As filed with the Securities and Exchange Commission
on October 27, 1999
Registration No. 33-___________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. [ ]
Fidelity Select Portfolios
(Exact Name of Registrant as Specified in Charter)
82 Devonshire St., Boston, MA 02109
(Address Of Principal Executive Offices)
Registrant's Telephone Number (617) 563-7000
Eric D. Roiter, Secretary
82 Devonshire Street
Boston, MA 02109
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable
after the Registration Statement becomes effective under the
Securities Act of 1933.
The Registrant has registered an indefinite amount of securities under
the Securities Act of 1933 pursuant to Section 24(f) under the
Investment Company Act of 1940; accordingly, no fee is payable
herewith because of reliance upon Section 24(f). Pursuant to Rule 429,
this Registration Statement relates to shares previously registered on
Form N-1A.
It is proposed that this filing will become effective on December 1,
1999, pursuant to Rule 488.
Fidelity Select Gold Portfolio
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement contains the following papers and
documents:
Facing Page
Contents of Registration Statement
Solicitation Letter to Shareholders
Form of Proxy Card
Notice of Special Meeting
Part A - Proxy Statement and Prospectus
Part B- Statement of Additional Information
Part C - Other Information
Signature Page
Exhibits
IMPORTANT PROXY MATERIALS
PLEASE CAST YOUR VOTE NOW!
Dear Shareholder:
I am writing to ask you for your vote on an important proposal to
merge Fidelity Select Precious Metals and Minerals Portfolio into
Fidelity Select Gold Portfolio. A shareholder meeting is scheduled
for February 16, 2000. Votes received in time to be counted at the
meeting will decide whether the merger takes place. This package
contains information about the proposal and includes all the materials
you will need to vote by mail.
The fund's Board of Trustees has reviewed the proposed merger and has
recommended that the proposed merger be presented to shareholders.
The Trustees, most of whom are not affiliated with Fidelity, are
responsible for protecting your interests as a shareholder. The
Trustees have determined that the proposed merger is in shareholders'
best interest. However, the final decision is up to you.
The proposed merger would give shareholders of Fidelity Select
Precious Metals and Minerals Portfolio the opportunity to participate
in a larger fund with similar investment policies. The combined fund
would also have lower expenses guaranteed through February 28, 2001.
As you know, in anticipation of the proposed merger, Fidelity Select
Precious Metals and Minerals Portfolio was closed to new investments
at the close of business on December 20, 1999. We have attached a Q&A
to assist you in understanding the proposal. The enclosed proxy
statement includes a detailed description of the proposed merger.
Please read the enclosed materials and promptly cast your vote on the
proxy card. You are entitled to one vote for each dollar of net asset
value you own of the fund on the record date, which is December 20,
1999. Your vote is extremely important, no matter how large or small
your holdings may be.
VOTING BY MAIL IS QUICK AND EASY. EVERYTHING YOU NEED IS ENCLOSED.
To cast your vote, simply complete the proxy card enclosed in this
package. Be sure to sign the card before mailing it in the
postage-paid envelope provided.
If you have any questions before you vote, please call us at
1-800-544-8888. We will be glad to help you get your vote in quickly.
Thank you for your participation in this important initiative for your
fund.
Sincerely,
Edward C. Johnson 3d
Chairman and Chief Executive Officer
Important information to help you understand and vote on the proposal
Please read the full text of the enclosed proxy statement. Below is a
brief overview of the proposal to be voted upon. Your vote is
important. We appreciate you placing your trust in Fidelity and look
forward to helping you achieve your financial goals.
WHAT PROPOSAL AM I BEING ASKED TO VOTE ON?
You are being asked to approve a merger of Fidelity Select Precious
Metals and Minerals Portfolio into Fidelity Select Gold Portfolio.
WHAT IS THE REASON FOR AND ADVANTAGES OF THIS MERGER?
The merger would allow Fidelity to maintain the Select Portfolios'
coverage of the gold and precious metals sectors while concentrating
its investment expertise on one fund. The merger would also simplify
the Select Portfolios' offerings by consolidating similar funds.
DO THE FUNDS BEING MERGED HAVE SIMILAR INVESTMENT POLICIES?
Both funds have substantially similar investment strategies. Both
funds seek capital appreciation by investing their assets primarily in
common stocks and in certain precious metals. In addition, both funds
have generally similar portfolios in terms of holdings.
WHO IS THE FUND MANAGER FOR THESE FUNDS?
George Domolky currently manages both funds and is expected to manage
the combined fund.
WILL TOTAL EXPENSES BE LIMITED FOLLOWING THE MERGER?
If the merger is approved, Fidelity has agreed to limit the combined
fund's total operating expenses to 1.54% of its average net assets
through February 28, 2001. After that date, the combined fund's
expenses could increase or decrease.
WHAT WILL BE THE NAME OF THE COMBINED FUND AFTER THE MERGER IS
COMPLETED?
If shareholders of Fidelity Select Precious Metals and Minerals
Portfolio approve the merger of their fund into Fidelity Select Gold
Portfolio, the combined fund's name will remain Fidelity Select Gold
Portfolio.
IS THE MERGER A TAXABLE EVENT FOR FEDERAL INCOME TAX PURPOSES?
Typically, the exchange of shares pursuant to a merger does not result
in a gain or loss for federal income tax purposes.
WHAT WILL BE THE SIZE OF FIDELITY SELECT GOLD PORTFOLIO AFTER THE
MERGER?
If the proposal is approved, the combined fund is anticipated to have
over $250 million in assets, based on current asset levels.
HOW WILL YOU DETERMINE THE NUMBER OF SHARES OF FIDELITY SELECT GOLD
PORTFOLIO THAT I WILL RECEIVE?
Shareholders will receive the number of full and fractional shares of
Fidelity Select Gold Portfolio that is equal in value to the net asset
value of their shares of Fidelity Select Precious Metals and Minerals
Portfolio as last determined on the Closing Date of the merger. The
anticipated Closing Date is February 29, 2000.
WHAT IF THERE ARE NOT ENOUGH VOTES TO REACH QUORUM BY THE SCHEDULED
SHAREHOLDER MEETING DATE?
To facilitate receiving sufficient votes, we will need to take further
action. Fidelity, or D.F. King & Co., Inc. or Management Information
Services Corp., proxy solicitation firms, may contact you by mail or
telephone. Therefore, we encourage shareholders to vote as soon as
they review the enclosed proxy materials to avoid additional mailings
or telephone calls.
If there are not sufficient votes to approve the proposal by the time
of the shareholder meeting (February 16, 2000), the meeting may be
adjourned to permit further solicitation of proxy votes.
HAS THE FUND'S BOARD OF TRUSTEES APPROVED THE PROPOSAL?
Yes. The Board of Trustees has unanimously approved the proposal and
recommends that you vote to approve it.
HOW MANY VOTES AM I ENTITLED TO CAST?
As a shareholder, you are entitled to one vote for each dollar of net
asset value you own of Fidelity Select Precious Metals and Minerals
Portfolio on the record date. The record date is December 20, 1999.
HOW DO I VOTE MY SHARES?
You can vote your shares by completing and signing the enclosed proxy
card, and mailing it in the enclosed postage paid envelope. If you
need any assistance, or have any questions regarding the proposal or
how to vote your shares, please call Fidelity at 800-544-8888.
HOW DO I SIGN THE PROXY CARD?
INDIVIDUAL ACCOUNTS: Shareholders should sign exactly as their names
appear on the account registration shown on the
card.
JOINT ACCOUNTS: Either owner may sign, but the name of the person
signing should conform exactly to a name shown in
the registration.
ALL OTHER ACCOUNTS: The person signing must indicate his or her
capacity. For example, a trustee for a trust or
other entity should sign, "Ann B. Collins,
Trustee."
Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- ----------------------------------------------------------------------
FIDELITY SELECT PORTFOLIOS:
FIDELITY SELECT PRECIOUS METALS AND MINERALS PORTFOLIO
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward
C. Johnson 3d, Eric D. Roiter, and Gerald McDonough, or any one or
more of them, attorneys, with full power of substitution, to vote all
shares of FIDELITY SELECT PORTFOLIOS: FIDELITY SELECT PRECIOUS METALS
AND MINERALS PORTFOLIO, which the undersigned is entitled to vote at
the Special Meeting of Shareholders of the fund to be held at an
office of the trust at 27 State Street, 10th Floor, Boston, MA 02109,
on February 16, 2000, at 9:00 a.m. Eastern time and at any
adjournments thereof. All powers may be exercised by a majority of
said proxy holders or substitutes voting or acting or, if only one
votes and acts, then by that one. This Proxy shall be voted on the
proposals described in the Proxy Statement as specified on the reverse
side. Receipt of the Notice of the Meeting and the accompanying Proxy
Statement is hereby acknowledged.
NOTE: Please sign exactly as your name appears
on this Proxy. When signing in a fiduciary
capacity, such as executor, administrator,
trustee, attorney, guardian, etc., please so
indicate. Corporate and partnership proxies
should be signed by an authorized person
indicating the person's title.
Date
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
cusip # 316390400/fund# 061
Please refer to the Proxy Statement discussion of this matter.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE
PROPOSAL.
As to any other matter, said attorneys shall vote in accordance with
their best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE FOLLOWING:
PLEASE DETACH AT PERFORATION BEFORE MAILING.
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW.
- ----------------------------------------------------------------------
______________________________________________________________________
1. To approve an Agreement and FOR [ ] AGAINST [ ] ABSTAIN [ ] 1.
Plan of Reorganization
between Fidelity Select
Precious Metals and Minerals
Portfolio and Fidelity
Select Gold Portfolio
providing for the transfer
of all of the assets of
Fidelity Select Precious
Metals and Minerals
Portfolio to Fidelity Select
Gold Portfolio in exchange
solely for shares of
beneficial interest of
Fidelity Select Gold
Portfolio and the assumption
by Fidelity Select Gold
Portfolio of Fidelity Select
Precious Metals and Minerals
Portfolio's liabilities,
followed by the distribution
of Fidelity Select Gold
Portfolio shares to
shareholders of Fidelity
Select Precious Metals and
Minerals Portfolio in
liquidation of Fidelity
Select Precious Metals and
Minerals Portfolio.
MET-PXC-1299 [cusip # 316390400/fund# 061]
FIDELITY SELECT PRECIOUS METALS AND MINERALS PORTFOLIO
A FUND OF
FIDELITY SELECT PORTFOLIOS(registered trademark)
82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109
1-800-544-8888
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of Fidelity Select Precious Metals and Minerals
Portfolio:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
Meeting) of Fidelity Select Precious Metals and Minerals Portfolio
(Precious Metals and Minerals Portfolio) will be held at an office of
Fidelity Select Portfolios (the trust), 27 State Street, 10th Floor,
Boston, Massachusetts 02109 on February 16, 2000, at 9:00 a.m. Eastern
time. The purpose of the Meeting is to consider and act upon the
following proposal, and to transact such other business as may
properly come before the Meeting or any adjournments thereof.
(1) To approve an Agreement and Plan of Reorganization between
Precious Metals and Minerals Portfolio and Fidelity Select Gold
Portfolio (Gold Portfolio), another fund of the trust, providing for
the transfer of all of the assets of Precious Metals and Minerals
Portfolio to Gold Portfolio in exchange solely for shares of
beneficial interest of Gold Portfolio and the assumption by Gold
Portfolio of Precious Metals and Minerals Portfolio's liabilities,
followed by the distribution of Gold Portfolio shares to shareholders
of Precious Metals and Minerals Portfolio in liquidation of Precious
Metals and Minerals Portfolio.
The Board of Trustees has fixed the close of business on December 20,
1999 as the record date for the determination of the shareholders of
Precious Metals and Minerals Portfolio entitled to notice of, and to
vote at, such Meeting and any adjournments thereof.
By order of the Board of Trustees,
ERIC D. ROITER, Secretary
December 20, 1999
YOUR VOTE IS IMPORTANT -
PLEASE RETURN YOUR PROXY CARD PROMPTLY.
SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. ANY
SHAREHOLDER WHO DOES NOT EXPECT TO ATTEND THE MEETING IS URGED TO
INDICATE VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD, DATE AND SIGN
IT, AND RETURN IT IN THE ENVELOPE PROVIDED, WHICH NEEDS NO POSTAGE IF
MAILED IN THE UNITED STATES. IN ORDER TO AVOID UNNECESSARY EXPENSE, WE
ASK YOUR COOPERATION IN MAILING YOUR PROXY CARD PROMPTLY, NO MATTER
HOW LARGE OR SMALL YOUR HOLDINGS MAY BE.
INSTRUCTIONS FOR EXECUTING PROXY CARD
The following general rules for executing proxy cards may be of
assistance to you and help avoid the time and expense involved in
validating your vote if you fail to execute your proxy card properly.
1. INDIVIDUAL ACCOUNTS: Your name should be signed exactly as it
appears in the registration on the proxy card.
2. JOINT ACCOUNTS: Either party may sign, but the name of the party
signing should conform exactly to a name shown in the registration.
3. ALL OTHER ACCOUNTS should show the capacity of the individual
signing. This can be shown either in the form of the account
registration itself or by the individual executing the proxy card. For
example:
REGISTRATION VALID SIGNATURE
A. 1) ABC Corp. John Smith, Treasurer
2) ABC Corp. John Smith, Treasurer
c/o John Smith, Treasurer
B. 1) ABC Corp. Profit Sharing Plan Ann B. Collins, Trustee
2) ABC Trust Ann B. Collins, Trustee
3) Ann B. Collins, Trustee Ann B. Collins, Trustee
u/t/d 12/28/78
C. 1) Anthony B. Craft, Cust. Anthony B. Craft
f/b/o Anthony B. Craft, Jr.
UGMA
FIDELITY SELECT PRECIOUS METALS AND MINERALS PORTFOLIO
A FUND OF
FIDELITY SELECT PORTFOLIOS(registered trademark)
82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109
1-800-544-8888
PROXY STATEMENT AND PROSPECTUS
DECEMBER 20, 1999
This Proxy Statement and Prospectus (Proxy Statement) is being
furnished to shareholders of Fidelity Select Precious Metals and
Minerals Portfolio (Precious Metals and Minerals Portfolio), a fund of
Fidelity Select Portfolios (the trust), in connection with the
solicitation of proxies by the trust's Board of Trustees for use at
the Special Meeting of Shareholders of Precious Metals and Minerals
Portfolio and at any adjournments thereof (the Meeting). The Meeting
will be held on Wednesday, February 16, 2000, at 9:00 a.m. Eastern
time at 27 State Street, 10th Floor, Boston, Massachusetts 02109, an
office of the trust.
As more fully described in the Proxy Statement, the purpose of the
Meeting is to vote on a proposed reorganization (Reorganization).
Pursuant to an Agreement and Plan of Reorganization (the Agreement),
Precious Metals and Minerals Portfolio would transfer all of its
assets to Fidelity Select Gold Portfolio (Gold Portfolio), another
fund of the trust, in exchange solely for shares of beneficial
interest of Gold Portfolio and the assumption by Gold Portfolio of
Precious Metals and Minerals Portfolio's liabilities. The number of
shares to be issued in the proposed Reorganization will be based upon
the relative net asset values of the funds last determined on the day
of the exchange. As provided in the Agreement, Precious Metals and
Minerals Portfolio will distribute shares of Gold Portfolio to its
shareholders in liquidation of Precious Metals and Minerals Portfolio
on February 29, 2000, or such other date as the parties may agree (the
Closing Date).
Gold Portfolio, is an equity fund, a non-diversified fund of Fidelity
Select Portfolios, an open-end management investment company organized
as a Massachusetts business trust on November 20, 1980. Gold
Portfolio's investment objective is to seek capital appreciation by
investing primarily in common stocks and in certain precious metals.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT AND PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This Proxy Statement, which should be retained for future reference,
sets forth concisely the information about the Reorganization and Gold
Portfolio that a shareholder should know before voting on the proposed
Reorganization. The Statement of Additional Information dated December
20, 1999 relating to this Proxy Statement has been filed with the
Securities and Exchange Commission (Commission) and is incorporated
herein by reference. This Proxy Statement is accompanied by the
Prospectus dated April 29, 1999 and supplemented August 16, 1999,
which offers shares of Gold Portfolio and Precious Metals and Minerals
Portfolio. The Statement of Additional Information for Gold Portfolio
and Precious Metals and Minerals Portfolio dated April 29, 1999 and
supplemented August 2, 1999 is available upon request. Attachment 1
contains excerpts from the Annual Report of Gold Portfolio dated
February 28, 1999. The Prospectus and Statement of Additional
Information for Gold Portfolio and Precious Metals and Minerals
Portfolio have been filed with the SEC and are incorporated herein by
reference. Copies of these documents may be obtained without charge by
contacting the trust at Fidelity Distributors Corporation, 82
Devonshire Street, Boston, Massachusetts 02109 or by calling
1-800-544-8888.
TABLE OF CONTENTS
Voting Information 5
Synopsis 7
Comparison of Other Policies of The Funds 13
Comparison of Principal Risk Factors 14
The Proposed Transaction 15
Additional Information About Fidelity Select Gold Portfolio 19
Miscellaneous 20
Attachment 1. Excerpts from the Annual Report of Fidelity
Select Gold Portfolio Dated February 28, 1999 21
Exhibit 1. Form of Agreement and Plan of Reorganization
of Fidelity Select Precious Metals and Minerals Portfolio 25
PROXY STATEMENT AND PROSPECTUS
SPECIAL MEETING OF SHAREHOLDERS OF
FIDELITY SELECT PRECIOUS METALS AND MINERALS PORTFOLIO
A FUND OF
FIDELITY SELECT PORTFOLIOS(registered trademark)
TO BE HELD ON FEBRUARY 16, 2000
82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109
1-800-544-8888
VOTING INFORMATION
This Proxy Statement and Prospectus (Proxy Statement) is furnished in
connection with a solicitation of proxies made by, and on behalf of,
the Board of Trustees of Fidelity Select Portfolios (the trust) to be
used at the Special Meeting of Shareholders of Fidelity Select
Precious Metals and Minerals Portfolio (Precious Metals and Minerals
Portfolio) and at any adjournments thereof (the Meeting), to be held
on Wednesday, February 16, 2000, at 9:00 a.m. Eastern time at 27 State
Street, 10th Floor, Boston, Massachusetts 02109, an office of the
trust and Fidelity Management & Research Company (FMR), the fund's
investment adviser.
The purpose of the Meeting is set forth in the accompanying Notice.
The solicitation is made primarily by the mailing of this Proxy
Statement and the accompanying proxy card on or about December 20,
1999. Supplementary solicitations may be made by mail, telephone,
telegraph, facsimile, electronic means or by personal interview by
representatives of the trust. In addition, D.F. King & Co., Inc.
and/or Management Information Services Corp. may be paid on a per-call
basis to solicit shareholders on behalf of the fund at an anticipated
cost of approximately $____. The expenses in connection with preparing
this Proxy Statement and its enclosures and of all solicitations will
be paid by the fund, provided the expenses do not exceed the fund's
voluntary annual expense cap of 2.50%. Expenses exceeding the fund's
voluntary expense cap will be paid by FMR. The fund will reimburse
brokerage firms and others for their reasonable expenses in forwarding
solicitation material to the beneficial owners of shares.
If the enclosed proxy card is executed and returned, it may
nevertheless be revoked at any time prior to its use by written
notification received by the trust, by the execution of a later-dated
proxy card, or by attending the Meeting and voting in person.
All proxy cards solicited by the Board of Trustees that are properly
executed and received by the Secretary prior to the Meeting, and which
are not revoked, will be voted at the Meeting. Shares represented by
such proxies will be voted in accordance with the instructions
thereon. If no specification is made on a proxy card, it will be voted
FOR the matters specified on the proxy card. Only proxies that are
voted will be counted toward establishing a quorum. Broker non-votes
are not considered voted for this purpose. Shareholders should note
that while votes to ABSTAIN will count toward establishing a quorum,
passage of any proposal being considered at the Meeting will occur
only if a sufficient number of votes are cast FOR the proposal.
Accordingly, votes to ABSTAIN and votes AGAINST will have the same
effect in determining whether the proposal is approved.
Precious Metals and Minerals Portfolio may also arrange to have votes
recorded by telephone. D.F. King & Co., Inc. may be paid on a per-call
basis for vote-by-phone solicitations on behalf of the fund at an
anticipated cost of approximately $_______. The expenses in connection
with telephone voting will be paid by the fund, provided the expenses
do not exceed the fund's voluntary expense cap of 2.50%. Expenses
exceeding the fund's voluntary expense cap will be paid by FMR. If the
fund records votes by telephone, it will use procedures designed to
authenticate shareholders' identities, to allow shareholders to
authorize the voting of their shares in accordance with their
instructions, and to confirm that their instructions have been
properly recorded. Proxies given by telephone may be revoked at any
time before they are voted in the same manner that proxies voted by
mail may be revoked.
If a quorum is not present at the Meeting, or if a quorum is present
at the Meeting but sufficient votes to approve one or more of the
proposed items are not received, or if other matters arise requiring
shareholder attention, the persons named as proxy agents may propose
one or more adjournments of the Meeting to permit further solicitation
of proxies. Any such adjournment will require the affirmative vote of
a majority of those shares present at the Meeting or represented by
proxy. When voting on a proposed adjournment, the persons named as
proxy agents will vote FOR the proposed adjournment all shares that
they are entitled to vote with respect to each item, unless directed
to vote AGAINST the item, in which case such shares will be voted
against the proposed adjournment with respect to that item. A
shareholder vote may be taken on one or more of the items in this
Proxy Statement or on any other business properly presented at the
Meeting prior to such adjournment if sufficient votes have been
received and it is otherwise appropriate.
On September 30, 1999, there were 16,789,285 and 15,859,749 shares
issued and outstanding for Precious Metals and Minerals Portfolio and
Fidelity Select Gold Portfolio (Gold Portfolio), respectively.
Precious Metals and Minerals Portfolio shareholders of record at the
close of business on December 20, 1999 will be entitled to vote at the
Meeting. Each such shareholder will be entitled to one vote for each
dollar of net asset value held on that date.
As of September 30, 1999, the Trustees, Members of the Advisory
Board, and officers of each fund owned, in the aggregate, less than 1%
of each fund's total outstanding shares.
To the knowledge of the trust and Fidelity Select Portfolios, no
shareholder owned of record or beneficially 5% or more of the
outstanding shares of each fund on that date. If the Reorganization
became effective on September 30, 1999, it is not anticipated that any
shareholders will own of record or beneficially 5% or more of the
outstanding shares of the combined fund.
VOTE REQUIRED: APPROVAL OF THE REORGANIZATION REQUIRES THE AFFIRMATIVE
VOTE OF A "MAJORITY OF THE OUTSTANDING VOTING SECURITIES" OF PRECIOUS
METALS AND MINERALS PORTFOLIO. UNDER THE INVESTMENT COMPANY ACT OF
1940 (THE 1940 ACT), THE VOTE OF A "MAJORITY OF THE OUTSTANDING VOTING
SECURITIES" MEANS THE AFFIRMATIVE VOTE OF THE LESSER OF (A) 67% OR
MORE OF THE VOTING SECURITIES PRESENT AT THE MEETING OR REPRESENTED BY
PROXY IF THE HOLDERS OF MORE THAN 50% OF THE OUTSTANDING VOTING
SECURITIES ARE PRESENT OR REPRESENTED BY PROXY OR (B) MORE THAN 50% OF
THE OUTSTANDING VOTING SECURITIES. BROKER NON-VOTES ARE NOT CONSIDERED
"PRESENT" FOR THIS PURPOSE.
SYNOPSIS
The following is a summary of certain information contained elsewhere
in this Proxy Statement, in the Agreement, and in the Prospectus of
Precious Metals and Minerals Portfolio and Gold Portfolio, which are
incorporated herein by this reference. Shareholders should read the
entire Proxy Statement and the Prospectus of Gold Portfolio carefully
for more complete information.
The proposed reorganization (the Reorganization) would merge Precious
Metals and Minerals Portfolio into Gold Portfolio, an equity fund also
managed by FMR. If the Reorganization is approved, Precious Metals and
Minerals Portfolio will cease to exist and current shareholders of the
fund will become shareholders of Gold Portfolio instead.
INVESTMENT OBJECTIVES AND POLICIES
The following summarizes the investment objective and policy
differences, if any, between Precious Metals and Minerals Portfolio
and Gold Portfolio.
Precious Metals and Minerals Portfolio and Gold Portfolio have
similar investment objectives and policies. Each fund's investment
objective is to seek capital appreciation by investing primarily in
common stocks and in certain precious metals. Precious Metals and
Minerals Portfolio invests primarily in companies engaged in
exploration, mining, processing, or dealing in gold, silver, platinum,
diamonds, or other precious metals and minerals. Gold Portfolio
invests primarily in companies engaged in exploration, mining,
processing, or dealing in gold, or to a lesser degree, in silver,
platinum, diamonds, or other precious metals and minerals.
The main difference between the funds is their policies of normally
investing at least 80% of fund assets in a particular industry or
group of industries. Precious Metals and Minerals Portfolio normally
invests at least 80% of its assets in securities of companies
principally engaged in exploration, mining, processing, or dealing in
gold, silver, platinum, diamonds, or other precious metals and
minerals, and in precious metals. Gold Portfolio normally invests at
least 80% of its assets in securities of companies principally engaged
in gold-related activities, and in gold bullion or coins. Precious
Metals and Minerals Portfolio's investment policy includes companies
principally engaged in activities related to platinum, silver,
diamonds and other non-gold precious metals and minerals, while Gold
Portfolio's does not.
EXPENSE STRUCTURES
The funds have identical expense structures.
Each fund pays its management fee and other expenses separately. Each
fund's management fee and other expenses, as a percentage of their
respective average net assets, vary from year to year. Precious Metals
and Minerals Portfolio's and Gold Portfolio's total operating expenses
(the sum of their respective management fee and other expenses) were
1.75% and 1.54%, respectively, of each fund's average net assets for
the 12 months ended August 31, 1999. If the Reorganization is
approved, FMR has agreed to limit the combined fund's total operating
expenses to the lower of the two funds' expense ratios for the 12
months ended August 31, 1999 (1.54% of its average net assets) through
February 28, 2001 (excluding interest, taxes, securities lending fees,
brokerage commissions and extraordinary expenses). After that date,
the combined fund's expenses could increase.
The funds also have identical fee structures. Each fund has a maximum
front-end sales charge of 3.00%. Each fund also has a redemption fee
of $7.50 or 0.75%, depending on how long shareholders held their
shares, which is deducted from the redemption amount when they sell
their shares. For fund shares held 29 days or less, the redemption fee
is equal to 0.75% of the redemption amount. For fund shares held 30
days or more, the redemption fee is equal to the lesser of $7.50 or
0.75% of the redemption amount. Shareholders of each fund may also pay
a $7.50 fee for each exchange out of the funds, unless shareholders
place their transaction through Fidelity's automated exchange
services.
In sum, the proposed merger would provide Precious Metals and
Minerals Portfolio shareholders with the opportunity to participate in
a larger fund with a similar investment objective, strategies, and
expenses guaranteed to be lower than Precious Metals and Minerals
Portfolio's for a period of approximately one year.
The Board of Trustees believes that the Reorganization would benefit
Precious Metals and Minerals Portfolio shareholders and recommends
that shareholders vote in favor of the Reorganization.
THE PROPOSED REORGANIZATION
Shareholders of Precious Metals and Minerals Portfolio will be asked
at the Meeting to vote upon and approve the Reorganization and the
Agreement, which provide for the acquisition by Gold Portfolio of all
of the assets of Precious Metals and Minerals Portfolio in exchange
solely for shares of Gold Portfolio and the assumption by Gold
Portfolio of the liabilities of Precious Metals and Minerals
Portfolio. Precious Metals and Minerals Portfolio will then distribute
the shares of Gold Portfolio to its respective shareholders, so that
each shareholder will receive the number of full and fractional shares
of Gold Portfolio equal in value to the aggregate net asset value of
the shareholder's shares of Precious Metals and Minerals Portfolio as
last determined on the Closing Date (defined below). The exchange of
Precious Metals and Minerals Portfolio's assets for Gold Portfolio's
shares will occur as of the close of business of the New York Stock
Exchange (NYSE) on February 29, 2000, or such other time and date as
the parties may agree (the Closing Date). Precious Metals and Minerals
Portfolio will then be liquidated as soon as practicable thereafter.
Approval of the Reorganization will be determined solely by approval
of the shareholders of the fund.
The funds have received an opinion of counsel that the Reorganization
will not result in any gain or loss for Federal income tax purposes
either to Precious Metals and Minerals Portfolio, or Gold Portfolio,
or to the shareholders of any fund. The rights and privileges of the
former shareholders of Precious Metals and Minerals Portfolio and the
shareholders of Gold Portfolio will be effectively unchanged by the
Reorganization.
COMPARATIVE FEE TABLES
Each fund pays a management fee to FMR for managing its investments
and business affairs which is calculated and paid to FMR every month.
Each fund pays management fees and other expenses separately. Each
fund's management fee is calculated by adding a monthly group fee rate
to an individual fund fee rate, and multiplying the result by each
fund's monthly average net assets. The group fee rate is based on the
monthly average net assets of all mutual funds advised by FMR. In
addition to the management fee payable by the funds, each fund also
incurs other expenses for services such as maintaining shareholder
records and furnishing shareholder statements and financial reports.
For the 12 months ended August 31, 1999, Precious Metals and Minerals
Portfolio's total management fee rate and total operating expense
ratio were 0.59% and 1.75%, respectively, and Gold Portfolio's total
management fee rate and total operating expense ratio were 0.59% and
1.54%, respectively. FMR has voluntarily agreed to limit the total
operating expenses of each fund to 2.50% of their respective average
net assets (excluding interest, taxes, securities lending fees,
brokerage commissions and extraordinary expenses).
If shareholders approve the Reorganization, the combined fund will
retain Gold Portfolio's expense structure, requiring payment of a
management fee and other operating expenses. FMR has agreed to limit
the combined fund's expense ratio to 1.54% of its average net assets
through February 28, 2001 (excluding interest, taxes, securities
lending fees, brokerage commissions and extraordinary expenses). This
expense limitation would lower Precious Metals and Minerals
Portfolio's total operating expenses from 1.75% to 1.54% of its
average net assets beginning on the first business day after the
Closing Date of the Reorganization through February 28, 2001. After
February 28, 2001, the combined fund's expenses could increase. If the
proposed Reorganization is not approved, the fund will maintain its
current fee structure. For more information about the funds' current
fees, refer to their Prospectus.
The following table shows the fees and expenses of Precious Metals
and Minerals Portfolio and Gold Portfolio for the 12 months ended
August 31, 1999, adjusted to reflect current fees, and pro forma fees
for the combined fund based on the same time period after giving
effect to the Reorganization, including the effect of FMR's guaranteed
expense limitation to 1.54% of average net assets through February 28,
2001 (excluding interest, taxes, securities lending fees, brokerage
commissions and extraordinary expenses).
ANNUAL FUND OPERATING EXPENSES
Annual fund operating expenses are paid out of each fund's assets.
Expenses are factored into each fund's share price and are not charged
directly to shareholder accounts. The following figures are based on
historical expenses, adjusted to reflect current fees, as of August
31, 1999, of each fund and are calculated as a percentage of average
net assets of each fund.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Precious Metals and Minerals Gold Portfolio Combined Fund
Portfolio
Maximum sales charge (load) 3.00% 3.00% 3.00%
on purchases (as a % of
offering price)A
Sales charge (load) on None None None
reinvested distributions
Deferred sales charge (load) None None None
on redemptions
Redemption fee for the funds
(as a % of amount redeemed)
on shares held 29 days or less 0.75% 0.75% 0.75%
on shares held 30 days or more:
for redemption amounts of up to
$1,000 0.75% 0.75% 0.75%
for redemption amounts of $1,000
or more
Exchange feeB $ 7.50 $ 7.50 $ 7.50
Annual account maintenance $ 12.00 $ 12.00 $ 12.00
fee (for accounts under
$2,500)
</TABLE>
A Lower sales charges may be available for accounts over $250,000.
B Shareholders will not pay an exchange fee if they exchange through
any of Fidelity's automated exchange services.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Precious Metals and Minerals Gold Portfolio Pro Forma
Portfolio ExpensesA -
Combined Fund
Management Fee 0.59% 0.59% 0.59%
12b-1 Fee None None None
Other Expenses 1.16% 0.95% 1.02%
Total Operating Expenses 1.75%B,C 1.54%B,C 1.61%B
</TABLE>
A FMR has agreed to limit the total operating expenses of the combined
fund to 1.54% of its average net assets (excluding interest, taxes,
securities lending fees, brokerage commissions, and extraordinary
expenses) through February 28, 2001 if the Reorganization is approved.
After giving effect to this voluntary expense limitation, the combined
fund's management fee, other expenses and total operating expenses
would be 0.52%, 1.02% and 1.54%, respectively.
B Each fund has entered into arrangements with its custodian and
transfer agent whereby credits realized as a result of uninvested cash
balances are used to reduce custodian and transfer agent expenses.
Including these reductions, the total fund operating expenses would
have been: 1.69% for Precious Metals and Minerals Portfolio; 1.47% for
Gold Portfolio; and 1.47% for the combined fund, giving effect to
FMR's voluntary expense limitation.
C FMR has voluntarily agreed to reimburse each fund to the extent that
total operating expenses (excluding interest, taxes, securities
lending fees, brokerage commissions, and extraordinary expenses) as a
percentage of their respective average net assets, exceed 2.50%.
EXAMPLES OF EFFECT OF FUND EXPENSES
This example assumes that you invest $10,000 in the funds for the
time periods indicated and then redeem all of your shares at the end
of those periods. The example also assumes that your investment has a
5% return each year and that the funds' operating expenses remain the
same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Precious Metals and Minerals Gold Portfolio Combined Fund (Pro Forma)
Portfolio
1 year $ 480 $ 459 $ 466
3 years $ 842 $ 779 $ 800
5 years $1,228 $1,122 $1,157
10 years $2,308 $2,087 $2,161
</TABLE>
Fees include the effect of each fund's 3.00% maximum front-end sales
charge and $7.50 redemption fee.
You would pay the following expenses if you did not redeem your
shares:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Precious Metals and Minerals Gold Portfolio Combined Fund (Pro Forma)
Portfolio
1 year $ 473 $ 452 $ 459
3 years $ 835 $ 772 $ 793
5 years $1,220 $1,114 $1,150
10 years $2,301 $2,079 $2,154
</TABLE>
These examples assume that all dividends and other distributions are
reinvested and that the percentage amounts listed under Annual Fund
Operating Expenses remain the same in the years shown. These examples
illustrate the effect of expenses, but are not meant to suggest actual
or expected expenses, which may vary. The assumed return of 5% is not
a prediction of, and does not represent, actual or expected
performance of any fund.
FORMS OF ORGANIZATION
Precious Metals and Minerals Portfolio and Gold Portfolio are
non-diversified funds of Fidelity Select Portfolios, an open-end
management investment company organized as a Massachusetts business
trust on November 20, 1980. The trust is authorized to issue an
unlimited number of shares of beneficial interest. Because the funds
are series of the same Massachusetts business trust, organized under
the same Declaration of Trust, the rights of the security holders of
Precious Metals and Minerals Portfolio under state law and the
governing documents are expected to remain unchanged after the
Reorganization. For more information regarding shareholder rights,
refer to the section of the funds' Statement of Additional Information
called "Description of the Trust."
INVESTMENT OBJECTIVES AND POLICIES
Precious Metals and Minerals Portfolio and Gold Portfolio have
similar investment objectives. Each fund seeks capital appreciation by
investing primarily in common stocks and in certain precious metals.
Precious Metals and Minerals Portfolio and Gold Portfolio have
substantially similar investment strategies. Precious Metals and
Minerals Portfolio invests primarily in companies engaged in
exploration, mining, processing, or dealing in gold, silver, platinum,
diamonds, or other precious metals and minerals. Gold Portfolio
invests primarily in companies engaged in exploration, mining,
processing, or dealing in gold, or to a lesser degree, in silver,
platinum, diamonds, or other precious metals and minerals.
The main difference between the funds is their non-fundamental
policies of normally investing at least 80% of fund assets in a
particular industry or group of industries. Precious Metals and
Minerals Portfolio normally invests at least 80% of its assets in
securities of companies principally engaged in exploration, mining,
processing, or dealing in gold, silver, platinum, diamonds, or other
precious metals and minerals, and in precious metals. Gold Portfolio
normally invests at least 80% of its assets in securities of companies
principally engaged in gold-related activities, and in gold bullion or
coins. Precious Metals and Minerals Portfolio's non-fundamental 80%
investment policy, therefore, includes companies principally engaged
in activities related to platinum, silver, diamonds and other non-gold
precious metals and minerals, while Gold Portfolio's does not.
The investment objective of each fund is fundamental and may not be
changed without the approval of a vote of at least a majority of the
outstanding voting securities of the fund. There can be no assurance
that any fund will achieve its objective. With the exception of
fundamental policies, investment policies of the funds can be changed
without shareholder approval. The differences between the funds
discussed above, except as noted, could be changed without a vote of
shareholders.
PERFORMANCE COMPARISONS OF THE FUNDS
The following table compares the funds' annual total returns for the
periods indicated. Please note that total returns are based on past
results and are not an indication of future performance.
ANNUAL TOTAL RETURNS*
(PERIODS ENDED DECEMBER 31)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1994 1995 1996 1997 1998 1999**
Gold Portfolio (15.46%) 11.20% 19.92% (39.39%) (8.64%) (5.50%)
Precious Metals and Minerals (1.14%) (3.34%) 5.42% (44.89%) 0.10% (6.28%)
Portfolio
</TABLE>
*Returns do not include the effect of each fund's 3.00% maximum
front-end sales charge or $7.50 exchange fee.
**Through August 31, 1999.
The following table compares Precious Metals and Minerals Portfolio's
individual cumulative returns to Gold Portfolio's for the periods
indicated. Please note that total returns are based on past results
and are not an indication of future performance.
CUMULATIVE TOTAL RETURNS*
(PERIODS ENDED AUGUST 31, 1999)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 Year 3 Years 5 Years
Gold Portfolio 45.98% (52.55)% (36.12)%
Precious Metals and Minerals 47.22% (54.07)% (49.48)%
Portfolio
</TABLE>
*Returns do not include the effect of each fund's 3.00% maximum
front-end sales charge or $7.50 exchange fee.
The tables above show that the funds have experienced generally
comparable performance over the time periods shown, with Gold
Portfolio slightly outperforming Precious Metals and Minerals
Portfolio.
The following graph shows the value of a hypothetical $10,000
investment in each fund made on August 31, 1994 assuming all
distributions are reinvested. The graph compares the cumulative
returns of the funds on a monthly basis from August 31, 1994 to August
31, 1999, and illustrates the relative volatility of their performance
over shorter periods of time.
Select Precious Metals Select Gold
& Minerals Portfolio (061) Portfolio (041)
Month Ending Select Precious Metals and Select Gold Portfolio*
Minerals Portfolio*
August 1994 $10,000 $10,000
September 1994 10,766 10,874
October 1994 10,348 10,087
November 1994 9,240 8,892
December 1994 9,589 9,154
January 1995 7,918 8,198
February 1995 8,282 8,478
March 1995 9,122 9,779
April 1995 9,198 9,743
May 1995 9,084 9,945
June 1995 9,193 10,083
July 1995 9,572 10,354
August 1995 9,703 10,377
September 1995 9,730 10,372
October 1995 8,515 9,122
November 1995 9,111 9,968
December 1995 9,268 10,179
January 1996 11,211 11,986
February 1996 11,407 12,464
March 1996 11,342 12,763
April 1996 11,599 13,067
May 1996 12,270 14,492
June 1996 10,562 12,446
July 1996 10,431 12,216
August 1996 10,999 13,462
September 1996 10,540 13,214
October 1996 10,453 12,851
November 1996 9,929 12,299
December 1996 9,771 12,207
January 1997 9,351 11,687
February 1997 10,693 13,224
March 1997 9,106 11,124
April 1997 8,500 10,452
May 1997 8,642 11,052
June 1997 7,747 10,105
July 1997 7,442 9,947
August 1997 7,480 10,041
September 1997 7,829 10,898
October 1997 6,514 9,228
November 1997 5,030 7,052
December 1997 5,385 7,399
January 1998 5,930 7,811
February 1998 5,608 7,518
March 1998 5,985 8,009
April 1998 6,563 8,475
May 1998 5,559 7,280
June 1998 4,736 6,393
July 1998 4,621 5,922
August 1998 3,432 4,376
September 1998 5,216 6,780
October 1998 5,216 6,577
November 1998 5,096 6,438
December 1998 5,390 6,760
January 1999 5,227 6,572
February 1999 4,997 6,339
March 1999 5,008 6,349
April 1999 5,723 7,340
May 1999 4,806 6,210
June 1999 4,981 6,507
July 1999 4,839 6,121
August 1999 5,052 6,388
*Returns do not include the effect of each fund's 3.00% maximum
front-end sales charge or $7.50 exchange fee.
COMPARISON OF OTHER POLICIES OF THE FUNDS
DIVERSIFICATION. Each fund is a non-diversified fund. In order to
qualify as a regulated investment company under the Internal Revenue
Code of 1986, as amended (the Code), the Code generally requires each
fund to invest no more than 25% of its total assets in securities of
any one issuer and to invest at least 50% of its total assets so that
no more than 5% of each fund's total assets are invested in securities
of any one issuer. However, the Code allows unlimited investments in
cash, cash items, government securities and securities of other
investment companies.
BORROWING. Each fund may borrow money from banks or from other funds
advised by FMR or its affiliates, or through reverse repurchase
agreements. As a matter of fundamental policy, each fund may borrow
money for temporary or emergency purposes, but not in an amount
exceeding 33-1/3% of its total assets.
LENDING. Each fund does not currently intend to lend assets, other
than securities, to other parties, except by lending money (up to 15%
of the fund's net assets) to other funds or portfolios advised by FMR
or an affiliate, or by acquiring loans, loan participations, or other
forms of direct debt instruments. As a matter of fundamental policy,
each fund may not lend more than 33-1/3% of its total assets to other
parties, but this limitation does not apply to purchases of debt
securities or to repurchase agreements.
TEMPORARY DEFENSIVE POLICIES. FMR normally invests each fund's assets
according to the fund's investment strategy. Each fund also reserves
the right to invest without limitation in investment-grade debt
securities for temporary defensive purposes.
For more information about the risks and restrictions associated with
these policies, see the funds' Prospectus, and for a more detailed
discussion of the funds' investments, see their Statement of
Additional Information, which is incorporated herein by reference.
OPERATIONS OF GOLD PORTFOLIO FOLLOWING THE REORGANIZATION
FMR does not expect Gold Portfolio to revise its investment policies
as a result of the Reorganization. In addition, FMR does not
anticipate significant changes to the fund's management or to agents
that provide the fund with services. Specifically, the Trustees and
officers, the investment adviser, distributor, and other agents will
continue to serve Gold Portfolio in their current capacities. George
Domolky, who is currently the Portfolio Manager of Gold Portfolio and
Precious Metals and Minerals Portfolio, is expected to continue to be
responsible for portfolio management after the Reorganization.
All of the current investments of Precious Metals and Minerals
Portfolio are permissible investments for Gold Portfolio.
Nevertheless, FMR may sell securities held by Precious Metals and
Minerals Portfolio and Gold Portfolio between the time of shareholder
approval and the Closing Date. Transaction costs associated with such
adjustments that occur between shareholder approval and the Closing
Date will be borne by the fund that incurred them. Transaction costs
associated with such adjustments that occur after the Closing Date
will be borne by Gold Portfolio.
PURCHASES AND REDEMPTIONS
The purchase and redemption policies for each fund are identical.
The price to buy one share of each fund is each fund's net asset
value per share (NAV). Each fund's shares are sold with a maximum
3.00% sales charge. Your shares are purchased at the next NAV
calculated after your investment is received and accepted. Each fund's
NAV is normally calculated each hour, from 10:00 a.m. to the close of
business of the New York Stock Exchange (NYSE), normally 4:00 p.m.
Eastern time. Refer to the funds' Prospectus for more information
regarding how to buy shares.
The price to sell one share of each fund is the fund's NAV, minus the
applicable redemption fee. Your shares will be sold at the next NAV
calculated after your order is received and accepted, minus the
applicable redemption fee. Each fund's NAV is normally calculated each
hour, from 10:00 a.m. to the close of business of the NYSE, normally
4:00 p.m. Eastern time. Each fund deducts a redemption fee based on
the length of time shares are held prior to redemption. For shares
held 29 days or less, the redemption fee is equal to 0.75% of the
redemption amount. For shares held 30 days or more, the redemption fee
is equal to the lesser of $7.50 or 0.75% of the redemption amount.
Refer to the funds' Prospectus for more information regarding how to
sell shares. The redemption fee will not apply to transactions
contemplated by the proposed Reorganization.
For each fund, the minimum initial investment amount is $2,500, the
minimum additional investment amount is $250, and the minimum account
balance is $2,000. The minimum investment and balance requirements for
shareholders of Precious Metals and Minerals Portfolio will remain
unchanged by the fund's Reorganization.
On December 20, 1999, Precious Metals and Minerals Portfolio closed
to all new investments pending the Reorganization. Precious Metals and
Minerals Portfolio shareholders as of that date will no longer be able
to purchase shares of the fund except through the reinvestment of
dividends and other distributions. Shareholders of Precious Metals and
Minerals Portfolio may redeem shares through the Closing Date of the
fund's Reorganization. The holding period of the shares of Gold
Portfolio issued in the Reorganization will include the period during
which the shares of Precious Metals and Minerals Portfolio surrendered
were held. If the Reorganization is approved, the purchase and
redemption policies of the combined fund will remain unchanged.
EXCHANGES
The exchange privilege currently offered by each fund is the same and
is not expected to change after the Reorganization. Shareholders of
the funds may exchange their shares of a fund for shares of any other
Fidelity fund available in a shareholder's state. An exchange fee of
$7.50 will be waived if shareholders exchange through any of
Fidelity's automated exchange services. The exchange fee will not
apply to transactions contemplated by the proposed Reorganization.
DIVIDENDS AND OTHER DISTRIBUTIONS
Each fund distributes substantially all of its net investment income
and capital gains to shareholders each year. Each fund normally
distributes dividends and capital gains in April and December. On or
before the Closing Date, Precious Metals and Minerals Portfolio may
declare additional dividends or other distributions in order to
distribute substantially all of its investment company taxable income
and net realized capital gain.
FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATION
Each fund has received an opinion of its counsel, Kirkpatrick &
Lockhart LLP, that the Reorganization will constitute a tax-free
reorganization within the meaning of Section 368(a)(1)(C) of the
Internal Revenue Code of 1986, as amended (the Code). Accordingly, no
gain or loss will be recognized to the funds or their shareholders as
a result of the Reorganization. Please see the section entitled
"Federal Income Tax Considerations" for more information.
As of September 30, 1999, Precious Metals and Minerals Portfolio and
Gold Portfolio had net unrealized gains of approximately $14,526,843
and $9,208,226, respectively. During the period between shareholder
approval and the Closing Date, FMR may sell certain securities to make
portfolio adjustments in connection with the Reorganization. Selling
these securities may result in realization of capital gains by the
selling fund; however, these gains may be offset by each fund's
existing capital loss carryforwards.
As of February 28, 1999, Precious Metals and Minerals Portfolio and
Gold Portfolio have capital loss carryforwards for federal income tax
purposes of approximately $78 million and $53 million, respectively.
Under current federal tax law, Gold Portfolio may be limited to using
only a portion, if any, of its capital loss carryforward or the
capital loss carryforwards transferred by Precious Metals and Minerals
Portfolio at the time of the Reorganization (capital loss
carryforwards). There is no assurance that Gold Portfolio will be able
to realize sufficient capital gains to use the capital loss
carryforwards before they expire. The capital loss carryforward
attributable to Precious Metals and Minerals Portfolio will expire
between February 28, 2001 and February 28, 2007.
COMPARISON OF PRINCIPAL RISK FACTORS
Because each fund invests primarily in common stocks and in certain
precious metals, the funds have substantially similar levels of
investment risk. Because FMR concentrates each fund's investments in a
particular industry or group of industries, each fund's performance is
expected to be closely tied to economic and market conditions within
that industry or group of industries and to be more volatile than the
performance of less concentrated funds. The precious metals and
minerals industry and gold industry can be significantly affected by
international monetary and political developments such as currency
devaluations or revaluations, central bank movements, economic and
social conditions within a country, trade imbalances, or trade or
currency restrictions between countries. The prices of gold and other
precious metals mining securities can be subject to substantial
fluctuations over short periods of time. Because much of the world's
gold reserves are located in South Africa, the social and economic
conditions there and in neighboring countries can affect gold and
gold-related companies located in South Africa and worldwide.
As non-diversified funds, each fund has the ability to invest a
significant percentage of its assets in the securities of a single
issuer. Thus, changes in the financial condition of an issuer, changes
in general economic conditions, and changes in specific economic
conditions that affect a particular type of issuer have the potential
to have a greater impact on non-diversified funds such as Precious
Metals and Minerals Portfolio and Gold Portfolio than such changes
might have on more diversified funds.
THE PROPOSED TRANSACTION
TO APPROVE AN AGREEMENT AND PLAN OF REORGANIZATION BETWEEN PRECIOUS
METALS AND MINERALS PORTFOLIO AND GOLD PORTFOLIO.
REORGANIZATION PLAN
The terms and conditions under which the proposed transaction may be
consummated are set forth in the Agreement. Significant provisions of
the Agreement are summarized below; however, this summary is qualified
in its entirety by reference to the Agreement, a copy of which is
attached at Exhibit 1 to this Proxy Statement.
The Agreement contemplates (a) Gold Portfolio acquiring as of the
Closing Date all of the assets of Precious Metals and Minerals
Portfolio in exchange solely for shares of Gold Portfolio and the
assumption by Gold Portfolio of Precious Metals and Minerals
Portfolio's liabilities; and (b) the distribution of shares of Gold
Portfolio to the shareholders of Precious Metals and Minerals
Portfolio as provided for in the Agreement.
The assets of Precious Metals and Minerals Portfolio to be acquired
by Gold Portfolio include all cash, cash equivalents, securities,
receivables (including interest or dividends receivables), claims,
choses in action, and other property owned by Precious Metals and
Minerals Portfolio, and any deferred or prepaid expenses shown as an
asset on the books of Precious Metals and Minerals Portfolio on the
Closing Date. Gold Portfolio will assume from Precious Metals and
Minerals Portfolio all liabilities, debts, obligations, and duties of
Precious Metals and Minerals Portfolio of whatever kind or nature,
whether absolute, accrued, contingent, or otherwise, whether or not
arising in the ordinary course of business, whether or not
determinable on the Closing Date, and whether or not specifically
referred to in the Agreement; provided, however, that Precious Metals
and Minerals Portfolio will use its best efforts, to the extent
practicable, to discharge all of its known liabilities prior to the
Closing Date, other than liabilities incurred in the ordinary course
of business. Gold Portfolio also will deliver to Precious Metals and
Minerals Portfolio the number of full and fractional shares of Gold
Portfolio having an aggregate net asset value (as last determined on
the Closing Date) equal to the value of the assets of Precious Metals
and Minerals Portfolio less the liabilities of Precious Metals and
Minerals Portfolio as of the Closing Date. Precious Metals and
Minerals Portfolio shall then distribute the Gold Portfolio shares PRO
RATA to its shareholders.
The value of Precious Metals and Minerals Portfolio's assets to be
acquired by Gold Portfolio and the amount of its liabilities to be
assumed by Gold Portfolio will be determined as of the close of
business of the NYSE on the Closing Date, using the valuation
procedures set forth in Precious Metals and Minerals Portfolio's
then-current Prospectus and Statement of Additional Information. The
net asset value of a share of Gold Portfolio will be determined as of
the same time using the valuation procedures set forth in its
then-current Prospectus and Statement of Additional Information.
As of the Closing Date, Precious Metals and Minerals Portfolio will
distribute to its shareholders of record the shares of Gold Portfolio
it received, so that each Precious Metals and Minerals Portfolio
shareholder will receive the number of full and fractional shares of
Gold Portfolio equal in value to the aggregate net asset value of
shares of Precious Metals and Minerals Portfolio held by such
shareholder as last determined on the Closing Date; Precious Metals
and Minerals Portfolio will be liquidated as soon as practicable
thereafter. Such distribution will be accomplished by opening accounts
on the books of Gold Portfolio in the names of the Precious Metals and
Minerals Portfolio shareholders and by transferring thereto shares of
Gold Portfolio. Each Precious Metals and Minerals Portfolio
shareholder's account shall be credited with the respective PRO RATA
number of full and fractional shares (rounded to the third decimal
place) of Gold Portfolio due that shareholder. Gold Portfolio shall
not issue certificates representing its shares in connection with such
exchange.
Accordingly, immediately after the Reorganization, each former
Precious Metals and Minerals Portfolio shareholder will own shares of
Gold Portfolio equal to the aggregate net asset value of that
shareholder's shares of Precious Metals and Minerals Portfolio
immediately prior to the Reorganization. The net asset value per share
of Gold Portfolio will be unchanged by the transaction. Thus, the
Reorganization will not result in a dilution of any shareholder
interest.
Any transfer taxes payable upon issuance of shares of Gold Portfolio
in a name other than that of the registered holder of the shares on
the books of Precious Metals and Minerals Portfolio as of that time
shall be paid by the person to whom such shares are to be issued as a
condition of such transfer. Any reporting responsibility of Precious
Metals and Minerals Portfolio is and will continue to be its
responsibility up to and including the Closing Date and such later
date on which Precious Metals and Minerals Portfolio is liquidated.
Pursuant to its management contract with FMR, Precious Metals and
Minerals Portfolio will bear the cost of the Reorganization, including
professional fees, expenses associated with the filing of registration
statements, and the cost of soliciting proxies for the Meeting, which
will consist principally of printing and mailing prospectuses and
proxy statements, together with the cost of any supplementary
solicitation, provided the expenses do not exceed Precious Metals and
Minerals Portfolio's expense cap of 2.50%. Expenses exceeding the
fund's expense cap will be paid by FMR. In addition, there may be some
transaction costs associated with portfolio adjustments to Precious
Metals and Minerals Portfolio and Gold Portfolio due to the
Reorganization prior to the Closing Date which will be borne by
Precious Metals and Minerals Portfolio and Gold Portfolio,
respectively. Any transaction costs associated with portfolio
adjustments to Precious Metals and Minerals Portfolio and Gold
Portfolio due to the Reorganization which occur after the Closing Date
and any additional merger-related costs attributable to Gold Portfolio
which occur after the Closing Date will be borne by Gold Portfolio.
The funds may recognize a taxable gain or loss on the disposition of
securities pursuant to these portfolio adjustments. See the section
entitled "Reasons for the Reorganization."
The consummation of the Reorganization is subject to a number of
conditions set forth in the Agreement, some of which may be waived by
a fund. In addition, the Agreement may be amended in any mutually
agreeable manner, except that no amendment that may have a materially
adverse effect on the shareholders' interests may be made subsequent
to the Meeting.
REASONS FOR THE REORGANIZATION
The Board of Trustees (the Board) of the funds have determined that
the Reorganization is in the best interests of the shareholders of
both funds and that the Reorganization will not result in a dilution
of the interests of shareholders of either fund.
In considering the Reorganization, the Board considered a number of
factors, including the following:
(1) the compatibility of the funds' investment objectives and
policies;
(2) the historical performance of the funds;
(3) the relative expense ratios of the funds;
(4) the costs to be incurred by each fund as a result of the
Reorganization;
(5) the tax consequences of the Reorganization;
(6) the relative size of the funds;
(7) the consolidation of similar funds;
(8) the impact of changes to the Select Portfolios' offerings on the
funds and their shareholders; and
(9) the benefit to FMR and to the shareholders of the funds.
FMR recommended the Reorganization to the Board at a meeting of the
Board on July 15, 1999. In recommending the Reorganization, FMR
advised the Board that the funds have similar investment objectives,
policies, and investment portfolios. FMR advised the Board that the
principal difference in their investment policies is that Precious
Metals and Minerals Portfolio normally invests at least 80% of its
assets in securities of companies principally engaged in exploration,
mining, processing, or dealing in gold, silver, platinum, diamonds, or
other precious metals and minerals, and in precious metals.
The Board considered that the proposed merger would provide
shareholders of Precious Metals and Minerals Portfolio with a fund
that has slightly stronger historical performance on a year-to-year
and cumulative basis.
In addition, the Board also considered that if the Reorganization is
approved, FMR would voluntarily limit the combined fund's total
operating expenses to the lower of the two funds' expense ratios for
the 12 months ended August 31, 1999 (1.54% of its average net assets)
through February 28, 2001 (excluding interest, taxes, securities
lending fees, brokerage commissions, and extraordinary expenses). This
expense limitation would reduce the total operating expenses of
Precious Metals and Minerals Portfolio from 1.75% to 1.54% of its
average net assets.
Finally, the Board considered the proposed Reorganization in the
context of the general goals of simplifying the Select Portfolios'
offerings by consolidating similar funds and of allowing FMR to
concentrate its investment expertise on one fund without sacrificing
the Select Portfolios' coverage of major industry sectors. While the
consolidation of similar funds potentially would benefit FMR, it
should also benefit shareholders by facilitating increased operational
efficiencies.
DESCRIPTION OF THE SECURITIES TO BE ISSUED
The trust, Fidelity Select Portfolios, is registered with the
Commission as an open-end management investment company. The trust's
Trustees are authorized to issue an unlimited number of shares of
beneficial interest of separate series. Gold Portfolio is one of 40
funds of the trust. Each share of Gold Portfolio represents an equal
proportionate interest with each other share of the fund, and each
such share of Gold Portfolio is entitled to equal voting, dividend,
liquidation, and redemption rights. Each shareholder of the fund is
entitled to one vote for each dollar value of net asset value of the
fund that shareholder owns. Shares of Gold Portfolio have no
preemptive or conversion rights. The voting and dividend rights, the
right of redemption, and the privilege of exchange are described in
the fund's Prospectus. Shares are fully paid and nonassessable, except
as set forth in the fund's Statement of Additional Information under
the heading "Shareholder and Trustee Liability."
The trust does not hold annual meetings of shareholders. There will
normally be no meetings of shareholders for the purpose of electing
Trustees unless less than a majority of the Trustees holding office
have been elected by shareholders, at which time the Trustees then in
office will call a shareholder meeting for the election of Trustees.
Under the 1940 Act, shareholders of record of at least two-thirds of
the outstanding shares of an investment company may remove a Trustee
by votes cast in person or by proxy at a meeting called for that
purpose. The Trustees are required to call a meeting of shareholders
for the purpose of voting upon the question of removal of any Trustee
when requested in writing to do so by the shareholders of record
holding at least 10% of the trust's outstanding shares.
FEDERAL INCOME TAX CONSIDERATIONS
The exchange of Precious Metals and Minerals Portfolio's assets for
Gold Portfolio's shares and the assumption of the liabilities of
Precious Metals and Minerals Portfolio by Gold Portfolio is intended
to qualify for federal income tax purposes as a tax-free
reorganization under the Code. With respect to the Reorganization, the
participating funds have received an opinion from Kirkpatrick &
Lockhart LLP, counsel to Precious Metals and Minerals Portfolio and
Gold Portfolio, substantially to the effect that:
(i) The acquisition by Gold Portfolio of all of the assets of
Precious Metals and Minerals Portfolio solely in exchange for Gold
Portfolio shares and the assumption by Gold Portfolio of Precious
Metals and Minerals Portfolio's liabilities, followed by the
distribution by Precious Metals and Minerals Portfolio of Gold
Portfolio shares to the shareholders of Precious Metals and Minerals
Portfolio pursuant to the liquidation of Precious Metals and Minerals
Portfolio and constructively in exchange for their Precious Metals and
Minerals Portfolio shares, will constitute a reorganization within the
meaning of section 368(a)(1)(C) of the Code, and Precious Metals and
Minerals Portfolio and Gold Portfolio will each be "a party to a
reorganization" within the meaning of section 368(b) of the Code;
(ii) No gain or loss will be recognized by Precious Metals and
Minerals Portfolio upon the transfer of all of its assets to Gold
Portfolio in exchange solely for Gold Portfolio shares and Gold
Portfolio's assumption of Precious Metals and Minerals Portfolio's
liabilities, followed by Precious Metals and Minerals Portfolio's
subsequent distribution of those shares to shareholders in liquidation
of Precious Metals and Minerals Portfolio;
(iii) No gain or loss will be recognized by Gold Portfolio upon the
receipt of the assets of Precious Metals and Minerals Portfolio in
exchange solely for Gold Portfolio shares and its assumption of
Precious Metals and Minerals Portfolio's liabilities;
(iv) The shareholders of Precious Metals and Minerals Portfolio will
recognize no gain or loss upon the exchange of their Precious Metals
and Minerals Portfolio shares solely for Gold Portfolio shares;
(v) The basis of Precious Metals and Minerals Portfolio's assets in
the hands of Gold Portfolio will be the same as the basis of those
assets in the hands of Precious Metals and Minerals Portfolio
immediately prior to the Reorganization, and the holding period of
those assets in the hands of Gold Portfolio will include the holding
period of those assets in the hands of Precious Metals and Minerals
Portfolio;
(vi) The basis of Precious Metals and Minerals Portfolio shareholders
in Gold Portfolio shares will be the same as their basis in Precious
Metals and Minerals Portfolio shares to be surrendered in exchange
therefor; and
(vii)The holding period of the Gold Portfolio shares to be received
by the Precious Metals and Minerals Portfolio shareholders will
include the period during which the Precious Metals and Minerals
Portfolio shares to be surrendered in exchange therefor were held,
provided such Precious Metals and Minerals Portfolio shares were held
as capital assets by those shareholders on the date of the
Reorganization.
Shareholders of Precious Metals and Minerals Portfolio should consult
their tax advisers regarding the effect, if any, of the proposed
Reorganization in light of their individual circumstances. Because the
foregoing discussion only relates to the federal income tax
consequences of the Reorganization, those shareholders also should
consult their tax advisers as to state and local tax consequences, if
any, of the Reorganization.
CAPITALIZATION
The following table shows the capitalization of the funds as of
August 31, 1999 and on a pro forma combined basis (unaudited) as of
that date giving effect to the Reorganization.
NET ASSETS NAV PER SHARE SHARES OUTSTANDING
Precious Metals and Minerals $131,012,865 $9.26 14,141,664
Portfolio
Gold Portfolio $177,226,949 $12.89 13,752,983
Pro Forma Combined Fund $308,239,814 $12.89 23,916,898
CONCLUSION
The Agreement and the transactions provided for therein were approved
by the Board at a meeting held on July 15, 1999. The Board of Trustees
of Fidelity Select Portfolios determined that the proposed
Reorganization is in the best interests of shareholders of each fund
and that the interests of existing shareholders of Precious Metals and
Minerals Portfolio and Gold Portfolio would not be diluted as a result
of the Reorganization. In the event that the Reorganization is not
consummated, Precious Metals and Minerals Portfolio will continue to
engage in business as a fund of a registered investment company and
the Board of Fidelity Select Portfolios will consider other proposals
for the reorganization or liquidation of the fund.
ADDITIONAL INFORMATION ABOUT GOLD PORTFOLIO
Gold Portfolio's Prospectus, dated April 29, 1999 and supplemented on
August 16, 1999, is enclosed with this Proxy Statement and is
incorporated herein by reference. The Prospectus contains additional
information about the fund including its investment objective and
policies, investment adviser, advisory fees and expenses,
organization, and procedures for purchasing and redeeming shares. This
Proxy Statement also contains Gold Portfolio's financial highlights
for the five fiscal years ended February 28, 1999, which have been
updated to include the semiannual unaudited data for the six months
ended August 31, 1999, as shown below:
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
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%
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>
<TABLE>
<CAPTION>
<S> <C>
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>
MISCELLANEOUS
LEGAL MATTERS. Certain legal matters in connection with the issuance
of Gold Portfolio shares have been passed upon by Kirkpatrick &
Lockhart LLP, counsel to the trust.
EXPERTS. The audited financial statements of Precious Metals and
Minerals Portfolio and Gold Portfolio incorporated by reference into
the Statement of Additional Information, have been examined by
PricewaterhouseCoopers LLP, independent accountants, whose reports
thereon are included in the Annual Report to Shareholders for the
fiscal year ended February 28, 1999. Unaudited financial statements
for Precious Metals and Minerals Portfolio and Gold Portfolio for the
six-month period ended August 31, 1999 are also incorporated by
reference into the Statement of Additional Information that relates to
this Proxy Statement. The financial statements audited by
PricewaterhouseCoopers LLP have been incorporated by reference in
reliance on their reports given on their authority as experts in
auditing and accounting.
AVAILABLE INFORMATION. Fidelity Select Portfolios is subject to the
informational requirements of the Securities and Exchange Act of 1934
and the 1940 Act, and in accordance therewith files reports, proxy
material, and other information with the Commission. Such reports,
proxy material, and other information can be inspected and copied at
the Public Reference Room maintained by the Commission at 450 Fifth
Street, N.W., Washington D.C. 20549 and 7 World Trade Center, New
York, NY 10048. Copies of such material can also be obtained from the
Public Reference Branch, Office of Consumer Affairs and Information
Services, Securities and Exchange Commission, Washington D.C. 20549,
at prescribed rates.
NOTICE TO BANKS, BROKER-DEALERS AND VOTING TRUSTEES AND THEIR
NOMINEES. Please advise Fidelity Select Portfolios, in care of
Fidelity Service Company, Inc., P.O. Box 789, Boston, Massachusetts,
02102, whether other persons are beneficial owners of shares for which
proxies are being solicited and, if so, the number of copies of the
Proxy Statement you wish to receive in order to supply copies to the
beneficial owners of the respective shares.
ATTACHMENT 1
EXCERPTS FROM THE ANNUAL REPORT OF FIDELITY SELECT GOLD
PORTFOLIO DATED FEBRUARY 28, 1999
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT GOLD -15.69% -9.46% -1.25%
SELECT GOLD (LOAD ADJ.) -18.29% -10.03% -1.56%
S&P 500 19.74% 24.15% 18.78%
GS Natural Resources -20.88% n/a n/a
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
$10,000 OVER 10 YEARS
Gold S&P 500
00041 SP001
1989/02/28 9700.00 10000.00
1989/03/31 9358.89 10233.00
1989/04/30 8906.14 10764.09
1989/05/31 8583.63 11200.04
1989/06/30 9067.39 11136.20
1989/07/31 9160.42 12141.80
1989/08/31 9625.58 12379.78
1989/09/30 9681.39 12329.02
1989/10/31 9780.63 12042.99
1989/11/30 11027.24 12288.66
1989/12/31 10853.58 12583.59
1990/01/31 11331.14 11739.23
1990/02/28 11014.83 11890.67
1990/03/31 10586.89 12205.77
1990/04/30 9439.51 11900.63
1990/05/31 10270.59 13060.94
1990/06/30 9613.17 12972.12
1990/07/31 10282.99 12930.61
1990/08/31 10096.93 11761.68
1990/09/30 10090.73 11188.89
1990/10/31 8434.78 11140.78
1990/11/30 8329.35 11860.47
1990/12/31 8986.76 12191.38
1991/01/31 7740.15 12722.92
1991/02/28 8440.98 13632.61
1991/03/31 8409.97 13962.52
1991/04/30 8112.28 13996.03
1991/05/31 8391.37 14600.66
1991/06/30 8955.75 13931.95
1991/07/31 8856.52 14581.18
1991/08/31 8137.08 14926.75
1991/09/30 8000.64 14677.48
1991/10/31 8614.64 14874.16
1991/11/30 8596.04 14274.73
1991/12/31 8434.78 15907.76
1992/01/31 8639.45 15611.87
1992/02/29 8372.76 15814.83
1992/03/31 7802.17 15506.44
1992/04/30 7405.24 15962.33
1992/05/31 7932.42 16040.54
1992/06/30 8447.19 15801.54
1992/07/31 8980.56 16447.82
1992/08/31 8813.11 16110.64
1992/09/30 8763.49 16300.75
1992/10/31 8503.01 16357.80
1992/11/30 7783.57 16915.60
1992/12/31 8174.30 17123.66
1993/01/31 8019.25 17267.50
1993/02/28 8775.90 17502.34
1993/03/31 9762.02 17871.64
1993/04/30 10996.23 17439.14
1993/05/31 12218.03 17906.51
1993/06/30 12931.27 17958.44
1993/07/31 13960.81 17886.61
1993/08/31 13228.96 18564.51
1993/09/30 11827.30 18421.56
1993/10/31 13594.88 18802.89
1993/11/30 13607.29 18624.26
1993/12/31 14605.82 18849.62
1994/01/31 14612.02 19490.50
1994/02/28 14053.84 18962.31
1994/03/31 14394.95 18135.55
1994/04/30 13179.35 18367.69
1994/05/31 13749.94 18668.92
1994/06/30 13073.91 18211.53
1994/07/31 12881.65 18808.87
1994/08/31 13489.45 19580.03
1994/09/30 14667.84 19100.32
1994/10/31 13607.29 19530.08
1994/11/30 11994.76 18818.79
1994/12/31 12348.27 19097.87
1995/01/31 11058.25 19593.08
1995/02/28 11436.57 20356.63
1995/03/31 13191.75 20957.35
1995/04/30 13142.14 21574.54
1995/05/31 13415.03 22436.88
1995/06/30 13601.09 22958.09
1995/07/31 13967.01 23719.38
1995/08/31 13998.02 23778.91
1995/09/30 13991.82 24782.38
1995/10/31 12304.86 24693.91
1995/11/30 13446.04 25777.97
1995/12/31 13731.33 26274.46
1996/01/31 16168.73 27168.84
1996/02/29 16813.75 27420.69
1996/03/31 17216.88 27684.75
1996/04/30 17626.21 28092.83
1996/05/31 19548.85 28817.34
1996/06/30 16788.94 28927.14
1996/07/31 16478.84 27649.13
1996/08/31 18159.59 28232.26
1996/09/30 17824.68 29821.17
1996/10/31 17334.72 30643.63
1996/11/30 16590.47 32959.99
1996/12/31 16466.67 32307.05
1997/01/31 15764.75 34325.59
1997/02/28 17838.90 34594.71
1997/03/31 15005.92 33173.21
1997/04/30 14099.42 35153.65
1997/05/31 14908.35 37293.80
1997/06/30 13631.44 38964.57
1997/07/31 13417.51 42064.98
1997/08/31 13544.53 39708.50
1997/09/30 14701.10 41883.33
1997/10/31 12448.13 40484.43
1997/11/30 9513.26 42358.45
1997/12/31 9981.24 43085.75
1998/01/31 10536.12 43562.28
1998/02/28 10141.69 46703.99
1998/03/31 10803.54 49095.70
1998/04/30 11431.96 49589.60
1998/05/31 9820.79 48737.16
1998/06/30 8624.11 50716.86
1998/07/31 7989.00 50176.72
1998/08/31 5903.17 42922.17
1998/09/30 9145.57 45671.77
1998/10/31 8871.47 49386.71
1998/11/30 8684.28 52380.04
1998/12/31 9118.83 55398.18
1999/01/31 8864.78 57714.93
1999/02/26 8543.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990307 162024 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Gold Portfolio on February 28, 1989, and
the current 3.00% sales charge was paid. As the chart shows, by
February 28, 1999, the value of the investment would have been $8,543
- - a 14.57% decrease on the initial investment - and includes the
effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $55,921 - a 459.21% increase.
An interview with George Domolky, Portfolio Manager of Fidelity Select
Gold Portfolio.
Q. HOW DID THE FUND PERFORM, GEORGE?
A. The fund once again had a negative return but performed well
relative to the more meaningful of its two benchmarks. For the 12
months that ended February 28, 1999, the fund had a total return of
- -15.69%, while the Goldman Sachs Natural Resources Index - an index of
96 stocks designed to measure the performance of companies in the
natural resources sector - returned -20.88%. The Standard & Poor's 500
Index posted a return of 19.74% during the same period.
Q. WHY DID THE FUND OUTPERFORM THE GOLDMAN SACHS INDEX BUT LAG THE S&P
500?
A. As always, the price of gold played a major role in determining how
the fund performed. Following a difficult period of steadily falling
prices in 1997, gold stabilized in 1998 and ended the period
essentially where it began, around $290 per ounce. On the other hand,
the prices of some other commodities, such as copper and nickel,
continued to fall during the period. The Goldman Sachs index contains
the stocks of companies involved in the production of a wide variety
of natural resources, including copper and nickel. The weakness of
those commodities, together with the fund's favorable stock selection
process, helped the fund's performance relative to the Goldman Sachs
index. Although gold stabilized, it remained low by historical
standards, and many mining companies found it difficult to do business
profitably. Consequently, investors tended to favor stocks from other
sectors over precious metals shares, as evidenced by the fund's poor
showing against the S&P 500.
Q. WHAT WAS YOUR STRATEGY DURING THE PERIOD?
A. Reflecting the June 1, 1998, change in the fund's investment
policies allowing it to invest in precious metals mining companies
anywhere in the world, I pursued a strategy of broadening the fund's
exposure to companies in Australia and, to a lesser extent, South
Africa. Although foreign investments are commonly viewed as having
greater risk than domestic ones, this strategy enabled the fund to
purchase stocks that, in general, were more modestly valued and
performed better than their peers in the United States and Canada. In
addition, the fund maintained its overall emphasis on finding strong
companies with healthy balance sheets and the ability to add
meaningfully to production.
Q. WHAT STOCKS HELPED THE FUND'S PERFORMANCE?
A. Getchell Gold, the fund's largest holding for much of the period,
was also the holding that made the most positive contribution to
performance. The company received a takeover bid from competitor
Placer Dome at a price considerably above Getchell's market price,
which buoyed the stock. Stillwater Mining was another positive
contributor. The company, which produces platinum and palladium, was
helped by higher prices resulting from cutbacks in Russian exports of
those metals. A third helpful holding was Buenaventura. The company is
a major gold producer in Chile and co-owner, with Newmont Mining, of
one of the lowest-cost mines in the world.
Q. WHAT STOCKS WERE DETRIMENTAL TO PERFORMANCE?
A. Greenstone Resources was the holding that hurt performance most.
The stock performed poorly after the company reported disappointing
production numbers. TVX Gold reacted poorly when the company
encountered delays in starting production at some new mines in Greece.
Pioneer Group suffered from poor gold mining results in Ghana. The
fund did not hold these positions at the end of the period.
Q. WHAT'S YOUR OUTLOOK, GEORGE?
A. The Far East is traditionally a strong source of demand for gold
jewelry, so a recovery in that region, particularly in Japan, would be
favorable for the yellow metal. In addition, gold is traditionally
viewed as a hedge against inflation, so any upturn in the inflation
outlook - a real possibility with the U.S. economy growing faster
than expected and economic forces in Asia beginning to recover - would
help the outlook for gold. Another factor to consider is central bank
sales, which helped to drive gold prices lower for the past several
years. Now that the European Economic Community has officially
launched its currency, the euro, it seems likely that, while central
bank sales in Europe may continue on a smaller scale, they will no
longer occur at levels that will depress the price of gold. Although
these developments seem promising, the fund does not make bets on the
price of gold, but rather attempts to invest in companies that can
benefit regardless of the level of gold prices.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH FEBRUARY 28, 1999. THE MANAGER'S VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET OR OTHER CONDITIONS.
EXHIBIT 1
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the Agreement) is made as
of December 20, 1999, by and between Fidelity Select Precious Metals
and Minerals Portfolio (Precious Metals and Minerals Portfolio) and
Fidelity Select Gold Portfolio (Gold Portfolio), funds of Fidelity
Select Portfolios (the trust). The trust is a duly organized business
trust under the laws of the Commonwealth of Massachusetts with an
office at 27 State Street, 10th Floor, Boston, Massachusetts 02109.
Gold Portfolio and Precious Metals and Minerals Portfolio may be
referred to herein collectively as the "Funds" or each individually as
the "Fund."
This Agreement is intended to be, and is adopted as, a plan of
reorganization within the meaning of Section 368(a)(1)(C) of the
Internal Revenue Code of 1986, as amended (the Code). The
reorganization will comprise: (a) the transfer of all of the assets of
Precious Metals and Minerals Portfolio to Gold Portfolio solely in
exchange for shares of beneficial interest in Gold Portfolio (the Gold
Portfolio Shares) and the assumption by Gold Portfolio of Precious
Metals and Minerals Portfolio's liabilities; and (b) the constructive
distribution of such shares by Precious Metals and Minerals Portfolio
PRO RATA to its shareholders in complete liquidation and termination
of Precious Metals and Minerals Portfolio in exchange for all of
Precious Metals and Minerals Portfolio's outstanding shares. Precious
Metals and Minerals Portfolio shall receive shares of Gold Portfolio
having an aggregate net asset value equal to the value of the assets
of Precious Metals and Minerals Portfolio as last determined on the
Closing Date (as defined in Section 6), which Precious Metals and
Minerals Portfolio shall then distribute PRO RATA to its shareholders.
The foregoing transactions are referred to herein as the
"Reorganization."
In consideration of the mutual promises and subject to the terms and
conditions herein, the parties covenant and agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF PRECIOUS METALS AND MINERALS
PORTFOLIO. Precious Metals and Minerals Portfolio represents and
warrants to and agrees with Gold Portfolio that:
(a) Precious Metals and Minerals Portfolio is a series of Fidelity
Select Portfolios, a business trust duly organized, validly existing,
and in good standing under the laws of the Commonwealth of
Massachusetts, and has the power to own all of its properties and
assets and to carry out its obligations under this Agreement. It has
all necessary federal, state, and local authorizations to carry on its
business as now being conducted and to carry out this Agreement;
(b) Fidelity Select Portfolios is an open-end, management investment
company duly registered under the Investment Company Act of 1940, as
amended (the 1940 Act), and such registration is in full force and
effect;
(c) The Prospectus and Statement of Additional Information of
Precious Metals and Minerals Portfolio dated April 29, 1999, the
supplement to the Prospectus dated August 16, 1999, and the supplement
to the Statement of Additional Information dated August 2, 1999,
previously furnished to Gold Portfolio, did not and do not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading;
(d) There are no material legal, administrative, or other proceedings
pending or, to the knowledge of Precious Metals and Minerals
Portfolio, threatened against Precious Metals and Minerals Portfolio
which assert liability on the part of Precious Metals and Minerals
Portfolio. Precious Metals and Minerals Portfolio knows of no facts
which might form the basis for the institution of such proceedings;
(e) Precious Metals and Minerals Portfolio is not in, and the
execution, delivery, and performance of this Agreement will not result
in, violation of any provision of its Amended and Restated Declaration
of Trust or By-laws, or, to the knowledge of Precious Metals and
Minerals Portfolio, of any agreement, indenture, instrument, contract,
lease, or other undertaking to which Precious Metals and Minerals
Portfolio is a party or by which Precious Metals and Minerals
Portfolio is bound or result in the acceleration of any obligation or
the imposition of any penalty under any agreement, judgment or decree
to which Precious Metals and Minerals Portfolio is a party or is
bound;
(f) The Statement of Assets and Liabilities, the Statement of
Operations, the Statement of Changes in Net Assets, Financial
Highlights, and the Schedule of Investments (including market values)
of Precious Metals and Minerals Portfolio at February 28, 1999, have
been audited by PricewaterhouseCoopers LLP, independent accountants,
and have been furnished to Gold Portfolio together with such unaudited
financial statements and schedule of investments (including market
values) for the six month period ended August 31, 1999. Said
Statements of Assets and Liabilities and Schedule of Investments
fairly present the Fund's financial position as of such date and said
Statement of Operations, Statement of Changes in Net Assets, and
Financial Highlights fairly reflect its results of operations, changes
in financial position, and financial highlights for the periods
covered thereby in conformity with generally accepted accounting
principles consistently applied;
(g) Precious Metals and Minerals Portfolio has no known liabilities
of a material nature, contingent or otherwise, other than those shown
as belonging to it on its statement of assets and liabilities as of
February 28, 1999 and those incurred in the ordinary course of
Precious Metals and Minerals Portfolio's business as an investment
company since February 28, 1999;
(h) The registration statement (Registration Statement) filed with
the Securities and Exchange Commission (Commission) by Fidelity Select
Portfolios on Form N-14 relating to the shares of Gold Portfolio
issuable hereunder and the proxy statement of Precious Metals and
Minerals Portfolio included therein (Proxy Statement), on the
effective date of the Registration Statement and insofar as they
relate to Precious Metals and Minerals Portfolio (i) comply in all
material respects with the provisions of the Securities Act of 1933,
as amended (the 1933 Act), the Securities Exchange Act of 1934, as
amended (the 1934 Act), and the 1940 Act, and the rules and
regulations thereunder, and (ii) do not contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading; and at the time of the shareholders' meeting referred to
in Section 7 and on the Closing Date, the prospectus contained in the
Registration Statement of which the Proxy Statement is a part (the
Prospectus), as amended or supplemented, insofar as it relates to
Precious Metals and Minerals Portfolio, does not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading;
(i) All material contracts and commitments of Precious Metals and
Minerals Portfolio (other than this Agreement) will be terminated
without liability to Precious Metals and Minerals Portfolio prior to
the Closing Date (other than those made in connection with redemptions
of shares and the purchase and sale of portfolio securities made in
the ordinary course of business);
(j) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by Precious
Metals and Minerals Portfolio of the transactions contemplated by this
Agreement, except such as have been obtained under the 1933 Act, the
1934 Act, the 1940 Act, and state securities or blue sky laws (which
term as used herein shall include the District of Columbia and Puerto
Rico);
(k) Precious Metals and Minerals Portfolio has filed or will file all
federal and state tax returns which, to the knowledge of Precious
Metals and Minerals Portfolio's officers, are required to be filed by
Precious Metals and Minerals Portfolio and has paid or will pay all
federal and state taxes shown to be due on said returns or provision
shall have been made for the payment thereof, and, to the best of
Precious Metals and Minerals Portfolio's knowledge, no such return is
currently under audit and no assessment has been asserted with respect
to such returns;
(l) Precious Metals and Minerals Portfolio has met the requirements
of Subchapter M of the Code for qualification and treatment as a
regulated investment company for all prior taxable years and intends
to meet such requirements for its current taxable year ending on the
Closing Date;
(m) All of the issued and outstanding shares of Precious Metals and
Minerals Portfolio are, and at the Closing Date will be, duly and
validly issued and outstanding and fully paid and nonassessable as a
matter of Massachusetts law (except as disclosed in the Fund's
Statement of Additional Information), and have been offered for sale
and in conformity with all applicable federal securities laws. All of
the issued and outstanding shares of Precious Metals and Minerals
Portfolio will, at the Closing Date, be held by the persons and in the
amounts set forth in the list of shareholders submitted to Gold
Portfolio in accordance with this Agreement;
(n) As of both the Valuation Time (as defined in Section 4) and the
Closing Date, Precious Metals and Minerals Portfolio will have the
full right, power, and authority to sell, assign, transfer, and
deliver its portfolio securities and any other assets of Precious
Metals and Minerals Portfolio to be transferred to Gold Portfolio
pursuant to this Agreement. As of the Closing Date, subject only to
the delivery of Precious Metals and Minerals Portfolio's portfolio
securities and any such other assets as contemplated by this
Agreement, Gold Portfolio will acquire Precious Metals and Minerals
Portfolio's portfolio securities and any such other assets subject to
no encumbrances, liens, or security interests (except for those that
may arise in the ordinary course and are disclosed to Gold Portfolio)
and without any restrictions upon the transfer thereof; and
(o) The execution, performance, and delivery of this Agreement will
have been duly authorized prior to the Closing Date by all necessary
corporate action on the part of Precious Metals and Minerals
Portfolio, and this Agreement constitutes a valid and binding
obligation of Precious Metals and Minerals Portfolio enforceable in
accordance with its terms, subject to shareholder approval.
2. REPRESENTATIONS AND WARRANTIES OF GOLD PORTFOLIO. Gold Portfolio
represents and warrants to and agrees with Precious Metals and
Minerals Portfolio that:
(a) Gold Portfolio is a series of Fidelity Select Portfolios, a
business trust duly organized, validly existing, and in good standing
under the laws of the Commonwealth of Massachusetts, and has the power
to own all of its properties and assets and to carry out its
obligations under this Agreement. It has all necessary federal, state,
and local authorizations to carry on its business as now being
conducted and to carry out this Agreement;
(b) Fidelity Select Portfolios is an open-end, management investment
company duly registered under the 1940 Act, and such registration is
in full force and effect;
(c) The Prospectus and Statement of Additional Information of Gold
Portfolio, dated April 29, 1999, the supplement to the Prospectus
dated August 16, 1999, and the supplement to the Statement of
Additional Information dated August 2, 1999, previously furnished to
Precious Metals and Minerals Portfolio did not and do not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading;
(d) There are no material legal, administrative, or other proceedings
pending or, to the knowledge of Gold Portfolio, threatened against
Gold Portfolio which assert liability on the part of Gold Portfolio.
Gold Portfolio knows of no facts which might form the basis for the
institution of such proceedings;
(e) Gold Portfolio is not in, and the execution, delivery, and
performance of this Agreement will not result in, violation of any
provision of its Amended and Restated Declaration of Trust or By-laws,
or, to the knowledge of Gold Portfolio, of any agreement, indenture,
instrument, contract, lease, or other undertaking to which Gold
Portfolio is a party or by which Gold Portfolio is bound or result in
the acceleration of any obligation or the imposition of any penalty
under any agreement, judgment, or decree to which Gold Portfolio is a
party or is bound;
(f) The Statement of Assets and Liabilities, the Statement of
Operations, the Statement of Changes in Net Assets, Financial
Highlights, and the Schedule of Investments (including market values)
of Gold Portfolio at February 28, 1999, have been audited by
PricewaterhouseCoopers LLP, independent accountants, and have been
furnished to Precious Metals and Minerals Portfolio together with such
unaudited financial statements and schedule of investments (including
market values) for the six month period ended August 31, 1999. Said
Statements of Assets and Liabilities and Schedule of Investments
fairly present its financial position as of such date and said
Statement of Operations, Statement of Changes in Net Assets, and
Financial Highlights fairly reflect its results of operations, changes
in financial position, and financial highlights for the periods
covered thereby in conformity with generally accepted accounting
principles consistently applied;
(g) Gold Portfolio has no known liabilities of a material nature,
contingent or otherwise, other than those shown as belonging to it on
its statement of assets and liabilities as of February 28, 1999 and
those incurred in the ordinary course of Gold Portfolio's business as
an investment company since February 28, 1999;
(h) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by Gold
Portfolio of the transactions contemplated by this Agreement, except
such as have been obtained under the 1933 Act, the 1934 Act, the 1940
Act, and state securities or blue sky laws (which term as used herein
shall include the District of Columbia and Puerto Rico);
(i) Gold Portfolio has filed or will file all federal and state tax
returns which, to the knowledge of Gold Portfolio's officers, are
required to be filed by Gold Portfolio and has paid or will pay all
federal and state taxes shown to be due on said returns or provision
shall have been made for the payment thereof, and, to the best of Gold
Portfolio's knowledge, no such return is currently under audit and no
assessment has been asserted with respect to such returns;
(j) Gold Portfolio has met the requirements of Subchapter M of the
Code for qualification and treatment as a regulated investment company
for all prior taxable years and intends to meet such requirements for
its current taxable year ending on February 29, 2000;
(k) As of the Closing Date, the shares of beneficial interest of Gold
Portfolio to be issued to Precious Metals and Minerals Portfolio will
have been duly authorized and, when issued and delivered pursuant to
this Agreement, will be legally and validly issued and will be fully
paid and nonassessable (except as disclosed in the Fund's Statement of
Additional Information) by Gold Portfolio, and no shareholder of Gold
Portfolio will have any preemptive right of subscription or purchase
in respect thereof;
(l) The execution, performance, and delivery of this Agreement will
have been duly authorized prior to the Closing Date by all necessary
corporate action on the part of Gold Portfolio, and this Agreement
constitutes a valid and binding obligation of Gold Portfolio
enforceable in accordance with its terms, subject to approval by the
shareholders of Precious Metals and Minerals Portfolio;
(m) The Registration Statement and the Proxy Statement, on the
effective date of the Registration Statement and insofar as they
relate to Gold Portfolio, (i) will comply in all material respects
with the provisions of the 1933 Act, the 1934 Act, and the 1940 Act,
and the rules and regulations thereunder, and (ii) will not contain
any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading; and at the time of the shareholders' meeting
referred to in Section 7 and on the Closing Date, the Prospectus, as
amended or supplemented, insofar as it relates to Gold Portfolio, will
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading;
(n) The issuance of the Gold Portfolio Shares pursuant to this
Agreement will be in compliance with all applicable federal securities
laws; and
(o) All of the issued and outstanding shares of beneficial interest
of Gold Portfolio have been offered for sale and sold in conformity
with the federal securities laws.
3. REORGANIZATION.
(a) Subject to the requisite approval of the shareholders of Precious
Metals and Minerals Portfolio and to the other terms and conditions
contained herein, Precious Metals and Minerals Portfolio agrees to
assign, sell, convey, transfer, and deliver to Gold Portfolio as of
the Closing Date all of the assets of Precious Metals and Minerals
Portfolio of every kind and nature existing on the Closing Date. Gold
Portfolio agrees in exchange therefor: (i) to assume all of Precious
Metals and Minerals Portfolio's liabilities existing on or after the
Closing Date, whether or not determinable on the Closing Date, and
(ii) to issue and deliver to Precious Metals and Minerals Portfolio
the number of full and fractional shares of Gold Portfolio having an
aggregate net asset value equal to the value of the assets of Precious
Metals and Minerals Portfolio transferred hereunder, less the value of
the liabilities of Precious Metals and Minerals Portfolio, determined
as provided for under Section 4.
(b) The assets of Precious Metals and Minerals Portfolio to be
acquired by Gold Portfolio shall include, without limitation, all
cash, cash equivalents, securities, receivables (including interest or
dividends receivables), claims, choses in action, and other property
owned by Precious Metals and Minerals Portfolio, and any deferred or
prepaid expenses shown as an asset on the books of Precious Metals and
Minerals Portfolio on the Closing Date. Precious Metals and Minerals
Portfolio will pay or cause to be paid to Gold Portfolio any dividend
or interest payments received by it on or after the Closing Date with
respect to the assets transferred to Gold Portfolio hereunder, and
Gold Portfolio will retain any dividend or interest payments received
by it after the Valuation Time with respect to the assets transferred
hereunder without regard to the payment date thereof.
(c) The liabilities of Precious Metals and Minerals Portfolio to be
assumed by Gold Portfolio shall include (except as otherwise provided
for herein) all of Precious Metals and Minerals Portfolio's
liabilities, debts, obligations, and duties, of whatever kind or
nature, whether absolute, accrued, contingent, or otherwise, whether
or not arising in the ordinary course of business, whether or not
determinable on the Closing Date, and whether or not specifically
referred to in this Agreement. Notwithstanding the foregoing, Precious
Metals and Minerals Portfolio agrees to use its best efforts to
discharge all of its known liabilities prior to the Closing Date,
other than liabilities incurred in the ordinary course of business.
(d) Pursuant to this Agreement, as soon after the Closing Date as is
conveniently practicable, Precious Metals and Minerals Portfolio will
constructively distribute PRO RATA to its shareholders of record,
determined as of the Valuation Time on the Closing Date, the Gold
Portfolio Shares in exchange for such shareholders' shares of
beneficial interest in Precious Metals and Minerals Portfolio and
Precious Metals and Minerals Portfolio will be liquidated in
accordance with Precious Metals and Minerals Portfolio's Amended and
Restated Declaration of Trust. Such distribution shall be accomplished
by the Funds' transfer agent opening accounts on Gold Portfolio's
share transfer books in the names of the Precious Metals and Minerals
Portfolio shareholders and transferring the Gold Portfolio Shares
thereto. Each Precious Metals and Minerals Portfolio shareholder's
account shall be credited with the respective PRO RATA number of full
and fractional (rounded to the third decimal place) Gold Portfolio
Shares due that shareholder. All outstanding Precious Metals and
Minerals Portfolio shares, including any represented by certificates,
shall simultaneously be canceled on Precious Metals and Minerals
Portfolio's share transfer records. Gold Portfolio shall not issue
certificates representing the Gold Portfolio Shares in connection with
the Reorganization.
(e) Any reporting responsibility of Precious Metals and Minerals
Portfolio is and shall remain its responsibility up to and including
the date on which it is terminated.
(f) Any transfer taxes payable upon issuance of the Gold Portfolio
Shares in a name other than that of the registered holder on Precious
Metals and Minerals Portfolio's books of the Precious Metals and
Minerals Portfolio shares constructively exchanged for the Gold
Portfolio Shares shall be paid by the person to whom such Gold
Portfolio Shares are to be issued, as a condition of such transfer.
4. VALUATION.
(a) The Valuation Time shall be as of the close of business of the
New York Stock Exchange on the Closing Date, or such other date as may
be mutually agreed upon in writing by the parties hereto (the
Valuation Time).
(b) As of the Closing Date, Gold Portfolio will deliver to Precious
Metals and Minerals Portfolio the number of Gold Portfolio Shares
having an aggregate net asset value equal to the value of the assets
of Precious Metals and Minerals Portfolio transferred hereunder less
the liabilities of Precious Metals and Minerals Portfolio, determined
as provided in this Section 4.
(c) The net asset value per share of the Gold Portfolio Shares to be
delivered to Precious Metals and Minerals Portfolio, the value of the
assets of Precious Metals and Minerals Portfolio transferred
hereunder, and the value of the liabilities of Precious Metals and
Minerals Portfolio to be assumed hereunder shall in each case be
determined as of the Valuation Time.
(d) The net asset value per share of the Gold Portfolio Shares shall
be computed in the manner set forth in the then-current Gold Portfolio
Prospectus and Statement of Additional Information, and the value of
the assets and liabilities of Precious Metals and Minerals Portfolio
shall be computed in the manner set forth in the then-current Precious
Metals and Minerals Portfolio Prospectus and Statement of Additional
Information.
(e) All computations pursuant to this Section shall be made by or
under the direction of Fidelity Service Company, Inc., a wholly-owned
subsidiary of FMR Corp., in accordance with its regular practice as
pricing agent for Precious Metals and Minerals Portfolio and Gold
Portfolio.
5. FEES; EXPENSES.
(a) Precious Metals and Minerals Portfolio shall be responsible for
all expenses, fees and other charges in connection with the
transactions contemplated by this Agreement, provided that they do not
exceed the fund's 2.50% expense cap. Expenses exceeding the fund's
expense cap will be paid by FMR (but not including costs incurred in
connection with the purchase or sale of portfolio securities). Any
expenses incurred in connection with the transactions contemplated by
this Agreement which may be attributable to Gold Portfolio will be
borne by Gold Portfolio, provided that they do not exceed the fund's
2.50% expense cap. Expenses exceeding the fund's expense cap will be
paid by FMR (but not including costs incurred in connection with the
purchase or sale of portfolio securities).
(b) Each of Gold Portfolio and Precious Metals and Minerals Portfolio
represents that there is no person who has dealt with it who by reason
of such dealings is entitled to any broker's or finder's or other
similar fee or commission arising out of the transactions contemplated
by this Agreement.
6. CLOSING DATE.
(a) The Reorganization, together with related acts necessary to
consummate the same (the Closing), unless otherwise provided herein,
shall occur at an office of the Trust, 27 State Street, 10th Floor,
Boston, Massachusetts, as of the Valuation Time on February 29, 2000,
or at some other time, date, and place agreed to by Precious Metals
and Minerals Portfolio and Gold Portfolio (the Closing Date).
(b) In the event that on the Closing Date: (i) any of the markets for
securities held by the Funds is closed to trading, or (ii) trading
thereon is restricted, or (iii) trading or the reporting of trading on
said market or elsewhere is disrupted, all so that accurate appraisal
of the total net asset value of Precious Metals and Minerals Portfolio
and the net asset value per share of Gold Portfolio is impracticable,
the Valuation Time and the Closing Date shall be postponed until the
first business day after the day when such trading shall have been
fully resumed and such reporting shall have been restored, or such
other date as the parties may agree.
7. SHAREHOLDER MEETING AND TERMINATION OF PRECIOUS METALS AND MINERALS
PORTFOLIO.
(a) Precious Metals and Minerals Portfolio agrees to call a meeting
of its shareholders after the effective date of the Registration
Statement, to consider transferring its assets to Gold Portfolio as
herein provided, adopting this Agreement, and authorizing the
liquidation of Precious Metals and Minerals Portfolio.
(b) Precious Metals and Minerals Portfolio agrees that as soon as
reasonably practicable after distribution of the Gold Portfolio
Shares, Precious Metals and Minerals Portfolio shall be terminated as
a series of Fidelity Select Portfolios pursuant to its Amended and
Restated Declaration of Trust, any further actions shall be taken in
connection therewith as required by applicable law, and on and after
the Closing Date Precious Metals and Minerals Portfolio shall not
conduct any business except in connection with its liquidation and
termination.
8. CONDITIONS TO OBLIGATIONS OF GOLD PORTFOLIO.
(a) That Precious Metals and Minerals Portfolio furnishes to Gold
Portfolio a statement, dated as of the Closing Date, signed by an
officer of Fidelity Select Portfolios, certifying that as of the
Valuation Time and the Closing Date all representations and warranties
of Precious Metals and Minerals Portfolio made in this Agreement are
true and correct in all material respects and that Precious Metals and
Minerals Portfolio has complied with all the agreements and satisfied
all the conditions on its part to be performed or satisfied at or
prior to such dates;
(b) That Precious Metals and Minerals Portfolio furnishes Gold
Portfolio with copies of the resolutions, certified by an officer of
Fidelity Select Portfolios, evidencing the adoption of this Agreement
and the approval of the transactions contemplated herein by the
requisite vote of the holders of the outstanding shares of beneficial
interest of Precious Metals and Minerals Portfolio;
(c) That, on or prior to the Closing Date, Precious Metals and
Minerals Portfolio will declare one or more dividends or distributions
which, together with all previous such dividends or distributions
attributable to its current taxable year, shall have the effect of
distributing to the shareholders of Precious Metals and Minerals
Portfolio substantially all of Precious Metals and Minerals
Portfolio's investment company taxable income and all of its net
realized capital gain, if any, as of the Closing Date;
(d) That Precious Metals and Minerals Portfolio shall deliver to Gold
Portfolio at the Closing a statement of its assets and liabilities,
together with a list of its portfolio securities showing each such
security's adjusted tax basis and holding period by lot, with values
determined as provided in Section 4 of this Agreement, all as of the
Valuation Time, certified on Precious Metals and Minerals Portfolio's
behalf by its Treasurer or Assistant Treasurer;
(e) That Precious Metals and Minerals Portfolio's custodian shall
deliver to Gold Portfolio a certificate identifying the assets of
Precious Metals and Minerals Portfolio held by such custodian as of
the Valuation Time on the Closing Date and stating that as of the
Valuation Time: (i) the assets held by the custodian will be
transferred to Gold Portfolio; (ii) Precious Metals and Minerals
Portfolio's assets have been duly endorsed in proper form for transfer
in such condition as to constitute good delivery thereof; and (iii) to
the best of the custodian's knowledge, all necessary taxes in
conjunction with the delivery of the assets, including all applicable
federal and state stock transfer stamps, if any, have been paid or
provision for payment has been made;
(f) That Precious Metals and Minerals Portfolio's transfer agent
shall deliver to Gold Portfolio at the Closing a certificate setting
forth the number of shares of Precious Metals and Minerals Portfolio
outstanding as of the Valuation Time and the name and address of each
holder of record of any such shares and the number of shares held of
record by each such shareholder;
(g) That Precious Metals and Minerals Portfolio calls a meeting of
its shareholders to be held after the effective date of the
Registration Statement, to consider transferring its assets to Gold
Portfolio as herein provided, adopting this Agreement, and authorizing
the liquidation and termination of Precious Metals and Minerals
Portfolio;
(h) That Precious Metals and Minerals Portfolio delivers to Gold
Portfolio a certificate of an officer of Fidelity Select Portfolios,
dated as of the Closing Date, that there has been no material adverse
change in Precious Metals and Minerals Portfolio's financial position
since February 28, 1999, other than changes in the market value of its
portfolio securities, or changes due to net redemptions of its shares,
dividends paid, or losses from operations; and
(i) That all of the issued and outstanding shares of beneficial
interest of Precious Metals and Minerals Portfolio shall have been
offered for sale and sold in conformity with all applicable state
securities laws and, to the extent that any audit of the records of
Precious Metals and Minerals Portfolio or its transfer agent by Gold
Portfolio or its agents shall have revealed otherwise, Precious Metals
and Minerals Portfolio shall have taken all actions that in the
opinion of Gold Portfolio are necessary to remedy any prior failure on
the part of Precious Metals and Minerals Portfolio to have offered for
sale and sold such shares in conformity with such laws.
9. CONDITIONS TO OBLIGATIONS OF PRECIOUS METALS AND MINERALS
PORTFOLIO.
(a) That Gold Portfolio shall have executed and delivered to Precious
Metals and Minerals Portfolio an Assumption of Liabilities, certified
by an officer of Fidelity Select Portfolios, dated as of the Closing
Date pursuant to which Gold Portfolio will assume all of the
liabilities of Precious Metals and Minerals Portfolio existing at the
Valuation Time in connection with the transactions contemplated by
this Agreement;
(b) That Gold Portfolio furnishes to Precious Metals and Minerals
Portfolio a statement, dated as of the Closing Date, signed by an
officer of Fidelity Select Portfolios, certifying that as of the
Valuation Time and the Closing Date all representations and warranties
of Gold Portfolio made in this Agreement are true and correct in all
material respects, and Gold Portfolio has complied with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to such dates; and
(c) That Precious Metals and Minerals Portfolio shall have received
an opinion of Kirkpatrick & Lockhart LLP, counsel to Precious Metals
and Minerals Portfolio and Gold Portfolio, to the effect that the Gold
Portfolio Shares are duly authorized and upon delivery to Precious
Metals and Minerals Portfolio as provided in this Agreement will be
validly issued and will be fully paid and nonassessable by Gold
Portfolio (except as disclosed in Gold Portfolio's Statement of
Additional Information) and no shareholder of Gold Portfolio has any
preemptive right of subscription or purchase in respect thereof.
10. CONDITIONS TO OBLIGATIONS OF GOLD PORTFOLIO AND PRECIOUS METALS
AND MINERALS PORTFOLIO.
(a) That this Agreement shall have been adopted and the transactions
contemplated herein shall have been approved by the requisite vote of
the holders of the outstanding shares of beneficial interest of
Precious Metals and Minerals Portfolio;
(b) That all consents of other parties and all other consents,
orders, and permits of federal, state, and local regulatory
authorities (including those of the Commission and of state Blue Sky
and securities authorities, which term as used herein shall include
the District of Columbia and Puerto Rico, and including "no action"
positions of such federal or state authorities) deemed necessary by
Gold Portfolio or Precious Metals and Minerals Portfolio to permit
consummation, in all material respects, of the transactions
contemplated hereby shall have been obtained, except where failure to
obtain any such consent, order, or permit would not involve a risk of
a material adverse effect on the assets or properties of Gold
Portfolio or Precious Metals and Minerals Portfolio, provided that
either party hereto may for itself waive any of such conditions;
(c) That all proceedings taken by either Fund in connection with the
transactions contemplated by this Agreement and all documents
incidental thereto shall be satisfactory in form and substance to it
and its counsel, Kirkpatrick & Lockhart LLP;
(d) That there shall not be any material litigation pending with
respect to the matters contemplated by this Agreement;
(e) That the Registration Statement shall have become effective under
the 1933 Act, and no stop order suspending such effectiveness shall
have been instituted or, to the knowledge of Gold Portfolio and
Precious Metals and Minerals Portfolio, threatened by the Commission;
and
(f) That Gold Portfolio and Precious Metals and Minerals Portfolio
shall have received an opinion of Kirkpatrick & Lockhart LLP
satisfactory to Gold Portfolio and Precious Metals and Minerals
Portfolio that for federal income tax purposes:
(i) The Reorganization will be a reorganization under section
368(a)(1)(C) of the Code, and Precious Metals and Minerals Portfolio
and Gold Portfolio will each be parties to the Reorganization under
section 368(b) of the Code;
(ii) No gain or loss will be recognized by Precious Metals and
Minerals Portfolio upon the transfer of all of its assets to Gold
Portfolio in exchange solely for the Gold Portfolio Shares and the
assumption of Precious Metals and Minerals Portfolio's liabilities
followed by the distribution of those Gold Portfolio Shares to the
shareholders of Precious Metals and Minerals Portfolio in liquidation
of Precious Metals and Minerals Portfolio;
(iii) No gain or loss will be recognized by Gold Portfolio on the
receipt of Precious Metals and Minerals Portfolio's assets in exchange
solely for the Gold Portfolio Shares and the assumption of Precious
Metals and Minerals Portfolio's liabilities;
(iv) The basis of Precious Metals and Minerals Portfolio's assets in
the hands of Gold Portfolio will be the same as the basis of such
assets in Precious Metals and Minerals Portfolio's hands immediately
prior to the Reorganization;
(v) Gold Portfolio's holding period in the assets to be received
from Precious Metals and Minerals Portfolio will include Precious
Metals and Minerals Portfolio's holding period in such assets;
(vi) A Precious Metals and Minerals Portfolio shareholder will
recognize no gain or loss on the exchange of his or her shares of
beneficial interest in Precious Metals and Minerals Portfolio for the
Gold Portfolio Shares in the Reorganization;
(vii) A Precious Metals and Minerals Portfolio shareholder's basis
in the Gold Portfolio Shares to be received by him or her will be the
same as his or her basis in the Precious Metals and Minerals Portfolio
shares exchanged therefor;
(viii) A Precious Metals and Minerals Portfolio shareholder's
holding period for his or her Gold Portfolio Shares will include the
holding period of Precious Metals and Minerals Portfolio shares
exchanged, provided that those Precious Metals and Minerals Portfolio
shares were held as capital assets on the date of the Reorganization.
Notwithstanding anything herein to the contrary, neither Precious
Metals and Minerals Portfolio nor Gold Portfolio may waive the
conditions set forth in this subsection 10(f).
11. COVENANTS OF GOLD PORTFOLIO AND PRECIOUS METALS AND MINERALS
PORTFOLIO.
(a) Gold Portfolio and Precious Metals and Minerals Portfolio each
covenants to operate its respective business in the ordinary course
between the date hereof and the Closing Date, it being understood that
such ordinary course of business will include the payment of customary
dividends and distributions;
(b) Precious Metals and Minerals Portfolio covenants that it is not
acquiring the Gold Portfolio Shares for the purpose of making any
distribution other than in accordance with the terms of this
Agreement;
(c) Precious Metals and Minerals Portfolio covenants that it will
assist Gold Portfolio in obtaining such information as Gold Portfolio
reasonably requests concerning the beneficial ownership of Precious
Metals and Minerals Portfolio's shares; and
(d) Precious Metals and Minerals Portfolio covenants that its
liquidation and termination will be effected in the manner provided in
its Amended and Restated Declaration of Trust in accordance with
applicable law and after the Closing Date, Precious Metals and
Minerals Portfolio will not conduct any business except in connection
with its liquidation and termination.
12. TERMINATION; WAIVER.
Gold Portfolio and Precious Metals and Minerals Portfolio may
terminate this Agreement by mutual agreement. In addition, either Gold
Portfolio or Precious Metals and Minerals Portfolio may at its option
terminate this Agreement at or prior to the Closing Date because:
(i) of a material breach by the other of any representation,
warranty, or agreement contained herein to be performed at or prior to
the Closing Date; or
(ii) a condition herein expressed to be precedent to the obligations
of the terminating party has not been met and it reasonably appears
that it will not or cannot be met.
In the event of any such termination, there shall be no liability for
damages on the part of Precious Metals and Minerals Portfolio or Gold
Portfolio, or their respective Trustees or officers.
13. SOLE AGREEMENT; AMENDMENTS; WAIVERS; SURVIVAL OF WARRANTIES.
(a) This Agreement supersedes all previous correspondence and oral
communications between the parties regarding the subject matter
hereof, constitutes the only understanding with respect to such
subject matter, may not be changed except by a letter of agreement
signed by each party hereto and shall be construed in accordance with
and governed by the laws of the Commonwealth of Massachusetts.
(b) This Agreement may be amended, modified, or supplemented in such
manner as may be mutually agreed upon in writing by the respective
President, any Vice President, or Treasurer of Gold Portfolio or
Precious Metals and Minerals Portfolio; provided, however, that
following the shareholders' meeting called by Precious Metals and
Minerals Portfolio pursuant to Section 7 of this Agreement, no such
amendment may have the effect of changing the provisions for
determining the number of Gold Portfolio Shares to be paid to Precious
Metals and Minerals Portfolio shareholders under this Agreement to the
detriment of such shareholders without their further approval.
(c) Either Fund may waive any condition to its obligations hereunder,
provided that such waiver does not have any material adverse effect on
the interests of such Fund's shareholders.
The representations, warranties, and covenants contained in the
Agreement, or in any document delivered pursuant hereto or in
connection herewith, shall survive the consummation of the
transactions contemplated hereunder.
14. DECLARATION OF TRUST.
A copy of the Funds' Declaration of Trust, as restated and amended,
is on file with the Secretary of State of the Commonwealth of
Massachusetts, and notice is hereby given that this instrument is
executed on behalf of the Trustees of each Fund as trustees and not
individually and that the obligations of each Fund under this
instrument are not binding upon any of such Fund's Trustees, officers,
or shareholders individually but are binding only upon the assets and
property of such Fund. Each Fund agrees that its obligations hereunder
apply only to such Fund and not to its shareholders individually or to
the Trustees of such Fund.
15. ASSIGNMENT.
This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment
or transfer of any rights or obligations hereunder shall be made by
any party without the written consent of the other parties. Nothing
herein expressed or implied is intended or shall be construed to
confer upon or give any person, firm, or corporation other than the
parties hereto and their respective successors and assigns any rights
or remedies under or by reason of this Agreement.
This Agreement may be executed in any number of counterparts, each of
which, when executed and delivered, shall be deemed to be an original.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by an appropriate officer.
[SIGNATURE LINES OMITTED]
Like securities of all mutual funds, these securities have
not been approved or disapproved by the Securities
and Exchange Commission, and the Securities and
Exchange Commission has not determined if this
prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.
FIDELITY
SELECT
PORTFOLIOS(REGISTERED TRADEMARK)
FUND TRADING
NUMBER SYMBOL
AIR TRANSPORTATION PORTFOLIO 034 FSAIX
AUTOMOTIVE PORTFOLIO 502 FSAVX
BIOTECHNOLOGY PORTFOLIO 042 FBIOX
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO 068 FSLBX
BUSINESS SERVICES AND OUTSOURCING 353 FBSOX
CHEMICALS PORTFOLIO 069 FSCHX
COMPUTERS PORTFOLIO 007 FDCPX
CONSTRUCTION AND HOUSING PORTFOLIO 511 FSHOX
CONSUMER INDUSTRIES PORTFOLIO 517 FSCPX
CYCLICAL INDUSTRIES PORTFOLIO 515 FCYCF
DEFENSE AND AEROSPACE PORTFOLIO 067 FSDAX
DEVELOPING COMMUNICATIONS PORTFOLIO 518 FSDCX
ELECTRONICS PORTFOLIO 008 FSELX
ENERGY PORTFOLIO 060 FSENX
ENERGY SERVICE PORTFOLIO 043 FSESX
ENVIRONMENTAL SERVICES PORTFOLIO 516 FSLEX
FINANCIAL SERVICES PORTFOLIO 066 FIDSX
FOOD AND AGRICULTURE PORTFOLIO 009 FDFAX
GOLD PORTFOLIO 041 FSAGX
HEALTH CARE PORTFOLIO 063 FSPHX
HOME FINANCE PORTFOLIO 098 FSVLX
INDUSTRIAL EQUIPMENT PORTFOLIO 510 FSCGX
INDUSTRIAL MATERIALS PORTFOLIO 509 FSDPX
INSURANCE PORTFOLIO 045 FSPCX
LEISURE PORTFOLIO 062 FDLSX
MEDICAL DELIVERY PORTFOLIO 505 FSHCX
MEDICAL EQUIPMENT AND SYSTEMS PORTFOLIO 354 FSMEX
MULTIMEDIA PORTFOLIO 503 FBMPX
NATURAL GAS PORTFOLIO 513 FSNGX
NATURAL RESOURCES PORTFOLIO 514 FNATF
PAPER AND FOREST PRODUCTS PORTFOLIO 506 FSPFX
PRECIOUS METALS AND MINERALS PORTFOLIO 061 FDPMX
REGIONAL BANKS PORTFOLIO 507 FSRBX
RETAILING PORTFOLIO 046 FSRPX
SOFTWARE AND COMPUTER SERVICES PORTFOLIO 028 FSCSX
TECHNOLOGY PORTFOLIO 064 FSPTX
TELECOMMUNICATIONS PORTFOLIO 096 FSTCX
TRANSPORTATION PORTFOLIO 512 FSRFX
UTILITIES GROWTH PORTFOLIO 065 FSUTX
MONEY MARKET PORTFOLIO 085 FSLXX
PROSPECTUS
APRIL 29, 1999
(FIDELITY_LOGO_GRAPHIC)(REGISTERED TRADEMARK)
82 DEVONSHIRE STREET, BOSTON, MA 02109
CONTENTS
FUND SUMMARY 2 INVESTMENT SUMMARY
17 PERFORMANCE
40 FEE TABLE
FUND BASICS 57 INVESTMENT DETAILS
70 VALUING SHARES
SHAREHOLDER INFORMATION 70 BUYING AND SELLING SHARES
78 EXCHANGING SHARES
78 ACCOUNT FEATURES AND POLICIES
81 DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS
81 TAX CONSEQUENCES
FUND SERVICES 82 FUND MANAGEMENT
85 FUND DISTRIBUTION
APPENDIX 86 FINANCIAL HIGHLIGHTS
FUND SUMMARY
INVESTMENT SUMMARY
THE STOCK FUNDS
INVESTMENT OBJECTIVE
AIR TRANSPORTATION PORTFOLIO seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
Fidelity Management & Research Company (FMR)'s principal investment
strategies include:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in the regional, national, and
international movement of passengers, mail, and freight via aircraft.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) AIR TRANSPORTATION INDUSTRY CONCENTRATION. The
air transportation industry can be significantly affected by
competition within the industry, domestic and foreign economies,
government regulation, and the price of fuel.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
AUTOMOTIVE PORTFOLIO seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in the manufacture, marketing or sale of
automobiles, trucks, specialty vehicles, parts, tires, and related
services.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) AUTOMOTIVE INDUSTRY CONCENTRATION. The automotive
industry is highly cyclical and can be significantly affected by labor
relations and fluctuating component prices.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
BIOTECHNOLOGY PORTFOLIO seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in the research, development, and
manufacture of various biotechnological products, services, and
processes.
(small solid bullet) Potentially investing in securities of companies
that distribute biotechnological and biomedical products and companies
that benefit significantly from scientific and technological advances
in biotechnology.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) BIOTECHNOLOGY INDUSTRY CONCENTRATION. The
biotechnology industry can be significantly affected by patent
considerations, intense competition, rapid technological change and
obsolescence, and government regulation.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO seeks capital
appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in stock brokerage, commodity brokerage,
investment banking, tax-advantaged investment or investment sales,
investment management, or related investment advisory services.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) BROKERAGE AND INVESTMENT MANAGEMENT INDUSTRY
CONCENTRATION. The brokerage and investment management industry can be
significantly affected by stock and bond market activity, changes in
regulations, brokerage commission structure, and a competitive
environment combined with the high operating leverage inherent in
companies in this industry.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
BUSINESS SERVICES AND OUTSOURCING PORTFOLIO seeks capital
appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in providing business-related services
to companies and other organizations.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) BUSINESS SERVICES AND OUTSOURCING INDUSTRY
CONCENTRATION. The business services and outsourcing industry is
subject to continued demand for such services and can be significantly
affected by competitive pressures, such as technological developments,
fixed-rate pricing, and the ability to attract and retain skilled
employees.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
CHEMICALS PORTFOLIO seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in the research, development,
manufacture or marketing of products or services related to the
chemical process industries.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) CHEMICAL INDUSTRY CONCENTRATION. The chemical
industry can be significantly affected by intense competition, product
obsolescence, and government regulation and can be subject to risks
associated with the production, handling and disposal of hazardous
components.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
COMPUTERS PORTFOLIO seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in research, design, development,
manufacture or distribution of products, processes or services that
relate to currently available or experimental hardware technology
within the computer industry.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) COMPUTER INDUSTRY CONCENTRATION. The computer
industry can be significantly affected by competitive pressures,
changing domestic and international demand, research and development
costs, and product obsolescence.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
CONSTRUCTION AND HOUSING PORTFOLIO seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in the design and construction of
residential, commercial, industrial and public works facilities, as
well as companies engaged in the manufacture, supply, distribution or
sale of products or services to these construction industries.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) CONSTRUCTION AND HOUSING INDUSTRY CONCENTRATION.
The construction and housing industry can be significantly affected by
changes in government spending, interest rates, consumer confidence
and spending, taxation, demographic patterns, housing starts and the
level of new and existing home sales.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
CONSUMER INDUSTRIES PORTFOLIO seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in the manufacture and distribution of
goods to consumers both domestically and internationally.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) CONSUMER INDUSTRY CONCENTRATION. The consumer
industries can be significantly affected by the performance of the
overall economy, interest rates, competition, consumer confidence and
spending, and changes in demographics and consumer tastes.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
CYCLICAL INDUSTRIES PORTFOLIO seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in the research, development,
manufacture, distribution, supply, or sale of materials, equipment,
products or services related to cyclical industries.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) CYCLICAL INDUSTRY CONCENTRATION. Cyclical
industries can be significantly affected by general economic trends,
changes in consumer sentiment and spending, commodity prices,
legislation, government regulation and spending, import controls, and
worldwide competition, and can be subject to liability for
environmental damage, depletion of resources, and mandated
expenditures for safety and pollution control.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
DEFENSE AND AEROSPACE PORTFOLIO seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in the research, manufacture or sale of
products or services related to the defense or aerospace industries.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) DEFENSE AND AEROSPACE INDUSTRY CONCENTRATION. The
defense and aerospace industry can be significantly affected by
government defense and aerospace regulation and spending policies.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
DEVELOPING COMMUNICATIONS PORTFOLIO seeks capital appreciation.
The fund is subject to the following principal investment risks:
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in the development, manufacture or sale
of emerging communications services or equipment.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) DEVELOPING COMMUNICATIONS INDUSTRY CONCENTRATION.
The developing communications industry can be significantly affected
by failure to obtain, or delays in obtaining, financing or regulatory
approval, intense competition, product compatibility, consumer
preferences, and rapid obsolescence.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
ELECTRONICS PORTFOLIO seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in the design, manufacture, or sale of
electronic components; equipment vendors to electronic component
manufacturers; electronic component distributors; and electronic
instruments and electronic systems vendors.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) ELECTRONICS INDUSTRY CONCENTRATION. The
electronics industry can be significantly affected by rapid
obsolescence, intense competition and global demand.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
ENERGY PORTFOLIO seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in the energy field, including the
conventional areas of oil, gas, electricity and coal, and newer
sources of energy such as nuclear, geothermal, oil shale, and solar
power.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) ENERGY INDUSTRY CONCENTRATION. The energy
industry can be significantly affected by fluctuations in price and
supply of energy fuels, energy conservation, the success of
exploration projects, and tax and other government regulations.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
ENERGY SERVICE PORTFOLIO seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in the energy service field, including
those that provide services and equipment to the conventional areas of
oil, gas, electricity and coal, and newer sources of energy such as
nuclear, geothermal, oil shale, and solar power.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) ENERGY SERVICE INDUSTRY CONCENTRATION. The energy
service industry can be significantly affected by the supply of and
demand for specific products or services, the supply of and demand for
oil and gas, the price of oil and gas, exploration and production
spending, government regulation, world events, and economic
conditions.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
ENVIRONMENTAL SERVICES PORTFOLIO seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in the research, development,
manufacture or distribution of products, processes or services related
to waste management or pollution control.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) ENVIRONMENTAL SERVICES INDUSTRY CONCENTRATION.
The environmental services industry can be significantly affected by
intense competition and legislation resulting in more strict
government regulations and enforcement policies and specific
expenditures for cleanup efforts, and can be subject to risks
associated with hazardous materials.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
FINANCIAL SERVICES PORTFOLIO seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in providing financial services to
consumers and industry.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) FINANCIAL SERVICES INDUSTRY CONCENTRATION. The
financial services industries are subject to extensive government
regulation and relatively rapid change due to increasingly blurred
distinctions between service segments, and can be significantly
affected by availability and cost of capital funds, changes in
interest rates, and price competition.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
FOOD AND AGRICULTURE PORTFOLIO seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in the manufacture, sale, or
distribution of food and beverage products, agricultural products, and
products related to the development of new food technologies.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) FOOD AND AGRICULTURE INDUSTRY CONCENTRATION. The
food and agriculture industry can be significantly affected by
demographic and product trends, food fads, marketing campaigns,
environmental factors and government regulation.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
GOLD PORTFOLIO seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks and in
certain precious metals.
(small solid bullet) Investing primarily in companies engaged in
exploration, mining, processing, or dealing in gold, or to a lesser
degree, in silver, platinum, diamonds, or other precious metals and
minerals.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in gold-related activities, and in gold
bullion or coins.
(small solid bullet) Potentially investing in other precious metals,
securities indexed to the price of precious metals, and securities of
companies that manufacture and distribute precious metal and minerals
products (such as jewelry, watches, and metal foil and leaf) and
companies that invest in other companies engaged in gold and other
precious metal and mineral-related activities.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) GOLD INDUSTRY CONCENTRATION. The gold industry
can be significantly affected by international monetary and political
developments such as currency devaluations or revaluations, central
bank movements, economic and social conditions within a country, trade
imbalances, or trade or currency restrictions between countries.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
HEALTH CARE PORTFOLIO seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in the design, manufacture, or sale of
products or services used for or in connection with health care or
medicine.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) HEALTH CARE INDUSTRY CONCENTRATION. The health
care industries are subject to government regulation and government
approval of products and services, which could have a significant
effect on price and availability, and can be significantly affected by
rapid obsolescence.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
HOME FINANCE PORTFOLIO seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in investing in real estate, usually
through mortgages and other consumer-related loans.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) HOME FINANCE INDUSTRY CONCENTRATION. The home
finance industry can be significantly affected by regulatory changes,
interest rate movements, home mortgage demand, refinancing activity,
and residential delinquency trends.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
INDUSTRIAL EQUIPMENT PORTFOLIO seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in the manufacture, distribution, or
service of products and equipment for the industrial sector, including
integrated producers of capital equipment, parts suppliers, and
subcontractors.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) INDUSTRIAL EQUIPMENT INDUSTRY CONCENTRATION. The
industrial equipment industry can be significantly affected by overall
capital spending levels, economic cycles, technical obsolescence,
labor relations, and government regulations.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
INDUSTRIAL MATERIALS PORTFOLIO seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in the manufacture, mining, processing,
or distribution of raw materials and intermediate goods used in the
industrial sector.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) INDUSTRIAL MATERIALS INDUSTRY CONCENTRATION. The
industrial materials industry can be significantly affected by the
level and volatility of commodity prices, the exchange value of the
dollar, import controls, worldwide competition, liability for
environmental damage, depletion of resources, and mandated
expenditures for safety and pollution control.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
INSURANCE PORTFOLIO seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in underwriting, reinsuring, selling,
distributing, or placing of property and casualty, life, or health
insurance.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) INSURANCE INDUSTRY CONCENTRATION. The insurance
industry is subject to extensive government regulation and can be
significantly affected by interest rates, general economic conditions,
and price and marketing competition. Different segments of the
industry can be significantly affected by natural disasters, mortality
and morbidity rates, and environmental clean-up.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
LEISURE PORTFOLIO seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in the design, production, or
distribution of goods or services in the leisure industries.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) LEISURE INDUSTRY CONCENTRATION. The leisure
industry can be significantly affected by changing consumer tastes,
intense competition, technological developments and government
regulation.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
MEDICAL DELIVERY PORTFOLIO seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in the ownership or management of
hospitals, nursing homes, health maintenance organizations, and other
companies specializing in the delivery of health care services.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) MEDICAL DELIVERY INDUSTRY CONCENTRATION. The
medical delivery industry is subject to extensive government
regulation and can be significantly affected by government
reimbursement for medical expenses, rising costs of medical products
and services, a shift away from traditional health insurance, and an
increased emphasis on outpatient services.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
MEDICAL EQUIPMENT AND SYSTEMS PORTFOLIO seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in research, development, manufacture,
distribution, supply or sale of medical equipment and devices and
related technologies.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) MEDICAL EQUIPMENT AND SYSTEMS INDUSTRY
CONCENTRATION. The medical equipment and systems industry can be
significantly affected by patent considerations, rapid technological
change and obsolescence, government regulation, and government
reimbursement for medical expenses.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
MULTIMEDIA PORTFOLIO seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in the development, production, sale,
and distribution of goods or services used in the broadcast and media
industries.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) MULTIMEDIA INDUSTRY CONCENTRATION. The multimedia
industry can be significantly affected by the federal deregulation of
cable and broadcasting, competitive pressures and government
regulation.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
NATURAL GAS PORTFOLIO seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in the production, transmission, and
distribution of natural gas, and involved in the exploration of
potential natural gas sources, as well as those companies that provide
services and equipment to natural gas producers, refineries,
cogeneration facilities, converters, and distributors.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) NATURAL GAS INDUSTRY CONCENTRATION. The natural
gas industry is subject to changes in price and supply of energy
sources and can be significantly affected by events relating to
international politics, energy conservation, the success of energy
source exploration projects, and tax and other government regulations.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
NATURAL RESOURCES PORTFOLIO seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks and in
certain precious metals.
(small solid bullet) Investing primarily in companies that own or
develop natural resources, or supply goods and services to such
companies.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in owning or developing natural
resources, or supplying goods and services to such companies, and in
precious metals.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) NATURAL RESOURCES INDUSTRY CONCENTRATION. The
natural resources industries can be significantly affected by events
relating to international political and economic developments, energy
conservation, the success of exploration projects, and tax and other
government regulations.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
PAPER AND FOREST PRODUCTS PORTFOLIO seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in the manufacture, research, sale, or
distribution of paper products, packaging products, building
materials, and other products related to the paper and forest products
industry.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) PAPER AND FOREST PRODUCTS INDUSTRY CONCENTRATION.
The paper and forest products industry can be significantly affected
by the health of the economy, worldwide production capacity, and
interest rates.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
PRECIOUS METALS AND MINERALS PORTFOLIO seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks and in
certain precious metals.
(small solid bullet) Investing primarily in companies engaged in
exploration, mining, processing, or dealing in gold, silver, platinum,
diamonds, or other precious metals and minerals.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in exploration, mining, processing, or
dealing in gold, silver, platinum, diamonds, or other precious metals
and minerals, and in precious metals.
(small solid bullet) Potentially investing in securities of companies
that invest in other companies engaged in gold and other precious
metal and mineral-related activities.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) PRECIOUS METALS AND MINERALS INDUSTRY
CONCENTRATION. The precious metals and minerals industry can be
significantly affected by international political and monetary
developments such as currency devaluations or revaluations, economic
and social conditions within a country, trade imbalances, or trade or
currency restrictions between countries.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
REGIONAL BANKS PORTFOLIO seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in accepting deposits and making
commercial and principally non-mortgage consumer loans (these
companies concentrate their operations in a specific part of the
country).
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) REGIONAL BANKS INDUSTRY CONCENTRATION. The
regional banking industry can be significantly affected by legislation
that would reduce the separation between commercial and investment
banking businesses and could change capitalization requirements and
the savings and loan industry and increase competition, and by changes
in general economic conditions and interest rates.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
RETAILING PORTFOLIO seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in merchandising finished goods and
services primarily to individual consumers.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) RETAIL INDUSTRY CONCENTRATION. The retail
industry can be significantly affected by consumer confidence and
spending, intense competition, and changing consumer tastes.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
SOFTWARE AND COMPUTER SERVICES PORTFOLIO seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in research, design, production or
distribution of products or processes that relate to software or
information-based services.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) SOFTWARE AND COMPUTER SERVICES INDUSTRY
CONCENTRATION. The software and computer services industry can be
significantly affected by competitive pressures, which can lead to
aggressive pricing and slower selling cycles.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
TECHNOLOGY PORTFOLIO seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in offering, using or developing
products, processes or services that will provide or will benefit
significantly from technological advances and improvements.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) TECHNOLOGY INDUSTRY CONCENTRATION. The technology
industries can be significantly affected by obsolescence of existing
technology, short product cycles, falling prices and profits, and
competition from new market entrants.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
TELECOMMUNICATIONS PORTFOLIO seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in the development, manufacture, or sale
of communications services or communications equipment.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) TELECOMMUNICATIONS INDUSTRY CONCENTRATION. The
telecommunications industry is subject to government regulation of
rates of return and services that may be offered and can be
significantly affected by intense competition.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
TRANSPORTATION PORTFOLIO seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in providing transportation services or
companies principally engaged in the design, manufacture,
distribution, or sale of transportation equipment.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) TRANSPORTATION INDUSTRY CONCENTRATION. The
transportation industry can be significantly affected by changes in
the economy, fuel prices, labor relations, insurance costs and
government regulation.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
INVESTMENT OBJECTIVE
UTILITIES GROWTH PORTFOLIO seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in the public utilities industry and
companies deriving a majority of their revenues from their public
utility operations.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) UTILITIES INDUSTRY CONCENTRATION. The utilities
industries can be significantly affected by government regulation,
financing difficulties, supply and demand of services or fuel, and
natural resource conservation.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. The value of securities of smaller
issuers can be more volatile than that of larger issuers.
In addition, each stock fund (except Financial Services, Home Finance
and Regional Banks) is considered non-diversified and can invest a
greater portion of assets in securities of individual issuers than a
diversified fund. As a result, changes in the market value of a single
issuer could cause greater fluctuations in share price than would
occur in a more diversified fund.
An investment in a stock fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of a stock fund, they could be worth more or
less than what you paid for them.
THE MONEY MARKET FUND
INVESTMENT OBJECTIVE
MONEY MARKET PORTFOLIO seeks to provide high current income,
consistent with preservation of capital and liquidity.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing in U.S. dollar-denominated money market
securities, including U.S. Government securities and repurchase
agreements, and entering into reverse repurchase agreements.
(small solid bullet) Investing at least 80% of assets in money market
instruments.
(small solid bullet) Investing more than 25% of total assets in the
financial services industry.
(small solid bullet) Investing in compliance with industry-standard
requirements for money market funds for the quality, maturity and
diversification of investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a money market security to decrease.
(small solid bullet) FOREIGN EXPOSURE. Entities located in foreign
countries can be affected by adverse political, regulatory, market or
economic developments in those countries.
(small solid bullet) FINANCIAL SERVICES EXPOSURE. Changes in
government regulation and interest rates and economic downturns can
have a significant negative affect on issuers in the financial
services sector.
(small solid bullet) ISSUER-SPECIFIC CHANGES. A decline in the credit
quality of an issuer or the provider of credit support or a
maturity-shortening structure for a security can cause the price of a
money market security to decrease.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency. Although the fund seeks to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in the fund.
PERFORMANCE
The following information illustrates the changes in the funds'
performance from year to year and compares the stock funds'
performance to the performance of a market index and an additional
index over various periods of time. Returns are based on past results
and are not an indication of future performance.
Because Business Services and Outsourcing and Medical Equipment and
Systems were new when this prospectus was printed, their performance
history is not included. Performance history will be available for
Business Services and Outsourcing and Medical Equipment and Systems
after each fund has been in operation for one calendar year.
YEAR-BY-YEAR RETURNS
The returns in the chart do not include the effect of each fund's
front-end sales charge. If the effect of the sales charge was
reflected, returns would be lower than those shown.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AIR TRANSPORTATION
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
26.33% -18.18% 37.06% 6.57% 30.89% -21.74% 59.54% 1.25% 31.14% 6.42%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 26.33
Row: 2, Col: 1, Value: -18.18
Row: 3, Col: 1, Value: 37.06
Row: 4, Col: 1, Value: 6.57
Row: 5, Col: 1, Value: 30.89
Row: 6, Col: 1, Value: -21.74
Row: 7, Col: 1, Value: 59.54
Row: 8, Col: 1, Value: 1.25
Row: 9, Col: 1, Value: 31.14
Row: 10, Col: 1, Value: 6.42
DURING THE PERIODS SHOWN IN THE CHART FOR AIR TRANSPORTATION, THE
HIGHEST RETURN FOR A QUARTER WAS 23.90% (QUARTER ENDING MARCH 31,
1991) AND THE LOWEST RETURN FOR A QUARTER WAS -26.72% (QUARTER ENDING
SEPTEMBER 30, 1998).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR AIR TRANSPORTATION
WAS 14.82%.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AUTOMOTIVE
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
4.10% -6.72% 37.33% 41.61% 35.38% -12.75% 13.43% 16.07% 16.78% 4.94%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 4.1
Row: 2, Col: 1, Value: -6.72
Row: 3, Col: 1, Value: 37.33
Row: 4, Col: 1, Value: 41.61
Row: 5, Col: 1, Value: 35.38
Row: 6, Col: 1, Value: -12.75
Row: 7, Col: 1, Value: 13.43
Row: 8, Col: 1, Value: 16.07
Row: 9, Col: 1, Value: 16.78
Row: 10, Col: 1, Value: 4.94
DURING THE PERIODS SHOWN IN THE CHART FOR AUTOMOTIVE, THE HIGHEST
RETURN FOR A QUARTER WAS 24.59% (QUARTER ENDING MARCH 31, 1992) AND
THE LOWEST RETURN FOR A QUARTER WAS -22.31% (QUARTER ENDING SEPTEMBER
30, 1990).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR AUTOMOTIVE WAS
- -7.29%.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BIOTECHNOLOGY
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
43.93% 44.35% 99.05% -10.34% 0.70% -18.18% 49.10% 5.61% 15.27% 29.72%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 43.93
Row: 2, Col: 1, Value: 44.34999999999999
Row: 3, Col: 1, Value: 99.05
Row: 4, Col: 1, Value: -10.34
Row: 5, Col: 1, Value: 0.7000000000000001
Row: 6, Col: 1, Value: -18.18
Row: 7, Col: 1, Value: 49.1
Row: 8, Col: 1, Value: 5.609999999999999
Row: 9, Col: 1, Value: 15.27
Row: 10, Col: 1, Value: 29.72
DURING THE PERIODS SHOWN IN THE CHART FOR BIOTECHNOLOGY, THE HIGHEST
RETURN FOR A QUARTER WAS 40.42% (QUARTER ENDING MARCH 31, 1991) AND
THE LOWEST RETURN FOR A QUARTER WAS -19.25% (QUARTER ENDING MARCH 31,
1993).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR BIOTECHNOLOGY WAS
9.08%.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BROKERAGE AND INVESTMENT
MANAGEMENT
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
14.06% -16.18% 82.26% 5.12% 49.33% -17.27% 23.59% 39.66% 62.32% 5.67%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 14.06
Row: 2, Col: 1, Value: -16.18
Row: 3, Col: 1, Value: 82.26000000000001
Row: 4, Col: 1, Value: 5.119999999999999
Row: 5, Col: 1, Value: 49.33
Row: 6, Col: 1, Value: -17.27
Row: 7, Col: 1, Value: 23.59
Row: 8, Col: 1, Value: 39.66
Row: 9, Col: 1, Value: 62.32
Row: 10, Col: 1, Value: 5.67
DURING THE PERIODS SHOWN IN THE CHART FOR BROKERAGE AND INVESTMENT
MANAGEMENT, THE HIGHEST RETURN FOR A QUARTER WAS 31.28% (QUARTER
ENDING MARCH 31, 1991) AND THE LOWEST RETURN FOR A QUARTER WAS -33.12%
(QUARTER ENDING SEPTEMBER 30, 1998).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR BROKERAGE AND
INVESTMENT MANAGEMENT WAS 15.47%.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CHEMICALS
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
17.31% -4.13% 38.66% 8.90% 12.76% 14.78% 21.45% 21.52% 16.48% -15.90%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 17.31
Row: 2, Col: 1, Value: -4.13
Row: 3, Col: 1, Value: 38.66
Row: 4, Col: 1, Value: 8.9
Row: 5, Col: 1, Value: 12.76
Row: 6, Col: 1, Value: 14.78
Row: 7, Col: 1, Value: 21.45
Row: 8, Col: 1, Value: 21.52
Row: 9, Col: 1, Value: 16.48
Row: 10, Col: 1, Value: -15.9
DURING THE PERIODS SHOWN IN THE CHART FOR CHEMICALS, THE HIGHEST
RETURN FOR A QUARTER WAS 17.65% (QUARTER ENDING MARCH 31, 1991) AND
THE LOWEST RETURN FOR A QUARTER WAS -19.95% (QUARTER ENDING SEPTEMBER
30, 1998).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR CHEMICALS WAS -1.38%.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COMPUTERS
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
6.84% 18.41% 30.75% 21.96% 28.87% 20.45% 51.83% 31.62% 0.10% 96.37%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 6.84
Row: 2, Col: 1, Value: 18.41
Row: 3, Col: 1, Value: 30.75
Row: 4, Col: 1, Value: 21.96
Row: 5, Col: 1, Value: 28.87
Row: 6, Col: 1, Value: 20.45
Row: 7, Col: 1, Value: 51.83
Row: 8, Col: 1, Value: 31.62
Row: 9, Col: 1, Value: 0.1
Row: 10, Col: 1, Value: 96.36999999999999
DURING THE PERIODS SHOWN IN THE CHART FOR COMPUTERS, THE HIGHEST
RETURN FOR A QUARTER WAS 39.44% (QUARTER ENDING DECEMBER 31, 1998) AND
THE LOWEST RETURN FOR A QUARTER WAS -27.00% (QUARTER ENDING SEPTEMBER
30, 1990).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR COMPUTERS WAS 13.50%.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONSTRUCTION AND HOUSING
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
16.60% -9.64% 41.31% 18.71% 33.61% -15.94% 28.78% 13.21% 29.83% 22.84%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 16.6
Row: 2, Col: 1, Value: -9.639999999999999
Row: 3, Col: 1, Value: 41.31
Row: 4, Col: 1, Value: 18.71
Row: 5, Col: 1, Value: 33.61
Row: 6, Col: 1, Value: -15.94
Row: 7, Col: 1, Value: 28.78
Row: 8, Col: 1, Value: 13.21
Row: 9, Col: 1, Value: 29.83
Row: 10, Col: 1, Value: 22.84
DURING THE PERIODS SHOWN IN THE CHART FOR CONSTRUCTION AND HOUSING,
THE HIGHEST RETURN FOR A QUARTER WAS 29.68% (QUARTER ENDING DECEMBER
31, 1998) AND THE LOWEST RETURN FOR A QUARTER WAS -25.81% (QUARTER
ENDING SEPTEMBER 30, 1990).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR CONSTRUCTION AND
HOUSING WAS -11.39%.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONSUMER INDUSTRIES
Calendar Years 1991 1992 1993 1994 1995 1996 1997 1998
38.53% 8.56% 24.67% -7.07% 28.30% 13.15% 38.06% 27.49%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 2, Col: 1, Value: nil
Row: 3, Col: 1, Value: 38.53
Row: 4, Col: 1, Value: 8.560000000000001
Row: 5, Col: 1, Value: 24.67
Row: 6, Col: 1, Value: -7.07
Row: 7, Col: 1, Value: 28.3
Row: 8, Col: 1, Value: 13.15
Row: 9, Col: 1, Value: 38.06
Row: 10, Col: 1, Value: 27.49
DURING THE PERIODS SHOWN IN THE CHART FOR CONSUMER INDUSTRIES, THE
HIGHEST RETURN FOR A QUARTER WAS 27.07% (QUARTER ENDING DECEMBER 31,
1998) AND THE LOWEST RETURN FOR A QUARTER WAS -15.37% (QUARTER ENDING
SEPTEMBER 30, 1998).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR CONSUMER INDUSTRIES
WAS 2.51%.
CYCLICAL INDUSTRIES
Calendar Year 1998
8.77%
Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 2, Col: 1, Value: 0.0
Row: 3, Col: 1, Value: 0.0
Row: 4, Col: 1, Value: 0.0
Row: 5, Col: 1, Value: 0.0
Row: 6, Col: 1, Value: 0.0
Row: 7, Col: 1, Value: 0.0
Row: 8, Col: 1, Value: 0.0
Row: 9, Col: 1, Value: 0.0
Row: 10, Col: 1, Value: 8.77
DURING THE PERIOD SHOWN IN THE CHART FOR CYCLICAL INDUSTRIES, THE
HIGHEST RETURN FOR A QUARTER WAS 17.39% (QUARTER ENDING DECEMBER 31,
1998) AND THE LOWEST RETURN FOR A QUARTER WAS -19.87% (QUARTER ENDING
SEPTEMBER 30, 1998).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR CYCLICAL INDUSTRIES
WAS -3.20%.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DEFENSE AND AEROSPACE
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
8.81% -4.58% 26.93% 0.00% 28.86% 1.76% 47.36% 25.03% 23.57% 4.34%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 8.810000000000001
Row: 2, Col: 1, Value: -4.58
Row: 3, Col: 1, Value: 26.93
Row: 4, Col: 1, Value: 0.0
Row: 5, Col: 1, Value: 28.86
Row: 6, Col: 1, Value: 1.76
Row: 7, Col: 1, Value: 47.36
Row: 8, Col: 1, Value: 25.03
Row: 9, Col: 1, Value: 23.57
Row: 10, Col: 1, Value: 4.34
DURING THE PERIODS SHOWN IN THE CHART FOR DEFENSE AND AEROSPACE, THE
HIGHEST RETURN FOR A QUARTER WAS 23.08% (QUARTER ENDING SEPTEMBER 30,
1997) AND THE LOWEST RETURN FOR A QUARTER WAS -18.25% (QUARTER ENDING
SEPTEMBER 30, 1998).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR DEFENSE AND AEROSPACE
WAS -0.18%.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DEVELOPING COMMUNICATIONS
Calendar Years 1991 1992 1993 1994 1995 1996 1997 1998
61.39% 17.21% 31.77% 15.14% 17.37% 14.55% 6.04% 67.68%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 2, Col: 1, Value: nil
Row: 3, Col: 1, Value: 61.39
Row: 4, Col: 1, Value: 17.21
Row: 5, Col: 1, Value: 31.77
Row: 6, Col: 1, Value: 15.14
Row: 7, Col: 1, Value: 17.37
Row: 8, Col: 1, Value: 14.55
Row: 9, Col: 1, Value: 6.04
Row: 10, Col: 1, Value: 67.67999999999999
DURING THE PERIODS SHOWN IN THE CHART FOR DEVELOPING COMMUNICATIONS,
THE HIGHEST RETURN FOR A QUARTER WAS 48.91% (QUARTER ENDING DECEMBER
31, 1998) AND THE LOWEST RETURN FOR A QUARTER WAS -15.48% (QUARTER
ENDING MARCH 31, 1997).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR DEVELOPING
COMMUNICATIONS WAS 25.57%.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ELECTRONICS
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
15.67% 5.81% 35.29% 27.44% 32.08% 17.17% 68.97% 41.72% 13.72% 51.12%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 15.67
Row: 2, Col: 1, Value: 5.81
Row: 3, Col: 1, Value: 35.29000000000001
Row: 4, Col: 1, Value: 27.44
Row: 5, Col: 1, Value: 32.08
Row: 6, Col: 1, Value: 17.17
Row: 7, Col: 1, Value: 68.97
Row: 8, Col: 1, Value: 41.72000000000001
Row: 9, Col: 1, Value: 13.72
Row: 10, Col: 1, Value: 51.12000000000001
DURING THE PERIODS SHOWN IN THE CHART FOR ELECTRONICS, THE HIGHEST
RETURN FOR A QUARTER WAS 56.77% (QUARTER ENDING DECEMBER 31, 1998) AND
THE LOWEST RETURN FOR A QUARTER WAS -31.76% (QUARTER ENDING SEPTEMBER
30, 1990).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR ELECTRONICS WAS
5.80%.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ENERGY
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
42.83% -4.49% 0.04% -2.39% 19.15% 0.41% 21.38% 32.47% 10.28% -14.74%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 42.83
Row: 2, Col: 1, Value: -4.49
Row: 3, Col: 1, Value: 0.04000000000000001
Row: 4, Col: 1, Value: -2.93
Row: 5, Col: 1, Value: 19.15
Row: 6, Col: 1, Value: 0.41
Row: 7, Col: 1, Value: 21.38
Row: 8, Col: 1, Value: 32.47
Row: 9, Col: 1, Value: 10.28
Row: 10, Col: 1, Value: -14.74
DURING THE PERIODS SHOWN IN THE CHART FOR ENERGY, THE HIGHEST RETURN
FOR A QUARTER WAS 16.27% (QUARTER ENDING MARCH 31, 1993) AND THE
LOWEST RETURN FOR A QUARTER WAS -11.75% (QUARTER ENDING SEPTEMBER 30,
1998).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR ENERGY WAS 11.07%.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ENERGY SERVICE
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
59.44% 1.75% -23.48% 3.43% 20.96% 0.57% 40.87% 49.08% 51.87% -49.72%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 59.44
Row: 2, Col: 1, Value: 1.75
Row: 3, Col: 1, Value: -23.48
Row: 4, Col: 1, Value: 3.43
Row: 5, Col: 1, Value: 20.96
Row: 6, Col: 1, Value: 0.5700000000000001
Row: 7, Col: 1, Value: 40.87
Row: 8, Col: 1, Value: 49.08
Row: 9, Col: 1, Value: 51.87
Row: 10, Col: 1, Value: -49.72000000000001
DURING THE PERIODS SHOWN IN THE CHART FOR ENERGY SERVICE, THE HIGHEST
RETURN FOR A QUARTER WAS 36.86% (QUARTER ENDING SEPTEMBER 30, 1997)
AND THE LOWEST RETURN FOR A QUARTER WAS -34.78% (QUARTER ENDING
SEPTEMBER 30, 1998).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR ENERGY SERVICE WAS
27.02%.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ENVIRONMENTAL SERVICES
Calendar Years 1990 1991 1992 1993 1994 1995 1996 1997 1998
-2.48% 7.66% -1.37% -0.62% -9.55% 26.13% 15.61% 17.87% -16.96%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 2, Col: 1, Value: -2.48
Row: 3, Col: 1, Value: 7.659999999999999
Row: 4, Col: 1, Value: -1.37
Row: 5, Col: 1, Value: -0.6200000000000001
Row: 6, Col: 1, Value: -9.550000000000001
Row: 7, Col: 1, Value: 26.13
Row: 8, Col: 1, Value: 15.61
Row: 9, Col: 1, Value: 17.87
Row: 10, Col: 1, Value: -16.96
DURING THE PERIODS SHOWN IN THE CHART FOR ENVIRONMENTAL SERVICES, THE
HIGHEST RETURN FOR A QUARTER WAS 13.75% (QUARTER ENDING MARCH 31,
1991) AND THE LOWEST RETURN FOR A QUARTER WAS -19.57% (QUARTER ENDING
SEPTEMBER 30, 1998).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR ENVIRONMENTAL
SERVICES WAS -8.78%.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FINANCIAL SERVICES
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
19.34% -24.33% 61.63% 42.82% 17.55% -3.65% 47.34% 32.12% 41.98% 14.13%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 19.34
Row: 2, Col: 1, Value: -24.33
Row: 3, Col: 1, Value: 61.63
Row: 4, Col: 1, Value: 42.82
Row: 5, Col: 1, Value: 17.55
Row: 6, Col: 1, Value: -3.65
Row: 7, Col: 1, Value: 47.34
Row: 8, Col: 1, Value: 32.12000000000001
Row: 9, Col: 1, Value: 41.98
Row: 10, Col: 1, Value: 14.13
DURING THE PERIODS SHOWN IN THE CHART FOR FINANCIAL SERVICES, THE
HIGHEST RETURN FOR A QUARTER WAS 27.43% (QUARTER ENDING MARCH 31,
1991) AND THE LOWEST RETURN FOR A QUARTER WAS -29.89% (QUARTER ENDING
SEPTEMBER 30, 1990).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR FINANCIAL SERVICES
WAS 5.74%.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FOOD AND AGRICULTURE
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
38.87% 9.33% 34.09% 6.03% 8.82% 6.09% 36.64% 13.35% 30.34% 15.69%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 38.87
Row: 2, Col: 1, Value: 9.33
Row: 3, Col: 1, Value: 34.09
Row: 4, Col: 1, Value: 6.03
Row: 5, Col: 1, Value: 8.82
Row: 6, Col: 1, Value: 6.09
Row: 7, Col: 1, Value: 36.64
Row: 8, Col: 1, Value: 13.35
Row: 9, Col: 1, Value: 30.34
Row: 10, Col: 1, Value: 15.69
DURING THE PERIODS SHOWN IN THE CHART FOR FOOD AND AGRICULTURE, THE
HIGHEST RETURN FOR A QUARTER WAS 16.88% (QUARTER ENDING DECEMBER 31,
1998) AND THE LOWEST RETURN FOR A QUARTER WAS -10.29% (QUARTER ENDING
SEPTEMBER 30, 1990).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR FOOD AND AGRICULTURE
WAS -8.12%.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GOLD
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
22.04% -17.20% -6.14% -3.09% 78.68% -15.46% 11.20% 19.92% -39.39% -8.64%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 22.04
Row: 2, Col: 1, Value: -17.2
Row: 3, Col: 1, Value: -6.14
Row: 4, Col: 1, Value: -3.09
Row: 5, Col: 1, Value: 78.67999999999999
Row: 6, Col: 1, Value: -15.46
Row: 7, Col: 1, Value: 11.2
Row: 8, Col: 1, Value: 19.92
Row: 9, Col: 1, Value: -39.39
Row: 10, Col: 1, Value: -8.639999999999999
DURING THE PERIODS SHOWN IN THE CHART FOR GOLD, THE HIGHEST RETURN FOR
A QUARTER WAS 32.47% (QUARTER ENDING JUNE 30, 1993) AND THE LOWEST
RETURN FOR A QUARTER WAS -32.11% (QUARTER ENDING DECEMBER 31, 1997).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR GOLD WAS -6.09%.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HEALTH CARE
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
42.49% 24.32% 83.69% -17.43% 2.42% 21.46% 45.86% 15.46% 31.15% 41.28%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 42.49
Row: 2, Col: 1, Value: 24.32
Row: 3, Col: 1, Value: 83.69
Row: 4, Col: 1, Value: -17.43
Row: 5, Col: 1, Value: 2.42
Row: 6, Col: 1, Value: 21.46
Row: 7, Col: 1, Value: 45.86
Row: 8, Col: 1, Value: 15.46
Row: 9, Col: 1, Value: 31.15
Row: 10, Col: 1, Value: 41.28
DURING THE PERIODS SHOWN IN THE CHART FOR HEALTH CARE, THE HIGHEST
RETURN FOR A QUARTER WAS 34.45% (QUARTER ENDING MARCH 31, 1991) AND
THE LOWEST RETURN FOR A QUARTER WAS -13.15% (QUARTER ENDING MARCH 31,
1992).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR HEALTH CARE WAS
1.99%.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HOME FINANCE
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
9.33% -15.08% 64.61% 57.85% 27.29% 2.68% 53.49% 36.88% 45.75% -14.81%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 9.33
Row: 2, Col: 1, Value: -15.08
Row: 3, Col: 1, Value: 64.61
Row: 4, Col: 1, Value: 57.84999999999999
Row: 5, Col: 1, Value: 27.29
Row: 6, Col: 1, Value: 2.68
Row: 7, Col: 1, Value: 53.49
Row: 8, Col: 1, Value: 36.88
Row: 9, Col: 1, Value: 45.75
Row: 10, Col: 1, Value: -14.81
DURING THE PERIODS SHOWN IN THE CHART FOR HOME FINANCE, THE HIGHEST
RETURN FOR A QUARTER WAS 30.19% (QUARTER ENDING MARCH 31, 1991) AND
THE LOWEST RETURN FOR A QUARTER WAS -25.76% (QUARTER ENDING SEPTEMBER
30, 1998).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR HOME FINANCE WAS
- -0.62%.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INDUSTRIAL EQUIPMENT
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
17.95% -15.51% 26.84% 11.34% 43.33% 3.13% 27.81% 26.71% 18.55% 12.67%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 17.95
Row: 2, Col: 1, Value: -15.51
Row: 3, Col: 1, Value: 26.84
Row: 4, Col: 1, Value: 11.34
Row: 5, Col: 1, Value: 43.33
Row: 6, Col: 1, Value: 3.13
Row: 7, Col: 1, Value: 27.81
Row: 8, Col: 1, Value: 26.71
Row: 9, Col: 1, Value: 18.55
Row: 10, Col: 1, Value: 12.67
DURING THE PERIODS SHOWN IN THE CHART FOR INDUSTRIAL EQUIPMENT, THE
HIGHEST RETURN FOR A QUARTER WAS 20.08% (QUARTER ENDING MARCH 31,
1991) AND THE LOWEST RETURN FOR A QUARTER WAS -29.18% (QUARTER ENDING
SEPTEMBER 30, 1990).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR INDUSTRIAL EQUIPMENT
WAS -1.47%.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INDUSTRIAL MATERIALS
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
4.45% -17.17% 35.81% 12.37% 21.38% 8.19% 15.39% 14.01% 1.75% -11.02%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 4.45
Row: 2, Col: 1, Value: -17.17
Row: 3, Col: 1, Value: 35.81
Row: 4, Col: 1, Value: 12.37
Row: 5, Col: 1, Value: 21.38
Row: 6, Col: 1, Value: 8.19
Row: 7, Col: 1, Value: 15.39
Row: 8, Col: 1, Value: 14.01
Row: 9, Col: 1, Value: 1.75
Row: 10, Col: 1, Value: -11.02
DURING THE PERIODS SHOWN IN THE CHART FOR INDUSTRIAL MATERIALS, THE
HIGHEST RETURN FOR A QUARTER WAS 12.69% (QUARTER ENDING MARCH 31,
1991) AND THE LOWEST RETURN FOR A QUARTER WAS -21.26% (QUARTER ENDING
SEPTEMBER 30, 1998).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR INDUSTRIAL MATERIALS
WAS 0.10%.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INSURANCE
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
37.83% -9.81% 36.68% 22.50% 8.18% -0.35% 34.81% 23.71% 42.47% 20.32%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 37.83
Row: 2, Col: 1, Value: -9.810000000000001
Row: 3, Col: 1, Value: 36.68
Row: 4, Col: 1, Value: 22.5
Row: 5, Col: 1, Value: 8.18
Row: 6, Col: 1, Value: -0.35
Row: 7, Col: 1, Value: 34.81
Row: 8, Col: 1, Value: 23.71
Row: 9, Col: 1, Value: 42.47
Row: 10, Col: 1, Value: 20.32
DURING THE PERIODS SHOWN IN THE CHART FOR INSURANCE, THE HIGHEST
RETURN FOR A QUARTER WAS 23.68% (QUARTER ENDING MARCH 31, 1991) AND
THE LOWEST RETURN FOR A QUARTER WAS -19.37% (QUARTER ENDING SEPTEMBER
30, 1990).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR INSURANCE WAS 0.97%.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LEISURE
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
31.21% -22.29% 32.94% 16.23% 39.55% -6.84% 26.96% 13.41% 41.29% 37.92%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 31.21
Row: 2, Col: 1, Value: -22.29
Row: 3, Col: 1, Value: 32.94
Row: 4, Col: 1, Value: 16.23
Row: 5, Col: 1, Value: 39.55
Row: 6, Col: 1, Value: -6.84
Row: 7, Col: 1, Value: 26.96
Row: 8, Col: 1, Value: 13.41
Row: 9, Col: 1, Value: 41.29000000000001
Row: 10, Col: 1, Value: 37.92
DURING THE PERIODS SHOWN IN THE CHART FOR LEISURE, THE HIGHEST RETURN
FOR A QUARTER WAS 32.19% (QUARTER ENDING DECEMBER 31, 1998) AND THE
LOWEST RETURN FOR A QUARTER WAS -22.70% (QUARTER ENDING SEPTEMBER 30,
1990).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR LEISURE WAS 16.40%.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MEDICAL DELIVERY
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
58.02% 16.26% 77.83% -13.19% 5.52% 19.84% 32.18% 11.00% 20.14% -6.16%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 58.02
Row: 2, Col: 1, Value: 16.26
Row: 3, Col: 1, Value: 77.83
Row: 4, Col: 1, Value: -13.19
Row: 5, Col: 1, Value: 5.52
Row: 6, Col: 1, Value: 19.84
Row: 7, Col: 1, Value: 32.18
Row: 8, Col: 1, Value: 11.0
Row: 9, Col: 1, Value: 20.14
Row: 10, Col: 1, Value: -6.159999999999999
DURING THE PERIODS SHOWN IN THE CHART FOR MEDICAL DELIVERY, THE
HIGHEST RETURN FOR A QUARTER WAS 41.61% (QUARTER ENDING MARCH 31,
1991) AND THE LOWEST RETURN FOR A QUARTER WAS -26.26% (QUARTER ENDING
SEPTEMBER 30, 1998).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR MEDICAL DELIVERY WAS
- -21.50%.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MULTIMEDIA
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
32.54% -26.21% 37.85% 21.50% 38.02% 4.00% 33.67% 1.07% 30.93% 35.69%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 32.54
Row: 2, Col: 1, Value: -26.21
Row: 3, Col: 1, Value: 37.84999999999999
Row: 4, Col: 1, Value: 21.5
Row: 5, Col: 1, Value: 38.02
Row: 6, Col: 1, Value: 4.0
Row: 7, Col: 1, Value: 33.67
Row: 8, Col: 1, Value: 1.07
Row: 9, Col: 1, Value: 30.93
Row: 10, Col: 1, Value: 35.69000000000001
DURING THE PERIODS SHOWN IN THE CHART FOR MULTIMEDIA, THE HIGHEST
RETURN FOR A QUARTER WAS 27.35% (QUARTER ENDING DECEMBER 31, 1998) AND
THE LOWEST RETURN FOR A QUARTER WAS -24.82% (QUARTER ENDING SEPTEMBER
30, 1990).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR MULTIMEDIA WAS
11.37%.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NATURAL GAS
Calendar Years 1994 1995 1996 1997 1998
-6.84% 30.38% 34.32% -8.06% -12.40%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 2, Col: 1, Value: nil
Row: 3, Col: 1, Value: nil
Row: 4, Col: 1, Value: nil
Row: 5, Col: 1, Value: nil
Row: 6, Col: 1, Value: -6.84
Row: 7, Col: 1, Value: 30.38
Row: 8, Col: 1, Value: 34.32
Row: 9, Col: 1, Value: -8.060000000000001
Row: 10, Col: 1, Value: -12.4
DURING THE PERIODS SHOWN IN THE CHART FOR NATURAL GAS, THE HIGHEST
RETURN FOR A QUARTER WAS 16.45% (QUARTER ENDING SEPTEMBER 30, 1997)
AND THE LOWEST RETURN FOR A QUARTER WAS -16.04% (QUARTER ENDING MARCH
31, 1997).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR NATURAL GAS WAS
7.20%.
NATURAL RESOURCES
Calendar Year 1998
-16.57%
Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 2, Col: 1, Value: nil
Row: 3, Col: 1, Value: nil
Row: 4, Col: 1, Value: nil
Row: 5, Col: 1, Value: nil
Row: 6, Col: 1, Value: nil
Row: 7, Col: 1, Value: nil
Row: 8, Col: 1, Value: nil
Row: 9, Col: 1, Value: nil
Row: 10, Col: 1, Value: -16.57
DURING THE PERIOD SHOWN IN THE CHART FOR NATURAL RESOURCES, THE
HIGHEST RETURN FOR A QUARTER WAS 4.82% (QUARTER ENDING MARCH 31, 1998)
AND THE LOWEST RETURN FOR A QUARTER WAS -11.34% (QUARTER ENDING
SEPTEMBER 30, 1998).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR NATURAL RESOURCES WAS
10.51%.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PAPER AND FOREST PRODUCTS
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
4.08% -15.11% 34.77% 12.05% 18.55% 14.14% 21.91% 7.07% 9.35% -7.89%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 4.08
Row: 2, Col: 1, Value: -15.11
Row: 3, Col: 1, Value: 34.77
Row: 4, Col: 1, Value: 12.05
Row: 5, Col: 1, Value: 18.55
Row: 6, Col: 1, Value: 14.14
Row: 7, Col: 1, Value: 21.91
Row: 8, Col: 1, Value: 7.07
Row: 9, Col: 1, Value: 9.350000000000001
Row: 10, Col: 1, Value: -7.89
DURING THE PERIODS SHOWN IN THE CHART FOR PAPER AND FOREST PRODUCTS,
THE HIGHEST RETURN FOR A QUARTER WAS 22.74% (QUARTER ENDING SEPTEMBER
30, 1994) AND THE LOWEST RETURN FOR A QUARTER WAS -21.04% (QUARTER
ENDING SEPTEMBER 30, 1998).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR PAPER AND FOREST
PRODUCTS WAS 1.41%.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRECIOUS METALS AND MINERALS
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
32.16% -21.07% 1.54% -21.87% 111.62% -1.14% -3.34% 5.42% -44.89% 0.10%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 32.16
Row: 2, Col: 1, Value: -21.07
Row: 3, Col: 1, Value: 1.54
Row: 4, Col: 1, Value: -21.87
Row: 5, Col: 1, Value: 111.62
Row: 6, Col: 1, Value: -1.14
Row: 7, Col: 1, Value: -3.34
Row: 8, Col: 1, Value: 5.42
Row: 9, Col: 1, Value: -44.89
Row: 10, Col: 1, Value: 0.1
DURING THE PERIODS SHOWN IN THE CHART FOR PRECIOUS METALS AND
MINERALS, THE HIGHEST RETURN FOR A QUARTER WAS 33.66% (QUARTER ENDING
JUNE 30, 1993) AND THE LOWEST RETURN FOR A QUARTER WAS -31.22%
(QUARTER ENDING DECEMBER 31, 1997).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR PRECIOUS METALS AND
MINERALS WAS -7.09%.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REGIONAL BANKS
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
26.65% -20.67% 65.79% 48.52% 11.17% 0.22% 46.77% 35.89% 45.56% 11.85%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 26.65
Row: 2, Col: 1, Value: -20.67
Row: 3, Col: 1, Value: 65.79000000000001
Row: 4, Col: 1, Value: 48.52
Row: 5, Col: 1, Value: 11.17
Row: 6, Col: 1, Value: 0.22
Row: 7, Col: 1, Value: 46.77
Row: 8, Col: 1, Value: 35.89
Row: 9, Col: 1, Value: 45.56
Row: 10, Col: 1, Value: 11.85
DURING THE PERIODS SHOWN IN THE CHART FOR REGIONAL BANKS, THE HIGHEST
RETURN FOR A QUARTER WAS 22.20% (QUARTER ENDING MARCH 31, 1991) AND
THE LOWEST RETURN FOR A QUARTER WAS -25.20% (QUARTER ENDING SEPTEMBER
30, 1990).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR REGIONAL BANKS WAS
- -3.13%.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
RETAILING
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
29.53% -5.03% 68.13% 22.08% 13.03% -5.01% 11.98% 20.86% 41.73% 45.76%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 29.53
Row: 2, Col: 1, Value: -5.03
Row: 3, Col: 1, Value: 68.13
Row: 4, Col: 1, Value: 22.08
Row: 5, Col: 1, Value: 13.03
Row: 6, Col: 1, Value: -5.01
Row: 7, Col: 1, Value: 11.98
Row: 8, Col: 1, Value: 20.86
Row: 9, Col: 1, Value: 41.73
Row: 10, Col: 1, Value: 45.76000000000001
DURING THE PERIODS SHOWN IN THE CHART FOR RETAILING, THE HIGHEST
RETURN FOR A QUARTER WAS 34.78% (QUARTER ENDING DECEMBER 31, 1998) AND
THE LOWEST RETURN FOR A QUARTER WAS -27.05% (QUARTER ENDING SEPTEMBER
30, 1990).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR RETAILING WAS 5.88%.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SOFTWARE AND COMPUTER SERVICES
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
12.05% 0.86% 45.84% 35.54% 32.73% 0.39% 46.26% 21.77% 15.01% 45.77%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 12.05
Row: 2, Col: 1, Value: 0.8600000000000001
Row: 3, Col: 1, Value: 45.84
Row: 4, Col: 1, Value: 35.54
Row: 5, Col: 1, Value: 32.73
Row: 6, Col: 1, Value: 0.3900000000000001
Row: 7, Col: 1, Value: 46.26000000000001
Row: 8, Col: 1, Value: 21.77
Row: 9, Col: 1, Value: 15.01
Row: 10, Col: 1, Value: 45.77
DURING THE PERIODS SHOWN IN THE CHART FOR SOFTWARE AND COMPUTER
SERVICES, THE HIGHEST RETURN FOR A QUARTER WAS 30.03% (QUARTER ENDING
MARCH 31, 1991) AND THE LOWEST RETURN FOR A QUARTER WAS -30.81%
(QUARTER ENDING SEPTEMBER 30, 1990).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR SOFTWARE AND COMPUTER
SERVICES WAS 9.12%.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TECHNOLOGY
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
16.99% 10.50% 58.97% 8.72% 28.65% 11.13% 43.81% 15.82% 10.33% 74.16%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 16.99
Row: 2, Col: 1, Value: 10.5
Row: 3, Col: 1, Value: 58.97
Row: 4, Col: 1, Value: 8.719999999999999
Row: 5, Col: 1, Value: 28.65
Row: 6, Col: 1, Value: 11.13
Row: 7, Col: 1, Value: 43.81
Row: 8, Col: 1, Value: 15.82
Row: 9, Col: 1, Value: 10.33
Row: 10, Col: 1, Value: 74.16
DURING THE PERIODS SHOWN IN THE CHART FOR TECHNOLOGY, THE HIGHEST
RETURN FOR A QUARTER WAS 45.96% (QUARTER ENDING DECEMBER 31, 1998) AND
THE LOWEST RETURN FOR A QUARTER WAS -25.19% (QUARTER ENDING SEPTEMBER
30, 1990).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR TECHNOLOGY WAS
18.63%.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TELECOMMUNICATIONS
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
50.88% -16.40% 30.85% 15.32% 29.72% 4.32% 29.66% 5.40% 25.83% 41.04%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 50.88
Row: 2, Col: 1, Value: -16.4
Row: 3, Col: 1, Value: 30.85
Row: 4, Col: 1, Value: 15.32
Row: 5, Col: 1, Value: 29.72
Row: 6, Col: 1, Value: 4.319999999999999
Row: 7, Col: 1, Value: 29.66
Row: 8, Col: 1, Value: 5.4
Row: 9, Col: 1, Value: 25.83
Row: 10, Col: 1, Value: 41.04
DURING THE PERIODS SHOWN IN THE CHART FOR TELECOMMUNICATIONS, THE
HIGHEST RETURN FOR A QUARTER WAS 30.69% (QUARTER ENDING DECEMBER 31,
1998) AND THE LOWEST RETURN FOR A QUARTER WAS -21.14% (QUARTER ENDING
SEPTEMBER 30, 1990).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR TELECOMMUNICATIONS
WAS 10.09%.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TRANSPORTATION
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
28.49% -21.59% 54.14% 23.79% 29.32% 3.87% 15.17% 9.50% 32.13% -4.34%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 28.49
Row: 2, Col: 1, Value: -21.59
Row: 3, Col: 1, Value: 54.14
Row: 4, Col: 1, Value: 23.79
Row: 5, Col: 1, Value: 29.32
Row: 6, Col: 1, Value: 3.87
Row: 7, Col: 1, Value: 15.17
Row: 8, Col: 1, Value: 9.5
Row: 9, Col: 1, Value: 32.13
Row: 10, Col: 1, Value: -4.34
DURING THE PERIODS SHOWN IN THE CHART FOR TRANSPORTATION, THE HIGHEST
RETURN FOR A QUARTER WAS 19.76% (QUARTER ENDING DECEMBER 31, 1998) AND
THE LOWEST RETURN FOR A QUARTER WAS -25.91% (QUARTER ENDING SEPTEMBER
30, 1990).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR TRANSPORTATION WAS
15.57%.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
UTILITIES GROWTH
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
39.02% 0.55% 21.03% 10.59% 12.54% -7.41% 34.39% 11.37% 30.31% 43.16%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 39.02
Row: 2, Col: 1, Value: 0.55
Row: 3, Col: 1, Value: 21.03
Row: 4, Col: 1, Value: 10.59
Row: 5, Col: 1, Value: 12.54
Row: 6, Col: 1, Value: -7.41
Row: 7, Col: 1, Value: 34.39
Row: 8, Col: 1, Value: 11.37
Row: 9, Col: 1, Value: 30.31
Row: 10, Col: 1, Value: 43.16
DURING THE PERIODS SHOWN IN THE CHART FOR UTILITIES GROWTH, THE
HIGHEST RETURN FOR A QUARTER WAS 23.01% (QUARTER ENDING DECEMBER 31,
1998) AND THE LOWEST RETURN FOR A QUARTER WAS -6.17% (QUARTER ENDING
DECEMBER 31, 1993).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR UTILITIES GROWTH WAS
3.84%.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MONEY MARKET
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
8.98% 7.79% 5.80% 3.52% 2.69% 3.74% 5.66% 5.06% 5.20% 5.20%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 8.98
Row: 2, Col: 1, Value: 7.79
Row: 3, Col: 1, Value: 5.8
Row: 4, Col: 1, Value: 3.52
Row: 5, Col: 1, Value: 2.69
Row: 6, Col: 1, Value: 3.74
Row: 7, Col: 1, Value: 5.659999999999999
Row: 8, Col: 1, Value: 5.06
Row: 9, Col: 1, Value: 5.2
Row: 10, Col: 1, Value: 5.2
DURING THE PERIODS SHOWN IN THE CHART FOR MONEY MARKET, THE HIGHEST
RETURN FOR A QUARTER WAS 1.91% (QUARTER ENDING JUNE 30, 1990) AND THE
LOWEST RETURN FOR A QUARTER WAS 0.63% (QUARTER ENDING DECEMBER 31,
1993).
THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR MONEY MARKET WAS
1.14%.
AVERAGE ANNUAL RETURNS
The returns in the following table include the effect of each fund's
3.00% maximum applicable front-end sales charge and $7.50 exchange fee
(stock funds only).
<TABLE>
<CAPTION>
For the periods ended Past 1 year Past 5 years Past 10 years/ Life of fundA
December 31, 1998
<S> <C> <C> <C>
Air Transportation 3.15% 11.33% 12.95%
S&P 500 28.58% 24.06% 19.21%
Goldman Sachs Cyclical 4.74% N/A N/A
Industries Index
Automotive 1.72% 6.42% 13.31%
S&P 500 28.58% 24.06% 19.21%
Goldman Sachs Cyclical 4.74% N/A N/A
Industries Index
Biotechnology 25.75% 13.31% 21.44%
S&P 500 28.58% 24.06% 19.21%
Goldman Sachs Health Care Index 40.26% N/A N/A
Brokerage and Investment 2.43% 18.89% 20.58%
Management
S&P 500 28.58% 24.06% 19.21%
Goldman Sachs Financial 9.04% N/A N/A
Services Index
Chemicals -18.49% 9.98% 11.91%
S&P 500 28.58% 24.06% 19.21%
Goldman Sachs Cyclical 4.74% N/A N/A
Industries Index
Computers 90.41% 35.63% 28.13%
S&P 500 28.58% 24.06% 19.21%
Goldman Sachs Technology Index 69.16% N/A N/A
Construction and Housing 19.08% 13.64% 16.17%
S&P 500 28.58% 24.06% 19.21%
Goldman Sachs Cyclical 4.74% N/A N/A
Industries Index
Consumer Industries 23.59% 18.15% 20.06%B
S&P 500 28.58% 24.06% 20.83%
Goldman Sachs Consumer 24.91% N/A N/A
Industries Index
Cyclical Industries 5.43% N/A 5.43%B
S&P 500 28.58% N/A 28.58%
Goldman Sachs Cyclical 4.74% N/A 4.74%
Industries Index
Defense and Aerospace 1.13% 18.57% 14.81%
S&P 500 28.58% 24.06% 19.21%
Goldman Sachs Cyclical 4.74% N/A N/A
Industries Index
Developing Communications 62.57% 21.69% 26.73%B
S&P 500 28.58% 24.06% 20.83%
Goldman Sachs Technology Index 69.16% N/A N/A
Electronics 46.51% 36.14% 29.27%
S&P 500 28.58% 24.06% 19.21%
Goldman Sachs Technology Index 69.16% N/A N/A
For the periods ended Past 1 year Past 5 years Past 10 years/ Life of fundA
December 31, 1998
Energy -17.37% 8.04% 8.86%
S&P 500 28.58% 24.06% 19.21%
Goldman Sachs Natural -14.19% N/A N/A
Resources Index
Energy Service -51.30% 9.35% 9.28%
S&P 500 28.58% 24.06% 19.21%
Goldman Sachs Natural -14.19% N/A N/A
Resources Index
Environmental Services -19.53% 4.59% 2.85%B
S&P 500 28.58% 24.06% 17.90%
Goldman Sachs Cyclical 4.74% N/A N/A
Industries Index
Financial Services 10.64% 24.13% 21.86%
S&P 500 28.58% 24.06% 19.21%
Goldman Sachs Financial 9.04% N/A N/A
Services Index
Food and Agriculture 12.14% 19.16% 18.89%
S&P 500 28.58% 24.06% 19.21%
Goldman Sachs Consumer 24.91% N/A N/A
Industries Index
Gold -11.45% -9.57% -0.06%
S&P 500 28.58% 24.06% 19.21%
Goldman Sachs Natural -14.19% N/A N/A
Resources Index
Health Care 36.97% 29.74% 26.04%
S&P 500 28.58% 24.06% 19.21%
Goldman Sachs Health Care Index 40.26% N/A N/A
Home Finance -17.43% 21.04% 23.08%
S&P 500 28.58% 24.06% 19.21%
Goldman Sachs Financial 9.04% N/A N/A
Services Index
Industrial Equipment 9.22% 16.69% 15.87%
S&P 500 28.58% 24.06% 19.21%
Goldman Sachs Cyclical 4.74% N/A N/A
Industries Index
Industrial Materials -13.76% 4.55% 7.19%
S&P 500 28.58% 24.06% 19.21%
Goldman Sachs Cyclical 4.74% N/A N/A
Industries Index
Insurance 16.64% 22.54% 20.06%
S&P 500 28.58% 24.06% 19.21%
Goldman Sachs Financial 9.04% N/A N/A
Services Index
Leisure 33.71% 20.44% 18.75%
S&P 500 28.58% 24.06% 19.21%
Goldman Sachs Consumer 24.91% N/A N/A
Industries Index
Medical Delivery -9.05% 13.96% 19.12%
S&P 500 28.58% 24.06% 19.21%
Goldman Sachs Health Care Index 40.26% N/A N/A
For the periods ended Past 1 year Past 5 years Past 10 years/ Life of fundA
December 31, 1998
Multimedia 31.55% 19.34% 18.53%
S&P 500 28.58% 24.06% 19.21%
Goldman Sachs Consumer 24.91% N/A N/A
Industries Index
Natural Gas -15.10% 4.96% 4.96%B
S&P 500 28.58% 24.06% 24.06%
Goldman Sachs Utilities Index 34.29% N/A N/A
Natural Resources -19.15% N/A -19.15%B
S&P 500 28.58% N/A 28.58%
Goldman Sachs Natural -14.19% N/A -14.19%
Resources Index
Paper and Forest Products -10.73% 7.79% 8.69%
S&P 500 28.58% 24.06% 19.21%
Goldman Sachs Cyclical 4.74% N/A N/A
Industries Index
Precious Metals and Minerals -2.97% -11.65% -0.58%
S&P 500 28.58% 24.06% 19.21%
Goldman Sachs Natural -14.19% N/A N/A
Resources Index
Regional Banks 8.42% 25.84% 24.12%
S&P 500 28.58% 24.06% 19.21%
Goldman Sachs Financial 9.04% N/A N/A
Services Index
Retailing 41.32% 20.83% 22.08%
S&P 500 28.58% 24.06% 19.21%
Goldman Sachs Consumer 24.91% N/A N/A
Industries Index
Software and Computer Services 41.32% 23.79% 24.04%
S&P 500 28.58% 24.06% 19.21%
Goldman Sachs Technology Index 69.16% N/A N/A
Technology 68.86% 28.10% 25.79%
S&P 500 28.58% 24.06% 19.21%
Goldman Sachs Technology Index 69.16% N/A N/A
Telecommunications 36.74% 19.66% 19.74%
S&P 500 28.58% 24.06% 19.21%
Goldman Sachs Utilities Index 34.29% N/A N/A
Transportation -7.28% 9.93% 14.85%
S&P 500 28.58% 24.06% 19.21%
Goldman Sachs Cyclical 4.74% N/A N/A
Industries Index
Utilities Growth 38.79% 20.18% 18.10%
S&P 500 28.58% 24.06% 19.21%
Goldman Sachs Utilities Index 34.29% N/A N/A
Money Market 2.04% 4.33% 5.03%
</TABLE>
A BEGINNING JANUARY 1 OF THE FIRST CALENDAR YEAR FOLLOWING THE FUND'S
COMMENCEMENT OF OPERATIONS.
B FROM JANUARY 1, 1990 FOR ENVIRONMENTAL SERVICES; JANUARY 1, 1991 FOR
CONSUMER INDUSTRIES AND DEVELOPING COMMUNICATIONS; JANUARY 1, 1994 FOR
NATURAL GAS; AND JANUARY 1, 1998 FOR CYCLICAL INDUSTRIES AND NATURAL
RESOURCES.
If FMR had not reimbursed certain fund expenses during these periods,
each fund's returns would have been lower.
Standard & Poor's 500 Index (S&P 500(registered trademark)) is a
market capitalization-weighted index of common stocks.
Goldman Sachs Consumer Industries Index is a market
capitalization-weighted index of 300 stocks designed to measure the
performance of companies in the consumer industries sector.
Goldman Sachs Cyclical Industries Index is a market
capitalization-weighted index of 277 stocks designed to measure the
performance of companies in the cyclical industries sector.
Goldman Sachs Financial Services Index is a market
capitalization-weighted index of 271 stocks designed to measure the
performance of companies in the financial services sector.
Goldman Sachs Health Care Index is a market capitalization-weighted
index of 93 stocks designed to measure the performance of companies in
the health care sector.
Goldman Sachs Natural Resources Index is a market
capitalization-weighted index of 96 stocks designed to measure the
performance of companies in the natural resources sector.
Goldman Sachs Technology Index is a market capitalization-weighted
index of 190 stocks designed to measure the performance of companies
in the technology sector.
Goldman Sachs Utilities Index is a market capitalization-weighted
index of 136 stocks designed to measure the performance of companies
in the utilities sector.
FEE TABLE
The following table describes the fees and expenses that are incurred
when you buy, hold or sell shares of a fund. The annual fund operating
expenses provided below for each fund do not reflect the effect of any
reduction of certain expenses during the period. The annual fund
operating expenses provided below for Cyclical Industries and Natural
Resources do not reflect the effect of any expense reimbursements
during the period.
SHAREHOLDER FEES (PAID BY THE INVESTOR DIRECTLY)
Maximum sales charge (load) 3.00%
on purchases (as a % of
offering price)A
Sales charge (load) on None
reinvested distributions
Deferred sales charge (load) None
on redemptions
Redemption fee for the stock
funds (as a % of amount
redeemed)
on shares held 29 days or less 0.75%
on shares held 30 days or more
for redemption amounts
of up to $1,000 0.75%
for redemption amounts of $1,000
or more $7.50
Exchange fee
for the stock funds onlyB $ 7.50
Annual account maintenance $ 12.00
fee (for accounts under
$2,500)
A LOWER SALES CHARGES MAY BE AVAILABLE FOR ACCOUNTS OVER $250,000.
B YOU WILL NOT PAY AN EXCHANGE FEE IF YOU EXCHANGE THROUGH ANY OF
FIDELITY'S AUTOMATED EXCHANGE SERVICES.
ANNUAL FUND OPERATING EXPENSES (PAID FROM FUND ASSETS)
AIR TRANSPORTATION Management fee 0.58%
Distribution and Service None
(12b-1) fee
Other expenses 0.77%
Total annual fund operating 1.35%
expensesA
AUTOMOTIVE Management fee 0.59%
Distribution and Service None
(12b-1) fee
Other expenses 0.86%
Total annual fund operating 1.45%
expensesA
BIOTECHNOLOGY Management fee 0.59%
Distribution and Service None
(12b-1) fee
Other expenses 0.75%
Total annual fund operating 1.34%
expensesA
BROKERAGE AND INVESTMENT Management fee 0.59%
MANAGEMENT
Distribution and Service None
(12b-1) fee
Other expenses 0.67%
Total annual fund operating 1.26%
expensesA
BUSINESS SERVICES AND Management fee 0.59%
OUTSOURCING
Distribution and Service None
(12b-1) fee
Other expenses 1.07%
Total annual fund operating 1.66%
expensesA
CHEMICALS Management fee 0.59%
Distribution and Service None
(12b-1) fee
Other expenses 0.99%
Total annual fund operating 1.58%
expensesA
COMPUTERS Management fee 0.60%
Distribution and Service None
(12b-1) fee
Other expenses 0.65%
Total annual fund operating 1.25%
expensesA
CONSTRUCTION AND HOUSING Management fee 0.59%
Distribution and Service None
(12b-1) fee
Other expenses 0.84%
Total annual fund operating 1.43%
expensesA
CONSUMER INDUSTRIES Management fee 0.59%
Distribution and Service None
(12b-1) fee
Other expenses 0.75%
Total annual fund operating 1.34%
expensesA
CYCLICAL INDUSTRIES Management fee 0.59%
Distribution and Service None
(12b-1) fee
Other expenses 3.38%
Total annual fund operating 3.97%
expensesA
DEFENSE AND AEROSPACE Management fee 0.58%
Distribution and Service None
(12b-1) fee
Other expenses 0.90%
Total annual fund operating 1.48%
expensesA
DEVELOPING COMMUNICATIONS Management fee 0.60%
Distribution and Service None
(12b-1) fee
Other expenses 0.78%
Total annual fund operating 1.38%
expensesA
ELECTRONICS Management fee 0.59%
Distribution and Service None
(12b-1) fee
Other expenses 0.59%
Total annual fund operating 1.18%
expensesA
ENERGY Management fee 0.59%
Distribution and Service None
(12b-1) fee
Other expenses 0.87%
Total annual fund operating 1.46%
expensesA
ENERGY SERVICE Management fee 0.59%
Distribution and Service None
(12b-1) fee
Other expenses 0.80%
Total annual fund operating 1.39%
expensesA
ENVIRONMENTAL SERVICES Management fee 0.59%
Distribution and Service None
(12b-1) fee
Other expenses 1.61%
Total annual fund operating 2.20%
expensesA
FINANCIAL SERVICES Management fee 0.59%
Distribution and Service None
(12b-1) fee
Other expenses 0.61%
Total annual fund operating 1.20%
expensesA
FOOD AND AGRICULTURE Management fee 0.59%
Distribution and Service None
(12b-1) fee
Other expenses 0.72%
Total annual fund operating 1.31%
expensesA
GOLD Management fee 0.59%
Distribution and Service None
(12b-1) fee
Other expenses 0.98%
Total annual fund operating 1.57%
expensesA
HEALTH CARE Management fee 0.59%
Distribution and Service None
(12b-1) fee
Other expenses 0.48%
Total annual fund operating 1.07%
expensesA
HOME FINANCE Management fee 0.58%
Distribution and Service None
(12b-1) fee
Other expenses 0.61%
Total annual fund operating 1.19%
expensesA
INDUSTRIAL EQUIPMENT Management fee 0.59%
Distribution and Service None
(12b-1) fee
Other expenses 0.84%
Total annual fund operating 1.43%
expensesA
INDUSTRIAL MATERIALS Management fee 0.59%
Distribution and Service None
(12b-1) fee
Other expenses 1.48%
Total annual fund operating 2.07%
expensesA
INSURANCE Management fee 0.59%
Distribution and Service None
(12b-1) fee
Other expenses 0.74%
Total annual fund operating 1.33%
expensesA
LEISURE Management fee 0.59%
Distribution and Service None
(12b-1) fee
Other expenses 0.67%
Total annual fund operating 1.26%
expensesA
MEDICAL DELIVERY Management fee 0.59%
Distribution and Service None
(12b-1) fee
Other expenses 0.81%
Total annual fund operating 1.40%
expensesA
MEDICAL EQUIPMENT AND SYSTEMS Management fee 0.60%
Distribution and Service None
(12b-1) fee
Other expenses 1.79%
Total annual fund operating 2.39%
expensesA
MULTIMEDIA Management fee 0.59%
Distribution and Service None
(12b-1) fee
Other expenses 0.76%
Total annual fund operating 1.35%
expensesA
NATURAL GAS Management fee 0.59%
Distribution and Service None
(12b-1) fee
Other expenses 0.98%
Total annual fund operating 1.57%
expensesA
NATURAL RESOURCES Management fee 0.59%
Distribution and Service None
(12b-1) fee
Other expenses 2.61%
Total annual fund operating 3.20%
expensesA
PAPER AND FOREST PRODUCTS Management fee 0.59%
Distribution and Service None
(12b-1) fee
Other expenses 1.71%
Total annual fund operating 2.30%
expensesA
PRECIOUS METALS AND MINERALS Management fee 0.59%
Distribution and Service None
(12b-1) fee
Other expenses 1.19%
Total annual fund operating 1.78%
expensesA
REGIONAL BANKS Management fee 0.59%
Distribution and Service None
(12b-1) fee
Other expenses 0.58%
Total annual fund operating 1.17%
expensesA
RETAILING Management fee 0.59%
Distribution and Service None
(12b-1) fee
Other expenses 0.66%
Total annual fund operating 1.25%
expensesA
SOFTWARE AND COMPUTER SERVICES Management fee 0.59%
Distribution and Service None
(12b-1) fee
Other expenses 0.69%
Total annual fund operating 1.28%
expensesA
TECHNOLOGY Management fee 0.60%
Distribution and Service None
(12b-1) fee
Other expenses 0.64%
Total annual fund operating 1.24%
expensesA
TELECOMMUNICATIONS Management fee 0.59%
Distribution and Service None
(12b-1) fee
Other expenses 0.68%
Total annual fund operating 1.27%
expensesA
TRANSPORTATION Management fee 0.58%
Distribution and Service None
(12b-1) fee
Other expenses 1.38%
Total annual fund operating 1.96%
expensesA
UTILITIES GROWTH Management fee 0.59%
Distribution and Service None
(12b-1) fee
Other expenses 0.59%
Total annual fund operating 1.18%
expensesA
MONEY MARKET Management fee 0.20%
Distribution and Service None
(12b-1) fee
Other expenses 0.30%
Total annual fund operating 0.50%
expensesA
A FMR HAS VOLUNTARILY AGREED TO REIMBURSE EACH FUND TO THE EXTENT THAT
TOTAL OPERATING EXPENSES (EXCLUDING INTEREST, TAXES, SECURITIES
LENDING FEES, BROKERAGE COMMISSIONS AND EXTRAORDINARY EXPENSES), AS A
PERCENTAGE OF THEIR RESPECTIVE AVERAGE NET ASSETS, EXCEED 2.50%. THESE
ARRANGEMENTS CAN BE TERMINATED BY FMR AT ANY TIME.
A portion of the brokerage commissions that a fund pays is used to
reduce that fund's expenses. In addition, each fund has entered into
arrangements with its custodian and transfer agent whereby credits
realized as a result of uninvested cash balances are used to reduce
custodian and transfer agent expenses. Including these reductions, the
total fund operating expenses, after reimbursement for Cyclical
Industries and Natural Resources, would have been:
Air Transportation 1.27%
Automotive 1.41%
Biotechnology 1.30%
Brokerage and Investment 1.24%
Management
Business Services and 1.64%
Outsourcing
Chemicals 1.51%
Computers 1.23%
Construction and Housing 1.37%
Consumer Industries 1.32%
Cyclical Industries 2.49%
Defense and Aerospace 1.42%
Developing Communications 1.34%
Electronics 1.15%
Energy 1.42%
Energy Service 1.35%
Environmental Services 2.16%
Financial Services 1.18%
Food and Agriculture 1.29%
Gold 1.54%
Health Care 1.05%
Home Finance 1.18%
Industrial Equipment 1.41%
Industrial Materials 2.04%
Insurance 1.31%
Leisure 1.24%
Medical Delivery 1.37%
Medical Equipment and Systems 2.38%
Multimedia 1.33%
Natural Gas 1.52%
Natural Resources 2.47%
Paper and Forest Products 2.21%
Precious Metals and Minerals 1.74%
Regional Banks 1.16%
Retailing 1.22%
Software and Computer Services 1.27%
Technology 1.20%
Telecommunications 1.25%
Transportation 1.90%
Utilities Growth 1.16%
Money Market 0.49%
This EXAMPLE helps you compare the cost of investing in the funds with
the cost of investing in other mutual funds.
