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. 55 [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: 617-563-7000
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)
( ) on ( ) pursuant to paragraph (a)(i)
( ) 75 days after filing pursuant to paragraph (a)(ii)
(x) on October 28, 1996 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 filed the Notice required by such Rule
on April 26, 1996.
FIDELITY SELECT PORTFOLIOS
CYCLICAL INDUSTRIES PORTFOLIO
NATURAL RESOURCES PORTFOLIO
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER PROSPECTUS SECTION
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1 .............................. Cover Page
2 a .............................. Expenses
b, c .............................. Contents; The Funds at a Glance; Who May Want
to Invest
3 a, b .............................. *
c, 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 .............................. *
8 .............................. How to Sell Shares; Investor Services; Transaction
Details; Exchange Restrictions
9 .............................. *
</TABLE>
* Not Applicable
FIDELITY SELECT PORTFOLIOS
CYCLICAL INDUSTRIES PORTFOLIO
NATURAL RESOURCES PORTFOLIO
CROSS REFERENCE SHEET
(CONTINUED)
FORM N-1A
ITEM NUMBER STATEMENT OF ADDITIONAL INFORMATION SECTION
<TABLE>
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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 FMR Affiliates
e - g ............................ *
h ............................ Description of the Trust
i ............................ Contracts with FMR Affiliates
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 FMR Affiliates
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.
Only Cyclical Industries and Natural Resources shares are offered through
this Prospectus. The other 35 Select stock funds and the money market fund
are offered through the Fidelity Select Portfolios Prospectus dated April
29, 1996, which is a part hereof. Throughout this Prospectus, the Fidelity
Select Portfolios Prospectus dated April 29, 1996, is referred to as the
"Select Prospectus."
To learn more about each fund and its investments, you can obtain a copy of
the Statement of Additional Information (SAI) dated October 28, 1996. The
SAI has been filed with the Securities and Exchange Commission (SEC) and is
available along with other related materials on the SEC's Internet Web site
(http://www.sec.gov). The SAI is incorporated herein by reference (legally
forms a part of the prospectus). For a free copy, call Fidelity at
1-800-544-8888.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, FEDERAL
RESERVE BOARD, OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
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-96-
Each 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.
FIDELITY
SELECT
PORTFOLIOS(REGISTERED TRADEMARK)
CYCLICAL INDUSTRIES PORTFOLIO
NATURAL RESOURCES PORTFOLIO
PROSPECTUS
OCTOBER 28, 1996(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.
4 FINANCIAL HIGHLIGHTS A summary of each fund's
financial data.
4 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
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KEY FACTS
THE FUNDS AT A GLANCE
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 may help
choose investments for the funds.
CYCLICAL INDUSTRIES
GROWTH
STRATEGY: Invests mainly in equity securities of companies engaged in the
research, development, manufacture, distribution, supply, or sale of
materials, equipment, products or services related to cyclical industries.
NATURAL RESOURCES
GROWTH
STRATEGY: Invests mainly in equity securities of companies that own or
develop natural resources, or supply goods and services to such companies.
WHO MAY WANT TO INVEST
Refer to the "Who May Want to Invest" section on page P-6 of the Select
Prospectus for a general discussion of the types of investors for whom each
of these stock funds is designed.
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy, sell, or
hold shares of a fund. See pages P-50 to P-57 of the Select Prospectus 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 distributions None
Deferred sales charge on redemptions None
Maximum redemption fees
on shares held 29 days or less (as a % of redemption amount) 0.75%
on shares held 30 days or more $7.50
Exchange fee $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 expenses are factored into its
share price or dividends and are not charged directly to shareholder
accounts (see page 6).
The following are projections based on estimated expenses, and are
calculated as a percentage of average net assets.
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, here's how much you would pay in total expenses after
the number of years indicated, first assuming that you leave your account
open, and then assuming that you close your account at the end of the
period.
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 Accoun Accoun
t open t
closed
CYCLICAL INDUSTRIES Management fee % After 1 $ $
year
12b-1 fee None After 3 $ $
years
Other expenses %
Total fund operating %
expenses
NATURAL RESOURCES Management fee % After 1 $ $
year
12b-1 fee None After 3 $ $
years
Other expenses %
Total fund operating %
expenses
FINANCIAL HIGHLIGHTS.
Financial information is not available for these funds because they were
new when this Prospectus was printed.
PERFORMANCE
Each fund's fiscal year runs from March 1 through February 28. Because
Cyclical Industries and Natural Resources were new funds when this
Prospectus was printed, performance information is not available at this
time.
Refer to the "Performance" section beginning on page P-30 of the Select
Prospectus for a discussion of the terms used in presenting performance
information.
THE FUNDS IN DETAIL
CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders' money
and invests it toward a specified goal. In technical terms, each fund is a
non-diversified fund of Fidelity Select Portfolios, an open-end management
investment company. The trust was organized as a Massachusetts business
trust on November 20, 1980.
The funds are managed by FMR, which handles their business affairs and
chooses their investments. Fidelity Management & Research (U.K.) Inc. (FMR
U.K.), in London, England, and Fidelity Management & Research (Far East)
Inc. (FMR Far East), in Tokyo, Japan, assist FMR with foreign investments
for the funds.
FUND MANAGER BIOS TO BE FILED BY SUBSEQUENT AMENDMENT.
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 ultimate parent company of FMR, FMR U.K., and FMR Far
East. Members of the Edward C. Johnson 3d family are the predominant owners
of a class of shares of common stock representing approximately 49% of the
voting power of FMR Corp. Under the Investment Company Act of 1940 (the
1940 Act), control of a company is presumed where one individual or group
of individuals owns more than 25% of the voting stock of that company;
therefore, the Johnson family may be deemed under the 1940 Act to form a
controlling group with respect to FMR Corp.
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.
Refer to the "Charter" section beginning on page P-34 of the Select
Prospectus for more information about how each fund is organized.
INVESTMENT PRINCIPLES AND RISKS
EACH FUND'S INVESTMENT APPROACH
Each fund seeks capital appreciation by concentrating its investments in
the securities of companies in a particular industry. Under normal
conditions, each fund will invest at least 80% of its assets in securities
of companies principally engaged in the business activities of its named
industry. For this purpose, Natural Resources treats investments in
precious metals, and instruments whose value is linked to the price of
precious metals, as investments in its named industry. The funds will
invest primarily in equity securities, although they may invest in other
types of instruments as well.
An issuer is considered to be 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.
The funds may involve significantly greater risks and therefore may
experience greater volatility than a diversified mutual fund. Because of
their narrow industry focus, each fund's performance is closely tied to and
affected by, its industry. Companies in an industry are often faced with
the same obstacles, issues, or regulatory burdens, and their securities may
react similarly to and move in unison with these or other market
conditions. Also because the funds are non-diversified, they are further
exposed to increased volatility. 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.
Finally, the funds' strategies in seeking to achieve their investment
objectives may lead to investments in smaller companies. Securities of
smaller companies, especially those whose business involves emerging
products or concepts, may be more volatile due to their limited product
lines, markets, or financial resources; or their susceptibility to major
setbacks or downturns.
The value of the funds' domestic and foreign investments varies in response
to many factors. Stock values fluctuate in response to the activities of
individual companies, and general market and economic conditions.
Investments in foreign securities may involve risks in addition to those of
U.S. investments, including increased political and economic risk, as well
as exposure to currency fluctuations.
FMR may use various investment techniques to hedge a portion of the funds'
risks, but there is no guarantee that these strategies will work as FMR
intends. Of course, when you sell your shares of a 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
fund may temporarily invest substantially in investment-grade debt
securities.
Refer to the "Investment Principles and Risks" section on page P-36 of the
Select Prospectus for more information about the investment principles and
risks associated with an investment in each fund.
CYCLICAL INDUSTRIES PORTFOLIO invests primarily in companies engaged in the
research, development, manufacture, distribution, supply, or sale of
materials, equipment, products or services related to cyclical industries.
These may include the automotive, chemical, construction and housing,
defense and aerospace, environmental services, industrial equipment and
materials, paper and forest products, and transportation industries.
Many companies in these industries are significantly affected by general
economic trends including employment, economic growth, and interest rates.
Other factors that may affect these industries are changes in consumer
sentiment and spending, commodity prices, legislation, government
regulation and spending, import controls, and worldwide competition. At
times, worldwide production of these materials used in cyclical industries
has exceeded demand as a result of, for example, over-building or economic
downturns. During these times, commodity price declines and unit volume
reductions resulted in poor investment returns and losses. Furthermore, a
company in the cyclical industries may be subject to liability for
environmental damage, depletion of resources, and mandated expenditures for
safety and pollution control.
NATURAL RESOURCES PORTFOLIO invests primarily in companies that own or
develop natural resources, or supply goods and services to such companies.
These may include companies involved either directly or through
subsidiaries in exploring, mining, refining, processing, transporting,
fabricating, dealing in, or owning natural resources. Natural resources
include precious metals (e.g., gold, platinum, and silver), ferrous and
nonferrous metals (e.g., iron, aluminum, and copper), strategic metals
(e.g., uranium and titanium), hydrocarbons (e.g., coal, oil, and natural
gases), chemicals, forest products, real estate, food products, and other
basic commodities. The fund may also invest in precious metals and
instruments whose value is linked to precious metals.
SECURITIES AND INVESTMENT PRACTICES
In addition to the information below, pages P-42 through P-45 of the Select
Prospectus contain more detailed information about types of instruments in
which a fund may invest, strategies FMR may employ in pursuit of a fund's
investment objective, and a summary of related risks. Any restrictions
listed supplement those discussed earlier in this Prospectus. A complete
listing of each fund's limitations and more detailed information about the
funds' investments are 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
unless it believes that they are consistent with a fund's investment
objective and policies and that doing so will help a fund achieve its goal.
For a free SAI, 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: Each fund 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.
RESTRICTIONS: Purchase of a debt security is consistent with a fund's debt
quality policy if it is rated at or above the stated level by Moody's or
rated in the equivalent categories by S&P, or is unrated but judged to be
of equivalent quality by FMR. Each fund currently intends to limit its
investments in lower than Baa-quality debt securities to 5% of its assets.
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 some illiquid securities and some other 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.
CASH MANAGEMENT. Each fund may invest in money market securities, in a
pooled account of repurchase agreements, and in a money market fund,
available only to FMR-managed funds and accounts, whose goal is to seek
high current income while maintaining a stable $1.00 share price. A major
change in interest rates or a default on the fund's investments could cause
its share price to change.
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: Each fund is considered non-diversified. Generally, to meet
federal tax requirements at the close of each quarter, a 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. These limitations do not apply to U.S. government
securities or investment company securities. Each fund normally invests at
least 80% of its assets, but always invests at least 25% of its total
assets, in securities of companies principally engaged in the business
activities identified for that fund.
BORROWING. A fund may borrow from banks or from other funds advised by FMR,
or through reverse repurchase agreements. If a fund borrows money, its
share price may be subject to greater fluctuation until the borrowing is
paid off. If the fund makes additional investments while borrowings are
outstanding, this may be considered a form of leverage.
RESTRICTIONS: Each fund may borrow only for temporary or emergency
purposes, but not in an amount exceeding 33% of its total assets.
LENDING. Lending securities to broker-dealers and institutions, including
Fidelity Brokerage Services, Inc. (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% of a fund's total
assets.
Refer to the "Securities and Investment Practices" sub-section beginning on
page P-42 of the Select Prospectus for additional information about the
types of instruments in which the funds may invest, strategies FMR may
employ in pursuit of a fund's objective, and a summary of related risks.
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.
CYCLICAL INDUSTRIES PORTFOLIO invests primarily in companies engaged in the
research, development, manufacture, distribution, supply, or sale of
materials, equipment, products or services related to cyclical industries.
1.NATURAL RESOURCES PORTFOLIO invests primarily in companies that own or
develop natural resources, or supply goods and services to such companies.
EACH FUND seeks capital appreciation.
EACH FUND invests at least 25% of its total assets in securities of
companies principally engaged in the business activities identified for the
fund.
EACH FUND may borrow only for temporary or emergency purposes, but not in
an amount exceeding 33% of its total assets.
Loans, in the aggregate, for each fund, may not exceed 33% 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. Each fund also pays OTHER EXPENSES, which
are explained on page 7 of this Prospectus.
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 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 0.52%, and it drops as
total assets under management increase.
The individual fund fee rate is 0.30% for the funds.
FMR HAS SUB-ADVISORY AGREEMENTS with FMR U.K. and FMR Far East on behalf of
the funds. These sub-advisers provide FMR with investment research and
advice on issuers 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 a fee equal to 50% of its
management fee rate with respect to a fund's investments that the
sub-adviser manages on a discretionary basis.
2.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 each fund's investments, and handling securities loans.
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 annualized portfolio turnover rate is not expected to exceed
200% in the first fiscal period ending February 28, 1997. This rate varies
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.
YOUR ACCOUNT
DOING BUSINESS WITH FIDELITY
Refer to the "Doing Business With Fidelity" section on page P-49 of the
Select Prospectus for information about Fidelity as a company and how to
obtain general information.
TYPES OF ACCOUNTS
Refer to the "Types of Accounts" section on page P-49 of the Select
Prospectus for details on the types of accounts available and the different
ways to set them up.
HOW TO BUY SHARES
Refer to the "How to Buy Shares" section on page P-50 of the Select
Prospectus for details on how to purchase shares of the funds and the
minimum investment amounts.
HOW TO SELL SHARES
Refer to the "How to Sell Shares" section on page P-51 of the Select
Prospectus for details on how to take money out and close your account.
INVESTOR SERVICES
Refer to the "Investor Services" section on page P-52 of the Select
Prospectus for details on the services available to shareholders of the
funds to help them manage their accounts.
SHAREHOLDER AND ACCOUNT POLICIES
DIVIDENDS, CAPITAL GAINS, AND TAXES
Refer to the "Dividends, Capital Gains, and Taxes" section beginning on
page P-53 of the Select Prospectus for information about capital gains and
dividends, distribution options, and taxes.
TRANSACTION DETAILS
Refer to the "Transaction Details" section beginning on page P-54 of the
Select Prospectus for information about share price calculations, the
timing of purchases and redemptions, and executing trades on your account.
EXCHANGE RESTRICTIONS
Refer to the "Exchange Restrictions" section beginning on page P-55 of the
Select Prospectus for information and limitations on making exchanges from
and between the funds.
SALES CHARGE REDUCTIONS AND WAIVERS
Refer to the "Sales Charge Reductions and Waivers" section beginning on
page P-56 of the Select Prospectus for information about when the sales
charge may be reduced or waived.
SUPPLEMENT TO THE FIDELITY SELECT
PORTFOLIOS(registered trademark) PROSPECTUS
DATED APRIL 29, 1996
Effective July 18, 1996, Fidelity Select Consumer Products Portfolio
changed its name to Fidelity Select Consumer Industries Portfolio.
The following information updates the similar information found in the
section entitled "FMR and Its Affiliates," beginning on page P-34.
Paul Antico is manager of Industrial Equipment, which he has managed since
March 1996. Mr. Antico joined Fidelity as a research analyst in 1991, after
receiving a B.S. from the Massachusetts Institute of Technology.
Minerva Butler is manager of Developing Communications, which she has
managed since August 1996. Since joining Fidelity in 1995, she has worked
as an equity analyst. Prior to joining Fidelity, Ms. Butler earned an MBA
from Stanford University in 1995. Before that, she was an internal audit
supervisor for US West, Inc., from 1989 to 1992.
Douglas Chase is manager of Automotive and Industrial Materials, which he
has managed since May 1996 and November 1994, respectively. Previously, he
was an equity analyst. Prior to joining Fidelity in 1993, Mr. Chase was a
consultant for Stanford Resources from 1988 to 1991. He received his MBA
from the University of Michigan in 1993.
Lawrence Rakers is manager of Precious Metals and Minerals, Paper and
Forest Products, and American Gold, which he has managed since July 1996,
February 1996, and July 1995, respectively. Mr. Rakers joined Fidelity in
1993. Prior to that, he was a project engineer for Loral Corporation from
1986 to 1993.
Kevin Richardson is manager of Air Transportation, which he has managed
since May 1996. He joined Fidelity in 1994 as an equity analyst, after
receiving his MBA from the University of North Carolina at Chapel Hill.
Previously, he was an equity analyst with Kidder, Peabody & Company.
Peter Saperstone is manager of Construction and Housing, which he has
managed since August 1996. Previously, he was an equity analyst. Prior to
joining Fidelity in August 1995, Mr. Saperstone was an equity research
analyst at Gabelli & Company, Inc., from 1993 to 1995, and a credit analyst
at National Westminster Bank USA from 1991 to 1993.
Nick Thakore is manager of Telecommunications, which he has managed since
July 1996. Previously, he was an equity analyst. Mr. Thakore joined
Fidelity in 1993 after receiving an MBA from The Wharton School at the
University of Pennsylvania. Prior to that, he was a real estate analyst for
Prudential Properties Company from 1989 to 1991.
Jason Weiner is manager of Computers, which he has managed since March
1996. Previously, he managed several other Fidelity funds. Mr. Weiner
joined Fidelity in 1991.
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 29, 1996. 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, FEDERAL
RESERVE BOARD, OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
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-496
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 by investing in high-quality,
short-term money market securities.
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 29, 1996(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON, MA
02109
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
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 may help
choose investments for some of the stock 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 29, 1996 the fund had over $75 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 precious metals.
SIZE: As of February 29, 1996 the fund had over $451 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 29, 1996 the fund had over $55 million in assets.
BIOTECHNOLOGY
GROWTH
STRATEGY: Invests mainly in equity securities of companies engaged in the
research, development, and manufacture of various biotechnological
products, services, and processes.
SIZE: As of February 29, 1996 the fund had over $1.0 billion 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 29, 1996 the fund had over $38 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 29, 1996 the fund had over $89 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 29, 1996 the fund had over $527 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 29, 1996 the fund had over $42 million in assets.
CONSUMER PRODUCTS
GROWTH
STRATEGY: Invests mainly in equity securities of companies engaged in the
manufacture and distribution of goods to consumers.
SIZE: As of February 29, 1996 the fund had over $22 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 29, 1996 the fund had over $26 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 29, 1996 the fund had over $333 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 29, 1996 the fund had over $1.1 billion 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 29, 1996 the fund had over $119 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 29, 1996 the fund had over $273 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 29, 1996 the fund had over $27 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 29, 1996 the fund had over $270 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 29, 1996 the fund had over $301 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 29, 1996 the fund had over $1.5 billion 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 29, 1996 the fund had over $617 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 29, 1996 the fund had over $137 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 29, 1996 the fund had over $86 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 29, 1996 the fund had over $38 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 29, 1996 the fund had over $85 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 29, 1996 the fund had over $295 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 29, 1996 the fund had over $94 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 29, 1996 the fund had over $60 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 29, 1996 the fund had over $27 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 29, 1996 the fund had over $467 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 29, 1996 the fund had over $315 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 29, 1996 the fund had over $44 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 29, 1996 the fund had over $337 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 29, 1996 the fund had over $483 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 29, 1996 the fund had over $468 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 29, 1996 the fund had over $11 million in assets.
UTILITIES GROWTH
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 29, 1996 the fund had over $266 million in assets.
MONEY MARKET
GROWTH
GOAL: Income while maintaining a stable $1.00 share price. As with any
mutual fund, there is no assurance the fund will achieve its goal.
STRATEGY: Invests in high-quality, short-term money market securities of
all types.
SIZE: As of February 29, 1996 the fund had over $610 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. Most of the funds are
non-diversified and may invest a greater portion of their assets in
securities of individual issuers than diversified funds. As a result,
changes in the market value of a single issuer could cause greater
fluctuations in share value than would occur in a more diversified fund.
The value of the stock funds' investments will vary from day to day, and
generally reflect market and industry conditions, interest rates, and other
company, political, or economic news both here and abroad. In the short
term, stock prices can fluctuate dramatically in response to these factors.
The securities of small, less well-known companies may be more volatile
than those of larger companies. Over time, however, stocks have shown
greater growth potential than other types of securities. Investments in
foreign securities may involve risks in addition to those of U.S.
investments, including increased political and economic risk, as well as
exposure to currency fluctuations. When you sell your stock fund shares,
they may be worth more or less than what you paid for them.
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 rate of income will vary from day to day, generally reflecting
short-term interest rates. 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, the funds do not constitute a balanced investment plan.
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy, sell, or
hold shares of a fund. See pages to 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 distributions None
Deferred sales charge on redemptions None
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
Exchange fee (stock funds only) $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 expenses are factored into its
share price or dividends and are not charged directly to shareholder
accounts (see page ).
The following are based on historical expenses, adjusted to reflect current
fees, and are calculated as a percentage of average net assets. A portion
of the brokerage commissions that the funds paid was used to reduce fund
expenses. In addition, the funds have entered into arrangements with their
custodians and transfer agents whereby interest earned on uninvested cash
balances is used to reduce custodian and transfer agent expenses. Including
these reductions, the total operating expenses presented in the table would
have been lower.
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, here's how much you would pay in total expenses after
the number of years indicated, first assuming that you leave your account
open, and then assuming that you close your account at the end of the
period.
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 Accoun Accoun
t open t
closed
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AIR TRANSPORTATION Management fee .61% After 1 $47 $55
year
12b-1 fee None After 3 $82 $90
years
Other expenses 1.08 After 5 $119 $127
% years
Total fund operating 1.69 After 10 $224 $232
expenses %A years
AMERICAN GOLD Management fee .61% After 1 $44 $52
year
12b-1 fee None After 3 $75 $83
years
Other expenses .85% After 5 $107 $115
years
Total fund operating 1.46 After 10 $199 $207
expenses % years
AUTOMOTIVE Management fee .61% After 1 $49 $57
year
12b-1 fee None After 3 $89 $97
years
Other expenses 1.32 After 5 $131 $139
% years
Total fund operating 1.93 After 10 $249 $257
expenses %A years
BIOTECHNOLOGY Management fee .61% After 1 $45 $53
year
12b-1 fee None After 3 $78 $86
years
Other expenses .95% After 5 $112 $120
years
Total fund operating 1.56 After 10 $210 $218
expenses %A years
BROKERAGE AND INVESTMENT MANAGEMENT Management fee .61% After 1 $50 $58
year
12b-1 fee None After 3 $91 $99
years
Other expenses 1.40 After 5 $135 $143
% years
Total fund operating 2.01 After 10 $257 $265
expenses %A years
</TABLE>
A A PORTION OF THE BROKERAGE COMMISSIONS THAT THE FUNDS PAY IS USED TO
REDUCE THE FUNDS' EXPENSES. IN ADDITION, THE FUNDS HAVE ENTERED INTO
ARRANGEMENTS WITH THEIR CUSTODIANS AND TRANSFER AGENTS WHEREBY INTEREST
EARNED ON UNINVESTED CASH BALANCES IS USED TO REDUCE TRANSFER AGENT
EXPENSES. IF THESE REDUCTIONS ARE INCLUDED, THE TOTAL OPERATING EXPENSES
FOR THE RESPECTIVE FUNDS WOULD BE: AIR TRANSPORTATION 1.63%; AUTOMOTIVE
1.92%; BIOTECHNOLOGY 1.55%; AND BROKERAGE AND INVESTMENT MANAGEMENT 1.98%.
Operating expenses Accoun Accoun
t open t
closed
<TABLE>
<CAPTION>
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CHEMICALS Management fee .61% After 1 $51 $59
year
12b-1 fee None After 3 $94 $102
years
Other expenses 1.48 After 5 $139 $147
% years
Total fund operating 2.09 After 10 $265 $273
expenses %A years
COMPUTERS Management fee .61% After 1 $45 $53
year
12b-1 fee None After 3 $75 $83
years
Other expenses .86% After 5 $108 $116
years
Total fund operating 1.47 After 10 $200 $208
expenses %A years
CONSTRUCTION AND HOUSING Management fee .61% After 1 $45 $53
year
12b-1 fee None After 3 $77 $85
years
Other expenses .91% After 5 $110 $118
years
Total fund operating 1.52 After 10 $206 $214
expenses %A years
CONSUMER PRODUCTS Management fee .61% After 1 $48 $56
year
12b-1 fee None After 3 $85 $93
years
Other expenses 1.20 After 5 $125 $133
% years
Total fund operating 1.81 After 10 $236 $244
expenses %A years
DEFENSE AND AEROSPACE Management fee .61% After 1 $51 $59
year
12b-1 fee None After 3 $94 $102
years
Other expenses 1.49 After 5 $139 $147
% years
Total fund operating 2.10 After 10 $266 $274
expenses %A years
DEVELOPING COMMUNICATIONS Management fee .61% After 1 $46 $54
year
12b-1 fee None After 3 $79 $87
years
Other expenses 1.00 After 5 $115 $123
% years
Total fund operating 1.61 After 10 $215 $223
expenses %A years
ELECTRONICS Management fee .61% After 1 $43 $51
year
12b-1 fee None After 3 $71 $79
years
Other expenses .73% After 5 $101 $109
years
Total fund operating 1.34 After 10 $186 $194
expenses %A years
ENERGY Management fee .61% After 1 $47 $55
year
12b-1 fee None After 3 $83 $91
years
Other expenses 1.11 After 5 $121 $129
% years
Total fund operating 1.72 After 10 $227 $235
expenses % years
</TABLE>
Operating expenses Accoun Accoun
t open t
closed
ENERGY SERVICE Management fee .61% After 1 $47 $55
year
12b-1 fee None After 3 $84 $92
years
Other expenses 1.15 After 5 $12 $13
% years 3 1
Total fund operating 1.76 After 10 $23 $23
expenses %A years 1 9
ENVIRONMENTAL SERVICES Management fee .61% After 1 $54 $62
year
12b-1 fee None After 3 $10 $11
years 5 3
Other expenses 1.86 After 5 $15 $16
% years 8 6
Total fund operating 2.47 After 10 $30 $31
expenses %A years 2 0
FINANCIAL SERVICES Management fee .61% After 1 $45 $53
year
12b-1 fee None After 3 $76 $84
years
Other expenses .89% After 5 $10 $11
years 9 7
Total fund operating 1.50 After 10 $20 $21
expenses %A years 4 2
FOOD AND AGRICULTURE Management fee .61% After 1 $45 $53
year
12b-1 fee None After 3 $76 $84
years
Other expenses .89% After 5 $10 $11
years 9 7
Total fund operating 1.50 After 10 $20 $21
expenses %A years 4 2
HEALTH CARE Management fee .61% After 1 $43 $51
year
12b-1 fee None After 3 $71 $79
years
Other expenses .74% After 5 $10 $11
years 2 0
Total fund operating 1.35 After 10 $18 $19
expenses %A years 8 6
HOME FINANCE Management fee .61% After 1 $44 $52
year
12b-1 fee None After 3 $74 $82
years
Other expenses .81% After 5 $10 $11
years 5 3
Total fund operating 1.42 After 10 $19 $20
expenses %A years 5 3
INDUSTRIAL EQUIPMENT Management fee .61% After 1 $46 $54
year
12b-1 fee None After 3 $80 $88
years
Other expenses 1.04 After 5 $11 $12
% years 7 5
Total fund operating 1.65 After 10 $22 $22
expenses %A years 0 8
INDUSTRIAL MATERIALS Management fee .61% After 1 $48 $56
year
12b-1 fee None After 3 $85 $93
years
Other expenses 1.18 After 5 $12 $13
% years 4 2
Total fund operating 1.79 After 10 $23 $24
expenses %A years 4 2
A A PORTION OF THE BROKERAGE COMMISSIONS THAT THE FUNDS PAY IS USED TO
REDUCE THE FUNDS' EXPENSES. IN ADDITION, THE FUNDS HAVE ENTERED INTO
ARRANGEMENTS WITH THEIR CUSTODIANS AND TRANSFER AGENTS WHEREBY INTEREST
EARNED ON UNINVESTED CASH BALANCES IS USED TO REDUCE TRANSFER AGENT
EXPENSES. IF THESE REDUCTIONS ARE INCLUDED, THE TOTAL OPERATING EXPENSES
FOR THE RESPECTIVE FUNDS WOULD BE: CHEMICALS 2.07%; COMPUTERS 1.45%;
CONSTRUCTION AND HOUSING 1.49%; CONSUMER PRODUCTS 1.76%; DEFENSE AND
AEROSPACE 2.08%; DEVELOPING COMMUNICATIONS 1.59%; ELECTRONICS 1.31%; ENERGY
SERVICE 1.75%; ENVIRONMENTAL SERVICES 2.43%; FINANCIAL SERVICES 1.49%; FOOD
AND AGRICULTURE 1.49%; HEALTH CARE 1.34%; HOME FINANCE 1.39%; INDUSTRIAL
EQUIPMENT 1.64%; AND INDUSTRIAL MATERIALS 1.76%.
Operating expenses Accoun Accoun
t open t
closed
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
INSURANCE Management fee .61% After 1 $49 $57
year
12b-1 fee None After 3 $89 $97
years
Other expenses 1.33 After 5 $13 $14
% years 2 0
Total fund operating 1.94 After 10 $25 $25
expenses %A years 0 8
LEISURE Management fee .61% After 1 $47 $55
year
12b-1 fee None After 3 $82 $90
years
Other expenses 1.08 After 5 $11 $12
% years 9 7
Total fund operating 1.69 After 10 $22 $23
expenses %A years 4 2
MEDICAL DELIVERY Management fee .61% After 1 $47 $55
year
12b-1 fee None After 3 $84 $92
years
Other expenses 1.15 After 5 $12 $13
% years 3 1
Total fund operating 1.76 After 10 $23 $23
expenses %A years 1 9
MULTIMEDIA Management fee .61% After 1 $46 $54
year
12b-1 fee None After 3 $81 $89
years
Other expenses 1.06 After 5 $11 $12
% years 8 6
Total fund operating 1.67 After 10 $22 $23
expenses %A years 2 0
NATURAL GAS Management fee .61% After 1 $48 $56
year
12b-1 fee None After 3 $85 $93
years
Other expenses 1.20 After 5 $12 $13
% years 5 3
Total fund operating 1.81 After 10 $23 $24
expenses %A years 6 4
PAPER AND FOREST PRODUCTS Management fee .61% After 1 $51 $59
year
12b-1 fee None After 3 $94 $10
years 2
Other expenses 1.48 After 5 $13 $14
% years 9 7
Total fund operating 2.09 After 10 $26 $27
expenses %A years 5 3
PRECIOUS METALS AND MINERALS Management fee .61% After 1 $46 $54
year
12b-1 fee None After 3 $79 $87
years
Other expenses 1.00 After 5 $11 $12
% years 5 3
Total fund operating 1.61 After 10 $21 $22
expenses % years 5 3
REGIONAL BANKS Management fee .61% After 1 $45 $53
year
12b-1 fee None After 3 $75 $83
years
Other expenses .86% After 5 $10 $11
years 8 6
Total fund operating 1.47 After 10 $20 $20
expenses %A years 0 8
</TABLE>
Operating expenses Accoun Accoun
t open t
closed
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
RETAILING Management fee .61% After 1 $50 $58
year
12b-1 fee None After 3 $93 $10
years 1
Other expenses 1.46 After 5 $13 $14
% years 8 6
Total fund operating 2.07 After 10 $26 $27
expenses %A years 3 1
SOFTWARE AND COMPUTER SERVICES Management fee .61% After 1 $45 $53
year
12b-1 fee None After 3 $77 $85
years
Other expenses .94% After 5 $11 $12
years 2 0
Total fund operating 1.55 After 10 $20 $21
expenses %A years 9 7
TECHNOLOGY Management fee .61% After 1 $44 $52
year
12b-1 fee None After 3 $75 $83
years
Other expenses .85% After 5 $10 $11
years 7 5
Total fund operating 1.46 After 10 $19 $20
expenses %A years 9 7
TELECOMMUNICATIONS Management fee .61% After 1 $45 $53
year
12b-1 fee None After 3 $77 $85
years
Other expenses .94% After 5 $11 $12
years 2 0
Total fund operating 1.55 After 10 $20 $21
expenses % years 9 7
TRANSPORTATION Management fee .02% After 1 $55 $63
year
12b-1 fee None After 3 $10 $11
years 6 4
Other expenses 2.48 After 5 $15 $16
% years 9 7
Total fund operating 2.50 After 10 $30 $31
expenses %A,B years 5 3
UTILITIES GROWTH Management fee .61% After 1 $44 $52
year
12b-1 fee None After 3 $74 $82
years
Other expenses .84% After 5 $10 $11
years 7 5
Total fund operating 1.45 After 10 $19 $20
expenses %A years 8 6
MONEY MARKET Management fee .24% After 1 $36 $36
year
12b-1 fee None After 3 $48 $48
years
Other expenses .35% After 5 $62 $62
years
Total fund operating .59% After 10 $10 $10
expenses years 2 2
</TABLE>
A A PORTION OF THE BROKERAGE COMMISSIONS THAT THE FUNDS PAY IS USED TO
REDUCE THE FUNDS' EXPENSES. IN ADDITION, THE FUNDS HAVE ENTERED INTO
ARRANGEMENTS WITH THEIR CUSTODIANS AND TRANSFER AGENTS WHEREBY INTEREST
EARNED ON UNINVESTED CASH BALANCES IS USED TO REDUCE TRANSFER AGENT
EXPENSES. IF THESE REDUCTIONS ARE INCLUDED, THE TOTAL OPERATING EXPENSES
FOR THE RESPECTIVE FUNDS WOULD BE: INSURANCE 1.91%; LEISURE 1.68%; MEDICAL
DELIVERY 1.73%; MULTIMEDIA 1.65%; NATURAL GAS 1.80%; PAPER AND FOREST
PRODUCTS 2.08%; REGIONAL BANKS 1.46%; RETAILING 2.05%; SOFTWARE AND
COMPUTER SERVICES 1.54%; TECHNOLOGY 1.45%; TRANSPORTATION 2.47%; AND
UTILITIES GROWTH 1.44%.
B FMR HAS VOLUNTARILY AGREED TO TEMPORARILY LIMIT THE FUND'S OPERATING
EXPENSES TO 2.50% OF ITS AVERAGE NET ASSETS. IF THIS AGREEMENT WAS NOT IN
EFFECT THE MANAGEMENT FEE, OTHER EXPENSES AND TOTAL EXPENSES WOULD BE .61%,
2.48%, AND 3.09%, RESPECTIVELY. EXPENSES ELIGIBLE FOR REIMBURSEMENT DO NOT
INCLUDE INTEREST, TAXES, BROKERAGE COMMISSIONS, OR EXTRAORDINARY EXPENSES.
KEY FACTS - CONTINUED
FINANCIAL HIGHLIGHTS.
The tables that follow are included in the funds' Annual Report and have
been audited by Price Waterhouse LLP, 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.
AIR TRANSPORTATION
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data
and Ratios 1996J 1995 1994 1993C 1992D 1991D 1990D 1989D 1988D 1987D
F
Years ended February 28
Net asset value,
beginning of period $ 13.93 $ 17.12 $ 13.60 $ 12.64 $ 11.53 $ 11.05 $ 11.77 $ 8.61 $ 11.87 $ 10.71
Income from Investment Operations
Net investment income
(loss) (.01) (.18) (.18) (.09)I (.13) (.04) -- (.02) (.08) .07
Net realized and
unrealized gain 7.47 (2.01) 3.78 1.33 1.40 .38 (.16) 3.18 (2.12) 1.09
(loss) on investments
Total from investment
operations 7.46 (2.19) 3.60 1.24 1.27 .34 (.16) 3.16 (2.20) 1.16
Less Distributions
From net investment
income -- -- -- -- -- -- -- -- (.02) --
From net realized gain (.46) (.92) (.22) (.36) (.25) -- (.57) -- (1.04) --
In excess of net
realized gain -- (.17) (.05) -- -- -- -- -- -- --
Total distributions (.46) (1.09) (.27) (.36) (.25) -- (.57) -- (1.06) --
Redemption fees added
to paid in .18 .09 .19 .08 .09 .14 .01 -- -- --
capital
Net asset value, end of
period $ 21.11 $ 13.93 $ 17.12 $ 13.60 $ 12.64 $ 11.53 $ 11.05 $ 11.77 $ 8.61 $ 11.87
Total return G,H 54.91% (12.45) 27.94% 10.69% 11.90% 4.34% (1.54) 36.70% (17.05) 10.83
% % % %
Net assets, end of
period (000 $ 75,359 $ 18,633 $ 11,035 $ 11,868 $ 6,971 $ 4,372 $ 4,688 $ 11,614 $ 2,728 $ 4,897
omitted)
Ratio of expenses to
average net 1.47% 2.50% 2.33% 2.48% 2.51% 2.48% 2.55% 2.52% 2.62% 1.58
assets E A,E E E E E E %
Ratio of expenses to
average net 1.41% 2.50% 2.31% 2.48% 2.51% 2.48% 2.55% 2.52% 2.62% 1.58
assets after B B A %
expense reductions
Ratio of net investment
income (.07) (1.31) (1.11) (.90)% (1.04) (.34) (.03) (.18) (.75) .36
(loss) to % % % A % % % % % %
average net assets
Portfolio turnover rate 504% 200% 171% 96% 261% 106% 143% 115% 340% 611
A %
</TABLE>
AMERICAN GOLD
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share
Data and 1996J 1995 1994 1993C 1992D 1991D 1990D 1989D 1988D 1987D
Ratios F
Years ended February 28
Net asset value,
beginning of $ 18.44 $ 22.66 $ 14.15 $ 11.94 $ 13.08 $ 15.22 $ 14.36 $ 15.82 $ 18.59 $ 10.11
period
Income from Investment
Operations
Net investment income
(loss) (.06) (.05) (.11) (.05) (.06) (.04) (.06) (.09) .01 .10
Net realized and unrealized
gain 8.62 (4.25) 8.44 2.16 (1.17) (2.23) .85 (1.37) (2.54) 8.38
(loss) on
investments
Total from investment
operations 8.56 (4.30) 8.33 2.11 (1.23) (2.27) .79 (1.46) (2.53) 8.48
Less Distributions
From net investment
income -- -- -- -- -- -- -- -- (.06) --
From net realized
gain -- -- -- -- -- -- -- -- (.18) --
Total
distributions -- -- -- -- -- -- -- -- (.24) --
Redemption fees added to
paid in .11 .08 .18 .10 .09 .13 .07 -- -- --
capital
Net asset value, end
of period $ 27.11 $ 18.44 $ 22.66 $ 14.15 $ 11.94 $ 13.08 $ 15.22 $ 14.36 $ 15.82 $ 18.59
Total return
G,H 47.02% (18.62) 60.14% 18.51% (8.72) (14.06) 5.99% (9.23) (13.65) 83.88%
% % % % %
Net assets, end of period
(000 $ 451,493 $ 278,197 $ 347,406 $ 168,033 $ 130,407 $ 164,137 $ 195,322 $ 175,059 $ 206,313 $ 435,510
omitted)
Ratio of expenses to average
net 1.39% 1.41% 1.50% 1.59%A 1.75% 1.75% 1.85% 2.03% 2.33% 1.21%
assets
Ratio of expenses to
average net 1.39% 1.41% 1.49% 1.59%A 1.75% 1.75% 1.85% 2.03% 2.33% 121%
assets after B
expense reductions
Ratio of net investment
income (.27) (.22) (.51) (.44)% (.47) (.29) (.38) (.61) .06% 1.13%
(loss) to % % % A % % % %
average net assets
Portfolio turnover
rate 56% 34% 39% 30%A 40% 38% 68% 56% 89% 78%
</TABLE>
A ANNUALIZED
B FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
C FOR THE TEN MONTHS ENDED FEBRUARY 28, 1993
D FOR THE YEAR ENDED APRIL 30
E DURING THE PERIOD, FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S
EXPENSES, OR EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE
LIMITATION. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
F FOR PERIODS PRESENTED SUBSEQUENT TO 1987, NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH
PERIOD. AS OF MAY 1, 1987, THE FUNDS DISCONTINUED THE USE OF EQUALIZATION
ACCOUNTING.
G TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
H THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
I INVESTMENT INCOME (LOSS) PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.01 PER SHARE.
J FOR THE YEAR ENDED FEBRUARY 29
AUTOMOTIVE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data
and Ratios 1996L 1995 1994 1993D 1992E 1991E 1990E 1989E 1988E 1987C
G
Years ended February 28
Net asset value,
beginning of period $ 19.84 $ 25.48 $ 20.69 $ 18.65 $ 12.58 $ 12.17 $ 12.86 $ 11.79 $ 12.58 $ 10.00
Income from Investment Operations
Net investment income .03 .08 .05 .13 .06 .25 .23 .15 .11 .16
Net realized and
unrealized gain 1.95 (3.46) 6.00 2.26 6.55 .29 (.52) .92 (.40) 2.42
(loss) on investments
Total from investment
operations 1.98 (3.38) 6.05 2.39 6.61 .54 (.29) 1.07 (.29) 2.58
Less Distributions
From net investment
income -- (.05) (.05) (.06) -- (.18) (.41) -- (.04) --
From net realized gain -- (2.26) (1.26) (.36) (.70) -- -- -- (.46) --
Total distributions -- (2.31) (1.31) (.42) (.70) (.18) (.41) -- (.50) --
Redemption fees added
to paid in .03 .05 .05 .07 .16 .05 .01 -- -- --
capital
Net asset value, end of
period $ 21.85 $ 19.84 $ 25.48 $ 20.69 $ 18.65 $ 12.58 $ 12.17 $ 12.86 $ 11.79 $ 12.58
Total return H,I 10.13% (12.59) 30.45% 13.42% 56.27% 4.81% (2.07) 9.08% (1.07) 25.80%
% % %
Net assets, end of
period (000 $ 55,753 $ 60,075 $ 228,698 $ 110,360 $ 178,445 $ 974 $ 1,213 $ 1,428 $ 8,218 $ 5,390
omitted)
Ratio of expenses to
average net 1.81% 1.82% 1.69% 1.57% 2.48% 2.25% 2.42% 2.63% 2.49% 1.63%
assets A F F F F A
Ratio of expenses to
average net 1.80% 1.80% 1.68% 1.57% 2.48% 2.25% 2.42% 2.63% 2.49% 1.63%
assets B B B A A
after expense reductions
Ratio of net investment
income to .13% .34% .22% .72% .36% 2.06% 1.84% 1.22% .91% 1.90%
average net assets A A
Portfolio turnover rate 61% 63% 64% 140% 29% 219% 121% 149% 311% 284%
A A
</TABLE>
BIOTECHNOLOGY
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share
Data and 1996L 1995 1994 1993D 1992E 1991E 1990E 1989E 1988E 1987E
Ratios G
Years ended February 28
Net asset value,
beginning of $ 25.30 $ 27.61 $ 22.60 $ 27.61 $ 26.78 $ 15.28 $ 11.90 $ 10.31 $ 13.90 $ 12.76
period
Income from Investment
Operations
Net investment
income (loss) .11 (.06) (.18) (.08) (.11) .05K (.04)J (.04) (.15) (.06)
Net realized
and unrealized 11.21 (2.26) 5.15 (1.09) 3.36 11.80 3.60 1.63 (3.16) 1.20
gain (loss)
on investments
Total from
investment 11.32 (2.32) 4.97 (1.17) 3.25 11.85 3.56 1.59 (3.31) 1.14
operations
Less Distributions
From net investment
income (.07) -- -- -- -- -- -- -- -- --
In excess of net
investment -- -- -- -- (.02) -- -- -- -- --
income
From net
realized gain -- -- -- (3.89) (2.52) (.67) (.24) -- (.28) --
Total
distributions (.07) -- -- (3.89) (2.54) (.67) (.24) -- (.28) --
Redemption fees
added to paid .05 .01 .04 .05 .12 .32 .06 -- -- --
in capital
Net asset value,
end of period $ 36.60 $ 25.30 $ 27.61 $ 22.60 $ 27.61 $ 26.78 $ 15.28 $ 11.90 $ 10.31 $ 13.90
Total return
H,I 44.97% (8.37) 22.17% (5.92) 12.36% 81.43% 30.53% 15.42% (23.52) 8.93%
% % %
Net assets, end
of period (000 $ 1,096,86 $ 448,197 $ 481,146 $ 507,993 $ 679,877 $ 482,271 $ 70,994 $ 46,946 $ 47,557 $ 75,093
omitted) 4
Ratio of expenses to
average net 1.44% 1.59% 1.62% 1.50% 1.50% 1.63% 2.07% 2.21% 2.51% 1.38%
assets F A F
Ratio of expenses
to average net 1.43% 1.59% 1.61% 1.50% 1.50% 1.63% 2.07% 2.21% 2.51% 1.38%
assets B B A
after expense reductions
Ratio of net investment
income .35% (.27) (.69) (.37)% (.34) .24% (.31) (.43) (1.31) (.41)
(loss) to average % % A % % % % %
net assets
Portfolio turnover
rate 67% 77% 51% 79% 160% 166% 290% 80% 205% 431%
A
</TABLE>
A ANNUALIZED
B FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
C FROM JUNE 30, 1986 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1987
D FOR THE TEN MONTHS ENDED FEBRUARY 28, 1993
E FOR THE YEAR ENDED APRIL 30
F DURING THE PERIOD, FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S
EXPENSES, OR EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE
LIMITATION. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
G FOR PERIODS PRESENTED SUBSEQUENT TO 1987, NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH
PERIOD. AS OF MAY 1, 1987, THE FUNDS DISCONTINUED THE USE OF EQUALIZATION
ACCOUNTING.
H TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
I THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
J INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO
$.05 PER SHARE.
K INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO
$.02 PER SHARE.
L FOR THE YEAR ENDED FEBRUARY 29
BROKERAGE AND INVESTMENT MANAGEMENT
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data and Ratios
F
Years ended February
28 1996I 1995 1994 1993C 1992D 1991D 1990D 1989D 1988D 1987D
Net asset value,
beginning of period $ 15.51 $ 17.75 $ 14.22 $ 11.48 $ 9.28 $ 7.97 $ 8.39 $ 7.14 $ 13.06 $ 13.480
Income from Investment Operations
Net investment income
(loss) .09 (.03) (.02) -- .02 .08 .08 .09 .01 .192
Net realized and
unrealized gain 4.29 (2.25) 4.95 2.65 1.96 1.15 (.35) 1.25 (4.75) (.577)
(loss)
on investments
Total from investment
operations 4.38 (2.28) 4.93 2.65 1.98 1.23 (.27) 1.34 (4.74) (.385)
Less Distributions
From net investment
income (.04) -- (.01) -- (.01) (.09) (.16) (.09) (.03) (.015)
From net realized gain (1.09) -- (1.47) -- -- -- -- -- (1.15) (.020)
In excess of net
realized gain (.35) -- -- -- -- -- -- -- -- --
Total distributions (1.48) -- (1.48) -- (.01) (.09) (.16) (.09) (1.18) (.035)
Redemption fees added to
paid in .08 .04 .08 .09 .23 .17 .01 -- -- --
capital
Net asset value, end of
period $ 18.49 $ 15.51 $ 17.75 $ 14.22 $ 11.48 $ 9.28 $ 7.97 $ 8.39 $ 7.14 $ 13.060
Total return G,H 29.85% (12.62) 35.87% 23.87% 23.84% 17.90% (3.23) 18.93 (34.82) (2.85)
% % % % %
Net assets, end of
period (000 $ 38,382 $ 27,346 $ 59,810 $ 24,687 $ 17,915 $ 11,285 $ 2,298 $ 4,340 $ 4,254 $ 13,819
omitted)
Ratio of expenses to
average net 1.64% 2.54% 1.79% 2.21% 2.17% 2.50% 2.50% 2.54 2.58% 1.67%
assets E E A E E %E E
Ratio of expenses to
average net 1.61% 2.54% 1.77% 2.21% 2.17% 2.50% 2.50% 2.54 2.58% 1.67%
assets B B A %
after expense reductions
Ratio of net investment
income (loss) .50% (.20) (.14) .02% .16% .94% .91% 1.18 .09% .69%
to average net assets % % A %
Portfolio turnover rate 166% 139% 295% 111% 254% 62% 142% 185 447% 603%
A %
</TABLE>
CHEMICALS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data and
Ratios F
Years ended February
28 1996I 1995 1994 1993C 1992D 1991D 1990D 1989D 1988D 1987D
Net asset value,
beginning of $ 33.91 $ 31.66 $ 28.62 $ 32.81 $ 26.25 $ 22.70 $ 23.77 $ 20.67 $ 20.43 $ 15.24
period
Income from Investment
Operations
Net investment
income .01 .36 .29 .30 .12 .28 .41 .28 .33 .23
Net realized and
unrealized 8.89 2.65 5.97 (.84) 7.27 3.94 (.21) 2.82 (.05) 5.02
gain (loss)
on investments
Total from investment 8.90 3.01 6.26 (.54) 7.39 4.22 .20 3.10 .28 5.25
operations
Less Distributions
From net investment
income (.08) (.22) (.23) (.31) (.18) (.10) (.16) -- -- --
From net realized
gain (3.22) (.60) (3.05) (3.36) (.71) (.60) (1.13) -- (.04) (.06)
Total distributions (3.30) (.82) (3.28) (3.67) (.89) (.70) (1.29) -- (.04) (.06)
Redemption fees added
to paid .02 .06 .06 .02 .06 .03 .02 -- -- --
in capital
Net asset value, end
of period $ 39.53 $ 33.91 $ 31.66 $ 28.62 $ 32.81 $ 26.25 $ 22.70 $ 23.77 $ 20.67 $ 20.43
Total return G,H 27.48% 9.90% 23.63% (1.61) 29.07% 18.99% .71% 15.00% 1.41% 34.59%
%
Net assets, end of
period (000 $ 89,230 $ 97,511 $ 62,217 $ 28,796 $ 39,566 $ 20,396 $ 21,150 $ 44,914 $ 118,942 $ 86,066
omitted)
Ratio of expenses to
average net 1.99% 1.52% 1.93% 1.89% 2.16% 2.50% 2.37% 2.24% 1.93% 1.52%
assets A E
after expense reductions
Ratio of expenses to
average net 1.97% 1.51% 1.93% 1.89% 2.16% 2.50% 2.37% 2.24% 1.93% 1.52%
assets B B A
after expense reductions
Ratio of net investment
income .04% 1.07% .97% 1.21% .40% 1.21% 1.65% 1.27% 1.61% 1.03%
to average A
net assets
Portfolio turnover
rate 87% 106% 81% 214% 87% 87% 99% 117% 179% 170%
A
</TABLE>
A ANNUALIZED
B FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
C FOR THE TEN MONTHS ENDED FEBRUARY 28, 1993
D FOR THE YEAR ENDED APRIL 30
E DURING THE PERIOD, FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S
EXPENSES, OR EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE
LIMITATION. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
F FOR PERIODS PRESENTED SUBSEQUENT TO 1987, NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH
PERIOD. AS OF MAY 1, 1987, THE FUNDS DISCONTINUED THE USE OF EQUALIZATION
ACCOUNTING.
G TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
H THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
I FOR THE YEAR ENDED FEBRUARY 29
COMPUTERS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share
Data and 1996M 1995 1994 1993D 1992E 1991E 1990E 1989E 1988E 1987E
Ratios G
Years ended February 28
Net asset value,
beginning of $ 30.67 $ 27.02 $ 20.15 $ 17.63 $ 16.60 $ 12.68 $ 11.60 $ 11.86 $ 16.60 $ 13.30
period
Income from Investment
Operations
Net investment
income (loss) (.23) (.31) (.21)L (.15) (.03)K .42J (.11) (.13) (.11) .03
Net realized and
unrealized 16.10 3.68 8.66 2.44 1.18 3.21 .98 (.13) (4.29) 3.31
gain (loss) on
investments
Total from
investment 15.87 3.37 8.45 2.29 1.15 3.63 .87 (.26) (4.40) 3.34
operations
Less Distributions
From net investment
income -- -- -- -- -- (.12) -- -- (.01) --
In excess of net
investment -- -- -- -- (.27) -- -- -- -- --
income
From net realized
gain (5.61) -- (1.80) -- (.22) -- -- -- (.33) (.04)
Total
distributions (5.61) -- (1.80) -- (.49) (.12) -- -- (.34) (.04)
Redemption fees
added to paid .10 .28 .22 .23 .37 .41 .21 -- -- --
in capital
Net asset value,
end of period $ 41.03 $ 30.67 $ 27.02 $ 20.15 $ 17.63 $ 16.60 $ 12.68 $ 11.60 $ 11.86 $ 16.60
Total return H,I 52.79% 13.51% 45.06% 14.29% 9.36% 32.11% 9.31% (2.19) (26.33) 25.26%
% %
Net assets, end
of period (000 $ 527,337 $ 215,014 $ 120,435 $ 47,596 $ 32,810 $ 29,455 $ 27,561 $ 15,730 $ 23,110 $ 118,910
omitted)
Ratio of expenses
to average net 1.40% 1.71% 1.90% 1.81% 2.17% 2.26% 2.64% 2.56% 2.62% 1.58%
assets A F F F
Ratio of expenses
to average net 1.38% 1.69% 1.89% 1.81% 2.17% 2.26% 2.64% 2.56% 2.62% 1.58%
assets B B B A
after expense reductions
Ratio of net
investment income (.56) (1.12) (.91) (.98)% (.18) 2.94% (.94) (1.18) (.75) .32%
(loss) to average % % % A % % % %
net assets
Portfolio turnover
rate 129% 189% 145% 254% 568% 695% 596% 466% 284% 259%
A
</TABLE>
CONSTRUCTION AND HOUSING
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data
and Ratios 1996M 1995 1994 1993D 1992E 1991E 1990E 1989E 1988E 1987C
G
Years ended February 28
Net asset value, beginning
of period $ 16.79 $ 19.82 $ 15.74 $ 13.84 $ 11.76 $ 11.66 $ 13.01 $ 11.25 $ 13.74 $ 10.00
Income from Investment Operations
Net investment income
(loss) .07 (.02) .01 .02 (.06) .01 -- .14 (.05) .06
Net realized and
unrealized gain 3.55 (2.50) 4.26 1.87 2.93 1.45 .34 1.95 (2.31) 3.68
(loss) on investments
Total from investment
operations 3.62 (2.52) 4.27 1.89 2.87 1.46 .34 2.09 (2.36) 3.74
Less Distributions
From net investment
income (.07) -- -- -- -- (.16) (.08) (.06) -- --
From net realized gain (.81) (.52) (.22) (.01) (.88) (1.27) (1.62) (.27) (.13) --
Total distributions (.88) (.52) (.22) (.01) (.88) (1.43) (1.70) (.33) (.13) --
Redemption fees added to
paid in .03 .01 .03 .02 .09 .07 .01 -- -- --
capital
Net asset value, end of
period $ 19.56 $ 16.79 $ 19.82 $ 15.74 $ 13.84 $ 11.76 $ 11.66 $ 13.01 $ 11.25 $ 13.74
Total return H,I 21.77% (12.54) 27.45% 13.81% 26.96% 13.46% 2.39% 19.01% (16.85) 37.40%
% %
Net assets, end of period
(000 $ 42,668 $ 16,863 $ 80,999 $ 31,111 $ 26,687 $ 4,070 $ 1,217 $ 1,335 $ 3,112 $ 6,387
omitted)
Ratio of expenses to
average net 1.43% 1.76% 1.67% 2.02% 2.50% 2.48% 2.41% 2.56% 2.70% 1.46%
assets A F F F F F A
Ratio of expenses to
average net 1.40% 1.74% 1.66% 2.02% 2.50% 2.48% 2.41% 2.56% 2.70% 1.46%
assets B B B A A
after expense reductions
Ratio of net investment
income .39% (.11) .03% .20% (.49) .08% (.03) 1.16% (.41) .57%
(loss) to average % A % % % A
net assets
Portfolio turnover rate 139% 45% 35% 60% 183% 137% 185% 225% 330% 590%
A A
</TABLE>
A ANNUALIZED
B FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
C FROM SEPTEMBER 29, 1986 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1987
D FOR THE TEN MONTHS ENDED FEBRUARY 28, 1993
E FOR THE YEAR ENDED APRIL 30
F DURING THE PERIOD, FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S
EXPENSES, OR EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE
LIMITATION. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
G FOR PERIODS PRESENTED SUBSEQUENT TO 1987, NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH
PERIOD. AS OF MAY 1, 1987, THE FUNDS DISCONTINUED THE USE OF EQUALIZATION
ACCOUNTING.
H TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
I THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
J INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO
$.08 PER SHARE AND $.36 PER SHARE RELATING TO A NONRECURRING INITIATIVE TO
INVEST IN DIVIDEND INCOME PRODUCING SECURITIES WHICH WAS IN EFFECT FOR A
PORTION OF 1991.
K INVESTMENT INCOME PER SHARE REFLECTS $.22 PER SHARE RELATING TO A
NONRECURRING INITIATIVE TO INVEST IN DIVIDEND INCOME PRODUCING SECURITIES
WHICH WAS IN EFFECT FOR A PORTION OF 1992.
L INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO
$.07 PER SHARE.
M FOR THE YEAR ENDED FEBRUARY 29
CONSUMER PRODUCTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data and RatiosF 1996L 1995 1994 1993C 1992D 1991B
Years ended February 28
Net asset value, beginning of period $ 13.91 $ 15.24 $ 12.97 $ 13.81 $ 11.22 $ 10.00
Income from Investment Operations
Net investment income (loss) .08 (.15) (.20) (.09) (.07) .05I
Net realized and unrealized gain (loss) on investments 3.97 (.60) 3.84 .20 2.86 1.18
Total from investment operations 4.05 (.75) 3.64 .11 2.79 1.23
Less Distributions
From net investment income (.02) -- -- -- -- (.06)
From net realized gain (.01) (.60) (1.40) (.97) (.22) --
In excess of net realized gain (.20) -- -- -- -- --
Total distributions (.23) (.60) (1.40) (.97) (.22) (.06)
Redemption fees added to paid in capital .11 .02 .03 .02 .02 .05
Net asset value, end of period $ 17.84 $ 13.91 $ 15.24 $ 12.97 $ 13.81 $ 11.22
Total return G,H 30.01% (4.59)% 28.43% .98% 25.27% 12.89%
Net assets, end of period (000 omitted) $ 22,362 $ 20,501 $ 8,374 $ 7,005 $ 7,553 $ 1,877
Ratio of expenses to average net assets 1.53% 2.49% 2.48% 2.47% 2.48% 2.43%
E E E A,E E A,E
Ratio of expenses to average net assets before expense reductions 1.48% 2.49% 2.48% 2.47% 2.48% 2.43%
K A A
Ratio of net investment income (loss) to average net assets .46% (1.08)% (1.34)% (.80)% (.56)% .62%
A A
Portfolio turnover rate 601% 190% 169% 215% 140% 108%
A A
</TABLE>
DEFENSE AND AEROSPACE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data and 1996L 1995 1994 1993C 1992D 1991D 1990D 1989D 1988D 1987D
Ratios F
Years ended February 28
Net asset value, beginning
of period $ 19.64 $ 19.14 $ 15.08 $ 14.37 $ 13.72 $ 11.90 $ 12.42 $ 12.16 $ 16.05 $ 15.870
Income from Investment Operations
Net investment income (loss) (.05) (.06) .07 (.02) (.01) .10 .04 (.05) (.12) .045
Net realized and unrealized
gain 9.09 .70J 4.57 .69 .67 1.72 (.56) .31 (3.31) .360
(loss) on investments
Total from investment
operations 9.04 .64 4.64 .67 .66 1.82 (.52) .26 (3.43) .405
Less Distributions
From net investment income -- -- (.10) -- (.04) (.12) -- -- -- (.025)
In excess of net investment -- -- -- -- (.02) -- -- -- -- --
income
From net realized gain (1.82) (.27) (.62) -- -- -- -- -- (.46) (.200)
Total distributions (1.82) (.27) (.72) -- (.06) (.12) -- -- (.46) (.225)
Redemption fees added to
paid in .11 .13 .14 .04 .05 .12 -- -- -- --
capital
Net asset value, end of
period $ 26.97 $ 19.64 $ 19.14 $ 15.08 $ 14.37 $ 13.72 $ 11.90 $ 12.42 $ 12.16 $ 16.050
Total return G,H 47.40% 4.13% 32.04 4.94% 5.18% 16.42 (4.19) 2.14% (20.90) 2.57
% % % % %
Net assets, end of period
(000 $ 26,648 $ 4,985 $ 11,136 $ 1,463 $ 1,280 $ 3,070 $ 1,599 $ 1,759 $ 2,439 $ 4,582
omitted)
Ratio of expenses to
average net 1.77% 2.49%E 2.53 2.48%A 2.46% 2.49 2.43% 2.53% 2.33% 1.54
assets E E %E ,E E %E E E E %
Ratio of expenses to
average net 1.75% 2.49% 2.53 2.48%A 2.46% 2.49 2.43% 2.53% 2.33% 1.54
assets E K % % %
before expense reductions E
Ratio of net investment
income (.20) (.32)% .40 (.14)% (.10) .78 .34% (.39) (.91) .16
(loss) to average % % A % % % % %
net assets
Portfolio turnover rate 267% 146% 324 87%A 32% 162 96% 62% 162% 264
% % %
</TABLE>
A ANNUALIZED
B FROM JUNE 29, 1990 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1991
C FOR THE TEN MONTHS ENDED FEBRUARY 28, 1993
D FOR THE YEAR ENDED APRIL 30
E DURING THE PERIOD, FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S
EXPENSES, OR EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE
LIMITATION. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
F FOR PERIODS PRESENTED SUBSEQUENT TO 1987, NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH
PERIOD. AS OF MAY 1, 1987, THE FUNDS DISCONTINUED THE USE OF EQUALIZATION
ACCOUNTING.
G TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
H THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
I INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO
$.02 PER SHARE.
J THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET GAIN (LOSS) ON INVESTMENTS FOR THE PERIOD ENDED DUE TO THE
TIMING OF SALES AND REPURCHASES OF FUND SHARES IN RELATION TO FLUCTUATING
MARKET VALUES OF THE INVESTMENTS OF THE FUND.
K FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
L FOR THE YEAR ENDED FEBRUARY 29
DEVELOPING COMMUNICATIONS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data and Ratios G
Years ended February 28 1996C 1995 1994 1993D 1992E 1991B
Net asset value, beginning of period $ 20.40 $ 19.65 $ 16.44 $ 13.54 $ 11.95 $ 10.00
Income from Investment Operations
Net investment income (loss) (.17) (.16) (.16) (.07) (.08)K (.10)
Net realized and unrealized gain (loss) on investments 4.17 2.55 4.82 2.98 2.42 1.86
Total from investment operations 4.00 2.39 4.66 2.91 2.34 1.76
Less Distributions
From net realized gain (5.00) (1.67) (1.47) (.03) (.79) --
Redemption fees added to paid in capital .02 .03 .02 .02 .04 .19
Net asset value, end of period $ 19.42 $ 20.40 $ 19.65 $ 16.44 $ 13.54 $ 11.95
Total return H,I 21.84% 13.63% 30.24% 21.66% 21.41% 19.50%
Net assets, end of period (000 omitted) $ 333,185 $ 254,426 $ 222,109 $ 83,383 $ 39,261 $ 7,745
Ratio of expenses to average net assets 1.53% 1.58% 1.56% 1.88%A 2.50% 2.50%A,
L
Ratio of expenses to average net assets after expense reductions 1.51%F 1.56%F 1.56% 1.88%A 2.50% 2.50%A
Ratio of net investment income (loss) to average net assets (.78)% (.83)% (.88)% (.59)% (.61)% (1.23)%
A A
Portfolio turnover rate 249% 266% 280% 77%A 25% 469%A
</TABLE>
ELECTRONICS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data and
Ratios G
Years ended
February 28 1996C 1995 1994 1993D 1992E 1991E 1990E 1989E 1988E 1987E
Net asset value,
beginning of $ 19.80 $ 17.67 $ 14.28 $ 11.81 $ 10.75 $ 9.11 $ 7.32 $ 7.86 $ 10.79 $ 12.14
period
Income from Investment
Operations
Net investment
income (loss) (.08) (.18) (.09) (.05) (.12) (.04) -- (.11) (.09) (.02)J
Net realized and
unrealized 13.51 2.11M 6.09 2.33 1.00 1.53 1.62 (.43) (2.84) (1.33)
gain (loss)
on investments
Total from
investment 13.43 1.93 6.00 2.28 .88 1.49 1.62 (.54) (2.93) (1.35)
operations
Less Distributions
From net investment
income -- -- -- -- -- (.01) -- -- -- --
From net realized
gain (5.25) -- (2.75) -- -- -- -- -- -- --
Total
distributions (5.25) -- (2.75) -- -- (.01) -- -- -- --
Redemption fees
added to paid .20 .20 .14 .19 .18 .16 .17 -- -- --
in capital
Net asset value,
end of period $ 28.18 $ 19.80 $ 17.67 $ 14.28 $ 11.81 $ 10.75 $ 9.11 $ 7.32 $ 7.86 $ 10.79
Total return H,I 72.75% 12.05% 46.24% 20.91% 9.86% 18.15% 24.45% (6.87) (27.15) (11.12)
% % %
Net assets, end of
period (000 $ 1,133,36 $ 216,433 $ 110,993 $ 48,027 $ 34,222 $ 18,178 $ 26,141 $ 8,667 $ 12,963 $ 16,626
omitted) 2
Ratio of expenses
to average net 1.25% 1.72% 1.67% 1.69% 2.16% 2.26% 2.57% 2.79% 2.54% 1.61%
assets A L L L
Ratio of expenses
to average net 1.22% 1.71% 1.67% 1.69% 2.16% 2.26% 2.57% 2.79% 2.54% 1.61%
assets F F A
after expense reductions
Ratio of net
investment income (.28) (.98) (.52) (.50)% (1.07) (.45) (.02) (1.51) (1.02) .05%
(loss) to average % % % A % % % % %
net assets
Portfolio turnover
rate 366% 205% 163% 293% 299% 268% 378% 697% 686% 511%
A
</TABLE>
A ANNUALIZED
B FROM JUNE 29, 1990 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1991
C FOR THE YEAR ENDED FEBRUARY 29
D FOR THE TEN MONTHS ENDED FEBRUARY 28, 1993
E FOR THE YEAR ENDED APRIL 30
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
G FOR PERIODS PRESENTED SUBSEQUENT TO 1987, NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH
PERIOD. AS OF MAY 1, 1987, THE FUNDS DISCONTINUED THE USE OF EQUALIZATION
ACCOUNTING.
H TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
I THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
J NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE MONTHLY SHARES OUTSTANDING.
K INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO
$.06 PER SHARE.
L DURING THE PERIOD, FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S
EXPENSES, OR EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE
LIMITATION. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
M THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET GAIN (LOSS) ON INVESTMENTS FOR THE PERIOD ENDED DUE TO THE
TIMING OF SALES AND REPURCHASES OF FUND SHARES IN RELATION TO FLUCTUATING
MARKET VALUES OF THE INVESTMENTS OF THE FUND.
ENERGY
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data and Ratios F
Years ended
February 28 1996I 1995 1994 1993C 1992D 1991D 1990D 1989D 1988D 1987D
Net asset value,
beginning of
period $ 16.10 $ 16.73 $ 15.84 $ 14.70 $ 15.43 $ 16.64 $ 14.40 $ 13.15 $ 13.68 $ 9.92
Income from Investment Operations
Net investment
income .18 .07 .06 .23 .17 .16 .27 .32 .24 .43
Net realized and
unrealized gain
(loss) 3.13 (.11) 1.35 1.16 (.75) .15 2.23 1.25 (.47) 3.33
on investments
Total from investment
operations 3.31 (.04) 1.41 1.39 (.58) .31 2.50 1.57 (.23) 3.76
Less Distributions
From net investment
income (.11) (.08) (.03) (.27) (.16) (.15) (.07) (.32) (.03) --
From net realized
gain (.36) (.54) (.57) -- (.02) (1.43) (.22) -- (.27) --
Total
distributions (.47) (.62) (.60) (.27) (.18) (1.58) (.29) (.32) (.30) --
Redemption fees added
to paid in capital .03 .03 .08 .02 .03 .06 .03 -- -- --
Net asset value,
end of period $ 18.97 $ 16.10 $ 16.73 $ 15.84 $ 14.70 $ 15.43 $ 16.64 $ 14.40 $ 13.15 $ 13.68
Total return G,H 20.92 .04 9.69 9.81 (3.55) 2.26 17.52 12.37 (1.15) 37.90
% % % % % % % % % %
Net assets, end
of period (000
omitted) $ 119,676 $ 96,023 $ 145,490 $ 179,133 $ 77,334 $ 92,611 $ 83,912 $ 80,225 $ 109,429 $ 104,671
Ratio of expenses
to average net
assets 1.63 1.85 1.67 1.71 1.78 1.79 1.94 1.77 2.09 1.50
% % % %A % % % % % %
Ratio of expenses
to average net
assets 1.63 1.85 1.66 1.71 1.78 1.79 1.94 1.77 2.09 1.50
after expense
reductions % % %B %A % % % % % %
Ratio of net
investment income
to average 1.04 .42 .37 1.88 1.16 .99 1.69 2.48 1.72 3.31
net assets % % % %A % % % % % %
Portfolio turnover
rate 97 106 157 72 81 61 74 168 183 226
% % % %A % % % % % %
</TABLE>
ENERGY SERVICE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data and Ratios F
Years ended February
28 1996I 1995 1994 1993C 1992D 1991D 1990D 1989D 1988D 1987D
Net asset value,
beginning of period $ 11.97 $ 11.66 $ 11.01 $ 9.43 $ 12.51 $ 12.19 $ 8.99 $ 9.22 $ 10.86 $ 8.82
Income from Investment Operations
Net investment
income (loss) .08J .02 .03 .01 (.12) -- (.05) (.04) (.12) .12
Net realized and
unrealized gain (loss) 4.49 .67 .51 1.47 (3.11) .15 3.17 (.19) (1.52) 1.92
on investments
Total from investment
operations 4.57 .69 .54 1.48 (3.23) .15 3.12 (.23) (1.64) 2.04
Less Distributions
From net investment
income (.04) (.01) (.05) -- -- (.02) -- -- -- --
In excess of net
investment income -- (.01) -- -- -- -- -- -- -- --
From net realized
gain (.48) (.35) -- -- -- -- -- -- -- --
In excess of net
realized gain -- (.13) -- -- -- -- -- -- -- --
Total distributions (.52) (.50) (.05) -- -- (.02) -- -- -- --
Redemption fees added
to paid in capital .07 .12 .16 .10 .15 .19 .08 -- -- --
Net asset value, end
of period $ 16.09 $ 11.97 $ 11.66 $ 11.01 $ 9.43 $ 12.51 $ 12.19 $ 8.99 $ 9.22 $ 10.86
Total return G,H 39.15 7.60 6.36 16.76 (24.62) 2.80 35.60 (2.49) (15.10) 23.13
% % % % % % % % % %
Net assets, end of
period (000 omitted) $ 273,805 $ 63,794 $ 40,857 $ 85,234 $ 41,322 $ 73,398 $ 61,821 $ 44,003 $ 33,089 $ 19,375
Ratio of expenses to
average net assets 1.59 1.81 1.66 1.76 2.07 1.82 2.29 2.53 2.71 1.49
% % % %A % % % %E %E %
Ratio of expenses to
average net assets 1.58 1.79 1.65 1.76 2.07 1.82 2.29 2.53 2.71 1.49
after expense
reductions %B %B %B %A % % % % % %
Ratio of net
investment income
(loss) to .60 .19 .23 .13 (1.13) (.02) (.42) (.45) (1.06) 1.03
average net assets % % % %A % % % % % %
Portfolio turnover
rate 223 209 137 236 89 62 128 78 461 575
% % % %A % % % % % %
</TABLE>
A ANNUALIZED
B FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
C FOR THE TEN MONTHS ENDED FEBRUARY 28, 1993
D FOR THE YEAR ENDED APRIL 30
E DURING THE PERIOD, FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S
EXPENSES, OR EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE
LIMITATION. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
F FOR PERIODS PRESENTED SUBSEQUENT TO 1987, NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH
PERIOD. AS OF MAY 1, 1987, THE FUNDS DISCONTINUED THE USE OF EQUALIZATION
ACCOUNTING.
G TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
H THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
I FOR THE YEAR ENDED FEBRUARY 29
J INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND FROM ARETHUSA
OFFSHORE LTD. WHICH AMOUNTED TO $.02 PER SHARE.
ENVIRONMENTAL SERVICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data and Ratios F
Years ended February 28 1996I 1995 1994 1993C 1992D 1991D 1990B
Net asset value, beginning of period $ 10.27 $ 11.93 $ 11.36 $ 11.39 $ 12.95 $ 11.41 $ 10.00
Income from Investment Operations
Net investment income (loss) (.17) (.14) (.11) (.06) (.09) (.04) .02
Net realized and unrealized gain (loss) on
investments 2.95 (1.53) .67 .42 (1.06) 1.55 1.38
Total from investment operations 2.78 (1.67) .56 .36 (1.15) 1.51 1.40
Less Distributions
From net investment income -- -- -- -- -- -- (.01)
From net realized gain (.65) -- -- (.39) (.42) -- --
Total distributions (.65) -- -- (.39) (.42) -- (.01)
Redemption fees added to paid in capital .02 .01 .01 -- .01 .03 .02
Net asset value, end of period $ 12.42 $ 10.27 $ 11.93 $ 11.36 $ 11.39 $ 12.95 $ 11.41
Total return G,H 27.49% (13.91) 5.02% 3.34% (8.67) 13.50% 14.20%
% %
Net assets, end of period (000 omitted) $ 27,587 $ 31,270 $ 65,956 $ 65,913 $ 65,132 $ 100,263 $ 101,736
Ratio of expenses to average net assets 2.36% 2.04% 2.07% 1.99% 2.03% 2.03% 2.25%
A A
Ratio of expenses to average net assets after
expense reductions 2.32% 2.01% 2.03% 1.99% 2.03% 2.03% 2.25%
E E E A A
Ratio of net investment income (loss) to average
net assets (1.43) (1.32) (1.02) (.70)% (.74) (.30) .16%
% % % A % % A
Portfolio turnover rate 138% 82% 191% 176% 130% 122% 72%
A A
</TABLE>
FINANCIAL SERVICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data and Ratios F
Years ended
February 28 1996I 1995 1994 1993C 1992D 1991D 1990D 1989D 1988D 1987D
Net asset value,
beginning of
period $ 48.23 $ 51.24 $ 53.29 $ 42.42 $ 30.55 $ 28.28 $ 30.64 $ 26.36 $ 32.47 $ 34.360
Income from Investment Operations
Net investment
income 1.03 .76 .29 .33 .54 .58 .66 1.00 .48 .557
Net realized and
unrealized gain 17.56 .87 5.02 14.30 11.35 1.67 (2.53) 4.09 (4.93) (1.912)
(loss) on investments
Total from
investment
operations 18.59 1.63 5.31 14.63 11.89 2.25 (1.87) 5.09 (4.45) (1.355)
Less Distributions
From net investment
income (.37) (.79) (.20) (.51) (.35) (.52) (.33) (.81) (.12) (.205)
From net realized
gain (.91) (3.93) (7.32) (3.38) -- -- (.19) -- (1.54) (.330)
Total
distributions (1.28) (4.72) (7.52) (3.89) (.35) (.52) (.52) (.81) (1.66) (.535)
Redemption fees
added to paid in .16 .08 .16 .13 .33 .54 .03 -- -- --
capital
Net asset value,
end of period $ 65.70 $ 48.23 $ 51.24 $ 53.29 $ 42.42 $ 30.55 $ 28.28 $ 30.64 $ 26.36 $ 32.470
Total return G,H 39.05% 4.72% 10.85% 36.46% 40.31% 10.51% (6.20) 19.68% (12.97) (4.05)
% % %
Net assets, end of
period (000
omitted) $ 270,466 $ 153,089 $ 116,195 $ 214,612 $ 91,700 $ 35,962 $ 21,087 $ 32,647 $ 28,371 $ 56,472
Ratio of expenses
to average net 1.42% 1.56% 1.64% 1.54% 1.85% 2.49% 2.22% 1.07% 2.47% 1.57%
assets A
Ratio of expenses
to average net 1.41% 1.54% 1.63% 1.54% 1.85% 2.49% 2.22% 1.07% 2.47% 1.57%
assets E E E A
after expense reductions
Ratio of net investment
income to 1.78% 1.52% .53% .86% 1.49% 2.22% 2.03% 3.53% 1.58% 1.65%
average net assets A
Portfolio turnover
rate 125% 107% 93% 100% 164% 237% 308% 186% 81% 40%
A
</TABLE>
A ANNUALIZED
B FROM JUNE 29, 1989 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1990
C FOR THE TEN MONTHS ENDED FEBRUARY 28, 1993
D FOR THE YEAR ENDED APRIL 30
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
F FOR PERIODS PRESENTED SUBSEQUENT TO 1987, NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH
PERIOD. AS OF MAY 1, 1987, THE FUNDS DISCONTINUED THE USE OF EQUALIZATION
ACCOUNTING.
G TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
H THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
I FOR THE YEAR ENDED FEBRUARY 29
FOOD AND AGRICULTURE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share
Data and 1996K 1995 1994 1993C 1992D 1991D 1990D 1989D 1988D 1987D
Ratios F
Years ended February 28
Net asset value,
beginning of $ 32.53 $ 31.49 $ 30.86 $ 29.22 $ 27.87 $ 22.84 $ 20.76 $ 16.05 $ 17.51 $ 14.05
period
Income from Investment
Operations
Net investment
income (loss) .37 .15 .09 .05 .13 .21 .19 .09 (.01) .10
Net realized and
unrealized 11.61 2.80 3.29 3.26 2.89 5.78 4.07 4.67 (.87) 3.36
gain (loss) on
investments
Total from
investment 11.98 2.95 3.38 3.31 3.02 5.99 4.26 4.76 (.88) 3.46
operations
Less Distributions
From net investment
income (.20) (.08) (.06) (.10) (.11) (.27) (.04) (.05) (.03) --
From net realized
gain (2.20) (1.85) (2.70) (1.57) (1.59) (.79) (2.17) -- (.55) --
Total distributions (2.40) (1.93) (2.76) (1.67) (1.70) (1.06) (2.21) (.05) (.58) --
Redemption fees added
to paid .04 .02 .01 -- .03 .10 .03 -- -- --
in capital
Net asset value, end
of period $ 42.15 $ 32.53 $ 31.49 $ 30.86 $ 29.22 $ 27.87 $ 22.84 $ 20.76 $ 16.05 $ 17.51
Total return G,H 37.92% 10.14% 11.69% 11.72% 11.11% 27.39% 20.83% 29.70% (4.63) 24.63%
%
Net assets, end of
period (000 $ 301,102 $ 197,130 $ 95,010 $ 108,377 $ 108,922 $ 64,490 $ 25,965 $ 15,536 $ 9,298 $ 11,244
omitted)
Ratio of expenses
to average net 1.43% 1.70% 1.65% 1.67% 1.83% 2.22% 2.53% 2.50% 2.45% 1.67%
assets A E E E
Ratio of expenses
to average net 1.42% 1.68% 1.64% 1.67% 1.83% 2.22% 2.53% 2.50% 2.45% 1.67%
assets B B B A
after expense reductions
Ratio of net investment
income .99% .49% .29% .21% .46% .85% .82% .48% (.04) .71%
(loss) to A %
average net assets
Portfolio turnover
rate 124% 126% 96% 515% 63% 124% 267% 248% 215% 608%
A
</TABLE>
HEALTH CARE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data and
Ratios F 1996K 1995 1994 1993C 1992D 1991D 1990D 1989D 1988D 1987D
Years ended February 28
Net asset value, beginning of
period $ 76.13 $ 63.31 $ 52.57 $ 70.42 $ 69.99 $ 46.15 $ 39.79 $ 33.59 $ 41.98 $ 33.57
Income from Investment Operations
Net investment income
(loss) .95 .75 .15 .13 (.02) .73J .72 .33 .02 (.04)I
Net realized and unrealized gain
(loss) 28.85 18.38 10.61 (9.34) 9.47 28.70 6.56 6.15 (7.49) 8.81
on investments
Total from investment
operations 29.80 19.13 10.76 (9.21) 9.45 29.43 7.28 6.48 (7.47) 8.77
Less Distributions
From net investment
income (.59) (.62) (.07) (.16) (.34) (.20) (.13) (.28) -- --
From net realized
gain (4.92) (5.74) -- (8.51) (8.81) (5.67) (.84) -- (.92) (.36)
Total
distributions (5.51) (6.36) (.07) (8.67) (9.15) (5.87) (.97) (.28) (.92) (.36)
Redemption fees added
to paid in .05 .05 .05 .03 .13 .28 .05 -- -- --
capital
Net asset value, end
of period $ 100.47 $ 76.13 $ 63.31 $ 52.57 $ 70.42 $ 69.99 $ 46.15 $ 39.79 $ 33.59 $ 41.98
Total
return G,H 39.68% 31.24% 20.57% (14.81) 13.92% 69.32 18.55 19.44 (17.58) 26.34%
% % % % %
Net assets, end of period (000
omitted) $ 1,525,9 $ 943,141 $ 522,890 $ 536,367 $ 838,814 $ 624,018 $ 217,522 $ 210,700 $ 208,048 $ 341,633
10
Ratio of expenses to average
net 1.31% 1.39% 1.59% 1.46% 1.44% 1.53 1.74 1.41 1.64% 1.39%
assets A % % %
Ratio of expenses to
average net 1.30% 1.36% 1.55% 1.46% 1.44% 1.53 1.74 1.41 1.64% 1.39%
assets B B B A % % %
before expense reductions
Ratio of net investment income
(loss) 1.06% 1.08% .26% .24% (.02) 1.28 1.61 .95 .06% (.01)
to average net assets A % % % % %
Portfolio turnover
rate 54% 151% 213% 112% 154% 159 126 114 122% 213%
A % % %
</TABLE>
A ANNUALIZED
B FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
C FOR THE TEN MONTHS ENDED FEBRUARY 28, 1993
D FOR THE YEAR ENDED APRIL 30
E DURING THE PERIOD, FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S
EXPENSES, OR EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE
LIMITATION. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
F FOR PERIODS PRESENTED SUBSEQUENT TO 1987, NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH
PERIOD. AS OF MAY 1, 1987, THE FUNDS DISCONTINUED THE USE OF EQUALIZATION
ACCOUNTING.
G TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
H THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
I NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE MONTHLY SHARES OUTSTANDING.
J INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO
$.55 PER SHARE.
K FOR THE YEAR ENDED FEBRUARY 29
HOME FINANCE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share
Data and 1996F 1995 1994 1993D 1992E 1991E 1990E 1989E 1988E 1987E
Ratios G
Years ended February 28
Net asset value,
beginning of $ 23.92 $ 25.03 $ 22.18 $ 15.38 $ 10.84 $ 8.98 $ 10.88 $ 8.57 $ 14.44 $ 13.32
period
Income from Investment
Operations
Net investment
income (loss) .53 .20 .03 .09 .05 .16 .09 .11 .02 (.01)
Net realized
and unrealized 9.72 2.34 4.15 6.80 4.40 1.69 (1.47) 2.33 (2.39) 1.13
gain (loss)
on investments
Total from
investment 10.25 2.54 4.18 6.89 4.45 1.85 (1.38) 2.44 (2.37) 1.12
operations
Less Distributions
From net investment
income (.19) (.12) (.01) (.01) (.14) (.14) (.04) (.13) -- --
From net realized
gain (.73) (3.60) (1.40) (.28) -- -- (.49) -- (3.50) --
Total distributions (.92) (3.72) (1.41) (.29) (.14) (.14) (.53) (.13) (3.50) --
Redemption fees added
to paid .05 .07 .08 .20 .23 .15 .01 -- -- --
in capital
Net asset value, end
of period $ 33.30 $ 23.92 $ 25.03 $ 22.18 $ 15.38 $ 10.84 $ 8.98 $ 10.88 $ 8.57 $ 14.44
Total return H,I 43.24% 12.43% 19.61% 46.43% 43.62% 22.88% (13.04) 28.76% (11.60) 8.41%
% %
Net assets, end of
period (000 $ 617,035 $ 229,924 $ 155,563 $ 337,903 $ 49,405 $ 8,782 $ 5,432 $ 5,557 $ 6,387 $ 24,656
omitted)
Ratio of expenses to
average net 1.35% 1.47% 1.58% 1.55% 2.08% 2.50% 2.53% 2.56% 2.57% 1.53%
assets A K K K K
Ratio of expenses to
average net 1.32% 1.45% 1.58% 1.55% 2.08% 2.50% 2.53% 2.56% 2.57% 1.53%
assets C C A
after expense reductions
Ratio of net investment
income 1.80% .80% .11% .61% .40% 1.78% .83% 1.13% .17% (.05)
(loss) to average A %
net assets
Portfolio turnover
rate 81% 124% 95% 61% 134% 159% 282% 216% 456% 335%
A
</TABLE>
INDUSTRIAL EQUIPMENT
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share
Data and 1996F 1995 1994 1993D 1992E 1991E 1990E 1989E 1988E 1987J
Ratios G
Years ended February 28
Net asset value,
beginning of $ 20.04 $ 20.61 $ 15.04 $ 13.89 $ 11.60 $ 12.41 $ 11.05 $ 10.52 $ 12.75 $ 10.00
period
Income from Investment
Operations
Net investment income
(loss) .04 .01 -- .02 (.07) .01 .13B (.07) (.04) .07
Net realized and
unrealized 7.10 (.44) 5.92 1.09 2.39 (.80) 1.19 .60 (1.96) 2.68
gain (loss) on
investments
Total from investment 7.14 (.43) 5.92 1.11 2.32 (.79) 1.32 .53 (2.00) 2.75
operations
Less Distributions
From net investment
income (.05) (.01) (.01) -- -- -- -- -- -- --
In excess of net
investment -- -- -- -- (.11) (.09) -- -- -- --
income
From net realized
gain (2.05) (.16) (.40) -- -- -- -- -- (.23) --
Total distributions (2.10) (.17) (.41) -- (.11) (.09) -- -- (.23) --
Redemption fees added
to paid .03 .03 .06 .04 .08 .07 .04 -- -- --
in capital
Net asset value, end of
period $ 25.11 $ 20.04 $ 20.61 $ 15.04 $ 13.89 $ 11.60 $ 12.41 $ 11.05 $ 10.52 $ 12.75
Total return H,I 36.86% (1.93)% 40.07% 8.28% 20.91% (5.90)% 12.31% 5.04% (15.32)% 27.50%
Net assets, end of
period (000 $ 137,520 $ 109,968 $ 206,012 $ 14,601 $ 7,529 $ 1,949 $ 3,240 $ 2,965 $ 5,607 $ 2,355
omitted)
Ratio of expenses to
average net 1.54% 1.80% 1.69% 2.49% 2.49% 2.52% 2.59% 2.58% 2.65% 1.70%
assets A,K K K K K K A
Ratio of expenses to
average 1.53% 1.78% 1.68% 2.49% 2.49% 2.52% 2.59% 2.58% 2.65% 1.70%
net assets C C C A A
after expense reductions
Ratio of net investment
income .19% .06% .01% .15% (.57)% .09% 1.06% (.66)% (.37)% .38%
(loss) to average net assets A A
Portfolio turnover rate 115% 131% 95% 407% 167% 43% 132% 164% 407% 514%
A A
</TABLE>
A ANNUALIZED
B INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO
$.11 PER SHARE.
C FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
D FOR THE TEN MONTHS ENDED FEBRUARY 28, 1993
E FOR THE YEAR ENDED APRIL 30
F FOR THE YEAR ENDED FEBRUARY 29
G FOR PERIODS PRESENTED SUBSEQUENT TO 1987, NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH
PERIOD. AS OF MAY 1, 1987, THE FUNDS DISCONTINUED THE USE OF EQUALIZATION
ACCOUNTING.
H TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
I THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
J FROM SEPTEMBER 29, 1986 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1987
K DURING THE PERIOD, FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S
EXPENSES, OR EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE
LIMITATION. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
INDUSTRIAL MATERIALS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share
Data and 1996F 1995 1994 1993D 1992E 1991E 1990E 1989E 1988E 1987B
Ratios G
Years ended February 28
Net asset value,
beginning of $ 23.13 $ 21.67 $ 17.44 $ 17.12 $ 12.63 $ 12.43 $ 13.73 $ 13.15 $ 14.56 $ 10.00
period
Income from Investment
Operations
Net investment income
(loss) .12 .17 .15 .12 .04 .15 .17 (.07) .06 .04
Net realized and
unrealized 2.92 1.43 4.07 .19 4.32 .37 (1.50) .86 (1.44) 4.52
gain (loss)
on investments
Total from investment 3.04 1.60 4.22 .31 4.36 .52 (1.33) .79 (1.38) 4.56
operations
Less Distributions
From net investment
income (.15) (.18) (.06) (.08) -- -- -- (.21) (.02) --
In excess of net
investment -- -- -- -- (.06) (.34) -- -- -- --
income
From net realized
gain -- -- -- -- -- -- -- -- (.01) --
Total distributions (.15) (.18) (.06) (.08) (.06) (.34) -- (.21) (.03) --
Redemption fees added
to paid .05 .04 .07 .09 .19 .02 .03 -- -- --
in capital
Net asset value, end of
period $ 26.07 $ 23.13 $ 21.67 $ 17.44 $ 17.12 $ 12.63 $ 12.43 $ 13.73 $ 13.15 $ 14.56
Total return H,I 13.38% 7.65% 24.66% 2.36% 36.15% 4.25% (9.47)% 6.13% (9.45)% 45.60%
Net assets, end of
period (000 $ 86,338 $ 183,454 $ 155,721 $ 25,041 $ 22,184 $ 2,689 $ 3,140 $ 8,571 $ 42,751 $ 27,976
omitted)
Ratio of expenses to
average net 1.64% 1.56% 2.10% 2.02% 2.47%J 2.49%J 2.59%J 2.68%J 2.43%J 1.56%
assets A A
Ratio of expenses to
average 1.61% 1.53% 2.08% 2.02% 2.47% 2.49% 2.59% 2.68% 2.43% 1.56%
net assets C C C A A
after expense reductions
Ratio of net investment
income .49% .77% .75% .86% .25% 1.30% 1.22% (.54)% .53% .15%
(loss) to average net assets A A
Portfolio turnover rate 138% 139% 185% 273% 222% 148% 250% 289% 455% 414%
A A
</TABLE>
INSURANCE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data
and Ratios 1996F 1995 1994 1993D 1992E 1991E 1990E 1989E 1988E 1987E
G
Years ended February 28
Net asset value, beginning
of period $ 21.31 $ 19.41 $ 21.58 $ 18.03 $ 16.73 $ 13.63 $ 12.65 $ 9.90 $ 11.30 $ 12.01
Income from Investment Operations
Net investment income
(loss) .06 .05 -- (.04) .04 .23 .17 .11 .03 .05
Net realized and unrealized
gain 6.15 1.78 (.24) 5.12 1.48 2.83 .93 2.73 (1.29) (.76)
(loss) on investments
Total from investment
operations 6.21 1.83 (.24) 5.08 1.52 3.06 1.10 2.84 (1.26) (.71)
Less Distributions
From net investment income (.07) -- (.01) -- (.26) -- (.15) (.09) (.14) --
In excess of net investment
income -- -- -- (.03) -- -- -- -- -- --
From net realized gain (.72) -- (1.96) (1.71) -- -- -- -- -- --
Total distributions (.79) -- (1.97) (1.74) (.26) -- (.15) (.09) (.14) --
Redemption fees added to
paid in .04 .07 .04 .21 .04 .04 .03 -- -- --
capital
Net asset value, end of
period $ 26.77 $ 21.31 $ 19.41 $ 21.58 $ 18.03 $ 16.73 $ 13.63 $ 12.65 $ 9.90 $ 11.30
Total return H,I 29.51% 9.79% (1.24) 31.98% 9.47% 22.74 8.82 28.83 (11.04) (5.91)
% % % % % %
Net assets, end of period
(000 $ 38,994 $ 21,838 $ 18,419 $ 26,367 $ 2,573 $ 2,176 $ 2,240 $ 3,160 $ 3,515 $ 7,573
omitted)
Ratio of expenses to
average net 1.77% 2.36% 1.93% 2.49% 2.47% 2.49 2.50 2.53 2.48% 1.63%
assets A,J J %J %J %J J
Ratio of expenses to
average net 1.74% 2.34% 1.93% 2.49% 2.47% 2.49 2.50 2.53 2.48% 1.63%
assets after expense
reductions C C A % % %
Ratio of net investment
income (loss) .26% .25% (.02) (.26)% .22% 1.58 1.15 .98 .28% .53%
to average net assets % A % % %
Portfolio turnover rate 164% 265% 101% 81% 112% 98 158 95 174% 718%
A % % %
</TABLE>
A ANNUALIZED
B FROM SEPTEMBER 29, 1986 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1987
C FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
D FOR THE TEN MONTHS ENDED FEBRUARY 28, 1993
E FOR THE YEAR ENDED APRIL 30
F FOR THE YEAR ENDED FEBRUARY 29
G FOR PERIODS PRESENTED SUBSEQUENT TO 1987, NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH
PERIOD. AS OF MAY 1, 1987, THE FUNDS DISCONTINUED THE USE OF EQUALIZATION
ACCOUNTING.
H TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
I THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
J DURING THE PERIOD, FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S
EXPENSES, OR EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE
LIMITATION. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
LEISURE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share
Data 1996J 1995 1994 1993C 1992D 1991D 1990D 1989D 1988D 1987D
and Ratios F
Years ended February 28
Net asset value,
beginning $ 40.71 $ 45.30 $ 35.77 $ 31.65 $ 26.32 $ 24.90 $ 28.51 $ 22.38 $ 24.83 $ 22.54
of period
Income from Investment
Operations
Net investment
income (.21) (.21) (.29) (.11) (.08) .08 .26I .12 (.03) (.09)
(loss)
Net realized and
unrealized 10.97 (.48) 12.98 4.21 5.40 1.55 (1.81) 6.41 (.39) 2.43
gain (loss)
on investments
Total from investment 10.76 (.69) 12.69 4.10 5.32 1.63 (1.55) 6.53 (.42) 2.34
operations
Less Distributions
From net investment -- -- -- -- -- (.23) (.07) -- -- (.01)
income
From net realized
gain (5.32) (3.93) (3.26) -- -- -- (2.03) (.40) (2.03) (.04)
Total distributions (5.32) (3.93) (3.26) -- -- (.23) (2.10) (.40) (2.03) (.05)
Redemption fees added
to .02 .03 .10 .02 .01 .02 .04 -- -- --
paid in capital
Net asset value, end of $ 46.17 $ 40.71 $ 45.30 $ 35.77 $ 31.65 $ 26.32 $ 24.90 $ 28.51 $ 22.38 $ 24.83
period
Total return G,H 27.61% (1.07)% 37.14% 13.02% 20.25% 6.78% (6.33)% 29.65% .25% 10.40%
Net assets, end of
period $ 85,013 $ 69,569 $ 105,833 $ 44,824 $ 40,051 $ 40,727 $ 49,609 $ 91,367 $ 56,149 $ 72,274
(000 omitted)
Ratio of expenses to 1.64% 1.64% 1.55% 1.90%A 2.21% 2.27% 1.96% 1.73% 1.96% 1.55%
average net assets
Ratio of expenses to 1.63% 1.62%E 1.53%E 1.90%A 2.21% 2.27% 1.96% 1.73% 1.96% 1.55%
average net assets E
after expense reductions
Ratio of net investment (.46) (.52)% (.69)% (.39)%A (.28)% .34% .86% .50% (.13)% (.16)%
income (loss) to average %
net assets
Portfolio turnover rate 141% 103% 170% 109%A 45% 75% 124% 249% 229% 148%
</TABLE>
MEDICAL DELIVERY
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected
Per-Share Data 1996J 1995 1994 1993C 1992D 1991D 1990D 1989D 1988D 1987B
and Ratios F
Years ended February 28
Net asset value,
beginning $ 23.18 $ 20.28 $ 14.46 $ 19.64 $ 18.75 $ 11.17 $ 9.85 $ 7.42 $ 8.67 $ 10.00
of period
Income from Investment
Operations
Net investment
income (.03) .06 (.10) (.13) (.15) (.01) .16 .05 (.05) .07
(loss)
Net realized
and 7.72 3.74 5.84 (3.56) 2.16 7.76 1.43 2.38 (.82) (1.40)
unrealized gain (loss)
on investments
Total from
investment 7.69 3.80 5.74 (3.69) 2.01 7.75 1.59 2.43 (.87) (1.33)
operations
Less Distributions
From net
investment -- (.06) -- -- -- -- (.05) -- (.02) --
income
From net
realized gain (1.91) (.89) -- (1.55) (1.24) (.39) (.26) -- (.36) --
Total
distributions (1.91) (.95) -- (1.55) (1.24) (.39) (.31) -- (.38) --
Redemption fees
added to .04 .05 .08 .06 .12 .22 .04 -- -- --
paid in capital
Net asset value,
end of $ 29.00 $ 23.18 $ 20.28 $ 14.46 $ 19.64 $ 18.75 $ 11.17 $ 9.85 $ 7.42 $ 8.67
period
Total return
G,H 34.15% 19.63% 40.25% (19.63)% 11.71% 72.85% 16.35% 32.75% (9.11)% (13.30)%
Net assets, end
of period $ 295,489 $ 299,570 $ 188,553 $ 71,809 $ 129,361 $ 131,622 $ 23,559 $ 20,077 $ 3,639 $ 3,430
(000 omitted)
Ratio of expenses
to 1.65% 1.48% 1.82% 1.77% 1.69% 1.94% 2.16% 2.48% 2.48% 1.49%
average net assets A K K A
Ratio of expenses
to 1.62% 1.45% 1.79% 1.77% 1.69% 1.94% 2.16% 2.48% 2.48% 1.49%
average net
assets after E E E A A
expense reductions
Ratio of net
investment (.13)% .29% (.57)% (.89)% (.71)% (.07)% 1.43% .59% (.65)% .62%
income (loss) to average A A
net assets
Portfolio turnover
rate 132% 123% 164% 155% 181% 165% 253% 92% 264% 221%
A A
</TABLE>
A ANNUALIZED
B FROM JUNE 30, 1986 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1987
C FOR THE TEN MONTHS ENDED FEBRUARY 28, 1993
D FOR THE YEAR ENDED APRIL 30
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
F FOR PERIODS PRESENTED SUBSEQUENT TO 1987, NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH
PERIOD. AS OF MAY 1, 1987, THE FUNDS DISCONTINUED THE USE OF EQUALIZATION
ACCOUNTING.
G TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
H THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
I INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO
$.16 PER SHARE.
J FOR THE YEAR ENDED FEBRUARY 29
K DURING THE PERIOD, FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S
EXPENSES, OR EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE
LIMITATION. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
MULTIMEDIA
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data
and Ratios G
Years ended February
28 1996L 1995 1994 1993D 1992E 1991E 1990E 1989E 1988E 1987B
Net asset value,
beginning $ 22.35 $ 23.87 $ 18.26 $ 15.93 $ 12.96 $ 11.65 $ 16.20 $ 12.45 $ 12.05 $ 10.00
of period
Income from Investment
Operations
Net investment income .02 (.01) (.10) (.07) (.17) (.05) (.02)J (.14) (.06) .03
(loss)
Net realized and 7.00 1.67 6.28 2.61 3.08 1.29 (1.96) 4.64 1.25 2.02
unrealized gain (loss)
on investments
Total from investment 7.02 1.66 6.18 2.54 2.91 1.24 (1.98) 4.50 1.19 2.05
operations
Less Distributions
From net investment (.02) -- -- -- -- -- -- -- (.01) --
income
From net realized gain (2.19) (3.21) (.65) (.23) -- -- (2.57) (.75) (.78) --
Total distributions (2.21) (3.21) (.65) (.23) -- -- (2.57) (.75) (.79) --
Redemption fees added to .02 .03 .08 .02 .06 .07 -- -- -- --
paid in capital
Net asset value, end of $ 27.18 $ 22.35 $ 23.87 $ 18.26 $ 15.93 $ 12.96 $ 11.65 $ 16.20 $ 12.45 $ 12.05
period
Total return H,I 31.98% 9.35% 34.86% 16.14% 22.92% 11.24% (15.32)% 38.22% 11.49% 20.50%
Net assets, end of
period $ 94,970 $ 38,157 $ 49,177 $ 16,647 $ 8,393 $ 5,177 $ 7,400 $ 45,670 $ 17,356 $ 7,008
(000 omitted)
Ratio of expenses to 1.56% 2.05% 1.66% 2.49% 2.49% 2.53% 2.51% 2.66% 2.48% 1.50%
average net assets A,K K K K K K A
Ratio of expenses to 1.54%F 2.03%F 1.63%F 2.49% 2.49% 2.53% 2.51% 2.66% 2.48% 1.50%
average net assets after A A
expense reductions
Ratio of net investment .08% (.07)% (.42)% (.52)% (1.22)% (.43)% (.14)% (1.01)% (.52)% .25%
income (loss) to average A A
net assets
Portfolio turnover rate 223% 107% 340% 70% 111% 150% 75% 437% 325% 224%
A A
</TABLE>
NATURAL GAS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Selected Per-Share Data and Ratios G
Year ended February 28 1996L 1995 1994C
Net asset value, beginning of period $ 8.98 $ 9.48 $ 10.00
Income from Investment Operations
Net investment income .05 .03 .02
Net realized and unrealized gain (loss) on investments 2.36 (.53) (.46)
Total from investment operations 2.41 (.50) (.44)
Less Distributions
From net investment income (.05) (.02) --
From net realized gain -- -- (.07)
In excess of net realized gain -- -- (.06)
Total distributions (.05) (.02) (.13)
Redemption fees added to paid in capital .02 .02 .05
Net asset value, end of period $ 11.36 $ 8.98 $ 9.48
Total return H,I 27.10% (5.06)% (3.84)%
Net assets, end of period (000 omitted) $ 60,228 $ 79,894 $ 63,073
Ratio of expenses to average net assets 1.68% 1.70% 1.94%A
Ratio of expenses to average net assets after expense reductions 1.67%F 1.66%F 1.93%A,
F
Ratio of net investment income to average net assets .46% .30% .17%A
Portfolio turnover rate 79% 177% 44%A
</TABLE>
A ANNUALIZED
B FROM JUNE 30, 1986 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1987
C FROM APRIL 21, 1993 (COMMENCEMENT OF OPERATIONS) TO FEBRUARY 28, 1994
D FOR THE TEN MONTHS ENDED FEBRUARY 28, 1993
E FOR THE YEAR ENDED APRIL 30
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
G FOR PERIODS PRESENTED SUBSEQUENT TO 1987, NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH
PERIOD. AS OF MAY 1, 1987, THE FUNDS DISCONTINUED THE USE OF EQUALIZATION
ACCOUNTING.
H TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
I THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
J INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO
$.05 PER SHARE.
K DURING THE PERIOD, FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S
EXPENSES, OR EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE
LIMITATION. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
L FOR THE YEAR ENDED FEBRUARY 29
PAPER AND FOREST PRODUCTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share
Data and 1996I 1995 1994 1993C 1992D 1991D 1990D 1989D 1988D 1987B
Ratios F
Years ended February 28
Net asset value,
beginning of $ 21.14 $ 19.61 $ 16.08 $ 15.37 $ 12.64 $ 11.00 $ 12.33 $ 11.71 $ 15.86 $ 10.00
period
Income from Investment
Operations
Net investment
income (loss) .08 .01 (.01) .06 .13 .19 .11 .01 (.03) .19
Net realized and
unrealized 1.83 2.53 3.38 .65 2.64 1.56 (1.31) .64 (3.04) 5.67
gain (loss)
on investments
Total from
investment 1.91 2.54 3.37 .71 2.77 1.75 (1.20) .65 (3.07) 5.86
operations
Less Distributions
From net investment
income (.08) -- (.01) (.09) (.30) (.17) (.15) (.03) (.04) --
From net realized
gain (2.27) (1.17) -- -- -- -- -- -- (1.04) --
Total distributions (2.35) (1.17) (.01) (.09) (.30) (.17) (.15) (.03) (1.08) --
Redemption fees added
to paid .08 .16 .17 .09 .26 .06 .02 -- -- --
in capital
Net asset value,
end of period $ 20.78 $ 21.14 $ 19.61 $ 16.08 $ 15.37 $ 12.64 $ 11.00 $ 12.33 $ 11.71 $ 15.86
Total return G,H 9.18% 14.91% 22.03% 5.25% 24.52% 16.85% (9.68)% 5.57% (19.01)% 58.60%
Net assets, end of
period (000 $ 27,270 $ 94,219 $ 66,908 $ 25,098 $ 28,957 $ 12,579 $ 5,289 $ 9,479 $ 15,426 $ 110,418
omitted)
Ratio of expenses to
average net 1.91% 1.88% 2.08% 2.21% 2.05% 2.49%J 2.57%J 2.54%J 2.52%J 1.29%
assets A A
Ratio of expenses to
average 1.90% 1.87% 2.07% 2.21% 2.05% 2.49% 2.57% 2.54% 2.52% 1.29%
net assets after
expense E E E A A
reduction
Ratio of net
investment income .34% .05% (.08)% .49% .92% 1.73% .92% .07% (.20)% 1.61%
(loss) to average net assets A A
Portfolio turnover
rate 78% 209% 176% 222% 421% 171% 221% 154% 209% 466%
A A
</TABLE>
PRECIOUS METALS AND MINERALS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share
Data and 1996I 1995 1994 1993C 1992D 1991D 1990D 1989D 1988D 1987D
Ratios F
Years ended February 28
Net asset value,
beginning of $ 15.27 $ 16.62 $ 9.86 $ 9.90 $ 10.68 $ 12.23 $ 11.35 $ 13.09 $ 18.38 $ 9.270
period
Income from Investment
Operations
Net investment income
(loss) .07 .17 .21 .09 .10 .18 .13 .26 .41 .321
Net realized and unrealized
gain 5.54 (1.42) 6.48 (.05) (.91) (1.71) .84 (1.54) (5.51) 8.884
(loss)
on investments
Total from
investment 5.61 (1.25) 6.69 .04 (.81) (1.53) .97 (1.28) (5.10) 9.205
operations
Less Distributions
From net investment
income (.06) (.18) (.19) (.17) (.10) (.15) (.18) (.46) (.07) (.095)
In excess of net
investment -- (.05) (.02) -- -- -- -- -- -- --
income
From net realized
gain -- -- -- -- -- -- -- -- (.12) --
Total
distributions (.06) (.23) (.21) (.17) (.10) (.15) (.18) (.46) (.19) (.095)
Redemption fees
added to paid .14 .13 .28 .09 .13 .13 .09 -- -- --
in capital
Net asset value,
end of period $ 20.96 $ 15.27 $ 16.62 $ 9.86 $ 9.90 $ 10.68 $ 12.23 $ 11.35 $ 13.09 $ 18.380
Total return
G,H 37.74% (6.86)% 70.58% 1.51% (6.46)% (11.45)% 9.08% (9.63)% (27.88)% 100.65%
Net assets, end of
period (000 $ 467,196 $ 364,204 $ 409,212 $ 137,922 $ 130,002 $ 155,367 $ 192,551 $ 180,837 $ 242,810 $ 648,051
omitted)
Ratio of expenses
to average 1.52% 1.46% 1.55% 1.73% 1.81% 1.79% 1.93% 1.88% 2.02% 1.50%
net assets A
Ratio of net investment
income .39% .99% 1.38% 1.12% .92% 1.52% 1.01% 2.18% 2.42% 3.44%
(loss) to average net assets A
Portfolio turnover
rate 53% 43% 73% 36% 44% 41% 98% 72% 86% 84%
A
</TABLE>
A ANNUALIZED
B FROM JUNE 30, 1986 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1987
C FOR THE TEN MONTHS ENDED FEBRUARY 28, 1993
D FOR THE YEAR ENDED APRIL 30
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
F FOR PERIODS PRESENTED SUBSEQUENT TO 1987, NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH
PERIOD. AS OF MAY 1, 1987, THE FUNDS DISCONTINUED THE USE OF EQUALIZATION
ACCOUNTING.
G TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
H THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
I FOR THE YEAR ENDED FEBRUARY 29
J DURING THE PERIOD, FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S
EXPENSES, OR EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE
LIMITATION. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
REGIONAL BANKS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data
and Ratios G
Years ended February
28 1996C 1995 1994 1993D 1992E 1991E 1990E 1989E 1988E 1987B
Net asset value,
beginning $ 18.01 $ 17.99 $ 20.88 $ 16.48 $ 11.40 $ 9.77 $ 11.33 $ 8.94 $ 9.21 $ 10.00
of period
Income from Investment
Operations
Net investment
income .52 .37 .19 .16 .25 .22 .21 .22 .15 .17
Net realized and 6.78 .87 .93 5.09 5.37 1.41 (1.03) 2.84 (.21) (.96)
unrealized gain (loss)
on investments
Total from
investment 7.30 1.24 1.12 5.25 5.62 1.63 (.82) 3.06 (.06) (.79)
operations
Less Distributions
From net
investment (.25) (.29) (.15) (.11) (.15) (.15) (.11) (.20) (.06) --
income
From net realized
gain (.72) (.98) (3.92) (.81) (.53) -- (.65) (.47) (.15) --
Total
distributions (.97) (1.27) (4.07) (.92) (.68) (.15) (.76) (.67) (.21) --
Redemption fees
added to .03 .05 .06 .07 .14 .15 .02 -- -- --
paid in capital
Net asset value,
end of $ 24.37 $ 18.01 $ 17.99 $ 20.88 $ 16.48 $ 11.40 $ 9.77 $ 11.33 $ 8.94 $ 9.21
period
Total return H,I 40.94% 7.79% 6.46% 33.10% 52.34% 18.73% (7.94)% 35.71% (.16)% (7.90)%
Net assets, end
of period $ 315,178 $ 164,603 $ 97,429 $ 315,520 $ 156,570 $ 24,212 $ 5,410 $ 17,961 $ 9,087 $ 2,979
(000 omitted)
Ratio of expenses
to 1.41% 1.58% 1.62% 1.49% 1.77% 2.51% 2.55% 2.53% 2.48% 1.63%
average net assets A K K K K A
Ratio of expenses
to 1.40%F 1.56%F 1.60%F 1.49% 1.77% 2.51% 2.55% 2.53% 2.48% 1.63%
average net assets after A A
expense reductions
Ratio of net
investment 2.42% 1.99% .88% 1.06% 1.80% 2.34% 1.74% 2.24% 1.61% 2.10%
income to average net A A
assets
Portfolio turnover
rate 103% 106% 74% 63% 89% 110% 411% 352% 291% 227%
A A
</TABLE>
RETAILING
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data and
Ratios G
Years ended February 28 1996C 1995 1994 1993D 1992E 1991E 1990E 1989E 1988E 1987E
Net asset value,
beginning of $ 23.91 $ 24.91 $ 23.87 $ 22.13 $ 17.42 $ 13.94 $ 14.60 $ 11.57 $ 13.51 $ 11.73
period
Income from Investment
Operations
Net investment income
(loss) (.14) (.18) (.22) (.08) (.03) (.05) .32J .06 .02 .05
Net realized and
unrealized 4.07 (.96) 3.85 2.93 5.09 3.43 1.72 3.18 (.97) 1.73
gain (loss) on
investments
Total from investment 3.93 (1.14) 3.63 2.85 5.06 3.38 2.04 3.24 (.95) 1.78
operations
Less Distributions
From net investment
income -- -- -- -- -- -- (.16) (.03) (.23) --
From net realized gain -- -- (2.63) (1.17) (.50) (.03) (2.57) (.18) (.76) --
Total distributions -- -- (2.63) (1.17) (.50) (.03) (2.73) (.21) (.99) --
Redemption fees added
to paid .03 .14 .04 .06 .15 .13 .03 -- -- --
in capital
Net asset value,
end of period $ 27.87 $ 23.91 $ 24.91 $ 23.87 $ 22.13 $ 17.42 $ 13.94 $ 14.60 $ 11.57 $ 13.51
Total return H,I 16.56% (4.01) 15.61% 13.72% 30.28% 25.26% 15.01% 28.32% (4.95) 15.17%
% %
Net assets, end of
period (000 $ 44,051 $ 31,090 $ 52,790 $ 74,878 $ 48,441 $ 18,069 $ 8,451 $ 9,149 $ 15,103 $ 9,513
omitted)
Ratio of expenses to
average net 1.94% 2.07% 1.86% 1.77% 1.87% 2.54% 2.50% 2.51% 2.47% 1.54%
assets A K K K K
Ratio of expenses to
average net 1.92% 1.96% 1.83% 1.77% 1.87% 2.54% 2.50% 2.51% 2.47% 1.54%
assets F F F A
after expense reductions
Ratio of net investment
income (.53) (.74) (.87) (.44)% (.13) (.34) 2.13% .48% .13% .39%
(loss) to % % % A % %
average net assets
Portfolio turnover rate 235% 481% 154% 171% 205% 115% 212% 290% 294% 596%
A
</TABLE>
A ANNUALIZED
B FROM JUNE 30, 1986 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1987
C FOR THE YEAR ENDED FEBRUARY 29
D FOR THE TEN MONTHS ENDED FEBRUARY 28, 1993
E FOR THE YEAR ENDED APRIL 30
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
G FOR PERIODS PRESENTED SUBSEQUENT TO 1987, NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH
PERIOD. AS OF MAY 1, 1987, THE FUNDS DISCONTINUED THE USE OF EQUALIZATION
ACCOUNTING.
H TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
I THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
J INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO
$.29 PER SHARE.
K DURING THE PERIOD, FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S
EXPENSES, OR EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE
LIMITATION. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
SOFTWARE AND COMPUTER SERVICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data
and 1996K 1995 1994 1993C 1992D 1991D 1990D 1989D 1988D 1987D
Ratios F
Years ended February 28
Net asset value,
beginning of $ 29.07 $ 28.89 $ 27.62 $ 21.63 $ 19.77 $ 15.58 $ 15.75 $ 14.36 $ 17.35 $ 13.36
period
Income from Investment
Operations
Net investment
income (loss) (.19) (.26) (.34) (.07)B (.28) (.14)J (.20) (.22) (.10) .06I
Net realized and
unrealized gain 11.85 .67 7.92 5.88 4.37 4.06 .82 1.61 (2.21) 3.93
(loss) on investments
Total from investment
operations 11.66 .41 7.58 5.81 4.09 3.92 .62 1.39 (2.31) 3.99
Less Distributions
From net realized
gain (4.60) (.33) (6.48) -- (2.50) -- (.86) -- (.68) --
Redemption fees added
to paid in .07 .10 .17 .18 .27 .27 .07 -- -- --
capital
Net asset value, end
of period $ 36.20 $ 29.07 $ 28.89 $ 27.62 $ 21.63 $ 19.77 $ 15.58 $ 15.75 $ 14.36 $ 17.35
Total return G,H 40.17% 1.97% 33.19% 27.69% 25.36% 26.89% 4.64% 9.68% (12.86) 29.87
% %
Net assets, end
of period (000 $ 337,633 $ 236,445 $ 178,034 $ 151,212 $ 89,571 $ 17,290 $ 10,539 $ 14,046 $ 23,084 $ 103,371
omitted)
Ratio of expenses
to average net 1.48% 1.52% 1.57% 1.64% 1.98% 2.50% 2.56% 2.63% 2.51% 1.51
assets A N N N N %
Ratio of expenses to
average net 1.47% 1.50% 1.57% 1.64% 1.98% 2.50% 2.56% 2.63% 2.51% 1.51
assets E E A %
after expense reductions
Ratio of net investment
income (.54)% (1.01) (1.19) (.37)% (1.30) (.84) (1.30) (1.51) (.61) .08
(loss) to % % A % % % % % %
average net assets
Portfolio turnover
rate 183% 164% 376% 402% 348% 326% 284% 434% 134% 220
A %
</TABLE>
TECHNOLOGY
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data and Ratios F
Years ended February
28 1996K 1995 1994 1993C 1992D 1991D 1990D 1989D 1988D 1987D
Net asset value, beginning of
period $ 42.05 $ 41.83 $ 34.62 $ 32.44 $ 27.06 $ 20.08 $ 18.37 $ 18.22 $ 25.98 $ 24.93
Income from Investment Operations
Net investment income
(loss) (.28) (.39) (.24)B .13M (.26) .14L (.15) (.12) (.16) (.07)
Net realized and unrealized gain
(loss) 20.83 1.95 11.04 4.68 5.56 6.46 1.75 .27 (6.80) 1.20
on investments
Total from investment
operations 20.55 1.56 10.80 4.81 5.30 6.60 1.60 .15 (6.96) 1.13
Less Distributions
From net investment
income -- -- (.13) -- -- -- -- -- -- --
In excess of net investment
income -- -- -- -- (.16) -- -- -- -- --
From net realized
gain (8.05) (1.50) (3.70) (2.75) -- -- -- -- (.80) (.08)
Total
distributions (8.05) (1.50) (3.83) (2.75) (.16) -- -- -- (.80) (.08)
Redemption fees added to
paid in .12 .16 .24 .12 .24 .38 .11 -- -- --
capital
Net asset value, end of
period $ 54.67 $ 42.05 $ 41.83 $ 34.62 $ 32.44 $ 27.06 $ 20.08 $ 18.37 $ 18.22 $ 25.98
Total return
G,H 50.71% 4.61% 35.62% 16.48% 20.57% 34.76% 9.31% .82% (26.49) 4.61%
%
Net assets, end of period
(000 $ 483,026 $ 229,761 $ 202,475 $ 132,689 $ 105,954 $ 117,055 $ 78,535 $ 105,604 $ 137,956 $ 296,479
omitted)
Ratio of expenses to
average net 1.40% 1.57% 1.55% 1.64% 1.72% 1.83% 2.09% 1.86% 1.76% 1.44%
assets A
Ratio of expenses to
average net 1.39% 1.56% 1.54% 1.64% 1.72% 1.83% 2.09% 1.86% 1.76% 1.44%
assets E E E A
after expense reductions
Ratio of net investment
income (loss) (.52) (.98) (.65) .52% (.84) .61% (.76) (.67) (.71) (.21)
to % % % A % % % % %
average net assets
Portfolio turnover
rate 112% 102% 213% 259% 353% 442% 327% 397% 140% 73%
A
</TABLE>
A ANNUALIZED
B INVESTMENT INCOME PER SHARE REFLECTS DIVIDENDS RECEIVED IN ARREARS WHICH
AMOUNTED TO $.03 PER SHARE.
C FOR THE TEN MONTHS ENDED FEBRUARY 28, 1993
D FOR THE YEAR ENDED APRIL 30
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
F FOR PERIODS PRESENTED SUBSEQUENT TO 1987, NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH
PERIOD. AS OF MAY 1, 1987, THE FUNDS DISCONTINUED THE USE OF EQUALIZATION
ACCOUNTING.
G TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
H THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
I NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE MONTHLY SHARES OUTSTANDING.
J INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO
$.02 PER SHARE.
K FOR THE YEAR ENDED FEBRUARY 29
L INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO
$.06 PER SHARE AND $.20 PER SHARE RELATING TO A NONRECURRING INITIATIVE TO
INVEST IN DIVIDEND INCOME PRODUCING SECURITIES WHICH WAS IN EFFECT FOR A
PORTION OF 1991.
M INVESTMENT INCOME PER SHARE REFLECTS DIVIDENDS RECEIVED IN ARREARS WHICH
AMOUNTED TO $.10 PER SHARE.
N DURING THE PERIOD, FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S
EXPENSES, OR EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE
LIMITATION. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
TELECOMMUNICATIONS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data and
Ratios G
Years ended
February 28 1996F 1995 1994 1993D 1992E 1991E 1990E 1989E 1988E 1987E
Net asset value, beginning
of period $ 38.34 $ 37.10 $ 34.19 $ 29.22 $ 24.98 $ 23.19 $ 22.76 $ 16.52 $ 15.65 $ 12.73
Income from Investment Operations
Net investment
income .51 .29 .25 .29 .36 .31 .46 .30 .27 .10
Net realized and
unrealized gain 9.15 2.54 7.00 5.29 4.13 1.86 1.02 6.09 .98 2.82
(loss) on investments
Total from investment
operations 9.66 2.83 7.25 5.58 4.49 2.17 1.48 6.39 1.25 2.92
Less Distributions
From net investment
income (.39) (.33) (.20) (.18) (.28) (.43) (.12) (.12) (.02) --
From net realized
gain (2.75) (1.27) (4.18) (.48) -- -- (.98) (.03) (.36) --
Total
distributions (3.14) (1.60) (4.38) (.66) (.28) (.43) (1.10) (.15) (.38) --
Redemption fees added
to paid in .01 .01 .04 .05 .03 .05 .05 -- -- --
capital
Net asset value,
end of period $ 44.87 $ 38.34 $ 37.10 $ 34.19 $ 29.22 $ 24.98 $ 23.19 $ 22.76 $ 16.52 $ 15.65
Total return H,I 25.79% 7.98% 21.90% 19.49% 18.19% 9.83% 6.21% 38.90% 8.45% 22.94%
Net assets, end of
period (000 $ 468,300 $ 369,476 $ 371,025 $ 134,338 $ 78,533 $ 55,162 $ 77,019 $ 116,016 $ 36,372 $ 11,415
omitted)
Ratio of expenses to
average net 1.52% 1.56% 1.54% 1.74% 1.90% 1.97% 1.85% 2.12% 2.48% 1.52%
assets A L
Ratio of expenses to
average net 1.52% 1.55% 1.53% 1.74% 1.90% 1.97% 1.85% 2.12% 2.48% 1.52%
assets B B A
after expense reductions
Ratio of net investment
income to 1.17% .77% .64% 1.16% 1.32% 1.35% 1.83% 1.63% 1.64% 1.12%
average net assets A
Portfolio turnover
rate 89% 107% 241% 115% 20% 262% 341% 224% 162% 284%
A
</TABLE>
TRANSPORTATION
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data and 1996F 1995 1994 1993D 1992E 1991E 1990E 1989E 1988E 1987C
Ratios G
Years ended February 28
Net asset value, beginning of
period $ 20.53 $ 21.67 $ 18.68 $ 15.49 $ 11.26 $ 12.23 $ 13.59 $ 9.87 $ 11.83 $ 10.00
Income from Investment Operations
Net investment income
(loss) (.09)K (.17) (.20) (.07) (.05) .06 (.03) (.04) (.06) .01J
Net realized and
unrealized gain 2.60 1.17 5.07 3.55 4.18 (.57) .96 3.76 (1.77) 1.82
(loss) on investments
Total from investment
operations 2.51 1.00 4.87 3.48 4.13 (.51) .93 3.72 (1.83) 1.83
Less Distributions
In excess of net investment -- -- -- -- (.04) -- -- -- -- --
income
From net realized gain (1.22) (2.19) (1.96) (.36) -- (.50) (2.32) -- (.13) --
Total distributions (1.22) (2.19) (1.96) (.36) (.04) (.50) (2.32) -- (.13) --
Redemption fees added to
paid in .10 .05 .08 .07 .14 .04 .03 -- -- --
capital
Net asset value, end of
period $ 21.92 $ 20.53 $ 21.67 $ 18.68 $ 15.49 $ 11.26 $ 12.23 $ 13.59 $ 9.87 $ 11.83
Total return H,I 12.95% 5.90% 27.47% 23.14% 38.01% (4.10) 6.90% 37.69% (15.17) 18.30%
% %
Net assets, end of period
(000 $ 11,445 $ 12,704 $ 13,077 $ 10,780 $ 2,998 $ 770 $ 1,630 $ 3,998 $ 1,355 $ 1,747
omitted)
Ratio of expenses to
average net 2.47% 2.37% 2.40% 2.48% 2.43% 2.39% 2.50% 2.50% 2.41% 1.60%
assets L A,L L L L L L A
Ratio of expenses to
average net 2.44% 2.36% 2.39% 2.48% 2.43% 2.39% 2.50% 2.50% 2.41% 1.60%
assets B B B A A
after expense reductions
Ratio of net investment
income (.43) (.83) (.96) (.53)% (.34) .52% (.20) (.33) (.59) .01%
(loss) to % % % A % % % % A
average net assets
Portfolio turnover rate 175% 178% 115% 116% 423% 187% 156% 172% 255% 218%
A A
</TABLE>
A ANNUALIZED
B FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
C FROM SEPTEMBER 29, 1986 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1987
D FOR THE TEN MONTHS ENDED FEBRUARY 28, 1993
E FOR THE YEAR ENDED APRIL 30
F FOR THE YEAR ENDED FEBRUARY 29
G FOR PERIODS PRESENTED SUBSEQUENT TO 1987, NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH
PERIOD. AS OF MAY 1, 1987, THE FUNDS DISCONTINUED THE USE OF EQUALIZATION
ACCOUNTING.
H TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
I THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
J NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE MONTHLY SHARES OUTSTANDING.
K INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND FROM PACCAR, INC.
WHICH AMOUNTED TO $.05 PER SHARE.
L DURING THE PERIOD, FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S
EXPENSES, OR EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE
LIMITATION. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
UTILITIES GROWTH
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data and Ratios F
Years ended
February 28 1996B 1995 1994 1993C 1992D 1991D 1990D 1989D 1988D 1987D
Net asset value, beginning
of period $ 34.88 $ 36.61 $ 41.49 $ 37.18 $ 35.57 $ 31.70 $ 28.82 $ 24.67 $ 26.31 $ 24.860
Income from Investment Operations
Net investment
income 1.10 1.13 1.33 1.19 1.66 1.59 1.27 1.39 1.21 1.335
Net realized and unrealized
gain (loss) 7.86 (1.17) (.16) 6.14 2.82 3.41 2.40 4.18 (1.56) .470
on investments
Total from investment
operations 8.96 (.04) 1.17 7.33 4.48 5.00 3.67 5.57 (.35) 1.805
Less Distributions
From net investment
income (.84) (1.05) (1.13) (1.33) (1.69) (.60) (.81) (1.42) (.45) (.215)
From net realized
gain -- (.67) (4.94) (1.70) (1.19) (.58) -- -- (.84) (.140)
Total
distributions (.84) (1.72) (6.07) (3.03) (2.88) (1.18) (.81) (1.42) (1.29) (.355)
Redemption fees added to paid
in capital .03 .03 .02 .01 .01 .05 .02 -- -- --
Net asset value, end
of period $ 43.03 $ 34.88 $ 36.61 $ 41.49 $ 37.18 $ 35.57 $ 31.70 $ 28.82 $ 24.67 $ 26.310
Total return G,H 25.82% .21% 2.53% 20.90% 13.23 16.25 13.00 23.39 (1.08) 7.19
% % % % % %
Net assets, end of period
(000 omitted) $ 266,768 $ 237,635 $ 250,522 $ 290,718 $ 206,87 $ 197,40 $ 124,93 $ 84,968 $ 85,008 $ 99,337
2 9 1
Ratio of expenses to average
net assets 1.39% 1.43% 1.36% 1.42% 1.51 1.65 1.67 1.21 1.94% 1.45
A % % % % %
Ratio of expenses to average
net assets 1.38% 1.42% 1.35% 1.42% 1.51 1.65 1.67 1.21 1.94% 1.45
E E E A % % % % %
after expense reductions
Ratio of net investment
income to 2.76% 3.24% 3.11% 3.71% 4.58 4.75 3.93 5.33 4.71% 4.88
average net assets A % % % % %
Portfolio turnover
rate 65% 24% 61% 34% 45 45 75 75 143% 161
A % % % % %
</TABLE>
MONEY MARKET
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data and Ratios
Years ended
February 28 1996B 1995 1994 1993C 1992D 1991D 1990D 1989D 1988D 1987D
Net asset value, beginning
of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Income from Investment
Operations .054 .042 .026 .026 .048 .073 .081 .078 .062 .056
Net interest income
Less Distributions
From net interest
income (.054) (.042) (.026) (.026) (.048) (.073) (.081) (.078) (.062) (.056)
Net asset value, end
of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Total return G 5.56% 4.28 2.62 2.63% 4.93 7.50 8.45 8.07 6.39% 5.73
% % % % % % %
Net assets, end of period
(000 omitted) $ 610,821 $ 573,14 $ 518,65 $ 431,133 $ 542,620 $ 608,39 $ 643,272 $ 724,452 $ 1,008,0 $ 629,080
4 7 4 10
Ratio of expenses to average
net assets .59% .65 .72 .56% .64 .73 .83 .76 .88% .76
% % A % % % % %
Ratio of net interest income
to average 5.39% 4.19 2.59 3.09% 4.84 7.20 8.13 7.74 6.22% 5.58
net assets % % A % % % % %
</TABLE>
A ANNUALIZED
B FOR THE YEAR ENDED FEBRUARY 29
C FOR THE TEN MONTHS ENDED FEBRUARY 28, 1993
D FOR THE YEAR ENDED APRIL 30
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
F FOR PERIODS PRESENTED SUBSEQUENT TO 1987, NET INVESTMENT INCOME (LOSS)
PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH
PERIOD. AS OF MAY 1, 1987, THE FUNDS DISCONTINUED THE USE OF EQUALIZATION
ACCOUNTING.
G TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
H THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
KEY FACTS - CONTINUED
PERFORMANCE
Stock fund performance is commonly measured as TOTAL RETURN. Money market
fund performance can be measured as total return or yield. The total
returns that follow are based on historical fund results and do not reflect
the effect of taxes and would have been lower had certain expenses not been
reduced during the periods shown.
