SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT (No. 2-69972)
UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 50 [X]
and
REGISTRATION STATEMENT (No. 811-3114)
UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. [ ]
Fidelity Select Portfolios
(Exact Name of Registrant as Specified in Charter)
82 Devonshire St., Boston, Massachusetts 02109
(Address Of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number: 617-570-7000
Arthur S. Loring, Secretary
82 Devonshire Street
Boston, Massachusetts 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
( ) immediately upon filing pursuant to paragraph (b)
( ) on () pursuant to paragraph (b)
( ) 60 days after filing pursuant to paragraph (a)(i)
(x) on April 30, 1995 pursuant to paragraph (a)(i)
( ) 75 days after filing pursuant to paragraph (a)(ii)
( ) on () pursuant to paragraph (a)(ii) of rule 485.
If appropriate, check the following box:
( ) this post-effective amendment designates a new effective date for a
previously filed
post-effective amendment.
Registrant has filed a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940 and intends to file the Notice required by
such Rule before April 30, 1995.
FIDELITY SELECT PORTFOLIOS
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER PROSPECTUS SECTION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 .............................. Cover Page
2 a .............................. Expenses
b, c .............................. Contents; The Funds at a Glance; Who May Want
to Invest
3 a .............................. Financial Highlights
b .............................. *
c .............................. Performance
d .............................. Performance
4 a i............................. Charter
ii........................... The Funds at a Glance; Investment Principles and
Risks
b .............................. Investment Principles and Risks
c .............................. Who May Want to Invest; Investment Principles
and Risks
5 a .............................. Charter
b i............................. Cover Page; The Funds at a Glance; Charter;
Doing Business with Fidelity
ii........................... Charter
iii.......................... Expenses; Breakdown of Expenses
c .............................. Charter
d .............................. Charter; Breakdown of Expenses
e .............................. Cover Page; Charter
f .............................. Expenses
g i............................. Charter
.
ii............................ *
..
5A .............................. Performance
6 a i............................. Charter
ii........................... How to Buy Shares; How to Sell Shares;
Transaction Details; Exchange Restrictions
iii.......................... Charter
b ............................. Charter
c .............................. Transactions Details; Exchange Restrictions
d .............................. *
e .............................. Doing Business with Fidelity; How to Buy Shares;
How to Sell Shares; Investor Services
f, g .............................. Dividends, Capital Gains, and Taxes
7 a .............................. Cover Page; Charter
b .............................. Expenses; How to Buy Shares; Transaction Details
c .............................. Sales Charge Reductions and Waivers
d .............................. How to Buy Shares
e .............................. *
f .............................. Breakdown of Expenses
8 .............................. How to Sell Shares; Investor Services; Transaction
Details; Exchange Restrictions
9 .............................. *
</TABLE>
* Not Applicable
FIDELITY SELECT PORTFOLIOS
CROSS REFERENCE SHEET
(CONTINUED)
FORM N-1A
ITEM NUMBER STATEMENT OF ADDITIONAL INFORMATION SECTION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
10, 11 ............................ Cover Page
12 ............................ Description of the Trust
13 a - c ............................ Investment Policies and Limitations
d ............................ Portfolio Transactions
14 a - c ............................ Trustees and Officers
15 a, b ............................ *
c ............................ Trustees and Officers
16 a i........................... FMR, Portfolio Transactions
ii.......................... Trustees and Officers
iii......................... Management Contracts
b ............................ Management Contracts
c, d ............................ Contracts with Companies Affiliated with FMR
e ............................ *
f ............................ *
g ............................ *
h ............................ Description of the Trust
i ............................ Contracts with Companies Affiliated with FMR
17 a - c ............................ Portfolio Transactions
d, e ............................ *
18 a ............................ Description of the Trust
b ............................ *
19 a ............................ Additional Purchase and Redemption Information
b ............................ Additional Purchase and Redemption Information;
Valuation of Portfolio Securities
c ............................ *
20 ............................ Distributions and Taxes
21 a, b ............................ Contracts with Companies Affiliated with FMR
c ............................ *
22 a, b ............................ Performance
23 ............................ Financial Statements
</TABLE>
* Not Applicable
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how each
fund invests and the services available to shareholders.
To learn more about each fund and its investments, you can obtain a copy
of the funds' most recent financial reports and portfolio listing, or a
copy of the Statement of Additional Information (SAI) dated April 30, 1995.
The SAI has been filed with the Securities and Exchange Commission (SEC)
and is incorporated herein by reference (legally forms a part of the
prospectus). For a free copy of either document, call Fidelity at
1-800-544-8888.
INVESTMENTS IN THE MONEY MARKET FUND ARE NEITHER INSURED NOR GUARANTEED BY
THE U.S. GOVERNMENT, AND THERE CAN BE NO ASSURANCE THAT THE FUND WILL
MAINTAIN A STABLE $1.00 SHARE PRICE.
Mutual fund shares are not deposits or obligations of, or guaranteed by,
any depository institution. Shares are not insured by the FDIC, the Federal
Reserve Board, or any other agency, and are subject to investment risk,
including the possible loss of principal.
LIKE ALL MUTUAL FUNDS, THESE
SECURITIES HAVE NOT BEEN
APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR
HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS
PROSPECTUS. ANY
REPRESENTATION TO THE
CONTRARY IS A CRIMINAL
OFFENSE.
SEL-pro-49 5
Each stock fund seeks to increase the value of your investment over the
long-term by investing mainly in equity securities of companies within a
particular industry. The money market fund seeks high current income while
maintaining a stable $1.00 share price.
FIDELITY
SELECT
PORTFOLIOS(REGISTERED TRADEMARK)
AIR TRANSPORTATION PORTFOLIO
AMERICAN GOLD PORTFOLIO
AUTOMOTIVE PORTFOLIO
BIOTECHNOLOGY PORTFOLIO
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
CHEMICALS PORTFOLIO
COMPUTERS PORTFOLIO
CONSTRUCTION AND HOUSING PORTFOLIO
CONSUMER PRODUCTS PORTFOLIO
DEFENSE AND AEROSPACE PORTFOLIO
DEVELOPING COMMUNICATIONS PORTFOLIO
ELECTRONICS PORTFOLIO
ENERGY PORTFOLIO
ENERGY SERVICE PORTFOLIO
ENVIRONMENTAL SERVICES PORTFOLIO
FINANCIAL SERVICES PORTFOLIO
FOOD AND AGRICULTURE PORTFOLIO
HEALTH CARE PORTFOLIO
HOME FINANCE PORTFOLIO
INDUSTRIAL EQUIPMENT PORTFOLIO
INDUSTRIAL MATERIALS PORTFOLIO
INSURANCE PORTFOLIO
LEISURE PORTFOLIO
MEDICAL DELIVERY PORTFOLIO
MULTIMEDIA PORTFOLIO
NATURAL GAS PORTFOLIO
PAPER AND FOREST PRODUCTS PORTFOLIO
PRECIOUS METALS AND MINERALS PORTFOLIO
REGIONAL BANKS PORTFOLIO
RETAILING PORTFOLIO
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
TECHNOLOGY PORTFOLIO
TELECOMMUNICATIONS PORTFOLIO
TRANSPORTATION PORTFOLIO
UTILITIES GROWTH PORTFOLIO
MONEY MARKET PORTFOLIO
PROSPECTUS
APRIL 30 , 199 5 (FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET,
BOSTON, MA 02109
CONTENTS
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KEY FACTS THE FUNDS AT A GLANCE
WHO MAY WANT TO INVEST
EXPENSES Each fund's sales charge (load) and
its yearly operating expenses.
FINANCIAL HIGHLIGHTS A summary of each fund's
financial data.
PERFORMANCE How each fund has done over
time.
THE FUNDS IN DETAIL CHARTER How each fund is organized.
INVESTMENT PRINCIPLES AND RISKS Each fund's
overall approach to investing.
BREAKDOWN OF EXPENSES How operating costs
are calculated and what they include.
YOUR ACCOUNT DOING BUSINESS WITH FIDELITY
TYPES OF ACCOUNTS Different ways to set up
your account, including tax-sheltered retirement
plans.
HOW TO BUY SHARES Opening an account and
making additional investments.
HOW TO SELL SHARES Taking money out and
closing your account.
INVESTOR SERVICES Services to help you
manage your account.
SHAREHOLDER AND ACCOUNT POLICIES DIVIDENDS, CAPITAL GAINS, AND TAXES
TRANSACTION DETAILS Share price calculations
and the timing of purchases and redemptions.
EXCHANGE RESTRICTIONS
SALES CHARGE REDUCTIONS AND WAIVERS
</TABLE>
KEY FACTS
THE FUNDS AT A GLANCE
STOCK FUNDS' GOAL: Capital appreciation (increase in the value of a fund's
shares). As with any mutual fund, there is no assurance that a fund will
achieve its goal.
MANAGEMENT: Fidelity Management & Research Company (FMR) is the management
arm of Fidelity Investments, which was established in 1946 and is now
America's largest mutual fund manager. Foreign affiliates of FMR help
choose investments for some of the funds. FMR Texas Inc. (FTX), a
subsidiary of FMR, chooses investments for the money market fund.
AIR TRANSPORTATION
GROWTH
STRATEGY: Invests mainly in equity securities of companies engaged in the
regional, national, and international movement of passengers, mail, and
freight via aircraft.
SIZE: As of February 28, 1995 the fund had over $ ___ million
in assets.
AMERICAN GOLD
GROWTH
STRATEGY: Invests mainly in equity securities of companies engaged in
exploration, mining, processing, or dealing in gold, or, to a lesser
degree, in silver, platinum, diamonds, or other precious metals and
minerals, and may also invest directly in gold.
SIZE: As of February 28, 1995 the fund had over $ ___ million
in assets.
AUTOMOTIVE
GROWTH
STRATEGY: Invests mainly in equity securities of companies engaged in the
manufacture, marketing, or sale of automobiles, trucks, specialty vehicles,
parts, tires, and related services.
SIZE: As of February 28, 1995 the fund had over $ ___ million
in assets.
BIOTECHNOLOGY
GROWTH
STRATEGY: Invests mainly in equity securities of companies engaged in the
research, development, scale up, and manufacture of various
biotechnological products, services, and processes.
SIZE: As of February 28, 1995 the fund had over $ ___ million
in assets.
BROKERAGE AND INVESTMENT MANAGEMENT
GROWTH
STRATEGY: Invests mainly in equity securities of companies engaged in stock
brokerage, commodity brokerage, investment banking, tax-advantaged
investment or investment sales, investment management, or related
investment advisory services.
SIZE: As of February 28, 1995 the fund had over $ ___ million
in assets.
CHEMICALS
GROWTH
STRATEGY: Invests mainly in equity securities of companies engaged in the
research, development, manufacture, or marketing of products or services
related to the chemical process industries.
SIZE: As of February 28, 1995 the fund had over $ ___ million
in assets.
COMPUTERS
GROWTH
STRATEGY: Invests mainly in equity securities of companies engaged in
research, design, development, manufacture, or distribution of products,
processes, or services that relate to currently available or experimental
hardware technology within the computer industry.
SIZE: As of February 28, 1995 the fund had over $ __ million
in assets.
CONSTRUCTION AND HOUSING
GROWTH
STRATEGY: Invests mainly in equity securities of companies engaged in the
design and construction of residential, commercial, industrial, and public
works facilities, as well as companies engaged in the manufacture, supply,
distribution, or sale of products or services to these construction
industries.
SIZE: As of February 28, 1995 the fund had over $ __ million
in assets.
CONSUMER PRODUCTS
GROWTH
STRATEGY: Invests mainly in equity securities of companies engaged in the
manufacture and distribution of goods to consumers, both domestically and
internationally.
SIZE: As of February 28, 1995 the fund had over $ ___ million
in assets.
DEFENSE AND AEROSPACE
GROWTH
STRATEGY: Invests mainly in equity securities of companies engaged in the
research, manufacture, or sale of products or services related to the
defense or aerospace industries.
SIZE: As of February 28, 1995 the fund had over $ ___ million
in assets.
DEVELOPING COMMUNICATIONS
GROWTH
STRATEGY: Invests mainly in equity securities of companies engaged in the
development, manufacture, or sale of emerging communications services or
equipment.
SIZE: As of February 28, 1995 the fund had over $ ___ million
in assets.
ELECTRONICS
GROWTH
STRATEGY: Invests mainly in equity securities of companies engaged in the
design, manufacture, or sale of electronic components, equipment vendors to
electronic component manufacturers, electronic component distributors, and
electronic instruments and electronics systems vendors.
SIZE: As of February 28, 1995 the fund had over $ ___ million
in assets.
ENERGY
GROWTH
STRATEGY: Invests mainly in equity securities of companies in the energy
field, including the conventional areas of oil, gas, electricity, and coal,
and newer sources of energy such as nuclear, geothermal, oil shale, and
solar power.
SIZE: As of February 28, 1995 the fund had over $ ___ million
in assets.
ENERGY SERVICE
GROWTH
STRATEGY: Invests mainly in equity securities of companies in the energy
service field, including those that provide services and equipment to the
conventional areas of oil, gas, electricity, and coal, and newer sources of
energy such as nuclear, geothermal, oil shale, and solar power.
SIZE: As of February 28, 1995 the fund had over $ ___ million
in assets.
ENVIRONMENTAL SERVICES
GROWTH
STRATEGY: Invests mainly in equity securities of companies engaged in the
research, development, manufacture, or distribution of products, processes,
or services related to waste management or pollution control.
SIZE: As of February 28, 1995 the fund had over $ ___ million
in assets.
FINANCIAL SERVICES
GROWTH
STRATEGY: Invests mainly in equity securities of companies providing
financial services to consumers and industry.
SIZE: As of February 28, 1995 the fund had over $___ million
in assets.
FOOD AND AGRICULTURE
GROWTH
STRATEGY: Invests mainly in equity securities of companies engaged in the
manufacture, sale, or distribution of food and beverage products,
agricultural products, and products related to the development of new food
technologies.
SIZE: As of February 28, 1995 the fund had over $___ million
in assets.
HEALTH CARE
GROWTH
STRATEGY: Invests mainly in equity securities of companies engaged in the
design, manufacture, or sale of products or services used for, or in
connection with, health care or medicine.
SIZE: As of February 28, 1995 the fund had over $ ___ million
in assets.
HOME FINANCE
GROWTH
STRATEGY: Invests mainly in equity securities of companies engaged in
investing in real estate, usually through mortgages and other
consumer-related loans.
SIZE: As of February 28, 1995 the fund had over $ ___ million
in assets.
INDUSTRIAL EQUIPMENT
GROWTH
STRATEGY: Invests mainly in equity securities of companies engaged in the
manufacture, distribution, or service of products and equipment for the
industrial sector, including integrated producers of capital equipment,
parts suppliers, and subcontractors.
SIZE: As of February 28, 1995 the fund had over $ ___ million
in assets.
INDUSTRIAL MATERIALS
GROWTH
STRATEGY: Invests mainly in equity securities of companies engaged in the
manufacture, mining, processing, or distribution of raw materials and
intermediate goods used in the industrial sector.
SIZE: As of February 28, 1995 the fund had over $ ___ million
in assets.
INSURANCE
GROWTH
STRATEGY: Invests mainly in equity securities of companies engaged in
underwriting, reinsuring, selling, distributing, or placing of property and
casualty, life, or health insurance.
SIZE: As of February 28, 1995 the fund had over $ ___ million
in assets.
LEISURE
GROWTH
STRATEGY: Invests mainly in equity securities of companies engaged in the
design, production, or distribution of goods or services in the leisure
industries.
SIZE: As of February 28, 1995 the fund had over $ ___ million
in assets.
MEDICAL DELIVERY
GROWTH
STRATEGY: Invests mainly in equity securities of companies engaged in the
ownership or management of hospitals, nursing homes, health maintenance
organizations, and other companies specializing in the delivery of health
care services.
SIZE: As of February 28, 1995 the fund had over $ ___ million
in assets.
MULTIMEDIA
GROWTH
STRATEGY: Invests mainly in equity securities of companies engaged in the
development, production, sale, and distribution of goods or services used
in the broadcast and media industries.
SIZE: As of February 28, 1995 the fund had over $ ___ million
in assets.
NATURAL GAS
GROWTH
STRATEGY: Invests mainly in equity securities of companies engaged in the
production, transmission, and distribution of natural gas, and involved in
the exploration of potential natural gas sources, as well as those
companies that provide services and equipment to natural gas producers,
refineries, cogeneration facilities, converters, and distributors.
SIZE: As of February 28, 1995 the fund had over $ ___ million
in assets.
PAPER AND FOREST PRODUCTS
GROWTH
STRATEGY: Invests mainly in equity securities of companies engaged in the
manufacture, research, sale, or distribution of paper products, packaging
products, building materials, and other products related to the paper and
forest products industry.
SIZE: As of February 28, 1995 the fund had over $ __ million
in assets.
PRECIOUS METALS AND MINERALS
GROWTH
STRATEGY: Invests mainly in equity securities of companies engaged in
exploration, mining, processing, or dealing in gold, silver, platinum,
diamonds, or other precious metals and minerals, and may also invest
directly in precious metals.
SIZE: As of February 28, 1995 the fund had over $ ___ million
in assets.
REGIONAL BANKS
GROWTH
STRATEGY: Invests mainly in equity securities of companies engaged in
accepting deposits and making commercial and principally non-mortgage
consumer loans.
SIZE: As of February 28, 1995 the fund had over $ ___ million
in assets.
RETAILING
GROWTH
STRATEGY: Invests mainly in equity securities of companies engaged in
merchandising finished goods and services primarily to individual
consumers.
SIZE: As of February 28, 1995 the fund had over $ ___ million
in assets.
SOFTWARE AND COMPUTER SERVICES
GROWTH
STRATEGY: Invests mainly in equity securities of companies engaged in
research, design, production, or distribution of products or processes that
relate to software or information-based services.
SIZE: As of February 28, 1995 the fund had over $ million in
assets.
TECHNOLOGY
GROWTH
STRATEGY: Invests mainly in equity securities of companies which FMR
believes have, or will develop, products, processes, or services that will
provide or will benefit significantly from technological advances and
improvements.
SIZE: As of February 28, 1995 the fund had over $ ___ million
in assets.
TELECOMMUNICATIONS
GROWTH
STRATEGY: Invests mainly in equity securities of companies engaged in the
development, manufacture, or sale of communications services or
communications equipment.
SIZE: As of February 28, 1995 the fund had over $ ___ million
in assets.
TRANSPORTATION
GROWTH
STRATEGY: Invests mainly in equity securities of companies engaged in
providing transportation services or companies engaged in the design,
manufacture, distribution, or sale of transportation equipment.
SIZE: As of February 28, 1995 the fund had over $ ___ million
in assets.
UTILITIES GROWTH ( FORMERLY UTILITIES)
GROWTH
STRATEGY: Invests mainly in equity securities of companies in the public
utilities industry and companies deriving a majority of their revenues from
their public utility operations.
SIZE: As of February 28, 1995 the fund had over $ ___ million
in assets.
MONEY MARKET
GROWTH
GOAL: Income while maintaining a stable share price.
STRATEGY: Invests in high-quality, short-term instruments of all types.
SIZE: As of February 28, 1995 the fund had over $ ___ million
in assets.
WHO MAY WANT TO INVEST
The stock funds may be appropriate for investors who want to pursue growth
aggressively by concentrating their investment on domestic and foreign
securities within an industry or group of industries. The funds are
designed for those who are interested in actively monitoring the progress
of, and can accept the risks of, industry-focused investing. Because the
funds are so narrowly focused, changes in a particular industry can have a
substantial impact on a fund's share price. Also, because most of the funds
are non-diversified, changes in the value of one company's securities can
significantly affect a fund's performance.
The money market fund may be appropriate for investors who would like to
earn income at current money market rates while preserving the value of
their investment. The fund is managed to keep its share price stable at
$1.00. The money market fund is designed for use in connection with
exchanges between the stock funds. Since this money market fund is sold
with a sales charge, it is not recommended that you invest in the money
market fund unless you intend to use it for that purpose.
By themselves, these funds do not constitute a balanced investment plan.
The value of the stock funds' investments will vary from day to day,
generally reflecting changes in market and industry conditions, and
political and economic news. Over time, stocks have shown greater growth
potential than other types of securities. In the shorter term, however,
stock prices can fluctuate dramatically in response to these factors.
When you sell your stock fund shares, they may be worth more or less
than what you paid for them. The rate of income for the money market fund
will vary from day to day generally reflecting short-term interest rates.
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy ,
sell , or hold shares of a fund. See pages P-__ to
P-__ for an explanation of how and when these charges apply. Lower
sales charges may be available for accounts over $250,000.
Maximum sales charge on purchases (as a % of offering price) 3.00%
Maximum sales charge on reinvested dividends None
Deferred sales charge on redemptions None
Exchange fee (stock funds only) $7.50
Maximum redemption fees (stock funds only)
on shares held 29 days or less (as a % of redemption amount) 0.75%
on shares held 30 days or more $7.50
Annual account maintenance fee (for accounts under $2,500) $12.00
ANNUAL FUND OPERATING EXPENSES are paid out of each fund's assets. Each
fund pays a management fee to FMR. Each fund also incurs other
expenses for services such as maintaining shareholder records and
furnishing shareholder statements and financial reports. A
fund's e xpenses are factored into its share price or dividends
and are not charged directly to shareholder accounts (see page
P-__ ).
The operating expenses are projections based on historical expenses, and
are calculated as a percentage of average net assets. A portion of the
brokerage commissions that some of the funds paid was used to reduce fund
expenses. Without this reduction, the total fund operating expenses for the
funds would have been higher.
EXAMPLES. Let's say, hypothetically, that each fund's annual return is 5%
and that its operating expenses are exactly as just described. For
every $1,000 you invested, the examples show how much you would pay
in total expenses if you close your account after the number of years
indicated.
The examples illustrate the effect of expenses, but are not meant to
suggest actual or expected costs or returns, all of which may vary.
Operating expenses Examples
<TABLE>
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AIR TRANSPORTATION Management fee After 1 year
12b-1 fee After 3 years
Other expenses After 5 years
Total fund operating After 10
expenses years
AMERICAN GOLD Management fee After 1 year
12b-1 fee After 3 years
Other expenses After 5 years
Total fund operating After 10
expenses years
AUTOMOTIVE Management fee After 1 year
12b-1 fee After 3 years
Other expenses After 5 years
Total fund operating After 10
expenses years
BIOTECHNOLOGY Management fee After 1 year
12b-1 fee After 3 years
Other expenses After 5 years
Total fund operating After 10
expenses years
BROKERAGE AND INVESTMENT MANAGEMENT Management fee After 1 year
12b-1 fee After 3 years
Other expenses After 5 years
Total fund operating After 10
expenses years
</TABLE>
A A PORTION OF THE BROKERAGE COMMISSIONS THAT THE FUNDS PAID WAS USED TO
REDUCE FUND EXPENSES. WITHOUT THIS REDUCTION, THE TOTAL FUND OPERATING
EXPENSES FOR THE RESPECTIVE FUNDS WOULD HAVE BEEN:
Operating expenses Examples
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CHEMICALS Management fee After 1 year
12b-1 fee After 3 years
Other expenses After 5 years
Total fund operating After 10
expenses years
COMPUTERS Management fee After 1 year
12b-1 fee After 3 years
Other expenses After 5 years
Total fund operating After 10
expenses years
CONSTRUCTION AND HOUSING Management fee After 1 year
12b-1 fee After 3 years
Other expenses After 5 years
Total fund operating After 10
expenses years
CONSUMER PRODUCTS Management fee
(after
After 1 year
reimbursement)
12b-1 fee After 3 years
Other expenses After 5 years
Total fund operating After 10
expenses years
DEFENSE AND AEROSPACE Management fee
(after
After 1 year
reimbursement)
12b-1 fee After 3 years
Other expenses After 5 years
Total fund operating After 10
expenses years
DEVELOPING COMMUNICATIONS Management fee After 1 year
12b-1 fee After 3 years
Other expenses After 5 years
Total fund operating After 10
expenses years
ELECTRONICS Management fee After 1 year
12b-1 fee After 3 years
Other expenses After 5 years
Total fund operating After 10
expenses years
ENERGY Management fee After 1 year
12b-1 fee After 3 years
Other expenses After 5 years
Total fund operating After 10
expenses years
</TABLE>
Operating expenses Examples
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ENERGY SERVICE Management fee After 1 year
12b-1 fee After 3 years
Other expenses After 5 years
Total fund operating After 10
expenses years
ENVIRONMENTAL SERVICES Management fee After 1 year
12b-1 fee After 3 years
Other expenses After 5 years
Total fund operating After 10
expenses years
FINANCIAL SERVICES Management fee After 1 year
12b-1 fee After 3 years
Other expenses After 5 years
Total fund operating After 10
expenses years
FOOD AND AGRICULTURE Management fee After 1 year
12b-1 fee After 3 years
Other expenses After 5 years
Total fund operating After 10
expenses years
HEALTH CARE Management fee After 1 year
12b-1 fee After 3 years
Other expenses After 5 years
Total fund operating After 10
expenses years
HOME FINANCE Management fee After 1 year
12b-1 fee After 3 years
Other expenses After 5 years
Total fund operating After 10
expenses years
INDUSTRIAL EQUIPMENT Management fee After 1 year
12b-1 fee After 3 years
Other expenses After 5 years
Total fund operating After 10
expenses years
INDUSTRIAL MATERIALS Management fee After 1 year
12b-1 fee After 3 years
Other expenses After 5 years
Total fund operating After 10
expenses years
</TABLE>
A A PORTION OF THE BROKERAGE COMMISSIONS THAT THE FUNDS PAID WAS USED TO
REDUCE FUND EXPENSES. WITHOUT THIS REDUCTION, THE TOTAL FUND OPERATING
EXPENSES FOR THE RESPECTIVE FUNDS WOULD HAVE BEEN:
B FMR REDUCED OR REIMBURSED THESE MANAGEMENT FEES OR OTHER EXPENSES AS A
RESULT OF EITHER A VOLUNTARY EXPENSE REIMBURSEMENT OR A STATE REGULATION.
EXPENSES ELIGIBLE FOR REDUCTION OR REIMBURSEMENT DO NOT INCLUDE INTEREST,
TAXES, BROKERAGE COMMISSIONS, OR EXTRAORDINARY EXPENSES. IF NOT FOR THE
REDUCTION OR REIMBURSEMENT, THE FUNDS' MANAGEMENT FEES, OTHER EXPENSES, AND
TOTAL OPERATING EXPENSES, RESPECTIVELY, WOULD BE:
Operating expenses Examples
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
INSURANCE Management fee After 1 year
12b-1 fee After 3 years
Other expenses After 5 years
Total fund operating After 10
expenses years
LEISURE Management fee After 1 year
12b-1 fee After 3 years
Other expenses After 5 years
Total fund operating After 10
expenses years
MEDICAL DELIVERY Management fee After 1 year
12b-1 fee After 3 years
Other expenses After 5 years
Total fund operating After 10
expenses years
MULTIMEDIA Management fee After 1 year
12b-1 fee After 3 years
Other expenses After 5 years
Total fund operating After 10
expenses years
NATURAL GAS Management fee After 1 year
12b-1 fee After 3 years
Other expenses After 5 years
Total fund operating After 10
expenses years
PAPER AND FOREST PRODUCTS Management fee After 1 year
12b-1 fee After 3 years
Other expenses After 5 years
Total fund operating After 10
expenses years
PRECIOUS METALS AND MINERALS Management fee After 1 year
12b-1 fee After 3 years
Other expenses After 5 years
Total fund operating After 10
expenses years
REGIONAL BANKS Management fee After 1 year
12b-1 fee After 3 years
Other expenses After 5 years
Total fund operating After 10
expenses years
</TABLE>
Operating expenses Examples
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
RETAILING Management fee After 1 year
12b-1 fee After 3 years
Other expenses After 5 years
Total fund operating After 10
expenses years
SOFTWARE AND COMPUTER SERVICES Management fee After 1 year
12b-1 fee After 3 years
Other expenses After 5 years
Total fund operating After 10
expenses years
TECHNOLOGY Management fee After 1 year
12b-1 fee After 3 years
Other expenses After 5 years
Total fund operating After 10
expenses years
TELECOMMUNICATIONS Management fee After 1 year
12b-1 fee After 3 years
Other expenses After 5 years
Total fund operating After 10
expenses years
TRANSPORTATION Management fee After 1 year
12b-1 fee After 3 years
Other expenses After 5 years
Total fund operating After 10
expenses years
UTILITIES GROWTH Management fee After 1 year
12b-1 fee After 3 years
Other expenses After 5 years
Total fund operating After 10
expenses years
MONEY MARKET Management fee After 1 year
12b-1 fee After 3 years
Other expenses After 5 years
Total fund operating After 10
expenses years
</TABLE>
A A PORTION OF THE BROKERAGE COMMISSIONS THAT THE FUNDS PAID WAS USED TO
REDUCE FUND EXPENSES. WITHOUT THIS REDUCTION, THE TOTAL FUND OPERATING
EXPENSES FOR THE RESPECTIVE FUNDS WOULD HAVE BEEN:
FINANCIAL HIGHLIGHTS. The tables that follow are included in the funds'
Annual Report and have been audited by __________, independent accountants.
Their report on the financial statements and financial highlights is
included in the Annual Report. The financial statements and financial
highlights are incorporated by reference into (are legally a part of) the
funds' Statement of Additional Information.
[Financial Highlights to be filed by subsequent amendment.]
PERFORMANCE
Mutual fund performance is commonly measured as TOTAL RETURN. The total
returns in this section are based on historical fund results and do not
reflect the effect of taxes.
The tables on pages to show e ach fund ' s performance over
past fiscal years compared to two measures: invest ing in a broad
selection of stocks (S&P 500), and not investing
at all (inflation, or CPI). Each fund's fiscal year runs from March 1
through February 28.
<TABLE>
<CAPTION>
<S> <C> <C>
Fiscal periods ended February 28, 199 5 Average Annual Total Return Cumulative Total Return
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Past 1 year Past 5 years Life of fund Past 1 year Past 5 years Life of fund
AIR TRANSPORTATION
AIR TRANSPORTATION (LOAD ADJ.A)
AMERICAN GOLD
AMERICAN GOLD (LOAD ADJ.A)
AUTOMOTIVE
AUTOMOTIVE (LOAD ADJ.A)
BIOTECHNOLOGY
BIOTECHNOLOGY (LOAD ADJ.A)
BROKERAGE AND INVESTMENT MANAGEMENT
BROKERAGE AND INVESTMENT MANAGEMENT
(LOAD ADJ.A)
CHEMICALS
CHEMICALS (LOAD ADJ.A)
COMPUTERS
COMPUTERS (LOAD ADJ.A)
</TABLE>
CONSTRUCTION AND HOUSING
CONSTRUCTION AND HOUSING (LOAD ADJ.A)
CONSUMER PRODUCTS
CONSUMER PRODUCTS (LOAD ADJ.A)
DEFENSE AND AEROSPACE
DEFENSE AND AEROSPACE (LOAD ADJ.A)
DEVELOPING COMMUNICATIONS
DEVELOPING COMMUNICATIONS (LOAD
ADJ.A)
S&P 500
Consumer Price Index
<TABLE>
<CAPTION>
<S> <C> <C>
Fiscal periods ended February 28, 199 5 Average Annual Total Return Cumulative Total Return
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Past 1 year Past 5 years Life of fund Past 1 year Past 5 years Life of fund
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
ELECTRONICS
ELECTRONICS (LOAD ADJ.A)
ENERGY
ENERGY (LOAD ADJ.A)
ENERGY SERVICE
ENERGY SERVICE (LOAD ADJ.A)
ENVIRONMENTAL SERVICES
ENVIRONMENTAL SERVICES (LOAD ADJ.A)
FINANCIAL SERVICES
FINANCIAL SERVICES (LOAD ADJ.A)
FOOD AND AGRICULTURE
FOOD AND AGRICULTURE (LOAD ADJ.A)
HEALTH CARE PORTFOLIO
HEALTH CARE PORTFOLIO (LOAD ADJ.A)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
HOME FINANCE PORTFOLIO
HOME FINANCE PORTFOLIO (LOAD ADJ.A)
INDUSTRIAL EQUIPMENT
INDUSTRIAL EQUIPMENT (LOAD ADJ.A)
INDUSTRIAL MATERIALS
INDUSTRIAL MATERIALS (LOAD ADJ.A)
INSURANCE
INSURANCE (LOAD ADJ.A)
LEISURE
LEISURE (LOAD ADJ.A)
MEDICAL DELIVERY
MEDICAL DELIVERY (LOAD ADJ.A)
MULTIMEDIA
MULTIMEDIA (LOAD ADJ.A)
NATURAL GAS
NATURAL GAS (LOAD ADJ.A)
S&P 500
Consumer Price Index
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Fiscal periods ended February 28, 199 5 Average Annual Total Return Cumulative Total Return
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Past 1 year Past 5 years Life of fund Past 1 year Past 5 years Life of fund
</TABLE>
PAPER AND FOREST PRODUCTS
PAPER AND FOREST PRODUCTS (LOAD ADJ.A)
PRECIOUS METALS AND MINERALS
PRECIOUS METALS AND MINERALS (LOAD
ADJ.A)
REGIONAL BANKS
REGIONAL BANKS (LOAD ADJ.A)
RETAILING
RETAILING (LOAD ADJ.A)
SOFTWARE AND COMPUTER SERVICES
SOFTWARE AND COMPUTER SERVICES (LOAD
ADJ.A)
TECHNOLOGY
TECHNOLOGY (LOAD ADJ.A)
TELECOMMUNICATIONS
TELECOMMUNICATIONS (LOAD ADJ.A)
TRANSPORTATION
TRANSPORTATION (LOAD ADJ.A)
UTILITIES GROWTH
UTILITIES ( GROWTH LOAD ADJ.A)
MONEY MARKET
MONEY MARKET (LOAD ADJ.A)
S&P 500
Consumer Price Index
A LOAD-ADJUSTED RETURNS INCLUDE THE EFFECT OF PAYING A FUND'S 3% SALES
CHARGE.
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment in a fund over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results. Average annual total returns covering
periods of less than one year assume that performance will remain constant
for the rest of the year.
THE S&P 500(registered trademark) is the Standard & Poor's Composite
Index of 500 Stocks , a widely recognized, unmanaged index of common
stock prices. The S&P 500 figures assume reinvestment of all dividends paid
by stocks included in the index. They do not, however, include any
allowance for the brokerage commissions or other fees you would pay if you
actually invested in those stocks.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. government.
YIELD, for the money market fund, refers to the income generated by an
investment in a fund over a given period of time, expressed as an annual
percentage rate. When a yield assumes that income earned is reinvested, it
is called an EFFECTIVE YIELD.
Other illustrations of fund performance may show moving averages over
specific periods.
The funds' recent strategies, performance, and holdings are detailed twice
a year in f inancial reports, which are sent to all shareholders. For
current performance or a free annual report, call 1-800-544-8888.
TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN
INDICATION OF FUTURE PERFORMANCE.
THE FUNDS IN DETAIL
CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pool s
shareholders' money and invest s it toward a specified goal. In
technical terms, each stock fund (except Financial Services, Regional
Banks, and Home Finance) is a non-diversified fund of Fidelity Select
Portfolios, an open-end management investment company. The money market
fund and the remaining stock funds are diversified funds of the trust. The
trust was organized as a Massachusetts business trust on November 20, 1980.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES, which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet throughout the year to oversee the funds' activities,
review contractual arrangements with companies that provide services to the
funds, and review performance. The majority of trustees are not otherwise
affiliated with Fidelity.
T H E FUND S MAY HOLD SPECIAL MEETINGS AND MAIL PROXY
MATERIALS. These meetings may be called to elect or remove trustees, change
fundamental policies, approve a management contract, or for other purposes.
Shareholders not attending these meetings are encouraged to vote by proxy.
Fidelity will mail proxy materials in advance, including a voting card and
information about the proposals to be voted on. The number of votes you are
entitled to is based on the dollar value of your investment.
FMR AND ITS AFFILIATES
The funds are managed by FMR, which chooses the stock funds '
investments and handles e ach fund's business affairs. Fidelity
Management and Research (U.K.), in London, England, and Fidelity
Management & Research (Far East) Inc. (FMR Far East), in Tokyo,
Japan, assist FMR with foreign investments. FTX has primary
responsibility for providing investment management services for the money
market fund.
Paul Antico has been portfolio manager of Developing Communications since
November 1993. Previously, he served as an analyst for the
telecommunications equipment and restaurant industries. He also served as
an assistant on Balanced and Equity-Income II. He joined Fidelity in 1991,
after receiving a B.S. in economics from the Massachusetts Institute of
Technology.
Philip Barton has been portfolio manager of Environmental Services since
October 1993. Previously, he managed Developing Communications and was
senior European technology analyst at Fidelity International in London.
Barton joined the company in 1986 as an analyst following first the banking
industry and then software and computer services. He received his C.F.A. in
1988.
Robert Bertelson has been portfolio manager of Industrial Equipment
since December 1994. Previously, he managed Energy. He joined Fidelity in
1991. Before joining Fidelity he was vice president of Wellington
Management Company.
Stephen Binder has been portfolio manager of Medical Delivery Portfolio
since December 1994. Previously, he managed Regional Banks, Defense and
Aerospace, and Financial Services. Mr. Binder joined Fidelity in 1989.
William Bower has been portfolio manager of Construction and Housing
since December 1994. He joined Fidelity as a research analyst in June 1994,
after receiving an M.B.A. from the University of Chicago. He also served as
a research intern at Fidelity in the summer of 1993. Previously, Mr. Bower
was a real estate commercial loan officer for Michigan National Bank.
Douglas Chase has been portfolio manager of Industrial Materials since
November 1994. He joined Fidelity as an analyst for the steel industry in
1993, after receiving an M.B.A. from the University of Michigan.
Previously, Mr. Chase was a market researcher and consultant for Stanford
Resources.
Robert Chow has been portfolio manager of Insurance since June 1993. He has
also served as manager of Computers, Paper and Forest Products and
Technology and as an assistant on Growth & Income. Chow joined the company
as a summer intern in 1989. Before that, he was a sub-project manager at
TRW, an aerospace company. Chow received an M.B.A. in finance from the
University of Chicago in 1990.
Stephen DuFour has been portfolio manager of Multimedia since July 1993
and Transportation since December 1994. He joined Fidelity in 1992 after
receiving an M.B.A. from the University of Chicago.
David Ellison has been portfolio manager of Home Finance since December
1985. Previously, he managed Brokerage and Investment Management and
Financial Services. He has also been a banking and finance analyst.
Mary English has been portfolio manager of Consumer Products since
February, 1994. Previously, she managed Retailing and was an equity analyst
following the specialty retail and advertising industries. English joined
Fidelity in 1991, after receiving her M.B.A. from the University of
Virginia. Before that, she was a senior equity analyst and vice president
at Furman, Selz, an institutional research firm.
Jeffrey Feinberg has been portfolio manager of Retailing since February
1994 and Brokerage and Investment Management since January 1995. He has
been a portfolio assistant for Magellan since January 1995. He joined
Fidelity as a research analyst in 1992. Previously, Mr. Feinberg was an
analyst at Wasserstein Perella & Company and was president of Feinberg and
Associates, his own merger and acquisition and investment advisory firm. He
received his M.B.A. from Harvard University in 1993.
David Felman has been portfolio manager of Telecommunications since April
1994 and Chemicals since January 1995. He has been a portfolio assistant
for Magellan since January 1995. He joined Fidelity as a research analyst
in June 1993 after receiving his M.A. from Harvard University. Mr. Felman
received his M.B.A. from New York University in 1991.
Karen Firestone has been portfolio manager of Biotechnology since August
1992. Previously, she managed Air Transportation, Multimedia, Leisure, and
Transportation, Firestone joined the company in 1983.
John Hurley has been portfolio manager of Software and Computer Services
since October 1994. Previously, he was a Fidelity analyst covering PC
databases, mainframe and software companies. Mr. Hurley joined Fidelity in
1993 as an analyst covering software companies. He received an M.B.A. from
Stanford University in 1993. Previously, Mr. Hurley served as an officer in
the U.S. Army.
Harry Lange has been portfolio manager of Electronics since January 1994,
Technology since November 1993, and Computers since June 1992. Previously,
he managed Automation and Machinery and Capital Goods. He joined the
company in 1987.
Malcolm MacNaught has been portfolio manager of American Gold since
December 1985 and Precious Metals and Minerals since July 1981. He also
manages Advisor Global Natural Resources.
Charles Mangum has been portfolio manager of Health Care since March 1992.
Previously, he managed Medical Delivery. He received an M.B.A. from the
University of Chicago in 1990. Before joining Fidelity in 1990, he worked
as a financial analyst at Eppler, Guerin and Turner, a Dallas-based
brokerage house.
William Mankivsky has been portfolio manager of Food and Agriculture since
April 1993. Previously, he managed Energy Service. He joined Fidelity in
1991 after receiving an M.B.A. from the University of Chicago. Previously,
he was an analyst at the Prudential Property Company in Chicago.
John Muresianu has been portfolio manager of Utilities Growth and
Utilities Fund since December 1992. Previously, he managed Natural Gas
and Electric Utilities and served as senior research analyst following
natural gas pipelines, life insurance, service companies, Canadian stocks
and foreign currencies. He has also been a pension fund manager with the
company. Muresianu joined Fidelity in 1986.
Scott Offen has been portfolio manager of Paper and Forest Products since
November 1993. Previously, he manage Brokerage and Investment Management
and Life Insurance. Offen joined the company in 1985 as an insurance and
finance analyst.
Daniel Pickering has been portfolio manager of Energy Services since
December 1994. He joined Fidelity as a research analyst in 1994, after
receiving an M.B.A. from the University of Chicago. Previously, Mr.
Pickering was a planning analyst and engineer for ARCO.
Brenda Reed has been portfolio manager of Automotive since May 1994.
Previously, she managed Air Transportation. Before joining Fidelity in
1992, she was an equity analyst at the Putnam Companies and vice president
of New England Research and Management. Ms. Reed received an M.B.A. from
the Amos Tuck School of Business Administration at Dartmouth College in
1992, and a B.S. in financial management from Boston University in
1989.
Albert Ruback has been portfolio manager of Energy since December 1994.
Previously, he managed Industrial Equipment. Mr. Ruback joined Fidelity in
1991, after receiving an M.B.A. from Harvard Business School.
William Rubin has been portfolio manager of Defense and Aerospace since
December 1994. He joined Fidelity in 1994 as an analyst, after receiving an
M.B.A. from Harvard Business School. Mr. Rubin also worked as a summer
analyst intern at Fidelity in 1993. Before joining Fidelity, he worked in
investor relations and was a financial analyst for VLSI Technology and was
a financial analyst for Robertson, Stephens and Company.
Louis Salemy has been portfolio manager of Regional Banks and Financial
Services since December 1994. Previously, he managed Industrial Materials
and Medical Delivery. Before joining Fidelity in 1992, Mr. Salemy was
a security analyst for Loomis, Sayles and Company. H e received an
M.B.A. in finance from New York University in 1989.
Mark Tempero has been portfolio manager of Natural Gas since February 1994.
He joined Fidelity in May 1993 as an analyst following domestic oil and gas
exploration and production as well as conglomerates. Tempero received an
M.B.A. from the University of Chicago in 1993 and his masters in economics
from the London School of Economics in 1992.
Jason Weiner has been portfolio manager of Air Transportation since
December 1994. Previously, he was a research analyst from 1993 to December
1994, covering biotechnology, technology, retail, and business services.
Mr. Weiner joined Fidelity as a research associate in 1991 after receiving
his B.A. from Swarthmore College.
