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 (ANNUAL ONLY)
RETAILING
SOFTWARE AND COMPUTER SERVICES
TECHNOLOGY
TELECOMMUNICATIONS
TRANSPORTATION
UTILITIES GROWTH
ANNUAL REPORT
FOR THE YEAR ENDING
FEBRUARY 29, 2000
AND
PROSPECTUS
DATED APRIL 29, 2000
(2_FIDELITY_LOGOS)(registered trademark)
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
PERFORMANCE OVERVIEW A-4
FUND UPDATES*
CONSUMER SECTOR A-6 CONSUMER INDUSTRIES
A-14 FOOD AND AGRICULTURE
A-20 LEISURE
A-26 MULTIMEDIA
A-32 RETAILING
CYCLICALS SECTOR A-37 AIR TRANSPORTATION
A-42 AUTOMOTIVE
A-47 CHEMICALS
A-52 CONSTRUCTION AND HOUSING
A-58 CYCLICAL INDUSTRIES
A-65 DEFENSE AND AEROSPACE
A-71 ENVIRONMENTAL SERVICES
A-76 INDUSTRIAL EQUIPMENT
A-82 INDUSTRIAL MATERIALS
A-88 PAPER AND FOREST PRODUCTS
A-93 TRANSPORTATION
FINANCIAL SERVICES SECTOR A-98 BANKING
A-103 BROKERAGE AND INVESTMENT MANAGEMENT
A-109 FINANCIAL SERVICES
A-115 HOME FINANCE
A-121 INSURANCE
HEALTH CARE SECTOR A-126 BIOTECHNOLOGY
A-132 HEALTH CARE
A-138 MEDICAL DELIVERY
A-144 MEDICAL EQUIPMENT AND SYSTEMS
NATURAL RESOURCES SECTOR A-149 ENERGY
A-155 ENERGY SERVICE
A-160 GOLD
A-166 NATURAL RESOURCES
A-172 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-176 BUSINESS SERVICES AND OUTSOURCING
A-181 COMPUTERS
A-187 DEVELOPING COMMUNICATIONS
A-193 ELECTRONICS
A-199 SOFTWARE AND COMPUTER SERVICES
A-205 TECHNOLOGY
UTILITIES SECTOR A-212 NATURAL GAS
A-218 TELECOMMUNICATIONS
A-224 UTILITIES GROWTH
A-230 MONEY MARKET
NOTES TO FINANCIAL STATEMENTS A-236 FOOTNOTES TO THE FINANCIAL
STATEMENTS
REPORT OF INDEPENDENT A-240 THE AUDITORS' OPINION
ACCOUNTANTS
DISTRIBUTIONS A-241
PROXY VOTING RESULTS A-242
FIDELITY SELECT PORTFOLIOS P-1
PROSPECTUS
</TABLE>
Standard & Poor's, S&P and S&P 500 are registered service marks of The
McGraw-Hill Companies, Inc. and have been licensed for use by
Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
This report is printed on recycled paper using soy-based inks.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF EACH FUND'S
PORTFOLIO MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS
STATED ON THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF
FIDELITY OR ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER
CONDITIONS AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH
VIEWS. THESE VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND,
BECAUSE INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
BECAUSE OF THEIR NARROW FOCUS, SECTOR FUNDS TEND TO BE MORE VOLATILE
THAN FUNDS THAT DIVERSIFY ACROSS MANY SECTORS AND COMPANIES.
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:
The threat of inflation that overhung the investment landscape for
nearly all of the 12-month period ending February 29, 2000, never
fully materialized. Four pre-emptive interest-rate hikes by the
Federal Reserve Board helped keep inflation at bay. But what did
emerge from this environment was unparalleled momentum in technology
that spurred the sector's rise to unprecedented heights. Phrases such
as "new economy," "e-commerce" and "dot.com" rolled off of investors'
tongues, while their dollars rolled into technology stocks and mutual
funds. On the other hand, save for a short-lived cyclical and value
rally in the early stages of the period, the stocks of more
traditional, stable growers saw their share prices tumble to seemingly
unjustified levels given their strong earnings growth rates. U.S.
equity market indexes told the tale of this performance divergence.
The broad-based Standard & Poor's 500SM Index - a large-capitalization
index of 500 widely held stocks - returned 11.73% during the 12-month
period. Meanwhile, the narrower, technology-focused NASDAQ Composite
Index returned 105.81%. Even the small-cap oriented Russell
2000(registered trademark) Index got in on the tech rally, gaining
49.28%, while blue chips lagged behind with a 10.47% return, as
measured by the Dow Jones Industrial Average.
Of the 39 Select equity portfolios, 19 topped the S&P 500's(registered
trademark) 12-month return, while 25 of the 39 beat their respective
Goldman Sachs index - a measure of the performance of companies within
the Select Portfolios' sector concentrations. The best performer for
the period was Select Technology, which gained 184.11%. Select Food &
Agriculture posted the lowest return, falling 27.86%. Select Precious
Metals and Minerals merged with Select Gold on the final day of the
period, February 29, 2000.
In addition to the rush into technology stocks, another significant
development during the period was a dramatic improvement in the global
economy. This spurred greater demand for commodities, which enhanced
the prospects for extractive industries - such as mining and oil and
natural gas drilling - where many stocks were selling at steep
discounts to the market averages. 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 period to around $30 per barrel by the end of
February.
Fears of an overheating domestic economy - and thus, inflation -
quickly put an end to the value rally, however. In May, the Fed
switched from a neutral bias to one favoring a hike in the federal
funds target rate, and later followed through with four 0.25
percentage point increases in June, August, November and February.
Turning to individual sector performance for the 12-month period, the
CONSUMER sector turned in mixed results. Multimedia and Leisure each
benefited from the strong performance of advertising-driven companies.
Rising interest rates put a damper on Retailing, which underperformed
its benchmarks. A lack of volume growth and pricing power detracted
from Food and Agriculture, while rising interest rates and compelling
technology returns subdued the performance of Consumer Industries.
While eight of the 11 Select CYCLICAL Portfolios beat their Goldman
Sachs benchmark, this sector also struggled to compete with the more
glamorous technology issues. Paper and Forest Products did very well
as the global economic recovery spurred demand. Cautious investor
sentiment about continued economic growth caused Industrial Materials
to drop into negative territory. Chemicals soundly beat its Goldman
Sachs index, helped by its exposure to the overseas rally. Cyclical
Industries had a slightly positive return, gained mostly from the
cyclical rally early in the period. Several large defense contractors
missed their earnings targets, detracting from Defense and Aerospace.
A sizable weighting in semiconductor stocks benefited Industrial
Equipment. Air Transportation and Transportation had a solid first
half, then pulled back somewhat due to soaring jet fuel prices.
Although auto sales were strong, fears of further Fed rate hikes
negatively affected Automotive. Construction and Housing fell from the
effects of interest-rate jitters on the housing market. Environmental
Services posted a negative return due to poor merger integrations and
missed earnings targets among solid waste companies.
FINANCIAL SERVICES stocks typically struggle in an environment of
rising interest rates, which highlighted the past 12 months. The Fed's
actions caused returns of Banking, Home Finance and Insurance to drop
by more than 20%. Although Financial Services beat its Goldman Sachs
benchmark, it too suffered a double-digit drop. Brokerage and
Investment Management, on the other hand, reaped the benefits of
record-breaking trading activity and its capital markets exposure.
After encountering a host of challenges in 1999, the HEALTH CARE
sector demonstrated new signs of life in 2000. However, only
Biotechnology delivered technology-like returns thanks to a number of
research & development breakthroughs. Exposure to the biotech industry
also helped Medical Equipment and Systems, as it returned over 25%.
Conversely, Medical Delivery was felled by a variety of macro-economic
factors, including federal budget cuts that reduced Medicare
reimbursements. Meanwhile, a poor year for pharmaceuticals contributed
to the flat return of Health Care.
Higher oil prices, increased demand and restricted supply were a boon
to most of the NATURAL RESOURCES sector. Natural Resources, Energy and
Energy Service were all beneficiaries of this scenario. Once again,
however, the relatively low prices of gold and excess supply fears
left Gold and Precious Metals and Minerals with only single-digit
returns.
What more can one say about TECHNOLOGY? Five of the six Fidelity
Select Portfolios in this sector - Technology, Electronics, Developing
Communications, Computers, and Software and Computer Services -
generated one-year returns in excess of 100%. While Business Services
and Outsourcing did beat the S&P 500, the Portfolio's focus on
companies that provide outsourcing services naturally precluded it
from owning the Internet and data-networking stocks that led the
period's charge.
All of the Select Portfolios within the UTILITIES sector beat their
Goldman Sachs and S&P 500 benchmarks. The explosion of data and
wireless communications demand spurred a return of nearly 85% for
Telecommunications. Utilities Growth jumped almost 30% on the strength
of its wireless exposure, and Natural Gas was up nearly 45% as the
price of and demand for natural gas surged during the past 12 months.
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
CUMULATIVE TOTAL RETURNS
FOR THE YEAR ENDED FEBRUARY 29, 2000
<TABLE>
<CAPTION>
<S> <C> <C>
Technology 184.11% Row: 1, Col: 1, Value: 184.11
Electronics 178.06% Row: 2, Col: 1, Value: 178.06
Biotechnology 173.22% Row: 3, Col: 1, Value: 173.22
Developing Communications 166.12% Row: 4, Col: 1, Value: 166.12
Energy Service 121.24% Row: 5, Col: 1, Value: 121.24
Computers 119.58% Row: 6, Col: 1, Value: 119.58
Software & Computer Services 100.83% Row: 7, Col: 1, Value: 100.83
Telecommunications 84.89% Row: 8, Col: 1, Value: 84.89
Natural Resources 48.42% Row: 9, Col: 1, Value: 48.42
Energy 44.89% Row: 10, Col: 1, Value: 44.89
Natural Gas 44.70% Row: 11, Col: 1, Value: 44.7
Utilities Growth 29.76% Row: 12, Col: 1, Value: 29.76
Multimedia 27.62% Row: 13, Col: 1, Value: 27.62
Medical Equipment & Systems 25.68% Row: 14, Col: 1, Value: 25.68
Paper & Forest Products 20.16% Row: 15, Col: 1, Value: 20.16
Brokerage & Investment Management 19.14% Row: 16, Col: 1, Value: 19.14
Industrial Equipment 18.98% Row: 17, Col: 1, Value: 18.98
Leisure 13.89% Row: 18, Col: 1, Value: 13.89
Business Services & Outsourcing 12.15% Row: 19, Col: 1, Value: 12.15
S&P 500 11.73% Row: 20, Col: 2, Value: 11.73
Chemicals 11.10% Row: 21, Col: 1, Value: 11.1
Air Transportation 8.50% Row: 22, Col: 1, Value: 8.5
Gold 5.16% Row: 23, Col: 1, Value: 5.159999999999999
Precious Metals & Minerals 5.02% Row: 24, Col: 1, Value: 5.02
Defense and Aerospace 3.24% Row: 25, Col: 1, Value: 3.24
Transportation 2.15% Row: 26, Col: 1, Value: 2.15
Cyclical Industries 1.40% Row: 27, Col: 1, Value: 1.4
Health Care 1.15% Row: 28, Col: 1, Value: 1.15
Industrial Materials -3.22% Row: 29, Col: 1, Value: -3.22
Consumer Industries -4.55% Row: 30, Col: 1, Value: -4.55
Retailing -12.15% Row: 31, Col: 1, Value: -12.15
Financial Services -14.53% Row: 32, Col: 1, Value: -14.53
Automotive -17.40% Row: 33, Col: 1, Value: -17.4
Construction & Housing -18.28% Row: 34, Col: 1, Value: -18.28
Medical Delivery -19.60% Row: 35, Col: 1, Value: -19.6
Banking -22.07% Row: 36, Col: 1, Value: -22.07
Insurance -22.12% Row: 37, Col: 1, Value: -22.12
Home Finance -24.88% Row: 38, Col: 1, Value: -24.88
Environmental Services -25.00% Row: 39, Col: 1, Value: -25.0
Food & Agriculture -27.86% Row: 40, Col: 1, Value: -27.86
</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.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 29, PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
2000
SELECT CONSUMER INDUSTRIES -4.55% 142.42% 324.17%
SELECT CONSUMER INDUSTRIES -7.48% 135.07% 311.37%
(LOAD ADJ.)
S&P 500 11.73% 206.94% 381.66%
GS Consumer Industries -5.41% 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 500SM Index - a
market capitalization-weighted index of common stocks - and the
Goldman Sachs Consumer Industries Index - a market
capitalization-weighted index of 301 stocks designed to measure the
performance of companies in the consumer industries sector. These
benchmarks include reinvestment of dividends and capital gains, if
any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 29, PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
2000
SELECT CONSUMER INDUSTRIES -4.55% 19.37% 16.12%
SELECT CONSUMER INDUSTRIES -7.48% 18.64% 15.76%
(LOAD ADJ.)
S&P 500 11.73% 25.14% 17.66%
GS Consumer Industries -5.41% 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 42215.99 46265.46
1999/09/30 41246.78 44997.32
1999/10/31 43392.89 47844.75
1999/11/30 44085.18 48817.43
1999/12/31 47042.51 51692.78
2000/01/31 43717.44 49095.74
2000/02/29 41137.00 48166.35
IMATRL PRASUN SHR__CHT 20000229 20000309 111400 R00000000000119
$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 29, 2000, the value of the
investment would have grown to $41,137 - a 311.37% 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 $48,166
- - a 381.66% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
Wal-Mart Stores, Inc. 7.0
Home Depot, Inc. 6.4
Procter & Gamble Co. 6.3
The Coca-Cola Co. 3.6
Walt Disney Co. 3.5
Time Warner, Inc. 3.5
AT&T Corp. - Liberty Media 2.8
Group Class A
CBS Corp. 2.1
MediaOne Group, Inc. 2.1
Philip Morris Companies, Inc. 2.0
39.3
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Broadcasting 17.4% Row: 1, Col: 6, Value: 17.4
General Merchandise Stores 11.4% Row: 1, Col: 5, Value: 11.4
Household Products 10.6% Row: 1, Col: 4, Value: 10.6
Retail & Wholesale,
Miscellaneous 10.4% Row: 1, Col: 3, Value: 10.4
Beverages 9.3% Row: 1, Col: 2, Value: 9.300000000000001
*All Others 40.9% Row: 1, Col: 1, Value: 40.9
</TABLE>
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
(photograph of John Porter)
John Porter, Portfolio Manager of Fidelity Select Consumer Industries
Portfolio
Q. HOW DID THE FUND PERFORM, JOHN?
A. For the 12 months that ended February 29, 2000, the fund posted a
return of -4.55%, outpacing the Goldman Sachs Consumer Industries
Index - an index of 301 stocks designed to measure the performance of
companies in the consumer industries sector - which declined 5.41%.
The Standard & Poor's 500 Index returned 11.73% during this same time
frame.
Q. WITH HISTORICALLY HIGH LEVELS OF CONSUMER SPENDING FUELING THE
ECONOMY, THE SECTOR STILL SEEMED TO STRUGGLE. WHY?
A. It's true that consumer spending was very strong, and many consumer
companies benefited from it. But the growth, which was attractive on
an absolute basis, was simply not all that exciting on a relative
basis. We're living in an environment where investors are expecting
the market to continue to deliver growth in the mid-teens or better,
and there were really only one or two sectors that could do that -
technology and telecommunications. Rising interest rates also proved
troubling for consumer stocks, but to a much lesser degree than the
relative attractiveness of the tech and telecom sectors.
Q. WHAT FACTORS ALLOWED THE FUND TO BEAT THE GOLDMAN SACHS INDEX
DURING THE 12-MONTH PERIOD?
A. Some good stock picks, coupled with strong industry positioning,
gave us the upper hand during the period. We gained an advantage by
maintaining an underweighting in soft drinks, most notably Coca-Cola,
which continued to grapple with local market challenges and falling
sales volumes. The fund benefited from its overexposure to Procter &
Gamble, which rallied in response to recovering global economies and a
company-wide reorganization. Having a smaller stake than the index in
retail department stores and foods, and a larger position in
broadcasting stocks, also helped. However, the fund's overweighting in
supermarkets and tobacco, both of which performed poorly, tempered its
gains.
Q. HAVE YOU MADE ANY NOTABLE CHANGES SINCE TAKING OVER THE FUND ON
SEPTEMBER 1, 1999?
A. As the period progressed, I became increasingly confident in the
state of the U.S. economy. So, I was more comfortable building up my
exposure on the domestic front, rotating away from defensive areas
such as supermarkets, and into more offensive high-growth retail,
advertising and media stocks. I did add modestly to the fund's stake
in multinationals as a play on the developing recoveries overseas.
Q. HOW DID THE FUND'S INVESTMENTS IN THE VARIOUS CONSUMER INDUSTRIES
INFLUENCE PERFORMANCE?
A. Our exposure to high-growth retailers Wal-Mart, Home Depot and
Costco, as well as our avoidance of weak department store benchmark
issues Sears, Kmart and J.C. Penney, served us well. I cut back on the
fund's exposure to supermarkets, a group in part felled by execution
problems related to merger activity, but those we did own - such as
Kroger, Albertson's and Safeway - really hurt. In advertising and
media, I stepped up our weighting in radio stocks - big beneficiaries
of Internet advertising - such as AMFM, which helped. Our
out-of-benchmark positioning in consumer-
electronics provider Gemstar gave us an additional lift. Finally, in
terms of food stocks, not holding Campbell Soup and having less
ConAgra - a top food conglomerate supplying well-known brands such as
Banquet, Peter Pan and Wesson - than the benchmark also added
meaningfully to returns.
Q. WHAT OTHER STOCKS WORKED OUT WELL FOR THE FUND? WHICH DISAPPOINTED?
A. CBS, Time Warner, MediaOne and Corning all were strong
contributors. On the downside, our stake in Saks hurt, as the stock
retreated - along with most department stores - in response to
declining mall traffic. The fund no longer held Saks at the close of
the period. As mentioned above, supermarket stocks also were big
negatives, as was Philip Morris, which continued to languish on
concerns surrounding tobacco-related litigation.
Q. WHAT'S YOUR OUTLOOK?
A. I'll continue to position the fund to further benefit from the
robustness of the U.S. economy, which I believe still has legs.
Globally, I feel it's too early to measure the sustainability of the
recoveries we're watching unfold today. If I happen to see signs of
deterioration domestically, I would consider adding more of the
leading multinationals, which could help performance in the event of a
slowdown.
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 29, 2000, more than
$63 million
MANAGER: John Porter, since September 1999;
manager, Fidelity Advisor Consumer Industries
Fund, since September 1999; several Fidelity
Select Portfolios, 1996-1999; joined Fidelity
in 1995
CONSUMER INDUSTRIES PORTFOLIO
INVESTMENTS FEBRUARY 29, 2000
Showing Percentage of Net Assets
COMMON STOCKS - 95.7%
SHARES VALUE (NOTE 1)
ADVERTISING - 1.9%
Interpublic Group of 9,700 $ 389,819
Companies, Inc.
Omnicom Group, Inc. 6,500 612,219
TMP Worldwide, Inc. (a) 500 67,969
Young & Rubicam, Inc. 2,000 101,000
1,171,007
APPAREL STORES - 3.1%
Abercrombie & Fitch Co. Class 6,500 95,469
A (a)
American Eagle Outfitters, 2,100 53,550
Inc. (a)
AnnTaylor Stores Corp. (a) 3,100 59,094
Claire's Stores, Inc. 3,300 57,544
Gap, Inc. 24,037 1,161,288
Payless ShoeSource, Inc. (a) 1,200 47,400
Talbots, Inc. 1,800 65,138
The Limited, Inc. 8,601 292,434
TJX Companies, Inc. 4,300 68,531
Too, Inc. (a) 1,285 30,840
Venator Group, Inc. (a) 5,000 28,438
1,959,726
AUTOS, TIRES, & ACCESSORIES -
0.1%
AutoNation, Inc. (a) 8,400 63,525
BEVERAGES - 9.3%
Adolph Coors Co. Class B 2,700 118,463
Anheuser-Busch Companies, 13,700 878,513
Inc.
Canandaigua Brands, Inc. 3,000 147,000
Class A (a)
Celestial Seasonings, Inc. (a) 14,100 366,600
Coca-Cola Enterprises, Inc. 14,000 327,250
Panamerican Beverages, Inc. 3,000 51,188
Class A
Pepsi Bottling Group, Inc. 4,100 68,675
PepsiCo, Inc. 36,500 1,177,125
Seagram Co. Ltd. 8,100 455,122
The Coca-Cola Co. 47,500 2,300,781
Whitman Corp. 1 13
5,890,730
BROADCASTING - 17.4%
Adelphia Communications Corp. 1,500 82,406
Class A (a)
American Tower Corp. Class A 1,000 49,250
(a)
AMFM, Inc. (a) 10,900 668,988
AT&T Corp. - Liberty Media 34,300 1,792,175
Group Class A (a)
Cablevision Systems Corp. 2,900 186,144
Class A (a)
CBS Corp. (a) 22,212 1,323,002
Clear Channel Communications, 6,638 442,257
Inc. (a)
Comcast Corp.:
Class A 2,300 92,000
Class A (special) 19,500 828,750
Cox Communications, Inc. 14,300 649,756
Class A (a)
E.W. Scripps Co. Class A 700 30,188
SHARES VALUE (NOTE 1)
EchoStar Communications Corp. 1,200 $ 136,800
Class A (a)
Entercom Communications Corp. 1,200 50,475
Hearst-Argyle Television, 1,400 29,138
Inc. (a)
Hispanic Broadcasting Corp. 1,400 130,813
(a)
Infinity Broadcasting Corp. 13,000 415,188
Class A (a)
MediaOne Group, Inc. (a) 16,600 1,303,100
Time Warner, Inc. 25,990 2,222,145
UnitedGlobalCom, Inc. (a) 1,700 177,650
Univision Communications, 700 71,313
Inc. Class A (a)
USA Networks, Inc. (a) 14,200 318,613
11,000,151
BUILDING MATERIALS - 0.1%
Fortune Brands, Inc. 3,500 76,563
CELLULAR - 0.4%
Crown Castle International 1,900 61,275
Corp. (a)
Rogers Communications, Inc. 6,300 214,259
Class B (non-vtg.) (a)
275,534
COMPUTER SERVICES & SOFTWARE
- - 1.0%
America Online, Inc. (a) 1,800 106,200
Circle.com (a) 1,000 9,438
Microsoft Corp. (a) 5,300 473,688
Sykes Enterprises, Inc. (a) 3,000 48,938
638,264
COMPUTERS & OFFICE EQUIPMENT
- - 0.1%
Pitney Bowes, Inc. 1,600 79,200
CONSUMER ELECTRONICS - 0.7%
Black & Decker Corp. 1,500 49,406
Gemstar International Group 4,500 341,438
Ltd. (a)
Whirlpool Corp. 1,000 54,313
445,157
DRUG STORES - 1.4%
CVS Corp. 5,154 180,390
Walgreen Co. 27,800 717,588
897,978
DRUGS & PHARMACEUTICALS - 0.3%
American Home Products Corp. 4,200 182,700
ENTERTAINMENT - 6.7%
Carnival Corp. 18,000 518,625
Fox Entertainment Group, Inc. 2,600 68,413
Class A
Hollywood Entertainment Corp. 2,500 25,469
(a)
International Speedway Corp. 600 26,550
Class A
Royal Caribbean Cruises Ltd. 5,800 205,175
SFX Entertainment, Inc. Class 4,250 163,625
A (a)
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ENTERTAINMENT - CONTINUED
Speedway Motorsports, Inc. (a) 1,200 $ 36,750
Viacom, Inc.:
Class A (a) 3,200 177,200
Class B (non-vtg.) (a) 14,100 786,075
Walt Disney Co. 66,600 2,231,100
4,238,982
FOODS - 3.7%
American Italian Pasta Co. 4,000 91,250
Class A (a)
Bestfoods 7,800 327,113
Corn Products International, 5,350 126,059
Inc.
Dean Foods Co. 1,400 37,975
Earthgrains Co. 3,800 57,000
General Mills, Inc. 4,500 148,219
Groupe Danone 170 34,245
Hormel Foods Corp. 3,400 56,738
IBP, Inc. 4,200 52,500
Keebler Foods Co. (a) 6,200 157,325
Kellogg Co. 3,000 75,938
Nabisco Group Holdings Corp. 15,400 132,825
Nabisco Holdings Corp. Class A 6,500 190,125
Quaker Oats Co. 8,400 453,075
Sara Lee Corp. 7,900 118,500
Sysco Corp. 8,300 272,344
2,331,231
GENERAL MERCHANDISE STORES -
11.4%
Ames Department Stores, Inc. 6,200 87,575
(a)
BJ's Wholesale Club, Inc. (a) 2,100 65,100
Consolidated Stores Corp. (a) 11,628 130,815
Costco Wholesale Corp. (a) 17,100 848,588
Dollar General Corp. 6,875 143,945
Dollar Tree Stores, Inc. (a) 1,500 58,219
Federated Department Stores, 2,400 88,050
Inc. (a)
Kohls Corp. (a) 6,200 470,038
Neiman Marcus Group, Inc. 572 12,012
Class B (a)
Stein Mart, Inc. (a) 8,900 38,381
Target Corp. 15,300 902,700
Wal-Mart Stores, Inc. 90,300 4,396,457
7,241,880
GROCERY STORES - 2.1%
Albertson's, Inc. 4,823 118,164
Fleming Companies, Inc. 10,000 154,375
Kroger Co. (a) 19,500 290,063
Safeway, Inc. (a) 14,900 574,581
U.S. Foodservice (a) 7,900 139,731
Winn-Dixie Stores, Inc. 1,100 17,738
1,294,652
SHARES VALUE (NOTE 1)
HOME FURNISHINGS - 0.2%
Linens'n Things, Inc. (a) 4,800 $ 94,500
HOUSEHOLD PRODUCTS - 10.6%
Avon Products, Inc. 23,600 638,675
Clorox Co. 14,156 572,433
Colgate-Palmolive Co. 5,800 302,688
Dial Corp. 14,500 208,438
Estee Lauder Companies, Inc. 9,600 416,400
Gillette Co. 8,900 313,725
Procter & Gamble Co. 45,100 3,968,800
Unilever NV 12,000 60,432
Unilever NV (NY Shares) 4,996 227,318
Yankee Candle Co., Inc. 1,400 18,200
6,727,109
LEASING & RENTAL - 0.1%
Hertz Corp. Class A 800 28,650
LEISURE DURABLES & TOYS - 0.5%
Callaway Golf Co. 5,200 62,400
Harley-Davidson, Inc. 4,100 279,313
341,713
LODGING & GAMING - 0.5%
Gtech Holdings Corp. (a) 1,800 36,000
Marriott International, Inc. 2,200 60,638
Class A
Mirage Resorts, Inc. (a) 5,400 85,725
Prime Hospitality Corp. (a) 8,800 74,800
Sun International Hotels Ltd. 800 17,050
(a)
WMS Industries, Inc. (a) 4,200 47,775
321,988
PACKAGING & CONTAINERS - 0.5%
Corning, Inc. 1,200 225,600
Tupperware Corp. 5,300 91,094
316,694
PAPER & FOREST PRODUCTS - 1.7%
Kimberly-Clark Corp. 20,300 1,049,256
PHOTOGRAPHIC EQUIPMENT - 0.4%
Eastman Kodak Co. 4,700 269,369
PRINTING - 0.1%
R.R. Donnelley & Sons Co. 4,700 89,888
PUBLISHING - 2.8%
Gannet Co., Inc. 5,400 352,013
Harcourt General, Inc. 2,300 79,206
Harte Hanks Communications, 3,300 71,981
Inc.
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PUBLISHING - CONTINUED
Knight-Ridder, Inc. 1,300 $ 60,938
McGraw-Hill Companies, Inc. 7,500 381,563
Meredith Corp. 4,000 114,500
Playboy Enterprises, Inc. 5,100 112,519
Class B (a)
Reader's Digest Association, 4,300 147,813
Inc. Class A (non-vtg.)
The New York Times Co. Class A 6,800 287,300
Tribune Co. 4,700 183,006
1,790,839
REAL ESTATE INVESTMENT TRUSTS
- - 0.1%
Pinnacle Holdings, Inc. 1,200 70,200
RESTAURANTS - 2.9%
Brinker International, Inc. 3,000 65,250
(a)
CEC Entertainment, Inc. (a) 2,700 61,425
Darden Restaurants, Inc. 3,300 43,519
Jack in the Box, Inc. (a) 5,100 102,319
McDonald's Corp. 38,700 1,221,469
Outback Steakhouse, Inc. (a) 8,600 224,675
Papa John's International, 3,100 74,400
Inc. (a)
Starbucks Corp. (a) 1,400 49,175
1,842,232
RETAIL & WHOLESALE,
MISCELLANEOUS - 10.4%
Alberto-Culver Co. Class A 5,100 100,725
Bed Bath & Beyond, Inc. (a) 6,800 192,950
Best Buy Co., Inc. (a) 3,300 179,438
Chemdex Corp. 900 202,388
Circuit City Stores, Inc. - 8,100 327,038
Circuit City Group
Drugstore.com, Inc. 1,500 28,500
Home Depot, Inc. 70,500 4,075,781
Lowe's Companies, Inc. 17,500 833,438
Office Depot, Inc. (a) 3,950 48,141
Staples, Inc. (a) 17,275 466,425
Tiffany & Co., Inc. 900 57,769
Webvan Group, Inc. 4,600 52,325
Zale Corp. (a) 700 26,338
6,591,256
SECURITIES INDUSTRY - 0.1%
Macrovision Corp. (a) 300 29,925
SERVICES - 1.9%
ACNielsen Corp. (a) 10,400 176,150
Cendant Corp. (a) 10,700 190,594
H&R Block, Inc. 3,200 140,400
Manpower, Inc. 4,500 147,094
Modis Professional Services, 700 11,025
Inc. (a)
SHARES VALUE (NOTE 1)
NCO Group, Inc. (a) 3,400 $ 79,475
Profit Recovery Group 3,000 55,500
International, Inc. (a)
Snyder Communications, Inc. 1 24
(SNC)
True North Communications 6,300 233,100
Viad Corp. 7,800 182,813
1,216,175
TEXTILES & APPAREL - 1.1%
Jones Apparel Group, Inc. (a) 6,600 149,325
Liz Claiborne, Inc. 5,200 194,675
Mohawk Industries, Inc. (a) 1,500 33,281
NIKE, Inc. Class B 7,300 207,594
Pacific Sunwear of 1,100 27,981
California, Inc. (a)
Shaw Industries, Inc. 2,500 31,719
Tommy Hilfiger (a) 500 5,813
WestPoint Stevens, Inc. Class 2,600 43,225
A
693,613
TOBACCO - 2.1%
Philip Morris Companies, Inc. 62,000 1,243,875
RJ Reynolds Tobacco Holdings, 4,900 88,200
Inc.
1,332,075
TOTAL COMMON STOCKS 60,592,762
(Cost $51,229,870)
CASH EQUIVALENTS - 9.3%
Central Cash Collateral Fund, 2,758,800 2,758,800
5.75% (b)
Taxable Central Cash Fund, 3,164,178 3,164,178
5.66% (b)
TOTAL CASH EQUIVALENTS 5,922,978
(Cost $5,922,978)
TOTAL INVESTMENT PORTFOLIO - 66,515,740
105.0%
(Cost $57,152,848)
NET OTHER ASSETS - (5.0)% (3,185,090)
NET ASSETS - 100% $ 63,330,650
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 $66,003,499 and $77,986,566, 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 $11,823 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $2,622,525. The fund
received cash collateral of $2,758,800 which was invested in cash
equivalents.
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $57,515,684. Net unrealized appreciation
aggregated $9,000,056, of which $14,966,778 related to appreciated
investment securities and $5,966,722 related to depreciated investment
securities.
The fund hereby designates approximately $4,378,000 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 2001 of amounts for use
in preparing 2000 income tax returns.
CONSUMER INDUSTRIES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 66,515,740
value (cost $57,152,848) -
See accompanying schedule
Receivable for fund shares 108,015
sold
Dividends receivable 32,540
Interest receivable 20,187
Redemption fees receivable 204
Other receivables 8,606
TOTAL ASSETS 66,685,292
LIABILITIES
Payable for fund shares $ 522,837
redeemed
Accrued management fee 32,513
Other payables and accrued 40,492
expenses
Collateral on securities 2,758,800
loaned, at value
TOTAL LIABILITIES 3,354,642
NET ASSETS $ 63,330,650
Net Assets consist of:
Paid in capital $ 53,227,150
Accumulated undistributed net 740,697
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 9,362,803
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 2,224,934 $ 63,330,650
shares outstanding
NET ASSET VALUE and $28.46
redemption price per share
($63,330,650 (divided by)
2,224,934 shares)
Maximum offering price per $29.34
share (100/97.00 of $28.46)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 614,401
Dividends
Special dividend from 91,055
Unilever NV (NY Shares)
Interest 257,645
Security lending 7,407
TOTAL INCOME 970,508
EXPENSES
Management fee $ 432,129
Transfer agent fees 393,981
Accounting and security 61,184
lending fees
Non-interested trustees' 219
compensation
Custodian fees and expenses 18,682
Registration fees 24,425
Audit 12,437
Legal 570
Miscellaneous 127
Total expenses before 943,754
reductions
Expense reductions (14,583) 929,171
NET INVESTMENT INCOME 41,337
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 4,504,410
Foreign currency transactions 925 4,505,335
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (7,292,420)
Assets and liabilities in (91) (7,292,511)
foreign currencies
NET GAIN (LOSS) (2,787,176)
NET INCREASE (DECREASE) IN $ (2,745,839)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 291,878
charges paid to FDC
Sales charges - Retained by $ 288,479
FDC
Deferred sales charges $ 326
withheld by FDC
Exchange fees withheld by FSC $ 4,172
Expense reductions $ 14,345
Directed brokerage
arrangements
Custodian credits 238
$ 14,583
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ 41,337 $ (117,811)
income (loss)
Net realized gain (loss) 4,505,335 2,849,083
Change in net unrealized (7,292,511) 10,439,435
appreciation (depreciation)
NET INCREASE (DECREASE) IN (2,745,839) 13,170,707
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (42,261) -
From net investment income
From net realized gain (4,852,121) (2,388,067)
TOTAL DISTRIBUTIONS (4,894,382) (2,388,067)
Share transactions Net 32,937,853 69,216,485
proceeds from sales of shares
Reinvestment of distributions 4,772,156 2,350,548
Cost of shares redeemed (49,036,030) (72,339,516)
NET INCREASE (DECREASE) IN (11,326,021) (772,483)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 52,792 81,867
TOTAL INCREASE (DECREASE) (18,913,450) 10,092,024
IN NET ASSETS
NET ASSETS
Beginning of period 82,244,100 72,152,076
End of period $ 63,330,650 $ 82,244,100
OTHER INFORMATION
Shares
Sold 1,041,150 2,390,153
Issued in reinvestment of 149,653 82,715
distributions
Redeemed (1,551,354) (2,529,261)
Net increase (decrease) (360,551) (56,393)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 G 1999 1998 1997 1996 G
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 31.81 $ 27.31 $ 20.66 $ 17.84 $ 13.91
period
Income from Investment
Operations
Net investment income (loss) C .02 D (.04) (.22) (.22) .08
Net realized and unrealized (1.29) 5.41 8.34 2.93 3.97
gain (loss)
Total from investment (1.27) 5.37 8.12 2.71 4.05
operations
Less Distributions
From net investment income (.02) - - - (.02)
From net realized gain (2.08) (.90) (1.52) - (.01)
In excess of net realized gain - - - - (.20)
Total distributions (2.10) (.90) (1.52) - (.23)
Redemption fees added to paid .02 .03 .05 .11 .11
in capital
Net asset value, end of period $ 28.46 $ 31.81 $ 27.31 $ 20.66 $ 17.84
TOTAL RETURN A, B (4.55)% 20.18% 40.36% 15.81% 30.01%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 63,331 $ 82,244 $ 72,152 $ 18,392 $ 22,362
(000 omitted)
Ratio of expenses to average 1.27% 1.34% 2.01% 2.49% 1.53% F
net assets
Ratio of expenses to average 1.25% E 1.32% E 1.97% E 2.44% E 1.48% E
net assets after expense
reductions
Ratio of net investment .06% (.15)% (.90)% (1.13)% .46%
income (loss) to average net
assets
Portfolio turnover rate 96% 150% 199% 340% 601%
</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
FROM UNILEVER NV (NY SHARES) WHICH AMOUNTED TO $.04 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 DURING THE PERIOD, FMR AGREED TO REIMBURSE A PORTION OF
THE FUND'S EXPENSES OR EXPENSES WERE LIMITED IN ACCORDANCE
WITH A STATE EXPENSE LIMITATION. WITHOUT THIS REIMBURSEMENT,
THE FUND'S EXPENSE RATIO WOULD HAVE BEEN HIGHER.
G FOR 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.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT FOOD AND AGRICULTURE -27.86% 50.62% 204.44%
SELECT FOOD AND AGRICULTURE -30.09% 46.03% 195.24%
(LOAD ADJ.)
S&P 500 11.73% 206.94% 425.47%
GS Consumer Industries -5.41% 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 301 stocks designed
to measure the performance of companies in the consumer industries
sector. These benchmarks include reinvestment of dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT FOOD AND AGRICULTURE -27.86% 8.54% 11.78%
SELECT FOOD AND AGRICULTURE -30.09% 7.87% 11.43%
(LOAD ADJ.)
S&P 500 11.73% 25.14% 18.05%
GS Consumer Industries -5.41% 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
1990/02/28 9700.00 10000.00
1990/03/31 10119.24 10265.00
1990/04/30 10079.53 10008.38
1990/05/31 10957.73 10984.19
1990/06/30 11313.18 10909.50
1990/07/31 11308.72 10874.59
1990/08/31 10483.76 9891.53
1990/09/30 10149.31 9409.81
1990/10/31 10390.11 9369.35
1990/11/30 10818.20 9974.61
1990/12/31 11236.76 10252.90
1991/01/31 11559.26 10699.92
1991/02/28 12430.00 11464.97
1991/03/31 13038.14 11742.42
1991/04/30 12840.04 11770.60
1991/05/31 13309.96 12279.09
1991/06/30 12761.58 11716.71
1991/07/31 13295.66 12262.71
1991/08/31 13825.05 12553.34
1991/09/30 13581.43 12343.69
1991/10/31 13586.12 12509.10
1991/11/30 13492.42 12004.98
1991/12/31 15067.34 13378.35
1992/01/31 14842.74 13129.52
1992/02/29 14759.74 13300.20
1992/03/31 14432.61 13040.85
1992/04/30 14266.61 13424.25
1992/05/31 14393.55 13490.03
1992/06/30 14236.18 13289.02
1992/07/31 14786.05 13832.55
1992/08/31 14720.47 13548.98
1992/09/30 14967.66 13708.86
1992/10/31 15129.09 13756.84
1992/11/30 15709.23 14225.94
1992/12/31 15975.29 14400.92
1993/01/31 15980.45 14521.89
1993/02/28 15939.13 14719.39
1993/03/31 16372.99 15029.97
1993/04/30 15737.26 14666.24
1993/05/31 16232.75 15059.30
1993/06/30 16071.18 15102.97
1993/07/31 15871.90 15042.56
1993/08/31 16631.30 15612.67
1993/09/30 16577.44 15492.45
1993/10/31 17202.19 15813.15
1993/11/30 17002.92 15662.92
1993/12/31 17383.90 15852.44
1994/01/31 17909.66 16391.43
1994/02/28 17802.24 15947.22
1994/03/31 16971.21 15251.92
1994/04/30 16781.58 15447.15
1994/05/31 16659.64 15700.48
1994/06/30 16787.39 15315.82
1994/07/31 17350.64 15818.18
1994/08/31 18453.93 16466.72
1994/09/30 18488.77 16063.29
1994/10/31 18837.18 16424.71
1994/11/30 18378.44 15826.52
1994/12/31 18443.27 16061.23
1995/01/31 19220.78 16477.70
1995/02/28 19606.52 17119.83
1995/03/31 20052.53 17625.04
1995/04/30 20490.81 18144.10
1995/05/31 21226.13 18869.32
1995/06/30 21728.59 19307.65
1995/07/31 21967.57 19947.89
1995/08/31 21930.81 19997.96
1995/09/30 23652.67 20841.88
1995/10/31 23689.44 20767.47
1995/11/30 24620.84 21679.16
1995/12/31 25200.66 22096.70
1996/01/31 26239.99 22848.87
1996/02/29 27041.95 23060.68
1996/03/31 26586.44 23282.76
1996/04/30 26101.80 23625.95
1996/05/31 27064.63 24235.26
1996/06/30 27091.01 24327.60
1996/07/31 26721.70 23252.80
1996/08/31 25870.99 23743.20
1996/09/30 26748.08 25079.47
1996/10/31 27242.68 25771.16
1996/11/30 28614.38 27719.21
1996/12/31 28564.81 27170.09
1997/01/31 29799.57 28867.68
1997/02/28 30717.01 29094.00
1997/03/31 29916.83 27898.53
1997/04/30 31103.76 29564.07
1997/05/31 32019.67 31363.93
1997/06/30 33083.30 32769.03
1997/07/31 34272.49 35376.46
1997/08/31 32691.82 33394.67
1997/09/30 34656.58 35223.70
1997/10/31 34036.13 34047.23
1997/11/30 36362.82 35623.28
1997/12/31 37230.28 36234.93
1998/01/31 35978.12 36635.68
1998/02/28 37961.35 39277.85
1998/03/31 39415.72 41289.27
1998/04/30 38417.75 41704.64
1998/05/31 39291.44 40987.74
1998/06/30 40115.68 42652.66
1998/07/31 38673.26 42198.41
1998/08/31 34914.74 36097.36
1998/09/30 36851.70 38409.76
1998/10/31 40132.17 41534.01
1998/11/30 41755.92 44051.38
1998/12/31 43070.90 46589.63
1999/01/31 41326.08 48538.00
1999/02/28 40933.50 47029.44
1999/03/31 39572.54 48911.09
1999/04/30 39063.78 50805.42
1999/05/31 39108.44 49605.90
1999/06/30 39581.89 52359.03
1999/07/31 39394.30 50724.38
1999/08/31 38259.81 50473.29
1999/09/30 36276.70 49089.82
1999/10/31 36687.61 52196.23
1999/11/30 35901.51 53257.37
1999/12/31 34255.19 56394.23
2000/01/31 31624.45 53560.99
2000/02/29 29524.00 52547.08
IMATRL PRASUN SHR__CHT 20000229 20000316 094919 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, 1990, and the current 3.00% sales charge was paid. As the chart
shows, by February 29, 2000, the value of the investment would have
grown to $29,524 - a 195.24% increase on the initial investment - and
includes the effect of a $7.50 trading fee. For comparison - look at
how the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $52,547 - a 425.47% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
Anheuser-Busch Companies, Inc. 7.0
Safeway, Inc. 6.2
Philip Morris Companies, Inc. 6.1
McDonald's Corp. 5.6
Unilever NV (NY Shares) 4.8
The Coca-Cola Co. 4.4
PepsiCo, Inc. 3.9
Kroger Co. 3.7
Quaker Oats Co. 3.1
Bestfoods 2.8
47.6
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Foods 35.9% Row: 1, Col: 6, Value: 35.9
Beverages 22.2% Row: 1, Col: 5, Value: 22.2
Grocery Stores 13.8% Row: 1, Col: 4, Value: 13.8
Restaurants 10.1% Row: 1, Col: 3, Value: 10.1
Tobacco 7.7% Row: 1, Col: 2, Value: 7.7
*All Others 10.3% Row: 1, Col: 1, Value: 10.3
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
FOOD & AGRICULTURE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Matthew Fruhan)
NOTE TO SHAREHOLDERS: Matthew Fruhan became Portfolio Manager of
Fidelity Select Food and Agriculture Portfolio on November 1, 1999.
Q. HOW DID THE FUND PERFORM, MATTHEW?
A. For the 12 months that ended February 29, 2000, the fund returned
- -27.86%. By comparison, the Goldman Sachs Consumer Industries Index -
an index of 301 stocks designed to measure the performance of
companies in the consumer industries sector - fell 5.41%. During the
same period, the Standard & Poor's 500 Index returned 11.73%.
Q. WHY DID THE FUND UNDERPERFORM THE GOLDMAN SACHS INDEX AND THE S&P
500 DURING THE PERIOD?
A. The Goldman Sachs index includes many blue-chip names, such as
Procter & Gamble, that performed quite well during the past year. Many
of these blue-chip names are not in the fund, which is comprised
mostly of food-company stocks. Investors in the stock market seemed to
be looking for sales growth, and there wasn't much volume growth in
the food industry over the past year. In addition, food companies have
very little pricing power - meaning they are unable to raise prices
without sacrificing market share. With minimal revenue growth, many of
these companies were only able to meet earnings expectations through
less sustainable means, such as cost cutting. Supermarket stocks did
not fare well, largely because some of the bigger names in that sector
were plagued by acquisition integration problems in 1999. All of these
reasons caused the fund to underperform both of its indexes during the
past year.
Q. WERE THERE ANY OTHER MARKET FACTORS THAT WEAKENED THE PERFORMANCE
OF FOOD AND AGRICULTURE STOCKS?
A. The general trends driving the stock market really hurt these
stocks. Investors sought out companies with high growth potential -
particularly technology companies - leaving many old economy companies
in the dust. Basically, it was a supply and demand issue. The supply
of food and agriculture stocks is fixed and there was a decrease in
demand for these stocks during the period, so their prices had to go
down.
Q. WHICH INDIVIDUAL STOCKS WERE THE MOST DISAPPOINTING?
A. All of the big supermarket stocks - including Safeway, Albertson's
and Kroger - hurt the fund's performance. As a group, supermarket
companies maintained solid long-term growth prospects, but investors
fled those stocks because of short-term acquisition integration
problems, such as Kroger's troubles with its purchase of Fred Meyer.
Finally, these stocks were hurt by a "Wal-Mart scare" - meaning
Wal-Mart's intentions to grow its overall food sales spooked
investors. The market also began to question the top-line growth rates
of some consumer products companies such as Coca-Cola. Finally, Philip
Morris was a big detractor from performance as the company went into a
tailspin because of the threat of continued tobacco litigation.
Q. WHICH OF THE FUND'S HOLDINGS PERFORMED WELL DURING THE PAST YEAR?
A. During this tough environment for food stocks, Corn Products
International was a diamond in the rough. The 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, Corn Products' stock rallied due to lower overhead costs and
higher profits. The company's position in Sysco, a food services
distributor, also did relatively well.
Q. WHAT'S YOUR OUTLOOK?
A. Food stocks continue to be hampered by flat volume growth and no
pricing power. The market is tired of earnings growth that comes
through cost cutting. Investors want to see strong sales growth. On
top of that, the continued consolidation among food retailers likely
will lead to more onerous terms from the packaged-food companies.
Consequently, I expect the large players in the consumer products
sector to continue to struggle in the near future. However, I do see
opportunities among smaller companies in fast-growing sectors, such as
organic food. Many of these small companies are private, but I think
we'll see the larger packaged-food companies snatching them up at a
premium. As an example of that trend, Kraft recently purchased Balance
Bar, a company in the fast-growing healthy snack segment. Finding new
avenues for growth at reasonable prices and developing new products
that retailers need on their shelves is critical to the long-term
success of food 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 A-3.
(checkmark)FUND FACTS
START DATE: July 29, 1985
FUND NUMBER: 009
TRADING SYMBOL: FDFAX
SIZE: as of February 29, 2000, more than
$78 million
MANAGER: Matthew Fruhan, since November
1999; analyst, food industry, since 1999; joined
Fidelity in 1995
FOOD AND AGRICULTURE PORTFOLIO
INVESTMENTS FEBRUARY 29, 2000
Showing Percentage of Net Assets
COMMON STOCKS - 95.5%
SHARES VALUE (NOTE 1)
BEVERAGES - 22.2%
Adolph Coors Co. Class B 29,600 $ 1,298,700
Anheuser-Busch Companies, 85,000 5,450,615
Inc.
Brown-Forman Corp. Class B 5,500 261,938
Canandaigua Brands, Inc. 7,100 347,900
Class A (a)
Celestial Seasonings, Inc. (a) 35,900 933,400
Coca-Cola Enterprises, Inc. 76,000 1,776,500
Diageo PLC sponsored ADR 21,900 674,794
PepsiCo, Inc. 94,700 3,054,075
The Coca-Cola Co. 71,300 3,453,594
Whitman Corp. 7,200 90,000
17,341,516
CHEMICALS & PLASTICS - 0.4%
IMC Global, Inc. 23,800 321,300
COMPUTER SERVICES & SOFTWARE
- - 0.0%
MatrixOne, Inc. 100 2,500
Onvia.com, Inc. 100 2,100
4,600
FOODS - 35.9%
American Italian Pasta Co. 11,200 255,500
Class A (a)
Archer-Daniels-Midland Co. 67,355 677,760
Aurora Foods, Inc. (a) 8,700 24,469
Bestfoods 52,700 2,210,106
Campbell Soup Co. 46,800 1,327,950
ConAgra, Inc. 84,800 1,388,600
Corn Products International, 19,075 449,455
Inc.
Dean Foods Co. 2,600 70,525
Earthgrains Co. 27,800 417,000
Flowers Industries, Inc. 13,100 169,481
General Mills, Inc. 47,800 1,574,413
Groupe Danone 2,200 443,168
H.J. Heinz Co. 56,500 1,804,469
Hershey Foods Corp. 7,300 320,744
Hormel Foods Corp. 13,000 216,938
IBP, Inc. 4,600 57,500
International Home Foods, 5,600 94,850
Inc. (a)
Interstate Bakeries Corp. 15,400 176,138
Keebler Foods Co. (a) 44,100 1,119,038
Kellogg Co. 55,600 1,407,375
McCormick & Co., Inc. 8,300 227,213
(non-vtg.)
Nabisco Group Holdings Corp. 128,000 1,104,000
Nabisco Holdings Corp. Class A 18,600 544,050
Nestle SA ADR (Reg.) 23,000 1,940,625
Quaker Oats Co. 45,000 2,427,188
Ralston Purina Co. 55,300 1,565,681
Sara Lee Corp. 145,200 2,178,000
Smithfield Foods, Inc. (a) 8,500 131,750
Suiza Foods Corp. (a) 5,000 195,625
Sysco Corp. 61,400 2,014,688
SHARES VALUE (NOTE 1)
Tootsie Roll Industries, Inc. 4,448 $ 132,050
Universal Foods Corp. 10,100 182,431
Wm. Wrigley Jr. Co. 17,900 1,210,488
28,059,268
GENERAL MERCHANDISE STORES -
0.6%
Wal-Mart Stores, Inc. 10,200 496,613
GROCERY STORES - 13.8%
Albertson's, Inc. 65,886 1,614,207
Kroger Co. (a) 194,800 2,897,650
Safeway, Inc. (a) 127,000 4,897,438
SUPERVALU, Inc. 24,500 421,094
U.S. Foodservice (a) 20,200 357,288
Whole Foods Market, Inc. (a) 10,300 391,078
Wild Oats Markets, Inc. (a) 13,100 245,625
10,824,380
HOUSEHOLD PRODUCTS - 4.8%
Unilever NV (NY Shares) 82,978 3,775,499
RESTAURANTS - 10.1%
Brinker International, Inc. 17,600 382,800
(a)
CEC Entertainment, Inc. (a) 11,800 268,450
Darden Restaurants, Inc. 16,100 212,319
McDonald's Corp. 139,400 4,399,813
Outback Steakhouse, Inc. (a) 38,900 1,016,263
Papa John's International, 15,100 362,400
Inc. (a)
Tricon Global Restaurants, 34,100 907,913
Inc. (a)
Wendy's International, Inc. 23,300 366,975
7,916,933
TOBACCO - 7.7%
British American Tobacco PLC 145,600 1,237,600
sponsored ADR
Philip Morris Companies, Inc. 239,100 4,796,944
6,034,544
TOTAL COMMON STOCKS 74,774,653
(Cost $85,880,606)
CASH EQUIVALENTS - 12.6%
Central Cash Collateral Fund, 6,422,500 6,422,500
5.75% (b)
Taxable Central Cash Fund, 3,434,831 3,434,831
5.66% (b)
TOTAL CASH EQUIVALENTS 9,857,331
(Cost $9,857,331)
TOTAL INVESTMENT PORTFOLIO - 84,631,984
108.1%
(Cost $95,737,937)
NET OTHER ASSETS - (8.1)% (6,344,192)
NET ASSETS - 100% $ 78,287,792
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 $53,400,954 and $127,676,365, 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 $13,213 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $6,103,338. The fund
received cash collateral of $6,422,500 which was invested in cash
equivalents.
Distribution of investments by country of issue, as a percentage of
net assets, is as follows:
United States of America 89.6%
Netherlands 4.8
Switzerland 2.5
United Kingdom 2.5
Others (individually less 0.6
than 1%)
100.0%
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $96,036,334. Net unrealized depreciation
aggregated $11,404,350, of which $6,138,792 related to appreciated
investment securities and $17,543,142 related to depreciated
investment securities.
The fund hereby designates approximately $7,754,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
The fund intends to elect to defer to its fiscal year ending February
28, 2001 approximately $1,232,000 of losses recognized during the
period November 1, 1999 to February 29, 2000.
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 2001 of amounts for use
in preparing 2000 income tax returns.
FOOD AND AGRICULTURE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 84,631,984
value (cost $95,737,937) -
See accompanying schedule
Receivable for investments 2,023,890
sold
Receivable for fund shares 77,869
sold
Dividends receivable 108,053
Interest receivable 18,012
Redemption fees receivable 458
Other receivables 2,265
TOTAL ASSETS 86,862,531
LIABILITIES
Payable to custodian bank $ 22,331
Payable for investments 796,291
purchased
Payable for fund shares 1,230,949
redeemed
Accrued management fee 41,054
Other payables and accrued 61,614
expenses
Collateral on securities 6,422,500
loaned, at value
TOTAL LIABILITIES 8,574,739
NET ASSETS $ 78,287,792
Net Assets consist of:
Paid in capital $ 89,751,101
Undistributed net investment 381,112
income
Accumulated undistributed net (737,230)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (11,107,191)
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 2,455,421 $ 78,287,792
shares outstanding
NET ASSET VALUE and $31.88
redemption price per share
($78,287,792 (divided by)
2,455,421 shares)
Maximum offering price per $32.87
share (100/97.00 of $31.88)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 1,996,194
Dividends
Special dividend from 993,960
Unilever NV (NY Shares)
Interest 416,710
Security lending 50,881
TOTAL INCOME 3,457,745
EXPENSES
Management fee $ 872,870
Transfer agent fees 934,515
Accounting and security 112,569
lending fees
Non-interested trustees' 222
compensation
Custodian fees and expenses 11,854
Registration fees 29,717
Audit 14,926
Legal 627
Miscellaneous 16
Total expenses before 1,977,316
reductions
Expense reductions (33,723) 1,943,593
NET INVESTMENT INCOME 1,514,152
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 2,918,682
Foreign currency transactions (14,829) 2,903,853
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (45,266,059)
Assets and liabilities in (1,176) (45,267,235)
foreign currencies
NET GAIN (LOSS) (42,363,382)
NET INCREASE (DECREASE) IN $ (40,849,230)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 157,165
charges paid to FDC
Sales charges - Retained by $ 156,771
FDC
Deferred sales charges $ 9,318
withheld by FDC
Exchange fees withheld by FSC $ 23,259
Expense reductions Directed $ 33,106
brokerage arrangements
Custodian credits 617
$ 33,723
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ 1,514,152 $ 1,020,362
income
Net realized gain (loss) 2,903,853 20,672,714
Change in net unrealized (45,267,235) (4,236,166)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (40,849,230) 17,456,910
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (1,366,746) (739,119)
From net investment income
From net realized gain (6,551,980) (25,615,738)
In excess of net realized (752,061) -
gain
TOTAL DISTRIBUTIONS (8,670,787) (26,354,857)
Share transactions Net 25,160,713 80,793,360
proceeds from sales of shares
Reinvestment of distributions 8,301,729 25,579,323
Cost of shares redeemed (111,774,157) (142,182,438)
NET INCREASE (DECREASE) IN (78,311,715) (35,809,755)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 112,538 148,005
TOTAL INCREASE (DECREASE) (127,719,194) (44,559,697)
IN NET ASSETS
NET ASSETS
Beginning of period 206,006,986 250,566,683
End of period (including $ 78,287,792 $ 206,006,986
undistributed net investment
income of $381,112 and
$490,066, respectively)
OTHER INFORMATION
Shares
Sold 602,218 1,684,840
Issued in reinvestment of 205,962 536,693
distributions
Redeemed (2,743,334) (2,964,307)
Net increase (decrease) (1,935,154) (742,774)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 F 1999 1998 1997 1996 F
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 46.92 $ 48.81 $ 44.53 $ 42.15 $ 32.53
period
Income from Investment
Operations
Net investment income C .42 D .21 .33 .42 .37
Net realized and unrealized (13.07) 3.50 9.22 4.91 11.61
gain (loss)
Total from investment (12.65) 3.71 9.55 5.33 11.98
operations
Less Distributions
From net investment income (.42) (.16) (.37) (.24) (.20)
From net realized gain (1.79) (5.47) (4.95) (2.77) (2.20)
In excess of net realized gain (.21) - - - -
Total distributions (2.42) (5.63) (5.32) (3.01) (2.40)
Redemption fees added to paid .03 .03 .05 .06 .04
in capital
Net asset value, end of period $ 31.88 $ 46.92 $ 48.81 $ 44.53 $ 42.15
TOTAL RETURN A, B (27.86)% 7.83% 23.58% 13.59% 37.92%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 78,288 $ 206,007 $ 250,567 $ 223,423 $ 301,102
(000 omitted)
Ratio of expenses to average 1.31% 1.31% 1.49% 1.52% 1.43%
net assets
Ratio of expenses to average 1.29% E 1.29% E 1.48% E 1.50% E 1.42% E
net assets after expense
reductions
Ratio of net investment 1.00% .45% .73% 1.01% .99%
income to average net assets
Portfolio turnover rate 38% 68% 74% 91% 124%
</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 INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL
DIVIDEND FROM UNILEVER NV (NY SHARES) WHICH AMOUNTED
TO $.28 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
LEISURE PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT LEISURE 13.89% 224.26% 518.31%
SELECT LEISURE (LOAD ADJ.) 10.40% 214.46% 499.69%
S&P 500 11.73% 206.94% 425.47%
GS Consumer Industries -5.41% 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 301 stocks designed
to measure the performance of companies in the consumer industries
sector. These benchmarks include reinvestment of dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT LEISURE 13.89% 26.53% 19.98%
SELECT LEISURE (LOAD ADJ.) 10.40% 25.75% 19.62%
S&P 500 11.73% 25.14% 18.05%
GS Consumer Industries -5.41% 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
1990/02/28 9700.00 10000.00
1990/03/31 9775.46 10265.00
1990/04/30 9394.40 10008.38
1990/05/31 10171.61 10984.19
1990/06/30 10054.65 10909.50
1990/07/31 9707.55 10874.59
1990/08/31 8587.01 9891.53
1990/09/30 7772.07 9409.81
1990/10/31 7681.52 9369.35
1990/11/30 8292.73 9974.61
1990/12/31 8655.42 10252.90
1991/01/31 9139.45 10699.92
1991/02/28 9840.73 11464.97
1991/03/31 10004.61 11742.42
1991/04/30 10031.29 11770.60
1991/05/31 10378.12 12279.09
1991/06/30 9794.99 11716.71
1991/07/31 10263.78 12262.71
1991/08/31 10370.50 12553.34
1991/09/30 10637.29 12343.69
1991/10/31 10957.43 12509.10
1991/11/30 10431.48 12004.98
1991/12/31 11506.26 13378.35
1992/01/31 11765.43 13129.52
1992/02/29 12177.04 13300.20
1992/03/31 11929.31 13040.85
1992/04/30 12062.71 13424.25
1992/05/31 12135.12 13490.03
1992/06/30 11948.37 13289.02
1992/07/31 12005.54 13832.55
1992/08/31 11834.03 13548.98
1992/09/30 12066.52 13708.86
1992/10/31 12157.99 13756.84
1992/11/30 12985.04 14225.94
1992/12/31 13373.79 14400.92
1993/01/31 13705.37 14521.89
1993/02/28 13632.95 14719.39
1993/03/31 14341.85 15029.97
1993/04/30 14018.64 14666.24
1993/05/31 15025.63 15059.30
1993/06/30 15430.02 15102.97
1993/07/31 15842.33 15042.56
1993/08/31 16932.58 15612.67
1993/09/30 17777.03 15492.45
1993/10/31 18760.24 15813.15
1993/11/30 18062.48 15662.92
1993/12/31 18663.61 15852.44
1994/01/31 18857.59 16391.43
1994/02/28 18696.63 15947.22
1994/03/31 17565.75 15251.92
1994/04/30 17601.16 15447.15
1994/05/31 17414.88 15700.48
1994/06/30 16678.85 15315.82
1994/07/31 17324.02 15818.18
1994/08/31 18014.61 16466.72
1994/09/30 18010.07 16063.29
1994/10/31 17946.46 16424.71
1994/11/30 17178.63 15826.52
1994/12/31 17387.62 16061.23
1995/01/31 17705.66 16477.70
1995/02/28 18496.22 17119.83
1995/03/31 18982.36 17625.04
1995/04/30 19150.53 18144.10
1995/05/31 19521.10 18869.32
1995/06/30 20275.95 19307.65
1995/07/31 21685.02 19947.89
1995/08/31 22380.41 19997.96
1995/09/30 22417.01 20841.88
1995/10/31 21337.33 20767.47
1995/11/30 22032.72 21679.16
1995/12/31 22074.94 22096.70
1996/01/31 22402.12 22848.87
1996/02/29 23603.52 23060.68
1996/03/31 23721.10 23282.76
1996/04/30 24695.06 23625.95
1996/05/31 25708.35 24235.26
1996/06/30 25609.11 24327.60
1996/07/31 23770.56 23252.80
1996/08/31 24360.78 23743.20
1996/09/30 25546.43 25079.47
1996/10/31 24846.53 25771.16
1996/11/30 25551.65 27719.21
1996/12/31 25034.15 27170.09
1997/01/31 26148.35 28867.68
1997/02/28 25996.17 29094.00
1997/03/31 25034.15 27898.53
1997/04/30 25270.07 29564.07
1997/05/31 27638.97 31363.93
1997/06/30 28729.23 32769.03
1997/07/31 30196.23 35376.46
1997/08/31 29711.03 33394.67
1997/09/30 32987.52 35223.70
1997/10/31 32479.50 34047.23
1997/11/30 33786.67 35623.28
1997/12/31 35370.65 36234.93
1998/01/31 35561.18 36635.68
1998/02/28 38290.03 39277.85
1998/03/31 40963.57 41289.27
1998/04/30 41630.54 41704.64
1998/05/31 40593.24 40987.74
1998/06/30 43560.56 42652.66
1998/07/31 42944.46 42198.41
1998/08/31 35475.86 36097.36
1998/09/30 36902.94 38409.76
1998/10/31 39436.48 41534.01
1998/11/30 43026.19 44051.38
1998/12/31 48783.35 46589.63
1999/01/31 52941.31 48538.00
1999/02/28 52663.26 47029.44
1999/03/31 56782.42 48911.09
1999/04/30 58958.24 50805.42
1999/05/31 56804.04 49605.90
1999/06/30 59286.63 52359.03
1999/07/31 57152.13 50724.38
1999/08/31 54314.88 50473.29
1999/09/30 54676.10 49089.82
1999/10/31 57290.05 52196.23
1999/11/30 58432.83 53257.37
1999/12/31 64796.78 56394.23
2000/01/31 61908.75 53560.99
2000/02/29 59969.00 52547.08
IMATRL PRASUN SHR__CHT 20000229 20000320 103140 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Leisure Portfolio on February 28, 1990,
and the current 3.00% sales charge was paid. As the chart shows, by
February 29, 2000, the value of the investment would have grown to
$59,969 - a 499.69% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $52,547 - a 425.47% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
Walt Disney Co. 6.7
Time Warner, Inc. 5.9
AT&T Corp. - Liberty Media 5.7
Group Class A
CBS Corp. 4.7
MediaOne Group, Inc. 4.1
AT&T Corp. 3.7
Seagram Co. Ltd. 3.5
Viacom, Inc. Class B (non-vtg.) 3.4
McDonald's Corp. 3.4
Yahoo!, Inc. 2.8
43.9
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
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Broadcasting 33.5% Row: 1, Col: 6, Value: 33.5
Entertainment 17.3% Row: 1, Col: 5, Value: 17.3
Computer Services
& Software 8.0% Row: 1, Col: 4, Value: 8.0
Publishing 7.0% Row: 1, Col: 3, Value: 7.0
Beverages 5.9% Row: 1, Col: 2, Value: 5.9
*All Others 28.3% Row: 1, Col: 1, Value: 28.3
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* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
LEISURE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Michael Tarlowe)
NOTE TO SHAREHOLDERS: Michael Tarlowe became Portfolio Manager of
Fidelity Select Leisure Portfolio on January 4, 2000.
Q. HOW DID THE FUND PERFORM, MICHAEL?
A. For the 12-month period ending February 29, 2000, the fund returned
13.89%. In comparison, the Goldman Sachs Consumer Industries Index -
an index of 301 stocks designed to measure the performance of
companies in the consumer industries sector - fell 5.41% for the same
period. The fund also compares its performance to the Standard &
Poor's 500 Index, which returned 11.73% for the 12-month period.
Q. WHAT HELPED THE FUND OUTPERFORM THE GOLDMAN SACHS AND THE S&P 500
INDEXES?
A. This sector is a mixed bag - there are innovative industries with
fast-changing technologies, such as cable, alongside more traditional,
consumer-oriented industries, such as retailing, restaurants and
lodging, and consumer staples. The fund's focus on advertising-driven
companies, as well as broadcasting and entertainment companies and
selected Internet issues, helped its performance during the period.
Its exposure to some of the more mature consumer-oriented companies
was reduced, which also helped. Toward the end of the period, I
modestly lowered the fund's exposure to cable as the group's
valuations became very high, while increasing its emphasis on
satellite television companies, which became much more competitive
than they had been in the past.
Q. BROADCASTING AND ENTERTAINMENT - THE FUND'S MAIN FOCUS DURING THE
YEAR - PERFORMED WELL . . .
A. Yes, they generally did very well. CBS, a top holding, benefited
from cost cutting and increased advertising revenues. The company
enjoyed an improvement in its cash flows, its TV network business made
a good recovery and it executed its business strategy flawlessly.
Entertainment company Viacom benefited from the strong advertising
market, as viewers continued to shift from traditional broadcast
networks to cable networks, driving more advertising dollars to such
cable networks as Viacom's. The company's announcement of its merger
with CBS also caused its stock to rise during the period.
Q. WHAT OTHER STOCKS STOOD OUT IN THIS ENVIRONMENT?
A. Cable stocks did well, as investors reacted favorably to new
digital cable and cable modem services. There also was very active
consolidation activity within this sector during the period, and fund
holding MediaOne benefited from its acquisition by AT&T. Time Warner's
announcement of its merger with America Online helped the company's
performance, as did the value of Time Warner's cable assets. Liberty
Media Corp., a holding company that owned stakes in cable companies
and Time Warner, also performed well. Fund holding America Online
benefited from its growing subscriber base in the U.S. and worldwide,
generating significant advertising and e-commerce-related revenues.
Q. WHAT ABOUT DISAPPOINTMENTS?
A. A significant decline in Walt Disney's home video business,
following a decision to remove some of its best-selling library titles
from the shelves, hurt its stock. Disney's consumer products business
also suffered as Disney store sales declined and its licensing
business performed poorly. Carnival Corp. was a disappointment.
Concerns about cruise line safety and worries about the company's
ability to absorb the significant capacity it added hurt Carnival's
performance. McDonald's performed well in the U.S., but its
international business was weak in Russia, Latin America and Japan.
Tricon, the owner of Pizza Hut and Kentucky Fried Chicken, had
disappointing sales related to Pizza Hut's Star Wars promotion last
summer and KFC's roll-out of its new product line.
Q. WHAT'S YOUR OUTLOOK, MICHAEL?
A. I'm optimistic. With so many places to invest, I believe that the
fund has the potential to pursue some great opportunities. Because
consumer-oriented companies could be hurt more than other leisure
sectors should there be additional interest-rate hikes, I will focus
on areas with better opportunities for growth. Currently,
entertainment, media and selected Internet-related companies look
attractive. There also are some exciting opportunities in satellite
television, with the potential for companies to gain greater share
through their ability to offer local programming and perhaps
high-speed Internet access. Although this traditionally has been a
cyclical sector - with some risk of slowing if the Fed continues to
raise interest rates - I'm finding companies with good prospects and
valuations, which could provide some protection if the market
declines.
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 29, 2000, more
than $314 million
MANAGER: Michael Tarlowe, since January 2000;
manager, Fidelity Select Multimedia Portfolio,
since January 2000; Fidelity Select Business
Services and Outsourcing Portfolio, 1998-2000;
research analyst, transportation,
telecommunications equipment, computer services
and Internet securities, 1994-1998; joined
Fidelity in 1994
LEISURE PORTFOLIO
INVESTMENTS FEBRUARY 29, 2000
Showing Percentage of Net Assets
COMMON STOCKS - 93.3%
SHARES VALUE (NOTE 1)
ADVERTISING - 3.0%
ADVO, Inc. (a) 15,800 $ 438,450
Interpublic Group of 96,000 3,858,000
Companies, Inc.
Omnicom Group, Inc. 45,600 4,294,950
Young & Rubicam, Inc. 16,000 808,000
9,399,400
AIR TRANSPORTATION - 1.0%
Preview Travel, Inc. (a) 68,900 3,173,706
APPAREL STORES - 0.3%
Gap, Inc. 20,150 973,497
BEVERAGES - 5.9%
Anheuser-Busch Companies, 116,800 7,489,800
Inc.
Seagram Co. Ltd. 196,300 11,029,688
18,519,488
BROADCASTING - 33.5%
Adelphia Communications Corp. 14,100 774,619
Class A (a)
AMFM, Inc. (a) 16,100 988,138
AT&T Corp. - Liberty Media 344,844 18,018,099
Group Class A (a)
Cablevision Systems Corp. 50,300 3,228,631
Class A (a)
CBS Corp. (a) 249,372 14,853,220
Chris-Craft Industries, Inc. 7,300 480,431
Clear Channel Communications, 72,459 4,827,581
Inc. (a)
Comcast Corp. Class A 186,400 7,922,000
(special)
Cox Communications, Inc. 147,687 6,710,528
Class A (a)
EchoStar Communications Corp. 42,700 4,867,800
Class A (a)
Hispanic Broadcasting Corp. 9,900 925,031
(a)
Infinity Broadcasting Corp. 71,050 2,269,159
Class A (a)
MediaOne Group, Inc. (a) 162,200 12,732,700
Time Warner, Inc. 216,636 18,522,378
UnitedGlobalCom, Inc. (a) 4,800 501,600
Univision Communications, 19,900 2,027,313
Inc. Class A (a)
USA Networks, Inc. (a) 206,600 4,635,588
Westwood One, Inc. (a) 17,200 1,149,175
105,433,991
COMMUNICATIONS EQUIPMENT - 0.2%
Globalstar Telecommunications 24,300 692,550
Ltd. (a)
COMPUTER SERVICES & SOFTWARE
- - 8.0%
America Online, Inc. (a) 121,600 7,174,400
At Plan, Inc. 120,000 1,200,000
CMGI, Inc. (a) 26,600 3,446,363
Lycos, Inc. (a) 33,400 1,991,475
MatrixOne, Inc. 100 2,500
Onvia.com, Inc. 200 4,200
SHARES VALUE (NOTE 1)
RealNetworks, Inc. (a) 14,600 $ 1,026,563
Sabre Holdings Corp. Class A 38,500 1,544,813
Yahoo!, Inc. (a) 54,000 8,623,125
25,013,439
CONSUMER ELECTRONICS - 1.7%
Gemstar International Group 37,400 2,837,725
Ltd. (a)
General Motors Corp. Class H 12,800 1,542,400
(a)
Sony Corp. sponsored ADR 3,500 1,096,813
5,476,938
ENTERTAINMENT - 17.3%
Carnival Corp. 151,100 4,353,569
EMI Group PLC 96,200 1,024,272
Fox Entertainment Group, Inc. 137,600 3,620,600
Class A
Metro-Goldwyn-Mayer, Inc. (a) 38,500 919,188
News Corp. Ltd. sponsored ADR 114,800 6,694,275
Premier Parks, Inc. (a) 52,700 1,067,175
Royal Caribbean Cruises Ltd. 55,800 1,973,925
SFX Entertainment, Inc. Class 32,850 1,264,725
A (a)
Ticketmaster Online 47,200 1,646,838
CitySearch, Inc. (a)
Viacom, Inc. Class B 193,000 10,759,750
(non-vtg.) (a)
Walt Disney Co. 626,856 20,999,667
54,323,984
HOUSEHOLD PRODUCTS - 2.4%
Avon Products, Inc. 76,600 2,072,988
Estee Lauder Companies, Inc. 18,000 780,750
Gillette Co. 135,600 4,779,900
7,633,638
LEISURE DURABLES & TOYS - 0.6%
Harley-Davidson, Inc. 26,000 1,771,250
LODGING & GAMING - 0.6%
Mirage Resorts, Inc. (a) 61,300 973,138
Starwood Hotels & Resorts 39,000 875,063
Worldwide, Inc. unit
1,848,201
PRINTING - 0.2%
R.R. Donnelley & Sons Co. 38,900 743,963
PUBLISHING - 7.0%
Gannet Co., Inc. 48,200 3,142,038
Harcourt General, Inc. 13,000 447,688
Harte Hanks Communications, 68,700 1,498,519
Inc.
Knight-Ridder, Inc. 10,200 478,125
McGraw-Hill Companies, Inc. 58,700 2,986,363
Meredith Corp. 81,800 2,341,525
Playboy Enterprises, Inc. 78,700 1,736,319
Class B (a)
PRIMEDIA, Inc. (a) 48,000 891,000
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PUBLISHING - CONTINUED
Reader's Digest Association, 115,000 $ 3,953,125
Inc. Class A (non-vtg.)
The New York Times Co. Class A 56,600 2,391,350
Tribune Co. 51,200 1,993,600
21,859,652
RESTAURANTS - 5.3%
Brinker International, Inc. 41,100 893,925
(a)
CEC Entertainment, Inc. (a) 24,650 560,788
Cheesecake Factory, Inc. (a) 17,000 505,750
Darden Restaurants, Inc. 38,000 501,125
McDonald's Corp. 334,200 10,548,188
Outback Steakhouse, Inc. (a) 66,750 1,743,844
Tricon Global Restaurants, 65,400 1,741,275
Inc. (a)
16,494,895
RETAIL & WHOLESALE,
MISCELLANEOUS - 0.2%
Intimate Brands, Inc. Class A 22,935 749,688
SERVICES - 1.4%
ACNielsen Corp. (a) 60,000 1,016,250
Dun & Bradstreet Corp. 36,300 950,606
Media Metrix, Inc. 40,000 1,405,000
True North Communications 31,000 1,147,000
4,518,856
TELEPHONE SERVICES - 3.7%
AT&T Corp. 236,700 11,701,856
TEXTILES & APPAREL - 1.0%
Liz Claiborne, Inc. 23,200 868,550
NIKE, Inc. Class B 57,300 1,629,469
Polo Ralph Lauren Corp. Class 29,600 495,800
A (a)
2,993,819
TOTAL COMMON STOCKS 293,322,811
(Cost $224,652,052)
CASH EQUIVALENTS - 13.2%
Central Cash Collateral Fund, 25,910,600 $ 25,910,600
5.75% (b)
Taxable Central Cash Fund, 15,534,241 15,534,241
5.66% (b)
TOTAL CASH EQUIVALENTS 41,444,841
(Cost $41,444,841)
TOTAL INVESTMENT PORTFOLIO - 334,767,652
106.5%
(Cost $266,096,893)
NET OTHER ASSETS - (6.5)% (20,420,007)
NET ASSETS - 100% $ 314,347,645
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 $437,198,180 and $513,044,336, 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 $48,009 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $21,006,331 The fund
received cash collateral of $25,910,600 which was invested in cash
equivalents. Cash collateral includes $4,165,000 received for
unsettled security loans.
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 $30,003,000. The weighted average interest
rate was 5.44%.
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $267,300,542. Net unrealized appreciation
aggregated $67,467,110, of which $86,783,827 related to appreciated
investment securities and $19,316,717 related to depreciated
investment securities.
The fund hereby designates approximately $47,121,000 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 2001 of amounts for use
in preparing 2000 income tax returns.
LEISURE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 334,767,652
value (cost $266,096,893) -
See accompanying schedule
Cash 446,200
Receivable for investments 12,750,162
sold
Receivable for fund shares 225,374
sold
Dividends receivable 206,996
Interest receivable 103,091
Redemption fees receivable 1,408
Other receivables 10,626
TOTAL ASSETS 348,511,509
LIABILITIES
Payable for investments $ 2,223,101
purchased
Payable for fund shares 5,287,980
redeemed
Accrued management fee 165,937
Other payables and accrued 576,246
expenses
Collateral on securities 25,910,600
loaned, at value
TOTAL LIABILITIES 34,163,864
NET ASSETS $ 314,347,645
Net Assets consist of:
Paid in capital $ 191,078,031
Accumulated undistributed net 54,599,234
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 68,670,380
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 3,710,126 $ 314,347,645
shares outstanding
NET ASSET VALUE and $84.73
redemption price per share
($314,347,645 (divided by)
3,710,126 shares)
Maximum offering price per $87.35
share (100/97.00 of $84.73)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 1,539,464
Dividends
Special dividend from Sabre 200,317
Holdings Corp. Class A
Interest 1,459,335
Security lending 23,511
TOTAL INCOME 3,222,627
EXPENSES
Management fee $ 2,325,785
Transfer agent fees 1,865,284
Accounting and security 295,776
lending fees
Non-interested trustees' 1,496
compensation
Custodian fees and expenses 19,648
Registration fees 85,830
Audit 17,637
Legal 1,881
Interest 4,531
Miscellaneous 635
Total expenses before 4,618,503
reductions
Expense reductions (125,492) 4,493,011
NET INVESTMENT INCOME (LOSS) (1,270,384)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 84,104,122
Foreign currency transactions 911 84,105,033
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (32,144,983)
Assets and liabilities in (285) (32,145,268)
foreign currencies
NET GAIN (LOSS) 51,959,765
NET INCREASE (DECREASE) IN $ 50,689,381
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 1,258,444
charges paid to FDC
Sales charges - Retained by $ 1,255,993
FDC
Deferred sales charges $ 15,030
withheld by FDC
Exchange fees withheld by FSC $ 30,533
Expense reductions Directed $ 118,101
brokerage arrangements
Custodian credits 7,391
$ 125,492
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STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ (1,270,384) $ (1,171,784)
income (loss)
Net realized gain (loss) 84,105,033 22,624,055
Change in net unrealized (32,145,268) 65,006,159
appreciation (depreciation)
NET INCREASE (DECREASE) IN 50,689,381 86,458,430
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (34,566,142) (14,475,212)
from net realized gains
Share transactions Net 342,207,955 283,063,939
proceeds from sales of shares
Reinvestment of distributions 33,284,316 14,128,858
Cost of shares redeemed (424,039,556) (280,558,227)
NET INCREASE (DECREASE) IN (48,547,285) 16,634,570
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 632,323 323,063
TOTAL INCREASE (DECREASE) (31,791,723) 88,940,851
IN NET ASSETS
NET ASSETS
Beginning of period 346,139,368 257,198,517
End of period $ 314,347,645 $ 346,139,368
OTHER INFORMATION
Shares
Sold 3,958,787 4,108,533
Issued in reinvestment of 381,645 211,513
distributions
Redeemed (4,880,345) (4,198,228)
Net increase (decrease) (539,913) 121,818
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 G 1999 1998 1997 1996 G
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 81.44 $ 62.30 $ 47.83 $ 46.17 $ 40.71
period
Income from Investment
Operations
Net investment income (loss) C (.28) D (.27) (.25) (.06) E (.21)
Net realized and unrealized 11.58 22.78 21.10 4.47 10.97
gain (loss)
Total from investment 11.30 22.51 20.85 4.41 10.76
operations
Less Distributions
From net realized gain (8.15) (3.44) (6.46) (2.83) (5.32)
Redemption fees added to paid .14 .07 .08 .08 .02
in capital
Net asset value, end of period $ 84.73 $ 81.44 $ 62.30 $ 47.83 $ 46.17
TOTAL RETURN A, B 13.89% 37.54% 47.29% 10.14% 27.61%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 314,348 $ 346,139 $ 257,199 $ 98,133 $ 85,013
(000 omitted)
Ratio of expenses to average 1.15% 1.26% 1.44% 1.56% 1.64%
net assets
Ratio of expenses to average 1.12% F 1.24% F 1.39% F 1.54% F 1.63% F
net assets after expense
reductions
Ratio of net investment (.32)% (.40)% (.46)% (.12)% (.46)%
income (loss) to average net
assets
Portfolio turnover rate 120% 107% 209% 127% 141%
</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
FROM SABRE HOLDINGS CORP CLASS A WHICH AMOUNTED TO
$.04 PER SHARE.
E INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND
WHICH AMOUNTED TO $.23 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
MULTIMEDIA PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the past 10 year total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT MULTIMEDIA 27.62% 213.05% 591.59%
SELECT MULTIMEDIA (LOAD ADJ.) 23.72% 203.58% 570.77%
S&P 500 11.73% 206.94% 425.47%
GS Consumer Industries -5.41% 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 301 stocks designed
to measure the performance of companies in the consumer industries
sector. These benchmarks include reinvestment of dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT MULTIMEDIA 27.62% 25.64% 21.33%
SELECT MULTIMEDIA (LOAD ADJ.) 23.72% 24.87% 20.96%
S&P 500 11.73% 25.14% 18.05%
GS Consumer Industries -5.41% 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
1990/02/28 9700.00 10000.00
1990/03/31 9605.75 10265.00
1990/04/30 9150.20 10008.38
1990/05/31 10022.02 10984.19
1990/06/30 9935.63 10909.50
1990/07/31 9385.83 10874.59
1990/08/31 8168.42 9891.53
1990/09/30 7469.39 9409.81
1990/10/31 7147.37 9369.35
1990/11/30 7885.67 9974.61
1990/12/31 8466.88 10252.90
1991/01/31 8922.43 10699.92
1991/02/28 9582.19 11464.97
1991/03/31 9841.38 11742.42
1991/04/30 10179.11 11770.60
1991/05/31 10234.09 12279.09
1991/06/30 9425.10 11716.71
1991/07/31 9778.54 12262.71
1991/08/31 10084.86 12553.34
1991/09/30 10697.49 12343.69
1991/10/31 11239.43 12509.10
1991/11/30 10469.72 12004.98
1991/12/31 11671.42 13378.35
1992/01/31 11977.73 13129.52
1992/02/29 12645.34 13300.20
1992/03/31 12323.32 13040.85
1992/04/30 12511.82 13424.25
1992/05/31 12700.32 13490.03
1992/06/30 12747.45 13289.02
1992/07/31 12778.87 13832.55
1992/08/31 12606.07 13548.98
1992/09/30 12527.53 13708.86
1992/10/31 12731.74 13756.84
1992/11/30 13658.54 14225.94
1992/12/31 14180.54 14400.92
1993/01/31 14467.02 14521.89
1993/02/28 14530.68 14719.39
1993/03/31 15103.63 15029.97
1993/04/30 14713.05 14666.24
1993/05/31 15716.03 15059.30
1993/06/30 16209.43 15102.97
1993/07/31 16816.07 15042.56
1993/08/31 18247.74 15612.67
1993/09/30 18684.52 15492.45
1993/10/31 20083.84 15813.15
1993/11/30 18773.16 15662.92
1993/12/31 19572.05 15852.44
1994/01/31 19851.19 16391.43
1994/02/28 19596.68 15947.22
1994/03/31 18398.06 15251.92
1994/04/30 18406.98 15447.15
1994/05/31 19083.92 15700.48
1994/06/30 18657.36 15315.82
1994/07/31 19111.74 15818.18
1994/08/31 20261.59 16466.72
1994/09/30 20122.50 16063.29
1994/10/31 20576.88 16424.71
1994/11/30 19927.76 15826.52
1994/12/31 20355.63 16061.23
1995/01/31 20585.74 16477.70
1995/02/28 21429.50 17119.83
1995/03/31 22791.02 17625.04
1995/04/30 23318.37 18144.10
1995/05/31 23443.01 18869.32
1995/06/30 24344.30 19307.65
1995/07/31 25782.52 19947.89
1995/08/31 26597.51 19997.96
1995/09/30 27354.97 20841.88
1995/10/31 26549.57 20767.47
1995/11/30 27575.50 21679.16
1995/12/31 27209.95 22096.70
1996/01/31 27376.44 22848.87
1996/02/29 28281.70 23060.68
1996/03/31 27907.11 23282.76
1996/04/30 29206.27 23625.95
1996/05/31 30176.26 24235.26
1996/06/30 28779.90 24327.60
1996/07/31 26040.48 23252.80
1996/08/31 27010.47 23743.20
1996/09/30 28726.60 25079.47
1996/10/31 27916.50 25771.16
1996/11/30 28428.14 27719.21
1996/12/31 27502.06 27170.09
1997/01/31 27361.13 28867.68
1997/02/28 27003.40 29094.00
1997/03/31 25691.71 27898.53
1997/04/30 26265.40 29564.07
1997/05/31 28773.21 31363.93
1997/06/30 30659.61 32769.03
1997/07/31 32301.90 35376.46
1997/08/31 31669.40 33394.67
1997/09/30 34232.69 35223.70
1997/10/31 33134.13 34047.23
1997/11/30 34232.69 35623.28
1997/12/31 36007.93 36234.93
1998/01/31 36271.35 36635.68
1998/02/28 38458.86 39277.85
1998/03/31 41161.74 41289.27
1998/04/30 42133.22 41704.64
1998/05/31 40975.37 40987.74
1998/06/30 43754.19 42652.66
1998/07/31 44278.27 42198.41
1998/08/31 36782.77 36097.36
1998/09/30 38367.19 38409.76
1998/10/31 40695.06 41534.01
1998/11/30 43120.43 44051.38
1998/12/31 48860.88 46589.63
1999/01/31 52858.48 48538.00
1999/02/28 52565.97 47029.44
1999/03/31 54418.51 48911.09
1999/04/30 57397.53 50805.42
1999/05/31 56497.61 49605.90
1999/06/30 59024.78 52359.03
1999/07/31 58001.59 50724.38
1999/08/31 55548.39 50473.29
1999/09/30 57446.84 49089.82
1999/10/31 61330.05 52196.23
1999/11/30 62328.59 53257.37
1999/12/31 70426.74 56394.23
2000/01/31 69057.16 53560.99
2000/02/29 67077.00 52547.08
IMATRL PRASUN SHR__CHT 20000229 20000314 100439 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Multimedia Portfolio on February 28, 1990
and the current 3.00% sales charge was paid. As the chart shows, by
February 29, 2000, the value of the investment would have grown to
$67,077 - a 570.77% 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 $52,547 - a 425.47% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
Viacom, Inc. Class B (non-vtg.) 6.6
AT&T Corp. - Liberty Media 6.4
Group Class A
Walt Disney Co. 6.1
CBS Corp. 5.9
Time Warner, Inc. 5.4
MediaOne Group, Inc. 5.3
Comcast Corp. Class A (special) 4.7
Seagram Co. Ltd. 4.7
Cox Communications, Inc. 4.4
Class A
AT&T Corp. 3.8
53.3
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Broadcasting 47.1% Row: 1, Col: 6, Value: 47.1
Entertainment 17.8% Row: 1, Col: 5, Value: 17.8
Publishing 11.6% Row: 1, Col: 4, Value: 11.6
Advertising 5.1% Row: 1, Col: 3, Value: 5.1
Beverages 4.7% Row: 1, Col: 2, Value: 4.7
* All Others 13.7% Row: 1, Col: 1, Value: 13.7
</TABLE>
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
MULTIMEDIA PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Michael Tarlowe)
NOTE TO SHAREHOLDERS: Michael Tarlowe became Portfolio Manager of
Fidelity Select Multimedia Portfolio on January 4, 2000.
Q. HOW DID THE FUND PERFORM, MICHAEL?
A. For the 12-month period ending February 29, 2000, the fund returned
27.62%. By comparison, the Goldman Sachs Consumer Industries Index -
an index of 301 stocks designed to measure the performance of
companies in the consumer industries sector - fell 5.41% for the same
period. The fund also compares its performance to the Standard &
Poor's 500 Index, which returned 11.73% for the 12-month period.
Q. WHAT HELPED THE FUND OUTPERFORM THE GOLDMAN SACHS AND THE S&P 500
INDEXES?
A. The advertising market was extremely robust during the period,
fueled by increased competition and advertising activity in
telecommunications, financial services and health care, as well as new
Internet companies spending on advertising to create brand awareness.
The fund's focus on advertising-driven companies, as well as
broadcasting and entertainment companies, helped its performance.
Toward the end of the period, I also modestly reduced the fund's
exposure to cable while increasing its emphasis on satellite
television companies, which had become much more competitive than they
had been in the past.
Q. BROADCASTING AND ENTERTAINMENT CONTINUED TO BE THE FUND'S MAIN
FOCUS DURING THE YEAR. HOW DID THESE STOCKS DO?
A. In general, they performed very well. CBS, the fund's number-four
holding, benefited from a turnaround at its network due to cost
cutting and increased advertising revenues. Its cash flows improved,
its TV network business made a good recovery and the company executed
its business strategy flawlessly. Entertainment companies also were
strong performers. Viacom saw its stock rise following the
announcement of its merger with CBS. The company also reaped the
benefits of the strong advertising market, as viewers continued to
shift from traditional broadcast networks to cable networks, driving
more advertising dollars to such cable networks as Viacom's.
Q. WHAT OTHER STOCKS STOOD OUT IN THIS ENVIRONMENT?
A. Cable stocks continued to shine, rolling out such new services as
digital cable and cable modem service, potentially leading to
increased revenues. There also was very active consolidation activity
within this sector, with fund holding MediaOne benefiting from its
acquisition by AT&T. Another top holding, Time Warner, benefited from
the announcement of a merger with America Online, and from the strong
performance of Time Warner's cable assets.
Q. WHAT ABOUT DISAPPOINTMENTS?
A. Walt Disney was a disappointment. A significant decline in Disney's
home video business followed a decision to remove some of its
best-selling library titles from the shelves. Its consumer products
business also suffered as Disney store sales declined and its
licensing business performed poorly. However, the company brought in
new management and is making new titles available, and its ABC and
ESPN networks are now benefiting from the robust advertising
environment and higher ratings. AT&T spent over $100 billion to
acquire two large cable companies, and investors became skeptical
about whether it could integrate these acquisitions effectively and
cost-efficiently. There also was some concern about whether AT&T paid
too much to get into cable, given the shifting competitive
environment. Along with most newspaper publishers, Gannett was hurt by
competition from the Internet, which took away revenues from
classified ads, traditionally a significant revenue source for
newspapers. Advertising dollars also shifted to radio during the year,
causing further stagnation in Gannett's performance.
Q. WHAT'S YOUR OUTLOOK, MICHAEL?
A. I'm optimistic. Overall, advertising activity is robust and growth
should be strong through the next few months, which is when television
networks sell as much as 75% of their inventory for the fall/spring
2001 season. We should see significant ad price increases during this
time and continued growth in revenues from advertising activity
through this year. I'm positioning the fund to take advantage of the
current climate, as well as evolving opportunities in broadband,
Internet/new media and new distribution platforms. There are some
exciting opportunities in satellite television, with the potential for
companies to gain greater share through their ability to offer local
programming and perhaps high-speed Internet access. Although
multimedia has traditionally been a cyclical sector - and there is
some risk of slowing if the Fed continues to raise interest rates -
I'm finding companies with attractive prospects and valuations, which
could provide some protection if the market declines.
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 29, 2000, more than
$238 million
MANAGER: Michael Tarlowe, since January 2000;
manager, Fidelity Select Leisure Portfolio, since
January 2000; Fidelity Select Business Services
and Outsourcing Portfolio, 1998-2000; research
analyst, transportation, telecommunications
equipment, computer services and Internet
securities, 1994-1998; joined Fidelity in 1994
MULTIMEDIA PORTFOLIO
INVESTMENTS FEBRUARY 29, 2000
Showing Percentage of Net Assets
COMMON STOCKS - 95.1%
SHARES VALUE (NOTE 1)
ADVERTISING - 5.1%
ADVO, Inc. (a) 11,400 $ 316,350
Interpublic Group of 109,600 4,404,550
Companies, Inc.
Lamar Advertising Co. Class A 11,000 479,188
(a)
Omnicom Group, Inc. 69,000 6,498,938
Young & Rubicam, Inc. 7,300 368,650
12,067,676
BEVERAGES - 4.7%
Seagram Co. Ltd. 200,600 11,271,296
BROADCASTING - 47.1%
Adelphia Communications Corp. 11,000 604,313
Class A (a)
AMFM, Inc. (a) 95,900 5,885,863
AT&T Corp. - Liberty Media 291,496 15,230,666
Group Class A (a)
Cablevision Systems Corp. 53,900 3,459,706
Class A (a)
CBS Corp. (a) 234,595 13,973,065
Chris-Craft Industries, Inc. 8,300 546,244
Clear Channel Communications, 126,120 8,402,745
Inc. (a)
Comcast Corp. Class A 266,500 11,326,250
(special)
Cox Communications, Inc. 229,760 10,439,720
Class A (a)
E.W. Scripps Co. Class A 22,500 970,313
EchoStar Communications Corp. 44,400 5,061,600
Class A (a)
Hispanic Broadcasting Corp. 9,600 897,000
(a)
Infinity Broadcasting Corp. 26,075 832,770
Class A (a)
MediaOne Group, Inc. (a) 162,500 12,756,250
PanAmSat Corp. (a) 11,300 551,581
Time Warner, Inc. 151,217 12,929,054
UnitedGlobalCom, Inc. (a) 23,600 2,466,200
Univision Communications, 3,500 356,563
Inc. Class A (a)
USA Networks, Inc. (a) 196,000 4,397,750
Westwood One, Inc. (a) 17,800 1,189,263
112,276,916
COMPUTER SERVICES & SOFTWARE
- - 1.0%
At Plan, Inc. 153,900 1,539,000
RealNetworks, Inc. (a) 4,400 309,375
Sabre Holdings Corp. Class A 14,100 565,763
2,414,138
CONSUMER ELECTRONICS - 1.4%
Gemstar International Group 21,000 1,593,375
Ltd. (a)
General Motors Corp. Class H 8,400 1,012,200
(a)
Sony Corp. sponsored ADR 2,300 720,763
3,326,338
ENGINEERING - 0.2%
Jupiter Communications, Inc. 13,400 428,800
SHARES VALUE (NOTE 1)
ENTERTAINMENT - 17.8%
EMI Group PLC 53,300 $ 567,502
Fox Entertainment Group, Inc. 76,000 1,999,750
Class A
News Corp. Ltd. sponsored ADR 151,700 8,846,006
Premier Parks, Inc. (a) 24,500 496,125
Ticketmaster Online 11,500 401,242
CitySearch, Inc. (a)
Viacom, Inc. Class B 281,500 15,693,615
(non-vtg.) (a)
Walt Disney Co. 431,500 14,455,250
42,459,490
PRINTING - 0.4%
R.R. Donnelley & Sons Co. 54,300 1,038,488
PUBLISHING - 11.6%
Gannet Co., Inc. 94,200 6,140,663
Harcourt General, Inc. 17,400 599,213
Harte Hanks Communications, 59,600 1,300,025
Inc.
Knight-Ridder, Inc. 22,900 1,073,438
McGraw-Hill Companies, Inc. 88,200 4,487,175
Meredith Corp. 66,300 1,897,838
Playboy Enterprises, Inc. 38,700 853,819
Class B (a)
PRIMEDIA, Inc. (a) 25,000 464,063
Reader's Digest Association, 106,600 3,664,375
Inc. Class A (non-vtg.)
The New York Times Co. Class A 81,100 3,426,475
Tribune Co. 98,100 3,819,769
27,726,853
SERVICES - 2.0%
ACNielsen Corp. (a) 78,200 1,324,513
Dun & Bradstreet Corp. 31,700 830,144
Gartner Group, Inc. Class B 119,500 1,411,594
(a)
Media Metrix, Inc. 15,000 526,875
True North Communications 21,200 784,400
4,877,526
TELEPHONE SERVICES - 3.8%
AT&T Corp. 181,000 8,948,188
TOTAL COMMON STOCKS 226,835,709
(Cost $158,783,139)
CASH EQUIVALENTS - 22.7%
SHARES VALUE (NOTE 1)
Central Cash Collateral Fund, 38,757,300 $ 38,757,300
5.75% (b)
Taxable Central Cash Fund, 15,375,275 15,375,275
5.66% (b)
TOTAL CASH EQUIVALENTS 54,132,575
(Cost $54,132,575)
TOTAL INVESTMENT PORTFOLIO - 280,968,284
117.8%
(Cost $212,915,714)
NET OTHER ASSETS - (17.8)% (42,356,584)
NET ASSETS - 100% $ 238,611,700
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 $182,411,188 and $145,732,178, 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 $24,819 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $30,283,725. The fund
received cash collateral of $38,757,300 which was invested in cash
equivalents.
Cash Collateral includes $6,069,000 received for unsettled security
loans.
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $213,594,802. Net unrealized appreciation
aggregated $67,373,482, of which $74,169,808 related to appreciated
investment securities and $6,796,326 related to depreciated investment
securities.
The fund hereby designates approximately $8,972,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 43% 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 2001 of amounts for use
in preparing 2000 income tax returns.