Each fund's fiscal year runs from March 1 through February 29. The tables
below show each fund's performance over past fiscal years compared to
investing in a broad selection of stocks (S&P 500).
<TABLE>
<CAPTION>
<S> <C> <C>
Fiscal periods ended February 29, 1996 Average Annual Total Returns Cumulative Total Returns
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Past 1 Past 5 Past 10 Life of Past 1 Past 5 Past 10 Life of
year years years fund year years years fund
AIR TRANSPORTATION 54.91 15.86 10.57 11.25 54.91 108.7 173.1 197.1
% % % % % 4% 5% 9%
AIR TRANSPORTATION (LOAD ADJ.A) 50.26 15.15 10.23 10.92 50.26 102.4 164.9 188.2
% % % % % 7% 5% 7%
AMERICAN GOLD 47.02 14.78 10.74 10.42 47.02 99.19 177.3 175.1
% % % % % % 2% 0%
AMERICAN GOLD (LOAD ADJ.A) 42.61 14.08 10.40 10.09 42.61 93.22 169.0 166.8
% % % % % % 0% 5%
AUTOMOTIVE 10.13 17.81 N/A 12.41 10.13 126.9 N/A 210.1
% % % % 0% 1%
AUTOMOTIVE (LOAD ADJ.A) 6.83% 17.09 N/A 12.05 6.83% 120.0 N/A 200.8
% % 9% 0%
BIOTECHNOLOGY 44.97 12.60 16.59 17.03 44.97 81.01 364.1 398.4
% % % % % % 2% 7%
BIOTECHNOLOGY (LOAD ADJ.A) 40.62 11.92 16.24 16.68 40.62 75.58 350.2 383.5
% % % % % % 0% 1%
BROKERAGE AND INVESTMENT MANAGEMENT 29.85 21.46 7.53% 9.97% 29.85 164.3 106.7 173.8
% % % 9% 0% 7%
BROKERAGE AND INVESTMENT MANAGEMENT 25.95 20.73 7.20% 9.66% 25.95 156.4 100.4 165.6
(LOAD ADJ.A) % % % 6% 9% 6%
CHEMICALS 27.48 17.44 15.90 18.98 27.48 123.4 337.4 530.4
% % % % % 2% 7% 0%
CHEMICALS (LOAD ADJ.A) 23.65 16.73 15.55 18.63 23.65 116.7 324.3 511.4
% % % % % 2% 5% 9%
COMPUTERS 52.79 25.98 16.25 17.35 52.79 217.3 350.8 445.0
% % % % % 3% 6% 9%
COMPUTERS (LOAD ADJ.A) 48.21 25.22 15.90 17.02 48.21 207.8 337.3 428.7
% % % % % 1% 4% 4%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CONSTRUCTION AND HOUSING 21.77 15.34 N/A 12.74 21.77 104.1 N/A 209.7
% % % % 1% 8%
CONSTRUCTION AND HOUSING (LOAD ADJ.A) 18.12 14.64 N/A 12.38 18.12 97.98 N/A 200.4
% % % % % 9%
CONSUMER PRODUCTS 30.01 15.86 N/A 15.58 30.01 108.7 N/A 127.4
% % % % 6% 8%
CONSUMER PRODUCTS (LOAD ADJ.A) 26.11 15.16 N/A 14.96 26.11 102.5 N/A 120.6
% % % % 0% 5%
DEFENSE AND AEROSPACE 47.40 18.84 8.22% 10.65 47.40 137.0 120.2 230.7
% % % % 0% 3% 0%
DEFENSE AND AEROSPACE (LOAD ADJ.A) 42.98 18.12 7.89% 10.36 42.98 129.8 113.6 220.7
% % % % 9% 3% 8%
DEVELOPING COMMUNICATIONS 21.84 23.43 N/A 22.62 21.84 186.4 N/A 218.2
% % % % 6% 6%
DEVELOPING COMMUNICATIONS (LOAD 18.19 22.68 N/A 21.96 18.19 177.8 N/A 208.7
ADJ.A) % % % % 7% 1%
S&P 500 34.70 14.99 14.47 N/A 34.70 101.1 286.7 N/A
% % % % 4% 6%
</TABLE>
A LOAD-ADJUSTED RETURNS INCLUDE THE EFFECT OF PAYING A FUND'S 3% SALES
CHARGE.
<TABLE>
<CAPTION>
<S> <C> <C>
Fiscal periods ended February 29, 1996 Average Annual Total Returns Cumulative Total Returns
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Past 1 Past 5 Past 10 Life of Past 1 Past 5 Past 10 Life of
year years years fund year years years fund
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ELECTRONICS 72.75 31.84 13.47 14.10 72.75 298.2 253.7 304.74
% % % % % 7% 9% %
ELECTRONICS (LOAD ADJ.A) 67.56 31.04 13.12 13.78 67.56 286.3 243.1 292.60
% % % % % 2% 8% %
ENERGY 20.92 6.99% 9.94% 7.18% 20.92 40.17 157.9 176.01
% % % 4% %
ENERGY (LOAD ADJ.A) 17.30 6.34% 9.60% 6.96% 17.30 35.97 150.2 167.73
% % % 0% %
ENERGY SERVICE 39.15 5.37% 6.90% 5.67% 39.15 29.87 94.92 75.62%
% % % %
ENERGY SERVICE (LOAD ADJ.A) 34.97 4.73% 6.58% 5.35% 34.97 25.98 89.07 70.35%
% % % %
ENVIRONMENTAL SERVICES 27.49 1.64% N/A 5.28% 27.49 8.45% N/A 41.00%
% %
ENVIRONMENTAL SERVICES (LOAD ADJ.A) 23.67 1.02% N/A 4.80% 23.67 5.20% N/A 36.77%
% %
FINANCIAL SERVICES 39.05 27.30 12.94 18.51 39.05 234.3 237.7 1021.9
% % % % % 7% 7% 7%
FINANCIAL SERVICES (LOAD ADJ.A) 34.88 26.53 12.60 18.26 34.88 224.3 227.6 988.31
% % % % % 4% 4% %
FOOD AND AGRICULTURE 37.92 16.82 18.64 20.19 37.92 117.5 452.4 602.16
% % % % % 5% 5% %
FOOD AND AGRICULTURE (LOAD ADJ.A) 33.79 16.11 18.28 19.85 33.79 111.0 435.8 581.09
% % % % % 3% 7% %
HEALTH CARE PORTFOLIO 39.68 18.08 19.91 21.93 39.68 129.5 514.3 1722.1
% % % % % 6% 5% 8%
HEALTH CARE PORTFOLIO (LOAD ADJ.A) 35.49 17.36 19.54 21.67 35.49 122.6 495.9 1667.5
% % % % % 7% 2% 1%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
HOME FINANCE PORTFOLIO 43.24 34.39 18.36 21.18 43.24 338.2 439.4 611.65
% % % % % 8% 6% %
HOME FINANCE PORTFOLIO (LOAD ADJ.A) 38.94 33.57 18.00 20.82 38.94 325.1 423.2 590.20
% % % % % 3% 8% %
INDUSTRIAL EQUIPMENT 36.86 19.29 N/A 12.16 36.86 141.5 N/A 194.99
% % % % 6% %
INDUSTRIAL EQUIPMENT (LOAD ADJ.A) 32.76 18.57 N/A 11.80 32.76 134.3 N/A 186.14
% % % % 1% %
INDUSTRIAL MATERIALS 13.38 16.57 N/A 11.54 13.38 115.2 N/A 180.01
% % % % 8% %
INDUSTRIAL MATERIALS (LOAD ADJ.A) 9.98% 15.87 N/A 11.18 9.98% 108.8 N/A 171.61
% % 3% %
INSURANCE 29.51 16.55 11.49 13.08 29.51 115.0 196.6 250.95
% % % % % 9% 6% %
INSURANCE (LOAD ADJ.A) 25.63 15.85 11.15 12.74 25.63 108.6 187.7 240.43
% % % % % 4% 6% %
LEISURE 27.61 19.12 14.14 18.75 27.61 139.8 275.3 662.48
% % % % % 6% 6% %
LEISURE (LOAD ADJ.A) 23.78 18.40 13.79 18.44 23.78 132.6 264.1 639.60
% % % % % 6% 0% %
MEDICAL DELIVERY 34.15 17.62 N/A 16.13 34.15 125.1 N/A 325.14
% % % % 4% %
MEDICAL DELIVERY (LOAD ADJ.A) 30.12 16.91 N/A 15.77 30.12 118.3 N/A 312.39
% % % % 8% %
MULTIMEDIA 31.98 24.17 N/A 17.75 31.98 195.1 N/A 386.04
% % % % 5% %
MULTIMEDIA (LOAD ADJ.A) 28.02 23.41 N/A 17.38 28.02 186.2 N/A 371.46
% % % % 9% %
NATURAL GAS 27.10 N/A N/A 5.34% 27.10 N/A N/A 16.05%
% %
NATURAL GAS (LOAD ADJ.A) 23.29 N/A N/A 4.22% 23.29 N/A N/A 12.56%
% %
S&P 500 34.70 14.99 14.47 N/A 34.70 101.1 286.7 N/A
% % % % 4% 6%
</TABLE>
A LOAD-ADJUSTED RETURNS INCLUDE THE EFFECT OF PAYING A FUND'S 3% SALES
CHARGE.
<TABLE>
<CAPTION>
<S> <C> <C>
Fiscal periods ended February 29, 1996 Average Annual Total Returns Cumulative Total Returns
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Past 1 Past 5 Past 10 Life of Past 1 Past 5 Past 10 Life of
year years years fund year years years fund
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PAPER AND FOREST PRODUCTS 9.18% 16.51 N/A 11.52 9.18% 114.7 N/A 187.1
% % 3% 2%
PAPER AND FOREST PRODUCTS (LOAD ADJ.A) 5.90% 15.81 N/A 11.16 5.90% 108.2 N/A 178.5
% % 9% 0%
PRECIOUS METALS AND MINERALS 37.74 15.24 8.85% 6.65% 37.74 103.2 133.5 156.5
% % % 4% 2% 6%
PRECIOUS METALS AND MINERALS (LOAD 33.61 14.54 8.52% 6.43% 33.61 97.15 126.5 148.8
ADJ.A) % % % % 2% 7%
REGIONAL BANKS 40.94 29.89 N/A 16.74 40.94 269.7 N/A 347.3
% % % % 9% 0%
REGIONAL BANKS (LOAD ADJ.A) 36.71 29.11 N/A 16.38 36.71 258.7 N/A 333.8
% % % % 0% 8%
RETAILING 16.56 16.49 15.71 15.99 16.56 114.5 330.3 354.9
% % % % % 5% 8% 1%
RETAILING (LOAD ADJ.A) 13.07 15.79 15.36 15.64 13.07 108.1 317.4 341.2
% % % % % 1% 7% 6%
SOFTWARE AND COMPUTER SERVICES 40.17 26.16 18.64 19.68 40.17 219.6 452.7 570.9
% % % % % 4% 0% 8%
SOFTWARE AND COMPUTER SERVICES (LOAD 35.97 25.40 18.28 19.33 35.97 210.0 436.1 550.8
ADJ.A) % % % % % 5% 2% 5%
TECHNOLOGY 50.71 25.26 13.70 16.11 50.71 208.3 261.2 791.1
% % % % % 6% 1% 9%
TECHNOLOGY (LOAD ADJ.A) 46.19 24.50 13.36 15.87 46.19 199.1 250.3 764.4
% % % % % 1% 7% 5%
TELECOMMUNICATIONS 25.79 19.68 18.27 19.20 25.79 145.5 435.4 543.0
% % % % % 2% 1% 3%
TELECOMMUNICATIONS (LOAD ADJ.A) 22.02 18.95 17.91 18.86 22.02 138.1 419.3 523.7
% % % % % 6% 5% 4%
TRANSPORTATION 12.95 20.93 N/A 14.79 12.95 158.6 N/A 267.0
% % % % 7% 4%
TRANSPORTATION (LOAD ADJ.A) 9.56% 20.20 N/A 14.42 9.56% 150.9 N/A 256.0
% % 1% 3%
UTILITIES GROWTH 25.82 12.25 11.91 15.59 25.82 78.17 208.1 686.5
% % % % % % 1% 1%
UTILITIES GROWTH (LOAD ADJ.A) 22.04 11.56 11.57 15.35 22.04 72.83 198.8 662.9
% % % % % % 7% 1%
MONEY MARKET 5.56% 4.21% 5.72% 5.81% 5.56% 22.87 74.42 81.12
% % %
MONEY MARKET (LOAD ADJ.A) 2.40% 3.57% 5.40% 5.51% 2.40% 19.19 69.18 75.69
% % %
S&P 500 34.70 14.99 14.47 N/A 34.70 101.1 286.7 N/A
% % % % 4% 6%
</TABLE>
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.
YIELD, for the money market fund, refers to the income generated by an
investment in the 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.
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.
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 financial 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 pools shareholders' money
and invests it toward a specified goal. In technical terms, each stock fund
(except Financial Services, Regional Banks, and Home Finance Portfolios) is
a non-diversified fund of Fidelity Select Portfolios, an open-end
management investment company. The money market fund and Financial
Services, Regional Banks, and Home Finance Portfolios 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.
THE FUNDS 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 handles their business affairs and
chooses the stock funds' investments. Fidelity Management & Research (U.K.)
Inc. (FMR U.K.), in London, England, and Fidelity Management & Research
(Far East) Inc. (FMR Far East), in Tokyo, Japan, assist FMR with foreign
investments for the stock funds (except American Gold). FTX, located in
Irving, Texas, has primary responsibility for providing investment
management services for the money market fund.
Paul Antico is manager of Developing Communications and Industrial
Equipment, which he has managed since November 1993 and March 1996,
respectively. Mr. Antico joined Fidelity as a research analyst in 1991,
after receiving a B.S. from the Massachusetts Institute of Technology.
John Avery is manager of Chemicals, which he has managed since July 1995.
He joined Fidelity as research analyst in January 1995. Previously, Mr.
Avery was an equity analyst at Putnam Investments from 1993 to December
1994, and he was an investment banking associate for Alex Brown & Sons from
1986 to 1991. He received an M.B.A. from the Wharton School at the
University of Pennsylvania in 1993.
Stephen Binder is manager of Medical Delivery Portfolio, which he has
managed since December 1994. Previously, he managed Regional Banks, Defense
and Aerospace, and Financial Services. Mr. Binder joined Fidelity in 1989.
William Bower is manager of Construction and Housing, which he has managed
since December 1994. He joined Fidelity as a research analyst in June 1994,
after receiving an M.B.A. from the University of Michigan. 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 is manager of Industrial Materials, which he has managed
since November 1994. He joined Fidelity as a research analyst 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.
Katherine Collins is manager of Leisure, which she has managed since
February 1996. Previously, she managed Construction and Housing. She joined
Fidelity as an equity analyst in 1990.
Stephen DuFour is manager of Transportation, which he has managed since
December 1994. Previously, he managed Multimedia. Mr. DuFour joined
Fidelity as an equity analyst in 1992, after receiving an M.B.A. from the
University of Chicago.
David Ellison is manager of Home Finance, which he has managed since
December 1985. Previously, he managed Brokerage and Investment Management
and Financial Services. Mr. Ellison joined Fidelity in 1983.
Mary English is manager of Consumer Products, which she has managed since
February 1994. Previously, she managed Retailing and was an equity analyst.
Ms. English joined Fidelity in 1991, after receiving an M.B.A. from the
University of Virginia.
Robert Ewing is manager of Environmental Services, which he has managed
since January 1996. Previously, he was an equity analyst. Mr. Ewing joined
Fidelity in 1990.
David Felman is manager of Telecommunications, which he has managed since
April 1994, and he has been assisting on Magellan since January 1995.
Previously, he managed Chemicals. Mr. Felman joined Fidelity as a research
analyst in June 1993, after receiving his M.A. from Harvard University. He
received his M.B.A. from New York University in 1991.
Karen Firestone is manager of Health Care and Biotechnology, which she has
managed since February 1995 and July 1992, respectively. Previously, she
managed Air Transportation and Leisure. Ms. Firestone joined Fidelity in
1983.
Adam Hetnarski is manager of Technology, which he has managed since March
1996. Previously, he was an equity analyst. Mr. Hetnarski joined Fidelity
in 1991.
John Hurley is manager of Software and Computer Services, which he has
managed since October 1994. He joined Fidelity as an analyst covering
software companies in 1993, after receiving an M.B.A. from Stanford
University. Previously, Mr. Hurley was an officer in the U.S. Army.
Marc Kaufman is manager of Electronics, which he has managed since March
1995. Mr. Kaufman joined Fidelity as a research analyst in 1992, after
receiving an M.S. in electrical engineering from the Massachusetts
Institute of Technology, where he also received a B.S. in 1991.
Malcolm MacNaught is manager of Precious Metals and Minerals, which he has
managed since July 1981. He also manages Advisor Global Resources, and he
previously managed American Gold. Mr. MacNaught joined Fidelity in 1968.
William Mankivsky is manager of Food and Agriculture, which he has managed
since April 1993. Previously, he managed Energy Service. Mr. Mankivsky
joined Fidelity in 1991, after receiving an M.B.A. from the University of
Chicago.
John Muresianu is manager of Utilities Growth, which he has managed since
December 1992. He also manages Utilities. Previously, he managed Natural
Gas, and he served as senior research analyst. He has also been a pension
fund manager with the company. Mr. Muresianu joined Fidelity in 1986.
Daniel Pickering is manager of Natural Gas and Energy Service, which he has
managed since February 1995 and December 1994, respectively. 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.
John Porter is manager of Multimedia, which he has managed since February
1996. He joined Fidelity as an equity analyst in 1995, after receiving an
M.B.A. from the University of Chicago. He also was a research intern at
Fidelity during the summer of 1994. Previously, Mr. Porter was a product
engineer for Ford Motor Company.
Lawrence Rakers is manager of American Gold and Paper and Forest Products,
which he has managed since July 1995 and February 1996, respectively. He
joined Fidelity as a research analyst in 1993. Previously, Mr. Rakers was a
project engineer for Loral Corporation from 1986 to 1993, and he received
an M.B.A. from Northeastern University in 1993.
Brenda Reed is manager of Automotive, which she has managed since May 1994.
Previously, she managed Air Transportation. She joined Fidelity as a
research analyst in 1992, after receiving an M.B.A. from Dartmouth College.
Previously, Ms. Reed was an equity analyst at Putnam Investments and a
portfolio manager at New England Research & Management.
Albert Ruback is manager of Energy, which he has managed since December
1994. Previously, he managed Industrial Equipment. Mr. Ruback joined
Fidelity as a research analyst in 1991, after receiving an M.B.A. from
Harvard Business School.
William Rubin is manager of Defense and Aerospace, which he has managed
since December 1994. He joined Fidelity as a research analyst in 1993,
after receiving an M.B.A. from Harvard Business School. Previously, Mr.
Rubin worked in investor relations, and he was a financial analyst for VLSI
Technology and was also a financial analyst for Robertson, Stephens and
Company.
Louis Salemy is manager of Brokerage and Investment Management and
Financial Services, which he has managed since December 1995 and December
1994, respectively. Previously, he managed Industrial Materials, Medical
Delivery, and Regional Banks. He joined Fidelity as a research analyst in
1992. Before joining Fidelity, Mr. Salemy was a security analyst for
Loomis, Sayles and Company.
Erin Sullivan is manager of Retailing, which she has managed since February
1995. Previously, she had been a research analyst. Ms. Sullivan joined
Fidelity as a research associate in 1991, after receiving a B.A. from
Harvard University.
Michael Tempero is manager of Insurance, which he has managed since
February 1995. Previously, he managed Natural Gas. Mr. Tempero joined
Fidelity as a research analyst in 1993, after receiving an M.B.A. from the
University of Chicago. He also received an M.A. from the London School of
Economics in 1992.
Remy Trafelet is manager of Regional Banks, which he has managed since
January 1996. Previously, he was an equity analyst. Mr. Trafelet joined
Fidelity as a research associate in 1992, after receiving a B.A. from
Dartmouth College.
Jason Weiner is manager of Air Transportation and Computers, which he has
managed since December 1994 and March 1996, respectively. Previously, he
was a research analyst. Mr. Weiner joined Fidelity as a research associate
in 1991, after receiving a B.A. from Swarthmore College.
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 ultimate parent company of FMR, FTX, FMR U.K., and FMR Far
East. Members of the Edward C. Johnson 3d family are the predominant owners
of a class of shares of common stock representing approximately 49% of the
voting power of FMR Corp. Under the Investment Company Act of 1940 (the
1940 Act), control of a company is presumed where one individual or group
of individuals owns more than 25% of the voting stock of that company;
therefore, the Johnson family may be deemed under the 1940 Act to form a
controlling group with respect to FMR Corp.
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
Each stock fund seeks capital appreciation by concentrating its investments
in the securities of companies in a particular industry. Under normal
conditions, each fund will invest at least 80% of its assets in securities
of companies principally engaged in the business activities of its named
industry. The funds will invest 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
and securities indexed to the price of precious metals.
For most of the stock funds, an issuer is considered to be 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 to be principally engaged if it derives more than 15%
of revenues or profits from brokerage or investment management activities.
It is important to note that in many cases, the focus of one stock fund
differs only slightly from another, so they may invest in many of the same
securities.
The stock funds may involve significantly greater risks and therefore may
experience greater volatility than a diversified mutual fund. Because of
their narrow industry focus, each fund's performance is closely tied to and
affected by, its industry. Companies in an industry are often faced with
the same obstacles, issues, or regulatory burdens, and their securities may
react similarly and move in unison to these or other market conditions.
This is especially true for funds with a particularly narrow industry
focus. Also because the funds (except Financial Services, Home Finance, and
Regional Banks Portfolios) are non-diversified, they are further exposed to
increased volatility. 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. Finally, the
funds' strategies in seeking to achieve their investment objectives may
lead to investments in smaller companies. Securities of smaller companies,
especially those whose business involves emerging products or concepts, may
be more volatile due to their limited product lines, markets, or financial
resources; or their susceptibility to major setbacks or downturns.
The value of the funds' domestic and foreign investments varies in response
to many factors. Stock values fluctuate in response to the activities of
individual companies, and general market and economic conditions.
Investments in foreign securities may involve risks in addition to those of
U.S. investments, including increased political and economic risk, as well
as exposure to currency fluctuations.
FMR may use various investment techniques to hedge a portion of the funds'
risks, but there is no guarantee that these strategies will work as FMR
intends. Of course, when you sell your shares of 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 as well as, to
a lesser degree, other precious metals in the form of bullion, coins, or
securities indexed to the price of precious metals. The fund may also
invest in securities of companies which themselves invest in companies
engaged in gold-related 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 closely tied to 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 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, 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
equity securities of any company that derives more than 15% of its revenues
from brokerage or investment management activities.
Legislation is currently being considered which would reduce the separation
between commercial and investment banking businesses. If enacted this could
significantly impact the industry and the fund.
Changes in regulations, brokerage commission structure, stock and bond
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, and 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 that provide
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 equity 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. Legislation is currently being considered which
would reduce the separation between commercial and investment banking
businesses. If enacted this could significantly impact the industry and the
fund.
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.
This industry is impacted by supply and demand, which may be affected by
demographic and product trends, and 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.
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 invest in companies
including broadcasting, film studios, cable television companies and
equipment 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
investments in those 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 gold-related 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.
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.
Legislation is currently being considered which would reduce the separation
between commercial and investment banking businesses. If enacted this could
significantly impact the industry and the fund.
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 in the industry fiercely compete 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 securities. 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 earns income at current money market rates. It stresses
preservation of capital, liquidity, and income, 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 and generally reflect
current short-term interest rates and other market conditions.
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 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, strategies FMR may employ in
pursuit of a fund's investment objective, and a summary of related risks.
Any restrictions listed supplement those discussed earlier in this section.
A complete listing of each fund's limitations and more detailed information
about the funds' investments are 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
unless it believes that they are consistent with a fund's investment
objective and policies and that doing so will help a fund achieve its goal.
Current holdings and recent investment strategies are described 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: Each stock fund may not own more than 10% of the outstanding
voting securities of a single issuer. Utilities Growth Portfolio 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. Brokerage and Investment Management and Financial Services
Portfolios may not invest more than 5% of their total assets in the equity
securities of any company that derives more than 15% of its revenues from
brokerage or investment management activities.
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.
RESTRICTIONS: Purchase of a debt security is consistent with a stock fund's
debt quality policy if it is rated at or above the stated level by Moody's
or rated in the equivalent categories by S&P, or is unrated but judged to
be of equivalent quality by FMR. Each stock fund currently intends to limit
its investments in lower than Baa-quality debt securities to 5% of its
assets.
OTHER INSTRUMENTS for the stock funds may include securities of closed-end
investment companies and real estate-related investments.
MONEY MARKET SECURITIES are high-quality, short-term obligations issued by
the U.S. Government, corporations, financial institutions, and other
entities. These obligations may carry fixed, variable, or floating interest
rates. Some money market securities employ a trust or other similar
structure to modify the maturity, price characteristics, or quality of
financial assets so that they are eligible investments for money market
funds. If the structure does not perform as intended, adverse tax or
investment consequences may result.
U.S. GOVERNMENT MONEY MARKET SECURITIES are short-term debt obligations
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.
OTHER MONEY MARKET SECURITIES may include commercial paper, certificates of
deposit, bankers' acceptances, and time deposits.
EXPOSURE TO FOREIGN MARKETS. Foreign securities, foreign currencies, and
securities issued by U.S. entities with substantial foreign operations may
involve additional risks and considerations. These include risks relating
to political or economic conditions in foreign countries, fluctuations in
foreign currencies, withholding or other taxes, operational risks,
increased regulatory burdens, and the potentially less stringent investor
protection and disclosure standards of foreign markets. Additionally,
governmental issuers of foreign debt securities may be unwilling to repay
principal and interest when due and may require that the conditions for
payment be renegotiated. All of these factors can make foreign investments,
especially those in developing countries, more volatile than U.S.
investments. Issuers of foreign securities include foreign governments,
corporations, and banks.
RESTRICTIONS: The money market fund may not invest in foreign securities
unless they are denominated in U.S. dollars.
CREDIT SUPPORT. Issuers may employ various forms of credit enhancement,
including letters of credit, guarantees, or insurance from a bank,
insurance company, or other entity. These arrangements expose the fund to
the credit risk of the entity. In the case of foreign entities, extensive
public information about the entity may not be available and the entity may
be subject to unfavorable political, economic, or governmental developments
which might affect its ability to honor its commitment.
ASSET-BACKED SECURITIES include interests in 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.
STRIPPED SECURITIES are the separate income or principal components of a
debt security. Their risks are similar to those of other money market
securities, although they may be more volatile.
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.
PUT FEATURES entitle the holder to put (sell back) a security to the issuer
or a financial intermediary. In exchange for this benefit, the funds may
pay periodic fees or accept a lower interest rate. The credit quality of
the investment may be affected by the creditworthiness of the put provider.
Demand features, standby commitments, and tender options are types of put
features.
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.
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 some illiquid securities and some other 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.
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 a fund's yield or the market value of its 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. For Financial Services, Regional Banks, and
Home Finance Portfolios, with respect to 75% of total assets, these funds
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 (except Precious Metals and Minerals and American
Gold Portfolios) 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 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. For American Gold Portfolio, the
fund normally invests at least 80% of its assets in securities of North,
Central, and South American companies engaged in gold-related activities,
and in gold bullion or coins, and instruments whose value is linked to the
price of gold. 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 stock fund may borrow only for temporary or emergency
purposes, but not in an amount exceeding 33% of its total assets. The money
market fund may borrow only for temporary or emergency purposes, or engage
in reverse repurchase agreements, but not in an amount exceeding 33% of its
total assets.
LENDING. Lending securities to broker-dealers and institutions, including
Fidelity Brokerage Services, Inc. (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% 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.
1.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 precious metals and
securities indexed to the price of gold and other precious metals.
AUTOMOTIVE PORTFOLIO invests primarily in companies engaged in the
manufacture, marketing or sale of automobiles, trucks, specialty vehicles,
parts, tires, and related services.
BIOTECHNOLOGY PORTFOLIO invests primarily in companies engaged in the
research, development, and manufacture of various biotechnological
products, services and processes.
2.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.
3.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. With respect to 75% of
total assets, the fund may not invest more than 5% of its total assets in
any one issuer.
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.
With respect to 75% of total assets, the fund may not invest more than 5%
of its total assets in any one issuer.
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.
4.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 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 and
securities indexed to the price of gold and other precious metals.
REGIONAL BANKS PORTFOLIO invests primarily in companies engaged in
accepting deposits and making commercial and principally non-mortgage
consumer loans. With respect to 75% of total assets, the fund may not
invest more than 5% of its total assets in any one issuer.
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. The fund may borrow only for temporary or
emergency purposes, or engage in reverse repurchase agreements, but not in
an amount exceeding 33% of its total assets.
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
and Precious Metals and Minerals Portfolios, 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. (American Gold and
Precious Metals and Minerals Portfolios operate under different policies;
see pages and ). 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 (except for
Brokerage and Investment Management and Financial Services Portfolios, see
page ).
EACH STOCK FUND may not own more than 10% of the outstanding voting
securities of a single issuer. 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.
EACH STOCK FUND may borrow only for temporary or emergency purposes, but
not in an amount exceeding 33% of its total assets.
When FMR considers it appropriate for defensive purposes, each stock fund
may temporarily invest substantially in investment-grade debt securities.
Loans, in the aggregate, for each fund, may not exceed 33% 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. Each fund also pays OTHER EXPENSES, which
are explained on page .
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 1996, the group fee rate was .3074%. The individual fund fee
rate is .30% for the stock funds. The total management fee rate for each
fund for fiscal 1996 is shown on the chart on page .
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 1996, the group fee rate was .1464%. The money market fund's
total management fee for fiscal 1996 was .24%.
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 issuers 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 a fee equal to 50% of its
management fee rate with respect to a fund's investments that the
sub-adviser manages 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 .12% of the money market fund's average net assets
for fiscal 1996.
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 each fund's investments, and handling securities loans. In fiscal
1996, the funds paid FSC the fees, expressed as a percentage of average net
assets, 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. 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 1996 are shown in the chart below.
6. Management Fees to Turnover
Fund fees FSC rate
Air Transportation .61% .58% 504%
American Gold .61% .72% 56%
Automotive .61% 1.10% 61%
Biotechnology .61% .85% 67%
Brokerage and Investment Management .61% 1.04% 166%
Chemicals .61% 1.27% 87%
Computers .61% .72% 129%
Construction and Housing .61% .69% 139%
Consumer Products .61% .59% 601%
Defense and Aerospace .61% .97% 267%
Developing Communications .61% .85% 249%
Electronics .61% .55% 366%
Energy .61% .96% 97%
Energy Service .61% .82% 223%
Environmental Services .61% 1.55% 138%
Financial Services .61% .74% 125%
Food and Agriculture .61% .75% 124%
Health Care .61% .66% 54%
Home Finance .61% .67% 81%
Industrial Equipment .61% .86% 115%
Industrial Materials .61% .95% 138%
Insurance .61% .89% 164%
Leisure .61% .95% 141%
Medical Delivery .61% .97% 132%
Multimedia .61% .87% 223%
Natural Gas .61% .92% 79%
Paper and Forest Products .61% 1.15% 78%
Precious Metals and Minerals .61% .82% 53%
Regional Banks .61% .76% 103%
Retailing .61% 1.18% 235%
Software and Computer Services .61% .81% 183%
Technology .61% .74% 112%
Telecommunications .61% .85% 89%
Transportation .02%A 1.62% 175%
Utilities Growth .61% .72% 65%
Money Market .24% .27% n/a
A AFTER REIMBURSEMENT
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, 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 80 walk-in Investor Centers across the country.
TYPES OF ACCOUNTS
You may set up an account directly in a fund 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 in the table that follows.
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). If you qualify
for a sales charge waiver as described on page , your share price will be
the NAV. If you pay a sales charge as described on page , your share price
will be the offering price. When you buy shares at the offering price,
Fidelity deducts the appropriate sales charge and invests the rest in the
fund.
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 in the table that follows. 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
These minimums may vary for investments through Fidelity Portfolio Advisory
Services. Refer to the program materials for details.
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
(null)
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 funds' current 3% sales charge became effective the funds'
shares
were sold with a 2% sales charge and a 1% deferred sales charge. Any shares
purchased prior to October 12, 1990 (including Select Cash Reserves) and
not
otherwise subject to a sales charge reduction or waiver will be charged a
1%
deferred sales charge upon redemption. The deferred sales charge does not
apply
to exchanges between Select funds.
To sell shares in a non#retirement account,
you may use any of the following methods.
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:
S
You wish to redeem more than $100,000 worth of shares,
S
Your account registration has changed within the last 30 days,
S
The check is being mailed to a different address than the one on your
account
(record address),
S
The check is being made payable to someone other than the account owner, or
S
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 that follows. 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) Financial reports (every six months)
To reduce expenses, only one copy of most financial reports and
prospectuses will be mailed to your household, even if you have more than
one account in the funds. Call 1-800-544-6666 if you need copies of
financial 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 writing. 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 they 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 or retirement
accounts.
(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
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
SHAREHOLDER AND ACCOUNT POLICIES
DIVIDENDS, CAPITAL GAINS, AND TAXES
Each stock fund distributes substantially all of its net income and capital
gains to shareholders each year. Normally, capital gains and dividends are
distributed 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
distributions.
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.
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.
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. on the last day of the month. Cash distribution
checks will be mailed within seven days.
TAXES
As with any investment, you should consider how your investment in a fund
will be taxed. If your account is not a tax-deferred retirement account,
you should be aware of these 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. 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.
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)
TAXES ON TRANSACTIONS. Your stock fund 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.
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 stock 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. However, an offsetting tax credit or deduction may be
available to you. If so, your tax statement will show more taxable income
or capital gains than were actually distributed by the fund, but will also
show the amount of the available offsetting credit or deduction.
There are 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 NAV 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 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.
THE OFFERING PRICE (price to buy one share) is the fund's NAV divided by
the result of one minus the applicable sales charge percentage. The maximum
sales charge is 3% of the offering price. 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 (money market
fund only) 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.
FBSI established a program permitting customers with Fidelity brokerage
accounts to sell short shares of certain 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 a 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. Note 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 (except non-prototype 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 each fund's 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 1.5% of a
fund's 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) Exchange limitations 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 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 a fund
receives or anticipates simultaneous orders affecting significant portions
of a fund's assets. In particular, a pattern of exchanges that coincides
with a "market timing" strategy may be disruptive to a fund.
(small solid bullet) For cash management purposes, up to three business
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
three business-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,
purchases made with assistance or intervention from a financial
intermediary are not eligible. Call Fidelity to see if your purchase
qualifies.
Sales Charge
Ranges As a % of Offering Price As an approximate % of net amount 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. A fund's sales charge will not apply:
1. If you buy shares as part of an employee benefit plan having more than
200 eligible employees or a minimum of $3 million in plan assets invested
in Fidelity mutual funds.
2. To shares in a Fidelity 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 or Fidelity
Charitable 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.
CYCLICAL INDUSTRIES PORTFOLIO
NATURAL RESOURCES PORTFOLIO
FUNDS OF FIDELITY SELECT PORTFOLIOS(registered trademark)
STATEMENT OF ADDITIONAL INFORMATION
OCTOBER 28, 1996
This Statement is not a prospectus but should be read in conjunction with
the funds' current Prospectus (dated October 28, 1996). Please retain this
document for future reference. Only Cyclical Industries and Natural
Resources are discussed in this Statement of Additional Information (SAI).
The other 35 Select stock funds and the money market fund are discussed in
the Fidelity Select Portfolios SAI dated April 29, 1996, which is a part
hereof. Throughout this SAI, the Fidelity Select Portfolios SAI dated April
29, 1996, is referred to as the "Select SAI." To obtain an additional copy
of the Prospectus, please call Fidelity Distributors Corporation at
1-800-544-8888.
TABLE OF CONTENTS PAGE
Investment Policies and Limitations 2
Portfolio Transactions
Valuation of Portfolio Securities 5
Performance 5
Additional Purchase and Redemption Information 5
Distributions and Taxes 5
FMR 5
Trustees and Officers 5
Management Contracts
Contracts With FMR Affiliates 7
Description of the Trust 7
Financial Statements 8
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc. (FMR U.K.)
Fidelity Management & Research (Far East) Inc. (FMR Far East)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENT
Fidelity Service Co. (FSC)
SELB-96-
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 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 the fund.
However, except for the fundamental investment limitations listed 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 FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33% 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% limitation;
(3) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(4) purchase the securities of any issuer if, as a result, less than 25% of
the fund's total assets would be invested in the securities of issuers
principally engaged in the business activities having the specific
characteristics denoted by the fund;
(5) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(6) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities). This limitation does not apply to the Natural Resources
Portfolio (see below); or
(7) lend any security or make any other loan if, as a result, more than 33%
of its total assets would be lent to other parties, but this limitation
does not apply to purchases of debt securities or to repurchase agreements.
(8) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company managed by Fidelity Management &
Research Company or an affiliate or successor with substantially the same
fundamental investment objective, policies, and limitations as the fund.
THE NATURAL RESOURCES PORTFOLIO MAY NOT:
(1) purchase or sell physical commodities other than precious metals,
provided that the fund may sell physical commodities acquired as a result
of ownership of securities or other instruments. This limitation shall not
prevent the fund from purchasing or selling options and futures contracts
or from investing in securities or other instruments backed by physical
commodities.
THE FOLLOWING ARE EACH FUND'S NON-FUNDAMENTAL LIMITATIONS WHICH MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) In order to qualify as a regulated investment company under Subchapter
M of the Internal Revenue Code of 1986, as amended, each fund currently
intends to comply with certain diversification limits imposed by Subchapter
M.
(ii) With respect to 75% of its total assets, the fund does not intend to
purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities, or securities of other investment companies) if, as a
result, the fund would hold more than 10% of the outstanding voting
securities of that issuer.
(iii) 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.
(iv) 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.
(v) The fund does not currently intend to hedge more than 40% of its total
assets with short sales against the box under normal conditions.
(vi) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (2)). The fund will not
purchase any security while borrowings 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.
(vii) 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.
(viii) The 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 the fund's net assets.
(ix) The Natural Resources Portfolio does not currently intend to invest
more than 25% of its total assets in readily marketable precious metals.
(x) The fund does not currently intend to lend assets other than securities
to other parties, except by (a) lending money (up to 5% of the fund's net
assets) to a registered investment company or portfolio for which Fidelity
Management & Research Company or an affiliate serves as investment adviser,
or (b) acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated unfunded
commitments of the sellers. (This limitation does not apply to purchases of
debt securities or to repurchase agreements.)
(xi) 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 (i) to securities received as dividends, through
offers of exchange, or as a result of a reorganization, consolidation, or
merger, or (ii) to securities of other open-end investment companies
managed by Fidelity Management & Research Company or a successor or
affiliate purchased pursuant to an exemptive order granted by the SEC.
(xii) The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company managed by
Fidelity Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For purposes of limitation (i), Subchapter M generally requires a fund to
invest no more than 25% of its total assets in securities of any one issuer
and to invest at least 50% of its total assets so that no more than 5% of a
fund's total assets are invested in securities of any one issuer. However,
Subchapter M allows unlimited investments in cash, cash items, government
securities (as defined in Subchapter M) and securities of other investment
companies. These tax requirements are generally applied at the end of each
quarter of a fund's taxable year.
For the funds' limitations on futures and options transactions, see the
section entitled "Limitations on Futures and Options Transactions"
beginning on page .
FUND DESCRIPTIONS
THE FUNDS INVEST PRIMARILY WITHIN THE INVESTMENT AREAS DESCRIBED BELOW.
CYCLICAL INDUSTRIES PORTFOLIO: COMPANIES ENGAGED IN THE RESEARCH,
DEVELOPMENT, MANUFACTURE, DISTRIBUTION, SUPPLY, OR SALE OF MATERIALS,
EQUIPMENT, PRODUCTS OR SERVICES RELATED TO CYCLICAL INDUSTRIES. These may
include the automotive, chemical, construction and housing, defense and
aerospace, environmental services, industrial equipment and materials,
paper and forest products, and transportation industries.
Many companies in these industries are significantly affected by general
economic trends including employment, economic growth, and interest rates.
Other factors that may affect these industries are changes in consumer
sentiment and spending, commodity prices, legislation, government
regulation and spending, import controls, and worldwide competition. At
times, worldwide production of these materials used in cyclical industries
has exceeded demand as a result of, for example, over-building or economic
downturns. During these times, commodity price declines and unit volume
reductions resulted in poor investment returns and losses. Furthermore, a
company in the cyclical industries may be subject to liability for
environmental damage, depletion of resources, and mandated expenditures for
safety and pollution control.
NATURAL RESOURCES PORTFOLIO: COMPANIES THAT OWN OR DEVELOP NATURAL
RESOURCES, OR SUPPLY GOODS AND SERVICES TO SUCH COMPANIES. Natural
resources include precious metals (e.g., gold, platinum and silver),
ferrous and nonferrous metals (e.g., iron, aluminum and copper), strategic
metals (e.g., uranium and titanium), hydrocarbons (e.g., coal, oil and
natural gases), chemicals, forest products, real estate, food products, and
other basic commodities. Exploring, mining, refining, processing,
transporting, and fabricating are examples of activities of companies in
the natural resources industry.
The fund may invest up to 25% of its total assets in precious metals and
currently intends to limit its investments to readily marketable precious
metals. Precious metals, at times, have been subject to substantial price
fluctuations over short periods of time and may be affected by
unpredictable international monetary and political policies such as
currency devaluations or revaluations, economic and social conditions
within a country, trade imbalances, or trade or currency restrictions
between countries. The fund may also consider instruments and securities
indexed to the price of gold or other precious metals as an alternative to
direct investments in precious metals.
As a practical matter, investments in physical commodities can present
concerns such as delivery, storage and maintenance, possible illiquidity
and the unavailability of accurate market valuations. FMR, in addressing
these concerns, currently intends to purchase only readily marketable
precious metals and to deliver and store them with a qualified U.S. bank.
Investments in bullion earn no investment income and may involve higher
custody and transaction costs than investments in securities. In order to
qualify as a regulated investment company, 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 bullion or securities when
it would not otherwise do so.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. Each fund intends to file
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, before engaging in any purchases or sales of futures
contracts or options on futures contracts. The funds intend to comply with
Rule 4.5 under the Commodity Exchange Act, which limits the extent to which
the funds can commit assets to initial margin deposits and option premiums.
In addition, each 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.
INDEXED SECURITIES. Each 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, for
example, typically provide for a maturity value that depends on the price
of gold, resulting in a security whose price tends to rise and fall
together with gold prices. Currency-indexed securities typically are
short-term to intermediate-term debt securities whose maturity values or
interest rates are determined by reference to the values of one or more
specified foreign currencies, and may offer higher yields than U.S.
dollar-denominated securities 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
United States 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.
Natural Resources may consider purchasing securities indexed to the price
of precious metals as an alternative to direct investments in precious
metals. The fund will only buy precious metals-indexed securities when it
is satisfied with the creditworthiness of the issuers liable for payment.
The securities generally will earn a nominal rate of interest while held by
the fund, and may have maturities of one year or more. In addition, the
securities may be subject to being put by the 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.