Deborah Wheeler has been portfolio manager of Leisure since August 1992.
Previously, Wheeler managed Food and Agriculture, Housing, and Retailing.
She was also an assistant on Magellan. Wheeler joined Fidelity in 1986.
Fidelity investment personnel may invest in securities for their own
account pursuant to a code of ethics that establishes procedures for
personal investing and restricts certain transactions.
Fidelity Distributors Corporation (FDC) distributes and markets Fidelity's
funds and services. Fidelity Service Co. (FSC) performs transfer agent
servicing functions for the funds.
FMR Corp. is the parent company of FMR, FMR Far East, FMR U.K. and FTX.
Through ownership of voting common stock, members of the Edward C. Johnson
3d family form a controlling group with respect to FMR Corp. Changes may
occur in the Johnson family group, through death or disability, which would
result in changes in each individual family member's holding of stock. Such
changes could result in one or more family members becoming holders of over
25% of the stock. FMR Corp. has received an opinion of counsel that changes
in the composition of the Johnson family group under these circumstances
would not result in the termination of the funds' management or
distribution contracts and, accordingly, would not require a shareholder
vote to continue operation under those contracts.
FMR may use its broker-dealer affiliates and other firms that sell fund
shares to carry out a fund's transactions, provided that the fund receives
brokerage services and commission rates comparable to those of other
broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
The stock funds seek capital appreciation by investing primarily in equity
securities, although they may invest in other types of instruments as well.
American Gold and Precious Metals and Minerals Portfolios can also invest
in precious metals. Each stock fund focuses its investments on a particular
industry, normally investing most of its assets in securities of companies
principally engaged in the business activities identified below. For most
of the stock funds, an issuer is considered principally engaged in a
business activity if at least 50% of its assets, gross income, or net
profits are committed to, or derived from, that activity. For Brokerage and
Investment Management and Financial Services Portfolios, an issuer is
considered principally engaged if it derives more than 15% of revenues or
profits from brokerage or investment management activities. The stock
funds' strategies can lead to investments in small companies, which often
involve more risk than larger companies. Securities of small companies,
especially those that base their business on emerging products or concepts,
may be volatile due to limited product lines, markets, or financial
resources. The funds invest in domestic and foreign securities, including
securities of emerging markets, which can be considered speculative and
experience more volatility than those of the more developed nations.
Non-diversified funds may have greater investments in a single issuer than
diversified funds, so the performance of a single issuer can have a
substantial impact on a fund's share price. Additionally, since the stock
funds focus on specific industries, their prices may be more volatile than
those of more broadly diversified investments. Each fund's performance is
closely tied to its industry, as well as to the economy as a whole.
Securities in an industry often react similarly to market conditions, and
may move in unison. As a result, the narrower a fund's focus is, the more
volatile its performance is likely to be. In many cases, the focus of a
fund differs from another only slightly, so they may invest in many of the
same securities.
Stock values fluctuate in response to the activities of individual
companies and general market and economic conditions. FMR may use
various investment techniques to hedge a fund's risks, but there is
no guarantee that these strategies will work as FMR intends. When you sell
your shares in a stock fund, they may be worth more or less than what you
paid for them.
FMR normally invests each fund's assets according to its investment
strategy. When FMR considers it appropriate for defensive purposes,
each stock fund may temporarily invest substantially in investment-grade
debt securities.
AIR TRANSPORTATION PORTFOLIO invests primarily in companies engaged in the
regional, national and international movement of passengers, mail, and
freight via aircraft. Investments in this fund may include, for example,
the airlines, air cargo providers, or companies that provide equipment or
services to these companies.
Airline profitability is substantially influenced by competition within the
industry, domestic and foreign economies and government regulation, and the
price of fuel. Additionally, the industry is still feeling the effects of
deregulation.
AMERICAN GOLD PORTFOLIO invests primarily in companies engaged in
exploration, mining, processing, or dealing in gold, or, to a lesser
degree, in silver, platinum, diamonds, or other precious metals and
minerals. The fund focuses on North, Central, and South American companies
engaged in gold-related activities. This focus may also include gold
bullion or coins and securities indexed to the price of gold. The fund may
also invest in securities of companies which themselves invest in companies
engaged in these activities.
The price of gold and other precious metal mining securities can face
substantial short-term volatility caused by international monetary and
political developments such as currency devaluations or revaluations,
economic and social conditions within a country, or trade restrictions
between countries. Since much of the world's gold reserves are located in
South Africa, the social and economic conditions there can affect gold and
gold-related companies located elsewhere. The price of gold bullion or
coins is more affected by broad economic and political conditions.
FMR does not currently intend to purchase gold if, as a result, more than
25% of the fund's total assets would be invested in gold and gold-indexed
securities, and does not currently intend to purchase coins. Under current
federal tax law, gains from selling gold may not exceed 10% of the fund's
annual gross income. This tax requirement could cause the fund to hold or
sell bullion or securities when it would not otherwise do so.
AUTOMOTIVE PORTFOLIO invests primarily in companies engaged in the
manufacture, marketing, or sale of automobiles, trucks, specialty vehicles,
parts, tires, and related services. These companies may include, for
example, automobile manufacturers, distributors, and parts providers. The
fund may also invest in companies that provide services to automobile
manufacturers, distributors, or consumers.
The automotive industry is highly cyclical and companies in the industry
may suffer periodic operating losses. While most of the major manufacturers
are large, financially strong companies, some are smaller manufacturers
that have a non-diversified product line or customer base.
BIOTECHNOLOGY PORTFOLIO invests primarily in companies engaged in the
research, development, scale up, and manufacture of various
biotechnological products, services, and processes. This may include, for
example, companies involved with new or experimental technologies such as
genetic engineering. The fund may also invest in companies that
manufacture, distribute, or benefit from biotechnological and biomedical
products, processes, or services.
FMR interprets the biotechnology sector broadly. For example, the fund may
invest in companies involved in applications and developments in such areas
as health care, pharmaceuticals, and agriculture.
Biotechnology companies are affected by patent considerations, intense
competition, rapid technological change and obsolescence, and regulatory
requirements. In addition, many of these companies may not offer products
yet and may have persistent losses or erratic revenue patterns.
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO invests primarily in
companies engaged in stock brokerage, commodity brokerage, investment
banking, tax-advantaged investment or investment sales, investment
management, or related investment advisory services. The fund does not
invest in securities of FMR or its affiliated companies. Under SEC
regulations the fund may not invest more than 5% of its total assets in the
securities of any company that derives more than 15% of its revenues from
brokerage or investment management activities.
Changes in regulations, brokerage commission structure, stock market
activity, and the competitive environment, combined with the operating
leverage inherent in companies in these industries, can produce erratic
returns over time.
CHEMICALS PORTFOLIO invests primarily in companies engaged in the research,
development, manufacture, or marketing of products or services related to
the chemical process industries. These products may include, for example,
synthetic and natural materials, such as fertilizers, building materials,
and plastics. The fund may also hold the securities of companies providing
design, engineering, construction, and consulting services to companies
engaged in chemical processing.
Companies in the chemical processing field are subject to intense
competition, product obsolescence and significant governmental regulation.
As regulations are developed and enforced, such companies may be required
to alter or cease production of a product, to pay fines, or to pay for
cleaning up a disposal site. In addition, chemical companies face unique
risks associated with handling hazardous products.
COMPUTERS PORTFOLIO invests primarily in companies engaged in research,
design, development, manufacture or distribution of products, processes, or
services that relate to currently available or experimental hardware
technology within the computer industry. The fund may invest in companies
that provide products or services such as computer and office equipment
wholesalers, software retailers, data processors, and designers of
artificial intelligence.
Competitive pressures and changing domestic and international demand may
have a significant effect on the financial condition of companies in the
computer industry. Companies in the industry spend heavily on research and
development and are sensitive to the risk of product obsolescence.
CONSTRUCTION AND HOUSING PORTFOLIO invests primarily in companies engaged
in the design and construction of residential, commercial, industrial, and
public works facilities, as well as companies engaged in the manufacture,
supply, distribution, or sale of products or services to these construction
industries. Examples of companies engaged in these activities include
companies that produce basic building materials such as cement, supply home
furnishings, or provide engineering or contracting services. The fund also
may invest in companies involved in real estate development and
construction financing such as home builders, architectural and design
firms, and property managers, and in companies involved in the home
improvement and maintenance industry.
Companies in this industry are subject to a variety of factors such as
government spending on housing subsidies, public works, and transportation
facilities, as well as changes in interest rates, consumer confidence and
spending, taxation, demographic patterns, the level of new and existing
home sales, and other economic activity.
CONSUMER PRODUCTS PORTFOLIO invests primarily in companies engaged in the
manufacture and distribution of goods to consumers both domestically and
internationally. This may include, for example, companies that manufacture
or sell durable goods such as homes, cars, boats, major appliances, and
personal computers. It may also include companies that manufacture or sell
non-durable goods such as food or entertainment products, and companies
that provide services such as lodging or childcare.
The success of consumer product manufacturers and retailers is closely tied
to the performance of the overall economy, interest rates, competition, and
consumer confidence. Success depends heavily on disposable household income
and consumer spending. Changes in demographics and consumer tastes can also
affect the demand for, and success of, consumer products in the
marketplace.
DEFENSE AND AEROSPACE PORTFOLIO invests primarily in companies engaged in
the research, manufacture, or sale of products or services related to the
defense or aerospace industries. For example, the fund may invest in
companies involved in defense electronics, aircraft or spacecraft
production, missile design, data processing or computer-related services.
The financial condition of companies in the industry and investor interest
in these companies are heavily influenced by government defense and
aerospace spending policies. Defense spending is currently under pressure
from efforts to control the U.S. budget deficit.
DEVELOPING COMMUNICATIONS PORTFOLIO invests primarily in companies engaged
in the development, manufacture, or sale of emerging communications
services or equipment. Emerging communications are those which derive from
new technologies or new applications of existing technologies. Examples of
the fund's investments may include companies involved in cellular
communications, software development, video conferencing or data
processing. The fund places less emphasis on traditional communications
companies such as large long distance carriers.
Products or services provided by this industry may be in the development
stage and can face risks such as failure to obtain financing or regulatory
approval, intense competition, product incompatibility, consumer
preferences, and rapid obsolescence.
ELECTRONICS PORTFOLIO invests primarily in companies engaged in the design,
manufacture, or sale of electronic components (semiconductors, connectors,
printed circuit boards, and other components); equipment vendors to
electronic component manufacturers; electronic component distributors; and
electronic instruments and electronic systems vendors. This may include
companies involved in new technologies or specialty areas such as defense
electronics, advanced design and manufacturing technologies, or lasers.
Many of the products offered by companies engaged in the design,
production, or distribution of electronic products are subject to risks of
rapid obsolescence and intense competition.
ENERGY PORTFOLIO invests primarily in companies in the energy field,
including the conventional areas of oil, gas, electricity, and coal, and
newer sources of energy such as nuclear, geothermal, oil shale, and solar
power. This may include, for example, companies that produce, transmit,
market, or measure energy, as well as companies involved in the exploration
of new sources of energy.
Securities of companies in the energy field are subject to changes in value
and dividend yield which depend largely on the price and supply of energy
fuels. Swift price and supply fluctuations may be caused by events relating
to international politics, energy conservation, the success of exploration
projects, and tax and other governmental regulatory policies.
ENERGY SERVICE PORTFOLIO invests primarily in companies in the energy
service field, including those that provide services and equipment to the
conventional areas of oil, gas, electricity, and coal, and newer sources of
energy such as nuclear, geothermal, oil shale, and solar power. Holdings
may include companies providing services such as onshore or offshore
drilling, or those involved in production and well maintenance, exploration
technology, energy transport or equipment and plant design or construction.
Energy service firms are affected by supply and demand both for their
specific product or service, and for energy products in general. The price
of oil and gas, exploration and production spending, governmental
regulation, world events and economic conditions will likewise affect the
performance of these companies.
ENVIRONMENTAL SERVICES PORTFOLIO invests primarily in companies engaged in
the research, development, manufacture, or distribution of products,
processes, or services related to waste management or pollution control.
The fund may invest in companies participating in pollution control through
methods such as packaging, disposal, and sanitation, companies that are
investigating new ways to protect the environment, and companies engaged in
design, construction, or consulting.
This industry can be impacted by legislation, government regulations, and
enforcement policies. As regulations are developed and enforced, companies
may be required to alter or cease production of a product or service. In
addition, hazardous materials may be involved, and companies can face
significant liability risk.
FINANCIAL SERVICES PORTFOLIO invests primarily in companies providing
financial services to consumers and industry. Examples of companies in the
financial services field include commercial banks, savings and loan
associations, brokerage companies, insurance companies, real estate and
leasing companies, and companies that span across these segments. Under SEC
regulations, the fund may not invest more than 5% of its total assets in
the securities of any company that derives more than 15% of its revenues
from brokerage or investment management activities.
Financial services companies are subject to extensive governmental
regulation which may limit both the amounts and types of loans and other
financial commitments they can make, and the interest rates and fees they
can charge. Profitability is largely dependent on the availability and cost
of capital funds, and can fluctuate significantly when interest rates
change. Credit losses resulting from financial difficulties of borrowers
can negatively impact the industry. Insurance companies may be subject to
severe price competition.
FOOD AND AGRICULTURE PORTFOLIO invests primarily in companies engaged in
the manufacture, sale, or distribution of food and beverage products,
agricultural products, and products related to the development of new food
technologies. This may include, for example, companies that sell products
and services, such as, grocery stores, and restaurants, companies that
manufacture and distribute products such as soft drinks, and companies
engaged in the development of new technologies such as improved hybrid
seeds.
The success of the industry is closely tied to supply and demand, which may
be affected by demographic and product trends, or stimulated by food fads,
marketing campaigns, and environmental factors. In the U.S., the
agricultural products industry is subject to regulation by numerous
government agencies.
HEALTH CARE PORTFOLIO invests primarily in companies engaged in the design,
manufacture, or sale of products or services used for or in connection with
health care or medicine. Companies in the health care field may include,
for example, pharmaceutical companies, companies involved in research and
development, companies involved in the operation of health care facilities,
and other companies involved in the design, manufacture, or sale of related
products or services.
Many of these companies are subject to government regulation and approval
of their products and services, which could have a significant effect on
their price and availability. Furthermore, the types of products or
services produced or provided by these companies may quickly become
obsolete. The administration is currently examining the health care
industry to determine whether government funds are spent appropriately, and
to ensure that adequate health care is available to everyone.
HOME FINANCE PORTFOLIO invests primarily in companies engaged in investing
in real estate, usually through mortgages and other consumer-related loans.
These companies may also offer discount brokerage services, insurance
products, leasing services, and joint venture financing. This may include,
for example, mortgage banking companies, real estate investment trusts,
banks, and other depository institutions.
The residential real estate finance industry has changed rapidly over the
last decade and is expected to continue to change. Regulatory changes at
federally insured institutions, in response to a high failure rate, have
mandated higher capital ratios and more prudent underwriting. This reduced
capacity has created growth opportunities for uninsured companies and
secondary market products to fill unmet demand for home finance. Regulatory
changes, interest rate movements, home mortgage demand, and residential
delinquency trends will affect the industry.
INDUSTRIAL EQUIPMENT PORTFOLIO invests primarily in companies engaged in
the manufacture, distribution, or service of products and equipment for the
industrial sector, including integrated producers of capital equipment
(such as general industrial machinery, farm equipment, and computers),
parts suppliers, and subcontractors. This may include, for example,
companies that manufacture products or service equipment for trucks,
construction, or machine tools.
The success of equipment manufacturing and distribution companies is
closely tied to overall capital spending levels, which is influenced by an
individual company's profitability, and broader issues such as interest
rates and foreign competition. The industry may also be affected by
economic cycles, technical progress, labor relations, and government
regulations.
INDUSTRIAL MATERIALS PORTFOLIO invests primarily in companies engaged in
the manufacture, mining, processing, or distribution of raw materials and
intermediate goods used in the industrial sector. These materials and goods
may include, for example, chemicals, metals, and wood products. Investments
may also include mining, processing, transportation, and distribution
companies, including equipment suppliers and railroads.
Many companies in this sector are significantly affected by the level and
volatility of commodity prices, the exchange value of the dollar, import
controls, and worldwide competition. At times, worldwide production of
these materials has exceeded demand as a result of over-building or
economic downturns, leading to poor investment returns or losses. Other
risks may include liability for environmental damage, depletion of
resources, and mandated expenditures for safety and pollution control.
INSURANCE PORTFOLIO invests primarily in companies engaged in underwriting,
reinsuring, selling, distributing, or placing of property and casualty,
life, or health insurance. Examples of the fund's investments may include
companies that provide a specific type of insurance, such as life or health
insurance, those that offer a variety of insurance products and those that
provide insurance services such as brokers and claims processors.
Insurance company profits are affected by interest rate levels, general
economic conditions, and price and marketing competition. Certain types of
insurance may be impacted by events or trends such as natural catastrophes,
mortality rates, or recessions. Companies may be exposed to material risks
including shortage of cash reserves and the inability to collect from
reinsurance carriers. Also, insurance companies are subject to extensive
governmental regulation, and can be adversely affected by proposed or
potential tax law changes.
LEISURE PORTFOLIO invests primarily in companies engaged in the design,
production, or distribution of goods or services in the leisure industries.
The goods or services provided by companies in the fund may include, for
example, television and radio broadcast, motion pictures, wireless
communications, gaming casinos, theme parks, apparel, restaurants, and
lodging.
Securities of companies in the leisure industry may be considered
speculative and generally exhibit greater volatility than the overall
market. Many companies have unpredictable earnings, due in part to changing
consumer tastes and intense competition. The industry has reacted strongly
to technological developments and to the threat of government regulation.
MEDICAL DELIVERY PORTFOLIO invests primarily in companies engaged in the
ownership or management of hospitals, nursing homes, health maintenance
organizations, and other companies specializing in the delivery of health
care services. This may include, for example, companies that operate acute
care, psychiatric, teaching, or specialized treatment hospitals, as well as
home health care providers, medical equipment suppliers, and those that
provide related services.
Federal and state governments provide a substantial percentage of revenues
to health care service providers via Medicare and Medicaid. These sources
are subject to extensive governmental regulation and appropriations are a
continued source of debate. The administration is currently examining the
health care industry to determine whether government funds are spent
appropriately, and to ensure that adequate health care is available to
everyone.
The demand for health care services should increase as the population ages.
However, studies have shown the ability of health care providers to curtail
unnecessary hospital stays and reduce costs. These changes could alter the
health care industry, focusing it more on home care, and placing less
emphasis on inpatient revenues as a source of profit.
MULTIMEDIA PORTFOLIO invests primarily in companies engaged in the
development, production, sale, and distribution of goods or services used
in the broadcast and media industries. The fund's investments may include
broadcasting companies, such as cable television providers, companies
involved in emerging technologies such as cellular communications, or other
companies involved in the ownership, operation or development of media
products or services.
Some of the companies in these industries are undergoing significant change
because of federal deregulation of cable and broadcasting. As a result,
competitive pressures are intense and the stocks are subject to increased
price volatility. FMR abides by Federal Communications Commission rules
governing the concentration of investment in AM, FM, or TV stations,
limiting investment alternatives.
NATURAL GAS PORTFOLIO invests primarily in companies engaged in the
production, transmission, and distribution of natural gas, and involved in
the exploration of potential natural gas sources, as well as those
companies that provide services and equipment to natural gas producers,
refineries, cogeneration facilities, converters, and distributors. This may
include, for example, companies participating in gas research, exploration,
or refining, companies working toward technological advances in the natural
gas field, and other companies providing products or services to the
industry.
The companies in the natural gas field are subject to changes in price and
supply of both conventional and alternative energy sources. Swift price and
supply fluctuations may be caused by events relating to international
politics, energy conservation, the success of energy source exploration
projects, and tax and other regulatory policies of domestic and foreign
governments.
PAPER AND FOREST PRODUCTS PORTFOLIO invests primarily in companies engaged
in the manufacture, research, sale, or distribution of paper products,
packaging products, building materials (such as lumber and paneling
products), and other products related to the paper and forest products
industry. Examples of the fund's investments may include paper production
companies, printers, and publishers.
The success of these companies depends on the health of the economy,
worldwide production capacity for the industry's products, and interest
rate levels, which may affect product pricing, costs, and operating
margins. These variables also affect the level of industry and consumer
capital spending for paper and forest products.
PRECIOUS METALS AND MINERALS PORTFOLIO invests primarily in companies
engaged in exploration, mining, processing, or dealing in gold, silver,
platinum, diamonds, or other precious metals and minerals. In addition to
its investments in these securities, the fund's focus includes investments
in precious metals such as gold, silver, and platinum, coins, and
securities indexed to the price of gold or other precious metals. The fund
may also invest in securities of companies which themselves invest in
companies engaged in these activities.
The price of precious metals is affected by broad economic and political
conditions. For example, the price of gold and other precious metal mining
securities can face substantial short-term volatility caused by
international monetary and political developments such as currency
devaluations or revaluations, economic and social conditions within a
country, or trade restrictions between countries. Since much of the world's
gold reserves are located in South Africa, the social and economic
conditions there can affect gold and gold-related companies located
elsewhere. The price of precious metals is more affected by broad economic
and political conditions.
FMR does not currently intend to purchase precious metals if, as a result,
more than 25% of the fund's total assets would be invested in precious
metals and securities indexed to the price of precious metals. Under
current federal tax law, gains from selling precious metals may not exceed
10% of the fund's annual gross income. This tax requirement could cause the
fund to hold or sell precious metals or securities when it would not
otherwise do so.
REGIONAL BANKS PORTFOLIO invests primarily in companies engaged in
accepting deposits and making commercial and principally non-mortgage
consumer loans. These companies concentrate their operations in a specific
part of the country. This may include, for example, state chartered banks,
savings and loan institutions, and banks that are members of the Federal
Reserve System. The fund may own securities of U.S. institutions whose
deposits are not insured by the federal government.
As the services offered by banks expand, banks are becoming more exposed to
well-established competitors. This exposure has also increased due to the
erosion of historical distinctions between regional banks and other
financial institutions. Increased competition may result from the
broadening of regional and national interstate banking powers, which has
already reduced the number of publicly traded regional banks. In addition,
general economic conditions are important to regional banks which face
exposure to credit losses, and dependence on interest rate activity.
RETAILING PORTFOLIO invests primarily in companies engaged in merchandising
finished goods and services primarily to individual consumers. This may
include, for example, department stores, food retailers, warehouse
membership clubs, mail order operations, or other companies involved in
alternative selling methods.
The success of retailing companies is closely tied to consumer spending,
which is affected by general economic conditions and consumer confidence
levels. The retailing industry is highly competitive, and a company's
success is often tied to its ability to anticipate changing consumer
tastes.
SOFTWARE AND COMPUTER SERVICES PORTFOLIO invests primarily in companies
engaged in research, design, production or distribution of products or
processes that relate to software or information-based services. This may
include, for example, companies that design products such as systems level
software to run the basic functions of a computer, or applications software
for one type of work, and consulting, communications, and related services.
Competitive pressures may have a significant effect on the financial
condition of companies in the software and computer services industries.
For example, an increasing number of companies and new product offerings
can lead to price cuts and slower selling cycles.
TECHNOLOGY PORTFOLIO invests primarily in companies which FMR believes
have, or will develop, products, processes, or services that will provide
or will benefit significantly from technological advances and improvements.
The description of the technology sector will be interpreted broadly by FMR
and may include such products or services as inexpensive computing power
such as personal computers, improved methods of communications such as
satellite transmission, or labor saving machines or instruments such as
computer-aided design equipment.
The fund emphasizes those companies positioned to benefit from
technological advances in areas such as semiconductors, minicomputers and
peripheral equipment, scientific instruments, computer software,
communications, and future automation trends in both office and factory
settings.
Competitive pressures may have a significant effect on the financial
condition of companies in the technology industry. For example, if
technology continues to advance at an accelerated rate, and the number of
companies and product offerings continues to expand, these companies could
become increasingly sensitive to short product cycles and aggressive
pricing.
TELECOMMUNICATIONS PORTFOLIO invests primarily in companies engaged in the
development, manufacture, or sale of communications services or
communications equipment. Companies in the telecommunications field may
range from traditional local and long-distance telephone service or
equipment providers, to companies involved in new technologies such as
cellular telephone or paging services.
Telephone operating companies are subject to both federal and state
regulations governing rates of return and services that may be offered.
Many companies represented in the fund are engaged in fierce competition
for market share. Although telephone companies usually pay an above average
dividend, the fund's investment decisions are primarily based on growth
potential and not on income.
TRANSPORTATION PORTFOLIO invests primarily in companies engaged in
providing transportation services or companies engaged in the design,
manufacture, distribution, or sale of transportation equipment.
Transportation services may include, for example, companies involved in the
movement of freight or people such as airlines, railroads, and bus
companies, equipment manufacturers, parts suppliers, and companies involved
in leasing, maintenance and related services.
Transportation stocks are cyclical and have occasional sharp price
movements which may result from changes in the economy, fuel prices, labor
agreements, and insurance costs. The U.S. has been deregulating these
industries, but it is uncertain whether this trend will continue and what
its effect will be.
UTILITIES GROWTH PORTFOLIO invests primarily in companies in the public
utilities industry and companies deriving a majority of their revenues from
their public utility operations. This may include, for example, companies
that manufacture, produce, sell, or transmit gas or electric energy, and
those involved in telephone, satellite, and other communication fields.
Public utility stocks have traditionally produced above-average dividend
income, but the fund's investments are based on growth potential. The gas
and electric public utilities industries may be subject to broad risks
resulting from governmental regulation, financing difficulties, supply and
demand of services or fuel, and special risks associated with energy and
atmosphere conservation. The fund may not own more than 5% of the
outstanding voting securities of more than one public utility company as
defined by the Public Utility Holding Company Act of 1935.
MONEY MARKET PORTFOLIO seeks to earn a high level of current income while
maintaining a stable $1.00 share price by investing in high-quality,
short-term money market instruments. As a result, your investment earns
income at current money market rates, and when you sell your shares, they
should be worth the same amount as when you bought them. Of course, there
is no guarantee that the fund will maintain a stable $1.00 share price.
The fund invests in U.S. dollar-denominated instruments of domestic and
foreign issuers, including banks and other financial institutions,
governments and their agencies and instrumentalities, and corporations. The
fund stresses income, preservation of capital, and liquidity, and does not
seek the higher yields or capital appreciation that more aggressive
investments may provide. The fund's yield will vary from day to day,
generally reflecting current short-term interest rates and other market
conditions.
The fund follows industry-standard guidelines on the quality and maturity
of its investments, which are designed to help maintain a stable $1.00
share price. The fund will purchase only high-quality securities that FMR
believes present minimal credit risks and will observe maturity
restrictions on securities it buys. In general, securities with longer
maturities are more vulnerable to price changes, although they may provide
higher yields. It is possible that a major change in interest rates or a
default on the fund's investments could cause its share price (and the
value of your investment) to change.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which a fund may invest, and strategies FMR may employ in
pursuit of a fund's investment objective. A summary of risks and
restrictions associated with these instrument types and investment
practices is included as well. A complete listing of each fund's
policies and limitations and more detailed information about the funds'
investments is contained in the funds' SAI. Policies and limitations
are considered at the time of purchase; the sale of instruments is not
required in the event of a subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques to
the full extent permitted unless it believes that doing so will help the
funds achieve their goals. Current holdings and recent investment
strategies are detailed in the funds' financial reports which are sent to
shareholders twice a year. For a free SAI or financial report, call
1-800-544-8888.
EQUITY SECURITIES may include common stocks, preferred stocks, convertible
securities, and warrants. Common stocks, the most familiar type, represent
an equity (ownership) interest in a corporation. Although equity
securities have a history of long-term growth in value, their prices
fluctuate based on changes in a company's financial condition and on
overall market and economic conditions. Smaller companies are especially
sensitive to these factors .
RESTRICTIONS: With respect to 75% of total assets, Financial Services,
Regional Banks and Home Finance may not own more than 10% of the
outstanding voting securities of a single issuer.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers to
borrow money from investors. The issuer pays the investor a fixed or
variable rate of interest, and must repay the amount borrowed at maturity.
Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values. In
general, bond prices rise when interest rates fall, and vice versa.
Debt securities, loans, and other direct debt have varying degrees of
quality and varying levels of sensitivity to changes in interest rates.
Lower-quality debt securities are sometimes called "junk bonds."
Longer-term bonds are generally more sensitive to interest rate changes
than short-term bonds.
Investment-grade debt securities are medium- and high-quality
securities. Some, however, may possess speculative characteristics and may
be more sensitive to economic changes and to changes in the financial
condition of issuers.
Lower-quality foreign government securities are often considered to be
speculative and involve greater risk of default or price changes, or they
may already be in default. These risks are in addition to the general risks
associated with foreign securities.
RESTRICTIONS: Each stock fund does not currently intend to invest more than
5% of its assets in lower-quality debt securities, sometimes called "junk
bonds" (those rated below Baa by Moody's or BBB by S&P, and unrated
securities judged by FMR to be of equivalent quality).
MONEY MARKET INSTRUMENTS are high-quality, short-term investments
issued by the U.S. government, corporations, financial institutions, and
other entitles. These investments may carry fixed, variable, or floating
interest rates. A security's credit may be enhanced by a bank, insurance
company, or other entity.
U.S. GOVERNMENT SECURITIES are high-quality debt securities issued or
guaranteed by the U.S. Treasury or by an agency or instrumentality of the
U.S. government. Not all U.S. government securities are backed by the full
faith and credit of the United States. For example, securities issued by
the Federal Farm Credit Bank or by the Federal National Mortgage
Association are supported by the instrumentality's right to borrow money
from the U.S. Treasury under certain circumstances. However, securities
issued by the Financing Corporation are supported only by the credit of the
entity that issued them.
FOREIGN SECURITIES and foreign currencies may involve additional risks.
These include currency fluctuations, risks relating to political or
economic conditions in the foreign country, and the potentially less
stringent investor protection and disclosure standards of foreign markets.
In addition to the political and economic factors that can affect foreign
securities, a governmental issuer may be unwilling to repay principal and
interest when due , and may require that the conditions for payment
be renegotiated. These factors could make foreign investments, especially
those in developing countries, more volatile.
STRUCTURED SECURITIES employ a trust or other similar structure to
modify the maturity, price characteristics or quality of financial assets.
If the structure does not perform as intended, adverse tax or investment
consequences may result.
RESTRICTIONS: The money market fund may not purchase structured
securities which are inconsistent with the fund's goal of maintaining a
stable share price.
ASSET-BACKED SECURITIES include pools of mortgages, loans, receivables, or
other assets. Payment of principal and interest may be largely dependent
upon the cash flows generated by the assets backing the securities.
VARIABLE AND FLOATING RATE SECURITIES have interest rates that are
periodically adjusted either at specific intervals or whenever a benchmark
rate changes. These interest rate adjustments are designed to help
stabilize the security's price.
RESTRICTIONS: The money market fund may not purchase certain types of
variable and floating rate securities which are inconsistent with the
fund's goal of maintaining a stable share price.
STRIPPED SECURITIES are the separate income or principal components of a
debt instrument. These involve risks that are similar to those of other
debt securities, although they may be more volatile and certain stripped
securities move in the same direction as interest rates.
ADJUSTING INVESTMENT EXPOSURE. A fund can use various techniques to
increase or decrease its exposure to changing security prices, interest
rates, currency exchange rates, commodity prices, or other factors that
affect security values. These techniques may involve derivative
transactions such as buying and selling options and futures contracts,
entering into currency exchange contracts or swap agreements, and
purchasing indexed securities.
FMR can use these practices to adjust the risk and return characteristics
of a fund's portfolio of investments. If FMR judges market conditions
incorrectly or employs a strategy that does not correlate well with the
fund's investments, these techniques could result in a loss, regardless of
whether the intent was to reduce risk or increase return. These techniques
may increase the volatility of the fund and may involve a small investment
of cash relative to the magnitude of the risk assumed. In addition, these
techniques could result in a loss if the counterparty to the transaction
does not perform as promised.
RESTRICTIONS: The money market fund may not use investment techniques
which are inconsistent with the fund's goal of maintaining a stable share
price.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund buys a security at
one price and simultaneously agrees to sell it back at a higher price.
Delays or losses could result if the other party to the agreement defaults
or becomes insolvent.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
temporarily transfers possession of a portfolio instrument to another party
in return for cash. This could increase the risk of fluctuation in a fund's
yield or in the market value of its assets.
OTHER MONEY MARKET INSTRUMENTS may include commercial paper, certificates
of deposit, bankers' acceptances, and tim e deposits.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by
FMR, under the supervision of the Board of Trustees, to be illiquid, which
means that they may be difficult to sell promptly at an acceptable price.
The sale of other securities, including illiquid securities, may be subject
to legal restrictions. Difficulty in selling securities may result in a
loss or may be costly to a fund.
RESTRICTIONS: A fund may not purchase a security if, as a result, more than
10% of its assets would be invested in illiquid securities.
OTHER INSTRUMENTS may include securities of closed-end investment
companies and real estate-related investments.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS are trading practices in
which payment and delivery for the securities take place at a future date.
The market value of a security could change during this period, which could
affect the market value of a fund's assets.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the
risks of investing. This may include limiting the amount of money invested
in any one issuer or, on a broader scale, in any one industry. A fund that
is not diversified may be more sensitive to changes in the market value of
a single issuer or industry.
RESTRICTIONS: The stock funds (except Financial Services, Home Finance, and
Regional Banks Portfolios) are considered non-diversified. Generally, to
meet federal tax requirements at the close of each quarter, a stock fund
does not invest more than 25% of its total assets in any one issuer and,
with respect to 50% of total assets, does not invest more than 5% of its
total assets in any one issuer. With respect to 75% of total assets,
Financial Services Portfolio, Regional Banks Portfolio, and Home Finance
Portfolio may not invest more than 5% of their total assets in any one
issuer. The money market fund may not invest more than 5% of its total
assets in the securities of any one issuer, except that it may invest up to
25 % of its assets in the highest-quality securities of a single
issuer for up to three days. Each stock fund normally invests at least 80%,
but always at least 25%, of its assets in securities of companies
principally engaged in the business activities identified for that fund.
For Precious Metals and Minerals Portfolio, the fund normally invests at
least 80% of its total assets in securities of companies principally
engaged in the business activities identified for the fund, precious
metals, and instruments whose value is linked to the price of precious
metals. The money market fund may not invest more than 25% of its total
assets in any one industry (other than the financial services industry; see
below). These limitations do not apply to U.S. government securities.
FINANCIAL SERVICES INDUSTRY. Companies in the financial services industry
are subject to various risks related to that industry, such as government
regulation, changes in interest rates, and exposure on loans, including
loans to foreign borrowers. If a fund invests substantially in this
industry, its performance may be affected by conditions affecting the
industry.
RESTRICTIONS: The money market fund will invest more than 25% of its total
assets in the financial services industry.
BORROWING. A fund may borrow from banks or from other funds advised by FMR,
or through reverse repurchase agreements. If a stock fund borrows money,
its share price may be subject to greater fluctuation until the borrowing
is paid off. If the fund makes additional investments while borrowings are
outstanding, this may be considered a form of leverage.
RESTRICTIONS: A fund may borrow only for temporary or emergency purposes,
but not in an amount exceeding 33 1/3% of its total assets.
LENDING. Lending securities to broker-dealers and institutions, including
FBSI, an affiliate of FMR, is a means of earning income. This practice
could result in a loss or a delay in recovering a fund's securities. A fund
may also lend money to other funds advised by FMR.
RESTRICTIONS: Loans, in the aggregate, may not exceed 33 1/3% of a fund's
total assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraphs restate all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraphs, can be changed without shareholder approval.
AIR TRANSPORTATION PORTFOLIO invests primarily in companies engaged in the
regional, national and international movement of passengers, mail, and
freight via aircraft.
AMERICAN GOLD PORTFOLIO invests primarily in companies engaged in
exploration, mining, processing, or dealing in gold, or, to a lesser
degree, in silver, platinum, diamonds, or other precious metals and
minerals. Normally at least 80% of the fund's assets will be invested in
securities of North, Central and South American companies engaged in
gold-related activities, and in gold bullion or coins. The fund is
authorized to invest up to 50% of its total assets in gold bullion or
coins.
AUTOMOTIVE PORTFOLIO invests primarily in companies engaged in the
manufacture, marketing or sale of automobiles, trucks, specialty vehicles,
parts, tires, and related services.
BIOTECHNOLOGY PORTFOLIO invests primarily in companies engaged in the
research, development, scale up and manufacture of various biotechnological
products, services and processes.
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO invests primarily in
companies engaged in stock brokerage, commodity brokerage, investment
banking, tax-advantaged investment or investment sales, investment
management, or related investment advisory services. A company is
principally engaged in the industry if it derives more than 15% of revenues
or profits from brokerage or investment management activities.
CHEMICALS PORTFOLIO invests primarily in companies engaged in the research,
development, manufacture or marketing of products or services related to
the chemical process industries.
COMPUTERS PORTFOLIO invests primarily in companies engaged in research,
design, development, manufacture or distribution of products, processes or
services that relate to currently available or experimental hardware
technology within the computer industry.
CONSTRUCTION AND HOUSING PORTFOLIO invests primarily in companies engaged
in the design and construction of residential, commercial, industrial and
public works facilities, as well as companies engaged in the manufacture,
supply, distribution or sale of products or services to these construction
industries.
CONSUMER PRODUCTS PORTFOLIO invests primarily in companies engaged in the
manufacture and distribution of goods to consumers both domestically and
internationally.
DEFENSE AND AEROSPACE PORTFOLIO invests primarily in companies engaged in
the research, manufacture or sale of products or services related to the
defense or aerospace industries.
DEVELOPING COMMUNICATIONS PORTFOLIO invests primarily in companies engaged
in the development, manufacture or sale of emerging communications services
or equipment.
ELECTRONICS PORTFOLIO invests primarily in companies engaged in the design,
manufacture, or sale of electronic components (semiconductors, connectors,
printed circuit boards and other components); equipment vendors to
electronic component manufacturers; electronic component distributors; and
electronic instruments and electronic systems vendors.
ENERGY PORTFOLIO invests primarily in companies in the energy field,
including the conventional areas of oil, gas, electricity and coal, and
newer sources of energy such as nuclear, geothermal, oil shale and solar
power.
ENERGY SERVICE PORTFOLIO invests primarily in companies in the energy
service field, including those that provide services and equipment to the
conventional areas of oil, gas, electricity and coal, and newer sources of
energy such as nuclear, geothermal, oil shale and solar power.
ENVIRONMENTAL SERVICES PORTFOLIO invests primarily in companies engaged in
the research, development, manufacture or distribution of products,
processes or services related to waste management or pollution control.
FINANCIAL SERVICES PORTFOLIO invests primarily in companies providing
financial services to consumers and industry. A company is principally
engaged in the industry if it derives more than 15% of revenues or profits
from brokerage or investment management activities.
FOOD AND AGRICULTURE PORTFOLIO invests primarily in companies engaged in
the manufacture, sale or distribution of food and beverage products,
agricultural products, and products related to the development of new food
technologies.
HEALTH CARE PORTFOLIO invests primarily in companies engaged in the design,
manufacture, or sale of products or services used for or in connection with
health care or medicine.
HOME FINANCE PORTFOLIO invests primarily in companies engaged in investing
in real estate, usually through mortgages and other consumer-related loans.
INDUSTRIAL EQUIPMENT PORTFOLIO invests primarily in companies engaged in
the manufacture, distribution or service of products and equipment for the
industrial sector, including integrated producers of capital equipment
(such as general industry machinery, farm equipment, and computers), parts
suppliers and subcontractors.
INDUSTRIAL MATERIALS PORTFOLIO invests primarily in companies engaged in
the manufacture, mining, processing, or distribution of raw materials and
intermediate goods used in the industrial sector.
INSURANCE PORTFOLIO invests primarily in companies engaged in underwriting,
reinsuring, selling, distributing, or placing of property and casualty,
life, or health insurance.
LEISURE PORTFOLIO invests primarily in companies engaged in the design,
production, or distribution of goods or services in the leisure industries.
MEDICAL DELIVERY PORTFOLIO invests primarily in companies engaged in the
ownership or management of hospitals, nursing homes, health maintenance
organizations, and other companies specializing in the delivery of health
care services.
MULTIMEDIA PORTFOLIO invests primarily in companies engaged in the
development, production, sale and distribution of goods or services used in
the broadcast and media industries.
NATURAL GAS PORTFOLIO invests primarily in companies engaged in the
production, transmission, and distribution of natural gas, and involved in
the exploration of potential natural gas sources, as well as those
companies that provide services and equipment to natural gas producers,
refineries, cogeneration facilities, converters, and distributors.
PAPER AND FOREST PRODUCTS PORTFOLIO invests primarily in companies engaged
in the manufacture, research, sale, or distribution of paper products,
packaging products, building materials (such as lumber and paneling
products), and other products related to the paper and forest products
industry.
PRECIOUS METALS AND MINERALS PORTFOLIO invests primarily in companies
engaged in exploration, mining, processing or dealing in gold, silver,
platinum, diamonds or other precious metals and minerals. Under normal
conditions, the fund will invest at least 80% of its total assets in (i)
securities of companies principally engaged in exploration, mining,
processing, or dealing in gold, silver, platinum, diamonds, or other
precious metals and minerals, and (ii) precious metals. The fund is
authorized to invest up to 50% of its total assets in precious metals.
REGIONAL BANKS PORTFOLIO invests primarily in companies engaged in
accepting deposits and making commercial and principally non-mortgage
consumer loans.
RETAILING PORTFOLIO invests primarily in companies engaged in merchandising
finished goods and services primarily to individual consumers.
SOFTWARE AND COMPUTER SERVICES PORTFOLIO invests primarily in companies
engaged in research, design, production or distribution of products or
processes that relate to software or information-based services.
TECHNOLOGY PORTFOLIO invests primarily in companies which FMR believes
have, or will develop, products, processes or services that will provide or
will benefit significantly from technological advances and improvements.
TELECOMMUNICATIONS PORTFOLIO invests primarily in companies engaged in the
development, manufacture, or sale of communications services or
communications equipment.
TRANSPORTATION PORTFOLIO invests primarily in companies engaged in
providing transportation services or companies engaged in the design,
manufacture, distribution, or sale of transportation equipment.
UTILITIES GROWTH PORTFOLIO invests primarily in companies in the
public utilities industry and companies deriving a majority of their
revenues from their public utility operations.
MONEY MARKET PORTFOLIO seeks to provide high current income, consistent
with preservation of capital and liquidity, by investing in a broad range
of high quality money market instruments. At all times, 80% or more of the
fund's assets will be invested in money market instruments. The fund may
not invest more than 25% of its total assets in any one industry, except
that the fund will invest more than 25% of its total assets in the
financial services industry.
EACH STOCK FUND seeks capital appreciation. The funds seek to achieve this
objective by investing primarily in equity securities, including common
stocks and securities convertible into common stocks, and for American Gold
Portfolio and Precious Metals and Minerals Portfolio, in certain precious
metals. Normally, at least 80%, and in no event less than 25%, of a stock
fund's assets will be invested in securities of companies principally
engaged in the business activities identified for that fund (except
Precious Metals and Minerals Portfolio). For the purposes of these
policies, a company is considered to be "principally engaged" in a
designated business activity (unless otherwise noted) if at least 50% of
its assets, gross income, or net profits are committed to, or derived from,
that activity. FMR does not place any emphasis on income when selecting
securities for the stock funds, except when it believes that income may
have a favorable effect on a security's market value.
When FMR considers it appropriate for defensive purposes, each stock fund
may temporarily invest substantially in investment-grade debt securities.
