,724,396
Issued in reinvestment of 118,559 57,528
distributions
Redeemed (2,107,821) (6,516,475)
Net increase (decrease) (237,999) 3,265,449
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 E
Net asset value, beginning of $ 13.57 $ 10.89 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.05) (.11) -
Net realized and unrealized 1.18 2.92 .89
gain (loss)
Total from investment 1.13 2.81 .89
operations
Less Distributions
From net realized gain (.37) (.16) -
Redemption fees added to paid .01 .03 -
in capital
Net asset value, end of period $ 14.34 $ 13.57 $ 10.89
TOTAL RETURN B, C 8.53% 26.23% 8.90%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 64,375 $ 64,123 $ 15,915
(000 omitted)
Ratio of expenses to average 1.48% A 1.66% 2.50% A, F
net assets
Ratio of expenses to average 1.46% A, G 1.64% G 2.50% A
net assets after expense
reductions
Ratio of net investment (.70)% A (.91)% (.49)% A
income (loss) to average net
assets
Portfolio turnover rate 66% A 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.
</TABLE>
COMPUTERS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the past 10 year total returns would
have been lower.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT COMPUTERS 30.14% 118.56% 437.85% 1,379.99%
SELECT COMPUTERS (LOAD ADJ.) 26.16% 111.93% 421.64% 1,335.52%
S&P 500 7.32% 39.82% 206.52% 384.79%
GS Technology 28.97% 109.92% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a 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 AUGUST 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT COMPUTERS 118.56% 40.00% 30.93%
SELECT COMPUTERS (LOAD ADJ.) 111.93% 39.15% 30.53%
S&P 500 39.82% 25.11% 17.10%
GS Technology 109.92% 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
1989/08/31 9700.00 10000.00
1989/09/30 9927.74 9959.00
1989/10/31 9598.78 9727.95
1989/11/30 9387.91 9926.40
1989/12/31 9489.13 10164.64
1990/01/31 9404.78 9482.59
1990/02/28 10256.70 9604.91
1990/03/31 10990.52 9859.44
1990/04/30 10695.30 9612.96
1990/05/31 12087.04 10550.22
1990/06/30 12306.35 10478.48
1990/07/31 11429.13 10444.95
1990/08/31 9615.65 9500.72
1990/09/30 8983.04 9038.04
1990/10/31 9320.43 8999.18
1990/11/30 10855.57 9580.52
1990/12/31 11235.77 9847.82
1991/01/31 13150.96 10277.18
1991/02/28 14002.15 11012.00
1991/03/31 15108.71 11278.49
1991/04/30 14129.83 11305.56
1991/05/31 14844.84 11793.96
1991/06/30 12823.47 11253.80
1991/07/31 14111.95 11778.23
1991/08/31 14988.47 12057.37
1991/09/30 14199.60 11856.01
1991/10/31 13919.12 12014.88
1991/11/30 12963.71 11530.68
1991/12/31 14690.45 12849.79
1992/01/31 16224.36 12610.79
1992/02/29 17337.54 12774.73
1992/03/31 15970.17 12525.62
1992/04/30 15453.02 12893.87
1992/05/31 15645.86 12957.05
1992/06/30 14138.25 12763.99
1992/07/31 14830.70 13286.04
1992/08/31 13980.47 13013.68
1992/09/30 14672.92 13167.24
1992/10/31 15829.93 13213.32
1992/11/30 16811.63 13663.90
1992/12/31 17916.04 13831.96
1993/01/31 18959.10 13948.15
1993/02/28 17661.85 14137.85
1993/03/31 18012.46 14436.15
1993/04/30 17500.88 14086.80
1993/05/31 19551.35 14464.33
1993/06/30 18768.93 14506.27
1993/07/31 19551.35 14448.25
1993/08/31 20711.48 14995.84
1993/09/30 21296.04 14880.37
1993/10/31 21296.04 15188.39
1993/11/30 22204.36 15044.10
1993/12/31 23088.03 15226.14
1994/01/31 24576.66 15743.82
1994/02/28 25619.65 15317.17
1994/03/31 25354.16 14649.34
1994/04/30 25192.97 14836.85
1994/05/31 25174.01 15080.17
1994/06/30 23106.99 14710.71
1994/07/31 23837.08 15193.22
1994/08/31 26691.09 15816.14
1994/09/30 26501.45 15428.65
1994/10/31 27497.03 15775.79
1994/11/30 27658.22 15201.24
1994/12/31 27809.93 15426.67
1995/01/31 26956.58 15826.69
1995/02/28 29080.48 16443.45
1995/03/31 31318.17 16928.70
1995/04/30 33806.50 17427.25
1995/05/31 35477.61 18123.82
1995/06/30 39357.68 18544.83
1995/07/31 44303.80 19159.78
1995/08/31 45293.02 19207.87
1995/09/30 47886.14 20018.44
1995/10/31 46147.79 19946.98
1995/11/30 45033.71 20822.65
1995/12/31 42223.92 21223.69
1996/01/31 41953.18 21946.15
1996/02/29 44433.12 22149.59
1996/03/31 40675.31 22362.89
1996/04/30 45146.24 22692.52
1996/05/31 46706.42 23277.76
1996/06/30 43311.39 23366.44
1996/07/31 40410.78 22334.12
1996/08/31 42157.74 22805.14
1996/09/30 47332.69 24088.62
1996/10/31 49826.77 24752.98
1996/11/30 56605.85 26624.06
1996/12/31 55574.44 26096.63
1997/01/31 62698.19 27727.15
1997/02/28 55083.54 27944.53
1997/03/31 50745.35 26796.29
1997/04/30 53513.32 28396.03
1997/05/31 57370.36 30124.78
1997/06/30 56997.09 31474.37
1997/07/31 70148.35 33978.79
1997/08/31 71566.75 32075.30
1997/09/30 74229.35 33832.06
1997/10/31 63802.90 32702.07
1997/11/30 62620.91 34215.85
1997/12/31 55631.06 34803.33
1998/01/31 60067.99 35188.26
1998/02/28 66279.70 37726.04
1998/03/31 64779.21 39657.99
1998/04/30 70974.78 40056.94
1998/05/31 66134.49 39368.37
1998/06/30 72023.51 40967.51
1998/07/31 75863.47 40531.21
1998/08/31 65682.73 34671.20
1998/09/30 78348.16 36892.24
1998/10/31 83882.22 39893.06
1998/11/30 92965.83 42310.97
1998/12/31 109245.34 44748.93
1999/01/31 125928.20 46620.33
1999/02/28 110310.20 45171.37
1999/03/31 123992.09 46978.68
1999/04/30 121880.60 48798.16
1999/05/31 118890.50 47646.04
1999/06/30 131717.36 50290.39
1999/07/31 133841.01 48720.33
1999/08/31 143552.00 48479.16
IMATRL PRASUN SHR__CHT 19990831 19990914 120349 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Computers Portfolio on August 31, 1989,
and the current 3.00% sales charge was paid. As the chart shows, by
August 31, 1999, the value of the investment would have grown to
$143,552 - a 1,335.52% increase on the initial investment - and
includes the effect of a $7.50 trading fee. For comparison, look at
how the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $48,479 - a 384.79% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
Microsoft Corp. 9.4
Cisco Systems, Inc. 5.5
Texas Instruments, Inc. 5.1
Intel Corp. 5.0
EMC Corp. 4.8
Gateway, Inc. 4.7
Hewlett-Packard Co. 4.6
Motorola, Inc. 2.8
Xerox Corp. 2.4
Best Buy Co., Inc. 2.3
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Computers & Office Equipment 30.4%
Electronics 27.7%
Computer Services & Software 16.9%
Communications Equipment 5.8%
Retail & Wholesale,
Miscellaneous 5.5%
All Others 13.7% *
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
Row: 1, Col: 1, Value: 13.7
Row: 1, Col: 2, Value: 5.5
Row: 1, Col: 3, Value: 5.8
Row: 1, Col: 4, Value: 16.9
Row: 1, Col: 5, Value: 27.7
Row: 1, Col: 6, Value: 30.4
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
COMPUTERS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Michael Tempero)
Michael Tempero,
Portfolio Manager
of Fidelity Select
Computers Portfolio
Q. HOW DID THE FUND PERFORM, MIKE?
A. It did well. For the six- and 12-month periods that ended August
31, 1999, the fund had total returns of 30.14% and 118.56%,
respectively. During those same periods, the Standard & Poor's 500
Index posted returns of 7.32% and 39.82%, respectively. The fund also
outpaced the Goldman Sachs Technology Index - an index of 190 stocks
designed to measure the performance of companies in the technology
sector - which returned 28.97% and 109.92% during those same periods.
Q. HOW DID THE FUND OUTPERFORM ITS TWO BENCHMARK INDEXES?
A. The fund garnered most of its gains from good stock picks and an
overweighted position in Internet holdings, such as America Online,
early in the period. Internet firms rallied as consumers grew more
accustomed to shopping, banking and communicating over the Web. Our
positions in networking equipment also made a significant contribution
to the fund, fueled by a sharp rise in demand for equipment used to
connect businesses to the Internet. The fund's underweighting in
computer hardware stocks also provided it with a significant advantage
over its benchmarks.
Q. WHAT WERE SOME OF YOUR KEY INVESTMENT STRATEGIES DURING THE PERIOD?
A. Throughout the period, I maintained my firm belief in the
importance of communications and the development of the Internet to
consumers and corporations alike. I increased the fund's overweighting
in those companies best suited to benefit from advances in bandwidth,
or data transmission capacity. I also broadened the fund's exposure to
semiconductor stocks early in the period as many of these companies
enjoyed an acceleration in business momentum. The prevalence of
low-priced personal computers and the explosion in mobile
communications contributed to a period of strong unit demand for
chips. Overall, the fund remained concentrated in some of the biggest
industry names, as the truly dominant companies continued to fuel the
growth of the technology sector.
Q. WHAT WERE SOME OF THE OTHER CHANGES YOU MADE TO THE PORTFOLIO?
A. Late in the period, I trimmed the fund's exposure to semiconductor
stocks to take some profits. The fear I had with many of these stocks
was that they might have run ahead of their business fundamentals. I
also cut back on some of the fund's Internet holdings as they hit
their valuation targets in the spring.
Q. WHICH STOCKS PERFORMED WELL FOR THE FUND?
A. Texas Instruments and Motorola each benefited from soaring demand
for cell phones and networking equipment. Cisco Systems, the market
leader in data networking routers, contributed heavily to returns as
investors rallied around the value of infrastructure to the Internet's
future development. Microsoft benefited from the release of its Office
2000 product, which provided its traditional software business with a
healthy lift. The stock also profited from the firm's strong product
pipeline. Gateway, a leader in the consumer PC market, also added
meaningfully to returns.
Q. WHICH STOCKS DISAPPOINTED?
A. Personal computer giant Compaq fell significantly as it struggled
to perform under intense competitive pressures in the PC market. At
Home, a provider of Internet services over cable lines, lost 50% of
its value amid the Internet stock correction of the late spring and
early summer. Xerox was tripped up by unfavorable foreign exchange
rates, which sent annual earnings estimates spiraling downward.
Newbridge Networks also stumbled during the period amid an earnings
shortfall, which detracted from fund performance.
Q. WHAT'S YOUR OUTLOOK?
A. I'm optimistic about the next six months. I will, however, keep an
eye out for any issues that may arise due to the Year 2000 changeover.
I intend to remain focused on the development of the Internet and,
more specifically, on suppliers to the Internet - companies that
specialize in software, networking and servers. I'll continue to
search for the fastest-growing stocks and industries within the
technology sector, all the while remaining watchful of valuations. As
long as corporate profitability remains good and consumers stay
confident, spending for technology should continue to be healthy.
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 3.
(checkmark)FUND FACTS
START DATE: July 29, 1985
FUND NUMBER: 007
TRADING SYMBOL: FDCPX
SIZE: as of August 31, 1999, more than
$2.2 billion
MANAGER: Michael Tempero, since 1997;
manager, Fidelity Advisor Technology Fund,
since 1998; Fidelity Select Insurance Portfolio,
1995-1997; Fidelity Select Natural Gas
Portfolio, 1994-1995; joined Fidelity in 1993
COMPUTERS PORTFOLIO
INVESTMENTS AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 88.8%
SHARES VALUE (NOTE 1)
ADVERTISING - 0.0%
Newgen Results Corp. (a) 4,300 $ 42,463
BROADCASTING - 0.0%
CAIS Internet, Inc. 900 10,913
Insight Communications, Inc. 3,400 92,650
NorthPoint Communication 1,600 42,300
Holdings, Inc.
Radio One, Inc. (a) 1,100 45,856
Salem Communications Corp. 2,300 63,250
Class A (a)
254,969
COMMUNICATIONS EQUIPMENT - 5.8%
Cisco Systems, Inc. (a) 1,849,400 125,412,438
Efficient Networks, Inc. 1,000 46,938
Paradyne Networks, Inc. 800 35,250
Tekelec (a) 200,000 3,225,000
Xircom, Inc. (a) 90,000 3,583,125
132,302,751
COMPUTER SERVICES & SOFTWARE
- - 16.9%
Accrue Software, Inc. 500 7,313
Active Software, Inc. (a) 600 10,425
Agile Software Corp. (a) 400 19,900
Ariba, Inc. 1,100 152,900
Art Technology Group, Inc. 600 12,000
Ask Jeeves, Inc. 1,200 37,350
At Home Corp. Series A (a) 274,694 11,022,097
At Plan, Inc. 200 2,050
Aware, Inc. (a) 271,300 9,088,550
BackWeb Technologies Ltd. (a) 1,000 22,563
barnesandnoble.com, Inc. 4,000 68,250
Class A
Bell & Howell Co. (a) 110,000 3,685,000
Careerbuilder, Inc. 900 6,638
CareInsite, Inc. 900 42,975
Chemdex Corp. 1,400 37,800
China.com Corp. 200 8,775
Clarent Corp. 2,700 89,775
Commerce One, Inc. 600 26,925
Convergent Communications, 2,000 24,375
Inc. (a)
CyberSource Corp. 800 25,650
Digex, Inc. Class A 1,400 46,550
drkoop.com, Inc. 1,200 20,400
Electronics for Imaging, Inc. 860,400 50,440,950
(a)
Engage Technologies, Inc. 800 23,200
Exodus Communications, Inc. 360,000 28,935,000
(a)
Fashionmall.com, Inc. 100 594
Flycast Communications Corp. 600 13,875
GoTo.com, Inc. (a) 900 32,625
High Speed Access Corp. 1,100 28,875
Homestore.com, Inc. (a) 1,400 73,675
Hoover's, Inc. 500 5,406
Inet Technologies, Inc. 900 27,956
SHARES VALUE (NOTE 1)
Interactive Pictures Corp. (a) 500 $ 10,000
Internet Capital Group, Inc. 800 60,000
(a)
Internet.com Corp. 600 9,263
Juno Online Services, Inc. (a) 1,500 28,406
Latitude Communications, Inc. 800 11,150
(a)
Liberate Technologies 1,300 34,288
Liquid Audio, Inc. (a) 300 8,016
Micromuse, Inc. (a) 80,000 4,570,000
Microsoft Corp. (a) 2,320,000 214,744,984
Mission Critical Software, 400 16,250
Inc. (a)
MP3.com, Inc. (a) 1,400 47,775
N2H2, Inc. 600 5,925
National Information 1,000 16,500
Consortium, Inc. (a)
National Instrument Corp. (a) 180,000 5,388,750
NCR Corp. (a) 200,000 8,750,000
NetIQ Corp. 800 24,000
NetObjects, Inc. (a) 700 3,763
Packeteer, Inc. 300 11,063
Persistence Software, Inc. 700 12,425
Phone.com, Inc. 86,000 10,158,750
Portal Software, Inc. (a) 600 28,238
Quest Software, Inc. (a) 600 25,125
RAVISENT Technologies, Inc. 2,300 36,800
(a)
Red Hat, Inc. (a) 1,000 81,875
Redback Networks, Inc. 112,400 12,083,000
Scient Corp. 300 18,938
Silknet Software, Inc. (a) 500 16,938
SilverStream Software, Inc. 500 15,063
(a)
Software.com, Inc. 1,200 54,525
StarMedia Network, Inc. (a) 900 34,819
Talk City, Inc. (a) 500 4,969
Tanning Technology Corp. (a) 2,000 35,000
TenFold Corp. (a) 500 13,656
TheStreet.Com, Inc. (a) 600 10,575
TIBCO Software, Inc. (a) 1,000 27,125
Tumbleweed Communications 1,300 25,025
Corp. (a)
Unisys Corp. (a) 200,000 8,600,000
Veritas Software Corp. (a) 225,000 13,331,250
Viant Corp. (a) 500 19,000
Visual Networks, Inc. (a) 130,000 5,395,000
Voyager.net, Inc. (a) 1,800 18,000
WatchGuard Technologies, Inc. 600 8,100
Wink Communications, Inc. (a) 600 24,600
ZipLink, Inc. (a) 4,300 39,506
387,898,852
COMPUTERS & OFFICE EQUIPMENT
- - 30.4%
Adaptec, Inc. (a) 410,000 15,990,000
Advanced Digital Information 341,400 11,010,150
Corp. (a)
Aironet Wireless 12,200 152,500
Communication, Inc.
CDW Computer Centers, Inc. (a) 200,000 8,875,000
Comdisco, Inc. 446,000 9,393,875
Compaq Computer Corp. 1,106,350 25,653,491
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
COMPUTERS & OFFICE EQUIPMENT
- - CONTINUED
Comverse Technology, Inc. (a) 282,700 $ 22,050,600
Creo Products, Inc. (a) 2,700 59,246
Dell Computer Corp. (a) 900,000 43,931,250
EMC Corp. (a) 1,838,000 110,280,000
Emulex Corp. (a) 220,600 15,207,613
Gadzoox Networks, Inc. 800 72,300
Gateway, Inc. (a) 1,125,000 109,054,688
Hewlett-Packard Co. 1,000,000 105,375,000
Inacom Corp. (a) 200,000 1,950,000
Ingram Micro, Inc. Class A (a) 419,700 10,597,425
Insight Enterprises, Inc. (a) 286,875 8,677,969
Juniper Networks, Inc. 56,300 11,541,500
Lexmark International Group, 360,000 28,350,000
Inc. Class A (a)
Network Appliance, Inc. (a) 290,000 19,049,375
Quantum Corp.:
DLT & Storage Systems (a) 580,000 10,621,250
Hard Disk Drive (a) 290,000 2,066,250
Seagate Technology, Inc. (a) 600,000 19,912,500
Sequent Computer Systems, 190,000 3,348,750
Inc. (a)
Sun Microsystems, Inc. (a) 400,000 31,800,000
Symbol Technologies, Inc. 258,700 9,005,994
Tech Data Corp. (a) 200,000 7,412,500
Xerox Corp. 1,160,300 55,404,325
696,843,551
CONSUMER ELECTRONICS - 1.2%
Gemstar International Group 400,000 27,600,000
Ltd. (a)
CREDIT & OTHER FINANCE - 0.0%
E-Loan, Inc. 500 14,250
NextCard, Inc. (a) 800 19,600
33,850
DRUGS & PHARMACEUTICALS - 0.0%
Genentech, Inc. 2,000 328,500
EDUCATIONAL SERVICES - 0.0%
Scientific Learning Corp. (a) 200 3,575
ELECTRICAL EQUIPMENT - 0.8%
American Power Conversion 400,000 7,025,000
Corp. (a)
ANTEC Corp. (a) 100,000 4,556,250
Ericsson (L.M.) Telefon AB 200,000 6,512,500
ADR Class B
18,093,750
ELECTRONIC INSTRUMENTS - 0.2%
LAM Research Corp. (a) 62,400 3,521,700
ELECTRONICS - 27.7%
Altera Corp. (a) 1,135,400 47,828,725
Analog Devices, Inc. (a) 800,000 41,200,000
Atmel Corp. (a) 290,000 11,400,625
SHARES VALUE (NOTE 1)
Broadcom Corp. Class A (a) 36,000 $ 4,635,000
Brocade Communications 36,400 6,847,750
Systems, Inc.
Cypress Semiconductor Corp. 200,000 4,625,000
(a)
GlobeSpan, Inc. (a) 300 18,150
Intel Corp. 1,383,600 113,714,625
JDS Uniphase Corp. (a) 152,600 16,185,138
Linear Technology Corp. 496,600 31,254,763
LSI Logic Corp. (a) 550,000 31,212,500
Maker Communications, Inc. 300 7,088
Maxim Integrated Products, 437,000 29,415,563
Inc. (a)
Microchip Technology, Inc. (a) 230,000 12,592,500
Micron Technology, Inc. (a) 511,200 38,116,350
Motorola, Inc. 700,000 64,575,000
National Semiconductor Corp. 610,000 17,194,375
(a)
PMC-Sierra, Inc. (a) 40,000 3,720,000
QLogic Corp. (a) 85,000 7,400,313
Semtech Corp. (a) 235,000 16,464,688
Texas Instruments, Inc. 1,418,400 116,397,450
Xilinx, Inc. (a) 295,000 20,631,563
635,437,166
ENGINEERING - 0.1%
AdForce, Inc. 500 8,094
DSP Group, Inc. (a) 60,000 2,310,000
2,318,094
ENTERTAINMENT - 0.0%
Musicmaker.com, Inc. (a) 1,200 14,213
Quokka Sports, Inc. 1,000 8,875
23,088
INSURANCE - 0.0%
MIIX Group, Inc. 300 5,250
Quotesmith.com, Inc. (a) 800 8,900
14,150
MEDICAL EQUIPMENT & SUPPLIES
- - 0.0%
Allscripts, Inc. 1,500 19,406
PHOTOGRAPHIC EQUIPMENT - 0.1%
Imation Corp. (a) 100,000 2,818,750
RESTAURANTS - 0.0%
Rubio's Restaurants, Inc. (a) 1,300 14,300
RETAIL & WHOLESALE,
MISCELLANEOUS - 5.5%
1-800-FLOWERS.COM, Inc. Class 1,600 28,800
A (a)
Alloy Online, Inc. 500 6,594
Best Buy Co., Inc. (a) 763,000 53,600,750
Circuit City Stores, Inc. - 750,000 32,250,000
Circuit City Group
Drugstore.com, Inc. 1,300 77,838
eToys, Inc. 800 34,800
Tandy Corp. 850,000 40,162,500
126,161,282
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SECURITIES INDUSTRY - 0.0%
DLJdirect, Inc. 1,100 $ 18,769
Goldman Sachs Group, Inc. 7,000 418,688
TD Waterhouse Group, Inc. (a) 13,000 195,813
Wit Capital Group, Inc. (a) 4,000 77,500
710,770
SERVICES - 0.1%
Gartner Group, Inc. Class B 39,060 800,730
(a)
InsWeb Corp. 600 19,200
iXL Enterprises, Inc. (a) 1,700 41,863
MapQuest.com, Inc. (a) 300 3,619
Media Metrix, Inc. (a) 200 9,594
875,006
TELEPHONE SERVICES - 0.0%
Digital Island, Inc. Delaware 7,000 132,125
Focal Communications Corp. 2,500 60,781
JFAX.COM, Inc. 4,400 30,250
Net2Phone, Inc. (a) 500 42,500
Network Plus Corp. 6,900 110,400
Time Warner Telecom, Inc. 1,400 37,800
413,856
TOTAL COMMON STOCKS 2,035,729,829
(Cost $1,472,515,124)
CASH EQUIVALENTS - 14.2%
Central Cash Collateral Fund, 68,940,100 68,940,100
5.26% (b)
Taxable Central Cash Fund, 255,954,911 255,954,911
5.20% (b)
TOTAL CASH EQUIVALENTS 324,895,011
(Cost $324,895,011)
TOTAL INVESTMENT PORTFOLIO - 2,360,624,840
103.0%
(Cost $1,797,410,135)
NET OTHER ASSETS - (3.0%) (69,468,636)
NET ASSETS - 100% $ 2,291,156,204
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $1,703,711,497 and $1,905,742,969, 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 $72,823 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $68,432,944. The fund
received
cash collateral of $68,940,100 which was invested in the Central Cash
Collateral Fund.
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $1,803,415,973. Net unrealized appreciation
aggregated $557,208,867, of which $600,375,468 related to appreciated
investment securities and $43,166,601 related to depreciated
investment securities.