MULTIMEDIA PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 280,968,284
value (cost $212,915,714) -
See accompanying schedule
Receivable for investments 2,182,414
sold
Receivable for fund shares 523,033
sold
Dividends receivable 117,180
Interest receivable 88,884
Redemption fees receivable 2,712
Other receivables 12,874
TOTAL ASSETS 283,895,381
LIABILITIES
Payable for investments $ 2,250,773
purchased
Payable for fund shares 4,028,485
redeemed
Accrued management fee 130,752
Other payables and accrued 116,371
expenses
Collateral on securities 38,757,300
loaned, at value
TOTAL LIABILITIES 45,283,681
NET ASSETS $ 238,611,700
Net Assets consist of:
Paid in capital $ 156,210,444
Accumulated net investment (17,095)
(loss)
Accumulated undistributed net 14,365,946
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 68,052,405
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 4,469,624 $ 238,611,700
shares outstanding
NET ASSET VALUE and $53.39
redemption price per share
($238,611,700 (divided by)
4,469,624 shares)
Maximum offering price per $55.04
share (100/97.00 of $53.39)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 847,534
Dividends
Interest 856,739
Security lending 29,929
TOTAL INCOME 1,734,202
EXPENSES
Management fee $ 1,229,878
Transfer agent fees 990,042
Accounting and security 155,901
lending fees
Non-interested trustees' 587
compensation
Custodian fees and expenses 12,187
Registration fees 57,081
Audit 17,221
Legal 776
Miscellaneous 146
Total expenses before 2,463,819
reductions
Expense reductions (42,775) 2,421,044
NET INVESTMENT INCOME (LOSS) (686,842)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 19,894,780
Foreign currency transactions 5,731 19,900,511
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 24,799,088
Assets and liabilities in (157) 24,798,931
foreign currencies
NET GAIN (LOSS) 44,699,442
NET INCREASE (DECREASE) IN $ 44,012,600
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 879,938
charges paid to FDC
Sales charges - Retained by $ 878,682
FDC
Deferred sales charges $ 1,738
withheld by FDC
Exchange fees withheld by FSC $ 9,579
Expense reductions Directed $ 35,474
brokerage arrangements
Custodian credits 1,819
Transfer agent credits 5,482
$ 42,775
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ (686,842) $ (681,089)
income (loss)
Net realized gain (loss) 19,900,511 3,497,059
Change in net unrealized 24,798,931 32,313,711
appreciation (depreciation)
NET INCREASE (DECREASE) IN 44,012,600 35,129,681
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (6,716,257) (7,954,098)
from net realized gains
Share transactions Net 211,032,647 158,099,619
proceeds from sales of shares
Reinvestment of distributions 6,530,741 7,877,838
Cost of shares redeemed (176,372,310) (149,217,492)
NET INCREASE (DECREASE) IN 41,191,078 16,759,965
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 394,751 309,134
TOTAL INCREASE (DECREASE) 78,882,172 44,244,682
IN NET ASSETS
NET ASSETS
Beginning of period 159,729,528 115,484,846
End of period (including $ 238,611,700 $ 159,729,528
accumulated net investment
loss of $17,095 and $17,095,
respectively)
OTHER INFORMATION
Shares
Sold 4,212,974 4,292,822
Issued in reinvestment of 127,825 230,819
distributions
Redeemed (3,574,961) (4,259,349)
Net increase (decrease) 765,838 264,292
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 F 1999 1998 1997 1996 F
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 43.13 $ 33.58 $ 24.91 $ 27.18 $ 22.35
period
Income from Investment
Operations
Net investment income (loss) C (.16) (.19) (.17) .35 D .02
Net realized and unrealized 11.90 11.85 10.30 (1.58) 7.00
gain (loss)
Total from investment 11.74 11.66 10.13 (1.23) 7.02
operations
Less Distributions
From net investment income - - - - (.02)
From net realized gain (1.57) (2.19) (1.52) (1.07) (2.19)
Total distributions (1.57) (2.19) (1.52) (1.07) (2.21)
Redemption fees added to paid .09 .08 .06 .03 .02
in capital
Net asset value, end of period $ 53.39 $ 43.13 $ 33.58 $ 24.91 $ 27.18
TOTAL RETURN A, B 27.62% 36.68% 42.42% (4.52)% 31.98%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 238,612 $ 159,730 $ 115,485 $ 54,171 $ 94,970
(000 omitted)
Ratio of expenses to average 1.17% 1.35% 1.75% 1.60% 1.56%
net assets
Ratio of expenses to average 1.15% E 1.33% E 1.71% E 1.56% E 1.54% E
net assets after expense
reductions
Ratio of net investment (.32)% (.52)% (.59)% 1.33% .08%
income (loss) to average net
assets
Portfolio turnover rate 76% 109% 219% 99% 223%
</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 $.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
RETAILING PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the past 10 year total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT RETAILING -12.15% 155.39% 460.96%
SELECT RETAILING (LOAD ADJ.) -14.86% 147.66% 444.06%
S&P 500 11.73% 206.94% 425.47%
GS Consumer Industries -5.41% 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 301 stocks designed
to measure the performance of companies in the consumer industries
sector. These benchmarks include reinvestment of dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT RETAILING -12.15% 20.63% 18.82%
SELECT RETAILING (LOAD ADJ.) -14.86% 19.89% 18.46%
S&P 500 11.73% 25.14% 18.05%
GS Consumer Industries -5.41% 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
1990/02/28 9700.00 10000.00
1990/03/31 10494.11 10265.00
1990/04/30 10345.68 10008.38
1990/05/31 11726.09 10984.19
1990/06/30 11577.66 10909.50
1990/07/31 11102.68 10874.59
1990/08/31 9507.04 9891.53
1990/09/30 8445.75 9409.81
1990/10/31 8052.41 9369.35
1990/11/30 9150.80 9974.61
1990/12/31 9656.05 10252.90
1991/01/31 10593.39 10699.92
1991/02/28 11575.36 11464.97
1991/03/31 12780.51 11742.42
1991/04/30 12959.05 11770.60
1991/05/31 14037.73 12279.09
1991/06/30 13591.38 11716.71
1991/07/31 14461.76 12262.71
1991/08/31 15227.99 12553.34
1991/09/30 15064.33 12343.69
1991/10/31 14781.64 12509.10
1991/11/30 14498.96 12004.98
1991/12/31 16235.03 13378.35
1992/01/31 17135.28 13129.52
1992/02/29 17959.24 13300.20
1992/03/31 17600.66 13040.85
1992/04/30 16883.51 13424.25
1992/05/31 17234.46 13490.03
1992/06/30 16429.97 13289.02
1992/07/31 17160.90 13832.55
1992/08/31 16771.60 13548.98
1992/09/30 17272.13 13708.86
1992/10/31 18455.91 13756.84
1992/11/30 19854.21 14225.94
1992/12/31 19819.12 14400.92
1993/01/31 19955.86 14521.89
1993/02/28 19199.77 14719.39
1993/03/31 20679.77 15029.97
1993/04/30 19492.80 14666.24
1993/05/31 20572.52 15059.30
1993/06/30 20077.99 15102.97
1993/07/31 20176.90 15042.56
1993/08/31 21100.03 15612.67
1993/09/30 21742.92 15492.45
1993/10/31 22080.85 15813.15
1993/11/30 22295.14 15662.92
1993/12/31 22401.86 15852.44
1994/01/31 21403.84 16391.43
1994/02/28 22196.91 15947.22
1994/03/31 21733.54 15251.92
1994/04/30 22392.94 15447.15
1994/05/31 21288.00 15700.48
1994/06/30 21109.78 15315.82
1994/07/31 21466.22 15818.18
1994/08/31 22829.58 16466.72
1994/09/30 22384.03 16063.29
1994/10/31 22482.05 16424.71
1994/11/30 21697.90 15826.52
1994/12/31 21279.09 16061.23
1995/01/31 21109.78 16477.70
1995/02/28 21305.82 17119.83
1995/03/31 21546.41 17625.04
1995/04/30 20708.80 18144.10
1995/05/31 21074.14 18869.32
1995/06/30 22419.68 19307.65
1995/07/31 23791.95 19947.89
1995/08/31 23462.25 19997.96
1995/09/30 24166.20 20841.88
1995/10/31 23087.99 20767.47
1995/11/30 24246.40 21679.16
1995/12/31 23827.59 22096.70
1996/01/31 23132.54 22848.87
1996/02/29 24834.52 23060.68
1996/03/31 26679.06 23282.76
1996/04/30 28238.46 23625.95
1996/05/31 29592.90 24235.26
1996/06/30 29067.17 24327.60
1996/07/31 26286.98 23252.80
1996/08/31 28773.11 23743.20
1996/09/30 29806.77 25079.47
1996/10/31 29218.65 25771.16
1996/11/30 30341.42 27719.21
1996/12/31 28798.16 27170.09
1997/01/31 28664.17 28867.68
1997/02/28 29700.33 29094.00
1997/03/31 30075.49 27898.53
1997/04/30 30537.36 29564.07
1997/05/31 31954.56 31363.93
1997/06/30 33985.57 32769.03
1997/07/31 37659.44 35376.46
1997/08/31 36395.70 33394.67
1997/09/30 38751.67 35223.70
1997/10/31 38535.03 34047.23
1997/11/30 41342.34 35623.28
1997/12/31 40814.23 36234.93
1998/01/31 41520.73 36635.68
1998/02/28 45324.99 39277.85
1998/03/31 48440.85 41289.27
1998/04/30 48249.93 41704.64
1998/05/31 49084.99 40987.74
1998/06/30 51792.05 42652.66
1998/07/31 50351.34 42198.41
1998/08/31 43900.28 36097.36
1998/09/30 44138.86 38409.76
1998/10/31 48259.10 41534.01
1998/11/30 53003.34 44051.38
1998/12/31 59491.11 46589.63
1999/01/31 62069.70 48538.00
1999/02/28 61941.23 47029.44
1999/03/31 62987.35 48911.09
1999/04/30 61987.12 50805.42
1999/05/31 60105.94 49605.90
1999/06/30 64428.06 52359.03
1999/07/31 61464.06 50724.38
1999/08/31 55334.17 50473.29
1999/09/30 55609.46 49089.82
1999/10/31 58307.35 52196.23
1999/11/30 60693.23 53257.37
1999/12/31 62582.87 56394.23
2000/01/31 55935.00 53560.99
2000/02/29 54406.00 52547.08
IMATRL PRASUN SHR__CHT 20000229 20000322 093556 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Retailing Portfolio on February 28, 1990,
and the current 3.00% sales charge was paid. As the chart shows, by
February 29, 2000, the value of the investment would have grown to
$54,406 - a 444.06% 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 $52,547 - a 425.47% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
Home Depot, Inc. 9.6
Costco Wholesale Corp. 9.3
Wal-Mart Stores, Inc. 8.4
Walgreen Co. 8.1
Target Corp. 7.7
Kohls Corp. 5.0
Lowe's Companies, Inc. 4.6
Gap, Inc. 4.6
BJ's Wholesale Club, Inc. 4.5
Staples, Inc. 4.4
66.2
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
General Merchandise Stores 38.2% Row: 1, Col: 6, Value: 38.2
Retail & Wholesale,
Miscellaneous 24.0% Row: 1, Col: 5, Value: 24.0
Drug Stores 9.3% Row: 1, Col: 4, Value: 9.300000000000001
Apparel Stores 7.5% Row: 1, Col: 3, Value: 7.5
Grocery Stores 5.1% Row: 1, Col: 2, Value: 5.1
*All Others 15.9% Row: 1, Col: 1, Value: 15.9
</TABLE>
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
(photograph of Steve Calhoun)
Steve Calhoun, Portfolio Manager of Fidelity Select Retailing
Portfolio
Q. HOW DID THE FUND PERFORM, STEVE?
A. The retailing stocks experienced a difficult period. For the 12
months that ended February 29, 2000, the fund fell 12.15%. For the
same 12-month period, the Goldman Sachs Consumer Industries Index - an
index of 301 stocks designed to measure the performance of companies
in the consumer industries sector - lost 5.41%, while the Standard &
Poor's 500 Index returned 11.73%.
Q. WHAT MARKET FACTORS AFFECTED PERFORMANCE OVER THE PAST 12 MONTHS?
A. The market environment was characterized by rising interest rates,
which hurt the interest-rate sensitive retailing sector. This was
especially evident in large capitalization stocks. The fund owned many
large capitalization retail companies with increasing market share and
superior unit growth. Despite the bright prospects for these
companies, the interest-rate environment caused their earnings
multiples - that is, the price of the security divided by the earnings
of the company - to decrease. The result was lower stock prices for
many retailing securities.
Q. WHAT INVESTMENT STRATEGY DID YOU PURSUE DURING THE PERIOD?
A. I chose to focus on a handful of companies with similar themes. All
of these companies were increasing their market share, growing
earnings and meeting their financial targets. Many of them were
leading or near the top of their categories. For example, Wal-Mart is
becoming one of the country's largest grocers, significantly
increasing its grocery business while pursuing a strategy of
aggressive unit expansion. These two factors have made Wal-Mart a very
attractive story. Target Stores is another example of a company that
is increasing its market share and earnings while expanding throughout
the country.
Q. WHAT STOCKS BENEFITED PERFORMANCE?
A. Home Depot and Costco were two important contributors. Both
companies significantly increased their unit growth while meeting
their financial objectives. Costco, like many of the wholesale clubs,
capitalized on increased consumer acceptance of buying branded goods
and groceries at discounted prices. Home Depot continued to benefit
from the trend toward home improvement. On the other hand, the fund
was underweighted in grocery stores, a strategy that proved beneficial
as grocery stores lagged due to flat unit growth and sales. In
addition, they faced increasing competition from both Wal-Mart and the
wholesale clubs.
Q. WHAT STOCKS WERE DISAPPOINTING?
A. Department stores were disappointing for the most part as they
struggled to adapt their business models to the new economy, and
continued to be faced with difficult decisions as they try to compete
with the Internet retailers. Unfortunately for the department stores,
the market was very unforgiving of traditional retailers that incurred
significant losses while trying to build their Internet presence. This
factor negatively affected the established retailers such as
Consolidated Stores. One exception to this was Kohls, which
demonstrated impressive store growth and rising market share
throughout the past 12 months.
Q. WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
A. I am cautiously optimistic about the next six months. The retail
sector has really suffered due to rising interest rates, but many of
the companies that I follow have met their financial targets and are
positioned to show impressive growth. Additionally, we are still
seeing very vibrant consumer spending. Even if spending moderates in
the next few months, the companies that I have focused on are still
poised to do extremely well. With that in mind, I am hoping for a
significant recovery in the retail sector in 2000.
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 29, 2000, more than
$75 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 FEBRUARY 29, 2000
Showing Percentage of Net Assets
COMMON STOCKS - 90.3%
SHARES VALUE (NOTE 1)
APPAREL STORES - 7.5%
Gap, Inc. 72,300 $ 3,492,994
The Limited, Inc. 64,400 2,189,600
5,682,594
DRUG STORES - 9.3%
CVS Corp. 26,774 937,090
Walgreen Co. 238,100 6,145,956
7,083,046
GENERAL MERCHANDISE STORES -
38.2%
BJ's Wholesale Club, Inc. (a) 109,000 3,379,000
Consolidated Stores Corp. (a) 168,558 1,896,278
Costco Wholesale Corp. (a) 142,000 7,046,750
Ito-Yokado Co. Ltd. 10,000 580,710
Kohls Corp. (a) 50,000 3,790,625
Target Corp. 99,500 5,870,500
Wal-Mart Stores, Inc. 131,500 6,402,406
28,966,269
GROCERY STORES - 5.1%
Loblaw Companies Ltd. 82,600 1,951,607
Whole Foods Market, Inc. (a) 22,700 861,891
Wild Oats Markets, Inc. (a) 57,500 1,078,125
3,891,623
HOME FURNISHINGS - 1.1%
Linens'n Things, Inc. (a) 43,600 858,375
RESTAURANTS - 5.1%
McDonald's Corp. 86,600 2,733,313
Outback Steakhouse, Inc. (a) 41,900 1,094,638
3,827,951
RETAIL & WHOLESALE,
MISCELLANEOUS - 24.0%
Bed Bath & Beyond, Inc. (a) 34,300 973,263
Best Buy Co., Inc. (a) 36,500 1,984,688
Circuit City Stores, Inc. - 28,700 1,158,763
Circuit City Group
Home Depot, Inc. 125,550 7,258,356
Lowe's Companies, Inc. 73,700 3,509,963
Staples, Inc. (a) 121,600 3,283,200
18,168,233
TOTAL COMMON STOCKS 68,478,091
(Cost $48,613,487)
CASH EQUIVALENTS - 6.5%
SHARES VALUE (NOTE 1)
Central Cash Collateral Fund, 741,000 $ 741,000
5.75% (b)
Taxable Central Cash Fund, 4,205,803 4,205,803
5.66% (b)
TOTAL CASH EQUIVALENTS 4,946,803
(Cost $4,946,803)
TOTAL INVESTMENT PORTFOLIO - 73,424,894
96.8%
(Cost $53,560,290)
NET OTHER ASSETS - 3.2% 2,396,801
NET ASSETS - 100% $ 75,821,695
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 $148,899,934 and $383,371,008, 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 $31,755 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $731,250. The fund received
cash collateral of $741,000 which was invested in cash equivalents.
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 February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $54,117,860. Net unrealized appreciation
aggregated $19,307,034, of which $22,813,867 related to appreciated
investment securities and $3,506,833 related to depreciated investment
securities.
The fund hereby designates approximately $37,953,000 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 2001 of amounts for use
in preparing 2000 income tax returns.
RETAILING PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 73,424,894
value (cost $53,560,290) -
See accompanying schedule
Receivable for investments 2,590,549
sold
Receivable for fund shares 1,810,278
sold
Dividends receivable 21,442
Interest receivable 24,875
Redemption fees receivable 730
Other receivables 175,929
TOTAL ASSETS 78,048,697
LIABILITIES
Payable for fund shares $ 1,394,881
redeemed
Accrued management fee 39,976
Other payables and accrued 51,145
expenses
Collateral on securities 741,000
loaned, at value
TOTAL LIABILITIES 2,227,002
NET ASSETS $ 75,821,695
Net Assets consist of:
Paid in capital $ 18,374,013
Accumulated undistributed net 37,583,065
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 19,864,617
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 1,503,668 $ 75,821,695
shares outstanding
NET ASSET VALUE, and $50.42
redemption price per share
($75,821,695 (divided by)
1,503,668 shares)
Maximum offering price per $51.98
share (100/97.00 of $50.42)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 506,341
Dividends
Interest 588,126
Security lending 5,338
TOTAL INCOME 1,099,805
EXPENSES
Management fee $ 1,047,886
Transfer agent fees 1,013,666
Accounting and security 135,084
lending fees
Non-interested trustees' 645
compensation
Custodian fees and expenses 11,758
Registration fees 38,810
Audit 16,951
Legal 2,828
Interest 4,904
Miscellaneous 296
Total expenses before 2,272,828
reductions
Expense reductions (83,030) 2,189,798
NET INVESTMENT INCOME (LOSS) (1,089,993)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 63,325,808
Foreign currency transactions (4,862) 63,320,946
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (80,761,561)
Assets and liabilities in 13 (80,761,548)
foreign currencies
NET GAIN (LOSS) (17,440,602)
NET INCREASE (DECREASE) IN $ (18,530,595)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 519,808
charges paid to FDC
Sales charges - Retained by $ 519,673
FDC
Deferred sales charges $ 4,022
withheld by FDC
Exchange fees withheld by FSC $ 30,054
Expense reductions Directed $ 81,471
brokerage arrangements
Custodian credits 1,559
$ 83,030
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ (1,089,993) $ (1,421,013)
income (loss)
Net realized gain (loss) 63,320,946 381,908
Change in net unrealized (80,761,548) 79,277,166
appreciation (depreciation)
NET INCREASE (DECREASE) IN (18,530,595) 78,238,061
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (21,286,354) (1,977,498)
From net realized gain
In excess of net realized - (1,495,766)
gain
TOTAL DISTRIBUTIONS (21,286,354) (3,473,264)
Share transactions Net 165,337,107 767,856,791
proceeds from sales of shares
Reinvestment of distributions 20,405,937 3,407,803
Cost of shares redeemed (408,057,115) (702,182,873)
NET INCREASE (DECREASE) IN (222,314,071) 69,081,721
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 439,543 805,978
TOTAL INCREASE (DECREASE) (261,691,477) 144,652,496
IN NET ASSETS
NET ASSETS
Beginning of period 337,513,172 192,860,676
End of period $ 75,821,695 $ 337,513,172
OTHER INFORMATION
Shares
Sold 2,486,363 13,691,594
Issued in reinvestment of 354,639 64,738
distributions
Redeemed (6,337,585) (12,610,578)
Net increase (decrease) (3,496,583) 1,145,754
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 E 1999 1998 1997 1996 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 67.50 $ 50.04 $ 33.25 $ 27.87 $ 23.91
period
Income from Investment
Operations
Net investment income (loss) C (.39) (.28) (.27) (.13) (.14)
Net realized and unrealized (6.72) 18.27 17.14 5.49 4.07
gain (loss)
Total from investment (7.11) 17.99 16.87 5.36 3.93
operations
Less Distributions
From net realized gain (10.13) (.39) (.51) (.08) -
In excess of net realized gain - (.30) - - -
Total distributions (10.13) (.69) (.51) (.08) -
Redemption fees added to paid .16 .16 .43 .10 .03
in capital
Net asset value, end of period $ 50.42 $ 67.50 $ 50.04 $ 33.25 $ 27.87
TOTAL RETURN A, B (12.15)% 36.66% 52.61% 19.59% 16.56%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 75,822 $ 337,513 $ 192,861 $ 59,348 $ 44,051
(000 omitted)
Ratio of expenses to average 1.25% 1.25% 1.63% 1.45% 1.94%
net assets
Ratio of expenses to average 1.20% D 1.22% D 1.55% D 1.39% D 1.92% D
net assets after expense
reductions
Ratio of net investment (.60)% (.50)% (.67)% (.39)% (.53)%
income (loss) to average net
assets
Portfolio turnover rate 88% 165% 308% 278% 235%
</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
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 10 year total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT AIR TRANSPORTATION 8.50% 139.48% 251.41%
SELECT AIR TRANSPORTATION 5.18% 132.22% 240.79%
(LOAD ADJ.)
S&P 500 11.73% 206.94% 425.47%
GS Cyclical Industries -7.75% 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 246 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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT AIR TRANSPORTATION 8.50% 19.08% 13.39%
SELECT AIR TRANSPORTATION 5.18% 18.35% 13.04%
(LOAD ADJ.)
S&P 500 11.73% 25.14% 18.05%
GS Cyclical Industries -7.75% 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
1990/02/28 9700.00 10000.00
1990/03/31 10207.25 10265.00
1990/04/30 9833.49 10008.38
1990/05/31 10518.72 10984.19
1990/06/30 10545.41 10909.50
1990/07/31 10225.05 10874.59
1990/08/31 8605.41 9891.53
1990/09/30 7742.20 9409.81
1990/10/31 8151.56 9369.35
1990/11/30 8026.97 9974.61
1990/12/31 8489.72 10252.90
1991/01/31 9495.32 10699.92
1991/02/28 10563.21 11464.97
1991/03/31 10518.72 11742.42
1991/04/30 10260.64 11770.60
1991/05/31 10865.78 12279.09
1991/06/30 10636.67 11716.71
1991/07/31 10963.67 12262.71
1991/08/31 10827.42 12553.34
1991/09/30 10464.08 12343.69
1991/10/31 10972.75 12509.10
1991/11/30 10482.25 12004.98
1991/12/31 11635.84 13378.35
1992/01/31 12308.01 13129.52
1992/02/29 12862.10 13300.20
1992/03/31 12108.18 13040.85
1992/04/30 11481.42 13424.25
1992/05/31 11635.84 13490.03
1992/06/30 11258.00 13289.02
1992/07/31 11193.29 13832.55
1992/08/31 10721.90 13548.98
1992/09/30 11073.13 13708.86
1992/10/31 11470.58 13756.84
1992/11/30 11747.88 14225.94
1992/12/31 12400.06 14400.92
1993/01/31 12512.19 14521.89
1993/02/28 12708.42 14719.39
1993/03/31 14110.09 15029.97
1993/04/30 14269.59 14666.24
1993/05/31 15084.73 15059.30
1993/06/30 13960.40 15102.97
1993/07/31 14438.24 15042.56
1993/08/31 15300.23 15612.67
1993/09/30 14991.04 15492.45
1993/10/31 15853.02 15813.15
1993/11/30 15890.50 15662.92
1993/12/31 16230.09 15852.44
1994/01/31 16856.88 16391.43
1994/02/28 16258.58 15947.22
1994/03/31 15318.40 15251.92
1994/04/30 15217.66 15447.15
1994/05/31 14581.49 15700.48
1994/06/30 14137.17 15315.82
1994/07/31 14874.33 15818.18
1994/08/31 15439.81 16466.72
1994/09/30 13713.06 16063.29
1994/10/31 13824.14 16424.71
1994/11/30 12905.22 15826.52
1994/12/31 12701.10 16061.23
1995/01/31 13109.82 16477.70
1995/02/28 14233.81 17119.83
1995/03/31 15153.44 17625.04
1995/04/30 16369.40 18144.10
1995/05/31 16635.07 18869.32
1995/06/30 18740.00 19307.65
1995/07/31 19373.52 19947.89
1995/08/31 18627.60 19997.96
1995/09/30 19312.21 20841.88
1995/10/31 19087.41 20767.47
1995/11/30 21549.97 21679.16
1995/12/31 20263.20 22096.70
1996/01/31 19803.63 22848.87
1996/02/29 22049.29 23060.68
1996/03/31 23177.34 23282.76
1996/04/30 22206.67 23625.95
1996/05/31 22418.06 24235.26
1996/06/30 22312.36 24327.60
1996/07/31 18655.29 23252.80
1996/08/31 18317.06 23743.20
1996/09/30 18095.10 25079.47
1996/10/31 17925.99 25771.16
1996/11/30 20113.89 27719.21
1996/12/31 20515.53 27170.09
1997/01/31 19712.25 28867.68
1997/02/28 18729.28 29094.00
1997/03/31 19881.36 27898.53
1997/04/30 20970.03 29564.07
1997/05/31 22428.63 31363.93
1997/06/30 22692.87 32769.03
1997/07/31 24056.34 35376.46
1997/08/31 23136.79 33394.67
1997/09/30 25028.74 35223.70
1997/10/31 24806.78 34047.23
1997/11/30 25440.95 35623.28
1997/12/31 26904.59 36234.93
1998/01/31 27926.86 36635.68
1998/02/28 30173.59 39277.85
1998/03/31 31532.86 41289.27
1998/04/30 32580.74 41704.64
1998/05/31 31222.74 40987.74
1998/06/30 33203.16 42652.66
1998/07/31 31437.76 42198.41
1998/08/31 24715.64 36097.36
1998/09/30 24330.88 38409.76
1998/10/31 26730.02 41534.01
1998/11/30 27307.17 44051.38
1998/12/31 28631.22 46589.63
1999/01/31 30634.27 48538.00
1999/02/28 31415.12 47029.44
1999/03/31 32874.98 48911.09
1999/04/30 36349.36 50805.42
1999/05/31 36152.81 49605.90
1999/06/30 37736.74 52359.03
1999/07/31 37956.41 50724.38
1999/08/31 36083.44 50473.29
1999/09/30 32904.03 49089.82
1999/10/31 36083.44 52196.23
1999/11/30 35794.41 53257.37
1999/12/31 38507.04 56394.23
2000/01/31 35285.24 53560.99
2000/02/29 34079.00 52547.08
IMATRL PRASUN SHR__CHT 20000229 20000322 162626 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Air Transportation Portfolio on February
28, 1990, and the current 3.00% sales charge was paid. As the chart
shows, by February 29, 2000, the value of the investment would have
grown to $34,079 - a 240.79% 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 $52,547 - a 425.47% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
AMR Corp. 13.2
Southwest Airlines Co. 7.8
United Technologies Corp. 6.2
Delta Air Lines, Inc. 6.1
General Dynamics Corp. 5.5
BFGoodrich Co. 5.3
Northwest Airlines Corp. 5.1
Class A
Atlas Air, Inc. 5.1
EGL, Inc. 4.8
Continental Airlines, Inc. 4.8
Class B
63.9
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Air Transportation 54.6% Row: 1, Col: 6, Value: 54.6
Aerospace & Defense 20.6% Row: 1, Col: 5, Value: 20.6
Trucking & Freight 12.1% Row: 1, Col: 4, Value: 12.1
Ship Building & Repair 5.5% Row: 1, Col: 3, Value: 5.5
Oil & Gas 0.2% Row: 1, Col: 2, Value: 0.2
*All Others 7.0% Row: 1, Col: 1, Value: 7.0
</TABLE>
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
AIR TRANSPORTATION PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
(photograph of Chris Zepf)(photograph of Jeff Feingold)
NOTE TO SHAREHOLDERS: The following is an interview with Chris Zepf
(left), who managed Fidelity Select Air Transportation Portfolio for
most of the period covered by this
report, with additional comments from Jeff Feingold (right), who
became manager of the fund on February 25, 2000.
Q. HOW DID THE FUND PERFORM, CHRIS?
C.Z. For the 12-month period that ended February 29, 2000, the fund
returned 8.50%. For the same 12-month period, the Standard & Poor's
500 Index returned 11.73%. For another comparison, the Goldman Sachs
Cyclical Industries Index - an index of 246 stocks designed to measure
the performance of companies in the cyclical industries sector - fell
7.75%.
Q. WHAT FACTORS DROVE AIR TRANSPORTATION STOCKS DURING
THE PERIOD?
C.Z. Air transport stocks had a pretty decent first half, thanks to
the strong U.S. economy and rebounding foreign economies. But the
second half proved much more difficult. The price of oil skyrocketed
to more than $30 a barrel and the price of jet fuel - the second
largest cost to airlines - more than doubled. Ongoing uncertainty
about where fuel prices were headed was a constant challenge, despite
the fact that some airlines had used various methods to hedge against
the rising cost of fuel. What's more, the airlines met with little
success in passing on fuel surcharges to their customers. Also, supply
and demand conditions remained unfavorable. The number of available
airline seats continued to outstrip demand in terms of the number of
airline tickets sold. Further, rising interest rates called into
question the group's future profitability.
Q. WHY DID THE FUND OUTPERFORM THE GOLDMAN SACHS INDEX?
C.Z. Despite the many challenges they faced during the year, airline
stocks outpaced many of the more interest-rate sensitive industry
groups that make up the Goldman Sachs Cyclical Industries Index. In
addition, the fund was helped by strong stock picking. Skywest
Airlines and Southwest Airlines both held up reasonably well. Skywest
Airlines benefited from strong revenue growth and passing on much of
its fuel cost increases to its partners. Low-cost carrier Southwest
continued to enjoy good financial results, partly due to its exploding
sales of tickets via the Internet. In 1999, nearly 20% of the
company's revenues came from tickets bought on its web site. That
helped to lower Southwest's distribution costs since ticket sales over
the Internet cost the airline far less than ticket sales through
travel agents.
Q. SPEAKING OF INTERNET-BASED TICKET SALES, PREVIEW TRAVEL AND SABRE
ALSO PERFORMED QUITE WELL AND CONTRIBUTED TO THE FUND'S OUTPERFORMANCE
OF THE GOLDMAN SACHS INDEX DURING THE YEAR . . .
C.Z. That's true. Last October, computer reservations provider Sabre
Holdings agreed to acquire Preview Travel and combine it with Sabre's
Travelocity.com unit. The combination of the No. 1 and No. 3 Web-based
sellers of airline, hotel and cruise reservations helped generate
investor enthusiasm for both companies. More recently, AMR, the parent
company of both American Airlines and Sabre, announced that it would
spin off Travelocity in a public offering of stock later this year,
which also boosted the stock prices of Sabre and Preview.
Q. WHICH HOLDINGS WERE DISAPPOINTING?
C.Z. Airlines that hadn't hedged against rising fuel costs using
various financial instruments were some of the biggest detractors from
the fund's performance for the year. The stock price of Northwest
Airlines, for example, dropped substantially because it hadn't hedged
its oil exposure. That occurred despite the fact that the company
enjoyed more revenue out of the economic rebound in Asia. Like most
airlines, American Airlines announced disappointing fourth quarter
1999 earnings, blaming higher fuel costs. Furthermore, in my view, the
market failed to realize the value of AMR's holdings in Sabre. Rising
fuel prices hurt regional airlines, too, including America West.
Q. TURNING TO YOU, JEFF, WHAT'S YOUR OUTLOOK?
J.F. Airline stocks are cyclical, meaning they're susceptible to the
global economy's ebbs and flow. As long as the global economy remains
strong, airlines could do well. If growth slows dramatically, however,
airline stocks will likely suffer. Another factor they'll have to
contend with is fuel prices, and at present it's not clear whether oil
will remain on the rise or if it will fall back to more historical
levels.
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: 034
TRADING SYMBOL: FSAIX
SIZE: as of February 29, 2000, more than
$24 million
MANAGER: Jeff Feingold, since February 2000;
manager, Fidelity Select Transportation
Portfolio, since February 2000; Fidelity Select
Defense and Aerospace Portfolio, since 1998;
equity analyst, various industries,
1997-1998; joined Fidelity in 1997
AIR TRANSPORTATION PORTFOLIO
INVESTMENTS FEBRUARY 29, 2000
Showing Percentage of Net Assets
COMMON STOCKS - 93.0%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 20.6%
BFGoodrich Co. 54,200 $ 1,297,413
Boeing Co. 29,700 1,095,188
Cordant Technologies, Inc. 27,000 874,125
Lockheed Martin Corp. 14,000 244,125
United Technologies Corp. 29,800 1,517,938
5,028,789
AIR TRANSPORTATION - 54.6%
America West Holding Corp. 58,000 775,750
Class B (a)
AMR Corp. (a) 61,200 3,235,947
Atlantic Coast Airlines 63,400 1,133,275
Holdings, Inc. (a)
Atlas Air, Inc. (a) 51,400 1,243,238
Continental Airlines, Inc. 37,300 1,179,613
Class B (a)
Delta Air Lines, Inc. 32,700 1,491,938
Northwest Airlines Corp. 72,900 1,257,525
Class A (a)
Preview Travel, Inc. (a) 8,900 409,956
SkyWest, Inc. 15,500 460,156
Southwest Airlines Co. 103,050 1,899,984
US Airways Group, Inc. (a) 14,900 278,444
13,365,826
COMPUTER SERVICES & SOFTWARE
- - 0.0%
MatrixOne, Inc. 100 2,500
Onvia.com, Inc. 100 2,100
4,600
OIL & GAS - 0.2%
Frontier Oil Corp. (a) 6,100 38,125
SHIP BUILDING & REPAIR - 5.5%
General Dynamics Corp. 31,100 1,345,075
TRUCKING & FREIGHT - 12.1%
Airborne Freight Corp. 7,400 136,900
Circle International Group, 10,700 261,481
Inc.
EGL, Inc. (a) 42,150 1,185,469
Expeditors International of 20,700 781,425
Washington, Inc.
Forward Air Corp. (a) 3,550 81,650
Fritz Companies, Inc. (a) 18,700 156,613
United Parcel Service, Inc. 6,700 365,988
Class B
2,969,526
TOTAL COMMON STOCKS 22,751,941
(Cost $22,647,059)
CASH EQUIVALENTS - 7.5%
SHARES VALUE (NOTE 1)
Central Cash Collateral Fund, 404,800 $ 404,800
5.75% (b)
Taxable Central Cash Fund, 1,426,701 1,426,701
5.66% (b)
TOTAL CASH EQUIVALENTS 1,831,501
(Cost $1,831,501)
TOTAL INVESTMENT PORTFOLIO - 24,583,442
100.5%
(Cost $24,478,560)
NET OTHER ASSETS - (0.5)% (120,693)
NET ASSETS - 100% $ 24,462,749
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 $125,831,549 and $172,647,421, 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 $23,162 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $405,350. The fund received
cash collateral of $404,800 which was invested in cash equivalents.
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $24,971,097. Net unrealized depreciation
aggregated $387,655, of which $1,803,915 related to appreciated
investment securities and $2,191,570 related to depreciated investment
securities.
The fund hereby designates approximately $3,395,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 5% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2001 of amounts for use
in preparing 2000 income tax returns.
AIR TRANSPORTATION PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 24,583,442
value (cost $24,478,560) -
See accompanying schedule
Receivable for investments 2,335,323
sold
Receivable for fund shares 17,273
sold
Dividends receivable 17,198
Interest receivable 9,030
Redemption fees receivable 1,301
Other receivables 4,368
TOTAL ASSETS 26,967,935
LIABILITIES
Payable for investments $ 1,561,286
purchased
Payable for fund shares 498,232
redeemed
Accrued management fee 13,403
Other payables and accrued 27,465
expenses
Collateral on securities 404,800
loaned, at value
TOTAL LIABILITIES 2,505,186
NET ASSETS $ 24,462,749
Net Assets consist of:
Paid in capital $ 16,382,386
Accumulated undistributed net 7,975,481
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 104,882
(depreciation) on investments
NET ASSETS, for 924,983 $ 24,462,749
shares outstanding
NET ASSET VALUE and $26.45
redemption price per share
($24,462,749 (divided by)
924,983 shares)
Maximum offering price per $27.27
share (100/97.00 of $26.45)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 280,929
Dividends
Interest 197,448
Security lending 6,345
TOTAL INCOME 484,722
EXPENSES
Management fee $ 322,853
Transfer agent fees 345,244
Accounting and security 60,950
lending fees
Non-interested trustees' 169
compensation
Custodian fees and expenses 11,583
Registration fees 30,362
Audit 12,171
Legal 243
Total expenses before 783,575
reductions
Expense reductions (32,638) 750,937
NET INVESTMENT INCOME (LOSS) (266,215)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 14,638,308
Foreign currency transactions 1,057 14,639,365
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (7,109,828)
Assets and liabilities in (1,943) (7,111,771)
foreign currencies
NET GAIN (LOSS) 7,527,594
NET INCREASE (DECREASE) IN $ 7,261,379
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 116,840
charges paid to FDC
Sales charges - Retained by $ 114,253
FDC
Deferred sales charges $ 1,637
withheld by FDC
Exchange fees withheld by FSC $ 8,575
Expense reductions Directed $ 32,616
brokerage arrangements
Custodian credits 22
$ 32,638
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ (266,215) $ (494,512)
income (loss)
Net realized gain (loss) 14,639,365 10,294,170
Change in net unrealized (7,111,771) (7,870,755)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 7,261,379 1,928,903
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (5,518,710) (1,287,140)
from net realized gains
Share transactions Net 85,072,471 234,828,394
proceeds from sales of shares
Reinvestment of distributions 5,319,847 1,276,230
Cost of shares redeemed (133,856,898) (352,683,506)
NET INCREASE (DECREASE) IN (43,464,580) (116,578,882)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 235,249 701,437
TOTAL INCREASE (DECREASE) (41,486,662) (115,235,682)
IN NET ASSETS
NET ASSETS
Beginning of period 65,949,411 181,185,093
End of period $ 24,462,749 $ 65,949,411
OTHER INFORMATION
Shares
Sold 2,797,655 8,676,907
Issued in reinvestment of 186,721 44,922
distributions
Redeemed (4,434,782) (13,091,302)
Net increase (decrease) (1,450,406) (4,369,473)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 E 1999 1998 1997 1996 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 27.76 $ 26.86 $ 17.72 $ 21.11 $ 13.93
period
Income from Investment
Operations
Net investment income (loss) C (.15) (.14) (.19) (.22) (.01)
Net realized and unrealized 2.59 1.06 10.59 (3.12) 7.47
gain (loss)
Total from investment 2.44 .92 10.40 (3.34) 7.46
operations
Less Distributions
From net realized gain (3.88) (.21) (1.43) (.07) (.46)
In excess of net realized gain - - - (.20) -
Total distributions (3.88) (.21) (1.43) (.27) (.46)
Redemption fees added to paid .13 .19 .17 .22 .18
in capital
Net asset value, end of period $ 26.45 $ 27.76 $ 26.86 $ 17.72 $ 21.11
TOTAL RETURN A, B 8.50% 4.11% 61.10% (15.06)% 54.91%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 24,463 $ 65,949 $ 181,185 $ 35,958 $ 75,359
(000 omitted)
Ratio of expenses to average 1.40% 1.35% 1.93% 1.89% 1.47%
net assets
Ratio of expenses to average 1.35% D 1.27% D 1.87% D 1.80% D 1.41% D
net assets after expense
reductions
Ratio of net investment (.48)% (.50)% (.84)% (1.10)% (.07)%
income (loss) to average net
assets
Portfolio turnover rate 252% 260% 294% 469% 504%
</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
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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT AUTOMOTIVE -17.40% 23.22% 169.89%
SELECT AUTOMOTIVE (LOAD ADJ.) -19.95% 19.46% 161.72%
S&P 500 11.73% 206.94% 425.47%
GS Cyclical Industries -7.75% 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 246 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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT AUTOMOTIVE -17.40% 4.27% 10.44%
SELECT AUTOMOTIVE (LOAD ADJ.) -19.95% 3.62% 10.10%
S&P 500 11.73% 25.14% 18.05%
GS Cyclical Industries -7.75% 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
1990/02/28 9700.00 10000.00
1990/03/31 10062.62 10265.00
1990/04/30 10029.65 10008.38
1990/05/31 10598.30 10984.19
1990/06/30 10788.08 10909.50
1990/07/31 10821.51 10874.59
1990/08/31 9267.22 9891.53
1990/09/30 8381.44 9409.81
1990/10/31 8214.32 9369.35
1990/11/30 8698.99 9974.61
1990/12/31 9024.89 10252.90
1991/01/31 9534.62 10699.92
1991/02/28 10311.77 11464.97
1991/03/31 10395.33 11742.42
1991/04/30 10512.32 11770.60
1991/05/31 11356.31 12279.09
1991/06/30 11331.25 11716.71
1991/07/31 11799.20 12262.71
1991/08/31 12183.60 12553.34
1991/09/30 11824.27 12343.69
1991/10/31 12133.46 12509.10
1991/11/30 11531.80 12004.98
1991/12/31 12393.45 13378.35
1992/01/31 13732.33 13129.52
1992/02/29 15115.25 13300.20
1992/03/31 15441.16 13040.85
1992/04/30 16427.70 13424.25
1992/05/31 16418.90 13490.03
1992/06/30 16321.21 13289.02
1992/07/31 16471.19 13832.55
1992/08/31 15447.81 13548.98
1992/09/30 15191.96 13708.86
1992/10/31 15827.17 13756.84
1992/11/30 16594.70 14225.94
1992/12/31 17550.94 14400.92
1993/01/31 18361.40 14521.89
1993/02/28 18631.55 14719.39
1993/03/31 19631.11 15029.97
1993/04/30 19517.69 14666.24
1993/05/31 20706.21 15059.30
1993/06/30 21068.33 15102.97
1993/07/31 21309.75 15042.56
1993/08/31 22052.58 15612.67
1993/09/30 22284.71 15492.45
1993/10/31 22758.26 15813.15
1993/11/30 22758.26 15662.92
1993/12/31 23761.26 15852.44
1994/01/31 25115.78 16391.43
1994/02/28 24304.98 15947.22
1994/03/31 22597.52 15251.92
1994/04/30 22138.03 15447.15
1994/05/31 21810.06 15700.48
1994/06/30 21530.32 15315.82
1994/07/31 22176.62 15818.18
1994/08/31 21810.06 16466.72
1994/09/30 20884.03 16063.29
1994/10/31 21279.52 16424.71
1994/11/30 19996.58 15826.52
1994/12/31 20731.01 16061.23
1995/01/31 20238.44 16477.70
1995/02/28 21245.01 17119.83
1995/03/31 21137.93 17625.04
1995/04/30 21073.68 18144.10
1995/05/31 21502.00 18869.32
1995/06/30 22037.41 19307.65
1995/07/31 23622.22 19947.89
1995/08/31 23408.06 19997.96
1995/09/30 23525.85 20841.88
1995/10/31 22433.61 20767.47
1995/11/30 22990.44 21679.16
1995/12/31 23515.14 22096.70
1996/01/31 23236.73 22848.87
1996/02/29 23397.35 23060.68
1996/03/31 24821.54 23282.76
1996/04/30 26075.60 23625.95
1996/05/31 26676.02 24235.26
1996/06/30 26365.09 24327.60
1996/07/31 24831.86 23252.80
1996/08/31 25464.45 23743.20
1996/09/30 25678.89 25079.47
1996/10/31 25796.83 25771.16
1996/11/30 27104.90 27719.21
1996/12/31 27294.26 27170.09
1997/01/31 27772.33 28867.68
1997/02/28 28217.04 29094.00
1997/03/31 27661.15 27898.53
1997/04/30 28279.22 29564.07
1997/05/31 29896.50 31363.93
1997/06/30 30797.55 32769.03
1997/07/31 32149.13 35376.46
1997/08/31 31906.54 33394.67
1997/09/30 33650.89 35223.70
1997/10/31 32102.92 34047.23
1997/11/30 31883.44 35623.28
1997/12/31 31873.81 36234.93
1998/01/31 31861.21 36635.68
1998/02/28 34645.44 39277.85
1998/03/31 36749.37 41289.27
1998/04/30 36579.91 41704.64
1998/05/31 36375.71 40987.74
1998/06/30 35817.55 42652.66
1998/07/31 34483.41 42198.41
1998/08/31 27826.33 36097.36
1998/09/30 27839.94 38409.76
1998/10/31 30358.47 41534.01
1998/11/30 32005.72 44051.38
1998/12/31 33448.77 46589.63
1999/01/31 33884.41 48538.00
1999/02/28 31692.61 47029.44
1999/03/31 31011.92 48911.09
1999/04/30 34469.79 50805.42
1999/05/31 34333.66 49605.90
1999/06/30 35409.14 52359.03
1999/07/31 33516.84 50724.38
1999/08/31 32740.86 50473.29
1999/09/30 30753.26 49089.82
1999/10/31 28983.49 52196.23
1999/11/30 27839.94 53257.37
1999/12/31 28942.65 56394.23
2000/01/31 26750.85 53560.99
2000/02/29 26172.00 52547.08
IMATRL PRASUN SHR__CHT 20000229 20000309 105819 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Automotive Portfolio on February 28, 1990,
and the current 3.00% sales charge was paid. As the chart shows, by
February 29, 2000, the value of the investment would have grown to
$26,172 - a 161.72% 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 $52,547 - a 425.47% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
SPX Corp. 10.2
General Motors Corp. 7.9
Honda Motor Co. Ltd. 7.7
TRW, Inc. 7.1
Delphi Automotive Systems Corp. 7.0
Johnson Controls, Inc. 5.9
Navistar International Corp. 5.9
Eaton Corp. 5.0
Danaher Corp. 5.0
Dana Corp. 3.4
65.1
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Autos, Tires, & Accessories 87.0% Row: 1, Col: 5, Value: 87.0
Leasing & Rental 2.9% Row: 1, Col: 4, Value: 2.9
Consumer Durables 1.7% Row: 1, Col: 3, Value: 1.7
Iron & Steel 0.4% Row: 1, Col: 2, Value: 0.4
*All Others 8.0% Row: 1, Col: 1, Value: 8.0
</TABLE>
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
(photograph of Douglas Nigen)
Douglas Nigen,
Portfolio Manager
of Fidelity Select
Automotive Portfolio
Q. HOW DID THE FUND PERFORM, DOUG?
A. For the 12 months that ended February 29, 2000, the fund returned
- -17.40%. By comparison, the Goldman Sachs Cyclical Industries Index -
an index of 246 stocks designed to measure the performance of
companies in the cyclical industries sector - fell 7.75%. During the
same period, the Standard & Poor's 500 Index returned 11.73%.
Q. WHY DID THE FUND UNDERPERFORM BOTH THE GOLDMAN SACHS INDEX AND THE
S&P 500 INDEX DURING THE PERIOD?
A. Despite booming auto sales in North America, auto stocks were
hammered by fears of rising interest rates as they tend to slow auto
sales. In addition, the trend of the stock market had a big effect, as
investors fled old economy - or industrial - stocks to buy new economy
- - or technology - stocks. These two factors caused the fund to
underperform both of its indexes. Also, a few of the fund's large
positions in the weak aftermarket for auto parts hurt performance
relative to the Goldman Sachs index.
Q. SPECIFICALLY, WHAT HAPPENED IN THE AUTO AFTERMARKET?
A. We witnessed a trend of too much inventory in the retail sector of
the auto aftermarket. Companies such as PepBoys and AutoZone were
forced to reduce new orders and clear current inventory, which slowed
supplier sales during the period. Also, a few big names in the
aftermarket suffered from company-specific problems. For example,
Federal-Mogul was punished over the past year as the company struggled
with acquisition-related difficulties.
Q. WHICH OF THE FUND'S LARGE HOLDINGS PERFORMED WELL OVER THE PAST
YEAR?
A. While it was a rough year for automotive companies, there were a
few bright spots. SPX - a diversified producer of industrial products,
vehicle components and auto aftermarket diagnostic tools - was the
biggest contributor to the fund's returns. Navistar International was
another strong performer. The company produces trucks and engines, and
it benefited from robust sales trends. Finally, some of the fund's
underweighted positions helped performance. For example, Goodyear
represented 5% of the Goldman Sachs index, but the fund held much less
than that - a position that helped the fund's relative returns when
that stock plummeted this year. I utilized the same underweighting
strategy with some of the poor-performing European auto manufacturers,
such as Volkswagen, Renault and DaimlerChrylser, which helped the
fund.
Q. WHICH STOCKS WERE DISAPPOINTING?
A. As I mentioned, Federal-Mogul - the fund's biggest detractor from
returns - suffered from acquisition-related difficulties. Another big
position that was disappointing was PepBoys, a company that suffered
from weakness in the auto aftermarket and also from a restructuring
plan that went awry. In addition, many auto suppliers were hurt by
fears about the advent of business-to-business e-commerce. Direct
electronic auctions could make an already thin-margin business worse.
I sold the fund's position in PepBoys by the end of the period.
Q. SIX MONTHS AGO, YOU MENTIONED THAT THE UNITED AUTOWORKERS BEGAN
NEGOTIATIONS ON A NEW CONTRACT. HOW DID THOSE NEGOTIATIONS AFFECT AUTO
STOCKS?
A. The UAW settled the strike, which was a positive for auto stocks in
the short term because there was no disruption of production. However,
the bad news is that the contract was very expensive and could weigh
auto stocks down with the long-term worry of rising costs.
Q. WHAT'S YOUR OUTLOOK?
A. I expect the automotive industry to continue to be plagued by the
same issues that affected the fund over the past year. Interest rates
are expected to continue rising in the year 2000, so I don't expect
automotive stocks to outperform the broad market in the near future.
The difference, however, is that automotive stocks are a lot cheaper
now, so I think the downside is limited. During this environment of
higher interest rates, the fund needs to explore investments in stocks
outside of pure-auto businesses. For example, General Motors did well
over the past year because of its Hughes Electronics subsidiary.
Johnson Controls, which has a large automation business, also did
well. Finally, I believe there are opportunities among Japanese
automakers because the Japanese economy looks to be bottoming and
that's generally when auto companies begin 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 A- 3.
(checkmark)FUND FACTS
START DATE: June 30, 1986
FUND NUMBER: 502
TRADING SYMBOL: FSAVX
SIZE: as of February 29, 2000, more than
$10 million
MANAGER: Douglas Nigen, since September
1999; analyst, automotive manufacturing,
automotive parts, tire and rental car industries,
since 1999; specialty apparel industry,
1997-1999; joined Fidelity in 1997
AUTOMOTIVE PORTFOLIO
INVESTMENTS FEBRUARY 29, 2000
Showing Percentage of Net Assets
COMMON STOCKS - 92.0%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES -
87.0%
American Axle & Manufacturing 1 $ 14
Holdings, Inc.
Arvin Industries, Inc. 1,500 27,563
AutoNation, Inc. (a) 12,900 97,556
AutoZone, Inc. (a) 9,000 221,063
DaimlerChrysler AG (Reg.) 1,727 117,004
Dana Corp. 16,900 360,181
Danaher Corp. 12,900 526,481
Delphi Automotive Systems 44,524 742,994
Corp.
Eaton Corp. 7,050 528,309
Federal-Mogul Corp. 7,750 105,594
Ford Motor Co. 8,600 357,975
Fuji Heavy Industries Ltd. 18,000 114,491
General Motors Corp. 11,000 836,688
Gentex Corp. (a) 10,900 318,484
Honda Motor Co. Ltd. (a) 24,000 810,000
Johnson Controls, Inc. 11,750 627,156
Lear Corp. (a) 7,550 159,494
Lithia Motors, Inc. (a) 4,900 73,194
Magna International, Inc. 3,800 153,353
Class A
Michelin SA (Compagnie 3,000 93,861
Generale des Etablissements)
Class B (a)
Navistar International Corp. 19,000 622,250
(a)
Oshkosh Truck Co. 1,700 45,050
Sonic Automotive, Inc. (a) 8,245 70,598
SPX Corp. (a) 12,400 1,079,572
Superior Industries 1,500 35,813
International, Inc.
Tower Automotive, Inc. (a) 4,625 54,922
Toyota Motor Corp. 6,000 238,998
TRW, Inc. 15,600 748,800
Wynn's International, Inc. 1,200 15,975
9,183,433
COMPUTER SERVICES & SOFTWARE
- - 0.0%
MatrixOne, Inc. 100 2,500
Onvia.com, Inc. 100 2,100
4,600
CONSUMER DURABLES - 1.7%
Snap-On, Inc. 8,100 176,681
IRON & STEEL - 0.4%
SPS Technologies, Inc. (a) 1,300 42,494
LEASING & RENTAL - 2.9%
Avis Rent A Car, Inc. (a) 9,930 144,606
Hertz Corp. Class A 4,390 157,217
301,823
SHARES VALUE (NOTE 1)
LODGING & GAMING - 0.0%
Magna Entertainment Corp. 760 $ 4,323
Class A (a)
TOTAL COMMON STOCKS 9,713,354
(Cost $10,072,806)
CASH EQUIVALENTS - 6.5%
Taxable Central Cash Fund, 693,156 693,156
5.66% (b) (Cost $693,156)
TOTAL INVESTMENT PORTFOLIO - 10,406,510
98.5%
(Cost $10,765,962)
NET OTHER ASSETS - 1.5% 154,973
NET ASSETS - 100% $ 10,561,483
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 $6,233,837 and $56,104,079, 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 $6,617 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 $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 85.4%
Japan 11.1
Canada 1.5
Germany 1.1
Others (individually less 0.9
than 1%)
100.0%
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $10,838,332. Net unrealized depreciation
aggregated $431,822, of which $1,048,119 related to appreciated
investment securities and $1,479,941 related to depreciated investment
securities.
At February 29, 2000, the fund had a capital loss carryforward of
approximately $7,479,000 of which $1,009,000 and $6,470,000 will
expire on February 28, 2007 and February 29, 2008, respectively.
The fund intends to elect to defer to its fiscal year ending February
28, 2001 approximately $866,000 of losses recognized during the period
November 1, 1999 to February 29, 2000.
AUTOMOTIVE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 10,406,510
value (cost $10,765,962) -
See accompanying schedule
Receivable for investments 349,440
sold
Receivable for fund shares 27,034
sold
Dividends receivable 27,342
Interest receivable 3,430
Redemption fees receivable 60
Other receivables 4,467
TOTAL ASSETS 10,818,283
LIABILITIES
Payable to custodian bank $ 17,730
Payable for investments 116,414
purchased
Payable for fund shares 92,944
redeemed
Accrued management fee 5,542
Other payables and accrued 24,170
expenses
TOTAL LIABILITIES 256,800
NET ASSETS $ 10,561,483
Net Assets consist of:
Paid in capital $ 19,391,760
Accumulated undistributed net (8,470,853)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (359,424)
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 549,086 $ 10,561,483
shares outstanding
NET ASSET VALUE and $19.23
redemption price per share
($10,561,483 (divided by)
549,086 shares)
Maximum offering price per $19.82
share (100/97.00 of $19.23)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 263,475
Dividends
Interest 66,401
Security lending 327
TOTAL INCOME 330,203
EXPENSES
Management fee $ 132,781
Transfer agent fees 209,768
Accounting and security 60,364
lending fees
Non-interested trustees' 46
compensation
Custodian fees and expenses 12,370
Registration fees 22,335
Audit 11,478
Legal 131
Interest 730
Total expenses before 450,003
reductions
Expense reductions (7,118) 442,885
NET INVESTMENT INCOME (LOSS) (112,682)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (3,878,219)
Foreign currency transactions 8,229 (3,869,990)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 764,848
Assets and liabilities in (19) 764,829
foreign currencies
NET GAIN (LOSS) (3,105,161)
NET INCREASE (DECREASE) IN $ (3,217,843)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 27,747
charges paid to FDC
Sales charges - Retained by $ 27,747
FDC
Deferred sales charges $ 430
withheld by FDC
Exchange fees withheld by FSC $ 8,102
Expense reductions Directed $ 7,118
brokerage arrangements
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ (112,682) $ 69,009
income (loss)
Net realized gain (loss) (3,869,990) (4,430,338)
Change in net unrealized 764,829 (3,784,633)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (3,217,843) (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 17,054,337 93,308,374
proceeds from sales of shares
Reinvestment of distributions - 2,635,878
Cost of shares redeemed (67,890,860) (53,084,232)
NET INCREASE (DECREASE) IN (50,836,523) 42,860,020
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 74,755 53,948
TOTAL INCREASE (DECREASE) (53,979,611) 32,052,152
IN NET ASSETS
NET ASSETS
Beginning of period 64,541,094 32,488,942
End of period (including $ 10,561,483 $ 64,541,094
undistributed net investment
income of $0 and $47,401,
respectively)
OTHER INFORMATION
Shares
Sold 717,103 3,661,058
Issued in reinvestment of - 97,455
distributions
Redeemed (2,940,612) (2,167,227)
Net increase (decrease) (2,223,509) 1,591,286
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 E 1999 1998 1997 1996 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 23.28 $ 27.50 $ 25.38 $ 21.85 $ 19.84
period
Income from Investment
Operations
Net investment income (loss) C (.12) .03 .05 .13 .03
Net realized and unrealized (4.01) (2.09) 5.21 4.28 1.95
gain (loss)
Total from investment (4.13) (2.06) 5.26 4.41 1.98
operations
Less Distributions
From net investment income - (.01) (.08) (.17) -
From net realized gain - (2.17) (3.09) (.75) -
Total distributions - (2.18) (3.17) (.92) -
Redemption fees added to paid .08 .02 .03 .04 .03
in capital
Net asset value, end of period $ 19.23 $ 23.28 $ 27.50 $ 25.38 $ 21.85
TOTAL RETURN A, B (17.40)% (8.52)% 22.78% 20.60% 10.13%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 10,561 $ 64,541 $ 32,489 $ 86,347 $ 55,753
(000 omitted)
Ratio of expenses to average 1.94% 1.45% 1.60% 1.56% 1.81%
net assets
Ratio of expenses to average 1.91% D 1.41% D 1.56% D 1.52% D 1.80% D
net assets after expense
reductions
Ratio of net investment (.49)% .11% .17% .54% .13%
income (loss) to average net
assets
Portfolio turnover rate 29% 96% 153% 175% 61%
</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
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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT CHEMICALS 11.10% 48.63% 206.89%
SELECT CHEMICALS (LOAD ADJ.) 7.70% 44.10% 197.61%
S&P 500 11.73% 206.94% 425.47%
GS Cyclical Industries -7.75% 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 246 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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT CHEMICALS 11.10% 8.25% 11.87%
SELECT CHEMICALS (LOAD ADJ.) 7.70% 7.58% 11.52%
S&P 500 11.73% 25.14% 18.05%
GS Cyclical Industries -7.75% 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
1990/02/28 9700.00 10000.00
1990/03/31 9987.95 10265.00
1990/04/30 9755.87 10008.38
1990/05/31 10606.82 10984.19
1990/06/30 10693.40 10909.50
1990/07/31 10728.78 10874.59
1990/08/31 9295.92 9891.53
1990/09/30 8835.99 9409.81
1990/10/31 8937.70 9369.35
1990/11/30 9534.73 9974.61
1990/12/31 9946.01 10252.90
1991/01/31 10613.80 10699.92
1991/02/28 11427.52 11464.97
1991/03/31 11701.71 11742.42
1991/04/30 11608.84 11770.60
1991/05/31 12413.72 12279.09
1991/06/30 12076.36 11716.71
1991/07/31 12658.40 12262.71
1991/08/31 12907.22 12553.34
1991/09/30 12809.47 12343.69
1991/10/31 13013.85 12509.10
1991/11/30 12365.16 12004.98
1991/12/31 13791.31 13378.35
1992/01/31 14056.18 13129.52
1992/02/29 14563.07 13300.20
1992/03/31 14458.04 13040.85
1992/04/30 14983.21 13424.25
1992/05/31 14896.44 13490.03
1992/06/30 14454.89 13289.02
1992/07/31 14911.00 13832.55
1992/08/31 14401.52 13548.98
1992/09/30 14416.07 13708.86
1992/10/31 14270.50 13756.84
1992/11/30 14702.36 14225.94
1992/12/31 15019.39 14400.92
1993/01/31 15003.94 14521.89
1993/02/28 14741.25 14719.39
1993/03/31 15091.50 15029.97
1993/04/30 15371.41 14666.24
1993/05/31 15604.15 15059.30
1993/06/30 15212.73 15102.97
1993/07/31 15445.47 15042.56
1993/08/31 16201.87 15612.67
1993/09/30 15688.79 15492.45
1993/10/31 16281.22 15813.15
1993/11/30 16402.88 15662.92
1993/12/31 16935.42 15852.44
1994/01/31 18253.65 16391.43
1994/02/28 18224.86 15947.22
1994/03/31 17678.00 15251.92
1994/04/30 18532.90 15447.15
1994/05/31 18979.12 15700.48
1994/06/30 18741.52 15315.82
1994/07/31 19587.61 15818.18
1994/08/31 20723.46 16466.72
1994/09/30 20572.79 16063.29
1994/10/31 20538.02 16424.71
1994/11/30 18926.97 15826.52
1994/12/31 19437.69 16061.23
1995/01/31 18929.75 16477.70
1995/02/28 20028.32 17119.83
1995/03/31 20642.58 17625.04
1995/04/30 21085.09 18144.10
1995/05/31 21295.04 18869.32
1995/06/30 21654.96 19307.65
1995/07/31 22680.72 19947.89
1995/08/31 22776.70 19997.96
1995/09/30 23136.61 20841.88
1995/10/31 21984.88 20767.47
1995/11/30 22944.66 21679.16
1995/12/31 23606.74 22096.70
1996/01/31 24691.81 22848.87
1996/02/29 25531.45 23060.68
1996/03/31 26765.07 23282.76
1996/04/30 27043.97 23625.95
1996/05/31 26985.48 24235.26
1996/06/30 26641.01 24327.60
1996/07/31 25562.11 23252.80
1996/08/31 26693.01 23743.20
1996/09/30 27875.89 25079.47
1996/10/31 28064.38 25771.16
1996/11/30 29097.78 27719.21
1996/12/31 28686.72 27170.09
1997/01/31 29135.70 28867.68
1997/02/28 29377.46 29094.00
1997/03/31 28431.14 27898.53
1997/04/30 29482.43 29564.07
1997/05/31 30934.42 31363.93
1997/06/30 31784.88 32769.03
1997/07/31 34329.33 35376.46
1997/08/31 34433.04 33394.67
1997/09/30 34647.38 35223.70
1997/10/31 32918.82 34047.23
1997/11/30 33105.50 35623.28
1997/12/31 33413.86 36234.93
1998/01/31 32932.15 36635.68
1998/02/28 35096.02 39277.85
1998/03/31 36388.23 41289.27
1998/04/30 36499.13 41704.64
1998/05/31 35070.39 40987.74
1998/06/30 32244.15 42652.66
1998/07/31 29503.79 42198.41
1998/08/31 25935.85 36097.36
1998/09/30 25810.93 38409.76
1998/10/31 26521.40 41534.01
1998/11/30 28434.19 44051.38
1998/12/31 28102.53 46589.63
1999/01/31 26543.19 48538.00
1999/02/28 26793.03 47029.44
1999/03/31 27714.85 48911.09
1999/04/30 33176.84 50805.42
1999/05/31 31720.88 49605.90
1999/06/30 32186.10 52359.03
1999/07/31 31695.04 50724.38
1999/08/31 31367.66 50473.29
1999/09/30 30058.16 49089.82
1999/10/31 30592.30 52196.23
1999/11/30 31393.51 53257.37
1999/12/31 33494.82 56394.23
2000/01/31 31354.04 53560.99
2000/02/29 29761.00 52547.08
IMATRL PRASUN SHR__CHT 20000229 20000309 110645 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Chemicals Portfolio on February 28, 1990,
and the current 3.00% sales charge was paid. As the chart shows, by
February 29, 2000, the value of the investment would have grown to
$29,761 - a 197.61% 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 $52,547 - a 425.47% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
Union Carbide Corp. 11.6
Rohm & Haas Co. 8.4
Minnesota Mining & 7.7
Manufacturing Co.
Avery Dennison Corp. 7.2
PPG Industries, Inc. 5.6
E.I. du Pont de Nemours and Co. 5.4
Monsanto Co. 4.7
Air Products & Chemicals, Inc. 3.4
Georgia Gulf Corp. 3.3
Ecolab, Inc. 3.3
60.6
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Chemicals & Plastics 73.5% Row: 1, Col: 6, Value: 73.5
Consumer Durables 7.7% Row: 1, Col: 5, Value: 7.7
Drugs & Pharmaceuticals 3.9% Row: 1, Col: 4, Value: 3.9
Services 3.3% Row: 1, Col: 3, Value: 3.3
Agriculture 1.1% Row: 1, Col: 2, Value: 1.1
*All Others 10.5% Row: 1, Col: 1, Value: 10.5
</TABLE>
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
(photograph of Jonathan Zang)
Jonathan Zang,
Portfolio Manager
of Fidelity Select
Chemicals Portfolio
Q. HOW DID THE FUND PERFORM, JONATHAN?
A. For the 12 months that ended on February 29, 2000, the fund had a
total return of 11.10% while the Goldman Sachs Cyclical Industries
Index - designed to measure the performance of 246 stocks in the
cyclical industries sector - returned -7.75%. During the same 12-month
period, the Standard & Poor's 500 Index, a measure of the broader
market's performance, had a return of 11.73%.
Q. WHAT FACTORS INFLUENCED THE FUND'S PERFORMANCE?
A. Chemical company stocks did extremely well during the early part of
the period, as accelerating worldwide economic growth resulted in
increased demand for many industrial products, contributing to strong
performance by cyclical stocks in general. During the final six months
of the period, many chemical companies reported stronger-than-expected
earnings growth. In January and February 2000, however, stocks of
companies in the chemical and other cyclical industries lost ground as
rising interest rates increased concerns that U.S. economic growth
would slow, resulting in diminished demand for many products in this
sector. In addition, higher oil prices put near-term pressure on
profit margins of chemical companies, many of which use oil-based
derivatives. Still, during the full 12-month period, chemical stocks
tended to perform better than stocks in other cyclical industries.
Q. WHAT WERE YOUR PRINCIPAL STRATEGIES?
A. To take advantage of the worldwide economic expansion, I favored
companies with significant international sales, such as Rohm & Haas,
Avery Dennison and DuPont. At the same time, I tended to avoid
companies seeking to acquire other companies to compensate for their
own lack of internal growth. In general, I de-emphasized companies
closely tied to changes in commodity prices or dependent on sales of
one chemical product. They tend to be more volatile, and I invested
only when I saw a specific positive factor, such as an overly
depressed stock price, that could compensate for the added risk.
Q. WHAT COMPANIES HELPED SUPPORT PERFORMANCE?
A. The largest single contributor was Optical Coatings, which
manufactures specialized chemicals used by technology and
telecommunications equipment companies. A beneficiary of the expansion
of the Internet's infrastructure, Optical Coatings' stock value also
rose when it was taken over by JDS Uniphase, a fast-growing technology
company. The industry consolidation theme also was a factor in the
strong performance of several other holdings that were acquired,
including Pioneer Hi-Bred, Nalco Chemical and Union Carbide. Other
contributors were the large industry leaders that I emphasized,
including DuPont, Dow and Minnesota Mining & Manufacturing (3M).
Q. WHAT INVESTMENTS WERE DISAPPOINTING?
A. Air Products, a company specializing in oxygen and other gases,
performed poorly after it overpaid for an acquisition. Ecolab, a
specialty chemical company that makes sanitation products for the food
service and hospitality industries, had strong earnings growth that
met all expectations. However, investors became concerned that its
growth was slowing, a concern that now appears unfounded. Monsanto was
disappointing both because of the controversy over genetically
modified grain seeds and because investors were disappointed with the
financial terms of Monsanto's proposed merger with Pharmacia & Upjohn.
Q. WHAT IS YOUR OUTLOOK?
A. I have been surprised at the extent to which the stock market has
reacted to the Federal Reserve Board's interest-rate increases and the
extent to which the market appears to be discounting a significant
economic slowdown. I do not think the Fed will raise interest rates
so much as to put the U.S. economy into a recession, and therefore I
see more upside potential than downside risk in chemical stocks at
their current prices. Many chemical company stocks are trading at
extremely low valuations and appear especially attractive within the
context of accelerating worldwide economic growth. Eventually, I
expect these stocks to trade closer to their intrinsic values as
determined by their ability to consistently deliver strong growth in
both earnings and cash flow.
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 29, 2000, more than
$26 million
MANAGER: Jonathan Zang, since 1999;
manager, Fidelity Select Utilities Growth Portfolio,
1998-1999; analyst, electric and gas utilities
and independent power producers,
1997-1999; joined Fidelity in 1997
CHEMICALS PORTFOLIO
INVESTMENTS FEBRUARY 29, 2000
Showing Percentage of Net Assets
COMMON STOCKS - 91.6%
SHARES VALUE (NOTE 1)
AGRICULTURE - 1.1%
Delta & Pine Land Co. 16,000 $ 287,000
BUILDING MATERIALS - 0.6%
Ferro Corp. 8,500 160,438
CHEMICALS & PLASTICS - 73.5%
Air Products & Chemicals, 34,600 890,950
Inc.
Albemarle Corp. 5,100 76,819
Arch Chemicals, Inc. 35,850 683,391
Avery Dennison Corp. 31,200 1,893,450
CK Witco Corp. 72,149 766,583
Dexter Corp. 13,600 627,300
Dow Chemical Co. 5,900 640,150
E.I. du Pont de Nemours and 28,337 1,431,019
Co.
Eastman Chemical Co. 5,500 197,656
Engelhard Corp. 26,900 366,513
Geon Co. 9,900 206,663
Georgia Gulf Corp. 38,100 866,775
Great Lakes Chemical Corp. 15,300 444,656
IMC Global, Inc. 32,500 438,750
Lyondell Chemical Co. 24,000 205,500
Monsanto Co. 32,200 1,249,763
Olin Corp. 24,400 378,200
PPG Industries, Inc. 30,000 1,481,250
Praxair, Inc. 20,800 702,000
Rohm & Haas Co. 54,743 2,210,249
Union Carbide Corp. 56,800 3,049,446
Valspar Corp. 11,700 383,906
Wellman, Inc. 7,900 147,138
19,338,127
COMPUTER SERVICES & SOFTWARE
- - 0.0%
MatrixOne, Inc. 100 2,500
Onvia.com, Inc. 100 2,100
4,600
CONSUMER DURABLES - 7.7%
Minnesota Mining & 22,900 2,018,063
Manufacturing Co.
DRUGS & PHARMACEUTICALS - 3.9%
Cambrex Corp. 8,100 325,013
Chirex, Inc. (a) 7,000 174,125
Millennium Pharmaceuticals, 1,000 260,125
Inc. (a)
Symyx Technologies, Inc. 4,800 264,000
1,023,263
MEDICAL FACILITIES MANAGEMENT
- - 0.6%
Apria Healthcare Group, Inc. 11,500 163,875
(a)
SHARES VALUE (NOTE 1)
SERVICES - 3.3%
Ecolab, Inc. 30,300 $ 855,975
TEXTILES & APPAREL - 0.9%
Polymer Group, Inc. 16,400 244,975
TOTAL COMMON STOCKS 24,096,316
(Cost $24,965,540)
CASH EQUIVALENTS - 10.8%
Taxable Central Cash Fund, 2,833,046 2,833,046
5.66% (b)(Cost $2,833,046)
TOTAL INVESTMENT PORTFOLIO - 26,929,362
102.4%
(Cost $27,798,586)
NET OTHER ASSETS - (2.4)% (621,909)
NET ASSETS - 100% $ 26,307,453
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 $45,523,982 and $54,039,928, 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 $8,076 for the
period.
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $28,267,708. Net unrealized depreciation
aggregated $1,338,346, of which $2,173,495 related to appreciated
investment securities and $3,511,841 related to depreciated investment
securities.
The fund hereby designates approximately $390,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
The fund intends to elect to defer to its fiscal year ending February
28, 2001 approximately $613,000 of losses recognized during the period
November 1, 1999 to February 29, 2000.
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 2001 of amounts for use
in preparing 2000 income tax returns.
CHEMICALS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 26,929,362
value (cost $27,798,586) -
See accompanying schedule
Receivable for investments 520,876
sold
Receivable for fund shares 33,135
sold
Dividends receivable 99,587
Interest receivable 9,224
Redemption fees receivable 113
Other receivables 177
TOTAL ASSETS 27,592,474
LIABILITIES
Payable for investments $ 891,931
purchased
Payable for fund shares 346,321
redeemed
Accrued management fee 14,475
Other payables and accrued 32,294
expenses
TOTAL LIABILITIES 1,285,021
NET ASSETS $ 26,307,453
Net Assets consist of:
Paid in capital $ 27,952,812
Undistributed net investment 81,847
income
Accumulated undistributed net (857,982)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (869,224)
(depreciation) on investments
NET ASSETS, for 778,469 $ 26,307,453
shares outstanding
NET ASSET VALUE and $33.79
redemption price per share
($26,307,453 (divided by)
778,469 shares)
Maximum offering price per $34.84
share (100/97.00 of $33.79)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 626,795
Dividends
Interest 158,513
Security lending 338
TOTAL INCOME 785,646
EXPENSES
Management fee $ 224,179
Transfer agent fees 294,011
Accounting and security 60,376
lending fees
Non-interested trustees' 189
compensation
Custodian fees and expenses 12,785
Registration fees 27,040
Audit 11,980
Legal 149
Miscellaneous 660
Total expenses before 631,369
reductions
Expense reductions (1,452) 629,917
NET INVESTMENT INCOME 155,729
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 2,023,589
Foreign currency transactions (1,627) 2,021,962
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 755,364
Assets and liabilities in (13) 755,351
foreign currencies
NET GAIN (LOSS) 2,777,313
NET INCREASE (DECREASE) IN $ 2,933,042
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 91,594
charges paid to FDC
Sales charges - Retained by $ 91,594
FDC
Deferred sales charges $ 4,185
withheld by FDC
Exchange fees withheld by FSC $ 5,476
Expense reductions $ 1,452
Directed brokerage
arrangements
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ 155,729 $ 208,208
income
Net realized gain (loss) 2,021,962 2,558,079
Change in net unrealized 755,351 (15,018,011)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 2,933,042 (12,251,724)
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (75,847) (51,919)
From net investment income
From net realized gain (615,000) (3,969,737)
In excess of net realized - (773,436)
gain
TOTAL DISTRIBUTIONS (690,847) (4,795,092)
Share transactions Net 60,660,224 17,546,799
proceeds from sales of shares
Reinvestment of distributions 656,447 4,627,284
Cost of shares redeemed (69,265,144) (42,678,413)
NET INCREASE (DECREASE) IN (7,948,473) (20,504,330)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 151,992 63,464
TOTAL INCREASE (DECREASE) (5,554,286) (37,487,682)
IN NET ASSETS
NET ASSETS
Beginning of period 31,861,739 69,349,421
End of period (including $ 26,307,453 $ 31,861,739
undistributed net investment
income of $81,847 and
$159,886, respectively)
OTHER INFORMATION
Shares
Sold 1,623,343 503,657
Issued in reinvestment of 18,089 132,380
distributions
Redeemed (1,887,294) (1,122,609)
Net increase (decrease) (245,862) (486,572)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 E 1999 1998 1997 1996 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 31.10 $ 45.90 $ 42.53 $ 39.53 $ 33.91
period
Income from Investment
Operations
Net investment income (loss) C .15 .17 (.02) .28 .01
Net realized and unrealized 3.22 (10.77) 7.88 5.49 8.89
gain (loss)
Total from investment 3.37 (10.60) 7.86 5.77 8.90
operations
Less Distributions
From net investment income (.09) (.05) - (.12) (.08)
From net realized gain (.73) (3.52) (4.54) (2.74) (3.22)
In excess of net realized gain - (.68) - - -
Total distributions (.82) (4.25) (4.54) (2.86) (3.30)
Redemption fees added to paid .14 .05 .05 .09 .02
in capital
Net asset value, end of period $ 33.79 $ 31.10 $ 45.90 $ 42.53 $ 39.53
TOTAL RETURN A, B 11.10% (23.66)% 19.47% 15.06% 27.48%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 26,307 $ 31,862 $ 69,349 $ 111,409 $ 89,230
(000 omitted)
Ratio of expenses to average 1.64% 1.58% 1.68% 1.83% 1.99%
net assets
Ratio of expenses to average 1.63% D 1.51% D 1.67% D 1.81% D 1.97% D
net assets after expense
reductions
Ratio of net investment .40% .44% (.05)% .67% .04%
income (loss) to average net
assets
Portfolio turnover rate 132% 141% 31% 207% 87%
</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
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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT CONSTRUCTION AND -18.28% 61.76% 203.15%
HOUSING
SELECT CONSTRUCTION AND -20.80% 56.84% 193.98%
HOUSING (LOAD ADJ.)
S&P 500 11.73% 206.94% 425.47%
GS Cyclical Industries -7.75% 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 246 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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT CONSTRUCTION AND -18.28% 10.10% 11.73%
HOUSING
SELECT CONSTRUCTION AND -20.80% 9.42% 11.39%
HOUSING (LOAD ADJ.)
S&P 500 11.73% 25.14% 18.05%
GS Cyclical Industries -7.75% 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
1990/02/28 9700.00 10000.00
1990/03/31 10246.00 10265.00
1990/04/30 9947.41 10008.38
1990/05/31 10868.78 10984.19
1990/06/30 10672.56 10909.50
1990/07/31 10115.90 10874.59
1990/08/31 8829.82 9891.53
1990/09/30 7918.04 9409.81
1990/10/31 7639.71 9369.35
1990/11/30 8378.73 9974.61
1990/12/31 9165.73 10252.90
1991/01/31 9971.93 10699.92
1991/02/28 10845.32 11464.97
1991/03/31 11114.05 11742.42
1991/04/30 11286.81 11770.60
1991/05/31 12409.73 12279.09
1991/06/30 11776.29 11716.71
1991/07/31 12083.41 12262.71
1991/08/31 12582.49 12553.34
1991/09/30 12304.16 12343.69
1991/10/31 12093.01 12509.10
1991/11/30 11488.36 12004.98
1991/12/31 12952.54 13378.35
1992/01/31 13915.44 13129.52
1992/02/29 14143.22 13300.20
1992/03/31 14132.87 13040.85
1992/04/30 14329.59 13424.25
1992/05/31 14785.15 13490.03
1992/06/30 13728.70 13289.02
1992/07/31 13977.37 13832.55
1992/08/31 13500.75 13548.98
1992/09/30 13676.89 13708.86
1992/10/31 14153.51 13756.84
1992/11/30 14972.05 14225.94
1992/12/31 15376.14 14400.92
1993/01/31 16018.54 14521.89
1993/02/28 16308.65 14719.39
1993/03/31 16692.02 15029.97
1993/04/30 16298.15 14666.24
1993/05/31 16474.40 15059.30
1993/06/30 16671.39 15102.97
1993/07/31 17241.62 15042.56
1993/08/31 17956.99 15612.67
1993/09/30 18537.59 15492.45
1993/10/31 19211.50 15813.15
1993/11/30 18910.83 15662.92
1993/12/31 20544.19 15852.44
1994/01/31 21215.36 16391.43
1994/02/28 20785.39 15947.22
1994/03/31 19568.89 15251.92
1994/04/30 19524.62 15447.15
1994/05/31 18491.46 15700.48
1994/06/30 18038.13 15315.82
1994/07/31 18554.71 15818.18
1994/08/31 19261.06 16466.72
1994/09/30 18185.73 16063.29
1994/10/31 17648.06 16424.71
1994/11/30 16931.18 15826.52
1994/12/31 17268.51 16061.23
1995/01/31 17344.29 16477.70
1995/02/28 18177.95 17119.83
1995/03/31 18502.74 17625.04
1995/04/30 18524.40 18144.10
1995/05/31 19433.84 18869.32
1995/06/30 19617.89 19307.65
1995/07/31 20527.33 19947.89
1995/08/31 20538.16 19997.96
1995/09/30 20419.06 20841.88
1995/10/31 20408.24 20767.47
1995/11/30 21664.13 21679.16
1995/12/31 22237.90 22096.70
1996/01/31 22192.63 22848.87
1996/02/29 22136.05 23060.68
1996/03/31 22894.29 23282.76
1996/04/30 22923.35 23625.95
1996/05/31 23677.64 24235.26
1996/06/30 23819.07 24327.60
1996/07/31 22817.28 23252.80
1996/08/31 23889.79 23743.20
1996/09/30 25186.22 25079.47
1996/10/31 24809.08 25771.16
1996/11/30 25940.51 27719.21
1996/12/31 25176.10 27170.09
1997/01/31 25426.79 28867.68
1997/02/28 26262.41 29094.00
1997/03/31 25510.35 27898.53
1997/04/30 26028.63 29564.07
1997/05/31 28519.60 31363.93
1997/06/30 29025.78 32769.03
1997/07/31 32076.22 35376.46
1997/08/31 31982.98 33394.67
1997/09/30 32995.35 35223.70
1997/10/31 31716.56 34047.23
1997/11/30 32422.56 35623.28
1997/12/31 32687.21 36234.93
1998/01/31 33863.83 36635.68
1998/02/28 36776.69 39277.85
1998/03/31 38670.77 41289.27
1998/04/30 38656.20 41704.64
1998/05/31 37980.29 40987.74
1998/06/30 38397.34 42652.66
1998/07/31 37016.76 42198.41
1998/08/31 31321.88 36097.36
1998/09/30 30962.35 38409.76
1998/10/31 34341.89 41534.01
1998/11/30 37002.38 44051.38
1998/12/31 40151.83 46589.63
1999/01/31 39461.54 48538.00
1999/02/28 35981.33 47029.44
1999/03/31 35578.66 48911.09
1999/04/30 37837.27 50805.42
1999/05/31 36945.29 49605.90
1999/06/30 37736.56 52359.03
1999/07/31 36441.75 50724.38
1999/08/31 33938.45 50473.29
1999/09/30 33060.85 49089.82
1999/10/31 33895.29 52196.23
1999/11/30 33075.24 53257.37
1999/12/31 35154.71 56394.23
2000/01/31 31613.94 53560.99
2000/02/29 29398.00 52547.08
IMATRL PRASUN SHR__CHT 20000229 20000320 115611 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, 1990, and the current 3.00% sales charge was paid. As the
chart shows, by February 29, 2000, the value of the investment would
have grown to $29,398 - a 193.98% 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 $52,547 - a 425.47% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
Lowe's Companies, Inc. 8.0
Home Depot, Inc. 7.7
Fannie Mae 6.1
Caterpillar, Inc. 5.9
Deere & Co. 5.9
Masco Corp. 5.4
Equity Residential Properties 3.5
Trust (SBI)
Georgia-Pacific Corp. 3.4
Fluor Corp. 3.4
Vulcan Materials Co. 2.5
51.8
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Retail & Wholesale,
Miscellaneous 15.7% Row: 1, Col: 6, Value: 15.7
Building Materials 14.7% Row: 1, Col: 5, Value: 14.7
Industrial Machinery
& Equipment 13.2% Row: 1, Col: 4, Value: 13.2
Real Estate
Investment Trusts 12.6% Row: 1, Col: 3, Value: 12.6
Federal Sponsored Credit 6.7% Row: 1, Col: 2, Value: 6.7
*All Others 37.1% Row: 1, Col: 1, Value: 37.1
</TABLE>
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
(photograph of Brian Hogan)
Brian Hogan,
Portfolio Manager of Fidelity Select Construction and Housing
Portfolio
Q. HOW DID THE FUND PERFORM, BRIAN?
A. For the 12 months that ended February 29, 2000, the fund returned
- -18.28%. For the same 12-month period, the Goldman Sachs Cyclical
Industries Index - an index of 246 stocks designed to measure the
performance of companies in the cyclical industries sector - fell
7.75%, while the Standard & Poor's 500 Index returned 11.73%. The fund
underperformed the Goldman Sachs index because the index is more
broadly based than the fund, with greater exposure to sectors that are
not represented in the construction and housing universe. Several of
those sectors outperformed construction and housing stocks during the
past 12 months.
Q. WHAT CHARACTERIZED THE INVESTMENT ENVIRONMENT DURING THE PERIOD?
A. Two factors created an unfavorable environment. First, steadily
rising interest rates had a significant impact on construction and
housing stock prices. Since June 1999, the Federal Reserve Board has
raised interest rates four times. Higher interest rates are typically
followed by higher mortgage rates, which usually reduce new and
existing home sales. In turn, slower building activity negatively
impacts suppliers to the construction and housing market. Although
building activity remained robust throughout the period, increasing
rates raised investors' expectations for a peak in the building cycle,
and stock prices weakened despite strong operating characteristics for
many companies. Second, the stock market became two-tiered during the
period. Investors increasingly favored new economy stocks with high
revenue growth expectations - such as technology and communications -
at the expense of stocks in more mature, old economy industries.
Q. WHAT WAS YOUR STRATEGY IN SUCH A CHALLENGING ENVIRONMENT?
A. I focused on selecting the best stocks available within a poorly
performing sector, primarily stocks that I expected to decline less in
a weak market environment and to rebound first when market sentiment
shifts, as it inevitably does. In addition, within the construction
and housing sector there are two types of companies - those that are
more consumer-oriented and those that are more manufacturing-oriented.
In the fund, I emphasized stocks of manufacturing and engineering
companies that were positioned to benefit from a global economic
recovery in Southeast Asia, Latin America and Europe, as well as from
strong industrial production domestically. At the same time, I
underweighted stocks of companies that were more sensitive to consumer
spending and the residential housing market, such as carpet
manufacturers and building material suppliers.
Q. WHICH HOLDINGS BENEFITED PERFORMANCE?
A. Home Depot offered some of the highest revenue growth available
within the sector, and it performed well for most of the period. Known
as a "category killer," Home Depot continued to gain market share and
exert greater control over its suppliers, as well as benefit from
positive housing activity during the period. Danaher, which
manufactures Sears' Craftsman Tools, also performed well, although I
reduced the fund's exposure on concerns that increasing market
leadership by chains like Home Depot could erode the Sears
distribution channel.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Consumer-oriented carpet manufacturers such as Maxim, Mohawk and
Shaw performed poorly as investors feared that higher interest rates
could derail the housing market expansion that began in 1991. Another
disappointment was a missed opportunity during the first two months of
the period, when cyclical and commodity-oriented stocks - such as
equipment manufacturers - posted a surprising rally. Although I acted
quickly to add holdings in those underrepresented sectors when I
assumed the fund's management, much of the market's move already had
taken place.
Q. WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
A. I am cautious. Despite record levels of building activity in 1999,
stocks reacted negatively as the market viewed these levels as
unsustainable in the face of rising interest rates. However, as higher
rates take hold and investors are provided with more concrete evidence
that the building cycle may have peaked, stocks in this sector may
begin to perform better. In the meantime, it's important to remember
that when a sector is out of favor, a company's stock price does not
necessarily represent its fundamental business characteristics.
Accordingly, I will continue to seek out the best-managed companies
with the most attractive long-term prospects.
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 29, 2000, more than
$7 million
MANAGER: Brian Hogan, since 1999;
manager, Fidelity Select Cyclical Industries
Portfolio, since February 2000; equity analyst,
various industries, since 1998; high-yield
analyst and portfolio manager, 1995-1998;
joined Fidelity in 1994
CONSTRUCTION AND HOUSING PORTFOLIO
INVESTMENTS FEBRUARY 29, 2000
Showing Percentage of Net Assets
COMMON STOCKS - 95.1%
SHARES VALUE (NOTE 1)
BUILDING MATERIALS - 14.7%
Armstrong World Industries, 700 $ 13,300
Inc.
Carlisle Companies, Inc. 1,500 49,688
Elcor Corp. 1,950 65,325
Johns Manville Corp. 3,000 24,375
Lafarge Corp. 4,016 79,065
Masco Corp. 23,900 427,213
Owens Corning 3,900 56,550
Sherwin-Williams Co. 4,000 76,500
Southdown, Inc. 2,040 101,235
USG Corp. 2,100 68,250
Vulcan Materials Co. 5,000 200,000
1,161,501
CHEMICALS & PLASTICS - 1.6%
DuPont Canada, Inc. 4,000 124,172
COMPUTER SERVICES & SOFTWARE
- - 0.1%
MatrixOne, Inc. 100 2,500
Onvia.com, Inc. 100 2,100
4,600
CONSTRUCTION - 4.5%
Centex Corp. 4,000 78,750
Clayton Homes, Inc. 7,000 56,875
D.R. Horton, Inc. 2,900 32,625
Jacobs Engineering Group, 1,200 33,675
Inc. (a)
Kaufman & Broad Home Corp. 2,300 43,988
Lennar Corp. 5,000 82,500
M/I Schottenstein Homes, Inc. 2,000 28,875
357,288
CONSUMER ELECTRONICS - 6.3%
Black & Decker Corp. 6,000 197,625
Maytag Corp. 4,100 108,394
Whirlpool Corp. 3,500 190,094
496,113
CREDIT & OTHER FINANCE - 1.6%
Countrywide Credit 4,996 124,588
Industries, Inc.
ENGINEERING - 3.4%
Fluor Corp. 9,500 270,156
FEDERAL SPONSORED CREDIT - 6.7%
Fannie Mae 9,200 487,600
Freddie Mac 1,100 45,925
533,525
SHARES VALUE (NOTE 1)
HOME FURNISHINGS - 4.6%
Ethan Allen Interiors, Inc. 3,000 $ 69,938
Furniture Brands 2,500 40,156
International, Inc. (a)
Herman Miller, Inc. 4,000 82,000
Leggett & Platt, Inc. 10,500 176,531
368,625
INDUSTRIAL MACHINERY &
EQUIPMENT - 13.2%
Caterpillar, Inc. 13,300 466,331
Deere & Co. 13,000 464,750
The Stanley Works 5,000 115,000
1,046,081
LEASING & RENTAL - 0.7%
United Rentals, Inc. (a) 3,500 54,688
LEISURE DURABLES & TOYS - 0.2%
Champion Enterprises, Inc. (a) 2,000 12,625
LODGING & GAMING - 0.3%
Prime Hospitality Corp. (a) 3,000 25,500
METALS & MINING - 1.6%
Martin Marietta Materials, 3,600 127,800
Inc.
PACKAGING & CONTAINERS - 0.4%
Gaylord Container Corp. Class 5,500 29,563
A (a)
PAPER & FOREST PRODUCTS - 3.7%
Georgia-Pacific Corp. 7,900 274,031
Trex Co., Inc. (a) 900 22,275
296,306
REAL ESTATE - 1.2%
Catellus Development Corp. (a) 6,000 73,875
LNR Property Corp. 1,200 23,400
97,275
REAL ESTATE INVESTMENT TRUSTS
- - 12.6%
Apartment Investment & 4,000 148,000
Management Co. Class A
Archstone Communities Trust 4,000 78,250
Avalonbay Communities, Inc. 2,000 67,500
Crescent Real Estate Equities 2,000 34,125
Co.
Equity Residential Properties 7,000 279,563
Trust (SBI)
Mack-Cali Realty Corp. 2,900 68,875
Post Properties, Inc. 1,500 56,438
Reckson Associates Realty 1,500 27,750
Corp.
Simon Property Group, Inc. 7,000 164,500
The Rouse Co. 3,300 72,188
997,189
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
RETAIL & WHOLESALE,
MISCELLANEOUS - 15.7%
Home Depot, Inc. 10,550 $ 609,922
Lowe's Companies, Inc. 13,400 638,171
1,248,093
TEXTILES & APPAREL - 2.0%
Mohawk Industries, Inc. (a) 3,250 72,109
Shaw Industries, Inc. 7,000 88,813
160,922
TOTAL COMMON STOCKS 7,536,610
(Cost $8,536,855)
CASH EQUIVALENTS - 13.0%
Central Cash Collateral Fund, 545,400 545,400
5.75% (b)
Taxable Central Cash Fund, 486,114 486,114
5.66% (b)
TOTAL CASH EQUIVALENTS 1,031,514
(Cost $1,031,514)
TOTAL INVESTMENT PORTFOLIO - 8,568,124
108.1%
(Cost $9,568,369)
NET OTHER ASSETS - (8.1)% (643,219)
NET ASSETS - 100% $ 7,924,905
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 $5,714,414 and $44,597,502, 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 $5,722 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $517,925. The fund received
cash collateral of $545,400 which was invested in cash equivalents.
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $9,588,097. Net unrealized depreciation
aggregated $1,019,973, of which $704,225 related to appreciated
investment securities and $1,724,198 related to depreciated investment
securities.
The fund hereby designates approximately $2,813,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 39% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2001 of amounts for use
in preparing 2000 income tax returns.
CONSTRUCTION AND HOUSING PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 8,568,124
value (cost $9,568,369) -
See accompanying schedule
Cash 5,701
Receivable for investments 49,262
sold
Receivable for fund shares 23,970
sold
Dividends receivable 6,814
Interest receivable 1,801
Redemption fees receivable 113
Other receivables 8,598
TOTAL ASSETS 8,664,383
LIABILITIES
Payable for investments $ 26,700
purchased
Payable for fund shares 142,659
redeemed
Accrued management fee 4,185
Other payables and accrued 20,534
expenses
Collateral on securities 545,400
loaned, at value
TOTAL LIABILITIES 739,478
NET ASSETS $ 7,924,905
Net Assets consist of:
Paid in capital $ 6,241,601
Undistributed net investment 7,898
income
Accumulated undistributed net 2,675,651
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (1,000,245)
(depreciation) on investments
NET ASSETS, for 454,396 $ 7,924,905
shares outstanding
NET ASSET VALUE and $17.44
redemption price per share
($7,924,905 (divided by)
454,396 shares)
Maximum offering price per $17.98
share (100/97.00 of $17.44)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 256,480
Dividends
Interest 40,419
Security lending 167
TOTAL INCOME 297,066
EXPENSES
Management fee $ 94,274
Transfer agent fees 193,728
Accounting and security 60,341
lending fees
Non-interested trustees' 64
compensation
Custodian fees and expenses 11,077
Registration fees 24,681
Audit 11,789
Legal 159
Total expenses before 396,113
reductions
Expense reductions (12,939) 383,174
NET INVESTMENT INCOME (LOSS) (86,108)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 4,516,367
Foreign currency transactions 34 4,516,401
Change in net unrealized (6,580,475)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) (2,064,074)
NET INCREASE (DECREASE) IN $ (2,150,182)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 24,695
charges paid to FDC
Sales charges - Retained by $ 24,695
FDC
Deferred sales charges $ 973
withheld by FDC
Exchange fees withheld by FSC $ 6,039
Expense reductions Directed $ 12,939
brokerage arrangements
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ (86,108) $ (195,271)
income (loss)
Net realized gain (loss) 4,516,401 1,243,920
Change in net unrealized (6,580,475) (58,044)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (2,150,182) 990,605
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (1,685,140) (144,845)
from net realized gains
Share transactions Net 6,797,348 137,817,090
proceeds from sales of shares
Reinvestment of distributions 1,553,985 142,901
Cost of shares redeemed (48,295,592) (144,767,914)
NET INCREASE (DECREASE) IN (39,944,259) (6,807,923)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 52,861 129,721
TOTAL INCREASE (DECREASE) (43,726,720) (5,832,442)
IN NET ASSETS
NET ASSETS
Beginning of period 51,651,625 57,484,067
End of period (including $ 7,924,905 $ 51,651,625
undistributed net investment
income of $7,898 and $0,
respectively)
OTHER INFORMATION
Shares
Sold 272,449 5,395,789
Issued in reinvestment of 78,282 5,303
distributions
Redeemed (1,961,021) (5,579,107)
Net increase (decrease) (1,610,290) (178,015)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 F 1999 1998 1997 1996 F
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 25.02 $ 25.63 $ 22.00 $ 19.56 $ 16.79
period
Income from Investment
Operations
Net investment income (loss) C (.13) (.06) (.25) .06 .07
Net realized and unrealized (4.11) (.53) 7.67 3.38 3.55
gain (loss)
Total from investment (4.24) (.59) 7.42 3.44 3.62
operations
Less Distributions
From net investment income - - (.02) (.02) (.07)
From net realized gain (3.42) (.06) (3.87) (1.03) (.81)
Total distributions (3.42) (.06) (3.89) (1.05) (.88)
Redemption fees added to paid .08 .04 .10 .05 .03
in capital
Net asset value, end of period $ 17.44 $ 25.02 $ 25.63 $ 22.00 $ 19.56
TOTAL RETURN A, B (18.28)% (2.16)% 40.04% 18.64% 21.77%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 7,925 $ 51,652 $ 57,484 $ 30,581 $ 42,668
(000 omitted)
Ratio of expenses to average 2.42% 1.43% 2.50% D 1.41% 1.43%
net assets
Ratio of expenses to average 2.34% E 1.37% E 2.43% E 1.35% E 1.40% E
net assets after expense
reductions
Ratio of net investment (.53)% (.23)% (1.10)% .27% .39%
income (loss) to average net
assets
Portfolio turnover rate 34% 226% 404% 270% 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 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
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 29, PAST 1 YEAR LIFE OF FUND
2000
SELECT CYCLICAL INDUSTRIES 1.40% 21.21%
SELECT CYCLICAL INDUSTRIES -1.71% 17.50%
(LOAD ADJ.)
S&P 500 11.73% 79.56%
GS Cyclical Industries -7.75% 11.65%
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
246 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 29, PAST 1 YEAR LIFE OF FUND
2000
SELECT CYCLICAL INDUSTRIES 1.40% 6.63%
SELECT CYCLICAL INDUSTRIES -1.71% 5.53%
(LOAD ADJ.)
S&P 500 11.73% 21.59%
GS Cyclical Industries -7.75% 3.75%
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 13039.59 17247.76
1999/09/30 12652.78 16775.00
1999/10/31 12886.90 17836.52
1999/11/30 12591.71 18199.14
1999/12/31 13670.71 19271.06
2000/01/31 12245.61 18302.89
2000/02/29 11750.00 17956.41
IMATRL PRASUN SHR__CHT 20000229 20000322 163117 R00000000000039
$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 29, 2000, the value of the
investment would have grown to $11,750 - a 17.50% increase on the
initial investment - and includes the effect of a $7.50 trading fee.
For comparison, look at how the Standard & Poor's 500 Index did over
the same period. With dividends and capital gains, if any, reinvested,
the same $10,000 investment would have grown to $17,956 - a 79.56%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
General Electric Co. 8.8
General Motors Corp. 6.5
Tyco International Ltd. 5.4
E.I. du Pont de Nemours and Co. 4.4
Honeywell International, Inc. 4.1
United Technologies Corp. 3.9
Minnesota Mining & 3.5
Manufacturing Co.
Boeing Co. 3.4
Union Carbide Corp. 3.0
General Dynamics Corp. 2.7
45.7
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Chemicals & Plastics 15.8% Row: 1, Col: 6, Value: 15.8
Aerospace & Defense 14.9% Row: 1, Col: 5, Value: 14.9
Autos, Tires, & Accessories 12.4% Row: 1, Col: 4, Value: 12.4
Electrical Equipment 10.7% Row: 1, Col: 3, Value: 10.7
Electronics 5.4% Row: 1, Col: 2, Value: 5.4
*All Others 40.8% Row: 1, Col: 1, Value: 40.8
</TABLE>
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
CYCLICAL INDUSTRIES PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
(photograph of Albert Ruback)(photograph of Brian Hogan)
NOTE TO SHAREHOLDERS: The following is an interview with Albert Ruback
(left), who managed Fidelity Select Cyclical Industries Portfolio for
most of the period covered by this report, with additional comments
from Brian Hogan (right), who became manager of the fund on February
1, 2000.
Q. HOW DID THE FUND PERFORM, ALBERT?
A.R. For the 12 months that ended February 29, 2000, the fund
returned 1.40%. For the same 12-month period, the Goldman Sachs
Cyclical Industries Index - an index of 246 stocks designed to measure
the performance of companies in the cyclical industries sector - fell
7.75%, while the Standard & Poor's 500 Index returned 11.73%.
Q. WHAT FACTORS DROVE CYCLICAL INDUSTRY STOCKS DURING THE PERIOD?
A.R. The first half of the period was characterized by a cyclical
stock rally in response to improving economies overseas. These
conditions renewed investors' interest in companies whose earnings are
closely linked to industrial production, such as metals, chemicals and
paper. This trend reversed itself during the past six months.
Investors began to favor stocks with high revenue growth expectations
- - such as technology and communications - at the expense of stocks
providing solid earnings growth with less spectacular revenue gains.
These conditions created obstacles for investors in many of the
well-managed industrial companies comprising the cyclical industries
group. Rising interest rates further complicated the investment
environment because cyclical stock price performance is closely linked
with investors' expectations about the economy's strength, and rising
interest rates typically suggest that economic growth may slow down.
Q. HOW DID THE FUND OUTPERFORM THE GOLDMAN SACHS INDEX IN THIS
ENVIRONMENT?
A.R. The fund outperformed the Goldman Sachs index by virtue of strong
stock selection across a variety of cyclical subsectors. I emphasized
well-managed companies with dominant market positions that adapted
their business models to participate in the evolving e-commerce
environment. For example, companies such as General Electric made
sizable, early investments in Internet technology and now are
well-positioned to increase market share, revenue growth and earnings
potential. In addition, the fund benefited from not owning certain
stocks for much of the period, including automobile manufacturers.
Rising interest rates forced automakers to offer significant
incentives to maintain sales volume, which had a negative effect on
their earnings growth and stock prices.
Q. WHAT STOCKS PERFORMED WELL FOR THE FUND?
A.R. I already mentioned General Electric, the fund's largest holding.
GE should benefit from its early investment in web site development,
as much of the site's content can lead to new marketing opportunities
and enhanced revenue growth. For example, within the Power Division,
utility managers can access GE's web site and evaluate the relative
performance of their GE turbines vis-<UNDEF>-vis those of their
competitors. Furthermore, the site alerts managers to products and
services that have the potential to increase operating efficiency, an
important feature in the deregulating utility sector. SPX Corp., a
global automotive parts manufacturer, also performed well,
particularly during the first half of the period when investors
rewarded companies whose earnings were expected to benefit from
improving economies worldwide. In addition, encouraging results from
an ongoing cost reduction program further contributed to the stock's
performance.
Q. WHAT STOCKS WERE DISAPPOINTING?
A.R. Several defense and aerospace-related stocks - General Dynamics,
Textron and Litton - fell short of my expectations during the period.
All three were affected by an industry-wide reduction in
price-to-earnings multiples in response to negative earnings surprises
during the period. Furthermore, because these companies operate in
mature, slow-growth industrial markets, they suffered from the shift
in investor sentiment toward stocks offering higher revenue growth
during the second half of the period.
Q. TURNING TO YOU, BRIAN, WHAT'S YOUR OUTLOOK FOR THE
COMING MONTHS?
B.H. Industrial activity levels - domestically and abroad - suggest a
positive business environment for many cyclical companies. I
anticipate focusing on companies where earnings are driven by
accelerating revenue growth rather than by cost cutting. More
specifically, I intend to highlight companies that have taken
advantage of the new economy by expanding their markets and business
opportunities. I also expect to de-emphasize interest-rate sensitive
consumer-oriented stocks - such as auto manufacturers and building
materials companies - that tend to perform poorly in rising
interest-rate environments.
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: March 3, 1997
FUND NUMBER: 515
TRADING SYMBOL: FCYIX
SIZE: as of February 29, 2000, more than
$4 million
MANAGER: Brian Hogan, since February 2000;
manager, Fidelity Select Construction and
Housing Portfolio, since 1999; equity analyst,
various industries, since 1998; high-yield analyst
and portfolio manager, 1995-1998; fixed-income
analyst, 1994; joined Fidelity in 1994
CYCLICAL INDUSTRIES PORTFOLIO
INVESTMENTS FEBRUARY 29, 2000
Showing Percentage of Net Assets
COMMON STOCKS - 93.4%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 14.9%
Alliant Techsystems, Inc. (a) 100 $ 5,413
BFGoodrich Co. 370 8,857
Boeing Co. 3,750 138,281
Cordant Technologies, Inc. 740 23,958
Honeywell International, Inc. 3,490 167,956
Howmet International, Inc. (a) 500 9,156
Lockheed Martin Corp. 640 11,160
Rockwell International Corp. 420 19,005
Textron, Inc. 1,110 67,710
United Technologies Corp. 3,191 162,542
614,038
AIR TRANSPORTATION - 4.7%
America West Holding Corp. 630 8,426
Class B (a)
AMR Corp. (a) 2,050 108,394
Continental Airlines, Inc. 1,600 50,600
Class B (a)
Northwest Airlines Corp. 180 3,105
Class A (a)
Southwest Airlines Co. 1,160 21,388
191,913
AUTOS, TIRES, & ACCESSORIES -
12.4%
Danaher Corp. 340 13,876
Delphi Automotive Systems 1,670 27,868
Corp.