EACH FUND may borrow only for temporary or emergency purposes or engage in
reverse repurchase agreements, but not in an amount exceeding 33 1/3% of
its total assets. Loans, in the aggregate, may not exceed 33 1/3% of total
assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of a fund's assets are reflected in its share
price or dividends; they are neither billed directly to shareholders nor
deducted from shareholder accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its investments and
business affairs. FMR in turn pays fees to affiliates who provide
assistance with these services for the funds. Each fund also pays OTHER
EXPENSES, which are explained at right.
FMR may, from time to time, agree to reimburse the funds for management
fees and other expenses above a specified limit. FMR retains the ability to
be repaid by a fund if expenses fall below the specified limit prior to the
end of the fiscal year. Reimbursement arrangements, which may be terminated
at any time without notice, can decrease a fund's expenses and boost
its performance.
MANAGEMENT FEE
EACH STOCK FUND'S management fee is calculated and paid to FMR every month.
The fee for each fund is calculated by adding a group fee rate to an
individual fund fee rate, and multiplying the result by the respective
fund's average net assets.
The group fee rate is based on the average net assets of all the mutual
funds advised by FMR. This rate cannot rise above .52 %, and it drops
as total assets under management increase.
For February 1995, the group fee rate was _____%. The individual fund
fee rate is .30% for the stock funds. The total management fee rate for
each stock fund for fiscal 1995 is shown on the chart at right.
THE MONEY MARKET FUND'S management fee is calculated by multiplying the sum
of two components by the fund's average net assets and adding an
income-based fee. One component, the group fee rate, is based on the
average net assets of all the mutual funds advised by FMR. It cannot rise
above .37% and it drops as total assets, under management increase. The
other component, the individual fund fee rate, is .03%. The income-based
fee is 6% of the fund's gross income in excess of a 5% yield and cannot
rise above .24% of the fund's average net assets.
For February 199 5 , the group fee rate was . ____ %. The money
market's total management fee for fiscal 199 5 was
___ % .
FMR HAS SUB-ADVISORY AGREEMENTS with FMR U.K. and FMR Far East on behalf of
the stock funds (except American Gold Portfolio). These sub-advisers
provide FMR with investment research and advice on companies based outside
the United States. Under the sub-advisory agreements, FMR pays FMR U.K. and
FMR Far East fees equal to 110% and 105%, respectively, of the costs of
providing these services.
The sub-advisers may also provide investment management services. In
return, FMR pays FMR U.K. and FMR Far East 50% of its management fee rate
with respect to a fund's investments that the sub-adviser manage s on
a discretionary basis.
FMR HAS A SUB-ADVISORY AGREEMENT with FTX, which has primary responsibility
for providing investment management for the money market fund, while FMR
retains responsibility for providing other management services. FMR pays
FTX 50% of its management fee (before expense reimbursements) for these
services. FMR paid FTX ___ % of the money market fund's average net
assets for fiscal 199 5 .
OTHER EXPENSES
While the management fee is a significant component of the funds' annual
operating costs, the funds have other expenses as well.
The funds contract with FSC to perform many transactions and accounting
functions. These services include processing shareholder transactions,
valuing e ach fund ' s investments, and handling securities
loans. In fiscal 199 5 the funds paid FSC the fees outlined in the
following table.
The funds also pay other expenses, such as legal, audit, and custodian
fees; proxy solicitation costs; and the compensation of trustees who are
not affiliated with Fidelity. A broker-dealer may use a portion of the
commissions paid by a fund to reduce the fund's custodian or transfer agent
fees.
Each fund's turnover rate varies from year to year, depending on market
conditions. These rates vary from year to year. High turnover rates
increase transaction costs, and may increase taxable capital gains. FMR
considers these effects when evaluating the anticipated benefits of
short-term investing. The funds' portfolio turnover rates for fiscal
199 5 are shown in the chart below.
Management Fees to Turnover
Fund fees FSC %
Air Transportation
American Gold
Automotive
Biotechnology
Brokerage and Investment Management
Chemicals
Computers
Construction and Housing
Consumer Products
Defense and Aerospace
Developing Communications
Electronics
Energy
Energy Service
Environmental Services
Financial Services
Food and Agriculture
Health Care
Home Finance
Industrial Equipment
Industrial Materials
Insurance
Leisure
Medical Delivery
Multimedia
Natural Gas
Paper and Forest Products
Precious Metals and Minerals
Regional Banks
Retailing
Software and Computer Services
Technology
Telecommunications
Transportation
Utilities Growth
Money Market
YOUR ACCOUNT
DOING BUSINESS WITH FIDELITY
Fidelity Investments was established in 1946 to manage one of America's
first mutual funds. Today, Fidelity is the largest mutual fund company in
the country, and is known as an innovative provider of high-quality
financial services to individuals and institutions.
In addition to its mutual fund business, the company operates one of
America's leading discount brokerage firms, Fidelity Brokerage Services,
Inc. (FBSI). Fidelity is also a leader in providing tax-sheltered
retirement plans for individuals investing on their own or through their
employer.
Fidelity is committed to providing investors with practical information to
make investment decisions. Based in Boston, Fidelity provides customers
with complete service 24 hours a day, 365 days a year, through a network of
telephone service centers around the country.
To reach Fidelity for general information, call these numbers:
(small solid bullet) For mutual funds, 1-800-544-8888
(small solid bullet) For brokerage, 1-800-544-7272
If you would prefer to speak with a representative in person, Fidelity has
over __ walk-in Investor Centers across the country.
TYPES OF ACCOUNTS
You may set up an account directly in the funds or, if you own or intend to
purchase individual securities as part of your total investment portfolio,
you may consider investing in a fund through a brokerage account.
If you are investing through FBSI or another financial institution or
investment professional, refer to its program materials for any special
provisions regarding your investment in a fund.
The different ways to set up (register) your account with Fidelity are
listed at right.
The account guidelines that follow may not apply to certain retirement
accounts. If your employer offers a fund through a retirement program,
contact your employer for more information. Otherwise, call Fidelity
directly.
WAYS TO SET UP YOUR ACCOUNT
GROWTH
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have two or
more owners (tenants).
RETIREMENT
TO SHELTER YOUR RETIREMENT SAVINGS FROM TAXES
Retirement plans allow individuals to shelter investment income and capital
gains from current taxes. In addition, contributions to these accounts may
be tax deductible. Retirement accounts require special applications and
typically have lower minimums.
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS) allow anyone of legal age and under
70 with earned income to save up to $2,000 per tax year. Individuals can
also invest in a spouse's IRA if the spouse has earned income of less than
$250.
ROLLOVER IRAS retain special tax advantages for certain distributions from
employer-sponsored retirement plans.
KEOGH OR CORPORATE PROFIT SHARING AND MONEY PURCHASE PENSION PLANS allow
self-employed individuals or small business owners (and their employees) to
make tax deductible contributions for themselves and any eligible employees
up to $30,000 per year.
SIMPLIFIED EMPLOYEE PENSION PLANS (SEP-IRAS) provide small business owners
or those with self-employed income (and their eligible employees) with many
of the same advantages as a Keogh, but with fewer administrative
requirements.
403(B) CUSTODIAL ACCOUNTS are available to employees of most tax-exempt
institutions, including schools, hospitals, and other charitable
organizations.
401(K) PROGRAMS allow employees of corporations of all sizes to contribute
a percentage of their wages on a tax-deferred basis. These accounts need to
be established by the trustee of the plan.
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and obtain
tax benefits. An individual can give up to $10,000 a year per child without
paying federal gift tax. Depending on state laws, you can set up a
custodial account under the Uniform Gifts to Minors Act (UGMA) or the
Uniform Transfers to Minors Act (UTMA).
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR OTHER
GROUPS
Requires a special application.
HOW TO BUY SHARES
SHARE PRICE
ONCE EACH HOUR OF EVERY BUSINESS DAY, TWO SHARE PRICES ARE CALCULATED FOR
EACH FUND: the offering price and the net asset value (NAV). The offering
price includes the 3% sales charge, which you pay when you
buy shares, unless you qualify for a reduction or waiver as
described on page ___ . When you buy shares at the offering price,
Fidelity deducts 3% and invests the rest at the NAV.
Shares are purchased at the next share price calculated after your
investment is received and accepted. Share price is normally calculated
hourly, each business day, from 10 a.m. to 4 p.m. Eastern time.
IF YOU ARE NEW TO FIDELITY, complete and sign an account application and
mail it along with your check. You may also open your account in person or
by wire as described at right. If there is no application accompanying this
prospectus, call 1-800-544-8888.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(small solid bullet) Mail in an application with a check, or
(small solid bullet) Open your account by exchanging from another Fidelity
fund.
IF YOU ARE INVESTING THROUGH A TAX-SHELTERED RETIREMENT PLAN, such as an
IRA, for the first time, you will need a special application. Retirement
investing also involves its own investment procedures. Call 1-800-544-8888
for more information and a retirement application.
If you buy shares by check or Fidelity Money Line(registered trademark) ,
and then sell those shares by any method other than by exchange to
another Fidelity fund, the payment may be delayed for up to seven business
days to ensure that your previous investment has cleared.
MINIMUM INVESTMENTS
GROWTH
TO OPEN AN ACCOUNT $2,500
For Fidelity retirement accounts $500
TO ADD TO AN ACCOUNT $250
For Fidelity retirement accounts $250
Through automatic investment plans $100
MINIMUM BALANCE $1,000
For Fidelity retirement accounts $500
Key Information
Phone 1#800#544#7777
S
To open an account, exchange from another Fidelity fund account with the
same
registration, including name, address, and taxpayer ID number.
S
To add to an account, exchange from another Fidelity fund account with the
same registration, including name, address, and taxpayer ID number. You can
also use Fidelity Money Line to transfer from your bank account. Call
before
your first use to verify that this service is in place on your account.
Maximum
Money Line: $50,000
Mail
S
To open an account, complete and sign the application. Make your check
payable
to Fidelity Select Portfolios and specify the fund you are investing in on
the application. Mail to the address indicated on the application.
S
To add to an account, make your check payable to the complete name of the
fund
of your choice. Indicate your fund account number on your check. Mail to
the
address printed on your account statement.
In Person
S
To open an account, bring your application and check to a Fidelity Investor
Center. Call 1#800#544#9797 for the center nearest you.
S
To add to an account, bring your check to a Fidelity Investor Center. Call
1#800#544#9797 for the center nearest you.
S
Orders will be executed at the next hourly price determined after your
investment
is accepted.
Wire
Not available for retirement accounts.
S
To open an account, call 1#800#544#7777 to set up your account and to
arrange
a wire transaction. Wire within 24 hours to the wire address below. Specify
the complete name of the fund and include your new account number and your
name.
S
To add to an account, wire to the wire address below. Specify the complete
name of the fund and include your account number and your name.
S
Wire address: Bankers Trust Company, Bank Routing #021001033, Account #
00163053.
Automatically
New accounts cannot be opened with these services.
S
Use Fidelity Automatic Account Builder or Direct Deposit to automatically
purchase
more shares. Sign up for these services when opening your account, or call
1#800#544#6666. Direct Deposit is not available for Select stock funds or
for
retirement accounts.
S
Use Directed Dividends or Fidelity Automatic Exchange Service to
automatically
send money from one Fidelity fund into another. Call 1#800#544#6666 for
instructions.
TDD - Service for the Deaf and Hearing#Impaired: 1#800#544#0118
YOUR ACCOUNT
HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares. Your shares will be sold at
the next share price calculated after your order is received and accepted.
Share price is normally calculated hourly, each business day, from 10 a.m.
to 4 p.m. Eastern time.
Before the fund s' current 3% sales charge became effective the
funds' shares were sold with a 2% sales charge and a 1% deferred sales
charge. The deferred sales charge applies to redemptions of fund shares
(including Select Cash Reserves) purchased prior to October 12, 1990, but
does not apply to exchanges between Select funds, or if you qualify for a
sales charge waiver.
TO SELL SHARES IN A NON-RETIREMENT ACCOUNT, you may use any of the methods
described on this page.
TO SELL SHARES IN A FIDELITY RETIREMENT ACCOUNT, your request must be made
in writing, except for exchanges to other Fidelity funds, which can be
requested by phone or in writing. Call 1-800-544-6666 for a retirement
distribution form.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least $1,000
worth of shares in the account to keep it open ($500 for retirement
accounts).
TO SELL SHARES BY BANK WIRE OR FIDELITY MONEY LINE, you will need to sign
up for these services in advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and Fidelity from fraud. Your request must be made in writing
and include a signature guarantee if any of the following situations apply:
(small solid bullet) You wish to redeem more than $100,000 worth of shares,
(small solid bullet) Your account registration has changed within the last
30 days,
(small solid bullet) The check is being mailed to a different
address than the one on your account (record address),
(small solid bullet) The check is being made payable to someone
other than the account owner, or
(small solid bullet) The redemption proceeds are being transferred to a
Fidelity account with a different registration.
You should be able to obtain a signature guarantee from a bank, broker
(including Fidelity Investor Centers), dealer, credit union (if authorized
under state law), securities exchange or association, clearing agency, or
savings association. A notary public cannot provide a signature guarantee.
TO SELL SHARES IN WRITING, write a "letter of instruction" with your name,
the fund's name, your fund account number, the dollar amount or
number of shares to be redeemed, and any other applicable requirements
listed in the table at right. Unless otherwise instructed, Fidelity
will send a check to the record address. Deliver your letter to a Fidelity
Investor Center, or mail it to:
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fees and Key Information
If you sell shares of a stock fund after holding them 29 days or less, the
fund will deduct a redemption fee equal to .75% of the value of those
shares.
For shares held 30 days or longer, the redemption fee is up to $7.50. In
addition,
there may be a $7.50 fee for each exchange out of a stock fund.
Phone 1#800#544#7777
All account types except retirement
S
Maximum check request: $100,000.
S
For Money Line transfers to your bank account; minimum: $10; maximum:
$100,000.
All account types
S
You may exchange to other Fidelity funds if both accounts are registered
with
the same name(s), address, and taxpayer ID number.
Mail or in Person
Individual, Joint Tenant, Sole Proprietorship, UGMA, UTMA
S
The letter of instruction must be signed by all persons required to sign
for
transactions, exactly as their names appear on the account.
Retirement account
S
The account owner should complete a retirement distribution form. Call
1#800#544#6666
to request one.
Trust
S
The trustee must sign the letter indicating capacity as trustee. If the
trustee's
name is not in the account registration, provide a copy of the trust
document
certified within the last 60 days.
Business or Organization
S
At least one person authorized by corporate resolution to act on the
account
must sign the letter.
S
Include a corporate resolution with corporate seal or a signature
guarantee.
Executor, Administrator, Conservator, Guardian
S
Call 1#800#544#6666 for instructions.
Wire
All account types except retirement
S
You must sign up for the wire feature before using it. To verify that it is
in place, call 1#800#544#6666. Minimum wire: $5,000.
S
Your wire redemption request must be received by Fidelity before 4 p.m.
Eastern
time for money to be wired on the next business day.
TDD - Service for the Deaf and Hearing#Impaired: 1#800#544#0118
YOUR ACCOUNT
INVESTOR SERVICES
Fidelity provides a variety of services to help you manage your account.
INFORMATION SERVICES
FIDELITY'S TELEPHONE REPRESENTATIVES are available 24 hours a day, 365 days
a year. Whenever you call, you can speak with someone equipped to provide
the information or service you need.
STATEMENTS AND REPORTS that Fidelity sends to you include the following:
(small solid bullet) Confirmation statements (after every transaction,
except reinvestments, that affects your account balance or your account
registration)
(small solid bullet) Account statements (quarterly)
(small solid bullet) F inancial reports (every six months)
To reduce expenses, only one copy of most f inancial reports will be
mailed to your household, even if you have more than one account in the
fund. Call 1-800-544-6666 if you need copies of f inancial reports or
historical account information.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your fund shares and buy shares of other
Fidelity funds by telephone or in writ ing . The shares you
exchange will carry credit for any sales charge you previously paid in
connection with their purchase. There is a $7.50 fee for each exchange out
of a stock fund, unless you place your transaction on Fidelity's automated
exchange services. This fee would apply in addition to the redemption fees
which you pay every time you sell your shares.
For exchanges made by mail, orders are executed:
(small solid bullet) Between Select funds or from a Fidelity money market
fund generally at 10:00 a.m. the day after the order is received.
(small solid bullet) From another Fidelity stock or bond fund, generally at
4:00 p.m.
For exchanges made by phone, orders are executed:
(small solid bullet) From a Select fund or from a Fidelity money market
fund, at the next hourly price following acceptance of your order.
(small solid bullet) From another Fidelity stock or bond fund, at the 4:00
p.m. price next determined after your order is accepted.
Note that exchanges between Select funds are unlimited, but exchanges out
of the funds to other Fidelity funds are limited to four per calendar year
and that th ey may have tax consequences for you. For details
on policies and restrictions governing exchanges, including circumstances
under which a shareholder's exchange privilege may be suspended or revoked,
see page ____ .
SYSTEMATIC WITHDRAWAL PLANS let you set up periodic redemptions from your
account. Because of the funds' sales charge, you may not want to set up
a systematic withdrawal plan during a period when you are
buying shares on a regular basis.
FIDELITY MONEY LINE(registered trademark) enables you to transfer money by
phone between your bank account and your fund account. Most transfers are
completed within three business days of your call.
REGULAR INVESTMENT PLANS
One easy way to pursue your financial goals is to invest money regularly.
Fidelity offers convenient services that let you transfer money into your
fund account, or between fund accounts, automatically. While regular
investment plans do not guarantee a profit and will not protect you against
loss in a declining market, they can be an excellent way to invest for
retirement, a home, educational expenses, and other long-term financial
goals. Certain restrictions apply for retirement accounts. Call
1-800-544-6666 for more information.
REGULAR INVESTOR PLANS
GROWTH
FIDELITY AUTOMATIC ACCOUNT BUILDERSM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY FUND
MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Monthly or (small solid bullet) For a new account,
quarterly complete the appropriate
section on the fund
application.
(small solid bullet) For existing accounts,
call 1-800-544-6666 for
an application.
(small solid bullet) To change the amount or
frequency of your
investment, call 1-800-
544-6666 at least three
business days prior to
your next scheduled
investment date.
DIRECT DEPOSIT
TO SEND ALL OR A PORTION OF YOUR PAYCHECK OR GOVERNMENT CHECK TO A FIDELITY
FUND
MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Every pay (small solid bullet) Not available for Select
period stock funds.
(small solid bullet) Check the appropriate
box on the fund
application, or call
1-800-544-6666 for an
authorization form.
(small solid bullet) Changes require a new
authorization form.
FIDELITY AUTOMATIC EXCHANGE SERVICE
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO ANOTHER FIDELITY FUND
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MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Monthly, (small solid bullet) Check the appropriate
bimonthly, box on the fund
quarterly, or application, or call
annually 1-800-544-6666 for an
authorization form.
(small solid bullet) To change the amount or
frequency of your
investment, call
1-800-544-6666
</TABLE>
SHAREHOLDER AND ACCOUNT POLICIES
DIVIDENDS, CAPITAL GAINS, AND TAXES
Each stock fund distributes substantially all of its net investment income
and capital gains to shareholders each year, normally in April and
December. Income dividends for the money market fund are declared daily and
paid monthly.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. If the option you prefer is not listed on the
application, call 1-800-544-6666 for instructions. Each stock fund
offers four options (three for the money market fund):
1. REINVESTMENT OPTION. Your dividend and capital gain distributions will
be automatically reinvested in additional shares of the fund. If you do not
indicate a choice on your application, you will be assigned this option.
2. INCOME-EARNED OPTION. Your capital gain distributions will be
automatically reinvested, but you will be sent a check for each dividend
distribution. This option is not available for the money market fund.
3. CASH OPTION. You will be sent a check for your dividend and
capital gain distribution s .
4. DIRECTED DIVIDENDS(registered trademark) OPTION. Your dividend and
capital gain distributions will be automatically invested in another
identically registered Fidelity fund.
FOR RETIREMENT ACCOUNTS, all distributions are automatically reinvested.
When you are over 59 years old, you can receive distributions in cash.
For the stock funds, distributions will be reinvested, or deducted from the
share price, at 10:00 a.m. on the ex-dividend date. Shareholders of record
at 4:00 p.m. on the business day before the ex-dividend will be entitled to
receive the distribution. For the money market fund, dividends will be
reinvested at 4:00 p.m. of the last day of the month. Cash distribution
checks will be mailed within seven days.
SHARES PURCHASED THROUGH REINVESTMENT of dividend and capital gain
distributions are not subject to the fund's 3 % sales charge.
Likewise, if you direct distributions to a fund with a 3 % sales
charge, you will not pay a sales charge on those purchases.
When a fund deducts a distribution from its NAV, the reinvestment price
is the fund's NAV at the close of business that day. Cash distribution
checks will be mailed within seven days.
UNDERSTANDING
DISTRIBUTIONS
As a fund shareholder, you
are entitled to your share of
the fund's net income and
gains on its investments. The
fund passes its earnings
along to its investors as
DISTRIBUTIONS.
The fund earns dividends
from stocks and interest from
bond, money market, and
other investments. These are
passed along as DIVIDEND
DISTRIBUTIONS. The fund
realizes capital gains
whenever it sells securities
for a higher price than it paid
for them. These are passed
along as CAPITAL GAIN
DISTRIBUTIONS.
(checkmark)
TAXES
As with any investment, you should consider how your investment in the fund
will be taxed. If your account is not a tax-deferred retirement account,
you should be aware of the following tax implications:
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income tax,
and may also be subject to state or local taxes. If you live outside the
United States, your distributions could also be taxed by the country in
which you reside. Your distributions are taxable when they are paid,
whether you take them in cash or reinvest them in additional shares.
However, distributions declared in December and paid in January are taxable
as if they were paid on December 31.
For federal tax purposes, each fund's income and short-term capital gain
distributions are taxed as dividends; long-term capital gain distributions
are taxed as long-term capital gains. Every January, Fidelity will send you
and the IRS a statement showing the taxable distributions paid to you in
the previous year.
TAXES ON TRANSACTIONS. Your redemptions - including exchanges to other
Fidelity funds - are subject to capital gains tax. A capital gain or loss
is the difference between the cost of your shares and the price you receive
when you sell them.
UNDERSTANDING DISTRIBUTIONS
As a fund shareholder, you are entitled to your
share of the fund's net income and gains on its
investments. The fund passes these earnings
along to its investors as DISTRIBUTIONS.
Each fund earns dividends from stocks and
interest from bond, money market and other
investments. These are passed along as
DIVIDEND DISTRIBUTIONS. A fund realizes capital
gains whenever it sells securities for a higher
price than it paid for them. These are passed
along as CAPITAL GAIN DISTRIBUTIONS.
(checkmark)
Whenever you sell shares of a fund, Fidelity will send you a confirmation
statement showing how many shares you sold and at what price. You will also
receive a consolidated transaction statement every January. However, it is
up to you or your tax preparer to determine whether this sale resulted in a
capital gain and, if so, the amount of tax to be paid. Be sure to keep your
regular account statements; the information they contain will be essential
in calculating the amount of your capital gains.
"BUYING A DIVIDEND." If you buy shares just before a fund deducts a
distribution from its NAV , you will pay the full price for the
shares and then receive a portion of the price back in the form of a
taxable distribution.
EFFECT OF FOREIGN TAXES. Foreign governments may impose taxes on a fund
and its investments and these taxes generally will reduce the fund's
distributions. A tax credit or deduction may be available to you. If so,
your tax statement will show more taxable income or capital gains than
actually distributed by the fund, but will also show the amount of the
available offsetting credit or deduction.
There are some tax requirements that all funds must follow in order to
avoid federal taxation. In its effort to adhere to these requirements, a
fund may have to limit its investment activity in some types of
instruments.
TRANSACTION DETAILS
THE FUNDS ARE OPEN FOR BUSINESS each day the New York Stock Exchange (NYSE)
is open. Fidelity normally calculates each fund's net asset value and
offering price, hourly, from 10:00 a.m. to 4:00 p.m. each business day of
the NYSE.
EACH FUND'S NAV is the value of a single share. The NAV is computed by
adding up the value of the fund's investments, cash, and other assets,
subtracting its liabilities, and then dividing the result by the number of
shares outstanding.
The stock funds' assets are valued primarily on the basis of market
quotations . Foreign securities are valued on the basis of quotations
from the primary market in which they are traded, and are translated from
the local currency into U.S. dollars using current exchange rates. If
quotations are not readily available, or if the values have been materially
affected by events occurring after the closing of a foreign market, assets
are valued by a method that the Board of Trustees believes accurately
reflects fair value.
The money market fund values the securities it owns on the basis of
amortized cost. This method minimizes the effect of changes in a security's
market value and helps the fund to maintain a stable $1.00 share price.
EACH FUND'S OFFERING PRICE (price to buy one share) is the fund's NAV plus
a sales charge. The sales charge is 3% of the offering price, or 3.09% of
the net amount invested. The REDEMPTION PRICE (price to sell one share) is
the fund's NAV plus a redemption fee of $7.50 or of 1% of the value of
your redemptions depending on how long your shares were held. Exchanges
will also be charged an additional $7.50 fee.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that
your Social Security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require a fund to
withhold 31% of your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Fidelity may only be
liable for losses resulting from unauthorized transactions if it does not
follow reasonable procedures designed to verify the identity of the caller.
Fidelity will request personalized security codes or other information,
and may also record calls. You should verify the accuracy of your
confirmation statements immediately after you receive them. If you do not
want the ability to redeem and exchange by telephone, call Fidelity for
instructions.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during periods
of unusual market activity), consider placing your order by mail or by
visiting a Fidelity Investor Center.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. Each fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page ___ . Purchase orders may be refused if, in FMR's opinion,
they would disrupt management of a fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your order will be processed at the
next offering price calculated after your order is received and accepted.
Note the following:
(small solid bullet) All of your purchases must be made in U.S. dollars and
checks must be drawn on U.S. banks.
(small solid bullet) Fidelity does not accept cash.
(small solid bullet) When making a purchase with more than one check, each
check must have a value of at least $50.
(small solid bullet) Each fund reserves the right to limit the number of
checks processed at one time.
(small solid bullet) If your check does not clear, your purchase will be
cancelled and you could be liable for any losses or fees a fund or its
transfer agent has incurred.
(small solid bullet) If you do not specify a particular stock fund, your
investment will be made in the money market fund until FSC receives
instructions from you.
TO AVOID THE COLLECTION PERIOD associated with check and Money Line
purchases, consider buying shares by bank wire, U.S. Postal money order,
U.S. Treasury check, Federal Reserve check, or direct deposit instead.
YOU MAY BUY SHARES OF THE FUNDS (AT THE OFFERING PRICE) OR SELL THEM
THROUGH A BROKER, who may charge you a fee for this service. If you
invest through a broker or other institution, read its program materials
for any additional service features or fees that may apply .
Fidelity Brokerage Services, Inc. (FBSI) established a program permitting
customers with Fidelity brokerage accounts to sell short shares of Select
stock funds. FMR reserves the right to suspend the short selling program at
any time in the future.
CERTAIN FINANCIAL INSTITUTIONS that have entered into sales agreements with
FDC may enter confirmed purchase orders on behalf of customers by phone,
with payment to follow no later than the time when the fund is priced on
the following business day. If payment is not received by that time, the
financial institution could be held liable for resulting fees or losses.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your request is received and accepted.
N ote the following:
(small solid bullet) Normally, redemption proceeds will be mailed to you on
the next business day, but if making immediate payment could adversely
affect a fund, it may take up to seven days to pay you.
(small solid bullet) Fidelity Money Line redemptions generally will be
credited to your bank account on the second or third business day after
your phone call.
(small solid bullet) Each fund may hold payment on redemptions until it is
reasonably satisfied that investments made by check or Fidelity Money Line
have been collected, which can take up to seven business days.
(small solid bullet) Redemptions may be suspended or payment dates
postponed when the NYSE is closed (other than weekends or holidays), when
trading on the NYSE is restricted, or as permitted by the SEC.
THE REDEMPTION FEE, if applicable, will be deducted from the amount of your
redemption. This fee is paid to the fund rather than FMR. If shares you are
redeeming were not all held for the same length of time, those shares you
held longest will be redeemed first for purposes of determining the
appropriate fee that applies.
The long-term redemption fee may be reduced to ensure that the fee is no
greater than 0.75% of the net asset value of the long-term shares redeemed.
Shares acquired through the reinvestment of dividends and capital gains
will be treated as long-term shares for purposes of the redemption fee.
FIDELITY RESERVES THE RIGHT TO DEDUCT AN ANNUAL MAINTENANCE FEE of
$12.00 from accounts with a value of less than $2,500 (including any amount
paid as a sales charge), subject to an annual maximum charge of $60.00 per
shareholder. It is expected that accounts will be valued on the second
Friday in November of each year. Accounts opened after September 30 will
not be subject to the fee for that year. The fee, which is payable to the
transfer agent, is designed to offset in part the relatively higher costs
of servicing smaller accounts. The fee will not be deducted from retirement
accounts, accounts using regular investment plans, or if total assets in
Fidelity funds exceed $50,000. Eligibility for the $50,000 waiver is
determined by aggregating Fidelity mutual fund accounts maintained by FSC
or FBSI which are registered under the same social security number or which
list the same social security number for the custodian of a Uniform
Gifts/Transfers to Minors Act account.
IF YOUR ACCOUNT BALANCE FALLS BELOW $1,000, you will be given 30 days'
notice to reestablish the minimum balance. If you do not increase your
balance, Fidelity reserves the right to close your account and send the
proceeds to you. Your shares will be redeemed at the NAV on the day your
account is closed.
THE SELECT CASH RESERVES ACCOUNT no longer accepts new investments. If you
have an investment in this account, you may leave it there, redeem your
investment, or exchange your shares for shares of a Select fund or another
Fidelity fund. The 1% deferred sales charge will apply to shares in the
Select Cash Reserves Account redeemed or exchanged to another Fidelity
fund, since these shares were available for purchase only when the 1%
deferred sales charge was still in effect. If you redeem by check from
Select Cash Reserves, and the amount of the check is greater than the value
of your account, your check will be returned to you and you may be subject
to extra charges.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
FDC collects the proceeds from the funds' 3% sales charge and may pay a
portion of them to securities dealers who have sold the fund's shares, or
to others, including banks and other financial institutions (qualified
recipients), under special arrangements in connection with FDC's sales
activities. The sales charge paid to qualified recipients is 2.25% of the
offering price.
FDC may, at its own expense, provide promotional incentives to qualified
recipients who support the sale of shares of the funds without
reimbursement from the funds. In some instances, these incentives may be
offered only to certain institutions whose representatives provide services
in connection with the sale or expected sale of significant amounts of
shares.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging shares of a fund for
shares of other Fidelity funds. However, you should note the following:
(small solid bullet) The fund you are exchanging into must be registered
for sale in your state.
(small solid bullet) You may only exchange between accounts that are
registered in the same name, address, and taxpayer identification number.
(small solid bullet) Before exchanging into a fund, read its prospectus.
(small solid bullet) If you exchange into a fund with a sales charge, you
pay the percentage-point difference between that fund's sales charge and
any sales charge you have previously paid in connection with the shares you
are exchanging. For example, if you had already paid a sales charge of 2%
on your shares and you exchange them into a fund with a 3% sales charge,
you would pay an additional 1% sales charge.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) Although there is no limit on the number of exchanges
you may make between the Select funds, the funds reserve the right to enact
limitations in the future. Because excessive trading can hurt fund
performance and shareholders, each fund reserves the right to temporarily
or permanently terminate the exchange privilege of any investor who makes
more than four exchanges out of the Select funds to other Fidelity funds
per calendar year. Accounts under common ownership or control, including
accounts with the same taxpayer identification number, will be counted
together for purposes of the four exchange limit.
(small solid bullet) Each fund reserves the right to reject exchange
purchases in excess of 1% of its net assets or $1 million, whichever is
less. For purposes of this policy, accounts under common ownership or
control will be aggregated.
(small solid bullet) Each exchange limit may be modified for accounts in
certain institutional retirement plans to conform to plan exchange limits
and Department of Labor regulations. See your plan materials for further
information.
(small solid bullet) Each fund also reserves the right to refuse exchange
purchases by any person or group if, in FMR's judgment, the fund would be
unable to invest the money effectively in accordance with its investment
objective and policies, or would otherwise potentially be adversely
affected.
(small solid bullet) Your exchanges may be restricted or refused if the
funds receive or anticipate simultaneous orders affecting significant
portions of the funds' assets. In particular, a pattern of exchanges that
coincide with a "market timing" strategy may be disruptive to the funds.
(small solid bullet) For cash management purposes, up to seven days may
pass before exchange proceeds are paid from one Select fund to another, or
to another Fidelity equity fund. Exchange proceeds are recorded in your
shareholder account when the transaction occurs. Therefore, when you
exchange from a stock fund to the money market fund, you will earn money
market dividends immediately. When you exchange from the money market fund
to a stock fund, you will not earn money market dividends during the
seven-day period. This policy could increase the volatility of the money
market fund's yield.
Although the funds will attempt to give you prior notice whenever they are
reasonably able to do so, they may impose these restrictions at any time.
The funds reserve the right to terminate or modify the exchange privilege
in the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
administrative fees of up to $7.50 and redemption fees of up to 1.50% on
exchanges. Check each fund's prospectus for details.
SALES CHARGE REDUCTIONS AND WAIVERS
REDUCTIONS. Each stock fund's sales charge may be reduced if you invest
directly with Fidelity or through prototype or prototype-like retirement
plans sponsored by FMR or FMR Corp. The amount you invest, plus the value
of your account, must fall within the ranges shown below. However,
p urchases made with assistance or intervention from a financial
intermediary are not eligible. Call Fidelity to see if your purchase
qualifies.
Net amount
Ranges Sales charge invested
$0 - 249,999 3% 3.09%
$250,000 - 499,999 2% 2.04%
$500,000 - 999,999 1% 1.01%
$1,000,000 or more none none
The sales charge for the stock funds and the money market fund will also be
reduced by the percentage of any sales charge you previously paid on
investments in other Fidelity funds (not including Fidelity's Foreign
Currency Funds). Similarly, your shares carry credit for any sales charge
you would have paid if the reductions in the table above had not existed.
These sales charge credits only apply to purchases made in one of the
ways listed below, and only if you continuously owned Fidelity fund
shares or a Fidelity brokerage core account, or participated in The
CORPORATEplan for Retirement Program.
1. By exchange from another Fidelity fund.
2. With proceeds of a transaction within a Fidelity brokerage core account,
including any free credit balance, core money market fund, or margin
availability, to the extent such proceeds were derived from redemption
proceeds from another Fidelity fund.
3. With redemption proceeds from one of Fidelity's Foreign Currency Funds,
if the Foreign Currency Fund shares were originally purchased with
redemption proceeds from a Fidelity fund.
4. Through the Directed Dividends Option (see page ___).
5. By participants in The CORPORATEplan for Retirement Program when shares
are purchased through plan-qualified loan repayments, and for exchanges
into and out of the Managed Income Portfolio.
WAIVERS. The fund's sales charge will not apply:
1. If you buy shares as part of an employee benefit plan having more than
200 eligible employees or a minimum of $3 million in plan assets invested
in Fidelity mutual funds.
2. To shares in a Fidelity Rollover IRA account purchased with the proceeds
of a distribution from an employee benefit plan, provided that at the time
of the distribution, the employer or its affiliate maintained a plan that
both qualified for waiver (1) above and had at least some of its assets
invested in Fidelity-managed products.
3. If you are a charitable organization (as defined in Section 501(c)(3) of
the Internal Revenue Code) investing $100,000 or more.
4. If you purchase shares for a charitable remainder trust or life income
pool established for the benefit of a charitable organization (as defined
by Section 501(c)(3) of the Internal Revenue Code).
5. If you are an investor participating in the Fidelity Trust Portfolios
program.
6. To shares purchased through Portfolio Advisory Services.
7. If you are a current or former trustee or officer of a Fidelity fund or
a current or retired officer, director, or regular employee of FMR Corp. or
its direct or indirect subsidiaries (a Fidelity Trustee or employee), the
spouse of a Fidelity trustee or employee, a Fidelity trustee or employee
acting as custodian for a minor child, or a person acting as trustee of a
trust for the sole benefit of the minor child of a Fidelity trustee or
employee.
8. If you are a bank trust officer, registered representative, or other
employee of a qualified recipient, as defined on page ___.
These waivers must be qualified through FDC in advance. More detailed
information about waivers (1), (2), and (5) is contained in the Statement
of Additional Information. A representative of your plan or organization
should call Fidelity for more information.
FIDELITY SELECT PORTFOLIOS (registered trademark)
STATEMENT OF ADDITIONAL INFORMATION
APRIL 30, 1995
This Statement is not a prospectus but should be read in conjunction with
the funds' current Prospectus (dated April 30, 1995). Please retain this
document for future reference. The funds' financial statements and
financial highlights, i ncluded in the Annual Report for the fiscal year
ended February 28, 1995, are incorporated herein by reference. To
obtain an additional copy of the Prospectus or the Annual Report, please
call Fidelity Distributors Corporation at 1-800-544-8888.
TABLE OF CONTENTS PAGE
Investment Policies and Limitations
Portfolio Transactions
Valuation of Portfolio Securities
Performance
Additional Purchase and Redemption Information
Distributions and Taxes
FMR
Trustees and Officers
Management Contracts
Contracts With Companies Affiliated With FMR
Description of the Trust
Financial Statements
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc. (FMR U.K.) (stock funds)
Fidelity Management & Research (Far East) Inc. (FMR Far East) (stock funds)
FMR Texas Inc. (FTX) (money market fund)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENT
Fidelity Service Company (FSC)
SEL-ptb-495
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of a fund's assets that may be
invested in any security or other asset, or sets forth a policy regarding
quality standards, such standard or percentage limitation will be
determined immediately after and as a result of the fund's acquisition of
such security or other asset. Accordingly, any subsequent change in
values, net assets, or other circumstances will not be considered when
determining whether the investment complies with the fund's investment
policies and limitations.
The funds of the trust are registered as non-diversified investment
companies (except the Money Market Portfolio ). Under the
Investment Company Act of 1940, as amended, an investment company is
diversified if at least 75% of the value of its total assets are
represented by cash, cash items, U.S. government securities, and other
securities of issuers which represent, with respect to each issuer, no more
than 5% of the value of the investment company's total assets and no more
than 10% of the outstanding voting securities of such issuer. As
non-diversified investment companie s , the stock fund s
need not satisfy these conditions. It is anticipated that each of the stock
funds, except the Financial Services, Regional Banks, and Home Finance
Portfolios, will operate as "non-diversified" funds. Under
non-fundamental investment policies, the Financial Services, Regional
Banks, and Home Finance Portfolios will operate as diversified
funds . As such, they will not purchase the securities of any
issuer (other than obligations issued or guaranteed by the U.S. government
or any of its agencies or instrumentalities) if, as a result, with respect
to 75% of its total assets, (a) more than 5% of a fund's total
assets would be invested in the securities of that issuer, or (b) a fund
would hold more than 10% of the outstanding voting securities of that
issuer . The Money Market Portfolio also operate s as a
diversified fund. Each fund also intends to meet the diversification
requirements necessary to qualify as a regulated investment company for
purposes of the Internal Revenue Code. (For the funds operating as
non-diversified, the requirements are stated in non-fundamental limit
(i) on page 3. Also see "Distributions and Taxes" beginning on page 37
for additional information.)
Each fund's fundamental investment policies and limitations cannot be
changed without approval by a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940) of that
fund. However, with respect to the money market fund, except for the
fundamental investment limitations set forth below, the investment policies
and limitations described in this Statement of Additional Information are
not fundamental and may be changed without shareholder approval.
THE FOLLOWING ARE EACH STOCK FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. EACH STOCK FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) borrow money, except that a fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days ( not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3% limitation;
(3) underwrite securities issued by others, except to the extent that a
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(4) purchase or sell the securities of any issuer, if, as a result of such
purchase or sale, less than 25% of the assets of the fund would be invested
in the securities of issuers principally engaged in the business activities
having the specific characteristics denoted by the fund;
(5) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent a fund from
investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(6) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent a
fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities). This limitation does not apply to the Precious Metals and
Minerals Portfolio (see below) or to the American Gold Portfolio;
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
IN ADDITION, A FUND MAY:
(8) notwithstanding any other fundamental investment policy or limitation,
invest all of its assets in the securities of a single open-end management
investment company with substantially the same fundamental investment
objectives, policies, and limitations as the fund.
THE PRECIOUS METALS AND MINERALS PORTFOLIO MAY NOT:
(1) purchase any precious metal if, as a result, more than 50% of its total
assets would be invested in precious metals; or
(2) purchase or sell physical commodities, provided that the fund may
purchase and sell precious metals, and further provided that the fund may
sell physical commodities acquired as a result of ownership of securities.
The fund may not purchase or sell options, options on futures contracts, or
futures contracts on physical commodities other than precious metals.
THE FOLLOWING ARE THE STOCK FUNDS' NON-FUNDAMENTAL LIMITATIONS WHICH MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
( i ) To meet federal tax requirements for qualification as a
"regulated investment company," each fund limits its investments so that at
the close of each quarter of its taxable year: (a) with regard to at least
50% of total assets, no more than 5% of total assets are invested in the
securities of a single issuer, and (b) no more than 25% of total assets are
invested in the securities of a single issuer. Limitations (a) and (b) do
not apply to "Government securities" as defined for federal tax purposes.
(ii) In addition to limitation (i) above, the Financial Services,
Regional Banks and Home Finance Portfolios, each with respect to 75% of the
fund's total assets, may not purchase the securities of any issuer (other
than securities issued or guaranteed by the U.S. government, or any of its
agencies or instrumentalities) if, as a result, (a) more than 5% of the
fund's total assets would be invested in the securities of that issuer, or
(b) the fund would hold more than 10% of the outstanding voting securities
of that issuer.
(iii) Each fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in kind and
amount to the securities sold short, and provided that transactions in
futures contracts and options are not deemed to constitute selling
securities short.
( iv ) Each fund does not currently intend to purchase securities on
margin, except that a fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
( v ) Each fund does not currently intend to hedge more than 40% of
its total assets with short sales against the box under normal conditions.
( vi) Each fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an affiliate
serves as investment adviser or (b) by engaging in reverse repurchase
agreements with any party (reverse repurchase agreements are treated as
borrowings for purposes of fundamental investment limitation (2)). Each
fund will not purchase any security while borrowings representing more than
5% of its total assets are outstanding. Each fund will not borrow from
other funds advised by FMR or its affiliates if total outstanding
borrowings immediately after such borrowing would exceed 15% of the fund's
total assets.
( vii ) Each fund does not currently intend to purchase any security
if, as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to legal
or contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
( viii ) Each fund does not currently intend to purchase interests
in real estate investment trusts that are not readily marketable or
interests in real estate limited partnerships that are not listed on an
exchange or traded on the NASDAQ National Market System if, as a result,
the sum of such interests and other investments considered illiquid under
limitation (vii) would exceed 10% of a fund's net assets.
( ix ) Each fund (except the American Gold Portfolio and the Precious
Metals and Minerals Portfolio) will not purchase physical commodities, or
purchase or sell futures contracts based on physical commodities.
(x) The American Gold Portfolio and the Precious Metals and Minerals
Portfolio will each limit investment in gold bullion or coins to no more
than 25% of its total assets.
( xi) Each fund does not currently intend to lend assets other than
securities to other parties, except (a) b y lending money (up to 5%
of a fund's net assets) to a registered investment company or
portfolio for which FMR or an affiliate serves as investment adviser , or
(b) acquiring loans, loan participations, or other forms of direct debt
instruments . (This limitation does not apply to purchases of debt
securities or to repurchase agreements.)