COMPUTERS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 2,360,624,840
value (cost $1,797,410,135)
- - See accompanying schedule
Receivable for investments 3,265,230
sold
Receivable for fund shares 6,212,319
sold
Dividends receivable 39,525
Interest receivable 1,141,238
Redemption fees receivable 6,175
Other receivables 93,295
TOTAL ASSETS 2,371,382,622
LIABILITIES
Payable for investments $ 4,656,250
purchased
Payable for fund shares 4,660,806
redeemed
Accrued management fee 1,050,762
Other payables and accrued 918,500
expenses
Collateral on securities 68,940,100
loaned, at value
TOTAL LIABILITIES 80,226,418
NET ASSETS $ 2,291,156,204
Net Assets consist of:
Paid in capital $ 1,401,157,353
Accumulated net investment (4,014,618)
loss
Accumulated undistributed net 330,798,764
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 563,214,705
(depreciation) on investments
NET ASSETS, for 27,114,144 $ 2,291,156,204
shares outstanding
NET ASSET VALUE and $84.50
redemption price per share
($2,291,156,204 (divided by)
27,114,144 shares)
Maximum offering price per $87.11
share (100/97.00 of $84.50)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 1,233,785
Dividends
Interest 5,399,912
Security lending 533,976
TOTAL INCOME 7,167,673
EXPENSES
Management fee $ 5,889,894
Transfer agent fees 4,622,890
Accounting and security 614,630
lending fees
Non-interested trustees' 3,179
compensation
Custodian fees and expenses 39,768
Registration fees 98,102
Audit 21,584
Legal 1,412
Total expenses before 11,291,459
reductions
Expense reductions (109,168) 11,182,291
NET INVESTMENT INCOME (LOSS) (4,014,618)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 335,273,772
Foreign currency transactions (38,934) 335,234,838
Change in net unrealized 194,207,140
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 529,441,978
NET INCREASE (DECREASE) IN $ 525,427,360
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 5,964,274
charges paid to FDC
Sales charges - Retained by $ 5,962,176
FDC
Deferred sales charges $ 3,333
withheld by FDC
Exchange fees withheld by FSC $ 46,140
Expense reductions Directed $ 102,972
brokerage arrangements
Custodian credits 4,447
Transfer agent credits 1,749
$ 109,168
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ (4,014,618) $ (5,471,121)
income (loss)
Net realized gain (loss) 335,234,838 193,034,531
Change in net unrealized 194,207,140 272,430,790
appreciation (depreciation)
NET INCREASE (DECREASE) IN 525,427,360 459,994,200
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (101,521,674) -
from net realized gains
Share transactions Net 581,128,381 1,830,119,568
proceeds from sales of shares
Reinvestment of distributions 98,738,212 -
Cost of shares redeemed (644,905,561) (1,247,821,903)
NET INCREASE (DECREASE) IN 34,961,032 582,297,665
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 854,677 3,678,254
TOTAL INCREASE (DECREASE) 459,721,395 1,045,970,119
IN NET ASSETS
NET ASSETS
Beginning of period 1,831,434,809 785,464,690
End of period (including $ 2,291,156,204 $ 1,831,434,809
accumulated net investment
loss of $4,014,618 and $0,
respectively)
OTHER INFORMATION
Shares
Sold 7,714,532 33,082,983
Issued in reinvestment of 1,334,660 -
distributions
Redeemed (8,721,128) (25,415,629)
Net increase (decrease) 328,064 7,667,354
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 1997 1996 F
Net asset value, beginning of $ 68.37 $ 41.08 $ 48.25 $ 41.03 $ 30.67
period
Income from Investment
Operations
Net investment income (loss) D (.15) (.29) (.32) (.36) (.23)
Net realized and unrealized 20.17 27.39 6.42 9.94 16.10
gain (loss)
Total from investment 20.02 27.10 6.10 9.58 15.87
operations
Less Distributions
From net realized gain (3.92) - (10.64) (2.47) (5.61)
In excess of net realized gain - - (2.75) - -
Total distributions (3.92) - (13.39) (2.47) (5.61)
Redemption fees added to paid .03 .19 .12 .11 .10
in capital
Net asset value, end of period $ 84.50 $ 68.37 $ 41.08 $ 48.25 $ 41.03
TOTAL RETURN B, C 30.14% 66.43% 20.33% 23.97% 52.79%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,291,156 $ 1,831,435 $ 785,465 $ 604,286 $ 527,337
(000 omitted)
Ratio of expenses to average 1.10% A 1.25% 1.40% 1.48% 1.40%
net assets
Ratio of expenses to average 1.09% A, E 1.23% E 1.34% E 1.44% E 1.38% E
net assets after expense
reductions
Ratio of net investment (.39)% A (.54)% (.67)% (.83)% (.56)%
income (loss) to average net
assets
Portfolio turnover rate 185% A 133% 333% 255% 129%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28,
SELECTED PER-SHARE DATA 1995
Net asset value, beginning of $ 27.02
period
Income from Investment
Operations
Net investment income (loss) D (.31)
Net realized and unrealized 3.68
gain (loss)
Total from investment 3.37
operations
Less Distributions
From net realized gain -
In excess of net realized gain -
Total distributions -
Redemption fees added to paid .28
in capital
Net asset value, end of period $ 30.67
TOTAL RETURN B, C 13.51%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 215,014
(000 omitted)
Ratio of expenses to average 1.71%
net assets
Ratio of expenses to average 1.69% E
net assets after expense
reductions
Ratio of net investment (1.12)%
income (loss) to average net
assets
Portfolio turnover rate 189%
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN. C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. F FOR 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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
SELECT DEVELOPING 22.58% 126.48% 253.64% 726.05%
COMMUNICATIONS
SELECT DEVELOPING 18.83% 119.61% 242.96% 701.20%
COMMUNICATIONS (LOAD ADJ.)
S&P 500 7.32% 39.82% 206.52% 362.65%
GS Technology 28.97% 109.92% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or since the fund started on June 29, 1990. You can compare the
fund's returns to the performance of both the Standard & Poor's 500
Index - a 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 AUGUST 31, 1999 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
SELECT DEVELOPING 126.48% 28.74% 25.90%
COMMUNICATIONS
SELECT DEVELOPING 119.61% 27.95% 25.48%
COMMUNICATIONS (LOAD ADJ.)
S&P 500 39.82% 25.11% 18.19%
GS Technology 109.92% 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
1999/02/28 65365.18 43108.71
1999/03/31 75453.64 44833.49
1999/04/30 80250.25 46569.89
1999/05/31 77188.21 45470.38
1999/06/30 83230.10 47993.98
1999/07/31 81586.04 46495.61
1999/08/31 80120.00 46265.46
IMATRL PRASUN SHR__CHT 19990831 19990914 120203 R00000000000113
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Select Developing Communications Portfolio on
June 29, 1990, when the fund started, and the current 3.00% sales
charge was paid. As the chart shows, by August 31, 1999, the value of
the investment would have grown to $80,120 - a 701.20% 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 $46,265 - a 362.65%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
Cisco Systems, Inc. 10.0
Motorola, Inc. 8.3
MCI WorldCom, Inc. 5.4
Lucent Technologies, Inc. 5.2
AT&T Corp. 4.1
JDS Uniphase Corp. 3.8
MediaOne Group, Inc. 3.4
Cox Communications, Inc. 3.1
Class A
Nokia AB sponsored ADR 3.0
Comcast Corp. Class A (special) 3.0
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Communications Equipment 23.6%
Electronics 18.3%
Telephone Services 13.1%
Broadcasting 11.5%
Computer Services
& Software 10.2%
All Others 23.3%*
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
Row: 1, Col: 1, Value: 23.3
Row: 1, Col: 2, Value: 10.2
Row: 1, Col: 3, Value: 11.5
Row: 1, Col: 4, Value: 13.1
Row: 1, Col: 5, Value: 18.3
Row: 1, Col: 6, Value: 23.6
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S 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. For the six-month period that ended August 31, 1999, the fund
posted a total return of 22.58%. In comparison, the Standard and
Poor's 500 Index returned 7.32% during the same six-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 28.97%. For the 12-month period that ended August 31, 1999,
the fund returned 126.48%, while the S&P 500 and Goldman Sachs indexes
returned 39.82% and 109.92%, respectively.
Q. WHAT FACTORS INFLUENCED PERFORMANCE?
A. Relative to the Goldman Sachs index, returns were curbed by the
fund's overweighted position in cable stocks, which suffered during
the period, and its underweighted position in semiconductor and
software firms, which enjoyed a strong six months. The fund benefited,
however, from some good stock picks and favorable industry weightings.
Most notably, the fund's overweighting in telecommunications equipment
companies relative to the Goldman Sachs index bolstered performance.
Also helping returns was the fund's healthy exposure to networking
firms, providers of infrastructure to the Internet, such as Cisco
Systems. Timely trading of Internet stocks such as America Online and
Yahoo! during the period also proved beneficial, although I did cut
back on these positions as they hit their price targets in the early
spring.
Q. WHAT WERE SOME OF YOUR STRATEGIES DURING THE SIX-MONTH PERIOD?
A. I directed some assets toward a number of emerging companies in the
world of computer networks and communications equipment. For example,
there were several attractive IPOs, namely Brocade Communications and
Juniper Networks, over the past six months that boosted relative
performance. In technology, you tend to want to own the leaders, but
you must keep a watchful eye on the sector as new industries are
developing all the time. It is critical to find the leaders in
emerging technologies whenever you can.
Q. WHICH STOCKS PERFORMED WELL FOR THE FUND?
A. Cisco Systems was a strong performer for the fund during the
period. Investors rallied around the stock, cognizant of the value of
infrastructure to the Internet's development. Motorola doubly
benefited from the semiconductor rally and from a sharp recovery in
its mobile handset business. While the fund no longer owns America
Online, its performance early in the period also boosted fund returns.
Nokia, a leader in wireless handsets, also performed well for the
fund.
Q. WHICH STOCKS DISAPPOINTED?
A. AT&T wilted amid a negative pricing environment in
telecommunications services. Its stock also weakened as a result of
the earnings dilution created by its cable acquisitions. Critical
Path, a provider of business-to-business Internet messaging solutions,
fell sharply amid the Internet stock correction of the late spring and
early summer. Other Internet-related service firms, such as Concentric
Network and Northpoint Communications, also faltered during the
period, hurting fund performance.
Q. WHAT'S YOUR OUTLOOK, ANDY?
A. In terms of the economy, the domestic outlook looks favorable and
the conditions in Asia have improved significantly over the past six
months. While still a small percentage of overall technology spending,
Asia remains a meaningful part of the growth equation. A sustained
recovery there spells good things for the sector over the next several
years. Down the road, I will consider further concentrating the fund's
telecommunications positions in data networking firms. Many of the
best companies from the traditional telecom world are moving into data
networking, especially into the Internet. To the extent that they're
successful at doing this, they may become important parts of the
portfolio.
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 3.
(checkmark)FUND FACTS
START DATE: June 29, 1990
FUND NUMBER: 518
TRADING SYMBOL: FSDCX
SIZE: as of August 31, 1999, more than $1.0
billion
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 AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 92.2%
SHARES VALUE (NOTE 1)
ADVERTISING - 0.7%
DoubleClick, Inc. (a) 80,000 $ 7,990,000
BROADCASTING - 11.5%
AT&T Corp. (Liberty Media 350,000 11,200,000
Group) Class A (a)
Cablevision Systems Corp. 1,000 70,000
Class A (a)
CBS Corp. (a) 74,600 3,506,200
Comcast Corp. Class A 1,000,000 32,625,000
(special)
Cox Communications, Inc. 900,000 33,468,750
Class A (a)
MediaOne Group, Inc. 575,000 37,806,250
Time Warner, Inc. 125,000 7,414,063
126,090,263
CELLULAR - 4.6%
QUALCOMM, Inc. 50,000 9,609,375
Sprint Corp. Series 1 (PCS 250,000 14,937,500
Group)
Vodafone AirTouch PLC 129,250 25,922,703
sponsored ADR
50,469,578
COMMUNICATIONS EQUIPMENT -
23.6%
ADC Telecommunications, Inc. 208,000 7,709,000
(a)
Advanced Fibre 500,000 8,156,250
Communications, Inc. (a)
Ciena Corp. (a) 225,000 7,903,125
Cisco Systems, Inc. (a) 1,615,000 109,517,184
Lucent Technologies, Inc. 888,440 56,915,688
Newbridge Networks Corp. (a) 846,400 23,251,189
Nokia AB sponsored ADR 400,000 33,350,000
Tekelec (a) 300,000 4,837,500
Tellabs, Inc. (a) 100,000 5,956,250
Terayon Communication 50,000 1,800,000
Systems, Inc. (a)
259,396,186
COMPUTER SERVICES & SOFTWARE
- - 10.2%
Amdocs Ltd. (a) 250,000 6,562,500
At Home Corp. Series A (a) 381,688 15,315,231
Aware, Inc. (a) 443,500 14,857,250
BroadVision, Inc. (a) 150,000 14,934,375
Concentric Network Corp. (a) 300,000 6,581,250
Internet Capital Group, Inc. 5,210 390,750
(a)
Micromuse, Inc. (a) 100,000 5,712,500
Networks Associates, Inc. (a) 300,000 5,062,500
Polycom, Inc. (a) 2,200 80,438
PSINet, Inc. (a) 168,000 8,043,000
Redback Networks, Inc. 72,000 7,740,000
Siebel Systems, Inc. (a) 32,900 2,259,819
US Interactive, Inc. (a) 2,605 54,054
Verio, Inc. (a) 250,000 9,296,875
Yahoo!, Inc. (a) 100,000 14,750,000
111,640,542
SHARES VALUE (NOTE 1)
COMPUTERS & OFFICE EQUIPMENT
- - 5.8%
Computer Network Technology 779,000 $ 12,317,938
Corp. (a)
Comverse Technology, Inc. (a) 339,650 26,492,700
Juniper Networks, Inc. 60,800 12,464,000
MMC Networks, Inc. (a) 200,000 6,175,000
Netopia, Inc. (a) 80,000 2,210,000
Safeguard Scientifics, Inc. 52,100 3,503,725
(a)
63,163,363
CONSUMER ELECTRONICS - 0.5%
Gemstar International Group 75,000 5,175,000
Ltd. (a)
ELECTRICAL EQUIPMENT - 2.1%
Ericsson (L.M.) Telefon AB 410,500 13,366,906
ADR Class B
Scientific-Atlanta, Inc. 200,000 10,250,000
23,616,906
ELECTRONIC INSTRUMENTS - 0.0%
Photon Dynamics, Inc. (a) 10,000 165,000
ELECTRONICS - 18.3%
Altera Corp. (a) 200,000 8,425,000
Analog Devices, Inc. (a) 200,000 10,300,000
Broadcom Corp. Class A (a) 81,600 10,506,000
Brocade Communications 130,800 24,606,750
Systems, Inc.
JDS Uniphase Corp. (a) 389,368 41,297,344
Motorola, Inc. 983,100 90,690,975
QLogic Corp. (a) 79,400 6,912,763
Texas Instruments, Inc. 20,000 1,641,250
Vitesse Semiconductor Corp. 17,400 1,183,200
(a)
Xilinx, Inc. (a) 75,000 5,245,313
200,808,595
GAS - 0.7%
Williams Companies, Inc. 200,000 8,250,000
PACKAGING & CONTAINERS - 1.1%
Corning, Inc. 182,000 12,103,000
TELEPHONE SERVICES - 13.1%
AT&T Corp. 1,000,000 45,000,000
MCI WorldCom, Inc. (a) 784,146 59,399,060
McLeodUSA, Inc. Class A (a) 100,000 3,337,500
Metromedia Fiber Network, 510,000 15,013,125
Inc. Class A (a)
NEXTLINK Communications, Inc. 250,000 12,593,750
Class A (a)
Rhythms NetConnections, Inc. 68,800 2,631,600
(a)
WinStar Communications, Inc. 124,000 6,300,750
(a)
144,275,785
TOTAL COMMON STOCKS 1,013,144,218
(Cost $821,903,673)
CASH EQUIVALENTS - 13.2%
SHARES VALUE (NOTE 1)
Central Cash Collateral Fund, 49,238,500 $ 49,238,500
5.26% (b)
Taxable Central Cash Fund, 95,283,138 95,283,138
5.20% (b)
TOTAL CASH EQUIVALENTS 144,521,638
(Cost $144,521,638)
TOTAL INVESTMENT PORTFOLIO - 1,157,665,856
105.4%
(Cost $966,425,311)
NET OTHER ASSETS - (5.4%) (59,505,636)
NET ASSETS - 100% $ 1,098,160,220
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $1,172,176,911 and $858,877,162, 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 $23,729 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $49,297,269 The fund
received cash collateral of $49,238,500 which was invested in the
Central Cash Collateral Fund.
The fund participated in the interfund lending program as a lender.
The average daily loan balance during the period for which loans were
outstanding amounted to $36,346,857. The weighted average interest
rate was 5.29%. Interest earned from the interfund lending program
amounted to $37,362 and is included in interest income on the
Statement of Operations.
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $971,491,986. Net unrealized appreciation
aggregated $186,173,870, of which $228,013,584 related to appreciated
investment securities and $41,839,714 related to depreciated
investment securities.
DEVELOPING COMMUNICATIONS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 1,157,665,856
value (cost $966,425,311) -
See accompanying schedule
Receivable for investments 21,196,477
sold
Receivable for fund shares 6,626,410
sold
Dividends receivable 56,394
Interest receivable 400,519
Redemption fees receivable 30,351
Other receivables 660,621
TOTAL ASSETS 1,186,636,628
LIABILITIES
Payable for investments $ 25,984,826
purchased
Payable for fund shares 12,140,890
redeemed
Accrued management fee 531,011
Other payables and accrued 581,181
expenses
Collateral on securities 49,238,500
loaned, at value
TOTAL LIABILITIES 88,476,408
NET ASSETS $ 1,098,160,220
Net Assets consist of:
Paid in capital $ 836,572,623
Accumulated net investment (2,516,742)
loss
Accumulated undistributed net 72,863,794
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 191,240,545
(depreciation) on investments
NET ASSETS, for 28,162,325 $ 1,098,160,220
shares outstanding
NET ASSET VALUE and $38.99
redemption price per share
($1,098,160,220 (divided by)
28,162,325 shares)
Maximum offering price per $40.20
share (100/97.00 of $38.99)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 930,143
Dividends
Interest 2,420,328
Security lending 45,400
TOTAL INCOME 3,395,871
EXPENSES
Management fee $ 3,007,867
Transfer agent fees 2,372,311
Accounting and security 335,139
lending fees
Non-interested trustees' 1,930
compensation
Custodian fees and expenses 20,203
Registration fees 204,774
Audit 8,142
Legal 2,714
Total expenses before 5,953,080
reductions
Expense reductions (40,467) 5,912,613
NET INVESTMENT INCOME (LOSS) (2,516,742)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 76,211,880
Foreign currency transactions 1,432 76,213,312
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 67,283,628
Assets and liabilities in (1,555) 67,282,073
foreign currencies
NET GAIN (LOSS) 143,495,385
NET INCREASE (DECREASE) IN $ 140,978,643
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 4,102,715
charges paid to FDC
Sales charges - Retained by $ 4,093,971
FDC
Deferred sales charges $ 1,380
withheld by FDC
Exchange fees withheld by FSC $ 27,015
Expense reductions Directed $ 38,371
brokerage arrangements
Custodian credits 1,190
Transfer agent credits 906
$ 40,467
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ (2,516,742) $ (1,996,908)
income (loss)
Net realized gain (loss) 76,213,312 53,731,227
Change in net unrealized 67,282,073 97,390,680
appreciation (depreciation)
NET INCREASE (DECREASE) IN 140,978,643 149,124,999
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (28,177,745) (820,226)
from net realized gains
Share transactions Net 897,031,286 606,604,197
proceeds from sales of shares
Reinvestment of distributions 27,382,252 808,781
Cost of shares redeemed (552,314,094) (383,100,933)
NET INCREASE (DECREASE) IN 372,099,444 224,312,045
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 1,198,660 1,088,615
TOTAL INCREASE (DECREASE) 486,099,002 373,705,433
IN NET ASSETS
NET ASSETS
Beginning of period 612,061,218 238,355,785
End of period (including $ 1,098,160,220 $ 612,061,218
accumulated net investment
loss of $2,516,742 and $0,
respectively)
OTHER INFORMATION
Shares
Sold 23,263,892 21,247,025
Issued in reinvestment of 689,559 39,007
distributions
Redeemed (14,494,649) (14,419,633)
Net increase (decrease) 9,458,802 6,866,399
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 1997 1996 f
Net asset value, beginning of $ 32.72 $ 20.14 $ 19.68 $ 19.42 $ 20.40
period
Income from Investment
Operations
Net investment income (loss) (.09) (.16) (.18) (.18) (.17)
D
Net realized and unrealized 7.46 12.72 4.95 .42 4.17
gain (loss)
Total from investment 7.37 12.56 4.77 .24 4.00
operations
Less Distributions
From net realized gain (1.14) (.07) (4.35) - (5.00)
Redemption fees added to paid .04 .09 .04 .02 .02
in capital
Net asset value, end of period $ 38.99 $ 32.72 $ 20.14 $ 19.68 $ 19.42
TOTAL RETURN B, C 22.58% 63.01% 28.17% 1.34% 21.84%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,098,160 $ 612,061 $ 238,356 $ 220,360 $ 333,185
(000 omitted)
Ratio of expenses to average 1.14% A 1.38% 1.61% 1.64% 1.53%
net assets
Ratio of expenses to average 1.13% A, E 1.34% E 1.55% E 1.62% E 1.51% E
net assets after expense
reductions
Ratio of net investment (.48)% A (.64)% (.82)% (.86)% (.78)%
income (loss) to average net
assets
Portfolio turnover rate 185% A 299% 383% 202% 249%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28,
SELECTED PER-SHARE DATA 1995
Net asset value, beginning of $ 19.65
period
Income from Investment
Operations
Net investment income (loss) (.16)
D
Net realized and unrealized 2.55
gain (loss)
Total from investment 2.39
operations
Less Distributions
From net realized gain (1.67)
Redemption fees added to paid .03
in capital
Net asset value, end of period $ 20.40
TOTAL RETURN B, C 13.63%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 254,426
(000 omitted)
Ratio of expenses to average 1.58%
net assets
Ratio of expenses to average 1.56% E
net assets after expense
reductions
Ratio of net investment (.83)%
income (loss) to average net
assets
Portfolio turnover rate 266%
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN. C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. F FOR 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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT ELECTRONICS 44.66% 161.08% 507.26% 1,651.76%
SELECT ELECTRONICS (LOAD ADJ.) 40.24% 153.17% 488.97% 1,599.14%
S&P 500 7.32% 39.82% 206.52% 384.79%
GS Technology 28.97% 109.92% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a 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 AUGUST 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT ELECTRONICS 161.08% 43.44% 33.15%
SELECT ELECTRONICS (LOAD ADJ.) 153.17% 42.57% 32.75%
S&P 500 39.82% 25.11% 17.10%
GS Technology 109.92% 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
1989/08/31 9700.00 10000.00
1989/09/30 9969.44 9959.00
1989/10/31 9520.37 9727.95
1989/11/30 9546.03 9926.40
1989/12/31 9943.78 10164.64
1990/01/31 10277.38 9482.59
1990/02/28 11098.54 9604.91
1990/03/31 11637.43 9859.44
1990/04/30 11688.76 9612.96
1990/05/31 13408.07 10550.22
1990/06/30 13613.36 10478.48
1990/07/31 12971.83 10444.95
1990/08/31 10944.58 9500.72
1990/09/30 9289.42 9038.04
1990/10/31 8955.82 8999.18
1990/11/30 9879.63 9580.52
1990/12/31 10521.29 9847.82
1991/01/31 11985.79 10277.18
1991/02/28 13039.21 11012.00
1991/03/31 13732.92 11278.49
1991/04/30 13810.00 11305.56
1991/05/31 14259.62 11793.96
1991/06/30 12525.35 11253.80
1991/07/31 13386.06 11778.23
1991/08/31 13938.46 12057.37
1991/09/30 12872.20 11856.01
1991/10/31 13501.68 12014.88
1991/11/30 12679.50 11530.68
1991/12/31 14233.93 12849.79
1992/01/31 15916.82 12610.79
1992/02/29 16790.39 12774.73
1992/03/31 15467.20 12525.62
1992/04/30 15171.73 12893.87
1992/05/31 15197.42 12957.05
1992/06/30 14092.62 12763.99
1992/07/31 14837.72 13286.04
1992/08/31 14991.88 13013.68
1992/09/30 15531.43 13167.24
1992/10/31 16700.46 13213.32
1992/11/30 17792.41 13663.90
1992/12/31 18139.27 13831.96
1993/01/31 18755.90 13948.15
1993/02/28 18344.81 14137.85
1993/03/31 18987.14 14436.15
1993/04/30 18652.45 14086.80
1993/05/31 20524.15 14464.33
1993/06/30 20898.49 14506.27
1993/07/31 21492.27 14448.25
1993/08/31 23338.15 14995.84
1993/09/30 23725.40 14880.37
1993/10/31 23273.61 15188.39
1993/11/30 23092.90 15044.10
1993/12/31 23958.31 15226.14
1994/01/31 25613.23 15743.82
1994/02/28 26827.84 15317.17
1994/03/31 26539.37 14649.34
1994/04/30 26463.46 14836.85
1994/05/31 26387.54 15080.17
1994/06/30 24975.55 14710.71
1994/07/31 25491.76 15193.22
1994/08/31 27981.73 15816.14
1994/09/30 27177.04 15428.65
1994/10/31 28285.38 15775.79
1994/11/30 27921.00 15201.24
1994/12/31 28072.82 15426.67
1995/01/31 27268.14 15826.69
1995/02/28 30061.76 16443.45
1995/03/31 33159.03 16928.70
1995/04/30 36863.61 17427.25
1995/05/31 39550.95 18123.82
1995/06/30 45183.73 18544.83
1995/07/31 51940.04 19159.78
1995/08/31 52623.26 19207.87
1995/09/30 53564.59 20018.44
1995/10/31 52091.87 19946.98
1995/11/30 50786.15 20822.65
1995/12/31 47434.17 21223.69
1996/01/31 49037.43 21946.15
1996/02/29 51930.65 22149.59
1996/03/31 48890.00 22362.89
1996/04/30 54473.75 22692.52
1996/05/31 55911.14 23277.76
1996/06/30 51211.95 23366.44
1996/07/31 48742.58 22334.12
1996/08/31 51101.39 22805.14
1996/09/30 57993.53 24088.62
1996/10/31 58454.24 24752.98
1996/11/30 67226.06 26624.06
1996/12/31 67226.06 26096.63
1997/01/31 77730.13 27727.15
1997/02/28 69935.00 27944.53
1997/03/31 65069.96 26796.29
1997/04/30 71133.37 28396.03
1997/05/31 78949.33 30124.78
1997/06/30 78463.36 31474.37
1997/07/31 92090.68 33978.79
1997/08/31 95573.44 32075.30
1997/09/30 99116.94 33832.06
1997/10/31 84416.45 32702.07
1997/11/30 83809.00 34215.85
1997/12/31 76449.62 34803.33
1998/01/31 77690.28 35188.26
1998/02/28 86821.56 37726.04
1998/03/31 84340.23 39657.99
1998/04/30 88310.35 40056.94
1998/05/31 76499.25 39368.37
1998/06/30 78012.86 40967.51
1998/07/31 81288.20 40531.21
1998/08/31 65085.15 34671.20
1998/09/30 73695.35 36892.24
1998/10/31 88186.29 39893.06
1998/11/30 100245.53 42310.97
1998/12/31 115530.49 44748.93
1999/01/31 139400.83 46620.33
1999/02/28 117465.92 45171.37
1999/03/31 122230.07 46978.68
1999/04/30 124761.02 48798.16
1999/05/31 129152.96 47646.04
1999/06/30 153991.02 50290.39
1999/07/31 158705.54 48720.33
1999/08/31 169914.00 48479.16
IMATRL PRASUN SHR__CHT 19990831 19990914 123226 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Electronics Portfolio on August 31, 1989,
and the current 3.00% sales charge was paid. As the chart shows, by
August 31, 1999, the value of the investment would have grown to
$169,914 - a 1,599.14% 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 $48,479 - a 384.79% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
Micron Technology, Inc. 7.0
Microsoft Corp. 5.1
Texas Instruments, Inc. 4.8
Analog Devices, Inc. 4.8
Altera Corp. 4.7
LSI Logic Corp. 4.2
Motorola, Inc. 4.2
LAM Research Corp. 3.7
Rambus, Inc. 3.5
Linear Technology Corp. 3.1
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Electronics 56.9%
Computers &
Office Equipment 9.2%
Computer Services
& Software 8.8%
Electronic Instruments 8.5%
Communications Equipment 3.1%
All Others 13.5%*
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
Row: 1, Col: 1, Value: 13.5
Row: 1, Col: 2, Value: 3.1
Row: 1, Col: 3, Value: 8.5
Row: 1, Col: 4, Value: 8.800000000000001
Row: 1, Col: 5, Value: 9.199999999999999
Row: 1, Col: 6, Value: 56.9
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S 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. It did very well. For the six-month period that ended on August 31,
1999, the fund had a total return of 44.66%. For the 12-month period
ending August 31, 1999, it returned 161.08%. For the comparable
periods, the Standard & Poor's 500 Index returned 7.32% and 39.82%,
respectively. The fund did quite well against the Goldman Sachs
Technology Index - an index of 190 stocks designed to measure the
performance of companies in the technology sector - which returned
28.97% and 109.92% for the same six-month and 12-month periods.