Ford Motor Co. 1,930 80,336
General Motors Corp. 3,530 268,501
Gentex Corp. (a) 520 15,194
Johnson Controls, Inc. 370 19,749
Navistar International Corp. 780 25,545
(a)
SPX Corp. (a) 680 59,202
510,271
BUILDING MATERIALS - 1.9%
American Standard Companies, 370 12,904
Inc. (a)
Ferro Corp. 470 8,871
Fortune Brands, Inc. 100 2,188
Lafarge Corp. 580 11,419
Masco Corp. 2,090 37,359
Owens Corning 210 3,045
USG Corp. 100 3,250
79,036
CHEMICALS & PLASTICS - 15.7%
Air Products & Chemicals, 210 5,408
Inc.
Arch Chemicals, Inc. 1,050 20,016
Avery Dennison Corp. 520 31,558
CK Witco Corp. 676 7,182
Dow Chemical Co. 260 28,210
E.I. du Pont de Nemours and 3,604 182,002
Co.
Engelhard Corp. 520 7,085
Lyondell Chemical Co. 530 4,538
SHARES VALUE (NOTE 1)
Monsanto Co. 1,050 $ 40,753
Potash Corp. of Saskatchewan 200 9,106
PPG Industries, Inc. 420 20,738
Praxair, Inc. 1,930 65,138
Rohm & Haas Co. 1,250 50,469
Sealed Air Corp. (a) 654 32,496
Solutia, Inc. 500 6,906
Spartech Corp. 420 10,710
Union Carbide Corp. 2,300 123,481
645,796
COMPUTER SERVICES & SOFTWARE
- - 0.5%
Commerce One, Inc. 40 8,355
Litton Industries, Inc. (a) 200 5,988
MatrixOne, Inc. 100 2,500
Onvia.com, Inc. 100 2,100
18,943
COMPUTERS & OFFICE EQUIPMENT
- - 0.4%
Pitney Bowes, Inc. 370 18,315
CONSTRUCTION - 0.4%
Centex Corp. 300 5,906
Kaufman & Broad Home Corp. 310 5,929
Lennar Corp. 310 5,115
Oakwood Homes Corp. 600 1,538
18,488
CONSUMER DURABLES - 3.5%
Minnesota Mining & 1,620 142,763
Manufacturing Co.
CONSUMER ELECTRONICS - 0.6%
Black & Decker Corp. 500 16,469
General Motors Corp. Class H 80 9,640
(a)
26,109
ELECTRICAL EQUIPMENT - 10.7%
Emerson Electric Co. 1,310 59,687
General Electric Co. 2,750 363,507
Hubbell, Inc. Class B 260 6,321
Plug Power, Inc. 100 11,744
441,259
ELECTRONICS - 5.4%
Tyco International Ltd. 5,810 220,417
ENGINEERING - 2.6%
Fluor Corp. 1,870 53,178
PerkinElmer, Inc. 850 54,931
108,109
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
HOME FURNISHINGS - 0.3%
Leggett & Platt, Inc. 680 $ 11,433
INDUSTRIAL MACHINERY &
EQUIPMENT - 4.0%
Caterpillar, Inc. 1,050 36,816
Deere & Co. 600 21,450
Illinois Tool Works, Inc. 1,150 59,441
Ingersoll-Rand Co. 780 29,884
Parker-Hannifin Corp. 420 15,225
162,816
IRON & STEEL - 0.4%
Bethlehem Steel Corp. (a) 2,000 11,375
USX - U.S. Steel Group 260 5,688
17,063
LEASING & RENTAL - 0.1%
Ryder System, Inc. 130 2,421
MEDICAL FACILITIES MANAGEMENT
- - 0.3%
Apria Healthcare Group, Inc. 790 11,258
(a)
METALS & MINING - 1.6%
Alcoa, Inc. 358 24,523
Inco Ltd. (a) 1,050 18,362
Martin Marietta Materials, 610 21,655
Inc.
64,540
PACKAGING & CONTAINERS - 1.0%
Ball Corp. 370 9,967
Bemis Co., Inc. 520 15,470
Owens-Illinois, Inc. (a) 1,100 15,194
40,631
PAPER & FOREST PRODUCTS - 1.1%
Bowater, Inc. 210 10,329
International Paper Co. 542 19,952
Smurfit-Stone Container Corp. 970 13,216
(a)
43,497
POLLUTION CONTROL - 0.4%
Ogden Corp. 990 11,261
Republic Services, Inc. Class 420 4,568
A (a)
15,829
RAILROADS - 2.5%
Burlington Northern Santa Fe 1,930 37,997
Corp.
Canadian Pacific Ltd. 1,560 30,025
SHARES VALUE (NOTE 1)
CSX Corp. 500 $ 11,094
Union Pacific Corp. 580 22,040
101,156
RETAIL & WHOLESALE,
MISCELLANEOUS - 0.2%
Chemdex Corp. 40 8,995
SECURITIES INDUSTRY - 1.0%
Kansas City Southern 520 40,950
Industries, Inc.
SERVICES - 1.1%
Ecolab, Inc. 1,160 32,770
FreeMarkets, Inc. 80 13,935
46,705
SHIP BUILDING & REPAIR - 2.7%
General Dynamics Corp. 2,590 112,018
TEXTILES & APPAREL - 0.1%
Shaw Industries, Inc. 260 3,299
Unifi, Inc. (a) 300 2,869
6,168
TRUCKING & FREIGHT - 2.9%
EGL, Inc. (a) 1,710 48,094
Expeditors International of 840 31,710
Washington, Inc.
FedEx Corp. (a) 520 18,168
United Parcel Service, Inc. 370 20,211
Class B
USFreightways Corp. 100 3,325
121,508
TOTAL COMMON STOCKS 3,842,445
(Cost $4,022,191)
CONVERTIBLE PREFERRED STOCKS
- - 0.1%
CHEMICALS & PLASTICS - 0.1%
Sealed Air Corp. Series A, 70 3,408
$2.00 (Cost $3,346)
CASH EQUIVALENTS - 5.9%
SHARES VALUE (NOTE 1)
Central Cash Collateral Fund, 37,000 $ 37,000
5.75% (b)
Taxable Central Cash Fund, 205,815 205,815
5.66% (b)
TOTAL CASH EQUIVALENTS 242,815
(Cost $242,815)
TOTAL INVESTMENT PORTFOLIO - 4,088,668
99.4%
(Cost $4,268,352)
NET OTHER ASSETS - 0.6% 23,272
NET ASSETS - 100% $ 4,111,940
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 $13,945,889 and $12,604,014, 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 $1,804 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $35,063. The fund received
cash collateral of $37,000 which was invested in cash equivalents.
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $4,326,677. Net unrealized depreciation
aggregated $238,009, of which $325,142 related to appreciated
investment securities and $563,151 related to depreciated investment
securities.
The fund hereby designates approximately $53,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
The fund intends to elect to defer to its fiscal year ending February
28, 2001 approximately $7,000 of losses recognized during the period
November 1, 1999 to February 29, 2000.
CYCLICAL INDUSTRIES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 4,088,668
value (cost $4,268,352) -
See accompanying schedule
Cash 8,543
Receivable for investments 239,651
sold
Receivable for fund shares 31,972
sold
Dividends receivable 9,745
Interest receivable 1,040
Redemption fees receivable 15
Other receivables 550
Receivable from investment 752
adviser for expense
reductions
TOTAL ASSETS 4,380,936
LIABILITIES
Payable for investments $ 199,631
purchased
Payable for fund shares 14,125
redeemed
Other payables and accrued 18,240
expenses
Collateral on securities 37,000
loaned, at value
TOTAL LIABILITIES 268,996
NET ASSETS $ 4,111,940
Net Assets consist of:
Paid in capital $ 4,188,474
Accumulated undistributed net 103,152
realized gain loss on
investments and foreign
currency transactions
Net unrealized appreciation (179,686)
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 355,926 $ 4,111,940
shares outstanding
NET ASSET VALUE and $11.55
redemption price per share
($4,111,940 (divided by)
355,926 shares)
Maximum offering price per $11.91
share (100/97.00 of $11.55)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 82,521
Dividends
Interest 13,288
Security lending 241
TOTAL INCOME 96,050
EXPENSES
Management fee $ 37,738
Transfer agent fees 49,199
Accounting and security 60,017
lending fees
Non-interested trustees' 18
compensation
Custodian fees and expenses 14,391
Registration fees 17,838
Audit 10,614
Legal 22
Miscellaneous 265
Total expenses before 190,102
reductions
Expense reductions (28,879) 161,223
NET INVESTMENT INCOME (LOSS) (65,173)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 169,072
Foreign currency transactions (125) 168,947
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (441,297)
Assets and liabilities in (2) (441,299)
foreign currencies
NET GAIN (LOSS) (272,352)
NET INCREASE (DECREASE) IN $ (337,525)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 42,617
charges paid to FDC
Sales charges - Retained by $ 42,617
FDC
Exchange fees withheld by FSC $ 1,772
Expense reductions $ 966
Directed brokerage
arrangements
FMR reimbursement 27,913
$ 28,879
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ (65,173) $ (41,151)
income (loss)
Net realized gain (loss) 168,947 21,698
Change in net unrealized (441,299) (207,859)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (337,525) (227,312)
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders
From net realized gain - (29,887)
Share transactions Net 16,676,868 3,255,351
proceeds from sales of shares
Reinvestment of distributions - 29,223
Cost of shares redeemed (15,352,529) (3,913,851)
NET INCREASE (DECREASE) IN 1,324,339 (629,277)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 38,142 8,220
TOTAL INCREASE (DECREASE) 1,024,956 (878,256)
IN NET ASSETS
NET ASSETS
Beginning of period 3,086,984 3,965,240
End of period $ 4,111,940 $ 3,086,984
OTHER INFORMATION
Shares
Sold 1,274,489 265,208
Issued in reinvestment of - 2,305
distributions
Redeemed (1,189,555) (325,171)
Net increase (decrease) 84,934 (57,658)
</TABLE>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 H 1999 1998 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 11.39 $ 12.07 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.13) (.13) (.11)
Net realized and unrealized .21 I (.49) 2.59
gain (loss)
Total from investment .08 (.62) 2.48
operations
Less Distributions
From net realized gain - (.09) (.46)
Redemption fees added to paid .08 .03 .05
in capital
Net asset value, end of period $ 11.55 $ 11.39 $ 12.07
TOTAL RETURN B, C 1.40% (4.96)% 25.77%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 4,112 $ 3,087 $ 3,965
(000 omitted)
Ratio of expenses to average 2.50% F 2.50% F 2.50% A, F
net assets
Ratio of expenses to average 2.49% G 2.49% G 2.50% A
net assets after expense
reductions
Ratio of net investment (1.00)% (1.09)% (.93)% A
income (loss) to average net
assets
Portfolio turnover rate 211% 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 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.
H FOR THE YEAR ENDED FEBRUARY 29
I THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT
CORRESPOND WITH THE AGGREGATE NET LOSS ON INVESTMENTS FOR
THE PERIOD DUE TO THE TIMING OF SALES AND PURCHASES OF FUND
SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF THE
INVESTMENTS OF THE FUND.
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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT DEFENSE AND AEROSPACE 3.24% 126.67% 307.68%
SELECT DEFENSE AND AEROSPACE 0.07% 119.79% 295.38%
(LOAD ADJ.)
S&P 500 11.73% 206.94% 425.47%
GS Cyclical Industries -7.75% 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 246 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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT DEFENSE AND AEROSPACE 3.24% 17.78% 15.09%
SELECT DEFENSE AND AEROSPACE 0.07% 17.06% 14.74%
(LOAD ADJ.)
S&P 500 11.73% 25.14% 18.05%
GS Cyclical Industries -7.75% 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
1990/02/28 9700.00 10000.00
1990/03/31 10297.43 10265.00
1990/04/30 9874.25 10008.38
1990/05/31 10604.45 10984.19
1990/06/30 10612.07 10909.50
1990/07/31 10186.25 10874.59
1990/08/31 9292.87 9891.53
1990/09/30 8992.29 9409.81
1990/10/31 8875.40 9369.35
1990/11/30 9351.32 9974.61
1990/12/31 9777.90 10252.90
1991/01/31 10640.90 10699.92
1991/02/28 10850.36 11464.97
1991/03/31 11688.23 11742.42
1991/04/30 11495.52 11770.60
1991/05/31 12031.76 12279.09
1991/06/30 11426.40 11716.71
1991/07/31 11922.83 12262.71
1991/08/31 11796.62 12553.34
1991/09/30 11518.95 12343.69
1991/10/31 12074.29 12509.10
1991/11/30 11527.37 12004.98
1991/12/31 12410.85 13378.35
1992/01/31 12368.78 13129.52
1992/02/29 12562.31 13300.20
1992/03/31 12309.88 13040.85
1992/04/30 12091.12 13424.25
1992/05/31 11485.30 13490.03
1992/06/30 10946.79 13289.02
1992/07/31 11367.50 13832.55
1992/08/31 11148.73 13548.98
1992/09/30 11308.60 13708.86
1992/10/31 11401.16 13756.84
1992/11/30 11796.62 14225.94
1992/12/31 12410.85 14400.92
1993/01/31 12781.07 14521.89
1993/02/28 12688.52 14719.39
1993/03/31 13361.65 15029.97
1993/04/30 13403.72 14666.24
1993/05/31 13816.01 15059.30
1993/06/30 14396.59 15102.97
1993/07/31 14985.58 15042.56
1993/08/31 14960.34 15612.67
1993/09/30 15347.39 15492.45
1993/10/31 15961.62 15813.15
1993/11/30 15490.43 15662.92
1993/12/31 15992.35 15852.44
1994/01/31 16753.90 16391.43
1994/02/28 16753.90 15947.22
1994/03/31 16079.89 15251.92
1994/04/30 16167.16 15447.15
1994/05/31 16220.46 15700.48
1994/06/30 15811.84 15315.82
1994/07/31 16042.80 15818.18
1994/08/31 16762.33 16466.72
1994/09/30 15918.44 16063.29
1994/10/31 16309.29 16424.71
1994/11/30 15669.71 15826.52
1994/12/31 16273.76 16061.23
1995/01/31 16264.88 16477.70
1995/02/28 17446.32 17119.83
1995/03/31 18192.50 17625.04
1995/04/30 19196.28 18144.10
1995/05/31 20377.73 18869.32
1995/06/30 21132.79 19307.65
1995/07/31 22296.47 19947.89
1995/08/31 22287.59 19997.96
1995/09/30 22909.40 20841.88
1995/10/31 22074.39 20767.47
1995/11/30 23664.46 21679.16
1995/12/31 23980.42 22096.70
1996/01/31 24409.49 22848.87
1996/02/29 25715.78 23060.68
1996/03/31 26306.95 23282.76
1996/04/30 27574.42 23625.95
1996/05/31 28605.52 24235.26
1996/06/30 27927.94 24327.60
1996/07/31 26042.51 23252.80
1996/08/31 27417.30 23743.20
1996/09/30 28762.64 25079.47
1996/10/31 28261.82 25771.16
1996/11/30 29803.55 27719.21
1996/12/31 29982.15 27170.09
1997/01/31 29333.50 28867.68
1997/02/28 29796.83 29094.00
1997/03/31 29601.20 27898.53
1997/04/30 30392.03 29564.07
1997/05/31 32824.64 31363.93
1997/06/30 33607.67 32769.03
1997/07/31 36718.91 35376.46
1997/08/31 38744.35 33394.67
1997/09/30 41364.89 35223.70
1997/10/31 38253.65 34047.23
1997/11/30 38326.73 35623.28
1997/12/31 37048.41 36234.93
1998/01/31 38825.02 36635.68
1998/02/28 42514.02 39277.85
1998/03/31 43690.87 41289.27
1998/04/30 44856.42 41704.64
1998/05/31 41948.22 40987.74
1998/06/30 41970.85 42652.66
1998/07/31 40126.35 42198.41
1998/08/31 32171.24 36097.36
1998/09/30 34309.95 38409.76
1998/10/31 37693.42 41534.01
1998/11/30 38587.38 44051.38
1998/12/31 38655.28 46589.63
1999/01/31 38587.38 48538.00
1999/02/28 38304.48 47029.44
1999/03/31 38587.38 48911.09
1999/04/30 42874.74 50805.42
1999/05/31 43238.67 49605.90
1999/06/30 45285.74 52359.03
1999/07/31 45172.01 50724.38
1999/08/31 43636.71 50473.29
1999/09/30 39861.00 49089.82
1999/10/31 39781.39 52196.23
1999/11/30 39610.80 53257.37
1999/12/31 43227.67 56394.23
2000/01/31 40005.16 53560.99
2000/02/29 39538.00 52547.08
IMATRL PRASUN SHR__CHT 20000229 20000316 093924 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, 1990, and the current 3.00% sales charge was paid. As the
chart shows, by February 29, 2000, the value of the investment would
have grown to $39,538 - a 295.38% 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 $52,547 - a 425.47% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
United Technologies Corp. 10.8
General Dynamics Corp. 9.4
Cordant Technologies, Inc. 7.0
General Electric Co. 5.2
Boeing Co. 5.0
General Motors Corp. Class H 4.3
BFGoodrich Co. 3.4
AMR Corp. 3.3
Adaptive Broadband Corp. 3.1
EchoStar Communications Corp. 3.0
Class A
54.5
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Aerospace & Defense 38.1% Row: 1, Col: 6, Value: 38.1
Electrical Equipment 15.6% Row: 1, Col: 5, Value: 15.6
Ship Building & Repair 11.1% Row: 1, Col: 4, Value: 11.1
Broadcasting 5.9% Row: 1, Col: 3, Value: 5.9
Air Transportation 5.5% Row: 1, Col: 2, Value: 5.5
* All Others 23.8% Row: 1, Col: 1, Value: 23.8
</TABLE>
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
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 12 months that ended February 29, 2000, the fund returned
3.24%. For the same 12-month period, the Goldman Sachs Cyclical
Industries Index - an index of 246 stocks designed to measure the
performance of companies in the cyclical industries sector - fell
7.75%, while the Standard & Poor's 500 Index returned 11.73%. The fund
outperformed the Goldman Sachs index because of the fund's relatively
lower exposure to large defense contractors and aerospace component
suppliers that performed poorly in response to earnings shortfalls.
Q. WHAT FACTORS AFFECTED DEFENSE AND AEROSPACE STOCKS OVER THE PAST 12
MONTHS?
A. The market environment was difficult for both sectors. Several of
the largest defense contractors, such as Lockheed, Northrop, Litton
and Raytheon, missed their financial targets as a result of higher
internal cost growth, revenue constraints and difficulties integrating
acquisitions. Aerospace suppliers suffered from reduced production
schedules and aggressive inventory reductions by Boeing. A
significant shift in investor preference toward new economy stocks
that offered higher expectations for revenue growth further
complicated the environment, particularly late in the period. Such
stocks, including those in the technology and communication sectors,
advanced strongly while cyclical stocks in more mature industries with
lower growth expectations fared poorly.
Q. WHAT INVESTMENT STRATEGY DID YOU PURSUE IN THIS CHALLENGING PERIOD?
A. My strategy comprised several features. My primary focus remained
on companies with strong management teams that have consistently
produced predictable earnings growth. Despite prevailing investor
sentiment, which tended to paint all cyclical stocks with the same
brush, many of the fund's core holdings were exceptionally
well-managed companies with strong business fundamentals and good
long-term prospects. In addition, I diversified the fund by investing
in companies that derived some - but not all - of their earnings from
defense- and aerospace-related businesses, and therefore offered
investors higher growth potential and greater earnings stability.
Q. WHAT STOCKS BENEFITED PERFORMANCE?
A. Several of the best performing stocks in the portfolio illustrated
my diversification strategy. Echostar and General Motors' Hughes
Division were the biggest contributors to performance. These companies
are the two largest participants in the fast-growing satellite TV
transmission market. Satellite TV services - such as GM's DirecTV -
provide a viable alternative to cable TV by offering viewers more
channels at competitive rates, and their stock prices reflected the
market's positive outlook for increasing revenue and subscriber
growth. General Electric performed well on the basis of strong
internal revenue growth and its long track record of earnings
consistency. The market rewarded Howmet Intl. for its commanding
market share in the high-growth industrial gas turbine business as
well as Cordant Technologies for its announced intention to buy the
remaining 15% of Howmet that it doesn't already own.
Q. WHAT STOCKS WERE DISAPPOINTING?
A. Two of the largest disappointments were investments in United
Technologies and General Dynamics. Although both companies
consistently met their financial targets - unlike many of their peers
over the past 12 months - they suffered from an industry-wide
contraction in price-to-earnings multiples. United Technologies stock
was further pressured by investors' concern regarding the potential
effect of a declining business and commercial aircraft production
cycle on its Pratt & Whitney jet engine division. General Dynamics'
purchase of Gulfstream Aerospace drew some concerns about new exposure
to the cyclical business-jet market. Although both stocks failed to
meet my short-term expectations, they remain well-managed companies
with strong track records of consistent, predictable earnings growth.
Q. WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
A. I am cautiously optimistic that the earnings shortfalls that
surprised investors during the past 12 months are behind us. However,
I expect continued challenges for defense contractors including their
reliance on a small number of large contracts and the difficulties of
working with the Department of Defense as their largest customer. I
anticipate the declining aircraft production cycle to pose further
obstacles for pure-play aerospace manufacturers and component
suppliers. As I look ahead, I expect to remain focused on companies
with more diversified exposure to the defense and aerospace industries
and that offer investors greater growth potential and more earnings
stability.
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 29, 2000, more than
$21 million
MANAGER: Jeff Feingold, since 1998; manager,
Fidelity Select Transportation and Select Air
Transportation Portfolios, since February, 2000;
equity analyst, defense and aerospace industries,
since 1998; joined Fidelity in 1997
DEFENSE AND AEROSPACE PORTFOLIO
INVESTMENTS FEBRUARY 29, 2000
Showing Percentage of Net Assets
COMMON STOCKS - 92.9%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 38.1%
Alliant Techsystems, Inc. (a) 4,500 $ 243,563
BE Aerospace, Inc. (a) 9,300 82,538
BFGoodrich Co. 30,700 734,881
Boeing Co. 29,200 1,076,750
British Aerospace PLC 47,300 234,076
Cordant Technologies, Inc. 46,400 1,502,200
Howmet International, Inc. (a) 24,900 455,981
Lockheed Martin Corp. 11,500 200,531
Northrop Grumman Corp. 13,800 627,038
Primex Technologies, Inc. 5,200 109,200
Rockwell International Corp. 12,900 583,725
United Technologies Corp. 45,200 2,302,371
8,152,854
AIR TRANSPORTATION - 5.5%
AMR Corp. (a) 13,500 713,813
Northwest Airlines Corp. 11,200 193,200
Class A (a)
Southwest Airlines Co. 14,400 265,500
1,172,513
BROADCASTING - 5.9%
EchoStar Communications Corp. 5,600 638,400
Class A (a)
PanAmSat Corp. (a) 12,900 629,681
1,268,081
COMMUNICATIONS EQUIPMENT - 3.4%
Globalstar Telecommunications 19,400 552,900
Ltd. (a)
P-Com, Inc. (a) 9,200 167,900
720,800
COMPUTER SERVICES & SOFTWARE
- - 3.5%
Litton Industries, Inc. (a) 7,700 230,519
MatrixOne, Inc. 100 2,500
Onvia.com, Inc. 100 2,100
Titan Corp. (a) 13,800 517,500
752,619
COMPUTERS & OFFICE EQUIPMENT
- - 0.3%
SBS Technologies, Inc. (a) 1,200 65,325
CONSUMER ELECTRONICS - 4.3%
General Motors Corp. Class H 7,600 915,800
(a)
DEFENSE ELECTRONICS - 2.1%
Anaren Microwave, Inc. (a) 1,200 91,050
Raytheon Co. Class A 12,352 244,724
REMEC, Inc. (a) 3,100 114,313
450,087
SHARES VALUE (NOTE 1)
ELECTRICAL EQUIPMENT - 15.6%
Adaptive Broadband Corp. (a) 5,700 $ 655,678
General Electric Co. 8,500 1,123,594
Harris Corp. 11,300 360,188
Loral Space & Communications 32,200 485,013
Ltd. (a)
Powerwave Technologies, Inc. 3,100 495,613
(a)
Teleflex, Inc. 3,500 98,875
ViaSat, Inc. (a) 1,500 117,000
3,335,961
ELECTRONIC INSTRUMENTS - 1.2%
Newport Corp. 1,600 256,000
ELECTRONICS - 1.9%
Digital Microwave Corp. (a) 12,100 403,838
SHIP BUILDING & REPAIR - 11.1%
General Dynamics Corp. 46,700 2,019,775
Newport News Shipbuilding, 12,800 362,400
Inc.
2,382,175
TOTAL COMMON STOCKS 19,876,053
(Cost $18,968,043)
CASH EQUIVALENTS - 16.0%
Central Cash Collateral Fund, 2,215,400 2,215,400
5.75% (b)
Taxable Central Cash Fund, 1,211,910 1,211,910
5.66% (b)
TOTAL CASH EQUIVALENTS 3,427,310
(Cost $3,427,310)
TOTAL INVESTMENT PORTFOLIO - 23,303,363
108.9%
(Cost $22,395,353)
NET OTHER ASSETS - (8.9)% (1,897,842)
NET ASSETS - 100% $ 21,405,521
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 $47,035,129 and $54,133,386, 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 $6,543 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $2,099,500. The fund
received cash collateral of $2,215,400 which was invested in cash
equivalents.
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 February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $22,710,576. Net unrealized appreciation
aggregated $592,787, of which $2,759,483 related to appreciated
investment securities and $2,166,696 related to depreciated investment
securities.
The fund hereby designates approximately $1,187,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 100% of the dividends during the fiscal year qualifies for
the dividends-received deductions for corporate shareholders
(unaudited).
The fund will notify shareholders in January 2001 of amounts for use
in preparing 2000 income tax returns.
DEFENSE AND AEROSPACE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 23,303,363
value (cost $22,395,353) -
See accompanying schedule
Receivable for investments 703,278
sold
Receivable for fund shares 41,266
sold
Dividends receivable 28,579
Interest receivable 4,511
Redemption fees receivable 138
Other receivables 4,994
TOTAL ASSETS 24,086,129
LIABILITIES
Payable for investments $ 79,739
purchased
Payable for fund shares 346,677
redeemed
Accrued management fee 10,942
Other payables and accrued 27,850
expenses
Collateral on securities 2,215,400
loaned, at value
TOTAL LIABILITIES 2,680,608
NET ASSETS $ 21,405,521
Net Assets consist of:
Paid in capital $ 19,105,544
Accumulated undistributed net 1,391,967
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 908,010
(depreciation) on investments
NET ASSETS, for 622,953 $ 21,405,521
shares outstanding
NET ASSET VALUE and $34.36
redemption price per share
($21,405,521 (divided by)
622,953 shares)
Maximum offering price per $35.42
share (100/97.00 of $34.36)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 323,641
Dividends
Interest 82,691
Security lending 2,849
TOTAL INCOME 409,181
EXPENSES
Management fee $ 202,860
Transfer agent fees 248,725
Accounting and security 60,402
lending fees
Non-interested trustees' 102
compensation
Custodian fees and expenses 12,340
Registration fees 25,114
Audit 11,809
Legal 230
Interest 386
Miscellaneous 41
Total expenses before 562,009
reductions
Expense reductions (7,249) 554,760
NET INVESTMENT INCOME (LOSS) (145,579)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 2,472,758
Foreign currency transactions 1,800 2,474,558
Change in net unrealized (1,520,748)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 953,810
NET INCREASE (DECREASE) IN $ 808,231
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 197,536
charges paid to FDC
Sales charges - Retained by $ 196,989
FDC
Deferred sales charges $ 650
withheld by FDC
Exchange fees withheld by FSC $ 5,649
Expense reductions $ 7,249
Directed brokerage
arrangements
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ (145,579) $ (280,808)
income (loss)
Net realized gain (loss) 2,474,558 3,586,940
Change in net unrealized (1,520,748) (8,328,194)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 808,231 (5,022,062)
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (436,796) -
from net realized gains
Share transactions Net 56,172,571 47,399,132
proceeds from sales of shares
Reinvestment of distributions 420,257 -
Cost of shares redeemed (64,155,432) (115,799,880)
NET INCREASE (DECREASE) IN (7,562,604) (68,400,748)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 99,858 115,021
TOTAL INCREASE (DECREASE) (7,091,311) (73,307,789)
IN NET ASSETS
NET ASSETS
Beginning of period 28,496,832 101,804,621
End of period $ 21,405,521 $ 28,496,832
OTHER INFORMATION
Shares
Sold 1,490,942 1,280,563
Issued in reinvestment of 12,111 -
distributions
Redeemed (1,721,904) (3,148,373)
Net increase (decrease) (218,851) (1,867,810)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 F 1999 1998 1997 1996 F
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 33.85 $ 37.57 $ 28.94 $ 26.97 $ 19.64
period
Income from Investment
Operations
Net investment income (loss) C (.15) (.19) (.29) (.11) (.05)
Net realized and unrealized 1.14 (3.61) 11.84 4.18 9.09
gain (loss)
Total from investment .99 (3.80) 11.55 4.07 9.04
operations
Less Distributions
From net realized gain (.59) - (3.04) (2.17) (1.82)
Redemption fees added to paid .11 .08 .12 .07 .11
in capital
Net asset value, end of period $ 34.36 $ 33.85 $ 37.57 $ 28.94 $ 26.97
TOTAL RETURN A, B 3.24% (9.90)% 42.68% 15.87% 47.40%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 21,406 $ 28,497 $ 101,805 $ 68,803 $ 26,648
(000 omitted)
Ratio of expenses to average 1.61% 1.48% 1.77% 1.84% 1.77% D
net assets
Ratio of expenses to average 1.59% E 1.42% E 1.71% E 1.81% E 1.75% E
net assets after expense
reductions
Ratio of net investment (.42)% (.53)% (.85)% (.39)% (.20)%
income (loss) to average net
assets
Portfolio turnover rate 146% 221% 311% 219% 267%
</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
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 29, 2000 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SELECT ENVIRONMENTAL SERVICES -25.00% -1.30% 0.25%
SELECT ENVIRONMENTAL SERVICES -27.32% -4.33% -2.83%
(LOAD ADJ.)
S&P 500 11.73% 206.94% 425.47%
GS Cyclical Industries -7.75% 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 246 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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT ENVIRONMENTAL SERVICES -25.00% -0.26% 0.02%
SELECT ENVIRONMENTAL SERVICES -27.32% -0.88% -0.29%
(LOAD ADJ.)
S&P 500 11.73% 25.14% 18.05%
GS Cyclical Industries -7.75% 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
1990/02/28 9700.00 10000.00
1990/03/31 10119.03 10265.00
1990/04/30 10172.52 10008.38
1990/05/31 11117.56 10984.19
1990/06/30 11465.26 10909.50
1990/07/31 11393.93 10874.59
1990/08/31 9976.38 9891.53
1990/09/30 9441.45 9409.81
1990/10/31 9307.72 9369.35
1990/11/30 9628.68 9974.61
1990/12/31 10181.43 10252.90
1991/01/31 11072.98 10699.92
1991/02/28 11581.16 11464.97
1991/03/31 11581.16 11742.42
1991/04/30 11545.50 11770.60
1991/05/31 11572.24 12279.09
1991/06/30 10698.53 11716.71
1991/07/31 11037.32 12262.71
1991/08/31 11233.46 12553.34
1991/09/30 10965.99 12343.69
1991/10/31 10555.88 12509.10
1991/11/30 9976.38 12004.98
1991/12/31 10961.51 13378.35
1992/01/31 11942.86 13129.52
1992/02/29 12072.47 13300.20
1992/03/31 10868.93 13040.85
1992/04/30 10544.90 13424.25
1992/05/31 10276.41 13490.03
1992/06/30 9726.95 13289.02
1992/07/31 9794.10 13832.55
1992/08/31 9592.66 13548.98
1992/09/30 9707.77 13708.86
1992/10/31 10168.22 13756.84
1992/11/30 10801.33 14225.94
1992/12/31 10810.92 14400.92
1993/01/31 11021.96 14521.89
1993/02/28 10897.26 14719.39
1993/03/31 10628.66 15029.97
1993/04/30 10408.03 14666.24
1993/05/31 10638.26 15059.30
1993/06/30 10503.96 15102.97
1993/07/31 10062.70 15042.56
1993/08/31 10599.89 15612.67
1993/09/30 10609.48 15492.45
1993/10/31 10906.85 15813.15
1993/11/30 10427.22 15662.92
1993/12/31 10743.78 15852.44
1994/01/31 11655.08 16391.43
1994/02/28 11444.04 15947.22
1994/03/31 10408.03 15251.92
1994/04/30 10580.70 15447.15
1994/05/31 10551.92 15700.48
1994/06/30 9918.81 15315.82
1994/07/31 10129.85 15818.18
1994/08/31 10484.77 16466.72
1994/09/30 10417.63 16063.29
1994/10/31 10062.70 16424.71
1994/11/30 9496.73 15826.52
1994/12/31 9717.36 16061.23
1995/01/31 9726.95 16477.70
1995/02/28 9851.66 17119.83
1995/03/31 10321.70 17625.04
1995/04/30 11060.33 18144.10
1995/05/31 11233.00 18869.32
1995/06/30 11693.45 19307.65
1995/07/31 12134.71 19947.89
1995/08/31 12307.38 19997.96
1995/09/30 12739.05 20841.88
1995/10/31 11837.34 20767.47
1995/11/30 12249.82 21679.16
1995/12/31 12256.58 22096.70
1996/01/31 12681.32 22848.87
1996/02/29 12559.96 23060.68
1996/03/31 13116.16 23282.76
1996/04/30 13551.65 23625.95
1996/05/31 14594.86 24235.26
1996/06/30 14331.52 24327.60
1996/07/31 12680.61 23252.80
1996/08/31 13480.75 23743.20
1996/09/30 13966.91 25079.47
1996/10/31 13825.11 25771.16
1996/11/30 14199.86 27719.21
1996/12/31 14169.47 27170.09
1997/01/31 15050.63 28867.68
1997/02/28 14686.01 29094.00
1997/03/31 13855.50 27898.53
1997/04/30 13774.47 29564.07
1997/05/31 14716.40 31363.93
1997/06/30 15536.79 32769.03
1997/07/31 15931.79 35376.46
1997/08/31 16144.49 33394.67
1997/09/30 17268.73 35223.70
1997/10/31 16012.82 34047.23
1997/11/30 15972.31 35623.28
1997/12/31 16701.54 36234.93
1998/01/31 15587.43 36635.68
1998/02/28 16671.16 39277.85
1998/03/31 17532.06 41289.27
1998/04/30 17815.66 41704.64
1998/05/31 16812.96 40987.74
1998/06/30 16458.47 42652.66
1998/07/31 15131.66 42198.41
1998/08/31 12174.20 36097.36
1998/09/30 13237.67 38409.76
1998/10/31 13521.26 41534.01
1998/11/30 12852.80 44051.38
1998/12/31 13868.36 46589.63
1999/01/31 13705.92 48538.00
1999/02/28 12964.79 47029.44
1999/03/31 12650.06 48911.09
1999/04/30 14347.15 50805.42
1999/05/31 14489.40 49605.90
1999/06/30 15373.40 52359.03
1999/07/31 13585.08 50724.38
1999/08/31 11542.75 50473.29
1999/09/30 10668.91 49089.82
1999/10/31 9977.98 52196.23
1999/11/30 9723.95 53257.37
1999/12/31 10282.80 56394.23
2000/01/31 10120.23 53560.99
2000/02/29 9717.00 52547.08
IMATRL PRASUN SHR__CHT 20000229 20000309 111757 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Environmental Services Portfolio on
February 28, 1990, and the current 3.00% sales charge was paid. As the
chart shows, by February 29, 2000, the value of the investment would
have been $9,717 - a 2.83% 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 $52,547 - a 425.47% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
Thermo Electron Corp. 9.1
Tetra Tech, Inc. 6.4
Newpark Resources, Inc. 6.0
Thermo Instrument Systems, Inc. 5.7
Republic Services, Inc. Class A 5.5
Waste Management, Inc. 5.0
Thermo Fibertek, Inc. 5.0
Insituform Technologies, Inc. 4.9
Class A
Catalytica, Inc. 4.7
Azurix Corp. 4.5
56.8
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Pollution Control 49.5% Row: 1, Col: 6, Value: 49.5
Electronic Instruments 15.7% Row: 1, Col: 5, Value: 15.7
Industrial Machinery &
Equipment 9.4% Row: 1, Col: 4, Value: 9.4
Retail & Wholesale,
Miscellaneous 6.0% Row: 1, Col: 3, Value: 6.0
Drugs & Pharmaceuticals 4.7% Row: 1, Col: 2, Value: 4.7
*All Others 14.7% Row: 1, Col: 1, Value: 14.7
</TABLE>
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
ENVIRONMENTAL SERVICES PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Ian Gutterman)
NOTE TO SHAREHOLDERS: Ian Gutterman became Portfolio Manager of
Fidelity Select Environmental Services Portfolio on November 1, 1999.
Q. HOW DID THE FUND PERFORM, IAN?
A. It continued to be a challenging environment for the sector. For
the 12 months that ended February 29, 2000, the fund declined 25.00%.
This trailed both the Standard & Poor's 500 Index, which returned
11.73% during the period, and the Goldman Sachs Cyclical Industries
Index, which returned -7.75%. The Goldman Sachs index is an index of
246 stocks designed to measure the performance of companies in the
cyclical industries sector.
Q. WHAT WERE THE MAIN FACTORS THAT HINDERED PERFORMANCE?
A. Solid waste stocks - which make up a significant portion of the
sector - continued to spiral downward. This was mostly due to a
less-than-smooth adjustment period following a series of mergers and
acquisitions throughout the group, and ultimately resulted in missed
earnings targets for three of the biggest waste players: Waste
Management, Allied Waste and Republic Services. Besides missed
earnings, Allied Waste struggled to mesh its various businesses
following its merger with Browning-Ferris Industries. Republic
Services, meanwhile, experienced similar execution problems with
assets that it purchased from Waste Management. This negative cycle
simply wasn't conducive to good performance for the fund's solid-waste
stocks.
Q. HOW DID HAZARDOUS WASTE AND WATER-UTILITY STOCKS PERFORM DURING THE
PERIOD?
A. I pared back on the fund's hazardous waste stocks, mostly because
continued fallout from supply/demand imbalances resulted in flat to
low earnings for many companies in this area. Throughout the period,
this group was challenged by too much capacity - in the form of
incinerators - and not enough demand. It also didn't help that one of
the more prominent members of the group, Safety-Kleen, experienced
accounting problems. On the whole, water-utility stock performance
also was subpar. Similar to the solid waste situation, the problems
for water stocks stemmed from slow progress following consolidation
activity, particularly deals involving foreign firms such as France's
Vivendi and Suez Lyonnaise.
Q. THE FUND'S TOP HOLDING AT THE END OF THE PERIOD, THERMO ELECTRON,
UNDERWENT A BUSINESS FACELIFT DURING THE PERIOD . . .
A. Yes, and for the better. Thermo Electron announced it would
streamline its overall structure by either divesting or incorporating
several of its subsidiary businesses. The company is a leading
manufacturer of measurement instruments that monitor, collect and
analyze information for a broad range of industries. Going forward,
Thermo Electron's new management has made the decision to integrate,
sell or spin out each subsidiary business, two of which include
separate stocks Thermo Instruments and Thermo Fibertek. The market has
viewed this simplified structure in a positive vein. At the close of
the period, Thermo Electron and Thermo Instruments were among the
fund's top-five holdings.
Q. WERE THERE ANY OTHER STOCKS THAT PERFORMED WELL? ANY ADDITIONAL
DISAPPOINTMENTS?
A. Water-utility stock Tetra Tech performed well, mostly because the
company had additional exposure to the telecommunications market. This
sideline business gave the company's stock a good performance boost.
Insituform Technologies - a market leader in repairing sewer pipes due
to its less-evasive techniques - managed to beat earnings expectations
throughout the period and also performed well. On the negative side,
the fund's stakes in water-utility owner Azurix and waste-to-energy
stock Ogden Corp. were disappointments.
Q. WHAT'S THE OUTLOOK FOR THE FUND AND THE SECTOR GOING FORWARD?
A. The near-term outlook for solid waste stocks will be key. Waste
stocks need to show the market that they're capable of generating
positive earnings and free cash flow. In terms of the portfolio
itself, I'll continue to look for stocks that have exposure to
faster-growing segments of the market.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET 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 29, 2000, more than
$17 million
MANAGER: Ian Gutterman, since November
1999; analyst, air freight and waste
industries, 1999-present; joined Fidelity in
1999
ENVIRONMENTAL SERVICES PORTFOLIO
INVESTMENTS FEBRUARY 29, 2000
Showing Percentage of Net Assets
COMMON STOCKS - 92.3%
SHARES VALUE (NOTE 1)
DRUGS & PHARMACEUTICALS - 4.7%
Catalytica, Inc. (a) 64,400 $ 829,150
ELECTRONIC INSTRUMENTS - 15.7%
Thermo Electron Corp. (a) 101,650 1,588,280
Thermo Instrument Systems, 62,600 1,005,513
Inc. (a)
Thermoquest Corp. (a) 9,700 160,050
2,753,843
INDUSTRIAL MACHINERY &
EQUIPMENT - 9.4%
Ionics, Inc. (a) 27,400 780,900
Thermo Fibertek, Inc. (a) 122,200 870,675
1,651,575
METALS & MINING - 2.5%
IMCO Recycling, Inc. 43,800 435,263
POLLUTION CONTROL - 49.5%
Allied Waste Industries, Inc. 109,060 613,462
(a)
Calgon Carbon Corp. 78,400 563,500
Casella Waste Systems, Inc. 69,505 475,675
Class A (a)
Insituform Technologies, Inc. 30,500 861,625
Class A (a)
IT Group, Inc. (a) 61,400 468,175
Ogden Corp. 68,400 778,050
Republic Services, Inc. Class 88,300 960,263
A (a)
Safety-Kleen Corp. (a) 93,450 455,569
Tetra Tech, Inc. (a) 44,637 1,118,715
TETRA Technologies, Inc. (a) 36,700 330,300
U.S. Liquids, Inc. (a) 21,700 135,625
Waste Connections, Inc. (a) 60,100 638,563
Waste Industries, Inc. (a) 37,900 400,319
Waste Management, Inc. 58,893 883,395
8,683,236
RETAIL & WHOLESALE,
MISCELLANEOUS - 6.0%
Newpark Resources, Inc. (a) 134,100 1,047,656
WATER - 4.5%
Azurix Corp. 106,700 800,250
TOTAL COMMON STOCKS 16,200,973
(Cost $22,641,354)
CASH EQUIVALENTS - 6.5%
Taxable Central Cash Fund, 1,143,666 1,143,666
5.66% (b) (Cost $1,143,666)
TOTAL INVESTMENT PORTFOLIO - 17,344,639
98.8%
(Cost $23,785,020)
NET OTHER ASSETS - 1.2% 208,500
NET ASSETS - 100% $ 17,553,139
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 $37,005,925 and $31,429,882, respectively.
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%.
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 $15,874 for the
period.
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $24,529,145. Net unrealized depreciation
aggregated $7,184,506, of which $796,922 related to appreciated
investment securities and $7,981,428 related to depreciated investment
securities.
The fund hereby designates approximately $12,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
At February 29, 2000, the fund had a capital loss carryforward of
approximately $635,000 all of which will expire on February 29, 2008.
ENVIRONMENTAL SERVICES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 17,344,639
value (cost $23,785,020) -
See accompanying schedule
Receivable for investments 835,864
sold
Receivable for fund shares 153,675
sold
Interest receivable 5,420
Redemption fees receivable 848
Other receivables 39,790
TOTAL ASSETS 18,380,236
LIABILITIES
Payable for investments $ 259,423
purchased
Payable for fund shares 525,468
redeemed
Accrued management fee 13,191
Other payables and accrued 29,015
expenses
TOTAL LIABILITIES 827,097
NET ASSETS $ 17,553,139
Net Assets consist of:
Paid in capital $ 25,572,577
Accumulated undistributed net (1,579,057)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (6,440,381)
(depreciation) on investments
NET ASSETS, for 1,834,014 $ 17,553,139
shares outstanding
NET ASSET VALUE and $9.57
redemption price per share
($17,553,139 (divided by)
1,834,014 shares)
Maximum offering price per $9.87
share (100/97.00 of $9.57)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 42,344
Dividends
Interest 58,501
Security lending 118
TOTAL INCOME 100,963
EXPENSES
Management fee $ 92,828
Transfer agent fees 198,679
Accounting and security 60,321
lending fees
Custodian fees and expenses 10,420
Registration fees 19,598
Audit 11,317
Legal 90
Interest 1,833
Total expenses before 395,086
reductions
Expense reductions (12,560) 382,526
NET INVESTMENT INCOME (LOSS) (281,563)
REALIZED AND UNREALIZED GAIN (576,637)
(LOSS)
Net realized gain (loss) on
investment securities
Change in net unrealized (3,731,086)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) (4,307,723)
NET INCREASE (DECREASE) IN $ (4,589,286)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 66,627
charges paid to FDC
Sales charges - Retained by $ 64,068
FDC
Deferred sales charges $ 9,071
withheld by FDC
Exchange fees withheld by FSC $ 5,049
Expense reductions
Directed brokerage $ 12,560
arrangements
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ (281,563) $ (256,748)
income (loss)
Net realized gain (loss) (576,637) (474,214)
Change in net unrealized (3,731,086) (4,374,725)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (4,589,286) (5,105,687)
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (11,275) (40,246)
in excess of net realized
gain
Share transactions Net 36,121,444 10,454,030
proceeds from sales of shares
Reinvestment of distributions 10,778 38,642
Cost of shares redeemed (29,576,762) (15,030,447)
NET INCREASE (DECREASE) IN 6,555,460 (4,537,775)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 64,679 34,045
TOTAL INCREASE (DECREASE) 2,019,578 (9,649,663)
IN NET ASSETS
NET ASSETS
Beginning of period 15,533,561 25,183,224
End of period $ 17,553,139 $ 15,533,561
OTHER INFORMATION
Shares
Sold 2,977,437 712,286
Issued in reinvestment of 885 3,084
distributions
Redeemed (2,361,044) (1,028,657)
Net increase (decrease) 617,278 (313,287)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 E 1999 1998 1997 1996 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 12.77 $ 16.46 $ 14.50 $ 12.42 $ 10.27
period
Income from Investment
Operations
Net investment income (loss) C (.21) (.18) (.13) (.08) (.17)
Net realized and unrealized (3.03) (3.50) 2.07 2.04 2.95
gain (loss)
Total from investment (3.24) (3.68) 1.94 1.96 2.78
operations
Less Distributions
From net realized gain - - - - (.65)
In excess of net realized gain (.01) (.03) - (.02) -
Total distributions (.01) (.03) - (.02) (.65)
Redemption fees added to paid .05 .02 .02 .14 .02
in capital
Net asset value, end of period $ 9.57 $ 12.77 $ 16.46 $ 14.50 $ 12.42
TOTAL RETURN A, B (25.00)% (22.23)% 13.52% 16.93% 27.49%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 17,553 $ 15,534 $ 25,183 $ 32,525 $ 27,587
(000 omitted)
Ratio of expenses to average 2.47% 2.20% 2.23% 2.18% 2.36%
net assets
Ratio of expenses to average 2.39% D 2.16% D 2.22% D 2.11% D 2.32% D
net assets after expense
reductions
Ratio of net investment (1.76)% (1.23)% (.84)% (.59)% (1.43)%
income (loss) to average net
assets
Portfolio turnover rate 206% 123% 59% 252% 138%
</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 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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT INDUSTRIAL EQUIPMENT 18.98% 144.56% 334.92%
SELECT INDUSTRIAL EQUIPMENT 15.34% 137.15% 321.80%
(LOAD ADJ.)
S&P 500 11.73% 206.94% 425.47%
GS Cyclical Industries -7.75% 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 246 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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT INDUSTRIAL EQUIPMENT 18.98% 19.59% 15.84%
SELECT INDUSTRIAL EQUIPMENT 15.34% 18.85% 15.48%
(LOAD ADJ.)
S&P 500 11.73% 25.14% 18.05%
GS Cyclical Industries -7.75% 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
1990/02/28 9700.00 10000.00
1990/03/31 10274.94 10265.00
1990/04/30 10192.80 10008.38
1990/05/31 11137.34 10984.19
1990/06/30 10939.39 10909.50
1990/07/31 10732.68 10874.59
1990/08/31 8963.19 9891.53
1990/09/30 7747.70 9409.81
1990/10/31 7540.99 9369.35
1990/11/30 7789.05 9974.61
1990/12/31 8070.18 10252.90
1991/01/31 8930.12 10699.92
1991/02/28 9773.52 11464.97
1991/03/31 9690.83 11742.42
1991/04/30 9591.61 11770.60
1991/05/31 9996.77 12279.09
1991/06/30 9674.04 11716.71
1991/07/31 9756.79 12262.71
1991/08/31 9905.75 12553.34
1991/09/30 10137.47 12343.69
1991/10/31 10079.54 12509.10
1991/11/30 9599.56 12004.98
1991/12/31 10236.25 13378.35
1992/01/31 11154.67 13129.52
1992/02/29 11947.85 13300.20
1992/03/31 11597.18 13040.85
1992/04/30 11597.18 13424.25
1992/05/31 11689.03 13490.03
1992/06/30 10970.99 13289.02
1992/07/31 11071.18 13832.55
1992/08/31 10495.08 13548.98
1992/09/30 10712.16 13708.86
1992/10/31 10670.41 13756.84
1992/11/30 11179.72 14225.94
1992/12/31 11396.80 14400.92
1993/01/31 11931.16 14521.89
1993/02/28 12557.35 14719.39
1993/03/31 12782.78 15029.97
1993/04/30 13367.62 14666.24
1993/05/31 14036.00 15059.30
1993/06/30 14219.81 15102.97
1993/07/31 14420.32 15042.56
1993/08/31 15406.19 15612.67
1993/09/30 15230.74 15492.45
1993/10/31 15740.38 15813.15
1993/11/30 15723.67 15662.92
1993/12/31 16334.91 15852.44
1994/01/31 17103.01 16391.43
1994/02/28 17589.47 15947.22
1994/03/31 16573.88 15251.92
1994/04/30 16423.87 15447.15
1994/05/31 16088.16 15700.48
1994/06/30 15261.80 15315.82
1994/07/31 15984.87 15818.18
1994/08/31 17121.11 16466.72
1994/09/30 17172.76 16063.29
1994/10/31 17387.95 16424.71
1994/11/30 16544.38 15826.52
1994/12/31 16845.66 16061.23
1995/01/31 16750.97 16477.70
1995/02/28 17250.23 17119.83
1995/03/31 18679.14 17625.04
1995/04/30 19557.37 18144.10
1995/05/31 19953.51 18869.32
1995/06/30 20711.35 19307.65
1995/07/31 22657.61 19947.89
1995/08/31 22218.41 19997.96
1995/09/30 21202.22 20841.88
1995/10/31 21159.16 20767.47
1995/11/30 21882.55 21679.16
1995/12/31 21531.13 22096.70
1996/01/31 22396.13 22848.87
1996/02/29 23609.02 23060.68
1996/03/31 23778.26 23282.76
1996/04/30 24215.14 23625.95
1996/05/31 24391.10 24235.26
1996/06/30 24283.57 24327.60
1996/07/31 23071.34 23252.80
1996/08/31 24068.50 23743.20
1996/09/30 25212.29 25079.47
1996/10/31 25055.87 25771.16
1996/11/30 27089.28 27719.21
1996/12/31 27282.18 27170.09
1997/01/31 28256.16 28867.68
1997/02/28 27916.91 29094.00
1997/03/31 26789.72 27898.53
1997/04/30 27766.47 29564.07
1997/05/31 30232.49 31363.93
1997/06/30 32117.58 32769.03
1997/07/31 34429.47 35376.46
1997/08/31 34216.07 33394.67
1997/09/30 35117.11 35223.70
1997/10/31 32378.40 34047.23
1997/11/30 32319.13 35623.28
1997/12/31 32342.84 36234.93
1998/01/31 31760.21 36635.68
1998/02/28 35106.95 39277.85
1998/03/31 37518.78 41289.27
1998/04/30 38467.25 41704.64
1998/05/31 37112.29 40987.74
1998/06/30 36963.24 42652.66
1998/07/31 35621.83 42198.41
1998/08/31 29619.37 36097.36
1998/09/30 30513.64 38409.76
1998/10/31 33860.39 41534.01
1998/11/30 35093.40 44051.38
1998/12/31 36440.57 46589.63
1999/01/31 36791.91 48538.00
1999/02/28 35456.83 47029.44
1999/03/31 35906.54 48911.09
1999/04/30 41170.31 50805.42
1999/05/31 40693.10 49605.90
1999/06/30 43050.24 52359.03
1999/07/31 42428.42 50724.38
1999/08/31 41748.75 50473.29
1999/09/30 41242.62 49089.82
1999/10/31 39087.94 52196.23
1999/11/30 39579.61 53257.37
1999/12/31 42778.88 56394.23
2000/01/31 40715.90 53560.99
2000/02/29 42180.00 52547.08
IMATRL PRASUN SHR__CHT 20000229 20000323 092329 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Industrial Equipment Portfolio on February
28, 1990, and the current 3.00% sales charge was paid. As the chart
shows, by February 29, 2000, the value of the investment would have
grown to $42,180 - a 321.80% 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 $52,547 - a 425.47% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
Applied Materials, Inc. 8.1
Tyco International Ltd. 6.5
Pitney Bowes, Inc. 6.0
General Electric Co. 5.1
Emerson Electric Co. 4.6
Honeywell International, Inc. 4.4
Illinois Tool Works, Inc. 4.0
Caterpillar, Inc. 3.9
Ingersoll-Rand Co. 3.9
Vodafone AirTouch PLC 3.5
50.0
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Industrial Machinery
& Equipment 20.5% Row: 1, Col: 6, Value: 20.5
Electronic Instruments 20.0% Row: 1, Col: 5, Value: 20.0
Electrical Equipment 14.4% Row: 1, Col: 4, Value: 14.4
Aerospace & Defense 9.4% Row: 1, Col: 3, Value: 9.4
Computers &
Office Equipment 8.1% Row: 1, Col: 2, Value: 8.1
*All Others 27.6% Row: 1, Col: 1, Value: 27.6
</TABLE>
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
INDUSTRIAL EQUIPMENT PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Praveen Abichandani)
NOTE TO SHAREHOLDERS: Praveen Abichandani became Portfolio Manager of
Fidelity Select Industrial Equipment Portfolio on January 4, 2000.
Q. HOW DID THE FUND PERFORM, PRAVEEN?
A. For the 12 months that ended on February 29, 2000, the fund had a
total return of 18.98%, while the Goldman Sachs Cyclical Industries
Index - an index of 246 stocks designed to measure the performance of
companies in the cyclical industries sector - returned -7.75%. During
the same 12-month period, the Standard & Poor's 500 Index, a measure
of the broader market's performance,
had a return of 11.73%.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S STRONG PERFORMANCE?
A. Several different factors influenced performance. Early in the
period, in the spring of 1999, the fund benefited from a snap-back in
cyclical industry stocks as emerging markets started to rally,
signaling an expansion in global economic growth. This recovery in
cyclical industry stocks continued through June. In the fall, fears
about potential Y2K computer problems started to recede and a strong
rally began in technology stocks, sparked by favorable earnings
reports and the long-range growth potential in networking and
telecommunications. This technology rally lifted the prices of
semiconductor capital equipment stocks in which the fund had a
meaningful position and helped the fund's performance even as many
other cyclical stocks faltered. Finally, strengthening commodity
prices, including higher oil prices, increased demand for companies
serving industries such as oil services. However, despite the strong
performance in some industry groups, stocks of many high quality
companies continued to trade at very low prices because of fears that
rising interest rates would slow economic growth significantly.
Q. WHAT HAVE BEEN YOUR PRINCIPAL STRATEGIES SINCE BECOMING THE FUND'S
MANAGER IN JANUARY?
A. I have maintained a focus on high-quality companies with strong
fundamentals, irrespective of top-down, macroeconomic trends. I've
overweighted companies such as Caterpillar, Parker Hannifin,
Pitney-Bowes and Ingersoll Rand that have been trading at
recessionary-level valuations. At the same time, I continued to
emphasize semiconductor equipment companies such as Applied Materials,
KLA Tencor, Kulicke & Soffa and Teradyne, where earnings expectations
are rising. I believe that the proliferation of semiconductor chips in
cars, home appliances and other everyday products signals an important
trend that is more secular than cyclical. Taking advantage of
developments in genomics, I also invested in equipment companies such
as Millipore, which provides test equipment for the biotechnology
industry. In addition, I have increased opportunistically the fund's
emphasis on telecommunications equipment companies such as Ilumnet and
Emerson Electronics, which is re-positioning itself. In general, I
favor companies with strong management teams that can meet or exceed
earnings expectations. I prefer companies with value-added products
that can't be treated as commodities, even in a deflationary economy.
Q. WHAT STOCKS WERE THE BIGGEST CONTRIBUTORS TO PERFORMANCE, AND WHAT
STOCKS WERE THE MOST DISAPPOINTING?
A. Semiconductor capital equipment companies had the largest positive
influence on fund performance, with Applied Materials the single
biggest contributor. General Electric also was a significant
contributor. The company continued to deliver strong earnings growth
as it successfully implemented its multi-line business strategy.
General Electric has positioned itself very well to take advantage of
opportunities in the new technology-based economy. Another contributor
was Honeywell, whose stock rose in value as it merged with
Allied-Signal. Xerox was the single biggest detractor from
performance. The company had disappointing earnings as it continued to
lose market share in office automation. In general, small-cap and
mid-cap industrials did not perform well, as the market preferred
technology stocks.
Q. WHAT IS YOUR OUTLOOK?
A. Three themes dominate my current thinking. First, while I am not
hung up on the new economy trend, I will invest in networking
equipment manufacturing companies that have good earnings growth
potential. Second, I see potential opportunity in high-quality
companies that have not participated in recent stock rallies and,
consequently, have very low stock valuations that already discount the
possibility the economy might suffer a hard landing. If the economy
were to have a soft landing, these stocks could offer attractive
opportunities. Third, I believe valuations of agriculture equipment
stocks are at very low levels, reflecting low grain prices. They also
may offer an 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 A- 3.
(checkmark)FUND FACTS
START DATE: September 29, 1986
FUND NUMBER: 510
TRADING SYMBOL: FSCGX
SIZE: as of February 29, 2000, more than
$26 million
MANAGER: Praveen Abichandani, since
January 2000; equity analyst, cable services
and equipment, 1998-2000; joined Fidelity
in 1998
INDUSTRIAL EQUIPMENT PORTFOLIO
INVESTMENTS FEBRUARY 29, 2000
Showing Percentage of Net Assets
COMMON STOCKS - 100.0%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 9.4%
Honeywell International, Inc. 24,025 $ 1,156,203
Rockwell International Corp. 14,400 651,600
Textron, Inc. 10,700 652,700
2,460,503
BUILDING MATERIALS - 1.0%
American Standard Companies, 6,200 216,225
Inc. (a)
York International Corp. 2,500 45,313
261,538
CELLULAR - 3.5%
Vodafone AirTouch PLC 159,204 918,408
COMMUNICATIONS EQUIPMENT - 1.6%
NEC Corp. ADR 3,800 428,925
COMPUTER SERVICES & SOFTWARE
- - 1.4%
Electronics for Imaging, Inc. 6,000 356,250
(a)
MatrixOne, Inc. 100 2,500
Onvia.com, Inc. 100 2,100
360,850
COMPUTERS & OFFICE EQUIPMENT
- - 8.1%
Pitney Bowes, Inc. 31,600 1,564,200
Xerox Corp. 25,000 542,188
2,106,388
CONSUMER ELECTRONICS - 1.8%
Matsushita Electric 1,600 470,300
Industrial Co. Ltd. ADR
ELECTRICAL EQUIPMENT - 14.4%
Emerson Electric Co. 26,100 1,189,181
General Electric Co. 10,050 1,328,484
Hubbell, Inc. Class B 4,000 97,250
Roper Industries, Inc. 9,000 245,250
Siemens AG sponsored ADR 5,000 887,500
W.W. Grainger, Inc. 300 12,844
3,760,509
ELECTRONIC INSTRUMENTS - 20.0%
Applied Materials, Inc. (a) 11,500 2,103,776
KLA-Tencor Corp. (a) 9,200 717,025
Kulicke & Soffa Industries, 9,500 755,250
Inc. (a)
LAM Research Corp. (a) 2,595 405,144
Novellus Systems, Inc. (a) 6,000 355,875
Teradyne, Inc. (a) 10,100 878,700
5,215,770
ELECTRONICS - 6.5%
Tyco International Ltd. 44,600 1,692,013
SHARES VALUE (NOTE 1)
ENERGY SERVICES - 6.6%
Baker Hughes, Inc. 4,100 $ 106,088
Halliburton Co. 18,800 717,925
Smith International, Inc. (a) 3,400 213,138
Weatherford International, 15,200 684,000
Inc. (a)
1,721,151
INDUSTRIAL MACHINERY &
EQUIPMENT - 20.5%
AGCO Corp. 3,600 39,600
Caterpillar, Inc. 29,200 1,023,825
CNH Global NV 14,800 163,725
Deere & Co. 14,300 511,225
Dover Corp. 9,800 377,913
Illinois Tool Works, Inc. 20,100 1,038,919
Ingersoll-Rand Co. 26,600 1,019,113
Milacron, Inc. 7,300 101,288
MSC Industrial Direct, Inc. 23,700 370,313
(a)
Pall Corp. 10,800 213,300
Parker-Hannifin Corp. 13,700 496,625
5,355,846
LEASING & RENTAL - 0.2%
Avis Rent A Car, Inc. (a) 3,600 52,425
MEDICAL EQUIPMENT & SUPPLIES
- - 2.4%
Millipore Corp. 11,700 625,219
PAPER & FOREST PRODUCTS - 0.0%
Trex Co., Inc. 1 25
RETAIL & WHOLESALE,
MISCELLANEOUS - 0.2%
Stamps.com, Inc. 1,800 50,963
SERVICES - 1.3%
Ritchie Bros. Auctioneers, 12,500 350,781
Inc. (a)
TELEPHONE SERVICES - 1.1%
Illuminet Holdings, Inc. 3,750 277,500
TOTAL COMMON STOCKS 26,109,114
(Cost $19,346,113)
CASH EQUIVALENTS - 4.1%
Central Cash Collateral Fund, 1,076,700 1,076,700
5.75% (b) (Cost $1,076,700)
TOTAL INVESTMENT PORTFOLIO - 27,185,814
104.1%
(Cost $20,422,813)
NET OTHER ASSETS - (4.1)% (1,068,670)
NET ASSETS - 100% $ 26,117,144
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 $38,454,094 and $47,784,091, 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 $4,565 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $1,020,319. The fund
received cash collateral of $1,076,700 which was invested in cash
equivalents.
The fund participated in the bank borrowing program. The average daily
loan balance during the period for which loans were outstanding
amounted to $5,970,000. The weighted average interest rate was 5.29%.
Distribution of investments by country of issue, as a percentage of
net assets, is as follows:
United States of America 87.8%
United Kingdom 3.5
Japan 3.4
Germany 3.4
Canada 1.3
Others (individually less 0.6
than 1%)
100.0%
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $20,512,458. Net unrealized appreciation
aggregated $6,673,356, of which $8,834,715 related to appreciated
investment securities and $2,161,359 related to depreciated investment
securities.
The fund hereby designates approximately $3,978,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 31% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2001 of amounts for use
in preparing 2000 income tax returns.
INDUSTRIAL EQUIPMENT PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 27,185,814
value (cost $20,422,813) -
See accompanying schedule
Receivable for investments 201,263
sold
Receivable for fund shares 24,635
sold
Dividends receivable 43,438
Interest receivable 194
Redemption fees receivable 83
Other receivables 8,529
TOTAL ASSETS 27,463,956
LIABILITIES
Payable to custodian bank $ 27,769
Payable for investments 26,700
purchased
Payable for fund shares 177,862
redeemed
Accrued management fee 12,762
Other payables and accrued 25,019
expenses
Collateral on securities 1,076,700
loaned, at value
TOTAL LIABILITIES 1,346,812
NET ASSETS $ 26,117,144
Net Assets consist of:
Paid in capital $ 17,223,019
Undistributed net investment 11,392
income
Accumulated undistributed net 2,119,732
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 6,763,001
(depreciation) on investments
NET ASSETS, for 990,004 $ 26,117,144
shares outstanding
NET ASSET VALUE and $26.38
redemption price per share
($26,117,144 (divided by)
990,004 shares)
Maximum offering price per $27.20
share (100/97.00 of $26.38)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 380,871
Dividends
Interest 138,598
Security lending 2,244
TOTAL INCOME 521,713
EXPENSES
Management fee $ 204,936
Transfer agent fees 190,044
Accounting and security 60,399
lending fees
Non-interested trustees' 104
compensation
Custodian fees and expenses 11,155
Registration fees 21,908
Audit 11,784
Legal 157
Interest 3,507
Total expenses before 503,994
reductions
Expense reductions (4,121) 499,873
NET INVESTMENT INCOME 21,840
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 4,990,376
Foreign currency transactions 516 4,990,892
Change in net unrealized 629,706
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 5,620,598
NET INCREASE (DECREASE) IN $ 5,642,438
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 48,861
charges paid to FDC
Sales charges - Retained by $ 48,861
FDC
Deferred sales charges $ 999
withheld by FDC
Exchange fees withheld by FSC $ 2,919
Expense reductions Directed $ 4,121
brokerage arrangements
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ 21,840 $ (69,481)
income (loss)
Net realized gain (loss) 4,990,892 3,586,120
Change in net unrealized 629,706 (3,320,873)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 5,642,438 195,766
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (10,963) -
From net investment income
From net realized gain (3,692,055) (1,273,263)
TOTAL DISTRIBUTIONS (3,703,018) (1,273,263)
Share transactions Net 27,153,867 20,888,073
proceeds from sales of shares
Reinvestment of distributions 3,534,052 1,219,714
Cost of shares redeemed (38,134,454) (39,935,425)
NET INCREASE (DECREASE) IN (7,446,535) (17,827,638)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 51,097 50,582
TOTAL INCREASE (DECREASE) (5,456,018) (18,854,553)
IN NET ASSETS
NET ASSETS
Beginning of period 31,573,162 50,427,715
End of period (including $ 26,117,144 $ 31,573,162
undistributed net investment
income of $11,392 and $0,
respectively)
OTHER INFORMATION
Shares
Sold 949,014 771,299
Issued in reinvestment of 142,239 49,301
distributions
Redeemed (1,352,644) (1,515,112)
Net increase (decrease) (261,391) (694,512)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 E 1999 1998 1997 1996 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 25.23 $ 25.91 $ 25.51 $ 25.11 $ 20.04
period
Income from Investment
Operations
Net investment income (loss) C .02 (.04) (.08) .06 .04
Net realized and unrealized 4.44 .25 5.73 4.15 7.10
gain (loss)
Total from investment 4.46 .21 5.65 4.21 7.14
operations
Less Distributions
From net investment income (.01) - (.02) (.04) (.05)
From net realized gain (3.34) (.92) (5.26) (3.84) (2.05)
Total distributions (3.35) (.92) (5.28) (3.88) (2.10)
Redemption fees added to paid .04 .03 .03 .07 .03
in capital
Net asset value, end of period $ 26.38 $ 25.23 $ 25.91 $ 25.51 $ 25.11
TOTAL RETURN A, B 18.98% 1.00% 25.76% 18.25% 36.86%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 26,117 $ 31,573 $ 50,428 $ 102,882 $ 137,520
(000 omitted)
Ratio of expenses to average 1.43% 1.43% 1.67% 1.51% 1.54%
net assets
Ratio of expenses to average 1.41% D 1.41% D 1.60% D 1.44% D 1.53% D
net assets after expense
reductions
Ratio of net investment .06% (.16)% (.32)% .25% .19%
income (loss) to average net
assets
Portfolio turnover rate 119% 84% 115% 261% 115%
</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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT INDUSTRIAL MATERIALS -3.22% 7.13% 99.41%
SELECT INDUSTRIAL MATERIALS -6.20% 3.85% 93.36%
(LOAD ADJ.)
S&P 500 11.73% 206.94% 425.47%
GS Cyclical Industries -7.75% 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 246 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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT INDUSTRIAL MATERIALS -3.22% 1.39% 7.15%
SELECT INDUSTRIAL MATERIALS -6.20% 0.76% 6.82%
(LOAD ADJ.)
S&P 500 11.73% 25.14% 18.05%
GS Cyclical Industries -7.75% 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
1990/02/28 9700.00 10000.00
1990/03/31 9983.10 10265.00
1990/04/30 9260.45 10008.38
1990/05/31 9819.20 10984.19
1990/06/30 9715.00 10909.50
1990/07/31 9600.34 10874.59
1990/08/31 8492.02 9891.53
1990/09/30 7888.18 9409.81
1990/10/31 7796.46 9369.35
1990/11/30 8209.21 9974.61
1990/12/31 8553.17 10252.90
1991/01/31 8858.92 10699.92
1991/02/28 9508.62 11464.97
1991/03/31 9638.56 11742.42
1991/04/30 9653.85 11770.60
1991/05/31 10479.36 12279.09
1991/06/30 10364.67 11716.71
1991/07/31 10779.25 12262.71
1991/08/31 11032.61 12553.34
1991/09/30 10886.74 12343.69
1991/10/31 11355.07 12509.10
1991/11/30 10449.12 12004.98
1991/12/31 11616.11 13378.35
1992/01/31 12122.82 13129.52
1992/02/29 12713.99 13300.20
1992/03/31 12491.34 13040.85
1992/04/30 13143.93 13424.25
1992/05/31 13297.48 13490.03
1992/06/30 12974.72 13289.02
1992/07/31 13266.63 13832.55
1992/08/31 12429.30 13548.98
1992/09/30 12260.30 13708.86
1992/10/31 12398.58 13756.84
1992/11/30 12859.49 14225.94
1992/12/31 13052.87 14400.92
1993/01/31 13330.59 14521.89
1993/02/28 13454.02 14719.39
1993/03/31 13677.74 15029.97
1993/04/30 13477.16 14666.24
1993/05/31 14032.61 15059.30
1993/06/30 14070.92 15102.97
1993/07/31 14264.42 15042.56
1993/08/31 14635.93 15612.67
1993/09/30 14179.28 15492.45
1993/10/31 15015.18 15813.15
1993/11/30 15216.41 15662.92
1993/12/31 15843.33 15852.44
1994/01/31 17128.14 16391.43
1994/02/28 16772.11 15947.22
1994/03/31 16299.98 15251.92
1994/04/30 16911.78 15447.15
1994/05/31 17082.45 15700.48
1994/06/30 16904.03 15315.82
1994/07/31 17532.40 15818.18
1994/08/31 18478.84 16466.72
1994/09/30 18246.11 16063.29
1994/10/31 18005.62 16424.71
1994/11/30 16733.36 15826.52
1994/12/31 17141.52 16061.23
1995/01/31 16657.56 16477.70
1995/02/28 18054.79 17119.83
1995/03/31 18468.50 17625.04
1995/04/30 18554.03 18144.10
1995/05/31 18366.38 18869.32
1995/06/30 19187.35 19307.65
1995/07/31 20844.94 19947.89
1995/08/31 20790.21 19997.96
1995/09/30 20203.80 20841.88
1995/10/31 19030.97 20767.47
1995/11/30 20782.39 21679.16
1995/12/31 19779.58 22096.70
1996/01/31 20085.81 22848.87
1996/02/29 20470.57 23060.68
1996/03/31 21507.05 23282.76
1996/04/30 22011.03 23625.95
1996/05/31 21875.50 24235.26
1996/06/30 21150.04 24327.60
1996/07/31 20273.11 23252.80
1996/08/31 21373.26 23743.20
1996/09/30 21843.62 25079.47
1996/10/31 21795.78 25771.16
1996/11/30 22457.47 27719.21
1996/12/31 22551.41 27170.09
1997/01/31 22651.49 28867.68
1997/02/28 23068.49 29094.00
1997/03/31 21533.93 27898.53
1997/04/30 21592.53 29564.07
1997/05/31 22960.75 31363.93
1997/06/30 22888.26 32769.03
1997/07/31 24890.76 35376.46
1997/08/31 24990.43 33394.67
1997/09/30 25642.83 35223.70
1997/10/31 23658.45 34047.23
1997/11/30 23377.56 35623.28
1997/12/31 22947.04 36234.93
1998/01/31 23379.82 36635.68
1998/02/28 24589.63 39277.85
1998/03/31 25789.60 41289.27
1998/04/30 26025.66 41704.64
1998/05/31 24747.00 40987.74
1998/06/30 23507.68 42652.66
1998/07/31 21845.42 42198.41
1998/08/31 18245.50 36097.36
1998/09/30 18511.07 38409.76
1998/10/31 19858.58 41534.01
1998/11/30 20556.93 44051.38
1998/12/31 20419.23 46589.63
1999/01/31 20527.42 48538.00
1999/02/28 19986.45 47029.44
1999/03/31 20438.90 48911.09
1999/04/30 24678.15 50805.42
1999/05/31 23084.74 49605.90
1999/06/30 23842.10 52359.03
1999/07/31 23360.15 50724.38
1999/08/31 22553.61 50473.29
1999/09/30 21963.45 49089.82
1999/10/31 22435.58 52196.23
1999/11/30 22110.99 53257.37
1999/12/31 23784.72 56394.23
2000/01/31 21224.05 53560.99
2000/02/29 19336.00 52547.08
IMATRL PRASUN SHR__CHT 20000229 20000322 092524 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Industrial Materials Portfolio on February
28, 1990, and the current 3.00% sales charge was paid. As the chart
shows, by February 29, 2000, the value of the investment would have
grown to $19,336 - a 93.36% 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 $52,547 - a 425.47% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
Minnesota Mining & 6.9
Manufacturing Co.
Alcoa, Inc. 5.9
E.I. du Pont de Nemours and Co. 5.5
Dow Chemical Co. 5.0
Kimberly-Clark Corp. 4.6
Monsanto Co. 4.3
International Paper Co. 3.2
Weyerhaeuser Co. 2.4
Inco Ltd. 2.2
Union Pacific Corp. 2.1
42.1
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Chemicals & Plastics 27.3% Row: 1, Col: 6, Value: 27.3
Paper & Forest Products 20.6% Row: 1, Col: 5, Value: 20.6
Metals & Mining 11.9% Row: 1, Col: 4, Value: 11.9
Iron & Steel 7.0% Row: 1, Col: 3, Value: 7.0
Railroads 6.9% Row: 1, Col: 2, Value: 6.9
*All Others 26.3% Row: 1, Col: 1, Value: 26.3
</TABLE>
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
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 29, 2000, the fund returned
- -3.22%. For the same 12-month period, the Goldman Sachs Cyclical
Industries Index - an index of 246 stocks designed to measure the
performance of companies in the cyclical industries sector - fell
7.75%, while the Standard & Poor's 500 Index returned 11.73%. The fund
outperformed the Goldman Sachs index because the index is more broadly
based and includes some cyclical industry sectors that performed
poorly relative to industrial materials. In addition, specific stock
selection within the industrial materials subsector contributed to the
fund's performance.
Q. HOW WOULD YOU CHARACTERIZE THE INVESTMENT ENVIRONMENT OVER THE PAST
12 MONTHS?
A. During the past year, global growth created a generally favorable
environment for earnings gains in industrial materials stocks. More
specifically, a rebound in Asian economies, a robust domestic economy
and signs of improvement in European economies generated improved
demand and pricing for commodities such as metals and paper. Early in
the period, these conditions created a strong rally in cyclical
stocks, and industrial materials stocks fully participated in the
sector's advance. However, for much of the rest of the period,
cyclical stock prices fell out of favor in response to investors'
heightened preference for new economy stocks - such as technology
stocks - that are characterized by high revenue growth expectations.
Although industrial materials stock fundamentals remained attractive
throughout the period, negative investor sentiment resulted in
correcting prices, particularly in the early months of 2000. In
addition, increasing interest rates, which suggest potentially slower
economic growth, played a significant role in cyclical stock price
weakness.
Q. WHAT STOCKS BENEFITED THE FUND'S PERFORMANCE?
A. Several of the fund's top 5 holdings generated strong performance.
Alcoa, Kimberly-Clark, Minnesota Mining & Manufacturing (3M) and Dow
Chemical all posted robust gains as they profited from rebounding
global economies and improving commodity prices. In addition, Alcoa's
stock performed well in response to its leadership position in the
aluminum industry's consolidation as well as continued benefits from a
significant cost-cutting campaign. Kimberly-Clark generated positive
investor response by divesting non-core businesses, gaining market
share in personal care products and implementing an aggressive share
re-purchase program.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Two of the largest detractors from the fund's performance were CSX
Corp. and Burlington Northern. Both stocks suffered from problems in
the ongoing consolidation of the U.S. railroad industry. Although
consolidation should have positive long-term benefits, short-term
problems pressured earnings and stock prices. For example, some recent
mergers performed poorly because of unsuccessful systems and operating
integration. In view of recent disappointing merger activity,
investors were unreceptive to Burlington Northern's announced
acquisition of Canadian National in December 1999. Another weak stock
was Monsanto, which lost ground over concerns - primarily in Europe -
about genetically modified foods, which represent one of Monsanto's
potentially higher-growth businesses.
Q. WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
A. As long as economic growth continues to trend upward both
domestically and abroad, I'll have a positive earnings outlook for the
remainder of the year. As a caveat, however, further interest-rate
hikes by the Federal Reserve Board have the potential to reduce
domestic demand for industrial materials, which would have a negative
earnings effect that might only partially be offset by strength
overseas. Additionally, many industrial materials stock fundamentals
remain strong with attractive earnings prospects. Although they appear
to be undervalued, current investor preference for new economy stocks
may lengthen the time horizon to capture the intrinsic value in
industrial materials 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: September 29, 1986
FUND NUMBER: 509
TRADING SYMBOL: FSDPX
SIZE: as of February 29, 2000, more than
$20 million
MANAGER: Peter Hirsch, since 1998; analyst,
growth and income funds and steel industries,
1995-1998; joined Fidelity in 1995
NOTE TO SHAREHOLDERS:
Effective April 1, 2000, Niel Marotta became Portfolio Manager of
Fidelity Select Industrial Materials Portfolio.
INDUSTRIAL MATERIALS PORTFOLIO
INVESTMENTS FEBRUARY 29, 2000
Showing Percentage of Net Assets
COMMON STOCKS - 93.8%
SHARES VALUE (NOTE 1)
BUILDING MATERIALS - 3.9%
Ferro Corp. 1,900 $ 35,863
Lafarge Corp. 3,887 76,525
Masco Corp. 16,700 298,513
Owens Corning 4,900 71,050
Sherwin-Williams Co. 900 17,213
Southdown, Inc. 1,700 84,363
USG Corp. 800 26,000
Vulcan Materials Co. 4,500 180,000
Water Pik Technologies, Inc. 865 5,839
(a)
795,366
CHEMICALS & PLASTICS - 27.3%
Air Products & Chemicals, 3,400 87,550
Inc.
Avery Dennison Corp. 5,500 333,781
CK Witco Corp. 7,195 76,447
Cytec Industries, Inc. (a) 1,600 38,800
Dow Chemical Co. 9,500 1,030,750
E.I. du Pont de Nemours and 22,600 1,141,300
Co.
Eastman Chemical Co. 3,600 129,375
Engelhard Corp. 9,700 132,163
Great Lakes Chemical Corp. 2,000 58,125
H.B. Fuller Co. 600 36,825
Hercules, Inc. 5,100 84,150
Ivex Packaging Corp. (a) 4,600 34,788
Lyondell Chemical Co. 5,400 46,238
M.A. Hanna Co. 2,500 28,594
Minerals Technologies, Inc. 800 32,450
Monsanto Co. 22,600 877,163
Olin Corp. 4,400 68,200
PPG Industries, Inc. 6,800 335,750
Praxair, Inc. 9,600 324,000
Sealed Air Corp. (a) 5,340 265,331
Union Carbide Corp. 6,400 343,600
Valspar Corp. 3,700 121,406
5,626,786
COMPUTER SERVICES & SOFTWARE
- - 0.0%
MatrixOne, Inc. 100 2,500
Onvia.com, Inc. 100 2,100
4,600
CONSUMER DURABLES - 6.9%
Minnesota Mining & 16,100 1,418,804
Manufacturing Co.
ELECTRICAL EQUIPMENT - 0.1%
Teledyne Technologies, Inc. 2,485 21,588
(a)
INDUSTRIAL MACHINERY &
EQUIPMENT - 0.2%
UCAR International, Inc. (a) 2,000 30,500
SHARES VALUE (NOTE 1)
IRON & STEEL - 7.0%
AK Steel Holding Corp. 35,700 $ 296,756
Allegheny Technologies, Inc. 8,150 138,041
Bethlehem Steel Corp. (a) 33,000 187,688
Nucor Corp. 8,000 397,500
Steel Dynamics, Inc. (a) 9,100 139,913
USX - U.S. Steel Group 11,100 242,813
Worthington Industries, Inc. 3,700 49,025
1,451,736
LEASING & RENTAL - 0.7%
Ryder System, Inc. 7,200 134,100
METALS & MINING - 11.9%
Alcoa, Inc. 17,882 1,224,917
Brush Wellman, Inc. 900 15,075
Cominco Ltd. 4,200 60,844
Falconbridge Ltd. 11,200 159,934
Inco Ltd. (a) 26,200 458,175
Kaiser Aluminum Corp. (a) 900 5,119
Martin Marietta Materials, 2,300 81,650
Inc.
Noranda, Inc. 7,200 75,000
Phelps Dodge Corp. 3,800 179,075
Reynolds Metals Co. 2,200 139,700
Ryerson Tull, Inc. 4,120 54,590
2,454,079
PACKAGING & CONTAINERS - 2.0%
Ball Corp. 1,206 32,487
Bemis Co., Inc. 3,300 98,175
Crown Cork & Seal Co., Inc. 4,500 63,000
Gaylord Container Corp. Class 17,800 95,675
A (a)
Owens-Illinois, Inc. (a) 9,500 131,219
420,556
PAPER & FOREST PRODUCTS - 20.6%
Boise Cascade Corp. 2,887 86,069
Bowater, Inc. 7,300 359,069
Champion International Corp. 4,500 232,875
Chesapeake Corp. 700 15,531
Consolidated Papers, Inc. 4,800 182,100
Domtar, Inc. 7,600 89,652
Fort James Corp. 9,500 178,719
Georgia-Pacific Corp. 6,800 235,875
International Paper Co. 17,686 651,066
Kimberly-Clark Corp. 18,400 951,050
Louisiana-Pacific Corp. 100 1,181
Mead Corp. 5,100 152,681
Potlatch Corp. 1,500 57,000
Smurfit-Stone Container Corp. 11,300 153,963
(a)
Temple-Inland, Inc. 2,200 112,475
Westvaco Corp. 5,400 148,838
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PAPER & FOREST PRODUCTS -
CONTINUED
Weyerhaeuser Co. 9,500 $ 487,469
Willamette Industries, Inc. 4,500 152,719
4,248,332
PRECIOUS METALS - 4.2%
Barrick Gold Corp. 20,000 326,297
Franco Nevada Mining Corp. 6,142 71,182
Ltd.
Kinross Gold Corp. (a) 22,600 35,546
Newmont Mining Corp. 9,550 211,294
Placer Dome, Inc. 12,145 105,565
Stillwater Mining Co. (a) 3,350 124,369
874,253
RAILROADS - 6.9%
Burlington Northern Santa Fe 20,000 393,750
Corp.
Canadian National Railway Co. 4,600 107,416
Canadian Pacific Ltd. 10,600 204,015
CSX Corp. 13,400 297,313
Union Pacific Corp. 11,300 429,400
1,431,894
SECURITIES INDUSTRY - 0.8%
Kansas City Southern 2,200 173,250
Industries, Inc.
TRUCKING & FREIGHT - 1.3%
CNF Transportation, Inc. 4,200 134,663
USFreightways Corp. 3,700 123,025
257,688
TOTAL COMMON STOCKS 19,343,532
(Cost $21,700,604)
CASH EQUIVALENTS - 12.3%
Central Cash Collateral Fund, 1,145,100 1,145,100
5.75% (b)
Taxable Central Cash Fund, 1,406,368 1,406,368
5.66% (b)
TOTAL CASH EQUIVALENTS 2,551,468
(Cost $2,551,468)
TOTAL INVESTMENT PORTFOLIO - 21,895,000
106.1%
(Cost $24,252,072)
NET OTHER ASSETS - (6.1)% (1,268,275)
NET ASSETS - 100% $ 20,626,725
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 $64,801,228 and $52,440,711, 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 $11,147 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $1,076,550. The fund
received cash collateral of $1,145,100 which was invested in cash
equivalents.
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 February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $24,727,383. Net unrealized depreciation
aggregated $2,832,383, of which $1,241,125 related to appreciated
investment securities and $4,073,508 related to depreciated investment
securities.
At February 29, 2000, the fund had a capital loss carryforward of
approximately $2,206,000 of which $840,000 and $1,366,000 will expire
on February 28, 2007 and February 29, 2008, respectively.
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 2001 of amounts for use
in preparing 2000 income tax returns.
INDUSTRIAL MATERIALS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 21,895,000
value (cost $24,252,072) -
See accompanying schedule
Receivable for investments 49,262
sold
Receivable for fund shares 96,960
sold
Dividends receivable 51,640
Interest receivable 6,414
Other receivables 63,785
TOTAL ASSETS 22,163,061
LIABILITIES
Payable for investments $ 26,701
purchased
Payable for fund shares 320,918
redeemed
Accrued management fee 11,139
Other payables and accrued 32,478
expenses
Collateral on securities 1,145,100
loaned, at value
TOTAL LIABILITIES 1,536,336
NET ASSETS $ 20,626,725
Net Assets consist of:
Paid in capital $ 26,027,361
Undistributed net investment 19,303
income
Accumulated undistributed net (3,062,871)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (2,357,068)
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 1,050,162 $ 20,626,725
shares outstanding
NET ASSET VALUE and $19.64
redemption price per share
($20,626,725 (divided by)
1,050,162 shares)
Maximum offering price per $20.25
share (100/97.00 of $19.64)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 396,424
Dividends
Interest 76,795
Security lending 2,782
TOTAL INCOME 476,001
EXPENSES
Management fee $ 132,530
Transfer agent fees 168,755
Accounting and security 60,367
lending fees
Non-interested trustees' 64
compensation
Custodian fees and expenses 33,056
Registration fees 25,010
Audit 11,449
Legal 243
Interest 2,031
Total expenses before 433,505
reductions
Expense reductions (5,778) 427,727
NET INVESTMENT INCOME 48,274
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (1,012,199)
Foreign currency transactions (942) (1,013,141)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (2,555,785)
Assets and liabilities in 7 (2,555,778)
foreign currencies
NET GAIN (LOSS) (3,568,919)
NET INCREASE (DECREASE) IN $ (3,520,645)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 120,846
charges paid to FDC
Sales charges - Retained by $ 120,846
FDC
Deferred sales charges $ 478
withheld by FDC
Exchange fees withheld by FSC $ 4,359
Expense reductions Directed $ 5,778
brokerage arrangements
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ 48,274 $ (83,870)
income (loss)
Net realized gain (loss) (1,013,141) (1,208,807)
Change in net unrealized (2,555,778) (1,993,477)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (3,520,645) (3,286,154)
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (28,030) -
from net investment income
Share transactions Net 84,117,245 9,957,438
proceeds from sales of shares
Reinvestment of distributions 27,010 -
Cost of shares redeemed (71,316,023) (18,118,847)
NET INCREASE (DECREASE) IN 12,828,232 (8,161,409)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 184,925 27,986
TOTAL INCREASE (DECREASE) 9,464,482 (11,419,577)
IN NET ASSETS
NET ASSETS
Beginning of period 11,162,243 22,581,820
End of period (including $ 20,626,725 $ 11,162,243
undistributed net investment
income of $19,303 and $0,
respectively)
OTHER INFORMATION
Shares
Sold 3,507,863 440,126
Issued in reinvestment of 1,180 -
distributions
Redeemed (3,008,070) (794,343)
Net increase (decrease) 500,973 (354,217)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 E 1999 1998 1997 1996 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 20.32 $ 25.00 $ 27.66 $ 26.07 $ 23.13
period
Income from Investment
Operations
Net investment income (loss) C .05 (.12) (.11) .06 .12
Net realized and unrealized (.89) (4.60) 1.43 3.12 2.92
gain (loss)
Total from investment (.84) (4.72) 1.32 3.18 3.04
operations
Less Distributions
From net investment income (.03) - (.03) (.06) (.15)
From net realized gain - - (4.00) (1.57) -
Total distributions (.03) - (4.03) (1.63) (.15)
Redemption fees added to paid .19 .04 .05 .04 .05
in capital
Net asset value, end of period $ 19.64 $ 20.32 $ 25.00 $ 27.66 $ 26.07
TOTAL RETURN A, B (3.22)% (18.72)% 6.59% 12.69% 13.38%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 20,627 $ 11,162 $ 22,582 $ 66,462 $ 86,338
(000 omitted)
Ratio of expenses to average 1.92% 2.07% 1.98% 1.54% 1.64%
net assets
Ratio of expenses to average 1.89% D 2.04% D 1.94% D 1.51% D 1.61% D
net assets after expense
reductions
Ratio of net investment .21% (.52)% (.42)% .23% .49%
income (loss) to average net
assets
Portfolio turnover rate 257% 82% 118% 105% 138%
</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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT PAPER AND FOREST 20.16% 39.47% 187.96%
PRODUCTS
SELECT PAPER AND FOREST 16.48% 35.21% 179.25%
PRODUCTS (LOAD ADJ.)
S&P 500 11.73% 206.94% 425.47%
GS Cyclical Industries -7.75% 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 246 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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT PAPER AND FOREST 20.16% 6.88% 11.16%
PRODUCTS
SELECT PAPER AND FOREST 16.48% 6.22% 10.82%
PRODUCTS (LOAD ADJ.)
S&P 500 11.73% 25.14% 18.05%
GS Cyclical Industries -7.75% 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
1990/02/28 9700.00 10000.00
1990/03/31 9971.33 10265.00
1990/04/30 9326.92 10008.38
1990/05/31 9945.89 10984.19
1990/06/30 9708.48 10909.50
1990/07/31 9852.62 10874.59
1990/08/31 8674.04 9891.53
1990/09/30 7834.62 9409.81
1990/10/31 7588.72 9369.35
1990/11/30 8351.84 9974.61
1990/12/31 8975.97 10252.90
1991/01/31 9717.50 10699.92
1991/02/28 10183.11 11464.97
1991/03/31 10390.05 11742.42
1991/04/30 10898.77 11770.60
1991/05/31 12149.03 12279.09
1991/06/30 11838.62 11716.71
1991/07/31 11847.24 12262.71
1991/08/31 11907.60 12553.34
1991/09/30 11450.61 12343.69
1991/10/31 11881.73 12509.10
1991/11/30 10976.38 12004.98
1991/12/31 12096.49 13378.35
1992/01/31 13209.01 13129.52
1992/02/29 13270.82 13300.20
1992/03/31 13359.11 13040.85
1992/04/30 13571.02 13424.25
1992/05/31 13191.35 13490.03
1992/06/30 13103.71 13289.02
1992/07/31 13006.39 13832.55
1992/08/31 12484.36 13548.98
1992/09/30 12351.64 13708.86
1992/10/31 12953.30 13756.84
1992/11/30 13431.09 14225.94
1992/12/31 13554.71 14400.92
1993/01/31 13972.19 14521.89
1993/02/28 14283.08 14719.39
1993/03/31 14265.32 15029.97
1993/04/30 14914.24 14666.24
1993/05/31 14958.68 15059.30
1993/06/30 14638.71 15102.97
1993/07/31 14487.61 15042.56
1993/08/31 14878.69 15612.67
1993/09/30 14167.64 15492.45
1993/10/31 14718.70 15813.15
1993/11/30 15634.18 15662.92
1993/12/31 16069.70 15852.44
1994/01/31 17936.20 16391.43
1994/02/28 17429.58 15947.22
1994/03/31 15580.85 15251.92
1994/04/30 15563.44 15447.15
1994/05/31 16198.31 15700.48
1994/06/30 16035.06 15315.82
1994/07/31 17395.50 15818.18
1994/08/31 19336.39 16466.72
1994/09/30 19681.04 16063.29
1994/10/31 18456.64 16424.71
1994/11/30 17649.45 15826.52
1994/12/31 18341.68 16061.23
1995/01/31 18218.52 16477.70
1995/02/28 20028.06 17119.83
1995/03/31 20170.17 17625.04
1995/04/30 20253.57 18144.10
1995/05/31 20588.42 18869.32
1995/06/30 22454.01 19307.65
1995/07/31 23219.38 19947.89
1995/08/31 23200.24 19997.96
1995/09/30 22817.56 20841.88
1995/10/31 22482.71 20767.47
1995/11/30 22817.56 21679.16
1995/12/31 22361.22 22096.70
1996/01/31 22918.94 22848.87
1996/02/29 21866.64 23060.68
1996/03/31 22982.07 23282.76
1996/04/30 23986.93 23625.95
1996/05/31 23503.45 24235.26
1996/06/30 22184.89 24327.60
1996/07/31 21602.52 23252.80
1996/08/31 22811.21 23743.20
1996/09/30 23635.31 25079.47
1996/10/31 23591.36 25771.16
1996/11/30 23866.06 27719.21
1996/12/31 23941.25 27170.09
1997/01/31 24187.83 28867.68
1997/02/28 24243.87 29094.00
1997/03/31 22932.48 27898.53
1997/04/30 23618.82 29564.07
1997/05/31 26533.73 31363.93
1997/06/30 26741.11 32769.03
1997/07/31 28826.48 35376.46
1997/08/31 28722.79 33394.67
1997/09/30 29563.85 35223.70
1997/10/31 26683.50 34047.23
1997/11/30 26856.32 35623.28
1997/12/31 26180.30 36234.93
1998/01/31 27181.53 36635.68
1998/02/28 28009.70 39277.85
1998/03/31 28442.33 41289.27
1998/04/30 29973.48 41704.64
1998/05/31 28222.19 40987.74
1998/06/30 26949.67 42652.66
1998/07/31 24354.24 42198.41
1998/08/31 20864.26 36097.36
1998/09/30 21280.03 38409.76
1998/10/31 22640.75 41534.01
1998/11/30 23711.68 44051.38
1998/12/31 24114.85 46589.63
1999/01/31 23056.52 48538.00
1999/02/28 23245.51 47029.44
1999/03/31 24455.03 48911.09
1999/04/30 29393.91 50805.42
1999/05/31 28915.15 49605.90
1999/06/30 29305.72 52359.03
1999/07/31 29091.53 50724.38
1999/08/31 28877.35 50473.29
1999/09/30 28285.19 49089.82
1999/10/31 28864.75 52196.23
1999/11/30 27642.63 53257.37
1999/12/31 31472.78 56394.23
2000/01/31 29482.11 53560.99
2000/02/29 27925.00 52547.08
IMATRL PRASUN SHR__CHT 20000229 20000309 114953 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, 1990, and the current 3.00% sales charge was paid. As the
chart shows, by February 29, 2000, the value of the investment would
have grown to $27,925 - a 179.25% 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 $52,547 - a 425.47% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
Pope & Talbot, Inc. 14.8
Bowater, Inc. 10.7
Tembec, Inc. Class A 10.4
Gaylord Container Corp. Class A 9.8
Abitibi-Consolidated, Inc. 8.6
Consolidated Papers, Inc. 6.8
Donohue, Inc. Class A (sub. 6.4
vtg.)
Domtar, Inc. 5.1
Champion International Corp. 4.2
Boise Cascade Corp. 4.1
80.9
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Paper & Forest Products 87.4% Row: 1, Col: 6, Value: 87.40000000000001
Packaging & Containers 10.1% Row: 1, Col: 5, Value: 10.1
Real Estate Investment Trusts 0.7% Row: 1, Col: 4, Value: 0.7000000000000001
Tobacco 0.4% Row: 1, Col: 3, Value: 0.4
Chemicals & Plastics 0.2% Row: 1, Col: 2, Value: 0.2
*All Others 1.2% Row: 1, Col: 1, Value: 1.2
</TABLE>
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
PAPER AND FOREST PRODUCTS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Adam Segel)
NOTE TO SHAREHOLDERS: On March 7, 2000, after the end of the period
covered by this report, Adam Segel became Portfolio Manager of
Fidelity Select Paper and Forest Products Portfolio.
Q. HOW DID THE FUND PERFORM, ADAM?
A. For the 12 months that ended February 29, 2000, the fund returned
20.16%. This compared favorably to the Standard & Poor's 500 Index,
which returned 11.73% during that time. The Goldman Sachs Cyclical
Industries Index - an index of 246 stocks designed to measure the
performance of companies in the cyclical industries sector - fell
7.75%.
Q. WHAT FACTORS HELPED SHAPE THE FUND'S PERFORMANCE?
A. The fund benefited from favorable sector trends throughout the
period. Two of the most critical drivers for the paper group -
operating rates and pulp prices - continued to be attractive.
Operating rates are simply the global consumption of paper products
divided by available capacity. While capacity expansion reached
near-historic lows during the period, demand - spurred on by improving
global economies and a pickup in exporting - was strong. A pickup in
Asian exports, for instance, helped paper prices. Rising pulp prices
also contributed positively to performance. Pulp serves as the
building block for all things paper, and paper-stock prices tend to
track the price of pulp.
Q. HOW DID EACH OF THE PAPER SUBSECTORS PERFORM DURING THE PERIOD?
A. Coated and uncoated free sheet grades have direct exposure to pulp
because pulp is a significant component of the cost involved in making
those types of paper. Inventories in each of these areas decreased
slightly, yet both experienced price increases. Most of the other
grades within the group were helped along by capacity reduction and
tighter inventories. The containerboard sector pushed through a couple
of price increases for linerboard, the material used in assembling
corrugated boxes, and newsprint prices also rose. Operating margins
within the tissue area have been fairly competitive, and tissue is
typically the last grade to be helped by rising pulp prices.
Q. THE FUND'S THREE LARGEST INDIVIDUAL POSITIONS AT THE END OF THE
PERIOD WERE POPE & TALBOT, BOWATER AND TEMBEC. WHAT CAN YOU TELL US
ABOUT THESE STOCKS?
A. Pope & Talbot was the fund's single best performer during the
period. The company benefited from good revenue growth from both its
wood products and pulp businesses. Its wood products business involves
the manufacture and sale of standardized and specialty wood and lumber
chips, while its pulp business manufactures and sells bleached kraft
pulp for newsprint, tissue and high-grade coated and uncoated paper.
Bowater is another market leader in this area, with a particular focus
on newsprint. Finally, Tembec is a leading Canadian forest products
company that markets its products to more than 50 countries across the
world. Bowater and Tembec turned in mediocre performances during the
period.
Q. WHICH OTHER STOCKS PERFORMED WELL? WHICH PROVED DISAPPOINTING?
A. The fund's holdings in Consolidated Papers, Westvaco and Champion
International all performed well, as each company rode the favorable
trends of low capacity and high demand. Gaylord Container, meanwhile,
was somewhat of a disappointment. The company specializes in
containerboard and, while prices rose within this group, pricing
momentum slowed relative to other paper grades. However, Gaylord - the
fund's fourth-largest position at the close of the period - appeared
to turn the corner in early 2000 as revenue growth took an upturn.
Other stocks that didn't perform up to par included Tenneco,
Abitibi-Consolidated and Plum Creek Timber.
Q. WHAT'S YOUR OUTLOOK, ADAM?
A. The fund is currently positioned to benefit from continued
improvement in operating rates, pricing and cost structures. Its top
holdings are concentrated in names that are leveraged to fine paper
prices and wood products, with lesser exposures to companies leveraged
to containerboard and newsprint. The outlook for operating rates in
most grades - particularly pulp - remains favorable as global demand
continues to rebound, and there are limited amounts of new capacity
coming on. The current tightness in the worldwide pulp market is
positive for paper prices, as producers are forced to pass on the cost
of higher pulp prices to consumers in the way of higher paper prices.
Slowing worldwide economic growth or major additions to supply are the
major risks to this thesis and, if either materializes, it could hurt
the paper cycle.
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 29, 2000, more than
$12 million
MANAGER: Adam Segel, since March 2000;
analyst, cellular and wireless industries; furniture
and appliance industries, since 1997; joined
Fidelity in 1997
PAPER AND FOREST PRODUCTS PORTFOLIO
INVESTMENTS FEBRUARY 29, 2000
Showing Percentage of Net Assets
COMMON STOCKS - 98.8%
SHARES VALUE (NOTE 1)
CHEMICALS & PLASTICS - 0.2%
Ivex Packaging Corp. (a) 2,400 $ 18,150
Pactiv Corp. (a) 250 2,078
20,228
INDUSTRIAL MACHINERY &
EQUIPMENT - 0.0%
Tenneco Automotive, Inc. 10 74
PACKAGING & CONTAINERS - 10.1%
Gaylord Container Corp. Class 225,700 1,213,138
A (a)
Longview Fibre Co. 3,000 40,875
1,254,013
PAPER & FOREST PRODUCTS - 87.4%
Abitibi-Consolidated, Inc. 120,300 1,062,252
Alliance Forest Products, 16,300 212,521
Inc. (a)
Boise Cascade Corp. 17,012 507,170
Bowater, Inc. 27,100 1,332,981
Caraustar Industries, Inc. 600 9,975
Champion International Corp. 10,060 520,605
Consolidated Papers, Inc. 22,284 845,399
Domtar, Inc. 53,700 633,464
Donohue, Inc. Class A (sub. 34,600 792,439
vtg.)