( xii) Each fund does not currently intend to (a) purchase securities
of other investment companies, except in the open market where no
commission except the ordinary broker's commission is paid, or (b) purchase
or retain securities issued by other open-end investment companies.
Limitations (a) and (b) do not apply to securities received as dividends,
through offers of exchange, or as a result of a reorganization,
consolidation, or merger.
( xiii ) Each fund does not currently intend to purchase the
securities of any issuer (other than securities issued or guaranteed by
domestic and foreign governments or political subdivisions thereof) if, as
a result, more than 5% of its total assets would be invested in the
securities of business enterprises that, including predecessors, have a
record of less than three years of continuous operation.
( xiv ) Each fund does not currently intend to purchase warrants,
valued at the lower of cost or market, in excess of 5% of the fund's net
assets. Included in that amount, but not to exceed 2% of a fund's net
assets, may be warrants that are not listed on the New York Stock Exchange
or the American Stock Exchange. Warrants acquired by a fund in units or
attached to securities are not subject to these restrictions. The
Brokerage and Investment Management Portfolio and Financial Services
Portfolio are subject to additional restrictions on the purchase of
warrants and rights. See page __
( xv ) Each fund does not currently intend to invest in oil, gas, or
other mineral exploration or development programs or leases; provided,
however, that if consistent with the designated business activities of a
particular fund, a fund may purchase securities of issuers whose principal
business activities fall within these areas.
(xvi) Each fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(xvii) Each fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company with
substantially the same fundamental investment objectives, policies, and
limitations as the funds.
For the stock funds' limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
beginning on page __ _.
THE FOLLOWING ARE THE MONEY MARKET FUND'S FUNDAMENTAL INVESTMENT
LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE MONEY MARKET FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities) if, as a result,
(a) more than 5% of the fund's total assets would be invested in the
securities of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer.
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may (i) borrow money for temporary
or emergency purposes (not for leveraging or investment) and (ii) engage in
reverse repurchase agreements for any purpose; provided that (i) and (ii)
in combination do not exceed 33 1/3% of the fund's total assets (including
the amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed this amount will be reduced within three
days (not including Sundays and holidays) to the extent necessary to comply
with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry, except that the fund will
invest more than 25% of its total assets in the financial services
industry;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments;
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements;
(9) invest in companies for the purpose of exercising control or
management.
IN ADDITION, THE FUND MAY:
(10) notwithstanding any other fundamental investment policy or limitation,
invest all of its assets in the securities of a single open-end management
investment company with substantially the same fundamental investment
objectives, policies, and limitations as the fund.
THE FOLLOWING ARE THE MONEY MARKET FUND'S NON-FUNDAMENTAL LIMITATIONS WHICH
MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to purchase a security (other than a
security issued or guaranteed by the U.S. government or any of its agencies
or instrumentalities) if, as a result, more than 5% of its total assets
would be invested in the securities of a single issuer; provided that the
fund may invest up to 25% of its total assets in the first tier securities
of a single issuer for up to three business days.
(ii) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(iii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party. The fund will not purchase any security while borrowings
(excluding reverse repurchase agreements) representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(v) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(vi) The fund does not currently intend to invest in securities of real
estate investment trusts that are not readily marketable, or to invest in
securities of real estate limited partnerships that are not listed on the
New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System.
(vii) The fund does not currently intend to purchase physical commodities
or purchase or sell futures contracts based on physical commodities.
(viii) The fund does not currently intend to lend assets other than
securities to other parties, except by lending money (up to 10% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser. (This limitation
does not apply to purchases of debt securities or to repurchase
agreements.)
(ix) The fund does not currently intend to (a) purchase securities of other
investment companies, except in the open market where no commission except
the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(x) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(xii) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(xii) The fund does not currently intend to purchase or sell futures
contracts or call options. This limitation does not apply to options
attached to or acquired or traded together with their underlying securities
and does not apply to securities that incorporate features similar to
options or futures contracts.
(xiii) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO AND FINANCIAL SERVICES
PORTFOLIO Rule 12d3-1 under the Investment Company Act of 1940, as
amended, allows investment portfolios such as these funds to invest in
companies engaged in securities-related activities subject to certain
conditions. Purchases of securities of a company that derived 15% or less
of gross revenues during its most recent fiscal year from
securities-related activities (i.e., broker/dealer, underwriting, or
investment advisory activities) are subject only to the same percentage
limitations as would apply to any other security the funds may purchase.
Each fund may purchase securities of an issuer that derived more than 15%
of its gross revenues in its most recent fiscal year from
securities-related activities, subject to the following conditions:
a. the purchase cannot cause more than 5% of the fund's total assets to be
invested in securities of that issuer;
b. for an equity security, the purchase cannot result in the fund owning
more than 5% of the issuer's outstanding securities in that class;
c. for a debt security, the purchase cannot result in the fund owning more
than 10% of the outstanding principal amount of the issuer's debt
securities.
In applying the gross revenue test, an issuer's own securities-related
activities must be combined with its ratable share of securities-related
revenues from enterprises in which it owns a 20% or greater voting or
equity interest. All of the above percentage limitations, as well as the
issuer's gross revenue test, are applicable at the time of purchase. With
respect to warrants, rights, and convertible securities, a determination of
compliance with the above limitations shall be made as though such warrant,
right, or conversion privilege had been exercised. Neither fund will be
required to divest its holdings of a particular issuer when circumstances
subsequent to the purchase cause one of the above conditions to not be met.
The funds are not permitted to acquire any security issued by FMR, FDC, or
any affiliated company of these companies that is a securities-related
business. The purchase of a general partnership interest in a
securities-related business is prohibited.
MULTIMEDIA PORTFOLIO
The Federal Communications Commission (FCC) has certain rules which limit
ownership of corporate broadcast licensees in an effort to assure that no
one person or entity (including mutual funds) exercises an unacceptable
degree of influence or control over broadcast facilities. Current FCC
rules prohibit the fund, together with all other funds advised by FMR, from
holding in the aggregate 10% of the voting stock of more than 18 AM, 18 FM,
or 12 TV broadcast stations. If the officer or director of a broadcast
licensee is a representative of the fund, that licensee must also be taken
into account in determining whether the limitation on the number of
stations has been exceeded. FCC rules also limit investment in multiple
stations serving the same area.
The attribution rules are not applicable to noncommercial educational FM
and TV stations, or to TV stations that are primarily "satellite"
operations. In addition, the rules do not restrict the ownership of a
broadcast licensee if any other person holds more than 50% of the
outstanding voting stock of the licensee. These limitations apply to the
aggregate assets of Multimedia Portfolio and of all funds managed by FMR.
AMERICAN GOLD PORTFOLIO AND PRECIOUS METALS AND MINERALS PORTFOLIO
The American Gold Portfolio and the Precious Metals and Minerals Portfolio
each have the authority to invest a portion of their assets in gold. The
Precious Metals and Minerals Portfolio can invest in other precious metals,
such as platinum, palladium, and silver. No more than 50% of the American
Gold Portfolio's total assets may be invested in gold bullion or coins. No
more than 50% of the Precious Metals and Minerals Portfolio's total assets
may be invested in precious metals, including gold bullion or coins.
FMR does not currently intend that either fund will hold gold coins, but
the Trustees reserve the right of the Portfolios to do so in the future.
Transactions in gold coins will be entered into only with prior approval by
the Trustees, prior notice to current shareholders, and provided that
disclosure regarding the nature of such investments is set forth in a
subsequent Prospectus that is part of the Registration Statement declared
effective by the Securities and Exchange Commission. In addition, the
ability of the funds to hold gold coins may be restricted by the securities
laws and/or regulations of states where the funds' shares are qualified for
sale.
The funds may also consider investments in securities indexed to the price
of gold (both funds) or other precious metals (Precious Metals Portfolio
only) as an alternative to direct investments in precious metals.
The Precious Metals and Minerals Portfolio's gold-related investments will
often contain securities of companies located in the Republic of South
Africa, which is a principal producer of gold. Unsettled political and
social conditions in South Africa and its neighboring countries, may from
time to time pose certain risks to the Precious Metals and Minerals
Portfolio's investments in South African issuers. These events could also
have an impact on the American Gold Portfolio through their influence on
the price of gold and related mining securities worldwide.
FUND DESCRIPTIONS
THE STOCK FUNDS INVEST PRIMARILY WITHIN THE INVESTMENT AREAS DESCRIBED
BELOW.
AIR TRANSPORTATION PORTFOLIO: COMPANIES ENGAGED IN THE REGIONAL, NATIONAL
AND INTERNATIONAL MOVEMENT OF PASSENGERS, MAIL, AND FREIGHT VIA AIRCRAFT.
Such companies include the major airlines, commuter airlines, air cargo and
express delivery operators, air freight forwarders, aviation service firms,
and manufacturers of aeronautical equipment.
Airline deregulation has substantially diminished the government's role in
the air transport industry while promoting an increased level of
competition. However, regulations and policies of various domestic and
foreign governments can still affect the profitability of individual
carriers as well as the entire industry. In addition to regulations and
competition, the air transport industry is also very sensitive to fuel
price levels and the state of foreign and domestic economies.
AMERICAN GOLD PORTFOLIO: COMPANIES ENGAGED IN EXPLORATION, MINING,
PROCESSING, OR DEALING IN GOLD, OR, TO A LESSER DEGREE, IN SILVER,
PLATINUM, DIAMONDS, OR OTHER PRECIOUS METALS AND MINERALS. FMR also may
invest in securities of companies which themselves invest in companies
engaged in these activities. Normally at least 80% of the fund's assets
will be invested in securities of North, Central and South American
companies engaged in gold-related activities, and in gold bullion or coins.
The prices of gold and other precious metal mining securities have been
subject to substantial fluctuations over short periods of time and may be
affected by unpredictable international monetary and political developments
such as currency devaluations or revaluations, economic and social
conditions within a country, trade imbalances, or trade or currency
restrictions between countries. Since much of the world's gold reserves are
located in South Africa, the social upheaval and related economic
difficulties there may, from time to time, influence the price of gold and
the share values of precious metals mining companies located elsewhere.
Investors should understand the special considerations and risks related to
such an investment emphasis, and, accordingly, the potential effect on the
fund's value.
In addition to its investments in securities, the fund may invest a portion
of its assets in gold bullion or coins. The price of gold is affected by
broad economic and political conditions, but is less subject to local and
company-specific factors than securities of individual companies. As a
result, gold may be more or less volatile in price than securities of
companies engaged in gold-related businesses. FMR intends to purchase only
those forms of gold that are readily marketable and that can be stored in
accordance with custody regulations applicable to mutual funds. The fund
may incur higher custody and transaction costs for gold than for
securities.
The fund is authorized to invest up to 50% of its total assets in gold
bullion or coins; however, as a non-fundamental policy (which can be
changed without shareholder approval), FMR does not currently intend to
purchase gold if, as a result, more than 25% of the fund's total assets
would be invested in gold, and does not currently intend to purchase coins.
As a further limit on gold investments, under current federal tax law,
gains from selling gold may not exceed 10% of the fund's annual gross
income. This tax requirement could cause the fund to hold or sell bullion
or securities when it would not otherwise do so. The fund also may purchase
securities whose redemption value is indexed to the price of gold, which
are discussed in the Statement of Additional Information. Because the value
of these securities is directly linked to the price of gold, they involve
risks and pricing characteristics similar to direct investments in gold.
FMR currently intends to treat such securities as gold investments for the
purposes of the 25% and 50% limitations above and the 80% policy in the
first paragraph of this section.
AUTOMOTIVE PORTFOLIO: COMPANIES ENGAGED IN THE MANUFACTURE, MARKETING OR
SALE OF AUTOMOBILES, TRUCKS, SPECIALTY VEHICLES, PARTS, TIRES, AND RELATED
SERVICES. These companies include those involved with the manufacture and
distribution of vehicles, vehicle parts and tires - either original
equipment or for the aftermarket - and those which are involved in the
retail sale of vehicles, parts or tires. In addition, the fund may invest
in companies that provide automotive-related services to manufacturers,
distributors or consumers.
The automotive industry is highly cyclical and companies involved in this
business may suffer periodic operating losses. While most of the major
manufacturers are large, financially strong companies, many others are
small and may be non-diversified in both product line and customer base.
BIOTECHNOLOGY PORTFOLIO: COMPANIES ENGAGED IN THE RESEARCH, DEVELOPMENT,
SCALE UP AND MANUFACTURE OF VARIOUS BIOTECHNOLOGICAL PRODUCTS, SERVICES AND
PROCESSES. These include companies involved with new or experimental
technologies such as genetic engineering, hybridoma and recombinant DNA
techniques and monoclonal antibodies. The fund may also invest in companies
that manufacture and/or distribute biotechnological and biomedical
products, including devices and instruments, and in companies that provide
or benefit significantly from scientific and technological advances in
biotechnology. Some biotechnology companies may provide processes or
services instead of, or in addition to, products.
The description of the biotechnology sector will be interpreted broadly by
FMR, and may include applications and developments in such areas as human
health care (e.g., cancer, infectious disease, diagnostics and
therapeutics); pharmaceuticals (e.g., new drug development and production);
agricultural and veterinary applications (e.g., improved seed varieties,
animal growth hormones); chemicals (e.g., enzymes, toxic waste treatment);
medical/surgical (e.g., epidermal growth factor, in vivo
imaging/therapeutics); and industry (e.g., biochips, fermentation, enhanced
mineral recovery).
Many of these companies may have losses and may not offer products until
the late 1990's. These companies may have persistent losses during a new
product's transition from development to production, and revenue patterns
may be erratic. In addition, biotechnology companies are affected by patent
considerations, intense competition, rapid technological change and
obsolescence, and regulatory requirements of the U.S. Food and Drug
Administration, the Environmental Protection Agency, state and local
governments, and foreign regulatory authorities. Many of these companies
are relatively small and their stock is thinly traded.
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO: COMPANIES ENGAGED IN STOCK
BROKERAGE, COMMODITY BROKERAGE, INVESTMENT BANKING, TAX-ADVANTAGED
INVESTMENT OR INVESTMENT SALES, INVESTMENT MANAGEMENT, OR RELATED
INVESTMENT ADVISORY SERVICES. Holdings may include diversified companies
with operations in the aforementioned areas, in addition to firms
principally engaged in brokerage activities or investment management. The
fund will not invest in securities of FMR or its affiliated companies.
Changes in regulations, the brokerage commission structure, and the
competitive environment, combined with the operating leverage inherent in
companies in these industries, can produce erratic revenues and earnings
over time. The performance of companies in this industry can be closely
tied to the stock market and can suffer during market declines. Revenues
often depend on overall market activity. Securities and Exchange Commission
regulations provide that the fund may not invest more than 5% of its total
assets in the securities of any one company that derives more than 15% of
its revenues from brokerage or investment management activities. These
companies, as well as those deriving more than 15% of profits from
brokerage and investment management activities, will be considered to be
"principally engaged" in this fund's specific business activity.
CHEMICALS PORTFOLIO: COMPANIES ENGAGED IN THE RESEARCH, DEVELOPMENT,
MANUFACTURE OR MARKETING OF PRODUCTS OR SERVICES RELATED TO THE CHEMICAL
PROCESS INDUSTRIES. Such products may include synthetic and natural
materials, such as basic and intermediate organic and inorganic chemicals,
plastics, synthetic fibers, fertilizers, industrial gases, flavorings,
fragrances, biological materials, catalysts, carriers, additives, and
process aids. The fund may also hold the securities of companies providing
design, engineering, construction, and consulting services to companies
engaged in chemical processing.
Companies in the chemical processing field are subject to regulation by
various federal and state authorities, including the Environmental
Protection Agency and its state agency counterparts. As regulations are
developed and enforced, such companies may be required to alter or cease
production of a product, to pay fines or to pay for cleaning up a disposal
site, or to agree to restrictions on their operations. In addition, some of
the materials and processes used by these companies involve hazardous
components. There are risks associated with their production, handling and
disposal. These risks are in addition to the more common risks of intense
competition and product obsolescence.
COMPUTERS PORTFOLIO: COMPANIES ENGAGED IN RESEARCH, DESIGN, DEVELOPMENT,
MANUFACTURE OR DISTRIBUTION OF PRODUCTS, PROCESSES OR SERVICES THAT RELATE
TO CURRENTLY AVAILABLE OR EXPERIMENTAL HARDWARE TECHNOLOGY WITHIN THE
COMPUTER INDUSTRY. The fund may hold securities of companies that provide
the following products or services: mainframes, minicomputers,
microcomputers, peripherals, data or information processing, office or
factory automation, robotics, artificial intelligence, computer aided
design, medical technology, engineering and manufacturing, data
communications and software.
Competitive pressures may have a significant effect on the financial
conditions of companies in the computer industry. For example, as product
cycles shorten and manufacturing capacity increases, these companies could
become increasingly subject to aggressive pricing, which hampers
profitability. Fluctuating domestic and international demand also affect
profitability.
CONSTRUCTION AND HOUSING PORTFOLIO: COMPANIES ENGAGED IN THE DESIGN AND
CONSTRUCTION OF RESIDENTIAL, COMMERCIAL, INDUSTRIAL AND PUBLIC WORKS
FACILITIES, AS WELL AS COMPANIES ENGAGED IN THE MANUFACTURE, SUPPLY,
DISTRIBUTION OR SALE OF PRODUCTS OR SERVICES TO THESE CONSTRUCTION
INDUSTRIES. Examples of companies engaged in these activities include
companies that provide engineering and contracting services, and companies
that produce basic building materials such as cement, aggregates, gypsum,
timber, wall coverings, and floor coverings.
The fund also may invest in the securities of companies involved in real
estate development and construction financing. Such companies could include
homebuilders, architectural and design firms, and property managers.
Additionally, the fund may invest in the securities of companies involved
in the home improvement and maintenance industry, which would include
building material retailers and distributors, household service firms, and
those that supply such companies.
The companies that the fund may invest in are subject to, among other
factors, changes in government spending on public works and transportation
facilities such as highways and airports, as well as changes in interest
rates and levels of economic activity, government-sponsored housing subsidy
programs, rate of housing turnover, taxation, demographic patterns,
consumer spending, consumer confidence, and new and existing home sales.
CONSUMER PRODUCTS PORTFOLIO: COMPANIES ENGAGED IN THE MANUFACTURE AND
DISTRIBUTION OF GOODS TO CONSUMERS BOTH DOMESTICALLY AND INTERNATIONALLY.
The fund may invest in companies that manufacture or sell durable products
such as homes, cars, boats, furniture, major appliances, and personal
computers.
The fund will also invest in companies that manufacture, wholesale, or
retail non-durable goods such as food, beverages, tobacco, health care
products, household and personal care products, apparel, and entertainment
products (books, magazines, TV, cable, movies, music). Consumer products
and services such as lodging, child care, convenience stores, and car
rentals may also be represented in the fund.
The success of durable goods manufacturers and retailers is closely tied to
the performance of the overall economy, interest rates, and consumer
confidence. These segments are very competitive; success depends heavily on
household disposable income and consumer spending. Consumer product and
retailing concepts tend to rise and fall with changes in demographics and
consumer tastes.
DEFENSE AND AEROSPACE PORTFOLIO: COMPANIES ENGAGED IN THE RESEARCH,
MANUFACTURE OR SALE OF PRODUCTS OR SERVICES RELATED TO THE DEFENSE OR
AEROSPACE INDUSTRIES. The fund may hold securities of companies that
provide the following products or services: air transport; data processing,
or computer-related services; communications systems; research; development
and manufacture of military weapons and transportation; general aviation
equipment, missiles, space launch vehicles, and spacecraft; units for
guidance, propulsion, and control of flight vehicles; equipment components
and airborne and ground-based equipment essential to the testing,
operation, and maintenance of flight vehicles.
Companies involved in the defense and aerospace industries rely to a large
extent on U.S. (and other) government demand for their products and
services. The financial condition of such companies and investor interest
in the stocks of these companies are heavily influenced by federal defense
and aerospace spending policies. For example, defense spending is currently
under pressure from efforts to control the U.S. budget deficit.
DEVELOPING COMMUNICATIONS PORTFOLIO: COMPANIES ENGAGED IN THE DEVELOPMENT,
MANUFACTURE OR SALE OF EMERGING COMMUNICATIONS SERVICES OR EQUIPMENT. The
fund may invest in companies developing or offering services or products
based on communications technologies such as cellular, paging, personal
communications networks, special mobile radio, facsimile, fiber optic
transmission, voice mail, video conferencing, microwave, satellite, local
and wide area networking, and other transmission electronics. For purposes
of characterizing the fund's investments, communications services or
equipment may be deemed to be "emerging" if they derive from new
technologies or new applications of existing technologies. The fund will
focus on companies whose business is based on these emerging technologies,
with less emphasis on traditional telephone utilities and large long
distance carriers. The fund will attempt to exploit growth opportunities
presented by new technologies and applications in the communications field.
Many of these opportunities may be in the development stage and, as such,
can pose large risks as well as potential rewards. Such risks might include
failure to obtain (or delays in obtaining) adequate financing or necessary
regulatory approvals, intense competition, product incompatibility,
consumer preferences and rapid obsolescence. Securities of small companies
that base their business on emerging technologies may be volatile due to
limited product lines, markets, or financial resources.
ELECTRONICS PORTFOLIO: COMPANIES ENGAGED IN THE DESIGN, MANUFACTURE, OR
SALE OF ELECTRONIC COMPONENTS (SEMICONDUCTORS, CONNECTORS, PRINTED CIRCUIT
BOARDS AND OTHER COMPONENTS); EQUIPMENT VENDORS TO ELECTRONIC COMPONENT
MANUFACTURERS; ELECTRONIC COMPONENT DISTRIBUTORS; AND ELECTRONIC
INSTRUMENTS AND ELECTRONIC SYSTEMS VENDORS. In addition, the fund may
invest in companies in the fields of defense electronics, medical
electronics, consumer electronics, advanced manufacturing technologies
(computer-aided design and computer-aided manufacturing [CAD/CAM],
computer-aided engineering, and robotics), lasers and electro-optics, and
other new electronic technologies. Many of the products offered by
companies engaged in the design, production or distribution of electronic
products are subject to risks of rapid obsolescence.
ENERGY PORTFOLIO: COMPANIES IN THE ENERGY FIELD, INCLUDING THE CONVENTIONAL
AREAS OF OIL, GAS, ELECTRICITY AND COAL, AND NEWER SOURCES OF ENERGY SUCH
AS NUCLEAR, GEOTHERMAL, OIL SHALE AND SOLAR POWER. The business activities
of companies held in the Energy Portfolio may include: production,
generation, transmission, marketing, control, or measurement of energy or
energy fuels; providing component parts or services to companies engaged in
the above activities; energy research or experimentation; and environmental
activities related to the solution of energy problems, such as energy
conservation and pollution control. Companies participating in new
activities resulting from technological advances or research discoveries in
the energy field will also be considered for this fund.
The securities of companies in the energy field are subject to changes in
value and dividend yield which depend, to a large extent, on the price and
supply of energy fuels. Swift price and supply fluctuations may be caused
by events relating to international politics, energy conservation, the
success of exploration projects, and tax and other regulatory policies of
various governments.
ENERGY SERVICE PORTFOLIO: COMPANIES IN THE ENERGY SERVICE FIELD, INCLUDING
THOSE THAT PROVIDE SERVICES AND EQUIPMENT TO THE CONVENTIONAL AREAS OF OIL,
GAS, ELECTRICITY AND COAL, AND NEWER SOURCES OF ENERGY SUCH AS NUCLEAR,
GEOTHERMAL, OIL SHALE AND SOLAR POWER. Holdings may include companies
involved in providing services and equipment for drilling processes such as
offshore and onshore drilling, drill bits, drilling rig equipment, drilling
string equipment, drilling fluids, tool joints and wireline logging. Many
energy service companies are engaged in production and well maintenance,
providing such products and services as packers, perforating equipment,
pressure pumping, downhole equipment, valves, pumps, compression equipment,
and well completion equipment and service. Certain companies supply energy
providers with exploration technology such as seismic data, geological and
geophysical services, and interpretation of this data. Holdings may also
include companies with a variety of products or services including pipeline
construction, oil tool rental, underwater well services, helicopter
services, geothermal plant design or construction, electric and nuclear
plant design or construction, energy-related capital equipment, mining
related equipment or services, and high technology companies serving the
above industries.
Energy service firms are affected by supply, demand and other normal
competitive factors for their specific products or services. They are also
affected by other unpredictable factors such as supply and demand for oil
and gas, prices of oil and gas, exploration and production spending,
governmental regulation, world events and economic conditions.
ENVIRONMENTAL SERVICES PORTFOLIO: COMPANIES ENGAGED IN THE RESEARCH,
DEVELOPMENT, MANUFACTURE OR DISTRIBUTION OF PRODUCTS, PROCESSES OR SERVICES
RELATED TO WASTE MANAGEMENT OR POLLUTION CONTROL. Such products or services
may include the transportation, treatment and disposal of both hazardous
and solid wastes, including waste-to-energy and recycling; remedial project
efforts, including groundwater and underground storage tank
decontamination, asbestos cleanup and emergency cleanup response; and the
detection, analysis, evaluation, and treatment of both existing and
potential environmental problems including, among others, contaminated
water, air pollution, and acid rain. The fund may also hold the securities
of companies providing design, engineering, construction, and consulting
services to companies engaged in waste management or pollution control.
The environmental services industry has generally been positively
influenced by legislation resulting in stricter government regulations and
enforcement policies for both commercial and governmental generators of
waste materials, as well as specific expenditures designated for remedial
cleanup efforts. Companies in the environmental services field are also
affected by regulation by various federal and state authorities, including
the federal Environmental Protection Agency and its state agency
counterparts. As regulations are developed and enforced, such companies may
be required to alter or cease production of a product or service or to
agree to restrictions on their operations. In addition, since the materials
handled and processes involved include hazardous components, there is
significant liability risk. There are also risks of intense competition
within the environmental services industry.
FINANCIAL SERVICES PORTFOLIO: COMPANIES PROVIDING FINANCIAL SERVICES TO
CONSUMERS AND INDUSTRY. Companies in the financial services field include:
commercial banks and savings and loan associations, consumer and industrial
finance companies, securities brokerage companies, real estate-related
companies, leasing companies, and a variety of firms in all segments of the
insurance field such as multi-line, property and casualty, and life
insurance.
The financial services area is currently undergoing relatively rapid change
as existing distinctions between financial service segments become less
clear. For instance, recent business combinations have included insurance,
finance, and securities brokerage under single ownership. Some primarily
retail corporations have expanded into securities and insurance fields.
Moreover, the federal laws generally separating commercial and investment
banking are currently being studied by Congress.
Banks, savings and loan associations, and finance companies are subject to
extensive governmental regulation which may limit both the amounts and
types of loans and other financial commitments they can make and the
interest rates and fees they can charge. The profitability of these groups
is largely dependent on the availability and cost of capital funds, and can
fluctuate significantly when interest rates change. In addition, general
economic conditions are important to the operations of these concerns, with
exposure to credit losses resulting from possible financial difficulties of
borrowers potentially having an adverse effect. Insurance companies are
likewise subject to substantial governmental regulation, predominantly at
the state level, and may be subject to severe price competition.
Securities and Exchange Commission regulations provide that the fund may
not invest more than 5% of its assets in the securities of any one company
that derives more than 15% of its revenues from brokerage or investment
management activities. These companies as well as those deriving more than
15% of profits from brokerage and investment management activities will be
considered to be "principally engaged" in this fund's business activity.
FOOD AND AGRICULTURE PORTFOLIO: COMPANIES ENGAGED IN THE MANUFACTURE, SALE
OR DISTRIBUTION OF FOOD AND BEVERAGE PRODUCTS, AGRICULTURAL PRODUCTS, AND
PRODUCTS RELATED TO THE DEVELOPMENT OF NEW FOOD TECHNOLOGIES. The goods and
services provided or manufactured by companies in the fund may include:
packaged food products such as cereals, pet foods and frozen foods; meat
and poultry processing; the production of hybrid seeds; the wholesale and
retail distribution and warehousing of food and food-related products,
including restaurants; and the manufacture and distribution of health food
and dietary products, fertilizer and agricultural machinery, wood products,
tobacco, and tobacco leaf. In addition to the above, food technology
companies engaged in and pioneering the development of new technologies to
provide improved hybrid seeds, new and safer food storage, and new enzyme
technologies may be purchased by the fund.
The success of food and food-related products is closely tied to supply and
demand, which may be strongly affected by demographic and product trends,
stimulated by food fads, marketing campaigns, and environmental factors. In
the U.S., the agricultural products industry is subject to regulation by
numerous federal and municipal government agencies.
HEALTH CARE PORTFOLIO: COMPANIES ENGAGED IN THE DESIGN, MANUFACTURE, OR
SALE OF PRODUCTS OR SERVICES USED FOR OR IN CONNECTION WITH HEALTH CARE OR
MEDICINE. Companies in the health care field include pharmaceutical
companies; firms that design, manufacture, sell, or supply medical, dental,
and optical products, hardware or services; companies involved in
biotechnology, medical diagnostic, and biochemical research and
development, as well as companies involved in the operation of health care
facilities. Many of these companies are subject to government regulation of
their products and services, a factor which could have a significant and
possibly unfavorable effect on the price and availability of such products
or services. Furthermore, the types of products or services produced or
provided by these companies may become obsolete quickly.
HOME FINANCE PORTFOLIO: COMPANIES ENGAGED IN INVESTING IN REAL ESTATE,
USUALLY THROUGH MORTGAGES AND OTHER CONSUMER-RELATED LOANS. These companies
may also offer discount brokerage services, insurance products, leasing
services, and joint venture financing. Investments may include mortgage
banking companies, government-sponsored enterprises, real estate investment
trusts, consumer finance companies, and similar entities, as well as
savings and loan associations, savings banks, building and loan
associations, cooperative banks, commercial banks, and similar depository
institutions. The fund may hold securities of U.S. depository institutions
whose customer deposits are insured by the Savings Association Insurance
Fund (SAIF) or the Bank Insurance Fund (BIF).
The residential real estate finance industry has changed rapidly over the
last decade. Regulatory changes at federally insured institutions, in
response to a high failure rate, have mandated higher capital ratios and
more prudent underwriting. This reduced capacity has created growth
opportunities for uninsured companies and secondary market products to fill
unmet demand for home finance. Continued change in the origination,
packaging, selling, holding, and insuring of home finance products is
expected going forward.
The fund will be influenced by potential regulatory changes, interest rate
movements, the level of home mortgage demand, and residential delinquency
trends.
INDUSTRIAL EQUIPMENT PORTFOLIO: COMPANIES ENGAGED IN THE MANUFACTURE,
DISTRIBUTION OR SERVICE OF PRODUCTS AND EQUIPMENT FOR THE INDUSTRIAL
SECTOR, INCLUDING INTEGRATED PRODUCERS OF CAPITAL EQUIPMENT (SUCH AS
GENERAL INDUSTRY MACHINERY, FARM EQUIPMENT, AND COMPUTERS), PARTS SUPPLIERS
AND SUBCONTRACTORS. The fund may invest in companies that manufacture
products or service equipment for the food, clothing or sporting goods
industries.
The success of equipment manufacturing and distribution companies is
closely tied to overall capital spending levels. Capital spending is
influenced by the individual company's profitability, and broader issues
such as interest rates and foreign competition, which are partly determined
by currency exchange rates. Equipment manufacturing concerns may also be
affected by economic cycles, technical obsolescence, labor relations
difficulties and government regulations pertaining to products, production
facilities, or production processes.
INDUSTRIAL MATERIALS PORTFOLIO: COMPANIES ENGAGED IN THE MANUFACTURE,
MINING, PROCESSING, OR DISTRIBUTION OF RAW MATERIALS AND INTERMEDIATE GOODS
USED IN THE INDUSTRIAL SECTOR. The products handled by the companies held
in the fund may include chemicals, timber, paper, copper, iron ore, nickel,
steel, aluminum, textiles, cement, and gypsum. Investments may also be made
in the securities of mining, processing, transportation, and distribution
companies, including equipment suppliers and railroads.
Many companies in this sector are significantly affected by the level and
volatility of commodity prices, the exchange value of the dollar, import
controls, and worldwide competition. At times, worldwide production of
these materials has exceeded demand as a result of over-building or
economic downturns. During these times, commodity price declines, and unit
volume reductions have led to poor investment returns and losses. Other
risks include liability for environmental damage, depletion of resources,
and mandated expenditures for safety and pollution control.
INSURANCE PORTFOLIO: COMPANIES ENGAGED IN UNDERWRITING, REINSURING,
SELLING, DISTRIBUTING, OR PLACING OF PROPERTY AND CASUALTY, LIFE, OR HEALTH
INSURANCE. The fund may invest in multi-line companies that provide
property and casualty coverage, as well as life and health insurance. The
fund may invest in insurance brokers, reciprocals, and claims processors.
The fund may also invest in diversified financial companies with
subsidiaries (including insurance brokers, reciprocals and claims
processors) engaged in underwriting, reinsuring, selling, distributing or
placing insurance with independent third parties.
Insurance company profits are affected by interest rate levels, general
economic conditions, and price and marketing competition. Property and
casualty insurance profits may also be affected by weather catastrophes and
other disasters. Life and health insurance profits may be affected by
mortality and morbidity rates. Individual companies may be exposed to
material risks including reserve inadequacy and the inability to collect
from reinsurance carriers. Insurance companies are subject to extensive
governmental regulation, including the imposition of maximum rate levels,
which may not be adequate for some lines of business. Proposed or potential
tax law changes may also adversely affect insurance companies' policy
sales, tax obligations, and profitability.
LEISURE PORTFOLIO: COMPANIES ENGAGED IN THE DESIGN, PRODUCTION, OR
DISTRIBUTION OF GOODS OR SERVICES IN THE LEISURE INDUSTRIES. The goods or
services provided by companies in the fund may include: television and
radio broadcast or manufacture (including cable television); motion
pictures and photography; recordings and musical instruments; publishing,
including newspapers and magazines; sporting goods and camping and
recreational equipment; and sports arenas. Other goods and services may
include toys and games (including video and other electronic games),
amusement and theme parks, travel-related services, hotels and motels,
leisure apparel or footwear, fast food, beverages, restaurants, and gaming
casinos.
Securities of companies in the leisure industry may be considered
speculative. Companies engaged in entertainment, gaming, broadcasting,
cable television and cellular communications, for example, have
unpredictable earnings, due in part to changing consumer tastes and intense
competition. Securities of companies in the leisure industry generally
exhibit greater volatility than the overall market. The market has been
known to react strongly to technological developments and to the specter of
government regulation in the leisure industry.
MEDICAL DELIVERY PORTFOLIO: COMPANIES ENGAGED IN THE OWNERSHIP OR
MANAGEMENT OF HOSPITALS, NURSING HOMES, HEALTH MAINTENANCE ORGANIZATIONS,
AND OTHER COMPANIES SPECIALIZING IN THE DELIVERY OF HEALTH CARE SERVICES.
Holdings may include companies that operate acute care, psychiatric,
teaching, or specialized treatment hospitals; firms that provide outpatient
surgical, outpatient rehabilitation, or other specialized care, home health
care, drug and alcohol abuse treatment, and dental care; firms operating
comprehensive health maintenance organizations and nursing homes for the
elderly and disabled; and firms that provide related laboratory services.
Federal and state governments provide a substantial percentage of revenues
to health care service providers via Medicare and Medicaid. The future
growth of this source of funds is subject to great uncertainty.
Additionally, the complexion of the private payment system is changing. For
example, insurance companies are beginning to offer long term health care
insurance for nursing home patients to supplement or replace government
benefits. Also, membership in health maintenance organizations or prepaid
health plans is displacing individual payments for each service rendered by
a hospital or physician.
The demand for health care services will tend to increase as the population
ages. However, review of patients' need for hospitalization by Medicare and
health maintenance organizations has demonstrated the ability of health
care providers to curtail unnecessary hospital stays and reduce costs.
MULTIMEDIA PORTFOLIO (FORMERLY BROADCAST AND MEDIA PORTFOLIO): COMPANIES
ENGAGED IN THE DEVELOPMENT, PRODUCTION, SALE AND DISTRIBUTION OF GOODS OR
SERVICES USED IN THE BROADCAST AND MEDIA INDUSTRIES. Business activities of
companies held in the fund may include: ownership, operation, or broadcast
of free or pay television, radio or cable stations; publication and sale of
newspapers, magazines, books or video products; and distribution of
data-based information. The fund may also invest in companies involved in
the development, syndication and transmission of the following products:
television and movie programming, pay-per-view television, advertising,
cellular communications, and emerging technology for the broadcast and
media industries.
Some of the companies in these industries are undergoing significant change
because of federal deregulation of cable and broadcasting. As a result,
competitive pressures are intense and the stocks are subject to increased
price volatility. Current Federal Communications Commission rules prohibit
the fund, together with all other funds advised by FMR, from holding in the
aggregate 10% of the voting stock of more than 18 AM, 18 FM or 12 TV
stations.
This fund may purchase securities identical to those in the Leisure
Portfolio, or securities of companies that are engaged in business
activities similar to those of certain companies in the Leisure Portfolio.
The Broadcast and Media Portfolio's narrower focus may make it a more
volatile investment than the Leisure Portfolio.
NATURAL GAS PORTFOLIO: COMPANIES ENGAGED IN THE PRODUCTION, TRANSMISSION,
AND DISTRIBUTION OF NATURAL GAS, AND INVOLVED IN THE EXPLORATION OF
POTENTIAL NATURAL GAS SOURCES, AS WELL AS THOSE COMPANIES THAT PROVIDE
SERVICES AND EQUIPMENT TO NATURAL GAS PRODUCERS, REFINERIES, COGENERATION
FACILITIES, CONVERTERS, AND DISTRIBUTORS. The business activities of
companies held in the Natural Gas Portfolio may include: production,
transmission, distribution, marketing, control, or measurement of natural
gas; exploration of potential natural gas sources; providing component
parts or services to companies engaged in the above activities; natural gas
research or experimentation; and environmental activities related to the
solution of energy problems, such as energy conservation or pollution
control through the use of natural gas. Companies participating in new
activities working toward technological advances in the natural gas field
may also be considered for the fund.
The companies in the natural gas field are subject to, among other factors,
changes in price and supply of both conventional and alternative energy
sources. Swift price and supply fluctuations may be caused by events
relating to international politics, energy conservation, the success of
energy source exploration projects, and tax and other regulatory policies
of domestic and foreign governments.
PAPER AND FOREST PRODUCTS PORTFOLIO: COMPANIES ENGAGED IN THE MANUFACTURE,
RESEARCH, SALE, OR DISTRIBUTION OF PAPER PRODUCTS, PACKAGING PRODUCTS,
BUILDING MATERIALS (SUCH AS LUMBER AND PANELING PRODUCTS), AND OTHER
PRODUCTS RELATED TO THE PAPER AND FOREST PRODUCTS INDUSTRY. Holdings may
include diversified companies with operations in the aforementioned
activities.
The success of these companies depends on, among other things, the health
of the economy, worldwide production capacity and prevailing interest rate
levels, which, in turn, may affect product pricing, costs and operating
margins. These variables also affect the level of industry and consumer
capital spending for paper and forest products.
PRECIOUS METALS AND MINERALS PORTFOLIO: COMPANIES ENGAGED IN EXPLORATION,
MINING, PROCESSING OR DEALING IN GOLD, SILVER, PLATINUM, DIAMONDS OR OTHER
PRECIOUS METALS AND MINERALS. The fund may also invest in securities of
companies which themselves invest in companies engaged in these activities.
Under normal conditions, the fund will invest at least 80% of its total
assets in (i) securities of companies principally engaged in exploration,
mining, processing, or dealing in gold, silver, platinum, diamonds, or
other precious metals and minerals, and (ii) precious metals. The fund's
investments also may include securities whose redemption value is indexed
to the price of gold or other precious metals.
The value of the fund's investments may be affected by changes in the price
of gold and other precious metals. Gold has been subject to substantial
price fluctuations over short periods of time and may be affected by
unpredictable international monetary and other governmental policies, such
as currency devaluations or revaluations; economic and social conditions
within a country; trade imbalances; or trade or currency restrictions
between countries. Since much of the world's known gold reserves are
located in South Africa, political and social conditions there may pose
certain risks to the fund's investments. For instance, social upheaval and
related economic difficulties in South Africa could cause a decrease in the
share values of South African issuers. A number of institutions have
adopted policies precluding investments in companies doing business in
South Africa.
Because companies involved in exploring, mining, processing, or dealing in
precious metals or minerals are frequently located outside of the United
States, all or a significant portion of this fund may be invested in
securities of foreign issuers. Investors should understand the special
considerations and risks related to such an investment emphasis.
In addition to its investments in securities, the fund may invest a portion
of its assets in precious metals, such as gold, silver, platinum, and
palladium. The prices of precious metals are affected by broad economic and
political conditions, but are less subject to local and company-specific
factors than securities of individual companies. As a result, precious
metals may be more or less volatile in price than securities of companies
engaged in precious metals-related businesses. The fund may purchase
precious metals in any form, including bullion and coins, provided that FMR
intends to purchase only those forms of precious metals that are readily
marketable and that can be stored in accordance with custody regulations
applicable to mutual funds. The fund may incur higher custody and
transaction costs for precious metals than for securities. Also, precious
metals investments do not pay income.
The fund is authorized to invest up to 50% of its total assets in precious
metals; however, as a non-fundamental policy (which can be changed without
shareholder approval), FMR does not currently intend to purchase precious
metals if, as a result, more than 25% of the fund's total assets would be
invested in precious metals. As a further limit on precious metals
investments, under current federal tax law, gains from selling precious
metals may not exceed 10% of the fund's annual gross income. This tax
requirement could cause the fund to hold or sell precious metals or
securities when it would not otherwise do so.
Securities whose redemption value is indexed to the price of gold or other
precious metals involve risks and pricing characteristics similar to direct
precious metals investments. FMR currently intends to treat such securities
as investments in precious metals for the purposes of the 25% and 50%
limitations above and the 80% policy in the first paragraph of this
section.
REGIONAL BANKS PORTFOLIO: COMPANIES ENGAGED IN ACCEPTING DEPOSITS AND
MAKING COMMERCIAL AND PRINCIPALLY NON-MORTGAGE CONSUMER LOANS. In addition,
these companies may offer the following services: merchant banking,
consumer and commercial finance, discount brokerage, leasing and insurance.
These companies concentrate their operations within a specific part of the
country rather than operating predominantly on a national or international
scale. The fund may invest in securities of foreign institutions, although
the majority of publicly-traded regional banks currently are organized in
the United States.
The fund may own, among others, securities of U.S. institutions whose
customer deposits may or may not be insured by the federal government. Such
U.S. institutions may include, but are not limited to, state chartered
banks, savings and loan institutions, and banks that are members of the
Federal Reserve System.
Federal laws generally separating commercial and investment banking, as
well as laws governing the capitalization and regulation of the savings and
loan industry, are currently being reexamined by Congress. The services
offered by banks may expand if legislation broadening bank powers is
enacted. While providing diversification, expanded powers could expose
banks to well-established competitors, particularly as the historical
distinctions between regional banks and other financial institutions erode.
Increased competition may also result from the broadening of regional and
national interstate banking powers, which has already reduced the number of
publicly traded regional banks. In addition, general economic conditions
are important to regional banking concerns, with exposure to credit losses
resulting from possible financial difficulties of borrowers potentially
having an adverse effect.