Let's say, hypothetically, that each fund's annual return is 5% and
that your shareholder fees and each fund's annual operating expenses
are exactly as described in the fee table. This example illustrates
the effect of fees and expenses, but is not meant to suggest actual or
expected fees and expenses or returns, all of which may vary. For
every $10,000 you invested, here's how much you would pay in total
expenses if you close your account after the number of years indicated
and if you leave your account open:
Account open Account closed
AIR TRANSPORTATION 1 year $ 433 $ 441
3 years $ 715 $ 722
5 years $ 1,017 $ 1,025
10 years $ 1,875 $ 1,883
AUTOMOTIVE 1 year $ 443 $ 451
3 years $ 745 $ 752
5 years $ 1,068 $ 1,076
10 years $ 1,983 $ 1,991
BIOTECHNOLOGY 1 year $ 432 $ 440
3 years $ 712 $ 719
5 years $ 1,012 $ 1,020
10 years $ 1,864 $ 1,872
BROKERAGE AND INVESTMENT 1 year $ 425 $ 432
MANAGEMENT
3 years $ 688 $ 695
5 years $ 971 $ 978
10 years $ 1,777 $ 1,784
BUSINESS SERVICES AND 1 year $ 464 $ 471
OUTSOURCING
3 years $ 808 $ 815
5 years $ 1,175 $ 1,183
10 years $ 2,206 $ 2,214
CHEMICALS 1 year $ 456 $ 463
3 years $ 784 $ 791
5 years $ 1,135 $ 1,142
10 years $ 2,122 $ 2,129
COMPUTERS 1 year $ 424 $ 431
3 years $ 685 $ 692
5 years $ 966 $ 973
10 years $ 1,766 $ 1,773
CONSTRUCTION AND HOUSING 1 year $ 441 $ 449
3 years $ 739 $ 746
5 years $ 1,058 $ 1,066
10 years $ 1,962 $ 1,969
CONSUMER INDUSTRIES 1 year $ 432 $ 440
3 years $ 712 $ 719
5 years $ 1,012 $ 1,020
10 years $ 1,864 $ 1,872
CYCLICAL INDUSTRIES 1 year $ 687 $ 695
3 years $ 1,473 $ 1,481
5 years $ 2,276 $ 2,283
10 years $ 4,355 $ 4,363
DEFENSE AND AEROSPACE 1 year $ 446 $ 454
3 years $ 754 $ 761
5 years $ 1,084 $ 1,091
10 years $ 2,015 $ 2,023
DEVELOPING COMMUNICATIONS 1 year $ 436 $ 444
3 years $ 724 $ 731
5 years $ 1,033 $ 1,040
10 years $ 1,908 $ 1,915
ELECTRONICS 1 year $ 417 $ 424
3 years $ 663 $ 671
5 years $ 930 $ 937
10 years $ 1,689 $ 1,696
ENERGY 1 year $ 444 $ 452
3 years $ 748 $ 755
5 years $ 1,073 $ 1,081
10 years $ 1,994 $ 2,001
ENERGY SERVICE 1 year $ 437 $ 445
3 years $ 727 $ 734
5 years $ 1,038 $ 1,045
10 years $ 1,919 $ 1,926
ENVIRONMENTAL SERVICES 1 year $ 516 $ 524
3 years $ 968 $ 975
5 years $ 1,444 $ 1,452
10 years $ 2,758 $ 2,765
FINANCIAL SERVICES 1 year $ 419 $ 426
3 years $ 670 $ 677
5 years $ 940 $ 947
10 years $ 1,711 $ 1,718
FOOD AND AGRICULTURE 1 year $ 429 $ 437
3 years $ 703 $ 710
5 years $ 997 $ 1,004
10 years $ 1,832 $ 1,839
GOLD 1 year $ 455 $ 462
3 years $ 781 $ 788
5 years $ 1,129 $ 1,137
10 years $ 2,111 $ 2,119
HEALTH CARE 1 year $ 406 $ 413
3 years $ 630 $ 638
5 years $ 872 $ 880
10 years $ 1,566 $ 1,574
HOME FINANCE 1 year $ 418 $ 425
3 years $ 667 $ 674
5 years $ 935 $ 942
10 years $ 1,700 $ 1,707
INDUSTRIAL EQUIPMENT 1 year $ 441 $ 449
3 years $ 739 $ 746
5 years $ 1,058 $ 1,066
10 years $ 1,962 $ 1,969
INDUSTRIAL MATERIALS 1 year $ 504 $ 511
3 years $ 929 $ 937
5 years $ 1,380 $ 1,388
10 years $ 2,628 $ 2,636
INSURANCE 1 year $ 431 $ 439
3 years $ 709 $ 716
5 years $ 1,007 $ 1,014
10 years $ 1,853 $ 1,861
LEISURE 1 year $ 425 $ 432
3 years $ 688 $ 695
5 years $ 971 $ 978
10 years $ 1,777 $ 1,784
MEDICAL DELIVERY 1 year $ 438 $ 446
3 years $ 730 $ 737
5 years $ 1,043 $ 1,050
10 years $ 1,929 $ 1,937
MEDICAL EQUIPMENT AND SYSTEMS 1 year $ 535 $ 542
3 years $ 1,023 $ 1,031
5 years $ 1,537 $ 1,545
10 years $ 2,944 $ 2,952
MULTIMEDIA 1 year $ 433 $ 441
3 years $ 715 $ 722
5 years $ 1,017 $ 1,025
10 years $ 1,875 $ 1,883
NATURAL GAS 1 year $ 455 $ 462
3 years $ 781 $ 788
5 years $ 1,129 $ 1,137
10 years $ 2,111 $ 2,119
NATURAL RESOURCES 1 year $ 613 $ 621
3 years $ 1,257 $ 1,264
5 years $ 1,923 $ 1,931
10 years $ 3,698 $ 3,706
PAPER AND FOREST PRODUCTS 1 year $ 526 $ 534
3 years $ 997 $ 1,004
5 years $ 1,493 $ 1,501
10 years $ 2,857 $ 2,864
PRECIOUS METALS AND MINERALS 1 year $ 475 $ 483
3 years $ 843 $ 851
5 years $ 1,236 $ 1,243
10 years $ 2,332 $ 2,339
REGIONAL BANKS 1 year $ 416 $ 423
3 years $ 660 $ 668
5 years $ 924 $ 932
10 years $ 1,678 $ 1,685
RETAILING 1 year $ 424 $ 431
3 years $ 685 $ 692
5 years $ 966 $ 973
10 years $ 1,766 $ 1,773
SOFTWARE AND COMPUTER SERVICES 1 year $ 426 $ 434
3 years $ 694 $ 701
5 years $ 981 $ 989
10 years $ 1,799 $ 1,806
TECHNOLOGY 1 year $ 423 $ 430
3 years $ 682 $ 689
5 years $ 961 $ 968
10 years $ 1,755 $ 1,762
TELECOMMUNICATIONS 1 year $ 425 $ 433
3 years $ 691 $ 699
5 years $ 976 $ 984
10 years $ 1,788 $ 1,796
TRANSPORTATION 1 year $ 493 $ 501
3 years $ 897 $ 904
5 years $ 1,326 $ 1,333
10 years $ 2,517 $ 2,524
UTILITIES GROWTH 1 year $ 417 $ 424
3 years $ 663 $ 671
5 years $ 930 $ 937
10 years $ 1,689 $ 1,696
MONEY MARKET 1 year $ 350 $ 350
3 years $ 456 $ 456
5 years $ 571 $ 571
10 years $ 909 $ 909
FUND BASICS
INVESTMENT DETAILS
THE STOCK FUNDS
INVESTMENT OBJECTIVE
Each fund seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
AIR TRANSPORTATION PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in the regional, national, and
international movement of passengers, mail, and freight via aircraft.
These companies may include, for example, major airlines, commuter
airlines, air cargo and express delivery operators, airfreight
forwarders, and companies that provide equipment or services to these
companies, such as aviation service firms and manufacturers of
aeronautical equipment.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
AUTOMOTIVE PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in the manufacture, marketing or sale
of automobiles, trucks, specialty vehicles, parts, tires, and related
services. These companies may include, for example, companies involved
with the manufacture and distribution of vehicles, vehicle parts and
tires (either original equipment or for the after market) and
companies involved in the retail sale of vehicles, parts, or tires.
They may also include companies that provide automotive-related
services to manufacturers, distributors or consumers.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
BIOTECHNOLOGY PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in the research, development, and
manufacture of various biotechnological products, services, and
processes. These companies may include, for example, companies
involved with applications and developments in such areas as human
health care (e.g., cancer, infectious disease, diagnostics and
therapeutics); pharmaceuticals (e.g., new drug development and
production); agricultural and veterinary applications (e.g., improved
seed varieties, animal growth hormones); chemicals (e.g., enzymes,
toxic waste treatment); medical/surgical (e.g., epidermal growth
factor, in vivo imaging/therapeutics); and industry (e.g., biochips,
fermentation, enhanced mineral recovery). They may also include
companies that manufacture biotechnological and biomedical products,
including devices and instruments; companies that provide
biotechnological processes or services; companies that provide
scientific and technological advances in biotechnology; and companies
involved with new or experimental technologies such as genetic
engineering, hybridoma and recombinant DNA techniques and monoclonal
antibodies.
FMR may also invest the fund's assets in securities of companies that
distribute biotechnological and biomedical products, including devices
and instruments, and companies that benefit significantly from
scientific and technological advances in biotechnology.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in stock brokerage, commodity
brokerage, investment banking, tax-advantaged investment or investment
sales, investment management, or related investment advisory services.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
BUSINESS SERVICES AND OUTSOURCING PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in providing business-related
services to companies and other organizations. These companies may
include those that provide, for example, data processing, consulting,
outsourcing, temporary employment, market research or database
services, printing, advertising, computer programming, credit
reporting, claims collection, mailing and photocopying, typically on a
contractual or fee basis.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
CHEMICALS PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in the research, development,
manufacture or marketing of products or services related to the
chemical process industries. These companies may include, for example,
companies involved with products such as basic and intermediate
organic and inorganic chemicals, plastics, synthetic fibers,
fertilizers, industrial gases, flavorings, fragrances, biological
materials, catalysts, carriers, additives, and process aids. They may
also include companies providing design, engineering, construction,
and consulting services to companies engaged in chemical processing.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
COMPUTERS PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in research, design, development,
manufacture or distribution of products, processes or services that
relate to currently available or experimental hardware technology
within the computer industry. These companies may include, for
example, companies that provide products or services such as
mainframes, minicomputers, microcomputers, peripherals, computer and
office equipment wholesalers, software retailers, data or information
processing, office or factory automation, robotics, artificial
intelligence, computer-aided design, medical technology, engineering
and manufacturing, data communications and software.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
CONSTRUCTION AND HOUSING PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in the design and construction of
residential, commercial, industrial and public works facilities, as
well as companies engaged in the manufacture, supply, distribution or
sale of products or services to these construction industries. These
companies may include, for example, companies that produce basic
building materials such as cement, aggregates, gypsum, timber, and
wall and floor coverings; companies that supply home furnishings; and
companies that provide engineering or contracting services. They may
also include companies involved in real estate development and
construction financing such as homebuilders, architectural and design
firms, and property managers, and companies involved in the home
improvement and maintenance industry, including building material
retailers and distributors, household service firms, and those
companies that supply such companies.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
CONSUMER INDUSTRIES PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in the manufacture and distribution
of goods to consumers both domestically and internationally. These
companies may include, for example, companies that manufacture or sell
durable goods such as homes, cars, boats, furniture, major appliances,
and personal computers; and companies that manufacture, wholesale, or
retail non-durable goods such as food, beverages, tobacco, health care
products, household and personal care products, apparel, and
entertainment products (e.g., books, magazines, TV, cable, movies,
music, gaming, sports). They may also include companies that provide
consumer services such as lodging, child care, convenience stores, and
car rentals.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
CYCLICAL INDUSTRIES PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in the research, development,
manufacture, distribution, supply, or sale of materials, equipment,
products or services related to cyclical industries. These companies
may include, for example, companies in the the automotive, chemical,
construction and housing, defense and aerospace, environmental
services, industrial equipment and materials, paper and forest
products, and transportation industries.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
DEFENSE AND AEROSPACE PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in the research, manufacture or sale
of products or services related to the defense or aerospace
industries. These companies may include, for example, companies that
provide the following products or services: air transport; defense
electronics; aircraft or spacecraft production; missile design; data
processing or computer-related services; communications systems;
research; development and manufacture of military weapons and
transportation; general aviation equipment, missiles, space launch
vehicles, and spacecraft; units for guidance, propulsion, and control
of flight vehicles; and equipment components and airborne and
ground-based equipment essential to the testing, operation, and
maintenance of flight vehicles.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
DEVELOPING COMMUNICATIONS PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in the development, manufacture or
sale of emerging communications services or equipment. Emerging
communications are those which derive from new technologies or new
applications of existing technologies. These companies may include,
for example, companies involved in cellular communications, software
development, video conferencing, data processing, paging, personal
communications networks, special mobile radio, facsimile, fiber optic
transmission, voicemail, microwave, satellite, local and wide area
networking, and other transmission electronics. FMR places less
emphasis on traditional communications companies such as traditional
telephone utilities and large long distance carriers.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
ELECTRONICS PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in the design, manufacture, or sale
of electronic components (semiconductors, connectors, printed circuit
boards and other components); equipment vendors to electronic
component manufacturers; electronic component distributors; and
electronic instruments and electronic systems vendors. These companies
may include, for example, companies involved in all aspects of the
electronics business and in new technologies or specialty areas such
as defense electronics, medical electronics, consumer electronics,
advanced design and manufacturing technologies (e.g., computer-aided
design and computer-aided manufacturing, computer-aided engineering,
and robotics), and lasers and electro-optics.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
ENERGY PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in the energy field, including the
conventional areas of oil, gas, electricity and coal, and newer
sources of energy such as nuclear, geothermal, oil shale, and solar
power. These companies may include, for example, companies that
produce, generate, refine, control, transmit, market, distribute or
measure energy or energy fuels such as petro-chemicals; companies
involved in providing products and services to companies in the energy
field; companies involved in energy research or experimentation; and
companies involved in the exploration of new sources of energy,
conservation, and energy-related pollution control.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
ENERGY SERVICE PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in the energy service field,
including those that provide services and equipment to the
conventional areas of oil, gas, electricity and coal, and newer
sources of energy such as nuclear, geothermal, oil shale, and solar
power. These companies may include, for example, companies providing
services and equipment for drilling processes such as offshore and
onshore drilling; companies involved in production and well
maintenance; companies involved in exploration engineering, data and
technology; companies that provide geological and geophysical
services; companies involved in energy transport; companies involved
in geothermal, electric or nuclear plant design or construction; and
companies with a variety of products or services including oil tool
rental, underwater well services, helicopter services, energy-related
capital equipment, and mining-related equipment or services. They may
also include companies that provide products and services to these
companies.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
ENVIRONMENTAL SERVICES PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in the research, development,
manufacture or distribution of products, processes, or services
related to waste management or pollution control. These companies may
include, for example, companies involved in the transportation,
treatment, and disposal of both hazardous and solid wastes, including:
waste-to-energy and recycling; remedial project efforts, including
groundwater and underground storage tank decontamination, asbestos
cleanup and emergency cleanup response; and the detection, analysis,
evaluation, and treatment of both existing and potential environmental
problems including, among others, contaminated water, air pollution,
and acid rain. They may also include companies that provide design,
engineering, construction, and consulting services to companies
engaged in waste management or pollution control.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
FINANCIAL SERVICES PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks.
FMR normally invests at least 80%, of the fund's assets in securities
of companies principally engaged in providing financial services to
consumers and industry. These companies may include, for example,
commercial banks, savings and loan associations, brokerage companies,
insurance companies, real estate-related companies, leasing companies,
and consumer and industrial finance companies.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
FOOD AND AGRICULTURE PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in the manufacture, sale, or
distribution of food and beverage products, agricultural products, and
products related to the development of new food technologies. These
companies may include, for example, companies that sell products and
services such as meat and poultry processing and wholesale and retail
distribution and warehousing of food and food-related products,
including restaurants and grocery stores; companies that manufacture
and distribute products including soft drinks, packaged food products
(such as cereals, pet foods, and frozen foods), health food and
dietary products, wood products, tobacco, fertilizer and agricultural
machinery; and companies engaged in the development of new
technologies to provide, for example, improved hybrid seeds, new and
safer food storage and new enzyme technologies.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
GOLD PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks and
in certain precious metals. FMR invests the fund's assets primarily in
companies engaged in exploration, mining, processing, or dealing in
gold, or to a lesser degree, in silver, platinum, diamonds, or other
precious metals and minerals.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in gold-related activities, and in
gold bullion or coins. Gold-related activities may include
exploration, mining, processing, or dealing in gold or the manufacture
or distribution of gold products such as jewelry, watches and gold
foil and leaf. FMR treats investments in instruments whose value is
linked to the price of gold as investments in gold bullion or coins.
FMR may also invest the fund's assets in other precious metals in the
form of bullion, coins, securities indexed to the price of precious
metals, and securities of companies that manufacture and distribute
precious metal and minerals products (such as jewelry, watches, and
metal foils and leaf) and companies that invest in other companies
engaged in gold and other precious metal and mineral-related
activities.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
HEALTH CARE PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in the design, manufacture, or sale
of products or services used for or in connection with health care or
medicine. These companies may include, for example, pharmaceutical
companies; companies involved in biotechnology, medical diagnostic,
biochemical or other health care research and development; companies
involved in the operation of health care facilities; and other
companies involved in the design, manufacture, or sale of health
care-related products or services such as medical, dental and optical
products, hardware or services.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
HOME FINANCE PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in investing in real estate, usually
through mortgages and other consumer-related loans. These companies
may include, for example, mortgage banking companies, real estate
investment trusts, government-sponsored enterprises, consumer finance
companies, savings and loan associations, savings banks, building and
loan associations, cooperative banks, commercial banks, and other
depository institutions.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
INDUSTRIAL EQUIPMENT PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in the manufacture, distribution, or
service of products and equipment for the industrial sector, including
integrated producers of capital equipment (such as general industrial
machinery, farm equipment, and computers), parts suppliers, and
subcontractors. These companies may include, for example, companies
that provide service establishment, railroad, textile, farming,
mining, oilfield, semiconductor, and telecommunications equipment;
companies that manufacture products or service equipment for trucks,
construction, transportation or machine tools; companies that
manufacture products or service equipment for the food, clothing or
sporting goods industries; cable equipment companies; and office
automation companies.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
INDUSTRIAL MATERIALS PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in the manufacture, mining,
processing, or distribution of raw materials and intermediate goods
used in the industrial sector. These materials and goods may include,
for example, chemicals, metals, textiles, wood products, cement and
gypsum. These companies may include, for example, mining, processing,
transportation, and distribution companies, including equipment
suppliers and railroads.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
INSURANCE PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in underwriting, reinsuring, selling,
distributing, or placing of property and casualty, life, or health
insurance. These companies may include, for example, companies that
provide a specific type of insurance, such as life or health
insurance, those that offer a variety of insurance products, and those
that provide insurance services such as insurance brokers, reciprocals
and claims processors.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
LEISURE PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in the design, production, or
distribution of goods or services in the leisure industries. These
companies may include, for example, companies that provide goods or
services including: television and radio broadcast or manufacture
(including cable television); motion pictures and photography;
recordings and musical instruments; publishing, including newspapers
and magazines; sporting goods and camping and recreational equipment;
sports arenas and gaming casinos; toys and games, including video and
other electronic games; amusement and theme parks; travel and
travel-related services; hotels and motels; leisure apparel or
footwear; fast food, beverages, restaurants, and tobacco products.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
MEDICAL DELIVERY PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in the ownership or management of
hospitals, nursing homes, health maintenance organizations, and other
companies specializing in the delivery of health care services. These
companies may include, for example, companies that operate acute care,
psychiatric, teaching, or specialized treatment hospitals; companies
that provide outpatient surgical, outpatient rehabilitation, or other
specialized care, home health care, drug and alcohol abuse treatment,
and dental care; companies that operate comprehensive health
maintenance organizations and nursing homes for the elderly and
disabled; companies that supply medical equipment; and companies that
provide related services.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
MEDICAL EQUIPMENT AND SYSTEMS PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in research, development,
manufacture, distribution, supply or sale of medical equipment and
devices and related technologies. These companies may include, for
example, companies involved in the design and manufacture of medical
equipment and devices, drug delivery technologies, hospital equipment
and supplies, medical instrumentation and medical diagnostics.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
MULTIMEDIA PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in the development, production, sale,
and distribution of goods or services used in the broadcast and media
industries. These companies may include, for example, advertising
companies; companies that own, operate or broadcast free or pay
television, radio or cable stations; theaters; film studios;
publishers or sellers of newspapers, magazines, books or video
products; printing, cable television and video companies and equipment
providers; pay-per-view television companies; companies involved in
emerging technologies for the broadcast and media industries; cellular
communications companies; companies involved in the development,
syndication and transmission of television, movie programming,
advertising and cellular communications; companies that distribute
data-based information; and other companies involved in the ownership,
operation, or development of media products or services.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
NATURAL GAS PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in the production, transmission, and
distribution of natural gas, and involved in the exploration of
potential natural gas sources, as well as those companies that provide
services and equipment to natural gas producers, refineries,
cogeneration facilities, converters, and distributors. These companies
may include, for example, companies involved in the production,
refinement, transmission, distribution, marketing, control, or
measurement of natural gas; companies involved in exploration of
potential natural gas sources; companies involved in natural gas
research or experimentation; companies working toward the solution of
energy problems, such as energy conservation or pollution control
through the use of natural gas; companies working toward technological
advances in the natural gas field; and other companies providing
equipment or services to the field.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
NATURAL RESOURCES PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks and
in certain precious metals. FMR invests the fund's assets primarily in
companies that own or develop natural resources, or supply goods and
services to such companies.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in owning or developing natural
resources, or supplying goods and services to such companies, and in
precious metals. These companies may include, for example, companies
involved either directly or through subsidiaries in exploring, mining,
refining, processing, transporting, fabricating, dealing in, or owning
natural resources. Natural resources include precious metals (e.g.,
gold, platinum, and silver), ferrous and nonferrous metals (e.g.,
iron, aluminum, and copper), strategic metals (e.g., uranium and
titanium), hydrocarbons (e.g., coal, oil, and natural gases),
chemicals, forest products, real estate, food, textile and tobacco
products, and other basic commodities. FMR treats investments in
instruments whose value is linked to the price of precious metals as
investments in precious metals.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
PAPER AND FOREST PRODUCTS PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in the manufacture, research, sale,
or distribution of paper products, packaging products, building
materials (such as lumber and paneling products), and other products
related to the paper and forest products industry. These companies may
include, for example, paper production and office product companies,
printers, and publishers.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
PRECIOUS METALS AND MINERALS PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks and
in certain precious metals. FMR invests the fund's assets primarily in
companies engaged in exploration, mining, processing, or dealing in
gold, silver, platinum, diamonds, or other precious metals and
minerals.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in exploration, mining, processing,
or dealing in gold, silver, platinum, diamonds, or other precious
metals and minerals, and in precious metals. These companies may
include, for example, companies that manufacture and distribute
precious metal and minerals products (such as jewelry, watches, and
metal foils and leaf). FMR treats investments in instruments whose
value is linked to the price of precious metals as investments in
precious metals.
FMR may also invest the fund's assets in securities of companies that
invest in other companies engaged in gold and other precious metal and
mineral-related activities.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
REGIONAL BANKS PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in accepting deposits and making
commercial and principally non-mortgage consumer loans. These
companies concentrate their operations in a specific part of the
country and may include, for example, state chartered banks, savings
and loan institutions, banks that are members of the Federal Reserve
System, and U.S. institutions whose deposits are not insured by the
federal government. In addition, these companies may offer merchant
banking, consumer and commercial finance, discount brokerage, leasing
and insurance.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
RETAILING PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in merchandising finished goods and
services primarily to individual consumers. These companies may
include, for example, general merchandise retailers; drug and
department stores; suppliers of goods and services for homes and
yards; specialty retailers selling a single category of merchandise
such as food, apparel, jewelry, toys, electronics, computers or home
improvement products; motor vehicle and marine dealers; warehouse
membership clubs; mail order operations; and companies involved in
alternative selling methods such as direct telephone marketing, mail
order, membership warehouse clubs, computer, or video-based electronic
systems.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in research, design, production or
distribution of products or processes that relate to software or
information-based services. These companies may include, for example,
companies that design products such as systems-level software (to run
the basic functions of a computer) or applications software (for one
type of work) for general use or use by certain industries or groups;
companies that provide communications software; and companies that
provide time-sharing services, computer consulting or facilities
management services, and data communications services.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
TECHNOLOGY PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in offering, using or developing
products, processes or services that will provide or will benefit
significantly from technological advances and improvements. These
companies may include, for example, companies that develop, produce or
distribute products or services in the computer, semi-conductor,
electronics, communications, health care, and biotechnology sectors.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
TELECOMMUNICATIONS PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in the development, manufacture, or
sale of communications services or communications equipment. These
companies may include, for example, companies that provide traditional
local and long-distance telephone service or equipment; companies that
provide cellular, paging, local and wide area product networks or
equipment; companies that provide satellite, microwave and cable
television or equipment; and companies involved in new technologies
such as fiber optics, semiconductors, and data transmission.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
TRANSPORTATION PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in providing transportation services
or companies principally engaged in the design, manufacture,
distribution, or sale of transportation equipment. These companies may
include, for example, companies involved in the movement of freight or
people such as airline, railroad, ship, truck and bus companies;
equipment manufacturers (including makers of trucks, automobiles,
planes, containers, railcars or other modes of transportation and
related products); parts suppliers; companies that provide leasing and
maintenance for automobiles, trucks, containers, railcars and planes;
and companies that sell fuel-saving devices to the transportation
industry and those that sell insurance and software developed
primarily for transportation companies.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
UTILITIES GROWTH PORTFOLIO
FMR normally invests the fund's assets primarily in common stocks.
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in the public utilities industry and
companies deriving a majority of their revenues from their public
utility operations. These companies may include, for example,
companies that manufacture, produce, generate, transmit or sell gas or
electric energy; water supply, waste disposal and sewerage, and
sanitary service companies; and companies involved in the
communication field, including telephone, telegraph, satellite,
microwave and the provision of other communication facilities for the
public benefit.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
DESCRIPTION OF PRINCIPAL SECURITY TYPES
EQUITY SECURITIES represent an ownership interest, or the right to
acquire an ownership interest, in an issuer. Different types of equity
securities provide different voting and dividend rights and priority
in the event of the bankruptcy of the issuer. Equity securities
include common stocks, preferred stocks, convertible securities and
warrants.
PRINCIPAL INVESTMENT RISKS
Many factors affect each fund's performance. A fund's share price
changes daily based on changes in market conditions and interest rates
and in response to other economic, political or financial
developments. A fund's reaction to these events will be affected by
the types of the securities in which the fund invests, the financial
condition, industry and economic sector, and geographic location of an
issuer, and the fund's level of investment in the securities of that
issuer. Because FMR concentrates each fund's investments in a
particular industry or group of industries, each fund's performance is
expected to be closely tied to economic and market conditions within
that industry or group of industries and to be more volatile than the
performance of less concentrated funds. In addition, because FMR may
invest a significant percentage of the assets of each fund (except
Financial Services, Home Finance and Regional Banks) in a single
issuer, the fund's performance could be closely tied to the market
value of that one issuer and could be more volatile than the
performance of more diversified funds. When you sell your shares of a
fund, they could be worth more or less than what you paid for them.
The following factors may significantly affect a fund's performance:
STOCK MARKET VOLATILITY. The value of equity securities fluctuates in
response to issuer, political, market and economic developments. In
the short term, equity prices can fluctuate dramatically in response
to these developments. Different parts of the market and different
types of equity securities can react differently to these
developments. For example, large cap stocks can react differently than
small cap stocks, and "growth" stocks can react differently than
"value" stocks. Issuer, political or economic developments can affect
a single issuer, issuers within an industry or economic sector or
geographic region, or the market as a whole.
FOREIGN EXPOSURE. Foreign securities, foreign currencies, and
securities issued by U.S. entities with substantial foreign operations
can involve additional risks relating to political, economic or
regulatory conditions in foreign countries. These risks include
fluctuations in foreign currencies; withholding or other taxes;
trading, settlement, custodial and other operational risks; and the
less stringent investor protection and disclosure standards of some
foreign markets. All of these factors can make foreign investments,
especially those in emerging markets, more volatile and potentially
less liquid than U.S. investments. In addition, foreign markets can
perform differently than the U.S. market.
INDUSTRY CONCENTRATION. Market conditions, interest rates, and
economic, regulatory or financial developments could significantly
affect a single industry or a group of related industries, and the
securities of companies in that industry or group of industries could
react similarly to these or other developments.
The AIR TRANSPORTATION industry can be significantly affected by
competition within the industry, domestic and foreign economies,
government regulation, and the price of fuel. Airline deregulation has
substantially diminished the government's role in the air transport
industry while promoting an increased level of competition. However,
regulations and policies of various domestic and foreign governments
can still affect the profitability of individual carriers as well as
the entire industry.
The AUTOMOTIVE industry can be highly cyclical and companies in the
industry may suffer periodic operating losses. The industry can be
significantly affected by labor relations and fluctuating component
prices. While most of the major manufacturers are large, financially
strong companies, many others are small and may be non-diversified in
both product line and customer base.
The BIOTECHNOLOGY industry can be significantly affected by patent
considerations, intense competition, rapid technological change and
obsolescence, and government regulation. Biotechnology companies may
have persistent losses during a new product's transition from
development to production, and revenue patterns may be erratic.
The BROKERAGE AND INVESTMENT MANAGEMENT industry can be significantly
affected by changes in regulations, brokerage commission structure,
and a competitive environment combined with the high operating
leverage inherent in companies in this industry. The performance of
companies in this industry can be closely tied to the stock and bond
markets and can suffer during market declines. Revenues often depend
on overall market activity.
The BUSINESS SERVICES AND OUTSOURCING industry is, in part, subject to
continued demand for such services as companies and other
organizations seek alternative, cost effective means to meet their
economic goals. The industry can be significantly affected by
competitive pressures, such as technological developments, fixed-rate
pricing, and the ability to attract and retain skilled employees.
The CHEMICAL industry can be significantly affected by intense
competition, product obsolescence, and government regulation. As
regulations are developed and enforced, chemical companies may be
required to alter or cease production of a product, to pay fines, to
pay for cleaning up a disposal site, or to agree to restrictions on
their operations. In addition, some of the materials and processes
used by these companies involve hazardous components. There are risks
associated with their production, handling and disposal.
The COMPUTER industry can be significantly affected by competitive
pressures. For example, as product cycles shorten and manufacturing
capacity increases, these companies could become increasingly subject
to aggressive pricing, which hampers profitability. Profitability can
also be affected by changing domestic and international demand,
research and development costs, and product obsolescence.
The CONSTRUCTION AND HOUSING industry can be significantly affected by
changes in government spending on housing subsidies, public works and
transportation facilities such as highways and airports, as well as
changes in interest rates, consumer confidence and spending, taxation,
demographic patterns, housing starts, and the level of new and
existing home sales.
The CONSUMER industries can be significantly affected by the
performance of the overall economy, interest rates, competition, and
consumer confidence. Success depends heavily on disposable household
income and consumer spending. Changes in demographics and consumer
tastes can also affect the demand for, and success of, consumer
products.
The CYCLICAL industries can be significantly affected by general
economic trends, including employment, economic growth and interest
rates, changes in consumer sentiment and spending, commodity prices,
legislation, government regulation and spending, import controls, and
worldwide competition. For example, commodity price declines and unit
volume reductions resulting from an over-supply of materials used in
cyclical industries can adversely affect those industries.
Furthermore, a company in the cyclical industries can be subject to
liability for environmental damage, depletion of resources, and
mandated expenditures for safety and pollution control.
The DEFENSE AND AEROSPACE industry can be significantly affected by
government defense and aerospace regulation and spending policies
because companies involved in the defense and aerospace industry rely
to a large extent on U.S. (and other) government demand for their
products and services. Defense spending is currently under pressure
from efforts to control the U.S. budget deficit.
The DEVELOPING COMMUNICATIONS industry can be significantly affected
by failure to obtain, or delays in obtaining, financing or regulatory
approval, intense competition, product compatibility, consumer
preferences, and rapid obsolescence.
The ELECTRONICS industry can be significantly affected by rapid
obsolescence, intense competition and global demand.
The ENERGY industry can be significantly affected by fluctuations in
price and supply of energy fuels caused by events relating to
international politics, energy conservation, the success of
exploration projects, and tax and other government regulations.
The ENERGY SERVICE industry can be significantly affected by the
supply of and demand for specific products or services, the supply of
and demand for oil and gas, the price of oil and gas, exploration and
production spending, government regulation, world events, and economic
conditions.
The ENVIRONMENTAL SERVICES industry can be significantly affected by
intense competition and legislation resulting in more strict
government regulations and enforcement policies for both commercial
and governmental generators of waste materials as well as specific
expenditures designated for remedial cleanup efforts. As regulations
are developed and enforced, companies may be required to alter or
cease production of a product or service or to agree to restrictions
on their operations. In addition, hazardous materials involved in
environmental services present significant liability risk.
The FINANCIAL SERVICES industries are subject to extensive government
regulation which can limit both the amounts and types of loans and
other financial commitments they can make, and the interest rates and
fees they can charge. Profitability is largely dependent on the
availability and cost of capital funds, and can fluctuate
significantly when interest rates change. Credit losses resulting from
financial difficulties of borrowers can negatively affect the
financial services industries. Insurance companies can be subject to
severe price competition. The financial services industries are
currently undergoing relatively rapid change as existing distinctions
between financial service segments become less clear. For instance,
recent business combinations have included insurance, finance, and
securities brokerage under single ownership. Some primarily retail
corporations have expanded into securities and insurance industries.
Moreover, the federal laws generally separating commercial and
investment banking are currently being studied by Congress.
The FOOD AND AGRICULTURE industry can be significantly affected by
demographic and product trends, food fads, marketing campaigns, and
environmental factors. In the United States, the agricultural products
industry is subject to regulation by numerous federal and state
government agencies.
The GOLD industry can be significantly affected by international
monetary and political developments such as currency devaluations or
revaluations, central bank movements, economic and social conditions
within a country, trade imbalances, or trade or currency restrictions
between countries. The prices of gold and other precious metal mining
securities can be subject to substantial fluctuations over short
periods of time. Because much of the world's gold reserves are located
in South Africa, the social and economic conditions there and in
neighboring countries can affect gold and gold-related companies
located in South Africa and worldwide.
The HEALTH CARE industries are subject to government regulation and
government approval of products and services, which could have a
significant effect on price and availability. Furthermore, the types
of products or services produced or provided by health care companies
quickly can become obsolete.
The HOME FINANCE industry can be significantly affected by regulatory
changes, interest rate movements, home mortgage demand, refinancing
activity and residential delinquency trends. The residential real
estate finance industry has changed rapidly over the last decade.
Regulatory changes at federally insured institutions, in response to a
high failure rate, have mandated higher capital ratios and more
prudent underwriting. This reduced capacity has created growth
opportunities for uninsured companies and secondary market products to
fill unmet demand for home finance. Change continues in the
origination, packaging, selling, holding, and insuring of home finance
products.
The INDUSTRIAL EQUIPMENT industry can be significantly affected by
overall capital spending levels, which are influenced by an individual
company's profitability and broader factors such as interest rates and
foreign competition. The industrial equipment industry can also be
significantly affected by economic cycles, technical obsolescence,
labor relations, and government regulations.
The INDUSTRIAL MATERIALS industry can be significantly affected by the
level and volatility of commodity prices, the exchange value of the
dollar, import controls, and worldwide competition. At times,
worldwide production of industrial materials has exceeded demand as a
result of over-building or economic downturns, which leads to
commodity price declines and unit price reductions. Companies in the
industry can also be adversely affected by liability for environmental
damage, depletion of resources, and mandated expenditures for safety
and pollution control.
The INSURANCE industry can be significantly affected by interest
rates, general economic conditions, and price and marketing
competition. Property and casualty insurance profits can be affected
by weather catastrophes and other natural disasters. Life and health
insurance profits can be affected by mortality and morbidity rates.
Insurance companies can be adversely affected by inadequacy of cash
reserves, the inability to collect from reinsurance carriers,
liability for the coverage of environmental clean-up costs from past
years, and as yet unanticipated liabilities. Also, insurance companies
are subject to extensive government regulation, including the
imposition of maximum rate levels, and can be adversely affected by
proposed or potential tax law changes.
The LEISURE industry can be significantly affected by changing
consumer tastes and intense competition. The industry has reacted
strongly to technological developments and to the threat of government
regulation.
The MEDICAL DELIVERY industry is subject to extensive government
regulation, and can be significantly affected by government
reimbursement for medical expenses. Federal and state governments
provide a substantial percentage of revenues to health care service
providers via Medicare and Medicaid. The industry can also be
significantly affected by rising costs of medical products and
services, a shift away from traditional health insurance toward health
maintenance organizations, and increased emphasis on outpatient
services.
The MEDICAL EQUIPMENT AND SYSTEMS industry can be significantly
affected by patent considerations, rapid technological change and
obsolescence, government regulation, and government reimbursement for
medical expenses.
The MULTIMEDIA industry can be significantly affected by the federal
deregulation of cable and broadcasting, competitive pressures, and
government regulation, including regulation of the concentration of
investment in AM, FM, or TV stations.
The NATURAL GAS industry is subject to changes in price and supply of
both conventional and alternative energy sources. Swift price and
supply fluctuations may be caused by events relating to international
politics, energy conservation, the success of energy source
exploration projects, and tax and other domestic and foreign
government regulations.
The NATURAL RESOURCES industries can be significantly affected by
events relating to international political and economic developments,
energy conservation, the success of exploration projects, and tax and
other government regulations.
The PAPER AND FOREST PRODUCTS industry can be significantly affected
by the health of the economy, worldwide production capacity, and
interest rates, which may affect product pricing, costs and operating
margins. These variables can also affect the level of industry and
consumer capital spending for paper and forest products.
The PRECIOUS METALS AND MINERALS industry can be significantly
affected by international monetary and political developments such as
currency devaluations or revaluations, economic and social conditions
within a country, trade imbalances, or trade or currency restrictions
between countries. The prices of precious metal mining securities can
be subject to substantial fluctuations over short periods of time.
Because much of the world's gold reserves are located in South Africa,
the social and economic conditions there and in neighboring countries
can affect gold and gold-related companies located in South Africa and
worldwide.
The REGIONAL BANKINg industry can be significantly affected by
legislation currently being considered that would reduce the
separation between commercial and investment banking businesses and
could change the laws governing capitalization and the savings and
loan industry. The services offered by banks could expand if
legislation broadening bank powers is enacted. While providing
diversification, expanded powers could expose banks to
well-established competitors, particularly as the historical
distinctions between regional banks and other financial institutions
erode. Increased competition can also result from the broadening of
regional and national interstate banking powers, which has already
reduced the number of publicly traded regional banks. In addition,
general economic conditions are important to regional banks which face
exposure to credit losses and are significantly affected by changes in
interest rates.
The RETAIL industry can be significantly affected by consumer
spending, which is affected by general economic conditions and
consumer confidence levels. The retailing industry is highly
competitive, and a company's success is often tied to its ability to
anticipate changing consumer tastes.
The SOFTWARE AND COMPUTER SERVICES industry can be significantly
affected by competitive pressures. For example, an increasing number
of companies and new product offerings can lead to aggressive pricing
and slower selling cycles.
The TECHNOLOGY industries can be significantly affected by
obsolescence of existing technology, short product cycles, falling
prices and profits, and competition from new market entrants.
The TELECOMMUNICATIONS industry, particularly telephone operating
companies, is subject to both federal and state government regulations
of rates of return and services that may be offered. Many
telecommunications companies fiercely compete for market share.
The TRANSPORTATION industry can be significantly affected by changes
in the economy, fuel prices, labor relations, and insurance costs. The
trend in the United States has been to deregulate the transportation
industry, which could have a favorable long-term effect, but future
government decisions may adversely affect transportation companies.
The UTILITIES industries can be significantly affected by government
regulation, financing difficulties, supply and demand of services or
fuel, and natural resource conservation.
ISSUER-SPECIFIC CHANGES. Changes in the financial condition of an
issuer, changes in specific economic or political conditions that
affect a particular type of security or issuer, and changes in general
economic or political conditions can affect the value of an issuer's
securities. The value of securities of smaller, less well-known
issuers can be more volatile than that of larger issuers. Smaller
issuers can have more limited product lines, markets or financial
resources.
In response to market, economic, political or other conditions, FMR
may temporarily use a different investment strategy for defensive
purposes. If FMR does so, different factors could affect a fund's
performance and the fund may not achieve its investment objective.
THE MONEY MARKET FUND
INVESTMENT OBJECTIVE
MONEY MARKET PORTFOLIO seeks to provide high current income,
consistent with preservation of capital and liquidity.
PRINCIPAL INVESTMENT STRATEGIES
FMR invests the fund's assets in U.S. dollar-denominated money market
securities of domestic and foreign issuers, including U.S. Government
securities and repurchase agreements. FMR also may enter into reverse
repurchase agreements for the fund. FMR invests at least 80% of the
fund's assets in money market instruments.
FMR will invest more than 25% of the fund's total assets in the
financial services industry.
In buying and selling securities for the fund, FMR complies with
industry-standard requirements for money market funds regarding the
quality, maturity and diversification of the fund's investments. FMR
stresses maintaining a stable $1.00 share price, liquidity and income.
DESCRIPTION OF PRINCIPAL SECURITY TYPES
MONEY MARKET SECURITIES are high-quality, short-term securities that
pay a fixed, variable or floating interest rate. Securities are often
specifically structured so that they are eligible investments for a
money market fund. For example, in order to satisfy the maturity
restrictions for a money market fund, some money market securities
have demand or put features which have the effect of shortening the
security's maturity. Taxable money market securities include bank
certificates of deposit, bank acceptances, bank time deposits, notes,
commercial paper and U.S. Government securities.
PRINCIPAL INVESTMENT RISKS
Many factors affect the fund's performance. The fund's yield will
change daily based on changes in interest rates and other market
conditions. Although the fund is managed to maintain a stable $1.00
share price, there is no guarantee that the fund will be able to do
so. For example, a major increase in interest rates or a decrease in
the credit quality of the issuer of one of the fund's investments
could cause the fund's share price to decrease. While the fund will be
charged premiums by a mutual insurance company for coverage of
specified types of losses related to default or bankruptcy on certain
securities, the fund may incur losses regardless of the insurance.
The following factors may significantly affect the fund's performance:
INTEREST RATE CHANGES. Money market securities have varying levels of
sensitivity to changes in interest rates. In general, the price of a
money market security can fall when interest rates rise and can rise
when interest rates fall. Securities with longer maturities and the
securities of issuers in the financial services sector can be more
sensitive to interest rate changes. Short-term securities tend to
react to changes in short-term interest rates.
FOREIGN EXPOSURE. Issuers located in foreign countries and entities
located in foreign countries that provide credit support or a
maturity-shortening structure can involve increased risks. Extensive
public information about the issuer or provider may not be available
and unfavorable political, economic or governmental developments could
affect the value of the security.
FINANCIAL SERVICES EXPOSURE. Financial services companies are highly
dependent on the supply of short-term financing. The value of
securities of issuers in the financial services sector can be
sensitive to changes in government regulation and interest rates and
to economic downturns in the United States and abroad.
ISSUER-SPECIFIC CHANGES. Changes in the financial condition of an
issuer, changes in specific economic or political conditions that
affect a particular type of issuer, and changes in general economic or
political conditions can affect the credit quality or value of an
issuer's securities. Entities providing credit support or a
maturity-shortening structure also can be affected by these types of
changes. If the structure of a security fails to function as intended,
the security could decline in value.
FUNDAMENTAL INVESTMENT POLICIES
The policies discussed below are fundamental, that is, subject to
change only by shareholder approval.
AIR TRANSPORTATION PORTFOLIO invests primarily in companies engaged in
the regional, national and international movement of passengers, mail,
and freight via aircraft.
AUTOMOTIVE PORTFOLIO invests primarily in companies engaged in the
manufacture, marketing or sale of automobiles, trucks, specialty
vehicles, parts, tires, and related services.
BIOTECHNOLOGY PORTFOLIO invests primarily in companies engaged in the
research, development, and manufacture of various biotechnological
products, services and processes.
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO invests primarily in
companies engaged in stock brokerage, commodity brokerage, investment
banking, tax-advantaged investment or investment sales, investment
management, or related investment advisory services.
BUSINESS SERVICES AND OUTSOURCING PORTFOLIO invests primarily in
companies that provide business-related services to companies and
other organizations.
CHEMICALS PORTFOLIO invests primarily in companies engaged in the
research, development, manufacture or marketing of products or
services related to the chemical process industries.
COMPUTERS PORTFOLIO invests primarily in companies engaged in
research, design, development, manufacture or distribution of
products, processes or services that relate to currently available or
experimental hardware technology within the computer industry.
CONSTRUCTION AND HOUSING PORTFOLIO invests primarily in companies
engaged in the design and construction of residential, commercial,
industrial and public works facilities, as well as companies engaged
in the manufacture, supply, distribution or sale of products or
services to these construction industries.
CONSUMER INDUSTRIES PORTFOLIO invests primarily in companies engaged
in the manufacture and distribution of goods to consumers both
domestically and internationally.
CYCLICAL INDUSTRIES PORTFOLIO invests primarily in companies engaged
in the research, development, manufacture, distribution, supply, or
sale of materials, equipment, products or services related to cyclical
industries.
DEFENSE AND AEROSPACE PORTFOLIO invests primarily in companies engaged
in the research, manufacture or sale of products or services related
to the defense or aerospace industries.
DEVELOPING COMMUNICATIONS PORTFOLIO invests primarily in companies
engaged in the development, manufacture or sale of emerging
communications services or equipment.
ELECTRONICS PORTFOLIO invests primarily in companies engaged in the
design, manufacture, or sale of electronic components (semiconductors,
connectors, printed circuit boards and other components); equipment
vendors to electronic component manufacturers; electronic component
distributors; and electronic instruments and electronic systems
vendors.
ENERGY PORTFOLIO invests primarily in companies in the energy field,
including the conventional areas of oil, gas, electricity and coal,
and newer sources of energy such as nuclear, geothermal, oil shale and
solar power.
ENERGY SERVICE PORTFOLIO invests primarily in companies in the energy
service field, including those that provide services and equipment to
the conventional areas of oil, gas, electricity and coal, and newer
sources of energy such as nuclear, geothermal, oil shale and solar
power.
ENVIRONMENTAL SERVICES PORTFOLIO invests primarily in companies
engaged in the research, development, manufacture or distribution of
products, processes or services related to waste management or
pollution control.
FINANCIAL SERVICES PORTFOLIO invests primarily in companies that
provide financial services to consumers and industry.
FOOD AND AGRICULTURE PORTFOLIO invests primarily in companies engaged
in the manufacture, sale, or distribution of food and beverage
products, agricultural products, and products related to the
development of new food technologies.
GOLD PORTFOLIO invests primarily in companies engaged in exploration,
mining, processing, or dealing in gold, or, to a lesser degree, in
silver, platinum, diamonds, or other precious metals and minerals.
HEALTH CARE PORTFOLIO invests primarily in companies engaged in the
design, manufacture, or sale of products or services used for or in
connection with health care or medicine.
HOME FINANCE PORTFOLIO invests primarily in companies engaged in
investing in real estate, usually through mortgages and other
consumer-related loans.
INDUSTRIAL EQUIPMENT PORTFOLIO invests primarily in companies engaged
in the manufacture, distribution or service of products and equipment
for the industrial sector, including integrated producers of capital
equipment (such as general industrial machinery, farm equipment, and
computers), parts suppliers and subcontractors.
INDUSTRIAL MATERIALS PORTFOLIO invests primarily in companies engaged
in the manufacture, mining, processing, or distribution of raw
materials and intermediate goods used in the industrial sector.
INSURANCE PORTFOLIO invests primarily in companies engaged in
underwriting, reinsuring, selling, distributing, or placing of
property and casualty, life, or health insurance.
LEISURE PORTFOLIO invests primarily in companies engaged in the
design, production, or distribution of goods or services in the
leisure industries.
MEDICAL DELIVERY PORTFOLIO invests primarily in companies engaged in
the ownership or management of hospitals, nursing homes, health
maintenance organizations, and other companies specializing in the
delivery of health care services.
MEDICAL EQUIPMENT AND SYSTEMS PORTFOLIO invests primarily in companies
engaged in research, development, manufacture, distribution, supply or
sale of medical equipment and devices and related technologies.
MULTIMEDIA PORTFOLIO invests primarily in companies engaged in the
development, production, sale and distribution of goods or services
used in the broadcast and media industries.
NATURAL GAS PORTFOLIO invests primarily in companies engaged in the
production, transmission, and distribution of natural gas, and
involved in the exploration of potential natural gas sources, as well
as those companies that provide services and equipment to natural gas
producers, refineries, cogeneration facilities, converters, and
distributors.
NATURAL RESOURCES PORTFOLIO invests primarily in companies that own or
develop natural resources, or supply goods and services to such
companies.
PAPER AND FOREST PRODUCTS PORTFOLIO invests primarily in companies
engaged in the manufacture, research, sale, or distribution of paper
products, packaging products, building materials (such as lumber and
paneling products), and other products related to the paper and forest
products industry.
PRECIOUS METALS AND MINERALS PORTFOLIO invests primarily in companies
engaged in exploration, mining, processing or dealing in gold, silver,
platinum, diamonds or other precious metals and minerals.
REGIONAL BANKS PORTFOLIO invests primarily in companies engaged in
accepting deposits and making commercial and principally non-mortgage
consumer loans.
RETAILING PORTFOLIO invests primarily in companies engaged in
merchandising finished goods and services primarily to individual
consumers.
SOFTWARE AND COMPUTER SERVICES PORTFOLIO invests primarily in
companies engaged in research, design, production or distribution of
products or processes that relate to software or information-based
services.
TECHNOLOGY PORTFOLIO invests primarily in companies which FMR believes
have, or will develop, products, processes or services that will
provide or will benefit significantly from technological advances and
improvements.
TELECOMMUNICATIONS PORTFOLIO invests primarily in companies engaged in
the development, manufacture, or sale of communications services or
communications equipment.
TRANSPORTATION PORTFOLIO invests primarily in companies engaged in
providing transportation services or companies engaged in the design,
manufacture, distribution, or sale of transportation equipment.
UTILITIES GROWTH PORTFOLIO invests primarily in companies in the
public utilities industry and companies deriving a majority of their
revenues from their public utility operations.
MONEY MARKET PORTFOLIO seeks to provide high current income,
consistent with preservation of capital and liquidity, by investing in
a broad range of high quality money market instruments.
EACH STOCK FUND seeks capital appreciation.
With the exception of Business Services and Outsourcing, Cyclical
Industries, Medical Equipment and Systems, and Natural Resources, each
stock fund seeks to achieve its investment objective by investing
primarily in equity securities, including common stocks and securities
convertible into common stocks, and for Gold and Precious Metals and
Minerals, in certain precious metals. For each stock fund (except
Business Services and Outsourcing, Cyclical Industries, Medical
Equipment and Systems, and Natural Resources), FMR does not place any
emphasis on income when selecting securities, except when it believes
that income may have a favorable effect on a security's market value.
When FMR considers it appropriate for defensive purposes, each stock
fund (except Business Services and Outsourcing, Cyclical Industries,
Medical Equipment and Systems, and Natural Resources) may temporarily
invest substantially in investment-grade debt securities.
VALUING SHARES
Each fund is open for business each day the New York Stock Exchange
(NYSE) is open.
Each fund's net asset value per share (NAV) is the value of a single
share. Fidelity normally calculates each stock fund's NAV as of each
hour, from 10:00 a.m. to the close of business of the NYSE, normally
4:00 p.m. Eastern time. On days when the NYSE closes early, Fidelity
will calculate the last NAV for the stock funds as of the close of the
NYSE. In addition, Fidelity will not calculate a stock fund's NAV if
trading on the NYSE is restricted or as permitted by the Securities
and Exchange Commission (SEC). Fidelity normally calculates the money
market fund's NAV as of the close of the NYSE, normally 4:00 p.m.
Eastern time. However, the money market fund's NAV may be calculated
earlier if trading on the NYSE is restricted or as permitted by the
SEC. Each fund's assets are valued as of these times for the purpose
of computing the fund's NAV.
To the extent that each fund's assets are traded in other markets on
days when the NYSE is closed, the value of the fund's assets may be
affected on days when the fund is not open for business. In addition,
trading in some of a fund's assets may not occur on days when the fund
is open for business.
The money market fund's assets are valued on the basis of amortized
cost.
Each stock fund's assets are valued primarily on the basis of market
quotations. Certain short-term securities are valued on the basis of
amortized cost. If market quotations are not readily available for a
security or if a security's value has been materially affected by
events occurring after the close of the exchange or market on which
the security is principally traded (for example, a foreign exchange or
market), that security may be valued by another method that the Board
of Trustees believes accurately reflects fair value. A security's
valuation may differ depending on the method used for determining
value.
SHAREHOLDER INFORMATION
BUYING AND SELLING SHARES
GENERAL INFORMATION
Fidelity Investments was established in 1946 to manage one of
America's first mutual funds. Today, Fidelity is the largest mutual
fund company in the country, and is known as an innovative provider of
high-quality financial services to individuals and institutions.
In addition to its mutual fund business, the company operates one of
America's leading discount brokerage firms, Fidelity Brokerage
Services, Inc. (FBSI). Fidelity is also a leader in providing
tax-advantaged retirement plans for individuals investing on their own
or through their employer.
For account, product and service information, please use the following
Web site and phone numbers:
(small solid bullet) For information over the Internet, visit
Fidelity's Web site at www.fidelity.com.
(small solid bullet) For accessing account information automatically
by phone, use TouchTone Xpress(registered trademark), 1-800-544-5555.
(small solid bullet) For exchanges and redemptions, 1-800-544-7777.
(small solid bullet) For account assistance, 1-800-544-6666.
(small solid bullet) For mutual fund and retirement information,
1-800-544-8888.
(small solid bullet) For brokerage information, 1-800-544-7272.
(small solid bullet) TDD - Service for the Deaf and Hearing-Impaired,
1-800-544-0118 (9:00 a.m.-9:00 p.m. Eastern time).
Please use the following addresses:
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
OVERNIGHT EXPRESS
Fidelity Investments
2300 Litton Lane - KH1A
Hebron, KY 41048
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75039-5517
You may buy or sell shares of the funds through a retirement account
or an investment professional. If you invest through a retirement
account or an investment professional, the procedures for buying,
selling and exchanging shares of a fund and the account features and
policies may differ. Additional fees may also apply to your investment
in a fund, including a transaction fee if you buy or sell shares of
the fund through a broker or other investment professional.
Certain methods of contacting Fidelity, such as by telephone or
electronically, may be unavailable or delayed (for example, during
periods of unusual market activity). In addition, the level and type
of service available may be restricted based on criteria established
by Fidelity.
The different ways to set up (register) your account with Fidelity are
listed in the following table.
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
RETIREMENT
FOR TAX-ADVANTAGED RETIREMENT SAVINGS
(solid bullet) TRADITIONAL INDIVIDUAL RETIREMENT ACCOUNTS (IRAS)
(solid bullet) ROTH IRAS
(solid bullet) ROLLOVER IRAS
(solid bullet) 401(K) PLANS AND CERTAIN OTHER 401(A)-QUALIFIED PLANS
(solid bullet) KEOGH PLANS
(solid bullet) SIMPLE IRAS
(solid bullet) SIMPLIFIED EMPLOYEE PENSION PLANS (SEP-IRAS)
(solid bullet) SALARY REDUCTION SEP-IRAS (SARSEPS)
(solid bullet) 403(B) CUSTODIAL ACCOUNTS
(solid bullet) DEFERRED COMPENSATION PLANS (457 PLANS)
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
TRUST
FOR MONEY BEING INVESTED BY A TRUST
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS OR
OTHER GROUPS
BUYING SHARES
The price to buy one share of each fund is the fund's offering price
or the fund's NAV, depending on whether you pay a sales charge.
If you pay a sales charge, your price will be the fund's offering
price. When you buy shares of a fund at the offering price, Fidelity
deducts the appropriate sales charge and invests the rest in the fund.
If you qualify for a sales charge waiver, your price will be the
fund's NAV.
The offering price of each fund is its NAV divided by the difference
between one and the applicable sales charge percentage. The maximum
sales charge is 3.00% of the offering price.
Your shares will be bought at the next offering price or NAV, as
applicable, calculated after your investment is received in proper
form.
Short-term or excessive trading into and out of a fund may harm
performance by disrupting portfolio management strategies and by
increasing expenses. Accordingly, a fund may reject any purchase
orders, including exchanges, particularly from market timers or
investors who, in FMR's opinion, have a pattern of short-term or
excessive trading or whose trading has been or may be disruptive to
that fund. For these purposes, FMR may consider an investor's trading
history in that fund or other Fidelity funds, and accounts under
common ownership or control.
Each fund may stop offering shares completely or may offer shares only
on a limited basis, for a period of time or permanently.
When you place an order to buy shares, note the following:
(small solid bullet) All of your purchases must be made in U.S.
dollars and checks must be drawn on U.S. banks.
(small solid bullet) Fidelity does not accept cash.
(small solid bullet) When making a purchase with more than one check,
each check must have a value of at least $50.
(small solid bullet) Fidelity reserves the right to limit the number
of checks processed at one time.
(small solid bullet) If your check does not clear, your purchase will
be canceled and you could be liable for any losses or fees a fund or
Fidelity has incurred.
(small solid bullet) If you do not specify a particular stock fund,
your investment will be made in the money market fund until Fidelity
receives instructions in proper form from you.
Certain financial institutions that have entered into sales agreements
with Fidelity Distributors Corporation (FDC) may enter confirmed
purchase orders on behalf of customers by phone, with payment to
follow no later than the time when a fund is priced on the following
business day. If payment is not received by that time, the order will
be canceled and the financial institution could be held liable for
resulting fees or losses.
MINIMUMS
TO OPEN AN ACCOUNT $2,500
For certain Fidelity retirement accountsA $500
TO ADD TO AN ACCOUNT $250
Through regular investment plans $100
MINIMUM BALANCE $2,000
For certain Fidelity retirement accountsA $500
A FIDELITY TRADITIONAL IRA, ROTH IRA, ROLLOVER IRA, SEP-IRA, AND KEOGH
ACCOUNTS.
There is no minimum account balance or initial or subsequent purchase
minimum for investments through Fidelity Portfolio Advisory Services
SM, a qualified state tuition program, certain Fidelity retirement
accounts funded through salary deduction, or accounts opened with the
proceeds of distributions from such retirement accounts.
In addition, each fund may waive or lower purchase minimums in other
circumstances.
KEY INFORMATION
PHONE 1-800-544-7777 TO OPEN AN ACCOUNT
(small solid bullet) Exchange
from another Fidelity fund.
Call the phone number at left.
TO ADD TO AN ACCOUNT
(small solid bullet) Exchange
from another Fidelity fund.
Call the phone number at left.
(small solid bullet) Use
Fidelity Money
Line(registered trademark)
to transfer from your bank
account.
INTERNET WWW.FIDELITY.COM TO OPEN AN ACCOUNT
(small solid bullet) Complete
and sign the application.
Make your check payable to
the complete name of the
fund. Mail to the address
under "Mail" below.
TO ADD TO AN ACCOUNT
(small solid bullet) Exchange
from another Fidelity fund.
(small solid bullet) Use
Fidelity Money Line to
transfer from your bank
account.
MAIL FIDELITY INVESTMENTS TO OPEN AN ACCOUNT
P.O. BOX 770001 CINCINNATI, (small solid bullet) Complete
OH 45277-0002 and sign the application.
Make your check payable to
the complete name of the
fund. Mail to the address at
left.
TO ADD TO AN ACCOUNT
(small solid bullet) Make
your check payable to the
complete name of the fund.
Indicate your fund account
number on your check and
mail to the address at left.
(small solid bullet) Exchange
from another Fidelity fund.
Send a letter of instruction
to the address at left,
including your name, the
funds' names, the fund
account numbers, and the
dollar amount or number of
shares to be exchanged.
IN PERSON TO OPEN AN ACCOUNT
(small solid bullet) Bring
your application and check
to a Fidelity Investor
Center. Call 1-800-544-9797
for the center nearest you.
TO ADD TO AN ACCOUNT
(small solid bullet) Bring
your check to a Fidelity
Investor Center. Call
1-800-544-9797 for the
center nearest you.
WIRE TO OPEN AN ACCOUNT
(small solid bullet) Call
1-800-544-7777 to set up
your account and to arrange
a wire transaction.
(small solid bullet) Wire
within 24 hours to: Bankers
Trust Company, Bank Routing
# 021001033, Account #
00163053.
(small solid bullet) Specify
the complete name of the
fund and include your new
fund account number and your
name.
TO ADD TO AN ACCOUNT
(small solid bullet) Wire to:
Bankers Trust Company, Bank
Routing # 021001033, Account
# 00163053.
(small solid bullet) Specify
the complete name of the
fund and include your fund
account number and your name.
AUTOMATICALLY TO OPEN AN ACCOUNT
(small solid bullet) Not
available.
TO ADD TO AN ACCOUNT
(small solid bullet) Use
Fidelity Automatic Account
Builder(registered
trademark) or Direct Deposit.
(small solid bullet) Direct
Deposit is not available for
Select stock funds.
(small solid bullet) Use
Fidelity Automatic Exchange
Service to exchange from a
Fidelity money market fund.
SELLING SHARES
The price to sell one share of the money market fund is the fund's
NAV. The price to sell one share of each stock fund is the fund's NAV
minus the applicable redemption fee (trading fee).
Each stock fund will deduct a trading fee of $7.50 or 0.75%, depending
on how long you held your shares, from the redemption amount when you
sell your shares. For stock fund shares held 29 days or less, the
trading fee is equal to 0.75% of the redemption amount. For stock fund
shares held 30 days or more, the trading fee is equal to the lesser of
$7.50 or 0.75% of the redemption amount. This fee is paid to the fund
rather than Fidelity, and is designed to offset the brokerage
commissions, market impact, and other costs associated with
fluctuations in fund asset levels and cash flow caused by shareholder
trading.
If you bought shares on different days, the shares you held longest
will be redeemed first for purposes of determining the trading fee.
The trading fee does not apply to shares that were acquired through
reinvestment of distributions.
Your shares will be sold at the next NAV calculated after your order
is received in proper form, minus the applicable trading fee.
Certain requests must include a signature guarantee. It is designed to
protect you and Fidelity from fraud. Your request must be made in
writing and include a signature guarantee if any of the following
situations apply:
(small solid bullet) You wish to sell more than $100,000 worth of
shares;
(small solid bullet) Your account registration has changed within the
last 30 days;
(small solid bullet) The check is being mailed to a different address
than the one on your account (record address);
(small solid bullet) The check is being made payable to someone other
than the account owner; or
(small solid bullet) The redemption proceeds are being transferred to
a Fidelity account with a different registration.
You should be able to obtain a signature guarantee from a bank, broker
(including Fidelity Investor Centers), dealer, credit union (if
authorized under state law), securities exchange or association,
clearing agency, or savings association. A notary public cannot
provide a signature guarantee.
When you place an order to sell shares, note the following:
(small solid bullet) If you are selling some but not all of your
shares, leave at least $2,000 worth of shares in the account to keep
it open ($500 for retirement accounts), except accounts not subject to
account minimums.
(small solid bullet) Normally, Fidelity will process redemptions by
the next business day, but Fidelity may take up to seven days to
process redemptions if making immediate payment would adversely affect
a fund.
(small solid bullet) Redemption proceeds may be delayed until money
from prior purchases sufficient to cover your redemption has been
received and collected. This can take up to seven business days after
a purchase. Exchange proceeds are paid from one Select fund to another
Select fund or to another Fidelity equity fund in three business days.
Exchange proceeds are recorded in your shareholder account when the
transaction occurs.
(small solid bullet) Redemptions may be suspended or payment dates
postponed when the NYSE is closed (other than weekends or holidays),
when trading on the NYSE is restricted, or as permitted by the SEC.
(small solid bullet) Redemption proceeds may be paid in securities or
other assets rather than in cash if the Board of Trustees determines
it is in the best interests of a fund.
(small solid bullet) You will not receive interest on amounts
represented by uncashed redemption checks.
(small solid bullet) Unless otherwise instructed, Fidelity will send a
check to the record address.
KEY INFORMATION
PHONE 1-800-544-7777 (small solid bullet) Call the
phone number at left to
initiate a wire transaction
or to request a check for
your redemption.
(small solid bullet) Use
Fidelity Money Line to
transfer to your bank account.
(small solid bullet) Exchange
to another Fidelity fund.
Call the phone number at left.
INTERNET WWW.FIDELITY.COM (small solid bullet) Exchange
to another Fidelity fund.
(small solid bullet) Use
Fidelity Money Line to
transfer to your bank account.
MAIL FIDELITY INVESTMENTS INDIVIDUAL, JOINT TENANT,
P.O. BOX 660602 DALLAS, TX SOLE PROPRIETORSHIP, UGMA,
75266-0602 UTMA
(small solid bullet) Send a
letter of instruction to the
address at left, including
your name, the fund's name,
your fund account number,
and the dollar amount or
number of shares to be sold.
The letter of instruction
must be signed by all
persons required to sign for
transactions, exactly as
their names appear on the
account.
RETIREMENT ACCOUNT
(small solid bullet) The
account owner should
complete a retirement
distribution form. Call
1-800-544-6666 to request one.
TRUST
(small solid bullet) Send a
letter of instruction to the
address at left, including
the trust's name, the fund's
name, the trust's fund
account number, and the
dollar amount or number of
shares to be sold. The
trustee must sign the letter
of instruction indicating
capacity as trustee. If the
trustee's name is not in the
account registration,
provide a copy of the trust
document certified within
the last 60 days.
BUSINESS OR ORGANIZATION
(small solid bullet) Send a
letter of instruction to the
address at left, including
the firm's name, the fund's
name, the firm's fund
account number, and the
dollar amount or number of
shares to be sold. At least
one person authorized by
corporate resolution to act
on the account must sign the
letter of instruction.
(small solid bullet) Include
a corporate resolution with
corporate seal or a
signature guarantee.
EXECUTOR, ADMINISTRATOR,
CONSERVATOR, GUARDIAN
(small solid bullet) Call
1-800-544-6666 for
instructions.
IN PERSON INDIVIDUAL, JOINT TENANT,
SOLE PROPRIETORSHIP, UGMA,
UTMA
(small solid bullet) Bring a
letter of instruction to a
Fidelity Investor Center.
Call 1-800-544-9797 for the
center nearest you. The
letter of instruction must
be signed by all persons
required to sign for
transactions, exactly as
their names appear on the
account.
RETIREMENT ACCOUNT
(small solid bullet) The
account owner should
complete a retirement
distribution form. Visit a
Fidelity Investor Center to
request one. Call
1-800-544-9797 for the
center nearest you.
TRUST
(small solid bullet) Bring a
letter of instruction to a
Fidelity Investor Center.
Call 1-800-544-9797 for the
center nearest you. The
trustee must sign the letter
of instruction indicating
capacity as trustee. If the
trustee's name is not in the
account registration,
provide a copy of the trust
document certified within
the last 60 days.
BUSINESS OR ORGANIZATION
(small solid bullet) Bring a
letter of instruction to a
Fidelity Investor Center.
Call 1-800-544-9797 for the
center nearest you. At least
one person authorized by
corporate resolution to act
on the account must sign the
letter of instruction.
(small solid bullet) Include
a corporate resolution with
corporate seal or a
signature guarantee.
EXECUTOR, ADMINISTRATOR,
CONSERVATOR, GUARDIAN
(small solid bullet) Visit a
Fidelity Investor Center for
instructions. Call
1-800-544-9797 for the
center nearest you.
AUTOMATICALLY (small solid bullet) Use
Personal Withdrawal Service
to set up periodic
redemptions from your stock
fund account.
EXCHANGING SHARES
An exchange involves the redemption of all or a portion of the shares
of one fund and the purchase of shares of another fund.
As a shareholder, you have the privilege of exchanging shares of a
fund for shares of other Fidelity funds.
However, you should note the following policies and restrictions
governing exchanges:
(small solid bullet) The fund you are exchanging into must be
available for sale in your state.
(small solid bullet) You may exchange only between accounts that are
registered in the same name, address, and taxpayer identification
number.
(small solid bullet) Before exchanging into a fund, read its
prospectus.
(small solid bullet) You may pay a $7.50 fee for each exchange out of
the stock funds, unless you place your transaction through Fidelity's
automated exchange services.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) Although there is no limit on the number of
exchanges you may make between the Select funds, the funds may enact
limitations in the future. Each fund may temporarily or permanently
terminate the exchange privilege of any investor who makes more than
four exchanges out of the Select funds to other Fidelity funds per
calendar year. Accounts under common ownership or control will be
counted together for purposes of the four exchange limit.
(small solid bullet) Each fund may reject exchange purchases in excess
of 1% of its net assets or $1 million, whichever is less.
(small solid bullet) The exchange limit may be modified for accounts
held by certain institutional retirement plans to conform to plan
exchange limits and Department of Labor regulations. See your plan
materials for further information.
(small solid bullet) Each fund may refuse exchange purchases by any
person or group if, in FMR's judgment, the fund would be unable to
invest the money effectively in accordance with its investment
objective and policies, or would otherwise potentially be adversely
affected.
The funds may terminate or modify the exchange privileges in the
future.
Other funds may have different exchange restrictions, and may impose
administrative fees of up to 1.00% and trading fees of up to 3.00% of
the amount exchanged. Check each fund's prospectus for details.
ACCOUNT FEATURES AND POLICIES
FEATURES
The following features are available to buy and sell shares of the
funds.
AUTOMATIC INVESTMENT AND WITHDRAWAL PROGRAMS. Fidelity offers
convenient services that let you automatically transfer money into
your account, between accounts or out of your account. While automatic
investment programs do not guarantee a profit and will not protect you
against loss in a declining market, they can be an excellent way to
invest for retirement, a home, educational expenses, and other
long-term financial goals. Automatic withdrawal or exchange programs
can be a convenient way to provide a consistent income flow or to move
money between your investments.
<TABLE>
<CAPTION>
<S> <C> <C>
FIDELITY AUTOMATIC ACCOUNT
BUILDER(registered
trademark) TO MOVE MONEY
FROM YOUR BANK ACCOUNT TO A
FIDELITY FUND.
MINIMUM FREQUENCY PROCEDURES
$100 Monthly or quarterly (small solid bullet) To set
up for a new account,
complete the appropriate
section on the fund
application.
(small solid bullet) To set
up for existing accounts,
call 1-800-544-6666 or visit
Fidelity's Web site for an
application.
(small solid bullet) To make
changes, call 1-800-544-6666
at least three business days
prior to your next scheduled
investment date.
DIRECT DEPOSIT TO SEND ALL OR
A PORTION OF YOUR PAYCHECK
OR GOVERNMENT CHECK TO A
FIDELITY FUND.
MINIMUM FREQUENCY PROCEDURES
$100 Every pay period (small solid bullet) Not
available for Select stock
funds.
(small solid bullet) To set
up for a new account, check
the appropriate box on the
fund application.
(small solid bullet) To set
up for an existing account,
call 1-800-544-6666 or visit
Fidelity's Web site for an
authorization form.
(small solid bullet) To make
changes you will need a new
authorization form. Call
1-800-544-6666 or visit
Fidelity's Web site to
obtain one.
FIDELITY AUTOMATIC EXCHANGE
SERVICE TO MOVE MONEY FROM A
FIDELITY MONEY MARKET FUND
TO ANOTHER FIDELITY FUND.
MINIMUM FREQUENCY PROCEDURES
$100 Monthly, bimonthly, (small solid bullet) To set
quarterly, or annually up, call 1-800-544-6666
after both accounts are
opened.
(small solid bullet) To make
changes, call 1-800-544-6666
at least three business days
prior to your next scheduled
exchange date.
</TABLE>
PERSONAL WITHDRAWAL SERVICE
TO SET UP PERIODIC
REDEMPTIONS FROM YOUR STOCK
FUND ACCOUNT TO YOU OR TO
YOUR BANK ACCOUNT.
FREQUENCY PROCEDURES
Monthly (small solid bullet) To set
up, call 1-800-544-6666.
(small solid bullet) To make
changes, call Fidelity at
1-800-544-6666 at least
three business days prior to
your next scheduled
withdrawal date.
(small solid bullet) Because
of each fund's front-end
sales charge, you may not
want to set up a systematic
withdrawal program when you
are buying shares on a
regular basis.
OTHER FEATURES. The following other features are also available to buy
and sell shares of the funds.
WIRE
TO PURCHASE AND SELL SHARES VIA THE FEDERAL RESERVE WIRE SYSTEM.
(small solid bullet) You must sign up for the Wire feature before
using it. Complete the appropriate section on the application when
opening your account, or call 1-800-544-7777 to add the feature after
your account is opened. Call 1-800-544-7777 before your first use to
verify that this feature is set up on your account.
(small solid bullet) To sell shares by wire, you must designate the
U.S. commercial bank account(s) into which you wish the redemption
proceeds deposited.
FIDELITY MONEY LINE
TO TRANSFER MONEY BETWEEN YOUR BANK ACCOUNT AND YOUR FUND ACCOUNT.
(small solid bullet) You must sign up for the Money Line feature
before using it. Complete the appropriate section on the application
and then call 1-800-544-7777 or visit Fidelity's Web site before your
first use to verify that this feature is set up on your account.
(small solid bullet) Most transfers are complete within three business
days of your call.
(small solid bullet) Maximum purchase: $100,000
FIDELITY ON-LINE XPRESS+(registered trademark)
TO MANAGE YOUR INVESTMENTS THROUGH YOUR PC.
CALL 1-800-544-7272 OR VISIT FIDELITY'S WEB SITE FOR MORE INFORMATION.
(small solid bullet) For account balances and holdings;
(small solid bullet) To review recent account history;
(small solid bullet) For mutual fund and brokerage trading; and
(small solid bullet) For access to research and analysis tools.
FIDELITY ONLINE TRADING
TO ACCESS AND MANAGE YOUR ACCOUNT OVER THE INTERNET AT FIDELITY'S WEB
SITE.
(small solid bullet) For account balances and holdings;
(small solid bullet) To review recent account history;
(small solid bullet) To obtain quotes;
(small solid bullet) For mutual fund and brokerage trading; and
(small solid bullet) To access third-party research on companies,
stocks, mutual funds and the market.
TOUCHTONE XPRESS(registered trademark)
TO ACCESS AND MANAGE YOUR ACCOUNT AUTOMATICALLY BY PHONE.
CALL 1-800-544-5555.
(small solid bullet) For account balances and holdings;
(small solid bullet) For mutual fund and brokerage trading;
(small solid bullet) To obtain quotes;
(small solid bullet) To review orders and mutual fund activity; and
(small solid bullet) To change your personal identification number
(PIN).
POLICIES
The following policies apply to you as a shareholder.
STATEMENTS AND REPORTS that Fidelity sends to you include the
following:
(small solid bullet) Confirmation statements (after transactions
affecting your account balance except reinvestment of distributions in
the fund or another fund and certain transactions through automatic
investment or withdrawal programs).
(small solid bullet) Monthly or quarterly account statements
(detailing account balances and all transactions completed during the
prior month or quarter).
(small solid bullet) Financial reports (every six months).
To reduce expenses, only one copy of most financial reports and
prospectuses will be mailed to your household, even if you have more
than one account in a fund. Call Fidelity at 1-800-544-8544 if you
need additional copies of financial reports or prospectuses.
Electronic copies of most financial reports and prospectuses are
available at Fidelity's Web site. To participate in Fidelity's
electronic delivery program, call Fidelity or visit Fidelity's Web
site for more information.
You may initiate many TRANSACTIONS BY TELEPHONE OR ELECTRONICALLY.
Fidelity will not be responsible for any losses resulting from
unauthorized transactions if it follows reasonable security procedures
designed to verify the identity of the investor. Fidelity will request
personalized security codes or other information, and may also record
calls. For transactions conducted through the Internet, Fidelity
recommends the use of an Internet browser with 128-bit encryption. You
should verify the accuracy of your confirmation statements immediately
after you receive them. If you do not want the ability to sell and
exchange by telephone, call Fidelity for instructions.
When you sign your ACCOUNT APPLICATION, you will be asked to certify
that your social security or taxpayer identification number is correct
and that you are not subject to 31% backup withholding for failing to
report income to the IRS. If you violate IRS regulations, the IRS can
require a fund to withhold 31% of your taxable distributions and
redemptions.
Fidelity may deduct an ANNUAL MAINTENANCE FEE of $12.00 from accounts
with a value of less than $2,500 (including any amount paid as a sales
charge), subject to an annual maximum charge of $24.00 per
shareholder. It is expected that accounts will be valued on the second
Friday in November of each year. Accounts opened after September 30
will not be subject to the fee for that year. The fee, which is
payable to Fidelity, is designed to offset in part the relatively
higher costs of servicing smaller accounts. This fee will not be
deducted from Fidelity brokerage accounts, retirement accounts (except
non-prototype retirement accounts), accounts using regular investment
plans, or if total assets with Fidelity exceed $30,000. Eligibility
for the $30,000 waiver is determined by aggregating accounts with
Fidelity maintained by Fidelity Service Company, Inc. or FBSI which
are registered under the same social security number or which list the
same social security number for the custodian of a Uniform
Gifts/Transfers to Minors Act account.
If your ACCOUNT BALANCE falls below $2,000 (except accounts not
subject to account minimums), you will be given 30 days' notice to
reestablish the minimum balance. If you do not increase your balance,
Fidelity may close your account and send the proceeds to you. Your
shares will be sold at the NAV, minus the applicable trading fee for
the stock funds, on the day your account is closed.
Fidelity may charge a FEE FOR CERTAIN SERVICES, such as providing
historical account documents.
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
Each fund earns dividends, interest and other income from its
investments, and distributes this income (less expenses) to
shareholders as dividends. Each fund also realizes capital gains from
its investments, and distributes these gains (less any losses) to
shareholders as capital gains distributions.
Each stock fund normally pays dividends and capital gains
distributions in April and December.
Distributions you receive from the money market fund consist primarily
of dividends. The money market fund normally declares dividends daily
and pays them monthly.
EARNING DIVIDENDS
For the money market fund, shares begin to earn dividends on the first
business day following the day of purchase.
For the money market fund, shares earn dividends until, but not
including, the next business day following the day of redemption.
When you exchange from a stock fund to the money market fund, you will
earn dividends the next business day. When you exchange from the money
market fund to a stock fund, you will earn dividends until, but not
including, the next business day following the day of redemption.
Exchange proceeds are paid from one Select fund to another or from a
Select fund to a Fidelity equity fund in three business days. As a
result, the delay in paying exchange proceeds when exchanging between
the money market fund and a stock fund or a Fidelity equity fund could
result in a lower or more volatile money market fund yield.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. The following options may be available for
each fund's distributions:
1. REINVESTMENT OPTION. Your dividends and capital gains distributions
will be automatically reinvested in additional shares of the fund. If
you do not indicate a choice on your application, you will be assigned
this option.
2. INCOME-EARNED OPTION. (stock funds only) Your capital gains
distributions will be automatically reinvested in additional shares of
the fund. Your dividends will be paid in cash.
3. CASH OPTION. Your dividends and capital gains distributions will be
paid in cash.
4. DIRECTED DIVIDENDS(registered trademark) OPTION. Your dividends
will be automatically invested in shares of another identically
registered Fidelity fund. Your capital gains distributions will be
automatically invested in shares of another identically registered
Fidelity fund, automatically reinvested in additional shares of the
fund, or paid in cash.
Not all distribution options are available for every account. If the
option you prefer is not listed on your account application, or if you
want to change your current option, call Fidelity.
If you elect to receive distributions paid in cash by check and the
U.S. Postal Service does not deliver your checks, your distribution
option may be converted to the Reinvestment Option. You will not
receive interest on amounts represented by uncashed distribution
checks.
TAX CONSEQUENCES
As with any investment, your investment in a fund could have tax
consequences for you. If you are not investing through a
tax-advantaged retirement account, you should consider these tax
consequences.
TAXES ON DISTRIBUTIONS. Distributions you receive from each fund are
subject to federal income tax, and may also be subject to state or
local taxes.
For federal tax purposes, each fund's dividends and distributions of
short-term capital gains are taxable to you as ordinary income. Each
fund's distributions of long-term capital gains are taxable to you
generally as capital gains.
If you buy shares when a fund has realized but not yet distributed
income (stock funds only) or capital gains, you will be "buying a
dividend" by paying the full price for the shares and then receiving a
portion of the price back in the form of a taxable distribution.
Any taxable distributions you receive from a fund will normally be
taxable to you when you receive them, regardless of your distribution
option. For the money market fund, if you elect to receive
distributions in cash or to invest distributions automatically in
shares of another Fidelity fund, you will receive certain December
distributions in January, but those distributions will be taxable as
if you received them on December 31.
TAXES ON TRANSACTIONS. Your stock fund redemptions, including
exchanges, may result in a capital gain or loss for federal tax
purposes. A capital gain or loss on your investment in a fund is the
difference between the cost of your shares and the price you receive
when you sell them.
FUND SERVICES
FUND MANAGEMENT
Each fund is a mutual fund, an investment that pools shareholders'
money and invests it toward a specified goal.
FMR is each fund's manager.
As of April 30, 1998, FMR had approximately $529 billion in
discretionary assets under management.
As the manager, FMR is responsible for choosing the funds' investments
and handling their business affairs.
Affiliates assist FMR with foreign investments:
(small solid bullet) Fidelity Management & Research (U.K.) Inc. (FMR
U.K.), in London, England, serves as a sub-adviser for each stock
fund. FMR U.K. was organized in 1986 to provide investment research
and advice to FMR. Currently, FMR U.K. provides investment research
and advice on issuers based outside the United States and may also
provide investment advisory services for each stock fund.
(small solid bullet) Fidelity Management & Research Far East Inc. (FMR
Far East), in Tokyo, Japan, serves as sub-adviser for each stock fund.
FMR Far East was organized in 1986 to provide investment research and
advice to FMR. Currently, FMR Far East provides investment research
and advice on issuers based outside the United States and may also
provide investment advisory services for each stock fund.
Fidelity Investments Money Management, Inc. (FIMM), in Merrimack, New
Hampshire, serves as sub-adviser for the money market fund. FIMM is
primarily responsible for choosing investments for the money market
fund.
FIMM is an affiliate of FMR. As of May 1, 1998, FIMM had approximately
$99 billion in discretionary assets under management.
A fund could be adversely affected if the computer systems used by FMR
and other service providers do not properly process and calculate
date-related information from and after January 1, 2000. FMR has
advised each fund that it is actively working on necessary changes to
its computer systems and expects that its systems, and those of other
major service providers, will be modified prior to January 1, 2000.
However, there can be no assurance that there will be no adverse
impact on a fund.
Ramin Arani is manager of Retailing, which he has managed since
January 1997. Previously, he was an analyst. Mr. Arani joined Fidelity
as a research associate in 1992, after receiving his bachelor of arts
degree from Tufts University.
James Catudal is manager of Energy Service, which he has managed since
January 1998. Mr. Catudal joined Fidelity in 1997 as a research
analyst. Previously, he was an equity analyst with State Street
Research & Management. He received an MBA from the Amos Tuck School at
Dartmouth College in 1995.
Douglas Chase is manager of Consumer Industries, which he has managed
since August 1997. He also manages other Fidelity funds. Mr. Chase
joined Fidelity as an equity analyst in 1993 after receiving his MBA
from the University of Michigan.
Tim Cohen is manager of Insurance, which he has managed since February
1999. Mr. Cohen Joined Fidelity as an analyst in 1996, after receiving
an MBA from The Wharton School at the University of Pennsylvania.
Previously, he was a senior associate in the business assurance group
at Coopers & Lybrand (now PricewaterhouseCoopers LLP), Boston, from
1991 to 1994.
George Domolky is manager of Precious Metals and Minerals and Gold,
both of which he has managed since February 1997. Previously, he
managed Canada from 1987 to 1996 as well as other Fidelity funds. Mr.
Domolky joined Fidelity in 1981, and has worked as an analyst and
manager.
Jeff Dorsey is manager of Multimedia and Leisure, which he has managed
since December 1997 and January 1998, respectively. Since joining
Fidelity in 1991, Mr. Dorsey has worked as an analyst, senior analyst,
corporate strategist and manager.
Noah Eccles is manager of Paper and Forest Products, which he has
managed since January 1999. Previously, he worked as an analyst. Mr.
Eccles joined Fidelity as a research associate in 1997, after
receiving a bachelor of arts degree in economics from Trinity College
in 1992 and an MBA from The Wharton School at the University of
Pennsylvania in 1997.
Robert Ewing is Manager of Financial Services, which he has managed
since January 1998. He also manages another Fidelity fund. Since
joining Fidelity in 1990, Mr. Ewing has worked as a research
associate, analyst and manager.
Jeffrey Feingold is manager of Defense and Aerospace, which he has
managed since November 1998. Mr. Feingold joined Fidelity in 1997 and
has worked as an equity analyst following the apparel, textile and
footwear industries.
Subra Ghose is manager of Environmental Services, which he has managed
since October 1998. Since joining Fidelity in 1995, Mr. Ghose has
worked as an analyst following the electric and gas utilities
industries. Prior to this, Mr. Ghose received a bachelor of science
degree in computer science from Birla Institute of Technology, India,
in 1991, and an MBA from Northeastern University in 1996.
Matthew Grech is manager of Electronics, which he has managed since
June 1998. Mr. Grech joined Fidelity in 1996 as an equity analyst,
after receiving his MBA from the University of Chicago. Previously, he
was a mutual fund accountant for Franklin/Templeton, in California,
from 1993 to 1994.
Albert Grosman is manager of Automotive, which he has managed since
December 1997. Mr. Grosman joined Fidelity in 1996 as an analyst. He
received his MBA from Columbia University in 1997. From 1993 to 1995,
Mr. Grosman managed investment portfolios on a discretionary basis in
Toronto, Canada.
Peter Hirsch is manager of Industrial Materials, which he has managed
since September 1998. Mr. Hirsch joined Fidelity in 1995 as a
portfolio analyst. He received his Masters in Public and Private
Management (MPPM) at Yale School of Management in 1994 and began his
career as an associate at CS First Boston in New York.
Brian Hogan is manager of Construction and Housing, which he has
managed since April 1999. Since joining Fidelity in 1994, Mr. Hogan
has worked as a fixed income analyst, research analyst and manager.
Previously, he worked as an analyst for Conseco Capital Management
from 1993 to 1994.
Andrew Kaplan is manager of Developing Communications and Technology,
which he has managed since April 1998 and July 1998, respectively.
Previously, he managed another Fidelity fund. Mr. Kaplan joined
Fidelity as an analyst in 1995. Before that, he was an analyst with T.
Rowe Price in 1994 and an associate director of consulting for Edward
S. Gordon Company, in New York City, from 1988 through 1993.
Rajiv Kaul is manager of Biotechnology, which he has managed since
June 1998. Since joining Fidelity in 1996, Mr. Kaul has worked as a
research associate and equity analyst. He received a bachelor of arts
degree in government from Harvard College in 1995.
Yolanda McGettigan is manager of Regional Banks, which she has managed
since April 1999. Ms. McGettigan joined Fidelity as an analyst in
1997, after receiving her MBA from the Fuqua School of Business at
Duke University. Previously, she was employed as a sales
representative for Robinson-Humphrey from 1994 to 1995 and a trader
for Cantor Fitzgerald from 1992 to 1994.
Kerry Nelson is manager of Medical Equipment and Systems, which she
has managed since April 1998. Since joining Fidelity in 1995, Ms.
Nelson has worked as a research associate, analyst and manager.
Previously, she was an analyst with Grandview Partners, L.P., in
Boston, from 1991 to 1994.
Scott Offen is manager of Food and Agriculture, which he has managed
since November 1996. Previously, he managed other Fidelity funds.
Since joining Fidelity in 1985, Mr. Offen has worked as an analyst and
manager.
Ted Orenstein is manager of Brokerage and Investment Management, which
he has managed since January 1999. Mr. Orenstein joined Fidelity as an
analyst in May 1998, after receiving a bachelor's degree in business
administration from Babson College in 1994 and an MBA from The Wharton
School at the University of Pennsylvania in 1998.
John Porter is manager of Software and Computer Services and Medical
Delivery, which he has managed since June 1997 and January 1998,
respectively. Previously, he managed another Fidelity fund. Mr. Porter
joined Fidelity as an analyst in 1995, after receiving his MBA from
the University of Chicago.
Lawrence Rakers is manager of Energy and Natural Resources, which he
has managed since January 1997 and March 1997, respectively. He also
manages another Fidelity fund. Mr. Rakers joined Fidelity as an
analyst in 1993.
Albert Ruback is manager of Cyclical Industries, which he has managed
since inception. He also manages another Fidelity fund. Mr. Ruback
joined Fidelity as an analyst in 1991, after receiving his MBA from
Harvard Business School.
Peter Saperstone is manager of Telecommunications, which he has
managed since October 1998. Mr. Saperstone joined Fidelity in 1995 and
has worked as an analyst and manager.
Beso Sikharulidze is manager of Health Care, which he has managed
since June 1997. He also manages another Fidelity fund. Mr.
Sikharulidze joined Fidelity as an analyst in 1992, after receiving
his MBA from Harvard University.
Michael Tarlowe is manager of Business Services and Outsourcing
Portfolio, which he has managed since February 1998. Mr. Tarlowe
joined Fidelity in 1994 as an analyst, after receiving a bachelor of
business administration degree in finance from the University of
Michigan.
Michael Tempero is manager of Computers, which he has managed since
January 1997. He also manages another Fidelity fund. Mr. Tempero
joined Fidelity as an analyst in 1993, after receiving his MBA from
the University of Chicago.
Victor Thay is manager of Natural Gas and Home Finance, which he has
managed since December 1997 and March 1999, respectively. Mr. Thay
joined Fidelity as a research associate in 1995, after receiving
undergraduate degrees in political science and business administration
from the University of California at Berkeley in 1995.
Simon Wolf is manager of Industrial Equipment, which he has managed
since August 1997. Mr. Wolf joined Fidelity in 1996 as a research
associate. Previously, he worked for Salomon Brothers as an analyst
from 1993 to 1996. Mr. Wolf received a bachelor of science degree in
economics from the University of Pennsylvania in 1992.
Dylan Yolles is manager of Chemicals, which he has managed since
January 1999. Mr. Yolles joined Fidelity in 1997 as an equity analyst,
after receiving a bachelor of arts degree in 1991 and an MBA in 1997,
both from Stanford University.
Jonathan Zang is manager of Utilities Growth, which he has managed
since July 1998. Mr. Zang joined Fidelity in 1997 as an equity
analyst, after receiving his MBA from the University of Chicago in
1997. Previously, he was an investment officer with Hawaiian Trust
Company, in Honolulu, from 1992 to 1995.
Chris Zepf is Manager of Transportation and Air Transportation, which
he has managed since September 1998 and October 1998, respectively.
Mr. Zepf joined Fidelity in 1997 and has worked as an analyst and
manager.
Fidelity investment personnel may invest in securities for their own
investment accounts pursuant to a code of ethics that establishes
procedures for personal investing and restricts certain transactions.
Each fund pays a management fee to FMR.
The management fee is calculated and paid to FMR every month. For the
stock funds, the fee is calculated by adding a group fee rate to an
individual fund fee rate, dividing by twelve, and multiplying the
result by the fund's average net assets throughout the month.
For the money market fund, the fee is calculated by adding a group fee
rate to an individual fund fee rate, dividing by twelve and
multiplying the result by the fund's average net assets throughout the
month, and then adding an income-based fee.
The income-based fee is 6% of the fund's monthly gross income in
excess of an annualized 5% yield, but it cannot rise above an annual
rate of 0.24% of the fund's average net assets throughout that month.
The group fee rate is based on the average net assets of all the
mutual funds advised by FMR. This rate cannot rise above 0.52% for
each stock fund or 0.37% for the money market fund, and it drops as
total assets under management increase.
For February 1999, the group fee rate was 0.2843% for each stock fund
and the group fee rate was 0.1312% for the money market fund. The
individual fund fee rate is 0.30% for each stock fund and 0.03% for
the money market fund.
The total management fee for the fiscal year ended February 28, 1999
for each fund, as a percentage of each fund's average net assets, is
shown in the table below.
Fund Management Fees
Air Transportation 0.58%
Automotive 0.59%
Biotechnology 0.59%
Brokerage and Investment 0.59%
Management
Business Services and 0.59%
Outsourcing
Chemicals 0.59%
Computers 0.60%
Construction and Housing 0.59%
Consumer Industries 0.59%
Cyclical Industries 0.59%
Defense and Aerospace 0.58%
Developing Communications 0.60%
Electronics 0.59%
Energy 0.59%
Energy Service 0.59%
Environmental Services 0.59%
Financial Services 0.59%
Food and Agriculture 0.59%
Gold 0.59%
Health Care 0.59%
Home Finance 0.58%
Industrial Equipment 0.59%
Industrial Materials 0.59%
Insurance 0.59%
Leisure 0.59%
Medical Delivery 0.59%
Medical Equipment and SystemsA 0.60%
Multimedia 0.59%
Fund Management Fees
Natural Gas 0.59%
Natural Resources 0.59%
Paper and Forest Products 0.59%
Precious Metals and Minerals 0.59%
Regional Banks 0.59%
Retailing 0.59%
Software and Computer Services 0.59%
Technology 0.60%
Telecommunications 0.59%
Transportation 0.58%
Utilities Growth 0.59%
Money Market 0.20%
A ANNUALIZED
FMR pays FIMM, FMR U.K. and FMR Far East for providing assistance with
investment advisory services.
FMR may, from time to time, agree to reimburse the funds for
management fees and other expenses above a specified limit. FMR
retains the ability to be repaid by a fund if expenses fall below the
specified limit prior to the end of the fiscal year. Reimbursement
arrangements, which may be terminated by FMR at any time, can decrease
a fund's expenses and boost its performance.
As of February 28, 1999, approximately 38.73% of Cyclical Industries'
total outstanding shares were held by an FMR affiliate.
FUND DISTRIBUTION
FDC distributes each fund's shares.
You may pay a sales charge when you buy your shares.
FDC collects the sales charge.
Each fund's sales charge may be reduced if you buy directly through
Fidelity or through prototype or prototype-like retirement plans
sponsored by FMR or FMR Corp. The amount you invest, plus the value of
your account, must fall within the ranges shown below. Purchases made
with assistance or intervention from a financial intermediary are not
eligible for a sales charge reduction.
Sales Charge
Ranges As a % of offering price As an approximate % of net
amount invested
$0 - 249,999 3.00% 3.09%
$250,000 - 499,999 2.00% 2.04%
$500,000 - 999,999 1.00% 1.01%
$1,000,000 or more none none
FDC may pay a portion of sales charge proceeds to securities dealers
who have sold a fund's shares, or to others, including banks and other
financial institutions (qualified recipients), under special
arrangements in connection with FDC's sales activities. The sales
charge paid to qualified recipients is 1.50% of a fund's offering
price.
The sales charge will also be reduced by the percentage of any sales
charge you previously paid on investments in other Fidelity funds or
by the percentage of any sales charge you would have paid if the
reductions in the table above had not existed. These sales charge
credits only apply to purchases made in one of the ways listed below,
and only if you continuously owned Fidelity fund shares, maintained a
Fidelity brokerage core account, or participated in The CORPORATEplan
for Retirement Program.
1. By exchange from another Fidelity fund.
2. With proceeds from a transaction in a Fidelity brokerage core
account, including any free credit balance, core money market fund, or
margin availability, to the extent such proceeds were derived from
redemption proceeds from another Fidelity fund.
3. As a participant in The CORPORATEplan for Retirement Program when
shares are bought through plan-qualified loan repayments, and for
exchanges into and out of the Managed Income Portfolio.
A fund's sales charge will not apply:
1. If you buy shares as part of an employee benefit plan having more
than 200 eligible employees or a minimum of $3 million in plan assets
invested in Fidelity mutual funds.
2. To shares in a Fidelity account bought with the proceeds of a
distribution from an employee benefit plan, provided that at the time
of the distribution, the employer or its affiliate maintained a plan
that both qualified for waiver (1) above and had at least some of its
assets invested in Fidelity-managed products. (Distributions
transferred to an IRA account must be transferred within 60 days from
the date of the distribution. All other distributions must be
transferred directly into a Fidelity account).
3. If you are a charitable organization (as defined for purposes of
Section 501(c)(3) of the Internal Revenue Code) investing $100,000 or
more.
4. If you buy shares for a charitable remainder trust or life income
pool established for the benefit of a charitable organization (as
defined for purposes of Section 501(c)(3) of the Internal Revenue
Code).
5. If you are an investor participating in the Fidelity Trust
Portfolios program.
6. To shares bought by a mutual fund or a qualified state tuition
program for which FMR or an affiliate serves as investment manager.
7. To shares bought through Portfolio Advisory Services or Fidelity
Charitable Advisory Services.
8. If you are a current or former trustee or officer of a Fidelity
fund or a current or retired officer, director, or regular employee of
FMR Corp. or Fidelity International Limited or their direct or
indirect subsidiaries (a Fidelity trustee or employee), the spouse of
a Fidelity trustee or employee, a Fidelity trustee or employee acting
as custodian for a minor child, or a person acting as trustee of a
trust for the sole benefit of the minor child of a Fidelity trustee or
employee.
9. If you are a bank trust officer, registered representative, or
other employee of a qualified recipient, as defined on page .
More detailed information about waivers (1), (2) and (5) is contained
in the Statement of Additional Information (SAI). A representative of
your plan or organization should call Fidelity for more information.
To qualify for a sales charge reduction or waiver, you must notify
Fidelity in advance of your purchase.
To receive sales concessions and waivers, qualified recipients must
sign the appropriate agreement with FDC in advance.
FMR may allocate brokerage transactions in a manner that takes into
account the sale of shares of a fund, provided that the fund receives
brokerage services and commission rates comparable to those of other
broker-dealers.
No dealer, sales representative, or any other person has been
authorized to give any information or to make any representations,
other than those contained in this Prospectus and in the related SAI,
in connection with the offer contained in this Prospectus. If given or
made, such other information or representations must not be relied
upon as having been authorized by the funds or FDC. This Prospectus
and the related SAI do not constitute an offer by the funds or by FDC
to sell shares of the funds or to buy shares of the funds to any
person to whom it is unlawful to make such offer.
APPENDIX
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand each
fund's financial history for the past 5 years (past 2 years for
Business Services and Outsourcing, Cyclical Industries and Natural
Resources, and past year for Medical Equipment and Systems). Certain
information reflects financial results for a single fund share. Total
returns for each period include the reinvestment of all dividends and
distributions. This information has been audited by
PricewaterhouseCoopers LLP, independent accountants, whose report,
along with each fund's financial highlights and financial statements,
are included in the funds' Annual Report. A free copy of the Annual
Report is available upon request.
AIR TRANSPORTATION
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended February 28, 1999 1998 1997 1996 F 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 26.86 $ 17.72 $ 21.11 $ 13.93 $ 17.12
period
Income from Investment
Operations
Net investment income (loss) (.14) (.19) (.22) (.01) (.18)
C
Net realized and unrealized 1.06 10.59 (3.12) 7.47 (2.01)
gain (loss)
Total from investment .92 10.40 (3.34) 7.46 (2.19)
operations
Less Distributions
From net realized gain (.21) (1.43) (.07) (.46) (.92)
In excess of net realized - - (.20) - (.17)
gain
Total distributions (.21) (1.43) (.27) (.46) (1.09)
Redemption fees added to paid .19 .17 .22 .18 .09
in capital
Net asset value, end of period $ 27.76 $ 26.86 $ 17.72 $ 21.11 $ 13.93
TOTAL RETURN A, B 4.11% 61.10% (15.06)% 54.91% (12.45)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 65,949 $ 181,185 $ 35,958 $ 75,359 $ 18,633
(000 omitted)
Ratio of expenses to average 1.35% 1.93% 1.89% 1.47% 2.50% D
net assets
Ratio of expenses to average 1.27% E 1.87% E 1.80% E 1.41% E 2.50%
net assets after expense
reductions
Ratio of net investment (.50)% (.84)% (1.10)% (.07)% (1.31)%
income (loss) to average net
assets
Portfolio turnover rate 260% 294% 469% 504% 200%
</TABLE>
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE.
C NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
D FMR AGREED TO REIMBURSE A
PORTION OF THE FUND'S
EXPENSES, OR EXPENSES WERE
LIMITED IN ACCORDANCE WITH A
STATE EXPENSE LIMITATION.
WITHOUT THIS REIMBURSEMENT,
THE FUND'S EXPENSE RATIO
WOULD HAVE BEEN HIGHER.
E FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
F FOR THE YEAR ENDED FEBRUARY
29.
AUTOMOTIVE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended February 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 27.50 $ 25.38 $ 21.85 $ 19.84 $ 25.48
period
Income from Investment
Operations
Net investment income C .03 .05 .13 .03 .08
Net realized and unrealized (2.09) 5.21 4.28 1.95 (3.46)
gain (loss)
Total from investment (2.06) 5.26 4.41 1.98 (3.38)
operations
Less Distributions
From net investment income (.01) (.08) (.17) - (.05)
From net realized gain (2.17) (3.09) (.75) - (2.26)
Total distributions (2.18) (3.17) (.92) - (2.31)
Redemption fees added to paid .02 .03 .04 .03 .05
in capital
Net asset value, end of period $ 23.28 $ 27.50 $ 25.38 $ 21.85 $ 19.84
TOTAL RETURN A, B (8.52)% 22.78% 20.60% 10.13% (12.59)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 64,541 $ 32,489 $ 86,347 $ 55,753 $ 60,075
(000 omitted)
Ratio of expenses to average 1.45% 1.60% 1.56% 1.81% 1.82%
net assets
Ratio of expenses to average 1.41% D 1.56% D 1.52% D 1.80% D 1.80% D
net assets after expense
reductions
Ratio of net investment .11% .17% .54% .13% .34%
income to average net assets
Portfolio turnover rate 96% 153% 175% 61% 63%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE.
C NET INVESTMENT INCOME PER
SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES
OUTSTANDING DURING THE
PERIOD.
D FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
E FOR THE YEAR ENDED FEBRUARY
29.
</TABLE>
BIOTECHNOLOGY
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended February 28, 1999 1998 1997 1996 F 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 34.52 $ 34.24 $ 36.60 $ 25.30 $ 27.61
period
Income from Investment
Operations
Net investment income (loss) (.26) (.27) (.20) .11 (.06)
C
Net realized and unrealized 9.15 5.20 1.89 11.21 (2.26)
gain (loss)
Total from investment 8.89 4.93 1.69 11.32 (2.32)
operations
Less Distributions
From net investment income - - (.03) (.07) -
From net realized gain (2.09) (4.71) (4.06) - -
Total distributions (2.09) (4.71) (4.09) (.07) -
Redemption fees added to paid .03 .06 .04 .05 .01
in capital
Net asset value, end of period $ 41.35 $ 34.52 $ 34.24 $ 36.60 $ 25.30
TOTAL RETURN A, B 27.13% 16.11% 5.85% 44.97% (8.37)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 741,530 $ 579,542 $ 674,902 $ 1,096,864 $ 448,197
(000 omitted)
Ratio of expenses to average 1.34% 1.49% 1.57% 1.44% D 1.59%
net assets
Ratio of expenses to average 1.30% E 1.47% E 1.56% E 1.43% E 1.59%
net assets after expense
reductions
Ratio of net investment (.75)% (.81)% (.59)% .35% (.27)%
income (loss) to average net
assets
Portfolio turnover rate 86% 162% 41% 67% 77%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE.
C NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
D FMR AGREED TO REIMBURSE A
PORTION OF THE FUND'S
EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT,
THE FUND'S EXPENSE RATIO
WOULD HAVE BEEN HIGHER.
E FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
F FOR THE YEAR ENDED FEBRUARY
29.
</TABLE>
BROKERAGE AND INVESTMENT MANAGEMENT
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended February 28, 1999 1998 1997 1996 F 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 39.78 $ 25.76 $ 18.49 $ 15.51 $ 17.75
period
Income from Investment
Operations
Net investment income (loss) .10 .16 .08 .09 (.03)
C
Net realized and unrealized 1.72 14.46 7.80 4.29 (2.25)
gain (loss)
Total from investment 1.82 14.62 7.88 4.38 (2.28)
operations
Less Distributions
From net investment income (.01) (.09) (.06) (.04) -
From net realized gain (.52) (.61) (.65) (1.09) -
In excess of net realized - - - (.35) -
gain
Total distributions (.53) (.70) (.71) (1.48) -
Redemption fees added to paid .09 .10 .10 .08 .04
in capital
Net asset value, end of period $ 41.16 $ 39.78 $ 25.76 $ 18.49 $ 15.51
TOTAL RETURN A, B 4.76% 57.56% 44.27% 29.85% (12.62)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 482,525 $ 676,067 $ 458,787 $ 38,382 $ 27,346
(000 omitted)
Ratio of expenses to average 1.26% 1.33% 1.94% 1.64% D 2.54% D
net assets
Ratio of expenses to average 1.24% E 1.29% E 1.93% E 1.61% E 2.54%
net assets after expense
reductions
Ratio of net investment .26% .49% .37% .50% (.20)%
income (loss) to average net
assets
Portfolio turnover rate 59% 100% 16% 166% 139%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE .
C NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
D FMR AGREED TO REIMBURSE A
PORTION OF THE FUND'S
EXPENSES, OR EXPENSES WERE
LIMITED IN ACCORDANCE WITH A
STATE EXPENSE LIMITATION.
WITHOUT THIS REIMBURSEMENT,
THE FUND'S EXPENSE RATIO
WOULD HAVE BEEN HIGHER.
E FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
F FOR THE YEAR ENDED FEBRUARY
29.
</TABLE>
BUSINESS SERVICES AND OUTSOURCING
Years ended February 28, 1999 1998E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.89 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) (.11) -
D
Net realized and unrealized 2.92 .89
gain (loss)
Total from investment 2.81 .89
operations
Less Distributions
From net realized gain (.16) -
Redemption fees added to paid .03 -
in capital
Net asset value, end of period $ 13.57 $ 10.89
TOTAL RETURN B, C 26.23% 8.90%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 64,123 $ 15,915
(000 omitted)
Ratio of expenses to average 1.66% 2.50% A, F
net assets
Ratio of expenses to average 1.64% G 2.50% A
net assets after expense
reductions
Ratio of net investment (.91)% (.49)% A
income (loss) to average net
assets
Portfolio turnover rate 115% 36% A
A ANNUALIZED
B THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
D NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
E FOR THE PERIOD FEBRUARY 4,
1998 (COMMENCEMENT OF
OPERATIONS) TO FEBRUARY 28,
1998.
F FMR AGREED TO REIMBURSE A
PORTION OF THE FUND'S
EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT,
THE FUND'S EXPENSE RATIO
WOULD HAVE BEEN HIGHER.
G FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
CHEMICALS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended February 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 45.90 $ 42.53 $ 39.53 $ 33.91 $ 31.66
period
Income from Investment
Operations
Net investment income (loss) .17 (.02) .28 .01 .36
C
Net realized and unrealized (10.77) 7.88 5.49 8.89 2.65
gain (loss)
Total from investment (10.60) 7.86 5.77 8.90 3.01
operations
Less Distributions
From net investment income (.05) - (.12) (.08) (.22)
From net realized gain (3.52) (4.54) (2.74) (3.22) (.60)
In excess of net realized (0.68) - - - -
gain
Total distributions (4.25) (4.54) (2.86) (3.30) (.82)
Redemption fees added to paid .05 .05 .09 .02 .06
in capital
Net asset value, end of period $ 31.10 $ 45.90 $ 42.53 $ 39.53 $ 33.91
TOTAL RETURN A, B (23.66)% 19.47% 15.06% 27.48% 9.90%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 31,862 $ 69,349 $ 111,409 $ 89,230 $ 97,511
(000 omitted)
Ratio of expenses to average 1.58% 1.68% 1.83% 1.99% 1.52%
net assets
Ratio of expenses to average 1.51% D 1.67% D 1.81% D 1.97% D 1.51% D
net assets after expense
reductions
Ratio of net investment .44% (.05)% .67% .04% 1.07%
income (loss) to average net
assets
Portfolio turnover rate 141% 31% 207% 87% 106%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE.
C NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
D FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
E FOR THE YEAR ENDED FEBRUARY
29.
</TABLE>
COMPUTERS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended February 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 41.08 $ 48.25 $ 41.03 $ 30.67 $ 27.02
period
Income from Investment
Operations
Net investment income (loss) (.29) (.32) (.36) (.23) (.31)
C
Net realized and unrealized 27.39 6.42 9.94 16.10 3.68
gain (loss)
Total from investment 27.10 6.10 9.58 15.87 3.37
operations
Less Distributions
From net realized gain - (10.64) (2.47) (5.61) -
In excess of net realized - (2.75) - - -
gain
Total distributions - (13.39) (2.47) (5.61) -
Redemption fees added to paid .19 .12 .11 .10 .28
in capital
Net asset value, end of period $ 68.37 $ 41.08 $ 48.25 $ 41.03 $ 30.67
TOTAL RETURN A, B 66.43% 20.33% 23.97% 52.79% 13.51%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,831,435 $ 785,465 $ 604,286 $ 527,337 $ 215,014
(000 omitted)
Ratio of expenses to average 1.25% 1.40% 1.48% 1.40% 1.71%
net assets
Ratio of expenses to average 1.23% D 1.34% D 1.44% D 1.38% D 1.69% D
net assets after expense
reductions
Ratio of net investment (.54)% (.67)% (.83)% (.56)% (1.12)%
income (loss) to average net
assets
Portfolio turnover rate 133% 333% 255% 129% 189%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE.
C NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
D FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
E FOR THE YEAR ENDED FEBRUARY
29.
</TABLE>
CONSTRUCTION AND HOUSING
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended February 28, 1999 1998 1997 1996 F 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 25.63 $ 22.00 $ 19.56 $ 16.79 $ 19.82
period
Income from Investment
Operations
Net investment income (loss) (.06) (.25) .06 .07 (.02)
C
Net realized and unrealized (.53) 7.67 3.38 3.55 (2.50)
gain (loss)
Total from investment (.59) 7.42 3.44 3.62 (2.52)
operations
Less Distributions
From net investment income - (.02) (.02) (.07) -
From net realized gain (.06) (3.87) (1.03) (.81) (.52)
Total distributions (.06) (3.89) (1.05) (.88) (.52)
Redemption fees added to paid .04 .10 .05 .03 .01
in capital
Net asset value, end of period $ 25.02 $ 25.63 $ 22.00 $ 19.56 $ 16.79
TOTAL RETURN A, B (2.16)% 40.04% 18.64% 21.77% (12.54)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 51,652 $ 57,484 $ 30,581 $ 42,668 $ 16,863
(000 omitted)
Ratio of expenses to average 1.43% 2.50% D 1.41% 1.43% 1.76%
net assets
Ratio of expenses to average 1.37% E 2.43% E 1.35% E 1.40% E 1.74% E
net assets after expense
reductions
Ratio of net investment (.23)% (1.10)% .27% .39% (.11)%
income (loss) to average net
assets
Portfolio turnover rate 226% 404% 270% 139% 45%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE.
C NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
D FMR AGREED TO REIMBURSE A
PORTION OF THE FUND'S
EXPENSED DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT,
THE FUND'S EXPENSE RATIO
WOULD HAVE BEEN HIGHER.
E FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
F FOR THE YEAR ENDED FEBRUARY
29.
</TABLE>
CONSUMER INDUSTRIES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended February 28, 1999 1998 1997 1996 F 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 27.31 $ 20.66 $ 17.84 $ 13.91 $ 15.24
period
Income from Investment
Operations
Net investment income (loss) (.04) (.22) (.22) .08 (.15)
C
Net realized and unrealized 5.41 8.34 2.93 3.97 (.60)
gain (loss)
Total from investment 5.37 8.12 2.71 4.05 (.75)
operations
Less Distributions
From net investment income - - - (.02) -
From net realized gain (.90) (1.52) - (.01) (.60)
In excess of net realized - - - (.20) -
gain
Total distributions (.90) (1.52) - (.23) (.60)
Redemption fees added to paid .03 .05 .11 .11 .02
in capital
Net asset value, end of period $ 31.81 $ 27.31 $ 20.66 $ 17.84 $ 13.91
TOTAL RETURN A, B 20.18% 40.36% 15.81% 30.01% (4.59)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 82,244 $ 72,152 $ 18,392 $ 22,362 $ 20,501
(000 omitted)
Ratio of expenses to average 1.34% 2.01% 2.49% 1.53% D 2.49% D
net assets
Ratio of expenses to average 1.32% E 1.97% E 2.44% E 1.48% E 2.49%
net assets after expense
reductions
Ratio of net investment (.15)% (.90)% (1.13)% .46% (1.08)%
income (loss) to average net
assets
Portfolio turnover rate 150% 199% 340% 601% 190%
</TABLE>
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE.
C NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
D FMR AGREED TO REIMBURSE A
PORTION OF THE FUND'S
EXPENSES, OR EXPENSES WERE
LIMITED IN ACCORDANCE WITH A
STATE EXPENSE LIMITATION.
WITHOUT THIS REIMBURSEMENT,
THE FUND'S EXPENSE RATIO
WOULD HAVE BEEN HIGHER.
E FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
F FOR THE YEAR ENDED FEBRUARY
29.
CYCLICAL INDUSTRIES
Years ended February 28, 1999 1998 F
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 12.07 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) (.13) (.11)
D
Net realized and unrealized (.49) 2.59
gain (loss)
Total from investment (.62) 2.48
operations
Less Distributions
From net realized gain (.09) (.46)
Redemption fees added to .03 .05
paid in capital
Net asset value, end of $ 11.39 $ 12.07
period
TOTAL RETURN B, C (4.96)% 25.77%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 3,087 $ 3,965
(000 omitted)
Ratio of expenses to average 2.50% E 2.50% A, E
net assets
Ratio of expenses to average 2.49% G 2.50% A
net assets after expense
reductions
Ratio of net investment (1.09)% (.93)% A
income (loss) to average net
assets
Portfolio turnover rate 103% 140% A
A ANNUALIZED
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 FOR THE PERIOD MARCH 3,
1997 (COMMENCEMENT OF
OPERATIONS) TO FEBRUARY 28,
1998.
G FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
DEFENSE AND AEROSPACE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended February 28, 1999 1998 1997 1996 F 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 37.57 $ 28.94 $ 26.97 $ 19.64 $ 19.14
period
Income from Investment
Operations
Net investment income (loss) (.19) (.29) (.11) (.05) (.06)
D
Net realized and unrealized (3.61) 11.84 4.18 9.09 .70
gain (loss)
Total from investment (3.80) 11.55 4.07 9.04 .64
operations
Less Distributions
From net realized gain - (3.04) (2.17) (1.82) (.27)
Redemption fees added to paid .08 .12 .07 .11 .13
in capital
Net asset value, end of period $ 33.85 $ 37.57 $ 28.94 $ 26.97 $ 19.64
TOTAL RETURN A, B (9.90)% 42.68% 15.87% 47.40% 4.13%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 28,497 $ 101,805 $ 68,803 $ 26,648 $ 4,985
(000 omitted)
Ratio of expenses to average 1.48% 1.77% 1.84% 1.77% C 2.49% C
net assets
Ratio of expenses to average 1.42% E 1.71% E 1.81% E 1.75% E 2.49%
net assets after expense
reductions
Ratio of net investment (.53)% (.85)% (.39)% (.20)% (.32)%
income (loss) to average net
assets
Portfolio turnover rate 221% 311% 219% 267% 146%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE.
C FMR AGREED TO REIMBURSE A
PORTION OF THE FUND'S
EXPENSES, OR EXPENSES WERE
LIMITED IN ACCORDANCE WITH A
STATE EXPENSE LIMITATION.
WITHOUT THIS REIMBURSEMENT,
THE FUND'S EXPENSE RATIO
WOULD HAVE BEEN HIGHER.
D NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
E FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
F FOR THE YEAR ENDED FEBRUARY
29.
</TABLE>
DEVELOPING COMMUNICATIONS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended February 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 20.14 $ 19.68 $ 19.42 $ 20.40 $ 19.65
period
Income from Investment
Operations
Net investment income (loss) (.16) (.18) (.18) (.17) (.16)
C
Net realized and unrealized 12.72 4.95 .42 4.17 2.55
gain (loss)
Total from investment 12.56 4.77 .24 4.00 2.39
operations
Less Distributions
From net realized gain (.07) (4.35) - (5.00) (1.67)
Redemption fees added to paid .09 .04 .02 .02 .03
in capital
Net asset value, end of period $ 32.72 $ 20.14 $ 19.68 $ 19.42 $ 20.40
TOTAL RETURN A, B 63.01% 28.17% 1.34% 21.84% 13.63%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 612,061 $ 238,356 $ 220,360 $ 333,185 $ 254,426
(000 omitted)
Ratio of expenses to average 1.38% 1.61% 1.64% 1.53% 1.58%
net assets
Ratio of expenses to average 1.34% D 1.55% D 1.62% D 1.51% D 1.56% D
net assets after expense
reductions
Ratio of net investment (.64)% (.82)% (.86)% (.78)% (.83)%
income (loss) to average net
assets
Portfolio turnover rate 299% 383% 202% 249% 266%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE.
C NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
D FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
E FOR THE YEAR ENDED FEBRUARY
29.
</TABLE>
ELECTRONICS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended February 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 34.99 $ 37.95 $ 28.18 $ 19.80 $ 17.67
period
Income from Investment
Operations
Net investment income (loss) (.23) (.17) (.17) (.08) (.18)
C
Net realized and unrealized 12.53 7.32 9.80 13.51 2.11
gain (loss)
Total from investment 12.30 7.15 9.63 13.43 1.93
operations
Less Distributions
From net realized gain - (7.60) - (5.25) -
In excess of net realized - (2.60) - - -
gain
Total distributions - (10.20) - (5.25) -
Redemption fees added to paid .05 .09 .14 .20 .20
in capital
Net asset value, end of period $ 47.34 $ 34.99 $ 37.95 $ 28.18 $ 19.80
TOTAL RETURN A, B 35.30% 24.15% 34.67% 72.75% 12.05%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,885,548 $ 2,668,750 $ 1,744,017 $ 1,133,362 $ 216,433
(000 omitted)
Ratio of expenses to average 1.18% 1.18% 1.33% 1.25% 1.72%
net assets
Ratio of expenses to average 1.15% D 1.12% D 1.29% D 1.22% D 1.71% D
net assets after expense
reductions
Ratio of net investment (.62)% (.42)% (.54)% (.28)% (.98)%
income (loss) to average net
assets
Portfolio turnover rate 160% 435% 341% 366% 205%
</TABLE>
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE.
C NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
D FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
E FOR THE YEAR ENDED FEBRUARY
29.
ENERGY
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended February 28, 1999 1998 1997 1996 F 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 21.20 $ 21.31 $ 18.97 $ 16.10 $ 16.73
period
Income from Investment
Operations
Net investment income C .13 .11 .13 .18 .07
Net realized and unrealized (4.71) 3.93 3.59 3.13 (.11)
gain (loss)
Total from investment (4.58) 4.04 3.72 3.31 (.04)
operations
Less Distributions
From net investment income (.02) E (.09) (.13) (.11) (.08)
From net realized gain (.40)E (4.09) (1.31) (.36) (.54)
Total distributions (.42) (4.18) (1.44) (.47) (.62)
Redemption fees added to paid .03 .03 .06 .03 .03
in capital
Net asset value, end of period $ 16.23 $ 21.20 $ 21.31 $ 18.97 $ 16.10
TOTAL RETURN A, B (22.00)% 20.40% 20.35% 20.92% .04%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 120,004 $ 147,023 $ 203,265 $ 119,676 $ 96,023
(000 omitted)
Ratio of expenses to average 1.46% 1.58% 1.57% 1.63% 1.85%
net assets
Ratio of expenses to average 1.42% D 1.53% D 1.55% D 1.63% 1.85%
net assets after expense
reductions
Ratio of net investment .68% .47% .62% 1.04% .42%
income to average net assets
Portfolio turnover rate 138% 115% 87% 97% 106%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE.
C NET INVESTMENT INCOME PER
SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES
OUTSTANDING DURING THE
PERIOD.
D FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
E AMOUNTS SHOWN REFLECT SOME
RECLASSIFICATION RELATED TO
BOOK TO TAX DIFFERENCES.
F FOR THE YEAR ENDED FEBRUARY
29.
</TABLE>
ENERGY SERVICE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended February 28, 1999 1998 1997 1996 F 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 28.02 $ 20.46 $ 16.09 $ 11.97 $ 11.66
period
Income from Investment
Operations
Net investment income (loss) (.10) (.10) (.01) .08 D .02
C
Net realized and unrealized (13.26) 9.36 5.05 4.49 .67
gain (loss)
Total from investment (13.36) 9.26 5.04 4.57 .69
operations
Less Distributions
From net investment income - - - (.04) (.01)
In excess of net investment - - - - (.01)
income
From net realized gain (1.71) (1.85) (.79) (.48) (.35)
In excess of net realized - - - - (.13)
gain
Total distributions (1.71) (1.85) (.79) (.52) (.50)
Redemption fees added to paid .14 .15 .12 .07 .12
in capital
Net asset value, end of period $ 13.09 $ 28.02 $ 20.46 $ 16.09 $ 11.97
TOTAL RETURN A, B (50.57)% 48.43% 32.26% 39.15% 7.60%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 366,896 $ 919,002 $ 439,504 $ 273,805 $ 63,794
(000 omitted)
Ratio of expenses to average 1.39% 1.25% 1.47% 1.59% 1.81%
net assets
Ratio of expenses to average 1.35% E 1.22% E 1.45% E 1.58% E 1.79% E
net assets after expense
reductions
Ratio of net investment (.49)% (.35)% (.07)% .60% .19%
income (loss) to average net
assets
Portfolio turnover rate 75% 78% 167% 223% 209%
</TABLE>
A THE TOTALS RETURN WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE.
C NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
D INVESTMENT INCOME PER SHARE
REFLECTS A SPECIAL DIVIDEND
WHICH AMOUNTED TO $.02 PER
SHARE.
E FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
F FOR THE YEAR ENDED FEBRUARY
29.
ENVIRONMENTAL SERVICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended February 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 16.46 $ 14.50 $ 12.42 $ 10.27 $ 11.93
period
Income from Investment
Operations
Net investment income (loss) (.18) (.13) (.08) (.17) (.14)
c
Net realized and unrealized (3.50) 2.07 2.04 2.95 (1.53)
gain (loss)
Total from investment (3.68) 1.94 1.96 2.78 (1.67)
operations
Less Distributions
From net realized gain - - - (.65) -
In excess of net realized (.03) - (.02) - -
gain
Total distributions (.03) - (.02) (.65) -
Redemption fees added to paid .02 .02 .14 .02 .01
in capital
Net asset value, end of period $ 12.77 $ 16.46 $ 14.50 $ 12.42 $ 10.27
TOTAL RETURN A, b (22.23)% 13.52% 16.93% 27.49% (13.91)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 15,534 $ 25,183 $ 32,525 $ 27,587 $ 31,270
(000 omitted)
Ratio of expenses to average 2.20% 2.23% 2.18% 2.36% 2.04%
net assets
Ratio of expenses to average 2.16% d 2.22% d 2.11% d 2.32% d 2.01% d
net assets after expense
reductions
Ratio of net investment (1.23)% (.84)% (.59)% (1.43)% (1.32)%
income (loss) to average net
assets
Portfolio turnover rate 123% 59% 252% 138% 82%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE.
C NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
D FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
E FOR THE YEAR ENDED FEBRUARY
29.
</TABLE>
FINANCIAL SERVICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended February 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 103.28 $ 82.94 $ 65.70 $ 48.23 $ 51.24
period
Income from Investment
Operations
Net investment income C .56 .70 .74 1.03 .76
Net realized and unrealized 7.88 30.65 21.55 17.56 .87
gain (loss)
Total from investment 8.44 31.35 22.29 18.59 1.63
operations
Less Distributions
From net investment income (.19) (.64) (.63) (.37) (.79)
From net realized gain (10.81) (10.51) (4.56) (.91) (3.93)
Total distributions (11.00) (11.15) (5.19) (1.28) (4.72)
Redemption fees added to paid .10 .14 .14 .16 .08
in capital
Net asset value, end of period $ 100.82 $ 103.28 $ 82.94 $ 65.70 $ 48.23
TOTAL RETURN A, B 8.42% 41.08% 35.54% 39.05% 4.72%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 547,000 $ 604,908 $ 426,424 $ 270,466 $ 153,089
(000 omitted)
Ratio of expenses to average 1.20% 1.31% 1.45% 1.42% 1.56%
net assets
Ratio of expenses to average 1.18% D 1.29% D 1.43% D 1.41% D 1.54% D
net assets after expense
reductions
Ratio of net investment .58% .78% 1.03% 1.78% 1.52%
income to average net assets
Portfolio turnover rate 60% 84% 80% 125% 107%
</TABLE>
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE.
C NET INVESTMENT INCOME PER
SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES
OUTSTANDING DURING THE
PERIOD.
D FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
E FOR THE YEAR ENDED FEBRUARY
29.
FOOD AND AGRICULTURE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended February 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 48.81 $ 44.53 $ 42.15 $ 32.53 $ 31.49
period
Income from Investment
Operations
Net investment income C .21 .33 .42 .37 .15
Net realized and unrealized 3.50 9.22 4.91 11.61 2.80
gain (loss)
Total from investment 3.71 9.55 5.33 11.98 2.95
operations
Less Distributions
From net investment income (.16) (.37) (.24) (.20) (.08)
From net realized gain (5.47) (4.95) (2.77) (2.20) (1.85)
Total distributions (5.63) (5.32) (3.01) (2.40) (1.93)
Redemption fees added to paid .03 .05 .06 .04 .02
in capital
Net asset value, end of period $ 46.92 $ 48.81 $ 44.53 $ 42.15 $ 32.53
TOTAL RETURN A, B 7.83% 23.58% 13.59% 37.92% 10.14%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 206,007 $ 250,567 $ 223,423 $ 301,102 $ 197,130
(000 omitted)
Ratio of expenses to average 1.31% 1.49% 1.52% 1.43% 1.70%
net assets
Ratio of expenses to average 1.29% D 1.48% D 1.50% D 1.42% D 1.68% D
net assets after expense
reductions
Ratio of net investment .45% .73% 1.01% .99% .49%
income to average net assets
Portfolio turnover rate 68% 74% 91% 124% 126%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE.
C NET INVESTMENT INCOME PER
SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
D FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
E FOR THE YEAR ENDED FEBRUARY
29.
</TABLE>
GOLD
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended February 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 15.17 $ 28.21 $ 27.11 $ 18.44 $ 22.66
period
Income from Investment
Operations
Net investment income (loss) (.08) (.13) (.16) (.06) (.05)
C
Net realized and unrealized (2.43) (11.78) 1.60 8.62 (4.25)
gain (loss)
Total from investment (2.51) (11.91) 1.44 8.56 (4.30)
operations
Less Distributions
From net realized gain - (1.29) (.50) - -
Redemption fees added to paid .13 .16 .16 .11 .08
in capital
Net asset value, end of period $ 12.79 $ 15.17 $ 28.21 $ 27.11 $ 18.44
TOTAL RETURN A, B (15.69)% (43.15)% 6.10% 47.02% (18.62)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 179,619 $ 219,668 $ 428,103 $ 451,493 $ 278,197
(000 omitted)
Ratio of expenses to average 1.57% 1.55% 1.44% 1.39% 1.41%
net assets
Ratio of expenses to average 1.54% D 1.48% D 1.42% D 1.39% 1.41%
net assets after expense
reductions
Ratio of net investment (.59)% (.67)% (.59)% (.27)% (.22)%
income (loss) to average net
assets
Portfolio turnover rate 59% 89% 63% 56% 34%
</TABLE>
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE.
C NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
D FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
E FOR THE YEAR ENDED FEBRUARY
29.
HEALTH CARE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended February 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 113.84 $ 102.45 $ 100.47 $ 76.13 $ 63.31
period
Income from Investment
Operations
Net investment income C .17 .33 .52 .95 .75
Net realized and unrealized 29.85 31.94 18.01 28.85 18.38
gain (loss)
Total from investment 30.02 32.27 18.53 29.80 19.13
operations
Less Distributions
From net investment income (.19) (.25) (.65) (.59) (.62)
From net realized gain (6.17) (20.73) (15.95) (4.92) (5.74)
Total distributions (6.36) (20.98) (16.60) (5.51) (6.36)
Redemption fees added to paid .10 .10 .05 .05 .05
in capital
Net asset value, end of period $ 137.60 $ 113.84 $ 102.45 $ 100.47 $ 76.13
TOTAL RETURN A, B 27.20% 36.47% 20.41% 39.68% 31.24%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 3,145,825 $ 2,224,019 $ 1,372,554 $ 1,525,910 $ 943,141
(000 omitted)
Ratio of expenses to average 1.07% 1.20% 1.33% 1.31% 1.39%
net assets
Ratio of expenses to average 1.05% D 1.18% D 1.32% D 1.30% D 1.36% D
net assets after expense
reductions
Ratio of net investment .14% .31% .52% 1.06% 1.08%
income to average net assets
Portfolio turnover rate 66% 79% 59% 54% 151%
</TABLE>
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE.
C NET INVESTMENT INCOME PER
SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES
OUTSTANDING DURING THE
PERIOD.
D FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
E FOR THE YEAR ENDED FEBRUARY
29.
HOME FINANCE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended February 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 53.36 $ 46.00 $ 33.30 $ 23.92 $ 25.03
period
Income from Investment
Operations
Net investment income c .28 .33 .53 .53 .20
Net realized and unrealized (10.16) 13.10 14.60 9.72 2.34
gain (loss)
Total from investment (9.88) 13.43 15.13 10.25 2.54
operations
Less Distributions
From net investment income (.07) (.29) (.32) (.19) (.12)
From net realized gain (1.38) (5.84) (2.16) (.73) (3.60)
Total distributions (1.45) (6.13) (2.48) (.92) (3.72)
Redemption fees added to paid .06 .06 .05 .05 .07
in capital
Net asset value, end of period $ 42.09 $ 53.36 $ 46.00 $ 33.30 $ 23.92
TOTAL RETURN a,b (19.12)% 32.39% 47.50% 43.24% 12.43%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 740,440 $ 1,668,610 $ 1,176,828 $ 617,035 $ 229,924
(000 omitted)
Ratio of expenses to average 1.19% 1.21% 1.38% 1.35% 1.47%
net assets
Ratio of expenses to average 1.18% d 1.19% d 1.34% d 1.32% d 1.45% d
net assets after expense
reductions
Ratio of net investment .57% .67% 1.41% 1.80% .80%
income to average net assets
Portfolio turnover rate 18% 54% 78% 81% 124%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE.
C NET INVESTMENT INCOME PER
SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES
OUTSTANDING DURING THE
PERIOD.
D FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
E FOR THE YEAR ENDED FEBRUARY
29.
</TABLE>
INDUSTRIAL EQUIPMENT
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended February 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 25.91 $ 25.51 $ 25.11 $ 20.04 $ 20.61
period
Income from Investment
Operations
Net investment income (loss) (.04) (.08) .06 .04 .01
C
Net realized and unrealized .25 5.73 4.15 7.10 (.44)
gain (loss)
Total from investment .21 5.65 4.21 7.14 (.43)
operations
Less Distributions
From net investment income - (.02) (.04) (.05) (.01)
From net realized gain (.92) (5.26) (3.84) (2.05) (.16)
Total distributions (.92) (5.28) (3.88) (2.10) (.17)
Redemption fees added to paid .03 .03 .07 .03 .03
in capital
Net asset value, end of period $ 25.23 $ 25.91 $ 25.51 $ 25.11 $ 20.04
TOTAL RETURN A, B 1.00% 25.76% 18.25% 36.86% (1.93)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 31,573 $ 50,428 $ 102,882 $ 137,520 $ 109,968
(000 omitted)
Ratio of expenses to average 1.43% 1.67% 1.51% 1.54% 1.80%
net assets
Ratio of expenses to average 1.41% D 1.60% D 1.44% D 1.53% D 1.78% D
net assets after expense
reductions
Ratio of net investment (.16)% (.32)% .25% .19% .06%
income (loss) to average net
assets
Portfolio turnover rate 84% 115% 261% 115% 131%
</TABLE>
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE.
C NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
D FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
E FOR THE YEAR ENDED FEBRUARY
29.
INDUSTRIAL MATERIALS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended February 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 25.00 $ 27.66 $ 26.07 $ 23.13 $ 21.67
period
Income from Investment
Operations
Net investment income (loss) (.12) (.11) .06 .12 .17
C
Net realized and unrealized (4.60) 1.43 3.12 2.92 1.43
gain (loss)
Total from investment (4.72) 1.32 3.18 3.04 1.60
operations
Less Distributions
From net investment income - (.03) (.06) (.15) (.18)
From net realized gain - (4.00) (1.57) - -
Total distributions - (4.03) (1.63) (.15) (.18)
Redemption fees added to paid .04 .05 .04 .05 .04
in capital
Net asset value, end of period $ 20.32 $ 25.00 $ 27.66 $ 26.07 $ 23.13
TOTAL RETURN A, B (18.72)% 6.59% 12.69% 13.38% 7.65%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 11,162 $ 22,582 $ 66,462 $ 86,338 $ 183,454
(000 omitted)
Ratio of expenses to average 2.07% 1.98% 1.54% 1.64% 1.56%
net assets
Ratio of expenses to average 2.04% D 1.94% D 1.51% D 1.61% D 1.53% D
net assets after expense
reductions
Ratio of net investment (.52)% (.42)% .23% .49% .77%
income (loss) to average net
assets
Portfolio turnover rate 82% 118% 105% 138% 139%
</TABLE>
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE .
C NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
D FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
E FOR THE YEAR ENDED FEBRUARY
29.
INSURANCE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended February 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 42.10 $ 32.62 $ 26.77 $ 21.31 $ 19.41
period
Income from Investment
Operations
Net investment income (loss) (.04) .01 .01 .06 .05
C
Net realized and unrealized 4.01 12.93 7.21 6.15 1.78
gain (loss)
Total from investment 3.97 12.94 7.22 6.21 1.83
operations
Less Distributions
From net investment income - - (.03) (.07) -
From net realized gain (3.98) (3.54) (1.45) (.72) -
Total distributions (3.98) (3.54) (1.48) (.79) -
Redemption fees added to paid .05 .08 .11 .04 .07
in capital
Net asset value, end of period $ 42.14 $ 42.10 $ 32.62 $ 26.77 $ 21.31
TOTAL RETURN A, B 9.84% 42.81% 28.28% 29.51% 9.79%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 82,879 $ 125,151 $ 42,367 $ 38,994 $ 21,838
(000 omitted)
Ratio of expenses to average 1.33% 1.45% 1.82% 1.77% 2.36%
net assets
Ratio of expenses to average 1.31% D 1.43% D 1.77% D 1.74% D 2.34% D
net assets after expense
reductions
Ratio of net investment (.10)% .02% .05% .26% .25%
income (loss) to average net
assets
Portfolio turnover rate 72% 157% 142% 164% 265%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE.
C NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
D FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
E FOR THE YEAR ENDED FEBRUARY
29.
</TABLE>
LEISURE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended February 28, 1999 1998 1997 1996 F 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 62.30 $ 47.83 $ 46.17 $ 40.71 $ 45.30
period
Income from Investment
Operations
Net investment income (loss) (.27) (.25) (.06) E (.21) (.21)
C
Net realized and unrealized 22.78 21.10 4.47 10.97 (.48)
gain (loss)
Total from investment 22.51 20.85 4.41 10.76 (.69)
operations
Less Distributions
From net realized gain (3.44) (6.46) (2.83) (5.32) (3.93)
Redemption fees added to paid .07 .08 .08 .02 .03
in capital
Net asset value, end of period $ 81.44 $ 62.30 $ 47.83 $ 46.17 $ 40.71
TOTAL RETURN A, B 37.54% 47.29% 10.14% 27.61% (1.07)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 346,139 $ 257,199 $ 98,133 $ 85,013 $ 69,569
(000 omitted)
Ratio of expenses to average 1.26% 1.44% 1.56% 1.64% 1.64%
net assets
Ratio of expenses to average 1.24% D 1.39% D 1.54% D 1.63% D 1.62% D
net assets after expense
reductions
Ratio of net investment (.40)% (.46)% (.12)% (.46)% (.52)%
income (loss) to average net
assets
Portfolio turnover rate 107% 209% 127% 141% 103%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE.
C NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
D FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
E INVESTMENT INCOME (LOSS)
PER SHARE REFLECTS A SPECIAL
DIVIDEND WHICH AMOUNTED TO
$.23 PER SHARE.
F FOR THE YEAR ENDED FEBRUARY
29.
</TABLE>
MEDICAL DELIVERY
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended February 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 28.32 $ 28.29 $ 29.00 $ 23.18 $ 20.28
period
Income from Investment
Operations
Net investment income (loss) (.06) F (.24) (.23) (.03) .06
C
Net realized and unrealized (7.88) 5.45 2.92 7.72 3.74
gain (loss)
Total from investment (7.94) 5.21 2.69 7.69 3.80
operations
Less Distributions
From net investment income - - - - (.06)
From net realized gain (1.21) (5.23) (3.45) (1.91) (.89)
In excess of net realized (.13) - - - --
gain
Total distributions (1.34) (5.23) (3.45) (1.91) (.95)
Redemption fees added to paid .04 .05 .05 .04 .05
in capital
Net asset value, end of period $ 19.08 $ 28.32 $ 28.29 $ 29.00 $ 23.18
TOTAL RETURN A, B (29.47)% 21.97% 10.50% 34.15% 19.63%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 76,842 $ 155,542 $ 192,385 $ 295,489 $ 299,570
(000 omitted)
Ratio of expenses to average 1.40% 1.57% 1.57% 1.65% 1.48%
net assets
Ratio of expenses to average 1.37% d 1.53% d 1.53% d 1.62% d 1.45% d
net assets after expense
reductions
Ratio of net investment (.25)% (.88)% (.84)% (.13)% .29%
income (loss) to average net
assets
Portfolio turnover rate 67% 109% 78% 132% 123%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE.
C NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
D FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
E FOR THE YEAR ENDED FEBRUARY
29.
F NET INVESTMENT INCOME
(LOSS) PER SHARE REFLECTS A
SPECIAL DIVIDEND FROM
VENCOR, INC., WHICH AMOUNTED
TO $.12 PER SHARE.
</TABLE>
MEDICAL EQUIPMENT AND SYSTEMS
Year ended February 28, 1999 F
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income (loss) (.11)
D
Net realized and unrealized 2.18
gain (loss)
Total from investment 2.07
operations
Redemption fees added to paid .03
in capital
Net asset value, end of period $ 12.10
TOTAL RETURN B, C 21.00%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 28,594
(000 omitted)
Ratio of expenses to average 2.39% A
net assets
Ratio of expenses to average 2.38% A, E
net assets after expense
reductions
Ratio of net investment (1.21)% A
income (loss) to average net
assets
Portfolio turnover rate 85% A
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE
BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIOD SHOWN.
C TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
D NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
E FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
F FOR THE PERIOD APRIL 28,
1998 (COMMENCEMENT OF
OPERATIONS) TO FEBRUARY 28,
1999.
MULTIMEDIA
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended February 28, 1999 1998 1997 1996 F 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 33.58 $ 24.91 $ 27.18 $ 22.35 $ 23.87
period
Income from Investment
Operations
Net investment income (loss) (.19) (.17) .35 D .02 (.01)
C
Net realized and unrealized 11.85 10.30 (1.58) 7.00 1.67
gain (loss)
Total from investment 11.66 10.13 (1.23) 7.02 1.66
operations
Less Distributions
From net investment income - - - (.02) -
From net realized gain (2.19) (1.52) (1.07) (2.19) (3.21)
Total distributions (2.19) (1.52) (1.07) (2.21) (3.21)
Redemption fees added to paid .08 .06 .03 .02 .03
in capital
Net asset value, end of period $ 43.13 $ 33.58 $ 24.91 $ 27.18 $ 22.35
TOTAL RETURN A, B 36.68% 42.42% (4.52)% 31.98% 9.35%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 159,730 $ 115,485 $ 54,171 $ 94,970 $ 38,157
(000 omitted)
Ratio of expenses to average 1.35% 1.75% 1.60% 1.56% 2.05%
net assets
Ratio of expenses to average 1.33% E 1.71% E 1.56% E 1.54% E 2.03% E
net assets after expense
reductions
Ratio of net investment (.52)% (.59)% 1.33% .08% (.07)%
income (loss) to average net
assets
Portfolio turnover rate 109% 219% 99% 223% 107%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE .
C NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
D INVESTMENT INCOME PER SHARE
REFLECTS A SPECIAL DIVIDEND
WHICH AMOUNTED TO $.49 PER
SHARE.
E FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
F FOR THE YEAR ENDED FEBRUARY
29.
</TABLE>
NATURAL GAS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended February 28, 1999 1998 1997 1996 F 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 13.22 $ 12.50 $ 11.36 $ 8.98 $ 9.48
period
Income from Investment
Operations
Net investment income (loss) .12 E (.05) (.06) .05 .03
C
Net realized and unrealized (2.68) 1.06 1.30 2.36 (.53)
gain (loss)
Total from investment (2.56) 1.01 1.24 2.41 (.50)
operations
Less Distributions
From net investment income (.10) - (.01) (.05) (.02)
From net realized gain - (.30) (.29) - -
In excess of net realized - (.03) - - -
gain
Total distributions (.10) (.33) (.30) (.05) (.02)
Redemption fees added to paid .03 .04 .20 .02 .02
in capital
Net asset value, end of period $ 10.59 $ 13.22 $ 12.50 $ 11.36 $ 8.98
TOTAL RETURN A, B (19.17)% 8.74% 12.45% 27.10% (5.06)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 36,828 $ 59,866 $ 81,566 $ 60,228 $ 79,894
(000 omitted)
Ratio of expenses to average 1.57% 1.82% 1.70% 1.68% 1.70%
net assets
Ratio of expenses to average 1.52% D 1.78% D 1.66% D 1.67% D 1.66% D
net assets after expense
reductions
Ratio of net investment .93% (.37)% (.46)% .46% .30%
income (loss) to average net
assets
Portfolio turnover rate 107% 118% 283% 79% 177%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE.
C NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
D FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
E NET INVESTMENT INCOME PER
SHARE REFLECTS A SPECIAL
DIVIDEND FROM TRANSCANADA
PIPELINES LTD. WHICH
AMOUNTED TO $.10 PER SHARE.
F FOR THE YEAR ENDED FEBRUARY
29.
</TABLE>
NATURAL RESOURCES
Years ended February 28, 1999 1998 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.46 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) (.05) (.09)
d
Net realized and unrealized (2.54) .76
gain (loss)
Total from investment (2.59) .67
operations
Less Distributions
From net realized gain - (.26)
Redemption fees added to paid .02 .05
in capital
Net asset value, end of period $ 7.89 $ 10.46
TOTAL RETURN B, C (24.57)% 7.30%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 5,134 $ 7,520
(000 omitted)
Ratio of expenses to average 2.50% F 2.50% A, F
net assets
Ratio of expenses to average 2.47% G 2.48% A, G
net assets after expense
reductions
Ratio of net investment (.54)% (.86)% A
income (loss) to average net
assets
Portfolio turnover rate 155% 165% A
A ANNUALIZED
B THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
D NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
E FOR THE PERIOD MARCH 3,
1997 (COMMENCEMENT OF
OPERATIONS) TO FEBRUARY 28,
1998.
F FMR AGREED TO REIMBURSE A
PORTION OF THE FUND'S
EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT,
THE FUND'S EXPENSE RATIO
WOULD HAVE BEEN HIGHER.
G FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
PAPER AND FOREST PRODUCTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended February 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 22.66 $ 21.63 $ 20.78 $ 21.14 $ 19.61
period
Income from Investment
Operations
Net investment income (loss) (.03) (.12) .01 .08 .01
C
Net realized and unrealized (3.87) 3.13 2.08 1.83 2.53
gain (loss)
Total from investment (3.90) 3.01 2.09 1.91 2.54
operations
Less Distributions
From net investment income - - (.03) (.08) -
In excess of net investment - (.04) (.07) - -
income
From net realized gain -- (2.07) (1.25) (2.27) (1.17)
In excess of net realized (.44) -- -- -- --
gain
Total distributions (.44) (2.11) (1.35) (2.35) (1.17)
Redemption fees added to paid .13 .13 .11 .08 .16
in capital
Net asset value, end of period $ 18.45 $ 22.66 $ 21.63 $ 20.78 $ 21.14
TOTAL RETURN A, B (17.01)% 15.53% 10.87% 9.18% 14.91%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 10,247 $ 31,384 $ 19,484 $ 27,270 $ 94,219
(000 omitted)
Ratio of expenses to average 2.30% 2.18% 2.19% 1.91% 1.88%
net assets
Ratio of expenses to average 2.21% D 2.15% D 2.16% D 1.90% D 1.87% D
net assets after expense
reductions
Ratio of net investment (.13)% (.50)% .04% .34% .05%
income (loss) to average net
assets
Portfolio turnover rate 338% 235% 180% 78% 209%
</TABLE>
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE.
C NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
D FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
E FOR THE YEAR ENDED FEBRUARY
29.
PRECIOUS METALS AND MINERALS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended February 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.28 $ 19.60 $ 20.96 $ 15.27 $ 16.62
period
Income from Investment
Operations
Net investment income (loss) (.01) (.04) (.01) .07 .17
C
Net realized and unrealized (1.27) (9.42) (1.42) 5.54 (1.42)
gain (loss)
Total from investment (1.28) (9.46) (1.43) 5.61 (1.25)
operations
Less Distributions
From net investment income - - (.04) (.06) (.18)
In excess of net investment - - (.01) - (.05)
income
Total distributions - - (.05) (.06) (.23)
Redemption fees added to paid .16 .14 .12 .14 .13
in capital
Net asset value, end of period $ 9.16 $ 10.28 $ 19.60 $ 20.96 $ 15.27
TOTAL RETURN A, B (10.89)% (47.55)% (6.26)% 37.74% (6.86)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 123,439 $ 165,960 $ 325,586 $ 467,196 $ 364,204
(000 omitted)
Ratio of expenses to average 1.78% 1.82% 1.62% 1.52% 1.46%
net assets
Ratio of expenses to average 1.74% D 1.76% D 1.61% D 1.52% 1.46%
net assets after expense
reductions
Ratio of net investment (.09)% (.26)% (.05)% .39% .99%
income (loss) to average net
assets
Portfolio turnover rate 53% 84% 54% 53% 43%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE.
C NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
D FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
E FOR THE YEAR ENDED FEBRUARY
29.
</TABLE>
REGIONAL BANKS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended February 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 43.18 $ 32.82 $ 24.37 $ 18.01 $ 17.99
period
Income from Investment
Operations
Net investment income C .39 .40 .37 .52 .37
Net realized and unrealized .91 11.41 9.70 6.78 .87
gain (loss)
Total from investment 1.30 11.81 10.07 7.30 1.24
operations
Less Distributions
From net investment income (.28) (.28) (.27) (.25) (.29)
From net realized gain (2.66) (1.23) (1.40) (.72) (.98)
Total distributions (2.94) (1.51) (1.67) (.97) (1.27)
Redemption fees added to paid .03 .06 .05 .03 .05
in capital
Net asset value, end of period $ 41.57 $ 43.18 $ 32.82 $ 24.37 $ 18.01
TOTAL RETURN A, B 3.10% 36.64% 43.33% 40.94% 7.79%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 925,829 $ 1,338,896 $ 837,952 $ 315,178 $ 164,603
(000 omitted)
Ratio of expenses to average 1.17% 1.25% 1.46% 1.41% 1.58%
net assets
Ratio of expenses to average 1.16% D 1.24% D 1.45% D 1.40% D 1.56% D
net assets after expense
reductions
Ratio of net investment .91% 1.07% 1.36% 2.42% 1.99%
income to average net assets
Portfolio turnover rate 22% 25% 43% 103% 106%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE.
C NET INVESTMENT INCOME PER
SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES
OUTSTANDING DURING THE
PERIOD.
D FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
E FOR THE YEAR ENDED FEBRUARY
29.
</TABLE>
RETAILING
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended February 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 50.04 $ 33.25 $ 27.87 $ 23.91 $ 24.91
period
Income from Investment
Operations
Net investment income (loss) (.28) (.27) (.13) (.14) (.18)
C
Net realized and unrealized 18.27 17.14 5.49 4.07 (.96)
gain (loss)
Total from investment 17.99 16.87 5.36 3.93 (1.14)
operations
Less Distributions
From net realized gain (.39) (.51) (.08) - -
In excess of net realized (.30) -- -- - -
gain
Total distributions (.69) (.51) (.08) - -
Redemption fees added to paid .16 .43 .10 .03 .14
in capital
Net asset value, end of period $ 67.50 $ 50.04 $ 33.25 $ 27.87 $ 23.91
TOTAL RETURN A, B 36.66% 52.61% 19.59% 16.56% (4.01)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 337,513 $ 192,861 $ 59,348 $ 44,051 $ 31,090
(000 omitted)
Ratio of expenses to average 1.25% 1.63% 1.45% 1.94% 2.07%
net assets
Ratio of expenses to average 1.22% D 1.55% D 1.39% D 1.92% D 1.96% D
net assets after expense
reductions
Ratio of net investment (.50)% (.67)% (.39)% (.53)% (.74)%
income (loss) to average net
assets
Portfolio turnover rate 165% 308% 278% 235% 481%
</TABLE>
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE.
C NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
D FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
E FOR THE YEAR ENDED FEBRUARY
29.
SOFTWARE AND COMPUTER SERVICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended February 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 44.26 $ 38.58 $ 36.20 $ 29.07 $ 28.89
period
Income from Investment
Operations
Net investment income (loss) (.39) (.33) (.25) (.19) (.26)
C
Net realized and unrealized 14.46 12.57 5.87 11.85 .67
gain (loss)
Total from investment 14.07 12.24 5.62 11.66 .41
operations
Less Distributions
From net realized gain (1.32) (6.61) (3.31) (4.60) (.33)
Redemption fees added to paid .08 .05 .07 .07 .10
in capital
Net asset value, end of period $ 57.09 $ 44.26 $ 38.58 $ 36.20 $ 29.07
TOTAL RETURN A, B 32.57% 35.50% 16.14% 40.17% 1.97%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 690,852 $ 503,367 $ 389,699 $ 337,633 $ 236,445
(000 omitted)
Ratio of expenses to average 1.28% 1.44% 1.54% 1.48% 1.52%
net assets
Ratio of expenses to average 1.27% D 1.42% D 1.51% D 1.47% D 1.50% D
net assets after expense
reductions
Ratio of net investment (.82)% (.81)% (.66)% (.54)% (1.01)%
income (loss) to average net
assets
Portfolio turnover rate 72% 145% 279% 183% 164%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE.
C NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
D FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
E FOR THE YEAR ENDED FEBRUARY
29.
</TABLE>
TECHNOLOGY
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended February 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 53.13 $ 57.70 $ 54.67 $ 42.05 $ 41.83
period
Income from Investment
Operations
Net investment income (loss) (.34) (.25) (.39) (.28) (.39)
C
Net realized and unrealized 29.79 11.29 6.95 20.83 1.95
gain (loss)
Total from investment 29.45 11.04 6.56 20.55 1.56
operations
Less Distributions
From net realized gain - (12.39) (3.68) (8.05) (1.50)
In excess of net realized - (3.30) - - -
gain
Total distributions - (15.69) (3.68) (8.05) (1.50)
Redemption fees added to paid .12 .08 .15 .12 .16
in capital
Net asset value, end of period $ 82.70 $ 53.13 $ 57.70 $ 54.67 $ 42.05
TOTAL RETURN A, B 55.66% 24.92% 12.64% 50.71% 4.61%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,367,148 $ 691,924 $ 478,444 $ 483,026 $ 229,761
(000 omitted)
Ratio of expenses to average 1.24% 1.38% 1.49% 1.40% 1.57%
net assets
Ratio of expenses to average 1.20% D 1.30% D 1.44% D 1.39% D 1.56% D
net assets after expense
reductions
Ratio of net investment (.54)% (.45)% (.72)% (.52)% (.98)%
income (loss) to average net
assets
Portfolio turnover rate 339% 556% 549% 112% 102%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE .
C NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
D FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
E FOR THE YEAR ENDED FEBRUARY
29.
</TABLE>
TELECOMMUNICATIONS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended February 28, 1999 1998 1997 1996 F 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 53.37 $ 41.80 $ 44.87 $ 38.34 $ 37.10
period
Income from Investment
Operations
Net investment income (loss) (.06) (.25) .12 D .51 .29
C
Net realized and unrealized 11.43 18.20 2.92 9.15 2.54
gain (loss)
Total from investment 11.37 17.95 3.04 9.66 2.83
operations
Less Distributions
From net investment income - - (.16) (.39) (.33)
From net realized gain (2.96) (6.44) (5.98) (2.75) (1.27)
Total distributions (2.96) (6.44) (6.14) (3.14) (1.60)
Redemption fees added to paid .07 .06 .03 .01 .01
in capital
Net asset value, end of period $ 61.85 $ 53.37 $ 41.80 $ 44.87 $ 38.34
TOTAL RETURN A, B 22.21% 46.52% 7.85% 25.79% 7.98%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 824,175 $ 643,449 $ 388,535 $ 468,300 $ 369,476
(000 omitted)
Ratio of expenses to average 1.27% 1.51% 1.51% 1.52% 1.56%
net assets
Ratio of expenses to average 1.25% E 1.48% E 1.47% E 1.52% 1.55% E
net assets after expense
reductions
Ratio of net investment (.11)% (.53)% .27% 1.17% .77%
income (loss) to average net
assets
Portfolio turnover rate 150% 157% 175% 89% 107%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE.
C NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
D INVESTMENT INCOME PER SHARE
REFLECTS A SPECIAL DIVIDEND
WHICH AMOUNTED TO $.07 PER
SHARE.
E FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
F FOR THE YEAR ENDED FEBRUARY
29.
</TABLE>
TRANSPORTATION
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended February 28, 1999 1998 1997 1996 G 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 28.34 $ 22.23 $ 21.92 $ 20.53 $ 21.67
period
Income from Investment
Operations
Net investment income (loss) (.18) (.02) (.13) (.09) D (.17)
C
Net realized and unrealized (.58) 8.85 1.06 2.60 1.17
gain (loss)
Total from investment (.76) 8.83 .93 2.51 1.00
operations
Less Distributions
From net realized gain (2.64) (2.80) (.71) (1.22) (2.19)
Redemption fees added to paid .10 .08 .09 .10 .05
in capital
Net asset value, end of period $ 25.04 $ 28.34 $ 22.23 $ 21.92 $ 20.53
TOTAL RETURN A, B (1.73)% 41.15% 4.67% 12.95% 5.90%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 19,855 $ 64,282 $ 8,890 $ 11,445 $ 12,704
(000 omitted)
Ratio of expenses to average 1.96% 1.58% 2.50% E 2.47% E 2.37%
net assets
Ratio of expenses to average 1.90% F 1.54% F 2.48% F 2.44% F 2.36% F
net assets after expense
reductions
Ratio of net investment (.68)% (.06)% (.58)% (.43)% (.83)%
income (loss) to average net
assets
Portfolio turnover rate 182% 210% 148% 175% 178%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE.
C NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD.
D INVESTMENT INCOME PER SHARE
REFLECTS A SPECIAL DIVIDEND
WHICH AMOUNTED TO $.05 PER
SHARE.
E FMR AGREED TO REIMBURSE A
PORTION OF THE FUND'S
EXPENSES, OR EXPENSES WERE
LIMITED IN ACCORDANCE WITH A
STATE EXPENSE LIMITATION.
WITHOUT THIS REIMBURSEMENT,
THE FUND'S EXPENSE RATIO
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>
UTILITIES GROWTH
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended February 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 53.50 $ 45.97 $ 43.03 $ 34.88 $ 36.61
period
Income from Investment
Operations
Net investment income C .44 .54 .73 1.10 1.13
Net realized and unrealized 15.77 14.83 6.41 7.86 (1.17)
gain (loss)
Total from investment 16.21 15.37 7.14 8.96 (.04)
operations
Less Distributions
From net investment income (.25) (.58) (.70) (.84) (1.05)
From net realized gain (7.93) (7.30) (3.54) - (.67)
Total distributions (8.18) (7.88) (4.24) (.84) (1.72)
Redemption fees added to paid .05 .04 .04 .03 .03
in capital
Net asset value, end of period $ 61.58 $ 53.50 $ 45.97 $ 43.03 $ 34.88
TOTAL RETURN A, B 32.17% 36.20% 18.13% 25.82% .21%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 507,841 $ 401,927 $ 256,844 $ 266,768 $ 237,635
(000 omitted)
Ratio of expenses to average 1.18% 1.33% 1.47% 1.39% 1.43%
net assets
Ratio of expenses to average 1.16% D 1.30% D 1.46% D 1.38% D 1.42% D
net assets after expense
reductions
Ratio of net investment .77% 1.11% 1.73% 2.76% 3.24%
income to average net assets
Portfolio turnover rate 113% 78% 31% 65% 24%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE .
C NET INVESTMENT INCOME PER
SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES
OUTSTANDING DURING THE
PERIOD.
D FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
E FOR THE YEAR ENDED FEBRUARY
29.
</TABLE>
MONEY MARKET
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended February 28, 1999 1998 1997 1996C 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
period
Income from Investment .050 .051 .049 .054 .042
Operations Net interest
income
Less Distributions
From net interest income (.050) (.051) (.049) (.054) (.042)
Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
TOTAL RETURN A 5.08% 5.26% 5.02% 5.56% 4.28%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,126,174 $ 584,919 $ 848,168 $ 610,821 $ 573,144
(000 omitted)
Ratio of expenses to average .50% .56% .56% .59% .65%
net assets
Ratio of expenses to average .49% B .56% .56% .59% .65%
net assets after expense
reductions
Ratio of net interest income 5.03% 5.13% 4.92% 5.39% 4.19%
to average net assets
</TABLE>
A TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE.
B FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
C FOR THE YEAR ENDED FEBRUARY
29.
You can obtain additional information about the funds. The funds' SAI
includes more detailed information about each fund and its
investments. The SAI is incorporated herein by reference (legally
forms a part of the prospectus). Each fund's annual and semi-annual
reports include a discussion of the fund's holdings and recent market
conditions and the fund's investment strategies that affected
performance.
For a free copy of any of these documents or to request other
information or ask questions about a fund, call Fidelity at
1-800-544-8544 or visit Fidelity's Web site at www.fidelity.com.
The SAI, the funds' annual and semi-annual reports and other related
materials are available on the SEC's Internet Web site
(http://www.sec.gov). You can obtain copies of this information upon
paying a duplicating fee, by writing the Public Reference Section of
the SEC, Washington, D.C. 20549-6009. You can also review and copy
information about the funds, including the funds' SAI, at the SEC's
Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for
information on the operation of the SEC's Public Reference Room.
INVESTMENT COMPANY ACT OF 1940, FILE NUMBER 811-3114
Select Portfolios, Fidelity Investments & (Pyramid) Design, Fidelity,
Fidelity Investments, TouchTone Xpress, Fidelity Money Line, Fidelity
Automatic Account Builder, Fidelity On-Line Xpress+, and Directed
Dividends are registered trademarks of FMR Corp.
Portfolio Advisory Services is a service mark of FMR Corp.
The third party marks appearing above are the marks of their
respective owners.
1.701898.101 SEL-pro-0499
SUPPLEMENT TO THE FIDELITY SELECT
PORTFOLIOS(registered trademark) APRIL 29, 1999 PROSPECTUS
Effective the close of business on December 20, 1999, shares of Select
Precious Metals and Minerals Portfolio will no longer be available for
purchase except through the reinvestment of dividends and other
distributions by shareholders of the fund on December 20, 1999.
PROPOSED REORGANIZATION. The Board of Trustees of Fidelity Select
Portfolios has unanimously approved an Agreement and Plan of
Reorganization ("Agreement") between Select Precious Metals and
Minerals Portfolio and Select Gold Portfolio.
The Agreement provides for the transfer of all of the assets and the
assumption of all of the liabilities of Select Precious Metals and
Minerals Portfolio solely in exchange for the number of shares of
Select Gold Portfolio equal in value to the relative net asset value
of the outstanding shares of Select Precious Metals and Minerals
Portfolio. Following such exchange, Select Precious Metals and
Minerals Portfolio will distribute the Select Gold Portfolio shares to
its shareholders pro rata, in liquidation of Select Precious Metals
and Minerals Portfolio as provided in the Agreement (the transactions
contemplated by the Agreement referred to as the "Reorganization").
The Reorganization can be consummated only if, among other things, it
is approved by a majority vote of shareholders. A Special Meeting (the
"Meeting") of the Shareholders of Select Precious Metals and Minerals
Portfolio will be held on February 16, 2000, and approval of the
Agreement will be voted on at that time. In connection with the
Meeting, Select Precious Metals and Minerals Portfolio will be filing
with the Securities and Exchange Commission and delivering to its
shareholders of record a Proxy Statement describing the Reorganization
and a Prospectus for Select Gold Portfolio.
If the Agreement is approved at the Meeting and certain conditions
required by the Agreement are satisfied, the Reorganization is
expected to become effective on or about February 29, 2000. If
shareholder approval of the Agreement is delayed due to failure to
meet a quorum or otherwise, the Reorganization will become effective,
if approved, as soon as practicable thereafter.
In the event Select Precious Metals and Minerals Portfolio
shareholders fail to approve the Agreement, Select Precious Metals and
Minerals Portfolio will continue to engage in business as a registered
investment company and the Board of Trustees will consider other
proposals for the reorganization or liquidation of Select Precious
Metals and Minerals Portfolio.
REGIONAL BANKS PORTFOLIO HAS CHANGED ITS NAME TO "BANKING PORTFOLIO."
References in the Prospectus to "Regional Banks Portfolio" are each
hereby replaced by "Banking Portfolio" and references to "Regional
Banks" are each hereby replaced by "Banking."
The following information replaces similar information for "Banking
Portfolio" found in the "Fund Summary" section on page P-15:
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing at least 80% of assets in securities of
companies principally engaged in accepting deposits and making
commercial and principally non-mortgage consumer loans.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
The following information replaces the second paragraph for
"Environmental Services Portfolio" found under the heading "Principal
Investment Strategies" in the "Fund Basics" section beginning on page
P-46:
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in the research, development,
manufacture or distribution of products, processes, or services
related to waste management or pollution control. These companies may
include, for example, companies involved in the transportation,
treatment, or disposal of hazardous or other wastes; transforming
waste into energy; recycling; and remedial projects such as
groundwater and underground storage tank decontamination, asbestos
cleanup, and emergency cleanup response. They may also include
companies involved in the detection, analysis, evaluation, and
treatment of both existing and potential environmental problems such
as contaminated water, air pollution, and acid rain; companies that
provide sanitation or filtration equipment or services; companies
involved in the reduction of hazardous emissions or other pollution
reduction or prevention efforts; and companies that provide design,
engineering, construction, and consulting services to companies
engaged in waste management or pollution control.
The following information replaces the second paragraph for "Banking
Portfolio" found under the heading "Principal Investment Strategies"
in the "Fund Basics" section on page P-52:
FMR normally invests at least 80% of the fund's assets in securities
of companies principally engaged in accepting deposits and making
commercial and principally non-mortgage consumer loans. These
companies may include, for example, state chartered banks, savings and
loan institutions, banks that are members of the Federal Reserve
System, and U.S. institutions whose deposits are not insured by the
federal government. In addition, these companies may offer merchant
banking, consumer and commercial finance, discount brokerage, leasing
and insurance.
EFFECTIVE SEPTEMBER 1, 1999, the following information replaces
similar information found in the "Fund Management" section beginning
on page P-69:
Douglas Nigen is manager of Automotive, which he has managed since
September 1999. Mr. Nigen joined Fidelity as a research analyst in
1997 after receiving his MBA from the University of Chicago.
Scott Offen is manager of Food and Agriculture, Energy, and Natural
Resources, which he has managed since November 1996, September 1999,
and September 1999, respectively. He also manages another Fidelity
fund. Since joining Fidelity in 1985, Mr. Offen has worked as a
research analyst and portfolio manager.
John Porter is manager of Consumer Industries, which he has managed
since September 1999. He also manages another Fidelity fund. Mr.
Porter joined Fidelity as an analyst in 1995, after receiving his MBA
from the University of Chicago.
Dylan Yolles is manager of Software and Computer Services, which he
has managed since September 1999. Mr. Yolles joined Fidelity in 1997
as an equity analyst, after receiving a bachelor of arts degree in
1991 and an MBA in 1997, both from Stanford University.
Jonathan Zang is manager of Utilities Growth and Chemicals, which he
has managed since July 1998 and September 1999, respectively. Mr. Zang
joined Fidelity in 1997 as an equity analyst, after receiving his MBA
from the University of Chicago in 1997. Previously, he was an
investment officer with Hawaiian Trust Company, in Honolulu, from 1992
to 1995.
The following information replaces similar information found in the
"Fund Management" section beginning on page P-69:
Ramin Arani is an analyst and manager of Health Care, which he has
managed since August 1999. He also manages other Fidelity funds. Mr.
Arani joined Fidelity as a research associate in 1992.
Steven Calhoun is manager of Retailing, which he has managed since
August 1999. Mr. Calhoun joined Fidelity as a research analyst in
1994.
Shep Perkins is an analyst and manager of Medical Delivery, which he
has managed since August 1999. Mr. Perkins joined Fidelity as an
equity research associate in 1997.
Christian Zann is an analyst and manager of Natural Gas, which he has
managed since August 1999. Mr. Zann joined Fidelity as an equity
research associate in 1996.
The following information replaces the fourth paragraph found in the
"Fund Distribution" section on page P-71:
Each stock fund's sales charge may be reduced if you buy directly
through Fidelity or through prototype or prototype-like retirement
plans sponsored by FMR or FMR Corp. The amount you invest, plus the
value of your account, must fall within the ranges shown below.
Purchases made with assistance or intervention from a financial
intermediary are not eligible for a sales charge reduction.
FIDELITY SELECT PORTFOLIOS(registered trademark)
STATEMENT OF ADDITIONAL INFORMATION
APRIL 29, 1999
This Statement of Additional Information (SAI) is not a prospectus.
Portions of the funds' Annual Report are incorporated herein. The
Annual Report is supplied with this SAI.
To obtain a free additional copy of the Prospectus, dated April 29,
1999, or an Annual Report, please call Fidelity(registered trademark)
at 1-800-544-8544 or visit Fidelity's Web site at www.fidelity.com.
TABLE OF CONTENTS PAGE
Investment Policies and 3
Limitations
Portfolio Transactions 12
Valuation 24
Performance 25
Additional Purchase, Exchange 123
and Redemption Information
Distributions and Taxes 123
Trustees and Officers 124
Control of Investment Advisers 134
Management Contracts 134
Distribution Services 149
Transfer and Service Agent 159
Agreements
Description of the Trust 162
Financial Statements 163
Appendix 163
SEL-ptb-0499
1.474722.101
(fidelity_logo_graphic)(registered trademark)
82 Devonshire Street, Boston, MA 02109
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in
the Prospectus. Unless otherwise noted, whenever an investment policy
or limitation states a maximum percentage of a fund's assets that may
be invested in any security or other asset, or sets forth a policy
regarding quality standards, such standard or percentage limitation
will be determined immediately after and as a result of the fund's
acquisition of such security or other asset. Accordingly, any
subsequent change in values, net assets, or other circumstances will
not be considered when determining whether the investment complies
with the fund's investment policies and limitations.
A fund's fundamental investment policies and limitations cannot be
changed without approval by a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940 (the
1940 Act)) of the fund. However, except for the fundamental investment
limitations listed below, the investment policies and limitations
described in this SAI are not fundamental and may be changed without
shareholder approval.
INVESTMENT LIMITATIONS OF EACH STOCK FUND (EXCEPT BUSINESS SERVICES
AND OUTSOURCING PORTFOLIO, CYCLICAL INDUSTRIES PORTFOLIO, MEDICAL
EQUIPMENT AND SYSTEMS PORTFOLIO, AND NATURAL RESOURCES PORTFOLIO)
THE FOLLOWING ARE THE FUNDS' FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. A FUND MAY NOT:
(1) issue senior securities, except in connection with the insurance
program established by the fund pursuant to an exemptive order issued
by the Securities and Exchange Commission or as otherwise permitted
under the Investment Company Act of 1940;
(2) borrow money, except that a fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed)
less liabilities (other than borrowings). Any borrowings that come to
exceed this amount will be reduced within three days (not including
Sundays and holidays) to the extent necessary to comply with the 33
1/3% limitation;
(3) underwrite securities issued by others, except to the extent that
a fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(4) purchase or sell the securities of any issuer, if, as a result of
such purchase or sale, less than 25% of the assets of the fund would
be invested in the securities of issuers principally engaged in the
business activities having the specific characteristics denoted by the
fund;
(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent a fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(6) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent a fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities). This limitation does not apply to Precious
Metals and Minerals Portfolio or to Gold Portfolio (see below); or
(7) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(8) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objectives, policies, and limitations as
the fund.
ADDITIONAL FUNDAMENTAL INVESTMENT LIMITATIONS OF CERTAIN OF THE STOCK
FUNDS.
GOLD PORTFOLIO AND PRECIOUS METALS AND MINERALS PORTFOLIO MAY NOT:
(1) purchase any precious metal if, as a result, more than 50% of its
total assets would be invested in precious metals; or
(2) purchase or sell physical commodities, provided that the fund may
purchase and sell precious metals, and further provided that the fund
may sell physical commodities acquired as a result of ownership of
securities. The fund may not purchase or sell options, options on
futures contracts, or futures contracts on physical commodities other
than precious metals.
FINANCIAL SERVICES PORTFOLIO, REGIONAL BANKS PORTFOLIO, AND HOME
FINANCE PORTFOLIO MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer.
THE FOLLOWING ARE NON-FUNDAMENTAL LIMITATIONS FOR EACH STOCK FUND
(EXCEPT BUSINESS SERVICES AND OUTSOURCING PORTFOLIO, CYCLICAL
INDUSTRIES PORTFOLIO, MEDICAL EQUIPMENT AND SYSTEMS PORTFOLIO, AND
NATURAL RESOURCES PORTFOLIO), WHICH MAY BE CHANGED WITHOUT SHAREHOLDER
APPROVAL.
(i) For each fund (except Home Finance, Financial Services, and
Regional Banks), in order to qualify as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986, as
amended, the fund currently intends to comply with certain
diversification limits imposed by Subchapter M.
(ii) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(iii) The fund does not currently intend to purchase securities on
margin, except that a fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iv) The fund does not currently intend to hedge more than 40% of its
total assets with short sales against the box under normal conditions.
(v) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (2) for all stock funds). Each fund will not borrow from
other funds advised by FMR or its affiliates if total outstanding
borrowings immediately after such borrowing would exceed 15% of the
fund's total assets.
(vi) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(vii) The fund does not currently intend to lend assets other than
securities to other parties, except (a) by lending money (up to 5% of
a fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser, or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(viii) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
with substantially the same fundamental investment objectives,
policies, and limitations as the funds.
For purposes of limitation (4), FMR considers an issuer to be
principally engaged in a business activity if (i) at least 50% of an
issuer's assets, income, sales or profits are committed to, or derived
from, the business activity, or (ii) a third party has given the
issuer an industry or sector classification consistent with the
designated business activity. For each of Brokerage and Investment
Management and Financial Services, an issuer that derives more than
15% of revenues or profits from brokerage or investment management
activities is considered to be principally engaged in the business
activities identified for the fund.
For purposes of limitations (1) and (2) for Gold Portfolio and
Precious Metals and Minerals Portfolio, FMR currently intends to treat
investments in securities whose redemption value is indexed to the
price of gold or other precious metals as investments in precious
metals.
For purposes of limitation (i), Subchapter M generally requires a fund
to invest no more than 25% of its total assets in securities of any
one issuer and to invest at least 50% of its total assets so that no
more than 5% of the fund's total assets are invested in securities of
any one issuer. However, Subchapter M allows unlimited investments in
cash, cash items, government securities (as defined in Subchapter M)
and securities of other investment companies. These tax requirements
are generally applied at the end of each quarter of a fund's taxable
year.
With respect to limitation (vi), if through a change in values, net
assets, or other circumstances, a fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the funds' limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page 11.
INVESTMENT LIMITATIONS OF BUSINESS SERVICES AND OUTSOURCING PORTFOLIO,
CYCLICAL INDUSTRIES PORTFOLIO, MEDICAL EQUIPMENT AND SYSTEMS
PORTFOLIO, AND NATURAL RESOURCES PORTFOLIO
THE FOLLOWING ARE THE FUNDS' FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. A FUND MAY NOT:
(1) issue senior securities, except in connection with the insurance
program established by the fund pursuant to an exemptive order issued
by the Securities and Exchange Commission or as otherwise permitted
under the Investment Company Act of 1940;
(2) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(3) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(4) purchase the securities of any issuer if, as a result, less than
25% of the fund's total assets would be invested in the securities of
issuers principally engaged in the business activities having the
specific characteristics denoted by the fund;
(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(6) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities). This limitation does not apply to Natural
Resources Portfolio (see below); or
(7) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(8) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
NATURAL RESOURCES PORTFOLIO MAY NOT:
(1) purchase or sell physical commodities other than precious metals,
provided that the fund may sell physical commodities acquired as a
result of ownership of securities or other instruments. This
limitation shall not prevent the fund from purchasing or selling
options and futures contracts or from investing in securities or other
instruments backed by physical commodities.
THE FOLLOWING ARE NON-FUNDAMENTAL LIMITS FOR BUSINESS SERVICES AND
OUTSOURCING PORTFOLIO, CYCLICAL INDUSTRIES PORTFOLIO, MEDICAL
EQUIPMENT AND SYSTEMS PORTFOLIO, AND NATURAL RESOURCES PORTFOLIO,
WHICH MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) For each fund, in order to qualify as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986, as
amended, the fund currently intends to comply with certain
diversification limits imposed by Subchapter M.
(ii) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(iii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iv) The fund does not currently intend to hedge more than 40% of its
total assets with short sales against the box under normal conditions.
(v) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (2)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(vi) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(vii) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which Fidelity Management & Research Company or an affiliate
serves as investment adviser, or (b) acquiring loans, loan
participations, or other forms of direct debt instruments and, in
connection therewith, assuming any associated unfunded commitments of
the sellers. (This limitation does not apply to purchases of debt
securities or to repurchase agreements.)
(viii) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
For purposes of limitation (4), FMR considers an issuer to be
principally engaged in a business activity if (i) at least 50% of an
issuer's assets, income, sales or profits are committed to, or derived
from, the business activity, or (ii) a third party has given the
issuer an industry or sector classification consistent with the
designated business activity.
For purposes of limitation (i), Subchapter M generally requires a fund
to invest no more than 25% of its total assets in securities of any
one issuer and to invest at least 50% of its total assets so that no
more than 5% of the fund's total assets are invested in securities of
any one issuer. However, Subchapter M allows unlimited investments in
cash, cash items, government securities (as defined in Subchapter M)
and securities of other investment companies. These tax requirements
are generally applied at the end of each quarter of a fund's taxable
year.
With respect to limitation (vi), if through a change in values, net
assets, or other circumstances, a fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the funds' limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page 13.
INVESTMENT LIMITATIONS OF SELECT MONEY MARKET PORTFOLIO (MONEY MARKET
FUND)
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer.
(2) issue senior securities, except in connection with the insurance
program established by the fund pursuant to an exemptive order issued
by the Securities and Exchange Commission or as otherwise permitted
under the Investment Company Act of 1940;
(3) borrow money, except that the fund may (i) borrow money for
temporary or emergency purposes (not for leveraging or investment) and
(ii) engage in reverse repurchase agreements for any purpose; provided
that (i) and (ii) in combination do not exceed 33 1/3% of the fund's
total assets (including the amount borrowed) less liabilities (other
than borrowings). Any borrowings that come to exceed this amount will
be reduced within three days (not including Sundays and holidays) to
the extent necessary to comply with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry, except that
the fund will invest more than 25% of its total assets in the
financial services industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments;
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements; or
(9) invest in companies for the purpose of exercising control or
management.
(10) In addition the fund may, notwithstanding any other fundamental
investment policy or limitation, invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objectives, policies,
and limitations as the fund.
THE FOLLOWING ARE THE FUND'S NON-FUNDAMENTAL LIMITATIONS WHICH MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to purchase a security (other
than securities issued or guaranteed by the U.S. Government or any of
its agencies or instrumentalities, or securities of other money market
funds) if, as a result, more than 5% of its total assets would be
invested in securities of a single issuer; provided that the fund may
invest up to 25% of its total assets in the first tier securities of a
single issuer for up to three business days.
(ii) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(iii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party. The fund will not borrow from
other funds advised by FMR or its affiliates if total outstanding
borrowings immediately after such borrowing would exceed 15% of the
fund's total assets.
(v) The fund does not currently intend to purchase any security if, as
a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(vi) The fund does not currently intend to purchase physical
commodities or purchase or sell futures contracts based on physical
commodities.
(vii) The fund does not currently intend to lend assets other than
securities to other parties, except by lending money (up to 10% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser. (This
limitation does not apply to purchases of debt securities or to
repurchase agreements.)
(viii) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
with substantially the same fundamental investment objective,
policies, and limitations as the fund.
For purposes of limitations (1) and (i), certain securities subject to
guarantees (including insurance, letters of credit and demand
features) are not considered securities of their issuer, but are
subject to separate diversification requirements, in accordance with
industry standard requirements for money market funds.
With respect to limitation (v), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO. The extent to which the
fund may invest in a company that engages in securities-related
activities is limited by federal securities laws.
FINANCIAL SERVICES PORTFOLIO. The extent to which the fund may invest
in a company that engages in securities-related activities is limited
by federal securities laws.
MULTIMEDIA PORTFOLIO. The extent to which the fund may invest in
corporate broadcast licensees is limited by Federal Communications
Commission regulations.
The following pages contain more detailed information about types of
instruments in which a fund may invest, strategies FMR may employ in
pursuit of a fund's investment objective, and a summary of related
risks. FMR may not buy all of these instruments or use all of these
techniques unless it believes that doing so will help a fund achieve
its goal.
AFFILIATED BANK TRANSACTIONS. A fund may engage in transactions with
financial institutions that are, or may be considered to be,
"affiliated persons" of the fund under the 1940 Act. These
transactions may involve repurchase agreements with custodian banks;
short-term obligations of, and repurchase agreements with, the 50
largest U.S. banks (measured by deposits); municipal securities; U.S.
Government securities with affiliated financial institutions that are
primary dealers in these securities; short-term currency transactions;
and short-term borrowings. In accordance with exemptive orders issued
by the Securities and Exchange Commission (SEC), the Board of Trustees
has established and periodically reviews procedures applicable to
transactions involving affiliated financial institutions.
ASSET-BACKED SECURITIES represent interests in pools of mortgages,
loans, receivables or other assets. Payment of interest and repayment
of principal may be largely dependent upon the cash flows generated by
the assets backing the securities and, in certain cases, supported by
letters of credit, surety bonds, or other credit enhancements.
Asset-backed security values may also be affected by other factors
including changes in interest rates, the availability of information
concerning the pool and its structure, the creditworthiness of the
servicing agent for the pool, the originator of the loans or
receivables, or the entities providing the credit enhancement. In
addition, these securities may be subject to prepayment risk.
BORROWING. Each fund may borrow from banks or from other funds advised
by FMR or its affiliates, or through reverse repurchase agreements. If
a fund borrows money, its share price may be subject to greater
fluctuation until the borrowing is paid off. If a fund makes
additional investments while borrowings are outstanding, this may be
considered a form of leverage.
CASH MANAGEMENT. A fund can hold uninvested cash or can invest it in
cash equivalents such as money market securities, repurchase
agreements or shares of money market funds. Generally, these
securities offer less potential for gains than other types of
securities.
CENTRAL CASH FUNDS are money market funds managed by FMR or its
affiliates that seek to earn a high level of current income (free from
federal income tax in the case of a municipal money market fund) while
maintaining a stable $1.00 share price. The funds comply with
industry-standard requirements for money market funds regarding the
quality, maturity and diversification of their investments.
COMMON STOCK represents an equity or ownership interest in an issuer.
In the event an issuer is liquidated or declares bankruptcy, the
claims of owners of bonds and preferred stock take precedence over the
claims of those who own common stock.
COMPANIES "PRINCIPALLY ENGAGED" IN A DESIGNATED BUSINESS ACTIVITY. For
purposes of each stock fund's policy of investing at least 80% of its
assets in securities of companies principally engaged in the business
activities identified for the fund, FMR considers a company to be
principally engaged in a designated business activity if: (i) at least
50% of a company's assets, income, sales or profits are committed to,
or derived from, the business activity, or (ii) a third party has
given the company an industry or sector classification consistent with
the designated business activity. For each of Brokerage and Investment
Management and Financial Services, an issuer that derives more than
15% of revenues or profits from brokerage or investment management
activities is considered to be principally engaged in the business
activities identified for the fund.
CONVERTIBLE SECURITIES are bonds, debentures, notes, preferred stocks
or other securities that may be converted or exchanged (by the holder
or by the issuer) into shares of the underlying common stock (or cash
or securities of equivalent value) at a stated exchange ratio. A
convertible security may also be called for redemption or conversion
by the issuer after a particular date and under certain circumstances
(including a specified price) established upon issue. If a convertible
security held by a fund is called for redemption or conversion, the
fund could be required to tender it for redemption, convert it into
the underlying common stock, or sell it to a third party.
Convertible securities generally have less potential for gain or loss
than common stocks. Convertible securities generally provide yields
higher than the underlying common stocks, but generally lower than
comparable non-convertible securities. Because of this higher yield,
convertible securities generally sell at prices above their
"conversion value," which is the current market value of the stock to
be received upon conversion. The difference between this conversion
value and the price of convertible securities will vary over time
depending on changes in the value of the underlying common stocks and
interest rates. When the underlying common stocks decline in value,
convertible securities will tend not to decline to the same extent
because of the interest or dividend payments and the repayment of
principal at maturity for certain types of convertible securities.
However, securities that are convertible other than at the option of
the holder generally do not limit the potential for loss to the same
extent as securities convertible at the option of the holder. When the
underlying common stocks rise in value, the value of convertible
securities may also be expected to increase. At the same time,
however, the difference between the market value of convertible
securities and their conversion value will narrow, which means that
the value of convertible securities will generally not increase to the
same extent as the value of the underlying common stocks. Because
convertible securities may also be interest-rate sensitive, their
value may increase as interest rates fall and decrease as interest
rates rise. Convertible securities are also subject to credit risk,
and are often lower-quality securities.
DEBT SECURITIES are used by issuers to borrow money. The issuer
usually pays a fixed, variable or floating rate of interest, and must
repay the amount borrowed at the maturity of the security. Some debt
securities, such as zero coupon bonds, do not pay interest but are
sold at a deep discount from their face values. Debt securities
include corporate bonds, government securities, and mortgage and other
asset-backed securities.
DOMESTIC AND FOREIGN INVESTMENTS (MONEY MARKET FUND ONLY) include U.S.
dollar-denominated time deposits, certificates of deposit, and
bankers' acceptances of U.S. banks and their branches located outside
of the United States, U.S. branches and agencies of foreign banks, and
foreign branches of foreign banks. Domestic and foreign investments
may also include U.S. dollar-denominated securities issued or
guaranteed by other U.S. or foreign issuers, including U.S. and
foreign corporations or other business organizations, foreign
governments, foreign government agencies or instrumentalities, and
U.S. and foreign financial institutions, including savings and loan
institutions, insurance companies, mortgage bankers, and real estate
investment trusts, as well as banks.
The obligations of foreign branches of U.S. banks may be general
obligations of the parent bank in addition to the issuing branch, or
may be limited by the terms of a specific obligation and by
governmental regulation. Payment of interest and repayment of
principal on these obligations may also be affected by governmental
action in the country of domicile of the branch (generally referred to
as sovereign risk). In addition, evidence of ownership of portfolio
securities may be held outside of the United States and a fund may be
subject to the risks associated with the holding of such property
overseas. Various provisions of federal law governing the
establishment and operation of U.S. branches do not apply to foreign
branches of U.S. banks.
Obligations of U.S. branches and agencies of foreign banks may be
general obligations of the parent bank in addition to the issuing
branch, or may be limited by the terms of a specific obligation and by
federal and state regulation, as well as by governmental action in the
country in which the foreign bank has its head office.
Obligations of foreign issuers involve certain additional risks. These
risks may include future unfavorable political and economic
developments, withholding taxes, seizures of foreign deposits,
currency controls, interest limitations, or other governmental
restrictions that might affect repayment of principal or payment of
interest, or the ability to honor a credit commitment. Additionally,
there may be less public information available about foreign entities.
Foreign issuers may be subject to less governmental regulation and
supervision than U.S. issuers. Foreign issuers also generally are not
bound by uniform accounting, auditing, and financial reporting
requirements comparable to those applicable to U.S. issuers.
EXPOSURE TO FOREIGN MARKETS. Foreign securities, foreign currencies,
and securities issued by U.S. entities with substantial foreign
operations may involve significant risks in addition to the risks
inherent in U.S. investments.
Foreign investments involve risks relating to local political,
economic, regulatory, or social instability, military action or
unrest, or adverse diplomatic developments, and may be affected by
actions of foreign governments adverse to the interests of U.S.
investors. Such actions may include expropriation or nationalization
of assets, confiscatory taxation, restrictions on U.S. investment or
on the ability to repatriate assets or convert currency into U.S.
dollars, or other government intervention. Additionally, governmental
issuers of foreign debt securities may be unwilling to pay interest
and repay principal when due and may require that the conditions for
payment be renegotiated. There is no assurance that FMR will be able
to anticipate these potential events or counter their effects. In
addition, the value of securities denominated in foreign currencies
and of dividends and interest paid with respect to such securities
will fluctuate based on the relative strength of the U.S. dollar.
It is anticipated that in most cases the best available market for
foreign securities will be on an exchange or in over-the-counter (OTC)
markets located outside of the United States. Foreign stock markets,
while growing in volume and sophistication, are generally not as
developed as those in the United States, and securities of some
foreign issuers may be less liquid and more volatile than securities
of comparable U.S. issuers. Foreign security trading, settlement and
custodial practices (including those involving securities settlement
where fund assets may be released prior to receipt of payment) are
often less developed than those in U.S. markets, and may result in
increased risk or substantial delays in the event of a failed trade or
the insolvency of, or breach of duty by, a foreign broker-dealer,
securities depository or foreign subcustodian. For example, many
foreign countries are less prepared than the United States to properly
process and calculate information related to dates from and after
January 1, 2000. As a result, some foreign markets, brokers, banks or
securities depositories could experience at least temporary
disruptions, which could result in difficulty buying and selling
securities in certain foreign markets and pricing foreign investments,
and foreign issuers could fail to pay timely dividends, interest or
principal. In addition, the costs associated with foreign investments,
including withholding taxes, brokerage commissions and custodial
costs, are generally higher than with U.S. investments.
Foreign markets may offer less protection to investors than U.S.
markets. Foreign issuers are generally not bound by uniform
accounting, auditing, and financial reporting requirements and
standards of practice comparable to those applicable to U.S. issuers.
Adequate public information on foreign issuers may not be available,
and it may be difficult to secure dividends and information regarding
corporate actions on a timely basis. In general, there is less overall
governmental supervision and regulation of securities exchanges,
brokers, and listed companies than in the United States. OTC markets
tend to be less regulated than stock exchange markets and, in certain
countries, may be totally unregulated. Regulatory enforcement may be
influenced by economic or political concerns, and investors may have
difficulty enforcing their legal rights in foreign countries.
Some foreign securities impose restrictions on transfer within the
United States or to U.S. persons. Although securities subject to such
transfer restrictions may be marketable abroad, they may be less
liquid than foreign securities of the same class that are not subject
to such restrictions.
American Depositary Receipts (ADRs) as well as other "hybrid" forms of
ADRs, including European Depositary Receipts (EDRs) and Global
Depositary Receipts (GDRs), are certificates evidencing ownership of
shares of a foreign issuer. These certificates are issued by
depository banks and generally trade on an established market in the
United States or elsewhere. The underlying shares are held in trust by
a custodian bank or similar financial institution in the issuer's home
country. The depository bank may not have physical custody of the
underlying securities at all times and may charge fees for various
services, including forwarding dividends and interest and corporate
actions. ADRs are alternatives to directly purchasing the underlying
foreign securities in their national markets and currencies. However,
ADRs continue to be subject to many of the risks associated with
investing directly in foreign securities. These risks include foreign
exchange risk as well as the political and economic risks of the
underlying issuer's country.
The risks of foreign investing may be magnified for investments in
emerging markets. Security prices in emerging markets can be
significantly more volatile than those in more developed markets,
reflecting the greater uncertainties of investing in less established
markets and economies. In particular, countries with emerging markets
may have relatively unstable governments, may present the risks of
nationalization of businesses, restrictions on foreign ownership and
prohibitions on the repatriation of assets, and may have less
protection of property rights than more developed countries. The
economies of countries with emerging markets may be based on only a
few industries, may be highly vulnerable to changes in local or global
trade conditions, and may suffer from extreme and volatile debt
burdens or inflation rates. Local securities markets may trade a small
number of securities and may be unable to respond effectively to
increases in trading volume, potentially making prompt liquidation of
holdings difficult or impossible at times.
FOREIGN CURRENCY TRANSACTIONS. A stock fund may conduct foreign
currency transactions on a spot (i.e., cash) or forward basis (i.e.,
by entering into forward contracts to purchase or sell foreign
currencies). Although foreign exchange dealers generally do not charge
a fee for such conversions, they do realize a profit based on the
difference between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign
currency at one rate, while offering a lesser rate of exchange should
the counterparty desire to resell that currency to the dealer. Forward
contracts are customized transactions that require a specific amount
of a currency to be delivered at a specific exchange rate on a
specific date or range of dates in the future. Forward contracts are
generally traded in an interbank market directly between currency
traders (usually large commercial banks) and their customers. The
parties to a forward contract may agree to offset or terminate the
contract before its maturity, or may hold the contract to maturity and
complete the contemplated currency exchange.
The following discussion summarizes the principal currency management
strategies involving forward contracts that could be used by a fund. A
fund may also use swap agreements, indexed securities, and options and
futures contracts relating to foreign currencies for the same
purposes.
A "settlement hedge" or "transaction hedge" is designed to protect a
fund against an adverse change in foreign currency values between the
date a security is purchased or sold and the date on which payment is
made or received. Entering into a forward contract for the purchase or
sale of the amount of foreign currency involved in an underlying
security transaction for a fixed amount of U.S. dollars "locks in" the
U.S. dollar price of the security. Forward contracts to purchase or
sell a foreign currency may also be used by a fund in anticipation of
future purchases or sales of securities denominated in foreign
currency, even if the specific investments have not yet been selected
by FMR.
A fund may also use forward contracts to hedge against a decline in
the value of existing investments denominated in foreign currency. For
example, if a fund owned securities denominated in pounds sterling, it
could enter into a forward contract to sell pounds sterling in return
for U.S. dollars to hedge against possible declines in the pound's
value. Such a hedge, sometimes referred to as a "position hedge,"
would tend to offset both positive and negative currency fluctuations,
but would not offset changes in security values caused by other
factors. A fund could also hedge the position by selling another
currency expected to perform similarly to the pound sterling. This
type of hedge, sometimes referred to as a "proxy hedge," could offer
advantages in terms of cost, yield, or efficiency, but generally would
not hedge currency exposure as effectively as a direct hedge into U.S.
dollars. Proxy hedges may result in losses if the currency used to
hedge does not perform similarly to the currency in which the hedged
securities are denominated.
A fund may enter into forward contracts to shift its investment
exposure from one currency into another. This may include shifting
exposure from U.S. dollars to a foreign currency, or from one foreign
currency to another foreign currency. This type of strategy, sometimes
known as a "cross-hedge," will tend to reduce or eliminate exposure to
the currency that is sold, and increase exposure to the currency that
is purchased, much as if a fund had sold a security denominated in one
currency and purchased an equivalent security denominated in another.
Cross-hedges protect against losses resulting from a decline in the
hedged currency, but will cause a fund to assume the risk of
fluctuations in the value of the currency it purchases.
Successful use of currency management strategies will depend on FMR's
skill in analyzing currency values. Currency management strategies may
substantially change a fund's investment exposure to changes in
currency exchange rates and could result in losses to a fund if
currencies do not perform as FMR anticipates. For example, if a
currency's value rose at a time when FMR had hedged a fund by selling
that currency in exchange for dollars, a fund would not participate in
the currency's appreciation. If FMR hedges currency exposure through
proxy hedges, a fund could realize currency losses from both the hedge
and the security position if the two currencies do not move in tandem.
Similarly, if FMR increases a fund's exposure to a foreign currency
and that currency's value declines, a fund will realize a loss. There
is no assurance that FMR's use of currency management strategies will
be advantageous to a fund or that it will hedge at appropriate times.
FUNDS' RIGHTS AS SHAREHOLDERS. The funds do not intend to direct or
administer the day-to-day operations of any company. A fund, however,
may exercise its rights as a shareholder and may communicate its views
on important matters of policy to management, the Board of Directors,
and shareholders of a company when FMR determines that such matters
could have a significant effect on the value of the fund's investment
in the company. The activities in which a fund may engage, either
individually or in conjunction with others, may include, among others,
supporting or opposing proposed changes in a company's corporate
structure or business activities; seeking changes in a company's
directors or management; seeking changes in a company's direction or
policies; seeking the sale or reorganization of the company or a
portion of its assets; or supporting or opposing third-party takeover
efforts. This area of corporate activity is increasingly prone to
litigation and it is possible that a fund could be involved in
lawsuits related to such activities. FMR will monitor such activities
with a view to mitigating, to the extent possible, the risk of
litigation against a fund and the risk of actual liability if a fund
is involved in litigation. No guarantee can be made, however, that
litigation against a fund will not be undertaken or liabilities
incurred.
FUTURES AND OPTIONS. The following paragraphs pertain to futures and
options: Combined Positions, Correlation of Price Changes, Futures
Contracts, Futures Margin Payments, Limitations on Futures and Options
Transactions, Liquidity of Options and Futures Contracts, Options and
Futures Relating to Foreign Currencies, OTC Options, Purchasing Put
and Call Options, and Writing Put and Call Options.