Fletcher Challenge Canada 7,700 90,301
Ltd.
Fort James Corp. 300 5,644
Georgia-Pacific Corp. 361 12,522
International Paper Co. 261 9,608
Jefferson Smurfit Group PLC 11,600 26,299
Jefferson Smurfit Group PLC 13,750 327,422
sponsored ADR
Mead Corp. 16,311 488,311
P.H. Glatfelter Co. 3,400 41,650
Pope & Talbot, Inc. 95,800 1,832,173
Potlatch Corp. 400 15,200
Rayonier, Inc. 300 11,925
Smurfit-Stone Container Corp. 24,500 333,813
(a)
Stora Enso Oyj 10,600 107,377
Svenska Cellulosa AB (SCA) 5,200 126,909
Series B
Tembec, Inc. Class A (a) 130,000 1,295,875
Temple-Inland, Inc. 377 19,274
Westvaco Corp. 6,700 184,669
10,845,778
REAL ESTATE INVESTMENT TRUSTS
- - 0.7%
Plum Creek Timber Co., Inc. 3,950 87,888
(REIT)
TOBACCO - 0.4%
Schweitzer-Mauduit 4,200 57,225
International, Inc.
TOTAL COMMON STOCKS 12,265,206
(Cost $12,574,929)
CASH EQUIVALENTS - 1.3%
SHARES VALUE (NOTE 1)
Central Cash Collateral Fund, 154,000 $ 154,000
5.75% (b) (Cost $154,000)
TOTAL INVESTMENT PORTFOLIO - 12,419,206
100.1%
(Cost $12,728,929)
NET OTHER ASSETS - (0.1)% (7,409)
NET ASSETS - 100% $ 12,411,797
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 $73,172,046 and $69,738,920, 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 $15,067 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $142,137. The fund received
cash collateral of $154,000 which was invested in cash equivalents.
The fund participated in the bank borrowing program. The average daily
loan balance during the period for which loans were outstanding
amounted to $1,069,000. The weighted average interest rate was 5.97%.
Distribution of investments by country of issue, as a percentage of
net assets, is as follows:
United States of America 62.4%
Canada 32.9
Ireland 2.8
Sweden 1.0
Others (individually less 0.9
than 1%)
100.0%
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $12,797,439. Net unrealized depreciation
aggregated $378,233, of which $1,451,757 related to appreciated
investment securities and $1,829,990 related to depreciated investment
securities.
At February 29, 2000, the fund had a capital loss carryforward of
approximately $1,444,000, all of which will expire on February 28,
2007.
The fund intends to elect to defer to its fiscal year ending February
28, 2001 approximately $1,496,000 of losses recognized during the
period November 1, 1999 to February 29, 2000.
PAPER AND FOREST PRODUCTS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 12,419,206
value (cost $12,728,929) -
See accompanying schedule
Receivable for investments 4,645,708
sold
Receivable for fund shares 78,550
sold
Dividends receivable 18,939
Interest receivable 2,308
Redemption fees receivable 2,173
Other receivables 16
TOTAL ASSETS 17,166,900
LIABILITIES
Payable to custodian bank $ 1,210,762
Payable for fund shares 3,357,014
redeemed
Accrued management fee 9,300
Other payables and accrued 24,027
expenses
Collateral on securities 154,000
loaned, at value
TOTAL LIABILITIES 4,755,103
NET ASSETS $ 12,411,797
Net Assets consist of:
Paid in capital $ 15,951,296
Undistributed net investment 15,056
income
Accumulated undistributed net (3,243,567)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (310,988)
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 559,895 $ 12,411,797
shares outstanding
NET ASSET VALUE and $22.17
redemption price per share
($12,411,797 (divided by)
559,895 shares)
Maximum offering price per $22.86
share (100/97.00 of $22.17)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 442,107
Dividends
Interest 105,961
Security lending 615
TOTAL INCOME 548,683
EXPENSES
Management fee $ 124,175
Transfer agent fees 156,807
Accounting and security 60,330
lending fees
Non-interested trustees' 60
compensation
Custodian fees and expenses 17,144
Registration fees 27,666
Audit 14,129
Legal 77
Interest 710
Total expenses before 401,098
reductions
Expense reductions (32,414) 368,684
NET INVESTMENT INCOME 179,999
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 110,502
Foreign currency transactions 670 111,172
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (310,414)
Assets and liabilities in (1,245) (311,659)
foreign currencies
NET GAIN (LOSS) (200,487)
NET INCREASE (DECREASE) IN $ (20,488)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 117,490
charges paid to FDC
Sales charges - Retained by $ 117,490
FDC
Deferred sales charges $ 1,145
withheld by FDC
Exchange fees withheld by FSC $ 6,414
Expense reductions Directed $ 32,414
brokerage arrangements
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ 179,999 $ (19,520)
income (loss)
Net realized gain (loss) 111,172 (2,776,473)
Change in net unrealized (311,659) (1,268,236)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (20,488) (4,064,229)
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders - (317,946)
In excess of net realized
gain
Share transactions Net 88,259,011 24,142,684
proceeds from sales of shares
Reinvestment of distributions - 312,733
Cost of shares redeemed (86,313,272) (41,303,607)
NET INCREASE (DECREASE) IN 1,945,739 (16,848,190)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 239,998 92,806
TOTAL INCREASE (DECREASE) 2,165,249 (21,137,559)
IN NET ASSETS
NET ASSETS
Beginning of period 10,246,548 31,384,107
End of period (including $ 12,411,797 $ 10,246,548
undistributed net investment
income of $15,056 and
$4,129, respectively)
OTHER INFORMATION
Shares
Sold 3,705,982 1,074,182
Issued in reinvestment of - 13,704
distributions
Redeemed (3,701,544) (1,917,231)
Net increase (decrease) 4,438 (829,345)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 F 1999 1998 1997 1996 F
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 18.45 $ 22.66 $ 21.63 $ 20.78 $ 21.14
period
Income from Investment
Operations
Net investment income (loss) C .20 (.03) (.12) .01 .08
Net realized and unrealized 3.26 d (3.87) 3.13 2.08 1.83
gain (loss)
Total from investment 3.46 (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 .26 .13 .13 .11 .08
in capital
Net asset value, end of period $ 22.17 $ 18.45 $ 22.66 $ 21.63 $ 20.78
TOTAL RETURN A, B 20.16% (17.01)% 15.53% 10.87% 9.18%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 12,412 $ 10,247 $ 31,384 $ 19,484 $ 27,270
(000 omitted)
Ratio of expenses to average 1.89% 2.30% 2.18% 2.19% 1.91%
net assets
Ratio of expenses to average 1.74% e 2.21% e 2.15% e 2.16% e 1.90% e
net assets after expense
reductions
Ratio of net investment .85% (.13)% (.50)% .04% .34%
income (loss) to average net
assets
Portfolio turnover rate 383% 338% 235% 180% 78%
</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 THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT
CORRESPOND WITH THE AGGREGATE NET LOSS ON INVESTMENTS
FOR THE PERIOD DUE TO THE TIMING OF SALES AND PURCHASES
OF FUND SHARES IN RELATION TO FLUCTUATING MARKET VALUES
OF THE INVESTMENTS OF THE FUND.
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
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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT TRANSPORTATION 2.15% 67.51% 265.23%
SELECT TRANSPORTATION (LOAD -0.99% 62.41% 254.20%
ADJ.)
S&P 500 11.73% 206.94% 425.47%
GS Cyclical Industries -7.75% 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 246 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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT TRANSPORTATION 2.15% 10.87% 13.83%
SELECT TRANSPORTATION (LOAD -0.99% 10.19% 13.48%
ADJ.)
S&P 500 11.73% 25.14% 18.05%
GS Cyclical Industries -7.75% 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
1990/02/28 9700.00 10000.00
1990/03/31 9990.84 10265.00
1990/04/30 9613.53 10008.38
1990/05/31 9967.26 10984.19
1990/06/30 9857.54 10909.50
1990/07/31 9824.79 10874.59
1990/08/31 8383.82 9891.53
1990/09/30 7303.09 9409.81
1990/10/31 7188.47 9369.35
1990/11/30 7483.21 9974.61
1990/12/31 7753.40 10252.90
1991/01/31 8416.57 10699.92
1991/02/28 9235.30 11464.97
1991/03/31 9243.49 11742.42
1991/04/30 9218.93 11770.60
1991/05/31 9947.60 12279.09
1991/06/30 9865.01 11716.71
1991/07/31 10464.63 12262.71
1991/08/31 10653.55 12553.34
1991/09/30 10456.41 12343.69
1991/10/31 11228.53 12509.10
1991/11/30 10530.34 12004.98
1991/12/31 11951.36 13378.35
1992/01/31 12058.14 13129.52
1992/02/29 12707.05 13300.20
1992/03/31 12403.13 13040.85
1992/04/30 12723.48 13424.25
1992/05/31 12986.32 13490.03
1992/06/30 12427.77 13289.02
1992/07/31 12608.48 13832.55
1992/08/31 12230.64 13548.98
1992/09/30 12715.26 13708.86
1992/10/31 13257.39 13756.84
1992/11/30 14218.42 14225.94
1992/12/31 14794.88 14400.92
1993/01/31 15457.47 14521.89
1993/02/28 15667.14 14719.39
1993/03/31 16715.53 15029.97
1993/04/30 16673.87 14666.24
1993/05/31 17296.72 15059.30
1993/06/30 17347.22 15102.97
1993/07/31 17347.22 15042.56
1993/08/31 17667.06 15612.67
1993/09/30 17709.14 15492.45
1993/10/31 18079.49 15813.15
1993/11/30 18180.49 15662.92
1993/12/31 19132.18 15852.44
1994/01/31 19970.82 16391.43
1994/02/28 19970.82 15947.22
1994/03/31 19436.30 15251.92
1994/04/30 19799.51 15447.15
1994/05/31 19481.22 15700.48
1994/06/30 19462.50 15315.82
1994/07/31 20117.80 15818.18
1994/08/31 20716.93 16466.72
1994/09/30 20164.61 16063.29
1994/10/31 20464.17 16424.71
1994/11/30 19237.82 15826.52
1994/12/31 19871.90 16061.23
1995/01/31 19737.98 16477.70
1995/02/28 21149.31 17119.83
1995/03/31 21427.45 17625.04
1995/04/30 21746.81 18144.10
1995/05/31 21097.80 18869.32
1995/06/30 20871.16 19307.65
1995/07/31 22663.65 19947.89
1995/08/31 22643.05 19997.96
1995/09/30 22437.02 20841.88
1995/10/31 22158.87 20767.47
1995/11/30 22921.19 21679.16
1995/12/31 22886.11 22096.70
1996/01/31 23234.85 22848.87
1996/02/29 23888.74 23060.68
1996/03/31 24466.35 23282.76
1996/04/30 25267.84 23625.95
1996/05/31 25300.71 24235.26
1996/06/30 25421.24 24327.60
1996/07/31 23580.39 23252.80
1996/08/31 23602.31 23743.20
1996/09/30 23711.88 25079.47
1996/10/31 23525.61 25771.16
1996/11/30 25191.14 27719.21
1996/12/31 25061.10 27170.09
1997/01/31 25241.07 28867.68
1997/02/28 25004.86 29094.00
1997/03/31 25769.74 27898.53
1997/04/30 27102.71 29564.07
1997/05/31 28944.64 31363.93
1997/06/30 29814.13 32769.03
1997/07/31 31896.31 35376.46
1997/08/31 31255.64 33394.67
1997/09/30 34344.59 35223.70
1997/10/31 33189.09 34047.23
1997/11/30 33040.37 35623.28
1997/12/31 33113.84 36234.93
1998/01/31 33176.11 36635.68
1998/02/28 35293.20 39277.85
1998/03/31 36563.46 41289.27
1998/04/30 36032.31 41704.64
1998/05/31 34320.14 40987.74
1998/06/30 35125.12 42652.66
1998/07/31 32160.76 42198.41
1998/08/31 26487.58 36097.36
1998/09/30 26449.25 38409.76
1998/10/31 29260.28 41534.01
1998/11/30 30704.13 44051.38
1998/12/31 31676.49 46589.63
1999/01/31 34502.03 48538.00
1999/02/28 34682.09 47029.44
1999/03/31 36607.33 48911.09
1999/04/30 41793.28 50805.42
1999/05/31 41260.78 49605.90
1999/06/30 43253.84 52359.03
1999/07/31 43269.05 50724.38
1999/08/31 40576.14 50473.29
1999/09/30 38217.95 49089.82
1999/10/31 40469.65 52196.23
1999/11/30 39130.80 53257.37
1999/12/31 40447.50 56394.23
2000/01/31 36458.53 53560.99
2000/02/29 35420.00 52547.08
IMATRL PRASUN SHR__CHT 20000229 20000309 125452 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Transportation Portfolio on February 28,
1990, and the current 3.00% sales charge was paid. As the chart shows,
by February 29, 2000, the value of the investment would have grown to
$35,420 - a 254.20% 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 $52,547 - a 425.47% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
AMR Corp. 10.4
Navistar International Corp. 7.9
Southwest Airlines Co. 5.8
Union Pacific Corp. 5.6
Delta Air Lines, Inc. 5.6
Canadian Pacific Ltd. 5.3
Burlington Northern Santa Fe 5.1
Corp.
Kansas City Southern 5.0
Industries, Inc.
CSX Corp. 4.9
Eaton Corp. 4.9
60.5
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Air Transportation 35.2% Row: 1, Col: 6, Value: 35.2
Railroads 24.8% Row: 1, Col: 5, Value: 24.8
Autos, Tires, & Accessories 12.8% Row: 1, Col: 4, Value: 12.8
Trucking & Freight 9.2% Row: 1, Col: 3, Value: 9.199999999999999
Securities Industry 5.0% Row: 1, Col: 2, Value: 5.0
*All Others 13.0% Row: 1, Col: 1, Value: 13.0
</TABLE>
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
TRANSPORTATION PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
(photograph of Chris Zepf)(photograph of Jeff Feingold)
NOTE TO SHAREHOLDERS: The following is an interview with Chris Zepf
(left), who managed Fidelity Select Transportation Portfolio for most
of the period covered by this report, with additional comments from
Jeff Feingold (right), who became manager of the fund on February 25,
2000.
Q. HOW DID THE FUND PERFORM, CHRIS?
C.Z. For the 12-month period that ended February 29, 2000, the fund
returned 2.15%. For the same 12-month period, the Standard & Poor's
500 Index returned 11.73%. For another comparison, the Goldman Sachs
Cyclical Industries Index - an index of 246 stocks designed to measure
the performance of companies in the cyclical industries sector - fell
7.75%.
Q. WHY DID THE FUND OUTPERFORM THE GOLDMAN SACHS INDEX?
C.Z. Although transportation stocks fell during the period, they
performed better than many of the other industries that make up the
Goldman Sachs Cyclical Industries Index. In addition, the fund
benefited from good security selection. Among the fund's best
performers were Skywest Airlines and Southwest Airlines. Skywest
continued to post good financial results because of strong revenue
growth and because it passed on much of its fuel cost increases to its
partners. Low-cost carrier Southwest Airlines also enjoyed stronger
sales. In addition, its increased sales of tickets via the Internet
helped lower Southwest's distribution costs. The fund got a further
boost from its holdings in Preview Travel, which was acquired by Sabre
Holdings, the No. 1 Web-based seller of airline, hotel and cruise
reservations.
Q. WHAT FACTORS MADE THE PAST YEAR SO TOUGH FOR TRANSPORTATION STOCKS?
C.Z. Soaring fuel prices sent transportation stocks down throughout
the year as crude oil prices edged above $30 a barrel for the first
time in nearly a decade. Even through air traffic remained solid, most
airlines couldn't combat surging jet fuel prices, an airline's
second-largest expense after labor. Fuel problems were just as serious
for truckers. On average, diesel prices were more than 50 cents a
gallon higher at the end of the period than they were at the beginning
and roughly 20 cents higher than they were at the start of 2000.
Railroad companies, meanwhile, frightened investors with their
inability to pull off a merger without service disruptions.
Q. GIVEN THE RANGE OF PROBLEMS FACING TRANSPORTATION STOCKS, WHICH OF
THE FUND'S HOLDINGS PROVED MOST DISAPPOINTING?
C.Z. AMR, the parent company of American Airlines and the fund's
largest holding, detracted from performance as airline stocks in
general slumped. Big western railroads Union Pacific and Burlington
Northern Santa Fe also hurt the fund's performance. Even though Union
Pacific enjoyed improving financials through gains in freight traffic
and efficiency improvements, it wasn't able to shake off investors'
skepticism about railroad stocks. Burlington's plans to merge with
Montreal-based Canadian National Railway Company, another of the
fund's bigger disappointments, also was unwelcomed by investors.
Q. WHAT CHANGES DID YOU MAKE TO THE FUND DURING THE PERIOD?
C.Z. One of the more noticeable changes was that I added to the fund's
stake in Expeditors International, a Seattle-based freight forwarder
and logistical management firm for heavy cargo. In a market that was
intensely focused on growth stocks, Expeditors did well because of its
strong track record and proven ability to grow earnings. Furthermore,
the company, which essentially moves freight across oceans, rebounded
in response to improving global economies and expanding world trade. I
also liked the fact that Expeditors doesn't own or lease any assets
such as planes, ships or delivery vehicles and isn't burdened with
costs associated with that. Instead, the company manages all the
efforts needed to get a package from one place to another.
Q. TURNING TO YOU, JEFF, WHAT'S YOUR OUTLOOK?
J.F. Because transportation stocks are cyclical, a great deal of their
performance will be determined by the strength or weakness of the
global economy. If we continue to enjoy strong worldwide economic
growth, I believe transportation stocks can do reasonably well. Just
as it has over the past year, the price of fuel also will play a role,
although it's unclear where the price of oil is headed. In my view,
transportation stocks will be okay if the economy stays strong, even
if oil prices rise a bit higher from current levels.
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: September 29, 1986
FUND NUMBER: 512
TRADING SYMBOL: FSRFX
SIZE: as of February 29, 2000, more than
$10 million
MANAGER: Jeff Feingold, since February 2000;
manager, Fidelity Select Air Transportation
Portfolio, since February 2000; Fidelity Select
Defense and Aerospace Portfolio, since 1998;
equity analyst, various industries, 1997-1998;
joined Fidelity in 1997
TRANSPORTATION PORTFOLIO
INVESTMENTS FEBRUARY 29, 2000
Showing Percentage of Net Assets
COMMON STOCKS - 93.0%
SHARES VALUE (NOTE 1)
AIR TRANSPORTATION - 35.2%
Air Canada (a) 4,900 $ 57,971
America West Holding Corp. 7,800 104,325
Class B (a)
AMR Corp. (a) 20,000 1,057,497
Atlantic Coast Airlines 11,800 210,925
Holdings, Inc. (a)
Atlas Air, Inc. (a) 9,000 217,688
Continental Airlines, Inc. 8,100 256,163
Class B (a)
Delta Air Lines, Inc. 12,500 570,313
Northwest Airlines Corp. 3,000 51,750
Class A (a)
Preview Travel, Inc. (a) 4,100 188,856
SkyWest, Inc. 9,600 285,000
Southwest Airlines Co. 31,825 586,773
3,587,261
AUTOS, TIRES, & ACCESSORIES -
12.8%
Eaton Corp. 6,600 494,588
Navistar International Corp. 24,700 808,925
(a)
1,303,513
COMPUTER SERVICES & SOFTWARE
- - 0.0%
MatrixOne, Inc. 100 2,500
Onvia.com, Inc. 100 2,100
4,600
ELECTRICAL EQUIPMENT - 1.3%
General Electric Co. 1,000 132,188
LEASING & RENTAL - 1.0%
Ryder System, Inc. 5,700 106,163
OIL & GAS - 2.5%
Frontier Oil Corp. (a) 40,000 250,000
RAILROADS - 24.8%
Burlington Northern Santa Fe 26,400 519,750
Corp.
Canadian Pacific Ltd. 28,000 538,907
CSX Corp. 22,600 501,438
Union Pacific Corp. 15,100 573,800
Westinghouse Air Brake Co. 41,996 398,962
2,532,857
SECURITIES INDUSTRY - 5.0%
Kansas City Southern 6,501 511,954
Industries, Inc.
SHIPPING - 1.2%
Kirby Corp. (a) 6,500 125,938
TRUCKING & FREIGHT - 9.2%
Circle International Group, 3,900 95,306
Inc.
CNF Transportation, Inc. 5,200 166,725
EGL, Inc. (a) 12,900 362,813
SHARES VALUE (NOTE 1)
Expeditors International of 4,900 $ 184,975
Washington, Inc.
United Parcel Service, Inc. 2,300 125,638
Class B
935,457
TOTAL COMMON STOCKS 9,489,931
(Cost $10,721,573)
CASH EQUIVALENTS - 9.5%
Central Cash Collateral Fund, 179,400 179,400
5.75% (b)
Taxable Central Cash Fund, 782,746 782,746
5.66% (b)
TOTAL CASH EQUIVALENTS 962,146
(Cost $962,146)
TOTAL INVESTMENT PORTFOLIO - 10,452,077
102.5%
(Cost $11,683,719)
NET OTHER ASSETS - (2.5)% (250,558)
NET ASSETS - 100% $ 10,201,519
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 $60,373,925 and $70,701,211, 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 $9,783 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $179,644. The fund received
cash collateral of $179,400 which was invested in cash equivalents.
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $11,843,589. Net unrealized depreciation
aggregated $1,391,512, of which $475,794 related to appreciated
investment securities and $1,867,306 related to depreciated investment
securities.
The fund hereby designates approximately $848,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 5% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2001 of amounts for use
in preparing 2000 income tax returns.
TRANSPORTATION PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 10,452,077
value (cost $11,683,719) -
See accompanying schedule
Receivable for investments 859,075
sold
Receivable for fund shares 20,981
sold
Dividends receivable 7,797
Interest receivable 3,737
Redemption fees receivable 248
Other receivables 41
TOTAL ASSETS 11,343,956
LIABILITIES
Payable for investments $ 646,240
purchased
Payable for fund shares 290,850
redeemed
Accrued management fee 5,129
Other payables and accrued 20,818
expenses
Collateral on securities 179,400
loaned, at value
TOTAL LIABILITIES 1,142,437
NET ASSETS $ 10,201,519
Net Assets consist of:
Paid in capital $ 9,433,878
Accumulated undistributed net 1,999,290
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (1,231,649)
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 486,632 $ 10,201,519
shares outstanding
NET ASSET VALUE and $20.96
redemption price per share
($10,201,519 (divided by)
486,632 shares)
Maximum offering price per $21.61
share (100/97.00 of $20.96)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 174,870
Dividends
Interest 68,796
Security lending 458
TOTAL INCOME 244,124
EXPENSES
Management fee $ 121,154
Transfer agent fees 141,804
Accounting and security 60,343
lending fees
Non-interested trustees' 62
compensation
Custodian fees and expenses 14,133
Registration fees 21,170
Audit 11,486
Legal 90
Miscellaneous 27
Total expenses before 370,269
reductions
Expense reductions (13,224) 357,045
NET INVESTMENT INCOME (LOSS) (112,921)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 3,810,546
Foreign currency transactions 6,072 3,816,618
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (2,491,180)
Assets and liabilities in (1,165) (2,492,345)
foreign currencies
NET GAIN (LOSS) 1,324,273
NET INCREASE (DECREASE) IN $ 1,211,352
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 106,609
charges paid to FDC
Sales charges - Retained by $ 106,409
FDC
Deferred sales charges $ 378
withheld by FDC
Exchange fees withheld by FSC $ 3,841
Expense reductions Directed $ 13,224
brokerage arrangements
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ (112,921) $ (164,660)
income (loss)
Net realized gain (loss) 3,816,618 6,235,364
Change in net unrealized (2,492,345) (6,047,484)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 1,211,352 23,220
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (3,020,619) (2,602,131)
from net realized gains
Share transactions Net 38,904,845 28,194,142
proceeds from sales of shares
Reinvestment of distributions 2,884,955 2,518,945
Cost of shares redeemed (49,710,711) (72,656,072)
NET INCREASE (DECREASE) IN (7,920,911) (41,942,985)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 76,905 94,942
TOTAL INCREASE (DECREASE) (9,653,273) (44,426,954)
IN NET ASSETS
NET ASSETS
Beginning of period 19,854,792 64,281,746
End of period $ 10,201,519 $ 19,854,792
OTHER INFORMATION
Shares
Sold 1,445,730 1,116,624
Issued in reinvestment of 121,282 97,938
distributions
Redeemed (1,873,381) (2,690,132)
Net increase (decrease) (306,369) (1,475,570)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 G 1999 1998 1997 1996 G
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 25.04 $ 28.34 $ 22.23 $ 21.92 $ 20.53
period
Income from Investment
Operations
Net investment income (loss) C (.14) (.18) (.02) (.13) (.09) D
Net realized and unrealized .93 (.58) 8.85 1.06 2.60
gain (loss)
Total from investment .79 (.76) 8.83 .93 2.51
operations
Less Distributions
From net realized gain (4.97) (2.64) (2.80) (.71) (1.22)
Redemption fees added to paid .10 .10 .08 .09 .10
in capital
Net asset value, end of period $ 20.96 $ 25.04 $ 28.34 $ 22.23 $ 21.92
TOTAL RETURN A, B 2.15% (1.73)% 41.15% 4.67% 12.95%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 10,202 $ 19,855 $ 64,282 $ 8,890 $ 11,445
(000 omitted)
Ratio of expenses to average 1.77% 1.96% 1.58% 2.50% E 2.47% E
net assets
Ratio of expenses to average 1.71% F 1.90% F 1.54% F 2.48% F 2.44% F
net assets after expense
reductions
Ratio of net investment (.54)% (.68)% (.06)% (.58)% (.43)%
income (loss) to average net
assets
Portfolio turnover rate 318% 182% 210% 148% 175%
</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 $.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
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.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT BANKING -22.07% 121.80% 463.69%
SELECT BANKING (LOAD ADJ.) -24.48% 115.07% 446.71%
S&P 500 11.73% 206.94% 425.47%
GS Financial Services -14.90% 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 252 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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT BANKING -22.07% 17.27% 18.88%
SELECT BANKING (LOAD ADJ.) -24.48% 16.55% 18.52%
S&P 500 11.73% 25.14% 18.05%
GS Financial Services -14.90% 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
BANKING S&P 500
00507 SP001
1990/02/28 9700.00 10000.00
1990/03/31 9462.52 10265.00
1990/04/30 8923.63 10008.38
1990/05/31 9544.73 10984.19
1990/06/30 9170.24 10909.50
1990/07/31 8613.09 10874.59
1990/08/31 7809.32 9891.53
1990/09/30 6859.42 9409.81
1990/10/31 6658.47 9369.35
1990/11/30 7544.44 9974.61
1990/12/31 8122.59 10252.90
1991/01/31 8661.61 10699.92
1991/02/28 9395.81 11464.97
1991/03/31 9925.54 11742.42
1991/04/30 10594.68 11770.60
1991/05/31 11282.40 12279.09
1991/06/30 10613.26 11716.71
1991/07/31 11496.15 12262.71
1991/08/31 12323.28 12553.34
1991/09/30 12081.65 12343.69
1991/10/31 12583.50 12509.10
1991/11/30 12007.30 12004.98
1991/12/31 13466.67 13378.35
1992/01/31 14308.95 13129.52
1992/02/29 15464.64 13300.20
1992/03/31 15249.17 13040.85
1992/04/30 16140.42 13424.25
1992/05/31 16825.99 13490.03
1992/06/30 16993.88 13289.02
1992/07/31 17013.60 13832.55
1992/08/31 16106.73 13548.98
1992/09/30 16855.88 13708.86
1992/10/31 17575.46 13756.84
1992/11/30 19014.62 14225.94
1992/12/31 20001.03 14400.92
1993/01/31 20834.41 14521.89
1993/02/28 21482.59 14719.39
1993/03/31 22398.27 15029.97
1993/04/30 21245.20 14666.24
1993/05/31 21037.52 15059.30
1993/06/30 22210.89 15102.97
1993/07/31 22273.19 15042.56
1993/08/31 22584.70 15612.67
1993/09/30 23363.49 15492.45
1993/10/31 22107.05 15813.15
1993/11/30 21411.34 15662.92
1993/12/31 22235.65 15852.44
1994/01/31 23532.41 16391.43
1994/02/28 22871.31 15947.22
1994/03/31 22489.91 15251.92
1994/04/30 23681.67 15447.15
1994/05/31 24865.11 15700.48
1994/06/30 24247.66 15315.82
1994/07/31 24890.83 15818.18
1994/08/31 25534.01 16466.72
1994/09/30 24016.12 16063.29
1994/10/31 23913.21 16424.71
1994/11/30 22369.59 15826.52
1994/12/31 22284.16 16061.23
1995/01/31 23406.59 16477.70
1995/02/28 24652.20 17119.83
1995/03/31 24857.52 17625.04
1995/04/30 25473.48 18144.10
1995/05/31 27143.43 18869.32
1995/06/30 27485.63 19307.65
1995/07/31 28553.30 19947.89
1995/08/31 29620.97 19997.96
1995/09/30 30962.40 20841.88
1995/10/31 30811.83 20767.47
1995/11/30 32577.59 21679.16
1995/12/31 32705.96 22096.70
1996/01/31 33775.25 22848.87
1996/02/29 34744.74 23060.68
1996/03/31 35771.25 23282.76
1996/04/30 35465.78 23625.95
1996/05/31 36065.41 24235.26
1996/06/30 35787.53 24327.60
1996/07/31 35846.03 23252.80
1996/08/31 37659.54 23743.20
1996/09/30 39516.92 25079.47
1996/10/31 42047.06 25771.16
1996/11/30 45600.95 27719.21
1996/12/31 44443.00 27170.09
1997/01/31 47720.46 28867.68
1997/02/28 49799.23 29094.00
1997/03/31 46445.90 27898.53
1997/04/30 48964.75 29564.07
1997/05/31 50688.97 31363.93
1997/06/30 53572.84 32769.03
1997/07/31 59340.58 35376.46
1997/08/31 55739.56 33394.67
1997/09/30 59966.18 35223.70
1997/10/31 59081.18 34047.23
1997/11/30 61797.21 35623.28
1997/12/31 64690.08 36234.93
1998/01/31 62657.19 36635.68
1998/02/28 68046.72 39277.85
1998/03/31 71813.09 41289.27
1998/04/30 73022.41 41704.64
1998/05/31 71025.51 40987.74
1998/06/30 72878.63 42652.66
1998/07/31 72990.46 42198.41
1998/08/31 56040.82 36097.36
1998/09/30 60897.27 38409.76
1998/10/31 66440.65 41534.01
1998/11/30 68597.29 44051.38
1998/12/31 72353.47 46589.63
1999/01/31 70496.95 48538.00
1999/02/28 70159.41 47029.44
1999/03/31 70091.90 48911.09
1999/04/30 77367.64 50805.42
1999/05/31 72258.46 49605.90
1999/06/30 74768.54 52359.03
1999/07/31 70264.63 50724.38
1999/08/31 66739.83 50473.29
1999/09/30 64639.19 49089.82
1999/10/31 73362.18 52196.23
1999/11/30 69766.17 53257.37
1999/12/31 65068.72 56394.23
2000/01/31 62858.45 53560.99
2000/02/29 54671.00 52547.08
IMATRL PRASUN SHR__CHT 20000229 20000313 090516 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Banking Portfolio on February 28, 1990,
and the current 3.00% sales charge was paid. As the chart shows, by
February 29, 2000, the value of the investment would have grown to
$54,671 - a 446.71% 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 $52,547 - a 425.47% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
Firstar Corp. 6.4
Bank of New York Co., Inc. 6.0
Chase Manhattan Corp. 5.7
Wells Fargo & Co. 5.5
FleetBoston Financial Corp. 4.9
SunTrust Banks, Inc. 4.8
Mellon Financial Corp. 4.7
Bank One Corp. 4.6
U.S. Bancorp 4.3
Bank of America Corp. 4.1
51.0
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Banks 89.4% Row: 1, Col: 4, Value: 89.40000000000001
Credit & Other Finance 0.6% Row: 1, Col: 3, Value: 0.6000000000000001
Computer Services & Software 0.1% Row: 1, Col: 2, Value: 0.1
*All Others 9.9% Row: 1, Col: 1, Value: 9.9
</TABLE>
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
BANKING PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
(photograph of Yolanda McGettigan)(photograph of Samuel Peters)
NOTE TO SHAREHOLDERS: The following is an interview with Yolanda
McGettigan (left), who managed Fidelity Select Banking Portfolio for
most of the period covered by this report, with additional comments
from Samuel Peters (right), who became manager of the fund on February
1, 2000.
Q. HOW DID THE FUND PERFORM, YOLANDA?
Y.M. Bank stocks continued to endure a challenging investing climate.
For the 12 months that ended February 29, 2000, the fund was down
22.07%. Over the same time, the Standard & Poor's 500 Index returned
11.73%. The Goldman Sachs Financial Services Index - an index of 252
stocks designed to measure the performance of companies in the
financial services sector - fell 14.90%.
Q. WHAT WERE THE MAIN OBSTACLES FOR BANK STOCKS DURING THE PERIOD?
Y.M. While rising interest rates were certainly detrimental, I'd say
the biggest negative driver for the group was that banks had
difficulty growing deposits. People elected to put more of their
assets into mutual funds and stocks, and less into bank checking and
savings accounts. When a bank can't grow deposits, it's funding
incremental loan volume with higher-cost, wholesale funding. This has
negative consequences for banks that derive a significant portion of
their revenues from lending and borrowing spreads, or what I call
their net interest margin. For the most part, banks reported in-line
earnings during the period. The problem was that the quality of those
earnings deteriorated as the period wore on. Increased competition
from online competitors also hurt the group.
Q. WHAT STRATEGIES DID YOU PURSUE TO TRY TO PROTECT THE FUND FROM THIS
SCENARIO?
Y.M. Since banks' problems were centered primarily around the whole
margin and spread issue, I tried to invest more in companies whose
businesses were less dependent on spread-related revenue, or income
generated mostly through loan yields. One company that fit this bill
was Bank of New York, which focuses much of its operations around
processing functions. As the capital markets continued to perform
well, I also tried to add to companies with equity underwriting and
trading exposure, including Citigroup and Chase Manhattan. The fund no
longer owned Citigroup at the end of the period.
Q. FLEET AND BANKBOSTON OFFICIALLY MERGED DURING THE PERIOD. WHAT WAS
THE EFFECT ON THE FUND?
Y.M. Overall, I'd say the effect was mostly negative. The market
remains cynical about the ability of big banks that merge to integrate
their respective businesses smoothly and effectively. While the
process seemed to be moving along nicely through the end of the
period, the market won't reward the stock - now known as FleetBoston -
until it sees the fruits of the merger. That may not happen until
later in 2000.
Q. WHICH STOCKS PERFORMED WELL DURING THE PERIOD? WHICH PERFORMED
POORLY?
Y.M. Northern Trust performed nicely. The company - which splits its
business between custody and processing operations, and private
banking - managed to avoid many of the pitfalls facing typical banks.
With so much wealth generated over the past few years, the company's
private banking services have been high in demand. In terms of
disappointments, U.S. Bancorp and Bank of America suffered from the
deposit problems I outlined earlier.
Q. TURNING TO YOU, SAM, WHAT'S IN STORE FOR THE SECTOR AND THE FUND AS
WE GET DEEPER INTO 2000?
S.P. I think we'll see continued weakness for bank stocks, with few
individual examples of outperformance. This weak group performance,
however, should provide an opportunity to buy higher-quality bank
names at attractive long-term valuations during the next few months.
This could also put the fund in excellent position to benefit when
bank stocks eventually stabilize. As far as the types of stocks I'll
be looking at, I'll continue Yolanda's approach of emphasizing
processing-oriented banks and the better-performing traditional banks.
As for interest rates, we should remain in a rising short-term rate
environment well into 2000.
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: June 30, 1986
FUND NUMBER: 507
TRADING SYMBOL: FSRBX
SIZE: as of February 29, 2000, more than
$363 million
MANAGER: Samuel Peters, since February
2000; analyst, retail and office furniture
industries, since 1999; joined Fidelity in 1999
BANKING PORTFOLIO
INVESTMENTS FEBRUARY 29, 2000
Showing Percentage of Net Assets
COMMON STOCKS - 90.1%
SHARES VALUE (NOTE 1)
BANKS - 89.4%
AmSouth Bancorp. 454,000 $ 6,583,000
Associated Banc-Corp. 75,600 1,913,625
Bank of America Corp. 325,006 14,970,589
Bank of New York Co., Inc. 649,996 21,652,992
Bank One Corp. 650,226 16,783,959
BB&T Corp. 340,450 8,000,575
Chase Manhattan Corp. 260,000 20,702,500
Comerica, Inc. 191,100 7,058,756
Commerce Bancshares, Inc. 68,450 1,967,938
Compass Bancshares, Inc. 142,600 2,308,338
First Security Corp. 226,875 5,260,664
First Union Corp. 300,000 8,850,000
First Virginia Banks, Inc. 60,400 1,902,600
Firstar Corp. 1,300,000 23,156,247
FleetBoston Financial Corp. 653,754 17,814,797
Huntington Bancshares, Inc. 280,400 5,853,350
KeyCorp 150,000 2,540,625
M&T Bank Corp. 11,000 4,059,000
Marshall & Ilsley Corp. 25,900 1,189,781
Mellon Financial Corp. 560,500 16,885,063
Mercantile Bankshares Corp. 82,000 2,060,250
National City Corp. 100,000 1,925,000
National Commmerce Bancorp 122,000 2,074,000
North Fork Bancorp, Inc. 44,700 731,963
Northern Trust Corp. 234,300 13,237,950
PNC Financial Corp. 350,000 13,540,625
Popular, Inc. 100,000 2,231,250
Regions Financial Corp. 224,000 4,536,000
SouthTrust Corp. 204,500 4,690,719
State Street Corp. 25,000 1,821,875
Summit Bancorp 209,900 5,024,481
SunTrust Banks, Inc. 343,747 17,466,644
Synovus Finanical Corp. 317,875 5,205,203
U.S. Bancorp 849,396 15,554,564
UnionBanCal Corp. 204,000 6,553,500
Wachovia Corp. 216,200 12,363,938
Wells Fargo & Co. 600,000 19,837,500
Zions Bancorp 125,000 6,632,813
324,942,674
COMPUTER SERVICES & SOFTWARE
- - 0.1%
Digital Insight Corp. 4,100 258,300
CREDIT & OTHER FINANCE - 0.6%
Old Kent Financial Corp. 90,000 2,356,875
TOTAL COMMON STOCKS 327,557,849
(Cost $327,848,789)
CASH EQUIVALENTS - 10.2%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund, 37,087,973 $ 37,087,973
5.66% (a) (Cost $37,087,973)
TOTAL INVESTMENT PORTFOLIO - 364,645,822
100.3%
(Cost $364,936,762)
NET OTHER ASSETS - (0.3)% (1,108,815)
NET ASSETS - 100% $ 363,537,007
LEGEND
(a) 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 $620,149,938 and $1,049,851,482, 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 $34,682 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 $2,914,250. The weighted average interest rate was 5.46%.
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $370,364,764. Net unrealized depreciation
aggregated $5,718,942, of which $44,520,866 related to appreciated
investment securities and $50,239,808 related to depreciated
investment securities.
The fund hereby designates approximately $176,257,000 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 2001 of amounts for use
in preparing 2000 income tax returns.
BANKING PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 364,645,822
value (cost $364,936,762) -
See accompanying schedule
Receivable for investments 11,037,469
sold
Receivable for fund shares 2,278,033
sold
Dividends receivable 846,071
Interest receivable 120,082
Redemption fees receivable 3,505
Other receivables 2,230
TOTAL ASSETS 378,933,212
LIABILITIES
Payable for investments $ 10,118,973
purchased
Payable for fund shares 4,913,020
redeemed
Accrued management fee 195,942
Other payables and accrued 168,270
expenses
TOTAL LIABILITIES 15,396,205
NET ASSETS $ 363,537,007
Net Assets consist of:
Paid in capital $ 274,462,695
Undistributed net investment 3,725,496
income
Accumulated undistributed net 85,639,756
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (290,940)
(depreciation) on investments
NET ASSETS, for 13,732,024 $ 363,537,007
shares outstanding
NET ASSET VALUE and $26.47
redemption price per share
($363,537,007 (divided by)
13,732,024 shares)
Maximum offering price per $27.29
share (100/97.00 of $26.47)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 13,949,581
Dividends
Interest 1,403,129
Security lending 7,426
TOTAL INCOME 15,360,136
EXPENSES
Management fee $ 4,050,752
Transfer agent fees 3,985,426
Accounting and security 476,476
lending fees
Non-interested trustees' 1,503
compensation
Custodian fees and expenses 18,818
Registration fees 62,355
Audit 32,494
Legal 2,951
Interest 1,766
Miscellaneous 1,188
Total expenses before 8,633,729
reductions
Expense reductions (273,296) 8,360,433
NET INVESTMENT INCOME 6,999,703
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 170,163,130
Foreign currency transactions (10,972) 170,152,158
Change in net unrealized (293,422,297)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) (123,270,139)
NET INCREASE (DECREASE) IN $ (116,270,436)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 754,724
charges paid to FDC
Sales charges - Retained by $ 753,565
FDC
Deferred sales charges $ 12,204
withheld by FDC
Exchange fees withheld by FSC $ 105,939
Expense reductions Directed $ 270,014
brokerage arrangements
Transfer agent credits 3,282
$ 273,296
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ 6,999,703 $ 11,351,194
income
Net realized gain (loss) 170,152,158 135,492,386
Change in net unrealized (293,422,297) (123,702,888)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (116,270,436) 23,140,692
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (6,587,083) (7,938,530)
From net investment income
From net realized gain (127,472,407) (74,512,814)
TOTAL DISTRIBUTIONS (134,059,490) (82,451,344)
Share transactions Net 233,488,860 506,783,832
proceeds from sales of shares
Reinvestment of distributions 127,608,941 79,475,689
Cost of shares redeemed (673,927,965) (940,968,587)
NET INCREASE (DECREASE) IN (312,830,164) (354,709,066)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 868,559 952,621
TOTAL INCREASE (DECREASE) (562,291,531) (413,067,097)
IN NET ASSETS
NET ASSETS
Beginning of period 925,828,538 1,338,895,635
End of period (including $ 363,537,007 $ 925,828,538
undistributed net investment
income of $3,725,496 and
$5,985,670, respectively)
OTHER INFORMATION
Shares
Sold 6,263,157 11,696,257
Issued in reinvestment of 3,483,815 1,891,390
distributions
Redeemed (18,286,774) (22,324,276)
Net increase (decrease) (8,539,802) (8,736,629)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 E 1999 1998 1997 1996 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 41.57 $ 43.18 $ 32.82 $ 24.37 $ 18.01
period
Income from Investment
Operations
Net investment income C .39 .39 .40 .37 .52
Net realized and unrealized (7.74) .91 11.41 9.70 6.78
gain (loss)
Total from investment (7.35) 1.30 11.81 10.07 7.30
operations
Less Distributions
From net investment income (.36) (.28) (.28) (.27) (.25)
From net realized gain (7.44) (2.66) (1.23) (1.40) (.72)
Total distributions (7.80) (2.94) (1.51) (1.67) (.97)
Redemption fees added to paid .05 .03 .06 .05 .03
in capital
Net asset value, end of period $ 26.47 $ 41.57 $ 43.18 $ 32.82 $ 24.37
TOTAL RETURN A , B (22.07)% 3.10% 36.64% 43.33% 40.94%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 363,537 $ 925,829 $ 1,338,896 $ 837,952 $ 315,178
(000 omitted)
Ratio of expenses to average 1.23% 1.17% 1.25% 1.46% 1.41%
net assets
Ratio of expenses to average 1.19% D 1.16% D 1.24% D 1.45% D 1.40% D
net assets after expense
reductions
Ratio of net investment 1.00% .91% 1.07% 1.36% 2.42%
income to average net assets
Portfolio turnover rate 94% 22% 25% 43% 103%
</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
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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT BROKERAGE AND 19.14% 268.38% 657.74%
INVESTMENT MANAGEMENT
SELECT BROKERAGE AND 15.49% 257.26% 634.93%
INVESTMENT MANAGEMENT (LOAD
ADJ.)
S&P 500 11.73% 206.94% 425.47%
GS Financial Services -14.90% 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 252 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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT BROKERAGE AND 19.14% 29.80% 22.45%
INVESTMENT MANAGEMENT
SELECT BROKERAGE AND 15.49% 29.00% 22.07%
INVESTMENT MANAGEMENT (LOAD
ADJ.)
S&P 500 11.73% 25.14% 18.05%
GS Financial Services -14.90% 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
BROKERAGE/INVT. MGT S&P 500
00068 SP001
1990/02/28 9700.00 10000.00
1990/03/31 9968.15 10265.00
1990/04/30 9291.95 10008.38
1990/05/31 10178.00 10984.19
1990/06/30 10166.06 10909.50
1990/07/31 9804.24 10874.59
1990/08/31 8473.66 9891.53
1990/09/30 7750.02 9409.81
1990/10/31 7271.47 9369.35
1990/11/30 7750.02 9974.61
1990/12/31 8228.56 10252.90
1991/01/31 8913.28 10699.92
1991/02/28 9798.71 11464.97
1991/03/31 10802.19 11742.42
1991/04/30 10955.67 11770.60
1991/05/31 11534.14 12279.09
1991/06/30 10766.14 11716.71
1991/07/31 11593.39 12262.71
1991/08/31 11853.39 12553.34
1991/09/30 12467.92 12343.69
1991/10/31 13295.18 12509.10
1991/11/30 12562.46 12004.98
1991/12/31 14996.96 13378.35
1992/01/31 15209.68 13129.52
1992/02/29 15115.14 13300.20
1992/03/31 14713.33 13040.85
1992/04/30 13566.99 13424.25
1992/05/31 13531.53 13490.03
1992/06/30 13212.45 13289.02
1992/07/31 13956.98 13832.55
1992/08/31 13555.17 13548.98
1992/09/30 13460.63 13708.86
1992/10/31 14063.34 13756.84
1992/11/30 15327.86 14225.94
1992/12/31 15765.12 14400.92
1993/01/31 16698.74 14521.89
1993/02/28 16805.10 14719.39
1993/03/31 18152.35 15029.97
1993/04/30 18093.23 14666.24
1993/05/31 18684.52 15059.30
1993/06/30 19571.44 15102.97
1993/07/31 20221.85 15042.56
1993/08/31 21818.31 15612.67
1993/09/30 22220.38 15492.45
1993/10/31 21499.02 15813.15
1993/11/30 20907.74 15662.92
1993/12/31 23541.29 15852.44
1994/01/31 24042.99 16391.43
1994/02/28 22833.77 15947.22
1994/03/31 20273.81 15251.92
1994/04/30 20106.58 15447.15
1994/05/31 20595.42 15700.48
1994/06/30 21380.13 15315.82
1994/07/31 20878.43 15818.18
1994/08/31 21032.80 16466.72
1994/09/30 20235.22 16063.29
1994/10/31 20222.36 16424.71
1994/11/30 18820.17 15826.52
1994/12/31 19476.24 16061.23
1995/01/31 19231.82 16477.70
1995/02/28 19952.21 17119.83
1995/03/31 20158.04 17625.04
1995/04/30 20768.75 18144.10
1995/05/31 21936.58 18869.32
1995/06/30 23170.76 19307.65
1995/07/31 24285.50 19947.89
1995/08/31 24059.90 19997.96
1995/09/30 25519.68 20841.88
1995/10/31 24099.71 20767.47
1995/11/30 24683.63 21679.16
1995/12/31 24071.51 22096.70
1996/01/31 25640.78 22848.87
1996/02/29 25907.00 23060.68
1996/03/31 27069.94 23282.76
1996/04/30 27234.69 23625.95
1996/05/31 28136.79 24235.26
1996/06/30 28050.87 24327.60
1996/07/31 26332.60 23252.80
1996/08/31 27334.93 23743.20
1996/09/30 28738.19 25079.47
1996/10/31 29754.83 25771.16
1996/11/30 32675.90 27719.21
1996/12/31 33617.61 27170.09
1997/01/31 36069.65 28867.68
1997/02/28 37375.47 29094.00
1997/03/31 33588.59 27898.53
1997/04/30 37222.28 29564.07
1997/05/31 39999.41 31363.93
1997/06/30 42325.80 32769.03
1997/07/31 46978.59 35376.46
1997/08/31 45539.13 33394.67
1997/09/30 52183.89 35223.70
1997/10/31 49494.00 34047.23
1997/11/30 51747.69 35623.28
1997/12/31 54566.53 36234.93
1998/01/31 52197.94 36635.68
1998/02/28 58889.22 39277.85
1998/03/31 62175.65 41289.27
1998/04/30 64886.40 41704.64
1998/05/31 63372.53 40987.74
1998/06/30 66759.99 42652.66
1998/07/31 67329.57 42198.41
1998/08/31 48503.67 36097.36
1998/09/30 44651.55 38409.76
1998/10/31 51051.76 41534.01
1998/11/30 57436.98 44051.38
1998/12/31 57661.81 46589.63
1999/01/31 63357.54 48538.00
1999/02/28 61693.79 47029.44
1999/03/31 66580.13 48911.09
1999/04/30 71689.91 50805.42
1999/05/31 69437.31 49605.90
1999/06/30 71206.13 52359.03
1999/07/31 65627.56 50724.38
1999/08/31 63148.20 50473.29
1999/09/30 60457.18 49089.82
1999/10/31 68847.71 52196.23
1999/11/30 70389.75 53257.37
1999/12/31 75334.19 56394.23
2000/01/31 72921.18 53560.99
2000/02/29 73493.00 52547.08
IMATRL PRASUN SHR__CHT 20000229 20000309 110354 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, 1990, and the current 3.00% sales charge was
paid. As the chart shows, by February 29, 2000, the value of the
investment would have grown to $73,493 - a 634.93% increase on the
initial investment - and includes the effect of a $7.50 trading fee.
For comparison, look at how the Standard & Poor's 500 Index did over
the same period. With dividends and capital gains, if any, reinvested,
the same $10,000 investment would have grown to $52,547 - a 425.47%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
Morgan Stanley Dean Witter & 9.3
Co.
Lehman Brothers Holdings, Inc. 8.3
Kansas City Southern 6.1
Industries, Inc.
Merrill Lynch & Co., Inc. 5.8
Charles Schwab Corp. 5.7
Goldman Sachs Group, Inc. 5.3
Citigroup, Inc. 4.4
Daiwa Securities Co. Ltd. 4.0
The Bear Stearns Companies, 3.7
Inc.
Nikko Securities Co. Ltd. 3.0
55.6
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Securities Industry 78.2% Row: 1, Col: 6, Value: 78.2
Credit & Other Finance 7.9% Row: 1, Col: 5, Value: 7.9
Banks 5.9% Row: 1, Col: 4, Value: 5.9
Insurance 5.8% Row: 1, Col: 3, Value: 5.8
Computer Services &
Software 2.2% Row: 1, Col: 2, Value: 2.2
*All Others 0.0% Row: 1, Col: 1, Value: 0.0
</TABLE>
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Ted Grenstein)
Ted Orenstein, Portfolio Manager of Fidelity Select Brokerage and
Investment Management Portfolio
Q. HOW DID THE FUND PERFORM, TED?
A. The fund continued to do very well relative to its benchmarks. For
the 12 months ending February 29, 2000, the fund returned 19.14%. The
Goldman Sachs Financial Services Index - an index of 252 stocks
designed to measure the performance of companies in the financial
services sector - fell 14.90% for the same period, while the Standard
& Poor's 500 Index returned 11.73%.
Q. WHY DID THE FUND OUTPERFORM ITS GOLDMAN SACHS BENCHMARK?
A. The fund had significant exposure to capital markets stocks and
less concentration on some of the slower growth areas of the financial
sector. Capital markets-oriented firms were the fastest growing stocks
in the financial sector during the past year. While many other
segments had problems contending with the Federal Reserve Board's rate
hikes, positioning of the long bond, and wider credit and swap
spreads, the overall industry fundamentals proved to be a tremendous
environment for brokerage firms.
Q. WHAT WERE SOME OF THE FACTORS THAT CONTRIBUTED TO PERFORMANCE?
A. Brokerage firms were able to benefit from the record trading and
underwriting environment - both in equity and debt - throughout much
of the year. Advisory fees were particularly strong, fueled by
domestic activity and significant demand in the international markets.
Brokerage commission levels grew solidly as well throughout the year
as a result of increased trading activity by retail customers,
institutional flows and strong exchange volumes.
Q. WHAT NOTABLE TRENDS EMERGED OVER THE PAST 12 MONTHS?
A. During the past year, many financial services companies improved
their risk management cultures and strengthened their balance sheets
by reducing exposure to high-risk instruments and lowering their
leverage levels, or equity committed to trading inventory. There also
was a concerted move toward reducing expenses with the intent of
achieving more consistent results. A good example can be found in the
asset management area. Those stocks rebounded in the second half of
1999, after suffering from high redemptions and consequently lower net
sales in the first half of the year. While the companies had been
experiencing growth early on, it was as a result of market activity,
not from new business bringing in new money. So, many of the companies
spent a good part of the year looking at expense controls and
searching for ways to improve their business. As the year came to a
close, gross sales re-surged, redemptions declined and net sales were
higher, leading to a marked improvement in results. Two companies that
added to the fund's performance were Kansas City Southern Industries,
which owns mutual fund company Janus and was a dominant player this
past year, and Waddell & Reed, which possesses an excellent
distribution system and low redemption rates.
Q. WHAT OTHER COMPANIES PERFORMED WELL DURING THE PERIOD, AND WHICH
WERE DISAPPOINTMENTS?
A. In terms of companies that did well, two that come to mind are
Morgan Stanley Dean Witter and Lehman Brothers. Morgan Stanley has a
diversified business mix that includes well-positioned securities and
credit card businesses, improving asset management and a very strong
culture of risk management. Lehman improved its business model by
focusing more on its equity capital markets rather than fixed-income,
and had significant exposure to overseas markets. On the negative
side, PaineWebber and Bear Stearns both had disappointing results,
some of this reflecting their largely domestic exposure.
Q. WHAT IS YOUR OUTLOOK FOR THE FUND?
A. I remain optimistic about the fund and the market in general.
Fundamentals are excellent, earnings are strong and return on equity
is quite high for the brokerage sector. I do have concerns over
widening credit and swap spreads and an inverted yield curve, meaning
long bonds had a lower yield than shorter-term bonds. While this is
not necessarily problematic for the brokerage and investment
management firms, it could create problems with the financial sector
over the long term by leading to a possible decline in liquidity.
However, this has not yet occurred and business fundamentals remain
very positive.
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: 068
TRADING SYMBOL: FSLBX
SIZE: as of February 29, 2000, more than
$423 million
MANAGER: Ted Orenstein, since 1999; equity
analyst for the securities brokerage industry,
1998-1999; joined Fidelity in 1998
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
INVESTMENTS FEBRUARY 29, 2000
Showing Percentage of Net Assets
COMMON STOCKS - 100.1%
SHARES VALUE (NOTE 1)
BANKS - 5.9%
Bank Sarasin & Compagnie 1 $ 2,043
Series B (Reg.)
Chase Manhattan Corp. 143,500 11,426,188
Credit Suisse Group (Reg.) 14,000 2,233,774
J.P. Morgan & Co., Inc. 5,900 654,900
Julius Baer Holding AG 1,900 5,846,154
Toronto Dominion Bank 197,000 4,987,514
25,150,573
COMPUTER SERVICES & SOFTWARE
- - 2.2%
DST Systems, Inc. (a) 161,400 9,058,575
CREDIT & OTHER FINANCE - 7.9%
American Express Co. 64,800 8,695,350
Citigroup, Inc. 363,125 18,769,023
Providian Financial Corp. 94,500 6,124,781
33,589,154
INSURANCE - 5.8%
AFLAC, Inc. 83,100 3,038,344
Ambac Financial Group, Inc. 10,000 439,375
American International Group, 21,425 1,894,773
Inc.
Hartford Life, Inc. Class A 116,500 4,121,188
Liberty Financial Companies, 73,100 1,411,744
Inc.
Marsh & McLennan Companies, 96,500 7,466,688
Inc.
Mutual Risk Management Ltd. 33,000 453,750
Nationwide Financial 111,700 2,576,081
Services, Inc. Class A
Protective Life Corp. 29,500 649,000
Reinsurance Group of America, 50 853
Inc.
Reliastar Financial Corp. 89,066 2,488,281
UICI (a) 17,800 155,750
24,695,827
REAL ESTATE INVESTMENT TRUSTS
- - 0.1%
AMRESCO Capital Trust, Inc. 36,800 340,400
SECURITIES INDUSTRY - 78.2%
A.G. Edwards, Inc. 7,300 231,319
Affiliated Managers Group, 150,200 5,904,738
Inc. (a)
AXA Financial, Inc. 250,700 7,505,331
BlackRock, Inc. Class A 169,900 3,684,706
Charles Schwab Corp. 581,500 24,313,969
Dain Rauscher Corp. 146,450 8,256,119
Daiwa Securities Co. Ltd. 1,061,000 16,799,247
DLJ, Inc. 223,000 9,686,563
E*Trade Group, Inc. (a) 123,100 3,031,338
Eaton Vance Corp. 32,500 1,346,719
Federated Investors, Inc. 446,100 10,399,706
Class B
Franklin Resources, Inc. 345,400 9,390,563
Goldman Sachs Group, Inc. 243,800 22,551,500
Investment Technology Group, 30,600 1,185,750
Inc.
Investors Group, Inc. 238,700 2,511,158
SHARES VALUE (NOTE 1)
Jefferies Group, Inc. 57,400 $ 1,341,725
John Nuveen Co. Class A 26,000 897,000
Kansas City Southern 328,700 25,885,125
Industries, Inc.
Legg Mason, Inc. 179,232 7,034,856
Lehman Brothers Holdings, 484,100 35,097,250
Inc.
Mackenzie Financial Corp. 140,100 2,102,080
Merrill Lynch & Co., Inc. 240,700 24,671,750
Morgan Keegan, Inc. 28,125 400,781
Morgan Stanley Dean Witter & 558,730 39,355,542
Co.
Neuberger Berman, Inc. 35,000 901,250
Nikko Securities Co. Ltd. 985,000 12,664,414
Nomura Securities Co. Ltd. 438,000 12,320,116
PaineWebber Group, Inc. 274,400 10,495,800
Phoenix Investment Partners 1 7
Ltd.
Pioneer Group, Inc. (a) 38,900 780,431
Raymond James Financial, Inc. 12,525 247,369
T. Rowe Price Associates, 79,000 2,602,063
Inc.
The Bear Stearns Companies, 395,686 15,530,676
Inc.
Waddell & Reed Financial, Inc.:
Class A 375,336 10,861,286
Class B 47,761 1,295,517
331,283,764
TOTAL COMMON STOCKS 424,118,293
(Cost $303,431,989)
CASH EQUIVALENTS - 0.7%
Central Cash Collateral Fund, 2,952,000 2,952,000
5.75% (b) (Cost $2,952,000)
TOTAL INVESTMENT PORTFOLIO - 427,070,293
100.8%
(Cost $306,383,989)
NET OTHER ASSETS - (0.8)% $ (3,498,403)
NET ASSETS - 100% $ 423,571,890
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 $210,699,172 and $314,111,786, 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 $18,793 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $3,028,875. The fund
received
cash collateral of $2,952,000 which was invested in cash equivalents.
The fund participated in the interfund lending program as a lender.
The average daily loan balance during the period for which loans were
out-
standing 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.
Distribution of investments by country of issue, as a percentage of
net assets, is as follows:
United States of America 85.9%
Japan 9.9
Canada 2.3
Switzerland 1.9
100.0%
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $308,497,705. Net unrealized appreciation
aggregated $118,572,588, of which $137,134,102 related to appreciated
investment securities and $18,561,514 related to depreciated
investment securities.
The fund hereby designates approximately $50,264,000 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 2001 of amounts for use
in preparing 2000 income tax returns.
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 427,070,293
value (cost $306,383,989) -
See accompanying schedule
Receivable for investments 3,978,197
sold
Receivable for fund shares 1,392,244
sold
Dividends receivable 213,634
Interest receivable 89,698
Redemption fees receivable 3,128
Other receivables 2,471
TOTAL ASSETS 432,749,665
LIABILITIES
Payable to custodian bank $ 296,874
Payable for fund shares 5,501,104
redeemed
Accrued management fee 215,094
Other payables and accrued 212,703
expenses
Collateral on securities 2,952,000
loaned, at value
TOTAL LIABILITIES 9,177,775
NET ASSETS $ 423,571,890
Net Assets consist of:
Paid in capital $ 272,534,131
Accumulated undistributed net 30,367,440
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 120,670,319
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 9,270,491 $ 423,571,890
shares outstanding
NET ASSET VALUE and $45.69
redemption price per share
($423,571,890 (divided by)
9,270,491 shares)
Maximum offering price per $47.10
share (100/97.00 of $45.69)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 4,275,085
Dividends
Interest 1,336,803
Security lending 56,441
TOTAL INCOME 5,668,329
EXPENSES
Management fee $ 2,764,553
Transfer agent fees 2,852,017
Accounting and security 348,961
lending fees
Non-interested trustees' 1,392
compensation
Custodian fees and expenses 30,485
Registration fees 113,134
Audit 23,635
Legal 1,807
Miscellaneous 11,472
Total expenses before 6,147,456
reductions
Expense reductions (48,271) 6,099,185
NET INVESTMENT INCOME (LOSS) (430,856)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 56,866,362
Foreign currency transactions 15,606 56,881,968
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 14,539,449
Assets and liabilities in (18,315) 14,521,134
foreign currencies
NET GAIN (LOSS) 71,403,102
NET INCREASE (DECREASE) IN $ 70,972,246
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 1,404,092
charges paid to FDC
Sales charges - Retained by $ 1,402,572
FDC
Deferred sales charges $ 3,484
withheld by FDC
Exchange fees withheld by FSC $ 60,190
Expense reductions Directed $ 47,406
brokerage arrangements
Custodian credits 98
Transfer agent credits 767
$ 48,271
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ (430,856) $ 1,879,801
income (loss)
Net realized gain (loss) 56,881,968 10,869,413
Change in net unrealized 14,521,134 (42,208,876)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 70,972,246 (29,459,662)
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (594,460) (201,762)
From net investment income
From net realized gain (29,239,962) (10,471,038)
TOTAL DISTRIBUTIONS (29,834,422) (10,672,800)
Share transactions Net 461,837,909 881,017,420
proceeds from sales of shares
Reinvestment of distributions 28,620,298 10,559,880
Cost of shares redeemed (591,672,937) (1,046,567,449)
NET INCREASE (DECREASE) IN (101,214,730) (154,990,149)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 1,123,789 1,580,230
TOTAL INCREASE (DECREASE) (58,953,117) (193,542,381)
IN NET ASSETS
NET ASSETS
Beginning of period 482,525,007 676,067,388
End of period (including $ 423,571,890 $ 482,525,007
undistributed net investment
income of $0 and $1,842,357,
respectively)
OTHER INFORMATION
Shares
Sold 10,180,475 21,245,778
Issued in reinvestment of 654,132 249,064
distributions
Redeemed (13,287,958) (26,767,460)
Net increase (decrease) (2,453,351) (5,272,618)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 F 1999 1998 1997 1996 F
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 41.16 $ 39.78 $ 25.76 $ 18.49 $ 15.51
period
Income from Investment
Operations
Net investment income (loss) C (.04) .10 .16 .08 .09
Net realized and unrealized 7.64 1.72 14.46 7.80 4.29
gain (loss)
Total from investment 7.60 1.82 14.62 7.88 4.38
operations
Less Distributions
From net investment income (.05) (.01) (.09) (.06) (.04)
From net realized gain (3.13) (.52) (.61) (.65) (1.09)
In excess of net realized gain - - - - (.35)
Total distributions (3.18) (.53) (.70) (.71) (1.48)
Redemption fees added to paid .11 .09 .10 .10 .08
in capital
Net asset value, end of period $ 45.69 $ 41.16 $ 39.78 $ 25.76 $ 18.49
TOTAL RETURN A, B 19.14% 4.76% 57.56% 44.27% 29.85%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 423,572 $ 482,525 $ 676,067 $ 458,787 $ 38,382
(000 omitted)
Ratio of expenses to average 1.29% 1.26% 1.33% 1.94% 1.64% D
net assets
Ratio of expenses to average 1.28% E 1.24% E 1.29% E 1.93% E 1.61% E
net assets after expense
reductions
Ratio of net investment (.09)% .26% .49% .37% .50%
income (loss) to average net
assets
Portfolio turnover rate 47% 59% 100% 16% 166%
</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
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
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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT FINANCIAL SERVICES -14.53% 146.39% 474.74%
SELECT FINANCIAL SERVICES -17.17% 138.93% 457.42%
(LOAD ADJ.)
S&P 500 11.73% 206.94% 425.47%
GS Financial Services -14.90% 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 252 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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT FINANCIAL SERVICES -14.53% 19.76% 19.11%
SELECT FINANCIAL SERVICES -17.17% 19.03% 18.75%
(LOAD ADJ.)
S&P 500 11.73% 25.14% 18.05%
GS Financial Services -14.90% 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
Financial Services S&P 500
00066 SP001
1990/02/28 9700.00 10000.00
1990/03/31 9550.17 10265.00
1990/04/30 9211.42 10008.38
1990/05/31 10022.46 10984.19
1990/06/30 9742.34 10909.50
1990/07/31 9116.96 10874.59
1990/08/31 8025.79 9891.53
1990/09/30 6830.39 9409.81
1990/10/31 6234.32 9369.35
1990/11/30 7113.77 9974.61
1990/12/31 7736.83 10252.90
1991/01/31 8439.87 10699.92
1991/02/28 9409.47 11464.97
1991/03/31 9859.29 11742.42
1991/04/30 10179.16 11770.60
1991/05/31 10958.84 12279.09
1991/06/30 10069.20 11716.71
1991/07/31 10865.54 12262.71
1991/08/31 11585.25 12553.34
1991/09/30 11515.27 12343.69
1991/10/31 11768.50 12509.10
1991/11/30 10895.53 12004.98
1991/12/31 12504.91 13378.35
1992/01/31 13127.80 13129.52
1992/02/29 14070.55 13300.20
1992/03/31 13754.05 13040.85
1992/04/30 14282.67 13424.25
1992/05/31 14895.46 13490.03
1992/06/30 15238.20 13289.02
1992/07/31 15673.96 13832.55
1992/08/31 14774.98 13548.98
1992/09/30 15234.76 13708.86
1992/10/31 15838.67 13756.84
1992/11/30 17029.31 14225.94
1992/12/31 17859.52 14400.92
1993/01/31 18986.03 14521.89
1993/02/28 19490.76 14719.39
1993/03/31 20511.20 15029.97
1993/04/30 19529.27 14666.24
1993/05/31 19536.68 15059.30
1993/06/30 20266.02 15102.97
1993/07/31 20810.24 15042.56
1993/08/31 21458.14 15612.67
1993/09/30 21954.23 15492.45
1993/10/31 21365.58 15813.15
1993/11/30 20414.11 15662.92
1993/12/31 20994.65 15852.44
1994/01/31 22419.87 16391.43
1994/02/28 21606.06 15947.22
1994/03/31 20619.37 15251.92
1994/04/30 21402.36 15447.15
1994/05/31 22315.91 15700.48
1994/06/30 21789.03 15315.82
1994/07/31 22549.60 15818.18
1994/08/31 23339.92 16466.72
1994/09/30 21580.82 16063.29
1994/10/31 21466.10 16424.71
1994/11/30 20106.41 15826.52
1994/12/31 20228.87 16061.23
1995/01/31 21275.03 16477.70
1995/02/28 22626.13 17119.83
1995/03/31 23024.89 17625.04
1995/04/30 23747.35 18144.10
1995/05/31 25065.60 18869.32
1995/06/30 25182.88 19307.65
1995/07/31 26027.32 19947.89
1995/08/31 27040.64 19997.96
1995/09/30 28584.07 20841.88
1995/10/31 27852.23 20767.47
1995/11/30 29728.75 21679.16
1995/12/31 29805.26 22096.70
1996/01/31 31198.79 22848.87
1996/02/29 31462.17 23060.68
1996/03/31 31835.69 23282.76
1996/04/30 31482.37 23625.95
1996/05/31 32213.95 24235.26
1996/06/30 32685.30 24327.60
1996/07/31 31973.36 23252.80
1996/08/31 32925.89 23743.20
1996/09/30 35110.80 25079.47
1996/10/31 37334.99 25771.16
1996/11/30 40541.16 27719.21
1996/12/31 39378.00 27170.09
1997/01/31 41722.48 28867.68
1997/02/28 42642.79 29094.00
1997/03/31 39439.70 27898.53
1997/04/30 42761.22 29564.07
1997/05/31 44164.99 31363.93
1997/06/30 46513.62 32769.03
1997/07/31 51723.80 35376.46
1997/08/31 48786.66 33394.67
1997/09/30 51912.77 35223.70
1997/10/31 51221.67 34047.23
1997/11/30 52954.80 35623.28
1997/12/31 55909.96 36234.93
1998/01/31 55309.97 36635.68
1998/02/28 60162.33 39277.85
1998/03/31 63424.42 41289.27
1998/04/30 64475.57 41704.64
1998/05/31 63269.34 40987.74
1998/06/30 66156.59 42652.66
1998/07/31 66368.33 42198.41
1998/08/31 51290.45 36097.36
1998/09/30 53093.38 38409.76
1998/10/31 58418.76 41534.01
1998/11/30 61767.97 44051.38
1998/12/31 63812.45 46589.63
1999/01/31 65009.38 48538.00
1999/02/28 65229.36 47029.44
1999/03/31 67474.41 48911.09
1999/04/30 72642.39 50805.42
1999/05/31 67929.89 49605.90
1999/06/30 70634.97 52359.03
1999/07/31 66916.30 50724.38
1999/08/31 63375.34 50473.29
1999/09/30 61216.54 49089.82
1999/10/31 69792.51 52196.23
1999/11/30 65988.28 53257.37
1999/12/31 64806.84 56394.23
2000/01/31 61604.90 53560.99
2000/02/29 55742.00 52547.08
IMATRL PRASUN SHR__CHT 20000229 20000316 093816 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Financial Services Portfolio on February
28, 1990, and the current 3.00% sales charge was paid. As the chart
shows, by February 29, 2000, the value of the investment would have
grown to $55,742 - a 457.42% increase on the initial investment - and
includes the effect of a $7.50 trading fee. For comparison, look at
how the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $52,547 - a 425.47% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
Citigroup, Inc. 6.2
American International Group, 5.0
Inc.
Morgan Stanley Dean Witter & 4.6
Co.
Bank of America Corp. 4.6
Fannie Mae 4.5
Chase Manhattan Corp. 4.4
American Express Co. 4.1
Berkshire Hathaway, Inc. 3.4
Class A
Wells Fargo & Co. 3.3
Freddie Mac 3.2
43.3
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Banks 27.7% Row: 1, Col: 6, Value: 27.7
Insurance 20.5% Row: 1, Col: 5, Value: 20.5
Securities Industry 16.0% Row: 1, Col: 4, Value: 16.0
Credit & Other Finance 15.2% Row: 1, Col: 3, Value: 15.2
Federal Sponsored Credit 8.4% Row: 1, Col: 2, Value: 8.4
*All Others 12.2% Row: 1, Col: 1, Value: 12.2
</TABLE>
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
FINANCIAL SERVICES PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
(photograph of Robert Ewing)(photograph of James Catudal)
NOTE TO SHAREHOLDERS: The following is an interview with Robert Ewing
(left), who managed Fidelity Select Financial Services Portfolio for
most the period covered by this report, with additional comments from
James Catudal (right), who became manager of the fund on February 1,
2000.
Q. HOW DID THE FUND PERFORM, BOB?
R.E. For the 12 months that ended February 29, 2000, the fund returned
- -14.53%. During the same time, the Goldman Sachs Financial Services
Index - an index of 252 companies designed to measure the performance
of companies in the financial services sector - had a return of
- -14.90%, while the Standard & Poor's 500 Index, a measure of the
broader market's performance, returned 11.73%.
Q. WHAT FACTORS AFFECTED PERFORMANCE DURING THE PERIOD?
R.E. Rising interest rates made it a challenging period for financial
services stocks. Higher rates traditionally have created difficulties
for these stocks for two reasons. First, the "spreads" between
short-term and long-term rates typically narrow, squeezing the
profitability of lending. Second, higher rates often signal the
beginning of the end of an economic growth cycle. Throughout the
period, we emphasized consumer stocks while de-emphasizing traditional
banks and property and casualty companies. The decision to emphasize
consumer-related companies was the least successful. While the
companies performed reasonably well, investors worried about
potentially slower economic growth. The decision to de-emphasize
traditional banks was more successful. These stocks were hurt both by
the rising interest-rate environment and by new competitive threats,
including those from the Internet and from traditional securities
firms. Similarly, the decision to underweight property and casualty
companies worked out well. Strong price competition hurt the group,
especially those in consumer businesses such as homeowners and
automobile insurance. Online competitors also were a threat.
Q. WHAT WERE SOME OF THE CONTRIBUTORS TO PERFORMANCE?
R.E. Citigroup was a healthy contributor. The company did an excellent
job combining the former Citicorp and Travelers organizations, and it
was the beneficiary of strong activity in the capital markets. While
most consumer stocks were disappointing, an exception was American
Express, the beneficiary of heavy charge card usage and a rising
number of consumer accounts. Investors also saw American Express as
well-positioned to take advantage of accelerating consumer spending on
the Internet.
Q. WHAT INVESTMENTS DISAPPOINTED YOU?
R.E. Associates First Capital, a consumer finance company, was very
disappointing. Earnings quality deteriorated as it experienced credit
problems in home equity loans and manufactured housing loans. Rising
interest rates hurt mortgage-related stocks such as Freddie Mac and
Fannie Mae, even though their businesses remained fundamentally
strong. BankAmerica also performed poorly. It had minor earnings
problems and was caught by concerns about the possibility of slowing
economic growth.
Q. TURNING TO YOU, JIM, HOW WOULD YOU DESCRIBE YOUR INVESTMENT STYLE?
J.C. I look for companies with solid strategies and strong managements
that are able to execute those strategies. I prefer attractive
valuations, but I don't just buy cheap stocks. While I am a bottom-up
manager who looks for stocks of good companies, I recognize that it
can be difficult to invest in a company where the macroeconomic trends
are moving against it.
Q. WHAT IS YOUR OUTLOOK, JIM?
J.C. The general outlook is mixed, at best. The Federal Reserve Board
has maintained its policy of raising short-term interest rates to slow
economic growth, making it difficult for financial services stocks.
During the past six months, most financial companies did not have
earnings difficulties, yet their stock prices fell because of concerns
about slower economic growth. For the most part, the only stocks to do
well have been brokerage and securities firms, and they may be
vulnerable if investors lose their enthusiasm for technology stocks.
In this environment, I will focus on companies that have demonstrated
their ability to generate strong revenue growth. I also will look for
opportunities in special situations, either where a low stock
valuation is inconsistent with the company's fundamental strengths or
where a company is turning its business around.
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 10, 1981
FUND NUMBER: 066
TRADING SYMBOL: FIDSX
SIZE: as of February 29, 2000, more than
$344 million
MANAGER: James Catudal, since February 2000;
manager, Fidelity Select Energy Service Portfolio,
1998-February 2000; Fidelity Select Industrial
Materials Portfolio, 1997-1998; joined
Fidelity in 1997
FINANCIAL SERVICES PORTFOLIO
INVESTMENTS FEBRUARY 29, 2000
Showing Percentage of Net Assets
COMMON STOCKS - 95.0%
SHARES VALUE (NOTE 1)
BANKS - 27.7%
Bank of America Corp. 341,079 $ 15,710,951
Bank of New York Co., Inc. 227,736 7,586,456
Bank One Corp. 175,519 4,530,584
Capital One Financial Corp. 39,000 1,435,688
Chase Manhattan Corp. 191,700 15,264,113
Comerica, Inc. 45,167 1,668,356
First Union Corp. 106,101 3,129,980
Firstar Corp. 200,000 3,562,500
FleetBoston Financial Corp. 191,234 5,211,127
Marshall & Ilsley Corp. 48,000 2,205,000
Mellon Financial Corp. 160,000 4,820,000
PNC Financial Corp. 59,000 2,282,563
State Street Corp. 33,000 2,404,875
SunTrust Banks, Inc. 35,000 1,778,438
Synovus Finanical Corp. 30,000 491,250
Toronto Dominion Bank 80,000 2,025,386
U.S. Bancorp 220,089 4,030,380
U.S. Trust Corp. 5,000 692,500
UnionBanCal Corp. 35,000 1,124,375
Wachovia Corp. 37,000 2,115,938
Wells Fargo & Co. 342,200 11,313,988
Zions Bancorp 40,000 2,122,500
95,506,948
COMPUTER SERVICES & SOFTWARE
- - 0.2%
Intuit, Inc. (a) 11,800 619,500
MatrixOne, Inc. 100 2,500
Onvia.com, Inc. 200 4,200
626,200
CREDIT & OTHER FINANCE - 15.2%
American Express Co. 106,300 14,264,131
Associates First Capital 305,200 6,065,850
Corp. Class A
Citigroup, Inc. 412,500 21,321,083
Household International, Inc. 159,046 5,079,532
MBNA Corp. 145,500 3,310,125
Metris Companies, Inc. 12,000 310,500
NextCard, Inc. 9,000 203,625
Providian Financial Corp. 27,500 1,782,344
52,337,190
FEDERAL SPONSORED CREDIT - 8.4%
Fannie Mae 291,500 15,449,500
Freddie Mac 262,600 10,963,550
SLM Holding Corp. 76,000 2,379,750
28,792,800
HOLDING COMPANIES - 0.2%
PartnerRe Ltd. 20,000 620,000
SHARES VALUE (NOTE 1)
INSURANCE - 20.5%
ACE Ltd. 102,000 $ 1,823,250
AFLAC, Inc. 127,000 4,643,438
Allmerica Financial Corp. 31,200 1,302,600
Ambac Financial Group, Inc. 50,400 2,214,450
American General Corp. 50,000 2,609,375
American International Group, 196,362 17,365,764
Inc.
Arthur J. Gallagher & Co. 22,000 1,124,750
Berkshire Hathaway, Inc. 269 11,836,000
Class A (a)
E.W. Blanch Holdings, Inc. 11,000 517,000
Hartford Financial Services 67,000 2,093,750
Group, Inc.
Hartford Life, Inc. Class A 85,000 3,006,875
HCC Insurance Holdings, Inc. 20,000 255,000
Jefferson-Pilot Corp. 25,000 1,301,563
Loews Corp. 25,000 1,112,500
Marsh & McLennan Companies, 62,500 4,835,938
Inc.
MBIA, Inc. 147,400 5,656,475
Mutual Risk Management Ltd. 63,000 866,250
Nationwide Financial 50,000 1,153,125
Services, Inc. Class A
PMI Group, Inc. 19,600 711,725
Reliastar Financial Corp. 43,305 1,209,833
The Chubb Corp. 14,000 688,625
Travelers Property Casualty 50,000 1,581,250
Corp. Class A
UICI (a) 25,000 218,750
Xl Capital Ltd. 60,000 2,426,250
70,554,536
LODGING & GAMING - 0.3%
Starwood Hotels & Resorts 40,000 897,500
Worldwide, Inc. unit
REAL ESTATE INVESTMENT TRUSTS
- - 4.3%
AMB Property Corp. 50,000 1,009,375
Apartment Investment & 10,000 370,000
Management Co. Class A
Cousins Properties, Inc. 20,000 710,000
Crescent Real Estate Equities 90,000 1,535,625
Co.
Duke-Weeks Realty Corp. 50,000 918,750
Equity Office Properties Trust 65,000 1,555,938
Equity Residential Properties 35,000 1,397,813
Trust (SBI)
First Industrial Realty 13,000 338,000
Trust, Inc.
Indymac Mortgage Holdings, 190,000 2,410,625
Inc.
Kimco Realty Corp. 25,000 860,938
ProLogis Trust 25,000 451,563
Public Storage, Inc. 35,000 772,188
Simon Property Group, Inc. 50,000 1,175,000
Spieker Properties, Inc. 34,000 1,364,250
14,870,065
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SAVINGS & LOANS - 1.8%
Charter One Financial, Inc. 57,750 $ 909,563
Commercial Federal Corp. 50,000 646,875
Golden State Bancorp, Inc. (a) 75,000 965,625
Golden West Financial Corp. 60,000 1,710,000
TCF Financial Corp. 80,000 1,585,000
Washington Mutual, Inc. 13,880 307,095
6,124,158
SECURITIES INDUSTRY - 16.0%
AXA Financial, Inc. 55,200 1,652,550
Charles Schwab Corp. 175,000 7,317,188
DLJ, Inc. 32,000 1,390,000
Eaton Vance Corp. 10,000 414,375
Federated Investors, Inc. 28,300 659,744
Class B
Franklin Resources, Inc. 25,000 679,688
Goldman Sachs Group, Inc. 105,000 9,712,500
Investors Group, Inc. 200,000 2,104,029
Lehman Brothers Holdings, 22,800 1,653,000
Inc.
Merrill Lynch & Co., Inc. 80,000 8,200,000
Morgan Stanley Dean Witter & 226,200 15,932,963
Co.
The Bear Stearns Companies, 45,387 1,781,440
Inc.
Waddell & Reed Financial, 128,535 3,719,482
Inc. Class A
55,216,959
SERVICES - 0.4%
CheckFree Holdings Corp. (a) 15,000 1,319,063
TOTAL COMMON STOCKS 326,865,419
(Cost $295,782,508)
CASH EQUIVALENTS - 6.3%
Central Cash Collateral Fund, 3,478,000 3,478,000
5.75% (b)
Taxable Central Cash Fund, 18,136,843 18,136,843
5.66% (b)
TOTAL CASH EQUIVALENTS 21,614,843
(Cost $21,614,843)
TOTAL INVESTMENT PORTFOLIO - 348,480,262
101.3%
(Cost $317,397,351)
NET OTHER ASSETS - (1.3)% (4,328,576)
NET ASSETS - 100% $ 344,151,686
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 $269,455,287 and $387,300,288, 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 $19,290 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $3,456,263. The fund
received cash collateral of $3,478,000 which was invested in cash
equivalents.
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $319,052,558. Net unrealized appreciation
aggregated $29,427,704, of which $66,414,140 related to appreciated
investment securities and $36,986,436 related to depreciated
investment securities.
The fund hereby designates approximately $39,067,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 100% of the dividends distributed the fiscal year qualifies
for the dividends-received deductions for corporate shareholders
(unaudited).
The fund will notify shareholders in January 2001 of amounts for the
use in preparing 2000 income tax returns.
FINANCIAL SERVICES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 348,480,262
value (cost $317,397,351) -
See accompanying schedule
Receivable for investments 53,663
sold
Receivable for fund shares 3,387,966
sold
Dividends receivable 364,184
Interest receivable 102,920
Redemption fees receivable 3,197
Other receivables 919
TOTAL ASSETS 352,393,111
LIABILITIES
Payable for investments $ 29,800
purchased
Payable for fund shares 4,379,443
redeemed
Accrued management fee 175,437
Other payables and accrued 178,745
expenses
Collateral on securities 3,478,000
loaned, at value
TOTAL LIABILITIES 8,241,425
NET ASSETS $ 344,151,686
Net Assets consist of:
Paid in capital $ 291,351,964
Undistributed net investment 1,570,371
income
Accumulated undistributed net 20,146,440
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 31,082,911
(depreciation) on investments
NET ASSETS, for 4,232,554 $ 344,151,686
shares outstanding
NET ASSET VALUE and $81.31
redemption price per share
($344,151,686 (divided by)
4,232,554 shares)
Maximum offering price per $83.82
share (100/97.00 of $81.31)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 7,740,066
Dividends
Interest 1,682,199
Security lending 11,312
TOTAL INCOME 9,433,577
EXPENSES
Management fee $ 2,973,467
Transfer agent fees 2,628,737
Accounting and security 371,216
lending fees
Non-interested trustees' 1,338
compensation
Custodian fees and expenses 14,226
Registration fees 85,267
Audit 21,956
Legal 2,032
Miscellaneous 830
Total expenses before 6,099,069
reductions
Expense reductions (70,138) 6,028,931
NET INVESTMENT INCOME 3,404,646
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 39,254,901
Foreign currency transactions (112) 39,254,789
Change in net unrealized (106,918,398)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) (67,663,609)
NET INCREASE (DECREASE) IN $ (64,258,963)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 1,218,365
charges paid to FDC
Sales charges - Retained by $ 1,205,409
FDC
Deferred sales charges $ 18,493
withheld by FDC
Exchange fees withheld by FSC $ 56,432
Expense reductions Directed $ 69,294
brokerage arrangements
Custodian credits 4
Transfer agent credits 840
$ 70,138
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ 3,404,646 $ 3,605,509
income
Net realized gain (loss) 39,254,789 21,785,427
Change in net unrealized (106,918,398) 9,159,238
appreciation (depreciation)
NET INCREASE (DECREASE) IN (64,258,963) 34,550,174
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (3,318,425) (1,162,919)
From net investment income
From net realized gain (25,466,741) (66,118,174)
TOTAL DISTRIBUTIONS (28,785,166) (67,281,093)
Share transactions Net 375,427,486 389,871,130
proceeds from sales of shares
Reinvestment of distributions 27,476,805 66,001,479
Cost of shares redeemed (513,506,187) (481,672,418)
NET INCREASE (DECREASE) IN (110,601,896) (25,799,809)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 798,200 622,623
TOTAL INCREASE (DECREASE) (202,847,825) (57,908,105)
IN NET ASSETS
NET ASSETS
Beginning of period 546,999,511 604,907,616
End of period (including $ 344,151,686 $ 546,999,511
undistributed net investment
income of $1,570,371 and
$3,679,892, respectively)
OTHER INFORMATION
Shares
Sold 3,739,478 3,952,203
Issued in reinvestment of 281,965 658,905
distributions
Redeemed (5,214,250) (5,042,955)
Net increase (decrease) (1,192,807) (431,847)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 E 1999 1998 1997 1996 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 100.82 $ 103.28 $ 82.94 $ 65.70 $ 48.23
period
Income from Investment
Operations
Net investment income C .67 .56 .70 .74 1.03
Net realized and unrealized (14.61) 7.88 30.65 21.55 17.56
gain (loss)
Total from investment (13.94) 8.44 31.35 22.29 18.59
operations
Less Distributions
From net investment income (.64) (.19) (.64) (.63) (.37)
From net realized gain (5.09) (10.81) (10.51) (4.56) (.91)
Total distributions (5.73) (11.00) (11.15) (5.19) (1.28)
Redemption fees added to paid .16 .10 .14 .14 .16
in capital
Net asset value, end of period $ 81.31 $ 100.82 $ 103.28 $ 82.94 $ 65.70
TOTAL RETURN A, B (14.53)% 8.42% 41.08% 35.54% 39.05%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 344,152 $ 547,000 $ 604,908 $ 426,424 $ 270,466
(000 omitted)
Ratio of expenses to average 1.19% 1.20% 1.31% 1.45% 1.42%
net assets
Ratio of expenses to average 1.17% D 1.18% D 1.29% D 1.43% D 1.41% D
net assets after expense
reductions
Ratio of net investment .66% .58% .78% 1.03% 1.78%
income to average net assets
Portfolio turnover rate 57% 60% 84% 80% 125%
</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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT HOME FINANCE -24.88% 69.94% 477.77%
SELECT HOME FINANCE (LOAD -27.21% 64.77% 460.36%
ADJ.)
S&P 500 11.73% 206.94% 425.47%
GS Financial Services -14.90% 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 252 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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT HOME FINANCE -24.88% 11.19% 19.17%
SELECT HOME FINANCE (LOAD -27.21% 10.50% 18.81%
ADJ.)
S&P 500 11.73% 25.14% 18.05%
GS Financial Services -14.90% 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
HOME FINANCE S&P 500
00098 SP001
1990/02/28 9700.00 10000.00
1990/03/31 9721.13 10265.00
1990/04/30 9488.67 10008.38
1990/05/31 10386.82 10984.19
1990/06/30 10281.15 10909.50
1990/07/31 9393.57 10874.59
1990/08/31 8442.59 9891.53
1990/09/30 7713.51 9409.81
1990/10/31 7132.35 9369.35
1990/11/30 7903.70 9974.61
1990/12/31 8658.66 10252.90
1991/01/31 9486.88 10699.92
1991/02/28 10777.62 11464.97
1991/03/31 11272.40 11742.42
1991/04/30 11659.62 11770.60
1991/05/31 12143.64 12279.09
1991/06/30 11466.01 11716.71
1991/07/31 12692.20 12262.71
1991/08/31 13176.23 12553.34
1991/09/30 13068.67 12343.69
1991/10/31 12842.79 12509.10
1991/11/30 12251.20 12004.98
1991/12/31 14252.65 13378.35
1992/01/31 15657.23 13129.52
1992/02/29 16680.72 13300.20
1992/03/31 16397.62 13040.85
1992/04/30 16746.04 13424.25
1992/05/31 18401.05 13490.03
1992/06/30 18424.10 13289.02
1992/07/31 19330.03 13832.55
1992/08/31 18282.21 13548.98
1992/09/30 18576.91 13708.86
1992/10/31 18926.18 13756.84
1992/11/30 20869.01 14225.94
1992/12/31 22498.19 14400.92
1993/01/31 24112.32 14521.89
1993/02/28 24521.37 14719.39
1993/03/31 25394.77 15029.97
1993/04/30 24019.27 14666.24
1993/05/31 23608.21 15059.30
1993/06/30 24197.03 15102.97
1993/07/31 25752.39 15042.56
1993/08/31 27107.78 15612.67
1993/09/30 28840.90 15492.45
1993/10/31 29063.10 15813.15
1993/11/30 27763.25 15662.92
1993/12/31 28639.07 15852.44
1994/01/31 29892.91 16391.43
1994/02/28 29330.44 15947.22
1994/03/31 28779.69 15251.92
1994/04/30 29892.40 15447.15
1994/05/31 31736.09 15700.48
1994/06/30 32264.62 15315.82
1994/07/31 32977.51 15818.18
1994/08/31 34046.85 16466.72
1994/09/30 32879.18 16063.29
1994/10/31 30912.58 16424.71
1994/11/30 29314.71 15826.52
1994/12/31 29406.91 16061.23
1995/01/31 30702.86 16477.70
1995/02/28 32977.65 17119.83
1995/03/31 32922.51 17625.04
1995/04/30 34645.84 18144.10
1995/05/31 36700.05 18869.32
1995/06/30 37086.07 19307.65
1995/07/31 38575.03 19947.89
1995/08/31 42131.98 19997.96
1995/09/30 43014.33 20841.88
1995/10/31 42228.49 20767.47
1995/11/30 44558.43 21679.16
1995/12/31 45137.07 22096.70
1996/01/31 46371.18 22848.87
1996/02/29 47236.47 23060.68
1996/03/31 48314.54 23282.76
1996/04/30 47697.70 23625.95
1996/05/31 48760.89 24235.26
1996/06/30 48979.35 24327.60
1996/07/31 49853.20 23252.80
1996/08/31 51906.75 23743.20
1996/09/30 54528.30 25079.47
1996/10/31 58358.68 25771.16
1996/11/30 62727.94 27719.21
1996/12/31 61781.79 27170.09
1997/01/31 65795.56 28867.68
1997/02/28 69673.02 29094.00
1997/03/31 63220.69 27898.53
1997/04/30 65115.59 29564.07
1997/05/31 69479.26 31363.93
1997/06/30 75410.61 32769.03
1997/07/31 82505.61 35376.46
1997/08/31 79095.48 33394.67
1997/09/30 86190.48 35223.70
1997/10/31 85511.69 34047.23
1997/11/30 85996.54 35623.28
1997/12/31 90046.66 36234.93
1998/01/31 84929.78 36635.68
1998/02/28 92242.08 39277.85
1998/03/31 98465.30 41289.27
1998/04/30 100785.86 41704.64
1998/05/31 97276.26 40987.74
1998/06/30 95592.36 42652.66
1998/07/31 91870.05 42198.41
1998/08/31 67480.09 36097.36
1998/09/30 70971.96 38409.76
1998/10/31 72886.29 41534.01
1998/11/30 76980.83 44051.38
1998/12/31 76714.95 46589.63
1999/01/31 76413.62 48538.00
1999/02/28 74605.64 47029.44
1999/03/31 76236.37 48911.09
1999/04/30 80639.21 50805.42
1999/05/31 77699.05 49605.90
1999/06/30 77645.27 52359.03
1999/07/31 76175.19 50724.38
1999/08/31 70994.06 50473.29
1999/09/30 70312.80 49089.82
1999/10/31 77107.43 52196.23
1999/11/30 71101.62 53257.37
1999/12/31 67227.10 56394.23
2000/01/31 63330.14 53560.99
2000/02/29 56036.00 52547.08
IMATRL PRASUN SHR__CHT 20000229 20000320 163136 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Home Finance Portfolio on February 28,
1990, and the current 3.00% sales charge was paid. As the chart shows,
by February 29, 2000, the value of the investment would have grown to
$56,036 - a 460.36% 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 $52,547 - a 425.47% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
Freddie Mac 13.9
Fannie Mae 13.3
Golden West Financial Corp. 8.1
PMI Group, Inc. 5.6
TCF Financial Corp. 4.9
Charter One Financial, Inc. 3.8
Washington Federal, Inc. 3.4
Dime Bancorp, Inc. 2.9
Wells Fargo & Co. 2.8
Chase Manhattan Corp. 2.2
60.9
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Savings & loans 35.5% Row: 1, Col: 6, Value: 35.5
Federal Sponsored Credit 27.2% Row: 1, Col: 5, Value: 27.2
Banks 10.9% Row: 1, Col: 4, Value: 10.9
Insurance 9.6% Row: 1, Col: 3, Value: 9.6
Credit & Other Finance 5.9% Row: 1, Col: 2, Value: 5.9
*All Others 10.9% Row: 1, Col: 1, Value: 10.9
</TABLE>
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
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. Not well. For the 12 months that ended February 29, 2000, the fund
returned -24.88%, trailing both the 11.73% return of the Standard &
Poor's 500 Index and the -14.90% return of the Goldman Sachs Financial
Services Index, an index of 252 stocks designed to measure the
performance of companies in the financial services sector.
Q. WHY DID THE FUND UNDERPERFORM THE INDEXES DURING THE PERIOD?
A. Rising interest rates were the main culprit. Although rising rates
tend to have a negative impact on stock prices generally, home finance
stocks are one of the most rate-sensitive groups in the financial
services sector. That's because higher rates tend to reduce borrowing
by homeowners and limit the growth of mortgage finance companies' loan
portfolios. Another unfavorable influence was the slightly inverted
yield curve - that is, the yields of some short-term debt securities
were higher than those of their longer-term counterparts. An inverted
yield curve is detrimental to home finance companies because they
borrow short-term funds from depositors and lend mortgage money on a
long-term basis. Profits are generated when long-term rates are above
short-term rates. When the yield curve is inverted, profit margins are
squeezed.
Q. AREN'T COMPANIES IN THE GOLDMAN SACHS INDEX RATE-SENSITIVE TOO?
A. They are to some extent. Remember, though, that the Goldman Sachs
index comprises more than just home finance stocks. For example, there
also are money center banks, which derive substantial revenue from
fees and venture capital activities. Another industry represented in
the index, brokerage firms, receives income from commissions on stock
transactions as well as from investment banking activities. These
various revenue streams were quite strong during the period, aided by
robust economic growth and sharply advancing stock prices in a few
less rate-sensitive sectors of the stock market.
Q. WHAT STOCKS PERFORMED WELL DURING THE PERIOD?
A. CMAC Investment Corp., which became a wholly owned subsidiary of
Radian Group during the period, and MGIC Investment Corp. were two
mortgage insurance holdings that did relatively well. Mortgage
insurance stocks rebounded after hitting a low point in 1998, when it
appeared that government-sponsored mortgage entities (GSEs) such as
Fannie Mae and Freddie Mac might enter the mortgage insurance business
and take away market share from existing players. As it turned out,
the GSEs decided to stay out of mortgage insurance, which triggered
stronger share prices in the group. In addition, investors responded
positively to cost-cutting initiatives by MGIC and CMAC. A third
holding that performed better than most was Long Beach Financial, an
originator of loans to borrowers with less-than-ideal credit
histories. The stock strengthened as the company was being acquired by
savings and loan company Washington Mutual.
Q. WHAT STOCKS DETRACTED FROM PERFORMANCE?
A. Freddie Mac and Fannie Mae, the two GSEs mentioned above, did
poorly during the period. Although their earnings were largely
insulated from rising interest rates, investors sold them along with
other home finance stocks. Charter One Financial, a savings and loan
making the transition to a commercial bank, was another
disappointment. The stock responded negatively to a recent acquisition
that raised questions about the viability of the company's business
strategy. Another lackluster holding was Washington Mutual. Following
a series of acquisitions in the past several years, the stock faltered
when the company missed its earnings estimates.
Q. WHAT'S YOUR OUTLOOK, VICTOR?
A. As long as the economy stays in overdrive and the Federal Reserve
Board feels compelled to raise interest rates to keep inflation in
check, home finance stocks will probably struggle. On the positive
side, the worst of the sector's underperformance due to higher rates
is probably behind us. While I expect several more rate hikes this
year, subsequent increases will probably have less impact on mortgage
finance stocks, financially and psychologically, than the increases
we've seen so far. My strategy in this challenging environment will be
to stick with the companies whose business models make sense at this
advanced stage of the business cycle and those with the lowest cost
structures and best balance sheets.
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: 098
TRADING SYMBOL: FSVLX
SIZE: as of February 29, 2000, more than
$213 million
MANAGER: Victor Thay, since 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 FEBRUARY 29, 2000
Showing Percentage of Net Assets
COMMON STOCKS - 94.7%
SHARES VALUE (NOTE 1)
BANKS - 10.9%
Chase Manhattan Corp. 59,300 $ 4,721,763
North Fork Bancorp, Inc. 130,900 2,143,488
Peoples Heritage Financial 370,775 3,939,484
Group, Inc.
PNC Financial Corp. 114,100 4,414,244
Seacoast Financial Services 210,700 2,080,663
Corp.
Wells Fargo & Co. 178,600 5,904,963
23,204,605
COMPUTER SERVICES & SOFTWARE
- - 5.1%
Automatic Data Processing, 30,000 1,306,875
Inc.
Digital Insight Corp. 2,400 151,200
First Data Corp. 50,000 2,250,000
Homestore.com, Inc. 20,000 1,366,250
Intuit, Inc. (a) 65,000 3,412,500
The Bisys Group (a) 45,000 2,320,313
10,807,138
CREDIT & OTHER FINANCE - 5.9%
Countrywide Credit 183,515 4,576,405
Industries, Inc.
Greenpoint Financial Corp. 91,300 1,455,094
Household International, Inc. 145,600 4,650,100
LendingTree, Inc. 100,000 1,175,000
WSFS Financial Corp. 70,000 809,375
12,665,974
FEDERAL SPONSORED CREDIT -
27.2%
Fannie Mae 534,800 28,344,400
Freddie Mac 711,300 29,696,770
58,041,170
INSURANCE - 9.6%
MGIC Investment Corp. 111,100 4,152,363
PMI Group, Inc. 331,310 12,030,694
Radian Group, Inc. 122,200 4,238,813
20,421,870
REAL ESTATE INVESTMENT TRUSTS
- - 0.4%
Indymac Mortgage Holdings, 63,000 799,313
Inc.
SAVINGS & LOANS - 35.5%
Astoria Financial Corp. 119,200 2,838,450
BankUnited Financial Corp. 200,000 1,393,750
Class A (a)
Charter One Financial, Inc. 510,470 8,039,903
Commercial Federal Corp. 84,225 1,089,661
Dime Bancorp, Inc. 500,000 6,093,750
Downey Financial Corp. 72,300 1,423,406
SHARES VALUE (NOTE 1)
First Federal Savings & Loan 35,300 $ 992,813
Association of East Hartford
First Sentinel Bancorp, Inc. 134,900 1,112,925
FirstFed Financial Corp. (a) 92,000 1,173,000
Golden State Bancorp, Inc. (a) 111,292 1,432,885
Golden West Financial Corp. 609,000 17,356,500
Haven Bancorp, Inc. 18,100 217,200
MAF Bancorp., Inc. 126,900 2,157,300
Quaker City Bancorp, Inc. (a) 83,825 1,278,331
Richmond County Financial 66,300 1,106,381
Corp.
Roslyn Bancorp, Inc. 106,015 1,629,981
SGV Bancorp., Inc. (a) 104,300 2,320,675
TCF Financial Corp. 532,000 10,540,250
Washington Federal, Inc. 473,470 7,250,009
Washington Mutual, Inc. 134,680 2,979,795
Webster Financial Corp. 153,700 3,246,913
75,673,878
TELEPHONE SERVICES - 0.1%
IXnet, Inc. 3,100 165,075
TOTAL COMMON STOCKS 201,779,023
(Cost $204,518,458)
CASH EQUIVALENTS - 8.4%
Central Cash Collateral Fund, 599,400 599,400
5.75% (b)
Taxable Central Cash Fund, 17,235,835 17,235,835
5.66% (b)
TOTAL CASH EQUIVALENTS 17,835,235
(Cost $17,835,235)
TOTAL INVESTMENT PORTFOLIO - 219,614,258
103.1%
(Cost $222,353,693)
NET OTHER ASSETS - (3.1)% $ (6,556,289)
NET ASSETS - 100% $ 213,057,969
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 $428,968,867 and $857,214,997, 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 $66,175 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $553,331. The fund received
cash collateral of $599,400 which was invested in cash equivalents.