Q. THE FUND OUTPERFORMED THE INDUSTRY INDEX BY A FAIRLY WIDE MARGIN.
WHY?
A. The main reason was that the fund was weighted fairly heavily
toward semiconductor stocks, which have done quite well since last
October. The Goldman Sachs Technology Index is a bit more broadly
based across the sector, so the fund had the benefit of a particularly
strong semiconductor environment within a technology environment that
itself was strengthening. A number of factors contributed to the
overall strength of the industry. The personal computer environment
improved greatly, with aggressive pricing driving stronger PC demand
on the consumer side and lower levels of concern about the Y2K
millennium bug spurring PC spending on the corporate side. The
cellular phone, or "wireless", business also was terrific. The
recovery in semiconductors came largely on the back of these
improvements in the PC and wireless segments. Emerging signs of
economic reawakening in South Korea and Japan also helped the
investment environment for technology stocks.
Q. WHAT WAS YOUR INVESTMENT STRATEGY DURING THIS PERIOD?
A. Last fall, as the broad market showed signs of improvement, I began
to concentrate the fund more in the semiconductor segment, including
semiconductor equipment manufacturers. I also tended to focus more on
companies that I believed were well-positioned for turnaround and
those whose business applications were closely aligned with the
wireless industry, which I believed would do well.
Q. WHICH STOCKS PERFORMED WELL DURING THE PERIOD?
A. Texas Instruments (TI) continued to be a very successful turnaround
story. With the sale of its memory business to Micron Technology, TI
demonstrated increased earnings by continuing to grow its market share
as a leading provider of digital signal processing (DSP), which is
closely aligned with the cellular telephone market. Analog Devices,
which derives about one-quarter of its revenues from DSPs, also did
well on the resurgence of the wireless market. LAM Research, a maker
of semiconductor equipment, is another great turnaround story that
helped fund performance. Xilinx and Altera, two programmable logic
companies, both performed well on the strength in the networking and
telecommunications businesses. Micron Technology benefited from a
firming of prices in the recovering digital random access memory
(DRAM) market and made a strong contribution to fund performance.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. No major disappointments spring to mind. However, Cadence Design, a
leading electronic design company whose product is used in the design
of semiconductors, did not recover in step with the semiconductor
industry as a whole and continued to show some earnings weakness.
SpeedFam-IPEC, a semiconductor equipment company that lost market
share, also hurt fund performance during the period.
Q. WHAT'S YOUR NEAR-TERM OUTLOOK FOR THE FUND, MATT?
A. I'm actually quite cautious at the moment. I've become increasingly
concerned about the high valuations of some of the companies in the
semiconductor and semiconductor equipment segments. I'm also concerned
about the technology sector as a whole. So much good news has been
priced into many of these names that I'm now feeling more and more
cautious about their ability to meet expectations. I believe there is
a good likelihood that corporate America will tone down its capital
spending on information technology during the fourth quarter of the
year based on concerns about Y2K. I don't think that viewpoint is
currently reflected in the stocks, and as a result, there may be some
disappointments in the short term.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE 3.
(checkmark)FUND FACTS
START DATE: July 29, 1985
FUND NUMBER: 008
TRADING SYMBOL: FSELX
SIZE: as of August 31, 1999, more than
$4.2 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 AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 91.3%
SHARES VALUE (NOTE 1)
COMMUNICATIONS EQUIPMENT - 3.1%
ADC Telecommunications, Inc. 150,000 $ 5,559,375
(a)
Ciena Corp. (a) 350,000 12,293,750
Cisco Systems, Inc. (a) 100,000 6,781,250
Jabil Circuit, Inc. (a) 2,330,000 104,413,125
129,047,500
COMPUTER SERVICES & SOFTWARE
- - 8.8%
America Online, Inc. (a) 25,000 2,282,813
Cadence Design Systems, Inc. 6,855,700 93,408,913
(a)
IMS Health, Inc. 574,200 15,862,275
Legato Systems, Inc. (a) 338,200 14,563,738
Microsoft Corp. (a) 2,340,000 216,596,250
Scient Corp. 1,200 75,750
Synopsys, Inc. (a) 525,000 29,367,188
372,156,927
COMPUTERS & OFFICE EQUIPMENT
- - 9.2%
Adaptec, Inc. (a) 2,575,000 100,425,000
Compaq Computer Corp. 2,400,000 55,650,000
Creative Technology Ltd. 100,000 981,250
(NASDAQ)
Gateway, Inc. (a) 781,270 75,734,361
Lexmark International Group, 200,000 15,750,000
Inc. Class A (a)
Quantum Corp. - DLT & Storage 1,299,100 23,789,769
Systems (a)
SCI Systems, Inc. (a) 2,317,500 115,440,469
387,770,849
CONSUMER ELECTRONICS - 0.3%
Gemstar International Group 200,000 13,800,000
Ltd. (a)
ELECTRICAL EQUIPMENT - 0.2%
Ericsson (L.M.) Telefon AB 300,000 9,768,750
ADR Class B
ELECTRONIC INSTRUMENTS - 8.5%
Applied Materials, Inc. (a) 28,400 2,018,175
KLA-Tencor Corp. (a) 1,215,600 76,354,875
LAM Research Corp. (a)(c) 2,758,227 155,667,436
Novellus Systems, Inc. (a) 1,199,100 64,676,456
Teradyne, Inc. (a) 856,600 58,302,338
357,019,280
ELECTRONICS - 56.9%
Altera Corp. (a) 4,743,300 199,811,513
Analog Devices, Inc. (a) 3,913,400 201,540,100
Arm Holdings PLC sponsored 243,900 10,274,288
ADR (a)
Avnet, Inc. 200,000 8,850,000
SHARES VALUE (NOTE 1)
AVX Corp. 765,700 $ 22,923,144
Broadcom Corp. Class A (a) 20,000 2,575,000
Dallas Semiconductor Corp. 1,098,500 55,474,250
DII Group, Inc. (a) 220,000 7,796,250
Etec Systems, Inc. (a) 730,300 32,133,200
Flextronics International 75,000 4,401,563
Ltd. (a)
Intel Corp. 1,200,000 98,625,000
KEMET Corp. (a) 237,500 6,130,469
Lattice Semiconductor Corp. 411,600 25,364,850
(a)
Linear Technology Corp. 2,111,020 132,862,321
LSI Logic Corp. (a) 3,154,800 179,034,900
Maxim Integrated Products, 1,728,900 116,376,581
Inc. (a)
Methode Electronics, Inc. 684,000 12,312,000
Class A
Microchip Technology, Inc. (a) 1,351,050 73,969,988
Micron Technology, Inc. (a) 3,970,000 296,013,120
Molex, Inc. Class A 300,000 8,437,500
Motorola, Inc. 1,923,300 177,424,425
National Semiconductor Corp. 2,515,100 70,894,381
(a)
PCD, Inc. (a) 200,000 1,687,500
PMC-Sierra, Inc. (a) 389,200 36,195,600
Rambus, Inc. (a)(c) 1,523,800 147,808,600
RF Micro Devices, Inc. (a) 50,000 2,196,875
Sanmina Corp. (a) 1,309,900 98,242,500
Solectron Corp. (a) 484,200 37,888,650
Texas Instruments, Inc. 2,487,400 204,122,263
Vitesse Semiconductor Corp. 779,700 53,019,600
(a)
Xilinx, Inc. (a) 1,140,700 79,777,706
2,404,164,137
INDUSTRIAL MACHINERY &
EQUIPMENT - 2.1%
ASM Lithography Holding NV (a) 636,600 40,185,375
PRI Automation, Inc. (a) 811,600 23,232,050
SpeedFam-IPEC, Inc. (a)(c) 1,849,760 18,266,380
Varian Semiconductor 356,900 8,119,475
Equipment Associates, Inc.
(a)
89,803,280
METALS & MINING - 0.4%
Cable Design Technology Corp. 796,000 16,765,750
(a)
SERVICES - 0.0%
Gartner Group, Inc. Class B 74,760 1,532,580
(a)
TELEPHONE SERVICES - 1.8%
Level 3 Communications, Inc. 360,000 21,510,000
(a)
MCI WorldCom, Inc. (a) 605,000 45,828,750
Metromedia Fiber Network, 321,700 9,470,044
Inc. Class A (a)
76,808,794
TOTAL COMMON STOCKS 3,858,637,847
(Cost $2,501,956,202)
CASH EQUIVALENTS - 11.5%
SHARES VALUE (NOTE 1)
Central Cash Collateral Fund, 88,402,500 $ 88,402,500
5.26% (b)
Taxable Central Cash Fund, 398,114,200 398,114,200
5.20% (b)
TOTAL CASH EQUIVALENTS 486,516,700
(Cost $486,516,700)
TOTAL INVESTMENT PORTFOLIO - $ 4,345,154,547
102.8% (Cost $2,988,472,902)
NET OTHER ASSETS - (2.8%) (119,116,983)
NET ASSETS - 100% $ 4,226,037,564
</TABLE>
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
(c) Affiliated company
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $2,144,688,693 and $2,150,384,982, 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 $170,536 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $81,767,313. The fund
received
cash collateral of $88,402,500 which was invested in the Central Cash
Collateral Fund.
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
LAM Research Corp. $ 1,712,810 $ - $ - $ 155,667,436
Rambus, Inc. 32,148,678 - - 147,808,600
SpeedFam-IPEC, Inc. 6,675,764 - - 18,266,380
Totals $ 40,537,252 $ - $ - $ 321,742,416
</TABLE>
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $3,006,294,216. Net unrealized appreciation
aggregated $1,338,860,331, of which $1,398,962,872 related to
appreciated investment securities and $60,102,541 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
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 4,345,154,547
value (cost $2,988,472,902)
- - See accompanying schedule
Receivable for investments 8,280,748
sold
Receivable for fund shares 17,954,148
sold
Dividends receivable 139,159
Interest receivable 1,403,973
Redemption fees receivable 12,827
Other receivables 112,156
TOTAL ASSETS 4,373,057,558
LIABILITIES
Payable for investments $ 43,904,582
purchased
Payable for fund shares 11,428,020
redeemed
Accrued management fee 1,935,331
Other payables and accrued 1,349,561
expenses
Collateral on securities 88,402,500
loaned, at value
TOTAL LIABILITIES 147,019,994
NET ASSETS $ 4,226,037,564
Net Assets consist of:
Paid in capital $ 2,442,119,178
Accumulated net investment (7,904,439)
(loss)
Accumulated undistributed net 435,141,180
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 1,356,681,645
(depreciation) on investments
NET ASSETS, for 61,710,653 $ 4,226,037,564
shares outstanding
NET ASSET VALUE and $68.48
redemption price per share
($4,226,037,564 (divided by)
61,710,653 shares)
Maximum offering price per $70.60
share (100/97.00 of $68.48)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 1,454,509
Dividends
Interest 7,642,758
Security lending 232,279
TOTAL INCOME 9,329,546
EXPENSES
Management fee $ 9,687,228
Transfer agent fees 6,688,737
Accounting and security 872,510
lending fees
Non-interested trustees' 5,355
compensation
Custodian fees and expenses 39,636
Registration fees 149,063
Audit 47,104
Legal 1,894
Total expenses before 17,491,527
reductions
Expense reductions (257,542) 17,233,985
NET INVESTMENT INCOME (LOSS) (7,904,439)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 564,498,843
Foreign currency transactions (7,131) 564,491,712
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 666,391,557
Assets and liabilities in 8,062 666,399,619
foreign currencies
NET GAIN (LOSS) 1,230,891,331
NET INCREASE (DECREASE) IN $ 1,222,986,892
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 6,414,167
charges paid to FDC
Sales charges - Retained by $ 6,393,671
FDC
Deferred sales charges $ 3,889
withheld by FDC
Exchange fees withheld by FSC $ 54,203
Expense reductions Directed $ 248,612
brokerage arrangements
Custodian credits 2,418
Transfer agent credits 6,512
$ 257,542
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ (7,904,439) $ (14,090,154)
income (loss)
Net realized gain (loss) 564,491,712 220,496,758
Change in net unrealized 666,399,619 431,151,334
appreciation (depreciation)
NET INCREASE (DECREASE) IN 1,222,986,892 637,557,938
NET ASSETS RESULTING FROM
OPERATIONS
Share transactions Net 1,152,707,040 1,488,308,447
proceeds from sales of shares
Cost of shares redeemed (1,036,744,965) (1,912,074,698)
NET INCREASE (DECREASE) IN 115,962,075 (423,766,251)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 1,540,664 3,006,511
TOTAL INCREASE (DECREASE) 1,340,489,631 216,798,198
IN NET ASSETS
NET ASSETS
Beginning of period 2,885,547,933 2,668,749,735
End of period (including $ 4,226,037,564 $ 2,885,547,933
accumulated net investment
loss of $7,904,439 and $0,
respectively)
OTHER INFORMATION
Shares
Sold 19,637,292 36,527,830
Redeemed (18,877,033) (51,847,162)
Net increase (decrease) 760,259 (15,319,332)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 1997 1996 F
Net asset value, beginning of $ 47.34 $ 34.99 $ 37.95 $ 28.18 $ 19.80
period
Income from Investment
Operations
Net investment income (loss) D (.14) (.23) (.17) (.17) (.08)
Net realized and unrealized 21.25 12.53 7.32 9.80 13.51
gain (loss)
Total from investment 21.11 12.30 7.15 9.63 13.43
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 .03 .05 .09 .14 .20
in capital
Net asset value, end of period $ 68.48 $ 47.34 $ 34.99 $ 37.95 $ 28.18
TOTAL RETURN B, C 44.66% 35.30% 24.15% 34.67% 72.75%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 4,226,038 $ 2,885,548 $ 2,668,750 $ 1,744,017 $ 1,133,362
(000 omitted)
Ratio of expenses to average 1.03% A 1.18% 1.18% 1.33% 1.25%
net assets
Ratio of expenses to average 1.02% A, E 1.15% E 1.12% E 1.29% E 1.22% E
net assets after expense
reductions
Ratio of net investment (.47)% A (.62)% (.42)% (.54)% (.28)%
income (loss) to average net
assets
Portfolio turnover rate 140% A 160% 435% 341% 366%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28,
SELECTED PER-SHARE DATA 1995
Net asset value, beginning of $ 17.67
period
Income from Investment
Operations
Net investment income (loss) D (.18)
Net realized and unrealized 2.11
gain (loss)
Total from investment 1.93
operations
Less Distributions
From net realized gain -
In excess of net realized gain -
Total distributions -
Redemption fees added to paid .20
in capital
Net asset value, end of period $ 19.80
TOTAL RETURN B, C 12.05%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 216,433
(000 omitted)
Ratio of expenses to average 1.72%
net assets
Ratio of expenses to average 1.71% E
net assets after expense
reductions
Ratio of net investment (.98)%
income (loss) to average net
assets
Portfolio turnover rate 205%
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN. C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. F FOR THE YEAR ENDED FEBRUARY 29
</TABLE>
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the past 10 year total returns would
have been lower.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT SOFTWARE AND COMPUTER 11.04% 73.18% 286.56% 889.52%
SERVICES
SELECT SOFTWARE AND COMPUTER 7.63% 67.91% 274.89% 859.76%
SERVICES (LOAD ADJ.)
S&P 500 7.32% 39.82% 206.52% 384.79%
GS Technology 28.97% 109.92% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a 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 AUGUST 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT SOFTWARE AND COMPUTER 73.18% 31.05% 25.76%
SERVICES
SELECT SOFTWARE AND COMPUTER 67.91% 30.25% 25.38%
SERVICES (LOAD ADJ.)
S&P 500 39.82% 25.11% 17.10%
GS Technology 109.92% 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
1989/08/31 9700.00 10000.00
1989/09/30 9894.81 9959.00
1989/10/31 10103.05 9727.95
1989/11/30 10398.61 9926.40
1989/12/31 10445.77 10164.64
1990/01/31 10074.43 9482.59
1990/02/28 10335.74 9604.91
1990/03/31 10748.35 9859.44
1990/04/30 10713.96 9612.96
1990/05/31 12061.80 10550.22
1990/06/30 12343.75 10478.48
1990/07/31 11215.96 10444.95
1990/08/31 9648.07 9500.72
1990/09/30 8540.91 9038.04
1990/10/31 8712.83 8999.18
1990/11/30 9833.74 9580.52
1990/12/31 10535.17 9847.82
1991/01/31 12082.43 10277.18
1991/02/28 12962.66 11012.00
1991/03/31 13698.47 11278.49
1991/04/30 13595.32 11305.56
1991/05/31 13842.88 11793.96
1991/06/30 12828.30 11253.80
1991/07/31 13616.33 11778.23
1991/08/31 14722.61 12057.37
1991/09/30 14237.67 11856.01
1991/10/31 14949.93 12014.88
1991/11/30 13313.24 11530.68
1991/12/31 15364.99 12849.79
1992/01/31 17831.27 12610.79
1992/02/29 18367.08 12774.73
1992/03/31 17484.58 12525.62
1992/04/30 17043.32 12893.87
1992/05/31 17311.23 12957.05
1992/06/30 16373.57 12763.99
1992/07/31 17531.85 13286.04
1992/08/31 16223.86 13013.68
1992/09/30 17397.90 13167.24
1992/10/31 18800.45 13213.32
1992/11/30 20439.38 13663.90
1992/12/31 20825.48 13831.96
1993/01/31 21897.09 13948.15
1993/02/28 21763.14 14137.85
1993/03/31 22228.03 14436.15
1993/04/30 21853.95 14086.80
1993/05/31 24318.74 14464.33
1993/06/30 25573.39 14506.27
1993/07/31 24799.25 14448.25
1993/08/31 26472.11 14995.84
1993/09/30 27006.00 14880.37
1993/10/31 26943.71 15188.39
1993/11/30 26276.35 15044.10
1993/12/31 27641.83 15226.14
1994/01/31 28605.03 15743.82
1994/02/28 28986.30 15317.17
1994/03/31 25875.96 14649.34
1994/04/30 26009.83 14836.85
1994/05/31 23406.82 15080.17
1994/06/30 21352.87 14710.71
1994/07/31 22400.18 15193.22
1994/08/31 24830.34 15816.14
1994/09/30 25958.99 15428.65
1994/10/31 27555.38 15775.79
1994/11/30 26924.96 15201.24
1994/12/31 27748.57 15426.67
1995/01/31 27291.01 15826.69
1995/02/28 29558.48 16443.45
1995/03/31 31246.37 16928.70
1995/04/30 32222.50 17427.25
1995/05/31 33096.96 18123.82
1995/06/30 36025.35 18544.83
1995/07/31 38201.31 19159.78
1995/08/31 38465.68 19207.87
1995/09/30 40051.89 20018.44
1995/10/31 40529.79 19946.98
1995/11/30 41678.78 20822.65
1995/12/31 40586.23 21223.69
1996/01/31 39029.62 21946.15
1996/02/29 41433.20 22149.59
1996/03/31 40380.20 22362.89
1996/04/30 44445.42 22692.52
1996/05/31 45995.15 23277.76
1996/06/30 43700.13 23366.44
1996/07/31 40340.40 22334.12
1996/08/31 41180.33 22805.14
1996/09/30 46563.00 24088.62
1996/10/31 46728.62 24752.98
1996/11/30 50431.42 26624.06
1996/12/31 49419.82 26096.63
1997/01/31 53386.38 27727.15
1997/02/28 48122.58 27944.53
1997/03/31 45652.84 26796.29
1997/04/30 48330.15 28396.03
1997/05/31 52422.29 30124.78
1997/06/30 52449.04 31474.37
1997/07/31 58787.86 33978.79
1997/08/31 58507.03 32075.30
1997/09/30 60339.13 33832.06
1997/10/31 57584.29 32702.07
1997/11/30 58854.72 34215.85
1997/12/31 56839.71 34803.33
1998/01/31 58401.41 35188.26
1998/02/28 65208.03 37726.04
1998/03/31 70644.49 39657.99
1998/04/30 69667.32 40056.94
1998/05/31 64224.10 39368.37
1998/06/30 72048.73 40967.51
1998/07/31 67818.40 40531.21
1998/08/31 55423.24 34671.20
1998/09/30 67626.11 36892.24
1998/10/31 65333.45 39893.06
1998/11/30 71457.08 42310.97
1998/12/31 82855.35 44748.93
1999/01/31 92924.57 46620.33
1999/02/28 86443.93 45171.37
1999/03/31 90411.05 46978.68
1999/04/30 86980.23 48798.16
1999/05/31 86933.01 47646.04
1999/06/30 98045.58 50290.39
1999/07/31 91938.39 48720.33
1999/08/31 95976.00 48479.16
IMATRL PRASUN SHR__CHT 19990831 19990921 142935 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Software and Computer Services Portfolio
on August 31, 1989, and the current 3.00% sales charge was paid. As
the chart shows, by August 31, 1999, the value of the investment would
have grown to $95,976 - an 859.76% increase on the initial investment
- - and includes the effect of a $7.50 trading fee. For comparison, look
at how the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $48,479 - a 384.79% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
Microsoft Corp. 17.2
Siebel Systems, Inc. 7.6
BMC Software, Inc. 6.3
Compuware Corp. 5.5
Oracle Corp. 4.8
Automatic Data Processing, Inc. 3.9
First Data Corp. 3.3
Yahoo!, Inc. 3.2
Computer Associates 2.8
International, Inc.
America Online, Inc. 2.6
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Computer Services & Software 87.1%
Computers &
Office Equipment 2.3%
Broadcasting 0.9%
Communications Equipment 0.8%
Services 0.4%
All Others 8.5%*
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
Row: 1, Col: 1, Value: 8.5
Row: 1, Col: 2, Value: 0.4
Row: 1, Col: 3, Value: 0.8
Row: 1, Col: 4, Value: 0.9
Row: 1, Col: 5, Value: 2.3
Row: 1, Col: 6, Value: 87.09999999999999
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
(photograph of John Porter) (photograph of Dylan Yolles)
NOTE TO SHAREHOLDERS: On September 1, 1999, after the period covered
by this report, Dylan Yolles (right) became Portfolio Manager of
Fidelity Select Software and Computer Services Portfolio. The
following is an interview with John Porter, who managed the fund
during the period covered by this report, with additional comments
from Dylan Yolles.
Q. HOW DID THE FUND PERFORM, JOHN?
J.P. For the six- and 12-month periods ending August 31, 1999, the
fund returned 11.04% and 73.18%, respectively. By comparison, the
Standard & Poor's 500 Index returned 7.32% and 39.82% for the same
time periods. 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
28.97% and 109.92% over the same six- and 12-month periods.
Q. WHY DID THE FUND'S PERFORMANCE LAG THAT OF THE GOLDMAN SACHS INDEX?
J.P. The fund invests primarily in a much narrower range of generally
less cyclical computer services and software stocks than those in the
broadly based Goldman Sachs Technology Index. During prolonged periods
of extraordinary returns - positive or negative - such as we've seen
during the past several years, the fund generally produces a more
modest return.
Q. WHICH STOCKS STOOD OUT IN THIS ENVIRONMENT?
J.P. Microsoft, the fund's number-one holding, continued to post
stellar earnings, and its stock performed well. Siebel Systems,
another good performer, was one of the fastest-growing software
companies around, posting earnings above expectations. Investor
concerns about the company's possible slowdown because of Y2K issues
abated during the period, helping Siebel's valuation. BMC Software
enjoyed good earnings growth and investors grew more comfortable about
the company's recent acquisitions. VeriSign also had strong earnings
and developed new pricing for its key products, offering the prospect
of even better growth for this company. Investors also recognized that
VeriSign could be a key beneficiary of growing e-commerce activity
over the Internet. America Online continued to enjoy terrific growth,
adding to its expanding membership base.
Q. WHAT ABOUT DISAPPOINTMENTS?
J.P. Oracle, which started out well in early 1999, had a very
disappointing six months. Its stock was volatile and business appeared
to slow toward the end of the period. Network Associates missed its
earnings targets, due in part to how Y2K budget demands shifted
spending from some of its products. In addition, the company's new
security product that launched this year didn't do as well as
expected. Aspect Development, which develops and markets enterprise
software designed to help manufacturers improve product development,
had a problem earlier this year when it lost a few of its most
important contracts. The company also suffered from
slower-than-planned sales-force growth and experienced some transition
issues in key management positions.