COMBINED POSITIONS involve purchasing and writing options in
combination with each other, or in combination with futures or forward
contracts, to adjust the risk and return characteristics of the
overall position. For example, purchasing a put option and writing a
call option on the same underlying instrument would construct a
combined position whose risk and return characteristics are similar to
selling a futures contract. Another possible combined position would
involve writing a call option at one strike price and buying a call
option at a lower price, to reduce the risk of the written call option
in the event of a substantial price increase. Because combined options
positions involve multiple trades, they result in higher transaction
costs and may be more difficult to open and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of
types of exchange-traded options and futures contracts, it is likely
that the standardized contracts available will not match a fund's
current or anticipated investments exactly. A fund may invest in
options and futures contracts based on securities with different
issuers, maturities, or other characteristics from the securities in
which the fund typically invests, which involves a risk that the
options or futures position will not track the performance of the
fund's other investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match a
fund's investments well. Options and futures prices are affected by
such factors as current and anticipated short-term interest rates,
changes in volatility of the underlying instrument, and the time
remaining until expiration of the contract, which may not affect
security prices the same way. Imperfect correlation may also result
from differing levels of demand in the options and futures markets and
the securities markets, from structural differences in how options and
futures and securities are traded, or from imposition of daily price
fluctuation limits or trading halts. A fund may purchase or sell
options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to
attempt to compensate for differences in volatility between the
contract and the securities, although this may not be successful in
all cases. If price changes in a fund's options or futures positions
are poorly correlated with its other investments, the positions may
fail to produce anticipated gains or result in losses that are not
offset by gains in other investments.
FUTURES CONTRACTS. In purchasing a futures contract, the buyer agrees
to purchase a specified underlying instrument at a specified future
date. In selling a futures contract, the seller agrees to sell a
specified underlying instrument at a specified future date. The price
at which the purchase and sale will take place is fixed when the buyer
and seller enter into the contract. Some currently available futures
contracts are based on specific securities, such as U.S. Treasury
bonds or notes, and some are based on indices of securities prices,
such as the Standard & Poor's 500 Index (S&P 500). Futures can be held
until their delivery dates, or can be closed out before then if a
liquid secondary market is available.
The value of a futures contract tends to increase and decrease in
tandem with the value of its underlying instrument. Therefore,
purchasing futures contracts will tend to increase a fund's exposure
to positive and negative price fluctuations in the underlying
instrument, much as if it had purchased the underlying instrument
directly. When a fund sells a futures contract, by contrast, the value
of its futures position will tend to move in a direction contrary to
the market. Selling futures contracts, therefore, will tend to offset
both positive and negative market price changes, much as if the
underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract
is not required to deliver or pay for the underlying instrument unless
the contract is held until the delivery date. However, both the
purchaser and seller are required to deposit "initial margin" with a
futures broker, known as a futures commission merchant (FCM), when the
contract is entered into. Initial margin deposits are typically equal
to a percentage of the contract's value. If the value of either
party's position declines, that party will be required to make
additional "variation margin" payments to settle the change in value
on a daily basis. The party that has a gain may be entitled to receive
all or a portion of this amount. Initial and variation margin payments
do not constitute purchasing securities on margin for purposes of a
fund's investment limitations. In the event of the bankruptcy of an
FCM that holds margin on behalf of a fund, the fund may be entitled to
return of margin owed to it only in proportion to the amount received
by the FCM's other customers, potentially resulting in losses to the
fund.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. Each stock fund has
filed a notice of eligibility for exclusion from the definition of the
term "commodity pool operator" with the Commodity Futures Trading
Commission (CFTC) and the National Futures Association, which regulate
trading in the futures markets. The funds intend to comply with Rule
4.5 under the Commodity Exchange Act, which limits the extent to which
the funds can commit assets to initial margin deposits and option
premiums.
In addition, each stock fund will not: (a) sell futures contracts,
purchase put options, or write call options if, as a result, more than
25% of the fund's total assets would be hedged with futures and
options under normal conditions; (b) purchase futures contracts or
write put options if, as a result, the fund's total obligations upon
settlement or exercise of purchased futures contracts and written put
options would exceed 25% of its total assets under normal conditions;
or (c) purchase call options if, as a result, the current value of
option premiums for call options purchased by the fund would exceed 5%
of the fund's total assets. These limitations do not apply to options
attached to or acquired or traded together with their underlying
securities, and do not apply to securities that incorporate features
similar to options.
The above limitations on the stock funds' investments in futures
contracts and options, and the funds' policies regarding futures
contracts and options discussed elsewhere in this SAI, may be changed
as regulatory agencies permit.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a
liquid secondary market will exist for any particular options or
futures contract at any particular time. Options may have relatively
low trading volume and liquidity if their strike prices are not close
to the underlying instrument's current price. In addition, exchanges
may establish daily price fluctuation limits for options and futures
contracts, and may halt trading if a contract's price moves upward or
downward more than the limit in a given day. On volatile trading days
when the price fluctuation limit is reached or a trading halt is
imposed, it may be impossible to enter into new positions or close out
existing positions. If the secondary market for a contract is not
liquid because of price fluctuation limits or otherwise, it could
prevent prompt liquidation of unfavorable positions, and potentially
could require a fund to continue to hold a position until delivery or
expiration regardless of changes in its value. As a result, a fund's
access to other assets held to cover its options or futures positions
could also be impaired.
OPTIONS AND FUTURES RELATING TO FOREIGN CURRENCIES. Currency futures
contracts are similar to forward currency exchange contracts, except
that they are traded on exchanges (and have margin requirements) and
are standardized as to contract size and delivery date. Most currency
futures contracts call for payment or delivery in U.S. dollars. The
underlying instrument of a currency option may be a foreign currency,
which generally is purchased or delivered in exchange for U.S.
dollars, or may be a futures contract. The purchaser of a currency
call obtains the right to purchase the underlying currency, and the
purchaser of a currency put obtains the right to sell the underlying
currency.
The uses and risks of currency options and futures are similar to
options and futures relating to securities or indices, as discussed
above. A fund may purchase and sell currency futures and may purchase
and write currency options to increase or decrease its exposure to
different foreign currencies. Currency options may also be purchased
or written in conjunction with each other or with currency futures or
forward contracts. Currency futures and options values can be expected
to correlate with exchange rates, but may not reflect other factors
that affect the value of a fund's investments. A currency hedge, for
example, should protect a Yen-denominated security from a decline in
the Yen, but will not protect a fund against a price decline resulting
from deterioration in the issuer's creditworthiness. Because the value
of a fund's foreign-denominated investments changes in response to
many factors other than exchange rates, it may not be possible to
match the amount of currency options and futures to the value of the
fund's investments exactly over time.
OTC OPTIONS. Unlike exchange-traded options, which are standardized
with respect to the underlying instrument, expiration date, contract
size, and strike price, the terms of over-the-counter (OTC) options
(options not traded on exchanges) generally are established through
negotiation with the other party to the option contract. While this
type of arrangement allows the purchaser or writer greater flexibility
to tailor an option to its needs, OTC options generally involve
greater credit risk than exchange-traded options, which are guaranteed
by the clearing organization of the exchanges where they are traded.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, the
purchaser obtains the right (but not the obligation) to sell the
option's underlying instrument at a fixed strike price. In return for
this right, the purchaser pays the current market price for the option
(known as the option premium). Options have various types of
underlying instruments, including specific securities, indices of
securities prices, and futures contracts. The purchaser may terminate
its position in a put option by allowing it to expire or by exercising
the option. If the option is allowed to expire, the purchaser will
lose the entire premium. If the option is exercised, the purchaser
completes the sale of the underlying instrument at the strike price. A
purchaser may also terminate a put option position by closing it out
in the secondary market at its current price, if a liquid secondary
market exists.
The buyer of a typical put option can expect to realize a gain if
security prices fall substantially. However, if the underlying
instrument's price does not fall enough to offset the cost of
purchasing the option, a put buyer can expect to suffer a loss
(limited to the amount of the premium, plus related transaction
costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right
to purchase, rather than sell, the underlying instrument at the
option's strike price. A call buyer typically attempts to participate
in potential price increases of the underlying instrument with risk
limited to the cost of the option if security prices fall. At the same
time, the buyer can expect to suffer a loss if security prices do not
rise sufficiently to offset the cost of the option.
WRITING PUT AND CALL OPTIONS. The writer of a put or call option takes
the opposite side of the transaction from the option's purchaser. In
return for receipt of the premium, the writer assumes the obligation
to pay the strike price for the option's underlying instrument if the
other party to the option chooses to exercise it. The writer may seek
to terminate a position in a put option before exercise by closing out
the option in the secondary market at its current price. If the
secondary market is not liquid for a put option, however, the writer
must continue to be prepared to pay the strike price while the option
is outstanding, regardless of price changes. When writing an option on
a futures contract, a fund will be required to make margin payments to
an FCM as described above for futures contracts.
If security prices rise, a put writer would generally expect to
profit, although its gain would be limited to the amount of the
premium it received. If security prices remain the same over time, it
is likely that the writer will also profit, because it should be able
to close out the option at a lower price. If security prices fall, the
put writer would expect to suffer a loss. This loss should be less
than the loss from purchasing the underlying instrument directly,
however, because the premium received for writing the option should
mitigate the effects of the decline.
Writing a call option obligates the writer to sell or deliver the
option's underlying instrument, in return for the strike price, upon
exercise of the option. The characteristics of writing call options
are similar to those of writing put options, except that writing calls
generally is a profitable strategy if prices remain the same or fall.
Through receipt of the option premium, a call writer mitigates the
effects of a price decline. At the same time, because a call writer
must be prepared to deliver the underlying instrument in return for
the strike price, even if its current value is greater, a call writer
gives up some ability to participate in security price increases.
ILLIQUID SECURITIES cannot be sold or disposed of in the ordinary
course of business at approximately the prices at which they are
valued. Difficulty in selling securities may result in a loss or may
be costly to a fund. Under the supervision of the Board of Trustees,
FMR determines the liquidity of a fund's investments and, through
reports from FMR, the Board monitors investments in illiquid
securities. In determining the liquidity of a fund's investments, FMR
may consider various factors, including (1) the frequency and volume
of trades and quotations, (2) the number of dealers and prospective
purchasers in the marketplace, (3) dealer undertakings to make a
market and (4) the nature of the security and the market in which it
trades (including any demand, put or tender features, the mechanics
and other requirements for transfer, any letters of credit or other
credit enhancement features, any ratings, the number of holders, the
method of soliciting offers, the time required to dispose of the
security, and the ability to assign or offset the rights and
obligations of the security).
INDEXED SECURITIES are instruments whose prices are indexed to the
prices of other securities, securities indices, currencies, precious
metals or other commodities, or other financial indicators. Indexed
securities typically, but not always, are debt securities or deposits
whose value at maturity or coupon rate is determined by reference to a
specific instrument or statistic.
Gold-indexed securities typically provide for a maturity value that
depends on the price of gold, resulting in a security whose price
tends to rise and fall together with gold prices. Currency-indexed
securities typically are short-term to intermediate-term debt
securities whose maturity values or interest rates are determined by
reference to the values of one or more specified foreign currencies,
and may offer higher yields than U.S. dollar-denominated securities.
Currency-indexed securities may be positively or negatively indexed;
that is, their maturity value may increase when the specified currency
value increases, resulting in a security that performs similarly to a
foreign-denominated instrument, or their maturity value may decline
when foreign currencies increase, resulting in a security whose price
characteristics are similar to a put on the underlying currency.
Currency-indexed securities may also have prices that depend on the
values of a number of different foreign currencies relative to each
other.
The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which
they are indexed, and may also be influenced by interest rate changes
in the United States and abroad. Indexed securities may be more
volatile than the underlying instruments. Indexed securities are also
subject to the credit risks associated with the issuer of the
security, and their values may decline substantially if the issuer's
creditworthiness deteriorates. Recent issuers of indexed securities
have included banks, corporations, and certain U.S. Government
agencies.
Gold Portfolio, Natural Resources Portfolio, and Precious Metals and
Minerals Portfolio may purchase securities indexed to the price of
precious metals as an alternative to direct investment in precious
metals. Because the value of these securities is directly linked to
the price of gold or other precious metals, they involve risks and
pricing characteristics similar to direct investments in precious
metals. The funds will purchase precious metals-indexed securities
only when FMR is satisfied with the creditworthiness of the issuers
liable for payment. The securities generally will earn a nominal rate
of interest while held by the funds, and may have maturities of one
year or more. In addition, the securities may be subject to being put
by a fund to the issuer, with payment to be received on no more than
seven days' notice. The put feature would ensure the liquidity of the
notes in the absence of an active secondary market.
INTERFUND BORROWING AND LENDING PROGRAM. Pursuant to an exemptive
order issued by the SEC, a fund may lend money to, and borrow money
from, other funds advised by FMR or its affiliates. A fund will lend
through the program only when the returns are higher than those
available from an investment in repurchase agreements, and will borrow
through the program only when the costs are equal to or lower than the
cost of bank loans. Interfund loans and borrowings normally extend
overnight, but can have a maximum duration of seven days. Loans may be
called on one day's notice. A fund may have to borrow from a bank at a
higher interest rate if an interfund loan is called or not renewed.
Any delay in repayment to a lending fund could result in a lost
investment opportunity or additional borrowing costs.
INVESTMENT-GRADE DEBT SECURITIES. Investment-grade debt securities are
medium and high-quality securities. Some may possess speculative
characteristics and may be more sensitive to economic changes and to
changes in the financial conditions of issuers. A debt security is
considered to be investment-grade if it is rated investment-grade by
Moody's Investors Service, Standard & Poor's, Duff & Phelps Credit
Rating Co., or Fitch IBCA Inc., or is unrated but considered to be of
equivalent quality by FMR.
LOANS AND OTHER DIRECT DEBT INSTRUMENTS. Direct debt instruments are
interests in amounts owed by a corporate, governmental, or other
borrower to lenders or lending syndicates (loans and loan
participations), to suppliers of goods or services (trade claims or
other receivables), or to other parties. Direct debt instruments
involve a risk of loss in case of default or insolvency of the
borrower and may offer less legal protection to the purchaser in the
event of fraud or misrepresentation, or there may be a requirement
that a fund supply additional cash to a borrower on demand.
Purchasers of loans and other forms of direct indebtedness depend
primarily upon the creditworthiness of the borrower for payment of
interest and repayment of principal. If scheduled interest or
principal payments are not made, the value of the instrument may be
adversely affected. Loans that are fully secured provide more
protections than an unsecured loan in the event of failure to make
scheduled interest or principal payments. However, there is no
assurance that the liquidation of collateral from a secured loan would
satisfy the borrower's obligation, or that the collateral could be
liquidated. Indebtedness of borrowers whose creditworthiness is poor
involves substantially greater risks and may be highly speculative.
Borrowers that are in bankruptcy or restructuring may never pay off
their indebtedness, or may pay only a small fraction of the amount
owed. Direct indebtedness of developing countries also involves a risk
that the governmental entities responsible for the repayment of the
debt may be unable, or unwilling, to pay interest and repay principal
when due.
Investments in loans through direct assignment of a financial
institution's interests with respect to a loan may involve additional
risks. For example, if a loan is foreclosed, the purchaser could
become part owner of any collateral, and would bear the costs and
liabilities associated with owning and disposing of the collateral. In
addition, it is conceivable that under emerging legal theories of
lender liability, a purchaser could be held liable as a co-lender.
Direct debt instruments may also involve a risk of insolvency of the
lending bank or other intermediary.
A loan is often administered by a bank or other financial institution
that acts as agent for all holders. The agent administers the terms of
the loan, as specified in the loan agreement. Unless, under the terms
of the loan or other indebtedness, the purchaser has direct recourse
against the borrower, the purchaser may have to rely on the agent to
apply appropriate credit remedies against a borrower. If assets held
by the agent for the benefit of a purchaser were determined to be
subject to the claims of the agent's general creditors, the purchaser
might incur certain costs and delays in realizing payment on the loan
or loan participation and could suffer a loss of principal or
interest.
Direct indebtedness may include letters of credit, revolving credit
facilities, or other standby financing commitments that obligate
purchasers to make additional cash payments on demand. These
commitments may have the effect of requiring a purchaser to increase
its investment in a borrower at a time when it would not otherwise
have done so, even if the borrower's condition makes it unlikely that
the amount will ever be repaid.
Each fund limits the amount of total assets that it will invest in any
one issuer or in issuers within the same industry (see each fund's
investment limitations). For purposes of these limitations, a fund
generally will treat the borrower as the "issuer" of indebtedness held
by the fund. In the case of loan participations where a bank or other
lending institution serves as financial intermediary between a fund
and the borrower, if the participation does not shift to the fund the
direct debtor-creditor relationship with the borrower, SEC
interpretations require a fund, in appropriate circumstances, to treat
both the lending bank or other lending institution and the borrower as
"issuers" for these purposes. Treating a financial intermediary as an
issuer of indebtedness may restrict a fund's ability to invest in
indebtedness related to a single financial intermediary, or a group of
intermediaries engaged in the same industry, even if the underlying
borrowers represent many different companies and industries.
LOWER-QUALITY DEBT SECURITIES. Lower-quality debt securities have poor
protection with respect to the payment of interest and repayment of
principal, or may be in default. These securities are often considered
to be speculative and involve greater risk of loss or price changes
due to changes in the issuer's capacity to pay. The market prices of
lower-quality debt securities may fluctuate more than those of
higher-quality debt securities and may decline significantly in
periods of general economic difficulty, which may follow periods of
rising interest rates.
The market for lower-quality debt securities may be thinner and less
active than that for higher-quality debt securities, which can
adversely affect the prices at which the former are sold. Adverse
publicity and changing investor perceptions may affect the liquidity
of lower-quality debt securities and the ability of outside pricing
services to value lower-quality debt securities.
Because the risk of default is higher for lower-quality debt
securities, FMR's research and credit analysis are an especially
important part of managing securities of this type. FMR will attempt
to identify those issuers of high-yielding securities whose financial
condition is adequate to meet future obligations, has improved, or is
expected to improve in the future. FMR's analysis focuses on relative
values based on such factors as interest or dividend coverage, asset
coverage, earnings prospects, and the experience and managerial
strength of the issuer.
A fund may choose, at its expense or in conjunction with others, to
pursue litigation or otherwise to exercise its rights as a security
holder to seek to protect the interests of security holders if it
determines this to be in the best interest of the fund's shareholders.
MONEY MARKET INSURANCE. The money market fund participates in a mutual
insurance company solely with other funds advised by FMR or its
affiliates. This company provides insurance coverage for losses on
certain money market instruments held by a participating fund
(eligible instruments), including losses from nonpayment of principal
or interest or a bankruptcy or insolvency of the issuer or credit
support provider, if any. The insurance does not cover losses
resulting from changes in interest rates or other market developments.
The money market fund is charged an annual premium for the insurance
coverage and may be subject to a special assessment of up to
approximately two and one-half times the fund's annual gross premium
if covered losses exceed certain levels. A participating fund may
recover no more than $100 million annually, including all other claims
of insured funds, and may only recover if the amount of the loss
exceeds 0.30% of its eligible instruments. The money market fund may
incur losses regardless of the insurance.
MONEY MARKET SECURITIES are high-quality, short-term obligations.
Money market securities may be structured to be, or may employ a trust
or other form so that they are, eligible investments for money market
funds. For example, put features can be used to modify the maturity of
a security or interest rate adjustment features can be used to enhance
price stability. If a structure fails to function as intended, adverse
tax or investment consequences may result. Neither the Internal
Revenue Service (IRS) nor any other regulatory authority has ruled
definitively on certain legal issues presented by certain structured
securities. Future tax or other regulatory determinations could
adversely affect the value, liquidity, or tax treatment of the income
received from these securities or the nature and timing of
distributions made by the fund.
MUNICIPAL SECURITIES are issued to raise money for a variety of public
or private purposes, including general financing for state and local
governments, or financing for specific projects or public facilities.
They may be issued in anticipation of future revenues and may be
backed by the full taxing power of a municipality, the revenues from a
specific project, or the credit of a private organization. The value
of some or all municipal securities may be affected by uncertainties
in the municipal market related to legislation or litigation involving
the taxation of municipal securities or the rights of municipal
securities holders. A municipal security may be owned directly or
through a participation interest.
PRECIOUS METALS. Precious metals, such as gold, silver, platinum and
palladium, at times have been subject to substantial price
fluctuations over short periods of time and may be affected by
unpredictable monetary and political policies such as currency
devaluations or revaluations, economic and social conditions within a
country, trade imbalances, or trade or currency restrictions between
countries. The prices of gold and other precious metals, however, are
less subject to local and company-specific factors than securities of
individual companies. As a result, precious metals may be more or less
volatile in price than securities of companies engaged in precious
metals-related businesses. Investments in precious metals can present
concerns such as delivery storage and maintenance, possible
illiquidity, and the unavailability of accurate market valuations.
Although precious metals can be purchased in any form, including
bullion and coins, FMR intends to purchase only those forms of
precious metals that are readily marketable and that can be stored in
accordance with custody regulations applicable to mutual funds. A fund
may incur higher custody and transaction costs for precious metals
than for securities. Also, precious metals investments do not pay
income.
For a fund to qualify as a regulated investment company under current
federal tax law, gains from selling precious metals may not exceed 10%
of the fund's gross income for its taxable year. This tax requirement
could cause a fund to hold or sell precious metals or securities when
it would not otherwise do so.
PREFERRED STOCK is a class of equity or ownership in an issuer that
pays dividends at a specified rate and that has precedence over common
stock in the payment of dividends. In the event an issuer is
liquidated or declares bankruptcy, the claims of owners of bonds take
precedence over the claims of those who own preferred and common
stock.
PUT FEATURES entitle the holder to sell a security back to the issuer
or a third party at any time or at specified intervals. In exchange
for this benefit, a fund may accept a lower interest rate. Securities
with put features are subject to the risk that the put provider is
unable to honor the put feature (purchase the security). Put providers
often support their ability to buy securities on demand by obtaining
letters of credit or other guarantees from other entities. Demand
features, standby commitments, and tender options are types of put
features.
REAL ESTATE INVESTMENT TRUSTS. Equity real estate investment trusts
own real estate properties, while mortgage real estate investment
trusts make construction, development, and long-term mortgage loans.
Their value may be affected by changes in the value of the underlying
property of the trusts, the creditworthiness of the issuer, property
taxes, interest rates, and tax and regulatory requirements, such as
those relating to the environment. Both types of trusts are dependent
upon management skill, are not diversified, and are subject to heavy
cash flow dependency, defaults by borrowers, self-liquidation, and the
possibility of failing to qualify for tax-free status of income under
the Internal Revenue Code and failing to maintain exemption from the
1940 Act.
REPURCHASE AGREEMENTS involve an agreement to purchase a security and
to sell that security back to the original seller at an agreed-upon
price. The resale price reflects the purchase price plus an
agreed-upon incremental amount which is unrelated to the coupon rate
or maturity of the purchased security. As protection against the risk
that the original seller will not fulfill its obligation, the
securities are held in a separate account at a bank, marked-to-market
daily, and maintained at a value at least equal to the sale price plus
the accrued incremental amount. The value of the security purchased
may be more or less than the price at which the counterparty has
agreed to purchase the security. In addition, delays or losses could
result if the other party to the agreement defaults or becomes
insolvent. The funds will engage in repurchase agreement transactions
with parties whose creditworthiness has been reviewed and found
satisfactory by FMR.
RESTRICTED SECURITIES are subject to legal restrictions on their sale.
Difficulty in selling securities may result in a loss or be costly to
a fund. Restricted securities generally can be sold in privately
negotiated transactions, pursuant to an exemption from registration
under the Securities Act of 1933, or in a registered public offering.
Where registration is required, the holder of a registered security
may be obligated to pay all or part of the registration expense and a
considerable period may elapse between the time it decides to seek
registration and the time it may be permitted to sell a security under
an effective registration statement. If, during such a period, adverse
market conditions were to develop, the holder might obtain a less
favorable price than prevailed when it decided to seek registration of
the security.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a
fund sells a security to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase that
security at an agreed-upon price and time. The funds will enter into
reverse repurchase agreements with parties whose creditworthiness has
been reviewed and found satisfactory by FMR. Such transactions may
increase fluctuations in the market value of fund assets and a fund's
yield and may be viewed as a form of leverage.
SECURITIES OF OTHER INVESTMENT COMPANIES. including shares of
closed-end investment companies, unit investment trusts, and open-end
investment companies, represent interests in professionally managed
portfolios that may invest in any type of instrument. Investing in
other investment companies involves substantially the same risks as
investing directly in the underlying instruments, but may involve
additional expenses at the investment company-level, such as portfolio
management fees and operating expenses. Certain types of investment
companies, such as closed-end investment companies, issue a fixed
number of shares that trade on a stock exchange or over-the-counter at
a premium or a discount to their net asset value. Others are
continuously offered at net asset value, but may also be traded in the
secondary market.
The extent to which a fund can invest in securities of other
investment companies is limited by federal securities laws.
SECURITIES LENDING. A fund may lend securities to parties such as
broker-dealers or other institutions, including Fidelity Brokerage
Services, Inc. (FBSI). FBSI is a member of the New York Stock Exchange
and a subsidiary of FMR Corp.
Securities lending allows a fund to retain ownership of the securities
loaned and, at the same time, to earn additional income. Because there
may be delays in the recovery of loaned securities, or even a loss of
rights in collateral supplied should the borrower fail financially,
loans will be made only to parties deemed by FMR to be of good
standing. Furthermore, they will only be made if, in FMR's judgment,
the consideration to be earned from such loans would justify the risk.
FMR understands that it is the current view of the SEC Staff that a
fund may engage in loan transactions only under the following
conditions: (1) the fund must receive 100% collateral in the form of
cash or cash equivalents (e.g., U.S. Treasury bills or notes) from the
borrower; (2) the borrower must increase the collateral whenever the
market value of the securities loaned (determined on a daily basis)
rises above the value of the collateral; (3) after giving notice, the
fund must be able to terminate the loan at any time; (4) the fund must
receive reasonable interest on the loan or a flat fee from the
borrower, as well as amounts equivalent to any dividends, interest, or
other distributions on the securities loaned and to any increase in
market value; (5) the fund may pay only reasonable custodian fees in
connection with the loan; and (6) the Board of Trustees must be able
to vote proxies on the securities loaned, either by terminating the
loan or by entering into an alternative arrangement with the borrower.
Cash received through loan transactions may be invested in other
eligible securities. Investing this cash subjects that investment, as
well as the security loaned, to market forces (i.e., capital
appreciation or depreciation).
SHORT SALES "AGAINST THE BOX" are short sales of securities that a
fund owns or has the right to obtain (equivalent in kind or amount to
the securities sold short). If a fund enters into a short sale against
the box, it will be required to set aside securities equivalent in
kind and amount to the securities sold short (or securities
convertible or exchangeable into such securities) and will be required
to hold such securities while the short sale is outstanding.
Short sales against the box could be used to protect the net asset
value per share (NAV) of a money market fund in anticipation of
increased interest rates, without sacrificing the current yield of the
securities sold short. A money market fund will incur transaction
costs in connection with opening and closing short sales against the
box. A stock fund will incur transaction costs, including interest
expenses, in connection with opening, maintaining, and closing short
sales against the box.
SOURCES OF CREDIT OR LIQUIDITY SUPPORT. Issuers may employ various
forms of credit and liquidity enhancements, including letters of
credit, guarantees, puts, and demand features, and insurance provided
by entities such as banks and other financial institutions. FMR may
rely on its evaluation of the credit or liquidity enhancement provider
in determining whether to purchase a security supported by such
enhancement. In evaluating the credit of a foreign bank or other
foreign entities, FMR will consider whether adequate public
information about the entity is available and whether the entity may
be subject to unfavorable political or economic developments, currency
controls, or other government restrictions that might affect its
ability to honor its commitment. Changes in the credit quality of the
entity providing the enhancement could affect the value of the
security or a fund's share price.
STRIPPED SECURITIES are the separate income or principal components of
a debt security. The risks associated with stripped securities are
similar to those of other money market securities, although stripped
securities may be more volatile. U.S. Treasury securities that have
been stripped by a Federal Reserve Bank are obligations issued by the
U.S. Treasury.
Privately stripped government securities are created when a dealer
deposits a U.S. Treasury security or other U.S. Government security
with a custodian for safekeeping. The custodian issues separate
receipts for the coupon payments and the principal payment, which the
dealer then sells.
Because the SEC does not consider privately stripped government
securities to be U.S. Government securities for purposes of Rule 2a-7,
a fund must evaluate them as it would non-government securities
pursuant to regulatory guidelines applicable to money market funds.
SWAP AGREEMENTS can be individually negotiated and structured to
include exposure to a variety of different types of investments or
market factors. Depending on their structure, swap agreements may
increase or decrease a fund's exposure to long- or short-term interest
rates (in the United States or abroad), foreign currency values,
mortgage securities, corporate borrowing rates, or other factors such
as security prices or inflation rates. Swap agreements can take many
different forms and are known by a variety of names.
In a typical cap or floor agreement, one party agrees to make payments
only under specified circumstances, usually in return for payment of a
fee by the other party. For example, the buyer of an interest rate cap
obtains the right to receive payments to the extent that a specified
interest rate exceeds an agreed-upon level, while the seller of an
interest rate floor is obligated to make payments to the extent that a
specified interest rate falls below an agreed-upon level. An interest
rate collar combines elements of buying a cap and selling a floor.
Swap agreements will tend to shift a fund's investment exposure from
one type of investment to another. For example, if the fund agreed to
exchange payments in dollars for payments in foreign currency, the
swap agreement would tend to decrease the fund's exposure to U.S.
interest rates and increase its exposure to foreign currency and
interest rates. Caps and floors have an effect similar to buying or
writing options. Depending on how they are used, swap agreements may
increase or decrease the overall volatility of a fund's investments
and its share price and yield.
The most significant factor in the performance of swap agreements is
the change in the specific interest rate, currency, or other factors
that determine the amounts of payments due to and from a fund. If a
swap agreement calls for payments by the fund, the fund must be
prepared to make such payments when due. In addition, if the
counterparty's creditworthiness declined, the value of a swap
agreement would be likely to decline, potentially resulting in losses.
A fund may be able to eliminate its exposure under a swap agreement
either by assignment or other disposition, or by entering into an
offsetting swap agreement with the same party or a similarly
creditworthy party.
TEMPORARY DEFENSIVE POLICIES. When FMR considers it appropriate for
defensive purposes, each stock fund (except Business Services and
Outsourcing, Cyclical Industries, Medical Equipment and Systems, and
Natural Resources) may temporarily invest substantially in
investment-grade debt securities.
Each of Business Services and Outsourcing, Cyclical Industries,
Medical Equipment and Systems and Natural Resources reserves the right
to invest without limitation in preferred stocks and investment-grade
debt instruments for temporary, defensive purposes.
VARIABLE AND FLOATING RATE SECURITIES provide for periodic adjustments
in the interest rate paid on the security. Variable rate securities
provide for a specified periodic adjustment in the interest rate,
while floating rate securities have interest rates that change
whenever there is a change in a designated benchmark rate. Some
variable or floating rate securities are structured with put features
that permit holders to demand payment of the unpaid principal balance
plus accrued interest from the issuers or certain financial
intermediaries.
WARRANTS. Warrants are instruments which entitle the holder to buy an
equity security at a specific price for a specific period of time.
Changes in the value of a warrant do not necessarily correspond to
changes in the value of its underlying security. The price of a
warrant may be more volatile than the price of its underlying
security, and a warrant may offer greater potential for capital
appreciation as well as capital loss.
Warrants do not entitle a holder to dividends or voting rights with
respect to the underlying security and do not represent any rights in
the assets of the issuing company. A warrant ceases to have value if
it is not exercised prior to its expiration date. These factors can
make warrants more speculative than other types of investments.
WHEN-ISSUED AND FORWARD PURCHASE OR SALE TRANSACTIONS involve a
commitment to purchase or sell specific securities at a predetermined
price or yield in which payment and delivery take place after the
customary settlement period for that type of security. Typically, no
interest accrues to the purchaser until the security is delivered.
When purchasing securities pursuant to one of these transactions, the
purchaser assumes the rights and risks of ownership, including the
risks of price and yield fluctuations and the risk that the security
will not be issued as anticipated. Because payment for the securities
is not required until the delivery date, these risks are in addition
to the risks associated with a fund's investments. If a fund remains
substantially fully invested at a time when a purchase is outstanding,
the purchases may result in a form of leverage. When a fund has sold a
security pursuant to one of these transactions, the fund does not
participate in further gains or losses with respect to the security.
If the other party to a delayed-delivery transaction fails to deliver
or pay for the securities, a fund could miss a favorable price or
yield opportunity or suffer a loss.
A fund may renegotiate a when-issued or forward transaction and may
sell the underlying securities before delivery, which may result in
capital gains or losses for the fund.
ZERO COUPON BONDS do not make interest payments; instead, they are
sold at a discount from their face value and are redeemed at face
value when they mature. Because zero coupon bonds do not pay current
income, their prices can be more volatile than other types of
fixed-income securities when interest rates change. In calculating a
fund's dividend, a portion of the difference between a zero coupon
bond's purchase price and its face value is considered income.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed
on behalf of each fund by FMR pursuant to authority contained in the
management contract. FMR is also responsible for the placement of
transaction orders for other investment companies and investment
accounts for which it or its affiliates act as investment adviser. In
selecting broker-dealers, subject to applicable limitations of the
federal securities laws, FMR considers various relevant factors,
including, but not limited to: the size and type of the transaction;
the nature and character of the markets for the security to be
purchased or sold; the execution efficiency, settlement capability,
and financial condition of the broker-dealer firm; the broker-dealer's
execution services rendered on a continuing basis; the reasonableness
of any commissions; and, if applicable, arrangements for payment of
fund expenses.
If FMR grants investment management authority to a sub-adviser (see
the section entitled "Management Contracts"), that sub-adviser is
authorized to place orders for the purchase and sale of portfolio
securities, and will do so in accordance with the policies described
above.
Generally, commissions for investments traded on foreign exchanges
will be higher than for investments traded on U.S. exchanges and may
not be subject to negotiation.
Each fund may execute portfolio transactions with broker-dealers who
provide research and execution services to the fund or other
investment accounts over which FMR or its affiliates exercise
investment discretion. Such services may include advice concerning the
value of securities; the advisability of investing in, purchasing, or
selling securities; and the availability of securities or the
purchasers or sellers of securities. In addition, such broker-dealers
may furnish analyses and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy, and
performance of investment accounts; and effect securities transactions
and perform functions incidental thereto (such as clearance and
settlement).
The selection of such broker-dealers for transactions in equity
securities is generally made by FMR (to the extent possible consistent
with execution considerations) in accordance with a ranking of
broker-dealers determined periodically by FMR's investment staff based
upon the quality of research and execution services provided.
For transactions in fixed-income securities, FMR's selection of
broker-dealers is generally based on the availability of a security
and its price and, to a lesser extent, on the overall quality of
execution and other services, including research, provided by the
broker-dealer.
The receipt of research from broker-dealers that execute transactions
on behalf of a fund may be useful to FMR in rendering investment
management services to that fund or its other clients, and conversely,
such research provided by broker-dealers who have executed transaction
orders on behalf of other FMR clients may be useful to FMR in carrying
out its obligations to a fund. The receipt of such research has not
reduced FMR's normal independent research activities; however, it
enables FMR to avoid the additional expenses that could be incurred if
FMR tried to develop comparable information through its own efforts.
Fixed-income securities are generally purchased from an issuer or
underwriter acting as principal for the securities, on a net basis
with no brokerage commission paid. However, the dealer is compensated
by a difference between the security's original purchase price and the
selling price, the so-called "bid-asked spread." Securities may also
be purchased from underwriters at prices that include underwriting
fees.
Subject to applicable limitations of the federal securities laws, a
fund may pay a broker-dealer commissions for agency transactions that
are in excess of the amount of commissions charged by other
broker-dealers in recognition of their research and execution
services. In order to cause a fund to pay such higher commissions, FMR
must determine in good faith that such commissions are reasonable in
relation to the value of the brokerage and research services provided
by such executing broker-dealers, viewed in terms of a particular
transaction or FMR's overall responsibilities to that fund or its
other clients. In reaching this determination, FMR will not attempt to
place a specific dollar value on the brokerage and research services
provided, or to determine what portion of the compensation should be
related to those services.
To the extent permitted by applicable law, FMR is authorized to
allocate portfolio transactions in a manner that takes into account
assistance received in the distribution of shares of the funds or
other Fidelity funds and to use the research services of brokerage and
other firms that have provided such assistance. FMR may use research
services provided by and place agency transactions with National
Financial Services Corporation (NFSC) and Fidelity Brokerage Services
Japan LLC (FBSJ), indirect subsidiaries of FMR Corp., if the
commissions are fair, reasonable, and comparable to commissions
charged by non-affiliated, qualified brokerage firms for similar
services. Prior to December 9, 1997, FMR used research services
provided by and placed agency transactions with Fidelity Brokerage
Services (FBS), an indirect subsidiary of FMR Corp.
FMR may allocate brokerage transactions to broker-dealers (including
affiliates of FMR) who have entered into arrangements with FMR under
which the broker-dealer allocates a portion of the commissions paid by
a fund toward the reduction of that fund's expenses. The transaction
quality must, however, be comparable to those of other qualified
broker-dealers.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members
of national securities exchanges from executing exchange transactions
for investment accounts which they or their affiliates manage, unless
certain requirements are satisfied. Pursuant to such requirements, the
Board of Trustees has authorized NFSC to execute portfolio
transactions on national securities exchanges in accordance with
approved procedures and applicable SEC rules.
The Trustees of each fund periodically review FMR's performance of its
responsibilities in connection with the placement of portfolio
transactions on behalf of the fund and review the commissions paid by
the fund over representative periods of time to determine if they are
reasonable in relation to the benefits to the fund.
For the fiscal periods ended February 28, 1999 and 1998, the portfolio
turnover rates for the stock funds (except Medical Equipment and
Systems for 1998) are presented in the table below. Variations in
turnover rate may be due to a fluctuating volume of shareholder
purchase and redemption orders, market conditions, or changes in FMR's
investment outlook.
Turnover Rates Fiscal 1999 Fiscal 1998
Air Transportation 260% 294%
Automotive 96% 153%
Biotechnology 86% 162%
Brokerage and Investment 59% 100%
Management
Business Services and 115% 36%A
Outsourcing
Chemicals 141% 31%
Computers 133% 333%
Construction and Housing 226% 404%
Consumer Industries 150% 199%
Cyclical Industries 103% 140%A
Defense and Aerospace 221% 311%
Developing Communications 299% 383%
Electronics 160% 435%
Energy 138% 115%
Energy Service 75% 78%
Environmental Services 123% 59%
Financial Services 60% 84%
Food and Agriculture 68% 74%
Gold 59% 89%
Health Care 66% 79%
Home Finance 18% 54%
Industrial Equipment 84% 115%
Industrial Materials 82% 118%
Insurance 72% 157%
Leisure 107% 209%
Medical Delivery 67% 109%
Medical Equipment and Systems 85%A N/A
Multimedia 109% 219%
Natural Gas 107% 118%
Natural Resources 155% 165%A
Paper and Forest Products 338% 235%
Precious Metals and Minerals 53% 84%
Regional Banks 22% 25%
Retailing 165% 308%
Software and Computer Services 72% 145%
Technology 339% 556%
Telecommunications 150% 157%
Transportation 182% 210%
Utilities Growth 113% 78%
A Annualized
The following tables show the brokerage commissions paid by the funds.
Significant changes in brokerage commissions paid by a fund from year
to year may result from changing asset levels throughout the year. A
fund may pay both commissions and spreads in connection with the
placement of portfolio transactions. For the fiscal years ended
February 1999, 1998, and 1997, the money market fund paid no brokerage
commissions.
Of the following tables, the first shows the total amount of brokerage
commissions paid by each fund to NFSC and FBS, as applicable, for the
past three fiscal years. The second table shows the approximate
percentage of aggregate brokerage commissions paid by a fund to NFSC
and FBS for transactions involving the approximate percentage of the
aggregate dollar amount of transactions for which the fund paid
brokerage commissions for the fiscal year ended 1999. NFSC and FBS are
paid on a commission basis. The second table also shows the dollar
amount of brokerage commissions paid to firms that provided research
services and the approximate dollar amount of the transactions
involved for the fiscal year ended 1999.
Fiscal Periods Ended February Total To NFSC To FBS
28
Air Transportation
1999 $ 466,528 $ 73,991 $ 0
1998 $ 377,945 $ 70,756 $ 0
1997 $ 588,326 $ 110,395 $ 609
Automotive
1999 $ 166,706 $ 23,803 $ 0
1998 $ 220,182 $ 36,417 $ 0
1997 $ 422,985 $ 66,744 $ 23,371
Biotechnology
1999 $ 443,990 $ 31,302 $ 0
1998 $ 843,401 $ 114,067 $ 15,773
1997 $ 466,616 $ 62,674 $ 1,784
Brokerage and Investment
Management
1999 $ 775,691 $ 47,015 $ 0
1998 $ 735,065 $ 86,544 $ 11,262
1997 $ 318,063 $ 61,662 $ 0
Business Services and
Outsourcing
1999 $ 100,721 $ 16,127 $ 0
1998* $ 3,710 $ 45 $ 0
Chemicals
1999 $ 152,343 $ 21,237 $ 0
1998 $ 101,154 $ 12,782 $ 17,404
1997 $ 442,545 $ 71,711 $ 31,240
Computers
1999 $ 1,257,001 $ 217,026 $ 0
1998 $ 1,763,117 $ 240,381 $ 0
1997 $ 1,247,598 $ 198,215 $ 0
Construction and Housing
1999 $ 370,610 $ 51,030 $ 0
1998 $ 218,917 $ 46,802 $ 0
1997 $ 348,359 $ 63,646 $ 0
Consumer Industries
1999 $ 117,209 $ 17,657 $ 0
1998 $ 76,547 $ 15,031 $ 0
1997 $ 121,479 $ 29,979 $ 0
Cyclical Industries
1999 $ 5,884 $ 579 $ 0
1998** $ 5,529 $ 470 $ 0
Defense and Aerospace
1999 $ 163,499 $ 29,426 $ 0
1998 $ 321,753 $ 60,895 $ 0
1997 $ 170,650 $ 24,182 $ 0
Developing Communications
1999 $ 757,140 $ 91,601 $ 0
1998 $ 699,196 $ 100,909 $ 3,085
1997 $ 657,790 $ 92,344 $ 24,230
Electronics
1999 $ 3,599,050 $ 363,022 $ 0
1998 $ 8,057,183 $ 1,038,942 $ 0
1997 $ 2,768,382 $ 595,711 $ 0
Energy
1999 $ 423,125 $ 48,921 $ 0
1998 $ 481,212 $ 56,921 $ 0
1997 $ 275,437 $ 53,327 $ 0
Fiscal Periods Ended February Total To NFSC To FBS
28
Energy Service
1999 $ 1,321,362 $ 132,958 $ 0
1998 $ 1,428,931 $ 208,445 $ 0
1997 $ 971,677 $ 263,380 $ 1,026
Environmental Services
1999 $ 72,365 $ 14,545 $ 0
1998 $ 53,033 $ 4,927 $ 0
1997 $ 240,792 $ 42,243 $ 0
Financial Services
1999 $ 506,934 $ 45,514 $ 0
1998 $ 467,674 $ 58,925 $ 0
1997 $ 330,933 $ 77,580 $ 0
Food and Agriculture
1999 $ 357,895 $ 54,460 $ 0
1998 $ 271,283 $ 44,060 $ 0
1997 $ 439,321 $ 97,562 $ 0
Gold
1999 $ 607,659 $ 16,916 $ 0
1998 $ 1,178,299 $ 91,784 $ 0
1997 $ 898,281 $ 82,611 $ 0
Health Care
1999 $ 2,810,021 $ 244,159 $ 0
1998 $ 1,780,678 $ 202,696 $ 39,030
1997 $ 1,330,539 $ 208,545 $ 19,436
Home Finance
1999 $ 858,979 $ 118,062 $ 0
1998 $ 999,285 $ 222,404 $ 11,072
1997 $ 824,781 $ 201,617 $ 0
Industrial Equipment
1999 $ 66,813 $ 8,504 $ 0
1998 $ 186,022 $ 28,906 $ 0
1997 $ 372,936 $ 78,288 $ 1,152
Industrial Materials
1999 $ 25,143 $ 3,612 $ 0
1998 $ 138,995 $ 19,267 $ 0
1997 $ 281,500 $ 37,253 $ 0
Insurance
1999 $ 171,027 $ 17,412 $ 0
1998 $ 249,991 $ 41,261 $ 4,571
1997 $ 51,916 $ 12,029 $ 0
Leisure
1999 $ 364,791 $ 84,286 $ 0
1998 $ 444,121 $ 113,958 $ 0
1997 $ 234,434 $ 56,198 $ 0
Medical Delivery
1999 $ 244,378 $ 23,772 $ 0
1998 $ 294,080 $ 54,751 $ 0
1997 $ 409,668 $ 62,985 $ 0
Medical Equipment and Systems
1999*** $ 14,974 $ 3,290 $ 0
Multimedia
1999 $ 156,430 $ 41,770 $ 0
1998 $ 213,979 $ 40,201 $ 0
1997 $ 181,181 $ 19,584 $ 0
Fiscal Periods Ended February Total To NFSC To FBS
28
Natural Gas
1999 $ 155,015 $ 13,630 $ 0
1998 $ 246,019 $ 38,095 $ 0
1997 $ 591,400 $ 75,903 $ 904
Natural Resources
1999 $ 17,047 $ 2,189 $ 0
1998**** $ 23,485 $ 1,465 $ 0
Paper and Forest Products
1999 $ 140,355 $ 15,977 $ 0
1998 $ 118,872 $ 11,543 $ 0
1997 $ 104,451 $ 22,646 $ 1,146
Precious Metals and Minerals
1999 $ 413,864 $ 11,498 $ 0
1998 $ 736,052 $ 34,762 $ 0
1997 $ 655,032 $ 43,075 $ 0
Regional Banks
1999 $ 615,558 $ 16,496 $ 0
1998 $ 372,550 $ 70,122 $ 0
1997 $ 385,163 $ 86,165 $ 0
Retailing
1999 $ 587,848 $ 155,653 $ 0
1998 $ 721,512 $ 132,299 $ 0
1997 $ 1,026,572 $ 250,241 $ 0
Software and Computer Services
1999 $ 273,818 $ 38,702 $ 0
1998 $ 444,769 $ 71,604 $ 0
1997 $ 559,248 $ 86,634 $ 0
Technology
1999 $ 1,912,128 $ 323,190 $ 0
1998 $ 2,228,245 $ 349,497 $ 0
1997 $ 1,737,289 $ 339,229 $ 574
Telecommunications
1999 $ 1,198,509 $ 123,641 $ 0
1998 $ 1,091,330 $ 81,847 $ 0
1997 $ 1,288,951 $ 103,768 $ 58,688
Transportation
1999 $ 86,899 $ 12,152 $ 0
1998 $ 144,625 $ 18,070 $ 0
1997 $ 23,737 $ 4,001 $ 44
Utilities Growth
1999 $ 789,881 $ 23,956 $ 0
1998 $ 317,455 $ 29,653 $ 1,975
1997 $ 167,248 $ 23,690 $ 2,643
* Business Services and Outsourcing commenced operations on February
4, 1998.
** Cyclical Industries commenced operations on March 3, 1997.
*** Medical Equipment and Systems commenced operations on April 28,
1998.
**** Natural Resources commenced operations on March 3, 1997.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fiscal Period Ended February % of Aggregate Commissions % of Aggregate Dollar Amount $ Amount of Commissions Paid
28, 1999 Paid to NFSC(dagger) of Transactions Effected To Firms that Provided
through NFSC Research Services*
Air TransportationA 15.85% 24.48% $ 442,411
AutomotiveA 14.28% 26.75% $ 149,860
BiotechnologyA 7.05% 26.73% $ 414,009
Brokerage and Investment 6.06% 9.39% $ 700,728
ManagementA
Business Services and 16.01% 23.70% $ 89,287
OutsourcingA
ChemicalsA 13.94% 21.71% $ 136,297
ComputersA 17.27% 23.05% $ 1,228,387
Construction and HousingA 13.77% 25.24% $ 340,925
Consumer IndustriesA 15.06% 20.49% $ 75,270
Cyclical IndustriesA 9.84% 16.78% $ 4,330
Defense and AerospaceA 18.00% 20.08% $ 144,207
Developing CommunicationsA 12.10% 18.76% $ 728,997
ElectronicsA 10.08% 15.04% $ 3,536,965
EnergyA 11.56% 20.31% $ 393,142
Energy ServiceA 10.06% 13.96% $ 1,224,413
Environmental ServicesA 20.10% 32.97% $ 58,839
Financial ServicesA 8.98% 15.43% $ 473,989
Food and AgricultureA 15.22% 25.36% $ 337,596
GoldA 2.78% 7.34% $ 571,922
Health CareA 8.69% 18.25% $ 2,716,085
Home FinanceA 13.75% 19.25% $ 775,148
Industrial EquipmentA 12.73% 17.61% $ 59,833
Industrial MaterialsA 14.37% 24.61% $ 19,417
InsuranceA 10.18% 16.96% $ 155,633
LeisureA 23.11% 37.50% $ 341,029
Medical DeliveryA 9.72% 17.91% $ 240,728
Medical Equipment and SystemsA 21.97% 29.67% $ 10,723
MultimediaA 26.70% 37.25% $ 139,952
Natural GasA 8.79% 15.43% $ 135,733
Natural ResourcesA 12.85% 25.12% $ 14,008
Paper and Forest ProductsA 11.39% 22.44% $ 110,406
Precious Metals and MineralsA 2.78% 6.45% $ 376,214
Regional BanksA 2.68% 4.80% $ 603,332
RetailingA 26.48% 36.45% $ 526,182
Software and Computer ServicesA 14.13% 21.79% $ 263,467
TechnologyA 16.90% 21.74% $ 1,849,609
TelecommunicationsA 10.32% 15.24% $ 1,100,051
TransportationA 13.98% 16.00% $ 74,517
Utilities GrowthA 3.04% 6.16% $ 674,254
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Fiscal Period Ended February $ Amount of Brokerage
28, 1999 Transactions Involved*
Air TransportationA $ 368,739,031
AutomotiveA $ 113,886,936
BiotechnologyA $ 360,645,234
Brokerage and Investment $ 742,337,817
ManagementA
Business Services and $ 52,022,736
OutsourcingA
ChemicalsA $ 108,247,155
ComputersA $ 1,631,682,148
Construction and HousingA $ 264,641,924
Consumer IndustriesA $ 74,099,816
Cyclical IndustriesA $ 2,981,631
Defense and AerospaceA $ 149,178,757
Developing CommunicationsA $ 739,946,207
ElectronicsA $ 3,033,778,555
EnergyA $ 280,314,569
Energy ServiceA $ 814,196,283
Environmental ServicesA $ 29,241,397
Financial ServicesA $ 592,807,308
Food and AgricultureA $ 283,642,508
GoldA $ 177,008,865
Health CareA $ 2,678,193,388
Home FinanceA $ 566,166,569
Industrial EquipmentA $ 45,615,265
Industrial MaterialsA $ 13,276,912
InsuranceA $ 146,056,202
LeisureA $ 333,386,076
Medical DeliveryA $ 123,807,682
Medical Equipment and SystemsA $ 12,833,460
MultimediaA $ 144,555,999
Natural GasA $ 78,898,705
Natural ResourcesA $ 9,544,699
Paper and Forest ProductsA $ 75,447,265
Precious Metals and MineralsA $ 128,927,976
Regional BanksA $ 705,809,048
RetailingA $ 555,755,250
Software and Computer ServicesA $ 290,036,364
TechnologyA $ 1,967,336,754
TelecommunicationsA $ 1,060,209,460
TransportationA $ 60,669,697
Utilities GrowthA $ 550,058,911
</TABLE>
* The provisions of research services was not necessarily a factor in
the placement of all this business with such firms.
(dagger) The difference between the percentage of aggregate brokerage
commissions paid to, and the percentage of the aggregate dollar mount
of transactions effected through NFSC and is a result of the low
commission rates charged by NFSC.
A Broker-dealer affiliates of FMR have used a portion of the
commissions paid by a fund to reduce that fund's custodian or transfer
agent fees.
The Trustees of each fund have approved procedures in conformity with
Rule 10f-3 under the 1940 Act whereby a fund may purchase securities
that are offered in underwritings in which an affiliate of FMR
participates. These procedures prohibit the funds from directly or
indirectly benefiting an FMR affiliate in connection with such
underwritings. In addition, for underwritings where an FMR affiliate
participates as a principal underwriter, certain restrictions may
apply that could, among other things, limit the amount of securities
that the funds could purchase in the underwriting.
From time to time the Trustees will review whether the recapture for
the benefit of the funds of some portion of the brokerage commissions
or similar fees paid by the funds on portfolio transactions is legally
permissible and advisable. Each fund seeks to recapture soliciting
broker-dealer fees on the tender of portfolio securities, but at
present no other recapture arrangements are in effect. The Trustees
intend to continue to review whether recapture opportunities are
available and are legally permissible and, if so, to determine in the
exercise of their business judgment whether it would be advisable for
each fund to seek such recapture.
Although the Trustees and officers of each fund are substantially the
same as those of other funds managed by FMR or its affiliates,
investment decisions for each fund are made independently from those
of other funds managed by FMR or investment accounts managed by FMR
affiliates. It sometimes happens that the same security is held in the
portfolio of more than one of these funds or investment accounts.
Simultaneous transactions are inevitable when several funds and
investment accounts are managed by the same investment adviser,
particularly when the same security is suitable for the investment
objective of more than one fund or investment account.
When two or more funds are simultaneously engaged in the purchase or
sale of the same security, the prices and amounts are allocated in
accordance with procedures believed to be appropriate and equitable
for each fund. In some cases this system could have a detrimental
effect on the price or value of the security as far as each fund is
concerned. In other cases, however, the ability of the funds to
participate in volume transactions will produce better executions and
prices for the funds. It is the current opinion of the Trustees that
the desirability of retaining FMR as investment adviser to each fund
outweighs any disadvantages that may be said to exist from exposure to
simultaneous transactions.
VALUATION
Each fund's NAV is the value of a single share. The NAV of each fund
is computed by adding the value of the fund's investments, cash, and
other assets, subtracting its liabilities, and dividing the result by
the number of shares outstanding.
STOCK FUNDS. Portfolio securities are valued by various methods
depending on the primary market or exchange on which they trade. Most
equity securities for which the primary market is the United States
are valued at last sale price or, if no sale has occurred, at the
closing bid price. Most equity securities for which the primary market
is outside the United States are valued using the official closing
price or the last sale price in the principal market in which they are
traded. If the last sale price (on the local exchange) is unavailable,
the last evaluated quote or closing bid price normally is used.
Securities of other open-end investment companies are valued at their
respective NAVs.
Fixed-income securities and other assets for which market quotations
are readily available may be valued at market values determined by
such securities' most recent bid prices (sales prices if the principal
market is an exchange) in the principal market in which they normally
are traded, as furnished by recognized dealers in such securities or
assets. Or, fixed-income securities and convertible securities may be
valued on the basis of information furnished by a pricing service that
uses a valuation matrix which incorporates both dealer-supplied
valuations and electronic data processing techniques. Use of pricing
services has been approved by the Board of Trustees. A number of
pricing services are available, and the funds may use various pricing
services or discontinue the use of any pricing service.
Futures contracts and options are valued on the basis of market
quotations, if available.
Independent brokers or quotation services provide prices of foreign
securities in their local currency. FSC gathers all exchange rates
daily at the close of the NYSE using the last quoted price on the
local currency and then translates the value of foreign securities
from their local currencies into U.S. dollars. Any changes in the
value of forward contracts due to exchange rate fluctuations and days
to maturity are included in the calculation of NAV. If an event that
is expected to materially affect the value of a portfolio security
occurs after the close of an exchange or market on which that security
is traded, then that security will be valued in good faith by a
committee appointed by the Board of Trustees.
Short-term securities with remaining maturities of sixty days or less
for which market quotations and information furnished by a pricing
service are not readily available are valued either at amortized cost
or at original cost plus accrued interest, both of which approximate
current value.
The procedures set forth above need not be used to determine the value
of the securities owned by a fund if, in the opinion of a committee
appointed by the Board of Trustees, some other method would more
accurately reflect the fair value of such securities. For example,
securities and other assets for which there is no readily available
market value may be valued in good faith by a committee appointed by
the Board of Trustees. In making a good faith determination of the
value of a security, the committee may review price movements in
futures contracts and American Depositary Receipts (ADRs), market and
trading trends, the bid/ask quotes of brokers and off-exchange
institutional trading.
MONEY MARKET FUND. Portfolio securities and other assets are valued on
the basis of amortized cost. This technique involves initially valuing
an instrument at its cost as adjusted for amortization of premium or
accretion of discount rather than its current market value. The
amortized cost value of an instrument may be higher or lower than the
price the fund would receive if it sold the instrument.
Securities of other open-end investment companies are valued at their
respective NAVs.
At such intervals as they deem appropriate, the Trustees consider the
extent to which NAV calculated by using market valuations would
deviate from the $1.00 per share calculated using amortized cost
valuation. If the Trustees believe that a deviation from the fund's
amortized cost per share may result in material dilution or other
unfair results to shareholders, the Trustees have agreed to take such
corrective action, if any, as they deem appropriate to eliminate or
reduce, to the extent reasonably practicable, the dilution or unfair
results. Such corrective action could include selling portfolio
instruments prior to maturity to realize capital gains or losses or to
shorten average portfolio maturity; withholding dividends; redeeming
shares in kind; establishing NAV by using available market quotations;
and such other measures as the Trustees may deem appropriate.
PERFORMANCE
A fund may quote performance in various ways. All performance
information supplied by the funds in advertising is historical and is
not intended to indicate future returns. The share price of a stock
fund, the yield of the money market fund, and return fluctuate in
response to market conditions and other factors, and the value of a
stock fund's shares when redeemed may be more or less than their
original cost.
YIELD CALCULATIONS (MONEY MARKET FUND). To compute the yield for the
fund for a period, the net change in value of a hypothetical account
containing one share reflects the value of additional shares purchased
with dividends from the one original share and dividends declared on
both the original share and any additional shares. The net change is
then divided by the value of the account at the beginning of the
period to obtain a base period return. This base period return is
annualized to obtain a current annualized yield. The fund also may
calculate an effective yield by compounding the base period return
over a one-year period. In addition to the current yield, the fund may
quote yields in advertising based on any historical seven-day period.
Yields for the fund are calculated on the same basis as other money
market funds, as required by applicable regulation.
Yield information may be useful in reviewing the fund's performance
and in providing a basis for comparison with other investment
alternatives. However, the fund's yield fluctuates, unlike investments
that pay a fixed interest rate over a stated period of time. When
comparing investment alternatives, investors should also note the
quality and maturity of the portfolio securities of respective
investment companies they have chosen to consider.
Investors should recognize that in periods of declining interest rates
the fund's yield will tend to be somewhat higher than prevailing
market rates, and in periods of rising interest rates the fund's yield
will tend to be somewhat lower. Also, when interest rates are falling,
the inflow of net new money to the fund from the continuous sale of
its shares will likely be invested in instruments producing lower
yields than the balance of the fund's holdings, thereby reducing the
fund's current yield. In periods of rising interest rates, the
opposite can be expected to occur.
Yield information may be useful in reviewing the fund's performance
and in providing a basis for comparison with other investment
alternatives. However, the fund's yield fluctuates, unlike investments
that pay a fixed interest rate over a stated period of time. When
comparing investment alternatives, investors should also note the
quality and maturity of the portfolio securities of respective
investment companies they have chosen to consider.
Investors should recognize that in periods of declining interest rates
the fund's yield will tend to be somewhat higher than prevailing
market rates, and in periods of rising interest rates the fund's yield
will tend to be somewhat lower. Also, when interest rates are falling,
the inflow of net new money to the fund from the continuous sale of
its shares will likely be invested in instruments producing lower
yields than the balance of the fund's holdings, thereby reducing the
fund's current yield. In periods of rising interest rates, the
opposite can be expected to occur.
RETURN CALCULATIONS. Returns quoted in advertising reflect all aspects
of a fund's return, including the effect of reinvesting dividends and
capital gain distributions, and any change in a fund's NAV over a
stated period. A cumulative return reflects actual performance over a
stated period of time. Average annual returns are calculated by
determining the growth or decline in value of a hypothetical
historical investment in a fund over a stated period, and then
calculating the annually compounded percentage rate that would have
produced the same result if the rate of growth or decline in value had
been constant over the period. For example, a cumulative return of
100% over ten years would produce an average annual return of 7.18%,
which is the steady annual rate of return that would equal 100% growth
on a compounded basis in ten years. Average annual returns covering
periods of less than one year are calculated by determining a fund's
return for the period, extending that return for a full year (assuming
that return remains constant over the year), and quoting the result as
an annual return. While average annual returns are a convenient means
of comparing investment alternatives, investors should realize that a
fund's performance is not constant over time, but changes from year to
year, and that average annual returns represent averaged figures as
opposed to the actual year-to-year performance of a fund.
In addition to average annual returns, a fund may quote unaveraged or
cumulative returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative returns
may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, or a
series of redemptions, over any time period. Returns may be broken
down into their components of income and capital (including capital
gains and changes in share price) in order to illustrate the
relationship of these factors and their contributions to return.
Returns may be quoted on a before-tax or after-tax basis and may be
quoted with or without taking each fund's maximum sales charge into
account, and may or may not include the effect of a stock fund's
trading fee. Excluding a fund's sales charge or trading fee from a
return calculation produces a higher return figure. Returns, yields,
and other performance information may be quoted numerically or in a
table, graph, or similar illustration.
NET ASSET VALUE. Charts and graphs using a fund's NAVs, adjusted NAVs,
and benchmark indexes may be used to exhibit performance. An adjusted
NAV includes any distributions paid by a fund and reflects all
elements of its return. Unless otherwise indicated, a fund's adjusted
NAVs are not adjusted for sales charges, if any.
MOVING AVERAGES. A stock fund may illustrate performance using moving
averages. A long-term moving average is the average of each week's
adjusted closing NAV for a specified period. A short-term moving
average is the average of each day's adjusted closing NAV for a
specified period. Moving Average Activity Indicators combine adjusted
closing NAVs from the last business day of each week with moving
averages for a specified period to produce indicators showing when an
NAV has crossed, stayed above, or stayed below its moving average. As
of February 26, 1999, the 13-week and 39-week short-term moving
averages are shown below.
<TABLE>
<CAPTION>
<S> <C> <C>
Fund Name 13-Week Short-Term Moving 39-Week Short-Term Moving
Average Average
Air Transportation $ 25.92 $ 25.42
Automotive $ 24.14 $ 23.66
Biotechnology $ 39.15 $ 34.11
Brokerage and Investment $ 39.41 $ 38.48
Management
Business Services and $ 13.30 $ 11.97
Outsourcing
Chemicals $ 31.76 $ 32.88
Computers $ 69.31 $ 54.61
Construction and Housing $ 26.52 $ 25.27
Consumer Industries $ 30.91 $ 28.80
Cyclical Industries $ 11.55 $ 11.41
Defense and Aerospace $ 33.84 $ 33.59
Developing Communications $ 31.03 $ 24.43
Electronics $ 49.40 $ 37.80
Energy $ 17.30 $ 18.58
Energy Service $ 14.31 $ 17.69
Environmental Services $ 13.21 $ 13.81
Financial Services $ 97.52 $ 94.72
Food and Agriculture $ 47.53 $ 45.70
Gold $ 13.45 $ 12.91
Health Care $ 133.76 $ 124.71
Home Finance $ 42.37 $ 45.05
Industrial Equipment $ 25.61 $ 24.66
Industrial Materials $ 20.63 $ 21.08
Insurance $ 41.61 $ 39.91
Leisure $ 75.54 $ 66.62
Medical Delivery $ 21.19 $ 22.85
Medical Equipment and Systems $ 11.88 $ 10.96
Multimedia $ 40.36 $ 35.89
Natural Gas $ 11.07 $ 11.80
Natural Resources $ 8.43 $ 9.02
Paper and Forest Products $ 18.57 $ 18.78
Precious Metals and Minerals $ 9.70 $ 9.15
Regional Banks $ 41.32 $ 40.52
Retailing $ 63.47 $ 57.02
Software and Computer Services $ 54.48 $ 47.36
Technology $ 81.61 $ 63.92
Telecommunications $ 59.92 $ 53.88
Transportation $ 23.57 $ 22.52
Utilities Growth $ 60.10 $ 53.01
</TABLE>
CALCULATING HISTORICAL FUND RESULTS. The following table shows
performance for each fund. The money market fund's returns include the
effect of the fund's 3% sales charge. For each stock fund, returns
include the effect of the fund's 3% sales charge and trading fee, but
do not include the effect of the fund's exchange fee.
HISTORICAL FUND RESULTS. The following table shows the money market
fund's 7-day yield and each fund's returns for fiscal periods ended
February 28, 1999.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Average Annual Total Returns Cumulative Total Returns
Seven-Day Yield One Year Five Years Ten Years/Life of Fund One Year Five Years
Air Transportation 0.92% 13.38% 12.79% 0.92% 87.35%
Automotive -11.34% 4.80% 12.32% -11.34% 26.41%
Biotechnology 23.25% 15.01% 21.19% 23.25% 101.27%
Brokerage and Investment 1.55% 21.24% 20.21% 1.55% 162.01%
Management
Business Services and 22.37% N/A 30.92%* 22.37% N/A
Outsourcing
Chemicals -26.02% 7.34% 10.80% -26.02% 42.53
Computers 61.37% 33.09% 27.76% 61.37% 317.58%
Construction and Housing -5.17% 10.91% 14.36% -5.17% 67.84%
Consumer Industries 16.50% 18.63% 18.36%* 16.50% 134.96%
Cyclical Industries -7.89% N/A 7.67%* -7.89% N/A
Defense and Aerospace -12.68% 17.26% 14.31% -12.68% 121.70%
Developing Communications 58.05% 23.24% 24.19%* 58.05% 184.27%
Electronics 31.16% 33.54% 29.22% 31.16% 324.64%
Energy -24.41% 5.80% 7.30% -24.41% 32.55%
Energy Service -52.12% 7.09% 7.43% -52.12% 40.85%
Environmental Services -24.64% 1.89% 3.62%* -24.64% 9.82%
Financial Services 5.10% 23.97% 21.55% 5.10% 192.77%
Food and Agriculture 4.52% 17.39% 17.91% 4.52% 122.96%
Gold -18.29% -10.03% -1.56% -18.29% -41.06%
Health Care 23.31% 30.02% 25.50% 23.31% 271.61%
Home Finance -21.62% 19.79% 21.49% -21.62% 146.66%
Industrial Equipment -2.11% 14.34% 15.21% -2.11% 95.46%
Industrial Materials -21.23% 2.93% 6.81% -21.23% 15.52%
Insurance 6.47% 22.64% 18.78% 6.47% 177.44%
Leisure 33.34% 22.26% 18.87% 33.34% 173.15%
Medical Delivery -31.66% 8.14% 15.49% -31.66% 47.91%
Medical Equipment and Systems N/A N/A N/A N/A N/A
Multimedia 32.51% 21.07% 18.08% 32.51% 160.12%
Natural Gas -21.66% 2.95% 1.83%* -21.66% 15.62%
Natural Resources -26.91% N/A -11.48%* -26.91% N/A
Paper and Forest Products -19.57% 5.27% 8.51% -19.57% 29.29%
Precious Metals and Minerals -13.64% -11.45% -2.04% -13.64% -45.55%
Regional Banks -0.06% 24.36% 22.80% -0.06% 197.48%
Retailing 32.49% 22.03% 22.15% 32.49% 170.61%
Software and Computer 28.52% 23.66% 24.24% 28.52% 189.20%
Services
Technology 50.91% 27.34% 25.76% 50.91% 234.89%
Telecommunications 18.47% 20.53% 19.05% 18.47% 154.38%
Transportation -4.75% 10.98% 14.82% -4.75% 68.38%
Utilities Growth 28.13% 21.06% 17.76% 28.13% 160.01%
Money Market 4.76% 1.93% 4.40% 4.96% 1.93% 24.03%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Cumulative Total Returns
Ten Years/Life of Fund
Air Transportation 233.08%
Automotive 219.47%
Biotechnology 583.45%
Brokerage and Investment 529.90%
Management
Business Services and 33.27%*
Outsourcing
Chemicals 178.89%
Computers 1058.44%
Construction and Housing 282.71%
Consumer Industries 330.97%*
Cyclical Industries 15.87%*
Defense and Aerospace 281.02%
Developing Communications 553.58%*
Electronics 1198.23%
Energy 102.37%
Energy Service 104.77%
Environmental Services 41.11%*
Financial Services 603.96%
Food and Agriculture 419.46%
Gold -14.57%
Health Care 869.08%
Home Finance 600.51%
Industrial Equipment 312.08%
Industrial Materials 93.26%
Insurance 458.86%
Leisure 463.43%
Medical Delivery 322.30%
Medical Equipment and Systems 17.30%*
Multimedia 427.14%
Natural Gas 11.19%*
Natural Resources -21.56%*
Paper and Forest Products 126.36%
Precious Metals and Minerals -18.66%
Regional Banks 679.81%
Retailing 639.25%
Software and Computer 776.15%
Services
Technology 889.23%
Telecommunications 471.95%
Transportation 298.34%
Utilities Growth 412.70%
Money Market 62.29%
</TABLE>
* From commencement of operations (June 29, 1990 for Consumer
Industries and Developing Communications; June 29, 1989 for
Environmental Services; April 21, 1993 for Natural Gas; March 3, 1997
for Cyclical Industries and Natural Resources; February 4, 1998 for
Business Services and Outsourcing; and April 28, 1998 for Medical
Equipment and Systems).
Note: If FMR had not reimbursed certain fund expenses during these
periods, Air Transportation's, Automotive's, Biotechnology's,
Brokerage and Investment Management's, Business Services and
Outsourcing's, Chemicals', Computer's, Construction and Housing's,
Consumer Industries', Cyclical Industries', Defense and Aerospace's,
Developing Communications', Electronics', Food and Agriculture's, Home
Finance's, Industrial Equipment's, Industrial Materials', Insurance's,
Multimedia's, Natural Resources', Paper and Forest Product's, Regional
Banks', Retailing's, Software and Computer Services', and
Transportation's returns would have been lower.
The following tables show the income and capital elements of each
fund's cumulative return. The tables compare each fund's return to the
record of the Standard & Poor's 500 (S&P 500), the Dow Jones
Industrial Average (DJIA), and the cost of living, as measured by the
Consumer Price Index (CPI), over the same period. The CPI information
is as of the month-end closest to the initial investment date for each
fund. The S&P 500 and DJIA comparisons are provided to show how each
fund's return compared to the record of a broad unmanaged index of
common stocks and a narrower set of stocks of major industrial
companies, respectively, over the same period. Because the money
market fund invests in short-term fixed-income securities, common
stocks represent a different type of investment from the fund. Common
stocks generally offer greater growth potential than the money market
fund, but generally experience greater price volatility, which means
greater potential for loss. In addition, common stocks generally
provide lower income than a fixed-income investment such as the fund.
Each stock fund has the ability to invest in securities not included
in either index, and its investment portfolio may or may not be
similar in composition to the indexes. The S&P 500 and DJIA returns
are based on the prices of unmanaged groups of stocks and, unlike each
fund's returns, do not include the effect of brokerage commissions or
other costs of investing.
The following tables show the growth in value of a hypothetical
$10,000 investment in each fund during the 10-year period ended
February 28, 1999 or life of fund, as applicable, assuming all
distributions were reinvested. Returns are based on past results and
are not an indication of future performance. Tax consequences of
different investments (with the exception of foreign tax withholdings)
have not been factored into the figures below.
AIR TRANSPORTATION PORTFOLIO: During the 10-year period ended February
28, 1999, a hypothetical $10,000 investment in Air Transportation
Portfolio would have grown to $33,315, including the effect of the
fund's 3.00% sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
AIR TRANSPORTATION PORTFOLIO
Year Ended Value of Initial $10,000 Value of Reinvested Divided Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
2/28/99 $ 24,979 $ 0 $ 8,336 $ 33,315
2/28/98 24,169 0 7,829 31,998
2/28/97 15,945 0 3,917 19,862
2/29/96 18,995 0 4,388 23,383
2/28/95 12,534 0 2,561 15,095
2/28/94 15,405 0 1,837 17,242
2/28/93 12,237 0 1,240 13,477
2/29/92 12,741 0 899 13,640
2/28/91 10,681 0 521 11,202
2/28/90 9,808 0 479 10,287
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AIR TRANSPORTATION PORTFOLIO INDEXES
Year Ended S&P 500 DJIA Cost of Living
2/28/99 $ 55,921 $ 54,030 $ 13,528
2/28/98 46,704 48,785 13,314
2/28/97 34,595 38,595 13,125
2/29/96 27,421 30,144 12,738
2/28/95 20,357 21,531 12,410
2/28/94 18,962 20,019 12,064
2/28/93 17,502 17,124 11,768
2/29/92 15,815 16,115 11,398
2/28/91 13,633 13,768 11,086
2/28/90 11,891 12,079 10,526
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Air
Transportation Portfolio on March 1, 1989, assuming the 3.00% sales
charge had been in effect, the net amount invested in fund shares was
$9,700. The cost of the initial investment ($10,000) together with the
aggregate cost of reinvested dividends and capital gain distributions
for the period covered (their cash value at the time they were
reinvested) amounted to $15,127. If distributions had not been
reinvested, the amount of distributions earned from the fund over time
would have been smaller, and cash payments for the period would have
amounted to $0 for dividends and $4,418 for capital gain
distributions. The figures in the table do not include the effect of a
stock fund's trading fee or exchange fee.
AUTOMOTIVE PORTFOLIO: During the 10-year period ended February 28,
1999, a hypothetical $10,000 investment in Automotive Portfolio would
have grown to $31,954, including the effect of the fund's 3.00% sales
charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
AUTOMOTIVE PORTFOLIO INDEXES
Year Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value S&P 500
Investment Distributions Gain Distributions
2/28/99 $ 18,693 $ 1,386 $ 11,875 $ 31,954 $ 55,921
2/28/98 22,082 1,611 11,238 34,931 46,704
2/28/97 20,380 1,390 6,680 28,450 34,595
2/29/96 17,545 1,030 5,015 23,590 27,421
2/28/95 15,931 935 4,554 21,420 20,357
2/28/94 20,460 1,133 2,912 24,505 18,962
2/28/93 16,614 876 1,295 18,785 17,502
2/29/92 13,779 679 782 15,240 15,815
2/28/91 9,909 488 0 10,397 13,633
2/28/90 9,451 329 0 9,780 11,891
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
AUTOMOTIVE PORTFOLIO
Year Ended DJIA Cost of Living
2/28/99 $ 54,030 $ 13,528
2/28/98 48,785 13,314
2/28/97 38,595 13,125
2/29/96 30,144 12,738
2/28/95 21,531 12,410
2/28/94 20,019 12,064
2/28/93 17,124 11,768
2/29/92 16,115 11,398
2/28/91 13,768 11,086
2/28/90 12,079 10,526
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Automotive
Portfolio on March 1, 1989, assuming the 3.00% sales charge had been
in effect, the net amount invested in fund shares was $9,700. The cost
of the initial investment ($10,000) together with the aggregate cost
of reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $22,309. If distributions had not been reinvested, the amount of
distributions earned from the fund over time would have been smaller,
and cash payments for the period would have amounted to $819 for
dividends and $8,496 for capital gain distributions. The figures in
the table do not include the effect of a stock fund's trading fee or
exchange fee.
BIOTECHNOLOGY PORTFOLIO: During the 10-year period ended February 28,
1999, a hypothetical $10,000 investment in Biotechnology Portfolio
would have grown to $68,352, including the effect of the fund's 3.00%
sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
BIOTECHNOLOGY PORTFOLIO INDEXES
Year Ended Value of Initial $10,000 Value of Reinvested Divided Value of Reinvested Capital Total Value S&P 500
Investment Distributions Gain Distributions
2/28/99 $ 37,416 $ 178 $ 30,758 $ 68,352 $ 55,921
2/28/98 31,235 149 22,380 53,764 46,704
2/28/97 30,982 148 15,175 46,305 34,595
2/29/96 33,118 119 10,509 43,746 27,421
2/28/95 22,893 18 7,264 30,175 20,357
2/28/94 24,983 20 7,927 32,930 18,962
2/28/93 20,450 16 6,489 26,955 17,502
2/29/92 29,815 24 4,354 34,193 15,815
2/28/91 22,965 0 1,203 24,168 13,633
2/28/90 13,102 0 218 13,320 11,891
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
BIOTECHNOLOGY PORTFOLIO
Year Ended DJIA Cost of Living
2/28/99 $ 54,030 $ 13,528
2/28/98 48,785 13,314
2/28/97 38,595 13,125
2/29/96 30,144 12,738
2/28/95 21,531 12,410
2/28/94 20,019 12,064
2/28/93 17,124 11,768
2/29/92 16,115 11,398
2/28/91 13,768 11,086
2/28/90 12,079 10,526
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Biotechnology Portfolio on March 1, 1989, assuming the 3.00% sales
charge had been in effect, the net amount invested in fund shares was
$9,700. The cost of the initial investment ($10,000) together with the
aggregate cost of reinvested dividends and capital gain distributions
for the period covered (their cash value at the time they were
reinvested) amounted to $32,291. If distributions had not been
reinvested, the amount of distributions earned from the fund over time
would have been smaller, and cash payments for the period would have
amounted to $109 for dividends and $16,450 for capital gain
distributions. The figures in the table do not include the effect of a
stock fund's trading fee or exchange fee.
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO: During the 10-year
period ended February 28, 1999, a hypothetical $10,000 investment in
Brokerage and Investment Management Portfolio would have grown to
$62,997, including the effect of the fund's 3.00% sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
BROKERAGE AND INVESTMENT INDEXES
MANAGEMENT PORTFOLIO
Year Ended Value of Initial
$10,000 Value of Reinvested Divided Value of Reinvested Capital Total Value S&P 500 DJIA
Investment Distributions Gain Distributions
2/28/99 $ 48,103 $ 2,074 $ 12,820 $ 62,997 $ 55,921 $ 54,030
2/28/98 46,490 1,991 11,653 60,134 46,704 48,785
2/28/97 30,105 1,188 6,872 38,165 34,595 38,595
2/29/96 21,609 775 4,070 26,454 27,421 30,144
2/28/95 18,126 603 1,645 20,374 20,357 21,531
2/28/94 20,744 690 1,882 23,316 18,962 20,019
2/28/93 16,619 541 0 17,160 17,502 17,124
2/29/92 14,947 488 0 15,435 15,815 16,115
2/28/91 9,700 306 0 10,006 13,633 13,768
2/28/90 9,723 182 0 9,905 11,891 12,079
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Year Ended Cost of Living
2/28/99 $ 13,528
2/28/98 13,314
2/28/97 13,125
2/29/96 12,738
2/28/95 12,410
2/28/94 12,064
2/28/93 11,768
2/29/92 11,398
2/28/91 11,086
2/28/90 10,526
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Brokerage
and Investment Management Portfolio on March 1, 1989, assuming the
3.00% sales charge had been in effect, the net amount invested in fund
shares was $9,700. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $16,945. If distributions had
not been reinvested, the amount of distributions earned from the fund
over time would have been smaller, and cash payments for the period
would have amounted to $5,481 for dividends and $549 for capital gain
distributions. The figures in the table do not include the effect of a
stock fund's trading fee or exchange fee.
BUSINESS SERVICES AND OUTSOURCING PORTFOLIO: During the period from
February 4, 1998 (commencement of operations) to February 28, 1999, a
hypothetical $10,000 investment in Business Services and Outsourcing
Portfolio would have grown to $13,335, including the effect of the
fund's 3.00% sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
BUSINESS SERVICES AND INDEXES
OUTSOURCING PORTFOLIO
Year Ended Value of Initial $10,000 Value of Reinvested Divided Value of Reinvested Capital Total Value S&P 500
Investment Distributions Gain Distributions
2/28/99 $ 13,163 $ 0 $ 172 $ 13,335 $ 12,495
2/28/98* 10,563 0 0 10,563 10,435
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
BUSINESS SERVICES AND
OUTSOURCING PORTFOLIO
Year Ended DJIA Cost of Living**
2/28/99 $ 11,655 $ 10,161
2/28/98* 10,524 10,019
</TABLE>
* From February 4, 1998 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Business
Services and Outsourcing Portfolio on February 4, 1998, assuming the
3.00% sales charge had been in effect, the net amount invested in fund
shares was $9,700. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $10,155. If distributions had
not been reinvested, the amount of distributions earned from the fund
over time would have been smaller, and cash payments for the period
would have amounted to $0 for dividends and $155 for capital gain
distributions. The figures in the table do not include the effect of a
stock fund's trading fee or exchange fee.
CHEMICALS PORTFOLIO: During the 10-year period ended February 28,
1999, a hypothetical $10,000 investment in Chemicals Portfolio would
have grown to $27,896, including the effect of the fund's 3.00% sales
charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CHEMICALS PORTFOLIO INDEXES
Year Ended Value of Initial $10,000 Value of Reinvested Divided Value of Reinvested Capital Total Value S&P 500
Investment Distributions Gain Distributions
2/28/99 $ 13,196 $ 826 $ 13,874 $ 27,896 $ 55,921
2/28/98 19,476 1,160 15,905 36,541 46,704
2/28/97 18,046 1,067 11,474 30,587 34,595
2/29/96 16,773 914 8,895 26,582 27,421
2/28/95 14,389 736 5,728 20,853 20,357
2/28/94 13,434 555 4,986 18,975 18,962
2/28/93 12,144 375 2,829 15,348 17,502
2/29/92 13,532 246 1,385 15,163 15,815
2/28/91 10,964 123 811 11,898 13,633
2/28/90 9,577 64 458 10,099 11,891
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
CHEMICALS PORTFOLIO
Year Ended DJIA Cost of Living
2/28/99 $ 54,030 $ 13,528
2/28/98 48,785 13,314
2/28/97 38,595 13,125
2/29/96 30,144 12,738
2/28/95 21,531 12,410
2/28/94 20,019 12,064
2/28/93 17,124 11,768
2/29/92 16,115 11,398
2/28/91 13,768 11,086
2/28/90 12,079 10,526
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Chemicals
Portfolio on March 1, 1989, assuming the 3.00% sales charge had been
in effect, the net amount invested in fund shares was $9,700. The cost
of the initial investment ($10,000) together with the aggregate cost
of reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $26,056. If distributions had not been reinvested, the amount of
distributions earned from the fund over time would have been smaller,
and cash payments for the period would have amounted to $620 for
dividends and $10,243 for capital gain distributions. The figures in
the table do not include the effect of a stock fund's trading fee or
exchange fee.
COMPUTERS PORTFOLIO: During the 10-year period ended February 28,
1999, a hypothetical $10,000 investment in Computers Portfolio would
have grown to $115,851, including the effect of the fund's 3.00% sales
charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
COMPUTERS PORTFOLIO INDEXES
Year Ended Value of Initial $10,000 Value of Reinvested Divided Value of Reinvested Capital Total Value S&P 500
Investment Distributions Gain Distributions
2/28/99 $ 60,565 $ 1,556 $ 53,730 $ 115,851 $ 55,921
2/28/98 36,391 935 32,283 69,609 46,704
2/28/97 42,742 1,098 14,010 57,850 34,595
2/29/96 36,346 934 9,385 46,665 27,421
2/28/95 27,169 698 2,674 30,541 20,357
2/28/94 23,936 614 2,356 26,906 18,962
2/28/93 17,850 458 241 18,549 17,502
2/29/92 17,522 450 236 18,208 15,815
2/28/91 14,572 133 0 14,705 13,633
2/28/90 10,772 0 0 10,772 11,891
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
COMPUTERS PORTFOLIO
Year Ended DJIA Cost of Living
2/28/99 $ 54,030 $ 13,528
2/28/98 48,785 13,314
2/28/97 38,595 13,125
2/29/96 30,144 12,738
2/28/95 21,531 12,410
2/28/94 20,019 12,064
2/28/93 17,124 11,768
2/29/92 16,115 11,398
2/28/91 13,768 11,086
2/28/90 12,079 10,526
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Computers
Portfolio on March 1, 1989, assuming the 3.00% sales charge had been
in effect, the net amount invested in fund shares was $9,700. The cost
of the initial investment ($10,000) together with the aggregate cost
of reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $37,815. If distributions had not been reinvested, the amount of
distributions earned from the fund over time would have been smaller,
and cash payments for the period would have amounted to $345 for
dividends and $20,808 for capital gain distributions. The figures in
the table do not include the effect of a stock fund's trading fee or
exchange fee.
CONSTRUCTION AND HOUSING PORTFOLIO: During the 10-year period ended
February 28, 1999, a hypothetical $10,000 investment in Construction
and Housing Portfolio would have grown to $38,278, including the
effect of the fund's 3.00% sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CONSTRUCTION AND HOUSING
PORTFOLIO
Year Ended Value of Initial $10,000 Value of Reinvested Divided Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
2/28/99 $ 19,877 $ 609 $ 17,792 $ 38,278
2/28/98 20,361 626 18,138 39,125
2/28/97 17,477 507 9,955 27,939
2/29/96 15,539 427 7,583 23,549
2/28/95 13,338 297 5,703 19,338
2/28/94 15,746 350 6,016 22,112
2/28/93 12,504 279 4,567 17,350
2/29/92 10,852 242 3,952 15,046
2/28/91 8,977 200 2,361 11,538
2/28/90 9,033 56 1,230 10,319
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CONSTRUCTION AND HOUSING INDEXES
PORTFOLIO
Year Ended S&P 500 DJIA Cost of Living
2/28/99 $ 55,921 $ 54,030 $ 13,528
2/28/98 46,704 48,785 13,314
2/28/97 34,595 38,595 13,125
2/29/96 27,421 30,144 12,738
2/28/95 20,357 21,531 12,410
2/28/94 18,962 20,019 12,064
2/28/93 17,502 17,124 11,768
2/29/92 15,815 16,115 11,398
2/28/91 13,633 13,768 11,086
2/28/90 11,891 12,079 10,526
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Construction and Housing Portfolio on March 1, 1989, assuming the
3.00% sales charge had been in effect, the net amount invested in fund
shares was $9,700. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $22,001. If distributions had
not been reinvested, the amount of distributions earned from the fund
over time would have been smaller, and cash payments for the period
would have amounted to $278 for dividends and $8,175 for capital gain
distributions. The figures in the table do not include the effect of a
stock fund's trading fee or exchange fee.
CONSUMER INDUSTRIES PORTFOLIO: During the period from June 29, 1990
(commencement of operations) to February 28, 1999, a hypothetical
$10,000 investment in Consumer Industries Portfolio would have grown
to $43,104, including the effect of the fund's 3.00% sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CONSUMER INDUSTRIES PORTFOLIO
Year Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
2/28/99 $ 30,856 $ 232 $ 12,016 $ 43,104
2/28/98 26,491 200 9,175 35,866
2/28/97 20,040 152 5,361 25,553
2/29/96 17,305 130 4,630 22,065
2/28/95 13,493 82 3,397 16,972
2/28/94 14,783 90 2,916 17,789
2/28/93 12,581 77 1,193 13,851
2/29/92 13,512 83 241 13,836
2/28/91* 10,505 65 0 10,570
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CONSUMER INDUSTRIES PORTFOLIO INDEXES
Year Ended S&P 500 DJIA Cost of Living**
2/28/99 $ 43,109 $ 40,297 $ 12,664
2/28/98 36,003 36,385 12,463
2/28/97 26,669 28,785 12,286
2/29/96 21,138 22,483 11,925
2/28/95 15,693 16,058 11,617
2/28/94 14,618 14,931 11,293
2/28/93 13,492 12,772 11,016
2/29/92 12,191 12,019 10,670
2/28/91* 10,509 10,269 10,377
</TABLE>
* From June 29, 1990 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Consumer
Industries Portfolio on June 29, 1990, assuming the 3.00% sales charge
had been in effect, the net amount invested in fund shares was $9,700.
The cost of the initial investment ($10,000) together with the
aggregate cost of reinvested dividends and capital gain distributions
for the period covered (their cash value at the time they were
reinvested) amounted to $16,802. If distributions had not been
reinvested, the amount of distributions earned from the fund over time
would have been smaller, and cash payments for the period would have
amounted to $78 for dividends and $5,645 for capital gain
distributions. The figures in the table do not include the effect of a
stock fund's trading fee or exchange fee.
CYCLICAL INDUSTRIES PORTFOLIO: During the period from March 3, 1997
(commencement of operations) to February 28, 1999, a hypothetical
$10,000 investment in Cyclical Industries Portfolio would have grown
to $11,594, including the effect of the fund's 3.00% sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CYCLICAL INDUSTRIES PORTFOLIO
Year Ended Value of Initial $10,000 Value of Reinvested Divided Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
2/28/99 $ 11,048 $ 0 $ 546 $ 11,594
2/28/98* 11,708 0 492 12,200
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CYCLICAL INDUSTRIES PORTFOLIO INDEXES
Year Ended S&P 500 DJIA Cost of Living**
2/28/99 $ 16,071 $ 13,914 $ 10,307
2/28/98* 13,422 12,563 10,144
</TABLE>
* From March 3, 1997 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Cyclical
Industries Portfolio on March 3, 1997, assuming the 3.00% sales charge
had been in effect, the net amount invested in fund shares was $9,700.
The cost of the initial investment ($10,000) together with the
aggregate cost of reinvested dividends and capital gain distributions
for the period covered (their cash value at the time they were
reinvested) amounted to $10,537. If distributions had not been
reinvested, the amount of distributions earned from the fund over time
would have been smaller, and cash payments for the period would have
amounted to $0 for dividends and $534 for capital gain distributions.
The figures in the table do not include the effect of a stock fund's
trading fee or exchange fee.
DEFENSE AND AEROSPACE PORTFOLIO: During the 10-year period ended
February 28, 1999, a hypothetical $10,000 investment in Defense and
Aerospace Portfolio would have grown to $38,109, including the effect
of the fund's 3.00% sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
DEFENSE AND AEROSPACE PORTFOLIO
Year Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
2/28/98 31,015 612 10,670 42,297
2/28/97 23,891 471 5,283 29,645
2/29/96 22,265 438 2,881 25,584
2/28/95 16,213 320 824 17,357
2/28/94 15,801 311 556 16,668
2/28/93 12,449 175 0 12,624
2/29/92 12,325 173 0 12,498
2/28/91 10,691 104 0 10,795
2/28/90 9,650 0 0 9,650
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DEFENSE AND AEROSPACE PORTFOLIO INDEXES
Year Ended S&P 500 DJIA Cost of Living
2/28/99 $ 55,921 $ 54,030 $ 13,528
2/28/98 46,704 48,785 13,314
2/28/97 34,595 38,595 13,125
2/29/96 27,421 30,144 12,738
2/28/95 20,357 21,531 12,410
2/28/94 18,962 20,019 12,064
2/28/93 17,502 17,124 11,768
2/29/92 15,815 16,115 11,398
2/28/91 13,633 13,768 11,086
2/28/90 11,891 12,079 10,526
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Defense
and Aerospace Portfolio on March 1, 1989, assuming the 3.00% sales
charge had been in effect, the net amount invested in fund shares was
$9,700. The cost of the initial investment ($10,000) together with the
aggregate cost of reinvested dividends and capital gain distributions
for the period covered (their cash value at the time they were
reinvested) amounted to $17,845. If distributions had not been
reinvested, the amount of distributions earned from the fund over time
would have been smaller, and cash payments for the period would have
amounted to $231 for dividends and $6,538 for capital gain
distributions. The figures in the table do not include the effect of a
stock fund's trading fee or exchange fee.
DEVELOPING COMMUNICATIONS PORTFOLIO: During the period from June 29,
1990 (commencement of operations) to February 28, 1999, a hypothetical
$10,000 investment in Developing Communications Portfolio would have
grown to $65,365, including the effect of the fund's 3.00% sales
charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
DEVELOPING COMMUNICATIONS
PORTFOLIO
Year Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
2/28/99 $ 31,738 $ 0 $ 33,627 $ 65,365
2/28/98 19,536 0 20,563 40,099
2/28/97 19,090 0 12,194 31,284
2/29/96 18,837 0 12,034 30,871
2/28/95 19,788 0 5,549 25,337
2/28/94 19,061 0 3,238 22,299
2/28/93 15,947 0 1,174 17,121
2/29/92 13,997 0 1,002 14,999
2/28/91* 10,777 0 0 10,777
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DEVELOPING COMMUNICATIONS INDEXES
PORTFOLIO
Year Ended S&P 500 DJIA Cost of Living**
2/28/99 $ 43,109 $ 40,297 $ 12,664
2/28/98 36,003 36,385 12,463
2/28/97 26,669 28,785 12,286
2/29/96 21,138 22,483 11,925
2/28/95 15,693 16,058 11,617
2/28/94 14,618 14,931 11,293
2/28/93 13,492 12,772 11,016
2/29/92 12,191 12,019 10,670
2/28/91* 10,509 10,269 10,377
</TABLE>
* From June 29, 1990 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Developing
Communications Portfolio on June 29, 1990, assuming the 3.00% sales
charge had been in effect, the net amount invested in fund shares was
$9,700. The cost of the initial investment ($10,000) together with the
aggregate cost of reinvested dividends and capital gain distributions
for the period covered (their cash value at the time they were
reinvested) amounted to $27,901. If distributions had not been
reinvested, the amount of distributions earned from the fund over time
would have been smaller, and cash payments for the period would have
amounted to $0 for dividends and $12,979 for capital gain
distributions. The figures in the table do not include the effect of a
stock fund's trading fee or exchange fee.
ELECTRONICS PORTFOLIO: During the 10-year period ended February 28,
1999, a hypothetical $10,000 investment in Electronics Portfolio would
have grown to $129,831, including the effect of the fund's 3.00% sales
charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
ELECTRONICS PORTFOLIO INDEXES
Year Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value S&P 500
Investment Distributions Gain Distributions
2/28/99 $ 67,134 $ 83 $ 62,614 $ 129,831 $ 55,921
2/28/98 49,620 62 46,279 95,961 46,704
2/28/97 53,818 67 23,412 77,297 34,595
2/29/96 39,963 49 17,385 57,397 27,421
2/28/95 28,079 34 5,113 33,226 20,357
2/28/94 25,058 31 4,563 29,652 18,962
2/28/93 20,251 25 0 20,276 17,502
2/29/92 18,535 23 0 18,558 15,815
2/28/91 14,394 18 0 14,412 13,633
2/28/90 12,267 0 0 12,267 11,891
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
ELECTRONICS PORTFOLIO
Year Ended DJIA Cost of Living
2/28/99 $ 54,030 $ 13,528
2/28/98 48,785 13,314
2/28/97 38,595 13,125
2/29/96 30,144 12,738
2/28/95 21,531 12,410
2/28/94 20,019 12,064
2/28/93 17,124 11,768
2/29/92 16,115 11,398
2/28/91 13,768 11,086
2/28/90 12,079 10,526
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Electronics Portfolio on March 1, 1989, assuming the 3.00% sales
charge had been in effect, the net amount invested in fund shares was
$9,700. The cost of the initial investment ($10,000) together with the
aggregate cost of reinvested dividends and capital gain distributions
for the period covered (their cash value at the time they were
reinvested) amounted to $44,921. If distributions had not been
reinvested, the amount of distributions earned from the fund over time
would have been smaller, and cash payments for the period would have
amounted to $14 for dividends and $25,810 for capital gain
distributions. The figures in the table do not include the effect of a
stock fund's trading fee or exchange fee.
ENERGY PORTFOLIO: During the 10-year period ended February 28, 1999, a
hypothetical $10,000 investment in Energy Portfolio would have grown
to $20,244, including the effect of the fund's 3.00% sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
ENERGY PORTFOLIO INDEXES
Year Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value S&P 500
Investment Distributions Gain Distributions
2/28/99 $ 11,954 $ 968 $ 7,322 $ 20,244 $ 55,921
2/28/98 15,614 1,254 9,087 25,955 46,704
2/28/97 15,695 1,163 4,699 21,557 34,595
2/29/96 13,972 922 3,019 17,913 27,421
2/28/95 11,858 692 2,263 14,813 20,357
2/28/94 12,322 614 1,871 14,807 18,962
2/28/93 11,667 555 1,277 13,499 17,502
2/29/92 10,437 271 1,142 11,850 15,815
2/28/91 11,394 155 1,230 12,779 13,633
2/28/90 12,676 51 164 12,891 11,891
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
ENERGY PORTFOLIO
Year Ended DJIA Cost of Living
2/28/99 $ 54,030 $ 13,528
2/28/98 48,785 13,314
2/28/97 38,595 13,125
2/29/96 30,144 12,738
2/28/95 21,531 12,410
2/28/94 20,019 12,064
2/28/93 17,124 11,768
2/29/92 16,115 11,398
2/28/91 13,768 11,086
2/28/90 12,079 10,526
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Energy
Portfolio on March 1, 1989, assuming the 3.00% sales charge had been
in effect, the net amount invested in fund shares was $9,700. The cost
of the initial investment ($10,000) together with the aggregate cost
of reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $19,584. If distributions had not been reinvested, the amount of
distributions earned from the fund over time would have been smaller,
and cash payments for the period would have amounted to $832 for
dividends and $6,570 for capital gain distributions. The figures in
the table do not include the effect of a stock fund's trading fee or
exchange fee.
ENERGY SERVICE PORTFOLIO: During the 10-year period ended February 28,
1999, a hypothetical $10,000 investment in Energy Service Portfolio
would have grown to $20,484, including the effect of the fund's 3.00%
sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ENERGY SERVICE PORTFOLIO
Year Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
2/28/99 $ 15,734 $ 178 $ 4,572 $ 20,484
2/28/98 33,680 382 7,378 41,440
2/28/97 24,593 278 3,048 27,919
2/29/96 19,340 208 1,561 21,109
2/28/95 14,388 113 669 15,170
2/28/94 14,015 84 0 14,099
2/28/93 13,234 22 0 13,256
2/29/92 11,275 19 0 11,294
2/28/91 16,227 27 0 16,254
2/28/90 14,760 0 0 14,760
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ENERGY SERVICE PORTFOLIO INDEXES
Year Ended S&P 500 DJIA Cost of Living
2/28/99 $ 55,921 $ 54,030 $ 13,528
2/28/98 46,704 48,785 13,314
2/28/97 34,595 38,595 13,125
2/29/96 27,421 30,144 12,738
2/28/95 20,357 21,531 12,410
2/28/94 18,962 20,019 12,064
2/28/93 17,502 17,124 11,768
2/29/92 15,815 16,115 11,398
2/28/91 13,633 13,768 11,086
2/28/90 11,891 12,079 10,526
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Energy
Service Portfolio on March 1, 1989, assuming the 3.00% sales charge
had been in effect, the net amount invested in fund shares was $9,700.
The cost of the initial investment ($10,000) together with the
aggregate cost of reinvested dividends and capital gain distributions
for the period covered (their cash value at the time they were
reinvested) amounted to $17,503. If distributions had not been
reinvested, the amount of distributions earned from the fund over time
would have been smaller, and cash payments for the period would have
amounted to $168 for dividends and $6,371 for capital gain
distributions. The figures in the table do not include the effect of a
stock fund's trading fee or exchange fee.
ENVIRONMENTAL SERVICES PORTFOLIO: During the period from June 29, 1989
(commencement of operations) to February 28, 1999, a hypothetical
$10,000 investment in Environmental Services Portfolio would have
grown to $14,118, including the effect of the fund's 3.00% sales
charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
ENVIRONMENTAL SERVICES INDEXES
PORTFOLIO
Year Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value S&P 500
Investment Distributions Gain Distributions
2/28/99 $ 12,387 $ 11 $ 1,720 $ 14,118 $ 49,952
2/28/98 15,966 14 2,174 18,154 41,719
2/28/97 14,065 12 1,915 15,992 30,902
2/29/96 12,047 11 1,619 13,677 24,494
2/28/95 9,962 9 757 10,728 18,184
2/28/94 11,572 10 880 12,462 16,938
2/28/93 11,019 10 838 11,867 15,634
2/29/92 12,649 11 486 13,146 14,127
2/28/91 12,600 11 0 12,611 12,178
2/28/90* 10,554 9 0 10,563 10,622
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
ENVIRONMENTAL SERVICES
PORTFOLIO
Year Ended DJIA Cost of Living**
2/28/99 $ 49,028 $ 13,255
2/28/98 44,268 13,046
2/28/97 35,022 12,861
2/29/96 27,353 12,482
2/28/95 19,537 12,160
2/28/94 18,166 11,821
2/28/93 15,539 11,531
2/29/92 14,623 11,168
2/28/91 12,493 10,862
2/28/90* 10,960 10,314
</TABLE>
* From June 29, 1989 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in
Environmental Services Portfolio on June 29, 1989, assuming the 3.00%
sales charge had been in effect, the net amount invested in fund
shares was $9,700. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $11,545. If distributions had
not been reinvested, the amount of distributions earned from the fund
over time would have been smaller, and cash payments for the period
would have amounted to $10 for dividends and $1,465 for capital gain
distributions. The figures in the table do not include the effect of a
stock fund's trading fee or exchange fee.
FINANCIAL SERVICES PORTFOLIO: During the 10-year period ended February
28, 1999, a hypothetical $10,000 investment in Financial Services
Portfolio would have grown to $70,403, including the effect of the
fund's 3.00% sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FINANCIAL SERVICES PORTFOLIO
Year Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
2/28/99 $ 34,877 $ 4,098 $ 31,428 $ 70,403
2/28/98 35,728 4,075 25,131 64,934
2/28/97 28,692 2,924 14,409 46,025
2/29/96 22,728 2,010 9,220 33,958
2/28/95 16,684 1,329 6,408 24,421
2/28/94 17,726 1,080 4,514 23,320
2/28/93 18,435 1,037 1,565 21,037
2/29/92 14,457 642 88 15,187
2/28/91 9,769 327 60 10,156
2/28/90 10,302 104 63 10,469
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL SERVICES PORTFOLIO INDEXES
Year Ended S&P 500 DJIA Cost of Living
2/28/99 $ 55,921 $ 54,030 $ 13,528
2/28/98 46,704 48,785 13,314
2/28/97 34,595 38,595 13,125
2/29/96 27,421 30,144 12,738
2/28/95 20,357 21,531 12,410
2/28/94 18,962 20,019 12,064
2/28/93 17,502 17,124 11,768
2/29/92 15,815 16,115 11,398
2/28/91 13,633 13,768 11,086
2/28/90 11,891 12,079 10,526
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Financial
Services Portfolio on March 1, 1989, assuming the 3.00% sales charge
had been in effect, the net amount invested in fund shares was $9,700.
The cost of the initial investment ($10,000) together with the
aggregate cost of reinvested dividends and capital gain distributions
for the period covered (their cash value at the time they were
reinvested) amounted to $33,827. If distributions had not been
reinvested, the amount of distributions earned from the fund over time
would have been smaller, and cash payments for the period would have
amounted to $1,498 for dividends and $14,464 for capital gain
distributions. The figures in the table do not include the effect of a
stock fund's trading fee or exchange fee.
FOOD AND AGRICULTURE PORTFOLIO: During the 10-year period ended
February 28, 1999, a hypothetical $10,000 investment in Food and
Agriculture Portfolio would have grown to $51,954, including the
effect of the fund's 3.00% sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FOOD AND AGRICULTURE PORTFOLIO
Year Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
2/28/99 $ 23,929 $ 1,661 $ 26,364 $ 51,954
2/28/98 24,893 1,557 21,731 48,181
2/28/97 22,710 1,081 15,196 38,987
2/29/96 21,496 817 12,009 34,322
2/28/95 16,590 499 7,796 24,885
2/28/94 16,060 420 6,115 22,595
2/28/93 15,738 357 4,135 20,230
2/29/92 15,417 286 3,030 18,733
2/28/91 13,760 194 1,822 15,776
2/28/90 11,210 19 1,082 12,311
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOOD AND AGRICULTURE PORTFOLIO INDEXES
Year Ended S&P 500 DJIA Cost of Living
2/28/99 $ 55,921 $ 54,030 $ 13,528
2/28/98 46,704 48,785 13,314
2/28/97 34,595 38,595 13,125
2/29/96 27,421 30,144 12,738
2/28/95 20,357 21,531 12,410
2/28/94 18,962 20,019 12,064
2/28/93 17,502 17,124 11,768
2/29/92 15,815 16,115 11,398
2/28/91 13,633 13,768 11,086
2/28/90 11,891 12,079 10,526
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Food and
Agriculture Portfolio on March 1, 1989, assuming the 3.00% sales
charge had been in effect, the net amount invested in fund shares was
$9,700. The cost of the initial investment ($10,000) together with the
aggregate cost of reinvested dividends and capital gain distributions
for the period covered (their cash value at the time they were
reinvested) amounted to $31,946. If distributions had not been
reinvested, the amount of distributions earned from the fund over time
would have been smaller, and cash payments for the period would have
amounted to $841 for dividends and $13,280 for capital gain
distributions. The figures in the table do not include the effect of a
stock fund's trading fee or exchange fee.
GOLD PORTFOLIO: During the 10-year period ended February 28, 1999, a
hypothetical $10,000 investment in Gold Portfolio would have grown to
$8,551, including the effect of the fund's 3.00% sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
GOLD PORTFOLIO INDEXES
Year Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value S&P 500
Investment Distributions Gain Distributions
2/28/99 $ 7,932 $ 0 $ 619 $ 8,551 $ 55,921
2/28/98 9,409 0 733 10,142 46,704
2/28/97 17,496 0 343 17,839 34,595
2/29/96 16,814 0 0 16,814 27,421
2/28/95 11,437 0 0 11,437 20,357
2/28/94 14,054 0 0 14,054 18,962
2/28/93 8,776 0 0 8,776 17,502
2/29/92 8,373 0 0 8,373 15,815
2/28/91 8,441 0 0 8,441 13,633
2/28/90 11,015 0 0 11,015 11,891
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
GOLD PORTFOLIO
Year Ended DJIA Cost of Living
2/28/99 $ 54,030 $ 13,528
2/28/98 48,785 13,314
2/28/97 38,595 13,125
2/29/96 30,144 12,738
2/28/95 21,531 12,410
2/28/94 20,019 12,064
2/28/93 17,124 11,768
2/29/92 16,115 11,398
2/28/91 13,768 11,086
2/28/90 12,079 10,526
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Gold
Portfolio on March 1, 1989, assuming the 3.00% sales charge had been
in effect, the net amount invested in fund shares was $9,700. The cost
of the initial investment ($10,000) together with the aggregate cost
of reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $11,126. If distributions had not been reinvested, the amount of
distributions earned from the fund over time would have been smaller,
and cash payments for the period would have amounted to $0 for
dividends and $1,110 for capital gain distributions. The figures in
the table do not include the effect of a stock fund's trading fee or
exchange fee.
HEALTH CARE PORTFOLIO: During the 10-year period ended February 28,
1999, a hypothetical $10,000 investment in Health Care Portfolio would
have grown to $96,916, including the effect of the fund's 3.00% sales
charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
HEALTH CARE PORTFOLIO INDEXES
Year Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value S&P 500
Investment Distributions Gain Distributions
2/28/99 $ 37,241 $ 2,341 $ 57,334 $ 96,916 $ 55,921
2/28/98 30,810 1,818 43,566 76,194 46,704
2/28/97 27,728 1,484 26,620 55,832 34,595
2/29/96 27,192 1,131 18,044 46,367 27,421
2/28/95 20,604 649 11,941 33,194 20,357
2/28/94 17,135 307 7,850 25,292 18,962
2/28/93 14,228 232 6,518 20,978 17,502
2/29/92 21,516 275 6,010 27,801 15,815
2/28/91 17,700 124 2,374 20,198 13,633
2/28/90 12,011 36 230 12,277 11,891
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
HEALTH CARE PORTFOLIO
Year Ended DJIA Cost of Living
2/28/99 $ 54,030 $ 13,528
2/28/98 48,785 13,314
2/28/97 38,595 13,125
2/29/96 30,144 12,738
2/28/95 21,531 12,410
2/28/94 20,019 12,064
2/28/93 17,124 11,768
2/29/92 16,115 11,398
2/28/91 13,768 11,086
2/28/90 12,079 10,526
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Health
Care Portfolio on March 1, 1989, assuming the 3.00% sales charge had
been in effect, the net amount invested in fund shares was $9,700. The
cost of the initial investment ($10,000) together with the aggregate
cost of reinvested dividends and capital gain distributions for the
period covered (their cash value at the time they were reinvested)
amounted to $47,157. If distributions had not been reinvested, the
amount of distributions earned from the fund over time would have been
smaller, and cash payments for the period would have amounted to $866
for dividends and $20,932 for capital gain distributions. The figures
in the table do not include the effect of a stock fund's trading fee
or exchange fee.
HOME FINANCE PORTFOLIO: During the 10-year period ended February 28,
1999, a hypothetical $10,000 investment in Home Finance Portfolio
would have grown to $70,058, including the effect of the fund's 3.00%
sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
HOME FINANCE PORTFOLIO INDEXES
Year Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value S&P 500
Investment Distributions Gain Distributions
2/28/99 $ 39,638 $ 3,060 $ 27,360 $ 70,058 $ 55,921
2/28/98 50,252 3,772 32,595 86,619 46,704
2/28/97 43,320 2,811 19,295 65,426 34,595
2/29/96 31,360 1,648 11,349 44,357 27,421
2/28/95 22,527 998 7,442 30,967 20,357
2/28/94 23,572 880 3,091 27,543 18,962
2/28/93 20,888 770 1,369 23,027 17,502
2/29/92 14,428 523 713 15,664 15,815
2/28/91 9,436 219 466 10,121 13,633
2/28/90 8,645 37 427 9,109 11,891
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
HOME FINANCE PORTFOLIO
Year Ended DJIA Cost of Living
2/28/99 $ 54,030 $ 13,528
2/28/98 48,785 13,314
2/28/97 38,595 13,125
2/29/96 30,144 12,738
2/28/95 21,531 12,410
2/28/94 20,019 12,064
2/28/93 17,124 11,768
2/29/92 16,115 11,398
2/28/91 13,768 11,086
2/28/90 12,079 10,526
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Home
Finance Portfolio on March 1, 1989, assuming the 3.00% sales charge
had been in effect, the net amount invested in fund shares was $9,700.
The cost of the initial investment ($10,000) together with the
aggregate cost of reinvested dividends and capital gain distributions
for the period covered (their cash value at the time they were
reinvested) amounted to $32,738. If distributions had not been
reinvested, the amount of distributions earned from the fund over time
would have been smaller, and cash payments for the period would have
amounted to $1,253 for dividends and $14,955 for capital gain
distributions. The figures in the table do not include the effect of a
stock fund's trading fee or exchange fee.
INDUSTRIAL EQUIPMENT PORTFOLIO: During the 10-year period ended
February 28, 1999, a hypothetical $10,000 investment in Industrial
Equipment Portfolio would have grown to $41,215 including the effect
of the fund's 3.00% sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
INDUSTRIAL EQUIPMENT PORTFOLIO
Year Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
2/28/99 $ 24,088 $ 545 $ 16,582 $ 41,215
2/28/98 24,737 560 15,511 40,808
2/28/97 24,355 523 7,573 32,451
2/29/96 23,973 468 3,002 27,443
2/28/95 19,133 329 590 20,052
2/28/94 19,677 339 430 20,446
2/28/93 14,359 238 0 14,597
2/29/92 13,662 226 0 13,888
2/28/91 11,285 76 0 11,361
2/28/90 11,275 0 0 11,275
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INDUSTRIAL EQUIPMENT PORTFOLIO INDEXES
Year Ended S&P 500 DJIA Cost of Living
2/28/99 $ 55,921 $ 54,030 $ 13,528
2/28/98 46,704 48,785 13,314
2/28/97 34,595 38,595 13,125
2/29/96 27,421 30,144 12,738
2/28/95 20,357 21,531 12,410
2/28/94 18,962 20,019 12,064
2/28/93 17,502 17,124 11,768
2/29/92 15,815 16,115 11,398
2/28/91 13,633 13,768 11,086
2/28/90 11,891 12,079 10,526
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Industrial
Equipment Portfolio on March 1, 1989, assuming the 3.00% sales charge
had been in effect, the net amount invested in fund shares was $9,700.
The cost of the initial investment ($10,000) together with the
aggregate cost of reinvested dividends and capital gain distributions
for the period covered (their cash value at the time they were
reinvested) amounted to $25,754. If distributions had not been
reinvested, the amount of distributions earned from the fund over time
would have been smaller, and cash payments for the period would have
amounted to $306 for dividends and $12,068 for capital gain
distributions. The figures in the table do not include the effect of a
stock fund's trading fee or exchange fee.
INDUSTRIAL MATERIALS PORTFOLIO: During the 10-year period ended
February 28, 1999, a hypothetical $10,000 investment in Industrial
Materials Portfolio would have grown to $19,333, including the effect
of the fund's 3.00% sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
INDUSTRIAL MATERIALS PORTFOLIO
Year Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
2/28/99 $ 14,644 $ 846 $ 3,843 $ 19,333
2/28/98 18,016 1,042 4,728 23,786
2/28/97 19,933 1,124 1,257 22,314
2/29/96 18,787 1,014 0 19,801
2/28/95 16,669 796 0 17,465
2/28/94 15,617 607 0 16,224
2/28/93 12,568 446 0 13,014
2/29/92 11,934 364 0 12,298
2/28/91 8,965 233 0 9,198
2/28/90 9,383 0 0 9,383
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INDUSTRIAL MATERIALS PORTFOLIO INDEXES
Year Ended S&P 500 DJIA Cost of Living
2/28/99 $ 55,921 $ 54,030 $ 13,528
2/28/98 46,704 48,785 13,314
2/28/97 34,595 38,595 13,125
2/29/96 27,421 30,144 12,738
2/28/95 20,357 21,531 12,410
2/28/94 18,962 20,019 12,064
2/28/93 17,502 17,124 11,768
2/29/92 15,815 16,115 11,398
2/28/91 13,633 13,768 11,086
2/28/90 11,891 12,079 10,526
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Industrial
Materials Portfolio on March 1, 1989, assuming the 3.00% sales charge
had been in effect, the net amount invested in fund shares was $9,700.
The cost of the initial investment ($10,000) together with the
aggregate cost of reinvested dividends and capital gain distributions
for the period covered (their cash value at the time they were
reinvested) amounted to $15,285. If distributions had not been
reinvested, the amount of distributions earned from the fund over time
would have been smaller, and cash payments for the period would have
amounted to $692 for dividends and $4,014 for capital gain
distributions. The figures in the table do not include the effect of a
stock fund's trading fee or exchange fee.
INSURANCE PORTFOLIO: During the 10-year period ended February 28,
1999, a hypothetical $10,000 investment in Insurance Portfolio would
have grown to $55,893, including the effect of the fund's 3.00% sales
charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
INSURANCE PORTFOLIO INDEXES
Year Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value S&P 500
Investment Distributions Gain Distributions
2/28/99 $ 34,149 $ 1,142 $ 20,602 $ 55,893 $ 55,921
2/28/98 34,116 1,142 15,630 50,888 46,704
2/28/97 26,434 885 8,315 35,634 34,595
2/29/96 21,693 695 5,391 27,779 27,421
2/28/95 17,269 488 3,692 21,449 20,357
2/28/94 15,729 446 3,362 19,537 18,962
2/28/93 17,488 485 1,810 19,783 17,502
2/29/92 15,210 394 0 15,604 15,815
2/28/91 12,787 128 0 12,915 13,633
2/28/90 11,499 115 0 11,614 11,891
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
INSURANCE PORTFOLIO
Year Ended DJIA Cost of Living
2/28/99 $ 54,030 $ 13,528
2/28/98 48,785 13,314
2/28/97 38,595 13,125
2/29/96 30,144 12,738
2/28/95 21,531 12,410
2/28/94 20,019 12,064
2/28/93 17,124 11,768
2/29/92 16,115 11,398
2/28/91 13,768 11,086
2/28/90 12,079 10,526
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Insurance
Portfolio on March 1, 1989, assuming the 3.00% sales charge had been
in effect, the net amount invested in fund shares was $9,700. The cost
of the initial investment ($10,000) together with the aggregate cost
of reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $24,828. If distributions had not been reinvested, the amount of
distributions earned from the fund over time would have been smaller,
and cash payments for the period would have amounted to $446 for
dividends and $10,826 for capital gain distributions. The figures in
the table do not include the effect of a stock fund's trading fee or
exchange fee.
LEISURE PORTFOLIO: During the 10-year period ended February 28, 1999,
a hypothetical $10,000 investment in Leisure Portfolio would have
grown to $56,350, including the effect of the fund's 3.00% sales
charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
LEISURE PORTFOLIO INDEXES
Year Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value S&P 500
Investment Distributions Gain Distributions
2/28/99 $ 30,655 $ 408 $ 25,287 $ 56,350 $ 55,921
2/28/98 23,450 313 17,208 40,971 46,704
2/28/97 18,004 240 9,572 27,816 34,595
2/29/96 17,379 232 7,645 25,256 27,421
2/28/95 15,324 204 4,263 19,791 20,357
2/28/94 17,051 228 2,727 20,006 18,962
2/28/93 13,464 179 944 14,587 17,502
2/29/92 12,026 161 843 13,030 15,815
2/28/91 9,719 130 681 10,530 13,633
2/28/90 9,677 24 678 10,379 11,891
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
LEISURE PORTFOLIO
Year Ended DJIA Cost of Living
2/28/99 $ 54,030 $ 13,528
2/28/98 48,785 13,314
2/28/97 38,595 13,125
2/29/96 30,144 12,738
2/28/95 21,531 12,410
2/28/94 20,019 12,064
2/28/93 17,124 11,768
2/29/92 16,115 11,398
2/28/91 13,768 11,086
2/28/90 12,079 10,526
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Leisure
Portfolio on March 1, 1989, assuming the 3.00% sales charge had been
in effect, the net amount invested in fund shares was $9,700. The cost
of the initial investment ($10,000) together with the aggregate cost
of reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $24,331. If distributions had not been reinvested, the amount of
distributions earned from the fund over time would have been smaller,
and cash payments for the period would have amounted to $113 for
dividends and $10,265 for capital gain distributions. The figures in
the table do not include the effect of a stock fund's trading fee or
exchange fee.
MEDICAL DELIVERY PORTFOLIO: During the 10-year period ended February
28, 1999, a hypothetical $10,000 investment in Medical Delivery
Portfolio would have grown to $42,237, including the effect of the
fund's 3.00% sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
MEDICAL DELIVERY PORTFOLIO
Year Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
2/28/99 $ 21,176 $ 182 $ 20,879 $ 42,237
2/28/98 31,431 271 28,181 59,883
2/28/97 31,397 272 17,426 49,095
2/29/96 32,185 279 11,966 44,430
2/28/95 25,726 222 7,171 33,119
2/28/94 22,508 98 5,079 27,685
2/28/93 16,048 71 3,621 19,740
2/29/92 24,305 108 2,974 27,387
2/28/91 18,679 81 974 19,734
2/28/90 11,731 52 253 12,036
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
MEDICAL DELIVERY PORTFOLIO INDEXES
Year Ended S&P 500 DJIA Cost of Living
2/28/99 $ 55,921 $ 54,030 $ 13,528
2/28/98 46,704 48,785 13,314
2/28/97 34,595 38,595 13,125
2/29/96 27,421 30,144 12,738
2/28/95 20,357 21,531 12,410
2/28/94 18,962 20,019 12,064
2/28/93 17,502 17,124 11,768
2/29/92 15,815 16,115 11,398
2/28/91 13,633 13,768 11,086
2/28/90 11,891 12,079 10,526
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Medical
Delivery Portfolio on March 1, 1989, assuming the 3.00% sales charge
had been in effect, the net amount invested in fund shares was $9,700.
The cost of the initial investment ($10,000) together with the
aggregate cost of reinvested dividends and capital gain distributions
for the period covered (their cash value at the time they were
reinvested) amounted to $36,042. If distributions had not been
reinvested, the amount of distributions earned from the fund over time
would have been smaller, and cash payments for the period would have
amounted to $133 for dividends and $18,035 for capital gain
distributions. The figures in the table do not include the effect of a
stock fund's trading fee or exchange fee.
MEDICAL EQUIPMENT AND SYSTEMS PORTFOLIO: During the period from April
28, 1998 (commencement of operations) to February 28, 1999, a
hypothetical $10,000 investment in Medical Equipment and Systems
Portfolio would have grown to $11,737, including the effect of the
fund's 3.00% sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
MEDICAL EQUIPMENT AND SYSTEMS
PORTFOLIO
Year Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
2/28/99* $ 11,737 $ 0 $ 0 $ 11,737
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
MEDICAL EQUIPMENT AND SYSTEMS INDEXES
PORTFOLIO
Year Ended S&P 500 DJIA Cost of Living**
2/28/99* $ 11,554 $ 10,609 $ 10,123
</TABLE>
* From April 28, 1998 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Medical
Equipment and Systems Portfolio on April 28, 1998, assuming the 3.00%
sales charge had been in effect, the net amount invested in fund
shares was $9,700. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $10,000. If distributions had
not been reinvested, the amount of distributions earned from the fund
over time would have been smaller, and cash payments for the period
would have amounted to $0 for dividends and $0 for capital gain
distributions. The figures in the table do not include the effect of a
stock fund's trading fee or exchange fee.
MONEY MARKET PORTFOLIO: During the 10-year period ended February 28,
1999, a hypothetical $10,000 investment in Money Market Portfolio
would have grown to $16,229, including the effect of the fund's 3.00%
sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
MONEY MARKET PORTFOLIO INDEXES
Year Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value S&P 500
Investment Distributions Gain Distributions
2/28/99 $ 9,700 $ 6,529 $ 0 $ 16,229 $ 55,921
2/28/98 9,700 5,745 0 15,445 46,704
2/28/97 9,700 4,973 0 14,673 34,595
2/29/96 9,700 4,272 0 13,972 27,421
2/28/95 9,700 3,536 0 13,236 20,357
2/28/94 9,700 2,992 0 12,692 18,962
2/28/93 9,700 2,668 0 12,368 17,502
2/29/92 9,700 2,275 0 11,975 15,815
2/28/91 9,700 1,671 0 11,371 13,633
2/28/90 9,700 851 0 10,551 11,891
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
MONEY MARKET PORTFOLIO
Year Ended DJIA Cost of Living
2/28/99 $ 54,030 $ 13,528
2/28/98 48,785 13,314
2/28/97 38,595 13,125
2/29/96 30,144 12,738
2/28/95 21,531 12,410
2/28/94 20,019 12,064
2/28/93 17,124 11,768
2/29/92 16,115 11,398
2/28/91 13,768 11,086
2/28/90 12,079 10,526
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Money
Market Portfolio on March 1, 1989, assuming the 3.00% sales charge had
been in effect, the net amount invested in fund shares was $9,700. The
cost of the initial investment ($10,000) together with the aggregate
cost of reinvested dividends and capital gain distributions for the
period covered (their cash value at the time they were reinvested)
amounted to $16,529. If distributions had not been reinvested, the
amount of distributions earned from the fund over time would have been
smaller, and cash payments for the period would have amounted to
$5,004 for dividends. The fund did not distribute any capital gains
during the period.
MULTIMEDIA PORTFOLIO: During the 10-year period ended February 28,
1999, a hypothetical $10,000 investment in Multimedia Portfolio would
have grown to $52,721, including the effect of the fund's 3.00% sales
charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
MULTIMEDIA PORTFOLIO INDEXES
Year Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value S&P 500
Investment Distributions Gain Distributions
2/28/99 $ 28,852 $ 32 $ 23,837 $ 52,721 $ 55,921
2/28/98 22,464 25 16,084 38,573 46,704
2/28/97 16,664 18 10,401 27,083 34,595
2/29/96 18,182 20 10,163 28,365 27,421
2/28/95 14,951 0 6,542 21,493 20,357
2/28/94 15,968 0 3,687 19,655 18,962
2/28/93 12,215 0 2,359 14,574 17,502
2/29/92 10,770 0 1,913 12,683 15,815
2/28/91 8,161 0 1,450 9,611 13,633
2/28/90 8,262 0 1,467 9,729 11,891
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
MULTIMEDIA PORTFOLIO
Year Ended DJIA Cost of Living
2/28/99 $ 54,030 $ 13,528
2/28/98 48,785 13,314
2/28/97 38,595 13,125
2/29/96 30,144 12,738
2/28/95 21,531 12,410
2/28/94 20,019 12,064
2/28/93 17,124 11,768
2/29/92 16,115 11,398
2/28/91 13,768 11,086
2/28/90 12,079 10,526
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Multimedia
Portfolio on March 1, 1989, assuming the 3.00% sales charge had been
in effect, the net amount invested in fund shares was $9,700. The cost
of the initial investment ($10,000) together with the aggregate cost
of reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $22,598. If distributions had not been reinvested, the amount of
distributions earned from the fund over time would have been smaller,
and cash payments for the period would have amounted to $13 for
dividends and $9,118 for capital gain distributions. The figures in
the table do not include the effect of a stock fund's trading fee or
exchange fee.
NATURAL GAS PORTFOLIO: During the period from April 21, 1993
(commencement of operations) to February 28, 1999, a hypothetical
$10,000 investment in Natural Gas Portfolio would have grown to
$11,126, including the effect of the fund's 3.00% sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
NATURAL GAS PORTFOLIO INDEXES
Year Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value S&P 500
Investment Distributions Gain Distributions
2/28/99 $ 10,272 $ 183 $ 671 $ 11,126 $ 31,830
2/28/98 12,823 103 838 13,764 26,583
2/28/97 12,125 97 436 12,658 19,691
2/29/96 11,019 78 159 11,256 15,608
2/28/95 8,711 20 125 8,856 11,587
2/28/94* 9,196 0 132 9,328 10,793
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
NATURAL GAS PORTFOLIO
Year Ended DJIA Cost of Living**
2/28/99 $ 30,794 $ 11,424
2/28/98 27,804 11,243
2/28/97 21,997 11,083
2/29/96 17,180 10,757
2/28/95 12,271 10,479
2/28/94* 11,410 10,188
</TABLE>
* From April 21, 1993 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Natural
Gas Portfolio on April 21, 1993, assuming the 3.00% sales charge had
been in effect, the net amount invested in fund shares was $9,700. The
cost of the initial investment ($10,000) together with the aggregate
cost of reinvested dividends and capital gain distributions for the
period covered (their cash value at the time they were reinvested)
amounted to $10,932. If distributions had not been reinvested, the
amount of distributions earned from the fund over time would have been
smaller, and cash payments for the period would have amounted to $175
for dividends and $728 for capital gain distributions. The figures in
the table do not include the effect of a stock fund's trading fee or
exchange fee.
NATURAL RESOURCES PORTFOLIO: During the period from March 3, 1997
(commencement of operations) to February 28, 1999, a hypothetical
$10,000 investment in Natural Gas Portfolio would have grown to
$7,851, including the effect of the fund's 3.00% sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
NATURAL RESOURCES PORTFOLIO
Year Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
2/28/99 $ 7,653 $ 0 $ 198 $ 7,851
2/28/98* 10,146 0 262 10,408
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
NATURAL RESOURCES PORTFOLIO INDEXES
Year Ended S&P 500 DJIA Cost of Living**
2/28/99 $ 16,071 $ 13,914 $ 10,307
2/28/98* 13,422 12,563 10,144
</TABLE>
* From March 3, 1997 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Natural
Resources Portfolio on March 3, 1997, assuming the 3.00% sales charge
had been in effect, the net amount invested in fund shares was $9,700.
The cost of the initial investment ($10,000) together with the
aggregate cost of reinvested dividends and capital gain distributions
for the period covered (their cash value at the time they were
reinvested) amounted to $10,252. If distributions had not been
reinvested, the amount of distributions earned from the fund over time
would have been smaller, and cash payments for the period would have
amounted to $0 for dividends and $252 for capital gain distributions.
The figures in the table do not include the effect of a stock fund's
trading fee or exchange fee.
PAPER AND FOREST PRODUCTS PORTFOLIO: During the 10-year period ended
February 28, 1999, a hypothetical $10,000 investment in Paper and
Forest Products Portfolio would have grown to $22,643, including the
effect of the fund's 3.00% sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PAPER AND FOREST PRODUCTS
PORTFOLIO
Year Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
2/28/99 $ 15,052 $ 1,120 $ 6,471 $ 22,643
2/28/98 18,486 1,377 7,421 27,284
2/28/97 17,646 1,266 4,704 23,616
2/29/96 16,953 1,110 3,237 21,300
2/28/95 17,246 1,056 1,207 19,509
2/28/94 15,998 980 0 16,978
2/28/93 13,118 795 0 13,913
2/29/92 12,262 665 0 12,927
2/28/91 9,635 284 0 9,919
2/28/90 9,333 116 0 9,449
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PAPER AND FOREST PRODUCTS INDEXES
PORTFOLIO
Year Ended S&P 500 DJIA Cost of Living
2/28/99 $ 55,921 $ 54,030 $ 13,528
2/28/98 46,704 48,785 13,314
2/28/97 34,595 38,595 13,125
2/29/96 27,421 30,144 12,738
2/28/95 20,357 21,531 12,410
2/28/94 18,962 20,019 12,064
2/28/93 17,502 17,124 11,768
2/29/92 15,815 16,115 11,398
2/28/91 13,633 13,768 11,086
2/28/90 11,891 12,079 10,526
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Paper and
Forest Products Portfolio on March 1, 1989, assuming the 3.00% sales
charge had been in effect, the net amount invested in fund shares was
$9,700. The cost of the initial investment ($10,000) together with the
aggregate cost of reinvested dividends and capital gain distributions
for the period covered (their cash value at the time they were
reinvested) amounted to $18,100. If distributions had not been
reinvested, the amount of distributions earned from the fund over time
would have been smaller, and cash payments for the period would have
amounted to $767 for dividends and $5,874 for capital gain
distributions. The figures in the table do not include the effect of a
stock fund's trading fee or exchange fee.
PRECIOUS METALS AND MINERALS PORTFOLIO: During the 10-year period
ended February 28, 1999, a hypothetical $10,000 investment in Precious
Metals and Minerals Portfolio would have grown to $8,142, including
the effect of the fund's 3.00% sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PRECIOUS METALS AND MINERALS
PORTFOLIO
Year Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
2/28/99 $ 7,473 $ 669 $ 0 $ 8,142
2/28/98 8,387 750 0 9,137
2/28/97 15,990 1,431 0 17,421
2/29/96 17,099 1,486 0 18,585
2/28/95 12,457 1,035 0 13,492
2/28/94 13,559 927 0 14,486
2/28/93 8,044 448 0 8,492
2/29/92 8,933 319 0 9,252
2/28/91 8,909 235 0 9,144
2/28/90 11,625 143 0 11,768
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PRECIOUS METALS AND MINERALS INDEXES
PORTFOLIO
Year Ended S&P 500 DJIA Cost of Living
2/28/99 $ 55,921 $ 54,030 $ 13,528
2/28/98 46,704 48,785 13,314
2/28/97 34,595 38,595 13,125
2/29/96 27,421 30,144 12,738
2/28/95 20,357 21,531 12,410
2/28/94 18,962 20,019 12,064
2/28/93 17,502 17,124 11,768
2/29/92 15,815 16,115 11,398
2/28/91 13,633 13,768 11,086
2/28/90 11,891 12,079 10,526
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Precious
Metals and Minerals Portfolio on March 1, 1989, assuming the 3.00%
sales charge had been in effect, the net amount invested in fund
shares was $9,700. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $10,977. If distributions had
not been reinvested, the amount of distributions earned from the fund
over time would have been smaller, and cash payments for the period
would have amounted to $938 for dividends and $0 for capital gain
distributions. The figures in the table do not include the effect of a
stock fund's trading fee or exchange fee.
REGIONAL BANKS PORTFOLIO: During the 10-year period ended February 28,
1999, a hypothetical $10,000 investment in Regional Banks Portfolio
would have grown to $77,988, including the effect of the fund's 3.00%
sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
REGIONAL BANKS PORTFOLIO
Year Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
2/28/99 $ 39,532 $ 5,603 $ 32,853 $ 77,988
2/28/98 41,063 5,314 29,263 75,640
2/28/97 31,211 3,643 20,502 55,356
2/29/96 23,175 2,307 13,140 38,622
2/28/95 17,127 1,411 8,865 27,403
2/28/94 17,108 1,002 7,313 25,423
2/28/93 19,856 961 3,063 23,880
2/29/92 15,016 621 1,553 17,190
2/28/91 9,614 274 556 10,444
2/28/90 10,099 99 584 10,782
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
REGIONAL BANKS PORTFOLIO INDEXES
Year Ended S&P 500 DJIA Cost of Living
2/28/99 $ 55,921 $ 54,030 $ 13,528
2/28/98 46,704 48,785 13,314
2/28/97 34,595 38,595 13,125
2/29/96 27,421 30,144 12,738
2/28/95 20,357 21,531 12,410
2/28/94 18,962 20,019 12,064
2/28/93 17,502 17,124 11,768
2/29/92 15,815 16,115 11,398
2/28/91 13,633 13,768 11,086
2/28/90 11,891 12,079 10,526
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Regional
Banks Portfolio on March 1, 1989, assuming the 3.00% sales charge had
been in effect, the net amount invested in fund shares was $9,700. The
cost of the initial investment ($10,000) together with the aggregate
cost of reinvested dividends and capital gain distributions for the
period covered (their cash value at the time they were reinvested)
amounted to $31,028. If distributions had not been reinvested, the
amount of distributions earned from the fund over time would have been
smaller, and cash payments for the period would have amounted to
$1,911 for dividends and $12,296 for capital gain distributions. The
figures in the table do not include the effect of a stock fund's
trading fee or exchange fee.
RETAILING PORTFOLIO: During the 10-year period ended February 28,
1999, a hypothetical $10,000 investment in Retailing Portfolio would
have grown to $73,932, including the effect of the fund's 3.00% sales
charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
RETAILING PORTFOLIO INDEXES
Year Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value S&P 500
Investment Distributions Gain Distributions
2/28/99 $ 49,640 $ 604 $ 23,688 $ 73,932 $ 55,921
2/28/98 36,800 447 16,852 54,099 46,704
2/28/97 24,452 298 10,700 35,450 34,595
2/29/96 20,496 249 8,897 29,642 27,421
2/28/95 17,584 213 7,633 25,430 20,357
2/28/94 18,319 223 7,952 26,494 18,962
2/28/93 17,554 214 5,149 22,917 17,502
2/29/92 17,311 211 3,914 21,436 15,815
2/28/91 11,443 139 2,234 13,816 13,633
2/28/90 9,612 117 1,849 11,578 11,891
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
RETAILING PORTFOLIO
Year Ended DJIA Cost of Living
2/28/99 $ 54,030 $ 13,528
2/28/98 48,785 13,314
2/28/97 38,595 13,125
2/29/96 30,144 12,738
2/28/95 21,531 12,410
2/28/94 20,019 12,064
2/28/93 17,124 11,768
2/29/92 16,115 11,398
2/28/91 13,768 11,086
2/28/90 12,079 10,526
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Retailing
Portfolio on March 1, 1989, assuming the 3.00% sales charge had been
in effect, the net amount invested in fund shares was $9,700. The cost
of the initial investment ($10,000) together with the aggregate cost
of reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $17,555. If distributions had not been reinvested, the amount of
distributions earned from the fund over time would have been smaller,
and cash payments for the period would have amounted to $118 for
dividends and $6,016 for capital gain distributions. The figures in
the table do not include the effect of a stock fund's trading fee or
exchange fee.
SOFTWARE AND COMPUTER SERVICES PORTFOLIO: During the 10-year period
ended February 28, 1999, a hypothetical $10,000 investment in Software
and Computer Services would have grown to $87,623, including the
effect of the fund's 3.00% sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SOFTWARE AND COMPUTER INDEXES
SERVICES PORTFOLIO
Year Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value S&P 500
Investment Distributions Gain Distributions
2/28/99 $ 37,620 $ 0 $ 50,003 $ 87,623 $ 55,921
2/28/98 29,166 0 36,931 66,097 46,704
2/28/97 25,423 0 23,356 48,779 34,595
2/29/96 23,855 0 18,143 41,998 27,421
2/28/95 19,156 0 10,806 29,962 20,357
2/28/94 19,038 0 10,344 29,382 18,962
2/28/93 18,201 0 3,859 22,060 17,502
2/29/92 15,361 0 3,257 18,618 15,815
2/28/91 12,422 0 717 13,139 13,633
2/28/90 9,904 0 573 10,477 11,891
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SOFTWARE AND COMPUTER
SERVICES PORTFOLIO
Year Ended DJIA Cost of Living
2/28/99 $ 54,030 $ 13,528
2/28/98 48,785 13,314
2/28/97 38,595 13,125
2/29/96 30,144 12,738
2/28/95 21,531 12,410
2/28/94 20,019 12,064
2/28/93 17,124 11,768
2/29/92 16,115 11,398
2/28/91 13,768 11,086
2/28/90 12,079 10,526
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Software
and Computer Services Portfolio on March 1, 1989, assuming the 3.00%
sales charge had been in effect, the net amount invested in fund
shares was $9,700. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $37,603. If distributions had
not been reinvested, the amount of distributions earned from the fund
over time would have been smaller, and cash payments for the period
would have amounted to $0 for dividends and $17,140 for capital gain
distributions. The figures in the table do not include the effect of a
stock fund's trading fee or exchange fee.
TECHNOLOGY PORTFOLIO: During the 10-year period ended February 28,
1999, a hypothetical $10,000 investment in Technology Portfolio would
have grown to $98,930, including the effect of the fund's 3.00% sales
charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
TECHNOLOGY PORTFOLIO INDEXES
Year Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value S&P 500
Investment Distributions Gain Distributions
2/28/99 $ 45,971 $ 477 $ 52,482 $ 98,930 $ 55,921
2/28/98 29,534 306 33,717 63,557 46,704
2/28/97 32,074 333 18,470 50,877 34,595
2/29/96 30,390 315 14,461 45,166 27,421
2/28/95 23,374 243 6,352 29,969 20,357
2/28/94 23,252 241 5,155 28,648 18,962
2/28/93 19,244 111 1,770 21,125 17,502
2/29/92 19,878 114 0 19,992 15,815
2/28/91 14,647 0 0 14,647 13,633
2/28/90 11,168 0 0 11,168 11,891
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TECHNOLOGY PORTFOLIO
Year Ended DJIA Cost of Living
2/28/99 $ 54,030 $ 13,528
2/28/98 48,785 13,314
2/28/97 38,595 13,125
2/29/96 30,144 12,738
2/28/95 21,531 12,410
2/28/94 20,019 12,064
2/28/93 17,124 11,768
2/29/92 16,115 11,398
2/28/91 13,768 11,086
2/28/90 12,079 10,526
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Technology
Portfolio on March 1, 1989, assuming the 3.00% sales charge had been
in effect, the net amount invested in fund shares was $9,700. The cost
of the initial investment ($10,000) together with the aggregate cost
of reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $38,943. If distributions had not been reinvested, the amount of
distributions earned from the fund over time would have been smaller,
and cash payments for the period would have amounted to $161 for
dividends and $19,661 for capital gain distributions. The figures in
the table do not include the effect of a stock fund's trading fee or
exchange fee.
TELECOMMUNICATIONS PORTFOLIO: During the 10-year period ended February
28, 1999, a hypothetical $10,000 investment in Telecommunications
Portfolio would have grown to $57,202, including the effect of the
fund's 3.00% sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
TELECOMMUNICATIONS PORTFOLIO
Year Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
2/28/99 $ 29,510 $ 2,602 $ 25,090 $ 57,202
2/28/98 25,464 2,245 19,098 46,807
2/28/97 19,944 1,758 10,243 31,945
2/29/96 21,409 1,679 6,532 29,620
2/28/95 18,293 1,222 4,031 23,546
2/28/94 17,701 862 3,243 21,806
2/28/93 16,313 692 884 17,889
2/29/92 13,927 503 526 14,956
2/28/91 11,351 284 429 12,064
2/28/90 11,489 54 434 11,977
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
TELECOMMUNICATIONS PORTFOLIO INDEXES
Year Ended S&P 500 DJIA Cost of Living
2/28/99 $ 55,921 $ 54,030 $ 13,528
2/28/98 46,704 48,785 13,314
2/28/97 34,595 38,595 13,125
2/29/96 27,421 30,144 12,738
2/28/95 20,357 21,531 12,410
2/28/94 18,962 20,019 12,064
2/28/93 17,502 17,124 11,768
2/29/92 15,815 16,115 11,398
2/28/91 13,633 13,768 11,086
2/28/90 11,891 12,079 10,526
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Telecommunications Portfolio on March 1, 1989, assuming the 3.00%
sales charge had been in effect, the net amount invested in fund
shares was $9,700. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $28,339. If distributions had
not been reinvested, the amount of distributions earned from the fund
over time would have been smaller, and cash payments for the period
would have amounted to $1,145 for dividends and $11,799 for capital
gain distributions. The figures in the table do not include the effect
of a stock fund's trading fee or exchange fee.
TRANSPORTATION PORTFOLIO: During the 10-year period ended February 28,
1999, a hypothetical $10,000 investment in Transportation Portfolio
would have grown to $39,841, including the effect of the fund's 3.00%
sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
TRANSPORTATION PORTFOLIO
Year Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
2/28/99 $ 19,035 $ 77 $ 20,729 $ 39,841
2/28/98 21,544 86 18,913 40,543
2/28/97 16,899 68 11,757 28,724
2/29/96 16,663 67 10,712 27,442
2/28/95 15,607 62 8,626 24,295
2/28/94 16,473 67 6,402 22,942
2/28/93 14,200 58 3,740 17,998
2/29/92 11,760 47 2,790 14,597
2/28/91 8,575 0 2,034 10,609
2/28/90 9,381 0 1,762 11,143
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
TRANSPORTATION PORTFOLIO INDEXES
Year Ended S&P 500 DJIA Cost of Living
2/28/99 $ 55,921 $ 54,030 $ 13,528
2/28/98 46,704 48,785 13,314
2/28/97 34,595 38,595 13,125
2/29/96 27,421 30,144 12,738
2/28/95 20,357 21,531 12,410
2/28/94 18,962 20,019 12,064
2/28/93 17,502 17,124 11,768
2/29/92 15,815 16,115 11,398
2/28/91 13,633 13,768 11,086
2/28/90 11,891 12,079 10,526
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Transportation Portfolio on March 1, 1989, assuming the 3.00% sales
charge had been in effect, the net amount invested in fund shares was
$9,700. The cost of the initial investment ($10,000) together with the
aggregate cost of reinvested dividends and capital gain distributions
for the period covered (their cash value at the time they were
reinvested) amounted to $26,765. If distributions had not been
reinvested, the amount of distributions earned from the fund over time
would have been smaller, and cash payments for the period would have
amounted to $30 for dividends and $11,175 for capital gain
distributions. The figures in the table do not include the effect of a
stock fund's trading fee or exchange fee.
UTILITIES GROWTH PORTFOLIO: During the 10-year period ended February
28, 1999, a hypothetical $10,000 investment in Utilities Growth
Portfolio would have grown to $51,277, including the effect of the
fund's 3.00% sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
UTILITIES GROWTH PORTFOLIO
Year Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
2/28/99 $ 22,164 $ 6,947 $ 22,166 $ 51,277
2/28/98 19,256 5,860 13,681 38,797
2/28/97 16,546 4,671 7,269 28,486
2/29/96 15,488 3,945 4,680 24,113
2/28/95 12,554 2,818 3,793 19,165
2/28/94 13,177 2,341 3,606 19,124
2/28/93 14,933 2,097 1,622 18,652
2/29/92 13,162 1,292 720 15,174
2/28/91 12,716 586 231 13,533
2/28/90 11,971 327 0 12,298
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
UTILITIES GROWTH PORTFOLIO INDEXES
Year Ended S&P 500 DJIA Cost of Living
2/28/99 $ 55,921 $ 54,030 $ 13,528
2/28/98 46,704 48,785 13,314
2/28/97 34,595 38,595 13,125
2/29/96 27,421 30,144 12,738
2/28/95 20,357 21,531 12,410
2/28/94 18,962 20,019 12,064
2/28/93 17,502 17,124 11,768
2/29/92 15,815 16,115 11,398
2/28/91 13,633 13,768 11,086
2/28/90 11,891 12,079 10,526
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Utilities
Growth Portfolio March 1, 1989, assuming the 3.00% sales charge had
been in effect, the net amount invested in fund shares was $9,700. The
cost of the initial investment ($10,000) together with the aggregate
cost of reinvested dividends and capital gain distributions for the
period covered (their cash value at the time they were reinvested)
amounted to $30,721. If distributions had not been reinvested, the
amount of distributions earned from the fund over time would have been
smaller, and cash payments for the period would have amounted to
$3,232 for dividends and $10,024 for capital gain distributions. The
figures in the table do not include the effect of a stock fund's
trading fee or exchange fee.
PERFORMANCE COMPARISONS. A fund's performance may be compared to the
performance of other mutual funds in general, or to the performance of
particular types of mutual funds. These comparisons may be expressed
as mutual fund rankings prepared by Lipper Analytical Services, Inc.
(Lipper), an independent service located in Summit, New Jersey that
monitors the performance of mutual funds. Generally, Lipper rankings
are based on return, assume reinvestment of distributions, do not take
sales charges or trading fees into consideration, and are prepared
without regard to tax consequences. Lipper may also rank based on
yield. In addition to the mutual fund rankings, a fund's performance
may be compared to stock, bond, and money market mutual fund
performance indexes prepared by Lipper or other organizations. When
comparing these indexes, it is important to remember the risk and
return characteristics of each type of investment. For example, while
stock mutual funds may offer higher potential returns, they also carry
the highest degree of share price volatility. Likewise, money market
funds may offer greater stability of principal, but generally do not
offer the higher potential returns available from stock mutual funds.
From time to time, a fund's performance may also be compared to other
mutual funds tracked by financial or business publications and
periodicals. For example, a fund may quote Morningstar, Inc. in its
advertising materials. Morningstar, Inc. is a mutual fund rating
service that rates mutual funds on the basis of risk-adjusted
performance. Rankings that compare the performance of Fidelity funds
to one another in appropriate categories over specific periods of time
may also be quoted in advertising.
A fund's performance may also be compared to that of the benchmark
index representing the universe of securities in which the fund may
invest. The return of the index reflects reinvestment of all dividends
and capital gains paid by securities included in the index. Unlike a
fund's returns, however, the index's returns do not reflect brokerage
commissions, transaction fees, or other costs of investing directly in
the securities included in the index.
Each stock fund may compare its performance to that of the Standard &
Poor's 500 Index, a market capitalization-weighted index of common
stocks.
Each of Consumer Industries, Food and Agriculture, Leisure, Multimedia
and Retailing may compare its performance to that of 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. Issues in the index include providers of
consumer services and products, including producers of
beverages-alcoholic and non-alcoholic, food, personal care, household
products and tobacco companies.
Each of Air Transportation, Automotive, Chemicals, Construction and
Housing, Cyclical Industries, Defense and Aerospace, Environmental
Services, Industrial Equipment, Industrial Materials, Paper and Forest
Products and Transportation may compare its performance to that of 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. Issues in
the index include providers of consumer and commercial goods and
services where performance is influenced by the cyclicality of
economy, such as: manufacturers of automobiles and companies involved
with construction of residential and commercial properties, producers
of chemicals, electrical equipment and components, and providers of
environmental services.
Each of Brokerage and Investment Management, Financial Services, Home
Finance, Insurance and Regional Banks may compare its performance to
that of 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. Issues in
the index include financial institutions providing banking services,
brokerage firms and asset managers, insurance companies, and real
estate holding and development companies.
Each of Biotechnology, Health Care, Medical Delivery and Medical
Equipment and Systems may compare its performance to that of 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. Issues in the index include providers of
health care related services including long-term care and hospital
facilities, health care management organizations and continuing care
services.
Each of Energy, Energy Service, Gold, Natural Resources and Precious
Metals and Minerals may compare its performance to that of 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. Issues in the index include extractive
industries including gold & precious metals mining along with other
mineral mining, energy companies providing oil & gas services, and
owners and operators of timber tracts and forestry services.
Each of Business Services and Outsourcing, Computers, Developing
Communications, Electronics, Software and Computer services and
Technology may compare its performance to that of the Goldman Sachs
Technology Index, a market capitalization-weighted index of 190 stocks
designed to measure the performance of companies in the technology
sector. Issues in the index include producers of sophisticated
devices, services and software related to the fields of computers,
electronics, networking and Internet services.
Each of Natural Gas, Telecommunications and Utilities Growth may
compare its performance to that of the Goldman Sachs Utilities Index,
a market capitalization-weighted index of 136 stocks designed to
measure the performance of companies in the utilities sector. Issues
in the index include generators and distributors of electricity,
distributors of natural gas and water, and providers of
telecommunications services.
A fund may be compared in advertising to Certificates of Deposit (CDs)
or other investments issued by banks or other depository institutions.
Mutual funds differ from bank investments in several respects. For
example, a fund may offer greater liquidity or higher potential
returns than CDs, a fund does not guarantee your principal or your
return, and fund shares are not FDIC insured.
Fidelity may provide information designed to help individuals
understand their investment goals and explore various financial
strategies. Such information may include information about current
economic, market, and political conditions; materials that describe
general principles of investing, such as asset allocation,
diversification, risk tolerance, and goal setting; questionnaires
designed to help create a personal financial profile; worksheets used
to project savings needs based on assumed rates of inflation and
hypothetical rates of return; and action plans offering investment
alternatives. Materials may also include discussions of Fidelity's
asset allocation funds and other Fidelity funds, products, and
services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides
historical returns of the capital markets in the United States,
including common stocks, small capitalization stocks, long-term
corporate bonds, intermediate-term government bonds, long-term
government bonds, Treasury bills, the U.S. rate of inflation (based on
the CPI), and combinations of various capital markets. The performance
of these capital markets is based on the returns of different indexes.
Fidelity funds may use the performance of these capital markets in
order to demonstrate general risk-versus-reward investment scenarios.
Performance comparisons may also include the value of a hypothetical
investment in any of these capital markets. The risks associated with
the security types in any capital market may or may not correspond
directly to those of the funds. Ibbotson calculates returns in the
same method as the funds. The funds may also compare performance to
that of other compilations or indexes that may be developed and made
available in the future.
The money market fund may compare its performance or the performance
of securities in which it may invest to averages published by IBC
Financial Data, Inc. of Ashland, Massachusetts. These averages assume
reinvestment of distributions. IBC's MONEY FUND REPORT
AVERAGES(trademark)/ALL TAXABLE, which is reported in IBC's MONEY FUND
REPORT(trademark), covers over 916 taxable money market funds.
In advertising materials, Fidelity may reference or discuss its
products and services, which may include other Fidelity funds;
retirement investing; brokerage products and services; model
portfolios or allocations; saving for college or other goals; and
charitable giving. In addition, Fidelity may quote or reprint
financial or business publications and periodicals as they relate to
current economic and political conditions, fund management, portfolio
composition, investment philosophy, investment techniques, the
desirability of owning a particular mutual fund, and Fidelity services
and products. Fidelity may also reprint, and use as advertising and
sales literature, articles from Fidelity Focus(registered trademark),
a quarterly magazine provided free of charge to Fidelity fund
shareholders.
A fund may present its fund number, Quotron(trademark) number, and
CUSIP number, and discuss or quote its current portfolio manager.
VOLATILITY. A stock fund may quote various measures of volatility and
benchmark correlation in advertising. In addition, the fund may
compare these measures to those of other funds. Measures of volatility
seek to compare a fund's historical share price fluctuations or
returns to those of a benchmark. Measures of benchmark correlation
indicate how valid a comparative benchmark may be. All measures of
volatility and correlation are calculated using averages of historical
data.
MOMENTUM INDICATORS indicate price movements over specific periods of
time for a stock fund. Each point on the momentum indicator represents
a fund's percentage change in price movements over that period.
A stock fund may advertise examples of the effects of periodic
investment plans, including the principle of dollar cost averaging. In
such a program, an investor invests a fixed dollar amount in a fund at
periodic intervals, thereby purchasing fewer shares when prices are
high and more shares when prices are low. While such a strategy does
not assure a profit or guard against loss in a declining market, the
investor's average cost per share can be lower than if fixed numbers
of shares are purchased at the same intervals. In evaluating such a
plan, investors should consider their ability to continue purchasing
shares during periods of low price levels.
A fund may be available for purchase through retirement plans or other
programs offering deferral of, or exemption from, income taxes, which
may produce superior after-tax returns over time. For example, a
$1,000 investment earning a taxable return of 10% annually would have
an after-tax value of $1,949 after ten years, assuming tax was
deducted from the return each year at a 31% rate. An equivalent
tax-deferred investment would have an after-tax value of $2,100 after
ten years, assuming tax was deducted at a 31% rate from the
tax-deferred earnings at the end of the ten-year period.
As of February 28, 1999, FMR advised over $34 billion in municipal
fund assets, $127 billion in taxable fixed-income fund assets, $131
billion in money market fund assets, $501 billion in equity fund
assets, $13 billion in international fund assets, and $32 billion in
Spartan fund assets. The funds may reference the growth and variety of
money market mutual funds and the adviser's innovation and
participation in the industry. The equity funds under management
figure represents the largest amount of equity fund assets under
management by a mutual fund investment adviser in the United States,
making FMR America's leading equity (stock) fund manager. FMR, its
subsidiaries, and affiliates maintain a worldwide information and
communications network for the purpose of researching and managing
investments abroad.
In addition to performance rankings, the money market fund may compare
its total expense ratio to the average total expense ratio of similar
funds tracked by Lipper. The fund's total expense ratio is a
significant factor in comparing bond and money market investments
because of its effect on yield.
ADDITIONAL PURCHASE, EXCHANGE AND REDEMPTION INFORMATION
Pursuant to Rule 22d-1 under the 1940 Act, FDC exercises its right to
waive each fund's front-end sales charge on shares acquired through
reinvestment of dividends and capital gain distributions or in
connection with a fund's merger with or acquisition of any investment
company or trust. In addition, FDC has chosen to waive each fund's
front-end sales charge in certain instances due to sales efficiencies
and competitive considerations. The sales charge will not apply:
1. to shares purchased in connection with an employee benefit plan
(including the Fidelity-sponsored 403(b) and corporate IRA programs
but otherwise as defined in the Employee Retirement Income Security
Act) maintained by a U.S. employer and having more than 200 eligible
employees, or a minimum of $3,000,000 in plan assets invested in
Fidelity mutual funds, or as part of an employee benefit plan
maintained by a U.S. employer that is a member of a parent-subsidiary
group of corporations (within the meaning of Section 1563(a)(1) of the
Internal Revenue Code, with "50%" substituted for "80%") any member of
which maintains an employee benefit plan having more than 200 eligible
employees, or a minimum of $3,000,000 in plan assets invested in
Fidelity mutual funds, or as part of an employee benefit plan
maintained by a non-U.S. employer having 200 or more eligible
employees, or a minimum of $3,000,000 in assets invested in Fidelity
mutual funds, the assets of which are held in a bona fide trust for
the exclusive benefit of employees participating therein;
2. to shares purchased by an insurance company separate account used
to fund annuity contracts purchased by employee benefit plans
(including 403(b) programs, but otherwise as defined in the Employee
Retirement Income Security Act), which, in the aggregate, have either
more than 200 eligible employees or a minimum of $3,000,000 in assets
invested in Fidelity funds;
3. to shares in a Fidelity account purchased (including purchases by
exchange) with the proceeds of a distribution from an employee benefit
plan provided that: (i) at the time of the distribution, the employer,
or an affiliate (as described in waiver (1) above) of such employer,
maintained at least one employee benefit plan that qualified for
waiver (1) above and that had at least some portion of its assets
invested in one or more mutual funds advised by FMR, or in one or more
investment accounts or pools advised by Fidelity Management Trust
Company; and (ii) either (a) the distribution is transferred from the
plan to a Fidelity IRA account within 60 days from the date of the
distribution or (b) the distribution is transferred directly from the
plan into another Fidelity account;
4. to shares purchased by a charitable organization (as defined for
purposes of Section 501(c)(3) of the Internal Revenue Code) investing
$100,000 or more;
5. to shares purchased for a charitable remainder trust or life income
pool established for the benefit of a charitable organization (as
defined for purposes of Section 501(c)(3) of the Internal Revenue
Code);
6. to shares purchased by an investor participating in the Fidelity
Trust Portfolios program (these investors must make initial
investments of $100,000 or more in the Trust Portfolios funds and
must, during the initial six-month period, reach and maintain an
aggregate balance of at least $500,000 in all accounts and subaccounts
purchased through the Trust Portfolios program);
7. to shares purchased by a mutual fund or a qualified state tuition
program for which FMR or an affiliate serves as investment manager;
8. to shares purchased through Portfolio Advisory ServicesSM or
Fidelity Charitable Advisory Services;
9. to shares purchased by a current or former Trustee or officer of a
Fidelity fund or a current or retired officer, director, or regular
employee of FMR Corp. or Fidelity International Limited or their
direct or indirect subsidiaries (a Fidelity Trustee or employee), the
spouse of a Fidelity Trustee or employee, a Fidelity Trustee or
employee acting as custodian for a minor child, or a person acting as
trustee of a trust for the sole benefit of the minor child of a
Fidelity Trustee or employee; or
10. to shares purchased by a bank trust officer, registered
representative, or other employee of a qualified recipient. Qualified
recipients are securities dealers or other entities, including banks
and other financial institutions, who have sold the fund's shares
under special arrangements in connection with FDC's sales activities.
A fund's sales charge may be reduced to reflect sales charges
previously paid, or that would have been paid absent a reduction for
some purchases made directly with Fidelity as noted in the prospectus,
in connection with investments in other Fidelity funds. This includes
reductions for investments in the following prototype or
prototype-like retirement plans sponsored by FMR or FMR Corp.: The
Fidelity Traditional IRA, The Fidelity Roth IRA, The Fidelity Rollover
IRA, The Fidelity SEP-IRA and SARSEP, The Fidelity SIMPLE IRA, The
Fidelity Retirement Plan, Fidelity Defined Benefit Plan, The Fidelity
Group IRA, The Fidelity 403(b) Program, The Fidelity Investments
401(a) Prototype Plan for Tax-Exempt Employers, and The CORPORATEplan
for Retirement (Profit Sharing and Money Purchase Plan).
On October 12, 1990, the funds changed their sales charge policy from
a 2% sales charge upon purchase and a 1% deferred sales charge upon
redemption, to a 3% sales charge upon purchase. If you purchased your
shares prior to that date, when you redeem those shares a trading fee
will be deducted and a deferred sales charge of 1% of this net
redemption amount will be deducted. The deferred sales charge does not
apply to exchanges between Select funds.
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are
valued in computing each fund's NAV. Shareholders receiving securities
or other property on redemption may realize a gain or loss for tax
purposes, and will incur any costs of sale, as well as the associated
inconveniences.
DISTRIBUTIONS AND TAXES
DIVIDENDS. A portion of each fund's income may qualify for the
dividends-received deduction available to corporate shareholders to
the extent that the fund's income is derived from qualifying
dividends. Because each fund may earn other types of income, such as
interest, short-term capital gains, and non-qualifying dividends, the
percentage of dividends from the fund that qualifies for the deduction
generally will be less than 100%. A portion of each fund's dividends
derived from certain U.S. Government securities and securities of
certain other investment companies may be exempt from state and local
taxation.
CAPITAL GAINS DISTRIBUTIONS. Each fund's long-term capital gains
distributions are federally taxable to shareholders generally as
capital gains. The money market fund may distribute any net realized
capital gains once a year or more often, as necessary.
As of February 28, 1999, Automotive had a capital loss carryforward
aggregating approximately $1,009,000. This loss carryforward, all of
which will expire on February 28, 2007, is available to offset future
capital gains.
As of February 28, 1999, Electronics had a capital loss carryforward
aggregating approximately $102,009,000. This loss carryforward, all of
which will expire on February 28, 2007, is available to offset future
capital gains.
As of February 28, 1999, Energy had a capital loss carryforward
aggregating approximately $3,040,000. This loss carryforward, all of
which will expire on February 28, 2007, is available to offset future
capital gains.
As of February 28, 1999, Energy Services had a capital loss
carryforward aggregating approximately $85,150,000. This loss
carryforward, all of which will expire on February 28, 2007, is
available to offset future capital gains.
As of February 28, 1999, Gold had a capital loss carryforward
aggregating approximately $52,460,000. This loss carryforward, of
which $35,849,000 and $16,611,000, will expire on February 28, 2006
and 2007, respectively, is available to offset future capital gains.
As of February 28, 1999, Industrial Materials had a capital loss
carryforward aggregating approximately $840,000. This loss
carryforward, all of which will expire on February 28, 2007, is
available to offset future capital gains.
As of February 28, 1999, Medical Delivery had a capital loss
carryforward aggregating approximately $10,988,000. This loss
carryforward, all of which will expire on February 28, 2007, is
available to offset future capital gains.
As of February 28, 1999, Natural Gas had a capital loss carryforward
aggregating approximately $3,229,000. This loss carryforward, all of
which will expire on February 28, 2007, is available to offset future
capital gains.
As of February 28, 1999, Natural Resources had a capital loss
carryforward aggregating approximately $563,000. This loss
carryforward, all of which will expire on February 28, 2007, is
available to offset future capital gains.
As of February 28, 1999, Paper and Forest Products had a capital loss
carryforward aggregating approximately $2,903,000. This loss
carryforward, all of which will expire on February 28, 2007, is
available to offset future capital gains.
As of February 28, 1999, Precious Metals and Minerals had a capital
loss carryforward aggregating approximately $77,793,000. This loss
carryforward, of which $1,376,000, $55,694,000, and $20,723,000, will
expire on February 28, 2001, 2006, and 2007, respectively, is
available to offset future capital gains.
RETURNS OF CAPITAL. If a fund's distributions exceed its taxable
income and capital gains realized during a taxable year, all or a
portion of the distributions made in the same taxable year may be
recharacterized as a return of capital to shareholders. A return of
capital distribution will generally not be taxable, but will reduce
each shareholder's cost basis in the fund and result in a higher
reported capital gain or lower reported capital loss when those shares
on which the distribution was received are sold.
FOREIGN TAX CREDIT OR DEDUCTION. Foreign governments may withhold
taxes on dividends and interest earned by a fund with respect to
foreign securities. Foreign governments may also impose taxes on other
payments or gains with respect to foreign securities. If, at the close
of its fiscal year, more than 50% of a fund's total assets is invested
in securities of foreign issuers, the fund may elect to pass through
eligible foreign taxes paid and thereby allow shareholders to take a
deduction or, if they meet certain holding period requirements with
respect to fund shares, a credit on their individual tax returns.
TAX STATUS OF THE FUNDS. Each fund intends to qualify each year as a
"regulated investment company" under Subchapter M of the Internal
Revenue Code so that it will not be liable for federal tax on income
and capital gains distributed to shareholders. In order to qualify as
a regulated investment company, and avoid being subject to federal
income or excise taxes at the fund level, each fund intends to
distribute substantially all of its net investment income and net
realized capital gains within each calendar year as well as on a
fiscal year basis, and intends to comply with other tax rules
applicable to regulated investment companies.
OTHER TAX INFORMATION. The information above is only a summary of some
of the tax consequences generally affecting each fund and its
shareholders, and no attempt has been made to discuss individual tax
consequences. It is up to you or your tax preparer to determine
whether the sale of shares of a fund resulted in a capital gain or
loss or other tax consequence to you. In addition to federal income
taxes, shareholders may be subject to state and local taxes on fund
distributions, and shares may be subject to state and local personal
property taxes. Investors should consult their tax advisers to
determine whether a fund is suitable to their particular tax
situation.
TRUSTEES AND OFFICERS
The Trustees, Members of the Advisory Board, and executive officers of
the trust are listed below. The Board of Trustees governs each fund
and is responsible for protecting the interests of shareholders. The
Trustees are experienced executives who meet periodically throughout
the year to oversee each fund's activities, review contractual
arrangements with companies that provide services to each fund, and
review each fund's performance. Except as indicated, each individual
has held the office shown or other offices in the same company for the
last five years. All persons named as Trustees and Members of the
Advisory Board also serve in similar capacities for other funds
advised by FMR or its affiliates. The business address of each
Trustee, Member of the Advisory Board, and officer who is an
"interested person" (as defined in the 1940 Act) is 82 Devonshire
Street, Boston, Massachusetts 02109, which is also the address of FMR.
The business address of all the other Trustees is Fidelity
Investments, P.O. Box 9235, Boston, Massachusetts 02205-9235. Those
Trustees who are "interested persons" by virtue of their affiliation
with either the trust or FMR are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d (68), Trustee and President, is Chairman, Chief
Executive Officer and a Director of FMR Corp.; a Director and Chairman
of the Board and of the Executive Committee of FMR; Chairman and a
Director of Fidelity Investments Money Management, Inc. (1998),
Fidelity Management & Research (U.K.) Inc., and Fidelity Management &
Research (Far East) Inc.; and a Director of FDC. Abigail Johnson,
Member of the Advisory Board of Fidelity Select Portfolios, is Mr.
Johnson's daughter.
ABIGAIL P. JOHNSON (37), Member of the Advisory Board of Fidelity
Select Portfolios (1999), is Vice President of certain Equity Funds
(1997), and is a Director of FMR Corp. (1994). Before assuming her
current responsibilities, Ms. Johnson managed a number of Fidelity
funds. Edward C. Johnson 3d, Trustee and President of the Funds, is
Ms. Johnson's father.
J. GARY BURKHEAD (57), Member of the Advisory Board (1997), is Vice
Chairman and a Member of the Board of Directors of FMR Corp. (1997)
and President of Fidelity Personal Investments and Brokerage Group
(1997). Previously, Mr. Burkhead served as President of Fidelity
Management & Research Company.
RALPH F. COX (65), Trustee, is President of RABAR Enterprises
(management consulting-engineering industry, 1994). Prior to February
1994, he was President of Greenhill Petroleum Corporation (petroleum
exploration and production). Until March 1990, Mr. Cox was President
and Chief Operating Officer of Union Pacific Resources Company
(exploration and production). He is a Director of USA Waste Services,
Inc. (non-hazardous waste, 1993), CH2M Hill Companies (engineering),
Rio Grande, Inc. (oil and gas production), and Daniel Industries
(petroleum measurement equipment manufacturer). In addition, he is a
member of advisory boards of Texas A&M University and the University
of Texas at Austin.
PHYLLIS BURKE DAVIS (66), Trustee. Prior to her retirement in
September 1991, Mrs. Davis was the Senior Vice President of Corporate
Affairs of Avon Products, Inc. She is currently a Director of
BellSouth Corporation (telecommunications), Eaton Corporation
(manufacturing, 1991), and the TJX Companies, Inc. (retail stores),
and previously served as a Director of Hallmark Cards, Inc.
(1985-1991) and Nabisco Brands, Inc. In addition, she is a member of
the President's Advisory Council of The University of Vermont School
of Business Administration.
ROBERT M. GATES (55), Trustee (1997), is a consultant, author, and
lecturer (1993). Mr. Gates was Director of the Central Intelligence
Agency (CIA) from 1991-1993. From 1989 to 1991, Mr. Gates served as
Assistant to the President of the United States and Deputy National
Security Advisor. Mr. Gates is a Director of LucasVarity PLC
(automotive components and diesel engines), Charles Stark Draper
Laboratory (non-profit), NACCO Industries, Inc. (mining and
manufacturing), and TRW Inc. (original equipment and replacement
products). Mr. Gates also is a Trustee of the Forum for International
Policy and of the Endowment Association of the College of William and
Mary. In addition, he is a member of the National Executive Board of
the Boy Scouts of America.
E. BRADLEY JONES (71), Trustee. Prior to his retirement in 1984, Mr.
Jones was Chairman and Chief Executive Officer of LTV Steel Company.
He is a Director of TRW Inc. (original equipment and replacement
products), Consolidated Rail Corporation, Birmingham Steel
Corporation, and RPM, Inc. (manufacturer of chemical products), and he
previously served as a Director of NACCO Industries, Inc. (mining and
manufacturing, 1985-1995), Hyster-Yale Materials Handling, Inc.
(1985-1995), and Cleveland-Cliffs Inc (mining), and as a Trustee of
First Union Real Estate Investments. In addition, he serves as a
Trustee of the Cleveland Clinic Foundation, where he has also been a
member of the Executive Committee as well as Chairman of the Board and
President, a Trustee and member of the Executive Committee of
University School (Cleveland), and a Trustee of Cleveland Clinic
Florida.
DONALD J. KIRK (66), Trustee, is Executive-in-Residence (1995) at
Columbia University Graduate School of Business and a financial
consultant. From 1987 to January 1995, Mr. Kirk was a Professor at
Columbia University Graduate School of Business. Prior to 1987, he was
Chairman of the Financial Accounting Standards Board. Mr. Kirk
previously served as Director of General Re Corporation (reinsurance,
1987-1998), and Valuation Research Corp. (appraisals and valuations,
1993-1995). He serves as Chairman of the Board of Directors of
National Arts Stabilization Inc., Chairman of the Board of Trustees of
the Greenwich Hospital Association, Director of the Yale-New Haven
Health Services Corp. (1998), a Member of the Public Oversight Board
of the American Institute of Certified Public Accountants' SEC
Practice Section (1995), and as a Public Governor of the National
Association of Securities Dealers, Inc. (1996).
*PETER S. LYNCH (56), Trustee, is Vice Chairman and Director of FMR.
Prior to May 31, 1990, he was a Director of FMR and Executive Vice
President of FMR (a position he held until March 31, 1991); Vice
President of Fidelity Magellan Fund and FMR Growth Group Leader; and
Managing Director of FMR Corp. Mr. Lynch was also Vice President of
Fidelity Investments Corporate Services (1991-1992). In addition, he
serves as a Trustee of Boston College, Massachusetts Eye & Ear
Infirmary, Historic Deerfield (1989) and Society for the Preservation
of New England Antiquities, and as an Overseer of the Museum of Fine
Arts of Boston.
WILLIAM O. McCOY (65), Trustee (1997), is the Vice President of
Finance for the University of North Carolina (16-school system, 1995).
Prior to his retirement in December 1994, Mr. McCoy was Vice Chairman
of the Board of BellSouth Corporation (telecommunications, 1984) and
President of BellSouth Enterprises (1986). He is currently a Director
of Liberty Corporation (holding company, 1984), Weeks Corporation of
Atlanta (real estate, 1994), Carolina Power and Light Company
(electric utility, 1996), and the Kenan Transport Co. (1996).
Previously, he was a Director of First American Corporation (bank
holding company, 1979-1996). In addition, Mr. McCoy serves as a member
of the Board of Visitors for the University of North Carolina at
Chapel Hill (1994) and for the Kenan-Flager Business School
(University of North Carolina at Chapel Hill, 1988).
GERALD C. McDONOUGH (70), Trustee and Chairman of the non-interested
Trustees, is Chairman of G.M. Management Group (strategic advisory
services). Mr. McDonough is a Director of York International Corp.
(air conditioning and refrigeration), Commercial Intertech Corp.
(hydraulic systems, building systems, and metal products, 1992), CUNO,
Inc. (liquid and gas filtration products, 1996), and Associated
Estates Realty Corporation (a real estate investment trust, 1993). Mr.
McDonough served as a Director of ACME-Cleveland Corp. (metal working,
telecommunications, and electronic products) from 1987-1996 and
Brush-Wellman Inc. (metal refining) from 1983-1997.
MARVIN L. MANN (65), Trustee (1993), is Chairman of the Board, of
Lexmark International, Inc. (office machines, 1991). Prior to 1991, he
held the positions of Vice President of International Business
Machines Corporation ("IBM") and President and General Manager of
various IBM divisions and subsidiaries. Mr. Mann is a Director of M.A.
Hanna Company (chemicals, 1993), Imation Corp. (imaging and
information storage, 1997).
*ROBERT C. POZEN (52), Trustee (1997) and Senior Vice President, is
also President and a Director of FMR (1997); and President and a
Director of Fidelity Investments Money Management, Inc. (1998),
Fidelity Management & Research (U.K.) Inc. (1997), and Fidelity
Management & Research (Far East) Inc. (1997). Previously, Mr. Pozen
served as General Counsel, Managing Director, and Senior Vice
President of FMR Corp.
THOMAS R. WILLIAMS (70), Trustee, is President of The Wales Group,
Inc. (management and financial advisory services). Prior to retiring
in 1987, Mr. Williams served as Chairman of the Board of First
Wachovia Corporation (bank holding company), and Chairman and Chief
Executive Officer of The First National Bank of Atlanta and First
Atlanta Corporation (bank holding company). He is currently a Director
of ConAgra, Inc. (agricultural products), Georgia Power Company
(electric utility), National Life Insurance Company of Vermont,
American Software, Inc., and AppleSouth, Inc. (restaurants, 1992).
BOYCE I. GREER (43), is Vice President of Money Market Funds (1997),
Group Leader of the Money Market Group (1997), Senior Vice President
of FMR (1997), and Vice President of FIMM (1998). Mr. Greer served as
the Leader of the Fixed-Income Group for Fidelity Management Trust
Company (1993-1995) and was Vice President and Group Leader of
Municipal Fixed-Income Investments (1996-1997).
FRED L. HENNING, JR. (59), is Vice President of Fidelity's
Fixed-Income Group (1995), Senior Vice President of FMR (1995), and
Senior Vice President of FIMM (1998). Before assuming his current
responsibilities, Mr. Henning was head of Fidelity's Money Market
Division.
JOHN T. TODD (50), is Vice President of Select Money Market Portfolio
(1996), and other funds advised by FMR. Prior to his current
responsibilities, Mr. Todd has managed a variety of Fidelity funds.
ERIC D. ROITER (50), Secretary (1998), is Vice President (1998) and
General Counsel of FMR (1998) and Vice President and Clerk of FDC
(1998). Prior to joining Fidelity, Mr. Roiter was with the law firm of
Debevoise & Plimpton, as an associate (1981-1984) and as a partner
(1985-1997), and served as an Assistant General Counsel of the U.S.
Securities and Exchange Commission (1979-1981). Mr. Roiter was an
Adjunct Member, Faculty of Law, at Columbia University Law School
(1996-1997).
RICHARD A. SILVER (51), Treasurer (1997), is Treasurer of the Fidelity
funds and is an employee of FMR (1997). Before joining FMR, Mr. Silver
served as Executive Vice President, Fund Accounting & Administration
at First Data Investor Services Group, Inc. (1996-1997). Prior to
1996, Mr. Silver was Senior Vice President and Chief Financial Officer
at The Colonial Group, Inc. Mr. Silver also served as Chairman of the
Accounting/Treasurer's Committee of the Investment Company Institute
(1987-1993).
MATTHEW N. KARSTETTER (37), Deputy Treasurer (1998), is Deputy
Treasurer of the Fidelity funds and is an employee of FMR (1998).
Before joining FMR, Mr. Karstetter served as Vice President of
Investment Accounting and Treasurer of IDS Mutual Funds at American
Express Financial Advisors (1996-1998). Prior to 1996, Mr. Karstetter
was Vice President, Mutual Fund Services at State Street Bank & Trust
(1991-1996).
STANLEY N. GRIFFITH (52), Assistant Vice President (1998), is
Assistant Vice President of Fidelity's Fixed-Income Funds (1998) and
an employee of FMR Corp.
JOHN H. COSTELLO (52), Assistant Treasurer, is an employee of FMR.
LEONARD M. RUSH (53), Assistant Treasurer (1994), is an employee of
FMR (1994). Prior to becoming Assistant Treasurer of the Fidelity
funds, Mr. Rush was Chief Compliance Officer of FMR Corp. (1993-1994)
and Chief Financial Officer of Fidelity Brokerage Services, Inc.
(1990-1993).
THOMAS J. SIMPSON (40), Assistant Treasurer (1996), is Assistant
Treasurer of Fidelity's Fixed-Income Funds (1998) and an employee of
FMR (1996). Prior to joining FMR, Mr. Simpson was Vice President and
Fund Controller of Liberty Investment Services (1987-1995).
The following table sets forth information describing the compensation
of each Trustee and Member of the Advisory Board of each fund for his
or her services for the fiscal year ended February 28, 1999, or
calendar year ended December 31, 1998, as applicable.
Compensation Table
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
AGGREGATE COMPENSATION FROM A Edward C. Johnson 3d** Abigail P. Johnson** J. Gary Burkhead ** Ralph F. Cox
FUNDA
Air TransportationB $ 0 $ 0 $ 0 $ 36
AutomotiveB $ 0 $ 0 $ 0 $ 20
BiotechnologyB $ 0 $ 0 $ 0 $ 194
Brokerage and Investment $ 0 $ 0 $ 0 $ 252
ManagementB
Business Services and $ 0 $ 0 $ 0 $ 17
OutsourcingB
ChemicalsB $ 0 $ 0 $ 0 $ 17
ComputersB $ 0 $ 0 $ 0 $ 316
Construction and HousingB $ 0 $ 0 $ 0 $ 28
Consumer IndustriesB $ 0 $ 0 $ 0 $ 26
Cyclical IndustriesB $ 0 $ 0 $ 0 $ 1
Defense and AerospaceB $ 0 $ 0 $ 0 $ 20
Developing CommunicationsB $ 0 $ 0 $ 0 $ 96
ElectronicsB $ 0 $ 0 $ 0 $ 761
EnergyB $ 0 $ 0 $ 0 $ 49
Energy ServiceB $ 0 $ 0 $ 0 $ 241
Environmental ServicesB $ 0 $ 0 $ 0 $ 7
Financial ServicesB $ 0 $ 0 $ 0 $ 216
Food and AgricultureB $ 0 $ 0 $ 0 $ 80
GoldB $ 0 $ 0 $ 0 $ 73
Health CareB,C,D $ 0 $ 0 $ 0 $ 843
Home FinanceB $ 0 $ 0 $ 0 $ 487
Industrial EquipmentB $ 0 $ 0 $ 0 $ 15
Industrial MaterialsB $ 0 $ 0 $ 0 $ 6
InsuranceB $ 0 $ 0 $ 0 $ 39
LeisureB $ 0 $ 0 $ 0 $ 98
Medical DeliveryB $ 0 $ 0 $ 0 $ 55
Medical Equipment and SystemsB+ $ 0 $ 0 $ 0 $ 5
MultimediaB $ 0 $ 0 $ 0 $ 44
Natural GasB $ 0 $ 0 $ 0 $ 18
Natural ResourcesB $ 0 $ 0 $ 0 $ 2
Paper and Forest ProductsB $ 0 $ 0 $ 0 $ 6
Precious Metals and MineralsB $ 0 $ 0 $ 0 $ 53
Regional BanksB $ 0 $ 0 $ 0 $ 439
RetailingB $ 0 $ 0 $ 0 $ 91
Software and Computer ServicesB $ 0 $ 0 $ 0 $ 191
TechnologyB $ 0 $ 0 $ 0 $ 240
TelecommunicationsB $ 0 $ 0 $ 0 $ 263
TransportationB $ 0 $ 0 $ 0 $ 10
Utilities GrowthB $ 0 $ 0 $ 0 $ 138
Money MarketB $ 0 $ 0 $ 0 $ 326
TOTAL COMPENSATION FROM THE $ 0 $ 0 $ 0 $ 223,500
FUND COMPLEX*,A
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
AGGREGATE COMPENSATION FROM A Phyllis Burke Davis Robert M. Gates E. Bradley Jones Donald J. Kirk Peter S. Lynch**
FUNDA
Air TransportationB $ 36 $ 36 $ 36 $ 36 $ 0
AutomotiveB $ 19 $ 20 $ 19 $ 20 $ 0
BiotechnologyB $ 191 $ 193 $ 192 $ 194 $ 0
Brokerage and Investment $ 248 $ 253 $ 251 $ 255 $ 0
ManagementB
Business Services and $ 17 $ 17 $ 17 $ 18 $ 0
OutsourcingB
ChemicalsB $ 17 $ 17 $ 17 $ 17 $ 0
ComputersB $ 311 $ 315 $ 313 $ 315 $ 0
Construction and HousingB $ 27 $ 28 $ 27 $ 28 $ 0
Consumer IndustriesB $ 26 $ 26 $ 26 $ 27 $ 0
Cyclical IndustriesB $ 1 $ 1 $ 1 $ 1 $ 0
Defense and AerospaceB $ 20 $ 20 $ 20 $ 20 $ 0
Developing CommunicationsB $ 94 $ 96 $ 95 $ 96 $ 0
ElectronicsB $ 751 $ 761 $ 756 $ 763 $ 0
EnergyB $ 49 $ 49 $ 49 $ 50 $ 0
Energy ServiceB $ 238 $ 242 $ 240 $ 243 $ 0
Environmental ServicesB $ 7 $ 7 $ 7 $ 7 $ 0
Financial ServicesB $ 213 $ 216 $ 214 $ 218 $ 0
Food and AgricultureB $ 79 $ 80 $ 79 $ 80 $ 0
GoldB $ 72 $ 72 $ 72 $ 73 $ 0
Health CareB,C,D $ 832 $ 842 $ 837 $ 848 $ 0
Home FinanceB $ 481 $ 488 $ 485 $ 493 $ 0
Industrial EquipmentB $ 15 $ 15 $ 15 $ 15 $ 0
Industrial MaterialsB $ 6 $ 6 $ 6 $ 6 $ 0
InsuranceB $ 38 $ 39 $ 39 $ 39 $ 0
LeisureB $ 96 $ 98 $ 97 $ 99 $ 0
Medical DeliveryB $ 54 $ 55 $ 55 $ 56 $ 0
Medical Equipment and SystemsB+ $ 5 $ 5 $ 5 $ 5 $ 0
MultimediaB $ 43 $ 44 $ 43 $ 44 $ 0
Natural GasB $ 18 $ 18 $ 18 $ 19 $ 0
Natural ResourcesB $ 2 $ 2 $ 2 $ 2 $ 0
Paper and Forest ProductsB $ 6 $ 6 $ 6 $ 6 $ 0
Precious Metals and MineralsB $ 52 $ 53 $ 53 $ 53 $ 0
Regional BanksB $ 433 $ 440 $ 437 $ 443 $ 0
RetailingB $ 90 $ 91 $ 91 $ 92 $ 0
Software and Computer ServicesB $ 188 $ 191 $ 189 $ 192 $ 0
TechnologyB $ 237 $ 240 $ 239 $ 240 $ 0
TelecommunicationsB $ 259 $ 263 $ 261 $ 265 $ 0
TransportationB $ 10 $ 10 $ 10 $ 10 $ 0
Utilities GrowthB $ 136 $ 138 $ 137 $ 138 $ 0
Money MarketB $ 322 $ 326 $ 323 $ 330 $ 0
TOTAL COMPENSATION FROM THE $ 220,500 $ 223,500 $222,000 $ 226,500 $ 0
FUND COMPLEX*,A
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
AGGREGATE COMPENSATION FROM
A William O. McCoy Gerald C. McDonough Marvin L. Mann Robert C. Pozen ** Thomas R. Williams
FUNDA
Air TransportationB $ 36 $ 44 $ 36 $ 0 $ 36
AutomotiveB $ 20 $ 24 $ 20 $ 0 $ 20
BiotechnologyB $ 193 $ 237 $ 193 $ 0 $ 193
Brokerage and Investment $ 253 $ 309 $ 253 $ 0 $ 253
ManagementB
Business Services and $ 17 $ 21 $ 17 $ 0 $ 17
OutsourcingB
ChemicalsB $ 17 $ 21 $ 17 $ 0 $ 17
ComputersB $ 315 $ 385 $ 315 $ 0 $ 315
Construction and HousingB $ 28 $ 34 $ 28 $ 0 $ 28
Consumer IndustriesB $ 26 $ 32 $ 26 $ 0 $ 26
Cyclical IndustriesB $ 1 $ 2 $ 1 $ 0 $ 1
Defense and AerospaceB $ 20 $ 25 $ 20 $ 0 $ 20
Developing CommunicationsB $ 96 $ 117 $ 96 $ 0 $ 96
ElectronicsB $ 761 $ 931 $ 761 $ 0 $ 761
EnergyB $ 49 $ 60 $ 49 $ 0 $ 49
Energy ServiceB $ 242 $ 296 $ 242 $ 0 $ 242
Environmental ServicesB $ 7 $ 9 $ 7 $ 0 $ 7
Financial ServicesB $ 216 $ 264 $ 216 $ 0 $ 216
Food and AgricultureB $ 80 $ 98 $ 80 $ 0 $ 80
GoldB $ 72 $ 89 $ 72 $ 0 $ 72
Health CareB,C,D $ 842 $ 1,031 $ 842 $ 0 $ 842
Home FinanceB $ 488 $ 598 $ 488 $ 0 $ 488
Industrial EquipmentB $ 15 $ 18 $ 15 $ 0 $ 15
Industrial MaterialsB $ 6 $ 7 $ 6 $ 0 $ 6
InsuranceB $ 39 $ 48 $ 39 $ 0 $ 39
LeisureB $ 98 $ 120 $ 98 $ 0 $ 98
Medical DeliveryB $ 55 $ 67 $ 55 $ 0 $ 55
Medical Equipment and
SystemsB+ $ 5 $ 6 $ 5 $ 0 $ 5
MultimediaB $ 44 $ 54 $ 44 $ 0 $ 44
Natural GasB $ 18 $ 23 $ 18 $ 0 $ 18
Natural ResourcesB $ 2 $ 3 $ 2 $ 0 $ 2
Paper and Forest ProductsB $ 6 $ 8 $ 6 $ 0 $ 6
Precious Metals and
MineralsB $ 53 $ 65 $ 53 $ 0 $ 53
Regional BanksB $ 440 $ 539 $ 440 $ 0 $ 440
RetailingB $ 91 $ 112 $ 91 $ 0 $ 91
Software and Computer
ServicesB $ 191 $ 233 $ 191 $ 0 $ 191
TechnologyB $ 240 $ 294 $ 240 $ 0 $ 240
TelecommunicationsB $ 263 $ 322 $ 263 $ 0 $ 263
TransportationB $ 10 $ 12 $ 10 $ 0 $ 10
Utilities GrowthB $ 138 $ 169 $ 138 $ 0 $ 138
Money MarketB $ 326 $ 396 $ 326 $ 0 $ 326
TOTAL COMPENSATION FROM
THE $ 223,500 $ 273,500 $ 220,500 $ 0 $ 223,500
FUND COMPLEX*,A
</TABLE>
* Information is for the calendar year ended December 31, 1998 for 237
funds in the complex.
** Interested Trustees of the funds, Ms. Johnson and Mr. Burkhead are
compensated by FMR.
+ Estimated
A Compensation figures include cash, amounts required to be deferred,
and may include amounts deferred at the election of Trustees. For the
calendar year ended December 31, 1998, the Trustees accrued required
deferred compensation from the funds as follows: Ralph F. Cox,
$75,000; Phyllis Burke Davis, $75,000; Robert M. Gates, $75,000; E.
Bradley Jones, $75,000; Donald J. Kirk, $75,000; William O. McCoy,
$75,000; Gerald C. McDonough, $87,500; Marvin L. Mann, $75,000; and
Thomas R. Williams, $75,000. Certain of the non-interested Trustees
elected voluntarily to defer a portion of their compensation as
follows: Ralph F. Cox, $55,039; Marvin L. Mann, $55,039; Thomas R.
Williams, $63,433; and William O. McCoy, $55,039.
B Compensation figures include cash, and may include amounts required
to be deferred and amounts deferred at the election of Trustees.
C The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $379; Phyllis Burke Davis, $379;
Robert M. Gates, $379; E. Bradley Jones, $379; Donald J. Kirk, $379;
William O. McCoy, $379; Gerald C. McDonough, $443; Marvin L. Mann,
$379; and Thomas R. Williams, $379.
D Certain of the non-interested Trustees' aggregate compensation from
a fund includes accrued voluntary deferred compensation as follows:
Ralph F. Cox, $321, Health Care; William O. McCoy, $321, Health Care;
Marvin L. Mann, $263, Health Care; and Thomas R. Williams, $321,
Health Care.
Under a deferred compensation plan adopted in September 1995 and
amended in November 1996 (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 fees. Amounts deferred under the
Plan are subject to vesting and are treated as though equivalent
dollar amounts had been invested in shares of a cross-section of
Fidelity funds including funds in each major investment discipline and
representing a majority of Fidelity's assets under management (the
Reference Funds). The amounts ultimately received by the Trustees
under the Plan will be directly linked to the investment performance
of the Reference Funds. Deferral of fees in accordance with the Plan
will have a negligible effect on a fund's assets, liabilities, and net
income per share, and will not obligate a fund to retain the services
of any Trustee or to pay any particular level of compensation to the
Trustee. A fund may invest in the Reference Funds under the Plan
without shareholder approval.
As of February 28, 1999, approximately 15.71% and 38.73% of Natural
Resources' and Cyclical Industries' total outstanding shares were held
by an FMR affiliate. FMR Corp. is the ultimate parent company of FMR
this FMR affiliate. By virtue of his ownership interest in FMR Corp.,
as described in the "Control of Investment Advisers" section on page
161, Mr. Edward C. Johnson 3d, President and Trustee of the fund, may
be deemed to be a beneficial owner of these shares. As of the above
date, with the exception of Mr. Johnson 3d's deemed ownership of
Natural Resources' and Cyclical Industries' shares, the Trustees,
Members of the Advisory Board, and officers of the funds owned, in the
aggregate, less than 1% of each fund's total outstanding shares.
As of February 28, 1999, the following owned of record or beneficially
5% or more (up to and including 25%) of each fund's outstanding
shares:
Air Transportation: First Trust Corporation, Denver, CO (5.80%)
Energy: Boston College, Boston, MA (5.64%)
Natural Resources: FMR Capital, Boston, MA (15.71%)
As of February 28, 1999, approximately 38.73% of Cyclical Industries'
total outstanding shares were held by FMR Capital, Boston,
Massachusetts.
A shareholder owning of record or beneficially more than 25% of a
fund's outstanding shares may be considered a controlling person. That
shareholder's vote could have a more significant effect on matters
presented at a shareholders' meeting than votes of other shareholders.
CONTROL OF INVESTMENT ADVISERS
FMR Corp., organized in 1972, is the ultimate parent company of FMR,
FIMM, FMR U.K. and FMR Far East. The voting common stock of FMR Corp.
is divided into two classes. Class B is held predominantly by members
of the Edward C. Johnson 3d family and is entitled to 49% of the vote
on any matter acted upon by the voting common stock. Class A is held
predominantly by non-Johnson family member employees of FMR Corp. and
its affiliates and is entitled to 51% of the vote on any such matter.
The Johnson family group and all other Class B shareholders have
entered into a shareholders' voting agreement under which all Class B
shares will be voted in accordance with the majority vote of Class B
shares. Under the Investment Company Act of 1940 (1940 Act), control
of a company is presumed where one individual or group of individuals
owns more than 25% of the voting stock of that company. Therefore,
through their ownership of voting common stock and the execution of
the shareholders' voting agreement, members of the Johnson family may
be deemed, under the 1940 Act, to form a controlling group with
respect to FMR Corp.
At present, the principal operating activities of FMR Corp. are those
conducted by its division, Fidelity Investments Retail Marketing
Company, which provides marketing services to various companies within
the Fidelity organization.
Fidelity investment personnel may invest in securities for their own
investment accounts pursuant to a code of ethics that sets forth all
employees' fiduciary responsibilities regarding the funds, establishes
procedures for personal investing and restricts certain transactions.
For example, all personal trades in most securities require
pre-clearance, and participation in initial public offerings is
prohibited. In addition, restrictions on the timing of personal
investing in relation to trades by Fidelity funds and on short-term
trading have been adopted.
MANAGEMENT CONTRACTS
Each fund has entered into a management contract with FMR, pursuant to
which FMR furnishes investment advisory and other services.
MANAGEMENT SERVICES. Under the terms of its management contract with
each fund, FMR acts as investment adviser and, subject to the
supervision of the Board of Trustees, directs the investments of the
fund in accordance with its investment objective, policies and
limitations. FMR also provides each fund with all necessary office
facilities and personnel for servicing the fund's investments,
compensates all officers of each fund and all Trustees who are
"interested persons" of the trust or of FMR, and all personnel of each
fund or FMR performing services relating to research, statistical and
investment activities.
In addition, FMR or its affiliates, subject to the supervision of the
Board of Trustees, provide the management and administrative services
necessary for the operation of each fund. These services include
providing facilities for maintaining each fund's organization;
supervising relations with custodians, transfer and pricing agents,
accountants, underwriters and other persons dealing with each fund;
preparing all general shareholder communications and conducting
shareholder relations; maintaining each fund's records and the
registration of each fund's shares under federal securities laws and
making necessary filings under state securities laws; developing
management and shareholder services for each fund; and furnishing
reports, evaluations and analyses on a variety of subjects to the
Trustees.