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
Acadiana Bancshares, Inc. $ - $ 570,826 $ 15,743 $ -
Citizens First Financial - 768,875 - -
Corp.
SGV Bancorp., Inc. - 311,600 - -
TOTALS $ - $ 1,651,301 $ 15,743 $ -
</TABLE>
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $222,502,940. Net unrealized depreciation
aggregated $2,888,682, of which $19,827,151 related to appreciated
investment securities and $22,715,833 related to depreciated
investment securities.
The fund hereby designates approximately $17,146,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
The fund intends to elect to defer to its fiscal year ending February
28, 2001 approximately $9,089,000 of losses recognized during the
period November 1, 1999 to February 29, 2000.
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 2001 of amounts for use
in preparing 2000 income tax returns.
HOME FINANCE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 219,614,258
value (cost $222,353,693) -
See accompanying schedule
Receivable for investments 4,815,610
sold
Receivable for fund shares 90,629
sold
Dividends receivable 274,042
Interest receivable 64,355
Redemption fees receivable 1,627
Other receivables 9,557
TOTAL ASSETS 224,870,078
LIABILITIES
Payable for investments $ 6,564,567
purchased
Payable for fund shares 4,359,932
redeemed
Accrued management fee 117,607
Other payables and accrued 170,603
expenses
Collateral on securities 599,400
loaned, at value
TOTAL LIABILITIES 11,812,109
NET ASSETS $ 213,057,969
Net Assets consist of:
Paid in capital $ 213,534,335
Undistributed net investment 2,868,182
income
Accumulated undistributed net (602,672)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (2,741,876)
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 6,890,209 $ 213,057,969
shares outstanding
NET ASSET VALUE and $30.92
redemption price per share
($213,057,969 (divided by)
6,890,209 shares)
Maximum offering price per $31.88
share (100/97.00 of $30.92)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 9,042,833
Dividends (including $15,743
received from affiliated
issuers)
Interest 1,454,159
Security lending 2,819
TOTAL INCOME 10,499,811
EXPENSES
Management fee $ 2,904,120
Transfer agent fees 3,617,871
Accounting and security 359,560
lending fees
Non-interested trustees' 1,425
compensation
Custodian fees and expenses 19,485
Registration fees 62,017
Audit 28,393
Legal 2,254
Miscellaneous 461
Total expenses before 6,995,586
reductions
Expense reductions (96,274) 6,899,312
NET INVESTMENT INCOME 3,600,499
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 5,417,240
(including realized gain
(loss) of $658,315 on sale
of investments in
affiliated issuers)
Foreign currency transactions (3,137) 5,414,103
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (94,926,895)
Assets and liabilities in (3,203) (94,930,098)
foreign currencies
NET GAIN (LOSS) (89,515,995)
NET INCREASE (DECREASE) IN $ (85,915,496)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 376,497
charges paid to FDC
Sales charges - Retained by $ 376,195
FDC
Deferred sales charges $ 11,748
withheld by FDC
Exchange fees withheld by FSC $ 111,382
Expense reductions $ 92,112
Directed brokerage
arrangements
Custodian credits 434
Transfer agent credits 3,728
$ 96,274
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ 3,600,499 $ 7,725,515
income
Net realized gain (loss) 5,414,103 22,583,634
Change in net unrealized (94,930,098) (316,657,120)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (85,915,496) (286,347,971)
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (2,523,487) (2,223,405)
From net investment income
From net realized gain (8,694,427) (43,930,438)
TOTAL DISTRIBUTIONS (11,217,914) (46,153,843)
Share transactions Net 119,654,192 655,146,906
proceeds from sales of shares
Reinvestment of distributions 10,658,735 45,331,306
Cost of shares redeemed (561,225,441) (1,297,847,011)
NET INCREASE (DECREASE) IN (430,912,514) (597,368,799)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 663,676 1,700,582
TOTAL INCREASE (DECREASE) (527,382,248) (928,170,031)
IN NET ASSETS
NET ASSETS
Beginning of period 740,440,217 1,668,610,248
End of period (including $ 213,057,969 $ 740,440,217
undistributed net investment
income of $2,868,182 and
$7,800,879, respectively)
OTHER INFORMATION
Shares
Sold 2,834,768 13,208,817
Issued in reinvestment of 267,110 793,059
distributions
Redeemed (13,801,852) (27,681,040)
Net increase (decrease) (10,699,974) (13,679,164)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 E 1999 1998 1997 1996 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 42.09 $ 53.36 $ 46.00 $ 33.30 $ 23.92
period
Income from Investment
Operations
Net investment income C .30 .28 .33 .53 .53
Net realized and unrealized (10.64) (10.16) 13.10 14.60 9.72
gain (loss)
Total from investment (10.34) (9.88) 13.43 15.13 10.25
operations
Less Distributions
From net investment income (.19) (.07) (.29) (.32) (.19)
From net realized gain (.69) (1.38) (5.84) (2.16) (.73)
Total distributions (.88) (1.45) (6.13) (2.48) (.92)
Redemption fees added to paid .05 .06 .06 .05 .05
in capital
Net asset value, end of period $ 30.92 $ 42.09 $ 53.36 $ 46.00 $ 33.30
TOTAL RETURN A, B (24.88)% (19.12)% 32.39% 47.50% 43.24%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 213,058 $ 740,440 $ 1,668,610 $ 1,176,828 $ 617,035
(000 omitted)
Ratio of expenses to average 1.39% 1.19% 1.21% 1.38% 1.35%
net assets
Ratio of expenses to average 1.37% D 1.18% D 1.19% D 1.34% D 1.32% D
net assets after expense
reductions
Ratio of net investment .72% .57% .67% 1.41% 1.80%
income to average net assets
Portfolio turnover rate 91% 18% 54% 78% 81%
</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
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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT INSURANCE -22.12% 102.94% 274.80%
SELECT INSURANCE (LOAD ADJ.) -24.53% 96.78% 263.48%
S&P 500 11.73% 206.94% 425.47%
GS Financial Services -14.90% 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 252 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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT INSURANCE -22.12% 15.21% 14.12%
SELECT INSURANCE (LOAD ADJ.) -24.53% 14.50% 13.78%
S&P 500 11.73% 25.14% 18.05%
GS Financial Services -14.90% 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
INSURANCE S&P 500
00045 SP001
1990/02/28 9700.00 10000.00
1990/03/31 9652.15 10265.00
1990/04/30 9317.20 10008.38
1990/05/31 10171.67 10984.19
1990/06/30 10199.01 10909.50
1990/07/31 10048.63 10874.59
1990/08/31 9002.75 9891.53
1990/09/30 8223.47 9409.81
1990/10/31 7895.35 9369.35
1990/11/30 8941.23 9974.61
1990/12/31 9296.69 10252.90
1991/01/31 9795.70 10699.92
1991/02/28 10786.89 11464.97
1991/03/31 11497.82 11742.42
1991/04/30 11436.29 11770.60
1991/05/31 11723.40 12279.09
1991/06/30 10994.63 11716.71
1991/07/31 11402.86 12262.71
1991/08/31 11333.67 12553.34
1991/09/30 11444.38 12343.69
1991/10/31 11790.34 12509.10
1991/11/30 11686.55 12004.98
1991/12/31 12706.75 13378.35
1992/01/31 12692.86 13129.52
1992/02/29 13033.10 13300.20
1992/03/31 12845.62 13040.85
1992/04/30 12519.27 13424.25
1992/05/31 12685.92 13490.03
1992/06/30 12951.31 13289.02
1992/07/31 13685.12 13832.55
1992/08/31 13284.17 13548.98
1992/09/30 13987.72 13708.86
1992/10/31 14585.36 13756.84
1992/11/30 15084.65 14225.94
1992/12/31 15565.92 14400.92
1993/01/31 16216.73 14521.89
1993/02/28 16522.99 14719.39
1993/03/31 17395.85 15029.97
1993/04/30 16981.91 14666.24
1993/05/31 16544.51 15059.30
1993/06/30 16721.01 15102.97
1993/07/31 17304.21 15042.56
1993/08/31 18186.69 15612.67
1993/09/30 18248.08 15492.45
1993/10/31 17718.59 15813.15
1993/11/30 16636.60 15662.92
1993/12/31 16838.66 15852.44
1994/01/31 17065.64 16391.43
1994/02/28 16317.44 15947.22
1994/03/31 15552.43 15251.92
1994/04/30 15720.56 15447.15
1994/05/31 16443.54 15700.48
1994/06/30 16351.07 15315.82
1994/07/31 16653.71 15818.18
1994/08/31 17107.67 16466.72
1994/09/30 16989.98 16063.29
1994/10/31 16779.81 16424.71
1994/11/30 15930.73 15826.52
1994/12/31 16779.81 16061.23
1995/01/31 17385.09 16477.70
1995/02/28 17914.72 17119.83
1995/03/31 18200.54 17625.04
1995/04/30 18368.69 18144.10
1995/05/31 18772.96 18869.32
1995/06/30 19362.51 19307.65
1995/07/31 19943.64 19947.89
1995/08/31 20524.76 19997.96
1995/09/30 21543.84 20841.88
1995/10/31 20895.34 20767.47
1995/11/30 22141.81 21679.16
1995/12/31 22620.80 22096.70
1996/01/31 23279.49 22848.87
1996/02/29 23201.49 23060.68
1996/03/31 22941.48 23282.76
1996/04/30 22656.92 23625.95
1996/05/31 23114.82 24235.26
1996/06/30 23528.68 24327.60
1996/07/31 23009.15 23252.80
1996/08/31 23977.77 23743.20
1996/09/30 25148.92 25079.47
1996/10/31 26469.77 25771.16
1996/11/30 28098.81 27719.21
1996/12/31 27983.39 27170.09
1997/01/31 29133.02 28867.68
1997/02/28 29762.58 29094.00
1997/03/31 28156.75 27898.53
1997/04/30 29818.48 29564.07
1997/05/31 32009.19 31363.93
1997/06/30 34352.96 32769.03
1997/07/31 37251.58 35376.46
1997/08/31 35328.73 33394.67
1997/09/30 37586.40 35223.70
1997/10/31 36591.50 34047.23
1997/11/30 37318.54 35623.28
1997/12/31 39868.20 36234.93
1998/01/31 39323.03 36635.68
1998/02/28 42503.19 39277.85
1998/03/31 44865.61 41289.27
1998/04/30 45136.71 41704.64
1998/05/31 44616.65 40987.74
1998/06/30 46588.54 42652.66
1998/07/31 45700.11 42198.41
1998/08/31 38473.47 36097.36
1998/09/30 40954.58 38409.76
1998/10/31 42677.27 41534.01
1998/11/30 45429.24 44051.38
1998/12/31 47968.60 46589.63
1999/01/31 46816.47 48538.00
1999/02/28 46683.53 47029.44
1999/03/31 48433.89 48911.09
1999/04/30 50958.10 50805.42
1999/05/31 50450.09 49605.90
1999/06/30 50631.52 52359.03
1999/07/31 48926.07 50724.38
1999/08/31 45986.87 50473.29
1999/09/30 41003.55 49089.82
1999/10/31 47099.66 52196.23
1999/11/30 45345.82 53257.37
1999/12/31 45115.82 56394.23
2000/01/31 41432.90 53560.99
2000/02/29 36348.00 52547.08
IMATRL PRASUN SHR__CHT 20000229 20000320 164145 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Insurance Portfolio on February 28, 1990,
and the current 3.00% sales charge was paid. As the chart shows, by
February 29, 2000, the value of the investment would have grown to
$36,348 - a 263.48% 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 $52,547 - a 425.47% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
American International Group, 7.7
Inc.
CIGNA Corp. 6.2
Marsh & McLennan Companies, 5.8
Inc.
Ambac Financial Group, Inc. 5.8
AXA Financial, Inc. 5.6
AFLAC, Inc. 5.3
The Chubb Corp. 5.0
Berkshire Hathaway, Inc. 4.8
Class A
American General Corp. 4.5
MBIA, Inc. 4.1
54.8
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Insurance 85.7% Row: 1, Col: 6, Value: 85.7
Securities Industry 5.6% Row: 1, Col: 5, Value: 5.6
Medical Facilities
Management 1.5% Row: 1, Col: 4, Value: 1.5
Holding Companies 1.4% Row: 1, Col: 3, Value: 1.4
Credit & Other Finance 1.0% Row: 1, Col: 2, Value: 1.0
*All Others 4.8% Row: 1, Col: 1, Value: 4.8
</TABLE>
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
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 a difficult period for insurance company stocks. For the 12
months ending February 29, 2000, the fund's total return was -22.12%.
During the same period, the Goldman Sachs Financial Services Index -
an index of 252 stocks designed to measure the performance of
companies in the financial services sector - had a return of -14.90%,
while the Standard & Poor's 500 Index, a measure of the broader
market's performance, returned 11.73%.
Q. WHAT WERE THE MAJOR FACTORS AFFECTING PERFORMANCE?
A. Virtually all insurance company stocks performed poorly as rising
interest rates hurt financial services companies in general. In the
insurance industry, intense price competition among property and
casualty companies kept premiums down, while the industry experienced
abnormally high damage claims because of natural disasters such as
earthquakes, tornadoes and hurricanes. In addition, the lack of
merger-and-acquisition activity among life insurance companies
disappointed investors.
Q. WHAT WERE YOUR PRINCIPAL STRATEGIES?
A. For most of the year, I favored health, life and specialty
insurers, while avoiding the commodity property and casualty sectors,
especially those companies emphasizing personal lines such as
automobile and home insurance. While I continued to avoid personal
lines insurers, I increased the investments in commercial property and
casualty insurers late in the period. Some of their stock prices
dropped well below their intrinsic values and I saw signs that
companies were gaining more power to raise the premiums they charged.
I invested in companies such as Chubb Insurance, which focuses largely
on the commercial insurance market, and Marsh & McLennan, a commercial
insurance brokerage company. I continued to favor bond insurance
companies because of their strong fundamentals. Later in the period, I
decreased the weightings in life and health companies, principally
because I saw better value in the commercial area and some of the
valuations had become stretched based on expectations of acquisitions.
Q. WHAT INVESTMENTS PERFORMED RELATIVELY WELL?
A. In an otherwise poor year for insurance companies, the best
performance came from my investments in high-quality, diversified
growth companies such as American International Group, Citigroup and
Marsh & McLennan. These large-cap companies demonstrated consistent
earnings growth and were in favor in the overall stock market.
Q. WHAT WERE YOUR MAJOR DISAPPOINTMENTS?
A. Bond insurance companies such as MBIA and Ambac Financial did not
perform well. Both are highly interest-rate sensitive and rising rates
throughout the year hurt their stock prices. My conviction in these
companies did not diminish, however. Their fundamentals actually
strengthened during the year as they realized healthy earnings growth
and gained improved pricing power. With their stocks trading at
extremely attractive valuations, I continued to hold them. Several
other companies also performed poorly. UnumProvident Corp. had
difficulty with a deficiency in reserves for claims in its disability
business. Mutual Risk Management, a Bermuda-based company that helps
commercial businesses establish self-insurance programs, also was
disappointing. At a time when commercial insurance premiums were very
low, businesses had less incentive to use self-insurance programs.
Q. WHAT IS YOUR OUTLOOK?
A. I am more encouraged about the prospects for insurance stocks than
I have been in over a year. The stocks have been trading at extremely
low valuations, and I am beginning to see signs that commercial
property and casualty companies are gaining greater pricing power. At
the same time, I must point out that this sector typically performs
poorly when interest rates rise. In addition, insurance company stocks
have suffered as investors sold old economy stocks and moved to new
economy opportunities in technology. Before insurance company stocks
begin to revive, we probably need to see a change in the external
factors of rising interest rates and investor fascination with
technology stocks. When these factors do change, the insurance sector
is poised to perform very well, especially in light of enactment of
new financial services industry legislation that should encourage
renewed merger-and-acquisition activity.
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: 045
TRADING SYMBOL: FSPCX
SIZE: as of February 29, 2000, more than
$29 million
MANAGER: Timothy Cohen, since 1999; equity
analyst, business and consumer services,
1996-1998; joined Fidelity in 1996
INSURANCE PORTFOLIO
INVESTMENTS FEBRUARY 29, 2000
Showing Percentage of Net Assets
COMMON STOCKS - 95.2%
SHARES VALUE (NOTE 1)
CREDIT & OTHER FINANCE - 1.0%
Citigroup, Inc. 5,948 $ 307,437
HOLDING COMPANIES - 1.4%
PartnerRe Ltd. 13,300 412,300
INSURANCE - 85.7%
ACE Ltd. 21,300 380,738
AFLAC, Inc. 42,900 1,568,531
Allmerica Financial Corp. 22,273 929,898
Ambac Financial Group, Inc. 38,700 1,700,381
American General Corp. 25,400 1,325,563
American International Group, 25,537 2,258,423
Inc.
Arthur J. Gallagher & Co. 5,700 291,413
Berkshire Hathaway, Inc. 32 1,408,000
Class A (a)
CIGNA Corp. 24,900 1,837,931
Commerce Group, Inc. 13,700 409,288
E.W. Blanch Holdings, Inc. 16,600 780,200
Everest Re Group Ltd. (a) 21,900 537,919
Financial Security Assurance 14,900 670,500
Holdings Ltd.
Hartford Financial Services 34,300 1,071,875
Group, Inc.
Hartford Life, Inc. Class A 14,200 502,325
Horace Mann Educators Corp. 21,300 330,150
Jefferson-Pilot Corp. 11,400 593,513
Lincoln National Corp. 22,200 617,438
Marsh & McLennan Companies, 22,100 1,709,988
Inc.
MBIA, Inc. 31,700 1,216,488
MGIC Investment Corp. 7,000 261,625
Mutual Risk Management Ltd. 25,100 345,125
Nationwide Financial 3,500 80,719
Services, Inc. Class A
PMI Group, Inc. 11,450 415,778
Protective Life Corp. 12,600 277,200
Reliastar Financial Corp. 22,711 634,489
RenaissanceRe Holdings Ltd. 12,900 488,588
The Chubb Corp. 30,300 1,490,381
Torchmark Corp. 11,800 233,788
UnumProvident Corp. 34,935 467,256
Xl Capital Ltd. 11,400 460,988
25,296,499
MEDICAL FACILITIES MANAGEMENT
- - 1.5%
Wellpoint Health Networks, 6,400 432,000
Inc. (a)
SECURITIES INDUSTRY - 5.6%
AXA Financial, Inc. 55,100 1,649,556
TOTAL COMMON STOCKS 28,097,792
(Cost $31,157,980)
CASH EQUIVALENTS - 5.1%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund, 1,501,763 $ 1,501,763
5.66% (b) (Cost $1,501,763)
TOTAL INVESTMENT PORTFOLIO - 29,599,555
100.3%
(Cost $32,659,743)
NET OTHER ASSETS - (0.3)% $ (78,962)
NET ASSETS - 100% $ 29,520,593
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 $63,350,978 and $105,133,071, 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 $6,528 for the
period.
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $32,719,661. Net unrealized depreciation
aggregated $3,120,106, of which $2,859,608 related to appreciated
investment securities and $5,979,714 related to depreciated investment
securities.
The fund hereby designates approximately $14,894,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
The fund intends to elect to defer to its fiscal year ending February
28, 2001 approximately $383,000 of losses recognized during the period
November 1, 1999 to February 29, 2000.
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 2001 of amounts for use
in preparing 2000 income tax returns.
INSURANCE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 29,599,555
value (cost $32,659,743) -
See accompanying schedule
Receivable for investments 635,408
sold
Receivable for fund shares 159,505
sold
Dividends receivable 53,744
Interest receivable 8,242
Redemption fees receivable 181
TOTAL ASSETS 30,456,635
LIABILITIES
Payable for fund shares $ 884,880
redeemed
Accrued management fee 16,235
Other payables and accrued 34,927
expenses
TOTAL LIABILITIES 936,042
NET ASSETS $ 29,520,593
Net Assets consist of:
Paid in capital $ 27,857,980
Accumulated undistributed net 4,722,801
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (3,060,188)
(depreciation) on investments
NET ASSETS, for 1,067,879 $ 29,520,593
shares outstanding
NET ASSET VALUE and $27.64
redemption price per share
($29,520,593 (divided by)
1,067,879 shares)
Maximum offering price per $28.49
share (100/97.00 of $27.64)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 642,126
Dividends
Interest 144,882
Security lending 658
TOTAL INCOME 787,666
EXPENSES
Management fee $ 366,679
Transfer agent fees 404,158
Accounting and security 61,095
lending fees
Non-interested trustees' 194
compensation
Custodian fees and expenses 13,969
Registration fees 25,903
Audit 12,478
Legal 268
Miscellaneous 62
Total expenses before 884,806
reductions
Expense reductions (19,336) 865,470
NET INVESTMENT INCOME (LOSS) (77,804)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 9,100,755
Foreign currency transactions 26 9,100,781
Change in net unrealized (18,366,238)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) (9,265,457)
NET INCREASE (DECREASE) IN $ (9,343,261)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 128,554
charges paid to FDC
Sales charges - Retained by $ 127,441
FDC
Deferred sales charges $ 1,211
withheld by FDC
Exchange fees withheld by FSC $ 11,664
Expense reductions Directed $ 19,336
brokerage arrangements
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ (77,804) $ (106,344)
income (loss)
Net realized gain (loss) 9,100,781 13,198,732
Change in net unrealized (18,366,238) (4,563,684)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (9,343,261) 8,528,704
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (11,006,673) (11,641,173)
from net realized gains
Share transactions Net 39,337,528 64,911,861
proceeds from sales of shares
Reinvestment of distributions 10,527,687 11,462,296
Cost of shares redeemed (82,991,526) (115,658,850)
NET INCREASE (DECREASE) IN (33,126,311) (39,284,693)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 117,358 126,042
TOTAL INCREASE (DECREASE) (53,358,887) (42,271,120)
IN NET ASSETS
NET ASSETS
Beginning of period 82,879,480 125,150,600
End of period $ 29,520,593 $ 82,879,480
OTHER INFORMATION
Shares
Sold 1,020,932 1,540,455
Issued in reinvestment of 282,466 274,802
distributions
Redeemed (2,202,457) (2,821,222)
Net increase (decrease) (899,059) (1,005,965)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 E 1999 1998 1997 1996 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 42.14 $ 42.10 $ 32.62 $ 26.77 $ 21.31
period
Income from Investment
Operations
Net investment income (loss) C (.05) (.04) .01 .01 .06
Net realized and unrealized (7.92) 4.01 12.93 7.21 6.15
gain (loss)
Total from investment (7.97) 3.97 12.94 7.22 6.21
operations
Less Distributions
From net investment income - - - (.03) (.07)
From net realized gain (6.60) (3.98) (3.54) (1.45) (.72)
Total distributions (6.60) (3.98) (3.54) (1.48) (.79)
Redemption fees added to paid .07 .05 .08 .11 .04
in capital
Net asset value, end of period $ 27.64 $ 42.14 $ 42.10 $ 32.62 $ 26.77
TOTAL RETURN A, B (22.12)% 9.84% 42.81% 28.28% 29.51%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 29,521 $ 82,879 $ 125,151 $ 42,367 $ 38,994
(000 omitted)
Ratio of expenses to average 1.39% 1.33% 1.45% 1.82% 1.77%
net assets
Ratio of expenses to average 1.36% D 1.31% D 1.43% D 1.77% D 1.74% D
net assets after expense
reductions
Ratio of net investment (.12)% (.10)% .02% .05% .26%
income (loss) to average net
assets
Portfolio turnover rate 107% 72% 157% 142% 164%
</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
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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT BIOTECHNOLOGY 173.22% 518.88% 1,302.07%
SELECT BIOTECHNOLOGY (LOAD 164.95% 500.24% 1,259.94%
ADJ.)
S&P 500 11.73% 206.94% 425.47%
GS Health Care 3.51% 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 97 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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT BIOTECHNOLOGY 173.22% 43.99% 30.22%
SELECT BIOTECHNOLOGY (LOAD 164.95% 43.11% 29.82%
ADJ.)
S&P 500 11.73% 25.14% 18.05%
GS Health Care 3.51% 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
1990/02/28 9700.00 10000.00
1990/03/31 10108.63 10265.00
1990/04/30 10235.91 10008.38
1990/05/31 11676.17 10984.19
1990/06/30 12491.56 10909.50
1990/07/31 12525.43 10874.59
1990/08/31 12139.30 9891.53
1990/09/30 11868.33 9409.81
1990/10/31 11969.95 9369.35
1990/11/30 13419.62 9974.61
1990/12/31 13827.67 10252.90
1991/01/31 15415.71 10699.92
1991/02/28 17600.12 11464.97
1991/03/31 19416.99 11742.42
1991/04/30 18570.97 11770.60
1991/05/31 19749.86 12279.09
1991/06/30 18701.26 11716.71
1991/07/31 20384.81 12262.71
1991/08/31 21813.28 12553.34
1991/09/30 22942.93 12343.69
1991/10/31 25202.24 12509.10
1991/11/30 23518.69 12004.98
1991/12/31 27523.31 13378.35
1992/01/31 26971.64 13129.52
1992/02/29 24900.97 13300.20
1992/03/31 23011.67 13040.85
1992/04/30 20865.42 13424.25
1992/05/31 22361.75 13490.03
1992/06/30 21969.26 13289.02
1992/07/31 23117.71 13832.55
1992/08/31 21671.82 13548.98
1992/09/30 21597.46 13708.86
1992/10/31 22655.02 13756.84
1992/11/30 24885.82 14225.94
1992/12/31 24676.51 14400.92
1993/01/31 23408.38 14521.89
1993/02/28 19630.03 14719.39
1993/03/31 19925.35 15029.97
1993/04/30 20437.82 14666.24
1993/05/31 21758.07 15059.30
1993/06/30 21888.35 15102.97
1993/07/31 21167.43 15042.56
1993/08/31 21966.53 15612.67
1993/09/30 22869.86 15492.45
1993/10/31 24572.28 15813.15
1993/11/30 24381.20 15662.92
1993/12/31 24850.23 15852.44
1994/01/31 25701.45 16391.43
1994/02/28 23981.65 15947.22
1994/03/31 21558.29 15251.92
1994/04/30 21167.43 15447.15
1994/05/31 20811.31 15700.48
1994/06/30 19986.15 15315.82
1994/07/31 20038.27 15818.18
1994/08/31 21914.41 16466.72
1994/09/30 21844.93 16063.29
1994/10/31 21097.94 16424.71
1994/11/30 20707.08 15826.52
1994/12/31 20333.59 16061.23
1995/01/31 21245.60 16477.70
1995/02/28 21975.21 17119.83
1995/03/31 22331.33 17625.04
1995/04/30 23026.20 18144.10
1995/05/31 23234.66 18869.32
1995/06/30 24077.19 19307.65
1995/07/31 25154.24 19947.89
1995/08/31 26161.80 19997.96
1995/09/30 27334.39 20841.88
1995/10/31 27117.24 20767.47
1995/11/30 28020.57 21679.16
1995/12/31 30317.42 22096.70
1996/01/31 32110.52 22848.87
1996/02/29 31858.10 23060.68
1996/03/31 31353.24 23282.76
1996/04/30 32030.18 23625.95
1996/05/31 32403.97 24235.26
1996/06/30 30446.03 24327.60
1996/07/31 28212.19 23252.80
1996/08/31 29511.56 23743.20
1996/09/30 31238.11 25079.47
1996/10/31 30152.34 25771.16
1996/11/30 30330.33 27719.21
1996/12/31 32017.78 27170.09
1997/01/31 33485.22 28867.68
1997/02/28 33721.59 29094.00
1997/03/31 30245.03 27898.53
1997/04/30 28918.51 29564.07
1997/05/31 32594.84 31363.93
1997/06/30 33448.64 32769.03
1997/07/31 33649.53 35376.46
1997/08/31 33880.56 33394.67
1997/09/30 38340.38 35223.70
1997/10/31 36944.17 34047.23
1997/11/30 36291.27 35623.28
1997/12/31 36907.99 36234.93
1998/01/31 37214.23 36635.68
1998/02/28 39153.77 39277.85
1998/03/31 40753.04 41289.27
1998/04/30 39135.97 41704.64
1998/05/31 37799.73 40987.74
1998/06/30 37835.85 42652.66
1998/07/31 38449.79 42198.41
1998/08/31 32514.99 36097.36
1998/09/30 37956.23 38409.76
1998/10/31 40508.31 41534.01
1998/11/30 42133.46 44051.38
1998/12/31 47875.65 46589.63
1999/01/31 50668.50 48538.00
1999/02/28 49777.67 47029.44
1999/03/31 52221.42 48911.09
1999/04/30 48044.36 50805.42
1999/05/31 49927.51 49605.90
1999/06/30 54007.66 52359.03
1999/07/31 59053.52 50724.38
1999/08/31 65801.46 50473.29
1999/09/30 60490.02 49089.82
1999/10/31 63532.03 52196.23
1999/11/30 68903.82 53257.37
1999/12/31 85110.04 56394.23
2000/01/31 98726.64 53560.99
2000/02/29 135994.00 52547.08
IMATRL PRASUN SHR__CHT 20000229 20000313 085407 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Biotechnology Portfolio on February 28,
1990, and the current 3.00% sales charge was paid. As the chart shows,
by February 29, 2000, the value of the investment would have grown to
$135,994 - a 1,259.94% 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 $52,547 - a 425.47% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
Immunex Corp. 7.8
Millennium Pharmaceuticals, 4.7
Inc.
Alkermes, Inc. 4.6
IDEC Pharmaceuticals Corp. 4.6
Human Genome Sciences, Inc. 4.6
Medimmune, Inc. 4.4
Amgen, Inc. 4.0
Biogen, Inc. 3.8
Protein Design Labs, Inc. 3.7
Affymetrix, Inc. 3.6
45.8
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Drugs & Pharmaceuticals 85.1% Row: 1, Col: 6, Value: 85.09999999999999
Computer Services &
Software 3.8% Row: 1, Col: 5, Value: 3.8
Medical Facilities
Management 0.3% Row: 1, Col: 4, Value: 0.03000000000000001
Medical Equipment
& Supplies 0.2% Row: 1, Col: 3, Value: 0.2
Electronic Instruments 0.0% Row: 1, Col: 2, Value: 0.0
*All Others 10.6% Row: 1, Col: 1, Value: 10.6
</TABLE>
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
BIOTECHNOLOGY PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
(photograph of Rajiv Kaul)(photograph of Yolanda McGettigan)
NOTE TO SHAREHOLDERS: The following is an interview with Rajiv Kaul
(left), who managed Fidelity Select Biotechnolgy Portfolio for most of
the period covered by this report, with additional comments from
Yolanda McGettigan, who became manager of the fund on February 1,
2000.
Q. HOW DID THE FUND PERFORM, RAJIV?
R.K. For the 12-month period that ended February 29, 2000, the fund
returned 173.22%, significantly outperforming the Goldman Sachs Health
Care Index - an index of 97 stocks designed to measure the performance
of companies in the health care sector - which returned 3.51%. The
fund also compares its performance to the Standard & Poor's 500 Index,
which returned 11.73% during the same time period.
Q. WHAT WERE THE REASONS FOR THE FUND'S STRONG PERFORMANCE?
R.K. Biotechnology stocks performed strongly as they began to reap the
rewards of their drug research and development. Many companies made
breakthroughs in launching new drugs or got much closer to releasing
new products to the market. Biotechnology companies also were seen as
potential takeover targets by large pharmaceutical companies seeking
to fill out their diminishing product pipelines. During the year, the
fund continued to focus not so much on the hyped stories, but on those
companies with existing products or the prospects of new product
cycles. The fund also benefited from its focus on companies with
strong business fundamentals.
Q. HOW DID GENOMICS COMPANIES DO?
R.K. Investor enthusiasm over genomics resulted in stellar performance
during the year. Genomics, or the decoding of the human genetic code,
has the potential to produce new drugs that are very effective and
profitable. By targeting specific diseases and treatments more
quickly, it also may reduce the time spent in development, saving
money. Genomics companies made significant progress during the year in
their efforts to map the human gene, leading to pinpointing genetic
differences of specific diseases and developing new, targeted
treatments.
Q. WHICH STOCKS HELPED THE FUND'S PERFORMANCE?
R.K. Immunex, the fund's top holding at the end of the period,
launched a blockbuster drug, Enbrel, used in the treatment of
rheumatoid arthritis. With no real competition for its lead drug and a
second drug in the pipeline, the company's momentum was very strong
and its stock did well. Medimmune, another top holding, also had a
very good year, launching its new drug, Synagis, a vaccine used in the
prevention of respiratory disease in premature infants. Affymetrix, a
maker of chips used for DNA analysis and genomics testing, had an
excellent year. Its superior technology propelled demand for its
product, and it performed well.
Q. WHICH STOCKS HURT THE FUND?
R.K. Although pharmaceutical companies had solid fundamentals, they
continued to face difficulties during the year. Rising interest rates,
products coming off of patent protection, few big product launches and
pending health care legislation all caused investors to be concerned
about the prospects for good performance. Fund holdings
Schering-Plough, Merck and Eli Lilly were all hurt by these factors.
Q. TURNING TO YOU, YOLANDA, WHERE DO YOU SEE OPPORTUNITIES NOW?
Y.M. I'm positioning the fund to capitalize on the strong fundamentals
of biotechnology drugs currently on the market, as well as the
potential for products in the late stage of development. The fund's
focus is on established biotechnology companies and companies
facilitating the process of drug development - both within genomics
and drug technology platforms. Both types of companies should enable
other biotechnology firms to develop drugs in a more focused,
expedited fashion, with improved odds of success. That said, the risks
inherent within the biotechnology industry are significant. Because of
this, the fund tends to avoid companies with products in the early
stage of development, where the probability of success can be as low
as 20%.
Q. WHAT'S YOUR OUTLOOK?
Y.M. I'm very optimistic. The environment for biotechnology companies
should continue to be favorable. Currently, there are approximately
750 drugs in clinical testing - up from 200 in 1994 - including
approximately 180 in late-stage development. This could translate into
70 new biotechnology drugs reaching the market by 2005. Additionally,
the fruits of the Human Genome Project, whose goal is to map the human
gene sequence, is scheduled to be completed this April. This could
potentially lead to more accurate and faster drug development.
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: 042
TRADING SYMBOL: FBIOX
SIZE: as of February 29, 2000, more than
$5.2 billion
MANAGER: Yolanda McGettigan, since
February 2000; manager, Fidelity Select
Banking Portfolio, 1999-January 2000;
Fidelity Select Construction and Housing
Portfolio, 1997-1999; joined Fidelity in 1997
BIOTECHNOLOGY PORTFOLIO
INVESTMENTS FEBRUARY 29, 2000
Showing Percentage of Net Assets
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 89.4%
SHARES VALUE (NOTE 1)
COMPUTER SERVICES & SOFTWARE
- - 3.8%
Affymetrix, Inc. (a) 666,450 $ 193,020,581
Healtheon/Web Maryland Corp. 200,000 11,062,500
MatrixOne, Inc. 1,300 32,500
Onvia.com, Inc. 3,600 75,600
204,191,181
DRUGS & PHARMACEUTICALS - 85.1%
Abgenix, Inc. (a) 63,400 20,422,725
Advanced Tissue Sciences, 216,000 1,647,000
Inc. (a)
Alkermes, Inc. (a) 1,272,400 244,141,750
Allergan, Inc. 1,106,500 55,670,781
Alliance Pharmaceutical Corp. 754,300 13,577,400
(a)
ALZA Corp. Class A. (a) 3,155,900 115,782,081
Amgen, Inc. (a) 3,087,500 210,528,906
Amylin Pharmaceuticals, Inc. 795,900 11,341,575
(a)
Anesta Corp. (a) 288,500 6,419,125
Ariad Pharmaceuticals, Inc. 187,500 4,921,875
(a)
Aviron (a) 40,100 1,626,556
AXYS Pharmaceuticals, Inc. (a) 377,700 6,043,200
Bio-Technology General Corp. 25,000 480,469
(a)
Biochem Pharma, Inc. (a) 1,824,300 47,822,434
BioCryst Pharmaceuticals, 182,300 4,922,100
Inc. (a)
Biogen, Inc. (a) 1,870,000 201,843,125
Biora AB sponsored ADR (a) 34,700 425,075
Biotransplant, Inc. (a) 273,100 5,188,900
Celgene Corp. (a) 200,040 33,106,620
Cell Genesys, Inc. (a) 500,000 19,437,500
Cellegy Pharmaceuticals, Inc. 286,100 1,984,819
(a)
Cephalon, Inc. (a) 646,600 42,978,694
Cerus Corp. (a) 127,000 6,127,750
Chiron Corp. (a) 3,309,700 165,485,000
COR Therapeutics, Inc. (a)(c) 1,645,290 147,459,116
Creative Biomolecules, Inc. 409,800 7,888,650
(a)
CV Therapeutics, Inc. (a) 550,400 35,500,800
CYTOGEN Corp. (a) 654,500 11,453,750
Cytyc Corp. (a) 679,700 31,266,200
Emisphere Technologies, Inc. 199,300 11,173,256
(a)
Enzo Biochem, Inc. (a) 523,200 41,463,600
Enzon, Inc. (a) 25,000 1,450,000
Epitope, Inc. (a) 60,000 712,500
GelTex Pharmaceuticals, Inc. 160,000 3,510,000
(a)
Genelabs Technologies, Inc. 718,700 7,726,025
(a)
Genentech, Inc. 775,200 149,516,700
Genome Therapeutics Corp. (a) 108,900 5,390,550
Genzyme Corp. - General 3,150,300 180,945,356
Division
Genzyme Transgenics Corp. (a) 207,700 9,242,650
Gilead Sciences, Inc. (a) 860,745 65,846,993
Guilford Pharmaceuticals, 137,500 4,554,688
Inc. (a)
Human Genome Sciences, Inc. 1,106,400 241,471,800
(a)
ICOS Corp. (a) 492,800 25,810,400
IDEC Pharmaceuticals Corp. (a) 1,715,980 241,738,683
SHARES VALUE (NOTE 1)
IGEN International, Inc. (a) 85,000 $ 2,358,750
Ilex Oncology, Inc. (a) 346,500 16,761,938
Imclone Systems, Inc. (a) 775,800 101,678,288
Immune Response Corp. (a) 200,000 3,100,000
Immunex Corp. (a) 2,077,750 410,225,761
Immunomedics, Inc. (a) 844,900 24,607,713
Incara Pharmaceuticals Corp. 61,600 246,400
(a)
Incyte Pharmaceuticals, Inc. 334,900 92,285,881
(a)
Inhale Therapeutic Systems, 838,100 84,857,625
Inc. (a)
Interneuron Pharmaceuticals, 1,591,600 6,465,875
Inc. (a)
Isis Pharmaceuticals Co. (a) 338,080 4,775,380
King Pharmaceuticals, Inc. (a) 125,409 5,980,442
Kos Pharmaceuticals, Inc. (a) 90,000 1,710,000
Ligand Pharmaceuticals, Inc. 797,500 17,345,625
Class B (a)
Liposome, Inc. (a) 435,800 5,856,063
Magainin Pharmaceuticals, 112,000 805,000
Inc. (a)
Martek Biosciences (a) 157,000 1,766,250
Matritech, Inc. (a) 77,500 823,438
Matrix Pharmaceutical, Inc. 60,000 1,042,500
(a)
Medarex, Inc. (a) 612,500 99,531,250
Medimmune, Inc. (a) 1,171,100 232,463,350
Merck & Co., Inc. 1,647,600 101,430,375
Millennium Pharmaceuticals, 962,000 250,240,250
Inc. (a)
Miravant Medical Technologies 160,800 4,482,300
(a)
Myriad Genetics, Inc. (a) 150,800 23,298,600
Nabi (a) 481,400 5,295,400
Neurogen Corp. (a) 50,800 2,146,300
North American Vaccine, Inc. 473,900 2,636,069
(a)
Northfield Laboratories, Inc. 44,500 990,125
(a)
Noven Pharmaceuticals, Inc. 294,000 4,244,625
(a)
NPS Pharmaceuticals, Inc. (a) 237,900 6,467,906
Organogenesis, Inc. (a) 161,900 2,428,500
OSI Pharmaceuticals, Inc. (a) 349,700 9,813,456
OXiGENE, Inc. (a) 181,300 4,226,556
PE Corp. - Celera Genomics 23,900 5,831,600
Group (a)
Protein Design Labs, Inc. (a) 776,200 194,195,538
Regeneron Pharmaceuticals, 73,500 4,152,750
Inc. (a)
Sangstat Medical Corp. (a) 392,300 16,966,975
Schering-Plough Corp. 2,721,200 94,901,850
Scios, Inc. (a) 247,500 1,980,000
Sepracor, Inc. (a) 1,107,400 112,262,675
Serologicals Corp. (a) 120,000 1,350,000
SICOR, Inc. (a) 1,375,500 13,669,031
Synaptic Pharmaceutical Corp. 17,500 227,500
(a)
Titan Pharmaceuticals, Inc. 286,000 14,371,500
(a)
Tularik, Inc. 28,800 2,271,600
Vertex Pharmaceuticals, Inc. 431,300 31,323,163
(a)
Vical, Inc. (a) 312,300 18,445,219
ViroPharma, Inc. (a) 50,600 4,737,425
Vivus, Inc. (a) 229,300 1,318,475
XOMA Ltd. (a) 580,000 5,365,000
4,501,805,469
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ELECTRONIC INSTRUMENTS - 0.0%
PE Corp. - Biosystems Group 80 $ 8,440
MEDICAL EQUIPMENT & SUPPLIES
- - 0.2%
Cygnus, Inc. (a) 517,900 9,548,781
Lifecore Biomedical, Inc. (a) 145,000 1,585,938
11,134,719
MEDICAL FACILITIES MANAGEMENT
- - 0.3%
Cryolife, Inc. (a) 147,500 2,931,563
Neurocrine Biosciences, Inc. 320,600 11,862,200
(a)
14,793,763
TOTAL COMMON STOCKS 4,731,933,572
(Cost $2,613,002,015)
CASH EQUIVALENTS - 16.0%
Central Cash Collateral Fund, 198,730,000 198,730,000
5.75% (b)
Taxable Central Cash Fund, 646,134,398 646,134,398
5.66% (b)
TOTAL CASH EQUIVALENTS 844,864,398
(Cost $844,864,398)
TOTAL INVESTMENT PORTFOLIO - 5,576,797,970
105.4%
(Cost $3,457,866,413)
NET OTHER ASSETS - (5.4)% (284,448,139)
NET ASSETS - 100% $ 5,292,349,831
</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 $2,910,540,673 and $980,687,244, 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 $35,822 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $203,820,792. The fund
received cash collateral of $198,730,000 which was invested in cash
equivalents.
Transactions during the period with companies which are or were
affiliates are as follows:
<TABLE>
<CAPTION>
<s. <C> <C> <C> <C>
PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
COR Therapeutics, Inc . $ 28,846,298 $ - $ - $147,459,116
CV Therapeutics, Inc. 1,112,287 4,019,061 - -
Cellegy Pharmaceuticals, Inc. - 608,231 - -
TOTALS $ 29,958,585 $ 4,627,292 $ - $147,459,116
</TABLE>
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $3,476,188,293. Net unrealized appreciation
aggregated $2,100,609,677, of which $2,173,436,275 related to
appreciated investment securities and $72,826,598 related to
depreciated investment securities.
The fund hereby designates approximately $42,369,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 5% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2001 of amounts for use
in preparing 2000 income tax returns.
BIOTECHNOLOGY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 5,576,797,970
value (cost $3,457,866,413)
- - See accompanying schedule
Receivable for investments 711,865
sold
Receivable for fund shares 119,261,929
sold
Dividends receivable 88,523
Interest receivable 2,072,959
Redemption fees receivable 33,086
Other receivables 323,633
TOTAL ASSETS 5,699,289,965
LIABILITIES
Payable for investments $ 189,676,622
purchased
Payable for fund shares 15,044,158
redeemed
Accrued management fee 1,826,902
Other payables and accrued 1,662,452
expenses
Collateral on securities 198,730,000
loaned, at value
TOTAL LIABILITIES 406,940,134
NET ASSETS $ 5,292,349,831
Net Assets consist of:
Paid in capital $ 3,076,550,646
Accumulated undistributed net 96,867,628
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 2,118,931,557
(depreciation) on investments
NET ASSETS, for 49,338,604 $ 5,292,349,831
shares outstanding
NET ASSET VALUE and $107.27
redemption price per share
($5,292,349,831 (divided by)
49,338,604 shares)
Maximum offering price per $110.59
share (100/97.00 of $107.27)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 1,751,135
Dividends
Interest 6,000,755
Security lending 489,956
TOTAL INCOME 8,241,846
EXPENSES
Management fee $ 7,618,538
Transfer agent fees 5,822,443
Accounting and security 738,739
lending fees
Non-interested trustees' 6,536
compensation
Custodian fees and expenses 51,062
Registration fees 796,582
Audit 35,382
Legal 3,522
Miscellaneous 689
Total expenses before 15,073,493
reductions
Expense reductions (155,224) 14,918,269
NET INVESTMENT INCOME (LOSS) (6,676,423)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 163,240,264
(including realized loss of
$967,563 on sales of
investments in affiliated
issuers)
Foreign currency transactions 11,968 163,252,232
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 1,933,492,335
Assets and liabilities in (645) 1,933,491,690
foreign currencies
NET GAIN (LOSS) 2,096,743,922
NET INCREASE (DECREASE) IN $ 2,090,067,499
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 23,234,295
charges paid to FDC
Sales charges - Retained by $ 23,232,011
FDC
Deferred sales charges $ 19,543
withheld by FDC
Exchange fees withheld by FSC $ 40,194
Expense reductions $ 144,324
Directed brokerage
arrangements
Custodian credits 5,783
Transfer agent credits 5,117
$ 155,224
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ (6,676,423) $ (4,327,543)
income (loss)
Net realized gain (loss) 163,252,232 2,585,385
Change in net unrealized 1,933,491,690 152,855,134
appreciation (depreciation)
NET INCREASE (DECREASE) IN 2,090,067,499 151,112,976
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (60,923,524) (33,971,527)
from net realized gains
Share transactions Net 3,361,002,098 320,529,357
proceeds from sales of shares
Reinvestment of distributions 58,575,624 33,062,818
Cost of shares redeemed (900,425,402) (309,253,094)
NET INCREASE (DECREASE) IN 2,519,152,320 44,339,081
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 2,524,013 507,092
TOTAL INCREASE (DECREASE) 4,550,820,308 161,987,622
IN NET ASSETS
NET ASSETS
Beginning of period 741,529,523 579,541,901
End of period $ 5,292,349,831 $ 741,529,523
OTHER INFORMATION
Shares
Sold 45,451,966 9,105,791
Issued in reinvestment of 1,100,383 970,436
distributions
Redeemed (15,147,699) (8,928,498)
Net increase (decrease) 31,404,650 1,147,729
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 F 1999 1998 1997 1996 F
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 41.35 $ 34.52 $ 34.24 $ 36.60 $ 25.30
period
Income from Investment
Operations
Net investment income (loss) C (.30) (.26) (.27) (.20) .11
Net realized and unrealized 68.93 9.15 5.20 1.89 11.21
gain (loss)
Total from investment 68.63 8.89 4.93 1.69 11.32
operations
Less Distributions
From net investment income - - - (.03) (.07)
From net realized gain (2.82) (2.09) (4.71) (4.06) -
Total distributions (2.82) (2.09) (4.71) (4.09) (.07)
Redemption fees added to paid .11 .03 .06 .04 .05
in capital
Net asset value, end of period $ 107.27 $ 41.35 $ 34.52 $ 34.24 $ 36.60
TOTAL RETURN A, B 173.22% 27.13% 16.11% 5.85% 44.97%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 5,292,350 $ 741,530 $ 579,542 $ 674,902 $ 1,096,864
(000 omitted)
Ratio of expenses to average 1.16% 1.34% 1.49% 1.57% 1.44% D
net assets
Ratio of expenses to average 1.15% E 1.30% E 1.47% E 1.56% E 1.43% E
net assets after expense
reductions
Ratio of net investment (.51)% (.75)% (.81)% (.59)% .35%
income (loss) to average net
assets
Portfolio turnover rate 72% 86% 162% 41% 67%
</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
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
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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT HEALTH CARE 1.15% 195.33% 698.52%
SELECT HEALTH CARE (LOAD ADJ.) -1.96% 186.40% 674.49%
S&P 500 11.73% 206.94% 425.47%
GS Health Care 3.51% 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 97 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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT HEALTH CARE 1.15% 24.18% 23.09%
SELECT HEALTH CARE (LOAD ADJ.) -1.96% 23.42% 22.72%
S&P 500 11.73% 25.14% 18.05%
GS Health Care 3.51% 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
1990/02/28 9700.00 10000.00
1990/03/31 10086.86 10265.00
1990/04/30 10086.86 10008.38
1990/05/31 11474.76 10984.19
1990/06/30 11865.74 10909.50
1990/07/31 12029.56 10874.59
1990/08/31 11490.31 9891.53
1990/09/30 11144.46 9409.81
1990/10/31 11399.30 9369.35
1990/11/30 12612.04 9974.61
1990/12/31 12928.18 10252.90
1991/01/31 14204.40 10699.92
1991/02/28 15958.90 11464.97
1991/03/31 17381.54 11742.42
1991/04/30 17078.95 11770.60
1991/05/31 18006.23 12279.09
1991/06/30 17194.29 11716.71
1991/07/31 18715.72 12262.71
1991/08/31 19650.99 12553.34
1991/09/30 20046.97 12343.69
1991/10/31 21367.81 12509.10
1991/11/30 20200.68 12004.98
1991/12/31 23748.09 13378.35
1992/01/31 22968.92 13129.52
1992/02/29 21965.95 13300.20
1992/03/31 20625.89 13040.85
1992/04/30 19457.13 13424.25
1992/05/31 19857.77 13490.03
1992/06/30 19092.37 13289.02
1992/07/31 20240.90 13832.55
1992/08/31 19694.98 13548.98
1992/09/30 18331.66 13708.86
1992/10/31 18895.48 13756.84
1992/11/30 19930.65 14225.94
1992/12/31 19607.79 14400.92
1993/01/31 18554.73 14521.89
1993/02/28 16574.72 14719.39
1993/03/31 17031.89 15029.97
1993/04/30 17025.58 14666.24
1993/05/31 17706.60 15059.30
1993/06/30 17643.55 15102.97
1993/07/31 17069.72 15042.56
1993/08/31 17678.23 15612.67
1993/09/30 18229.98 15492.45
1993/10/31 19585.72 15813.15
1993/11/30 19519.51 15662.92
1993/12/31 20081.64 15852.44
1994/01/31 20479.36 16391.43
1994/02/28 19983.79 15947.22
1994/03/31 18680.16 15251.92
1994/04/30 19429.56 15447.15
1994/05/31 20526.90 15700.48
1994/06/30 20201.18 15315.82
1994/07/31 20605.96 15818.18
1994/08/31 23309.78 16466.72
1994/09/30 23477.39 16063.29
1994/10/31 23803.11 16424.71
1994/11/30 24318.58 15826.52
1994/12/31 24390.89 16061.23
1995/01/31 25682.78 16477.70
1995/02/28 26227.10 17119.83
1995/03/31 26940.22 17625.04
1995/04/30 27315.73 18144.10
1995/05/31 27578.91 18869.32
1995/06/30 28974.48 19307.65
1995/07/31 30633.23 19947.89
1995/08/31 30892.95 19997.96
1995/09/30 32624.43 20841.88
1995/10/31 32704.07 20767.47
1995/11/30 34082.33 21679.16
1995/12/31 35577.74 22096.70
1996/01/31 36850.33 22848.87
1996/02/29 36635.19 23060.68
1996/03/31 36762.82 23282.76
1996/04/30 36608.91 23625.95
1996/05/31 37273.02 24235.26
1996/06/30 37299.43 24327.60
1996/07/31 35842.93 23252.80
1996/08/31 37057.94 23743.20
1996/09/30 39608.72 25079.47
1996/10/31 38831.41 25771.16
1996/11/30 40918.06 27719.21
1996/12/31 41077.79 27170.09
1997/01/31 43557.96 28867.68
1997/02/28 44113.41 29094.00
1997/03/31 41693.52 27898.53
1997/04/30 43774.31 29564.07
1997/05/31 47108.23 31363.93
1997/06/30 50612.75 32769.03
1997/07/31 52503.36 35376.46
1997/08/31 48846.66 33394.67
1997/09/30 51876.23 35223.70
1997/10/31 51857.78 34047.23
1997/11/30 53310.32 35623.28
1997/12/31 53872.10 36234.93
1998/01/31 57748.43 36635.68
1998/02/28 60202.21 39277.85
1998/03/31 62343.98 41289.27
1998/04/30 63525.52 41704.64
1998/05/31 63144.74 40987.74
1998/06/30 66898.17 42652.66
1998/07/31 67099.45 42198.41
1998/08/31 60131.11 36097.36
1998/09/30 67104.89 38409.76
1998/10/31 69095.84 41534.01
1998/11/30 72044.19 44051.38
1998/12/31 76112.43 46589.63
1999/01/31 76969.44 48538.00
1999/02/28 76574.33 47029.44
1999/03/31 77626.11 48911.09
1999/04/30 73065.28 50805.42
1999/05/31 71851.49 49605.90
1999/06/30 75163.88 52359.03
1999/07/31 73178.72 50724.38
1999/08/31 75027.75 50473.29
1999/09/30 68300.89 49089.82
1999/10/31 73195.73 52196.23
1999/11/30 75180.89 53257.37
1999/12/31 73921.11 56394.23
2000/01/31 78493.07 53560.99
2000/02/29 77449.00 52547.08
IMATRL PRASUN SHR__CHT 20000229 20000313 085011 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Health Care Portfolio on February 28,
1990, and the current 3.00% sales charge was paid. As the chart shows,
by February 29, 2000, the value of the investment would have grown to
$77,449 - a 674.49% 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 $52,547 - a 425.47% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
Warner-Lambert Co. 9.9
Bristol-Myers Squibb Co. 7.3
Eli Lilly & Co. 5.8
Amgen, Inc. 5.2
Medtronic, Inc. 5.1
Merck & Co., Inc. 4.8
American Home Products Corp. 4.6
Johnson & Johnson 4.2
Schering-Plough Corp. 4.0
Immunex Corp. 3.7
54.6
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Drugs & Pharmaceuticals 64.9% Row: 1, Col: 6, Value: 64.90000000000001
Medical Equipment
& Supplies 20.9% Row: 1, Col: 5, Value: 20.9
Medical Facilities
Management 4.0% Row: 1, Col: 4, Value: 4.0
Insurance 1.7% Row: 1, Col: 3, Value: 1.7
Electronic Instruments 1.7% Row: 1, Col: 2, Value: 1.7
*All Others 6.8% Row: 1, Col: 1, Value: 6.8
</TABLE>
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
HEALTH CARE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Ramin Arani)
Ramin Arani,
Portfolio Manager
of Fidelity Select
Health Care Portfolio
Q. HOW DID THE FUND PERFORM, RAMIN?
A. For the 12 months that ended February 29, 2000, the fund returned
1.15%. By comparison, the Goldman Sachs Health Care Index - an index
of 97 stocks designed to measure the performance of companies in the
health care sector - returned 3.51%. During the same period, the
Standard & Poor's 500 Index returned 11.73%.
Q. WHY DID THE FUND UNDERPERFORM BOTH THE GOLDMAN SACHS INDEX AND THE
S&P 500 INDEX DURING THE PERIOD?
A. During the first six months of the period, the fund's overweighted
position in pharmaceutical stocks - relative to the Goldman Sachs
index - hurt performance as these stocks fell out of favor. Later in
the year, the fund reduced its weighting in pharmaceutical stocks and
added some high-flying biotechnology names. Unfortunately, this
transition was not enough to boost the fund's 12-month returns over
that of the Goldman Sachs index or the S&P 500.
Q. WHY DID PHARMACEUTICAL STOCKS UNDERPERFORM?
A. The earnings growth rate for the pharmaceutical industry had been
incredibly robust during the past couple of years, mostly due to U.S.
Food and Drug Administration reforms that resulted in a significant
amount of new product approvals. During the past year, however,
investors began to realize that this pace of product approvals was
unsustainable and that the earnings growth rate for pharmaceutical
companies was likely peaking in 1999. At that point, drug stocks
started losing their luster. On top of that, the stocks suffered from
political concerns, including fears about passage of a universal
Medicare drug benefit and the possibility that it could lead to price
controls.
Q. YOU MENTIONED THE STRONG PERFORMANCE OF BIOTECH STOCKS.
SPECIFICALLY, WHY DID THEY DO SO WELL?
A. In 1999, biotech companies began reporting very good data from
their clinical trials for new products and, by and large, these stocks
trade relative to the quality of their clinical data. Promising new
products caused their earnings growth rates to accelerate - and, many
times, to exceed analysts' expectations. In turn, investors flocked to
biotech stocks in droves late in the year, especially as the
pharmaceutical sector struggled.
Q. WHICH INDIVIDUAL STOCKS DETRACTED THE MOST FROM PERFORMANCE?
A. Some of the fund's large pharmaceutical holdings, such as Eli Lilly
and Schering-Plough, hurt returns. These stocks were dragged down by
the aforementioned issues that pressured the pharmaceutical group as a
whole, but company-specific concerns also played a part in their
underperformance. In addition, the fund held a few large positions in
health care service stocks, such as Cardinal Health, that fell under
extreme pressures due to concerns about the sustainability of their
earnings growth rates.
Q. WHICH OF THE FUND'S LARGE HOLDINGS PERFORMED WELL OVER THE PAST
YEAR?
A. Warner-Lambert, the fund's largest holding at the end of the
period, helped performance because the company was the target of a
takeover battle between American Home Products and Pfizer. Pfizer
ultimately signed a contract to acquire Warner-Lambert, but the
ensuing battle drove the stock price to record highs. The biggest
winner on the biotech side was Amgen. The company reported strong
sales growth in its core products, while also reporting good data from
its clinical trials and the promise to launch several new drugs over
the next few years. Stocks such as Affymetrix, a developer of genetic
technology, and Millennium Pharmaceuticals also did well as those
companies generated strong earnings growth during the period.
Q. WHAT'S YOUR OUTLOOK?
A. Health care stocks are driven by relative earnings growth. Given
that the outlook for earnings growth in health care stocks is pretty
stable, the growth rate of the S&P 500 must decelerate for health care
issues to really outperform. I don't think I can predict the future of
the S&P 500, but I believe that a 20% growth rate for that index will
become unsustainable at some point. Therefore, I believe health care
stocks could generate strong relative returns when growth of the
broader market slows.
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 29, 2000, more than
$2.3 billion
MANAGER: Ramin Arani, since 1999; manager,
Fidelity Select Retailing Portfolio 1997-1999;
equity research associate, 1992-1996;
joined Fidelity in 1992
HEALTH CARE PORTFOLIO
INVESTMENTS FEBRUARY 29, 2000
Showing Percentage of Net Assets
COMMON STOCKS - 94.9%
SHARES VALUE (NOTE 1)
COMPUTER SERVICES & SOFTWARE
- - 1.5%
Affymetrix, Inc. (a) 58,900 $ 17,058,913
Healtheon/Web Maryland Corp. 127,700 7,063,406
IMS Health, Inc. 588,100 11,835,513
MatrixOne, Inc. 600 15,000
Onvia.com, Inc. 1,700 35,700
36,008,532
DRUGS & PHARMACEUTICALS - 64.9%
Allergan, Inc. 446,060 22,442,394
ALZA Corp. Class A. (a) 147,700 5,418,744
American Home Products Corp. 2,494,300 108,502,050
Amgen, Inc. (a) 1,810,900 123,480,744
Andrx Corp. (a) 97,500 9,366,094
Bausch & Lomb, Inc. 231,400 12,206,350
Biochem Pharma, Inc. (a) 7,200 188,742
Biogen, Inc. (a) 415,200 44,815,650
Biovail Corp. International 142,900 9,271,347
(a)
Bristol-Myers Squibb Co. 3,028,800 172,073,700
Celgene Corp. (a) 79,100 13,091,050
Cephalon, Inc. (a) 329,781 21,920,131
Chiron Corp. (a) 488,500 24,425,000
Eli Lilly & Co. 2,304,352 136,964,922
Enzon, Inc. (a) 91,200 5,289,600
Forest Laboratories, Inc. (a) 349,900 23,902,544
Genentech, Inc. 8,400 1,620,150
Genzyme Corp. - General 163,500 9,391,031
Division
Gilead Sciences, Inc. (a) 123,500 9,447,750
Human Genome Sciences, Inc. 82,500 18,005,625
(a)
IDEC Pharmaceuticals Corp. (a) 175,984 24,791,746
Immunex Corp. (a) 447,500 88,353,281
Medicis Pharmaceutical Corp. 104,900 5,290,894
Class A (a)
Medimmune, Inc. (a) 197,400 39,183,900
Merck & Co., Inc. 1,855,300 114,216,906
Millennium Pharmaceuticals, 98,400 25,596,300
Inc. (a)
PE Corp. - Celera Genomics 10,800 2,635,200
Group (a)
Pfizer, Inc. 1,719,100 55,226,088
Pharmacia & Upjohn, Inc. 463,400 22,069,425
Protein Design Labs, Inc. (a) 69,800 17,463,088
QLT PhotoTherapeutics, Inc. 38,300 2,734,582
(a)
Schering-Plough Corp. 2,673,800 93,248,775
Sepracor, Inc. (a) 289,400 29,337,925
SuperGen, Inc. (a) 45,900 2,825,719
Warner-Lambert Co. 2,737,000 234,184,559
Watson Pharmaceuticals, Inc. 156,400 6,256,000
(a)
1,535,238,006
SHARES VALUE (NOTE 1)
ELECTRONIC INSTRUMENTS - 1.7%
Beckman Coulter, Inc. 45,800 $ 2,204,125
PE Corp. - Biosystems Group 234,400 24,729,200
Waters Corp. (a) 121,700 11,934,206
38,867,531
INSURANCE - 1.7%
CIGNA Corp. 544,100 40,161,381
MEDICAL EQUIPMENT & SUPPLIES
- - 20.9%
Abbott Laboratories 2,594,600 84,973,150
Allscripts, Inc. 1,500 103,500
AmeriSource Health Corp. 53,100 773,269
Class A (a)
Baxter International, Inc. 779,100 42,460,950
Becton, Dickinson & Co. 556,000 17,270,750
Biomet, Inc. 458,600 15,133,800
C.R. Bard, Inc. 300 11,850
Cardinal Health, Inc. 687,905 28,376,081
Guidant Corp. (a) 874,420 58,914,048
Johnson & Johnson 1,373,515 98,549,701
Mallinckrodt, Inc. 2,000 49,250
Medtronic, Inc. 2,511,672 121,659,113
Patterson Dental Co. (a) 61,000 2,197,906
Resmed, Inc. (a) 55,000 4,104,375
Stryker Corp. 107,700 6,300,450
Sybron International, Inc. (a) 378,200 10,589,600
VISX, Inc. (a) 70,000 1,185,625
492,653,418
MEDICAL FACILITIES MANAGEMENT
- - 4.0%
Columbia/HCA Healthcare Corp. 1,402,100 27,078,056
Express Scripts, Inc. Class A 315,100 14,514,294
(a)
Lincare Holdings, Inc. (a) 227,500 5,332,031
Oxford Health Plans, Inc. (a) 223,300 3,447,194
Trigon Healthcare, Inc. (a) 181,700 5,803,044
United HealthCare Corp. 482,800 24,683,150
Wellpoint Health Networks, 212,000 14,310,000
Inc. (a)
95,167,769
SERVICES - 0.2%
Caremark Rx, Inc. (a) 1,145,700 5,155,650
TOTAL COMMON STOCKS 2,243,252,287
(Cost $1,521,768,351)
CASH EQUIVALENTS - 6.1%
SHARES VALUE (NOTE 1)
Central Cash Collateral Fund, 9,795,500 $ 9,795,500
5.75% (b)
Taxable Central Cash Fund, 135,593,584 135,593,584
5.66% (b)
TOTAL CASH EQUIVALENTS 145,389,084
(Cost $145,389,084)
TOTAL INVESTMENT PORTFOLIO - 2,388,641,371
101.0%
(Cost $1,667,157,435)
NET OTHER ASSETS - (1.0)% (23,578,333)
NET ASSETS - 100% $ 2,365,063,038
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 $1,826,204,663 and $2,576,033,207, 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 $143,093 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $9,794,806. The fund
received cash collateral of $9,795,500 which was invested in cash
equivalents.
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $1,668,874,380. Net unrealized appreciation
aggregated $719,766,991, of which $795,851,059 related to appreciated
investment securities and $76,084,068 related to depreciated
investment securities.
The fund hereby designates approximately $153,808,000 as a capital
gain dividend for the purpose of the dividend paid deduction.
A total of 50% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2001 of amounts for use
in preparing 2000 income tax returns.
HEALTH CARE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 2,388,641,371
value (cost $1,667,157,435)
- - See accompanying schedule
Receivable for investments 3,206,814
sold
Receivable for fund shares 2,500,046
sold
Dividends receivable 2,557,012
Interest receivable 692,171
Redemption fees receivable 8,100
Other receivables 123,405
TOTAL ASSETS 2,397,728,919
LIABILITIES
Payable for investments $ 2,640,600
purchased
Payable for fund shares 18,163,231
redeemed
Accrued management fee 1,187,410
Other payables and accrued 879,140
expenses
Collateral on securities 9,795,500
loaned, at value
TOTAL LIABILITIES 32,665,881
NET ASSETS $ 2,365,063,038
Net Assets consist of:
Paid in capital $ 1,540,724,272
Undistributed net investment 2,230,397
income
Accumulated undistributed net 100,634,248
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 721,474,121
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 18,082,391 $ 2,365,063,038
shares outstanding
NET ASSET VALUE and $130.79
redemption price per share
($2,365,063,038 (divided by)
18,082,391 shares)
Maximum offering price per $134.84
share (100/97.00 of $130.79)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 24,201,967
Dividends
Interest 8,199,950
Security lending 162,523
TOTAL INCOME 32,564,440
EXPENSES
Management fee $ 16,196,325
Transfer agent fees 11,913,589
Accounting and security 1,571,747
lending fees
Non-interested trustees' 9,459
compensation
Custodian fees and expenses 89,598
Registration fees 144,588
Audit 61,743
Legal 12,308
Miscellaneous 4,640
Total expenses before 30,003,997
reductions
Expense reductions (695,076) 29,308,921
NET INVESTMENT INCOME 3,255,519
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 204,652,131
Foreign currency transactions (34,949) 204,617,182
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (209,752,846)
Assets and liabilities in (14,345) (209,767,191)
foreign currencies
NET GAIN (LOSS) (5,150,009)
NET INCREASE (DECREASE) IN $ (1,894,490)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 6,917,352
charges paid to FDC
Sales charges - Retained by $ 6,892,954
FDC
Deferred sales charges $ 84,087
withheld by FDC
Exchange fees withheld by FSC $ 197,379
Expense reductions Directed $ 679,973
brokerage arrangements
Custodian credits 1,683
Transfer agent credits 13,420
$ 695,076
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ 3,255,519 $ 3,477,655
income
Net realized gain (loss) 204,617,182 141,016,806
Change in net unrealized (209,767,191) 456,695,074
appreciation (depreciation)
NET INCREASE (DECREASE) IN (1,894,490) 601,189,535
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (1,677,421) (3,782,810)
From net investment income
From net realized gain (163,613,261) (121,803,514)
TOTAL DISTRIBUTIONS (165,290,682) (125,586,324)
Share transactions Net 762,183,703 1,715,677,379
proceeds from sales of shares
Reinvestment of distributions 158,184,675 121,790,160
Cost of shares redeemed (1,535,337,928) (1,393,295,000)
NET INCREASE (DECREASE) IN (614,969,550) 444,172,539
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 1,393,204 2,029,623
TOTAL INCREASE (DECREASE) (780,761,518) 921,805,373
IN NET ASSETS
NET ASSETS
Beginning of period 3,145,824,556 2,224,019,183
End of period (including $ 2,365,063,038 $ 3,145,824,556
undistributed net investment
income of $2,230,397 and
$1,027,364, respectively)
OTHER INFORMATION
Shares
Sold 5,768,494 13,702,070
Issued in reinvestment of 1,257,783 985,706
distributions
Redeemed (11,805,281) (11,362,310)
Net increase (decrease) (4,779,004) 3,325,466
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 E 1999 1998 1997 1996 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 137.60 $ 113.84 $ 102.45 $ 100.47 $ 76.13
period
Income from Investment
Operations
Net investment income C .15 .17 .33 .52 .95
Net realized and unrealized .90 F 29.85 31.94 18.01 28.85
gain (loss)
Total from investment 1.05 30.02 32.27 18.53 29.80
operations
Less Distributions
From net investment income (.08) (.19) (.25) (.65) (.59)
From net realized gain (7.85) (6.17) (20.73) (15.95) (4.92)
Total distributions (7.93) (6.36) (20.98) (16.60) (5.51)
Redemption fees added to paid .07 .10 .10 .05 .05
in capital
Net asset value, end of period $ 130.79 $ 137.60 $ 113.84 $ 102.45 $ 100.47
TOTAL RETURN A, B 1.15% 27.20% 36.47% 20.41% 39.68%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,365,063 $ 3,145,825 $ 2,224,019 $ 1,372,554 $ 1,525,910
(000 omitted)
Ratio of expenses to average 1.07% 1.07% 1.20% 1.33% 1.31%
net assets
Ratio of expenses to average 1.05% D 1.05% D 1.18% D 1.32% D 1.30% D
net assets after expense
reductions
Ratio of net investment .12% .14% .31% .52% 1.06%
income to average net assets
Portfolio turnover rate 70% 66% 79% 59% 54%
</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
F THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT
CORRESPOND WITH THE AGGREGATE NET LOSS ON INVESTMENTS FOR
THE PERIOD DUE TO THE TIMING OF SALES AND REPURCHASES OF
FUND SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF
THE INVESTMENTS OF THE FUND.
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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT MEDICAL DELIVERY -19.60% 2.53% 182.13%
SELECT MEDICAL DELIVERY (LOAD -22.09% -0.62% 173.60%
ADJ.)
S&P 500 11.73% 206.94% 425.47%
GS Health Care 3.51% 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 97 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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT MEDICAL DELIVERY -19.60% 0.50% 10.93%
SELECT MEDICAL DELIVERY -22.09% -0.12% 10.59%
(LOAD ADJ.)
S&P 500 11.73% 25.14% 18.05%
GS Health Care 3.51% 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
1990/02/28 9700.00 10000.00
1990/03/31 10149.67 10265.00
1990/04/30 10250.61 10008.38
1990/05/31 11700.57 10984.19
1990/06/30 12260.36 10909.50
1990/07/31 12306.24 10874.59
1990/08/31 11324.31 9891.53
1990/09/30 10571.81 9409.81
1990/10/31 10443.33 9369.35
1990/11/30 11893.28 9974.61
1990/12/31 12899.13 10252.90
1991/01/31 14978.11 10699.92
1991/02/28 15904.20 11464.97
1991/03/31 18266.68 11742.42
1991/04/30 17718.59 11770.60
1991/05/31 19183.32 12279.09
1991/06/30 17567.22 11716.71
1991/07/31 19329.85 12262.71
1991/08/31 19556.34 12553.34
1991/09/30 19733.59 12343.69
1991/10/31 20166.86 12509.10
1991/11/30 19605.57 12004.98
1991/12/31 22937.89 13378.35
1992/01/31 22958.05 13129.52
1992/02/29 22071.17 13300.20
1992/03/31 20609.83 13040.85
1992/04/30 19793.50 13424.25
1992/05/31 19591.94 13490.03
1992/06/30 18560.27 13289.02
1992/07/31 19616.46 13832.55
1992/08/31 19594.46 13548.98
1992/09/30 17295.05 13708.86
1992/10/31 18153.20 13756.84
1992/11/30 19935.52 14225.94
1992/12/31 19913.51 14400.92
1993/01/31 18901.33 14521.89
1993/02/28 15908.81 14719.39
1993/03/31 16260.87 15029.97
1993/04/30 16062.83 14666.24
1993/05/31 16557.92 15059.30
1993/06/30 16722.95 15102.97
1993/07/31 17141.02 15042.56
1993/08/31 17086.01 15612.67
1993/09/30 18494.26 15492.45
1993/10/31 19363.41 15813.15
1993/11/30 19682.47 15662.92
1993/12/31 21013.71 15852.44
1994/01/31 22190.91 16391.43
1994/02/28 22311.93 15947.22
1994/03/31 21200.74 15251.92
1994/04/30 21882.86 15447.15
1994/05/31 22619.99 15700.48
1994/06/30 21222.74 15315.82
1994/07/31 22168.91 15818.18
1994/08/31 24413.31 16466.72
1994/09/30 25282.46 16063.29
1994/10/31 26107.60 16424.71
1994/11/30 24985.41 15826.52
1994/12/31 25182.84 16061.23
1995/01/31 26288.26 16477.70
1995/02/28 26691.28 17119.83
1995/03/31 28383.95 17625.04
1995/04/30 27461.47 18144.10
1995/05/31 26560.71 18869.32
1995/06/30 26988.00 19307.65
1995/07/31 29713.36 19947.89
1995/08/31 29851.93 19997.96
1995/09/30 30475.53 20841.88
1995/10/31 29955.87 20767.47
1995/11/30 32461.81 21679.16
1995/12/31 33287.39 22096.70
1996/01/31 35077.70 22848.87
1996/02/29 35806.17 23060.68
1996/03/31 36151.89 23282.76
1996/04/30 36563.52 23625.95
1996/05/31 36486.30 24235.26
1996/06/30 35624.01 24327.60
1996/07/31 31763.03 23252.80
1996/08/31 34697.38 23743.20
1996/09/30 37181.28 25079.47
1996/10/31 34375.63 25771.16
1996/11/30 36318.99 27719.21
1996/12/31 36950.58 27170.09
1997/01/31 38698.81 28867.68
1997/02/28 39565.94 29094.00
1997/03/31 37062.47 27898.53
1997/04/30 37907.42 29564.07
1997/05/31 41422.41 31363.93
1997/06/30 41710.28 32769.03
1997/07/31 44391.98 35376.46
1997/08/31 42861.74 33394.67
1997/09/30 44134.42 35223.70
1997/10/31 42679.93 34047.23
1997/11/30 43695.04 35623.28
1997/12/31 44391.83 36234.93
1998/01/31 43096.72 36635.68
1998/02/28 48260.14 39277.85
1998/03/31 50202.82 41289.27
1998/04/30 51451.35 41704.64
1998/05/31 49025.07 40987.74
1998/06/30 49667.32 42652.66
1998/07/31 45831.66 42198.41
1998/08/31 35448.62 36097.36
1998/09/30 36626.08 38409.76
1998/10/31 39123.72 41534.01
1998/11/30 40622.30 44051.38
1998/12/31 41657.04 46589.63
1999/01/31 35716.23 48538.00
1999/02/28 34039.24 47029.44
1999/03/31 32701.22 48911.09
1999/04/30 35734.07 50805.42
1999/05/31 35288.06 49605.90
1999/06/30 34378.21 52359.03
1999/07/31 32433.62 50724.38
1999/08/31 30649.59 50473.29
1999/09/30 27081.54 49089.82
1999/10/31 26546.33 52196.23
1999/11/30 27884.35 53257.37
1999/12/31 29329.41 56394.23
2000/01/31 29115.33 53560.99
2000/02/29 27360.00 52547.08
IMATRL PRASUN SHR__CHT 20000229 20000309 114726 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Medical Delivery Portfolio on February 28,
1990, and the current 3.00% sales charge was paid. As the chart shows,
by February 29, 2000, the value of the investment would have grown to
$27,360 - a 173.60% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $52,547 - a 425.47% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
CIGNA Corp. 8.4
United HealthCare Corp. 6.4
Columbia/HCA Healthcare Corp. 5.9
Wellpoint Health Networks, Inc. 5.3
Healtheon/Web Maryland Corp. 5.0
Caremark Rx, Inc. 4.5
Cardinal Health, Inc. 4.4
Express Scripts, Inc. Class A 4.3
CareInsite, Inc. 4.2
McKesson HBOC, Inc. 3.7
52.1
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Medical Facilities Management 42.1% Row: 1, Col: 6, Value: 42.1
Computer Services
& Software 13.0% Row: 1, Col: 5, Value: 13.0
Insurance 13.0% Row: 1, Col: 4, Value: 13.0
Medical Equipment
& Supplies 12.3% Row: 1, Col: 3, Value: 12.3
Services 4.8% Row: 1, Col: 2, Value: 4.8
* All Others 14.8% Row: 1, Col: 1, Value: 14.8
</TABLE>
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
(photograph of Shep Perkins)(photograph of Pratima Abichandani)
NOTE TO SHAREHOLDERS: The following is an interview with Shep Perkins
(left), who managed Fidelity Select Medical Delivery Portfolio for
most of the period covered by this report, with additional comments
from Pratima Abichandani, who became manager of the fund on February
25, 2000.
Q. HOW DID THE FUND PERFORM, SHEP?
S.P. For the 12-month period that ended February 29, 2000, the fund
returned -19.60%. In comparison, the Goldman Sachs Health Care Index -
an index of 97 stocks designed to measure the performance of companies
in the health care sector - returned 3.51%. The fund also compares its
performance to the Standard & Poor's 500 Index, which returned 11.73%
during the same time period.
Q. WHY DID THE FUND'S PERFORMANCE LAG THAT OF THE S&P 500 AND THE
GOLDMAN SACHS INDEXES?
S.P. It was a very difficult year for medical delivery stocks, a much
narrower universe of stocks than the Goldman Sachs or the S&P 500
indexes. Earlier in the year, these stocks were hurt by federal budget
cuts, which reduced Medicare reimbursements to health care providers.
While some companies' earnings improved during the period, overall
results were dampened by escalating wage inflation. Finally, despite
solid fundamental performance on the part of managed care companies,
their stocks were hit by the threat of lawsuits by tobacco plaintiff
lawyers for alleged illegal incentive programs for doctors. The
Goldman Sachs index benefited from the performance of biotechnology
and genomics stocks, while the fund was limited in its ability to
invest in this area.
Q. WHAT WAS YOUR STRATEGY IN THIS DIFFICULT ENVIRONMENT?
S.P. I looked for the best opportunities within the fund's investment
universe and, given all the interest in Internet stocks, I added
selected Internet health care-related stocks toward the end of the
year. These companies are attempting to transform and streamline
information flow, removing redundancies and inefficiencies within the
health care industry. For example, sending electronic claims over the
Internet and maintaining and tracking patient data could make
back-office functions more efficient and cost-effective. Although
these developments are still in the early stages, investors are
excited about their prospects.
Q. WHICH STOCKS HELPED THE FUND'S PERFORMANCE?
S.P. The fund's Internet-related holdings performed very well. Ventro
(formerly Chemdex) formed an online business-to-business marketplace
for life sciences and health care companies, so hospitals and other
organizations can buy medical equipment and supplies over the Internet
using Ventro's exchange. Healtheon/WebMD helped streamline the
administrative process by developing the capability of sending
electronic claims over the Internet. CareInsite is developing a
process that will put best practices on a doctor's desktop computer to
provide information that assists with diagnoses and treatment
protocols, making patient consultations more efficient.
Q. WERE THERE OTHER STOCKS THAT DID WELL?
S.P. Biotechnology holdings did exceptionally well. Millennium
Pharmaceuticals discovered several promising compounds using new
genomics technologies. Amgen, another biotech company, benefited from
strong demand for its product Epogen - used to treat anemia in
patients on dialysis - and its product pipeline looked more promising
than expected.
Q. WHICH STOCKS DETRACTED FROM PERFORMANCE?
S.P. Health Management Associates missed its earnings targets earlier
in the year due to higher-than-expected operating expenses, which
continued to weigh on the company's stock. Respiratory care company
Lincare had steady operating performance throughout the year, but
investors became increasingly concerned about slowing revenue growth
and wage pressures. HEALTHSOUTH missed its earnings targets by a wide
margin due to pricing pressure, which, coupled with a heavy debt load,
led to disappointing stock performance.
Q. TURNING TO YOU, PRATIMA, WHAT'S YOUR OUTLOOK FOR THE NEXT FEW
MONTHS?
P.A. There are some encouraging signs. With many opportunities to
overhaul the back-office and the supply chain, companies are looking
to use better tools to re-engineer and improve their business
processes. Another piece of good news is that many of the largest
managed care companies are beating earnings estimates for the first
time in four years. Finally, the level of cuts resulting from Medicare
reform appears to have slowed, and it looks like the worst may be over
in that area. There are still some legislative changes and class
action lawsuits pending, but I am cautiously optimistic about general
business fundamentals.
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: June 30, 1986
FUND NUMBER: 505
TRADING SYMBOL: FSHCX
SIZE: as of February 29, 2000, more than
$45 million
MANAGER: Pratima Abichandani, since February
2000; manager, several Fidelity international funds,
1997-2000; sector leader, Asian
telecommunications sector, 1998-2000; analyst,
India and Singapore, 1995-1997; joined Fidelity
in 1994
MEDICAL DELIVERY PORTFOLIO
INVESTMENTS FEBRUARY 29, 2000
Showing Percentage of Net Assets
COMMON STOCKS - 94.0%
SHARES VALUE (NOTE 1)
CHEMICALS & PLASTICS - 1.0%
Medical Manager Corp. (a) 5,200 $ 437,775
COMPUTER SERVICES & SOFTWARE
- - 13.0%
CareInsite, Inc. 28,200 1,917,600
ebenX, Inc. 5,400 303,075
Eclipsys Corp. (a) 7,300 175,200
First Consulting Group, Inc. 7,300 109,044
(a)
Healtheon/Web Maryland Corp. 40,700 2,251,219
IDX Systems Corp. (a) 6,900 250,125
MatrixOne, Inc. 100 2,500
National Data Corp. 7,500 232,500
Onvia.com, Inc. 100 2,100
SciQuest.com, Inc. 2,500 187,188
Shared Medical Systems Corp. 11,500 447,781
5,878,332
DRUGS & PHARMACEUTICALS - 4.3%
Amgen, Inc. (a) 2,700 184,106
Bristol-Myers Squibb Co. 3,800 215,888
Cephalon, Inc. (a) 3,400 225,994
Immunex Corp. (a) 1,100 217,181
Millennium Pharmaceuticals, 800 208,100
Inc. (a)
Quintiles Transnational Corp. 24,500 727,344
(a)
Schering-Plough Corp. 5,200 181,350
1,959,963
ELECTRONIC INSTRUMENTS - 1.3%
Fisher Scientific 13,800 600,300
International, Inc.
INSURANCE - 13.0%
Aetna, Inc. 34,800 1,431,150
CIGNA Corp. 51,600 3,808,720
First Health Group Corp. (a) 25,700 620,013
5,859,883
MEDICAL EQUIPMENT & SUPPLIES
- - 12.3%
AmeriSource Health Corp. 12,200 177,663
Class A (a)
Bindley Western Industries, 23,500 403,906
Inc.
Cardinal Health, Inc. 48,050 1,982,063
Guidant Corp. (a) 3,200 215,600
Johnson & Johnson 2,500 179,375
McKesson HBOC, Inc. 87,000 1,685,625
Omnicare, Inc. 22,000 202,125
Patterson Dental Co. (a) 14,900 536,866
Sybron International, Inc. (a) 5,100 142,800
5,526,023
MEDICAL FACILITIES MANAGEMENT
- - 42.1%
Advance Paradigm, Inc. (a) 14,000 331,188
Apria Healthcare Group, Inc. 37,600 535,800
(a)
SHARES VALUE (NOTE 1)
Columbia/HCA Healthcare Corp. 138,623 $ 2,677,157
Express Scripts, Inc. Class A 41,700 1,920,806
(a)
Health Management Associates, 103,417 1,111,733
Inc. Class A (a)
HEALTHSOUTH Corp. (a) 116,300 566,963
Lifepoint Hospitals, Inc. (a) 9,200 138,575
Lincare Holdings, Inc. (a) 46,800 1,096,875
Manor Care, Inc. (a) 45,200 392,675
Medquist, Inc. (a) 12,600 324,450
Oxford Health Plans, Inc. (a) 64,300 992,631
Quorum Health Group, Inc. (a) 17,600 156,750
Renal Care Group, Inc. (a) 24,650 432,916
Syncor International Corp. (a) 12,800 313,600
Tenet Healthcare Corp. (a) 49,800 871,500
Triad Hospitals, Inc. (a) 22,000 352,000
Trigon Healthcare, Inc. (a) 29,800 951,738
United HealthCare Corp. 56,400 2,883,450
Universal Health Services, 14,000 544,250
Inc. Class B (a)
Wellpoint Health Networks, 35,500 2,396,250
Inc. (a)
18,991,307
RETAIL & WHOLESALE,
MISCELLANEOUS - 2.2%
Chemdex Corp. 2,800 629,650
Drugstore.com, Inc. 8,400 159,600
PlanetRx.com, Inc. 15,700 182,513
971,763
SERVICES - 4.8%
Caremark Rx, Inc. (a) 446,040 2,007,180
Superior Consultant Holdings 8,700 134,850
Corp. (a)
2,142,030
TOTAL COMMON STOCKS 42,367,376
(Cost $44,036,406)
CASH EQUIVALENTS - 8.1%
Central Cash Collateral Fund, 3,664,500 3,664,500
5.75% (b) (Cost $3,664,500)
TOTAL INVESTMENT PORTFOLIO - 46,031,876
102.1%
(Cost $47,700,906)
NET OTHER ASSETS - (2.1)% (925,973)
NET ASSETS - 100% $ 45,105,903
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 $87,901,175 and $103,578,577, 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 $17,503 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $3,500,919. The fund
received cash collateral of $3,664,500 which was invested in cash
equivalents.
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $48,406,659. Net unrealized depreciation
aggregated $2,374,783, of which $4,008,551 related to appreciated
investment securities and $6,383,334 related to depreciated investment
securities.
At February 29, 2000, the fund had a capital loss carryforward of
approximately $38,668,000, of which $10,988,000 and $27,680,000 will
expire on February 28, 2007 and February 29, 2008, respectively.
The fund intends to elect to defer to its fiscal year ending February
28, 2001 approximately $3,786,000 of losses recognized during the
period November 1, 1999 to February 29, 2000.
MEDICAL DELIVERY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 46,031,876
value (cost $47,700,906) -
See accompanying schedule
Receivable for investments 9,268,979
sold
Receivable for fund shares 93,261
sold
Dividends receivable 11,809
Interest receivable 9,321
Redemption fees receivable 2,469
Other receivables 9,306
TOTAL ASSETS 55,427,021
LIABILITIES
Payable to custodian bank $ 2,096,398
Payable for investments 495,662
purchased
Payable for fund shares 3,989,093
redeemed
Accrued management fee 28,762
Other payables and accrued 46,703
expenses
Collateral on securities 3,664,500
loaned, at value
TOTAL LIABILITIES 10,321,118
NET ASSETS $ 45,105,903
Net Assets consist of:
Paid in capital $ 89,981,549
Accumulated undistributed net (43,206,616)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (1,669,030)
(depreciation) on investments
NET ASSETS, for 2,941,114 $ 45,105,903
shares outstanding
NET ASSET VALUE and $15.34
redemption price per share
($45,105,903 (divided by)
2,941,114 shares)
Maximum offering price per $15.81
share (100/97.00 of $15.34)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 160,121
Dividends
Interest 238,379
Security lending 14,629
TOTAL INCOME 413,129
EXPENSES
Management fee $ 366,977
Transfer agent fees 603,980
Accounting and security 60,806
lending fees
Custodian fees and expenses 12,550
Registration fees 32,655
Audit 16,047
Legal 344
Total expenses before 1,093,359
reductions
Expense reductions (37,246) 1,056,113
NET INVESTMENT INCOME (LOSS) (642,984)
REALIZED AND UNREALIZED GAIN (12,937,981)
(LOSS)
Net realized gain (loss) on
investment securities
Change in net unrealized (1,057,478)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) (13,995,459)
NET INCREASE (DECREASE) IN $ (14,638,443)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 148,780
charges paid to FDC
Sales charges - Retained by $ 147,252
FDC
Deferred sales charges $ 4,305
withheld by FDC
Exchange fees withheld by FSC $ 16,705
Expense reductions Directed $ 34,638
brokerage arrangements
Transfer agent credits 2,608
$ 37,246
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ (642,984) $ (390,234)
income (loss)
Net realized gain (loss) (12,937,981) (29,445,200)
Change in net unrealized (1,057,478) (24,558,768)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (14,638,443) (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 81,001,356 162,156,332
proceeds from sales of shares
Reinvestment of distributions - 8,097,680
Cost of shares redeemed (98,291,380) (186,595,554)
NET INCREASE (DECREASE) IN (17,290,024) (16,341,542)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 192,090 248,569
TOTAL INCREASE (DECREASE) (31,736,377) (78,700,163)
IN NET ASSETS
NET ASSETS
Beginning of period 76,842,280 155,542,443
End of period $ 45,105,903 $ 76,842,280
OTHER INFORMATION
Shares
Sold 4,531,558 6,115,538
Issued in reinvestment of - 283,433
distributions
Redeemed (5,618,803) (7,863,246)
Net increase (decrease) (1,087,245) (1,464,275)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 F 1999 1998 1997 1996 F
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 19.08 $ 28.32 $ 28.29 $ 29.00 $ 23.18
period
Income from Investment
Operations
Net investment income (loss) C (.18) (.06) E (.24) (.23) (.03)
Net realized and unrealized (3.61) (7.88) 5.45 2.92 7.72
gain (loss)
Total from investment (3.79) (7.94) 5.21 2.69 7.69
operations
Less Distributions
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 .05 .04 .05 .05 .04
in capital
Net asset value, end of period $ 15.34 $ 19.08 $ 28.32 $ 28.29 $ 29.00
TOTAL RETURN A, B (19.60)% (29.47)% 21.97% 10.50% 34.15%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 45,106 $ 76,842 $ 155,542 $ 192,385 $ 295,489
(000 omitted)
Ratio of expenses to average 1.73% 1.40% 1.57% 1.57% 1.65%
net assets
Ratio of expenses to average 1.67% D 1.37% D 1.53% D 1.53% D 1.62% D
net assets after expense
reductions
Ratio of net investment (1.02)% (.25)% (.88)% (.84)% (.13)%
income (loss) to average net
assets
Portfolio turnover rate 154% 67% 109% 78% 132%
</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 INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND
WHICH AMOUNTED TO $.12 PER SHARE.
F FOR THE YEAR ENDED FEBRUARY 29
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 29, 2000 PAST 1 YEAR LIFE OF FUND
SELECT MEDICAL EQUIPMENT AND 25.68% 52.07%
SYSTEMS
SELECT MEDICAL EQUIPMENT AND 21.84% 47.44%
SYSTEMS (LOAD ADJ.)
S&P 500 11.73% 29.10%
GS Health Care 3.51% 23.51%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year or since the fund
started on April 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 97
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 FEBRUARY 29, 2000 PAST 1 YEAR LIFE OF FUND
SELECT MEDICAL EQUIPMENT AND 25.68% 25.57%
SYSTEMS
SELECT MEDICAL EQUIPMENT AND 21.84% 23.48%
SYSTEMS (LOAD ADJ.)
S&P 500 11.73% 14.88%
GS Health Care 3.51% 12.16%
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 12853.70 12400.49
1999/09/30 11835.79 12060.59
1999/10/31 11656.15 12823.79
1999/11/30 12095.26 13084.50
1999/12/31 13156.47 13855.17
2000/01/31 13948.66 13159.09
2000/02/29 14744.00 12909.99
IMATRL PRASUN SHR__CHT 20000229 20000320 151202 R00000000000026
$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 29, 2000, the value
of the investment would have grown to $14,744 - a 47.44% 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 been $12,910 - a
29.10% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
Abbott Laboratories 6.9
Becton, Dickinson & Co. 6.8
Baxter International, Inc. 6.5
Guidant Corp. 6.4
Biomet, Inc. 6.1
Johnson & Johnson 5.4
Medtronic, Inc. 5.4
PE Corp. - Biosystems Group 5.4
Chiron Corp. 4.9
Bausch & Lomb, Inc. 4.5
58.3
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Medical Equipment & Supplies 60.3% Row: 1, Col: 6, Value: 60.3
Drugs & Pharmaceuticals 17.5% Row: 1, Col: 5, Value: 17.5
Electronic Instruments 8.4% Row: 1, Col: 4, Value: 8.4
Industrial Machinery &
Equipment 1.2% Row: 1, Col: 3, Value: 1.2
Home Furnishings 1.1% Row: 1, Col: 2, Value: 1.1
* All Others 11.5% Row: 1, Col: 1, Value: 11.5
</TABLE>
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
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 12 months that ended February 29, 2000, the
fund returned 25.68%, compared to 11.73% for the Standard & Poor's 500
Index and 3.51% for the Goldman Sachs Health Care Index, an index of
97 stocks designed to measure the performance of companies in the
health care sector.
Q. WHY DID THE FUND OUTPERFORM THE GOLDMAN SACHS INDEX?
A. The fund carried a heavier weighting in several high-growth
industries that helped it outperform the Goldman Sachs index. For
example, although the fund maintained its primary emphasis on medical
technology companies, significant outperformance came from companies
with an exposure to biotechnology, which was extremely strong during
the period. The cardiology area also helped, as several of the fund's
core holdings in that area did well. Orthopedic stocks were a third
category that contributed nicely, buoyed by expanding product demand
and industry consolidation that led to better pricing. Finally,
underweighting manufacturers of health care capital equipment aided
relative performance because those stocks were weak during the period.
Q. WHY WERE INVESTORS DRAWN TO BIOTECHNOLOGY STOCKS DURING THE PERIOD?
A. Investor enthusiasm for biotechnology stocks focused on more robust
product pipelines, several high-profile product launches that exceeded
expectations and recent advances in genomics, the study of genes. In
particular, the industry appeared close to mapping a complete sequence
of the human genome - the genetic material that makes up a human
being. Success in this area could speed up the discovery of new, more
powerful drugs as well as help better identify which patients are
likely to respond to a drug and which are not.
Q. WHAT STOCKS DID WELL FOR THE FUND DURING THE PERIOD?
A. Four of the top contributors were biotechnology or genomics-related
stocks: PE Biosystems, Chiron, Waters and Celera. All four benefited
from positive investor sentiment due to the trends I mentioned
earlier. Two cardiology stocks - Guidant and Medtronic - also made
positive contributions to performance. Guidant was helped by gains in
its share of the market for stents, the small pieces of metal used to
prop open the artery walls of people with heart disease. Medtronic
shares advanced due to positive sentiment surrounding a new cycle of
products used to treat tachycardia - rapid, irregular heartbeat.
Stryker, an orthopedic stock, also turned in a strong performance. The
company successfully integrated an acquisition that was initially
unpopular with investors because it had a dilutive effect on earnings.
Q. WHAT STOCKS HURT PERFORMANCE?
A. Abbott Laboratories was the biggest detractor. This holding,
normally one of the fund's most consistent performers, ran into a
series of problems. The company was ordered by the Food and Drug
Administration to remove two of its top-selling drugs from the market,
while a third was subject to increased competitive pressures as the
result of a patent expiration. Believing that investors overreacted to
this negative news, I added to the fund's position in Abbott. Another
disappointing holding was Baxter International, a health care
conglomerate. The company had solid business prospects but suffered
from investors' preoccupation with stocks perceived to have stronger
growth prospects. Finally, Johnson & Johnson was hurt by a dip in
sales and earnings growth following the company's announcement of
plans to absorb distributor overstocks of its drugs in the fourth
quarter of 1999.
Q. WHAT'S YOUR OUTLOOK, KERRY?
A. In terms of this sector's basic business prospects, my outlook has
not changed much from a year ago. The constructive trends in
orthopedics and some areas of cardiology - especially cardiac rhythm
management - should enable companies in these industries to keep
growing at attractive rates. In the hospital supply group, business
prospects are solid, but the stocks could continue to be out of favor
if the economy continues its robust pace. These stocks are considered
defensive holdings and tend to do well in a slower-growing economy
than we have presently. I am also keeping my eye on the Internet to
identify its potential impact on the medical device 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: April 28, 1998
FUND NUMBER: 354
TRADING SYMBOL: FSMEX
SIZE: as of February 29, 2000, more than
$52 million
MANAGER: Kerry Nelson, since inception;
analyst, medical devices and automotive
industries, since 1997; joined Fidelity in 1995
MEDICAL EQUIPMENT AND SYSTEMS PORTFOLIO
INVESTMENTS FEBRUARY 29, 2000
Showing Percentage of Net Assets
COMMON STOCKS - 90.0%
SHARES VALUE (NOTE 1)
COMPUTER SERVICES & SOFTWARE
- - 0.5%
Healtheon/Web Maryland Corp. 4,900 $ 271,031
MatrixOne, Inc. 100 2,500
Onvia.com, Inc. 100 2,100
275,631
DRUGS & PHARMACEUTICALS - 17.5%
Allergan, Inc. 44,500 2,238,906
Bausch & Lomb, Inc. 44,680 2,356,870
Chiron Corp. (a) 50,400 2,520,000
Eli Lilly & Co. 2,300 136,706
Human Genome Sciences, Inc. 1,600 349,200
(a)
IDEXX Laboratories, Inc. (a) 14,500 428,656
Millennium Pharmaceuticals, 2,200 572,275
Inc. (a)
PE Corp. - Celera Genomics 1,140 278,160
Group (a)
Sepracor, Inc. (a) 2,200 223,025
9,103,798
ELECTRONIC INSTRUMENTS - 8.4%
PE Corp. - Biosystems Group 26,360 2,780,980
Waters Corp. (a) 16,020 1,570,961
4,351,941
HOME FURNISHINGS - 1.1%
Hillenbrand Industries, Inc. 19,800 601,425
INDUSTRIAL MACHINERY &
EQUIPMENT - 1.2%
Mettler-Toledo International, 16,010 618,386
Inc. (a)
MEDICAL EQUIPMENT & SUPPLIES
- - 60.3%
Abbott Laboratories 109,520 3,586,780
Arrow International, Inc. 7,200 284,400
Baxter International, Inc. 61,560 3,355,020
Becton, Dickinson & Co. 113,660 3,530,564
Biomet, Inc. 95,910 3,165,030
Boston Scientific Corp. (a) 20,600 375,950
C.R. Bard, Inc. 35,430 1,399,485
Cardinal Health, Inc. 10,700 441,375
CONMED Corp. (a) 8,400 231,000
DENTSPLY International, Inc. 20,400 522,750
Dionex Corp. (a) 200 6,313
Guidant Corp. (a) 49,520 3,336,410
Johnson & Johnson 39,250 2,816,188
Mallinckrodt, Inc. 15,400 379,225
Medtronic, Inc. 58,016 2,810,150
Novoste Corp. (a) 12,800 467,200
Orthofix International NV (a) 8,170 135,826
Respironics, Inc. (a) 16,100 226,406
St. Jude Medical, Inc. (a) 22,600 590,425
SHARES VALUE (NOTE 1)
Stryker Corp. 37,040 $ 2,166,840
Sybron International, Inc. (a) 54,860 1,536,080
31,363,417
MEDICAL FACILITIES MANAGEMENT
- - 1.0%
Quest Diagnostics, Inc. (a) 14,700 504,394
TOTAL COMMON STOCKS 46,818,992
(Cost $43,297,525)
CASH EQUIVALENTS - 6.5%
Taxable Central Cash Fund, 3,388,731 3,388,731
5.66% (b) (Cost $3,388,731)
TOTAL INVESTMENT PORTFOLIO - 50,207,723
96.5%
(Cost $46,686,256)
NET OTHER ASSETS - 3.5% 1,822,572
NET ASSETS - 100% $ 52,030,295
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 $47,805,029 and $36,335,402, 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 $5,647 for the
period.
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $46,960,421. Net unrealized appreciation
aggregated $3,247,302, of which $7,252,502 related to appreciated
investment securities and $4,005,200 related to depreciated investment
securities.
The fund hereby designates approximately $502,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 23% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2001 of amounts for use
in preparing 2000 income tax returns.