RETAILING PORTFOLIO: COMPANIES ENGAGED IN MERCHANDISING FINISHED GOODS AND
SERVICES PRIMARILY TO INDIVIDUAL CONSUMERS. Companies in the fund may
include: general merchandise retailers, department stores, food retailers,
drug stores, and any specialty retailers selling a single category of
merchandise such as apparel, toys, or consumer electronics products.
Companies engaged in selling goods and services through alternative means
such as direct telephone marketing, mail order, membership warehouse clubs,
computer, or video based electronic systems may also be purchased by the
fund.
The success of retailing companies is closely tied to consumer spending
which, in turn, is affected by general economic conditions and consumer
confidence levels. The retailing industry is highly competitive; success is
often tied to a company's ability to anticipate changing consumer tastes.
SOFTWARE AND COMPUTER SERVICES PORTFOLIO: COMPANIES ENGAGED IN RESEARCH,
DESIGN, PRODUCTION OR DISTRIBUTION OF PRODUCTS OR PROCESSES THAT RELATE TO
SOFTWARE OR INFORMATION-BASED SERVICES. The fund may hold securities of
companies that provide systems level software (designed to run the basic
functions of a computer) or applications software (designed for one type of
work) directed at either horizontal (general use) or vertical (certain
industries or groups) markets, time-sharing services, information-based
services, computer consulting or facilities management services,
communications software, and data communications services.
Competitive pressures may have a significant effect on the financial
condition of companies in the software and computer services industries.
For example, the increasing number of companies and product offerings in
the vertical and horizontal markets may lead to aggressive pricing and
slower selling cycles.
TECHNOLOGY PORTFOLIO: COMPANIES WHICH FMR BELIEVES HAVE, OR WILL DEVELOP,
PRODUCTS, PROCESSES OR SERVICES THAT WILL PROVIDE OR WILL BENEFIT
SIGNIFICANTLY FROM TECHNOLOGICAL ADVANCES AND IMPROVEMENTS. The description
of the technology sector will be interpreted broadly by FMR and may include
such products or services as inexpensive computing power, such as personal
computers; improved methods of communications, such as satellite
transmission, or labor saving machines or instruments, such as
computer-aided design equipment.
The prime emphasis of the fund will be to identify those companies
positioned to benefit from technological advances in areas such as
semiconductors, minicomputers and peripheral equipment, scientific
instruments, computer software, communications, and future automation
trends in both office and factory settings.
Competitive pressures may have a significant effect on the financial
condition of companies in the technology industry. For example, if
technology continues to advance at an accelerated rate, and the number of
companies and product offerings continue to expand, these companies could
become increasingly sensitive to short product cycles and aggressive
pricing.
TELECOMMUNICATIONS PORTFOLIO: COMPANIES ENGAGED IN THE DEVELOPMENT,
MANUFACTURE, OR SALE OF COMMUNICATIONS SERVICES OR COMMUNICATIONS
EQUIPMENT. Companies in the telecommunications field offer a variety of
services and products, including local and long distance telephone service;
cellular, paging, local and wide area product networks; satellite,
microwave and cable television; and equipment used to provide these
products and services. Long distance telephone companies may also have
interests in new technologies, such as fiber optics and data transmission.
Telephone operating companies are subject to both federal and state
regulation affecting permitted rates of return and the kinds of services
that may be offered. Telephone companies usually pay an above average
dividend. However, the fund's investment decisions are based primarily upon
capital appreciation potential rather than income considerations. Certain
types of companies represented in the fund are engaged in fierce
competition for a share of the market for their products. In recent years,
these have been companies providing goods or services such as private and
local area networks, or engaged in the sale of telephone set equipment.
TRANSPORTATION PORTFOLIO: COMPANIES ENGAGED IN PROVIDING TRANSPORTATION
SERVICES OR COMPANIES ENGAGED IN THE DESIGN, MANUFACTURE, DISTRIBUTION, OR
SALE OF TRANSPORTATION EQUIPMENT. Transportation services include the
movement of freight or people by airlines, railroads, ships, trucks, and
bus companies. Other service companies include those providing auto, truck,
container, rail car, and plane leasing and maintenance. Equipment
manufacturers include makers of trucks, autos, planes, containers, rail
cars, or any other mode of transportation and their related products. In
addition, the fund may invest in companies that sell fuel saving devices to
the transportation industry and those that sell insurance and software
developed primarily for transportation companies.
Risk factors that affect transportation stocks include the state of the
economy, fuel prices, labor agreements, and insurance costs. Transportation
stocks are cyclical and have occasional sharp price movements. The U.S.
trend has been to deregulate these industries, which could have a favorable
long-term effect, but future government decisions may adversely affect
these companies.
UTILITIES GROWTH PORTFOLIO: COMPANIES IN THE PUBLIC UTILITIES
INDUSTRY AND COMPANIES DERIVING A MAJORITY OF THEIR REVENUES FROM THEIR
PUBLIC UTILITY OPERATIONS. Public utility investments will include
companies engaged in the manufacture, production, generation, transmission
and sale of gas and electric energy, and companies engaged in the
communications field, including telephone, telegraph, satellite, microwave
and the provision of other communication facilities for the public benefit
(not including companies involved in public broadcasting). Public utility
stocks have traditionally produced above-average dividend income, but the
fund's investments are made based on capital appreciation potential. The
fund may not own more than 5% of the outstanding voting securities of more
than one public utility company as defined by the Public Utility Holding
Company Act of 1935. This policy is non-fundamental and may be changed by
the Board of Trustees.
Each fund's investments must be consistent with its investment objective
and policies. Accordingly, not all of the security types and investment
techniques discussed below are eligible investments for each of the
funds.
QUALITY AND MATURITY (MONEY MARKET FUND ONLY). Pursuant to procedures
adopted by the Board of Trustees, the fund may purchase only high-quality
securities that FMR believes present minimal credit risks. To be considered
high quality, a security must be rated in accordance with applicable rules
in one of the two highest categories for short-term securities by at least
two nationally recognized rating services (or by one, if only one rating
service has rated the security); or, if unrated, judged to be of equivalent
quality by FMR.
High-quality securities are divided into "first tier" and "second tier"
securities. First tier securities are those deemed to be in the highest
rating category (e.g., Standard & Poor's A-1) and second tier securities
are those deemed to be in the second highest rating category (e.g.,
Standard & Poor's A-2).
The fund may not invest more than 5% of its total assets in second tier
securities. In addition, the fund may not invest more than 1% of its total
assets or $1 million (whichever is greater) in the second tier securities
of a single issuer.
The fund currently intends to l imit its investments to securities
with remaining maturities of 397 days or less, and to maintain a
dollar-weighted average maturity of 90 days or less. When determining
the maturity of a security, the fund may look to an interest rate reset or
demand feature.
AFFILIATED BANK TRANSACTIONS. A fund may engage in transactions with
financial institutions that are, or may be considered to be,
"affiliated persons" of the fund under the Investment Company Act of 1940.
These transactions may include repurchase agreements with custodian banks;
short-term obligations of, and repurchase agreements with, the 50 largest
U.S. banks (measured by deposits); municipal securities; U.S. government
securities with affiliated financial institutions that are primary dealers
in these securities; short-term currency transactions; and short-term
borrowing s. In accordance with exemptive orders issued by the
Securities and Exchange Commission, the Board of Trustees has established
and periodically reviews procedures applicable to transactions involving
affiliated financial institutions.
FUNDS' RIGHTS AS A SHAREHOLDER. The stock funds do not intend to direct or
administer the day-to-day operations of any company. Each stock fund,
however, may exercise its rights as a shareholder and may communicate its
views on important matters of policy to management, the Board of Directors,
and shareholders of a company when FMR determines that such matters could
have a significant effect on the value of the fund's investment in the
company. The activities that a fund may engage in, either
individually or in conjunction with others, may include, among others,
supporting or opposing proposed changes in a company's corporate structure
or business activities; seeking changes in a company's directors or
management; seeking changes in a company's direction or policies; seeking
the sale or reorganization of the company or a portion of its assets; or
supporting or opposing third party takeover efforts. This area of corporate
activity is increasingly prone to litigation and it is possible that a fund
could be involved in lawsuits related to such activities. FMR will monitor
such activities with a view to mitigating, to the extent possible, the risk
of litigation against a fund and the risk of actual liability if a
fund is involved in litigation. No guarantee can be made, however, that
litigation against a fund will not be undertaken or liabilities incurred.
ASSET-BACKED SECURITIES include pools of mortgages, loans, receivables or
other assets. Payment of principal and interest may be largely dependent
upon the cash flows generated by the assets backing the securities, and, in
certain cases, supported by letters of credit, surety bonds, or other
credit enhancements. The value of asset-backed securities may also be
affected by the creditworthiness of the servicing agent for the pool, the
originator of the loans or receivables, or the financial institution(s)
providing the credit support.
DELAYED-DELIVERY TRANSACTIONS. The money market fund may buy and sell
securities on a delayed-delivery or when-issued basis. These transactions
involve a commitment by a fund to purchase or sell specific securities at a
predetermined price or yield, with payment and delivery taking place after
the customary settlement period for that type of security (and more than
seven days in the future). Typically, no interest accrues to the purchaser
until the security is delivered.
When purchasing securities on a delayed-delivery basis, the fund assumes
the rights and risks of ownership, including the risk of price and yield
fluctuations. Because the fund is not required to pay for securities until
the delivery date, these risks are in addition to the risks associated with
each fund's other investments. If the fund remains substantially fully
invested at a time when delayed-delivery purchases are outstanding, the
delayed-delivery purchases may result in a form of leverage. When
delayed-delivery purchases are outstanding, the fund will set aside
appropriate liquid assets in a segregated custodial account to cover its
purchase obligations. When the fund has sold a security on a
delayed-delivery basis, the fund does not participate in further gains or
losses with respect to the security. If the other party to a
delayed-delivery transaction fails to deliver or pay for the securities,
the fund could miss a favorable price or yield opportunity, or could suffer
a loss.
The fund may renegotiate delayed-delivery transactions after they are
entered into, and may sell underlying securities before they are delivered,
which may result in capital gains or losses.
STRUCTURED SECURITIES employ a trust or other similar structure
to modify the maturity, price characteristics or quality of financial
assets. For example, structural features can be used to modify the maturity
of a security or interest rate adjustment features can be used to enhance
price stability. If the structure does not perform as intended, adverse tax
or investment consequences may result. Neither the Internal Revenue Service
(IRS) nor any other regulatory authority has ruled definitively on certain
legal issues presented by structured securities. Future tax or other
regulatory determinations could adversely affect the value, liquidity or
tax treatment of the income received from these securities or the nature
and timing of distributions made by the funds. The payment of principal and
interest on structured securities may be largely dependent on the cash
flows generated by the underlying financial assets.
VARIABLE OR FLOATING RATE SECURITIES provide for periodic adjustments of
the interest rate paid. Variable rate securities provide for a specified
periodic adjustment in the interest rate, while floating rate securities
have interest rates that change whenever there is a change in a designated
benchmark rate. Some variable or floating rate securities have put
features.
P UT FEATURES entitle the holder to sell a security back to the issuer or
a third party at any time or at specified intervals. They are subject to
the risk that the put provider is unable to honor the put feature (purchase
the security). Put providers often support their ability to buy securities
on demand by obtaining letters of credit or other guarantees from domestic
or foreign banks. FMR may rely on its evaluation of a bank's credit in
determining whether to purchase a security supported by a letter of credit.
In evaluating a foreign bank's credit, FMR will consider whether adequate
public information about the bank is available and whether the bank may be
subject to unfavorable political or economic developments, currency
controls, or other government restrictions that might affect the bank's
ability to honor its credit commitment. Demand features, standby
commitments, and tender options are types of put features.
LOWER-QUALITY DEBT SECURITIES. The stock funds may purchase
lower-quality deb t securities (those rated below Baa by Moody's
Investors Service, Inc. or BBB by Standard and Poor's Corporation, and
unrated securities judged by FMR to be of equivalent quality) that have
poor protection with respect to the payment of interest and repayment of
principal, or may be in default. These securities are often considered to
be speculative and involve greater risk of loss or price changes due to
changes in the issuer's capacity to pay. The market prices of
lower -quality debt securities may fluctuate more than those of
higher-quality debt securities and may decline significantly in periods of
general economic difficulty, which may follow periods of rising interest
rates.
While the market for high-yield corporate debt securities has been in
existence for many years and has weathered previous economic downturns, the
1980s brought a dramatic increase in the use of such securities to fund
highly leveraged corporate acquisitions and restructurings. Past experience
may not provide an accurate indication of the future performance of the
high-yield bond market, especially during periods of economic recession. In
fact, from 1989 to 1991, the percentage of lower-quality s ecurities
that defaulted rose significantly above prior levels, although the default
rate decreased in 1992 and 1993.
The market for lowe r-quality debt securities may be thinner and less
active than that for higher-quality debt securities, which can
adversely affect the prices at which the former are sold. If market
quotations are not available, l ower-quality debt securities will be
valued in accordance with procedures established by the Board of Trustees,
including the use of outside pricing services. Judgment plays a greater
role in valuing high-yield corporate debt securities than is the case for
securities for which more external sources for quotations and last-sale
information are available. Adverse publicity and changing investor
perceptions may affect the ability of outside pricing services to value
lo wer-quality d ebt securities and a fund's ability to sell these
securities.
Since the risk of default is higher for lower-quality d ebt
securities, FMR's research and credit analysis are an especially important
part of managing securities of this type held by a fund. In considering
investments for the funds, FMR will attempt to identify those issuers of
high-yielding securities whose financial condition is adequate to meet
future obligations, has improved, or is expected to improve in the future.
FMR's analysis focuses on relative values based on such factors as interest
or dividend coverage, asset coverage, earnings prospects, and the
experience and managerial strength of the issuer.
Each fund may choose, at its expense or in conjunction with others, to
pursue litigation or otherwise to exercise its rights as a security holder
to seek to protect the interests of security holders if it determines this
to be in the best interest of the fund's shareholders.
SWAP AGREEMENTS. Swap agreements can be individually negotiated and
structured to include exposure to a variety of different types of
investments or market factors. Depending on their structure, swap
agreements may increase or decrease a fund's exposure to long- or
short-term interest rates (in the United States or abroad), foreign
currency values, mortgage securities, corporate borrowing rates, or other
factors such as security prices or inflation rates. Swap agreements can
take many different forms and are known by a variety of names. The stock
funds are not limited to any particular form of swap agreement if FMR
determines it is consistent with a fund's investment objective and
policies.
In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by
the other party. For example, the buyer of an interest rate cap obtains the
right to receive payments to the extent that a specified interest rate
exceeds an agreed-upon level, while the seller of an interest rate floor is
obligated to make payments to the extent that a specified interest rate
falls below an agreed-upon level. An interest rate collar combines elements
of buying a cap and selling a floor.
Swap agreements will tend to shift a fund's investment exposure from one
type of investment to another. For example, if a fund agreed to exchange
payments in dollars for payments in foreign currency, the swap agreement
would tend to decrease the fund's exposure to U.S. interest rates and
increase its exposure to foreign currency and interest rates. Caps and
floors have an effect similar to buying or writing options. Depending on
how they are used, swap agreements may increase or decrease the overall
volatility of a fund's investments and its share price.
The most significant factor in the performance of swap agreements is the
change in the specific interest rate, currency, or other factors that
determine the amounts of payments due to and from a fund. If a swap
agreement calls for payments by a fund, the fund must be prepared to make
such payments when due. In addition, if the counterparty's creditworthiness
declined, the value of a swap agreement would be likely to decline,
potentially resulting in losses. Each equity fund expects to be able to
eliminate its exposure under swap agreements either by assignment or other
disposition, or by entering into an offsetting swap agreement with the same
party or a similarly creditworthy party.
Each equity fund will maintain appropriate liquid assets in a segregated
custodial account to cover its current obligations under swap agreements.
If a fund enters into a swap agreement on a net basis, it will segregate
assets with a daily value at least equal to the excess, if any, of the
fund's accrued obligations under the swap agreement over the accrued amount
the fund is entitled to receive under the agreement. If a fund enters into
a swap agreement on other than a net basis, it will segregate assets with a
value equal to the full amount of the fund's accrued obligations under the
agreement.
LOANS AND OTHER DIRECT DEBT INSTRUMENTS are interests in amounts
owed by a corporate, governmental, or other borrower to another party. They
may represent amounts owed to lenders or lending syndicates (loans and loan
participations), to suppliers of goods or services (trade claims or other
receivables), or to other parties. Direct debt instruments involve a risk
of loss in case of default or insolvency of the borrower and may offer less
legal protection to the fund in the event of fraud or misrepresentation. In
addition, loan participations involve a risk of insolvency of the lending
bank or other financial intermediary. Direct debt instruments may also
include standby financing commitments that obligate a fund to supply
additional cash to the borrower on demand.
INDEXED SECURITIES. Each stock fund may purchase securities whose prices
are indexed to the prices of other securities, securities indices,
currencies, precious metals or other commodities, or other financial
indicators. Indexed securities typically, but not always, are debt
securities or deposits whose value at maturity or coupon rate is determined
by reference to a specific instrument or statistic. Gold-indexed
securities typically are short-term to intermediate-term debt securities
whose maturity values or interest rates are determined by reference to the
values of one or more specified foreign currencies, and may offer higher
yields than U.S. dollar-denominated securities of equivalent issuers.
Currency-indexed securities may be positively or negatively indexed; that
is, their maturity value may increase when the specified currency value
increases, resulting in a security that performs similarly to a
foreign-denominated instrument, or their maturity value may decline when
foreign currencies increase, resulting in a security whose price
characteristics are similar to a put on the underlying currency.
Currency-indexed securities may also have prices that depend on the values
of a number of different foreign currencies relative to each other.
The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which they
are indexed, and may also be influenced by interest rate changes in the
U.S. and abroad. At the same time, indexed securities are subject to the
credit risks associated with the issuer of the security, and their values
may decline substantially if the issuer's creditworthiness deteriorates.
Recent issuers of indexed securities have included banks, corporations, and
certain U.S. government agencies. Indexed securities may be more volatile
than the underlying instruments.
The American Gold Portfolio and the Precious Metals and Minerals Portfolio
may consider purchasing securities indexed to the price of gold as an
alternative to direct investments in gold. The funds will only buy
gold-indexed securities when they are satisfied with the creditworthiness
of the issuers liable for payment. The securities generally will earn a
nominal rate of interest while held by a fund, and may have maturities of
one year or more. In addition, the securities may be subject to being put
by a fund to the issuer, with payment to be received on no more than seven
days' notice. The put feature would ensure the liquidity of the notes in
the absence of an active secondary market. The Precious Metals and
Minerals fund may consider investments in securities indexed to the price
of platinum, silver, or other precious metals.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they
are valued. Under the supervision of the Board of Trustees, FMR determines
the liquidity of a fund's investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of a fund's investments, FMR may consider various factors,
including (1) the frequency of trades and quotations, (2) the number of
dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including
any demand or tender features), and (5) the nature of the marketplace for
trades (including the ability to assign or offset the fund's rights and
obligations relating to the investment).
For the money market fund, investments currently considered by the fund to
be illiquid include repurchase agreements not entitling the holder to
payment of principal and interest within seven days. Also, FMR may
determine some restricted securities and time deposits to be illiquid.
Investments currently considered by the stock funds to be illiquid
include repurchase agreements not entitling the holder to payment of
principal and interest within seven days, over-the-counter options, and
non-government stripped fixed-rate mortgage-backed securities. Also, FMR
may determine some restricted securities, government-stripped fixed-rate
mortgage-backed securities, loans and other direct debt instruments, and
swap agreements to be illiquid. However, with respect to over-the-counter
options a fund writes, all or a portion of the value of the underlying
instrument may be illiquid depending on the assets held to cover the option
and the nature and terms of any agreement the fund may have to close out
the option before expiration.
In the absence of market quotations, illiquid investments are, for the
money market fund, valued for purposes of monitoring amortized cost
valuation, or, for the stock funds, priced at fair value as determined in
good faith by a committee appointed by the Board of Trustees. If through a
change in values, net assets, or other circumstances, a fund were in a
position where more than 10% of its net assets was invested in illiquid
securities, it would seek to take appropriate steps to protect liquidity.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, a fund may be obligated to pay all or part of the
registration expense and a considerable period may elapse between the time
it decides to seek registration and the time it may be permitted to sell a
security under an effective registration statement. If, during such a
period, adverse market conditions were to develop, a fund might obtain a
less favorable price than prevailed when it decided to seek registration of
the security. However, in general, the money market fund anticipates
holding restricted securities to maturity or selling them in an exempt
transaction.
REPURCHASE AGREEMENTS. I n a repurchase agreement, a fund purchases a
security and simultaneously commits to sell that security back to the
original seller at an agreed-upon price. The resale price reflects the
purchase price plus an agreed-upon incremental amount which is unrelated to
the coupon rate or maturity of the purchased security. While it does not
presently appear possible to eliminate all risks from these transactions
(particularly the possibility that the value of the underlying security
will be less than the resale price, as well as delays and costs to a fund
in connection with bankruptcy proceedings), it is each fund's current
policy to engage in repurchase agreement transactions with parties whose
creditworthiness has been reviewed and found satisfactory by FMR.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
sells a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the instrument
at a particular price and time. While a reverse repurchase agreement is
outstanding, the fund will maintain appropriate liquid assets in a
segregated custodial account to cover its obligation under the agreement. A
fund will enter into reverse repurchase agreements only with parties whose
creditworthiness has been found satisfactory by FMR. Such transactions may
increase fluctuations in the market value of the fund's assets and may be
viewed as a form of leverage.
STRIPPED GOVERNMENT SECURITIES. Stripped securities are created
by separating the income and principal components of a debt instrument and
selling them separately. Each of the funds may purchase U.S. Treasury
STRIPS (Separate Trading of Registered Interest and Principal of
Securities), that are created when the coupon payments and the principal
payment are stripped from an outstanding Treasury bond by the Federal
Reserve Bank. Bonds issued by the Resolution Funding Corporation (REFCORP)
can also be stripped in this fashion. REFCORP Strips are eligible
investments for the funds.
Money Market can purchase privately stripped government securities,
which are created when a dealer deposits a Treasury security or federal
agency security with a custodian for safekeeping and then sells the coupon
payments and principal payment that will be generated by this security.
Proprietary receipts, such as Certificates of Accrual on Treasury
Securities (CATS), Treasury Investment Growth Receipts (TIGRS), and generic
Treasury Receipts (TRs), are stripped U.S. Treasury securities that are
separated into their component parts through trusts created by their broker
sponsors. Bonds issued by the Financing Corporation (FICO) can also be
stripped in this fashion.
Because of the SEC's views on privately stripped government securities,
the money market fund must evaluate them as it would non-government
securities pursuant to regulatory guidelines applicable to all money market
funds.
SECURITIES LENDING. The stock funds may lend securities to parties such as
broker-dealers or institutional investors, including Fidelity Brokerage
Services, Inc. (FBSI). FBSI is a member of the New York Stock Exchange and
a subsidiary of FMR Corp.
Securities lending allows a fund to retain ownership of the
securities loaned and, at the same time, to earn additional income. Since
there may be delays in the recovery of loaned securities, or even a loss of
rights in collateral supplied should the borrower fail financially, loans
will be made only to parties deemed by FMR to be of good standing.
Furthermore, they will only be made if, in FMR's judgment, the
consideration to be earned from such loans would justify the risk.
FMR understands that it is the current view of the SEC Staff that a fund
may engage in loan transactions only under the following conditions: (1)
the fund must receive 100% collateral in the form of cash or cash
equivalents (e.g., U.S. Treasury bills or notes) from the borrower; (2) the
borrower must increase the collateral whenever the market value of the
securities loaned (determined on a daily basis) rises above the value of
the collateral; (3) after giving notice, the fund must be able to terminate
the loan at any time; (4) the fund must receive reasonable interest on the
loan or a flat fee from the borrower, as well as amounts equivalent to any
dividends, interest, or other distributions on the securities loaned and to
any increase in market value; (5) the fund may pay only reasonable
custodian fees in connection with the loan; and (6) the Board of Trustees
must be able to vote proxies on the securities loaned, either by
terminating the loan or by entering into an alternative arrangement with
the borrower.
Cash received through loan transactions may be invested in any security in
which a fund is authorized to invest. Investing this cash subjects
that investment, as well as the security loaned, to market forces (i.e.,
capital appreciation or depreciation).
REAL ESTATE-RELATED INSTRUMENTS include real estate investment trusts,
commercial and residential mortgage-backed securities, and real estate
financings. Real estate-related instruments are sensitive to factors such
as real estate values and property taxes, interest rates, cash flow of
underlying real estate assets, overbuilding, and the management skill and
creditworthiness of the issuer. Real estate-related instruments may also be
affected by tax and regulatory requirements, such as those relating to the
environment.
SHORT SALES "AGAINST THE BOX". The money market fund may sell securities
short when it owns or has the right to obtain securities equivalent in kind
or amount to the securities sold short. Short sales could be used to
protect the net asset value per share of the fund in anticipation of
increase interest rates, without sacrificing the current yield of the
securities sold short. If the money market fund or a stock fund enters
into a short sale against the box, it will be required to set aside
securities equivalent in kind and amount to the securities sold short (or
securities convertible or exchangeable into such securities) and will be
required to hold such securities while the short sale is outstanding. The
fund will incur transaction costs, including interest expense, in
connection with opening, maintaining, and closing short sales against the
box.
INTERFUND BORROWING PROGRAM. Each fund has received permission from the SEC
to lend money to and borrow money from other funds advised by FMR or its
affiliates. Interfund loans and borrowings normally will extend overnight,
but can have a maximum duration of seven days. Loans may be called on one
day's notice. The funds will lend through the program only when the
returns are higher than those available at the same time from other
short-term instruments (such as repurchase agreements), and will borrow
through the program only when the costs are equal to or lower than the cost
of bank loans. The funds may have to borrow from a bank at a higher
interest rate if an interfund loan is called or not renewed. Any delay in
repayment to a lending fund could result in a lost investment opportunity
or additional borrowing costs.
DOMESTIC AND FOREIGN ISSUERS (MONEY MARKET FUND). Investments may be
made in U.S. dollar-denominated time deposits, certificates of deposit, and
bankers' acceptances of U.S. banks and their branches located outside of
the United States, U.S. branches and agencies of foreign banks, and foreign
branches of foreign banks. The fund may also invest in U.S.
dollar-denominated securities issued or guaranteed by other U.S. or foreign
issuers, including U.S. and foreign corporations or other business
organizations, foreign governments, foreign government agencies or
instrumentalities, and U.S. and foreign financial institutions, including
savings and loan institutions, insurance companies, mortgage bankers, and
real estate investment trusts, as well as banks.
The obligations of foreign branches of U.S. banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by governmental
regulation. Payment of interest and principal on these obligations may also
be affected by governmental action in the country of domicile of the branch
(generally referred to as sovereign risk). In addition, evidence of
ownership of portfolio securities may be held outside of the United States
and the fund may be subject to the risks associated with the holding of
such property overseas. Various provisions of federal law governing the
establishment and operation of U.S. branches do not apply to foreign
branches of U.S. banks.
Obligations of U.S. branches and agencies of foreign banks may be
general obligations of the parent bank in addition to the issuing branch,
or may be limited by the terms of a specific obligation and by federal and
state regulation, as well as by governmental action in the country in which
the foreign bank has its head office.
Obligations of foreign issuers involve certain additional risks. These
risks may include future unfavorable political and economic developments,
withholding taxes, seizures of foreign deposits, currency controls,
interest limitations, or other governmental restrictions that might affect
payment of principal or interest. Additionally, there may be less public
information available about foreign banks and their branches. Foreign
issuers may be subject to less governmental regulation and supervision than
U.S. issuers. Foreign issuers also generally are not bound by uniform
accounting, auditing, and financial reporting requirements comparable to
those applicable to U.S. issuers.
FOREIGN INVESTMENTS (STOCK FUNDS). Investing in securities issued by
companies or other issuers whose principal activities are outside the
United States may involve significant risks in addition to the risks
inherent in U.S. investments. The value of securities denominated in
foreign currencies and of dividends and interest paid with respect to such
securities will fluctuate based on the relative strength of the U.S.
dollar. In addition, there is generally less publicly available information
about foreign issuers' financial condition and operations, particularly
those not subject to the disclosure and reporting requirements of the U.S.
securities laws. Foreign issuers are generally not bound by uniform
accounting, auditing, and financial reporting requirements and standards of
practice comparable to those applicable to U.S. issuers. Further, economies
of particular countries or areas of the world may differ favorably or
unfavorably from the economy of the United States.
Investing abroad also involves different political and economic risks.
Foreign investments may be affected by actions of foreign governments
adverse to the interests of U.S. investors, including the possibility of
expropriation or nationalization of assets, confiscatory taxation,
restrictions on U.S. investment or on the ability to repatriate assets or
convert currency into U.S. dollars, or other government intervention. There
may be a greater possibility of default by foreign governments or foreign
government-sponsored enterprises. Investments in foreign countries also
involve a risk of local political, economic, or social instability,
military action or unrest, or adverse diplomatic developments. There is no
assurance that FMR will be able to anticipate these potential events or
counter their effects. The considerations noted above generally are
intensified for investments in developing countries. Developing countries
may have relatively unstable governments, economies based on only a few
industries, and securities markets that trade a small number of
securities.
Foreign markets may offer less protection to investors than U.S.
markets. It is anticipated that in most cases the best available market for
foreign securities will be on exchanges or in over-the-counter markets
located outside of the United States. Foreign stock markets, while growing
in volume and sophistication, are generally not as developed as those in
the United States, and securities of some foreign issuers (particularly
those located in developing countries) may be less liquid and more volatile
than securities of comparable U.S. issuers. Foreign security trading
practices, including those involving securities settlement where fund
assets may be released prior to receipt of payment, may expose a fund to
increased risk in the event of a failed trade or the insolvency of a
foreign broker-dealer, and may involve substantial delays. In addition, the
costs of foreign investing, including withholding taxes, brokerage
commissions and custodial costs, are generally higher than for U.S.
investors. In general, there is less overall governmental supervision and
regulation of securities exchanges, brokers, and listed companies than in
the United States. It may also be difficult to enforce legal rights in
foreign countries.
A fund may invest in foreign securities that impose restrictions on
transfer within the United States or to U.S. persons. Although securities
subject to such transfer restrictions may be marketable abroad, they may be
less liquid than foreign securities of the same class that are not subject
to such restrictions.
A fund may invest in A merican Depository Receipts and European
Depository Receipts (ADRs and EDRs), which are certificates evidencing
ownership of shares of a foreign-based issuer held in trust by a bank or
similar financial institution. Designed for use in the U.S. and European
securities markets, respectively, ADRs and EDRs are alternatives to the
purchase of the underlying securities in their national markets and
currencies.
FOREIGN CURRENCY TRANSACTIONS. T he funds may conduct foreign currency
transactions on a spot (i.e., cash) basis or by entering into forward
contracts to purchase or sell foreign currencies at a future date and
price. The funds will convert currency on a spot basis from time to time,
and investors should be aware of the costs of currency conversion. Although
foreign exchange dealers generally do not charge a fee for conversion, they
do realize a profit based on the difference between the prices at which
they are buying and selling various currencies. Thus, a dealer may offer to
sell a foreign currency to the fund at one rate, while offering a lesser
rate of exchange should the fund desire to resell that currency to the
dealer. Forward contracts are generally traded in an interbank market
conducted directly between currency traders (usually large commercial
banks) and their customers. The parties to a forward contract may agree to
offset or terminate the contract before its maturity, or may hold the
contract to maturity and complete the contemplated currency exchange.
Each fund may use currency forward contracts for any purpose consistent
with its investment objective. The following discussion summarizes the
principal currency management strategies involving forward contracts that
could be used by each fund. The funds may also use swap agreements, indexed
securities, and options and futures contracts relating to foreign
currencies for the same purposes.
When a fund agrees to buy or sell a security denominated in a foreign
currency, it may desire to "lock in" the U.S. dollar price of the security.
By entering into a forward contract for the purchase or sale, for a fixed
amount of U.S. dollars, of the amount of foreign currency involved in the
underlying security transaction, the fund will be able to protect itself
against an adverse change in foreign currency values between the date the
security is purchased or sold and the date on which payment is made or
received. This technique is sometimes referred to as a "settlement hedge"
or "transaction hedge." The funds may also enter into forward contracts to
purchase or sell a foreign currency in anticipation of future purchases or
sales of securities denominated in foreign currency, even if the specific
investments have not yet been selected by FMR.
The funds may also use forward contracts to hedge against a decline in the
value of existing investments denominated in foreign currency. For example,
if a fund owned securities denominated in pounds sterling, it could enter
into a forward contract to sell pounds sterling in return for U.S. dollars
to hedge against possible declines in the pound's value. Such a hedge,
sometimes referred to as a "position hedge," would tend to offset both
positive and negative currency fluctuations, but would not offset changes
in security values caused by other factors. A fund could also hedge the
position by selling another currency expected to perform similarly to the
pound sterling - for example, by entering into a forward contract to sell
Deutschemarks or European Currency Units in return for U.S. dollars. This
type of hedge, sometimes referred to as a "proxy hedge," could offer
advantages in terms of cost, yield, or efficiency, but generally would not
hedge currency exposure as effectively as a simple hedge into U.S. dollars.
Proxy hedges may result in losses if the currency used to hedge does not
perform similarly to the currency in which the hedged securities are
denominated.
Each fund may enter into forward contracts to shift its investment
exposure from one currency into another. This may include shifting exposure
from U.S. dollars to a foreign currency, or from one foreign currency to
another foreign currency. For example, if a fund held investments
denominated in Deutschemarks, the fund could enter into forward contracts
to sell Deutschemarks and purchase Swiss Francs. This type of strategy,
sometimes known as a "cross-hedge," will tend to reduce or eliminate
exposure to the currency that is sold, and increase exposure to the
currency that is purchased, much as if the fund had sold a security
denominated in one currency and purchased an equivalent security
denominated in another. Cross-hedges protect against losses resulting from
a decline in the hedged currency, but will cause the fund to assume the
risk of fluctuations in the value of the currency it purchases.
Under certain conditions, SEC guidelines require mutual funds to set aside
appropriate liquid assets in a segregated custodial account to cover
currency forward contracts. As required by SEC guidelines, the funds will
segregate assets to cover currency forward contracts, if any, whose purpose
is essentially speculative. The funds will not segregate assets to cover
forward contracts entered into for hedging purposes, including settlement
hedges, position hedges, and proxy hedges.
Successful use of currency management strategies will depend on
FMR's skill in analyzing and predicting currency values. Currency
management strategies may substantially change a fund's investment
exposure to changes in currency exchange rates, and could result in losses
to the fund if currencies do not perform as FMR anticipates. For example,
if a currency's value rose at a time when FMR had hedged a fund by selling
that currency in exchange for dollars, the fund would be unable to
participate in the currency's appreciation. If FMR hedges currency exposure
through proxy hedges, a fund could realize currency losses from the hedge
and the security position at the same time if the two currencies do not
move in tandem. Similarly, if FMR increases a fund's exposure to a foreign
currency, and that currency's value declines, the fund will realize a loss.
There is no assurance that FMR's use of currency management
strategies will be advantageous to the funds or that it will hedge at
an appropriate time.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. Each stock fund has
file d a notice of eligibility for exclusion from the definition of
the term "commodity pool operator" with the Commodity Futures Trading
Commission (CFTC) and the National Futures Association, which regulate
trading in the futures markets . The stock funds intend to comply with
Rule 4.5 under the Commodity Exchange Act, which limits the extent to which
the funds can commit assets to initial margin deposits and option
premiums.
In addition, each fund will not: (a) sell futures contracts, purchase put
options, or write call options if, as a result, more than 25% of the fund's
total assets would be hedged with futures and options under normal
conditions; (b) purchase futures contracts or write put options if, as a
result, the fund's total obligations upon settlement or exercise of
purchased futures contracts and written put options would exceed 25% of its
total assets; or (c) purchase call options if, as a result, the current
value of option premiums for call options purchased by the fund would
exceed 5% of the fund's total assets. These limitations do not apply to
options attached to or acquired or traded together with their underlying
securities, and do not apply to securities that incorporate features
similar to options.
The above limitations on the funds' investments in futures contracts and
options, and the funds' policies regarding futures contracts and options
discussed elsewhere in this Statement of Additional Information, are not
fundamental policies and may be changed as regulatory agencies permit.
FUTURES CONTRACTS. When a fund purchases a futures contract, it agrees to
purchase a specified underlying instrument at a specified future date. When
a fund sells a futures contract, it agrees to sell the underlying
instrument at a specified future date. The price at which the purchase and
sale will take place is fixed when the fund enters into the
contract. Some currently available futures contracts are based on specific
securities, such as U.S. Treasury bonds or notes, and some are based on
indices of securities prices, such as the Standard & Poor's Composite
Index of 500 Stocks (S&P 500) . Futures can be held until their delivery
dates, or can be closed out before then if a liquid secondary market is
available.
The value of a futures contract tends to increase and decrease in tandem
with the value of its underlying instrument. Therefore, purchasing futures
contracts will tend to increase a fund's exposure to positive and negative
price fluctuations in the underlying instrument, much as if it had
purchased the underlying instrument directly. When a fund sells a futures
contract, by contrast, the value of its futures position will tend to move
in a direction contrary to the market. Selling futures contracts,
therefore, will tend to offset both positive and negative market price
changes, much as if the underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract is
not required to deliver or pay for the underlying instrument unless the
contract is held until the delivery date. However, both the purchaser and
seller are required to deposit "initial margin" with a futures broker,
known as a futures commission merchant (FCM), when the contract is entered
into. Initial margin deposits are typically equal to a percentage of the
contract's value. If the value of either party's position declines, that
party will be required to make additional "variation margin" payments to
settle the change in value on a daily basis. The party that has a gain may
be entitled to receive all or a portion of this amount. Initial and
variation margin payments do not constitute purchasing securities on margin
for purposes o f a fund's investment limitations. In the event of the
bankruptcy of an FCM that holds margin on behalf of a fund, the fund may be
entitled to return of margin owed to it only in proportion to the amount
received by the FCM's other customers, potentially resulting in losses to
the fund.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, a fund obtains
the right (but not the obligation) to sell the option's underlying
instrument at a fixed strike price. In return for this right, the fund pays
the current market price for the option (known as the option premium).
Options have various types of underlying instruments, including specific
securities, indices of securities prices, and futures contracts. The
fund may terminate its position in a put option it has purchased by
allowing it to expire or by exercising the option. If the option is allowed
to expire, the fund will lose the entire premium it paid. If the fund
exercises the option, it completes the sale of the underlying instrument at
the strike price. A fund may also terminate a put option position by
closing it out in the secondary market at its current price, if a liquid
secondary market exists.
The buyer of a typical put option can expect to realize a gain if security
prices fall substantially. However, if the underlying instrument's price
does not fall enough to offset the cost of purchasing the option, a put
buyer can expect to suffer a loss (limited to the amount of the premium
paid, plus related transaction costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's
strike price. A call buyer typically attempts to participate in potential
price increases of the underlying instrument with risk limited to the cost
of the option if security prices fall. At the same time, the buyer can
expect to suffer a loss if security prices do not rise sufficiently to
offset the cost of the option.
WRITING PUT AND CALL OPTIONS. When a fund writes a put option, it takes the
opposite side of the transaction from the option's purchaser. In return for
receipt of the premium, the fund assumes the obligation to pay the strike
price for the option's underlying instrument if the other party to the
option chooses to exercise it. When writing an option on a futures
contract, the fund will be required to make margin payments to an FCM as
described above for futures contracts. A fund may seek to terminate its
position in a put option it writes before exercise by closing out the
option in the secondary market at its current price. If the secondary
market is not liquid for a put option the fund has written, however, the
fund must continue to be prepared to pay the strike price while the option
is outstanding, regardless of price changes, and must continue to set aside
assets to cover its position.
If security prices rise, a put writer would generally expect to profit,
although its gain would be limited to the amount of the premium it
received. If security prices remain the same over time, it is likely that
the writer will also profit, because it should be able to close out the
option at a lower price. If security prices fall, the put writer would
expect to suffer a loss. This loss should be less than the loss from
purchasing the underlying instrument directly, however, because the premium
received for writing the option should mitigate the effects of the decline.
Writing a call option obligates a fund to sell or deliver the option's
underlying instrument, in return for the strike price, upon exercise of the
option. The characteristics of writing call options are similar to those of
writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium, a call writer mitigates the effects of a price decline. At the
same time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price, even if its current value is
greater, a call writer gives up some ability to participate in security
price increases.
COMBINED POSITIONS. A fund may purchase and write options in combination
with each other, or in combination with futures or forward contracts, to
adjust the risk and return characteristics of the overall position. For
example, a fund may purchase a put option and write a call option on the
same underlying instrument, in order to construct a combined position whose
risk and return characteristics are similar to selling a futures contract.
Another possible combined position would involve writing a call option at
one strike price and buying a call option at a lower price, in order to
reduce the risk of the written call option in the event of a substantial
price increase. Because combined options positions involve multiple trades,
they result in higher transaction costs and may be more difficult to open
and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of types
of exchange-traded options and futures contracts, it is likely that the
standardized contracts available will not match a fund's current or
anticipated investments exactly. The funds may invest in options and
futures contracts based on securities with different issuers, maturities,
or other characteristics from the securities in which they typically
invest , which involves a risk that the options or futures position will
not track the performance of a fund's other investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match a fund's
investments well. Options and futures prices are affected by such factors
as current and anticipated short-term interest rates, changes in volatility
of the underlying instrument, and the time remaining until expiration of
the contract, which may not affect security prices the same way. Imperfect
correlation may also result from differing levels of demand in the options
and futures markets and the securities markets, from structural differences
in how options and futures and securities are traded, or from imposition of
daily price fluctuation limits or trading halts. A fund may purchase or
sell options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to attempt to
compensate for differences in volatility between the contract and the
securities, although this may not be successful in all cases. If price
changes in a fund's options or futures positions are poorly correlated with
its other investments, the positions may fail to produce anticipated gains
or result in losses that are not offset by gains in other investments.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a liquid
secondary market will exist for any particular options or futures contract
at any particular time. Options may have relatively low trading volume and
liquidity if their strike prices are not close to the underlying
instrument's current price. In addition, exchanges may establish daily
price fluctuation limits for options and futures contracts, and may halt
trading if a contract's price moves upward or downward more than the limit
in a given day. On volatile trading days when the price fluctuation limit
is reached or a trading halt is imposed, it may be impossible for a fund to
enter into new positions or close out existing positions. If the secondary
market for a contract is not liquid because of price fluctuation limits or
otherwise, it could prevent prompt liquidation of unfavorable positions,
and potentially could require a fund to continue to hold a position until
delivery or expiration regardless of changes in its value. As a result,
a f und's access to other assets held to cover its options or futures
positions could also be impaired.
OTC OPTIONS. Unlike exchange-traded options, which are standardized with
respect to the underlying instrument, expiration date, contract size, and
strike price, the terms of over-the-counter (OTC) options (options not
traded on exchanges) generally are established through negotiation with the
other party to the option contract. While this type of arrangement allows
the funds greater flexibility to tailor an option to its needs, OTC
options generally involve greater credit risk than exchange-traded options,
which are guaranteed by the clearing organization of the exchanges where
they are traded.
OPTIONS AND FUTURES RELATING TO FOREIGN CURRENCIES. Currency futures
contracts are similar to forward currency exchange contracts, except that
they are traded on exchanges (and have margin requirements) and are
standardized as to contract size and delivery date. Most currency futures
contracts call for payment or delivery in U.S. dollars. The underlying
instrument of a currency option may be a foreign currency, which generally
is purchased or delivered in exchange for U.S. dollars, or may be a futures
contract. The purchaser of a currency call obtains the right to purchase
the underlying currency, and the purchaser of a currency put obtains the
right to sell the underlying currency.