MANAGEMENT-RELATED EXPENSES. In addition to the management fee payable
to FMR and the fees payable to the transfer, dividend disbursing, and
shareholder servicing agent, pricing and bookkeeping agent, and
securities lending agent, as applicable, each fund pays all of its
expenses that are not assumed by those parties. Each fund pays for the
typesetting, printing, and mailing of its proxy materials to
shareholders, legal expenses, and the fees of the custodian, auditor
and non-interested Trustees. Each fund's management contract further
provides that the fund will pay for typesetting, printing, and mailing
prospectuses, statements of additional information, notices, and
reports to shareholders; however, under the terms of each fund's
transfer agent agreement, the transfer agent bears the costs of
providing these services to existing shareholders. Other expenses paid
by each fund include interest, taxes, brokerage commissions, the
fund's proportionate share of insurance premiums and Investment
Company Institute dues, and the costs of registering shares under
federal securities laws and making necessary filings under state
securities laws. Each fund is also liable for such non-recurring
expenses as may arise, including costs of any litigation to which the
fund may be a party, and any obligation it may have to indemnify its
officers and Trustees with respect to litigation.
MANAGEMENT FEES. For the services of FMR under the management
contract, the money market fund pays FMR a monthly management fee
which has three components: a group fee rate, an individual fund fee
rate, and an income-based component of 6% of the fund's monthly gross
income in excess of an annualized 5% yield. For this purpose, gross
income includes interest accrued and/or discount earned (including
both original issue discount and market discount) on portfolio
obligations, less amortization of premium on portfolio obligations.
The maximum income-based component is an amount equal to an annual
rate of 0.24% of the fund's average net assets throughout the month.
The group fee rate is based on the monthly average net assets of all
of the registered investment companies with which FMR has management
contracts.
The following is the fee schedule for the money market fund.
MONEY MARKET FUND
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Group Fee Rate Schedule Effective Annual Fee Rates
Average Group Assets Annualized Rate Group Net Assets Effective Annual Fee Rate
0 - $3 billion .3700% $ 0.5 billion .3700%
3 - 6 .3400 25 .2664
6 - 9 .3100 50 .2188
9 - 12 .2800 75 .1986
12 - 15 .2500 100 .1869
15 - 18 .2200 125 .1793
18 - 21 .2000 150 .1736
21 - 24 .1900 175 .1690
24 - 30 .1800 200 .1652
30 - 36 .1750 225 .1618
36 - 42 .1700 250 .1587
42 - 48 .1650 275 .1560
48 - 66 .1600 300 .1536
66 - 84 .1550 325 .1514
84 - 120 .1500 350 .1494
120 - 156 .1450 375 .1476
156 - 192 .1400 400 .1459
192 - 228 .1350 425 .1443
228 - 264 .1300 450 .1427
264 - 300 .1275 475 .1413
300 - 336 .1250 500 .1399
336 - 372 .1225 525 .1385
372 - 408 .1200 550 .1372
408 - 444 .1175
444 - 480 .1150
480 - 516 .1125
Over 516 .1100
</TABLE>
The group fee rate is calculated on a cumulative basis pursuant to the
graduated fee rate schedule shown above on the left. The schedule
above on the right shows the effective annual group fee rate at
various asset levels, which is the result of cumulatively applying the
annualized rates on the left. For example, the effective annual fee
rate at $707 billion of group net assets - the approximate level for
February 1999 - was 0.1312%, which is the weighted average of the
respective fee rates for each level of group net assets up to $707
billion.
The money market fund's individual fund fee rate is 0.03%. One-twelfth
of the sum of the group fee rate and the individual fund fee rate is
applied to the fund's average net assets for the month, giving a
dollar amount which is the fee for that month to which the
income-based component is added.
For the services of FMR under the management contract, each stock fund
pays FMR a monthly management fee which has two components: a group
fee rate and an individual fund fee rate.
The following is the fee schedule for the stock funds.
STOCK FUNDS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Group Fee Rate SchedulE Effective Annual Fee RateS
Average Group Assets Annualized Rate Group Net Assets Effective Annual Fee Rate
0 - $3 billion .5200% $ 0.5 billion .5200%
3 - 6 .4900 25 .4238
6 - 9 .4600 50 .3823
9 - 12 .4300 75 .3626
12 - 15 .4000 100 .3512
15 - 18 .3850 125 .3430
18 - 21 .3700 150 .3371
21 - 24 .3600 175 .3325
24 - 30 .3500 200 .3284
30 - 36 .3450 225 .3249
36 - 42 .3400 250 .3219
42 - 48 .3350 275 .3190
48 - 66 .3250 300 .3163
66 - 84 .3200 325 .3137
84 - 102 .3150 350 .3113
102 - 138 .3100 375 .3090
138 - 174 .3050 400 .3067
174 - 210 .3000 425 .3046
210 - 246 .2950 450 .3024
246 - 282 .2900 475 .3003
282 - 318 .2850 500 .2982
318 - 354 .2800 525 .2962
354 - 390 .2750 550 .2942
390 - 426 .2700
426 - 462 .2650
462 - 498 .2600
498 - 534 .2550
Over 534 .2500
</TABLE>
The group fee rate is calculated on a cumulative basis pursuant to the
graduated fee rate schedule shown above on the left. The schedule
above on the right shows the effective annual group fee rate at
various asset levels, which is the result of cumulatively applying the
annualized rates on the left. For example, the effective annual fee
rate at $707 billion of group net assets - the approximate level for
February 1999 - was 0.2843%, which is the weighted average of the
respective fee rates for each level of group net assets up to $707
billion.
Each stock fund's individual fund fee rate is 0.30%. Based on the
average group net assets of the funds advised by FMR for February
1999, each stock fund's annual management fee rate would be calculated
as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Group Fee Rate Individual Fund Fee Rate Management Fee Rate
Stock Funds 0.2843% + 0.30% = 0.5843%
</TABLE>
One-twelfth of the management fee rate is applied to each stock fund's
average net assets for the month, giving a dollar amount which is the
fee for that month.
The following table shows the amount of management fees paid by each
fund to FMR for the past three fiscal years.
<TABLE>
<CAPTION>
<S> <C> <C>
Fund Fiscal Years Ended February 28 Management Fees Paid to FMR
Air Transportation 1999 $ 573,138
1998 $ 378,349
1997 $ 539,940
Automotive 1999 $ 357,296
1998 $ 369,375
1997 $ 726,743
Biotechnology 1999 $ 3,390,377
1998 $ 3,442,469
1997 $ 4,324,960
Brokerage and Investment 1999 $ 4,267,725
Management
1998 $ 2,493,991
1997 $ 448,938
Business Services and 1999 $ 326,653
Outsourcing
1998* $ 2,948
Chemicals 1999 $ 276,652
1998 $ 496,851
1997 $ 745,680
Computers 1999 $ 6,013,190
1998 $ 3,921,116
1997 $ 3,309,228
Construction and Housing 1999 $ 490,439
1998 $ 155,730
1997 $ 408,988
Consumer Industries 1999 $ 457,965
1998 $ 161,119
1997 $ 154,434
Cyclical Industries 1999 $ 22,236
1998** $ 21,141
Defense and Aerospace 1999 $ 312,058
1998 $ 381,060
1997 $ 268,010
Developing Communications 1999 $ 1,854,817
1998 $ 1,420,790
1997 $ 1,856,888
Electronics 1999 $ 13,375,808
1998 $ 14,146,742
1997 $ 7,859,173
Energy 1999 $ 825,294
1998 $ 1,137,325
1997 $ 1,066,783
Energy Service 1999 $ 3,826,822
1998 $ 5,735,646
1997 $ 2,790,650
Environmental Services 1999 $ 122,145
1998 $ 165,498
1997 $ 252,081
Fund Fiscal Years Ended February 28 Management Fees Paid to FMR
Financial Services 1999 $ 3,668,034
1998 $ 2,799,557
1997 $ 1,661,452
Food and Agriculture 1999 $ 1,335,082
1998 $ 1,473,308
1997 $ 1,682,437
Gold 1999 $ 1,216,228
1998 $ 1,664,398
1997 $ 2,501,556
Health Care 1999 $ 14,851,440
1998 $ 9,512,189
1997 $ 7,661,331
Home Finance 1999 $ 7,895,622
1998 $ 7,971,664
1997 $ 4,201,147
Industrial Equipment 1999 $ 249,535
1998 $ 358,194
1997 $ 560,442
Industrial Materials 1999 $ 94,263
1998 $ 178,398
1997 $ 590,927
Insurance 1999 $ 645,431
1998 $ 657,447
1997 $ 204,881
Leisure 1999 $ 1,721,162
1998 $ 853,326
1997 $ 643,761
Medical Delivery 1999 $ 909,497
1998 $ 949,169
1997 $ 1,307,251
Medical Equipment and Systems 1999*** $ 80,475
Multimedia 1999 $ 768,461
1998 $ 355,794
1997 $ 513,562
Natural Gas 1999 $ 301,788
1998 $ 489,011
1997 $ 679,330
Natural Resources 1999 $ 38,307
1998** $ 38,241
Paper and Forest Products 1999 $ 87,942
1998 $ 144,890
1997 $ 194,763
Precious Metals and Minerals 1999 $ 882,668
1998 $ 1,160,570
1997 $ 2,005,219
Regional Banks 1999 $ 7,314,180
1998 $ 6,188,500
1997 $ 2,534,699
Fund Fiscal Years Ended February 28 Management Fees Paid to FMR
Retailing 1999 $ 1,658,052
1998 $ 911,425
1997 $ 1,338,783
Software and Computer Services 1999 $ 3,378,317
1998 $ 2,593,824
1997 $ 2,546,782
Technology 1999 $ 4,515,599
1998 $ 3,293,787
1997 $ 2,800,144
Telecommunications 1999 $ 4,615,660
1998 $ 2,473,329
1997 $ 2,878,937
Transportation 1999 $ 142,306
1998 $ 341,054
1997 $ 50,368
Utilities Growth 1999 $ 2,410,584
1998 $ 1,639,699
1997 $ 1,440,039
Money Market 1999 $ 1,853,858
1998 $ 1,715,272
1997 $ 1,584,080
</TABLE>
* Business Services and Outsourcing commenced operations of February
4, 1998.
** Cyclical Industries and Natural Resources commenced operations on
March 3, 1997.
*** Medical Equipment and Systems commenced operations on April 28,
1998.
FMR may, from time to time, voluntarily reimburse all or a portion of
a fund's operating expenses (exclusive of interest, taxes, securities
lending fees, brokerage commissions, and extraordinary expenses) which
is subject to revision or termination. FMR retains the ability to be
repaid for these expense reimbursements in the amount that expenses
fall below the limit prior to the end of the fiscal year.
Expense reimbursements by FMR will increase a fund's returns and
yield, and repayment of the reimbursement by a fund will lower its
returns and yield.
During the past three fiscal periods, FMR voluntarily agreed to
reimburse the funds if and to the extent that the fund's aggregate
operating expenses, including management fees, were in excess of an
annual rate of its average net assets. The table below shows the
dollar amount of management fees incurred under each applicable fund's
contract before reimbursement; and the dollar amount of management
fees reimbursed by FMR under the expense reimbursement for each
period.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name of Fund Aggregate Operating Expense Fiscal Years Ended February 28 Management Fee Before
Limitation Reimbursement
Construction and Housing 2.50% 1998 $ 155,730
Cyclical Industries 2.50% 1999 $ 22,236
1998 $ 21,141
Natural Resources 2.50% 1999 $ 38,307
1998 $ 38,241
Business Services and 2.50% 1998 $ 2,948
Outsourcing
Transportation 2.50% 1997 $ 75,979
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Name of Fund Amount of Management Fee
Reimbursement
Construction and Housing $ 9,992
Cyclical Industries $ 22,236
$ 21,141
Natural Resources $ 38,307
$ 38,241
Business Services and $ 2,948
Outsourcing
Transportation $ 25,611
</TABLE>
SUB-ADVISER. On behalf of the money market fund, FMR has entered into
a sub-advisory agreement with FIMM pursuant to which FIMM has primary
responsibility for choosing investments for the fund. Prior to January
23, 1998, FMR Texas Inc. (FMR Texas) had primary responsibility for
providing investment management services to the fund. On January 23,
1998, FMR Texas was merged into FIMM, which succeeded to the
operations of FMR Texas.
Under the terms of the sub-advisory agreement for the money market
fund, FMR pays FIMM fees equal to 50% of the management fee payable to
FMR under its management contract with the fund. The fees paid to FIMM
are not reduced by any voluntary or mandatory expense reimbursements
that may be in effect from time to time.
On behalf of the money market fund, for the fiscal years ended
February 28, 1998 and 1997, FMR paid FMR Texas fees of $857,636 and
$792,040, respectively. On behalf of the money market fund, for the
fiscal year ended February 28, 1999, FMR paid FIMM fees of $926,930.
On behalf of the stock funds, FMR has entered into subadvisory
agreements with FMR U.K. and FMR Far East. Pursuant to the
sub-advisory agreements, FMR may receive investment advice and
research services outside the United States from the sub-advisers.
On behalf of the stock funds, FMR may also grant FMR U.K. and FMR Far
East investment management authority as well as the authority to buy
and sell securities if FMR believes it would be beneficial to the
funds.
Under the sub-advisory agreements FMR pays the fees of FMR U.K. and
FMR Far East. For providing non-discretionary investment advice and
research services, FMR pays FMR U.K. and FMR Far East fees equal to
110% and 105%, respectively, of FMR U.K.'s and FMR Far East's costs
incurred in connection with providing investment advice and research
services.
On behalf of the stock funds, for providing discretionary investment
management and executing portfolio transactions, FMR pays FMR U.K. and
FMR Far East a fee equal to 50% of its monthly management fee rate
with respect to each fund's average net assets managed by the
sub-adviser on a discretionary basis.
For providing investment advice and research services, fees paid to
FMR U.K. and FMR Far East on behalf of the stock funds for the past
three fiscal years are shown in the table below.
FEES PAID BY FMR TO FOREIGN SUB-ADVISERS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Fund FEES PAID BY FMR TO FMR U.K. FEES PAID BY FMR TO FMR FAR
EAST
1999 1998 1997 1999 1998 1997
Air Transportation $ 2,553 $ 3,327 $ 1,385 $ 2,411 $ 3,202 $ 1,429
Automotive 6,503 4,434 16,190 5,175 4,325 14,746
Biotechnology 5,639 11,836 57,555 4,245 10,833 55,421
Brokerage and Investment 35,636 13,584 1,593 31,379 13,185 1,549
Management
Business Services and 65 6* -- 48 5* --
Outsourcing
Chemicals 1,562 5,873 11,460 1,516 5,590 11,730
Computers 17,784 15,517 14,494 13,154 15,486 14,124
Construction and Housing 583 6 463 525 5 439
Consumer Industries 1,246 474 190 1,024 455 189
Cyclical Industries 13 40** -- 9 40** --
Defense and Aerospace 0 1,692 928 0 1,755 853
Developing Communications 40,270 19,094 16,341 32,779 18,708 15,580
Electronics 82,887 147,596 26,600 72,615 143,650 22,356
Energy 22,599 25,414 27,154 18,894 24,716 25,283
Energy Service 40,212 51,145 26,346 35,640 49,720 25,339
Environmental Services 17 2,414 1,352 19 2,242 1,317
Financial Services 4,454 439 0 3,790 424 0
Food and Agriculture 18,053 5,707 1,856 15,039 5,521 1,799
Gold 20,125 -- -- 15,199 -- --
Health Care 97,086 96,459 140,931 78,047 95,116 132,786
Home Finance 9,249 14,065 13,987 9,829 13,533 12,464
Industrial Equipment 590 736 1,764 533 746 1,518
Industrial Materials 35 1,579 12,985 35 1,540 12,586
Insurance 917 770 153 879 746 146
Leisure 7,018 1,740 2,080 5,868 1,685 1,990
Medical Delivery 0 216 741 0 187 642
Medical Equipment and Systems 73*** -- -- 63*** -- --
Multimedia 1,632 711 3,001 1,301 694 2,963
Natural Gas 1,450 182 786 1,150 154 660
Natural Resources 1,041 559** -- 851 554** --
Paper and Forest Products 1,858 809 1,218 1,762 772 1,118
Precious Metals and Minerals 48,237 42,196 104,793 39,878 40,224 101,856
Regional Banks 3,255 6,772 2,772 3,095 6,544 2,458
Retailing 0 0 1,846 0 0 1,805
Software and Computer Services 14,881 14,371 16,414 13,002 13,791 15,288
Technology 86,248 23,941 16,385 66,343 25,181 14,600
Telecommunications 47,989 37,699 24,984 39,416 36,443 25,546
Transportation 502 571 563 474 575 539
Utilities Growth 3,104 3,855 3,110 2,777 3,672 3,012
</TABLE>
* Business Services and Outsourcing commenced operations of February
4, 1998.
** Cyclical Industries and Natural Resources commenced operations on
March 3, 1997.
*** Medical Equipment and Systems commenced operations on April 28,
1998.
For discretionary investment management and execution of portfolio
transactions, no fees were paid to FMR U.K. and FMR Far East on behalf
of the stock funds for the past three fiscal years.
DISTRIBUTION SERVICES
Each fund has entered into a distribution agreement with FDC, an
affiliate of FMR. FDC is a broker-dealer registered under the
Securities Exchange Act of 1934 and a member of the National
Association of Securities Dealers, Inc. The distribution agreements
call for FDC to use all reasonable efforts, consistent with its other
business, to secure purchasers for shares of the fund, which are
continuously offered. Promotional and administrative expenses in
connection with the offer and sale of shares are paid by FMR.
For fiscal 1997, FDC collected, in the aggregate, $550,208 of deferred
sales charges from the total value of shares redeemed by shareholders
in all funds. On October 12, 1990, the funds' 2.00% sales charge was
increased to 3.00% and the 1.00% deferred sales charge was eliminated.
For fiscal 1997, FDC collected, in the aggregate, $51,023,883 of
front-end sales charges. The following table shows the sales charge
revenue retained by FDC for fiscal 1997.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fiscal Year Ended Sales Charge Revenue Deferred Sales Charge Revenue
Air Transportation Feb. 28, 1997 $ 668,390 $ 1,386
Automotive Feb. 28, 1997 466,135 2,159
Biotechnology Feb. 28, 1997 1,854,442 41,551
Brokerage and Investment Feb. 28, 1997 903,649 1,311
Management
Chemicals Feb. 28, 1997 579,393 6,478
Computers Feb. 28, 1997 2,540,952 5,155
Construction and Housing Feb. 28, 1997 174,919 1,261
Consumer Industries Feb. 28, 1997 169,639 682
Defense and Aerospace Feb. 28, 1997 292,571 1,408
Developing Communications Feb. 28, 1997 733,692 7,987
Electronics Feb. 28, 1997 9,021,074 9,923
Energy Feb. 28, 1997 1,029,850 14,667
Energy Service Feb. 28, 1997 4,165,989 10,974
Environmental Services Feb. 28, 1997 177,009 9,944
Financial Services Feb. 28, 1997 1,400,884 8,487
Food and Agriculture Feb. 28, 1997 1,095,115 7,683
Gold Feb. 28, 1997 1,162,696 43,678
Health Care Feb. 28, 1997 2,553,184 69,909
Home Finance Feb. 28, 1997 5,869,188 4,653
Industrial Equipment Feb. 28, 1997 252,021 2,660
Industrial Materials Feb. 28, 1997 866,268 4,072
Insurance Feb. 28, 1997 248,750 1,364
Leisure Feb. 28, 1997 282,104 14,717
Medical Delivery Feb. 28, 1997 567,463 6,016
Multimedia Feb. 28, 1997 338,283 4,261
Natural Gas Feb. 28, 1997 682,901 2,332
Paper and Forest Products Feb. 28, 1997 126,407 2,892
Precious Metals and Minerals Feb. 28, 1997 669,762 45,427
Regional Banks Feb. 28, 1997 3,497,512 3,702
Retailing Feb. 28, 1997 838,536 4,812
Software and Computer Services Feb. 28, 1997 1,921,006 5,034
Technology Feb. 28, 1997 1,543,709 36,252
Telecommunications Feb. 28, 1997 1,182,016 30,536
Transportation Feb. 28, 1997 101,332 682
Utilities Growth Feb. 28, 1997 238,618 38,523
Money Market Feb. 28, 1997 2,788,424 97,630
</TABLE>
Sales charge revenues collected and retained by FDC for the fiscal
years 1999 and 1998 are shown in the table below.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Sales Charge Revenue Deferred Sales Charge Revenue
Fiscal Year Ended Amount Paid to FDC Amount Retained by FDC Amount Paid to FDC
Air Transportation Feb. 28, 1999 $ 432,957 $ 423,538 $ 2,545
Feb. 28, 1998 299,325 290,774 946
Automotive Feb. 28, 1999 151,425 151,425 1,131
Feb. 28, 1998 70,085 69,822 597
Biotechnology Feb. 28, 1999 1,182,620 1,176,547 23,624
Feb. 28, 1998 1,105,374 1,099,427 31,256
Brokerage and Investment Feb. 28, 1999 4,817,568 4,806,902 5,812
Management
Feb. 28, 1998 4,327,828 4,314,336 2,431
Business Services and Feb. 28, 1999 661,865 661,865 106
Outsourcing
Feb. 28, 1998* 61,937 61,787 0
Chemicals Feb. 28, 1999 45,096 44,178 7,081
Feb. 28, 1998 84,712 84,544 7,955
Computers Feb. 28, 1999 9,062,985 9,053,383 5,657
Feb. 28, 1998 3,518,068 3,494,034 6,144
Construction and Housing Feb. 28, 1999 451,157 449,854 653
Feb. 28, 1998 257,572 257,391 240
Consumer Industries Feb. 28, 1999 342,823 339,350 208
Feb. 28, 1998 84,756 79,995 805
Cyclical Industries Feb. 28, 1999 16,210 16,210 0
Feb. 28, 1998** 36,552 36,552 0
Defense and Aerospace Feb. 28, 1999 127,643 125,494 824
Feb. 28, 1998 312,026 309,320 1,329
Developing Communications Feb. 28, 1999 1,740,638 1,737,968 3,177
Feb. 28, 1998 479,806 477,848 6,980
Electronics Feb. 28, 1999 7,287,169 7,252,407 10,633
Feb. 28, 1998 20,665,782 20,595,342 10,101
Energy Feb. 28, 1999 570,198 567,585 12,418
Feb. 28, 1998 600,122 592,780 14,514
Energy Service Feb. 28, 1999 3,272,526 3,265,721 9,358
Feb. 28, 1998 10,530,278 10,501,244 11,289
Environmental Services Feb. 28, 1999 29,658 28,390 7,574
Feb. 28, 1998 42,162 42,118 6,428
Financial Services Feb. 28, 1999 2,154,649 2,152,071 13,596
Feb. 28, 1998 2,098,142 2,087,581 8,343
Food and Agriculture Feb. 28, 1999 373,556 371,478 5,955
Feb. 28, 1998 682,877 665,203 5,255
Gold Feb. 28, 1999 691,742 685,928 19,578
Feb. 28, 1998 916,845 902,000 27,084
Health Care Feb. 28, 1999 10,991,959 10,970,853 58,978
Feb. 28, 1998 4,316,495 4,275,358 56,845
Home Finance Feb. 28, 1999 4,255,219 4,241,642 13,199
Feb. 28, 1998 9,770,117 9,751,663 5,349
Industrial Equipment Feb. 28, 1999 25,189 24,472 1,074
Feb. 28, 1998 60,451 60,217 2,151
Industrial Materials Feb. 28, 1999 12,710 12,337 1,065
Feb. 28, 1998 21,426 20,666 2,207
Insurance Feb. 28, 1999 351,928 351,772 1,491
Feb. 28, 1998 686,986 664,282 786
Leisure Feb. 28, 1999 956,242 946,671 10,919
Feb. 28, 1998 457,999 448,102 13,069
Sales Charge Revenue Deferred Sales Charge Revenue
Fiscal Year Ended Amount Paid to FDC Amount Retained by FDC Amount Paid to FDC
Medical Delivery Feb. 28, 1999 $ 324,894 $ 324,831 $ 6,973
Feb. 28, 1998 212,167 208,986 6,095
Medical Equipment and
Systems Feb. 28, 1999*** 283,524 283,524 2,642
Multimedia Feb. 28, 1999 599,274 596,505 1,687
Feb. 28, 1998 304,729 289,533 739
Natural Gas Feb. 28, 1999 123,203 121,320 982
Feb. 28, 1998 288,000 286,855 2,018
Natural Resources Feb. 28, 1999 24,488 24,488 8
Feb. 28, 1998** 81,304 81,304 26
Paper and Forest Products Feb. 28, 1999 45,535 45,535 737
Feb. 28, 1998 82,389 81,018 2,161
Precious Metals and
Minerals Feb. 28, 1999 418,114 414,477 18,943
Feb. 28, 1998 590,860 588,609 30,793
Regional Banks Feb. 28, 1999 3,590,683 3,579,211 8,288
Feb. 28, 1998 7,288,315 7,262,004 4,790
Retailing Feb. 28, 1999 1,568,122 1,565,474 2,870
Feb. 28, 1998 622,003 618,590 2,757
Software and Computer
Services Feb. 28, 1999 1,939,605 1,925,580 4,793
Feb. 28, 1998 1,272,908 1,258,051 5,910
Technology Feb. 28, 1999 5,573,254 5,562,533 32,321
Feb. 28, 1998 2,082,341 2,072,865 22,926
Telecommunications Feb. 28, 1999 3,594,841 3,578,078 12,323
Feb. 28, 1998 1,091,356 1,084,052 16,675
Transportation Feb. 28, 1999 94,851 93,190 657
Feb. 28, 1998 168,254 167,042 925
Utilities Growth Feb. 28, 1999 1,250,178 1,246,320 21,580
Feb. 28, 1998 629,220 601,884 22,382
Money Market Feb. 28, 1999 1,708,692 1,617,903 67,970
Feb. 28, 1998 2,402,715 2,223,313 95,881
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Amount Retained by FDC
Air Transportation $ 2,545
946
Automotive 1,131
597
Biotechnology 23,624
31,256
Brokerage and Investment 5,812
Management
2,431
Business Services and 106
Outsourcing
0
Chemicals 7,081
7,955
Computers 5,657
6,144
Construction and Housing 653
240
Consumer Industries 208
805
Cyclical Industries 0
0
Defense and Aerospace 824
1,329
Developing Communications 3,177
6,980
Electronics 10,633
10,101
Energy 12,418
14,514
Energy Service 9,358
11,289
Environmental Services 7,574
6,428
Financial Services 13,596
8,343
Food and Agriculture 5,955
5,255
Gold 19,578
27,084
Health Care 58,978
56,845
Home Finance 13,199
5,349
Industrial Equipment 1,074
2,151
Industrial Materials 1,065
2,207
Insurance 1,491
786
Leisure 10,919
13,069
Amount Retained by FDC
Medical Delivery $ 6,973
6,095
Medical Equipment and Systems 2,642
Multimedia 1,687
739
Natural Gas 982
2,018
Natural Resources 8
26
Paper and Forest Products 737
2,161
Precious Metals and Minerals 18,943
30,793
Regional Banks 8,288
4,790
Retailing 2,870
2,757
Software and Computer Services 4,793
5,910
Technology 32,321
22,926
Telecommunications 12,323
16,675
Transportation 657
925
Utilities Growth 21,580
22,382
Money Market 67,970
95,881
</TABLE>
* Business Services and Outsourcing commenced operations on February
4, 1998.
** Cyclical Industries and Natural Resources commenced operations on
March 3, 1997.
*** Medical Equipment and Systems commenced operations on April 28,
1998.
TRANSFER AND SERVICE AGENT AGREEMENTS
Each fund has entered into a transfer agent agreement with FSC, an
affiliate of FMR. Under the terms of the agreements, FSC performs
transfer agency, dividend disbursing, and shareholder services for
each fund.
For providing transfer agency services, FSC receives an account fee
and an asset-based fee each paid monthly with respect to each account
in a fund. For retail accounts and certain institutional accounts,
these fees are based on account size and fund type. For certain
institutional retirement accounts, these fees are based on fund type.
For certain other institutional retirement accounts, these fees are
based on account type and fund type. The account fees are subject to
increase based on postage rate changes.
For the stock funds, the asset-based fees are subject to adjustment if
the year-to-date total return of the S&P 500 exceeds a positive or
negative 15%.
FSC also collects small account fees from certain accounts with
balances of less than $2,500.
In addition, FSC collects a $7.50 exchange fee for each exchange out
of a stock fund.
In addition, FSC receives the pro rata portion of the transfer agency
fees applicable to shareholder accounts in a qualified state tuition
program (QSTP), as defined under the Small Business Job Protection Act
of 1996, managed by FMR or an affiliate and each Fidelity Freedom
Fund, a fund of funds managed by an FMR affiliate, according to the
percentage of the QSTP's or Freedom Fund's assets that is invested in
a fund.
FSC pays out-of-pocket expenses associated with providing transfer
agent services. In addition, FSC bears the expense of typesetting,
printing, and mailing prospectuses, statements of additional
information, and all other reports, notices, and statements to
existing shareholders, with the exception of proxy statements.
Each fund has also entered into a service agent agreement with FSC.
Under the terms of the agreements, FSC calculates the NAV and
dividends for each fund, maintains each fund's portfolio and general
accounting records, and administers each stock fund's securities
lending program.
For providing pricing and bookkeeping services, FSC receives a monthly
fee based on each fund's average daily net assets throughout the
month.
The annual rates for pricing and bookkeeping services for the money
market fund are 0.0150% for the first $500 million of average net
assets, 0.0075% of average net assets between $500 million and $10
billion, and 0.0010% of average net assets in excess of $10 billion.
The fee, not including reimbursement for out-of-pocket expenses, is
limited to a minimum of $40,000 per year.
The annual rates for pricing and bookkeeping services for the stock
funds are 0.0750% for the first $500 million of average net assets,
0.0550% of average net assets between $500 million and $3 billion, and
0.0010% of average net assets in excess of $3 billion. The fee, not
including reimbursement for out-of-pocket expenses, is limited to a
minimum of $60,000 per year.
Pricing and bookkeeping fees, including reimbursement for
out-of-pocket expenses, paid by the funds to FSC for the past three
fiscal years are shown in the table below.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PRICING AND BOOKKEEPING FEES
FISCAL 1999 FISCAL 1998 FISCAL 1997
Air Transportation $ 98,333 $ 73,865 $ 92,138
Automotive 67,412 65,849 120,805
Biotechnology 518,521 538,574 612,580
Brokerage and Investment 593,407 404,906 88,697
Management
Business Services and 60,809 5,000* N/A
Outsourcing
Chemicals 62,258 83,611 123,784
Computers 746,605 578,646 520,629
Construction and Housing 80,383 60,209 76,325
Consumer Industries 75,037 61,506 60,450
Cyclical Industries 60,050 59,755** N/A
Defense and Aerospace 68,157 68,287 61,443
Developing Communications 287,287 239,077 308,377
Electronics 967,497 802,315 799,758
Energy 135,861 191,416 177,681
Energy Service 545,287 680,412 445,567
Environmental Services 57,141 60,348 64,394
Financial Services 543,141 465,691 276,349
Food and Agriculture 220,104 246,634 279,388
Gold 199,332 280,044 416,410
Health Care 964,925 800,697 805,100
Home Finance 753,655 791,859 596,198
Industrial Equipment 60,400 65,050 93,288
Industrial Materials 60,350 60,356 98,357
Insurance 106,572 114,165 60,415
Leisure 279,815 143,851 107,125
Medical Delivery 150,958 161,193 215,825
Medical Equipment and Systems 50,606*** N/A N/A
Multimedia 124,969 68,383 85,280
Natural Gas 60,991 82,484 113,435
Natural Resources 60,054 59,758** N/A
Paper and Forest Products 60,339 60,338 60,429
Precious Metals and Minerals 145,054 195,123 333,124
Regional Banks 777,110 749,121 408,850
Retailing 268,863 153,141 222,542
Software and Computer Services 517,970 436,026 419,686
Technology 622,874 524,451 466,774
Telecommunications 625,067 410,851 479,593
Transportation 61,603 64,993 60,368
Utilities Growth 389,868 274,740 239,403
Money Market 120,261 111,447 108,892
</TABLE>
* Business Services and Outsourcing commenced operations on February
4, 1998.
** Cyclical Industries and Natural Resources commenced operations on
March 3, 1997.
*** Medical Equipment and Systems commenced operations on April 28,
1998.
For administering each stock fund's securities lending program, FSC
receives fees based on the number and duration of individual
securities loans.
For the fiscal years ended February 1999, 1998, and 1997, no
securities lending fees were incurred by those funds not listed below.
Securities lending fees paid by the funds to FSC for the past three
fiscal years are shown in the table below.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SECURITIES LENDING FEES
FISCAL 1999 FISCAL 1998 FISCAL 1997
Biotechnology $ 18,000 $ 8,740 $ 9,415
Chemicals 395 4,265 770
Computers 17,470 11,975 6,265
Construction and Housing 355 298 445
Electronics 14,330 31,045 13,690
Energy 365 575 2,320
Energy Service 125 2,025 1,290
Financial Services 275 775 0
Food and Agriculture 2,160 5,870 0
Gold 435 1,255 3,065
Health Care 13,910 7,995 7,915
Medical Delivery 2,510 1,275 8,900
Regional Banks 145 2,730 3,860
Precious Metals and Minerals 285 965 710
Retailing 125 2,570 4,965
Software and Computer Services 7,605 18,840 5,940
Technology 11,065 20,865 16,005
Telecommunications 57,445 10,585 10,530
Transportation 625 3,155 0
Utilities Growth 6,915 2,530 780
</TABLE>
DESCRIPTION OF THE TRUST
TRUST ORGANIZATION. Fidelity Select Portfolios is an open-end
management investment company organized as a Massachusetts business
trust on November 20, 1980. On June 1, 1998, American Gold Portfolio
changed its name from American Gold Portfolio to "Gold Portfolio." On
July 18, 1996, Consumer Products Portfolio changed its name from
Consumer Products Portfolio to "Consumer Industries Portfolio." On
August 3, 1994, Utilities Portfolio changed its name from Utilities
Portfolio to "Utilities Growth Portfolio." On April 30, 1994,
Broadcast and Media Portfolio changed its name from Broadcast and
Media Portfolio to "Multimedia Portfolio." Currently, there are 40
funds in Fidelity Select Portfolios: Air Transportation Portfolio,
Automotive Portfolio, Biotechnology Portfolio, Brokerage and
Investment Management Portfolio, Business Services and Outsourcing,
Chemicals Portfolio, Computers Portfolio, Construction and Housing
Portfolio, Consumer Industries Portfolio, Cyclical Industries
Portfolio, Defense and Aerospace Portfolio, Developing Communications
Portfolio, Electronics Portfolio, Energy Portfolio, Energy Service
Portfolio, Environmental Services Portfolio, Financial Services
Portfolio, Food and Agriculture Portfolio, Gold Portfolio, Health Care
Portfolio, Home Finance Portfolio, Industrial Equipment Portfolio,
Industrial Materials Portfolio, Insurance Portfolio, Leisure
Portfolio, Medical Delivery Portfolio, Medical Equipment and Systems
Portfolio, Multimedia Portfolio, Natural Gas Portfolio, Natural
Resources Portfolio, Paper and Forest Products Portfolio, Precious
Metals and Minerals Portfolio, Regional Banks Portfolio, Retailing
Portfolio, Software and Computer Services Portfolio, Technology
Portfolio, Telecommunications Portfolio, Transportation Portfolio,
Utilities Growth Portfolio, and Money Market Portfolio. The Trustees
are permitted to create additional funds in the trust.
The assets of the trust received for the issue or sale of shares of
each fund and all income, earnings, profits, and proceeds thereof,
subject to the rights of creditors, are allocated to such fund, and
constitute the underlying assets of such fund. The underlying assets
of each fund in the trust shall be charged with the liabilities and
expenses attributable to such fund. Any general expenses of the trust
shall be allocated between or among any one or more of the funds.
SHAREHOLDER LIABILITY. The trust is an entity commonly known as a
"Massachusetts business trust." Under Massachusetts law, shareholders
of such a trust may, under certain circumstances, be held personally
liable for the obligations of the trust.
The Declaration of Trust contains an express disclaimer of shareholder
liability for the debts, liabilities, obligations, and expenses of the
trust or fund. The Declaration of Trust provides that the trust shall
not have any claim against shareholders except for the payment of the
purchase price of shares and requires that each agreement, obligation,
or instrument entered into or executed by the trust or the Trustees
relating to the trust or to a fund shall include a provision limiting
the obligations created thereby to the trust or to one or more funds
and its or their assets. The Declaration of Trust further provides
that shareholders of a fund shall not have a claim on or right to any
assets belonging to any other fund.
The Declaration of Trust provides for indemnification out of each
fund's property of any shareholder or former shareholder held
personally liable for the obligations of the fund solely by reason of
his or her being or having been a shareholder and not because of his
or her acts or omissions or for some other reason. The Declaration of
Trust also provides that each fund shall, upon request, assume the
defense of any claim made against any shareholder for any act or
obligation of the fund and satisfy any judgment thereon. Thus, the
risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which a fund
itself would be unable to meet its obligations. FMR believes that, in
view of the above, the risk of personal liability to shareholders is
remote.
VOTING RIGHTS. Each fund's capital consists of shares of beneficial
interest. As a shareholder, you are entitled to one vote for each
dollar of net asset value that you own. The voting rights of
shareholders can be changed only by a shareholder vote. Shares may be
voted in the aggregate, by fund and by class.
The shares have no preemptive or conversion rights. Shares are fully
paid and nonassessable, except as set forth under the heading
"Shareholder Liability" above.
The trust or any of its funds may be terminated upon the sale of its
assets to, or merger with, another open-end management investment
company or series thereof, or upon liquidation and distribution of its
assets. Generally, the merger of the trust or a fund with another
entity or the sale of substantially all of the assets of the trust or
a fund to another entity requires approval by a vote of shareholders
of the trust or the fund. The Trustees may, however, reorganize or
terminate the trust or any of its funds without prior shareholder
approval. In the event of the dissolution or liquidation of the trust,
shareholders of each of its funds are entitled to receive the
underlying assets of such fund available for distribution. In the
event of the dissolution or liquidation of a fund, shareholders of
that fund are entitled to receive the underlying assets of the fund
available for distribution.
CUSTODIAN. Brown Brothers Harriman & Co., 40 Water Street, Boston,
Massachusetts is custodian of the assets of the stock funds. The Bank
of New York, 110 Washington Street, New York, New York, is custodian
of the assets of the money market fund. Each custodian is responsible
for the safekeeping of a fund's assets and the appointment of any
subcustodian banks and clearing agencies. The Bank of New York and The
Chase Manhattan Bank, each headquartered in New York, also may serve
as special purpose custodians of certain assets in connection with
repurchase agreement transactions.
FMR, its officers and directors, its affiliated companies, and members
of the Board of Trustees may, from time to time, conduct transactions
with various banks, including banks serving as custodians for certain
funds advised by FMR. The Boston branch of the stock funds' custodian
leases its office space from an affiliate of FMR at a lease payment
which, when entered into, was consistent with prevailing market rates.
Transactions that have occurred to date include mortgages and personal
and general business loans. In the judgment of FMR, the terms and
conditions of those transactions were not influenced by existing or
potential custodial or other fund relationships.
AUDITOR. PricewaterhouseCoopers LLP, 160 Federal Street, Boston,
Massachusetts serves as independent accountant for each fund. The
auditor examines financial statements for the funds and provides other
audit, tax, and related services.
FINANCIAL STATEMENTS
Each fund's financial statements and financial highlights for the
fiscal year ended February 28, 1999, and report of the auditor, are
included in the funds' Annual Report and are incorporated herein by
reference.
APPENDIX
Select Portfolios, Fidelity, Fidelity Investments & (Pyramid) Design,
Fidelity Focus, Fidelity Investments, and Magellan, are registered
trademarks of FMR Corp.
Portfolio Advisory Services is a service mark of FMR Corp.
THE THIRD PARTY MARKS APPEARING ABOVE ARE THE MARKS OF THEIR
RESPECTIVE OWNERS.
SUPPLEMENT TO THE FIDELITY SELECT PORTFOLIOS(registered trademark)
APRIL 29, 1999
STATEMENT OF ADDITIONAL INFORMATION
REGIONAL BANKS PORTFOLIO HAS BEEN RENAMED BANKING PORTFOLIO. ALL
REFERENCES TO REGIONAL BANKS PORTFOLIO THROUGHOUT THIS SAI SHOULD BE
REPLACED WITH BANKING PORTFOLIO.
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION FOR EACH STOCK
FUND (EXCEPT BUSINESS SERVICES AND OUTSOURCING PORTFOLIO, CYCLICAL
INDUSTRIES PORTFOLIO, MEDICAL EQUIPMENT AND SYSTEMS PORTFOLIO, AND
NATURAL RESOURCES PORTFOLIO) FOUND IN THE "INVESTMENT POLICIES AND
LIMITATIONS" SECTION BEGINNING ON PAGE 2.
(v) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental limitation (2)).
(vii) The fund does not currently intend to lend assets other than
securities to other parties, except (a) by lending money (up to 15% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION FOR EACH OF
BUSINESS SERVICES AND OUTSOURCING PORTFOLIO, CYCLICAL INDUSTRIES
PORTFOLIO, MEDICAL EQUIPMENT AND SYSTEMS PORTFOLIO, AND NATURAL
RESOURCES PORTFOLIO FOUND IN THE "INVESTMENT POLICIES AND LIMITATIONS"
SECTION BEGINNING ON PAGE 3.
(v) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental limitation (2)).
(vii) The fund does not currently intend to lend assets other than
securities to other parties, except by lending money (up to 15% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION FOR MONEY
MARKET PORTFOLIO FOUND IN THE "INVESTMENT POLICIES AND LIMITATIONS"
SECTION BEGINNING ON PAGE 5.
(iv) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party.
(vii) The fund does not currently intend to lend assets other than
securities to other parties, except by lending money (up to 15% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser. (This
limitation does not apply to purchases of debt securities or to
repurchase agreements.)
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION FOUND IN THE
"INVESTMENT POLICIES AND LIMITATIONS" SECTION BEGINNING ON PAGE 2.
SOURCES OF CREDIT OR LIQUIDITY SUPPORT. Issuers may employ various
forms of credit and liquidity enhancements, including letters of
credit, guarantees, puts, and demand features, and insurance provided
by domestic or foreign entities such as banks and other financial
institutions. FMR may rely on its evaluation of the credit of the
liquidity or credit enhancement provider in determining whether to
purchase a security supported by such enhancement. In evaluating the
credit of a foreign bank or other foreign entities, FMR will consider
whether adequate public information about the entity is available and
whether the entity may be subject to unfavorable political or economic
developments, currency controls, or other government restrictions that
might affect its ability to honor its commitment. Changes in the
credit quality of the entity providing the enhancement could affect
the value of the security or a fund's share price.
FIDELITY
SELECT
PORTFOLIOS(REGISTERED TRADEMARK)
AIR TRANSPORTATION
AUTOMOTIVE
BIOTECHNOLOGY
BROKERAGE AND INVESTMENT MANAGEMENT
BUSINESS SERVICES AND OUTSOURCING
CHEMICALS
COMPUTERS
CONSTRUCTION AND HOUSING
CONSUMER INDUSTRIES
CYCLICAL INDUSTRIES
DEFENSE AND AEROSPACE
DEVELOPING COMMUNICATIONS
ELECTRONICS
ENERGY
ENERGY SERVICE
ENVIRONMENTAL SERVICES
FINANCIAL SERVICES
FOOD AND AGRICULTURE
GOLD
HEALTH CARE
HOME FINANCE
INDUSTRIAL EQUIPMENT
INDUSTRIAL MATERIALS
INSURANCE
LEISURE
MEDICAL DELIVERY
MEDICAL EQUIPMENT AND SYSTEMS
MONEY MARKET
MULTIMEDIA
NATURAL GAS
NATURAL RESOURCES
PAPER AND FOREST PRODUCTS
PRECIOUS METALS AND MINERALS
REGIONAL BANKS
RETAILING
SOFTWARE AND COMPUTER SERVICES
TECHNOLOGY
TELECOMMUNICATIONS
TRANSPORTATION
UTILITIES GROWTH
ANNUAL REPORT
FOR THE YEAR ENDING
FEBRUARY 28, 1999
AND
PROSPECTUS
DATED APRIL 29,1999
(Fidelity Logo graphics)(registered trademark)
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
PERFORMANCE OVERVIEW A-4
FUND UPDATES*
CONSUMER SECTOR A-6 CONSUMER INDUSTRIES
A-13 FOOD AND AGRICULTURE
A-19 LEISURE
A-25 MULTIMEDIA
A-30 RETAILING
CYCLICALS SECTOR A-35 AIR TRANSPORTATION
A-40 AUTOMOTIVE
A-45 CHEMICALS
A-50 CONSTRUCTION AND HOUSING
A-56 CYCLICAL INDUSTRIES
A-62 DEFENSE AND AEROSPACE
A-67 ENVIRONMENTAL SERVICES
A-72 INDUSTRIAL EQUIPMENT
A-78 INDUSTRIAL MATERIALS
A-84 PAPER AND FOREST PRODUCTS
A-89 TRANSPORTATION
FINANCIAL SERVICES SECTOR A-94 BROKERAGE AND INVESTMENT MANAGEMENT
A-100 FINANCIAL SERVICES
A-106 HOME FINANCE
A-112 INSURANCE
A-117 REGIONAL BANKS
HEALTH CARE SECTOR A-122 BIOTECHNOLOGY
A-128 HEALTH CARE
A-134 MEDICAL DELIVERY
A-139 MEDICAL EQUIPMENT AND SYSTEMS
NATURAL RESOURCES SECTOR A-144 ENERGY
A-150 ENERGY SERVICE
A-156 GOLD
A-162 NATURAL RESOURCES
A-168 PRECIOUS METALS AND MINERALS
</TABLE>
* FUND UPDATES FOR EACH SELECT PORTFOLIO INCLUDE: PERFORMANCE AND
INVESTMENT SUMMARY, MANAGER'S OVERVIEW, INVESTMENTS, AND FINANCIAL
STATEMENTS.
<TABLE>
<CAPTION>
<S> <C> <C>
TECHNOLOGY SECTOR A-174 BUSINESS SERVICES AND OUTSOURCING
A-180 COMPUTERS
A-186 DEVELOPING COMMUNICATIONS
A-192 ELECTRONICS
A-198 SOFTWARE AND COMPUTER SERVICES
A-204 TECHNOLOGY
UTILITIES SECTOR A-210 NATURAL GAS
A-215 TELECOMMUNICATIONS
A-221 UTILITIES GROWTH
A-226 MONEY MARKET
NOTES TO FINANCIAL STATEMENTS A-233 FOOTNOTES TO THE FINANCIAL
STATEMENTS
REPORT OF INDEPENDENT A-237 THE AUDITORS' OPINION.
ACCOUNTANTS
DISTRIBUTIONS A-238
FIDELITY SELECT PORTFOLIO P-1
PROSPECTUS
</TABLE>
Standard & Poor's, S&P and S&P 500 are registered service marks of The
McGraw-Hill Companies, Inc. and have been licensed for use by
Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
(recycle logo) 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.
DEAR SHAREHOLDER:
Predictable only for their volatility, U.S. equity markets overcame a
major correction to post impressive double-digit returns for the
12-month period ending February 28, 1999. For the period, the Standard
& Poor's 500 Index - a large-capitalization-oriented index based on
the performance of 500 widely held stocks - returned 19.74%, nearly
double its historical annual average return. The Dow Jones Industrial
Average - an index of 30 blue-chip stocks - had a 10.75% increase for
the 12-month period.
Of the 39 Select equity portfolios, 15 topped the S&P 500's return for
the past 12 months. Meanwhile, 20 beat their Goldman Sachs indexes -
which are designed to measure the performance of companies within the
Select portfolios' sector concentrations. In comparison, 10 Select
portfolios bested their S&P benchmark in the last reporting period six
months ago, while 14 topped their Goldman Sachs index. The
best-performing Select portfolio for the 12-month period was
Computers, with a gain of 66.43%. Energy Service - whose performance
tends to be closely linked to the price of oil - had the lowest
return, declining 50.57%.
The period began with the U.S. economy continuing to demonstrate its
strength. Low unemployment, tame inflation, strong consumer buying
patterns and low interest rates all sparked hopes of continued growth.
But while the equity market soared, concerns grew about the impact of
Asia's economic woes. Those fears soon became reality when Russia's
escalating economic and political difficulties culminated in a series
of loan defaults and a devaluation of the ruble. Investor reaction was
swift and extreme: Money began to pour out of stocks and the Dow
plunged 512.61 points on August 31 - erasing all previous gains for
the year.
Seeking a safe haven, investors found refuge in U.S. Treasuries. While
Treasury yields dropped to their lowest levels in three decades, new
fears loomed on the horizon. The specter of presidential impeachment
hearings recalled the 1970s bear market during the Watergate scandal.
Rumors of troubled hedge funds and their potential impact on the
nation's economy added to investor worries.
Faced with the possibility of a global economic crisis, the U.S.
Federal Reserve Board stepped in. To address the lack of confidence in
domestic and global equity markets, the Fed instituted a series of
three separate quarter-point interest-rate cuts. The first came on
September 29. Then, in a surprise move, the Fed slashed rates another
quarter-point on October 15, and the Dow responded with its
third-greatest single-day point gain ever. The third reduction - a
so-called "insurance" cut on November 17 - helped solidify the
confidence the stock market needed to support a fourth-quarter rally.
Technology stocks, particularly the high-flying Internet issues,
helped drive stock market performance to new heights. Strong holiday
sales also lifted confidence heading into the new year.
The stock market maintained its momentum in January. The S&P 500, Dow
and NASDAQ all reached record highs during the first month of 1999 -
this, despite concerns about the impact of Brazil's currency
devaluation. The markets slowed somewhat in February, principally in
anticipation that the Fed was considering a rate hike, and fears of a
slowdown in the technology sector.
The strength of the domestic economy during the 12-month period helped
the CONSUMER sector notch solid returns. Holdings in cable TV and
Internet stocks bolstered Multimedia and Leisure. Retailing and
Consumer Industries benefited from their domestic focus. Food &
Agriculture trailed its indexes due to the poor earnings of many
packaged-food companies.
CYCLICAL stocks - whose performance tends to mirror the ups and downs
of the economy - were hampered by weak international economies.
Despite the global exposure of many airlines, Air Transportation
notched a positive return. Transportation fell slightly, but beat its
Goldman Sachs index. Construction and Housing suffered due to
poor-performing new-home builder stocks. Automotive lagged due to the
poor performance of auto parts stocks. An unfavorable supply/demand
balance, created by weakness in Asia, detracted from Chemicals.
Satellite launch and orbit failures, along with failed mergers in the
sector, hurt Defense and Aerospace. The oversupply and slack demand
for global commodities impaired Industrial Materials, Paper and Forest
Products, and Industrial Equipment. The economically sensitive
Cyclical Industries and Environmental Services portfolios also were
dragged down by the international fiscal crisis.
Currency devaluations in Russia and Brazil, and Russia's loan
defaults, were particularly detrimental to the FINANCIAL SERVICES
sector. The resulting liquidity crunch prevented any of the Select
portfolios from topping the broad-based S&P 500. However, thanks to
strong stock picking, Insurance and Financial Services beat their
Goldman Sachs benchmark. Regional Banks, as well as Brokerage and
Investment Management, posted positive - albeit more modest - returns.
A sharp increase in loan prepayments and refinancings hurt Home
Finance.
Continuing their trend of recent vigorous performance, HEALTH CARE
stocks helped contribute to the broad market's overall success. The
strong pharmaceutical industry buoyed Health Care and Biotechnology.
An emphasis on large-cap cardiology stocks helped Medical Equipment
and Systems generate index-beating performance. The uncertain
profitability outlook for HMOs and concern over Medicare budget cuts
dragged down Medical Delivery.
The period's hardest-hit sector was NATURAL RESOURCES. Overproduction,
lack of demand and weak global economic growth contributed to poor
results nearly across the board. While the price of gold finally
stopped its slide, it was still too low for holdings in both the Gold
and the Precious Metals and Minerals portfolios to operate profitably.
The low price and oversupply of oil was the major detractor for
Natural Resources, Energy and Energy Service.
The TECHNOLOGY sector accounted for nine of the top-10 best-performing
stocks in the S&P 500 by the end of 1998. Computers, Developing
Communications and Technology each returned over 55%. Both the
Electronics and the Software and Computer Services portfolios returned
over 30%, yet they still trailed the Goldman Sachs index. A lack of
exposure to large hardware and software companies caused Business
Services and Outsourcing to lag the Goldman Sachs benchmark.
Telecommunication companies were among the few outperformers in the
UTILITIES sector. Overweighted positions in that industry helped
Utilities Growth and Telecommunications produce solid returns. Natural
Gas, on the other hand, struggled greatly because of plunging oil
prices and weak demand.
In the pages that follow, you'll find detailed summaries for each of
the Select funds. We hope that you find them informative and useful
for evaluating your investments. Thank you very much for your
continued interest in the Fidelity Select Portfolios.
Sincerely,
William R. Ebsworth
Group Leader, FMRCo Equity Research
Select Group Leader
CUMULATIVE TOTAL RETURNS
FOR THE YEAR ENDED FEBRUARY 28, 1999
Computers Row: 1, Col: 1, Value: 66.43000000000001%
Row: 1, Col: 2, Value: nil
Developing Communications Row: 2, Col: 1, Value: 63.01%
Row: 2, Col: 2, Value: 0.0
Technology Row: 3, Col: 1, Value: 55.66%
Row: 3, Col: 2, Value: 0.0
Leisure Row: 4, Col: 1, Value: 37.54%
Row: 4, Col: 2, Value: 0.0
Multimedia Row: 5, Col: 1, Value: 36.68%
Row: 5, Col: 2, Value: 0.0
Retailing Row: 6, Col: 1, Value: 36.66%
Row: 6, Col: 2, Value: 0.0
Electronics Row: 7, Col: 1, Value: 35.3%
Row: 7, Col: 2, Value: 0.0
Software & Computer
Services Row: 8, Col: 1, Value: 32.57%
Row: 8, Col: 2, Value: 0.0
Utilities Growth Row: 9, Col: 1, Value: 32.17%
Row: 9, Col: 2, Value: 0.0
Health Care Row: 10, Col: 1, Value: 27.2%
Row: 10, Col: 2, Value: 0.0
Biotechnology Row: 11, Col: 1, Value: 27.13%
Row: 11, Col: 2, Value: 0.0
Business Services &
Outsourcing Row: 12, Col: 1, Value: 26.23%
Row: 12, Col: 2, Value: 0.0
Telecommunications Row: 13, Col: 1, Value: 22.21%
Row: 13, Col: 2, Value: 0.0
Medical Equipment &
Systems 1 Row: 14, Col: 1, Value: 21.0%
Row: 14, Col: 2, Value: 0.0
Consumer Industries Row: 15, Col: 1, Value: 20.18%
Row: 15, Col: 2, Value: 0.0
S&P 500 Row: 16, Col: 1, Value: 0.0
Row: 16, Col: 2, Value: 19.74%
Insurance Row: 17, Col: 1, Value: 9.84%
Row: 17, Col: 2, Value: 0.0
Financial Services Row: 18, Col: 1, Value: 8.42%
Row: 18, Col: 2, Value: 0.0
Food & Agriculture Row: 19, Col: 1, Value: 7.83%
Row: 19, Col: 2, Value: 0.0
Brokerage & Investment
Management Row: 20, Col: 1, Value: 4.76%
Row: 20, Col: 2, Value: 0.0
Air Transportation Row: 21, Col: 1, Value: 4.109999999999999%
Row: 21, Col: 2, Value: 0.0
Regional Banks Row: 22, Col: 1, Value: 3.1%
Row: 22, Col: 2, Value: 0.0
Industrial Equipment Row: 23, Col: 1, Value: 1.0%
Row: 23, Col: 2, Value: 0.0
Transportation Row: 24, Col: 1, Value: -1.73%
Row: 24, Col: 2, Value: 0.0
Construction & Housing Row: 25, Col: 1, Value: -2.16%
Row: 25, Col: 2, Value: 0.0
Cyclical Industries Row: 26, Col: 1, Value: -4.96%
Row: 26, Col: 2, Value: 0.0
Automotive Row: 27, Col: 1, Value: -8.52%
Row: 27, Col: 2, Value: 0.0
Defense & Aerospace Row: 28, Col: 1, Value: -9.9%
Row: 28, Col: 2, Value: 0.0
Precious Metals &
Minerals Row: 29, Col: 1, Value: -10.89%
Row: 29, Col: 2, Value: 0.0
Gold Row: 30, Col: 1, Value: -15.69%
Row: 30, Col: 2, Value: 0.0
Paper & Forest Row: 31, Col: 1, Value: -17.01%
Row: 31, Col: 2, Value: 0.0
Industrial Materials Row: 32, Col: 1, Value: -18.72%
Row: 32, Col: 2, Value: 0.0
Home Finance Row: 33, Col: 1, Value: -19.12%
Row: 33, Col: 2, Value: 0.0
Natural Gas Row: 34, Col: 1, Value: -19.17%
Row: 34, Col: 2, Value: 0.0
Energy Row: 35, Col: 1, Value: -22.0%
Row: 35, Col: 2, Value: 0.0
Environmental Services Row: 36, Col: 1, Value: -22.23%
Row: 36, Col: 2, Value: 0.0
Chemicals Row: 37, Col: 1, Value: -23.66%
Row: 37, Col: 2, Value: 0.0
Natural Resources Row: 38, Col: 1, Value: -24.57%
Row: 38, Col: 2, Value: 0.0
Medical Delivery Row: 39, Col: 1, Value: -29.47%
Row: 39, Col: 2, Value: 0.0
Energy Service Row: 40, Col: 1, Value: -50.57%
Row: 40, Col: 2, Value: 0.0
1. RETURNS ARE FROM INCEPTION DATE APRIL 28, 1998.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. TOTAL RETURNS
INCLUDE CHANGES IN A FUND'S SHARE PRICE, PLUS REINVESTMENT OF ANY
DIVIDENDS AND CAPITAL GAINS BUT DO NOT INCLUDE SELECT'S 3% SALES
CHARGE, AND CERTAIN FEES PAID BY SHAREHOLDERS UPON EXCHANGE OR
REDEMPTION. FIGURES FOR THE STANDARD & POOR'S 500 INDEX (S&P 500
(registered trademark)), A MARKET CAPITALIZATION-WEIGHTED INDEX OF
COMMON STOCKS, INCLUDE REINVESTMENT OF DIVIDENDS. S&P 500 IS A
REGISTERED TRADEMARK OF STANDARD & POOR'S. ALL PERFORMANCE NUMBERS ARE
HISTORICAL; EACH EQUITY FUND'S SHARE PRICE AND RETURN WILL VARY AND
SHAREHOLDERS MAY HAVE A GAIN OR LOSS WHEN THEY SELL THEIR SHARES. IF
FMR HAD NOT REIMBURSED CERTAIN FUND EXPENSES FOR SOME OF THE FUNDS,
THOSE RETURNS WOULD HAVE BEEN LOWER.
CONSUMER INDUSTRIES PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the past five year and life of fund
total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
1999
SELECT CONSUMER INDUSTRIES 20.18% 142.30% 344.37%
SELECT CONSUMER INDUSTRIES 16.50% 134.96% 330.97%
(LOAD ADJ.)
S&P 500 19.74% 194.91% 331.09%
GS Consumer Industries 16.26% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or since
the fund started on June 29, 1990. You can compare the fund's returns
to the performance of both the Standard & Poor's 500 Index - a market
capitalization-weighted index of common stocks - and the Goldman Sachs
Consumer Industries Index - a market capitalization-weighted index of
300 stocks designed to measure the performance of companies in the
consumer industries sector. These benchmarks include reinvestment of
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
1999
SELECT CONSUMER INDUSTRIES 20.18% 19.36% 18.78%
SELECT CONSUMER INDUSTRIES 16.50% 18.63% 18.36%
(LOAD ADJ.)
S&P 500 19.74% 24.15% 18.36%
GS Consumer Industries 16.26% n/a n/a
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER LIFE OF FUND
Consumer Industries S&P 500
00517 SP001
1990/06/29 9700.00 10000.00
1990/07/31 9670.90 9968.00
1990/08/31 8943.40 9066.89
1990/09/30 8439.00 8625.34
1990/10/31 8749.40 8588.25
1990/11/30 9234.40 9143.05
1990/12/31 9593.72 9398.14
1991/01/31 9808.43 9807.90
1991/02/28 10569.68 10509.16
1991/03/31 11077.18 10763.48
1991/04/30 10950.31 10789.32
1991/05/31 11477.33 11255.41
1991/06/30 10911.27 10739.92
1991/07/31 11623.72 11240.40
1991/08/31 12101.94 11506.79
1991/09/30 11994.59 11314.63
1991/10/31 12375.21 11466.25
1991/11/30 11857.95 11004.16
1991/12/31 13290.07 12263.03
1992/01/31 13379.46 12034.94
1992/02/29 13836.37 12191.39
1992/03/31 13677.45 11953.66
1992/04/30 13717.18 12305.10
1992/05/31 13627.78 12365.39
1992/06/30 13015.69 12181.15
1992/07/31 13388.15 12679.36
1992/08/31 13253.65 12419.43
1992/09/30 13377.81 12565.98
1992/10/31 13595.08 12609.96
1992/11/30 14246.90 13039.96
1992/12/31 14427.78 13200.35
1993/01/31 14331.67 13311.24
1993/02/28 13851.10 13492.27
1993/03/31 14662.73 13776.96
1993/04/30 14566.61 13443.55
1993/05/31 15719.98 13803.84
1993/06/30 15730.66 13843.87
1993/07/31 15880.17 13788.50
1993/08/31 16916.07 14311.08
1993/09/30 17289.85 14200.89
1993/10/31 17823.81 14494.84
1993/11/30 17428.68 14357.14
1993/12/31 17987.73 14530.86
1994/01/31 17835.98 15024.91
1994/02/28 17789.29 14617.74
1994/03/31 16645.36 13980.40
1994/04/30 16823.06 14159.35
1994/05/31 16600.01 14391.57
1994/06/30 15684.31 14038.97
1994/07/31 16106.94 14499.45
1994/08/31 17046.12 15093.93
1994/09/30 16729.15 14724.13
1994/10/31 17057.86 15055.42
1994/11/30 16224.34 14507.10
1994/12/31 16716.09 14722.24
1995/01/31 16569.67 15103.99
1995/02/28 16972.32 15692.59
1995/03/31 17435.98 16155.68
1995/04/30 17815.10 16631.47
1995/05/31 18145.91 17296.23
1995/06/30 18133.66 17698.02
1995/07/31 18893.31 18284.88
1995/08/31 18856.56 18330.78
1995/09/30 19861.26 19104.34
1995/10/31 20755.69 19036.14
1995/11/30 21980.94 19871.82
1995/12/31 21446.67 20254.55
1996/01/31 21446.67 20944.02
1996/02/29 22065.08 21138.17
1996/03/31 22844.29 21341.73
1996/04/30 23611.12 21656.31
1996/05/31 24835.58 22214.82
1996/06/30 24711.90 22299.46
1996/07/31 22015.61 21314.27
1996/08/31 22361.92 21763.79
1996/09/30 23809.01 22988.66
1996/10/31 23994.54 23622.68
1996/11/30 24674.80 25408.32
1996/12/31 24266.64 24904.98
1997/01/31 25355.05 26461.05
1997/02/28 25552.95 26668.50
1997/03/31 24798.48 25572.69
1997/04/30 24984.00 27099.38
1997/05/31 26715.57 28749.19
1997/06/30 28026.61 30037.16
1997/07/31 29646.86 32427.21
1997/08/31 28929.50 30610.64
1997/09/30 31836.05 32287.18
1997/10/31 31205.27 31208.79
1997/11/30 32541.05 32653.45
1997/12/31 33501.90 33214.11
1998/01/31 33331.18 33581.45
1998/02/28 35865.82 36003.35
1998/03/31 37888.28 37847.08
1998/04/30 37655.37 38227.82
1998/05/31 37857.53 37570.69
1998/06/30 39717.39 39096.81
1998/07/31 38976.14 38680.43
1998/08/31 33410.05 33088.01
1998/09/30 33612.21 35207.63
1998/10/31 37709.28 38071.42
1998/11/30 39825.21 40378.93
1998/12/31 42711.33 42705.56
1999/01/31 43537.91 44491.51
1999/02/26 43097.00 43108.71
IMATRL PRASUN SHR__CHT 19990228 19990309 143604 R00000000000107
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Select Consumer Industries Portfolio on June 29,
1990, when the fund started, and the current 3.00% sales charge was
paid. As the chart shows, by February 28, 1999, the value of the
investment would have grown to $43,097 - a 330.97% increase on the
initial investment - and includes the effect of a $7.50 trading fee.
For comparison, look at how the Standard & Poor's 500 Index did over
the same period. With dividends and capital gains, if any, reinvested,
the same $10,000 investment would have grown to $43,109 - a 331.09%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Wal-Mart Stores, Inc. 6.7
Procter & Gamble Co. 4.6
Philip Morris Companies, Inc. 3.9
Home Depot, Inc. 3.1
McDonald's Corp. 2.7
CBS Corp. 2.3
Gillette Co. 2.2
Disney (Walt) Co. 2.2
Time Warner, Inc. 2.2
PepsiCo, Inc. 2.0
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
General Merchandise Stores 12.5%
Household Products 11.2%
Broadcasting 10.5%
Foods 7.5%
Retail & Wholesale,
Miscellaneous 6.4%
All Others 51.9%*
Row: 1, Col: 1, Value: 51.9
Row: 1, Col: 2, Value: 6.4
Row: 1, Col: 3, Value: 7.5
Row: 1, Col: 4, Value: 10.5
Row: 1, Col: 5, Value: 11.2
Row: 1, Col: 6, Value: 12.5
* INCLUDES SHORT-TERM INVESTMENTS
CONSUMER INDUSTRIES PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Doug Chase)
Doug Chase,
Portfolio Manager of
Fidelity Select Consumer
Industries Portfolio
Q. HOW DID THE FUND PERFORM, DOUG?
A. For the 12-month period that ended February 28, 1999, the fund
returned 20.18%. This compared favorably to the 19.74% return of the
Standard & Poor's 500 Index. The fund also outperformed the Goldman
Sachs Consumer Industries Index - an index of 300 stocks designed to
measure the performance of companies in the consumer industries sector
- - which returned 16.26% over the same period.
Q. WHAT WAS YOUR STRATEGY DURING THIS VOLATILE PERIOD?
A. I looked for opportunities to buy undervalued companies, as well as
companies that appeared to have the best business trends at the time.
In the beginning of August, I began to shift from retailing stocks to
multinational companies, because multinationals were cheap and
retailers were getting expensive. When the market plummeted in late
August, retailing took it on the chin, so as retail stocks got
cheaper, I added more to the portfolio. With the approach of the end
of the calendar year - the usual time for retail stock sell-offs - I
decided that conditions still looked positive after talking to the
management of many retailers. I pared back the fund's multinational
holdings and added even more retail stocks. This strategy worked well.
Within the consumer products area, I stayed focused on household
products and personal care during the year rather than on food,
beverage and tobacco. The first two groups tend to have higher sales
growth and better earnings growth over time, because it's much easier
to innovate in these areas.
Q. HOW MUCH OF AN IMPACT DID GLOBAL ECONOMIC PROBLEMS HAVE ON THE
FUND?
A. Among consumer stocks, I observed that generally if the majority
of a company's sales came from the U.S., and if it made its earnings
targets, its stock performed well. If the majority of sales came from
outside the U.S., then its stock did poorly, whether or not the
company made its earnings targets. So, multinational companies like
Coca-Cola, Gillette and Avon were punished, regardless of the impact
on their earnings from international economic problems.
Q. WHICH STOCKS PERFORMED WELL?
A. By their nature, retailers operate primarily in the U.S., so they
generally performed well during the period. Dayton Hudson - which owns
discounter Target Stores - Lowe's hardware stores and Saks all
performed strongly. Wal-Mart, the fund's top holding at the end of the
period, was a stellar performer, benefiting from its steadily
increasing market share and its growing earnings. Clorox acquired
First Brands, the maker of Glad Bag products, and its stock price
increased as a result. Clorox also performed well based on its
earnings and volume growth. Drug chains Walgreen and CVS did very
well, benefiting from steady earnings growth.
Q. WHICH STOCKS DISAPPOINTED?
A. As I mentioned earlier, Gillette, one of the fund's top holdings,
did poorly overall, recovering slightly toward the end of the period.
Gillette did have lower earnings, but it also had a great story - its
launch of the new Mach 3 razor. Although the launch was a huge
success, it could not offset the impact of the global economic crisis.
Coca-Cola was another disappointment. With the majority of its sales
outside the U.S., Coca-Cola had significant international exposure,
and its stock performed poorly. Avon was an even bigger
disappointment, because in spite of meeting earnings targets and
maintaining earnings estimates, its stock was extremely volatile,
simply because the majority of its business is outside the U.S.
Q. WHAT'S YOUR OUTLOOK, DOUG?
A. I'm always cautious. Consumer activity is very strong right now,
but the U.S. may not have absorbed the total impact of the world's
economic problems. It is possible that the U.S. economy simply cannot
strengthen much further without triggering wage inflation. Stocks have
become much more expensive without a corresponding decline in interest
rates to justify their higher price-to-earnings ratios. I'm continuing
to take a bottom-up approach, picking high-quality stocks rather than
betting on the direction of the economy. I'm also taking a long-term
view, waiting for opportunities to present themselves rather than
trying to predict the future or reacting emotionally to events in the
market. So far, that's proved to be a successful strategy for the
fund.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: June 29, 1990
FUND NUMBER: 517
TRADING SYMBOL: FSCPX
SIZE: as of February 28, 1999, more than
$82 million
MANAGER: Doug Chase, since 1997; manager,
Fidelity Select Automotive Portfolio, 1994-1997;
Fidelity Select Industrial Materials Portfolio,
1994- 1997; joined Fidelity in 1993
CONSUMER INDUSTRIES PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.5%
SHARES VALUE (NOTE 1)
ADVERTISING - 1.8%
Interpublic Group of 4,000 $ 299,250
Companies, Inc.
Omnicom Group, Inc. 9,200 609,500
Outdoor Systems, Inc. (a) 9,875 275,883
Young & Rubicam, Inc. 6,600 249,150
1,433,783
AIR TRANSPORTATION - 0.3%
Viad Corp. 10,400 274,950
APPAREL STORES - 4.6%
Abercrombie & Fitch Co. Class 7,100 539,600
A (a)
AnnTaylor Stores Corp. (a) 10,700 404,594
Chicos Fas, Inc. (a) 5,500 135,438
Gap, Inc. 17,225 1,114,242
Limited, Inc. (The) 22,200 788,100
Ross Stores, Inc. 3,500 160,125
TJX Companies, Inc. 16,300 465,569
Wet Seal, Inc. Class A (a) 4,500 174,656
3,782,324
AUTOS, TIRES, & ACCESSORIES -
0.4%
Canadian Tire Corp. Ltd. 4,900 124,791
Series A
Pep Boys-Manny, Moe & Jack 8,700 158,775
283,566
BEVERAGES - 5.8%
Anheuser-Busch Companies, 17,200 1,319,025
Inc.
Celestial Seasonings, Inc. (a) 5,300 153,038
Coca-Cola Co. (The) 7,600 485,925
Coors (Adolph) Co. Class B 5,100 303,769
Golden State Vinters, Inc. 21,300 258,263
Class B (a)
PepsiCo, Inc. 42,600 1,602,825
Seagram Co. Ltd. 12,800 593,394
4,716,239
BROADCASTING - 10.5%
Cablevision Systems Corp. 5,000 325,000
Class A (a)
CBS Corp. 49,800 1,836,375
Chancellor Media Corp. (a) 4,100 179,375
Clear Channel Communications, 5,200 312,000
Inc. (a)
Comcast Corp.:
Class A 5,000 339,375
Class A (special) 5,900 418,531
Cox Communications, Inc. 8,700 615,525
Class A (a)
Jacor Communications, Inc. 8,300 578,925
Class A (a)
MediaOne Group, Inc. 17,900 975,550
Tele-Communications, Inc. 14,600 917,063
(TCI Group) Series A (a)
Time Warner, Inc. 27,502 1,773,879
USA Networks, Inc. (a) 7,100 282,225
8,553,823
SHARES VALUE (NOTE 1)
CONSUMER ELECTRONICS - 1.0%
Gemstar International Group 3,600 $ 230,400
Ltd. (a)
Newell Co. 14,400 612,000
842,400
DRUG STORES - 2.4%
CVS Corp. 16,854 893,262
Walgreen Co. 33,800 1,081,600
1,974,862
EDUCATIONAL SERVICES - 0.1%
Apollo Group, Inc. Class A (a) 2,400 72,150
ENTERTAINMENT - 5.8%
Carnival Corp. 7,300 324,850
Disney (Walt) Co. 51,300 1,805,119
King World Productions, Inc. 11,800 311,963
(a)
Royal Carribean Cruises Ltd. 2,400 79,200
Tele-Communications, Inc. 13,550 730,006
(Liberty Media Group) Series
A (a)
Viacom, Inc.:
Class A (a) 1,900 165,894
Class B (non-vtg.) (a) 14,900 1,316,788
4,733,820
FOODS - 7.5%
American Italian Pasta Co. 11,200 285,600
Class A (a)
Archer-Daniels-Midland Co. 5,670 85,759
Bestfoods 10,200 478,763
ConAgra, Inc. 12,000 361,500
Corn Products International, 4,050 95,175
Inc.
Dean Foods Co. 2,900 105,669
Earthgrains Co. 6,700 164,569
Flowers Industries, Inc. 2,900 70,688
Groupe Danone 900 225,142
Heinz (H.J.) Co. 15,800 860,113
Hershey Foods Corp. 3,100 192,975
Interstate Bakeries Corp. 6,500 156,000
Keebler Foods Co. (a) 9,700 378,300
Kellogg Co. 11,800 436,600
Nabisco Holdings Corp. Class A 8,500 377,188
Quaker Oats Co. 7,800 426,075
Ralston Purina Co. 6,100 164,319
Sanderson Farms, Inc. 7,800 115,050
Sara Lee Corp. 26,700 725,906
Tootsie Roll Industries, Inc. 3,600 165,600
Vlasic Foods International, 7,100 86,531
Inc. (a)
Wrigley (Wm.) Jr. Co. 1,700 158,100
6,115,622
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
GENERAL MERCHANDISE STORES -
12.5%
Consolidated Stores Corp. (a) 11,428 $ 287,843
Costco Companies, Inc. (a) 8,500 682,656
Dayton Hudson Corp. 24,800 1,551,550
Dollar Tree Stores, Inc. (a) 6,000 240,000
Federated Department Stores, 23,600 898,275
Inc. (a)
Nordstrom, Inc. 4,900 197,225
Saks, Inc. (a) 25,543 917,952
Wal-Mart Stores, Inc. 62,900 5,432,975
10,208,476
GROCERY STORES - 4.2%
Albertson's, Inc. 11,100 632,700
Kroger Co. (a) 7,800 504,563
Loblaw Companies Ltd. 6,600 170,712
Meyer (Fred), Inc. (a) 16,800 1,079,400
Safeway, Inc. (a) 17,400 1,004,850
3,392,225
HOME FURNISHINGS - 0.1%
Maxim Group, Inc. (a) 5,900 106,938
HOUSEHOLD PRODUCTS - 11.2%
Alberto-Culver Co. Class A 6,600 143,550
Avon Products, Inc. 18,800 782,550
Church & Dwight Co., Inc. 4,700 196,225
Clorox Co. 9,178 1,085,872
Gillette Co. 33,800 1,812,525
Procter & Gamble Co. 41,700 3,732,150
Unilever NV (NY shares) 18,900 1,369,069
9,121,941
LEISURE DURABLES & TOYS - 1.0%
Brunswick Corp. 2,200 46,888
Harley-Davidson, Inc. 4,700 271,719
Hasbro, Inc. 5,500 203,500
Mattel, Inc. 11,800 311,225
833,332
LODGING & GAMING - 1.0%
Circus Circus Enterprises, 11,400 195,225
Inc. (a)
Prime Hospitality Corp. (a) 23,900 244,975
Promus Hotel Corp. (a) 7,200 253,350
Sun International Hotels Ltd. 3,400 120,913
(a)
814,463
MEDICAL FACILITIES MANAGEMENT
- - 0.0%
Coram Healthcare Corp. 216 0
warrants 7/11/99 (a)
SHARES VALUE (NOTE 1)
PACKAGING & CONTAINERS - 0.7%
Corning, Inc. 6,700 $ 358,450
Tupperware Corp. 9,900 173,250
531,700
PAPER & FOREST PRODUCTS - 1.0%
Kimberly-Clark Corp. 17,900 845,775
PRINTING - 0.2%
Reynolds & Reynolds Co. Class 5,400 101,925
A
Valassis Communications, Inc. 1,100 52,800
(a)
154,725
PUBLISHING - 3.1%
American Greetings Corp. 2,500 59,219
Class A
Gannet, Inc. 7,800 495,300
Harcourt General, Inc. 6,100 279,456
Harte Hanks Communications, 4,700 121,613
Inc.
Knight-Ridder, Inc. 2,200 110,413
McGraw-Hill Companies, Inc. 4,700 514,356
Playboy Enterprises, Inc. 11,900 318,325
Class B (a)
Reader's Digest Association, 11,600 394,400
Inc. Class A (non-vtg.)
Tribune Co. 3,100 205,569
2,498,651
REAL ESTATE INVESTMENT TRUSTS
- - 0.3%
Starwood Hotels & Resorts 7,300 226,300
Worldwide, Inc.
RESTAURANTS - 4.5%
Brinker International, Inc. 2,800 81,025
(a)
CEC Entertainment, Inc. (a) 2,600 78,000
CKE Restaurants, Inc. 5,700 151,406
Marriott International, Inc. 7,500 270,000
Class A
McDonald's Corp. 25,700 2,184,500
Outback Steakhouse, Inc. (a) 5,600 245,700
Papa John's International, 2,000 86,500
Inc. (a)
Sizzler International, Inc. 29,900 63,538
(a)
Starbucks Corp. (a) 2,200 116,325
Tricon Global Restaurants, 6,700 415,400
Inc. (a)
3,692,394
RETAIL & WHOLESALE,
MISCELLANEOUS - 6.4%
Action Performance Companies, 5,700 204,488
Inc. (a)
Finish Line, Inc. Class A (a) 12,900 155,606
Home Depot, Inc. 41,800 2,494,938
Lowe's Companies, Inc. 18,700 1,109,144
Office Depot, Inc. (a) 21,200 756,575
Staples, Inc. (a) 10,275 302,149
Tandy Corp. 2,100 116,813
Williams-Sonoma, Inc. (a) 2,100 71,794
5,211,507
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SERVICES - 1.1%
ACNielsen Corp. (a) 10,900 $ 283,400
Cintas Corp. 2,800 198,100
Day Runner, Inc. (a) 2,500 34,063
Modis Professional Services, 7,800 106,763
Inc. (a)
Service Corp. International 6,000 92,250
ServiceMaster Co. 9,350 174,728
889,304
TEXTILES & APPAREL - 1.1%
Fruit of the Loom, Inc. Class 3,100 39,331
A (a)
Liz Claiborne, Inc. 4,700 158,331
Mohawk Industries, Inc. (a) 1,200 39,000
Pacific Sunwear of 4,850 138,225
California, Inc. (a)
Tommy Hilfiger (a) 3,900 269,344
VF Corp. 2,600 125,125
WestPoint Stevens, Inc. Class 3,400 86,700
A (a)
856,056
TOBACCO - 3.9%
Philip Morris Companies, Inc. 81,700 3,196,513
TOTAL COMMON STOCKS 75,363,839
(Cost $58,708,527)
CASH EQUIVALENTS - 7.5%
Taxable Central Cash Fund (b) 6,128,201 6,128,201
(Cost $6,128,201)
TOTAL INVESTMENT IN $ 81,492,040
SECURITIES - 100%
(Cost $64,836,728)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $109,279,094 and $115,562,379, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $17,657 for the
period.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $65,576,721. Net unrealized appreciation
aggregated $15,915,319, of which $17,581,133 related to appreciated
investment securities and $1,665,814 related to depreciated investment
securities.
The fund hereby designates approximately $697,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 29% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentage for use in preparing 1999 income tax returns.
CONSUMER INDUSTRIES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 81,492,040
value (cost $64,836,728) -
See accompanying schedule
Receivable for investments 814,718
sold
Receivable for fund shares 719,696
sold
Dividends receivable 43,182
Interest receivable 16,458
Redemption fees receivable 67
Other receivables 35,533
TOTAL ASSETS 83,121,694
LIABILITIES
Payable for investments $ 639,912
purchased
Payable for fund shares 143,891
redeemed
Accrued management fee 39,145
Other payables and accrued 54,646
expenses
TOTAL LIABILITIES 877,594
NET ASSETS $ 82,244,100
Net Assets consist of:
Paid in capital $ 63,406,467
Accumulated undistributed net 2,182,319
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 16,655,314
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 2,585,485 $ 82,244,100
shares outstanding
NET ASSET VALUE and $31.81
redemption price per share
($82,244,100 (divided by)
2,585,485 shares)
Maximum offering price per $32.79
share (100/97.00 of $31.81)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 658,885
Dividends
Interest 250,336
TOTAL INCOME 909,221
EXPENSES
Management fee $ 457,965
Transfer agent fees 441,855
Accounting fees and expenses 75,037
Non-interested trustees' 274
compensation
Custodian fees and expenses 17,783
Registration fees 21,053
Audit 17,180
Legal 531
Reports to shareholders 8,724
Total expenses before 1,040,402
reductions
Expense reductions (13,370) 1,027,032
NET INVESTMENT INCOME (LOSS) (117,811)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 2,848,102
Foreign currency transactions 981 2,849,083
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 10,439,472
Assets and liabilities in (37) 10,439,435
foreign currencies
NET GAIN (LOSS) 13,288,518
NET INCREASE (DECREASE) IN $ 13,170,707
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 342,823
charges paid to FDC
Sales charges - Retained by $ 339,350
FDC
Deferred sales charges $ 208
withheld by FDC
Exchange fees withheld by FSC $ 4,553
Expense reductions Directed $ 12,166
brokerage arrangements
Custodian credits 1,204
$ 13,370
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (117,811) $ (238,907)
income (loss)
Net realized gain (loss) 2,849,083 5,217,352
Change in net unrealized 10,439,435 4,912,453
appreciation (depreciation)
NET INCREASE (DECREASE) IN 13,170,707 9,890,898
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (2,388,067) (1,876,813)
from net realized gains
Share transactions Net 69,216,485 75,182,201
proceeds from sales of shares
Reinvestment of distributions 2,350,548 1,832,262
Cost of shares redeemed (72,339,516) (31,326,802)
NET INCREASE (DECREASE) IN (772,483) 45,687,661
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 81,867 58,220
TOTAL INCREASE (DECREASE) 10,092,024 53,759,966
IN NET ASSETS
NET ASSETS
Beginning of period 72,152,076 18,392,110
End of period $ 82,244,100 $ 72,152,076
OTHER INFORMATION
Shares
Sold 2,390,153 3,007,674
Issued in reinvestment of 82,715 74,511
distributions
Redeemed (2,529,261) (1,330,685)
Net increase (decrease) (56,393) 1,751,500
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 F 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 27.31 $ 20.66 $ 17.84 $ 13.91 $ 15.24
period
Income from Investment
Operations
Net investment income (loss) C (.04) (.22) (.22) .08 (.15)
Net realized and unrealized 5.41 8.34 2.93 3.97 (.60)
gain (loss)
Total from investment 5.37 8.12 2.71 4.05 (.75)
operations
Less Distributions
From net investment income - - - (.02) -
From net realized gain (.90) (1.52) - (.01) (.60)
In excess of net realized gain - - - (.20) -
Total distributions (.90) (1.52) - (.23) (.60)
Redemption fees added to paid .03 .05 .11 .11 .02
in capital
Net asset value, end of period $ 31.81 $ 27.31 $ 20.66 $ 17.84 $ 13.91
TOTAL RETURN A, B 20.18% 40.36% 15.81% 30.01% (4.59)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 82,244 $ 72,152 $ 18,392 $ 22,362 $ 20,501
(000 omitted)
Ratio of expenses to average 1.34% 2.01% 2.49% 1.53% D 2.49% D
net assets
Ratio of expenses to average 1.32% E 1.97% E 2.44% E 1.48% E 2.49%
net assets after expense
reductions
Ratio of net investment (.15)% (.90)% (1.13)% .46% (1.08)%
income (loss) to average net
assets
Portfolio turnover rate 150% 199% 340% 601% 190%
</TABLE>
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D DURING THE
PERIOD, FMR AGREED TO
REIMBURSE A PORTION OF THE
FUND'S EXPENSES OR EXPENSES
WERE LIMITED IN ACCORDANCE
WITH A STATE EXPENSE
LIMITATION. WITHOUT THIS
REIMBURSEMENT, THE FUND'S
EXPENSE RATIO WOULD HAVE
BEEN HIGHER. E FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. F FOR
THE YEAR ENDED FEBRUARY 29.
FOOD AND AGRICULTURE PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the past 10 year total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT FOOD AND AGRICULTURE 7.83% 129.93% 435.61%
SELECT FOOD AND AGRICULTURE 4.52% 122.96% 419.46%
(LOAD ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Consumer Industries 16.26% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
index of common stocks - and the Goldman Sachs Consumer Industries
Index - a market capitalization-weighted index of 300 stocks designed
to measure the performance of companies in the consumer industries
sector. These benchmarks include reinvestment of dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT FOOD AND AGRICULTURE 7.83% 18.12% 18.27%
SELECT FOOD AND AGRICULTURE 4.52% 17.39% 17.91%
(LOAD ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Consumer Industries 16.26% n/a n/a
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER 10 YEARS
Food & Agriculture S&P 500
00009 SP001
1989/02/28 9700.00 10000.00
1989/03/31 10067.19 10233.00
1989/04/30 10587.38 10764.09
1989/05/31 11240.17 11200.04
1989/06/30 11461.02 11136.20
1989/07/31 12554.29 12141.80
1989/08/31 12360.75 12379.78
1989/09/30 12413.06 12329.02
1989/10/31 12287.52 12042.99
1989/11/30 12753.07 12288.66
1989/12/31 13045.22 12583.59
1990/01/31 12137.82 11739.23
1990/02/28 12311.46 11890.67
1990/03/31 12843.57 12205.77
1990/04/30 12793.16 11900.63
1990/05/31 13907.80 13060.94
1990/06/30 14358.95 12972.12
1990/07/31 14353.29 12930.61
1990/08/31 13306.22 11761.68
1990/09/30 12881.74 11188.89
1990/10/31 13187.37 11140.78
1990/11/30 13730.71 11860.47
1990/12/31 14261.95 12191.38
1991/01/31 14671.27 12722.92
1991/02/28 15776.44 13632.61
1991/03/31 16548.31 13962.52
1991/04/30 16296.86 13996.03
1991/05/31 16893.31 14600.66
1991/06/30 16197.29 13931.95
1991/07/31 16875.15 14581.18
1991/08/31 17547.06 14926.75
1991/09/30 17237.86 14677.48
1991/10/31 17243.81 14874.16
1991/11/30 17124.88 14274.73
1991/12/31 19123.80 15907.76
1992/01/31 18838.74 15611.87
1992/02/29 18733.39 15814.83
1992/03/31 18318.20 15506.44
1992/04/30 18107.50 15962.33
1992/05/31 18268.62 16040.54
1992/06/30 18068.88 15801.54
1992/07/31 18766.79 16447.82
1992/08/31 18683.55 16110.64
1992/09/30 18997.29 16300.75
1992/10/31 19202.19 16357.80
1992/11/30 19938.51 16915.60
1992/12/31 20276.20 17123.66
1993/01/31 20282.75 17267.50
1993/02/28 20230.31 17502.34
1993/03/31 20780.97 17871.64
1993/04/30 19974.08 17439.14
1993/05/31 20602.97 17906.51
1993/06/30 20397.90 17958.44
1993/07/31 20144.98 17886.61
1993/08/31 21108.82 18564.51
1993/09/30 21040.46 18421.56
1993/10/31 21833.41 18802.89
1993/11/30 21580.48 18624.26
1993/12/31 22064.04 18849.62
1994/01/31 22731.34 19490.50
1994/02/28 22595.01 18962.31
1994/03/31 21540.24 18135.55
1994/04/30 21299.56 18367.69
1994/05/31 21144.79 18668.92
1994/06/30 21306.93 18211.53
1994/07/31 22021.83 18808.87
1994/08/31 23422.14 19580.03
1994/09/30 23466.36 19100.32
1994/10/31 23908.57 19530.08
1994/11/30 23326.33 18818.79
1994/12/31 23408.61 19097.87
1995/01/31 24395.44 19593.08
1995/02/28 24885.04 20356.63
1995/03/31 25451.13 20957.35
1995/04/30 26007.40 21574.54
1995/05/31 26940.68 22436.88
1995/06/30 27578.42 22958.09
1995/07/31 27881.74 23719.38
1995/08/31 27835.07 23778.91
1995/09/30 30020.50 24782.38
1995/10/31 30067.17 24693.91
1995/11/30 31249.32 25777.97
1995/12/31 31985.24 26274.46
1996/01/31 33304.39 27168.84
1996/02/29 34322.25 27420.69
1996/03/31 33744.11 27684.75
1996/04/30 33128.99 28092.83
1996/05/31 34351.03 28817.34
1996/06/30 34384.52 28927.14
1996/07/31 33915.79 27649.13
1996/08/31 32836.04 28232.26
1996/09/30 33949.27 29821.17
1996/10/31 34577.03 30643.63
1996/11/30 36318.02 32959.99
1996/12/31 36255.11 32307.05
1997/01/31 37822.28 34325.59
1997/02/28 38986.72 34594.71
1997/03/31 37971.12 33173.21
1997/04/30 39477.60 35153.65
1997/05/31 40640.08 37293.80
1997/06/30 41990.06 38964.57
1997/07/31 43499.42 42064.98
1997/08/31 41493.20 39708.50
1997/09/30 43986.91 41883.33
1997/10/31 43199.42 40484.43
1997/11/30 46152.51 42358.45
1997/12/31 47253.51 43085.75
1998/01/31 45664.24 43562.28
1998/02/28 48181.40 46703.99
1998/03/31 50027.32 49095.70
1998/04/30 48760.67 49589.60
1998/05/31 49869.58 48737.16
1998/06/30 50915.73 50716.86
1998/07/31 49084.98 50176.72
1998/08/31 44314.57 42922.17
1998/09/30 46773.00 45671.77
1998/10/31 50936.65 49386.71
1998/11/30 52997.55 52380.04
1998/12/31 54666.56 55398.18
1999/01/31 52452.00 57714.93
1999/02/26 51946.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990309 144216 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Food and Agriculture Portfolio on February
28, 1989, and the current 3.00% sales charge was paid. As the chart
shows, by February 28, 1999, the value of the investment would have
grown to $51,946 - a 419.46% increase on the initial investment - and
includes the effect of a $7.50 trading fee. For comparison - look at
how the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Anheuser-Busch Companies, Inc. 7.4
McDonald's Corp. 6.9
PepsiCo, Inc. 5.8
Safeway, Inc. 5.7
Sara Lee Corp. 4.7
Philip Morris Companies, Inc. 4.3
Unilever NV (NY shares) 3.7
Heinz (H.J.) Co. 3.6
Kroger Co. 3.4
Coca-Cola Co. (The) 3.2
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Foods 35.1%
Beverages 19.3%
Grocery Stores 18.8%
Restaurants 8.9%
Household Products 5.3%
All Others 12.6%*
Row: 1, Col: 1, Value: 12.6
Row: 1, Col: 2, Value: 5.3
Row: 1, Col: 3, Value: 8.9
Row: 1, Col: 4, Value: 18.8
Row: 1, Col: 5, Value: 19.3
Row: 1, Col: 6, Value: 35.1
* INCLUDES SHORT-TERM INVESTMENTS
FOOD AND AGRICULTURE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Scott Offen)
Scott Offen,
Portfolio Manager
of Fidelity Select Food
and Agriculture Portfolio
Q. SCOTT, HOW DID THE FUND PERFORM?
A. For the 12 months that ended February 28, 1999, the fund posted a
total return of 7.83%, while the Standard & Poor's 500 Index returned
19.74% and the Goldman Sachs Consumer Industries Index - an index of
300 stocks designed to measure the performance of companies in the
consumer industries sector - returned 16.26% during the same 12-month
period.
Q. WHAT FACTORS AFFECTED THE FOOD AND AGRICULTURE SECTOR OVER THE PAST
YEAR?
A. It was a difficult period for most of the sector. The most
significant detractor to performance was the earnings shortfall
suffered by many packaged-foods companies. These earnings
disappointments were tied to the increased bargaining power grocery
store chains have developed through active consolidation. By creating
economies of scale - where growing to a certain size can lower costs -
the grocers have increased their leverage and helped force
packaged-food companies to sell their products to them at lower
prices. That deflation cut into food company earnings. In addition,
buying and eating trends among Americans have changed. Consumers are
buying more lower-priced, private-label or store-brand products and
are purchasing more prepared meals. These trends hurt food companies'
earnings at a time when, amid the volatile backdrop of the past year,
investors generally gravitate toward them; they generally post steady
earnings growth that arises from fairly constant demand for their
products. But earnings shortfalls dominated to the point where they
even hurt the share prices of some companies that met or exceeded
their earnings expectations.
Q. HOW DID THE OTHER GROUPS WITHIN THE SECTOR FARE?
A. They generally struggled as well. Beverage company stocks were
basically flat, including Coca-Cola, which was hurt by slowing
overseas sales. Tobacco companies, including Philip Morris, rebounded
when an agreement was reached with the states' attorneys general, but
started lagging again when a new round of civil litigation started.
Agricultural stocks were hurt by a deflationary environment. On the
positive side, beer stocks did well because of improved unit growth
and pricing power - the ability to sustain or raise prices without
sacrificing sales or market share.
Q. WHICH STOCKS WERE THE TOP CONTRIBUTORS TO THE FUND'S PERFORMANCE?
WHICH STOCKS DETRACTED?
A. Anheuser-Busch was a top performer, as this beer company enjoyed
the strong unit growth and pricing power I just talked about. Safeway
and Kroger also did well, as they bought up smaller supermarkets. As I
mentioned, large supermarket chains are strengthening through
consolidation, so I maintained a healthy weighting in that arena.
McDonald's improved its earnings by reducing costs in its U.S.
operations. In addition, the company's international business started
to generate free cash flow so that the company's overall cash flow
generation improved. Philip Morris, which I already mentioned, was a
net winner due to the tobacco settlement. On the negative side, Dole
Foods was hurt because Hurricane Mitch interrupted the banana market.
And Corn Products International proved to be one of the fund's worst
detractors. This is the kind of story that can confound stock market
investors from time to time. Stock prices generally follow a company's
earnings: When earnings improve or surprise on the upside, a stock
generally goes up, and vice versa. Corn Products International posted
one of the strongest growth rates in earnings among the stocks in the
fund. The company increased its earnings per share during the period,
yet the stock price fell over the past year. It's hard to pinpoint why
the stock didn't attract more investor interest. Perhaps it lagged
because it's a smaller-capitalization stock and investors focused more
on large-caps during the period, or maybe the company's story wasn't
as "sexy" as alternatives in the marketplace, such as Internet stocks.
The stock market doesn't always react logically.
Q. WHAT'S YOUR OUTLOOK?
A. Looking specifically at the packaged-food industry, these are
companies that could benefit from a round of consolidation. The
resulting larger companies would benefit from reduced costs and
economies of scale that would help them bargain for better pricing. As
it stands, there's too much competition and most of these firms have
been reluctant to consolidate. Looking at the overall sector, most
companies have improved their business plans. In addition, I think
investors have reset their expectations for the companies in the
sector, looking to see if they can match earnings projections that are
perhaps a bit more achievable. I believe the future looks better than
the recent past, but we'll have to see how it plays out.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: July 29, 1985
FUND NUMBER: 009
TRADING SYMBOL: FDFAX
SIZE: as of February 28, 1999, more than
$206 million
MANAGER: Scott Offen, since 1996; manager,
Fidelity Select Paper and Forest Products
Portfolio, 1993-1996; Fidelity Select
Brokerage and Investment Management Portfolio,
1990-1993; Fidelity Select Life Insurance
Portfolio, 1988-1990; joined Fidelity in 1985
FOOD AND AGRICULTURE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.7%
SHARES VALUE (NOTE 1)
AGRICULTURE - 0.4%
Delta & Pine Land Co. 10,100 $ 326,988
Pioneer Hi-Bred 21,300 499,219
International, Inc.
826,207
BEVERAGES - 19.3%
Anheuser-Busch Companies, 198,500 15,222,465
Inc.
Celestial Seasonings, Inc. (a) 24,400 704,550
Coca-Cola Bottling Co. 20,100 1,125,600
Consolidated
Coca-Cola Co. (The) 104,600 6,687,863
Coca-Cola Enterprises, Inc. 29,800 923,800
Coors (Adolph) Co. Class B 41,300 2,459,931
PepsiCo, Inc. 317,800 11,957,225
Whitman Corp. 38,000 722,000
39,803,434
CHEMICALS & PLASTICS - 0.5%
IMC Global, Inc. 46,700 931,081
FOODS - 35.1%
American Italian Pasta Co. 36,000 918,000
Class A (a)
Archer-Daniels-Midland Co. 181,259 2,741,542
Aurora Foods, Inc. (a) 28,400 459,725
Bestfoods 101,200 4,750,075
ConAgra, Inc. 191,400 5,765,925
Corn Products International, 147,375 3,463,313
Inc.
Dean Foods Co. 19,600 714,175
Dole Food, Inc. 24,100 759,150
Earthgrains Co. 29,300 719,681
Flowers Industries, Inc. 74,600 1,818,375
General Mills, Inc. 24,100 1,944,569
Groupe Danone 5,300 1,325,833
Heinz (H.J.) Co. 136,500 7,430,719
Hershey Foods Corp. 35,700 2,222,325
Hormel Foods Corp. 25,200 907,200
IBP, Inc. 35,300 794,250
International Home Foods, 26,600 415,625
Inc. (a)
Interstate Bakeries Corp. 34,900 837,600
Keebler Foods Co. (a) 61,300 2,390,700
McCormick & Co., Inc. 22,100 632,613
(non-vtg.)
Nabisco Holdings Corp. Class A 55,300 2,453,938
Nestle SA:
ADR (Reg.) 34,700 3,313,850
(Reg.) 956 1,806,952
Quaker Oats Co. 46,900 2,561,913
Ralston Purina Co. 111,800 3,011,613
Sanderson Farms, Inc. 46,900 691,775
Sara Lee Corp. 356,600 9,695,063
Smithfield Foods, Inc. (a) 22,500 591,328
Suiza Foods Corp. (a) 11,700 432,900
Sysco Corp. 135,600 3,830,700
Tootsie Roll Industries, Inc. 19,562 899,852
SHARES VALUE (NOTE 1)
Tyson Foods, Inc. 50,925 $ 1,043,963
United Biscuits Holdings PLC 54,555 158,725
Universal Foods Corp. 19,200 435,600
Vlasic Foods International, 20,000 243,750
Inc. (a)
Wrigley (Wm.) Jr. Co. 4,200 390,600
72,573,917
GROCERY STORES - 18.8%
Albertson's, Inc. 111,600 6,361,200
American Stores Co. 162,800 5,494,500
Hannaford Brothers Co. 40,500 1,903,500
Kroger Co. (a) 108,800 7,038,000
Meyer (Fred), Inc. (a) 83,500 5,364,875
Safeway, Inc. (a) 204,200 11,792,550
Supervalu, Inc. 39,800 957,688
38,912,313
HOLDING COMPANIES - 0.1%
Triarc Companies, Inc. Class 19,600 311,150
A (a)
HOUSEHOLD PRODUCTS - 5.3%
Unilever NV (NY shares) 105,800 7,663,888
Unilever PLC 326,900 3,187,251
10,851,139
RESTAURANTS - 8.9%
McDonald's Corp. 166,400 14,144,000
Outback Steakhouse, Inc. (a) 29,200 1,281,150
Tricon Global Restaurants, 46,100 2,858,200
Inc. (a)
18,283,350
TOBACCO - 4.3%
Philip Morris Companies, Inc. 227,600 8,904,850
TOTAL COMMON STOCKS 191,397,441
(Cost $157,237,335)
CASH EQUIVALENTS - 7.3%
Taxable Central Cash Fund (b) 15,157,520 15,157,520
(Cost $15,157,520)
TOTAL INVESTMENT IN $ 206,554,961
SECURITIES - 100%
(Cost $172,394,855)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $141,491,375 and $202,525,536, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $54,460 for the
period.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $172,928,466. Net unrealized appreciation
aggregated $33,626,495, of which $38,352,761 related to appreciated
investment securities and $4,726,266 related to depreciated investment
securities.
The fund hereby designates approximately $27,714,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 100% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentage for use in preparing 1999 income tax returns.
FOOD AND AGRICULTURE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 206,554,961
value (cost $172,394,855) -
See accompanying schedule
Receivable for fund shares 208,427
sold
Dividends receivable 214,122
Interest receivable 60,759
Redemption fees receivable 280
TOTAL ASSETS 207,038,549
LIABILITIES
Payable for fund shares $ 801,602
redeemed
Accrued management fee 101,113
Other payables and accrued 128,848
expenses
TOTAL LIABILITIES 1,031,563
NET ASSETS $ 206,006,986
Net Assets consist of:
Paid in capital $ 163,091,993
Undistributed net investment 490,066
income
Accumulated undistributed net 8,264,883
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 34,160,044
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 4,390,575 $ 206,006,986
shares outstanding
NET ASSET VALUE and $46.92
redemption price per share
($206,006,986 (divided by)
4,390,575 shares)
Maximum offering price per $48.37
share (100/97.00 of $46.92)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 3,016,334
Dividends
Interest (including income on 929,718
securities loaned of $39,045)
TOTAL INCOME 3,946,052
EXPENSES
Management fee $ 1,335,082
Transfer agent fees 1,340,677
Accounting and security 222,264
lending fees
Non-interested trustees' 796
compensation
Custodian fees and expenses 15,000
Registration fees 23,434
Audit 15,760
Legal 1,372
Reports to shareholders 34,266
Total expenses before 2,988,651
reductions
Expense reductions (62,961) 2,925,690
NET INVESTMENT INCOME 1,020,362
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 20,703,810
Foreign currency transactions (31,096) 20,672,714
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (4,236,124)
Assets and liabilities in (42) (4,236,166)
foreign currencies
NET GAIN (LOSS) 16,436,548
NET INCREASE (DECREASE) IN $ 17,456,910
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 373,556
charges paid to FDC
Sales charges - Retained by $ 371,478
FDC
Deferred sales charges $ 5,955
withheld by FDC
Exchange fees withheld by FSC $ 16,665
Expense reductions Directed $ 62,550
brokerage arrangements
Custodian credits 411
$ 62,961
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ 1,020,362 $ 1,795,355
income
Net realized gain (loss) 20,672,714 33,786,692
Change in net unrealized (4,236,166) 14,339,862
appreciation (depreciation)
NET INCREASE (DECREASE) IN 17,456,910 49,921,909
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (739,119) (2,133,491)
From net investment income
From net realized gain (25,615,738) (27,598,622)
TOTAL DISTRIBUTIONS (26,354,857) (29,732,113)
Share transactions Net 80,793,360 212,263,562
proceeds from sales of shares
Reinvestment of distributions 25,579,323 29,301,818
Cost of shares redeemed (142,182,438) (234,907,260)
NET INCREASE (DECREASE) IN (35,809,755) 6,658,120
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 148,005 296,205
TOTAL INCREASE (DECREASE) (44,559,697) 27,144,121
IN NET ASSETS
NET ASSETS
Beginning of period 250,566,683 223,422,562
End of period (including $ 206,006,986 $ 250,566,683
undistributed net investment
income of $490,066 and
$367,788, respectively)
OTHER INFORMATION
Shares
Sold 1,684,840 4,609,772
Issued in reinvestment of 536,693 675,395
distributions
Redeemed (2,964,307) (5,169,172)
Net increase (decrease) (742,774) 115,995
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 48.81 $ 44.53 $ 42.15 $ 32.53 $ 31.49
period
Income from Investment
Operations
Net investment income C .21 .33 .42 .37 .15
Net realized and unrealized 3.50 9.22 4.91 11.61 2.80
gain (loss)
Total from investment 3.71 9.55 5.33 11.98 2.95
operations
Less Distributions
From net investment income (.16) (.37) (.24) (.20) (.08)
From net realized gain (5.47) (4.95) (2.77) (2.20) (1.85)
Total distributions (5.63) (5.32) (3.01) (2.40) (1.93)
Redemption fees added to paid .03 .05 .06 .04 .02
in capital
Net asset value, end of period $ 46.92 $ 48.81 $ 44.53 $ 42.15 $ 32.53
TOTAL RETURN A, B 7.83% 23.58% 13.59% 37.92% 10.14%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 206,007 $ 250,567 $ 223,423 $ 301,102 $ 197,130
(000 omitted)
Ratio of expenses to average 1.31% 1.49% 1.52% 1.43% 1.70%
net assets
Ratio of expenses to average 1.29% D 1.48% D 1.50% D 1.42% D 1.68% D
net assets after expense
reductions
Ratio of net investment .45% .73% 1.01% .99% .49%
income to average net assets
Portfolio turnover rate 68% 74% 91% 124% 126%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME PER
SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES
OUTSTANDING DURING THE
PERIOD. D FMR OR THE FUND
HAS ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE
FUND'S EXPENSES. E FOR THE
YEAR ENDED FEBRUARY 29.
</TABLE>
LEISURE PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT LEISURE 37.54% 181.67% 480.93%
SELECT LEISURE (LOAD ADJ.) 33.34% 173.15% 463.43%
S&P 500 19.74% 194.91% 459.21%
GS Consumer Industries 16.26% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index- a market capitalization-weighted
index of common stocks - and the Goldman Sachs Consumer Industries
Index - a market capitalization-weighted index of 300 stocks designed
to measure the performance of companies in the consumer industries
sector. These benchmarks include reinvestment of dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT LEISURE 37.54% 23.01% 19.24%
SELECT LEISURE (LOAD ADJ.) 33.34% 22.26% 18.87%
S&P 500 19.74% 24.15% 18.78%
GS Consumer Industries 16.26% n/a n/a
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER 10 YEARS
Leisure S&P 500
00062 SP001
1989/02/28 9700.00 10000.00
1989/03/31 10155.45 10233.00
1989/04/30 10731.35 10764.09
1989/05/31 11265.85 11200.04
1989/06/30 11372.68 11136.20
1989/07/31 12327.05 12141.80
1989/08/31 12425.91 12379.78
1989/09/30 12505.76 12329.02
1989/10/31 11604.62 12042.99
1989/11/30 11741.50 12288.66
1989/12/31 11917.20 12583.59
1990/01/31 10471.96 11739.23
1990/02/28 10379.11 11890.67
1990/03/31 10459.85 12205.77
1990/04/30 10052.11 11900.63
1990/05/31 10883.73 13060.94
1990/06/30 10758.59 12972.12
1990/07/31 10387.18 12930.61
1990/08/31 9188.20 11761.68
1990/09/30 8316.21 11188.89
1990/10/31 8219.32 11140.78
1990/11/30 8873.31 11860.47
1990/12/31 9261.40 12191.38
1991/01/31 9779.32 12722.92
1991/02/28 10529.69 13632.61
1991/03/31 10705.05 13962.52
1991/04/30 10733.60 13996.03
1991/05/31 11104.70 14600.66
1991/06/30 10480.75 13931.95
1991/07/31 10982.36 14581.18
1991/08/31 11096.55 14926.75
1991/09/30 11382.02 14677.48
1991/10/31 11724.58 14874.16
1991/11/30 11161.80 14274.73
1991/12/31 12311.83 15907.76
1992/01/31 12589.14 15611.87
1992/02/29 13029.57 15814.83
1992/03/31 12764.50 15506.44
1992/04/30 12907.23 15962.33
1992/05/31 12984.71 16040.54
1992/06/30 12784.89 15801.54
1992/07/31 12846.06 16447.82
1992/08/31 12662.54 16110.64
1992/09/30 12911.31 16300.75
1992/10/31 13009.18 16357.80
1992/11/30 13894.13 16915.60
1992/12/31 14310.10 17123.66
1993/01/31 14664.90 17267.50
1993/02/28 14587.41 17502.34
1993/03/31 15345.94 17871.64
1993/04/30 15000.10 17439.14
1993/05/31 16077.60 17906.51
1993/06/30 16510.29 17958.44
1993/07/31 16951.47 17886.61
1993/08/31 18118.05 18564.51
1993/09/30 19021.62 18421.56
1993/10/31 20073.66 18802.89
1993/11/30 19327.05 18624.26
1993/12/31 19970.27 18849.62
1994/01/31 20177.84 19490.50
1994/02/28 20005.60 18962.31
1994/03/31 18795.55 18135.55
1994/04/30 18833.44 18367.69
1994/05/31 18634.12 18668.92
1994/06/30 17846.56 18211.53
1994/07/31 18536.89 18808.87
1994/08/31 19275.84 19580.03
1994/09/30 19270.98 19100.32
1994/10/31 19202.92 19530.08
1994/11/30 18381.32 18818.79
1994/12/31 18604.95 19097.87
1995/01/31 18945.26 19593.08
1995/02/28 19791.16 20356.63
1995/03/31 20311.34 20957.35
1995/04/30 20491.28 21574.54
1995/05/31 20887.79 22436.88
1995/06/30 21695.50 22958.09
1995/07/31 23203.22 23719.38
1995/08/31 23947.29 23778.91
1995/09/30 23986.45 24782.38
1995/10/31 22831.18 24693.91
1995/11/30 23575.25 25777.97
1995/12/31 23620.43 26274.46
1996/01/31 23970.53 27168.84
1996/02/29 25256.03 27420.69
1996/03/31 25381.84 27684.75
1996/04/30 26423.99 28092.83
1996/05/31 27508.22 28817.34
1996/06/30 27402.03 28927.14
1996/07/31 25434.77 27649.13
1996/08/31 26066.30 28232.26
1996/09/30 27334.97 29821.17
1996/10/31 26586.07 30643.63
1996/11/30 27340.56 32959.99
1996/12/31 26786.83 32307.05
1997/01/31 27979.03 34325.59
1997/02/28 27816.19 34594.71
1997/03/31 26786.83 33173.21
1997/04/30 27039.26 35153.65
1997/05/31 29574.00 37293.80
1997/06/30 30740.60 38964.57
1997/07/31 32310.30 42064.98
1997/08/31 31791.14 39708.50
1997/09/30 35297.02 41883.33
1997/10/31 34753.43 40484.43
1997/11/30 36152.11 42358.45
1997/12/31 37846.99 43085.75
1998/01/31 38050.86 43562.28
1998/02/28 40970.77 46703.99
1998/03/31 43831.49 49095.70
1998/04/30 44545.15 49589.60
1998/05/31 43435.22 48737.16
1998/06/30 46610.29 50716.86
1998/07/31 45951.06 50176.72
1998/08/31 37959.57 42922.17
1998/09/30 39486.56 45671.77
1998/10/31 42197.48 49386.71
1998/11/30 46038.51 52380.04
1998/12/31 52198.73 55398.18
1999/01/31 56647.80 57714.93
1999/02/26 56353.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990309 160436 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Leisure Portfolio on February 28, 1989,
and the current 3.00% sales charge was paid. As the chart shows, by
February 28, 1999, the value of the investment would have grown to
$56,343 - a 463.43% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
America Online, Inc. 5.8
Time Warner, Inc. 5.8
Disney (Walt) Co. 5.4
McDonald's Corp. 5.3
Microsoft Corp. 4.8
CBS Corp. 4.5
Anheuser-Busch Companies, Inc. 3.3
Tele-Communications, Inc. 3.1
(Liberty Media Group) Series A
Gap, Inc. 2.7
Comcast Corp. Class A (special) 2.5
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Broadcasting 25.9%
Entertainment 15.3%
Computer Services
& Software 12.8%
Restaurants 8.6%
Apparel Stores 6.4%
All Others 31.0%*
Row: 1, Col: 1, Value: 31.0
Row: 1, Col: 2, Value: 6.4
Row: 1, Col: 3, Value: 8.6
Row: 1, Col: 4, Value: 12.8
Row: 1, Col: 5, Value: 15.3
Row: 1, Col: 6, Value: 25.9
* INCLUDES SHORT-TERM 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. Very well. For the 12 months that ended February 28, 1999, the fund
returned 37.54%, outperforming the Standard & Poor's 500 Index's
return of 19.74%. The fund also compares itself to the Goldman Sachs
Consumer Industries Index - an index of 300 stocks designed to measure
the performance of companies in the consumer industries sector - which
returned 16.26% over the same 12-month period.
Q. WHAT ACCOUNTED FOR THE FUND'S EXCEPTIONALLY STRONG PERFORMANCE?
A. The fund's focus on entertainment companies, cable providers and
advertising companies - as well as its underweighting in gaming and
lodging companies - all contributed to strong performance during the
year. A healthy U.S. economy helped entertainment companies to thrive.
Many entertainment companies have reduced debt, grown their cash flows
and benefited from economies of scale. After the stock market dip in
the late summer and early fall, many of these companies got cheaper
and, with their fundamentals still strong, I bought more shares.
Furthermore, the fund's heavy concentration in cable companies helped
performance; cable providers continued to develop new revenue sources
during the year, posting strong returns. In general, they had an
outstanding year. Though future price increases may be muted on the
basic cable side, the advent of digital cable, telephony and online
services has boosted the growth rate for this industry. Advertising
companies benefited from increased ad budgets and consolidation within
the industry.
Q. WHICH STOCKS STOOD OUT IN THIS POSITIVE ENVIRONMENT?
A. Entertainment companies Time Warner - the fund's number-two holding
at the end of the period - and Viacom were both standouts during the
year, benefiting from the strength of their cable television networks
and their very solid film entertainment divisions. Cable providers
Comcast, TCI Group and Cox Communications all performed well,
reflecting the success cable systems achieved in offering a much
greater range of services to consumers. McDonald's had a great year.
The company did a terrific job in restructuring its operations and
developed a winning growth strategy that was reflected in its strong
stock performance. Reader's Digest was another success story . With a
new CEO in place for nearly a year, the leadership at Reader's Digest
identified a significant amount of cost cutting and articulated a
growth strategy for the future. The reinvigoration of this company was
made possible by using its considerable strengths, including its huge
customer database, to drive new growth initiatives.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Gaming and lodging stocks generally were disappointing, suffering
from a decline in demand. However, the fund had very little exposure
to these stocks. I did own a few - such as Harrah's - and have sold
them from the fund's portfolio. Starwood Hotels, which owns several
hotel chains, reflected this industry's sluggish performance as the
previously strong trend toward consolidation stalled during 1998.
Disney continued to disappoint as lower home-video sales, plus Asia's
weakness and its corresponding economic decline, hurt results.
However, with the launch of Disney's GO Network and further
substantial investment spending this year, the company is making a
good effort to position itself for a re-acceleration of growth.
Q. WHERE DO YOU SEE NEW OPPORTUNITIES?
A. With advertising trends positive, I think we may actually see an
acceleration in activity from increased "millennium spending" as the
Year 2000 approaches. Add to this an upcoming presidential campaign
and the 2000 Olympics, and we should see a very strong second half of
1999, while 2000 should be one of the biggest advertising years in
recent memory. Consequently, I'll be looking for companies that could
benefit from this phenomenon.
Q. WHAT'S YOUR OUTLOOK, JEFF?
A. I'm optimistic. At this point, the outlook for leisure stocks is
strong, reflecting a healthy U.S. economy and the domestic orientation
of most of the companies in this sector. As long as business
fundamentals remain attractive, I believe that there are ample
opportunities to identify good companies that are well-positioned for
the future, and to buy their stock at a reasonable price.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: May 8, 1984
FUND NUMBER: 062
TRADING SYMBOL: FDLSX
SIZE: as of February 28, 1999, more than
$346 million
MANAGER: Jeffrey Dorsey, since 1998;
manager, Fidelity Select Multimedia Portfolio,
since 1997; analyst, fixed-income securities,
1991-1997; joined Fidelity in 1991
LEISURE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.0%
SHARES VALUE (NOTE 1)
ADVERTISING - 5.7%
Interpublic Group of 62,300 $ 4,660,819
Companies, Inc.
Lamar Advertising Co. Class A 30,900 1,193,513
(a)
Omnicom Group, Inc. 73,100 4,842,875
Outdoor Systems, Inc. (a) 162,400 4,537,050
WPP Group PLC 235,400 1,864,090
WPP Group PLC sponsored ADR 22,600 1,799,525
Young & Rubicam, Inc. 24,400 921,100
19,818,972
APPAREL STORES - 6.4%
Abercrombie & Fitch Co. Class 53,615 4,074,740
A (a)
AnnTaylor Stores Corp. (a) 19,900 752,469
Gap, Inc. 145,500 9,412,031
Intimate Brands, Inc. Class A 25,600 1,006,400
Limited, Inc. (The) 70,900 2,516,950
Payless ShoeSource, Inc. (a) 20,600 1,130,425
TJX Companies, Inc. 80,600 2,302,138
Wet Seal, Inc. Class A (a) 24,600 954,788
22,149,941
BEVERAGES - 5.1%
Anheuser-Busch Companies, 148,600 11,395,763
Inc.
Seagram Co. Ltd. 136,600 6,332,630
17,728,393
BROADCASTING - 25.9%
Cablevision Systems Corp. 63,600 4,134,000
Class A (a)
CBS Corp. 425,117 15,676,189
Chancellor Media Corp. (a) 122,300 5,350,625
Clear Channel Communications, 101,824 6,109,440
Inc. (a)
Comcast Corp. Class A 120,400 8,540,875
(special)
Cox Communications, Inc. 117,800 8,334,350
Class A (a)
Infinity Broadcasting Corp. 14,500 344,375
Class A (a)
Jacor Communications, Inc. 50,700 3,536,325
Class A (a)
MediaOne Group, Inc. 96,100 5,237,450
PanAmSat Corp. (a) 49,200 1,765,050
TCA Cable TV, Inc. 7,700 339,763
Tele-Communications, Inc. 128,000 8,040,000
(TCI Group) Series A (a)
Time Warner, Inc. 310,061 19,998,935
USA Networks, Inc. (a) 38,700 1,538,325
Westwood One, Inc. (a) 12,400 302,250
89,247,952
COMPUTER SERVICES & SOFTWARE
- - 12.8%
America Online, Inc. 226,600 20,153,225
At Home Corp. Series A (a) 12,500 1,326,563
SHARES VALUE (NOTE 1)
CNET, Inc. (a) 2,900 $ 332,413
Electronic Arts, Inc. (a) 17,800 709,775
Lycos, Inc. (a) 35,200 3,084,400
Microsoft Corp. (a) 111,100 16,678,888
Modem Media . Poppe Tyson, 100 2,688
Inc. (a)
Sportsline USA, Inc. (a) 20,200 909,000
Yahoo!, Inc. (a) 6,100 936,350
44,133,302
COMPUTERS & OFFICE EQUIPMENT
- - 0.7%
Coinstar, Inc. (a) 151,100 2,379,825
CONSUMER ELECTRONICS - 0.1%
Fossil, Inc. (a) 5,100 160,650
ENTERTAINMENT - 15.3%
Carnival Corp. 24,800 1,103,600
Disney (Walt) Co. 530,256 18,658,383
Fox Entertainment Group, Inc. 12,000 312,000
(a)
IMAX Corp. (a) 87,000 1,555,014
King World Productions, Inc. 18,100 478,519
(a)
News Corp. Ltd.: ADR 43,700 1,239,988
sponsored ADR (ltd. vtg.) 101,900 2,674,875
Premier Parks, Inc. (a) 103,800 3,023,175
Royal Carribean Cruises Ltd. 48,200 1,590,600
SFX Entertainment, Inc. Class 18,100 1,106,363
A (a)
Tele-Communications, Inc.:
(Liberty Media Group) Series 200,700 10,812,713
A (a)
(TCI Ventures Group) Series A 87,800 2,430,963
(a)
Ticketmaster Online 200 7,225
CitySearch, Inc. (a)
Viacom, Inc. Class B 87,000 7,688,625
(non-vtg.) (a)
52,682,043
GENERAL MERCHANDISE STORES -
0.2%
Michaels Stores, Inc. (a) 13,800 236,325
Saks, Inc. (a) 13,600 488,750
725,075
HOUSEHOLD PRODUCTS - 1.0%
Avon Products, Inc. 81,500 3,392,438
LEASING & RENTAL - 0.0%
Hollywood Entertainment Corp. 5,000 137,188
(a)
LEISURE DURABLES & TOYS - 0.8%
Hasbro, Inc. 35,400 1,309,800
Mattel, Inc. 53,300 1,405,788
2,715,588
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
LODGING & GAMING - 0.5%
Promus Hotel Corp. (a) 17,600 $ 619,300
Sun International Hotels Ltd. 28,200 1,002,863
(a)
1,622,163
PRINTING - 0.9%
Donnelley (R.R.) & Sons Co. 36,000 1,233,000
Valassis Communications, Inc. 39,500 1,896,000
(a)
3,129,000
PUBLISHING - 5.5%
American Greetings Corp. 20,900 495,069
Class A
Harte Hanks Communications, 38,100 985,838
Inc.
McGraw-Hill Companies, Inc. 34,500 3,775,594
Meredith Corp. 70,300 2,372,625
Playboy Enterprises, Inc. 155,200 4,151,600
Class B (a)
Reader's Digest Association, 108,400 3,685,600
Inc. Class A (non-vtg.)
Tribune Co. 50,500 3,348,781
18,815,107
REAL ESTATE - 0.0%
ResortQuest International, 3,000 52,688
Inc. (a)
REAL ESTATE INVESTMENT TRUSTS
- - 0.6%
Starwood Hotels & Resorts 61,400 1,903,400
Worldwide, Inc.
RESTAURANTS - 8.6%
Brinker International, Inc. 33,800 978,088
(a)
CKE Restaurants, Inc. 16,560 439,875
McDonald's Corp. 214,400 18,224,000
Outback Steakhouse, Inc. (a) 19,700 864,338
Papa John's International, 10,000 432,500
Inc. (a)
PJ America, Inc. (a) 51,500 1,010,688
Starbucks Corp. (a) 60,400 3,193,650
Tricon Global Restaurants, 73,200 4,538,400
Inc. (a)
29,681,539
RETAIL & WHOLESALE,
MISCELLANEOUS - 0.7%
Action Performance Companies, 21,500 771,313
Inc. (a)
Barnes & Noble, Inc. (a) 21,500 635,594
Bed Bath & Beyond, Inc. (a) 37,200 1,095,075
Piercing Pagoda, Inc. (a) 1,300 13,325
2,515,307
SHARES VALUE (NOTE 1)
TEXTILES & APPAREL - 1.2%
Liz Claiborne, Inc. 21,300 $ 717,544
NIKE, Inc. Class B 65,300 3,501,713
4,219,257
TOTAL COMMON STOCKS 317,209,828
(Cost $216,394,086)
CASH EQUIVALENTS - 8.0%
Taxable Central Cash Fund (b) 27,721,242 27,721,242
(Cost $27,721,242)
TOTAL INVESTMENT IN $ 344,931,070
SECURITIES - 100%
(Cost $244,115,328)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $294,037,393 and $290,681,002, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $84,286 for the
period.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $245,469,507. Net unrealized appreciation
aggregated $99,461,563, of which $104,699,680 related to appreciated
investment securities and $5,238,117 related to depreciated investment
securities.
The fund hereby designates approximately $10,012,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 12% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentage for use in preparing 1999 income tax returns.
LEISURE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 344,931,070
value (cost $244,115,328) -
See accompanying schedule
Receivable for fund shares 2,232,887
sold
Dividends receivable 149,528
Interest receivable 101,730
Redemption fees receivable 282
Other receivables 49,491
TOTAL ASSETS 347,464,988
LIABILITIES
Payable for fund shares $ 986,552
redeemed
Accrued management fee 164,062
Other payables and accrued 175,006
expenses
TOTAL LIABILITIES 1,325,620
NET ASSETS $ 346,139,368
Net Assets consist of:
Paid in capital $ 231,932,004
Accumulated undistributed net 13,391,716
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 100,815,648
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 4,250,039 $ 346,139,368
shares outstanding
NET ASSET VALUE and $81.44
redemption price per share
($346,139,368 (divided by)
4,250,039 shares)
Maximum offering price per $83.96
share (100/97.00 of $81.44)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 1,278,268
Dividends
Interest 1,178,921
TOTAL INCOME 2,457,189
EXPENSES
Management fee $ 1,721,162
Transfer agent fees 1,556,159
Accounting fees and expenses 279,815
Non-interested trustees' 1,166
compensation
Custodian fees and expenses 14,784
Registration fees 56,416
Audit 22,874
Legal 1,948
Reports to shareholders 30,091
Total expenses before 3,684,415
reductions
Expense reductions (55,442) 3,628,973
NET INVESTMENT INCOME (LOSS) (1,171,784)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 22,616,844
Foreign currency transactions 7,211 22,624,055
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 65,006,125
Assets and liabilities in 34 65,006,159
foreign currencies
NET GAIN (LOSS) 87,630,214
NET INCREASE (DECREASE) IN $ 86,458,430
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 956,242
charges paid to FDC
Sales charges - Retained by $ 946,671
FDC
Deferred sales charges $ 10,919
withheld by FDC
Exchange fees withheld by FSC $ 18,008
Expense Reductions
Directed brokerage $ 53,531
arrangements
Custodian credits 1,911
$ 55,442
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (1,171,784) $ (652,887)
income (loss)
Net realized gain (loss) 22,624,055 27,572,262
Change in net unrealized 65,006,159 29,426,716
appreciation (depreciation)
NET INCREASE (DECREASE) IN 86,458,430 56,346,091
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (14,475,212) (19,896,472)
from net realized gains
Share transactions Net 283,063,939 221,739,781
proceeds from sales of shares
Reinvestment of distributions 14,128,858 19,641,349
Cost of shares redeemed (280,558,227) (118,975,901)
NET INCREASE (DECREASE) IN 16,634,570 122,405,229
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 323,063 210,283
TOTAL INCREASE (DECREASE) 88,940,851 159,065,131
IN NET ASSETS
NET ASSETS
Beginning of period 257,198,517 98,133,386
End of period $ 346,139,368 $ 257,198,517
OTHER INFORMATION
Shares
Sold 4,108,533 3,893,810
Issued in reinvestment of 211,513 374,739
distributions
Redeemed (4,198,228) (2,192,054)
Net increase (decrease) 121,818 2,076,495
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 F 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 62.30 $ 47.83 $ 46.17 $ 40.71 $ 45.30
period
Income from Investment
Operations
Net investment income (loss) C (.27) (.25) (.06) E (.21) (.21)
Net realized and unrealized 22.78 21.10 4.47 10.97 (.48)
gain (loss)
Total from investment 22.51 20.85 4.41 10.76 (.69)
operations
Less Distributions
From net realized gain (3.44) (6.46) (2.83) (5.32) (3.93)
Redemption fees added to paid .07 .08 .08 .02 .03
in capital
Net asset value, end of period $ 81.44 $ 62.30 $ 47.83 $ 46.17 $ 40.71
TOTAL RETURN A, B 37.54% 47.29% 10.14% 27.61% (1.07)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 346,139 $ 257,199 $ 98,133 $ 85,013 $ 69,569
(000 omitted)
Ratio of expenses to average 1.26% 1.44% 1.56% 1.64% 1.64%
net assets
Ratio of expenses to average 1.24% D 1.39% D 1.54% D 1.63% D 1.62% D
net assets after expense
reductions
Ratio of net investment (.40)% (.46)% (.12)% (.46)% (.52)%
income (loss) to average net
assets
Portfolio turnover rate 107% 209% 127% 141% 103%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE.
CNET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. E
INVESTMENT INCOME (LOSS) PER
SHARE REFLECTS A SPECIAL
DIVIDEND WHICH AMOUNTED TO
$.23 PER SHARE. F FOR THE
YEAR ENDED FEBRUARY 29.
</TABLE>
MULTIMEDIA PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the past 10 year total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT MULTIMEDIA 36.68% 168.24% 443.52%
SELECT MULTIMEDIA (LOAD ADJ.) 32.51% 160.12% 427.14%
S&P 500 19.74% 194.91% 459.21%
GS Consumer Industries 16.26% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
index of common stocks - and the Goldman Sachs Consumer Industries
Index - a market capitalization-weighted index of 300 stocks designed
to measure the performance of companies in the consumer industries
sector. These benchmarks include reinvestment of dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT MULTIMEDIA 36.68% 21.82% 18.45%
SELECT MULTIMEDIA (LOAD ADJ.) 32.51% 21.07% 18.08%
S&P 500 19.74% 24.15% 18.78%
GS Consumer Industries 16.26% n/a n/a
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER 10 YEARS
Multimedia S&P 500
00503 SP001
1989/02/28 9700.00 10000.00
1989/03/31 10154.90 10233.00
1989/04/30 10837.24 10764.09
1989/05/31 11359.03 11200.04
1989/06/30 11591.62 11136.20
1989/07/31 12473.45 12141.80
1989/08/31 12459.99 12379.78
1989/09/30 12264.77 12329.02
1989/10/31 11436.80 12042.99
1989/11/30 11504.12 12288.66
1989/12/31 11508.99 12583.59
1990/01/31 9980.76 11739.23
1990/02/28 9728.68 11890.67
1990/03/31 9634.15 12205.77
1990/04/30 9177.26 11900.63
1990/05/31 10051.66 13060.94
1990/06/30 9965.00 12972.12
1990/07/31 9413.58 12930.61
1990/08/31 8192.57 11761.68
1990/09/30 7491.48 11188.89
1990/10/31 7168.50 11140.78
1990/11/30 7908.98 11860.47
1990/12/31 8491.92 12191.38
1991/01/31 8948.81 12722.92
1991/02/28 9610.52 13632.61
1991/03/31 9870.47 13962.52
1991/04/30 10209.20 13996.03
1991/05/31 10264.35 14600.66
1991/06/30 9452.97 13931.95
1991/07/31 9807.45 14581.18
1991/08/31 10114.68 14926.75
1991/09/30 10729.12 14677.48
1991/10/31 11272.66 14874.16
1991/11/30 10500.67 14274.73
1991/12/31 11705.92 15907.76
1992/01/31 12013.15 15611.87
1992/02/29 12682.73 15814.83
1992/03/31 12359.76 15506.44
1992/04/30 12548.81 15962.33
1992/05/31 12737.87 16040.54
1992/06/30 12785.14 15801.54
1992/07/31 12816.65 16447.82
1992/08/31 12643.34 16110.64
1992/09/30 12564.57 16300.75
1992/10/31 12769.38 16357.80
1992/11/30 13698.93 16915.60
1992/12/31 14222.47 17123.66
1993/01/31 14509.79 17267.50
1993/02/28 14573.64 17502.34
1993/03/31 15148.29 17871.64
1993/04/30 14756.55 17439.14
1993/05/31 15762.50 17906.51
1993/06/30 16257.36 17958.44
1993/07/31 16865.79 17886.61
1993/08/31 18301.69 18564.51
1993/09/30 18739.77 18421.56
1993/10/31 20143.22 18802.89
1993/11/30 18828.66 18624.26
1993/12/31 19629.92 18849.62
1994/01/31 19909.88 19490.50
1994/02/28 19654.62 18962.31
1994/03/31 18452.45 18135.55
1994/04/30 18461.41 18367.69
1994/05/31 19140.34 18668.92
1994/06/30 18712.52 18211.53
1994/07/31 19168.24 18808.87
1994/08/31 20321.50 19580.03
1994/09/30 20181.99 19100.32
1994/10/31 20637.71 19530.08
1994/11/30 19986.68 18818.79
1994/12/31 20415.81 19097.87
1995/01/31 20646.61 19593.08
1995/02/28 21492.86 20356.63
1995/03/31 22858.40 20957.35
1995/04/30 23387.31 21574.54
1995/05/31 23512.32 22436.88
1995/06/30 24416.27 22958.09
1995/07/31 25858.75 23719.38
1995/08/31 26676.15 23778.91
1995/09/30 27435.85 24782.38
1995/10/31 26628.07 24693.91
1995/11/30 27657.03 25777.97
1995/12/31 27290.40 26274.46
1996/01/31 27457.38 27168.84
1996/02/29 28365.32 27420.69
1996/03/31 27989.62 27684.75
1996/04/30 29292.62 28092.83
1996/05/31 30265.47 28817.34
1996/06/30 28864.99 28927.14
1996/07/31 26117.47 27649.13
1996/08/31 27090.33 28232.26
1996/09/30 28811.53 29821.17
1996/10/31 27999.04 30643.63
1996/11/30 28512.19 32959.99
1996/12/31 27583.37 32307.05
1997/01/31 27442.03 34325.59
1997/02/28 27083.24 34594.71
1997/03/31 25767.67 33173.21
1997/04/30 26343.06 35153.65
1997/05/31 28858.28 37293.80
1997/06/30 30750.26 38964.57
1997/07/31 32397.40 42064.98
1997/08/31 31763.03 39708.50
1997/09/30 34333.90 41883.33
1997/10/31 33232.10 40484.43
1997/11/30 34333.90 42358.45
1997/12/31 36114.40 43085.75
1998/01/31 36378.59 43562.28
1998/02/28 38572.56 46703.99
1998/03/31 41283.44 49095.70
1998/04/30 42257.79 49589.60
1998/05/31 41096.52 48737.16
1998/06/30 43883.56 50716.86
1998/07/31 44409.18 50176.72
1998/08/31 36891.52 42922.17
1998/09/30 38480.62 45671.77
1998/10/31 40815.37 49386.71
1998/11/30 43247.92 52380.04
1998/12/31 49005.34 55398.18
1999/01/31 53014.76 57714.93
1999/02/26 52714.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990310 115444 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Multimedia Portfolio on February 28, 1989
and the current 3.00% sales charge was paid. As the chart shows, by
February 28, 1999, the value of the investment would have grown to
$52,714 - a 427.14% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Comcast Corp. Class A (special) 6.2
CBS Corp. 5.8
Viacom, Inc. Class B (non-vtg.) 5.6
Time Warner, Inc. 5.3
Tele-Communications, Inc. 5.2
(TCI Group) Series A
Disney (Walt) Co. 5.0
Cox Communications, Inc. 4.2
Class A
MCI WorldCom, Inc. 4.0
Clear Channel Communications, 3.5
Inc.
AT&T Corp. 3.4
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
7.7
Broadcasting 42.9%
Entertainment 18.8%
Publishing 8.5%
Advertising 7.7%
Telephone Services 7.4%
All Others 14.7%*
Row: 1, Col: 1, Value: 14.7
Row: 1, Col: 2, Value: 7.4
Row: 1, Col: 3, Value: 7.7
Row: 1, Col: 4, Value: 8.5
Row: 1, Col: 5, Value: 18.8
Row: 1, Col: 6, Value: 42.9
* INCLUDES SHORT-TERM 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. Very well. For the 12 months that ended February 28, 1999, the fund
returned 36.68%, outperforming the Standard & Poor's 500 Index's
return of 19.74%. The fund also compares itself to the Goldman Sachs
Consumer Industries Index - an index of 300 stocks designed to measure
the performance of companies in the consumer industries sector - which
returned 16.26% over the same 12-month period.
Q. WHAT ACCOUNTED FOR THE FUND'S EXCEPTIONALLY STRONG PERFORMANCE?
A. The fund's focus on entertainment companies, cable providers and
advertising companies - as well as its underweighting in newspaper
publishers - all contributed to its strong performance during the
year. A healthy U.S. economy helped entertainment companies to thrive,
with many of these companies reducing debt, growing their cash flows
and benefiting from economies of scale. After the stock market dip in
the late summer and early fall, entertainment stocks got cheaper and,
with their business fundamentals still strong, I bought more shares.
Furthermore, the fund's heavy concentration in cable companies helped
performance; in general, cable providers had an outstanding year,
continuing to develop new revenue sources and posting strong returns.
Though future price increases may be muted on the basic cable side,
the advent of digital cable, telephony and online services has
boosted the overall growth rate for this industry. Advertising
companies benefited from increased ad budgets and consolidation within
their industry. As for newspapers, help-wanted advertising activity
continued to decline, based on an ongoing shift from print to radio
and online mediums.
Q. WHICH STOCKS STOOD OUT IN THIS POSITIVE ENVIRONMENT?
A. Entertainment companies Time Warner and Viacom were both standouts
during the year, benefiting from the strength of their cable
television networks and their very solid film entertainment divisions.
Comcast, a cable provider, performed well, reflecting the success
cable systems achieved in offering a much greater range of services to
consumers. Reader's Digest is another success story in the making.
With a new CEO in place for nearly a year, the leadership at Reader's
Digest identified a significant amount of cost cutting and articulated
a growth strategy for the future. The reinvigoration of this company
was made possible by using its considerable strengths, including its
huge customer database, to drive new growth initiatives.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Disney continued to disappoint as lower home-video sales, Asia's
economic weakness and declining demand hurt results. However, with the
launch of its GO Network and further substantial investment spending
this year, the company is making a good effort to position itself for
a re-acceleration of growth. Seagram is another company that
experienced difficulties resulting from disappointments in its
entertainment division and Asia's economic problems, but it has formed
the most powerful music company in the industry with its purchase of
Polygram. Seagram, too, is hoping to structure itself for substantial
profit growth through both cost cutting and top-line improvement at
its theme-park division.
Q. WHERE DO YOU SEE NEW OPPORTUNITIES?
A. With advertising trends positive, I think we may actually see an
acceleration in activity from increased "millennium spending" as the
Year 2000 approaches. Add to this an upcoming presidential campaign
and the 2000 Olympics, and we should see a very strong second half of
1999. In fact, 2000 should be one of the biggest advertising years in
recent memory. Consequently, I'll be looking for companies that will
benefit from this phenomenon.
Q. WHAT'S YOUR OUTLOOK, JEFF?
A. I'm optimistic. At this point, the outlook for multimedia stocks is
strong, reflecting a healthy U.S. economy and the domestic nature of
most of the companies in this sector. As long as business fundamentals
remain attractive, I believe that there are ample opportunities to
identify good companies that are well-positioned for the future. To
take advantage of the strong potential I'm seeing now in many
companies, I'll continue to build a more concentrated portfolio. Most
companies in this sector have one element in common: They're affected
by advertising activity. As long as the economy doesn't weaken
significantly and advertising activity remains strong, many of these
companies should benefit.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: June 30, 1986
FUND NUMBER: 503
TRADING SYMBOL: FBMPX
SIZE: as of February 28, 1999, more than
$159 million
MANAGER: Jeffrey Dorsey, since 1997;
manager, Fidelity Select Leisure Portfolio,
since 1998; analyst, fixed-income securities,
1991-1997; joined Fidelity in 1991
MULTIMEDIA PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 91.0%
SHARES VALUE (NOTE 1)
ADVERTISING - 7.7%
Interpublic Group of 55,300 $ 4,137,131
Companies, Inc.
Lamar Advertising Co. Class A 15,500 598,688
(a)
Omnicom Group, Inc. 67,000 4,438,750
Outdoor Systems, Inc. (a) 62,600 1,748,887
WPP Group PLC 172,700 1,367,580
12,291,036
BEVERAGES - 2.5%
Seagram Co. Ltd. 85,200 3,949,781
BROADCASTING - 42.9%
Cablevision Systems Corp. 61,500 3,997,500
Class A (a)
CBS Corp. 252,550 9,312,781
Chancellor Media Corp. (a) 55,500 2,428,125
Clear Channel Communications, 94,500 5,670,000
Inc. (a)
Comcast Corp. Class A 138,900 9,853,214
(special)
Cox Communications, Inc. 96,000 6,792,000
Class A (a)
E.W. Scripps Co. Class A 12,100 496,100
Infinity Broadcasting Corp. 6,000 142,500
Class A (a)
Jacor Communications, Inc. 39,900 2,783,025
Class A (a)
MediaOne Group, Inc. 91,100 4,964,950
Moviefone, Inc. Class A (a) 11,800 354,000
Nielsen Media Research, Inc. 29,700 582,863
(a)
PanAmSat Corp. (a) 60,900 2,184,788
TCA Cable TV, Inc. 2,100 92,663
Tele-Communications, Inc. 133,605 8,392,064
(TCI Group) Series A (a)
Time Warner, Inc. 130,947 8,446,082
USA Networks, Inc. (a) 47,600 1,892,100
Westwood One, Inc. (a) 9,900 241,313
68,626,068
COMPUTER SERVICES & SOFTWARE
- - 1.1%
America Online, Inc. 11,600 1,031,675
FactSet Research Systems, 5,850 243,872
Inc.
Modem Media Poppe Tyson, Inc. 100 2,688
(a)
Sportsline USA, Inc. (a) 11,400 513,000
1,791,235
ENTERTAINMENT - 18.8%
Disney (Walt) Co. 228,000 8,022,750
Fox Entertainment Group, Inc. 5,000 130,000
(a)
King World Productions, Inc. 24,000 634,500
(a)
News Corp. Ltd. ADR 34,600 981,775
Premier Parks, Inc. (a) 41,500 1,208,688
SFX Entertainment, Inc. Class 8,200 501,225
A (a)
Tele-Communications, Inc.:
(Liberty Media Group) Series 99,202 5,344,508
A (a)
(TCI Ventures Group) Series A 159,800 4,424,463
(a)
Ticketmaster Online 100 3,613
CitySearch, Inc. (a)
Viacom, Inc. Class B 100,600 8,890,525
(non-vtg.) (a)
30,142,047
PRINTING - 1.7%
Donnelley (R.R.) & Sons Co. 42,500 1,455,625
Valassis Communications, Inc. 26,200 1,257,600
(a)
2,713,225
SHARES VALUE (NOTE 1)
PUBLISHING - 8.5%
American Greetings Corp. 21,900 $ 518,756
Class A
Banta Corp. 11,400 242,963
Harte Hanks Communications, 48,300 1,249,763
Inc.
McGraw-Hill Companies, Inc. 32,100 3,512,944
Meredith Corp. 42,500 1,434,375
Playboy Enterprises, Inc. 52,100 1,393,675
Class B (a)
Reader's Digest Association, 66,800 2,271,200
Inc. Class A (non-vtg.)
Tribune Co. 44,200 2,931,013
13,554,689
SERVICES - 0.4%
ACNielsen Corp. (a) 8,800 228,800
Catalina Marketing Corp. (a) 5,600 360,500
589,300
TELEPHONE SERVICES - 7.4%
AT&T Corp. 66,800 5,485,950
MCI WorldCom, Inc. (a) 76,600 6,319,500
11,805,450
TOTAL COMMON STOCKS 145,462,831
(Cost $102,209,349)
CASH EQUIVALENTS - 9.0%
Taxable Central Cash Fund (b) 14,391,006 14,391,006
(Cost $14,391,006)
TOTAL INVESTMENT IN $ 159,853,837
SECURITIES - 100%
(Cost $116,600,355)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $135,513,128 and $132,504,769, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $41,770 for the
period.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $117,064,039. Net unrealized appreciation
aggregated $42,789,798, of which $44,808,607 related to appreciated
investment securities and $2,018,809 related to depreciated investment
securities.
The fund hereby designates approximately $5,431,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 19% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentage for use in preparing 1999 income tax returns.
MULTIMEDIA PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 159,853,837
value (cost $116,600,355) -
See accompanying schedule
Receivable for fund shares 579,849
sold
Dividends receivable 67,251
Interest receivable 45,921
Redemption fees receivable 1,385
Other receivables 18,276
TOTAL ASSETS 160,566,519
LIABILITIES
Payable for fund shares $ 666,421
redeemed
Accrued management fee 77,149
Other payables and accrued 93,421
expenses
TOTAL LIABILITIES 836,991
NET ASSETS $ 159,729,528
Net Assets consist of:
Paid in capital $ 113,715,452
Accumulated net investment (17,095)
loss
Accumulated undistributed net 2,777,697
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 43,253,474
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 3,703,786 $ 159,729,528
shares outstanding
NET ASSET VALUE and $43.13
redemption price per share
($159,729,528 (divided by)
3,703,786 shares)
Maximum offering price per $44.46
share (100/97.00 of $43.13)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 553,150
Dividends
Interest 496,822
TOTAL INCOME 1,049,972
EXPENSES
Management fee $ 768,461
Transfer agent fees 795,802
Accounting fees and expenses 124,969
Non-interested trustees' 452
compensation
Custodian fees and expenses 15,329
Registration fees 22,574
Audit 16,016
Legal 675
Reports to shareholders 17,970
Total expenses before 1,762,248
reductions
Expense reductions (31,187) 1,731,061
NET INVESTMENT INCOME (LOSS) (681,089)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 3,487,861
Foreign currency transactions 9,198 3,497,059
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 32,313,719
Assets and liabilities in (8) 32,313,711
foreign currencies
NET GAIN (LOSS) 35,810,770
NET INCREASE (DECREASE) IN $ 35,129,681
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 599,274
charges paid to FDC
Sales charges - Retained by $ 596,505
FDC
Deferred sales charges $ 1,687
withheld by FDC
Exchange fees withheld by FSC $ 10,110
Expense reductions Directed $ 30,211
brokerage arrangements
Custodian credits 976
$ 31,187
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (681,089) $ (345,513)
income (loss)
Net realized gain (loss) 3,497,059 11,157,423
Change in net unrealized 32,313,711 11,000,546
appreciation (depreciation)
NET INCREASE (DECREASE) IN 35,129,681 21,812,456
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (7,954,098) (2,764,701)
from net realized gains
Share transactions Net 158,099,619 123,445,992
proceeds from sales of shares
Reinvestment of distributions 7,877,838 2,725,416
Cost of shares redeemed (149,217,492) (84,022,531)
NET INCREASE (DECREASE) IN 16,759,965 42,148,877
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 309,134 117,385
TOTAL INCREASE (DECREASE) 44,244,682 61,314,017
IN NET ASSETS
NET ASSETS
Beginning of period 115,484,846 54,170,829
End of period (including $ 159,729,528 $ 115,484,846
accumulated net investment
loss of $17,095 and $1,536,
respectively)
OTHER INFORMATION
Shares
Sold 4,292,822 4,033,610
Issued in reinvestment of 230,819 101,335
distributions
Redeemed (4,259,349) (2,869,891)
Net increase (decrease) 264,292 1,265,054
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 F 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 33.58 $ 24.91 $ 27.18 $ 22.35 $ 23.87
period
Income from Investment
Operations
Net investment income (loss) C (.19) (.17) .35 D .02 (.01)
Net realized and unrealized 11.85 10.30 (1.58) 7.00 1.67
gain (loss)
Total from investment 11.66 10.13 (1.23) 7.02 1.66
operations
Less Distributions
From net investment income - - - (.02) -
From net realized gain (2.19) (1.52) (1.07) (2.19) (3.21)
Total distributions (2.19) (1.52) (1.07) (2.21) (3.21)
Redemption fees added to paid .08 .06 .03 .02 .03
in capital
Net asset value, end of period $ 43.13 $ 33.58 $ 24.91 $ 27.18 $ 22.35
TOTAL RETURN A, B 36.68% 42.42% (4.52)% 31.98% 9.35%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 159,730 $ 115,485 $ 54,171 $ 94,970 $ 38,157
(000 omitted)
Ratio of expenses to average 1.35% 1.75% 1.60% 1.56% 2.05%
net assets
Ratio of expenses to average 1.33% E 1.71% E 1.56% E 1.54% E 2.03% E
net assets after expense
reductions
Ratio of net investment (.52)% (.59)% 1.33% .08% (.07)%
income (loss) to average net
assets
Portfolio turnover rate 109% 219% 99% 223% 107%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE .
C NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D INVESTMENT
INCOME PER SHARE REFLECTS A
SPECIAL DIVIDEND WHICH
AMOUNTED TO $.49 PER SHARE.
E FMR OR THE FUND HAS
ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE
FUND'S EXPENSES. F FOR THE
YEAR ENDED FEBRUARY 29.
</TABLE>
RETAILING PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the past 10 year total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT RETAILING 36.66% 179.05% 662.19%
SELECT RETAILING (LOAD ADJ.) 32.49% 170.61% 639.25%
S&P 500 19.74% 194.91% 459.21%
GS Consumer Industries 16.26% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
index of common stocks - and the Goldman Sachs Consumer Industries
Index - a market capitalization-weighted index of 300 stocks designed
to measure the performance of companies in the consumer industries
sector. These benchmarks include reinvestment of dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT RETAILING 36.66% 22.78% 22.52%
SELECT RETAILING (LOAD ADJ.) 32.49% 22.03% 22.15%
S&P 500 19.74% 24.15% 18.78%
GS Consumer Industries 16.26% n/a n/a
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER 10 YEARS
Retailing S&P 500
00046 SP001
1989/02/28 9700.00 10000.00
1989/03/31 10163.31 10233.00
1989/04/30 10736.92 10764.09
1989/05/31 11479.68 11200.04
1989/06/30 11275.31 11136.20
1989/07/31 12184.61 12141.80
1989/08/31 12775.66 12379.78
1989/09/30 12745.35 12329.02
1989/10/31 12131.57 12042.99
1989/11/30 12207.34 12288.66
1989/12/31 12135.84 12583.59
1990/01/31 11188.01 11739.23
1990/02/28 11577.77 11890.67
1990/03/31 12525.60 12205.77
1990/04/30 12348.44 11900.63
1990/05/31 13996.08 13060.94
1990/06/30 13818.91 12972.12
1990/07/31 13251.98 12930.61
1990/08/31 11347.45 11761.68
1990/09/30 10080.72 11188.89
1990/10/31 9611.23 11140.78
1990/11/30 10922.26 11860.47
1990/12/31 11525.31 12191.38
1991/01/31 12644.10 12722.92
1991/02/28 13816.17 13632.61
1991/03/31 15254.61 13962.52
1991/04/30 15467.72 13996.03
1991/05/31 16755.21 14600.66
1991/06/30 16222.45 13931.95
1991/07/31 17261.33 14581.18
1991/08/31 18175.90 14926.75
1991/09/30 17980.55 14677.48
1991/10/31 17643.14 14874.16
1991/11/30 17305.73 14274.73
1991/12/31 19377.88 15907.76
1992/01/31 20452.40 15611.87
1992/02/29 21435.87 15814.83
1992/03/31 21007.88 15506.44
1992/04/30 20151.90 15962.33
1992/05/31 20570.78 16040.54
1992/06/30 19610.56 15801.54
1992/07/31 20482.98 16447.82
1992/08/31 20018.32 16110.64
1992/09/30 20615.74 16300.75
1992/10/31 22028.69 16357.80
1992/11/30 23697.67 16915.60
1992/12/31 23655.79 17123.66
1993/01/31 23819.00 17267.50
1993/02/28 22916.55 17502.34
1993/03/31 24683.05 17871.64
1993/04/30 23266.30 17439.14
1993/05/31 24555.05 17906.51
1993/06/30 23964.78 17958.44
1993/07/31 24082.83 17886.61
1993/08/31 25184.66 18564.51
1993/09/30 25952.01 18421.56
1993/10/31 26355.36 18802.89
1993/11/30 26611.14 18624.26
1993/12/31 26738.51 18849.62
1994/01/31 25547.29 19490.50
1994/02/28 26493.88 18962.31
1994/03/31 25940.82 18135.55
1994/04/30 26727.87 18367.69
1994/05/31 25409.03 18668.92
1994/06/30 25196.31 18211.53
1994/07/31 25621.74 18808.87
1994/08/31 27249.03 19580.03
1994/09/30 26717.24 19100.32
1994/10/31 26834.23 19530.08
1994/11/30 25898.28 18818.79
1994/12/31 25398.39 19097.87
1995/01/31 25196.31 19593.08
1995/02/28 25430.30 20356.63
1995/03/31 25717.47 20957.35
1995/04/30 24717.70 21574.54
1995/05/31 25153.77 22436.88
1995/06/30 26759.78 22958.09
1995/07/31 28397.70 23719.38
1995/08/31 28004.17 23778.91
1995/09/30 28844.40 24782.38
1995/10/31 27557.47 24693.91
1995/11/30 28940.13 25777.97
1995/12/31 28440.24 26274.46
1996/01/31 27610.65 27168.84
1996/02/29 29642.09 27420.69
1996/03/31 31843.71 27684.75
1996/04/30 33704.98 28092.83
1996/05/31 35321.63 28817.34
1996/06/30 34694.12 28927.14
1996/07/31 31375.73 27649.13
1996/08/31 34343.13 28232.26
1996/09/30 35576.89 29821.17
1996/10/31 34874.93 30643.63
1996/11/30 36215.04 32959.99
1996/12/31 34373.03 32307.05
1997/01/31 34213.11 34325.59
1997/02/28 35449.85 34594.71
1997/03/31 35897.64 33173.21
1997/04/30 36448.92 35153.65
1997/05/31 38140.46 37293.80
1997/06/30 40564.65 38964.57
1997/07/31 44949.72 42064.98
1997/08/31 43441.34 39708.50
1997/09/30 46253.39 41883.33
1997/10/31 45994.81 40484.43
1997/11/30 49345.57 42358.45
1997/12/31 48715.23 43085.75
1998/01/31 49558.50 43562.28
1998/02/28 54099.20 46703.99
1998/03/31 57818.25 49095.70
1998/04/30 57590.36 49589.60
1998/05/31 58587.08 48737.16
1998/06/30 61818.18 50716.86
1998/07/31 60098.58 50176.72
1998/08/31 52398.69 42922.17
1998/09/30 52683.46 45671.77
1998/10/31 57601.32 49386.71
1998/11/30 63263.97 52380.04
1998/12/31 71007.67 55398.18
1999/01/31 74085.43 57714.93
1999/02/26 73925.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990309 145048 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Retailing Portfolio on February 28, 1989,
and the current 3.00% sales charge was paid. As the chart shows, by
February 28, 1999, the value of the investment would have grown to
$73,925 - a 639.25% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Dayton Hudson Corp. 6.9
Safeway, Inc. 6.0
CVS Corp. 5.6
McDonald's Corp. 5.5
Wal-Mart Stores, Inc. 5.1
Home Depot, Inc. 5.1
Walgreen Co. 5.0
Gap, Inc. 5.0
Federated Department Stores, 4.5
Inc.
Lowe's Companies, Inc. 4.0
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
General Merchandise Stores 25.7%
Retail & Wholesale,
Miscellaneous 19.2%
Grocery Stores 15.9%
Apparel Stores 13.3%
Drug Stores 11.2%
All Others 14.7%*
Row: 1, Col: 1, Value: 14.7
Row: 1, Col: 2, Value: 11.2
Row: 1, Col: 3, Value: 13.3
Row: 1, Col: 4, Value: 15.9
Row: 1, Col: 5, Value: 19.2
Row: 1, Col: 6, Value: 25.7
* INCLUDES SHORT-TERM INVESTMENTS
RETAILING PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Ramin Arani)
Ramin Arani,
Portfolio Manager
of Fidelity Select
Retailing Portfolio
Q. HOW DID THE FUND PERFORM, RAMIN?
A. I'm very pleased with the fund's performance. During the 12-month
period that ended February 28, 1999, the fund returned 36.66%. This
performance compares favorably with the Standard & Poor's 500 Index,
which returned 19.74% and the Goldman Sachs Consumer Industries Index
- - an index of 300 stocks designed to measure the performance of
companies in the consumer industries sector - which returned 16.26%
during the same period.
Q. WHAT MARKET FACTORS ALLOWED THE FUND AND RETAIL STOCKS TO PERFORM
SO WELL DURING THE PERIOD?
A. The principle factor was the solid economy, which was characterized
by low interest rates, non-existent signs of inflation, low levels of
unemployment and rising household incomes leading to robust consumer
spending. All of these economic trends are very good for retail
stocks. In addition to the strong economy, managements at many retail
companies really began to run their businesses better over the last
couple of years. Today, instead of focusing on square footage
expansion, which led to over-capacity and saturated retail markets,
companies now concentrate on improving returns on invested capital
through increased scrutiny of capital expenditures and enhanced
inventory management. With more effective and efficient ways of
removing excess inventories and reducing costs, many retail companies
improved their business profitability and, subsequently, produced
stellar sales results. This led to increased returns on invested
capital and earnings growth. Stock prices rallied in light of these
solid business fundamentals and the favorable economic environment.
Q. DID ANY OTHER FACTORS CONTRIBUTE TO THE FUND'S SOLID RESULTS?
A. Individual stock picking and the fund's holdings across a wide
range of retail sectors helped performance. Overweighted positions in
home improvement stores, discount stores and specialty retailers, such
as Home Depot, Wal-Mart, Dayton Hudson, The Gap and Abercrombie &
Fitch, all provided a boost to total return. Each of these companies
produced strong performance results driven by a commitment to
effective cost reduction and inventory management. In addition, the
fund's focus on top-performing supermarket and drug store chains, such
as Safeway, CVS and Walgreen, also contributed to fund performance.
Q. DID INTERNET COMMERCE PLAY ANY ROLE IN THE PERFORMANCE OF THESE
STOCKS?
A. For certain companies. More specifically, specialty retailer The
Limited and discount wholesaler Costco benefited as valuations
increased due to the favorable prospects for growth on the Internet.
While the Internet provides an additional and convenient distribution
outlet for many companies and their customers, business and marketing
strategies are somewhat new in this arena and have yet to prove their
ability to produce significant earnings growth. Of course, I'll be
keeping a close eye on new developments to determine the Internet's
impact on more traditional retail sales.
Q. WERE THERE ANY DISAPPOINTMENTS DURING THE PERIOD?
A. There were a couple. While the share prices of Federated Department
Stores and Consolidated Stores recovered somewhat toward the end of
the period, stock performance of Federated suffered in the second half
of 1998 in response to lower-than-expected sales results. Shares of
Consolidated Stores were hurt as the company struggled to execute
certain business plans.
Q. WHAT'S YOUR OUTLOOK FOR RETAIL STOCKS OVER THE NEXT SIX MONTHS?
A. While the future for many retail stocks and the broader market
indexes lies in the hands of the economic environment to a large
extent, it is very difficult to predict where the economy and
financial markets may be headed over the next six months. A strong
argument can be made to say that the U.S. economy and consumer
spending will remain strong. On the other hand, many economists remain
cautious about the impact of persistent problems overseas. As a
result, I remain focused on extensive bottom-up, stock-by-stock
research to locate companies that can outperform others in the retail
industry, regardless of the economic environment and the general
direction of the markets.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: December 16, 1985
FUND NUMBER: 046
TRADING SYMBOL: FSRPX
SIZE: as of February 28, 1999, more than
$337 million
MANAGER: Ramin Arani, since 1997; equity
research associate, defense electronics
industry and real estate investment trusts,
1992-1996; joined Fidelity in 1992
RETAILING PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 91.9%
SHARES VALUE (NOTE 1)
APPAREL STORES - 13.3%
Abercrombie & Fitch Co. Class 130,401 $ 9,910,476
A (a)
AnnTaylor Stores Corp. (a) 49,700 1,879,281
Gap, Inc. 267,125 17,279,648
Limited, Inc. (The) 179,200 6,361,600
Ross Stores, Inc. 41,100 1,880,325
TJX Companies, Inc. 310,400 8,865,800
46,177,130
DRUG STORES - 11.2%
CVS Corp. 366,274 19,412,522
Duane Reade, Inc. (a) 100 3,025
Rite Aid Corp. 50,700 2,097,713
Walgreen Co. 548,100 17,539,200
39,052,460
GENERAL MERCHANDISE STORES -
25.7%
Consolidated Stores Corp. (a) 90,758 2,285,967
Costco Companies, Inc. (a) 152,300 12,231,594
Dayton Hudson Corp. 387,600 24,249,222
Dollar Tree Stores, Inc. (a) 24,800 992,000
Federated Department Stores, 409,100 15,571,369
Inc. (a)
Nordstrom, Inc. 96,900 3,900,225
Saks, Inc. (a) 350,385 12,591,961
Wal-Mart Stores, Inc. 207,200 17,896,900
89,719,238
GROCERY STORES - 15.9%
Albertson's, Inc. 93,000 5,301,000
American Stores Co. 116,000 3,915,000
Kroger Co. (a) 157,700 10,201,219
Loblaw Companies Ltd. 145,200 3,755,671
Meyer (Fred), Inc. (a) 179,080 11,505,890
Safeway, Inc. (a) 361,174 20,857,799
55,536,579
RESTAURANTS - 6.6%
McDonald's Corp. 224,800 19,108,000
Starbucks Corp. (a) 29,500 1,559,813
Tricon Global Restaurants, 39,000 2,418,000
Inc. (a)
23,085,813
RETAIL & WHOLESALE,
MISCELLANEOUS - 19.2%
Barnes & Noble, Inc. (a) 38,800 1,147,025
Bed Bath & Beyond, Inc. (a) 95,100 2,799,506
Best Buy Co., Inc. (a) 64,400 5,973,100
Circuit City Stores, Inc. - 58,400 3,168,200
Circuit City Group
Home Depot, Inc. 298,500 17,816,719
Lowe's Companies, Inc. 233,100 13,825,744
Noodle Kidoodle, Inc. (a) 58,100 464,800
Office Depot, Inc. (a) 209,300 7,469,394
Staples, Inc. (a) 277,900 8,171,997
SHARES VALUE (NOTE 1)
Tandy Corp. 60,100 $ 3,343,063
Williams-Sonoma, Inc. (a) 75,200 2,570,900
66,750,448
TEXTILES & APPAREL - 0.0%
Liz Claiborne, Inc. 1,700 57,269
Polo Ralph Lauren Corp. Class 300 5,981
A (a)
63,250
TOTAL COMMON STOCKS 320,384,918
(Cost $219,758,753)
CASH EQUIVALENTS - 8.1%
Taxable Central Cash Fund (b) 28,256,826 28,256,826
(Cost $28,256,826)
TOTAL INVESTMENT IN $ 348,641,744
SECURITIES - 100%
(Cost $248,015,579)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $486,355,683 and $423,275,928, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $155,653 for the
period.
The fund participated in the interfund lending program as a borrower.
The maximum loan and average daily balances during the period for
which loans were outstanding amounted to $24,920,000 and $21,329,714,
respectively. The weighted average interest rate was 5.79%. Interest
expense includes $24,017 paid under the interfund lending program.
The fund participated in the bank borrowing program. The maximum loan
and average daily balances during the period for which loans were
outstanding amounted to $13,350,000 and $6,603,083, respectively. The
weighted average interest rate was 5.85%. Interest expense includes
$12,876 paid under the bank borrowing program.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $251,616,531. Net unrealized appreciation
aggregated $97,025,213, of which $100,236,719 related to appreciated
investment securities and $3,211,506 related to depreciated investment
securities.
The fund hereby designates approximately $3,435,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 100% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentage for use in preparing 1999 income tax returns.
RETAILING PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 348,641,744
value (cost $248,015,579) -
See accompanying schedule
Receivable for fund shares 2,120,505
sold
Dividends receivable 73,994
Interest receivable 70,783
Redemption fees receivable 8,315
Other receivables 235,410
TOTAL ASSETS 351,150,751
LIABILITIES
Payable for investments $ 2,357,631
purchased
Payable for fund shares 10,939,389
redeemed
Accrued management fee 164,791
Other payables and accrued 175,768
expenses
TOTAL LIABILITIES 13,637,579
NET ASSETS $ 337,513,172
Net Assets consist of:
Paid in capital $ 239,803,785
Accumulated undistributed net (2,916,778)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 100,626,165
(depreciation) on investments
NET ASSETS, for 5,000,251 $ 337,513,172
shares outstanding
NET ASSET VALUE and $67.50
redemption price per share
($337,513,172 (divided by)
5,000,251 shares)
Maximum offering price per $69.59
share (100/97.00 of $67.50)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 1,053,166
Dividends
Interest (including income on 981,331
securities loaned of $1,752)
TOTAL INCOME 2,034,497
EXPENSES
Management fee $ 1,658,052
Transfer agent fees 1,394,457
Accounting and security 268,988
lending fees
Non-interested trustees' 1,114
compensation
Custodian fees and expenses 16,538
Registration fees 109,094
Audit 21,635
Legal 2,333
Interest 36,893
Reports to shareholders 26,779
Miscellaneous 107
Total expenses before 3,535,990
reductions
Expense reductions (80,480) 3,455,510
NET INVESTMENT INCOME (LOSS) (1,421,013)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 378,538
Foreign currency transactions 3,370 381,908
Change in net unrealized 79,277,166
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 79,659,074
NET INCREASE (DECREASE) IN $ 78,238,061
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 1,568,122
charges paid to FDC
Sales charges - Retained by $ 1,565,474
FDC
Deferred sales charges $ 2,870
withheld by FDC
Exchange fees withheld by FSC $ 36,173
Expense reductions Directed $ 80,365
brokerage arrangements
Custodian credits 115
$ 80,480
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (1,421,013) $ (1,019,153)
income (loss)
Net realized gain (loss) 381,908 6,177,469
Change in net unrealized 79,277,166 16,637,718
appreciation (depreciation)
NET INCREASE (DECREASE) IN 78,238,061 21,796,034
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (1,977,498) (3,631,382)
From net realized gains
In excess of net realized (1,495,766) -
gain
TOTAL DISTRIBUTIONS (3,473,264) (3,631,382)
Share transactions Net 767,856,791 722,604,794
proceeds from sales of shares
Reinvestment of distributions 3,407,803 3,609,234
Cost of shares redeemed (702,182,873) (612,476,826)
NET INCREASE (DECREASE) IN 69,081,721 113,737,202
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 805,978 1,610,457
TOTAL INCREASE (DECREASE) 144,652,496 133,512,311
IN NET ASSETS
NET ASSETS
Beginning of period 192,860,676 59,348,365
End of period $ 337,513,172 $ 192,860,676
OTHER INFORMATION
Shares
Sold 13,691,594 17,451,277
Issued in reinvestment of 64,738 95,408
distributions
Redeemed (12,610,578) (15,477,247)
Net increase (decrease) 1,145,754 2,069,438
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 50.04 $ 33.25 $ 27.87 $ 23.91 $ 24.91
period
Income from Investment
Operations
Net investment income (loss) C (.28) (.27) (.13) (.14) (.18)
Net realized and unrealized 18.27 17.14 5.49 4.07 (.96)
gain (loss)
Total from investment 17.99 16.87 5.36 3.93 (1.14)
operations
Less Distributions
From net realized gain (.39) (.51) (.08) - -
In excess of net realized gain (.30) - - - -
Total distributions (.69) (.51) (.08) - -
Redemption fees added to paid .16 .43 .10 .03 .14
in capital
Net asset value, end of period $ 67.50 $ 50.04 $ 33.25 $ 27.87 $ 23.91
TOTAL RETURN A, B 36.66% 52.61% 19.59% 16.56% (4.01)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 337,513 $ 192,861 $ 59,348 $ 44,051 $ 31,090
(000 omitted)
Ratio of expenses to average 1.25% 1.63% 1.45% 1.94% 2.07%
net assets
Ratio of expenses to average 1.22% D 1.55% D 1.39% D 1.92% D 1.96% D
net assets after expense
reductions
Ratio of net investment (.50)% (.67)% (.39)% (.53)% (.74)%
income (loss) to average net
assets
Portfolio turnover rate 165% 308% 278% 235% 481%
</TABLE>
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. DFMR OR THE FUND
HAS ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE
FUND'S EXPENSES. E FOR THE
YEAR ENDED FEBRUARY 29.
AIR TRANSPORTATION PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the past five year and past 10 year
total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT AIR TRANSPORTATION 4.11% 93.22% 243.45%
SELECT AIR TRANSPORTATION 0.92% 87.35% 233.08%
(LOAD ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Cyclical Industries -4.79% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
index of common stocks - and the Goldman Sachs Cyclical Industries
Index - a market capitalization-weighted index of 277 stocks designed
to measure the performance of companies in the cyclical industries
sector. These benchmarks include reinvestment of dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT AIR TRANSPORTATION 4.11% 14.08% 13.13%
SELECT AIR TRANSPORTATION 0.92% 13.38% 12.79%
(LOAD ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Cyclical Industries -4.79% n/a n/a
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER 10 YEARS
Air Transportation S&P 500
00034 SP001
1989/02/28 9700.00 10000.00
1989/03/31 10185.90 10233.00
1989/04/30 10590.82 10764.09
1989/05/31 10860.76 11200.04
1989/06/30 10806.47 11136.20
1989/07/31 11567.36 12141.80
1989/08/31 12446.01 12379.78
1989/09/30 11956.87 12329.02
1989/10/31 11014.81 12042.99
1989/11/30 10906.11 12288.66
1989/12/31 11003.86 12583.59
1990/01/31 9871.38 11739.23
1990/02/28 10286.62 11890.67
1990/03/31 10824.55 12205.77
1990/04/30 10428.18 11900.63
1990/05/31 11154.85 13060.94
1990/06/30 11183.17 12972.12
1990/07/31 10843.42 12930.61
1990/08/31 9125.84 11761.68
1990/09/30 8210.43 11188.89
1990/10/31 8644.54 11140.78
1990/11/30 8512.42 11860.47
1990/12/31 9003.16 12191.38
1991/01/31 10069.57 12722.92
1991/02/28 11202.04 13632.61
1991/03/31 11154.85 13962.52
1991/04/30 10881.17 13996.03
1991/05/31 11522.91 14600.66
1991/06/30 11279.94 13931.95
1991/07/31 11626.72 14581.18
1991/08/31 11482.23 14926.75
1991/09/30 11096.92 14677.48
1991/10/31 11636.35 14874.16
1991/11/30 11116.18 14274.73
1991/12/31 12339.54 15907.76
1992/01/31 13052.36 15611.87
1992/02/29 13639.96 15814.83
1992/03/31 12840.44 15506.44
1992/04/30 12175.78 15962.33
1992/05/31 12339.54 16040.54
1992/06/30 11938.84 15801.54
1992/07/31 11870.23 16447.82
1992/08/31 11370.33 16110.64
1992/09/30 11742.80 16300.75
1992/10/31 12164.29 16357.80
1992/11/30 12458.35 16915.60
1992/12/31 13149.97 17123.66
1993/01/31 13268.89 17267.50
1993/02/28 13476.99 17502.34
1993/03/31 14963.42 17871.64
1993/04/30 15132.57 17439.14
1993/05/31 15997.01 17906.51
1993/06/30 14804.68 17958.44
1993/07/31 15311.42 17886.61
1993/08/31 16225.54 18564.51
1993/09/30 15897.65 18421.56
1993/10/31 16811.76 18802.89
1993/11/30 16851.51 18624.26
1993/12/31 17211.64 18849.62
1994/01/31 17876.33 19490.50
1994/02/28 17241.85 18962.31
1994/03/31 16244.80 18135.55
1994/04/30 16137.97 18367.69
1994/05/31 15463.33 18668.92
1994/06/30 14992.15 18211.53
1994/07/31 15773.88 18808.87
1994/08/31 16373.56 19580.03
1994/09/30 14542.38 19100.32
1994/10/31 14660.18 19530.08
1994/11/30 13685.69 18818.79
1994/12/31 13469.22 19097.87
1995/01/31 13902.66 19593.08
1995/02/28 15094.63 20356.63
1995/03/31 16069.87 20957.35
1995/04/30 17359.37 21574.54
1995/05/31 17641.10 22436.88
1995/06/30 19873.33 22958.09
1995/07/31 20545.17 23719.38
1995/08/31 19754.13 23778.91
1995/09/30 20480.15 24782.38
1995/10/31 20241.76 24693.91
1995/11/30 22853.25 25777.97
1995/12/31 21488.66 26274.46
1996/01/31 21001.29 27168.84
1996/02/29 23382.76 27420.69
1996/03/31 24579.04 27684.75
1996/04/30 23549.65 28092.83
1996/05/31 23773.83 28817.34
1996/06/30 23661.74 28927.14
1996/07/31 19783.50 27649.13
1996/08/31 19424.82 28232.26
1996/09/30 19189.44 29821.17
1996/10/31 19010.10 30643.63
1996/11/30 21330.31 32959.99
1996/12/31 21756.25 32307.05
1997/01/31 20904.38 34325.59
1997/02/28 19861.96 34594.71
1997/03/31 21083.72 33173.21
1997/04/30 22238.23 35153.65
1997/05/31 23785.04 37293.80
1997/06/30 24065.26 38964.57
1997/07/31 25511.19 42064.98
1997/08/31 24536.03 39708.50
1997/09/30 26542.40 41883.33
1997/10/31 26307.01 40484.43
1997/11/30 26979.54 42358.45
1997/12/31 28531.70 43085.75
1998/01/31 29615.78 43562.28
1998/02/28 31998.39 46703.99
1998/03/31 33439.86 49095.70
1998/04/30 34551.12 49589.60
1998/05/31 33110.99 48737.16
1998/06/30 35211.18 50716.86
1998/07/31 33339.01 50176.72
1998/08/31 26210.37 42922.17
1998/09/30 25802.33 45671.77
1998/10/31 28346.56 49386.71
1998/11/30 28958.62 52380.04
1998/12/31 30362.74 55398.18
1999/01/31 32486.93 57714.93
1999/02/26 33308.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990309 142758 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Air Transportation Portfolio on February
28, 1989, and the current 3.00% sales charge was paid. As the chart
shows, by February 28, 1999, the value of the investment would have
grown to $33,308 - a 233.08% increase on the initial investment - and
includes the effect of a $7.50 trading fee. For comparison, look at
how the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Continental Airlines, Inc. 8.0
Class B
Delta Air Lines, Inc. 5.5
Northwest Airlines Corp. 5.3
Class A
United Technologies Corp. 4.5
Cordant Technologies, Inc. 4.4
ASA Holdings, Inc. 4.4
AMR Corp. 4.3
Airborne Freight Corp. 4.3
Sabre Group Holdings, Inc. 4.3
Class A
Sundstrand Corp. 4.0
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Air Transportation 50.9%
Aerospace & Defense 25.1%
Trucking & Freight 9.5%
Computer Services
& Software 4.3%
Industrial Machinery
& Equipment 1.8%
All Others 8.4%*
Row: 1, Col: 1, Value: 8.4
Row: 1, Col: 2, Value: 1.8
Row: 1, Col: 3, Value: 4.3
Row: 1, Col: 4, Value: 9.5
Row: 1, Col: 5, Value: 25.1
Row: 1, Col: 6, Value: 50.9
* INCLUDES SHORT-TERM INVESTMENTS
AIR TRANSPORTATION PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Christopher Zepf)
NOTE TO SHAREHOLDERS: Christopher Zepf became Portfolio Manager of
Fidelity Select Air Transportation Portfolio on
October 30, 1998.
Q. HOW DID THE FUND PERFORM, CHRIS?
A. For the 12-month period that ended February 28, 1999, the fund
returned 4.11%. For the same 12-month period, the Standard & Poor's
500 Index returned 19.74%. For another comparison, the Goldman Sachs
Cyclical Industries Index - an index of 277 stocks designed to measure
the performance of companies in the cyclical industries sector -
returned -4.79%.
Q. THE PAST 12 MONTHS PROVED TO BE A FAIRLY TURBULENT TIME FOR AIRLINE
STOCKS. WHAT FACTORS INFLUENCED THEIR PERFORMANCE?
A. Airlines are cyclical - meaning, they are very sensitive to the
economy's ebbs and flows - and they performed according to shifting
expectations throughout the year. In the early months of the period,
airline stocks behaved fairly well based on investors' beliefs that
the U.S. economy would be resistant to problems in Southeast Asia and
Latin America. In July, airline stocks reversed course and began to
perform quite poorly based on fears that the U.S. economy was in
danger of slowing after all. Furthermore, weak airline traffic out of
the troubled Asia and Latin America regions hurt the international
operations of U.S. carriers. Another worry was the future growth in
industry capacity - which is expected to expand about 5% in 1999.
Investors worried that supply would outstrip demand. Over the past
several months of the period, however, airline stocks gained some
altitude on news that the U.S. economy was growing at a much
quicker-than-expected pace and that many of the troubled areas of the
world were doing a bit better than originally expected. The fact that
oil prices were low was another positive, since fuel is one of the
airlines' major expenditures.
Q. WHAT CHANGES HAVE YOU MADE SINCE TAKING OVER THE FUND?
A. I focused on finding stocks that I felt already had priced in the
possibility of a global recession. My reason for emphasizing those
stocks was that I felt they had limited downside if a recession were
to occur, and good potential for strong returns if the economy turned
out to be stronger than most observers believed. Specifically, I made
significant additions to the fund's holdings in America West, which
staged a major rebound after resolving its labor dispute with its
mechanics. Other airlines with most of their operations in the United
States also posted strong returns, including Southwest Airlines and
Atlantic Coast Airlines. I also added to the fund's holdings in
Continental Airlines, which I liked because it has grown at a faster
pace than the industry as a whole. That stock, too, posted decent
gains since I added to the fund's stake in it.
Q. WERE THERE ANY DISAPPOINTMENTS AMONG THE FUND'S AIRLINE HOLDINGS?
A. Yes, there were. Atlantic Southeast Airlines (ASA) lagged the
regional airline group, mostly due to operational and company-specific
issues. Delta, which already owned roughly 27% of ASA, recently
announced its intention to acquire the company.
Q. WHAT INVESTMENTS DID YOU CHOOSE OUTSIDE THE AIRLINE GROUP?
A. I added to the fund's stake in computer reservations provider Sabre
Group, which performed relatively well. The company is getting more
and more of the reservations business that airlines are increasingly
outsourcing. In addition, Travelocity - the company's Internet booking
and travel information service - continued to attract both new
customers and higher sales. Airborne Freight, which I bought in the
late fall when fears of a global recession were at their peak, and
thus had an attractive valuation, has performed well.
Q. WHAT'S YOUR OUTLOOK?
A. I think that capacity growth - which is measured in available seat
miles - will be an issue for airline stocks over the next two years.
In an environment where capacity outpaces demand, it will be difficult
for airlines to grow their earnings. However, if the U.S. economy
remains robust and oil prices remain low, airline stocks could
continue their recent strong performance.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: December 16, 1985
FUND NUMBER: 034
TRADING SYMBOL: FSAIX
SIZE: as of February 28, 1999, more than
$65 million
MANAGER: Christopher Zepf, since October
1998; manager, Fidelity Select Transportation
Portfolio, since 1998; joined Fidelity in 1998
AIR TRANSPORTATION PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.9%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 25.1%
Boeing Co. 46,000 $ 1,635,875
Cordant Technologies, Inc. 75,600 2,943,675
Gulfstream Aerospace Corp. (a) 49,100 2,197,225
Howmet International, Inc. (a) 39,000 628,875
Kellstrom Industries, Inc. (a) 38,000 615,125
Lockheed Martin Corp. 70,000 2,638,125
Precision Castparts Corp. 13,400 497,475
Sundstrand Corp. 39,300 2,660,119
United Technologies Corp. 24,000 2,973,000
16,789,494
AIR TRANSPORTATION - 50.9%
Air Canada, Inc. (a) 75,001 303,426
Alaska Air Group, Inc. (a) 37,300 1,890,644
America West Holding Corp. 94,300 1,603,100
Class B (a)
AMR Corp. (a) 52,300 2,899,381
ASA Holdings, Inc. 87,600 2,940,075
Atlantic Coast Airlines 21,000 672,000
Holdings (a)
Atlas Air, Inc. (a) 21,450 646,181
British Airways PLC ADR 7,000 518,000
Comair Holdings, Inc. 56,850 2,138,981
Continental Airlines, Inc. 155,200 5,373,801
Class B (a)
Delta Air Lines, Inc. 60,000 3,648,750
Midwest Express Holdings, 70,400 1,892,000
Inc. (a)
Northwest Airlines Corp. 142,000 3,550,000
Class A (a)
Ryanair Holdings PLC 24,600 931,725
sponsored ADR (a)
SkyWest, Inc. 1,500 47,156
Southwest Airlines Co. 79,400 2,391,925
US Airways Group, Inc. (a) 53,800 2,548,775
33,995,920
AUTOS, TIRES, & ACCESSORIES -
0.5%
World Fuel Services Corp. 30,200 313,325
COMPUTER SERVICES & SOFTWARE
- - 4.3%
Sabre Group Holdings, Inc. 73,000 2,865,250
Class A (a)
DEFENSE ELECTRONICS - 0.8%
Litton Industries, Inc. (a) 10,000 561,250
INDUSTRIAL MACHINERY &
EQUIPMENT - 1.8%
AVTEAM, Inc. Class A (a) 252,300 1,198,425
TRUCKING & FREIGHT - 9.5%
Airborne Freight Corp. 73,800 2,878,200
Eagle USA Airfreight, Inc. (a) 35,000 1,010,625
Expeditors International of 11,100 516,844
Washington, Inc.
FDX Corp. (a) 20,000 1,910,000
6,315,669
TOTAL COMMON STOCKS 62,039,333
(Cost $54,824,623)
CASH EQUIVALENTS - 7.1%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund (b) 4,743,535 $ 4,743,535
(Cost $4,743,535)
TOTAL INVESTMENT IN $ 66,782,868
SECURITIES - 100%
(Cost $59,568,158)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $237,617,388 and $344,369,991, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $73,991 for the
period.
The fund participated in the bank borrowing program. The maximum loan
and average daily balance during the period for which the loan was
outstanding amounted to $3,008,000. The weighted average interest rate
was 5.94%.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $61,896,349. Net unrealized appreciation
aggregated $4,886,519, of which $6,246,428 related to appreciated
investment securities and $1,359,909 related to depreciated investment
securities.
The fund hereby designates approximately $804,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 18% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentage for use in preparing 1999 income tax returns.
AIR TRANSPORTATION PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 66,782,868
value (cost $59,568,158) -
See accompanying schedule
Foreign currency held at 318,434
value (cost $321,010)
Receivable for investments 1,775,553
sold
Receivable for fund shares 1,309,792
sold
Dividends receivable 42,072
Interest receivable 15,702
Redemption fees receivable 1,321
Other receivables 575
TOTAL ASSETS 70,246,317
LIABILITIES
Payable for investments $ 3,003,785
purchased
Payable for fund shares 1,221,159
redeemed
Accrued management fee 29,597
Other payables and accrued 42,365
expenses
TOTAL LIABILITIES 4,296,906
NET ASSETS $ 65,949,411
Net Assets consist of:
Paid in capital $ 49,213,691
Accumulated undistributed net 9,519,067
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 7,216,653
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 2,375,389 $ 65,949,411
shares outstanding
NET ASSET VALUE and $27.76
redemption price per share
($65,949,411 (divided by)
2,375,389 shares)
Maximum offering price per $28.62
share (100/97.00 of $27.76)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 379,217
Dividends
Interest 372,979
TOTAL INCOME 752,196
EXPENSES
Management fee $ 573,138
Transfer agent fees 575,180
Accounting fees and expenses 98,333
Non-interested trustees' 374
compensation
Custodian fees and expenses 18,252
Registration fees 17,710
Audit 20,919
Legal 638
Interest 496
Reports to shareholders 18,150
Total expenses before 1,323,190
reductions
Expense reductions (76,482) 1,246,708
NET INVESTMENT INCOME (LOSS) (494,512)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 10,288,875
Foreign currency transactions 5,295 10,294,170
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (7,872,698)
Assets and liabilities in 1,943 (7,870,755)
foreign currencies
NET GAIN (LOSS) 2,423,415
NET INCREASE (DECREASE) IN $ 1,928,903
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 432,957
charges paid to FDC
Sales charges - Retained by $ 423,538
FDC
Deferred sales charges $ 2,545
withheld by FDC
Exchange fees withheld by FSC $ 21,908
Expense reductions Directed $ 71,923
brokerage arrangements
Custodian credits 4,559
$ 76,482
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (494,512) $ (529,067)
income (loss)
Net realized gain (loss) 10,294,170 13,099,045
Change in net unrealized (7,870,755) 17,664,167
appreciation (depreciation)
NET INCREASE (DECREASE) IN 1,928,903 30,234,145
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (1,287,140) (3,545,132)
from net realized gains
Share transactions Net 234,828,394 317,061,095
proceeds from sales of shares
Reinvestment of distributions 1,276,230 3,512,172
Cost of shares redeemed (352,683,506) (202,499,252)
NET INCREASE (DECREASE) IN (116,578,882) 118,074,015
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 701,437 464,487
TOTAL INCREASE (DECREASE) (115,235,682) 145,227,515
IN NET ASSETS
NET ASSETS
Beginning of period 181,185,093 35,957,578
End of period 65,949,411 181,185,093
OTHER INFORMATION
Shares
Sold 8,676,907 13,782,585
Issued in reinvestment of 44,922 154,313
distributions
Redeemed (13,091,302) (9,221,113)
Net increase (decrease) (4,369,473) 4,715,785
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 F 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 26.86 $ 17.72 $ 21.11 $ 13.93 $ 17.12
period
Income from Investment
Operations
Net investment income (loss) C (.14) (.19) (.22) (.01) (.18)
Net realized and unrealized 1.06 10.59 (3.12) 7.47 (2.01)
gain (loss)
Total from investment .92 10.40 (3.34) 7.46 (2.19)
operations
Less Distributions
From net realized gain (.21) (1.43) (.07) (.46) (.92)
In excess of net realized gain - - (.20) - (.17)
Total distributions (.21) (1.43) (.27) (.46) (1.09)
Redemption fees added to paid .19 .17 .22 .18 .09
in capital
Net asset value, end of period $ 27.76 $ 26.86 $ 17.72 $ 21.11 $ 13.93
TOTAL RETURN A, B 4.11% 61.10% (15.06)% 54.91% (12.45)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 65,949 $ 181,185 $ 35,958 $ 75,359 $ 18,633
(000 omitted)
Ratio of expenses to average 1.35% 1.93% 1.89% 1.47% 2.50% D
net assets
Ratio of expenses to average 1.27% E 1.87% E 1.80% E 1.41% E 2.50%
net assets after expense
reductions
Ratio of net investment (.50)% (.84)% (1.10)% (.07)% (1.31)%
income (loss) to average net
assets
Portfolio turnover rate 260% 294% 469% 504% 200%
</TABLE>
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR AGREED TO
REIMBURSE A PORTION OF THE
FUND'S EXPENSES, OR EXPENSES
WERE LIMITED IN ACCORDANCE
WITH A STATE EXPENSE
LIMITATION. WITHOUT THIS
REIMBURSEMENT, THE FUND'S
EXPENSE RATIO WOULD HAVE
BEEN HIGHER. E FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. F FOR
THE YEAR ENDED FEBRUARY 29.
AUTOMOTIVE PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the past 10 year total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT AUTOMOTIVE -8.52% 30.40% 229.42%
SELECT AUTOMOTIVE (LOAD ADJ.) -11.34% 26.41% 219.47%
S&P 500 19.74% 194.91% 459.21%
GS Cyclical Industries -4.79% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
index of common stocks - and the Goldman Sachs Cyclical Industries
Index - a market capitalization-weighted index of 277 stocks designed
to measure the performance of companies in the cyclical industries
sector. These benchmarks include reinvestment of dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT AUTOMOTIVE -8.52% 5.45% 12.66%
SELECT AUTOMOTIVE (LOAD ADJ.) -11.34% 4.80% 12.32%
S&P 500 19.74% 24.15% 18.78%
GS Cyclical Industries -4.79% n/a n/a
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER 10 YEARS
Automotive S&P 500
00502 SP001
1989/02/28 9700.00 10000.00
1989/03/31 9884.69 10233.00
1989/04/30 10326.32 10764.09
1989/05/31 10478.89 11200.04
1989/06/30 10294.21 11136.20
1989/07/31 10655.55 12141.80
1989/08/31 10759.93 12379.78
1989/09/30 10511.01 12329.02
1989/10/31 9635.76 12042.99
1989/11/30 9724.09 12288.66
1989/12/31 9755.09 12583.59
1990/01/31 9497.50 11739.23
1990/02/28 9780.02 11890.67
1990/03/31 10145.63 12205.77
1990/04/30 10112.39 11900.63
1990/05/31 10685.73 13060.94
1990/06/30 10877.08 12972.12
1990/07/31 10910.78 12930.61
1990/08/31 9343.67 11761.68
1990/09/30 8450.59 11188.89
1990/10/31 8282.08 11140.78
1990/11/30 8770.75 11860.47
1990/12/31 9099.33 12191.38
1991/01/31 9613.28 12722.92
1991/02/28 10396.83 13632.61
1991/03/31 10481.09 13962.52
1991/04/30 10599.04 13996.03
1991/05/31 11450.00 14600.66
1991/06/30 11424.72 13931.95
1991/07/31 11896.54 14581.18
1991/08/31 12284.10 14926.75
1991/09/30 11921.81 14677.48
1991/10/31 12233.55 14874.16
1991/11/30 11626.93 14274.73
1991/12/31 12495.69 15907.76
1992/01/31 13845.61 15611.87
1992/02/29 15239.94 15814.83
1992/03/31 15568.54 15506.44
1992/04/30 16563.22 15962.33
1992/05/31 16554.34 16040.54
1992/06/30 16455.85 15801.54
1992/07/31 16607.07 16447.82
1992/08/31 15575.24 16110.64
1992/09/30 15317.29 16300.75
1992/10/31 15957.73 16357.80
1992/11/30 16731.60 16915.60
1992/12/31 17695.72 17123.66
1993/01/31 18512.86 17267.50
1993/02/28 18785.25 17502.34
1993/03/31 19793.06 17871.64
1993/04/30 19678.70 17439.14
1993/05/31 20877.02 17906.51
1993/06/30 21242.13 17958.44
1993/07/31 21485.54 17886.61
1993/08/31 22234.50 18564.51
1993/09/30 22468.54 18421.56
1993/10/31 22946.00 18802.89
1993/11/30 22946.00 18624.26
1993/12/31 23957.28 18849.62
1994/01/31 25322.97 19490.50
1994/02/28 24505.48 18962.31
1994/03/31 22783.94 18135.55
1994/04/30 22320.66 18367.69
1994/05/31 21989.98 18668.92
1994/06/30 21707.93 18211.53
1994/07/31 22359.56 18808.87
1994/08/31 21989.98 19580.03
1994/09/30 21056.31 19100.32
1994/10/31 21455.06 19530.08
1994/11/30 20161.53 18818.79
1994/12/31 20902.03 19097.87
1995/01/31 20405.39 19593.08
1995/02/28 21420.26 20356.63
1995/03/31 21312.30 20957.35
1995/04/30 21247.52 21574.54
1995/05/31 21679.38 22436.88
1995/06/30 22219.21 22958.09
1995/07/31 23817.09 23719.38
1995/08/31 23601.16 23778.91
1995/09/30 23719.92 24782.38
1995/10/31 22618.68 24693.91
1995/11/30 23180.09 25777.97
1995/12/31 23709.12 26274.46
1996/01/31 23428.41 27168.84
1996/02/29 23590.36 27420.69
1996/03/31 25026.30 27684.75
1996/04/30 26290.70 28092.83
1996/05/31 26896.08 28817.34
1996/06/30 26582.58 28927.14
1996/07/31 25036.71 27649.13
1996/08/31 25674.51 28232.26
1996/09/30 25890.72 29821.17
1996/10/31 26009.63 30643.63
1996/11/30 27328.49 32959.99
1996/12/31 27519.42 32307.05
1997/01/31 28001.43 34325.59
1997/02/28 28449.82 34594.71
1997/03/31 27889.34 33173.21
1997/04/30 28512.51 35153.65
1997/05/31 30143.12 37293.80
1997/06/30 31051.61 38964.57
1997/07/31 32414.34 42064.98
1997/08/31 32169.75 39708.50
1997/09/30 33928.48 41883.33
1997/10/31 32367.75 40484.43
1997/11/30 32146.45 42358.45
1997/12/31 32136.75 43085.75
1998/01/31 32124.04 43562.28
1998/02/28 34931.25 46703.99
1998/03/31 37052.53 49095.70
1998/04/30 36881.67 49589.60
1998/05/31 36675.78 48737.16
1998/06/30 36113.02 50716.86
1998/07/31 34767.87 50176.72
1998/08/31 28055.88 42922.17
1998/09/30 28069.60 45671.77
1998/10/31 30608.91 49386.71
1998/11/30 32269.75 52380.04
1998/12/31 33724.70 55398.18
1999/01/31 34163.93 57714.93
1999/02/26 31947.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990309 142800 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Automotive Portfolio on February 28, 1989,
and the current 3.00% sales charge was paid. As the chart shows, by
February 28, 1999, the value of the investment would have grown to
$31,947 - a 219.47% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Federal-Mogul Corp. 8.4
Ford Motor Co. 7.3
TRW, Inc. 6.2
Danaher Corp. 6.0
DaimlerChrysler AG (Reg.) 5.5
Eaton Corp. 4.8
Honda Motor Co. Ltd. 4.7
AutoZone, Inc. 4.7
Johnson Controls, Inc. 4.6
General Motors Corp. 4.1
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Autos, Tires, & Accessories 92.9%
Iron & Steel 1.5%
Industrial Machinery
& Equipment 1.2%
Electronics 0.5%
Leisure Durables & Toys 0.4%
All Others 3.5%*
Row: 1, Col: 1, Value: 3.5
Row: 1, Col: 2, Value: 1.4
Row: 1, Col: 3, Value: 1.5
Row: 1, Col: 4, Value: 1.2
Row: 1, Col: 5, Value: 1.5
Row: 1, Col: 6, Value: 92.90000000000001
* INCLUDES SHORT-TERM INVESTMENTS
AUTOMOTIVE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Abert Grosman)
Albert Grosman,
Portfolio Manager
of Fidelity Select
Automotive Portfolio
Q. HOW DID THE FUND PERFORM, ALBERT?
A. For the 12 months that ended February 28, 1999, the fund returned
- -8.52%, while the Standard & Poor's 500 Index returned 19.74%. During
the same period, the Goldman Sachs Cyclical Industries Index - an
index of 277 stocks designed to measure the performance of companies
in the cyclical industries sector - generated a return of -4.79%.