In addition to the preceding information, pages 2 through 22 of the Select
SAI contains more detailed information about the types of instruments in
which the funds may invest, strategies FMR may employ in pursuit of a
fund's objective, and a summary of related risks. Any restrictions listed
supplement those discussed earlier in this SAI.
PORTFOLIO TRANSACTIONS
Each fund's annualized portfolio turnover rate is not expected to exceed
200% in the first fiscal period ending February 28, 1997.
Refer to the "Portfolio Transactions" section beginning on page 22 of the
Select SAI for more information about how each fund's transactions in
portfolio securities are effected.
VALUATION OF PORTFOLIO SECURITIES
Refer to the "Valuation of Portfolio Securities" section beginning on page
26 of the Select SAI for information on how each fund's assets are valued.
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. Each fund's share price and total
return fluctuates in response to market conditions and other factors, and
the value of each fund's shares when redeemed may be more or less than
their original cost.
Average annual total returns covering periods of less than one year are
calculated by determining a fund's total return for the period, extending
that return for a full year (assuming that return remains constant over the
year), and quoting the result as an annual return.
Refer to the "Performance" section beginning on page 27 of the Select SAI
for more information about calculating, reporting, and quoting the funds'
performance.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Refer to the "Additional Purchase and Redemption Information" section
beginning on page 41 of the Select SAI for information on share price
calculations and sales charge waivers and reductions.
DISTRIBUTIONS AND TAXES
Refer to the "Distributions and Taxes" section beginning on page 42 of the
Select SAI for information about distribution options and taxes.
FMR
Refer to the "FMR" section on page 44 of the Select SAI for detailed
information about FMR, the investment adviser of the funds.
TRUSTEES AND OFFICERS
Refer to the "Trustees and Officers" section beginning on page 44 of the
Select SAI for detailed information about the funds' trustees and officers.
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 each fund with all necessary
office facilities and personnel for servicing each fund's investments,
compensates all officers of each fund and all Trustees who are "interested
persons" of the trust or FMR, and all personnel of each fund or FMR
performing services relating to research, statistical, and investment
activities.
In addition, FMR or its affiliates, subject to the supervision of the Board
of Trustees, provide the management and administrative services necessary
for the operation of each fund. These services include providing facilities
for maintaining each fund's organization; supervising relations with
custodians, transfer and pricing agents, accountants, underwriters, and
other persons dealing with each fund; preparing all general shareholder
communications and conducting shareholder relations; maintaining each
fund's records and the registration of each fund's shares under federal and
state laws; developing management and shareholder services for each fund;
and furnishing reports, evaluations, and analyses on a variety of subjects
to the 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 pays for the typesetting, printing, and
mailing of its proxy materials to shareholders, legal expenses, and the
fees of the custodian, auditor, and non-interested Trustees. Although each
fund's current management contract provides that each 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 costs of providing these services to
existing shareholders. Other expenses paid by each 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 each fund may be a party, and any obligation it may
have to indemnify its officers and Trustees with respect to litigation.
FMR is each fund's manager pursuant to management contracts dated
____________, 1996, which were approved by FMR, the then sole shareholder
on ___________, 1996.
For the services of FMR under the contract, each fund pays 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 below on the left. The schedule below on the right shows the
effective annual group fee rate at various asset levels, which is the
result of cumulatively applying the annualized rates on the left. For
example, the effective annual fee rate at $____ billion of group net assets
- - the approximate level for June 1996 - 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 Fee
Assets Rate Assets Rate
0 - $3 billion .5200% $ 0.5 billion .5200%
3 - 6 .4900 25 .4238
6 - 9 .4600 50 .3823
9 - 12 .4300 75 .3626
12 - 15 .4000 100 .3512
15 - 18 .3850 125 .3430
18 - 21 .3700 150 .3371
21 - 24 .3600 175 .3325
24 - 30 .3500 200 .3284
30 - 36 .3450 225 .3249
36 - 42 .3400 250 .3219
42 - 48 .3350 275 .3190
48 - 66 .3250 300 .3163
66 - 84 .3200 325 .3137
84 - 102 .3150 350 .3113
102 - 138 .3100 375 .3090
138 - 174 .3050 400 .3067
174 - 210 .3000 425 .3046
210 - 246 .2950 450 .3024
246 - 282 .2900 475 .3003
282 - 318 .2850 500 .2982
318 - 354 .2800 525 .2962
354 - 390 .2750 550 .2942
390 - 426 .2700
426 - 462 .2650
462 - 498 .2600
498 - 534 .2550
Over 534 .2500
The individual fund fee rate is .30%. Based on the average group net assets
of funds advised by FMR for June 1996, the annual management fee rate would
be calculated as follows:
Group Fee Rate Individual Fund Fee Rate Basic Fee Rate
% + .30% = %
One twelfth (1/12) of this annual management fee rate is applied to each
fund's net assets averaged for the most recent month, giving a dollar
amount, which is the fee for that month.
FEES COLLECTED BY FMR. 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
repayment of the reimbursement by each fund will lower its total returns.
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% of the first $30 million, 2% of the next
$70 million, and 1% 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%
of average net assets.
SUB-ADVISERS. On behalf of each fund, 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 the 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 fund.
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, which were organized in 1986, 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.
CONTRACTS WITH FMR AFFILIATES
FSC is transfer, dividend disbursing, and shareholder servicing agent for
each fund. FSC receives annual account fees and asset-based fees based on
account size and fund type for each retail account and certain
institutional accounts. With respect to certain institutional retirement
accounts, FSC receives annual account fees and asset-based fees based on
account type or fund type. These annual account fees are subject to
increase based on postal rate changes. The asset-based fees are subject to
adjustment if the year-to-date total return of the Standard & Poor's 500
exceeds a positive or negative 15%. FSC also collects small account fees
from certain accounts with balances of less than $2,500.
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.
FSC also performs the calculations necessary to determine each fund's net
asset value per share and dividends, and maintains each fund's accounting
records. The annual fee rates for these pricing and bookkeeping services
are based on each fund's average net assets, specifically, .1000% for the
first $500 million of average net assets and .0500% for average net assets
in excess of $500 million. The fee is limited to a minimum of $60,000 and a
maximum of $800,000 per year.
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.
Currently, FSC is credited with a $7.50 exchange fee for each exchange from
each fund, including each exchange from each 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 the 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 FMR.
DESCRIPTION OF THE TRUST
On July 18, 1996, Consumer Products Portfolio was renamed "Consumer
Industries Portfolio."
Currently there are thirty-eight funds of the trust.
Refer to the "Description of the Trust" section beginning on page 57 of the
Select SAI for more information about the Trust's organization, shareholder
and Trustee liability, and voting rights of the funds' shareholders, and
custodian and auditor information.
FINANCIAL STATEMENTS
Financial statements and financial highlights for Cyclical Industries and
Natural Resources are not available since the funds were new when this SAI
was printed.
FIDELITY SELECT PORTFOLIOS(registered trademark)
STATEMENT OF ADDITIONAL INFORMATION
APRIL 29, 1996
This Statement is not a prospectus but should be read in conjunction with
the funds' current Prospectus (dated April 29, 1996). Please retain this
document for future reference. The funds' financial statements and
financial highlights, included in the Annual Report for the fiscal year
ended February 29, 1996, 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 2
Portfolio Transactions 22
Valuation of Portfolio Securities 26
Performance 27
Additional Purchase and Redemption Information 41
Distributions and Taxes 42
FMR 44
Trustees and Officers 44
Management Contracts 49
Contracts With FMR Affiliates 56
Description of the Trust
Financial Statements
Appendix
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 Co. (FSC)
SEL-ptb- 496
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 Financial Services, Regional Banks, Home Finance, and
Money Market Portfolios). 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 is 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 companies, the stock funds 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. The Financial
Services, Regional Banks, and Home Finance Portfolios will operate as
"diversified" funds. They will 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, with respect to 75%
of its total assets, more than 5% of a fund's total assets would be
invested in the securities of that issuer. The Money Market Portfolio also
operates 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 . Also see "Distributions and Taxes" beginning on page 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) purchase the securities of any issuer (except securities issued or
guaranteed by the United States government or its agencies or
instrumentalities) if, as a result, more than 10% of the outstanding voting
securities of that issuer would be owned by the fund;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) 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% 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% limitation;
(4) 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;
(5) 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;
(6) 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);
(7) 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 or to the American Gold Portfolio (see below);
(8) lend any security or make any other loan if, as a result, more than 33%
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, EACH STOCK FUND MAY:
(9) 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 AMERICAN GOLD AND PRECIOUS METALS AND MINERALS PORTFOLIOS 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 FINANCIAL SERVICES, REGIONAL BANKS, AND HOME FINANCE PORTFOLIOS MAY
NOT:
(1) with respect to 75% of 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, more than 5%
of its total assets would be invested in the securities of that issuer.
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) 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.
(iii) 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.
(iv) Each fund does not currently intend to hedge more than 40% of its
total assets with short sales against the box under normal conditions.
(v) 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 (3)). 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.
(vi) 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.
(vii) 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
(vi) would exceed 10% of a fund's net assets.
(viii) 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.
(ix) The American Gold Portfolio and the Precious Metals and Minerals
Portfolio will each limit investment in precious metals bullion or coins to
no more than 25% of its total assets.
(x) Each fund does not currently intend to lend assets other than
securities to other parties, except (a) by lending money (up to 5% of a
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser, or (b) acquiring
loans, loan participations, or other forms of direct debt instruments and,
in connection therewith, assuming any associated unfunded commitments of
the sellers. (This limitation does not apply to purchases of debt
securities or to repurchase agreements.)
(xi) 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.
(xii) 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.
(xiii) 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 .
(xiv) 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.
(xv) 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.
(xvi) 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 purposes of limitation (xii), pass-through entities and other special
purpose vehicles or pools of financial assets, such as issuers of
asset-backed securities or investment companies, are not considered
"business enterprises."
For the stock funds' limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
beginning on page .
For the stock funds' policies on foreign investments, see the section
entitled "Exposure to Foreign Markets" 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% 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% 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%
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.
(xi) 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.
For the money market fund's policies on quality and maturity, see the
section entitled "Quality and Maturity" on page .
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 20 AM, 20 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 precious
metals, such as gold, platinum, palladium, and silver. No more than 50% of
either fund'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 or other precious metals 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 or other precious metals in the form of bullion,
coins, or securities indexed to the price of precious metals. The price of
gold and other precious metals 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, precious metals may be
more or less volatile in price than securities of companies engaged in
precious metals-related businesses. 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.
The fund is authorized to invest up to 50% of its total assets in precious
metals bullion or coins; 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, and does not currently intend
to purchase coins. 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 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 or other precious metals, which are discussed in this
Statement of Additional Information. Because the value of these securities
is directly linked to the price of precious metals, they involve risks and
pricing characteristics similar to direct investments in precious metals.
FMR currently intends to treat such securities as precious metals
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,
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, refining, marketing, control, or measurement of
energy or energy fuels such as petrochemicals; 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: 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 20 AM, 20 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 Multimedia 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 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.
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
borrowings. In accordance with exemptive orders issued by the Securities
and Exchange Commission (SEC), the Board of Trustees has established and
periodically reviews procedures applicable to transactions involving
affiliated financial institutions.
ASSET-BACKED SECURITIES 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 entities providing the
credit support.
CLOSED-END INVESTMENT COMPANIES. Each fund may purchase the shares of
closed-end investment companies to facilitate investment in certain
countries. Shares of closed-end investment companies may trade at a premium
or a discount to their net asset value.
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 the 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. 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
the 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.
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, or the ability to honor a credit
commitment. Additionally, there may be less public information available
about foreign entities. Foreign issuers may be subject to less governmental
regulation and supervision than U.S. issuers. Foreign issuers also
generally are not bound by uniform accounting, auditing, and financial
reporting requirements comparable to those applicable to U.S. issuers.
EXPOSURE TO FOREIGN MARKETS (STOCK FUNDS). Foreign securities, foreign
currencies, and securities issued by U.S. entities with substantial foreign
operations may involve significant risks in addition to the risks inherent
in U.S. investments. 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.
Foreign investments involve a risk of local political, economic, or social
instability, military action or unrest, or adverse diplomatic developments,
and may be affected by actions of foreign governments adverse to the
interests of U.S. investors. Such actions may include 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
is no assurance that FMR will be able to anticipate these potential events
or counter their effects. These risks are magnified for investments in
developing countries, which may have relatively unstable governments,
economies based on only a few industries, and securities markets that trade
a small number of securities.
Economies of particular countries or areas of the world may differ
favorably or unfavorably from the economy of the United States. 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 an exchange 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 result in 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. 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.
Some foreign securities impose restrictions on transfer within the United
States or to U.S. persons. Although securities subject to such transfer
restrictions may be marketable abroad, they may be less liquid than foreign
securities of the same class that are not subject to such restrictions.
American Depository Receipts (ADRs) as well as other "hybrid" forms of ADRs
including European Depository Receipts (EDRs) and Global Depository
Receipts (GDRs), are certificates evidencing ownership of shares of a
foreign issuer. These certificates are issued by depository banks and
generally trade on an established market in the United States or elsewhere.
The underlying shares are held in trust by a custodian bank or similar
financial institution in the issuer's home country. The depository bank may
not have physical custody of the underlying securities at all times and may
charge fees for various services, including forwarding dividends and
interest and corporate actions. ADRs are an alternative to directly
purchasing the underlying foreign securities in their national markets and
currencies. However, ADRs continue to be subject to many of the risks
associated with investing directly in foreign securities. These risks
include foreign exchange risk as well as the political and economic risks
of the underlying issuer's country.
FOREIGN CURRENCY TRANSACTIONS. Each stock fund 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.
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.
FUTURES AND OPTIONS. The following sections pertain to futures and options:
Asset Coverage for Futures and Options Positions, Combined Positions,
Correlation of Price Changes, Futures Contracts, Futures Margin Payments,
Limitations on Futures and Options Transactions, Liquidity of Options and
Futures Contracts, Options and Futures Relating to Foreign Currencies, OTC
Options, Purchasing Put and Call Options, and Writing Put and Call Options.
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.
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.
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 of a fund's investment limitations. In the event of the
bankruptcy of an FCM that holds margin on behalf of a fund, the fund may be
entitled to return of margin owed to it only in proportion to the amount
received by the FCM's other customers, potentially resulting in losses to
the fund.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. Each stock fund has filed
a notice of eligibility for exclusion from the definition of the term
"commodity pool operator" with the Commodity Futures Trading Commission
(CFTC) and the National Futures Association, which regulate trading in the
futures markets. The 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.
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
fund's access to other assets held to cover its options or futures
positions could also be impaired.
OPTIONS AND FUTURES RELATING TO FOREIGN CURRENCIES. Currency futures
contracts are similar to forward currency exchange contracts, except that
they are traded on exchanges (and have margin requirements) and are
standardized as to contract size and delivery date. Most currency futures
contracts call for payment or delivery in U.S. dollars. The underlying
instrument of a currency option may be a foreign currency, which generally
is purchased or delivered in exchange for U.S. dollars, or may be a futures
contract. The purchaser of a currency call obtains the right to purchase
the underlying currency, and the purchaser of a currency put obtains the
right to sell the underlying currency.
The uses and risks of currency options and futures are similar to options
and futures relating to securities or indices, as discussed above. 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.
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.
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.
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, emerging market
securities, 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 for the money
market fund are valued for purposes of monitoring amortized cost valuation,
and for the stock funds are 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.
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, for example, typically provide for a maturity value that
depends on the price of gold, resulting in a security whose price tends to
rise and fall together with gold prices. Currency-indexed securities
typically are short-term to intermediate-term debt securities whose
maturity values or interest rates are determined by reference to the values
of one or more specified foreign currencies, and may offer higher yields
than U.S. dollar-denominated securities 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
United States 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 precious metals
as an alternative to direct investments in precious metals. The funds will
only buy precious metals-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.
INTERFUND BORROWING AND LENDING PROGRAM. Pursuant to an exemptive order
issued by the SEC, each fund has received permission to lend money to, and
borrow money from, other funds advised by FMR or its affiliates. Interfund
loans and borrowings normally extend overnight, but can have a maximum
duration of seven days. Loans may be called on one day's notice. A fund
will lend through the program only when the returns are higher than those
available 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. A fund may have to borrow
from a bank at a higher interest rate if an interfund loan is called or not
renewed. Any delay in repayment to a lending fund could result in a lost
investment opportunity or additional borrowing costs.
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.
LOWER-QUALITY DEBT SECURITIES. Each stock fund may purchase lower-quality
debt securities (those rated below Baa by Moody's Investors Service, Inc.
or BBB by Standard and Poor's, 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.
The market for lower-quality debt securities may be thinner and less active
than that for higher-quality debt securities, which can adversely affect
the prices at which the former are sold. If market quotations are not
available, lower-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 lower-quality debt
securities and a fund's ability to sell these securities.
Since the risk of default is higher for lower-quality debt securities,
FMR's research and credit analysis are an especially important part of
managing securities of this type 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.
MONEY MARKET SECURITIES are high-quality, short-term obligations. Some
money market securities employ a trust or other similar structure to modify
the maturity, price characteristics, or quality of financial assets. For
example, put features can be used to modify the maturity of a security or
interest rate adjustment features can be used to enhance price stability.
If 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 fund.
MUNICIPAL SECURITIES are issued to raise money for a variety of public or
private purposes, including general financing for state and local
governments, or financing for specific projects or public facilities. They
may be issued in anticipation of future revenues and may be backed by the
full taxing power of a municipality, the revenues from a specific project,
or the credit of a private organization. The value of some or all municipal
securities may be affected by uncertainties in the municipal market related
to legislation or litigation involving the taxation of municipal securities
or the rights of municipal securities holders. A fund may own a municipal
security directly or through a participation interest.
PUT 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 other
entities. Demand features, standby commitments, and tender options are
types of put features.
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). Split-rated securities may be determined to be
either first tier or second tier based on applicable regulations.
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 limit 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.
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.
REPURCHASE AGREEMENTS. In 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. To protect the fund
from the risk that the original seller will not fulfill its obligation, the
securities are held in an account of the fund at a bank, marked-to-market
daily, and maintained at a value at least equal to the sale price plus the
accrued incremental amount. 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.
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.
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.
SECURITIES LENDING. Each stock fund 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).
SHORT SALES "AGAINST THE BOX." A 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 increased interest
rates, without sacrificing the current yield of the securities sold short.
If a fund enters into a short sale against the box, it will be required to
set aside securities equivalent in kind and amount to the securities sold
short (or securities convertible or exchangeable into such securities) and
will be required to hold such securities while the short sale is
outstanding. The fund may incur transaction costs, including interest
expenses, in connection with opening, maintaining, and closing short sales
against the box.
SOURCES OF CREDIT OR LIQUIDITY SUPPORT. FMR may rely on its evaluation of
the credit of a bank or another entity in determining whether to purchase a
security supported by a letter of credit guarantee, insurance or other
source of credit or liquidity. In evaluating the credit of a foreign bank
or other foreign entities, FMR will consider whether adequate public
information about the entity is available and whether the entity may be
subject to unfavorable political or economic developments, currency
controls, or other government restrictions that might affect its ability to
honor its commitment.
STRIPPED GOVERNMENT SECURITIES (MONEY MARKET FUND). Stripped securities are
created by separating the income and principal components of a debt
instrument and selling them separately. U.S. Treasury STRIPS (Separate
Trading of Registered Interest and Principal of Securities) 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
government agencies also may be stripped in this fashion.
Privately stripped government securities 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
government agencies also may be stripped in this fashion.
Because of the SEC's views on privately stripped government securities, the
fund must evaluate them as it would non-government securities pursuant to
regulatory guidelines applicable to all money market funds. In addition,
the fund currently intends to purchase only those privately stripped
government securities that have either received the highest rating from two
nationally recognized rating services (or one, if only one has rated the
security) or, if unrated, been judged to be of equivalent quality by FMR
pursuant to procedures adopted by the Board of Trustees.
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 stock 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 stock 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.
VARIABLE AND FLOATING RATE SECURITIES provide for periodic adjustments of
the interest rate paid on the security. Variable rate securities provide
for a specified periodic adjustment in the interest rate, while floating
rate securities have interest rates that change whenever there is a change
in a designated benchmark rate. Some variable or floating rate securities
have put features.
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 investments traded on foreign exchanges will be higher than
for investments traded on U.S. exchanges 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; and the availability of
securities or the purchasers or sellers of securities. In addition, such
broker-dealers may furnish analyses and reports concerning issuers,
industries, securities, economic factors and trends, portfolio strategy,
and performance of accounts; effect securities transactions; and perform
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 for the stock funds 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 selection of such broker-dealers for the money market fund
generally is made by FMR (to the extent possible consistent with execution
considerations) 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 (FBS), subsidiaries of FMR
Corp., if the commissions are fair, reasonable, and comparable to
commissions charged by non-affiliated, qualified brokerage firms for
similar services. From September 1992 through December 1994, FBS operated
under the name Fidelity Brokerage Services Limited, Inc. (FBSL). As of
January 1995, FBSL was converted to an unlimited liability company and
assumed the name FBS. 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.
Each fund's 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 years ended February 29,
1996 and February 28, 1995 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 1996 FISCAL 1995
Air Transportation 504% 200%
American Gold 56% 34%
Automotive 61% 63%
Biotechnology 67% 77%
Brokerage and Investment Management 166% 139%
Chemicals 87% 106%
Computers 129% 189%
Construction and Housing 139% 45%
Consumer Products 601% 190%
Defense and Aerospace 267% 146%
Developing Communications 249% 266%
Electronics 366% 205%
Energy 97% 106%
Energy Service 223% 209%
Environmental Services 138% 82%
Financial Services 125% 107%
Food and Agriculture 124% 126%
Health Care 54% 151%
Home Finance 81% 124%
Industrial Equipment 115% 131%
Industrial Materials 138% 139%
Insurance 164% 265%
Leisure 141% 103%
Medical Delivery 132% 123%
Multimedia 223% 107%
Natural Gas 79% 177%
Paper and Forest Products 78% 209%
Precious Metals and Minerals 53% 43%
Regional Banks 103% 106%
Retailing 235% 481%
Software and Computer Services 183% 164%
Technology 112% 102%
Telecommunications 89% 107%
Transportation 175% 178%
Utilities Growth 65% 24%
BROKERAGE COMMISSIONS. The 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 FBS and FBSL for fiscal 1996, 1995, and 1994. The tables also list
the percentage of each fund's aggregate brokerage commissions paid to FBS
and FBSL during the 1996, 1995, and 1994 fiscal years, as well as the
percentage of each fund's aggregate dollar amount of transactions executed
through FBS and FBSL during the same periods. However, during fiscal 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 FBS and FBSL is a result of
the low commission rates charged by FBS and FBSL.
% of % of
% of % of Transactions Transactions
Fiscal % Paid to Commissions Commissions Effected Effected
Period Ended Firms Providing Paid Paid through through
February 29 Total Research To FBSI To FBS To FBSI To FBS FBSI FBS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AIR TRANSPOR-
TATION
1996 $ 686,690 95% $ 108,868 $ 12,126 16% 2% 38% 1%
1995 $ 44,221 95% $ 11,047 $ 858 25% 2% 56% 1%
1994 $ 65,372 71% $ 15,992 $ -- 24% -- 49% --
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AMERICAN
GOLD
1996 $ 890,082 95% $ 341,569 $ -- 38% -- 47% --
1995 $ 434,646 96% $ 66,393 $ -- 15% -- 28% --
1994 $ 572,538 82% $ 59,125 $ -- 10% -- 17% --
AUTOMOTIVE
1996 $ 101,868 89% $ 13,806 $ 9,408 14% 9% 26% 8%
1995 $ 261,551 92% $ 62,506 $ 6,340 24% 2% 33% 1%
1994 $ 206,497 58% $ 47,865 $ -- 23% -- 35% --
BIOTECHNOLOGY
1996 $ 514,556 92% $ 141,230 $ 22,319 27% 4% 41% 2%
1995 $ 269,543 98% $ 86,356 $ -- 32% -- 35% --
1994 $ 128,536 60% $ 42,992 $ -- 33% -- 36% --
BROKERAGE AND
INVESTMENT
MANAGEMENT
1996 $ 152,008 88% $ 18,355 $ -- 12% -- 25% --
1995 $ 285,000 99% $ 9,202 $ -- 3% -- 10% --
1994 $ 722,667 82% $ 96,223 $ -- 13% -- 34% --
CHEMICALS
1996 $ 148,858 95% $ 69,929 $ 452 47% -- 62% --
1995 $ 299,801 85% $ 92,389 $ 38,585 31% 13% 43% --
1994 $ 77,565 52% $ 27,722 $ -- 36% -- 49% --
COMPUTERS
1996 $ 666,974 92% $ 88,690 $ -- 13% -- 25% --
1995 $ 340,960 98% $ 154,477 $ -- 45% -- 59% --
1994 $ 111,949 55% $ 45,787 $ -- 41% -- 60% --
CONSTRUCTION
AND HOUSING
1996 $ 145,931 88% $ 27,836 -- 19% -- 32% --
1995 $ 83,667 93% $ 22,274 $ -- 27% -- 41% --
1994 $ 72,398 64% $ 21,215 $ -- 29% -- 45% --
CONSUMER
PRODUCTS
1996 $ 227,375 94% $ 91,856 $ -- 40% -- 51% --
1995 $ 37,144 95% $ 14,756 $ -- 40% -- 50% --
1994 $ 26,503 46% $ 10,852 $ -- 41% -- 55% --
DEFENSE AND
AEROSPACE
1996 $ 84,977 83% $ 36,879 $ -- 43% -- 60% --
1995 $ 12,412 97% $ 6,197 $ -- 50% -- 69% --
1994 $ 23,698 63% $ 7,073 $ -- 30% -- 53% --
DEVELOPING
COMMUNICATI
ONS
1996 $ 842,041 92% $ 190,186 $ 10,041 23% 1% 29% 1%
1995 $ 815,766 97% $ 178,340 $ 2,788 22% -- 31% --
1994 $ 857,319 76% $ 168,725 $ -- 20% -- 34% --
ELECTRONICS
1996 $ 2,508,628 98% $ 395,989 $ -- 16% -- 26% --
1995 $ 311,242 97% $ 138,231 $ -- 44% -- 53% --
1994 $ 66,371 37% $ 35,182 $ -- 53% -- 59% --
ENERGY
1996 $ 212,221 93% $ 60,047 $ -- 28% -- 34% --
1995 $ 284,436 91% $ 96,604 $ -- 34% -- 45% --
1994 $ 407,705 54% $ 157,374 $ -- 39% -- 59% --
</TABLE>
% of % of
% of % of Transactions Transactions
Fiscal % Paid to Commissions Commissions Effected Effected
Period Ended Firms Providing Paid Paid through through
February 29 Total Research To FBSI To FBS To FBSI To FBS FBSI FBS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ENERGY SERVICE
1996 $ 708,875 95% $ 376,373 $ -- 53% -- 64% --
1995 $ 227,450 91% $ 105,206 $ -- 46% -- 52% --
1994 $ 427,988 56% $ 154,629 $ -- 36% -- 46% --
ENVIRONMENTAL
SERVICES
1996 $ 128,959 95% $ 36,310 $ -- 28% -- 35% --
1995 $ 148,268 97% $ 44,929 $ -- 30% -- 41% --
1994 $ 324,850 70% $ 84,034 $ -- 26% -- 36% --
FINANCIAL
SERVICES
1996 $ 286,790 96% $ 115,231 $ -- 40% -- 45% --
1995 $ 246,696 97% $ 56,906 $ -- 23% -- 34% --
1994 $ 406,834 77% $ 67,939 $ -- 17% -- 27% --
FOOD AND
AGRICULTURE
1996 $ 367,085 88% $ 213,864 $ -- 58% -- 67% --
1995 $ 330,566 95% $ 168,049 $ -- 51% -- 57% --
1994 $ 199,987 61% $ 61,212 $ -- 31% -- 48% --
HEALTH CARE
1996 $ 946,588 88% $ 226,621 $ 63,489 24% 7% 41% 4%
1995 $ 1,456,527 97% $ 270,239 $ 2,567 19% -- 27% --
1994 $ 1,892,280 77% $ 342,394 $ -- 18% -- 26% --
HOME FINANCE
1996 $ 584,457 97% $ 139,402 $ -- 24% -- 30% --
1995 $ 251,035 97% $ 87,018 $ -- 35% -- 39% --
1994 $ 309,902 40% $ 145,280 $ -- 47% -- 53% --
INDUSTRIAL
EQUIPMENT
1996 $ 178,940 93% $ 65,425 $ -- 37% -- 51% --
1995 $ 300,847 97% $ 59,687 $ -- 20% -- 27% --
1994 $ 210,288 63% $ 60,492 $ -- 29% -- 42% --
INDUSTRIAL
MATERIALS
1996 $ 628,984 94% $ 112,184 $ 4,705 18% 1% 31% 1%
1995 $ 420,047 98% $ 73,573 $ -- 18% -- 27% --
1994 $ 207,708 81% $ 33,380 $ -- 16% -- 21% --
INSURANCE
1996 $ 52,255 87% $ 28,422 $ -- 54% -- 65% --
1995 $ 41,494 90% $ 22,909 $ -- 55% -- 69% --
1994 $ 42,755 40% $ 18,400 $ -- 43% -- 58% --
LEISURE
1996 $ 241,001 88% $ 61,874 $ -- 26% -- 32% --
1995 $ 216,511 88% $ 55,302 $ -- 26% -- 37% --
1994 $ 311,929 62% $ 89,656 $ -- 29% -- 43% --
MEDICAL
DELIVERY
1996 $ 430,449 94% $ 101,216 $ -- 24% -- 33% --
1995 $ 444,242 96% $ 112,144 $ -- 25% -- 28% --
1994 $ 369,409 73% $ 71,221 $ -- 19% -- 24% --
MULTIMEDIA
1996 $ 429,967 86% $ 76,336 $ -- 18% -- 29% --
1995 $ 79,153 93% $ 12,190 $ -- 15% -- 25% --
1994 $ 329,560 64% $ 80,739 $ -- 25% -- 38% --
NATURAL GAS
1996 $ 175,038 93% $ 87,403 $ -- 50% -- 61% --
1995 $ 441,760 92% $ 165,488 $ -- 37% -- 47% --
1994 $ 131,215 69% $ 33,752 $ -- 26% -- 42% --
PAPER AND
FOREST
PRODUCTS
1996 $ 175,147 92% $ 40,660 $ 1,839 23% 1% 48% 1%
1995 $ 317,019 90% $ 71,722 $ -- 23% -- 46% --
1994 $ 195,352 68% $ 47,840 $ -- 24% -- 39% --
</TABLE>
% of % of
% of % of Transactions Transactions
Fiscal % Paid to Commissions Commissions Effected Effected
Period Ended Firms Providing Paid Paid through through
February 29 Total Research To FBSI To FBS To FBSI To FBS FBSI FBS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PRECIOUS
METALS AND
MINERALS
1996 $ 668,532 90% $ 179,259 $ -- 27% -- 33% --
1995 $ 466,587 91% $ 40,501 $ -- 9% -- 17% --
1994 $ 532,810 79% $ 78,769 $ -- 15% -- 23% --
REGIONAL
BANKS
1996 $ 346,066 88% $ 101,949 $ -- 29% -- 35% --
1995 $ 243,598 93% $ 83,609 $ -- 34% -- 44% --
1994 $ 372,619 70% $ 81,725 $ -- 22% -- 32% --
RETAILING
1996 $ 144,844 90% $ 55,131 $ -- 38% -- 50% --
1995 $ 519,888 97% $ 163,684 $ -- 31% -- 45% --
1994 $ 249,618 59% $ 78,686 $ -- 32% -- 46% --
SOFTWARE AND
COMPUTER
SERVICES
1996 $ 317,440 97% $ 42,554 $ -- 13% -- 23% --
1995 $ 304,193 99% $ 49,029 $ -- 16% -- 29% --
1994 $ 540,163 69% $ 136,866 $ -- 25% -- 49% --
TECHNOLOGY
1996 $ 407,855 91% $ 55,981 $ 586 14% -- 26% --
1995 $ 235,440 97% $ 110,367 $ -- 47% -- 58% --
1994 $ 293,550 63% $ 93,434 $ -- 32% -- 52% --
TELECOMMUNIC
ATIONS
1996 $ 476,696 94% $ 113,105 $ 1,744 24% -- 34% --
1995 $ 745,067 95% $ 164,640 $ -- 22% -- 37% --
1994 $ 1,449,954 65% $ 326,700 $ -- 23% -- 41% --
TRANSPORTATIO
N
1996 $ 34,585 84% $ 7,224 $ 127 21% -- 43% --
1995 $ 56,044 96% $ 13,666 $ 201 24% -- 46% --
1994 $ 24,997 56% $ 9,066 $ -- 36% -- 62% --
UTILITIES
GROWTH
1996 $ 334,639 92% $ 100,887 $ 6,273 30% 2% 44% 1%
1995 $ 143,954 98% $ 47,308 $ -- 33% -- 47% --
1994 $ 355,499 50% $ 137,624 $ -- 39% -- 50% --
</TABLE>
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 prices, the
money market fund's yield and each fund's total return fluctuate in
response to market conditions and other factors, 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
stated 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 total return of 100% over ten years would produce an average
annual total 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 total 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
total 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 basis and may be quoted with or without taking each
fund's 3% maximum sales charge into account and may or may not include the
effect of a fund's redemption fees. 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 23, 1996, the 13-week and 39-week
short-term moving averages were as follows:
13-WEEK SHORT-TERM 39-WEEK SHORT-TERM
FUND NAME MOVING AVERAGE MOVING AVERAGE
Air Transportation $ 19.87 $ 18.80
American Gold $ 24.33 $ 22.87
Automotive $ 21.76 $ 21.52
Biotechnology $ 34.83 $ 31.30
Brokerage and Investment Management $ 17.69 $ 17.34
Chemicals $ 37.16 $ 35.51
Computers $ 38.97 $ 39.99
Construction and Housing $ 19.35 $ 18.46
Consumer Products $ 17.41 $ 16.22
Defense and Aerospace $ 25.29 $ 23.86
Developing Communications $ 18.42 $ 19.53
Electronics $ 26.22 $ 26.82
Energy $ 18.61 $ 17.65
Energy Service $ 15.05 $ 13.97
Environmental Services $ 12.22 $ 12.03
Financial Services $ 62.97 $ 58.60
Food and Agriculture $ 39.97 $ 36.79
Health Care $ 97.63 $ 89.04
Home Finance $ 31.95 $ 29.70
Industrial Equipment $ 23.37 $ 23.02
Industrial Materials $ 25.59 $ 25.46
Insurance $ 26.15 $ 24.41
Leisure $ 43.42 $ 42.40
Medical Delivery $ 27.34 $ 24.91
Multimedia $ 26.26 $ 25.41
Natural Gas $ 11.16 $ 10.39
Paper and Forest Products $ 21.16 $ 21.42
Precious Metals and Minerals $ 19.03 $ 17.91
Regional Banks $ 23.12 $ 21.53
Retailing $ 26.42 $ 26.24
Software and Computer Services $ 34.66 $ 33.92
Technology $ 51.74 $ 51.80
Telecommunications $ 45.11 $ 43.49
Transportation $ 21.19 $ 20.59
Utilities Growth $ 43.45 $ 40.12
HISTORICAL RESULTS. The following table shows the funds' total returns for
the periods ended February 29, 1996. Total return figures include the
effect of the funds' 3% sales charge, but do not include the effects of
certain fees paid by the stock funds' shareholders upon exchange or
redemption and would have been lower had certain expenses not been reduced
during the periods shown.
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
One Five Ten Life of One Five Ten Life of
Year Years Years Fund Year Years Years Fund
Air Transportation 50.26% 15.15% 10.23% 10.92% 50.26% 102.47% 164.95% 188.27%
American Gold 42.61% 14.08% 10.40% 10.09% 42.61% 93.22% 169.00% 166.85%
Automotive 6.83% 17.09% N/A 12.05% 6.83% 120.09% N/A 200.80%
Biotechnology 40.62% 11.92% 16.24% 16.68% 40.62% 75.58% 350.20% 383.51%
Brokerage and Investment 25.95% 20.73% 7.20% 9.66% 25.95% 156.46% 100.49% 165.66%
Management
Chemicals 23.65% 16.73% 15.55% 18.63% 23.65% 116.72% 324.35% 511.49%
Computers 48.21% 25.22% 15.90% 17.02% 48.21% 207.81% 337.34% 428.74%
Construction and Housing 18.12% 14.64% N/A 12.38% 18.12% 97.98% N/A 200.49%
Consumer Products 26.11% 15.16% N/A 14.96% 26.11% 102.50% N/A 120.65%
Defense and Aerospace 42.98% 18.12% 7.89% 10.36% 42.98% 129.89% 113.63% 220.78%
Developing 18.19% 22.68% N/A 21.96% 18.19% 177.87% N/A 208.71%
Communications
Electronics 67.56% 31.04% 13.12% 13.78% 67.56% 286.32% 243.18% 292.60%
Energy 17.30% 6.34% 9.60% 6.96% 17.30% 35.97% 150.20% 167.73%
Energy Service 34.97% 4.73% 6.58% 5.35% 34.97% 25.98% 89.07% 70.35%
Environmental Services 23.67% 1.02% N/A 4.80% 23.67% 5.20% N/A 36.77%
Financial Services 34.88% 26.53% 12.60% 18.26% 34.88% 224.34% 227.64% 988.31%
Food and Agriculture 33.79% 16.11% 18.28% 19.85% 33.79% 111.03% 435.87% 581.09%
Health Care Portfolio 35.49% 17.36% 19.54% 21.67% 35.49% 122.67% 495.92% 1667.51%
Home Finance Portfolio 38.94% 33.57% 18.00% 20.82% 38.94% 325.13% 423.28% 590.20%
Industrial Equipment 32.76% 18.57% N/A 11.80% 32.76% 134.31% N/A 186.14%
Industrial Materials 9.98% 15.87% N/A 11.18% 9.98% 108.83% N/A 171.61%
Insurance 25.63% 15.85% 11.15% 12.74% 25.63% 108.64% 187.76% 240.43%
Leisure 23.78% 18.40% 13.79% 18.44% 23.78% 132.66% 264.10% 639.60%
Medical Delivery 30.12% 16.91% N/A 15.77% 30.12% 118.38% N/A 312.39%
Multimedia 28.02% 23.41% N/A 17.38% 28.02% 186.29% N/A 371.46%
Natural Gas 23.29% N/A N/A 4.22% 23.29% N/A N/A 12.56%
Paper and Forest Products 5.90% 15.81% N/A 11.16% 5.90% 108.29% N/A 178.50%
Precious Metals and 33.61% 14.54% 8.52% 6.43% 33.61% 97.15% 126.52% 148.87%
Minerals
Regional Banks 36.71% 29.11% N/A 16.38% 36.71% 258.70% N/A 333.88%
Retailing 13.07% 15.79% 15.36% 15.64% 13.07% 108.11% 317.47% 341.26%
Software and Computer 35.97% 25.40% 18.28% 19.33% 35.97% 210.05% 436.12% 550.85%
Services
Technology 46.19% 24.50% 13.36% 15.87% 46.19% 199.11% 250.37% 764.45%
Telecommunications 22.02% 18.95% 17.91% 18.86% 22.02% 138.16% 419.35% 523.74%
Transportation 9.56% 20.20% N/A 14.42% 9.56% 150.91% N/A 256.03%
Utilities Growth 22.04% 11.56% 11.57% 15.35% 22.04% 72.83% 198.87% 662.91%
Money Market 2.40% 3.57% 5.40% 5.51% 2.40% 19.19% 69.18% 75.69%
</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
index. 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 in the first column (rounded to the nearest dollar) represent
the value of a hypothetical $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 but assumes all dividends
were reinvested. This was a period of widely fluctuating stock prices, and
the figures below should not be considered representative of the dividend
income or capital gain or loss that could be realized from investments in
the funds today. For funds with less than 10 years of operations the
hypothetical investment begins at commencement of operations.
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 DIVIDEND CAPITAL GAIN TOTAL COST
FUND ENDED INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P 500 OF LIVING*
Air Transportation 2/28/87 $ 10,948 $ 0 $ 0 $ 10,948 $ 12,952 $ 10,210
(12/16/85)** 2/29/88 7,444 20 1,050 8,514 12,606 10,613
2/28/89 9,611 26 1,354 10,991 14,105 11,125
2/28/90 9,718 26 1,912 11,656 16,771 11,711
2/28/91 10,583 29 2,081 12,693 19,228 12,333
2/29/92 12,624 34 2,798 15,456 22,306 12,681
2/28/93 12,125 33 3,113 15,271 24,686 13,092
2/28/94 15,263 41 4,233 19,537 26,746 13,422
2/28/95 12,419 34 4,651 17,104 28,712 13,806
2/29/96 18,820 51 7,624 26,495 38,676 14,172
American Gold 2/28/87 14,706 0 0 14,706 12,952 10,210
(12/16/85)** 2/29/88 13,973 52 154 14,179 12,606 10,613
2/28/89 15,293 56 170 15,519 14,105 11,125
2/28/90 17,366 64 192 17,622 16,771 11,711
2/28/91 13,308 49 147 13,504 19,228 12,333
2/29/92 13,201 49 145 13,395 22,306 12,681
2/28/93 13,836 51 153 14,040 24,686 13,092
2/28/94 22,157 82 245 22,484 26,746 13,422
2/28/95 18,031 66 200 18,297 28,712 13,806
2/29/96 26,509 98 293 26,900 38,676 14,172
Automotive 2/28/87 11,708 0 0 11,708 11,644 10,192
(6/30/86)** 2/29/88 10,486 47 535 11,068 11,333 10,594
2/28/89 11,718 52 599 12,369 12,680 11,105
2/28/90 11,417 470 584 12,471 15,077 11,689
2/28/91 11,970 676 611 13,257 17,286 12,311
2/29/92 16,645 939 1,849 19,433 20,053 12,658
2/28/93 20,069 1,207 2,677 23,953 22,193 13,068
2/28/94 24,716 1,556 4,975 31,247 24,044 13,397
2/28/95 19,245 1,278 6,790 27,313 25,812 13,781
2/29/96 21,195 1,407 7,478 30,080 34,769 14,146
</TABLE>
* From month end closest to initial hypothetical investment date.