Q. DYLAN, WHERE DO YOU SEE GOOD OPPORTUNITIES?
D.Y. I think that the Internet is creating tremendous growth
opportunities for many software companies. In general, most
enterprises will need to rebuild much of their software infrastructure
over the next few years to prepare for the amount of business which
will be conducted on the Internet, and many areas of software -
including infrastructure, database and enterprise applications - could
benefit from this trend. There are a number of areas that have
experienced extremely fast growth. For example, within the enterprise
software area, customer relationship-management software is finding a
growing number of companies interested in developing more effective
ways to engage their customers. This software is designed to help
those companies come up with better ways of reaching their customers
via the Internet, while enabling their customers to use the Internet
to reach them.
Q. WHAT'S YOUR OUTLOOK, DYLAN?
D.Y. Overall, I believe that the software industry will continue to
grow and that there will be good investment opportunities within the
industry. My goal is to identify software companies that are market
leaders, forging new growth opportunities that may not yet be fully
recognized by the market. In addition, I think it's important to look
for early-warning signs that could indicate when a software company's
growth is slowing. In general, it's much more challenging than other
more conservative areas of the equity markets, but the potential
reward is commensurate with the risk.
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 3.
(checkmark)FUND FACTS
START DATE: July 29, 1985
FUND NUMBER: 028
TRADING SYMBOL: FSCSX
SIZE: as of August 31, 1999, more than $729
million
MANAGER: Dylan Yolles, since September, 1999;
manager, Fidelity Select Chemicals Portfolio,
January-August, 1999; research analyst,
commodities, diversified chemicals, gaming
and lodging, 1997-present; joined Fidelity in
1997
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
INVESTMENTS AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 91.9%
SHARES VALUE (NOTE 1)
BROADCASTING - 0.9%
MediaOne Group, Inc. 100,000 $ 6,575,000
COMMUNICATIONS EQUIPMENT - 0.8%
Cisco Systems, Inc. (a) 60,000 4,068,750
Nokia AB sponsored ADR 25,000 2,084,375
6,153,125
COMPUTER SERVICES & SOFTWARE
- - 87.1%
Affiliated Computer Services, 150,000 6,412,500
Inc. Class A (a)
Amazon.com, Inc. (a) 44,000 5,472,500
America Online, Inc. (a) 205,000 18,719,063
Ariba, Inc. 15,400 2,140,600
Aspect Development, Inc. (a) 355,000 5,569,063
At Home Corp. Series A (a) 256,676 10,299,125
Automatic Data Processing, 728,900 28,654,881
Inc.
Axent Technolgies, Inc. (a) 200,000 2,525,000
BMC Software, Inc. (a) 855,225 46,021,795
BroadVision, Inc. (a) 15,000 1,493,438
Cambridge Technology 30,000 410,625
Partners, Inc. (a)
Ceridian Corp. (a) 179,400 5,023,200
Check Point Software 40,000 3,085,000
Technologies Ltd. (a)
Citrix Systems, Inc. (a) 95,000 5,415,000
Clarify, Inc. (a) 110,000 4,840,000
CMGI, Inc. (a) 79,000 6,631,063
CNET, Inc. (a) 93,000 3,493,313
Computer Associates 364,250 20,580,125
International, Inc.
Computer Sciences Corp. (a) 165,000 11,415,938
Computron Software, Inc. (a) 111 76
Compuware Corp. (a) 1,327,300 40,067,869
DST Systems, Inc. (a) 100,000 6,650,000
eBay, Inc. 30,000 3,766,875
Electronic Data Systems Corp. 329,100 18,470,738
Equifax, Inc. 175,000 5,337,500
Exodus Communications, Inc. 90,000 7,233,750
(a)
First Data Corp. 555,000 24,420,000
Fiserv, Inc. (a) 67,500 2,079,844
Galileo International, Inc. 120,000 5,820,000
i2 Technologies, Inc. (a) 175,800 5,581,650
IMS Health, Inc. 250,000 6,906,250
Industri-Matematik 378,400 626,725
International Corp. (a)
Informatica Corp. (a) 20,000 1,122,500
Informix Corp. (a) 150,000 1,092,188
Infoseek Corp. (a) 25,000 760,938
Inktomi Corp. (a) 31,000 3,514,625
International Business 100,000 12,456,250
Machines Corp.
International Integration, 50,000 1,150,000
Inc. (a)
SHARES VALUE (NOTE 1)
Intuit, Inc. (a) 71,100 $ 6,367,894
ISS Group, Inc. (a) 70,000 1,728,125
J.D. Edwards & Co. (a) 100,000 1,837,500
Keane, Inc. (a) 30,000 650,625
Lycos, Inc. (a) 40,000 1,625,000
Microsoft Corp. (a) 1,354,000 125,329,618
MindSpring Enterprises, Inc. 30,000 875,625
(a)
Network Solutions, Inc. Class 14,000 806,750
A (a)
Networks Associates, Inc. (a) 120,000 2,025,000
New Era of Networks, Inc. (a) 80,000 1,340,000
Oracle Corp. (a) 950,900 34,707,850
Pervasive Software, Inc. (a) 100,000 2,125,000
Policy Management Systems 78,400 2,396,100
Corp. (a)
RealNetworks, Inc. (a) 60,000 4,905,000
Sabre Group Holdings, Inc. 90,000 5,040,000
Class A (a)
SalesLogix Corp. (a) 20,000 360,000
Security Dynamics 10,000 236,250
Technologies, Inc. (a)
Siebel Systems, Inc. (a) 806,125 55,370,711
SunGard Data Systems, Inc. (a) 90,200 2,255,000
Technology Solutions, Inc. (a) 100,000 1,200,000
TSI International Software 40,000 760,000
Ltd. (a)
Tumbleweed Communications 113,000 2,175,250
Corp. (a)
VeriSign, Inc. (a) 100,200 10,852,913
Veritas Software Corp. (a) 100,000 5,925,000
Vignette Corp. (a) 22,200 1,505,438
WatchGuard Technologies, Inc. 200,400 2,705,400
Whittman-Hart, Inc. (a) 40,000 1,052,500
Yahoo!, Inc. (a) 158,000 23,305,000
634,723,556
COMPUTERS & OFFICE EQUIPMENT
- - 2.3%
Compaq Computer Corp. 10,000 231,875
Gateway, Inc. (a) 27,800 2,694,863
Sun Microsystems, Inc. (a) 160,000 12,720,000
Tech Data Corp. (a) 34,600 1,282,363
16,929,101
ELECTRONICS - 0.0%
Intel Corp. 2,000 164,375
SECURITIES INDUSTRY - 0.4%
E*Trade Group, Inc. (a) 110,000 2,750,000
SERVICES - 0.4%
Computer Horizons Corp. (a) 61,300 796,900
Diamond Technology Partners, 40,000 1,325,000
Inc. Class A (a)
Gartner Group, Inc. Class B 32,550 667,275
(a)
2,789,175
TOTAL COMMON STOCKS 670,084,332
(Cost $420,389,264)
CASH EQUIVALENTS - 13.0%
SHARES VALUE (NOTE 1)
Central Cash Collateral Fund, 31,657,094 $ 31,657,094
5.26% (b)
Taxable Central Cash Fund, 63,221,819 63,221,819
5.20% (b)
TOTAL CASH EQUIVALENTS 94,878,913
(Cost $94,878,913)
TOTAL INVESTMENT PORTFOLIO - 764,963,245
104.9%
(Cost $515,268,177)
NET OTHER ASSETS - (4.9%) (35,845,370)
TOTAL NET ASSETS - 100% $ 729,117,875
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $183,602,374 and $234,876,420, 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 $6,738 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $31,487,001. The fund
received cash collateral of $31,657,094 which was invested in the
Central Cash Collateral Fund.
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $517,604,257. Net unrealized appreciation
aggregated $247,358,988, of which $278,163,245 related to appreciated
investment securities and $30,804,257 related to depreciated
investment securities.
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 764,963,245
value (cost $515,268,177) -
See accompanying schedule
Cash 456,675
Receivable for investments 6,076,392
sold
Receivable for fund shares 1,196,401
sold
Dividends receivable 82,775
Interest receivable 243,946
Redemption fees receivable 5,199
Other receivables 586,478
TOTAL ASSETS 773,611,111
LIABILITIES
Payable for investments $ 8,879,987
purchased
Payable for fund shares 3,256,180
redeemed
Accrued management fee 340,997
Other payables and accrued 358,978
expenses
Collateral on securities 31,657,094
loaned, at value
TOTAL LIABILITIES 44,493,236
NET ASSETS $ 729,117,875
Net Assets consist of:
Paid in capital $ 441,422,718
Accumulated net investment (2,102,110)
loss
Accumulated undistributed net 40,102,460
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 249,694,807
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 11,956,856 $ 729,117,875
shares outstanding
NET ASSET VALUE and $60.98
redemption price per share
($729,117,875 (divided by)
11,956,856 shares)
Maximum offering price per $62.87
share (100/97.00 of $60.98)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 290,103
Dividends
Interest 1,382,312
Security lending 336,566
TOTAL INCOME 2,008,981
EXPENSES
Management fee $ 2,025,113
Transfer agent fees 1,758,174
Accounting and security 248,081
lending fees
Non-interested trustees' 1,150
compensation
Custodian fees and expenses 14,888
Registration fees 53,598
Audit 11,991
Legal 2,281
Total expenses before 4,115,276
reductions
Expense reductions (4,185) 4,111,091
NET INVESTMENT INCOME (LOSS) (2,102,110)
REALIZED AND UNREALIZED GAIN 42,800,766
(LOSS)
Net realized gain (loss) on
investment securities
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 27,121,455
Assets and liabilities in (261) 27,121,194
foreign currencies
NET GAIN (LOSS) 69,921,960
NET INCREASE (DECREASE) IN $ 67,819,850
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 933,948
charges paid to FDC
Sales charges - Retained by $ 931,501
FDC
Deferred sales charges $ 3,248
withheld by FDC
Exchange fees withheld by FSC $ 16,950
Expense reductions Directed $ 2,454
brokerage arrangements
Custodian credits 1,345
Transfer agent credits 386
$ 4,185
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ (2,102,110) $ (4,709,221)
income (loss)
Net realized gain (loss) 42,800,766 46,870,113
Change in net unrealized 27,121,194 110,443,885
appreciation (depreciation)
NET INCREASE (DECREASE) IN 67,819,850 152,604,777
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (27,222,764) (15,509,477)
from net realized gains
Share transactions Net 181,085,673 512,689,909
proceeds from sales of shares
Reinvestment of distributions 26,224,199 15,022,690
Cost of shares redeemed (210,103,290) (478,286,707)
NET INCREASE (DECREASE) IN (2,793,418) 49,425,892
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 462,207 963,911
TOTAL INCREASE (DECREASE) 38,265,875 187,485,103
IN NET ASSETS
NET ASSETS
Beginning of period 690,852,000 503,366,897
End of period (including $ 729,117,875 $ 690,852,000
accumulated net investment
loss of $2,102,110 and $0,
respectively)
OTHER INFORMATION
Shares
Sold 3,075,720 10,599,999
Issued in reinvestment of 450,668 314,660
distributions
Redeemed (3,670,167) (10,186,951)
Net increase (decrease) (143,779) 727,708
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 1997 1996 F
Net asset value, beginning of $ 57.09 $ 44.26 $ 38.58 $ 36.20 $ 29.07
period
Income from Investment
Operations
Net investment income (loss) D (.18) (.39) (.33) (.25) (.19)
Net realized and unrealized 6.33 14.46 12.57 5.87 11.85
gain (loss)
Total from investment 6.15 14.07 12.24 5.62 11.66
operations
Less Distributions
From net realized gain (2.30) (1.32) (6.61) (3.31) (4.60)
Redemption fees added to paid .04 .08 .05 .07 .07
in capital
Net asset value, end of period $ 60.98 $ 57.09 $ 44.26 $ 38.58 $ 36.20
TOTAL RETURN B, C 11.04% 32.57% 35.50% 16.14% 40.17%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 729,118 $ 690,852 $ 503,367 $ 389,699 $ 337,633
(000 omitted)
Ratio of expenses to average 1.16% A 1.28% 1.44% 1.54% 1.48%
net assets
Ratio of expenses to average 1.16% A 1.27% E 1.42% E 1.51% E 1.47% E
net assets after expense
reductions
Ratio of net investment (.59)% A (.82)% (.81)% (.66)% (.54)%
income (loss) to average net
assets
Portfolio turnover rate 56% A 72% 145% 279% 183%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28,
SELECTED PER-SHARE DATA 1995
Net asset value, beginning of $ 28.89
period
Income from Investment
Operations
Net investment income (loss) D (.26)
Net realized and unrealized .67
gain (loss)
Total from investment .41
operations
Less Distributions
From net realized gain (.33)
Redemption fees added to paid .10
in capital
Net asset value, end of period $ 29.07
TOTAL RETURN B, C 1.97%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 236,445
(000 omitted)
Ratio of expenses to average 1.52%
net assets
Ratio of expenses to average 1.50% E
net assets after expense
reductions
Ratio of net investment (1.01)%
income (loss) to average net
assets
Portfolio turnover rate 164%
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN. C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. F FOR 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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT TECHNOLOGY 36.44% 145.29% 372.76% 1,189.53%
SELECT TECHNOLOGY (LOAD ADJ.) 32.27% 137.86% 358.51% 1,150.77%
S&P 500 7.32% 39.82% 206.52% 384.79%
GS Technology 28.97% 109.92% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a 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 AUGUST 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT TECHNOLOGY 145.29% 36.44% 29.13%
SELECT TECHNOLOGY (LOAD ADJ.) 137.86% 35.60% 28.74%
S&P 500 39.82% 25.11% 17.10%
GS Technology 109.92% 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
1989/08/31 9700.00 10000.00
1989/09/30 9931.81 9959.00
1989/10/31 9859.69 9727.95
1989/11/30 9885.45 9926.40
1989/12/31 10003.93 10164.64
1990/01/31 9797.88 9482.59
1990/02/28 10349.07 9604.91
1990/03/31 10833.30 9859.44
1990/04/30 10343.92 9612.96
1990/05/31 11678.12 10550.22
1990/06/30 11781.15 10478.48
1990/07/31 11152.68 10444.95
1990/08/31 9633.03 9500.72
1990/09/30 8813.97 9038.04
1990/10/31 9066.38 8999.18
1990/11/30 10426.34 9580.52
1990/12/31 11054.81 9847.82
1991/01/31 12919.60 10277.18
1991/02/28 13573.82 11012.00
1991/03/31 14660.75 11278.49
1991/04/30 13939.56 11305.56
1991/05/31 14712.27 11793.96
1991/06/30 13285.01 11253.80
1991/07/31 14755.94 11778.23
1991/08/31 15481.05 12057.37
1991/09/30 15558.74 11856.01
1991/10/31 15978.27 12014.88
1991/11/30 15455.15 11530.68
1991/12/31 17573.98 12849.79
1992/01/31 18242.33 12610.79
1992/02/29 18527.28 12774.73
1992/03/31 17055.88 12525.62
1992/04/30 16807.19 12893.87
1992/05/31 16972.98 12957.05
1992/06/30 15759.57 12763.99
1992/07/31 16562.53 13286.04
1992/08/31 15714.33 13013.68
1992/09/30 16483.36 13167.24
1992/10/31 17455.97 13213.32
1992/11/30 18869.63 13663.90
1992/12/31 19107.13 13831.96
1993/01/31 19689.56 13948.15
1993/02/28 19576.47 14137.85
1993/03/31 19830.93 14436.15
1993/04/30 19774.07 14086.80
1993/05/31 21768.99 14464.33
1993/06/30 22832.11 14506.27
1993/07/31 22225.50 14448.25
1993/08/31 23413.70 14995.84
1993/09/30 23776.41 14880.37
1993/10/31 23307.39 15188.39
1993/11/30 23082.25 15044.10
1993/12/31 24581.34 15226.14
1994/01/31 25818.98 15743.82
1994/02/28 26548.86 15317.17
1994/03/31 25653.96 14649.34
1994/04/30 25137.26 14836.85
1994/05/31 25176.89 15080.17
1994/06/30 23043.59 14710.71
1994/07/31 23935.22 15193.22
1994/08/31 26458.19 15816.14
1994/09/30 26326.10 15428.65
1994/10/31 27310.19 15775.79
1994/11/30 26933.72 15201.24
1994/12/31 27316.79 15426.67
1995/01/31 26253.44 15826.69
1995/02/28 27772.51 16443.45
1995/03/31 29463.30 16928.70
1995/04/30 31683.98 17427.25
1995/05/31 32909.67 18123.82
1995/06/30 35967.07 18544.83
1995/07/31 39603.27 19159.78
1995/08/31 40828.96 19207.87
1995/09/30 42708.34 20018.44
1995/10/31 42068.26 19946.98
1995/11/30 41850.36 20822.65
1995/12/31 39283.42 21223.69
1996/01/31 39681.53 21946.15
1996/02/29 41855.86 22149.59
1996/03/31 38617.34 22362.89
1996/04/30 41942.95 22692.52
1996/05/31 43080.51 23277.76
1996/06/30 40016.05 23366.44
1996/07/31 35744.37 22334.12
1996/08/31 37129.57 22805.14
1996/09/30 41888.78 24088.62
1996/10/31 41586.97 24752.98
1996/11/30 46717.63 26624.06
1996/12/31 45497.34 26096.63
1997/01/31 50882.17 27727.15
1997/02/28 47147.93 27944.53
1997/03/31 44026.52 26796.29
1997/04/30 46592.80 28396.03
1997/05/31 51545.29 30124.78
1997/06/30 52494.43 31474.37
1997/07/31 58508.83 33978.79
1997/08/31 60144.00 32075.30
1997/09/30 62568.55 33832.06
1997/10/31 53687.92 32702.07
1997/11/30 52748.17 34215.85
1997/12/31 50196.52 34803.33
1998/01/31 52923.63 35188.26
1998/02/28 58898.88 37726.04
1998/03/31 59109.51 39657.99
1998/04/30 61526.21 40056.94
1998/05/31 56903.43 39368.37
1998/06/30 61637.07 40967.51
1998/07/31 61803.36 40531.21
1998/08/31 50994.70 34671.20
1998/09/30 59896.60 36892.24
1998/10/31 64685.67 39893.06
1998/11/30 74884.61 42310.97
1998/12/31 87422.65 44748.93
1999/01/31 102565.86 46620.33
1999/02/28 91679.60 45171.37
1999/03/31 103707.70 46978.68
1999/04/30 106357.77 48798.16
1999/05/31 103847.03 47646.04
1999/06/30 119119.73 50290.39
1999/07/31 116976.41 48720.33
1999/08/31 125077.00 48479.16
IMATRL PRASUN SHR__CHT 19990831 19990924 115652 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Technology Portfolio on August 31, 1989,
and the current 3.00% sales charge was paid. As the chart shows, by
August 31, 1999, the value of the investment would have grown to
$125,077 - a 1,150.77% 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 $48,479 - a 384.79% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
Microsoft Corp. 10.2
Cisco Systems, Inc. 7.7
Intel Corp. 5.4
Motorola, Inc. 4.8
Lucent Technologies, Inc. 4.3
Micron Technology, Inc. 4.0
Analog Devices, Inc. 3.0
Altera Corp. 2.8
Dell Computer Corp. 2.3
QLogic Corp. 2.3
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Electronics 37.0%
Computer Services
& Software 20.9%
Communications Equipment 15.2%
Computers &
Office Equipment 12.0%
Electrical Equipment 2.4%
All Others 12.5%*
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
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
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S 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. Quite well. For the six- and 12-month periods that ended August 31,
1999, the fund had total returns of 36.44% and 145.29%, respectively.
During those same periods, the Standard & Poor's 500 Index posted
returns of 7.32% and 39.82%, respectively. The fund also outpaced the
Goldman Sachs Technology Index - an index of 190 stocks designed to
measure the performance of companies in the technology sector - which
returned 28.97% and 109.92% for those same periods.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S SOUND PERFORMANCE VERSUS THE
GOLDMAN SACHS INDEX?
A. Strong stock selection and favorable industry weightings -
specifically, the fund's underweighting in computer hardware firms and
overweighting in semiconductor stocks - gave it an advantage over the
Goldman Sachs index. The fund's healthy exposure to networking firms
that provide infrastructure to the Internet, such as Cisco Systems,
also helped returns. A modest overweighting in Internet stocks such as
America Online and eBay during the first half of the period proved
beneficial, although I did cut back on these positions as they hit
their valuation targets in the early spring. The fund no longer held
eBay at the end of the period.
Q. WHAT'S BEHIND THE FALL OFF IN THE COMPUTER HARDWARE SECTOR?
A. Computer hardware stocks have been hurt by the emergence of the
low-price, or free, personal computer phenomenon. Demand for personal
computers rebounded strongly, fueled by falling prices, which set the
stage for fierce competitive battles among suppliers. It became
increasingly difficult for even the best companies to show growth and
margin improvement. Of course, firms like Microsoft and Intel
undoubtedly benefited from this phenomenon, as a lack of pricing
pressure enabled these firms to simply tag along for the ride. Basic
arithmetic reveals that as the number of PC shipments rise, the number
of operating systems and chips found in every box rise in unison.
Every additional box that goes out the door directly helps the bottom
lines of these industry leaders.
Q. WHAT WERE SOME OF YOUR STRATEGIES DURING THE SIX-MONTH PERIOD?
A. I broadened the fund's investment portfolio to include a number of
emerging companies, the likes of Brocade Communications and Juniper
Networks, each of which added meaningfully to relative performance. As
we move toward an Internet-based economy, new emerging technology
providers create niches that could enable them to become, perhaps, the
new giants.
Q. WHICH HOLDINGS CONTRIBUTED TO PERFORMANCE?
A. Intel, a dominant supplier of chips for personal computers, rallied
late in the period as the low-priced PC took center stage in the
marketplace, effectively ending a long period of excess supply.
Motorola benefited doubly from the semiconductor rally and from a
sharp recovery in its mobile handset business. Cisco Systems remained
one of the brightest stars in the technology sector and helped sustain
the fund's upward climb during the period. Bullish investors continued
to bid up the stock, as it became increasingly clear to them the
inherent value of infrastructure to the development of the Internet.
Q. WHICH HOLDINGS DETRACTED?
A. At Home, a provider of Internet services over cable lines, and
Critical Path, which specializes in business-to-business Internet
messaging solutions, fell sharply amid the Internet stock correction
of the late spring and early summer. Cadence Design Systems, a leading
electronic design firm, and Newbridge Networks, a provider of
networking solutions, also faltered during the period, negatively
influencing fund performance. The fund no longer held At Home and
Critical Path at the end of the period.
Q. WHAT'S YOUR OUTLOOK?
A. In terms of the economy, the domestic outlook looks favorable and
the conditions in Asia have improved significantly over past six
months. While still a small percentage of overall technology spending,
Asia remains a meaningful part of the growth equation. A sustained
recovery there spells good things for the sector over the next several
years. As time goes on, I will consider further concentrating the
fund's Internet positions in advertising, and away from connectivity
and electronic commerce. In telecommunications, I may shift the fund's
investments to data networking firms. Many of the best companies from
the traditional telecom world are moving into data networking,
especially into the Internet. To the extent that they're successful at
doing this, they may become important parts of the portfolio.
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 3.
(checkmark)FUND FACTS
START DATE: July 14, 1981
FUND NUMBER: 064
TRADING SYMBOL: FSPTX
SIZE: as of August 31, 1999, more
than $2.3 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 AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 92.7%
SHARES VALUE (NOTE 1)
ADVERTISING - 2.1%
DoubleClick, Inc. (a) 480,000 $ 47,940,000
BROADCASTING - 0.3%
Cox Communications, Inc. 200,000 7,437,500
Class A (a)
Insight Communications, Inc. 3,300 89,925
7,527,425
COMMUNICATIONS EQUIPMENT -
15.2%
ADC Telecommunications, Inc. 202,700 7,512,569
(a)
Cabletron Systems, Inc. (a) 500,000 8,406,250
Cisco Systems, Inc. (a) 2,610,450 177,021,141
Efficient Networks, Inc. 1,000 46,938
Jabil Circuit, Inc. (a) 460,000 20,613,750
Lucent Technologies, Inc. 1,527,205 97,836,570
Newbridge Networks Corp. (a) 272,900 7,496,750
Nokia AB sponsored ADR 357,000 29,764,875
Paradyne Networks, Inc. 800 35,250
348,734,093
COMPUTER SERVICES & SOFTWARE
- - 20.9%
Accrue Software, Inc. 900 13,163
Active Software, Inc. (a) 1,100 19,113
Agile Software Corp. (a) 400 19,900
America Online, Inc. (a) 1,800 164,363
Ariba, Inc. 1,100 152,900
Art Technology Group, Inc. 1,200 24,000
At Plan, Inc. 200 2,050
Audible, Inc. 2,700 30,038
Automatic Data Processing, 100,400 3,946,975
Inc.
Autoweb.Com, Inc. 1,000 9,219
Aware, Inc. (a) 214,300 7,179,050
barnesandnoble.com, Inc. 3,000 51,188
Class A
BMC Software, Inc. (a) 100,000 5,381,250
BroadVision, Inc. (a) 125,000 12,445,313
Cadence Design Systems, Inc. 800,000 10,900,000
(a)
CareInsite, Inc. 1,700 81,175
Chemdex Corp. 2,700 72,900
China.com Corp. 200 8,775
Citrix Systems, Inc. (a) 198,600 11,320,200
Clarent Corp. 2,600 86,450
Commerce One, Inc. 1,100 49,363
Compuware Corp. (a) 300,000 9,056,250
Concentric Network Corp. (a) 325,000 7,129,688
Convergent Communications, 2,000 24,375
Inc. (a)
CyberSource Corp. 700 22,444
Digex, Inc. Class A 2,700 89,775
DST Systems, Inc. (a) 200,000 13,300,000
Engage Technologies, Inc. 300,800 8,723,200
Exodus Communications, Inc. 231,800 18,630,925
(a)
Fashionmall.com, Inc. 100 594
High Speed Access Corp. 1,000 26,250
Inet Technologies, Inc. 800 24,850
SHARES VALUE (NOTE 1)
Interactive Pictures Corp. (a) 1,000 $ 20,000
International Business 75,000 9,342,188
Machines Corp.