MEDICAL EQUIPMENT AND SYSTEMS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 50,207,723
value (cost $46,686,256) -
See accompanying schedule
Receivable for investments 1,599,009
sold
Receivable for fund shares 660,509
sold
Dividends receivable 16,908
Interest receivable 21,766
Redemption fees receivable 321
Other receivables 28
TOTAL ASSETS 52,506,264
LIABILITIES
Payable for investments $ 26,700
purchased
Payable for fund shares 379,431
redeemed
Accrued management fee 25,237
Other payables and accrued 44,601
expenses
TOTAL LIABILITIES 475,969
NET ASSETS $ 52,030,295
Net Assets consist of:
Paid in capital $ 41,819,496
Accumulated undistributed net 6,689,332
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 3,521,467
(depreciation) on investments
NET ASSETS, for 3,536,723 $ 52,030,295
shares outstanding
NET ASSET VALUE and $14.71
redemption price per share
($52,030,295 (divided by)
3,536,723 shares)
Maximum offering price per $15.16
share (100/97.00 of $14.71)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 242,667
Dividends
Interest 165,007
Security lending 2,195
TOTAL INCOME 409,869
EXPENSES
Management fee $ 228,913
Transfer agent fees 301,303
Accounting and security 60,401
lending fees
Non-interested trustees' 108
compensation
Custodian fees and expenses 9,825
Registration fees 42,338
Audit 11,865
Legal 123
Miscellaneous 75
Total expenses before 654,951
reductions
Expense reductions (4,054) 650,897
NET INVESTMENT INCOME (LOSS) (241,028)
REALIZED AND UNREALIZED GAIN 7,168,011
(LOSS)
Net realized gain (loss) on
investment securities
Change in net unrealized 1,927,877
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 9,095,888
NET INCREASE (DECREASE) IN $ 8,854,860
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 317,761
charges paid to FDC
Sales charges - Retained by $ 316,216
FDC
Deferred sales charges $ 470
withheld by FDC
Exchange fees withheld by FSC $ 5,401
Expense reductions $ 3,936
Directed brokerage
arrangements
Custodian credits 118
$ 4,054
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 APRIL 28, 1998 (COMMENCEMENT
ASSETS OF OPERATIONS) TO FEBRUARY
28, 1999
Operations Net investment $ (241,028) $ (164,120)
income (loss)
Net realized gain (loss) 7,168,011 1,286,496
Change in net unrealized 1,927,877 1,593,590
appreciation (depreciation)
NET INCREASE (DECREASE) IN 8,854,860 2,715,966
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (1,173,170) -
from net realized gains
Share transactions Net 58,510,274 45,365,490
proceeds from sales of shares
Reinvestment of distributions 1,142,384 -
Cost of shares redeemed (43,972,480) (19,529,306)
NET INCREASE (DECREASE) IN 15,680,178 25,836,184
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 74,009 42,268
TOTAL INCREASE (DECREASE) 23,435,877 28,594,418
IN NET ASSETS
NET ASSETS
Beginning of period 28,594,418 -
End of period $ 52,030,295 $ 28,594,418
OTHER INFORMATION
Shares
Sold 4,477,921 4,138,562
Issued in reinvestment of 91,548 -
distributions
Redeemed (3,396,782) (1,774,526)
Net increase (decrease) 1,172,687 2,364,036
</TABLE>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 G 1999 F
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 12.10 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.08) (.11)
Net realized and unrealized 3.09 2.18
gain (loss)
Total from investment 3.01 2.07
operations
Less Distributions
From net realized gain (.42) -
Redemption fees added to paid .02 .03
in capital
Net asset value, end of period $ 14.71 $ 12.10
TOTAL RETURN B, C 25.68% 21.00%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 52,030 $ 28,594
(000 omitted)
Ratio of expenses to average 1.66% 2.39% A
net assets
Ratio of expenses to average 1.65% E 2.38% A, E
net assets after expense
reductions
Ratio of net investment (.61)% (1.21)% A
income (loss) to average net
assets
Portfolio turnover rate 101% 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.
G FOR THE YEAR ENDED FEBRUARY 29
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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT ENERGY 44.89% 98.01% 127.53%
SELECT ENERGY (LOAD ADJ.) 40.47% 91.99% 120.63%
S&P 500 11.73% 206.94% 425.47%
GS Natural Resources 27.62% 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 105 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 FEBRUARY 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT ENERGY 44.89% 14.64% 8.57%
SELECT ENERGY (LOAD ADJ.) 40.47% 13.94% 8.23%
S&P 500 11.73% 25.14% 18.05%
GS Natural Resources 27.62% 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
1990/02/28 9700.00 10000.00
1990/03/31 9705.64 10265.00
1990/04/30 9378.73 10008.38
1990/05/31 9948.00 10984.19
1990/06/30 9713.54 10909.50
1990/07/31 10375.15 10874.59
1990/08/31 10561.60 9891.53
1990/09/30 10531.52 9409.81
1990/10/31 9990.21 9369.35
1990/11/30 9881.95 9974.61
1990/12/31 9404.20 10252.90
1991/01/31 8795.07 10699.92
1991/02/28 9615.53 11464.97
1991/03/31 9485.00 11742.42
1991/04/30 9590.67 11770.60
1991/05/31 9646.61 12279.09
1991/06/30 9216.85 11716.71
1991/07/31 9690.14 12262.71
1991/08/31 9876.97 12553.34
1991/09/30 9777.33 12343.69
1991/10/31 10070.03 12509.10
1991/11/30 9322.72 12004.98
1991/12/31 9407.51 13378.35
1992/01/31 8904.10 13129.52
1992/02/29 8916.69 13300.20
1992/03/31 8658.69 13040.85
1992/04/30 9250.20 13424.25
1992/05/31 9690.68 13490.03
1992/06/30 9211.15 13289.02
1992/07/31 9457.20 13832.55
1992/08/31 9627.54 13548.98
1992/09/30 9684.32 13708.86
1992/10/31 9267.93 13756.84
1992/11/30 9053.42 14225.94
1992/12/31 9182.81 14400.92
1993/01/31 9529.09 14521.89
1993/02/28 10157.53 14719.39
1993/03/31 10676.94 15029.97
1993/04/30 10882.33 14666.24
1993/05/31 11209.57 15059.30
1993/06/30 11357.14 15102.97
1993/07/31 11273.73 15042.56
1993/08/31 12165.62 15612.67
1993/09/30 12095.04 15492.45
1993/10/31 11921.79 15813.15
1993/11/30 10478.09 15662.92
1993/12/31 10941.73 15852.44
1994/01/31 11527.78 16391.43
1994/02/28 11141.52 15947.22
1994/03/31 10602.09 15251.92
1994/04/30 11411.95 15447.15
1994/05/31 11532.72 15700.48
1994/06/30 11472.34 15315.82
1994/07/31 11646.77 15818.18
1994/08/31 11452.21 16466.72
1994/09/30 11364.99 16063.29
1994/10/31 12009.05 16424.71
1994/11/30 11271.07 15826.52
1994/12/31 10986.86 16061.23
1995/01/31 10723.79 16477.70
1995/02/28 11146.09 17119.83
1995/03/31 11755.32 17625.04
1995/04/30 12116.59 18144.10
1995/05/31 12429.24 18869.32
1995/06/30 12067.96 19307.65
1995/07/31 12352.81 19947.89
1995/08/31 12262.49 19997.96
1995/09/30 12269.44 20841.88
1995/10/31 11741.42 20767.47
1995/11/30 12415.34 21679.16
1995/12/31 13336.18 22096.70
1996/01/31 13542.23 22848.87
1996/02/29 13478.28 23060.68
1996/03/31 14380.62 23282.76
1996/04/30 15077.01 23625.95
1996/05/31 15232.82 24235.26
1996/06/30 15514.77 24327.60
1996/07/31 14817.31 23252.80
1996/08/31 15396.06 23743.20
1996/09/30 16212.23 25079.47
1996/10/31 16872.59 25771.16
1996/11/30 17807.49 27719.21
1996/12/31 17666.91 27170.09
1997/01/31 18070.33 28867.68
1997/02/28 16220.67 29094.00
1997/03/31 16669.76 27898.53
1997/04/30 16520.96 29564.07
1997/05/31 18025.05 31363.93
1997/06/30 18289.07 32769.03
1997/07/31 19489.14 35376.46
1997/08/31 19689.15 33394.67
1997/09/30 21137.23 35223.70
1997/10/31 20553.20 34047.23
1997/11/30 19369.13 35623.28
1997/12/31 19483.54 36234.93
1998/01/31 18442.58 36635.68
1998/02/28 19529.60 39277.85
1998/03/31 20460.02 41289.27
1998/04/30 20854.58 41704.64
1998/05/31 20347.76 40987.74
1998/06/30 19812.79 42652.66
1998/07/31 18179.71 42198.41
1998/08/31 14932.33 36097.36
1998/09/30 17485.18 38409.76
1998/10/31 17691.67 41534.01
1998/11/30 17072.22 44051.38
1998/12/31 16612.33 46589.63
1999/01/31 15476.69 48538.00
1999/02/28 15232.66 47029.44
1999/03/31 18451.89 48911.09
1999/04/30 21612.39 50805.42
1999/05/31 21142.15 49605.90
1999/06/30 22261.33 52359.03
1999/07/31 22853.84 50724.38
1999/08/31 23540.39 50473.29
1999/09/30 22515.26 49089.82
1999/10/31 21753.47 52196.23
1999/11/30 21809.89 53257.37
1999/12/31 22299.14 56394.23
2000/01/31 21984.00 53560.99
2000/02/29 22063.00 52547.08
IMATRL PRASUN SHR__CHT 20000229 20000316 094712 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Energy Portfolio on February 28, 1990, and
the current 3.00% sales charge was paid. As the chart shows, by
February 29, 2000, the value of the investment would have grown to
$22,063 - a 120.63% 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 $52,547 - a 425.47% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
Exxon Mobil Corp. 8.3
Royal Dutch Petroleum Co. (NY 7.0
Shares)
Schlumberger Ltd. 6.2
Atlantic Richfield Co. 5.8
Chevron Corp. 5.7
Halliburton Co. 4.4
Amerada Hess Corp. 3.4
BP Amoco PLC sponsored ADR 3.3
Noble Drilling Corp. 2.7
Smith International, Inc. 2.7
49.5
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Oil & Gas 64.5% Row: 1, Col: 6, Value: 64.5
Energy Services 29.9% Row: 1, Col: 5, Value: 29.9
Gas 3.1% Row: 1, Col: 4, Value: 3.1
Electric Utility 0.8% Row: 1, Col: 3, Value: 0.8
Autos, Tires, & Accessories 0.2% Row: 1, Col: 2, Value: 0.2
* All Others 1.5% Row: 1, Col: 1, Value: 1.5
</TABLE>
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
ENERGY PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Scott Offen)
Scott Offen,
Portfolio Manager
of Fidelity Select
Energy Portfolio
Q. HOW DID THE FUND PERFORM DURING ITS FISCAL YEAR, SCOTT?
A. For the 12 months that ended February 29, 2000, the fund returned
44.89%, while the Goldman Sachs Natural Resources Index - an index of
105 stocks designed to measure the performance of companies in the
natural resources sector - returned 27.62%, and the Standard & Poor's
500 Index returned 11.73%.
Q. WHAT FACTORS HELPED THE FUND POST SUCH A STRONG PERFORMANCE?
A. Oil prices hit historically high levels, and fundamentals in the
energy industry were quite positive. The fund beat the Goldman Sachs
index because the index includes stocks outside of the energy industry
- - such as paper and forest products, steel and non-ferrous metals
companies - all of which did not perform as well as energy stocks.
Also, within the energy sector, exploration and production (E&P) and
energy service stocks outperformed the rest of the sector, and the
fund was overweighted relative to the index in these two areas.
Q. HOW HAVE YOU STRUCTURED THE PORTFOLIO SINCE TAKING OVER THE FUND AT
THE BEGINNING OF SEPTEMBER?
A. I added to the fund's investments in E&P companies, which tend to
benefit from high oil prices. While these stocks fell initially -
hurting the fund's performance over the short term - they were
attractive to me because they were selling at very cheap valuations.
As I said, oil prices hit historically high levels - more than $30 per
barrel. Nevertheless, valuations for energy stocks, in general, and
E&P stocks, in particular, discounted an eventual price of about $16
per barrel for crude oil. I believe we're reaching a peak, but I don't
believe that oil will fall to such a low level again. I think the E&P
stock prices will move up as oil prices move down, meeting somewhere
in the middle to provide a solid return. In addition, two-thirds of
the E&P companies' business is in natural gas, where the fundamentals
look terrific, characterized by growing consumption and declining
supply. As with oil, I believe the price of natural gas should be
sustainable at a higher price than current estimates are calling for.
Q. WHAT OTHER MOVES HAVE YOU MADE WITH THE FUND?
A. I cut back on the number of stocks in the fund, so that I could
focus on what I considered to be the best ideas. In addition, I
invested in stocks that usually do well when the price of oil is high
but moving lower - well-managed refiners and integrated oil companies
whose earnings come from refining and marketing. The fund also held a
larger weighting than the index in energy service stocks - which
helped boost performance - because of my feeling that while oil prices
might fall, they should stay high enough to stimulate added supply.
Q. WHICH STOCKS PERFORMED WELL? WHICH DISAPPOINTED?
A. Most of the fund's top performers came from the energy services
industry, including Schlumberger, BJ Services, Noble Drilling, Baker
Hughes and Halliburton. These firms do well when investors believe
that the capital expenditure budgets of the integrated oil companies
are on the rise. When the oil companies are flush with cash, they tend
to re-invest in their businesses. That certainly was the case with oil
prices at such a high level. As far as disappointments, I'd include
Royal Dutch Petroleum, which did not achieve the cost savings it had
promised investors, and Chevron, which suffered from expectations of
lower oil production.
Q. WHAT IS YOUR OUTLOOK?
A. Almost all of the run-up in energy stocks occurred in the first
half of the year. By the end of the period, energy stocks had
cheapened significantly. While fundamentals for the energy sector
remain positive, that doesn't mean stock prices will necessarily
follow, but we are optimistic that stock performance should follow
fundamentals.
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 29, 2000, more than
$175 million
MANAGER: Scott Offen, since September 1999;
manager, Fidelity Select Natural Resources
Portfolio and Fidelity Advisor Natural Resources
Portfolio, since September 1999; several Fidelity
Select Portfolios, 1988-1999; joined Fidelity in
1985
ENERGY PORTFOLIO
INVESTMENTS FEBRUARY 29, 2000
Showing Percentage of Net Assets
COMMON STOCKS - 98.2%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES -
0.2%
Barrett Resources Corp. (a) 15,400 $ 448,525
COMPUTER SERVICES & SOFTWARE
- - 0.0%
MatrixOne, Inc. 100 2,500
Onvia.com, Inc. 100 2,100
4,600
ELECTRIC UTILITY - 0.8%
Calpine Corp. (a) 15,400 1,409,100
ENERGY SERVICES - 29.9%
Baker Hughes, Inc. 145,850 3,773,869
BJ Services Co. (a) 30,100 1,717,581
Diamond Offshore Drilling, 16,400 520,700
Inc.
ENSCO International, Inc. 137,200 4,150,300
Global Marine, Inc. (a) 64,000 1,436,000
Halliburton Co. 204,600 7,813,163
Hanover Compressor Co. (a) 19,300 905,894
Helmerich & Payne, Inc. 25,400 676,275
Marine Drilling Companies, 30,200 688,938
Inc. (a)
McDermott International, Inc. 400 3,750
Nabors Industries, Inc. (a) 97,200 3,487,050
Noble Drilling Corp. (a) 134,000 4,824,000
R&B Falcon Corp. (a) 11,000 169,813
Rowan Companies, Inc. (a) 27,800 698,475
Santa Fe International Corp. 11,600 332,775
Schlumberger Ltd. 146,480 10,821,210
Smith International, Inc. (a) 76,200 4,776,788
Superior Energy Services, 69,301 511,095
Inc. (a)
Tidewater, Inc. 21,200 600,225
Transocean Sedco Forex, Inc. 46,768 1,844,413
Weatherford International, 62,025 2,791,125
Inc. (a)
52,543,439
GAS - 3.1%
Dynegy, Inc. Class A 51,215 2,400,703
Kinder Morgan, Inc. 102,800 2,865,550
5,266,253
METALS & MINING - 0.0%
Alcoa, Inc. 1 69
OIL & GAS - 64.2%
Alberta Energy Co. Ltd. 54,200 1,473,151
Amerada Hess Corp. 117,600 5,946,150
Anadarko Petroleum Corp. 72,300 2,223,225
Apache Corp. 52,300 1,908,950
Atlantic Richfield Co. 144,500 10,259,500
BP Amoco PLC sponsored ADR 122,200 5,743,400
Burlington Resources, Inc. 17,825 492,416
SHARES VALUE (NOTE 1)
Cabot Oil & Gas Corp. Class A 33,100 $ 523,394
Canada Occidental Petroleum 68,700 1,274,855
Ltd.
Canadian Hunter Exploration 37,200 587,666
Ltd. (a)
Chevron Corp. 133,500 9,970,781
Conoco, Inc.:
Class A 56,500 1,084,094
Class B 128,411 2,528,092
Cooper Cameron Corp. (a) 14,360 793,390
Crestar Energy, Inc. (a) 21,300 268,160
EOG Resources, Inc. 69,700 1,062,925
Exxon Mobil Corp. 194,055 14,614,763
Forest Oil Corp. (a) 36,000 294,750
Frontier Oil Corp. (a) 215,100 1,344,375
Imperial Oil Ltd. 38,600 718,957
Kerr-McGee Corp. 31,900 1,427,525
Magnum Hunter Resources, Inc. 1 3
Noble Affiliates, Inc. 14,700 330,750
Nuevo Energy Co. (a) 60,100 1,066,775
Occidental Petroleum Corp. 180,000 2,891,250
Penn West Petroleum Ltd. (a) 14,600 298,124
Petro-Canada 120,500 1,695,778
Phillips Petroleum Co. 25,900 990,675
Pioneer Natural Resources Co. 138,200 1,148,788
Pogo Producing Co. 19,900 460,188
Prima Energy Corp. (a) 34,500 700,781
Rio Alto Exploration Ltd. (a) 52,300 793,736
Royal Dutch Petroleum Co. (NY 232,700 12,216,750
Shares)
Santa Fe Snyder Corp. (a) 321,485 2,411,138
Shell Transport & Trading Co. 89,400 619,282
PLC (Reg.)
Suncor Energy, Inc. 63,900 2,433,278
Sunoco, Inc. 87,500 2,160,156
Talisman Energy, Inc. (a) 73,000 1,888,452
Texaco, Inc. 93,400 4,430,663
Tosco Corp. 84,300 2,255,025
Total Fina SA sponsored ADR 10,811 725,688
Ultramar Diamond Shamrock 56,100 1,216,669
Corp.
Union Pacific Resources 91,500 817,781
Group, Inc.
USX - Marathon Group 189,600 4,100,100
Valero Energy Corp. 73,300 1,869,150
Vastar Resources, Inc. 14,000 742,875
112,804,374
TOTAL COMMON STOCKS 172,476,360
(Cost $152,254,076)
CONVERTIBLE PREFERRED STOCKS
- - 0.3%
OIL & GAS - 0.3%
Chesapeake Energy Corp. $3.50 15,000 555,000
(a) (Cost $146,211)
CASH EQUIVALENTS - 5.1%
SHARES VALUE (NOTE 1)
Central Cash Collateral 4,505,696 $ 4,505,696
Fund, 5.75% (b)
Taxable Central Cash Fund, 4,404,404 4,404,404
5.66% (b)
TOTAL CASH EQUIVALENTS 8,910,100
(Cost $8,910,100)
TOTAL INVESTMENT PORTFOLIO - 181,941,460
103.6%
(Cost $161,310,387)
NET OTHER ASSETS - (3.6)% (6,269,653)
NET ASSETS - 100% $ 175,671,807
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 $242,251,234 and $239,760,747, 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 $41,409 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $4,537,328. The fund
received cash collateral of $4,505,696 which was invested in cash
equivalents.
Distribution of investments by country of issue, as a percentage of
net assets, is as follows:
United States of America 75.3%
Netherlands 7.0
Canada 6.4
Netherlands Antilles 6.2
United Kingdom 3.6
Grand Cayman Islands 1.1
Others (individually less 0.4
than 1%)
100.0%
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $163,098,790. Net unrealized appreciation
aggregated $18,842,670, of which $28,854,002 related to appreciated
investment securities and $10,011,332 related to depreciated
investment securities.
The fund hereby designates approximately $1,682,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 73% 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 2001 of amounts for use
in preparing 2000 income tax returns.
ENERGY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 181,941,460
value (cost $161,310,387) -
See accompanying schedule
Receivable for investments 1,121,045
sold
Receivable for fund shares 318,951
sold
Dividends receivable 584,801
Interest receivable 32,434
Redemption fees receivable 872
Other receivables 3,153
TOTAL ASSETS 184,002,716
LIABILITIES
Payable for investments $ 26,700
purchased
Payable for fund shares 3,613,434
redeemed
Accrued management fee 87,536
Other payables and accrued 97,543
expenses
Collateral on securities 4,505,696
loaned, at value
TOTAL LIABILITIES 8,330,909
NET ASSETS $ 175,671,807
Net Assets consist of:
Paid in capital $ 146,034,692
Undistributed net investment 458,754
income
Accumulated undistributed net 8,547,288
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 20,631,073
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 7,602,344 $ 175,671,807
shares outstanding
NET ASSET VALUE and $23.11
redemption price per share
($175,671,807 (divided by)
7,602,344 shares)
Maximum offering price per $23.82
share (100/97.00 of $23.11)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 2,954,474
Dividends
Interest 544,606
Security lending 18,737
TOTAL INCOME 3,517,817
EXPENSES
Management fee $ 1,204,091
Transfer agent fees 1,207,603
Accounting and security 153,657
lending fees
Non-interested trustees' 842
compensation
Custodian fees and expenses 41,388
Registration fees 54,462
Audit 14,824
Legal 731
Miscellaneous 231
Total expenses before 2,677,829
reductions
Expense reductions (95,101) 2,582,728
NET INVESTMENT INCOME 935,089
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 23,278,638
Foreign currency transactions 2,099 23,280,737
Change in net unrealized 34,688,428
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 57,969,165
NET INCREASE (DECREASE) IN $ 58,904,254
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 930,422
charges paid to FDC
Sales charges - Retained by $ 928,434
FDC
Deferred sales charges $ 9,981
withheld by FDC
Exchange fees withheld by FSC $ 19,869
Expense reductions $ 94,960
Directed brokerage
arrangements
Custodian credits 141
$ 95,101
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ 935,089 $ 960,799
income
Net realized gain (loss) 23,280,737 (12,098,193)
Change in net unrealized 34,688,428 (22,108,978)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 58,904,254 (33,246,372)
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (786,455) (118,598)
From net investment income
From net realized gain (2,442,218) (2,920,602)
TOTAL DISTRIBUTIONS (3,228,673) (3,039,200)
Share transactions Net 235,865,753 115,988,469
proceeds from sales of shares
Reinvestment of distributions 3,080,231 2,970,065
Cost of shares redeemed (239,412,583) (109,891,379)
NET INCREASE (DECREASE) IN (466,599) 9,067,155
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 458,349 199,403
TOTAL INCREASE (DECREASE) 55,667,331 (27,019,014)
IN NET ASSETS
NET ASSETS
Beginning of period 120,004,476 147,023,490
End of period (including $ 175,671,807 $ 120,004,476
undistributed net investment
income of $458,754 and
$825,869, respectively)
OTHER INFORMATION
Shares
Sold 10,521,938 5,995,866
Issued in reinvestment of 141,927 133,126
distributions
Redeemed (10,457,389) (5,669,002)
Net increase (decrease) 206,476 459,990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 E 1999 1998 1997 1996 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 16.23 $ 21.20 $ 21.31 $ 18.97 $ 16.10
period
Income from Investment
Operations
Net investment income C .10 .13 .11 .13 .18
Net realized and unrealized 7.11 (4.71) 3.93 3.59 3.13
gain (loss)
Total from investment 7.21 (4.58) 4.04 3.72 3.31
operations
Less Distributions
From net investment income (.09) (.02) (.09) (.13) (.11)
From net realized gain (.29) (.40) (4.09) (1.31) (.36)
Total distributions (.38) (.42) (4.18) (1.44) (.47)
Redemption fees added to paid .05 .03 .03 .06 .03
in capital
Net asset value, end of period $ 23.11 $ 16.23 $ 21.20 $ 21.31 $ 18.97
TOTAL RETURN A, B 44.89% (22.00)% 20.40% 20.35% 20.92%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 175,672 $ 120,004 $ 147,023 $ 203,265 $ 119,676
(000 omitted)
Ratio of expenses to average 1.29% 1.46% 1.58% 1.57% 1.63%
net assets
Ratio of expenses to average 1.25% D 1.42% D 1.53% D 1.55% D 1.63%
net assets after expense
reductions
Ratio of net investment .45% .68% .47% .62% 1.04%
income to average net assets
Portfolio turnover rate 124% 138% 115% 87% 97%
</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
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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT ENERGY SERVICE 121.24% 198.73% 207.03%
SELECT ENERGY SERVICE (LOAD 114.53% 189.69% 197.74%
ADJ.)
S&P 500 11.73% 206.94% 425.47%
GS Natural Resources 27.62% 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 105 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 FEBRUARY 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT ENERGY SERVICE 121.24% 24.47% 11.87%
SELECT ENERGY SERVICE (LOAD 114.53% 23.71% 11.53%
ADJ.)
S&P 500 11.73% 25.14% 18.05%
GS Natural Resources 27.62% 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
1990/02/28 9700.00 10000.00
1990/03/31 10166.04 10265.00
1990/04/30 9628.91 10008.38
1990/05/31 11248.21 10984.19
1990/06/30 10671.58 10909.50
1990/07/31 11674.76 10874.59
1990/08/31 11469.38 9891.53
1990/09/30 11248.21 9409.81
1990/10/31 9834.28 9369.35
1990/11/30 9984.36 9974.61
1990/12/31 9637.14 10252.90
1991/01/31 9201.96 10699.92
1991/02/28 10681.56 11464.97
1991/03/31 9850.77 11742.42
1991/04/30 9898.24 11770.60
1991/05/31 10159.35 12279.09
1991/06/30 8830.09 11716.71
1991/07/31 9494.72 12262.71
1991/08/31 9391.86 12553.34
1991/09/30 8529.42 12343.69
1991/10/31 8656.02 12509.10
1991/11/30 7619.51 12004.98
1991/12/31 7374.23 13378.35
1992/01/31 7271.37 13129.52
1992/02/29 7421.70 13300.20
1992/03/31 6891.58 13040.85
1992/04/30 7461.27 13424.25
1992/05/31 8054.69 13490.03
1992/06/30 7587.86 13289.02
1992/07/31 7904.35 13832.55
1992/08/31 8307.88 13548.98
1992/09/30 8561.07 13708.86
1992/10/31 8117.98 13756.84
1992/11/30 7951.83 14225.94
1992/12/31 7627.42 14400.92
1993/01/31 7928.09 14521.89
1993/02/28 8711.40 14719.39
1993/03/31 9399.77 15029.97
1993/04/30 9906.47 14666.24
1993/05/31 10365.76 15059.30
1993/06/30 10310.33 15102.97
1993/07/31 10452.87 15042.56
1993/08/31 10817.14 15612.67
1993/09/30 10500.38 15492.45
1993/10/31 10349.93 15813.15
1993/11/30 9257.13 15662.92
1993/12/31 9225.87 15852.44
1994/01/31 9313.28 16391.43
1994/02/28 9265.60 15947.22
1994/03/31 8574.25 15251.92
1994/04/30 9022.55 15447.15
1994/05/31 9424.47 15700.48
1994/06/30 9711.55 15315.82
1994/07/31 9892.00 15818.18
1994/08/31 9498.29 16466.72
1994/09/30 9859.19 16063.29
1994/10/31 10252.90 16424.71
1994/11/30 9719.75 15826.52
1994/12/31 9278.21 16061.23
1995/01/31 9336.52 16477.70
1995/02/28 9969.50 17119.83
1995/03/31 10519.20 17625.04
1995/04/30 11160.51 18144.10
1995/05/31 11452.02 18869.32
1995/06/30 11060.56 19307.65
1995/07/31 11610.26 19947.89
1995/08/31 12076.67 19997.96
1995/09/30 12109.99 20841.88
1995/10/31 11060.56 20767.47
1995/11/30 11685.22 21679.16
1995/12/31 13070.60 22096.70
1996/01/31 13355.12 22848.87
1996/02/29 13872.42 23060.68
1996/03/31 14967.39 23282.76
1996/04/30 16092.97 23625.95
1996/05/31 15858.86 24235.26
1996/06/30 15893.54 24327.60
1996/07/31 15017.79 23252.80
1996/08/31 15971.58 23743.20
1996/09/30 16569.86 25079.47
1996/10/31 18416.74 25771.16
1996/11/30 19162.43 27719.21
1996/12/31 19486.16 27170.09
1997/01/31 20571.22 28867.68
1997/02/28 18347.30 29094.00
1997/03/31 19638.61 27898.53
1997/04/30 19411.60 29564.07
1997/05/31 22105.80 31363.93
1997/06/30 23552.86 32769.03
1997/07/31 27256.20 35376.46
1997/08/31 29188.80 33394.67
1997/09/30 32235.25 35223.70
1997/10/31 33463.35 34047.23
1997/11/30 29369.68 35623.28
1997/12/31 29594.38 36234.93
1998/01/31 25405.49 36635.68
1998/02/28 27232.67 39277.85
1998/03/31 29273.66 41289.27
1998/04/30 31684.15 41704.64
1998/05/31 29647.97 40987.74
1998/06/30 25781.29 42652.66
1998/07/31 20104.68 42198.41
1998/08/31 13739.05 36097.36
1998/09/30 16813.89 38409.76
1998/10/31 19261.41 41534.01
1998/11/30 14674.87 44051.38
1998/12/31 14880.55 46589.63
1999/01/31 14191.54 48538.00
1999/02/28 13461.39 47029.44
1999/03/31 18901.48 48911.09
1999/04/30 22038.02 50805.42
1999/05/31 21307.87 49605.90
1999/06/30 22881.28 52359.03
1999/07/31 23601.14 50724.38
1999/08/31 24742.64 50473.29
1999/09/30 22367.10 49089.82
1999/10/31 21852.91 52196.23
1999/11/30 22901.85 53257.37
1999/12/31 25616.75 56394.23
2000/01/31 25390.51 53560.99
2000/02/29 29774.00 52547.08
IMATRL PRASUN SHR__CHT 20000229 20000316 093643 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Energy Service Portfolio on February 28,
1990, and the current 3.00% sales charge was paid. As the chart shows,
by February 29, 2000, the value of the investment would have grown to
$29,774 - a 197.74% increase on the initial investment - and includes
the effect of a $7.50 trading fee. For comparison, look at how the
Standard & Poor's 500 Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $52,547 - a 425.47% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
ENSCO International, Inc. 8.4
Smith International, Inc. 7.7
Weatherford International, Inc. 7.5
Noble Drilling Corp. 7.0
Cooper Cameron Corp. 6.7
Nabors Industries, Inc. 6.3
BJ Services Co. 5.7
Baker Hughes, Inc. 4.5
Marine Drilling Companies, Inc. 4.2
Halliburton Co. 4.2
62.2
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Energy Services 84.0% Row: 1, Col: 5, Value: 84.0
Oil & Gas 6.8% Row: 1, Col: 4, Value: 6.8
Retail & Wholesale,
Miscellaneous 0.1% Row: 1, Col: 3, Value: 0.1
* All Others 9.1% Row: 1, Col: 1, Value: 9.1
</TABLE>
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
(photograph of James Catudel)(photograph of Nick Tiller)
NOTE TO SHAREHOLDERS: The following is an interview with James Catudal
(left), who managed Fidelity Select Energy Service Portfolio for most
of the period covered by this report, with additional comments from
Nick Tiller (right), who became manager of the fund on February 1,
2000.
Q. HOW DID THE FUND PERFORM, JIM?
J.C. Extremely well. For the 12 months that ended February 29, 2000,
the fund returned 121.24%, far outdistancing the 27.62% return of the
Goldman Sachs Natural Resources Index, an index of 105 stocks designed
to measure the performance of companies in the natural resources
sector. The fund also finished well ahead of the Standard & Poor's 500
Index, which returned 11.73% during the same period.
Q. WHAT WAS RESPONSIBLE FOR THE FUND'S OUTSTANDING PERFORMANCE?
J.C. Sharply advancing crude oil and natural gas prices were the
primary drivers of performance. To put the recent rally in
perspective, at the end of the period oil prices were at levels not
seen since the Gulf War in 1990, when Iraq invaded Kuwait. Firming
prices resulted from both diminished supply and growing demand. On the
supply side, the Organization of Petroleum Exporting Countries (OPEC),
in concert with Norway and Mexico, was successful in reining in oil
production. At the same time, demand for oil expanded due to economic
recovery in Asia and Latin America as well as continued prosperity in
the U.S. and Europe. In the case of natural gas, prices experienced a
smaller but still significant rise. Typically, rallies of this
magnitude stimulate more spending for exploration and production,
which directly benefits energy service companies. While some stocks in
the Goldman Sachs index reacted to surging energy prices, others were
dependent on the prices for metals, paper or other commodities that
were more stable during the period. The broader market as represented
by the S&P 500 also was subject to factors that limited performance in
some sectors, notably higher interest rates.
Q. HOW DID YOU POSITION THE FUND DURING THE PERIOD?
J.C. In the energy service sector, stocks are categorized as either
early-cycle, mid-cycle or late-cycle, depending on how quickly the
company's business activity responds to changes in energy prices. I
focused the fund on early-cycle and North American stocks, which are
normally the first to reflect stronger oil and gas prices. As I
expected, those two groups led the rally, so the strategy paid off
well.
Q. WHAT STOCKS DID WELL FOR THE FUND?
J.C. Two stocks mentioned in the report six months ago showed up once
again on the list of top performers. BJ Services, a provider of
pressure pumping services, and Noble Drilling - both early-cycle
stocks - turned in stellar performances. Ensco International also made
a positive contribution. Ensco is a shallow-water driller with high
exposure to the Gulf of Mexico, which was one of the first drilling
markets to recover. Another early-cycle stock, Weatherford
International, was attractive to investors because of plans to spin
off its drill pipe business.
Q. WHAT STOCKS WERE DISAPPOINTING?
J.C. There was only one stock that detracted significantly from
performance - McDermott International. When the company released
earnings in November, it revealed that potential asbestos-related
liabilities had increased. The stock pulled back sharply on the news.
Q. TURNING TO YOU, NICK, WHAT'S YOUR OUTLOOK?
N.T. My long-term outlook for the energy service sector is positive.
Inventories of oil recently hit 23-year lows, indicating extremely
tight supplies. Over the short term, the supply squeeze has been
alleviated by an OPEC production increase. Increased production
lowered oil prices from the recent high of $34 per barrel. If
worldwide economic activity continues to expand, however, it probably
would not take long for the production increase to be absorbed by
higher demand. Furthermore, it's important to realize that exploration
and production activity - and therefore demand in the energy service
market - will likely see a healthy increase if oil stays anywhere
above $20 per barrel. One challenge as we move forward will be to time
the migration from early-cycle holdings to mid- and late-cycle stocks,
and I will be looking at that issue carefully in the months to come.
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: 043
TRADING SYMBOL: FSESX
SIZE: as of February 29, 2000, more than
$631 million
MANAGER: Nicholas Tiller, since February
2000; analyst, various industries, since 1998;
joined Fidelity in 1998
ENERGY SERVICE PORTFOLIO
INVESTMENTS FEBRUARY 29, 2000
Showing Percentage of Net Assets
COMMON STOCKS - 90.9%
SHARES VALUE (NOTE 1)
COMPUTER SERVICES & SOFTWARE
- - 0.0%
MatrixOne, Inc. 200 $ 5,000
Onvia.com, Inc. 400 8,400
13,400
ELECTRICAL EQUIPMENT - 0.0%
NQL Drilling Tools, Inc. 60,600 232,016
Class A (a)
ENERGY SERVICES - 84.0%
Atwood Oceanics, Inc. (a) 122,300 6,497,188
Baker Hughes, Inc. 1,096,836 28,380,632
BJ Services Co. (a) 627,076 35,782,524
Carbo Ceramics, Inc. 45,300 985,275
Coflexip SA sponsored ADR 117,600 5,269,950
Diamond Offshore Drilling, 226,500 7,191,375
Inc.
ENSCO International, Inc. 1,750,600 52,955,646
Global Industries Ltd. (a) 837,300 8,582,325
Global Marine, Inc. (a) 911,000 20,440,563
Halliburton Co. 697,567 26,638,340
Hanover Compressor Co. (a) 71,900 3,374,806
Helmerich & Payne, Inc. 541,400 14,414,775
Input/Output, Inc. (a) 89,300 541,381
Lone Star Technologies, Inc. 201,400 7,552,500
(a)
Marine Drilling Companies, 1,169,800 26,686,063
Inc. (a)
McDermott International, Inc. 846,300 7,934,063
Nabors Industries, Inc. (a) 1,114,577 39,985,450
Noble Drilling Corp. (a) 1,225,450 44,116,200
Oceaneering International, 766,500 14,563,500
Inc. (a)
Offshore Logistics, Inc. (a) 158,900 1,579,069
Parker Drilling Co. (a) 321,100 1,284,400
Precision Drilling Corp. 58,400 1,671,909
Class A (a)
Rowan Companies, Inc. (a) 923,100 23,192,888
Ryan Energy Technologies, 212,300 446,685
Inc. (a)
Santa Fe International Corp. 54,700 1,569,206
Schlumberger Ltd. 270,445 19,979,124
SEACOR SMIT, Inc. (a) 67,100 3,254,350
Smith International, Inc. (a) 777,000 48,708,188
Superior Energy Services, 96,300 710,213
Inc. (a)
Tidewater, Inc. 653,465 18,501,228
TMBR/Sharp Drilling, Inc. (a) 14,100 133,950
Transocean Sedco Forex, Inc. 75,327 2,970,709
Tuboscope, Inc. (a) 409,600 6,835,200
Varco International, Inc. (a) 75,400 834,113
Weatherford International, 1,049,305 47,218,725
Inc. (a)
530,782,513
ENGINEERING - 0.0%
Stolt Comex Seaway SA (a) 100 1,300
IRON & STEEL - 0.0%
NS Group, Inc. (a) 14,600 170,638
SHARES VALUE (NOTE 1)
OIL & GAS - 6.8%
Compagnie Generale de 25,478 $ 292,997
Geophysique SA sponsored ADR
(a)
Cooper Cameron Corp. (a) 770,176 42,552,224
Petroleum Geo-Services ASA 3,900 63,863
sponsored ADR (a)
42,909,084
RETAIL & WHOLESALE,
MISCELLANEOUS - 0.1%
Newpark Resources, Inc. (a) 38,900 303,906
TOTAL COMMON STOCKS 574,412,857
(Cost $382,067,236)
CASH EQUIVALENTS - 4.5%
Central Cash Collateral Fund, 9,473,400 9,473,400
5.75% (b)
Taxable Central Cash Fund, 18,714,291 18,714,291
5.66% (b)
TOTAL CASH EQUIVALENTS 28,187,691
(Cost $28,187,691)
TOTAL INVESTMENT PORTFOLIO - 602,600,548
95.4%
(Cost $410,254,927)
NET OTHER ASSETS - 4.6% 29,285,438
NET ASSETS - 100% $ 631,885,986
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 $433,935,367 and $636,368,911, 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 $117,730 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $9,998,063. The fund
received cash collateral of $9,473,400 which was invested in cash
equivalents.
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $416,294,903. Net unrealized appreciation
aggregated $186,305,645, of which $208,041,840 related to appreciated
investment securities and $21,736,195 related to depreciated
investment securities.
At February 29, 2000, the fund had a capital loss carryforward of
approximately $162,650,000 of which $85,150,000 and $77,500,000 will
expire on February 28, 2007 and February 29, 2008, respectively.
ENERGY SERVICE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 602,600,548
value (cost $410,254,927) -
See accompanying schedule
Receivable for investments 42,212,019
sold
Receivable for fund shares 5,804,129
sold
Dividends receivable 340,011
Interest receivable 102,187
Redemption fees receivable 4,733
Other receivables 2,235
TOTAL ASSETS 651,065,862
LIABILITIES
Payable for investments $ 1,477,966
purchased
Payable for fund shares 7,672,651
redeemed
Accrued management fee 297,771
Other payables and accrued 258,088
expenses
Collateral on securities 9,473,400
loaned, at value
TOTAL LIABILITIES 19,179,876
NET ASSETS $ 631,885,986
Net Assets consist of:
Paid in capital $ 608,725,839
Accumulated undistributed net (169,185,474)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 192,345,621
(depreciation) on investments
NET ASSETS, for 21,816,791 $ 631,885,986
shares outstanding
NET ASSET VALUE and $28.96
redemption price per share
($631,885,986 (divided by)
21,816,791 shares)
Maximum offering price per $29.86
share (100/97.00 of $28.96)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 3,345,033
Dividends
Interest 2,162,744
Security lending 14,230
TOTAL INCOME 5,522,007
EXPENSES
Management fee $ 3,977,952
Transfer agent fees 3,794,938
Accounting and security 467,998
lending fees
Non-interested trustees' 2,140
compensation
Custodian fees and expenses 29,465
Registration fees 152,192
Audit 25,754
Legal 2,417
Miscellaneous 1,126
Total expenses before 8,453,982
reductions
Expense reductions (218,638) 8,235,344
NET INVESTMENT INCOME (LOSS) (2,713,337)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 17,447,443
Foreign currency transactions (15,438) 17,432,005
Change in net unrealized 413,309,116
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 430,741,121
NET INCREASE (DECREASE) IN $ 428,027,784
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 2,622,816
charges paid to FDC
Sales charges - Retained by $ 2,615,772
FDC
Deferred sales charges $ 8,292
withheld by FDC
Exchange fees withheld by FSC $ 80,663
Expense reductions $ 214,185
Directed brokerage
arrangements
Custodian credits 1,312
Transfer agent credits 3,141
$ 218,638
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ (2,713,337) $ (3,167,669)
income (loss)
Net realized gain (loss) 17,432,005 (185,190,842)
Change in net unrealized 413,309,116 (243,966,665)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 428,027,784 (432,325,176)
NET ASSETS RESULTING FROM
OPERATIONS
From net realized gain - (54,767,354)
Share transactions Net 1,103,932,587 1,182,599,212
proceeds from sales of shares
Reinvestment of distributions - 53,845,591
Cost of shares redeemed (1,270,153,739) (1,305,871,677)
NET INCREASE (DECREASE) IN (166,221,152) (69,426,874)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 3,182,982 4,414,000
TOTAL INCREASE (DECREASE) 264,989,614 (552,105,404)
IN NET ASSETS
NET ASSETS
Beginning of period 366,896,372 919,001,776
End of period $ 631,885,986 $ 366,896,372
OTHER INFORMATION
Shares
Sold 52,841,715 53,434,483
Issued in reinvestment of - 1,829,614
distributions
Redeemed (59,047,414) (60,036,675)
Net increase (decrease) (6,205,699) (4,772,578)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 F 1999 1998 1997 1996 f
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 13.09 $ 28.02 $ 20.46 $ 16.09 $ 11.97
period
Income from Investment
Operations
Net investment income (loss) C (.09) (.10) (.10) (.01) .08 d
Net realized and unrealized 15.86 (13.26) 9.36 5.05 4.49
gain (loss)
Total from investment 15.77 (13.36) 9.26 5.04 4.57
operations
Less Distributions
From net investment income - - - - (.04)
From net realized gain - (1.71) (1.85) (.79) (.48)
Total distributions - (1.71) (1.85) (.79) (.52)
Redemption fees added to paid .10 .14 .15 .12 .07
in capital
Net asset value, end of period $ 28.96 $ 13.09 $ 28.02 $ 20.46 $ 16.09
TOTAL RETURN A, B 121.24% (50.57)% 48.43% 32.26% 39.15%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 631,886 $ 366,896 $ 919,002 $ 439,504 $ 273,805
(000 omitted)
Ratio of expenses to average 1.23% 1.39% 1.25% 1.47% 1.59%
net assets
Ratio of expenses to average 1.20% e 1.35% e 1.22% e 1.45% e 1.58% e
net assets after expense
reductions
Ratio of net investment (.40)% (.49)% (.35)% (.07)% .60%
income (loss) to average net
assets
Portfolio turnover rate 69% 75% 78% 167% 223%
</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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT GOLD 5.16% -21.38% -18.37%
SELECT GOLD (LOAD ADJ.) 1.93% -23.81% -20.89%
S&P 500 11.73% 206.94% 425.47%
GS Natural Resources 27.62% 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 105 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 FEBRUARY 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT GOLD 5.16% -4.70% -2.01%
SELECT GOLD (LOAD ADJ.) 1.93% -5.29% -2.32%
S&P 500 11.73% 25.14% 18.05%
GS Natural Resources 27.62% 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
1990/02/28 9700.00 10000.00
1990/03/31 9323.14 10265.00
1990/04/30 8312.73 10008.38
1990/05/31 9044.59 10984.19
1990/06/30 8465.65 10909.50
1990/07/31 9055.52 10874.59
1990/08/31 8891.67 9891.53
1990/09/30 8886.20 9409.81
1990/10/31 7427.93 9369.35
1990/11/30 7335.08 9974.61
1990/12/31 7914.02 10252.90
1991/01/31 6816.22 10699.92
1991/02/28 7433.39 11464.97
1991/03/31 7406.08 11742.42
1991/04/30 7143.92 11770.60
1991/05/31 7389.70 12279.09
1991/06/30 7886.71 11716.71
1991/07/31 7799.32 12262.71
1991/08/31 7165.77 12553.34
1991/09/30 7045.61 12343.69
1991/10/31 7586.32 12509.10
1991/11/30 7569.93 12004.98
1991/12/31 7427.93 13378.35
1992/01/31 7608.16 13129.52
1992/02/29 7373.31 13300.20
1992/03/31 6870.83 13040.85
1992/04/30 6521.28 13424.25
1992/05/31 6985.53 13490.03
1992/06/30 7438.85 13289.02
1992/07/31 7908.56 13832.55
1992/08/31 7761.09 13548.98
1992/09/30 7717.40 13708.86
1992/10/31 7488.01 13756.84
1992/11/30 6854.45 14225.94
1992/12/31 7198.54 14400.92
1993/01/31 7061.99 14521.89
1993/02/28 7728.32 14719.39
1993/03/31 8596.73 15029.97
1993/04/30 9683.61 14666.24
1993/05/31 10759.57 15059.30
1993/06/30 11387.67 15102.97
1993/07/31 12294.31 15042.56
1993/08/31 11649.83 15612.67
1993/09/30 10415.48 15492.45
1993/10/31 11972.07 15813.15
1993/11/30 11983.00 15662.92
1993/12/31 12862.33 15852.44
1994/01/31 12867.79 16391.43
1994/02/28 12376.24 15947.22
1994/03/31 12676.63 15251.92
1994/04/30 11606.14 15447.15
1994/05/31 12108.61 15700.48
1994/06/30 11513.29 15315.82
1994/07/31 11343.98 15818.18
1994/08/31 11879.22 16466.72
1994/09/30 12916.95 16063.29
1994/10/31 11983.00 16424.71
1994/11/30 10562.95 15826.52
1994/12/31 10874.27 16061.23
1995/01/31 9738.23 16477.70
1995/02/28 10071.40 17119.83
1995/03/31 11617.06 17625.04
1995/04/30 11573.37 18144.10
1995/05/31 11813.68 18869.32
1995/06/30 11977.53 19307.65
1995/07/31 12299.77 19947.89
1995/08/31 12327.08 19997.96
1995/09/30 12321.62 20841.88
1995/10/31 10836.04 20767.47
1995/11/30 11840.99 21679.16
1995/12/31 12092.23 22096.70
1996/01/31 14238.68 22848.87
1996/02/29 14806.70 23060.68
1996/03/31 15161.71 23282.76
1996/04/30 15522.18 23625.95
1996/05/31 17215.32 24235.26
1996/06/30 14784.85 24327.60
1996/07/31 14511.77 23252.80
1996/08/31 15991.89 23743.20
1996/09/30 15696.96 25079.47
1996/10/31 15265.48 25771.16
1996/11/30 14610.08 27719.21
1996/12/31 14501.06 27170.09
1997/01/31 13882.92 28867.68
1997/02/28 15709.48 29094.00
1997/03/31 13214.67 27898.53
1997/04/30 12416.38 29564.07
1997/05/31 13128.75 31363.93
1997/06/30 12004.27 32769.03
1997/07/31 11815.87 35376.46
1997/08/31 11927.73 33394.67
1997/09/30 12946.24 35223.70
1997/10/31 10962.21 34047.23
1997/11/30 8377.67 35623.28
1997/12/31 8789.78 36234.93
1998/01/31 9278.43 36635.68
1998/02/28 8931.08 39277.85
1998/03/31 9513.93 41289.27
1998/04/30 10067.33 41704.64
1998/05/31 8648.49 40987.74
1998/06/30 7594.66 42652.66
1998/07/31 7035.36 42198.41
1998/08/31 5198.51 36097.36
1998/09/30 8053.87 38409.76
1998/10/31 7812.49 41534.01
1998/11/30 7647.64 44051.38
1998/12/31 8030.32 46589.63
1999/01/31 7806.60 48538.00
1999/02/28 7529.89 47029.44
1999/03/31 7541.67 48911.09
1999/04/30 8719.14 50805.42
1999/05/31 7376.82 49605.90
1999/06/30 7730.06 52359.03
1999/07/31 7270.85 50724.38
1999/08/31 7588.77 50473.29
1999/09/30 9555.14 49089.82
1999/10/31 8748.57 52196.23
1999/11/30 8401.22 53257.37
1999/12/31 8701.47 56394.23
2000/01/31 7665.30 53560.99
2000/02/29 7911.00 52547.08
IMATRL PRASUN SHR__CHT 20000229 20000309 111933 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Gold Portfolio on February 28, 1990, and
the current 3.00% sales charge was paid. As the chart shows, by
February 29, 2000, the value of the investment would have been $7,911
- - a 20.89% 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 $52,547 - a 425.47% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
Meridian Gold, Inc. 13.8
Anglogold Ltd. sponsored ADR 7.8
Newcrest Mining Ltd. 6.8
Agnico-Eagle Mines Ltd. 5.0
Newmont Mining Corp. 4.9
Gold Fields Ltd. 4.8
Normandy Mining Ltd. 4.6
Anglogold Ltd. 4.6
Barrick Gold Corp. 4.4
Delta Gold NL 4.4
61.1
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Gold Ores 58.7% Row: 1, Col: 6, Value: 58.7
Gold & Silver Ores 28.1% Row: 1, Col: 5, Value: 28.1
Silver Ores 6.5% Row: 1, Col: 4, Value: 6.5
Registered
Investment Companies 1.9% Row: 1, Col: 3, Value: 1.9
Miscellaneous
Nonmetallic Minerals 1.2% Row: 1, Col: 2, Value: 1.2
* All Others 3.6% Row: 1, Col: 1, Value: 3.6
</TABLE>
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
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. While encouraging in some respects, the fund's return reflected
gold's mediocre performance. For the 12 months that ended February 29,
2000, the fund returned 5.16%, trailing the 11.73% return of the
Standard & Poor's 500 Index and the 27.62% return of the Goldman Sachs
Natural Resources Index, an index of 105 stocks designed to measure
the performance of companies in the natural resources sector.
Q. WHY DID THE FUND UNDERPERFORM ITS INDEXES?
A. The price of gold, which largely determines the profitability of
gold mining companies, failed to make much upside progress. Gold
plunged in response to the Bank of England's announcement in May that
it planned to sell approximately 400 tons of gold over the next 18
months. After flirting with the $250-per-ounce price level over the
summer, prices rallied in September on news of an agreement by
European central banks to restrict their collective gold sales to no
more than 500 tons per year for the next five years. The rally carried
the yellow metal to around $320 per ounce, from where it settled back
to approximately $290 per ounce as the period came to an end. While
gold merely treaded water, however, the prices of such base metals as
copper, nickel, aluminum and zinc rallied sharply during the period,
providing a boost to the Goldman Sachs index. Another factor helping
the Goldman Sachs index was its weighting of energy stocks, which
mirrored significantly higher oil and gas prices during the period.
Generally favorable economic conditions, including robust growth,
minimal inflation and low - albeit rising - interest rates, enabled
the S&P 500 to outperform the fund.
Q. WHAT OTHER SIGNIFICANT DEVELOPMENTS OCCURRED DURING THE PERIOD?
A. Several major gold producers announced plans to reduce their
hedging operations. Less hedging activity should support the price of
gold because hedging requires a mining company to sell gold in the
forward or futures market, which exerts downward pressure on gold.
Q. WHAT STOCKS HELPED THE FUND'S PERFORMANCE?
A. Stillwater Mining was a strong performer. The company is the only
North American supplier of palladium, a metal used in the catalytic
converters of automobile emission control devices. A shortage of
palladium, caused in part by lower-than-expected deliveries of the
metal from Russia, was responsible for Stillwater's strength.
Anglogold Ltd. was another positive contributor. The largest gold
company in the world, Anglogold executed an effective restructuring
program that succeeded in lowering costs and streamlining production.
Newmont Mining also helped the fund's performance. The company
benefited from a substantial increase in production and reserves at
its Yanacoccha property in Peru.
Q. WHAT STOCKS DETRACTED FROM PERFORMANCE?
A. Normandy Mining was a disappointment due to difficulties with
containing costs and negligible progress toward increasing production.
Franco-Nevada, a company that derives most of its revenues from gold
royalties, suffered production delays at its Aber diamond and Voise
Bay nickel interests due to environmental and economic difficulties.
Homestake Mining also underperformed. Investors were cautious about
the stock due to uncertainty over the company's restructuring effort.
Q. WHAT'S YOUR OUTLOOK, GEORGE?
A. The decision by European central banks to curtail their gold sales
and the willingness of gold producers to restrict their hedging
operations, both of which have depressed the price of gold in the
past, bode well for the long-suffering gold market. Furthermore,
improving economic conditions in Asia and continued prosperity in the
U.S. and Europe should keep demand for gold jewelry at healthy levels.
However, the real catalyst for a recovery in gold would be a
resurgence of inflation. While we have yet to see evidence of such a
resurgence, stronger worldwide economic activity would suggest that it
is not an unlikely prospect in the next year or two.
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 1, 2000, Niel Marotta became
portfolio manager of Fidelity Select Gold Portfolio.
(checkmark)FUND FACTS
START DATE: December 16, 1985
FUND NUMBER: 041
TRADING SYMBOL: FSAGX
SIZE: as of February 29, 2000, more than
$283 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 29, 2000
Showing Percentage of Net Assets
COMMON STOCKS - 98.2%
SHARES VALUE (NOTE 1)
AUSTRALIA - 19.1%
PRECIOUS METALS - 19.1%
GOLD & SILVER ORES - 6.8%
Normandy Mining Ltd. 24,247,212 $ 13,050,468
Sons of Gwalia NL 2,222,517 6,407,314
19,457,782
GOLD ORES - 12.3%
Delta Gold NL 9,166,328 12,362,232
Lihir Gold Ltd. (a) 7,030,720 3,218,671
Newcrest Mining Ltd. (a) 7,203,062 19,384,358
34,965,261
TOTAL AUSTRALIA 54,423,043
CANADA - 40.6%
METALS & MINING - 1.7%
METAL MINING - 0.3%
Ivanhoe Mines Ltd. (a) 100,000 63,466
Pangea Goldfields, Inc. (a) 319,200 781,705
845,171
METAL MINING SERVICES - 0.2%
Minefinders Corp. Ltd. (a) 497,800 343,405
Minefinders Corp. Ltd. (a)(d) 200,000 137,969
481,374
MISCELLANEOUS NONMETALLIC
MINERALS - 1.2%
DIA Metropolitan Minerals Ltd.:
Class A (sub-vtg.) (a) 50,650 648,150
Class B (multi-vtg.) (a) 204,400 2,897,641
3,545,791
TOTAL METALS & MINING 4,872,336
OIL & GAS - 0.5%
OIL & GAS FIELD EXPLORATION
SERVICES - 0.5%
Southwestern Gold Corp. (a) 362,500 1,475,407
PRECIOUS METALS - 38.4%
GOLD & SILVER ORES - 4.1%
Goldcorp, Inc. Class A (a) 2,385,300 11,189,321
Richmont Mines, Inc. (a) 206,300 284,630
11,473,951
GOLD ORES - 34.3%
Agnico-Eagle Mines Ltd. 2,026,100 14,116,729
Barrick Gold Corp. 765,500 12,489,014
Francisco Gold Corp. (a) 221,400 954,574
Francisco Gold Corp. (d) 199,000 857,995
Franco Nevada Mining Corp. 587,294 6,806,387
Ltd.
Franco Nevada Mining Corp. 187,100 2,168,377
Ltd. (d)
Franco Nevada Mining Corp. 58,334 291,750
Ltd. Class B warrants
9/15/03 (a)(d)
Glamis Gold Ltd. (a) 1,760,800 3,644,040
SHARES VALUE (NOTE 1)
High River Gold Mines Ltd. (a) 120,000 $ 49,669
IAMGOLD Corp. (a) 335,000 727,959
IAMGOLD Corp. (d) 60,000 130,381
Meridian Gold, Inc. (a)(c) 6,422,800 39,212,042
Metallica Resources, Inc. 1,490,800 462,790
(a)(c)
Metallica Resources, Inc. 200,000 62,086
(a)(c)(d)
Placer Dome, Inc. 1,262,452 10,973,300
Repadre Capital Corp. (a) 576,000 715,232
Repadre Capital Corp. (a)(d) 155,000 192,467
Teck Corp. Class B (sub. vtg.) 465,300 3,530,836
97,385,628
TOTAL PRECIOUS METALS 108,859,579
TOTAL CANADA 115,207,322
GRAND CAYMAN ISLANDS - 0.0%
PRECIOUS METALS - 0.0%
SILVER ORES - 0.0%
Apex Silver Mines Ltd. (a) 14,800 153,550
PERU - 6.5%
PRECIOUS METALS - 6.5%
SILVER ORES - 6.5%
Compania de Minas
Buenaventura SA:
Class B 1,265,864 11,424,100
Class B sponsored ADR 400,600 6,985,463
18,409,563
SOUTH AFRICA - 19.8%
METALS & MINING - 0.1%
MISCELLANEOUS METAL ORES, NEC
- - 0.1%
Anglo American Platinum Corp. 800 22,722
Ltd.
Impala Platinum Holdings Ltd. 4,000 142,643
165,365
PRECIOUS METALS - 19.7%
GOLD & SILVER ORES - 17.2%
Anglogold Ltd. 251,086 13,034,681
Anglogold Ltd. sponsored ADR 870,628 22,309,843
Gold Fields Ltd. 2,949,705 13,683,839
49,028,363
GOLD ORES - 2.5%
Avgold Ltd. (a) 45,000 30,604
Gold Fields of South Africa 85,600 210,708
Ltd.
Gold Fields of South Africa 73,700 179,644
Ltd. sponsored ADR
Harmony Gold Mining Co. Ltd. 1,065,700 6,642,233
7,063,189
TOTAL PRECIOUS METALS 56,091,552
TOTAL SOUTH AFRICA 56,256,917
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED STATES OF AMERICA -
12.2%
INVESTMENT COMPANIES - 1.9%
REGISTERED INVESTMENT
COMPANIES - 1.9%
ASA Ltd. 293,000 $ 5,383,875
METALS & MINING - 0.4%
COPPER ORES - 0.4%
Freeport-McMoRan Copper & 73,700 1,013,375
Gold, Inc. Class B (a)
PRECIOUS METALS - 9.6%
GOLD ORES - 9.6%
Homestake Mining Co. 550,006 3,575,039
Newmont Mining Corp. 630,565 13,951,251
Stillwater Mining Co. (a) 170,950 6,346,519
Stillwater Mining Co. (d) 93,900 3,486,038
27,358,847
SERVICES - 0.3%
JEWELRY, PRECIOUS METAL - 0.3%
Lazare Kaplan International, 110,300 827,250
Inc. (a)
TOTAL UNITED STATES OF AMERICA 34,583,347
TOTAL COMMON STOCKS 279,033,742
(Cost $326,384,804)
CASH EQUIVALENTS - 2.6%
Central Cash Collateral Fund, 4,418,500 4,418,500
5.75% (b)
Taxable Central Cash Fund, 2,870,802 2,870,802
5.66% (b)
TOTAL CASH EQUIVALENTS 7,289,302
(Cost $7,289,302)
TOTAL INVESTMENT PORTFOLIO - 286,323,044
100.8%
(Cost $333,674,106)
NET OTHER ASSETS - (0.8)% (2,356,840)
NET ASSETS - 100% $ 283,966,204
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 $7,327,063 or 2.6% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $256,841,346 and $139,436,619, 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 $17,440 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $4,336,094. The fund
received cash collateral of $4,418,500 which was invested in cash
equivalents.
The fund participated in the bank borrowing program. The average daily
loan balance during the period for which loans were outstanding
amounted to $2,062,625. The weighted average interest rate was 5.75%.
Transactions during the period with companies which are or were
affiliates are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Meridan Gold, Inc. $ - $ - $ - $ 39,212,042
Metallica Resources, Inc. - - - 524,876
TOTALS $ - $ - $ - $ 39,736,918
</TABLE>
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $336,303,760. Net unrealized depreciation
aggregated $49,980,716, of which $30,359,101 related to appreciated
investment securities and $80,339,817 related to depreciated
investment securities.
At February 29, 2000, the fund had a capital loss carryforward of
approximately $173,233,000 of which $1,376,000, $91,543,000,
$37,334,000 and $42,980,000 will expire on February 28, 2001, 2006,
2007 and February 29, 2008, respectively. Approximately $92,589,000,
of which $1,376,000, $55,694,000, $20,723,000 and $14,796,000 will
expire on February 28, 2001, 2006, 2007 and February 29, 2008,
respectively, was acquired in the merger and is available to offset
future capital gains of the fund to the extent provided by
regulations.
GOLD PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 286,323,044
value (cost $333,674,106) -
See accompanying schedule
Receivable for investments 4,202,231
sold
Receivable for fund shares 1,730,990
sold
Dividends receivable 1,748,052
Interest receivable 26,058
Redemption fees receivable 16,853
Other receivables 8,224
TOTAL ASSETS 294,055,452
LIABILITIES
Payable to custodian bank $ 790,170
Payable for investments 464,125
purchased
Payable for fund shares 4,041,993
redeemed
Accrued management fee 145,049
Other payables and accrued 229,411
expenses
Collateral on securities 4,418,500
loaned, at value
TOTAL LIABILITIES 10,089,248
NET ASSETS $ 283,966,204
Net Assets consist of:
Paid in capital $ 413,634,388
Undistributed net investment 1,223,012
income
Accumulated undistributed net (83,529,614)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation (47,361,582)
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 21,107,056 $ 283,966,204
shares outstanding
NET ASSET VALUE and $13.45
redemption price per share
($283,966,204 (divided by)
21,107,056 shares)
Maximum offering price per $13.87
share (100/97.00 of $13.45)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 2,947,486
Dividends
Special dividend from Gold 875,395
Fields Ltd.
Interest 156,339
Security lending 6,804
TOTAL INCOME 3,986,024
EXPENSES
Management fee $ 1,103,778
Transfer agent fees 1,392,489
Accounting and security 140,439
lending fees
Non-interested trustees' 82
compensation
Custodian fees and expenses 118,812
Registration fees 51,248
Audit 18,416
Legal 710
Interest 2,637
Total expenses before 2,828,611
reductions
Expense reductions (141,972) 2,686,639
NET INVESTMENT INCOME 1,299,385
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (5,353,195)
Foreign currency transactions (40,781) (5,393,976)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 7,856,842
Assets and liabilities in (7,555) 7,849,287
foreign currencies
NET GAIN (LOSS) 2,455,311
NET INCREASE (DECREASE) IN $ 3,754,696
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 639,487
charges paid to FDC
Sales charges - Retained by $ 637,994
FDC
Deferred sales charges $ 22,792
withheld by FDC
Exchange fees withheld by FSC $ 25,861
Expense reductions Directed $ 141,928
brokerage arrangements
Custodian credits 44
$ 141,972
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ 1,299,385 $ (1,223,735)
income (loss)
Net realized gain (loss) (5,393,976) (32,008,820)
Change in net unrealized 7,849,287 (3,278,038)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 3,754,696 (36,510,593)
NET ASSETS RESULTING FROM
OPERATIONS
Share transactions Net 349,062,624 403,467,113
proceeds from sales of shares
Net asset value of shares 104,054,922 -
issued in exchange for the
net assets of Fidelity
Select Precious Metals and
Minerals Portfolio (Note 10)
Cost of shares redeemed (354,065,350) (408,945,830)
NET INCREASE (DECREASE) IN 99,052,196 (5,478,717)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 1,539,985 1,940,375
TOTAL INCREASE (DECREASE) 104,346,877 (40,048,935)
IN NET ASSETS
NET ASSETS
Beginning of period 179,619,327 219,668,262
End of period (including $ 283,966,204 $ 179,619,327
undistributed net investment
income (loss) of $1,223,012
and $(35,591), respectively)
OTHER INFORMATION
Shares
Sold 24,108,341 29,231,688
Issued in exchange for the 7,736,425 -
shares of Fidelity Select
Precious Metals and Minerals
Portfolio (Note 10)
Redeemed (24,782,701) (29,663,500)
Net increase (decrease) 7,062,065 (431,812)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 E 1999 1998 1997 1996 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 12.79 $ 15.17 $ 28.21 $ 27.11 $ 18.44
period
Income from Investment
Operations
Net investment income (loss) C .09 D (.08) (.13) (.16) (.06)
Net realized and unrealized .46 (2.43) (11.78) 1.60 8.62
gain (loss)
Total from investment .55 (2.51) (11.91) 1.44 8.56
operations
Less Distributions
From net realized gain - - (1.29) (.50) -
Redemption fees added to paid .11 .13 .16 .16 .11
in capital
Net asset value, end of period $ 13.45 $ 12.79 $ 15.17 $ 28.21 $ 27.11
TOTAL RETURN A, B 5.16% (15.69)% (43.15)% 6.10% 47.02%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 283,966 $ 179,619 $ 219,668 $ 428,103 $ 451,493
(000 omitted)
Ratio of expenses to average 1.49% 1.57% 1.55% 1.44% 1.39%
net assets
Ratio of expenses to average 1.41% F 1.54% F 1.48% F 1.42% F 1.39%
net assets after expense
reductions
Ratio of net investment .68% (.59)% (.67)% (.59)% (.27)%
income (loss) to average net
assets
Portfolio turnover rate 71% G 59% 89% 63% 56%
</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
FROM GOLD FIELDS LTD. WHICH AMOUNTED TO $.06 PER SHARE.
E FOR THE YEAR ENDED FEBRUARY 29
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 THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS
ACQUIRED IN THE MERGER.
NATURAL RESOURCES PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the life of fund total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 29, PAST 1 YEAR LIFE OF FUND
2000
SELECT NATURAL RESOURCES 48.42% 20.13%
SELECT NATURAL RESOURCES 43.89% 16.45%
(LOAD ADJ.)
S&P 500 11.73% 79.56%
GS Natural Resources 27.62% 18.35%
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
105 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 FEBRUARY 29, PAST 1 YEAR LIFE OF FUND
2000
SELECT NATURAL RESOURCES 48.42% 6.31%
SELECT NATURAL RESOURCES 43.89% 5.22%
(LOAD ADJ.)
S&P 500 11.73% 21.59%
GS Natural Resources 27.62% 5.79%
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 12010.49 17247.76
1999/09/30 11552.76 16775.00
1999/10/31 11164.68 17836.52
1999/11/30 11284.09 18199.14
1999/12/31 11960.74 19271.06
2000/01/31 11572.66 18302.89
2000/02/29 11645.00 17956.41
IMATRL PRASUN SHR__CHT 20000229 20000320 152754 R00000000000039
$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 29, 2000, the value of the
investment would have been $11,645 - a 16.45% 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 $17,956 - a 79.56%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
Exxon Mobil Corp. 7.2
Royal Dutch Petroleum Co. (NY 6.1
Shares)
Schlumberger Ltd. 5.4
Chevron Corp. 5.2
Halliburton Co. 3.9
Alcoa, Inc. 3.7
Atlantic Richfield Co. 3.1
Amerada Hess Corp. 3.0
BP Amoco PLC sponsored ADR 2.7
Noble Drilling Corp. 2.4
42.7
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Oil & Gas 55.1% Row: 1, Col: 6, Value: 55.1
Energy Services 26.0% Row: 1, Col: 5, Value: 26.0
Metals & Mining 5.7% Row: 1, Col: 4, Value: 5.7
Precious Metals 3.9% Row: 1, Col: 3, Value: 3.9
Gas 2.6% Row: 1, Col: 2, Value: 2.6
* All Others 6.7% Row: 1, Col: 1, Value: 6.7
</TABLE>
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
NATURAL RESOURCES PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Scott Offen)
Scott Offen,
Portfolio Manager of Fidelity Select Natural
Resources Portfolio
Q. SCOTT, HOW DID THE FUND PERFORM DURING ITS FISCAL YEAR?
A. For the 12 months that ended February 29, 2000, the fund returned
48.42%, while the Goldman Sachs Natural Resources Index - an index of
105 stocks designed to measure the performance of companies in the
natural resources sector - returned 27.62%, and the Standard & Poor's
500 Index returned 11.73%.
Q. WHAT FACTORS HELPED PERFORMANCE?
A. Overall, the sector was helped by the strong performance of energy
stocks during the first six months of the period. Oil prices hit
historically high levels and fundamentals in the energy industry -
which makes up a large proportion of the natural resources sector -
were quite positive. The fund beat the Goldman Sachs index because I
overweighted energy stocks and significantly underweighted paper and
forest product stocks. The latter group was added to the index in
January 2000, but they were unappealing to me because it appeared
their fundamentals had peaked after a rally in 1999.
Q. WHAT MOVES HAVE YOU MADE WITH THE FUND SINCE TAKING OVER AT THE
BEGINNING OF SEPTEMBER?
A. I trimmed the number of stocks in the fund to focus on what I felt
were the best ideas. In addition, with oil prices at very high levels,
I organized the portfolio to benefit from a downward trend in prices
going forward. In particular, I turned my attention to stocks that
typically do well when the price of oil is high but trending downward,
namely dollar-wise refiners and integrated oil companies. A greater
proportion of their earnings comes from refining and marketing. As the
price of oil falls, these companies typically see their earnings rise.
While the fund was hurt initially by its investments in exploration
and production (E&P) stocks, I maintained an overweighted position in
that industry relative to the Goldman Sachs index because I felt
investors were underestimating the sustainability of the price of oil.
The fund also carried a larger weighting in energy services stocks
than the index - a positive for performance - because I felt that
while oil prices may fall, they should stay high enough to stimulate
increased supply.
Q. WHAT INVESTMENTS DID YOU PURSUE OUTSIDE THE ENERGY SPHERE?
A. I looked to cut back the fund's investments in gold stocks - which
had done well for the fund - because it was uncertain whether or not
central banks around the world would continue to sell some of their
reserves. I also reduced the fund's investments in non-ferrous metals
at around their peak, and increased the percentage of the fund
dedicated to steel investments. Stocks in that industry moved upward
but then fell back.
Q. WHICH STOCKS PERFORMED WELL? WHICH DISAPPOINTED?
A. Enron Corp. - which the fund held during the period but not at the
end of it - and Dynegy, two natural gas and crude oil marketers,
performed well due to their diversification into other industries.
Both started operations to provide broadband delivery of Internet
content and applications. The stock of Calpine, an independent power
producer, took off due to deregulation in the U.S. electric industry.
On the downside, two E&P companies, Burlington Resources and Santa Fe
Snyder, suffered from investors' belief that the price of oil would
collapse.
Q. WHAT IS YOUR OUTLOOK?
A. At the end of the period, energy stocks were cheap. Prices
reflected an expectation that oil would fall from where it stood at
around $30 per barrel to possibly as low as $16. My feeling is that
the long-term price will be higher than $16. Overall, the fundamentals
for the natural resources sector remain positive. The big question is
whether or not that will help stock prices. Recently, the market has
been driven by a preference for rapid-growth stocks, mainly in the
technology sector. People once invested in natural resources stocks
because they offered potentially high rewards for taking on some
additional risk. That role has been assumed by Internet 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: March 3, 1997
FUND NUMBER: 514
TRADING SYMBOL: FNARX
SIZE: as of February 29, 2000, more than
$14 million
MANAGER: Scott Offen, since September 1999;
manager, Fidelity Select Energy Portfolio,
since September 1999; Fidelity Advisor
Natural Resources Portfolio, since September
1999; several Fidelity Select Portfolios,
1988-1999; joined Fidelity in 1985
NATURAL RESOURCES PORTFOLIO
INVESTMENTS FEBRUARY 29, 2000
Showing Percentage of Net Assets
COMMON STOCKS - 96.0%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES -
0.2%
Barrett Resources Corp. (a) 1,000 $ 29,125
COMPUTER SERVICES & SOFTWARE
- - 0.0%
MatrixOne, Inc. 100 2,500
Onvia.com, Inc. 100 2,100
4,600
ELECTRIC UTILITY - 0.7%
Calpine Corp. (a) 1,100 100,650
ENERGY SERVICES - 26.0%
Baker Hughes, Inc. 10,190 263,666
BJ Services Co. (a) 2,100 119,831
Diamond Offshore Drilling, 1,200 38,100
Inc.
ENSCO International, Inc. 9,500 287,375
Global Marine, Inc. (a) 4,400 98,725
Halliburton Co. 14,200 542,263
Hanover Compressor Co. (a) 1,300 61,019
Helmerich & Payne, Inc. 1,800 47,925
Marine Drilling Companies, 2,200 50,188
Inc. (a)
Nabors Industries, Inc. (a) 6,800 243,950
Noble Drilling Corp. (a) 9,300 334,800
R&B Falcon Corp. (a) 700 10,806
Rowan Companies, Inc. (a) 1,900 47,738
Santa Fe International Corp. 800 22,950
Schlumberger Ltd. 10,226 755,446
Smith International, Inc. (a) 5,300 332,244
Superior Energy Services, 4,800 35,400
Inc. (a)
Tidewater, Inc. 1,600 45,300
Transocean Sedco Forex, Inc. 3,231 127,423
Weatherford International, 4,295 193,275
Inc. (a)
3,658,424
GAS - 2.6%
Dynegy, Inc. Class A 3,540 165,937
Kinder Morgan, Inc. 7,100 197,913
363,850
IRON & STEEL - 1.0%
USX - U.S. Steel Group 6,600 144,375
METALS & MINING - 5.7%
Alcan Aluminium Ltd. 900 29,584
Alcoa, Inc. 7,600 520,600
Cominco Ltd. 500 7,243
Freeport-McMoRan Copper & 2,100 26,906
Gold, Inc.: Class A (a)
Class B (a) 2,300 31,625
Inco Ltd. (a) 2,900 50,714
Phelps Dodge Corp. 1,200 56,550
Reynolds Metals Co. 1,300 82,550
805,772
SHARES VALUE (NOTE 1)
OIL & GAS - 54.8%
Alberta Energy Co. Ltd. 3,800 $ 103,284
Amerada Hess Corp. 8,200 414,613
Anadarko Petroleum Corp. 5,000 153,750
Apache Corp. 3,600 131,400
Atlantic Richfield Co. 6,100 433,100
BP Amoco PLC sponsored ADR 8,100 380,700
Burlington Resources, Inc. 1,300 35,913
Cabot Oil & Gas Corp. Class A 2,400 37,950
Canada Occidental Petroleum 4,800 89,073
Ltd.
Canadian Hunter Exploration 2,700 42,653
Ltd. (a)
Chevron Corp. 9,800 731,938
Conoco, Inc.:
Class A 3,900 74,831
Class B 9,251 182,129
Cooper Cameron Corp. (a) 900 49,725
Crestar Energy, Inc. (a) 1,400 17,626
EOG Resources, Inc. 4,900 74,725
Exxon Mobil Corp. 13,498 1,016,563
Forest Oil Corp. (a) 2,400 19,650
Frontier Oil Corp. (a) 29,700 185,625
Gulf Canada Resources Ltd. (a) 200 657
Imperial Oil Ltd. 2,700 50,290
Kerr-McGee Corp. 2,100 93,975
Magnum Hunter Resources, Inc. 3,966 1,735
warrants 7/1/02
Noble Affiliates, Inc. 1,000 22,500
Nuevo Energy Co. (a) 4,200 74,550
Occidental Petroleum Corp. 12,500 200,781
Penn West Petroleum Ltd. (a) 1,000 20,419
Petro-Canada 8,400 118,212
Petrobras PN (Pfd. Reg.) 1 0
Phillips Petroleum Co. 1,800 68,850
Pioneer Natural Resources Co. 10,000 83,125
Pogo Producing Co. 1,400 32,375
Prima Energy Corp. (a) 2,400 48,750
Rio Alto Exploration Ltd. (a) 3,600 54,636
Royal Dutch Petroleum Co. (NY 16,200 850,500
Shares)
Santa Fe Snyder Corp. (a) 22,385 167,888
Shell Transport & Trading Co. 6,200 42,948
PLC (Reg.)
Suncor Energy, Inc. 4,400 167,550
Sunoco, Inc. 6,100 150,594
Talisman Energy, Inc. (a) 5,100 131,933
Texaco, Inc. 6,500 308,344
Tosco Corp. 5,900 157,825
Total Fina SA sponsored ADR 759 50,948
Ultramar Diamond Shamrock 4,400 95,425
Corp.
Union Pacific Resources 6,400 57,200
Group, Inc.
USX - Marathon Group 13,200 285,450
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
OIL & GAS - CONTINUED
Valero Energy Corp. 5,600 $ 142,800
Vastar Resources, Inc. 900 47,756
7,703,264
PAPER & FOREST PRODUCTS - 1.1%
Abitibi-Consolidated, Inc. 3,800 33,554
Consolidated Papers, Inc. 1,900 72,081
Domtar, Inc. 3,700 43,647
149,282
PRECIOUS METALS - 3.9%
Barrick Gold Corp. 1,400 22,841
Homestake Mining Co. 1,200 7,800
Meridian Gold, Inc. (a) 13,100 79,977
Newmont Mining Corp. 3,200 70,800
Placer Dome, Inc. 14,400 125,166
Stillwater Mining Co. (a) 6,350 235,744
William Resources, Inc. 15,750 0
warrants 2/15/03 (a)(c)
542,328
TOTAL COMMON STOCKS 13,501,670
(Cost $12,132,055)
CONVERTIBLE PREFERRED STOCKS
- - 0.3%
OIL & GAS - 0.3%
Chesapeake Energy Corp. $3.50 1,000 37,000
(a) (Cost $9,692)
CASH EQUIVALENTS - 3.8%
Taxable Central Cash Fund, 537,314 537,314
5.66% (b) (Cost $537,314)
TOTAL INVESTMENT PORTFOLIO - 14,075,984
100.1%
(Cost $12,679,061)
NET OTHER ASSETS - (0.1)% (18,512)
NET ASSETS - 100% $ 14,057,472
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 $30,847,500 and $25,453,649, 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 $4,865 for the
period.
Distribution of investments by country of issue, as a percentage of
net assets, is as follows:
United States of America 75.7%
Canada 8.5
Netherlands 6.1
Netherlands Antilles 5.4
United Kingdom 3.0
Others (individually less 1.3
than 1%)
100.0%
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $12,783,386. Net unrealized appreciation
aggregated $1,292,598, of which $2,325,085 related to appreciated
investment securities and $1,032,487 related to depreciated investment
securities.
NATURAL RESOURCES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 14,075,984
value (cost $12,679,061) -
See accompanying schedule
Receivable for investments 124,247
sold
Receivable for fund shares 25,237
sold
Dividends receivable 43,657
Interest receivable 2,999
Redemption fees receivable 86
Other receivables 47
TOTAL ASSETS 14,272,257
LIABILITIES
Payable for investments $ 26,700
purchased
Payable for fund shares 157,329
redeemed
Accrued management fee 7,293
Other payables and accrued 23,463
expenses
TOTAL LIABILITIES 214,785
NET ASSETS $ 14,057,472
Net Assets consist of:
Paid in capital $ 12,756,699
Accumulated undistributed net (96,150)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 1,396,923
(depreciation) on investments
NET ASSETS, for 1,200,252 $ 14,057,472
shares outstanding
NET ASSET VALUE and $11.71
redemption price per share
($14,057,472 (divided by)
1,200,252 shares)
Maximum offering price per $12.07
share (100/97.00 of $11.71)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 231,052
Dividends
Interest 54,023
Security lending 661
TOTAL INCOME 285,736
EXPENSES
Management fee $ 98,795
Transfer agent fees 98,201
Accounting and security 60,180
lending fees
Non-interested trustees' 47
compensation
Custodian fees and expenses 27,636
Registration fees 23,647
Audit 11,271
Legal 50
Miscellaneous 288
Total expenses before 320,115
reductions
Expense reductions (5,477) 314,638
NET INVESTMENT INCOME (LOSS) (28,902)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 1,138,158
Foreign currency transactions (3,202) 1,134,956
Change in net unrealized 2,141,582
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 3,276,538
NET INCREASE (DECREASE) IN $ 3,247,636
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 73,194
charges paid to FDC
Sales charges - Retained by $ 73,154
FDC
Deferred sales charges $ 77
withheld by FDC
Exchange fees withheld by FSC $ 2,138
Expense reductions $ 5,477
Directed brokerage
arrangements
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ (28,902) $ (35,238)
income (loss)
Net realized gain (loss) 1,134,956 (1,206,189)
Change in net unrealized 2,141,582 (510,320)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 3,247,636 (1,751,747)
NET ASSETS RESULTING FROM
OPERATIONS
Share transactions Net 32,389,849 6,170,322
proceeds from sales of shares
Cost of shares redeemed (26,769,375) (6,819,368)
NET INCREASE (DECREASE) IN 5,620,474 (649,046)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 55,216 15,080
TOTAL INCREASE (DECREASE) 8,923,326 (2,385,713)
IN NET ASSETS
NET ASSETS
Beginning of period 5,134,146 7,519,859
End of period $ 14,057,472 $ 5,134,146
OTHER INFORMATION
Shares
Sold 2,913,758 655,279
Redeemed (2,364,245) (723,578)
Net increase (decrease) 549,513 (68,299)
</TABLE>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 H 1999 1998 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 7.89 $ 10.46 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.02) (.05) (.09)
Net realized and unrealized 3.80 (2.54) .76
gain (loss)
Total from investment 3.78 (2.59) .67
operations
Less Distributions
From net realized gain - - (.26)
Redemption fees added to paid .04 .02 .05
in capital
Net asset value, end of period $ 11.71 $ 7.89 $ 10.46
TOTAL RETURN B, C 48.42% (24.57)% 7.30%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 14,057 $ 5,134 $ 7,520
(000 omitted)
Ratio of expenses to average 1.89% 2.50% F 2.50% A, F
net assets
Ratio of expenses to average 1.85% G 2.47% G 2.48% A, G
net assets after expense
reductions
Ratio of net investment (.17)% (.54)% (.86)% A
income (loss) to average net
assets
Portfolio turnover rate 164% 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.
H FOR THE YEAR ENDED FEBRUARY 29
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. The performance figures
were calculated using the net asset value per share calculated in
conjunction with the merger at the close of business on February 29,
2000.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT PRECIOUS METALS AND 5.02% -36.62% -27.34%
MINERALS
SELECT PRECIOUS METALS AND 1.80% -38.60% -29.59%
MINERALS (LOAD ADJ.)
S&P 500 11.73% 206.94% 425.47%
GS Natural Resources 27.62% 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 105 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 FEBRUARY 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT PRECIOUS METALS AND 5.02% -8.72% -3.14%
MINERALS
SELECT PRECIOUS METALS AND 1.80% -9.29% -3.45%
MINERALS (LOAD ADJ.)
S&P 500 11.73% 25.14% 18.05%
GS Natural Resources 27.62% 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
1990/02/28 9700.00 10000.00
1990/03/31 9277.96 10265.00
1990/04/30 8324.98 10008.38
1990/05/31 8801.47 10984.19
1990/06/30 8161.61 10909.50
1990/07/31 8658.53 10874.59
1990/08/31 8747.02 9891.53
1990/09/30 8549.61 9409.81
1990/10/31 7589.82 9369.35
1990/11/30 7453.68 9974.61
1990/12/31 7757.95 10252.90
1991/01/31 6915.89 10699.92
1991/02/28 7537.08 11464.97
1991/03/31 7392.14 11742.42
1991/04/30 7371.43 11770.60
1991/05/31 7785.55 12279.09
1991/06/30 8296.31 11716.71
1991/07/31 8296.31 12262.71
1991/08/31 7426.65 12553.34
1991/09/30 7578.49 12343.69
1991/10/31 8089.25 12509.10
1991/11/30 8344.62 12004.98
1991/12/31 7877.23 13378.35
1992/01/31 8044.38 13129.52
1992/02/29 7626.49 13300.20
1992/03/31 7327.01 13040.85
1992/04/30 6895.19 13424.25
1992/05/31 7347.90 13490.03
1992/06/30 7389.35 13289.02
1992/07/31 7487.04 13832.55
1992/08/31 7152.11 13548.98
1992/09/30 6859.05 13708.86
1992/10/31 6419.46 13756.84
1992/11/30 6042.66 14225.94
1992/12/31 6154.79 14400.92
1993/01/31 6303.87 14521.89
1993/02/28 6999.57 14719.39
1993/03/31 7950.83 15029.97
1993/04/30 9235.74 14666.24
1993/05/31 10456.76 15059.30
1993/06/30 10627.13 15102.97
1993/07/31 12011.43 15042.56
1993/08/31 10804.61 15612.67
1993/09/30 9952.73 15492.45
1993/10/31 11365.42 15813.15
1993/11/30 11344.13 15662.92
1993/12/31 13025.02 15852.44
1994/01/31 12486.21 16391.43
1994/02/28 11940.20 15947.22
1994/03/31 11818.07 15251.92
1994/04/30 11818.55 15447.15
1994/05/31 11840.11 15700.48
1994/06/30 12077.35 15315.82
1994/07/31 12537.44 15818.18
1994/08/31 13428.86 16466.72
1994/09/30 14456.87 16063.29
1994/10/31 13896.14 16424.71
1994/11/30 12408.04 15826.52
1994/12/31 12876.41 16061.23
1995/01/31 10633.23 16477.70
1995/02/28 11121.20 17119.83
1995/03/31 12250.07 17625.04
1995/04/30 12352.03 18144.10
1995/05/31 12199.09 18869.32
1995/06/30 12344.75 19307.65
1995/07/31 12854.56 19947.89
1995/08/31 13029.35 19997.96
1995/09/30 13065.77 20841.88
1995/10/31 11434.37 20767.47
1995/11/30 12235.50 21679.16
1995/12/31 12446.43 22096.70
1996/01/31 15055.58 22848.87
1996/02/29 15318.68 23060.68
1996/03/31 15230.98 23282.76
1996/04/30 15575.82 23625.95
1996/05/31 16476.96 24235.26
1996/06/30 14183.81 24327.60
1996/07/31 14007.98 23252.80
1996/08/31 14769.92 23743.20
1996/09/30 14154.51 25079.47
1996/10/31 14037.28 25771.16
1996/11/30 13333.96 27719.21
1996/12/31 13121.49 27170.09
1997/01/31 12557.36 28867.68
1997/02/28 14359.64 29094.00
1997/03/31 12227.68 27898.53
1997/04/30 11414.45 29564.07
1997/05/31 11604.94 31363.93
1997/06/30 10403.42 32769.03
1997/07/31 9993.14 35376.46
1997/08/31 10044.42 33394.67
1997/09/30 10513.31 35223.70
1997/10/31 8747.66 34047.23
1997/11/30 6754.89 35623.28
1997/12/31 7231.11 36234.93
1998/01/31 7963.74 36635.68
1998/02/28 7531.49 39277.85
1998/03/31 8037.00 41289.27
1998/04/30 8813.60 41704.64
1998/05/31 7465.55 40987.74
1998/06/30 6359.27 42652.66
1998/07/31 6205.42 42198.41
1998/08/31 4608.27 36097.36
1998/09/30 7003.99 38409.76
1998/10/31 7003.99 41534.01
1998/11/30 6842.81 44051.38
1998/12/31 7238.43 46589.63
1999/01/31 7018.64 48538.00
1999/02/28 6710.94 47029.44
1999/03/31 6725.59 48911.09
1999/04/30 7685.34 50805.42
1999/05/31 6454.51 49605.90
1999/06/30 6688.96 52359.03
1999/07/31 6498.47 50724.38
1999/08/31 6784.20 50473.29
1999/09/30 8439.95 49089.82
1999/10/31 7780.58 52196.23
1999/11/30 7509.51 53257.37
1999/12/31 7758.60 56394.23
2000/01/31 6791.53 53560.99
2000/02/29 7041.00 52547.08
IMATRL PRASUN SHR__CHT 20000229 20000309 131634 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, 1990, and the 3.00% sales charge was paid. As the
chart shows, by February 29, 2000, the value of the investment would
have been $7,041 - a 29.59% 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 $52,547 - a 425.47% increase.
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. For the 12 months that ended February 29, 2000, the fund returned
5.02%, considerably behind the 27.62% return of the Goldman Sachs
Natural Resources Index, an index of 105 stocks designed to measure
the performance of companies in the natural resources sector. The fund
also trailed the Standard & Poor's 500 Index, which returned 11.73%
during the same period.
Q. WHY DID THE FUND UNDERPERFORM ITS INDEXES DURING THE PERIOD?
A. The fund's performance reflected the lackluster performance of gold
itself. The yellow metal had a rough time of it early in the period
when the Bank of England announced in May that it planned to sell
approximately 400 tons of gold over the next 18 months. After flirting
with the $250-per-ounce mark over the summer, gold got a boost in
September when a number of key European central banks agreed to
restrict their collective gold sales to no more than 500 tons per year
for the next five years. The ensuing rally carried prices to around
$320 per ounce before they settled back to approximately $290 per
ounce at the end of the period. In contrast to gold's mediocre
performance, the prices of such base metals as copper, nickel,
aluminum and zinc rallied sharply during the period, boosting the
return of the Goldman Sachs index. Another factor helping the Goldman
Sachs index was its weighting of energy stocks, which mirrored
significantly higher oil and gas prices during the period. Generally
favorable economic conditions, including robust growth, minimal
inflation and low - albeit rising - interest rates, enabled the S&P
500 to outperform the fund.
Q. WHAT WAS THE RATIONALE FOR THE FUND'S MERGER WITH FIDELITY SELECT
GOLD PORTFOLIO AS OF THE END OF BUSINESS ON THE LAST DAY OF THE
PERIOD?
A. The two funds shared the same manager and similar investment
objectives. Merging them allows Fidelity to concentrate its investment
expertise on one fund without sacrificing the Select Portfolios'
coverage of major industry sectors. The merger also simplifies the
Select Portfolios' product offerings by consolidating similar funds.
Q. WHAT STOCKS HELPED THE FUND'S PERFORMANCE?
A. The fund's most positive contributor was Stillwater Mining. The
company is the only North American supplier of palladium, a metal used
in the catalytic converters of automobile emission control devices. A
shortage of palladium, caused in part by lower-than-expected
deliveries of the metal from Russia, contributed to Stillwater's
strength. Another helpful holding was De Beers Consolidated Mines
Ltd., which benefited from strong demand for diamonds due to healthy
economic activity in Europe and the U.S. as well as the ongoing
recovery in Asia. De Beers also was helped by worldwide millennium
celebrations, which prompted more purchases of diamond gifts. Finally,
Freeport McMoran contributed positively to performance. The company,
which mines copper as a by-product of its gold mining operations,
received a boost from some exploration successes as well as improving
copper prices.
Q. WHAT STOCKS DETRACTED FROM PERFORMANCE?
A. Normandy Mining was a disappointment due to difficulties with cost
containment and negligible progress toward increasing production.
Lihir Gold struggled under the weight of equipment problems afflicting
its operations in Papua, New Guinea. Franco-Nevada, a company that
derives most of its revenues from gold royalties, suffered production
delays at its Aber diamond and Voise Bay nickel interests due to
environmental and economic difficulties.
Q. WHAT'S YOUR OUTLOOK, GEORGE?
A. Gold investors can take some comfort in the decision by European
central banks to curtail their gold sales and the willingness of gold
producers to restrict their hedging operations, both of which have
depressed the price of gold in the past. In addition, improving
economic conditions in Asia and continued prosperity in the U.S. and
Europe should keep demand for gold jewelry at healthy levels. However,
the real catalyst for gold's recovery would be a resurgence of
inflation, which would likely trigger increased demand from investors.
While we have yet to see evidence of such a resurgence, stronger
worldwide economic activity would suggest that it is not an unlikely
prospect in the next year or two.
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: On February 29, 2000, Fidelity Select Gold
Portfolio acquired all of the assets and assumed all of the
liabilities of Fidelity Select Precious Metals and Minerals Portfolio.
The acquisition, which was approved by the shareholders of Fidelity
Select Precious Metals and Minerals Portfolio on February 16, 2000,
was accomplished by an exchange of shares of Fidelity Select Precious
Metals and Minerals Portfolio for shares of Fidelity Select Gold
Portfolio.
(checkmark)FUND FACTS
START DATE: July 14, 1981
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
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 2,807,057
Dividends
Special dividend from Gold 1,280,213
Fields Ltd.
Interest 80,955
Security lending 26,696
TOTAL INCOME 4,194,921
EXPENSES
Management fee $ 763,104
Transfer agent fees 1,201,698
Accounting and security 97,533
lending fees
Non-interested trustees' 478
compensation
Custodian fees and expenses 74,544
Registration fees 57,446
Audit 15,278
Legal 11,302
Interest 8,124
Reports to shareholders 15,757
Miscellaneous 91
Total expenses before 2,245,355
reductions
Expense reductions (83,455) 2,161,900
NET INVESTMENT INCOME 2,033,021
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (2,203,476)
Foreign currency transactions (43,038) (2,246,514)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 9,655,444
Assets and liabilities in (5,997) 9,649,447
foreign currencies
NET GAIN (LOSS) 7,402,933
NET INCREASE (DECREASE) IN $ 9,435,954
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 246,487
charges paid to FDC
Sales charges - Retained by $ 246,487
FDC
Deferred sales charges $ 17,488
withheld by FDC
Exchange fees withheld by FSC $ 22,504
Expense reductions $ 83,455
Directed brokerage
arrangements
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $101,676,834 and $130,662,869, 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 $12,642 for the
period.
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 $5,874,333. The weighted average interest rate
was 5.28%. Interest expense includes $5,169 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 $2,229,000. The weighted average interest rate was 5.97%.
Interest expense includes $2,955 paid under the bank borrowing
program.
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ 2,033,021 $ (142,318)
income (loss)
Net realized gain (loss) (2,246,514) (21,007,323)
Change in net unrealized 9,649,447 3,724,303
appreciation (depreciation)
NET INCREASE (DECREASE) IN 9,435,954 (17,425,338)
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (868,658) -
from net investment income
Share transactions Net 218,550,731 415,102,396
proceeds from sales of shares
Reinvestment of distributions 836,188 -
Net asset value of shares (104,054,922) -
exchanged for shares of
Fidelity Select Gold
Portfolio (Note 10)
Cost of shares redeemed (248,535,572) (442,648,944)
NET INCREASE (DECREASE) IN (133,203,575) (27,546,548)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 1,197,151 2,450,806
TOTAL INCREASE (DECREASE) (123,439,128) (42,521,080)
IN NET ASSETS
NET ASSETS
Beginning of period 123,439,128 165,960,208
End of period (including - $ 123,439,128
accumulated net investment
loss of $0 and $37,156,
respectively)
OTHER INFORMATION
Shares
Sold 21,569,463 42,223,635
Issued in reinvestment of 87,835 -
distributions
Redeemed in exchange for the (10,907,225) -
shares of Fidelity Select
Gold Portfolio (Note 10)
Redeemed (24,224,749) (44,898,226)
Net increase (decrease) (13,474,676) (2,674,591)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 F 1999 1998 1997 1996 F
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 9.16 $ 10.28 $ 19.60 $ 20.96 $ 15.27
period
Income from Investment
Operations
Net investment income (loss) C .15 D (.01) (.04) (.01) .07
Net realized and unrealized .22 (1.27) (9.42) (1.42) 5.54
gain (loss)
Total from investment .37 (1.28) (9.46) (1.43) 5.61
operations
Less Distributions
From net investment income (.08) - - (.04) (.06)
In excess of net investment - - - (.01) -
income
Total distributions (.08) - - (.05) (.06)
Redemption fees added to paid .09 .16 .14 .12 .14
in capital
Net asset value per share (9.54) - - - -
exchanged for shares of
Fidelity Select Gold
Portfolio
Net asset value, end of period $ - $ 9.16 $ 10.28 $ 19.60 $ 20.96
TOTAL RETURN A, B 5.02% G (10.89)% (47.55)% (6.26)% 37.74%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ - $ 123,439 $ 165,960 $ 325,586 $ 467,196
(000 omitted)
Ratio of expenses to average 1.71% 1.78% 1.82% 1.62% 1.52%
net assets
Ratio of expenses to average 1.64% E 1.74% E 1.76% E 1.61% E 1.52%
net assets after expense
reductions
Ratio of net investment 1.54% (.09)% (.26)% (.05)% .39%
income (loss) to average net
assets
Portfolio turnover rate 79% 53% 84% 54% 53%
</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
FROM GOLD FIELDS LTD. WHICH AMOUNTED TO $.09 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
G THE TOTAL RETURN WAS CALCULATED USING THE NET ASSET VALUE
PER SHARE CALCULATED IN CONJUNCTION WITH THE MERGER AT THE
CLOSE OF BUSINESS ON FEBRUARY 29, 2000.
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 29, 2000 PAST 1 YEAR LIFE OF FUND
SELECT BUSINESS SERVICES AND 12.15% 54.17%
OUTSOURCING
SELECT BUSINESS SERVICES AND 8.71% 49.48%
OUTSOURCING (LOAD ADJ.)
S&P 500 11.73% 39.61%
GS Technology 104.99% 220.20%
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 185
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 29, 2000 PAST 1 YEAR LIFE OF FUND
SELECT BUSINESS SERVICES AND 12.15% 23.29%
OUTSOURCING
SELECT BUSINESS SERVICES AND 8.71% 21.46%
OUTSOURCING (LOAD ADJ.)
S&P 500 11.73% 17.51%
GS Technology 104.99% 75.55%
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 14472.00 13409.87
1999/09/30 14239.88 13042.30
1999/10/31 14774.76 13867.62
1999/11/30 15249.09 14149.55
1999/12/31 17176.77 14982.96
2000/01/31 15713.32 14230.21
2000/02/29 14948.00 13960.83
IMATRL PRASUN SHR__CHT 20000229 20000320 153540 R00000000000028
$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 29, 2000,
the value of the investment would have been $14,948 - a 49.48%
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 been
$13,961 - a 39.61% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
Automatic Data Processing, Inc. 8.2
First Data Corp. 7.5
Paychex, Inc. 5.7
Computer Sciences Corp. 5.7
Omnicom Group, Inc. 5.4
Electronic Data Systems Corp. 4.9
IMS Health, Inc. 4.4
DST Systems, Inc. 4.2
Interpublic Group of 4.2
Companies, Inc.
Ceridian Corp. 4.1
54.3
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Computer Services & Software 66.7% Row: 1, Col: 6, Value: 66.7
Services 13.8% Row: 1, Col: 5, Value: 13.8
Advertising 10.6% Row: 1, Col: 4, Value: 10.6
Printing 0.9% Row: 1, Col: 3, Value: 0.9
Publishing 0.7% Row: 1, Col: 2, Value: 0.7000000000000001
* All Others 7.3% Row: 1, Col: 1, Value: 7.3
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
BUSINESS SERVICES AND OUTSOURCING PORTFOLIO
FUND TALK: THE MANAGERS' OVERVIEW
(photograph of Michael Tarlowe)(photograph of Simon Wolf)
NOTE TO SHAREHOLDERS: The following is an interview with Michael
Tarlowe (left), who managed Fidelity Select Business Services and
Outsourcing Portfolio for most of the period covered by this report,
with additional comments from Simon Wolf (right), who became manager
of the fund on January 4, 2000.
Q. HOW DID THE FUND PERFORM, MICHAEL?
M.T. For the 12 months ending February 29, 2000, the fund returned
12.15%. The Standard & Poor's 500 Index returned 11.73% for the same
time period, while the Goldman Sachs Technology Index - an index of
185 stocks designed to measure the performance of companies in the
technology sector - returned 104.99%.
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE OVER THE PAST YEAR?
M.T. The fund experienced positive performance compared to the S&P 500
index primarily due to stock selection and an overweighted position
compared to the index in the computer services industry. The fund
fared unfavorably relative to the Goldman Sachs index because it owned
hardly any Internet and related large-cap hardware and software
companies. Those companies had exceptional performance but were not in
the fund because they are not business-service providers.
Q. WHAT WAS YOUR FOCUS DURING THE YEAR?
M.T. While the fund has a technology bias, I continued to focus on
companies providing outsourcing services that were outside of the
technology industry. I was successful in taking advantage of
opportunities within other industries where the movement to
outsourcing was gaining momentum.
Q. WHICH OF THE FUND'S HOLDINGS ADDED THE MOST TO PERFORMANCE?
M.T. Nielsen Media Research added value to the fund during the period.
During the first part of the year, the company announced its agreement
to be acquired by VNU N.V. - a Netherlands-based international
publishing company - and during the latter part of the year the
acquisition was completed, increasing the value of the company's
stock. Technology Solutions also was a strong contributor to
performance. I had taken a position in the company betting on a
turnaround and, as the company transformed its business to become an
Internet services provider, the stock witnessed multiple expansions
and rewarded us for that bet. Forrester Research added to performance
as well, as investors began to recognize the company's value in
providing Internet research, strategy and advisory services to
companies not yet doing business on the Web.
Q. WERE THERE ANY DETRACTORS FROM PERFORMANCE?
M.T. Affiliated Computer Services was a disappointment in terms of its
performance during the past 12 months. The company's stock
underperformed expectations due to concerns over a Y2K-induced
slowdown in demand. Ceridian, while maintaining compelling valuations,
was another stock that performed poorly during the year because of
lower-than-expected earnings in the company's payroll division. The
Gartner Group also detracted from performance. The company's stock
experienced a sell-off after it announced an intense investment
program to enable the company to take advantage of Internet services.
The spending resulted in lower earnings, which caused the stock's
valuations to decrease.
Q. SIMON, WHAT CHANGES HAVE YOU MADE TO THE FUND SINCE TAKING OVER IN
EARLY JANUARY?
S.W. Toward the end of the period, there were a number of initial
public offerings, or IPOs, for Internet consulting, telecommunications
and software businesses. The heavy IPO activity allowed me to increase
the fund's exposure in these areas. I anticipate growth in those areas
as companies continue to outsource portions of their business needs.
The addition of these companies also will more closely align the fund
to the Goldman Sachs Technology Index.
Q. WHAT IS YOUR OUTLOOK?
S.W. My outlook for the fund and the sector is positive. The Y2K
software lock-down passed quietly and the proliferation of technology
outsourcing continues. Prospects for the sector are bright as
technology spending continues. This activity is being driven by the
fact that as traditional companies move into the Internet age, they
need to undertake a large amount of spending to supplement areas where
the company lacks experience and expertise.