The uses and risks of currency options and futures are similar to options
and futures relating to securities or indices, as discussed above. The
funds may purchase and sell currency futures and may purchase and write
currency options to increase or decrease their exposure to different
foreign currencies. A fund may also purchase and write currency
options in conjunction with each other or with currency futures or forward
contracts. Currency futures and options values can be expected to correlate
with exchange rates, but may not reflect other factors that affect the
value of a fund's investments. A currency hedge, for example, should
protect a Yen-denominated security from a decline in the Yen, but will not
protect a fund against a price decline resulting from deterioration in the
issuer's creditworthiness. Because the value of a fund's
foreign-denominated investments changes in response to many factors other
than exchange rates, it may not be possible to match the amount of currency
options and futures to the value of the fund's investments exactly over
time.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. The funds will comply
with guidelines established by the Securities and Exchange Commission with
respect to coverage of options and futures strategies by mutual funds, and
if the guidelines so require will set aside appropriate liquid assets in a
segregated custodial account in the amount prescribed. Securities held in a
segregated account cannot be sold while the futures or option strategy is
outstanding, unless they are replaced with other suitable assets. As a
result, there is a possibility that segregation of a large percentage of a
fund's assets could impede portfolio management or the fund's ability to
meet redemption requests or other current obligations.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed
on behalf of each fund by FMR pursuant to authority contained in the
management contract. If FMR grants investment management authority to the
sub-advisers (see the section entitled "Management Contracts"), the
sub-advisers are authorized to place orders for the purchase and sale of
portfolio securities, and will do so in accordance with the policies
described below. FMR is also responsible for the placement of
transaction orders for other investment companies and accounts for which it
or its affiliates act as investment adviser. Securities purchased and sold
by the money market fund will generally be traded on a net basis (i.e.,
without commission). In selecting broker-dealers, subject to applicable
limitations of the federal securities laws, FMR considers various relevant
factors, including, but not limited to: the size and type of the
transaction; the nature and character of the markets for the security to be
purchased or sold; the execution efficiency, settlement capability, and
financial condition of the broker-dealer firm; the broker-dealer's
execution services rendered on a continuing basis; the reasonableness of
any commissions; and for the stock funds arrangements for payment of fund
expenses. Generally, commissions for foreign investments traded will
be higher than for U.S. investments and may not be subject to negotiation.
The funds may execute portfolio transactions with broker-dealers who
provide research and execution services to the funds or other accounts over
which FMR or its affiliates exercise investment discretion. Such services
may include advice concerning the value of securities; the advisability of
investing in, purchasing, or selling securities; the availability of
securities or the purchasers or sellers of securities; furnishing analyses
and reports concerning issuers, industries, securities, economic factors
and trends, portfolio strategy, and performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such
as clearance and settlement). FMR maintains a listing of broker-dealers
who provide such services on a regular basis. However, as many transactions
on behalf of the money market fund are placed with broker-dealers
(including broker-dealers on the list) without regard to the furnishing of
such services, it is not possible to estimate the proportion of such
transactions directed to such broker-dealers solely because such services
were provided. The selection of such broker-dealers generally is
made by FMR (to the extent possible consistent with execution
considerations) in accordance with a ranking of broker-dealers determined
periodically by FMR's investment staff based upon the quality of research
and execution services provided.
The receipt of research from broker-dealers that execute transactions on
behalf of the funds may be useful to FMR in rendering investment management
services to the funds or its other clients, and conversely, such
research provided by broker-dealers who have executed transaction orders on
behalf of other FMR clients may be useful to FMR in carrying out its
obligations to the funds. The receipt of such research has not reduced
FMR's normal independent research activities; however, it enables FMR to
avoid the additional expenses that could be incurred if FMR tried to
develop comparable information through its own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause
each fund to pay such higher commissions, FMR must determine in good
faith that such commissions are reasonable in relation to the value of the
brokerage and research services provided by such executing broker-dealers,
viewed in terms of a particular transaction or FMR's overall
responsibilities to the funds and its other clients. In reaching
this determination, FMR will not attempt to place a specific dollar value
on the brokerage and research services provided, or to determine what
portion of the compensation should be related to those services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the funds or shares of other Fidelity
funds to the extent permitted by law. FMR may use research services
provided by and place agency transactions with Fidelity Brokerage Services,
Inc. (FBSI) and Fidelity Brokerage Services, Ltd. (FBSL), subsidiaries of
FMR Corp., if the commissions are fair, reasonable, and comparable to
commissions charged by non-affiliated, qualified brokerage firms for
similar services. Prior to September 4, 1992, FBSL operated under the name
Fidelity Portfolio Services, Ltd. (FPSL) as a wholly owned subsidiary of
Fidelity International Limited (FIL). Edward C. Johnson 3d is Chairman of
FIL. Mr. Johnson 3d, Johnson family members, and various trusts for the
benefit of the Johnson family own, directly or indirectly, more than 25% of
the voting common stock of FIL.
FMR may allocate brokerage transactions to broker-dealers who have entered
into arrangements with FMR under which the broker-dealer allocates a
portion of the commissions paid by each fund toward payment of the fund's
expenses, such as transfer agent fees or custodian fees. The transaction
quality must, however, be comparable to those of other qualified
broker-dealers.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members of
national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, unless certain requirements
are satisfied. Pursuant to such requirements, the Board of Trustees has
authorized FBSI to execute portfolio transactions on national securities
exchanges in accordance with approved procedures and applicable SEC rules.
The Trustees periodically review FMR's performance of its responsibilities
in connection with the placement of portfolio transactions on behalf of the
funds and review the commissions paid by each fund over
representative periods of time to determine if they are reasonable in
relation to the benefits to the funds.
The stock funds' turnover rates for the fiscal yea rs ended
February 28, 1995 and 1994 are presented in the table below. The stock
funds' annual portfolio turnover rates may be substantially greater than
those of other equity investment companies. The significantly higher or
lower portfolio turnover rates from year to year are primarily the result
of fluctuations in asset levels and FMR's assessment of changing economic
conditions throughout each year for various industries. High turnover may
also be the result of short-term shareholder trading activity which
increases brokerage and operating costs. This shareholder activity may
also result in required purchases or sales of portfolio securities at
disadvantageous times.
TURNOVER RATES FISCAL 1995 FISCAL 1994
Air Transportation
American Gold
Automotive
Biotechnology
Brokerage and Investment Management
Chemicals
Computers
Construction and Housing
Consumer Products
Defense and Aerospace
Developing Communications
Electronics
Energy
Energy Service
Environmental Services
Financial Services
Food and Agriculture
Health Care
Home Finance
Industrial Equipment
Industrial Materials
Insurance
Leisure
Medical Delivery
Multimedia
Natural Gas
Paper and Forest Products
Precious Metals and Minerals
Regional Banks
Retailing
Software and Computer Services
Technology
Telecommunications
Transporation
Utilities Growth
____
1 From _____ (commencement of operations).
* Annualized
BROKERAGE COMMISSIONS. T he table below lists the total brokerage
commissions; the percentage of brokerage commissions paid to brokerage
firms that provided research services; and the dollar amount of commissions
paid to FBSI and FBSL for the fiscal periods ended February 28, 1995, 1994,
and 1993. The tables also list the percentage of each fund's aggregate
brokerage commissions paid to FBSI and FBSL during the 1995, 1994, and 1993
fiscal periods, as well as the percentage of each fund's aggregate dollar
amount of transactions executed through FBSI and FBSL during the same
periods. However, during fiscal 1995 and 1994, the funds did not pay any
commissions to FBSL. The difference in the percentage of the brokerage
commissions paid to and the percentage of the dollar amount of transactions
effected through FBSI and FBSL is a result of the low commission rates
charged by FBSI and FBSL.
% of % of
% of % of Transactions Transactions
Fiscal % Paid to Commissions Commissions Effected Effected
Period Ended Firms Providing Paid Paid through through
February 28 Total Research To FBSI To FBSL To FBSI FBSL To FBSI FBSL
AIR
TRANSPORTATIO
N
1995 $ % $ $ % % % %
1994 $ % $ % % % %
1993 $ % $ $ % % % %
AMERICAN
GOLD
1995 $ % $ $ % % % %
1994 $ % $ % % % %
1993 $ % $ $ % % % %
AUTOMOTIVE
1995 $ % $ $ % % % %
1994 $ % $ % % % %
1993 $ % $ $ % % % %
BIOTECHNOLOGY
1995 $ % $ $ % % % %
1994 $ % $ % % % %
1993 $ % $ $ % % % %
BROKERAGE AND
INVESTMENT
MANAGEMENT
1995 $ % $ $ % % % %
1994 $ % $ % % % %
1993 $ % $ $ % % % %
CHEMICALS
1995 $ % $ $ % % % %
1994 $ % $ % % % %
1993 $ % $ $ % % % %
COMPUTERS
1995 $ % $ $ % % % %
1994 $ % $ % % % %
1993 $ % $ $ % % % %
CONSTRUCTION
AND HOUSING
1995 $ % $ $ % % % %
1994 $ % $ % % % %
1993 $ % $ $ % % % %
CONSUMER
PRODUCTS
1995 $ % $ $ % % % %
1994 $ % $ % % % %
1993 $ % $ $ % % % %
DEFENSE AND
AEROSPACE
1995 $ % $ $ % % % %
1994 $ % $ % % % %
1993 $ % $ $ % % % %
DEVELOPING
COMMNUNICAT
IONS
1995 $ % $ $ % % % %
1994 $ % $ % % % %
1993 $ % $ $ % % % %
ELECTRONICS
1995 $ % $ $ % % % %
1994 $ % $ % % % %
1993 $ % $ $ % % % %
ENERGY
1995 $ % $ $ % % % %
1994 $ % $ % % % %
1993 $ % $ $ % % % %
ENERGY
SERVICE
1995 $ % $ $ % % % %
1994 $ % $ % % % %
1993 $ % $ $ % % % %
ENVIRONMENTA
L SERVICES
1995 $ % $ $ % % % %
1994 $ % $ % % % %
1993 $ % $ $ % % % %
FINANCIAL
SERVICES
1995 $ % $ $ % % % %
1994 $ % $ % % % %
1993 $ % $ $ % % % %
FOOD AND
AGRICULTURE
1995 $ % $ $ % % % %
1994 $ % $ % % % %
1993 $ % $ $ % % % %
HEALTH CARE
1995 $ % $ $ % % % %
1994 $ % $ % % % %
1993 $ % $ $ % % % %
HOME FINANCE %
1995 $ % $ $ % % % %
1994 $ % $ % % % %
1993 $ % $ $ % % % %
INDUSTRIAL
EQUIPMENT
1995 $ % $ $ % % % %
1994 $ % $ % % % %
1993 $ % $ $ % % % %
INDUSTRIAL
MATERIALS
1995 $ % $ $ % % % %
1994 $ % $ % % % %
1993 $ % $ $ % % % %
INSURANCE
1995 $ % $ $ % % % %
1994 $ % $ % % % %
1993 $ % $ $ % % % %
LEISURE
1995 $ % $ $ % % % %
1994 $ % $ % % % %
1993 $ % $ $ % % % %
MEDICAL
DELIVERY
1995 $ % $ $ % % % %
1994 $ % $ % % % %
1993 $ % $ $ % % % %
MULTIMEDIA
1995 $ % $ $ % % % %
1994 $ % $ % % % %
1993 $ % $ $ % % % %
NATURAL GAS
1995 $ % $ $ % % % %
1994 $ % $ % % % %
1993 $ % $ $ % % % %
PAPER AND
FOREST
PRODUCTS
1995 $ % $ $ % % % %
1994 $ % $ % % % %
1993 $ % $ $ % % % %
PRECIOUS
METALS AND
MINERALS
1995 $ % $ $ % % % %
1994 $ % $ % % % %
1993 $ % $ $ % % % %
REGIONAL
BANKS
1995 $ % $ $ % % % %
1994 $ % $ % % %
1993 $ % $ $ % % % %
RETAILING
1995 $ % $ $ % % % %
1994 $ % $ % % %
1993 $ % $ $ % % % %
SOFTWARE AND
COMPUTER
SERVICES
1995 $ % $ $ % % % %
1994 $ % $ % % %
1993 $ % $ $ % % % %
TECHNOLOGY
1995 $ % $ $ % % % %
1994 $ % $ % % %
1993 $ % $ $ % % % %
TELECOMMUNIC
ATIONS
1995 $ % $ $ % % % %
1994 $ % $ % % %
1993 $ % $ $ % % % %
TRANSPORTATIO
N
1995 $ % $ $ % % % %
1994 $ % $ % % %
1993 $ % $ $ % % % %
UTILITIES
GROWTH
1995 $ % $ $ % % % %
1994 $ % $ % % %
1993 $ % $ $ % % % %
_____
1 From (commencement of operations).
2 From (commencement of operations).
3 From (commencement of operations).
From time to time the Trustees will review whether the recapture for the
benefit of the funds of some portion of the brokerage commissions or
similar fees paid by the funds on portfolio transactions is legally
permissible and advisable. Each fund seeks to recapture soliciting
broker-dealer fees on the tender of portfolio securities, but at present no
other recapture arrangements are in effect. The Trustees intend to continue
to review whether recapture opportunities are available and are legally
permissible and, if so, to determine in the exercise of their business
judgment whether it would be advisable for each fund to seek such
recapture.
Although the Trustees and officers of each fund are substantially
the same as those of other funds managed by FMR, investment decisions for
each fund are made independently from those of other funds managed by FMR
or accounts managed by FMR affiliates. It sometimes happens that the same
security is held in the portfolio of more than one of these funds or
accounts. Simultaneous transactions are inevitable when several funds and
accounts are managed by the same investment adviser, particularly when the
same security is suitable for the investment objective of more than one
fund or account.
When two or more funds are simultaneously engaged in the purchase or sale
of the same security, the prices and amounts are allocated in accordance
with procedures believed to be appropriate and equitable for each
fund. In some cases this system could have a detrimental effect on the
price or value of the security as far as each fund is concerned. In
other cases, however, the ability of the funds to participate in
volume transactions will produce better executions and prices for the
funds . It is the current opinion of the Trustees that the desirability
of retaining FMR as investment adviser to each fund outweighs any
disadvantages that may be said to exist from exposure to simultaneous
transactions.
VALUATION OF PORTFOLIO SECURITIES
Each stock fund's net asset value is determined hourly during business
hours observed by the New York Stock Exchange. Currently, the Exchange is
open from 9:30 a.m. to 4:00 p.m. Eastern time, Monday through Friday. The
Board has approved the following "valuation times" for the determination of
each fund's net asset value: 10:00 a.m., 11:00 a.m., 12:00 noon, 1:00
p.m., 2:00 p.m., 3:00 p.m. and 4:00 p.m. At each valuation time, the value
of each fund's assets will be determined in the manner described below.
STOCK FUNDS. Portfolio securities are valued by various methods depending
on the primary market or exchange on which they trade. Most equity
securities for which the primary market is the U.S. are valued at last
sale price or, if no sale has occurred, at the closing bid price. Most
equity securities for which the primary market is outside the U.S. are
valued using the official closing price or the last sale price in the
principal market where they are traded. If the last sale price (on the
local exchange) is unavailable, the last evaluated quote or last bid price
is normally used. Short-term securities are valued either at amortized cost
or at original cost plus accrued interest, both of which approximate
current value. Convertible securities and fixed-income securities
are valued primarily by a pricing service that uses a vendor security
valuation matrix which incorporates both dealer-supplied valuations and
electronic data processing techniques. This two-fold approach is believed
to more accurately reflect fair value because it takes into account
appropriate factors such as institutional trading in similar groups of
securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics, and other market data, without exclusive reliance upon
quoted, exchange, or over-the counter prices. Use of pricing services has
been approved by the Board of Trustees.
Securities and other assets for which there is no readily available market
are valued in good faith by a committee appointed by the Board of Trustees.
The procedures set forth above need not be used to determine the value of
the securities owned by the fund if, in the opinion of a committee
appointed by the Board of Trustees, some other method (e.g., closing
over-the-counter bid prices in the case of debt instruments traded on an
exchange) would more accurately reflect the fair market value of such
securities.
Generally, the valuation of foreign and domestic equity securities, as well
as corporate bonds, U.S. government securities, money market instruments,
and repurchase agreements, is substantially completed each day at the close
of the NYSE. The values of any such securities held by a fund are
determined as of such time for the purpose of computing the fund's net
asset value. Foreign security prices are furnished by independent brokers
or quotation services which express the value of securities in their local
currency. FSC gathers all exchange rates daily at the close of the NYSE
using the last quoted price on the local currency and then translates the
value of foreign securities from their local currency into U.S. dollars.
Any changes in the value of forward contracts due to exchange rate
fluctuations and days to maturity are included in the calculation of net
asset value. If an extraordinary event that is expected to materially
affect the value of a portfolio security occurs after the close of an
exchange on which that security is traded, then the security will be valued
as determined in good faith by a committee appointed by the Board of
Trustees.
MONEY MARKET FUND. The fund values its investments on the basis of
amortized cost. This technique involves valuing an instrument at its cost
as adjusted for amortization of premium or accretion of discount rather
than its value based on current market quotations or appropriate
substitutes which reflect current market conditions. The amortized cost
value of an instrument may be higher or lower than the price the fund would
receive if it sold the instrument.
Valuing the fund's instruments on the basis of amortized cost and use of
the term "money market fund" are permitted by Rule 2a-7 under the 1940
Act . The fund must adhere to certain conditions under Rule 2a-7 .
The Board of Trustees of the trust oversees FMR's adherence to SEC
rules concerning money market funds, and has established procedures
designed to stabilize the fund's net asset value (NAV) at $1.00. At
such intervals as they deem appropriate, the Trustees consider the extent
to which NAV calculated by using market valuations would deviate from $1.00
per share. If the Trustees believe that a deviation from the fund's
amortized cost per share may result in material dilution or other unfair
results to shareholders, the Trustees have agreed to take such corrective
action, if any, as they deem appropriate to eliminate or reduce, to the
extent reasonably practicable, the dilution or unfair results. Such
corrective action could include selling portfolio instruments prior to
maturity to realize capital gains or losses or to shorten average portfolio
maturity; withholding dividends; redeeming shares in kind; establishing NAV
by using available market quotations; and such other measures as the
Trustees may deem appropriate.
During periods of declining interest rates, the fund's yield based on
amortized cost may be higher than the yield based on market valuations.
Under these circumstances, a shareholder in the fund would be able to
obtain a somewhat higher yield than would result if the fund utilized
market valuations to determine its NAV. The converse would apply in a
period of rising interest rates.
PERFORMANCE
The funds may quote performance in various ways. All performance
information supplied by the funds in advertising is historical and is not
intended to indicate future returns. The stock funds' share price,
and each fund's yield and total return fluctuate in response to
market conditions and other f actors, and the value of the stock
funds' shares when redeemed may be more or less than their original
cost.
YIELD CALCULATIONS. To compute the money market fund's yield for a
period, the net change in value of a hypothetical account containing one
share reflects the value of additional shares purchased with dividends from
the one original share and dividends declared on both the original share
and any additional shares. The net change is then divided by the value of
the account at the beginning of the period to obtain a base period return.
This base period return is annualized to obtain a current annualized yield.
The fund also may calculate an effective yield by compounding the base
period return over a one year period. In addition to the current yield, the
fund may quote yields in advertising based on any historical seven-day
period. Yields for the fund are calculated on the same basis as other money
market funds, as required by applicable regulations.
Yield information may be useful in reviewing the fund's performance and
in providing a basis for comparison with other investment alternatives.
However, the fund's yield fluctuates, unlike investments that pay a fixed
interest rate over a stated period of time. When comparing investment
alternatives, investors should also note the quality and maturity of the
portfolio securities of respective investment companies they have chosen to
consider.
Investors should recognize that in periods of declining interest rates
the fund's yield will tend to be somewhat higher than prevailing market
rates, and in periods of rising interest rates the fund's yield will tend
to be somewhat lower. Also, when interest rates are falling, the inflow of
net new money to the fund from the continuous sale of its shares will
likely be invested in instruments producing lower yields than the balance
of the fund's holdings, thereby reducing the fund's current yield. In
periods of rising interest rates, the opposite can be expected to
occur.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect all
aspects of a fund's return, including the effect of reinvesting dividends
and capital gain distributions, and any change in the fund' s NAV
over a s tated period. Average annual total returns are
calculated by determining the growth or decline in value of a hypothetical
historical investment in a fund over a stated period, and then calculating
the annually compounded percentage rate that would have produced the same
result if the rate of growth or decline in value had been constant over the
period. For example, a cumulative tota l return of 100% over ten
years would produce an average annual return of 7.18%, which is the steady
annual rate of return that would equal 100% growth on a compounded basis in
ten years. While average annual returns are a convenient means of comparing
investment alternatives, investors should realize that a fund's
performance is not constant over time, but changes from year to year, and
that average annual returns represent averaged figures as opposed to the
actual year-to-year performance of the fund.
In addition to average annual total returns, a fund may quote
unaveraged or cumulative total returns reflecting the simple change in
value of an investment over a stated period. Average annual and cumulative
total returns may be quoted as a percentage or as a dollar amount, and may
be calculated for a single investment, a series of investments, or a series
of redemptions, over any time period. Total returns may be broken down into
their components of income and capital (including capital gains and changes
in share price) in order to illustrate the relationship of these factors
and their contributions to total return. Total returns may be quoted
on a before-tax or after-tax basi s and may be quoted with or without
taking each fund's 3% maximum sales charge or redemption fees into account.
Excluding a fund's sales charge and/or redemption fee from a total return
calculation produces a higher total return figure. Total returns, yields,
and other performance information may be quoted numerically or in a table,
graph, or similar illustration.
NET ASSET VALUE. Charts and graphs using a fund's net asset values,
adjusted net asset values, and benchmark indices may be used to exhibit
performance. An adjusted NAV includes any distributions paid by a fund and
reflects all elements of its return. Unless otherwise indicated, a fund's
adjusted NAVs are not adjusted for sales charges, if any.
MOVING AVERAGES. A stock fund may illustrate performance using moving
averages. A long-term moving average is the average of each week's adjusted
closing NAV for a specified period. A short-term moving average is the
average of each day's adjusted closing NAV for a specified period. Moving
Average Activity Indicators combine adjusted closing NAVs from the last
business day of each week with moving averages for a specified period to
produce indicators showing when an NAV has crossed, stayed above, or stayed
below its moving average. On February 28, 1995, the 13-week and 39-week
short-term moving averages were as follows:
FUND 13 WEEK SHORT-TERM 39 WEEK SHORT-TERM
NAME MOVING AVERAGE MOVING AVERAGE
Air Transportation
American Gold
Automotive
Biotechnology
Brokerage and Investment Management
Chemicals
Computers
Construction and Housing
Consumer Products
Defense and Aerospace
Developing Communications
Electronics
Energy
Energy Service
Environmental Services
Financial Services
Food and Agriculture
Health Care
Home Finance
Industrial Equipment
Industrial Materials
Insurance
Leisure
Medical Delivery
Multimedia
Natural Gas
Paper and Forest Products
Precious Metals and Minerals
Regional Banks
Retailing
Software and Computer Services
Technology
Telecommunications
Transporation
Utilities Growth
HISTORICAL RESULTS. The following table shows each fund's total returns
for the periods ended February 28, 199 5. The total return figures
include the effect of the funds' 3% sales charge, but do not include the
effects of the stock funds' exchange or redemption fees.
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Commencement of One Five Ten Life of One Five Ten Life of
Year Years Years Fund Year Years Years Fund
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Air Transportation % % % % % %
American Gold
Automotive
Biotechnology
Brokerage and Investment Mgmt.
Chemicals
Computers
Construction and Housing
Consumer Products
Defense and Aerospace
Developing Communications
Electronics
Energy
Energy Service
Environmental Services
Financial Services
Food and Agriculture
Health Care
Home Finance
Industrial Equipment
Industrial Materials
Insurance
Leisure
Medical Delivery
Multimedia
Natural Gas
Paper and Forest Products
Precious Metals and Minerals
Regional Banks
Retailing
Software and Computer Services
Technology
Telecommunications
Transportation
Utilities Growth
Money Market
</TABLE>
The following table shows the income and capital elements of each fund's
cumulative total return. The table compares each fund's return to the
record of the Standard and Poor's Composite Index of 500 Stocks (S&P
500(registered trademark)) and the cost of living (measured by the Consumer
Price Index, or CPI) over the same period. The CPI information is as of the
month end closest to the initial investment date for each fund. The S&P 500
comparison is provided to show how each fund's total return compared to the
record of a broad average of common stock prices over the same period. Each
fund has the ability to invest in securities not included in the index, and
its investment portfolio may or may not be similar in composition to the
indices. Of course, since the money market fund invests in short-term
fixed-income securities, common stocks represent a different type of
investment from the fund. Common stocks generally offer greater growth
potential than the money market fund, but generally experience greater
price volatility, which means greater potential for loss. In addition,
common stocks generally provide lower income than a fixed-income investment
such as the money market fund. Figures for the S&P 500 are based on the
prices of unmanaged groups of stocks and, unlike the funds' returns, do
not include the effect of paying brokerage commissions and other costs of
investing.
The figures below (rounded to the nearest dollar) represent the value of a
$10,000 investment (after deducting the fund's 3% sales charge) in each
fund before redemption, and do not take the stock funds' exchange or
redemption fees into account. This was a period of widely fluctuating
stock prices, and should not be considered representative of the dividend
income or capital gain or loss that could be realized from investments in
the funds today.
FIDELITY SELECT PORTFOLIOS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
VALUE OF VALUE OF VALUE OF
FISCAL INITIAL REINVESTED REINVESTED
PERIOD $10,000 CAPITAL GAIN DIVIDEND TOTAL COST
FUND ENDED INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P 500 OF LIVING*
Air Transportation 2/28/86
2/28/87
2/28/88
2/28/89
2/28/90
2/28/91
</TABLE>
2/28/92
2/28/93
2/28/94
2/28/95
American Gold 2/28/86
2/28/87
2/28/88
2/28/90
2/28/91
2/28/92
2/28/93
2/28/94
2/28/95
Biotechnology 2/28/86
2/28/87
2/28/88
2/28/89
2/28/90
2/28/91
2/28/92
2/28/93
2/28/94
2/28/95
Brokerage and Investment 2/28/86
Management 2/28/87
2/28/88
2/28/89
2/28/90
2/28/91
2/28/92
2/28/93
2/28/94
2/28/95
Chemicals 2/28/86
2/28/87
2/28/88
2/28/89
2/28/90
2/28/91
2/28/92
2/28/93
2/28/94
2/28/95
FIDELITY SELECT PORTFOLIOS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
VALUE OF VALUE OF VALUE OF
FISCAL INITIAL REINVESTED REINVESTED
PERIOD $10,000 CAPITAL GAIN DIVIDEND TOTAL COST
FUND ENDED INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P 500 OF LIVING*
</TABLE>
Computers 2/28/86
2/28/87
2/28/88
2/28/89
2/28/90
2/28/91
2/28/92
2/28/93
2/28/94
2/28/95
Construction and Housing 2/28/86
2/28/87
2/28/88
2/28/89
2/28/90
2/28/91
2/28/92
2/28/93
2/28/94
2/28/95
Consumer Products 2/28/86
2/28/87
2/28/88
2/28/89
2/28/90
2/28/91
2/28/92
2/28/93
2/28/94
2/28/95
Defense and Aerospace 2/28/86
2/28/87
2/28/88
2/28/89
2/28/90
2/28/91
2/28/92
2/28/93
2/28/94
2/28/95
Developing 2/28/86
Communications 2/28/87
2/28/88
2/28/89
2/28/90
2/28/91
2/28/92
2/28/93
2/28/94
2/28/95
FIDELITY SELECT PORTFOLIOS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
VALUE OF VALUE OF VALUE OF
FISCAL INITIAL REINVESTED REINVESTED
PERIOD $10,000 CAPITAL GAIN DIVIDEND TOTAL COST
FUND ENDED INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P 500 OF LIVING*
</TABLE>
Electronics 2/28/86
2/28/87
2/28/88
2/28/89
2/28/90
2/28/91
2/28/92
2/28/93
2/28/94
2/28/95
Energy 2/28/86
2/28/87
2/28/88
2/28/89
2/28/90
2/28/91
2/28/92
2/28/93
2/28/94
2/28/95
Energy Service 2/28/86
2/28/87
2/28/88
2/28/89
2/28/90
2/28/91
2/28/92
2/28/93
2/28/94
2/28/95
Environmental Services 2/28/86
2/28/87
2/28/88
2/28/89
2/28/90
2/28/91
2/28/92
2/28/93
2/28/94
2/28/95
Financial Services 2/28/86
2/28/87
2/28/88
2/28/89
2/28/90
2/28/91
2/28/92
2/28/93
2/28/94
2/28/95
FIDELITY SELECT PORTFOLIOS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
VALUE OF VALUE OF VALUE OF
FISCAL INITIAL REINVESTED REINVESTED
PERIOD $10,000 CAPITAL GAIN DIVIDEND TOTAL COST
FUND ENDED INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P 500 OF LIVING*
</TABLE>
Food and Agriculture 2/28/86
2/28/87
2/28/88
2/28/89
2/28/90
2/28/91
2/28/92
2/28/93
2/28/94
2/28/95
Health Care 2/28/86
2/28/87
2/28/88
2/28/89
2/28/90
2/28/91
2/28/92
2/28/93
2/28/94
2/28/95
Home Finance 2/28/86
2/28/87
2/28/88
2/28/89
2/28/90
2/28/91
2/28/92
2/28/92
2/28/93
2/28/94
2/28/95
Industrial Equipment 2/28/86
2/28/87
2/28/88
2/28/89
2/28/90
2/28/91
2/28/92
2/28/93
2/28/94
2/28/95
Industrial Materials 2/28/86
2/28/87
2/28/88
2/28/89
2/28/90
2/28/91
2/28/92
2/28/93
2/28/94
2/28/95
FIDELITY SELECT PORTFOLIOS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
VALUE OF VALUE OF VALUE OF
FISCAL INITIAL REINVESTED REINVESTED
PERIOD $10,000 CAPITAL GAIN DIVIDEND TOTAL COST
FUND ENDED INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P 500 OF LIVING*
</TABLE>
Insurance 2/28/86
2/28/87
2/28/88
2/28/89
2/28/90
2/28/91
2/28/92
2/28/93
2/28/94
2/28/95
Leisure 2/28/86
2/28/87
2/28/88
2/28/89
2/28/90
2/28/91
2/28/92
2/28/93
2/28/94
2/28/95
Medical Delivery 2/28/86
2/28/87
2/28/88
2/28/89
2/28/90
2/28/91
2/28/92
2/28/93
2/28/94
2/28/95
Money Market 2/28/86
2/28/87
2/28/88
2/28/89
2/28/90
2/28/91
2/28/92
2/28/93
2/28/94
2/28/95
Multimedia 2/28/86
2/28/87
2/28/88
2/28/89
2/28/90
2/28/91
2/28/92
2/28/93
2/28/94
2/28/95
FIDELITY SELECT PORTFOLIOS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
VALUE OF VALUE OF VALUE OF
PERIOD $10,000 CAPITAL GAIN DIVIDEND TOTAL COST
FUND ENDED INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P 500 OF LIVING*
</TABLE>
Natural Gas 2/28/86
2/28/87
2/28/88
2/28/89
2/28/90
2/28/91
2/28/92
2/28/93
2/28/94
2/28/95
Paper and Forest Products 2/28/86
2/28/87
2/28/88
2/28/89
2/28/90
2/28/91
2/28/92
2/28/93
2/28/94
2/28/95
Precious Metals and 2/28/86
Minerals 2/28/87
2/28/88
2/28/89
2/28/90
2/28/91
2/28/92
2/28/93
2/28/94
2/28/95
Regional Banks 2/28/86
2/28/87
2/28/88
2/28/89
2/28/90
2/28/91
2/28/92
2/28/93
2/28/94
2/28/95
Retailing 2/28/86
2/28/87
2/28/88
2/28/89
2/28/90
2/28/91
2/28/92
2/28/93
2/28/94
2/28/95
FIDELITY SELECT PORTFOLIOS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
VALUE OF VALUE OF VALUE OF
FISCAL INITIAL REINVESTED REINVESTED
PERIOD $10,000 CAPITAL GAIN DIVIDEND TOTAL COST
FUND ENDED INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P 500 OF LIVING*
</TABLE>
Telecommunications 2/28/86
2/28/87
2/28/88
2/28/89
2/28/90
2/28/91
2/28/92
2/28/93
2/28/94
2/28/95
Transportation 2/28/86
2/28/87
2/28/88
2/28/89
2/28/90
2/28/91
2/28/92
2/28/93
2/28/94
2/28/95
Utilities Growth 2/28/86
2/28/87
2/28/88
2/28/89
2/28/90
2/28/91
2/28/92
2/28/93
2/28/94
2/28/95
*From month end closest to initial investment date.
Explanatory notes: With an initial investment of $10,000 made, assuming the
3% load had been in effect, the net amount invested in fund shares was
$9,700. The table on the next page reflects the cost of the initial $10,000
investment in each of the stock funds, together with the aggregate cost of
reinvested dividends and capital gain distributions, if any, from
commencement of operations, or February 28, 1985 for funds in operation for
ten years or more, through February 28, 1995. If no additional shares of
these funds had been acquired through the reinvestment of distributions,
the cash payments from these funds would have come to the amounts shown in
column (A) for capital gain distributions, and the amounts shown in column
(B) for income dividends. No adjustment has been made for a shareholder's
income tax liability on dividends and capital gain distributions.
(A) (B)
CAPITAL GAIN INCOME
FUND COST DISTRIBUTIONS DIVIDENDS
Air Transportation $ $ $
American Gold
Automotive
Biotechnology
Brokerage and Investment Management
Chemicals
Computers
Construction and Housing
Consumer Products
Defense and Aerospace
Developing Communications
Electronics
Energy
Energy Service
Environmental Services
Financial Services
Food and Agriculture
Health Care
Home Finance
Industrial Equipment
Industrial Materials
Insurance
Leisure
Medical Delivery
Money Market
Multimedia
Natural Gas
Paper and Forest Products
Precious Metals and Minerals
Regional Banks
Retailing
Software and Computer Services
Technology
Telecommunications
Transportation
Utilities Growth
A fund's performance may be compared to the performance of other mutual
funds in general, or to the performance of particular types of mutual
funds. These comparisons may be expressed as mutual fund rankings prepared
by Lipper Analytical Services, Inc. (Lipper), an independent service
located in Summit, New Jersey that monitors the performance of mutual
funds. Lipper generally ranks funds on the basis of total return, assuming
reinvestment of distributions, but does not take sales charges or
redemption fees into consideration, and is prepared without regard to tax
consequences. Lipper may also rank money market funds based on yield. In
addition to the mutual fund rankings, a fund's performance may be compared
to stock, bond, and money market mutual fund performance indices
prepared by Lipper or other organizations. When comparing these indices, it
is important to remember the risk and return characteristics of each type
of investment. For example, while stock mutual funds may offer higher
potential returns, they also carry the highest degree of share price
volatility. Likewise, money market funds may offer greater stability of
principal, but generally do not offer the higher potential returns from
stock mutual funds.
From time to time, a fund's performance may also be compared to other
mutual funds tracked by financial or business publications and periodicals.
For example, the fund may quote Morningstar, Inc. in its advertising
materials. Morningstar, Inc. is a mutual fund rating service that rates
mutual funds on the basis of risk-adjusted performance. Rankings that
compare the performance of Fidelity funds to one another in appropriate
categories over specific periods of time may also be quoted in advertising.
A fund may be compared in advertising to Certificates of Deposit (CDs) or
other investments issued by banks or other depository institutions. Mutual
funds differ from bank investments in several respects. For example, a fund
may offer greater liquidity or higher potential returns than CDs, a fund
does not guarantee your principal or your return, and fund shares are not
FDIC insured.
Fidelity may provide information designed to help individuals understand
their investment goals and explore various financial strategies. Such
information may include information about current economic, market, and
political conditions; materials that describe general principles of
investing, such as asset allocation, diversification, risk tolerance, and
goal setting; questionnaires designed to help create a personal financial
profile; worksheets used to project savings needs based on assumed rates of
inflation and hypothetical rates of return; and action plans offering
investment alternatives. Materials may also include discussions of
Fidelity's asset allocation funds and other Fidelity funds, products, and
services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical
returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury
bills, the U.S. rate of inflation (based on the CPI), and combinations of
various capital markets. The performance of these capital markets is based
on the returns of different indices.
Fidelity funds may use the performance of these capital markets in order to
demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any
of these capital markets. The risks associated with the security types in
any capital market may or may not correspond directly to those of the
funds. Ibbotson calculates total returns in the same method as the funds.
The funds may also compare performance to that of other compilations or
indices that may be developed and made available in the future.
The money market fund may compare its performance or the performance of
securities in which it may invest to averages published by IBC USA
(Publications), Inc. of Ashland, Massachusetts. These averages assume
reinvestment of distributions. The IBC/Donoghue's MONEY FUND
AVERAGES(Trademark)/All Tax-Free, which is reported in the MONEY FUND
REPORT(Registered trademark), covers over 325 tax-free money market funds.
In advertising materials, Fidelity may reference or discuss its products
and services, which may include: other Fidelity funds; retirement
investing; brokerage products and services; the effects of periodic
investment plans and dollar cost averaging; saving for college or other
goals ; charitable giving; and the Fidelity credit card. In addition,
Fidelity may quote or reprint financial or business publications and
periodicals, including model portfolios or allocations, as they relate to
current economic and political conditions , fund management,
p ortfolio composition , investment philosophy, investment
techniques, the desirability of owning a particular mutual fund, and
Fidelity services and products . Fidelity may also reprint, and use as
advertising and sales literature, articles from Fidelity Focus, a quarterly
magazine provided free of charge to Fidelity fund shareholders.
A fund may present its fund number, Quotron(trademark) number, and CUSIP
number, and discuss or quote its current portfolio manager.
VOLATILITY. The stock funds may quote various measures of volatility and
benchmark correlation in advertising. In addition, the funds may compare
these measures to those of other funds. Measures of volatility seek to
compare the fund's historical share price fluctuations or total returns to
those of a benchmark. Measures of benchmark correlation indicate how valid
a comparative benchmark may be. All measures of volatility and correlation
are calculated using averages of historical data.
MOMENTUM INDICATORS indicate a stock fund's price movements over specific
periods of time. Each point on the momentum indicator represents the fund's
percentage change in price movements over that period.
A stock fund may advertise examples of the effects of periodic investment
plans, including the principle of dollar cost averaging. In such a program,
an investor invests a fixed dollar amount in a fund at periodic intervals,
thereby purchasing fewer shares when prices are high and more shares when
prices are low. While such a strategy does not assure a profit or guard
against loss in a declining market, the investor's average cost per share
can be lower than if fixed numbers of shares are purchased at the same
intervals. In evaluating such a plan, investors should consider their
ability to continue purchasing shares during periods of low price levels.
A fund may be available for purchase through retirement plans or other
programs offering deferral of, or exemption from, income taxes, which may
produce superior after-tax returns over time. For example, a $1,000
investment earning a taxable return of 10% annually would have an after-tax
value of $1,949 after ten years, assuming tax was deducted from the return
each year at a 31% rate. An equivalent tax-deferred investment would have
an after-tax value of $2,100 after ten years, assuming tax was deducted at
a 31% rate from the tax-deferred earnings at the end of the ten-year
period.
As of February 28, 1995, FM R advised over $__ billion in tax -free
fund assets, $__ billion in money market fund assets, $___ billion in
equity fund assets, $__ billion in international fund assets, and $___
billion in Spartan fund assets. The funds may reference the growth and
variety of money market mutual funds and the adviser's innovation and
participation in the industry. The equity funds under management figure
represents the largest amount of equity fund assets under management by a
mutual fund investment adviser in the United States, making FMR America's
leading equity (stock) fund manager. FMR, its subsidiaries, and affiliates
maintain a worldwide information and communications network for the purpose
of researching and managing investments abroad.
In addition to performance rankings, the money marekt fund may compare
its total expense ratio to the average total expense ratio of similar funds
tracked by Lipper. A fund's total expense ratio is a significant factor in
comparing bond and money market investments because of its effect on
yield.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Pursuant to Rule 22d-1 under the Investment Company Act of 1940 (the
1940 Act), FDC exercises its right to waive each fund's front-end
sales charge on shares acquired through reinvestment of dividends and
capital gain distributions or in connection with the fund's merger with or
acquisition of any investment company or trust. In addition, FDC has
chosen to waive each fund's sales charge in certain instances because of
efficiencies involved in those sales of shares . The sales charge will
not apply:
1. to shares purchased in connection with an employee benefit plan
(including the Fidelity-sponsored 403(b) and corporate IRA programs but
otherwise as defined in the Employee Retirement Income Security Act)
maintained by a U.S. employer and having more than 200 eligible employees,
or a minimum of $3,000,000 in plan assets invested in Fidelity mutual
funds, or as part of an employee benefit plan maintained by a U.S. employer
that is a member of a parent-subsidiary group of corporations (within the
meaning of Section 1563(a)(1) of the Internal Revenue Code, with "50%"
substituted for "80%") any member of which maintains an employee benefit
plan having more than 200 eligible employees, or a minimum of $3,000,000 in
plan assets invested in Fidelity mutual funds, or as part of an employee
benefit plan maintained by a non-U.S. employer having 200 or more eligible
employees, or a minimum of $3,000,000 in assets invested in Fidelity mutual
funds, the assets of which are held in a bona fide trust for the exclusive
benefit of employees participating therein;
2. to shares purchased by an insurance company separate account used to
fund annuity contracts purchased by employee benefit plans (including
403(b) programs, but otherwise as defined in the Employee Retirement Income
Security Act), which, in the aggregate, have either more than 200 eligible
employees or a minimum of $3,000,000 in assets invested in Fidelity
funds;
3. to shares in a Fidelity IRA account purchased (including purchases by
exchange) with the proceeds of a distribution from an employee benefit plan
provided that: (i) at the time of the distribution, the employer, or an
affiliate (as described in exemption 1 above) of such employer, maintained
at least one employee benefit plan that qualified for exemption 1 and that
had at least some portion of its assets invested in one or more mutual
funds advised by FMR, or in one or more accounts or pools advised by
Fidelity Management Trust Company; and (ii) the distribution is transferred
from the plan to a Fidelity Rollover IRA account within 60 days from the
date of the distribution;
4. to shares purchased by a charitable organization (as defined in
Section 501(c)(3) of the Internal Revenue Code) investing $100,000 or
more;
5. to shares purchased for a charitable remainder trust or life income
pool established for the benefit of a charitable organization (as defined
by Section 501(c)(3) of the Internal Revenue Code);
6. to shares purchased by an investor participating in the Fidelity
Trust Portfolios program (these investors must make initial investments of
$100,000 or more in the Trust Portfolios funds and must, during the initial
six-month period, reach and maintain an aggregate balance of at least
$500,000 in all accounts and subaccounts purchased through the Trust
Portfolios program);
7. to shares purchased through Portfolio Advisory Services;
8. to shares purchased by a current or former Trustee or officer of a
Fidelity fund or a current or retired officer, director, or regular
employee of FMR Corp. or its direct or indirect subsidiaries (a Fidelity
Trustee or employee), the spouse of a Fidelity Trustee or employee, a
Fidelity Trustee or employee acting as custodian for a minor child, or a
person acting as trustee of a trust for the sole benefit of the minor child
of a Fidelity Trustee or employee; or
9. to shares purchased by a bank trust officer, registered
representative, or other employee of a qualified recipient. Qualified
recipients are securities dealers or other entities, including banks and
other financial institutions, who have sold the fund's shares under special
arrangements in connection with FDC's sales activities.