International Integration, 400,000 9,200,000
Inc. (a)
Internet Capital Group, Inc. 6,920 519,000
(a)
Internet.com Corp. 1,100 16,981
Juno Online Services, Inc. (a) 1,300 24,619
Legato Systems, Inc. (a) 302,200 13,013,488
Liberate Technologies 2,500 65,938
Liquid Audio, Inc. (a) 300 8,016
Micromuse, Inc. (a) 100,000 5,712,500
Microsoft Corp. (a) 2,532,080 234,375,639
Mission Critical Software, 800 32,500
Inc. (a)
MP3.com, Inc. (a) 2,800 95,550
N2H2, Inc. 600 5,925
National Information 2,000 33,000
Consortium, Inc. (a)
NetIQ Corp. 1,600 48,000
New Era of Networks, Inc. (a) 100,000 1,675,000
Oracle Corp. (a) 100,000 3,650,000
Orbotech Ltd. 150,000 8,015,625
Packeteer, Inc. 700 25,813
pcOrder.com, Inc. (a) 102,600 3,289,613
Persistence Software, Inc. 600 10,650
Phone.com, Inc. 700 82,688
QRS Corp. (a) 5,850 281,531
Quest Software, Inc. (a) 1,100 46,063
RAVISENT Technologies, Inc. 4,600 73,600
(a)
Red Hat, Inc. (a) 1,900 155,563
Redback Networks, Inc. 301,400 32,400,500
SilverStream Software, Inc. 1,000 30,125
(a)
Software.com, Inc. 2,100 95,419
StarMedia Network, Inc. (a) 800 30,950
Symantec Corp. (a) 194,300 5,829,000
Synopsys, Inc. (a) 8,100 453,094
Talk City, Inc. (a) 400 3,975
Tanning Technology Corp. (a) 1,900 33,250
TenFold Corp. (a) 500 13,656
TIBCO Software, Inc. (a) 2,000 54,250
Tumbleweed Communications 2,500 48,125
Corp. (a)
US Interactive, Inc. (a) 2,660 55,195
Verio, Inc. (a) 229,400 8,530,813
Veritas Software Corp. (a) 200,000 11,850,000
VerticalNet, Inc. (a) 800 27,600
Viant Corp. (a) 400 15,200
Voyager.net, Inc. (a) 3,500 35,000
WatchGuard Technologies, Inc. 1,200 16,200
Wink Communications, Inc. (a) 600 24,600
Yahoo!, Inc. (a) 150,000 22,125,000
ZipLink, Inc. (a) 3,800 34,913
480,512,091
COMPUTERS & OFFICE EQUIPMENT
- - 12.0%
Advanced Digital Information 80,000 2,580,000
Corp. (a)
Aironet Wireless 11,900 148,750
Communication, Inc.
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
COMPUTERS & OFFICE EQUIPMENT
- - CONTINUED
Ancor Communications, Inc. (a) 389,000 $ 10,308,500
Comverse Technology, Inc. (a) 657,300 51,269,400
Creo Products, Inc. (a) 2,600 57,052
Dell Computer Corp. (a) 1,100,000 53,693,750
EMC Corp. (a) 298,000 17,880,000
Emulex Corp. (a) 600,000 41,362,500
Gadzoox Networks, Inc. 800 72,300
Hewlett-Packard Co. 150,000 15,806,250
Ingram Micro, Inc. Class A (a) 200,000 5,050,000
Juniper Networks, Inc. 112,900 23,144,500
MMC Networks, Inc. (a) 35,000 1,080,625
Network Appliance, Inc. (a) 285,800 18,773,488
Safeguard Scientifics, Inc. 53,200 3,577,700
(a)
SCI Systems, Inc. (a) 402,400 20,044,550
Sun Microsystems, Inc. (a) 150,000 11,925,000
276,774,365
CONSUMER ELECTRONICS - 0.1%
Gemstar International Group 25,000 1,725,000
Ltd. (a)
DRUGS & PHARMACEUTICALS - 0.0%
Genentech, Inc. 2,000 328,500
EDUCATIONAL SERVICES - 0.0%
Scientific Learning Corp. (a) 200 3,575
ELECTRICAL EQUIPMENT - 2.4%
Ericsson (L.M.) Telefon AB 819,500 26,684,969
ADR Class B
Koninklijke Philips 87,800 9,026,938
Electronics NV NY Shares
Powerwave Technologies, Inc. 200,000 8,487,500
(a)
Scientific-Atlanta, Inc. 200,000 10,250,000
54,449,407
ELECTRONIC INSTRUMENTS - 1.9%
KLA-Tencor Corp. (a) 100,000 6,281,250
Novellus Systems, Inc. (a) 198,100 10,685,019
Photon Dynamics, Inc. (a)(c) 500,000 8,250,000
Sawtek, Inc. (a) 205,000 6,777,813
Teradyne, Inc. (a) 184,300 12,543,919
44,538,001
ELECTRONICS - 37.0%
3Dfx Interactive, Inc. (a) 200,000 2,225,000
Advanced Micro Devices, Inc. 500,000 10,343,750
(a)
Altera Corp. (a) 1,528,600 64,392,275
Analog Devices, Inc. (a) 1,346,700 69,355,050
Atmel Corp. (a) 1,050,000 41,278,125
Audiovox Corp. Class A (a) 252,700 3,585,181
Avnet, Inc. 123,700 5,473,725
Broadcom Corp. Class A (a) 166,800 21,475,500
SHARES VALUE (NOTE 1)
Brocade Communications 121,300 $ 22,819,563
Systems, Inc.
Burr-Brown Corp. (a) 230,500 8,787,813
Cypress Semiconductor Corp. 600,000 13,875,000
(a)
DII Group, Inc. (a) 200,000 7,087,500
GlobeSpan, Inc. (a) 600 36,300
Hadco Corp. (a) 200,000 8,312,500
Intel Corp. 1,500,000 123,281,250
JDS Uniphase Corp. (a) 156,848 16,635,691
KEMET Corp. (a) 725,000 18,714,063
Linear Technology Corp. 181,000 11,391,688
LSI Logic Corp. (a) 850,000 48,237,500
Maxim Integrated Products, 120,000 8,077,500
Inc. (a)
Micron Technology, Inc. (a) 1,250,000 93,203,125
MIPS Technologies, Inc. (a) 48,600 1,664,550
Motorola, Inc. 1,200,000 110,700,000
National Semiconductor Corp. 396,400 11,173,525
(a)
PMC-Sierra, Inc. (a) 60,000 5,580,000
QLogic Corp. (a) 605,400 52,707,638
Rambus, Inc. (a) 20,600 1,998,200
RF Micro Devices, Inc. (a) 100,000 4,393,750
Semtech Corp. (a) 313,600 21,971,600
Silicon Storage Technology, 801,400 12,521,875
Inc. (a)
Solectron Corp. (a) 82,000 6,416,500
STMicroelectronics NV 50,000 3,337,500
Unitrode Corp. (a) 300,000 12,262,500
Xilinx, Inc. (a) 123,400 8,630,288
851,946,025
ENTERTAINMENT - 0.0%
Musicmaker.com, Inc. (a) 2,300 27,241
Quokka Sports, Inc. 2,000 17,750
44,991
INDUSTRIAL MACHINERY &
EQUIPMENT - 0.3%
PRI Automation, Inc. (a) 250,000 7,156,250
INSURANCE - 0.0%
MIIX Group, Inc. 300 5,250
Quotesmith.com, Inc. (a) 800 8,900
14,150
MEDICAL EQUIPMENT & SUPPLIES
- - 0.0%
Allscripts, Inc. 1,500 19,406
PACKAGING & CONTAINERS - 0.2%
Corning, Inc. 50,000 3,325,000
RETAIL & WHOLESALE,
MISCELLANEOUS - 0.0%
1-800-FLOWERS.COM, Inc. Class 1,600 28,800
A (a)
CDnow, Inc. (a) 41,800 590,425
Drugstore.com, Inc. 1,800 107,775
Valley Media, Inc. (a) 600 7,350
734,350
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SECURITIES INDUSTRY - 0.0%
TD Waterhouse Group, Inc. (a) 12,000 $ 180,750
SERVICES - 0.3%
Diamond Technology Partners, 200,000 6,625,000
Inc. Class A (a)
InsWeb Corp. 1,300 41,600
iXL Enterprises, Inc. (a) 1,500 36,938
6,703,538
TELEPHONE SERVICES - 0.0%
Covad Communications Group, 1,050 48,431
Inc.
Digital Island, Inc. Delaware 13,000 245,375
Focal Communications Corp. 2,500 60,781
JFAX.COM, Inc. 8,700 59,813
Net2Phone, Inc. (a) 500 42,500
Network Plus Corp. 6,500 104,000
Rhythms NetConnections, Inc. 600 22,950
(a)
Time Warner Telecom, Inc. 1,200 32,400
616,250
TOTAL COMMON STOCKS 2,133,273,167
(Cost $1,700,278,376)
CASH EQUIVALENTS - 16.9%
Central Cash Collateral Fund, 111,385,800 111,385,800
5.26% (b)
Taxable Central Cash Fund, 277,462,647 277,462,647
5.20% (b)
TOTAL CASH EQUIVALENTS 388,848,447
(Cost $388,848,447)
TOTAL INVESTMENT PORTFOLIO - 2,522,121,614
109.6%
(Cost $2,089,126,823)
NET OTHER ASSETS - (9.6%) (220,480,941)
NET ASSETS - 100% $ 2,301,640,673
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
(c) Affiliated company
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $3,182,222,591 and $2,751,693,680, 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 $158,571 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $109,099,544. The fund
received cash collateral of $111,385,800 which was invested in the
Central Cash Collateral Fund.
The fund participated in the bank borrowing program. The average daily
loan balance during the period for which loans were outstanding
amounted to $5,390,000. The weighted average interest rate was 5.41%.
Transactions during the period with companies that are or were
affiliates are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PURCHASES SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Photon Dynamics, Inc. $ 734,377 $ - $ - $ 8,250,000
</TABLE>
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $2,112,307,675. Net unrealized appreciation
aggregated $409,813,939, of which $450,951,470 related to appreciated
investment securities and $41,137,531 related to depreciated
investment securities.
TECHNOLOGY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 2,522,121,614
value (cost $2,089,126,823)
- - See accompanying schedule
Receivable for investments 60,090,388
sold
Receivable for fund shares 13,736,913
sold
Dividends receivable 136,500
Interest receivable 880,322
Redemption fees receivable 16,198
Other receivables 517,299
TOTAL ASSETS 2,597,499,234
LIABILITIES
Payable for investments $ 175,170,735
purchased
Payable for fund shares 7,273,982
redeemed
Accrued management fee 1,034,026
Other payables and accrued 994,018
expenses
Collateral on securities 111,385,800
loaned, at value
TOTAL LIABILITIES 295,858,561
NET ASSETS $ 2,301,640,673
Net Assets consist of:
Paid in capital $ 1,580,891,356
Accumulated net investment (1,077,051)
loss
Accumulated undistributed net 288,831,577
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 432,994,791
(depreciation) on investments
NET ASSETS, for 22,536,336 $ 2,301,640,673
shares outstanding
NET ASSET VALUE and $102.13
redemption price per share
($2,301,640,673 (divided by)
22,536,336 shares)
Maximum offering price per $105.29
share (100/97.00 of $102.13)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 1,812,729
Dividends
Special dividend from 1,823,201
Koninklijke Philips
Electronics NV ADR
Interest 4,276,879
Security lending 953,849
TOTAL INCOME 8,866,658
EXPENSES
Management fee $ 5,280,212
Transfer agent fees 3,931,098
Accounting and security 560,455
lending fees
Non-interested trustees' 3,389
compensation
Custodian fees and expenses 42,480
Registration fees 256,614
Audit 18,137
Legal 2,388
Interest 810
Total expenses before 10,095,583
reductions
Expense reductions (151,874) 9,943,709
NET INVESTMENT INCOME (LOSS) (1,077,051)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 300,918,314
Foreign currency transactions (14,666) 300,903,648
Change in net unrealized 229,599,268
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 530,502,916
NET INCREASE (DECREASE) IN $ 529,425,865
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 7,549,394
charges paid to FDC
Sales charges - Retained by $ 7,536,592
FDC
Deferred sales charges $ 13,721
withheld by FDC
Exchange fees withheld by FSC $ 31,658
Expense reductions Directed $ 140,552
brokerage arrangements
Custodian credits 6,677
Transfer agent credits 4,645
$ 151,874
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ (1,077,051) $ (4,097,480)
income (loss)
Net realized gain (loss) 300,903,648 215,485,901
Change in net unrealized 229,599,268 122,793,603
appreciation (depreciation)
NET INCREASE (DECREASE) IN 529,425,865 334,182,024
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (152,669,414) -
from net realized gains
Share transactions Net 966,645,704 1,006,339,152
proceeds from sales of shares
Reinvestment of distributions 147,207,437 -
Cost of shares redeemed (557,181,062) (666,801,634)
NET INCREASE (DECREASE) IN 556,672,079 339,537,518
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 1,064,632 1,503,543
TOTAL INCREASE (DECREASE) 934,493,162 675,223,085
IN NET ASSETS
NET ASSETS
Beginning of period 1,367,147,511 691,924,426
End of period (including $ 2,301,640,673 $ 1,367,147,511
accumulated net investment
loss of $1,077,051 and $0,
respectively)
OTHER INFORMATION
Shares
Sold 10,454,091 14,223,107
Issued in reinvestment of 1,717,899 -
distributions
Redeemed (6,167,386) (10,714,156)
Net increase (decrease) 6,004,604 3,508,951
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 1997 1996 G
Net asset value, beginning of $ 82.70 $ 53.13 $ 57.70 $ 54.67 $ 42.05
period
Income from Investment
Operations
Net investment income (loss) D (.05) E (.34) (.25) (.39) (.28)
Net realized and unrealized 28.41 29.79 11.29 6.95 20.83
gain (loss)
Total from investment 28.36 29.45 11.04 6.56 20.55
operations
Less Distributions
From net realized gain (8.98) - (12.39) (3.68) (8.05)
In excess of net realized gain - - (3.30) - -
Total distributions (8.98) - (15.69) (3.68) (8.05)
Redemption fees added to paid .05 .12 .08 .15 .12
in capital
Net asset value, end of period $ 102.13 $ 82.70 $ 53.13 $ 57.70 $ 54.67
TOTAL RETURN B, C 36.44% 55.66% 24.92% 12.64% 50.71%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,301,641 $ 1,367,148 $ 691,924 $ 478,444 $ 483,026
(000 omitted)
Ratio of expenses to average 1.10% A 1.24% 1.38% 1.49% 1.40%
net assets
Ratio of expenses to average 1.08% A, F 1.20% F 1.30% F 1.44% F 1.39% F
net assets after expense
reductions
Ratio of net investment (.12)% A (.54)% (.45)% (.72)% (.52)%
income (loss) to average net
assets
Portfolio turnover rate 331% A 339% 556% 549% 112%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28,
SELECTED PER-SHARE DATA 1995
Net asset value, beginning of $ 41.83
period
Income from Investment
Operations
Net investment income (loss) D (.39)
Net realized and unrealized 1.95
gain (loss)
Total from investment 1.56
operations
Less Distributions
From net realized gain (1.50)
In excess of net realized gain -
Total distributions (1.50)
Redemption fees added to paid .16
in capital
Net asset value, end of period $ 42.05
TOTAL RETURN B, C 4.61%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 229,761
(000 omitted)
Ratio of expenses to average 1.57%
net assets
Ratio of expenses to average 1.56% F
net assets after expense
reductions
Ratio of net investment (.98)%
income (loss) to average net
assets
Portfolio turnover rate 102%
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 NET INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND FROM
KONINKLIJKE PHILIPS ELECTRONICS NV ADR WHICH AMOUNTED TO $.09 PER SHARE F FMR OR THE FUND HAS
ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE
FUND'S EXPENSES. G 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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
SELECT NATURAL GAS 49.45% 59.39% 79.01% 71.42%
SELECT NATURAL GAS (LOAD ADJ.) 44.90% 54.54% 73.57% 66.21%
S&P 500 7.32% 39.82% 206.52% 241.61%
GS Utilities 4.02% 35.90% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or since the fund started on April 21, 1993. You can compare the
fund's returns to the performance of both the Standard & Poor's 500
Index - a 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 AUGUST 31, 1999 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
SELECT NATURAL GAS 59.39% 12.35% 8.84%
SELECT NATURAL GAS (LOAD ADJ.) 54.54% 11.66% 8.31%
S&P 500 39.82% 25.11% 21.29%
GS Utilities 35.90% 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
1999/02/28 11125.87 31829.72
1999/03/31 12974.93 33103.23
1999/04/30 15050.95 34385.32
1999/05/31 15019.20 33573.48
1999/06/30 15548.42 35436.81
1999/07/31 16278.74 34330.47
1999/08/31 16621.00 34160.54
IMATRL PRASUN SHR__CHT 19990831 19990914 141606 R00000000000080
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Select Natural Gas Portfolio on April 21, 1993,
when the fund started, and the current 3.00% sales charge was paid. As
the chart shows, by August 31, 1999, the value of the investment would
have grown to $16,621 - a 66.21% increase on the initial investment -
and includes the effect of a $7.50 trading fee. For comparison, look
at how the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $34,161 - a 241.61% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
Coastal Corp. (The) 5.1
Williams Companies, Inc. 4.8
Enron Corp. 4.8
Burlington Resources, Inc. 4.3
Vastar Resources, Inc. 4.0
BP Amoco PLC sponsored ADR 3.3
Anadarko Petroleum Corp. 2.7
Apache Corp. 2.5
Santa Fe Snyder Corp. 2.3
AES Corp. 2.3
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Oil & Gas 56.9%
Gas 25.9%
Energy Services 6.5%
Electric Utility 5.8%
Autos, Tires, & Accessories 1.6%
All Others 3.3%*
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
Row: 1, Col: 1, Value: 3.3
Row: 1, Col: 2, Value: 1.6
Row: 1, Col: 3, Value: 5.8
Row: 1, Col: 4, Value: 6.5
Row: 1, Col: 5, Value: 25.9
Row: 1, Col: 6, Value: 56.9
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
NATURAL GAS PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
(photograph of Victor Thay) (photograph of Christian Zann)
NOTE TO SHAREHOLDERS: On August 2, 1999, Christian Zann (right) became
Portfolio Manager of Fidelity Select Natural Gas Portfolio. The
following is an interview with Victor Thay, who managed the fund
during most of the period covered by this report, with additional
comments from Christian Zann on his outlook.
Q. HOW DID THE FUND PERFORM, VICTOR?
V.T. The fund did very well. For the six months that ended August 31,
1999, the fund had a total return of 49.45%, far exceeding the 7.32%
gain of the Standard & Poor's 500 Index and the 4.02% return of the
Goldman Sachs Utilities Index, an index of 136 stocks designed to
measure the performance of companies in the utilities sector. For the
12 months that ended August 31, 1999, the fund had a total return of
59.39%, again outperforming the S&P 500 and the Goldman Sachs index,
which gained 39.82% and 35.90%, respectively.
Q. WHAT WAS RESPONSIBLE FOR THE FUND'S STRONG PERFORMANCE?
V.T. The main factor was a dramatic improvement in the supply and
demand picture for natural gas and crude oil. Natural gas production
had been slowing, which cut back on supply. However, an extremely warm
summer resulted in liberal use of air conditioning systems, which
spurred demand. On the crude oil side, OPEC (Organization of Petroleum
Exporting Countries) was apparently successful, at least over the
short term, in reining in the production of its members. In addition,
the oil market benefited from more rapid recoveries in many Asian
economies than most people expected, which added to demand for energy
products. So it was an ideal environment for the fund. The broadly
based S&P 500 also did well but lagged the fund's performance because
of the index's much greater diversification. The Goldman Sachs
Utilities Index, on the other hand, suffered somewhat from its focus
on utilities, which tend to underperform when interest rates are
rising, as they did during the period.
Q. WHAT STRATEGIC MOVES DID YOU MAKE DURING THE PERIOD?
V.T. Drilling stocks had a phenomenal run, so I took some profits
there. I also moved out a bit more on the risk spectrum toward
exploration and production (E&P) companies with higher cost structures
and greater financial leverage. My rationale was that in an
environment of rising energy prices, such companies would reap the
greatest benefits.
Q. WHICH STOCKS HELPED THE FUND?
V.T. Enron was one of the fund's best performers. The company was a
big winner in the move toward energy deregulation around the world. In
addition, it gained a foothold in the telecommunications market - more
specifically, in the potentially lucrative business of buying and
selling bandwidth, or telecommunications network capacity. Another
strong performer, Vastar Resources, is a gas E&P company that enjoyed
some exploration successes recently. Another factor helping in this
case was speculation that BP Amoco, which already owns 80% of Vastar's
stock, would buy the other 20%. Finally, Apache Corporation - another
E&P company - purchased some property in the Gulf of Mexico from Royal
Dutch Petroleum that was widely anticipated to help Apache's earnings.
In addition, the company had an extremely healthy balance sheet that
appealed to investors.
Q. WHICH STOCKS DETRACTED FROM PERFORMANCE?
V.T. With the extremely favorable environment for natural gas stocks,
most of the fund's holdings helped its performance. However, Atmos
Energy, a gas utility, was hurt marginally by interest-rate fears.
Q. TURNING TO YOU, CHRISTIAN, WHAT'S YOUR OUTLOOK?
C.Z. The supply and demand situation for both natural gas and crude
oil appears favorable at this juncture. Natural gas supplies are tight
enough to support prices at roughly their current levels if we have a
relatively normal winter, and gas-related stocks should do well in
that case. It takes a while to increase production after a period of
weak prices such as we had recently, and the supply of natural gas is
still in the process of catching up with demand. Supply and demand for
oil also appear to be in good shape, but, as always, OPEC is an
unpredictable wild card. OPEC meetings scheduled for September 1999
and March 2000 should provide more clues about the direction of oil
prices.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGERS ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE 3.
(checkmark)FUND FACTS
START DATE: April 21, 1993
FUND NUMBER: 513
TRADING SYMBOL: FSNGX
SIZE: as of August 31, 1999, more than
$72 million
MANAGER: Christian Zann, since August 1999;
analyst, oil and natural gas companies, since
1999; analyst, retail and consumer products
companies, 1996-1999; joined Fidelity in 1996
NATURAL GAS PORTFOLIO
INVESTMENTS AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 96.7%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES -
1.6%
Barrett Resources Corp. (a) 31,100 $ 1,121,544
ELECTRIC UTILITY - 5.8%
AES Corp. (a) 27,200 1,650,700
Calpine Corp. (a) 12,500 1,132,813
CMS Energy Corp. 12,400 490,576
Entergy Corp. 31,800 948,038
4,222,127
ENERGY SERVICES - 6.5%
BJ Services Co. (a) 16,100 551,425
ENSCO International, Inc. 33,200 707,575
Halliburton Co. 10,700 496,213
Marine Drilling Companies, 13,900 220,663
Inc. (a)
Nabors Industries, Inc. (a) 17,200 464,400
Noble Drilling Corp. (a) 24,000 591,000
Oceaneering International, 14,700 294,919
Inc. (a)
Pool Energy Services Co. (a) 15,100 398,263
Precision Drilling Corp. 45,600 1,035,739
Class A (a)
4,760,197
GAS - 25.9%
Atmos Energy Corp. 19,700 493,731
Cascade Natural Gas Corp. 37,200 681,225
Columbia Energy Group 15,100 891,844
Dynegy, Inc. 68,900 1,619,150
Energen Corp. 42,000 792,750
Enron Corp. 84,100 3,521,688
Equitable Resources, Inc. 30,100 1,106,175
K N Energy, Inc. 65,000 1,324,375
National Fuel Gas Co. 14,000 658,875
New Jersey Resources Corp. 9,300 360,375
Northwest Natural Gas Co. 13,700 342,500
Ocean Energy, Inc. (a) 121,100 1,226,138
ONEOK, Inc. 6,500 201,906
SEMCO Energy, Inc. 13,600 197,200
Sonat, Inc. 40,100 1,448,613
Westcoast Energy, Inc. 26,100 509,759
Williams Companies, Inc. 85,660 3,533,475
18,909,779
OIL & GAS - 56.9%
Alberta Energy Co. Ltd. 37,167 1,145,516
Anadarko Petroleum Corp. 58,450 1,987,300
Anderson Exploration Ltd. (a) 38,500 554,606
Apache Corp. 39,625 1,802,938
Atlantic Richfield Co. 4,600 404,513
Baytex Energy Ltd. (a) 7,700 51,849
Bonavista Petroleum Ltd. (a) 3,300 40,352
BP Amoco PLC sponsored ADR 21,619 2,424,030
Burlington Resources, Inc. 75,672 3,164,036
SHARES VALUE (NOTE 1)
Cabot Oil & Gas Corp. Class A 10,300 $ 196,344
Canada Occidental Petroleum 61,300 1,129,481
Ltd.
Canadian Hunter Exploration 51,800 841,642
Ltd.
Canadian Natural Resources 56,500 1,400,670
Ltd. (a)
Coastal Corp. (The) 85,670 3,710,571
Comstock Resources, Inc. (a) 60,700 280,738
Enbridge, Inc. 52,700 1,126,385
Encal Energy Ltd. (a) 24,100 129,179
Enron Oil & Gas Co. 51,400 1,227,175
Ensign Resource Service 23,200 512,965
Group, Inc.