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: February 4, 1998
FUND NUMBER: 353
TRADING SYMBOL: FBSOX
SIZE: as of February 29, 2000, more than
$52 million
MANAGER: Simon Wolf, since January 2000;
manager, Fidelity Select Industrial Equipment
Portfolio, 1997-2000; joined Fidelity in 1996
BUSINESS SERVICES AND OUTSOURCING PORTFOLIO
INVESTMENTS FEBRUARY 29, 2000
Showing Percentage of Net Assets
COMMON STOCKS - 94.5%
SHARES VALUE (NOTE 1)
ADVERTISING - 10.6%
Interpublic Group of 55,000 $ 2,210,313
Companies, Inc.
Lamar Advertising Co. Class A 12,450 542,353
(a)
Omnicom Group, Inc. 29,639 2,791,623
5,544,289
BANKS - 0.3%
State Street Corp. 1,900 138,463
BROADCASTING - 0.3%
Infinity Broadcasting Corp. 5,350 170,866
Class A (a)
COMPUTER SERVICES & SOFTWARE
- - 66.7%
Affiliated Computer Services, 67,900 2,138,850
Inc. Class A (a)
Amdocs Ltd. (a) 5,884 436,519
Automatic Data Processing, 98,300 4,282,191
Inc.
Cambridge Technology 17,500 262,500
Partners, Inc. (a)
Ceridian Corp. (a) 108,500 2,149,656
Computer Sciences Corp. (a) 37,500 2,955,469
DST Systems, Inc. (a) 39,400 2,211,325
Electronic Data Systems Corp. 39,600 2,564,100
Equifax, Inc. 49,000 1,038,188
Extensity, Inc. 100 7,250
First Data Corp. 87,700 3,946,500
Fiserv, Inc. (a) 58,575 1,596,169
Galileo International, Inc. 16,600 282,200
IMS Health, Inc. 113,300 2,280,163
MatrixOne, Inc. 100 2,500
Metasolv Software, Inc. 3,900 343,688
National Data Corp. 36,800 1,140,800
Onvia.com, Inc. 100 2,100
Paychex, Inc. 59,625 2,984,977
Proxicom, Inc. 3,800 159,125
Razorfish, Inc. 2,600 87,100
Sabre Holdings Corp. Class A 31,700 1,271,963
SunGard Data Systems, Inc. (a) 16,200 486,000
Technology Solutions, Inc. 28,900 209,525
The Bisys Group (a) 28,400 1,464,375
The TriZetto Group, Inc. 6,900 562,350
34,865,583
ELECTRONICS - 0.4%
Sterling Commerce, Inc. (a) 4,600 201,538
ENGINEERING - 0.1%
Jupiter Communications, Inc. 2,300 73,600
ENTERTAINMENT - 0.4%
Ticketmaster Online 5,600 195,388
CitySearch, Inc. (a)
PRINTING - 0.9%
Reynolds & Reynolds Co. Class 16,200 447,525
A
PUBLISHING - 0.7%
Harte Hanks Communications, 17,500 381,719
Inc.
SHARES VALUE (NOTE 1)
SERVICES - 13.8%
ACNielsen Corp. (a) 43,600 $ 738,475
Cintas Corp. 18,300 730,856
Diamond Technology Partners, 3,450 235,894
Inc. Class A (a)
Dun & Bradstreet Corp. 43,100 1,128,681
eLoyalty Corp. 20,500 626,531
Forrester Research, Inc. (a) 11,200 448,000
Gartner Group, Inc.:
Class A 46,000 658,375
Class B (a) 71,683 846,755
Manpower, Inc. 15,500 506,656
Media Metrix, Inc. 4,600 161,575
Robert Half International, 15,800 667,550
Inc. (a)
True North Communications 5,600 207,200
Viad Corp. 10,000 234,375
7,190,923
TRUCKING & FREIGHT - 0.3%
Expeditors International of 4,600 173,650
Washington, Inc.
TOTAL COMMON STOCKS 49,383,544
(Cost $42,547,429)
CASH EQUIVALENTS - 4.0%
Taxable Central Cash Fund, 2,104,060 2,104,060
5.66% (b) (Cost $2,104,060)
TOTAL INVESTMENT PORTFOLIO - 51,487,604
98.5%
(Cost $44,651,489)
NET OTHER ASSETS - 1.5% 790,776
NET ASSETS - 100% $ 52,278,380
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 $32,119,845 and $49,624,865, 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 $4,996 for the
period.
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $45,010,865. Net unrealized appreciation
aggregated $6,476,739, of which $10,271,185 related to appreciated
investment securities and $3,794,446 related to depreciated investment
securities.
The fund hereby designates approximately $3,462,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 7% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2001 of amounts for use
in preparing 2000 income tax returns.
BUSINESS SERVICES AND OUTSOURCING PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 51,487,604
value (cost $44,651,489) -
See accompanying schedule
Receivable for investments 1,663,312
sold
Receivable for fund shares 252,104
sold
Dividends receivable 30,469
Interest receivable 11,247
Redemption fees receivable 530
Other receivables 501
TOTAL ASSETS 53,445,767
LIABILITIES
Payable for investments $ 26,700
purchased
Payable for fund shares 1,067,318
redeemed
Accrued management fee 27,875
Other payables and accrued 45,494
expenses
TOTAL LIABILITIES 1,167,387
NET ASSETS $ 52,278,380
Net Assets consist of:
Paid in capital $ 41,263,956
Accumulated undistributed net 4,178,309
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 6,836,115
(depreciation) on investments
NET ASSETS, for 3,733,248 $ 52,278,380
shares outstanding
NET ASSET VALUE and $14.00
redemption price per share
($52,278,380 (divided by)
3,733,248 shares)
Maximum offering price per $14.43
share (100/97.00 of $14.00)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 243,254
Dividends
Special dividend from Sabre 232,575
Holdings Corp. Class A
Interest 236,212
Security lending 3,503
TOTAL INCOME 715,544
EXPENSES
Management fee $ 373,270
Transfer agent fees 482,616
Accounting and security 60,490
lending fees
Non-interested trustees' 188
compensation
Custodian fees and expenses 9,827
Registration fees 26,306
Audit 12,064
Legal 217
Miscellaneous 131
Total expenses before 965,109
reductions
Expense reductions (9,220) 955,889
NET INVESTMENT INCOME (LOSS) (240,345)
REALIZED AND UNREALIZED GAIN 9,010,305
(LOSS)
Net realized gain (loss) on
investment securities
Change in net unrealized (934,194)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 8,076,111
NET INCREASE (DECREASE) IN $ 7,835,766
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 305,372
charges paid to FDC
Sales charges - Retained by $ 305,372
FDC
Deferred sales charges $ 574
withheld by FDC
Exchange fees withheld by FSC $ 10,292
Expense reductions Directed $ 5,758
brokerage arrangements
Custodian credits 438
Transfer agent credits 3,024
$ 9,220
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ (240,345) $ (505,124)
income (loss)
Net realized gain (loss) 9,010,305 2,392,697
Change in net unrealized (934,194) 7,144,279
appreciation (depreciation)
NET INCREASE (DECREASE) IN 7,835,766 9,031,852
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (5,476,884) (724,580)
from net realized gains
Share transactions Net 45,241,050 115,593,201
proceeds from sales of shares
Reinvestment of distributions 5,296,143 706,597
Cost of shares redeemed (64,818,931) (76,520,490)
NET INCREASE (DECREASE) IN (14,281,738) 39,779,308
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 78,625 120,875
TOTAL INCREASE (DECREASE) (11,844,231) 48,207,455
IN NET ASSETS
NET ASSETS
Beginning of period 64,122,611 15,915,156
End of period $ 52,278,380 $ 64,122,611
OTHER INFORMATION
Shares
Sold 3,100,058 9,724,396
Issued in reinvestment of 368,258 57,528
distributions
Redeemed (4,461,537) (6,516,475)
Net increase (decrease) (993,221) 3,265,449
</TABLE>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 I 1999 1998 F
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 13.57 $ 10.89 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.05) E (.11) -
Net realized and unrealized 1.69 2.92 .89
gain (loss)
Total from investment 1.64 2.81 .89
operations
Less Distributions
From net realized gain (1.23) (.16) -
Redemption fees added to paid .02 .03 -
in capital
Net asset value, end of period $ 14.00 $ 13.57 $ 10.89
TOTAL RETURN B, C 12.15% 26.23% 8.90%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 52,278 $ 64,123 $ 15,915
(000 omitted)
Ratio of expenses to average 1.50% 1.66% 2.50% A, G
net assets
Ratio of expenses to average 1.48% H 1.64% H 2.50% A
net assets after expense
reductions
Ratio of net investment (.37)% (.91)% (.49)% A
income (loss) to average net
assets
Portfolio turnover rate 54% 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 INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL
DIVIDEND FROM SABRE HOLDINGS CORP. CLASS A WHICH
AMOUNTED TO $.05 PER SHARE.
F FOR THE PERIOD FEBRUARY 4, 1998 (COMMENCEMENT OF
OPERATIONS) TO FEBRUARY 28, 1998.
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
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.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT COMPUTERS 119.58% 732.94% 2,261.60%
SELECT COMPUTERS (LOAD ADJ.) 112.92% 707.88% 2,190.68%
S&P 500 11.73% 206.94% 425.47%
GS Technology 104.99% 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 185 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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT COMPUTERS 119.58% 52.80% 37.19%
SELECT COMPUTERS (LOAD ADJ.) 112.92% 51.87% 36.77%
S&P 500 11.73% 25.14% 18.05%
GS Technology 104.99% 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
1990/02/28 9700.00 10000.00
1990/03/31 10394.00 10265.00
1990/04/30 10114.80 10008.38
1990/05/31 11431.00 10984.19
1990/06/30 11638.40 10909.50
1990/07/31 10808.80 10874.59
1990/08/31 9093.75 9891.53
1990/09/30 8495.48 9409.81
1990/10/31 8814.56 9369.35
1990/11/30 10266.37 9974.61
1990/12/31 10625.93 10252.90
1991/01/31 12437.17 10699.92
1991/02/28 13242.17 11464.97
1991/03/31 14288.66 11742.42
1991/04/30 13362.92 11770.60
1991/05/31 14039.11 12279.09
1991/06/30 12127.46 11716.71
1991/07/31 13346.01 12262.71
1991/08/31 14174.95 12553.34
1991/09/30 13428.90 12343.69
1991/10/31 13163.64 12509.10
1991/11/30 12260.09 12004.98
1991/12/31 13893.11 13378.35
1992/01/31 15343.76 13129.52
1992/02/29 16396.52 13300.20
1992/03/31 15103.37 13040.85
1992/04/30 14614.29 13424.25
1992/05/31 14796.66 13490.03
1992/06/30 13370.87 13289.02
1992/07/31 14025.74 13832.55
1992/08/31 13221.66 13548.98
1992/09/30 13876.53 13708.86
1992/10/31 14970.74 13756.84
1992/11/30 15899.15 14225.94
1992/12/31 16943.62 14400.92
1993/01/31 17930.07 14521.89
1993/02/28 16703.23 14719.39
1993/03/31 17034.81 15029.97
1993/04/30 16551.00 14666.24
1993/05/31 18490.17 15059.30
1993/06/30 17750.22 15102.97
1993/07/31 18490.17 15042.56
1993/08/31 19587.33 15612.67
1993/09/30 20140.17 15492.45
1993/10/31 20140.17 15813.15
1993/11/30 20999.19 15662.92
1993/12/31 21834.89 15852.44
1994/01/31 23242.73 16391.43
1994/02/28 24229.11 15947.22
1994/03/31 23978.03 15251.92
1994/04/30 23825.59 15447.15
1994/05/31 23807.66 15700.48
1994/06/30 21852.83 15315.82
1994/07/31 22543.30 15818.18
1994/08/31 25242.39 16466.72
1994/09/30 25063.05 16063.29
1994/10/31 26004.60 16424.71
1994/11/30 26157.04 15826.52
1994/12/31 26300.51 16061.23
1995/01/31 25493.47 16477.70
1995/02/28 27502.10 17119.83
1995/03/31 29618.34 17625.04
1995/04/30 31971.61 18144.10
1995/05/31 33552.02 18869.32
1995/06/30 37221.49 19307.65
1995/07/31 41899.15 19947.89
1995/08/31 42834.68 19997.96
1995/09/30 45287.05 20841.88
1995/10/31 43643.06 20767.47
1995/11/30 42589.45 21679.16
1995/12/31 39932.16 22096.70
1996/01/31 39676.12 22848.87
1996/02/29 42021.46 23060.68
1996/03/31 38467.61 23282.76
1996/04/30 42695.87 23625.95
1996/05/31 44171.37 24235.26
1996/06/30 40960.60 24327.60
1996/07/31 38217.43 23252.80
1996/08/31 39869.57 23743.20
1996/09/30 44763.64 25079.47
1996/10/31 47122.36 25771.16
1996/11/30 53533.49 27719.21
1996/12/31 52558.06 27170.09
1997/01/31 59295.17 28867.68
1997/02/28 52093.80 29094.00
1997/03/31 47991.08 27898.53
1997/04/30 50608.81 29564.07
1997/05/31 54256.50 31363.93
1997/06/30 53903.50 32769.03
1997/07/31 66340.96 35376.46
1997/08/31 67682.37 33394.67
1997/09/30 70200.46 35223.70
1997/10/31 60339.92 34047.23
1997/11/30 59222.07 35623.28
1997/12/31 52611.61 36234.93
1998/01/31 56807.73 36635.68
1998/02/28 62682.28 39277.85
1998/03/31 61263.23 41289.27
1998/04/30 67122.53 41704.64
1998/05/31 62544.95 40987.74
1998/06/30 68114.34 42652.66
1998/07/31 71745.88 42198.41
1998/08/31 62117.71 36097.36
1998/09/30 74095.71 38409.76
1998/10/31 79329.40 41534.01
1998/11/30 87919.99 44051.38
1998/12/31 103315.90 46589.63
1999/01/31 119093.28 48538.00
1999/02/28 104322.97 47029.44
1999/03/31 117262.25 48911.09
1999/04/30 115265.37 50805.42
1999/05/31 112437.56 49605.90
1999/06/30 124568.23 52359.03
1999/07/31 126576.61 50724.38
1999/08/31 135766.99 50473.29
1999/09/30 132055.49 49089.82
1999/10/31 140538.92 52196.23
1999/11/30 158662.61 53257.37
1999/12/31 187109.80 56394.23
2000/01/31 183636.51 53560.99
2000/02/29 229068.00 52547.08
IMATRL PRASUN SHR__CHT 20000229 20000316 094404 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Computers Portfolio on February 28, 1990,
and the current 3.00% sales charge was paid. As the chart shows, by
February 29, 2000, the value of the investment would have grown to
$229,068 - a 2,190.68% 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 $52,547 - a 425.47% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
EMC Corp. 6.8
Cisco Systems, Inc. 6.6
Texas Instruments, Inc. 6.5
Hewlett-Packard Co. 4.1
Analog Devices, Inc. 3.7
Motorola, Inc. 3.6
Network Appliance, Inc. 3.1
Gateway, Inc. 2.8
Exodus Communications, Inc. 2.3
JDS Uniphase Corp. 2.3
41.8
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Computers & Office Equipment 33.3% Row: 1, Col: 6, Value: 33.3
Electronics 31.3% Row: 1, Col: 5, Value: 31.3
Computer Services
& Software 15.6% Row: 1, Col: 4, Value: 15.6
Communications Equipment 10.1% Row: 1, Col: 3, Value: 10.1
Retail & Wholesale,
Miscellaneous 2.1% Row: 1, Col: 2, Value: 2.1
* All Others 7.6% Row: 1, Col: 1, Value: 7.6
</TABLE>
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
COMPUTERS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Larry Rakers)
NOTE TO SHAREHOLDERS: Larry Rakers became Portfolio Manager of
Fidelity Select Computers Portfolio on January 4, 2000.
Q. HOW DID THE FUND PERFORM, LARRY?
A. For the 12-month period that ended February 29, 2000, the fund
produced a total return of 119.58%, outpacing the Goldman Sachs
Technology Index - an index of 185 stocks designed to measure the
performance of companies in the technology sector - and the Standard &
Poor's 500 Index, which returned 104.99% and 11.73%, respectively.
Q. HOW DID THE FUND GAIN AN ADVANTAGE OVER THE GOLDMAN SACHS INDEX
DURING THE PAST 12 MONTHS?
A. Strong stock picking, coupled with an emphasis on high-growth data
networking, communications-semiconductor and Internet infrastructure
names at the expense of computer hardware manufacturers, gave the fund
an edge during the period. The decision to remain underweighted in
computer stocks - namely IBM and Dell - was a good one, as these top
providers were felled by declining sales related to Y2K.
Q. WHAT CHANGES HAVE YOU MADE SINCE TAKING OVER THE FUND?
A. Very few. The fund's overarching themes remain in play today. The
basic premise behind our positioning is simply a function of where we
perceive the highest growth rates to be in the technology sector,
which hasn't changed much in recent months. On the margin, though, I
made some moves that deserve mention, namely reducing the fund's
underweighting in computer hardware - based on a recently improved
technical picture - broadening the fund's exposure to optical
networking - an area I feel houses some of the best growth prospects
in the sector - and taking some profits in a richly valued Internet
services group.
Q. SPECIFICALLY, HOW DID THE FUND'S VARIOUS STRATEGIES PLAY OUT FOR
THE FUND?
A. The fund's significant overweighting in semiconductors relative to
the Goldman Sachs index proved particularly beneficial. Our stake in
communications chipmakers Texas Instruments, Analog Devices and LSI
Logic helped, as these firms responded to the explosive demand for
voice and data communications. In terms of computer chips, our bet on
fiber channel as a new protocol for data transfer between computer
devices, storage devices and related peripherals relative to SCSI - or
small computer systems interface - paid off for us during the period.
Our play on this high-growth area included names such as Emulex,
QLogic and Brocade. Additionally, having a healthy exposure to
Internet infrastructure providers Redback Networks, Cisco Systems,
Juniper Networks and Veritas Software further bolstered fund
performance.
Q. WHAT OTHER STOCKS WERE KEY CONTRIBUTORS?
A. The fund was rewarded for its exposure to the dramatic growth in
data storage demand in firms such as top holding EMC, Network
Appliance and Advanced Digital Information Corp. Gateway was one of
the few bright spots in the personal computer industry, benefiting in
the months leading up to Y2K from selling exclusively to individual
consumers, a group seemingly more resilient than corporations in the
face of the millennium changeover. JDS Uniphase, a top manufacturer of
optical network components, and Exodus, a leading Web hosting
provider, also added meaningfully to returns.
Q. WHICH STOCKS WEREN'T SO HELPFUL?
A. Holding less Intel and Sun Microsystems than the index hurt, as
these stocks nearly doubled and tripled in price, respectively, during
the period. Compaq fell along with many of its counterparts, plagued
by weak personal computer sales. Xerox slid lower on slackened demand
for copiers and toner attributed to the growing popularity of
distributing printing by way of the Internet.
Q. WHAT'S YOUR OUTLOOK?
A. I think data storage could be the place to be in the foreseeable
future, as projected growth rates look to dramatically outpace those
of other computer hardware types. From a broader perspective, I'm
watching for an acceleration in hardware consumption as we move
further away from Y2K. It's feasible that many of these stocks could
have a nice boost in revenue, which could similarly sweeten the
prospects for component and software manufacturers alike. I'll pay
close attention to the introduction of new Internet appliances later
on in the year, which logic dictates should lead to exponential growth
in networking and server demand as the world tries to satisfy all of
its data needs.
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 29, 2000, more than
$3.8 billion
MANAGER: Larry Rakers, since January 2000;
manager, Fidelity Select Technology Portfolio,
since February 2000; Fidelity Advisor Technology
Fund, since January 2000; Fidelity Advisor
Natural Resources Fund, 1997-1999; several
Fidelity Select Portfolios, 1995-1997; joined
Fidelity in 1993
COMPUTERS PORTFOLIO
INVESTMENTS FEBRUARY 29, 2000
Showing Percentage of Net Assets
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 95.2%
SHARES VALUE (NOTE 1)
ADVERTISING - 0.1%
Avenue A, Inc. 900 $ 64,800
Internet Capital Group, Inc. 30,000 3,172,500
3,237,300
COMMUNICATIONS EQUIPMENT -
10.1%
Cabletron Systems, Inc. (a) 300,000 14,700,000
Cisco Systems, Inc. (a) 1,919,400 253,720,688
Comverse Technology, Inc. (a) 257,700 50,734,688
Nokia AB sponsored ADR 189,000 37,481,063
Telefonaktiebolaget LM 320,000 30,720,000
Ericsson sponsored ADR
387,356,439
COMPUTER SERVICES & SOFTWARE
- - 15.6%
Akamai Technologies, Inc. 100,000 26,125,000
Ariba, Inc. 20,000 5,290,000
Banyan Systems, Inc. (a) 100,000 3,325,000
BEA Systems, Inc. (a) 25,000 3,164,063
BMC Software, Inc. (a) 50,000 2,300,000
Breakaway Solutions, Inc. 84,842 10,605,250
Citrix Systems, Inc. (a) 50,000 5,271,875
Commerce One, Inc. 101,800 21,263,475
E.piphany, Inc. 20,000 4,397,500
Electronics for Imaging, Inc. 950,400 56,430,000
(a)
Exodus Communications, Inc. 630,000 89,696,250
(a)
F5 Networks, Inc. 75,000 6,750,000
Intuit, Inc. (a) 700,000 36,750,000
Legato Systems, Inc. (a) 85,000 3,028,125
MatrixOne, Inc. 1,000 25,000
Micromuse, Inc. (a) 60,000 8,508,750
Microsoft Corp. (a) 969,100 86,613,313
National Instrument Corp. (a) 180,000 8,083,125
NCR Corp. (a) 60,000 2,276,250
Net.Genesis Corp. 600 34,088
Niku Corp. 1,800 124,200
Onvia.com, Inc. 2,700 56,700
Phone.com, Inc. 37,800 5,277,825
Proxicom, Inc. 20,000 837,500
Redback Networks, Inc. 207,400 61,908,900
Silknet Software, Inc. 20,000 4,481,250
Software.com, Inc. 40,000 3,850,000
Technology Solutions, Inc. 250,000 1,812,500
Unisys Corp. (a) 1,420,000 42,511,250
Usinternetworking, Inc. 130,000 8,677,500
VERITAS Software Corp. (a) 292,500 57,878,438
Vignette Corp. 100,000 23,050,000
Visual Networks, Inc. (a) 110,000 7,232,500
597,635,627
COMPUTERS & OFFICE EQUIPMENT
- - 33.3%
Adaptec, Inc. (a) 561,100 23,005,100
Advanced Digital Information 286,400 25,955,000
Corp. (a)
SHARES VALUE (NOTE 1)
Alteon Websystems, Inc. 15,000 $ 1,346,250
Apple Computer, Inc. (a) 530,000 60,751,250
CDW Computer Centers, Inc. (a) 400,000 21,950,000
Comdisco, Inc. 186,000 7,149,375
Compaq Computer Corp. 1,756,350 43,689,206
Dell Computer Corp. (a) 1,725,000 70,401,563
EMC Corp. (a) 2,183,000 259,776,994
Emulex Corp. (a) 441,200 70,592,000
Gateway, Inc. (a) 1,538,700 105,785,625
Globix Corp. (a) 70,000 3,670,625
Hewlett-Packard Co. 1,150,000 154,675,000
Insight Enterprises, Inc. (a) 276,875 8,686,953
Juniper Networks, Inc. 315,900 86,655,319
Lexmark International Group, 430,000 51,277,500
Inc. Class A (a)
Network Appliance, Inc. (a) 630,000 118,912,500
Pitney Bowes, Inc. 310,000 15,345,000
Quantum Corp. - DLT & 655,000 6,795,625
Storage Systems Group (a)
SCM Microsystems, Inc. (a) 15,800 1,829,166
Seagate Technology, Inc. (a) 250,000 12,468,750
Silicon Graphics, Inc. (a) 900,000 8,831,250
Sun Microsystems, Inc. (a) 900,000 85,725,000
Symbol Technologies, Inc. 253,700 24,133,213
Tech Data Corp. (a) 68,300 1,481,256
1,270,889,520
CONSUMER ELECTRONICS - 1.5%
Gemstar International Group 750,000 56,906,250
Ltd. (a)
ELECTRICAL EQUIPMENT - 0.7%
American Power Conversion 590,000 20,023,125
Corp. (a)
ANTEC Corp. (a) 100,000 5,293,750
Pinnacle Systems (a) 50,000 2,506,250
27,823,125
ELECTRONIC INSTRUMENTS - 0.2%
Agilent Technologies, Inc. 23,600 2,447,025
Credence Systems Corp. (a) 48,000 6,396,000
8,843,025
ELECTRONICS - 31.3%
Altera Corp. (a) 885,400 70,610,650
Analog Devices, Inc. (a) 900,000 141,300,000
Atmel Corp. (a) 580,000 28,710,000
Broadcom Corp. Class A (a) 40,000 7,895,000
Brocade Communications 167,800 48,515,175
Systems, Inc.
Cree Research, Inc. (a) 57,000 10,708,875
Cypress Semiconductor Corp. 200,000 9,125,000
(a)
Flextronics International 53,200 3,238,550
Ltd. (a)
Intel Corp. 150,000 16,950,000
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ELECTRONICS - CONTINUED
JDS Uniphase Corp. (a) 335,200 $ 88,367,100
KEMET Corp. (a) 290,100 17,823,019
Linear Technology Corp. 716,600 75,198,213
LSI Logic Corp. (a) 1,320,000 84,562,500
Maxim Integrated Products, 964,000 64,407,250
Inc. (a)
Microchip Technology, Inc. (a) 345,000 21,540,938
Motorola, Inc. 816,200 139,162,100
National Semiconductor Corp. 610,000 45,826,250
(a)
PMC-Sierra, Inc. (a) 80,000 15,445,000
QLogic Corp. (a) 170,000 26,520,000
STMicroelectronics NV 170,000 34,000,000
Texas Instruments, Inc. 1,488,400 247,818,600
1,197,724,220
PHOTOGRAPHIC EQUIPMENT - 0.1%
Imation Corp. (a) 100,000 3,093,750
RETAIL & WHOLESALE,
MISCELLANEOUS - 2.1%
Best Buy Co., Inc. (a) 983,000 53,450,625
Circuit City Stores, Inc. - 620,000 25,032,500
Circuit City Group
78,483,125
SERVICES - 0.2%
Diamond Technology Partners, 62,250 4,256,344
Inc. Class A (a)
eLoyalty Corp. 95,000 2,903,438
7,159,782
TOTAL COMMON STOCKS 3,639,152,163
(Cost $1,616,878,991)
CASH EQUIVALENTS - 9.8%
Central Cash Collateral Fund, 183,211,300 183,211,300
5.75% (b)
Taxable Central Cash Fund, 191,605,385 191,605,385
5.66% (b)
TOTAL CASH EQUIVALENTS 374,816,685
(Cost $374,816,685)
TOTAL INVESTMENT PORTFOLIO - 4,013,968,848
105.0%
(Cost $1,991,695,676)
NET OTHER ASSETS - (5.0)% (189,753,495)
NET ASSETS - 100% $ 3,824,215,353
</TABLE>
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 $2,876,474,244 and $3,058,277,719, 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 $137,531 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $181,496,863. The fund
received cash collateral of $183,211,300 which was invested in cash
equivalents.
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $2,018,674,929. Net unrealized appreciation
aggregated $1,995,293,919, of which $2,052,128,020 related to
appreciated investment securities and $56,834,101 related to
depreciated investment securities.
The fund hereby designates approximately $255,923,000 as a capital
gain dividend for the purpose of the dividend paid deduction.
A total of 1% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate
shareholders (unaudited).
The fund will notify shareholders in January 2001 of amounts for use
in preparing 2000 income tax returns.
COMPUTERS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 4,013,968,848
value (cost $1,991,695,676)
- - See accompanying schedule
Receivable for investments 31,520,584
sold
Receivable for fund shares 8,148,145
sold
Dividends receivable 100,250
Interest receivable 763,854
Redemption fees receivable 6,901
Other receivables 200,179
TOTAL ASSETS 4,054,708,761
LIABILITIES
Payable for investments $ 33,220,850
purchased
Payable for fund shares 11,313,761
redeemed
Accrued management fee 1,668,140
Other payables and accrued 1,079,357
expenses
Collateral on securities 183,211,300
loaned, at value
TOTAL LIABILITIES 230,493,408
NET ASSETS $ 3,824,215,353
Net Assets consist of:
Paid in capital $ 1,660,627,905
Accumulated undistributed net 141,314,276
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 2,022,273,172
(depreciation) on investments
NET ASSETS, for 29,887,615 $ 3,824,215,353
shares outstanding
NET ASSET VALUE and $127.95
redemption price per share
($3,824,215,353 (divided by)
29,887,615 shares)
Maximum offering price per $131.91
share (100/97.00 of $127.95)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 2,563,455
Dividends
Interest 10,521,008
Security lending 996,995
TOTAL INCOME 14,081,458
EXPENSES
Management fee $ 13,963,837
Transfer agent fees 9,900,981
Accounting and security 1,342,533
lending fees
Non-interested trustees' 7,973
compensation
Custodian fees and expenses 67,791
Registration fees 253,218
Audit 56,616
Legal 8,227
Miscellaneous 33,726
Total expenses before 25,634,902
reductions
Expense reductions (332,105) 25,302,797
NET INVESTMENT INCOME (LOSS) (11,221,339)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 459,409,641
Foreign currency transactions (38,391) 459,371,250
Change in net unrealized 1,653,265,607
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 2,112,636,857
NET INCREASE (DECREASE) IN $ 2,101,415,518
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 11,922,459
charges paid to FDC
Sales charges - Retained by $ 11,919,086
FDC
Deferred sales charges $ 7,975
withheld by FDC
Exchange fees withheld by $ 89,799
FSC
Expense reductions Directed $ 317,192
brokerage arrangements
Custodian credits 6,587
Transfer agent credits 8,326
$ 332,105
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ (11,221,339) $ (5,471,121)
income (loss)
Net realized gain (loss) 459,371,250 193,034,531
Change in net unrealized 1,653,265,607 272,430,790
appreciation (depreciation)
NET INCREASE (DECREASE) IN 2,101,415,518 459,994,200
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (403,921,111) -
from net realized gains
Share transactions Net 1,163,982,244 1,830,119,568
proceeds from sales of shares
Reinvestment of distributions 392,677,083 -
Cost of shares redeemed (1,262,885,832) (1,247,821,903)
NET INCREASE (DECREASE) IN 293,773,495 582,297,665
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 1,512,642 3,678,254
TOTAL INCREASE (DECREASE) 1,992,780,544 1,045,970,119
IN NET ASSETS
NET ASSETS
Beginning of period 1,831,434,809 785,464,690
End of period $ 3,824,215,353 $ 1,831,434,809
OTHER INFORMATION
Shares
Sold 13,611,310 33,082,983
Issued in reinvestment of 4,388,872 -
distributions
Redeemed (14,898,647) (25,415,629)
Net increase (decrease) 3,101,535 7,667,354
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 E 1999 1998 1997 1996 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 68.37 $ 41.08 $ 48.25 $ 41.03 $ 30.67
period
Income from Investment
Operations
Net investment income (loss) C (.41) (.29) (.32) (.36) (.23)
Net realized and unrealized 74.86 27.39 6.42 9.94 16.10
gain (loss)
Total from investment 74.45 27.10 6.10 9.58 15.87
operations
Less Distributions
From net realized gain (14.92) - (10.64) (2.47) (5.61)
In excess of net realized gain - - (2.75) - -
Total distributions (14.92) - (13.39) (2.47) (5.61)
Redemption fees added to paid .05 .19 .12 .11 .10
in capital
Net asset value, end of period $ 127.95 $ 68.37 $ 41.08 $ 48.25 $ 41.03
TOTAL RETURN A, B 119.58% 66.43% 20.33% 23.97% 52.79%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 3,824,215 $ 1,831,435 $ 785,465 $ 604,286 $ 527,337
(000 omitted)
Ratio of expenses to average 1.07% 1.25% 1.40% 1.48% 1.40%
net assets
Ratio of expenses to average 1.05% D 1.23% D 1.34% D 1.44% D 1.38% D
net assets after expense
reductions
Ratio of net investment (.47)% (.54)% (.67)% (.83)% (.56)%
income (loss) to average net
assets
Portfolio turnover rate 129% 133% 333% 255% 129%
</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
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 29, PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
2000
SELECT DEVELOPING 166.12% 586.54% 1,693.31%
COMMUNICATIONS
SELECT DEVELOPING 158.07% 565.87% 1,639.44%
COMMUNICATIONS (LOAD ADJ.)
S&P 500 11.73% 206.94% 381.66%
GS Technology 104.99% 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 185
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 29, PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
2000
SELECT DEVELOPING 166.12% 47.01% 34.80%
COMMUNICATIONS
SELECT DEVELOPING 158.07% 46.11% 34.37%
COMMUNICATIONS (LOAD ADJ.)
S&P 500 11.73% 25.14% 17.66%
GS Technology 104.99% 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 80126.95 46265.46
1999/09/30 81771.00 44997.32
1999/10/31 92868.35 47844.75
1999/11/30 103801.29 48817.43
1999/12/31 133700.78 51692.78
2000/01/31 133062.89 49095.74
2000/02/29 173944.00 48166.35
IMATRL PRASUN SHR__CHT 20000229 20000316 093509 R00000000000119
$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 29, 2000, the value
of the investment would have grown to $173,944 - a 1,639.44% 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 $48,166 -
a 381.66% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
Juniper Networks, Inc. 8.9
JDS Uniphase Corp. 6.1
Vignette Corp. 6.0
Motorola, Inc. 4.9
Cisco Systems, Inc. 4.8
Broadcom Corp. Class A 4.2
Redback Networks, Inc. 3.7
BroadVision, Inc. 3.4
Sycamore Networks, Inc. 3.1
Comverse Technology, Inc. 2.5
47.6
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Computer Services & Software 24.9% Row: 1, Col: 6, Value: 24.9
Electronics 22.5% Row: 1, Col: 5, Value: 22.5
Communications
Equipment 20.1% Row: 1, Col: 4, Value: 20.1
Computers & Office
Equipment 9.2% Row: 1, Col: 3, Value: 9.199999999999999
Telephone Services 4.5% Row: 1, Col: 2, Value: 4.5
* All Others 18.8% Row: 1, Col: 1, Value: 18.8
</TABLE>
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
DEVELOPING COMMUNICATIONS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Rajiv Kaul)
NOTE TO SHAREHOLDERS: Rajiv Kaul became Portfolio Manager of Fidelity
Select Developing Communications Portfolio on February 7, 2000.
Q. HOW DID THE FUND PERFORM, RAJIV?
A. Very well. For the 12-month period ending February 29, 2000, the
fund returned 166.12%. By comparison, the Goldman Sachs Technology
Index - an index of 185 stocks designed to measure the performance of
companies in the technology sector - was up 104.99% for the same
period. The fund also compares its performance to the Standard &
Poor's 500 Index, which returned 11.73% for the 12-month period.
Q. WHY DID THE FUND OUTPERFORM THE GOLDMAN SACHS AND THE S&P 500
INDEXES BY SUCH A WIDE MARGIN?
A. The place to invest - particularly in the latter part of the period
- - was the Internet. The fund focused on Internet-related wireless and
fiber-optics stocks in the telecommunications industry, which
performed exceptionally well. The demand for bandwidth really took
off, and companies couldn't keep up with that demand. Semiconductor
companies also performed well. Their businesses were boosted by demand
for chips for the telecommunications industry. Companies involved in
developing data, video telephony and voice transmission over the
Internet also were winners, accounting for much of the fund's strong
performance during the period.
Q. WHAT IMPACT DID GLOBAL ECONOMIC CONDITIONS HAVE ON THE FUND DURING
THE PERIOD?
A. Global capital markets had a significant impact, because they
funded many of the new networks being built around the world. As
global economic conditions improved, it allowed more capital to be
freed up to support funding to establish new networks. The strongest
growth came from Europe, where deregulation spurred significant
activity. Asian markets also were generally strong, and the U.S. saw
greatly increased demand as well.
Q. WHAT STOCKS STOOD OUT IN THIS ENVIRONMENT?
A. JDS Uniphase, the largest maker of fiber-optic components,
performed very well. Demand was so strong for its products that the
company just couldn't keep up. JDS strengthened its position by buying
competitors, providing further consolidation within the industry.
Companies in the area of computer networks and communications
equipment also were good bets. Juniper Networks, an attractive IPO
that was added to the fund's portfolio early in the period, posted
good results. Its product, a high-speed router that competes with
Cisco's, benefited from growing demand and, with only two companies
competing in this market, Juniper had a very good year. Redback
Networks, another maker of products allowing for high-speed access to
the Internet, also enjoyed growing demand for its products and
performed very well.
Q. WHAT ABOUT DISAPPOINTMENTS?
A. Newbridge Networks was a disappointment. The company attempted to
compete with Cisco in the enterprise software area and was
unsuccessful in its efforts. Internet-related service firm Northpoint
Communications also disappointed, delivering slower-than-expected
growth. These stocks were sold from the fund's portfolio. AT&T also
had a difficult year, as investors became increasingly concerned
about its ability to join competitors in moving from traditional
voice-based services to services capable of sending data in a
cost-efficient manner while remaining competitive. AT&T also made some
acquisitions in the cable area, and investors reacted negatively to
the high amount it paid for those acquisitions.
Q. WHAT'S YOUR OUTLOOK, RAJIV?
A. I'm very excited about the opportunities that I see ahead. Many new
networks being built are in their early phases and the demand for
bandwidth is huge. The companies in these areas should enjoy a
positive market environment, with ample opportunities to grow over
the next several years. Wireless is going to be a big component of
this growth, adding to demand for bandwidth. Although further
interest-rate increases could dampen growth - hurting capital markets
and limiting financing available for building new networks - the
fundamentals in this industry are strong. This market is driven by the
demand for e-commerce, greater access to leisure activities on the
Internet, and phone, video and business-to-business services.
Technology also is reducing the cost of these services, making them
more affordable. As long as regulation doesn't tighten up, I believe
that the potential for growth is very good. Through all types of
markets and economic conditions, however, my job is to find the
leaders in emerging technologies early, while constantly watching out
for new potential leaders.
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 29, 2000, more than
$3.4 billion
MANAGER: Rajiv Kaul, since February 2000;
manager, Fidelity Select Biotechnology Portfolio,
1998-February 2000; equity research associate,
health care industry, 1996-1998; joined
Fidelity in 1996
DEVELOPING COMMUNICATIONS PORTFOLIO
INVESTMENTS FEBRUARY 29, 2000
Showing Percentage of Net Assets
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 93.3%
SHARES VALUE (NOTE 1)
ADVERTISING - 0.5%
DoubleClick, Inc. (a) 160,000 $ 14,210,000
Internet Capital Group, Inc. 10,420 1,101,915
15,311,915
BROADCASTING - 4.5%
AT&T Corp. - Liberty Media 350,000 18,287,500
Group Class A (a)
Cablevision Systems Corp. 1,000 64,188
Class A (a)
CBS Corp. (a) 74,600 4,443,363
Comcast Corp. Class A 700,100 29,754,250
(special)
Cox Communications, Inc. 500,000 22,718,750
Class A (a)
MediaOne Group, Inc. (a) 375,000 29,437,500
Wireless Facilities, Inc. 400,000 49,600,000
154,305,551
CELLULAR - 4.3%
China Telecom (Hong Kong) 45,000 8,364,375
Ltd. sponsored ADR (a)
Leap Wireless International, 204,600 17,940,863
Inc. (a)
Sprint Corp. - PCS Group 500,000 25,875,000
Series 1 (a)
Vodafone AirTouch PLC 646,250 37,280,547
sponsored ADR
VoiceStream Wireless Corp. (a) 450,000 59,878,125
149,338,910
COMMUNICATIONS EQUIPMENT -
20.1%
Advanced Fibre 656,800 44,744,500
Communications, Inc. (a)
Carrier Access Corp. (a) 200,000 11,350,000
Cisco Systems, Inc. (a) 1,256,600 166,106,813
Comverse Technology, Inc. (a) 439,650 86,556,094
Ditech Communications Corp. 273,200 29,847,100
Globalstar Telecommunications 951,500 27,117,750
Ltd. (a)
Lucent Technologies, Inc. 688,440 40,962,180
Nokia AB sponsored ADR 300,000 59,493,750
Nortel Networks Corp. 300,000 33,216,060
Sycamore Networks, Inc. 729,300 107,936,400
Tekelec (a) 300,000 15,450,000
Telefonaktiebolaget LM 510,500 49,008,000
Ericsson sponsored ADR
Tellabs, Inc. (a) 200,000 9,600,000
Terayon Communication 50,000 12,856,250
Systems, Inc. (a)
694,244,897
COMPUTER SERVICES & SOFTWARE
- - 24.9%
Akamai Technologies, Inc. 115,000 30,043,750
Amdocs Ltd. (a) 250,000 18,546,875
At Home Corp. Series A (a) 181,688 6,234,170
Aware, Inc. (a) 243,500 15,340,500
BroadVision, Inc. (a) 466,700 117,870,919
Cobalt Networks, Inc. 1,000 95,750
Concentric Network Corp. (a) 300,000 16,087,500
Critical Path, Inc. 39,600 3,410,550
SHARES VALUE (NOTE 1)
DSET Corp. (a)(c) 594,200 $ 14,855,000
eMerge Interactive, Inc. 5,210 276,781
Class A
Exodus Communications, Inc. 200,000 28,475,000
(a)
Internap Network Services 440,000 42,680,000
Corp.
Metasolv Software, Inc. 499,900 44,053,688
Micromuse, Inc. (a) 200,000 28,362,500
PSINet, Inc. (a) 336,000 15,582,000
Redback Networks, Inc. 430,900 128,623,650
Siebel Systems, Inc. (a) 65,800 9,125,638
Silknet Software, Inc. 200,000 44,812,500
US Interactive, Inc. 2,605 118,528
Verio, Inc. (a) 250,000 18,765,625
VeriSign, Inc. (a) 50,000 12,650,000
Vignette Corp. 903,500 208,256,750
WorldGate Communications, 190,000 6,555,000
Inc.
Yahoo!, Inc. (a) 300,000 47,906,250
858,728,924
COMPUTERS & OFFICE EQUIPMENT
- - 9.2%
Juniper Networks, Inc. 1,125,500 308,738,713
Safeguard Scientifics, Inc. 52,100 9,114,244
(a)
317,852,957
CONSUMER ELECTRONICS - 0.3%
Gemstar International Group 150,000 11,381,250
Ltd. (a)
ELECTRONIC INSTRUMENTS - 0.4%
NetOptix Corp. (a) 38,000 6,215,375
Photon Dynamics, Inc. (a) 110,000 7,150,000
13,365,375
ELECTRONICS - 22.5%
Applied Micro Circuits Corp. 139,300 38,316,206
(a)
Audiovox Corp. Class A (a) 141,100 9,129,611
Brightpoint, Inc. (a) 990,400 12,751,400
Broadcom Corp. Class A (a) 738,200 145,702,225
Brocade Communications 191,900 55,483,088
Systems, Inc.
Conductus, Inc. (a) 88,000 5,896,000
Conexant Systems, Inc. (a) 100,000 9,825,000
E Tek Dynamics, Inc. (a) 66,100 18,061,825
GlobeSpan, Inc. 435,000 32,842,500
Illinois Superconductor Corp. 570,000 14,036,250
(a)
JDS Uniphase Corp. (a) 793,736 209,248,653
Motorola, Inc. 991,200 168,999,600
QLogic Corp. (a) 158,800 24,772,800
SDL, Inc. (a) 33,500 13,735,000
Texas Instruments, Inc. 20,000 3,330,000
Vitesse Semiconductor Corp. 34,800 3,612,675
(a)
Xilinx, Inc. (a) 150,000 11,962,500
777,705,333
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
GAS - 0.3%
Williams Companies, Inc. 200,000 $ 8,362,500
PACKAGING & CONTAINERS - 1.8%
Corning, Inc. 332,000 62,416,000
TELEPHONE SERVICES - 4.5%
AT&T Corp. 1,000,000 49,437,500
MCI WorldCom, Inc. (a) 375,000 16,734,375
McLeodUSA, Inc. Class A (a) 100,000 8,800,000
Metromedia Fiber Network, 510,000 36,664,219
Inc. Class A (a)
NEXTLINK Communications, Inc. 250,000 27,546,875
Class A (a)
Pac-West Telecomm, Inc. 5,210 182,350
Time Warner Telecom, Inc. 224,200 17,263,400
156,628,719
TOTAL COMMON STOCKS 3,219,642,331
(Cost $1,541,950,322)
CASH EQUIVALENTS - 17.8%
Central Cash Collateral Fund, 377,506,700 377,506,700
5.75% (b)
Taxable Central Cash Fund, 230,938,303 230,938,303
5.66% (b)
MATURITY AMOUNT
Investments in repurchase $ 7,132,135 7,131,000
agreements (U.S. Treasury
obligations), in a joint
trading account at 5.73%,
dated 2/29/00 due 3/1/00
TOTAL CASH EQUIVALENTS 615,576,003
(Cost $615,576,003)
TOTAL INVESTMENT PORTFOLIO - 3,835,218,334
111.1%
(Cost $2,157,526,325)
NET OTHER ASSETS - (11.1)% (382,491,780)
NET ASSETS - 100% $ 3,452,726,554
</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 $2,454,507,507 and $1,516,857,851, 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 $41,229 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $386,773,550. The fund
received cash collateral of $377,506,700 which was invested in cash
equivalents.
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.
Transactions during the period with companies which are or were
affiliates
are as follows:
AFFILIATE PURCHASE COST SALES COST DIVIDEND INCOME VALUE
DSET Corp. $ 1,035,000 $ - $ - $ 14,855,000
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $2,161,323,516. Net unrealized appreciation
aggregated $1,673,894,818, of which $1,703,298,881 related to
appreciated investment securities and $29,404,063 related to
depreciated investment securities.
The fund hereby designates approximately $59,562,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
A total of 3% of the dividends distributed the fiscal year qualifies
for the dividends-received deductions for corporate shareholders
(unaudited).
The fund will notify shareholders in January 2001 of amounts for the
use in preparing 2000 income tax returns.
DEVELOPING COMMUNICATIONS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 3,835,218,334
value (including repurchase
agreements of $7,131,000)
(cost $2,157,526,325) - See
accompanying schedule
Cash 660
Receivable for investments 20,566,537
sold
Receivable for fund shares 44,554,525
sold
Dividends receivable 13,769
Interest receivable 983,756
Redemption fees receivable 5,108
Other receivables 518,889
TOTAL ASSETS 3,901,861,578
LIABILITIES
Payable for investments $ 61,942,045
purchased
Payable for fund shares 7,141,230
redeemed
Accrued management fee 1,382,699
Other payables and accrued 1,162,350
expenses
Collateral on securities 377,506,700
loaned, at value
TOTAL LIABILITIES 449,135,024
NET ASSETS $ 3,452,726,554
Net Assets consist of:
Paid in capital $ 1,677,517,185
Accumulated undistributed net 97,517,360
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 1,677,692,009
(depreciation) on investments
NET ASSETS, for 42,201,815 $ 3,452,726,554
shares outstanding
NET ASSET VALUE and $81.81
redemption price per share
($3,452,726,554 (divided by)
42,201,815 shares)
Maximum offering price per $84.34
share (100/97.00 of $81.81)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 1,804,599
Dividends
Interest 6,384,708
Security lending 791,738
TOTAL INCOME 8,981,045
EXPENSES
Management fee $ 8,255,415
Transfer agent fees 5,890,569
Accounting and security 830,937
lending fees
Non-interested trustees' 5,444
compensation
Custodian fees and expenses 40,416
Registration fees 647,193
Audit 41,095
Legal 8,906
Miscellaneous 1,517
Total expenses before 15,721,492
reductions
Expense reductions (94,810) 15,626,682
NET INVESTMENT INCOME (LOSS) (6,645,637)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 171,908,622
Foreign currency transactions (9,785) 171,898,837
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 1,553,735,092
Assets and liabilities in (1,555) 1,553,733,537
foreign currencies
NET GAIN (LOSS) 1,725,632,374
NET INCREASE (DECREASE) IN $ 1,718,986,737
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 13,537,124
charges paid to FDC
Sales charge - Retained by $ 13,526,554
FDC
Deferred sales charges $ 3,734
withheld by FDC
Exchange fees withheld by FSC $ 55,141
Expense reductions $ 87,692
Directed brokerage
arrangements
Custodian credits 2,646
Transfer agent credits 4,472
$ 94,810
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ (6,645,637) $ (1,996,908)
income (loss)
Net realized gain (loss) 171,898,837 53,731,227
Change in net unrealized 1,553,733,537 97,390,680
appreciation (depreciation)
NET INCREASE (DECREASE) IN 1,718,986,737 149,124,999
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (92,564,065) (820,226)
from net realized gains
Share transactions Net 2,222,798,318 606,604,197
proceeds from sales of shares
Reinvestment of distributions 90,014,100 808,781
Cost of shares redeemed (1,100,728,465) (383,100,933)
NET INCREASE (DECREASE) IN 1,212,083,953 224,312,045
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 2,158,711 1,088,615
TOTAL INCREASE (DECREASE) 2,840,665,336 373,705,433
IN NET ASSETS
NET ASSETS
Beginning of period 612,061,218 238,355,785
End of period $ 3,452,726,554 $ 612,061,218
OTHER INFORMATION
Shares
Sold 46,122,962 21,247,025
Issued in reinvestment of 1,814,211 39,007
distributions
Redeemed (24,438,881) (14,419,633)
Net increase (decrease) 23,498,292 6,866,399
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 E 1999 1998 1997 1996 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 32.72 $ 20.14 $ 19.68 $ 19.42 $ 20.40
period
Income from Investment
Operations
Net investment income (loss) C (.22) (.16) (.18) (.18) (.17)
Net realized and unrealized 52.31 12.72 4.95 .42 4.17
gain (loss)
Total from investment 52.09 12.56 4.77 .24 4.00
operations
Less Distributions
From net realized gain (3.07) (.07) (4.35) - (5.00)
Redemption fees added to paid .07 .09 .04 .02 .02
in capital
Net asset value, end of period $ 81.81 $ 32.72 $ 20.14 $ 19.68 $ 19.42
TOTAL RETURN A, B 166.12% 63.01% 28.17% 1.34% 21.84%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 3,452,727 $ 612,061 $ 238,356 $ 220,360 $ 333,185
(000 omitted)
Ratio of expenses to average 1.11% 1.38% 1.61% 1.64% 1.53%
net assets
Ratio of expenses to average 1.11% 1.34% D 1.55% D 1.62% D 1.51% D
net assets after expense
reductions
Ratio of net investment (.47)% (.64)% (.82)% (.86)% (.78)%
income (loss) to average net
assets
Portfolio turnover rate 112% 299% 383% 202% 249%
</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
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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT ELECTRONICS 178.06% 986.50% 2,842.92%
SELECT ELECTRONICS (LOAD ADJ.) 169.64% 953.83% 2,754.56%
S&P 500 11.73% 206.94% 425.47%
GS Technology 104.99% 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 185 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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT ELECTRONICS 178.06% 61.14% 40.24%
SELECT ELECTRONICS (LOAD ADJ.) 169.64% 60.16% 39.82%
S&P 500 11.73% 25.14% 18.05%
GS Technology 104.99% 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
1990/02/28 9700.00 10000.00
1990/03/31 10170.98 10265.00
1990/04/30 10215.84 10008.38
1990/05/31 11718.50 10984.19
1990/06/30 11897.92 10909.50
1990/07/31 11337.23 10874.59
1990/08/31 9565.43 9891.53
1990/09/30 8118.84 9409.81
1990/10/31 7827.28 9369.35
1990/11/30 8634.68 9974.61
1990/12/31 9195.49 10252.90
1991/01/31 10475.44 10699.92
1991/02/28 11396.12 11464.97
1991/03/31 12002.41 11742.42
1991/04/30 12069.78 11770.60
1991/05/31 12462.75 12279.09
1991/06/30 10947.01 11716.71
1991/07/31 11699.26 12262.71
1991/08/31 12182.05 12553.34
1991/09/30 11250.16 12343.69
1991/10/31 11800.31 12509.10
1991/11/30 11081.74 12004.98
1991/12/31 12440.29 13378.35
1992/01/31 13911.12 13129.52
1992/02/29 14674.60 13300.20
1992/03/31 13518.15 13040.85
1992/04/30 13259.91 13424.25
1992/05/31 13282.37 13490.03
1992/06/30 12316.79 13289.02
1992/07/31 12967.99 13832.55
1992/08/31 13102.73 13548.98
1992/09/30 13574.29 13708.86
1992/10/31 14596.01 13756.84
1992/11/30 15550.36 14225.94
1992/12/31 15853.51 14400.92
1993/01/31 16392.44 14521.89
1993/02/28 16033.16 14719.39
1993/03/31 16594.54 15029.97
1993/04/30 16302.03 14666.24
1993/05/31 17937.87 15059.30
1993/06/30 18265.04 15102.97
1993/07/31 18784.00 15042.56
1993/08/31 20397.28 15612.67
1993/09/30 20735.73 15492.45
1993/10/31 20340.87 15813.15
1993/11/30 20182.92 15662.92
1993/12/31 20939.29 15852.44
1994/01/31 22385.66 16391.43
1994/02/28 23447.22 15947.22
1994/03/31 23195.10 15251.92
1994/04/30 23128.76 15447.15
1994/05/31 23062.41 15700.48
1994/06/30 21828.34 15315.82
1994/07/31 22279.51 15818.18
1994/08/31 24455.71 16466.72
1994/09/30 23752.42 16063.29
1994/10/31 24721.10 16424.71
1994/11/30 24402.63 15826.52
1994/12/31 24535.32 16061.23
1995/01/31 23832.04 16477.70
1995/02/28 26273.63 17119.83
1995/03/31 28980.61 17625.04
1995/04/30 32218.37 18144.10
1995/05/31 34567.07 18869.32
1995/06/30 39490.06 19307.65
1995/07/31 45394.99 19947.89
1995/08/31 45992.12 19997.96
1995/09/30 46814.83 20841.88
1995/10/31 45527.69 20767.47
1995/11/30 44386.51 21679.16
1995/12/31 41456.92 22096.70
1996/01/31 42858.14 22848.87
1996/02/29 45386.79 23060.68
1996/03/31 42729.30 23282.76
1996/04/30 47609.42 23625.95
1996/05/31 48865.69 24235.26
1996/06/30 44758.66 24327.60
1996/07/31 42600.45 23252.80
1996/08/31 44662.02 23743.20
1996/09/30 50685.68 25079.47
1996/10/31 51088.33 25771.16
1996/11/30 58754.80 27719.21
1996/12/31 58754.80 27170.09
1997/01/31 67935.23 28867.68
1997/02/28 61122.38 29094.00
1997/03/31 56870.39 27898.53
1997/04/30 62169.74 29564.07
1997/05/31 69000.80 31363.93
1997/06/30 68576.07 32769.03
1997/07/31 80486.19 35376.46
1997/08/31 83530.08 33394.67
1997/09/30 86627.06 35223.70
1997/10/31 73779.00 34047.23
1997/11/30 73248.09 35623.28
1997/12/31 66816.08 36234.93
1998/01/31 67900.41 36635.68
1998/02/28 75881.04 39277.85
1998/03/31 73712.39 41289.27
1998/04/30 77182.23 41704.64
1998/05/31 66859.46 40987.74
1998/06/30 68182.33 42652.66
1998/07/31 71044.95 42198.41
1998/08/31 56883.67 36097.36
1998/09/30 64408.88 38409.76
1998/10/31 77073.80 41534.01
1998/11/30 87613.43 44051.38
1998/12/31 100972.31 46589.63
1999/01/31 121834.72 48538.00
1999/02/28 102663.86 47029.44
1999/03/31 106827.66 48911.09
1999/04/30 109039.69 50805.42
1999/05/31 112878.20 49605.90
1999/06/30 134586.38 52359.03
1999/07/31 138706.81 50724.38
1999/08/31 148509.10 50473.29
1999/09/30 145472.99 49089.82
1999/10/31 161824.61 52196.23
1999/11/30 177308.77 53257.37
1999/12/31 208685.63 56394.23
2000/01/31 216833.01 53560.99
2000/02/29 285457.00 52547.08
IMATRL PRASUN SHR__CHT 20000229 20000314 100320 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Electronics Portfolio on February 28,
1990, and the current 3.00% sales charge was paid. As the chart shows,
by February 29, 2000, the value of the investment would have grown to
$285,456 - a 2,754.56% 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 $52,547 - a 425.47% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
Texas Instruments, Inc. 5.7
Analog Devices, Inc. 5.6
PMC-Sierra, Inc. 5.6
National Semiconductor Corp. 4.8
LAM Research Corp. 4.6
Intel Corp. 4.4
Micron Technology, Inc. 4.3
Linear Technology Corp. 3.7
Altera Corp. 3.5
Motorola, Inc. 3.4
45.6
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Electronics 69.5% Row: 1, Col: 6, Value: 69.5
Electronic Instruments 12.3% Row: 1, Col: 5, Value: 12.3
Computers &
Office Equipment 4.7% Row: 1, Col: 4, Value: 4.7
Communications Equipment 2.3% Row: 1, Col: 3, Value: 2.3
Computer Services &
Software 1.5% Row: 1, Col: 2, Value: 1.5
* All Others 9.7% Row: 1, Col: 1, Value: 9.699999999999999
</TABLE>
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
ELECTRONICS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Brian Hanson)
NOTE TO SHAREHOLDERS: Brian Hanson became Portfolio Manager of
Fidelity Select Electronics Portfolio on February 1, 2000.
Q. HOW DID THE FUND PERFORM, BRIAN?
A. The fund performed extremely well relative to its benchmarks. For
the 12 months ending February 29, 2000, the fund returned 178.06%. The
Goldman Sachs Technology Index - an index of 185 stocks designed to
measure the performance of companies in the technology sector -
returned 104.99% for the same period, while the Standard & Poor's 500
Index returned 11.73%.
Q. WHY WAS THE FUND'S PERFORMANCE SO STRONG COMPARED TO THE GOLDMAN
SACHS INDEX?
A. The fund was overweighted, compared to the index, in the
semiconductor and semiconductor capital equipment industries, both of
which tend to be somewhat cyclical. In late 1998, we recognized signs
that the semiconductor business appeared to be bottoming out, that the
low levels of spending were unsustainable and that industry demand was
starting to improve. At the start of 1999, the fund was
well-positioned to benefit from the very strong performance that these
segments produced - driven by the first full year of a cyclical
recovery in these industries.
Q. WERE THERE ANY COMPANIES THAT SPECIFICALLY CONTRIBUTED TO THE
FUND'S OUTPERFORMANCE?
A. Lam Research was an obvious standout. This company sells equipment
that enables semiconductor manufacturers to make chips faster and
cheaper. Like many equipment suppliers, Lam was hurt badly by the
industry downturn that began with the Asian monetary crisis in 1997,
and many investors had given up on the company. The fund held a
position in Lam and increased that position based on a determination
that the industry was beginning its recovery, and that Lam's
management would have the company in a position to benefit from the
upturn. In 1999, the Asian crisis subsided, the industry began to
recover and the management of Lam turned the company around with the
result being that it was a great stock to own. Texas Instruments and
Analog Devices also were positive contributors to the fund's
outperformance for the period. These companies make both analog
semiconductors and digital signal processors (DSPs), which are much in
demand for use in new cellular phones. Both companies were
well-positioned to deliver the chips that will enable the world to go
"digital." As the usage of digital cellular phones, DVDs and digital
cameras proliferated in 1999, the two firms began to see very strong
sales and earnings growth, which helped make these stocks great
performers for the year.
Q. WERE THERE ANY AREAS THAT DETRACTED FROM PERFORMANCE?
A. In general, the companies that were tied to the personal computer
industry did not fare as well as those tied to the communications
industry. While many personal computer-related companies were good
stocks during the period, it was hard for them to compete with some of
the communications stocks that saw their end markets grow by more than
50%. An example of this is the huge increase in cellular telephone
sales, which grew by approximately 75%, compared to about a 20% growth
rate for personal computer sales. As we saw this shift occur, we
became much more selective in our stock picking and chose only the
most attractive PC stocks, while focusing more on the communications
sector.
Q. HAVE YOU FOCUSED ON ANY OTHER PARTICULAR AREAS SINCE TAKING OVER
THE FUND?
A. I have positioned the fund to benefit from the trend of
communications becoming a bigger driver for the electronics industry.
I like companies that make products used in wireless communications
and broadband Internet access. These areas are seeing explosive growth
as they are in the early stages of adoption. Sales for cellular phones
are strong and, in fact, are already outselling personal computers.
Future generations of cellular phones also will have data capabilities
such as wireless Internet access, and these additional features will
be made possible by better semiconductors. As for broadband Internet
access, demand is rapidly gaining momentum as consumers call for
faster access to the Internet.
Q. BRIAN, WHAT IS YOUR OUTLOOK?
A. Assuming the global economic picture remains healthy, I think 2000
will be another good year for the electronics sector. With tech stocks
up so much already and valuations at all-time highs, the risk and
volatility will be high but the fund will continue to focus on owning
the best names, in the best sectors, as that is the key to
outperformance.
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 29, 2000, more than
$9.9 billion
MANAGER: Brian Hanson, since February 2000;
analyst, semiconductor equipment, 1998-2000;
health care industry, 1996-1998; joined
Fidelity in 1996
ELECTRONICS PORTFOLIO
INVESTMENTS FEBRUARY 29, 2000
Showing Percentage of Net Assets
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 92.8%
SHARES VALUE (NOTE 1)
CELLULAR - 0.2%
Nextel Communications, Inc. 50,000 $ 6,837,500
Class A (a)
VoiceStream Wireless Corp. (a) 100,000 13,306,250
20,143,750
COMMUNICATIONS EQUIPMENT - 2.3%
Jabil Circuit, Inc. (a) 2,785,600 193,425,100
Nokia AB sponsored ADR 200,000 39,662,500
233,087,600
COMPUTER SERVICES & SOFTWARE
- - 1.5%
Cadence Design Systems, Inc. 7,470,300 148,939,106
(a)
MatrixOne, Inc. 2,300 57,500
Onvia.com, Inc. 6,800 142,800
149,139,406
COMPUTERS & OFFICE EQUIPMENT
- - 4.7%
Adaptec, Inc. (a) 2,752,900 112,868,900
Dell Computer Corp. (a) 500,000 20,406,250
Emulex Corp. (a) 271,400 43,424,000
Gateway, Inc. (a) 600,000 41,250,000
Network Appliance, Inc. (a) 150,000 28,312,500
SCI Systems, Inc. (a) 5,435,000 218,758,750
465,020,400
CONSUMER ELECTRONICS - 0.7%
Gemstar International Group 960,000 72,840,000
Ltd. (a)
ELECTRONIC INSTRUMENTS - 12.3%
Agilent Technologies, Inc. 300,000 31,106,250
Cohu, Inc. 400,000 22,550,000
KLA-Tencor Corp. (a) 2,981,200 232,347,275
Kulicke & Soffa Industries, 371,000 29,494,500
Inc. (a)
LAM Research Corp. (a)(c) 2,892,927 451,658,228
Lernout & Hauspie Speech 600,000 63,562,500
Products NV (a)
Novellus Systems, Inc. (a) 3,628,200 215,197,613
St. Assembly Test Services 31,300 1,502,400
Ltd. ADR
Teradyne, Inc. (a) 1,976,700 171,972,900
1,219,391,666
ELECTRONICS - 69.5%
Altera Corp. (a) 4,346,700 346,649,325
Analog Devices, Inc. (a) 3,550,300 557,397,100
Applied Micro Circuits Corp. 365,000 100,397,813
(a)
ARM Holdings PLC sponsored 243,900 56,981,138
ADR (a)
Avnet, Inc. 221,000 14,779,375
AVX Corp. 1,958,200 124,345,700
Broadcom Corp. Class A (a) 500,000 98,687,500
SHARES VALUE (NOTE 1)
Brocade Communications 25,000 $ 7,228,125
Systems, Inc.
Celestica, Inc. (sub. vtg.) 711,200 33,852,649
(a)
Chartered Semiconduct 275,400 24,304,050
Manufacturing Ltd. ADR
Cree Research, Inc. (a) 507,600 95,365,350
Dallas Semiconductor Corp. 1,482,800 59,868,050
DII Group, Inc. (a)(c) 2,039,700 197,213,494
Epcos AG (a) 54,600 7,532,575
Etec Systems, Inc. (a) 630,300 74,237,522
Fairchild Semiconduct 200,000 7,550,000
International, Inc. Class A
Flextronics International 218,200 13,282,925
Ltd. (a)
GlobeSpan, Inc. 369,300 27,882,150
Integrated Device Technology, 487,500 17,976,563
Inc. (a)
Intel Corp. 3,883,000 438,779,000
Intersil Holding Corp. 25,500 1,514,063
KEMET Corp. (a) 719,900 44,228,856
Lattice Semiconductor Corp. 898,200 63,098,550
(a)
Linear Technology Corp. 3,516,720 369,035,805
LSI Logic Corp. (a) 5,188,000 332,356,250
Maxim Integrated Products, 3,921,000 261,971,813
Inc. (a)
Methode Electronics, Inc. 794,500 46,180,313
Class A
Microchip Technology, Inc. (a) 1,164,075 72,681,933
Micron Technology, Inc. (a) 4,382,900 429,798,131
Motorola, Inc. 1,990,200 339,329,100
National Semiconductor Corp. 6,324,200 475,105,525
(a)
PCD, Inc. (a) 50,000 250,000
Plexus Corp. (a) 509,700 28,782,122
PMC-Sierra, Inc. (a) 2,876,200 555,286,363
QLogic Corp. (a) 200,000 31,200,000
Rambus, Inc. (a) 360,000 108,585,000
RF Micro Devices, Inc. (a) 395,000 54,633,438
Samsung Electronics Co. Ltd. 199,420 45,134,189
Sanmina Corp. (a) 1,719,800 201,324,088
Solectron Corp. (a) 2,739,900 179,463,450
Texas Instruments, Inc. 3,429,100 570,945,144
Vitesse Semiconductor Corp. 2,079,400 215,867,713
(a)
Xilinx, Inc. (a) 2,451,800 195,531,050
6,926,613,300
INDUSTRIAL MACHINERY &
EQUIPMENT - 1.2%
ASM Lithography Holding NV (a) 143,100 18,334,688
PRI Automation, Inc. (a) 761,600 60,832,800
Varian Semiconductor 756,900 43,994,813
Equipment Associates, Inc.
(a)
123,162,301
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TELEPHONE SERVICES - 0.4%
McLeodUSA, Inc. Class A (a) 150,000 $ 13,200,000
Metromedia Fiber Network, 304,700 21,905,073
Inc. Class A (a)
35,105,073
TOTAL COMMON STOCKS 9,244,503,496
(Cost $4,118,987,067)
CASH EQUIVALENTS - 7.7%
SHARES
Central Cash Collateral Fund, 150,514,500 150,514,500
5.75% (b)
Taxable Central Cash Fund, 590,281,072 590,281,072
5.66% (b)
MATURITY AMOUNT
Investments in repurchase $ 20,823,314 20,820,000
agreements (U.S. Treasury
obligations), in a joint
trading account at 5.73%,
dated 2/29/00 due 3/1/00
TOTAL CASH EQUIVALENTS 761,615,572
(Cost $761,615,572)
TOTAL INVESTMENT PORTFOLIO - 10,006,119,068
100.5%
(Cost $4,880,602,639)
NET OTHER ASSETS - (0.5)% (45,235,239)
NET ASSETS - 100% $ 9,960,883,829
</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 $6,419,838,286 and $5,506,306,071, 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 $267,827 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $167,533,313. The fund
received cash collateral of $150,514,500 which was invested in cash
equivalents.
Transactions during the period with companies which are or were
affiliates are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
DII Group, Inc. $ 5,203,125 $ - $ - $ 197,213,494
LAM Research Corp. 11,140,676 - - 451,658,228
Rambus, Inc. 52,722,193 53,783,517 - -
SpeedFam-IPEC, Inc. - 9,979,852 - -
TOTALS $ 69,065,994 $ 63,763,369 $ - $ 648,871,722
</TABLE>
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $4,907,432,618. Net unrealized appreciation
aggregated $5,098,686,450, of which $5,148,925,291 related to
appreciated investment securities and $50,238,841 related to
depreciated investment securities.
The fund hereby designates approximately $375,456,000 as a capital
gain dividend for the purpose of the dividend paid deduction.
A total of 2% 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 2001 of amounts for use
in preparing 2000 income tax returns.
ELECTRONICS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 10,006,119,068
value (including repurchase
agreements of $20,820,000)
(cost $4,880,602,639) - See
accompanying schedule
Cash 843
Receivable for investments 145,947,841
sold
Receivable for fund shares 68,431,891
sold
Dividends receivable 204,751
Interest receivable 2,527,431
Redemption fees receivable 22,520
Other receivables 727,109
TOTAL ASSETS 10,223,981,454
LIABILITIES
Payable for investments $ 85,422,736
purchased
Payable for fund shares 20,836,995
redeemed
Accrued management fee 4,085,762
Other payables and accrued 2,237,632
expenses
Collateral on securities 150,514,500
loaned, at value
TOTAL LIABILITIES 263,097,625
NET ASSETS $ 9,960,883,829
Net Assets consist of:
Paid in capital $ 4,185,453,141
Accumulated undistributed 649,914,553
net realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 5,125,516,135
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 81,930,320 $ 9,960,883,829
shares outstanding
NET ASSET VALUE and $121.58
redemption price per share
($9,960,883,829 (divided by)
81,930,320 shares)
Maximum offering price per $125.34
share (100/97.00 of $121.58)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 3,206,419
Dividends
Interest 19,705,992
Security lending 1,225,978
TOTAL INCOME 24,138,389
EXPENSES
Management fee $ 27,111,529
Transfer agent fees 16,045,438
Accounting and security 1,711,230
lending fees
Non-interested trustees' 14,905
compensation
Custodian fees and expenses 114,332
Registration fees 897,432
Audit 123,652
Legal 14,078
Miscellaneous 54,859
Total expenses before 46,087,455
reductions
Expense reductions (693,280) 45,394,175
NET INVESTMENT INCOME (LOSS) (21,255,786)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 1,262,301,205
(including realized loss
of $13,172,535 on sales of
investments in affiliated
issuers)
Foreign currency transactions (186,682) 1,262,114,523
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 4,435,226,341
Assets and liabilities in 7,768 4,435,234,109
foreign currencies
NET GAIN (LOSS) 5,697,348,632
NET INCREASE (DECREASE) IN $ 5,676,092,846
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 29,173,213
charges paid to FDC
Sales charges - Retained $ 29,139,832
by FDC
Deferred sales charges $ 10,707
withheld by FDC
Exchange fees withheld by FSC $ 109,127
Expense reductions $ 665,255
Directed brokerage
arrangements
Custodian credits 2,146
Transfer agent credits 25,879
$ 693,280
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ (21,255,786) $ (14,090,154)
income (loss)
Net realized gain (loss) 1,262,114,523 220,496,758
Change in net unrealized 4,435,234,109 431,151,334
appreciation (depreciation)
NET INCREASE (DECREASE) IN 5,676,092,846 637,557,938
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (461,593,652) -
from net realized gains
Share transactions Net 3,828,731,759 1,488,308,447
proceeds from sales of shares
Reinvestment of distributions 446,827,109 -
Cost of shares redeemed (2,418,702,252) (1,912,074,698)
NET INCREASE (DECREASE) IN 1,856,856,616 (423,766,251)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 3,980,086 3,006,511
TOTAL INCREASE (DECREASE) 7,075,335,896 216,798,198
IN NET ASSETS
NET ASSETS
Beginning of period 2,885,547,933 2,668,749,735
End of period $ 9,960,883,829 $ 2,885,547,933
OTHER INFORMATION
Shares
Sold 50,589,405 36,527,830
Issued in reinvestment of 5,580,487 -
distributions
Redeemed (35,189,966) (51,847,162)
Net increase (decrease) 20,979,926 (15,319,332)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 E 1999 1998 1997 1996 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 47.34 $ 34.99 $ 37.95 $ 28.18 $ 19.80
period
Income from Investment
Operations
Net investment income (loss) C (.33) (.23) (.17) (.17) (.08)
Net realized and unrealized 81.13 12.53 7.32 9.80 13.51
gain (loss)
Total from investment 80.80 12.30 7.15 9.63 13.43
operations
Less Distributions
From net realized gain (6.62) - (7.60) - (5.25)
In excess of net realized gain - - (2.60) - -
Total distributions (6.62) - (10.20) - (5.25)
Redemption fees added to paid .06 .05 .09 .14 .20
in capital
Net asset value, end of period $ 121.58 $ 47.34 $ 34.99 $ 37.95 $ 28.18
TOTAL RETURN A, B 178.06% 35.30% 24.15% 34.67% 72.75%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 9,960,884 $ 2,885,548 $ 2,668,750 $ 1,744,017 $ 1,133,362
(000 omitted)
Ratio of expenses to average .99% 1.18% 1.18% 1.33% 1.25%
net assets
Ratio of expenses to average .98% D 1.15% D 1.12% D 1.29% D 1.22% D
net assets after expense
reductions
Ratio of net investment (.46)% (.62)% (.42)% (.54)% (.28)%
income (loss) to average net
assets
Portfolio turnover rate 125% 160% 435% 341% 366%
</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 PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Load adjusted returns include a 3.00% sales
charge and the effect of a $7.50 trading fee. If Fidelity had not
reimbursed certain fund expenses, the past 10 year total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT SOFTWARE AND COMPUTER 100.83% 487.34% 1,579.69%
SERVICES
SELECT SOFTWARE AND COMPUTER 94.74% 469.64% 1,529.22%
SERVICES (LOAD ADJ.)
S&P 500 11.73% 206.94% 425.47%
GS Technology 104.99% 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 185 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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT SOFTWARE AND COMPUTER 100.83% 42.49% 32.59%
SERVICES
SELECT SOFTWARE AND COMPUTER 94.74% 41.62% 32.19%
SERVICES (LOAD ADJ.)
S&P 500 11.73% 25.14% 18.05%
GS Technology 104.99% 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
1990/02/28 9700.00 10000.00
1990/03/31 10087.23 10265.00
1990/04/30 10054.96 10008.38
1990/05/31 11319.89 10984.19
1990/06/30 11584.50 10909.50
1990/07/31 10526.08 10874.59
1990/08/31 9054.62 9891.53
1990/09/30 8015.57 9409.81
1990/10/31 8176.91 9369.35
1990/11/30 9228.88 9974.61
1990/12/31 9887.16 10252.90
1991/01/31 11339.25 10699.92
1991/02/28 12165.34 11464.97
1991/03/31 12855.89 11742.42
1991/04/30 12759.08 11770.60
1991/05/31 12991.42 12279.09
1991/06/30 12039.24 11716.71
1991/07/31 12778.80 12262.71
1991/08/31 13817.04 12553.34
1991/09/30 13361.92 12343.69
1991/10/31 14030.37 12509.10
1991/11/30 12494.36 12004.98
1991/12/31 14419.91 13378.35
1992/01/31 16734.49 13129.52
1992/02/29 17237.34 13300.20
1992/03/31 16409.12 13040.85
1992/04/30 15995.01 13424.25
1992/05/31 16246.43 13490.03
1992/06/30 15366.45 13289.02
1992/07/31 16453.49 13832.55
1992/08/31 15225.94 13548.98
1992/09/30 16327.77 13708.86
1992/10/31 17644.05 13756.84
1992/11/30 19182.18 14225.94
1992/12/31 19544.52 14400.92
1993/01/31 20550.22 14521.89
1993/02/28 20424.51 14719.39
1993/03/31 20860.80 15029.97
1993/04/30 20509.73 14666.24
1993/05/31 22822.92 15059.30
1993/06/30 24000.39 15102.97
1993/07/31 23273.87 15042.56
1993/08/31 24843.83 15612.67
1993/09/30 25344.88 15492.45
1993/10/31 25286.43 15813.15
1993/11/30 24660.11 15662.92
1993/12/31 25941.61 15852.44
1994/01/31 26845.56 16391.43
1994/02/28 27203.38 15947.22
1994/03/31 24284.36 15251.92
1994/04/30 24410.00 15447.15
1994/05/31 21967.09 15700.48
1994/06/30 20039.48 15315.82
1994/07/31 21022.37 15818.18
1994/08/31 23303.05 16466.72
1994/09/30 24362.28 16063.29
1994/10/31 25860.47 16424.71
1994/11/30 25268.83 15826.52
1994/12/31 26041.78 16061.23
1995/01/31 25612.36 16477.70
1995/02/28 27740.37 17119.83
1995/03/31 29324.44 17625.04
1995/04/30 30240.53 18144.10
1995/05/31 31061.19 18869.32
1995/06/30 33809.47 19307.65
1995/07/31 35851.58 19947.89
1995/08/31 36099.69 19997.96
1995/09/30 37588.34 20841.88
1995/10/31 38036.84 20767.47
1995/11/30 39115.16 21679.16
1995/12/31 38089.81 22096.70
1996/01/31 36628.95 22848.87
1996/02/29 38884.69 23060.68
1996/03/31 37896.46 23282.76
1996/04/30 41711.63 23625.95
1996/05/31 43166.04 24235.26
1996/06/30 41012.18 24327.60
1996/07/31 37859.10 23252.80
1996/08/31 38647.37 23743.20
1996/09/30 43698.95 25079.47
1996/10/31 43854.38 25771.16
1996/11/30 47329.43 27719.21
1996/12/31 46380.06 27170.09
1997/01/31 50102.64 28867.68
1997/02/28 45162.61 29094.00
1997/03/31 42844.78 27898.53
1997/04/30 45357.41 29564.07
1997/05/31 49197.85 31363.93
1997/06/30 49222.95 32769.03
1997/07/31 55171.88 35376.46
1997/08/31 54908.32 33394.67
1997/09/30 56627.73 35223.70
1997/10/31 54042.33 34047.23
1997/11/30 55234.63 35623.28
1997/12/31 53343.56 36234.93
1998/01/31 54809.19 36635.68
1998/02/28 61197.15 39277.85
1998/03/31 66299.21 41289.27
1998/04/30 65382.15 41704.64
1998/05/31 60273.74 40987.74
1998/06/30 67617.09 42652.66
1998/07/31 63646.96 42198.41
1998/08/31 52014.21 36097.36
1998/09/30 63466.50 38409.76
1998/10/31 61314.86 41534.01
1998/11/30 67061.82 44051.38
1998/12/31 77759.00 46589.63
1999/01/31 87208.87 48538.00
1999/02/28 81126.85 47029.44
1999/03/31 84849.96 48911.09
1999/04/30 81630.16 50805.42
1999/05/31 81585.85 49605.90
1999/06/30 92014.89 52359.03
1999/07/31 86283.35 50724.38
1999/08/31 90079.76 50473.29
1999/09/30 95589.72 49089.82
1999/10/31 102798.46 52196.23
1999/11/30 117732.97 53257.37
1999/12/31 150169.88 56394.23
2000/01/31 136309.48 53560.99
2000/02/29 162922.00 52547.08
IMATRL PRASUN SHR__CHT 20000229 20000320 102934 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, 1990, and the current 3.00% sales charge was paid. As
the chart shows, by February 29, 2000, the value of the investment
would have grown to $162,922 - a 1,529.22% 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 $52,547 - a 425.47%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
Oracle Corp. 8.9
Microsoft Corp. 7.7
Siebel Systems, Inc. 7.1
i2 Technologies, Inc. 5.4
Computer Associates 5.1
International, Inc.
VERITAS Software Corp. 3.7
Intuit, Inc. 3.4
America Online, Inc. 2.8
Yahoo!, Inc. 2.8
Automatic Data Processing, Inc. 2.7
49.6
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Computer Services & Software 86.5% Row: 1, Col: 6, Value: 86.5
Computers & Office Equipment 3.5% Row: 1, Col: 5, Value: 3.5
Communications Equipment 3.2% Row: 1, Col: 4, Value: 3.2
Services 0.6% Row: 1, Col: 3, Value: 0.6
Electronics 0.6% Row: 1, Col: 2, Value: 0.6
* All Others 5.6% Row: 1, Col: 1, Value: 5.6
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Telis Bertsekas)
NOTE TO SHAREHOLDERS: Telis Bertsekas became Portfolio Manager of
Fidelity Select Software and Computer Services Portfolio on March 15,
2000, after the period covered by this report.
Q. HOW DID THE FUND PERFORM, TELIS?
A. For the 12-month period ending February 29, 2000, the fund returned
100.83%. In comparison, the Goldman Sachs Technology Index - an index
of 185 stocks designed to measure the performance of companies in the
technology sector - returned 104.99% during the same period. The fund
also compares its performance to the Standard & Poor's 500 Index,
which returned 11.73% for the 12-month period.
Q. WHY DID THE FUND SLIGHTLY UNDERPERFORM THE GOLDMAN
SACHS INDEX?
A. The fund invests in a narrower range of stocks than the Goldman
Sachs index and has a greater proportion of service stocks, which did
not do as well as other stocks in this sector. The fund also is
slightly less cyclical in nature than the index and will tend to have
a more moderate return during prolonged periods of positive and
negative market environments.
Q. WHAT WAS THE FUND'S STRATEGY DURING THE PERIOD?
A. First, the fund focused on companies in the sector's
fastest-growing areas - supply chain management, customer-relationship
management and Web infrastructure applications. Second, it focused on
companies leveraged to the growth of the Internet in general and
business-to-business e-commerce in particular. The fund's top holdings
as of the end of the period generally reflected these strategies.
Q. WHAT STOCKS STOOD OUT IN THIS ENVIRONMENT?
A. Siebel Systems was one of the fund's most successful performers.
This company maintained one of the best growth rates in the software
industry with a strong offering in customer-relationship management.
It also was bolstered by its distribution agreement with IBM and
weakening competition. Oracle did well as investors began to view the
company as having a strategic role in Internet infrastructure and
applications. Oracle's database product is an important component of
Internet infrastructure, since every Internet site needs a database.
The company also announced a number of business-to-business trading
exchanges, first with Ford, which proved to be a catalyst for Oracle's
stock price improvement. Another holding, i2 Technologies, continued
to demonstrate good growth and dominated the supply-chain management
software area. The company's move to business-to-business e-commerce
drove its stock to higher levels during the period. The announcement
of the establishment of i2's new trading exchanges helped the company
as investors believed that its trading exchange technology had unique
advantages over the competition.
Q. WHAT ABOUT DISAPPOINTMENTS?
A. Software company Network Associates missed its earnings targets by
a significant margin in 1999 due to Y2K budget demands that shifted
spending away from some of its products. In addition, the company's
new security product that launched last year didn't do as well as
expected. This stock is no longer held by the fund. At Home Corp. was
another disappointment. Following its acquisition of Excite, investors
began to worry about the company's long-term prospects - its strategic
agreement with AT&T to sell its products to AT&T customers could
expire within two years. Galileo, which provides reservations systems
for travel agents, was hurt by travel agencies' declining growth rates
and shrinking market share, as more travelers booked reservations via
the Internet.
Q. WHAT'S YOUR OUTLOOK, TELIS?
A. My outlook is positive for overall company fundamentals. The year
2000 should be another strong one for software spending, particularly
in the areas most leveraged to the growth in Internet
business-to-business e-commerce. The market has rewarded the growth
potential in this segment with record high valuations, and this
clearly adds some risk to investing in the sector while amplifying the
need for careful stock selection. While I expect there will be
significant opportunities for both large, well-established companies
and rapidly emerging smaller companies, my style tends to favor the
fastest-growing and most defensible business models, rather than
looking for value in second- or third-tier players. While the fund is
not as directly exposed to an economic downturn as other industries,
the impact of rising interest rates and inflation on U.S. economic
growth may affect the fundamental performance of this sector down the
road. The software and computer services sector also may suffer from
any large-scale slowing in corporate spending on technology.
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 29, 2000, more than
$1.4 billion
MANAGER: Telis Bertsekas, since March 2000;
analyst, beverage and tobacco industries,
since 1997; joined Fidelity in 1997
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
INVESTMENTS FEBRUARY 29, 2000
Showing Percentage of Net Assets
COMMON STOCKS - 95.2%
SHARES VALUE (NOTE 1)
BROADCASTING - 0.6%
MediaOne Group, Inc. (a) 100,000 $ 7,850,000
COMMUNICATIONS EQUIPMENT - 3.2%
3Com Corp. (a) 344,827 33,793,046
Cisco Systems, Inc. (a) 60,000 7,931,250
Nokia AB sponsored ADR 25,000 4,957,813
46,682,109
COMPUTER SERVICES & SOFTWARE
- - 86.5%
Adobe Systems, Inc. 247,253 25,219,806
Affiliated Computer Services, 150,000 4,725,000
Inc. Class A (a)
America Online, Inc. (a) 696,300 41,081,700
Art Technology Group, Inc. 29,000 4,190,500
Aspect Development, Inc. (a) 181,353 26,998,928
At Home Corp. Series A (a) 256,676 8,807,195
Automatic Data Processing, 892,700 38,888,244
Inc.
Axent Technolgies, Inc. (a) 200,000 5,425,000
BEA Systems, Inc. (a) 139,582 17,665,847
BMC Software, Inc. (a) 802,525 36,916,150
BroadVision, Inc. (a) 45,000 11,365,313
Calico Commerce, Inc. 40 1,723
Cambridge Technology 30,000 450,000
Partners, Inc. (a)
Ceridian Corp. (a) 179,400 3,554,363
Check Point Software 80,000 16,315,000
Technologies Ltd. (a)
Citrix Systems, Inc. (a) 257,546 27,155,006
Clarify, Inc. (a) 110,000 15,874,375
CMGI, Inc. (a) 158,000 20,470,875
CNET, Inc. (a) 93,000 6,219,375
Computer Associates 1,148,380 73,855,189
International, Inc.
Computer Sciences Corp. (a) 279,732 22,046,378
Compuware Corp. (a) 463,193 10,248,145
DST Systems, Inc. (a) 100,000 5,612,500
eBay, Inc. (a) 30,000 4,301,250
Electronic Data Systems Corp. 329,100 21,309,225
Entrust Technologies, Inc. (a) 62,000 5,471,500
Equifax, Inc. 175,000 3,707,813
Exodus Communications, Inc. 180,000 25,627,500
(a)
First Data Corp. 555,000 24,975,000
Fiserv, Inc. (a) 67,500 1,839,375
Galileo International, Inc. 120,000 2,040,000
Go.com (a) 28,750 634,297
Great Plains Software, Inc. 7,500 521,719
(a)
i2 Technologies, Inc. (a) 479,598 78,414,273
IMS Health, Inc. 250,000 5,031,250
Industri-Matematik 378,400 3,784,000
International Corp. (a)
Informatica Corp. 20,000 3,430,000
Informix Corp. (a) 150,000 2,400,000
Intertrust Technologies Corp. 1,600 135,900
Interwoven, Inc. 6,800 1,016,600
Intuit, Inc. (a) 937,571 49,222,478
SHARES VALUE (NOTE 1)
ISS Group, Inc. (a) 119,259 $ 12,522,195
J.D. Edwards & Co. (a) 100,000 4,062,500
Lycos, Inc. (a) 40,000 2,385,000
MatrixOne, Inc. 700 17,500
Microsoft Corp. (a) 1,254,000 112,076,250
NetIQ Corp. 20,000 1,342,500
Network Solutions, Inc. Class 14,000 4,514,125
A (a)
New Era of Networks, Inc. (a) 80,000 7,330,000
Novell, Inc. (a) 246,955 8,164,950
Onvia.com, Inc. 1,000 21,000
Oracle Corp. (a) 1,738,868 129,110,945
Parametric Technology Corp. 186,915 5,665,861
(a)
Pervasive Software, Inc. (a) 100,000 1,068,750
Policy Management Systems 30,800 273,350
Corp. (a)
Rational Software Corp. (a) 100,000 7,112,500
Razorfish, Inc. 87,500 2,931,250
RealNetworks, Inc. (a) 120,000 8,437,500
Sabre Holdings Corp. Class A 90,000 3,611,250
SalesLogix Corp. 58,700 1,636,263
Siebel Systems, Inc. (a) 742,540 102,981,016
SunGard Data Systems, Inc. (a) 90,200 2,706,000
Technology Solutions, Inc. 100,000 725,000
TSI International Software 125,106 10,610,553
Ltd. (a)
Tumbleweed Communications 113,000 8,588,000
Corp.
Unisys Corp. (a) 173,900 5,206,131
VeriSign, Inc. (a) 68,364 17,296,092
VERITAS Software Corp. (a) 267,000 52,832,625
Vignette Corp. 124,400 28,674,200
WatchGuard Technologies, Inc. 200,400 11,823,600
Whittman-Hart, Inc. (a) 40,000 1,815,000
Yahoo!, Inc. (a) 250,008 39,923,153
1,252,413,851
COMPUTERS & OFFICE EQUIPMENT
- - 3.5%
Compaq Computer Corp. 10,000 248,750
Gateway, Inc. (a) 55,600 3,822,500
International Business 100,000 10,200,000
Machines Corp.
RSA Security, Inc. (a) 10,000 669,375
Sun Microsystems, Inc. (a) 320,000 30,480,000
Tech Data Corp. (a) 238,700 5,176,806
50,597,431
ELECTRONICS - 0.6%
Inktomi Corp. (a) 62,000 8,501,750
Intel Corp. 2,000 226,000
8,727,750
SECURITIES INDUSTRY - 0.2%
E*Trade Group, Inc. (a) 110,000 2,708,750
SERVICES - 0.6%
Computer Horizons Corp. (a) 61,300 1,363,925
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SERVICES - CONTINUED
Diamond Technology Partners, 60,000 $ 4,102,500
Inc. Class A (a)
eLoyalty Corp. 100,000 3,056,250
Gartner Group, Inc. Class B 32,550 384,497
(a)
8,907,172
TOTAL COMMON STOCKS 1,377,887,063
(Cost $603,551,602)
CASH EQUIVALENTS - 7.0%
Central Cash Collateral Fund, 33,551,700 33,551,700
5.75% (b)
Taxable Central Cash Fund, 68,748,650 68,748,650
5.66% (b)
TOTAL CASH EQUIVALENTS 102,300,350
(Cost $102,300,350)
TOTAL INVESTMENT PORTFOLIO - 1,480,187,413
102.2%
(Cost $705,851,952)
NET OTHER ASSETS - (2.2)% (32,501,532)
NET ASSETS - 100% $ 1,447,685,881
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 $513,797,653 and $489,075,914, 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 $6,868 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $33,974,925. The fund
received cash collateral of $33,551,700 which was invested in cash
equivalents.
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $706,311,370. Net unrealized appreciation
aggregated $773,876,043, of which $810,091,861 related to appreciated
investment securities and $36,215,818 related to depreciated
investment securities.
The fund hereby designates approximately $90,415,000 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 2001 of amounts for use
in preparing 2000 income tax returns.
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 1,480,187,413
value (cost $705,851,952) -
See accompanying schedule
Receivable for investments 427,340
sold
Receivable for fund shares 7,199,538
sold
Dividends receivable 82,613
Interest receivable 209,890
Redemption fees receivable 2,514
Other receivables 464,022
TOTAL ASSETS 1,488,573,330
LIABILITIES
Payable for investments $ 164,700
purchased
Payable for fund shares 6,032,650
redeemed
Accrued management fee 656,703
Other payables and accrued 481,696
expenses
Collateral on securities 33,551,700
loaned, at value
TOTAL LIABILITIES 40,887,449
NET ASSETS $ 1,447,685,881
Net Assets consist of:
Paid in capital $ 582,217,257
Accumulated undistributed net 91,133,163
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 774,335,461
(depreciation) on investments
NET ASSETS, for 13,776,111 $ 1,447,685,881
shares outstanding
NET ASSET VALUE and $105.09
redemption price per share
($1,447,685,881 (divided by)
13,776,111 shares)
Maximum offering price per $108.34
share (100/97.00 of $105.09)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 680,127
Dividends
Special dividend from Sabre 468,273
Holdings Corp. Class A
Interest 3,622,188
Security lending 507,138
TOTAL INCOME 5,277,726
EXPENSES
Management fee $ 5,131,852
Transfer agent fees 3,862,948
Accounting and security 568,005
lending fees
Non-interested trustees' 4,012
compensation
Custodian fees and expenses 27,113
Registration fees 172,540
Audit 32,209
Legal 8,072
Miscellaneous 937
Total expenses before 9,807,688
reductions
Expense reductions (36,752) 9,770,936
NET INVESTMENT INCOME (LOSS) (4,493,210)
REALIZED AND UNREALIZED GAIN 149,967,319
(LOSS)
Net realized gain (loss) on
investment securities
Change in net unrealized 551,761,848
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 701,729,167
NET INCREASE (DECREASE) IN $ 697,235,957
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 3,756,113
charges paid to FDC
Sales charges - Retained by $ 3,753,515
FDC
Deferred sales charges $ 6,139
withheld by FDC
Exchange fees withheld by FSC $ 35,313
Expense reductions $ 32,304
Directed brokerage
arrangements
Custodian credits 2,504
Transfer agent credits 1,944
$ 36,752
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ (4,493,210) $ (4,709,221)
income (loss)
Net realized gain (loss) 149,967,319 46,870,113
Change in net unrealized 551,761,848 110,443,885
appreciation (depreciation)
NET INCREASE (DECREASE) IN 697,235,957 152,604,777
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (78,865,404) (15,509,477)
from net realized gain
Share transactions Net 637,476,790 512,689,909
proceeds from sales of shares
Reinvestment of distributions 76,024,721 15,022,690
Cost of shares redeemed (576,132,935) (478,286,707)
NET INCREASE (DECREASE) IN 137,368,576 49,425,892
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 1,094,752 963,911
TOTAL INCREASE (DECREASE) 756,833,881 187,485,103
IN NET ASSETS
NET ASSETS
Beginning of period 690,852,000 503,366,897
End of period $ 1,447,685,881 $ 690,852,000
OTHER INFORMATION
Shares
Sold 8,519,859 10,599,999
Issued in reinvestment of 1,062,841 314,660
distributions
Redeemed (7,907,224) (10,186,951)
Net increase (decrease) 1,675,476 727,708
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 E 1999 1998 1997 1996 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 57.09 $ 44.26 $ 38.58 $ 36.20 $ 29.07
period
Income from Investment
Operations
Net investment income (loss) C (.36) F (.39) (.33) (.25) (.19)
Net realized and unrealized 54.60 14.46 12.57 5.87 11.85
gain (loss)
Total from investment 54.24 14.07 12.24 5.62 11.66
operations
Less distributions from net (6.33) (1.32) (6.61) (3.31) (4.60)
realized gain
Redemption fees added to paid .09 .08 .05 .07 .07
in capital
Net asset value, end of period $ 105.09 $ 57.09 $ 44.26 $ 38.58 $ 36.20
TOTAL RETURN A, B 100.83% 32.57% 35.50% 16.14% 40.17%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,447,686 $ 690,852 $ 503,367 $ 389,699 $ 337,633
(000 omitted)
Ratio of expenses to average 1.11% 1.28% 1.44% 1.54% 1.48%
net assets
Ratio of expenses to average 1.11% 1.27% D 1.42% D 1.51% D 1.47% D
net assets after expense
reductions
Ratio of net investment (.51)% (.82)% (.81)% (.66)% (.54)%
income (loss) to average net
assets
Portfolio turnover rate 59% 72% 145% 279% 183%
</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
F INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND
FROM SABRE HOLDINGS CORP. CLASS A WHICH AMOUNTED TO
$.01 PER SHARE.
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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT TECHNOLOGY 184.11% 837.89% 2,416.89%
SELECT TECHNOLOGY (LOAD ADJ.) 175.52% 809.68% 2,341.31%
S&P 500 11.73% 206.94% 425.47%
GS Technology 104.99% 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 185 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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT TECHNOLOGY 184.11% 56.47% 38.07%
SELECT TECHNOLOGY (LOAD ADJ.) 175.52% 55.52% 37.65%
S&P 500 11.73% 25.14% 18.05%
GS Technology 104.99% 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
1990/02/28 9700.00 10000.00
1990/03/31 10153.86 10265.00
1990/04/30 9695.17 10008.38
1990/05/31 10945.69 10984.19
1990/06/30 11042.26 10909.50
1990/07/31 10453.21 10874.59
1990/08/31 9028.87 9891.53
1990/09/30 8261.17 9409.81
1990/10/31 8497.76 9369.35
1990/11/30 9772.42 9974.61
1990/12/31 10361.47 10252.90
1991/01/31 12109.31 10699.92
1991/02/28 12722.50 11464.97
1991/03/31 13741.26 11742.42
1991/04/30 13065.31 11770.60
1991/05/31 13789.55 12279.09
1991/06/30 12451.80 11716.71
1991/07/31 13830.48 12262.71
1991/08/31 14510.11 12553.34
1991/09/30 14582.93 12343.69
1991/10/31 14976.14 12509.10
1991/11/30 14485.84 12004.98
1991/12/31 16471.78 13378.35
1992/01/31 17098.21 13129.52
1992/02/29 17365.29 13300.20
1992/03/31 15986.17 13040.85
1992/04/30 15753.08 13424.25
1992/05/31 15908.47 13490.03
1992/06/30 14771.16 13289.02
1992/07/31 15523.76 13832.55
1992/08/31 14728.76 13548.98
1992/09/30 15449.56 13708.86
1992/10/31 16361.17 13756.84
1992/11/30 17686.17 14225.94
1992/12/31 17908.77 14400.92
1993/01/31 18454.68 14521.89
1993/02/28 18348.68 14719.39
1993/03/31 18587.18 15029.97
1993/04/30 18533.88 14666.24
1993/05/31 20403.68 15059.30
1993/06/30 21400.13 15102.97
1993/07/31 20831.57 15042.56
1993/08/31 21945.24 15612.67
1993/09/30 22285.21 15492.45
1993/10/31 21845.60 15813.15
1993/11/30 21634.59 15662.92
1993/12/31 23039.65 15852.44
1994/01/31 24199.67 16391.43
1994/02/28 24883.78 15947.22
1994/03/31 24045.00 15251.92
1994/04/30 23560.71 15447.15
1994/05/31 23597.85 15700.48
1994/06/30 21598.35 15315.82
1994/07/31 22434.05 15818.18
1994/08/31 24798.79 16466.72
1994/09/30 24674.98 16063.29
1994/10/31 25597.35 16424.71
1994/11/30 25244.50 15826.52
1994/12/31 25603.54 16061.23
1995/01/31 24606.89 16477.70
1995/02/28 26030.68 17119.83
1995/03/31 27615.43 17625.04
1995/04/30 29696.83 18144.10
1995/05/31 30845.65 18869.32
1995/06/30 33711.30 19307.65
1995/07/31 37119.44 19947.89
1995/08/31 38268.26 19997.96
1995/09/30 40029.77 20841.88
1995/10/31 39429.84 20767.47
1995/11/30 39225.60 21679.16
1995/12/31 36819.65 22096.70
1996/01/31 37192.80 22848.87
1996/02/29 39230.76 23060.68
1996/03/31 36195.34 23282.76
1996/04/30 39312.38 23625.95
1996/05/31 40378.60 24235.26
1996/06/30 37506.33 24327.60
1996/07/31 33502.56 23252.80
1996/08/31 34800.88 23743.20
1996/09/30 39261.61 25079.47
1996/10/31 38978.73 25771.16
1996/11/30 43787.61 27719.21
1996/12/31 42643.85 27170.09
1997/01/31 47690.96 28867.68
1997/02/28 44190.91 29094.00
1997/03/31 41265.28 27898.53
1997/04/30 43670.61 29564.07
1997/05/31 48312.48 31363.93
1997/06/30 49202.10 32769.03
1997/07/31 54839.29 35376.46
1997/08/31 56371.90 33394.67
1997/09/30 58644.39 35223.70
1997/10/31 50320.73 34047.23
1997/11/30 49439.92 35623.28
1997/12/31 47048.31 36234.93
1998/01/31 49604.38 36635.68
1998/02/28 55204.87 39277.85
1998/03/31 55402.29 41289.27
1998/04/30 57667.42 41704.64
1998/05/31 53334.58 40987.74
1998/06/30 57771.33 42652.66
1998/07/31 57927.19 42198.41
1998/08/31 47796.42 36097.36
1998/09/30 56140.02 38409.76
1998/10/31 60628.72 41534.01
1998/11/30 70188.01 44051.38
1998/12/31 81939.70 46589.63
1999/01/31 96133.16 48538.00
1999/02/28 85929.66 47029.44
1999/03/31 97203.38 48911.09
1999/04/30 99687.25 50805.42
1999/05/31 97333.97 49605.90
1999/06/30 111648.80 52359.03
1999/07/31 109639.91 50724.38
1999/08/31 117239.28 50473.29
1999/09/30 117147.44 49089.82
1999/10/31 131244.17 52196.23
1999/11/30 147051.32 53257.37
1999/12/31 189895.27 56394.23
2000/01/31 185733.25 53560.99
2000/02/29 244131.00 52547.08
IMATRL PRASUN SHR__CHT 20000229 20000309 125343 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Technology Portfolio on February 28, 1990,
and the current 3.00% sales charge was paid. As the chart shows, by
February 29, 2000, the value of the investment would have grown to
$244,131 - a 2,341.31% increase on the initial investment - and
includes the effect of a $7.50 trading fee. For comparison, look at
how the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $52,547 - a 425.47% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
Juniper Networks, Inc. 9.9
Cisco Systems, Inc. 5.2
Vignette Corp. 4.4
Motorola, Inc. 3.7
Broadcom Corp. Class A 3.1
Redback Networks, Inc. 3.1
Microsoft Corp. 2.9
DoubleClick, Inc. 2.8
Cree Research, Inc. 2.7
Emulex Corp. 2.0
39.8
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Computer Services & Software 27.9% Row: 1, Col: 6, Value: 27.9
Electronics 23.9% Row: 1, Col: 5, Value: 23.9
Computers &
Office Equipment 18.0% Row: 1, Col: 4, Value: 18.0
Communications Equipment 16.0% Row: 1, Col: 3, Value: 16.0
Advertising 3.1% Row: 1, Col: 2, Value: 3.1
* All Others 11.1% Row: 1, Col: 1, Value: 11.1
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
TECHNOLOGY PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Larry Rakers)
NOTE TO SHAREHOLDERS: Larry Rakers became Portfolio Manager of
Fidelity Select Technology Portfolio on February 7, 2000.