Q. WHY DID THE FUND UNDERPERFORM ITS TWO BENCHMARKS OVER THE PAST 12
MONTHS?
A. Although it was a fairly good year for automakers, many auto-parts
makers and retailers hit a rough patch as a result of continued
softness in the after-market, or the market for replacement parts.
Longer-lasting vehicles caused a drop in the demand for replacement
parts - a trend that dragged down the performance of the entire
automotive industry during the period. Parts manufacturers also faced
pricing pressures as a result of sluggish sales in the after-market.
Q. SIX MONTHS AGO, YOU TALKED ABOUT THE DIFFICULT ENVIRONMENT FOR
CYCLICAL STOCKS. DID THAT SITUATION IMPROVE RECENTLY?
A. Somewhat. Fears of a slowdown in the economy continued to hurt
cyclical stocks from August through October. However, many of these
stocks rebounded in late October and early November when expectations
grew that the Federal Reserve Board would continue to lower the target
for interest rates. Generally, cyclical stocks - such as automakers -
do well when rates are coming down because consumers tend to have more
money. For instance, lower rates can prompt people to refinance their
mortgages, leaving them with more disposable income. Automotive sales
are heavily tied to the financial health of consumers. That said, even
the recent improvement in the economic landscape couldn't erase the
negative returns generated earlier in the year - or the pitfalls
encountered by the parts makers over the past few months.
Q. WHICH INDIVIDUAL HOLDINGS HELPED PERFORMANCE?
A. Big contributors on the auto manufacturing side were Ford Motor
Company and DaimlerChrysler. Ford was the best-performing stock in
this group during the period, because the company was offering the
right mix of products - such as its popular line of sport utility
vehicles (SUVs), which sold well. In addition, DaimlerChrysler reaped
the benefits of its merger, including cost-effectiveness and a
well-received product line. Auto dealerships, such as Group 1
Automotive and Sonic Automotive, were also positive contributors for
the fund. These companies have become more profitable over the past
few years through consolidation in the industry.
Q. WHICH STOCKS WERE DISAPPOINTING?
A. Breed Technologies, a maker of seat belts, air bags and other
safety equipment, was a big detractor from performance. Breed's
restructuring efforts hit a roadblock as the company continued to
struggle with the integration of several of its acquisitions. The fund
sold its position in Breed by the end of the period. In addition, some
auto-parts companies, such as Borg-Warner and Lear Corp., were unable
to offset high fixed costs and lower demand from automakers.
Q. FEDERAL-MOGUL CONTINUED TO BE THE FUND'S NO. 1 HOLDING,
REPRESENTING MORE THAN 8% OF THE PORTFOLIO AT THE END OF THE PERIOD.
WHAT DID YOU FIND ATTRACTIVE ABOUT THAT STOCK?
A. Federal-Mogul is one of the parts manufacturers that was able to
achieve success through an aggressive acquisition strategy. The
company's management team focused on generating strong returns, rather
than just on growing the business.
Q. WHAT'S YOUR OUTLOOK FOR THE AUTOMOTIVE INDUSTRY?
A. Low interest rates and low unemployment bode well for the financial
health of the average U.S. consumer - which is good news for
automakers. As a result, I'm not terribly concerned about sales
volumes in North America. However, I am concerned about pricing
pressures that may arise because some manufacturers aren't offering
competitive products in specific segments of the market, such as small
passenger cars, compact SUVs and small pick-up trucks. As a result,
some manufacturers may need to rely solely on price for its sales.
We're witnessing a similar situation in Europe as pricing pressures
are mounting in the market for smaller passenger cars. Overall, I
think the global economy is stable. Therefore, manufacturers with
competitive product lines and good management teams should continue to
thrive in this market. On the other hand, auto-parts makers may
continue to suffer as a result of increasing fixed costs and pricing
pressures from the automakers.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: June 30, 1986
FUND NUMBER: 502
TRADING SYMBOL: FSAVX
SIZE: as of February 28, 1999, more than
$64 million
MANAGER: Albert Grosman, since 1997; analyst,
automotive manufacturing, automotive parts, tire
and rental car industries, 1997- present; Latin
American steel, oil and cable industries,
1996-1997; joined Fidelity in 1996
AUTOMOTIVE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 96.8%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES -
92.9%
American Axle & Manufacturing 24,000 $ 352,500
Holdings, Inc. (a)
Arvin Industries, Inc. 27,200 986,000
AutoZone, Inc. (a) 86,200 3,017,000
Borg-Warner Automotive, Inc. 13,800 601,163
DaimlerChrysler AG (Reg.) 37,927 3,562,768
Dana Corp. 48,500 1,830,875
Danaher Corp. 80,200 3,869,650
Delphi Automotive Systems 4,000 73,750
Corp. (a)
Discount Auto Parts, Inc. (a) 27,300 585,244
Eaton Corp. 44,750 3,104,531
Federal-Mogul Corp. 110,500 5,435,217
Ford Motor Co. 79,500 4,715,344
General Motors Corp. 32,600 2,691,538
Gentex Corp. (a) 60,700 1,316,431
Goodyear Tire & Rubber Co. 30,500 1,410,625
Group 1 Automotive, Inc. (a) 27,600 695,175
Honda Motor Co. Ltd. 80,000 3,035,000
Johnson Controls, Inc. 48,150 2,961,225
Lear Corp. (a) 40,900 1,444,281
Magna International, Inc. 28,400 1,695,185
Class A
Mascotech, Inc. 26,300 397,788
Monro Muffler Brake, Inc. 5,095 42,671
Navistar International Corp. 43,100 1,853,300
(a)
Oshkosh Truck Co. Class B 3,900 131,625
Pep Boys-Manny, Moe & Jack 92,600 1,689,950
Renault SA 19,200 899,640
Republic Industries, Inc. (a) 45,800 561,050
Snap-On, Inc. 33,100 935,075
Sonic Automotive, Inc. (a) 20,000 322,500
SPX Corp. 45,600 2,604,900
Standard Motor Products, Inc. 17,000 364,438
Standard Products Co. 3,600 54,000
Superior Industries 10,000 247,500
International, Inc.
TBC Corp. (a) 18,000 102,375
Tower Automotive, Inc. (a) 64,400 1,199,450
TRW, Inc. 85,200 4,025,700
Volkswagen AG 12,200 786,854
Volvo AB ADR Class B 12,000 306,000
Wabash National Corp. 15,000 184,688
Wynn's International, Inc. 3,600 66,600
60,159,606
CHEMICALS & PLASTICS - 0.3%
Myers Industries, Inc. 9,200 179,400
ELECTRONICS - 0.5%
Stoneridge, Inc. (a) 19,300 326,894
INDUSTRIAL MACHINERY &
EQUIPMENT - 1.2%
Ballard Power Systems, Inc. 15,000 405,889
(a)
Mark IV Industries, Inc. 26,100 393,131
799,020
SHARES VALUE (NOTE 1)
IRON & STEEL - 1.5%
Linamar Corp. 40,100 $ 712,747
SPS Technologies, Inc. (a) 6,600 272,250
984,997
LEISURE DURABLES & TOYS - 0.4%
Coachmen Industries, Inc. 12,200 247,050
TOTAL COMMON STOCKS 62,696,967
(Cost $63,821,267)
CASH EQUIVALENTS - 3.2%
Taxable Central Cash Fund (b) 2,063,258 2,063,258
(Cost $2,063,258)
TOTAL INVESTMENT IN $ 64,760,225
SECURITIES - 100%
(Cost $65,884,525)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $95,113,946 and $55,240,463, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $23,803 for the
period.
Distribution of investments by country of issue, as a percentage of
total value of investments in securities, is as follows:
United States of America 82.4%
Germany 6.7
Japan 4.7
Canada 4.3
France 1.4
Others individually less than 0.5
1%
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $66,277,893. Net unrealized depreciation
aggregated $1,517,668, of which $5,404,600 related to appreciated
investment securities and $6,922,268 related to depreciated investment
securities.
The fund hereby designates approximately $978,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
At February 28, 1999, the fund had a capital loss carryforward of
approximately $1,009,000, all of which will expire on February 28,
2007.
The fund intends to elect to defer to its fiscal year ending February
29, 2000 approximately $3,193,000 of losses recognized during the
period November 1, 1998 to February 28,1999.
A total of 33% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentage for use in preparing 1999 income tax returns.
AUTOMOTIVE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 64,760,225
value (cost $65,884,525) -
See accompanying schedule
Receivable for fund shares 28,118
sold
Dividends receivable 119,989
Interest receivable 7,805
Redemption fees receivable 82
Other receivables 2,470
TOTAL ASSETS 64,918,689
LIABILITIES
Payable for fund shares $ 293,270
redeemed
Accrued management fee 34,070
Other payables and accrued 50,255
expenses
TOTAL LIABILITIES 377,595
NET ASSETS $ 64,541,094
Net Assets consist of:
Paid in capital $ 70,210,580
Undistributed net investment 47,401
income
Accumulated undistributed net (4,592,634)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (1,124,253)
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 2,772,595 $ 64,541,094
shares outstanding
NET ASSET VALUE and $23.28
redemption price per share
($64,541,094 (divided by)
2,772,595 shares)
Maximum offering price per $24.00
share (100/97.00 of $23.28)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 700,748
Dividends
Interest 225,135
TOTAL INCOME 925,883
EXPENSES
Management fee $ 357,296
Transfer agent fees 397,375
Accounting fees and expenses 67,412
Non-interested trustees' 160
compensation
Custodian fees and expenses 13,317
Registration fees 19,077
Audit 15,140
Legal 300
Reports to shareholders 6,518
Total expenses before 876,595
reductions
Expense reductions (19,721) 856,874
NET INVESTMENT INCOME 69,009
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (4,430,645)
Foreign currency transactions 307 (4,430,338)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (3,784,738)
Assets and liabilities in 105 (3,784,633)
foreign currencies
NET GAIN (LOSS) (8,214,971)
NET INCREASE (DECREASE) IN $ (8,145,962)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 151,425
charges paid to FDC
Sales charges - Retained by $ 151,425
FDC
Deferred sales charges $ 1,131
withheld by FDC
Exchange fees withheld by FSC $ 4,493
Expense reductions Directed $ 18,421
brokerage arrangements
Custodian credits 1,300
$ 19,721
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ 69,009 $ 108,611
income
Net realized gain (loss) (4,430,338) 12,457,463
Change in net unrealized (3,784,633) (2,220,824)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (8,145,962) 10,345,250
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (41,356) (202,512)
From net investment income
From net realized gain (2,674,498) (7,054,725)
TOTAL DISTRIBUTIONS (2,715,854) (7,257,237)
Share transactions Net 93,308,374 38,285,022
proceeds from sales of shares
Reinvestment of distributions 2,635,878 7,198,159
Cost of shares redeemed (53,084,232) (102,498,033)
NET INCREASE (DECREASE) IN 42,860,020 (57,014,852)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 53,948 69,215
TOTAL INCREASE (DECREASE) 32,052,152 (53,857,624)
IN NET ASSETS
NET ASSETS
Beginning of period 32,488,942 86,346,566
End of period (including $ 64,541,094 $ 32,488,942
undistributed net investment
income of $47,401 and
$52,621, respectively)
OTHER INFORMATION
Shares
Sold 3,661,058 1,443,301
Issued in reinvestment of 97,455 295,056
distributions
Redeemed (2,167,227) (3,958,616)
Net increase (decrease) 1,591,286 (2,220,259)
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 27.50 $ 25.38 $ 21.85 $ 19.84 $ 25.48
period
Income from Investment
Operations
Net investment income C .03 .05 .13 .03 .08
Net realized and unrealized (2.09) 5.21 4.28 1.95 (3.46)
gain (loss)
Total from investment (2.06) 5.26 4.41 1.98 (3.38)
operations
Less Distributions
From net investment income (.01) (.08) (.17) - (.05)
From net realized gain (2.17) (3.09) (.75) - (2.26)
Total distributions (2.18) (3.17) (.92) - (2.31)
Redemption fees added to paid .02 .03 .04 .03 .05
in capital
Net asset value, end of period $ 23.28 $ 27.50 $ 25.38 $ 21.85 $ 19.84
TOTAL RETURN A, B (8.52)% 22.78% 20.60% 10.13% (12.59)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 64,541 $ 32,489 $ 86,347 $ 55,753 $ 60,075
(000 omitted)
Ratio of expenses to average 1.45% 1.60% 1.56% 1.81% 1.82%
net assets
Ratio of expenses to average 1.41% D 1.56% D 1.52% D 1.80% D 1.80% D
net assets after expense
reductions
Ratio of net investment .11% .17% .54% .13% .34%
income to average net assets
Portfolio turnover rate 96% 153% 175% 61% 63%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME PER
SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES
OUTSTANDING DURING THE
PERIOD. D FMR OR THE FUND
HAS ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE
FUND'S EXPENSES. E FOR THE
YEAR ENDED FEBRUARY 29.
</TABLE>
CHEMICALS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the past 10 year total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT CHEMICALS -23.66% 47.01% 187.59%
SELECT CHEMICALS (LOAD ADJ.) -26.02% 42.53% 178.89%
S&P 500 19.74% 194.91% 459.21%
GS Cyclical Industries -4.79% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
index of common stocks - and the Goldman Sachs Cyclical Industries
Index - a market capitalization-weighted index of 277 stocks designed
to measure the performance of companies in the cyclical industries
sector. These benchmarks include reinvestment of dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT CHEMICALS -23.66% 8.01% 11.14%
SELECT CHEMICALS (LOAD ADJ.) -26.02% 7.34% 10.80%
S&P 500 19.74% 24.15% 18.78%
GS Cyclical Industries -4.79% n/a n/a
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER 10 YEARS
Chemicals S&P 500
00069 SP001
1989/02/28 9700.00 10000.00
1989/03/31 9806.08 10233.00
1989/04/30 10086.13 10764.09
1989/05/31 10319.51 11200.04
1989/06/30 10196.30 11136.20
1989/07/31 10846.04 12141.80
1989/08/31 11342.90 12379.78
1989/09/30 10939.47 12329.02
1989/10/31 10166.57 12042.99
1989/11/30 10383.15 12288.66
1989/12/31 10801.78 12583.59
1990/01/31 10032.14 11739.23
1990/02/28 10099.26 11890.67
1990/03/31 10399.06 12205.77
1990/04/30 10157.43 11900.63
1990/05/31 11043.41 13060.94
1990/06/30 11133.55 12972.12
1990/07/31 11170.38 12930.61
1990/08/31 9678.54 11761.68
1990/09/30 9199.68 11188.89
1990/10/31 9305.58 11140.78
1990/11/30 9927.18 11860.47
1990/12/31 10355.40 12191.38
1991/01/31 11050.67 12722.92
1991/02/28 11897.89 13632.61
1991/03/31 12183.36 13962.52
1991/04/30 12086.67 13996.03
1991/05/31 12924.68 14600.66
1991/06/30 12573.42 13931.95
1991/07/31 13179.43 14581.18
1991/08/31 13438.48 14926.75
1991/09/30 13336.71 14677.48
1991/10/31 13549.51 14874.16
1991/11/30 12874.11 14274.73
1991/12/31 14358.97 15907.76
1992/01/31 14634.73 15611.87
1992/02/29 15162.50 15814.83
1992/03/31 15053.14 15506.44
1992/04/30 15599.92 15962.33
1992/05/31 15509.59 16040.54
1992/06/30 15049.86 15801.54
1992/07/31 15524.75 16447.82
1992/08/31 14994.29 16110.64
1992/09/30 15009.45 16300.75
1992/10/31 14857.89 16357.80
1992/11/30 15307.51 16915.60
1992/12/31 15637.59 17123.66
1993/01/31 15621.51 17267.50
1993/02/28 15348.01 17502.34
1993/03/31 15712.67 17871.64
1993/04/30 16004.11 17439.14
1993/05/31 16246.43 17906.51
1993/06/30 15838.89 17958.44
1993/07/31 16081.21 17886.61
1993/08/31 16868.75 18564.51
1993/09/30 16334.55 18421.56
1993/10/31 16951.36 18802.89
1993/11/30 17078.03 18624.26
1993/12/31 17632.49 18849.62
1994/01/31 19004.97 19490.50
1994/02/28 18975.01 18962.31
1994/03/31 18405.64 18135.55
1994/04/30 19295.72 18367.69
1994/05/31 19760.31 18668.92
1994/06/30 19512.93 18211.53
1994/07/31 20393.85 18808.87
1994/08/31 21576.45 19580.03
1994/09/30 21419.58 19100.32
1994/10/31 21383.37 19530.08
1994/11/30 19706.01 18818.79
1994/12/31 20237.75 19097.87
1995/01/31 19708.90 19593.08
1995/02/28 20852.70 20356.63
1995/03/31 21492.24 20957.35
1995/04/30 21952.96 21574.54
1995/05/31 22171.56 22436.88
1995/06/30 22546.29 22958.09
1995/07/31 23614.27 23719.38
1995/08/31 23714.20 23778.91
1995/09/30 24088.93 24782.38
1995/10/31 22889.79 24693.91
1995/11/30 23889.07 25777.97
1995/12/31 24578.40 26274.46
1996/01/31 25708.14 27168.84
1996/02/29 26582.33 27420.69
1996/03/31 27866.73 27684.75
1996/04/30 28157.12 28092.83
1996/05/31 28096.21 28817.34
1996/06/30 27737.57 28927.14
1996/07/31 26614.26 27649.13
1996/08/31 27791.70 28232.26
1996/09/30 29023.28 29821.17
1996/10/31 29219.52 30643.63
1996/11/30 30295.46 32959.99
1996/12/31 29867.48 32307.05
1997/01/31 30334.94 34325.59
1997/02/28 30586.65 34594.71
1997/03/31 29601.38 33173.21
1997/04/30 30695.94 35153.65
1997/05/31 32207.70 37293.80
1997/06/30 33093.16 38964.57
1997/07/31 35742.34 42064.98
1997/08/31 35850.32 39708.50
1997/09/30 36073.49 41883.33
1997/10/31 34273.77 40484.43
1997/11/30 34468.14 42358.45
1997/12/31 34789.19 43085.75
1998/01/31 34287.65 43562.28
1998/02/28 36540.59 46703.99
1998/03/31 37885.99 49095.70
1998/04/30 38001.45 49589.60
1998/05/31 36513.91 48737.16
1998/06/30 33571.33 50716.86
1998/07/31 30718.18 50176.72
1998/08/31 27003.38 42922.17
1998/09/30 26873.32 45671.77
1998/10/31 27613.03 49386.71
1998/11/30 29604.55 52380.04
1998/12/31 29259.25 55398.18
1999/01/31 27635.73 57714.93
1999/02/26 27889.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990309 143208 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Chemicals Portfolio on February 28, 1989,
and the current 3.00% sales charge was paid. As the chart shows, by
February 28, 1999, the value of the investment would have grown to
$27,889 - a 178.89% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
du Pont (E.I.) de Nemours & Co. 9.2
Dow Chemical Co. 8.8
Minnesota Mining & 7.4
Manufacturing Co.
Praxair, Inc. 6.3
PPG Industries, Inc. 5.6
Avery Dennison Corp. 3.8
Monsanto Co. 3.4
Morton International, Inc. 3.3
Rohm & Haas Co. 3.2
Air Products & Chemicals, Inc. 3.2
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Chemicals & Plastics 66.8%
Consumer Durables 7.4%
Drugs & Pharmaceuticals 5.3%
Agriculture 5.2%
Building Materials 4.3%
All Others 11.0%*
Row: 1, Col: 1, Value: 11.0
Row: 1, Col: 2, Value: 4.3
Row: 1, Col: 3, Value: 5.2
Row: 1, Col: 4, Value: 5.3
Row: 1, Col: 5, Value: 7.4
Row: 1, Col: 6, Value: 66.8
* INCLUDES SHORT-TERM INVESTMENTS
CHEMICALS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Dylan J. Yolles)
NOTE TO SHAREHOLDERS:
Dylan J. Yolles became
Portfolio Manager of Fidelity Select Chemicals Portfolio on January 4,
1999.
Q. HOW DID THE FUND PERFORM, DYLAN?
A. For the 12 months that ended February 28, 1999, the fund had a
total return of -23.66%. During the same period, the Standard & Poor's
500 Index had a return of 19.74%, while the Goldman Sachs Cyclical
Industries Index - an index of 277 stocks designed to measure the
performance of companies in the cyclical industries sector - had a
return of -4.79%.
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
A. The chemical industry faced an unfavorable supply/demand balance
that lowered chemical prices, reduced profitability and caused a sharp
drop in its stock prices. A great deal of new production capacity in
the industry became operational in 1997 and 1998, increasing supply at
the very time that a worsening global economy caused a weakness in
demand, resulting in lower prices. Asia's economic problems put
pressure on U.S. companies in two ways: They had to compete
domestically against cheap imports from Asia, and they faced declining
export markets in that region of the world. Although the U.S. economy
grew, the most significant growth occurred in technology, rather than
basic industries. When the unfavorable supply/demand balance caused
earnings disappointments, the stock prices of chemical companies
corrected sharply.
Q. WERE THERE ANY BRIGHT SPOTS IN PERFORMANCE, AND WHERE WERE THE
BIGGEST DISAPPOINTMENTS?
A. Monsanto's basic agricultural business continued to do well, and
its Searle pharmaceutical division successfully introduced a new
anti-arthritis drug - Celebrex. The stock performance also was helped
by reports that Monsanto might be acquired by a larger company. In
general, we had disappointments among the small- and mid-cap specialty
companies, including Witco, Sealed Air and Cytec. Each of these
companies had its own problems, but the group as a whole was penalized
when analysts lowered growth expectations in light of disappointing
earnings. DuPont, the biggest company in the industry, was a major
disappointment as it failed to meet earnings expectations.
Q. WHAT CHANGES HAVE YOU MADE IN THE PORTFOLIO SINCE TAKING OVER THE
FUND IN JANUARY?
A. In general, I have given the fund a larger-cap bias. I believe that
in a relatively tough economic environment, the downside risk of
large-cap companies is more limited. These companies are much better
able to weather the storm, but still have the potential to do well in
a recovery. I increased the exposure to commodity companies, including
Dow Chemical and Union Carbide. Profit margins in commodities have
reached historical lows. In the past, this has been a good time to
begin buying the stocks, since stock performance should do better when
profit margins recover. I also added some higher-quality specialty
companies in the mid- to large-cap areas. Two examples are Morton
International, which was recently acquired by Rohm & Haas, and Avery
Dennison Corp., manufacturer of labels and adhesives. In addition, I
added industrial gas companies such as Praxair. These larger-cap
stocks were relatively inexpensive. Historically, they have shown good
earnings growth, and have had fairly stable earnings during economic
downturns.
Q. HOW WOULD YOU DESCRIBE YOUR INVESTMENT STYLE, DYLAN?
A. I look for companies with demonstrated records of financial
success, which usually are a combination of a high return on capital
and good earnings growth. I also like companies with good records of
adding new products and strong market positions. Finally, I balance
valuations relative to the company's fundamental outlook. I want to
make sure I am paying a reasonable price for the stock.
Q. WHAT IS YOUR OUTLOOK?
A. A lot depends on what happens in the global economy over the next
12 months. The chemical company stocks are cheap relative to the
overall market. If there is improvement in Asia and a bottom to the
recession in Latin America, I think that chemical stocks have the
potential to go up significantly and quickly. While few analysts are
optimistic about the near-term economic outlook, keep in mind that
this is a cyclical industry: The best time to buy cyclical companies
is when things have not gone well. Eventually, things will get better,
but you have to be patient.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: July 29, 1985
FUND NUMBER: 069
TRADING SYMBOL: FSCHX
SIZE: as of February 28, 1999, more than
$31 million
MANAGER: Dylan J. Yolles, since January 1999;
equity analyst, commodity and diversified
chemicals, since 1998; equity analyst, gaming
and lodging, 1997-1998; joined Fidelity in
1997
CHEMICALS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.2%
SHARES VALUE (NOTE 1)
AGRICULTURE - 5.2%
Delta & Pine Land Co. 22,000 $ 712,250
Pioneer Hi-Bred 40,900 958,594
International, Inc.
1,670,844
BUILDING MATERIALS - 4.3%
Owens-Corning 11,700 372,206
Sherwin-Williams Co. 41,500 998,594
1,370,800
CHEMICALS & PLASTICS - 66.8%
Agrium, Inc. 25,300 201,353
Air Products & Chemicals, 32,000 1,028,000
Inc.
Arch Chemicals, Inc. (a) 11,550 219,450
Avery Dennison Corp. 22,600 1,213,338
Borden Chemicals&Plastics 6,900 34,500
Ltd.
Cabot Corp. 14,500 365,219
Cytec Industries, Inc. (a) 18,800 504,075
Dow Chemical Co. 28,600 2,813,525
du Pont (E.I.) de Nemours & 57,400 2,945,335
Co.
Eastman Chemical Co. 16,100 759,719
Ferro Corp. 14,600 312,075
Geon Co. 8,300 189,344
Great Lakes Chemical Corp. 400 15,575
IMC Global, Inc. 30,200 602,113
Methanex Corp. (a) 38,100 162,982
Millennium Chemicals, Inc. 19,300 348,606
Minerals Technologies, Inc. 10,100 433,669
Monsanto Co. 24,000 1,093,500
Morton International, Inc. 29,100 1,051,238
Olin Corp. 23,100 293,081
Potash Corp. of Saskatchewan 7,400 420,354
PPG Industries, Inc. 34,400 1,790,950
Praxair, Inc. 57,600 2,012,400
Raychem Corp. 19,700 449,406
Rohm & Haas Co. 33,000 1,031,250
Union Carbide Corp. 19,000 836,000
Valspar Corp. 8,300 269,750
21,396,807
CONSUMER DURABLES - 7.4%
Minnesota Mining & 31,900 2,362,594
Manufacturing Co.
DRUGS & PHARMACEUTICALS - 5.3%
Cambrex Corp. 8,700 208,256
Chirex, Inc. (a) 10,300 215,013
Rhone-Poulenc SA sponsored 11,500 529,000
ADR Class A
Sigma-Aldrich Corp. 27,700 730,588
1,682,857
SHARES VALUE (NOTE 1)
ELECTRONIC INSTRUMENTS - 0.8%
Optical Coating Laboratories, 8,000 $ 256,000
Inc.
SERVICES - 2.8%
Ecolab, Inc. 22,500 897,188
TEXTILES & APPAREL - 0.6%
Polymer Group, Inc. (a) 19,500 196,219
TOTAL COMMON STOCKS 29,833,309
(Cost $31,457,897)
CASH EQUIVALENTS - 6.8%
Taxable Central Cash Fund (b) 2,189,378 2,189,378
(Cost $2,189,378)
TOTAL INVESTMENT IN $ 32,022,687
SECURITIES - 100%
(Cost $33,647,275)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $61,535,452 and $82,787,097, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $21,237 for the
period.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $34,170,646. Net unrealized depreciation
aggregated $2,147,959, of which $1,268,936 related to appreciated
investment securities and $3,416,895 related to depreciated investment
securities.
The fund hereby designates approximately $3,906,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
The fund intends to elect to defer its fiscal year ending February 29,
2000 approximately $1,740,000 of losses recognized during the period
November 1, 1998 to February 28, 1999.
A total of 34% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentages for use in preparing 1999 income tax returns.
CHEMICALS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 32,022,687
value (cost $33,647,275) -
See accompanying schedule
Receivable for investments 7,140
sold
Receivable for fund shares 19,812
sold
Dividends receivable 89,345
Interest receivable 11,964
Redemption fees receivable 128
Other receivables 2,035
TOTAL ASSETS 32,153,111
LIABILITIES
Payable to custodian bank $ 5,061
Payable for investments 3,700
purchased
Payable for fund shares 232,787
redeemed
Accrued management fee 16,196
Other payables and accrued 33,628
expenses
TOTAL LIABILITIES 291,372
NET ASSETS $ 31,861,739
Net Assets consist of:
Paid in capital $ 34,103,460
Undistributed net investment 159,886
income
Accumulated undistributed net (777,032)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (1,624,575)
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 1,024,331 $ 31,861,739
shares outstanding
NET ASSET VALUE and $31.10
redemption price per share
($31,861,739 (divided by)
1,024,331 shares)
Maximum offering price per $32.06
share (100/97.00 of $31.10)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 774,503
Dividends
Interest (including income on 149,011
securities loaned of $8,336)
TOTAL INCOME 923,514
EXPENSES
Management fee $ 276,652
Transfer agent fees 359,063
Accounting and security 62,653
lending fees
Non-interested trustees' 154
compensation
Custodian fees and expenses 7,794
Registration fees 17,086
Audit 13,240
Legal 319
Reports to shareholders 11,132
Total expenses before 748,093
reductions
Expense reductions (32,787) 715,306
NET INVESTMENT INCOME 208,208
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 2,554,482
Foreign currency transactions 3,597 2,558,079
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (15,018,197)
Assets and liabilities in 186 (15,018,011)
foreign currencies
NET GAIN (LOSS) (12,459,932)
NET INCREASE (DECREASE) IN $ (12,251,724)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 45,096
charges paid to FDC
Sales charges - Retained by $ 44,178
FDC
Deferred sales charges $ 7,081
withheld by FDC
Exchange fees withheld by FSC $ 7,718
Expense reductions Directed $ 32,355
brokerage arrangements
Custodian credits 432
$ 32,787
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ 208,208 $ (39,750)
income (loss)
Net realized gain (loss) 2,558,079 11,437,021
Change in net unrealized (15,018,011) 2,762,987
appreciation (depreciation)
NET INCREASE (DECREASE) IN (12,251,724) 14,160,258
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (51,919) -
From net investment income
From net realized gain (3,969,737) (6,539,426)
In excess of net realized (773,436) -
gain
TOTAL DISTRIBUTIONS (4,795,092) (6,539,426)
Share transactions Net 17,546,799 31,893,479
proceeds from sales of shares
Reinvestment of distributions 4,627,284 6,395,130
Cost of shares redeemed (42,678,413) (88,066,094)
NET INCREASE (DECREASE) IN (20,504,330) (49,777,485)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 63,464 96,792
TOTAL INCREASE (DECREASE) (37,487,682) (42,059,861)
IN NET ASSETS
NET ASSETS
Beginning of period 69,349,421 111,409,282
End of period (including $ 31,861,739 $ 69,349,421
undistributed net investment
income of $159,886 and $0,
respectively)
OTHER INFORMATION
Shares
Sold 503,657 706,740
Issued in reinvestment of 132,380 150,551
distributions
Redeemed (1,122,609) (1,965,911)
Net increase (decrease) (486,572) (1,108,620)
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 45.90 $ 42.53 $ 39.53 $ 33.91 $ 31.66
period
Income from Investment
Operations
Net investment income (loss) .17 (.02) .28 .01 .36
C
Net realized and unrealized (10.77) 7.88 5.49 8.89 2.65
gain (loss)
Total from investment (10.60) 7.86 5.77 8.90 3.01
operations
Less Distributions
From net investment income (.05) - (.12) (.08) (.22)
From net realized gain (3.52) (4.54) (2.74) (3.22) (.60)
In excess of net realized gain (.68) - - - -
Total distributions (4.25) (4.54) (2.86) (3.30) (.82)
Redemption fees added to paid .05 .05 .09 .02 .06
in capital
Net asset value, end of period $ 31.10 $ 45.90 $ 42.53 $ 39.53 $ 33.91
TOTAL RETURN A, B (23.66)% 19.47% 15.06% 27.48% 9.90%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 31,862 $ 69,349 $ 111,409 $ 89,230 $ 97,511
(000 omitted)
Ratio of expenses to average 1.58% 1.68% 1.83% 1.99% 1.52%
net assets
Ratio of expenses to average 1.51% D 1.67% D 1.81% D 1.97% D 1.51% D
net assets after expense
reductions
Ratio of net investment .44% (.05)% .67% .04% 1.07%
income (loss) to average net
assets
Portfolio turnover rate 141% 31% 207% 87% 106%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. E FOR
THE YEAR ENDED FEBRUARY 29.
</TABLE>
CONSTRUCTION AND HOUSING PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the past five year and past 10 year
total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT CONSTRUCTION AND -2.16% 73.11% 294.62%
HOUSING
SELECT CONSTRUCTION AND -5.17% 67.84% 282.71%
HOUSING (LOAD ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Cyclical Industries -4.79% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
index of common stocks - and the Goldman Sachs Cyclical Industries
Index - a market capitalization-weighted index of 277 stocks designed
to measure the performance of companies in the cyclical industries
sector. These benchmarks include reinvestment of dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT CONSTRUCTION AND -2.16% 11.60% 14.71%
HOUSING
SELECT CONSTRUCTION AND -5.17% 10.91% 14.36%
HOUSING (LOAD ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Cyclical Industries -4.79% n/a n/a
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER 10 YEARS
Construction & Housing S&P 500
00511 SP001
1989/02/28 9700.00 10000.00
1989/03/31 9946.27 10233.00
1989/04/30 10335.54 10764.09
1989/05/31 10700.98 11200.04
1989/06/30 10694.22 11136.20
1989/07/31 11128.12 12141.80
1989/08/31 11315.29 12379.78
1989/09/30 11519.47 12329.02
1989/10/31 10872.88 12042.99
1989/11/30 11034.53 12288.66
1989/12/31 10791.20 12583.59
1990/01/31 10110.51 11739.23
1990/02/28 10319.26 11890.67
1990/03/31 10900.11 12205.77
1990/04/30 10582.46 11900.63
1990/05/31 11562.65 13060.94
1990/06/30 11353.90 12972.12
1990/07/31 10761.70 12930.61
1990/08/31 9393.52 11761.68
1990/09/30 8423.54 11188.89
1990/10/31 8127.44 11140.78
1990/11/30 8913.63 11860.47
1990/12/31 9750.88 12191.38
1991/01/31 10608.55 12722.92
1991/02/28 11537.69 13632.61
1991/03/31 11823.58 13962.52
1991/04/30 12007.37 13996.03
1991/05/31 13201.98 14600.66
1991/06/30 12528.09 13931.95
1991/07/31 12854.83 14581.18
1991/08/31 13385.76 14926.75
1991/09/30 13089.66 14677.48
1991/10/31 12865.04 14874.16
1991/11/30 12221.78 14274.73
1991/12/31 13779.44 15907.76
1992/01/31 14803.81 15611.87
1992/02/29 15046.14 15814.83
1992/03/31 15035.12 15506.44
1992/04/30 15244.40 15962.33
1992/05/31 15729.05 16040.54
1992/06/30 14605.15 15801.54
1992/07/31 14869.69 16447.82
1992/08/31 14362.65 16110.64
1992/09/30 14550.03 16300.75
1992/10/31 15057.08 16357.80
1992/11/30 15927.88 16915.60
1992/12/31 16357.77 17123.66
1993/01/31 17041.18 17267.50
1993/02/28 17349.81 17502.34
1993/03/31 17757.65 17871.64
1993/04/30 17338.64 17439.14
1993/05/31 17526.14 17906.51
1993/06/30 17735.71 17958.44
1993/07/31 18342.34 17886.61
1993/08/31 19103.39 18564.51
1993/09/30 19721.05 18421.56
1993/10/31 20437.97 18802.89
1993/11/30 20118.11 18624.26
1993/12/31 21855.75 18849.62
1994/01/31 22569.77 19490.50
1994/02/28 22112.35 18962.31
1994/03/31 20818.19 18135.55
1994/04/30 20771.09 18367.69
1994/05/31 19671.97 18668.92
1994/06/30 19189.70 18211.53
1994/07/31 19739.26 18808.87
1994/08/31 20490.70 19580.03
1994/09/30 19346.72 19100.32
1994/10/31 18774.73 19530.08
1994/11/30 18012.08 18818.79
1994/12/31 18370.94 19097.87
1995/01/31 18451.57 19593.08
1995/02/28 19338.44 20356.63
1995/03/31 19683.98 20957.35
1995/04/30 19707.01 21574.54
1995/05/31 20674.51 22436.88
1995/06/30 20870.31 22958.09
1995/07/31 21837.81 23719.38
1995/08/31 21849.33 23778.91
1995/09/30 21722.63 24782.38
1995/10/31 21711.11 24693.91
1995/11/30 23047.18 25777.97
1995/12/31 23657.59 26274.46
1996/01/31 23609.43 27168.84
1996/02/29 23549.23 27420.69
1996/03/31 24355.88 27684.75
1996/04/30 24386.80 28092.83
1996/05/31 25189.24 28817.34
1996/06/30 25339.70 28927.14
1996/07/31 24273.95 27649.13
1996/08/31 25414.93 28232.26
1996/09/30 26794.13 29821.17
1996/10/31 26392.91 30643.63
1996/11/30 27596.58 32959.99
1996/12/31 26783.37 32307.05
1997/01/31 27050.06 34325.59
1997/02/28 27939.03 34594.71
1997/03/31 27138.96 33173.21
1997/04/30 27690.32 35153.65
1997/05/31 30340.31 37293.80
1997/06/30 30878.81 38964.57
1997/07/31 34124.00 42064.98
1997/08/31 34024.80 39708.50
1997/09/30 35101.80 41883.33
1997/10/31 33741.38 40484.43
1997/11/30 34492.44 42358.45
1997/12/31 34773.99 43085.75
1998/01/31 36025.73 43562.28
1998/02/28 39124.55 46703.99
1998/03/31 41139.55 49095.70
1998/04/30 41124.05 49589.60
1998/05/31 40404.99 48737.16
1998/06/30 40848.66 50716.86
1998/07/31 39379.95 50176.72
1998/08/31 33321.49 42922.17
1998/09/30 32939.01 45671.77
1998/10/31 36534.31 49386.71
1998/11/30 39364.65 52380.04
1998/12/31 42715.16 55398.18
1999/01/31 41980.80 57714.93
1999/02/26 38271.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990309 143221 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Construction and Housing Portfolio on
February, 28, 1989, and the current 3.00% sales charge was paid. As
the chart shows, by February 28, 1999, the value of the investment
would have grown to $38,271 - a 282.71% increase on the initial
investment - and includes the effect of a $7.50 trading fee. For
comparison, look at how the Standard & Poor's 500 Index did over the
same period. With dividends and capital gains, if any, reinvested, the
same $10,000 investment would have grown to $55,921 - a 459.21%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Lowe's Companies, Inc. 9.0
Danaher Corp. 8.6
Masco Corp. 6.7
Home Depot, Inc. 6.3
Fannie Mae 6.1
Black & Decker Corp. 5.4
Shaw Industries, Inc. 4.3
Leggett & Platt, Inc. 4.2
Lennar Corp. 4.1
Mohawk Industries, Inc. 4.0
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Building Materials 15.9%
Retail & Wholesale,
Miscellaneous 15.3%
Home Furnishings 9.7%
Construction 9.7%
Autos, Tires, & Accessories 8.6%
All Others 40.8%*
Row: 1, Col: 1, Value: 40.8
Row: 1, Col: 2, Value: 8.6
Row: 1, Col: 3, Value: 9.699999999999999
Row: 1, Col: 4, Value: 9.699999999999999
Row: 1, Col: 5, Value: 15.3
Row: 1, Col: 6, Value: 15.9
* INCLUDES SHORT-TERM INVESTMENTS
CONSTRUCTION AND HOUSING PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Yolanda McGettigan,
Portfolio Manager of Fidelity Select Construction and Housing
Portfolio
Q. HOW DID THE FUND PERFORM, YOLANDA?
A. For the 12 months that ended February 28, 1999, the fund returned
- -2.16%. For the same 12-month period, the Standard and Poor's 500
Index returned 19.74%, while the Goldman Sachs Cyclical Industries
Index - an index of 277 stocks designed to measure the performance of
companies in the cyclical industries sector - returned -4.79%. The
fund outperformed the Goldman Sachs index because the index contains
many cyclical industries, some of which had weaker performance than
housing and construction. In addition, the fund was underweighted in
construction and engineering stocks that suffered from weak overseas
economies and falling commodity prices.
Q. WHAT FACTORS INFLUENCED THE FUND'S PERFORMANCE DURING THE PAST
YEAR?
A. The biggest factor was the strong housing market, which expanded
for the eighth year in a row. Both housing starts and housing turnover
- - which measure new construction activity and sales of new and
existing homes, respectively - hit record levels in 1998. This trend
increased demand for construction materials, home furnishings and
appliances. However, many stock prices didn't reflect these positive
conditions because investors had been anticipating the housing
market's peak for several years and were reluctant to bid up prices.
Stocks in the construction and engineering sector performed poorly
because of declining economies in Asia and Latin America and
collapsing commodity prices. Reduced demand and weak pricing forced a
number of industries to cut back capital spending for large-scale
construction projects.
Q. DID YOU CHANGE THE FUND'S INVESTMENT STRATEGY DURING THE YEAR?
A. Yes, I made several strategic changes. First, I shifted assets away
from companies with significant ties to international economies and
into domestic companies that could benefit from the strong housing
market. Second, within the housing sector I emphasized companies with
growth characteristics independent of the housing market's strength.
Third, I increased the fund's exposure to high-quality mid- and
large-cap stocks that tend to perform better in unpredictable markets.
Q. WHAT HOLDINGS PERFORMED WELL DURING THE YEAR?
A. Maytag performed well. Maytag is a leading appliance producer that
successfully implemented a premium brand and product innovation
strategy. For example, Maytag introduced the "Neptune" class of
washing machines late in 1997. Despite the machine's $1,100 price tag
- - considerably higher than the $350 charge for an average washer -
sales exceeded expectations. Danaher Corp. also did well. Danaher
manufactures Sears' Craftsman tools as well as controls used in
manufacturing automation and environmental testing. By employing an
aggressive acquisition strategy, the company has generated a 10-year
record of consistent earnings growth, and traded at a
price-to-earnings ratio about twice the industry average. Home Depot's
stock price benefited from the company's increased market share of a
strong repair and remodeling market driven by booming home sales.
Q. WHAT ABOUT DISAPPOINTMENTS?
A. I had a positive outlook for Owens-Corning, the country's largest
fiberglass insulation manufacturer. Successive price increases and a
significant restructuring had positioned Owens-Corning for strong
earnings growth. However, the stock had disappointing performance
because the company settled an asbestos lawsuit for a
higher-than-expected sum. Although the settlement removed a great deal
of financial uncertainty, it significantly reduced potential upside in
the stock price. Another disappointing stock was Black & Decker, the
world's leading power-tool manufacturer. Despite a successful
restructuring that included divesting underperforming businesses,
weaker-than-expected revenue growth held the stock down.
Q. WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
A. I have a guarded outlook. The housing and construction industries
are cyclical and 1998 marks the eighth consecutive year of economic
expansion. The housing market's performance is tied to the strength of
the economy and the direction of interest rates, and some leading
indicators suggest that housing-related activity may slow down in
1999. Construction and engineering stocks with global exposure and
strong ties to capital spending may continue to suffer in the absence
of an interest-rate cut or signs of recovery in foreign economies. As
a result, I anticipate underweighting this sector in favor of
housing-market stocks. Within the housing sector, I am planning to
stick with medium- and large-cap companies that offer steady growth
and that are taking decisive steps to shield their earnings from a
weaker economy.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: September 29, 1986
FUND NUMBER: 511
TRADING SYMBOL: FSHOX
SIZE: as of February 28, 1999, more than
$51 million
MANAGER: Yolanda McGettigan, since 1997;
analyst, appliances, building materials,
home-building, engineering and construction
industries, since 1997; joined Fidelity in 1997
NOTE TO SHAREHOLDERS: Effective April 30, 1999, Brian Hogan will
become manager of Select Construction & Housing Portfolio.
CONSTRUCTION AND HOUSING PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 98.0%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES -
8.6%
Danaher Corp. 88,600 $ 4,274,950
BUILDING MATERIALS - 15.9%
Carlisle Companies, Inc. 12,600 521,325
Elcor Corp. 15,800 497,700
Lafarge Corp. 15,800 503,625
Lone Star Industries, Inc. 3,300 108,900
Masco Corp. 125,800 3,302,250
Owens-Corning 12,400 394,475
Sherwin-Williams Co. 36,500 878,281
Southdown, Inc. 6,040 285,013
USG Corp. 11,900 596,488
Vulcan Materials Co. 5,900 795,025
7,883,082
CONSTRUCTION - 9.7%
Centex Corp. 27,500 1,012,344
Clayton Homes, Inc. 35,000 433,125
Jacobs Engineering Group, 7,000 276,938
Inc. (a)
Kaufman & Broad Home Corp. 45,000 1,012,500
Lennar Corp. 88,000 2,040,500
4,775,407
CONSUMER ELECTRONICS - 8.5%
Black & Decker Corp. 54,800 2,671,500
Maytag Corp. 27,300 1,530,506
4,202,006
CREDIT & OTHER FINANCE - 2.2%
Countrywide Credit 28,100 1,064,288
Industries, Inc.
FEDERAL SPONSORED CREDIT - 8.2%
Fannie Mae 43,600 3,052,000
Freddie Mac 17,400 1,024,425
4,076,425
HOME FURNISHINGS - 9.7%
Ethan Allen Interiors, Inc. 6,000 270,000
Furniture Brands 12,100 258,638
International, Inc. (a)
Knoll, Inc. (a) 13,600 260,100
Leggett & Platt, Inc. 98,200 2,056,063
Maxim Group, Inc. (a) 107,900 1,955,688
4,800,489
LEASING & RENTAL - 1.0%
United Rentals, Inc. (a) 15,900 511,781
LEISURE DURABLES & TOYS - 0.4%
Champion Enterprises, Inc. (a) 10,400 204,750
METALS & MINING - 1.1%
Martin Marietta Materials, 10,200 523,388
Inc.
SHARES VALUE (NOTE 1)
REAL ESTATE - 2.2%
Catellus Development Corp. (a) 25,600 $ 369,600
Rouse Co. (The) 30,500 712,938
1,082,538
REAL ESTATE INVESTMENT TRUSTS
- - 6.9%
Apartment Investment & 2,900 113,463
Management Co. Class A
Archstone Communities Trust 31,700 620,131
Equity Residential Properties 25,800 1,057,800
Trust (SBI)
Mack-Cali Realty Corp. 12,700 367,506
Post Properties, Inc. 8,800 314,050
Simon Property Group, Inc. 37,600 956,450
3,429,400
RETAIL & WHOLESALE,
MISCELLANEOUS - 15.3%
Home Depot, Inc. 52,200 3,115,688
Lowe's Companies, Inc. 74,700 4,430,639
7,546,327
TEXTILES & APPAREL - 8.3%
Mohawk Industries, Inc. (a) 60,550 1,967,875
Shaw Industries, Inc. 97,600 2,141,100
4,108,975
TOTAL COMMON STOCKS 48,483,806
(Cost $42,903,576)
CASH EQUIVALENTS - 2.0%
Taxable Central Cash Fund (b) 1,005,868 1,005,868
(Cost $1,005,868)
TOTAL INVESTMENT IN $ 49,489,674
SECURITIES - 100%
(Cost $43,909,444)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $168,374,456 and $172,267,058, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $51,030 for the
period.
The fund participated in the bank borrowing program. The maximum loan
and average daily balances during the period for which loans were
outstanding amounted to $5,939,000 and $4,311,750, respectively. The
weighted average interest rate was 5.08%.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $43,982,378. Net unrealized appreciation
aggregated $5,507,296, of which $7,013,824 related to appreciated
investment securities and $1,506,528 related to depreciated investment
securities.
The fund hereby designates approximately $749,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 100% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentage for use in preparing 1999 income tax returns.
CONSTRUCTION AND HOUSING PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 49,489,674
value (cost $43,909,444) -
See accompanying schedule
Receivable for investments 8,428,016
sold
Receivable for fund shares 78,061
sold
Dividends receivable 36,759
Interest receivable 6,729
Redemption fees receivable 3,944
Other receivables 7,253
TOTAL ASSETS 58,050,436
LIABILITIES
Payable for fund shares $ 6,305,383
redeemed
Accrued management fee 36,964
Other payables and accrued 56,464
expenses
TOTAL LIABILITIES 6,398,811
NET ASSETS $ 51,651,625
Net Assets consist of:
Paid in capital $ 45,398,583
Accumulated undistributed net 672,812
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 5,580,230
(depreciation) on investments
NET ASSETS, for 2,064,686 $ 51,651,625
shares outstanding
NET ASSET VALUE and $25.02
redemption price per share
($51,651,625 (divided by)
2,064,686 shares)
Maximum offering price per $25.79
share (100/97.00 of $25.02)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 638,925
Dividends
Interest (including income on 307,536
securities loaned of $7,398)
TOTAL INCOME 946,461
EXPENSES
Management fee $ 490,439
Transfer agent fees 535,294
Accounting and security 80,738
lending fees
Non-interested trustees' 287
compensation
Custodian fees and expenses 12,077
Registration fees 34,181
Audit 22,982
Legal 371
Interest 4,870
Reports to shareholders 7,258
Total expenses before 1,188,497
reductions
Expense reductions (46,765) 1,141,732
NET INVESTMENT INCOME (LOSS) (195,271)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 1,245,125
Foreign currency transactions (1,205) 1,243,920
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (58,045)
Assets and liabilities in 1 (58,044)
foreign currencies
NET GAIN (LOSS) 1,185,876
NET INCREASE (DECREASE) IN $ 990,605
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 451,157
charges paid to FDC
Sales charges - Retained by $ 449,854
FDC
Deferred sales charges $ 653
withheld by FDC
Exchange fees withheld by FSC $ 10,418
Expense reductions Directed $ 45,252
brokerage arrangements
Custodian credits 1,513
$ 46,765
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (195,271) $ (285,511)
income (loss)
Net realized gain (loss) 1,243,920 3,768,064
Change in net unrealized (58,044) 4,728,366
appreciation (depreciation)
NET INCREASE (DECREASE) IN 990,605 8,210,919
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders - (23,292)
From net investment income
From net realized gain (144,845) (4,419,906)
TOTAL DISTRIBUTIONS (144,845) (4,443,198)
Share transactions Net 137,817,090 96,959,375
proceeds from sales of shares
Reinvestment of distributions 142,901 4,390,230
Cost of shares redeemed (144,767,914) (78,323,951)
NET INCREASE (DECREASE) IN (6,807,923) 23,025,654
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 129,721 110,066
TOTAL INCREASE (DECREASE) (5,832,442) 26,903,441
IN NET ASSETS
NET ASSETS
Beginning of period 57,484,067 30,580,626
End of period $ 51,651,625 $ 57,484,067
OTHER INFORMATION
Shares
Sold 5,395,789 4,140,467
Issued in reinvestment of 5,303 222,821
distributions
Redeemed (5,579,107) (3,510,718)
Net increase (decrease) (178,015) 852,570
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 G 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 25.63 $ 22.00 $ 19.56 $ 16.79 $ 19.82
period
Income from Investment
Operations
Net investment income (loss) C (.06) (.25) .06 .07 (.02)
Net realized and unrealized (.53) F 7.67 3.38 3.55 (2.50)
gain (loss)
Total from investment (.59) 7.42 3.44 3.62 (2.52)
operations
Less Distributions
From net investment income - (.02) (.02) (.07) -
From net realized gain (.06) (3.87) (1.03) (.81) (.52)
Total distributions (.06) (3.89) (1.05) (.88) (.52)
Redemption fees added to paid .04 .10 .05 .03 .01
in capital
Net asset value, end of period $ 25.02 $ 25.63 $ 22.00 $ 19.56 $ 16.79
TOTAL RETURN A, B (2.16)% 40.04% 18.64% 21.77% (12.54)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 51,652 $ 57,484 $ 30,581 $ 42,668 $ 16,863
(000 omitted)
Ratio of expenses to average 1.43% 2.50% D 1.41% 1.43% 1.76%
net assets
Ratio of expenses to average 1.37% E 2.43% E 1.35% E 1.40% E 1.74% E
net assets after expense
reductions
Ratio of net investment (.23)% (1.10)% .27% .39% (.11)%
income (loss) to average net
assets
Portfolio turnover rate 226% 404% 270% 139% 45%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR AGREED TO
REIMBURSE A PORTION OF THE
FUND'S EXPENSED DURING THE
PERIOD. WITHOUT THIS
REIMBURSEMENT, THE FUND'S
EXPENSE RATIO WOULD HAVE
BEEN HIGHER. E FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. F THE
AMOUNT SHOWN FOR A SHARE
OUTSTANDING DOES NOT
CORRESPOND WITH THE
AGGREGATE NET GAIN ON
INVESTMENTS FOR THE PERIOD
DUE TO THE TIMING OF SALES
AND REPURCHASES OF FUND
SHARES IN RELATION TO
FLUCTUATING MARKET VALUES OF
THE INVESTMENTS OF THE FUND.
G FOR THE YEAR ENDED
FEBRUARY 29.
</TABLE>
CYCLICAL INDUSTRIES PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the total returns would have been
lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR LIFE OF FUND
1999
SELECT CYCLICAL INDUSTRIES -4.96% 19.53%
SELECT CYCLICAL INDUSTRIES -7.89% 15.87%
(LOAD ADJ.)
S&P 500 19.74% 60.71%
GS Cyclical Industries -4.79% 21.02%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year or since the fund
started on March 3, 1997. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a market
capitalization-weighted index of common stocks and the Goldman Sachs
Cyclical Industries Index - a market capitalization-weighted index of
277 stocks designed to measure the performance of companies in the
cyclical industries sector. These benchmarks include reinvestment of
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR LIFE OF FUND
1999
SELECT CYCLICAL INDUSTRIES -4.96% 9.37%
SELECT CYCLICAL INDUSTRIES -7.89% 7.67%
(LOAD ADJ.)
S&P 500 19.74% 26.89%
GS Cyclical Industries -4.79% 10.05%
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER LIFE OF FUND
Cyclical Industries S&P 500
00515 SP001
1997/03/03 9700.00 10000.00
1997/03/31 9418.70 9533.50
1997/04/30 9738.80 10102.65
1997/05/31 10476.00 10717.70
1997/06/30 10999.80 11197.85
1997/07/31 11688.50 12088.86
1997/08/31 11504.20 11411.64
1997/09/30 11766.10 12036.66
1997/10/31 10893.10 11634.64
1997/11/30 11096.80 12173.20
1997/12/31 11118.24 12382.22
1998/01/31 11401.25 12519.16
1998/02/28 12199.74 13422.05
1998/03/31 12846.62 14109.39
1998/04/30 12998.88 14251.33
1998/05/31 12795.29 14006.35
1998/06/30 12856.37 14575.29
1998/07/31 12133.64 14420.06
1998/08/31 10230.13 12335.21
1998/09/30 10301.38 13125.40
1998/10/31 11237.87 14193.02
1998/11/30 11594.14 15053.26
1998/12/31 12092.92 15920.63
1999/01/31 11858.80 16586.43
1999/02/26 11587.00 16070.92
IMATRL PRASUN SHR__CHT 19990228 19990322 094431 R00000000000027
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Select Cyclical Industries Portfolio on March 3,
1997, when the fund started, and the current 3.00% sales charge was
paid. As the chart shows, by February 28, 1999, the value of the
investment would have grown to $11,587 - a 15.87% increase on the
initial investment - and includes the effect of a $7.50 trading fee.
For comparison, look at how the Standard & Poor's 500 Index did over
the same period. With dividends and capital gains, if any, reinvested,
the same $10,000 investment would have grown to $16,071 - a 60.71%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
General Electric Co. 7.8
Textron, Inc. 7.1
Tyco International Ltd. 6.3
Ford Motor Co. 5.2
Waste Management, Inc. 3.7
DaimlerChrysler AG (Reg.) 3.5
Coltec Industries, Inc. 3.1
Emerson Electric Co. 2.9
du Pont (E.I.) de Nemours & Co. 2.6
Monsanto Co. 2.5
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Industrial Machinery & Equipment 13.2%
Electrical Equipment 13.1%
Autos, Tires, & Accessories 12.0%
Aerospace & Defense 9.7%
Chemicals & Plastics 8.9%
All Others 43.1%*
Row: 1, Col: 1, Value: 43.1
Row: 1, Col: 2, Value: 8.9
Row: 1, Col: 3, Value: 9.699999999999999
Row: 1, Col: 4, Value: 12.02
Row: 1, Col: 5, Value: 13.1
Row: 1, Col: 6, Value: 13.2
* INCLUDES SHORT-TERM 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. For the 12 months that ended February 28, 1999, the fund had a
total return of -4.96%. In comparison, the Standard & Poor's 500 Index
returned 19.74% and the Goldman Sachs Cyclical Industries Index - an
index of 277 stocks designed to measure the performance of companies
in the cyclical industries sector - returned -4.79% during the same
12-month period.
Q. WHAT MARKET FACTORS INFLUENCED THE FUND'S PERFORMANCE? WHY DID THE
FUND LAG THE GOLDMAN SACHS INDEX DURING THE 12-MONTH PERIOD?
A. Cyclical industries turned in mixed results during the period. In
the third quarter of 1998, the fund produced negative returns as the
global economic crisis took hold of the U.S. stock market. In the
fourth quarter, the fund staged a turnaround, led by strong
performance from conglomerates such as Tyco International and General
Electric. Both companies managed to increase profits and earnings
during the period. However, the primary reason for the fund's
underperformance compared to the Goldman Sachs index was the
portfolio's asset underweighting in auto stocks. General Motors, Ford
and DaimlerChrysler all surged in response to record sales numbers. In
hindsight, I underestimated the potential of the auto stocks, given my
doubts about the strength of the U.S. economy.
Q. IN LIGHT OF THE DIFFICULT ENVIRONMENT FOR CYCLICAL STOCKS, WHAT
STRATEGY DID YOU PURSUE TO STABILIZE FUND PERFORMANCE?
A. I continued to concentrate a significant portion of fund assets in
conglomerates such as Tyco International and General Electric and
added conglomerates, including Textron and Pentair. While the U.S.
economy appeared relatively stable, the global economic situation was
less bright. Since cyclical stocks are highly dependent on solid
economic growth for their performance, I felt these companies offered
a diversity of strong revenue sources that could shield the portfolio
during difficult and uncertain periods.
Q. YOU MADE SOME CHANGES TO THE FUND'S TOP HOLDINGS DURING THE PERIOD
. . .
A. That's right. I sold off the fund's holdings in DEKALB after it was
acquired by Monsanto. The stock performed very well during the period,
so I felt it was prudent to lock in profits. Textron was added to the
fund's top holdings because I felt that its stock was undervalued,
considering its fundamental business outlook and its strong track
record of earnings growth.
Q. WHAT STOCKS HELPED PERFORMANCE?
A. Tyco International and General Electric were the biggest
contributors to total return. Tyco International stock rallied during
the period as it increased profits by acquiring a number of companies,
including an announced $11 billion bid for electric device maker AMP.
General Electric performed solidly in response to strong earnings
growth and a dividend increase. The stock surged from a 12-month low
of $72 on October 8, 1998, to close at $100 by the end of the period.
Q. WHAT STOCKS WERE THE MAIN DISAPPOINTMENTS?
A. While the fund's assets remained underweighted relative to the
Goldman Sachs index in industrial commodities such as chemicals and
paper, these sectors continued to lag. Prior to Stone Container's
merger with Jefferson Smurfit, the stock detracted significantly from
performance as the paper sector continued to languish in a poor
business environment with little ability to raise prices and increase
profit margins. Lackluster performance from chemical companies duPont
and Monsanto also detracted from total return.
Q. WHAT'S YOUR OUTLOOK, ALBERT?
A. I think the short-term environment remains difficult for cyclical
stocks. In the absence of a catalyst such as another interest-rate cut
or strong signs of a turnaround in Asia and the global economy,
industrial commodities and cyclical stocks could continue to struggle
in 1999. This is the primary reason for my defensive strategy of
allocating a significant portion of fund assets to conglomerates.
These holdings can provide predictable earnings and the ability to
quickly cut costs in a weak economic environment.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: March 3, 1997
FUND NUMBER: 515
TRADING SYMBOL: FCYCF
SIZE: as of February 28, 1999, more than
$3 million
MANAGER: Albert Ruback, since inception;
manager, Fidelity Select Energy Portfolio,
1994-1996; Fidelity Select Industrial Equipment
Portfolio, 1991-1994; sector leader, cyclical
industries since 1996; joined Fidelity in 1991
CYCLICAL INDUSTRIES PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.6%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 9.7%
Alliant Techsystems, Inc. (a) 100 $ 7,919
Gulfstream Aerospace Corp. (a) 500 22,375
Lockheed Martin Corp. 1,000 37,688
Sundstrand Corp. 100 6,769
Textron, Inc. 2,700 210,600
285,351
AIR TRANSPORTATION - 2.3%
America West Holding Corp. 600 10,200
Class B (a)
Southwest Airlines Co. 1,000 30,125
US Airways Group, Inc. (a) 600 28,425
68,750
AUTOS, TIRES, & ACCESSORIES -
12.0%
DaimlerChrysler AG (Reg.) 1,100 103,331
Danaher Corp. 250 12,063
Federal-Mogul Corp. 450 22,134
Ford Motor Co. 2,600 154,213
General Motors Corp. 600 49,538
SPX Corp. 250 14,281
355,560
BROADCASTING - 0.9%
PanAmSat Corp. (a) 700 25,113
BUILDING MATERIALS - 2.6%
Carlisle Companies, Inc. 300 12,413
Crane Co. 600 16,463
Masco Corp. 1,000 26,250
Owens-Corning 700 22,269
77,395
CHEMICALS & PLASTICS - 8.6%
du Pont (E.I.) de Nemours & 1,500 76,969
Co.
Ferro Corp. 550 11,756
Ivex Packaging Corp. (a) 1,500 22,688
Monsanto Co. 1,600 72,900
Nalco Chemical Co. 300 8,438
Potash Corp. of Saskatchewan 200 11,361
Sealed Air Corp. (a) 414 21,011
Solutia, Inc. 240 4,275
Spartech Corp. 500 11,813
Witco Corp. 800 13,550
254,761
COMPUTERS & OFFICE EQUIPMENT
- - 2.3%
Pitney Bowes, Inc. 400 25,275
Xerox Corp. 800 44,150
69,425
SHARES VALUE (NOTE 1)
CONSTRUCTION - 1.1%
Centex Corp. 300 $ 11,044
Kaufman & Broad Home Corp. 300 6,750
Lennar Corp. 300 6,956
Oakwood Homes Corp. 500 8,063
32,813
CONSUMER ELECTRONICS - 0.7%
Black & Decker Corp. 400 19,500
DEFENSE ELECTRONICS - 3.5%
Litton Industries, Inc. (a) 300 16,838
Raytheon Co.:
Class A 600 31,725
Class B 1,000 53,438
102,001
ELECTRICAL EQUIPMENT - 13.1%
Emerson Electric Co. 1,500 86,156
General Electric Co. 2,300 230,706
Honeywell, Inc. 1,000 69,938
386,800
ENGINEERING - 0.8%
EG & G, Inc. 900 23,850
HOME FURNISHINGS - 0.4%
Leggett & Platt, Inc. 600 12,563
INDUSTRIAL MACHINERY &
EQUIPMENT - 13.2%
Case Corp. 200 3,900
Caterpillar, Inc. 700 31,894
Coltec Industries, Inc. (a) 5,000 90,000
Illinois Tool Works, Inc. 700 48,125
Ingersoll-Rand Co. 650 30,875
Tyco International Ltd. 2,500 186,094
390,888
METALS & MINING - 1.5%
Alcoa, Inc. 848 34,344
Martin Marietta Materials, 200 10,263
Inc.
44,607
PACKAGING & CONTAINERS - 1.2%
Owens-Illinois, Inc. (a) 700 16,756
Silgan Holdings, Inc. (a) 800 17,750
34,506
PAPER & FOREST PRODUCTS - 6.2%
Bowater, Inc. 700 29,488
Champion International Corp. 500 18,500
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PAPER & FOREST PRODUCTS -
CONTINUED
Fort James Corp. 687 $ 20,524
Pentair, Inc. 300 11,363
Smurfit-Stone Container Corp. 2,970 53,646
(a)
Temple-Inland, Inc. 300 17,981
Union Camp Corp. 300 20,063
Willamette Industries, Inc. 300 10,931
182,496
POLLUTION CONTROL - 4.1%
Ogden Corp. 500 12,219
Waste Management, Inc. 2,245 109,724
121,943
RAILROADS - 3.7%
Bombardier, Inc. Class B 600 8,814
Burlington Northern Santa Fe 1,500 49,688
Corp.
Canadian National Railway Co. 300 14,485
Union Pacific Corp. 500 23,438
Wisconsin Central 1,000 13,750
Transportation Corp. (a)
110,175
SERVICES - 1.6%
Ecolab, Inc. 1,200 47,850
SHIP BUILDING & REPAIR - 1.8%
Avondale Industries, Inc. 700 21,613
General Dynamics Corp. 500 30,219
51,832
TEXTILES & APPAREL - 1.4%
Shaw Industries, Inc. 1,700 37,294
Unifi, Inc. 300 3,619
40,913
TRUCKING & FREIGHT - 0.9%
CNF Transportation, Inc. 200 8,450
Expeditors International of 200 9,313
Washington, Inc.
USFreightways Corp. 300 9,563
27,326
TOTAL COMMON STOCKS 2,766,418
(Cost $2,506,497)
CONVERTIBLE PREFERRED STOCKS
- - 0.3%
CHEMICALS & PLASTICS - 0.3%
Sealed Air Corp. Series A, 190 9,785
$2.00 (Cost $8,093)
CASH EQUIVALENTS - 6.1%
MATURITY AMOUNT VALUE (NOTE 1)
Investments in repurchase $ 29,011 $ 29,000
agreements (U.S. Treasury
obligations), in a joint
trading account at 4.74%,
dated 2/26/99 due 3/1/99
SHARES
Taxable Central Cash Fund (b) 149,752 149,752
TOTAL CASH EQUIVALENTS 178,752
(Cost $178,752)
TOTAL INVESTMENT IN $ 2,954,955
SECURITIES - 100%
(Cost $2,693,342)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $3,633,603 and $4,456,955, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $579 for the
period.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $2,693,963. Net unrealized appreciation
aggregated $260,992, of which $449,365 related to appreciated
investment securities and $188,373 related to depreciated investment
securities.
The fund hereby designates approximately $22,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 100% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentage for use in preparing 1999 income tax returns.
CYCLICAL INDUSTRIES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 2,954,955
value (including repurchase
agreements of $29,000) (cost
$2,693,342) - See
accompanying schedule
Cash 117
Receivable for investments 143,540
sold
Receivable for fund shares 5,619
sold
Dividends receivable 4,515
Interest receivable 328
Receivable from investment 1,565
adviser for expense
reductions
TOTAL ASSETS 3,110,639
LIABILITIES
Payable for investments $ 3,700
purchased
Other payables and accrued 19,955
expenses
TOTAL LIABILITIES 23,655
NET ASSETS $ 3,086,984
Net Assets consist of:
Paid in capital $ 2,807,386
Accumulated undistributed net 17,985
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 261,613
(depreciation) on investments
NET ASSETS, for 270,992 $ 3,086,984
shares outstanding
NET ASSET VALUE and $11.39
redemption price per share
($3,086,984 (divided by)
270,992 shares)
Maximum offering price per $11.74
share (100/97.00 of $11.39)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 41,330
Dividends
Interest 11,720
TOTAL INCOME 53,050
EXPENSES
Management fee $ 22,236
Transfer agent fees 28,977
Accounting fees and expenses 60,050
Non-interested trustees' 14
compensation
Custodian fees and expenses 8,160
Registration fees 12,920
Audit 17,333
Legal 21
Reports to shareholders 647
Miscellaneous 12
Total expenses before 150,370
reductions
Expense reductions (56,169) 94,201
NET INVESTMENT INCOME (LOSS) (41,151)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 21,503
Foreign currency transactions 195 21,698
Change in net unrealized (207,859)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) (186,161)
NET INCREASE (DECREASE) IN $ (227,312)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 16,210
charges paid to FDC
Sale charges - Retained by $ 16,210
FDC
Exchange fees withheld by FSC $ 698
Expense reductions Directed $ 521
brokerage arrangements
FMR reimbursement 55,648
$ 56,169
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 MARCH 3, 1997 (COMMENCEMENT
ASSETS OF OPERATIONS) TO FEBRUARY
28, 1998
Operations Net investment $ (41,151) $ (33,119)
income (loss)
Net realized gain (loss) 21,698 328,506
Change in net unrealized (207,859) 469,472
appreciation (depreciation)
NET INCREASE (DECREASE) IN (227,312) 764,859
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (29,887) (144,767)
from net realized gains
Share transactions Net 3,255,351 10,028,973
proceeds from sales of shares
Reinvestment of distributions 29,223 143,304
Cost of shares redeemed (3,913,851) (6,843,907)
NET INCREASE (DECREASE) IN (629,277) 3,328,370
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 8,220 16,778
TOTAL INCREASE (DECREASE) (878,256) 3,965,240
IN NET ASSETS
NET ASSETS
Beginning of period 3,965,240 -
End of period 3,086,984 3,965,240
OTHER INFORMATION
Shares
Sold 265,208 908,349
Issued in reinvestment of 2,305 13,087
distributions
Redeemed (325,171) (592,786)
Net increase (decrease) (57,658) 328,650
</TABLE>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 1999 1998 F
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 12.07 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.13) (.11)
Net realized and unrealized (.49) 2.59
gain (loss)
Total from investment (.62) 2.48
operations
Less Distributions
From net realized gain (.09) (.46)
Redemption fees added to paid .03 .05
in capital
Net asset value, end of period $ 11.39 $ 12.07
TOTAL RETURN B, C (4.96)% 25.77%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 3,087 $ 3,965
(000 omitted)
Ratio of expenses to average 2.50% E 2.50% A, E
net assets
Ratio of expenses to average 2.49% G 2.50% A
net assets after expense
reductions
Ratio of net investment (1.09)% (.93)% A
income (loss) to average net
assets
Portfolio turnover rate 103% 140% A
A ANNUALIZED BTHE TOTAL
RETURNS WOULD HAVE BEEN
LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE
PERIODS SHOWN. C TOTAL
RETURNS DO NOT INCLUDE THE
ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED. D
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. E FMR AGREED TO
REIMBURSE A PORTION OF THE
FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS
REIMBURSEMENT, THE FUND'S
EXPENSE RATIO WOULD HAVE
BEEN HIGHER. F FOR THE
PERIOD MARCH 3, 1997
(COMMENCEMENT OF OPERATIONS)
TO FEBRUARY 28, 1998. G FMR
OR THE FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES.
DEFENSE AND AEROSPACE PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the past five year and past 10 year
total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT DEFENSE AND AEROSPACE -9.90% 128.63% 292.88%
SELECT DEFENSE AND AEROSPACE -12.68% 121.70% 281.02%
(LOAD ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Cyclical Industries -4.79% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
index of common stocks - and the Goldman Sachs Cyclical Industries
Index - a market capitalization-weighted index of 277 stocks designed
to measure the performance of companies in the cyclical industries
sector. These benchmarks include reinvestment of dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT DEFENSE AND AEROSPACE -9.90% 17.98% 14.66%
SELECT DEFENSE AND AEROSPACE -12.68% 17.26% 14.31%
(LOAD ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Cyclical Industries -4.79% n/a n/a
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER 10 YEARS
Defense & Aerospace S&P 500
00067 SP001
1989/02/28 9700.00 10000.00
1989/03/31 9898.13 10233.00
1989/04/30 10253.11 10764.09
1989/05/31 10434.72 11200.04
1989/06/30 10310.89 11136.20
1989/07/31 10979.57 12141.80
1989/08/31 11260.26 12379.78
1989/09/30 11053.87 12329.02
1989/10/31 10426.47 12042.99
1989/11/30 10030.21 12288.66
1989/12/31 10195.32 12583.59
1990/01/31 9617.45 11739.23
1990/02/28 9650.47 11890.67
1990/03/31 10244.85 12205.77
1990/04/30 9823.83 11900.63
1990/05/31 10550.30 13060.94
1990/06/30 10557.88 12972.12
1990/07/31 10134.24 12930.61
1990/08/31 9245.42 11761.68
1990/09/30 8946.37 11188.89
1990/10/31 8830.08 11140.78
1990/11/30 9303.56 11860.47
1990/12/31 9727.97 12191.38
1991/01/31 10586.56 12722.92
1991/02/28 10794.96 13632.61
1991/03/31 11628.55 13962.52
1991/04/30 11436.82 13996.03
1991/05/31 11970.32 14600.66
1991/06/30 11368.05 13931.95
1991/07/31 11861.95 14581.18
1991/08/31 11736.38 14926.75
1991/09/30 11460.13 14677.48
1991/10/31 12012.63 14874.16
1991/11/30 11468.51 14274.73
1991/12/31 12347.48 15907.76
1992/01/31 12305.62 15611.87
1992/02/29 12498.16 15814.83
1992/03/31 12247.02 15506.44
1992/04/30 12029.37 15962.33
1992/05/31 11426.65 16040.54
1992/06/30 10890.89 15801.54
1992/07/31 11309.45 16447.82
1992/08/31 11091.80 16110.64
1992/09/30 11250.85 16300.75
1992/10/31 11342.94 16357.80
1992/11/30 11736.38 16915.60
1992/12/31 12347.48 17123.66
1993/01/31 12715.81 17267.50
1993/02/28 12623.73 17502.34
1993/03/31 13293.42 17871.64
1993/04/30 13335.28 17439.14
1993/05/31 13745.46 17906.51
1993/06/30 14323.07 17958.44
1993/07/31 14909.06 17886.61
1993/08/31 14883.94 18564.51
1993/09/30 15269.02 18421.56
1993/10/31 15880.11 18802.89
1993/11/30 15411.33 18624.26
1993/12/31 15910.69 18849.62
1994/01/31 16668.34 19490.50
1994/02/28 16668.34 18962.31
1994/03/31 15997.78 18135.55
1994/04/30 16084.61 18367.69
1994/05/31 16137.63 18668.92
1994/06/30 15731.10 18211.53
1994/07/31 15960.88 18808.87
1994/08/31 16676.73 19580.03
1994/09/30 15837.15 19100.32
1994/10/31 16226.01 19530.08
1994/11/30 15589.70 18818.79
1994/12/31 16190.66 19097.87
1995/01/31 16181.82 19593.08
1995/02/28 17357.23 20356.63
1995/03/31 18099.60 20957.35
1995/04/30 19098.26 21574.54
1995/05/31 20273.67 22436.88
1995/06/30 21024.88 22958.09
1995/07/31 22182.62 23719.38
1995/08/31 22173.78 23778.91
1995/09/30 22792.42 24782.38
1995/10/31 21961.67 24693.91
1995/11/30 23543.62 25777.97
1995/12/31 23857.97 26274.46
1996/01/31 24284.85 27168.84
1996/02/29 25584.47 27420.69
1996/03/31 26172.61 27684.75
1996/04/30 27433.62 28092.83
1996/05/31 28459.45 28817.34
1996/06/30 27785.33 28927.14
1996/07/31 25909.53 27649.13
1996/08/31 27277.30 28232.26
1996/09/30 28615.76 29821.17
1996/10/31 28117.50 30643.63
1996/11/30 29651.36 32959.99
1996/12/31 29829.05 32307.05
1997/01/31 29183.71 34325.59
1997/02/28 29644.67 34594.71
1997/03/31 29450.05 33173.21
1997/04/30 30236.83 35153.65
1997/05/31 32657.02 37293.80
1997/06/30 33436.06 38964.57
1997/07/31 36531.41 42064.98
1997/08/31 38546.51 39708.50
1997/09/30 41153.67 41883.33
1997/10/31 38058.31 40484.43
1997/11/30 38131.02 42358.45
1997/12/31 36859.23 43085.75
1998/01/31 38626.76 43562.28
1998/02/28 42296.92 46703.99
1998/03/31 43467.77 49095.70
1998/04/30 44627.36 49589.60
1998/05/31 41734.01 48737.16
1998/06/30 41756.53 50716.86
1998/07/31 39921.45 50176.72
1998/08/31 32006.96 42922.17
1998/09/30 34134.75 45671.77
1998/10/31 37500.94 49386.71
1998/11/30 38390.34 52380.04
1998/12/31 38457.89 55398.18
1999/01/31 38390.34 57714.93
1999/02/26 38102.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990309 143614 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Defense and Aerospace Portfolio on
February 28, 1989, and the current 3.00% sales charge was paid. As the
chart shows, by February 28, 1999, the value of the investment would
have grown to $38,102 - a 281.02% increase on the initial investment -
and includes the effect of a $7.50 trading fee. For comparison, look
at how the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
28, 1999
% OF FUND'S INVESTMENTS
United Technologies Corp. 8.6
General Dynamics Corp. 8.1
Cordant Technologies, Inc. 7.5
Raytheon Co. Class A 6.2
General Motors Corp. Class H 5.3
Sundstrand Corp. 5.1
Gulfstream Aerospace Corp. 5.1
Litton Industries, Inc. 4.4
Boeing Co. 3.7
PanAmSat Corp. 3.2
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Aerospace & Defense 47.5%
Defense Electronics 13.6%
Ship Building & Repair 10.7%
Consumer Electronics 5.3%
Electrical Equipment 4.2%
All Others 18.7%*
Row: 1, Col: 1, Value: 18.7
Row: 1, Col: 2, Value: 4.2
Row: 1, Col: 3, Value: 5.3
Row: 1, Col: 4, Value: 10.7
Row: 1, Col: 5, Value: 13.6
Row: 1, Col: 6, Value: 47.5
* INCLUDES SHORT-TERM INVESTMENTS
DEFENSE AND AEROSPACE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Jeff Feingold)
NOTE TO SHAREHOLDERS: Jeff Feingold became Portfolio Manager of
Fidelity Select Defense
and Aerospace Portfolio on October 30, 1998.
Q. HOW DID THE FUND PERFORM, JEFF?
A. For the 12 months that ended February 28, 1999, the fund returned
- -9.90%. For the same 12 month period, the Standard & Poor's 500 Index
returned 19.74%, while the Goldman Sachs Cyclical Industries Index -
an index of 277 stocks designed to measure the performance of
companies in the cyclical industries sector - returned -4.79%. The
fund lagged the Goldman Sachs index because it had a greater
concentration in defense and aerospace stocks that underperformed
other industry sectors included in the more diversified Cyclical
Industries index.
Q. WHAT FACTORS INFLUENCED THE FUND'S RETURNS?
A. On the positive side, the government's 1999 budget proposal
features the first meaningful increase in defense spending since 1985,
although funds appropriated this year will take about 18 to 24 months
to convert to actual procurement spending. On the negative side, the
year's biggest proposed merger - between Lockheed Martin and Northrop
Grumman - was called off in response to regulatory concerns. While the
failed merger disappointed investors, both companies also delivered
earnings below expectations. At Lockheed, launch failures in its
commercial satellite division hurt earnings. Northrop had problems in
its airborne surveillance segment. Results were further weakened by an
industry-wide reduction in demand for commercial aircraft components,
particularly at Boeing.
Q. WHAT ABOUT AEROSPACE STOCKS? DID THEY FARE ANY BETTER?
A. Aerospace stocks suffered fallout from the Asian economic crisis,
as Asia's passenger traffic and demand for new aircraft declined.
Boeing - the world's largest aircraft manufacturer - saw its orders
peak two years ago, and expects production and deliveries to crest
this year. Component suppliers, whose earnings depend on aircraft
production levels, also had weak performance. For example, an
investment in Cordant Technologies, one of Boeing's largest suppliers
of fasteners, did poorly despite the healthy performance and good
growth prospects of some of the company's other business segments.
Q. WHAT STOCKS HELPED THE FUND'S PERFORMANCE?
A. Stocks with consistent and predictable earnings growth fared well.
For example, General Dynamics, a defense contractor with operations in
basic armaments, shipbuilding and electronics, downsized in the early
1990s to cope with defense cutbacks. Since then, it has generated
annual earnings growth that outpaced many of its peers. Another solid
performer was United Technologies Corp. Its business segments -
including Pratt & Whitney aircraft engines, Otis Elevator, and Carrier
heat and air conditioning systems - are market leaders offering
relatively predictable growth.
Q. WHAT ABOUT SATELLITE STOCKS?
A. The fund owns a number of satellite stocks, including COMSAT,
PanAmSat and Loral Space & Communications. However, I reduced the
fund's exposure to these companies for several reasons. First,
satellite companies have a relatively high degree of financial risk
because they must invest significant capital before they can expect to
break even on a cash-flow basis. Second, it is unclear which companies
have the most appropriate technology or business models. Both
satellite launch and in-orbit failures during the past year
demonstrated this risk. Finally, these stocks have significant price
volatility because their growth rates are unpredictable. During the
past year, the market has severely penalized satellite companies that
missed their earnings or revenue projections.
Q. WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
A. I am relatively optimistic about the defense industry. Over the
longer term, increased defense spending should improve the climate for
these stocks, especially as we approach the conversion of
appropriation into procurement. My outlook for aerospace stocks is
more cautious. It is difficult to see much good news over the next 12
months as production and delivery peak for the world's largest
manufacturers. Over the longer term, Asia's recovery will be critical
for the industry to regain momentum.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: May 8, 1984
FUND NUMBER: 067
TRADING SYMBOL: FSDAX
SIZE: as of February 28, 1999, more than
$28 million
MANAGER: Jeff Feingold, since 1998; equity
analyst, defense and aerospace industries,
since 1998; footwear industry, since 1997;
textile and apparel industries, 1997-1998;
joined Fidelity in 1997
DEFENSE AND AEROSPACE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.6%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 47.5%
AAR Corp. 12,300 $ 186,038
Alliant Techsystems, Inc. (a) 11,200 886,900
BE Aerospace, Inc. (a) 14,500 213,875
Boeing Co. 29,200 1,038,425
Cordant Technologies, Inc. 54,400 2,118,200
Goodrich (B.F.) Co. 14,500 494,813
Gulfstream Aerospace Corp. (a) 31,900 1,427,525
Howmet International, Inc. (a) 47,300 762,713
Lockheed Martin Corp. 22,600 851,738
Orbital Sciences Corp. (a) 25,800 712,725
Primex Technologies, Inc. 2,400 99,750
Rockwell International Corp. 15,100 671,006
Sundstrand Corp. 21,400 1,448,513
United Technologies Corp. 19,600 2,427,947
13,340,168
AUTOS, TIRES, & ACCESSORIES -
1.9%
TRW, Inc. 11,400 538,650
BROADCASTING - 3.2%
PanAmSat Corp. (a) 25,400 911,225
COMPUTER SERVICES & SOFTWARE
- - 1.3%
Titan Corp. (a) 67,500 379,688
CONSUMER ELECTRONICS - 5.3%
General Motors Corp. Class H 31,500 1,486,406
(a)
DEFENSE ELECTRONICS - 13.6%
Litton Industries, Inc. (a) 22,100 1,240,363
Northrop Grumman Corp. 13,600 847,450
Raytheon Co. Class A 32,952 1,742,337
3,830,150
ELECTRICAL EQUIPMENT - 4.2%
Harris Corp. 6,800 211,650
L-3 Communications Holdings, 5,000 214,375
Inc. (a)
Loral Space & Communications 41,800 752,400
Ltd. (a)
1,178,425
ELECTRONICS - 1.8%
Airport Systems 90,200 191,675
International, Inc. (a)
Conexant Systems, Inc. (a) 13,350 226,950
Maxwell Technologies, Inc. (a) 3,300 84,769
503,394
MEDICAL EQUIPMENT & SUPPLIES
- - 1.3%
Teleflex, Inc. 10,000 355,625
SHIP BUILDING & REPAIR - 10.7%
Avondale Industries, Inc. 7,300 225,388
SHARES VALUE (NOTE 1)
General Dynamics Corp. 37,600 $ 2,272,450
Newport News Shipbuilding, 17,500 506,406
Inc.
3,004,244
TELEPHONE SERVICES - 1.8%
COMSAT Corp. Series 1 16,900 494,325
TOTAL COMMON STOCKS 26,022,300
(Cost $23,593,542)
CASH EQUIVALENTS - 7.4%
Taxable Central Cash Fund (b) 2,078,393 2,078,393
(Cost $2,078,393)
TOTAL INVESTMENT IN $ 28,100,693
SECURITIES - 100%
(Cost $25,671,935)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $109,202,806 and $171,978,745, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $29,426 for the
period.
Transactions during the period with companies which are or were
affiliates are as follows:
PURCHASES SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Airport Systems International, Inc. $ - $ 715,850 $ - $ -
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $26,299,141. Net unrealized appreciation
aggregated $1,801,552, of which $3,200,190 related to appreciated
investment securities and $1,398,638 related to depreciated investment
securities.
The fund hereby designates approximately $928,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
DEFENSE AND AEROSPACE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 28,100,693
value (cost $25,671,935) -
See accompanying schedule
Receivable for investments 943,519
sold
Receivable for fund shares 54,391
sold
Dividends receivable 39,904
Interest receivable 5,447
Redemption fees receivable 108
Other receivables 7,999
TOTAL ASSETS 29,152,061
LIABILITIES
Payable for investments $ 371,965
purchased
Payable for fund shares 233,739
redeemed
Accrued management fee 14,423
Other payables and accrued 35,102
expenses
TOTAL LIABILITIES 655,229
NET ASSETS $ 28,496,832
Net Assets consist of:
Paid in capital $ 23,289,679
Accumulated undistributed net 2,778,395
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 2,428,758
(depreciation) on investments
NET ASSETS, for 841,804 $ 28,496,832
shares outstanding
NET ASSET VALUE and $33.85
redemption price per share
($28,496,832 (divided by)
841,804 shares)
Maximum offering price per $34.90
share (100/97.00 of $33.85)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 304,878
Dividends
Interest 172,051
TOTAL INCOME 476,929
EXPENSES
Management fee $ 312,058
Transfer agent fees 346,580
Accounting fees and expenses 68,157
Non-interested trustees' 210
compensation
Custodian fees and expenses 12,152
Registration fees 21,406
Audit 16,243
Legal 413
Reports to shareholders 11,871
Miscellaneous 75
Total expenses before 789,165
reductions
Expense reductions (31,428) 757,737
NET INVESTMENT INCOME (LOSS) (280,808)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 3,589,524
(including realized loss of
$328,497 on sales of
investments in affiliated
issuers)
Foreign currency transactions (2,584) 3,586,940
Change in net unrealized (8,328,194)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) (4,741,254)
NET INCREASE (DECREASE) IN $ (5,022,062)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 127,643
charges paid to FDC
Sales charges - Retained by $ 125,494
FDC
Deferred sales charges $ 824
withheld by FDC
Exchange fees withheld by FSC $ 8,738
Expense reductions Directed $ 31,108
brokerage arrangements
Custodian credits 320
$ 31,428
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (280,808) $ (542,358)
income (loss)
Net realized gain (loss) 3,586,940 10,620,706
Change in net unrealized (8,328,194) 9,171,056
appreciation (depreciation)
NET INCREASE (DECREASE) IN (5,022,062) 19,249,404
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders - (4,691,578)
from net realized gain
Share transactions Net 47,399,132 173,648,929
proceeds from sales of shares
Reinvestment of distributions - 4,606,502
Cost of shares redeemed (115,799,880) (160,032,419)
NET INCREASE (DECREASE) IN (68,400,748) 18,223,012
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 115,021 221,243
TOTAL INCREASE (DECREASE) (73,307,789) 33,002,081
IN NET ASSETS
NET ASSETS
Beginning of period 101,804,621 68,802,540
End of period $ 28,496,832 $ 101,804,621
OTHER INFORMATION
Shares
Sold 1,280,563 4,923,503
Issued in reinvestment of - 149,545
distributions
Redeemed (3,148,373) (4,740,835)
Net increase (decrease) (1,867,810) 332,213
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 F 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 37.57 $ 28.94 $ 26.97 $ 19.64 $ 19.14
period
Income from Investment
Operations
Net investment income (loss) D (.19) (.29) (.11) (.05) (.06)
Net realized and unrealized (3.61) 11.84 4.18 9.09 .70
gain (loss)
Total from investment (3.80) 11.55 4.07 9.04 .64
operations
Less Distributions
From net realized gain - (3.04) (2.17) (1.82) (.27)
Redemption fees added to paid .08 .12 .07 .11 .13
in capital
Net asset value, end of period $ 33.85 $ 37.57 $ 28.94 $ 26.97 $ 19.64
TOTAL RETURN A, B (9.90)% 42.68% 15.87% 47.40% 4.13%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 28,497 $ 101,805 $ 68,803 $ 26,648 $ 4,985
(000 omitted)
Ratio of expenses to average 1.48% 1.77% 1.84% 1.77% C 2.49% C
net assets
Ratio of expenses to average 1.42% E 1.71% E 1.81% E 1.75% E 2.49%
net assets after expense
reductions
Ratio of net investment (.53)% (.85)% (.39)% (.20)% (.32)%
income (loss) to average net
assets
Portfolio turnover rate 221% 311% 219% 267% 146%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
FMR AGREED TO REIMBURSE A
PORTION OF THE FUND'S
EXPENSES, OR EXPENSES WERE
LIMITED IN ACCORDANCE WITH A
STATE EXPENSE LIMITATION.
WITHOUT THIS REIMBURSEMENT,
THE FUND'S EXPENSE RATIO
WOULD HAVE BEEN HIGHER. D
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. E FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. F FOR
THE YEAR ENDED FEBRUARY 29.
</TABLE>
ENVIRONMENTAL SERVICES PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, 1999 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
SELECT ENVIRONMENTAL SERVICES -22.23% 13.29% 45.55%
SELECT ENVIRONMENTAL -24.64% 9.82% 41.11%
SERVICES (LOAD ADJ.)
S&P 500 19.74% 194.91% 399.52%
GS Cyclical Industries -4.79% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or since
the fund started on June 29, 1989. You can compare the fund's returns
to the performance of both the Standard & Poor's 500 Index - a market
capitalization-weighted index of common stocks - and the Goldman Sachs
Cyclical Industries Index - a market capitalization-weighted index of
277 stocks designed to measure the performance of companies in the
cyclical industries sector. These benchmarks include reinvestment of
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
1999
SELECT ENVIRONMENTAL SERVICES -22.23% 2.53% 3.96%
SELECT ENVIRONMENTAL -24.64% 1.89% 3.62%
SERVICES (LOAD ADJ.)
S&P 500 19.74% 24.15% 18.09%
GS Cyclical Industries -4.79% n/a n/a
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER LIFE OF FUND
Environmental Services S&P 500
00516 SP001
1989/06/29 9700.00 10000.00
1989/06/30 9573.90 9947.57
1989/07/31 10485.70 10845.83
1989/08/31 10621.50 11058.41
1989/09/30 11193.80 11013.07
1989/10/31 10941.60 10757.57
1989/11/30 11009.50 10977.02
1989/12/31 11368.64 11240.47
1990/01/31 10358.96 10486.23
1990/02/28 10562.83 10621.51
1990/03/31 11019.13 10902.98
1990/04/30 11077.38 10630.40
1990/05/31 12106.48 11666.87
1990/06/30 12485.11 11587.53
1990/07/31 12407.45 11550.45
1990/08/31 10863.80 10506.29
1990/09/30 10281.29 9994.63
1990/10/31 10135.66 9951.66
1990/11/30 10485.17 10594.53
1990/12/31 11087.09 10890.12
1991/01/31 12057.94 11364.93
1991/02/28 12611.32 12177.52
1991/03/31 12611.32 12472.22
1991/04/30 12572.49 12502.15
1991/05/31 12601.62 13042.25
1991/06/30 11650.18 12444.91
1991/07/31 12019.11 13024.84
1991/08/31 12232.69 13333.53
1991/09/30 11941.44 13110.86
1991/10/31 11494.85 13286.55
1991/11/30 10863.80 12751.10
1991/12/31 11936.55 14209.83
1992/01/31 13005.20 13945.52
1992/02/29 13146.34 14126.81
1992/03/31 11835.74 13851.34
1992/04/30 11482.88 14258.57
1992/05/31 11190.52 14328.44
1992/06/30 10592.18 14114.94
1992/07/31 10665.31 14692.25
1992/08/31 10445.94 14391.05
1992/09/30 10571.29 14560.87
1992/10/31 11072.70 14611.83
1992/11/30 11762.13 15110.10
1992/12/31 11772.58 15295.95
1993/01/31 12002.39 15424.44
1993/02/28 11866.59 15634.21
1993/03/31 11574.10 15964.09
1993/04/30 11333.85 15577.76
1993/05/31 11584.55 15995.24
1993/06/30 11438.31 16041.63
1993/07/31 10957.79 15977.46
1993/08/31 11542.77 16583.01
1993/09/30 11553.21 16455.32
1993/10/31 11877.04 16795.94
1993/11/30 11354.74 16636.38
1993/12/31 11699.45 16837.68
1994/01/31 12691.82 17410.16
1994/02/28 12462.01 16938.35
1994/03/31 11333.85 16199.84
1994/04/30 11521.87 16407.19
1994/05/31 11490.54 16676.27
1994/06/30 10801.10 16267.70
1994/07/31 11030.91 16801.28
1994/08/31 11417.41 17490.14
1994/09/30 11344.29 17061.63
1994/10/31 10957.79 17445.52
1994/11/30 10341.48 16810.15
1994/12/31 10581.74 17059.44
1995/01/31 10592.18 17501.80
1995/02/28 10727.98 18183.84
1995/03/31 11239.83 18720.45
1995/04/30 12044.17 19271.76
1995/05/31 12232.20 20042.06
1995/06/30 12733.60 20507.63
1995/07/31 13214.12 21187.67
1995/08/31 13402.14 21240.85
1995/09/30 13872.21 22137.21
1995/10/31 12890.29 22058.18
1995/11/30 13339.47 23026.53
1995/12/31 13346.83 23470.03
1996/01/31 13809.34 24268.95
1996/02/29 13677.20 24493.92
1996/03/31 14282.87 24729.80
1996/04/30 14757.09 25094.31
1996/05/31 15893.10 25741.49
1996/06/30 15606.34 25839.57
1996/07/31 13808.58 24697.98
1996/08/31 14679.89 25218.86
1996/09/30 15209.29 26638.18
1996/10/31 15054.88 27372.86
1996/11/30 15462.96 29441.97
1996/12/31 15429.87 28858.72
1997/01/31 16389.42 30661.82
1997/02/28 15992.36 30902.21
1997/03/31 15087.97 29632.44
1997/04/30 14999.73 31401.49
1997/05/31 16025.45 33313.21
1997/06/30 16918.82 34805.65
1997/07/31 17348.96 37575.13
1997/08/31 17580.57 35470.17
1997/09/30 18804.81 37412.87
1997/10/31 17437.19 36163.28
1997/11/30 17393.07 37837.28
1997/12/31 18187.18 38486.95
1998/01/31 16973.96 38912.61
1998/02/28 18154.09 41718.99
1998/03/31 19091.57 43855.42
1998/04/30 19400.39 44296.61
1998/05/31 18308.50 43535.15
1998/06/30 17922.48 45303.55
1998/07/31 16477.65 44821.06
1998/08/31 13257.12 38340.83
1998/09/30 14415.19 40796.95
1998/10/31 14724.00 44115.37
1998/11/30 13996.08 46789.20
1998/12/31 15101.98 49485.20
1999/01/31 14925.09 51554.67
1999/02/26 14118.03 49952.35
IMATRL PRASUN SHR__CHT 19990228 19990322 095822 R00000000000120
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Select Environmental Services Portfolio on June
29, 1989, when the fund started, and the current 3.00% sales charge
was paid. As the chart shows, by February 28, 1999, the value of the
investment would have grown to $14,111 - a 41.11% increase on the
initial investment - and includes the effect of a $7.50 trading fee.
For comparison, look at how the Standard & Poor's 500 Index did over
the same period. With dividends and capital gains, if any, reinvested,
the same $10,000 investment would have grown to $49,952 - a 399.52%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Waste Management, Inc. 13.7
Allied Waste Industries, Inc. 11.2
Browning-Ferris Industries, 6.2
Inc.
Superior Services, Inc. 5.5
Republic Services, Inc. Class A 5.1
IT Group, Inc. (The) 4.5
KTI, Inc. 4.0
Casella Waste Systems, Inc. 3.7
Class A
Thermo Electron Corp. 3.6
Safety-Kleen Corp. 3.6
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Pollution Control 70.9%
Electronic Instruments 9.3%
Industrial Machinery
& Equipment 6.7%
Electric Utility 4.0%
Water 2.4%
All Others 6.7%*
Row: 1, Col: 1, Value: 6.7
Row: 1, Col: 2, Value: 2.4
Row: 1, Col: 3, Value: 4.0
Row: 1, Col: 4, Value: 6.7
Row: 1, Col: 5, Value: 9.300000000000001
Row: 1, Col: 6, Value: 70.90000000000001
* INCLUDES SHORT-TERM 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. Overall, it was a tough period for environmental services stocks.
For the 12 months that ended February 28, 1999, the fund returned
- -22.23%. The Standard & Poor's 500 Index returned 19.74% during the
same period, while the Goldman Sachs Cyclical Industries Index - an
index of 277 stocks designed to measure the performance of companies
in the cyclical industries sector - fell 4.79%.
Q. WHAT FACTORS HURT PERFORMANCE?
A. The five major areas of investment for the fund are solid waste,
water purification, environmental consulting, hazardous waste and
thermal instrumentation. Water purification and thermal
instrumentation realize a good portion of their revenues from Asia,
and the slowdown in that region hurt badly. As we entered the period,
the sector was still smarting from the Asian economic turmoil. As
fears of a U.S. economic slowdown spread in the fall, environmental
services stocks, which are economically sensitive, hit their low
point. Since that time, we've seen a slight rebound in performance,
but nothing significant. Some groups have benefited from increased
merger and acquisition activity, and many companies seem more willing
to restructure their internal operations in an attempt to boost
stalling profitability.
Q. THE FUND'S TOP-FIVE HOLDINGS AT THE END OF THE PERIOD WERE ALL
SOLID WASTE-RELATED STOCKS. HOW DID THEY PERFORM?
A. Like the other groups, solid waste stocks struggled. The group
experienced dramatic changes over the past year, due mostly to the
consolidation of several large companies. For instance, Waste
Management and USA Waste merged operations, and there was much talk
about Allied Waste making a large acquisition. While consolidation is
generally beneficial, there was some uncertainty as to whether
companies of that size could integrate themselves smoothly. That being
said, solid waste stocks began to turn the corner during the second
half of the period. Waste Management - the fund's largest individual
stake and a key player in the solid waste field - reported strong
earnings in the third and fourth quarters of 1998.
Q. THE FUND ALSO HAD SOME EXPOSURE TO HAZARDOUS WASTE AND THERMAL
INSTRUMENTATION STOCKS AT THE CLOSE OF THE PERIOD. HOW DID THESE
GROUPS FARE?
A. A combination of excess capacity and weak pricing was disastrous
for hazardous waste stocks. Strict dumping regulations have limited
the volume of hazardous waste, but the incinerators that destroy the
waste were still populous. While some of the fund's investments in
this area - such as IT Group - worked well, I'm not overly optimistic
that the hazardous waste group can right its ship soon. Thermal
instrumentation companies, were also disappointing. Many of these
companies - which manufacture instruments designed to aid
environmental research - performed poorly due to their exposure to
Asia, weak U.S. capital equipment markets and a complex corporate
structure. As a result, the fund's investments in Thermo Electron and
Thermo Instruments detracted from overall performance. Fortunately,
Thermo Electron is undergoing a major restructuring of business units
and management. This could make for an interesting story down the
road.
Q. WHICH STOCKS PERFORMED WELL DURING THE PERIOD? WHICH DISAPPOINTED?
A. Two small-cap, solid waste companies - American Disposal and
Eastern Environmental - were acquired by other companies during the
period and this gave the fund a bit of a performance boost. U.S.
Filter Corp., a leader in the water purification area, also performed
well during the second half of the period as its exposure to
semiconductor companies helped. Semiconductor firms use highly
purified water in processing their chips and, when semiconductor
stocks rallied in December, demand picked up. Allied Waste, meanwhile,
was one of the fund's bigger disappointments as speculation over the
company's acquisition plans caused uncertainty.
Q. WHAT'S YOUR OUTLOOK?
A. The key phrase going forward is "long term." The sector has
undergone quite a bit of volatility recently, and at the close of the
period there was no single group that stood out over any other in
terms of offering good opportunities. That being said, my emphasis
will be on finding good stories that could play out nicely in the long
run. Solid waste fundamentals are definitely improving, albeit slowly.
The water filtration and thermal instrumentation groups could turn
around with pickups in the Asian and U.S. capital equipment markets.
When the sector does eventually turn around, my patience will
hopefully be rewarded.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: June 29, 1989
FUND NUMBER: 516
TRADING SYMBOL: FSLEX
SIZE: as of February 28, 1999, more than
$15 million
MANAGER: Subrata Ghose, since October 1998;
analyst, environmental services industry, 1997-
present; gas, electric and water industries,
1997-1998; joined Fidelity in 1995
ENVIRONMENTAL SERVICES PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 95.7%
SHARES VALUE (NOTE 1)
CHEMICALS & PLASTICS - 2.0%
Catalytica, Inc. (a) 22,000 $ 313,500
ELECTRIC UTILITY - 4.0%
KTI, Inc. (a) 35,000 630,000
ELECTRONIC INSTRUMENTS - 9.3%
Thermo Electron Corp. (a) 41,050 567,003
Thermo Instrument Systems, 13,200 195,525
Inc. (a)
Thermo Optek Corp. (a) 20,000 217,500
Thermoquest Corp. (a) 42,200 464,200
1,444,228
INDUSTRIAL MACHINERY &
EQUIPMENT - 6.7%
Ionics, Inc. (a) 7,200 200,700
Recovery Engineering, Inc. (a) 14,000 152,250
Thermo Fibertek, Inc. (a) 4,000 31,000
United States Filter Corp. (a) 21,800 535,463
Waterlink, Inc. (a) 29,600 131,350
1,050,763
METALS & MINING - 0.4%
IMCO Recycling, Inc. 5,000 62,813
POLLUTION CONTROL - 70.9%
Allied Waste Industries, Inc. 89,460 1,744,470
(a)
Browning-Ferris Industries, 30,900 973,350
Inc.
Calgon Carbon Corp. 9,100 54,031
Casella Waste Systems, Inc. 27,300 573,300
Class A (a)
Insituform Technologies, Inc. 20,200 300,475
Class A (a)
IT Group, Inc. (The) (a) 54,000 708,750
Ogden Corp. 22,100 540,069
Republic Services, Inc. Class 46,000 802,125
A (a)
Safety-Kleen Corp. (a) 40,150 559,591
Stericycle, Inc. (a) 23,000 291,813
Superior Services, Inc. (a) 42,900 862,022
Tetra Tech, Inc. (a) 23,750 452,734
U.S. Liquids, Inc. 6,000 136,125
Waste Connections, Inc. (a) 20,000 400,000
Waste Industries, Inc. (a) 39,700 535,950
Waste Management, Inc. 43,593 2,130,606
11,065,411
WATER - 2.4%
American Water Works, Inc. 5,000 151,250
E'Town Corp. 5,000 214,688
365,938
TOTAL COMMON STOCKS 14,932,653
(Cost $17,641,948)
CASH EQUIVALENTS - 4.3%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund (b) 677,744 $ 677,744
(Cost $677,744)
TOTAL INVESTMENT IN $ 15,610,397
SECURITIES - 100%
(Cost $18,319,692)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $23,763,535 and $27,829,701, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $14,545 for the
period.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $18,477,058. Net unrealized depreciation
aggregated $2,866,661, of which $574,854 related to appreciated
investment securities and $3,441,515 related to depreciated investment
securities.
The fund hereby designates approximately $169,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
The fund intends to elect to defer to its fiscal year ending February
29, 2000 approximately $845,000 of losses recognized during the period
November 1, 1998 to February 28, 1999.
ENVIRONMENTAL SERVICES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 15,610,397
value (cost $18,319,692) -
See accompanying schedule
Receivable for fund shares 3,580
sold
Interest receivable 3,311
Redemption fees receivable 16
TOTAL ASSETS 15,617,304
LIABILITIES
Payable for fund shares $ 41,663
redeemed
Accrued management fee 8,529
Other payables and accrued 33,551
expenses
TOTAL LIABILITIES 83,743
NET ASSETS $ 15,533,561
Net Assets consist of:
Paid in capital $ 19,113,474
Accumulated undistributed net (870,618)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (2,709,295)
(depreciation) on investments
NET ASSETS, for 1,216,736 $ 15,533,561
shares outstanding
NET ASSET VALUE and $12.77
redemption price per share
($15,533,561 (divided by)
1,216,736 shares)
Maximum offering price per $13.16
share (100/97.00 of $12.77)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 120,420
Dividends
Interest 72,918
TOTAL INCOME 193,338
EXPENSES
Management fee $ 122,145
Transfer agent fees 234,438
Accounting fees and expenses 57,141
Custodian fees and expenses 9,513
Registration fees 12,390
Audit 14,562
Legal 130
Reports to shareholders 8,386
Total expenses before 458,705
reductions
Expense reductions (8,619) 450,086
NET INVESTMENT INCOME (LOSS) (256,748)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (475,663)
Foreign currency transactions 1,449 (474,214)
Change in net unrealized (4,374,725)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) (4,848,939)
NET INCREASE (DECREASE) IN $ (5,105,687)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 29,658
charges paid to FDC
Sales charges - Retained by $ 28,390
FDC
Deferred sales charges $ 7,574
withheld by FDC
Exchange fees withheld by FSC $ 3,083
Expense reductions Directed $ 8,015
brokerage arrangements
Custodian credits 604
$ 8,619
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (256,748) $ (233,737)
income (loss)
Net realized gain (loss) (474,214) 491,329
Change in net unrealized (4,374,725) 2,816,729
appreciation (depreciation)
NET INCREASE (DECREASE) IN (5,105,687) 3,074,321
NET ASSETS RESULTING FROM
OPERATIONS
Distributions in excess of (40,246) -
net realized gains
Share transactions Net 10,454,030 19,043,654
proceeds from sales of shares
Reinvestment of distributions 38,642 -
Cost of shares redeemed (15,030,447) (29,500,558)
NET INCREASE (DECREASE) IN (4,537,775) (10,456,904)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 34,045 40,370
TOTAL INCREASE (DECREASE) (9,649,663) (7,342,213)
IN NET ASSETS
NET ASSETS
Beginning of period 25,183,224 32,525,437
End of period $ 15,533,561 $ 25,183,224
OTHER INFORMATION
Shares
Sold 712,286 1,183,759
Issued in reinvestment of 3,084 -
distributions
Redeemed (1,028,657) (1,896,214)
Net increase (decrease) (313,287) (712,455)
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 16.46 $ 14.50 $ 12.42 $ 10.27 $ 11.93
period
Income from Investment
Operations
Net investment income (loss) c (.18) (.13) (.08) (.17) (.14)
Net realized and unrealized (3.50) 2.07 2.04 2.95 (1.53)
gain (loss)
Total from investment (3.68) 1.94 1.96 2.78 (1.67)
operations
Less Distributions
From net realized gain - - - (.65) -
In excess of net realized gain (.03) - (.02) - -
Total distributions (.03) - (.02) (.65) -
Redemption fees added to paid .02 .02 .14 .02 .01
in capital
Net asset value, end of period $ 12.77 $ 16.46 $ 14.50 $ 12.42 $ 10.27
TOTAL RETURN A, b (22.23)% 13.52% 16.93% 27.49% (13.91)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 15,534 $ 25,183 $ 32,525 $ 27,587 $ 31,270
(000 omitted)
Ratio of expenses to average 2.20% 2.23% 2.18% 2.36% 2.04%
net assets
Ratio of expenses to average 2.16% d 2.22% d 2.11% d 2.32% d 2.01% d
net assets after expense
reductions
Ratio of net investment (1.23)% (.84)% (.59)% (1.43)% (1.32)%
income (loss) to average net
assets
Portfolio turnover rate 123% 59% 252% 138% 82%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. E FOR
THE YEAR ENDED FEBRUARY 29.
</TABLE>
INDUSTRIAL EQUIPMENT PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the past 10 year total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT INDUSTRIAL EQUIPMENT 1.00% 101.58% 324.90%
SELECT INDUSTRIAL EQUIPMENT -2.11% 95.46% 312.08%
(LOAD ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Cyclical Industries -4.79% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
index of common stocks - and the Goldman Sachs Cyclical Industries
Index - a market capitalization-weighted index of 277 stocks designed
to measure the performance of companies in the cyclical industries
sector. These benchmarks include reinvestment of dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT INDUSTRIAL EQUIPMENT 1.00% 15.05% 15.57%
SELECT INDUSTRIAL EQUIPMENT -2.11% 14.34% 15.21%
(LOAD ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Cyclical Industries -4.79% n/a n/a
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER 10 YEARS
Industrial Equipment S&P 500
00510 SP001
1989/02/28 9700.00 10000.00
1989/03/31 9843.21 10233.00
1989/04/30 10549.70 10764.09
1989/05/31 11122.54 11200.04
1989/06/30 10645.18 11136.20
1989/07/31 11323.03 12141.80
1989/08/31 11533.07 12379.78
1989/09/30 11370.77 12329.02
1989/10/31 10616.54 12042.99
1989/11/30 10912.50 12288.66
1989/12/31 11103.44 12583.59
1990/01/31 10731.10 11739.23
1990/02/28 11275.30 11890.67
1990/03/31 11943.60 12205.77
1990/04/30 11848.13 11900.63
1990/05/31 12946.06 13060.94
1990/06/30 12715.97 12972.12
1990/07/31 12475.68 12930.61
1990/08/31 10418.83 11761.68
1990/09/30 9005.94 11188.89
1990/10/31 8765.65 11140.78
1990/11/30 9054.00 11860.47
1990/12/31 9380.79 12191.38
1991/01/31 10380.38 12722.92
1991/02/28 11360.75 13632.61
1991/03/31 11264.63 13962.52
1991/04/30 11149.30 13996.03
1991/05/31 11620.26 14600.66
1991/06/30 11245.12 13931.95
1991/07/31 11341.31 14581.18
1991/08/31 11514.46 14926.75
1991/09/30 11783.81 14677.48
1991/10/31 11716.47 14874.16
1991/11/30 11158.54 14274.73
1991/12/31 11898.63 15907.76
1992/01/31 12966.21 15611.87
1992/02/29 13888.20 15814.83
1992/03/31 13480.58 15506.44
1992/04/30 13480.58 15962.33
1992/05/31 13587.34 16040.54
1992/06/30 12752.69 15801.54
1992/07/31 12869.15 16447.82
1992/08/31 12199.49 16110.64
1992/09/30 12451.83 16300.75
1992/10/31 12403.30 16357.80
1992/11/30 12995.32 16915.60
1992/12/31 13247.66 17123.66
1993/01/31 13868.79 17267.50
1993/02/28 14596.69 17502.34
1993/03/31 14858.73 17871.64
1993/04/30 15538.55 17439.14
1993/05/31 16315.47 17906.51
1993/06/30 16529.13 17958.44
1993/07/31 16762.21 17886.61
1993/08/31 17908.17 18564.51
1993/09/30 17704.23 18421.56
1993/10/31 18296.64 18802.89
1993/11/30 18277.22 18624.26
1993/12/31 18987.73 18849.62
1994/01/31 19880.57 19490.50
1994/02/28 20446.03 18962.31
1994/03/31 19265.50 18135.55
1994/04/30 19091.13 18367.69
1994/05/31 18700.90 18668.92
1994/06/30 17740.34 18211.53
1994/07/31 18580.83 18808.87
1994/08/31 19901.60 19580.03
1994/09/30 19961.64 19100.32
1994/10/31 20211.78 19530.08
1994/11/30 19231.21 18818.79
1994/12/31 19581.42 19097.87
1995/01/31 19471.35 19593.08
1995/02/28 20051.69 20356.63
1995/03/31 21712.66 20957.35
1995/04/30 22733.51 21574.54
1995/05/31 23193.99 22436.88
1995/06/30 24074.90 22958.09
1995/07/31 26337.24 23719.38
1995/08/31 25826.71 23778.91
1995/09/30 24645.49 24782.38
1995/10/31 24595.44 24693.91
1995/11/30 25436.31 25777.97
1995/12/31 25027.82 26274.46
1996/01/31 26033.30 27168.84
1996/02/29 27443.17 27420.69
1996/03/31 27639.89 27684.75
1996/04/30 28147.71 28092.83
1996/05/31 28352.26 28817.34
1996/06/30 28227.26 28927.14
1996/07/31 26818.17 27649.13
1996/08/31 27977.26 28232.26
1996/09/30 29306.80 29821.17
1996/10/31 29124.98 30643.63
1996/11/30 31488.62 32959.99
1996/12/31 31712.85 32307.05
1997/01/31 32845.00 34325.59
1997/02/28 32450.66 34594.71
1997/03/31 31140.42 33173.21
1997/04/30 32275.79 35153.65
1997/05/31 35142.29 37293.80
1997/06/30 37333.52 38964.57
1997/07/31 40020.87 42064.98
1997/08/31 39772.81 39708.50
1997/09/30 40820.19 41883.33
1997/10/31 37636.71 40484.43
1997/11/30 37567.80 42358.45
1997/12/31 37595.36 43085.75
1998/01/31 36918.11 43562.28
1998/02/28 40808.37 46703.99
1998/03/31 43611.88 49095.70
1998/04/30 44714.39 49589.60
1998/05/31 43139.38 48737.16
1998/06/30 42966.13 50716.86
1998/07/31 41406.88 50176.72
1998/08/31 34429.61 42922.17
1998/09/30 35469.11 45671.77
1998/10/31 39359.37 49386.71
1998/11/30 40792.62 52380.04
1998/12/31 42358.58 55398.18
1999/01/31 42766.97 57714.93
1999/02/26 41208.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990309 144528 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Industrial Equipment Portfolio on February
28, 1989, and the current 3.00% sales charge was paid. As the chart
shows, by February 28, 1999, the value of the investment would have
grown to $41,208 - a 312.08% increase on the initial investment - and
includes the effect of a $7.50 trading fee. For comparison, look at
how the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Tyco International Ltd. 10.1
Pitney Bowes, Inc. 8.5
General Electric Co. 8.3
Illinois Tool Works, Inc. 6.7
Emerson Electric Co. 5.7
Xerox Corp. 5.0
Applied Materials, Inc. 4.8
Ingersoll-Rand Co. 4.7
Caterpillar, Inc. 4.1
COMSAT Corp. Series 1 3.1
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Industrial Machinery
& Equipment 30.2%
Electrical Equipment 19.8%
Computers & Office
Equipment 13.9%
Electronic Instruments 7.3%
Telephone Services 3.8%
All Others 25.0%*
Row: 1, Col: 1, Value: 25.0
Row: 1, Col: 2, Value: 3.8
Row: 1, Col: 3, Value: 7.3
Row: 1, Col: 4, Value: 13.9
Row: 1, Col: 5, Value: 19.8
Row: 1, Col: 6, Value: 30.2
* INCLUDES SHORT-TERM 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 12 months that ended February 28, 1999, the fund returned
1.00%. For the same 12-month period, the Standard & Poor's 500 Index
returned 19.74%, while the Goldman Sachs Cyclical Industries Index -
an index of 277 stocks designed to measure the performance of
companies in the cyclical industries sector - returned -4.79%. The
fund outperformed the Goldman Sachs index due to the portfolio's
smaller exposure to stocks with strong ties to falling commodity
prices and its larger exposure to defensive, consumer-oriented stocks.
Q. WHAT FACTORS INFLUENCED THE FUND'S PERFORMANCE DURING THE PAST
YEAR?
A. The biggest factor was weak international economies, particularly
in Asia, Russia and Latin America. As conditions worsened, demand for
commodity-oriented products such as coal, paper and oil fell
significantly, resulting in capital spending cutbacks and reduced
equipment orders. Declining demand for agricultural products was
exacerbated by record crop yields in the U.S., driving commodity
prices to historically low levels and reducing demand for agricultural
equipment. In addition, because U.S. exports represent an important
component of revenue, declining currencies versus the dollar further
aggravated conditions. These factors all led to deteriorating earnings
growth and weak stock price performance for industrial and
agricultural companies.
Q. HOW DID YOU MANAGE THE FUND IN THIS DIFFICULT ENVIRONMENT?
A. I underweighted companies whose earnings were sensitive to falling
commodity prices and weak international economies. For example, the
fund had relatively small positions in agricultural and mining
equipment manufacturers and industrial component suppliers. In
addition, I significantly overweighted large-cap stocks that offered
investors good liquidity, expanding revenues and steady, predictable
earnings growth.
Q. WHICH OF THE FUND'S HOLDINGS REFLECTED YOUR STRATEGY?
A. Tyco International and Pitney Bowes - the fund's two largest
positions at the end of the period - were large-cap companies that
generated strong sales and predictable earnings growth. Both of these
stocks performed well throughout the year. Tyco diversified its
operations by establishing leadership positions in such businesses as
fire and security services - it owns ADT, the top U.S. provider of
security monitoring - and electronic components. These relatively
non-cyclical businesses offer good growth rates and high margins.
Pitney Bowes manufactures office equipment and is the world's largest
producer of postage meters. With a domestic market share in excess of
80%, the company recently benefited from U.S. Postal Service
regulations that are driving a major product transition. These
regulations eliminated older, mechanical postage meters in favor of
newer, more efficient electronic and digital meters.
Q. WHERE ELSE DID YOU FIND VALUE?
A. I increased the fund's holdings in semiconductor equipment stocks.
Excess inventories and falling prices hurt this sector earlier in the
year when many personal computer manufacturers scaled back production
and reduced semiconductor orders. However, after inventories were sold
down, pricing improved and these stocks recovered. For example, the
fund's performance benefited from an investment in Applied Materials -
the dominant producer of wafer-fabrication equipment used by
semiconductor manufacturers - when its stock price more than tripled
between October and February.
Q. WHAT STOCKS DETRACTED FROM PERFORMANCE?
A. Investments in Loral and Comsat, two satellite companies, performed
poorly. Both launch and in-orbit failures accentuated their lack of
earnings predictability. As a result, their stock prices fell sharply
despite a favorable deployment history and strong demand for satellite
services and capacity. Loral is no longer in the portfolio. Emerson
Electric - a large manufacturer of electrical products - weakened
significantly during the last part of the period. The stock performed
well throughout the fall of 1998 as the market rewarded its relatively
steady earnings growth. Ultimately, however, weak global economies and
falling commodity prices led to a deteriorating earnings outlook and
investors were disappointed.
Q. WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
A. I am modestly optimistic that conditions should improve for North
American industrial equipment manufacturers. Although I'm mindful of
weaknesses in Latin America and potentially slower growth in Europe, I
am encouraged by signs of economic recovery and stronger currencies in
some Asian countries, including Singapore and Korea. As confidence in
Asia's recovery increases, demand for industrial products should
improve. Looking ahead, I plan to maintain my focus on companies
offering steady growth and predictable earnings. However, I also plan
to increase the fund's exposure to companies that should be
performance leaders - such as component suppliers to the large
equipment manufacturers - when the industrial equipment cycle turns
around.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: September 29, 1986
FUND NUMBER: 510
TRADING SYMBOL: FSCGX
SIZE: as of February 28, 1999, more than
$31 million
MANAGER: Simon Wolf, since 1997; research
analyst, industrial and electrical equipment
industries, since 1997; joined Fidelity in 1996
INDUSTRIAL EQUIPMENT PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 89.6%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 2.8%
AlliedSignal, Inc. 10,000 $ 413,750
Cordant Technologies, Inc. 3,100 120,706
Textron, Inc. 5,000 390,000
924,456
BUILDING MATERIALS - 1.2%
American Standard Companies, 5,000 167,813
Inc. (a)
York International Corp. 6,000 217,500
385,313
CHEMICALS & PLASTICS - 0.9%
Tredegar Industries, Inc. 12,000 306,750
COMPUTERS & OFFICE EQUIPMENT
- - 13.9%
Neopost SA (a) 8,100 129,489
Pitney Bowes, Inc. 45,000 2,843,438
Xerox Corp. 30,000 1,655,625
4,628,552
ELECTRICAL EQUIPMENT - 19.8%
Baldor Electric Co. 11,866 226,937
Emerson Electric Co. 33,000 1,895,438
General Electric Co. 27,500 2,758,594
Genlyte Group, Inc. (a) 15,000 271,406
Honeywell, Inc. 13,000 909,188
Hubbell, Inc. Class B 9,000 335,250
SLI, Inc. (a) 9,000 201,375
6,598,188
ELECTRONIC INSTRUMENTS - 7.3%
Applied Materials, Inc. (a) 28,500 1,585,313
KLA-Tencor Corp. (a) 8,500 440,406
LAM Research Corp. (a) 3,500 103,469
Novellus Systems, Inc. (a) 1,850 109,266
Teradyne, Inc. (a) 4,000 190,500
2,428,954
ELECTRONICS - 1.2%
AMP, Inc. 7,500 398,906
ENERGY SERVICES - 1.1%
Halliburton Co. 13,000 367,250
ENTERTAINMENT - 1.3%
Tele-Communications, Inc. 15,000 415,313
(TCI Ventures Group) Series
A (a)
INDUSTRIAL MACHINERY &
EQUIPMENT - 30.2%
Caterpillar, Inc. 30,000 1,366,875
Cooper Industries, Inc. 6,000 262,500
Dover Corp. 9,900 336,600
SHARES VALUE (NOTE 1)
IDEX Corp. 5,000 $ 118,750
Illinois Tool Works, Inc. 32,500 2,234,375
Ingersoll-Rand Co. 33,000 1,567,500
Kaydon Corp. 4,500 137,250
Lindsay Manufacturing Co. 15,000 238,125
Manitowoc Co., Inc. 5,250 193,594
MSC Industrial Direct, Inc. 13,000 232,375
(a)
Tyco International Ltd. 45,000 3,349,682
10,037,626
LEASING & RENTAL - 0.6%
United Rentals, Inc. (a) 6,000 193,125
MEDICAL EQUIPMENT & SUPPLIES
- - 1.5%
Millipore Corp. 14,000 390,250
Pall Corp. 5,000 105,938
496,188
METALS & MINING - 1.3%
AFC Cable Systems, Inc. (a) 7,000 231,875
Superior Telecom, Inc. 7,500 212,344
444,219
OIL & GAS - 1.0%
Cooper Cameron Corp. (a) 100 2,313
Weatherford International, 20,000 340,000
Inc. (a)
342,313
PACKAGING & CONTAINERS - 0.7%
Owens-Illinois, Inc. (a) 10,000 239,375
RETAIL & WHOLESALE,
MISCELLANEOUS - 0.3%
IKON Office Solutions, Inc. 7,500 105,938
SERVICES - 0.7%
Ritchie Bros. Auctioneers, 7,500 235,313
Inc.
TELEPHONE SERVICES - 3.8%
COMSAT Corp. Series 1 35,000 1,023,750
MCI WorldCom, Inc. (a) 3,000 247,500
1,271,250
TOTAL COMMON STOCKS 29,819,029
(Cost $23,685,734)
CASH EQUIVALENTS - 10.4%
Taxable Central Cash Fund (b) 3,445,357 3,445,357
(Cost $3,445,357)
TOTAL INVESTMENT IN $ 33,264,386
SECURITIES - 100%
(Cost $27,131,091)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $32,425,269 and $43,857,749, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $8,504 for the
period.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $27,171,099. Net unrealized appreciation
aggregated $6,093,287 of which $7,322,018 related to appreciated
investment securities and $1,228,731 related to depreciated investment
securities.
The fund hereby designates approximately $1,939,000 as capital gain
dividend for the purpose of the dividend paid deduction.
INDUSTRIAL EQUIPMENT PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 33,264,386
value (cost $27,131,091) -
See accompanying schedule
Receivable for fund shares 3,336
sold
Dividends receivable 48,163
Interest receivable 6,368
Redemption fees receivable 112
Other receivables 8,150
TOTAL ASSETS 33,330,515
LIABILITIES
Payable to custodian bank $ 49,145
Payable for investments 363,454
purchased
Payable for fund shares 1,295,808
redeemed
Accrued management fee 16,224
Other payables and accrued 32,722
expenses
TOTAL LIABILITIES 1,757,353
NET ASSETS $ 31,573,162
Net Assets consist of:
Paid in capital $ 23,290,162
Accumulated undistributed net 2,149,705
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 6,133,295
(depreciation) on investments
NET ASSETS, for 1,251,395 $ 31,573,162
shares outstanding
NET ASSET VALUE and $25.23
redemption price per share
($31,573,162 (divided by)
1,251,395 shares)
Maximum offering price per $26.01
share (100/97.00 of $25.23)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 365,472
Dividends
Interest 164,210
TOTAL INCOME 529,682
EXPENSES
Management fee $ 249,535
Transfer agent fees 248,573
Accounting fees and expenses 60,400
Non-interested trustees' 158
compensation
Custodian fees and expenses 9,119
Registration fees 17,222
Audit 14,066
Legal 347
Reports to shareholders 6,504
Total expenses before 605,924
reductions
Expense reductions (6,761) 599,163
NET INVESTMENT INCOME (LOSS) (69,481)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 3,585,290
Foreign currency transactions 830 3,586,120
Change in net unrealized (3,320,873)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 265,247
NET INCREASE (DECREASE) IN $ 195,766
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 25,189
charges paid to FDC
Sales charges - Retained by $ 24,472
FDC
Deferred sales charges $ 1,074
withheld by FDC
Exchange fees withheld by FSC $ 4,058
Expense reductions Directed $ 6,560
brokerage arrangements
Custodian credits 201
$ 6,761
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (69,481) $ (190,412)
income (loss)
Net realized gain (loss) 3,586,120 9,532,487
Change in net unrealized (3,320,873) 4,204,137
appreciation (depreciation)
NET INCREASE (DECREASE) IN 195,766 13,546,212
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders - (59,949)
From net investment income
From net realized gain (1,273,263) (11,693,964)
TOTAL DISTRIBUTIONS (1,273,263) (11,753,913)
Share transactions Net 20,888,073 24,781,618
proceeds from sales of shares
Reinvestment of distributions 1,219,714 11,543,701
Cost of shares redeemed (39,935,425) (90,632,790)
NET INCREASE (DECREASE) IN (17,827,638) (54,307,471)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 50,582 60,604
TOTAL INCREASE (DECREASE) (18,854,553) (52,454,568)
IN NET ASSETS
NET ASSETS
Beginning of period 50,427,715 102,882,283
End of period $ 31,573,162 $ 50,427,715
OTHER INFORMATION
Shares
Sold 771,299 934,187
Issued in reinvestment of 49,301 497,967
distributions
Redeemed (1,515,112) (3,519,270)
Net increase (decrease) (694,512) (2,087,116)
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 25.91 $ 25.51 $ 25.11 $ 20.04 $ 20.61
period
Income from Investment
Operations
Net investment income (loss) C (.04) (.08) .06 .04 .01
Net realized and unrealized .25 5.73 4.15 7.10 (.44)
gain (loss)
Total from investment .21 5.65 4.21 7.14 (.43)
operations
Less Distributions
From net investment income - (.02) (.04) (.05) (.01)
From net realized gain (.92) (5.26) (3.84) (2.05) (.16)
Total distributions (.92) (5.28) (3.88) (2.10) (.17)
Redemption fees added to paid .03 .03 .07 .03 .03
in capital
Net asset value, end of period $ 25.23 $ 25.91 $ 25.51 $ 25.11 $ 20.04
TOTAL RETURN A, B 1.00% 25.76% 18.25% 36.86% (1.93)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 31,573 $ 50,428 $ 102,882 $ 137,520 $ 109,968
(000 omitted)
Ratio of expenses to average 1.43% 1.67% 1.51% 1.54% 1.80%
net assets
Ratio of expenses to average 1.41% D 1.60% D 1.44% D 1.53% D 1.78% D
net assets after expense
reductions
Ratio of net investment (.16)% (.32)% .25% .19% .06%
income (loss) to average net
assets
Portfolio turnover rate 84% 115% 261% 115% 131%
</TABLE>
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. E FOR
THE YEAR ENDED FEBRUARY 29.
INDUSTRIAL MATERIALS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the past 10 year total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT INDUSTRIAL MATERIALS -18.72% 19.16% 99.31%
SELECT INDUSTRIAL MATERIALS -21.23% 15.52% 93.26%
(LOAD ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Cyclical Industries -4.79% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
index of common stocks - and the Goldman Sachs Cyclical Industries
Index - a market capitalization-weighted index of 277 stocks designed
to measure the performance of companies in the cyclical industries
sector. These benchmarks include reinvestment of dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT INDUSTRIAL MATERIALS -18.72% 3.57% 7.14%
SELECT INDUSTRIAL MATERIALS -21.23% 2.93% 6.81%
(LOAD ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Cyclical Industries -4.79% n/a n/a
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER 10 YEARS
Industrial Materials S&P 500
00509 SP001
1989/02/28 9700.00 10000.00
1989/03/31 9599.11 10233.00
1989/04/30 9894.58 10764.09
1989/05/31 10024.29 11200.04
1989/06/30 9440.56 11136.20
1989/07/31 10290.94 12141.80
1989/08/31 11112.48 12379.78
1989/09/30 10435.07 12329.02
1989/10/31 9577.49 12042.99
1989/11/30 9714.41 12288.66
1989/12/31 9988.26 12583.59
1990/01/31 9224.37 11739.23
1990/02/28 9382.91 11890.67
1990/03/31 9656.76 12205.77
1990/04/30 8957.73 11900.63
1990/05/31 9498.22 13060.94
1990/06/30 9397.42 12972.12
1990/07/31 9286.51 12930.61
1990/08/31 8214.42 11761.68
1990/09/30 7630.32 11188.89
1990/10/31 7541.60 11140.78
1990/11/30 7940.86 11860.47
1990/12/31 8273.57 12191.38
1991/01/31 8569.32 12722.92
1991/02/28 9197.79 13632.61
1991/03/31 9323.48 13962.52
1991/04/30 9338.27 13996.03
1991/05/31 10136.79 14600.66
1991/06/30 10025.85 13931.95
1991/07/31 10426.89 14581.18
1991/08/31 10671.96 14926.75
1991/09/30 10530.86 14677.48
1991/10/31 10983.88 14874.16
1991/11/30 10107.54 14274.73
1991/12/31 11236.38 15907.76
1992/01/31 11726.53 15611.87
1992/02/29 12298.38 15814.83
1992/03/31 12083.01 15506.44
1992/04/30 12714.27 15962.33
1992/05/31 12862.80 16040.54
1992/06/30 12550.58 15801.54
1992/07/31 12832.95 16447.82
1992/08/31 12023.00 16110.64
1992/09/30 11859.52 16300.75
1992/10/31 11993.27 16357.80
1992/11/30 12439.12 16915.60
1992/12/31 12626.18 17123.66
1993/01/31 12894.82 17267.50
1993/02/28 13014.22 17502.34
1993/03/31 13230.62 17871.64
1993/04/30 13036.60 17439.14
1993/05/31 13573.89 17906.51
1993/06/30 13610.95 17958.44
1993/07/31 13798.12 17886.61
1993/08/31 14157.49 18564.51
1993/09/30 13715.77 18421.56
1993/10/31 14524.34 18802.89
1993/11/30 14719.00 18624.26
1993/12/31 15325.42 18849.62
1994/01/31 16568.23 19490.50
1994/02/28 16223.84 18962.31
1994/03/31 15767.14 18135.55
1994/04/30 16358.95 18367.69
1994/05/31 16524.04 18668.92
1994/06/30 16351.44 18211.53
1994/07/31 16959.27 18808.87
1994/08/31 17874.77 19580.03
1994/09/30 17649.65 19100.32
1994/10/31 17417.02 19530.08
1994/11/30 16186.35 18818.79
1994/12/31 16581.17 19097.87
1995/01/31 16113.03 19593.08
1995/02/28 17464.59 20356.63
1995/03/31 17864.78 20957.35
1995/04/30 17947.51 21574.54
1995/05/31 17765.99 22436.88
1995/06/30 18560.13 22958.09
1995/07/31 20163.53 23719.38
1995/08/31 20110.59 23778.91
1995/09/30 19543.34 24782.38
1995/10/31 18408.86 24693.91
1995/11/30 20103.02 25777.97
1995/12/31 19132.99 26274.46
1996/01/31 19429.22 27168.84
1996/02/29 19801.40 27420.69
1996/03/31 20804.00 27684.75
1996/04/30 21291.50 28092.83
1996/05/31 21160.41 28817.34
1996/06/30 20458.66 28927.14
1996/07/31 19610.39 27649.13
1996/08/31 20674.58 28232.26
1996/09/30 21129.56 29821.17
1996/10/31 21083.29 30643.63
1996/11/30 21723.35 32959.99
1996/12/31 21814.22 32307.05
1997/01/31 21911.03 34325.59
1997/02/28 22314.40 34594.71
1997/03/31 20830.00 33173.21
1997/04/30 20886.68 35153.65
1997/05/31 22210.18 37293.80
1997/06/30 22140.06 38964.57
1997/07/31 24077.09 42064.98
1997/08/31 24173.51 39708.50
1997/09/30 24804.58 41883.33
1997/10/31 22885.07 40484.43
1997/11/30 22613.36 42358.45
1997/12/31 22196.91 43085.75
1998/01/31 22615.54 43562.28
1998/02/28 23785.81 46703.99
1998/03/31 24946.55 49095.70
1998/04/30 25174.90 49589.60
1998/05/31 23938.03 48737.16
1998/06/30 22739.23 50716.86
1998/07/31 21131.31 50176.72
1998/08/31 17649.07 42922.17
1998/09/30 17905.95 45671.77
1998/10/31 19209.42 49386.71
1998/11/30 19884.93 52380.04
1998/12/31 19751.73 55398.18
1999/01/31 19856.39 57714.93
1999/02/26 19326.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990309 144533 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Industrial Materials Portfolio on February
28, 1989, and the current 3.00% sales charge was paid. As the chart
shows, by February 28, 1999, the value of the investment would have
grown to $19,326 - a 93.26% increase on the initial investment - and
includes the effect of a $7.50 trading fee. For comparison, look at
how the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Kimberly-Clark Corp. 9.2
Minnesota Mining & 7.9
Manufacturing Co.
Monsanto Co. 6.8
du Pont (E.I.) de Nemours & Co. 6.7
Burlington Northern Santa Fe 5.6
Corp.
Alcoa, Inc. 4.4
Dow Chemical Co. 4.3
Getchell Gold Corp. 3.0
Union Pacific Corp. 2.5
International Paper Co. 2.3
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Chemicals & Plastics 25.2%
Paper & Forest Products 23.8%
Railroads 9.8%
Consumer Durables 7.9%
Metals & Mining 7.2%
All Others 26.1%*
Row: 1, Col: 1, Value: 26.1
Row: 1, Col: 2, Value: 7.2
Row: 1, Col: 3, Value: 7.9
Row: 1, Col: 4, Value: 9.800000000000001
Row: 1, Col: 5, Value: 23.8
Row: 1, Col: 6, Value: 25.2
* INCLUDES SHORT-TERM 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. For the 12 months that ended February 28, 1999, the fund had a
total return of -18.72%, compared to 19.74% for the Standard & Poor's
500 Index. The Goldman Sachs Cyclical Industries Index, comprised of
277 stocks in the cyclical industries sector, had a return of -4.79%.
Q. WHY DID THE FUND TRAIL THE S&P 500 AND THE GOLDMAN SACHS INDEX?
A. The story hasn't changed much from six months ago. The fund's
performance depends heavily on the prices of global commodities such
as steel, paper, chemicals, plastics and non-ferrous metals. Ongoing
weak demand from Asia and Latin America kept commodity prices low,
thereby diminishing the profitability of most companies in the sector.
The S&P 500, on the other hand, is a broadly based index containing
the stocks of companies from a variety of sectors. With the exception
of the three-month period from mid-July through mid-October, the
general market was strong, enabling the S&P 500 to outperform the fund
by a considerable degree. The Goldman Sachs index, although closer in
composition than the S&P 500 to the universe of stocks in which the
fund can invest, nevertheless also contains stocks from industries
that are more insulated from weak overseas demand. Consequently, the
Goldman Sachs index performed better than the fund did.
Q. DID YOU MAKE ANY SIGNIFICANT CHANGES SINCE TAKING OVER THE FUND IN
SEPTEMBER 1998?
A. There were no major shifts in strategy. I tried to pick the best
stocks in each industry, particularly those with the ability to grow
their earnings and generate solid cash flow during difficult periods.
Q. WHAT STOCKS DID WELL FOR THE FUND DURING THE PERIOD?
A. Alcoa helped the fund's performance. The company was able to grow
its earnings through cost reductions and a variety of
productivity-enhancing programs. In addition, Alcoa made a number of
acquisitions that added to earnings. One of those acquisitions was
Alumax, another relatively strong performer during the period.
Getchell Gold also performed well. The stock surged higher on news of
a takeover bid by another gold mining company, Placer Dome.
Q. WHAT STOCKS DETRACTED FROM PERFORMANCE?
A. Cytec was one of the biggest detractors. A supplier to Boeing, the
company was adversely affected by the aerospace giant's plans to build
fewer planes in the year 2000. Owens-Illinois performed poorly in part
because of weakness in the economies of Latin America, where the
company does a fair amount of business. Ryerson Tull - a metal service
center/distributor - was another disappointment. The company's
business slowed in response to slackening demand for the products of
its customers in the heavy machinery manufacturing industry. Finally,
Kimberly-Clark detracted significantly from the fund's performance.
Although the stock suffered only a slight decline, Kimberly-Clark was
one of the fund's largest holdings during the period, so even a modest
decline was enough to put a noticeable dent in the fund's performance.
Q. WHAT'S YOUR OUTLOOK, PETER?
A. An improving outlook for the industrial materials sector depends to
a significant degree on a rebound in global demand for the commodities
used to produce those materials. Current prospects in that regard are
mixed. On the one hand, Japan's economy remains in a recession, and
Latin America may be in the early stages of contracting the "Asian
flu" - as the recent devaluation of the Brazilian currency suggests.
Furthermore, some European economies are weaker than they were six
months ago. China is still a question mark. A devaluation of the
Chinese yuan, which some analysts have been anticipating, could put
downward pressure on industrial materials prices. On the other hand,
some parts of Asia, such as South Korea, appear to be rebounding from
their economic doldrums. Another positive factor is the United States
economy, which continues to show surprising strength.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: September 29, 1986
FUND NUMBER: 509
TRADING SYMBOL: FSDPX
SIZE: as of February 28, 1999, more than
$11 million
MANAGER: Peter Hirsch, since September
1998; analyst, growth and income funds and
steel industries, 1995-1998; joined Fidelity in
1995
INDUSTRIAL MATERIALS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 94.2%
SHARES VALUE (NOTE 1)
BUILDING MATERIALS - 6.0%
Lafarge Corp. 1,820 $ 58,013
Masco Corp. 9,400 246,750
Owens-Corning 800 25,450
Sherwin-Williams Co. 4,300 103,469
Southdown, Inc. 3,900 184,031
USG Corp. 1,100 55,138
672,851
CHEMICALS & PLASTICS - 25.2%
Air Products & Chemicals, 900 28,913
Inc.
Avery Dennison Corp. 2,800 150,325
Cytec Industries, Inc. (a) 3,500 93,844
Dow Chemical Co. 4,900 482,038
du Pont (E.I.) de Nemours & 14,700 754,294
Co.
Ivex Packaging Corp. (a) 5,300 80,163
Monsanto Co. 16,800 765,450
Praxair, Inc. 5,500 192,156
Raychem Corp. 20 456
Sealed Air Corp. (a) 3,440 174,580
Union Carbide Corp. 1,700 74,800
Witco Corp. 1,600 27,100
2,824,119
CONSUMER DURABLES - 7.9%
Minnesota Mining & 12,000 888,750
Manufacturing Co.
DRUGS & PHARMACEUTICALS - 0.5%
Sigma-Aldrich Corp. 2,100 55,388
IRON & STEEL - 3.5%
AK Steel Holding Corp. 3,300 71,981
Allegheny Teledyne, Inc. 3,800 78,375
Nucor Corp. 2,500 111,406
Steel Dynamics, Inc. (a) 8,500 133,875
395,637
LEASING & RENTAL - 0.4%
Ryder Systems, Inc. 1,600 43,200
METALS & MINING - 7.2%
Alcoa, Inc. 12,282 497,421
Brush Wellman, Inc. 400 5,750
Cominco Ltd. 1,800 24,771
Falconbridge Ltd. 4,500 49,990
Kaiser Aluminum Corp. (a) 7,000 35,000
Phelps Dodge Corp. 1,400 67,900
Reynolds Metals Co. 1,500 64,125
Ryerson Tull, Inc. (a) 3,220 58,765
803,722
PACKAGING & CONTAINERS - 1.2%
Owens-Illinois, Inc. (a) 5,400 129,263
SHARES VALUE (NOTE 1)
PAPER & FOREST PRODUCTS - 23.8%
Boise Cascade Corp. 1,587 $ 49,296
Bowater, Inc. 1,600 67,400
Champion International Corp. 2,700 99,900
Consolidated Papers, Inc. 1,800 40,050
Fort James Corp. 5,500 164,313
Georgia-Pacific Corp. 2,900 212,425
International Paper Co. 6,100 256,200
Kimberly-Clark Corp. 21,700 1,025,319
Louisiana-Pacific Corp. 2,000 36,750
Mead Corp. 1,700 51,744
Potlatch Corp. 700 24,281
Smurfit-Stone Container Corp. 4,900 88,506
(a)
Temple-Inland, Inc. 1,400 83,913
Union Camp Corp. 1,600 107,000
Westvaco Corp. 2,300 51,463
Weyerhaeuser Co. 4,100 228,575
Willamette Industries, Inc. 2,000 72,875
2,660,010
PRECIOUS METALS - 6.4%
Barrick Gold Corp. 12,200 215,632
Euro-Nevada Mining Corp. Ltd. 2,000 28,916
Getchell Gold Corp. (a) 12,900 334,594
Kinross Gold Corp. (a) 6,100 13,593
Newmont Mining Corp. 6,150 106,088
Stillwater Mining Co. (a) 750 17,203
716,026
RAILROADS - 9.8%
Burlington Northern Santa Fe 18,900 626,063
Corp.
Canadian National Railway Co. 2,100 101,393
Kansas City Southern 1,900 88,825
Industries, Inc.
Union Pacific Corp. 6,100 285,938
1,102,219
TRUCKING & FREIGHT - 2.3%
CNF Transportation, Inc. 2,000 84,500
USFreightways Corp. 5,500 175,313
259,813
TOTAL COMMON STOCKS 10,550,998
(Cost $10,352,285)
CASH EQUIVALENTS - 5.8%
Taxable Central Cash Fund (b) 644,087 644,087
(Cost $644,087)
TOTAL INVESTMENT IN $ 11,195,085
SECURITIES - 100%
(Cost $10,996,372)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $12,528,232 and $20,188,827, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $3,612 for the
period.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $11,139,998. Net unrealized appreciation
aggregated $55,087, of which $762,001 related to appreciated
investment securities and $706,914 related to depreciated investment
securities.
At February 28, 1999, the fund had a capital loss carryforward of
approximately $840,000, all of which will expire on February 28, 2007.
The fund intends to elect to defer its fiscal year ending February 29,
2000 approximately $1,067,000 of losses recognized during the period
November 1, 1998 to February 28, 1999.
INDUSTRIAL MATERIALS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 11,195,085
value (cost $10,996,372) -
See accompanying schedule
Receivable for investments 5,922
sold
Receivable for fund shares 560
sold
Dividends receivable 22,038
Interest receivable 2,418
Redemption fees receivable 46
Other receivables 340
TOTAL ASSETS 11,226,409
LIABILITIES
Payable for fund shares $ 32,072
redeemed
Accrued management fee 5,616
Other payables and accrued 26,478
expenses
TOTAL LIABILITIES 64,166
NET ASSETS $ 11,162,243
Net Assets consist of:
Paid in capital $ 13,014,205
Accumulated undistributed net (2,050,672)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 198,710
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 549,189 $ 11,162,243
shares outstanding
NET ASSET VALUE and $20.32
redemption price per share
($11,162,243 (divided by)
549,189 shares)
Maximum offering price per $20.95
share (100/97.00 of $20.32)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 204,818
Dividends
Interest 39,996
TOTAL INCOME 244,814
EXPENSES
Management fee $ 94,263
Transfer agent fees 131,584
Accounting fees and expenses 60,350
Non-interested trustees' 62
compensation
Custodian fees and expenses 11,394
Registration fees 16,934
Audit 12,599
Legal 118
Reports to shareholders 6,245
Total expenses before 333,549
reductions
Expense reductions (4,865) 328,684
NET INVESTMENT INCOME (LOSS) (83,870)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (1,209,571)
Foreign currency transactions 764 (1,208,807)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (1,993,507)
Assets and liabilities in 30 (1,993,477)
foreign currencies
NET GAIN (LOSS) (3,202,284)
NET INCREASE (DECREASE) IN $ (3,286,154)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 12,710
charges paid to FDC
Sales charges - Retained by $ 12,337
FDC
Deferred sales charges $ 1,065
withheld by FDC
Exchange fees withheld by FSC $ 2,640
Expense reductions Directed $ 4,865
brokerage arrangements
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (83,870) $ (124,764)
income (loss)
Net realized gain (loss) (1,208,807) 3,017,681
Change in net unrealized (1,993,477) (1,210,871)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (3,286,154) 1,682,046
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders - (37,279)
From net investment income
From net realized gain - (4,304,754)
TOTAL DISTRIBUTIONS - (4,342,033)
Share transactions Net 9,957,438 15,807,574
proceeds from sales of shares
Reinvestment of distributions - 4,249,488
Cost of shares redeemed (18,118,847) (61,328,959)
NET INCREASE (DECREASE) IN (8,161,409) (41,271,897)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 27,986 51,834
TOTAL INCREASE (DECREASE) (11,419,577) (43,880,050)
IN NET ASSETS
NET ASSETS
Beginning of period 22,581,820 66,461,870
End of period $ 11,162,243 $ 22,581,820
OTHER INFORMATION
Shares
Sold 440,126 605,194
Issued in reinvestment of - 181,274
distributions
Redeemed (794,343) (2,285,848)
Net increase (decrease) (354,217) (1,499,380)
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 25.00 $ 27.66 $ 26.07 $ 23.13 $ 21.67
period
Income from Investment
Operations
Net investment income (loss) C (.12) (.11) .06 .12 .17
Net realized and unrealized (4.60) 1.43 3.12 2.92 1.43
gain (loss)
Total from investment (4.72) 1.32 3.18 3.04 1.60
operations
Less Distributions
From net investment income - (.03) (.06) (.15) (.18)
From net realized gain - (4.00) (1.57) - -
Total distributions - (4.03) (1.63) (.15) (.18)
Redemption fees added to paid .04 .05 .04 .05 .04
in capital
Net asset value, end of period $ 20.32 $ 25.00 $ 27.66 $ 26.07 $ 23.13
TOTAL RETURN A, B (18.72)% 6.59% 12.69% 13.38% 7.65%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 11,162 $ 22,582 $ 66,462 $ 86,338 $ 183,454
(000 omitted)
Ratio of expenses to average 2.07% 1.98% 1.54% 1.64% 1.56%
net assets
Ratio of expenses to average 2.04% D 1.94% D 1.51% D 1.61% D 1.53% D
net assets after expense
reductions
Ratio of net investment (.52)% (.42)% .23% .49% .77%
income (loss) to average net
assets
Portfolio turnover rate 82% 118% 105% 138% 139%
</TABLE>
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE .
C NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. E FOR
THE YEAR ENDED FEBRUARY 29.
PAPER AND FOREST PRODUCTS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the past 10 year total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT PAPER AND FOREST -17.01% 33.37% 133.44%
PRODUCTS
SELECT PAPER AND FOREST -19.57% 29.29% 126.36%
PRODUCTS (LOAD ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Cyclical Industries -4.79% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
index of common stocks - and the Goldman Sachs Cyclical Industries
Index - a market capitalization-weighted index of 277 stocks designed
to measure the performance of companies in the cyclical industries
sector. These benchmarks include reinvestment of dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT PAPER AND FOREST -17.01% 5.93% 8.85%
PRODUCTS
SELECT PAPER AND FOREST -19.57% 5.27% 8.51%
PRODUCTS (LOAD ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Cyclical Industries -4.79% n/a n/a
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER 10 YEARS
Paper & Forest S&P 500
00506 SP001
1989/02/28 9700.00 10000.00
1989/03/31 9708.16 10233.00
1989/04/30 10058.96 10764.09
1989/05/31 10238.44 11200.04
1989/06/30 9585.79 11136.20
1989/07/31 10507.65 12141.80
1989/08/31 11258.20 12379.78
1989/09/30 10638.18 12329.02
1989/10/31 10156.85 12042.99
1989/11/30 10083.43 12288.66
1989/12/31 10299.39 12583.59
1990/01/31 9357.82 11739.23
1990/02/28 9448.68 11890.67
1990/03/31 9712.98 12205.77
1990/04/30 9085.27 11900.63
1990/05/31 9688.20 13060.94
1990/06/30 9456.94 12972.12
1990/07/31 9597.35 12930.61
1990/08/31 8449.30 11761.68
1990/09/30 7631.62 11188.89
1990/10/31 7392.10 11140.78
1990/11/30 8135.44 11860.47
1990/12/31 8743.40 12191.38
1991/01/31 9465.72 12722.92
1991/02/28 9919.27 13632.61
1991/03/31 10120.85 13962.52
1991/04/30 10616.39 13996.03
1991/05/31 11834.25 14600.66
1991/06/30 11531.89 13931.95
1991/07/31 11540.29 14581.18
1991/08/31 11599.08 14926.75
1991/09/30 11153.93 14677.48
1991/10/31 11573.88 14874.16
1991/11/30 10691.98 14274.73
1991/12/31 11783.07 15907.76
1992/01/31 12866.77 15611.87
1992/02/29 12926.98 15814.83
1992/03/31 13012.98 15506.44
1992/04/30 13219.40 15962.33
1992/05/31 12849.57 16040.54
1992/06/30 12764.20 15801.54
1992/07/31 12669.40 16447.82
1992/08/31 12160.90 16110.64
1992/09/30 12031.62 16300.75
1992/10/31 12617.69 16357.80
1992/11/30 13083.09 16915.60
1992/12/31 13203.52 17123.66
1993/01/31 13610.18 17267.50
1993/02/28 13913.01 17502.34
1993/03/31 13895.71 17871.64
1993/04/30 14527.82 17439.14
1993/05/31 14571.11 17906.51
1993/06/30 14259.43 17958.44
1993/07/31 14112.25 17886.61
1993/08/31 14493.19 18564.51
1993/09/30 13800.56 18421.56
1993/10/31 14337.35 18802.89
1993/11/30 15229.10 18624.26
1993/12/31 15653.34 18849.62
1994/01/31 17471.48 19490.50
1994/02/28 16977.98 18962.31
1994/03/31 15177.16 18135.55
1994/04/30 15160.20 18367.69
1994/05/31 15778.62 18668.92
1994/06/30 15619.59 18211.53
1994/07/31 16944.79 18808.87
1994/08/31 18835.39 19580.03
1994/09/30 19171.11 19100.32
1994/10/31 17978.44 19530.08
1994/11/30 17192.16 18818.79
1994/12/31 17866.46 19097.87
1995/01/31 17746.49 19593.08
1995/02/28 19509.14 20356.63
1995/03/31 19647.57 20957.35
1995/04/30 19728.81 21574.54
1995/05/31 20054.98 22436.88
1995/06/30 21872.23 22958.09
1995/07/31 22617.77 23719.38
1995/08/31 22599.13 23778.91
1995/09/30 22226.37 24782.38
1995/10/31 21900.19 24693.91
1995/11/30 22226.37 25777.97
1995/12/31 21781.85 26274.46
1996/01/31 22325.12 27168.84
1996/02/29 21300.09 27420.69
1996/03/31 22386.62 27684.75
1996/04/30 23365.44 28092.83
1996/05/31 22894.49 28817.34
1996/06/30 21610.09 28927.14
1996/07/31 21042.81 27649.13
1996/08/31 22220.18 28232.26
1996/09/30 23022.93 29821.17
1996/10/31 22980.12 30643.63
1996/11/30 23247.70 32959.99
1996/12/31 23320.94 32307.05
1997/01/31 23561.14 34325.59
1997/02/28 23615.73 34594.71
1997/03/31 22338.31 33173.21
1997/04/30 23006.86 35153.65
1997/05/31 25846.25 37293.80
1997/06/30 26048.26 38964.57
1997/07/31 28079.60 42064.98
1997/08/31 27978.59 39708.50
1997/09/30 28797.86 41883.33
1997/10/31 25992.15 40484.43
1997/11/30 26160.49 42358.45
1997/12/31 25501.98 43085.75
1998/01/31 26477.27 43562.28
1998/02/28 27283.99 46703.99
1998/03/31 27705.41 49095.70
1998/04/30 29196.88 49589.60
1998/05/31 27490.97 48737.16
1998/06/30 26251.42 50716.86
1998/07/31 23723.23 50176.72
1998/08/31 20323.68 42922.17
1998/09/30 20728.68 45671.77
1998/10/31 22054.14 49386.71
1998/11/30 23097.32 52380.04
1998/12/31 23490.05 55398.18
1999/01/31 22459.14 57714.93
1999/02/26 22636.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990310 115448 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Paper and Forest Products Portfolio on
February 28, 1989, and the current 3.00% sales charge was paid. As the
chart shows, by February 28, 1999, the value of the investment would
have grown to $22,636 - a 126.36% increase on the initial investment -
and includes the effect of a $7.50 trading fee. For comparison, look
at how the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Westvaco Corp. 10.5
Champion International Corp. 7.7
Consolidated Papers, Inc. 6.9
Union Camp Corp. 6.1
Smurfit-Stone Container Corp. 5.2
Georgia-Pacific Corp. (Timber 5.1
Group)
Kimberly-Clark Corp. 5.0
Mead Corp. 3.8
International Paper Co. 3.5
Bowater, Inc. 3.4
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Paper & Forest Products 85.9%
Packaging & Containers 3.3%
Chemicals & Plastics 1.8%
Building Materials 1.0%
All Others 8.0%*
Row: 1, Col: 1, Value: 8.0
Row: 1, Col: 2, Value: 1.0
Row: 1, Col: 3, Value: 1.8
Row: 1, Col: 4, Value: 3.3
Row: 1, Col: 5, Value: 85.90000000000001
* INCLUDES SHORT-TERM INVESTMENTS
PAPER AND FOREST PRODUCTS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Noah Eccles)
NOTE TO SHAREHOLDERS: Noah Eccles became Portfolio Manager of Fidelity
Select Paper and Forest Products Portfolio on January 4, 1999.
Q. HOW DID THE FUND PERFORM, NOAH?
A. It was a challenging year for paper stocks. For the 12 months that
ended February 28, 1999, the fund returned -17.01%. During that same
period, the Standard & Poor's 500 Index returned 19.74%, while the
Goldman Sachs Cyclical Industries Index - an index of 277 stocks
designed to measure the performance of companies in the cyclical
industries sector - fell 4.79%.
Q. WHAT FACTORS CONSPIRED TO MAKE IT A CHALLENGING ENVIRONMENT FOR THE
SECTOR?
A. Through the first half of the period, the paper industry was still
trying to recover from the ongoing economic problems in Asia.
Paper-company stocks generally rise and fall in step with paper
prices, and since Asia accounts for a significant portion of the
world's paper demand, the lack of demand from that region sent paper
prices spiraling downward. A poor pricing environment, combined with
overcapacity within the sector, caused many paper stocks to decline.
The second half of the period, however, brought better results as
capacity was reduced and the sector reacted favorably to International
Paper's acquisition of Union Camp.
Q. WHAT STOCKS HURT THE FUND THE MOST? WHICH HELPED?
A. Through the first half of the period, most stocks in the five major
paper grades - pulp, containerboard, uncoated free sheet, newsprint
and tissue - detracted from performance. Newsprint stocks such as
Bowater were particular laggards, as were tissue-related stocks such
as Fort James. In the second half of the period, companies with
exposure to building products - such as Georgia-Pacific and
Louisiana-Pacific - performed well due to warm weather trends, a low
interest-rate environment and strong housing starts. But the real
excitement involved containerboard companies. A merger between
Jefferson Smurfit and Stone Container, two of the larger
containerboard-related companies, reduced overall capacity and was met
with optimism. As a result, containerboard companies bounced back
quicker than those in the other grades, and the fund's holdings in
stocks such as Georgia-Pacific, Weyerhaeuser and the newly merged
company, Smurfit-Stone, benefited.
Q. DID THE GAP BETWEEN THE PERFORMANCE OF CONTAINERBOARD AND THE OTHER
GRADES CONCERN YOU?
A. It did, simply because past history tells us that when one paper
grade improves, the rest typically follow suit. The possibility exists
that the other grades will catch up to containerboard and building
products, but my feeling is that an across-the-board recovery will
happen later rather than sooner. As a result, I positioned the fund a
bit more defensively in the latter stages of the period. I chose to
de-emphasize some of the containerboard stocks that had risen
dramatically - which is why I sold Weyerhaeuser - and emphasize stocks
in the pulp, coated free sheet, uncoated free sheet and newsprint
categories that were within 10% of their downside valuations. My
thinking here was that the stocks in these areas had more room to grow
if the paper cycle works, and less downside if it doesn't.
Q. THE FUND'S LARGEST POSITION AT THE END OF THE PERIOD WAS ITS
INVESTMENT IN WESTVACO. WHAT'S YOUR SCOUTING REPORT ON THIS COMPANY?
A. Westvaco has strong exposure to both coated free sheet - which is
the glossy type of paper used in catalogs - and bleachboard, which is
used for folded paper products such as food takeout cartons and
cigarette boxes. I felt the company fit nicely into my defensive
strategy and I was attracted to its valuation. While Westvaco turned
in a fairly flat performance during the month since we increased our
holdings, I'm optimistic about its future.
Q. WHAT'S YOUR OUTLOOK?
A. Since I feel we may not see a broad recovery until at least 2000 or
later, I'll continue to take a defensive approach to the portfolio for
now. I'll also keep a close eye on Brazil and the evolving economic
problems there. Brazil is one of the world's larger paper exporters,
and the worry is that Brazil will start flooding the U.S. market with
excess product.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: June 30, 1986
FUND NUMBER: 506
TRADING SYMBOL: FSPFX
SIZE: as of February 28, 1999, more than
$10 million
MANAGER: Noah Eccles, since January 1999;
analyst, agricultural chemicals industry, 1997-
present; specialty chemicals and packing
industries, 1997-1998; joined Fidelity in 1997
PAPER AND FOREST PRODUCTS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.0%
SHARES VALUE (NOTE 1)
BUILDING MATERIALS - 1.0%
T.J. International, Inc. 4,400 $ 95,150
CHEMICALS & PLASTICS - 1.8%
Ivex Packaging Corp. (a) 11,800 178,475
PACKAGING & CONTAINERS - 3.3%
Sonoco Products Co. 13,100 320,950
PAPER & FOREST PRODUCTS - 85.9%
Abitibi-Consolidated, Inc. 25,300 202,192
Alliance Forest Products, 5,700 62,943
Inc. (a)
Boise Cascade Corp. 8,600 267,138
Bowater, Inc. 8,000 337,000
Champion International Corp. 20,400 754,800
Consolidated Papers, Inc. 30,400 676,400
Domtar, Inc. 23,300 139,077
Donohue, Inc. Class A (sub. 10,400 211,062
vtg.)
Fletcher Challenge Canada 2,500 23,213
Ltd.
Fort James Corp. 7,600 227,050
Georgia-Pacific Corp. (Timber 24,300 495,113
Group)
International Paper Co. 8,200 344,400
Kimberly-Clark Corp. 10,300 486,675
Louisiana-Pacific Corp. 11,800 216,825
Macmillan Bloedel Ltd. 16,700 167,244
Mead Corp. 12,300 374,381
Mercer International, Inc. 1,600 12,000
(SBI)
Plum Creek Timber Co. unit 6,400 170,000
Potlatch Corp. 3,800 131,813
Rayonier, Inc. 4,000 163,750
Smurfit (Jefferson) Group PLC 23,600 50,737
Smurfit-Stone Container Corp. 28,300 511,169
(a)
St. Laurent Paperboard, Inc. 7,500 58,446
(a)
Stora Enso Oyj 28,300 251,166
Svenska Cellulosa AB (SCA) 2,700 54,108
Class B
Tembec, Inc. Class A (a) 11,500 61,016
Temple-Inland, Inc. 3,600 215,775
Union Camp Corp. 9,000 601,875
UPM-Kymmene Corp. 5,400 140,800
Westvaco Corp. 46,000 1,029,249
8,437,417
TOTAL COMMON STOCKS 9,031,992
(Cost $9,031,301)
CASH EQUIVALENTS - 8.0%
Taxable Central Cash Fund (b) 786,687 786,687
(Cost $786,687)
TOTAL INVESTMENT IN $ 9,818,679
SECURITIES - 100%
(Cost $9,817,988)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $48,680,043 and $64,950,440, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $15,977 for the
period.
Distribution of investments by country of issue, as a percentage of
total value of investments in securities, is as follows:
United States of America 85.4%
Canada 9.5
Finland 4.0
Others (individually less 1.1
than 1%)
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $9,964,481. Net unrealized depreciation
aggregated $145,802, of which $437,901 related to appreciated
investment securities and $583,703 related to depreciated investment
securities.
The fund hereby designates approximately $181,000 as capital gain
dividend for the purpose of the dividend paid deduction.
At February 28, 1999, the fund had a capital loss carryforward of
approximately $2,903,000, all of which will expire on February 28,
2007.
The fund intends to elect to defer to its fiscal year ending February
29, 2000 approximately $463,000 of losses recognized during the period
November 1, 1998 to February 28, 1999.
A total of 100% of the dividends distributed during the fiscal year
qualifies for the dividend-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of this percentage
for use in preparing 1999 income tax returns.
PAPER AND FOREST PRODUCTS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 9,818,679
value (cost $9,817,988) -
See accompanying schedule
Receivable for investments 1,008,764
sold
Receivable for fund shares 29,470
sold
Dividends receivable 21,049
Interest receivable 3,024
Redemption fees receivable 62
TOTAL ASSETS 10,881,048
LIABILITIES
Payable for investments $ 562,680
purchased
Payable for fund shares 41,342
redeemed
Accrued management fee 5,053
Other payables and accrued 25,425
expenses
TOTAL LIABILITIES 634,500
NET ASSETS $ 10,246,548
Net Assets consist of:
Paid in capital $ 13,754,844
Undistributed net investment 4,129
income
Accumulated undistributed net (3,513,096)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 671
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 555,457 $ 10,246,548
shares outstanding
NET ASSET VALUE and $18.45
redemption price per share
($10,246,548 (divided by)
555,457 shares)
Maximum offering price per $19.02
share (100/97.00 of $18.45)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 249,426
Dividends
Interest 62,508
TOTAL INCOME 311,934
EXPENSES
Management fee $ 87,942
Transfer agent fees 139,644
Accounting fees and expenses 60,339
Non-interested trustees' 64
compensation
Custodian fees and expenses 14,884
Registration fees 18,940
Audit 17,079
Legal 94
Reports to shareholders 5,985
Total expenses before 344,971
reductions
Expense reductions (13,517) 331,454
NET INVESTMENT INCOME (LOSS) (19,520)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (2,774,252)
Foreign currency transactions (2,221) (2,776,473)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (1,268,266)
Assets and liabilities in 30 (1,268,236)
foreign currencies
NET GAIN (LOSS) (4,044,709)
NET INCREASE (DECREASE) IN $ (4,064,229)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 45,535
charges paid to FDC
Sales charges - Retained by $ 45,535
FDC
Deferred sales charges $ 737
withheld by FDC
Exchange fees withheld by FSC $ 3,038
Expense reductions Direct $ 13,487
brokerage arrangements
Custodian credits 30
$ 13,517
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (19,520) $ (121,775)
income (loss)
Net realized gain (loss) (2,776,473) 2,537,439
Change in net unrealized (1,268,236) 1,291,272
appreciation (depreciation)
NET INCREASE (DECREASE) IN (4,064,229) 3,706,936
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders
In excess of net investment - (31,544)
income
From net realized gain - (1,592,672)
In excess of net realized (317,946) -
gain
TOTAL DISTRIBUTIONS (317,946) (1,624,216)
Share transactions Net 24,142,684 71,567,372
proceeds from sales of shares
Reinvestment of distributions 312,733 1,584,087
Cost of shares redeemed (41,303,607) (63,467,979)
NET INCREASE (DECREASE) IN (16,848,190) 9,683,480
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 92,806 134,393
TOTAL INCREASE (DECREASE) (21,137,559) 11,900,593
IN NET ASSETS
NET ASSETS
Beginning of period 31,384,107 19,483,514
End of period (including $ 10,246,548 $ 31,384,107
undistributed net investment
income of $4,129 and
$31,081, respectively)
OTHER INFORMATION
Shares
Sold 1,074,182 3,117,317
Issued in reinvestment of 13,704 75,670
distributions
Redeemed (1,917,231) (2,708,921)
Net increase (decrease) (829,345) 484,066
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 22.66 $ 21.63 $ 20.78 $ 21.14 $ 19.61
period
Income from Investment
Operations
Net investment income (loss) C (.03) (.12) .01 .08 .01
Net realized and unrealized (3.87) 3.13 2.08 1.83 2.53
gain (loss)
Total from investment (3.90) 3.01 2.09 1.91 2.54
operations
Less Distributions
From net investment income - - (.03) (.08) -
In excess of net investment - (.04) (.07) - -
income
From net realized gain - (2.07) (1.25) (2.27) (1.17)
In excess of net realized gain (.44) - - - -
Total distributions (.44) (2.11) (1.35) (2.35) (1.17)
Redemption fees added to paid .13 .13 .11 .08 .16
in capital
Net asset value, end of period $ 18.45 $ 22.66 $ 21.63 $ 20.78 $ 21.14
TOTAL RETURN A, B (17.01)% 15.53% 10.87% 9.18% 14.91%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 10,247 $ 31,384 $ 19,484 $ 27,270 $ 94,219
(000 omitted)
Ratio of expenses to average 2.30% 2.18% 2.19% 1.91% 1.88%
net assets
Ratio of expenses to average 2.21% D 2.15% D 2.16% D 1.90% D 1.87% D
net assets after expense
reductions
Ratio of net investment (.13)% (.50)% .04% .34% .05%
income (loss) to average net
assets
Portfolio turnover rate 338% 235% 180% 78% 209%
</TABLE>
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. E FOR
THE YEAR ENDED FEBRUARY 29.
TRANSPORTATION PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the past five years and past 10
years total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT TRANSPORTATION -1.73% 73.66% 310.73%
SELECT TRANSPORTATION (LOAD -4.75% 68.38% 298.34%
ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Cyclical Industries -4.79% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
index of common stocks - and the Goldman Sachs Cyclical Industries
Index - a market capitalization-weighted index of 277 stocks designed
to measure the performance of companies in the cyclical industries
sector. These benchmarks include reinvestment of dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT TRANSPORTATION -1.73% 11.67% 15.17%
SELECT TRANSPORTATION (LOAD -4.75% 10.98% 14.82%
ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Cyclical Industries -4.79% n/a n/a
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER 10 YEARS
Transportation S&P 500
00512 SP001
1989/02/28 9700.00 10000.00
1989/03/31 9996.47 10233.00
1989/04/30 10330.96 10764.09
1989/05/31 10771.87 11200.04
1989/06/30 10705.46 11136.20
1989/07/31 11354.27 12141.80
1989/08/31 12092.30 12379.78
1989/09/30 11857.11 12329.02
1989/10/31 11102.86 12042.99
1989/11/30 11200.18 12288.66
1989/12/31 11359.63 12583.59
1990/01/31 10646.26 11739.23
1990/02/28 11142.91 11890.67
1990/03/31 11477.01 12205.77
1990/04/30 11043.58 11900.63
1990/05/31 11449.92 13060.94
1990/06/30 11323.88 12972.12
1990/07/31 11286.26 12930.61
1990/08/31 9630.94 11761.68
1990/09/30 8389.45 11188.89
1990/10/31 8257.78 11140.78
1990/11/30 8596.37 11860.47
1990/12/31 8906.74 12191.38
1991/01/31 9668.56 12722.92
1991/02/28 10609.08 13632.61
1991/03/31 10618.49 13962.52
1991/04/30 10590.27 13996.03
1991/05/31 11427.34 14600.66
1991/06/30 11332.46 13931.95
1991/07/31 12021.28 14581.18
1991/08/31 12238.30 14926.75
1991/09/30 12011.84 14677.48
1991/10/31 12898.81 14874.16
1991/11/30 12096.76 14274.73
1991/12/31 13729.17 15907.76
1992/01/31 13851.83 15611.87
1992/02/29 14597.26 15814.83
1992/03/31 14248.14 15506.44
1992/04/30 14616.14 15962.33
1992/05/31 14918.08 16040.54
1992/06/30 14276.45 15801.54
1992/07/31 14484.03 16447.82
1992/08/31 14049.98 16110.64
1992/09/30 14606.70 16300.75
1992/10/31 15229.47 16357.80
1992/11/30 16333.46 16915.60
1992/12/31 16995.67 17123.66
1993/01/31 17756.82 17267.50
1993/02/28 17997.68 17502.34
1993/03/31 19202.03 17871.64
1993/04/30 19154.16 17439.14
1993/05/31 19869.66 17906.51
1993/06/30 19927.68 17958.44
1993/07/31 19927.68 17886.61
1993/08/31 20295.10 18564.51
1993/09/30 20343.44 18421.56
1993/10/31 20768.87 18802.89
1993/11/30 20884.90 18624.26
1993/12/31 21978.16 18849.62
1994/01/31 22941.55 19490.50
1994/02/28 22941.55 18962.31
1994/03/31 22327.52 18135.55
1994/04/30 22744.75 18367.69
1994/05/31 22379.11 18668.92
1994/06/30 22357.61 18211.53
1994/07/31 23110.39 18808.87
1994/08/31 23798.65 19580.03
1994/09/30 23164.16 19100.32
1994/10/31 23508.29 19530.08
1994/11/30 22099.51 18818.79
1994/12/31 22827.92 19097.87
1995/01/31 22674.07 19593.08
1995/02/28 24295.34 20356.63
1995/03/31 24614.86 20957.35
1995/04/30 24981.72 21574.54
1995/05/31 24236.17 22436.88
1995/06/30 23975.82 22958.09
1995/07/31 26034.95 23719.38
1995/08/31 26011.28 23778.91
1995/09/30 25774.60 24782.38
1995/10/31 25455.08 24693.91
1995/11/30 26330.80 25777.97
1995/12/31 26290.50 26274.46
1996/01/31 26691.12 27168.84
1996/02/29 27442.27 27420.69
1996/03/31 28105.80 27684.75
1996/04/30 29026.51 28092.83
1996/05/31 29064.28 28817.34
1996/06/30 29202.74 28927.14
1996/07/31 27088.06 27649.13
1996/08/31 27113.23 28232.26
1996/09/30 27239.11 29821.17
1996/10/31 27025.12 30643.63
1996/11/30 28938.40 32959.99
1996/12/31 28789.02 32307.05
1997/01/31 28995.77 34325.59
1997/02/28 28724.42 34594.71
1997/03/31 29603.08 33173.21
1997/04/30 31134.33 35153.65
1997/05/31 33250.26 37293.80
1997/06/30 34249.08 38964.57
1997/07/31 36640.99 42064.98
1997/08/31 35905.02 39708.50
1997/09/30 39453.47 41883.33
1997/10/31 38126.08 40484.43
1997/11/30 37955.23 42358.45
1997/12/31 38039.63 43085.75
1998/01/31 38111.16 43562.28
1998/02/28 40543.18 46703.99
1998/03/31 42002.39 49095.70
1998/04/30 41392.24 49589.60
1998/05/31 39425.37 48737.16
1998/06/30 40350.09 50716.86
1998/07/31 36944.78 50176.72
1998/08/31 30427.70 42922.17
1998/09/30 30383.67 45671.77
1998/10/31 33612.85 49386.71
1998/11/30 35271.47 52380.04
1998/12/31 36388.47 55398.18
1999/01/31 39634.32 57714.93
1999/02/26 39834.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990309 145347 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Transportation Portfolio on February 28,
1989, and the current 3.00% sales charge was paid. As the chart shows,
by February 28, 1999, the value of the investment would have grown to
$39,834 - a 298.34% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Union Pacific Corp. 9.9
Burlington Northern Santa Fe 8.9
Corp.
Continental Airlines, Inc. 6.5
Class B
CSX Corp. 5.2
Delta Air Lines, Inc. 4.6
Southwest Airlines Co. 4.1
Eaton Corp. 3.5
Northwest Airlines Corp. 3.5
Class A
Navistar International Corp. 3.1
Kansas City Southern 3.1
Industries, Inc.
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Air Transportation 33.2%
Railroads 31.2%
Trucking & Freighting 14.3%
Autos, Tires & Accesories 10.0%
Leasing & Rental 2.4%
All Others 8.9%*
Row: 1, Col: 1, Value: 8.9
Row: 1, Col: 2, Value: 2.4
Row: 1, Col: 3, Value: 10.0
Row: 1, Col: 4, Value: 14.3
Row: 1, Col: 5, Value: 31.2
Row: 1, Col: 6, Value: 33.2
* INCLUDES SHORT-TERM 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 12-month period that ended February 28, 1999, the fund
returned -1.73%, while the Standard & Poor's 500 Index returned
19.74%. For another comparison, the Goldman Sachs Cyclical Industries
Index - an index of 277 stocks designed to measure the performance of
companies in the cyclical industries sector -
returned -4.79% for the same 12-month period.
Q. FOR TRANSPORTATION STOCKS, THE PAST YEAR WAS A TALE OF TWO HALVES -
ONE BAD, AND THE MORE RECENT ONE, GOOD. WHAT ACCOUNTED FOR THAT
TURNAROUND?
A. After getting off to a fairly strong start in the spring of 1998,
transportation stocks suffered a sharp sell-off beginning this past
summer. That's when investors were most worried that protracted and
expanding economic problems in Japan, Latin America, Russia and
Southeast Asia would further curtail worldwide economic growth and
potentially throw the U.S. into a recession. Of course, transportation
companies tend to do best during periods of economic growth because
they can grow earnings by raising prices and eliminating excess
capacity. More recently, however, the transportation industry has
staged a significant rebound as investors became less worried about a
global recession in light of the U.S. economy's faster-than-expected
growth. In addition, the price of oil - which is a major expense for
most transportation companies - fell to levels not seen in over a
decade.
Q. HOW DID YOU RESPOND TO THOSE CHANGING CONDITIONS?
A. Since taking over the fund this past September, I've made a number
of changes. I looked for stocks that I felt had a global recession
already factored into their prices. In my view, these stocks had good
upside potential if the economy strengthened, but only limited
downside if a recession occurred. One outgrowth of that strategy was
that I added to the fund's stake in airline stocks, many of which
performed quite well since I initiated positions in them or expanded
existing holdings. America West, for example, posted strong gains
after it settled its dispute with mechanics. Other domestically
oriented airlines, including Southwest Airlines and Atlantic Coast
Airlines, also performed well. The biggest addition was Continental
Airlines, which became the fund's third-largest holding by the end of
the period. I liked that airline because it was growing at a rate much
faster than the industry as a whole, mainly by expanding the use of
its under-utilized hubs at Newark and Houston airports.
Q. WHICH OF THE FUND'S HOLDINGS PROVED MOST DISAPPOINTING?
A. Union Pacific, the largest domestic railroad, with routes primarily
in the western United States, detracted from performance for the year
due to significant operational difficulties stemming from its
acquisition of Southern Pacific. I chose to add to the fund's stake in
Union Pacific in the fall because I felt that the market had too
severely punished the stock based on those problems. Since then, the
stock has recouped some of its losses when it became evident that the
company was enjoying a turnaround. I took a similar approach to
Burlington Northern, buying the stock in the fall when it was
relatively cheap. I liked it because it is the only major railroad
that isn't expected to face merger-related issues in 1999. It also has
a strong presence in the low-sulfur coal shipping business. That
market position is important because the Clean Air Act - which goes
into effect next year - should spur demand. Although it was up only
slightly for the one-year period, Burlington Northern has posted good
recent gains.
Q. WHAT'S YOUR OUTLOOK?
A. Transportation companies are cyclical, meaning their performance is
tied closely to the economy's ups and downs. As a result,
transportation stocks should perform in line with expectations about
the economy's potential strength or weakness. However, I'll try to
identify the strongest companies in the group, because I believe they
are better able to take advantage of robust economic periods and
manage their operations well during difficult economic times.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: September 29, 1986
FUND NUMBER: 512
TRADING SYMBOL: FSRFX
SIZE: as of February 28,1999, more than
$19 million
MANGER: Christopher Zepf, since September
1998; manager, Fidelity Select Air Transportation
Portfolio, since 1998; equity analyst, trucking
and rails industries, since 1998; joined Fidelity in
1998
TRANSPORTATION PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.1%
SHARES VALUE (NOTE 1)
AIR TRANSPORTATION - 33.2%
Air Canada, Inc. (a) 25,000 $ 101,141
Alaska Air Group, Inc. (a) 4,300 217,956
America West Holding Corp. 12,800 217,600
Class B (a)
AMR Corp. (a) 10,000 554,375
ASA Holdings, Inc. 5,700 191,306
Atlantic Coast Airlines 2,800 89,600
Holdings (a)
Atlas Air, Inc. (a) 5,000 150,625
Comair Holdings, Inc. 4,000 150,500
Continental Airlines, Inc. 37,500 1,298,438
Class B (a)
Delta Air Lines, Inc. 15,000 912,188
Midwest Express Holdings, 15,000 403,125
Inc. (a)
Northwest Airlines Corp. 27,500 687,500
Class A (a)
SkyWest, Inc. 12,400 389,825
Southwest Airlines Co. 27,150 817,894
US Airways Group, Inc. (a) 8,700 412,163
6,594,236
AUTOS, TIRES, & ACCESSORIES -
10.0%
Eaton Corp. 10,100 700,688
Meritor Automotive, Inc. 6,000 95,250
Navistar International Corp. 14,500 623,500
(a)
PACCAR, Inc. 7,000 293,125
Republic Industries, Inc. (a) 14,100 172,725
World Fuel Services Corp. 10,000 103,750
1,989,038
COMPUTER SERVICES & SOFTWARE
- - 0.9%
Sabre Group Holdings, Inc. 4,300 168,775
Class A (a)
LEASING & RENTAL - 2.4%
GATX Corp. 2,400 82,950
Ryder Systems, Inc. 14,700 396,900
479,850
RAILROADS - 31.2%
Burlington Northern Santa Fe 53,700 1,778,813
Corp.
Canadian National Railway Co. 12,600 608,357
CSX Corp. 26,500 1,040,125
Florida East Coast Industries 3,000 81,375
Kansas City Southern 13,100 612,425
Industries, Inc.
Railtex, Inc. (a) 11,500 125,063
Union Pacific Corp. 41,800 1,959,371
6,205,529
SHIPPING - 1.1%
Peninsular & Oriental Steam 4,400 51,735
Navigation Co.
Sea Containers Ltd. Class A 8,000 175,000
226,735
SHARES VALUE (NOTE 1)
TRUCKING & FREIGHT - 14.3%
Airborne Freight Corp. 4,000 $ 156,000
Circle International Group, 5,000 85,625
Inc.
CNF Transportation, Inc. 9,000 380,250
Consolidated Freightways 3,000 43,500
Corp. (a)
Eagle USA Airfreight, Inc. (a) 7,500 216,563
Expeditors International of 8,000 372,500
Washington, Inc.
FDX Corp. (a) 5,000 477,500
Hub Group, Inc. Class A (a) 5,000 97,500
Hunt (J.B.) Transport 16,000 376,000
Services, Inc.
M.S. Carriers, Inc. (a) 3,000 81,000
USFreightways Corp. 11,000 350,625
Werner Enterprises, Inc. 6,000 107,250
Yellow Corp. (a) 5,000 89,375
2,833,688
TOTAL COMMON STOCKS 18,497,851
(Cost $17,238,313)
CASH EQUIVALENTS - 6.9%
Taxable Central Cash Fund (b) 1,362,746 1,362,746
(Cost $1,362,746)
TOTAL INVESTMENT IN $ 19,860,597
SECURITIES - 100%
(Cost $18,601,059)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $44,073,749 and $86,107,016, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $12,152 for the
period.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $18,856,313. Net unrealized appreciation
aggregated $1,004,284, of which $1,322,101 related to appreciated
investment securities and $317,817 related to depreciated investment
securities.
The fund hereby designates approximately $1,324,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 8% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentage for use in preparing 1999 income tax returns.
TRANSPORTATION PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 19,860,597
value (cost $18,601,059) -
See accompanying schedule
Foreign currency held at 106,146
value (cost $106,458)
Receivable for investments 853,396
sold
Receivable for fund shares 160,369
sold
Dividends receivable 19,881
Interest receivable 4,626
Redemption fees receivable 324
Other receivables 2,032
TOTAL ASSETS 21,007,371
LIABILITIES
Payable for investments $ 1,051,206
purchased
Payable for fund shares 66,782
redeemed
Accrued management fee 9,122
Other payables and accrued 25,469
expenses
TOTAL LIABILITIES 1,152,579
NET ASSETS $ 19,854,792
Net Assets consist of:
Paid in capital $ 13,838,885
Accumulated undistributed net 4,755,211
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 1,260,696
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 793,001 $ 19,854,792
shares outstanding
NET ASSET VALUE and $25.04
redemption price per share
($19,854,792 (divided by)
793,001 shares)
Maximum offering price per $25.81
share (100/97.00 of $25.04)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 215,371
Dividends
Interest (including income on 83,138
securities loaned of $12,548)
TOTAL INCOME 298,509
EXPENSES
Management fee $ 142,306
Transfer agent fees 205,276
Accounting and security 62,228
lending fees
Non-interested trustees' 104
compensation
Custodian fees and expenses 13,182
Registration fees 24,256
Audit 20,404
Legal 228
Reports to shareholders 9,326
Total expenses before 477,310
reductions
Expense reductions (14,141) 463,169
NET INVESTMENT INCOME (LOSS) (164,660)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 6,231,096
Foreign currency transactions 4,268 6,235,364
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (6,048,799)
Assets and liabilities in 1,315 (6,047,484)
foreign currencies
NET GAIN (LOSS) 187,880
NET INCREASE (DECREASE) IN $ 23,220
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 94,851
charges paid to FDC
Sales charges - Retained by $ 93,190
FDC
Deferred sales charges $ 657
withheld by FDC
Exchange fees withheld by FSC $ 5,753
Expense reductions Directed $ 13,997
brokerage arrangements
Custodian credits 144
$ 14,141
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (164,660) $ (36,059)
income (loss)
Net realized gain (loss) 6,235,364 10,298,362
Change in net unrealized (6,047,484) 7,061,282
appreciation (depreciation)
NET INCREASE (DECREASE) IN 23,220 17,323,585
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (2,602,131) (4,986,487)
from net realized gains
Share transactions Net 28,194,142 152,644,299
proceeds from sales of shares
Reinvestment of distributions 2,518,945 4,933,755
Cost of shares redeemed (72,656,072) (114,694,116)
NET INCREASE (DECREASE) IN (41,942,985) 42,883,938
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 94,942 170,335
TOTAL INCREASE (DECREASE) (44,426,954) 55,391,371
IN NET ASSETS
NET ASSETS
Beginning of period 64,281,746 8,890,375
End of period $ 19,854,792 $ 64,281,746
OTHER INFORMATION
Shares
Sold 1,116,624 6,004,453
Issued in reinvestment of 97,938 182,560
distributions
Redeemed (2,690,132) (4,318,403)
Net increase (decrease) (1,475,570) 1,868,610
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 G 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 28.34 $ 22.23 $ 21.92 $ 20.53 $ 21.67
period
Income from Investment
Operations
Net investment income (loss) C (.18) (.02) (.13) (.09) D (.17)
Net realized and unrealized (.58) H 8.85 1.06 2.60 1.17
gain (loss)
Total from investment (.76) 8.83 .93 2.51 1.00
operations
Less Distributions
From net realized gain (2.64) (2.80) (.71) (1.22) (2.19)
Redemption fees added to paid .10 .08 .09 .10 .05
in capital
Net asset value, end of period $ 25.04 $ 28.34 $ 22.23 $ 21.92 $ 20.53
TOTAL RETURN A, B (1.73)% 41.15% 4.67% 12.95% 5.90%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 19,855 $ 64,282 $ 8,890 $ 11,445 $ 12,704
(000 omitted)
Ratio of expenses to average 1.96% 1.58% 2.50% E 2.47% E 2.37%
net assets
Ratio of expenses to average 1.90% F 1.54% F 2.48% F 2.44% F 2.36% F
net assets after expense
reductions
Ratio of net investment (.68)% (.06)% (.58)% (.43)% (.83)%
income (loss) to average net
assets
Portfolio turnover rate 182% 210% 148% 175% 178%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D INVESTMENT
INCOME PER SHARE REFLECTS A
SPECIAL DIVIDEND WHICH
AMOUNTED TO $.05 PER SHARE.
E FMR AGREED TO REIMBURSE A
PORTION OF THE FUND'S
EXPENSES, OR EXPENSES WERE
LIMITED IN ACCORDANCE WITH A
STATE EXPENSE LIMITATION.
WITHOUT THIS REIMBURSEMENT,
THE FUND'S EXPENSE RATIO CLD
HAVE BEEN HIGHER. F FMR OR
THE FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. G FOR
THE YEAR ENDED FEBRUARY 29.
H THE AMOUNT SHOWN FOR A
SHARE OUTSTANDING DOES NOT
CORRESPOND WITH THE
AGGREGATE NET GAIN ON
INVESTMENTS FOR THE PERIOD
DUE TO THE TIMING OF SALES
AND REPURCHASES OF FUND
SHARES IN RELATION TO
FLUCTUATING MARKET VALUES OF
THE INVESTMENTS OF THE FUND.
</TABLE>
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the past five year and past 10 year
total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT BROKERAGE AND 4.76% 170.19% 549.46%
INVESTMENT MANAGEMENT
SELECT BROKERAGE AND 1.55% 162.01% 529.90%
INVESTMENT MANAGEMENT (LOAD
ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Financial Services 4.74% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
index of common stocks - and the Goldman Sachs Financial Services
Index - a market capitalization-weighted index of 271 stocks designed
to measure the performance of companies in the financial services
sector. These benchmarks include reinvestment of dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT BROKERAGE AND 4.76% 21.99% 20.57%
INVESTMENT MANAGEMENT
SELECT BROKERAGE AND 1.55% 21.24% 20.21%
INVESTMENT MANAGEMENT (LOAD
ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Financial Services 4.74% n/a n/a
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER 10 YEARS
Brokerage/Invt. Mgt S&P 500
00068 SP001
1989/02/28 9700.00 10000.00
1989/03/31 9711.69 10233.00
1989/04/30 9805.18 10764.09
1989/05/31 10447.95 11200.04
1989/06/30 10154.20 11136.20
1989/07/31 11376.47 12141.80
1989/08/31 11658.53 12379.78
1989/09/30 11294.20 12329.02
1989/10/31 10377.50 12042.99
1989/11/30 10271.73 12288.66
1989/12/31 10024.01 12583.59
1990/01/31 9583.53 11739.23
1990/02/28 9904.96 11890.67
1990/03/31 10178.78 12205.77
1990/04/30 9488.29 11900.63
1990/05/31 10393.07 13060.94
1990/06/30 10380.87 12972.12
1990/07/31 10011.40 12930.61
1990/08/31 8652.71 11761.68
1990/09/30 7913.77 11188.89
1990/10/31 7425.12 11140.78
1990/11/30 7913.77 11860.47
1990/12/31 8402.42 12191.38
1991/01/31 9101.62 12722.92
1991/02/28 10005.76 13632.61
1991/03/31 11030.44 13962.52
1991/04/30 11187.16 13996.03
1991/05/31 11777.86 14600.66
1991/06/30 10993.63 13931.95
1991/07/31 11838.36 14581.18
1991/08/31 12103.85 14926.75
1991/09/30 12731.37 14677.48
1991/10/31 13576.10 14874.16
1991/11/30 12827.91 14274.73
1991/12/31 15313.84 15907.76
1992/01/31 15531.06 15611.87
1992/02/29 15434.52 15814.83
1992/03/31 15024.22 15506.44
1992/04/30 13853.66 15962.33
1992/05/31 13817.46 16040.54
1992/06/30 13491.63 15801.54
1992/07/31 14251.89 16447.82
1992/08/31 13841.59 16110.64
1992/09/30 13745.05 16300.75
1992/10/31 14360.50 16357.80
1992/11/30 15651.74 16915.60
1992/12/31 16098.24 17123.66
1993/01/31 17051.58 17267.50
1993/02/28 17160.19 17502.34
1993/03/31 18535.91 17871.64
1993/04/30 18475.54 17439.14
1993/05/31 19079.32 17906.51
1993/06/30 19984.98 17958.44
1993/07/31 20649.14 17886.61
1993/08/31 22279.33 18564.51
1993/09/30 22689.90 18421.56
1993/10/31 21953.29 18802.89
1993/11/30 21349.52 18624.26
1993/12/31 24038.72 18849.62
1994/01/31 24551.02 19490.50
1994/02/28 23316.25 18962.31
1994/03/31 20702.20 18135.55
1994/04/30 20531.43 18367.69
1994/05/31 21030.60 18668.92
1994/06/30 21831.89 18211.53
1994/07/31 21319.59 18808.87
1994/08/31 21477.22 19580.03
1994/09/30 20662.79 19100.32
1994/10/31 20649.66 19530.08
1994/11/30 19217.84 18818.79
1994/12/31 19887.77 19097.87
1995/01/31 19638.19 19593.08
1995/02/28 20373.80 20356.63
1995/03/31 20583.98 20957.35
1995/04/30 21207.59 21574.54
1995/05/31 22400.10 22436.88
1995/06/30 23660.36 22958.09
1995/07/31 24798.66 23719.38
1995/08/31 24568.29 23778.91
1995/09/30 26058.92 24782.38
1995/10/31 24608.94 24693.91
1995/11/30 25205.19 25777.97
1995/12/31 24580.14 26274.46
1996/01/31 26182.57 27168.84
1996/02/29 26454.41 27420.69
1996/03/31 27641.93 27684.75
1996/04/30 27810.16 28092.83
1996/05/31 28731.32 28817.34
1996/06/30 28643.59 28927.14
1996/07/31 26889.01 27649.13
1996/08/31 27912.51 28232.26
1996/09/30 29345.42 29821.17
1996/10/31 30383.55 30643.63
1996/11/30 33366.35 32959.99
1996/12/31 34327.95 32307.05
1997/01/31 36831.80 34325.59
1997/02/28 38165.21 34594.71
1997/03/31 34298.31 33173.21
1997/04/30 38008.79 35153.65
1997/05/31 40844.60 37293.80
1997/06/30 43220.15 38964.57
1997/07/31 47971.25 42064.98
1997/08/31 46501.38 39708.50
1997/09/30 53286.54 41883.33
1997/10/31 50539.81 40484.43
1997/11/30 52841.12 42358.45
1997/12/31 55719.53 43085.75
1998/01/31 53300.88 43562.28
1998/02/28 60133.55 46703.99
1998/03/31 63489.42 49095.70
1998/04/30 66257.45 49589.60
1998/05/31 64711.59 48737.16
1998/06/30 68170.63 50716.86
1998/07/31 68752.24 50176.72
1998/08/31 49528.55 42922.17
1998/09/30 45595.04 45671.77
1998/10/31 52130.48 49386.71
1998/11/30 58650.62 52380.04
1998/12/31 58880.20 55398.18
1999/01/31 64696.29 57714.93
1999/02/26 62990.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990309 142809 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Brokerage and Investment Management
Portfolio on February 28, 1989, and the current 3.00% sales charge was
paid. As the chart shows, by February 28, 1999, the value of the
investment would have grown to $62,990 - a 529.90% increase on the
initial investment - and includes the effect of a $7.50 trading fee.