Forest Oil Corp. (a) 46,100 688,619
Kerr-McGee Corp. 17,912 1,003,072
Louis Dreyfus Natural Gas 4,700 102,813
Corp. (a)
Murphy Oil Corp. 3,800 192,850
Newfield Exploration Co. (a) 28,300 859,613
Nuevo Energy Co. (a) 60,100 1,051,750
Paramount Resources Ltd. 35,700 550,151
Penn West Petroleum Ltd. (a) 70,200 1,493,367
Pennaco Energy, Inc. (a) 50,000 581,250
Pioneer Natural Resources Co. 50,000 568,750
Plains Resources, Inc. (a) 84,500 1,616,063
Remington Oil & Gas Corp. 45,300 234,994
Rio Alto Exploration Ltd. (a) 82,400 1,347,109
Santa Fe Snyder Corp. (a) 172,015 1,677,146
St. Mary Land & Exploration 4,000 106,000
Co.
Stone Energy Corp. (a) 13,500 718,875
Swift Energy Co. (a) 37,500 473,438
Ulster Petroleums Ltd. (a) 76,500 845,729
Union Pacific Resources 17,500 313,906
Group, Inc.
Vastar Resources, Inc. 43,700 2,911,513
Vintage Petroleum, Inc. 103,800 1,485,638
Western Gas Resources, Inc. 32,700 557,944
Wiser Oil Co. 3,900 11,456
41,522,336
TOTAL COMMON STOCKS 70,535,983
(Cost $55,935,271)
CASH EQUIVALENTS - 6.6%
Central Cash Collateral Fund, 1,578,100 1,578,100
5.26% (b)
Taxable Central Cash Fund, 3,216,022 3,216,022
5.20% (b)
TOTAL CASH EQUIVALENTS 4,794,122
(Cost $4,794,122)
TOTAL INVESTMENT PORTFOLIO - 75,330,105
103.3% (Cost $60,729,393)
NET OTHER ASSETS - (3.3%) (2,388,169)
NET ASSETS - 100% $ 72,941,936
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $41,439,130 and $25,511,580, 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 $5,079 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $1,550,575. The fund
received
cash collateral of $1,578,100 which was invested in the Central Cash
Collateral Fund.
Distribution of investments by country of issue, as a percentage of
net assets, is as follows:
United States of America 79.2%
Canada 17.5
United Kingdom 3.3
100.0%
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $60,975,957. Net unrealized appreciation
aggregated $14,354,148, of which $15,441,205 related to appreciated
investment securities and $1,087,057 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 has elected 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.
NATURAL GAS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 75,330,105
value (cost $60,729,393) -
See accompanying schedule
Receivable for fund shares 463,380
sold
Dividends receivable 87,223
Interest receivable 20,686
Redemption fees receivable 3,197
Other receivables 26
TOTAL ASSETS 75,904,617
LIABILITIES
Payable for investments $ 381,715
purchased
Payable for fund shares 926,726
redeemed
Accrued management fee 32,683
Other payables and accrued 43,457
expenses
Collateral on securities 1,578,100
loaned, at value
TOTAL LIABILITIES 2,962,681
NET ASSETS $ 72,941,936
Net Assets consist of:
Paid in capital $ 60,843,242
Undistributed net investment 11,754
income
Accumulated undistributed net (2,514,483)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 14,601,423
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 4,642,207 $ 72,941,936
shares outstanding
NET ASSET VALUE and $15.71
redemption price per share
($72,941,936 (divided by)
4,642,207 shares)
Maximum offering price per $16.20
share (100/97.00 of $15.71)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 336,141
Dividends
Interest 82,286
Security lending 111
TOTAL INCOME 418,538
EXPENSES
Management fee $ 164,615
Transfer agent fees 182,047
Accounting and security 30,324
lending fees
Non-interested trustees' 73
compensation
Custodian fees and expenses 11,071
Registration fees 20,479
Audit 4,124
Legal 28
Total expenses before 412,761
reductions
Expense reductions (16,834) 395,927
NET INVESTMENT INCOME 22,611
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 2,923,237
Foreign currency transactions (2,188) 2,921,049
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 16,616,401
Assets and liabilities in 770 16,617,171
foreign currencies
NET GAIN (LOSS) 19,538,220
NET INCREASE (DECREASE) IN $ 19,560,831
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 90,429
charges paid to FDC
Sales charges - Retained by $ 90,429
FDC
Deferred sales charges $ 650
withheld by FDC
Exchange fees withheld by FSC $ 3,083
Expense reductions Directed $ 16,780
brokerage arrangements
Custody credits 54
$ 16,834
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ 22,611 $ 479,288
income
Net realized gain (loss) 2,921,049 (5,303,326)
Change in net unrealized 16,617,171 (4,576,943)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 19,560,831 (9,400,981)
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (330,540) (375,571)
from net investment income
Share transactions Net 54,516,665 47,858,222
proceeds from sales of shares
Reinvestment of distributions 314,409 356,687
Cost of shares redeemed (38,028,300) (61,599,489)
NET INCREASE (DECREASE) IN 16,802,774 (13,384,580)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 80,445 123,693
TOTAL INCREASE (DECREASE) 36,113,510 (23,037,439)
IN NET ASSETS
NET ASSETS
Beginning of period 36,828,426 59,865,865
End of period (including $ 72,941,936 $ 36,828,426
undistributed net investment
income of $11,754 and
$319,683, respectively)
OTHER INFORMATION
Shares
Sold 3,778,624 3,845,626
Issued in reinvestment of 26,049 32,426
distributions
Redeemed (2,640,529) (4,929,086)
Net increase (decrease) 1,164,144 (1,051,034)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 1997 1996 G 1995
Net asset value, beginning of $ 10.59 $ 13.22 $ 12.50 $ 11.36 $ 8.98 $ 9.48
period
Income from Investment
Operations
Net investment income (loss) D .01 .12 E (.05) (.06) .05 .03
Net realized and unrealized 5.18 (2.68) 1.06 1.30 2.36 (.53)
gain (loss)
Total from investment 5.19 (2.56) 1.01 1.24 2.41 (.50)
operations
Less Distributions
From net investment income (.09) (.10) - (.01) (.05) (.02)
From net realized gain - - (.30) (.29) - -
In excess of net realized gain - - (.03) - - -
Total distributions (.09) (.10) (.33) (.30) (.05) (.02)
Redemption fees added to paid .02 .03 .04 .20 .02 .02
in capital
Net asset value, end of period $ 15.71 $ 10.59 $ 13.22 $ 12.50 $ 11.36 $ 8.98
TOTAL RETURN B, C 49.45% (19.17)% 8.74% 12.45% 27.10% (5.06)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 72,942 $ 36,828 $ 59,866 $ 81,566 $ 60,228 $ 79,894
(000 omitted)
Ratio of expenses to average 1.42% A 1.57% 1.82% 1.70% 1.68% 1.70%
net assets
Ratio of expenses to average 1.36% A, F 1.52% F 1.78% F 1.66% F 1.67% F 1.66% F
net assets after expense
reductions
Ratio of net investment .08% A .93% (.37)% (.46)% .46% .30%
income (loss) to average net
assets
Portfolio turnover rate 94% A 107% 118% 283% 79% 177%
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 NET INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.10 PER SHARE. F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. G 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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT TELECOMMUNICATIONS 16.42% 65.71% 187.09% 431.39%
SELECT TELECOMMUNICATIONS 12.86% 60.67% 178.40% 415.38%
(LOAD ADJ.)
S&P 500 7.32% 39.82% 206.52% 384.79%
GS Utilities 4.02% 35.90% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a 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 AUGUST 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT TELECOMMUNICATIONS 65.71% 23.48% 18.18%
SELECT TELECOMMUNICATIONS 60.67% 22.73% 17.82%
(LOAD ADJ.)
S&P 500 39.82% 25.11% 17.10%
GS Utilities 35.90% 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
1989/08/31 9700.00 10000.00
1989/09/30 10056.51 9959.00
1989/10/31 9700.00 9727.95
1989/11/30 9945.10 9926.40
1989/12/31 10436.26 10164.64
1990/01/31 9304.48 9482.59
1990/02/28 9269.83 9604.91
1990/03/31 9485.41 9859.44
1990/04/30 8927.22 9612.96
1990/05/31 9866.52 10550.22
1990/06/30 9670.19 10478.48
1990/07/31 9227.49 10444.95
1990/08/31 8153.45 9500.72
1990/09/30 7626.05 9038.04
1990/10/31 7891.67 8999.18
1990/11/30 8342.08 9580.52
1990/12/31 8725.07 9847.82
1991/01/31 9035.14 10277.18
1991/02/28 9337.36 11012.00
1991/03/31 9600.33 11278.49
1991/04/30 9804.42 11305.56
1991/05/31 9906.47 11793.96
1991/06/30 9494.35 11253.80
1991/07/31 10032.07 11778.23
1991/08/31 10330.36 12057.37
1991/09/30 10463.81 11856.01
1991/10/31 10875.92 12014.88
1991/11/30 10459.88 11530.68
1991/12/31 11416.91 12849.79
1992/01/31 11432.77 12610.79
1992/02/29 11575.53 12774.73
1992/03/31 11167.08 12525.62
1992/04/30 11587.43 12893.87
1992/05/31 11452.60 12957.05
1992/06/30 11186.62 12763.99
1992/07/31 11786.90 13286.04
1992/08/31 11647.76 13013.68
1992/09/30 11874.35 13167.24
1992/10/31 11993.62 13213.32
1992/11/30 12617.74 13663.90
1992/12/31 13165.76 13831.96
1993/01/31 13125.26 13948.15
1993/02/28 13846.12 14137.85
1993/03/31 14413.08 14436.15
1993/04/30 14443.49 14086.80
1993/05/31 15024.89 14464.33
1993/06/30 15672.73 14506.27
1993/07/31 16129.54 14448.25
1993/08/31 17346.31 14995.84
1993/09/30 17595.48 14880.37
1993/10/31 18102.12 15188.39
1993/11/30 16619.57 15044.10
1993/12/31 17078.04 15226.14
1994/01/31 17423.79 15743.82
1994/02/28 16877.88 15317.17
1994/03/31 16350.16 14649.34
1994/04/30 16641.99 14836.85
1994/05/31 16544.26 15080.17
1994/06/30 16530.30 14710.71
1994/07/31 17447.10 15193.22
1994/08/31 17954.36 15816.14
1994/09/30 17744.94 15428.65
1994/10/31 18591.93 15775.79
1994/11/30 17605.33 15201.24
1994/12/31 17815.67 15426.67
1995/01/31 18062.84 15826.69
1995/02/28 18224.46 16443.45
1995/03/31 18452.62 16928.70
1995/04/30 19026.13 17427.25
1995/05/31 19545.47 18123.82
1995/06/30 20487.07 18544.83
1995/07/31 21787.84 19159.78
1995/08/31 22433.37 19207.87
1995/09/30 23171.11 20018.44
1995/10/31 22200.39 19946.98
1995/11/30 22690.61 20822.65
1995/12/31 23099.10 21223.69
1996/01/31 23262.60 21946.15
1996/02/29 22925.39 22149.59
1996/03/31 22818.09 22362.89
1996/04/30 23883.43 22692.52
1996/05/31 24413.44 23277.76
1996/06/30 24661.88 23366.44
1996/07/31 22795.81 22334.12
1996/08/31 23270.61 22805.14
1996/09/30 23955.20 24088.62
1996/10/31 23480.40 24752.98
1996/11/30 24192.60 26624.06
1996/12/31 24346.38 26096.63
1997/01/31 24512.00 27727.15
1997/02/28 24724.94 27944.53
1997/03/31 22642.84 26796.29
1997/04/30 23351.25 28396.03
1997/05/31 26674.99 30124.78
1997/06/30 28145.46 31474.37
1997/07/31 28716.63 33978.79
1997/08/31 27313.00 32075.30
1997/09/30 30855.49 33832.06
1997/10/31 30108.10 32702.07
1997/11/30 31353.75 34215.85
1997/12/31 30634.54 34803.33
1998/01/31 33214.01 35188.26
1998/02/28 36227.91 37726.04
1998/03/31 39452.24 39657.99
1998/04/30 39296.78 40056.94
1998/05/31 37619.22 39368.37
1998/06/30 39059.12 40967.51
1998/07/31 40317.29 40531.21
1998/08/31 31104.71 34671.20
1998/09/30 33061.86 36892.24
1998/10/31 35431.40 39893.06
1998/11/30 37451.46 42310.97
1998/12/31 43207.11 44748.93
1999/01/31 46786.22 46620.33
1999/02/28 44273.68 45171.37
1999/03/31 47566.47 46978.68
1999/04/30 51128.34 48798.16
1999/05/31 50945.64 47646.04
1999/06/30 55133.25 50290.39
1999/07/31 54387.81 48720.33
1999/08/31 51538.00 48479.16
IMATRL PRASUN SHR__CHT 19990831 19990924 121921 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Telecommunications Portfolio on August 31,
1989, and the current 3.00% sales charge was paid. As the chart shows,
by August 31, 1999, the value of the investment would have grown to
$51,538 - a 415.38% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $48,479 - a 384.79% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
MCI WorldCom, Inc. 11.2
Ameritech Corp. 7.0
Cisco Systems, Inc. 6.2
Vodafone AirTouch PLC 5.6
sponsored ADR
AT&T Corp. 4.3
Motorola, Inc. 3.4
MediaOne Group, Inc. 3.1
Cincinnati Bell, Inc. 2.8
ALLTEL Corp. 2.7
SBC Communications, Inc. 2.7
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Telephone Services 50.2%
Cellular 13.5%
Communications Equipment 10.3%
Computer Services
& Software 6.4%
Broadcasting 5.2%
All Others 14.4%*
* INCLUDES SHORT-TERM INVESTMENTS AND OTHER NET ASSETS.
Row: 1, Col: 1, Value: 14.4
Row: 1, Col: 2, Value: 5.2
Row: 1, Col: 3, Value: 6.4
Row: 1, Col: 4, Value: 10.3
Row: 1, Col: 5, Value: 13.5
Row: 1, Col: 6, Value: 50.2
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
TELECOMMUNICATIONS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Peter Saperstone)
Peter Saperstone, Portfolio Manager
of Fidelity Select Telecommunications Portfolio
Q. HOW DID THE FUND PERFORM, PETER?
A. The fund's performance was very strong. For the six months that
ended August 31, 1999, the fund returned 16.42%, far ahead of the
7.32% return of the Standard & Poor's 500 Index and the 4.02% gain of
the Goldman Sachs Utilities Index, an index of 136 stocks designed to
measure the performance of companies in the utilities sector. For the
12 months that ended August 31, 1999, the fund returned 65.71%, which
also compared favorably to the 39.82% return of the S&P 500 and the
35.90% return of the Goldman Sachs index.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S STRONG PERFORMANCE?
A. The fund benefited from its emphasis on the stocks of companies
involved in two of the fastest-growing segments of the
telecommunications market - data communications and wireless
communications. In addition, I underweighted the regional Bell
operating companies (RBOCs), which tend to underperform when interest
rates are rising, as they did during the period. In general, I favored
the stocks of competitive local exchange carriers (CLECs) over the
RBOCs because the former are better positioned to benefit from the
deregulation of the local telephone service market. The general
market, as represented by the S&P 500, also performed well, but gains
in many sectors of the market were limited by the Federal Reserve
Board's two increases of short-term interest rates over the summer.
Higher interest rates also played a role in the fund's ability to
outperform the Goldman Sachs index. Electric utility stocks, which
typically move with bond prices and counter to the direction of
interest rates, make up approximately 20% of that index and held back
its performance during the period.
Q. WHY DID DATA AND WIRELESS COMMUNICATIONS STOCKS PERFORM SO WELL?
A. More and more business is being transacted over the Internet, and
much of it involves data communications of some kind. That's good for
the companies building the equipment that makes data networks
possible. At the moment, data traffic is growing much faster than
voice traffic, and investors were attracted by that growth. In the
wireless market, prices for cellular equipment and service have come
down to the point where most people can realistically consider
purchasing them. One result of that was healthy sales and earnings
growth for companies that make cellular equipment and provide the
infrastructure by which it operates.
Q. WHAT STOCKS DID WELL FOR THE FUND?
A. Cisco Systems, the fund's third-largest holding at the end of the
period, made a positive contribution to performance. The company
manufactures products that enable companies to operate data networks
on the Internet and was one of the beneficiaries of the growth in data
traffic I mentioned. Exodus Communications also helped performance. A
provider of Web-hosting capabilities for Internet service providers,
Exodus presented another way to play the strength in data
communications stocks. Another strong performer, McLeodUSA,
exemplified the potential that investors saw in the CLEC area.
Vodafone Airtouch and Nextel are both wireless companies that
benefited from healthy demand and flattening supply for cellular
products and services.
Q. WHAT STOCKS DISAPPOINTED YOU?
A. AT&T and MCI WorldCom, both providers of long-distance telephone
service, were hurt by a price war that broke out over the summer.
Cincinnati Bell, a local telephone service provider, caught investors
off guard with its purchase of a long-distance service wholesaler,
implying an abrupt and challenging shift in the company's strategy.
PSINet, which provides Web-hosting capabilities for other companies,
suffered when investors took profits on their Internet holdings over
the summer.
Q. WHAT'S YOUR OUTLOOK, PETER?
A. I foresee continued strong growth in the two markets I mentioned
earlier - data and wireless communications. The main concern going
forward will be to keep an eye on valuations. I also think we'll see
competition between long-distance carriers and local service companies
heating up very soon. My feeling is that the RBOCs have more to lose
in that battle because they have operated as monopolies for so long,
whereas the long-distance market has been competitive for a number of
years now. Overall, the telecommunications sector should continue to
offer excellent opportunities for investors.
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 3.
(checkmark)FUND FACTS
START DATE: July 29, 1985
FUND NUMBER: 096
TRADING SYMBOL: FSTCX
SIZE: as of August 31, 1999, more than
$994 million
MANAGER: Peter Saperstone, since 1998;
manager, Fidelity Utilities Fund and Fidelity
Advisor Utilities Growth Fund, since 1998;
manager, Fidelity Select Air Transportation
Portfolio and Fidelity Select Defense and
Aerospace Portfolio, 1997-1998; manager,
Fidelity Select Construction and Housing
Portfolio, 1996-1997; joined Fidelity in 1995
TELECOMMUNICATIONS PORTFOLIO
INVESTMENTS AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 91.5%
SHARES VALUE (NOTE 1)
BROADCASTING - 5.2%
AlphaNet Telecom, Inc. (a)(c) 1,196,200 $ 8
AT&T Corp. (Liberty Media 295,000 9,440,000
Group) Class A (a)
EchoStar Communications Corp. 69,700 5,828,663
Class A (a)
MediaOne Group, Inc. 474,800 31,218,100
NTL, Inc. (a) 48,900 4,801,369
51,288,140
CELLULAR - 13.5%
ALLTEL Corp. 403,800 27,306,975
Mannesmann AG 89,600 13,550,177
Nextel Communications, Inc. 259,300 14,990,781
Class A (a)
QUALCOMM, Inc. 80,700 15,509,531
Sprint Corp. Series 1 (PCS 44,800 2,676,800
Group)
Telephone & Data Systems, 56,099 3,905,893
Inc.
Vodafone AirTouch PLC 278,650 55,886,741
sponsored ADR
133,826,898
COMMUNICATIONS EQUIPMENT -
10.3%
ADC Telecommunications, Inc. 97,100 3,598,769
(a)
Cisco Systems, Inc. (a) 903,400 61,261,813
Dycom Industries, Inc. (a) 82,600 2,550,275
Lucent Technologies, Inc. 405,675 25,988,555
Newbridge Networks Corp. (a) 69,700 1,914,707
Nokia AB sponsored ADR 87,600 7,303,650
102,617,769
COMPUTER SERVICES & SOFTWARE
- - 6.4%
America Online, Inc. (a) 10,800 986,175
At Home Corp. Series A (a) 92,800 3,723,600
Digex, Inc. Class A 127,600 4,242,700
Exodus Communications, Inc. 184,600 14,837,225
(a)
IXnet, Inc. (a) 379,800 7,121,250
PSINet, Inc. (a) 484,900 23,214,588
Verio, Inc. (a) 151,000 5,615,313
Visual Networks, Inc. (a) 101,500 4,212,250
Yahoo!, Inc. (a) 600 88,500
64,041,601
ELECTRICAL EQUIPMENT - 2.5%
ANTEC Corp. (a) 238,200 10,852,988
Ericsson (L.M.) Telefon AB 145,200 4,728,075
ADR Class B
Oak Industries, Inc. (a) 284,800 8,935,600
24,516,663
ELECTRONICS - 3.4%
Motorola, Inc. 366,900 33,846,525
SHARES VALUE (NOTE 1)
TELEPHONE SERVICES - 50.2%
Ameritech Corp. 1,106,200 $ 69,828,875
AT&T Corp. 948,792 42,695,640
Bell Atlantic Corp. 382,500 23,428,125
BellSouth Corp. 255,400 11,556,850
CenturyTel, Inc. 379,800 14,930,888
Cincinnati Bell, Inc. 1,522,700 28,169,950
Commonwealth Telephone 197,500 8,418,437
Enterprises, Inc. (a)
COMSAT Corp. Series 1 147,000 5,108,250
CTC Communications Corp. (a) 34,800 524,175
Focal Communications Corp. 130,800 3,180,075
Frontier Corp. 446,800 18,737,675
GTE Corp. 332,600 22,824,675
Intermedia Communications, 400,700 10,418,200
Inc. (a)
MCI WorldCom, Inc. (a) 1,471,703 111,481,498
McLeodUSA, Inc. Class A (a) 697,000 23,262,375
Metromedia Fiber Network, 258,100 7,597,819
Inc. Class A (a)
NEXTLINK Communications, Inc. 121,400 6,115,525
Class A (a)
Nippon Telegraph & Telephone 298 3,346,022
Corp.
Qwest Communications 221,180 6,358,925
International, Inc. (a)
SBC Communications, Inc. 562,600 27,004,800
Sprint Corp. (FON Group) 604,500 26,824,688
TALK.com, Inc. (a) 1,111,950 11,466,984
TALK.com, Inc. rights 2/28/00 62,033 1
(a)
Telebras sponsored:
ADR 32,100 1,505
ADR (PFD) 24,800 1,839,850
WinStar Communications, Inc. 289,700 14,720,381
(a)
499,842,188
TOTAL COMMON STOCKS 909,979,784
(Cost $726,209,783)
CASH EQUIVALENTS - 13.7%
Central Cash Collateral Fund, 60,681,400 60,681,400
5.26% (b)
Taxable Central Cash Fund, 75,964,054 75,964,054
5.20% (b)
TOTAL CASH EQUIVALENTS 136,645,454
(Cost $136,645,454)
TOTAL INVESTMENT PORTFOLIO - 1,046,625,238
105.2%
(Cost $862,855,237)
NET OTHER ASSETS - (5.2%) (51,745,620)
NET ASSETS - 100% $ 994,879,618
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
(c) Affiliated company
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $775,103,089 and $765,908,672, 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 $32,690 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $59,449,856. The fund
received cash collateral of $60,681,400 which was invested in the
Central Cash Collateral Fund.
The fund participated in the bank borrowing program. The average daily
loan balance during the period for which loans were outstanding
amounted to $4,672,000. The weighted average interest rate was 5.01%.
Transactions during the period with companies which are or were
affiliates are as follows:
AFFILIATE PURCHASE COST SALES COST DIVIDEND INCOME VALUE
AlphaNet Telecom, Inc. $ - $ - $ - $ 8
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $867,119,517. Net unrealized appreciation
aggregated $179,505,721, of which $227,332,481 related to appreciated
investment securities and $47,826,760 related to depreciated
investment securities.