Each fund' s sales charge may be reduced to reflect sales charges
previously paid, or that would have been paid absent a reduction f or
some purchases made directly with Fidelity as noted in the prospectus,
in connection with investments in other Fidelity funds. This includes
reductions for investments in prototype-like retirement plans sponsored
b y FMR or FMR Corp., which are listed above.
Each fund is open for business and its net asset value per share (NAV) is
calculated hourly each day the New York Stock Exchange (NYSE) is open for
trading. The NYSE has designated the following holiday closings for 199 5
: New Year's Day (observed), Washington's Birthday (observed), Good
Friday, Memorial Day (observed), Independence Day, Labor Day, Thanksgiving
Day, and Christmas Day. Although FMR expects the same holiday schedule to
be observed in the future, the NYSE may modify its holiday schedule at any
time.
FSC normally determines each fund's NAV hourly, from 10:00 a.m. to 4:00
p.m., and the final determination of each fund's NAV will coincide with the
close of the NYSE (normally 4:00 p.m. Eastern time). However, NAV may be
calculated earlier if trading on the NYSE is restricted or as permitted
by the Securities and Exchange Commission (SEC). To the extent that
portfolio securities are traded in other markets on days when the NYSE is
closed, a fund's NAV may be affected on days when investors do not have
access to the fund to purchase or redeem shares. In addition, trading in
some of a fund's portfolio securities may not occur on days when the fund
is open for business.
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing a fund's NAV. Shareholders receiving securities or other property
on redemption may realize a gain or loss for tax purposes, and will incur
any costs of sale, as well as the associated inconveniences.
Pursuant to Rule 11a-3 under the Investment Company Act of 1940 (the 1940
Act), each fund is required to give shareholders at least 60 days' notice
prior to terminating or modifying its exchange privilege. Under the Rule,
the 60-day notification requirement may be waived if (i) the only effect of
a modification would be to reduce or eliminate an administrative fee,
redemption fee, or deferred sales charge ordinarily payable at the time of
an exchange, or (ii) the fund suspends the redemption of the shares to be
exchanged as permitted under the 1940 Act or the rules and regulations
thereunder, or the fund to be acquired suspends the sale of its shares
because it is unable to invest amounts effectively in accordance with its
investment objective and policies.
In the Prospectus, each fund has notified shareholders that it reserves the
right at any time, without prior notice, to refuse exchange purchases by
any person or group if, in FMR's judgment, the fund would be unable to
invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and the
U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, Fidelity may reinvest your distributions at the
then-current NAV. All subsequent distributions will then be reinvested
until you provide Fidelity with alternate instructions.
DIVIDENDS. A portion of the stock funds' income may qualify for the
dividends-received deduction available to corporate shareholders to the
extent that ea ch fund' s income is derived from qualifying dividends.
Because each fund may earn other types of income, such as interest,
income from securities loans, non-qualifying dividends, and short-term
capital gains, the percentage of dividends from the stock funds that
qu alifies for the deduction generally will be less than 100%.
Each fund will notify corporate shareholders annually of the percentage
of fund dividends that qualifies f or the dividends-received
deduction. A portion o f each fund's d ividends derived from certain
U.S. government obligations may be exempt from state and local taxation.
Gains (losses) attributable to foreign currency fluctuations are generally
taxable as ordinary income, and therefore will increase (decrease) dividend
distributions. S hort-term capital gains are distributed as dividend
income. Each fund will send each shareholder a notice in January
describing the tax status of dividends and capital gain distributions for
the prior year.
As of February 28, 1995, the following funds hereby designate a capital
gain dividend for the purpose of the dividend-paid deduction:
[to be updated]
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by each
fund on the sale of securities and distributed to shareholders are
federally taxable as long-term capital gains, regardless of the length of
time shareholders have held their shares. If a shareholder receives a
long-term capital gain distribution on shares of a fund, and such shares
are held six months or less and are sold at a loss, the portion of the loss
equal to the amount of the long-term capital gain distribution will be
considered a long-term loss for tax purposes. S hort-term capital gains
distributed by each fund are taxable to shareholders as dividends, not as
capital gains.
As of February 28, 199 5 the funds had capital loss carryovers
available to offset future capital gains, approximated as follows:
Aggregate
Capital
Loss Amount that Expires on February 28,
Fund Carryovers 1996 1997 1998 1999 2000 2001 2002
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
American $38,864,000 $13,677,000 $2,503,000 $ 1,152,000 $ 13,193,00 $ 8,339,000
Gold 0
Biotechnology 10,841,000 $10,841,000
Environmental 289,000 289,000
Services
Health Care 529,000 529,000
Industrial 11,257,000 1,664,000 8,694,000 141,000 758,000
Materials
Medical 12,438,000 1,480,000 10,958,000
Delivery
Money Market 65,000 2,000 31,000 5,000 21,000 6,000
PreciousMetal 69,642,000 41,690,000 6,357,000 2,070,000 8,843,000 10,682,000
s and
Minerals
</TABLE>
Subsequent to the reorganization of certain funds of the trust on October
26, 1990, the Insurance and Industrial Equipment Portfolios acquired
substantially all of the assets of the Life Insurance and Automation and
Machinery Portfolios, respectively. The Life Insurance and Automation and
Machinery Portfolios have capital loss carryovers of approximately $96,000
and $143,000, respectively, available to offset future realized capital
gains in the Insurance and Industrial Equipment Portfolios, respectively,
to the extent provided by regulations.
To the extent that capital loss carryovers are used to offset any future
capital gains, it is unlikely that the gains so offset will be distributed
to shareholders since any such distributions may be taxable to shareholders
as ordinary income.
FOREIGN TAXES. Foreign governments may withhold taxes on dividends and
interest paid with respect to foreign securities. Foreign governments may
also impose taxes on other payments or gains with respect to foreign
securities. If, at the close of its fiscal year, more than 50% of a fund's
total assets are invested in securities of foreign issuers, the fund may
elect to pass through foreign taxes paid and thereby allow shareholders to
take a credit or deduction on their individual tax returns.
TAX STATUS OF THE FUNDS. Each fund intends to qualify each year as a
"regulated investment company" for tax purposes so that it will not be
liable for federal tax on income and capital gains distributed to
shareholders. In order to qualify as a regulated investment company and
avoid being subject to federal income or excise taxes at the fund level,
each fund intends to distribute substantially all of its net investment
income and net realized capital gains within each calendar year as well as
on a fiscal year basis. Each fund intends to comply with other tax
rules applicable to regulated investment companies, including a requirement
that capital gains from the sale of securities held less than three months
constitute less than 30% of the fund's gross income for each fiscal year.
Gains from some forward currency contracts, futures contracts, and
options are included in this 30% calculation, which may limit a fund's
investments in such instruments.
If a fund purchases shares in certain foreign investment entities,
defined as passive foreign investment companies (PFICs) in the Internal
Revenue Code, it may be subject to U.S. federal income tax on a portion of
any excess distribution or gain from the disposition of such shares.
Interest charges may also be imposed on a fund with respect to deferred
taxes arising from such distributions or gains. Generally, each fund will
elect to mark-to-market any PFIC shares. Unrealized gains will be
recognized as income for tax purposes and must be distributed to
shareholders as dividends.
Each fund is treated as a separate entity from the other fu nds of
Fidelity Select Portfolios for tax purposes.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax consequences generally affecting each fund and its
shareholders, and no attempt has been made to discuss individual tax
consequences. In addition to federal income taxes, shareholders may be
subject to state and local taxes on fund distributions, and shares
may be subject to state and local personal property taxes. Investors should
consult their tax a dvisers to determine whether a fund is suitable
to their particular tax situation.
FMR
All of the stock of FMR is owned by FMR Corp., its parent company
organized in 1972. Through ownership of voting common stock and the
execution of a shareholders' voting agreement, Edward C. Johnson 3d,
Johnson family members, and various trusts for the benefit of the Johnson
family form a controlling group with respect to FMR Corp.
At present, the principal operating activities of FMR Corp. are those
conducted by three of its divisions as follows: FSC, which is the transfer
and shareholder servicing agent for certain of the funds advised by FMR;
Fidelity Investments Institutional Operations Company, which performs
shareholder servicing functions for institutional customers and funds
sold through intermediaries ; and Fidelity Investments Retail Marketing
Company, which provides marketing services to various companies within the
Fidelity organization.
Fidelity investment personnel may invest in securities for their own
account pursuant to a code of ethics that sets forth all employees'
fiduciary responsibilities regarding the funds, establishes procedures for
personal investing and restricts certain transactions. For example, all
personal trades in most securities require pre-clearance, and participation
in initial public offerings is prohibited. In addition, restrictions on the
timing of personal investing in relation to trades by Fidelity funds and on
short-term trading have been adopted.
TRUSTEES AND OFFICERS
The Trustees and executive officers of the trust are listed below. Except
as indicated, each individual has held the office shown or other offices in
the same company for the last five years. All persons named as Trustees
also serve in similar capacities for other funds advised by FMR. Unless
otherwise noted, the business address of each Trustee and officer is 82
Devonshire Street, Boston, Massachusetts 02109, which is also the address
of FMR. Those Trustees who are "interested persons" (as defined in the
Investment Company Act of 1940) by virtue of their affiliation with either
the trust or FMR are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d, Trustee and President, is Chairman, Chief Executive
Officer and a Director of FMR Corp.; a Director and Chairman of the Board
and of the Executive Committee of FMR; Chairman and a Director of FMR Texas
Inc. (1989), Fidelity Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.
*J. GARY BURKHEAD, Trustee and Senior Vice President, is President of FMR;
and President and a Director of FMR Texas Inc. (1989), Fidelity Management
& Research (U.K.) Inc., and Fidelity Management & Research (Far East) Inc.
RALPH F. COX, 200 Rivercrest Drive, Fort Worth, TX, Trustee (1991), is a
consultant to Western Mining Corporation (1994). Prior to February 1994, he
was President of Greenhill Petroleum Corporation (petroleum exploration and
production, 1990). Until March 1990, Mr. Cox was President and Chief
Operating Officer of Union Pacific Resources Company (exploration and
production). He is a Director of Sanifill Corporation (non-hazardous waste,
1993) and CH2M Hill Companies (engineering). In addition, he served on the
Board of Directors of the Norton Company (manufacturer of industrial
devices, 1983-1990) and continues to serve on the Board of Directors of the
Texas State Chamber of Commerce, and is a member of advisory boards of
Texas A&M University and the University of Texas at Austin.
PHYLLIS BURKE DAVIS, P.O. Box 264, Bridgehampton, NY, Trustee (1992). Prior
to her retirement in September 1991, Mrs. Davis was the Senior Vice
President of Corporate Affairs of Avon Products, Inc. She is currently a
Director of BellSouth Corporation (telecommunications), Eaton Corporation
(manufacturing, 1991), and the TJX Companies, Inc. (retail stores, 1990),
and previously served as a Director of Hallmark Cards, Inc. (1985-1991) and
Nabisco Brands, Inc. In addition, she is a member of the President's
Advisory Council of The University of Vermont School of Business
Administration.
RICHARD J. FLYNN, 77 Fiske Hill, Sturbridge, MA, Trustee, is a financial
consultant. Prior to September 1986, Mr. Flynn was Vice Chairman and a
Director of the Norton Company (manufacturer of industrial devices). He is
currently a Director of Mechanics Bank and a Trustee of College of the Holy
Cross and Old Sturbridge Village, Inc.
E. BRADLEY JONES, 3881-2 Lander Road, Chagrin Falls, OH, Trustee (1990).
Prior to his retirement in 1984, Mr. Jones was Chairman and Chief Executive
Officer of LTV Steel Company. Prior to May 1990, he was Director of
National City Corporation (a bank holding company) and National City Bank
of Cleveland. He is a Director of TRW Inc. (original equipment and
replacement products), Cleveland-Cliffs Inc (mining), NACCO Industries,
Inc. (mining and marketing), Consolidated Rail Corporation, Birmingham
Steel Corporation, Hyster-Yale Materials Handling, Inc. (1989), and RPM,
Inc. (manufacturer of chemical products, 1990). In addition, he serves as a
Trustee of First Union Real Estate Investments, a Trustee and member of the
Executive Committee of the Cleveland Clinic Foundation, a Trustee and
member of the Executive Committee of University School (Cleveland), and a
Trustee of Cleveland Clinic Florida.
DONALD J. KIRK, 680 Steamboat Road, Apartment #1-North, Greenwich, CT,
Trustee, is a Professor at Columbia University Graduate School of Business
and a financial consultant. Prior to 1987, he was Chairman of the Financial
Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance) and Valuation Research Corp. (appraisals and
valuations, 1993). In addition, he serves as Vice Chairman of the Board of
Directors of the National Arts Stabilization Fund and Vice Chairman of the
Board of Trustees of the Greenwich Hospital Association.
*PETER S. LYNCH, Trustee (1990) is Vice Chairman of FMR (1992). Prior to
his retirement on May 31, 1990, he was a Director of FMR (1989) and
Executive Vice President of FMR (a position he held until March 31, 1991);
Vice President of Fidelity Magellan Fund and FMR Growth Group Leader; and
Managing Director of FMR Corp. Mr. Lynch was also Vice President of
Fidelity Investments Corporate Services (1991-1992). He is a Director of
W.R. Grace & Co. (chemicals, 1989) and Morrison Knudsen Corporation
(engineering and construction). In addition, he serves as a Trustee of
Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield
(1989) and Society for the Preservation of New England Antiquities, and as
an Overseer of the Museum of Fine Arts of Boston (1990).
GERALD C. McDONOUGH, 135 Aspenwood Drive, Cleveland, OH, Trustee (1989), is
Chairman of G.M. Management Group (strategic advisory services). Prior to
his retirement in July 1988, he was Chairman and Chief Executive Officer of
Leaseway Transportation Corp. (physical distribution services). Mr.
McDonough is a Director of ACME-Cleveland Corp. (metal working,
telecommunications and electronic products), Brush-Wellman Inc. (metal
refining), York International Corp. (air conditioning and refrigeration,
1989), Commercial Intertech Corp. (water treatment equipment, 1992), and
Associated Estates Realty Corporation (a real estate investment trust,
1993).
EDWARD H. MALONE, 5601 Turtle Bay Drive #2104, Naples, FL, Trustee. Prior
to his retirement in 1985, Mr. Malone was Chairman, General Electric
Investment Corporation and a Vice President of General Electric Company. He
is a Director of Allegheny Power Systems, Inc. (electric utility), General
Re Corporation (reinsurance) and Mattel Inc. (toy manufacturer). In
addition, he serves as a Trustee of Corporate Property Investors, the
EPS Foundation at Trinity College, the Naples Philharmonic Center for the
Arts, and Rensselaer Polytechnic Institute, a nd he is a member of the
Advisory Boards of Butler Capital Corporation Funds and Warburg, Pincus
Partnership Funds.
MARVIN L. MANN, 55 Railroad Avenue, Greenwich, CT, Trustee (1993) is
Chairman of the Board, President, and Chief Executive Officer of Lexmark
International, Inc. (office machines, 1991). Prior to 1991, he held the
positions of Vice President of International Business Machines Corporation
("IBM") and President and General Manager of various IBM divisions and
subsidiaries. Mr. Mann is a Director of M.A. Hanna Company (chemicals,
1993) and Infomart (marketing services, 1991), a Trammell Crow Co. In
addition, he serves as the Campaign Vice Chairman of the Tri-State United
Way (1993) and is a member of the University of Alabama President's Cabinet
(1990).
THOMAS R. WILLIAMS, 21st Floor, 191 Peachtree Street, N.E., Atlanta, GA,
Trustee, is President of The Wales Group, Inc. (management and financial
advisory services). Prior to retiring in 1987, Mr. Williams served as
Chairman of the Board of First Wachovia Corporation (bank holding company),
and Chairman and Chief Executive Officer of The First National Bank of
Atlanta and First Atlanta Corporation (bank holding company). He is
currently a Director of BellSouth Corporation (telecommunications),
ConAgra, Inc. (agricultural products), Fisher Business Systems, Inc.
(computer software), Georgia Power Company (electric utility), Gerber Alley
& Associates, Inc. (computer software), National Life Insurance Company of
Vermont, American Software, Inc. (1989), and AppleSouth, Inc. (restaurants,
1992).
WILLIAM J. HAYES, Vice President (1994), is Vice President of Fidelity's
equity funds; Senior Vice President of FMR; and Managing Director of FMR
Corp.
ROBERT H. MORRISON, Manager of Security Transactions of Fidelity's
equity funds is Vice President of FMR.
FRED L. HENNING, JR., (money market fund only) Vice President (1994),
is Vice President of Fidelity's money market funds and Senior Vice
President of FMR Texas Inc.
ARTHUR S. LORING, Secretary, is Senior Vice President (1993) and General
Counsel of FMR, Vice President-Legal of FMR Corp., and Vice President and
Clerk of FDC.
GARY L. FRENCH, Treasurer (1991). Prior to becoming Treasurer of the
Fidelity funds, Mr. French was Senior Vice President, Fund Accounting -
Fidelity Accounting & Custody Services Co. (1991); Vice President, Fund
Accounting - Fidelity Accounting & Custody Services Co. (1990); and Senior
Vice President, Chief Financial and Operations Officer - Huntington
Advisers, Inc. (1985-1990).
THOMAS D. MAHER, (money market fund only) Assistant Vice President
(1990), is Assistant Vice President of Fidelity's money market funds and
Vice President and Associate General Counsel of FMR Texas Inc. (1990).
Prior to 1990, Mr. Maher was an employee of FMR.
JOHN H. COSTELLO, Assistant Treasurer, is an employee of FMR.
LEONARD M. RUSH, Assistant Treasurer (1994), is an employee of FMR
(1994). Prior to becoming Assistant Treasurer of the Fidelity Funds, Mr.
Rush was Chief Compliance of Officer of FMR Corp. (1993-1994); Chief
Financial Officer of Fidelity Brokerage Services, Inc. (1990-1993); and
Vice President, Assistant Controller, and Director of the Accounting
Department - First Boston Corp. (1986-1990).
The following table sets forth information describing the compensation of
each current non-interested trustee of each fund for his or her services as
trustee for the fiscal year ended February 28, 1995.
COMPENSATION TABLE
Aggregate Compensation
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Ralph F. Phyllis Richard E. Donald Gerald C. Edward Marvin Thomas
Cox Burke J. Flynn Bradley J. Kirk McDonough H. L. Mann R.
Davis Jones Malone Williams
Air Transportation $ $ $ $ $ $ $ $ $
American Gold $ $ $ $ $ $ $ $ $
Automotive $ $ $ $ $ $ $ $ $
Biotechnology $ $ $ $ $ $ $ $ $
Brokerage and $ $ $ $ $ $ $ $ $
Investment
Management
Chemicals $ $ $ $ $ $ $ $ $
Computers $ $ $ $ $ $ $ $ $
Construction and $ $ $ $ $ $ $ $ $
Housing
Consumer $ $ $ $ $ $ $ $ $
Products
Defense and $ $ $ $ $ $ $ $ $
Aerospace
Developing $ $ $ $ $ $ $ $ $
Communications
Electronics $ $ $ $ $ $ $ $ $
Energy $ $ $ $ $ $ $ $ $
Energy Service $ $ $ $ $ $ $ $ $
Environmental $ $ $ $ $ $ $ $ $
Services
Financial Services $ $ $ $ $ $ $ $ $
Food and $ $ $ $ $ $ $ $ $
Agriculture
Health Care $ $ $ $ $ $ $ $ $
Home Finance $ $ $ $ $ $ $ $ $
Industrial $ $ $ $ $ $ $ $ $
Equipment
Industrial $ $ $ $ $ $ $ $ $
Materials
Insurance $ $ $ $ $ $ $ $ $
Leisure $ $ $ $ $ $ $ $ $
Medical Delivery $ $ $ $ $ $ $ $ $
Multimedia $ $ $ $ $ $ $ $ $
Natural Gas $ $ $ $ $ $ $ $ $
Paper and Forest $ $ $ $ $ $ $ $ $
Products
Precious Metals $ $ $ $ $ $ $ $ $
and Minerals
Regional Banks $ $ $ $ $ $ $ $ $
Retailing $ $ $ $ $ $ $ $ $
Software and $ $ $ $ $ $ $ $ $
Computer
Services
Technology $ $ $ $ $ $ $ $ $
Telecommunicatio $ $ $ $ $ $ $ $ $
ns
Transportation $ $ $ $ $ $ $ $ $
Utilities Growth $ $ $ $ $ $ $ $ $
Money Market $ $ $ $ $ $ $ $ $
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Pension or Estimated Annual Total
Retirement Benefits Upon Compensation
Benefits Accrued Retirement from from the Fund
from the Fund the Fund Complex*
Complex* Complex*
Ralph F. Cox $ 5,200 $ 52,000 $ 125,000
Phyllis Burke Davis 5,200 52,000 122,000
Richard J. Flynn 0 52,000 154,500
E. Bradley Jones 5,200 49,400 123,500
Donald J. Kirk 5,200 52,000 125,000
Gerald C. McDonough 5,200 52,000 125,000
Edward H. Malone 5,200 44,200 128,000
Marvin L. Mann 5,200 52,000 125,000
Thomas R. Williams 5,200 52,000 126,500
</TABLE>
* Information is as of December 31, 1994 for the 206 funds in the complex.
Under a retirement program adopted in July 1988, the non-interested
Trustees, upon reaching age 72, become eligible to participate in a
retirement program under which they receive payments during their lifetime
from a fund based on their basic trustee fees and length of service. The
obligation of a fund to make such payments are not secured or funded.
Trustees become eligible if, at the time of retirement, they have served on
the Board for at least five years. Currently, Messrs. Ralph S. Saul,
William R. Spaulding, Bertram H. Witham, and David L. Yunich, all former
non-interested Trustees, receive retirement benefits under the program
On February 28, the Truste es and officers of th e fund owned, in the
aggregate, less than __% of the fund's total outstanding shares.
MANAGEMENT CONTRACTS
Each fund employs FMR to furnish investment advisory and other
services. Under its management contract with each fund, FMR acts as
investment adviser and, subject to the supervision of the Board of
Trustees, directs the investments of each fund in accordance with its
investment objective, policies, and limitations. FMR also provides
e ach fund with all necessary office facilities and personnel for
servicing e ach fund ' s investments, compensates all officers
of e ach fund and all Trustees who are "interested persons" of
e ach fund or FMR, and all personnel of the trust or FMR performing
services relating to research, statistical, and investment activities.
In addition, FMR or its affiliates, subject to the supervision of the Board
of Trustees, provide the management and administrative services necessary
for the operation of e ach fund. These services include providing
facilities for maintaining e ach fund ' s organization;
supervising relations with custodians, transfer and pricing agents,
accountants, underwriters, and other persons dealing with
e ach fund; preparing all general shareholder communications and
conducting shareholder relations; maintaining e ach fund ' s
records and the registration of e ach fund ' s shares
under federal and state law s ; developing management and shareholder
services for e ach fund; and furnishing reports, evaluations, and
analyses on a variety of subjects to the Board of Trustees.
In addition to the management fee payable to FMR and the fees payable to
FSC, each fund pays all of its expenses, without limitation, that are not
assumed by those parties. Each fund pay s for t he
ty pesetting, printing, and mailing of its proxy
material s to shareholders, legal expenses, and the fees of the
custodian, auditor, and non-interested Trustees. Although each fund's
management contract provides that e ach fund will pay for
typesetting, printing and mailing prospectuses, statements of additional
information, notices, and reports to shareholders, the trust , on behalf
of each fund has entered into a revised transfer agent agreement with
FSC, pursuant to which FSC bears the cost s of providing these
services to existing shareholders. Other expenses paid by e ach fund
include interest, taxes, brokerage commissions, and each fund's
proportionate share of insurance premiums and Investment Company Institute
dues . Each fund is also liable for such nonrecurring
expenses as may arise, including costs of any litigation to which
e ach fund may be a party, and any obligation it may have to
indemnify its officers and Trustees with respect to litigation.
MONEY MARKET FUND. FMR is the money market fund's manager pursuant to a
management contract dated March 1, 1994, which was approved by shareholders
on February 16, 1994.
For the services of FMR under the contract, the fund pays FMR a monthly
management fee composed of a group fee rate, an individual fund fee
rate (.03%), and an income-based component of 6% of the fund's gross
income in excess of a 5% yield . The maximum income-based component is
.24% of average net assets.
The group fee rate is based on the monthly average net assets of
the registered investment companies with which FMR has management contracts
and is calculated on a cumulative basis pursuant to the graduated fee rate
schedule shown on the left . The schedule o n the right shows
the effective annual group fee rate at var ious asset
levels ,which is the result of cumulatively applying the annualized rates
on the left. For example, the effective annual fee rate at
$_____billion of group net assets - their approximate level for February
28, 19 95 - was _____%, which is the weighted average of the
respective fee rates for each level of group net assets up to _____
billion.
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual
Assets Rate Assets Fee Rate
0 - $ 3 billion .3700% $ 0.5 billion .3700%
3 - 6 .3400 25 .2664
6 - 9 .3100 50 .2188
9 - 12 .2800 75 .1986
12 - 15 .2500 100 .1869
15 - 18 .2200 125 .1793
18 - 21 .2000 150 .1736
21 - 24 .1900 175 .1695
24 - 30 .1800 200 .1658
30 - 36 .1750 225 .1629
36 - 42 .1700 250 .1604
42 - 48 .1650 275 .1583
48 - 66 .1600 300 .1565
66 - 84 .1550 325 .1548
84 - 120 .1500 350 .1533
120 - 174 .1450 400 .1507
174 - 228 .1400
228 - 282 .1375
282 - 336 .1350
Over 336 .1325
Prior to March 1, 1994, the group fee rate was based on a schedule with
breakpoints ending at .1500% for average group assets in excess of $84
billion. The group fee rate breakpoints shown above for average group
assets in excess of $120 billion and under $228 billion were voluntarily
adopted by FMR on January 1, 1992. The additional breakpoints shown above
for average group assets in excess of $228 billion were voluntarily adopted
by FMR on November 1, 1993. The fund's current management contract reflects
these extensions of the group fee rate schedule.
On August 1, 1994, FMR voluntarily revised the prior extensions to the
group fee rate schedule, and added new breakpoints. The revised group fee
rate schedule provides for lower management fee rates as FMR's assets under
management increase. The revised group fee rate schedule is identical to
the above schedule for average group assets under $156 billion. For
average group assets in excess of $156 billion, the group fee rate schedule
voluntarily adopted by FMR is as follows:
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual
Assets Rate Assets Fee Rate
120 - $156 billion .1450% $150 billion .1736%
156 - 192 .1400 175 .1690
192 - 228 .1350 200 .1652
228 - 264 .1300 225 .1618
264 - 300 .1275 250 .1587
300 - 336 .1250 275 .1560
336 - 372 .1225 300 .1536
Over 372 .1200 325 .1514
350 .1494
375 .1476
400 .1459
The individual fund fee rate is .03%
One twelfth of the sum of the group fee rate and the individual fund fee
rate is applied to the fund's average net assets for the current month,
giving a dollar amount which is the f ee for that month.
If the fund's gross yield is 5% or less, the total management fee is the
sum of the group fee and the individual fund fee . If the fund's
monthly gross yield is greater than 5%, the management fee that FMR
receives includes an income-based component. The income-based component
of the proposed fee is added to the basic fee when the fund's yield is
greater than 5%. The income-based component equals 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% (annualized)
of average net assets, at a fund gross yield of 9% or more . Gross
income for this purpose, includes interest accrued and/or discount earned
(including both original issue discount and market discount) on portfolio
obligations, less amortization of premium. Realized and unrealized gains
and losses, if any, are not included in gross income.
The fund's management contract with FMR prior to March 1, 1994 was dated
May 1, 1987. For the services of FMR under the contract, the money market
fund paid FMR a monthly management fee computed on the basis of the fund's
gross income. To the extent that the fund's monthly gross income equalled
an annualized yield of 5% or less, FMR received 4% of that amount of the
fund's gross income. To the extent that the fund's monthly income exceeded
an annualized yield of 5%, FMR received 6% of that excess. For this
purpose, gross income includes interest accrued or discount earned
(including both original issue and market discount), less amortization of
premium. The amount of discount or premium on portfolio instruments is
fixed at the time of purchase. Realized and unrealized gains and losses,
if any, are not included in gross income.
Pursuant to the terms of the contract, limitations were imposed on the
compensation FMR could receive under the above formula. These limitations
were based on the fund's average monthly net assets as follows:
Annualized
Rate
On the first $1.5 billion .50%
On the portion in excess of $1.5 to $3.0 billion .45%
On the portion in excess of $3.0 billion to $4.5 billion .43%
On the portion in excess of $4.5 billion to $6.0 billion .41%
On the portion in excess of $6.0 billion .40%
SUB-ADVISER. With respect to the money market fund, FMR has entered into a
sub-advisory agreement with FTX, dated March 1, 1994 pursuant to which FTX
has primary responsibility for providing portfolio investment management
services to the money market fund.
The sub-advisory agreement provides that FMR will pay FTX fees equal to 50%
of the management fee payable to FMR under its management contract with the
fund. The fees paid to FTX are not reduced by any voluntary or mandatory
expense reimbursements that may be in effect from time to time. During the
year s ended February 28, 1995, 1994, and the fiscal period May 1, 1992
to February 28, 1993, FMR paid FTX fees of $__________, $304,933, and
$286,083, respectively, with respect to the money market fund.
STOCK FUNDS. FMR is each stock fund's manager pursuant to management
contracts dated March 1, 1994 and approved by shareholders on February 16,
1994. For the services of FMR under the contracts, the funds each pay FMR
a monthly management fee composed of the sum of two elements: a group fee
rate and an individual fund fee rate.
The group fee rate is based on the monthly average net assets of all of the
registered investment companies with which FMR has management contracts and
is calculated on a cumulative basis pursuant to the graduated schedule
shown on the left of the chart below. On the right, the effective annual
fee rate shows the results of cumulatively applying the annualized rates at
varying asset levels. For example, the effective annual fee rate at
$_____billion of group net assets - their approximate level for February
28, 1995 - was _____%, which is the weighted average of the respective fee
rates for each level of group net assets up to _____ billion.
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual
Assets Rate Assets Fee Rate
0 - $ 3 billion .5200% $ 0.5 billion .5200%
3 - 6 .4900 25 .4238
6 - 9 .4600 50 .3823
9 - 12 .4300 75 .3626
12 - 15 .4000 100 .3512
15 - 18 .3850 125 .3430
18 - 21 .3700 150 .3371
21 - 24 .3600 175 .3325
24 - 30 .3500 200 .3284
30 - 36 .3450 225 .3253
36 - 42 .3400 250 .3223
42 - 48 .3350 275 .3198
48 - 66 .3250 300 .3175
66 - 84 .3200 325 .3153
84 - 102 .3150 350 .3133
102 - 138 .3100
138 - 174 .3050
174 - 228 .3000
228 - 282 .2950
282 - 336 .2900
Over 336 .2850
Prior to March 1, 1994, the group fee rate was based on a schedule with
breakpoints ending at .3100% for average group assets in excess of $102
billion. The group fee rate breakpoints shown above for average group
assets in excess of $138 billion and under $228 billion were voluntarily
adopted by FMR on January 1, 1992. The additional breakpoints shown above
for average group assets in excess of $228 billion were voluntarily adopted
by FMR on November 1, 1993. The fund's current management contract reflects
these extensions of the group fee rate schedule.
On August 1, 1994, FMR voluntarily revised the prior extensions to the
group fee rate schedule, and added new breakpoints. The revised group fee
rate schedule provides for lower management fee rates as FMR's assets under
management increase. The revised group fee rate schedule is identical to
the above schedule for average group assets under $210 billion. For
average group assets in excess of $210 billion, the group fee rate schedule
voluntarily adopted by FMR is as follows:
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual
Assets Rate Assets Fee Rate
138 - $174 billion .3050% $150 billion .3371%
174 - 210 .3000 175 .3325
210 - 246 .2950 200 .3284
246 - 282 .2900 225 .3249
282 - 318 .2850 250 .3219
318 - 354 .2800 275 .3190
354 - 390 .2750 300 .3163
Over 390 .2700 325 .3137
350 .3113
375 .3090
400 .3067
The individual fund fee rate is .30%. Based on the average net assets of
funds advised by FMR for February 1995, the annual management fee rate
would be calculated as follows:
Group Fee Rate Individual Fund Fee Rate Management Fee Rate
% + .30% = %
One twelfth (1/12) of this annual management fee rate is then applied to
each fund's average net assets for the current month, giving a dollar
amount which is the fee for that month.
FEES COLLECTED BY FMR. The table on page ____ provides information
about the management fees payable to FMR under the management contracts in
effect for the last three fiscal periods. The column entitled "Gross
Management Fees" provides the dollar amount of management fees provided for
under those contracts. The column entitled "Reimbursements" lists the sum
of any fees and other expenses of the fund that FMR effectively assumed by
reimbursing the funds for those expenses, as discussed below. Expense
reimbursements represent reductions of FMR's revenues from the funds. The
column entitled "Net Fees" represents the gross management fees payable to
FMR, less the amount of fee and expense reimbursements by FMR during the
period.
FMR may, from time to time, voluntarily reimburse all or a portion of each
fund's operating expenses (exclusive of interest, taxes, brokerage
commissions, and extraordinarily expenses). FMR retains the ability to be
repaid for these expense reimbursements in the amount that expenses fall
below the limit prior to the end of the fiscal year. Expense reimbursements
by FMR will increase each fund's total returns and yield (money market
fund) and repayment of the reimbursement by each fund will lower its total
returns and yield (money market fund).
To comply with the California Code of Regulations, FMR will reimburse each
fund if and to the extent that a fund's aggregate annual operating expenses
exceed specified percentages of its average net assets. In connection with
the expense limitation regulations, each fund has received an order which
permits excluding from aggregate operating expenses a portion of its
transfer and shareholder's servicing agent fees and out-of-pocket expenses.
The applicable percentages are 2 1/2% of the first $30 million, 2% of the
next $70 million, and 1 1/2% of average net assets in excess of $100
million. When calculating each fund's expenses for purposes of this
regulation, a fund may exclude interest, taxes, brokerage commissions, and
extraordinary expenses, as well as a portion of its custodian fees
attributable to investments in foreign securities. In addition, the fund
has agreed to a condition imposed by the State of California which requires
certain funds, for purposes of the expense limitation regulations, to
include in aggregate operating expenses all expenses incurred in connection
with the acquisition, retention, and disposal of gold, including brokerage
commissions. Also, FMR voluntarily limits expenses, excluding interest,
taxes, brokerage commissions, and extraordinary expenses of each fund to 2
1/2% of average net assets.
SUB-ADVISERS.On behalf of the stock funds, FMR has entered into
sub-advisory agreements with FMR U.K., and FMR Far East. Pursuant to the
sub-advisory agreements, FMR may receive investment advice and research
services outside the United States from t he sub-advisers. FMR may also
grant the sub-advisers investment management authority as well as the
authority to buy and sell securities if FMR believes it would be beneficial
to the funds.
Currently, FMR U.K. and FMR Far East each focus on issuers in countries
other than the United States such as those in Europe, Asia, and the Pacific
Basin.
FMR U.K. and FMR Far East are wholly owned subsidiaries of FMR. Under
the sub-advisory agreements FMR pays the fees of FMR U.K. and FMR Far East.
For providing non-discretionary investment advice and research services,
FMR pays FMR U.K. and FMR Far East fees equal to 110% and 105%,
respectively, of FMR U.K.'s and FMR Far East's costs incurred in connection
with providing investment advice and research services.
For providing discretionary investment management and executing
portfolio transactions, FMR pays FMR U.K. and FMR Far East a fee equal to
50% of its monthly management fee with respect to the fund's average net
assets managed by the sub-adviser on a discretionary basis.
The table below shows the fees paid for providing investment advice and
research services by FMR to FMR U.K and FMR Far East with respect to
certain of the funds for the fiscal years ended February 28, 1995 and 1994,
and the fiscal period ended February 28, 1993.
MANAGEMENT FEES
44
Fiscal 1995 Fiscal 1994 Fiscal 1993
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross Reimbursements Gross Reimbursements Gross Reimbursements
Management by Net Management by Net Management by Net
Fees FMR Fees Fees FMR Fees Fees FMR Fees
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Air Transportation $ 111,986 $ - $ 111,986 $ 59,743 $ 14,656 $ 45,087
American Gold 1,968,132 - 1,968,132 845,121 -- 845,121
Automotive 842,489 - 842,489 567,565 -- 567,565
Biotechnology 3,444,469 - 3,444,469 3,963,575 -- 3,963,575
Brokerage and Investment
Management 434,585 - 434,585 95,887 -- 95,887
Chemicals 172,586 - 172,586 185,268 -- 185,268
Computers 260,092 - 260,092 204,894 -- 204,894
Construction and Housing 266,225 - 266,225 117,233 -- 117,233
Consumer Products 56,196 13,001 43,195 39,378 43,176 --
Defense and Aerospace 29,101 48,710 6,864 76,661 --
Developing Communications 1,112,057 - 1,112,057 273,728 -- 273,728
Electronics 340,672 - 340,672 250,377 -- 250,377
Energy 790,258 - 790,258 416,288 -- 416,288
Energy Service 588,460 - 588,460 275,342 -- 275,342
Environmental Services 354,982 - 354,982 330,763 -- 330,763
Financial Services 1,053,341 - 1,053,341 638,638 -- 638,638
Food and Agriculture 687,792 - 687,792 576,530 -- 576,530
Health Care 3,460,974 - 3,460,974 4,123,675 -- 4,123,675
Home Finance 1,403,951 - 1,403,951 740,779 -- 740,779
Industrial Equipment 368,162 - 368,162 32,577 46,631 --
Industrial Materials 217,293 - 217,293 131,822 -- 131,822
Insurance 140,010 - 140,010 66,292 3,264 63,028
Leisure 553,372 - 553,372 209,257 -- 209,257
Medical Delivery 667,707 - 667,707 664,439 -- 664,439
Money Market 609,866 - 609,866 572,165 -- 572,165
Multimedia 394,337 - 394,337 73,299 6,172 67,127
Natural Gas 243,289 - 243,289 -- -- --
Paper and Forest Products 171,761 - 171,761 92,798 -- 92,798
Precious Metals and Minerals 2,378,390 - 2,378,390 674,744 -- 674,744
Regional Banks 1,251,566 - 1,251,566 1,028,328 -- 1,028,328
Retailing 359,512 - 359,512 334,719 -- 334,719
Software and Computer Services 1,077,770 - 1,077,770 607,554 -- 607,554
Technology 1,025,784 - 1,025,784 611,003 -- 611,003
Telecommunications 2,219,724 - 2,219,724 504,083 -- 504,083
Transportation 66,064 - 66,064 23,650 62,581 --
Utilities Growth 1,945,321 - 1,945,321 1,288,773 -- 1,288,773
</TABLE>
FEES PAID BY FMR TO FOREIGN SUB-ADVISERS
FUND FEES PAID BY FMR TO FMR U.K. FEES PAID BY FMR TO FMR FAR EAST
FISCAL 1995 FISCAL 1994 FISCAL 1993 FISCAL 1995 FISCAL 1994 FISCAL 1993
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Air Transportation $ $ 537 $ 276 $ $ 901 $ 454
American Gold
Automotive 443 736 722 924
Biotechnology 870 6,825 1,205 9,072
Brokerage and Investment 4,308 51 -- 64
Management
Chemicals 624 456 1,065 579
Computers 950 255 1,564 412
Construction and Housing 74 -- 118 --
Consumer Products 76 102 126 152
Defense and Aerospace -- -- -- --
Developing Communications 5,519 374 9,352 596
Electronics 813 189 1,346 339
Energy 4,003 4,766 6,620 5,985
Energy Service 107 142 149 491
Environmental Services 1,063 185 1,722 471
Financial Services 3,965 571 6,418 680
Food and Agriculture 2,440 6,561 4,052 6,915
Health Care 8,184 9,977 14,628 16,490
Home Finance
Industrial Equipment -- -- -- --
Industrial Materials 1,003 36 1,368 69
Insurance 1,776 31 3,405 70
Leisure 1,482 843 2,493 1,227
Medical Delivery 412 37 701 132
Multimedia 1,263 75 2,180 112
Natural Gas 235 -- 286 --
Paper and Forest Products 1,060 88 1,545 108
Precious Metals and Minerals 36,622 8221 64,331 11,951
Regional Banks 57 188 79 233
Retailing -- 101 -- 113
Software and Computer Services 3,912 3,236 7,125 5,037
Technology 4,764 2,998 7,869 4,190
Telecommunications 11,670 1,018 18,896 1,487
Transportation 93 45 138 82
Utilities Growth 1,182 1,082 1,966 1,413
</TABLE>
CONTRACTS WITH COMPANIES AFFILIATED WITH FMR
FSC is transfer, dividend disbursing, and shareholders' servicing agent for
the funds. Under the trust's contract with FSC, each fund pays an annual
fee of $____ per basic retail account with a balance of $5,000 or more,
$____ per basic retail account with a balance of less than $5,000, and a
supplemental activity charge of $___ for standing order transactions and
$___ for other monetary transactions. These fees and charges are subject to
annual cost escalation based on postal rate changes and changes in wage and
price levels as measured by the National Consumer Price Index for Urban
Areas. With respect to certain institutional client master accounts, the
funds pay FSC a per-account fee of $___ and monetary transaction charges of
$___ or $___, depending on the nature of services provided. With respect to
certain broker-dealer master accounts, the funds pay FSC a per-account fee
of $___ and a charge of $___ for monetary transactions. Fees for certain
institutional retirement plan accounts are based on the net assets of all
such accounts in a fund.
Under the contract, FSC pays out-of-pocket expenses associated with
providing transfer agent services. In addition, FSC bears the expense of
typesetting, printing, and mailing prospectuses, statements of additional
information, and all other reports, notices, and statements to
shareholders, with the exception of proxy statements.
The table below shows the transfer agent fees paid to FSC during each
fund's last three fiscal periods ended February 28.
TRANSFER AGENT FEES FEES BEFORE BROKERAGE
ARRANGEMENTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FISCAL FISCAL FISCAL FISCAL
1995 1994 1993 1995
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Air Transportation $ 245,456 $ 117,931
American Gold 2,461,216 1,086,255
Automotive 1,281,117 776,705
Biotechnology 4,952,404 5,041,968
Brokerage and Investment Management 731,955 168,092
Chemicals 297,583 305,400
Computers 459,401 318,208
Construction and Housing 372,979 183,446
Consumer Products 121,453 77,241
Defense and Aerospace 70,376 17,117
Developing Communications 1,402,155 440,744
Electronics 512,984 362,155
Energy 1,229,644 588,317
Energy Service 909,981 432,758
Environmental Services 736,867 640,648
Financial Services 1,528,993 751,881
Food and Agriculture 1,022,108 809,112
Health Care 4,552,338 4,978,972
Home Finance 2,031,849 848,854
Industrial Equipment 524,752 64,231
Industrial Materials 418,805 234,240
Insurance 229,465 121,497
Leisure 667,500 337,467
Medical Delivery 1,118,945 1,142,334
Money Market 2,285,303 1,476,509
Multimedia 539,603 141,067
Natural Gas 412,248 -
Paper and Forest Products 325,084 162,052
Precious Metals and Minerals 3,153,305 1,003,502
Regional Banks 1,877,946 1,187,398
Retailing 636,558 522,518
Software and Computer Services 1,458,568 846,760
Technology 1,317,939 834,807
Telecommunications 2,806,988 762,528
Transportation 125,041 48,712
Utilities Growth 1,955,199 1,335,888
</TABLE>
The trust's contract with FSC also provides that FSC will perform the
calculations necessary to determine each fund's net asset value per share
and dividends, and maintain each fund's accounting records. The fee rates
for pricing and bookkeeping are based on each fund's average net assets,
specifically, .10% for the first $500 million of average net assets and
.05% for average net assets in excess of $500 million. The fee is limited
to a minimum of $45,000 and a maximum of $750,000 per year.