** Commencement of operations.
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 DIVIDEND CAPITAL GAIN TOTAL COST
FUND ENDED INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P 500 OF LIVING*
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Biotechnology 2/28/87 $ 12,771 $ 0 $ 0 $ 12,771 $ 12,952 $ 10,210
(12/16/85)** 2/29/88 9,546 0 297 9,843 12,606 10,613
2/28/89 9,682 0 300 9,982 14,105 11,125
2/28/90 13,078 0 629 13,707 16,771 11,711
2/28/91 22,922 0 1,949 24,871 19,228 12,333
2/29/92 29,759 25 5,405 35,189 22,306 12,681
2/28/93 20,412 17 7,311 27,740 24,686 13,092
2/28/94 24,936 21 8,932 33,889 26,746 13,422
2/28/95 22,850 19 8,185 31,054 28,712 13,806
2/29/96 33,056 123 11,841 45,020 38,676 14,172
Brokerage and Investment 2/28/87 10,776 13 17 10,806 12,952 10,210
Management 2/29/88 5,278 32 1,000 6,310 12,606 10,613
(7/29/85)** 2/28/89 6,076 125 1,151 7,352 14,105 11,125
2/28/90 6,091 263 1,153 7,507 16,771 11,711
2/28/91 6,076 356 1,151 7,583 19,228 12,333
2/29/92 9,363 561 1,774 11,698 22,306 12,681
2/28/93 10,410 624 1,972 13,006 24,686 13,092
2/28/94 12,994 790 3,887 17,671 26,746 13,422
2/28/95 11,354 690 3,397 15,441 28,712 13,806
2/29/96 13,536 865 5,648 20,049 38,676 14,172
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Chemicals 2/28/87 13,059 0 52 13,111 12,952 10,210
(7/29/85)** 2/29/88 13,086 0 82 13,168 12,606 10,613
2/28/89 15,388 0 97 15,485 14,105 11,125
2/28/90 15,193 103 826 16,122 16,771 11,711
2/28/91 17,394 195 1,404 18,993 19,228 12,333
2/29/92 21,467 393 2,345 24,205 22,306 12,681
2/28/93 19,265 598 4,638 24,501 24,686 13,092
2/28/94 21,312 885 8,094 30,291 26,746 13,422
2/28/95 22,826 1,174 9,288 33,288 28,712 13,806
2/29/96 26,609 1,459 14,367 42,435 38,676 14,172
Computers 2/28/87 12,917 0 46 12,963 12,952 10,210
(7/29/85)** 2/29/88 9,195 8 311 9,514 12,606 10,613
2/28/89 8,785 8 298 9,091 14,105 11,125
2/28/90 9,756 9 330 10,095 16,771 11,711
2/28/91 13,198 137 447 13,782 19,228 12,333
2/29/92 15,870 436 759 17,065 22,306 12,681
2/28/93 16,167 445 772 17,384 24,686 13,092
2/28/94 21,679 596 2,941 25,216 26,746 13,422
2/28/95 24,607 677 3,339 28,623 28,712 13,806
2/29/96 32,919 905 9,910 43,734 38,676 14,172
Construction and Housing 2/28/87 13,483 0 0 13,483 12,407 10,127
(9/29/86)** 2/29/88 10,195 0 158 10,353 12,076 10,526
2/28/89 11,844 64 469 12,377 13,511 11,034
2/28/90 11,029 132 2,006 13,167 16,066 11,615
2/28/91 10,961 314 3,447 14,722 18,419 12,232
2/29/92 13,250 380 5,569 19,199 21,368 12,577
2/28/93 15,268 437 6,433 22,138 23,648 12,985
2/28/94 19,225 551 8,439 28,215 25,620 13,312
2/28/95 16,286 467 7,923 24,676 27,504 13,693
2/29/96 18,973 647 10,429 30,049 37,048 14,056
</TABLE>
* From month end closest to initial hypothetical investment date.
** Commencement of operations.
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 DIVIDEND CAPITAL GAIN TOTAL COST
FUND ENDED INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P 500 OF LIVING*
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Consumer Products 2/28/91 $ 10,505 $ 65 $ 0 $ 10,570 $ 10,522 $ 10,377
(6/29/90)** 2/29/92 13,512 83 241 13,836 12,206 10,670
2/28/93 12,581 77 1,193 13,851 13,509 11,016
2/28/94 14,783 91 2,915 17,789 14,636 11,293
2/28/95 13,493 83 3,396 16,972 15,712 11,617
2/29/96 17,305 131 4,629 22,065 21,164 11,925
Defense and Aerospace 2/28/87 11,132 18 140 11,290 12,952 10,210
(5/8/84)** 2/29/88 7,988 13 457 8,458 12,606 10,613
2/28/89 7,649 12 438 8,099 14,105 11,125
2/28/90 7,610 12 436 8,058 16,771 11,711
2/28/91 8,431 100 483 9,014 19,228 12,333
2/29/92 9,720 160 556 10,436 22,306 12,681
2/28/93 9,817 161 563 10,541 24,686 13,092
2/28/94 12,460 280 1,178 13,918 26,746 13,422
2/28/95 12,786 287 1,420 14,493 28,712 13,806
2/29/96 17,558 394 3,411 21,363 38,676 14,172
Developing 2/28/91 10,777 0 0 10,777 10,522 10,377
Communications 2/29/92 13,997 0 1,002 14,999 12,206 10,670
(6/29/90)** 2/28/93 15,947 0 1,174 17,121 13,509 11,016
2/28/94 19,061 0 3,238 22,299 14,636 11,293
2/28/95 19,788 0 5,549 25,337 15,712 11,617
2/29/96 18,837 0 12,034 30,871 21,164 11,925
Electronics 2/28/87 9,030 0 0 9,030 12,952 10,210
(7/29/85)** 2/29/88 6,469 0 0 6,469 12,606 10,613
2/28/89 5,800 0 0 5,800 14,105 11,125
2/28/90 7,334 0 0 7,334 16,771 11,711
2/28/91 8,606 11 0 8,617 19,228 12,333
2/29/92 11,082 14 0 11,096 22,306 12,681
2/28/93 12,108 15 0 12,123 24,686 13,092
2/28/94 14,982 18 2,729 17,729 26,746 13,422
2/28/95 16,788 21 3,057 19,866 28,712 13,806
2/29/96 23,894 29 10,395 34,318 38,676 14,172
Energy 2/28/87 12,673 0 0 12,673 12,952 10,210
(7/14/81)** 2/29/88 11,533 33 294 11,860 12,606 10,613
2/28/89 12,839 382 328 13,549 14,105 11,125
2/28/90 16,778 571 657 18,006 16,771 11,711
2/28/91 15,081 665 2,104 17,850 19,228 12,333
2/29/92 13,814 790 1,948 16,552 22,306 12,681
2/28/93 15,442 1,236 2,178 18,856 24,686 13,092
2/28/94 16,310 1,343 3,029 20,682 26,746 13,422
2/28/95 15,695 1,433 3,563 20,691 28,712 13,806
2/29/96 18,493 1,837 4,690 25,020 38,676 14,172
</TABLE>
* From month end closest to initial hypothetical investment date.
** Commencement of operations.
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 DIVIDEND CAPITAL GAIN TOTAL COST
FUND ENDED INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P 500 OF LIVING*
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Energy Service 2/28/87 $ 10,680 $ 0 $ 0 $ 10,680 $ 12,952 $ 10,210
(12/16/85)** 2/29/88 9,194 0 0 9,194 12,606 10,613
2/28/89 8,688 0 0 8,688 14,105 11,125
2/28/90 13,220 0 0 13,220 16,771 11,711
2/28/91 14,534 24 0 14,558 19,228 12,333
2/29/92 10,098 17 0 10,115 22,306 12,681
2/28/93 11,853 20 0 11,873 24,686 13,092
2/28/94 12,553 75 0 12,628 26,746 13,422
2/28/95 12,887 102 599 13,588 28,712 13,806
2/29/96 17,322 187 1,398 18,907 38,676 14,172
Environmental Services 2/28/90 10,554 9 0 10,563 10,422 10,314
(6/29/89)** 2/28/91 12,600 11 0 12,611 11,949 10,862
2/29/92 12,649 11 486 13,146 13,862 11,168
2/28/93 11,019 10 838 11,867 15,341 11,531
2/28/94 11,572 10 880 12,462 16,621 11,821
2/28/95 9,962 9 757 10,728 17,843 12,160
2/29/96 12,047 11 1,619 13,677 24,035 12,482
Financial Services 2/28/87 10,727 63 102 10,892 12,952 10,210
(12/10/81)** 2/29/88 8,130 91 629 8,850 12,606 10,613
2/28/89 8,351 362 646 9,359 14,105 11,125
2/28/90 8,869 486 746 10,101 16,771 11,711
2/28/91 8,410 681 708 9,799 19,228 12,333
2/29/92 12,446 1,159 1,048 14,653 22,306 12,681
2/28/93 15,871 1,690 2,736 20,297 24,686 13,092
2/28/94 15,260 1,705 5,535 22,500 26,746 13,422
2/28/95 14,364 1,906 7,292 23,562 28,712 13,806
2/29/96 19,567 2,788 10,409 32,764 38,676 14,172
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Food and Agriculture 2/28/87 13,012 0 0 13,012 12,952 10,210
(7/29/85)** 2/29/88 12,127 25 465 12,617 12,606 10,613
2/28/89 14,516 72 557 15,145 14,105 11,125
2/28/90 16,775 115 2,332 19,222 16,771 11,711
2/28/91 20,591 407 3,634 24,632 19,228 12,333
2/29/92 23,071 561 5,616 29,248 22,306 12,681
2/28/93 23,552 674 7,360 31,586 24,686 13,092
2/28/94 24,032 777 10,469 35,278 26,746 13,422
2/28/95 24,826 902 13,125 38,853 28,712 13,806
2/29/96 32,168 1,436 19,983 53,587 38,676 14,172
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Health Care 2/28/87 14,341 0 148 14,489 12,952 10,210
(7/14/81)** 2/29/88 11,600 0 471 12,071 12,606 10,613
2/28/89 11,881 102 484 12,467 14,105 11,125
2/28/90 14,712 172 894 15,778 16,771 11,711
2/28/91 21,681 345 3,933 25,959 19,228 12,333
2/29/92 26,355 579 8,796 35,730 22,306 12,681
2/28/93 17,428 447 9,086 26,961 24,686 13,092
2/28/94 20,988 576 10,942 32,506 26,746 13,422
2/28/95 25,238 1,051 16,373 42,662 28,712 13,806
2/29/96 33,307 1,740 24,545 59,592 38,676 14,172
</TABLE>
* From month end closest to initial hypothetical investment date.
** Commencement of operations.
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 DIVIDEND CAPITAL GAIN TOTAL COST
FUND ENDED INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P 500 OF LIVING*
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Home Finance 2/28/87 $ 11,965 $ 0 $ 0 $ 11,965 $ 12,952 $ 10,210
(12/16/85)** 2/29/88 6,376 0 3,121 9,497 12,606 10,613
2/28/89 7,575 160 3,708 11,443 14,105 11,125
2/28/90 6,751 186 3,809 10,746 16,771 11,711
2/28/91 7,369 413 4,157 11,939 19,228 12,333
2/29/92 11,266 856 6,357 18,479 22,306 12,681
2/28/93 16,311 1,253 9,600 27,164 24,686 13,092
2/28/94 18,407 1,428 12,657 32,492 26,747 13,422
2/28/95 17,591 1,551 17,390 36,532 28,712 13,806
2/29/96 24,489 2,463 25,376 52,328 38,676 14,172
Industrial Equipment 2/28/87 12,804 0 0 12,804 12,407 10,127
(9/29/86)** 2/29/88 9,768 0 256 10,024 12,076 10,526
2/28/89 9,855 0 259 10,114 13,511 11,034
2/28/90 11,456 0 300 11,756 16,066 11,615
2/28/91 11,465 79 302 11,846 18,419 12,232
2/29/92 13,881 236 364 14,481 21,368 12,577
2/28/93 14,589 248 383 15,220 23,648 12,985
2/28/94 19,992 353 974 21,319 25,620 13,312
2/28/95 19,439 343 1,125 20,907 27,504 13,693
2/29/96 24,357 488 3,769 28,614 37,048 14,056
Industrial Materials 2/28/87 13,017 0 0 13,017 12,407 10,127
(9/29/86)** 2/29/88 12,513 21 11 12,545 12,076 10,526
2/28/89 13,056 238 11 13,305 13,511 11,034
2/28/90 12,629 230 11 12,870 16,066 11,615
2/28/91 12,067 539 10 12,616 18,419 12,232
2/29/92 16,063 793 13 16,869 21,368 12,577
2/28/93 16,917 920 14 17,851 23,648 12,985
2/28/94 21,020 1,216 18 22,254 25,620 13,312
2/28/95 22,436 1,501 19 23,956 27,504 13,693
2/29/96 25,288 1,852 21 27,161 37,048 14,056
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Insurance 2/28/87 10,643 0 0 10,643 12,952 10,210
(12/16/85)** 2/29/88 8,372 129 0 8,501 12,606 10,613
2/28/89 9,815 233 0 10,048 14,105 11,125
2/28/90 11,635 396 0 12,031 16,771 11,711
2/28/91 12,939 440 0 13,379 19,228 12,333
2/29/92 15,390 775 0 16,165 22,306 12,681
2/28/93 17,695 923 1,875 20,493 24,686 13,092
2/28/94 15,915 840 3,483 20,238 26,746 13,422
2/28/95 17,473 922 3,824 22,219 28,712 13,806
2/29/96 21,950 1,242 5,584 28,776 38,676 14,172
Leisure 2/28/87 12,010 5 21 12,036 12,952 10,210
(5/8/84)** 2/29/88 10,293 4 1,177 11,474 12,606 10,613
2/28/89 12,326 5 1,653 13,984 14,105 11,125
2/28/90 12,297 39 2,627 14,963 16,771 11,711
2/28/91 12,350 192 2,638 15,180 19,228 12,333
2/29/92 15,282 238 3,264 18,784 22,306 12,681
2/28/93 17,109 266 3,655 21,030 24,686 13,092
2/28/94 21,667 337 6,837 28,841 26,746 13,422
2/28/95 19,472 303 8,757 28,532 28,712 13,806
2/29/96 22,083 344 13,983 36,410 38,676 14,172
</TABLE>
* From month end closest to initial hypothetical investment date.
** Commencement of operations.
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 DIVIDEND CAPITAL GAIN TOTAL COST
FUND ENDED INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P 500 OF LIVING*
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Medical Delivery 2/28/87 $ 8,953 $ 0 $ 0 $ 8,953 $ 11,644 $ 10,192
(6/30/86)** 2/29/88 6,955 23 408 7,386 11,333 10,594
2/28/89 8,478 28 497 9,003 12,680 11,105
2/28/90 10,253 81 838 11,172 15,077 11,689
2/28/91 16,325 130 1,862 18,317 17,286 12,311
2/29/92 21,243 169 4,008 25,420 20,053 12,658
2/28/93 14,026 111 4,185 18,322 22,193 13,068
2/28/94 19,672 156 5,869 25,697 24,044 13,397
2/28/95 22,485 279 7,977 30,741 25,812 13,781
2/29/96 28,130 350 12,759 41,239 34,769 14,146
Money Market 2/28/87 9,700 594 0 10,294 12,952 10,210
(8/30/85)** 2/29/88 9,700 1,230 0 10,930 12,606 10,613
2/28/89 9,700 2,045 0 11,745 14,105 11,125
2/28/90 9,700 3,075 0 12,775 16,771 11,711
2/28/91 9,700 4,069 0 13,769 19,228 12,333
2/29/92 9,700 4,800 0 14,500 22,306 12,681
2/28/93 9,700 5,276 0 14,976 24,686 13,092
2/28/94 9,700 5,668 0 15,368 26,746 13,422
2/28/95 9,700 6,327 0 16,027 28,712 13,806
2/29/96 9,700 7,218 0 16,918 38,676 14,172
Multimedia 2/28/87 11,912 0 0 11,912 11,644 10,192
(6/30/86)** 2/29/88 11,436 11 894 12,341 11,333 10,594
2/28/89 14,065 14 2,043 16,122 12,680 11,105
2/28/90 11,980 12 4,178 16,170 15,077 11,689
2/28/91 11,834 12 4,128 15,974 17,286 12,311
2/29/92 15,617 16 5,447 21,080 20,053 12,658
2/28/93 17,712 18 6,493 24,223 22,193 13,068
2/28/94 23,154 23 9,491 32,668 24,044 13,397
2/28/95 21,680 22 14,021 35,723 25,812 13,781
2/29/96 26,365 60 20,721 47,146 34,769 14,146
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Natural Gas 2/28/94 9,196 0 132 9,328 10,758 10,188
(4/21/93)** 2/28/95 8,711 20 125 8,856 11,549 10,479
2/29/96 11,019 79 158 11,256 15,557 10,757
Paper and Forest Products 2/28/87 15,190 0 0 15,190 11,644 10,192
(6/30/86)** 2/29/88 11,601 42 1,082 12,725 11,333 10,594
2/28/89 11,533 74 1,076 12,683 12,680 11,105
2/28/90 11,097 222 1,035 12,354 15,077 11,689
2/28/91 11,456 445 1,069 12,970 17,286 12,311
2/29/92 14,579 963 1,360 16,902 20,053 12,658
2/28/93 15,598 1,139 1,455 18,192 22,193 13,068
2/28/94 19,022 1,403 1,774 22,199 24,044 13,397
2/28/95 20,506 1,513 3,490 25,509 25,812 13,781
2/29/96 20,157 1,581 6,112 27,850 34,769 14,146
</TABLE>
* From month end closest to initial hypothetical investment date.
** Commencement of operations.
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 DIVIDEND CAPITAL GAIN TOTAL COST
FUND ENDED INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P 500 OF LIVING*
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Precious Metals and 2/28/87 $ 12,446 $ 149 $ 0 $ 12,595 $ 12,952 $ 10,210
Minerals 2/29/88 11,636 194 95 11,925 12,606 10,613
(7/14/81)** 2/28/89 11,068 665 90 11,823 14,105 11,125
2/28/90 13,265 970 108 14,343 16,771 11,711
2/28/91 10,165 897 83 11,145 19,228 12,333
2/29/92 10,193 1,001 83 11,277 22,306 12,681
2/28/93 9,179 1,097 74 10,350 24,686 13,092
2/28/94 15,472 2,059 125 17,656 26,746 13,422
2/28/95 14,215 2,115 115 16,445 28,712 13,806
2/29/96 19,512 2,982 158 22,652 38,676 14,172
Regional Banks 2/28/87 9,487 0 0 9,487 11,644 10,192
(6/30/86)** 2/29/88 8,575 70 174 8,819 11,333 10,594
2/28/89 9,894 296 707 10,897 12,680 11,105
2/28/90 10,301 419 1,393 12,113 15,077 11,689
2/28/91 9,807 601 1,325 11,733 17,286 12,311
2/29/92 15,316 1,156 2,840 19,312 20,053 12,658
2/28/93 20,254 1,684 4,889 26,827 22,193 13,068
2/28/94 17,450 1,648 9,463 28,561 24,044 13,397
2/28/95 17,470 2,107 11,208 30,785 25,812 13,781
2/29/96 23,639 3,297 16,452 43,388 34,769 14,146
Retailing 2/28/87 12,416 0 0 12,416 12,952 10,210
(12/16/85)** 2/29/88 10,168 260 857 11,285 12,606 10,613
2/28/89 12,104 341 1,216 13,661 14,105 11,125
2/28/90 11,994 503 3,809 16,306 16,771 11,711
2/28/91 14,279 599 4,580 19,458 19,228 12,333
2/29/92 21,602 906 7,682 30,190 22,306 12,681
2/28/93 21,905 919 9,451 32,275 24,686 13,092
2/28/94 22,860 959 13,494 37,313 26,746 13,422
2/28/95 21,942 920 12,953 35,815 28,712 13,806
2/29/96 25,576 1,073 15,098 41,747 38,676 14,172
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Software and Computer 2/28/87 13,407 0 0 13,407 12,952 10,210
Services 2/29/88 11,042 0 583 11,625 12,606 10,613
(7/29/85)** 2/28/89 11,761 0 621 12,382 14,105 11,125
2/28/90 12,009 0 1,365 13,374 16,771 11,711
2/28/91 15,061 0 1,712 16,773 19,228 12,333
2/29/92 18,625 0 5,141 23,776 22,306 12,681
2/28/93 22,069 0 6,091 28,160 24,686 13,092
2/28/94 23,083 0 14,424 37,507 26,746 13,422
2/28/95 23,227 0 15,020 38,247 28,712 13,806
2/29/96 28,924 0 24,688 53,612 38,676 14,172
</TABLE>
Technology 2/28/87 10,970 0 43 11,013 12,952 10,210
(7/14/81)** 2/29/88 7,270 0 380 7,650 12,606 10,613
2/28/89 7,151 0 374 7,525 14,105 11,125
2/28/90 8,233 0 430 8,663 16,771 11,711
2/28/91 10,798 0 564 11,362 19,228 12,333
2/29/92 14,654 89 766 15,509 22,306 12,681
2/28/93 14,187 86 2,114 16,387 24,686 13,092
2/28/94 17,142 187 4,895 22,224 26,746 13,422
2/28/95 17,232 188 5,828 23,248 28,712 13,806
2/29/96 22,404 245 12,388 35,037 38,676 14,172
* From month end closest to initial hypothetical investment date.
** Commencement of operations.
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 DIVIDEND CAPITAL GAIN TOTAL COST
FUND ENDED INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P 500 OF LIVING*
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Telecommunications 2/28/87 $ 12,995 $ 0 $ 0 $ 12,995 $ 12,952 $ 10,210
(7/29/85)** 2/29/88 12,866 19 334 13,219 12,606 10,613
2/28/89 16,420 134 454 17,008 14,105 11,125
2/28/90 19,448 252 1,300 21,000 16,771 11,711
2/28/91 19,214 655 1,284 21,153 19,228 12,333
2/29/92 23,576 1,073 1,574 26,223 22,306 12,681
2/28/93 27,614 1,440 2,313 31,367 24,686 13,092
2/28/94 29,964 1,755 6,516 38,235 26,746 13,422
2/28/95 30,966 2,395 7,925 41,286 28,712 13,806
2/29/96 36,240 3,240 12,455 51,935 38,676 14,172
Transportation 2/28/87 11,398 0 0 11,398 12,407 10,127
(9/29/86)** 2/29/88 9,264 0 155 9,419 12,076 10,526
2/28/89 12,377 0 208 12,585 13,511 11,034
2/28/90 11,970 0 2,487 14,457 16,066 11,615
2/28/91 10,942 0 2,822 13,764 18,419 12,232
2/29/92 15,006 61 3,871 18,938 21,368 12,577
2/28/93 18,120 74 5,156 23,350 23,648 12,985
2/28/94 21,020 86 8,658 29,764 25,620 13,312
2/28/95 19,914 82 11,524 31,520 27,504 13,693
2/29/96 21,262 87 14,254 35,603 37,048 14,056
Utilities Growth 2/28/87 11,257 88 57 11,402 12,952 10,210
(12/10/81)** 2/29/88 10,008 272 415 10,695 12,606 10,613
2/28/89 10,653 930 440 12,023 14,105 11,125
2/28/90 13,147 1,553 543 15,243 16,771 11,711
2/28/91 13,965 1,946 863 16,774 19,228 12,333
2/29/92 14,455 2,864 1,489 18,808 22,306 12,681
2/28/93 16,400 4,030 2,689 23,119 24,686 13,092
2/28/94 14,471 4,165 5,068 23,704 26,746 13,422
2/28/95 13,787 4,695 5,272 23,754 28,712 13,806
2/29/96 17,009 6,375 6,503 29,887 38,676 14,172
</TABLE>
* From month end closest to initial hypothetical investment date.
** Commencement of operations.
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, 1986 for funds in operation for
ten years or more, through February 29, 1996. If distributions had not been
reinvested, the amount of distributions earned from the fund over time
would have been smaller, and cash payments for the period would have
amounted to the figures shown in column (A) for capital gain distributions,
and the figures shown in column (B) for income dividends. Tax consequences
of different investments have not been factored into the following figures.
The figures do not reflect the stock funds' exchange or redemption fees.
(A) (B)
CAPITAL GAIN INCOME
FUND COST DISTRIBUTIONS DIVIDENDS
Air Transportation $ 14,316 $ 3,602 $ 18
American Gold 10,235 176 59
Automotive 16,725 4,889 766
Biotechnology 18,051 6,864 81
Brokerage and Investment Management 14,062 2,987 326
Chemicals 21,905 8,596 862
Computers 17,696 6,419 321
Construction and Housing 17,395 5,558 359
Consumer Products 13,735 3,298 78
Defense and Aerospace 12,617 2,194 199
Developing Communications 20,847 8,691 0
Electronics 17,622 6,783 8
Energy 15,216 3,295 1,219
Energy Service 11,213 1,034 140
Environmental Services 11,490 1,416 10
Financial Services 18,389 5,301 1,193
Food and Agriculture 24,411 10,227 733
Health Care 27,196 11,858 792
Home Finance 22,121 7,354 574
Industrial Equipment 13,206 2,765 252
Industrial Materials 11,114 10 1,067
Insurance 14,754 3,600 615
Leisure 20,708 8,136 148
Medical Delivery 18,015 6,392 136
Money Market 17,218 0 5,410
Multimedia 23,659 10,069 29
Natural Gas 10,195 126 68
Paper and Forest Products 16,070 4,346 844
Precious Metals and Minerals 11,843 112 1,606
Regional Banks 22,750 8,012 1,397
Retailing 19,824 7,195 385
Software and Computer Services 27,093 12,345 0
Technology 18,826 6,917 119
Telecommunications 21,776 7,955 1,833
Transportation 20,964 8,420 39
Utilities Growth 20,271 3,976 3,769
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
available from stock mutual funds.
From time to time, a fund's performance may also be compared to other
mutual funds tracked by financial or business publications and periodicals.
For example, 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 TAXABLE, which is reported in the MONEY FUND
REPORT(Registered trademark), covers over 772 taxable money market funds.
In advertising materials, Fidelity may reference or discuss its products
and services, which may include other Fidelity funds; retirement investing;
brokerage products and services; model portfolios or allocations; saving
for college or other goals; charitable giving; and the Fidelity credit
card. In addition, Fidelity may quote or reprint financial or business
publications and periodicals as they relate to current economic and
political conditions, fund management, portfolio composition, investment
philosophy, investment techniques, the desirability of owning a particular
mutual fund, and Fidelity services and products. Fidelity may also reprint,
and use as advertising and sales literature, articles from Fidelity
Focus(registered trademark), a quarterly magazine provided free of charge
to Fidelity fund shareholders.
A fund may present its fund number, Quotron(trademark) number, and CUSIP
number, and discuss or quote its current portfolio manager.
VOLATILITY. A stock fund may quote various measures of volatility and
benchmark correlation in advertising. In addition, the 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 29, 1996, FMR advised over $26.5 billion in tax-free fund
assets, $80 billion in money market fund assets, $256 billion in equity
fund assets, $55 billion in international fund assets, and $23 billion in
Spartan fund assets. The funds may reference the growth and variety of
money market mutual funds and the adviser's innovation and participation in
the industry. The equity funds under management figure represents the
largest amount of equity fund assets under management by a mutual fund
investment adviser in the United States, making FMR America's leading
equity (stock) fund manager. FMR, its subsidiaries, and affiliates maintain
a worldwide information and communications network for the purpose of
researching and managing investments abroad.
In addition to performance rankings, the money market fund may compare its
total expense ratio to the average total expense ratio of similar funds
tracked by Lipper. 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 or Fidelity
Charitable 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 for some purchases
made directly with Fidelity as noted in the prospectus, in connection with
investments in other Fidelity funds. This includes reductions for
investments in the following prototype or prototype-like retirement plans
sponsored by FMR or FMR Corp.: The Fidelity IRA, The Fidelity Rollover IRA,
The Fidelity SEP-IRA and SARSEP, The Fidelity Retirement Plan, Fidelity
Defined Benefit Plan, The Fidelity Group IRA, The Fidelity 403(b) Program,
The Fidelity Investments 401(a) Prototype Plan for Tax-Exempt Employers,
and The CORPORATEplan for Retirement (Profit Sharing and Money Purchase
Plan).
On October 12, 1990, the fund changed its sales charge policy from a 2%
sales charge upon purchase and 1% deferred sales charge upon redemption, to
a 3% sales charge upon purchase. If your shares were purchased prior to
that date and you do not qualify for a front-end sales charge reduction
under applicable conditions noted above, then, when you redeem those
shares, a deferred sales charge amounting to 1% of the net asset value of
shares redeemed will be withheld from your redemption proceeds and paid to
FDC.
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 1996:
New Year's Day, Presidents' Day (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. In addition,
the funds will not process wire purchases and redemptions on days when the
Federal Reserve Wire System is closed.
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 each stock fund's income may qualify for the
dividends-received deduction available to corporate shareholders to the
extent that each 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 qualifies for
the deduction generally will be less than 100%. Each fund will notify
corporate shareholders annually of the percentage of fund dividends that
qualifies for the dividends-received deduction. A portion of each fund's
dividends 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. Short-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.
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. Short-term capital gains distributed by
each fund are taxable to shareholders as dividends, not as capital gains.
As of February 29, 1996, the following funds hereby designate a capital
gain dividend for the purpose of the dividend-paid deduction:
CAPITAL GAIN DIVIDEND
Fund Dollar Amount
Biotechnology $ 905,000
Brokerage and Investment Management 319,000
Chemicals 2,934,000
Computers 33,599,000
Construction and Housing 710,000
Consumer Products 334,000
Defense and Aerospace 405,000
Developing Communications 17,067,000
Electronics 22,330,000
Energy 2,385,000
Energy Service 1,445,000
Financial Services 3,544,000
Food and Agriculture 4,015,000
Health Care 22,385,000
Home Finance 12,866,000
Industrial Equipment 3,565,000
Industrial Materials 783,000
Insurance 227,000
Leisure 3,446,000
Medical Delivery 15,560,000
Multimedia 5,134,000
Natural Gas 20,000
Paper and Forest Products 2,469,000
Regional Banks 7,686,000
Software and Computer Services 16,984,000
Technology 28,980,000
Telecommunications 4,493,000
Transportation 474,000
Utilities Growth 7,862,000
As of February 29, 1996, the funds had capital loss carryforwards available
to offset future capital gains, approximated as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Aggregate Capital Loss Amount that Expires on February 28, (or 29, if a leap year)
</TABLE>
Fund Carryforward 1997 1998 1999 2000 2001 2002 2003 2004
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
American Gold $ 10,611,000 $ 0 $ 0 $ 0 $ 2,272,000 $ 8,339,000 $ 0 $ 0 $ 0
Automotive 2,947,000 0 0 0 0 0 0 0 2,947,000
Precious Metals 16,253,000 0 0 0 5,571,000 10,682,000 0 0 0
and Minerals
Retailing 591,000 0 0 0 0 0 0 591,000 0
</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 carryforwards of approximately
$12,000 and $74,000, 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 carryforwards 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 funds 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 advisers
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 organized in
1972. The voting common stock of FMR Corp. is divided into two classes.
Class B is held predominantly by members of the Edward C. Johnson 3d family
and is entitled to 49% of the vote on any matter acted upon by the voting
common stock. Class A is held predominantly by non-Johnson family member
employees of FMR Corp. and its affiliates and is entitled to 51% of the
vote on any such matter. The Johnson family group and all other Class B
shareholders have entered into a shareholders' voting agreement under which
all Class B shares will be voted in accordance with the majority vote of
Class B shares. Under the 1940 Act, control of a company is presumed where
one individual or group of individuals owns more than 25% of the voting
stock of that company. Therefore, through their ownership of voting common
stock and the execution of the shareholders' voting agreement, members of
the Johnson family may be deemed, under the 1940 Act, to form a controlling
group with respect to FMR Corp.
At present, the principal operating activities of FMR Corp. are those
conducted by 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. The
business address of each Trustee and officer who is an "interested person"
(as defined in the Investment Company Act of 1940) is 82 Devonshire Street,
Boston, Massachusetts 02109, which is also the address of FMR. The business
address of all the other Trustees is Fidelity Investments, P.O. Box 9235,
Boston, Massachusetts 02205-9235. Those Trustees who are "interested
persons" by virtue of their affiliation with either the trust or FMR are
indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d (65), 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., Fidelity Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.
*J. GARY BURKHEAD (54), Trustee and Senior Vice President, is President of
FMR; and President and a Director of FMR Texas Inc., Fidelity Management &
Research (U.K.) Inc., and Fidelity Management & Research (Far East) Inc.
RALPH F. COX (63), 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 (64), 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 (72), 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 Trustee of
College of the Holy Cross and Old Sturbridge Village, Inc., and he
previously served as a Director of Mechanics Bank (1971-1995).
E. BRADLEY JONES (68), Trustee (1990). Prior to his retirement in 1984, Mr.
Jones was Chairman and Chief Executive Officer of LTV Steel Company. He is
a Director of TRW Inc. (original equipment and replacement products),
Cleveland-Cliffs Inc (mining), Consolidated Rail Corporation, Birmingham
Steel Corporation, and RPM, Inc. (manufacturer of chemical products, 1990),
and he previously served as a Director of NACCO Industries, Inc. (mining
and marketing, 1985-1995) and Hyster-Yale Materials Handling, Inc.
(1985-1995). 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 (63), Trustee, is Executive-in-Residence (1995) at Columbia
University Graduate School of Business and a financial consultant. From
1987 to January 1995, Mr. Kirk was a Professor at Columbia University
Graduate School of Business. Prior to 1987, he was Chairman of the
Financial Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance), and he previously served as a Director of
Valuation Research Corp. (appraisals and valuations, 1993-1995). In
addition, he serves as Chairman of the Board of Directors of the National
Arts Stabilization Fund, Vice Chairman of the Board of Trustees of the
Greenwich Hospital Association, and as a Member of the Public Oversight
Board of the American Institute of Certified Public Accountants' SEC
Practice Section (1995).
*PETER S. LYNCH (53), Trustee (1990) is Vice Chairman and Director of FMR
(1992). Prior to May 31, 1990, he was a Director of FMR and Executive Vice
President of FMR (a position he held until March 31, 1991); Vice President
of Fidelity Magellan Fund and FMR Growth Group Leader; and Managing
Director of FMR Corp. Mr. Lynch was also Vice President of Fidelity
Investments Corporate Services (1991-1992). He is a Director of W.R. Grace
& Co. (chemicals) 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 (66), Trustee, 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), Commercial Intertech Corp. (water
treatment equipment, 1992), and Associated Estates Realty Corporation (a
real estate investment trust, 1993).
EDWARD H. MALONE (71), 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 the Naples
Philharmonic Center for the Arts and Rensselaer Polytechnic Institute, and
he is a member of the Advisory Boards of Butler Capital Corporation Funds
and Warburg, Pincus Partnership Funds.
MARVIN L. MANN (62), 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 (67), 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., and AppleSouth,
Inc. (restaurants, 1992).
WILLIAM J. HAYES (61), (stock funds only) 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 (55), Manager of Security Transactions of Fidelity's
equity funds is Vice President of FMR.
FRED L. HENNING, JR. (56), (money market fund only) Vice President, is Vice
President of Fidelity's money market (1994) and fixed-income (1995) funds
and Senior Vice President of FMR Texas Inc.
ARTHUR S. LORING (48), Secretary, is Senior Vice President (1993) and
General Counsel of FMR, Vice President-Legal of FMR Corp., and Vice
President and Clerk of FDC.
KENNETH A. RATHGEBER (48), Treasurer (1995), is Treasurer of the Fidelity
funds and is an employee of FMR (1995). Before joining FMR, Mr. Rathgeber
was a Vice President of Goldman Sachs & Co. (1978-1995), where he served in
various positions, including Vice President of Proprietary Accounting
(1988-1992), Global Co-Controller (1992-1994), and Chief Operations Officer
of Goldman Sachs (Asia) LLC (1994-1995).
THOMAS D. MAHER (51), (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 (49), Assistant Treasurer, is an employee of FMR.
LEONARD M. RUSH (50), Assistant Treasurer (1994), is an employee of FMR
(1994). Prior to becoming Assistant Treasurer of the Fidelity funds, Mr.
Rush was Chief Compliance Officer of FMR Corp. (1993-1994); 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 trustee of each fund for his or her services as trustee for
the fiscal year ended February 29, 1996.
COMPENSATION TABLE
Aggregate Compensation
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Trustees J. Gary Ralph F. Phyllis Richard Edward C. E. Donald Peter S. Gerald C. Edward Marvin Thomas
Burkhea Cox
(dagger) Burke J. Flynn Johnson Bradley J. Kirk Lynch** McDonough H. L. R.
d** Davis 3d** Jones Malone(dagger) Mann(dagger) Williams
Air $ 0 $ 27 $ 29 $ 38 $ 0 $ 30 $ 30 $ 0 $ 29 $ 27 $ 27 $ 29
Transportation
American Gold $ 0 $ 133 $ 131 $ 163 $ 0 $ 132 $ 132 $ 0 $ 129 $ 133 $ 133 $ 129
Automotive $ 0 $ 27 $ 27 $ 33 $ 0 $ 27 $ 27 $ 0 $ 26 $ 27 $ 27 $ 26
Biotechnology $ 0 $ 204 $ 193 $ 241 $ 0 $ 196 $ 196 $ 0 $ 190 $ 204 $ 204 $ 191
Brokerage and $ 0 $ 13 $ 13 $ 16 $ 0 $ 13 $ 13 $ 0 $ 13 $ 13 $ 13 $ 13
Investment
Management
Chemicals $ 0 $ 45 $ 45 $ 55 $ 0 $ 45 $ 45 $ 0 $ 45 $ 45 $ 45 $ 45
Computers $ 0 $ 161 $ 161 $ 204 $ 0 $ 163 $ 163 $ 0 $ 159 $ 161 $ 161 $ 159
Construction $ 0 $ 14 $ 14 $ 18 $ 0 $ 15 $ 15 $ 0 $ 14 $ 14 $ 14 $ 14
and Housing
Consumer $ 0 $ 13 $ 16 $ 20 $ 0 $ 16 $ 16 $ 0 $ 16 $ 13 $ 13 $ 16
Products
Defense and $ 0 $ 8 $ 8 $ 10 $ 0 $ 8 $ 8 $ 0 $ 7 $ 8 $ 8 $ 7
Aerospace
Developing $ 0 $ 134 $ 134 $ 169 $ 0 $ 136 $ 136 $ 0 $ 133 $ 134 $ 134 $ 133
Communications
Electronics $ 0 $ 289 $ 288 $ 370 $ 0 $ 292 $ 292 $ 0 $ 284 $ 289 $ 289 $ 284
Energy $ 0 $ 43 $ 42 $ 52 $ 0 $ 42 $ 42 $ 0 $ 41 $ 43 $ 43 $ 41
Energy
Service $ 0 $ 42 $ 38 $ 47 $ 0 $ 38 $ 38 $ 0 $ 37 $ 42 $ 42 $ 37
Environmental $ 0 $ 13 $ 13 $ 16 $ 0 $ 13 $ 13 $ 0 $ 13 $ 13 $ 13 $ 13
Services
Financial $ 0 $ 68 $ 68 $ 85 $ 0 $ 69 $ 69 $ 0 $ 67 $ 68 $ 68 $ 67
Services
Food and $ 0 $ 69 $ 68 $ 86 $ 0 $ 69 $ 69 $ 0 $ 67 $ 70 $ 69 $ 67
Agriculture
Health
Care(dagger) $ 0 $ 405 $ 397 $ 496 $ 0 $ 403 $ 403 $ 0 $ 392 $ 405 $ 405 $ 394
Home Finance $ 0 $ 126 $ 125 $ 157 $ 0 $ 127 $ 127 $ 0 $ 123 $ 126 $ 126 $ 123
Industrial $ 0 $ 42 $ 42 $ 52 $ 0 $ 42 $ 42 $ 0 $ 42 $ 42 $ 42 $ 41
Equipment
Industrial $ 0 $ 60 $ 61 $ 75 $ 0 $ 61 $ 61 $ 0 $ 60 $ 60 $ 60 $ 60
Materials
Insurance $ 0 $ 7 $ 7 $ 9 $ 0 $ 7 $ 7 $ 0 $ 7 $ 7 $ 7 $ 7
Leisure $ 0 $ 29 $ 29 $ 36 $ 0 $ 29 $ 29 $ 0 $ 29 $ 29 $ 29 $ 29
Medical $ 0 $ 81 $ 79 $ 98 $ 0 $ 80 $ 80 $ 0 $ 79 $ 81 $ 81 $ 79
Delivery
Multimedia $ 0 $ 27 $ 27 $ 34 $ 0 $ 27 $ 27 $ 0 $ 27 $ 27 $ 27 $ 26
Natural Gas $ 0 $ 29 $ 28 $ 35 $ 0 $ 29 $ 29 $ 0 $ 28 $ 29 $ 29 $ 28
Paper and $ 0 $ 30 $ 30 $ 38 $ 0 $ 30 $ 30 $ 0 $ 30 $ 30 $ 30 $ 30
Forest Products
Precious
Metals $ 0 $ 154 $ 151 $ 188 $ 0 $ 153 $ 153 $ 0 $ 150 $ 155 $ 154 $ 149
and Minerals
Regional
Banks $ 0 $ 81 $ 80 $ 101 $ 0 $ 81 $ 81 $ 0 $ 82 $ 81 $ 81 $ 79
Retailing $ 0 $ 15 $ 16 $ 19 $ 0 $ 16 $ 16 $ 0 $ 15 $ 15 $ 15 $ 15
</TABLE>
COMPENSATION TABLE (CONTINUED)
Aggregate Compensation
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Trustees J. Gary Ralph F. Phyllis Richard Edward C. E. Donald Peter S. Gerald C. Edward Marvin Thomas
Burkhea Cox Burke J. Flynn Johnson Bradley J. Kirk Lynch** McDonough H. L. Mann R.
d** Davis 3d** Jones Malone Williams
Software and $ 0 $ 117 $ 117 $ 147 $ 0 $ 119 $ 119 $ 0 $ 116 $ 117 $ 117 $ 116
Computer
Services
Technology $ 0 $ 137 $ 137 $ 172 $ 0 $ 138 $ 138 $ 0 $ 135 $ 137 $ 137 $ 135
Telecommunica $ 0 $ 167 $ 164 $ 205 $ 0 $ 166 $ 166 $ 0 $ 163 $ 167 $ 167 $ 163
tions
Transportat
ion $ 0 $ 5 $ 5 $ 6 $ 0 $ 5 $ 5 $ 0 $ 5 $ 5 $ 5 $ 5
Utilities
Growth $ 0 $ 102 $ 100 $ 125 $ 0 $ 101 $ 101 $ 0 $ 98 $ 102 $ 102 $ 98
Money Market $ 0 $ 274 $ 272 $ 340 $ 0 $ 275 $ 275 $ 0 $ 269 $ 274 $ 274 $ 269
</TABLE>
(dagger) For the fiscal year ended February 29, 1996, certain of the
non-interested trustees accrued deferred compensation as follows: Ralph
Cox, $131.51, Health Care; Edward Malone, $132.75, Health Care; and Marvin
Mann, $131.68, Health Care.
Pension or Estimated Annual Total
Retirement Benefits Upon Compensation
Benefits Accrued Retirement from from the Fund
as Part of Fund the Fund Complex*
Expenses from the Complex*
Fund Complex*
J. Gary Burkhead** $ 0 $ 0 $ 0
Ralph F. Cox 5,200 52,000 128,000
Phyllis Burke Davis 5,200 52,000 125,000
Richard J. Flynn 0 52,000 160,500
Edward C. Johnson 3d** 0 0 0
E. Bradley Jones 5,200 49,400 128,000
Donald J. Kirk 5,200 52,000 129,500
Peter S. Lynch** 0 0 0
Gerald C. McDonough 5,200 52,000 128,000
Edward H. Malone 5,200 44,200 128,000
Marvin L. Mann 5,200 52,000 128,000
Thomas R. Williams 5,200 52,000 125,000
* Information is as of December 31, 1995 for 219 funds in the complex.