TELECOMMUNICATIONS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 1,046,625,238
value (cost $862,855,237) -
See accompanying schedule
Receivable for investments 13,930,500
sold
Receivable for fund shares 2,177,890
sold
Dividends receivable 194,607
Interest receivable 200,707
Redemption fees receivable 1,914
Other receivables 299,473
TOTAL ASSETS 1,063,430,329
LIABILITIES
Payable to custodian bank $ 1,476,027
Payable for investments 3,474,578
purchased
Payable for fund shares 1,943,265
redeemed
Accrued management fee 492,175
Other payables and accrued 483,266
expenses
Collateral on securities 60,681,400
loaned, at value
TOTAL LIABILITIES 68,550,711
NET ASSETS $ 994,879,618
Net Assets consist of:
Paid in capital $ 685,046,426
Accumulated net investment (636,384)
loss
Accumulated undistributed net 126,699,821
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 183,769,755
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 14,105,824 $ 994,879,618
shares outstanding
NET ASSET VALUE and $70.53
redemption price per share
($994,879,618 (divided by)
14,105,824 shares)
Maximum offering price per $72.71
share (100/97.00 of $70.53)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 3,488,005
Dividends
Interest 1,304,516
Security lending 137,777
TOTAL INCOME 4,930,298
EXPENSES
Management fee $ 2,869,188
Transfer agent fees 2,358,695
Accounting and security 329,871
lending fees
Non-interested trustees' 2,186
compensation
Custodian fees and expenses 28,364
Registration fees 52,607
Audit 14,217
Legal 1,560
Interest 651
Total expenses before 5,657,339
reductions
Expense reductions (90,657) 5,566,682
NET INVESTMENT INCOME (LOSS) (636,384)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 132,373,314
Foreign currency transactions 190,637 132,563,951
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (2,768,997)
Assets and liabilities in (3,952) (2,772,949)
foreign currencies
NET GAIN (LOSS) 129,791,002
NET INCREASE (DECREASE) IN $ 129,154,618
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 1,613,517
charges paid to FDC
Sales charges - Retained by $ 1,607,031
FDC
Deferred sales charges $ 4,705
withheld by FDC
Exchange fees withheld by FSC $ 17,280
Expense reductions Directed $ 76,210
brokerage arrangements
Custodian credits 13,398
Transfer agent credits 1,049
$ 90,657
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ (636,384) $ (874,454)
income (loss)
Net realized gain (loss) 132,563,951 45,836,208
Change in net unrealized (2,772,949) 85,596,709
appreciation (depreciation)
NET INCREASE (DECREASE) IN 129,154,618 130,558,463
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (18,192,342) (46,022,800)
from net realized gains
Share transactions Net 252,880,468 863,829,740
proceeds from sales of shares
Reinvestment of distributions 17,540,314 44,998,804
Cost of shares redeemed (210,950,727) (813,636,128)
NET INCREASE (DECREASE) IN 59,470,055 95,192,416
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 271,974 997,935
TOTAL INCREASE (DECREASE) 170,704,305 180,726,014
IN NET ASSETS
NET ASSETS
Beginning of period 824,175,313 643,449,299
End of period (including $ 994,879,618 $ 824,175,313
accumulated net investment
loss of $636,384 and $0,
respectively)
OTHER INFORMATION
Shares
Sold 3,519,873 15,272,906
Issued in reinvestment of 266,328 813,871
distributions
Redeemed (3,006,615) (14,817,799)
Net increase (decrease) 779,586 1,268,978
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 1997 1996 G
Net asset value, beginning of $ 61.85 $ 53.37 $ 41.80 $ 44.87 $ 38.34
period
Income from Investment
Operations
Net investment income (loss) D (.05) (.06) (.25) .12 E .51
Net realized and unrealized 10.09 11.43 18.20 2.92 9.15
gain (loss)
Total from investment 10.04 11.37 17.95 3.04 9.66
operations
Less Distributions
From net investment income - - - (.16) (.39)
From net realized gain (1.38) (2.96) (6.44) (5.98) (2.75)
Total distributions (1.38) (2.96) (6.44) (6.14) (3.14)
Redemption fees added to paid .02 .07 .06 .03 .01
in capital
Net asset value, end of period $ 70.53 $ 61.85 $ 53.37 $ 41.80 $ 44.87
TOTAL RETURN B, C 16.42% 22.21% 46.52% 7.85% 25.79%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 994,880 $ 824,175 $ 643,449 $ 388,535 $ 468,300
(000 omitted)
Ratio of expenses to average 1.13% A 1.27% 1.51% 1.51% 1.52%
net assets
Ratio of expenses to average 1.11% A, F 1.25% F 1.48% F 1.47% F 1.52%
net assets after expense
reductions
Ratio of net investment (.13)% A (.11)% (.53)% .27% 1.17%
income (loss) to average net
assets
Portfolio turnover rate 165% A 150% 157% 175% 89%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28,
SELECTED PER-SHARE DATA 1995
Net asset value, beginning of $ 37.10
period
Income from Investment
Operations
Net investment income (loss) D .29
Net realized and unrealized 2.54
gain (loss)
Total from investment 2.83
operations
Less Distributions
From net investment income (.33)
From net realized gain (1.27)
Total distributions (1.60)
Redemption fees added to paid .01
in capital
Net asset value, end of period $ 38.34
TOTAL RETURN B, C 7.98%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 369,476
(000 omitted)
Ratio of expenses to average 1.56%
net assets
Ratio of expenses to average 1.55% F
net assets after expense
reductions
Ratio of net investment .77%
income (loss) to average net
assets
Portfolio turnover rate 107%
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 NET INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.07 PER SHARE. F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. G 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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT UTILITIES GROWTH 11.67% 52.51% 201.61% 385.18%
SELECT UTILITIES GROWTH (LOAD 8.25% 47.87% 192.49% 370.56%
ADJ.)
S&P 500 7.32% 39.82% 206.52% 384.79%
GS Utilities 4.02% 35.90% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a 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 AUGUST 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT UTILITIES GROWTH 52.51% 24.71% 17.11%
SELECT UTILITIES GROWTH (LOAD 47.87% 23.94% 16.75%
ADJ.)
S&P 500 39.82% 25.11% 17.10%
GS Utilities 35.90% 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
1989/08/31 9700.00 10000.00
1989/09/30 9839.79 9959.00
1989/10/31 9794.20 9727.95
1989/11/30 10116.32 9926.40
1989/12/31 10651.16 10164.64
1990/01/31 10125.44 9482.59
1990/02/28 10107.21 9604.91
1990/03/31 10052.51 9859.44
1990/04/30 9633.15 9612.96
1990/05/31 10134.56 10550.22
1990/06/30 10254.65 10478.48
1990/07/31 10338.83 10444.95
1990/08/31 9771.38 9500.72
1990/09/30 9796.32 9038.04
1990/10/31 10298.30 8999.18
1990/11/30 10569.55 9580.52
1990/12/31 10710.22 9847.82
1991/01/31 10663.00 10277.18
1991/02/28 11122.64 11012.00
1991/03/31 11248.57 11278.49
1991/04/30 11198.20 11305.56
1991/05/31 11201.34 11793.96
1991/06/30 11065.47 11253.80
1991/07/31 11425.59 11778.23
1991/08/31 11687.49 12057.37
1991/09/30 12047.61 11856.01
1991/10/31 12214.57 12014.88
1991/11/30 12355.35 11530.68
1991/12/31 12962.37 12849.79
1992/01/31 12563.37 12610.79
1992/02/29 12471.30 12774.73
1992/03/31 12341.71 12525.62
1992/04/30 12679.32 12893.87
1992/05/31 12924.86 12957.05
1992/06/30 13074.37 12763.99
1992/07/31 13769.56 13286.04
1992/08/31 13762.50 13013.68
1992/09/30 13836.61 13167.24
1992/10/31 13833.08 13213.32
1992/11/30 13928.36 13663.90
1992/12/31 14335.39 13831.96
1993/01/31 14579.24 13948.15
1993/02/28 15329.26 14137.85
1993/03/31 15743.06 14436.15
1993/04/30 15657.02 14086.80
1993/05/31 15690.60 14464.33
1993/06/30 16291.36 14506.27
1993/07/31 16477.93 14448.25
1993/08/31 17194.37 14995.84
1993/09/30 17194.37 14880.37
1993/10/31 17018.99 15188.39
1993/11/30 16186.88 15044.10
1993/12/31 16133.72 15226.14
1994/01/31 16464.29 15743.82
1994/02/28 15717.28 15317.17
1994/03/31 15150.59 14649.34
1994/04/30 15586.40 14836.85
1994/05/31 15275.20 15080.17
1994/06/30 15226.99 14710.71
1994/07/31 15665.30 15193.22
1994/08/31 15603.94 15816.14
1994/09/30 15205.07 15428.65
1994/10/31 15397.93 15775.79
1994/11/30 14841.27 15201.24
1994/12/31 14938.10 15426.67
1995/01/31 15547.73 15826.69
1995/02/28 15750.93 16443.45
1995/03/31 15814.15 16928.70
1995/04/30 16365.40 17427.25
1995/05/31 16618.63 18123.82
1995/06/30 16781.43 18544.83
1995/07/31 17233.64 19159.78
1995/08/31 17672.28 19207.87
1995/09/30 18513.39 20018.44
1995/10/31 18694.27 19946.98
1995/11/30 19105.78 20822.65
1995/12/31 20075.23 21223.69
1996/01/31 20287.09 21946.15
1996/02/29 19817.33 22149.59
1996/03/31 19642.32 22362.89
1996/04/30 20435.40 22692.52
1996/05/31 20450.19 23277.76
1996/06/30 20765.72 23366.44
1996/07/31 19858.57 22334.12
1996/08/31 19863.50 22805.14
1996/09/30 20223.40 24088.62
1996/10/31 21071.39 24752.98
1996/11/30 22062.34 26624.06
1996/12/31 22356.97 26096.63
1997/01/31 23029.20 27727.15
1997/02/28 23411.16 27944.53
1997/03/31 22168.54 26796.29
1997/04/30 22961.97 28396.03
1997/05/31 24471.53 30124.78
1997/06/30 25218.47 31474.37
1997/07/31 25819.16 33978.79
1997/08/31 24659.57 32075.30
1997/09/30 26832.49 33832.06
1997/10/31 26905.62 32702.07
1997/11/30 28535.31 34215.85
1997/12/31 29132.39 34803.33
1998/01/31 30258.82 35188.26
1998/02/28 31885.90 37726.04
1998/03/31 34049.37 39657.99
1998/04/30 33368.33 40056.94
1998/05/31 32967.19 39368.37
1998/06/30 32991.50 40967.51
1998/07/31 33726.94 40531.21
1998/08/31 30858.11 34671.20
1998/09/30 33903.20 36892.24
1998/10/31 36042.66 39893.06
1998/11/30 37434.53 42310.97
1998/12/31 41704.91 44748.93
1999/01/31 42950.45 46620.33
1999/02/28 42142.90 45171.37
1999/03/31 43306.31 46978.68
1999/04/30 46794.24 48798.16
1999/05/31 47991.86 47646.04
1999/06/30 49073.35 50290.39
1999/07/31 49465.29 48720.33
1999/08/31 47056.00 48479.16
IMATRL PRASUN SHR__CHT 19990831 19990914 141047 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Utilities Growth Portfolio on August 31,
1989, and the current 3.00% sales charge was paid. As the chart shows,
by August 31, 1999, the value of the investment would have grown to
$47,056 - a 370.56% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the S&P
500 did over the same period. With dividends and capital gains, if
any, reinvested, the same $10,000 investment would have grown to
$48,479 - a 384.79% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF AUGUST
31, 1999
% OF FUND'S NET ASSETS
MCI WorldCom, Inc. 9.2
AES Corp. 8.1
AT&T Corp. 7.6
Calpine Corp. 7.5
SBC Communications, Inc. 6.8
Ameritech Corp. 4.6
K N Energy, Inc. 4.4
PG&E Corp. 4.1
Vodafone AirTouch PLC 3.9
sponsored ADR
Enron Corp. 3.7
TOP INDUSTRIES AS OF AUGUST 31, 1999
% OF FUND'S NET ASSETS
Telephone Services 45.8%
Electric Utility 31.0%
Gas 11.0%
Cellular 5.4%
Water 1.1%
All Others 5.7%*
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
Row: 1, Col: 1, Value: 5.7
Row: 1, Col: 2, Value: 1.1
Row: 1, Col: 3, Value: 5.4
Row: 1, Col: 4, Value: 11.0
Row: 1, Col: 5, Value: 31.0
Row: 1, Col: 6, Value: 45.8
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S 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 did very well. For the six months that ended August 31,
1999, the fund returned 11.67%, compared to 7.32% for the Standard &
Poor's 500 Index and 4.02% for the Goldman Sachs Utilities Index, an
index of 136 stocks designed to measure the performance of companies
in the utilities sector. For the 12 months that ended August 31, 1999,
the fund returned 52.51%, surpassing the 39.82% gain of the S&P 500
and the 35.90% gain of the Goldman Sachs index during the same period.
Q. WHAT ACCOUNTED FOR THE FUND'S STRONG PERFORMANCE?
A. Independent power producers (IPPs) - included under the category of
electric utilities in the fund's holdings - accounted for a lot of its
gains. IPPs have been the primary beneficiaries of an industrywide
shortage of power-generating capacity, as electric utilities have
postponed or abandoned building projects due to uncertainty about
deregulation. Extremely hot weather over the summer exacerbated those
pre-existing supply shortages. Against the favorable backdrop of
moderate economic growth and low inflation, the overall market, as
represented by the broadly based S&P 500, also did well, but rising
interest rates limited gains in many sectors. In the Goldman Sachs
index, the telecommunications and energy subsectors were strong, but
electric utilities backed off in response to higher interest rates.
Utilities are typically valued in large part for their income stream,
and the stocks usually move counter to the direction of interest
rates.
Q. WHAT IMPORTANT ADJUSTMENTS DID YOU MAKE IN THE FUND'S HOLDINGS
DURING THE PERIOD?
A. I became more confident in energy-related stocks, as higher energy
prices and deregulation continued to create attractive opportunities
in that area. My confidence was reflected in an increase in electric
utility stocks - mostly independent power producers - from 26.4% of
the portfolio's net assets six months ago to 31.0% at the end of the
period. In addition, there was an increase in gas-related stocks -
from 4.2% six months ago to 11.0% at the end of the period. On the
other hand, I reduced the fund's holdings in some of the higher-valued
telecommunications stocks, a move that proved to be timely.
Q. WHICH STOCKS DID WELL FOR THE FUND?
A. Calpine and AES, independent power producers and two of the fund's
10 largest holdings, were its strongest performers. Calpine benefited
from both higher earnings and earnings estimates that were driven by
promising new projects and better-than-expected results from existing
projects. AES was helped when regulators in Brazil honored the
company's contracts and granted it significant rate increases to
compensate for the devaluation of the Brazilian currency earlier in
the year. Another holding that did well, McLeod-USA, exemplified the
potential that investors saw in competitive local exchange carriers
(CLECs) - those that are competing with the regional Bell operating
companies (RBOCs) for local telephone service. Finally, Enron, a
diversified energy company, saw further healthy earnings growth from
its energy trading operations. The company also announced plans to
enter the telecommunications market by creating a market for trading
bandwidth - that is, telecommunications network capacity.
Q. WHICH STOCKS DETRACTED FROM PERFORMANCE?
A. AT&T Corp. and MCI WorldCom were two stocks that hurt performance.
During the summer, intense competition among the major long-distance
carriers triggered faster-than-expected reductions in rates, causing
many of those stocks to experience sharp pullbacks. SBC
Communications, part of the RBOC group, declined partly as a reaction
to higher interest rates. The stock prices of RBOCs, like those of
electric utilities, tend to move down when interest rates are rising.
Q. WHAT'S YOUR OUTLOOK, JONATHAN?
A. Deregulation should continue to offer attractive opportunities for
the fund's investors. For example, the supply constraints working in
favor of independent power producers should take a couple of years to
dissipate. In the meantime, those companies should be able to profit
from selling power to local utilities at attractive prices, especially
during peak usage periods. In the telecommunications area, the ongoing
deregulation of local telephone service markets will continue to be an
important focus of the fund. In that case, the long-distance companies
and CLECs have the most to gain, while the RBOCs have the most to
lose, in my opinion. Overall, the outlook for growth-oriented
utilities stocks appears quite favorable.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE 3.
(checkmark)FUND FACTS
START DATE: December 10, 1981
FUND NUMBER: 065
TRADING SYMBOL: FSUTX
SIZE: as of August 31, 1999, more than
$588 million
MANAGER: Jonathan Zang, since 1998;
analyst, utilities industry, 1997-present;
joined Fidelity in 1997
UTILITIES GROWTH PORTFOLIO
INVESTMENTS AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
COMMON STOCKS - 95.6%
SHARES VALUE (NOTE 1)
BROADCASTING - 0.6%
AT&T Corp. (Liberty Media 110,000 $ 3,520,000
Group) Class A (a)
CELLULAR - 5.4%
ALLTEL Corp. 130,700 8,838,588
Vodafone AirTouch PLC 113,900 22,844,069
sponsored ADR
31,682,657
COMPUTERS & OFFICE EQUIPMENT
- - 0.7%
Comverse Technology, Inc. (a) 50,000 3,900,000
ELECTRIC UTILITY - 31.0%
AES Corp. (a) 788,800 47,870,300
Bangor Hydro-Electric Co. 59,800 982,963
Calpine Corp. (a) 487,800 44,206,875
CILCORP, Inc. 100,000 6,443,750
CMS Energy Corp. 400,200 15,832,913
Entergy Corp. 659,200 19,652,400
Illinova Corp. 424,100 13,518,188
IPALCO Enterprises, Inc. 468,600 9,811,313
PG&E Corp. 793,500 24,052,969
182,371,671
GAS - 11.0%
Dynegy, Inc. 259,100 6,088,850
Enron Corp. 515,592 21,590,415
K N Energy, Inc. 1,270,000 25,876,250
Williams Companies, Inc. 275,000 11,343,750
64,899,265
TELEPHONE SERVICES - 45.8%
Ameritech Corp. 433,600 27,371,000
AT&T Corp. 992,539 44,664,255
Bell Atlantic Corp. 63,200 3,871,000
Cincinnati Bell, Inc. 437,700 8,097,450
e.spire Communications, Inc. 395,200 3,161,600
(a)
Frontier Corp. 350,000 14,678,125
GTE Corp. 275,100 18,878,738
MCI WorldCom, Inc. (a) 716,583 54,281,158
McLeodUSA, Inc. Class A (a) 291,600 9,732,150
Metromedia Fiber Network, 351,200 10,338,450
Inc. Class A (a)
Qwest Communications 386,266 11,105,148
International, Inc. (a)
SBC Communications, Inc. 837,644 40,206,912
Sprint Corp. (FON Group) 372,800 16,543,000
TALK.com, Inc. (a) 310,900 3,206,156
TALK.com, Inc. rights 2/28/00 30,225 0
(a)
WinStar Communications, Inc. 72,600 3,688,988
(a)
269,824,130
SHARES VALUE (NOTE 1)
WATER - 1.1%
Azurix Corp. 363,700 $ 6,751,181
TOTAL COMMON STOCKS 562,948,904
(Cost $438,405,328)
CASH EQUIVALENTS - 8.1%
Central Cash Collateral Fund, 21,518,600 21,518,600
5.26% (b)
Taxable Central Cash Fund, 25,967,084 25,967,084
5.20% (b)
TOTAL CASH EQUIVALENTS 47,485,684
(Cost $47,485,684)
TOTAL INVESTMENT PORTFOLIO - 610,434,588
103.7% (Cost 485,891,012)
NET OTHER ASSETS - (3.7%) (21,629,761)
NET ASSETS - 100% $ 588,804,827
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $241,703,032 and $211,225,396, 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 $3,662 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $21,205,913. The fund
received
cash collateral of $21,518,600 which was invested in the Central Cash
Collateral Fund.
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $485,966,462. Net unrealized appreciation
aggregated $124,468,126, of which $143,113,313 related to appreciated
investment securities and $18,645,187 related to depreciated
investment securities.
UTILITIES GROWTH PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 610,434,588
value (cost $485,891,012) -
See accompanying schedule
Receivable for fund shares 1,208,193
sold
Dividends receivable 494,602
Interest receivable 120,308
Redemption fees receivable 585
Other receivables 13,751
TOTAL ASSETS 612,272,027
LIABILITIES
Payable for fund shares $ 1,411,028
redeemed
Accrued management fee 293,216
Other payables and accrued 244,356
expenses
Collateral on securities 21,518,600
loaned, at value
TOTAL LIABILITIES 23,467,200
NET ASSETS $ 588,804,827
Net Assets consist of:
Paid in capital $ 430,144,960
Undistributed net investment 1,965,942
income
Accumulated undistributed net 32,150,349
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 124,543,576
(depreciation) on investments
NET ASSETS, for 9,080,423 $ 588,804,827
shares outstanding
NET ASSET VALUE and $64.84
redemption price per share
($588,804,827 (divided by)
9,080,423 shares)
Maximum offering price per $66.85
share (100/97.00 of $64.84)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 4,257,171
Dividends
Interest 755,240
Security lending 52,228
TOTAL INCOME 5,064,639
EXPENSES
Management fee $ 1,699,670
Transfer agent fees 1,174,572
Accounting and security 213,500
lending fees
Non-interested trustees' 1,466
compensation
Custodian fees and expenses 11,556
Registration fees 52,906
Audit 10,388
Legal 309
Total expenses before 3,164,367
reductions
Expense reductions (87,868) 3,076,499
NET INVESTMENT INCOME 1,988,140
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 33,211,090
Foreign currency transactions (122) 33,210,968
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 22,088,553
Assets and liabilities in (13) 22,088,540
foreign currencies
NET GAIN (LOSS) 55,299,508
NET INCREASE (DECREASE) IN $ 57,287,648
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 1,006,518
charges paid to FDC
Sales charges - Retained by $ 1,005,557
FDC
Deferred sales charges $ 4,867
withheld by FDC
Exchange fees withheld by FSC $ 9,683
Expense reductions Directed $ 86,538
brokerage arrangements
Custodian credits 1,194
Transfer agent credits 136
$ 87,868
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1999
ASSETS 1999 (UNAUDITED)
Operations Net investment $ 1,988,140 $ 3,134,078
income
Net realized gain (loss) 33,210,968 98,328,176
Change in net unrealized 22,088,540 19,577,920
appreciation (depreciation)
NET INCREASE (DECREASE) IN 57,287,648 121,040,174
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (980,203) (1,845,471)
From net investment income
From net realized gain (28,752,707) (58,304,043)
TOTAL DISTRIBUTIONS (29,732,910) (60,149,514)
Share transactions Net 147,655,765 311,901,481
proceeds from sales of shares
Reinvestment of distributions 28,454,602 57,497,817
Cost of shares redeemed (122,822,310) (324,713,707)
NET INCREASE (DECREASE) IN 53,288,057 44,685,591
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 120,925 337,629
TOTAL INCREASE (DECREASE) 80,963,720 105,913,880
IN NET ASSETS
NET ASSETS
Beginning of period 507,841,107 401,927,227
End of period (including $ 588,804,827 $ 507,841,107
undistributed net investment
income of $1,965,942 and
$1,646,086, respectively)
OTHER INFORMATION
Shares
Sold 2,228,796 5,410,133
Issued in reinvestment of 473,692 1,024,484
distributions
Redeemed (1,869,130) (5,700,831)
Net increase (decrease) 833,358 733,786
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 1997 1996 F
Net asset value, beginning of $ 61.58 $ 53.50 $ 45.97 $ 43.03 $ 34.88
period
Income from Investment
Operations
Net investment income D .22 .44 .54 .73 1.10
Net realized and unrealized 6.67 15.77 14.83 6.41 7.86
gain (loss)
Total from investment 6.89 16.21 15.37 7.14 8.96
operations
Less Distributions
From net investment income (.12) (.25) (.58) (.70) (.84)
From net realized gain (3.52) (7.93) (7.30) (3.54) -
Total distributions (3.64) (8.18) (7.88) (4.24) (.84)
Redemption fees added to paid .01 .05 .04 .04 .03
in capital
Net asset value, end of period $ 64.84 $ 61.58 $ 53.50 $ 45.97 $ 43.03
TOTAL RETURN B, C 11.67% 32.17% 36.20% 18.13% 25.82%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 588,805 $ 507,841 $ 401,927 $ 256,844 $ 266,768
(000 omitted)
Ratio of expenses to average 1.07% A 1.18% 1.33% 1.47% 1.39%
net assets
Ratio of expenses to average 1.04% A, E 1.16% E 1.30% E 1.46% E 1.38% E
net assets after expense
reductions
Ratio of net investment .67% A .77% 1.11% 1.73% 2.76%
income to average net assets
Portfolio turnover rate 76% A 113% 78% 31% 65%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28,
SELECTED PER-SHARE DATA 1995
Net asset value, beginning of $ 36.61
period
Income from Investment
Operations
Net investment income D 1.13
Net realized and unrealized (1.17)
gain (loss)
Total from investment (.04)
operations
Less Distributions
From net investment income (1.05)
From net realized gain (.67)
Total distributions (1.72)
Redemption fees added to paid .03
in capital
Net asset value, end of period $ 34.88
TOTAL RETURN B, C .21%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 237,635
(000 omitted)
Ratio of expenses to average 1.43%
net assets
Ratio of expenses to average 1.42% E
net assets after expense
reductions
Ratio of net investment 3.24%
income to average net assets
Portfolio turnover rate 24%
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN. C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. F FOR THE YEAR ENDED FEBRUARY 29
</TABLE>
MONEY MARKET PORTFOLIO
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT MONEY MARKET 2.35% 4.85% 28.60% 63.69%
SELECT MONEY MARKET (LOAD ADJ.) -0.72% 1.71% 24.74% 58.78%
All Taxable Money Market 2.23% 4.60% 27.88% 62.28%
Funds Average
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment
would be $1,050 without including the effect of the 3.00% 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 931 taxable money market
funds with similar objectives tracked by IBC Financial Data, Inc. over
the past six months.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT MONEY MARKET 4.85% 5.16% 5.05%
SELECT MONEY MARKET (LOAD ADJ.) 1.71% 4.52% 4.73%
All Taxable Money Market 4.60% 5.04% 4.96%
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
<TABLE>
<CAPTION>
,s> <C> <C> <C> <C> <C>
8/31/99 6/1/99 3/2/99 12/1/98 9/1/98
SELECT
MONEY MARKET 4.99% 4.37% 4.71% 4.71% 5.10%
All Taxable
Money Market
Funds Average 4.64% 4.33% 4.37% 4.57% 5.03%
9/1/99 6/2/99 3/3/99 12/2/98 9/2/98
MMDA 2.06% 2.06% 2.16% 2.32% 2.55%
</TABLE>
Money Market
All Taxable
Money Market
Funds Average
MMDA
6% -
4% -
2% -
0%
Row: 1, Col: 1, Value: 4.99
Row: 1, Col: 2, Value: 4.64
Row: 1, Col: 3, Value: 2.06
Row: 2, Col: 1, Value: 4.37
Row: 2, Col: 2, Value: 4.33
Row: 2, Col: 3, Value: 2.06
Row: 3, Col: 1, Value: 4.71
Row: 3, Col: 2, Value: 4.37
Row: 3, Col: 3, Value: 2.16
Row: 4, Col: 1, Value: 4.71
Row: 4, Col: 2, Value: 4.57
Row: 4, Col: 3, Value: 2.32
Row: 5, Col: 1, Value: 5.1
Row: 5, Col: 2, Value: 5.03
Row: 5, Col: 3, Value: 2.55
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. JOHN, WHAT WAS THE INVESTMENT ENVIRONMENT LIKE OVER THE SIX MONTHS
THAT ENDED AUGUST 31, 1999?
A. At the beginning of the period, the markets were recovering from
the global financial meltdown that occurred in late 1998. To help
alleviate that crisis, the Federal Reserve Board reduced the rate that
banks charge each other for overnight loans - known as the fed funds
rate - by 0.25 percentage points three times, bringing the fed funds
rate down to 4.75%. When the period started, the overall world economy
was fairly static, although economies in Asia - with the exception of
Japan - seemed to be reviving. That rebirth helped to spark a recovery
in oil and other commodity prices. The Asian recovery, coupled with
Latin America's ability to head off the threat of an additional
financial crisis, helped convince U.S. markets that the international
economic situation had stabilized somewhat. As investors turned their
eyes back to the domestic scene, they saw an economy that continued to
grow at a fairly robust rate. Final demand - meaning retail sales -
remained strong, but standard inflation measures such as the consumer
price index (CPI) and the producer price index (PPI) stayed fairly
benign. In May, however, there was an unexpected outsized gain in the
CPI.