Q. HOW DID THE FUND PERFORM, LARRY?
A. It fared quite well. For the 12-month period that ended February
29, 2000, the fund posted a total return of 184.11%. That topped the
Goldman Sachs Technology Index - an index of 185 stocks designed to
measure the performance of companies in the technology sector - and
the Standard & Poor's 500 Index, which returned 104.99% and 11.73%,
respectively.
Q. WHAT ALLOWED THE FUND TO BEAT THE GOLDMAN SACHS INDEX BY SUCH A
WIDE MARGIN DURING THE PAST 12 MONTHS?
A. Our strategy to remain underweighted in many lagging computer
hardware manufacturers relative to the index worked out nicely for the
fund. Not holding IBM and having considerably less Dell and Compaq
than the index really helped. Many of the major players in this space
were hurt by declining sales attributed to component shortages and
Y2K-related shortfalls. Another key was the fund's out-of-benchmark
positioning in leading communications equipment and Internet
infrastructure names such as Nokia, Juniper and Redback Networks, as
was its overweighting in Broadcom. Some good picks within Internet
services, most notably DoubleClick, along with our exposure to
communications semiconductor providers QLogic and Emulex further
bolstered relative performance.
Q. HAVE YOU MADE ANY NOTABLE CHANGES SINCE TAKING OVER THE FUND?
A. No, I really haven't made many significant changes to the
prevailing themes I just outlined. The basic premise behind our
current positioning is the same. It remains simply a function of where
we perceive the highest growth rates to be in the technology group,
which hasn't changed much in recent months. On the margin, though, I
did step up our exposure to optical networking - sending data or voice
traffic as light signals over fiber-optic cables - an area I feel has
some of the best long-term growth prospects in the sector.
Q. TECHNOLOGY TROUNCED THE BROADER MARKET OVER THE PAST 12 MONTHS.
WHAT HELPED FUEL THIS DISPARITY?
A. In short, it was relative growth rates. Investors rallied around
the group's superior earnings growth potential relative to all other
areas of the market, respectful of the power of the Internet to
re-shape the face of the domestic economy and permanently alter the
way business is transacted. The market's confidence in the sector was
so strong that even markedly higher interest rates - typically a
nemesis of growth stocks - couldn't tame the bullishness.
Q. WHAT OTHER HOLDINGS PROVED PARTICULARLY BENEFICIAL TO PERFORMANCE?
A. The market rewarded JDS Uniphase, a top manufacturer of optical
network components, for its leadership position in the race for higher
bandwidth - a measure of transmission speed and capacity to deliver
data, voice and video. Exodus rose sharply on strong demand for its
Web hosting services from companies looking to bring their businesses
to the Internet. Having out-of-benchmark exposure to software
companies that provide Internet infrastructure, such as Vignette and
BroadVision, as well as Cree - a manufacturer of silicon carbide-based
semiconductor devices used to make LEDs - also gave us a nice lift.
Q. WHAT WERE SOME OF THE STOCKS THAT HURT PERFORMANCE?
A. We didn't have much luck with software utility provider BMC, which
was felled by slowing sales related to Y2K and a salesforce
restructuring. Our stake in Electronics for Imaging - a provider of
printer-related products - was equally inauspicious as its stock
recoiled in response to soft earnings posted by Xerox, its largest
customer. The fund's underexposure to a handful of the period's
biggest winners, namely Cisco, Qualcomm, Sun Microsystems, Oracle and
Texas Instruments, also dampened relative performance.
Q. WHAT'S YOUR OUTLOOK?
A. I expect much of the same in terms of strategy in the coming
months. That is, I'll likely maintain the fund's overweighting in
communications equipment and Internet infrastructure at the expense of
computer systems and hardware. I'll continue to be mindful of
valuations and relative growth rates to help me further hone my
industry positioning. With regard to security selection, I will rely
heavily on my team of 20 analysts to support me in uncovering the best
stocks in a rapidly changing sector.
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 29, 2000, more than
$7.9 billion
MANAGER: Larry Rakers, since February 2000;
manager, Fidelity Select Computers Portfolio and
Fidelity Advisor Technology Fund, since
January 2000; Fidelity Advisor Natural Resources
Fund, 1997-1999; several Fidelity Select
Portfolios, 1995-1997; joined Fidelity in 1993
TECHNOLOGY PORTFOLIO
INVESTMENTS FEBRUARY 29, 2000
Showing Percentage of Net Assets
COMMON STOCKS - 92.8%
SHARES VALUE (NOTE 1)
ADVERTISING - 3.1%
Avenue A, Inc. 3,800 $ 273,600
DoubleClick, Inc. (a) 2,469,500 219,322,469
Internet Capital Group, Inc. 177,840 18,806,580
Lifeminders.com, Inc. 183,300 9,737,813
248,140,462
BROADCASTING - 0.1%
American Tower Corp. Class A 200,000 9,850,000
(a)
CELLULAR - 0.9%
Leap Wireless International, 184,400 16,169,575
Inc. (a)
QUALCOMM, Inc. (a) 374,100 53,285,869
69,455,444
CHEMICALS & PLASTICS - 0.1%
Peak International Ltd. (a) 701,000 8,368,188
(c)
COMMUNICATIONS EQUIPMENT -
16.0%
Ciena Corp. (a) 80,000 12,785,000
Cisco Systems, Inc. (a) 3,099,450 409,708,547
Comverse Technology, Inc. (a) 792,300 155,984,063
Ditech Communications Corp. 848,000 92,644,000
Efficient Networks, Inc. 76,000 12,255,000
Jabil Circuit, Inc. (a) 260,000 18,053,750
Lucent Technologies, Inc. 2,627,205 156,318,698
Nokia AB sponsored ADR 600,000 118,987,500
Nortel Networks Corp. 650,000 71,968,129
Sycamore Networks, Inc. 704,200 104,221,600
Telefonaktiebolaget LM 1,119,500 107,472,000
Ericsson sponsored ADR
1,260,398,287
COMPUTER SERVICES & SOFTWARE
- - 27.9%
Adobe Systems, Inc. 81,400 8,302,800
Amdocs Ltd. (a) 100,000 7,418,750
America Online, Inc. (a) 600,000 35,400,000
Ariba, Inc. 102,200 27,031,900
Art Technology Group, Inc. 150,000 21,675,000
Automatic Data Processing, 100,400 4,373,675
Inc.
BEA Systems, Inc. (a) 225,000 28,476,563
BMC Software, Inc. (a) 500,000 23,000,000
BroadVision, Inc. (a) 283,300 71,550,956
Cadence Design Systems, Inc. 725,000 14,454,688
(a)
Ceridian Corp. (a) 200,000 3,962,500
Citrix Systems, Inc. (a) 597,200 62,967,275
CMGI, Inc. (a) 700,000 90,693,750
Commerce One, Inc. 125,000 26,109,375
Computer Associates 550,000 35,371,875
International, Inc.
Concentric Network Corp. (a) 125,000 6,703,125
Critical Path, Inc. 290,000 24,976,250
SHARES VALUE (NOTE 1)
Digex, Inc. Class A 112,700 $ 18,257,400
DigitalThink, Inc. 5,900 240,425
DSET Corp. (a) 500,000 12,500,000
DST Systems, Inc. (a) 200,000 11,225,000
Electronics for Imaging, Inc. 413,900 24,575,313
(a)
Engage Technologies, Inc. 120,800 17,516,000
Entrust Technologies, Inc. (a) 65,000 5,736,250
Exodus Communications, Inc. 900,880 128,262,790
(a)
Hotel Reservations Network, 1,600 41,600
Inc.
Intuit, Inc. (a) 500,000 26,250,000
Kana Communications, Inc. 394,200 56,173,500
Keynote Systems, Inc. 60,000 9,825,000
Liberate Technologies 129,600 13,203,000
MatrixOne, Inc. 3,800 95,000
Metasolv Software, Inc. 502,400 44,274,000
Micromuse, Inc. (a) 200,000 28,362,500
Microsoft Corp. (a) 2,532,080 226,304,650
Net.Genesis Corp. 2,300 130,669
New Era of Networks, Inc. (a) 200,000 18,325,000
Niku Corp. 7,200 496,800
Novell, Inc. (a) 475,000 15,704,688
Onvia.com, Inc. 10,800 226,800
Oracle Corp. (a) 550,000 40,837,500
pcOrder.com, Inc. 204,600 5,421,900
Phone.com, Inc. 300,000 41,887,500
Priceline.com, Inc. 500,000 27,968,750
Proxicom, Inc. 681,000 28,516,875
Redback Networks, Inc. 813,700 242,889,450
SalesLogix Corp. 147,900 4,122,713
Silknet Software, Inc. 500,000 112,031,250
Software.com, Inc. 394,600 37,980,250
Technology Solutions, Inc. 300,000 2,175,000
Unisys Corp. (a) 1,200,000 35,925,000
VeriSign, Inc. (a) 140,000 35,420,000
VERITAS Software Corp. (a) 450,000 89,043,750
Vignette Corp. 1,513,560 348,875,580
WorldGate Communications, 200,000 6,900,000
Inc.
2,210,190,385
COMPUTERS & OFFICE EQUIPMENT
- - 18.0%
Advanced Digital Information 75,000 6,796,875
Corp. (a)
Alteon Websystems, Inc. 533,600 47,890,600
CacheFlow, Inc. 177,500 21,610,625
Compaq Computer Corp. 2,100,000 52,237,500
Dell Computer Corp. (a) 877,900 35,829,294
EMC Corp. (a) 1,008,000 119,952,000
Emulex Corp. (a) 1,000,000 160,000,000
Gateway, Inc. (a) 525,000 36,093,750
Hewlett-Packard Co. 300,000 40,350,000
Juniper Networks, Inc. 2,856,200 783,491,355
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
COMPUTERS & OFFICE EQUIPMENT
- - CONTINUED
Lexmark International Group, 75,000 $ 8,943,750
Inc. Class A (a)
Safeguard Scientifics, Inc. 53,200 9,306,675
(a)
SanDisk Corp. (a) 683,800 60,858,200
Sun Microsystems, Inc. (a) 500,000 47,625,000
1,430,985,624
ELECTRONIC INSTRUMENTS - 1.3%
Agilent Technologies, Inc. 22,800 2,364,075
Credence Systems Corp. (a) 95,500 12,725,375
KLA-Tencor Corp. (a) 500,000 38,968,750
NetOptix Corp. (a) 87,200 14,262,650
Sawtek, Inc. (a) 205,000 9,840,000
Teradyne, Inc. (a) 250,000 21,750,000
99,910,850
ELECTRONICS - 23.9%
Altera Corp. (a) 1,003,000 79,989,250
Applied Micro Circuits Corp. 90,000 24,755,625
(a)
Atmel Corp. (a) 600,000 29,700,000
AVX Corp. 344,100 21,850,350
Broadcom Corp. Class A (a) 1,253,800 247,468,775
Brocade Communications 358,700 103,709,138
Systems, Inc.
Cree Research, Inc. (a) 1,141,330 214,427,374
E Tek Dynamics, Inc. (a) 95,000 25,958,750
Flextronics International 610,100 37,139,838
Ltd. (a)
GlobeSpan, Inc. 773,400 58,391,700
JDS Uniphase Corp. (a) 588,696 155,194,983
KEMET Corp. (a) 1,052,800 64,681,400
LSI Logic Corp. (a) 200,000 12,812,500
Methode Electronics, Inc. 126,600 7,358,625
Class A
Micron Technology, Inc. (a) 206,400 20,240,100
Motorola, Inc. 1,704,200 290,566,100
National Semiconductor Corp. 12,800 961,600
(a)
PMC-Sierra, Inc. (a) 470,000 90,739,375
QLogic Corp. (a) 910,800 142,084,800
RF Micro Devices, Inc. (a) 100,000 13,831,250
Semtech Corp. (a) 181,400 11,337,500
Silicon Storage Technology, 1,058,900 66,843,063
Inc. (a)
Solectron Corp. (a) 132,000 8,646,000
STMicroelectronics NV 50,000 10,000,000
Texas Instruments, Inc. 800,000 133,200,000
Vitesse Semiconductor Corp. 200,000 20,762,500
(a)
1,892,650,596
INDUSTRIAL MACHINERY &
EQUIPMENT - 0.1%
PRI Automation, Inc. (a) 100,000 7,987,500
SHARES VALUE (NOTE 1)
PACKAGING & CONTAINERS - 0.9%
Corning, Inc. 395,000 $ 74,260,000
PRINTING - 0.0%
Deluxe Corp. 84,600 1,982,813
RETAIL & WHOLESALE,
MISCELLANEOUS - 0.1%
ShopNow.com, Inc. 235,000 3,290,000
SERVICES - 0.4%
Diamond Technology Partners, 300,000 20,512,500
Inc. Class A (a)
eLoyalty Corp. 300,000 9,168,750
Per-Se Technologies, Inc. 3,258 0
warrants 7/8/03 (a)
29,681,250
TOTAL COMMON STOCKS 7,347,151,399
(Cost $3,927,016,632)
CASH EQUIVALENTS - 13.8%
Central Cash Collateral Fund, 546,679,900 546,679,900
5.75% (b)
Taxable Central Cash Fund, 549,013,771 549,013,771
5.66% (b)
TOTAL CASH EQUIVALENTS 1,095,693,671
(Cost $1,095,693,671)
TOTAL INVESTMENT PORTFOLIO - 8,442,845,070
106.6%
(Cost $5,022,710,303)
NET OTHER ASSETS - (6.6)% (522,894,226)
NET ASSETS - 100% $ 7,919,950,844
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 $8,170,003,398 and $5,981,941,034, 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 $325,672 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $583,764,400. The fund
received cash collateral of $546,679,900 which was invested in cash
equivalents.
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 which are or were
affiliates are as follows:
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Peak International Ltd. $ 287,950 $ - $ - $ 8,368,188
Photon Dynamics, Inc. 8,098,253 9,062,047 - -
TOTALS $ 8,386,203 $ 9,062,047 $ - $ 8,368,188
</TABLE>
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $5,053,542,426. Net unrealized appreciation
aggregated $3,389,302,644, of which $3,501,136,552 related to
appreciated investment securities and $111,833,908 related to
depreciated investment securities.
The fund hereby designates approximately $90,902,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
TECHNOLOGY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 8,442,845,070
value (cost $5,022,710,303)
- - See accompanying schedule
Receivable for investments 56,647,471
sold
Receivable for fund shares 73,456,906
sold
Dividends receivable 70,846
Interest receivable 2,314,152
Redemption fees receivable 17,402
Other receivables 563,594
TOTAL ASSETS 8,575,915,441
LIABILITIES
Payable for investments $ 85,466,300
purchased
Payable for fund shares 18,060,760
redeemed
Accrued management fee 3,229,633
Other payables and accrued 2,528,004
expenses
Collateral on securities 546,679,900
loaned, at value
TOTAL LIABILITIES 655,964,597
NET ASSETS $ 7,919,950,844
Net Assets consist of:
Paid in capital $ 4,058,365,160
Accumulated undistributed 441,461,445
net realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 3,420,124,239
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 40,423,494 $ 7,919,950,844
shares outstanding
NET ASSET VALUE and $195.92
redemption price per share
($7,919,950,844 (divided by)
40,423,494 shares)
Maximum offering price per $201.98
share (100/97.00 of $195.92)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 2,442,938
Dividends
Special dividend from 1,823,201
Koninklijke Philips
Electronics NV ADR
Interest 14,122,929
Security lending 2,166,600
TOTAL INCOME 20,555,668
EXPENSES
Management fee $ 17,262,679
Transfer agent fees 11,024,073
Accounting and security 1,346,527
lending fees
Non-interested trustees' 10,998
compensation
Custodian fees and expenses 90,670
Registration fees 1,264,429
Audit 81,937
Legal 10,926
Interest 810
Miscellaneous 3,285
Total expenses before 31,096,334
reductions
Expense reductions (476,148) 30,620,186
NET INVESTMENT INCOME (LOSS) (10,064,518)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 770,123,117
(including realized gain
(loss) of $9,351,657 on
sales of investments in
affiliated issuers)
Foreign currency transactions (59,518) 770,063,599
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 3,216,739,244
Assets and liabilities in (10,528) 3,216,728,716
foreign currencies
NET GAIN (LOSS) 3,986,792,315
NET INCREASE (DECREASE) IN $ 3,976,727,797
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 37,877,519
charges paid to FDC
Sales charges - Retained by $ 37,853,864
FDC
Deferred sales charges $ 32,154
withheld by FDC
Exchange fees withheld by FSC $ 79,157
Expense reductions $ 451,275
Directed brokerage
arrangements
Custodian credits 10,606
Transfer agent credits 14,267
$ 476,148
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ (10,064,518) $ (4,097,480)
income (loss)
Net realized gain (loss) 770,063,599 215,485,901
Change in net unrealized 3,216,728,716 122,793,603
appreciation (depreciation)
NET INCREASE (DECREASE) IN 3,976,727,797 334,182,024
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (459,113,578) -
from net realized gains
Share transactions Net 4,214,973,000 1,006,339,152
proceeds from sales of shares
Reinvestment of distributions 444,041,082 -
Cost of shares redeemed (1,626,839,777) (666,801,634)
NET INCREASE (DECREASE) IN 3,032,174,305 339,537,518
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 3,014,809 1,503,543
TOTAL INCREASE (DECREASE) 6,552,803,333 675,223,085
IN NET ASSETS
NET ASSETS
Beginning of period 1,367,147,511 691,924,426
End of period $ 7,919,950,844 $ 1,367,147,511
OTHER INFORMATION
Shares
Sold 33,612,582 14,223,107
Issued in reinvestment of 4,064,032 -
distributions
Redeemed (13,784,852) (10,714,156)
Net increase (decrease) 23,891,762 3,508,951
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 F 1999 1998 1997 1996 F
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 82.70 $ 53.13 $ 57.70 $ 54.67 $ 42.05
period
Income from Investment
Operations
Net investment income (loss) C (.40) D (.34) (.25) (.39) (.28)
Net realized and unrealized 133.30 29.79 11.29 6.95 20.83
gain (loss)
Total from investment 132.90 29.45 11.04 6.56 20.55
operations
Less Distributions
From net realized gain (19.80) - (12.39) (3.68) (8.05)
In excess of net realized gain - - (3.30) - -
Total distributions (19.80) - (15.69) (3.68) (8.05)
Redemption fees added to paid .12 .12 .08 .15 .12
in capital
Net asset value, end of period $ 195.92 $ 82.70 $ 53.13 $ 57.70 $ 54.67
TOTAL RETURN A, B 184.11% 55.66% 24.92% 12.64% 50.71%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 7,919,951 $ 1,367,148 $ 691,924 $ 478,444 $ 483,026
(000 omitted)
Ratio of expenses to average 1.05% 1.24% 1.38% 1.49% 1.40%
net assets
Ratio of expenses to average 1.04% E 1.20% E 1.30% E 1.44% E 1.39% E
net assets after expense
reductions
Ratio of net investment (.34)% (.54)% (.45)% (.72)% (.52)%
income to average net assets
Portfolio turnover rate 210% 339% 556% 549% 112%
</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
FROM KONINKLIJKE PHILIPS ELECTRONICS NV ADR 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
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 29, PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
2000
SELECT NATURAL GAS 44.70% 81.78% 65.97%
SELECT NATURAL GAS (LOAD ADJ.) 40.28% 76.25% 60.92%
S&P 500 11.73% 206.94% 255.64%
GS Utilities 19.78% 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 150 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 29, PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
2000
SELECT NATURAL GAS 44.70% 12.70% 7.66%
SELECT NATURAL GAS (LOAD ADJ.) 40.28% 12.00% 7.18%
S&P 500 11.73% 25.14% 20.31%
GS Utilities 19.78% 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 16628.02 34160.54
1999/09/30 16014.13 33224.19
1999/10/31 15717.77 35326.62
1999/11/30 14892.19 36044.81
1999/12/31 15273.22 38167.85
2000/01/31 15770.69 36250.30
2000/02/29 16092.00 35564.08
IMATRL PRASUN SHR__CHT 20000229 20000309 114846 R00000000000086
$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 29, 2000, the value of the investment
would have grown to $16,092 - a 60.92% increase on the initial
investment - and includes the effect of a $7.50 trading fee. For
comparison, look at how the Standard & Poor's 500 Index did over the
same period. With dividends and capital gains, if any, reinvested, the
same $10,000 investment would have grown to $35,564 - a 255.64%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
Williams Companies, Inc. 7.4
The Coastal Corp. 6.7
Enron Corp. 4.7
Burlington Resources, Inc. 4.1
BP Amoco PLC sponsored ADR 4.0
Vastar Resources, Inc. 3.8
Dynegy, Inc. 3.6
Kinder Morgan, Inc. 3.6
Calpine Corp. 3.0
AES Corp. 2.9
43.8
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Oil & Gas 46.8% Row: 1, Col: 6, Value: 46.8
Gas 32.7% Row: 1, Col: 5, Value: 32.7
Electric Utility 8.2% Row: 1, Col: 4, Value: 8.199999999999999
Energy Services 7.3% Row: 1, Col: 3, Value: 7.3
Autos, Tires, & Accessories 0.9% Row: 1, Col: 2, Value: 0.9
*All Others 4.1% Row: 1, Col: 1, Value: 4.1
</TABLE>
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
NATURAL GAS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Christian Zann)
Christian Zann,
Portfolio Manager
of Fidelity Select
Natural Gas Portfolio
Q. HOW DID THE FUND PERFORM, CHRISTIAN?
A. It did well. For the 12 months that ended February 29, 2000, the
fund returned 44.70%, outpacing the 19.78% return of the Goldman Sachs
Utilities Index, an index of 150 stocks designed to measure the
performance of companies in the utilities sector. The fund also beat
the Standard & Poor's 500 Index, which returned 11.73% during the same
period.
Q. WHY DID THE FUND OUTPERFORM ITS INDEXES?
A. Strength in natural gas and oil prices was a key factor influencing
the fund's performance. At the beginning of the period, the gas market
experienced tight supplies due to decreased drilling activity
resulting from previously depressed gas prices. Despite a third
consecutive warm winter toward the end of the period, demand was
strong enough and supplies remained tight enough to keep prices firm.
Oil prices were supported by lower production quotas implemented by
the Organization of Petroleum Exporting Countries (OPEC). Lower
production from OPEC also coincided with increased demand because of
economic recovery in Asia and continued prosperity in the U.S. and
Europe. In this environment, the fund's overweighting of gas and oil
exploration and production (E&P) stocks was beneficial. Furthermore,
the Goldman Sachs index has a heavier exposure to gas and electric
utilities, which typically underperform when interest rates rise
sharply, as they did during the period. Higher rates also were a
limiting factor for the broadly based S&P 500, which includes stocks
from a wide variety of sectors.
Q. WHAT OTHER FACTORS CONTRIBUTED TO PERFORMANCE?
A. An overweighting in independent power producers (IPPs) was a
positive influence. A relatively new category of company made possible
by the deregulation of the utility industry, IPPs compete with
traditional electric and gas utilities. Many IPPs built gas-fired
power plants in places where there were power shortages and were
well-positioned to reap the benefits.
Q. WHAT STOCKS HELPED THE FUND'S PERFORMANCE?
A. Enron, which topped the list of the fund's strongest stocks six
months ago, occupied the same position at the end of the period.
Investors approved of the company's move to add bandwidth trading to
its already profitable gas and electric power trading operations.
Calpine, an IPP, was originally valued like a traditional utility.
However, as earnings estimates for the company were repeatedly revised
sharply upward, investors flocked to the stock, causing it to more
than quadruple during the period. Vastar outperformed due to its
exposure to gas and deep water drilling in the Gulf of Mexico. Penn
West, a heavy oil producer, benefited from increased demand for heavy
oil as a substitute for light oil.
Q. WHAT STOCKS DETRACTED FROM PERFORMANCE?
A. Burlington Resources - mainly a gas E&P company - was one of the
fund's most disappointing holdings. A lack of deep-water drilling
success prompted investors to seek other alternatives. I held on to
the stock because I was confident about continued strength in gas
prices and the company's re-focus on on-shore drilling. Another gas
holding, EOG Resources, also suffered from disappointing production
growth. Entergy and CMS Energy reflected the negative influence of
increased competition and higher interest rates on electric utilities.
Q. WHAT'S YOUR OUTLOOK, CHRISTIAN?
A. Year-over-year comparisons reveal that natural gas supplies are
declining. Although the number of drilling rigs has increased
significantly in the past year or so, indicating more exploration,
production from existing wells is declining faster than before.
Consequently, more new sources must be found just to keep production
stable. Furthermore, a number of new power generation projects coming
on line later in 2000 are gas-fired, which will add to demand. In the
oil market, assuming an increase in production from OPEC in 2000, we
may see short-term softness in crude oil prices. However, historically
low inventories and firm demand should help offset the effects of any
production increases over the next 12 months. Most companies with oil
exposure can do reasonably well in that type of 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: April 21, 1993
FUND NUMBER: 513
TRADING SYMBOL: FSNGX
SIZE: as of February 29, 2000, more than
$53 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 FEBRUARY 29, 2000
Showing Percentage of Net Assets
COMMON STOCKS - 95.9%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES -
0.9%
Barrett Resources Corp. (a) 16,200 $ 471,825
ELECTRIC UTILITY - 8.2%
AES Corp. (a) 18,500 1,550,531
Calpine Corp. (a) 17,900 1,637,850
CMS Energy Corp. 12,400 207,700
Entergy Corp. 31,800 643,950
Independent Energy Holdings 7,600 380,475
PLC sponsored ADR (a)
4,420,506
ENERGY SERVICES - 7.3%
ENSCO International, Inc. 15,000 453,750
Ensign Resource Service 200 5,070
Group, Inc.
Halliburton Co. 10,200 389,513
Marine Drilling Companies, 13,900 317,094
Inc. (a)
Nabors Industries, Inc. (a) 36,777 1,319,375
Noble Drilling Corp. (a) 40,100 1,443,600
Oceaneering International, 200 3,800
Inc. (a)
Precision Drilling Corp. 100 2,863
Class A (a)
3,935,065
GAS - 32.7%
Atmos Energy Corp. 20,201 345,942
Cascade Natural Gas Corp. 37,200 537,075
Columbia Energy Group 15,100 890,900
Dynegy, Inc. Class A 41,541 1,947,234
El Paso Energy Corp. 40,100 1,486,206
Enbridge, Inc. 40,900 747,689
Energen Corp. 21,200 344,500
Enron Corp. 37,000 2,553,000
Equitable Resources, Inc. 30,100 1,136,275
Kinder Morgan, Inc. 69,500 1,937,313
National Fuel Gas Co. 14,000 573,125
New Jersey Resources Corp. 9,300 345,263
Northwest Natural Gas Co. 13,700 267,150
ONEOK, Inc. 6,500 147,469
SEMCO Energy, Inc. 13,600 163,200
Westcoast Energy, Inc. 16,700 241,929
Williams Companies, Inc. 95,560 3,995,599
17,659,869
OIL & GAS - 46.8%
Alberta Energy Co. Ltd. 37,167 1,010,196
Anadarko Petroleum Corp. 44,650 1,372,988
Anderson Exploration Ltd. (a) 38,500 464,783
Apache Corp. 39,725 1,449,963
SHARES VALUE (NOTE 1)
Atlantic Richfield Co. 4,600 $ 326,600
Baytex Energy Ltd. (a) 7,700 50,462
Bonavista Petroleum Ltd. (a) 3,300 43,253
BP Amoco PLC sponsored ADR 46,438 2,182,586
Burlington Resources, Inc. 79,972 2,209,227
Cabot Oil & Gas Corp. Class A 10,300 162,869
Canada Occidental Petroleum 24,500 454,643
Ltd.
Canadian Hunter Exploration 13,700 216,425
Ltd. (a)
Canadian Natural Resources 49,400 1,056,429
Ltd. (a)
Comstock Resources, Inc. (a) 60,700 254,181
Encal Energy Ltd. (a) 24,100 100,583
EOG Resources, Inc. 60,300 919,575
Forest Oil Corp. (a) 23,100 189,131
Kerr-McGee Corp. 8,012 358,537
Louis Dreyfus Natural Gas 4,700 96,938
Corp. (a)
Newfield Exploration Co. (a) 11,400 353,400
Noble Affiliates, Inc. 15,400 346,500
Nuevo Energy Co. (a) 5,600 99,400
Ocean Energy, Inc. (a) 57,200 611,325
Paramount Resources Ltd. 35,700 331,240
Penn West Petroleum Ltd. (a) 26,200 534,989
Pioneer Natural Resources Co. 50,000 415,625
Prima Energy Corp. (a) 19,800 402,188
Remington Oil & Gas Corp. (a) 400 1,275
Rio Alto Exploration Ltd. (a) 79,300 1,203,504
Santa Fe Snyder Corp. (a) 172,015 1,290,113
Talisman Energy, Inc. (a) 23,700 613,100
The Coastal Corp. 85,770 3,607,701
Ulster Petroleums Ltd. (a) 12,000 56,291
Union Pacific Resources 34,400 307,450
Group, Inc.
Unocal Corp. 4,600 123,050
Vastar Resources, Inc. 38,700 2,053,519
Western Gas Resources, Inc. 1 14
Wiser Oil Co. (a) 3,900 10,238
25,280,291
TOTAL COMMON STOCKS 51,767,556
(Cost $43,462,500)
CASH EQUIVALENTS - 5.4%
Taxable Central Cash Fund, 2,885,433 2,885,433
5.66% (b) (Cost $2,885,433)
TOTAL INVESTMENT PORTFOLIO - 54,652,989
101.3%
(Cost $46,347,933)
NET OTHER ASSETS - (1.3)% (676,609)
NET ASSETS - 100% $ 53,976,380
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 $47,328,321 and $46,577,003, 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 $8,100 for the
period.
Distribution of investments by country of issue, as a percentage of
net assets, is as follows:
United States of America 82.1%
Canada 13.2
United Kingdom 4.7
100.0%
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $46,489,213. Net unrealized appreciation
aggregated $8,163,776, of which $12,786,848 related to appreciated
investment securities and $4,623,072 related to depreciated investment
securities.
The fund hereby designates approximately $51,000 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 2001 of amounts for use
in preparing 2000 income tax returns.
NATURAL GAS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 54,652,989
value (cost $46,347,933) -
See accompanying schedule
Receivable for investments 549,462
sold
Receivable for fund shares 208,808
sold
Dividends receivable 68,961
Interest receivable 16,691
Redemption fees receivable 383
Other receivables 2,934
TOTAL ASSETS 55,500,228
LIABILITIES
Payable for fund shares $ 1,457,872
redeemed
Accrued management fee 26,576
Other payables and accrued 39,400
expenses
TOTAL LIABILITIES 1,523,848
NET ASSETS $ 53,976,380
Net Assets consist of:
Paid in capital $ 45,471,023
Undistributed net investment 9,147
income
Accumulated undistributed net 191,173
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 8,305,037
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 3,547,816 $ 53,976,380
shares outstanding
NET ASSET VALUE and $15.21
redemption price per share
($53,976,380 (divided by)
3,547,816 shares)
Maximum offering price per $15.68
share (100/97.00 of $15.21)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 672,452
Dividends
Interest 153,750
Security lending 4,880
TOTAL INCOME 831,082
EXPENSES
Management fee $ 339,370
Transfer agent fees 369,977
Accounting and security 60,428
lending fees
Non-interested trustees' 165
compensation
Custodian fees and expenses 14,986
Registration fees 34,869
Audit 12,165
Legal 189
Total expenses before 832,149
reductions
Expense reductions (20,816) 811,333
NET INVESTMENT INCOME 19,749
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 5,626,698
Foreign currency transactions 254 5,626,952
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 10,320,745
Assets and liabilities in 40 10,320,785
foreign currencies
NET GAIN (LOSS) 15,947,737
NET INCREASE (DECREASE) IN $ 15,967,486
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 189,442
charges paid to FDC
Sales charges - Retained by $ 189,442
FDC
Deferred sales charges $ 1,450
withheld by FDC
Exchange fees withheld by FSC $ 6,528
Expense reductions $ 20,816
Directed brokerage
arrangements
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ 19,749 $ 479,288
income
Net realized gain (loss) 5,626,952 (5,303,326)
Change in net unrealized 10,320,785 (4,576,943)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 15,967,486 (9,400,981)
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (330,540) (375,571)
From net investment income
Share transactions Net 78,842,639 47,858,222
proceeds from sales of shares
Reinvestment of distributions 314,409 356,687
Cost of shares redeemed (77,779,879) (61,599,489)
NET INCREASE (DECREASE) IN 1,377,169 (13,384,580)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 133,839 123,693
TOTAL INCREASE (DECREASE) 17,147,954 (23,037,439)
IN NET ASSETS
NET ASSETS
Beginning of period 36,828,426 59,865,865
End of period (including $ 53,976,380 $ 36,828,426
undistributed net investment
income of $9,147 and
$319,683, respectively)
OTHER INFORMATION
Shares
Sold 5,386,067 3,845,626
Issued in reinvestment of 26,049 32,426
distributions
Redeemed (5,342,363) (4,929,086)
Net increase (decrease) 69,753 (1,051,034)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 F 1999 1998 1997 1996 F
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.59 $ 13.22 $ 12.50 $ 11.36 $ 8.98
period
Income from Investment
Operations
Net investment income (loss) C .00 .12 D (.05) (.06) .05
Net realized and unrealized 4.68 (2.68) 1.06 1.30 2.36
gain (loss)
Total from investment 4.68 (2.56) 1.01 1.24 2.41
operations
Less Distributions
From net investment income (.09) (.10) - (.01) (.05)
From net realized gain - - (.30) (.29) -
In excess of net realized gain - - (.03) - -
Total distributions (.09) (.10) (.33) (.30) (.05)
Redemption fees added to paid .03 .03 .04 .20 .02
in capital
Net asset value, end of period $ 15.21 $ 10.59 $ 13.22 $ 12.50 $ 11.36
TOTAL RETURN A, B 44.70% (19.17)% 8.74% 12.45% 27.10%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 53,976 $ 36,828 $ 59,866 $ 81,566 $ 60,228
(000 omitted)
Ratio of expenses to average 1.42% 1.57% 1.82% 1.70% 1.68%
net assets
Ratio of expenses to average 1.39% E 1.52% E 1.78% E 1.66% E 1.67% E
net assets after expense
reductions
Ratio of net investment .03% .93% (.37)% (.46)% .46%
income (loss) to average net
assets
Portfolio turnover rate 85% 107% 118% 283% 79%
</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 $.10 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
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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT TELECOMMUNICATIONS 84.89% 349.17% 783.06%
SELECT TELECOMMUNICATIONS 79.27% 335.62% 756.50%
(LOAD ADJ.)
S&P 500 11.73% 206.94% 425.47%
GS Utilities 19.78% 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 150 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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT TELECOMMUNICATIONS 84.89% 35.05% 24.34%
SELECT TELECOMMUNICATIONS 79.27% 34.22% 23.96%
(LOAD ADJ.)
S&P 500 11.73% 25.14% 18.05%
GS Utilities 19.78% 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
1990/02/28 9700.00 10000.00
1990/03/31 9925.58 10265.00
1990/04/30 9341.49 10008.38
1990/05/31 10324.38 10984.19
1990/06/30 10118.94 10909.50
1990/07/31 9655.69 10874.59
1990/08/31 8531.81 9891.53
1990/09/30 7979.94 9409.81
1990/10/31 8257.89 9369.35
1990/11/30 8729.19 9974.61
1990/12/31 9129.96 10252.90
1991/01/31 9454.42 10699.92
1991/02/28 9770.66 11464.97
1991/03/31 10045.83 11742.42
1991/04/30 10259.40 11770.60
1991/05/31 10366.18 12279.09
1991/06/30 9934.94 11716.71
1991/07/31 10497.61 12262.71
1991/08/31 10809.74 12553.34
1991/09/30 10949.38 12343.69
1991/10/31 11380.62 12509.10
1991/11/30 10945.27 12004.98
1991/12/31 11946.71 13378.35
1992/01/31 11963.31 13129.52
1992/02/29 12112.70 13300.20
1992/03/31 11685.29 13040.85
1992/04/30 12125.14 13424.25
1992/05/31 11984.06 13490.03
1992/06/30 11705.74 13289.02
1992/07/31 12333.87 13832.55
1992/08/31 12188.28 13548.98
1992/09/30 12425.39 13708.86
1992/10/31 12550.18 13756.84
1992/11/30 13203.27 14225.94
1992/12/31 13776.72 14400.92
1993/01/31 13734.34 14521.89
1993/02/28 14488.65 14719.39
1993/03/31 15081.93 15029.97
1993/04/30 15113.75 14666.24
1993/05/31 15722.12 15059.30
1993/06/30 16400.02 15102.97
1993/07/31 16878.03 15042.56
1993/08/31 18151.27 15612.67
1993/09/30 18412.00 15492.45
1993/10/31 18942.16 15813.15
1993/11/30 17390.80 15662.92
1993/12/31 17870.56 15852.44
1994/01/31 18232.35 16391.43
1994/02/28 17661.10 15947.22
1994/03/31 17108.89 15251.92
1994/04/30 17414.27 15447.15
1994/05/31 17312.00 15700.48
1994/06/30 17297.39 15315.82
1994/07/31 18256.73 15818.18
1994/08/31 18787.54 16466.72
1994/09/30 18568.40 16063.29
1994/10/31 19454.69 16424.71
1994/11/30 18422.31 15826.52
1994/12/31 18642.41 16061.23
1995/01/31 18901.06 16477.70
1995/02/28 19070.17 17119.83
1995/03/31 19308.92 17625.04
1995/04/30 19909.05 18144.10
1995/05/31 20452.48 18869.32
1995/06/30 21437.78 19307.65
1995/07/31 22798.91 19947.89
1995/08/31 23474.39 19997.96
1995/09/30 24246.38 20841.88
1995/10/31 23230.61 20767.47
1995/11/30 23743.57 21679.16
1995/12/31 24171.02 22096.70
1996/01/31 24342.11 22848.87
1996/02/29 23989.25 23060.68
1996/03/31 23876.97 23282.76
1996/04/30 24991.75 23625.95
1996/05/31 25546.35 24235.26
1996/06/30 25806.32 24327.60
1996/07/31 23853.66 23252.80
1996/08/31 24350.49 23743.20
1996/09/30 25066.85 25079.47
1996/10/31 24570.02 25771.16
1996/11/30 25315.27 27719.21
1996/12/31 25476.18 27170.09
1997/01/31 25649.49 28867.68
1997/02/28 25872.31 29094.00
1997/03/31 23693.59 27898.53
1997/04/30 24434.87 29564.07
1997/05/31 27912.85 31363.93
1997/06/30 29451.55 32769.03
1997/07/31 30049.23 35376.46
1997/08/31 28580.47 33394.67
1997/09/30 32287.35 35223.70
1997/10/31 31505.28 34047.23
1997/11/30 32808.73 35623.28
1997/12/31 32056.14 36234.93
1998/01/31 34755.31 36635.68
1998/02/28 37909.07 39277.85
1998/03/31 41283.03 41289.27
1998/04/30 41120.35 41704.64
1998/05/31 39364.95 40987.74
1998/06/30 40871.67 42652.66
1998/07/31 42188.23 42198.41
1998/08/31 32548.13 36097.36
1998/09/30 34596.10 38409.76
1998/10/31 37075.61 41534.01
1998/11/30 39189.41 44051.38
1998/12/31 45212.14 46589.63
1999/01/31 48957.35 48538.00
1999/02/28 46328.22 47029.44
1999/03/31 49773.81 48911.09
1999/04/30 53500.97 50805.42
1999/05/31 53309.78 49605.90
1999/06/30 57691.73 52359.03
1999/07/31 56911.69 50724.38
1999/08/31 53936.87 50473.29
1999/09/30 55374.57 49089.82
1999/10/31 61209.51 52196.23
1999/11/30 67503.30 53257.37
1999/12/31 75322.39 56394.23
2000/01/31 76349.90 53560.99
2000/02/29 85650.00 52547.08
IMATRL PRASUN SHR__CHT 20000229 20000309 125425 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Telecommunications Portfolio on February
28, 1990, and the current 3.00% sales charge was paid. As the chart
shows, by February 29, 2000, the value of the investment would have
grown to $85,650 - a 756.50% increase on the initial investment - and
includes the effect of a $7.50 trading fee. For comparison, look at
how the Standard & Poor's 500 Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $52,547 - a 425.47% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
Nextel Communications, Inc. 7.2
Class A
Vodafone AirTouch PLC 6.1
BellSouth Corp. 5.7
AT&T Corp. 5.5
Cisco Systems, Inc. 5.4
Motorola, Inc. 4.9
MCI WorldCom, Inc. 3.9
Nokia AB sponsored ADR 3.9
Sprint Corp. - PCS Group 3.4
Series 1
Omnipoint Corp. 3.4
49.4
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Telephone Services 36.4% Row: 1, Col: 6, Value: 36.4
Cellular 30.3% Row: 1, Col: 5, Value: 30.3
Communications Equipment 12.6% Row: 1, Col: 4, Value: 12.6
Computer Services
& Software 6.4% Row: 1, Col: 3, Value: 6.4
Electronics 5.1% Row: 1, Col: 2, Value: 5.1
*All Others 9.2% Row: 1, Col: 1, Value: 9.199999999999999
</TABLE>
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
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 had one of its strongest periods ever. For the 12 months
that ended February 29, 2000, the fund returned 84.89%, far
outdistancing the 11.73% return of the Standard & Poor's 500 Index.
The fund also outperformed the 19.78% return of the Goldman Sachs
Utilities Index, an index of 150 stocks designed to measure the
performance of companies in the utilities sector.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S EXTRAORDINARILY STRONG
PERFORMANCE?
A. Wireless communications stocks - a group I significantly
overweighted relative to the Goldman Sachs index - were big winners
during the period. Wireless, or cellular, telephones reached a
critical mass in terms of their affordability and technological
sophistication. The cost of the handset itself was negligible - in
fact, cell phones are often provided to customers free of charge in
return for signing up with a particular wireless service provider -
and the monthly service fees fell to the point where the average
person could easily afford them. Technologically, exciting things were
happening, too. Internet-ready wireless phones were introduced in the
U.S. during the period, and investors were attracted for that reason.
Data communications was another strong point for the fund, reflecting
the fact that data communications continued to grow much faster than
voice communications. A final high-growth area for the fund was CLECs
- - competitive local exchange carriers. These companies were making
rapid inroads into local telephone service markets around the country
and in the process taking market share from the more established
regional Bell operating companies (RBOCs), which I underweighted
relative to the Goldman Sachs index.
Q. DID HIGHER INTEREST RATES HAVE ANY APPRECIABLE EFFECT ON HOW YOU
MANAGED THE FUND?
A. Higher rates gave me an additional reason to underweight the RBOCs.
Investors have traditionally considered them as a close proxy for
bonds and, as a result, they tend to follow bond prices lower in a
period of rising rates.
Q. WHAT STOCKS PERFORMED WELL FOR THE FUND?
A. Cisco Systems, a core holding during the period, was the most
positive contributor to performance. Cisco manufactures routers and
other equipment that support data networks on the Internet. The strong
wireless segment was reflected in the performance of a number of
stocks, including Nextel Communications, Motorola, Nokia, Vodafone
AirTouch and Qualcomm. All were aided by the favorable factors I
mentioned earlier. Representing the CLECs group, McLeodUSA and
Metromedia Fiber performed well, as both companies continued to gain
market share and expand their capacity to handle data traffic.
Q. WHAT STOCKS WERE DISAPPOINTMENTS?
A. The list of underperformers included two RBOCs, SBC Communications
and BellSouth. The combination of higher interest rates and the
potential for slowing earnings growth as a result of increasing market
penetration by the CLECs made it a difficult environment for the
RBOCs. In the long distance market, slowing earnings growth and
increased competition also resulted in the underperformance of core
holding MCI WorldCom.
Q. WHAT'S YOUR OUTLOOK, PETER?
A. I look for strong growth in wireless and data communications, as
technological innovation continues to be a catalyst in those markets.
Likewise, deregulation should remain a powerful force in the
telecommunications sector, and the spoils of victory will go to those
that are in a position to offer the most competitive products and
services. For the most part, I believe deregulation favors newer
companies, which generally have lower cost structures and greater
flexibility to pursue the markets and methods of delivery offering the
highest profit margins. Finally, after the phenomenal returns the fund
enjoyed during the period, I would caution shareholders not to expect
comparable performance on a regular basis. With that caveat, I believe
that telecommunications will continue to be a high-growth sector for a
long time to come.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET 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 29, 2000, more than
$1.8 billion
MANAGER: Peter Saperstone, since 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 29, 2000
Showing Percentage of Net Assets
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 96.0%
SHARES VALUE (NOTE 1)
BROADCASTING - 1.2%
AlphaNet Telecom, Inc. (a)(c) 1,196,200 $ 8
EchoStar Communications Corp. 53,400 6,087,600
Class A (a)
Metro One Telecommunications, 1,040,700 15,610,500
Inc. (a)(c)
21,698,108
CELLULAR - 30.3%
ALLTEL Corp. 203,800 11,820,400
China Telecom (Hong Kong) 5,581,000 51,868,421
Ltd. (a)
Crown Castle International 250,000 8,062,500
Corp. (a)
Dobson Communications Corp. 350,000 6,650,000
Class A
Nextel Communications, Inc. 992,200 135,683,344
Class A (a)
Nextel Partners, Inc. 6,000 192,000
Omnipoint Corp. (a) 535,300 63,045,793
QUALCOMM, Inc. (a) 282,800 40,281,325
SBA Communications Corp. 467,000 18,913,500
Sprint Corp. - PCS Group 1,233,900 63,854,325
Series 1 (a)
Tele Sudeste Celular 245,000 14,026,250
Participacoes SA ADR
Telemig Celular Participacoes 98,100 7,222,613
SA ADR
Telesp Celular Participacoes 438,800 23,640,350
SA ADR
Triton PCS Holdings, Inc. 184,500 11,070,000
Class A
Vodafone AirTouch PLC 20,024,378 115,515,587
571,846,408
COMMUNICATIONS EQUIPMENT -
12.6%
ADC Telecommunications, Inc. 100,000 4,487,500
(a)
Cisco Systems, Inc. (a) 773,400 102,233,813
Lucent Technologies, Inc. 100 5,950
Nokia AB sponsored ADR 369,200 73,216,975
Nortel Networks Corp. 300,000 33,216,060
Pairgain Technologies, Inc. 50,000 893,750
(a)
Telefonaktiebolaget LM 245,200 23,539,200
Ericsson sponsored ADR
237,593,248
COMPUTER SERVICES & SOFTWARE
- - 6.4%
America Online, Inc. (a) 100 5,900
Concentric Network Corp. (a) 174,100 9,336,113
Covad Communications Group, 500,000 45,125,000
Inc.
Digex, Inc. Class A 100,000 16,200,000
Infonet Services Corp. Class B 150,000 4,143,750
PSINet, Inc. (a) 406,800 18,865,350
Verio, Inc. (a) 372,800 27,983,300
121,659,413
SHARES VALUE (NOTE 1)
COMPUTERS & OFFICE EQUIPMENT
- - 1.5%
Juniper Networks, Inc. 26,400 $ 7,241,850
Psion PLC 259,973 21,799,406
29,041,256
ELECTRICAL EQUIPMENT - 1.9%
ANTEC Corp. (a) 151,100 7,998,856
California Amplifier, Inc. 638,400 28,807,800
(a)(c)
36,806,656
ELECTRONICS - 5.1%
JDS Uniphase Corp. (a) 15,000 3,954,375
Motorola, Inc. 546,200 93,127,100
97,081,475
REAL ESTATE INVESTMENT TRUSTS
- - 0.6%
Pinnacle Holdings, Inc. 180,100 10,535,850
TELEPHONE SERVICES - 36.4%
Alaska Communication Systems 373,000 5,222,000
Group, Inc.
Allegiance Telecom, Inc. (a) 112,500 11,123,438
AT&T Corp. 2,102,792 103,956,780
BCE, Inc. 100,000 10,899,559
BellSouth Corp. 2,624,100 106,932,075
Carrier1 International SA ADR 6,100 197,869
CenturyTel, Inc. 306,700 10,312,788
Commonwealth Telephone 100,000 4,362,500
Enterprises, Inc. (a)
Intermedia Communications, 133,400 8,445,888
Inc. (a)
IXnet, Inc. 276,400 14,718,300
MCI WorldCom, Inc. (a) 1,653,554 73,789,847
McLeodUSA, Inc. Class A (a) 697,000 61,336,000
Metromedia Fiber Network, 714,800 51,387,419
Inc. Class A (a)
NEXTLINK Communications, Inc. 452,100 49,815,769
Class A (a)
Qwest Communications 800,000 37,100,000
International, Inc. (a)
SBC Communications, Inc. 1,157,949 44,002,062
Telefonica SA sponsored ADR 182,212 15,795,503
U.S. WEST, Inc. 400,000 29,050,000
WinStar Communications, Inc. 408,700 31,623,163
(a)
WorldQuest Networks, Inc. 3,900 132,600
Z-Tel Technologies, Inc. 455,100 16,099,163
686,302,723
TOTAL COMMON STOCKS 1,812,565,137
(Cost $1,197,316,379)
CASH EQUIVALENTS - 14.1%
SHARES VALUE (NOTE 1)
Central Cash Collateral Fund, 191,599,700 $ 191,599,700
5.75% (b)
Taxable Central Cash Fund, 73,962,288 73,962,288
5.66% (b)
TOTAL CASH EQUIVALENTS 265,561,988
(Cost $265,561,988)
TOTAL INVESTMENT PORTFOLIO - 2,078,127,125
110.1%
(Cost $1,462,878,367)
NET OTHER ASSETS - (10.1)% (189,909,684)
NET ASSETS - 100% $ 1,888,217,441
</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 $2,205,600,769 and $1,934,102,254, 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 $74,514 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $189,766,256. The fund
received cash collateral of $191,599,700 which was invested in cash
equivalents.
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%.
Distribution of investments by country of issue, as a percentage of
net assets, is as follows:
United States of America 79.4%
United Kingdom 7.2
Finland 3.9
Hong Kong 2.7
Brazil 2.4
Canada 2.4
Sweden 1.2
Others (individually less 0.8
than 1%)
100.0%
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
AlphaNet Telecom, Inc. $ - $ - $ - $ 8
California Amplifier, Inc. - - - 28,807,800
Metro One Tele- communica- 5,512,599 - - 15,610,500
tions, Inc.
TOTALS $ 5,512,599 $ - $ - $ 44,418,308
</TABLE>
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $1,464,576,162. Net unrealized appreciation
aggregated $613,550,963, of which $654,376,324 related to appreciated
investment securities and $40,825,361 related to depreciated
investment securities.
The fund hereby designates approximately $90,298,000 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 2001 of amounts for use
in preparing 2000 income tax returns.
TELECOMMUNICATIONS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 2,078,127,125
value (cost $1,462,878,367)
- - See accompanying schedule
Foreign currency held at 1,725,610
value (cost $1,725,634)
Receivable for investments 2,985,202
sold
Receivable for fund shares 8,626,983
sold
Dividends receivable 157,488
Interest receivable 350,937
Redemption fees receivable 4,019
Other receivables 208,854
TOTAL ASSETS 2,092,186,218
LIABILITIES
Payable for investments $ 3,041,757
purchased
Payable for fund shares 7,784,665
redeemed
Accrued management fee 858,088
Other payables and accrued 684,567
expenses
Collateral on securities 191,599,700
loaned, at value
TOTAL LIABILITIES 203,968,777
NET ASSETS $ 1,888,217,441
Net Assets consist of:
Paid in capital $ 1,080,057,527
Accumulated undistributed net 192,911,933
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 615,247,981
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 18,719,240 $ 1,888,217,441
shares outstanding
NET ASSET VALUE and $100.87
redemption price per share
($1,888,217,441 (divided by)
18,719,240 shares)
Maximum offering price per $103.99
share (100/97.00 of $100.87)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 6,680,948
Dividends
Interest 3,663,538
Security lending 663,333
TOTAL INCOME 11,007,819
EXPENSES
Management fee $ 6,819,043
Transfer agent fees 5,169,450
Accounting and security 726,100
lending fees
Non-interested trustees' 5,169
compensation
Custodian fees and expenses 56,990
Registration fees 240,740
Audit 35,340
Legal 5,787
Interest 651
Miscellaneous 1,065
Total expenses before 13,060,335
reductions
Expense reductions (244,763) 12,815,572
NET INVESTMENT INCOME (LOSS) (1,807,753)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 341,175,811
Foreign currency transactions 174,459 341,350,270
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 428,709,760
Assets and liabilities in (4,483) 428,705,277
foreign currencies
NET GAIN (LOSS) 770,055,547
NET INCREASE (DECREASE) IN $ 768,247,794
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 5,928,316
charges paid to FDC
Sales charges - Retained by $ 5,920,617
FDC
Deferred sales charges $ 11,792
withheld by FDC
Exchange fees withheld by FSC $ 37,832
Expense reductions $ 218,752
Directed brokerage
arrangements
Custodian credits 21,131
Transfer agent credits 4,880
$ 244,763
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ (1,807,753) $ (874,454)
income (loss)
Net realized gain (loss) 341,350,270 45,836,208
Change in net unrealized 428,705,277 85,596,709
appreciation (depreciation)
NET INCREASE (DECREASE) IN 768,247,794 130,558,463
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (158,958,797) (46,022,800)
from net realized gains
Share transactions Net 805,565,488 863,829,740
proceeds from sales of shares
Reinvestment of distributions 152,949,500 44,998,804
Cost of shares redeemed (504,407,282) (813,636,128)
NET INCREASE (DECREASE) IN 454,107,706 95,192,416
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 645,425 997,935
TOTAL INCREASE (DECREASE) 1,064,042,128 180,726,014
IN NET ASSETS
NET ASSETS
Beginning of period 824,175,313 643,449,299
End of period $ 1,888,217,441 $ 824,175,313
OTHER INFORMATION
Shares
Sold 9,915,113 15,272,906
Issued in reinvestment of 1,909,440 813,871
distributions
Redeemed (6,431,551) (14,817,799)
Net increase (decrease) 5,393,002 1,268,978
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 F 1999 1998 1997 1996 F
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 61.85 $ 53.37 $ 41.80 $ 44.87 $ 38.34
period
Income from Investment
Operations
Net investment income (loss) C (.12) (.06) (.25) .12 D .51
Net realized and unrealized 49.58 11.43 18.20 2.92 9.15
gain (loss)
Total from investment 49.46 11.37 17.95 3.04 9.66
operations
Less Distributions
From net investment income - - - (.16) (.39)
From net realized gain (10.48) (2.96) (6.44) (5.98) (2.75)
Total distributions (10.48) (2.96) (6.44) (6.14) (3.14)
Redemption fees added to paid .04 .07 .06 .03 .01
in capital
Net asset value, end of period $ 100.87 $ 61.85 $ 53.37 $ 41.80 $ 44.87
TOTAL RETURN A, B 84.89% 22.21% 46.52% 7.85% 25.79%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,888,217 $ 824,175 $ 643,449 $ 388,535 $ 468,300
(000 omitted)
Ratio of expenses to average 1.12% 1.27% 1.51% 1.51% 1.52%
net assets
Ratio of expenses to average 1.09% E 1.25% E 1.48% E 1.47% E 1.52%
net assets after expense
reductions
Ratio of net investment (.15)% (.11)% (.53)% .27% 1.17%
income (loss) to average net
assets
Portfolio turnover rate 173% 150% 157% 175% 89%
</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 $.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
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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT UTILITIES GROWTH 29.76% 247.19% 441.05%
SELECT UTILITIES GROWTH (LOAD 25.80% 236.70% 424.75%
ADJ.)
S&P 500 11.73% 206.94% 425.47%
GS Utilities 19.78% 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 150 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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT UTILITIES GROWTH 29.76% 28.27% 18.39%
SELECT UTILITIES GROWTH (LOAD 25.80% 27.48% 18.03%
ADJ.)
S&P 500 11.73% 25.14% 18.05%
GS Utilities 19.78% 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
1990/02/28 9700.00 10000.00
1990/03/31 9647.50 10265.00
1990/04/30 9245.04 10008.38
1990/05/31 9726.25 10984.19
1990/06/30 9841.50 10909.50
1990/07/31 9922.30 10874.59
1990/08/31 9377.71 9891.53
1990/09/30 9401.64 9409.81
1990/10/31 9883.40 9369.35
1990/11/30 10143.72 9974.61
1990/12/31 10278.72 10252.90
1991/01/31 10233.40 10699.92
1991/02/28 10674.52 11464.97
1991/03/31 10795.38 11742.42
1991/04/30 10747.04 11770.60
1991/05/31 10750.06 12279.09
1991/06/30 10619.66 11716.71
1991/07/31 10965.27 12262.71
1991/08/31 11216.62 12553.34
1991/09/30 11562.23 12343.69
1991/10/31 11722.47 12509.10
1991/11/30 11857.57 12004.98
1991/12/31 12440.14 13378.35
1992/01/31 12057.21 13129.52
1992/02/29 11968.84 13300.20
1992/03/31 11844.48 13040.85
1992/04/30 12168.49 13424.25
1992/05/31 12404.13 13490.03
1992/06/30 12547.63 13289.02
1992/07/31 13214.80 13832.55
1992/08/31 13208.03 13548.98
1992/09/30 13279.15 13708.86
1992/10/31 13275.76 13756.84
1992/11/30 13367.20 14225.94
1992/12/31 13757.84 14400.92
1993/01/31 13991.86 14521.89
1993/02/28 14711.66 14719.39
1993/03/31 15108.80 15029.97
1993/04/30 15026.22 14666.24
1993/05/31 15058.45 15059.30
1993/06/30 15635.01 15102.97
1993/07/31 15814.06 15042.56
1993/08/31 16501.63 15612.67
1993/09/30 16501.63 15492.45
1993/10/31 16333.32 15813.15
1993/11/30 15534.74 15662.92
1993/12/31 15483.71 15852.44
1994/01/31 15800.97 16391.43
1994/02/28 15084.06 15947.22
1994/03/31 14540.19 15251.92
1994/04/30 14958.45 15447.15
1994/05/31 14659.78 15700.48
1994/06/30 14613.51 15315.82
1994/07/31 15034.17 15818.18
1994/08/31 14975.28 16466.72
1994/09/30 14592.48 16063.29
1994/10/31 14777.57 16424.71
1994/11/30 14243.34 15826.52
1994/12/31 14336.26 16061.23
1995/01/31 14921.33 16477.70
1995/02/28 15116.35 17119.83
1995/03/31 15177.02 17625.04
1995/04/30 15706.06 18144.10
1995/05/31 15949.09 18869.32
1995/06/30 16105.33 19307.65
1995/07/31 16539.32 19947.89
1995/08/31 16960.29 19997.96
1995/09/30 17767.51 20841.88
1995/10/31 17941.10 20767.47
1995/11/30 18336.03 21679.16
1995/12/31 19266.43 22096.70
1996/01/31 19469.75 22848.87
1996/02/29 19018.91 23060.68
1996/03/31 18850.96 23282.76
1996/04/30 19612.08 23625.95
1996/05/31 19626.28 24235.26
1996/06/30 19929.09 24327.60
1996/07/31 19058.50 23252.80
1996/08/31 19063.23 23743.20
1996/09/30 19408.63 25079.47
1996/10/31 20222.45 25771.16
1996/11/30 21173.48 27719.21
1996/12/31 21456.23 27170.09
1997/01/31 22101.39 28867.68
1997/02/28 22467.95 29094.00
1997/03/31 21275.40 27898.53
1997/04/30 22036.86 29564.07
1997/05/31 23485.60 31363.93
1997/06/30 24202.45 32769.03
1997/07/31 24778.94 35376.46
1997/08/31 23666.07 33394.67
1997/09/30 25751.45 35223.70
1997/10/31 25821.63 34047.23
1997/11/30 27385.67 35623.28
1997/12/31 27958.68 36234.93
1998/01/31 29039.74 36635.68
1998/02/28 30601.26 39277.85
1998/03/31 32677.57 41289.27
1998/04/30 32023.97 41704.64
1998/05/31 31638.98 40987.74
1998/06/30 31662.32 42652.66
1998/07/31 32368.13 42198.41
1998/08/31 29614.88 36097.36
1998/09/30 32537.29 38409.76
1998/10/31 34590.55 41534.01
1998/11/30 35926.34 44051.38
1998/12/31 40024.68 46589.63
1999/01/31 41220.03 48538.00
1999/02/28 40445.02 47029.44
1999/03/31 41561.56 48911.09
1999/04/30 44908.96 50805.42
1999/05/31 46058.33 49605.90
1999/06/30 47096.25 52359.03
1999/07/31 47472.40 50724.38
1999/08/31 45166.70 50473.29
1999/09/30 45117.94 49089.82
1999/10/31 48168.99 52196.23
1999/11/30 48482.46 53257.37
1999/12/31 50400.24 56394.23
2000/01/31 52443.70 53560.99
2000/02/29 52475.00 52547.08
IMATRL PRASUN SHR__CHT 20000229 20000309 125539 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Select Utilities Growth Portfolio on February 28,
1990, and the current 3.00% sales charge was paid. As the chart shows,
by February 29, 2000, the value of the investment would have grown to
$52,475 - a 424.75% 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 $52,547 - a 425.47% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY
29, 2000
% OF FUND'S NET ASSETS
AT&T Corp. 6.3
SBC Communications, Inc. 5.9
MCI WorldCom, Inc. 4.8
BellSouth Corp. 4.8
AES Corp. 4.8
Dynegy, Inc. 4.5
Calpine Corp. 4.4
BCE, Inc. 4.3
Nextel Communications, Inc. 4.1
Class A
Enron Corp. 3.7
47.6
TOP INDUSTRIES AS OF FEBRUARY 29, 2000
% OF FUND'S NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Telephone Services 49.9% Row: 1, Col: 6, Value: 49.9
Electric Utility 16.8% Row: 1, Col: 5, Value: 16.8
Cellular 12.5% Row: 1, Col: 4, Value: 12.5
Gas 10.3% Row: 1, Col: 3, Value: 10.3
Broadcasting 2.9% Row: 1, Col: 2, Value: 2.9
* All Others 7.6% Row: 1, Col: 1, Value: 7.6
</TABLE>
* INCLUDES SHORT-TERM INVESTMENTS AND NET OTHER ASSETS.
(photograph of John Roth)
John Roth,
Portfolio Manager
of Fidelity Select
Utilities Growth Portfolio
Q. HOW DID THE FUND PERFORM, JOHN?
A. The fund did well. For the 12 months that ended February 29, 2000,
the fund returned 29.76%, finishing ahead of both the Goldman Sachs
Utilities Index - an index of 150 stocks designed to measure the
performance of companies in the utilities sector - and the Standard &
Poor's 500 Index, which returned 19.78% and 11.73%, respectively.
Q. WHY DID THE FUND BEAT ITS INDEXES?
A. Relative to both indexes, one factor that helped the fund was its
heavier weighting of independent power producers (IPPs). Although
classified as electric utilities, IPPs acted more like growth stocks
during the period, as investors realized the potential for strong
earnings growth in those companies. Overweighting competitive local
exchange carriers (CLECs) also helped relative performance, as did
underweighting the slower-growing regional Bell operating companies
(RBOCs) and conventional electric utilities. Higher interest rates and
intense competitive pressures hurt the performance of stocks in the
latter two categories. The Federal Reserve Board raised short-term
interest rates in June, August, November and February, making it a
difficult period for any stock with even a mild sensitivity to
interest rates. Historically, the share prices of electric utilities
and RBOCs have followed bond prices, which were sharply lower during
the period.
Q. YOU BEGAN MANAGING THE FUND ON NOVEMBER 1, 1999.
CAN YOU DESCRIBE YOUR MANAGEMENT STYLE?
A. I don't expect my style to differ noticeably from that of the
previous manager. Like him, I emphasized stocks from the
telecommunications sector because of the many outstanding growth
opportunities there. The ongoing build-out of worldwide fiber-optics
networks and the explosion in wireless usage spurred by new
applications in voice and data are powerful influences that should be
felt for some time in the telecommunications industry. Likewise,
deregulation and privatization have opened the door for IPPs to take
market share from the incumbent electric utilities. Having made those
"big-picture" observations, though, I also should stress that I am
very focused on evaluating the fund's holdings on a stock-by-stock
basis and taking full advantage of Fidelity's in-depth research
capabilities.
Q. WHAT STOCKS DID WELL FOR THE FUND?
A. IPPs Calpine and AES, both mentioned in the semiannual report six
months ago, again topped the list of stocks that helped performance.
Calpine saw the need for new power generation projects in the United
States at a time when traditional utilities were being cautious about
expanding power generation facilities because of concerns about
deregulation. Calpine rushed in to fill the gap, resulting in dynamic
earnings growth that galvanized investor interest during the period.
AES got off to a rough start during the period, hobbled by Brazil's
devaluation of its currency, the real, and the concerns it raised
about earnings from AES' Brazilian operations. However, the stock
recovered nicely when regulators in Brazil granted AES significant
rate increases to compensate for the devaluation. McLeodUSA and
Metromedia Fiber represented the strong CLECs group, which continued
to win market share from the incumbent local telephone service
providers, the RBOCs. Nextel benefited from the strong business
prospects for wireless companies.
Q. WHAT STOCKS DETRACTED FROM PERFORMANCE?
A. SBC Communications reflected the weak RBOCs group, which was
plagued by the twin difficulties of higher interest rates and
competitive pressures due to deregulation. Those same challenges,
along with lower-than-expected earnings from its international
operations, caused electric utility CMS Energy to decline. Another
underperforming utility, PG&E, received an unfavorable rate decision
from the California Public Utility Commission. I sold the latter two
holdings.
Q. WHAT'S YOUR OUTLOOK, JOHN?
A. I see plenty of opportunity in the utilities sector. With respect
to both the telecommunications and power industries, the key will
likely remain to invest in the companies that stand to benefit most
from advances in technology and the ongoing trends of deregulation and
privatization. In general, that means investing in newer companies
with lower cost structures and greater flexibility to respond to
changing market conditions, while underweighting established players
that may be slow to adjust to the new playing fields in these
industries. As long as interest rates are rising, there is an
additional reason to underweight traditional electric utilities and
RBOCs because of the close correlation between those stocks and bond
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 10, 1981
FUND NUMBER: 065
TRADING SYMBOL: FSUTX
SIZE: as of February 29, 2000, more than
$645 million
MANAGER: John Roth, since November 1999;
analyst, utilities industry, September 1999-
present; joined Fidelity in 1999
UTILITIES GROWTH PORTFOLIO
INVESTMENTS FEBRUARY 29, 2000
Showing Percentage of Net Assets
COMMON STOCKS - 95.3%
SHARES VALUE (NOTE 1)
BROADCASTING - 2.9%
American Tower Corp. Class A 72,200 $ 3,555,850
(a)
AMFM, Inc. (a) 65,600 4,026,200
AT&T Corp. - Liberty Media 63,200 3,302,200
Group Class A (a)
EchoStar Communications Corp. 27,300 3,112,200
Class A (a)
NTL, Inc. (a) 53,250 4,872,375
18,868,825
CELLULAR - 12.5%
Aerial Communications, Inc. 35,100 2,103,806
(a)
ALLTEL Corp. 117,000 6,786,000
Crown Castle International 79,800 2,573,550
Corp. (a)
Nextel Communications, Inc. 193,600 26,474,800
Class A (a)
Omnipoint Corp. (a) 70,100 8,256,137
SBA Communications Corp. 120,600 4,884,300
Sprint Corp. - PCS Group 322,000 16,663,500
Series 1 (a)
Telephone & Data Systems, 14,263 1,504,747
Inc.
United States Cellular Corp. 10,400 696,150
(a)
Vodafone AirTouch PLC 57,900 3,340,106
sponsored ADR
VoiceStream Wireless Corp. (a) 55,300 7,358,356
80,641,452
COMMUNICATIONS EQUIPMENT - 1.8%
Comverse Technology, Inc. (a) 50,000 9,843,750
Globalstar Telecommunications 59,400 1,692,900
Ltd. (a)
11,536,650
COMPUTER SERVICES & SOFTWARE
- - 0.4%
Covad Communications Group, 28,400 2,563,100
Inc.
MatrixOne, Inc. 200 5,000
Onvia.com, Inc. 500 10,500
2,578,600
CONSUMER ELECTRONICS - 0.5%
General Motors Corp. Class H 27,300 3,289,650
(a)
ELECTRIC UTILITY - 16.8%
AES Corp. (a) 368,675 30,899,573
Calpine Corp. (a) 308,700 28,246,050
DPL, Inc. 351,200 7,550,800
DTE Energy Co. 63,900 1,928,981
Duke Energy Corp. 162,900 7,900,650
Edison International 156,100 4,107,381
Entergy Corp. 97,000 1,964,250
Independent Energy Holdings 185,100 9,266,569
PLC sponsored ADR (a)
IPALCO Enterprises, Inc. 418,600 7,090,038
Montana Power Co. 123,200 4,851,000
NSTAR Companies 105,200 4,306,625
108,111,917
SHARES VALUE (NOTE 1)
GAS - 10.3%
Dynegy, Inc. 621,047 $ 29,111,578
Enron Corp. 346,792 23,928,648
Kinder Morgan, Inc. 299,700 8,354,138
Williams Companies, Inc. 125,000 5,226,563
66,620,927
REAL ESTATE INVESTMENT TRUSTS
- - 0.2%
Pinnacle Holdings, Inc. 21,600 1,263,600
TELEPHONE SERVICES - 49.9%
Allegiance Telecom, Inc. (a) 54,450 5,383,744
AT&T Corp. 825,739 40,822,468
BCE, Inc. 256,900 28,000,966
Bell Atlantic Corp. 386,100 18,894,769
BellSouth Corp. 758,600 30,912,950
CenturyTel, Inc. 52,700 1,772,038
Global Crossing Ltd. (a) 205,700 9,590,763
GTE Corp. 232,300 13,705,700
Level 3 Communications, Inc. 132,600 15,099,825
(a)
MCI WorldCom, Inc. (a) 699,324 31,207,334
McLeodUSA, Inc. Class A (a) 242,400 21,331,200
Metromedia Fiber Network, 249,500 17,936,711
Inc. Class A (a)
NEXTLINK Communications, Inc. 14,800 1,630,775
Class A (a)
Qwest Communications 303,266 14,063,961
International, Inc. (a)
SBC Communications, Inc. 1,002,861 38,108,718
Sprint Corp. - FON Group 304,000 18,544,000
U.S. WEST, Inc. 121,500 8,823,938
WinStar Communications, Inc. 72,600 5,617,425
(a)
321,447,285
TOTAL COMMON STOCKS 614,358,906
(Cost $432,041,690)
CASH EQUIVALENTS - 14.1%
Central Cash Collateral Fund, 54,382,500 54,382,500
5.75% (b)
Taxable Central Cash Fund, 36,692,913 36,692,913
5.66% (b)
TOTAL CASH EQUIVALENTS 91,075,413
(Cost $91,075,413)
TOTAL INVESTMENT PORTFOLIO - 705,434,319
109.4%
(Cost $523,117,103)
NET OTHER ASSETS - (9.4)% (60,329,224)
NET ASSETS - 100% $ 645,105,095
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 $522,864,089 and $530,877,264, 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 $7,727 for the
period.
The fund participated in the security lending program. At period end,
the value of securities loaned amounted to $52,542,658. The fund
received cash collateral of $54,382,500 which was invested in cash
equivalents.
INCOME TAX INFORMATION
At February 29, 2000, the aggregate cost of investment securities for
income tax purposes was $523,191,269. Net unrealized appreciation
aggregated $182,243,050, of which $205,213,033 related to appreciated
investment securities and $22,969,983 related to depreciated
investment securities.
The fund hereby designates approximately $45,820,000 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 2001 of amounts for use
in preparing 2000 income tax returns.
UTILITIES GROWTH PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 705,434,319
value (cost $523,117,103) -
See accompanying schedule
Receivable for investments 7,634,824
sold
Receivable for fund shares 2,107,418
sold
Dividends receivable 466,145
Interest receivable 178,660
Redemption fees receivable 3,435
Other receivables 110,422
TOTAL ASSETS 715,935,223
LIABILITIES
Payable for investments $ 5,051,789
purchased
Payable for fund shares 10,846,062
redeemed
Accrued management fee 314,892
Other payables and accrued 234,885
expenses
Collateral on securities 54,382,500
loaned, at value
TOTAL LIABILITIES 70,830,128
NET ASSETS $ 645,105,095
Net Assets consist of:
Paid in capital $ 447,582,385
Undistributed net investment 1,726,687
income
Accumulated undistributed net 13,478,807
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 182,317,216
(depreciation) on investments
NET ASSETS, for 9,372,360 $ 645,105,095
shares outstanding
NET ASSET VALUE and $68.83
redemption price per share
($645,105,095 (divided by)
9,372,360 shares)
Maximum offering price per $70.96
share (100/97.00 of $68.83)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME $ 8,464,691
Dividends
Interest 1,843,700
Security lending 287,237
TOTAL INCOME 10,595,628
EXPENSES
Management fee $ 3,483,400
Transfer agent fees 2,358,446
Accounting and security 424,136
lending fees
Non-interested trustees' 2,664
compensation
Custodian fees and expenses 22,364
Registration fees 80,949
Audit 22,037
Legal 2,104
Miscellaneous 776
Total expenses before 6,396,876
reductions
Expense reductions (131,037) 6,265,839
NET INVESTMENT INCOME 4,329,789
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 65,338,263
Foreign currency transactions 55,830 65,394,093
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 79,862,193
Assets and liabilities in (13) 79,862,180
foreign currencies
NET GAIN (LOSS) 145,256,273
NET INCREASE (DECREASE) IN $ 149,586,062
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION Sales $ 1,834,883
charges paid to FDC
Sales charges - Retained by $ 1,833,822
FDC
Deferred sales charges $ 15,873
withheld by FDC
Exchange fees withheld by FSC $ 22,570
Expense reductions Directed $ 127,307
brokerage arrangements
Custodian credits 2,010
Transfer agent credits 1,720
$ 131,037
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net investment $ 4,329,789 $ 3,134,078
income
Net realized gain (loss) 65,394,093 98,328,176
Change in net unrealized 79,862,180 19,577,920
appreciation (depreciation)
NET INCREASE (DECREASE) IN 149,586,062 121,040,174
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (3,616,937) (1,845,471)
From net investment income
From net realized gain (79,551,544) (58,304,043)
TOTAL DISTRIBUTIONS (83,168,481) (60,149,514)
Share transactions Net 251,824,406 311,901,481
proceeds from sales of shares
Reinvestment of distributions 79,235,957 57,497,817
Cost of shares redeemed (260,445,004) (324,713,707)
NET INCREASE (DECREASE) IN 70,615,359 44,685,591
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 231,048 337,629
TOTAL INCREASE (DECREASE) 137,263,988 105,913,880
IN NET ASSETS
NET ASSETS
Beginning of period 507,841,107 401,927,227
End of period (including $ 645,105,095 $ 507,841,107
undistributed net investment
income of $1,726,687 and
$1,646,086, respectively)
OTHER INFORMATION
Shares
Sold 3,779,328 5,410,133
Issued in reinvestment of 1,263,812 1,024,484
distributions
Redeemed (3,917,845) (5,700,831)
Net increase (decrease) 1,125,295 733,786
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 E 1999 1998 1997 1996 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 61.58 $ 53.50 $ 45.97 $ 43.03 $ 34.88
period
Income from Investment
Operations
Net investment income C .48 .44 .54 .73 1.10
Net realized and unrealized 16.46 15.77 14.83 6.41 7.86
gain (loss)
Total from investment 16.94 16.21 15.37 7.14 8.96
operations
Less Distributions
From net investment income (.42) (.25) (.58) (.70) (.84)
From net realized gain (9.30) (7.93) (7.30) (3.54) -
Total distributions (9.72) (8.18) (7.88) (4.24) (.84)
Redemption fees added to paid .03 .05 .04 .04 .03
in capital
Net asset value, end of period $ 68.83 $ 61.58 $ 53.50 $ 45.97 $ 43.03
TOTAL RETURN A, B 29.76% 32.17% 36.20% 18.13% 25.82%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 645,105 $ 507,841 $ 401,927 $ 256,844 $ 266,768
(000 omitted)
Ratio of expenses to average 1.07% 1.18% 1.33% 1.47% 1.39%
net assets
Ratio of expenses to average 1.04% D 1.16% D 1.30% D 1.46% D 1.38% D
net assets after expense
reductions
Ratio of net investment .72% .77% 1.11% 1.73% 2.76%
income to average net assets
Portfolio turnover rate 93% 113% 78% 31% 65%
</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
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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT MONEY MARKET 5.08% 28.85% 61.64%
SELECT MONEY MARKET (LOAD ADJ.) 1.93% 24.98% 56.79%
All Taxable Money Market 4.79% 28.01% 59.94%
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 3.00% 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 969 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 29, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
2000
SELECT MONEY MARKET 5.08% 5.20% 4.92%
SELECT MONEY MARKET (LOAD ADJ.) 1.93% 4.56% 4.60%
All Taxable Money Market 4.79% 5.06% 4.80%
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>
2/29/00 11/30/99 8/31/99 6/1/99 3/2/99
SELECT
MONEY MARKET 5.53% 5.18% 4.99% 4.37% 4.71%
All Taxable
Money Market
Funds Average 5.27% 5.03% 4.64% 4.33% 4.37%
3/1/00 12/1/99 9/1/99 6/2/99 3/3/99
MMDA 2.09% 2.07% 2.06% 2.06% 2.16%
</TABLE>
Money Market
All Taxable
Money Market
Funds Average
MMDA
6% -
4% -
2% -
0%
Row: 1, Col: 1, Value: 5.53
Row: 1, Col: 2, Value: 5.270000000000001
Row: 1, Col: 3, Value: 2.09
Row: 2, Col: 1, Value: 5.18
Row: 2, Col: 2, Value: 5.03
Row: 2, Col: 3, Value: 2.07
Row: 3, Col: 1, Value: 4.99
Row: 3, Col: 2, Value: 4.64
Row: 3, Col: 3, Value: 2.06
Row: 4, Col: 1, Value: 4.37
Row: 4, Col: 2, Value: 4.33
Row: 4, Col: 3, Value: 2.06
Row: 5, Col: 1, Value: 4.71
Row: 5, Col: 2, Value: 4.37
Row: 5, Col: 3, Value: 2.16
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 DURING THE 12 MONTHS
THAT ENDED FEBRUARY 29, 2000?
A. The economy was very strong. Gross domestic product grew at a rate
of 4.5% in 1999, including a 6.9% rate in the fourth quarter, its
largest gain in three years. At the same time, unemployment edged
down, reaching a 30-year low. History tells us that this kind of
backdrop typically sparks inflationary pressures. However, even though
commodity prices spiked up recently - particularly energy prices -
gains in productivity and intense competition helped prevent price
increases from reaching the consumer. In turn, consumer spending has
sparked the dynamic growth of the economy, driven by gains in both the
stock and real estate markets. This environment put the Federal
Reserve Board into a difficult situation. On the one hand, with the
economy performing so well amid a relatively benign inflation
environment, the Fed did not want to pull the rug from under the
economy by raising short-term interest rates too far, too fast. On the
other, by any historical standard, analysis of the data suggested that
the Fed should do something. As a result, the Fed adopted a gradualist
approach, inching short-term interest rates higher during the past 12
months in an attempt to tap the brakes on the economy and head off
inflation before it emerged. To do so, the Fed raised the rate banks
charge each other for overnight loans - known as the fed funds rate -
by 0.25 percentage points four times, in June, August and November
1999, and in February 2000, bringing the fed funds rate up to 5.75% by
the end of the period.
Q. WHAT WAS YOUR STRATEGY WITH THE FUND?
A. For much of the 12-month period, I kept the fund's average maturity
fairly short. By doing so in a rising interest-rate environment, I was
able to re-invest maturing assets in securities offering ever-higher
yields. A key part of this approach was emphasizing variable-rate
securities, whose yields are re-set to match the direction of the
market. These instruments ratcheted up in yield in response to Fed
rate hikes, and offered a better alternative to longer-term,
fixed-rate securities that did not incorporate the higher rates that I
anticipated. However, there were two times during the course of the
year when I extended the average maturity of the fund to take
advantage of attractive yields offered by longer-term money market
securities. The first was in the second quarter of 1999, when, for a
time, longer-term yields factored in more significant Fed rate hikes
than I thought would occur. The second was in September 1999, when the
market was factoring in a sharp spike in rates over the turn of the
century because of Y2K concerns. My expectation was that Fed policies
designed to maintain liquidity in the marketplace as we entered 2000
would help keep interest rates at a more stable level, which turned
out to be correct and helped the fund's performance. During the last
month of the period, I again emphasized securities with very short
maturities - in the 30- to 60-day range - with the notion that the Fed
is likely to raise rates again in March and, depending on emerging
data, again in May or June.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on February 29, 2000, was 5.53%,
compared to 4.76% 12 months ago. For the 12 months that ended February
29, 2000, the fund had a total return of 5.08%, compared to 4.79% for
the all taxable money market funds average, according to IBC Financial
Data, Inc.
Q. WHAT IS YOUR OUTLOOK?
A. We're experiencing something unusual: the acceleration of the
economy well into a record-long economic expansion, with declining
unemployment and low inflation. As long as the business community
continues to invest capital to improve productivity, the Fed appears
to have accepted that the economy can grow at a rate above which one
would normally expect inflation to occur. If the economy continues to
grow without any signs of emerging inflation, I would expect the Fed
to continue its gradualist approach, implementing rate hikes slowly to
moderately restrain growth. However, if there is some sort of negative
surprise on the inflation front, the Fed is liable to adopt a more
dramatic monetary policy.
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 29, 2000, more than
$888 million
MANAGER: John Todd, since 1991; manager,
various Fidelity and Spartan money market
funds; joined Fidelity in 1981
MONEY MARKET PORTFOLIO
INVESTMENTS FEBRUARY 29, 2000
Showing Percentage of Net Assets
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CERTIFICATES OF DEPOSIT - 14.1%
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT VALUE (NOTE 1)
PURCHASE
DOMESTIC CERTIFICATES OF
DEPOSIT - 0.9%
First Union National Bank,
North Carolina
5/20/00 6.18% (b) $ 8,000,000 $ 8,000,000
LONDON BRANCH, EURODOLLAR,
FOREIGN BANKS - 1.7%
Bayerische Hypo-und
Vereinsbank AG
3/8/00 6.00 5,000,000 5,000,000
ING Bank NV
8/3/00 6.25 10,000,000 10,000,209
15,000,209
NEW YORK BRANCH, YANKEE
DOLLAR, FOREIGN BANKS - 11.5%
Bank of Scotland Treasury
Services
3/2/00 5.81 (b) 5,000,000 4,999,993
Commerzbank AG
7/28/00 6.25 37,000,000 36,984,350
Credit Communale de Belgique
3/7/00 6.00 5,000,000 5,000,000
Deutsche Bank AG
5/30/00 6.02 25,000,000 25,000,000
Societe Generale
3/9/00 5.87 (b) 5,000,000 4,997,175
UBS AG
5/18/00 5.35 25,000,000 24,996,918
101,978,436
TOTAL CERTIFICATES OF DEPOSIT 124,978,645
COMMERCIAL PAPER - 44.6%
Alliance & Leicester PLC
3/8/00 5.94 30,000,000 29,965,992
American Express Credit Corp.
3/1/00 6.00 5,000,000 5,000,000
Aspen Funding Corp.
3/13/00 5.84 20,000,000 19,961,267
Asset Securitization Coop.
Corp.
3/3/00 6.02 (b) 7,000,000 7,000,000
3/14/00 6.17 (b) 5,000,000 5,000,000
Centric Capital Corp.
3/8/00 6.03 10,000,000 9,988,450
Chase Manhattan Corp.
4/26/00 6.03 15,000,000 14,863,500
Citibank Credit Card Master
Trust I (Dakota Certificate
Program)
3/8/00 6.04 10,000,000 9,988,450
3/9/00 6.04 5,000,000 4,993,389
4/4/00 5.93 25,000,000 24,861,403
Commonwealth Bank of Australia
3/10/00 6.03 5,000,000 4,992,575
Corporate Receivables Corp.
3/14/00 5.86 25,000,000 24,947,458
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT VALUE (NOTE 1)
PURCHASE
CXC, Inc.
3/16/00 6.09% $ 10,000,000 $ 9,975,000
Daimler-Chrysler North
America Holding Corp.
3/6/00 6.04 5,000,000 4,995,868
3/6/00 6.05 5,000,000 4,995,903
3/13/00 6.17 10,000,000 9,979,733
3/15/00 6.09 10,000,000 9,976,667
Delaware Funding Corp.
3/20/00 5.83 5,585,000 5,567,904
Edison Asset Securitization LLC
3/10/00 5.96 2,000,000 1,997,100
Enterprise Funding Corp.
3/13/00 5.84 5,926,000 5,914,523
Ford Motor Credit Co.
3/6/00 6.05 10,000,000 9,991,722
GE Capital International
Funding, Inc.
3/10/00 6.11 10,000,000 9,985,075
3/15/00 6.06 10,000,000 9,977,056
General Electric Capital Corp.
3/3/00 6.04 25,000,000 24,991,819
General Electric Capital
Services, Inc.
3/7/00 5.91 25,000,000 24,976,042
General Motors Acceptance Corp.
3/6/00 5.90 5,000,000 4,996,028
Goldman Sachs Group, Inc.
5/15/00 6.00 5,000,000 4,938,438
Marsh USA, Inc.
3/22/00 5.92 5,000,000 4,983,229
New Center Asset Trust
3/22/00 5.83 10,000,000 9,966,167
Park Avenue Receivables Corp.
3/20/00 5.83 20,000,000 19,938,778
Rohm & Haas Co.
3/8/00 6.35 2,000,000 1,997,608
Tyco International Group SA
3/8/00 6.72 5,000,000 4,993,583
Westdeutsche Landesbank
Girozentrale
5/24/00 6.04 25,000,000 24,652,917
Windmill Funding Corp.
5/3/00 6.00 25,000,000 24,741,438
TOTAL COMMERCIAL PAPER 396,095,082
FEDERAL AGENCIES - 12.7%
FANNIE MAE - 12.7%
Discount Notes - 12.7%
5/4/00 5.91 42,820,000 42,376,956
8/10/00 6.09 25,000,000 24,335,687
8/17/00 6.12 47,873,000 46,538,061
113,250,704
U.S. TREASURY OBLIGATIONS -
5.6%
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT VALUE (NOTE 1)
PURCHASE
U.S. TREASURY BILLS - 5.6%
4/27/00 5.76% $ 50,000,000 $ 49,548,747
BANK NOTES - 10.8%
Bank of America NA
8/15/00 6.27 35,000,000 34,984,344
Bank One NA
7/26/00 6.25 5,000,000 4,998,068
Bank One NA, Chicago
4/24/00 6.00 (b) 5,000,000 4,997,114
First National Bank, Chicago
7/12/00 5.75 10,000,000 9,998,255
First Union National Bank,
North Carolina
4/4/00 6.09 (b) 5,000,000 5,000,000
Fleet National Bank
3/1/00 5.96 (b) 25,000,000 24,995,607
Key Bank NA
3/16/00 6.00 (b) 6,000,000 6,000,000
NationsBank NA
3/1/00 5.91 (b) 5,000,000 4,999,789
TOTAL BANK NOTES 95,973,177
MASTER NOTES - 1.7%
J. P. Morgan Securities, Inc.
3/2/00 5.86 (b) 15,000,000 15,000,000
MEDIUM-TERM NOTES - 4.0%
American Telephone & Telegraph
3/7/00 5.95 (b) 15,000,000 15,000,000
CIESCO LP
3/15/00 5.87 (b) 5,000,000 4,999,628
Ford Motor Credit Co.
3/1/00 5.95 (b) 6,000,000 6,000,000
5/23/00 6.09 (b) 10,000,000 9,996,714
TOTAL MEDIUM-TERM NOTES 35,996,342
SHORT-TERM NOTES - 1.0%
RACERS Series 1999 16MM,
3/2/00 5.91 (a)(b) 5,000,000 5,000,000
SMM Trust Series 1999 E,
4/5/00 6.02 (a)(b) 2,000,000 2,000,000
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT VALUE (NOTE 1)
PURCHASE
SMM Trust Series 1999 I,
5/26/00 6.11% (a)(b) $ 2,000,000 $ 2,000,000
TOTAL SHORT-TERM NOTES 9,000,000
</TABLE>
REPURCHASE AGREEMENTS - 7.2%
MATURITY AMOUNT
In a joint trading account $ 3,769,614 3,769,000
(U.S. Government
Obligations) dated 2/29/00
due 3/1/00 At 5.86%
With:
Deutsche Bank Securities, 20,003,344 20,000,000
Inc. At 6.02%, dated
2/29/00 due 3/1/00
(Corporate Bond Obligations)
(principal amount
$20,521,719) 7.15% - 7.91%,
11/15/09 - 12/15/27
Salomon Smith Barney At 40,006,675 40,000,000
6.01%, dated 2/29/00 due
3/1/00 (Commercial Paper
Obligations) (principal
amount $40,924,320) 0% -
6.02%, 3/10/00 - 3/31/00
TOTAL REPURCHASE AGREEMENTS 63,769,000
TOTAL INVESTMENT PORTFOLIO - 903,611,697
101.7%
NET OTHER ASSETS - (1.7)% (14,742,539)
NET ASSETS - 100% $ 888,869,158
Total Cost for Income Tax Purposes $ 903,611,697
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 1.0% 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.
OTHER INFORMATION
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 $11,687,000. The weighted average interest
rate was 5.37%. Interest earned from the interfund lending program
amounted to $1,743 and is included in interest income on the Statement
of Operations.
INCOME TAX INFORMATION
At February 29, 2000, the fund had a capital loss carryforward of
approximately $6,000 all of which will expire on February 29, 2008.
MONEY MARKET PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investment in securities, at $ 903,611,697
value (including repurchase
agreements of $63,769,000)
- - See accompanying schedule
Cash 255
Receivable for fund shares 35,619,906
sold
Interest receivable 2,869,931
Prepaid expenses 41,555
TOTAL ASSETS 942,143,344
LIABILITIES
Payable for fund shares $ 52,598,513
redeemed
Distributions payable 300,601
Accrued management fee 155,212
Other payables and accrued 219,860
expenses
TOTAL LIABILITIES 53,274,186
NET ASSETS $ 888,869,158
Net Assets consist of:
Paid in capital $ 888,875,077
Accumulated undistributed (5,919)
net realized gain (loss) on
investments
NET ASSETS, for 888,808,187 $ 888,869,158
shares outstanding
NET ASSET VALUE and $1.00
redemption price per share
($888,869,158 (divided by)
888,808,187 shares)
Maximum offering price per $1.03
share (100/97.00 of $1.00)
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INTEREST INCOME $ 56,789,257
EXPENSES
Management fee $ 1,924,888
Transfer agent fees 2,197,634
Accounting fees and expenses 119,494
Non-interested trustees' 3,341
compensation
Custodian fees and expenses 24,558
Registration fees 636,569
Audit 34,843
Legal 3,590
Miscellaneous 56,000
Total expenses before 5,000,917
reductions
Expense reductions (13,922) 4,986,995
NET INTEREST INCOME 51,802,262
NET REALIZED GAIN (LOSS) ON (5,919)
INVESTMENTS
NET INCREASE IN NET ASSETS $ 51,796,343
RESULTING FROM OPERATIONS
OTHER INFORMATION Sales $ 1,898,136
charges paid to FDC
Sales charges - Retained by $ 1,885,554
FDC
Deferred sales charges $ 62,882
withheld by FDC
Expense reductions $ 5,294
Custodian credits
Transfer agent credits 8,628
$ 13,922
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET YEAR ENDED FEBRUARY 29, 2000 YEAR ENDED FEBRUARY 28, 1999
ASSETS
Operations Net interest income $ 51,802,262 $ 47,769,375
Net realized gain (loss) (5,919) 54,995
NET INCREASE (DECREASE) IN 51,796,343 47,824,370
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (51,802,262) (47,769,375)
from net interest income
Share transactions at net 4,948,605,084 6,779,151,867
asset value of $1.00 per
share Proceeds from sales of
shares
Reinvestment of 47,380,569 42,982,213
distributions from net
interest income
Cost of shares redeemed (5,233,284,138) (6,280,934,055)
NET INCREASE (DECREASE) IN (237,298,485) 541,200,025
NET ASSETS AND SHARES
RESULTING FROM SHARE
TRANSACTIONS
TOTAL INCREASE (DECREASE) (237,304,404) 541,255,020
IN NET ASSETS
NET ASSETS
Beginning of period 1,126,173,562 584,918,542
End of period $ 888,869,158 $ 1,126,173,562
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED FEBRUARY 28, 2000 D 1999 1998 1997 1996 D
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
period
Income from Investment .050 .050 .051 .049 .054
Operations Net interest
income
Less Distributions
From net interest income (.050) (.050) (.051) (.049) (.054)
Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
TOTAL RETURN A, B 5.08% 5.08% 5.26% 5.02% 5.56%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 888,869 $ 1,126,174 $ 584,919 $ 848,168 $ 610,821
(000 omitted)
Ratio of expenses to average .48% .50% .56% .56% .59%
net assets
Ratio of expenses to average .48% .49% C .56% .56% .59%
net assets after expense
reductions
Ratio of net interest income 4.95% 5.03% 5.13% 4.92% 5.39%
to average net assets
</TABLE>
A THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN.
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES
CHARGE.
C FMR OR THE FUND HAS ENTERED INTO VARYING
ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR
REDUCED A PORTION OF THE FUND'S EXPENSES.
D FOR THE YEAR ENDED FEBRUARY 29
NOTES TO FINANCIAL STATEMENTS
For the period ended February 29, 2000
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Select Portfolios (the trust) is registered under the
Investment Company Act of 1940, as amended (the 1940 Act), as an
open-end management investment company organized as a Massachusetts
business trust. The trust has thirty-eight equity funds (the fund or
the funds) which invest primarily in securities of companies whose
principal business activities fall within specific industries, and a
money market fund which invests in high quality money market
instruments. Each fund is authorized to issue an unlimited number of
shares. The Gold 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 the business of the fund, are expected
to materially affect the value of those securities, then they are
valued at their fair value taking this trading or these events into
account. Fair value is determined in good faith under consistently
applied procedures under the general supervision of the Board of
Trustees. Securities (including restricted securities) for which
exchange quotations are not readily available (and in certain cases
debt securities which trade on an exchange) are valued primarily using
dealer-supplied valuations or at their fair value. Short-term
securities with remaining maturities of sixty days or less for which
quotations are not readily available are valued at amortized cost or
original cost plus accrued interest, both of which approximate current
value. Direct investments in precious metals in the form of bullion
are valued at the most recent bid price quoted by a major bank on the
New York Commodities Exchange.
MONEY MARKET FUND. As permitted under Rule 2a-7 of the 1940 Act, and
certain conditions therein, securities are valued initially at cost
and thereafter assume a constant amortization to maturity of any
discount or premium.
FOREIGN CURRENCY TRANSLATION. The accounting records of the funds are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
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
U.S. federal 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, 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, Federal Agency,
and other obligations found satisfactory by FMR 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
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
.2167% 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 annual 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 .0920% 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
annual rate of .18%. The income-based portion of this fee was equal to
$265,903, 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 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
$49,866 for the calendar year 2000 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 $27,913 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>
<CAPTION>
<S> <C> <C> <C>
BENEFICIAL INTEREST
FUND FMR % OF OWNERSHIP NUMBER OF UNAFFILIATED % OF UNAFFILIATED OWNERSHIP
SHAREHOLDERS
Cyclical Industries 29.5 - -
Environmental Services - 1 18.7
Industrial Materials - 1 14.5
Multimedia - 1 10.7
Natural Resources 35.0 - -
</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. MERGER INFORMATION.
On February 29, 2000, Fidelity Select Gold Portfolio acquired all of
the assets and assumed all of the liabilities of Fidelity Select
Precious Metals and Minerals Portfolio. The acquisition, which was
approved by the shareholders of Fidelity Select Precious Metals and
Minerals Portfolio on February 16, 2000, was accomplished by an
exchange of 7,736,425 shares of Fidelity Select Gold Portfolio for the
10,907,225 shares then outstanding (each valued at $9.54) of Fidelity
Select Precious Metals and Minerals Portfolio. Based on the opinion of
fund counsel, the reorganization qualified as a tax-free
reorganization for federal income tax purposes with no gain or loss
recognized to the funds or their shareholders. Fidelity Select
Precious Metals and Minerals Portfolio's net assets, including
$14,545,376 of unrealized depreciation, were combined with Fidelity
Select Gold Portfolio's net assets for total net assets after the
acquisition of $283,966,204. In addition, FMR agreed to reimburse
Fidelity Select Gold Portfolio's operating expenses (excluding
interest, taxes, certain securities lending costs, brokerage
commissions and extraordinary expenses, if any) above an annual rate
of 1.54% of average net assets. This arrangement with Fidelity Select
Gold Portfolio is effective March 1, 2000 and will remain in effect
through February 28, 2001.
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 funds constituting Fidelity Select Portfolios at February
29, 2000, and the results of their operations, the changes in their
net assets and the financial highlights for the periods indicated, in
conformity with accounting principles generally accepted in the United
States. 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 auditing standards generally accepted in the United States 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 29, 2000 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, 2000
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 per share derived from capital gains realized
from sales of portfolio securities, and dividends derived from net
investment income for each of the following funds:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
AMOUNTS PER SHARE
RECORD &
FUND PAY DATE EX. DATE DIVIDENDS CAPITAL GAINS
Air Transportation 4/10/00 4/7/00 - $2.39
Banking 4/17/00 4/14/00 $0.10 $2.48
Biotechnology 4/10/00 4/7/00 - $2.11
Brokerage and Investment 4/10/00 4/7/00 - $0.92
Management
Business Services and 4/17/00 4/14/00 - $0.82
Outsourcing
Chemicals 4/10/00 4/7/00 $0.03 -
Computers 4/10/00 4/7/00 - $3.79
Construction and Housing 4/17/00 4/14/00 - $0.45
Cyclical Industries 4/17/00 4/14/00 - $0.12
Defense and Aerospace 4/10/00 4/7/00 - $0.75
Developing Communications 4/17/00 4/14/00 - $1.75
Electronics 4/10/00 4/7/00 - $6.53
Energy 4/10/00 4/7/00 $0.04 $0.96
Financial Services 4/10/00 4/7/00 $0.12 $1.65
Gold 4/10/00 4/7/00 $0.03 -
Health Care 4/10/00 4/7/00 $0.09 $3.96
Home Finance 4/17/00 4/14/00 $0.03 $0.07
Industrial Equipment 4/17/00 4/14/00 - $0.36
Industrial Materials 4/17/00 4/14/00 $0.02 -
Leisure 4/10/00 4/7/00 - $9.92
Medical Equipment and
Systems 4/10/00 4/7/00 - $1.63
Multimedia 4/17/00 4/14/00 - $2.50
Natural Gas 4/17/00 4/14/00 - $0.07
Natural Resources 4/17/00 4/14/00 - $0.04
Paper and Forest Products 4/17/00 4/14/00 $0.04 -
Retailing 4/17/00 4/14/00 - $5.36
Software and Computer
Services 4/10/00 4/7/00 - $5.32
Technology 4/10/00 4/7/00 - $9.46
Telecommunications 4/10/00 4/7/00 - $8.59
Transportation 4/17/00 4/14/00 - $0.19
Utilities Growth 4/10/00 4/7/00 $0.07 $0.55
</TABLE>
Each fund hereby designates 100% of the long-term capital gain
dividends distributed during the fiscal year as 20%-rate capital gain
dividends.
The amounts per share which represent income derived from sources
within, and taxes paid to, foreign countries or possessions of the
United States are $.082 and $.002 for the dividend paid from Select
Precious Metals and Minerals Portfolio for the year ended February 29,
2000.
PROXY VOTING RESULTS
A special meeting of the fund's shareholders was held on February 16,
2000. The results of votes taken among shareholders on proposals
before them are reported below. Each vote reported represents one
dollar of net asset value held on the record date for the meeting.
PROPOSAL 1
To approve an Agreement and 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.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 55,960,195.58 85.077
Against 5,879,093.17 8.938
Abstain 3,936,550.02 5.985
TOTAL 65,775,838.77 100.00
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Investments Money Management, Inc.,
MONEY MARKET FUND
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Far East) Inc.
Fidelity Investments Japan Ltd.
OFFICERS
Edward C. Johnson 3d, PRESIDENT
Robert C. Pozen, SENIOR VICE PRESIDENT
Eric D. Roiter, SECRETARY
Robert A. Dwight, TREASURER
Matthew N. Karstetter, DEPUTY TREASURER
Maria F. Dwyer, 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
Donald J. Kirk *
Ned C. Lautenbach *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
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
Construction and Housing
Cyclical Industries
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
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
and Account Assistance 1-800-544-6666
Product Information 1-800-544-6666
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
(2_FIDLIETY_LOGOS)(registered trademark)
BULK RATE
U.S. Postage
PAID
Fidelity
Investments
P.O. Box 193
Boston, MA 02101