For comparison, look at how the Standard & Poor's 500 Index did over
the same period. With dividends and capital gains, if any, reinvested,
the same $10,000 investment would have grown to $55,921 - a 459.21%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Bear Stearns Companies, Inc. 6.7
Lehman Brothers Holdings, Inc. 6.7
Merrill Lynch & Co., Inc. 6.2
Equitable Companies (The), Inc. 5.7
Morgan Stanley, Dean Witter & 4.7
Co.
PaineWebber Group, Inc. 4.5
Donaldson Lufkin & Jenrette, 4.1
Inc.
Citigroup, Inc. 4.0
Kansas City Southern 4.0
Industries, Inc.
Marsh & McLennan Companies, 3.8
Inc.
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Securities Industry 59.0%
Credit & Other Finance 14.1%
Insurance 10.8%
Banks 5.4%
Railroads 4.0%
All Others 6.7%*
Row: 1, Col: 1, Value: 6.7
Row: 1, Col: 2, Value: 4.0
Row: 1, Col: 3, Value: 5.4
Row: 1, Col: 4, Value: 10.8
Row: 1, Col: 5, Value: 14.1
Row: 1, Col: 6, Value: 59.0
* INCLUDES SHORT-TERM INVESTMENTS
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
(photographs of Peter Fruzzetti and Ted Orenstein)
NOTE TO SHAREHOLDERS: The following is an interview with Peter
Fruzzetti (left), who managed the Fidelity Select Brokerage and
Investment Management Portfolio for most of the period covered by this
report, and with Ted Orenstein (right), who became manager of the fund
on January 4, 1999.
Q. HOW DID THE FUND PERFORM, PETER?
P.F. For the 12-month period that ended on February 28, 1999, the fund
had a total return of 4.76%. This trailed the broad market as measured
by the Standard & Poor's 500 Index, which had a total return of 19.74%
for the same period, but is right in line with the total return of
4.74% for the Goldman Sachs Financial Services Index - an index of 271
stocks designed to measure the relative performance of companies in
the financial services sector.
Q. WHAT WERE THE MAJOR FACTORS AFFECTING THIS SOMEWHAT SLUGGISH
PERFORMANCE?
P.F. Probably the biggest factor affecting the entire financial
services sector has been the uncertainty in overseas financial
markets, beginning with Russia's default on its debt in mid-summer of
1998 and continuing through various currency crises, first in Asia,
then in Latin America. The brokerage and investment management
businesses are global in scope and, on the brokerage side especially -
where the business is highly leveraged - stock prices tend to be
extremely volatile during times of market uncertainty. So when
widespread global problems began last summer and world financial
markets began to slide, these deteriorating conditions had serious
repercussions for brokerage stocks. Furthermore, as U.S. investors
became more risk averse, fewer new securities were issued, which
limited brokers' underwriting profits. Interest-rate spreads also
widened significantly, resulting in lower earnings from sales and
trading. In the past few months, overall market conditions have
improved considerably, which has helped boost fund performance, but
the sector has not regained all of the ground it lost over the past
year.
Q. DID YOU MAKE ANY SIGNIFICANT CHANGES IN STRATEGY WITHIN THIS
DIFFICULT ENVIRONMENT?
P.F. Initially, as a play on uncertainty, my strategy was to position
the fund toward companies that have more stable earnings. Typically,
this means the investment management firms. Although their earnings
are often tied to the stock and bond markets, they tend to be more
stable because they are fee-based and less transaction-oriented. As it
happened, investment management stocks were hurt as badly as brokerage
stocks during this market turbulence. So in the early fall, the fund
was repositioned toward brokerage stocks that I felt would show more
explosive earnings growth in a period of volatility. This
opportunistic approach worked out pretty well.
Q. WHICH HOLDINGS HELPED PERFORMANCE?
P.F. As the market rebounded, I felt that large institutional
brokerage firms would likely be the first to recover. Indeed, such
firms as Merrill Lynch and Morgan Stanley came back quite a bit, as
did Lehman Brothers and Bear Stearns. PaineWebber performed well, as
did Equitable, whose activities are diversified among the brokerage,
asset management, life insurance and annuity businesses. The fund also
benefited from its investment in E Trade Group, the online retail
broker, which experienced tremendous growth, particularly in the
latter months of the period.
Q. WHICH WERE DISAPPOINTMENTS?
P.F. Some of the investment managers were underperformers. Franklin
Resources saw its growth slow, due mainly to the global nature of its
business. T. Rowe Price and Waddell & Reed also disappointed.
Q. TURNING TO YOU TED, WHAT'S YOUR OUTLOOK FOR THE INDUSTRY OVER THE
NEXT SIX MONTHS?
T.O. I'm fairly optimistic. I think there's room for further recovery
in many of the holdings. Given an environment of low interest rates
and narrowing spreads, combined with the significant deferral of
activity from last fall, the institutional brokerage stocks should
continue to perform well over the next six months. As investor
confidence and the pace of retail brokerage business increase, I
believe that trend also will have a positive impact on the regional
brokerage firms we hold. The investment management companies should
start to show better net sales and recovering earnings, which should
provide added benefit to the fund. In addition, there is a global
consolidation theme that continues to be played out in the life
insurance industry, and I believe the fund is positioned properly to
take advantage of that trend.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGERS ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: July 29, 1985
FUND NUMBER: 068
TRADING SYMBOL: FSLBX
SIZE: as of February 28, 1999, more than
$482 million
MANAGER: Ted Orenstein, since January 1999;
equity analyst for securities brokerage
industry, 1998-1999; joined Fidelity in 1998
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 94.4%
SHARES VALUE (NOTE 1)
BANKS - 5.4%
Bank of Montreal 50,600 $ 2,089,037
Bank Sarasin & Compagnie 910 1,647,685
Class B (Reg.)
BankAmerica Corp. 25,464 1,663,118
Chase Manhattan Corp. 72,500 5,772,813
Credit Suisse Group (Reg.) 23,900 3,716,310
Julius Baer Holding AG 2,500 7,603,663
Morgan (JP) & Co., Inc. 10,000 1,114,375
Royal Bank of Canada 52,200 2,527,258
26,134,259
COMPUTER SERVICES & SOFTWARE
- - 0.6%
DST Systems, Inc. (a) 53,100 2,880,675
CREDIT & OTHER FINANCE - 14.1%
American Express Co. 84,300 9,146,550
Citigroup, Inc. 330,150 19,396,313
Equitable Companies (The), 406,500 27,464,156
Inc.
Investors Financial Services 6,207 360,006
Corp.
Perpetual PLC 16,500 998,469
Providian Financial Corp. 103,200 10,539,300
67,904,794
INSURANCE - 10.8%
AFLAC, Inc. 63,900 2,819,588
American Bankers Insurance 165,400 7,939,200
Group, Inc.
ARM Financial Group, Inc. 83,100 1,293,244
Class A
Hartford Life, Inc. Class A 133,500 7,743,000
Liberty Financial Companies, 140,200 3,145,738
Inc.
Marsh & McLennan Companies, 257,600 18,241,300
Inc.
Nationwide Financial 119,100 5,411,606
Services, Inc. Class A
Protective Life Corp. 31,400 1,083,300
Reinsurance Group of America, 24,800 1,598,050
Inc.
Torchmark Corp. 84,800 2,819,600
UICI (a) 12,400 285,200
52,379,826
RAILROADS - 4.0%
Kansas City Southern 411,400 19,232,950
Industries, Inc.
REAL ESTATE INVESTMENT TRUSTS
- - 0.1%
AMRESCO Capital Trust, Inc. 41,400 362,250
SAVINGS & LOANS - 0.4%
Dime Bancorp, Inc. 51,300 1,269,675
Washington Mutual, Inc. 18,900 756,000
2,025,675
SECURITIES INDUSTRY - 59.0%
Advest Group, Inc. (The) 208,900 4,151,888
Affiliated Managers Group, 91,400 2,376,400
Inc. (a)
SHARES VALUE (NOTE 1)
Bear Stearns Companies, Inc. 759,330 $ 32,508,809
Conning Corp. 500 8,000
Dain Rauscher Corp. 115,950 3,666,919
Donaldson Lufkin & Jenrette, 346,700 19,761,900
Inc.
E Trade Group, Inc. (a) 254,800 11,720,800
Eaton Vance Corp. 74,400 1,464,750
Edwards (A.G.), Inc. 493,700 16,076,106
Everen Capital Corp. 223,400 4,803,100
Federated Investors, Inc. 115,100 2,208,481
Class B
First Marathon, Inc. Class A 37,000 445,384
(non-vtg.)
Franklin Resources, Inc. 273,400 8,697,538
Hambrecht & Quist Group (a) 217,300 5,785,613
Investors Group, Inc. 804,600 11,686,391
Jefferies Group, Inc. 135,300 5,335,894
John Nuveen Co. Class A 162,500 6,418,750
Legg Mason, Inc. 241,032 6,824,219
Lehman Brothers Holdings, 612,400 32,457,200
Inc.
Mackenzie Financial Corp. 275,600 3,271,813
Merrill Lynch & Co., Inc. 390,400 29,963,200
Morgan Keegan, Inc. 139,425 2,300,513
Morgan Stanley, Dean Witter & 253,765 22,965,733
Co.
PaineWebber Group, Inc. 577,500 21,584,063
Phoenix Investment Partners 203,200 1,511,300
Ltd.
Pilgrim America Capital Corp. 57,100 1,284,750
(a)
Pioneer Group, Inc. 131,500 2,145,094
Price (T. Rowe) Associates, 325,300 10,023,306
Inc.
Raymond James Financial, Inc. 177,625 3,241,656
Southwest Securities Group, 50,567 1,456,962
Inc.
Stifel Financial Corp. 95,817 940,204
United Asset Management Corp. 45,000 1,020,938
Waddell & Reed Financial, Inc.:
Class A 328,636 6,203,004
Class B 48,161 893,989
285,204,667
TOTAL COMMON STOCKS 456,125,096
(Cost $349,978,241)
CASH EQUIVALENTS - 5.6%
Taxable Central Cash Fund (b) 27,012,968 27,012,968
(Cost $27,012,968)
TOTAL INVESTMENT IN $ 483,138,064
SECURITIES - 100%
(Cost $376,991,209)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $391,812,067 and $521,601,050, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $47,015 for the
period.
The fund participated in the bank borrowing program. The maximum loan
and average daily balances during the period for which loans were
outstanding amounted to $2,851,000 and $2,311,600, respectively. The
weighted average interest rate was 5.0%.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $377,770,273. Net unrealized appreciation
aggregated $105,367,791, of which $119,928,083 related to appreciated
investment securities and $14,560,292 related to depreciated
investment securities.
The fund hereby designates approximately $11,036,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 99% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of these percentages
for use in preparing 1999 income tax returns.
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 483,138,064
value (cost $376,991,209) -
See accompanying schedule
Receivable for investments 5,672,438
sold
Receivable for fund shares 634,807
sold
Dividends receivable 315,066
Interest receivable 23,840
Redemption fees receivable 6,692
TOTAL ASSETS 489,790,907
LIABILITIES
Payable for investments $ 2,450,967
purchased
Payable for fund shares 4,277,062
redeemed
Accrued management fee 241,603
Other payables and accrued 296,268
expenses
TOTAL LIABILITIES 7,265,900
NET ASSETS $ 482,525,007
Net Assets consist of:
Paid in capital $ 364,482,172
Undistributed net investment 1,842,357
income
Accumulated undistributed net 10,051,293
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 106,149,185
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 11,723,842 $ 482,525,007
shares outstanding
NET ASSET VALUE and $41.16
redemption price per share
($482,525,007 (divided by)
11,723,842 shares)
Maximum offering price per $42.43
share (100/97.00 of $41.16)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 8,442,201
Dividends
Interest 2,455,320
TOTAL INCOME 10,897,521
EXPENSES
Management fee $ 4,267,725
Transfer agent fees 4,027,741
Accounting fees and expenses 593,407
Non-interested trustees' 2,610
compensation
Custodian fees and expenses 49,280
Registration fees 103,404
Audit 34,276
Legal 3,931
Interest 1,608
Reports to shareholders 74,397
Miscellaneous 670
Total expenses before 9,159,049
reductions
Expense reductions (141,329) 9,017,720
NET INVESTMENT INCOME 1,879,801
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 11,015,878
Foreign currency transactions (146,465) 10,869,413
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (42,207,693)
Assets and liabilities in (1,183) (42,208,876)
foreign currencies
NET GAIN (LOSS) (31,339,463)
NET INCREASE (DECREASE) IN $ (29,459,662)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 4,817,568
charges paid to FDC
Sales charges - Retained by $ 4,806,902
FDC
Deferred sales charges $ 5,812
withheld by FDC
Exchange fees withheld by FSC $ 92,633
Expense reductions Directed $ 136,233
brokerage arrangements
Custodian credits 1,168
Transfer agent credits 3,928
$ 141,329
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ 1,879,801 $ 2,052,773
income
Net realized gain (loss) 10,869,413 24,237,839
Change in net unrealized (42,208,876) 128,112,104
appreciation (depreciation)
NET INCREASE (DECREASE) IN (29,459,662) 154,402,716
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (201,762) (1,439,025)
From net investment income
From net realized gain (10,471,038) (10,009,644)
TOTAL DISTRIBUTIONS (10,672,800) (11,448,669)
Share transactions Net 881,017,420 894,533,503
proceeds from sales of shares
Reinvestment of distributions 10,559,880 11,336,755
Cost of shares redeemed (1,046,567,449) (832,884,965)
NET INCREASE (DECREASE) IN (154,990,149) 72,985,293
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 1,580,230 1,340,868
TOTAL INCREASE (DECREASE) (193,542,381) 217,280,208
IN NET ASSETS
NET ASSETS
Beginning of period 676,067,388 458,787,180
End of period (including $ 482,525,007 $ 676,067,388
undistributed net investment
income of $1,842,357 and
$675,811, respectively)
OTHER INFORMATION
Shares
Sold 21,245,778 26,764,779
Issued in reinvestment of 249,064 321,841
distributions
Redeemed (26,767,460) (27,900,822)
Net increase (decrease) (5,272,618) (814,202)
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 F 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 39.78 $ 25.76 $ 18.49 $ 15.51 $ 17.75
period
Income from Investment
Operations
Net investment income (loss) C .10 .16 .08 .09 (.03)
Net realized and unrealized 1.72 G 14.46 7.80 4.29 (2.25)
gain (loss)
Total from investment 1.82 14.62 7.88 4.38 (2.28)
operations
Less Distributions
From net investment income (.01) (.09) (.06) (.04) -
From net realized gain (.52) (.61) (.65) (1.09) -
In excess of net realized gain - - - (.35) -
Total distributions (.53) (.70) (.71) (1.48) -
Redemption fees added to paid .09 .10 .10 .08 .04
in capital
Net asset value, end of period $ 41.16 $ 39.78 $ 25.76 $ 18.49 $ 15.51
TOTAL RETURN A, B 4.76% 57.56% 44.27% 29.85% (12.62)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 482,525 $ 676,067 $ 458,787 $ 38,382 $ 27,346
(000 omitted)
Ratio of expenses to average 1.26% 1.33% 1.94% 1.64% D 2.54% D
net assets
Ratio of expenses to average 1.24% E 1.29% E 1.93% E 1.61% E 2.54%
net assets after expense
reductions
Ratio of net investment .26% .49% .37% .50% (.20)%
income (loss) to average net
assets
Portfolio turnover rate 59% 100% 16% 166% 139%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
BTOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE. CNET INVESTMENT
INCOME (LOSS) PER SHARE HAS
BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING
DURING THE PERIOD. DFMR
AGREED TO REIMBURSE A
PORTION OF THE FUND'S
EXPENSES, OR EXPENSES WERE
LIMITED IN ACCORDANCE WITH A
STATE EXPENSE LIMITATION.
WITHOUT THIS REIMBURSEMENT,
THE FUND'S EXPENSE RATIO
WOULD HAVE BEEN HIGHER. EFMR
OR THE FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. FFOR
THE YEAR ENDED FEBRUARY 29.
GTHE AMOUNT SHOWN FOR A
SHARE OUTSTANDING DOES NOT
CORRESPOND WITH THE
AGGREGATE NET LOSS ON
INVESTMENTS FOR THE PERIOD
DUE TO THE TIMING OF SALES
AND REPURCHASES OF FUND
SHARES IN RELATION TO
FLUCTUATING MARKET VALUES OF
THE INVESTMENTS OF THE FUND.
</TABLE>
FINANCIAL SERVICES PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT FINANCIAL SERVICES 8.42% 201.90% 625.81%
SELECT FINANCIAL SERVICES 5.10% 192.77% 603.96%
(LOAD ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Financial Services 4.74% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
index of common stocks - and the Goldman Sachs Financial Services
Index - a market capitalization-weighted index of 271 stocks designed
to measure the performance of companies in the financial services
sector. These benchmarks include reinvestment of dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT FINANCIAL SERVICES 8.42% 24.73% 21.92%
SELECT FINANCIAL SERVICES 5.10% 23.97% 21.55%
(LOAD ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Financial Services 4.74% n/a n/a
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER 10 YEARS
Financial Services S&P 500
00066 SP001
1989/02/28 9700.00 10000.00
1989/03/31 10409.17 10233.00
1989/04/30 10599.43 10764.09
1989/05/31 11263.62 11200.04
1989/06/30 11185.14 11136.20
1989/07/31 12080.37 12141.80
1989/08/31 12421.74 12379.78
1989/09/30 12679.51 12329.02
1989/10/31 11470.78 12042.99
1989/11/30 11314.02 12288.66
1989/12/31 11035.38 12583.59
1990/01/31 10103.76 11739.23
1990/02/28 10469.38 11890.67
1990/03/31 10307.66 12205.77
1990/04/30 9942.04 11900.63
1990/05/31 10817.42 13060.94
1990/06/30 10515.08 12972.12
1990/07/31 9840.09 12930.61
1990/08/31 8662.37 11761.68
1990/09/30 7372.16 11188.89
1990/10/31 6728.81 11140.78
1990/11/30 7678.01 11860.47
1990/12/31 8350.49 12191.38
1991/01/31 9109.30 12722.92
1991/02/28 10155.81 13632.61
1991/03/31 10641.30 13962.52
1991/04/30 10986.54 13996.03
1991/05/31 11828.06 14600.66
1991/06/30 10867.86 13931.95
1991/07/31 11727.37 14581.18
1991/08/31 12504.16 14926.75
1991/09/30 12428.63 14677.48
1991/10/31 12701.95 14874.16
1991/11/30 11759.73 14274.73
1991/12/31 13496.77 15907.76
1992/01/31 14169.06 15611.87
1992/02/29 15186.59 15814.83
1992/03/31 14844.99 15506.44
1992/04/30 15415.53 15962.33
1992/05/31 16076.92 16040.54
1992/06/30 16446.85 15801.54
1992/07/31 16917.18 16447.82
1992/08/31 15946.89 16110.64
1992/09/30 16443.14 16300.75
1992/10/31 17094.94 16357.80
1992/11/30 18380.03 16915.60
1992/12/31 19276.09 17123.66
1993/01/31 20491.95 17267.50
1993/02/28 21036.72 17502.34
1993/03/31 22138.10 17871.64
1993/04/30 21078.28 17439.14
1993/05/31 21086.27 17906.51
1993/06/30 21873.46 17958.44
1993/07/31 22460.86 17886.61
1993/08/31 23160.14 18564.51
1993/09/30 23695.58 18421.56
1993/10/31 23060.24 18802.89
1993/11/30 22033.30 18624.26
1993/12/31 22659.88 18849.62
1994/01/31 24198.15 19490.50
1994/02/28 23319.79 18962.31
1994/03/31 22254.84 18135.55
1994/04/30 23099.94 18367.69
1994/05/31 24085.94 18668.92
1994/06/30 23517.27 18211.53
1994/07/31 24338.18 18808.87
1994/08/31 25191.18 19580.03
1994/09/30 23292.56 19100.32
1994/10/31 23168.73 19530.08
1994/11/30 21701.20 18818.79
1994/12/31 21833.37 19097.87
1995/01/31 22962.51 19593.08
1995/02/28 24420.77 20356.63
1995/03/31 24851.16 20957.35
1995/04/30 25630.92 21574.54
1995/05/31 27053.73 22436.88
1995/06/30 27180.32 22958.09
1995/07/31 28091.73 23719.38
1995/08/31 29185.43 23778.91
1995/09/30 30851.28 24782.38
1995/10/31 30061.39 24693.91
1995/11/30 32086.75 25777.97
1995/12/31 32169.33 26274.46
1996/01/31 33673.39 27168.84
1996/02/29 33957.66 27420.69
1996/03/31 34360.81 27684.75
1996/04/30 33979.47 28092.83
1996/05/31 34769.07 28817.34
1996/06/30 35277.81 28927.14
1996/07/31 34509.40 27649.13
1996/08/31 35537.48 28232.26
1996/09/30 37895.69 29821.17
1996/10/31 40296.30 30643.63
1996/11/30 43756.78 32959.99
1996/12/31 42501.36 32307.05
1997/01/31 45031.80 34325.59
1997/02/28 46025.10 34594.71
1997/03/31 42567.95 33173.21
1997/04/30 46152.92 35153.65
1997/05/31 47668.04 37293.80
1997/06/30 50202.96 38964.57
1997/07/31 55826.39 42064.98
1997/08/31 52656.29 39708.50
1997/09/30 56030.34 41883.33
1997/10/31 55284.44 40484.43
1997/11/30 57155.03 42358.45
1997/12/31 60344.58 43085.75
1998/01/31 59697.00 43562.28
1998/02/28 64934.24 46703.99
1998/03/31 68455.08 49095.70
1998/04/30 69589.60 49589.60
1998/05/31 68287.69 48737.16
1998/06/30 71403.95 50716.86
1998/07/31 71632.48 50176.72
1998/08/31 55358.67 42922.17
1998/09/30 57304.60 45671.77
1998/10/31 63052.37 49386.71
1998/11/30 66667.24 52380.04
1998/12/31 68873.88 55398.18
1999/01/31 70165.75 57714.93
1999/02/26 70396.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990309 144213 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Financial Services Portfolio on February
28, 1989, and the current 3.00% sales charge was paid. As the chart
shows, by February 28, 1999, the value of the investment would have
grown to $70,396 - a 603.96% increase on the initial investment - and
includes the effect of a $7.50 trading fee. For comparison, look at
how the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Citigroup, Inc. 6.3
American International Group, 5.4
Inc.
Chase Manhattan Corp. 4.7
American Express Co. 4.7
Providian Financial Corp. 4.4
Wells Fargo & Co. 4.4
BankAmerica Corp. 4.4
Household International, Inc. 3.9
Bank One Corp. 3.8
Freddie Mac 3.5
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Banks 29.7%
Credit & Other Finance 27.2%
Insurance 19.8%
Federal Sponsored Credit 8.1%
Securities Industry 4.4%
All Others 10.8%*
Row: 1, Col: 1, Value: 10.8
Row: 1, Col: 2, Value: 4.4
Row: 1, Col: 3, Value: 8.1
Row: 1, Col: 4, Value: 19.8
Row: 1, Col: 5, Value: 27.2
Row: 1, Col: 6, Value: 29.7
* INCLUDES SHORT-TERM 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. The fund had a respectable year within the context of what happened
to financial services company stocks, although it trailed the overall
stock market. For the 12-month period that ended February 28, 1999,
the fund had a total return of 8.42%. The Goldman Sachs Financial
Services Index - an index of 271 stocks designed to measure the
performance of companies in the financial services sector - returned
4.74% during the same 12-month period, while the Standard & Poor's 500
Index had a return of 19.74%.
Q. WHAT FACTORS AFFECTED THE MARKET FOR FINANCIAL SERVICES STOCKS
DURING THE PAST 12 MONTHS?
A. Financial services stocks did not fare as well as stocks in
general. The 12-month period began with an escalation of global
economic turmoil, starting with Asia and moving into other markets,
including Eastern European countries and South America. The global
problems affected the quality of loans and the earnings growth of
financial companies. Market volatility and uncertainty were at their
highest in the late summer and early fall, following the Russian bond
default and currency devaluation in August. However, when the U.S.
Federal Reserve Board cut short-term interest rates three successive
times in the fall, the capital markets rebounded. Financial services
stocks, which had fallen more sharply than the market as a whole, at
first recovered more quickly, but have since lagged the market
slightly. At the end of the period, we saw more stability. The year
also witnessed an unusually large number of big-company mergers,
including Citicorp and Travelers, BankAmerica and NationsBank, First
Chicago and Bank One, and Norwest and Wells Fargo.
Q. WHAT WERE YOUR PRINCIPAL STRATEGIES DURING THE YEAR?
A. At the beginning of the 12-month period, the fund's portfolio was
diversified across large-cap, mid-cap and small-cap companies.
Small-cap and mid-cap companies performed well then, but became more
expensive on a price-to-earnings ratio basis. Late in the spring, I
moved more heavily into big-cap stocks. This worked well as large-cap
banks slowed their acquisitions of smaller banks and started merging
with each other. Throughout the year, I also focused on
consumer-oriented firms, including banks and companies emphasizing
consumer finance and credit card operations. The international
volatility also had an influence on strategy, as we shifted our
emphasis depending on relative valuations. In the spring, as Asia was
deteriorating, I de-emphasized companies with an international focus,
such as the large money-center banks. Then, as international events
unfolded, stocks with a foreign focus were penalized and became
unusually cheap. In November, I began increasing our exposure to these
companies, adding to positions in stocks such as Chase Manhattan and
Citigroup. For most of the period, I also concentrated on companies
with more predictable and sustainable earnings growth, such as life
insurance companies, including SunAmerica and AFLAC. At the end of the
fiscal year, the fund continued to have a big-cap bias, although we
did increase our emphasis on mid-cap banks as their relative
valuations became more attractive.
Q. WHAT STOCKS HELPED PERFORMANCE, AND WHAT WERE THE DISAPPOINTMENTS?
A. The biggest single contributor to performance was Providian
Financial Group, which increased both its credit card business and its
fee income. Another healthy performer was American Express, a holding
which illustrates the fund's consumer-oriented strategy. American
International Group (AIG), which successfully weathered the
international problems, helped, as did SunAmerica, which has done a
wonderful job selling variable and fixed-rate annuities. AIG acquired
SunAmerica in November. BankAmerica was a disappointment as it was
affected by the international turmoil even more than most people
expected. U.S. Bancorp failed to meet expectations, with disappointing
earnings growth the past two fiscal quarters. Also disappointing was a
smaller company, Ocwen Asset Investment, a commercial mortgage real
estate investment trust.
Q. WHAT IS YOUR OUTLOOK?
A. I still think the backdrop is positive for financial service
companies. I think the industry's average earnings growth during the
coming year may exceed overall market earnings growth. If that
happens, financial services stocks should outperform the market as a
whole. While I am somewhat optimistic, I am vigilant in tracking
international developments. If we continue to get erosion in
international markets, the U.S. economy will be affected, hurting
credit quality and the performance of financial services stocks.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: December 10, 1981
FUND NUMBER: 066
TRADING SYMBOL: FIDSX
SIZE: as of February 28, 1999, more than
$546 million
MANAGER: Robert Ewing, since 1998; manager,
Fidelity Advisor Financial Services Fund, since
1998; Fidelity Select Environmental Services
Portfolio, 1996-1997; Fidelity Select
Energy Service Portfolio, 1996-1998; joined
Fidelity in 1990
FINANCIAL SERVICES PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.1%
SHARES VALUE (NOTE 1)
BANKS - 29.7%
AmSouth Bancorp. 40,000 $ 1,880,000
Bank of New York Co., Inc. 425,936 14,881,139
Bank One Corp. 389,219 20,920,521
BankAmerica Corp. 366,879 23,961,785
Chase Manhattan Corp. 325,000 25,878,125
Comerica, Inc. 120,167 7,961,064
First Union Corp. 90,690 4,834,911
M&T Bank Corp. 6,000 2,854,500
Marshall & Ilsley Corp. 30,000 1,680,000
Mellon Bank Corp. 40,000 2,705,000
U.S. Bancorp 568,089 18,356,376
Wachovia Corp. 89,500 7,613,094
Wells Fargo & Co. 665,000 24,438,750
Zions Bancorp 90,000 5,760,000
163,725,265
CREDIT & OTHER FINANCE - 27.2%
American Express Co. 237,800 25,801,300
Associates First Capital 440,200 17,883,125
Corp. Class A
Citigroup, Inc. 587,000 34,486,246
Equitable Companies (The), 89,200 6,026,575
Inc.
Firstcity Financial Corp. (a) 100,300 1,209,869
Fleet Financial Group, Inc. 234,534 10,070,304
Household International, Inc. 529,746 21,520,931
MBNA Corp. 287,500 6,971,875
Metris Companies, Inc. 25,000 1,075,000
Providian Financial Corp. 239,700 24,479,363
149,524,588
FEDERAL SPONSORED CREDIT - 8.1%
Fannie Mae 230,000 16,100,000
Freddie Mac 329,600 19,405,200
SLM Holding Corp. 216,000 9,261,000
44,766,200
INSURANCE - 19.8%
ACE Ltd. 80,000 2,180,000
Aegon NV (Reg.) 36,940 3,864,848
AFLAC, Inc. 142,000 6,265,750
Allmerica Financial Corp. 31,200 1,665,300
Allstate Corp. 127,800 4,792,500
Ambac Financial Group, Inc. 65,000 3,640,000
American Bankers Insurance 75,000 3,600,000
Group, Inc.
American International Group, 259,050 29,515,509
Inc.
Berkshire Hathaway, Inc.:
Class A (a) 154 10,949,400
Class B (a) 7 16,653
Blanch E.W. Holdings, Inc. 35,000 1,942,500
CMAC Investments Corp. 75,000 3,098,438
Hartford Financial Services 170,000 9,190,625
Group, Inc.
SHARES VALUE (NOTE 1)
Hartford Life, Inc. Class A 25,000 $ 1,450,000
Marsh & McLennan Companies, 107,500 7,612,344
Inc.
MBIA, Inc. 52,400 3,225,875
Nationwide Financial 35,000 1,590,313
Services, Inc. Class A
PMI Group, Inc. 46,400 2,001,000
Progressive Corp. 17,500 2,248,750
Reliastar Financial Corp. 65,000 2,949,375
Torchmark Corp. 150,000 4,987,500
UICI (a) 100,000 2,300,000
109,086,680
REAL ESTATE INVESTMENT TRUSTS
- - 1.5%
Crescent Real Estate Equities 140,000 2,922,500
Co.
Duke Realty Investments, Inc. 50,000 1,090,625
Equity Office Properties Trust 50,000 1,287,500
Ocwen Asset Investment Corp. 369,000 1,914,188
Public Storage, Inc. 40,000 1,020,000
8,234,813
SAVINGS & LOANS - 2.4%
Charter One Financial, Inc. 75,000 2,160,938
Dime Bancorp, Inc. 60,000 1,485,000
Golden State Bancorp, Inc. 100,000 1,781,250
Golden State Bancorp, Inc. 50,000 253,125
litigation warrants 12/31/99
(a)
Washington Mutual, Inc. 188,880 7,555,200
13,235,513
SECURITIES INDUSTRY - 4.4%
Bear Stearns Companies, Inc. 57,750 2,472,422
E Trade Group, Inc. (a) 30,000 1,380,000
Investors Group, Inc. 200,000 2,904,895
Lehman Brothers Holdings, 125,600 6,656,800
Inc.
Morgan Stanley, Dean Witter & 70,000 6,335,000
Co.
Waddell & Reed Financial, Inc.:
Class A 178,535 3,369,848
Class B 36,735 681,893
23,800,858
TOTAL COMMON STOCKS 512,373,917
(Cost $374,372,608)
CASH EQUIVALENTS - 6.9%
Taxable Central Cash Fund (b) 37,949,707 37,949,707
(Cost $37,949,707)
TOTAL INVESTMENT IN $ 550,323,624
SECURITIES - 100%
(Cost $412,322,315)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $343,643,233 and $421,107,652, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $45,514 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $1,820,475. The fund
received cash collateral of $1,861,800.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $414,728,198. Net unrealized appreciation
aggregated $135,595,426, of which $147,529,914 related to appreciated
investment securities and $11,934,488 related to depreciated
investment securities.
The fund hereby designates approximately $62,832,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 51% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of this percentage
for use in preparing 1999 income tax returns.
FINANCIAL SERVICES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 550,323,624
value (cost $412,322,315) -
See accompanying schedule
Receivable for fund shares 1,408,735
sold
Dividends receivable 503,053
Interest receivable 120,798
Redemption fees receivable 5,946
TOTAL ASSETS 552,362,156
LIABILITIES
Payable for fund shares $ 2,951,093
redeemed
Accrued management fee 262,558
Other payables and accrued 287,194
expenses
Collateral on securities 1,861,800
loaned, at value
TOTAL LIABILITIES 5,362,645
NET ASSETS $ 546,999,511
Net Assets consist of:
Paid in capital $ 388,431,484
Undistributed net investment 3,679,892
income
Accumulated undistributed net 16,886,826
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 138,001,309
(depreciation) on investments
NET ASSETS, for 5,425,361 $ 546,999,511
shares outstanding
NET ASSET VALUE and $100.82
redemption price per share
($546,999,511 (divided by)
5,425,361 shares)
Maximum offering price per $103.94
share (100/97.00 of $100.82)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 8,663,505
Dividends
Interest (including income on 2,337,085
securities loaned of $5,426)
TOTAL INCOME 11,000,590
EXPENSES
Management fee $ 3,668,034
Transfer agent fees 3,122,127
Accounting and security 543,416
lending fees
Non-interested trustees' 2,407
compensation
Custodian fees and expenses 17,213
Registration fees 53,760
Audit 28,584
Legal 3,384
Reports to shareholders 62,257
Total expenses before 7,501,182
reductions
Expense reductions (106,101) 7,395,081
NET INVESTMENT INCOME 3,605,509
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 21,710,294
Foreign currency transactions 75,133 21,785,427
Change in net unrealized 9,159,238
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 30,944,665
NET INCREASE (DECREASE) IN $ 34,550,174
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 2,154,649
charges paid to FDC
Sales charges - Retained by $ 2,152,071
FDC
Deferred sales charges $ 13,596
withheld by FDC
Exchange fees withheld by FSC $ 52,705
Expense reductions Directed $ 104,171
brokerage arrangements
Custodian credits 1,684
Transfer agent credits 246
$ 106,101
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ 3,605,509 $ 3,633,948
income
Net realized gain (loss) 21,785,427 108,047,031
Change in net unrealized 9,159,238 47,345,052
appreciation (depreciation)
NET INCREASE (DECREASE) IN 34,550,174 159,026,031
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (1,162,919) (3,089,281)
From net investment income
From net realized gain (66,118,174) (50,526,464)
TOTAL DISTRIBUTIONS (67,281,093) (53,615,745)
Share transactions Net 389,871,130 474,752,061
proceeds from sales of shares
Reinvestment of distributions 66,001,479 52,640,022
Cost of shares redeemed (481,672,418) (455,053,591)
NET INCREASE (DECREASE) IN (25,799,809) 72,338,492
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 622,623 734,651
TOTAL INCREASE (DECREASE) (57,908,105) 178,483,429
IN NET ASSETS
NET ASSETS
Beginning of period 604,907,616 426,424,187
End of period (including $ 546,999,511 $ 604,907,616
undistributed net investment
income of $3,679,892 and
$1,378,882, respectively)
OTHER INFORMATION
Shares
Sold 3,952,203 5,332,883
Issued in reinvestment of 658,905 604,501
distributions
Redeemed (5,042,955) (5,221,709)
Net increase (decrease) (431,847) 715,675
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 103.28 $ 82.94 $ 65.70 $ 48.23 $ 51.24
period
Income from Investment
Operations
Net investment income C .56 .70 .74 1.03 .76
Net realized and unrealized 7.88 30.65 21.55 17.56 .87
gain (loss)
Total from investment 8.44 31.35 22.29 18.59 1.63
operations
Less Distributions
From net investment income (.19) (.64) (.63) (.37) (.79)
From net realized gain (10.81) (10.51) (4.56) (.91) (3.93)
Total distributions (11.00) (11.15) (5.19) (1.28) (4.72)
Redemption fees added to paid .10 .14 .14 .16 .08
in capital
Net asset value, end of period $ 100.82 $ 103.28 $ 82.94 $ 65.70 $ 48.23
TOTAL RETURN A, B 8.42% 41.08% 35.54% 39.05% 4.72%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 547,000 $ 604,908 $ 426,424 $ 270,466 $ 153,089
(000 omitted)
Ratio of expenses to average 1.20% 1.31% 1.45% 1.42% 1.56%
net assets
Ratio of expenses to average 1.18% D 1.29% D 1.43% D 1.41% D 1.54% D
net assets after expense
reductions
Ratio of net investment .58% .78% 1.03% 1.78% 1.52%
income to average net assets
Portfolio turnover rate 60% 84% 80% 125% 107%
</TABLE>
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME PER
SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES
OUTSTANDING DURING THE
PERIOD. D FMR OR THE FUND
HAS ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE
FUND'S EXPENSES. E FOR THE
YEAR ENDED FEBRUARY 29.
HOME FINANCE PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the past 10 year total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT HOME FINANCE -19.12% 154.36% 622.25%
SELECT HOME FINANCE (LOAD -21.62% 146.66% 600.51%
ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Financial Services 4.74% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
index of common stocks - and the Goldman Sachs Financial Services
Index - a market capitalization-weighted index of 271 stocks designed
to measure the performance of companies in the financial services
sector. These benchmarks include reinvestment of dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT HOME FINANCE -19.12% 20.53% 21.86%
SELECT HOME FINANCE (LOAD -21.62% 19.79% 21.49%
ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Financial Services 4.74% n/a n/a
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER 10 YEARS
Home Finance S&P 500
00098 SP001
1989/02/28 9700.00 10000.00
1989/03/31 9747.09 10233.00
1989/04/30 10246.21 10764.09
1989/05/31 10688.83 11200.04
1989/06/30 10903.98 11136.20
1989/07/31 11283.91 12141.80
1989/08/31 11977.28 12379.78
1989/09/30 12423.70 12329.02
1989/10/31 10875.49 12042.99
1989/11/30 10524.05 12288.66
1989/12/31 9575.08 12583.59
1990/01/31 8781.29 11739.23
1990/02/28 9108.73 11890.67
1990/03/31 9128.57 12205.77
1990/04/30 8910.28 11900.63
1990/05/31 9753.68 13060.94
1990/06/30 9654.46 12972.12
1990/07/31 8820.98 12930.61
1990/08/31 7927.97 11761.68
1990/09/30 7243.32 11188.89
1990/10/31 6697.59 11140.78
1990/11/30 7421.93 11860.47
1990/12/31 8130.87 12191.38
1991/01/31 8908.60 12722.92
1991/02/28 10120.65 13632.61
1991/03/31 10585.28 13962.52
1991/04/30 10948.89 13996.03
1991/05/31 11403.41 14600.66
1991/06/30 10767.08 13931.95
1991/07/31 11918.54 14581.18
1991/08/31 12373.06 14926.75
1991/09/30 12272.05 14677.48
1991/10/31 12059.94 14874.16
1991/11/30 11504.42 14274.73
1991/12/31 13383.86 15907.76
1992/01/31 14702.82 15611.87
1992/02/29 15663.93 15814.83
1992/03/31 15398.09 15506.44
1992/04/30 15725.27 15962.33
1992/05/31 17279.40 16040.54
1992/06/30 17301.04 15801.54
1992/07/31 18151.74 16447.82
1992/08/31 17167.80 16110.64
1992/09/30 17444.53 16300.75
1992/10/31 17772.52 16357.80
1992/11/30 19596.91 16915.60
1992/12/31 21126.79 17123.66
1993/01/31 22642.52 17267.50
1993/02/28 23026.65 17502.34
1993/03/31 23846.80 17871.64
1993/04/30 22555.15 17439.14
1993/05/31 22169.15 17906.51
1993/06/30 22722.07 17958.44
1993/07/31 24182.63 17886.61
1993/08/31 25455.40 18564.51
1993/09/30 27082.87 18421.56
1993/10/31 27291.52 18802.89
1993/11/30 26070.92 18624.26
1993/12/31 26893.35 18849.62
1994/01/31 28070.76 19490.50
1994/02/28 27542.57 18962.31
1994/03/31 27025.39 18135.55
1994/04/30 28070.28 18367.69
1994/05/31 29801.59 18668.92
1994/06/30 30297.89 18211.53
1994/07/31 30967.33 18808.87
1994/08/31 31971.49 19580.03
1994/09/30 30875.00 19100.32
1994/10/31 29028.27 19530.08
1994/11/30 27527.80 18818.79
1994/12/31 27614.38 19097.87
1995/01/31 28831.33 19593.08
1995/02/28 30967.47 20356.63
1995/03/31 30915.68 20957.35
1995/04/30 32533.96 21574.54
1995/05/31 34462.96 22436.88
1995/06/30 34825.45 22958.09
1995/07/31 36223.65 23719.38
1995/08/31 39563.79 23778.91
1995/09/30 40392.35 24782.38
1995/10/31 39654.41 24693.91
1995/11/30 41842.33 25777.97
1995/12/31 42385.70 26274.46
1996/01/31 43544.58 27168.84
1996/02/29 44357.13 27420.69
1996/03/31 45369.48 27684.75
1996/04/30 44790.24 28092.83
1996/05/31 45788.62 28817.34
1996/06/30 45993.76 28927.14
1996/07/31 46814.35 27649.13
1996/08/31 48742.72 28232.26
1996/09/30 51204.47 29821.17
1996/10/31 54801.37 30643.63
1996/11/30 58904.29 32959.99
1996/12/31 58015.82 32307.05
1997/01/31 61784.93 34325.59
1997/02/28 65426.03 34594.71
1997/03/31 59367.01 33173.21
1997/04/30 61146.40 35153.65
1997/05/31 65244.08 37293.80
1997/06/30 70813.88 38964.57
1997/07/31 77476.39 42064.98
1997/08/31 74274.14 39708.50
1997/09/30 80936.65 41883.33
1997/10/31 80299.23 40484.43
1997/11/30 80754.53 42358.45
1997/12/31 84557.77 43085.75
1998/01/31 79752.80 43562.28
1998/02/28 86619.36 46703.99
1998/03/31 92463.25 49095.70
1998/04/30 94642.35 49589.60
1998/05/31 91346.68 48737.16
1998/06/30 89765.43 50716.86
1998/07/31 86270.02 50176.72
1998/08/31 63366.77 42922.17
1998/09/30 66645.79 45671.77
1998/10/31 68443.43 49386.71
1998/11/30 72288.38 52380.04
1998/12/31 72038.71 55398.18
1999/01/31 71755.75 57714.93
1999/02/26 70051.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990307 162722 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Home Finance Portfolio on February 28,
1989, and the current 3.00% sales charge was paid. As the chart shows,
by February 28, 1999, the value of the investment would have grown to
$70,051 - a 600.51% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Washington Mutual, Inc. 13.1
Charter One Financial, Inc. 7.6
Dime Bancorp, Inc. 6.1
Astoria Financial Corp. 5.8
Freddie Mac 5.6
Greenpoint Financial Corp. 4.8
Peoples Heritage Financial 3.1
Group, Inc.
PMI Group, Inc. 3.0
Bank United Corp. Class A 2.6
Washington Federal, Inc. 2.4
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Savings & Loans 57.2%
Credit & Finance 12.6%
Banks 11.0%
Federal Sponsored Credit 7.6%
Insurance 5.6%
All Others 6.0%*
Row: 1, Col: 1, Value: 6.0
Row: 1, Col: 2, Value: 5.6
Row: 1, Col: 3, Value: 7.6
Row: 1, Col: 4, Value: 11.0
Row: 1, Col: 5, Value: 12.6
Row: 1, Col: 6, Value: 57.2
* INCLUDES SHORT-TERM INVESTMENTS
HOME FINANCE PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
(photographs of Robert Ewing and Victor Thay)
NOTE TO SHAREHOLDERS: The following is an interview with Robert Ewing
(left), Fidelity Financial Services Sector Leader, who addresses the
fund's 12-month performance under its previous portfolio manager; and
with Victor Thay (right), who became manager of the Fidelity Select
Home Finance Portfolio on March 30, 1999, after the end of the period
covered by this report.
Q. HOW DID THE FUND PERFORM, BOB?
B.E. It was a disappointing year. For the 12 months that ended
February 28, 1999, the fund had a total return of -19.12%, compared to
a gain of 19.74% for the broadly based Standard & Poor's 500 Index.
Moreover, the Goldman Sachs Financial Services Index - an index of 271
stocks designed to measure the performance of companies in the
financial services sector - had a return of 4.74% over the same
period.
Q. WHY WAS THE FUND'S PERFORMANCE SO WEAK COMPARED TO ITS BENCHMARKS?
B.E. Russia's currency devaluation and debt default, together with the
near-failure of a prominent hedge fund, created a severe credit crunch
that prompted a sharp selloff in virtually all sectors of the market -
particularly mortgage finance shares - in the late summer and early
fall of 1998. Subsequently, other segments of the Goldman Sachs index
and the S&P 500 enjoyed greater participation in the rally that took
place in the second half of the period. Another negative factor was
the fund's overweighting in small-capitalization stocks, which
underperformed large-cap shares during the selloff and ensuing
recovery.
Q. WHY DID MORTGAGE FINANCE SHARES LANGUISH WHILE OTHER STOCKS
RALLIED?
B.E. Investors were concerned about slower asset growth due to an
increase in refinancings and prepayments triggered by the overall
downward trend in interest rates. There was also concern that the
narrowing spread between short-term and long-term interest rates would
decrease profit margins for mortgage lenders. Furthermore, industry
consolidation, which had helped to fuel the outperformance of mortgage
finance stocks in the past, slowed in response to last fall's credit
crunch.
Q. WHAT ADJUSTMENTS DID THE FUND MAKE IN RESPONSE TO
THESE EVENTS?
B.E. The fund shifted some assets out of small-capitalization stocks
and into higher-quality, large-capitalization shares.
Q. WHAT STOCKS PERFORMED WELL FOR THE FUND?
B.E. Freddie Mac benefited from the refinancing wave and the shift
toward fixed-rate mortgages, where the company has a profitable niche.
The resulting stronger-than-expected portfolio and earnings growth
allowed Freddie Mac to buck the downward trend of most mortgage
finance stocks. Providian Financial, a credit card and consumer
finance company, was another strong holding. The company reported
faster-than-expected earnings growth and pursued an innovative
strategy of focusing on an underserved market segment.
Q. WHAT STOCKS DETRACTED FROM PERFORMANCE?
B.E. Sub-prime home equity lenders - firms that lend money to people
with less than prime credit histories - performed poorly. In that
category, FIRSTPLUS Financial, Aames Financial and ContiFinancial were
all hurt by last fall's liquidity crunch and by a higher-than-expected
increase in prepayments resulting from falling interest rates.
Small-capitalization savings and loan stocks also were weak, as fears
abounded of slower asset and earnings growth. Roslyn Bancorp was one
example.
Q. TURNING TO YOU, VICTOR, WHAT'S YOUR OUTLOOK FOR THE FUND?
V.T. There are several potential positives either already occurring or
on the near-term horizon. The first two months of 1999 saw mortgage
rates rise about one-half of a percent, resulting in a meaningful
slowdown in refinancings. In addition, the spread - or difference in
yield - between short-term and long-term interest rates widened
moderately, enabling lenders such as banks and savings and loans to
operate more profitably. Moreover, several high-profile thrifts that
have recently completed mergers will be eligible to buy back their
stock in the next few months, which should tend to support their stock
prices. Another positive is that industry consolidation is likely to
accelerate again as companies begin to look past the uncertainty of
January 1, 2000. Finally, a widely followed lawsuit against the
federal government is due to be settled in April. A settlement in
favor of the plaintiff - a large California savings and loan - would
set an important precedent for other thrifts. These factors, together
with an apparently strong economy and housing market, good credit
quality and other favorable economic fundamentals, should enable
mortgage finance companies to continue to grow their earnings at an
average rate above that of most S&P 500 firms. Given price-to-earnings
ratios for mortgage finance shares that have been averaging about half
of those of the typical S&P 500 stock, I believe mortgage finance
stocks represent excellent values with good growth potential.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGERS ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: December 16, 1985
FUND NUMBER: 098
TRADING SYMBOL: FSVLX
SIZE: as of February 28, 1999, more than
$740 million
MANAGER: Victor Thay, since March 1999;
manager, Fidelity Select Natural Gas Portfolio,
since 1997; analyst, U.S. and Canadian
exploration and production industry,
1996-present; analyst, Canadian equities,
1995-1996; joined Fidelity in 1995
HOME FINANCE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 96.2%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES -
0.5%
Ugly Duckling Corp. 767,800 $ 3,982,962
BANKS - 11.0%
Acadiana Bancshares, Inc. (c) 121,100 2,179,800
Advanta Corp. 132,900 1,553,269
BankAmerica Corp. 189,217 12,358,235
Chase Manhattan Corp. 201,000 16,004,625
North Fork Bancorp, Inc. 617,024 13,574,528
Peoples Heritage Financial 1,346,175 22,884,975
Group, Inc.
R&G Financial Corp. Class B 72,700 1,354,038
SouthTrust Corp. 9,100 364,569
U.S. Bancorp 163,800 5,292,788
UnionBanCal Corp. 139,800 4,394,963
UST Corp. 81,640 1,709,338
81,671,128
CREDIT & OTHER FINANCE - 12.6%
Aames Financial Corp. 536,750 1,107,047
Allied Capital Corp. 29,200 514,650
Associates First Capital 105,100 4,269,688
Corp. Class A
BNC Mortgage, Inc. (a) 204,600 1,176,450
Citigroup, Inc. 23,700 1,392,375
Coast Federal Litigation 269,400 1,835,288
Contingent Payment Rights
Trust rights 12/31/00 (a)
ContiFinancial Corp. (a) 125,000 437,500
Countrywide Credit 96,603 3,658,839
Industries, Inc.
Delta Financial Corp. (a) 527,300 3,064,931
Doral Financial Corp. 86,100 1,630,519
Federal Agricultural Mortgage 119,400 5,074,500
Corp. Class C (a)
First Alliance Corp. (a) 595,250 2,157,781
FIRSTPLUS Financial Group, 987,600 1,357,950
Inc. (a)
Greenpoint Financial Corp. 1,162,700 35,680,356
Household International, Inc. 50,000 2,031,250
Imperial Credit Industries (a) 342,500 2,954,063
Life Financial Corp. (a) 326,400 1,264,800
Long Beach Financial Corp. (a) 916,200 8,703,900
New Century Financial Corp. 376,600 4,425,050
(a)
Providian Financial Corp. 76,900 7,853,413
Resource Bancshares Mortgage 248,775 3,482,850
Group, Inc.
United Companies Financial 115,300 50,444
Corp.
94,123,644
FEDERAL SPONSORED CREDIT - 7.6%
Fannie Mae 120,000 8,400,000
Freddie Mac 705,900 41,559,863
SLM Holding Corp. 152,000 6,517,000
56,476,863
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY &
EQUIPMENT - 0.1%
Linc Capital, Inc. (a) 68,400 $ 547,200
INSURANCE - 5.6%
CMAC Investments Corp. 216,600 8,948,288
Conseco, Inc. 47,823 1,431,701
MGIC Investment Corp. 272,800 9,292,250
PMI Group, Inc. 518,040 22,340,475
42,012,714
REAL ESTATE INVESTMENT TRUSTS
- - 1.6%
Impac Mortgage Holdings, Inc. 222,600 1,279,950
Imperial Credit Commercial 107,700 976,031
Mortgage Investment Corp.
Indymac Mortgage Holdings, 258,200 2,743,375
Inc.
Novastar Financial, Inc. 86,200 554,913
Ocwen Asset Investment Corp. 791,300 4,104,869
Thornburg Mortgage Asset 250,900 2,367,869
Corp.
12,027,007
SAVINGS & LOANS - 57.2%
Andover Bancorp, Inc. 87,150 2,614,500
Astoria Financial Corp. 958,800 43,445,625
Bank Plus Corp. (a) 278,600 1,218,875
Bank United Corp. Class A 494,200 19,520,900
Bay View Capital Corp. 261,003 5,203,747
Carver Bancorp, Inc. 99,800 698,600
Charter One Financial, Inc. 1,971,964 56,817,213
Citizens First Financial 172,000 2,644,500
Corp. (a)(c)
Commercial Federal Corp. 765,425 16,695,833
Dime Bancorp, Inc. 1,848,184 45,742,554
Dime Community Bancorp, Inc. 169,000 3,728,563
Downey Financial Corp. 24,662 500,947
First Bergen Bancorp 56,100 1,311,338
First Essex Bancorp, Inc. 49,100 804,013
First Federal Savings & Loan 52,300 1,287,888
Association (East Hartford,
Conn.)
First Washington Bancorp, 59,200 1,261,700
Inc.
FirstFed Financial Corp. (a) 357,100 6,048,381
Flagstar Bancorp, Inc. 246,200 6,893,600
GA Financial, Inc. 203,400 3,101,850
Golden State Bancorp, Inc. 1,010,092 17,992,264
Golden State Bancorp, Inc. 898,761 4,549,978
litigation warrants 12/31/99
(a)
Haven Bancorp, Inc. 263,400 3,720,525
HF Bancorp, Inc. (a) 113,200 1,952,700
ITLA Capital Corp. (a) 76,300 1,182,650
Ocwen Financial Corp. (a) 205,400 1,643,200
Peoples Bancorp, Inc. 366,800 3,576,300
PFF Bancorp, Inc. (a) 345,200 6,041,000
Provident Financial Holdings, 95,700 1,531,200
Inc. (a)
Quaker City Bancorp, Inc. (a) 83,825 1,252,136
Richmond County Financial 102,500 1,582,344
Corp.
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SAVINGS & LOANS - CONTINUED
Roslyn Bancorp, Inc. 316,315 $ 5,159,888
SGV Bancorp., Inc. (a)(c) 137,800 1,670,825
Sovereign Bancorp, Inc. 1,271,877 15,580,493
TCF Financial Corp. 708,700 17,053,094
Washington Federal, Inc. 803,470 18,078,075
Washington Mutual, Inc. 2,451,180 98,047,191
Webster Financial Corp. 188,400 5,757,975
Wilshire Financial Services 374,600 140,475
Group, Inc. (a)
Yonkers Financial Corp. 61,200 910,350
426,963,290
TOTAL COMMON STOCKS 717,804,808
(Cost $625,347,348)
CONVERTIBLE PREFERRED STOCKS
- - 0.2%
REAL ESTATE INVESTMENT TRUSTS
- - 0.2%
Walden Residential 80,000 1,730,000
Properties, Inc. Series B,
$2.29 (Cost $2,000,000)
CASH EQUIVALENTS - 3.6%
Taxable Central Cash Fund (b) 26,596,475 26,596,475
(Cost $26,596,475)
TOTAL INVESTMENT IN $ 746,131,283
SECURITIES - 100%
(Cost $653,943,823)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(c) Affiliated company
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $236,128,665 and $794,743,099, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $118,062 for the
period.
The fund participated in the bank borrowing program. The maximum loan
and average daily balances during the period for which loans were
outstanding amounted to $9,580,000 and $4,095,824, respectively. The
weighted average interest rate was 5.18%.
Transactions during the period with companies which are or were
affiliates are as follows:
PURCHASES SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Acadiana Bancshares,
Inc. $ - $ 431,330 $ 66,924 $ 2,179,800
Carver Bancorp, Inc. - 311,715 6,990 -
Citizens First Financial
Corp. - 29,498 - 2,644,500
First Alliance Corp. 2,556,250 237,188 - -
First Bergen Bancorp - 536,250 8,775 -
Life Financial Corp. 123,750 343,913 - -
Long Beach Financial
Corp. 795,513 1,808,425 - -
R&G Financial Corp.
Class B - 391,667 - -
RedFed Bancorp, Inc. - 1,771,875 - -
Redwood Trust, Inc. 888,284 3,012,247 207,599 -
SGV Bancorp., Inc. - 20,900 - 1,670,825
Ugly Duckling Corp. 778,735 10,748,373 128,203 -
TOTALS $ 5,142,532 $ 19,643,381 $ 418,491 $ 6,495,125
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $656,861,339. Net unrealized appreciation
aggregated $89,269,944, of which $213,371,565 related to appreciated
investment securities and $124,101,621 related to depreciated
investment securities.
The fund hereby designates approximately $45,625,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 100% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentage for use in preparing 1999 income tax returns.
HOME FINANCE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 746,131,283
value (cost $653,943,823) -
See accompanying schedule
Receivable for investments 1,122,003
sold
Receivable for fund shares 312,111
sold
Dividends receivable 1,020,966
Interest receivable 77,051
Redemption fees receivable 4,211
Other receivables 7,329
TOTAL ASSETS 748,674,954
LIABILITIES
Payable for investments $ 1,355,000
purchased
Payable for fund shares 6,038,322
redeemed
Accrued management fee 378,339
Other payables and accrued 463,076
expenses
TOTAL LIABILITIES 8,234,737
NET ASSETS $ 740,440,217
Net Assets consist of:
Paid in capital $ 620,230,274
Undistributed net investment 7,800,879
income
Accumulated undistributed net 20,220,842
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 92,188,222
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 17,590,183 $ 740,440,217
shares outstanding
NET ASSET VALUE and $42.09
redemption price per share
($740,440,217 (divided by)
17,590,183 shares)
Maximum offering price per $43.39
share (100/97.00 of $42.09)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 21,826,996
Dividends (including $418,491
received from affiliated
issuers)
Interest 1,839,067
TOTAL INCOME 23,666,063
EXPENSES
Management fee $ 7,895,622
Transfer agent fees 7,065,489
Accounting fees and expenses 753,655
Non-interested trustees' 4,508
compensation
Custodian fees and expenses 63,138
Registration fees 64,138
Audit 41,149
Legal 8,350
Interest 10,024
Reports to shareholders 175,156
Total expenses before 16,081,229
reductions
Expense reductions (140,681) 15,940,548
NET INVESTMENT INCOME 7,725,515
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 22,593,970
(including realized gain
(loss) of $7,792,207 on
sales of investments in
affiliated issuers)
Foreign currency transactions (10,336) 22,583,634
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (316,656,889)
Assets and liabilities in (231) (316,657,120)
foreign currencies
NET GAIN (LOSS) (294,073,486)
NET INCREASE (DECREASE) IN $ (286,347,971)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 4,255,219
charges paid to FDC
Sales charges - Retained by $ 4,241,642
FDC
Deferred sales charges $ 13,199
withheld by FDC
Exchange fees withheld by FSC $ 159,788
EXPENSE REDUCTIONS Directed 119,026
brokerage arrangements
Custodian credits 12,536
Transfer agent credits 9,119
$ 140,681
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ 7,725,515 $ 8,926,749
income
Net realized gain (loss) 22,583,634 177,748,259
Change in net unrealized (316,657,120) 165,002,991
appreciation (depreciation)
NET INCREASE (DECREASE) IN (286,347,971) 351,677,999
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (2,223,405) (7,530,670)
From net investment income
From net realized gain (43,930,438) (153,895,241)
TOTAL DISTRIBUTIONS (46,153,843) (161,425,911)
Share transactions Net 655,146,906 1,194,996,073
proceeds from sales of shares
Reinvestment of distributions 45,331,306 158,982,280
Cost of shares redeemed (1,297,847,011) (1,054,168,696)
NET INCREASE (DECREASE) IN (597,368,799) 299,809,657
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 1,700,582 1,720,473
TOTAL INCREASE (DECREASE) (928,170,031) 491,782,218
IN NET ASSETS
NET ASSETS
Beginning of period 1,668,610,248 1,176,828,030
End of period (including $ 740,440,217 $ 1,668,610,248
undistributed net investment
income of $7,800,879 and
$4,200,147, respectively)
OTHER INFORMATION
Shares
Sold 13,208,817 24,323,664
Issued in reinvestment of 793,059 3,484,445
distributions
Redeemed (27,681,040) (22,121,347)
Net increase (decrease) (13,679,164) 5,686,762
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 53.36 $ 46.00 $ 33.30 $ 23.92 $ 25.03
period
Income from Investment
Operations
Net investment income c .28 .33 .53 .53 .20
Net realized and unrealized (10.16) 13.10 14.60 9.72 2.34
gain (loss)
Total from investment (9.88) 13.43 15.13 10.25 2.54
operations
Less Distributions
From net investment income (.07) (.29) (.32) (.19) (.12)
From net realized gain (1.38) (5.84) (2.16) (.73) (3.60)
Total distributions (1.45) (6.13) (2.48) (.92) (3.72)
Redemption fees added to paid .06 .06 .05 .05 .07
in capital
Net asset value, end of period $ 42.09 $ 53.36 $ 46.00 $ 33.30 $ 23.92
TOTAL RETURN a,b (19.12)% 32.39% 47.50% 43.24% 12.43%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 740,440 $ 1,668,610 $ 1,176,828 $ 617,035 $ 229,924
(000 omitted)
Ratio of expenses to average 1.19% 1.21% 1.38% 1.35% 1.47%
net assets
Ratio of expenses to average 1.18% d 1.19% d 1.34% d 1.32% d 1.45% d
net assets after expense
reductions
Ratio of net investment .57% .67% 1.41% 1.80% .80%
income to average net assets
Portfolio turnover rate 18% 54% 78% 81% 124%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME PER
SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES
OUTSTANDING DURING THE
PERIOD. D FMR OR THE FUND
HAS ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE
FUND'S EXPENSES. E FOR THE
YEAR ENDED FEBRUARY 29.
</TABLE>
INSURANCE PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the past 10 year total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT INSURANCE 9.84% 186.10% 476.22%
SELECT INSURANCE (LOAD ADJ.) 6.47% 177.44% 458.86%
S&P 500 19.74% 194.91% 459.21%
GS Financial Services 4.74% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
index of common stocks - and the Goldman Sachs Financial Services
Index - a market capitalization-weighted index of 271 stocks designed
to measure the performance of companies in the financial services
sector. These benchmarks include reinvestment of dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT INSURANCE 9.84% 23.40% 19.14%
SELECT INSURANCE (LOAD ADJ.) 6.47% 22.64% 18.78%
S&P 500 19.74% 24.15% 18.78%
GS Financial Services 4.74% n/a n/a
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER 10 YEARS
Insurance S&P 500
00045 SP001
1989/02/28 9700.00 10000.00
1989/03/31 9926.90 10233.00
1989/04/30 10251.04 10764.09
1989/05/31 10307.77 11200.04
1989/06/30 10534.57 11136.20
1989/07/31 11419.21 12141.80
1989/08/31 11768.20 12379.78
1989/09/30 11930.52 12329.02
1989/10/31 12320.09 12042.99
1989/11/30 12652.85 12288.66
1989/12/31 12342.05 12583.59
1990/01/31 11294.45 11739.23
1990/02/28 11613.64 11890.67
1990/03/31 11556.35 12205.77
1990/04/30 11155.31 11900.63
1990/05/31 12178.36 13060.94
1990/06/30 12211.10 12972.12
1990/07/31 12031.04 12930.61
1990/08/31 10778.83 11761.68
1990/09/30 9845.81 11188.89
1990/10/31 9452.96 11140.78
1990/11/30 10705.17 11860.47
1990/12/31 11130.76 12191.38
1991/01/31 11728.22 12722.92
1991/02/28 12914.95 13632.61
1991/03/31 13766.13 13962.52
1991/04/30 13692.47 13996.03
1991/05/31 14036.21 14600.66
1991/06/30 13163.67 13931.95
1991/07/31 13652.45 14581.18
1991/08/31 13569.60 14926.75
1991/09/30 13702.15 14677.48
1991/10/31 14116.36 14874.16
1991/11/30 13992.10 14274.73
1991/12/31 15213.56 15907.76
1992/01/31 15196.93 15611.87
1992/02/29 15604.29 15814.83
1992/03/31 15379.83 15506.44
1992/04/30 14989.10 15962.33
1992/05/31 15188.62 16040.54
1992/06/30 15506.38 15801.54
1992/07/31 16384.95 16447.82
1992/08/31 15904.90 16110.64
1992/09/30 16747.25 16300.75
1992/10/31 17462.79 16357.80
1992/11/30 18060.58 16915.60
1992/12/31 18636.79 17123.66
1993/01/31 19416.00 17267.50
1993/02/28 19782.69 17502.34
1993/03/31 20827.74 17871.64
1993/04/30 20332.14 17439.14
1993/05/31 19808.45 17906.51
1993/06/30 20019.76 17958.44
1993/07/31 20718.02 17886.61
1993/08/31 21774.59 18564.51
1993/09/30 21848.09 18421.56
1993/10/31 21214.15 18802.89
1993/11/30 19918.70 18624.26
1993/12/31 20160.62 18849.62
1994/01/31 20432.38 19490.50
1994/02/28 19536.58 18962.31
1994/03/31 18620.64 18135.55
1994/04/30 18821.95 18367.69
1994/05/31 19687.56 18668.92
1994/06/30 19576.84 18211.53
1994/07/31 19939.19 18808.87
1994/08/31 20482.71 19580.03
1994/09/30 20341.80 19100.32
1994/10/31 20090.16 19530.08
1994/11/30 19073.58 18818.79
1994/12/31 20090.16 19097.87
1995/01/31 20814.86 19593.08
1995/02/28 21448.97 20356.63
1995/03/31 21791.19 20957.35
1995/04/30 21992.51 21574.54
1995/05/31 22476.53 22436.88
1995/06/30 23182.38 22958.09
1995/07/31 23878.16 23719.38
1995/08/31 24573.93 23778.91
1995/09/30 25794.06 24782.38
1995/10/31 25017.61 24693.91
1995/11/30 26510.00 25777.97
1995/12/31 27083.48 26274.46
1996/01/31 27872.12 27168.84
1996/02/29 27778.72 27420.69
1996/03/31 27467.42 27684.75
1996/04/30 27126.73 28092.83
1996/05/31 27674.96 28817.34
1996/06/30 28170.47 28927.14
1996/07/31 27548.44 27649.13
1996/08/31 28708.15 28232.26
1996/09/30 30110.35 29821.17
1996/10/31 31691.78 30643.63
1996/11/30 33642.20 32959.99
1996/12/31 33504.01 32307.05
1997/01/31 34880.44 34325.59
1997/02/28 35634.20 34594.71
1997/03/31 33711.57 33173.21
1997/04/30 35701.13 35153.65
1997/05/31 38324.03 37293.80
1997/06/30 41130.18 38964.57
1997/07/31 44600.65 42064.98
1997/08/31 42298.46 39708.50
1997/09/30 45001.53 41883.33
1997/10/31 43810.34 40484.43
1997/11/30 44680.82 42358.45
1997/12/31 47733.48 43085.75
1998/01/31 47080.76 43562.28
1998/02/28 50888.31 46703.99
1998/03/31 53716.78 49095.70
1998/04/30 54041.37 49589.60
1998/05/31 53418.72 48737.16
1998/06/30 55779.62 50716.86
1998/07/31 54715.92 50176.72
1998/08/31 46063.59 42922.17
1998/09/30 49034.18 45671.77
1998/10/31 51096.73 49386.71
1998/11/30 54391.62 52380.04
1998/12/31 57431.95 55398.18
1999/01/31 56052.52 57714.93
1999/02/26 55886.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990312 110614 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Insurance Portfolio on February 28, 1989,
and the current 3.00% sales charge was paid. As the chart shows, by
February 28, 1999, the value of the investment would have grown to
$55,886 - a 458.86% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
American International Group, 6.5
Inc.
Marsh & McLennan Companies, 6.0
Inc.
AFLAC, Inc. 6.0
Citigroup, Inc. 4.9
Providian Financial Corp. 4.7
Allmerica Financial Corp. 4.7
Mutual Risk Management Ltd. 4.4
Ambac Financial Group, Inc. 4.3
Wellpoint Health Networks, Inc. 3.9
Enhance Financial Services 3.8
Group, Inc.
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Insurance 79.8%
Credit & Other Finance 9.6%
Medical Facilities Management 3.9%
Services 1.8%
All Others 4.9%*
Row: 1, Col: 1, Value: 4.9
Row: 1, Col: 2, Value: 1.8
Row: 1, Col: 3, Value: 3.9
Row: 1, Col: 4, Value: 9.6
Row: 1, Col: 5, Value: 79.8
* INCLUDES SHORT-TERM INVESTMENTS
INSURANCE PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
(photographs of Thomas Allen and Timothy Cohen)
NOTE TO SHAREHOLDERS: The following is an interview with Thomas Allen
(left), who managed Fidelity Select Insurance Portfolio for most of
the period covered by this report, and with Timothy Cohen (right), who
became manager of the fund on February 1, 1999.
Q. HOW DID THE FUND PERFORM, TOM?
T.A. It did pretty well relative to the financial services industry as
a whole, particularly in the second half of the period. But the entire
sector has been struggling just to keep pace with the broader market.
For the 12 months that ended February 28, 1999, the fund returned
9.84%. This compares favorably with the total return of 4.74% for the
Goldman Sachs Financial Services Index - an index of 271 stocks
designed to measure the relative performance of companies in the
financial services sector - but it is well below the 19.74% return of
the Standard and Poor's 500 Index over the same 12-month period.
Q. WHAT MAJOR FACTORS AFFECTED FUND PERFORMANCE?
T.A. Worries about financial collapse in emerging markets, combined
with fears of a deep worldwide recession, had a dampening effect on
the financial services industry as a whole, and insurance stocks were
by no means immune from these concerns. In addition, competitive
pricing pressures continued to hurt the insurance sector. However, the
fund rebounded from a disappointing first half, benefiting mainly from
continued consolidation activity in the industry and some quality-bias
shifts in the fund's holdings.
Q. YOU MADE CHANGES TO YOUR STRATEGY THEN?
T.A. There was no fundamental change in strategy. I continued to focus
on quality companies with good prospects for long-term revenue growth
and solid records of managing losses. But during the early fall of
1998, as I became more concerned about pricing pressures in the
property-casualty business, I began trimming the number of holdings in
the fund, narrowing the portfolio in favor of fewer, higher-quality
names.
Q. WAS IT THIS SUBTLE SHIFT THAT HELPED YOU BEAT THE FINANCIAL
SERVICES SECTOR AS A WHOLE?
T.A. To some degree, yes, I believe it was. As I mentioned earlier, it
was not a great year for financial services stocks. The quality bias I
emphasized during the year resulted in the fund owning a group of
stocks that either suffered less than the industry as a whole, or
benefited from better revenue growth and fewer losses.
Q. WHICH OF THE FUND'S HOLDINGS DID WELL?
T.A. Providian Financial, a credit card company spin-off of Providian
Insurance Company, did especially well, based on solid revenue growth,
excellent underwriting and loss management, and outstanding earnings
growth. The fund also benefited from the consummation of two large
acquisitions: the take-over of SunAmerica by American International
Group (AIG) in the life insurance sector and, in the insurance
brokerage sector, the acquisition of Sedgwick Group by Marsh &
McLennan Companies.
Q. WHICH STOCKS HURT PERFORMANCE?
T.A. MBIA, a municipal bond insurer, suffered a material loss during
the summer, which had a negative impact on fund performance.
Similarly, Capital Re, a bond re-insurer, was affected by MBIA's
difficulties and suffered its own unexpected loss during the period.
The investment in PAULA Financial also was disappointing. Not long
after this workers' compensation insurer launched an initial public
offering, the company announced it would take a charge against
earnings because of insufficient loss reserves. This event hurt the
stock price and the performance of the fund. I sold the fund's
positions in both PAULA Financial and Capital Re.
Q. TURNING TO YOU, TIM, HAVE YOU MADE ANY SIGNIFICANT CHANGES IN
STRATEGY SINCE TAKING OVER THE FUND IN EARLY FEBRUARY?
T.C. Tom and I have worked very closely to transition the fund. We've
tended to look at things in the same way, so I haven't really made
any major changes in how I intend to manage the fund going forward.
Q. WHAT IS YOUR OUTLOOK?
T.C. Like Tom, I'm somewhat cautious in my outlook, especially with
the property-casualty sector, which continues to suffer from excess
capital and a very tough pricing environment. I tend to look for
companies with a strong franchise or a sustainable competitive
advantage, which can be tough to find in the industry these days.
Still, the fund now holds some specialty insurance brokers that
dominate niche segments of the industry, as well as some life and bond
insurance companies that have built and sustained valuable brand names
in the marketplace. I believe these holdings should help the fund
achieve good relative performance in the near term.
(checkmark) FUND FACTS
START DATE: December 16, 1985
FUND NUMBER: 045
TRADING SYMBOL: FSPCX
SIZE: as of February 28, 1999, more than
$82 million
MANAGER: Timothy Cohen, since February 1999;
equity analyst, business and consumer services,
1996-1999; joined Fidelity in 1996
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGERS ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
INSURANCE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 95.1%
SHARES VALUE (NOTE 1)
CREDIT & OTHER FINANCE - 9.6%
Citigroup, Inc. 69,799 $ 4,100,691
Providian Financial Corp. 38,250 3,906,281
8,006,972
INSURANCE - 79.8%
ACE Ltd. 74,100 2,019,225
AFLAC, Inc. 112,400 4,959,650
Allmerica Financial Corp. 72,673 3,878,921
Ambac Financial Group, Inc. 64,600 3,617,600
American Bankers Insurance 63,800 3,062,400
Group, Inc.
American International Group, 47,150 5,372,151
Inc.
Blanch E.W. Holdings, Inc. 48,200 2,675,100
CIGNA Corp. 10,900 855,650
CMAC Investments Corp. 57,400 2,371,338
Enhance Financial Services 134,200 3,178,863
Group, Inc.
Hartford Financial Services 41,100 2,221,969
Group, Inc.
Hartford Life, Inc. Class A 26,900 1,560,200
HIH Insurance Ltd. 23,616 31,922
Marsh & McLennan Companies, 70,700 5,006,444
Inc.
MBIA, Inc. 33,100 2,037,719
Mercury General Corp. 17,000 592,875
MGIC Investment Corp. 3,400 115,813
Mutual Risk Management Ltd. 99,800 3,648,938
Nationwide Financial 27,500 1,249,531
Services, Inc. Class A
Philadelphia Consolidated 52,300 1,124,450
Holding Corp. (a)
PMI Group, Inc. 19,200 828,000
Poe & Brown, Inc. 22,900 742,819
Progressive Corp. 12,200 1,567,700
Protective Life Corp. 67,000 2,311,500
Provident Companies, Inc. 11,000 360,250
Reinsurance Group of America, 36,700 2,364,856
Inc.
Reliastar Financial Corp. 23,738 1,077,112
RenaissanceRe Holdings Ltd. 34,800 1,183,200
Terra Nova (Bermuda) Holdings 67,000 1,599,625
Ltd. Class A
Torchmark Corp. 41,700 1,386,525
UICI (a) 27,800 639,400
UNUM Corp. 60,900 2,725,275
66,367,021
MEDICAL FACILITIES MANAGEMENT
- - 3.9%
Wellpoint Health Networks, 41,000 3,233,875
Inc. (a)
SERVICES - 1.8%
Service Corp. International 100,000 1,537,500
TOTAL COMMON STOCKS 79,145,368
(Cost $63,839,318)
CASH EQUIVALENTS - 4.9%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund (b) 4,076,031 $ 4,076,031
(Cost $4,076,031)
TOTAL INVESTMENT IN $ 83,221,399
SECURITIES - 100%
(Cost $67,915,349)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $74,970,161 and $123,193,029, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $17,412 for the
period.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $68,110,427. Net unrealized appreciation
aggregated $15,110,972, of which $17,419,133 related to appreciated
investment securities and $2,308,161 related to depreciated investment
securities.
The fund hereby designates approximately $7,184,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 12% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentage for use in preparing 1999 income tax returns.
INSURANCE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 83,221,399
value (cost $67,915,349) -
See accompanying schedule
Receivable for fund shares 178,524
sold
Dividends receivable 63,039
Interest receivable 14,116
Redemption fees receivable 105
Other receivables 143
TOTAL ASSETS 83,477,326
LIABILITIES
Payable for fund shares $ 495,321
redeemed
Accrued management fee 41,014
Other payables and accrued 61,511
expenses
TOTAL LIABILITIES 597,846
NET ASSETS $ 82,879,480
Net Assets consist of:
Paid in capital $ 56,985,255
Accumulated undistributed net 10,588,175
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 15,306,050
(depreciation) on investments
NET ASSETS, for 1,966,938 $ 82,879,480
shares outstanding
NET ASSET VALUE and $42.14
redemption price per share
($82,879,480 (divided by)
1,966,938 shares)
Maximum offering price per $43.44
share (100/97.00 of $42.14)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 1,096,543
Dividends
Interest 235,419
TOTAL INCOME 1,331,962
EXPENSES
Management fee $ 645,431
Transfer agent fees 650,121
Accounting fees and expenses 106,572
Non-interested trustees' 410
compensation
Custodian fees and expenses 11,411
Registration fees 25,206
Audit 17,939
Legal 640
Reports to shareholders 7,812
Total expenses before 1,465,542
reductions
Expense reductions (27,236) 1,438,306
NET INVESTMENT INCOME (LOSS) (106,344)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 13,176,110
Foreign currency transactions 22,622 13,198,732
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (4,563,631)
Assets and liabilities in (53) (4,563,684)
foreign currencies
NET GAIN (LOSS) 8,635,048
NET INCREASE (DECREASE) IN $ 8,528,704
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 351,928
charges paid to FDC
Sales charges - Retained by $ 351,772
FDC
Deferred sales charges $ 1,491
withheld by FDC
Exchange fees withheld by FSC $ 11,648
Expense reductions Directed $ 26,812
brokerage arrangements
Custodian credits 424
$ 27,236
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (106,344) $ 25,471
income (loss)
Net realized gain (loss) 13,198,732 23,084,468
Change in net unrealized (4,563,684) 14,487,273
appreciation (depreciation)
NET INCREASE (DECREASE) IN 8,528,704 37,597,212
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (11,641,173) (6,676,096)
from net realized gains
Share transactions Net 64,911,861 244,332,955
proceeds from sales of shares
Reinvestment of distributions 11,462,296 6,593,993
Cost of shares redeemed (115,658,850) (199,288,742)
NET INCREASE (DECREASE) IN (39,284,693) 51,638,206
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 126,042 224,405
TOTAL INCREASE (DECREASE) (42,271,120) 82,783,727
IN NET ASSETS
NET ASSETS
Beginning of period 125,150,600 42,366,873
End of period (including $ 82,879,480 $ 125,150,600
undistributed net investment
income of $0 and $27,193,
respectively)
OTHER INFORMATION
Shares
Sold 1,540,455 6,761,043
Issued in reinvestment of 274,802 185,836
distributions
Redeemed (2,821,222) (5,272,969)
Net increase (decrease) (1,005,965) 1,673,910
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 42.10 $ 32.62 $ 26.77 $ 21.31 $ 19.41
period
Income from Investment
Operations
Net investment income (loss) C (.04) .01 .01 .06 .05
Net realized and unrealized 4.01 12.93 7.21 6.15 1.78
gain (loss)
Total from investment 3.97 12.94 7.22 6.21 1.83
operations
Less Distributions
From net investment income - - (.03) (.07) -
From net realized gain (3.98) (3.54) (1.45) (.72) -
Total distributions (3.98) (3.54) (1.48) (.79) -
Redemption fees added to paid .05 .08 .11 .04 .07
in capital
Net asset value, end of period $ 42.14 $ 42.10 $ 32.62 $ 26.77 $ 21.31
TOTAL RETURN A, B 9.84% 42.81% 28.28% 29.51% 9.79%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 82,879 $ 125,151 $ 42,367 $ 38,994 $ 21,838
(000 omitted)
Ratio of expenses to average 1.33% 1.45% 1.82% 1.77% 2.36%
net assets
Ratio of expenses to average 1.31% D 1.43% D 1.77% D 1.74% D 2.34% D
net assets after expense
reductions
Ratio of net investment (.10)% .02% .05% .26% .25%
income (loss) to average net
assets
Portfolio turnover rate 72% 157% 142% 164% 265%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. E FOR
THE YEAR ENDED FEBRUARY 29.
</TABLE>
REGIONAL BANKS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the past 10 year total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT REGIONAL BANKS 3.10% 206.76% 704.00%
SELECT REGIONAL BANKS (LOAD -0.06% 197.48% 679.81%
ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Financial Services 4.74% n/a n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
index of common stocks - and the Goldman Sachs Financial Services
Index - a market capitalization-weighted index of 271 stocks designed
to measure the performance of companies in the financial services
sector. These benchmarks include reinvestment of dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT REGIONAL BANKS 3.10% 25.13% 23.18%
SELECT REGIONAL BANKS (LOAD -0.06% 24.36% 22.80%
ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Financial Services 4.74% n/a n/a
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER 10 YEARS
Regional Banks S&P 500
00507 SP001
1989/02/28 9700.00 10000.00
1989/03/31 10498.82 10233.00
1989/04/30 10774.61 10764.09
1989/05/31 11601.96 11200.04
1989/06/30 11408.98 11136.20
1989/07/31 12424.39 12141.80
1989/08/31 12730.93 12379.78
1989/09/30 12836.30 12329.02
1989/10/31 11648.47 12042.99
1989/11/30 11629.31 12288.66
1989/12/31 11381.39 12583.59
1990/01/31 10355.95 11739.23
1990/02/28 10782.37 11890.67
1990/03/31 10518.40 12205.77
1990/04/30 9919.38 11900.63
1990/05/31 10609.77 13060.94
1990/06/30 10193.50 12972.12
1990/07/31 9574.18 12930.61
1990/08/31 8680.72 11761.68
1990/09/30 7624.82 11188.89
1990/10/31 7401.46 11140.78
1990/11/30 8386.29 11860.47
1990/12/31 9028.94 12191.38
1991/01/31 9628.12 12722.92
1991/02/28 10444.23 13632.61
1991/03/31 11033.08 13962.52
1991/04/30 11776.88 13996.03
1991/05/31 12541.35 14600.66
1991/06/30 11797.54 13931.95
1991/07/31 12778.95 14581.18
1991/08/31 13698.37 14926.75
1991/09/30 13429.78 14677.48
1991/10/31 13987.63 14874.16
1991/11/30 13347.13 14274.73
1991/12/31 14969.35 15907.76
1992/01/31 15905.61 15611.87
1992/02/29 17190.25 15814.83
1992/03/31 16950.74 15506.44
1992/04/30 17941.44 15962.33
1992/05/31 18703.52 16040.54
1992/06/30 18890.14 15801.54
1992/07/31 18912.06 16447.82
1992/08/31 17904.00 16110.64
1992/09/30 18736.74 16300.75
1992/10/31 19536.61 16357.80
1992/11/30 21136.36 16915.60
1992/12/31 22232.84 17123.66
1993/01/31 23159.21 17267.50
1993/02/28 23879.72 17502.34
1993/03/31 24897.58 17871.64
1993/04/30 23615.84 17439.14
1993/05/31 23384.99 17906.51
1993/06/30 24689.29 17958.44
1993/07/31 24758.54 17886.61
1993/08/31 25104.81 18564.51
1993/09/30 25970.50 18421.56
1993/10/31 24573.86 18802.89
1993/11/30 23800.52 18624.26
1993/12/31 24716.81 18849.62
1994/01/31 26158.27 19490.50
1994/02/28 25423.40 18962.31
1994/03/31 24999.45 18135.55
1994/04/30 26324.18 18367.69
1994/05/31 27639.67 18668.92
1994/06/30 26953.33 18211.53
1994/07/31 27668.27 18808.87
1994/08/31 28383.21 19580.03
1994/09/30 26695.95 19100.32
1994/10/31 26581.56 19530.08
1994/11/30 24865.70 18818.79
1994/12/31 24770.74 19097.87
1995/01/31 26018.40 19593.08
1995/02/28 27403.01 20356.63
1995/03/31 27631.24 20957.35
1995/04/30 28315.94 21574.54
1995/05/31 30172.22 22436.88
1995/06/30 30552.60 22958.09
1995/07/31 31739.41 23719.38
1995/08/31 32926.21 23778.91
1995/09/30 34417.33 24782.38
1995/10/31 34249.96 24693.91
1995/11/30 36212.75 25777.97
1995/12/31 36355.45 26274.46
1996/01/31 37544.05 27168.84
1996/02/29 38621.72 27420.69
1996/03/31 39762.78 27684.75
1996/04/30 39423.22 28092.83
1996/05/31 40089.76 28817.34
1996/06/30 39780.87 28927.14
1996/07/31 39845.90 27649.13
1996/08/31 41861.77 28232.26
1996/09/30 43926.41 29821.17
1996/10/31 46738.87 30643.63
1996/11/30 50689.32 32959.99
1996/12/31 49402.16 32307.05
1997/01/31 53045.34 34325.59
1997/02/28 55356.06 34594.71
1997/03/31 51628.55 33173.21
1997/04/30 54428.47 35153.65
1997/05/31 56345.09 37293.80
1997/06/30 59550.75 38964.57
1997/07/31 65962.08 42064.98
1997/08/31 61959.24 39708.50
1997/09/30 66657.49 41883.33
1997/10/31 65673.74 40484.43
1997/11/30 68692.84 42358.45
1997/12/31 71908.51 43085.75
1998/01/31 69648.78 43562.28
1998/02/28 75639.70 46703.99
1998/03/31 79826.33 49095.70
1998/04/30 81170.59 49589.60
1998/05/31 78950.88 48737.16
1998/06/30 81010.77 50716.86
1998/07/31 81135.08 50176.72
1998/08/31 62294.12 42922.17
1998/09/30 67692.48 45671.77
1998/10/31 73854.41 49386.71
1998/11/30 76251.70 52380.04
1998/12/31 80427.01 55398.18
1999/01/31 78363.34 57714.93
1999/02/26 77981.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990307 170117 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Regional Banks Portfolio on February 28,
1989, and the current 3.00% sales charge was paid. As the chart shows,
by February 28, 1999, the value of the investment would have grown to
$77,981 - a 679.81% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
28, 1999
% OF FUND'S INVESTMENTS
Bank One Corp. 10.6
Bank of New York Co., Inc. 9.3
Fleet Financial Group, Inc. 8.2
Wells Fargo & Co. 7.9
U.S. Bancorp 7.5
Comerica, Inc. 5.9
BankAmerica Corp. 3.7
MBNA Corp. 3.3
Zions Bancorp 3.0
BB&T Corp. 2.9
TOP REGIONS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Midwest 28.4%
Northeast 14.4%
Southeast 14.1%
West 12.8%
Multi-regional 6.2%
All Others 24.1%*
Row: 1, Col: 1, Value: 24.1
Row: 1, Col: 2, Value: 6.2
Row: 1, Col: 3, Value: 12.8
Row: 1, Col: 4, Value: 14.1
Row: 1, Col: 5, Value: 14.4
Row: 1, Col: 6, Value: 28.4
* INCLUDES SHORT-TERM INVESTMENTS
REGIONAL BANKS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Christine Schaulat)
Christine Schaulat,
Portfolio Manager
of Fidelity Select
Regional Banks Portfolio
Q. HOW DID THE FUND PERFORM, CHRIS?
A. Bank stocks were hard-pressed to realize positive returns over the
past year. Still, the fund managed to gain 3.10% during the 12-month
period ending February 28, 1999. For the same period, the Standard &
Poor's 500 Index returned 19.74%, while the Goldman Sachs Financial
Services Index - an index of 271 stocks designed to measure the
performance of companies in the financial services sector - returned
4.74%.
Q. CAN YOU RECAP FOR US THE MARKET CONDITIONS THAT INFLUENCED THE
FUND'S PERFORMANCE?
A. Sure. In the first half of 1998, market confidence was strong as
the U.S. economy continued its steady growth. In the third quarter,
however, Russia's loan defaults and currency devaluation caught
investors off guard, and they feared a chain reaction in emerging
markets. On the heels of Russia's bad news came the near-collapse of
Long-Term Capital Management, a highly leveraged hedge fund. The
subsequent liquidity crunch and aversion to risk resulted in depressed
valuations for bank stocks in light of this uncertain environment. To
address the lack of confidence and restore liquidity to the markets,
the Federal Reserve Board implemented three separate 0.25%
interest-rate cuts. Stocks rallied furiously in response during the
fourth quarter. To illustrate, the fund returned 25.19% for the
six-month period ending February 28, 1999.
Q. WHAT STRATEGY DID YOU EMPLOY TO TEMPER THE IMPACT OF THE MARKET'S
UNCERTAINTY ON THE FUND?
A. Throughout the period, the fund maintained a large-cap bias for
several reasons. First, at the beginning of the period, I felt many of
the smaller issues were priced at a premium in anticipation of
takeover bids. I anticipated a slowdown in consolidation, and
large-cap valuations were quite compelling comparatively. I also felt
larger issues would be better equipped to weather the market's
turbulence, and, in hindsight, this decision helped the performance of
the fund.
Q. BUT THERE WERE THREE SIGNIFICANT MERGERS DURING THE PERIOD,
CORRECT?
A. That's right, but those were cases where large banks merged with
other large banks, and they were announced very early in the period.
Banc One merged with First Chicago to form Bank One. Wells Fargo and
Norwest merged, creating Wells Fargo & Co., the nation's
seventh-largest bank. And BankAmerica joined forces with NationsBank,
resulting in BankAmerica Corp., one of the country's largest banks.
Q. WERE THESE MERGERS A POSITIVE FOR THE FUND?
A. The jury's still out. Typically, bank mergers result in significant
cost savings as they integrate their computer systems and reduce
headcount. However, banks are reluctant to do so right now given their
focus on testing for Y2K compliance, so the cost savings for some of
these large bank mergers have been delayed. I believe these cost
savings will come through and these mergers will prove to be winning
combinations. One immediate impact of the banks' consolidation was
that six positions in the fund became three very large positions.
Combined, those three holdings represented 22% of the fund at the end
of the period.
Q. WHAT SPECIFIC HOLDINGS HELPED THE FUND DURING THE PERIOD? WHICH
DIDN'T PERFORM AS YOU'D HOPED?
A. Bank of New York was a big contributor to performance. This bank
outperformed due to its strong securities-processing business, which
has higher returns and a higher growth rate than basic banking. Zions
Bancorp also performed very well, in large part due to a savvy
acquisition in California. Fleet Financial had a strong year thanks to
its high quality of earnings and its domestic focus. On the other
hand, U.S. Bancorp was a big detractor due to a significant slowdown
in revenue growth in the second half of 1998. Washington Mutual, a
thrift that experienced increased mortgage prepayments as interest
rates declined to very low levels, also hurt performance.
Q. WHAT IS YOUR OUTLOOK FOR THE FUND, CHRIS?
A. As is always the case with this sector, the key risk is
deterioration in credit quality. Banks are currently very well
reserved - meaning their reserve-to-loan ratios are stronger than they
were in the early 1990s - and credit quality remains stable. I will
continue to evaluate the fund's large-cap bias in light of relative
valuations and the potential for merger activity to resume after the
Year 2000 issue is resolved. Going forward, I think there is a good
possibility that bank stocks can perform well, given the current
favorable interest-rate and economic environment.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
NOTE TO SHAREHOLDERS: Effective April 30, 1999, Yolanda McGettigan
will become manager of Select Regional Banks Portfolio.
(checkmark) FUND FACTS
START DATE: June 30, 1986
FUND NUMBER: 507
TRADING SYMBOL: FSRBX
SIZE: as of February 28, 1999, more than
$925 million
MANAGER: Christine Schaulat, since 1998;
equity analyst, regional banks securities;
since 1997; joined Fidelity in 1997
REGIONAL BANKS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 96.9%
SHARES VALUE (NOTE 1)
BANKS - 76.7%
INTERNATIONAL - 0.8%
Bank of Nova Scotia 366,000 $ 7,561,281
MIDWEST - 28.4%
Bank One Corp. 1,802,426 96,880,396
Comerica, Inc. 803,850 53,255,063
Marshall & Ilsley Corp. 373,000 20,888,000
National City Corp. 223,909 15,645,641
Wells Fargo & Co. 1,956,760 71,910,930
258,580,030
MULTI-REGIONAL - 6.2%
BankAmerica Corp. 511,306 33,394,673
M&T Bank Corp. 47,000 22,360,250
55,754,923
NORTHEAST - 14.4%
Bank of New York Co., Inc. 2,429,696 84,887,504
Mellon Bank Corp. 251,000 16,973,875
North Fork Bancorp, Inc. 292,000 6,424,000
State Street Corp. 297,800 22,837,538
131,122,917
SOUTHEAST - 14.1%
AmSouth Bancorp. 345,000 16,215,000
BB&T Corp. 691,300 26,182,988
CCB Financial Corp. 102,300 5,313,206
Centura Banks, Inc. 79,500 5,088,000
Compass Bancshares, Inc. 150,000 5,493,750
First Tennessee National 379,400 14,440,913
Corp.
SouthTrust Corp. 318,400 12,755,900
SunTrust Banks, Inc. 341,147 23,176,674
Synovus Finanical Corp. 197,175 4,695,230
Wachovia Corp. 167,300 14,230,956
127,592,617
WEST - 12.8%
First Security Corp. 230,375 4,276,336
U.S. Bancorp 2,097,696 67,781,802
Westamerica Bancorp. 495,000 16,582,500
Zions Bancorp 427,300 27,347,200
115,987,838
TOTAL BANKS 696,599,606
CREDIT & OTHER FINANCE - 18.9%
FINANCIAL SERVICES - 3.6%
American Express Co. 183,100 19,866,350
Citigroup, Inc. 218,300 12,825,125
32,691,475
SHARES VALUE (NOTE 1)
OFFICES OF BANK HOLDING
COMPANIES - 8.2%
Fleet Financial Group, Inc. 1,730,934 $ 74,321,979
PERSONAL CREDIT INSTITUTIONS
- - 7.1%
Associates First Capital 327,400 13,300,625
Corp. Class A
Household International, Inc. 529,800 21,523,125
MBNA Corp. 1,239,000 30,045,750
64,869,500
TOTAL CREDIT & OTHER FINANCE 171,882,954
SAVINGS & LOANS - 1.3%
SAVINGS INSTITUTIONS,
FEDERALLY CHARTERED - 1.3%
Washington Mutual, Inc. 300,900 12,036,000
TOTAL COMMON STOCKS 880,518,560
(Cost $587,387,203)
CASH EQUIVALENTS - 3.1%
Taxable Central Cash Fund (a) 28,415,353 28,415,353
(Cost $28,415,353)
TOTAL INVESTMENT IN $ 908,933,913
SECURITIES - 100%
(Cost $615,802,556)
LEGEND
(a) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $251,064,881 and $629,554,774, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $16,496 for the
period.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $616,143,699. Net unrealized appreciation
aggregated $292,790,214, of which $298,995,475 related to appreciated
investment securities and $6,205,261 related to depreciated investment
securities.
The fund hereby designates approximately $104,480,000 as a capital
gain dividend for the purpose of the dividend paid deduction.
A total of 100% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentage for use in preparing 1999 income tax returns.
REGIONAL BANKS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 908,933,913
value (cost $615,802,556) -
See accompanying schedule
Receivable for investments 21,125,000
sold
Receivable for fund shares 504,425
sold
Dividends receivable 1,491,484
Interest receivable 83,183
Redemption fees receivable 2,551
Other receivables 2,230
TOTAL ASSETS 932,142,786
LIABILITIES
Payable for fund shares $ 5,362,194
redeemed
Accrued management fee 457,021
Other payables and accrued 495,033
expenses
TOTAL LIABILITIES 6,314,248
NET ASSETS $ 925,828,538
Net Assets consist of:
Paid in capital $ 549,096,464
Undistributed net investment 5,985,670
income
Accumulated undistributed net 77,615,047
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 293,131,357
(depreciation) on investments
NET ASSETS, for 22,271,826 $ 925,828,538
shares outstanding
NET ASSET VALUE and $41.57
redemption price per share
($925,828,538 (divided by)
22,271,826 shares)
Maximum offering price per $42.86
share (100/97.00 of $41.57)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 21,686,854
Dividends
Interest (including income on 4,138,978
securities loaned of $8,290)
TOTAL INCOME 25,825,832
EXPENSES
Management fee $ 7,314,180
Transfer agent fees 6,235,230
Accounting and security 777,255
lending fees
Non-interested trustees' 4,992
compensation
Custodian fees and expenses 27,299
Registration fees 57,637
Audit 47,084
Legal 7,133
Reports to shareholders 144,554
Total expenses before 14,615,364
reductions
Expense reductions (140,726) 14,474,638
NET INVESTMENT INCOME 11,351,194
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 135,351,703
Foreign currency transactions 140,683 135,492,386
Change in net unrealized (123,702,888)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 11,789,498
NET INCREASE (DECREASE) IN $ 23,140,692
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 3,590,683
charges paid to FDC
Sales charges - Retained by $ 3,579,211
FDC
Deferred sales charges $ 8,288
withheld by FDC
Exchange fees withheld by FSC $ 110,257
Expense reductions Directed $ 133,907
brokerage arrangements
Custodian credits 365
Transfer agent credits 6,454
$ 140,726
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ 11,351,194 $ 11,124,320
income
Net realized gain (loss) 135,492,386 58,722,862
Change in net unrealized (123,702,888) 242,816,882
appreciation (depreciation)
NET INCREASE (DECREASE) IN 23,140,692 312,664,064
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (7,938,530) (7,980,022)
From net investment income
From net realized gain (74,512,814) (35,012,104)
TOTAL DISTRIBUTIONS (82,451,344) (42,992,126)
Share transactions Net 506,783,832 1,093,335,837
proceeds from sales of shares
Reinvestment of distributions 79,475,689 42,239,518
Cost of shares redeemed (940,968,587) (905,908,084)
NET INCREASE (DECREASE) IN (354,709,066) 229,667,271
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 952,621 1,604,750
TOTAL INCREASE (DECREASE) (413,067,097) 500,943,959
IN NET ASSETS
NET ASSETS
Beginning of period 1,338,895,635 837,951,676
End of period (including $ 925,828,538 $ 1,338,895,635
undistributed net investment
income of $5,985,670 and
$3,805,982, respectively)
OTHER INFORMATION
Shares
Sold 11,696,257 29,339,423
Issued in reinvestment of 1,891,390 1,067,874
distributions
Redeemed (22,324,276) (24,927,202)
Net increase (decrease) (8,736,629) 5,480,095
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 43.18 $ 32.82 $ 24.37 $ 18.01 $ 17.99
period
Income from Investment
Operations
Net investment income C .39 .40 .37 .52 .37
Net realized and unrealized .91 11.41 9.70 6.78 .87
gain (loss)
Total from investment 1.30 11.81 10.07 7.30 1.24
operations
Less Distributions
From net investment income (.28) (.28) (.27) (.25) (.29)
From net realized gain (2.66) (1.23) (1.40) (.72) (.98)
Total distributions (2.94) (1.51) (1.67) (.97) (1.27)
Redemption fees added to paid .03 .06 .05 .03 .05
in capital
Net asset value, end of period $ 41.57 $ 43.18 $ 32.82 $ 24.37 $ 18.01
TOTAL RETURN A, B 3.10% 36.64% 43.33% 40.94% 7.79%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 925,829 $ 1,338,896 $ 837,952 $ 315,178 $ 164,603
(000 omitted)
Ratio of expenses to average 1.17% 1.25% 1.46% 1.41% 1.58%
net assets
Ratio of expenses to average 1.16% D 1.24% D 1.45% D 1.40% D 1.56% D
net assets after expense
reductions
Ratio of net investment .91% 1.07% 1.36% 2.42% 1.99%
income to average net assets
Portfolio turnover rate 22% 25% 43% 103% 106%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME PER
SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES
OUTSTANDING DURING THE
PERIOD. D FMR OR THE FUND
HAS ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE
FUND'S EXPENSES. E FOR THE
YEAR ENDED FEBRUARY 29.
</TABLE>
BIOTECHNOLOGY PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the past five year and past 10 year
total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT BIOTECHNOLOGY 27.13% 107.57% 604.66%
SELECT BIOTECHNOLOGY (LOAD 23.25% 101.27% 583.45%
ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Health Care 23.88% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
index of common stocks - and the Goldman Sachs Health Care Index - a
market capitalization-weighted index of 93 stocks designed to measure
the performance of companies in the health care sector. These
benchmarks include reinvestment of dividends and capital gains, if
any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT BIOTECHNOLOGY 27.13% 15.73% 21.56%
SELECT BIOTECHNOLOGY (LOAD 23.25% 15.01% 21.19%
ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Health Care 23.88% n/a n/a
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER 10 YEARS
Biotechnology S&P 500
00042 SP001
1989/02/28 9700.00 10000.00
1989/03/31 10414.83 10233.00
1989/04/30 10767.72 10764.09
1989/05/31 11256.34 11200.04
1989/06/30 10966.79 11136.20
1989/07/31 11980.22 12141.80
1989/08/31 12432.65 12379.78
1989/09/30 12957.46 12329.02
1989/10/31 13002.71 12042.99
1989/11/30 13409.89 12288.66
1989/12/31 13153.98 12583.59
1990/01/31 12169.73 11739.23
1990/02/28 13319.55 11890.67
1990/03/31 13880.67 12205.77
1990/04/30 14055.44 11900.63
1990/05/31 16033.14 13060.94
1990/06/30 17152.78 12972.12
1990/07/31 17199.29 12930.61
1990/08/31 16669.08 11761.68
1990/09/30 16297.00 11188.89
1990/10/31 16436.53 11140.78
1990/11/30 18427.15 11860.47
1990/12/31 18987.47 12191.38
1991/01/31 21168.07 12722.92
1991/02/28 24167.60 13632.61
1991/03/31 26662.44 13962.52
1991/04/30 25500.72 13996.03
1991/05/31 27119.51 14600.66
1991/06/30 25679.63 13931.95
1991/07/31 27991.40 14581.18
1991/08/31 29952.90 14926.75
1991/09/30 31504.09 14677.48
1991/10/31 34606.46 14874.16
1991/11/30 32294.69 14274.73
1991/12/31 37793.63 15907.76
1992/01/31 37036.10 15611.87
1992/02/29 34192.76 15814.83
1992/03/31 31598.46 15506.44
1992/04/30 28651.35 15962.33
1992/05/31 30706.03 16040.54
1992/06/30 30167.08 15801.54
1992/07/31 31744.07 16447.82
1992/08/31 29758.65 16110.64
1992/09/30 29656.54 16300.75
1992/10/31 31108.74 16357.80
1992/11/30 34171.96 16915.60
1992/12/31 33884.55 17123.66
1993/01/31 32143.21 17267.50
1993/02/28 26954.98 17502.34
1993/03/31 27360.49 17871.64
1993/04/30 28064.18 17439.14
1993/05/31 29877.09 17906.51
1993/06/30 30055.99 17958.44
1993/07/31 29066.05 17886.61
1993/08/31 30163.33 18564.51
1993/09/30 31403.74 18421.56
1993/10/31 33741.43 18802.89
1993/11/30 33479.03 18624.26
1993/12/31 34123.09 18849.62
1994/01/31 35291.93 19490.50
1994/02/28 32930.39 18962.31
1994/03/31 29602.76 18135.55
1994/04/30 29066.05 18367.69
1994/05/31 28577.04 18668.92
1994/06/30 27443.98 18211.53
1994/07/31 27515.54 18808.87
1994/08/31 30091.77 19580.03
1994/09/30 29996.36 19100.32
1994/10/31 28970.63 19530.08
1994/11/30 28433.92 18818.79
1994/12/31 27921.06 19097.87
1995/01/31 29173.39 19593.08
1995/02/28 30175.26 20356.63
1995/03/31 30664.27 20957.35
1995/04/30 31618.42 21574.54
1995/05/31 31904.67 22436.88
1995/06/30 33061.59 22958.09
1995/07/31 34540.53 23719.38
1995/08/31 35924.06 23778.91
1995/09/30 37534.21 24782.38
1995/10/31 37236.03 24693.91
1995/11/30 38476.44 25777.97
1995/12/31 41630.35 26274.46
1996/01/31 44092.56 27168.84
1996/02/29 43745.94 27420.69
1996/03/31 43052.70 27684.75
1996/04/30 43982.24 28092.83
1996/05/31 44495.51 28817.34
1996/06/30 41806.96 28927.14
1996/07/31 38739.57 27649.13
1996/08/31 40523.79 28232.26
1996/09/30 42894.60 29821.17
1996/10/31 41403.68 30643.63
1996/11/30 41648.09 32959.99
1996/12/31 43965.21 32307.05
1997/01/31 45980.22 34325.59
1997/02/28 46304.79 34594.71
1997/03/31 41530.96 33173.21
1997/04/30 39709.44 35153.65
1997/05/31 44757.60 37293.80
1997/06/30 45929.99 38964.57
1997/07/31 46205.85 42064.98
1997/08/31 46523.08 39708.50
1997/09/30 52647.08 41883.33
1997/10/31 50729.88 40484.43
1997/11/30 49833.35 42358.45
1997/12/31 50680.19 43085.75
1998/01/31 51100.71 43562.28
1998/02/28 53763.99 46703.99
1998/03/31 55960.03 49095.70
1998/04/30 53739.54 49589.60
1998/05/31 51904.70 48737.16
1998/06/30 51954.29 50716.86
1998/07/31 52797.33 50176.72
1998/08/31 44647.96 42922.17
1998/09/30 52119.59 45671.77
1998/10/31 55623.98 49386.71
1998/11/30 57855.55 52380.04
1998/12/31 65740.44 55398.18
1999/01/31 69575.44 57714.93
1999/02/26 68345.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990307 154002 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Biotechnology Portfolio on February 28,
1989, and the current 3.00% sales charge was paid. As the chart shows,
by February 28, 1999, the value of the investment would have grown to
$68,345 - a 583.45% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Amgen, Inc. 7.7
Biogen, Inc. 7.7
Genentech, Inc. (special) 6.2
Sepracor, Inc. 6.0
Merck & Co., Inc. 5.9
Medimmune, Inc. 5.6
Genzyme Corp. (General 5.0
Division)
Schering-Plough Corp. 4.6
Forest Laboratories, Inc. 4.3
Chiron Corp. 4.2
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Drugs & Pharmaceuticals 86.4%
Medical Equipment
& Supplies 1.7%
Electronic Instruments 1.4%
Computer Services
& Software 0.2%
All Others 10.3%*
Row: 1, Col: 1, Value: 10.3
Row: 1, Col: 2, Value: 1.2
Row: 1, Col: 3, Value: 2.4
Row: 1, Col: 4, Value: 2.7
Row: 1, Col: 5, Value: 83.40000000000001
* INCLUDES SHORT-TERM INVESTMENTS
BIOTECHNOLOGY PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Rajiv Kaul)
Rajiv Kaul,
Portfolio Manager
of Fidelity Select
Biotechnology Portfolio
Q. HOW DID THE FUND PERFORM, RAJIV?
A. For the 12 months that ended February 28, 1999, the fund posted a
total return of 27.13%. During the same period, the Standard & Poor's
500 Index returned 19.74%. The fund also compares its performance to
the Goldman Sachs Health Care Index - an index of 93 stocks designed
to measure the performance of companies in the health care sector -
which returned 23.88% during the same period.
Q. WHAT PRIMARY FACTORS CONTRIBUTED TO THE STRONG PERFORMANCE OF
BIOTECHNOLOGY STOCKS?
A. Following a difficult period of global market instability and
disappointing results during the summer and early fall of 1998, the
biotechnology sector and the broader market staged an enthusiastic
comeback during the last half of the period. During this six-month
stock market rally, the fund posted an impressive return of 53.09%.
Beyond the strong performance of the market, the fund's overweighted
positions in the biotechnology and pharmaceutical sectors, along with
significant holdings in companies such as Amgen, Biogen, Genentech,
Sepracor and Medimmune, contributed considerably to performance.
Profitable product pipelines, strong fundamental business outlooks and
robust sales during the period buoyed the stock prices of these
companies.
Q. YOU MENTIONED AMGEN, BIOGEN, MEDIMMUNE AND A FEW OTHER NAMES AS
MAJOR CONTRIBUTORS TO FUND PERFORMANCE. WHY DID THESE STOCKS PERFORM
SO WELL?
A. Amgen, maker of Epogen, one of the world's best-selling anemia
drugs, was one of the fund's best performers; its stock soared nearly
100% during the 12-month period. The share price responded favorably
after the company was awarded all rights to a new version of Epogen
following an arbitration battle with Johnson & Johnson. Biogen also
boosted total return as investors reacted positively to the company's
solid business outlook and the absence of any serious competitive
threats. Medimmune shares appreciated considerably as its new product
launches were successful and its lead products turned in solid sales
results.
Q. DID ANY OTHER MARKET FACTORS ADD TO THIS NOTABLE PERFORMANCE?
A. One of the primary reasons for the bullish performance is an aging
population with accelerating demand for biotechnology and health care
products. Along with increasing demand, many companies are developing
a wide range of innovative, effective and safe biotechnological
products, services and processes. This favorable business environment
translated into strong stock performance.
Q. YOU SIGNIFICANTLY INCREASED THE FUND'S EXPOSURE TO LARGE-CAP
BIOTECHNOLOGY STOCKS DURING THE PERIOD. WHAT WAS YOUR RATIONALE FOR
THIS DECISION, AND HOW DID THIS STRATEGY WORK OUT?
A. I liked the earnings growth potential I saw in new product launches
offered by the larger-cap biotechnology companies. In addition, the
lead products for many of these companies had encouraging outlooks
and, subsequently, produced record sales results. This strategy worked
out very well for the fund. As I mentioned, these stocks were the key
contributors to the fund's outperformance of the indexes.
Q. WERE THERE ANY DETRACTORS FROM FUND PERFORMANCE?
A. While the fund was underweighted in HMOs and health care service
providers, such as MedPartners and Beverly Enterprises, these stocks
still detracted from the fund's total return. The market continued to
push stock prices lower in this sector amid uncertainty about the
group's profitability and concerns about rising medical costs. Medical
device maker Cytyc also hurt performance. Its shares stumbled late in
the period due to concerns about future earnings growth.
Q. WHAT'S YOUR OUTLOOK, RAJIV?
A. I'm comfortable with the portfolio's asset allocation and feel that
the fund's holdings have strong long-term business fundamentals and
healthy outlooks. The companies in the fund have historically reliable
earnings growth, profitable product pipelines and their competitors
have high barriers to entry. As a result, I think these companies
should hold up well relative to the rest of the biotechnology sector,
regardless of which direction the market heads in the short term.
Similar to what I mentioned in the report six months ago, I will
continue to focus on larger-cap biotechnology companies with
established market dominance and predictable earnings strength. I
believe these types of holdings offer reduced downside risk in this
environment of high market valuations.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: December 16, 1985
FUND NUMBER: 042
TRADING SYMBOL: FBIOX
SIZE: as of February 28, 1999, more than
$741 million
MANAGER: Rajiv Kaul, since 1998; equity
research associate, health care industry,
1996-1998; joined Fidelity in 1996
BIOTECHNOLOGY PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 89.7%
SHARES VALUE (NOTE 1)
COMPUTER SERVICES & SOFTWARE
- - 0.2%
Affymetrix, Inc. (a) 40,000 $ 1,550,000
DRUGS & PHARMACEUTICALS - 86.4%
Alkermes, Inc. (a) 563,200 15,804,800
Allergan, Inc. 125,000 10,187,500
Alliance Pharmaceutical Corp. 737,500 1,843,750
(a)
Alpharma, Inc. Class A 190,000 7,196,250
ALZA Corp. Class A (a) 20,000 1,048,750
Amgen, Inc. (a) 487,600 60,889,045
Andrx Corp. (a) 156,700 10,636,013
Anesta Corp. (a) 113,700 2,252,681
Aviron (a) 200,000 4,287,500
AXYS Pharmaceuticals, Inc. (a) 703,900 3,255,538
Biochem Pharma, Inc. 1,031,300 25,307,136
Biogen, Inc. (a) 633,200 60,866,350
Cellegy Pharmaceuticals, Inc. 578,600 2,025,100
(a)(c)
Centocor, Inc. (a) 324,200 13,474,563
Chiron Corp. (a) 1,565,900 32,981,769
Creative Biomolecules, Inc. 325,500 874,781
(a)
CV Therapeutics, Inc. (a)(c) 787,000 4,820,375
Cytyc Corp. (a) 99,000 1,794,375
Elan Corp. PLC sponsored ADR 30,000 2,300,625
(a)
Forest Laboratories, Inc. (a) 684,800 33,854,800
GelTex Pharmaceuticals, Inc. 50,000 859,375
(a)
Genentech, Inc. (special) (a) 606,600 48,414,263
Genzyme Corp. (General 872,000 39,240,000
Division)
Gilead Sciences, Inc. (a) 418,700 17,271,375
ICN Pharmaceuticals, Inc. 1,500 32,813
IDEC Pharmaceuticals Corp. (a) 408,500 17,693,156
Immunex Corp. (a) 186,950 26,453,425
Inhale Therapeutic Systems, 69,700 1,916,750
Inc. (a)
Invitrogen Corp. (a) 30,000 450,000
LeukoSite, Inc. (a) 440,000 5,060,000
Ligand Pharmaceuticals, Inc. 400,000 3,925,000
Class B (a)
Lilly (Eli) & Co. 165,000 15,623,438
Magainin Pharmaceuticals, 230,000 934,375
Inc. (a)
Medimmune, Inc. (a) 798,300 43,906,500
Merck & Co., Inc. 566,600 46,319,550
Mylan Laboratories, Inc. 30,000 819,375
NeXstar Pharmeceuticals, Inc. 246,100 3,399,256
(a)
NPS Pharmaceuticals, Inc. (a) 345,000 2,544,375
Pfizer, Inc. 30,000 3,958,125
QLT PhotoTherapeutics, Inc. 161,900 6,302,912
(a)
Roberts Pharmaceutical Corp. 16,700 377,838
(a)
Schering-Plough Corp. 640,600 35,833,563
Scios, Inc. (a) 290,000 2,682,500
Sepracor, Inc. (a) 378,900 47,267,775
Sequus Pharmaceuticals, Inc. 64,000 1,308,000
(a)
Serologicals Corp. (a) 50,000 893,750
ViroPharma, Inc. (a) 357,700 2,973,381
SHARES VALUE (NOTE 1)
Warner-Lambert Co. 35,000 $ 2,417,188
Zonagen, Inc. (a) 175,000 4,834,375
679,414,134
ELECTRICAL EQUIPMENT - 0.0%
American Satellite Network 5,000 -
(ASN) warrants 6/30/99 (a)
ELECTRONIC INSTRUMENTS - 1.4%
Perkin-Elmer Corp. 112,270 10,637,583
MEDICAL EQUIPMENT & SUPPLIES
- - 1.7%
Cardinal Health, Inc. 68,804 4,966,789
Cygnus, Inc. (a) 64,800 372,600
Medtronic, Inc. 65,000 4,590,625
Osteotech, Inc. (a) 70,500 3,815,813
13,745,827
TOTAL COMMON STOCKS 705,347,544
(Cost $519,908,322)
CASH EQUIVALENTS - 10.3%
Taxable Central Cash Fund (b) 80,825,501 80,825,501
(Cost $80,825,501)
TOTAL INVESTMENT IN $ 786,173,045
SECURITIES - 100%
(Cost $600,733,823)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(c) Affiliated company
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $499,721,864 and $473,490,492, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $31,302 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $36,161,622. The fund
received cash collateral of $36,293,300.
Transactions during the period with companies which are or were
affiliates are as follows:
PURCHASES SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Alkermes, Inc. $ - $ - $ - $ -
CV Therapeutics, Inc. 791,700 170,625 - 4,820,375
Cellegy Pharmaceuticals,
Inc. 315,038 225,000 - 2,025,100
Magainin Pharmaceuticals,
Inc. 249,257 2,714,380 - -
ViroPharma, Inc. - 771,075 - -
TOTALS $ 1,355,995 $ 3,881,080 $ - $ 6,845,475
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $601,690,691. Net unrealized appreciation
aggregated $184,482,354, of which $216,700,973 related to appreciated
investment securities and $32,218,619 related to depreciated
investment securities.
The fund hereby designates approximately $24,934,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 11% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentage for use in preparing 1999 income tax returns.
BIOTECHNOLOGY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 786,173,045
value (cost $600,733,823) -
See accompanying schedule
Cash 126,800
Receivable for investments 2,284,720
sold
Receivable for fund shares 1,345,985
sold
Dividends receivable 70,886
Interest receivable 263,683
Redemption fees receivable 1,210
Other receivables 36,520
TOTAL ASSETS 790,302,849
LIABILITIES
Payable for investments $ 10,416,729
purchased
Payable for fund shares 1,255,129
redeemed
Accrued management fee 364,555
Other payables and accrued 443,613
expenses
Collateral on securities 36,293,300
loaned, at value
TOTAL LIABILITIES 48,773,326
NET ASSETS $ 741,529,523
Net Assets consist of:
Paid in capital $ 553,672,039
Accumulated undistributed net 2,417,617
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 185,439,867
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 17,933,954 $ 741,529,523
shares outstanding
NET ASSET VALUE and $41.35
redemption price per share
($741,529,523 (divided by)
17,933,954 shares)
Maximum offering price per $42.63
share (100/97.00 of $41.35)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 1,104,719
Dividends
Interest (including income on 2,056,527
securities loaned of
$309,832)
TOTAL INCOME 3,161,246
EXPENSES
Management fee $ 3,390,377
Transfer agent fees 3,550,214
Accounting and security 536,521
lending fees
Non-interested trustees' 3,422
compensation
Custodian fees and expenses 22,172
Registration fees 62,626
Audit 18,459
Legal 3,487
Reports to shareholders 91,367
Total expenses before 7,678,645
reductions
Expense reductions (189,856) 7,488,789
NET INVESTMENT INCOME (LOSS) (4,327,543)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 2,588,579
(including realized loss
of $1,989,327 on sales of
investments in affiliated
issuers)
Foreign currency transactions (3,194) 2,585,385
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 152,854,489
Assets and liabilities in 645 152,855,134
foreign currencies
NET GAIN (LOSS) 155,440,519
NET INCREASE (DECREASE) IN $ 151,112,976
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 1,182,620
charges paid to FDC
Sales charges - Retained by $ 1,176,547
FDC
Deferred sales charges $ 23,624
withheld by FDC
Exchange fees withheld by FSC $ 33,195
Expense reductions Directed $ 178,555
brokerage arrangements
Custodian credits 4,105
Transfer agent credits 7,196
$ 189,856
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (4,327,543) $ (4,649,288)
income (loss)
Net realized gain (loss) 2,585,385 136,618,693
Change in net unrealized 152,855,134 (59,882,024)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 151,112,976 72,087,381
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (33,971,527) (74,816,933)
from net realized gain
Share transactions Net 320,529,357 370,670,921
proceeds from sales of shares
Reinvestment of distributions 33,062,818 72,734,215
Cost of shares redeemed (309,253,094) (536,988,307)
NET INCREASE (DECREASE) IN 44,339,081 (93,583,171)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 507,092 952,260
TOTAL INCREASE (DECREASE) 161,987,622 (95,360,463)
IN NET ASSETS
NET ASSETS
Beginning of period 579,541,901 674,902,364
End of period 741,529,523 579,541,901
OTHER INFORMATION
Shares
Sold 9,105,791 10,542,169
Issued in reinvestment of 970,436 2,304,448
distributions
Redeemed (8,928,498) (15,772,857)
Net increase (decrease) 1,147,729 (2,926,240)
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 F 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 34.52 $ 34.24 $ 36.60 $ 25.30 $ 27.61
period
Income from Investment
Operations
Net investment income (loss) C (.26) (.27) (.20) .11 (.06)
Net realized and unrealized 9.15 5.20 1.89 11.21 (2.26)
gain (loss)
Total from investment 8.89 4.93 1.69 11.32 (2.32)
operations
Less Distributions
From net investment income - - (.03) (.07) -
From net realized gain (2.09) (4.71) (4.06) - -
Total distributions (2.09) (4.71) (4.09) (.07) -
Redemption fees added to paid .03 .06 .04 .05 .01
in capital
Net asset value, end of period $ 41.35 $ 34.52 $ 34.24 $ 36.60 $ 25.30
TOTAL RETURN A, B 27.13% 16.11% 5.85% 44.97% (8.37)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 741,530 $ 579,542 $ 674,902 $ 1,096,864 $ 448,197
(000 omitted)
Ratio of expenses to average 1.34% 1.49% 1.57% 1.44% D 1.59%
net assets
Ratio of expenses to average 1.30% E 1.47% E 1.56% E 1.43% E 1.59%
net assets after expense
reductions
Ratio of net investment (.75)% (.81)% (.59)% .35% (.27)%
income (loss) to average net
assets
Portfolio turnover rate 86% 162% 41% 67% 77%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR AGREED TO
REIMBURSE A PORTION OF THE
FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS
REIMBURSEMENT, THE FUND'S
EXPENSE RATIO WOULD HAVE
BEEN HIGHER. E FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. F FOR
THE YEAR ENDED FEBRUARY 29.
</TABLE>
HEALTH CARE PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT HEALTH CARE 27.20% 283.18% 899.13%
SELECT HEALTH CARE (LOAD ADJ.) 23.31% 271.61% 869.08%
S&P 500 19.74% 194.91% 459.21%
GS Health Care 23.88% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years, or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
index of common stocks - and the Goldman Sachs Health Care Index - a
market capitalization-weighted index of 93 stocks designed to measure
the performance of companies in the health care sector. These
benchmarks include reinvestment of dividends and capital gains, if
any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT HEALTH CARE 27.20% 30.82% 25.88%
SELECT HEALTH CARE (LOAD ADJ.) 23.31% 30.02% 25.50%
S&P 500 19.74% 24.15% 18.78%
GS Health Care 23.88% n/a n/a
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER 10 YEARS
Health Care S&P 500
00063 SP001
1989/02/28 9700.00 10000.00
1989/03/31 10211.52 10233.00
1989/04/30 10769.06 10764.09
1989/05/31 11104.66 11200.04
1989/06/30 10854.35 11136.20
1989/07/31 12198.85 12141.80
1989/08/31 12493.98 12379.78
1989/09/30 12584.16 12329.02
1989/10/31 12491.25 12042.99
1989/11/30 13029.59 12288.66
1989/12/31 13161.94 12583.59
1990/01/31 12406.75 11739.23
1990/02/28 12276.73 11890.67
1990/03/31 12766.36 12205.77
1990/04/30 12766.36 11900.63
1990/05/31 14522.95 13060.94
1990/06/30 15017.78 12972.12
1990/07/31 15225.12 12930.61
1990/08/31 14542.62 11761.68
1990/09/30 14104.91 11188.89
1990/10/31 14427.44 11140.78
1990/11/30 15962.33 11860.47
1990/12/31 16362.45 12191.38
1991/01/31 17977.69 12722.92
1991/02/28 20198.26 13632.61
1991/03/31 21998.81 13962.52
1991/04/30 21615.85 13996.03
1991/05/31 22789.45 14600.66
1991/06/30 21761.82 13931.95
1991/07/31 23687.41 14581.18
1991/08/31 24871.12 14926.75
1991/09/30 25372.30 14677.48
1991/10/31 27044.00 14874.16
1991/11/30 25566.84 14274.73
1991/12/31 30056.59 15907.76
1992/01/31 29070.44 15611.87
1992/02/29 27801.04 15814.83
1992/03/31 26105.00 15506.44
1992/04/30 24625.77 15962.33
1992/05/31 25132.84 16040.54
1992/06/30 24164.12 15801.54
1992/07/31 25617.74 16447.82
1992/08/31 24926.80 16110.64
1992/09/30 23201.33 16300.75
1992/10/31 23914.92 16357.80
1992/11/30 25225.07 16915.60
1992/12/31 24816.46 17123.66
1993/01/31 23483.65 17267.50
1993/02/28 20977.67 17502.34
1993/03/31 21556.28 17871.64
1993/04/30 21548.30 17439.14
1993/05/31 22410.23 17906.51
1993/06/30 22330.42 17958.44
1993/07/31 21604.16 17886.61
1993/08/31 22374.32 18564.51
1993/09/30 23072.64 18421.56
1993/10/31 24788.52 18802.89
1993/11/30 24704.72 18624.26
1993/12/31 25416.18 18849.62
1994/01/31 25919.55 19490.50
1994/02/28 25292.34 18962.31
1994/03/31 23642.40 18135.55
1994/04/30 24590.88 18367.69
1994/05/31 25979.72 18668.92
1994/06/30 25567.47 18211.53
1994/07/31 26079.78 18808.87
1994/08/31 29501.85 19580.03
1994/09/30 29713.98 19100.32
1994/10/31 30126.23 19530.08
1994/11/30 30778.62 18818.79
1994/12/31 30870.14 19097.87
1995/01/31 32505.21 19593.08
1995/02/28 33194.12 20356.63
1995/03/31 34096.68 20957.35
1995/04/30 34571.94 21574.54
1995/05/31 34905.04 22436.88
1995/06/30 36671.33 22958.09
1995/07/31 38770.72 23719.38
1995/08/31 39099.43 23778.91
1995/09/30 41290.86 24782.38
1995/10/31 41391.66 24693.91
1995/11/30 43136.04 25777.97
1995/12/31 45028.70 26274.46
1996/01/31 46639.34 27168.84
1996/02/29 46367.05 27420.69
1996/03/31 46528.58 27684.75
1996/04/30 46333.79 28092.83
1996/05/31 47174.32 28817.34
1996/06/30 47207.75 28927.14
1996/07/31 45364.33 27649.13
1996/08/31 46902.10 28232.26
1996/09/30 50130.47 29821.17
1996/10/31 49146.68 30643.63
1996/11/30 51787.64 32959.99
1996/12/31 51989.79 32307.05
1997/01/31 55128.80 34325.59
1997/02/28 55831.80 34594.71
1997/03/31 52769.09 33173.21
1997/04/30 55402.63 35153.65
1997/05/31 59622.17 37293.80
1997/06/30 64057.65 38964.57
1997/07/31 66450.47 42064.98
1997/08/31 61822.40 39708.50
1997/09/30 65656.76 41883.33
1997/10/31 65633.41 40484.43
1997/11/30 67471.80 42358.45
1997/12/31 68182.81 43085.75
1998/01/31 73088.87 43562.28
1998/02/28 76194.47 46703.99
1998/03/31 78905.19 49095.70
1998/04/30 80400.60 49589.60
1998/05/31 79918.66 48737.16
1998/06/30 84669.17 50716.86
1998/07/31 84923.90 50176.72
1998/08/31 76104.49 42922.17
1998/09/30 84930.79 45671.77
1998/10/31 87450.62 49386.71
1998/11/30 91182.18 52380.04
1998/12/31 96331.12 55398.18
1999/01/31 97415.79 57714.93
1999/02/26 96908.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990307 162407 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Health Care Portfolio on February 28,
1989, and the current 3.00% sales charge was paid. As the chart shows,
by February 28, 1999, the value of the investment would have grown to
$96,908 - an 869.08% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Lilly (Eli) & Co. 10.2
Merck & Co., Inc. 10.0
Warner-Lambert Co. 8.0
Schering-Plough Corp. 7.0
Johnson & Johnson 5.4
Medtronic, Inc. 4.7
Bristol-Myers Squibb Co. 4.5
Pfizer, Inc. 4.2
Abbott Laboratories 4.1
Amgen, Inc. 3.6
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Drugs & Pharmaceuticals 62.0%
Medical Equipment
& Supplies 24.0%
Medical Facilities
Management 3.7%
Drug Stores 2.1%
Computer Services
& Software 1.2%
All Others 7.0%*
Row: 1, Col: 1, Value: 7.0
Row: 1, Col: 2, Value: 1.2
Row: 1, Col: 3, Value: 2.1
Row: 1, Col: 4, Value: 3.7
Row: 1, Col: 5, Value: 24.0
Row: 1, Col: 6, Value: 62.0
* INCLUDES SHORT-TERM INVESTMENTS
HEALTH CARE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Beso Sikharulidze)
Beso Sikharulidze,
Portfolio Manager
of Fidelity Select
Health Care Portfolio
Q. HOW DID THE FUND PERFORM, BESO?
A. For the 12 months that ended February 28, 1999, the fund returned
27.20%. During the same time period, the Standard & Poor's 500 Index
returned 19.74%. Fund performance also compared favorably to the
Goldman Sachs Health Care Index - an index of 93 stocks designed to
measure the performance of companies in the health care sector - which
returned 23.88% over the same 12-month period.
Q. WHAT WERE THE MAIN FACTORS CONTRIBUTING TO THE FUND'S STRONG
PERFORMANCE?
A. Drug stocks posted solid gains during most of the period due to
strong product pipelines, increased merger activity and robust
domestic sales. During periods of market weakness, I took the
opportunity to increase the fund's asset weightings in pharmaceuticals
and medical equipment. My strategy of overweighting these sectors
relative to the Goldman Sachs index worked out well. While the fund
was overweighted in pharmaceutical stocks relative to the benchmark
indexes, total return received the biggest boost from a number of top
holdings, such as Eli Lilly, Warner-Lambert and Schering-Plough.
Performance also was helped by the fund's underweighted position
relative to the Goldman Sachs benchmark in HMOs and hospitals, which
continued to struggle during the period.
Q. YOU MENTIONED ELI LILLY, WARNER-LAMBERT AND SCHERING-PLOUGH AS
MAJOR CONTRIBUTORS TO THE FUND'S PERFORMANCE.
WHAT WERE THE STORIES THERE?
A. These stocks performed very well. But first, I would like to talk
about a stock you didn't ask about - Amgen. While it was not as large
of a holding as the others you asked about, it provided a significant
boost to total return. I liked Amgen because it had some very
successful products and, at one point, traded at a significant
discount to other health care companies. The stock soared after an
arbitration panel gave the company all rights to a new version of
Epogen, a popular anemia drug. Concerning the other stocks you
mentioned, Eli Lilly rallied as the company kept generic drug
companies at bay by developing a new version of its blockbuster
anti-depressant drug, Prozac. Warner-Lambert shares appreciated as the
company reported increased earnings driven by the continued success of
its cholesterol treatment, Lipitor. Schering-Plough's stock continued
to benefit from upward earnings estimates and strong sales of its
major product, Claritin.
Q. WHAT WAS YOUR RATIONALE BEHIND THE DECISION TO SIGNIFICANTLY
INCREASE THE FUND'S HOLDINGS IN PHARMACEUTICAL
AND MEDICAL EQUIPMENT COMPANIES?
A. Similar to what I mentioned in the semiannual report six months
ago, I did not foresee any major changes in the market's favorable
growth outlook for these companies. As a result, I continued to take a
positive long-term view about their prospects. The major factors for
this bullish outlook were an aging population with increasing demand
for health care products and an increasing supply of innovative,
effective and safe new drugs. Most importantly, these companies
produced strong corporate earnings combined with a favorable business
outlook.
Q. WHAT STOCKS HURT TOTAL RETURN?
A. Monsanto, a diversified chemicals company, hurt fund performance
when its proposed merger with American Home Products fell apart. While
the fund was underweighted in HMOs and health care service providers,
such as Medpartners and Foundation Health Systems, this sector
continued to detract from the fund's total return as investors
remained uncertain about the groups' profitability outlook and rising
medical costs.
Q. WHAT'S YOUR OUTLOOK, BESO?
A. I still see a strong business cycle ahead for pharmaceutical
companies, especially those drug companies with dominant market
presence and a strong pipeline of profitable products. I will continue
to focus on the pharmaceutical companies because I believe they have
the best prospects for long-term, sustainable market growth. I also
like some of the companies that stand to benefit from the strong
pharmaceutical sector. For example, medical research and development
(R&D) companies could benefit from the robust R&D cycle and the
growing popularity of outsourcing drug research and development.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: July 14, 1981
FUND NUMBER: 063
TRADING SYMBOL: FSPHX
SIZE: as of February 28, 1999, more than
$3.1 billion
MANAGER: Beso Sikharulidze, since 1997;
manager, Fidelity Advisor Health Care Fund,
since 1997; Fidelity Select Transportation
Portfolio, 1993-1994; security analyst,
appliance, trucking and shipping industries,
1992-1993; joined Fidelity in 1992
HEALTH CARE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 95.0%
SHARES VALUE (NOTE 1)
AGRICULTURE - 0.4%
Pioneer Hi-Bred 500,000 $ 11,718,750
International, Inc.
COMPUTER SERVICES & SOFTWARE
- - 1.2%
IMS Health, Inc. 800,000 28,400,000
Medical Manager Corp. (a) 54,900 1,537,200
Shared Medical Systems Corp. 175,400 8,945,400
38,882,600
DRUG STORES - 2.1%
CVS Corp. 107,154 5,679,162
Walgreen Co. 1,920,500 61,456,000
67,135,162
DRUGS & PHARMACEUTICALS - 62.0%
Allergan, Inc. 126,180 10,283,670
American Home Products Corp. 1,324,600 78,813,700
Amgen, Inc. (a) 909,800 113,611,275
Biogen, Inc. (a) 256,300 24,636,838
Bristol-Myers Squibb Co. 1,114,300 140,332,156
Centocor, Inc. (a) 8,500 353,281
Chiron Corp. (a) 321,800 6,777,913
Elan Corp. PLC sponsored ADR 297,020 22,777,721
(a)
Forest Laboratories, Inc. (a) 680,000 33,617,500
Genentech, Inc. (special) (a) 397,400 31,717,488
Genzyme Corp.:
(General Division) 477,600 21,492,000
(Molecular Oncology) (a) 27,315 104,138
Glaxo Wellcome PLC sponsored 572,500 36,675,781
ADR
Immunex Corp. (a) 72,500 10,258,750
Lilly (Eli) & Co. 3,406,812 322,582,508
Medimmune, Inc. (a) 172,800 9,504,000
Merck & Co., Inc. 3,864,800 315,947,400
Novartis AG (Reg.) 14,501 25,474,459
PAREXEL International Corp. 195,300 4,064,681
(a)
Pfizer, Inc. 991,400 130,802,838
Pharmacia & Upjohn, Inc. 232,000 12,644,000
QLT PhotoTherapeutics, Inc. 66,400 2,585,011
(a)
Quintiles Transnational Corp. 294,700 12,708,938
(a)
Rhone-Poulenc SA sponsored 152,300 7,005,800
ADR Class A
Roche Holding AG 2,350 29,801,313
participation certificates
Schering-Plough Corp. 3,939,800 220,382,563
Sepracor, Inc. (a) 70,100 8,744,975
SmithKline Beecham PLC 500,900 35,626,513
sponsored ADR
Takeda Chemical Industries 448,000 15,353,549
Ltd.
Warner-Lambert Co. 3,664,200 253,058,813
Watson Pharmaceuticals, Inc. 252,800 12,213,400
(a)
SHARES VALUE (NOTE 1)
XOMA Ltd. (a) 1,476 $ 4,133
Zonagen, Inc. (a) 259,100 7,157,638
1,957,114,743
ELECTRONIC INSTRUMENTS - 1.0%
Perkin-Elmer Corp. 119,900 11,360,525
Waters Corp. (a) 213,200 19,840,925
31,201,450
INSURANCE - 0.5%
Aetna, Inc. 900 66,656
CIGNA Corp. 211,800 16,626,300
16,692,956
MEDICAL EQUIPMENT & SUPPLIES
- - 24.0%
Abbott Laboratories 2,779,800 129,086,963
AmeriSource Health Corp. 383,000 28,581,375
Class A (a)
Bausch & Lomb, Inc. 124,300 7,496,844
Baxter International, Inc. 1,307,800 92,036,425
Becton, Dickinson & Co. 1,481,200 49,620,200
Biomet, Inc. 50,700 1,860,056
Boston Scientific Corp. (a) 742,536 19,677,204
Cardinal Health, Inc. 863,805 62,355,923
Guidant Corp. 728,720 41,537,040
Johnson & Johnson 2,003,900 171,082,963
Mallinckrodt, Inc. 7,200 222,750
Medtronic, Inc. 2,101,886 148,445,699
Omnicare, Inc. 9,200 220,225
Sybron International, Inc. (a) 239,700 5,887,631
758,111,298
MEDICAL FACILITIES MANAGEMENT
- - 3.7%
Concentra Managed Care, Inc. 277,200 2,945,250
(a)
Foundation Health Systems, 232,100 1,856,800
Inc. Class A (a)
Health Management Associates, 955,500 12,361,781
Inc. Class A (a)
HEALTHSOUTH Corp. (a) 713,200 8,290,950
Humana, Inc. (a) 260,600 4,560,500
Lincare Holdings, Inc. (a) 764,400 27,231,750
PacifiCare Health Systems, 8,800 635,800
Inc. Class B (a)
Tenet Healthcare Corp. (a) 52,800 1,039,500
Total Renal Care Holdings, 622,300 5,522,913
Inc. (a)
Trigon Healthcare, Inc. (a) 100,000 3,506,250
United HealthCare Corp. 347,300 17,126,231
Universal Health Services, 300,000 12,187,500
Inc. Class B (a)
Wellpoint Health Networks, 229,800 18,125,475
Inc. (a)
115,390,700
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SERVICES - 0.1%
Medpartners, Inc. (a) 326,000 $ 1,935,625
TOTAL COMMON STOCKS 2,998,183,284
(Cost $2,066,944,764)
CASH EQUIVALENTS - 5.0%
Taxable Central Cash Fund (b) 157,479,759 157,479,759
(Cost $157,479,759)
TOTAL INVESTMENT IN $ 3,155,663,043
SECURITIES - 100%
(Cost $2,224,424,523)
</TABLE>
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $2,023,455,625 and $1,543,188,343, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $244,159 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $13,395,137. The fund
received cash collateral of $13,304,800.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $2,224,754,689. Net unrealized appreciation
aggregated $930,908,354, of which $973,074,201 related to appreciated
investment securities and $42,165,847 related to depreciated
investment securities.
The fund hereby designates approximately $103,283,000 as a capital
gain dividend for the purpose of the dividend paid deduction.
A total of 65% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentage for use in preparing 1999 income tax returns.
HEALTH CARE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 3,155,663,043
value (cost $2,224,424,523)
- - See accompanying schedule
Receivable for investments 2,545,052
sold
Receivable for fund shares 6,544,577
sold
Dividends receivable 2,805,069
Interest receivable 807,435
Redemption fees receivable 5,071
Other receivables 181,348
TOTAL ASSETS 3,168,551,595
LIABILITIES
Payable for fund shares $ 6,553,547
redeemed
Accrued management fee 1,513,897
Other payables and accrued 1,354,795
expenses
Collateral on securities 13,304,800
loaned, at value
TOTAL LIABILITIES 22,727,039
NET ASSETS $ 3,145,824,556
Net Assets consist of:
Paid in capital $ 2,136,274,229
Undistributed net investment 1,027,364
income
Accumulated undistributed net 77,281,651
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 931,241,312
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 22,861,395 $ 3,145,824,556
shares outstanding
NET ASSET VALUE and $137.60
redemption price per share
($3,145,824,556 (divided by)
22,861,395 shares)
Maximum offering price per $141.86
share (100/97.00 of $137.60)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 19,172,514
Dividends
Interest (including income on 10,666,331
securities loaned of
$356,115)
TOTAL INCOME 29,838,845
EXPENSES
Management fee $ 14,851,440
Transfer agent fees 10,618,207
Accounting and security 978,835
lending fees
Non-interested trustees' 13,557
compensation
Custodian fees and expenses 77,520
Registration fees 149,900
Audit 69,969
Legal 14,375
Reports to shareholders 193,559
Total expenses before 26,967,362
reductions
Expense reductions (606,172) 26,361,190
NET INVESTMENT INCOME 3,477,655
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 141,328,826
Foreign currency transactions (312,020) 141,016,806
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 456,692,226
Assets and liabilities in 2,848 456,695,074
foreign currencies
NET GAIN (LOSS) 597,711,880
NET INCREASE (DECREASE) IN $ 601,189,535
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 10,991,959
charges paid to FDC
Sales charges - Retained by $ 10,970,853
FDC
Deferred sales charges $ 58,978
withheld by FDC
Exchange fees withheld by FSC $ 79,358
Expense reductions Directed $ 590,859
brokerage arrangements
Custodian credits 5,771
Transfer agent credits 9,542
$ 606,172
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ 3,477,655 $ 4,973,301
income
Net realized gain (loss) 141,016,806 304,829,057
Change in net unrealized 456,695,074 201,089,915
appreciation (depreciation)
NET INCREASE (DECREASE) IN 601,189,535 510,892,273
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (3,782,810) (3,399,542)
From net investment income
From net realized gain (121,803,514) (285,151,308)
TOTAL DISTRIBUTIONS (125,586,324) (288,550,850)
Share transactions Net 1,715,677,379 1,156,162,920
proceeds from sales of shares
Reinvestment of distributions 121,790,160 281,663,060
Cost of shares redeemed (1,393,295,000) (810,127,873)
NET INCREASE (DECREASE) IN 444,172,539 627,698,107
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 2,029,623 1,425,211
TOTAL INCREASE (DECREASE) 921,805,373 851,464,741
IN NET ASSETS
NET ASSETS
Beginning of period 2,224,019,183 1,372,554,442
End of period (including $ 3,145,824,556 $ 2,224,019,183
undistributed net investment
income of $1,027,364 and
$2,734,330, respectively)
OTHER INFORMATION
Shares
Sold 13,702,070 10,761,631
Issued in reinvestment of 985,706 2,916,990
distributions
Redeemed (11,362,310) (7,540,216)
Net increase (decrease) 3,325,466 6,138,405
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 113.84 $ 102.45 $ 100.47 $ 76.13 $ 63.31
period
Income from Investment
Operations
Net investment income C .17 .33 .52 .95 .75
Net realized and unrealized 29.85 31.94 18.01 28.85 18.38
gain (loss)
Total from investment 30.02 32.27 18.53 29.80 19.13
operations
Less Distributions
From net investment income (.19) (.25) (.65) (.59) (.62)
From net realized gain (6.17) (20.73) (15.95) (4.92) (5.74)
Total distributions (6.36) (20.98) (16.60) (5.51) (6.36)
Redemption fees added to paid .10 .10 .05 .05 .05
in capital
Net asset value, end of period $ 137.60 $ 113.84 $ 102.45 $ 100.47 $ 76.13
TOTAL RETURN A, B 27.20% 36.47% 20.41% 39.68% 31.24%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 3,145,825 $ 2,224,019 $ 1,372,554 $ 1,525,910 $ 943,141
(000 omitted)
Ratio of expenses to average 1.07% 1.20% 1.33% 1.31% 1.39%
net assets
Ratio of expenses to average 1.05% D 1.18% D 1.32% D 1.30% D 1.36% D
net assets after expense
reductions
Ratio of net investment .14% .31% .52% 1.06% 1.08%
income to average net assets
Portfolio turnover rate 66% 79% 59% 54% 151%
</TABLE>
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME PER
SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES
OUTSTANDING DURING THE
PERIOD. D FMR OR THE FUND
HAS ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE
FUND'S EXPENSES. E FOR THE
YEAR ENDED FEBRUARY 29.
MEDICAL DELIVERY PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT MEDICAL DELIVERY -29.47% 52.56% 335.43%
SELECT MEDICAL DELIVERY (LOAD -31.66% 47.91% 322.30%
ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Health Care 23.88% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
index of common stocks - and the Goldman Sachs Health Care Index - a
market capitalization-weighted index of 93 stocks designed to measure
the performance of companies in the health care sector. These
benchmarks include reinvestment of dividends and capital gains, if
any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT MEDICAL DELIVERY -29.47% 8.81% 15.85%
SELECT MEDICAL DELIVERY -31.66% 8.14% 15.49%
(LOAD ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Health Care 23.88% n/a n/a
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER 10 YEARS
Medical Delivery S&P 500
00505 SP001
1989/02/28 9700.00 10000.00
1989/03/31 10232.72 10233.00
1989/04/30 10931.92 10764.09
1989/05/31 11497.94 11200.04
1989/06/30 11364.27 11136.20
1989/07/31 12654.15 12141.80
1989/08/31 13243.49 12379.78
1989/09/30 13610.44 12329.02
1989/10/31 13154.53 12042.99
1989/11/30 13766.11 12288.66
1989/12/31 13766.92 12583.59
1990/01/31 11740.02 11739.23
1990/02/28 12036.09 11890.67
1990/03/31 12594.05 12205.77
1990/04/30 12719.31 11900.63
1990/05/31 14518.46 13060.94
1990/06/30 15213.07 12972.12
1990/07/31 15270.00 12930.61
1990/08/31 14051.59 11761.68
1990/09/30 13117.85 11188.89
1990/10/31 12958.44 11140.78
1990/11/30 14757.59 11860.47
1990/12/31 16005.68 12191.38
1991/01/31 18585.35 12722.92
1991/02/28 19734.47 13632.61
1991/03/31 22665.92 13962.52
1991/04/30 21985.82 13996.03
1991/05/31 23803.32 14600.66
1991/06/30 21798.00 13931.95
1991/07/31 23985.14 14581.18
1991/08/31 24266.16 14926.75
1991/09/30 24486.10 14677.48
1991/10/31 25023.72 14874.16
1991/11/30 24327.26 14274.73
1991/12/31 28462.11 15907.76
1992/01/31 28487.12 15611.87
1992/02/29 27386.65 15814.83
1992/03/31 25573.38 15506.44
1992/04/30 24560.45 15962.33
1992/05/31 24310.34 16040.54
1992/06/30 23030.21 15801.54
1992/07/31 24340.76 16447.82
1992/08/31 24313.46 16110.64
1992/09/30 21460.28 16300.75
1992/10/31 22525.10 16357.80
1992/11/30 24736.66 16915.60
1992/12/31 24709.36 17123.66
1993/01/31 23453.41 17267.50
1993/02/28 19740.18 17502.34
1993/03/31 20177.03 17871.64
1993/04/30 19931.31 17439.14
1993/05/31 20545.63 17906.51
1993/06/30 20750.40 17958.44
1993/07/31 21269.16 17886.61
1993/08/31 21200.90 18564.51
1993/09/30 22948.30 18421.56
1993/10/31 24026.78 18802.89
1993/11/30 24422.67 18624.26
1993/12/31 26074.52 18849.62
1994/01/31 27535.23 19490.50
1994/02/28 27685.40 18962.31
1994/03/31 26306.59 18135.55
1994/04/30 27152.99 18367.69
1994/05/31 28067.65 18668.92
1994/06/30 26333.90 18211.53
1994/07/31 27507.93 18808.87
1994/08/31 30292.85 19580.03
1994/09/30 31371.33 19100.32
1994/10/31 32395.20 19530.08
1994/11/30 31002.74 18818.79
1994/12/31 31247.72 19097.87
1995/01/31 32619.36 19593.08
1995/02/28 33119.44 20356.63
1995/03/31 35219.77 20957.35
1995/04/30 34075.12 21574.54
1995/05/31 32957.43 22436.88
1995/06/30 33487.62 22958.09
1995/07/31 36869.34 23719.38
1995/08/31 37041.29 23778.91
1995/09/30 37815.07 24782.38
1995/10/31 37170.25 24693.91
1995/11/30 40279.71 25777.97
1995/12/31 41304.12 26274.46
1996/01/31 43525.59 27168.84
1996/02/29 44429.50 27420.69
1996/03/31 44858.48 27684.75
1996/04/30 45369.25 28092.83
1996/05/31 45273.43 28817.34
1996/06/30 44203.48 28927.14
1996/07/31 39412.64 27649.13
1996/08/31 43053.68 28232.26
1996/09/30 46135.78 29821.17
1996/10/31 42654.44 30643.63
1996/11/30 45065.83 32959.99
1996/12/31 45849.53 32307.05
1997/01/31 48018.79 34325.59
1997/02/28 49094.75 34594.71
1997/03/31 45988.36 33173.21
1997/04/30 47036.80 35153.65
1997/05/31 51398.33 37293.80
1997/06/30 51755.52 38964.57
1997/07/31 55083.07 42064.98
1997/08/31 53184.30 39708.50
1997/09/30 54763.47 41883.33
1997/10/31 52958.70 40484.43
1997/11/30 54218.28 42358.45
1997/12/31 55082.88 43085.75
1998/01/31 53475.86 43562.28
1998/02/28 59882.81 46703.99
1998/03/31 62293.35 49095.70
1998/04/30 63842.57 49589.60
1998/05/31 60831.96 48737.16
1998/06/30 61628.89 50716.86
1998/07/31 56869.47 50176.72
1998/08/31 43985.85 42922.17
1998/09/30 45446.88 45671.77
1998/10/31 48546.03 49386.71
1998/11/30 50405.53 52380.04
1998/12/31 51689.46 55398.18
1999/01/31 44317.90 57714.93
1999/02/26 42230.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990307 163817 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Medical Delivery Portfolio on February 28,
1989, and the current 3.00% sales charge was paid. As the chart shows,
by February 28, 1999, the value of the investment would have grown to
$42,230 - a 322.30% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Lincare Holdings, Inc. 14.6
Health Management Associates, 10.5
Inc. Class A
Wellpoint Health Networks, Inc. 9.1
Universal Health Services, 5.5
Inc. Class B
PacifiCare Health Systems, 5.5
Inc. Class B
Tenet Healthcare Corp. 4.8
HEALTHSOUTH Corp. 4.8
Humana, Inc. 3.9
Columbia/HCA Healthcare Corp. 3.0
Quorum Health Group, Inc. 2.9
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Medical Facilities
Management 77.1%
Drugs & Pharmaceuticals 8.8%
Medical Equipment
& Supplies 6.6%
Insurance 2.9%
Computer Services
& Software 0.6%
All Others 4.0%*
Row: 1, Col: 1, Value: 4.0
Row: 1, Col: 2, Value: 1.6
Row: 1, Col: 3, Value: 2.9
Row: 1, Col: 4, Value: 6.6
Row: 1, Col: 5, Value: 8.800000000000001
Row: 1, Col: 6, Value: 76.09999999999999
* INCLUDES SHORT-TERM INVESTMENTS
MEDICAL DELIVERY PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of John Porter)
John Porter,
Portfolio Manager
of Fidelity Select
Medical Delivery Portfolio
Q. HOW DID THE FUND PERFORM, JOHN?
A. For the 12 months that ended February 28, 1999, the fund returned
- -29.47%. By comparison, the Standard & Poor's 500 Index and the
Goldman Sachs Health Care Index - an index of 93 stocks designed to
measure the performance of companies in the health care sector -
returned 19.74% and 23.88%, respectively.
Q. WHY DID THE FUND LAG THE GOLDMAN SACHS INDEX BY SUCH A WIDE MARGIN?
A. The fund's return obviously was disappointing as conditions across
all health care services continued to be very challenging. HMOs were
not able to find a solution to spiraling costs - particularly in the
pharmaceuticals area - or to pass those costs on to patients, making
their stocks unattractive to investors. The government's overhaul of
Medicare was probably the biggest negative factor affecting hospitals
and long-term care providers. Changes in the federal budget for 1998,
which reduced Medicare reimbursement, severely affected the revenues
of hospitals, long-term care facilities and the home health care
sector. Physician practice managers also struggled to create an
attractive long-term business model. Meanwhile, investors continued to
gravitate to pharmaceutical stocks - a significant part of the Goldman
Sachs index - where growth has been healthy and demand strong.
Q. WHAT DID YOU DO TO TRY TO ALLEVIATE THE SITUATION?
A. While the fund could not avoid being affected by the changes in
Medicare, I looked for opportunities to offset the negative trends
within the industry. For example, while the rising cost of
prescription drugs has hurt managed-care companies, pharmaceutical
stocks have performed well, so I increased the fund's investments in
that area, holding Eli Lilly, Merck, Pfizer and Bristol-Myers Squibb.
I've since sold Pfizer from the fund's portfolio to take profits for
the fund. I also bought stocks of companies that don't depend as much
on Medicare, and therefore shouldn't be as severely affected by the
changes. Examples include small hospitals that focus more on basic
medical services that are in less danger of being cut by Medicare. In
addition, I shifted the fund's HMO holdings to those companies with
little Medicare exposure.
Q. WHICH STOCKS PERFORMED WELL DURING THE PERIOD?
A. Wellpoint Health Networks did well, reflecting its success in
controlling costs and in increasing its membership. Drug makers Eli
Lilly, Merck, Pfizer and Bristol-Myers Squibb benefited from the
pharmaceutical industry's strong growth and rising prices. An aging
population demanding a wider range of more effective drugs helped
boost the industry. Lincare, a respiratory care company, performed
well as it continued to expand its market share through acquisitions
and did a good job managing its internal cost structure. Cardinal
Health, the country's second-largest hospital and pharmacy drug
distributor, performed well, reflecting increased demand and its
acquisition activities. Cardinal successfully employed its own
extensive sales and distribution system for efficient, cost-effective
product delivery.
Q. WHICH STOCKS WERE DISAPPOINTMENTS?
A. HEALTHSOUTH, United HealthCare and Columbia/HCA were all
disappointing stocks for the fund. Each experienced earnings
shortfalls at various times during the year. Foundation Health
Systems, a managed-care company, was hurt by rising costs and slow
membership growth, particularly on the Medicare side of its business.
Quorum Health Group, another managed-care company, was subject to a
government probe. Quorum also had disappointing performance in some of
its newly acquired hospitals, and its stock suffered as a result.
Q. WHAT'S YOUR OUTLOOK, JOHN?
A. Although I'm still cautious, the outlook for HMOs appears to be
improving, as recent data on pricing trends in 1999 look more
positive. It also appears that there is some movement by the federal
government to make the Medicare HMO formula more attractive. Though
hospital business trends became bleaker in late 1998 and early 1999 as
patient volumes slowed when this winter's cases of flu and other upper
respiratory diseases declined, the overall picture looks better for
hospitals. First, the changes in 1999 Medicare reimbursement have not
been nearly as onerous as they were in 1998. Second, the recent
slowdown in business trends was a cyclical event that should return to
normal. The silver lining is that there may now exist some good buying
opportunities. I'll try to find the companies with attractive relative
valuations that are likely to do well, should business trends improve.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: June 30, 1986
FUND NUMBER: 505
TRADING SYMBOL: FSHCX
SIZE: as of February 28, 1999, more than
$76 million
MANAGER: John Porter, since 1998; manager,
Fidelity Select Software and Computer
Services Portfolio, since 1997; Fidelity Select
Multimedia Portfolio, 1996-1997; joined
Fidelity in 1995
MEDICAL DELIVERY PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 96.4%
SHARES VALUE (NOTE 1)
COMPUTER SERVICES & SOFTWARE
- - 0.6%
Shared Medical Systems Corp. 8,900 $ 453,900
DRUGS & PHARMACEUTICALS - 8.8%
Bristol-Myers Squibb Co. 5,100 642,281
Lilly (Eli) & Co. 22,500 2,130,469
Merck & Co., Inc. 19,000 1,553,250
Schering-Plough Corp. 7,500 419,531
Warner-Lambert Co. 26,200 1,809,438
6,554,969
INSURANCE - 2.9%
CIGNA Corp. 27,700 2,174,450
MEDICAL EQUIPMENT & SUPPLIES
- - 6.6%
Abbott Laboratories 10,600 492,238
Baxter International, Inc. 7,000 492,625
Boston Scientific Corp. (a) 9,500 251,750
Cardinal Health, Inc. 15,850 1,144,172
Guidant Corp. 8,200 467,400
Johnson & Johnson 6,000 512,250
McKesson HBOC, Inc. 1,744 118,592
Medtronic, Inc. 10,200 720,375
Omnicare, Inc. 20,000 478,750
St. Jude Medical, Inc. (a) 9,250 232,406
4,910,558
MEDICAL FACILITIES MANAGEMENT
- - 77.1%
Carematrix Corp. (a) 8,000 177,000
Columbia/HCA Healthcare Corp. 124,723 2,229,424
Coram Healthcare Corp. 9,740 0
warrants 7/11/99 (a)
Foundation Health Systems, 128,870 1,030,960
Inc. Class A (a)
HCR Manor Care, Inc. (a) 58,800 1,315,650
Health Management Associates, 607,717 7,862,339
Inc. Class A (a)
HEALTHSOUTH Corp. (a) 307,700 3,577,013
Humana, Inc. (a) 167,800 2,936,500
Lincare Holdings, Inc. (a) 306,100 10,904,809
NovaCare, Inc. (a) 40,000 85,000
Oxford Health Plans, Inc. (a) 21,100 399,581
PacifiCare Health Systems,
Inc.:
Class A (a) 4,500 296,438
Class B (a) 56,800 4,103,800
Pediatrix Medical Group (a) 13,400 413,725
Phycor, Inc. (a) 7,900 42,956
Physician Reliance Network, 48,300 437,719
Inc. (a)
Quorum Health Group, Inc. (a) 236,400 2,186,700
Renal Care Group, Inc. (a) 60,850 1,205,591
Sierra Health Services, Inc. 20,600 296,125
(a)
Tenet Healthcare Corp. (a) 183,100 3,604,781
Total Renal Care Holdings, 96,066 852,586
Inc. (a)
Trigon Healthcare, Inc. (a) 19,300 676,706
SHARES VALUE (NOTE 1)
United HealthCare Corp. 41,700 $ 2,056,331
Universal Health Services, 101,900 4,139,688
Inc. Class B (a)
Wellpoint Health Networks, 86,300 6,806,913
Inc. (a)
57,638,335
SERVICES - 0.4%
Magellan Health Services, 23,600 160,775
Inc. (a)
Medpartners, Inc. (a) 24,800 147,250
308,025
TOTAL COMMON STOCKS 72,040,237
(Cost $72,651,789)
CASH EQUIVALENTS - 3.6%
Taxable Central Cash Fund (b) 2,705,792 2,705,792
(Cost $2,705,792)
TOTAL INVESTMENT IN $ 74,746,029
SECURITIES - 100%
(Cost $75,357,581)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $91,251,954 and $106,080,592, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $23,772 for the
period.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $76,541,184. Net unrealized depreciation
aggregated $1,795,155, of which $11,240,396 related to appreciated
investment securities and $13,035,551 related to depreciated
investment securities.
The fund hereby designates approximately $6,804,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
At February 28, 1999, the fund had a capital loss carryforward of
approximately $10,988,000, all of which will expire on February 28,
2007.
The fund intends to elect to defer to its fiscal year ending February
29, 2000 approximately $18,134,000 of losses recognized during the
period November 1, 1998 to February 28,1999.
A total of 66% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of this percentage
for use in preparing 1999 income tax returns.
MEDICAL DELIVERY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 74,746,029
value (cost $75,357,581) -
See accompanying schedule
Receivable for investments 2,890,910
sold
Receivable for fund shares 45,593
sold
Dividends receivable 16,250
Interest receivable 16,589
Redemption fees receivable 277
Other receivables 37,310
TOTAL ASSETS 77,752,958
LIABILITIES
Payable for fund shares $ 791,042
redeemed
Accrued management fee 42,231
Other payables and accrued 77,405
expenses
TOTAL LIABILITIES 910,678
NET ASSETS $ 76,842,280
Net Assets consist of:
Paid in capital $ 107,722,467
Accumulated undistributed net (30,268,635)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (611,552)
(depreciation) on investments
NET ASSETS, for 4,028,359 $ 76,842,280
shares outstanding
NET ASSET VALUE and $19.08
redemption price per share
($76,842,280 (divided by)
4,028,359 shares)
Maximum offering price per $19.67
share (100/97.00 of $19.08)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 184,483
Dividends
Special dividend from 748,113
Vencor, Inc.
Interest (including income on 814,106
securities loaned of $27,838)
TOTAL INCOME 1,746,702
EXPENSES
Management fee $ 909,497
Transfer agent fees 1,031,055
Accounting and security 153,468
lending fees
Non-interested trustees' 197
compensation
Custodian fees and expenses 10,198
Registration fees 38,310
Audit 13,275
Legal 1,627
Reports to shareholders 24,315
Total expenses before 2,181,942
reductions
Expense reductions (45,006) 2,136,936
NET INVESTMENT INCOME (LOSS) (390,234)
REALIZED AND UNREALIZED GAIN (29,445,200)
(LOSS)
Net realized gain (loss) on
investment securities
Change in net unrealized (24,558,768)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) (54,003,968)
NET INCREASE (DECREASE) IN $ (54,394,202)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 324,894
charges paid to FDC
Sales charges - Retained by $ 324,831
FDC
Deferred sales charges $ 6,973
withheld by FDC
Exchange fees withheld by FSC $ 19,297
Expense reductions Directed $ 41,000
brokerage arrangements
Custodian credits 649
Transfer agent credits 3,357
$ 45,006
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (390,234) $ (1,403,143)
income (loss)
Net realized gain (loss) (29,445,200) 30,147,880
Change in net unrealized (24,558,768) (1,649,494)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (54,394,202) 27,095,243
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (7,388,637) (27,697,433)
From net realized gain
In excess of net realized (824,351) -
gain
TOTAL DISTRIBUTIONS (8,212,988) (27,697,433)
Share transactions Net 162,156,332 114,716,005
proceeds from sales of shares
Reinvestment of distributions 8,097,680 27,235,291
Cost of shares redeemed (186,595,554) (178,502,092)
NET INCREASE (DECREASE) IN (16,341,542) (36,550,796)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 248,569 310,663
TOTAL INCREASE (DECREASE) (78,700,163) (36,842,323)
IN NET ASSETS
NET ASSETS
Beginning of period 155,542,443 192,384,766
End of period $ 76,842,280 $ 155,542,443
OTHER INFORMATION
Shares
Sold 6,115,538 4,089,783
Issued in reinvestment of 283,433 1,085,517
distributions
Redeemed (7,863,246) (6,483,186)
Net increase (decrease) (1,464,275) (1,307,886)
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 28.32 $ 28.29 $ 29.00 $ 23.18 $ 20.28
period
Income from Investment
Operations
Net investment income (loss) C (.06) F (.24) (.23) (.03) .06
Net realized and unrealized (7.88) 5.45 2.92 7.72 3.74
gain (loss)
Total from investment (7.94) 5.21 2.69 7.69 3.80
operations
Less Distributions
From net investment income - - - - (.06)
From net realized gain (1.21) (5.23) (3.45) (1.91) (.89)
In excess of net realized gain (.13) - - - -
Total distributions (1.34) (5.23) (3.45) (1.91) (.95)
Redemption fees added to paid .04 .05 .05 .04 .05
in capital
Net asset value, end of period $ 19.08 $ 28.32 $ 28.29 $ 29.00 $ 23.18
TOTAL RETURN A, B (29.47)% 21.97% 10.50% 34.15% 19.63%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 76,842 $ 155,542 $ 192,385 $ 295,489 $ 299,570
(000 omitted)
Ratio of expenses to average 1.40% 1.57% 1.57% 1.65% 1.48%
net assets
Ratio of expenses to average 1.37% d 1.53% d 1.53% d 1.62% d 1.45% d
net assets after expense
reductions
Ratio of net investment (.25)% (.88)% (.84)% (.13)% .29%
income (loss) to average net
assets
Portfolio turnover rate 67% 109% 78% 132% 123%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. E FOR
THE YEAR ENDED FEBRUARY 29.
F NET INVESTMENT INCOME
(LOSS) PER SHARE REFLECTS A
SPECIAL DIVIDEND FROM
VENCOR, INC., WHICH AMOUNTED
TO $.12 PER SHARE.
</TABLE>
MEDICAL EQUIPMENT AND SYSTEMS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED FEBRUARY 28, 1999 LIFE OF FUND
SELECT MEDICAL EQUIPMENT AND 21.00%
SYSTEMS
SELECT MEDICAL EQUIPMENT AND 17.30%
SYSTEMS (LOAD ADJ.)
S&P 500 15.54%
GS Health Care 19.32%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case the period since the fund
started on April 28, 1998. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a market
capitalization-weighted index of common stocks - and the Goldman Sachs
Health Care Index - a market capitalization-weighted index of 93
stocks designed to measure the performance of companies in the health
care sector. These benchmarks include reinvestment of dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year. These numbers will be reported once the fund is a year old.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER LIFE OF FUND
Medical Equipment/Systems S&P 500
00354 SP001
1998/04/28 9700.00 10000.00
1998/04/30 9961.90 10246.17
1998/05/31 9816.40 10070.04
1998/06/30 10340.20 10479.08
1998/07/31 10543.90 10367.48
1998/08/31 9185.90 8868.55
1998/09/30 9874.60 9436.67
1998/10/31 10349.90 10204.25
1998/11/30 11067.70 10822.73
1998/12/31 11882.50 11446.33
1999/01/31 11872.80 11925.02
1999/02/26 11730.00 11554.39
IMATRL PRASUN SHR__CHT 19990228 19990315 135209 R00000000000014
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Select Medical Equipment and Systems Portfolio on
April 28, 1998, when the fund started, and the current 3.00% sales
charge was paid. As the chart shows, by February 28, 1999, the value
of the investment would have grown to $11,730 - a 17.30% increase on
the initial investment - and includes the effect of a $7.50 trading
fee. For comparison, look at how the Standard & Poor's 500 Index did
over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 investment would have been $11,554 - a
15.54% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Baxter International, Inc. 7.2
Becton, Dickinson & Co. 6.7
Medtronic, Inc. 6.6
Guidant Corp. 6.1
Abbott Laboratories 5.9
Johnson & Johnson 5.7
Biomet, Inc. 5.0
Boston Scientific Corp. 4.5
Bausch & Lomb, Inc. 4.1
Allergan, Inc. 3.8
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Medical Equipment & Supplies 70.4%
Drugs & Pharmaceuticals 10.3%
Electronic Instruments 5.7%
Industrial Machinery
& Equipment 1.0%
Household Products 0.4%
All Others 12.2%*
Row: 1, Col: 1, Value: 12.2
Row: 1, Col: 2, Value: 1.4
Row: 1, Col: 3, Value: 2.0
Row: 1, Col: 4, Value: 5.7
Row: 1, Col: 5, Value: 10.3
Row: 1, Col: 6, Value: 68.40000000000001
* INCLUDES SHORT-TERM INVESTMENTS
MEDICAL EQUIPMENT AND SYSTEMS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Kerry Nelson)
Kerry Nelson, Portfolio Manager of Fidelity
Select Medical Equipment and Systems Portfolio
Q. HOW DID THE FUND PERFORM, KERRY?
A. The fund did well on both an absolute and a relative basis. From
its inception on April 28, 1998, through February 28, 1999, the fund
returned 21.00%, compared to 15.54% for the Standard and Poor's 500
Index and 19.32% for the Goldman Sachs Health Care Index, an index of
93 stocks designed to measure the performance of companies in the
health care sector.
Q. WHAT ENABLED THE FUND TO BEAT BOTH OF ITS BENCHMARKS?
A. Medical device stocks performed well during the period due to
major, profitable product launches at many of the larger companies,
leading to faster earnings growth than that experienced by the typical
S&P 500 company. Superior earnings growth, combined with increased
industry consolidation and generally favorable business prospects,
contributed to the fund's strong performance. In addition, the fund's
overweighted position in large-cap cardiology stocks, which tend to
offer higher quality, faster growth and greater product
diversification than many of the smaller companies within the sector,
helped the fund outperform its benchmarks.
Q. WHAT SHIFTS IN STRATEGY DID YOU MAKE DURING THE PERIOD?
A. I increased the fund's exposure to the large-cap, diversified
cardiology companies I mentioned earlier, and sold more of the
small-cap, single-product companies. Because earnings for S&P 500
companies were slowing, I focused on medical device companies that
seemed capable of generating consistent revenue and earnings growth.
Medical device companies with diversified product portfolios tend to
have more consistent results than many of the smaller companies, which
tend to be more dependent on their ability to gain regulatory approval
for and successfully market a single product. As the year progressed,
investors became increasingly willing to pay higher premiums for
companies with solid growth prospects. In addition, I raised the
fund's weighting in orthopedic stocks. That decision was driven by an
improvement in the industry's basic business prospects following a
wave of consolidation that I believed would lead to more stable
pricing. Consolidation and the improved fundamental outlook boded well
for the prices of orthopedic shares.
Q. WHAT STOCKS CONTRIBUTED POSITIVELY TO THE FUND'S PERFORMANCE DURING
THE PERIOD?
A. Guidant, one of the fund's core holdings, was also one of the top
performers. The company has a leadership position in three key
segments of the cardiology market and reported strong earnings during
the period. Arterial Vascular Engineering was another star performer.
The company was acquired by Medtronic at a significant premium to the
stock's price. Sofamor/Danek Group, an orthopedic company specializing
in products for the spine, also performed well when it, too, was
acquired by Medtronic at a substantial premium.
Q. WHAT STOCKS WERE DISAPPOINTING?
A. The fund was hurt by its large position in Boston Scientific, which
suffered the double whammy of a Food and Drug Administration
(FDA)-mandated recall on a major new product and an apparently related
investigation by the Department of Justice. Another disappointment was
ESC Medical Systems, an Israel-based firm that manufactures lasers for
medical purposes. The company suffered a sharp decline in sales
concurrent with difficulties in integrating a recent acquisition.
Q. WHAT'S YOUR OUTLOOK, KERRY?
A. My outlook for the medical device industry remains positive. The
overall economic, demographic and regulatory environment appears
supportive of stable pricing and further healthy growth in the demand
for medical devices. I continue to favor larger, diversified companies
and remain cautious of single-product companies, particularly those
without proven success in the marketplace. One area that I am keeping
an eye on in 1999 is the discussion in Washington about Medicare
reform. Some topics being discussed - for example, the reimbursement
of pharmaceuticals - could lead to measures that negatively affect
some medical device stocks with pharmaceutical exposure. On the
positive side, accounting changes have been proposed by the Financial
Accounting Standards Board that could stimulate more short-term
consolidation in the industry, as participants attempt to complete
mergers and acquisitions before these new standards take effect.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: April 28, 1998
FUND NUMBER: 354
TRADING SYMBOL: FSMEX
SIZE: as of February 28, 1999, more than
$28 million
MANAGER: Kerry Nelson, since inception;
analyst, medical devices and automotive
industries; joined Fidelity in 1995
MEDICAL EQUIPMENT AND SYSTEMS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 88.0%
SHARES VALUE (NOTE 1)
DRUGS & PHARMACEUTICALS - 10.3%
Allergan, Inc. 14,050 $ 1,145,075
Biomatrix, Inc. (a) 2,000 139,000
Chiron Corp. (a) 33,000 695,063
Cytyc Corp. (a) 9,000 163,125
Lilly (Eli) & Co. 2,800 265,125
Merck & Co., Inc. 1,200 98,100
Pfizer, Inc. 500 65,969
Sepracor, Inc. (a) 1,000 124,750
Ventana Medical Systems, Inc. 15,300 265,838
(a)
Warner-Lambert Co. 1,500 103,594
3,065,639
ELECTRONIC INSTRUMENTS - 5.7%
Perkin-Elmer Corp. 8,740 828,115
Thermo Optek Corp. (a) 2,680 29,145
Waters Corp. (a) 9,160 852,453
1,709,713
HOUSEHOLD PRODUCTS - 0.4%
Safeskin Corp. (a) 5,290 122,993
INDUSTRIAL MACHINERY &
EQUIPMENT - 1.0%
Mettler-Toledo International, 11,310 289,112
Inc. (a)
MEDICAL EQUIPMENT & SUPPLIES
- - 70.4%
Abbott Laboratories 38,120 1,770,198
ADAC Laboratories (a) 5,000 89,375
Ballard Medical Products 4,700 112,506
Bard (C.R.), Inc. 14,630 824,766
Bausch & Lomb, Inc. 20,380 1,229,169
Baxter International, Inc. 30,460 2,143,619
Becton, Dickinson & Co. 59,960 2,008,660
Biomet, Inc. 41,110 1,508,223
Boston Scientific Corp. (a) 50,220 1,330,830
CONMED Corp. (a) 3,000 92,625
Cooper Companies, Inc. (a) 4,310 63,034
Dionex Corp. (a) 3,500 129,063
ESC Medical Systems Ltd. (a) 6,690 33,659
Guidant Corp. 31,820 1,813,740
Haemonetics Corp. (a) 5,600 93,450
Heartport, Inc. (a) 4,000 26,500
Hillenbrand Industries, Inc. 20,670 865,556
Johnson & Johnson 19,850 1,694,694
Mallinckrodt, Inc. 6,000 185,625
Medtronic, Inc. 27,808 1,963,940
Mentor Corp. 3,120 47,970
Ocular Sciences, Inc. (a) 11,900 291,550
Orthofix International NV (a) 8,170 114,380
Pall Corp. 2,900 61,444
Resmed, Inc. (a) 3,500 108,500
St. Jude Medical, Inc. (a) 18,000 452,250
Steris Corp. (a) 18,620 612,133
Stryker Corp. 12,540 592,515
Sybron International, Inc. (a) 27,060 664,661
Thoratec Laboratories Corp. 2,150 16,259
(a)
VISX, Inc. (a) 1,000 61,750
21,002,644
SHARES VALUE (NOTE 1)
MEDICAL FACILITIES MANAGEMENT
- - 0.2%
Cambridge Heart, Inc. (a) 7,800 $ 63,375
TOTAL COMMON STOCKS 26,253,476
(Cost $24,659,886)
CASH EQUIVALENTS - 12.0%
Taxable Central Cash Fund (b) 3,591,929 3,591,929
(Cost $3,591,929)
TOTAL INVESTMENT IN $ 29,845,405
SECURITIES - 100%
(Cost $28,251,815)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $33,765,122 and $10,391,732, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $3,290 for the
period.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $28,271,997. Net unrealized appreciation
aggregated $1,573,408, of which $2,853,110 related to appreciated
investment securities and $1,279,702 related to depreciated investment
securities.
MEDICAL EQUIPMENT AND SYSTEMS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 29,845,405
value (cost $28,251,815) -
See accompanying schedule
Receivable for investments 139,961
sold
Receivable for fund shares 155,198
sold
Dividends receivable 9,725
Interest receivable 12,234
Redemption fees receivable 30
TOTAL ASSETS 30,162,553
LIABILITIES
Payable for investments $ 1,492,114
purchased
Payable for fund shares 20,669
redeemed
Accrued management fee 12,967
Other payables and accrued 42,385
expenses
TOTAL LIABILITIES 1,568,135
NET ASSETS $ 28,594,418
Net Assets consist of:
Paid in capital $ 25,878,452
Accumulated undistributed net 1,122,376
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 1,593,590
(depreciation) on investments
NET ASSETS, for 2,364,036 $ 28,594,418
shares outstanding
NET ASSET VALUE and $12.10
redemption price per share
($28,594,418 (divided by)
2,364,036 shares)
Maximum offering price per $12.47
share (100/97.00 of $12.10)
STATEMENT OF OPERATIONS
APRIL 28, 1998 (COMMENCEMENT
OF OPERATIONS) TO FEBRUARY
28, 1999
INVESTMENT INCOME $ 77,548
Dividends
Interest 80,397
TOTAL INCOME 157,945
EXPENSES
Management fee $ 80,475
Transfer agent fees 107,471
Accounting fees and expenses 50,606
Non-interested trustees' 41
compensation
Custodian fees and expenses 9,620
Registration fees 54,577
Audit 20,376
Legal 41
Miscellaneous 278
Total expenses before 323,485
reductions
Expense reductions (1,420) 322,065
NET INVESTMENT INCOME (LOSS) (164,120)
REALIZED AND UNREALIZED GAIN 1,286,496
(LOSS)
Net realized gain (loss) on
investment securities
Change in net unrealized 1,593,590
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 2,880,086
NET INCREASE (DECREASE) IN $ 2,715,966
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 283,524
charges paid to FDC
Sales charges retained by FDC $ 283,524
Deferred sales charges $ 2,642
withheld by FDC
Exchange fees withheld by FSC $ 1,635
Expense Reductions
Direct brokerage $ 1,351
arrangements
Custodian credits 69
$ 1,420
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET APRIL 28, 1998 (COMMENCEMENT
ASSETS OF OPERATIONS) TO FEBRUARY
28, 1999
Operations Net investment $ (164,120)
income (loss)
Net realized gain (loss) 1,286,496
Change in net unrealized 1,593,590
appreciation (depreciation)
NET INCREASE (DECREASE) IN 2,715,966
NET ASSETS RESULTING FROM
OPERATIONS
Share transactions Net 45,365,490
proceeds from sales of shares
Cost of shares redeemed (19,529,306)
NET INCREASE (DECREASE) IN 25,836,184
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 42,268
TOTAL INCREASE (DECREASE) 28,594,418
IN NET ASSETS
NET ASSETS
Beginning of period -
End of period $ 28,594,418
OTHER INFORMATION
Shares
Sold 4,138,562
Redeemed (1,774,526)
Net increase (decrease) 2,364,036
FINANCIAL HIGHLIGHTS
YEAR ENDED FEBRUARY 28, 1999 F
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.11)
Net realized and unrealized 2.18
gain (loss)
Total from investment 2.07
operations
Redemption fees added to paid .03
in capital
Net asset value, end of period $ 12.10
TOTAL RETURN B, C 21.00%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 28,594
(000 omitted)
Ratio of expenses to average 2.39% A
net assets
Ratio of expenses to average 2.38% A, E
net assets after expense
reductions
Ratio of net investment (1.21)% A
income (loss) to average net
assets
Portfolio turnover rate 85% A
A ANNUALIZED B THE TOTAL
RETURN WOULD HAVE BEEN LOWER
HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE
PERIOD SHOWN. C TOTAL
RETURNS DO NOT INCLUDE THE
ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED. D
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. E FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. F FOR
THE PERIOD APRIL 28, 1998
(COMMENCEMENT OF OPERATIONS)
TO FEBRUARY 28, 1999.
ENERGY PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT ENERGY -22.00% 36.72% 108.70%
SELECT ENERGY (LOAD ADJ.) -24.41% 32.55% 102.37%
S&P 500 19.74% 194.91% 459.21%
GS Natural Resources -20.88% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
index of common stocks - and the Goldman Sachs Natural Resources Index
- - a market capitalization-weighted index of 96 stocks designed to
measure the performance of companies in the natural resource sector.
These benchmarks include reinvestment of dividends and capital gains,
if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT ENERGY -22.00% 6.46% 7.63%
SELECT ENERGY (LOAD ADJ.) -24.41% 5.80% 7.30%
S&P 500 19.74% 24.15% 18.78%
GS Natural Resources -20.88% n/a n/a
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER 10 YEARS
Energy S&P 500
00060 SP001
1989/02/28 9700.00 10000.00
1989/03/31 10259.76 10233.00
1989/04/30 10605.92 10764.09
1989/05/31 10731.13 11200.04
1989/06/30 10952.09 11136.20
1989/07/31 11408.73 12141.80
1989/08/31 11659.15 12379.78
1989/09/30 11843.28 12329.02
1989/10/31 11762.26 12042.99
1989/11/30 12204.18 12288.66
1989/12/31 13086.16 12583.59
1990/01/31 12501.89 11739.23
1990/02/28 12891.40 11890.67
1990/03/31 12898.89 12205.77
1990/04/30 12464.43 11900.63
1990/05/31 13220.99 13060.94
1990/06/30 12909.40 12972.12
1990/07/31 13788.68 12930.61
1990/08/31 14036.47 11761.68
1990/09/30 13996.50 11188.89
1990/10/31 13277.10 11140.78
1990/11/30 13133.21 11860.47
1990/12/31 12498.28 12191.38
1991/01/31 11688.74 12722.92
1991/02/28 12779.14 13632.61
1991/03/31 12605.67 13962.52
1991/04/30 12746.10 13996.03
1991/05/31 12820.44 14600.66
1991/06/30 12249.28 13931.95
1991/07/31 12878.30 14581.18
1991/08/31 13126.60 14926.75
1991/09/30 12994.17 14677.48
1991/10/31 13383.17 14874.16
1991/11/30 12389.98 14274.73
1991/12/31 12502.68 15907.76
1992/01/31 11833.64 15611.87
1992/02/29 11850.37 15814.83
1992/03/31 11507.48 15506.44
1992/04/30 12293.60 15962.33
1992/05/31 12879.01 16040.54
1992/06/30 12241.71 15801.54
1992/07/31 12568.71 16447.82
1992/08/31 12795.10 16110.64
1992/09/30 12870.56 16300.75
1992/10/31 12317.17 16357.80
1992/11/30 12032.09 16915.60
1992/12/31 12204.05 17123.66
1993/01/31 12664.26 17267.50
1993/02/28 13499.46 17502.34
1993/03/31 14189.77 17871.64
1993/04/30 14462.72 17439.14
1993/05/31 14897.63 17906.51
1993/06/30 15093.76 17958.44
1993/07/31 14982.90 17886.61
1993/08/31 16168.23 18564.51
1993/09/30 16074.43 18421.56
1993/10/31 15844.19 18802.89
1993/11/30 13925.49 18624.26
1993/12/31 14541.68 18849.62
1994/01/31 15320.54 19490.50
1994/02/28 14807.20 18962.31
1994/03/31 14090.29 18135.55
1994/04/30 15166.60 18367.69
1994/05/31 15327.10 18668.92
1994/06/30 15246.85 18211.53
1994/07/31 15478.68 18808.87
1994/08/31 15220.10 19580.03
1994/09/30 15104.19 19100.32
1994/10/31 15960.15 19530.08
1994/11/30 14979.36 18818.79
1994/12/31 14601.65 19097.87
1995/01/31 14252.02 19593.08
1995/02/28 14813.27 20356.63
1995/03/31 15622.94 20957.35
1995/04/30 16103.08 21574.54
1995/05/31 16518.58 22436.88
1995/06/30 16038.44 22958.09
1995/07/31 16417.01 23719.38
1995/08/31 16296.98 23778.91
1995/09/30 16306.21 24782.38
1995/10/31 15604.47 24693.91
1995/11/30 16500.11 25777.97
1995/12/31 17723.92 26274.46
1996/01/31 17997.76 27168.84
1996/02/29 17912.78 27420.69
1996/03/31 19112.00 27684.75
1996/04/30 20037.50 28092.83
1996/05/31 20244.58 28817.34
1996/06/30 20619.29 28927.14
1996/07/31 19692.36 27649.13
1996/08/31 20461.52 28232.26
1996/09/30 21546.23 29821.17
1996/10/31 22423.85 30643.63
1996/11/30 23666.33 32959.99
1996/12/31 23479.50 32307.05
1997/01/31 24015.65 34325.59
1997/02/28 21557.44 34594.71
1997/03/31 22154.29 33173.21
1997/04/30 21956.53 35153.65
1997/05/31 23955.48 37293.80
1997/06/30 24306.36 38964.57
1997/07/31 25901.26 42064.98
1997/08/31 26167.08 39708.50
1997/09/30 28091.60 41883.33
1997/10/31 27315.41 40484.43
1997/11/30 25741.77 42358.45
1997/12/31 25893.83 43085.75
1998/01/31 24510.37 43562.28
1998/02/28 25955.04 46703.99
1998/03/31 27191.58 49095.70
1998/04/30 27715.95 49589.60
1998/05/31 27042.38 48737.16
1998/06/30 26331.40 50716.86
1998/07/31 24161.02 50176.72
1998/08/31 19845.22 42922.17
1998/09/30 23237.99 45671.77
1998/10/31 23512.41 49386.71
1998/11/30 22689.16 52380.04
1998/12/31 22077.96 55398.18
1999/01/31 20568.68 57714.93
1999/02/26 20237.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990322 111032 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Energy Portfolio on February 28, 1989, and
the current 3.00% sales charge was paid. As the chart shows, by
February 28, 1999, the value of the investment would have grown to
$20,237 - a 102.37% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
BP Amoco PLC sponsored ADR 7.0
Mobil Corp. 6.2
USX-Marathon Group 5.6
Schlumberger Ltd. 5.3
Exxon Corp. 5.3
Enron Corp. 5.2
Chevron Corp. 3.5
Total SA sponsored ADR 3.5
Amerada Hess Corp. 3.3
Halliburton Co. 3.2
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Oil & Gas 63.0%
Energy Services 18.6%
Gas 5.6%
Chemicals & Plastics 3.9%
Electric Utility 2.3%
All Others 6.6%*
Row: 1, Col: 1, Value: 6.6
Row: 1, Col: 2, Value: 2.3
Row: 1, Col: 3, Value: 3.9
Row: 1, Col: 4, Value: 5.6
Row: 1, Col: 5, Value: 18.6
Row: 1, Col: 6, Value: 63.0
* INCLUDES SHORT-TERM INVESTMENTS
ENERGY PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Larry Rakers)
Larry Rakers,
Portfolio Manager
of Fidelity Select
Energy Portfolio
Q. HOW DID THE FUND PERFORM, LARRY?
A. For the 12 months that ended February 28, 1999, the fund returned
- -22.00%, while the Standard & Poor's 500 Index returned 19.74% during
the same period. The fund also compares its performance to the Goldman
Sachs Natural Resources Index - an index of 96 stocks designed to
measure the performance of companies in the natural resources sector -
which returned -20.88% during the same 12-month period.
Q. WHAT MARKET FACTORS HURT PERFORMANCE AND WHAT CAUSED THE FUND TO
UNDERPERFORM THE GOLDMAN SACHS INDEX FOR THE PERIOD?
A. The major cause of poor performance was weak global economic
growth. Many international economies continued to languish in a mire
of political, financial and currency troubles. Over the past couple of
years, the global demand for oil has declined from approximately a 2%
annual growth rate to 0%. In this environment, even a slight increase
in the supply of oil is too much and, as a result, commodity prices
have tanked across the board. Regarding the fund's performance
relative to the Goldman Sachs index, the fund underperformed because I
allocated a larger percentage of assets to small and mid-cap
integrated oil companies and energy service companies compared to the
index. These are more sensitive to oil prices and underperformed the
larger integrated oil companies, such as Mobil and Exxon, in this
bearish environment.
Q. WHAT ABOUT THE ELECTRIC AND GAS UTILITIES SECTORS? IN COMPARISON TO
THE GOLDMAN SACHS INDEX, WHY WAS THE FUND UNDERWEIGHTED IN THESE AREAS
AND OVERWEIGHTED IN MORE AGGRESSIVE OIL COMPANIES?
A. Gas and electric stocks are defensive investments that I tend to
focus on when I am concerned about oil prices declining. However, I
believed there wasn't much room for oil prices to go lower and there
was a strong argument to say that prices were ready to go higher. In
hindsight, I was early in my prediction that oil prices were poised to
rebound. However, I am comfortable with the fund's asset allocation. I
believe for a number of reasons - which I will discuss in more detail
in my market outlook - that we are starting to see signs of impending
strength in oil prices. As a result, if we do see an increase in oil
prices, the smaller-cap integrated oil companies and energy service
companies - which are more sensitive to oil prices - should perform
better than electric and gas utilities, as well as the larger-cap
integrated oil companies.
Q. WERE THERE ANY BRIGHT SPOTS IN THIS DIFFICULT ENVIRONMENT?
A. The major oil stocks, such as BP Amoco, Mobil and Exxon, managed to
gain approximately 13% combined over the past year. All of these
stocks provided a boost to the fund's total return and rallied in
response to merger announcements. In comparison, the secondary energy
stocks - drillers, oil service and oil equipment - all posted
significant losses for the year.
Q. WHAT OTHER STOCKS DETRACTED FROM PERFORMANCE?
A. With the exception of the large integrated oil stocks, the energy
and energy service sectors experienced negative returns across the
board. With energy prices hitting 12-year lows, significant detractors
were USX-Marathon, Tosco, Weatherford International and Schlumberger.
As I mentioned earlier, the stock prices of these companies are even
more dependent on energy prices than the larger integrated oil
companies. When the prices of oil and natural gas drop below a certain
level, it no longer makes economic sense to explore for these fuels or
drill new wells. In this environment, business deteriorates for energy
service companies like Weatherford and Schlumberger. On the other
hand, if energy prices pick up, earnings can rise exponentially for
these companies.
Q. WHAT'S YOUR OUTLOOK, LARRY?
A. I'm starting to get excited about the outlook for oil stocks for
the first time in a while. The Organization of Petroleum Exporting
Countries (OPEC) is scheduled to meet on March 23, 1999. We started to
see a strong rebound in oil prices toward the end of the period as
investors anticipated that OPEC will reduce oil production. If this
trend continues, combined with a slight increase in demand, the fund
could perform well. In addition, for the first time in a while, we are
starting to see a response on the supply side to price movement. For
example, the typical oil company cut capital expenditures by 30%, cut
back on exploration, and the number of rigs drilling for oil and gas
fell to a 49-year low. As a result, oil and gas production may fall in
1999. If we get even a slight rebound in demand from Asia or Latin
America, I don't think it will take much for a squeeze on supply. This
scenario could be very good for the fund.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: July 14, 1981
FUND NUMBER: 060
TRADING SYMBOL: FSENX
SIZE: as of February 28, 1999, more than
$120 million
MANAGER: Lawrence Rakers, since 1997;
manager, Fidelity Select Natural Resources
Portfolio, since 1997; Fidelity Select Paper and
Forest Products Portfolio, Fidelity Select Precious
Metals and Minerals Portfolio, 1996-1997; Fidelity
Select Gold Portfolio, 1995-1997; joined Fidelity
in 1993
ENERGY PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.7%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES -
0.1%
Forest Oil Corp. (a) 10,000 $ 63,750
CHEMICALS & PLASTICS - 3.9%
Crompton & Knowles Corp. 61,600 1,139,600
du Pont (E.I.) de Nemours & 69,600 3,571,350
Co.
4,710,950
ELECTRIC UTILITY - 2.3%
AES Corp. (a) 62,000 2,305,625
Calenergy, Inc. (a) 16,700 468,644
2,774,269
ENERGY SERVICES - 18.6%
Baker Hughes, Inc. 135,650 2,441,700
BJ Services Co. (a) 151,100 2,124,844
Coflexip SA sponsored ADR 29,300 842,375
ENSCO International, Inc. 145,400 1,290,425
Global Industries Ltd. (a) 10,000 50,625
Global Marine, Inc. (a) 38,000 294,500
Halliburton Co. 135,400 3,825,050
Helmerich & Payne, Inc. 44,400 724,275
Marine Drilling Companies, 20,000 127,500
Inc. (a)
Nabors Industries, Inc. (a) 25,000 287,500
Noble Drilling Corp. (a) 105,800 1,309,275
Pool Energy Services Co. (a) 87,000 883,594
Rowan Companies, Inc. (a) 20,000 172,500
Ryan Energy Technologies, 32,900 50,186
Inc. (a)
Santa Fe International Corp. 17,300 231,388
Schlumberger Ltd. 131,880 6,404,423
Smith International, Inc. 47,600 1,157,275
UTI Energy Corp. (a) 27,000 156,938
22,374,373
ENGINEERING - 0.2%
Stolt Comex Seaway SA 13,800 91,425
Stolt Comex Seaway SA 20,000 117,500
sponsored ADR Class A
208,925
GAS - 5.6%
Dynegy, Inc. 11,000 132,000
Enron Corp. 96,800 6,292,000
Williams Companies, Inc. 10,000 370,000
6,794,000
OIL & GAS - 62.9%
Alberta Energy Co. Ltd. 23,000 493,467
Amerada Hess Corp. 87,200 3,956,700
SHARES VALUE (NOTE 1)
Anadarko Petroleum Corp. 25,900 $ 712,250
Apache Corp. 10,000 199,375
Berkley Petroleum Corp. (a) 38,800 211,009
BP Amoco PLC sponsored ADR 99,390 8,448,140
Burlington Resources, Inc. 2,825 91,459
Cabot Oil & Gas Corp. Class A 26,500 289,844
Canadian Natural Resources 72,600 1,003,920
Ltd. (a)
Chesapeake Energy Corp. 50,000 34,375
Chevron Corp. 54,600 4,197,375
Compagnie Generale de 25,800 212,850
Geophysique SA sponsored ADR
(a)
Conoco, Inc. Class A 15,000 304,688
Cooper Cameron Corp. (a) 14,800 342,250
Crestar Energy, Inc. (a) 49,500 334,859
Elf Aquitaine SA sponsored ADR 71,300 3,680,863
Eni Spa sponsored ADR 5,000 295,000
Enron Oil & Gas Co. 55,200 910,800
Exxon Corp. 95,500 6,356,719
Frontier Oil Corp. (a) 249,600 1,310,400
Gulf Canada Resources Ltd. (a) 93,000 221,429
Imperial Oil Ltd. 147,000 2,271,588
Louis Dreyfus Natural Gas 54,700 652,981
Corp. (a)
Magnum Hunter Resources, Inc. 60,200 154,263
(a)
Mallon Resources Corp. (a) 5,000 31,563
Mobil Corp. 88,900 7,395,369
Newfield Exploration Co. (a) 5,000 81,250
Noble Affiliates, Inc. 12,800 289,600
Ocean Energy, Inc. (a) 31,800 135,150
Oryx Energy Co. (a) 90,600 939,975
Paramount Resources Ltd. (c) 38,200 325,554
Penn West Petroleum Ltd. (a) 25,800 255,810
Petro-Canada 85,100 914,326
Plains Resources, Inc. (a) 96,400 891,700
Post Energy Corp. (a) 47,500 105,535
Ranger Oil Ltd. 40,000 111,686
Renaissance Energy Ltd. (a) 43,300 381,941
Rio Alto Exploration Ltd. (a) 101,700 900,448
Seagull Energy Corp. (a) 77,100 366,225
Shell Transport & Trading Co.