** Interested trustees of each fund are compensated by FMR.
The non-interested Trustees may elect to defer receipt of all or a
percentage of their annual fees in accordance with the terms of a Deferred
Compensation Plan (the Plan). Under the Plan, compensation deferred by a
Trustee is periodically adjusted as though an equivalent amount had been
invested and reinvested in shares of one or more funds in the complex
designated by such Trustee (designated securities). The amount paid to the
Trustee under the Plan will be determined based upon the performance of
such investments. Deferral of Trustees' fees in accordance with the Plan
will have a negligible effect on a fund's assets, liabilities, and net
income per share, and will not obligate the fund to retain the services of
any Trustee or to pay any particular level of compensation to the Trustee.
Each fund may invest in such designated securities under the Plan without
shareholder approval.
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.
As of February 29, 1996, the Trustees and officers of the funds owned, in
the aggregate, less than 1% of each fund's total outstanding shares.
As of February 29, 1996, Resources Trust Co., Engelwood, CO, was known by
the trust to own of record or beneficially approximately 38.4%, 7.3%,
61.9%, 23.2%, 41.1%, 7.1%, and 21.1% of the total outstanding shares of the
Automotive, Computers, Construction and Housing, Industrial Equipment,
Industrial Materials, Medical Delivery, and Multimedia Portfolios,
respectively; FTC & Co., P.O. Box 173736, Denver, CO, was known by the
trust to own of record or beneficially approximately 9.1% and 6.2% of the
total outstanding shares of the Air Transportation and Chemicals
Portfolios, respectively; and Charles Schwab & Co., Inc./Mutual Fund
Department, San Francisco, CA, was known by the trust to own of record or
beneficially approximately 5.1% of the total outstanding shares of the
Regional Banks Portfolio.
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 each fund with all necessary
office facilities and personnel for servicing each fund's investments,
compensates all officers of each fund and all Trustees who are "interested
persons" of the trust or FMR, and all personnel of each fund or FMR
performing services relating to research, statistical, and investment
activities.
In addition, FMR or its affiliates, subject to the supervision of the Board
of Trustees, provide the management and administrative services necessary
for the operation of each fund. These services include providing facilities
for maintaining each fund's organization; supervising relations with
custodians, transfer and pricing agents, accountants, underwriters, and
other persons dealing with each fund; preparing all general shareholder
communications and conducting shareholder relations; maintaining each
fund's records and the registration of each fund's shares under federal and
state laws; developing management and shareholder services for each fund;
and furnishing reports, evaluations, and analyses on a variety of subjects
to the 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 pays for the typesetting, printing, and
mailing of its proxy materials to shareholders, legal expenses, and the
fees of the custodian, auditor, and non-interested Trustees. Although each
fund's current management contract provides that each 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 costs of providing these services to
existing shareholders. Other expenses paid by each 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 each 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 money market 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 all 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 below on the left. The schedule below on the right shows the
effective annual group fee rate at various asset levels,which is the result
of cumulatively applying the annualized rates on the left. For example, the
effective annual fee rate at $392 billion of group net assets - the
approximate level for February 1996 - was .1464%, which is the weighted
average of the respective fee rates for each level of group net assets up
to $392 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 for average group assets
in excess of $156 billion and under $372 billion as shown in the schedule
below. The revised group fee rate schedule was identical to the above
schedule for average group assets under $156 billion.
On January 1, 1996, FMR voluntarily added new breakpoints to the revised
schedule for average group assets in excess of $372 billion, pending
shareholder approval of a new management contract reflecting the revised
schedule and additional breakpoints. The revised group fee rate schedule
and its extensions provide for lower management fee rates as FMR's assets
under management increase. For average group assets in excess of $156
billion, the revised group fee rate schedule with additional breakpoints
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
372 - 408 .1200 325 .1514
408 - 444 .1175 350 .1494
444 - 480 .1150 375 .1476
480 - 516 .1125 400 .1459
Over 516 .1100 425 .1443
450 .1427
475 .1413
500 .1399
525 .1385
550 .1372
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 fee for that month.
If the fund's monthly 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
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. On behalf of the money market fund, FMR has entered into a
sub-advisory agreement with FTX pursuant to which FTX has primary
responsibility for providing portfolio investment management services to
the fund.
Under the sub-advisory agreement, dated March 1, 1994, which was approved
by shareholders on February 16, 1994, FMR pays 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. On behalf of the
money market fund, for fiscal 1996, 1995, and 1994, FMR paid FTX fees of
$779,003, $690,183, and $304,933, respectively.
STOCK FUNDS. FMR is each stock fund's manager pursuant to management
contracts dated March 1, 1994, which were approved by shareholders on
February 16, 1994.
For the services of FMR under the contract, each fund pays 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 below on the left. The schedule below on the right shows the
effective annual group fee rate at various asset levels, which is the
result of cumulatively applying the annualized rates on the left. For
example, the effective annual fee rate at $393 billion of group net assets
- - the approximate level for February 1996 - was .3074%, which is the
weighted average of the respective fee rates for each level of group net
assets up to $393 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. Each 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 for average group assets
in excess of $210 billion and under $390 billion as shown in the schedule
below. The revised group fee rate schedule was identical to the above
schedule for average group assets under $210 billion.
On January 1, 1996, FMR voluntarily added new breakpoints to the revised
schedule for average group assets in excess of $390 billion, pending
shareholder approval of a new management contract reflecting the revised
schedule and additional breakpoints. The revised group fee rate schedule
and its extensions provide for lower management fee rates as FMR's assets
under management increase. For average group assets in excess of $210
billion, the revised group fee rate schedule with additional breakpoints
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
174 - $210 billion .3000% $ 150 billion .3371%
210 - 246 .2950 175 .3325
246 - 282 .2900 200 .3284
282 - 318 .2850 225 .3249
318 - 354 .2800 250 .3219
354 - 390 .2750 275 .3190
390 - 426 .2700 300 .3163
426 - 462 .2650 325 .3137
462 - 498 .2600 350 .3113
498 - 534 .2550 375 .3090
Over 534 .2500 400 .3067
425 .3046
450 .3024
475 .3003
500 .2982
525 .2962
550 .2942
The individual fund fee rate is .30%. Based on the average group net assets
of funds advised by FMR for February 1996, the annual management fee rate
would be calculated as follows:
Group Fee Rate Individual Fund Fee Rate Basic Fee Rate
.3074% + .30% = .6074%
One twelfth (1/12) of this annual management fee rate is applied to each
fund's net assets averaged for the most recent 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 by FMR" 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% of the first $30 million, 2% of the next
$70 million, and 1% 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%
of average net assets.
1MANAGEMENT FEES
<UNDEF>
Fiscal 1996 Fiscal 1995 Fiscal 1994
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross Expense Net Fees Gross Expense Net Fees Gross Expense Net Fees
Management Limitation Management Limitation Management Limitation
Fees Reimbursements Fees Reimbursements Fees Reimbursements
Air
Transportation $ 425,938 $ -- $ 425,938 $ 58,574 $ 35,895 $ 22,679 $ 111,986 $ -- $ 111,986
American Gold 2,155,590 -- 2,155,590 2,170,533 -- 2,170,533 1,968,132 -- 1,968,132
Automotive 363,327 -- 363,327 628,194 -- 628,194 842,489 -- 842,489
Biotechnology 3,676,822 -- 3,676,822A 2,565,447 -- 2,565,447 3,444,469 -- 3,444,469
Brokerage and
Investment 204,478 -- 204,478A 188,068 111,215 76,853 434,585 -- 434,585
Management
Chemicals 481,260 -- 481,260 888,515 -- 888,515 172,586 -- 172,586
Computers 2,922,505 -- 2,922,505 818,112 -- 818,112 260,092 -- 260,092
Construction
and Housing 258,650 -- 258,650 251,922 -- 251,922 266,225 -- 266,225
Consumer
Products 219,534 -- 219,534A 49,334 25,374 23,960 56,196 13,001 43,195
Defense and
Aerospace 131,560 -- 131,560A 32,632 75,680 -- 29,101 48,710 --
Developing
Communications 2,034,963 -- 2,034,963 1,383,242 -- 1,383,242 1,112,057 -- 1,112,057
Electronics 5,626,255 -- 5,626,255 967,445 -- 967,445 340,672 -- 340,672
Energy 691,768 -- 691,768 646,577 -- 646,577 790,258 -- 790,258
Energy Service 983,400 -- 983,400 369,132 -- 369,132 588,460 -- 588,460
Environmental
Services 195,326 -- 195,326 277,824 -- 277,824 354,982 -- 354,982
Financial
Services 1,203,738 -- 1,203,738 671,165 -- 671,165 1,053,341 -- 1,053,341
Food and
Agriculture 1,286,233 -- 1,286,233 577,884 -- 577,884 687,792 -- 687,792
Health Care 6,868,340 -- 6,868,340 3,999,219 -- 3,999,219 3,460,974 -- 3,460,974
Home Finance 2,401,434 -- 2,401,434 1,238,263 -- 1,238,263 1,403,951 -- 1,403,951
Industrial
Equipment 623,645 -- 623,645 767,043 -- 767,043 368,162 -- 368,162
Industrial
Materials 777,296 -- 777,296 1,097,939 -- 1,097,939 217,293 -- 217,293
Insurance 129,061 -- 129,061 64,796 -- 64,796 140,010 -- 140,010
Leisure 486,216 -- 486,216 452,572 -- 452,572 553,372 -- 553,372
Medical
Delivery 1,208,374 -- 1,208,374 1,329,801 -- 1,329,801 667,707 -- 667,707
Money Market 1,558,005 -- 1,558,005 1,380,366 -- 1,380,366 609,866 -- 609,866
Multimedia 587,354 -- 587,354 195,423 -- 195,423 394,337 -- 394,337
Natural Gas 431,858 -- 431,858 478,146 -- 478,146 243,289 -- 243,289
Paper and Forest
Products 355,643 -- 355,643 348,896 -- 348,896 171,761 -- 171,761
Precious Metals
and Minerals 2,345,736 -- 2,345,736 2,704,371 -- 2,704,371 2,378,390 -- 2,378,390
Regional Banks 1,410,233 -- 1,410,233 892,544 -- 892,544 1,251,566 -- 1,251,566
Retailing 226,958 -- 226,958 377,628 -- 377,628 359,512 -- 359,512
Software and Computer
Services 1,899,182 -- 1,899,182 1,132,169 -- 1,132,169 1,077,770 -- 1,077,770
Technology 2,349,322 -- 2,349,322 1,278,290 -- 1,278,290 1,025,784 -- 1,025,784
Telecommunicat
ions 2,590,151 -- 2,590,151 2,320,344 -- 2,320,344 2,219,724 -- 2,219,724
Transportation 66,606 15,090 51,516A 79,035 -- 79,035 66,064 -- 66,064
Utilities
Growth 1,615,924 -- 1,615,924 1,391,823 -- 1,391,823 1,945,321 -- 1,945,321
</TABLE>
A During the period, FMR issued a one-time credit reducing management fees.
The amount of the credit issued to the respective funds was: Biotechnology
$503,762; Brokerage and Investment Management $79,974; Consumer Products
$22,835; Defense and Aerospace $24,455; and Transportation $7,559.
SUB-ADVISERS. On behalf of the stock funds (except American Gold
Portfolio), 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 the
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, which were organized in 1986, 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 to the sub-advisers for providing
investment advice and research services on behalf of certain of the funds
for fiscal 1996, 1995 and 1994.
For the fiscal years ended 1996, 1995, and 1994, no fees were paid by FMR
to the sub-advisers on behalf of the funds for providing discretionary
investment management or executing portfolio transactions.
FEES PAID BY FMR TO FOREIGN SUB-ADVISERS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FUND FEES PAID BY FMR TO FMR U.K. FEES PAID BY FMR TO FMR FAR EAST
FISCAL 1996 FISCAL 1995 FISCAL 1994 FISCAL 1996 FISCAL 1995 FISCAL 1994
Air
Transportation $ 7,281 $ 1,184 $ 537 $ 7,977 $ 141 $ 901
Automotive 2,829 1,021 443 3,065 1,953 722
Biotechnology 43,136 14,099 870 45,732 -- 1,205
Brokerage and
Investment 1,737 2,134 4,308 1,873 5,666 --
Management
Chemicals 4,067 9,005 624 4,360 1,430 1,065
Computers 44,800 1,071 950 48,650 6,480 1,564
Construction
and Housing -- 9 74 -- 61 118
Consumer
Products 477 256 76 521 3 126
Defense and
Aerospace 323 23 -- 367 -- --
Developing
Communications 31,635 21,581 5,519 35,287 683 9,352
Electronics 50,403 957 813 59,693 7,701 1,346
Energy 14,746 12,700 4,003 15,810 -- 6,620
Energy Service 8,516 968 107 9,360 -- 149
Environmental
Services 1,469 2,261 1,063 1,640 3 1,722
Financial
Services -- 907 3,965 -- 855 6,418
Food and
Agriculture 2,915 2,898 2,440 3,087 204 4,052
Health Care 62,044 18,349 8,184 66,180 -- 14,628
Home Finance -- 9 -- -- 61 --
Industrial
Equipment 787 41 -- 907 52 --
Industrial
Materials 10,004 7,396 1,003 11,002 -- 1,368
Insurance 34 -- 1,776 40 -- 3,405
Leisure 5,700 1,372 1,482 6,340 501 2,493
Medical
Delivery -- -- 412 -- -- 701
Multimedia 6,935 626 1,263 7,504 296 2,180
Natural Gas 1,012 2,100 235 1,005 360 286
Paper and
Forest Products 2,270 2,521 1,060 2,457 34 1,545
Precious Metals
and Minerals 118,405 107,341 36,622 126,271 23,056 64,331
Regional Banks -- -- 57 -- -- 79
Retailing 585 107 -- 632 -- --
Software and
Computer
Services 5,397 7,534 3,912 6,305 115 7,125
Technology 36,101 3,283 4,764 39,503 7,604 7,869
Telecommuni
cations 53,688 38,500 11,670 57,717 5,830 18,896
Transportation 289 657 93 310 248 138
Utilities
Growth 4,286 2,167 1,182 4,379 176 1,966
</TABLE>
CONTRACTS WITH FMR AFFILIATES
FSC is transfer, dividend disbursing, and shareholder servicing agent for
each fund. FSC receives annual account fees and asset-based fees based on
account size and fund type for each retail account and certain
institutional accounts. With respect to certain institutional retirement
accounts, FSC receives annual account fees and asset-based fees based on
account type or fund type. These annual account fees are subject to
increase based on postal rate changes. For the stock funds, the asset-based
fees are subject to adjustment if the year-to-date total return of the
Standard & Poor's 500 exceeds a positive or negative 15%. FSC also collects
small account fees from certain accounts with balances of less than $2,500.
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.
FSC also performs the calculations necessary to determine each fund's net
asset value per share and dividends, and maintains each fund's accounting
records. The annual fee rates for these pricing and bookkeeping services
are based on each fund's average net assets, specifically, .1000% for the
first $500 million of average net assets and .0500% for average net assets
in excess of $500 million. The fee is limited to a minimum of $60,000 and a
maximum of $800,000 per year.
The table below shows the fees paid to FSC for pricing and bookkeeping
services, including related out-of-pocket expenses during each fund's last
three fiscal years.
PRICING AND BOOKKEEPING FEES
FISCAL 1996 FISCAL 1995 FISCAL 1994
Air Transportation $ 73,290 $ 45,044 $ 45,503
American Gold 351,847 351,263 316,381
Automotive 60,082 101,598 135,527
Biotechnology 527,898 427,062 537,640
Brokerage and Investment Management 47,818 45,614 74,109
Chemicals 78,925 144,351 46,188
Computers 454,150 132,274 52,178
Construction and Housing 49,539 49,640 52,429
Consumer Products 59,535 45,039 45,448
Defense and Aerospace 47,698 45,035 45,439
Developing Communications 333,332 223,703 178,709
Electronics 651,136 159,153 56,600
Energy 112,800 116,560 115,301
Energy Service 160,802 61,676 95,263
Environmental Services 47,732 49,038 57,311
Financial Services 196,984 108,517 169,723
Food and Agriculture 210,607 93,455 111,592
Health Care 738,412 593,155 543,706
Home Finance 382,635 200,207 225,185
Industrial Equipment 102,205 123,986 67,846
Industrial Materials 127,391 177,982 55,728
Insurance 47,689 45,049 45,505
Leisure 79,740 73,182 89,132
Medical Delivery 197,086 217,243 111,491
Money Market 99,064 100,919 81,066
Multimedia 96,559 45,584 72,219
Natural Gas 70,811 77,295 46,258
Paper and Forest Products 62,846 62,045 50,532
Precious Metals and Minerals 383,741 431,938 381,783
Regional Banks 231,139 144,275 200,635
Retailing 47,630 67,016 59,935
Software and Computer Services 307,359 188,418 180,104
Technology 378,688 206,675 164,841
Telecommunications 418,462 380,164 355,887
Transportation 47,681 45,053 45,464
Utilities Growth 264,628 225,235 312,148
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 by certain of the funds to FSC during each fund's last three
fiscal years.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SECURITIES LENDING FEES
FISCAL 1996 FISCAL 1995 FISCAL 1994
American Gold $ 3,985 $ -- $ --
Biotechnology 10,900 12,005 9,770
Chemicals 180 690 275
Computers 11,060 -- --
Electronics 12,190 3,015 335
Energy 1,115 230 185
Energy Service 380 595 140
Financial Services 305 -- 660
Food And Agriculture -- -- 649
Health Care 12,373 20,600 22,430
Industrial Materials 2,065 400 145
Medical Delivery 3,795 2,120 4,240
Paper and Forest Products 375 230 --
Precious Metals And Minerals 325 50 295
Retailing 2,010 3,535 1,335
Software And Computer Services 5,525 4,245 7,660
Technology 11,840 -- --
Telecommunications 11,295 5,140 2,420
Utilities Growth 120 140 290
</TABLE>
The aggregate exchange fees retained by FSC during fiscal 1996, 1995, and
1994 amounted to $4,400,274, $2,942,608, and $4,248,878, respectively.
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 fiscal 1996, 1995, and 1994, FDC collected, in the aggregate, $560,711,
$657,652, and $1,507,482, respectively, of deferred sales charges from the
total value of shares redeemed by shareholders in all funds and from the
Select Cash Reserves Account. On October 12, 1990, the fund's 2% sales
charge was increased to 3% and the 1% deferred sales charge was eliminated.
For fiscal 1996, 1995, and 1994, FDC collected in the aggregate,
$71,957,898, $33,024,875, and $47,390,126, respectively of front-end sales
charges.
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 a fund's assets and the appointment of the subcustodian
banks and clearing agencies. The custodian takes no part in determining the
investment policies of a fund or in deciding which securities are purchased
or sold by a fund. However, a fund may invest in obligations of the
custodian and may purchase securities from or sell securities to the
custodian. The Bank of New York (stock funds only) and Chemical Bank, each
headquartered in New York, also may serve as a special purpose custodian of
certain assets in connection with pooled repurchase agreement transactions.
FMR, its officers and directors, its affiliated companies, and the Board of
Trustees may, from time to time, conduct transactions with various banks,
including banks serving as custodians for certain funds advised by FMR. The
Boston branch of the stock funds' custodian leases its office space from an
affiliate of FMR at a lease payment which, when entered into, was
consistent with prevailing market rates. Transactions that have occurred to
date include mortgages and personal and general business loans. In the
judgment of FMR, the terms and conditions of those transactions were not
influenced by existing or potential custodial or other fund relationships.
AUDITOR. Price Waterhouse LLP, 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.
LITIGATION. In December 1995, several individuals who purchased shares of
Apple Computer Inc. ("Apple") in September 1995 filed complaints in the
United States District Court in Boston against Select Technology Portfolio,
Select Computers Portfolio, FMR, FMR Corp. and Harry Lange, the funds'
portfolio manager. The complaints allege that, in violation of a federal
securities law, the funds' portfolio manager made misleading statements
regarding Apple and the funds' holdings of Apple. Plaintiffs seek to have
the complaints certified as a class action on behalf of specified
purchasers of Apple shares. The defendants deny the allegations in the
complaints and intend to defend the lawsuits vigorously.
FINANCIAL STATEMENTS
Each fund's financial statements and financial highlights for the fiscal
year ended February 29, 1996 are included in the funds' 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.
APPENDIX
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S COMMERCIAL PAPER RATINGS:
Issuers rated PRIME-1 (or related supporting institutions) have a superior
capacity for payment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following
characteristics:
Leading market positions in well established industries.
High rates of return on funds employed.
Conservative capitalization structures with moderate reliance on debt and
ample asset protection.
Broad margins in earning coverage of fixed financial charges and with high
internal cash generation.
Well established access to a range of financial markets and assured sources
of alternate liquidity.
Issuers rated PRIME-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earning trends and coverage ratios, while sound, will be
more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
DESCRIPTION OF STANDARD & POOR'S COMMERCIAL PAPER RATINGS:
A - Issues assigned this highest rating are regarded as having the greatest
capacity for timely payment. Issues in this category are delineated with
the numbers 1, 2 and 3 to indicate the relative degree of safety.
A-1 - This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics will be denoted with a plus (+)
sign designation.
A-2 - Capacity for timely payment on issues with this designation is
strong. However, the relative degree of safety is not as high as for issues
designated A-1.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S CORPORATE BOND RATINGS:
AAA - Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.
AA - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than in Aaa securities.
Moody's applies numerical modifiers, 1, 2, and 3 in the generic rating
classification for Aa in its corporate bond rating system. The modifier 1
indicates that the security ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end of its generic rating
category.
DESCRIPTION OF STANDARD & POOR'S CORPORATE BOND RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard & Poor's
to a debt obligation. Capacity to pay interest and repay principal is
extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher-rated issues only in small degree.
The rating AA may be modified by the addition of a plus or minus to show
relative standing within the major rating category.
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) of Post-Effective
Amendment No. 48.
(2) Bylaws of the Trust, as amended, are incorporated herein by reference
to Exhibit 2(a) of Fidelity Union Street Trust's (File no. 2-50318)
Post-Effective Amendment No. 87.
(3) Not applicable.
(4) 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 Industries (formerly Consumer Products),
Defense and Aerospace, Developing Communications, Electronics, Energy,
Energy Service, Environmental Services, Financial Services, Food and
Agriculture, Health Care, Home Finance (formerly Savings and Loan),
Industrial Equipment (formerly Industrial Technology), Industrial
Materials, Insurance (formerly Property and Casualty Insurance), Leisure,
Medical Delivery, Multimedia (formerly Broadcast and Media), Natural Gas,
Paper and Forest Products, Precious Metals and Minerals, Regional Banks,
Retailing, Software and Computer Services, Technology, Telecommunications,
Transportation, 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) of 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 Industries (formerly Consumer Products),
Defense and Aerospace, Developing Communications, Electronics, Energy,
Energy Service, Environmental Services, Financial Services, Food and
Agriculture, Health Care, Home Finance (formerly Savings and Loan),
Industrial Equipment (formerly Industrial Technology), Industrial
Materials, Insurance (formerly Property and Casualty Insurance), Leisure,
Medical Delivery, Multimedia (formerly Broadcast and Media), Natural Gas,
Paper and Forest Products, Precious Metals and Minerals, Regional Banks,
Retailing, Software and Computer Services, Technology, Telecommunications,
Transportation, and Utilities Growth (formerly Utilities) Portfolios, are
incorporated herein by reference to Exhibit Nos. 5(b)(1-34) of
Post-Effective Amendment No. 48.
(c) Sub-Advisory Agreement, dated 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(c) of
Post-Effective Amendment No. 51.
(d) Form of Management Contract, between Cyclical Industries
Portfolio and Fidelity Management & Research Company, is filed herein as
Exhibit 5(d).
(e) Form of Management Contract, between Natural Resources Portfolio
and Fidelity Management & Research Company, is filed herein as Exhibit
5(e).
(f) Form of Sub-Advisory Agreement, between Fidelity Management &
Research (U.K.) Inc. and Fidelity Management & Research Company on behalf
of Cyclical Industries Portfolio, is filed herein as Exhibit 5(f).
(g) Form of Sub-Advisory Agreement, between Fidelity Management &
Research (Far East) Inc. and Fidelity Management & Research Company on
behalf of Cyclical Industries Portfolio, is filed herein as Exhibit 5(g).
(h) Form of Sub-Advisory Agreement, between Fidelity Management &
Research (U.K.) Inc. and Fidelity Management & Research Company on behalf
of Natural Resources Portfolio, is filed herein as Exhibit 5(h).
(i) Form of Sub-Advisory Agreement, between Fidelity Management &
Research (Far East) Inc. and Fidelity Management & Research Company on
behalf of Natural Resources Portfolio, is filed herein as Exhibit 5(i).
(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, Insurance
(formerly Property and Casualty Insurance), Leisure, Medical Delivery,
Money Market, Multimedia (formerly Broadcast and Media), Paper and Forest
Products, Precious Metals and Minerals, Regional Banks, Retailing, Software
and Computer Services, Technology, Telecommunications, Transportation, and
Utilities Growth (formerly Utilities) Portfolios and Fidelity Distributors
Corporation, are incorporated herein by reference to Exhibit Nos.
6(a)(1-31) of Post-Effective Amendment No. 51.
(b) Amendment to General Distribution Agreements, dated January 1,
1988, between 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 Capital Goods),
Insurance (formerly Property and Casualty Insurance), Leisure, Medical
Delivery, Money Market, Multimedia (formerly Broadcast and Media), Paper
and Forest Products, Precious Metals and Minerals, Regional Banks,
Retailing, Software and Computer Services, Technology, Telecommunications,
Transportation, and Utilities Growth (formerly Utilities) Portfolios and
Fidelity Distributors Corporation, is incorporated herein by reference to
Exhibit 6(b) of Post-Effective Amendment No. 51.
(c) 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) of
Post-Effective Amendment No. 51.
(d) General Distribution Agreement, dated June 14, 1990, between
Registrant's Consumer Industries (formerly Consumer Products) Portfolio and
Fidelity Distributors Corporation, is incorporated herein by reference to
Exhibit 6(d) of Post-Effective Amendment No. 51.
(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) of
Post-Effective Amendment No. 51.
(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) of 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 incorporated herein by reference
to Exhibit 6(g) of Post-Effective Amendment No. 50.
(h) General Distribution Agreement, dated April 1, 1987, between
Registrant's Industrial Equipment (formerly Capital Goods) Portfolio and
Fidelity Distributors Corporation, is incorporated herein by reference to
Exhibit 6(h) of Post-Effective Amendment No. 54.
(i) Form of General Distribution Agreement, between Cyclical
Industries Portfolio and Fidelity Distributors Corporation, is filed herein
as Exhibit 6(i).
(j) Form of General Distribution Agreement, between Natural Resources
Portfolio and Fidelity Distributors Corporation, is filed herein as Exhibit
6(j).
(7)(a) Retirement Plan for Non-Interested Person Trustees, Directors or
General Partners, as amended November 16, 1995, is incorporated herein by
reference to Exhibit 7(a) of Post-Effective Amendment No. 54.
(b) The Fee Deferral Plan for Non-Interested Person Directors and
Trustees of the Fidelity Funds, effective as of December 1, 1995, is
incorporated herein by reference to Exhibit 7(b) of Fidelity School Street
Trust's (File No. 2-57167) Post-Effective Amendment No. 47.
(8)(a) Custodian Agreement and Appendix C, dated September 1, 1994,
between Brown Brothers Harriman & Company and Fidelity Select Portfolios on
behalf of the equity portfolios with the exception of Cyclical Industries
and Natural Resources Portfolios is incorporated herein by reference to
Exhibit 8(a) of Fidelity Commonwealth Trust's Post-Effective Amendment No.
56 (File No. 2-52322).
(b) Appendix A, dated January 18, 1996, to the Custodian Agreement,
dated September 1, 1994, between Brown Brothers Harriman & Company and
Fidelity Select Portfolios on behalf of the equity portfolios with the
exception of Cyclical Industries and Natural Resources Portfolios is
incorporated herein by reference to Exhibit 8(d) of Fidelity Investment
Trust's Post-Effective Amendment No. 65 (File No. 2-90649).
(c) Appendix B, dated September 14, 1995, to the Custodian Agreement,
dated September 1, 1994, between Brown Brothers Harriman & Company and
Fidelity Select Portfolios on behalf of the equity portfolios with the
exception of Cyclical Industries and Natural Resources Portfolios is
incorporated herein by reference to Exhibit 8(b) of Fidelity Capital
Trust's Post-Effective Amendment No. 63 (File No. 2-61760).
(d) Custodian Agreement and Appendix C, dated December 1, 1994,
between The Bank of New York and Fidelity Select Portfolios on behalf of
Select Money Market Portfolio is incorporated herein by reference to
Exhibit 8(a) of Fidelity Hereford Street Trust's Post-Effective Amendment
No. 4 (File No. 33-52577).
(e) Appendix A, dated May 16, 1996, to the Custodian Agreement, dated
December 1, 1994, between The Bank of New York and Fidelity Select
Portfolios on behalf of Select Money Market Portfolio is filed herein as
Exhibit 8(e).
(f) Appendix B, dated September 14, 1995, to the Custodian Agreement,
dated December 1, 1994, between The Bank of New York and the Fidelity
Select Portfolios on behalf of Select Money Market Portfolio is
incorporated herein by reference to Exhibit 8(e) of Fidelity Charles Street
Trust's Post-Effective Amendment No. 54 (File No. 2-73133).
(g) Fidelity Group Repo Custodian Agreement among The Bank of New
York, J. P. Morgan Securities, Inc., and Fidelity Select Portfolios on
behalf of all of the portfolios with the exception of Cyclical Industries
and Natural Resources Portfolios, dated February 12, 1996, is incorporated
herein by reference to Exhibit 8(d) of Fidelity Institutional Cash
Portfolios' (File No. 2-74808) Post-Effective Amendment No. 31.
(h) Schedule 1 to the Fidelity Group Repo Custodian Agreement between
The Bank of New York and Fidelity Select Portfolios on behalf of all of the
portfolios with the exception of Cyclical Industries and Natural Resources
Portfolios, dated February 12, 1996, is incorporated herein by reference to
Exhibit 8(e) of Fidelity Institutional Cash Portfolios' (File No. 2-74808)
Post-Effective Amendment No. 31.
(i) Fidelity Group Repo Custodian Agreement among Chemical Bank,
Greenwich Capital Markets, Inc., and Fidelity Select Portfolios on behalf
of all of the portfolios with the exception of Cyclical Industries and
Natural Resources Portfolios, dated November 13, 1995, is incorporated
herein by reference to Exhibit 8(f) of Fidelity Institutional Cash
Portfolios' (File No. 2-74808) Post-Effective Amendment No. 31.
(j) Schedule 1 to the Fidelity Group Repo Custodian Agreement between
Chemical Bank and Fidelity Select Portfolios on behalf of all of the
portfolios with the exception of Cyclical Industries and Natural Resources
Portfolios, dated November 13, 1995, is incorporated herein by reference to
Exhibit 8(g) of Fidelity Institutional Cash Portfolios' (File No. 2-74808)
Post-Effective Amendment No. 31.
(k) Joint Trading Account Custody Agreement between The Bank of New
York and Fidelity Select Portfolios on behalf of all of the portfolios with
the exception of Cyclical Industries and Natural Resources Portfolios,
dated May 11, 1995, is incorporated herein by reference to Exhibit 8(h) of
Fidelity Institutional Cash Portfolios' (File No. 2-74808) Post-Effective
Amendment No. 31.
(l) First Amendment to Joint Trading Account Custody Agreement between
The Bank of New York and Fidelity Select Portfolios on behalf of all of the
portfolios with the exception of Cyclical Industries and Natural Resources
Portfolios, dated July 14, 1995, is incorporated herein by reference to
Exhibit 8(i) of Fidelity Institutional Cash Portfolios' (File No. 2-74808)
Post-Effective Amendment No. 31.
(9) Not applicable.
(10) Not applicable.
(11) Consent of Price Waterhouse LLP is filed herein as Exhibit 11.
(12) Not applicable.
(13) Not applicable.
(14)(a) Fidelity Individual Retirement Account Custodial Agreement and
Disclosure Statement, as currently in effect, is incorporated herein by
reference to Exhibit 14(a) of Fidelity Union Street Trust's (File No.
2-50318) Post-Effective Amendment No. 87.
(b) Fidelity Institutional Individual Retirement Account Custodial
Agreement and Disclosure Statement, as currently in effect, is incorporated
herein by reference to Exhibit 14(d) of Fidelity Union Street Trust's (File
No. 2-50318) Post-Effective Amendment No. 87.
(c) 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) of Fidelity
Union Street Trust's (File No. 2-50318) Post-Effective Amendment No. 87.
(d) 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) of Fidelity
Union Street Trust's (File No. 2-50318) Post-Effective Amendment No. 87.
(e) Fidelity 403(b)(7) Custodial Account Agreement, as currently in
effect, is incorporated herein by reference to Exhibit 14(e) of Fidelity
Union Street Trust's (File No. 2-50318) Post-Effective Amendment No. 87.
(f) National Financial Services Corporation Defined Contribution
Retirement Plan and Trust Agreement, as currently in effect, is
incorporated herein by reference to Exhibit 14(k) of Fidelity Union Street
Trust's (File No. 2-50318) Post-Effective Amendment No. 87.
(g) The CORPORATEplan for Retirement Profit Sharing/401K Plan, as
currently in effect, is incorporated herein by reference to Exhibit 14(l)
of Fidelity Union Street Trust's (File No. 2-50318) Post-Effective
Amendment No. 87.
(h) The CORPORATEplan for Retirement Money Purchase Pension Plan, as
currently in effect, is incorporated herein by reference to Exhibit 14(m)
of Fidelity Union Street Trust's (File No. 2-50318) Post-Effective
Amendment No. 87.
(i) 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(f) of Fidelity Commonwealth
Trust's (File No. 2-52322) Post-Effective Amendment No. 57.
(j) Plymouth Investments Defined Contribution Retirement Plan and
Trust Agreement, as currently in effect, is incorporated herein by
reference to Exhibit 14(o) of Fidelity Commonwealth Trust's (File No.
2-52322) Post-Effective Amendment No. 57.
(k) The Fidelity Prototype Defined Benefit Pension Plan and Trust
Basic Plan Document and Adoption Agreement, as currently in effect, is
incorporated herein by reference to Exhibit 14(d) of Fidelity Securities
Fund's (File No. 2-93601) Post-Effective Amendment No. 33.
(l) The Institutional Prototype Plan Basic Plan Document,
Standardized Adoption Agreement, and Non-Standardized Adoption Agreement,
as currently in effect, is incorporated herein by reference to Exhibit
14(o) of Fidelity Securities Fund's (File No. 2-93601) Post-Effective
Amendment No. 33.
(m) The CORPORATEplan for Retirement 100SM Profit Sharing/401(k)
Basic Plan Document, Standardized Adoption Agreement, and Non-Standardized
Adoption Agreement, as currently in effect, is incorporated herein by
reference to Exhibit 14(f) of Fidelity Securities Fund's (File No. 2-93601)
Post-Effective Amendment No. 33.
(n) The Fidelity Investments 401(a) Prototype Plan for Tax-Exempt
Employers Basic Plan Document, Standardized Profit Sharing Plan Adoption
Agreement, Non-Standardized Discretionary Contribution Plan No. 002
Adoption Agreement, and Non-Standardized Discretionary Contribution Plan
No. 003 Adoption Agreement, as currently in effect, is incorporated herein
by reference to Exhibit 14(g) of Fidelity Securities Fund's (File No.
2-93601) Post-Effective Amendment No. 33.
(o) Fidelity Investments 403(b) Sample Plan Basic Plan Document and
Adoption Agreement, as currently in effect, is incorporated herein by
reference to Exhibit 14(p) of Fidelity Securities Fund's (File No. 2-93601)
Post-Effective Amendment No. 33.
(p) Fidelity Defined Contribution Retirement Plan and Trust
Agreement, as currently in effect, is incorporated herein by reference to
Exhibit 14(c) of Fidelity Securities Fund's (File No. 2-93601)
Post-Effective Amendment No. 33.
(15) Not applicable.
(16)(a) Schedules for the computation of performance calculations and
yield calculations for Select Natural Gas Portfolio and Select Money Market
Portfolio on behalf of the trust were filed as Exhibit 16(a) of
Post-Effective Amendment No. 51.
(b) A schedule for the computation of a moving average for Select
Insurance Portfolio on behalf of the equity portfolios in the trust was
filed as Exhibit 16(b) of Post-Effective Amendment No. 51.
(17) Not applicable.
(18) Not applicable.
Item 25. Persons Controlled by or under Common Control with Registrant
The Board of Trustees of Registrant is substantially the same as the
boards 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 June 30, 1996
Title of Class: Shares of Beneficial Interest
Title of Class Number of Record Holders
Air Transportation Portfolio 6,567
American Gold Portfolio 29,882
Automotive Portfolio 13,511
Biotechnology Portfolio 72,880
Brokerage and Investment Management Portfolio 4,163
Chemicals Portfolio 9,587
Computers Portfolio 45,597
Construction and Housing Portfolio 2,553
Consumer Industries Portfolio 3,999
Cyclical Industries Portfolio 0
Defense and Aerospace Portfolio 4,076
Developing Communications Portfolio 36,643
Electronics Portfolio 84,633
Energy Portfolio 12,529
Energy Service Portfolio 20,168
Environmental Services Portfolio 8,455
Financial Services Portfolio 18,668
Food and Agriculture Portfolio 27,287
Health Care Portfolio 94,611
Home Finance Portfolio 37,032
Industrial Equipment Portfolio 5,680
Industrial Materials Portfolio 6,013
Insurance Portfolio 2,595
Leisure Portfolio 11,288
Medical Delivery Portfolio 21,285
Money Market Portfolio 32,296
Multimedia Portfolio 8,521
Natural Gas Portfolio 7,108
Natural Resources Portfolio 0
Paper and Forest Products Portfolio 3,665
Precious Metals and Minerals Portfolio 32,397
Regional Banks Portfolio 26,617
Retailing Portfolio 20,129
Software and Computer Services Portfolio 39,228
Technology Portfolio 40,615
Telecommunications Portfolio 49,383
Transportation Portfolio 1,845
Utilities Growth Portfolio 19,090
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.
Pursuant to Section 11 of the Distribution Agreement, the Registrant
agrees to indemnify and hold harmless the Distributor and each of its
directors and officers and each person, if any, who controls the
Distributor within the meaning of Section 15 of the 1933 Act against any
loss, liability, claim, damages or expense arising by reason of any person
acquiring any shares, based upon the ground that the registration
statement, Prospectus, Statement of Additional Information, shareholder
reports or other information filed or made public by the Registrant
included a materially misleading statement or omission. However, the
Registrant does not agree to indemnify the Distributor or hold it harmless
to the extent that the statement or omission was made in reliance upon, and
in conformity with, information furnished to the Registrant by or on behalf
of the Distributor. The Registrant does not agree to indemnify the parties
against any liability to which they would be subject by reason of willful
misfeasance, bad faith, gross negligence, and reckless disregard of the
obligations and duties under the Distribution Agreement.
Pursuant to the agreement by which Fidelity Service Company ("Service") is
appointed sub-transfer agent, the Transfer Agent agrees to indemnify
Service for its losses, claims, damages, liabilities and expenses to the
extent the Transfer Agent is entitled to and receives indemnification from
the Registrant for the same events. Under the Transfer Agency Agreement,
the Registrant agrees to indemnify and hold the Transfer Agent harmless
against any losses, claims, damages, liabilities, or expenses resulting
from:
(1) any claim, demand, action or suit brought by any person other than the
Registrant, which names the Transfer Agent and/or the Registrant as a party
and is not based on and does not result from the Transfer Agent's willful
misfeasance, bad faith, negligence or reckless disregard of its duties, and
arises out of or in connection with the Transfer Agent's performance under
the Transfer Agency Agreement; or
(2) any claim, demand, action or suit (except to the extent contributed to
by the Transfer Agent's willful misfeasance, bad faith, negligence or
reckless disregard of its duties) which results from the negligence of the
Registrant, or from the Transfer Agent's acting upon any instruction(s)
reasonably believed by it to have been executed or communicated by any
person duly authorized by the Registrant, or as a result of the Transfer
Agent's acting in reliance upon advice reasonably believed by the Transfer
Agent to have been given by counsel for the Registrant, or as a result of
the Transfer Agent's acting in reliance upon any instrument or stock
certificate reasonably believed by it to have been genuine and signed,
countersigned or executed by the proper person.
Item 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.
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).
William 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.
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 C. Habermann 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.
John Hickling Vice President of FMR (1993) and of funds advised by
FMR.
Robert F. Hill Vice President of FMR; Director of Technical
Research.
Curtis Hollingsworth Vice President of FMR (1993).
Stephen P. 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); 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. MacNaught III Vice President of FMR (1993).
Robert H. Morrison Vice President of FMR; Director of Equity Trading.
David Murphy Vice President of FMR and of funds advised by FMR.
Andrew Offit 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 Spillane Vice President of FMR; Senior Vice President and
Director of Operations and Compliance of FMR U.K.
(1993).
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;
Tax-Free Fixed-Income Group Leader.
Thomas Sweeney Vice President of FMR (1993).
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 Tuckett Vice President of FMR (1993).
George A. Vanderheiden Senior Vice President of FMR; Vice President of funds
advised by FMR; Growth Group Leader.
Arthur S. Loring Senior Vice President (1993), Clerk, and General
Counsel of FMR; Vice President, Legal of FMR Corp.;
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.
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.
Richard Spillane Senior Vice President and Director of Operations and
Compliance of FMR U.K. (1993).
Stephen P. 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.
(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.
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 P. 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.
(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.
Edward C. Johnson 3d Chairman and Director of FMR Texas;
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., 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;
Fixed-Income Division Leader (1995).
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; Money Market
Division Leader (1995).
Stephen P. Jonas Treasurer of FMR Texas Inc. (1993), Fidelity
Management & Research (U.K.) Inc. (1993),
and Fidelity Management & 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.
Item 29. Principal Underwriters
(a) Fidelity Distributors Corporation (FDC) acts as distributor for most
funds advised by FMR.
(b)
Name and Principal Positions and Offices Positions and Offices
Business Address* With Underwriter With Registrant
Edward C. Johnson 3d Director Trustee and President
Michael Mlinac Director None
Mark Peterson Director None
Neal Litvak President None
Arthur S. Loring Vice President and Clerk Secretary
Caron Ketchum Treasurer and Controller None
Gary Greenstein Assistant Treasurer None
Jay Freedman Assistant Clerk None
Linda Holland Compliance Officer None
* 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
custodians 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 to file a Post-Effective Amendment, using
financial statements for Cyclical Industries Portfolio and Natural
Resources Portfolio, which need not be certified, within six months of the
funds' effectiveness, unless permitted by the SEC to extend this period.
(b)The Registrant undertakes for Natural Gas Portfolio, Cyclical Industries
Portfolio, and Natural Resources Portfolio: 1) to call a meeting of
shareholders for the purpose of voting upon the questions 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.
(c)The Registrant, on behalf of Fidelity Select Portfolios, provided the
information required for the stock funds by Item 5A is contained in the
annual report, undertakes to furnish to each person to whom a prospectus
has been delivered, upon their request and without charge, a copy of the
Registrant's 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. 55 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 13th day of August 1996.