Q. HOW DID THE FED RESPOND TO THESE CONDITIONS?
A. At its May meeting, the Fed shifted from a neutral interest-rate
stance to a bias toward hiking rates to head off inflation. The Fed
followed through with a 0.25 percentage point increase in the fed
funds rate at the end of June, although it went back to a neutral
stance at that time. Nevertheless, market observers expected the Fed
to take back the three rate cuts it implemented in late 1998 in
response to a credit crunch sparked by Russia's default on its debt
and the near collapse of a highly leveraged hedge fund. The Fed raised
the fed funds rate by 0.25 percentage points once again in August, and
it stood at 5.25% at the end of the period.
Q. WHAT WAS YOUR STRATEGY WITH THE FUND?
A. I let the fund's average maturity slide down from 60 days at the
beginning of the period to 50 days at the end of April, because I felt
longer-term securities were not offering enough yield for investing
farther out on the money market yield curve. With the CPI scare at the
beginning of May, yields in the market rose in anticipation of Fed
action. As a result, I extended the average maturity to take advantage
of yields offered by one-year securities, which I found to be
especially attractive because they factored in more significant Fed
rate hikes than I thought would occur. Since the end of June, I've let
the fund's average maturity slip back to 52 days at the end of the
period. By doing so, I positioned the fund to take advantage of the
additional Fed rate hike that is widely anticipated by the market, and
because there are market pressures that typically lead to higher
yields at the end of the year. I also increased the fund's holdings in
variable-rate securities - whose yields are reset periodically - to
14% of the fund at the end of the period. These instruments should
ratchet up in yield in response to potential Fed rate hikes and as we
approach the increases in market rates typically experienced at
year-end.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on August 31, 1999, was 4.99%, compared
to 4.76% six months ago. For the six months that ended August 31,
1999, the fund had a total return of 2.35%, compared to 2.23% for the
all taxable money market funds average, according to IBC Financial
Data, Inc.
Q. WHAT IS YOUR OUTLOOK?
A. The big question is whether or not the Fed will take back the last
of the three rate hikes it implemented in late 1998, bringing the fed
funds rate back to 5.50%. My sense at this point is that the Fed will
do so before the end of the year. The Fed appeared relatively
comfortable with its monetary policy before last year's global
economic crisis, when it felt compelled to lower rates to benefit the
financial markets. At that point, the fed funds rate was at 5.50% and
the economy was healthy without exhibiting excesses that might lead to
inflation.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE 3.
(checkmark)FUND FACTS
START DATE: August 30, 1985
FUND NUMBER: 085
TRADING SYMBOL: FSLXX
SIZE: as of August 31, 1999, more than $1.1
billion
MANAGER: John Todd, since 1991; manager,
various Fidelity and Spartan money market funds;
joined Fidelity in 1981
MONEY MARKET PORTFOLIO
INVESTMENTS AUGUST 31, 1999 (UNAUDITED)
Showing Percentage of Net Assets
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CERTIFICATES OF DEPOSIT - 13.8%
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT VALUE (NOTE 1)
PURCHASE
DOMESTIC CERTIFICATES OF
DEPOSIT - 0.7%
First Union National Bank,
North Carolina
11/20/99 5.55% (b) $ 8,000,000 $ 8,000,000
LONDON BRANCH, EURODOLLAR,
FOREIGN BANKS - 6.8%
Abbey National Treasury
Services PLC
9/24/99 5.15 15,000,000 15,000,000
9/27/99 5.20 5,000,000 5,000,000
Bank of Scotland Treasury
Services
2/16/00 5.14 5,000,000 4,999,113
Banque Nationale de Paris
11/10/99 5.00 25,000,000 24,998,821
Barclays Bank PLC
9/7/99 4.90 5,000,000 5,000,080
9/7/99 5.03 25,000,000 25,000,000
79,998,014
NEW YORK BRANCH, YANKEE
DOLLAR, FOREIGN BANKS - 6.3%
Bank of Scotland Treasury
Services
9/2/99 5.10 (b) 5,000,000 4,998,750
Deutsche Bank AG
2/16/00 5.12 10,000,000 9,997,782
RaboBank Nederland Coop.
Central
9/2/99 5.00 5,000,000 5,000,000
Societe Generale, France
12/6/99 5.21 9,000,000 9,000,000
UBS AG
5/18/00 5.35 25,000,000 24,989,726
Westdeutsche Landesbank
Girozentrale
9/7/99 5.18 10,000,000 10,000,000
9/8/99 5.18 10,000,000 10,000,000
73,986,258
TOTAL CERTIFICATES OF DEPOSIT 161,984,272
COMMERCIAL PAPER - 57.8%
ABN-AMRO North America, Inc.
12/6/99 5.20 3,000,000 2,959,480
Aspen Funding Corp.
9/1/99 5.58 39,000,000 39,000,000
Asset Securitization Coop.
Corp.
9/10/99 5.26 (b) 10,000,000 10,000,000
9/20/99 5.05 (b) 5,000,000 5,000,000
Bear Stearns Companies, Inc.
2/23/00 5.72 5,000,000 4,865,469
Caisse des Depots et
Consignations
9/7/99 5.19 10,000,000 9,991,383
Centric Capital Corp.
9/10/99 5.08 8,100,000 8,089,835
9/10/99 5.22 4,000,000 3,994,800
9/13/99 5.18 9,754,000 9,737,288
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT VALUE (NOTE 1)
PURCHASE
Citibank Credit Card Master
Trust I (Dakota Certificate
Program)
9/2/99 5.19% $ 21,000,000 $ 20,996,984
ConAgra, Inc.
9/3/99 5.40 2,000,000 1,999,401
9/10/99 5.41 1,000,000 998,650
10/4/99 5.49 2,000,000 1,989,990
Conoco, Inc.
9/23/99 5.42 2,000,000 1,993,400
CXC, Inc.
9/7/99 5.20 5,000,000 4,995,683
9/8/99 5.19 5,000,000 4,995,003
10/18/99 5.24 3,000,000 2,979,751
Daimler-Chrysler North
America Holding Corp.
9/8/99 5.22 5,000,000 4,994,954
Deutsche Bank Financial, Inc.
9/27/99 5.33 20,000,000 19,923,444
12/8/99 5.21 20,000,000 19,723,967
Edison Asset Securitization LLC
9/1/99 5.20 25,222,000 25,222,000
10/25/99 5.40 5,000,000 4,959,875
10/26/99 5.39 5,000,000 4,959,132
Enterprise Funding Corp.
9/9/99 5.20 10,000,000 9,988,511
9/23/99 5.34 20,000,000 19,934,978
10/19/99 5.41 8,000,000 7,942,827
Falcon Asset Securitization
Corp.
9/1/99 5.18 12,000,000 12,000,000
9/21/99 5.32 3,135,000 3,125,769
10/27/99 5.43 6,000,000 5,949,880
10/28/99 5.42 15,000,000 14,872,700
11/1/99 5.46 5,000,000 4,954,250
Finova Capital Corp.
9/7/99 5.21 10,000,000 9,991,417
9/9/99 5.41 (b) 3,000,000 3,000,000
Fleet Funding Corp.
9/10/99 5.22 5,439,000 5,431,929
General Electric Capital Corp.
2/24/00 5.60 10,000,000 9,735,511
General Electric Capital
International Funding, Inc.
9/3/99 5.21 10,000,000 9,997,117
10/6/99 5.36 12,000,000 11,937,817
General Motors Acceptance Corp.
2/22/00 5.90 25,000,000 24,308,833
2/23/00 5.60 10,000,000 9,736,528
2/23/00 5.90 20,000,000 19,443,889
3/6/00 5.90 5,000,000 4,851,439
Goldman Sachs Group, Inc.
2/9/00 5.80 10,000,000 9,748,438
Heller Financial, Inc.
9/9/99 5.21 5,000,000 4,994,278
9/9/99 5.32 5,000,000 4,994,111
COMMERCIAL PAPER - CONTINUED
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT VALUE (NOTE 1)
PURCHASE
J.P. Morgan & Co., Inc.
2/2/00 5.75% $ 15,000,000 $ 14,641,308
2/9/00 5.62 25,000,000 24,390,660
Kitty Hawk Funding Corp.
9/17/99 5.17 5,175,000 5,163,201
10/20/99 5.41 3,000,000 2,978,113
Lehman Brothers Holdings, Inc.
9/16/99 5.30 3,000,000 2,993,438
MCI WorldCom, Inc.
9/1/99 5.28 1,000,000 1,000,000
11/15/99 5.48 (b) 5,000,000 5,000,000
Newport Funding Corp.
9/15/99 5.32 (b) 5,000,000 5,000,000
Norfolk Southern Corp.
9/8/99 5.36 2,000,000 1,997,927
PHH Corp.
9/13/99 5.42 3,000,000 2,994,600
Preferred Receivables Funding
Corp.
10/15/99 5.40 5,000,000 4,967,306
10/18/99 5.40 3,000,000 2,979,046
10/19/99 5.40 8,000,000 7,942,933
11/15/99 5.47 10,000,000 9,887,500
Rohm & Haas Co.
9/22/99 5.41 2,000,000 1,993,712
9/28/99 5.42 3,000,000 2,987,850
Salomon Smith Barney
Holdings, Inc.
2/8/00 5.63 15,000,000 14,636,000
Societe Generale, North
America, Inc.
9/7/99 5.22 10,000,000 9,991,333
Svenska Handelsbanken, Inc.
12/2/99 5.15 17,000,000 16,781,909
Triple-A One Funding Corp.
9/8/99 5.22 5,000,000 4,994,944
9/13/99 5.18 8,000,000 7,986,293
10/13/99 5.39 8,926,000 8,870,287
Tyco International Group SA
9/16/99 5.37 1,000,000 997,792
9/22/99 5.47 4,000,000 3,987,283
UBS Finance (Delaware), Inc.
9/10/99 5.20 10,000,000 9,987,050
12/7/99 5.27 15,000,000 14,792,663
Westdeutsche Landesbank
Girozentrale
9/28/99 5.32 10,000,000 9,960,288
Windmill Funding Corp.
9/2/99 5.20 2,288,000 2,287,671
9/13/99 5.27 16,675,000 16,645,819
9/27/99 5.33 10,000,000 9,961,722
9/27/99 5.34 17,000,000 16,934,682
10/25/99 5.40 10,000,000 9,919,750
TOTAL COMMERCIAL PAPER 676,963,791
FEDERAL AGENCIES - 5.1%
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT VALUE (NOTE 1)
PURCHASE
FREDDIE MAC - DISCOUNT NOTES
- - 5.1%
9/16/99 5.06% $ 10,000,000 $ 9,979,167
11/18/99 4.88 50,000,000 49,484,331
59,463,498
BANK NOTES - 5.5%
First National Bank, Chicago
7/12/00 5.75 10,000,000 9,995,867
Fleet National Bank
9/1/99 5.46 (b) 25,000,000 24,989,639
NationsBank NA
9/1/99 5.41 (b) 5,000,000 4,998,689
9/8/99 5.01 25,000,000 25,000,000
TOTAL BANK NOTES 64,984,195
MASTER NOTES - 1.7%
Goldman Sachs Group, Inc.
9/1/99 5.18 (b) 5,000,000 5,000,000
J.P. Morgan Securities, Inc.
9/7/99 5.18 (b) 15,000,000 15,000,000
TOTAL MASTER NOTES 20,000,000
MEDIUM-TERM NOTES - 4.8%
American Telephone & Telegraph
9/7/99 5.26 (b) 15,000,000 15,000,000
Bishops Gate Resources
Mortgage Trust
9/1/99 5.38 (b) 2,000,000 2,000,000
CIESCO L.P.
9/15/99 5.25 (b) 5,000,000 4,999,138
Ford Motor Credit Co.
9/1/99 5.45 (b) 6,000,000 6,000,000
11/23/99 5.46 (b) 10,000,000 9,993,297
Goldman Sachs Group L.P.
10/7/99 5.51 (b)(c) 4,000,000 4,000,000
Morgan Guaranty Trust Co., NY
9/27/99 5.31 (b) 10,000,000 9,999,654
Norwest Corp.
10/22/99 5.33 (b) 4,000,000 4,000,000
TOTAL MEDIUM-TERM NOTES 55,992,089
SHORT-TERM NOTES - 1.1%
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT VALUE (NOTE 1)
PURCHASE
Capital One Funding Corp.
Series 1998 B,
9/7/99 5.47% (b) $ 3,752,000 $ 3,752,000
RACERS Series 1999 - 16MM,
9/2/99 5.20 (a)(b) 5,000,000 5,000,000
SMM Trust Series 1999 E,
10/5/99 5.32 (a)(b) 2,000,000 2,000,000
SMM Trust Series 1999 I,
11/26/99 5.49 (a)(b) 2,000,000 2,000,000
TOTAL SHORT-TERM NOTES 12,752,000
TIME DEPOSITS - 3.4%
Societe Generale, France
9/1/99 5.56 40,000,000 40,000,000
</TABLE>
REPURCHASE AGREEMENTS - 8.4%
MATURITY AMOUNT
In a joint trading account $ 97,849,972 97,835,000
(U.S. Government
Obligations) dated 8/31/99
due 9/1/99 At 5.51%
TOTAL INVESTMENT PORTFOLIO - 1,189,974,845
101.6%
NET OTHER ASSETS - (1.6%) (18,807,293)
NET ASSETS - 100% $ 1,171,167,552
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
$9,000,000 or 0.8% 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.
Additional information on each holding is as follows:
SECURITY ACQUISITION DATE COST
Goldman Sachs Group L.P. 12/7/98 $ 4,000,000
5.51%, 10/7/99
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 0.3% of net assets.
INCOME TAX INFORMATION
At August 31, 1999, the aggregate cost of investment securities for
income tax purposes was $1,189,974,845.
MONEY MARKET PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999
ASSETS
Investment in securities, at $ 1,189,974,845
value (including repurchase
agreements of $97,835,000) -
See accompanying schedule
Receivable for fund shares 49,498,509
sold
Interest receivable 4,039,468
Prepaid expenses 18,608
TOTAL ASSETS 1,243,531,430
LIABILITIES
Payable to custodian bank $ 199
Payable for investments 4,959,132
purchased
Payable for fund shares 66,693,267
redemed
Distributions payable 201,036
Accrued management fee 179,924
Other payables and accrued 330,320
expenses
TOTAL LIABILITIES 72,363,878
NET ASSETS $ 1,171,167,552
Net Assets consist of:
Paid in capital $ 1,171,173,477
Accumulated net realized gain (5,925)
(loss) on investments
NET ASSETS, for 1,171,106,587 $ 1,171,167,552
shares outstanding
NET ASSET VALUE, offering $1.00
price and redemption price
per share ($1,171,167,552
(divided by) 1,171,106,587
shares)
Maximum offering price per $1.03
share (100/97.00 of $1.00)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31,
1999
INTEREST INCOME $ 26,662,451
EXPENSES
Management fee $ 864,868
Transfer agent fees 1,132,616
Accounting fees and expenses 60,101
Non-interested trustees' 1,580
compensation
Custodian fees and expenses 11,130
Registration fees 318,285
Audit 19,706
Legal 602
Miscellaneous 27,527
Total expenses before 2,436,415
reductions
Expense reductions (2,139) 2,434,276
NET INTEREST INCOME 24,228,175
NET REALIZED GAIN (LOSS) ON (5,925)
INVESTMENTS
NET INCREASE IN NET ASSETS $ 24,222,250
RESULTING FROM OPERATIONS
OTHER INFORMATION
Sales charge paid to FDC $ 951,807
Sales charges - Retained by $ 933,503
FDC
Deferred sales charges $ 30,783
withheld by FDC
Expense reductions Transfer $ 2,139
agent credits
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28, 1998
ASSETS 1999 (UNAUDITED)
Operations Net interest income $ 24,228,175 $ 47,769,375
Net realized gain (loss) (5,925) 54,995
NET INCREASE (DECREASE) IN 24,222,250 47,824,370
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (24,228,175) (47,769,375)
from net interest income
Share transactions at net 2,530,501,844 6,779,151,867
asset value of $1.00 per
share Proceeds from sales of
shares
Reinvestment of 22,337,550 42,982,213
distributions from net
interest income
Cost of shares redeemed (2,507,839,479) (6,280,934,055)
NET INCREASE (DECREASE) IN 44,999,915 541,200,025
NET ASSETS AND SHARES
RESULTING FROM SHARE
TRANSACTIONS
TOTAL INCREASE (DECREASE) 44,993,990 541,255,020
IN NET ASSETS
NET ASSETS
Beginning of period 1,126,173,562 584,918,542
End of period $ 1,171,167,552 $ 1,126,173,562
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED AUGUST 31, YEARS ENDED FEBRUARY 28,
1999
SELECTED PER-SHARE DATA (UNAUDITED) 1999 1998 1997 1996 E
Net asset value, beginning of $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
period
Income from Investment .023 .050 .051 .049 .054
Operations Net interest
income
Less Distributions
From net interest income (.023) (.050) (.051) (.049) (.054)
Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
TOTAL RETURN B, C 2.35% 5.08% 5.26% 5.02% 5.56%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,171,168 $ 1,126,174 $ 584,919 $ 848,168 $ 610,821
(000 omitted)
Ratio of expenses to average .46% A .50% .56% .56% .59%
net assets
Ratio of expenses to average .46% A .49% D .56% .56% .59%
net assets after expense
reductions
Ratio of net interest income 4.62% A 5.03% 5.13% 4.92% 5.39%
to average net assets
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28,
SELECTED PER-SHARE DATA 1995
Net asset value, beginning of $ 1.000
period
Income from Investment .042
Operations Net interest
income
Less Distributions
From net interest income (.042)
Net asset value, end of period $ 1.000
TOTAL RETURN B, C 4.28%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 573,144
(000 omitted)
Ratio of expenses to average .65%
net assets
Ratio of expenses to average .65%
net assets after expense
reductions
Ratio of net interest income 4.19%
to average net assets
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
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
NOTES TO FINANCIAL STATEMENTS
For the period ended August 31, 1999 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Select Portfolios (the trust) is registered under the
Investment Company Act of 1940, as amended (the 1940 Act), as an
open-end management investment company organized as a Massachusetts
business trust. The trust has thirty-nine equity funds 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 (the fund or
the funds). Each fund is authorized to issue an unlimited number of
shares. The 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 as determined in
good faith under consistently applied procedures under the general
supervision of the Board of Trustees. Short-term securities with
remaining maturities of sixty days or less for which quotations are
not readily available are valued at amortized cost or original cost
plus accrued interest, both of which approximate current value. Direct
investments in precious metals in the form of bullion are valued at
the most recent bid price quoted by a major bank on the New York
Commodities Exchange.
MONEY MARKET FUND. As permitted under Rule 2a-7 of the 1940 Act, and
certain conditions therein, securities are valued initially at cost
and thereafter assume a constant amortization to maturity of any
discount or premium.
FOREIGN CURRENCY TRANSLATION. The accounting records of the funds are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of 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 is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for the fiscal year. Each fund may be subject to
foreign taxes on income and gains on investments which are accrued
based upon each fund's understanding of the tax rules and regulations
that exist in the markets in which they invest. Each fund accrues such
taxes as applicable.
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 Fidelity Management & Research Company
(FMR), may transfer uninvested cash balances into one or more joint
trading accounts. These balances are invested in one or more
repurchase agreements for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the funds, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the funds' investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
CENTRAL CASH FUNDS. Pursuant to an Exemptive Order issued by the SEC,
the funds may invest in the Taxable Central Cash Fund and the Central
Cash Collateral Fund (the Cash Funds) managed by Fidelity Investments
Money Management, Inc. (FIMM), an affiliate of FMR. The Cash Funds are
open-end money market funds available only to investment companies and
other accounts managed by FMR and its affiliates. The Cash Funds seek
preservation of capital, liquidity, and current income. Income
distributions from the Cash Funds are declared daily and paid monthly
from net interest income. Income distributions earned by the funds are
recorded as either interest income or security lending 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
at the end of each applicable fund's schedule of investments.
3. PURCHASES AND SALES OF INVESTMENTS.
Information regarding purchases and sales of securities (other than
short-term securities), is included under the caption "Other
Information" at the end of each applicable fund's schedule of
investments.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, FMR receives a
monthly fee.
For each equity fund, the monthly fee is calculated on the basis of a
group fee rate plus a fixed individual fund fee rate applied to the
average net assets of each fund. The group fee rate is the weighted
average of a series of rates and is based on the monthly average net
assets of all the mutual funds advised by FMR. The rates ranged from
.2500% to .5200% for the period. The annual individual fund fee rate
is .30%. In the event that these rates were lower than the contractual
rates in effect during the period, FMR voluntarily implemented the
above rates, as they resulted in the same or a lower management fee.
For the period, the management fees were equivalent to annualized
rates that ranged from .57% to .59%, 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 income-based 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 total management fee was equivalent to an
annualized rate of .17%. The income-based portion of this fee was
equal to $26,364, or an annualized rate of .01% 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 fees are 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 funds. 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. 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 lend portfolio securities from time to time in order to
earn additional income. Each applicable fund receives collateral (in
the form of U.S. Treasury obligations, letters of credit and/or cash)
against the loaned securities and maintains collateral in an amount
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 funds and any additional
required collateral is delivered to the funds on the next business
day. If the borrower defaults on its obligation to return the
securities loaned because of insolvency or other reasons, a fund could
experience delays and costs in recovering the securities loaned or in
gaining access to the collateral. Information regarding the value of
securities loaned and the value of collateral at period end
5. SECURITY LENDING - CONTINUED
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, certain securities lending fees, brokerage
commissions and extraordinary expenses, if any) above an annual rate
of 2.50% of average net assets. FMR retains the ability to be repaid
by the funds for these expense reductions in the amount that expenses
fall below the limit prior to the end of the fiscal year. For the
period, the reimbursement reduced the expenses by $6,261 for Cyclical
Industries Portfolio.
FMR has directed certain portfolio trades to brokers who paid a
portion of certain equity funds' expenses. In addition, certain funds
have entered into arrangements with their custodian and transfer agent
whereby credits realized on uninvested cash balances were used to
offset a portion of certain funds' 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 and its affiliates were record owners of
more than 5% of the outstanding shares, and certain unaffiliated
shareholders were each record owners of 10% or more of the total
outstanding shares of the following funds:
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BENEFICIAL INTEREST
FUND FMR % OF OWNERSHIP NUMBER OF UNAFFILIATED % OF UNAFFILIATED OWNERSHIP
SHAREHOLDERS
Cyclical Industries 18.8 - -
Multimedia - 1 12.9
Natural Resources 28.4 - -
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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.
10. PROPOSED REORGANIZATION.
The Board of Trustees of has approved an Agreement and Plan of
Reorganization ("Agreement") between the Fidelity Select Gold
Portfolio ("Acquiring Fund") and Fidelity Select Precious Metals and
Minerals Portfolio ("Target Fund") ("Reorganization"). The Agreement
provides for the transfer of all of the assets of the Target Fund to
the Acquiring Fund in exchange solely for the number of shares of the
Acquiring Fund having the same aggregate net asset value as the
outstanding shares of the Target Fund as of the close of business of
the New York Stock Exchange on the day that the Reorganization is
effective. The Agreement also provides for the assumption by the
Acquiring Fund of all of the liabilities of the Target Fund. The
Reorganization can be consummated only if, among other things, it is
approved by the vote of a majority (as defined by the 1940 Act) of
outstanding voting securities of the Target Fund. A Special Meeting of
Shareholders ("Meeting") of the Target Fund will be held on February
16, 2000 to vote on the Agreement. A detailed description of the
proposed transaction and voting information will be sent to
shareholders of the Target Fund in December 1999. If the Agreement is
approved at the Meeting, the Reorganization is expected to become
effective on or about February 29, 2000.
Effective at the close of business on December 20, 1999, shares of
Fidelity Select Precious Metals and Minerals Portfolio will no longer
be available for purchase or exchange to new accounts of the fund
pending the proposed Reorganization.
MANAGING YOUR INVESTMENTS
Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a
day.
BY PHONE
Fidelity Automated Service Telephone provides a single toll-free
number to access account balances, positions, quotes and trading. It's
easy to navigate the service, and on your first call, the system will
help you create a personal identification number (PIN) for security.
(PHONE_GRAPHIC)FIDELITY AUTOMATED SERVICE TELEPHONE (FASTSM)
1-800-544-5555
PRESS
1 For mutual fund and brokerage trading.
2 For quotes.*
3 For account balances and holdings.
4 To review orders and mutual fund activity.
5 To change your PIN.
*0 To speak to a Fidelity representative.
BY PC
Fidelity's Web site on the Internet provides a wide range of
information, including daily financial news, fund performance,
interactive planning tools and news about Fidelity products and
services.
(COMPUTER_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call EarthLink Sprint at
1-800-288-2967, and be sure to ask for registration number SMD004 to
receive a special Fidelity package that includes 30 days of free
Internet access. EarthLink is North America's #1 independent Internet
access provider.
(COMPUTER_GRAPHIC)
FIDELITY ON-LINE XPRESS+X(registered trademark)
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity
at 1-800-544-7272 or visit our Web site for more information on how to
manage your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD
AND RETURN WILL VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE
WILL ALSO VARY. THIS
MEANS THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES.
THERE IS NO ASSURANCE THAT MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN
A STABLE $1 SHARE
PRICE; AN INVESTMENT IN A MONEY MARKET FUND IS NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND
INCLUDE CHANGES IN SHARE
PRICE, REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF
ANY SALES CHARGES.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Investments Money Management, Inc. (FIMM),
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
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
Banking
Brokerage and Investment Management
Financial Services
Home Finance
Insurance
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)
Fidelity Automated Service
Telephone (FASTSM) 1-800-544-5555
AUTOMATED LINE FOR QUICKEST SERVICE
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(2_FIDELITY_LOGOS)(REGISTERED TRADEMARK) BULK RATE
P.O. Box 193 U.S. Postage
Boston, MA 02101 PAID
Printed on Recycled Paper SEL-SANN-1099 86080
1.536823.102
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