PLC:
ADR 83,100 2,789,044
(Reg.) 510,000 2,852,853
Snyder Oil Corp. 59,900 625,206
Stellarton Energy Corp. Class 100,000 79,586
A (a)
Suncor Energy, Inc. 44,800 1,311,792
Texaco, Inc. 80,600 3,752,938
Tosco Corp. 52,100 1,077,819
Total SA sponsored ADR 81,200 4,191,950
Ulster Petroleums Ltd. (a) 34,600 192,758
Ultramar Diamond Shamrock 29,100 574,725
Corp.
Union Pacific Resources 76,100 680,144
Group, Inc.
Upton Resources, Inc. (a) 59,700 55,432
USX-Marathon Group 325,400 6,731,713
Vastar Resources, Inc. 5,200 200,200
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
OIL & GAS - CONTINUED
Vintage Petroleum, Inc. 14,900 $ 66,119
Weatherford International, 28,425 483,225
Inc. (a)
75,478,240
SHIP BUILDING & REPAIR - 0.1%
Halter Marine Group, Inc. (a) 20,000 80,000
TOTAL COMMON STOCKS 112,484,507
(Cost $126,539,724)
CONVERTIBLE PREFERRED STOCKS
- - 0.1%
OIL & GAS - 0.1%
Chesapeake Energy Corp. $3.50 9,400 89,300
(Cost $91,438)
CASH EQUIVALENTS - 6.2%
Taxable Central Cash Fund (b) 7,421,818 7,421,818
(Cost $7,421,818)
TOTAL INVESTMENT IN $ 119,995,625
SECURITIES - 100%
(Cost $134,052,980)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(c) Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in
transactions exempt from registration, normally to qualified
institutional buyers. At the period end, the value of these securities
amounted to $325,554 or 0.3% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $188,611,682 and $178,672,234, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $48,921 for the
period.
Distribution of investments by country of issue, as a percentage of
total value of investments in securities, is as follows:
United States of America 67.4%
United Kingdom 11.7
Canada 7.7
France 7.5
Netherlands Antilles 5.3
Others (individually less 0.4
than 1%)
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $137,186,700. Net unrealized depreciation
aggregated $17,191,075, of which $3,832,545 related to appreciated
investment securities and $21,023,620 related to depreciated
investment securities.
The fund hereby designates approximately $2,129,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
At February 28, 1999, the fund had a capital loss carryforward
of approximately $3,040,000 all of which will expire on
February 28, 2007.
The fund intends to elect to defer to its fiscal year ending February
29, 2000 approximately $6,117,000 of losses recognized during the
period November 1, 1998 to February 28, 1999
A total of 100% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of this percentage
for use in preparing 1999 income tax returns.
ENERGY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 119,995,625
value (cost $134,052,980) -
See accompanying schedule
Receivable for investments 7,140
sold
Receivable for fund shares 565,649
sold
Dividends receivable 452,490
Interest receivable 36,831
Redemption fees receivable 411
Other receivables 1,364
TOTAL ASSETS 121,059,510
LIABILITIES
Payable for investments $ 122,508
purchased
Payable for fund shares 779,716
redeemed
Accrued management fee 59,148
Other payables and accrued 93,662
expenses
TOTAL LIABILITIES 1,055,034
NET ASSETS $ 120,004,476
Net Assets consist of:
Paid in capital $ 145,525,094
Undistributed net investment 825,869
income
Accumulated undistributed net (12,289,132)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (14,057,355)
(depreciation) on investments
NET ASSETS, for 7,395,868 $ 120,004,476
shares outstanding
NET ASSET VALUE and $16.23
redemption price per share
($120,004,476 (divided by)
7,395,868 shares)
Maximum offering price per $16.73
share (100/97.00 of $16.23)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 2,450,558
Dividends
Interest (including income on 500,765
securities loaned of $5,546)
TOTAL INCOME 2,951,323
EXPENSES
Management fee $ 825,294
Transfer agent fees 989,327
Accounting and security 136,226
lending fees
Non-interested trustees' 332
compensation
Custodian fees and expenses 30,016
Registration fees 25,954
Audit 12,517
Legal 796
Reports to shareholders 24,787
Miscellaneous 1,374
Total expenses before 2,046,623
reductions
Expense reductions (56,099) 1,990,524
NET INVESTMENT INCOME 960,799
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (12,009,667)
Foreign currency transactions (88,526) (12,098,193)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (22,109,006)
Assets and liabilities in 28 (22,108,978)
foreign currencies
NET GAIN (LOSS) (34,207,171)
NET INCREASE (DECREASE) IN $ (33,246,372)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 570,198
charges paid to FDC
Sales charges - Retained by $ 567,585
FDC
Deferred sales charges $ 12,418
withheld by FDC
Exchange fees withheld by FSC $ 15,098
Expense reductions Directed $ 55,993
brokerage arrangements
Custodian credits 106
$ 56,099
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ 960,799 $ 899,143
income
Net realized gain (loss) (12,098,193) 35,228,064
Change in net unrealized (22,108,978) 1,070,352
appreciation (depreciation)
NET INCREASE (DECREASE) IN (33,246,372) 37,197,559
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (118,598) (711,215)
From net investment income
From net realized gain (2,920,602) (31,012,994)
TOTAL DISTRIBUTIONS (3,039,200) (31,724,209)
Share transactions Net 115,988,469 138,864,076
proceeds from sales of shares
Reinvestment of distributions 2,970,065 31,069,131
Cost of shares redeemed (109,891,379) (231,915,098)
NET INCREASE (DECREASE) IN 9,067,155 (61,981,891)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 199,403 267,473
TOTAL INCREASE (DECREASE) (27,019,014) (56,241,068)
IN NET ASSETS
NET ASSETS
Beginning of period 147,023,490 203,264,558
End of period (including $ 120,004,476 $ 147,023,490
undistributed net investment
income of $825,869 and
$431,333, respectively)
OTHER INFORMATION
Shares
Sold 5,995,866 5,967,396
Issued in reinvestment of 133,126 1,509,439
distributions
Redeemed (5,669,002) (10,078,784)
Net increase (decrease) 459,990 (2,601,949)
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 F 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 21.20 $ 21.31 $ 18.97 $ 16.10 $ 16.73
period
Income from Investment
Operations
Net investment income C .13 .11 .13 .18 .07
Net realized and unrealized (4.71) 3.93 3.59 3.13 (.11)
gain (loss)
Total from investment (4.58) 4.04 3.72 3.31 (.04)
operations
Less Distributions
From net investment income (.02) E (.09) (.13) (.11) (.08)
From net realized gain (.40) E (4.09) (1.31) (.36) (.54)
Total distributions (.42) (4.18) (1.44) (.47) (.62)
Redemption fees added to paid .03 .03 .06 .03 .03
in capital
Net asset value, end of period $ 16.23 $ 21.20 $ 21.31 $ 18.97 $ 16.10
TOTAL RETURN A, B (22.00)% 20.40% 20.35% 20.92% .04%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 120,004 $ 147,023 $ 203,265 $ 119,676 $ 96,023
(000 omitted)
Ratio of expenses to average 1.46% 1.58% 1.57% 1.63% 1.85%
net assets
Ratio of expenses to average 1.42% D 1.53% D 1.55% D 1.63% 1.85%
net assets after expense
reductions
Ratio of net investment .68% .47% .62% 1.04% .42%
income to average net assets
Portfolio turnover rate 138% 115% 87% 97% 106%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME PER
SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES
OUTSTANDING DURING THE
PERIOD. D FMR OR THE FUND
HAS ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE
FUND'S EXPENSES. E THE
AMOUNTS SHOWN REFLECT
CERTAIN RECLASSIFICATIONS
RELATED TO BOOK TO TAX
DIFFERENCES. F FOR THE YEAR
ENDED FEBRUARY 29.
</TABLE>
ENERGY SERVICE PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT ENERGY SERVICE -50.57% 45.28% 111.18%
SELECT ENERGY SERVICE (LOAD -52.12% 40.85% 104.77%
ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Natural Resources -20.88% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of the
Standard & Poor's 500 Index - a market capitalization-weighted index
of common stocks - and the Goldman Sachs Natural Resources Index - a
market capitalization-weighted index of 96 stocks designed to measure
the performance of companies in the natural resource sector. These
benchmarks include reinvestment of dividends and capital gains, if
any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT ENERGY SERVICE -50.57% 7.76% 7.76%
SELECT ENERGY SERVICE (LOAD -52.12% 7.09% 7.43%
ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Natural Resources -20.88% n/a n/a
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER 10 YEARS
Energy Service S&P 500
00043 SP001
1989/02/28 9700.00 10000.00
1989/03/31 10313.01 10233.00
1989/04/30 10805.82 10764.09
1989/05/31 10998.14 11200.04
1989/06/30 11358.74 11136.20
1989/07/31 11995.79 12141.80
1989/08/31 12560.72 12379.78
1989/09/30 12380.42 12329.02
1989/10/31 11767.41 12042.99
1989/11/30 12777.08 12288.66
1989/12/31 14411.77 12583.59
1990/01/31 13486.25 11739.23
1990/02/28 14760.35 11890.67
1990/03/31 15469.52 12205.77
1990/04/30 14652.17 11900.63
1990/05/31 17116.23 13060.94
1990/06/30 16238.79 12972.12
1990/07/31 17765.30 12930.61
1990/08/31 17452.79 11761.68
1990/09/30 17116.23 11188.89
1990/10/31 14964.68 11140.78
1990/11/30 15193.06 11860.47
1990/12/31 14664.69 12191.38
1991/01/31 14002.49 12722.92
1991/02/28 16253.97 13632.61
1991/03/31 14989.77 13962.52
1991/04/30 15062.01 13996.03
1991/05/31 15459.33 14600.66
1991/06/30 13436.61 13931.95
1991/07/31 14447.97 14581.18
1991/08/31 14291.45 14926.75
1991/09/30 12979.10 14677.48
1991/10/31 13171.73 14874.16
1991/11/30 11594.50 14274.73
1991/12/31 11221.26 15907.76
1992/01/31 11064.74 15611.87
1992/02/29 11293.50 15814.83
1992/03/31 10486.82 15506.44
1992/04/30 11353.70 15962.33
1992/05/31 12256.70 16040.54
1992/06/30 11546.34 15801.54
1992/07/31 12027.94 16447.82
1992/08/31 12641.98 16110.64
1992/09/30 13027.26 16300.75
1992/10/31 12353.02 16357.80
1992/11/30 12100.18 16915.60
1992/12/31 11606.54 17123.66
1993/01/31 12064.06 17267.50
1993/02/28 13256.01 17502.34
1993/03/31 14303.49 17871.64
1993/04/30 15074.53 17439.14
1993/05/31 15773.43 17906.51
1993/06/30 15689.08 17958.44
1993/07/31 15905.98 17886.61
1993/08/31 16460.28 18564.51
1993/09/30 15978.28 18421.56
1993/10/31 15749.33 18802.89
1993/11/30 14086.43 18624.26
1993/12/31 14038.86 18849.62
1994/01/31 14171.88 19490.50
1994/02/28 14099.32 18962.31
1994/03/31 13047.32 18135.55
1994/04/30 13729.48 18367.69
1994/05/31 14341.07 18668.92
1994/06/30 14777.92 18211.53
1994/07/31 15052.51 18808.87
1994/08/31 14453.40 19580.03
1994/09/30 15002.58 19100.32
1994/10/31 15601.69 19530.08
1994/11/30 14790.40 18818.79
1994/12/31 14118.52 19097.87
1995/01/31 14207.24 19593.08
1995/02/28 15170.44 20356.63
1995/03/31 16006.91 20957.35
1995/04/30 16982.78 21574.54
1995/05/31 17426.36 22436.88
1995/06/30 16830.70 22958.09
1995/07/31 17667.16 23719.38
1995/08/31 18376.89 23778.91
1995/09/30 18427.59 24782.38
1995/10/31 16830.70 24693.91
1995/11/30 17781.23 25777.97
1995/12/31 19889.33 26274.46
1996/01/31 20322.28 27168.84
1996/02/29 21109.46 27420.69
1996/03/31 22775.65 27684.75
1996/04/30 24488.43 28092.83
1996/05/31 24132.19 28817.34
1996/06/30 24184.97 28927.14
1996/07/31 22852.35 27649.13
1996/08/31 24303.72 28232.26
1996/09/30 25214.12 29821.17
1996/10/31 28024.48 30643.63
1996/11/30 29159.18 32959.99
1996/12/31 29651.81 32307.05
1997/01/31 31302.92 34325.59
1997/02/28 27918.82 34594.71
1997/03/31 29883.78 33173.21
1997/04/30 29538.34 35153.65
1997/05/31 33638.07 37293.80
1997/06/30 35840.05 38964.57
1997/07/31 41475.36 42064.98
1997/08/31 44416.16 39708.50
1997/09/30 49051.90 41883.33
1997/10/31 50920.68 40484.43
1997/11/30 44691.41 42358.45
1997/12/31 45033.34 43085.75
1998/01/31 38659.16 43562.28
1998/02/28 41439.55 46703.99
1998/03/31 44545.29 49095.70
1998/04/30 48213.30 49589.60
1998/05/31 45114.88 48737.16
1998/06/30 39231.01 50716.86
1998/07/31 30592.99 50176.72
1998/08/31 20906.52 42922.17
1998/09/30 25585.44 45671.77
1998/10/31 29309.81 49386.71
1998/11/30 22330.54 52380.04
1998/12/31 22643.51 55398.18
1999/01/31 21595.05 57714.93
1999/02/26 20477.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990309 144156 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Energy Service Portfolio on February 28,
1989, and the current 3.00% sales charge was paid. As the chart shows,
by February 28, 1999, the value of the investment would have grown to
$20,477 - a 104.77% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Halliburton Co. 8.7
Schlumberger Ltd. 7.0
Baker Hughes, Inc. 6.7
Cooper Cameron Corp. 6.0
Noble Drilling Corp. 5.7
Weatherford International, Inc. 5.0
Smith International, Inc. 5.0
BJ Services Co. 4.4
McDermott International, Inc. 4.0
Helmerich & Payne, Inc. 3.6
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Energy Services 76.2%
Oil & Gas 12.2%
Construction 2.7%
Engineering 1.7%
Services 0.4%
All Others 6.8%*
Row: 1, Col: 1, Value: 6.8
Row: 1, Col: 2, Value: 1.0
Row: 1, Col: 3, Value: 1.7
Row: 1, Col: 4, Value: 2.7
Row: 1, Col: 5, Value: 12.2
Row: 1, Col: 6, Value: 75.2
* INCLUDES SHORT-TERM INVESTMENTS
ENERGY SERVICE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of James Catudal)
James Catudal,
Portfolio Manager
of Fidelity Select
Energy Service Portfolio
Q. HOW DID THE FUND PERFORM, JIM?
A. It was a very difficult period. For the 12 months that ended
February 28, 1999, the fund had a total return of -50.57%, compared to
19.74% for the Standard & Poor's 500 Index. The Goldman Sachs Natural
Resources Index - an index of 96 stocks designed to measure the
performance of companies in the natural resources sector - returned
- -20.88% during the same period.
Q. WHAT ACCOUNTED FOR THE FUND'S EXTREMELY WEAK PERFORMANCE VERSUS ITS
BENCHMARKS?
A. The basic business prospects - and, in turn, the stock prices - of
energy service companies depend to a considerable extent on the price
of oil, which continued to decline for most of the period, dipping
below $11 a barrel in December 1998. On the other hand, aside from a
rough stretch from mid-July through mid-October, the broader stock
market turned in another strong showing, enabling the S&P 500 to far
surpass the fund's performance. The Goldman Sachs index contains the
stocks of companies involved in the production of a wide variety of
natural resources, most of which performed better than oil did during
the period. In addition, energy service stocks are typically very
volatile and highly sensitive to the price of oil, whereas the Goldman
Sachs index also contains some less volatile components - for example,
the stocks of large integrated oil companies. These factors helped the
Goldman Sachs index to outperform the fund.
Q. HOW DID YOU MANAGE THE FUND DURING THIS DIFFICULT PERIOD?
A. I tried to focus on the stocks of companies that could weather the
downturn better than others. That meant seeking out the shares of
larger companies with strong balance sheets - many with leadership
positions in the sector - and avoiding the stocks of companies with
high financial leverage and low value-added products and services.
Secondarily, I emphasized the shares of companies with exposure to
the U.S. natural gas market, which was somewhat healthier than the oil
market. As the price of oil continued to grind lower, however, there
was virtually no segment of the energy service sector that was immune
to plunging stock prices. In the words of a song that was popular some
years ago, there was "nowhere to run, nowhere to hide."
Q. WHAT STOCKS HELPED THE FUND'S PERFORMANCE DURING THE PERIOD?
A. Unfortunately, there is nothing worth mentioning on the positive
side, as almost all energy service stocks underperformed during the
period.
Q. WHAT STOCKS WERE DISAPPOINTING?
A. Cooper Cameron, the fund's largest holding for most of the period,
was one of the biggest detractors from performance. A well-managed oil
field equipment company, Cooper Cameron was hurt by falling order
backlogs. Drilling companies were extremely poor performers, as day
rates for drill rigs fell sharply along with utilization. R&B Falcon,
Noble Drilling and Diamond Offshore Drilling were examples of drilling
stocks that detracted from performance. Even Halliburton, widely
considered to be a "blue chip" energy service holding, saw its stock
perform poorly during the period.
Q. WHAT'S YOUR OUTLOOK, JIM?
A. Despite sailing on rough seas recently, there may be some rays of
light on the horizon for energy service stocks. The Organization of
Petroleum Exporting Countries (OPEC) has a meeting scheduled for March
23, 1999, at which it will decide whether or not to reduce oil
production further. If additional cuts are made, oil prices could firm
up in short order. However, even if OPEC cannot agree on any
production cuts, low oil prices will eventually result in decreased
supplies, which should be supportive of higher prices. On the demand
side, Asia appears to be consuming more oil again, but that influence
is being offset to some extent by lower demand from Brazil and the
rest of Latin America. To sum up, the short-term outlook is uncertain,
and all eyes are on OPEC, but over the longer term, the oil market -
and energy service stocks in general - should see improvement
regardless of what OPEC does on March 23.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: December 16, 1985
FUND NUMBER: 043
TRADING SYMBOL: FSESX
SIZE: as of February 28, 1999, more than
$366 million
MANAGER: James Catudal, since 1998;
manager, Fidelity Select Industrial Materials
Portfolio, 1997-1998; research analyst,
North American non-ferrous metals
companies, since 1997; joined Fidelity in
1997
ENERGY SERVICE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 94.1%
SHARES VALUE (NOTE 1)
COMPUTER SERVICES & SOFTWARE
- - 0.1%
GeoScience Corp. (a) 20,000 $ 270,000
CONSTRUCTION - 2.7%
Bouygues Offshore SA 59,000 781,750
sponsored ADR
McDermott (J. Ray) SA (a) 449,900 9,307,306
10,089,056
ELECTRICAL EQUIPMENT - 0.3%
NQL Drilling Tools, Inc. 495,300 1,215,420
Class A (a)
ENERGY SERVICES - 76.2%
Atwood Oceanics, Inc. (a) 225,700 3,794,581
Baker Hughes, Inc. 1,370,936 24,676,848
BJ Services Co. (a) 1,153,176 16,216,538
CAL Dive International, Inc. 49,300 708,688
(a)
Carbo Ceramics, Inc. 61,000 976,000
Coflexip SA sponsored ADR 343,600 9,878,500
Daniel Industries, Inc. 341,800 3,631,625
Diamond Offshore Drilling, 596,500 12,340,094
Inc.
ENSCO International, Inc. 1,367,800 12,139,225
Global Industries Ltd. (a) 942,300 4,770,394
Global Marine, Inc. (a) 546,000 4,231,500
Halliburton Co. 1,137,167 32,124,962
Helmerich & Payne, Inc. 801,300 13,071,206
Input/Output, Inc. (a) 716,800 4,032,000
Marine Drilling Companies, 832,100 5,304,638
Inc. (a)
McDermott International, Inc. 737,500 14,703,906
Nabors Industries, Inc. (a) 937,700 10,783,550
Noble Drilling Corp. (a) 1,705,650 21,107,419
Oceaneering International, 517,600 5,176,000
Inc. (a)
Offshore Logistics, Inc. (a) 159,300 1,388,897
Parker Drilling Co. (a) 25,000 62,500
Pool Energy Services Co. (a) 325,600 3,306,875
R&B Falcon Corp. (a) 75,118 413,149
Rowan Companies, Inc. (a) 923,600 7,966,050
Ryan Energy Technologies, 397,200 605,889
Inc. (a)
Santa Fe International Corp. 338,300 4,524,763
Schlumberger Ltd. 532,245 25,847,148
SEACOR SMIT, Inc. (a) 128,900 5,075,438
Smith International, Inc. 754,600 18,346,213
Superior Energy Services, 50,000 137,500
Inc. (a)
Tidewater, Inc. 146,465 2,755,373
Transocean Offshore, Inc. 338,154 6,974,426
UTI Energy Corp. (a) 115,000 668,438
Varco International, Inc. (a) 292,500 2,266,875
280,007,208
ENGINEERING - 1.7%
Stolt Comex Seaway SA 669,500 4,435,438
Stolt Comex Seaway SA 302,900 1,779,538
sponsored ADR Class A
6,214,976
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY &
EQUIPMENT - 0.1%
Gardner Denver Machinery, 35,000 $ 446,250
Inc. (a)
METALS & MINING - 0.1%
Cameco Corp. 20,000 426,449
OIL & GAS - 12.2%
Compagnie Generale de 140,300 1,157,475
Geophysique SA sponsored ADR
(a)
Cooper Cameron Corp. (a) 946,276 21,882,633
Petroleum Geo-Services ASA 116,600 1,333,613
sponsored ADR (a)
Veritas DGC, Inc. (a) 190,500 1,797,844
Weatherford International, 1,090,940 18,545,980
Inc. (a)
44,717,545
SERVICES - 0.4%
Tuboscope, Inc. (a) 290,900 1,563,588
SHIP BUILDING & REPAIR - 0.3%
Dril-Quip, Inc. (a) 67,400 859,350
Halter Marine Group, Inc. (a) 70,000 280,000
1,139,350
TOTAL COMMON STOCKS 346,089,842
(Cost $567,053,337)
CASH EQUIVALENTS - 5.9%
Taxable Central Cash Fund (b) 21,633,087 21,633,087
(Cost $21,633,087)
TOTAL INVESTMENT IN $ 367,722,929
SECURITIES - 100%
(Cost $588,686,424)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $457,434,835 and $570,297,633, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $132,958 for the
period.
Distribution of investments by country of issue, as a percentage of
total value of investments in securities, is as follows:
United States of America 84.6%
Netherlands Antilles 7.0
France 3.2
Panama 2.5
Luxembourg 1.7
Others (individually less 1.0
than 1%)
total 100.0%
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $633,527,520. Net unrealized depreciation
aggregated $265,804,591, of which $2,654,891 related to appreciated
investment securities and $268,459,482 related to depreciated
investment securities.
The fund hereby designates approximately $34,268,000 as capital gain
dividend for the purpose of the dividend paid deduction.
At February 28, 1999, the fund had a capital loss carryforward of
approximately $85,150,000, all of which will expire on February 28,
2007.
The fund intends to elect to defer to its fiscal year ending February
29, 2000 approximately $56,642,000 of losses recognized during the
period November 1, 1998 to February 28, 1999.
A total of 11% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of this percentage
for use in preparing 1999 income tax returns.
ENERGY SERVICE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 367,722,929
value (cost $588,686,424) -
See accompanying schedule
Receivable for investments 1,215,887
sold
Receivable for fund shares 2,332,234
sold
Dividends receivable 395,147
Interest receivable 84,285
Redemption fees receivable 3,369
TOTAL ASSETS 371,753,851
LIABILITIES
Payable for investments $ 2,378,387
purchased
Payable for fund shares 2,012,857
redeemed
Accrued management fee 187,002
Other payables and accrued 279,233
expenses
TOTAL LIABILITIES 4,857,479
NET ASSETS $ 366,896,372
Net Assets consist of:
Paid in capital $ 774,492,783
Accumulated undistributed net (186,632,916)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (220,963,495)
(depreciation) on investments
NET ASSETS, for 28,022,490 $ 366,896,372
shares outstanding
NET ASSET VALUE and $13.09
redemption price per share
($366,896,372 (divided by)
28,022,490 shares)
Maximum offering price per $13.49
share (100/97.00 of $13.09)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 3,891,533
Dividends
Interest (including income on 1,782,191
securities loaned of
$218,074)
TOTAL INCOME 5,673,724
EXPENSES
Management fee $ 3,826,822
Transfer agent fees 4,328,274
Accounting and security 545,412
lending fees
Non-interested trustees' 2,014
compensation
Custodian fees and expenses 24,274
Registration fees 175,479
Audit 27,810
Legal 4,387
Reports to shareholders 124,072
Total expenses before 9,058,544
reductions
Expense reductions (217,151) 8,841,393
NET INVESTMENT INCOME (LOSS) (3,167,669)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (185,189,396)
Foreign currency transactions (1,446) (185,190,842)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (243,966,833)
Assets and liabilities in 168 (243,966,665)
foreign currencies
NET GAIN (LOSS) (429,157,507)
NET INCREASE (DECREASE) IN $ (432,325,176)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 3,272,526
charges paid to FDC
Sales charges - Retained by $ 3,265,721
FDC
Deferred sales charges $ 9,358
withheld by FDC
Exchange fees withheld by FSC $ 136,703
Expense reductions Directed $ 214,503
brokerage arrangements
Custodian credits 773
Transfer agent credits 1,875
$ 217,151
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (3,167,669) $ (3,364,496)
income (loss)
Net realized gain (loss) (185,190,842) 157,396,467
Change in net unrealized (243,966,665) 12,574,205
appreciation (depreciation)
NET INCREASE (DECREASE) IN (432,325,176) 166,606,176
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (54,767,354) (52,135,101)
from net realized gains
Share transactions Net 1,182,599,212 2,385,855,385
proceeds from sales of shares
Reinvestment of distributions 53,845,591 51,297,776
Cost of shares redeemed (1,305,871,677) (2,077,124,405)
NET INCREASE (DECREASE) IN (69,426,874) 360,028,756
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 4,414,000 4,998,236
TOTAL INCREASE (DECREASE) (552,105,404) 479,498,067
IN NET ASSETS
NET ASSETS
Beginning of period 919,001,776 439,503,709
End of period $ 366,896,372 $ 919,001,776
OTHER INFORMATION
Shares
Sold 53,434,483 81,787,357
Issued in reinvestment of 1,829,614 2,167,528
distributions
Redeemed (60,036,675) (72,645,359)
Net increase (decrease) (4,772,578) 11,309,526
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 F 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 28.02 $ 20.46 $ 16.09 $ 11.97 $ 11.66
period
Income from Investment
Operations
Net investment income (loss) C (.10) (.10) (.01) .08 D .02
Net realized and unrealized (13.26) 9.36 5.05 4.49 .67
gain (loss)
Total from investment (13.36) 9.26 5.04 4.57 .69
operations
Less Distributions
From net investment income - - - (.04) (.01)
In excess of net investment - - - - (.01)
income
From net realized gain (1.71) (1.85) (.79) (.48) (.35)
In excess of net realized gain - - - - (.13)
Total distributions (1.71) (1.85) (.79) (.52) (.50)
Redemption fees added to paid .14 .15 .12 .07 .12
in capital
Net asset value, end of period $ 13.09 $ 28.02 $ 20.46 $ 16.09 $ 11.97
TOTAL RETURN A, B (50.57)% 48.43% 32.26% 39.15% 7.60%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 366,896 $ 919,002 $ 439,504 $ 273,805 $ 63,794
(000 omitted)
Ratio of expenses to average 1.39% 1.25% 1.47% 1.59% 1.81%
net assets
Ratio of expenses to average 1.35% E 1.22% E 1.45% E 1.58% E 1.79% E
net assets after expense
reductions
Ratio of net investment (.49)% (.35)% (.07)% .60% .19%
income (loss) to average net
assets
Portfolio turnover rate 75% 78% 167% 223% 209%
</TABLE>
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D INVESTMENT
INCOME PER SHARE REFLECTS A
SPECIAL DIVIDEND WHICH
AMOUNTED TO $.02 PER SHARE.
E FMR OR THE FUND HAS
ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE
FUND'S EXPENSES. F FOR THE
YEAR ENDED FEBRUARY 29.
GOLD PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT GOLD -15.69% -39.16% -11.85%
SELECT GOLD (LOAD ADJ.) -18.29% -41.06% -14.57%
S&P 500 19.74% 194.91% 459.21%
GS Natural Resources -20.88% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 index - a market capitalization-weighted
index of common stocks - and the Goldman Sachs Natural Resources Index
- - a market capitalization-weighted index of 96 stocks designed to
measure the performance of companies in the natural resource sector.
These benchmarks include reinvestment of dividends and capital gains,
if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT GOLD -15.69% -9.46% -1.25%
SELECT GOLD (LOAD ADJ.) -18.29% -10.03% -1.56%
S&P 500 19.74% 24.15% 18.78%
GS Natural Resources -20.88% n/a n/a
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER 10 YEARS
Gold S&P 500
00041 SP001
1989/02/28 9700.00 10000.00
1989/03/31 9358.89 10233.00
1989/04/30 8906.14 10764.09
1989/05/31 8583.63 11200.04
1989/06/30 9067.39 11136.20
1989/07/31 9160.42 12141.80
1989/08/31 9625.58 12379.78
1989/09/30 9681.39 12329.02
1989/10/31 9780.63 12042.99
1989/11/30 11027.24 12288.66
1989/12/31 10853.58 12583.59
1990/01/31 11331.14 11739.23
1990/02/28 11014.83 11890.67
1990/03/31 10586.89 12205.77
1990/04/30 9439.51 11900.63
1990/05/31 10270.59 13060.94
1990/06/30 9613.17 12972.12
1990/07/31 10282.99 12930.61
1990/08/31 10096.93 11761.68
1990/09/30 10090.73 11188.89
1990/10/31 8434.78 11140.78
1990/11/30 8329.35 11860.47
1990/12/31 8986.76 12191.38
1991/01/31 7740.15 12722.92
1991/02/28 8440.98 13632.61
1991/03/31 8409.97 13962.52
1991/04/30 8112.28 13996.03
1991/05/31 8391.37 14600.66
1991/06/30 8955.75 13931.95
1991/07/31 8856.52 14581.18
1991/08/31 8137.08 14926.75
1991/09/30 8000.64 14677.48
1991/10/31 8614.64 14874.16
1991/11/30 8596.04 14274.73
1991/12/31 8434.78 15907.76
1992/01/31 8639.45 15611.87
1992/02/29 8372.76 15814.83
1992/03/31 7802.17 15506.44
1992/04/30 7405.24 15962.33
1992/05/31 7932.42 16040.54
1992/06/30 8447.19 15801.54
1992/07/31 8980.56 16447.82
1992/08/31 8813.11 16110.64
1992/09/30 8763.49 16300.75
1992/10/31 8503.01 16357.80
1992/11/30 7783.57 16915.60
1992/12/31 8174.30 17123.66
1993/01/31 8019.25 17267.50
1993/02/28 8775.90 17502.34
1993/03/31 9762.02 17871.64
1993/04/30 10996.23 17439.14
1993/05/31 12218.03 17906.51
1993/06/30 12931.27 17958.44
1993/07/31 13960.81 17886.61
1993/08/31 13228.96 18564.51
1993/09/30 11827.30 18421.56
1993/10/31 13594.88 18802.89
1993/11/30 13607.29 18624.26
1993/12/31 14605.82 18849.62
1994/01/31 14612.02 19490.50
1994/02/28 14053.84 18962.31
1994/03/31 14394.95 18135.55
1994/04/30 13179.35 18367.69
1994/05/31 13749.94 18668.92
1994/06/30 13073.91 18211.53
1994/07/31 12881.65 18808.87
1994/08/31 13489.45 19580.03
1994/09/30 14667.84 19100.32
1994/10/31 13607.29 19530.08
1994/11/30 11994.76 18818.79
1994/12/31 12348.27 19097.87
1995/01/31 11058.25 19593.08
1995/02/28 11436.57 20356.63
1995/03/31 13191.75 20957.35
1995/04/30 13142.14 21574.54
1995/05/31 13415.03 22436.88
1995/06/30 13601.09 22958.09
1995/07/31 13967.01 23719.38
1995/08/31 13998.02 23778.91
1995/09/30 13991.82 24782.38
1995/10/31 12304.86 24693.91
1995/11/30 13446.04 25777.97
1995/12/31 13731.33 26274.46
1996/01/31 16168.73 27168.84
1996/02/29 16813.75 27420.69
1996/03/31 17216.88 27684.75
1996/04/30 17626.21 28092.83
1996/05/31 19548.85 28817.34
1996/06/30 16788.94 28927.14
1996/07/31 16478.84 27649.13
1996/08/31 18159.59 28232.26
1996/09/30 17824.68 29821.17
1996/10/31 17334.72 30643.63
1996/11/30 16590.47 32959.99
1996/12/31 16466.67 32307.05
1997/01/31 15764.75 34325.59
1997/02/28 17838.90 34594.71
1997/03/31 15005.92 33173.21
1997/04/30 14099.42 35153.65
1997/05/31 14908.35 37293.80
1997/06/30 13631.44 38964.57
1997/07/31 13417.51 42064.98
1997/08/31 13544.53 39708.50
1997/09/30 14701.10 41883.33
1997/10/31 12448.13 40484.43
1997/11/30 9513.26 42358.45
1997/12/31 9981.24 43085.75
1998/01/31 10536.12 43562.28
1998/02/28 10141.69 46703.99
1998/03/31 10803.54 49095.70
1998/04/30 11431.96 49589.60
1998/05/31 9820.79 48737.16
1998/06/30 8624.11 50716.86
1998/07/31 7989.00 50176.72
1998/08/31 5903.17 42922.17
1998/09/30 9145.57 45671.77
1998/10/31 8871.47 49386.71
1998/11/30 8684.28 52380.04
1998/12/31 9118.83 55398.18
1999/01/31 8864.78 57714.93
1999/02/26 8543.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990307 162024 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Gold Portfolio on February 28, 1989, and
the current 3.00% sales charge was paid. As the chart shows, by
February 28, 1999, the value of the investment would have been $8,543
- - a 14.57% decrease on the initial investment - and includes the
effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Getchell Gold Corp. 11.9
Meridian Gold, Inc. 10.8
Euro-Nevada Mining Corp. Ltd. 8.6
Barrick Gold Corp. 7.0
Normandy Mining Ltd. 6.7
Newmont Mining Corp. 4.8
Anglogold Ltd. 4.3
Stillwater Mining Co. 4.0
Compania de Minas 3.9
Buenaventura SA Class B
Franco Nevada Mining Corp. Ltd. 3.6
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Gold Ores 60.1%
Gold & Silver Ores 24.4%
Silver Ores 4.8%
Miscellaneous Nonmetallic
Minerals 2.5%
Metal Mining Services 1.3%
All Others 6.9%*
Row: 1, Col: 1, Value: 6.9
Row: 1, Col: 2, Value: 1.3
Row: 1, Col: 3, Value: 2.5
Row: 1, Col: 4, Value: 4.8
Row: 1, Col: 5, Value: 24.4
Row: 1, Col: 6, Value: 60.1
* INCLUDES SHORT-TERM INVESTMENTS
GOLD PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of George Domolky)
George Domolky,
Portfolio Manager
of Fidelity Select
Gold Portfolio
Q. HOW DID THE FUND PERFORM, GEORGE?
A. The fund once again had a negative return but performed well
relative to the more meaningful of its two benchmarks. For the 12
months that ended February 28, 1999, the fund had a total return of
- -15.69%, while the Goldman Sachs Natural Resources Index - an index of
96 stocks designed to measure the performance of companies in the
natural resources sector - returned -20.88%. The Standard & Poor's 500
Index posted a return of 19.74% during the same period.
Q. WHY DID THE FUND OUTPERFORM THE GOLDMAN SACHS INDEX BUT LAG THE S&P
500?
A. As always, the price of gold played a major role in determining how
the fund performed. Following a difficult period of steadily falling
prices in 1997, gold stabilized in 1998 and ended the period
essentially where it began, around $290 per ounce. On the other hand,
the prices of some other commodities, such as copper and nickel,
continued to fall during the period. The Goldman Sachs index contains
the stocks of companies involved in the production of a wide variety
of natural resources, including copper and nickel. The weakness of
those commodities, together with the fund's favorable stock selection
process, helped the fund's performance relative to the Goldman Sachs
index. Although gold stabilized, it remained low by historical
standards, and many mining companies found it difficult to do business
profitably. Consequently, investors tended to favor stocks from other
sectors over precious metals shares, as evidenced by the fund's poor
showing against the S&P 500.
Q. WHAT WAS YOUR STRATEGY DURING THE PERIOD?
A. Reflecting the June 1, 1998, change in the fund's investment
policies allowing it to invest in precious metals mining companies
anywhere in the world, I pursued a strategy of broadening the fund's
exposure to companies in Australia and, to a lesser extent, South
Africa. Although foreign investments are commonly viewed as having
greater risk than domestic ones, this strategy enabled the fund to
purchase stocks that, in general, were more modestly valued and
performed better than their peers in the United States and Canada. In
addition, the fund maintained its overall emphasis on finding strong
companies with healthy balance sheets and the ability to add
meaningfully to production.
Q. WHAT STOCKS HELPED THE FUND'S PERFORMANCE?
A. Getchell Gold, the fund's largest holding for much of the period,
was also the holding that made the most positive contribution to
performance. The company received a takeover bid from competitor
Placer Dome at a price considerably above Getchell's market price,
which buoyed the stock. Stillwater Mining was another positive
contributor. The company, which produces platinum and palladium, was
helped by higher prices resulting from cutbacks in Russian exports of
those metals. A third helpful holding was Buenaventura. The company is
a major gold producer in Chile and co-owner, with Newmont Mining, of
one of the lowest-cost mines in the world.
Q. WHAT STOCKS WERE DETRIMENTAL TO PERFORMANCE?
A. Greenstone Resources was the holding that hurt performance most.
The stock performed poorly after the company reported disappointing
production numbers. TVX Gold reacted poorly when the company
encountered delays in starting production at some new mines in Greece.
Pioneer Group suffered from poor gold mining results in Ghana. The
fund did not hold these positions at the end of the period.
Q. WHAT'S YOUR OUTLOOK, GEORGE?
A. The Far East is traditionally a strong source of demand for gold
jewelry, so a recovery in that region, particularly in Japan, would be
favorable for the yellow metal. In addition, gold is traditionally
viewed as a hedge against inflation, so any upturn in the inflation
outlook - a real possibility with the U.S. economy growing faster
than expected and economic forces in Asia beginning to recover - would
help the outlook for gold. Another factor to consider is central bank
sales, which helped to drive gold prices lower for the past several
years. Now that the European Economic Community has officially
launched its currency, the euro, it seems likely that, while central
bank sales in Europe may continue on a smaller scale, they will no
longer occur at levels that will depress the price of gold. Although
these developments seem promising, the fund does not make bets on the
price of gold, but rather attempts to invest in companies that can
benefit regardless of the level of gold prices.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: December 16, 1985
FUND NUMBER: 041
TRADING SYMBOL: FSAGX
SIZE: as of February 28, 1999, more than
$179 million
MANAGER: George Domolky, since 1997;
manager, Fidelity Select Precious Metals and
Minerals Portfolio, since 1997; Fidelity Canada
Fund, 1987-1996; Fidelity Select Food and
Agriculture Portfolio, 1985-1987; joined Fidelity in
1981
GOLD PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 94.7%
SHARES VALUE (NOTE 1)
AUSTRALIA - 10.3%
METALS & MINING - 1.0%
METAL MINING SERVICES - 1.0%
Acacia Resources Ltd. 1,360,755 $ 1,809,059
PRECIOUS METALS - 9.3%
GOLD & SILVER ORES - 7.2%
Normandy Mining Ltd. 14,388,954 12,278,425
Sons of Gwalia NL 307,210 896,627
13,175,052
GOLD ORES - 2.1%
Delta Gold NL 895,509 1,317,896
Lihir Gold Ltd. (a) 1,433,500 1,170,054
Resolute Ltd. 1,900,000 1,327,597
3,815,547
TOTAL PRECIOUS METALS 16,990,599
TOTAL AUSTRALIA 18,799,658
CANADA - 48.1%
METALS & MINING - 2.8%
METAL MINING SERVICES - 0.3%
Minefinders Corp. Ltd. (a) 297,600 325,667
Minefinders Corp. Ltd. (a)(c) 200,000 218,862
544,529
MISCELLANEOUS NONMETALLIC
MINERALS - 2.5%
Aber Resources Ltd. (a) 291,700 2,011,991
Camphor Ventures, Inc. (a) 14,100 6,827
DIA Metropolitan Minerals Ltd.:
Class A (sub-vtg.) (a) 50,650 520,676
Class B (multi-vtg.) (a) 172,400 2,000,929
4,540,423
TOTAL METALS & MINING 5,084,952
OIL & GAS - 0.4%
OIL & GAS FIELD EXPLORATION
SERVICES - 0.4%
Southwestern Gold Corp. (a) 227,500 829,851
PRECIOUS METALS - 44.9%
GOLD & SILVER ORES - 1.0%
Goldcorp, Inc. Class A (a) 221,100 1,319,737
Richmont Mines, Inc. (a) 187,300 434,773
1,754,510
GOLD ORES - 43.9%
Agnico-Eagle Mines Ltd. 447,800 2,465,009
Argentina Gold Corp. (a) 164,900 479,017
Barrick Gold Corp. 724,100 12,798,292
Cambior, Inc. 1,142,400 4,508,078
SHARES VALUE (NOTE 1)
Crown Resources Corp. (a) 307,700 $ 788,481
Euro-Nevada Mining Corp. Ltd. 1,096,400 15,851,917
Francisco Gold Corp. (a) 182,200 1,147,964
Francisco Gold Corp. (a)(c) 144,500 910,432
Franco Nevada Mining Corp. 424,600 6,561,334
Ltd.
Franco Nevada Mining Corp. 106,900 1,651,923
Ltd. (c)
Franco Nevada Mining Corp. 33,334 276,346
Ltd. Class B warrants
9/15/98 (a)(c)
Geomaque Explorations Ltd. (a) 678,100 535,176
Glamis Gold Ltd. (a) 125,300 216,063
High River Gold Mines Ltd. (a) 60,000 19,101
IAMGOLD, International 195,200 608,463
African Mining Gold Corp. (a)
IAMGOLD, International 60,000 187,027
African Mining Gold Corp.
(a)(c)
Kinross Gold Corp. (a) 573,100 1,277,103
Kinross Gold Corp. (a)(c) 320,000 713,092
Meridian Gold, Inc. (a) 3,519,700 19,841,789
Metallica Resources, Inc. 1,042,100 414,684
(a)(d)
Metallica Resources, Inc. 100,000 39,793
(a)(c)(d)
Mountain Province Mining, 874,900 1,740,748
Inc. (a)
Placer Dome, Inc. 455,400 4,983,486
Repadre Capital Corp. (a) 156,200 269,346
Repadre Capital Corp. (a)(c) 155,000 267,277
Rio Narcea Gold Mines Ltd. (a) 221,800 189,761
Teck Corp. Class B (sub-vtg.) 220,300 1,556,039
Vengold, Inc. (a) 315,000 96,100
Viceroy Resources Corp. (a) 130,000 146,571
80,540,412
TOTAL PRECIOUS METALS 82,294,922
TOTAL CANADA 88,209,725
GHANA - 1.5%
PRECIOUS METALS - 1.5%
GOLD ORES - 1.5%
Ashanti Goldfields Co. Ltd. 316,422 2,808,245
GDR
PERU - 4.8%
PRECIOUS METALS - 4.8%
SILVER ORES - 4.8%
Compania de Minas
Buenaventura SA:
Class B 1,041,419 7,121,962
Series A sponsored ADR 224,445 1,546,762
sponsored ADR Class B 11,700 157,219
8,825,943
SOUTH AFRICA - 5.0%
PRECIOUS METALS - 5.0%
GOLD & SILVER ORES - 4.3%
Anglogold Ltd. 219,200 8,002,779
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SOUTH AFRICA - CONTINUED
PRECIOUS METALS - CONTINUED
GOLD ORES - 0.7%
Gold Fields Ltd. 231,700 $ 1,242,670
TOTAL PRECIOUS METALS 9,245,449
UNITED STATES OF AMERICA -
25.0%
METALS & MINING - 0.8%
COPPER ORES - 0.8%
Freeport-McMoRan Copper & 152,500 1,439,219
Gold, Inc. Class B
PRECIOUS METALS - 23.8%
GOLD & SILVER ORES - 11.9%
Getchell Gold Corp. (a) 844,648 21,908,057
GOLD ORES - 11.9%
Battle Mountain Gold Co. 109,700 370,238
Homestake Mining Co. 425,006 3,904,743
Newmont Mining Corp. 510,565 8,807,246
Stillwater Mining Co. (a) 320,900 7,360,644
Stillwater Mining Co. (a)(c) 59,400 1,362,488
21,805,359
TOTAL PRECIOUS METALS 43,713,416
SERVICES - 0.4%
JEWELRY, PRECIOUS METAL - 0.4%
Lazare Kaplan International, 85,300 629,088
Inc. (a)
TOTAL UNITED STATES OF AMERICA 45,781,723
TOTAL COMMON STOCKS 173,670,743
(Cost $214,333,271)
CASH EQUIVALENTS - 5.3%
Taxable Central Cash Fund (b) 9,775,494 9,775,494
(Cost $9,775,494)
TOTAL INVESTMENT IN $ 183,446,237
SECURITIES - 100%
(Cost $224,108,765)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(c) Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers.
At the period end, the value of these securities amounted to
$5,627,240 or 3.1% of net assets.
(d) Affilliated Company
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $114,881,881 and $115,404,549, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $16,916 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $4,983,442. The fund
received cash collateral of $5,464,800.
The fund participated in the bank borrowing program. The maximum loan
and average daily balances during the period for which loans were
outstanding amounted to $5,749,000 and $3,319,000, respectively. The
weighted average interest rate was 5.21%.
Transactions during the period with companies which are or were
affiliates are as follows:
PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Mentor Exploration
& Development Co. Ltd. $ - $ 182,383 $ - $ -
Metallica Resources, Inc. - - - 454,477
TOTALS $ - $ 182,383 $ - $ 454,477
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $225,745,288. Net unrealized depreciation
aggregated $42,299,051, of which $21,822,102 related to appreciated
investment securities and $64,121,153 related to depreciated
investment securities.
At February 28, 1999 the fund had a capital loss carryforward of
approximately $52,460,000 of which $35,849,000 and $16,611,000 will
expire on February 28, 2006 and 2007, respectively.
The fund intends to defer to its fiscal year ending February 29, 2000
approximately $24,084,000 of losses recognized during the period
November 1, 1998 to February 28, 1999.
GOLD PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 183,446,237
value (cost $224,108,765) -
See accompanying schedule
Receivable for investments 5,195,313
sold
Receivable for fund shares 329,962
sold
Dividends receivable 507,752
Interest receivable 17,484
Redemption fees receivable 3,723
Other receivables 3,500
TOTAL ASSETS 189,503,971
LIABILITIES
Payable for investments $ 3,131,072
purchased
Payable for fund shares 1,024,503
redeemed
Accrued management fee 92,759
Other payables and accrued 171,510
expenses
Collateral on securities 5,464,800
loaned, at value
TOTAL LIABILITIES 9,884,644
NET ASSETS $ 179,619,327
Net Assets consist of:
Paid in capital $ 298,496,829
Accumulated net investment (35,591)
loss
Accumulated undistributed net (78,176,418)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (40,665,493)
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 14,044,991 $ 179,619,327
shares outstanding
NET ASSET VALUE and $12.79
redemption price per share
($179,619,327 (divided by)
14,044,991 shares)
Maximum offering price per $13.19
share (100/97.00 of $12.79)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 1,663,035
Dividends
Interest (including income on 288,508
securities loaned of $11,259)
TOTAL INCOME 1,951,543
EXPENSES
Management fee $ 1,216,228
Transfer agent fees 1,592,230
Accounting and security 199,767
lending fees
Non-interested trustees' 654
compensation
Custodian fees and expenses 96,242
Registration fees 70,643
Audit 15,879
Legal 1,155
Interest 6,342
Reports to shareholders 42,148
Total expenses before 3,241,288
reductions
Expense reductions (66,010) 3,175,278
NET INVESTMENT INCOME (LOSS) (1,223,735)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (31,983,550)
(including realized loss
$171,879 on sales of
investments in affiliated
issuers)
Foreign currency transactions (25,270) (32,008,820)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (3,271,556)
Assets and liabilities in (6,482) (3,278,038)
foreign currencies
NET GAIN (LOSS) (35,286,858)
NET INCREASE (DECREASE) IN $ (36,510,593)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 691,742
charges paid to FDC
Sales charges - Retained by $ 685,928
FDC
Deferred sales charges $ 19,578
withheld by FDC
Exchange fees withheld by FSC $ 32,157
Expense Reductions
Direct brokerage arrangements $ 65,602
Transfer agent credits 408
$ 66,010
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (1,223,735) $ (1,879,396)
income (loss)
Net realized gain (loss) (32,008,820) (42,330,692)
Change in net unrealized (3,278,038) (126,678,432)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (36,510,593) (170,888,520)
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders - (17,386,044)
from net realized gains
Share transactions Net 403,467,113 510,192,668
proceeds from sales of shares
Reinvestment of distributions - 17,026,797
Cost of shares redeemed (408,945,830) (549,713,586)
NET INCREASE (DECREASE) IN (5,478,717) (22,494,121)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 1,940,375 2,333,972
TOTAL INCREASE (DECREASE) (40,048,935) (208,434,713)
IN NET ASSETS
NET ASSETS
Beginning of period 219,668,262 428,102,975
End of period (including $ 179,619,327 $ 219,668,262
accumulated net investment
loss of $35,591 and
$2,671,127, respectively)
OTHER INFORMATION
Shares
Sold 29,231,688 26,655,922
Issued in reinvestment of - 755,071
distributions
Redeemed (29,663,500) (28,111,853)
Net increase (decrease) (431,812) (700,860)
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 15.17 $ 28.21 $ 27.11 $ 18.44 $ 22.66
period
Income from Investment
Operations
Net investment income (loss) C (.08) (.13) (.16) (.06) (.05)
Net realized and unrealized (2.43) (11.78) 1.60 8.62 (4.25)
gain (loss)
Total from investment (2.51) (11.91) 1.44 8.56 (4.30)
operations
Less Distributions
From net realized gain - (1.29) (.50) - -
Redemption fees added to paid .13 .16 .16 .11 .08
in capital
Net asset value, end of period $ 12.79 $ 15.17 $ 28.21 $ 27.11 $ 18.44
TOTAL RETURN A, B (15.69)% (43.15)% 6.10% 47.02% (18.62)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 179,619 $ 219,668 $ 428,103 $ 451,493 $ 278,197
(000 omitted)
Ratio of expenses to average 1.57% 1.55% 1.44% 1.39% 1.41%
net assets
Ratio of expenses to average 1.54% D 1.48% D 1.42% D 1.39% 1.41%
net assets after expense
reductions
Ratio of net investment (.59)% (.67)% (.59)% (.27)% (.22)%
income (loss) to average net
assets
Portfolio turnover rate 59% 89% 63% 56% 34%
</TABLE>
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. E FOR
THE YEAR ENDED FEBRUARY 29.
NATURAL RESOURCES PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the total returns would have been
lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR LIFE OF FUND
1999
SELECT NATURAL RESOURCES -24.57% -19.06%
SELECT NATURAL RESOURCES -26.91% -21.56%
(LOAD ADJ.)
S&P 500 19.74% 60.71%
GS Natural Resources -20.88% -7.26%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year or since the fund
started on March 3, 1997. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a market
capitalization-weighted index of common stocks - and the Goldman Sachs
Natural Resources Index - a market capitalization-weighted index of 96
stocks designed to measure the performance of companies in the natural
resource sector. These benchmarks include reinvestment of dividends
and capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR LIFE OF FUND
1999
SELECT NATURAL RESOURCES -24.57% -10.07%
SELECT NATURAL RESOURCES -26.91% -11.48%
(LOAD ADJ.)
S&P 500 19.74% 26.89%
GS Natural Resources -20.88% -3.72%
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER LIFE OF FUND
Natural Resources S&P 500
00514 SP001
1997/03/03 9700.00 10000.00
1997/03/31 9438.10 9533.50
1997/04/30 9428.40 10102.65
1997/05/31 10262.60 10717.70
1997/06/30 10320.80 11197.85
1997/07/31 10931.90 12088.86
1997/08/31 10980.40 11411.64
1997/09/30 11785.50 12036.66
1997/10/31 11145.30 11634.64
1997/11/30 10233.50 12173.20
1997/12/31 10328.82 12382.22
1998/01/31 10010.40 12519.16
1998/02/28 10408.43 13422.05
1998/03/31 10826.36 14109.39
1998/04/30 11224.38 14251.33
1998/05/31 10627.34 14006.35
1998/06/30 10179.56 14575.29
1998/07/31 9363.60 14420.06
1998/08/31 7572.48 12335.21
1998/09/30 9025.28 13125.40
1998/10/31 9065.08 14193.02
1998/11/30 8726.76 15053.26
1998/12/31 8617.30 15920.63
1999/01/31 8030.21 16586.43
1999/02/26 7844.00 16070.92
IMATRL PRASUN SHR__CHT 19990228 19990307 165520 R00000000000027
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Select Natural Resources Portfolio on March 3,
1997 when the fund started, and the current 3.00% sales charge was
paid. As the chart shows, by February 28, 1999, the value of the
investment would have been $7,844 - a 21.56% decrease on the initial
investment - and includes the effect of a $7.50 trading fee. For
comparison, look at how the Standard & Poor's 500 Index did over the
same period. With dividends and capital gains, if any, reinvested, the
same $10,000 investment would have grown to $16,071 - a 60.71%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
28, 1999
% OF FUND'S INVESTMENTS
Mobil Corp. 8.2
USX-Marathon Group 6.0
BP Amoco PLC sponsored ADR 5.9
Elf Aquitaine SA sponsored ADR 5.2
Total SA sponsored ADR 5.1
Exxon Corp. 4.9
Schlumberger Ltd. 4.3
Halliburton Co. 3.8
Chevron Corp. 3.7
Amerada Hess Corp. 3.1
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Oil & Gas 63.5%
Energy Services 18.8%
Precious Metals 6.1%
Metals & Mining 4.4%
Gas 0.8%
All Others 6.4%*
Row: 1, Col: 1, Value: 6.4
Row: 1, Col: 2, Value: 1.8
Row: 1, Col: 3, Value: 4.4
Row: 1, Col: 4, Value: 6.1
Row: 1, Col: 5, Value: 18.8
Row: 1, Col: 6, Value: 62.5
* INCLUDES SHORT-TERM INVESTMENTS
NATURAL RESOURCES PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Larry Rakers)
Larry Rakers,
Portfolio Manager
Fidelity Select Natural
Resources Portfolio
Q. HOW DID THE FUND PERFORM, LARRY?
A. The natural resources sector continued to suffer during the period.
For the 12 months that ended February 28, 1999, the fund returned
- -24.57%. The Standard & Poor's 500 Index returned 19.74% during the
same period. The fund also compares its performance to the Goldman
Sachs Natural Resources Index - an index of 96 stocks designed to
measure the performance of companies in the natural resources sector -
which returned -20.88% during the 12-month period.
Q. WHAT MARKET FACTORS HURT PERFORMANCE AND WHAT CAUSED THE FUND TO
UNDERPERFORM THE GOLDMAN SACHS INDEX FOR THE PERIOD?
A. The major cause of poor performance was weak global economic
growth. Many international economies continue to languish in a mire of
political, financial and currency troubles. Over the past couple of
years, the global demand for natural resources has declined from
approximately a 2% annual growth rate to 0%. In this environment, even
a slight increase in the supply of natural resources is too much, and,
as a result, commodity prices tanked across the board. Regarding the
fund's performance relative to the Goldman Sachs index, the fund
underperformed because I allocated a larger percentage of fund assets
to small and mid-cap integrated oil companies, energy service
companies and drillers compared to the index. These companies are more
sensitive to oil prices and underperformed the larger integrated oil
companies, such as Mobil and Exxon, in this bearish environment.
Q. WHY DID YOU OVERWEIGHT THE FUND IN MORE AGGRESSIVE OIL COMPANIES,
RELATIVE TO THE INDEX?
A. In hindsight, I was early in my prediction that oil prices were
poised to rebound. However, I am comfortable with the fund's asset
allocation. I believe for a number of reasons - which I will discuss
in more detail in my market outlook - that we are starting to see
signs of impending strength in oil prices. As a result, if we do see
an increase in oil prices, the smaller-cap integrated oil companies
and energy service companies - which are more sensitive to oil prices
- - should perform better than the larger-cap integrated oil companies,
such as Mobil, BP Amoco and Exxon.
Q. WERE THERE ANY BRIGHT SPOTS IN THIS DIFFICULT ENVIRONMENT?
A. The major oil stocks, such as BP Amoco, Mobil and Exxon, managed to
produce solid gains over the past year. All of these stocks provided a
boost to the fund's total return and rallied in response to merger
announcements. In comparison, the majority of secondary energy stocks
- - drillers, oil service and oil equipment - posted significant losses
for the year. Gold was the star of the metals group. The price of gold
was essentially flat during the past 12-month period, while prices for
most other commodities were down approximately 20% to 30% for the same
period.
Q. WHAT STOCKS DETRACTED FROM PERFORMANCE?
A. With the exception of the large integrated oil stocks and a select
group of precious-metals companies, the natural resources sector
experienced negative returns across the board. With energy prices
hitting 12-year lows, significant detractors were USX-Marathon, Tosco,
Weatherford International and Schlumberger. As I mentioned earlier,
the stock prices of these energy service companies are even more
dependent on energy prices than the larger integrated oil companies.
When the prices of oil and natural gas drop below a certain level, it
no longer makes economic sense to explore for these fuels or drill new
wells. In this environment, business deteriorates for energy service
companies such as Weatherford and Schlumberger, and their stock prices
suffer. On the other hand, if energy prices pick up, earnings can rise
exponentially for these companies.
Q. WHAT'S YOUR OUTLOOK, LARRY?
A. I'm starting to get excited about the outlook for natural resources
for the first time in a while. Look at oil, for instance, where we are
starting to see a response on the supply side to price movement. For
example, as oil prices declined, the typical oil company cut capital
expenditures by 30%, cut back on exploration, and the number of rigs
drilling for oil and gas fell to a 49-year low. As a result, oil and
gas production will most likely fall in 1999. In addition, some
base-metals mines have been closing worldwide. If we get even a slight
rebound in demand from Asia or Latin America, it will not take much
for a squeeze on supply. This situation could set the stage for an
increase in commodity prices, which ultimately could be good for the
fund.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: March 3, 1997
FUND NUMBER: 514
TRADING SYMBOL: FNATF
SIZE: as of February 28, 1999, more than
$5 million
MANAGER: Lawrence Rakers, since inception;
manager, Fidelity Select Energy Portfolio,
since 1997; Fidelity Select Paper and Forest
Products Portfolio, Fidelity Select Precious
Metals and Minerals Portfolio,1996-1997;
Fidelity Select American Gold Portfolio
1995-1997; joined Fidelity in 1993
NATURAL RESOURCES PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.7%
SHARES VALUE (NOTE 1)
ENERGY SERVICES - 18.8%
Baker Hughes, Inc. 5,290 $ 95,220
BJ Services Co. (a) 5,000 70,313
Carbo Ceramics, Inc. 200 3,200
Coflexip SA sponsored ADR 1,500 43,125
ENSCO International, Inc. 6,200 55,025
Global Marine, Inc. (a) 1,500 11,625
Halliburton Co. 7,000 197,750
Helmerich & Payne, Inc. 2,200 35,888
Marine Drilling Companies, 1,300 8,288
Inc. (a)
Nabors Industries, Inc. (a) 3,800 43,700
Noble Drilling Corp. (a) 5,300 65,588
Pool Energy Services Co. (a) 2,500 25,391
Santa Fe International Corp. 2,300 30,763
Schlumberger Ltd. 4,626 224,650
Smith International, Inc. 2,200 53,488
Transocean Offshore, Inc. 200 4,125
UTI Energy Corp. (a) 1,400 8,138
976,277
ENGINEERING - 0.2%
Stolt Comex Seaway SA 1,800 10,575
sponsored ADR Class A
GAS - 0.8%
Dynegy, Inc. 2,000 24,000
Williams Companies, Inc. 500 18,500
42,500
METALS & MINING - 4.4%
Alcoa, Inc. 3,800 153,900
Breakwater Resources Ltd. (a) 13,700 9,086
Cameco Corp. 800 17,058
Camphor Ventures, Inc. (a) 16,400 7,940
Cominco Ltd. 600 8,257
Cyprus Amax Minerals Co. 700 7,875
Freeport-McMoRan Copper & 400 3,700
Gold, Inc.
Inco Ltd. 1,100 13,788
Rio Algom Ltd. 700 7,289
228,893
OIL & GAS - 63.4%
Alberta Energy Co. Ltd. 1,000 21,455
Amerada Hess Corp. 3,600 163,350
Anadarko Petroleum Corp. 1,600 44,000
Apache Corp. 400 7,975
Berkley Petroleum Corp. (a) 1,000 5,438
BP Amoco PLC sponsored ADR 3,577 304,045
Burlington Resources, Inc. 557 18,033
Canadian Natural Resources 1,000 13,828
Ltd. (a)
SHARES VALUE (NOTE 1)
Chevron Corp. 2,500 $ 192,188
Compagnie Generale de 1,300 10,725
Geophysique SA sponsored ADR
(a)
Conoco, Inc. Class A 600 12,188
Cooper Cameron Corp. (a) 200 4,625
Crestar Energy, Inc. (a) 900 6,088
Elf Aquitaine SA sponsored ADR 5,200 268,450
Eni Spa sponsored ADR 100 5,900
Enron Oil & Gas Co. 2,100 34,650
Exxon Corp. 3,800 252,938
Frontier Oil Corp. (a) 18,700 98,175
Gulf Canada Resources Ltd. (a) 6,000 14,286
Imperial Oil Ltd. 5,700 88,082
Louis Dreyfus Natural Gas 1,600 19,100
Corp. (a)
Magnum Hunter Resources, Inc. 3,600 9,225
(a)
Mobil Corp. 5,100 424,248
Noble Affiliates, Inc. 700 15,838
Occidental Petroleum Corp. 200 3,013
Ocean Energy, Inc. (a) 1,000 4,250
Oryx Energy Co. (a) 5,300 54,988
Paramount Resources Ltd. (c) 1,400 11,931
Penn West Petroleum Ltd. (a) 500 4,958
Petro-Canada 3,400 36,530
Petrobras PN (Pfd. Reg.) 1 0
Phillips Petroleum Co. 200 7,738
Plains Resources, Inc. (a) 4,100 37,925
Renaissance Energy Ltd. (a) 600 5,292
Rio Alto Exploration Ltd. (a) 2,200 19,479
Seagull Energy Corp. (a) 3,100 14,725
Shell Transport & Trading Co.
PLC:
ADR 2,000 67,125
(Reg.) 10,000 55,938
Snyder Oil Corp. 500 5,219
Suncor Energy, Inc. 1,800 52,706
Tesoro Petroleum Corp. (a) 1,200 9,600
Texaco, Inc. 3,400 158,313
Tosco Corp. 2,000 41,375
Total SA sponsored ADR 5,100 263,288
Ulster Petroleums Ltd. (a) 1,700 9,471
Ultramar Diamond Shamrock 1,100 21,725
Corp.
Union Pacific Resources 3,300 29,494
Group, Inc.
USX-Marathon Group 15,000 310,313
Veritas DGC, Inc. (a) 300 2,831
Vintage Petroleum, Inc. 800 3,550
Weatherford International, 1,195 20,315
Inc. (a)
3,286,922
PRECIOUS METALS - 6.1%
Argentina Gold Corp. (a) 10,000 29,049
Getchell Gold Corp. (a) 4,200 108,938
Greenstone Resources Ltd. (a) 71,232 26,928
Greenstone Resources Ltd. 500 189
(a)(c)
Meridian Gold, Inc. (a) 10,600 59,756
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PRECIOUS METALS - CONTINUED
Mountain Province Mining, 1,500 $ 2,984
Inc. (a)
Pan American Silver Corp. (a) 1,700 9,527
Stillwater Mining Co. (a) 3,350 76,841
William Resources, Inc. 15,750 0
warrants 12/31/02 (a)(c)
314,212
TOTAL COMMON STOCKS 4,859,379
(Cost $5,603,913)
CONVERTIBLE PREFERRED STOCKS
- - 0.1%
OIL & GAS - 0.1%
Chesapeake Energy Corp. $3.50 600 5,700
(Cost $5,825)
CASH EQUIVALENTS - 6.2%
Taxable Central Cash Fund (b) 323,594 323,594
(Cost $323,594)
TOTAL INVESTMENT IN $ 5,188,673
SECURITIES - 100%
(Cost $5,933,332)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(c) Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in
transactions exempt from registration, normally to qualified
institutional buyers. At the period end, the value of these securities
amounted to $12,120 or 0.2% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $9,348,795 and $9,820,624, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $2,189 for the
period.
Distribution of investments by country of issue, as a percentage of
total value of investments in securities, is as follows:
United States of America 66.5%
France 11.3
Canada 9.3
United Kingdom 8.3
Netherlands Antilles 4.3
Others (individually less 0.3
than 1%)
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $6,257,950. Net unrealized depreciation
aggregated $1,069,277, of which $148,481 related to appreciated
investment securities and $1,217,758 related to depreciated investment
securities.
At February 28, 1999, the fund had a capital loss carryforward of
approximately $563,000, all of which will expire on February 28, 2007.
The fund intends to elect to defer to its fiscal year ending February
29, 2000 approximately $345,000 of losses recognized during the period
November 1, 1998 to February 28, 1999.
NATURAL RESOURCES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 5,188,673
value (cost $5,933,332) -
See accompanying schedule
Receivable for investments 7,140
sold
Receivable for fund shares 5,460
sold
Dividends receivable 17,363
Interest receivable 1,399
Redemption fees receivable 191
Receivable from investment 479
adviser for expense
reductions
TOTAL ASSETS 5,220,705
LIABILITIES
Payable to custodian bank $ 23,647
Payable for investments 9,145
purchased
Payable for fund shares 30,673
redeemed
Other payables and accrued 23,094
expenses
TOTAL LIABILITIES 86,559
NET ASSETS $ 5,134,146
Net Assets consist of:
Paid in capital $ 7,111,468
Accumulated undistributed net (1,232,663)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (744,659)
(depreciation) on investments
NET ASSETS, for 650,739 $ 5,134,146
shares outstanding
NET ASSET VALUE and $7.89
redemption price per share
($5,134,146 (divided by)
650,739 shares)
Maximum offering price per $8.13
share (100/97.00 of $7.89)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 102,921
Dividends
Interest 23,193
TOTAL INCOME 126,114
EXPENSES
Management fee $ 38,307
Transfer agent fees 59,138
Accounting fees and expenses 60,054
Non-interested trustees' 24
compensation
Custodian fees and expenses 18,146
Registration fees 12,995
Audit 18,493
Legal 39
Reports to shareholders 1,416
Miscellaneous 239
Total expenses before 208,851
reductions
Expense reductions (47,499) 161,352
NET INVESTMENT INCOME (LOSS) (35,238)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (1,196,635)
Foreign currency transactions (9,554) (1,206,189)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (510,349)
Assets and liabilities in 29 (510,320)
foreign currencies
NET GAIN (LOSS) (1,716,509)
NET INCREASE (DECREASE) IN $ (1,751,747)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 24,488
charges paid to FDC
Sales charges - Retained by $ 24,488
FDC
Deferred sales charges $ 8
withheld by FDC
Exchange fees withheld by FSC $ 1,035
Expense reductions Directed $ 2,114
brokerage arrangements
Custodian credits 35
FMR reimbursement 45,350
$ 47,499
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 MARCH 3,1997 (COMMENCEMENT OF
ASSETS OPERATIONS) TO FEBRUARY 28,
1998
Operations Net investment $ (35,238) $ (55,268)
income (loss)
Net realized gain (loss) (1,206,189) 327,737
Change in net unrealized (510,320) (234,339)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (1,751,747) 38,130
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to - (189,236)
shareholders from net
realized gains
Share transactions Net 6,170,322 19,111,951
proceeds from sales of shares
Reinvestment of distributions - 187,981
Cost of shares redeemed (6,819,368) (11,661,561)
NET INCREASE (DECREASE) IN (649,046) 7,638,371
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 15,080 32,594
TOTAL INCREASE (DECREASE) (2,385,713) 7,519,859
IN NET ASSETS
NET ASSETS
Beginning of period 7,519,859 -
End of period (including $ 5,134,146 $ 7,519,859
accumulated net investment
loss of $0 and $908,
respectively)
OTHER INFORMATION
Shares
Sold 655,279 1,783,337
Issued in reinvestment of - 18,686
distributions
Redeemed (723,578) (1,082,985)
Net increase (decrease) (68,299) 719,038
</TABLE>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 1999 1998 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.46 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) d (.05) (.09)
Net realized and unrealized (2.54) .76
gain (loss)
Total from investment (2.59) .67
operations
Less Distributions
From net realized gain - (.26)
Redemption fees added to paid .02 .05
in capital
Net asset value, end of period $ 7.89 $ 10.46
TOTAL RETURN B, C (24.57)% 7.30%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 5,134 $ 7,520
(000 omitted)
Ratio of expenses to average 2.50% F 2.50% A, F
net assets
Ratio of expenses to average 2.47% G 2.48% A, G
net assets after expense
reductions
Ratio of net investment (.54)% (.86)% A
income (loss) to average net
assets
Portfolio turnover rate 155% 165% A
A ANNUALIZED B THE TOTAL
RETURNS WOULD HAVE BEEN
LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE
PERIODS SHOWN. C TOTAL
RETURNS DO NOT INCLUDE THE
ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED. D
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. E FOR THE PERIOD
MARCH 3, 1997 (COMMENCEMENT
OF OPERATIONS) TO FEBRUARY
28, 1998. F FMR AGREED TO
REIMBURSE A PORTION OF THE
FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS
REIMBURSEMENT, THE FUND'S
EXPENSE RATIO WOULD HAVE
BEEN HIGHER. G FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES.
PRECIOUS METALS AND MINERALS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT PRECIOUS METALS AND -10.89% -43.80% -16.07%
MINERALS
SELECT PRECIOUS METALS AND -13.64% -45.55% -18.66%
MINERALS (LOAD ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Natural Resources -20.88% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years, or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
index of common stocks - and the Goldman Sachs Natural Resources Index
- - a market capitalization-weighted index of 96 stocks designed to
measure the performance of companies in the natural resource sector.
These benchmarks include reinvestment of dividends and capital gains,
if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT PRECIOUS METALS AND -10.89% -10.88% -1.74%
MINERALS
SELECT PRECIOUS METALS AND -13.64% -11.45% -2.04%
MINERALS (LOAD ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Natural Resources -20.88% n/a n/a
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER 10 YEARS
Precious Metals&Minerals S&P 500
00061 SP001
1989/02/28 9700.00 10000.00
1989/03/31 9700.00 10233.00
1989/04/30 9259.46 10764.09
1989/05/31 8818.92 11200.04
1989/06/30 9512.36 11136.20
1989/07/31 9773.42 12141.80
1989/08/31 9969.22 12379.78
1989/09/30 10320.02 12329.02
1989/10/31 10311.86 12042.99
1989/11/30 11625.32 12288.66
1989/12/31 11924.86 12583.59
1990/01/31 12874.56 11739.23
1990/02/28 11767.96 11890.67
1990/03/31 11255.95 12205.77
1990/04/30 10099.80 11900.63
1990/05/31 10677.87 13060.94
1990/06/30 9901.60 12972.12
1990/07/31 10504.45 12930.61
1990/08/31 10611.81 11761.68
1990/09/30 10372.32 11188.89
1990/10/31 9207.91 11140.78
1990/11/30 9042.75 11860.47
1990/12/31 9411.87 12191.38
1991/01/31 8390.30 12722.92
1991/02/28 9143.92 13632.61
1991/03/31 8968.08 13962.52
1991/04/30 8942.96 13996.03
1991/05/31 9445.37 14600.66
1991/06/30 10065.01 13931.95
1991/07/31 10065.01 14581.18
1991/08/31 9009.94 14926.75
1991/09/30 9194.16 14677.48
1991/10/31 9813.81 14874.16
1991/11/30 10123.63 14274.73
1991/12/31 9556.58 15907.76
1992/01/31 9759.38 15611.87
1992/02/29 9252.40 15814.83
1992/03/31 8889.06 15506.44
1992/04/30 8365.18 15962.33
1992/05/31 8914.41 16040.54
1992/06/30 8964.70 15801.54
1992/07/31 9083.22 16447.82
1992/08/31 8676.88 16110.64
1992/09/30 8321.34 16300.75
1992/10/31 7788.03 16357.80
1992/11/30 7330.91 16915.60
1992/12/31 7466.94 17123.66
1993/01/31 7647.80 17267.50
1993/02/28 8491.82 17502.34
1993/03/31 9645.88 17871.64
1993/04/30 11204.72 17439.14
1993/05/31 12686.05 17906.51
1993/06/30 12892.75 17958.44
1993/07/31 14572.16 17886.61
1993/08/31 13108.06 18564.51
1993/09/30 12074.57 18421.56
1993/10/31 13788.43 18802.89
1993/11/30 13762.60 18624.26
1993/12/31 15801.85 18849.62
1994/01/31 15148.16 19490.50
1994/02/28 14485.75 18962.31
1994/03/31 14337.58 18135.55
1994/04/30 14338.16 18367.69
1994/05/31 14364.32 18668.92
1994/06/30 14652.13 18211.53
1994/07/31 15210.31 18808.87
1994/08/31 16291.78 19580.03
1994/09/30 17538.95 19100.32
1994/10/31 16858.68 19530.08
1994/11/30 15053.32 18818.79
1994/12/31 15621.55 19097.87
1995/01/31 12900.15 19593.08
1995/02/28 13492.14 20356.63
1995/03/31 14861.68 20957.35
1995/04/30 14985.38 21574.54
1995/05/31 14799.83 22436.88
1995/06/30 14976.54 22958.09
1995/07/31 15595.04 23719.38
1995/08/31 15807.10 23778.91
1995/09/30 15851.28 24782.38
1995/10/31 13872.08 24693.91
1995/11/30 14844.01 25777.97
1995/12/31 15099.90 26274.46
1996/01/31 18265.30 27168.84
1996/02/29 18584.50 27420.69
1996/03/31 18478.10 27684.75
1996/04/30 18896.45 28092.83
1996/05/31 19989.71 28817.34
1996/06/30 17207.68 28927.14
1996/07/31 16994.36 27649.13
1996/08/31 17918.74 28232.26
1996/09/30 17172.13 29821.17
1996/10/31 17029.91 30643.63
1996/11/30 16176.64 32959.99
1996/12/31 15918.88 32307.05
1997/01/31 15234.48 34325.59
1997/02/28 17421.00 34594.71
1997/03/31 14834.51 33173.21
1997/04/30 13847.92 35153.65
1997/05/31 14079.01 37293.80
1997/06/30 12621.33 38964.57
1997/07/31 12123.59 42064.98
1997/08/31 12185.81 39708.50
1997/09/30 12754.66 41883.33
1997/10/31 10612.59 40484.43
1997/11/30 8194.98 42358.45
1997/12/31 8772.72 43085.75
1998/01/31 9661.54 43562.28
1998/02/28 9137.14 46703.99
1998/03/31 9750.43 49095.70
1998/04/30 10692.58 49589.60
1998/05/31 9057.14 48737.16
1998/06/30 7715.01 50716.86
1998/07/31 7528.36 50176.72
1998/08/31 5590.72 42922.17
1998/09/30 8497.18 45671.77
1998/10/31 8497.18 49386.71
1998/11/30 8301.64 52380.04
1998/12/31 8781.60 55398.18
1999/01/31 8514.96 57714.93
1999/02/26 8134.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990307 165850 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Precious Metals and Minerals Portfolio on
February 28, 1989, and the current 3.00% sales charge was paid. As the
chart shows, by February 28, 1999, the value of the investment would
have been $8,134 - an 18.66% decrease on the initial investment - and
includes the effect of a $7.50 trading fee. For comparison, look at
how the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
28, 1999
% OF FUND'S INVESTMENTS
Meridian Gold, Inc. 12.9
Normandy Mining Ltd. 12.6
Euro-Nevada Mining Corp. Ltd. 8.1
Getchell Gold Corp. 8.0
Delta Gold NL 4.9
Franco Nevada Mining Corp. Ltd. 4.7
Acacia Resources Ltd. 4.6
Stillwater Mining Co. 4.2
Anglogold Ltd. sponsored ADR 3.2
Lihir Gold Ltd. 2.8
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Gold Ores (Canada) 33.5%
Gold & Silver Ores (Australia) 13.8%
Gold Ores (Australia) 9.0%
Gold & Silver Ores (United States
of America) 8.0%
Gold Ores (South Africa) 7.3%
All Others 28.4%*
Row: 1, Col: 1, Value: 28.4
Row: 1, Col: 2, Value: 7.3
Row: 1, Col: 3, Value: 8.0
Row: 1, Col: 4, Value: 9.0
Row: 1, Col: 5, Value: 13.8
Row: 1, Col: 6, Value: 33.5
* INCLUDES SHORT-TERM INVESTMENTS
PRECIOUS METALS AND MINERALS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of George Domolky)
George Domolky,
Portfolio Manager of
Fidelity Select Precious
Metals and Minerals Portfolio
Q. HOW DID THE FUND PERFORM, GEORGE?
A. While the fund lost more ground on an absolute basis, its losses
were relatively small compared to those of some recent periods.
Moreover, the fund's performance compared favorably to that of its
most meaningful benchmark: the Goldman Sachs Natural Resources Index,
an index of 96 stocks designed to measure the performance of companies
in the natural resources sector. For the 12 months that ended February
28, 1999, the fund had a total return of -10.89%, while the Goldman
Sachs index returned -20.88%. The Standard & Poor's 500 Index posted a
return of 19.74% during the same period.
Q. WHY DID THE FUND BEAT THE GOLDMAN SACHS INDEX BUT TRAIL THE S&P
500?
A. The price of gold - the primary determinant of the fund's fortunes
- - was essentially the same at the end of the period as at the
beginning, a welcome relief from the relentlessly sinking gold prices
seen during most of 1997. In contrast, certain other components of the
Goldman Sachs index, such as companies in the copper and nickel
industries, had to cope with commodity prices that continued to fall
during the period. This downward pressure on the non-gold elements of
the Goldman Sachs index, together with the fund's favorable stock
selection process, helped the fund to outperform the index. However,
the level at which the price of gold stabilized - around $290 per
ounce - was too low for many mines to operate profitably. As a result,
investors tended to favor stocks from other sectors over precious
metals shares, as evidenced by the fund's poor showing against the S&P
500.
Q. WHAT OTHER FACTORS INFLUENCED THE FUND'S PERFORMANCE?
A. The decision to expand the fund's holdings of Australian gold
mining companies paid off. Although foreign investments are commonly
viewed as being riskier than domestic ones, Australian shares were
generally undervalued relative to their peers in Canada and the United
States, and outperformed them during the period. Moreover, I continued
to consolidate the fund's South African holdings in two of the
strongest candidates, Anglogold and Gold Fields. South African mining
companies tend to have higher cost structures than firms in other
countries, making them more sensitive to low gold prices.
Q. WHAT STOCKS PERFORMED WELL DURING THE PERIOD?
A. One of the fund's major holdings - Getchell Gold - received a
takeover bid at a substantial premium over its market price, causing
the stock to rise. Meridian Gold was another beneficial holding that
firmed on news of promising discoveries in Chile. Australian company
Delta Gold also helped the fund's performance and reflected my
decision to increase holdings Down Under. Another positive
contributor, Stillwater Mining, is a producer of platinum and
palladium that benefited from firmer prices in response to decreased
exports of those metals from Russia.
Q. WHAT HOLDINGS DISAPPOINTED YOU?
A. Greenstone Resources - no longer one of the fund's holdings -
reported disappointing production numbers, and the market responded in
predictable fashion by trimming the stock price. Franco Nevada
suffered from the perception that it's primarily a holding company at
a time when investors preferred to hold producers. TVX Gold was hurt
by a slow start of production at some new mines in Greece.
Q. WHAT'S YOUR OUTLOOK, GEORGE?
A. There are several important factors to watch for during the
remainder of 1999. One key to improving precious metals prices would
be a strengthening of the Far East economies, especially Japan. The
Far East is a traditionally strong source of demand for gold jewelry,
so a recovery in that region would be favorable for the yellow metal.
In view of gold's traditional role as a hedge against inflation, the
inflation outlook here in the United States is also important.
Although it has been dormant for quite some time, inflation could
become a concern if strengthening economic forces here and abroad
trigger a recovery in the price of oil and other commodities. Another
factor to consider is central bank sales, which helped to drive gold
prices lower for the past several years. Now that the European
Economic Community has officially launched its currency, the euro, it
seems likely that, while central bank sales in Europe may continue on
a smaller scale, they will no longer occur at levels that will depress
the price of gold. The investment case for gold also would be helped
if the U.S. stock market or the U.S. dollar were to falter to any
substantial degree.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: July 14, 1981
FUND NUMBER: 061
TRADING SYMBOL: FDPMX
SIZE: as of February 28, 1999, more than
$123 million
MANAGER: George Domolky, since 1997; manager,
Fidelity Select Gold Portfolio, since 1997; Fidelity
Canada Fund, 1987-1996; Fidelity Select Food
and Agriculture Portfolio, 1985-1987; joined
Fidelity in 1981
PRECIOUS METALS AND MINERALS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 96.4%
SHARES VALUE (NOTE 1)
AUSTRALIA - 27.5%
METALS & MINING - 4.7%
METAL MINING SERVICES - 4.6%
Acacia Resources Ltd. 4,339,253 $ 5,768,831
MISCELLANEOUS METAL ORES, NEC
- - 0.1%
Zimbabwe Platinum Mines Ltd. 738,508 162,113
(a)
TOTAL METALS & MINING 5,930,944
PRECIOUS METALS - 22.8%
GOLD & SILVER ORES - 13.8%
Normandy Mining Ltd. 18,595,066 15,867,598
Sons of Gwalia NL 526,902 1,537,823
17,405,421
GOLD ORES - 9.0%
Delta Gold NL 4,195,819 6,174,874
Lihir Gold Ltd. (a) 4,391,375 3,584,337
Resolute Ltd. 1,950,000 1,362,534
Ross Mining NL 452,197 229,285
11,351,030
TOTAL PRECIOUS METALS 28,756,451
TOTAL AUSTRALIA 34,687,395
CANADA - 36.3%
METALS & MINING - 1.1%
METAL MINING SERVICES - 0.1%
Minefinders Corp. Ltd. (a) 200,200 219,081
MISCELLANEOUS NONMETALLIC
MINERALS - 1.0%
Aber Resources Ltd. (a) 148,500 1,024,274
DIA Metropolitan Minerals 19,500 226,323
Ltd. Class B (multi-vtg.) (a)
1,250,597
TOTAL METALS & MINING 1,469,678
OIL & GAS - 0.4%
OIL & GAS FIELD EXPLORATION
SERVICES - 0.4%
Southwestern Gold Corp. (a) 135,000 492,439
PRECIOUS METALS - 34.8%
GOLD & SILVER ORES - 1.3%
Goldcorp, Inc. Class A (a) 266,400 1,590,131
GOLD ORES - 33.5%
Agnico-Eagle Mines Ltd. 152,000 836,716
Barrick Gold Corp. 5,000 88,374
Cambior, Inc. 213,000 840,529
Crown Resources Corp. (a) 81,900 209,869
Euro-Nevada Mining Corp. Ltd. 705,300 10,197,334
Francisco Gold Corp. (a) 43,500 274,075
Francisco Gold Corp. (a)(c) 54,500 343,381
Franco Nevada Mining Corp. 386,400 5,971,031
Ltd.
Franco Nevada Mining Corp. 80,200 1,239,329
Ltd. (c)
SHARES VALUE (NOTE 1)
Franco Nevada Mining Corp. 25,000 $ 207,256
Ltd. Class B warrants
9/15/98 (a)(c)
Geomaque Explorations Ltd. (a) 457,100 360,757
High River Gold Mines Ltd. (a) 60,000 19,101
IAMGOLD, International 69,800 217,575
African Mining Gold Corp. (a)
Kinross Gold Corp. (a) 300,000 668,524
Meridian Gold, Inc. (a) 2,889,400 16,288,564
Metallica Resources, Inc. (a) 448,700 178,552
Metallica Resources, Inc. 100,000 39,793
(a)(c)
Mountain Province Mining, 336,700 669,916
Inc. (a)
Placer Dome, Inc. 148,000 1,619,578
Repadre Capital Corp. (a) 181,200 312,455
Rio Narcea Gold Mines Ltd. (a) 1,168,000 999,284
Sutton Resources Ltd. (a) 51,000 402,507
Vengold, Inc. (a) 410,600 125,266
Viceroy Resources Corp. (a) 194,700 219,518
42,329,284
TOTAL PRECIOUS METALS 43,919,415
TOTAL CANADA 45,881,532
GHANA - 1.5%
PRECIOUS METALS - 1.5%
GOLD ORES - 1.5%
Ashanti Goldfields Co. Ltd. 215,773 1,914,985
GDR
PERU - 1.7%
PRECIOUS METALS - 1.7%
SILVER ORES - 1.7%
Compania de Minas 156,900 2,108,344
Buenaventura SA sponsored
ADR Class B
SOUTH AFRICA - 13.8%
HOLDING COMPANIES - 0.6%
OFFICES OF HOLDING COMPANIES,
NEC - 0.6%
Gencor Ltd. (Reg.) 342,000 784,524
METALS & MINING - 1.1%
MISCELLANEOUS METAL ORES, NEC
- - 0.8%
Anglo American Platinum Corp. 63,100 1,037,693
Ltd.
MISCELLANEOUS NONMETALLIC
MINERALS - 0.3%
De Beers Consolidated Mines 19,700 339,883
Ltd./ De Beers Centenary AG
unit
TOTAL METALS & MINING 1,377,576
PRECIOUS METALS - 12.1%
GOLD & SILVER ORES - 4.8%
Anglogold Ltd. 53,186 1,941,769
Anglogold Ltd. sponsored ADR 224,690 4,072,506
6,014,275
GOLD ORES - 7.3%
Anglo American Corp. of South 61,400 1,916,317
Africa Ltd.
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SOUTH AFRICA - CONTINUED
PRECIOUS METALS - CONTINUED
GOLD ORES - CONTINUED
Avgold Ltd. (a) 45,000 $ 21,082
De Beers Consolidated Mines 137,500 2,354,688
Ltd. ADR
Gold Fields Ltd. 631,336 3,386,027
Gold Fields of South Africa 85,600 135,516
Ltd.
Gold Fields of South Africa 73,700 110,550
Ltd. ADR
Harmony Gold Mining Co. Ltd. 165,700 738,794
Randfontein Estates Gold 52,463 25,425
Mining Co. warrants 7/1/02
(a)
Western Areas Gold Mining 215,000 574,815
Ltd. (a)
9,263,214
TOTAL PRECIOUS METALS 15,277,489
TOTAL SOUTH AFRICA 17,439,589
UNITED STATES OF AMERICA -
15.6%
METALS & MINING - 0.8%
COPPER ORES - 0.8%
Freeport-McMoRan Copper & 100,000 943,750
Gold, Inc. Class B
PRECIOUS METALS - 14.7%
GOLD & SILVER ORES - 8.0%
Getchell Gold Corp. (a) 391,700 10,159,719
GOLD ORES - 6.7%
Homestake Mining Co. 240,106 2,205,973
Homestake Mining Co. (ASTL) 22,900 201,217
Stillwater Mining Co. (a) 229,150 5,256,128
Stillwater Mining Co. (a)(c) 34,500 791,344
8,454,662
TOTAL PRECIOUS METALS 18,614,381
SERVICES - 0.1%
JEWELRY, PRECIOUS METAL - 0.1%
Lazare Kaplan International, 10,000 73,750
Inc. (a)
TOTAL UNITED STATES OF AMERICA 19,631,881
TOTAL COMMON STOCKS 121,663,726
(Cost $145,864,546)
CASH EQUIVALENTS - 3.6%
Taxable Central Cash Fund (b) 4,600,787 4,600,787
(Cost $4,600,787)
TOTAL INVESTMENT IN $ 126,264,513
SECURITIES - 100%
(Cost $150,465,333)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(c) Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in
transactions exempt from registration, normally to qualified
institutional buyers. At the period end, the value of these securities
amounted to $2,621,103 or 2.1% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $75,666,319 and $94,287,029, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $11,498 for the
period.
The fund participated in the bank borrowing program. The maximum loan
and average daily balances during the period for which loans were
outstanding amounted to $3,755,000 and $2,353,182, respectively. The
weighted average interest rate was 5.05%.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $151,305,065. Net unrealized depreciation
aggregated $25,040,552, of which $17,051,472 related to appreciated
investment securities and $42,092,024 related to depreciated
investment securities.
At February 28, 1999, the fund had a capital loss carryforward of
approximately $77,793,000 of which $1,376,000, $55,694,000, and
$20,723,000 will expire on February 28, 2001, 2006, and 2007,
respectively.
The fund intends to defer to its fiscal year ending February 29, 2000
approximately $12,682,000 of losses recognized during the period
November 1, 1998 to February 28, 1999.
PRECIOUS METALS AND MINERALS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 126,264,513
value (cost $150,465,333) -
See accompanying schedule
Receivable for investments 403,856
sold
Receivable for fund shares 240,966
sold
Dividends receivable 649,189
Interest receivable 9,582
Redemption fees receivable 894
TOTAL ASSETS 127,569,000
LIABILITIES
Payable for investments $ 3,397,461
purchased
Payable for fund shares 528,773
redeemed
Accrued management fee 64,619
Other payables and accrued 139,019
expenses
TOTAL LIABILITIES 4,129,872
NET ASSETS $ 123,439,128
Net Assets consist of:
Paid in capital $ 238,968,188
Accumulated net investment (37,156)
loss
Accumulated undistributed net (91,281,851)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (24,210,053)
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 13,474,676 $ 123,439,128
shares outstanding
NET ASSET VALUE and $9.16
redemption price per share
($123,439,128 (divided by)
13,474,676 shares)
Maximum offering price per $9.44
share (100/97.00 of $9.16)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 2,262,380
Dividends
Interest (including income on 204,614
securities loaned of $3,486)
TOTAL INCOME 2,466,994
EXPENSES
Management fee $ 882,668
Transfer agent fees 1,431,323
Accounting and security 145,339
lending fees
Non-interested trustees' 441
compensation
Custodian fees and expenses 72,947
Registration fees 74,184
Audit 11,901
Legal 809
Interest 3,630
Reports to shareholders 40,820
Total expenses before 2,664,062
reductions
Expense reductions (54,750) 2,609,312
NET INVESTMENT INCOME (LOSS) (142,318)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (21,030,575)
Foreign currency transactions 23,252 (21,007,323)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 3,733,889
Assets and liabilities in (9,586) 3,724,303
foreign currencies
NET GAIN (LOSS) (17,283,020)
NET INCREASE (DECREASE) IN $ (17,425,338)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 418,114
charges paid to FDC
Sales charges - Retained by $ 414,477
FDC
Deferred sales charges $ 18,943
withheld by FDC
Exchange fees withheld by FSC $ 30,587
Expense reductions Directed $ 53,824
brokerage arrangements
Custodian credits 237
Transfer agent credits 689
$ 54,750
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (142,318) $ (511,682)
income (loss)
Net realized gain (loss) (21,007,323) (66,607,356)
Change in net unrealized 3,724,303 (65,517,001)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (17,425,338) (132,636,039)
NET ASSETS RESULTING FROM
OPERATIONS
Share transactions Net 415,102,396 372,321,003
proceeds from sales of shares
Cost of shares redeemed (442,648,944) (401,322,827)
NET INCREASE (DECREASE) IN (27,546,548) (29,001,824)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 2,450,806 2,011,726
TOTAL INCREASE (DECREASE) (42,521,080) (159,626,137)
IN NET ASSETS
NET ASSETS
Beginning of period 165,960,208 325,586,345
End of period (including $ 123,439,128 $ 165,960,208
accumulated net investment
loss of $37,156 and
$1,339,643, respectively)
OTHER INFORMATION
Shares
Sold 42,223,635 30,945,409
Redeemed (44,898,226) (31,406,772)
Net increase (decrease) (2,674,591) (461,363)
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.28 $ 19.60 $ 20.96 $ 15.27 $ 16.62
period
Income from Investment
Operations
Net investment income (loss) C (.01) (.04) (.01) .07 .17
Net realized and unrealized (1.27) (9.42) (1.42) 5.54 (1.42)
gain (loss)
Total from investment (1.28) (9.46) (1.43) 5.61 (1.25)
operations
Less Distributions
From net investment income - - (.04) (.06) (.18)
In excess of net investment - - (.01) - (.05)
income
Total distributions - - (.05) (.06) (.23)
Redemption fees added to paid .16 .14 .12 .14 .13
in capital
Net asset value, end of period $ 9.16 $ 10.28 $ 19.60 $ 20.96 $ 15.27
TOTAL RETURN A, B (10.89)% (47.55)% (6.26)% 37.74% (6.86)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 123,439 $ 165,960 $ 325,586 $ 467,196 $ 364,204
(000 omitted)
Ratio of expenses to average 1.78% 1.82% 1.62% 1.52% 1.46%
net assets
Ratio of expenses to average 1.74% D 1.76% D 1.61% D 1.52% 1.46%
net assets after expense
reductions
Ratio of net investment (.09)% (.26)% (.05)% .39% .99%
income (loss) to average net
assets
Portfolio turnover rate 53% 84% 54% 53% 43%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. E FOR
THE YEAR ENDED FEBRUARY 29.
</TABLE>
BUSINESS SERVICES AND OUTSOURCING PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the life of fund total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, 1999 PAST 1 YEAR LIFE OF FUND
SELECT BUSINESS SERVICES AND 26.23% 37.47%
OUTSOURCING
SELECT BUSINESS SERVICES AND 22.37% 33.27%
OUTSOURCING (LOAD ADJ.)
S&P 500 19.74% 24.95%
GS Technology 48.15% 56.20%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year or since the fund
started on February 4, 1998. You can compare the fund's returns to the
performance of both the Standard & Poor's 500 Index - a market
capitalization-weighted index of common stocks - and the Goldman Sachs
Technology Index - a market capitalization-weighted index of 190
stocks designed to measure the performance of companies in the
technology sector. These benchmarks include reinvestment of dividends
and capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, 1999 PAST 1 YEAR LIFE OF FUND
SELECT BUSINESS SERVICES AND 26.23% 34.79%
OUTSOURCING
SELECT BUSINESS SERVICES AND 22.37% 30.92%
OUTSOURCING (LOAD ADJ.)
S&P 500 19.74% 23.24%
GS Technology 48.15% 51.95%
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER LIFE OF FUND
Business Svcs/Outsourcing S&P 500
00353 SP001
1998/02/04 9700.00 10000.00
1998/02/28 10563.30 10435.43
1998/03/31 11339.30 10969.83
1998/04/30 11329.55 11080.19
1998/05/31 10950.93 10889.72
1998/06/30 11824.67 11332.06
1998/07/31 11620.80 11211.37
1998/08/31 9756.81 9590.43
1998/09/30 10465.51 10204.80
1998/10/31 11387.80 11034.86
1998/11/30 11999.42 11703.68
1998/12/31 13275.56 12378.04
1999/01/31 13806.19 12895.69
1999/02/26 13327.00 12494.90
IMATRL PRASUN SHR__CHT 19990228 19990307 154325 R00000000000016
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Select Business Services and Outsourcing
Portfolio on February 4, 1998, when the fund started, and the current
3.00% sales charge was paid. As the chart shows, by February 28, 1999,
the value of the investment would have been $13,327 - a 33.27%
increase on the initial investment - and includes the effect of a
$7.50 trading fee. For comparison, look at how the Standard & Poor's
500 Index did over the same period. With dividends and capital gains,
if any, reinvested, the same $10,000 investment would have been
$12,495 - a 24.95% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
First Data Corp. 7.5
Automatic Data Processing, Inc. 5.9
IMS Health, Inc. 5.7
DST Systems, Inc. 5.1
Ceridian Corp. 4.6
Nielsen Media Research, Inc. 4.6
Affiliated Computer Services, 4.3
Inc. Class A
Sabre Group Holdings, Inc. 4.0
Class A
Computer Sciences Corp. 3.8
Equifax, Inc. 3.4
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Computer Services & Software 61.6%
Services 11.2%
Advertising 8.1%
Broadcasting 4.6%
Trucking & Freight 3.0%
All Others 11.5%*
Row: 1, Col: 1, Value: 11.5
Row: 1, Col: 2, Value: 3.0
Row: 1, Col: 3, Value: 4.6
Row: 1, Col: 4, Value: 8.1
Row: 1, Col: 5, Value: 11.2
Row: 1, Col: 6, Value: 61.6
* INCLUDES SHORT-TERM INVESTMENTS
BUSINESS SERVICES AND OUTSOURCING PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Michael Tarlowe)
Michael Tarlowe,
Portfolio Manager of Select Business Services and Outsourcing
Portfolio
Q. HOW DID THE FUND PERFORM, MICHAEL?
A. For the 12 months that ended February 28, 1999, the fund posted a
total return of 26.23%. To compare, the Standard & Poor's 500 Index
returned 19.74% during the same 12-month period, and the Goldman Sachs
Technology Index - an index of 190 stocks designed to measure the
performance of companies in the technology sector - returned 48.15%.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE OVER THE PAST 12
MONTHS?
A. The fund - and the business services and outsourcing sector -
performed well relative to the S&P 500 because of the defensive nature
of many of the stocks; they tend to have stable revenue streams.
During the year, many investors were concerned that a weakened
domestic economy could result from continued financial problems in
Asia and currency devaluations in Latin America. Many stocks in the
fund did well because they had little or no business in these
countries, and enjoyed predictable revenues. Relative to the Goldman
Sachs Technology Index, the fund didn't own the large technology
hardware and software companies that dominate the index and drove the
technology sector over the past 12 months. Companies like Microsoft
and Intel posted very strong performance, but the fund generally
wouldn't own these product companies; it's focused on companies that
provide business-related services.
Q. DID YOUR STRATEGY CHANGE AS WE WORKED OUR WAY THROUGH THE TURMOIL
IN THE MARKETS IN THE LATTER HALF OF 1998?
A. No, it didn't. I continued to search for companies with strong
earnings-growth prospects or improving fundamentals, selling at
reasonable or attractive valuations. I looked for turnaround
situations or under-followed securities. Recurring revenues, strong
near-term earnings outlooks and strong cash flows were among the
common characteristics shared by many of the fund's holdings.
Q. WHICH STOCKS WERE STRONG CONTRIBUTORS TO THE FUND'S PERFORMANCE?
A. On the plus side, there was Nielsen Media Research, a company that
enjoys a virtual monopoly in the business of measuring television
audiences. The company split from Cognizant in July 1998. Because
Nielsen was so small when the split occurred, it received very little
coverage on Wall Street at that time. Recognizing the company's strong
market position and appreciating its stock's low valuation, I took a
large position in the stock for the fund. In time, the company saw its
share price rise as investors came to appreciate the company's
consistent earnings-growth potential. Ceridian, a data management
firm, sold off some of its businesses, better positioning itself to
produce superior earnings growth and strong cash flow. First Data was
a turnaround story, as this data management company's stock rebounded
from record lows. Finally, Affiliated Computer Services continued to
generate strong earnings growth and made some positive acquisitions to
its business-process outsourcing operations.
Q. WHICH STOCKS PROVED TO BE DISAPPOINTING?
A. On the downside, Technology Solutions and Cambridge Technology
Partners - two computer system integration companies - suffered from
disappointing near-term earnings growth because demand for their
services declined. However, the fund continued to own both securities
at the end of the period because their valuations were reasonable and
their prospects appeared favorable.
Q. WHAT'S YOUR OUTLOOK?
A. I'm very positive about the outlook for this sector over the next
six months. Companies in the sector appear poised to post earnings
growth in excess of the overall market, as measured by the S&P 500. In
addition, there should be continued possibilities for consolidation as
well as a pipeline of new stock offerings that could create new
investment opportunities for the fund. As I've said in the past, as
more and more companies look to outsource some of their functions, the
companies in the sector should be the main beneficiaries.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: February 4, 1998
FUND NUMBER: 353
TRADING SYMBOL: FBSOX
SIZE: as of February 28, 1999, more than
$64 million
MANAGER: Michael Tarlowe, since inception;
analyst, transportation, telecommunications
equipment, computer services and Internet
securities, 1994-present; joined Fidelity in 1994
BUSINESS SERVICES AND OUTSOURCING PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 91.0%
SHARES VALUE (NOTE 1)
ADVERTISING - 8.1%
Interpublic Group of 20,800 $ 1,556,100
Companies, Inc.
Lamar Advertising Co. Class A 17,250 666,281
(a)
Omnicom Group, Inc. 29,039 1,923,834
Outdoor Systems, Inc. (a) 24,000 670,500
Pharmaceutical Marketing 30,000 435,000
Services, Inc. (a)
5,251,715
AIR TRANSPORTATION - 0.6%
Viad Corp. 13,600 359,550
BROADCASTING - 4.6%
Nielsen Media Research, Inc. 150,600 2,955,525
(a)
COMPUTER SERVICES & SOFTWARE
- - 61.6%
Affiliated Computer Services, 60,200 2,784,250
Inc. Class A (a)
Automatic Data Processing, 96,100 3,819,975
Inc.
CACI International, Inc. 10,000 165,000
Class A (a)
Cambridge Technology 21,500 540,188
Partners, Inc. (a)
Ceridian Corp. (a) 41,500 2,972,438
Computer Sciences Corp. 37,200 2,478,450
Convergys Corp. (a) 16,500 285,656
Cotelligent, Inc. (a) 12,000 159,000
DST Systems, Inc. (a) 60,500 3,282,125
Electronic Data Systems Corp. 41,000 1,906,500
Equifax, Inc. 57,500 2,170,625
First Data Corp. 127,000 4,857,745
Fiserv, Inc. (a) 30,050 1,412,350
Fundtech Ltd. 8,500 177,438
Galileo International, Inc. 17,200 868,600
HNC Software, Inc. (a) 7,000 188,125
IMS Health, Inc. 103,600 3,677,800
IntelliQuest Information 38,700 420,863
Group, Inc. (a)
International Integration, 15,000 298,125
Inc. (a)
Paychex, Inc. 46,150 1,955,606
QRS Corp. (a) 6,700 333,744
Sabre Group Holdings, Inc. 65,500 2,570,875
Class A (a)
SunGard Data Systems, Inc. (a) 20,600 816,275
Technology Solutions, Inc. (a) 68,100 557,569
Wang Laboratories, Inc. (a) 47,200 1,126,900
39,826,222
INSURANCE - 0.2%
Scottish Annuity & Life Hold 15,800 156,025
(a)
LEASING & RENTAL - 0.5%
Caribiner International, Inc. 43,500 339,844
(a)
PRINTING - 0.6%
Reynolds & Reynolds Co. Class 21,000 396,375
A
SHARES VALUE (NOTE 1)
PUBLISHING - 0.3%
Harte Hanks Communications, 6,500 $ 168,188
Inc.
RESTAURANTS - 0.3%
Sodexho Marriott Services, 8,500 198,688
Inc. (a)
SERVICES - 11.2%
ABR Information Services, 7,900 139,238
Inc. (a)
ACNielsen Corp. (a) 15,900 413,400
Cintas Corp. 10,800 764,100
Compass International 47,000 384,813
Services Corp.
Data Processing Resources 15,000 285,000
Corp. (a)
Diamond Technology Partners, 16,000 397,000
Inc. Class A (a)
Dun & Bradstreet Corp. 36,400 1,246,700
Gartner Group, Inc. Class A 20,500 459,969
(a)
International Telecom Data 35,000 481,250
Systems, Inc.
Korn/Ferry International (a) 19,000 216,125
Lai Worldwide, Inc. (a) 59,500 438,813
Manpower, Inc. 13,300 318,369
Market Facts, Inc. (a) 34,100 801,350
Paymentech, Inc. (a) 11,000 210,375
Robert Half International, 18,900 680,400
Inc. (a)
7,236,902
TRUCKING & FREIGHT - 3.0%
Air Express International 38,200 670,888
Corp.
Expeditors International of 26,900 1,252,531
Washington, Inc.
1,923,419
TOTAL COMMON STOCKS 58,812,453
(Cost $51,042,144)
CASH EQUIVALENTS - 9.0%
Taxable Central Cash Fund (b) 5,813,720 5,813,720
(Cost $5,813,720)
TOTAL INVESTMENT IN $ 64,626,173
SECURITIES - 100%
(Cost $56,855,864)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $92,045,698 and $57,419,897, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $16,127 for the
period.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $57,599,238. Net unrealized appreciation
aggregated $7,026,935, of which $9,954,218 related to appreciated
investment securities and $2,927,283 related to depreciated investment
securities.
A total of 20% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of this percentage
for use in preparing 1999 income tax returns.
BUSINESS SERVICES AND OUTSOURCING PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 64,626,173
value (cost $56,855,864) -
See accompanying schedule
Receivable for fund shares 318,349
sold
Dividends receivable 25,757
Interest receivable 21,611
Redemption fees receivable 213
TOTAL ASSETS 64,992,103
LIABILITIES
Payable for investments $ 310,463
purchased
Payable for fund shares 459,005
redeemed
Accrued management fee 31,472
Other payables and accrued 68,552
expenses
TOTAL LIABILITIES 869,492
NET ASSETS $ 64,122,611
Net Assets consist of:
Paid in capital $ 55,174,965
Accumulated undistributed net 1,177,337
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 7,770,309
(depreciation) on investments
NET ASSETS, for 4,726,469 $ 64,122,611
shares outstanding
NET ASSET VALUE and $13.57
redemption price per share
($64,122,611 (divided by)
4,726,469 shares)
Maximum offering price per $13.99
share (100/97.00 of $13.57)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 181,268
Dividends
Interest 221,409
TOTAL INCOME 402,677
EXPENSES
Management fee $ 326,653
Transfer agent fees 421,635
Accounting fees and expenses 60,809
Non-interested trustees' 177
compensation
Custodian fees and expenses 13,013
Registration fees 64,318
Audit 30,659
Legal 745
Reports to shareholders 1,557
Miscellaneous 403
Total expenses before 919,969
reductions
Expense reductions (12,168) 907,801
NET INVESTMENT INCOME (LOSS) (505,124)
REALIZED AND UNREALIZED GAIN 2,392,697
(LOSS)
Net realized gain (loss) on
investment securities
Change in net unrealized 7,144,279
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 9,536,976
NET INCREASE (DECREASE) IN $ 9,031,852
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 661,865
charges paid to FDC
Sales charges - Retained by $ 661,865
FDC
Deferred sales charges $ 106
withheld by FDC
Exchange fees withheld by FSC $ 7,478
Expense reductions Directed $ 11,380
brokerage arrangements
Custodian credits 788
$ 12,168
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
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INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 FEBRUARY 4, 1998
ASSETS (COMMENCEMENT OF OPERATIONS)
TO FEBRUARY 28, 1998
Operations Net investment $ (505,124) $ (2,203)
income (loss)
Net realized gain (loss) 2,392,697 16,708
Change in net unrealized 7,144,279 626,030
appreciation (depreciation)
NET INCREASE (DECREASE) IN 9,031,852 640,535
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (724,580) -
from net realized gains
Share transactions Net 115,593,201 15,378,163
proceeds from sales of shares
Reinvestment of distributions 706,597 -
Cost of shares redeemed (76,520,490) (103,682)
NET INCREASE (DECREASE) IN 39,779,308 15,274,481
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 120,875 140
TOTAL INCREASE (DECREASE) 48,207,455 15,915,156
IN NET ASSETS
NET ASSETS
Beginning of period 15,915,156 -
End of period $ 64,122,611 $ 15,915,156
OTHER INFORMATION
Shares
Sold 9,724,396 1,470,842
Issued in reinvestment of 57,528 -
distributions
Redeemed (6,516,475) (9,822)
Net increase (decrease) 3,265,449 1,461,020
</TABLE>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 1999 1998E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.89 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.11) -
Net realized and unrealized 2.92 .89
gain (loss)
Total from investment 2.81 .89
operations
Less Distributions
From net realized gain (.16) -
Redemption fees added to paid .03 -
in capital
Net asset value, end of period $ 13.57 $ 10.89
TOTAL RETURN B, C 26.23% 8.90%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 64,123 $ 15,915
(000 omitted)
Ratio of expenses to average 1.66% 2.50% A, F
net assets
Ratio of expenses to average 1.64% G 2.50% A
net assets after expense
reductions
Ratio of net investment (.91)% (.49)% A
income (loss) to average net
assets
Portfolio turnover rate 115% 36% A
A ANNUALIZED B THE TOTAL
RETURNS WOULD HAVE BEEN
LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE
PERIODS SHOWN. C TOTAL
RETURNS DO NOT INCLUDE THE
ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE
YEAR ARE NOT ANNUALIZED. D
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. E FOR THE PERIOD
FEBRUARY 4, 1998
(COMMENCEMENT OF OPERATIONS)
TO FEBRUARY 28, 1998. F FMR
AGREED TO REIMBURSE A
PORTION OF THE FUND'S
EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT,
THE FUND'S EXPENSE RATIO
WOULD HAVE BEEN HIGHER. G
FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
COMPUTERS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the past 10 year total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT COMPUTERS 66.43% 330.57% 1,094.34%
SELECT COMPUTERS (LOAD ADJ.) 61.37% 317.58% 1,058.44%
S&P 500 19.74% 194.91% 459.21%
GS Technology 48.15% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
index of common stocks - and the Goldman Sachs Technology Index - a
market capitalization-weighted index of 190 stocks designed to measure
the performance of companies in the technology sector. These
benchmarks include reinvestment of dividends and capital gains, if
any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT COMPUTERS 66.43% 33.91% 28.15%
SELECT COMPUTERS (LOAD ADJ.) 61.37% 33.09% 27.76%
S&P 500 19.74% 24.15% 18.78%
GS Technology 48.15% n/a n/a
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER 10 YEARS
Computers S&P 500
00007 SP001
1989/02/28 9700.00 10000.00
1989/03/31 9239.36 10233.00
1989/04/30 10275.80 10764.09
1989/05/31 11188.22 11200.04
1989/06/30 9859.45 11136.20
1989/07/31 10036.62 12141.80
1989/08/31 10187.21 12379.78
1989/09/30 10426.39 12329.02
1989/10/31 10080.91 12042.99
1989/11/30 9859.45 12288.66
1989/12/31 9965.75 12583.59
1990/01/31 9877.17 11739.23
1990/02/28 10771.87 11890.67
1990/03/31 11542.56 12205.77
1990/04/30 11232.51 11900.63
1990/05/31 12694.16 13060.94
1990/06/30 12924.47 12972.12
1990/07/31 12003.20 12930.61
1990/08/31 10098.63 11761.68
1990/09/30 9434.25 11188.89
1990/10/31 9788.58 11140.78
1990/11/30 11400.82 11860.47
1990/12/31 11800.12 12191.38
1991/01/31 13811.51 12722.92
1991/02/28 14705.46 13632.61
1991/03/31 15867.59 13962.52
1991/04/30 14839.55 13996.03
1991/05/31 15590.47 14600.66
1991/06/30 13467.57 13931.95
1991/07/31 14820.77 14581.18
1991/08/31 15741.31 14926.75
1991/09/30 14912.82 14677.48
1991/10/31 14618.25 14874.16
1991/11/30 13614.86 14274.73
1991/12/31 15428.33 15907.76
1992/01/31 17039.28 15611.87
1992/02/29 18208.37 15814.83
1992/03/31 16772.32 15506.44
1992/04/30 16229.20 15962.33
1992/05/31 16431.72 16040.54
1992/06/30 14848.39 15801.54
1992/07/31 15575.62 16447.82
1992/08/31 14682.69 16110.64
1992/09/30 15409.92 16300.75
1992/10/31 16625.04 16357.80
1992/11/30 17656.05 16915.60
1992/12/31 18815.93 17123.66
1993/01/31 19911.38 17267.50
1993/02/28 18548.98 17502.34
1993/03/31 18917.19 17871.64
1993/04/30 18379.92 17439.14
1993/05/31 20533.38 17906.51
1993/06/30 19711.67 17958.44
1993/07/31 20533.38 17886.61
1993/08/31 21751.78 18564.51
1993/09/30 22365.70 18421.56
1993/10/31 22365.70 18802.89
1993/11/30 23319.65 18624.26
1993/12/31 24247.70 18849.62
1994/01/31 25811.10 19490.50
1994/02/28 26906.48 18962.31
1994/03/31 26627.66 18135.55
1994/04/30 26458.37 18367.69
1994/05/31 26438.46 18668.92
1994/06/30 24267.62 18211.53
1994/07/31 25034.38 18808.87
1994/08/31 28031.73 19580.03
1994/09/30 27832.58 19100.32
1994/10/31 28878.16 19530.08
1994/11/30 29047.45 18818.79
1994/12/31 29206.78 19097.87
1995/01/31 28310.56 19593.08
1995/02/28 30541.15 20356.63
1995/03/31 32891.23 20957.35
1995/04/30 35504.54 21574.54
1995/05/31 37259.59 22436.88
1995/06/30 41334.55 22958.09
1995/07/31 46529.10 23719.38
1995/08/31 47568.02 23778.91
1995/09/30 50291.37 24782.38
1995/10/31 48465.72 24693.91
1995/11/30 47295.68 25777.97
1995/12/31 44344.76 26274.46
1996/01/31 44060.42 27168.84
1996/02/29 46664.92 27420.69
1996/03/31 42718.36 27684.75
1996/04/30 47413.86 28092.83
1996/05/31 49052.40 28817.34
1996/06/30 45486.85 28927.14
1996/07/31 42440.54 27649.13
1996/08/31 44275.25 28232.26
1996/09/30 49710.13 29821.17
1996/10/31 52329.49 30643.63
1996/11/30 59449.07 32959.99
1996/12/31 58365.85 32307.05
1997/01/31 65847.42 34325.59
1997/02/28 57850.29 34594.71
1997/03/31 53294.20 33173.21
1997/04/30 56201.20 35153.65
1997/05/31 60251.97 37293.80
1997/06/30 59859.96 38964.57
1997/07/31 73671.79 42064.98
1997/08/31 75161.43 39708.50
1997/09/30 77957.77 41883.33
1997/10/31 67007.61 40484.43
1997/11/30 65766.25 42358.45
1997/12/31 58425.32 43085.75
1998/01/31 63085.11 43562.28
1998/02/28 69608.82 46703.99
1998/03/31 68032.96 49095.70
1998/04/30 74539.72 49589.60
1998/05/31 69456.31 48737.16
1998/06/30 75641.13 50716.86
1998/07/31 79673.97 50176.72
1998/08/31 68981.86 42922.17
1998/09/30 82283.45 45671.77
1998/10/31 88095.48 49386.71
1998/11/30 97635.35 52380.04
1998/12/31 114732.55 55398.18
1999/01/31 132253.36 57714.93
1999/02/26 115844.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990309 143213 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Computers Portfolio on February 28, 1989,
and the current 3.00% sales charge was paid. As the chart shows, by
February 28, 1999, the value of the investment would have grown to
$115,844 - a 1,058.44% increase on the initial investment - and
includes the effect of a $7.50 trading fee. For comparison, look at
how the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
EMC Corp. 9.0
Texas Instruments, Inc. 6.8
Microsoft Corp. 5.3
Cisco Systems, Inc. 5.1
Micron Technology, Inc. 4.8
Applied Materials, Inc. 4.8
America Online, Inc. 4.5
Dell Computer Corp. 4.1
Compaq Computer Corp. 2.7
Intel Corp. 2.4
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Electronics 25.0%
Computers &
Office Equipment 24.1%
Computer Services
& Software 19.3%
Communications Equipment 7.1%
Electronic Instruments 7.0%
All Others 17.5%*
Row: 1, Col: 1, Value: 17.5
Row: 1, Col: 2, Value: 7.0
Row: 1, Col: 3, Value: 7.1
Row: 1, Col: 4, Value: 19.3
Row: 1, Col: 5, Value: 24.1
Row: 1, Col: 6, Value: 25.0
* INCLUDES SHORT-TERM INVESTMENTS
COMPUTERS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Mike Tempero)
Mike Tempero,
Portfolio Manager
of Fidelity Select
Computers Portfolio
Q. HOW DID THE FUND PERFORM, MIKE?
A. For the 12 months that ended February 28, 1999, the fund returned
66.43%. For the same 12-month period, the Standard & Poor's 500 Index
returned 19.74%, while the Goldman Sachs Technology Index - an index
of 190 stocks designed to measure the performance of companies in the
technology sector - returned 48.15%. The fund outperformed the Goldman
Sachs index due to the fund's smaller exposure to poorly performing
semiconductor stocks during the first half of the period.
Q. HOW WOULD YOU CHARACTERIZE THE INVESTMENT ENVIRONMENT OVER THE PAST
YEAR?
A. Firm computer demand helped the sector perform very well for most
of the year, although there were weak periods. During the late summer
and early fall, economic crises in emerging markets caused a broadly
based stock market decline. However, when the market rebounded in
October, computer and technology stocks led the rally, with some
prices doubling. Within the computer sector, semiconductor and
semiconductor equipment stock prices were soft for a large part of the
year. Excess inventories and falling prices hurt this segment when
many personal computer manufacturers scaled back production and
reduced semiconductor orders early in 1998. However, after inventories
sold down, continued demand helped improve semiconductor pricing and
these stocks recovered. In February 1999, several computer
manufacturers, including Compaq and Dell, announced that unit sales
were running below expectations. Computer stocks ended the period on a
weaker note amid concerns of slower revenue and earnings growth.
Q. YOU NOW HAVE SEMICONDUCTOR STOCKS IN YOUR TOP-10 HOLDINGS. WHAT LED
YOU TO SELECT THEM?
A. Although semiconductor stocks underperformed for much of the year,
these stocks appeared to bottom out in the fall as investors
anticipated improving business conditions. For example, Applied
Materials, Inc. did very well - its stock more than doubled between
October and February. Applied Materials dominates the market for
wafer-fabrication equipment used by semiconductor manufacturers and
counts Intel, the world's leading chip maker, as its largest customer.
I also added to positions in Texas Instruments and Micron Technology.
Texas Instruments is the leading producer of the digital signal
processors used in more than 85 million cellular phones; Micron is a
low-cost provider of semiconductor memory components.
Q. WHAT HOLDINGS INFLUENCED THE FUND'S STRONG PERFORMANCE?
A. EMC Corp., the fund's largest holding, performed extremely well.
EMC manufactures large-scale data storage units and is a prime
beneficiary of increased electronic data generation - every e-mail,
online transaction or file transfer needs safe warehousing. EMC
dominates the storage market largely because its units are compatible
with many types of mainframes, network servers and operating systems.
Dell Computer also did well. As the industry's low-cost leader in
personal computer manufacturing, Dell has prospered because it sells
PCs directly to consumers and assembles units only as orders are
received. Not only does this strategy keep inventories lean, it gives
Dell a competitive advantage. When component costs - such as
semiconductors - are falling, Dell can benefit from lower costs
immediately while other manufacturers are burdened with inventories of
more expensive components.
Q. WHAT STOCKS WERE DISAPPOINTING DURING THE PERIOD?
A. One stock that fell short of my expectations was Seagate
Technology. Seagate is the largest independent producer of computer
disk drives and specializes in high-end networking applications. I
believed Seagate's earnings growth would improve after reducing
built-up inventories during the fall. However, severe price
competition and expectations of lower demand in Seagate's high-end
market caused the stock to sell off sharply early in 1999. Most
disappointments, however, fell into the category of omission. For
example, after the market corrected, I was slow to buy more Cisco
Systems, the market leader in data networking routers. Cisco's shares
more than doubled from their low in October.
Q. WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
A. Computer stock performance in 1999 will rest on two critical
issues: consumer spending and corporate profitability. As long as
consumer confidence remains strong and corporate profits are
relatively stable, spending for computers and related products should
continue. I will be watching for new trends in the industry that could
shift spending patterns. For example, increased bandwidth that helps
speed up connections and reduces data log-jams between computers is
crucial for system upgrades. Consequently, companies that can provide
the means for greater bandwidth capacity may lead the next big wave in
the computing industry.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: July 29, 1985
FUND NUMBER: 007
TRADING SYMBOL: FDCPX
SIZE: as of February 28, 1999, more than
$1.8 billion
MANAGER: Michael Tempero, since 1997;
manager, Fidelity Select Insurance Portfolio,
1995-1997; Fidelity Select Natural Gas
Portfolio, 1994-1995; joined Fidelity in 1993
COMPUTERS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
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<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 86.4%
SHARES VALUE (NOTE 1)
ADVERTISING - 0.2%
DoubleClick, Inc. (a) 50,000 $ 4,493,750
VerticalNet, Inc. (a) 300 12,375
4,506,125
BROADCASTING - 0.1%
Infinity Broadcasting Corp. 33,000 783,750
Class A (a)
COMMUNICATIONS EQUIPMENT - 7.1%
ADC Telecommunications, Inc. 550,000 22,275,000
(a)
Cisco Systems, Inc. (a) 1,039,500 101,676,094
OY Nokia AB sponsored ADR 125,000 16,953,125
140,904,219
COMPUTER SERVICES & SOFTWARE
- - 19.3%
AboveNet Communications, Inc. 500 15,625
(a)
Allaire Corp. (a) 400 19,500
America Online, Inc. 990,800 88,119,275
At Home Corp. Series A (a) 100,000 10,612,500
Aware, Inc. (a) 336,300 11,644,388
BMC Software, Inc. 200,000 8,175,000
Cambridge Technology 150,000 3,768,750
Partners, Inc. (a)
Computer Learning Centers, 22,800 98,325
Inc. (a)
Documentum, Inc. (a) 100,000 2,137,500
eBay, Inc. (a) 100,500 33,567,000
Electronics for Imaging, Inc. 615,400 21,500,538
(a)
Equifax, Inc. 300,000 11,325,000
IMS Health, Inc. 300,000 10,650,000
Inacom Corp. (a) 200,000 3,100,000
Inktomi Corp. (a) 50,000 3,106,250
Internet America, Inc. (a) 300 8,719
Intraware, Inc. 700 13,213
Microsoft Corp. (a) 700,000 105,087,500
Oracle Corp. (a) 200,000 11,175,000
Pacific Internet Ltd. (a) 200 5,975
pcOrder.com, Inc. (a) 400 18,850
Perot Systems Corp. (a) 400 17,375
Siebel Systems, Inc. (a) 704,000 30,976,000
VeriSign, Inc. (a) 50,000 4,900,000
Vignette Corp. (a) 100,700 5,462,975
Wang Laboratories, Inc. (a) 50,000 1,193,750
WebTrends Corp. (a) 1,000 25,125
Yahoo!, Inc. (a) 100,000 15,350,000
382,074,133
COMPUTERS & OFFICE EQUIPMENT
- - 24.1%
Advanced Digital Information 170,700 2,901,900
Corp. (a)
CDW Computer Centers, Inc. (a) 100,000 6,962,500
Compaq Computer Corp. 1,506,350 53,098,838
Dell Computer Corp. (a) 1,000,000 80,125,000
EMC Corp. (a) 1,729,000 177,006,371
SHARES VALUE (NOTE 1)
Ingram Micro, Inc. Class A (a) 50,000 $ 1,100,000
Insight Enterprises, Inc. (a) 286,875 6,669,844
International Business 204,000 34,680,000
Machines Corp.
Iomega Corp. (a) 200,000 1,212,500
Komag, Inc. (a) 100,000 700,000
Lexmark International Group, 250,000 25,796,875
Inc. Class A (a)
Micron Electronics, Inc. (a) 200,000 2,875,000
Network Appliance, Inc. (a) 150,000 6,300,000
Quantum Corp. (a) 247,000 4,060,063
Seagate Technology, Inc. (a) 500,000 14,468,750
Sun Microsystems, Inc. (a) 450,000 43,790,625
Symbol Technologies, Inc. 100,000 5,300,000
Tech Data Corp. (a) 200,000 3,400,000
Unisys Corp. (a) 200,000 5,962,500
476,410,766
CONSUMER ELECTRONICS - 1.0%
Sharp Corp. 1,968,000 19,142,747
DEFENSE ELECTRONICS - 0.1%
Alpha Industries, Inc. (a) 60,000 1,222,500
ELECTRONIC INSTRUMENTS - 7.0%
Advantest Corp. 105,100 7,954,229
Applied Materials, Inc. (a) 1,700,000 94,562,500
KLA-Tencor Corp. (a) 100,000 5,181,250
LAM Research Corp. (a) 62,400 1,844,700
Smart Modular Technologies, 650,000 10,440,625
Inc. (a)
Teradyne, Inc. (a) 400,000 19,050,000
139,033,304
ELECTRONICS - 25.0%
Altera Corp. (a) 300,000 14,587,500
Analog Devices, Inc. (a) 450,000 11,278,125
C-Cube Microsystems, Inc. (a) 72,300 1,355,625
Intel Corp. 400,000 47,975,000
Linear Technology Corp. 1,046,600 45,854,163
LSI Logic Corp. (a) 500,000 12,968,750
Microchip Technology, Inc. (a) 100,000 2,725,000
Micron Technology, Inc. (a) 1,655,000 95,369,375
Motorola, Inc. 630,000 44,257,500
PMC-Sierra, Inc. (a) 50,000 3,543,750
Rambus, Inc. (a) 75,300 5,473,369
Semtech Corp. (a) 470,000 14,276,250
Solectron Corp. (a) 173,200 7,739,875
Texas Instruments, Inc. 1,499,200 133,709,900
Tokyo Electron Ltd. 172,000 7,801,764
Xilinx, Inc. (a) 650,000 45,337,500
494,253,446
INDUSTRIAL MACHINERY &
EQUIPMENT - 0.6%
ASM Lithography Holding N V 300,000 11,887,500
(a)
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SERVICES - 0.0%
Corporate Executive Board Co. 1,200 $ 29,400
(a)
TELEPHONE SERVICES - 1.9%
MCI WorldCom, Inc. (a) 461,000 38,032,500
TOTAL COMMON STOCKS 1,708,280,390
(Cost $1,339,272,825)
CASH EQUIVALENTS - 13.6%
MATURITY AMOUNT
Investments in repurchase $ 4,474,771 4,473,000
agreements (U.S. Treasury
obligations), in a joint
trading account at 4.75%,
dated 2/26/99 due 3/1/99
SHARES
Taxable Central Cash Fund (b) 264,220,070 264,220,070
TOTAL CASH EQUIVALENTS 268,693,070
(Cost $268,693,070)
TOTAL INVESTMENT IN $ 1,976,973,460
SECURITIES - 100%
(Cost $1,607,965,895)
</TABLE>
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $1,827,516,954 and $1,247,515,427, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $217,026 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $18,833,331. The fund
received cash collateral of $18,038,100.
The fund participated in the interfund lending program as a lender.
The maximum loan and average daily balances during the period for
which loans were outstanding amounted to $37,166,000. The weighted
average interest rate was 5.87%. Interest earned from the interfund
lending program amounted to $6,055 and is included in interest income
on the Statement of Operations.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $1,612,250,580. Net unrealized appreciation
aggregated $364,722,880, of which $447,991,267 related to appreciated
investment securities and $83,268,387 related to depreciated
investment securities.
The fund hereby designates approximately $1,825,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
COMPUTERS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 1,976,973,460
value (including repurchase
agreements of $4,473,000)
(cost $1,607,965,895) - See
accompanying schedule
Cash 540
Receivable for investments 74,550,698
sold
Receivable for fund shares 12,196,853
sold
Dividends receivable 111,480
Interest receivable 847,493
Redemption fees receivable 6,719
Other receivables 82,279
TOTAL ASSETS 2,064,769,522
LIABILITIES
Payable for investments $ 205,491,186
purchased
Payable for fund shares 7,938,408
redeemed
Accrued management fee 946,369
Other payables and accrued 920,650
expenses
Collateral on securities 18,038,100
loaned, at value
TOTAL LIABILITIES 233,334,713
NET ASSETS $ 1,831,434,809
Net Assets consist of:
Paid in capital $ 1,363,112,573
Accumulated undistributed net 99,314,671
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 369,007,565
(depreciation) on investments
NET ASSETS, for 26,786,080 $ 1,831,434,809
shares outstanding
NET ASSET VALUE and $68.37
redemption price per share
($1,831,434,809 (divided by)
26,786,080 shares)
Maximum offering price per $70.48
share (100/97.00 of $68.37)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 1,207,978
Dividends
Interest (including income on 5,691,380
securities loaned of
$578,753)
TOTAL INCOME 6,899,358
EXPENSES
Management fee $ 6,013,190
Transfer agent fees 5,234,820
Accounting and security 764,075
lending fees
Non-interested trustees' 3,899
compensation
Custodian fees and expenses 37,728
Registration fees 380,098
Audit 42,206
Legal 5,276
Reports to shareholders 103,662
Total expenses before 12,584,954
reductions
Expense reductions (214,475) 12,370,479
NET INVESTMENT INCOME (LOSS) (5,471,121)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 193,009,783
Foreign currency transactions 24,748 193,034,531
Change in net unrealized 272,430,790
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 465,465,321
NET INCREASE (DECREASE) IN $ 459,994,200
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 9,062,985
charges paid to FDC
Sales charges - Retained by $ 9,053,383
FDC
Deferred sales charges $ 5,657
withheld by FDC
Exchange fees withheld by FSC $ 73,148
EXPENSE REDUCTIONS Directed $ 207,334
brokerage arrangements
Custodian credits 5,645
Transfer agent credits 1,496
$ 214,475
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (5,471,121) $ (4,376,259)
income (loss)
Net realized gain (loss) 193,034,531 89,255,411
Change in net unrealized 272,430,790 22,245,884
appreciation (depreciation)
NET INCREASE (DECREASE) IN 459,994,200 107,125,036
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders - (132,918,806)
From net realized gain
In excess of net realized - (34,413,012)
gain
TOTAL DISTRIBUTIONS - (167,331,818)
Share transactions Net 1,830,119,568 808,411,253
proceeds from sales of shares
Reinvestment of distributions - 165,233,207
Cost of shares redeemed (1,247,821,903) (733,889,159)
NET INCREASE (DECREASE) IN 582,297,665 239,755,301
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 3,678,254 1,629,692
TOTAL INCREASE (DECREASE) 1,045,970,119 181,178,211
IN NET ASSETS
NET ASSETS
Beginning of period 785,464,690 604,286,479
End of period $ 1,831,434,809 $ 785,464,690
OTHER INFORMATION
Shares
Sold 33,082,983 17,046,061
Issued in reinvestment of - 4,788,686
distributions
Redeemed (25,415,629) (15,239,529)
Net increase (decrease) 7,667,354 6,595,218
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 41.08 $ 48.25 $ 41.03 $ 30.67 $ 27.02
period
Income from Investment
Operations
Net investment income (loss) C (.29) (.32) (.36) (.23) (.31)
Net realized and unrealized 27.39 6.42 9.94 16.10 3.68
gain (loss)
Total from investment 27.10 6.10 9.58 15.87 3.37
operations
Less Distributions
From net realized gain - (10.64) (2.47) (5.61) -
In excess of net realized gain - (2.75) - - -
Total distributions - (13.39) (2.47) (5.61) -
Redemption fees added to paid .19 .12 .11 .10 .28
in capital
Net asset value, end of period $ 68.37 $ 41.08 $ 48.25 $ 41.03 $ 30.67
TOTAL RETURN A, B 66.43% 20.33% 23.97% 52.79% 13.51%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,831,435 $ 785,465 $ 604,286 $ 527,337 $ 215,014
(000 omitted)
Ratio of expenses to average 1.25% 1.40% 1.48% 1.40% 1.71%
net assets
Ratio of expenses to average 1.23% D 1.34% D 1.44% D 1.38% D 1.69% D
net assets after expense
reductions
Ratio of net investment (.54)% (.67)% (.83)% (.56)% (1.12)%
income (loss) to average net
assets
Portfolio turnover rate 133% 333% 255% 129% 189%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. E FOR
THE YEAR ENDED FEBRUARY 29.
</TABLE>
DEVELOPING COMMUNICATIONS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the life of fund total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
1999
SELECT DEVELOPING 63.01% 193.13% 573.87%
COMMUNICATIONS
SELECT DEVELOPING 58.05% 184.27% 553.58%
COMMUNICATIONS (LOAD ADJ.)
S&P 500 19.74% 194.91% 331.09%
GS Technology 48.15% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or since
the fund started on June 29, 1990. You can compare the fund's returns
to the performance of both the Standard & Poor's 500 Index - a market
capitalization-weighted index of common stocks - and the Goldman Sachs
Technology Index - a market capitalization-weighted index of 190
stocks designed to measure the performance of companies in the
technology sector. These benchmarks include reinvestment of dividends
and capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
1999
SELECT DEVELOPING 63.01% 24.00% 24.62%
COMMUNICATIONS
SELECT DEVELOPING 58.05% 23.24% 24.19%
COMMUNICATIONS (LOAD ADJ.)
S&P 500 19.74% 24.15% 18.36%
GS Technology 48.15% n/a n/a
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER LIFE OF FUND
Developing Communications S&P 500
00518 SP001
1990/06/29 9700.00 10000.00
1990/07/31 8953.10 9968.00
1990/08/31 7866.70 9066.89
1990/09/30 6751.20 8625.34
1990/10/31 7081.00 8588.25
1990/11/30 8235.30 9143.05
1990/12/31 8759.10 9398.14
1991/01/31 10146.20 9807.90
1991/02/28 10776.70 10509.16
1991/03/31 11494.50 10763.48
1991/04/30 11591.50 10789.32
1991/05/31 11766.10 11255.41
1991/06/30 10841.06 10739.92
1991/07/31 11963.62 11240.40
1991/08/31 12670.42 11506.79
1991/09/30 12815.94 11314.63
1991/10/31 13564.32 11466.25
1991/11/30 12888.70 11004.16
1991/12/31 14135.99 12263.03
1992/01/31 14510.18 12034.94
1992/02/29 14998.70 12191.39
1992/03/31 14260.72 11953.66
1992/04/30 14073.63 12305.10
1992/05/31 14011.26 12365.39
1992/06/30 13512.35 12181.15
1992/07/31 14104.81 12679.36
1992/08/31 13574.71 12419.43
1992/09/30 14032.05 12565.98
1992/10/31 14655.70 12609.96
1992/11/30 15986.14 13039.96
1992/12/31 16569.33 13200.35
1993/01/31 17017.15 13311.24
1993/02/28 17121.30 13492.27
1993/03/31 17735.75 13776.96
1993/04/30 17206.93 13443.55
1993/05/31 18365.83 13803.84
1993/06/30 19160.51 13843.87
1993/07/31 19535.77 13788.50
1993/08/31 21323.79 14311.08
1993/09/30 21621.79 14200.89
1993/10/31 22372.32 14494.84
1993/11/30 20672.60 14357.14
1993/12/31 21833.52 14530.86
1994/01/31 22673.27 15024.91
1994/02/28 22298.78 14617.74
1994/03/31 20744.11 13980.40
1994/04/30 21598.03 14159.35
1994/05/31 20440.78 14391.57
1994/06/30 18918.07 14038.97
1994/07/31 20879.32 14499.45
1994/08/31 22657.83 15093.93
1994/09/30 22962.38 14724.13
1994/10/31 25021.07 15055.42
1994/11/30 24314.54 14507.10
1994/12/31 25138.57 14722.24
1995/01/31 24467.87 15103.99
1995/02/28 25337.29 15692.59
1995/03/31 25473.91 16155.68
1995/04/30 26593.13 16631.47
1995/05/31 27505.97 17296.23
1995/06/30 30405.58 17698.02
1995/07/31 33318.60 18284.88
1995/08/31 33399.15 18330.78
1995/09/30 34285.14 19104.34
1995/10/31 30875.42 19036.14
1995/11/30 31023.08 19871.82
1995/12/31 29504.05 20254.55
1996/01/31 28582.05 20944.02
1996/02/29 30871.16 21138.17
1996/03/31 30569.12 21341.73
1996/04/30 32572.09 21656.31
1996/05/31 34416.10 22214.82
1996/06/30 32921.82 22299.46
1996/07/31 30060.43 21314.27
1996/08/31 31570.61 21763.79
1996/09/30 34416.10 22988.66
1996/10/31 32969.51 23622.68
1996/11/30 34527.37 25408.32
1996/12/31 33796.13 24904.98
1997/01/31 35226.82 26461.05
1997/02/28 31284.47 26668.50
1997/03/31 28566.15 25572.69
1997/04/30 29742.50 27099.38
1997/05/31 33907.41 28749.19
1997/06/30 35099.65 30037.16
1997/07/31 39566.59 32427.21
1997/08/31 39407.62 30610.64
1997/09/30 42110.04 32287.18
1997/10/31 37198.00 31208.79
1997/11/30 37500.03 32653.45
1997/12/31 35837.88 33214.11
1998/01/31 35758.25 33581.45
1998/02/28 40098.61 36003.35
1998/03/31 41452.49 37847.08
1998/04/30 42391.48 38227.82
1998/05/31 40333.83 37570.69
1998/06/30 43290.45 39096.81
1998/07/31 44369.22 38680.43
1998/08/31 35379.51 33088.01
1998/09/30 40353.81 35207.63
1998/10/31 43789.88 38071.42
1998/11/30 50202.54 40378.93
1998/12/31 60091.22 42705.56
1999/01/31 70259.58 44491.51
1999/02/26 65358.00 43108.71
IMATRL PRASUN SHR__CHT 19990228 19990309 143851 R00000000000107
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Select Developing Communications Portfolio on
June 29, 1990, when the fund started, and the current 3.00% sales
charge was paid. As the chart shows, by February 28, 1999, the value
of the investment would have grown to $65,358 - a 553.58% increase on
the initial investment - and includes the effect of a $7.50 trading
fee. For comparison, look at how the Standard & Poor's 500 Index did
over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 investment would have grown to $43,109 -
a 331.09% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
28, 1999
% OF FUND'S INVESTMENTS
OY Nokia AB sponsored ADR 10.0
MCI WorldCom, Inc. 7.3
Motorola, Inc. 7.3
ADC Telecommunications, Inc. 5.0
Cisco Systems, Inc. 5.0
Cox Communications, Inc. 3.5
Class A
Aware, Inc. 3.1
Texas Instruments, Inc. 3.1
America Online, Inc. 3.0
Comcast Corp. Class A (special) 2.9
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Communications Equipment 28.6%
Telephone Services 14.8%
Broadcasting 12.0%
Computer Services
& Software 11.3%
Electronics 10.5%
All Others 22.8%*
Row: 1, Col: 1, Value: 34.0
Row: 1, Col: 2, Value: 7.9
Row: 1, Col: 3, Value: 9.699999999999999
Row: 1, Col: 4, Value: 9.800000000000001
Row: 1, Col: 5, Value: 12.9
Row: 1, Col: 6, Value: 25.7
* INCLUDES SHORT-TERM INVESTMENTS
DEVELOPING COMMUNICATIONS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Andrew Kaplan)
Andrew Kaplan,
Portfolio Manager of Fidelity Select Developing Communications
Portfolio
Q. HOW DID THE FUND PERFORM, ANDY?
A. Very well. For the 12 months that ended February 28, 1999, the fund
returned 63.01%, while the Standard & Poor's 500 Index returned
19.74%. During the same period, the Goldman Sachs Technology Index -
an index of 190 stocks designed to measure the performance of
companies in the technology sector - returned 48.15%.
Q. HOW WAS THE FUND ABLE TO OUTPACE THE RETURNS OF BOTH BENCHMARKS
OVER THE PAST 12 MONTHS?
A. The incredible rebound of technology stocks over the last four
months of the period helped the fund generate robust returns.
Technology stocks hit a low point in early October when fears about an
economic slowdown peaked following financial turmoil in Asian and
Russian markets. However, when it became evident that the
international situation was not getting worse and, more importantly,
that U.S. economic growth was accelerating, investors returned to
technology stocks with a vengeance. Specifically, the fund
outperformed the Goldman Sachs Technology Index because of my focus on
large-capitalization stocks. I continued to believe that investors
would pay a premium for stocks that weren't at risk of reporting
disappointing earnings numbers - and these were mostly larger-cap
stocks. On top of that, I focused on Internet stocks - the industry
that enjoyed the most dramatic growth.
Q. WHICH INDIVIDUAL HOLDINGS PERFORMED PARTICULARLY WELL?
A. Some examples of the Internet stocks that did particularly well
were Yahoo!, America Online and Amazon.com. Another Internet play that
was successful was Aware, Inc., a company that provides high-speed
Internet access. Cisco Systems, a maker of networking equipment for
the Internet, also generated healthy returns. Looking to other areas,
wireless communications was one of the fastest growing areas of
technology. The promise of wireless is its increasing reach into
developing economies that have no access to wire-line phones. In
addition, as advances in technology cause service prices to fall,
wireless phones are becoming mass-market items rather than luxury
items. Nokia was one of my favorite wireless names. It rapidly
increased market share by commercializing and mass-producing devices
with the latest technologies.
Q. ARE YOU CONCERNED ABOUT THE INCREDIBLE RUN-UP IN INTERNET STOCKS?
A. Sure. After all, we've seen several years of appreciation all in a
few months. For instance, from early October through early January,
many Internet stocks appreciated as much as 400% to 500%. I'm always
concerned that there may be a correction after that kind of run-up. As
a result, I reduced the weighting of some of the Internet stocks that
enjoyed the most dramatic gains during the period, such as Yahoo! and
Amazon. However, I continued to make investments directly in Internet
companies, or indirectly through the service providers, because I
believe in the long-term growth of the sector.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. It was an extraordinary period because almost all of the fund's
large positions did well. In hindsight, I would have owned more cable
stocks. I was a little late in recognizing the potential of cable as a
means of accessing the Internet. Cable companies have been aggressive
in their introduction of cable modems and in providing high-speed
Internet service to the home. This strategy was a great catalyst for
growth and provided cable companies with a tremendous source of
ancillary revenue. By the end of the period, both Cox Communications
and Comcast were among the fund's top-10 holdings, but I believe I
could have done more sooner.
Q. WHAT'S YOUR OUTLOOK?
A. I continue to be bullish about technology and developing
communications, especially because - with the Internet - we're only in
the second inning. People are starting to realize that these business
models can make money and that the industry is far from mature. For
instance, we have barely captured 10% of the potential subscriber base
and we've only scratched the surface as far as ways to make money
through this medium. I will continue to look for the most aggressive
ways to capitalize on the future growth in that area. However, I am
more concerned about valuations than I was six months ago - and I'd be
foolish not to be - given the incredible run-up in the stocks. As a
result, I will continue to focus on stocks that I believe can deliver
strong earnings.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: June 29, 1990
FUND NUMBER: 518
TRADING SYMBOL: FSDCX
SIZE: as of February 28, 1999, more than
$612 million
MANAGER: Andrew Kaplan, since 1998;
manager, Fidelity Select Technology Portfolio,
since 1998; Fidelity Select Electronics
Portfolio, 1996-1998; joined Fidelity in 1995
DEVELOPING COMMUNICATIONS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.2%
SHARES VALUE (NOTE 1)
BROADCASTING - 12.0%
Cablevision Systems Corp. 1,000 $ 65,000
Class A (a)
CBS Corp. 74,600 2,750,875
Comcast Corp. Class A 250,000 17,734,375
(special)
Cox Communications, Inc. 300,000 21,225,000
Class A (a)
MediaOne Group, Inc. 300,000 16,350,000
Tele-Communications, Inc. 225,000 14,132,813
(TCI Group) Series A (a)
72,258,063
CELLULAR - 2.6%
AirTouch Communications, Inc. 88,500 8,059,031
(a)
Nextel Communications, Inc. 255,000 7,665,938
Class A (a)
15,724,969
COMMUNICATIONS EQUIPMENT -
28.6%
3Com Corp. (a) 25,000 785,938
ADC Telecommunications, Inc. 750,000 30,375,000
(a)
Ascend Communications, Inc. 153,600 11,817,600
(a)
Carrier Access Corp. (a) 200,000 7,900,000
Cisco Systems, Inc. (a) 307,500 30,077,344
Filtronic PLC 81,180 1,034,546
InterVoice, Inc. (a) 149,400 1,624,725
Level One Communications, 231,100 7,741,850
Inc. (a)
Newbridge Networks Corp. (a) 196,400 4,773,882
OY Nokia AB sponsored ADR 445,000 60,353,123
P-Com, Inc. (a) 800,000 5,075,000
Plantronics, Inc. (a) 20,400 1,234,200
Premisys Communications, Inc. 128,800 1,062,600
(a)
Tekelec (a) 700,000 8,487,500
172,343,308
COMPUTER SERVICES & SOFTWARE
- - 11.3%
Amazon.com, Inc. (a) 45,000 5,765,625
America Online, Inc. 200,000 17,787,500
Aware, Inc. (a) 545,000 18,870,625
eBay, Inc. (a) 20,000 6,680,000
Franklin Electronic 182,800 1,051,100
Publishers (a)
InterVU, Inc. (a) 65,000 1,332,500
Lycos, Inc. (a) 25,000 2,190,625
Siebel Systems, Inc. (a) 32,900 1,447,600
Yahoo!, Inc. (a) 83,400 12,801,900
67,927,475
COMPUTERS & OFFICE EQUIPMENT
- - 1.2%
Comverse Technology, Inc. (a) 103,100 7,397,425
DEFENSE ELECTRONICS - 1.6%
Alpha Industries, Inc. (a) 101,150 2,060,931
REMEC, Inc. (a) 450,000 7,734,375
9,795,306
SHARES VALUE (NOTE 1)
ELECTRICAL EQUIPMENT - 3.3%
Adtran, Inc. (a) 600,000 $ 12,300,000
ANTEC Corp. (a) 50,000 1,393,750
General Instrument Corp. (a) 178,600 5,224,050
Research in Motion Ltd. (a) 150,000 1,333,068
20,250,868
ELECTRONIC INSTRUMENTS - 3.1%
Aeroflex, Inc. (a) 300,000 4,031,250
Intest Corp. (a) 188,000 1,269,000
JDS Fitel, Inc. (a) 307,400 13,149,821
18,450,071
ELECTRONICS - 10.5%
Motorola, Inc. 625,000 43,906,250
Texas Instruments, Inc. 210,000 18,729,375
Vitesse Semiconductor Corp. 17,400 799,313
(a)
63,434,938
ENTERTAINMENT - 0.9%
Tele-Communications, Inc. 100,000 5,387,500
(Liberty Media Group) Series
A (a)
PACKAGING & CONTAINERS - 2.3%
Corning, Inc. 257,000 13,749,500
TELEPHONE SERVICES - 14.8%
Covad Communications Group, 300,700 12,178,350
Inc. (a)
MCI WorldCom, Inc. (a) 534,146 44,067,045
McLeodUSA, Inc. Class A (a) 50,000 1,925,000
Metromedia Fiber Network, 375,000 16,312,500
Inc. Class A (a)
Qwest Communications 131,689 8,090,643
International, Inc. (a)
WinStar Communications, Inc. 224,000 7,056,000
(a)
89,629,538
TOTAL COMMON STOCKS 556,348,961
(Cost $432,392,044)
CASH EQUIVALENTS - 7.8%
Taxable Central Cash Fund (b) 46,881,297 46,881,297
(Cost $46,881,297)
TOTAL INVESTMENT IN $ 603,230,258
SECURITIES - 100%
(Cost $479,273,341)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $1,067,740,674 and $863,840,247, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $91,601 for the
period.
Distribution of investments by country of issue, as a percentage of
total value of investments in securities, is as follows:
United States 86.6%
Finland 10.0
Canada 3.2
Others (individually less 0.2
than 1%)
TOTAL 100.0%
Transactions during the period with companies which are or were
affiliates are as follows:
PURCHASES SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Anicom, Inc. $ - $ 1,787,500 $ - $ -
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $482,807,908. Net unrealized appreciation
aggregated $120,422,350, of which $146,132,317 related to appreciated
investment securities and $25,709,967 related to depreciated
investment securities.
The fund hereby designates approximately $734,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 19% of the dividends distributed the fiscal year qualifies
for the dividends-received deductions for corporate shareholders
(unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentage for the use in preparing 1999 income tax returns.
DEVELOPING COMMUNICATIONS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 603,230,258
value (cost $479,273,341) -
See accompanying schedule
Receivable for investments 7,097,155
sold
Receivable for fund shares 11,595,475
sold
Dividends receivable 157,150
Interest receivable 150,223
Redemption fees receivable 3,362
Other receivables 453,068
TOTAL ASSETS 622,686,691
LIABILITIES
Payable for investments $ 7,781,817
purchased
Payable for fund shares 2,246,529
redeemed
Accrued management fee 311,449
Other payables and accrued 285,678
expenses
TOTAL LIABILITIES 10,625,473
NET ASSETS $ 612,061,218
Net Assets consist of:
Paid in capital $ 455,289,751
Accumulated undistributed net 32,812,995
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 123,958,472
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 18,703,523 $ 612,061,218
shares outstanding
NET ASSET VALUE and $32.72
redemption price per share
($612,061,218 (divided by)
18,703,523 shares)
Maximum offering price per $33.73
share (100/97.00 of $32.72)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 518,090
Dividends
Interest 1,648,201
TOTAL INCOME 2,166,291
EXPENSES
Management fee $ 1,854,817
Transfer agent fees 1,936,382
Accounting fees and expenses 287,287
Non-interested trustees' 1,386
compensation
Custodian fees and expenses 35,597
Registration fees 108,938
Audit 23,069
Legal 3,389
Reports to shareholders 43,296
Total expenses before 4,294,161
reductions
Expense reductions (130,962) 4,163,199
NET INVESTMENT INCOME (LOSS) (1,996,908)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 53,776,976
(including realized gain of
$159,311 on sale of
investments in affiliated
issuers)
Foreign currency transactions (45,749) 53,731,227
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 97,385,464
Assets and liabilities in 5,216 97,390,680
foreign currencies
NET GAIN (LOSS) 151,121,907
NET INCREASE (DECREASE) IN $ 149,124,999
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 1,740,638
charges paid to FDC
Sales charges - Retained by $ 1,737,968
FDC
Deferred sales charges $ 3,177
withheld by FDC
Exchange fees withheld by FSC $ 23,850
Expense reductions Directed $ 128,666
brokerage arrangements
Custodian credits 2,296
$ 130,962
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (1,996,908) $ (1,952,549)
income (loss)
Net realized gain (loss) 53,731,227 43,720,650
Change in net unrealized 97,390,680 15,846,999
appreciation (depreciation)
NET INCREASE (DECREASE) IN 149,124,999 57,615,100
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (820,226) (39,986,959)
from net realized gains
Share transactions Net 606,604,197 191,485,848
proceeds from sales of shares
Reinvestment of distributions 808,781 39,302,908
Cost of shares redeemed (383,100,933) (230,874,543)
NET INCREASE (DECREASE) IN 224,312,045 (85,787)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 1,088,615 453,709
TOTAL INCREASE (DECREASE) 373,705,433 17,996,063
IN NET ASSETS
NET ASSETS
Beginning of period 238,355,785 220,359,722
End of period $ 612,061,218 $ 238,355,785
OTHER INFORMATION
Shares
Sold 21,247,025 8,748,662
Issued in reinvestment of 39,007 2,281,074
distributions
Redeemed (14,419,633) (10,392,215)
Net increase (decrease) 6,866,399 637,521
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 20.14 $ 19.68 $ 19.42 $ 20.40 $ 19.65
period
Income from Investment
Operations
Net investment income (loss) C (.16) (.18) (.18) (.17) (.16)
Net realized and unrealized 12.72 4.95 .42 4.17 2.55
gain (loss)
Total from investment 12.56 4.77 .24 4.00 2.39
operations
Less Distributions
From net realized gain (.07) (4.35) - (5.00) (1.67)
Redemption fees added to paid .09 .04 .02 .02 .03
in capital
Net asset value, end of period $ 32.72 $ 20.14 $ 19.68 $ 19.42 $ 20.40
TOTAL RETURN A, B 63.01% 28.17% 1.34% 21.84% 13.63%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 612,061 $ 238,356 $ 220,360 $ 333,185 $ 254,426
(000 omitted)
Ratio of expenses to average 1.38% 1.61% 1.64% 1.53% 1.58%
net assets
Ratio of expenses to average 1.34% D 1.55% D 1.62% D 1.51% D 1.56% D
net assets after expense
reductions
Ratio of net investment (.64)% (.82)% (.86)% (.78)% (.83)%
income (loss) to average net
assets
Portfolio turnover rate 299% 383% 202% 249% 266%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE.
CNET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. E FOR
THE YEAR ENDED FEBRUARY 29.
</TABLE>
ELECTRONICS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the past 10 year total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT ELECTRONICS 35.30% 337.85% 1,238.46%
SELECT ELECTRONICS (LOAD ADJ.) 31.16% 324.64% 1,198.23%
S&P 500 19.74% 194.91% 459.21%
GS Technology 48.15% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
index of common stocks - and the Goldman Sachs Technology Index - a
market capitalization-weighted index of 190 stocks designed to measure
the performance of companies in the technology sector. These
benchmarks include reinvestment of dividends and capital gains, if
any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT ELECTRONICS 35.30% 34.36% 29.62%
SELECT ELECTRONICS (LOAD ADJ.) 31.16% 33.54% 29.22%
S&P 500 19.74% 24.15% 18.78%
GS Technology 48.15% n/a n/a
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER 10 YEARS
Electronics S&P 500
00008 SP001
1989/02/28 9700.00 10000.00
1989/03/31 9629.09 10233.00
1989/04/30 10380.70 10764.09
1989/05/31 11373.39 11200.04
1989/06/30 10253.07 11136.20
1989/07/31 10366.52 12141.80
1989/08/31 10721.05 12379.78
1989/09/30 11018.86 12329.02
1989/10/31 10522.51 12042.99
1989/11/30 10550.88 12288.66
1989/12/31 10990.50 12583.59
1990/01/31 11359.21 11739.23
1990/02/28 12266.81 11890.67
1990/03/31 12862.43 12205.77
1990/04/30 12919.15 11900.63
1990/05/31 14819.44 13060.94
1990/06/30 15046.35 12972.12
1990/07/31 14337.28 12930.61
1990/08/31 12096.64 11761.68
1990/09/30 10267.25 11188.89
1990/10/31 9898.54 11140.78
1990/11/30 10919.59 11860.47
1990/12/31 11628.79 12191.38
1991/01/31 13247.45 12722.92
1991/02/28 14411.75 13632.61
1991/03/31 15178.49 13962.52
1991/04/30 15263.68 13996.03
1991/05/31 15760.64 14600.66
1991/06/30 13843.80 13931.95
1991/07/31 14795.12 14581.18
1991/08/31 15405.67 14926.75
1991/09/30 14227.17 14677.48
1991/10/31 14922.91 14874.16
1991/11/30 14014.19 14274.73
1991/12/31 15732.24 15907.76
1992/01/31 17592.28 15611.87
1992/02/29 18557.80 15814.83
1992/03/31 17095.32 15506.44
1992/04/30 16768.75 15962.33
1992/05/31 16797.15 16040.54
1992/06/30 15576.05 15801.54
1992/07/31 16399.58 16447.82
1992/08/31 16569.97 16110.64
1992/09/30 17166.32 16300.75
1992/10/31 18458.40 16357.80
1992/11/30 19665.30 16915.60
1992/12/31 20048.67 17123.66
1993/01/31 20730.21 17267.50
1993/02/28 20275.85 17502.34
1993/03/31 20985.79 17871.64
1993/04/30 20615.87 17439.14
1993/05/31 22684.59 17906.51
1993/06/30 23098.33 17958.44
1993/07/31 23754.62 17886.61
1993/08/31 25794.80 18564.51
1993/09/30 26222.81 18421.56
1993/10/31 25723.47 18802.89
1993/11/30 25523.73 18624.26
1993/12/31 26480.24 18849.62
1994/01/31 28309.35 19490.50
1994/02/28 29651.83 18962.31
1994/03/31 29332.99 18135.55
1994/04/30 29249.08 18367.69
1994/05/31 29165.18 18668.92
1994/06/30 27604.56 18211.53
1994/07/31 28175.11 18808.87
1994/08/31 30927.17 19580.03
1994/09/30 30037.79 19100.32
1994/10/31 31262.79 19530.08
1994/11/30 30860.05 18818.79
1994/12/31 31027.86 19097.87
1995/01/31 30138.47 19593.08
1995/02/28 33226.15 20356.63
1995/03/31 36649.45 20957.35
1995/04/30 40743.99 21574.54
1995/05/31 43714.21 22436.88
1995/06/30 49939.92 22958.09
1995/07/31 57407.41 23719.38
1995/08/31 58162.55 23778.91
1995/09/30 59202.97 24782.38
1995/10/31 57575.22 24693.91
1995/11/30 56132.06 25777.97
1995/12/31 52427.25 26274.46
1996/01/31 54199.26 27168.84
1996/02/29 57397.04 27420.69
1996/03/31 54036.32 27684.75
1996/04/30 60207.82 28092.83
1996/05/31 61796.53 28817.34
1996/06/30 56602.69 28927.14
1996/07/31 53873.37 27649.13
1996/08/31 56480.48 28232.26
1996/09/30 64098.11 29821.17
1996/10/31 64607.31 30643.63
1996/11/30 74302.48 32959.99
1996/12/31 74302.48 32307.05
1997/01/31 85912.25 34325.59
1997/02/28 77296.58 34594.71
1997/03/31 71919.43 33173.21
1997/04/30 78621.09 35153.65
1997/05/31 87259.78 37293.80
1997/06/30 86722.66 38964.57
1997/07/31 101784.43 42064.98
1997/08/31 105633.80 39708.50
1997/09/30 109550.31 41883.33
1997/10/31 93302.40 40484.43
1997/11/30 92630.99 42358.45
1997/12/31 84496.95 43085.75
1998/01/31 85868.21 43562.28
1998/02/28 95960.67 46703.99
1998/03/31 93218.15 49095.70
1998/04/30 97606.18 49589.60
1998/05/31 84551.80 48737.16
1998/06/30 86224.74 50716.86
1998/07/31 89844.86 50176.72
1998/08/31 71936.22 42922.17
1998/09/30 81452.76 45671.77
1998/10/31 97469.05 49386.71
1998/11/30 110797.69 52380.04
1998/12/31 127691.59 55398.18
1999/01/31 154074.61 57714.93
1999/02/26 129823.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990322 112556 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Electronics Portfolio on February 28,
1989, and the current 3.00% sales charge was paid. As the chart shows,
by February 28, 1999, the value of the investment would have grown to
$129,823 - an 1,198.23% increase on the initial investment - and
includes the effect of a $7.50 trading fee. For comparison, look at
how the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Texas Instruments, Inc. 9.9
Micron Technology, Inc. 9.3
Intel Corp. 6.7
Applied Materials, Inc. 5.6
Motorola, Inc. 4.9
KLA-Tencor Corp. 3.5
Xilinx, Inc. 3.2
Teradyne, Inc. 3.1
LAM Research Corp. 2.7
Cadence Design Systems, Inc. 2.6
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Electronics 55.6%
Electronic Instruments 17.8%
Computer Services
& Software 5.2%
Computers &
Office Equipment 4.0%
Industrial Machinery
& Equipment 2.8%
All Others 14.6%*
Row: 1, Col: 1, Value: 14.6
Row: 1, Col: 2, Value: 2.8
Row: 1, Col: 3, Value: 4.0
Row: 1, Col: 4, Value: 5.2
Row: 1, Col: 5, Value: 17.8
Row: 1, Col: 6, Value: 55.6
* INCLUDES SHORT-TERM INVESTMENTS
ELECTRONICS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Matthew Grech)
Matthew Grech,
Portfolio Manager
of Fidelity Select
Electronics Portfolio
Q. HOW DID THE FUND PERFORM, MATT?
A. For the 12 months that ended February 28, 1999, the fund returned
35.30%, outperforming the 19.74% return of the Standard & Poor's 500
Index. The fund also compares itself to the Goldman Sachs Technology
Index - an index of 190 stocks designed to measure the performance of
companies in the technology sector - which returned 48.15% over the
same 12-month time period.
Q. WHAT WAS THE INVESTING ENVIRONMENT LIKE FOR ELECTRONICS STOCKS?
A. It was mixed. The first part of the year was a struggle because
personal computer (PC) inventories were high and slow to come down in
the aftermath of the Asian economic crisis and subsequent rapidly
declining demand. In October, the market improved overall, following
good news about the prospects for recovery in Korea and Taiwan, and,
to a lesser extent, Japan. Investors saw strong PC sales through the
holiday season and into January. In February, concerns re-emerged when
disappointing earnings announcements, which resulted in a correction,
dampened the market's euphoria. Throughout the year, investors
gravitated to large-cap companies across industries, while small-cap
stocks never really got off the ground. In this environment, the fund
performed very strongly during the October-January recovery, as
electronics stocks tended to do better relative to the rest of the
technology sector, but could not keep pace with the Goldman Sachs
index for the entire period, given the benchmark's exposure to
Internet stocks and other strong-performing, large-cap technology
issues.
Q. WHAT STRATEGY DID YOU USE TO MANAGE THE FUND IN THIS VOLATILE
ENVIRONMENT?
A. It generally was a stock picker's market, where the difference in
performance was made by individual stock selection - although some
industries did better than others. I beefed up on large-cap companies,
which continued to maintain their edge over smaller companies during
the period. Anticipating growing interest in manufacturing
outsourcing, I also bought electronics contract manufacturers, more
specifically telecommunications equipment manufacturers such as
Solectron, Jabil and Sanmina.
Q. WHICH STOCKS PERFORMED WELL DURING THE PAST 12 MONTHS?
A. PC makers Intel, Micron Technology, Teradyne and Texas Instruments
all did well as personal computer inventory wound down and demand
picked up. PMC-Sierra and Vitesse sell semiconductors to communication
companies, which use them in their equipment. They both performed
well, enjoying strong demand for their products. Sanmina, Solectron
and Jabil, all electronic contract manufacturers, benefited from the
growing outsourcing trend.
Q. WHICH STOCKS DISAPPOINTED?
A. Cadence Design, a leader in its industry and whose automated
electronic design product is used in the design of semiconductors,
did not do as well as I hoped. Cadence should have followed the
performance of semiconductor companies. Unfortunately, its recovery,
along with other design automation companies, was much slower than I
expected. Integrated Device Technology, a maker of standard random
access memory, tried to branch out, getting into the low-end
microprocessor game, and didn't reach expectations. Along with other
PC makers, Hewlett-Packard suffered from high inventories during the
first part of the period. Its problems in the corporate desktop market
prevented the company's full participation in the industry's recovery
in October, and its performance suffered. I sold both Hewlett-Packard
and Integrated Device Technology from the fund's portfolio.
Q. WHAT'S YOUR OUTLOOK, MATT?
A. Although some of the valuations for larger companies have risen so
high that it's hard for me to fathom a huge buying surge, I think the
demand for electronic goods and Internet-related technology will
enable continued growth. I'm also bullish on the business fundamentals
for the networking semiconductor market. Companies such as Lucent and
Nortel are just now starting to adopt outsourcing policies, which
could fuel future growth in this area. Hopefully, there will be
continued improvement in Asia, which could also drive demand
significantly. I'll continue to search for those companies that have
good business fundamentals and are selling at reasonable valuations.
Certain industries are growing faster than others, but then again,
there are a lot of places to invest in this sector, with plenty of
opportunities to discover new and growing businesses.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: July 29, 1985
FUND NUMBER: 008
TRADING SYMBOL: FSELX
SIZE: as of February 28, 1999, more than
$2.8 billion
MANAGER: Matthew Grech, since 1998; analyst,
semiconductor equipment, electronic distribution,
components, electronic design automation and
electronic contract manufacturing industries,
since 1996; joined Fidelity in 1996
ELECTRONICS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 89.3%
SHARES VALUE (NOTE 1)
CHEMICALS & PLASTICS - 0.0%
Atmi, Inc. (a) 20,000 $ 455,000
COMMUNICATIONS EQUIPMENT - 2.7%
ADC Telecommunications, Inc. 300,000 12,150,000
(a)
Cisco Systems, Inc. (a) 75,000 7,335,938
Jabil Circuit, Inc. (a) 1,070,000 34,908,750
OY Nokia AB sponsored ADR 190,000 25,768,750
80,163,438
COMPUTER SERVICES & SOFTWARE
- - 5.2%
America Online, Inc. 15,000 1,334,063
Aware, Inc. (a) 240,200 8,316,925
BMC Software, Inc. 200,000 8,175,000
Cadence Design Systems, Inc. 3,187,200 76,692,000
(a)
Cambridge Technology 325,000 8,165,625
Partners, Inc. (a)
Citrix Systems, Inc. (a) 18,300 1,411,388
i2 Technologies, Inc. (a) 31,800 793,013
J.D. Edwards & Co. (a) 150,000 2,371,875
Microsoft Corp. (a) 85,000 12,760,625
PeopleSoft, Inc. 300,000 5,662,500
Siebel Systems, Inc. (a) 630,600 27,746,400
153,429,414
COMPUTERS & OFFICE EQUIPMENT
- - 4.0%
Adaptec, Inc. (a) 700,000 13,956,250
Dell Computer Corp. (a) 200,000 16,025,000
EMC Corp. (a) 150,450 15,402,319
Quantum Corp. (a) 310,000 5,095,625
SCI Systems, Inc. (a) 2,150,500 66,531,094
Seagate Technology, Inc. (a) 50,000 1,446,875
118,457,163
DRUGS & PHARMACEUTICALS - 0.5%
Integrated Process Equipment 1,356,000 15,255,000
Corp. (a) (c)
ELECTRICAL EQUIPMENT - 0.3%
Research in Motion Ltd. (a) 1,000,800 8,894,230
ELECTRONIC INSTRUMENTS - 17.8%
Applied Materials, Inc. (a) 2,948,000 163,982,500
Credence Systems Corp. (a) 350,000 7,393,750
Helix Technology, Inc. 200,000 3,937,500
Keithley Instruments, Inc. 43,800 328,500
KLA-Tencor Corp. (a) 1,990,600 103,137,963
Kulicke & Soffa Industries, 150,000 3,806,250
Inc. (a)
LAM Research Corp. (a) (c) 2,703,227 79,914,148
Novellus Systems, Inc. (a) 1,202,900 71,046,281
Teradyne, Inc. (a) 1,922,600 91,563,825
525,110,717
SHARES VALUE (NOTE 1)
ELECTRONICS - 55.6%
Advanced Energy Industries, 439,000 $ 8,450,750
Inc. (a)
Altera Corp. (a) 1,179,600 57,358,050
Analog Devices, Inc. (a) 1,880,500 47,130,031
Arm Holdings PLC sponsored 100,000 11,550,000
ADR (a)
Conexant Systems, Inc. (a) 555,000 9,435,000
Dallas Semiconductor Corp. 184,400 6,523,150
DII Group, Inc. (a) 220,000 5,142,500
Etec Systems, Inc. (a) 765,300 33,912,356
Flextronics International (a) 50,000 1,884,375
Hadco Corp. (a) 200,000 6,375,000
Intel Corp. 1,654,000 198,376,625
Linear Technology Corp. 1,386,020 60,725,001
LSI Logic Corp. (a) 300,000 7,781,250
Maxim Integrated Products, 1,124,700 46,885,931
Inc. (a)
Methode Electronics, Inc. 684,000 7,182,000
Class A
Microchip Technology, Inc. (a) 1,226,050 33,409,863
Micron Technology, Inc. (a) 4,766,900 274,692,613
Molex, Inc. Class A 400,000 9,400,000
Motorola, Inc. 2,056,300 144,455,075
PCD, Inc. (a) 200,000 2,800,000
PMC-Sierra, Inc. (a) 769,600 54,545,400
Rambus, Inc. (a) 582,800 42,362,275
Sanmina Corp. (a) 1,420,700 74,231,575
Solectron Corp. (a) 999,600 44,669,625
Speedfam International, Inc. 887,000 14,469,188
(a) (c)
Texas Instruments, Inc. 3,267,000 291,375,559
Vitesse Semiconductor Corp. 1,149,700 52,814,344
(a)
Xilinx, Inc. (a) 1,339,400 93,423,150
1,641,360,686
INDUSTRIAL MACHINERY &
EQUIPMENT - 2.8%
ASM Lithography Holding NV (a) 1,136,600 45,037,775
Asyst Technologies, Inc. (a) 430,500 9,255,750
PRI Automation, Inc. 911,600 27,348,000
81,641,525
METALS & MINING - 0.3%
Cable Design Technology Corp. 575,000 7,439,063
(a)
TELEPHONE SERVICES - 0.1%
MCI WorldCom, Inc. (a) 15,000 1,237,500
TOTAL COMMON STOCKS 2,633,443,736
(Cost $1,943,153,648)
CASH EQUIVALENTS - 10.7%
Taxable Central Cash Fund (b) 316,780,214 316,780,214
(Cost $316,780,214)
TOTAL INVESTMENT IN $ 2,950,223,950
SECURITIES - 100%
(Cost $2,259,933,862)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(c) Affiliated Company
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $3,418,222,442 and $3,789,829,078, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $363,022 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $29,074,800. The fund
received cash collateral of $30,800,000.
Transactions during the period with companies which are or were
affiliates are as follows:
PURCHASES SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Benchmarq Microelectronics, Inc.
$ - $ 1,281,788 $ - $ -
Galileo Technology Ltd.
6,278,291 11,105,381 - -
Integrated Process Equipment Corp.
3,794,538 - - 15,255,000
LAM Research Corp.
1,350,343 - - 79,914,148
Speedfam International, Inc.
1,029,375 - - 14,469,188
3D Labs, Inc. Ltd.
1,556,811 4,035,636 - -
TOTALS $ 14,009,358 $ 16,422,805 $ - $ 109,638,336
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $2,287,309,686. Net unrealized appreciation
aggregated $662,914,264, of which $741,259,879 related to appreciated
investment securities and $78,345,615 related to depreciated
investment securities.
At February 28, 1999, the fund had a capital loss carryforward of
approximately $102,009,000 all of which will expire on February 28,
2007.
ELECTRONICS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 2,950,223,950
value (cost $2,259,933,862)
- - See accompanying schedule
Receivable for investments 32,937,353
sold
Receivable for fund shares 16,645,802
sold
Dividends receivable 109,288
Interest receivable 937,990
Redemption fees receivable 20,215
Other receivables 39,058
TOTAL ASSETS 3,000,913,656
LIABILITIES
Payable for investments $ 69,895,831
purchased
Payable for fund shares 11,892,574
redeemed
Accrued management fee 1,568,022
Other payables and accrued 1,209,296
expenses
Collateral on securities 30,800,000
loaned, at value
TOTAL LIABILITIES 115,365,723
NET ASSETS $ 2,885,547,933
Net Assets consist of:
Paid in capital $ 2,324,616,439
Accumulated undistributed (129,350,532)
net realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 690,282,026
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 60,950,394 $ 2,885,547,933
shares outstanding
NET ASSET VALUE and $47.34
redemption price per share
($2,885,547,933 (divided by)
60,950,394 shares)
Maximum offering price per $48.80
share (100/97.00 of $47.34)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 2,816,769
Dividends
Interest (including income on 9,020,936
securities loaned of
$537,775)
TOTAL INCOME 11,837,705
EXPENSES
Management fee $ 13,375,808
Transfer agent fees 11,621,314
Accounting and security 981,827
lending fees
Non-interested trustees' 8,487
compensation
Custodian fees and expenses 93,428
Registration fees 143,459
Audit 75,536
Legal 12,666
Reports to shareholders 312,570
Total expenses before 26,625,095
reductions
Expense reductions (697,236) 25,927,859
NET INVESTMENT INCOME (LOSS) (14,090,154)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 220,511,771
(including realized loss of
$3,124,773 on sales of
investments in affiliated
issuers)
Foreign currency transactions (15,013) 220,496,758
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 431,156,460
Assets and liabilities in (5,126) 431,151,334
foreign currencies
NET GAIN (LOSS) 651,648,092
NET INCREASE (DECREASE) IN $ 637,557,938
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 7,287,169
charges paid to FDC
Sales charges - Retained by $ 7,252,407
FDC
Deferred sales charges $ 10,633
withheld by FDC
Exchange fees withheld by FSC $ 176,614
Expense reductions Directed $ 671,026
brokerage arrangements
Custodian credits 8,449
Transfer agent credits 17,761
$ 697,236
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (14,090,154) $ (10,090,302)
income (loss)
Net realized gain (loss) 220,496,758 286,758,046
Change in net unrealized 431,151,334 113,929,512
appreciation (depreciation)
NET INCREASE (DECREASE) IN 637,557,938 390,597,256
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders
From net realized gain - (424,271,823)
In excess of net realized - (145,162,086)
gain
TOTAL DISTRIBUTIONS - (569,433,909)
Share transactions Net 1,488,308,447 3,020,162,765
proceeds from sales of shares
Reinvestment of distributions - 559,329,509
Cost of shares redeemed (1,912,074,698) (2,481,381,434)
NET INCREASE (DECREASE) IN (423,766,251) 1,098,110,840
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 3,006,511 5,459,035
TOTAL INCREASE (DECREASE) 216,798,198 924,733,222
IN NET ASSETS
NET ASSETS
Beginning of period 2,668,749,735 1,744,016,513
End of period $ 2,885,547,933 $ 2,668,749,735
OTHER INFORMATION
Shares
Sold 36,527,830 75,772,884
Issued in reinvestment of - 17,854,821
distributions
Redeemed (51,847,162) (63,315,407)
Net increase (decrease) (15,319,332) 30,312,298
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 34.99 $ 37.95 $ 28.18 $ 19.80 $ 17.67
period
Income from Investment
Operations
Net investment income (loss) C (.23) (.17) (.17) (.08) (.18)
Net realized and unrealized 12.53 7.32 9.80 13.51 2.11
gain (loss)
Total from investment 12.30 7.15 9.63 13.43 1.93
operations
Less Distributions
From net realized gain - (7.60) - (5.25) -
In excess of net realized gain - (2.60) - - -
Total distributions - (10.20) - (5.25) -
Redemption fees added to paid .05 .09 .14 .20 .20
in capital
Net asset value, end of period $ 47.34 $ 34.99 $ 37.95 $ 28.18 $ 19.80
TOTAL RETURN A, B 35.30% 24.15% 34.67% 72.75% 12.05%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,885,548 $ 2,668,750 $ 1,744,017 $ 1,133,362 $ 216,433
(000 omitted)
Ratio of expenses to average 1.18% 1.18% 1.33% 1.25% 1.72%
net assets
Ratio of expenses to average 1.15% D 1.12% D 1.29% D 1.22% D 1.71% D
net assets after expense
reductions
Ratio of net investment (.62)% (.42)% (.54)% (.28)% (.98)%
income (loss) to average net
assets
Portfolio turnover rate 160% 435% 341% 366% 205%
</TABLE>
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE.
CNET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. E FOR
THE YEAR ENDED FEBRUARY 29.
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the past 10 year total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT SOFTWARE AND COMPUTER 32.57% 198.22% 803.33%
SERVICES
SELECT SOFTWARE AND COMPUTER 28.52% 189.20% 776.15%
SERVICES (LOAD ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Technology 48.15% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
index of common stocks - and the Goldman Sachs Technology Index - a
market capitalization-weighted index of 190 stocks designed to measure
the performance of companies in the technology sector. These
benchmarks include reinvestment of dividends and capital gains, if
any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT SOFTWARE AND COMPUTER 32.57% 24.43% 24.62%
SERVICES
SELECT SOFTWARE AND COMPUTER 28.52% 23.66% 24.24%
SERVICES (LOAD ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Technology 48.15% n/a n/a
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER 10 YEARS
Software/Computer Svcs S&P 500
00028 SP001
1989/02/28 9700.00 10000.00
1989/03/31 9462.77 10233.00
1989/04/30 10378.74 10764.09
1989/05/31 10754.35 11200.04
1989/06/30 9689.27 11136.20
1989/07/31 9403.29 12141.80
1989/08/31 9832.26 12379.78
1989/09/30 10029.72 12329.02
1989/10/31 10240.80 12042.99
1989/11/30 10540.40 12288.66
1989/12/31 10588.20 12583.59
1990/01/31 10211.79 11739.23
1990/02/28 10476.67 11890.67
1990/03/31 10894.90 12205.77
1990/04/30 10860.05 11900.63
1990/05/31 12226.26 13060.94
1990/06/30 12512.05 12972.12
1990/07/31 11368.89 12930.61
1990/08/31 9779.62 11761.68
1990/09/30 8657.37 11188.89
1990/10/31 8831.63 11140.78
1990/11/30 9967.82 11860.47
1990/12/31 10678.81 12191.38
1991/01/31 12247.18 12722.92
1991/02/28 13139.40 13632.61
1991/03/31 13885.24 13962.52
1991/04/30 13780.69 13996.03
1991/05/31 14031.62 14600.66
1991/06/30 13003.21 13931.95
1991/07/31 13801.99 14581.18
1991/08/31 14923.35 14926.75
1991/09/30 14431.80 14677.48
1991/10/31 15153.77 14874.16
1991/11/30 13494.77 14274.73
1991/12/31 15574.49 15907.76
1992/01/31 18074.40 15611.87
1992/02/29 18617.51 15814.83
1992/03/31 17722.98 15506.44
1992/04/30 17275.71 15962.33
1992/05/31 17547.26 16040.54
1992/06/30 16596.82 15801.54
1992/07/31 17770.90 16447.82
1992/08/31 16445.07 16110.64
1992/09/30 17635.12 16300.75
1992/10/31 19056.79 16357.80
1992/11/30 20718.07 16915.60
1992/12/31 21109.43 17123.66
1993/01/31 22195.65 17267.50
1993/02/28 22059.87 17502.34
1993/03/31 22531.10 17871.64
1993/04/30 22151.92 17439.14
1993/05/31 24650.33 17906.51
1993/06/30 25922.08 17958.44
1993/07/31 25137.38 17886.61
1993/08/31 26833.05 18564.51
1993/09/30 27374.22 18421.56
1993/10/31 27311.08 18802.89
1993/11/30 26634.62 18624.26
1993/12/31 28018.72 18849.62
1994/01/31 28995.06 19490.50
1994/02/28 29381.52 18962.31
1994/03/31 26228.78 18135.55
1994/04/30 26364.47 18367.69
1994/05/31 23725.97 18668.92
1994/06/30 21644.02 18211.53
1994/07/31 22705.61 18808.87
1994/08/31 25168.90 19580.03
1994/09/30 26312.94 19100.32
1994/10/31 27931.09 19530.08
1994/11/30 27292.08 18818.79
1994/12/31 28126.92 19097.87
1995/01/31 27663.12 19593.08
1995/02/28 29961.50 20356.63
1995/03/31 31672.41 20957.35
1995/04/30 32661.85 21574.54
1995/05/31 33548.23 22436.88
1995/06/30 36516.55 22958.09
1995/07/31 38722.18 23719.38
1995/08/31 38990.15 23778.91
1995/09/30 40597.99 24782.38
1995/10/31 41082.41 24693.91
1995/11/30 42247.06 25777.97
1995/12/31 41139.61 26274.46
1996/01/31 39561.78 27168.84
1996/02/29 41998.14 27420.69
1996/03/31 40930.78 27684.75
1996/04/30 45051.43 28092.83
1996/05/31 46622.29 28817.34
1996/06/30 44295.97 28927.14
1996/07/31 40890.44 27649.13
1996/08/31 41741.82 28232.26
1996/09/30 47197.87 29821.17
1996/10/31 47365.75 30643.63
1996/11/30 51119.04 32959.99
1996/12/31 50093.66 32307.05
1997/01/31 54114.30 34325.59
1997/02/28 48778.73 34594.71
1997/03/31 46275.31 33173.21
1997/04/30 48989.12 35153.65
1997/05/31 53137.06 37293.80
1997/06/30 53164.18 38964.57
1997/07/31 59589.42 42064.98
1997/08/31 59304.76 39708.50
1997/09/30 61161.85 41883.33
1997/10/31 58369.44 40484.43
1997/11/30 59657.20 42358.45
1997/12/31 57614.72 43085.75
1998/01/31 59197.70 43562.28
1998/02/28 66097.13 46703.99
1998/03/31 71607.71 49095.70
1998/04/30 70617.23 49589.60
1998/05/31 65099.79 48737.16
1998/06/30 73031.11 50716.86
1998/07/31 68743.10 50176.72
1998/08/31 56178.93 42922.17
1998/09/30 68548.19 45671.77
1998/10/31 66224.26 49386.71
1998/11/30 72431.38 52380.04
1998/12/31 83985.07 55398.18
1999/01/31 94191.59 57714.93
1999/02/26 87615.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990309 145051 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Software and Computer Services Portfolio
on February 28, 1989, and the current 3.00% sales charge was paid. As
the chart shows, by February 28, 1999, the value of the investment
would have grown to $87,615 - a 776.15% increase on the initial
investment - and includes the effect of a $7.50 trading fee. For
comparison, look at how the Standard & Poor's 500 Index did over the
same period. With dividends and capital gains, if any, reinvested, the
same $10,000 investment would have grown to $55,921 - a 459.21%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Microsoft Corp. 14.5
Oracle Corp. 13.2
Siebel Systems, Inc. 8.9
BMC Software, Inc. 6.2
Compuware Corp. 5.9
America Online, Inc. 4.7
Yahoo!, Inc. 3.9
Aspect Development, Inc. 2.7
Networks Associates, Inc. 2.6
Automatic Data Processing, Inc. 2.4
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Computer Services & Software 88.8%
Computers &
Office Equipment 2.7%
Communications Equipment 0.8%
Securities Industry 0.5%
Electronics 0.2%
All Others 7.0%*
Row: 1, Col: 1, Value: 7.0
Row: 1, Col: 2, Value: 1.2
Row: 1, Col: 3, Value: 1.5
Row: 1, Col: 4, Value: 1.8
Row: 1, Col: 5, Value: 2.7
Row: 1, Col: 6, Value: 85.8
* INCLUDES SHORT-TERM INVESTMENTS
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of John Porter)
John Porter,
Portfolio Manager of
Fidelity Software and
Computer Services Portfolio
Q. HOW DID THE FUND PERFORM, JOHN?
A. For the 12 months that ended February 28, 1999, the fund returned
32.57%. This topped the 19.74% return of the Standard & Poor's 500
Index over the same period. The fund also compares itself to the
Goldman Sachs Technology Index - an index of 190 stocks designed to
measure the performance of companies in the technology sector - which
returned 48.15% over the same 12-month period.
Q. WHY DID THE FUND TRAIL THE GOLDMAN SACHS INDEX?
A. It's important to understand that the fund invests primarily in
software and computer services, two sub-sectors of technology that are
not as cyclical as many other areas, while the broadly based Goldman
Sachs Technology Index covers the entire range of technology stocks.
Therefore, when there are prolonged periods of extraordinarily high
returns - positive or negative - the fund will typically produce a
more modest return.
Q. WHAT WAS YOUR INVESTMENT STRATEGY DURING THE YEAR?
A. In software, there has been a tendency for one clear leader to
emerge in each sub-sector over time. I tried to identify those
eventual "winners" as key investments for the fund, concentrating
investments in industry leaders. I also reduced the fund's exposure to
areas of technology that I believed were most susceptible to Year 2000
(Y2K) problems, such as the enterprise resource planning (ERP) sector.
The concern is that as we move closer to the Year 2000, companies are
increasing their technology budgets to fix the Y2K problem, rather
than spending on new applications that are designed to integrate and
manage internal operations more efficiently. ERP companies, such as
PeopleSoft and SAP, were vulnerable to this shift. Finally, I
increased the fund's exposure to Internet stocks. Although selected
Internet companies represented a significant percentage of the fund's
portfolio as of the end of the year, I wish I had invested in them
earlier.
Q. WHICH STOCKS PERFORMED WELL?
A. Microsoft, Siebel and Oracle were all standouts. Microsoft
continued to demonstrate good performance, reflecting terrific demand
for its Office suite of products. Microsoft's server products also
continued to improve following new product releases, helping the
company's revenue growth. Siebel, another strong performer, completed
a very successful merger with another company and enjoyed an 80%
revenue growth rate during 1998. Oracle enjoyed a strong improvement
in business trends from a disappointing 1997, as demand rebounded for
its database technology during 1998.
Q. WHICH STOCKS DISAPPOINTED?
A. Despite a cautious view of the ERP sector, I was not as aggressive
as I could have been in reducing the fund's exposure to these
companies. Examples include PeopleSoft, which had disappointing
earnings in the face of declining demand for its products. I sold this
stock from the fund's portfolio. J.D. Edwards, another ERP company and
a leader in offerings for small and medium-sized businesses, had
weaker business trends than expected, which was reflected in its poor
performance. I expected ERP demand to remain stronger for small and
medium-sized businesses than it actually was. Computer Associates was
another disappointment. The company experienced a slowdown in revenue
growth because customers, under budgetary pressures from Y2K, scaled
back purchases of its products.
Q. WHAT'S YOUR OUTLOOK, JOHN?
A. The only certainty in technology is volatility. Although some areas
of this sector have better potential for growth than others, there are
plenty of opportunities in this sector. Over the long term, I'm
confident about the prospects for both software and computer services
companies. Looking forward, technology should continue to grow as a
percentage of capital spending, and therefore should be an attractive
area for investment. In the short term, I think the greatest
uncertainty will be the potential impact of Y2K, and to what degree
and when any rebound from that event will occur.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: July 29, 1985
FUND NUMBER: 028
TRADING SYMBOL: FSCSX
SIZE: as of February 28, 1999, more than
$690 million
MANAGER: John Porter, since 1997; manager
Fidelity Select Medical Delivery Portfolio,
since 1998; Fidelity Select Multimedia
Portfolio, 1996-1997; joined Fidelity in 1995
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.1%
SHARES VALUE (NOTE 1)
COMMUNICATIONS EQUIPMENT - 0.8%
Cisco Systems, Inc. (a) 15,000 $ 1,467,188
OY Nokia AB sponsored ADR 30,000 4,068,750
5,535,938
COMPUTER SERVICES & SOFTWARE
- - 88.8%
Affiliated Computer Services, 130,000 6,012,500
Inc. Class A (a)
Amazon.com, Inc. (a) 52,000 6,662,500
America Online, Inc. 370,000 32,906,875
Aspect Development, Inc. (a) 630,000 19,215,000
At Home Corp. Series A (a) 55,000 5,836,875
Automatic Data Processing, 430,000 17,092,500
Inc.
BMC Software, Inc. 1,059,600 43,311,150
BroadVision, Inc. (a) 75,000 3,365,625
Cambridge Technology 30,000 753,750
Partners, Inc. (a)
Ceridian Corp. (a) 50,000 3,581,250
Check Point Software 75,000 2,878,125
Technologies Ltd. (a)
Citrix Systems, Inc. (a) 85,000 6,555,625
Clarify, Inc. (a) 190,000 5,153,750
CMGI, Inc. (a) 55,000 6,744,375
CNET, Inc. (a) 25,000 2,865,625
Computer Associates 239,250 10,048,500
International, Inc.
Computer Sciences Corp. 35,000 2,331,875
Computron Software, Inc. (a) 111 139
Compuware Corp. (a) 736,200 41,181,188
Documentum, Inc. (a) 140,000 2,992,500
eBay, Inc. (a) 15,000 5,010,000
Electronic Data Systems Corp. 24,100 1,120,650
Equifax, Inc. 130,000 4,907,500
Excite, Inc. (a) 20,000 2,050,000
First Data Corp. 340,000 13,005,000
Fiserv, Inc. (a) 45,000 2,115,000
Galileo International, Inc. 30,000 1,515,000
i2 Technologies, Inc. (a) 275,800 6,877,763
Industri-Matematik 378,400 1,324,400
International Corp. (a)
Informix Corp. (a) 200,000 1,750,000
Infoseek Corp. (a) 10,000 715,625
Inktomi Corp. (a) 31,000 1,925,875
J.D. Edwards & Co. (a) 475,000 7,510,938
Keane, Inc. (a) 60,000 1,856,250
Mercury Interactive Corp. (a) 50,000 3,240,625
Microsoft Corp. (a) 677,000 101,634,621
MindSpring Enterprises, Inc. 15,000 1,282,500
(a)
Netscape Communications Corp. 65,000 5,033,438
(a)
Network Solutions, Inc. Class 10,000 1,815,000
A (a)
Networks Associates, Inc. (a) 390,000 18,330,000
New Era of Networks, Inc. (a) 90,000 5,613,750
Oracle Corp. (a) 1,650,600 92,227,275
Platinum Technology, Inc. (a) 325,000 4,306,250
SHARES VALUE (NOTE 1)
Policy Management Systems 78,400 $ 2,866,500
Corp. (a)
RealNetworks, Inc. (a) 25,000 1,753,125
Sabre Group Holdings, Inc. 50,000 1,962,500
Class A (a)
Security Dynamics 30,000 555,000
Technologies, Inc. (a)
Siebel Systems, Inc. (a) 1,416,125 62,309,500
SunGard Data Systems, Inc. (a) 105,200 4,168,550
Technology Solutions, Inc. (a) 100,000 818,750
TSI International Software 50,000 2,509,375
Ltd. (a)
VeriSign, Inc. (a) 100,100 9,809,800
Vignette Corp. (a) 22,200 1,204,350
Whittman-Hart, Inc. (a) 40,000 1,252,500
Yahoo!, Inc. (a) 178,000 27,323,000
621,190,137
COMPUTERS & OFFICE EQUIPMENT
- - 2.7%
Compaq Computer Corp. 10,000 352,500
Gateway 2000, Inc. (a) 27,800 2,020,713
International Business 15,000 2,550,000
Machines Corp.
Sun Microsystems, Inc. (a) 140,000 13,623,750
Tech Data Corp. (a) 34,600 588,200
19,135,163
ELECTRONICS - 0.2%
Intel Corp. 12,000 1,439,250
SECURITIES INDUSTRY - 0.5%
E Trade Group, Inc. (a) 70,000 3,220,000
SERVICES - 0.1%
Computer Horizons Corp. (a) 61,300 915,669
TOTAL COMMON STOCKS 651,436,157
(Cost $428,862,544)
CASH EQUIVALENTS - 6.9%
Taxable Central Cash Fund (b) 48,513,650 48,513,650
(Cost $48,513,650)
TOTAL INVESTMENT IN $ 699,949,807
SECURITIES - 100%
(Cost $477,376,194)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $415,381,363 and $390,592,306, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $38,702 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $13,712,500. The fund
received cash collateral of $13,320,000.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $480,173,539. Net unrealized appreciation
aggregated $219,776,268, of which $245,569,259 related to appreciated
investment securities and $25,792,991 related to depreciated
investment securities.
The fund hereby designates approximately $18,816,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 37% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentage for use in preparing 1999 income tax returns.