The table below shows the fees paid to FSC for pricing and bookkeeping
services, including related out-of-pocket expenses for the fiscal years
ended February 28, 1995 and 1994, and the fiscal period ended February 28,
1993.
PRICING AND BOOKKEEPING FEES
FISCAL FISCAL FISCAL
1995 1994 1993
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Air Transportation $ 45,503 $ 37,638
American Gold 316,381 135,825
Automotive 135,527 90,154
Biotechnology 537,640 541,731
Brokerage and Investment Management 74,109 37,712
Chemicals 46,188 37,786
Computers 52,178 41,740
Construction and Housing 52,429 37,822
Consumer Products 45,448 37,669
Defense and Aerospace 45,439 37,615
Developing Communications 178,709 46,374
Electronics 56,600 47,286
Energy 115,301 66,546
Energy Service 95,263 45,991
Environmental Services 57,311 52,744
Financial Services 169,723 104,535
Food and Agriculture 111,592 91,812
Health Care 543,706 553,099
Home Finance 225,185 117,281
Industrial Equipment 67,846 37,581
Industrial Materials 55,728 37,737
Insurance 45,505 37,521
Leisure 89,132 37,900
Medical Delivery 111,491 109,268
Money Market 81,066 70,831
Multimedia 72,219 37,725
Natural Gas 46,258 -
Paper and Forest Products 50,532 37,829
Precious Metals and Minerals 381,783 108,598
Regional Banks 200,635 165,687
Retailing 59,935 53,809
Software and Computer Services 180,104 99,153
Technology 164,841 97,062
Telecommunications 355,887 81,440
Transportation 45,464 37,639
Utilities Growth 312,148 204,083
</TABLE>
FSC also receives fees for administering each fund's securities lending
program. Securities lending fees are based on the number and duration of
individual securities loans. The table below shows the securities lending
fees paid to FSC during the fiscal years ended February 28, 1995 and 1994,
and the fiscal period ended February 28, 1993.
SECURITIES LENDING FEES
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FISCAL 1995 FISCAL 1994 FISCAL 1993
American Gold -- 2,777
Biotechnology 58,348 129,715
Chemicals 1,690 --
Electronics 1,141 399
Energy $ 2,387 $ 632
Energy Service 895 --
Financial Services 2,973 28,974
Food And Agriculture 5,633 --
Health Care 83,391 165,457
Industrial Materials 1,284 --
Medical Delivery 34,005 30,881
Precious Metals And Minerals 2,476 1,194
Regional Banks -- 23,970
Retailing 9,246 1,574
Software And Computer Services 47,901 13,661
Telecommunications 21,143 16,157
Utilities Growth 1,645 528
</TABLE>
The aggregate exchange fees retained by FSC during the fiscal periods ended
February 28, 1995, 1994, and 1993 amounted to $_________, $4,248,878, and
$2,069,471, respectively. Exchange fees retained by FSC or credited to the
funds are not reflected in the table on page ___. Currently, FSC is
credited with a $7.50 exchange fee for each exchange from a stock fund,
including each exchange from a stock fund to another Fidelity fund. The
funds are credited with redemption fees, the amounts of which are based on
the length of time shares are held in an equity fund prior to redemption.
Each fund has a distribution agreement with FDC, a Massachusetts
corporation organized on July 18, 1960. FDC is a broker-dealer registered
under the Securities Exchange Act of 1934 and is a member of the National
Association of Securities Dealers, Inc. The distribution agreements call
for FDC to use all reasonable efforts, consistent with its other business,
to secure purchasers for shares of each fund, which are continuously
offered. Promotional and administrative expenses in connection with the
offer and sale of shares are paid by FDC.
For the fiscal periods ended February 28, 1995, 1994, and 1993, FDC
collected, in the aggregate, $__________, $1,507,482, and $1,331,160,
respectively, of deferred sales charges from the total value of shares
redeemed by shareholders in all funds and from the Select Cash Reserves
Account. Beginning on June 15, 1983, the funds' shares were sold subject
to a 2% sales charge. On October 12, 1990, the fund's 2% sales charge was
increased to 3% and the 1% deferred sales charge was eliminated. FDC
received aggregate sales charge revenue for the fiscal periods ended
February 28, 1995, 1994, and 1993 in amounts of $__________, $47,390,126,
and $22,273,836, respectively.
DESCRIPTION OF THE TRUST
TRUST ORGANIZATION. Fidelity Select Portfolios is an open-end management
investment company organized as a Massachusetts business trust on November
20, 1980. Subsequent to the reorganization of certain funds of the trust
on October 26, 1990, Automation and Machinery Portfolio, Life Insurance
Portfolio, and Restaurant Industry Portfolio no longer exist. Also due to
the reorganization, Capital Goods Portfolio was renamed "Industrial
Technology Portfolio," and Property and Casualty Insurance Portfolio was
renamed "Insurance Portfolio." Subsequent to an additional reorganization
on February 25, 1994, Electric Utilities Portfolio no longer exists.
On August 3, 1994 Utilities Portfolio was renamed "Utilities Growth
Portfolio."
On April 30 , 1994, Broadcast and Media Portfolio was renamed
"Multimedia Portfolio."
On February 17, 1993, Savings and Loan Portfolio was renamed "Home Finance
Portfolio."
On June 29, 1992, Industrial Technology Portfolio was renamed "Industrial
Equipment Portfolio."
On June 14, 1990, Housing Portfolio was renamed "Construction and Housing
Portfolio."
On July 10, 1987, Health Care Delivery Portfolio was renamed "Medical
Delivery Portfolio."
On July 29, 1985, Leisure and Entertainment Portfolio was renamed "Leisure
Portfolio."
Currently there are thirty-six funds of the trust. The Declaration of
Trust permits the Trustees to create additional funds.
In the event that FMR ceases to be the investment adviser to the trust or a
fund, the right of the trust or fund to use the identifying name "Fidelity"
may be withdrawn. There is a remote possibility that one fund might become
liable for any misstatement in its prospectus or statement of additional
information about another fund.
The assets of the trust received for the issue or sale of shares of each
fund and all income, earnings, profits, and proceeds thereof, subject only
to the rights of creditors, are especially allocated to such fund, and
constitute the underlying assets of such fund. The underlying assets of
each fund are segregated on the books of account, and are to be charged
with the liabilities with respect to such fund and with a share of the
general expenses of the trust. Expenses with respect to the trust are to be
allocated in proportion to the asset value of the respective funds, except
where allocations of direct expense can otherwise be fairly made. The
officers of the trust, subject to the general supervision of the Board of
Trustees, have the power to determine which expenses are allocable to a
given fund, or which are general or allocable to all of the funds. In the
event of the dissolution or liquidation of the trust, shareholders of each
fund are entitled to receive as a class the underlying assets of such fund
available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. The trust is an entity of the type
commonly known as "Massachusetts business trust." Under Massachusetts law,
shareholders of such a trust may, under certain circumstances, be held
personally liable for the obligations of the trust. The Declaration of
Trust provides that the trust shall not have any claim against shareholders
except for the payment of the purchase price of shares and requires that
each agreement, obligation, or instrument entered into or executed by the
trust or the Trustees shall include a provision limiting the obligations
created thereby to the trust and its assets. The Declaration of Trust
provides for indemnification out of each fund's property of any
shareholders held personally liable for the obligations of the fund. The
Declaration of Trust also provides that each fund shall, upon request,
assume the defense of any claim made against any shareholder for any act or
obligation of the fund and satisfy any judgment thereon. Thus, the risk of
a shareholder incurring financial loss on account of shareholder liability
is limited to circumstances in which the fund itself would be unable to
meet its obligations. FMR believes that, in view of the above, the risk of
personal liability to shareholders is remote.
The Declaration of Trust further provides that the Trustees, if they have
exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protects Trustees
against any liability to which they would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of
the duties involved in the conduct of their office.
VOTING RIGHTS. Each fund's capital consists of shares of beneficial
interest. As a shareholder, you receive one vote for each dollar value of
net asset value you own. The shares have no preemptive or conversion
rights; the voting and dividend rights, the right of redemption, and the
privilege of exchange are described in the Prospectus. Shares are fully
paid and nonassessable, except as set forth under the heading "Shareholder
and Trustee Liability" above. Shareholders representing 10% or more of the
trust or a fund may, as set forth in the Declaration of Trust, call
meetings of the trust or a fund for any purpose related to the trust or
fund, as the case may be, including, in the case of a meeting of the entire
trust, the purpose of voting on removal of one or more Trustees. The trust
or any fund may be terminated upon the sale of its assets to another
open-end management investment company, or upon liquidation and
distribution of its assets, if approved by vote of the holders of a
majority of the trust or the fund, as determined by the current value of
each shareholder's investment in the fund or trust. If not so terminated,
the trust and the funds will continue indefinitely. Each fund may invest
all of its assets in another investment company.
CUSTODIAN. Brown Brothers Harriman & Co., 40 Water Street, Boston,
Massachusetts, is custodian of the assets of the stock funds. The Bank of
New York, 110 Washington Street, New York, New York is custodian of the
assets of the money market fund. The custodian is responsible for the
safekeeping of the fund's assets and the appointment of subcustodian banks
and clearing agencies. The custodian takes no part in determining the
investment policies of the funds or in deciding which securities are
purchased or sold by the funds. The funds may, however, invest in
obligations of the custodian and may purchase securities from or sell
securities to the custodian.
FMR, its officers and directors, its affiliated companies, and the trust's
Trustees may from time to time have transactions with various banks,
including banks serving as custodians for certain of the funds advised by
FMR. The Boston branch of the stock funds' custodian leases its office
space from an affiliate of FMR at a lease payment which, when entered into,
was consistent with prevailing market rates. Transactions that have
occurred to date include mortgages and personal and general business loans.
In the judgment of FMR, the terms and conditions of those transactions were
not influenced by existing or potential custodial or other fund
relationships.
AUDITOR. _____________, 160 Federal Street, Boston, Massachusetts, serves
as the trust's independent accountant. The auditor examines financial
statements for the funds and provides other audit, tax, and related
services.
FINANCIAL STATEMENTS
Each fund's financial statements and financial highlights for the fiscal
year ended February 28, 1995 are included in the fund's Annual Report,
which is a separate report supplied with this Statement of Additional
Information. Each fund's financial statements and financial highlights are
incorporated herein by reference.
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Not applicable.
(b) Exhibits.
(1)(a) Amended and Restated Declaration of Trust, dated April 14, 1994, is
incorporated herein by reference to Exhibit 1(a) to Post-Effective
Amendment No. 48.
(2) Bylaws of the Trust, as amended, are incorporated herein by reference
to Exhibit 2(a) to Fidelity Union Street Trust's (File no. 2-50318)
Post-Effective Amendment No. 87.
(3) Not applicable.
(4) Not applicable.
(5)(a) Management Contracts, dated March 1, 1994, between Registrant's Air
Transportation, American Gold, Automotive, Biotechnology, Brokerage and
Investment Management, Chemicals, Computers, Construction and Housing
(formerly Housing), Consumer Products, Defense and Aerospace, Developing
Communications, Electronics, Energy, Energy Service, Environmental
Services, Financial Services, Food and Agriculture, Health Care, Home
Finance (formerly Savings and Loan), Industrial Equipment (formerly
Industrial Technology), Industrial Materials, Insurance (formerly Property
and Casualty Insurance), Leisure, Medical Delivery, Multimedia (formerly
Broadcast and Media), Natural Gas, Paper and Forest Products, Precious
Metals and Minerals, Regional Banks, Retailing, Software and Computer
Services, Technology, Telecommunications, Transportation, Utilities Growth
(formerly Utilities), and Money Market Portfolios and Fidelity Management &
Research Company, are incorporated herein by reference to Exhibit Nos.
5(a)(1-36) to Post Effective Amendment No. 48.
(b) Sub-Advisory Agreements, dated March 1, 1994, between Fidelity
Management & Research Company and Fidelity Management & Research (U.K.)
Inc. and between Fidelity Management & Research Company and Fidelity
Management & Research (Far East) Inc., respectively, with respect to
Registrant's Air Transportation, Automotive, Biotechnology, Brokerage and
Investment Management, Chemicals, Computers, Construction and Housing
(formerly Housing), Consumer Products, Defense and Aerospace, Developing
Communications, Electronics, Energy, Energy Service, Environmental
Services, Financial Services, Food and Agriculture, Health Care, Home
Finance (formerly Savings and Loan), Industrial Equipment (formerly
Industrial Technology), Industrial Materials, Insurance (formerly Property
and Casualty Insurance), Leisure, Medical Delivery, Multimedia (formerly
Broadcast and Media), Natural Gas, Paper and Forest Products, Precious
Metals and Minerals, Regional Banks, Retailing, Software and Computer
Services, Technology, Telecommunications, Transportation, and Utilities
Growth (formerly Utilities) Portfolios, are incorporated herein by
reference to Exhibit Nos. 5(b)(1-34) to Post Effective Amendment No. 48.
(c) Sub-Advisory Agreement, dated January 1, 1990, between Fidelity
Management & Research Company and FMR Texas Inc. with respect to the Money
Market Portfolio, is incorporated herein by reference to Exhibit 5(g) to
Post-Effective Amendment No. 34.
(6)(a) General Distribution Agreements, dated April 1, 1987, between
Registrant's Air Transportation, American Gold, Automotive, Biotechnology,
Brokerage and Investment Management, Chemicals, Computers, Construction and
Housing (formerly Housing), Defense and Aerospace, Electronics, Energy,
Energy Service, Financial Services, Food and Agriculture, Health Care, Home
Finance (formerly Savings and Loan), Industrial Materials, Industrial
Equipment (formerly Industrial Technology), Insurance (formerly Property
and Casualty Insurance), Leisure, Medical Delivery, Money Market,
Multimedia (formerly Broadcast and Media), Paper and Forest Products,
Precious Metals and Minerals, Regional Banks, Retailing, Software and
Computer Services, Technology, Telecommunications, Transportation, and
Utilities Growth (formerly Utilities) Portfolios and Fidelity Distributors
Corporation, are incorporated herein by reference to Exhibit Nos. 6(a)
(1-36) to Post-Effective Amendment No. 23.
(b) Amendment to General Distribution Agreements, dated January 1,
1988, between Air Transportation, American Gold, Automotive, Biotechnology,
Brokerage and Investment Management, Chemicals, Computers, Construction and
Housing (formerly Housing), Defense and Aerospace, Electronics, Energy,
Energy Service, Financial Services, Food and Agriculture, Health Care, Home
Finance (formerly Savings and Loan), Industrial Materials, Industrial
Equipment (formerly Industrial Technology), Insurance (formerly Property
and Casualty Insurance), Leisure, Medical Delivery, Money Market,
Multimedia (formerly Broadcast and Media), Paper and Forest Products,
Precious Metals and Minerals, Regional Banks, Retailing, Software and
Computer Services, Technology, Telecommunications, Transportation, and
Utilities Portfolios and Fidelity Distributors Corporation, are
incorporated herein by reference to Exhibit 6(b) to Post-Effective
Amendment No. 25.
(c) General Distribution Agreement, dated June 29, 1989, between
Registrant's Environmental Services Portfolio and Fidelity Distributors
Corporation, is incorporated herein by reference to Exhibit 6(c) to
Post-Effective Amendment No. 34.
(d) General Distribution Agreement, dated June 14, 1990, between
Registrant's Consumer Products Portfolio and Fidelity Distributors
Corporation, is incorporated herein by reference to Exhibit 6(d) to
Post-Effective Amendment No. 36.
(e) General Distribution Agreement, dated June 14, 1990 between
Registrant's Developing Communications Portfolio and Fidelity Distributors
Corporation, is incorporated herein by reference to Exhibit 6(e) to
Post-Effective Amendment No. 36.
(f) General Distribution Agreement, dated April 15, 1993, between
Registrant's Natural Gas Portfolio and Fidelity Distributors Corporation,
is incorporated herein by reference to Exhibit 6(f) to Post-Effective
Amendment No. 46.
(g) Amendment, dated May 10, 1994, to the General Distribution
Agreement, dated April 15, 1993, between Registrant's Natural Gas Portfolio
and Fidelity Distributors Corporation, is filed herein as Exhibit 6(g).
(7) Retirement Plan for Non-Interested Person Trustees, Directors or
General Partners, is incorporated herein by reference to Exhibit 7 to
Fidelity Union Street Trust's (File No. 2-50318) Post-Effective Amendment
No. 87.
(8)(a) Custodian Contract, dated July 18, 1991, between Registrant and
Brown Brothers Harriman & Co,. on behalf of the equity Portfolios, is
incorporated herein by reference to Exhibit 8(a) to Post-Effective
Amendment No. 41.
(b) Custodian Contract, dated July 18, 1991, between Registrant and
Bank of New York, on behalf of Select Money Market Portfolio, is
incorporated herein by reference to Exhibit 8(b) to Post-Effective
Amendment No. 41.
(9) Not applicable.
(10) Not applicable.
(11) Not applicable.
(12) Not applicable.
(13) Not applicable.
(14)(a) Fidelity Defined Contribution Retirement Plan and Trust Agreement,
as currently in effect, is incorporated herein by reference to Exhibit
14(b) to Post-Effective Amendment No. 38.
(b) Fidelity Defined Benefit Pension Plan and Trust Agreement, as
currently in effect, is incorporated herein by reference to Exhibit 14(c)
to Post-Effective Amendment No. 38.
(c) Fidelity Group Individual Retirement Account Custodial Agreement
and Disclosure Statement, as currently in effect, is incorporated herein by
reference to Exhibit 14(d) to Post-Effective Amendment No. 38.
(d) Fidelity Master Plan for Savings and Investments, as currently
in effect, is incorporated herein by reference to Exhibit 14(f) to
Post-Effective Amendment No. 39.
(e) Fidelity 401(a) Prototype Plan for Tax-Exempt Employers, as
currently in effect, is incorporated herein by reference to Exhibit 14(g)
to Post-Effective Amendment No. 38.
(f) Fidelity Individual Retirement Account Custodial Agreement and
Disclosure Statement, as currently in effect, is incorporated herein by
reference to Exhibit 14(a) to Fidelity Union Street Trust's (File No.
2-50318) Post-Effective Amendment No. 87.
(g) Fidelity Institutional Individual Retirement Account Custodial
Agreement and Disclosure Statement, as currently in effect, is incorporated
herein by reference to Exhibit 14(d) to Fidelity Union Street Trust's (File
No. 2-50318) Post-Effective Amendment No. 87.
(h) Fidelity 403(b)(7) Custodial Account Agreement, as currently in
effect, is incorporated herein by reference to Exhibit 14(e) to Fidelity
Union Street Trust's (File No. 2-50318) Post-Effective Amendment No. 87.
(i) National Financial Services Corporation Individual Retirement
Account Custodial Agreement and Disclosure Statement, as currently in
effect, is incorporated herein by reference to Exhibit 14(h) to Fidelity
Union Street Trust's (File No. 2-50318) Post-Effective Amendment No. 87.
(j) Fidelity Portfolio Advisory Services Individual Retirement
Account Custodial Agreement and Disclosure Statement, as currently in
effect, is incorporated herein by reference to Exhibit 14(i) to Fidelity
Union Street Trust's (File No. 2-50318) Post-Effective Amendment No. 87.
(k) Fidelity Investments Section 403(b)(7) Individual Custodial
Account Agreement and Disclosure Statement, as currently in effect, is
incorporated herein by reference to Exhibit 14(j) to Fidelity Union Street
Trust's (File No. 2-50318) Post-Effective Amendment No. 87.
(l) National Financial Services Corporation Defined Contribution
Retirement Plan and Trust Agreement, as currently in effect, is
incorporated herein by reference to Exhibit 14(k) to Fidelity Union Street
Trust's (File No. 2-50318) Post-Effective Amendment No. 87.
(m) The CORPORATEplan for Retirement Profit Sharing/401K Plan, as
currently in effect, is incorporated herein by reference to Exhibit 14(l)
to Fidelity Union Street Trust's (File No. 2-50318) Post-Effective
Amendment No. 87.
(n) The CORPORATEplan for Retirement Money Purchase Pension Plan, as
currently in effect, is incorporated herein by reference to Exhibit 14(m)
to Fidelity Union Street Trust's (File No. 2-50318) Post-Effective
Amendment No. 87.
(15) Not applicable.
(16)(a) A schedule for computation of performance quotations for each
Portfolio then registered was filed as Exhibit 16 to Post-Effective
Amendment No. 26.
(b) A schedule for computation of performance quotations regarding
adjusted net asset value for the equity Portfolios was filed as Exhibit
16(b) to Post-Effective Amendment No. 44.
(c) Backup for the computation of a moving average (using Select
American Gold Portfolio as an example) was filed as Exhibit 16 (c) to
Post-Effective Amendment No. 45.
(17) Not applicable.
Item 25. Persons Controlled by or under Common Control with Registrant
The Board of Trustees of Registrant is the same as the Board of Trustees
of other funds advised by FMR, each of which has Fidelity Management &
Research Company as its investment adviser. In addition, the officers of
these funds are substantially identical. Nonetheless, Registrant takes the
position that it is not under common control with these other funds since
the power residing in the respective boards and officers arises as the
result of an official position with the respective funds.
Item 26. Number of Holders of Securities December 31, 1994
Title of Class: Shares of Beneficial Interest
Title of Class Number of Record Holders
Air Transportation Portfolio 3,076
American Gold Portfolio 49,246
Automotive Portfolio 28,472
Biotechnology Portfolio 82,914
Brokerage and Investment Management Portfolio 12,249
Chemicals Portfolio 26,079
Computers Portfolio 25,764
Construction and Housing Portfolio 9,015
Consumer Products Portfolio 2,065
Defense and Aerospace Portfolio 2,086
Developing Communications Portfolio 42,164
Electronics Portfolio 31,033
Energy Portfolio 27,002
Energy Service Portfolio 14,426
Environmental Services Portfolio 13,967
Financial Services Portfolio 20,388
Food and Agriculture Portfolio 20,883
Health Care Portfolio 92,514
Home Finance Portfolio 35,549
Industrial Equipment Portfolio 28,493
Industrial Materials Portfolio 31,093
Insurance Portfolio 2,215
Leisure Portfolio 13,855
Medical Delivery Portfolio 35,226
Money Market Portfolio 48,235
Multimedia Portfolio 8,749
Natural Gas Portfolio 16,058
Paper and Forest Products Portfolio 15,865
Precious Metals and Minerals Portfolio 70,876
Regional Banks Portfolio 27,809
Retailing Portfolio 17,205
Software and Computer Services Portfolio 31,316
Technology Portfolio 37,472
Telecommunications Portfolio 67,480
Transportation Portfolio 3,152
Utilities Growth Portfolio 32,910
Item 27. Indemnification
Article XI, Section 2 of the Declaration of Trust sets forth the
reasonable and fair means for determining whether indemnification shall be
provided to any past or present Trustee or officer. It states that the
Registrant shall indemnify any present or past Trustee or officer to the
fullest extent permitted by law against liability and all expenses
reasonably incurred by him in connection with any claim, action, suit or
proceeding in which he is involved by virtue of his service as a trustee,
an officer, or both. Additionally, amounts paid or incurred in settlement
of such matters are covered by this indemnification. Indemnification will
not be provided in certain circumstances, however. These include instances
of willful misfeasance, bad faith, gross negligence, and reckless disregard
of the duties involved in the conduct of the particular office involved.
Item 28. Business and Other Connections of Investment Adviser
(1) FIDELITY MANAGEMENT & RESEARCH COMPANY
FMR serves as investment adviser to a number of other investment
companies. The directors and officers of the Adviser have held, during the
past two fiscal years, the following positions of a substantial nature.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman of the Executive Committee of FMR; President
and Chief Executive Officer of FMR Corp.; Chairman of
the Board and a Director of FMR, FMR Corp., FMR Texas
Inc., Fidelity Management & Research (U.K.) Inc., and
Fidelity Management & Research (Far East) Inc.; President
and Trustee of funds advised by FMR.
J. Gary Burkhead President of FMR; Managing Director of FMR Corp.;
President and a Director of FMR Texas Inc., Fidelity
Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.; Senior Vice
President and Trustee of funds advised by FMR.
Peter S. Lynch Vice Chairman and Director of FMR (1992).
Robert Beckwitt Vice President of FMR and of funds advised by FMR.
David Breazzano Vice President of FMR (1993) and of a fund advised by
FMR.
Stephan Campbell Vice President of FMR (1993).
Dwight Churchill Vice President of FMR (1993).
Rufus C. Cushman, Jr. Vice President of FMR and of funds advised by FMR;
Corporate Preferred Group Leader.
Will Danoff Vice President of FMR (1993) and of a fund advised by
FMR.
Scott DeSano Vice President of FMR (1993).
Penelope Dobkin Vice President of FMR and of a fund advised by FMR.
Larry Domash Vice President of FMR (1993).
George Domolky Vice President of FMR (1993) and of a fund advised by
FMR.
Robert K. Duby Vice President of FMR.
Margaret L. Eagle Vice President of FMR and of a fund advised by FMR.
Kathryn L. Eklund Vice President of FMR.
Richard B. Fentin Senior Vice President of FMR (1993) and of a fund advised
by FMR.
Daniel R. Frank Vice President of FMR and of funds advised by FMR.
Gary L. French Vice President of FMR and Treasurer of the funds advised
by FMR.
Michael S. Gray Vice President of FMR and of funds advised by FMR.
Lawrence Greenberg Vice President of FMR (1993).
Barry A. Greenfield Vice President of FMR and of a fund advised by FMR.
William J. Hayes Senior Vice President of FMR; Equity Division Leader.
Robert Haber Vice President of FMR and of funds advised by FMR.
Richard Haberman Senior Vice President of FMR (1993).
Daniel Harmetz Vice President of FMR and of a fund advised by FMR.
Ellen S. Heller Vice President of FMR.
</TABLE>
John Hickling Vice President of FMR (1993) and of funds advised by
FMR.
<TABLE>
<CAPTION>
<S> <C>
Robert F. Hill Vice President of FMR; and Director of Technical
Research.
Stephen Jonas Treasurer and Vice President of FMR (1993); Treasurer of
FMR Texas Inc. (1993), Fidelity Management & Research
(U.K.) Inc. (1993), and Fidelity Management & Research
(Far East) Inc. (1993).
David B. Jones Vice President of FMR (1993).
Steven Kaye Vice President of FMR (1993) and of a fund advised by
FMR.
Frank Knox Vice President of FMR (1993).
Robert A. Lawrence Senior Vice President of FMR (1993); and High Income
Division Leader.
Alan Leifer Vice President of FMR and of a fund advised by FMR.
Harris Leviton Vice President of FMR (1993) and of a fund advised by
FMR.
Bradford E. Lewis Vice President of FMR and of funds advised by FMR.
Malcolm W. McNaught III Vice President of FMR (1993).
Robert H. Morrison Vice President of FMR and Director of Equity Trading.
David Murphy Vice President of FMR and of funds advised by FMR.
Andrew Offit Vice President of FMR (1993).
Judy Pagliuca Vice President of FMR (1993).
Jacques Perold Vice President of FMR.
Anne Punzak Vice President of FMR and of funds advised by FMR.
Lee Sandwen Vice President of FMR (1993).
Patricia A. Satterthwaite Vice President of FMR (1993) and of a fund advised by
FMR.
Thomas T. Soviero Vice President of FMR (1993).
Richard A. Spillane Vice President of FMR and of funds advised by FMR; and
Director of Equity Research.
Robert E. Stansky Senior Vice President of FMR (1993) and of funds advised
by FMR.
Gary L. Swayze Vice President of FMR and of funds advised by FMR; and
Tax-Free Fixed-Income Group Leader.
Thomas Sweeney Vice President of FMR (1993).
Donald Taylor Vice President of FMR (1993) and of funds advised by
FMR.
Beth F. Terrana Senior Vice President of FMR (1993) and of funds advised
by FMR.
Joel Tillinghast Vice President of FMR (1993) and of a fund advised by
FMR.
Robert Tucket Vice President of FMR (1993).
George A. Vanderheiden Senior Vice President of FMR; Vice President of funds
advised by FMR; and Growth Group Leader.
Jeffrey Vinik Senior Vice President of FMR (1993) and of a fund advised
by FMR.
Guy E. Wickwire Vice President of FMR and of a fund advised by FMR.
Arthur S. Loring Senior Vice President (1993), Clerk and General Counsel of
FMR; Vice President, Legal of FMR Corp.; and Secretary
of funds advised by FMR.
</TABLE>
(2) FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. (FMR U.K.)
FMR U.K. provides investment advisory services to Fidelity Management &
Research Company and Fidelity Management Trust Company. The directors and
officers of the Sub-Adviser have held the following positions of a
substantial nature during the past two fiscal years.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman and Director of FMR U.K.; Chairman of the
Executive Committee of FMR; Chief Executive Officer of FMR
Corp.; Chairman of the Board and a Director of FMR, FMR
Corp., FMR Texas Inc., and Fidelity Management & Research
(Far East) Inc.; President and Trustee of funds advised by FMR.
J. Gary Burkhead President and Director of FMR U.K.; President of FMR;
Managing Director of FMR Corp.; President and a Director of
FMR Texas Inc. and Fidelity Management & Research (Far
East) Inc.; Senior Vice President and Trustee of funds advised
by FMR.
Richard C. Habermann Senior Vice President of FMR U.K.; Senior Vice President of
Fidelity Management & Research (Far East) Inc.; Director of
Worldwide Research of FMR.
Rick Spillane Senior Vice President and Director of Operations and
Compliance of FMR U.K. (1993).
Stephen Jonas Treasurer of FMR U.K. (1993), Fidelity Management &
Research (Far East) Inc. (1993), and FMR Texas Inc. (1993);
Treasurer and Vice President of FMR (1993).
David Weinstein Clerk of FMR U.K.; Clerk of Fidelity Management & Research
(Far East) Inc.; Secretary of FMR Texas Inc.
</TABLE>
(3) FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. (FMR Far East)
FMR Far East provides investment advisory services to Fidelity Management
& Research Company and Fidelity Management Trust Company. The directors
and officers of the Sub-Adviser have held the following positions of a
substantial nature during the past two fiscal years.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman and Director of FMR Far East; Chairman of the
Executive Committee of FMR; Chief Executive Officer of
FMR Corp.; Chairman of the Board and a Director of
FMR, FMR Corp., FMR Texas Inc. and Fidelity
Management & Research (U.K.) Inc.; President and
Trustee of funds advised by FMR.
J. Gary Burkhead President and Director of FMR Far East; President of
FMR; Managing Director of FMR Corp.; President and a
Director of FMR Texas Inc. and Fidelity Management &
Research (U.K.) Inc.; Senior Vice President and Trustee
of funds advised by FMR.
Richard C. Habermann Senior Vice President of FMR Far East; Senior Vice
President of Fidelity Management & Research (U.K.)
Inc.; Director of Worldwide Research of FMR.
William R. Ebsworth Vice President of FMR Far East.
Bill Wilder Vice President of FMR Far East (1993).
Stephen Jonas Treasurer of FMR Far East (1993), Fidelity Management
& Research (U.K.) Inc. (1993), and FMR Texas Inc.
(1993); Treasurer and Vice President of FMR (1993).
David C. Weinstein Clerk of FMR Far East; Clerk of Fidelity Management &
Research (U.K.) Inc.; Secretary of FMR Texas Inc.
</TABLE>
(4) FMR TEXAS INC. (FMR Texas)
FMR Texas provides investment advisory services to Fidelity Management &
Research Company. The directors and officers of the Sub-Adviser have held
the following positions of a substantial nature during the past two fiscal
years.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman and Director of FMR Texas; Chairman of the
Executive Committee of FMR; President and Chief
Exective Officer of FMR Corp.; Chairman of the Board
and a Director of FMR, FMR Corp., Fidelity
Management & Research (Far East) Inc. and Fidelity
Management & Research (U.K.) Inc.; President and
Trustee of funds advised by FMR.
J. Gary Burkhead President and Director of FMR Texas; President of FMR;
Managing Director of FMR Corp.; President and a
Director of Fidelity Management & Research (Far East)
Inc. and Fidelity Management & Research (U.K.) Inc.;
Senior Vice President and Trustee of funds advised by
FMR.
Fred L. Henning, Jr. Senior Vice President of FMR Texas; Money Market
Division Leader.
Robert Auld Vice President of FMR Texas (1993).
Leland Barron Vice President of FMR Texas and of funds advised by
FMR.
Robert Litterst Vice President of FMR Texas and of funds advised by
FMR (1993).
Thomas D. Maher Vice President of FMR Texas and Assistant Vice
President of funds advised by FMR.
Burnell R. Stehman Vice President of FMR Texas and of funds advised by
FMR.
John J. Todd Vice President of FMR Texas and of funds advised by
FMR.
Sarah H. Zenoble Vice President of FMR Texas and of funds advised by
FMR.
Stephen Jonas Treasurer of FMR Texas Inc. (1993), Fidelity Manage-
ment & Research (U.K.) Inc. (1993), and Fidelity Man-
agement & Research (Far East) Inc. (1993); Treasurer
and Vice President of FMR (1993).
David C. Weinstein Secretary of FMR Texas; Clerk of Fidelity Management
& Research (U.K.) Inc.; Clerk of Fidelity Management &
Research (Far East) Inc.
</TABLE>
Item 29. Principal Underwriters
(a) Fidelity Distributors Corporation (FDC) acts as distributor for most
funds advised by FMR and the following other funds:
CrestFunds, Inc.
ARK Funds
(b)
Name and Principal Positions and Offices Positions and Offices
Business Address* With Underwriter With Registrant
Edward C. Johnson 3d Director Trustee and President
Nita B. Kincaid Director None
W. Humphrey Bogart Director None
Kurt A. Lange President and Treasurer None
William L. Adair Senior Vice President None
Thomas W. Littauer Senior Vice President None
Arthur S. Loring Vice President and Clerk Secretary
* 82 Devonshire Street, Boston, MA
(c) Not applicable.
Item 30. Location of Accounts and Records
All accounts, books, and other documents required to be maintained by
Section 31a of the 1940 Act and the Rules promulgated thereunder are
maintained by Fidelity Management & Research Company or Fidelity Service
Co., 82 Devonshire Street, Boston, MA 02109, or the funds' respective
custodian The Bank of New York, 110 Washington Street, New York, N.Y. and
Brown Brothers Harriman & Co., 40 Water Street, Boston, MA.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a)The Registrant undertakes for Natural Gas Portfolio: 1) to call a
meeting of shareholders for the purpose of voting upon the question of
removal of a trustee or trustees, when requested to do so by record holders
of not less than 10% of its outstanding shares; and 2) to assist in
communications with other shareholders pursuant to Section 16(c)(1) and
(2), whenever shareholders meeting the qualifications set forth in Section
16(c) seek the opportunity to communicate with other shareholders with a
view toward requesting a meeting.
(b)The Registrant on behalf of Fidelity Select Portfolios undertakes,
provided the information required for the stock funds by Item 5A is
contained in the annual report, to furnish each person to whom a prospectus
has been delivered, upon their request and without charge, a copy of the
Registrants latest annual report to shareholders.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment No. 50 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Boston, and Commonwealth of Massachusetts, on the 9th day of February 1995.
FIDELITY SELECT PORTFOLIOS
By /s/Edward C. Johnson 3d (dagger)
Edward C. Johnson 3d, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
(Signature) (Title) (Date)
<TABLE>
<CAPTION>
<S> <C> <C>
/s/Edward C. Johnson 3d(dagger) President and Trustee February 9, 1995
Edward C. Johnson 3d (Principal Executive Officer)
</TABLE>
/s/Gary L. French Treasurer February 9, 1995
Gary L. French
/s/J. Gary Burkhead Trustee February 9, 1995
J. Gary Burkhead
/s/Ralph F. Cox * Trustee February 9, 1995
Ralph F. Cox
/s/Phyllis Burke Davis * Trustee February 9, 1995
Phyllis Burke Davis
/s/Richard J. Flynn * Trustee February 9, 1995
Richard J. Flynn
/s/E. Bradley Jones * Trustee February 9, 1995
E. Bradley Jones
/s/Donald J. Kirk * Trustee February 9, 1995
Donald J. Kirk
/s/Peter S. Lynch * Trustee February 9, 1995
Peter S. Lynch
/s/Edward H. Malone * Trustee February 9, 1995
Edward H. Malone
/s/Gerald C. McDonough* Trustee February 9, 1995
Gerald C. McDonough
/s/Thomas R. Williams * Trustee February 9, 1995
Thomas R. Williams
/s/Marvin L. Mann * Trustee February 9, 1995
Marvin L. Mann
(dagger) Signatures affixed by J. Gary Burkhead pursuant to a power of
attorney dated December 15, 1994 and filed herewith.
* Signature affixed by Robert C. Hacker pursuant to a power of attorney
dated December 15, 1994 and filed herewith.
POWER OF ATTORNEY
We, the undersigned Directors, Trustees or General Partners, as the case
may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Annuity Fund Fidelity Income Fund
Fidelity Advisor Series I Fidelity Institutional Trust
Fidelity Advisor Series II Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Magellan Fund
Fidelity Advisor Series IV Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series V Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VI Fidelity Municipal Trust
Fidelity Advisor Series VII Fidelity New York Municipal Trust
Fidelity Advisor Series VIII Fidelity Puritan Trust
Fidelity California Municipal Trust Fidelity School Street Trust
Fidelity Capital Trust Fidelity Securities Fund
Fidelity Charles Street Trust Fidelity Select Portfolios
Fidelity Commonwealth Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Congress Street Fund Fidelity Summer Street Trust
Fidelity Contrafund Fidelity Trend Fund
Fidelity Corporate Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Court Street Trust Fidelity U.S. Investments-Government Securities
Fidelity Deutsche Mark Performance Fund, L.P.
Portfolio, L.P. Fidelity Union Street Trust
Fidelity Devonshire Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Exchange Fund Spartan U.S. Treasury Money Market
Fidelity Financial Trust Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Fidelity Government Securities Fund Variable Insurance Products Fund II
Fidelity Hastings Street Trust
</TABLE>
plus any other investment company for which Fidelity Management & Research
Company acts as investment adviser and for which the undersigned
individuals serve as Board Members (collectively, the "Funds"), hereby
severally constitute and appoint Arthur J. Brown, Arthur C. Delibert,
Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A.
Djinis, each of them singly, our true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to sign
for us and in our names in the appropriate capacities, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
our names and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS our hands on this fifteenth day of December, 1994.
/s/Edward C. Johnson 3d /s/Donald J. Kirk
Edward C. Johnson 3d Donald J. Kirk
/s/J. Gary Burkhead /s/Peter S. Lynch
J. Gary Burkhead Peter S. Lynch
/s/Ralph F. Cox /s/Marvin L. Mann
Ralph F. Cox Marvin L. Mann
/s/Phyllis Burke Davis /s/Edward H. Malone
Phyllis Burke Davis Edward H. Malone
/s/Richard J. Flynn /s/Gerald C. McDonough
Richard J. Flynn Gerald C. McDonough
/s/E. Bradley Jones /s/Thomas R. Williams
E. Bradley Jones Thomas R. Williams
POWER OF ATTORNEY
I, the undersigned President and Director, Trustee or General Partner, as
the case may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Annuity Fund Fidelity Institutional Trust
Fidelity Advisor Series I Fidelity Investment Trust
Fidelity Advisor Series II Fidelity Magellan Fund
Fidelity Advisor Series III Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series IV Fidelity Money Market Trust
Fidelity Advisor Series V Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VI Fidelity Municipal Trust
Fidelity Advisor Series VII Fidelity New York Municipal Trust
Fidelity Advisor Series VIII Fidelity Puritan Trust
Fidelity California Municipal Trust Fidelity School Street Trust
Fidelity Capital Trust Fidelity Securities Fund
Fidelity Charles Street Trust Fidelity Select Portfolios
Fidelity Commonwealth Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Congress Street Fund Fidelity Summer Street Trust
Fidelity Contrafund Fidelity Trend Fund
Fidelity Corporate Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Court Street Trust Fidelity U.S. Investments-Government Securities
Fidelity Destiny Portfolios Fund, L.P.
Fidelity Deutsche Mark Performance Fidelity Union Street Trust
Portfolio, L.P. Fidelity Yen Performance Portfolio, L.P.
Fidelity Devonshire Trust Spartan U.S. Treasury Money Market
Fidelity Exchange Fund Fund
Fidelity Financial Trust Variable Insurance Products Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund II
Fidelity Government Securities Fund
Fidelity Hastings Street Trust
Fidelity Income Fund
</TABLE>
plus any other investment company for which Fidelity Management & Research
Company acts as investment adviser and for which the undersigned individual
serves as President and Board Member (collectively, the "Funds"), hereby
severally constitute and appoint J. Gary Burkhead, my true and lawful
attorney-in-fact, with full power of substitution, and with full power to
sign for me and in my name in the appropriate capacity, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
my name and behalf in connection therewith as said attorney-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission. I hereby ratify
and confirm all that said attorneys-in-fact or their substitutes may do or
cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Edward C. Johnson 3d December 15, 1994
Edward C. Johnson 3d
EXHIBIT 6(G)
AMENDMENT TO GENERAL DISTRIBUTION AGREEMENT
Effective May 10, 1994, Paragraph 8 of the General Distribution Agreement
between each of the funds or portfolios indicated on the attached Schedule
A shall be amended to read in full as follows:
8. Portfolio Securities - Portfolio securities of the issuer may be bought
or sold by or through the Distributor, and the Distributor may participate
directly or indirectly in brokerage commissions or "spreads" for
transactions in portfolio securities of the Issuer.
Signed on behalf of each of the funds or portfolios identified on Schedule
A.
On Behalf of Each of the Funds or Portfolios:
Attest:/s/ Arthur S. Loring_____________ By:/s/ J. Gary
Burkhead___________________
Arthur S. Loring J. Gary Burkhead
Secretary
FIDELITY
DISTRIBUTORS CORPORATION:
Attest:/s/ Arthur S. Loring_____________ By:/s/ Kurt A.
Lang___________________
Arthur S. Loring Kurt A. Lang
AMENDMENT TO GENERAL DISTRIBUTION AGREEMENT
Schedule A
Fidelity Deutsche Mark Performance Portfolio, L.P.
Fidelity Dividend Growth Fund
Fidelity Diversified International Fund
Fidelity Emerging Markets Fund
Fidelity Connecticut Municipal Money Market Portfolio
Fidelity Fifty
Fidelity Government Securities Fund
Fidelity Select Natural Gas Portfolio
Fidelity New Markets Income Fund
Fidelity New Millennium Fund
Fidelity Short-Intermediate Government Fund
Fidelity Short-Term World Income Fund
Fidelity Small Cap Stock Fund
Spartan Aggressive Municipal Fund
Spartan Connecticut Municipal High Yield Portfolio
Spartan Ginnie Mae Fund
Spartan High Income Fund
Spartan Intermediate Municipal Fund
Spartan Investment Grade Bond Fund
Spartan Massachusetts Money Market Fund
Spartan Short-Term Income Fund
Fidelity Sterling Performance Portfolio, L.P.
Fidelity Worldwide Fund
Fidelity Yen Performance Portfolio, L.P.