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 699,949,807
value (cost $477,376,194) -
See accompanying schedule
Receivable for investments 4,435,292
sold
Receivable for fund shares 1,927,987
sold
Dividends receivable 19,095
Interest receivable 271,166
Redemption fees receivable 1,084
Other receivables 155,673
TOTAL ASSETS 706,760,104
LIABILITIES
Payable for fund shares $ 1,873,587
redeemed
Accrued management fee 342,417
Other payables and accrued 372,100
expenses
Collateral on securities 13,320,000
loaned, at value
TOTAL LIABILITIES 15,908,104
NET ASSETS $ 690,852,000
Net Assets consist of:
Paid in capital $ 439,147,038
Accumulated undistributed net 29,131,349
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 222,573,613
(depreciation) on investments
NET ASSETS, for 12,100,635 $ 690,852,000
shares outstanding
NET ASSET VALUE and $57.09
redemption price per share
($690,852,000 (divided by)
12,100,635 shares)
Maximum offering price per $58.86
share (100/97.00 of $57.09)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 533,478
Dividends
Interest (including income on 2,024,987
securities loaned of
$274,250)
TOTAL INCOME 2,558,465
EXPENSES
Management fee $ 3,378,317
Transfer agent fees 3,206,917
Accounting and security 525,575
lending fees
Non-interested trustees' 2,274
compensation
Custodian fees and expenses 20,319
Registration fees 77,590
Audit 25,754
Legal 3,206
Reports to shareholders 69,247
Total expenses before 7,309,199
reductions
Expense reductions (41,513) 7,267,686
NET INVESTMENT INCOME (LOSS) (4,709,221)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 46,872,115
Foreign currency transactions (2,002) 46,870,113
Change in net unrealized 110,443,885
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 157,313,998
NET INCREASE (DECREASE) IN $ 152,604,777
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 1,939,605
charges paid to FDC
Sales charges - Retained by $ 1,925,580
FDC
Deferred sales charges $ 4,793
withheld by FDC
Exchange fees withheld by FSC $ 31,838
Expense reductions Directed $ 39,450
brokerage arrangements
Custodian credits 836
Transfer agent credits 1,227
$ 41,513
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (4,709,221) $ (3,518,045)
income (loss)
Net realized gain (loss) 46,870,113 56,333,154
Change in net unrealized 110,443,885 76,776,311
appreciation (depreciation)
NET INCREASE (DECREASE) IN 152,604,777 129,591,420
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (15,509,477) (67,010,560)
from net realized gains
Share transactions Net 512,689,909 284,940,442
proceeds from sales of shares
Reinvestment of distributions 15,022,690 66,130,192
Cost of shares redeemed (478,286,707) (300,538,798)
NET INCREASE (DECREASE) IN 49,425,892 50,531,836
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 963,911 555,345
TOTAL INCREASE (DECREASE) 187,485,103 113,668,041
IN NET ASSETS
NET ASSETS
Beginning of period 503,366,897 389,698,856
End of period 690,852,000 503,366,897
OTHER INFORMATION
Shares
Sold 10,599,999 6,972,295
Issued in reinvestment of 314,660 1,737,307
distributions
Redeemed (10,186,951) (7,436,837)
Net increase (decrease) 727,708 1,272,765
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 44.26 $ 38.58 $ 36.20 $ 29.07 $ 28.89
period
Income from Investment
Operations
Net investment income (loss) C (.39) (.33) (.25) (.19) (.26)
Net realized and unrealized 14.46 12.57 5.87 11.85 .67
gain (loss)
Total from investment 14.07 12.24 5.62 11.66 .41
operations
Less Distributions
From net realized gain (1.32) (6.61) (3.31) (4.60) (.33)
Redemption fees added to paid .08 .05 .07 .07 .10
in capital
Net asset value, end of period $ 57.09 $ 44.26 $ 38.58 $ 36.20 $ 29.07
TOTAL RETURN A, B 32.57% 35.50% 16.14% 40.17% 1.97%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 690,852 $ 503,367 $ 389,699 $ 337,633 $ 236,445
(000 omitted)
Ratio of expenses to average 1.28% 1.44% 1.54% 1.48% 1.52%
net assets
Ratio of expenses to average 1.27% D 1.42% D 1.51% D 1.47% D 1.50% D
net assets after expense
reductions
Ratio of net investment (.82)% (.81)% (.66)% (.54)% (1.01)%
income (loss) to average net
assets
Portfolio turnover rate 72% 145% 279% 183% 164%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. E FOR
THE YEAR ENDED FEBRUARY 29.
</TABLE>
TECHNOLOGY PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT TECHNOLOGY 55.66% 245.32% 919.90%
SELECT TECHNOLOGY (LOAD ADJ.) 50.91% 234.89% 889.23%
S&P 500 19.74% 194.91% 459.21%
GS Technology 48.15% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
index of common stocks - and the Goldman Sachs Technology Index - a
market capitalization-weighted index of 190 stocks designed to measure
the performance of companies in the technology sector. These
benchmarks include reinvestment of dividends and capital gains, if
any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT TECHNOLOGY 55.66% 28.13% 26.14%
SELECT TECHNOLOGY (LOAD ADJ.) 50.91% 27.34% 25.76%
S&P 500 19.74% 24.15% 18.78%
GS Technology 48.15% n/a n/a
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER 10 YEARS
Technology S&P 500
00064 SP001
1989/02/28 9700.00 10000.00
1989/03/31 9522.12 10233.00
1989/04/30 10211.40 10764.09
1989/05/31 11045.21 11200.04
1989/06/30 10066.88 11136.20
1989/07/31 10244.76 12141.80
1989/08/31 10467.11 12379.78
1989/09/30 10717.25 12329.02
1989/10/31 10639.43 12042.99
1989/11/30 10667.22 12288.66
1989/12/31 10795.07 12583.59
1990/01/31 10572.72 11739.23
1990/02/28 11167.51 11890.67
1990/03/31 11690.03 12205.77
1990/04/30 11161.95 11900.63
1990/05/31 12601.66 13060.94
1990/06/30 12712.84 12972.12
1990/07/31 12034.67 12930.61
1990/08/31 10394.84 11761.68
1990/09/30 9511.00 11188.89
1990/10/31 9783.38 11140.78
1990/11/30 11250.89 11860.47
1990/12/31 11929.05 12191.38
1991/01/31 13941.32 12722.92
1991/02/28 14647.28 13632.61
1991/03/31 15820.17 13962.52
1991/04/30 15041.95 13996.03
1991/05/31 15875.76 14600.66
1991/06/30 14335.63 13931.95
1991/07/31 15922.89 14581.18
1991/08/31 16705.34 14926.75
1991/09/30 16789.17 14677.48
1991/10/31 17241.88 14874.16
1991/11/30 16677.39 14274.73
1991/12/31 18963.78 15907.76
1992/01/31 19684.99 15611.87
1992/02/29 19992.48 15814.83
1992/03/31 18404.71 15506.44
1992/04/30 18136.35 15962.33
1992/05/31 18315.26 16040.54
1992/06/30 17005.88 15801.54
1992/07/31 17872.34 16447.82
1992/08/31 16957.07 16110.64
1992/09/30 17786.92 16300.75
1992/10/31 18836.44 16357.80
1992/11/30 20361.90 16915.60
1992/12/31 20618.18 17123.66
1993/01/31 21246.67 17267.50
1993/02/28 21124.64 17502.34
1993/03/31 21399.22 17871.64
1993/04/30 21337.86 17439.14
1993/05/31 23490.54 17906.51
1993/06/30 24637.74 17958.44
1993/07/31 23983.16 17886.61
1993/08/31 25265.33 18564.51
1993/09/30 25656.72 18421.56
1993/10/31 25150.61 18802.89
1993/11/30 24907.67 18624.26
1993/12/31 26525.31 18849.62
1994/01/31 27860.82 19490.50
1994/02/28 28648.43 18962.31
1994/03/31 27682.75 18135.55
1994/04/30 27125.19 18367.69
1994/05/31 27167.95 18668.92
1994/06/30 24865.95 18211.53
1994/07/31 25828.09 18808.87
1994/08/31 28550.58 19580.03
1994/09/30 28408.04 19100.32
1994/10/31 29469.96 19530.08
1994/11/30 29063.72 18818.79
1994/12/31 29477.09 19097.87
1995/01/31 28329.65 19593.08
1995/02/28 29968.85 20356.63
1995/03/31 31793.35 20957.35
1995/04/30 34189.65 21574.54
1995/05/31 35512.26 22436.88
1995/06/30 38811.46 22958.09
1995/07/31 42735.22 23719.38
1995/08/31 44057.84 23778.91
1995/09/30 46085.85 24782.38
1995/10/31 45395.15 24693.91
1995/11/30 45160.02 25777.97
1995/12/31 42390.07 26274.46
1996/01/31 42819.67 27168.84
1996/02/29 45165.96 27420.69
1996/03/31 41671.32 27684.75
1996/04/30 45259.93 28092.83
1996/05/31 46487.45 28817.34
1996/06/30 43180.64 28927.14
1996/07/31 38571.14 27649.13
1996/08/31 40065.89 28232.26
1996/09/30 45201.47 29821.17
1996/10/31 44875.80 30643.63
1996/11/30 50412.21 32959.99
1996/12/31 49095.41 32307.05
1997/01/31 54906.09 34325.59
1997/02/28 50876.53 34594.71
1997/03/31 47508.27 33173.21
1997/04/30 50277.51 35153.65
1997/05/31 55621.65 37293.80
1997/06/30 56645.86 38964.57
1997/07/31 63135.89 42064.98
1997/08/31 64900.37 39708.50
1997/09/30 67516.67 41883.33
1997/10/31 57933.72 40484.43
1997/11/30 56919.66 42358.45
1997/12/31 54166.22 43085.75
1998/01/31 57108.99 43562.28
1998/02/28 63556.78 46703.99
1998/03/31 63784.07 49095.70
1998/04/30 66391.89 49589.60
1998/05/31 61403.53 48737.16
1998/06/30 66511.52 50716.86
1998/07/31 66690.96 50176.72
1998/08/31 55027.52 42922.17
1998/09/30 64633.41 45671.77
1998/10/31 69801.21 49386.71
1998/11/30 80806.71 52380.04
1998/12/31 94336.30 55398.18
1999/01/31 110677.08 57714.93
1999/02/26 98923.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990310 115456 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Technology Portfolio on February 28, 1989,
and the current 3.00% sales charge was paid. As the chart shows, by
February 28, 1999, the value of the investment would have grown to
$98,923 - an 889.23% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
OY Nokia AB sponsored ADR 8.5
Motorola, Inc. 6.3
Cisco Systems, Inc. 5.0
Microsoft Corp. 4.1
Texas Instruments, Inc. 3.9
ADC Telecommunications, Inc. 3.9
eBay, Inc. 3.7
Flextronics International 2.9
Xilinx, Inc. 2.8
America Online, Inc. 2.6
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Electronics 22.7%
Communications Equipment 22.7%
Computer Services
& Software 18.5%
Computers & Office
Equipment 9.4%
Electronic Instruments 4.7%
All Others 22.0%*
Row: 1, Col: 1, Value: 22.0
Row: 1, Col: 2, Value: 4.7
Row: 1, Col: 3, Value: 9.4
Row: 1, Col: 4, Value: 18.5
Row: 1, Col: 5, Value: 22.7
Row: 1, Col: 6, Value: 22.7
* INCLUDES SHORT-TERM INVESTMENTS
TECHNOLOGY PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Andrew Kaplan)
Andrew Kaplan,
Portfolio Manager
of Fidelity Select
Technology Portfolio
Q. HOW DID THE FUND PERFORM, ANDY?
A. Very well. For the 12 months that ended February 28, 1999, the fund
returned 55.66%, while the Standard & Poor's 500 Index returned
19.74%. During the same period, the Goldman Sachs Technology Index -
an index of 190 stocks designed to measure the performance of
companies in the technology sector - returned 48.15%.
Q. WHAT FACTORS HELPED THE FUND OUTPACE THE RETURNS OF BOTH BENCHMARKS
OVER THE PAST 12 MONTHS?
A. The incredible rebound of technology stocks over the last four
months of the period helped the fund generate robust returns.
Technology stocks hit a low point in early October when fears about an
economic slowdown peaked following financial turmoil in both Russia
and Asia. However, when it became evident that the situation in Asia
was not getting worse and, more importantly, that U.S. economic growth
was accelerating, investors returned to technology stocks with a
vengeance. Specifically, the fund outperformed the Goldman Sachs
Technology Index because of my focus on large-capitalization stocks. I
continued to believe that investors would pay a premium for stocks
that weren't at risk of reporting disappointing earnings numbers - and
these were mostly larger-cap stocks. On top of that, I focused on
Internet stocks - the sector that has enjoyed the most dramatic
growth.
Q. WHICH INDIVIDUAL HOLDINGS PERFORMED PARTICULARLY WELL?
A. eBay, an online interactive auction site that debuted on Wall
Street with its successful initial public offering in September,
generated one of the biggest returns during the period. Another strong
performer was Cisco Systems, a maker of networking equipment for the
Internet. Looking to other areas, I anticipated a recovery of the
semiconductor market after a long period of excess supply. As a
result, I bought several semiconductor capital equipment stocks, such
as Applied Materials, ASM Lithography and Texas Instruments - all of
which did very well. I also tried to capitalize on the rapid growth of
the wireless communications sector by investing in Motorola. Wireless
phones, which are quickly becoming mass-market items as service prices
fall, have huge growth potential in developing economies that have no
access to wire-line phones. In addition, Motorola's management team
has implemented a restructuring plan that is focused on cutting costs
and improving returns.
Q. WHAT OTHER FACTORS HELPED PERFORMANCE?
A. I reduced the fund's weighting in personal computer (PC)
manufacturers in late 1998. This helped the fund because several PC
makers reported disappointing earnings in the latest quarter as a
result of slowing demand growth, and their stocks were punished.
Q. ARE YOU CONCERNED ABOUT THE INCREDIBLE RUN-UP IN INTERNET STOCKS?
A. Sure. After all, we've seen several years of appreciation all in a
few months. For instance, from early October through early January,
many Internet stocks appreciated as much as 400% to 500%. I'm always
concerned that there may be a correction after that kind of run-up. As
a result, I reduced the weighting of some of the Internet stocks that
enjoyed the most dramatic gains during the period, such as Yahoo! and
America Online. However, I continued to make investments directly in
Internet companies or indirectly through the service providers because
I believe in the long-term growth prospects of the sector.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. One big void was that the fund did not own any Sun Microsystems.
This stock generated huge returns during the period. I did not realize
the company's Internet tie-in quickly enough. Sun Microsystems makes
high-end servers that are now being used by Internet sites to store
data.
Q. WHAT'S YOUR OUTLOOK?
A. I continue to be bullish about technology, especially because -
with the Internet - we're only in the second inning. We have barely
captured 10% of the potential subscriber base and we've only scratched
the surface as far as ways to make money through this medium. I will
continue to look for the most aggressive ways to capitalize on the
future growth of the Internet. However, I am more concerned about
valuations than I was six months ago, so I plan to concentrate on
stocks that I believe can deliver strong earnings. In addition, I'm
somewhat more cautious about the semiconductor sector because of the
recent slowdown in PC demand growth, as well as the huge run-ups we've
seen in those stocks over the past few months.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: July 14, 1981
FUND NUMBER: 064
TRADING SYMBOL: FSPTX
SIZE: as of February 28, 1999, more than
$1.3 billion
MANAGER: Andrew Kaplan, since 1998; manager,
Fidelity Select Developing Communications
Portfolio, since 1998; Fidelity Select Electronics
Portfolio, 1996-1998; joined Fidelity in 1995
TECHNOLOGY PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 85.6%
SHARES VALUE (NOTE 1)
ADVERTISING - 0.0%
VerticalNet, Inc. (a) 400 $ 16,500
BROADCASTING - 1.0%
Comcast Corp. Class A 100,000 7,093,750
(special)
Cox Communications, Inc. 100,000 7,075,000
Class A (a)
14,168,750
COMMUNICATIONS EQUIPMENT -
22.7%
ADC Telecommunications, Inc. 1,300,000 52,650,000
(a)
Ascend Communications, Inc. 236,700 18,211,106
(a)
Cisco Systems, Inc. (a) 705,225 68,979,820
Jabil Circuit, Inc. (a) 400,000 13,050,000
Level One Communications, 259,400 8,689,900
Inc. (a)
Lucent Technologies, Inc. 141,100 14,330,469
OY Nokia AB sponsored ADR 861,000 116,773,121
P-Com, Inc. (a) 1,000,000 6,343,750
Premisys Communications, Inc. 374,700 3,091,275
(a)
Tekelec (a) 722,200 8,756,675
310,876,116
COMPUTER SERVICES & SOFTWARE
- - 18.5%
Amazon.com, Inc. (a) 65,000 8,328,125
America Online, Inc. 396,800 35,290,400
Aware, Inc. (a) 300,000 10,387,500
BMC Software, Inc. 250,000 10,218,750
Bottomline Technologies, Inc. 600 12,600
(a)
broadcast.com, Inc. (a) 200 16,763
Cadence Design Systems, Inc. 450,700 10,844,969
(a)
Cambridge Technology 200,000 5,025,000
Partners, Inc. (a)
Catapult Communications Corp. 300 3,019
(a)
Citrix Systems, Inc. (a) 111,800 8,622,575
Concur Technologies, Inc. (a) 700 21,700
eBay, Inc. (a) 150,000 50,100,000
Electronic Data Systems Corp. 100,000 4,650,000
GeoCities (a) 400 39,100
Healtheon Corp. (a) 2,900 78,300
i2 Technologies, Inc. (a) 3,600 89,775
Intraware, Inc. 1,000 18,875
Lycos, Inc. (a) 75,000 6,571,875
Microsoft Corp. (a) 378,540 56,828,318
Modem Media . Poppe Tyson, 200 5,375
Inc. (a)
Momentum Business 4,000 34,500
Applications Inc (a)
ONYX Software Corp. (a) 500 9,281
Oracle Corp. (a) 250,000 13,968,750
pcOrder.com, Inc. (a) 500 23,563
Perot Systems Corp. (a) 300 13,031
Prodigy Communications Corp. 1,500 58,313
(a)
SERENA Software, Inc. (a) 600 7,875
Siebel Systems, Inc. (a) 150,000 6,600,000
Symantec Corp. (a) 194,300 3,509,544
Vignette Corp. (a) 300 16,275
SHARES VALUE (NOTE 1)
WebTrends Corp. (a) 400 $ 10,050
Yahoo!, Inc. (a) 143,000 21,950,500
253,354,701
COMPUTERS & OFFICE EQUIPMENT
- - 9.4%
Adaptec, Inc. (a) 300,000 5,981,250
Dell Computer Corp. (a) 72,500 5,809,063
EMC Corp. (a) 304,000 31,122,000
Hewlett-Packard Co. 350,000 23,253,125
International Business 36,700 6,239,000
Machines Corp.
Lexmark International Group, 200,000 20,637,500
Inc. Class A (a)
Maxtor Corp. (a) 204,200 1,684,650
Network Appliance, Inc. (a) 300,000 12,600,000
SanDisk Corp. (a) 446,100 12,490,800
SCI Systems, Inc. (a) 281,700 8,715,094
128,532,482
DEFENSE ELECTRONICS - 0.6%
Alpha Industries, Inc. (a) 162,050 3,301,769
REMEC, Inc. (a) 300,000 5,156,250
8,458,019
DRUGS & PHARMACEUTICALS - 0.0%
Albany Molecular Research, 400 8,000
Inc. (a)
EDUCATIONAL SERVICES - 0.0%
Corinthian Colleges, Inc. (a) 6,800 152,150
ELECTRICAL EQUIPMENT - 2.3%
Adtran, Inc. (a) 410,000 8,405,000
General Instrument Corp. (a) 197,400 5,773,950
Philips Electronics NV (NY 250,000 17,406,250
shares)
31,585,200
ELECTRONIC INSTRUMENTS - 4.7%
Aeroflex, Inc. (a) 300,000 4,031,250
Applied Materials, Inc. (a) 450,000 25,031,250
JDS Fitel, Inc. (a) 200,000 8,555,511
KLA-Tencor Corp. (a) 130,300 6,751,169
Kulicke & Soffa Industries, 265,000 6,724,375
Inc. (a)
Novellus Systems, Inc. (a) 6,200 366,188
Smart Modular Technologies, 350,000 5,621,875
Inc. (a)
Teradyne, Inc. (a) 139,000 6,619,875
63,701,493
ELECTRONICS - 22.7%
Altera Corp. (a) 126,800 6,165,650
DII Group, Inc. (a) 400,000 9,350,000
Flextronics International (a) 1,042,800 39,300,525
Galileo Technology Ltd. (a) 200,000 4,100,000
Intel Corp. 154,800 18,566,325
Micron Technology, Inc. (a) 587,700 33,866,213
Motorola, Inc. 1,225,000 86,056,250
PMC-Sierra, Inc. (a) 5,000 354,375
Rambus, Inc. (a) 245,600 17,852,050
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ELECTRONICS - CONTINUED
Solectron Corp. (a) 82,000 $ 3,664,375
Texas Instruments, Inc. 600,000 53,512,500
Xilinx, Inc. (a) 550,000 38,362,500
311,150,763
ENTERTAINMENT - 0.2%
Ticketmaster Online 71,200 2,572,100
CitySearch, Inc. (a)
INDUSTRIAL MACHINERY &
EQUIPMENT - 3.0%
ASM Lithography Holding N V 800,000 31,700,000
(a)
PRI Automation, Inc. 300,000 9,000,000
40,700,000
SECURITIES INDUSTRY - 0.5%
E Trade Group, Inc. (a) 150,000 6,900,000
SERVICES - 0.0%
Corporate Executive Board Co. 900 22,050
(a)
TELEPHONE SERVICES - 0.0%
Covad Communications Group, 700 28,350
Inc. (a)
TOTAL COMMON STOCKS 1,172,226,674
(Cost $968,831,151)
CASH EQUIVALENTS - 14.4%
Taxable Central Cash Fund (b) 197,935,034 197,935,034
(Cost $197,935,034)
TOTAL INVESTMENT IN $ 1,370,161,708
SECURITIES - 100%
(Cost $1,166,766,185)
</TABLE>
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $2,662,982,813 and $2,417,743,979, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $323,190 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $54,358,127. The fund
received cash collateral of $52,357,000.
The fund participated in the interfund lending program as a lender.
The maximum loan and average daily balances during the period for
which loans were outstanding amounted to $35,121,000 and $26,026,833,
respectively. The weighted average interest rate was 5.28%. Interest
earned from the interfund lending program amounted to $22,897 and is
included in interest income on the Statement of Operations.
Distribution of investments by country of issue, as a percentage of
total value of investments in securities, is as follows:
United States of America 84.1%
Finland 8.5
Netherlands 3.6
Singapore 2.9
Others (individually less 0.9
than 1%)
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $1,178,964,874. Net unrealized appreciation
aggregated $191,196,834, of which $239,560,713 related to appreciated
investment securities and $48,363,879 related to depreciated
investment securities.
The fund hereby designates approximately $2,157,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
TECHNOLOGY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 1,370,161,708
value (cost $1,166,766,185)
- - See accompanying schedule
Cash 155,383
Receivable for investments 138,535,148
sold
Receivable for fund shares 10,739,703
sold
Dividends receivable 40,910
Interest receivable 672,196
Redemption fees receivable 9,311
Other receivables 290,210
TOTAL ASSETS 1,520,604,569
LIABILITIES
Payable for investments $ 94,033,397
purchased
Payable for fund shares 5,789,219
redeemed
Accrued management fee 686,134
Other payables and accrued 591,308
expenses
Collateral on securities 52,357,000
loaned, at value
TOTAL LIABILITIES 153,457,058
NET ASSETS $ 1,367,147,511
Net Assets consist of:
Paid in capital $ 1,006,589,737
Accumulated undistributed 157,162,251
net realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 203,395,523
(depreciation) on investments
NET ASSETS, for 16,531,732 $ 1,367,147,511
shares outstanding
NET ASSET VALUE and $82.70
redemption price per share
($1,367,147,511 (divided by)
16,531,732 shares)
Maximum offering price per $85.26
share (100/97.00 of $82.70)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 1,000,332
Dividends
Interest (including income on 3,971,800
securities loaned of
$474,304)
TOTAL INCOME 4,972,132
EXPENSES
Management fee $ 4,515,599
Transfer agent fees 3,907,220
Accounting and security 633,939
lending fees
Non-interested trustees' 3,322
compensation
Custodian fees and expenses 46,862
Registration fees 179,099
Audit 35,290
Legal 4,915
Reports to shareholders 81,822
Total expenses before 9,408,068
reductions
Expense reductions (338,456) 9,069,612
NET INVESTMENT INCOME (LOSS) (4,097,480)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 215,507,098
Foreign currency transactions (21,197) 215,485,901
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 122,793,314
Assets and liabilities in 289 122,793,603
foreign currencies
NET GAIN (LOSS) 338,279,504
NET INCREASE (DECREASE) IN $ 334,182,024
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 5,573,254
charges paid to FDC
Sales charges - Retained by $ 5,562,533
FDC
Deferred sales charges $ 32,321
withheld by FDC
Exchange fees withheld by FSC $ 46,395
Expense reductions Directed $ 331,286
brokerage arrangements
Custodian credits 5,356
Transfer agent credits 1,814
$ 338,456
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (4,097,480) $ (2,470,345)
income (loss)
Net realized gain (loss) 215,485,901 56,871,240
Change in net unrealized 122,793,603 69,437,348
appreciation (depreciation)
NET INCREASE (DECREASE) IN 334,182,024 123,838,243
NET ASSETS RESULTING FROM
OPERATIONS
Distribution to shareholders - (112,130,367)
From net realized gain
In excess of net realized - (29,870,994)
gain
TOTAL DISTRIBUTIONS - (142,001,361)
Share transactions Net 1,006,339,152 519,887,482
proceeds from sales of shares
Reinvestment of distributions - 139,074,837
Cost of shares redeemed (666,801,634) (428,139,579)
NET INCREASE (DECREASE) IN 339,537,518 230,822,740
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 1,503,543 820,601
TOTAL INCREASE (DECREASE) 675,223,085 213,480,223
IN NET ASSETS
NET ASSETS
Beginning of period 691,924,426 478,444,203
End of period $ 1,367,147,511 $ 691,924,426
OTHER INFORMATION
Shares
Sold 14,223,107 9,533,953
Issued in reinvestment of - 2,923,252
distributions
Redeemed (10,714,156) (7,726,118)
Net increase (decrease) 3,508,951 4,731,087
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 53.13 $ 57.70 $ 54.67 $ 42.05 $ 41.83
period
Income from Investment
Operations
Net investment income (loss) C (.34) (.25) (.39) (.28) (.39)
Net realized and unrealized 29.79 11.29 6.95 20.83 1.95
gain (loss)
Total from investment 29.45 11.04 6.56 20.55 1.56
operations
Less Distributions
From net realized gain - (12.39) (3.68) (8.05) (1.50)
In excess of net realized gain - (3.30) - - -
Total distributions - (15.69) (3.68) (8.05) (1.50)
Redemption fees added to paid .12 .08 .15 .12 .16
in capital
Net asset value, end of period $ 82.70 $ 53.13 $ 57.70 $ 54.67 $ 42.05
TOTAL RETURN A, B 55.66% 24.92% 12.64% 50.71% 4.61%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,367,148 $ 691,924 $ 478,444 $ 483,026 $ 229,761
(000 omitted)
Ratio of expenses to average 1.24% 1.38% 1.49% 1.40% 1.57%
net assets
Ratio of expenses to average 1.20% D 1.30% D 1.44% D 1.39% D 1.56% D
net assets after expense
reductions
Ratio of net investment (.54)% (.45)% (.72)% (.52)% (.98)%
income (loss) to average net
assets
Portfolio turnover rate 339% 556% 549% 112% 102%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE .
C NET INVESTMENT INCOME
(LOSS) PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. E FOR
THE YEAR ENDED FEBRUARY 29.
</TABLE>
NATURAL GAS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
1999
SELECT NATURAL GAS -19.17% 19.27% 14.70%
SELECT NATURAL GAS (LOAD ADJ.) -21.66% 15.62% 11.19%
S&P 500 19.74% 194.91% 218.30%
GS Utilities 30.02% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or since
the fund started on April 21, 1993. You can compare the fund's returns
to the performance of both the Standard & Poor's 500 Index - a market
capitalization-weighted index of common stocks - and the Goldman Sachs
Utilities Index - a market capitalization-weighted index of 136 stocks
designed to measure the performance of companies in the utilities
sector. These benchmarks include reinvestment of dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
1999
SELECT NATURAL GAS -19.17% 3.59% 2.37%
SELECT NATURAL GAS (LOAD ADJ.) -21.66% 2.95% 1.83%
S&P 500 19.74% 24.15% 21.84%
GS Utilities 30.02% n/a n/a
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER LIFE OF FUND
Natural Gas S&P 500
00513 SP001
1993/04/21 9700.00 10000.00
1993/04/30 9515.70 9926.17
1993/05/31 9670.90 10192.20
1993/06/30 9952.20 10221.75
1993/07/31 9913.40 10180.87
1993/08/31 10767.00 10566.72
1993/09/30 10582.70 10485.36
1993/10/31 10010.40 10702.40
1993/11/30 9156.80 10600.73
1993/12/31 9209.91 10729.00
1994/01/31 9672.37 11093.79
1994/02/28 9327.98 10793.14
1994/03/31 8993.44 10322.56
1994/04/30 9692.05 10454.69
1994/05/31 9613.33 10626.15
1994/06/30 9662.53 10365.81
1994/07/31 9603.49 10705.81
1994/08/31 9288.63 11144.75
1994/09/30 9229.59 10871.70
1994/10/31 9554.30 11116.31
1994/11/30 8717.93 10711.46
1994/12/31 8580.06 10870.31
1995/01/31 8313.78 11152.17
1995/02/28 8856.20 11586.77
1995/03/31 9378.89 11928.70
1995/04/30 9536.79 12280.00
1995/05/31 9902.07 12770.83
1995/06/30 9665.13 13067.50
1995/07/31 9665.13 13500.82
1995/08/31 9951.43 13534.70
1995/09/30 10237.73 14105.87
1995/10/31 9793.47 14055.51
1995/11/30 10632.63 14672.55
1995/12/31 11187.09 14955.14
1996/01/31 11236.63 15464.21
1996/02/29 11256.45 15607.57
1996/03/31 11761.80 15757.87
1996/04/30 12587.74 15990.14
1996/05/31 12687.64 16402.52
1996/06/30 13356.99 16465.02
1996/07/31 12397.92 15737.59
1996/08/31 12867.47 16069.50
1996/09/30 13406.94 16973.89
1996/10/31 14376.00 17442.03
1996/11/30 15195.20 18760.47
1996/12/31 15026.99 18388.83
1997/01/31 14794.09 19537.76
1997/02/28 12657.51 19690.94
1997/03/31 12617.00 18881.84
1997/04/30 12431.17 20009.08
1997/05/31 13607.66 21227.24
1997/06/30 13097.50 22178.22
1997/07/31 13670.13 23942.94
1997/08/31 14721.67 22601.65
1997/09/30 15252.65 23839.55
1997/10/31 14825.79 23043.31
1997/11/30 13826.30 24109.98
1997/12/31 13815.88 24523.95
1998/01/31 13107.91 24795.18
1998/02/28 13763.83 26583.41
1998/03/31 14430.16 27944.75
1998/04/30 14825.79 28225.87
1998/05/31 14003.29 27740.67
1998/06/30 13930.41 28867.50
1998/07/31 12743.51 28560.06
1998/08/31 10432.19 24430.84
1998/09/30 12691.46 25995.88
1998/10/31 12951.74 28110.39
1998/11/30 12066.77 29814.16
1998/12/31 12102.93 31532.05
1999/01/31 11251.94 32850.72
1999/02/26 11119.00 31829.72
IMATRL PRASUN SHR__CHT 19990228 19990309 145029 R00000000000074
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Select Natural Gas Portfolio on April 21, 1993,
when the fund started, and the current 3.00% sales charge was paid. As
the chart shows, by February 28, 1999, the value of the investment
would have grown to $11,119 - an 11.19% increase on the initial
investment - and includes the effect of a $7.50 trading fee. For
comparison, look at how the Standard & Poor's 500 Index did over the
same period. With dividends and capital gains, if any, reinvested, the
same $10,000 investment would have grown to $31,830 - a 218.30%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Enron Corp. 8.8
Coastal Corp. (The) 6.0
Vastar Resources, Inc. 5.3
Williams Companies, Inc. 5.3
BP Amoco PLC sponsored ADR 5.1
Anadarko Petroleum Corp. 4.5
Consolidated Natural Gas Co. 3.3
Columbia Gas System, Inc. 2.8
Enbridge, Inc. 2.7
El Paso Energy Corp. 2.5
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Oil & Gas 52.9%
Gas 31.5%
Energy Services 6.0%
Electric Utility 4.7%
All Others 4.9%*
Row: 1, Col: 1, Value: 4.9
Row: 1, Col: 2, Value: 4.7
Row: 1, Col: 3, Value: 6.0
Row: 1, Col: 4, Value: 31.5
Row: 1, Col: 5, Value: 52.9
* INCLUDES SHORT-TERM INVESTMENTS
NATURAL GAS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Victor Thay)
Victor Thay,
Portfolio Manager
of Fidelity Select
Natural Gas Portfolio
Q. HOW DID THE FUND PERFORM, VICTOR?
A. It was a disappointing period. For the 12 months that ended
February 28, 1999, the fund had a total return of -19.17%, compared to
a gain of 19.74% for the Standard & Poor's 500 Index. The Goldman
Sachs Utilities Index - an index of 136 stocks designed to measure the
performance of companies in the utilities sector - turned in a stellar
return of 30.02%.
Q. WHY WAS THE FUND'S RETURN SO FAR BEHIND THOSE OF ITS BENCHMARKS?
A. Natural gas prices, on which the fund's performance depends to a
great extent, trended mainly downward during the period. Oil prices,
which also influence many of the fund's holdings, were even weaker
than gas prices. On the other hand, a number of other stock sectors
performed well except for a few months in the late summer and early
fall of 1998, accounting for the strong showing of the broadly based
S&P 500. The Goldman Sachs index contains a number of holdings that
are incompatible with the fund's primary focus on natural gas,
including significant positions in telecommunications, electric
utilities - even the Internet. In particular, the Goldman Sachs index
benefited from a large position in America Online, one of the
strongest stocks in a surging Internet group. Consequently, the fund
came up short against both of its benchmarks.
Q. WHY WERE OIL AND NATURAL GAS PRICES SO WEAK?
A. Poor global demand, especially from Southeast Asia, was one problem
affecting oil prices, as was the inability of the Organization of
Petroleum Exporting Countries (OPEC) to sufficiently restrict the
production of its member countries. On the natural gas side, the main
problem was uncooperative weather. The winter of 1997-98 was the
second-warmest winter on record, and so far the winter of 1998-99 has
been even warmer. Furthermore, low oil prices caused some users to
substitute oil for natural gas, thereby reducing demand for gas.
Q. WHAT WAS YOUR STRATEGY DURING THE PERIOD?
A. The fund's primary emphasis was on the stocks of exploration and
production (E&P) companies with solid balance sheets and the
capability to add meaningfully to reserves at a relatively low cost.
In the fall, I reduced the fund's E&P holdings slightly and increased
exposure to gas utilities and integrated pipeline companies to take
advantage of falling interest rates. In the fourth quarter of 1998, I
built up positions in drilling and energy service companies. My
rationale was that we had probably seen the worst of the oil and gas
price declines for this cycle, and these companies were well
positioned to benefit from a recovery in commodity prices.
Q. WHAT STOCKS CONTRIBUTED POSITIVELY TO THE FUND'S PERFORMANCE?
A. Enron, the fund's largest holding at the end of the period, was one
stock that helped performance. This diversified energy company
benefited from strong growth in its wholesale trading operations and
increased visibility in its retail energy services division.
Consolidated Natural Gas saw its stock price firm amid takeover
speculation.
Q. WHAT ABOUT DISAPPOINTING HOLDINGS?
A. Plains Resources, an oil-oriented E&P company, experienced weakness
in its stock price mainly because of declining oil prices. Ocean
Energy - no longer one of the fund's holdings - is another oil-based
E&P company whose balance sheet deteriorated over the period when the
company spent considerable sums on exploration but came up with no
significant finds. Burlington Resources, primarily a gas E&P company,
weakened when it failed to meet production expectations, and the cost
savings from a recent merger took longer than expected to materialize.
Q. WHAT'S YOUR OUTLOOK, VICTOR?
A. After considerable declines, both oil and gas prices are low enough
to force cutbacks in production, which should be supportive of higher
prices in the long run. Moreover, OPEC has scheduled a meeting for
March 23 to debate further cuts in oil production. There will probably
be adequate natural gas supplies for the first half of 1999, but
supplies may shrink later in the year, lending support to that market.
Furthermore, two recent high-profile unions - Dominion Resources
bought Consolidated Natural Gas and Sempra Energy purchased K N Energy
- - may stimulate further consolidation in the natural gas industry,
which could be a positive influence on stock prices. Therefore, while
I am cautious about the near-term prospects for natural gas stocks, I
am optimistic about the longer-term outlook.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: April 21, 1993
FUND NUMBER: 513
TRADING SYMBOL: FSNGX
SIZE: as of February 28, 1999, more than
$36 million
MANAGER: Victor Thay, since 1997; manager,
Fidelity Select Home Finance Portfolio,
since March 1999; analyst, U.S. and
Canadian exploration and production industry,
1996-present; Canadian equities,
1995-1996; joined Fidelity in 1995
NATURAL GAS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 95.1%
SHARES VALUE (NOTE 1)
ELECTRIC UTILITY - 4.7%
AES Corp. (a) 15,300 $ 568,969
CMS Energy Corp. 9,200 380,650
PG&E Corp. 24,800 781,200
1,730,819
ENERGY SERVICES - 6.0%
BJ Services Co. (a) 14,600 205,313
ENSCO International, Inc. 45,700 405,588
Halliburton Co. 10,700 302,275
Noble Drilling Corp. (a) 24,400 301,950
Pool Energy Services Co. (a) 34,100 346,328
Santa Fe International Corp. 21,800 291,575
Schlumberger Ltd. 7,600 369,075
2,222,104
GAS - 31.5%
Atmos Energy Corp. 19,700 472,800
Cascade Natural Gas Corp. 25,400 401,638
Columbia Gas System, Inc. 20,800 1,050,400
Consolidated Natural Gas Co. 22,250 1,222,359
Dynegy, Inc. 36,600 439,200
El Paso Energy Corp. 24,950 909,116
Enron Corp. 49,800 3,236,997
Equitable Resources, Inc. 8,600 222,525
K N Energy, Inc. 15,600 326,625
Midcoast Energy Resources, 3,710 82,548
Inc.
National Fuel Gas Co. 6,300 253,969
New Jersey Resources Corp. 5,700 199,144
Northwest Natural Gas Co. 14,400 352,350
ONEOK, Inc. 9,800 263,988
SEMCO Energy, Inc. 12,400 195,300
Transcanada Pipelines Ltd. 3,296 45,250
Williams Companies, Inc. 52,460 1,941,020
11,615,229
OIL & GAS - 52.9%
Anadarko Petroleum Corp. 59,950 1,648,625
Apache Corp. 33,225 662,423
BP Amoco PLC sponsored ADR 22,319 1,897,115
Burlington Resources, Inc. 24,672 798,756
Canadian Natural Resources 47,100 651,303
Ltd. (a)
Coastal Corp. (The) 69,170 2,213,440
Enbridge, Inc. 21,500 1,012,402
Enron Oil & Gas Co. 28,200 465,300
Newfield Exploration Co. (a) 29,800 484,250
Noble Affiliates, Inc. 29,000 656,125
Nuevo Energy Co. (a) 12,500 87,500
Oryx Energy Co. (a) 12,500 129,688
Paramount Resources Ltd. 54,700 466,173
Penn West Petroleum Ltd. (a) 75,600 749,582
Plains Resources, Inc. (a) 84,400 780,700
Renaissance Energy Ltd. (a) 60,500 533,658
Rio Alto Exploration Ltd. (a) 85,800 759,670
SHARES VALUE (NOTE 1)
Santa Fe Energy Resources, 89,300 $ 468,825
Inc. (a)
Seagull Energy Corp. (a) 92,700 440,325
Stone Energy Corp. (a) 21,500 520,031
Suncor Energy, Inc. 19,500 570,981
Ulster Petroleums Ltd. (a) 113,900 634,540
Union Pacific Resources 86,000 768,625
Group, Inc.
Vastar Resources, Inc. 50,700 1,951,950
Vintage Petroleum, Inc. 33,500 148,656
19,500,643
TOTAL COMMON STOCKS 35,068,795
(Cost $37,084,484)
CASH EQUIVALENTS - 4.9%
Taxable Central Cash Fund (b) 1,803,368 1,803,368
(Cost $1,803,368)
TOTAL INVESTMENT IN $ 36,872,163
SECURITIES - 100%
(Cost $38,887,852)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $51,708,839 and $63,353,313, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $13,630 for the
period.
The fund participated in the bank borrowing program. The maximum loan
and average daily balances during the period for which loans were
outstanding amounted to $2,590,000 and $1,717,000, respectively. The
weighted average interest rate was 5.7%.
Distribution of investments by country of issue, as a percentage of
total value of investments in securities, is as follows:
United States of America 79.3%
Canada 14.6
United Kingdom 5.1
Netherlands Antilles 1.0
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $39,375,928. Net unrealized depreciation
aggregated $2,503,765, of which $3,185,025 related to appreciated
investment securities and $5,688,790 related to depreciated investment
securities.
At February 28, 1999, the fund had a capital loss carryforward of
approximately $3,229,000, all of which will expire on February 28,
2007.
The fund intends to elect to defer to its fiscal year ending February
29, 2000 approximately $1,719,000 of losses recognized during the
period November 1, 1998 to February 28, 1999.
A total of 100% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of this percentage
for use in preparing 1999 income tax returns.
NATURAL GAS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 36,872,163
value (cost $38,887,852) -
See accompanying schedule
Receivable for fund shares 46,471
sold
Dividends receivable 43,421
Interest receivable 6,414
Redemption fees receivable 105
Other receivables 26
TOTAL ASSETS 36,968,600
LIABILITIES
Payable for fund shares $ 78,219
redeemed
Accrued management fee 18,520
Other payables and accrued 43,435
expenses
TOTAL LIABILITIES 140,174
NET ASSETS $ 36,828,426
Net Assets consist of:
Paid in capital $ 43,960,023
Undistributed net investment 319,683
income
Accumulated undistributed net (5,435,532)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (2,015,748)
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 3,478,063 $ 36,828,426
shares outstanding
NET ASSET VALUE and $10.59
redemption price per share
($36,828,426 (divided by)
3,478,063 shares)
Maximum offering price per $10.92
share (100/97.00 of $10.59)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 715,257
Dividends
Special dividend from 399,656
Transcanada Pipelines Ltd.
Interest 147,033
TOTAL INCOME 1,261,946
EXPENSES
Management fee $ 301,788
Transfer agent fees 393,852
Accounting fees and expenses 60,991
Non-interested trustees' 195
compensation
Custodian fees and expenses 14,741
Registration fees 14,687
Audit 10,733
Legal 306
Interest 548
Reports to shareholders 10,973
Miscellaneous 14
Total expenses before 808,828
reductions
Expense reductions (26,170) 782,658
NET INVESTMENT INCOME 479,288
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (5,298,288)
Foreign currency transactions (5,038) (5,303,326)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (4,576,884)
Assets and liabilities in (59) (4,576,943)
foreign currencies
NET GAIN (LOSS) (9,880,269)
NET INCREASE (DECREASE) IN $ (9,400,981)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 123,203
charges paid to FDC
Sales charges - Retained by $ 121,320
FDC
Deferred sales charges $ 982
withheld by FDC
Exchange fees withheld by FSC $ 7,478
Expense reductions Directed $ 25,878
brokerage arrangements
Custodian credits 176
Transfer agent credits 116
$ 26,170
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ 479,288 $ (306,523)
income (loss)
Net realized gain (loss) (5,303,326) 1,119,826
Change in net unrealized (4,576,943) 5,428,784
appreciation (depreciation)
NET INCREASE (DECREASE) IN (9,400,981) 6,242,087
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (375,571) -
From net investment income
From net realized gain - (1,875,328)
In excess of net realized - (210,862)
gain
TOTAL DISTRIBUTIONS (375,571) (2,086,190)
Share transactions Net 47,858,222 108,990,438
proceeds from sales of shares
Reinvestment of distributions 356,687 2,046,549
Cost of shares redeemed (61,599,489) (137,149,165)
NET INCREASE (DECREASE) IN (13,384,580) (26,112,178)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 123,693 255,983
TOTAL INCREASE (DECREASE) (23,037,439) (21,700,298)
IN NET ASSETS
NET ASSETS
Beginning of period 59,865,865 81,566,163
End of period (including $ 36,828,426 $ 59,865,865
undistributed net investment
income of $319,683 and
$297,648, respectively)
OTHER INFORMATION
Shares
Sold 3,845,626 8,021,019
Issued in reinvestment of 32,426 174,767
distributions
Redeemed (4,929,086) (10,189,472)
Net increase (decrease) (1,051,034) (1,993,686)
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 F 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 13.22 $ 12.50 $ 11.36 $ 8.98 $ 9.48
period
Income from Investment
Operations
Net investment income (loss) C .12 E (.05) (.06) .05 .03
Net realized and unrealized (2.68) 1.06 1.30 2.36 (.53)
gain (loss)
Total from investment (2.56) 1.01 1.24 2.41 (.50)
operations
Less Distributions
From net investment income (.10) - (.01) (.05) (.02)
From net realized gain - (.30) (.29) - -
In excess of net realized gain - (.03) - - -
Total distributions (.10) (.33) (.30) (.05) (.02)
Redemption fees added to paid .03 .04 .20 .02 .02
in capital
Net asset value, end of period $ 10.59 $ 13.22 $ 12.50 $ 11.36 $ 8.98
TOTAL RETURN A, B (19.17)% 8.74% 12.45% 27.10% (5.06)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 36,828 $ 59,866 $ 81,566 $ 60,228 $ 79,894
(000 omitted)
Ratio of expenses to average 1.57% 1.82% 1.70% 1.68% 1.70%
net assets
Ratio of expenses to average 1.52% D 1.78% D 1.66% D 1.67% D 1.66% D
net assets after expense
reductions
Ratio of net investment .93% (.37)% (.46)% .46% .30%
income (loss) to average net
assets
Portfolio turnover rate 107% 118% 283% 79% 177%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D FMR OR THE
FUND HAS ENTERED INTO
VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER
PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES. E NET
INVESTMENT INCOME PER SHARE
REFLECTS A SPECIAL DIVIDEND
FROM TRANSCANADA PIPELINES
LTD. WHICH AMOUNTED TO $.10
PER SHARE. F FOR THE YEAR
ENDED FEBRUARY 29.
</TABLE>
TELECOMMUNICATIONS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT TELECOMMUNICATIONS 22.21% 162.32% 489.71%
SELECT TELECOMMUNICATIONS 18.47% 154.38% 471.95%
(LOAD ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Utilities 30.02% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
index of common stocks - and the Goldman Sachs Utilities Index - a
market capitalization-weighted index of 136 stocks designed to measure
the performance of companies in the utilities sector. These benchmarks
include reinvestment of dividends and capital gains, if any, and
exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT TELECOMMUNICATIONS 22.21% 21.27% 19.42%
SELECT TELECOMMUNICATIONS 18.47% 20.53% 19.05%
(LOAD ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Utilities 30.02% n/a n/a
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER 10 YEARS
Telecommunications S&P 500
00096 SP001
1989/02/28 9700.00 10000.00
1989/03/31 10096.02 10233.00
1989/04/30 10859.42 10764.09
1989/05/31 11660.99 11200.04
1989/06/30 11376.12 11136.20
1989/07/31 12239.76 12141.80
1989/08/31 12532.44 12379.78
1989/09/30 12993.05 12329.02
1989/10/31 12532.44 12042.99
1989/11/30 12849.11 12288.66
1989/12/31 13483.69 12583.59
1990/01/31 12021.42 11739.23
1990/02/28 11976.66 11890.67
1990/03/31 12255.19 12205.77
1990/04/30 11534.00 11900.63
1990/05/31 12747.58 13060.94
1990/06/30 12493.93 12972.12
1990/07/31 11921.95 12930.61
1990/08/31 10534.29 11761.68
1990/09/30 9852.89 11188.89
1990/10/31 10196.08 11140.78
1990/11/30 10778.00 11860.47
1990/12/31 11272.83 12191.38
1991/01/31 11673.44 12722.92
1991/02/28 12063.90 13632.61
1991/03/31 12403.66 13962.52
1991/04/30 12667.35 13996.03
1991/05/31 12799.20 14600.66
1991/06/30 12266.74 13931.95
1991/07/31 12961.47 14581.18
1991/08/31 13346.87 14926.75
1991/09/30 13519.28 14677.48
1991/10/31 14051.74 14874.16
1991/11/30 13514.21 14274.73
1991/12/31 14750.69 15907.76
1992/01/31 14771.19 15611.87
1992/02/29 14955.63 15814.83
1992/03/31 14427.91 15506.44
1992/04/30 14971.01 15962.33
1992/05/31 14796.81 16040.54
1992/06/30 14453.16 15801.54
1992/07/31 15228.72 16447.82
1992/08/31 15048.96 16110.64
1992/09/30 15341.72 16300.75
1992/10/31 15495.80 16357.80
1992/11/30 16302.18 16915.60
1992/12/31 17010.22 17123.66
1993/01/31 16957.89 17267.50
1993/02/28 17889.24 17502.34
1993/03/31 18621.77 17871.64
1993/04/30 18661.05 17439.14
1993/05/31 19412.22 17906.51
1993/06/30 20249.23 17958.44
1993/07/31 20839.43 17886.61
1993/08/31 22411.51 18564.51
1993/09/30 22733.44 18421.56
1993/10/31 23388.02 18802.89
1993/11/30 21472.55 18624.26
1993/12/31 22064.91 18849.62
1994/01/31 22511.61 19490.50
1994/02/28 21806.29 18962.31
1994/03/31 21124.47 18135.55
1994/04/30 21501.52 18367.69
1994/05/31 21375.25 18668.92
1994/06/30 21357.22 18211.53
1994/07/31 22541.72 18808.87
1994/08/31 23197.11 19580.03
1994/09/30 22926.54 19100.32
1994/10/31 24020.86 19530.08
1994/11/30 22746.16 18818.79
1994/12/31 23017.92 19097.87
1995/01/31 23337.27 19593.08
1995/02/28 23546.08 20356.63
1995/03/31 23840.87 20957.35
1995/04/30 24581.85 21574.54
1995/05/31 25252.83 22436.88
1995/06/30 26469.38 22958.09
1995/07/31 28149.98 23719.38
1995/08/31 28984.01 23778.91
1995/09/30 29937.18 24782.38
1995/10/31 28683.00 24693.91
1995/11/30 29316.36 25777.97
1995/12/31 29844.14 26274.46
1996/01/31 30055.38 27168.84
1996/02/29 29619.70 27420.69
1996/03/31 29481.07 27684.75
1996/04/30 30857.50 28092.83
1996/05/31 31542.27 28817.34
1996/06/30 31863.25 28927.14
1996/07/31 29452.29 27649.13
1996/08/31 30065.73 28232.26
1996/09/30 30950.22 29821.17
1996/10/31 30336.78 30643.63
1996/11/30 31256.95 32959.99
1996/12/31 31455.63 32307.05
1997/01/31 31669.61 34325.59
1997/02/28 31944.73 34594.71
1997/03/31 29254.65 33173.21
1997/04/30 30169.91 35153.65
1997/05/31 34464.20 37293.80
1997/06/30 36364.05 38964.57
1997/07/31 37102.01 42064.98
1997/08/31 35288.52 39708.50
1997/09/30 39865.42 41883.33
1997/10/31 38899.80 40484.43
1997/11/30 40509.17 42358.45
1997/12/31 39579.96 43085.75
1998/01/31 42912.64 43562.28
1998/02/28 46806.61 46703.99
1998/03/31 50972.46 49095.70
1998/04/30 50771.60 49589.60
1998/05/31 48604.19 48737.16
1998/06/30 50464.55 50716.86
1998/07/31 52090.11 50176.72
1998/08/31 40187.41 42922.17
1998/09/30 42716.06 45671.77
1998/10/31 45777.53 49386.71
1998/11/30 48387.45 52380.04
1998/12/31 55823.77 55398.18
1999/01/31 60448.00 57714.93
1999/02/26 57195.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990307 170836 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Telecommunications Portfolio on February
28, 1989, and the current 3.00% sales charge was paid. As the chart
shows, by February 28, 1999, the value of the investment would have
grown to $57,195 - a 471.95% increase on the initial investment - and
includes the effect of a $7.50 trading fee. For comparison, look at
how the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
28, 1999
% OF FUND'S INVESTMENTS
MCI WorldCom, Inc. 14.0
Tele-Communications, Inc. 5.3
(TCI Group) Series A
Cisco Systems, Inc. 5.0
SBC Communications, Inc. 5.0
AirTouch Communications, Inc. 4.5
Bell Atlantic Corp. 4.2
Motorola, Inc. 3.8
OY Nokia AB sponsored ADR 3.4
Sprint Corp. (FON Group) 3.3
AT&T Corp. 3.1
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Telephone Services 56.1%
Communications Equipment 14.4%
Broadcasting 7.3%
Cellular 5.6%
Computer Services &
Software 5.4%
All Others 11.2%*
Row: 1, Col: 1, Value: 11.2
Row: 1, Col: 2, Value: 5.4
Row: 1, Col: 3, Value: 5.6
Row: 1, Col: 4, Value: 7.3
Row: 1, Col: 5, Value: 14.4
Row: 1, Col: 6, Value: 56.1
Row: 1, Col: 1, Value: 16.5
Row: 1, Col: 2, Value: 3.4
Row: 1, Col: 3, Value: 3.8
Row: 1, Col: 4, Value: 6.2
Row: 1, Col: 5, Value: 9.300000000000001
Row: 1, Col: 6, Value: 60.8
* INCLUDES SHORT-TERM INVESTMENTS
TELECOMMUNICATIONS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Peter Saperstone)
NOTE TO SHAREHOLDERS: Peter Saperstone became Portfolio Manager of
Fidelity Select Telecommunications Portfolio on
October 30, 1998.
Q. HOW DID THE FUND PERFORM, PETER?
A. It was a good year. For the 12 months that ended February 28, 1999,
the fund had a total return of 22.21%, besting the 19.74% return of
the Standard & Poor's 500 Index over the same period. Although the
fund outperformed the S&P 500, it trailed the 30.02% return of the
Goldman Sachs Utilities Index, an index of 136 stocks designed to
measure the performance of companies in the utilities sector.
Q. WHY DID THE FUND BEAT THE S&P 500 BUT TRAIL THE GOLDMAN SACHS
INDEX?
A. Telecommunications stocks in general fared well during the period,
reflecting dynamic growth in that sector recently. For the past
several years, the telecommunications market has grown at more than
twice the rate of the overall economy, which helps to explain why the
fund outperformed the broadly based S&P 500. Poor stock selection in a
few cases and a comparative underweighting of Internet stocks caused
the fund to trail the Goldman Sachs index. The stellar performance of
that index was attributable in part to a roughly 5% weighting in one
of the period's star performers, America Online.
Q. PETER, YOU TOOK OVER THE FUND ON OCTOBER 30, 1998.
CAN YOU COMMENT ON SOME OF THE CHANGES YOU'VE MADE?
A. Sure. I believe in restricting the fund's investments to those
stocks in which I have the most confidence. While fewer holdings tend
to increase short-term volatility in the fund's performance, my aim is
to enhance long-term returns by minimizing the diluting effects of
marginal holdings. Consequently, I reduced the number of holdings in
the fund from about 70 when I took over to approximately 50 as of the
end of the period. I also tended to favor large-capitalization stocks
over small-cap shares. Finally, I marginally increased the allocation
of Internet stocks, but the position is still less than the 7% or so
allocated to Internet shares in the Goldman Sachs index.
Q. WHAT STOCKS PERFORMED WELL FOR THE FUND DURING THE PERIOD?
A. MCI WorldCom helped performance because the stock did well and it
was the fund's largest holding for most of the period. The company
continued to attract investor interest because it was well positioned
to benefit from the fastest-growing segment of the industry - data
communications. Qwest Communications, in many ways a smaller version
of MCI WorldCom, also contributed positively to performance. The
company is building a national network designed to accommodate
state-of-the-art data communication. Another beneficial holding, Cisco
Systems, is a leading supplier of hardware for data and voice
networks.
Q. WHAT STOCKS TURNED IN DISAPPOINTING PERFORMANCES?
A. Tel-Save.com heads the list of disappointments. As the company made
the conversion to distributing long-distance calling services over the
Internet, it experienced lower earnings than investors expected.
Smartalk also hurt the fund's performance. The company suffered from
disappointing earnings attributable to more competition in its prepaid
calling card business. Another weak performer was World Access, which
found it harder to compete against larger rivals in the cellular
telecommunications industry. I sold the fund's holdings in both
Smartalk and World Access.
Q. WHAT'S YOUR OUTLOOK, PETER?
A. My outlook for the telecommunications sector remains positive. In
the short term, we should see overall revenues continue to grow at a
healthy rate, with the majority of that growth coming from the data
services segment of the industry. In the next year or two, the
regional Bell operating companies (RBOCs) are expected to enter the
long-distance market, and the lines between long-distance carriers and
local phone companies will blur further. As the market makes this
transition, there will be some confusion as investors attempt to sort
out the winners and losers. My own view is that the RBOCs may see
their earnings erode as they are forced to open up their local markets
as a prerequisite to participate in the long-distance market. Time
will tell, but I am confident that the fund remains well positioned to
benefit from the segments of the telecommunications sector currently
offering the highest growth potential.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: July 29, 1985
FUND NUMBER: 096
TRADING SYMBOL: FSTCX
SIZE: as of February 28, 1999, more than
$824 million
MANAGER: Peter Saperstone, since October
1998; manager, Fidelity Utilities Fund and
Fidelity Advisor Utilities Growth Fund, since
1998; Fidelity Select Air Transportation
Portfolio and Fidelity Select Defense and
Aerospace Portfolio, 1997-1998; Fidelity
Select Construction and Housing Portfolio,
1996-1997; joined Fidelity in 1995
TELECOMMUNICATIONS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 94.3%
SHARES VALUE (NOTE 1)
BROADCASTING - 7.3%
AlphaNet Telecom, Inc. (a)(c) 1,196,200 $ 8
American Tower Corp. Class A 43,700 1,171,706
(a)
Cablevision Systems Corp. 57,100 3,711,500
Class A (a)
MediaOne Group, Inc. 100,000 5,450,000
NTL, Inc. (a) 76,400 5,935,325
Tele-Communications, Inc. 689,934 43,336,479
(TCI Group) Series A (a)
59,605,018
CELLULAR - 5.6%
AirTouch Communications, Inc. 406,100 36,980,481
(a)
Nextel Communications, Inc. 117,200 3,523,325
Class A (a)
SkyTel Communications, Inc. 31,700 570,600
(a)
Telephone & Data Systems, 87,300 4,386,825
Inc.
45,461,231
COMMUNICATIONS EQUIPMENT -
14.4%
ADC Telecommunications, Inc. 261,900 10,606,950
(a)
Ascend Communications, Inc. 131,000 10,078,813
(a)
Cisco Systems, Inc. (a) 423,500 41,423,594
Intermedia Communications, 579,000 10,494,375
Inc. (a)
Lucent Technologies, Inc. 142,800 14,503,125
Newbridge Networks Corp. (a) 126,700 3,079,689
OY Nokia AB sponsored ADR 206,700 28,033,688
118,220,234
COMPUTER SERVICES & SOFTWARE
- - 5.4%
America Online, Inc. 229,000 20,366,688
Novell, Inc. (a) 159,100 3,082,563
Saville Systems PLC sponsored 163,100 3,251,806
ADR (a)
Yahoo!, Inc. (a) 113,500 17,422,250
44,123,307
COMPUTERS & OFFICE EQUIPMENT
- - 0.6%
Fore Systems, Inc. (a) 340,700 4,940,150
ELECTRICAL EQUIPMENT - 1.1%
ANTEC Corp. (a) 329,300 9,179,238
ELECTRONICS - 3.8%
Motorola, Inc. 445,000 31,261,250
TELEPHONE SERVICES - 56.1%
ALLTEL Corp. 335,300 20,076,088
Ameritech Corp. 259,100 16,938,663
AT&T Corp. 306,547 25,175,172
BCE, Inc. 298,300 12,087,896
Bell Atlantic Corp. 597,300 34,307,419
BellSouth Corp. 50,000 2,312,500
Cable & Wireless PLC ADR 87,300 3,541,106
Cincinnati Bell, Inc. 255,400 5,044,150
Commonwealth Telephone 289,100 9,359,613
Enterprises, Inc. (a)
COMSAT Corp. Series 1 229,600 6,715,800
SHARES VALUE (NOTE 1)
Covad Communications Group, 178,100 $ 7,213,050
Inc. (a)
Frontier Corp. 594,100 21,350,469
Global TeleSystems Group, 26,500 1,470,750
Inc. (a)
GTE Corp. 288,500 18,716,438
MCI WorldCom, Inc. (a) 1,383,003 114,097,743
McLeodUSA, Inc. Class A (a) 463,500 17,844,750
Metromedia Fiber Network, 320,500 13,941,750
Inc. Class A (a)
Nippon Telegraph & Telephone 464 3,811,777
Corp.
Qwest Communications 259,290 15,930,129
International, Inc. (a)
SBC Communications, Inc. 767,000 40,555,125
Sprint Corp. (FON Group) 313,000 26,859,313
Tel-Save.com, Inc. (a) 1,771,550 17,604,778
Telebras sponsored ADR 38,600 2,492,113
PFD-Holdr (a)
U.S. WEST, Inc. 286,500 15,274,031
WinStar Communications, Inc. 180,000 5,670,000
(a)
458,390,623
TOTAL COMMON STOCKS 771,181,051
(Cost $584,642,053)
CASH EQUIVALENTS - 5.7%
Taxable Central Cash Fund (b) 46,400,881 46,400,881
(Cost $46,400,881)
TOTAL INVESTMENT IN $ 817,581,932
SECURITIES - 100%
(Cost $631,042,934)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(c) Affiliated company.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $1,124,377,604 and $1,098,129,165, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $123,641 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $5,316,534. The fund
received cash collateral of $6,740,600.
The fund participated in the interfund lending program as a lender.
The maximum loan and average daily balances during the period for
which loans were outstanding amounted to $32,000,000 and $31,250,000
respectively. The weighted average interest rate was 5.47%. Interest
earned from the interfund lending program amounted to $18,984 and is
included in interest income on the Statement of Operations.
Transactions during the period with companies which are or were
affiliates are as follows:
PURCHASES SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Able Teccom Holdings Corp.
$ 3,157,131 $ 6,930,054 $ - $ -
AlphaNet Telecom, Inc.
54,339 1,434,852 - 8
California Amplifier, Inc.
185,967 1,664,342 - -
SmarTalk TeleServices, Inc.
2,434,493 15,877,925 - -
Tel-Save.com, Inc.
2,648,830 30,187,740 - -
Titan Corp.
263,832 734,200 - -
Viatel, Inc.
- 6,303,500 - -
TOTALS $ 8,744,592 $ 63,132,613 $ - $ 8
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $637,023,529. Net unrealized appreciation
aggregated $180,558,403, of which $216,260,764 related to appreciated
investment securities and $35,702,361 related to depreciated
investment securities.
The fund hereby designates approximately $32,933,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 9% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of the applicable
percentage for the use in preparing 1999 income tax returns.
TELECOMMUNICATIONS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 817,581,932
value (cost $631,042,934) -
See accompanying schedule
Cash 1,243,094
Receivable for investments 55,727,870
sold
Receivable for fund shares 956,110
sold
Dividends receivable 596,315
Interest receivable 225,363
Redemption fees receivable 2,631
Other receivables 138,196
TOTAL ASSETS 876,471,511
LIABILITIES
Payable for investments $ 42,383,267
purchased
Payable for fund shares 2,314,454
redeemed
Accrued management fee 416,632
Other payables and accrued 441,245
expenses
Collateral on securities 6,740,600
loaned, at value
TOTAL LIABILITIES 52,296,198
NET ASSETS $ 824,175,313
Net Assets consist of:
Paid in capital $ 613,532,997
Accumulated undistributed net 24,099,612
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 186,542,704
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 13,326,238 $ 824,175,313
shares outstanding
NET ASSET VALUE and $61.85
redemption price per share
($824,175,313 (divided by)
13,326,238 shares)
Maximum offering price per $63.76
share (100/97.00 of $61.85)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 4,051,599
Dividends
Interest (including income on 4,826,969
securities loaned of
$2,420,214)
TOTAL INCOME 8,878,568
EXPENSES
Management fee $ 4,615,660
Transfer agent fees 4,327,726
Accounting and security 682,512
lending fees
Non-interested trustees' 3,153
compensation
Custodian fees and expenses 70,818
Registration fees 129,839
Audit 29,402
Legal 4,452
Reports to shareholders 79,448
Total expenses before 9,943,010
reductions
Expense reductions (189,988) 9,753,022
NET INVESTMENT INCOME (LOSS) (874,454)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 45,892,397
(including realized loss of
$27,541,180 on sales of
investments in affiliated
issuers)
Foreign currency transactions (56,189) 45,836,208
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 85,585,831
Assets and liabilities in 10,878 85,596,709
foreign currencies
NET GAIN (LOSS) 131,432,917
NET INCREASE (DECREASE) IN $ 130,558,463
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 3,594,841
charges paid to FDC
Sales charges - Retained by $ 3,578,078
FDC
Deferred sales charges $ 12,323
withheld by FDC
Exchange fees withheld by FSC $ 57,437
Expense reductions Directed $ 177,481
brokerage arrangements
Custodian credits 10,290
Transfer agent credits 2,217
$ 189,988
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ (874,454) $ (2,208,196)
income (loss)
Net realized gain (loss) 45,836,208 89,769,920
Change in net unrealized 85,596,709 75,630,156
appreciation (depreciation)
NET INCREASE (DECREASE) IN 130,558,463 163,191,880
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (46,022,800) (57,660,802)
from net realized gains
Share transactions Net 863,829,740 394,333,392
proceeds from sales of shares
Reinvestment of distributions 44,998,804 56,532,142
Cost of shares redeemed (813,636,128) (302,046,680)
NET INCREASE (DECREASE) IN 95,192,416 148,818,854
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 997,935 564,136
TOTAL INCREASE (DECREASE) 180,726,014 254,914,068
IN NET ASSETS
NET ASSETS
Beginning of period 643,449,299 388,535,231
End of period $ 824,175,313 $ 643,449,299
OTHER INFORMATION
Shares
Sold 15,272,906 8,067,245
Issued in reinvestment of 813,871 1,266,807
distributions
Redeemed (14,817,799) (6,572,964)
Net increase (decrease) 1,268,978 2,761,088
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 F 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 53.37 $ 41.80 $ 44.87 $ 38.34 $ 37.10
period
Income from Investment
Operations
Net investment income (loss) C (.06) (.25) .12 D .51 .29
Net realized and unrealized 11.43 18.20 2.92 9.15 2.54
gain (loss)
Total from investment 11.37 17.95 3.04 9.66 2.83
operations
Less Distributions
From net investment income - - (.16) (.39) (.33)
From net realized gain (2.96) (6.44) (5.98) (2.75) (1.27)
Total distributions (2.96) (6.44) (6.14) (3.14) (1.60)
Redemption fees added to paid .07 .06 .03 .01 .01
in capital
Net asset value, end of period $ 61.85 $ 53.37 $ 41.80 $ 44.87 $ 38.34
TOTAL RETURN A, B 22.21% 46.52% 7.85% 25.79% 7.98%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 824,175 $ 643,449 $ 388,535 $ 468,300 $ 369,476
(000 omitted)
Ratio of expenses to average 1.27% 1.51% 1.51% 1.52% 1.56%
net assets
Ratio of expenses to average 1.25% E 1.48% E 1.47% E 1.52% 1.55% E
net assets after expense
reductions
Ratio of net investment (.11)% (.53)% .27% 1.17% .77%
income (loss) to average net
assets
Portfolio turnover rate 150% 157% 175% 89% 107%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING
THE PERIOD. D INVESTMENT
INCOME PER SHARE REFLECTS A
SPECIAL DIVIDEND WHICH
AMOUNTED TO $.07 PER SHARE.
E FMR OR THE FUND HAS
ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE
FUND'S EXPENSES. F FOR THE
YEAR ENDED FEBRUARY 29.
</TABLE>
UTILITIES GROWTH PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT UTILITIES GROWTH 32.17% 168.13% 428.63%
SELECT UTILITIES GROWTH (LOAD 28.13% 160.01% 412.70%
ADJ.)
S&P 500 19.74% 194.91% 459.21%
GS Utilities 30.02% n/a n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. You can compare the fund's returns to the performance of both
the Standard & Poor's 500 Index - a market capitalization-weighted
index of common stocks - and the Goldman Sachs Utilities Index - a
market capitalization-weighted index of 136 stocks designed to measure
the performance of companies in the utilities sector. These benchmarks
include reinvestment of dividends and capital gains, if any, and
exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT UTILITIES GROWTH 32.17% 21.81% 18.12%
SELECT UTILITIES GROWTH (LOAD 28.13% 21.06% 17.76%
ADJ.)
S&P 500 19.74% 24.15% 18.78%
GS Utilities 30.02% n/a n/a
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate
each year.
(checkmark) UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of long-term growth and
short-term volatility. Unlike the broader market,
however, some sectors may not have a history
of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary.
$10,000 OVER 10 YEARS
Utilities Growth S&P 500
00065 SP001
1989/02/28 9700.00 10000.00
1989/03/31 9865.57 10233.00
1989/04/30 10373.06 10764.09
1989/05/31 10866.16 11200.04
1989/06/30 11140.62 11136.20
1989/07/31 11750.71 12141.80
1989/08/31 11802.48 12379.78
1989/09/30 11972.57 12329.02
1989/10/31 11917.10 12042.99
1989/11/30 12309.04 12288.66
1989/12/31 12959.80 12583.59
1990/01/31 12320.13 11739.23
1990/02/28 12297.95 11890.67
1990/03/31 12231.39 12205.77
1990/04/30 11721.13 11900.63
1990/05/31 12331.22 13060.94
1990/06/30 12477.35 12972.12
1990/07/31 12579.78 12930.61
1990/08/31 11889.33 11761.68
1990/09/30 11919.68 11188.89
1990/10/31 12530.46 11140.78
1990/11/30 12860.51 11860.47
1990/12/31 13031.67 12191.38
1991/01/31 12974.21 12722.92
1991/02/28 13533.48 13632.61
1991/03/31 13686.70 13962.52
1991/04/30 13625.41 13996.03
1991/05/31 13629.24 14600.66
1991/06/30 13463.91 13931.95
1991/07/31 13902.09 14581.18
1991/08/31 14220.76 14926.75
1991/09/30 14658.94 14677.48
1991/10/31 14862.09 14874.16
1991/11/30 15033.38 14274.73
1991/12/31 15771.97 15907.76
1992/01/31 15286.49 15611.87
1992/02/29 15174.45 15814.83
1992/03/31 15016.78 15506.44
1992/04/30 15427.57 15962.33
1992/05/31 15726.33 16040.54
1992/06/30 15908.25 15801.54
1992/07/31 16754.12 16447.82
1992/08/31 16745.53 16110.64
1992/09/30 16835.70 16300.75
1992/10/31 16831.40 16357.80
1992/11/30 16947.33 16915.60
1992/12/31 17442.59 17123.66
1993/01/31 17739.29 17267.50
1993/02/28 18651.88 17502.34
1993/03/31 19155.38 17871.64
1993/04/30 19050.69 17439.14
1993/05/31 19091.55 17906.51
1993/06/30 19822.52 17958.44
1993/07/31 20049.53 17886.61
1993/08/31 20921.25 18564.51
1993/09/30 20921.25 18421.56
1993/10/31 20707.86 18802.89
1993/11/30 19695.40 18624.26
1993/12/31 19630.71 18849.62
1994/01/31 20032.94 19490.50
1994/02/28 19124.01 18962.31
1994/03/31 18434.48 18135.55
1994/04/30 18964.76 18367.69
1994/05/31 18586.11 18668.92
1994/06/30 18527.44 18211.53
1994/07/31 19060.76 18808.87
1994/08/31 18986.10 19580.03
1994/09/30 18500.78 19100.32
1994/10/31 18735.44 19530.08
1994/11/30 18058.13 18818.79
1994/12/31 18175.94 19097.87
1995/01/31 18917.70 19593.08
1995/02/28 19164.96 20356.63
1995/03/31 19241.88 20957.35
1995/04/30 19912.61 21574.54
1995/05/31 20220.73 22436.88
1995/06/30 20418.81 22958.09
1995/07/31 20969.04 23719.38
1995/08/31 21502.75 23778.91
1995/09/30 22526.17 24782.38
1995/10/31 22746.26 24693.91
1995/11/30 23246.96 25777.97
1995/12/31 24426.55 26274.46
1996/01/31 24684.32 27168.84
1996/02/29 24112.74 27420.69
1996/03/31 23899.80 27684.75
1996/04/30 24864.78 28092.83
1996/05/31 24882.78 28817.34
1996/06/30 25266.70 28927.14
1996/07/31 24162.93 27649.13
1996/08/31 24168.93 28232.26
1996/09/30 24606.84 29821.17
1996/10/31 25638.62 30643.63
1996/11/30 26844.37 32959.99
1996/12/31 27202.85 32307.05
1997/01/31 28020.79 34325.59
1997/02/28 28485.53 34594.71
1997/03/31 26973.58 33173.21
1997/04/30 27938.99 35153.65
1997/05/31 29775.74 37293.80
1997/06/30 30684.59 38964.57
1997/07/31 31415.47 42064.98
1997/08/31 30004.54 39708.50
1997/09/30 32648.45 41883.33
1997/10/31 32737.43 40484.43
1997/11/30 34720.36 42358.45
1997/12/31 35446.84 43085.75
1998/01/31 36817.44 43562.28
1998/02/28 38797.18 46703.99
1998/03/31 41429.59 49095.70
1998/04/30 40600.94 49589.60
1998/05/31 40112.84 48737.16
1998/06/30 40142.42 50716.86
1998/07/31 41037.27 50176.72
1998/08/31 37546.62 42922.17
1998/09/30 41251.74 45671.77
1998/10/31 43854.93 49386.71
1998/11/30 45548.48 52380.04
1998/12/31 50744.47 55398.18
1999/01/31 52259.98 57714.93
1999/02/26 51270.00 55921.15
IMATRL PRASUN SHR__CHT 19990228 19990309 145353 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Utilities Growth Portfolio on February 28,
1989, and the current 3.00% sales charge was paid. As the chart shows,
by February 28, 1999, the value of the investment would have grown to
$51,270 - a 412.70% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the S&P
500 did over the same period. With dividends and capital gains, if
any, reinvested, the same $10,000 investment would have grown to
$55,921 - a 459.21% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
MCI WorldCom, Inc. 11.3
AT&T Corp. 8.1
Bell Atlantic Corp. 6.0
SBC Communications, Inc. 5.9
AES Corp. 5.2
PG&E Corp. 4.9
AirTouch Communications, Inc. 4.0
Ameritech Corp. 3.6
GTE Corp. 3.5
BellSouth Corp. 3.3
TOP INDUSTRIES AS OF FEBRUARY 28, 1999
% OF FUND'S INVESTMENTS
Telephone Services 55.0%
Electric Utility 26.2%
Cellular 4.5%
Gas 4.2%
Broadcasting 1.7%
All Others 8.4%*
Row: 1, Col: 1, Value: 8.4
Row: 1, Col: 2, Value: 1.7
Row: 1, Col: 3, Value: 4.2
Row: 1, Col: 4, Value: 4.5
Row: 1, Col: 5, Value: 26.2
Row: 1, Col: 6, Value: 55.0
* INCLUDES SHORT-TERM INVESTMENTS
UTILITIES GROWTH PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Jonathan Zang)
Jonathan Zang,
Portfolio Manager
of Fidelity Select
Utilities Growth Portfolio
Q. HOW DID THE FUND PERFORM, JONATHAN?
A. The fund had a good year. For the 12 months that ended February 28,
1999, the fund's total return was 32.17%, compared to 19.74% for the
Standard & Poor's 500 Index. The Goldman Sachs Utilities Index - an
index of 136 stocks designed to measure the performance of companies
in the utilities sector - had a total return of 30.02%.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S STRONG PERFORMANCE AGAINST
ITS BENCHMARKS?
A. The fund's stock selection, especially in the area of long-distance
carriers, helped it outperform the S&P 500. Secondarily, the fund
significantly underweighted the regional Bell operating companies
(RBOCs) during the first half of 1998, when they underperformed the
S&P 500. Shortly after I took over the fund on July 1, 1998, I
substantially increased its holdings of RBOCs. That shift coincided
with renewed strength in the group, as the RBOCs outperformed the S&P
500 for most of the remainder of the period. With respect to the
Goldman Sachs index, the fund was helped by its heavier weighting of
telecommunications stocks and lighter emphasis on electric utilities.
Within the telecommunications sector, overweighting long distance
carriers and competitive local exchange carriers (CLECs) at the
expense of RBOCs was beneficial.
Q. CAN YOU REVIEW YOUR STRATEGY FOR ALLOCATING FUNDS AMONG THE
TELECOMMUNICATIONS, ELECTRIC AND GAS UTILITIES SEGMENTS OF THE FUND?
A. Sure. Telecommunications stocks typically make up the bulk of the
fund's holdings - 62.2% as of the end of the period. This is based on
my assessment of the superior growth potential of telecommunications
companies compared to electric and gas utilities. Electric utilities
and independent power producers accounted for 26.2% of the fund's
holdings at the end of the period. I use electric utilities, in part,
to adjust the risk profile of the fund as market conditions warrant.
For example, when the broader market dropped sharply last fall and
investors flocked to electric utilities for their "safe haven" status,
I took profits on some of the fund's holdings in the sector and
reinvested them in out-of-favor telecom stocks. Gas utilities and
integrated energy companies, on the other hand, are normally a very
small component of the fund - about 5%. They generally don't compare
favorably with opportunities I see in telecommunications and electric
utilities.
Q. WHAT STOCKS DID WELL FOR THE FUND?
A. MCI WorldCom, the fund's largest holding for much of the period,
was a key contributor. The company experienced strong growth in its
data communications business, as well as cost savings from the merger
of WorldCom and MCI. AT&T also performed well. I bought more AT&T
shares around the middle of 1998, after the stock had been driven down
on investor skepticism about the acquisition of cable company TCI
Group. AT&T rebounded strongly in December and January, as investors
reconsidered their initial misgivings.
Q. WHAT ABOUT HOLDINGS THAT FAILED TO MEET YOUR EXPECTATIONS?
A. Tel-Save.com was a disappointment. The former CEO tried to find a
buyer for the company, but no deal transpired. In addition, the
company's exclusive agreement to market long-distance telephone
services through America Online resulted in marketing costs that were
higher than anticipated. Intermedia Communications and e.spire
Communications are both CLECs that failed to execute their growth
strategies according to investors' expectations.
Q. WHAT'S YOUR OUTLOOK, JONATHAN?
A. I continue to see lots of opportunity in the utilities sector.
Deregulation in the United States and privatization abroad are two
powerful forces that are opening up markets worldwide, allowing
well-managed companies to reap the benefits. There are plenty of
opportunities in the stocks of domestic companies. I generally favor
participating in overseas markets indirectly, through U.S. firms with
foreign subsidiaries, rather than investing directly in foreign
companies, which generally entails higher risk. With the
telecommunications industry at a more advanced stage of deregulation,
I think that growth opportunities will continue to be better there
than in other utilities markets.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: December 10, 1981
FUND NUMBER: 065
TRADING SYMBOL: FSUTX
SIZE: as of February 28, 1999, more than
$507 million
MANAGER: Jonathan Zang, since 1998;
analyst, utilities industry, 1997- present;
joined Fidelity in 1997
UTILITIES GROWTH PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.4%
SHARES VALUE (NOTE 1)
BROADCASTING - 1.7%
Tele-Communications, Inc. 139,500 $ 8,762,344
(TCI Group) Series A (a)
CELLULAR - 4.5%
AirTouch Communications, Inc. 225,200 20,507,275
(a)
Vodafone Group PLC sponsored 14,300 2,605,281
ADR
23,112,556
COMMUNICATIONS EQUIPMENT - 1.0%
Intermedia Communications, 279,700 5,069,563
Inc. (a)
ELECTRIC UTILITY - 26.2%
AES Corp. (a) 718,800 26,730,375
CMS Energy Corp. 350,200 14,489,525
Duke Energy Corp. 282,708 16,079,018
Entergy Corp. 403,200 11,390,400
Illinova Corp. 345,800 8,212,750
IPALCO Enterprises, Inc. 234,300 11,231,756
Montana Power Co. 84,900 5,168,288
NIPSCO Industries, Inc. 130,000 3,371,875
PECO Energy Co. 158,800 5,627,475
PG&E Corp. 793,500 24,995,250
Unicom Corp. 184,700 6,568,394
133,865,106
ENGINEERING - 0.2%
Stone & Webster, Inc. 40,000 1,070,000
GAS - 4.2%
Columbia Gas System, Inc. 39,700 2,004,850
Dynegy, Inc. 197,900 2,374,800
Enron Corp. 167,796 10,906,740
MDU Resources Group, Inc. 61,250 1,439,375
Williams Companies, Inc. 120,000 4,440,000
21,165,765
OIL & GAS - 0.6%
Coastal Corp. (The) 100,400 3,212,800
TELEPHONE SERVICES - 55.0%
ALLTEL Corp. 121,700 7,286,788
Ameritech Corp. 283,600 18,540,350
AT&T Corp. 503,483 41,348,541
Bell Atlantic Corp. 533,200 30,625,675
BellSouth Corp. 359,600 16,631,500
Cincinnati Bell, Inc. 214,900 4,244,275
e.spire Communications, Inc. 1,629,400 8,961,700
(a)
Frontier Corp. 100,000 3,593,750
Global TeleSystems Group, 10,600 588,300
Inc. (a)
GTE Corp. 275,100 17,847,113
MCI WorldCom, Inc. (a) 702,583 57,963,095
SHARES VALUE (NOTE 1)
McLeodUSA, Inc. Class A (a) 105,800 $ 4,073,300
Metromedia Fiber Network, 61,200 2,662,200
Inc. Class A (a)
Qwest Communications 210,133 12,910,046
International, Inc. (a)
SBC Communications, Inc. 567,644 30,014,177
Sprint Corp. (FON Group) 144,900 12,434,231
Tel-Save.com, Inc. (a) 799,600 7,946,025
Telebras sponsored ADR 14,800 955,525
PFD-Holdr (a)
WinStar Communications, Inc. 72,600 2,286,900
(a)
280,913,491
TOTAL COMMON STOCKS 477,171,625
(Cost $374,716,602)
CASH EQUIVALENTS - 6.6%
Taxable Central Cash Fund (b) 33,712,144 33,712,144
(Cost $33,712,144)
TOTAL INVESTMENT IN $ 510,883,769
SECURITIES - 100%
(Cost $408,428,746)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $442,537,597 and $465,480,084, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company.
The commissions paid to these affiliated firms were $23,956 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $3,443,324. The fund
received cash collateral of $3,563,400.
INCOME TAX INFORMATION
At February 28, 1999, the aggregate cost of investment securities for
income tax purposes was $409,446,753. Net unrealized appreciation
aggregated $101,437,016, of which $118,578,668 related to appreciated
investment securities and $17,141,652 related to depreciated
investment securities.
The fund hereby designates approximately $46,415,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 24% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2000 of these percentages
for use in preparing 1999 income tax returns.
UTILITIES GROWTH PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 510,883,769
value (cost $408,428,746) -
See accompanying schedule
Receivable for investments 2,118,097
sold
Receivable for fund shares 1,070,924
sold
Dividends receivable 604,398
Interest receivable 128,172
Redemption fees receivable 2,152
Other receivables 123
TOTAL ASSETS 514,807,635
LIABILITIES
Payable for investments $ 1,572,415
purchased
Payable for fund shares 1,341,906
redeemed
Accrued management fee 249,727
Other payables and accrued 239,080
expenses
Collateral on securities 3,563,400
loaned, at value
TOTAL LIABILITIES 6,966,528
NET ASSETS $ 507,841,107
Net Assets consist of:
Paid in capital $ 355,427,419
Undistributed net investment 1,646,086
income
Accumulated undistributed net 48,312,566
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 102,455,036
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 8,247,065 $ 507,841,107
shares outstanding
NET ASSET VALUE and $61.58
redemption price per share
($507,841,107 (divided by)
8,247,065 shares)
Maximum offering price per $63.48
share (100/97.00 of $61.58)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME $ 6,569,955
Dividends
Interest (including income on 1,295,447
securities loaned of
$275,553)
TOTAL INCOME 7,865,402
EXPENSES
Management fee $ 2,410,584
Transfer agent fees 1,894,258
Accounting and security 396,783
lending fees
Non-interested trustees' 2,041
compensation
Custodian fees and expenses 24,893
Registration fees 37,651
Audit 24,062
Legal 2,162
Reports to shareholders 41,649
Miscellaneous 1,999
Total expenses before 4,836,082
reductions
Expense reductions (104,758) 4,731,324
NET INVESTMENT INCOME 3,134,078
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 98,334,683
Foreign currency transactions (6,507) 98,328,176
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 19,577,907
Assets and liabilities in 13 19,577,920
foreign currencies
NET GAIN (LOSS) 117,906,096
NET INCREASE (DECREASE) IN $ 121,040,174
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 1,250,178
charges paid to FDC
Sales charges - Retained by $ 1,246,320
FDC
Deferred sales charges $ 21,580
withheld by FDC
Exchange fees withheld by FSC $ 20,948
Expense reductions Directed $ 94,853
brokerage arrangements
Custodian credits 8,956
Transfer agent credits 949
$ 104,758
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net investment $ 3,134,078 $ 3,040,458
income
Net realized gain (loss) 98,328,176 52,835,863
Change in net unrealized 19,577,920 34,220,552
appreciation (depreciation)
NET INCREASE (DECREASE) IN 121,040,174 90,096,873
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (1,845,471) (3,324,884)
From net investment income
From net realized gain (58,304,043) (43,053,193)
TOTAL DISTRIBUTIONS (60,149,514) (46,378,077)
Share transactions Net 311,901,481 235,594,493
proceeds from sales of shares
Reinvestment of distributions 57,497,817 45,039,264
Cost of shares redeemed (324,713,707) (179,495,059)
NET INCREASE (DECREASE) IN 44,685,591 101,138,698
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 337,629 225,357
TOTAL INCREASE (DECREASE) 105,913,880 145,082,851
IN NET ASSETS
NET ASSETS
Beginning of period 401,927,227 256,844,376
End of period (including $ 507,841,107 $ 401,927,227
undistributed net investment
income of $1,646,086 and
$677,487, respectively)
OTHER INFORMATION
Shares
Sold 5,410,133 4,622,639
Issued in reinvestment of 1,024,484 950,425
distributions
Redeemed (5,700,831) (3,646,680)
Net increase (decrease) 733,786 1,926,384
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996 E 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 53.50 $ 45.97 $ 43.03 $ 34.88 $ 36.61
period
Income from Investment
Operations
Net investment income C .44 .54 .73 1.10 1.13
Net realized and unrealized 15.77 14.83 6.41 7.86 (1.17)
gain (loss)
Total from investment 16.21 15.37 7.14 8.96 (.04)
operations
Less Distributions
From net investment income (.25) (.58) (.70) (.84) (1.05)
From net realized gain (7.93) (7.30) (3.54) - (.67)
Total distributions (8.18) (7.88) (4.24) (.84) (1.72)
Redemption fees added to paid .05 .04 .04 .03 .03
in capital
Net asset value, end of period $ 61.58 $ 53.50 $ 45.97 $ 43.03 $ 34.88
TOTAL RETURN A, B 32.17% 36.20% 18.13% 25.82% .21%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 507,841 $ 401,927 $ 256,844 $ 266,768 $ 237,635
(000 omitted)
Ratio of expenses to average 1.18% 1.33% 1.47% 1.39% 1.43%
net assets
Ratio of expenses to average 1.16% D 1.30% D 1.46% D 1.38% D 1.42% D
net assets after expense
reductions
Ratio of net investment .77% 1.11% 1.73% 2.76% 3.24%
income to average net assets
Portfolio turnover rate 113% 78% 31% 65% 24%
A THE TOTAL RETURNS WOULD
HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN. B
TOTAL RETURNS DO NOT INCLUDE
THE ONE TIME SALES CHARGE. C
NET INVESTMENT INCOME PER
SHARE HAS BEEN CALCULATED
BASED ON AVERAGE SHARES
OUTSTANDING DURING THE
PERIOD. D FMR OR THE FUND
HAS ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE
FUND'S EXPENSES. E FOR THE
YEAR ENDED FEBRUARY 29.
</TABLE>
MONEY MARKET PORTFOLIO
PERFORMANCE
To evaluate a money market fund's historical performance, you can look
at either total return or yield. Total return reflects the change in
the value of an investment, assuming reinvestment of the fund's
dividend income. Yield measures the income paid by a fund. Since a
money market fund tries to maintain a $1 share price, yield is an
important measure of performance. Load adjusted returns include a
3.00% sales charge.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT MONEY MARKET 5.08% 27.87% 67.31%
SELECT MONEY MARKET (LOAD ADJ.) 1.93% 24.03% 62.29%
All Taxable Money Market 4.93% 27.22% 66.07%
Funds Average
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be
$1,050 without including the effect of the 3% sales charge. To measure
how the fund's performance stacked up against its peers, you can
compare it to the all taxable money market funds average, which
reflects the performance of 916 taxable money market funds with
similar objectives tracked by IBC Financial Data, Inc. over the past
one year.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SELECT MONEY MARKET 5.08% 5.04% 5.28%
SELECT MONEY MARKET (LOAD ADJ.) 1.93% 4.40% 4.96%
All Taxable Money Market 4.93% 4.93% 5.24%
Funds Average
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and
show you what would have happened if the fund had performed at a
constant rate each year.
YIELDS
3/2/99 12/1/98 9/1/98 6/2/98 3/3/98
SELECT
MONEY MARKET 4.71% 4.71% 5.10% 5.00% 5.27%
All Taxable
Money Market
Funds Average 4.37% 4.57% 5.03% 5.02% 5.07%
3/3/99 12/2/98 9/2/98 6/3/98 2/25/98
MMDA 2.16% 2.32% 2.55% 2.51% 2.58%
Row: 1, Col: 1, Value: 4.71
Row: 1, Col: 2, Value: 4.37
Row: 1, Col: 3, Value: 2.16
Row: 2, Col: 1, Value: 4.71
Row: 2, Col: 2, Value: 4.57
Row: 2, Col: 3, Value: 2.32
Row: 3, Col: 1, Value: 5.1
Row: 3, Col: 2, Value: 5.03
Row: 3, Col: 3, Value: 2.55
Row: 4, Col: 1, Value: 5.0
Row: 4, Col: 2, Value: 5.02
Row: 4, Col: 3, Value: 2.51
Row: 5, Col: 1, Value: 5.270000000000001
Row: 5, Col: 2, Value: 5.07
Row: 5, Col: 3, Value: 2.58
6% -
4% -
2% -
0%
Money Market
All Taxable
Money Market
Funds Average
MMDA
YIELD refers to the income paid by the fund over a given period.
Yields for money market funds are usually for seven-day periods,
expressed as annual percentage rates. A yield that assumes income
earned is reinvested or compounded is called an effective yield. The
chart above shows the fund's current seven-day yield at quarterly
intervals over the past year. You can compare these yields to the all
taxable money market funds average and the bank money market deposit
account average (MMDA). Figures for the all taxable money market funds
average are from IBC Financial Data, Inc. The MMDA average is supplied
by BANK RATE MONITOR.(Trademark)
(checkmark) COMPARING PERFORMANCE
There are some important differences between
a bank money market deposit account (MMDA)
and a money market fund. First, the U.S.
government neither insures nor guarantees a
money market fund. In fact, there is no assurance
that a money market fund will maintain a $1 share
price. Second, a money market fund returns to its
shareholders income earned by the fund's
investments after expenses. This is in contrast to
banks, which set their MMDA rates periodically
based on current interest rates, competitors'
rates, and internal criteria.
MONEY MARKET PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of John Todd)
John Todd,
Portfolio Manager
of Select Money
Market Portfolio
Q. WHAT WAS THE INVESTMENT ENVIRONMENT LIKE OVER THE PAST YEAR, JOHN?
A. At the beginning of the 12-month period ending February 28, 1999,
economic growth was strong in the U.S. but inflation remained benign.
Weakness abroad - especially in Asia - translated into cheaper imports
into the U.S. that helped stabilize inflation. However, when that
slowdown in growth overseas started to negatively affect U.S. economic
growth in the second quarter of 1998, market sentiment shifted. Market
observers revised downward their expectations for economic growth and
corporate profits. Then, problems in Russia in August 1998 sparked
declines in stock market indexes that had reached record highs earlier
in the third quarter, and caused the yield differential between U.S.
Treasuries and all other debt obligations to widen considerably.
Falling commodity prices and other issues caused several countries'
currencies to decline and their interest rates to climb. Fears arose
that these problems would start to erode U.S. economic growth and lead
to further problems in the capital markets, which were rocked in the
fall by the well-publicized problems encountered by several highly
leveraged hedge funds.
Q. WHAT WAS THE FEDERAL RESERVE BOARD'S ROLE AS THESE EVENTS
DEVELOPED?
A. Up until mid-July, it was commonly believed that the Fed might
raise the rate banks charge each other for overnight loans - the fed
funds rate - to slow growth and control inflation. The Fed maintained
a bias toward raising rates until its September meeting, when it cut
the fed funds rate from 5.50% to 5.25%. The Fed acted in an effort to
head off slower growth, at a time when we saw further deterioration in
the financial markets and growing liquidity problems in the
fixed-income markets. Acting out of character by making an
announcement between meetings of its Open Market Committee, the Fed
cut the fed funds rate to 5.00% on October 15. The Fed further reduced
that rate to 4.75% on November 17, marking the third reduction in that
rate in just seven weeks. These moves came in response to continued
deterioration in the fixed-income markets, and were an attempt on the
Fed's part to avoid a "credit crunch" - where lenders hold back from
lending to even the most creditworthy borrowers. The financial markets
have since rebounded and found stability, as witnessed by the muted
reaction to the recent currency crisis in Brazil.
Q. WHAT STRATEGY DID YOU PURSUE WITH THE FUND?
A. At the beginning of the period, the best opportunities were found
on either end of the maturity spectrum, so I pursued a "barbell
strategy" - focusing on investments with very short maturities on the
one hand, and one-year securities on the other. When the economic
outlook deteriorated and called for declining interest rates, I looked
for opportunities to maintain the fund's average maturity, shifting
investments from very short-term and one-year securities to those in
the three- to six-month range. Those maturities offered the most
attractive rates and were also appealing from a credit standpoint,
given the uncertainty in the market about different issuers' exposure
to hedge fund problems. The fund also took advantage of seasonally
high yields for short-term securities at the end of 1998, and has
since emphasized instruments in the two- to four-month range.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on February 28, 1999, was 4.76%,
compared to 5.26% one year ago. For the 12 months that ended February
28, 1999, the fund had a total return of 5.08%, compared to 4.93% for
the all taxable money market funds average, according to IBC Financial
Data, Inc.
Q. WHAT'S YOUR OUTLOOK?
A. Inflation continues to be relatively dormant. While domestic
consumption in the U.S. has been strong, it has not generated
increased prices in services and products where intense competition
has held pricing power in check. Assuming inflation remains benign,
the Fed is likely to keep its monetary policy unchanged over the near
term. The Fed continues to expect that economic growth will moderate,
a forecast it has had in place for the past year and a half. If
incoming data does not confirm this view, the Fed may move to increase
short-term rates in order to reduce inflationary pressures by negating
some of the economic stimulus it provided the economy last fall.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET OR OTHER CONDITIONS. FOR MORE INFORMATION, SEE PAGE A-3.
(checkmark) FUND FACTS
START DATE: August 30, 1985
FUND NUMBER: 085
TRADING SYMBOL: FSLXX
SIZE: as of February 28, 1999, more than
$1.1 billion
MANAGER: John Todd, since 1991; manager,
various Fidelity and Spartan taxable money
market funds; joined Fidelity in 1981
MONEY MARKET PORTFOLIO
INVESTMENTS FEBRUARY 28, 1999
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CERTIFICATES OF DEPOSIT - 22.9%
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT VALUE (NOTE 1)
PURCHASE
DOMESTIC CERTIFICATES OF
DEPOSIT - 1.8%
First Union National Bank of
North Carolina
3/9/99 5.42% $ 10,000,000 $ 10,000,000
4/12/99 5.44 10,000,000 10,000,000
20,000,000
LONDON BRANCH, EURODOLLAR,
DOMESTIC BANKS - 0.9%
NationsBank NA
3/2/99 5.50 10,000,000 10,000,000
LONDON BRANCH, EURODOLLAR,
FOREIGN BANKS - 4.2%
Abbey National Treasury
Services PLC
3/15/99 5.15 10,000,000 10,000,000
Bank of Scotland Treasury
Services
2/16/00 5.14 5,000,000 4,998,141
Barclays Bank PLC
3/25/99 5.50 11,000,000 11,000,274
Bayerische Hypo-und
Vereinsbank AG
5/12/99 4.89 5,000,000 5,000,000
Halifax PLC
8/31/99 4.98 5,000,000 5,000,000
Westdeutsche Landesbank
Girozentrale
5/17/99 4.90 10,000,000 10,000,000
45,998,415
NEW YORK BRANCH, YANKEE
DOLLAR, FOREIGN BANKS - 16.0%
ABN-AMRO Bank NV
6/7/99 5.76 5,000,000 4,999,229
Bank of Scotland Treasury
Services
4/2/99 4.88 (b) 5,000,000 4,997,500
Banque Nationale de Paris
3/17/99 5.32 10,000,000 10,000,000
Barclays Bank PLC
3/23/99 5.45 10,000,000 10,000,208
Bayerische Hypo-und
Vereinsbank AG
3/8/99 4.85 15,000,000 15,000,000
3/10/99 5.40 5,000,000 5,000,000
Credit Agricole Indosuez
4/30/99 5.87 5,000,000 4,999,528
Deutsche Bank AG
2/16/00 5.12 10,000,000 9,995,352
Landesbank Hessen-Thuringen
4/12/99 5.07 5,000,000 5,000,057
Lloyds Bank PLC
5/17/99 4.88 40,000,000 40,000,000
National Westminster Bank PLC
6/7/99 5.75 5,000,000 4,999,132
RaboBank Nederland Coop.
Central
6/4/99 5.75 10,000,000 9,998,255
9/2/99 5.00 5,000,000 5,000,000
Societe Generale, France
3/22/99 5.15 5,000,000 5,000,909
3/22/99 5.20 5,000,000 5,000,880
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT VALUE (NOTE 1)
PURCHASE
Swiss Bank Corp.
4/30/99 5.87% $ 5,000,000 $ 4,999,528
6/3/99 5.75 10,000,000 9,998,273
Toronto Dominion Bank
6/4/99 5.75 10,000,000 9,998,255
Westdeutsche Landesbank
Girozentrale
3/17/99 5.14 10,000,000 10,000,000
174,987,106
TOTAL CERTIFICATES OF DEPOSIT 250,985,521
COMMERCIAL PAPER - 51.0%
AVCO Financial Services, Inc.
3/15/99 5.15 9,000,000 8,982,220
Asset Securitization Coop.
Corp.
3/15/99 5.28 3,000,000 2,993,933
3/19/99 5.17 3,000,000 2,992,350
4/15/99 5.14 5,000,000 4,968,438
4/15/99 5.17 5,000,000 4,968,250
Associates Corp. of North
America
4/6/99 4.86 5,000,000 4,975,900
Associates First Capital Corp.
3/24/99 5.15 7,000,000 6,977,281
CIESCO L.P.
4/16/99 4.88 40,000,000 39,753,644
Centric Capital Corp.
3/22/99 4.89 5,000,000 4,985,796
5/14/99 4.90 5,000,000 4,950,153
Citibank Credit Card Master
Trust I (Dakota Certificate
Program)
5/13/99 4.89 25,000,000 24,755,146
5/14/99 4.90 5,000,000 4,950,256
Commonwealth Bank of Australia
3/4/99 4.86 10,000,000 9,995,975
8/10/99 4.92 4,000,000 3,913,600
8/16/99 4.95 5,000,000 4,887,300
Daimler-Chrysler North
America Corp.
4/20/99 5.14 8,260,000 8,202,065
4/26/99 5.07 5,000,000 4,961,267
5/20/99 4.91 12,000,000 11,870,667
5/26/99 4.90 14,000,000 13,838,129
Delaware Funding Corp.
3/9/99 5.21 30,396,000 30,361,213
3/16/99 4.91 2,325,000 2,320,253
Deutsche Bank Financial, Inc.
5/10/99 4.90 40,000,000 39,623,556
Dresdner US Finance, Inc.
3/10/99 5.16 5,000,000 4,993,625
Enterprise Funding Corp.
5/19/99 4.91 9,856,000 9,751,102
COMMERCIAL PAPER - CONTINUED
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT VALUE (NOTE 1)
PURCHASE
Falcon Asset Securitization
3/9/99 5.18% $ 25,355,000 $ 25,326,152
3/11/99 4.89 6,880,000 6,870,712
3/22/99 5.22 4,310,000 4,297,052
Ford Motor Credit Co.
3/5/99 5.18 30,000,000 29,982,967
4/29/99 4.87 10,000,000 9,921,333
General Electric Capital Corp.
7/26/99 4.93 30,000,000 29,409,550
General Motors Acceptance Corp.
5/19/99 4.90 5,000,000 4,946,894
Kitty Hawk Funding Corp.
3/12/99 4.88 1,399,000 1,396,927
4/15/99 4.90 25,000,000 24,848,125
Lehman Brothers Holdings, Inc.
3/9/99 5.15 3,000,000 2,996,587
3/17/99 5.16 3,000,000 2,993,173
MCI WorldCom, Inc.
3/26/99 5.54 2,000,000 1,992,431
3/30/99 5.02 3,000,000 2,987,917
5/5/99 5.02 2,000,000 1,982,125
National Australia Funding,
Inc.
3/10/99 5.41 10,000,000 9,986,825
Nationwide Building Society
5/11/99 4.91 41,500,000 41,103,041
New Center Asset Trust
3/8/99 5.17 5,000,000 4,995,042
4/22/99 4.87 25,000,000 24,826,125
Newport Funding Corp.
5/19/99 4.92 5,000,000 4,946,675
Nordbanken, North America, Inc.
3/1/99 5.26 5,000,000 5,000,000
3/10/99 5.15 2,000,000 1,997,460
Norddeutsche Landesbank
Girozentrale
8/5/99 4.91 10,000,000 9,791,103
Norfolk Southern Corp.
3/4/99 5.02 3,000,000 2,998,750
Preferred Receivables Funding
Corp.
3/3/99 5.21 5,000,000 4,998,569
3/5/99 5.23 6,800,000 6,796,094
3/16/99 4.91 5,000,000 4,989,854
4/15/99 4.86 1,670,000 1,659,959
Tyco International Group SA
3/25/99 5.04 5,000,000 4,983,333
UBS Finance (Delaware), Inc.
4/5/99 5.12 20,000,000 19,902,194
TOTAL COMMERCIAL PAPER 559,899,088
FEDERAL AGENCIES - 10.7%
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT VALUE (NOTE 1)
PURCHASE
FANNIE MAE - 3.2%
Discount Notes - 3.2%
5/13/99 4.81% $ 35,000,000 $ 34,662,527
FEDERAL HOME LOAN BANK - 4.3%
Discount Notes - 4.3%
5/12/99 4.81 48,000,000 47,543,998
FREDDIE MAC - 3.2%
Discount Notes - 3.2%
5/20/99 4.81 35,000,000 34,630,556
TOTAL FEDERAL AGENCIES 116,837,081
BANK NOTES - 7.3%
First Union National Bank of
North Carolina
3/1/99 4.99 (b) 10,000,000 10,000,000
3/1/99 5.50 15,000,000 15,000,000
NationsBank NA
3/17/99 5.30 10,000,000 10,000,000
4/13/99 5.05 20,000,000 20,000,000
9/8/99 5.01 25,000,000 25,000,000
TOTAL BANK NOTES 80,000,000
MASTER NOTES - 1.8%
Goldman Sachs Group L.P.
3/8/99 5.30 (b) 5,000,000 5,000,000
J.P. Morgan Securities, Inc.
3/5/99 4.91 (b) 15,000,000 15,000,000
TOTAL MASTER NOTES 20,000,000
MEDIUM-TERM NOTES - 5.0%
Bishops Gate Resources
Mortgage Trust
3/1/99 5.14 (b) 2,000,000 2,000,000
General Motors Acceptance Corp.
3/16/99 5.22 28,000,000 27,989,618
Goldman Sachs Group L.P.
4/7/99 5.26 (b)(c) 4,000,000 4,000,000
Merrill Lynch & Co., Inc.
3/4/99 5.21 (b) 5,000,000 4,999,745
Morgan Guaranty Trust Co., NY
3/29/99 4.89 (b) 10,000,000 9,997,208
Norwest Corp.
4/22/99 4.99 (b) 4,000,000 4,000,000
Premier Auto Trust
6/8/99 5.41 1,787,018 1,786,912
TOTAL MEDIUM-TERM NOTES 54,773,483
SHORT-TERM NOTES - 0.9%
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT VALUE (NOTE 1)
PURCHASE
Capital One Funding Corp.
(1998-B)
3/5/99 4.97% (b) $ 3,863,000 $ 3,863,000
SMM Trust (1998-I)
3/29/99 4.94 (a)(b) 2,000,000 2,000,000
Strategic Money Market Trust
(1998-B)
3/5/99 4.94 (a)(b) 4,000,000 4,000,000
TOTAL SHORT-TERM NOTES 9,863,000
</TABLE>
REPURCHASE AGREEMENTS - 0.4%
MATURITY AMOUNT
In a joint trading account $ 4,349,761 4,348,000
(U.S. Government
Obligations) dated 2/26/99
due 3/1/99 At 4.86%
TOTAL INVESTMENT IN $ 1,096,706,173
SECURITIES - 100%
Total Cost for Income Tax Purposes $ 1,096,706,173
LEGEND
(a) Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in
transactions exempt from registration, normally to qualified
institutional buyers. At the period end, the value of these securities
amounted to $6,000,000 or 0.5% of net assets.
(b) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end. The due dates on these types of
securities reflects the next interest rate reset date or, when
applicable, the final maturity date.
(c) Restricted securities - Investment in securities not registered
under the Securities Act of 1933.
SECURITY ACQUISITION DATE COST
Goldman Sachs Group L.P. 12/7/98 $ 4,000,000
5.26%, 4/7/99
OTHER INFORMATION
The fund invested in securities that are not registered under the
Securities Act of 1933. These securities are subject to legal or
contractual restrictions on resale. At the end of the period,
restricted securities (excluding 144A issues) amounted to $4,000,000
and 0.4% of net assets.
MONEY MARKET PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
ASSETS
Investment in securities, at $ 1,096,706,173
value (including repurchase
agreements of $4,348,000) -
See accompanying schedule
Receivable for fund shares 56,892,192
sold
Interest receivable 7,249,940
Prepaid expenses 46,521
TOTAL ASSETS 1,160,894,826
LIABILITIES
Payable to custodian bank $ 7,589
Payable for investments 9,997,500
purchased
Payable for fund shares 24,110,193
redeemed
Distributions payable 300,137
Accrued management fee 126,721
Other payables and accrued 179,124
expenses
TOTAL LIABILITIES 34,721,264
NET ASSETS $ 1,126,173,562
Net Assets consist of:
Paid in capital $ 1,126,173,562
NET ASSETS, for 1,126,106,672 $ 1,126,173,562
shares outstanding
NET ASSET VALUE, offering $1.00
price and redemption price
per share ($1,126,173,562
(divided by) 1,126,106,672
shares)
Maximum offering price per $1.03
share (100/97.00 of $1.00)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
INTEREST INCOME $ 52,463,460
EXPENSES
Management fee $ 1,853,858
Transfer agent fees 2,010,926
Accounting fees and expenses 120,261
Non-interested trustees' 3,711
compensation
Custodian fees and expenses 19,989
Registration fees 599,928
Audit 35,570
Legal 5,015
Reports to shareholders 53,674
Miscellaneous 1,085
Total expenses before 4,704,017
reductions
Expense reductions (9,932) 4,694,085
NET INTEREST INCOME 47,769,375
NET REALIZED GAIN (LOSS) ON 54,995
INVESTMENTS
NET INCREASE IN NET ASSETS $ 47,824,370
RESULTING FROM OPERATIONS
OTHER INFORMATION Sales $ 1,708,692
charges paid to FDC
Sales charges - Retained by $ 1,671,903
FDC
Deferred sales charges $ 67,970
withheld by FDC
Expense reductions $ 4,200
Custodian credits
Transfer agent credits 5,732
$ 9,932
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 28, 1999 YEAR ENDED FEBRUARY 28, 1998
ASSETS
Operations Net interest income $ 47,769,375 $ 41,842,077
Net realized gain (loss) 54,995 (6,232)
NET INCREASE (DECREASE) IN 47,824,370 41,835,845
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (47,769,375) (41,842,077)
from net interest income
Share transactions at net 6,779,151,867 7,445,369,611
asset value of $1.00 per
share Proceeds from sales of
shares
Reinvestment of 42,982,213 38,682,466
distributions from net
interest income
Cost of shares redeemed (6,280,934,055) (7,747,295,187)
NET INCREASE (DECREASE) IN 541,200,025 (263,243,110)
NET ASSETS AND SHARES
RESULTING FROM SHARE
TRANSACTIONS
TOTAL INCREASE (DECREASE) 541,255,020 (263,249,342)
IN NET ASSETS
NET ASSETS
Beginning of period 584,918,542 848,167,884
End of period $ 1,126,173,562 $ 584,918,542
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED FEBRUARY 28, 1999 1998 1997 1996C 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
period
Income from Investment .050 .051 .049 .054 .042
Operations Net interest
income
Less Distributions
From net interest income (.050) (.051) (.049) (.054) (.042)
Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
TOTAL RETURN A 5.08% 5.26% 5.02% 5.56% 4.28%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,126,174 $ 584,919 $ 848,168 $ 610,821 $ 573,144
(000 omitted)
Ratio of expenses to average .50% .56% .56% .59% .65%
net assets
Ratio of expenses to average .49% B .56% .56% .59% .65%
net assets after expense
reductions
Ratio of net interest income 5.03% 5.13% 4.92% 5.39% 4.19%
to average net assets
</TABLE>
A TOTAL RETURNS DO NOT
INCLUDE THE ONE TIME SALES
CHARGE.
B FMR OR THE FUND HAS ENTERED
INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A
PORTION OF THE FUND'S
EXPENSES.
C FOR THE YEAR ENDED FEBRUARY
29.
NOTES TO FINANCIAL STATEMENTS
For the period ended February 28, 1999
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Select Portfolios (the trust) is registered under the
Investment Company Act of 1940, as amended (the 1940 Act), as an
open-end management investment company organized as a Massachusetts
business trust. The trust has thirty-nine equity funds (the fund or
the funds) which invest primarily in securities of companies whose
principal business activities fall within specific industries, and a
money market fund which invests in high quality money market
instruments. Each fund is authorized to issue an unlimited number of
shares. The Gold Portfolio (formerly American Gold Portfolio),
Precious Metals and Minerals Portfolio and Natural Resources Portfolio
may also invest in certain precious metals. The financial statements
have been prepared in conformity with generally accepted accounting
principles which require management to make certain estimates and
assumptions at the date of the financial statements. The following
summarizes the significant accounting policies of the funds:
SECURITY VALUATION:
EQUITY FUNDS. Securities for which exchange quotations are readily
available are valued at the last sale price, or if no sale price, at
the closing bid price. Foreign securities are valued based on
quotations from the principal market in which such securities are
normally traded. If trading or events occurring in other markets after
the close of the principal market in which foreign securities are
traded, and before the close of business of the fund, are expected to
materially affect the value of those securities, then they are valued
at their fair value taking this trading or these events into account.
Fair value is determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
Securities (including restricted securities) for which exchange
quotations are not readily available (and in certain cases debt
securities which trade on an exchange) are valued primarily using
dealer-supplied valuations or at their fair value. Short-term
securities with remaining maturities of sixty days or less for which
quotations are not readily available are valued at amortized cost or
original cost plus accrued interest, both of which approximate current
value. Direct investments in precious metals in the form of bullion
are valued at the most recent bid price quoted by a major bank on the
New York Commodities Exchange.
MONEY MARKET FUND. As permitted under Rule 2a-7 of the 1940 Act, and
certain conditions therein, securities are valued initially at cost
and thereafter assume a constant amortization to maturity of any
discount or premium.
FOREIGN CURRENCY TRANSLATION. The accounting records of the funds are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Purchase
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
and settlement date on purchases and sales of securities. The effects
of changes in foreign currency exchange rates on investments in
securities are included with the net realized and unrealized gain or
loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, each fund (except for
Medical Equipment and Systems Portfolio) is not subject to U.S.
federal income taxes to the extent that it distributes substantially
all of its taxable income for its fiscal year. Each fund may be
subject to foreign taxes on income and gains on investments which are
accrued based upon each fund's understanding of the tax rules and
regulations that exist in the markets in which they invest. Each fund
accrues such taxes as applicable.
Medical Equipment and Systems Portfolio intends to qualify as a
regulated investment company under Subchapter M of the Internal
Revenue Code. By so qualifying, the fund will not be subject to income
taxes to the extent that it distributes substantially all of its
taxable income for the fiscal year.
The schedules of investments include information regarding income
taxes under the caption "Income Tax Information."
INVESTMENT INCOME:
EQUITY FUNDS. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend
date may have passed, are recorded as soon as the funds are informed
of the ex-dividend date. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the
securities received. Interest income is accrued as earned. Investment
income is recorded net of foreign taxes withheld where recovery of
such taxes is uncertain.
MONEY MARKET FUND. Interest income, which includes amortization of
premium and accretion of discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DEFERRED TRUSTEE COMPENSATION. Under a Deferred Compensation Plan (the
Plan) non-interested Trustees must defer receipt of a portion of, and
may elect to defer receipt of an additional portion of, their annual
compensation. Deferred amounts are treated as though equivalent dollar
amounts had been invested in shares of the fund or are invested in a
cross-section of other Fidelity funds. Deferred amounts remain in the
fund until distributed in accordance with the Plan.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid
monthly from net interest income for the money market fund.
Distributions are recorded on the ex-dividend date for all other
funds.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for litigation proceeds, foreign currency transactions,
passive foreign investment companies (PFIC), market discount,
partnerships, non-taxable dividends, net operating losses, capital
loss carryforwards, and losses deferred due to wash sales and excise
tax regulations. Certain funds also utilized earnings and profits
distributed to shareholders on redemption of shares as a part of the
dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income, distributions in excess of net
investment income, accumulated net investment loss and accumulated
undistributed net realized gain (loss) on investments and foreign
currency transactions may include temporary book and tax basis
differences that will reverse in a subsequent period. Any taxable
income or gain remaining at fiscal year end is distributed in the
following year.
TRADING (REDEMPTION) FEES. Shares redeemed (including exchanges) from
an equity fund are subject to trading fees. Shares held less than 30
days are subject to a trading fee equal to .75% of the net asset value
of shares redeemed. Shares held 30 days or more are subject to a
trading fee equal to the lesser of $7.50 or .75% of the net asset
value of shares redeemed. The fees, which are retained by the fund,
are accounted for as an addition to paid in capital. Shareholders are
also subject to an additional $7.50 fee for shares exchanged into
another Fidelity fund (see note 4).
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. Certain funds use foreign currency
contracts to facilitate transactions in foreign-denominated
securities. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at
the time of each trade.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the funds, along with
other affiliated entities of FMR, may transfer uninvested cash
balances into one or more joint trading accounts. These balances are
invested in one or more repurchase agreements for U.S. Treasury or
Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the funds, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the funds' investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the funds may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by Fidelity Investments Money Management, Inc.
(FIMM), an affiliate of FMR. The Cash Fund is an open-end money market
fund available only to investment companies and other accounts managed
by FMR and its affiliates. The Cash Fund seeks preservation of
capital, liquidity, and current income by investing in U.S. Treasury
securities and repurchase agreements for these securities. Income
distributions from the Cash Fund are declared daily and paid monthly
from net interest income. Income distributions earned by the funds are
recorded as interest income in the accompanying financial statements.
INTERFUND LENDING PROGRAM. Pursuant to an Exemptive Order issued by
the SEC, the funds, along with other registered investment companies
having management contracts with FMR, may participate in an interfund
lending program. This program provides an alternative credit facility
allowing the funds to borrow from, or lend money to, other
participating funds. Information regarding each fund's participation
in the program is included under the caption "Other Information" at
the end of each applicable fund's schedule of investments.
RESTRICTED SECURITIES. Certain funds are permitted to invest in
securities that are subject to legal or contractual restrictions on
resale. These securities generally may be resold in transactions
exempt from registration or to the public if the securities are
registered. Disposal of these securities may involve time-consuming
negotiations and expense, and prompt sale at an acceptable price may
be difficult. Information regarding restricted securities is included
under the caption "Other Information" at the end of each applicable
fund's schedule of investments.
3. PURCHASES AND SALES OF INVESTMENTS.
Information regarding purchases and sales of securities (other than
short-term securities), is included under the caption "Other
Information" at the end of each applicable fund's schedule of
investments.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, FMR receives a
monthly fee.
For each equity fund, the monthly fee is calculated on the basis of a
group fee rate plus a fixed individual fund fee rate applied to the
average net assets of each fund. The group fee rate is the weighted
average of a series of rates and is based on the monthly average net
assets of all the mutual funds advised by FMR. The rates ranged from
.2500% to .5200% for the period. The annual individual fund fee rate
is .30%. In the event that these rates were lower than the contractual
rates in effect during the period, FMR voluntarily
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
implemented the above rates, as they resulted in the same or a lower
management fee. For the period, the management fees were equivalent to
an annual rate that ranged from .58% to .60% of average net assets for
the equity funds.
For the money market fund, FMR receives a monthly fee that is
calculated on the basis of a group fee rate plus a fixed individual
fund fee rate applied to the average net assets of the fund and an
income-based fee. The group fee rate is the weighted average of a
series of rates and is based on the monthly average net assets of all
the mutual funds advised by FMR. The rates ranged from .1100% to
.3700% for the period. The annual individual fund fee rate is .03%. In
the event that these rates were lower than the contractual rates in
effect during the period, FMR voluntarily implemented the above rates,
as they resulted in the same or a lower management fee. The
income-based fee is added only when the fund's gross yield exceeds 5%.
At that time, the fee would equal 6% of that portion of the fund's
gross income that represents a gross yield of more than 5% per year.
The maximum income-based component is .24% of average net assets. For
the period, the management fee was equivalent to an annual rate of
.20% of the fund's average net assets. The income-based portion of
this fee was equal to $298,684 or an annual rate of .03% of the fund's
average net assets.
SUB-ADVISER FEE. As the money market fund's investment sub-adviser,
FIMM, a wholly owned subsidiary of FMR, receives a fee from FMR of 50%
of the management fee payable to FMR. The fee is paid prior to any
voluntary expense reimbursements which may be in effect.
SALES LOAD. Fidelity Distributors Corporation (FDC), an affiliate of
FMR, is the general distributor of the fund. FDC receives a sales
charge of up to 3% for selling shares of each fund. A portion of these
sales charges are reallowed to financial intermediaries. Prior to
October 12, 1990, FDC received a sales charge of up to 2% and a 1%
deferred sales charge. Shares purchased prior to October 12, 1990, are
subject to a 1% deferred sales charge upon redemption or exchange to
any other Fidelity Fund (other than Select funds). All deferred sales
charges are retained by FDC. The amounts received and retained by FDC
for sales charges and deferred sales charges are shown under the
caption "Other Information" on each fund's Statement of Operations.
TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an
affiliate of FMR, is the funds' transfer, dividend disbursing and
shareholder servicing agent. FSC receives account fees and asset-based
fees that vary according to account size and type of account. FSC pays
for typesetting, printing and mailing of all shareholder reports,
except proxy statements.
ACCOUNTING AND SECURITY LENDING FEES. FSC maintains each fund's
accounting records and administers the security lending program. The
security lending fee is based on the number and duration of lending
transactions. The accounting fee is based on the level of average net
assets for the month plus out-of-pocket expenses.
MONEY MARKET INSURANCE. Pursuant to an Exemptive Order issued by the
SEC, the money market fund, along with other money market funds
advised by FMR or its affiliates, has entered into insurance
agreements with FIDFUNDS Mutual Limited (FIDFUNDS), an affiliated
mutual insurance company, effective January 1, 1999. FIDFUNDS provides
limited coverage for certain loss events including issuer default as
to payment of principal or interest and bankruptcy or insolvency of a
credit enhancement provider. The insurance does not cover losses
resulting from changes in interest rates, ratings downgrades or other
market conditions. The fund may be subject to a special assessment of
up to approximately 2.5 times the fund's annual gross premium if
covered losses exceed certain levels. During the period, the fund paid
premiums of $55,825 to FIDFUNDS which are being amortized over one
year.
EXCHANGE FEES. FSC receives the proceeds of $7.50 to cover
administrative costs associated with exchanges out of an equity fund
to any other Fidelity Select fund or to any other Fidelity fund. The
exchange fees retained by FSC are shown under the caption "Other
Information" on each fund's Statement of Operations.
BROKERAGE COMMISSIONS. Certain funds placed a portion of their
portfolio transactions with brokerage firms which are affiliates of
FMR. The commissions paid to these affiliated firms are shown under
the caption "Other Information" at the end of each applicable fund's
schedule of investments
5. SECURITY LENDING.
Certain funds loaned securities to brokers who paid the funds
negotiated lenders' fees. These fees are included in interest income.
Each applicable fund receives U.S. Treasury obligations and/or cash as
collateral against the loaned securities, in an amount at least equal
to 102% of the market value of the loaned securities at the inception
of each loan. This collateral must be maintained at not less than 100%
of the market value of the loaned securities during the period of the
loan. The market value of the loaned securities is determined at the
close of business of the fund and any additional required collateral
is delivered to the fund on the next business day. Information
regarding the value of securities loaned and the value of collateral
at period end is included under the caption "Other Information" at the
end of each applicable fund's schedule of investments.
6. BANK BORROWINGS.
Each fund is permitted to have bank borrowings for temporary or
emergency purposes to fund shareholder redemptions. Each fund has
established borrowing arrangements with certain banks. The interest
rate on the borrowings is the bank's base rate, as revised from time
to time. Information regarding a fund's participation in the program
is included under the caption "Other Information" at the end of each
applicable fund's schedule of investments.
7. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse the funds' operating expenses
(excluding interest, taxes, brokerage commissions and extraordinary
expenses) above an annual rate of 2.50% of average
7. EXPENSE REDUCTIONS - CONTINUED
net assets. FMR retains the ability to be repaid by the funds for
these expense reductions in the amount that expenses fall below the
limit prior to the end of the fiscal year. For the period, the
reimbursement reduced the expenses by $55,648 for Cyclical Industries
Portfolio, and $45,350 for Natural Resources Portfolio.
FMR has directed certain portfolio trades to brokers who paid a
portion of certain equity fund's expenses. In addition, certain funds
have entered into arrangements with their custodian and transfer agent
whereby credits realized as a result of uninvested cash balances were
used to reduce a portion of each applicable fund's expenses. For the
period, the reductions under these arrangements are shown under the
caption "Other Information" on each applicable fund's Statement of
Operations.
8. BENEFICIAL INTEREST.
At the end of the period, FMR Capital, an affiliate of FMR, was record
owner of more than 5% of the outstanding shares of the following
funds:
BENEFICIAL INTEREST
%
FUND OWNERSHIP
Cyclical Industries 38.7
Natural Resources 15.7
9. TRANSACTIONS WITH AFFILIATED COMPANIES.
An affiliated company is a company which the fund has ownership of at
least 5% of the voting securities. Information regarding transactions
with affiliated companies is included in "Other Information" at the
end of each applicable fund's schedule of investments.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and the Shareholders of Fidelity Select Portfolios:
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
each of the forty funds constituting Fidelity Select Portfolios at
February 28, 1999, and the results of their operations, the changes in
their net assets and the financial highlights for the periods
indicated, in conformity with generally accepted accounting
principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the
responsibility of the Fidelity Select Portfolios' management; our
responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation
of securities at February 28, 1999 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion
expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 19, 1999
DISTRIBUTIONS
The Board of Trustees of Fidelity Select Portfolios voted to pay to
shareholders of record at the opening of business on record date, the
following distributions derived from capital gains realized from sales
of portfolio securities, and dividends derived from net investment
income for each of the following funds:
AMOUNTS PER SHARE
RECORD &
FUND EX-DATE PAY DATE DIVIDENDS CAPITAL GAINS
Air Transportation 4/1/99 4/5/99 $ - $ 0.62
Biotechnology 4/1/99 4/5/99 $ - $ 0.12
Brokerage and Investment
Management 4/1/99 4/5/99 $ 0.05 $ 0.33
Business Services and
Outsourcing 4/9/99 4/12/99 $ - $ 0.37
Computers 4/1/99 4/5/99 $ - $ 3.92
Construction and Housing 4/9/99 4/12/99 $ - $ 0.01
Consumer Industries 4/9/99 4/12/99 $ - $ 0.71
Defense and Aerospace 4/1/99 4/5/99 $ - $ 0.17
Developing Communications 4/9/99 4/12/99 $ - $ 1.14
Energy 4/1/99 4/5/99 $ 0.04 $ -
Environmental Services 4/9/99 4/12/99 $ - $ 0.01
Financial Services 4/1/99 4/5/99 $ 0.29 $ 1.48
Food and Agriculture 4/1/99 4/5/99 $ 0.06 $ 1.00
Health Care 4/1/99 4/5/99 $ 0.03 $ 2.61
Home Finance 4/9/99 4/12/99 $ 0.12 $ 0.36
Industrial Equipment 4/9/99 4/12/99 $ - $ 0.74
Insurance 4/9/99 4/12/99 $ - $ 3.65
Leisure 4/1/99 4/5/99 $ - $ 1.36
Medical Equipment and
Systems 4/1/99 4/5/99 $ - $ 0.36
Multimedia 4/9/99 4/12/99 $ - $ 0.54
Natural Gas 4/9/99 4/12/99 $ 0.09 $ -
Regional Banks 4/9/99 4/12/99 $ 0.16 $ 2.09
Software and Computer
Services 4/1/99 4/5/99 $ - $ 2.30
Technology 4/1/99 4/5/99 $ - $ 8.98
Telecommunications 4/1/99 4/5/99 $ - $ 1.38
Transportation 4/9/99 4/12/99 $ - $ 2.40
Utilities Growth 4/1/99 4/5/99 $ 0.12 $ 3.52
Each fund hereby designates 100% of the long-term capital gain
dividends distributed during the fiscal year as 20%-rate capital gain
dividends.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Investments Money Management, Inc.,
Merrimack, NH, MONEY MARKET FUND
Fidelity Management & Research
(U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, PRESIDENT
Robert C. Pozen, SENIOR VICE PRESIDENT
Eric D. Roiter, SECRETARY
Richard A. Silver, TREASURER
Matthew N. Karstetter, DEPUTY TREASURER
Fred L. Henning Jr., VICE PRESIDENT, MONEY MARKET FUND
Boyce I. Greer, VICE PRESIDENT, MONEY MARKET FUND
John Todd, VICE PRESIDENT, MONEY MARKET FUND
Stanley N. Griffith, VICE PRESIDENT, MONEY MARKET FUND
John H. Costello, ASSISTANT TREASURER
Leonard M. Rush, ASSISTANT TREASURER
Thomas J. Simpson, ASSISTANT TREASURER, MONEY MARKET FUND
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
Abigail P. Johnson
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
CUSTODIANS
Brown Brothers Harriman & Co.
Boston, MA
and
The Bank of New York
New York, NY
CORPORATE HEADQUARTERS
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
* INDEPENDENT TRUSTEES
FIDELITY SELECT PORTFOLIOS
CONSUMER SECTOR
Consumer Industries
Food and Agriculture
Leisure
Multimedia
Retailing
CYCLICALS SECTOR
Air Transportation
Automotive
Chemicals
Cyclical Industries
Construction and Housing
Defense and Aerospace
Environmental Services
Industrial Equipment
Industrial Materials
Paper and Forest Products
Transportation
FINANCIAL SERVICES SECTOR
Brokerage and Investment Management
Financial Services
Home Finance
Insurance
Regional Banks
HEALTH CARE SECTOR
Biotechnology
Health Care
Medical Delivery
Medical Equipment and Systems
NATURAL RESOURCES SECTOR
Energy
Energy Service
Gold
Natural Resources
Precious Metals and Minerals
TECHNOLOGY SECTOR
Business Services and Outsourcing
Computers
Developing Communications
Electronics
Software and Computer Services
Technology
UTILITIES SECTOR
Natural Gas
Telecommunications
Utilities Growth
Money Market
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0111
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
TouchTone Xpress (registered trademark) (automated graphic)
1-800-544-5555
(automated graphic) AUTOMATED LINE FOR QUICKEST SERVICE
(Fidelity logo graphic)(registered trademark)
P.O. Box 193
Boston, MA 02101
BULK RATE
U.S. Postage
PAID
Fidelity
Investments
(recycle logo) Printed on Recycled Paper
SEL-ANN-0499 74113
1.701407.101
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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<CAPTION>
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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>
<S> <C> <C>
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>
<CAPTION>
<S> <C> <C>
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>
<CAPTION>
<S> <C> <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 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%
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.
</TABLE>
FOOD AND AGRICULTURE PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the past 10 year total returns would
have been lower.
<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%
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
</TABLE>
LEISURE PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee.
<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
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<CAPTION>
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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>
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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
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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.
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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>
<CAPTION>
<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:
<TABLE>
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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 - -
</TABLE>
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
<TABLE>
<CAPTION>
<S> <C>
(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
</TABLE>
Fidelity Select Precious Metals and Minerals Portfolio
(A Fund of Fidelity Select Portfolios(registered trademark))
Fidelity Select Gold Portfolio
(A Fund of Fidelity Select Portfolios)
FORM N-14
STATEMENT OF ADDITIONAL INFORMATION
December 20, 1999
This Statement of Additional Information, relates to the proposed
reorganization whereby Fidelity Select Gold Portfolio, a fund of
Fidelity Select Portfolios, would acquire all of the assets of
Fidelity Select Precious Metals and Minerals Portfolio, also a fund of
Fidelity Select Portfolios, and assume all of Fidelity Select Precious
Metals and Minerals Portfolio's liabilities in exchange for shares of
beneficial interest in Fidelity Select Gold Portfolio.
This Statement of Additional Information consists of this cover page
and the following described documents, each of which is incorporated
herein by reference:
1. The Prospectus and Statement of Additional Information of
Fidelity Select Gold Portfolio and Fidelity Select
Precious Metals and Minerals Portfolio dated April 29,
1999, which was previously filed via EDGAR (Accession No.
0000320351-99-000009).
2. The Supplement to the Prospectus of Fidelity Select Gold
Portfolio and Fidelity Select Precious Metals and
Minerals Portfolio dated August 16, 1999, which was
previously filed on August 16, 1999 via EDGAR (Accession
No. 0000315700-99-000023).
3. The Supplement to the Statement of Additional Information
of Fidelity Select Gold Portfolio and Fidelity Select
Precious Metals and Minerals Portfolio dated August 2,
1999, which was previously filed on August 2, 1999 via
EDGAR (Accession No. 0000320351-99-000011).
4. The Financial Statements included in the Annual Report of
Fidelity Select Gold Portfolio and Fidelity Select
Precious Metals and Minerals Portfolio for the fiscal
year ended February 28, 1999.
5. The Unaudited Financial Statements included in the
Semiannual Report of Fidelity Select Gold Portfoilo and
Fidelity Select Precious Metals and Minerals Portfolio
for the fiscal year ended August 31, 1999.
6. The Pro Forma Financial Statements for Fidelity Select
Precious Metals and Minerals Portfolio and Fidelity
Select Gold Portfolio for the period ended August 31,
1999.
This Statement of Additional Information is not a prospectus. A Proxy
Statement and Prospectus dated December 20, 1999, relating to the
above-referenced matter may be obtained from Fidelity Distributors
Corporation, 82 Devonshire Street, Boston, Massachusetts, 02109. This
Statement of Additional Information relates to, and should be read in
conjunction with, such Proxy Statement and Prospectus.
PART C. OTHER INFORMATION
Item 15. Indemnification
Article XI, Section 2 of the Declaration of Trust sets forth the
reasonable and fair means for determining whether indemnification
shall be provided to any past or present Trustee or officer. It states
that the Trust shall indemnify any present or past trustee or officer
to the fullest extent permitted by law against liability, and all
expenses reasonably incurred by him or her in connection with any
claim, action, suit or proceeding in which he or she is involved by
virtue of his or her service as a trustee or officer and against any
amount incurred in settlement thereof. Indemnification will not be
provided to a person adjudged by a court or other adjudicatory body to
be liable to the Trust or its shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of his
or her duties (collectively, "disabling conduct"), or not to have
acted in good faith in the reasonable belief that his or her action
was in the best interest of the Trust. In the event of a settlement,
no indemnification may be provided unless there has been a
determination, as specified in the Declaration of Trust, that the
officer or trustee did not engage in disabling conduct.
Pursuant to Section 11 of the Distribution Agreement, the Trust
agrees to indemnify and hold harmless the Distributor and each of its
directors and officers and each person, if any, who controls the
Distributor within the meaning of Section 15 of the 1933 Act against
any loss, liability, claim, damages or expense (including the
reasonable cost of investigating or defending any alleged loss,
liability, claim, damages, or expense and reasonable counsel fees
incurred in connection therewith) arising by reason of any person
acquiring any shares, based upon the ground that the registration
statement, Prospectus, Statement of Additional Information,
shareholder reports or other information filed or made public by the
Trust (as from time to time amended) included an untrue statement of a
material fact or omitted to state a material fact required to be
stated or necessary in order to make the statements not misleading
under the 1933 Act, or any other statute or the common law. However,
the Trust does not agree to indemnify the Distributor or hold it
harmless to the extent that the statement or omission was made in
reliance upon, and in conformity with, information furnished to the
Trust by or on behalf of the Distributor. In no case is the indemnity
of the Trust in favor of the Distributor or any person indemnified to
be deemed to protect the Distributor or any person against any
liability to the Issuer or its security holders to which the
Distributor or such person would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance
of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement.
Pursuant to the agreement by which Fidelity Service Company, Inc.
("FSC") is appointed transfer agent, the Trust agrees to indemnify and
hold FSC harmless against any losses, claims, damages, liabilities or
expenses (including reasonable counsel fees and expenses) resulting
from:
(1) any claim, demand, action or suit brought by any person other
than the Trust, including by a shareholder, which names FSC and/or the
Trust as a party and is not based on and does not result from FSC's
willful misfeasance, bad faith or negligence or reckless disregard of
duties, and arises out of or in connection with FSC's performance
under the Transfer Agency Agreement; or
(2) any claim, demand, action or suit (except to the extent
contributed to by FSC's willful misfeasance, bad faith or negligence
or reckless disregard of its duties) which results from the negligence
of the Trust, or from FSC's acting upon any instruction(s) reasonably
believed by it to have been executed or communicated by any person
duly authorized by the Trust, or as a result of FSC's acting in
reliance upon advice reasonably believed by FSC to have been given by
counsel for the Trust, or as a result of FSC's acting in reliance upon
any instrument or stock certificate reasonably believed by it to have
been genuine and signed, countersigned or executed by the proper
person.
Item 16. Exhibits
(1) Amended and Restated Declaration of Trust, dated May 13, 1998, is
incorporated herein by reference to Exhibit a(1) of Post-Effective
Amendment No. 65.
(2) Bylaws of the Trust, as amended, are incorporated herein by
reference to Exhibit 2(a) of Fidelity Union Street Trust's (File no.
2-50318) Post-Effective Amendment No. 87.
(3) Not applicable.
(4) Agreement and Plan of Reorganization between Fidelity Select
Portfolios: Fidelity Select Gold Portfolio and Fidelity Select
Portfolios: Fidelity Select Precious Metals and Minerals Portfolio is
filed herein as Exhibit 1 to the Proxy Statement and Prospectus.
(5) Articles VIII and XII of the Amended and Restated Declaration of
Trust, dated May 13, 1998, are incorporated by reference to Exhibit
a(1) of Post-Effective Amendment No. 65.
(6)(a) Management Contracts, dated June 1, 1998, between the Trust's
Air Transportation, Automotive, Biotechnology, Brokerage and
Investment Management, Chemicals, Computers, Construction and Housing,
Consumer 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, Multimedia, Natural Gas, Paper and Forest Products,
Precious Metals and Minerals, Regional Banks, Retailing, Software and
Computer Services, Technology, Telecommunications, Transportation,
Utilities Growth, and Money Market Portfolios and Fidelity Management
& Research Company, are incorporated herein by reference to Exhibits
d(1)(a-jj) of Post-Effective Amendment No. 65.
(b) Sub-Advisory Agreements, dated March 1, 1994, between Fidelity
Management & Research Company and Fidelity Management & Research
(U.K.) Inc. and between Fidelity Management & Research Company and
Fidelity Management & Research (Far East) Inc., respectively, with
respect to the Registrant's Air Transportation, Automotive,
Biotechnology, Brokerage and Investment Management, Chemicals,
Computers, Construction and Housing (formerly Housing), Consumer
Industries (formerly Consumer Products), Defense and Aerospace,
Developing Communications, Electronics, Energy, Energy Service,
Environmental Services, Financial Services, Food and Agriculture,
Health Care, Home Finance (formerly Savings and Loan), Industrial
Equipment (formerly Industrial Technology), Industrial Materials,
Insurance (formerly Property and Casualty Insurance), Leisure, Medical
Delivery, Multimedia (formerly Broadcast and Media), Natural Gas,
Paper and Forest Products, Precious Metals and Minerals, Regional
Banks, Retailing, Software and Computer Services, Technology,
Telecommunications, Transportation, and Utilities Growth (formerly
Utilities) Portfolios, are incorporated herein by reference to Exhibit
Nos. 5(b)(1-34) of Post-Effective Amendment No. 48.
(c) Sub-Advisory Agreement, dated June 1, 1998, between Fidelity
Management & Research (U.K.) Inc. and Fidelity Management & Research
Company on behalf of Gold Portfolio, is incorporated herein by
reference to Exhibit d(16) of Post-Effective Amendment No. 65.
(d) Sub-Advisory Agreement, dated June 1, 1998, between Fidelity
Management & Research (Far East) Inc. and Fidelity Management &
Research Company on behalf of Gold Portfolio, is incorporated herein
by reference to Exhibit d(17) of Post-Effective Amendment No. 65.
(7)(a) General Distribution Agreements, dated April 1, 1987, between
the Registrant's Air Transportation, Gold (formerly American Gold),
Automotive, Biotechnology, Brokerage and Investment Management,
Chemicals, Computers, Construction and Housing (formerly Housing),
Defense and Aerospace, Electronics, Energy, Energy Service, Financial
Services, Food and Agriculture, Health Care, Home Finance (formerly
Savings and Loan), Industrial Materials, Insurance (formerly Property
and Casualty Insurance), Leisure, Medical Delivery, Money Market,
Multimedia (formerly Broadcast and Media), Paper and Forest Products,
Precious Metals and Minerals, Regional Banks, Retailing, Software and
Computer Services, Technology, Telecommunications, Transportation, and
Utilities Growth (formerly Utilities) Portfolios and Fidelity
Distributors Corporation, are incorporated herein by reference to
Exhibit Nos. 6(a)(1-31) of Post-Effective Amendment No. 51.
(b) Amendment to General Distribution Agreements, dated January
1, 1988, between the Registrant's Air Transportation, Gold (formerly
American Gold), Automotive, Biotechnology, Brokerage and Investment
Management, Chemicals, Computers, Construction and Housing (formerly
Housing), Defense and Aerospace, Electronics, Energy, Energy Service,
Financial Services, Food and Agriculture, Health Care, Home Finance
(formerly Savings and Loan), Industrial Materials, Industrial
Equipment (formerly Capital Goods), Insurance (formerly Property and
Casualty Insurance), Leisure, Medical Delivery, Money Market,
Multimedia (formerly Broadcast and Media), Paper and Forest Products,
Precious Metals and Minerals, Regional Banks, Retailing, Software and
Computer Services, Technology, Telecommunications, Transportation, and
Utilities Growth (formerly Utilities) Portfolios and Fidelity
Distributors Corporation, is incorporated herein by reference to
Exhibit 6(b) of Post-Effective Amendment No. 51.
(c) Amendments, dated March 14, 1996 and July 15, 1996, to the
General Distribution Agreement beteween Fidelity Select Portfolios on
behalf of each Fidelity Select Portfolio except Natural Gas, Cyclical
Industries, Natural Resources, Business Services and Outsourcing, and
Medical Equipment and Systems and Fidelity Distributors Corporation
are incorporated herein by reference to Exhibit 6(k) of Post-Effective
Amendment No. 57.
(8) Retirement Plan for Non-Interested Person Trustees, Directors or
General Partners, as amended November 16, 1995, is incorporated herein
by reference to Exhibit 7(a) of Post-Effective Amendment No. 54.
(9)(a) Custodian Agreement and Appendix C, dated September 1, 1994,
between Brown Brothers Harriman & Company and Fidelity Select
Portfolios on behalf of the equity portfolios are incorporated herein
by reference to Exhibit 8(a) of Fidelity Commonwealth Trust's (File
No. 2-52322) Post-Effective Amendment No. 56.
(b) Appendix A, dated November 19, 1998, to the Custodian
Agreement, dated September 1, 1994, between Brown Brothers Harriman &
Company and Fidelity Select Portfolios on behalf of the equity
portfolios is incorporated herein by reference to Exhibit g(2) of
Fidelity Contrafund's (File No. 2-25235) Post-Effective Amendment No.
53.
(c) Appendix B, dated December 17, 1998, to the Custodian
Agreement, dated September 1, 1994, between Brown Brothers Harriman &
Company and Fidelity Select Portfolios on behalf of the equity
portfolios is incorporated herein by reference to Exhibit g(3) of
Fidelity Contrafund's (File No. 2-25235) Post-Effective Amendment No.
53.
(d) Fidelity Group Repo Custodian Agreement among The Bank of
New York, J. P. Morgan Securities, Inc., and Fidelity Select
Portfolios on behalf of all of the portfolios with the exception of
Cyclical Industries, Natural Resources, Business Services and
Outsourcing, and Medical Equipment and Systems Portfolios, dated
February 12, 1996, is incorporated herein by reference to Exhibit 8(d)
of Fidelity Institutional Cash Portfolios' (File No. 2-74808)
Post-Effective Amendment No. 31.
(e) Schedule 1 to the Fidelity Group Repo Custodian Agreement
between The Bank of New York and Fidelity Select Portfolios on behalf
of all of the portfolios with the exception of Cyclical Industries,
Natural Resources, Business Services and Outsourcing, and Medical
Equipment and Systems Portfolios, dated February 12, 1996, is
incorporated herein by reference to Exhibit 8(e) of Fidelity
Institutional Cash Portfolios' (File No. 2-74808) Post-Effective
Amendment No. 31.
(f) Fidelity Group Repo Custodian Agreement among Chemical Bank,
Greenwich Capital Markets, Inc., and Fidelity Select Portfolios on
behalf of all of the portfolios with the exception of Cyclical
Industries, Natural Resources, Business Services and Outsourcing, and
Medical Equipment and Systems Portfolios, dated November 13, 1995, is
incorporated herein by reference to Exhibit 8(f) of Fidelity
Institutional Cash Portfolios' (File No. 2-74808) Post-Effective
Amendment No. 31.
(g) Schedule 1 to the Fidelity Group Repo Custodian Agreement
between Chemical Bank and Fidelity Select Portfolios on behalf of all
of the portfolios with the exception of Cyclical Industries, Natural
Resources, Business Services and Outsourcing, and Medical Equipment
and Systems Portfolios, dated November 13, 1995, is incorporated
herein by reference to Exhibit 8(g) of Fidelity Institutional Cash
Portfolios' (File No. 2-74808) Post-Effective Amendment No. 31.
(h) Joint Trading Account Custody Agreement between The Bank of
New York and Fidelity Select Portfolios on behalf of all of the
portfolios with the exception of Cyclical Industries, Natural
Resources, Business Services and Outsourcing, and Medical Equipment
and Systems Portfolios, dated May 11, 1995, is incorporated herein by
reference to Exhibit 8(h) of Fidelity Institutional Cash Portfolios'
(File No. 2-74808) Post-Effective Amendment No. 31.
(i) First Amendment to Joint Trading Account Custody Agreement
between The Bank of New York and Fidelity Select Portfolios on behalf
of all of the portfolios with the exception of Cyclical Industries
Portfolio, Natural Resources Portfolio, Business Services and
Outsourcing Portfolio, and Medical Equipment and Systems Portfolio,
dated July 14, 1995, is incorporated herein by reference to Exhibit
8(i) of Fidelity Institutional Cash Portfolios' (File No. 2-74808)
Post-Effective Amendment No. 31.
(10) Not applicable.
(11) Opinion and consent of Kirkpatrick & Lockhart LLP as to the
legality of shares being registered is filed herein as Exhibit 11.
(12) Opinion and consent of Kirkpatrick & Lockhart LLP as to tax
matters in connection with the reorganization of Fidelity Select
Precious Metals and Minerals Portfolio is filed herein as Exhibit 12.
(13) Not applicable.
(14) Consent of PricewaterhouseCoopers LLP is filed herein as Exhibit
14.
(15) Pro Forma combining financial statements are filed herein as
Exhibit 15.
(16) Powers of Attorney, dated December 19, 1996, March 6, 1997, and
July 17, 1997, are filed herein as Exhibit 16.
(17) Not applicable.
Item 17. Undertakings
(1) The undersigned Registrant agrees that prior to any public
reoffering of the securities registered through the use of the
prospectus which is a part of this Registration Statement by any
person or party who is deemed to be an underwriter within the meaning
of Rule 145(c) of the Securities Act of 1933, the reoffering
prospectus will contain the information called for by the applicable
registration form for reoffering by persons who may be deemed
underwriters, in addition to the information called for by the other
items of the applicable form.
(2) The undersigned Registrant agrees that every prospectus that is
filed under paragraph (1) above will be filed as part of an amendment
to the Registration Statement and will not be used until the amendment
is effective, and that, in determining any liability under the
Securities Act of 1933, each Post-Effective Amendment shall be deemed
to be a new Registration Statement for the securities offered therein,
and the offering of securities at that time shall be deemed to be the
initial bona fide offering of them.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boston, and
Commonwealth of Massachusetts, on the 27th day of October 1999.
Fidelity Select Portfolios
By /s/Edward C. Johnson 3d (dagger)
Edward C. Johnson 3d, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
(Signature) (Title) (Date)
/s/Edward C. Johnson 3d(dagger) President and Trustee October 27, 1999
Edward C. Johnson 3d (Principal Executive Officer)
/s/Richard A. Silver Treasurer October 27, 1999
Richard A. Silver
/s/Robert C. Pozen Trustee October 27, 1999
Robert C. Pozen
/s/Ralph F. Cox* Trustee October 27, 1999
Ralph F. Cox
/s/Phyllis Burke Davis* Trustee October 27, 1999
Phyllis Burke Davis
/s/Robert M. Gates** Trustee October 27, 1999
Robert M. Gates
/s/E. Bradley Jones* Trustee October 27, 1999
E. Bradley Jones
/s/Donald J. Kirk* Trustee October 27, 1999
Donald J. Kirk
/s/Peter S. Lynch* Trustee October 27, 1999
Peter S. Lynch
/s/Marvin L. Mann* Trustee October 27, 1999
Marvin L. Mann
/s/William O. McCoy* Trustee October 27, 1999
William O. McCoy
/s/Gerald C. McDonough* Trustee October 27, 1999
Gerald C. McDonough
/s/Thomas R. Williams* Trustee October 27, 1999
Thomas R. Williams
</TABLE>
(dagger) Signatures affixed by Robert C. Pozen pursuant to a power of
attorney dated July 17, 1997 and filed herewith.
* Signature affixed by Robert C. Hacker pursuant to a power of
attorney dated December 19, 1996 and filed herewith.
** Signature affixed by Robert C. Hacker pursuant to a power of
attorney dated March 6, 1997 and filed herewith.
Exhibit 11
KIRKPATRICK & LOCKHART LLP
1800 Massachusetts Avenue, N.W.
2nd Floor
Washington, D.C. 20036-1800
Telephone (202) 778-9000
Facsimile (202) 778-9100
www.kl.com
October 27, 1999
Fidelity Select Portfolios
82 Devonshire Street
Boston, Massachusetts 02109
Ladies and Gentlemen:
You have requested our opinion regarding certain matters in
connection with the issuance of shares of Fidelity Select Gold
Portfolio ("Gold Portfolio"), a series of Fidelity Select Portfolios
(the "Trust"), pursuant to a Registration Statement to be filed by the
Trust on Form N-14 ("Registration Statement") under the Securities Act
of 1933 ("1933 Act") in connection with the proposed acquisition by
Gold Portfolio of all of the assets of Fidelity Select Precious Metals
and Minerals Portfolio ("Precious Metals and Minerals Portfolio"),
also a series of the Trust, and the assumption by Gold Portfolio of
the liabilities of Precious Metals and Minerals Portfolio solely in
exchange for Gold Portfolio shares.
In connection with our services as counsel for the Trust, we have
examined, among other things, originals or copies of such documents,
certificates and corporate and other records as we deemed necessary or
appropriate for purposes of this opinion. We have assumed the
genuineness of all signatures, the authenticity of all documents
submitted to us, the conformity to original documents of all documents
presented to us as copies thereof and the authenticity of the original
documents from which any such copies were made, which assumptions we
have not independently verified. As to various matters of fact
material to this opinion, we have relied upon statements and
certificates of officers of the Trust. Based upon this examination,
we are of the opinion that the shares to be issued pursuant to the
Registration Statement, when issued upon the terms provided in the
Registration Statement, subject to compliance with the 1933 Act, the
Investment Company Act of 1940, and applicable state law regulating
the offer and sale of securities, will be legally issued, fully paid,
and non-assessable.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders of a business
trust may be held personally liable for the obligations of the Trust.
The Trust's Declaration of Trust provides that the Trustees shall have
no power to bind any shareholder personally or to call upon any
shareholder for the payment of any sum of money or assessment
whatsoever other than such as the shareholder may at any time
personally agree to pay by way of subscription for any shares or
otherwise. The Declaration of Trust also requires that every note,
bond, contract or other undertaking issued by or on behalf of the
Trust or the Trustees relating to the Trust shall include a recitation
limiting the obligation represented thereby to the Trust and its
assets (although the omission of such recitation shall not operate to
bind any shareholder). The Declaration of Trust provides that: (i) in
case any shareholder or any former shareholder of any Series of the
Trust shall be held personally liable solely by reason of his being or
having been a shareholder and not because of his acts or omissions or
for some other reason, the shareholder or former shareholder shall be
entitled out of the assets belonging to the applicable Series to be
held harmless from and indemnified against all loss and expense
arising from such liability; and (ii) a Series shall, upon request by
the shareholder, assume the defense of any claim made against any
shareholder for any act or obligation of that Series and satisfy any
judgment thereon.
We hereby consent to your filing a copy of this opinion as an exhibit
to the Registration Statement.
Yours truly,
/s/ Kirkpatrick & Lockhart LLP
Kirkpatrick & Lockhart LLP
Exhibit 12
Kirkpatrick & Lockhart llp
1800 Massachusetts avenue, n.w.
2nd floor
washington, d.c. 20036-1800
telephone (202) 778-9000
facsimile (202) 778-9100
October 27, 1999
Fidelity Select Portfolios
82 Devonshire Street
Boston, MA 02109
Ladies and Gentlemen:
Fidelity Select Portfolios ("FSP"), a Massachusetts business trust,
on behalf of Fidelity Select Precious Metals and Minerals Portfolio
("Acquired") and Fidelity Select Gold Portfolio ("Acquiring"), both
series of FSP, has requested our opinion as to certain federal income
tax consequences of a transaction ("Reorganization") in which
Acquiring will acquire all of the assets and assume all of the
liabilities of Acquired in exchange solely for shares of beneficial
interest in Acquiring ("Acquiring Shares") pursuant to an Agreement
and Plan of Reorganization ("Agreement") expected to be entered into
between Acquired and Acquiring as of December 20, 1999.
In rendering this opinion, we have examined a draft of the Agreement
("Draft Agreement"), the prospectus/proxy statement to be filed with
the Securities and Exchange Commission in connection with the
Reorganization, the currently effective prospectuses and statements of
additional information of Acquired and Acquiring, and such other
documents as we have deemed necessary. We have also relied, with your
consent, on certificates of officers of FSP.
OPINION
Based solely on the facts and representations set forth in the
reviewed documents and the certificates of officers of FSP, and
assuming that (i) those representations are true on the date of the
Reorganization, (ii) the Reorganization is consummated in accordance
with the Agreement, and (iii) the Agreement does not differ materially
from the Draft Agreement, our opinion with respect to the federal
income tax consequences of the Reorganization is as follows:
1. The Reorganization will be a reorganization under Section
368(a)(1)(C) of the Internal Revenue Code of 1986, as amended
("Code"), and Acquired and Acquiring will each be parties to the
Reorganization under Section 368(b) of the Code.
2. No gain or loss will be recognized by Acquired upon the transfer
of all of its assets to Acquiring in exchange solely for Acquiring
Shares and Acquiring's assumption of Acquired's liabilities followed
by the distribution of those Acquiring Shares to the Acquired
shareholders in liquidation of Acquired.
3. No gain or loss will be recognized by Acquiring on the receipt of
Acquired's assets in exchange solely for Acquiring Shares and the
assumption of Acquired's liabilities.
4. The basis of Acquired's assets in the hands of Acquiring will be
the same as the basis of such assets in Acquired's hands immediately
prior to the Reorganization.
5. Acquiring's holding period in the assets to be received from
Acquired will include Acquired's holding period in such assets.
6. The Acquired shareholders will recognize no gain or loss on the
exchange of shares of beneficial interest in Acquired ("Acquired
Shares") solely for the Acquiring Shares in the Reorganization.
7. The Acquired shareholders' basis in the Acquiring Shares to be
received by them will be the same as their basis in the Acquired
Shares to be surrendered in exchange therefor.
8. The holding period of the Acquiring Shares to be received by the
Acquired shareholders will include the holding period of the Acquired
Shares to be surrendered in exchange therefor, provided those Acquired
Shares were held as capital assets on the date of the Reorganization.
The foregoing opinion is based on, and is conditioned on the
continued applicability of, the provisions of the Code and the
regulations thereunder, case law precedent, and the Internal Revenue
Service pronouncements in existence at the date hereof. We express no
opinion as to whether Acquired will recognize gain or loss in the
Reorganization under Section 1256 of the Code with respect to futures,
forwards, or options, or income or deductions under Section 1296 of
the Code with respect to its investments in passive foreign investment
companies. Nor do we express any opinion other than those contained
herein.
We consent to the inclusion of this opinion in the Registration
Statement on Form N-14 filed with the Securities and Exchange
Commission and the inclusion of the name "Kirkpatrick & Lockhart LLP"
in the "Federal Income Tax Consequences of the Reorganization,"
"Federal Income Tax Considerations" and "Legal Matters" Sections of
that Registration Statement.
Very truly yours,
/s/ Kirkpatrick & Lockhart LLP
Kirkpatrick & Lockhart LLP
Exhibit 14
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference, into the Proxy
Statement and Prospectus (the Proxy/Prospectus) constituting part of
this Registration Statement on Form N-14 (the Registration Statement)
of Fidelity Select Portfolios: Fidelity Select Gold Portfolio and
Fidelity Select Precious Metals and Minerals Portfolio, of our report
dated April 19, 1999 on the financial statements and financial
highlights included in the February 28, 1999 Annual Report to
Shareholders of Fidelity Select Portfolios: Fidelity Select Gold
Portfolio and Fidelity Select Precious Metals and Minerals Portfolio.
We further consent to the references to our Firm under the headings
"Experts" and "Financial Highlights" in the Proxy/Prospectus and to
the references to our Firm under the headings "Financial Highlights"
in the Prospectus and "Auditor" in the Statement of Additional
Information, each dated April 29, 1999, for Fidelity Select
Portfolios: Fidelity Select Gold Portfolio and Fidelity Select
Portfolios: Fidelity Select Precious Metals and Minerals Portfolio.
The Prospectus and Statement of Additional Information are also
incorporated by reference into the Proxy/Prospectus.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
October 27, 1999
Fidelity Select Portfolios: Gold Portfolio and
Fidelity Select Portfolios: Precious Metals and Minerals Portfolio
Merger
Notes to Pro Forma Combining Financial Statements
(Unaudited)
The accompanying unaudited Pro Forma Combining Schedule of
Investments and Statement of Assets and Liabilities as of August 31,
1999 and the unaudited Pro Forma Combining Statement of Operations for
the year ended August 31, 1999 are intended to present the financial
condition and related results of operations of Gold Portfolio as if
the reorganization with Precious Metals and Minerals Portfolio had
been consummated on September 1, 1998. Had the pro forma adjustments
not included the effect of the FMR voluntary expense limitations, Pro
Forma Combined Expense reductions would have been $219,560, resulting
in Pro Forma Combined Net Investment Income and Pro Forma Combined Net
Increase in Net Assets resulting from operations of $2,040,715 and
$103,725,073, respectively.
The pro forma adjustments to these pro forma financial statements are
comprised of:
(a) Reflects the conversion of Precious Metals and Minerals Portfolio
shares as of August 31, 1999.
(b) Increase in fees reflects contractual rates charged against
combined average net assets.
(c) Decrease in fees reflects net decrease in costs incurred as a
result of the reorganization including savings from duplicate
charges.
(d) Reflects FMR's agreement to voluntarily limit the combined fund's
operating expenses to 1.54% of average net assets.
(e) Increase in credits based on rates in effect applied to combined
funds average net assets.
The unaudited pro forma combining statements should be read in
conjunction with the separate annual audited financial statements as
of February 28, 1999 for Fidelity Select Portfolios: Gold Portfolio,
and for Fidelity Select Portfolios: Precious Metals and Minerals
Portfolio, which are incorporated by reference in the Statement of
Additional Information to this Proxy Statement and Prospectus.
<TABLE>
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FIDELITY SELECT PORTFOLIOS: GOLD PORTFOLIO AND FIDELITY
SELECT PORTFOLIOS: PRECIOUS METALS AND MINERALS PORTFOLIO
PRO FORMA COMBINING STATEMENT OF ASSETS & LIABILITIES AS OF AUGUST 31, 1999
(UNAUDITED)
GOLD PORTFOLIO PRECIOUS METALS COMBINED
AND MINERALS
PORTFOLIO
ASSETS
Investment in securities, at
value
- See accompanying
schedule $ 174,541,005 130,823,568 $ 305,364,573
Foreign currency held at - 534,742 534,742
value
Receivable for investments 917,463 8,299 925,762
sold
Receivable for fund shares 2,123,552 1,074,223 3,197,775
sold
Dividends receivable 726,592 564,449 1,291,041
Interest receivable 13,561 12,101 25,662
Redemption fees receivable 1,403 1,743 3,146
Other receivables 6,280 2,148 8,428
TOTAL ASSETS 178,329,856 133,021,273 311,351,129
LIABILITIES
Payable to custodian bank 7,124 - 7,124
Payable for investments 276,737 106,750 383,487
purchased
Payable for fund shares 588,581 520,530 1,109,111
redeemed
Accrued management fee 86,690 64,178 150,868
Other payables and accrued 143,775 128,750 272,525
expenses
Collateral on securities - 1,188,200 1,188,200
loaned, at value
TOTAL LIABILITIES 1,102,907 2,008,408 3,111,315
NET ASSETS $ 177,226,949 $ 131,012,865 $ 308,239,814
Net Assets consist of:
Paid in capital $ 295,022,663 $ 244,657,417 $ 539,680,080
Undistributions net 909,084 1,550,567 2,459,651
investment income
Accumulated undistributed
net realized gain (loss)
on investments and (83,209,442) (97,130,941) (180,340,383)
foreign currency transactions
Net unrealized appreciation
(depreciation) on investments
and assets and (35,495,356) (18,064,178) (53,559,534)
liabilities in foreign
currencies
NET ASSETS $ 177,226,949 $ 131,012,865 $ 308,239,814
NET ASSETS $ 177,226,949 $ 131,012,865 $ 308,239,814
Net Asset Value, offering
price and
redemption price per
share $ 12.89 $ 9.26
Shares outstanding 13,752,983 14,141,664 27,894,647
Maximum offering price per $ 12.89 $ 9.26
share
(100/97.00) $ 13.29 $ 9.55
</TABLE>
<TABLE>
<CAPTION>
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FIDELITY SELECT PORTFOLIOS: GOLD PORTFOLIO AND FIDELITY
SELECT PORTFOLIOS: PRECIOUS METALS AND MINERALS PORTFOLIO
PRO FORMA COMBINING STATEMENT OF ASSETS & LIABILITIES AS OF AUGUST 31, 1999
(UNAUDITED)
PRO FORMA PRO FORMA
ADJUSTMENTS COMBINED
ASSETS
Investment in securities, at
value
- See accompanying schedule $ - $ 305,364,573
Foreign currency held at - 534,742
value
Receivable for investments - 925,762
sold
Receivable for fund shares - 3,197,775
sold
Dividends receivable - 1,291,041
Interest receivable - 25,662
Redemption fees receivable - 3,146
Other receivables - 8,428
TOTAL ASSETS - 311,351,129
LIABILITIES
Payable to custodian bank - 7,124
Payable for investments - 383,487
purchased
Payable for fund shares - 1,109,111
redeemed
Accrued management fee - 150,868
Other payables and accrued - 272,525
expenses
Collateral on securities - 1,188,200
loaned, at value
TOTAL LIABILITIES - 3,111,315
NET ASSETS $ - $ 308,239,814
Net Assets consist of:
Paid in capital - $ 539,680,080
Undistributions net - 2,459,651
investment income
Accumulated undistributed
net realized gain (loss)
on investments and - (180,340,383)
foreign currency transactions
Net unrealized appreciation
(depreciation) on investments
and assets and - (53,559,534)
liabilities in foreign
currencies
NET ASSETS $ - $ 308,239,814
NET ASSETS $ 308,239,814
Net Asset Value, offering
price and
redemption price per share $ 12.89
Shares outstanding (3,977,749) (a) 23,916,898
Maximum offering price per $ 12.89
share
(100/97.00) $ 13.29
</TABLE>
See accompanying notes which are an integral part of the financial
statements
<TABLE>
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FIDELITY SELECT PORTFOLIOS: GOLD PORTFOLIO AND FIDELITY
SELECT PORTFOLIOS: PRECIOUS METALS AND MINERALS PORTFOLIO
PRO FORMA COMBINING STATEMENT OF ASSETS & LIABILITIES AS OF AUGUST 31, 1999
(UNAUDITED)
GOLD PORTFOLIO PRECIOUS METALS AND COMBINED PRO FORMA
MINERALS PORTFOLIO ADJUSTMENTS
INVESTMENT INCOME
Dividends $ 3,035,651 $ 3,729,178 $ 6,764,829 $ -
Interest 212,061 142,993 355,054 -
Security lending 4,260 2,148 6,408 -
Total Income 3,251,972 3,874,319 7,126,291 -
EXPENSES
Management fee 1,134,049 794,577 1,928,626
Transfer agent fees 1,489,866 1,312,631 2,802,497
Accounting and security 163,925 114,787 278,712
lending fees
Non-interested trustees' 137 87 224
compensation
Custodian fees and expenses 96,510 63,095 159,605 4,538 (b)
Registration fees 64,711 67,168 131,879 (36,098) (c)
Audit 16,042 14,444 30,486 (6,486) (c)
Legal 660 446 1,106
Interest 6,342 3,630 9,972
Miscellaneous (113) 188 75
Total expenses before 2,972,129 2,371,053 5,343,182 (38,046)
reductions
Expense reductions (133,494) (74,066) (207,560) (247,207) (d)(e)
Total expenses 2,838,635 2,296,987 5,135,622 (285,253)
NET INVESTMENT INCOME 413,337 1,577,332 1,990,669 285,253
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (39,467,662) (27,312,547) (66,780,209) -
Foreign curreny (28,303) (6,424) (34,727) -
transactions
(39,495,965) (27,318,971) (66,814,936) -
Change in net unrealized
appreciation
(depreciation) on:
Investment securities 95,728,861 72,756,990 168,485,851 -
Assets and liabilities in 13,209 234 13,443 -
foreign currencies
95,742,070 72,757,224 168,499,294 -
NET GAIN (LOSS) 56,246,105 45,438,253 101,684,358 -
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM $ 56,659,442 $ 47,015,585 $ 103,675,027 $ 285,253
OPERATIONS
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FIDELITY SELECT PORTFOLIOS: GOLD PORTFOLIO AND FIDELITY
SELECT PORTFOLIOS: PRECIOUS METALS AND MINERALS PORTFOLIO
PRO FORMA COMBINING STATEMENT OF ASSETS & LIABILITIES AS OF AUGUST 31, 1999
(UNAUDITED)
PRO FORMA
COMBINED
INVESTMENT INCOME
Dividends $ 6,764,829
Interest 355,054
Security lending 6,408
Total Income 7,126,291
EXPENSES
Management fee 1,928,626
Transfer agent fees 2,802,497
Accounting and security 278,712
lending fees
Non-interested trustees' 224
compensation
Custodian fees and expenses 164,143
Registration fees 95,781
Audit 24,000
Legal 1,106
Interest 9,972
Miscellaneous 75
Total expenses before 5,305,136
reductions
Expense reductions (454,767)
Total expenses 4,850,369
NET INVESTMENT INCOME 2,275,922
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (66,780,209)
Foreign curreny (34,727)
transactions
(66,814,936)
Change in net unrealized
appreciation
(depreciation) on:
Investment securities 168,485,851
Assets and liabilities in 13,443
foreign currencies
168,499,294
NET GAIN (LOSS) 101,684,358
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM $ 103,960,280
OPERATIONS
</TABLE>
See accompanying notes which are an integral part of the financial
statements
<TABLE>
<CAPTION>
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GOLD PORTFOLIO PRECIOUS METALS PORTFOLIO
SHARES MARKET VALUE SHARES MARKET VALUE
COMMON STOCKS - 98.2%
AUSTRALIA - 19.9%
METALS & MINING - 3.2%
METAL MINING SERVICES - 3.2%
Acacia Resources Ltd. 3,060,755 $ 3,642,100 5,139,253 $ 6,115,377
PRECIOUS METALS - 16.7%
GOLD & SILVER ORES - 7.5%
Normandy Mining Ltd. 14,355,416 10,285,943 13,289,419 9,522,135
Sons of Gwalia NL 635,235 1,584,927 675,211 1,684,668
11,870,870 11,206,803
GOLD ORES - 9.2%
Delta Gold NL 5,320,509 7,515,581 4,645,819 6,562,535
Newcrest Mining Ltd. (a) 3,335,062 7,894,342 2,668,000 6,315,356
Ross Mining NL - 452,197 138,861
15,409,923 13,016,752
TOTAL PRECIOUS METALS 27,280,793 24,223,555
TOTAL AUSTRALIA 30,922,893 30,338,932
CANADA - 44.2%
METALS & MINING - 1.4%
METAL MINING -0.03%
Ivanhoe Mines Ltd. - - 100,000 105,193
METALS & MINING SERVICES - 0.1%
Minefinders Corp. Ltd. (a) 297,600 129,608 200,200 87,189
Minefinders Corp. Ltd. (a)(d) 200,000 87,102
216,710 87,189
MISCELLANEOUS NONMETALLIC
MINERALS - 1.3%
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 22,500 354,271
3,562,425 354,271
TOTAL METALS & MINING 3,779,135 546,653
OIL & GAS - 0.4%
OIL & GAS FIELD EXPLORATION
SERVICES - 0.4%
Southwestern Gold Corp. (a) 227,500 670,687 135,000 397,990
PRECIOUS METALS - 42.4%
GOLD & SILVER ORES - 2.6%
Goldcorp, Inc. Class A (a) 1,056,200 5,236,771 515,900 2,557,896
Richmont Mines, Inc. (a) 198,600 294,074 7,700 11,402
5,530,845 2,569,298
GOLD ORES - 39.8%
Agnico-Eagle Mines Ltd. 1,427,500 8,608,040 348,800 2,103,317
Barrick Gold Corp. 485,500 9,368,442 205,000 3,955,779
Claude Resources, Inc. (a) - 500,500 486,248
Euro-Nevada Mining Corp. Ltd. 721,400 8,676,134 545,800 6,564,228
Francisco Gold Corp. (a) 191,200 980,020 53,500 274,221
Francisco Gold Corp. (d) 144,500 740,653 54,500 279,347
Franco Nevada Mining Corp. 369,600 5,819,497 281,400 4,430,754
Ltd.
Franco Nevada Mining Corp. 106,900 1,683,183 80,200 1,262,781
Ltd. (d)
Franco Nevada Mining Corp. 33,334 167,508 25,000 125,628
Ltd. Class B warrants
9/15/98 (a)(d)
Geomaque Explorations Ltd. (a) 678,100 227,169 537,100 179,933
Glamis Gold Ltd. (a) 897,600 1,683,940 240,000 450,251
High River Gold Mines Ltd. (a) 60,000 17,688 60,000 17,688
IAMGOLD, International 195,200 438,137 139,800 313,789
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 2,853,100 15,006,251
Metallica Resources, Inc. 1,042,100 363,077 448,700 156,331
(a)(c)
Metallica Resources, Inc. 100,000 34,841 100,000 34,841
(a)(c)(d)
Mountain Province Mining, 427,400 773,186 291,500 527,337
Inc. (a)
Placer Dome, Inc. 1,584,787 16,458,424 762,665 7,920,474
Repadre Capital Corp. (a) 301,200 435,908 274,800 397,701
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 15,829 410,600 20,633
78,231,593 44,507,532
TOTAL PRECIOUS METALS 83,762,438 47,076,830
TOTAL CANADA 88,212,260 48,021,473
GHANA - 1.2%
PRECIOUS METALS - 1.2%
GOLD ORES - 1.2%
Ashanti Goldfields Co. Ltd. GDR 319,902 2,319,290 218,146 1,581,559
GRAND CAYMAN ISLANDS - 0.0%
PRECIOUS METALS - 0.0%
SILVER ORES - 0.0%
Apex Silver Mines Ltd. (a) 14,800 190,550 - -
PERU - 4.8%
PRECIOUS METALS - 4.8%
SILVER ORES - 4.8%
Compania de Minas
Buenaventura SA:
Class B 939,419 7,184,690 102,000 780,097
sponsored ADR Class B - - 327,600 5,036,850
Series A sponsored ADR 224,445 1,722,523 - -
8,907,213 5,816,947
SOUTH AFRICA - 12.7%
HOLDING COMPANIES - 0.4%
OFFICES OF HOLDING COMPANIES,
NEC - 0.4%
Gencor Ltd. (Reg.) - 352,000 1,139,308
METALS & MINING - 2.8%
MISCELLANEOUS METAL ORES, NEC
- - 0.6%
Anglo American Platinum Corp. 80,800 1,837,299
Ltd.
Impala Platinum Holdings Ltd. - - 4,000 128,152
- 1,965,451
NON-METALIC MINERALS, EXCEPT
FUELS - 2.2
De Beers Consolidated Mines 25,000 679,688 222,500 6,049,219
Ltd. ADR
TOTAL METALS & MINING 679,688 8,014,670
PRECIOUS METALS - 9.5%
GOLD & SILVER ORES - 9.0%
Anglogold Ltd. 236,500 11,851,228 64,586 3,236,463
Anglogold Ltd. sponsored ADR - 224,690 5,813,854
Gold Fields Ltd. 919,135 3,171,254 1,101,270 3,799,667
15,022,482 12,849,984
GOLD ORES - 0.5%
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 15,022,482 14,330,409
TOTAL SOUTH AFRICA 15,702,170 23,484,387
UNITED KINGDOM - 1.8%
METALS & MINING - 1.8%
MISCELLANEOUS METAL ORES, NEC
- - 1.8%
Anglo American PLC (a) 10,000 550,070 89,400 4,917,624
UNITED STATES OF AMERICA -
13.6%
METALS & MINING - 5.3%
COPPER ORES - 5.3%
Freeport-McMoRan Copper & 655,000 10,520,938 364,000 5,846,750
Gold, Inc. Class B
PRECIOUS METALS - 8.0%
GOLD ORES - 8.0%
Homestake Mining Co. 340,006 2,890,051 70,000 595,000
Newmont Mining Corp. 420,565 8,595,297 315,000 6,437,813
Stillwater Mining Co. (a) 136,000 3,000,500 44,150 974,059
Stillwater Mining Co. (d) 59,400 1,310,513 34,500 761,156
15,796,361 8,768,028
SERVICES - 0.3%
JEWELRY, PRECIOUS METAL - 0.3%
Lazare Kaplan International, 85,300 703,725 25,000 206,250
Inc. (a)
TOTAL UNITED STATES OF AMERICA 27,021,024 14,821,028
TOTAL COMMON STOCKS 173,825,470 128,981,950
CASH EQUIVALENTS - 0.8%
Central Cash Collateral Fund, - - 1,188,200 1,188,200
5.26% (b)
Taxable Central Cash Fund, 715,535 715,535 653,418 653,418
5.20% (b)
TOTAL CASH EQUIVALENTS 715,535 1,841,618
TOTAL INVESTMENT PORTFOLIO - (COST $210,046,827) 174,541,005 (COST $148,882,013) 130,823,568
99.0%
NET OTHER ASSETS - 1.0% 2,685,944 189,297
NET ASSETS - 100% 177,226,949 131,012,865
</TABLE>
<TABLE>
<CAPTION>
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COMBINED PORTFOLIOS
SHARES MARKET VALUE
COMMON STOCKS - 98.2%
AUSTRALIA - 19.9%
METALS & MINING - 3.2%
METAL MINING SERVICES - 3.2%
Acacia Resources Ltd. 8,200,008 $ 9,757,477
PRECIOUS METALS - 16.7%
GOLD & SILVER ORES - 7.5%
Normandy Mining Ltd. 27,644,835 19,808,078
Sons of Gwalia NL 1,310,446 3,269,595
23,077,673
GOLD ORES - 9.2%
Delta Gold NL 9,966,328 14,078,116
Newcrest Mining Ltd. (a) 6,003,062 14,209,698
Ross Mining NL 452,197 138,861
28,426,675
TOTAL PRECIOUS METALS 51,504,348
TOTAL AUSTRALIA 61,261,825
CANADA - 44.2%
METALS & MINING - 1.4%
METAL MINING -0.03%
Ivanhoe Mines Ltd. 100,000 105,193
METALS & MINING SERVICES - 0.1%
Minefinders Corp. Ltd. (a) 497,800 216,797
Minefinders Corp. Ltd. (a)(d) 200,000 87,102
303,899
MISCELLANEOUS NONMETALLIC
MINERALS - 1.3%
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) 200,400 3,155,377
3,916,696
TOTAL METALS & MINING 4,325,788
OIL & GAS - 0.4%
OIL & GAS FIELD EXPLORATION
SERVICES - 0.4%
Southwestern Gold Corp. (a) 362,500 1,068,677
PRECIOUS METALS - 42.4%
GOLD & SILVER ORES - 2.6%
Goldcorp, Inc. Class A (a) 1,572,100 7,794,667
Richmont Mines, Inc. (a) 206,300 305,476
8,100,143
GOLD ORES - 39.8%
Agnico-Eagle Mines Ltd. 1,776,300 10,711,357
Barrick Gold Corp. 690,500 13,324,221
Claude Resources, Inc. (a) 500,500 486,248
Euro-Nevada Mining Corp. Ltd. 1,267,200 15,240,362
Francisco Gold Corp. (a) 244,700 1,254,241
Francisco Gold Corp. (d) 199,000 1,020,000
Franco Nevada Mining Corp. 651,000 10,250,251
Ltd.
Franco Nevada Mining Corp. 187,100 2,945,964
Ltd. (d)
Franco Nevada Mining Corp. 58,334 293,136
Ltd. Class B warrants
9/15/98 (a)(d)
Geomaque Explorations Ltd. (a) 1,215,200 407,102
Glamis Gold Ltd. (a) 1,137,600 2,134,191
High River Gold Mines Ltd. (a) 120,000 35,376
IAMGOLD, International 335,000 751,926
African Mining Gold Corp. (a)
IAMGOLD, International 60,000 134,673
African Mining Gold Corp. (d)
Meridian Gold, Inc. (a) 6,422,800 33,781,555
Metallica Resources, Inc. 1,490,800 519,408
(a)(c)
Metallica Resources, Inc. 200,000 69,682
(a)(c)(d)
Mountain Province Mining, 718,900 1,300,523
Inc. (a)
Placer Dome, Inc. 2,347,452 24,378,898
Repadre Capital Corp. (a) 576,000 833,609
Repadre Capital Corp. (a)(d) 155,000 224,322
Teck Corp. Class B (sub-vtg.) 300,300 2,605,618
Vengold, Inc. (a) 725,600 36,462
122,739,125
TOTAL PRECIOUS METALS 130,839,268
TOTAL CANADA 136,233,733
GHANA - 1.2%
PRECIOUS METALS - 1.2%
GOLD ORES - 1.2%
Ashanti Goldfields Co. Ltd. GDR 538,048 3,900,849
GRAND CAYMAN ISLANDS - 0.0%
PRECIOUS METALS - 0.0%
SILVER ORES - 0.0%
Apex Silver Mines Ltd. (a) 14,800 190,550
PERU - 4.8%
PRECIOUS METALS - 4.8%
SILVER ORES - 4.8%
Compania de Minas
Buenaventura SA:
Class B 1,041,419 7,964,787
sponsored ADR Class B 327,600 5,036,850
Series A sponsored ADR 224,445 1,722,523
14,724,160
SOUTH AFRICA - 12.7%
HOLDING COMPANIES - 0.4%
OFFICES OF HOLDING COMPANIES,
NEC - 0.4%
Gencor Ltd. (Reg.) 352,000 1,139,308
METALS & MINING - 2.8%
MISCELLANEOUS METAL ORES, NEC
- - 0.6%
Anglo American Platinum Corp. 80,800 1,837,299
Ltd.
Impala Platinum Holdings Ltd. 4,000 128,152
1,965,451
NON-METALIC MINERALS, EXCEPT
FUELS - 2.2
De Beers Consolidated Mines 247,500 6,728,907
Ltd. ADR
TOTAL METALS & MINING 8,694,358
PRECIOUS METALS - 9.5%
GOLD & SILVER ORES - 9.0%
Anglogold Ltd. 301,086 15,087,691
Anglogold Ltd. sponsored ADR 224,690 5,813,854
Gold Fields Ltd. 2,020,405 6,970,921
27,872,466
GOLD ORES - 0.5%
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 29,352,891
TOTAL SOUTH AFRICA 39,186,557
UNITED KINGDOM - 1.8%
METALS & MINING - 1.8%
MISCELLANEOUS METAL ORES, NEC
- - 1.8%
Anglo American PLC (a) 99,400 5,467,694
UNITED STATES OF AMERICA -
13.6%
METALS & MINING - 5.3%
COPPER ORES - 5.3%
Freeport-McMoRan Copper & 1,019,000 16,367,688
Gold, Inc. Class B
PRECIOUS METALS - 8.0%
GOLD ORES - 8.0%
Homestake Mining Co. 410,006 3,485,051
Newmont Mining Corp. 735,565 15,033,110
Stillwater Mining Co. (a) 180,150 3,974,559
Stillwater Mining Co. (d) 93,900 2,071,669
24,564,389
SERVICES - 0.3%
JEWELRY, PRECIOUS METAL - 0.3%
Lazare Kaplan International, 110,300 909,975
Inc. (a)
TOTAL UNITED STATES OF AMERICA 41,842,052
TOTAL COMMON STOCKS 302,807,420
CASH EQUIVALENTS - 0.8%
Central Cash Collateral Fund, 1,188,200 1,188,200
5.26% (b)
Taxable Central Cash Fund, 1,368,953 1,368,953
5.20% (b)
TOTAL CASH EQUIVALENTS 2,557,153
TOTAL INVESTMENT PORTFOLIO - (COST $358,928,840) 305,364,573
99.0%
NET OTHER ASSETS - 1.0% 2,875,241
NET ASSETS - 100% 308,239,814
</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: An affiliated company is a company which the
fund has ownership of at least 5% of the voting securities.
(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
$6,846,548 or 2.2% of net assets.
POWER OF ATTORNEY
I, the undersigned President and Director, Trustee, or General
Partner, as the case may be, of the following investment companies:
Fidelity Aberdeen Street Trust Fidelity Hereford Street Trust
Fidelity Advisor Series I Fidelity Income Fund
Fidelity Advisor Series II Fidelity Institutional Cash
Fidelity Advisor Series III Portfolios
Fidelity Advisor Series IV Fidelity Institutional
Fidelity Advisor Series V Tax-Exempt Cash Portfolios
Fidelity Advisor Series VI Fidelity Investment Trust
Fidelity Advisor Series VII Fidelity Magellan Fund
Fidelity Advisor Series VIII Fidelity Massachusetts
Fidelity Beacon Street Trust Municipal Trust
Fidelity Boston Street Trust Fidelity Money Market Trust
Fidelity California Municipal Fidelity Mt. Vernon Street
Trust Trust
Fidelity California Municipal Fidelity Municipal Trust
Trust II Fidelity Municipal Trust II
Fidelity Capital Trust Fidelity New York Municipal
Fidelity Charles Street Trust Trust
Fidelity Commonwealth Trust Fidelity New York Municipal
Fidelity Concord Street Trust Trust II
Fidelity Congress Street Fund Fidelity Phillips Street Trust
Fidelity Contrafund Fidelity Puritan Trust
Fidelity Corporate Trust Fidelity Revere Street Trust
Fidelity Court Street Trust Fidelity School Street Trust
Fidelity Court Street Trust II Fidelity Securities Fund
Fidelity Covington Trust Fidelity Select Portfolios
Fidelity Daily Money Fund Fidelity Sterling Performance
Fidelity Destiny Portfolios Portfolio, L.P.
Fidelity Deutsche Mark Fidelity Summer Street Trust
Performance Fidelity Trend Fund
Portfolio, L.P. Fidelity U.S.
Fidelity Devonshire Trust Investments-Bond Fund, L.P.
Fidelity Exchange Fund Fidelity U.S.
Fidelity Financial Trust Investments-Government
Fidelity Fixed-Income Trust Securities
Fidelity Government Fund, L.P.
Securities Fund Fidelity Union Street Trust
Fidelity Hastings Street Trust Fidelity Union Street Trust II
Fidelity Yen Performance
Portfolio, L.P.
Newbury Street Trust
Variable Insurance Products
Fund
Variable Insurance Products
Fund II
Variable Insurance Products
Fund III
in addition to any other investment company for which Fidelity
Management & Research Company or an affiliate acts as investment
adviser and for which the undersigned individual serves as President
and Director, Trustee, or General Partner (collectively, the "Funds"),
hereby constitute and appoint Robert C. Pozen my true and lawful
attorney-in-fact, with full power of substitution, and with full power
to him to sign for me and in my name in the appropriate capacity, all
Registration Statements of the Funds on Form N-1A, Form N-8A, or any
successor thereto, any and all subsequent Amendments, Pre-Effective
Amendments, or Post-Effective Amendments to said Registration
Statements on Form N-1A, Form N-8A, or any successor thereto, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such
things in my name and on my behalf in connection therewith as said
attorney-in-fact deems necessary or appropriate, to comply with the
provisions of the Securities Act of 1933 and the Investment Company
Act of 1940, and all related requirements of the Securities and
Exchange Commission. I hereby ratify and confirm all that said
attorney-in-fact or his substitutes may do or cause to be done by
virtue hereof. This power of attorney is effective for all documents
filed on or after August 1, 1997.
WITNESS my hand on the date set forth below.
/s/Edward C. Johnson 3d July 17, 1997
Edward C. Johnson 3d
POWER OF ATTORNEY
I, the undersigned Director, Trustee, or General Partner, as the case
may be, of the following investment companies:
Fidelity Aberdeen Street Trust Fidelity Government
Fidelity Advisor Annuity Fund Securities Fund
Fidelity Advisor Series I Fidelity Hastings Street Trust
Fidelity Advisor Series II Fidelity Hereford Street Trust
Fidelity Advisor Series III Fidelity Income Fund
Fidelity Advisor Series IV Fidelity Institutional Cash
Fidelity Advisor Series V Portfolios
Fidelity Advisor Series VI Fidelity Institutional
Fidelity Advisor Series VII Tax-Exempt Cash Portfolios
Fidelity Advisor Series VIII Fidelity Institutional Trust
Fidelity Beacon Street Trust Fidelity Investment Trust
Fidelity Boston Street Trust Fidelity Magellan Fund
Fidelity California Municipal Fidelity Massachusetts
Trust Municipal Trust
Fidelity California Municipal Fidelity Money Market Trust
Trust II Fidelity Mt. Vernon Street
Fidelity Capital Trust Trust
Fidelity Charles Street Trust Fidelity Municipal Trust
Fidelity Commonwealth Trust Fidelity Municipal Trust II
Fidelity Congress Street Fund Fidelity New York Municipal
Fidelity Contrafund Trust
Fidelity Corporate Trust Fidelity New York Municipal
Fidelity Court Street Trust Trust II
Fidelity Court Street Trust II Fidelity Phillips Street Trust
Fidelity Covington Trust Fidelity Puritan Trust
Fidelity Daily Money Fund Fidelity Revere Street Trust
Fidelity Daily Tax-Exempt Fund Fidelity School Street Trust
Fidelity Destiny Portfolios Fidelity Securities Fund
Fidelity Deutsche Mark Fidelity Select Portfolios
Performance Fidelity Sterling Performance
Portfolio, L.P. Portfolio, L.P.
Fidelity Devonshire Trust Fidelity Summer Street Trust
Fidelity Exchange Fund Fidelity Trend Fund
Fidelity Financial Trust Fidelity U.S.
Fidelity Fixed-Income Trust Investments-Bond Fund, L.P.
Fidelity U.S.
Investments-Government
Securities
Fund, L.P.
Fidelity Union Street Trust
Fidelity Union Street Trust II
Fidelity Yen Performance
Portfolio, L.P.
Variable Insurance Products
Fund
Variable Insurance Products
Fund II
plus any other investment company for which Fidelity Management &
Research Company or an affiliate acts as investment adviser and for
which the undersigned individual serves as Director, Trustee, or
General Partner (collectively, the "Funds"), hereby constitute and
appoint Arthur J. Brown, Arthur C. Delibert, Stephanie A. Djinis,
Robert C. Hacker, Thomas M. Leahey, Richard M. Phillips, and Dana L.
Platt, each of them singly, my true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to
sign for me and in my name in the appropriate capacities, all
Registration Statements of the Funds on Form N-1A, Form N-8A or any
successor thereto, any and all subsequent Amendments, Pre-Effective
Amendments, or Post-Effective Amendments to said Registration
Statements on Form N-1A or any successor thereto, any Registration
Statements on Form N-14, and any supplements or other instruments in
connection therewith, and generally to do all such things in my name
and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the
Securities Act of 1933 and the Investment Company Act of 1940, and all
related requirements of the Securities and Exchange Commission. I
hereby ratify and confirm all that said attorneys-in-fact or their
substitutes may do or cause to be done by virtue hereof. This power
of attorney is effective for all documents filed on or after March 1,
1997.
WITNESS my hand on the date set forth below.
/s/Robert M. Gates March 6, 1997
Robert M. Gates
POWER OF ATTORNEY
We, the undersigned Directors, Trustees, or General Partners, as the
case may be, of the following investment companies:
Fidelity Aberdeen Street Trust Fidelity Government
Fidelity Advisor Annuity Fund Securities Fund
Fidelity Advisor Series I Fidelity Hastings Street Trust
Fidelity Advisor Series II Fidelity Hereford Street Trust
Fidelity Advisor Series III Fidelity Income Fund
Fidelity Advisor Series IV Fidelity Institutional Cash
Fidelity Advisor Series V Portfolios
Fidelity Advisor Series VI Fidelity Institutional
Fidelity Advisor Series VII Tax-Exempt Cash Portfolios
Fidelity Advisor Series VIII Fidelity Institutional Trust
Fidelity Beacon Street Trust Fidelity Investment Trust
Fidelity Boston Street Trust Fidelity Magellan Fund
Fidelity California Municipal Fidelity Massachusetts
Trust Municipal Trust
Fidelity California Municipal Fidelity Money Market Trust
Trust II Fidelity Mt. Vernon Street
Fidelity Capital Trust Trust
Fidelity Charles Street Trust Fidelity Municipal Trust
Fidelity Commonwealth Trust Fidelity Municipal Trust II
Fidelity Congress Street Fund Fidelity New York Municipal
Fidelity Contrafund Trust
Fidelity Corporate Trust Fidelity New York Municipal
Fidelity Court Street Trust Trust II
Fidelity Court Street Trust II Fidelity Phillips Street Trust
Fidelity Covington Trust Fidelity Puritan Trust
Fidelity Daily Money Fund Fidelity Revere Street Trust
Fidelity Daily Tax-Exempt Fund Fidelity School Street Trust
Fidelity Destiny Portfolios Fidelity Securities Fund
Fidelity Deutsche Mark Fidelity Select Portfolios
Performance Fidelity Sterling Performance
Portfolio, L.P. Portfolio, L.P.
Fidelity Devonshire Trust Fidelity Summer Street Trust
Fidelity Exchange Fund Fidelity Trend Fund
Fidelity Financial Trust Fidelity U.S.
Fidelity Fixed-Income Trust Investments-Bond Fund, L.P.
Fidelity U.S.
Investments-Government
Securities
Fund, L.P.
Fidelity Union Street Trust
Fidelity Union Street Trust II
Fidelity Yen Performance
Portfolio, L.P.
Variable Insurance Products
Fund
Variable Insurance Products
Fund II
plus any other investment company for which Fidelity Management &
Research Company or an affiliate acts as investment adviser and for
which the undersigned individual serves as Directors, Trustees, or
General Partners (collectively, the "Funds"), hereby constitute and
appoint Arthur J. Brown, Arthur C. Delibert, Stephanie A. Djinis,
Robert C. Hacker, Thomas M. Leahey, Richard M. Phillips, and Dana L.
Platt, each of them singly, our true and lawful attorneys-in-fact,
with full power of substitution, and with full power to each of them,
to sign for us and in our names in the appropriate capacities, all
Registration Statements of the Funds on Form N-1A, Form N-8A or any
successor thereto, any and all subsequent Amendments, Pre-Effective
Amendments, or Post-Effective Amendments to said Registration
Statements on Form N-1A or any successor thereto, any Registration
Statements on Form N-14, and any supplements or other instruments in
connection therewith, and generally to do all such things in our names
and behalf in connection therewith as said attorneys-in-fact deems
necessary or appropriate, to comply with the provisions of the
Securities Act of 1933 and the Investment Company Act of 1940, and all
related requirements of the Securities and Exchange Commission. I
hereby ratify and confirm all that said attorneys-in-fact or their
substitutes may do or cause to be done by virtue hereof. This power
of attorney is effective for all documents filed on or after January
1, 1997.
WITNESS our hands on this nineteenth day of December, 1996.
/s/Edward C. Johnson 3d /s/Peter S. Lynch
Edward C. Johnson 3d Peter S. Lynch
/s/J. Gary Burkhead /s/William O. McCoy
J. Gary Burkhead William O. McCoy
/s/Ralph F. Cox /s/Gerald C. McDonough
Ralph F. Cox Gerald C. McDonough
/s/Phyllis Burke Davis /s/Marvin L. Mann
Phyllis Burke Davis Marvin L. Mann
/s/E. Bradley Jones /s/Thomas R. Williams
E. Bradley Jones Thomas R. Williams
/s/Donald J. Kirk
Donald J. Kirk