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 August 13, 1996
Edward C. Johnson 3d (Principal Executive Officer)
</TABLE>
/s/Kenneth A. Rathgeber Treasurer August 13, 1996
Kenneth A. Rathgeber
/s/J. Gary Burkhead Trustee August 13, 1996
J. Gary Burkhead
/s/Ralph F. Cox * Trustee August 13, 1996
Ralph F. Cox
/s/Phyllis Burke Davis * Trustee August 13, 1996
Phyllis Burke Davis
/s/Richard J. Flynn * Trustee August 13, 1996
Richard J. Flynn
/s/E. Bradley Jones * Trustee August 13, 1996
E. Bradley Jones
/s/Donald J. Kirk * Trustee August 13, 1996
Donald J. Kirk
/s/Peter S. Lynch * Trustee August 13, 1996
Peter S. Lynch
/s/Edward H. Malone * Trustee August 13, 1996
Edward H. Malone
/s/Marvin L. Mann * Trustee August 13, 1996
Marvin L. Mann
/s/Gerald C. McDonough* Trustee August 13, 1996
Gerald C. McDonough
/s/Thomas R. Williams * Trustee August 13, 1996
Thomas R. Williams
(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 5(d)
Form of
MANAGEMENT CONTRACT
between
FIDELITY SELECT PORTFOLIOS:
CYCLICAL INDUSTRIES PORTFOLIO
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
AGREEMENT made this ___th day of __________ 1996, by and between Fidelity
Select Portfolios, a Massachusetts business trust which may issue one or
more series of shares of beneficial interest (hereinafter called the
"Fund"), on behalf of Cyclical Industries Portfolio (hereinafter called the
"Portfolio"), and Fidelity Management & Research Company, a Massachusetts
corporation (hereinafter called the "Adviser") as set forth in its entirety
below.
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the supervision
of the Fund's Board of Trustees, direct the investments of the Portfolio in
accordance with the investment objective, policies and limitations as
provided in the Portfolio's Prospectus or other governing instruments, as
amended from time to time, the Investment Company Act of 1940 and rules
thereunder, as amended from time to time (the "1940 Act"), and such other
limitations as the Portfolio may impose by notice in writing to the
Adviser. The Adviser shall also furnish for the use of the Portfolio
office space and all necessary office facilities, equipment and personnel
for servicing the investments of the Portfolio; and shall pay the salaries
and fees of all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all personnel of
the Fund or the Adviser performing services relating to research,
statistical and investment activities. The Adviser is authorized, in its
discretion and without prior consultation with the Portfolio, to buy, sell,
lend and otherwise trade in any stocks, bonds and other securities and
investment instruments on behalf of the Portfolio. The investment policies
and all other actions of the Portfolio are and shall at all times be
subject to the control and direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for the
performance by its affiliates of) the management and administrative
services necessary for the operation of the Fund. The Adviser shall,
subject to the supervision of the Board of Trustees, perform various
services for the Portfolio, including but not limited to: (i) providing the
Portfolio with office space, equipment and facilities (which may be its
own) for maintaining its organization; (ii) on behalf of the Portfolio,
supervising relations with, and monitoring the performance of, custodians,
depositories, transfer and pricing agents, accountants, attorneys,
underwriters, brokers and dealers, insurers and other persons in any
capacity deemed to be necessary or desirable; (iii) preparing all general
shareholder communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered, maintaining
the registration and qualification of the Portfolio's shares under federal
and state law; and (vii) investigating the development of and developing
and implementing, if appropriate, management and shareholder services
designed to enhance the value or convenience of the Portfolio as an
investment vehicle.
The Adviser shall also furnish such reports, evaluations, information or
analyses to the Fund as the Fund's Board of Trustees may request from time
to time or as the Adviser may deem to be desirable. The Adviser shall make
recommendations to the Fund's Board of Trustees with respect to Fund
policies, and shall carry out such policies as are adopted by the Trustees.
The Adviser shall, subject to review by the Board of Trustees, furnish such
other services as the Adviser shall from time to time determine to be
necessary or useful to perform its obligations under this Contract.
(c) The Adviser shall place all orders for the purchase and sale of
portfolio securities for the Portfolio's account with brokers or dealers
selected by the Adviser, which may include brokers or dealers affiliated
with the Adviser. The Adviser shall use its best efforts to seek to
execute portfolio transactions at prices which are advantageous to the
Portfolio and at commission rates which are reasonable in relation to the
benefits received. In selecting brokers or dealers qualified to execute a
particular transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to the Portfolio and/or the
other accounts over which the Adviser or its affiliates exercise investment
discretion. The Adviser is authorized to pay a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for the Portfolio which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Adviser determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This determination
may be viewed in terms of either that particular transaction or the overall
responsibilities which the Adviser and its affiliates have with respect to
accounts over which they exercise investment discretion. The Trustees of
the Fund shall periodically review the commissions paid by the Portfolio to
determine if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor. The
Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of the
Fund are or may be or become interested in the Adviser as directors,
officers or otherwise and that directors, officers and stockholders of the
Adviser are or may be or become similarly interested in the Fund, and that
the Adviser may be or become interested in the Fund as a shareholder or
otherwise.
3. The Adviser will be compensated on the following basis for the services
and facilities to be furnished hereunder. The Adviser shall receive a
monthly management fee, payable monthly as soon as practicable after the
last day of each month, composed of a Group Fee and an Individual Fund Fee.
(a) Group Fee Rate. The Group Fee Rate shall be based upon the monthly
average of the net assets of the registered investment companies having
Advisory and Service or Management Contracts with the Adviser (computed in
the manner set forth in the fund's Declaration of Trust or other
organizational document) determined as of the close of business on each
business day throughout the month. The Group Fee Rate shall be determined
on a cumulative basis pursuant to the following schedule:
Average Net Assets Annualized Fee Rate (for each level)
0 - $ 3 billion .5200%
3 - 6 .4900
6 - 9 .4600
9 - 12 .4300
12 - 15 .4000
15 - 18 .3850
18 - 21 .3700
21 - 24 .3600
24 - 30 .3500
30 - 36 .3450
36 - 42 .3400
42 - 48 .3350
48 - 66 .3250
66 - 84 .3200
84 - 102 .3150
102 - 138 .3100
138 - 174 .3050
174 - 210 .3000
210 - 246 .2950
246 - 282 .2900
282 - 318 .2850
318 - 354 .2800
354 - 390 .2750
390 - 426 .2700
426 - 462 .2650
462 - 498 .2600
498 - 534 .2550
Over - 534 .2500
(b) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be .30%.
The sum of the Group Fee Rate, calculated as described above to the
nearest millionth, and the Individual Fund Fee Rate shall constitute the
Annual Management Fee Rate. One-twelfth of the Annual Management Fee Rate
shall be applied to the average of the net assets of the Portfolio
(computed in the manner set forth in the Fund's Declaration of Trust or
other organizational document) determined as of the close of business on
each business day throughout the month.
(c) In case of termination of this Contract during any month, the fee for
that month shall be reduced proportionately on the basis of the number of
business days during which it is in effect, and the fee computed upon the
average net assets for the business days it is so in effect for that month.
4. It is understood that the Portfolio will pay all its expenses, which
expenses payable by the Portfolio shall include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in
connection with the purchase or sale of securities and other investment
instruments; (iii) fees and expenses of the Fund's Trustees other than
those who are "interested persons" of the Fund or the Adviser; (iv) legal
and audit expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Fund and the Portfolio's shares for distribution under
state and federal securities laws; (vii) expenses of printing and mailing
reports and notices and proxy material to shareholders of the Portfolio;
(viii) all other expenses incidental to holding meetings of the Portfolio's
shareholders, including proxy solicitations therefor; (ix) a pro rata
share, based on relative net assets of the Portfolio and other registered
investment companies having Advisory and Service or Management Contracts
with the Adviser, of 50% of insurance premiums for fidelity and other
coverage; (x) its proportionate share of association membership dues; (xi)
expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (xii) expenses of printing
and mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a party
and the legal obligation which the Portfolio may have to indemnify the
Fund's Trustees and officers with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and engage
in other activities, provided, however, that such other services and
activities do not, during the term of this Contract, interfere, in a
material manner, with the Adviser's ability to meet all of its obligations
with respect to rendering services to the Portfolio hereunder. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Adviser,
the Adviser shall not be subject to liability to the Portfolio or to any
shareholder of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security or other
investment instrument.
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Contract shall continue in force until July 31, 1997
and indefinitely thereafter, but only so long as the continuance after such
date shall be specifically approved at least annually by vote of the
Trustees of the Fund or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Contract may be modified by mutual consent, such consent on the
part of the Fund to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph 6, the terms of any continuance or modification of this Contract
must have been approved by the vote of a majority of those Trustees of the
Fund who are not parties to the Contract or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval.
(d) Either party hereto may, at any time on sixty (60) days' prior written
notice to the other, terminate this Contract, without payment of any
penalty, by action of its Trustees or Board of Directors, as the case may
be, or with respect to the Portfolio by vote of a majority of the
outstanding voting securities of the Portfolio. This Contract shall
terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust or
other organizational document and agrees that the obligations assumed by
the Fund pursuant to this Contract shall be limited in all cases to the
Portfolio and its assets, and the Adviser shall not seek satisfaction of
any such obligation from the shareholders or any shareholder of the
Portfolio or any other Portfolios of the Fund. In addition, the Adviser
shall not seek satisfaction of any such obligations from the Trustees or
any individual Trustee. The Adviser understands that the rights and
obligations of any Portfolio under the Declaration of Trust or other
organizational document are separate and distinct from those of any and all
other Portfolios.
8. This Agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts, without giving effect to the
choice of laws provisions thereof.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as
hereafter amended, and subject to such orders as may be granted by the
Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized, and
their respective seals to be hereunto affixed, all as of the date written
above.
[SIGNATURE LINES OMITTED]
Exhibit 5(e)
Form of
MANAGEMENT CONTRACT
between
FIDELITY SELECT PORTFOLIOS:
NATURAL RESOURCES PORTFOLIO
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
AGREEMENT made this ___th day of _________ 1996, by and between Fidelity
Select Portfolios, a Massachusetts business trust which may issue one or
more series of shares of beneficial interest (hereinafter called the
"Fund"), on behalf of Natural Resources Portfolio (hereinafter called the
"Portfolio"), and Fidelity Management & Research Company, a Massachusetts
corporation (hereinafter called the "Adviser") as set forth in its entirety
below.
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the supervision
of the Fund's Board of Trustees, direct the investments of the Portfolio in
accordance with the investment objective, policies and limitations as
provided in the Portfolio's Prospectus or other governing instruments, as
amended from time to time, the Investment Company Act of 1940 and rules
thereunder, as amended from time to time (the "1940 Act"), and such other
limitations as the Portfolio may impose by notice in writing to the
Adviser. The Adviser shall also furnish for the use of the Portfolio
office space and all necessary office facilities, equipment and personnel
for servicing the investments of the Portfolio; and shall pay the salaries
and fees of all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all personnel of
the Fund or the Adviser performing services relating to research,
statistical and investment activities. The Adviser is authorized, in its
discretion and without prior consultation with the Portfolio, to buy, sell,
lend and otherwise trade in any stocks, bonds and other securities and
investment instruments on behalf of the Portfolio. The investment policies
and all other actions of the Portfolio are and shall at all times be
subject to the control and direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for the
performance by its affiliates of) the management and administrative
services necessary for the operation of the Fund. The Adviser shall,
subject to the supervision of the Board of Trustees, perform various
services for the Portfolio, including but not limited to: (i) providing the
Portfolio with office space, equipment and facilities (which may be its
own) for maintaining its organization; (ii) on behalf of the Portfolio,
supervising relations with, and monitoring the performance of, custodians,
depositories, transfer and pricing agents, accountants, attorneys,
underwriters, brokers and dealers, insurers and other persons in any
capacity deemed to be necessary or desirable; (iii) preparing all general
shareholder communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered, maintaining
the registration and qualification of the Portfolio's shares under federal
and state law; and (vii) investigating the development of and developing
and implementing, if appropriate, management and shareholder services
designed to enhance the value or convenience of the Portfolio as an
investment vehicle.
The Adviser shall also furnish such reports, evaluations, information or
analyses to the Fund as the Fund's Board of Trustees may request from time
to time or as the Adviser may deem to be desirable. The Adviser shall make
recommendations to the Fund's Board of Trustees with respect to Fund
policies, and shall carry out such policies as are adopted by the Trustees.
The Adviser shall, subject to review by the Board of Trustees, furnish such
other services as the Adviser shall from time to time determine to be
necessary or useful to perform its obligations under this Contract.
(c) The Adviser shall place all orders for the purchase and sale of
portfolio securities for the Portfolio's account with brokers or dealers
selected by the Adviser, which may include brokers or dealers affiliated
with the Adviser. The Adviser shall use its best efforts to seek to
execute portfolio transactions at prices which are advantageous to the
Portfolio and at commission rates which are reasonable in relation to the
benefits received. In selecting brokers or dealers qualified to execute a
particular transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to the Portfolio and/or the
other accounts over which the Adviser or its affiliates exercise investment
discretion. The Adviser is authorized to pay a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for the Portfolio which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Adviser determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This determination
may be viewed in terms of either that particular transaction or the overall
responsibilities which the Adviser and its affiliates have with respect to
accounts over which they exercise investment discretion. The Trustees of
the Fund shall periodically review the commissions paid by the Portfolio to
determine if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor. The
Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of the
Fund are or may be or become interested in the Adviser as directors,
officers or otherwise and that directors, officers and stockholders of the
Adviser are or may be or become similarly interested in the Fund, and that
the Adviser may be or become interested in the Fund as a shareholder or
otherwise.
3. The Adviser will be compensated on the following basis for the services
and facilities to be furnished hereunder. The Adviser shall receive a
monthly management fee, payable monthly as soon as practicable after the
last day of each month, composed of a Group Fee and an Individual Fund Fee.
(a) Group Fee Rate. The Group Fee Rate shall be based upon the monthly
average of the net assets of the registered investment companies having
Advisory and Service or Management Contracts with the Adviser (computed in
the manner set forth in the fund's Declaration of Trust or other
organizational document) determined as of the close of business on each
business day throughout the month. The Group Fee Rate shall be determined
on a cumulative basis pursuant to the following schedule:
Average Net Assets Annualized Fee Rate (for each level)
0 - $ 3 billion .5200%
3 - 6 .4900
6 - 9 .4600
9 - 12 .4300
12 - 15 .4000
15 - 18 .3850
18 - 21 .3700
21 - 24 .3600
24 - 30 .3500
30 - 36 .3450
36 - 42 .3400
42 - 48 .3350
48 - 66 .3250
66 - 84 .3200
84 - 102 .3150
102 - 138 .3100
138 - 174 .3050
174 - 210 .3000
210 - 246 .2950
246 - 282 .2900
282 - 318 .2850
318 - 354 .2800
354 - 390 .2750
390 - 426 .2700
426 - 462 .2650
462 - 498 .2600
498 - 534 .2550
Over - 534 .2500
(b) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be .30%.
The sum of the Group Fee Rate, calculated as described above to the
nearest millionth, and the Individual Fund Fee Rate shall constitute the
Annual Management Fee Rate. One-twelfth of the Annual Management Fee Rate
shall be applied to the average of the net assets of the Portfolio
(computed in the manner set forth in the Fund's Declaration of Trust or
other organizational document) determined as of the close of business on
each business day throughout the month.
(c) In case of termination of this Contract during any month, the fee for
that month shall be reduced proportionately on the basis of the number of
business days during which it is in effect, and the fee computed upon the
average net assets for the business days it is so in effect for that month.
4. It is understood that the Portfolio will pay all its expenses, which
expenses payable by the Portfolio shall include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in
connection with the purchase or sale of securities and other investment
instruments; (iii) fees and expenses of the Fund's Trustees other than
those who are "interested persons" of the Fund or the Adviser; (iv) legal
and audit expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Fund and the Portfolio's shares for distribution under
state and federal securities laws; (vii) expenses of printing and mailing
reports and notices and proxy material to shareholders of the Portfolio;
(viii) all other expenses incidental to holding meetings of the Portfolio's
shareholders, including proxy solicitations therefor; (ix) a pro rata
share, based on relative net assets of the Portfolio and other registered
investment companies having Advisory and Service or Management Contracts
with the Adviser, of 50% of insurance premiums for fidelity and other
coverage; (x) its proportionate share of association membership dues; (xi)
expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (xii) expenses of printing
and mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a party
and the legal obligation which the Portfolio may have to indemnify the
Fund's Trustees and officers with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and engage
in other activities, provided, however, that such other services and
activities do not, during the term of this Contract, interfere, in a
material manner, with the Adviser's ability to meet all of its obligations
with respect to rendering services to the Portfolio hereunder. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Adviser,
the Adviser shall not be subject to liability to the Portfolio or to any
shareholder of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security or other
investment instrument.
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Contract shall continue in force until July 31, 1997
and indefinitely thereafter, but only so long as the continuance after such
date shall be specifically approved at least annually by vote of the
Trustees of the Fund or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Contract may be modified by mutual consent, such consent on the
part of the Fund to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph 6, the terms of any continuance or modification of this Contract
must have been approved by the vote of a majority of those Trustees of the
Fund who are not parties to the Contract or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval.
(d) Either party hereto may, at any time on sixty (60) days' prior written
notice to the other, terminate this Contract, without payment of any
penalty, by action of its Trustees or Board of Directors, as the case may
be, or with respect to the Portfolio by vote of a majority of the
outstanding voting securities of the Portfolio. This Contract shall
terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust or
other organizational document and agrees that the obligations assumed by
the Fund pursuant to this Contract shall be limited in all cases to the
Portfolio and its assets, and the Adviser shall not seek satisfaction of
any such obligation from the shareholders or any shareholder of the
Portfolio or any other Portfolios of the Fund. In addition, the Adviser
shall not seek satisfaction of any such obligations from the Trustees or
any individual Trustee. The Adviser understands that the rights and
obligations of any Portfolio under the Declaration of Trust or other
organizational document are separate and distinct from those of any and all
other Portfolios.
8. This Agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts, without giving effect to the
choice of laws provisions thereof.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as
hereafter amended, and subject to such orders as may be granted by the
Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized, and
their respective seals to be hereunto affixed, all as of the date written
above.
[SIGNATURE LINES OMITTED.]
Exhibit 5(f)
FORM OF
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (U.K.) INC.
AND
FIDELITY SELECT PORTFOLIOS ON BEHALF OF CYCLICAL INDUSTRIES PORTFOLIO
AGREEMENT made this ___th day of _________, 1996, by and between Fidelity
Management & Research Company, a Massachusetts corporation with principal
offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called
the "Advisor"); Fidelity Management & Research (U.K.) Inc. (hereinafter
called the "Sub-Advisor"); and Fidelity Select Portfolios, a Massachusetts
business trust which may issue one or more series of shares of beneficial
interest (hereinafter called the "Trust") on behalf of Cyclical Industries
Portfolio (hereinafter called the "Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management Contract
on behalf of the Portfolio, pursuant to which the Advisor is to act as
investment manager of the Portfolio; and
WHEREAS the Sub-Advisor and its subsidiaries and other affiliated persons
have personnel in various locations throughout the world and have been
formed in part for the purpose of researching and compiling information and
recommendations with respect to the economies of various countries, and
securities of issuers located in such countries, and providing investment
advisory services in connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the Trust, the Advisor and the Sub-Advisor agree as
follows:
1. Duties: The Advisor may, in its discretion, appoint the Sub-Advisor
to perform one or more of the following services with respect to all or a
portion of the investments of the Portfolio. The services and the portion
of the investments of the Portfolio to be advised or managed by the
Sub-Advisor shall be as agreed upon from time to time by the Advisor and
the Sub-Advisor. The Sub-Advisor shall pay the salaries and fees of all
personnel of the Sub-Advisor performing services for the Portfolio relating
to research, statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the Advisor, the
Sub-Advisor shall provide investment advice to the Portfolio and the
Advisor with respect to all or a portion of the investments of the
Portfolio, and in connection with such advice shall furnish the Portfolio
and the Advisor such factual information, research reports and investment
recommendations as the Advisor may reasonably require. Such information
may include written and oral reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the Advisor,
the Sub-Advisor shall, subject to the supervision of the Advisor, manage
all or a portion of the investments of the Portfolio in accordance with the
investment objective, policies and limitations provided in the Portfolio's
Prospectus or other governing instruments, as amended from time to time,
the Investment Company Act of 1940 (the "1940 Act") and rules thereunder,
as amended from time to time, and such other limitations as the Trust or
Advisor may impose with respect to the Portfolio by notice to the
Sub-Advisor. With respect to the portion of the investments of the
Portfolio under its management, the Sub-Advisor is authorized to make
investment decisions on behalf of the Portfolio with regard to any stock,
bond, other security or investment instrument, and to place orders for the
purchase and sale of such securities through such broker-dealers as the
Sub-Advisor may select. The Sub-Advisor may also be authorized, but only
to the extent such duties are delegated in writing by the Advisor, to
provide additional investment management services to the Portfolio,
including but not limited to services such as managing foreign currency
investments, purchasing and selling or writing futures and options
contracts, borrowing money or lending securities on behalf of the
Portfolio. All investment management and any other activities of the
Sub-Advisor shall at all times be subject to the control and direction of
the Advisor and the Trust's Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or all
of the services contemplated by this Agreement directly or through such of
its subsidiaries or other affiliated persons as the Sub-Advisor shall
determine; provided, however, that performance of such services through
such subsidiaries or other affiliated persons shall have been approved by
the Trust to the extent required pursuant to the 1940 Act and rules
thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees or
the Advisor may reasonably request from time to time, or as the Sub-Advisor
may deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor shall
place all orders for the purchase and sale of portfolio securities for the
Portfolio's account with brokers or dealers selected by the Sub-Advisor,
which may include brokers or dealers affiliated with the Advisor or
Sub-Advisor. The Sub-Advisor shall use its best efforts to seek to execute
portfolio transactions at prices which are advantageous to the Portfolio
and at commission rates which are reasonable in relation to the benefits
received. In selecting brokers or dealers qualified to execute a
particular transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of l934) to the Portfolio and/or to
the other accounts over which the Sub-Advisor or Advisor exercise
investment discretion. The Sub-Advisor is authorized to pay a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Sub-Advisor determines in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular transaction
or the overall responsibilities which the Sub-Advisor has with respect to
accounts over which it exercises investment discretion. The Trustees of
the Trust shall periodically review the commissions paid by the Portfolio
to determine if the commissions paid over representative periods of time
were reasonable in relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under subparagraph (a)
of paragraph 1 of this Agreement, the Advisor agrees to pay the Sub-Advisor
a monthly Sub-Advisory Fee. The Sub-Advisory Fee shall be equal to 110% of
the Sub-Advisor's costs incurred in connection with rendering the services
referred to in subparagraph (a) of paragraph 1 of this Agreement. The
Sub-Advisory Fee shall not be reduced to reflect expense reimbursements or
fee waivers by the Advisor, if any, in effect from time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Investment Management Fee. The Investment Management
Fee shall be equal to: (i) 50% of the monthly management fee rate
(including performance adjustments, if any) that the Portfolio is obligated
to pay the Advisor under its Management Contract with the Advisor,
multiplied by: (ii) the fraction equal to the net assets of the Portfolio
as to which the Sub-Advisor shall have provided investment management
services divided by the net assets of the Portfolio for that month. If in
any fiscal year the aggregate expenses of the Portfolio exceed any
applicable expense limitation imposed by any state or federal securities
laws or regulations, and the Advisor waives all or a portion of its
management fee or reimburses the Portfolio for expenses to the extent
required to satisfy such limitation, the Investment Management Fee paid to
the Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements and
the Advisor subsequently recovers all or any portion of such waivers or
reimbursements, then the Sub-Advisor shall be entitled to receive from the
Advisor a proportionate share of the amount recovered. To the extent that
waivers and reimbursements by the Advisor required by such limitations are
in excess of the Advisor's management fee, the Investment Management Fee
paid to the Sub-Advisor will be reduced to zero for that month, but in no
event shall the Sub-Advisor be required to reimburse the Advisor for all or
a portion of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph (1) for
the same portion of the investments of the Portfolio for the same period,
the fees paid to the Sub-Advisor with respect to such investments shall be
calculated exclusively under subparagraph (b) of this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the Sub-Advisor
hereunder or by the Advisor under the Management Contract with the
Portfolio, which expenses payable by the Portfolio shall include, without
limitation, (i) interest and taxes; (ii) brokerage commissions and other
costs in connection with the purchase or sale of securities and other
investment instruments; (iii) fees and expenses of the Trust's Trustees
other than those who are "interested persons" of the Trust, the Sub-Advisor
or the Advisor; (iv) legal and audit expenses; (v) custodian, registrar and
transfer agent fees and expenses; (vi) fees and expenses related to the
registration and qualification of the Trust and the Portfolio's shares for
distribution under state and federal securities laws; (vii) expenses of
printing and mailing reports and notices and proxy material to shareholders
of the Portfolio; (viii) all other expenses incidental to holding meetings
of the Portfolio's shareholders, including proxy solicitations therefore;
(ix) a pro rata share, based on relative net assets of the Portfolio and
other registered investment companies having Advisory and Service or
Management Contracts with the Advisor, of 50% of insurance premiums for
fidelity and other coverage; (x) its proportionate share of association
membership dues; (xi) expenses of typesetting for printing Prospectuses and
Statements of Additional Information and supplements thereto; (xii)
expenses of printing and mailing Prospectuses and Statements of Additional
Information and supplements thereto sent to existing shareholders; and
(xiii) such non-recurring or extraordinary expenses as may arise, including
those relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to indemnify
the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers, and
shareholders of the Trust are or may be or become interested in the Advisor
or the Sub-Advisor as directors, officers or otherwise and that directors,
officers and stockholders of the Advisor or the Sub-Advisor are or may be
or become similarly interested in the Trust, and that the Advisor or the
Sub-Advisor may be or become interested in the Trust as a shareholder or
otherwise.
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in other
activities, provided, however, that such other services and activities do
not, during the term of this Agreement, interfere, in a material manner,
with the Sub-Advisor's ability to meet all of its obligations hereunder.
The Sub-Advisor shall for all purposes be an independent contractor and not
an agent or employee of the Advisor or the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties hereunder
on the part of the Sub-Advisor, the Sub-Advisor shall not be subject to
liability to the Advisor, the Trust or to any shareholder of the Portfolio
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the purchase,
holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of this
paragraph 9, this Agreement shall continue in force until July 31, 1997 and
indefinitely thereafter, but only so long as the continuance after such
period shall be specifically approved at least annually by vote of the
Trust's Board of Trustees or by vote of a majority of the outstanding
voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor, the
Sub-Advisor and the Portfolio, such consent on the part of the Portfolio to
be authorized by vote of a majority of the outstanding voting securities of
the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of this
paragraph 9, the terms of any continuance or modification of this Agreement
must have been approved by the vote of a majority of those Trustees of the
Trust who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any time
on sixty (60) days' prior written notice to the other parties, terminate
this Agreement, without payment of any penalty, by action of its Board of
Trustees or Directors, or with respect to the Portfolio by vote of a
majority of its outstanding voting securities. This Agreement shall
terminate automatically in the event of its assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly put on
notice of the limitation of shareholder liability as set forth in the
Declaration of Trust or other organizational document of the Trust and
agrees that any obligations of the Trust or the Portfolio arising in
connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-Advisor shall not seek satisfaction
of any such obligation from the shareholders or any shareholder of the
Portfolio. Nor shall the Sub-Advisor seek satisfaction of any such
obligation from the Trustees or any individual Trustee.
11. Governing Law: This Agreement shall be governed by, and construed
in accordance with, the laws of the Commonwealth of Massachusetts, without
giving effect to the choice of laws provisions thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons,"
when used herein, shall have the respective meanings specified in the 1940
Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as of
the date written above.
[SIGNATURE LINES OMITTED.]
Exhibit 5(g)
FORM OF
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
AND
FIDELITY SELECT PORTFOLIOS ON BEHALF OF CYCLICAL INDUSTRIES PORTFOLIO
AGREEMENT made this ___th day of __________, 1996, by and between Fidelity
Management & Research Company, a Massachusetts corporation with principal
offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called
the "Advisor"); Fidelity Management & Research (Far East) Inc. (hereinafter
called the "Sub-Advisor"); and Fidelity Select Portfolios, a Massachusetts
business trust which may issue one or more series of shares of beneficial
interest (hereinafter called the "Trust") on behalf of Cyclical Industries
Portfolio (hereinafter called the "Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management Contract
on behalf of the Portfolio, pursuant to which the Advisor is to act as
investment manager of the Portfolio; and
WHEREAS the Sub-Advisor and its subsidiaries and other affiliated persons
have personnel in various locations throughout the world and have been
formed in part for the purpose of researching and compiling information and
recommendations with respect to the economies of various countries, and
securities of issuers located in such countries, and providing investment
advisory services in connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the Trust, the Advisor and the Sub-Advisor agree as
follows:
1. Duties: The Advisor may, in its discretion, appoint the Sub-Advisor
to perform one or more of the following services with respect to all or a
portion of the investments of the Portfolio. The services and the portion
of the investments of the Portfolio to be advised or managed by the
Sub-Advisor shall be as agreed upon from time to time by the Advisor and
the Sub-Advisor. The Sub-Advisor shall pay the salaries and fees of all
personnel of the Sub-Advisor performing services for the Portfolio relating
to research, statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the Advisor, the
Sub-Advisor shall provide investment advice to the Portfolio and the
Advisor with respect to all or a portion of the investments of the
Portfolio, and in connection with such advice shall furnish the Portfolio
and the Advisor such factual information, research reports and investment
recommendations as the Advisor may reasonably require. Such information
may include written and oral reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the Advisor,
the Sub-Advisor shall, subject to the supervision of the Advisor, manage
all or a portion of the investments of the Portfolio in accordance with the
investment objective, policies and limitations provided in the Portfolio's
Prospectus or other governing instruments, as amended from time to time,
the Investment Company Act of 1940 (the "1940 Act") and rules thereunder,
as amended from time to time, and such other limitations as the Trust or
Advisor may impose with respect to the Portfolio by notice to the
Sub-Advisor. With respect to the portion of the investments of the
Portfolio under its management, the Sub-Advisor is authorized to make
investment decisions on behalf of the Portfolio with regard to any stock,
bond, other security or investment instrument, and to place orders for the
purchase and sale of such securities through such broker-dealers as the
Sub-Advisor may select. The Sub-Advisor may also be authorized, but only
to the extent such duties are delegated in writing by the Advisor, to
provide additional investment management services to the Portfolio,
including but not limited to services such as managing foreign currency
investments, purchasing and selling or writing futures and options
contracts, borrowing money, or lending securities on behalf of the
Portfolio. All investment management and any other activities of the
Sub-Advisor shall at all times be subject to the control and direction of
the Advisor and the Trust's Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or all
of the services contemplated by this Agreement directly or through such of
its subsidiaries or other affiliated persons as the Sub-Advisor shall
determine; provided, however, that performance of such services through
such subsidiaries or other affiliated persons shall have been approved by
the Trust to the extent required pursuant to the 1940 Act and rules
thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees or
the Advisor may reasonably request from time to time, or as the Sub-Advisor
may deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor shall
place all orders for the purchase and sale of portfolio securities for the
Portfolio's account with brokers or dealers selected by the Sub-Advisor,
which may include brokers or dealers affiliated with the Advisor or
Sub-Advisor. The Sub-Advisor shall use its best efforts to seek to execute
portfolio transactions at prices which are advantageous to the Portfolio
and at commission rates which are reasonable in relation to the benefits
received. In selecting brokers or dealers qualified to execute a
particular transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of l934) to the Portfolio and/or to
the other accounts over which the Sub-Advisor or Advisor exercise
investment discretion. The Sub-Advisor is authorized to pay a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Sub-Advisor determines in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular transaction
or the overall responsibilities which the Sub-Advisor has with respect to
accounts over which it exercises investment discretion. The Trustees of
the Trust shall periodically review the commissions paid by the Portfolio
to determine if the commissions paid over representative periods of time
were reasonable in relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under subparagraph (a)
of paragraph 1 of this Agreement, the Advisor agrees to pay the Sub-Advisor
a monthly Sub-Advisory Fee. The Sub-Advisory Fee shall be equal to 105% of
the Sub-Advisor's costs incurred in connection with rendering the services
referred to in subparagraph (a) of paragraph 1 of this Agreement. The
Sub-Advisory Fee shall not be reduced to reflect expense reimbursements or
fee waivers by the Advisor, if any, in effect from time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Investment Management Fee. The Investment Management
Fee shall be equal to: (i) 50% of the monthly management fee rate
(including performance adjustments, if any) that the Portfolio is obligated
to pay the Advisor under its Management Contract with the Advisor,
multiplied by: (ii) the fraction equal to the net assets of the Portfolio
as to which the Sub-Advisor shall have provided investment management
services divided by the net assets of the Portfolio for that month. If in
any fiscal year the aggregate expenses of the Portfolio exceed any
applicable expense limitation imposed by any state or federal securities
laws or regulations, and the Advisor waives all or a portion of its
management fee or reimburses the Portfolio for expenses to the extent
required to satisfy such limitation, the Investment Management Fee paid to
the Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements and
the Advisor subsequently recovers all or any portion of such waivers and
reimbursements, then the Sub-Advisor shall be entitled to receive from the
Advisor a proportionate share of the amount recovered. To the extent that
waivers and reimbursements by the Advisor required by such limitations are
in excess of the Advisor's management fee, the Investment Management Fee
paid to the Sub-Advisor will be reduced to zero for that month, but in no
event shall the Sub-Advisor be required to reimburse the Advisor for all or
a portion of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1 for
the same portion of the investments of the Portfolio for the same period,
the fees paid to the Sub-Advisor with respect to such investments shall be
calculated exclusively under subparagraph (b) of this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the Sub-Advisor
hereunder or by the Advisor under the Management Contract with the
Portfolio, which expenses payable by the Portfolio shall include, without
limitation, (i) interest and taxes; (ii) brokerage commissions and other
costs in connection with the purchase or sale of securities and other
investment instruments; (iii) fees and expenses of the Trust's Trustees
other than those who are "interested persons" of the Trust, the Sub-Advisor
or the Advisor; (iv) legal and audit expenses; (v) custodian, registrar and
transfer agent fees and expenses; (vi) fees and expenses related to the
registration and qualification of the Trust and the Portfolio's shares for
distribution under state and federal securities laws; (vii) expenses of
printing and mailing reports and notices and proxy material to shareholders
of the Portfolio; (viii) all other expenses incidental to holding meetings
of the Portfolio's shareholders, including proxy solicitations therefore;
(ix) a pro rata share, based on relative net assets of the Portfolio and
other registered investment companies having Advisory and Service or
Management Contracts with the Advisor, of 50% of insurance premiums for
fidelity and other coverage; (x) its proportionate share of association
membership dues; (xi) expenses of typesetting for printing Prospectuses and
Statements of Additional Information and supplements thereto; (xii)
expenses of printing and mailing Prospectuses and Statements of Additional
Information and supplements thereto sent to existing shareholders; and
(xiii) such non-recurring or extraordinary expenses as may arise, including
those relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to indemnify
the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers, and
shareholders of the Trust are or may be or become interested in the Advisor
or the Sub-Advisor as directors, officers or otherwise and that directors,
officers and stockholders of the Advisor or the Sub-Advisor are or may be
or become similarly interested in the Trust, and that the Advisor or the
Sub-Advisor may be or become interested in the Trust as a shareholder or
otherwise.
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in other
activities, provided, however, that such other services and activities do
not, during the term of this Agreement, interfere, in a material manner,
with the Sub-Advisor's ability to meet all of its obligations hereunder.
The Sub-Advisor shall for all purposes be an independent contractor and not
an agent or employee of the Advisor or the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties hereunder
on the part of the Sub-Advisor, the Sub-Advisor shall not be subject to
liability to the Advisor, the Trust or to any shareholder of the Portfolio
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the purchase,
holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of this
paragraph 9, this Agreement shall continue in force until July 31, 1997
and indefinitely thereafter, but only so long as the continuance after such
period shall be specifically approved at least annually by vote of the
Trust's Board of Trustees or by vote of a majority of the outstanding
voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor, the
Sub-Advisor and the Portfolio, such consent on the part of the Portfolio to
be authorized by vote of a majority of the outstanding voting securities of
the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of this
paragraph 9, the terms of any continuance or modification of this Agreement
must have been approved by the vote of a majority of those Trustees of the
Trust who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any time
on sixty (60) days' prior written notice to the other parties, terminate
this Agreement, without payment of any penalty, by action of its Board of
Trustees or Directors, or with respect to the Portfolio by vote of a
majority of its outstanding voting securities. This Agreement shall
terminate automatically in the event of its assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly put on
notice of the limitation of shareholder liability as set forth in the
Declaration of Trust or other organizational document of the Trust and
agrees that any obligations of the Trust or the Portfolio arising in
connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-Advisor shall not seek satisfaction
of any such obligation from the shareholders or any shareholder of the
Portfolio. Nor shall the Sub-Advisor seek satisfaction of any such
obligation from the Trustees or any individual Trustee.
11. Governing Law: This Agreement shall be governed by, and construed
in accordance with, the laws of the Commonwealth of Massachusetts, without
giving effect to the choice of laws provisions thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons,"
when used herein, shall have the respective meanings specified in the 1940
Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as of
the date written above.
[SIGNATURE LINES OMITTED.]
Exhibit 5(h)
FORM OF
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (U.K.) INC.
AND
FIDELITY SELECT PORTFOLIOS ON BEHALF OF NATURAL RESOURCES PORTFOLIO
AGREEMENT made this ___th day of _________, 1996, by and between Fidelity
Management & Research Company, a Massachusetts corporation with principal
offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called
the "Advisor"); Fidelity Management & Research (U.K.) Inc. (hereinafter
called the "Sub-Advisor"); and Fidelity Select Portfolios, a Massachusetts
business trust which may issue one or more series of shares of beneficial
interest (hereinafter called the "Trust") on behalf of Natural Resources
Portfolio (hereinafter called the "Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management Contract
on behalf of the Portfolio, pursuant to which the Advisor is to act as
investment manager of the Portfolio; and
WHEREAS the Sub-Advisor and its subsidiaries and other affiliated persons
have personnel in various locations throughout the world and have been
formed in part for the purpose of researching and compiling information and
recommendations with respect to the economies of various countries, and
securities of issuers located in such countries, and providing investment
advisory services in connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the Trust, the Advisor and the Sub-Advisor agree as
follows:
1. Duties: The Advisor may, in its discretion, appoint the Sub-Advisor
to perform one or more of the following services with respect to all or a
portion of the investments of the Portfolio. The services and the portion
of the investments of the Portfolio to be advised or managed by the
Sub-Advisor shall be as agreed upon from time to time by the Advisor and
the Sub-Advisor. The Sub-Advisor shall pay the salaries and fees of all
personnel of the Sub-Advisor performing services for the Portfolio relating
to research, statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the Advisor, the
Sub-Advisor shall provide investment advice to the Portfolio and the
Advisor with respect to all or a portion of the investments of the
Portfolio, and in connection with such advice shall furnish the Portfolio
and the Advisor such factual information, research reports and investment
recommendations as the Advisor may reasonably require. Such information
may include written and oral reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the Advisor,
the Sub-Advisor shall, subject to the supervision of the Advisor, manage
all or a portion of the investments of the Portfolio in accordance with the
investment objective, policies and limitations provided in the Portfolio's
Prospectus or other governing instruments, as amended from time to time,
the Investment Company Act of 1940 (the "1940 Act") and rules thereunder,
as amended from time to time, and such other limitations as the Trust or
Advisor may impose with respect to the Portfolio by notice to the
Sub-Advisor. With respect to the portion of the investments of the
Portfolio under its management, the Sub-Advisor is authorized to make
investment decisions on behalf of the Portfolio with regard to any stock,
bond, other security or investment instrument, and to place orders for the
purchase and sale of such securities through such broker-dealers as the
Sub-Advisor may select. The Sub-Advisor may also be authorized, but only
to the extent such duties are delegated in writing by the Advisor, to
provide additional investment management services to the Portfolio,
including but not limited to services such as managing foreign currency
investments, purchasing and selling or writing futures and options
contracts, borrowing money or lending securities on behalf of the
Portfolio. All investment management and any other activities of the
Sub-Advisor shall at all times be subject to the control and direction of
the Advisor and the Trust's Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or all
of the services contemplated by this Agreement directly or through such of
its subsidiaries or other affiliated persons as the Sub-Advisor shall
determine; provided, however, that performance of such services through
such subsidiaries or other affiliated persons shall have been approved by
the Trust to the extent required pursuant to the 1940 Act and rules
thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees or
the Advisor may reasonably request from time to time, or as the Sub-Advisor
may deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor shall
place all orders for the purchase and sale of portfolio securities for the
Portfolio's account with brokers or dealers selected by the Sub-Advisor,
which may include brokers or dealers affiliated with the Advisor or
Sub-Advisor. The Sub-Advisor shall use its best efforts to seek to execute
portfolio transactions at prices which are advantageous to the Portfolio
and at commission rates which are reasonable in relation to the benefits
received. In selecting brokers or dealers qualified to execute a
particular transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of l934) to the Portfolio and/or to
the other accounts over which the Sub-Advisor or Advisor exercise
investment discretion. The Sub-Advisor is authorized to pay a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Sub-Advisor determines in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular transaction
or the overall responsibilities which the Sub-Advisor has with respect to
accounts over which it exercises investment discretion. The Trustees of
the Trust shall periodically review the commissions paid by the Portfolio
to determine if the commissions paid over representative periods of time
were reasonable in relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under subparagraph (a)
of paragraph 1 of this Agreement, the Advisor agrees to pay the Sub-Advisor
a monthly Sub-Advisory Fee. The Sub-Advisory Fee shall be equal to 110% of
the Sub-Advisor's costs incurred in connection with rendering the services
referred to in subparagraph (a) of paragraph 1 of this Agreement. The
Sub-Advisory Fee shall not be reduced to reflect expense reimbursements or
fee waivers by the Advisor, if any, in effect from time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Investment Management Fee. The Investment Management
Fee shall be equal to: (i) 50% of the monthly management fee rate
(including performance adjustments, if any) that the Portfolio is obligated
to pay the Advisor under its Management Contract with the Advisor,
multiplied by: (ii) the fraction equal to the net assets of the Portfolio
as to which the Sub-Advisor shall have provided investment management
services divided by the net assets of the Portfolio for that month. If in
any fiscal year the aggregate expenses of the Portfolio exceed any
applicable expense limitation imposed by any state or federal securities
laws or regulations, and the Advisor waives all or a portion of its
management fee or reimburses the Portfolio for expenses to the extent
required to satisfy such limitation, the Investment Management Fee paid to
the Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements and
the Advisor subsequently recovers all or any portion of such waivers or
reimbursements, then the Sub-Advisor shall be entitled to receive from the
Advisor a proportionate share of the amount recovered. To the extent that
waivers and reimbursements by the Advisor required by such limitations are
in excess of the Advisor's management fee, the Investment Management Fee
paid to the Sub-Advisor will be reduced to zero for that month, but in no
event shall the Sub-Advisor be required to reimburse the Advisor for all or
a portion of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph (1) for
the same portion of the investments of the Portfolio for the same period,
the fees paid to the Sub-Advisor with respect to such investments shall be
calculated exclusively under subparagraph (b) of this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the Sub-Advisor
hereunder or by the Advisor under the Management Contract with the
Portfolio, which expenses payable by the Portfolio shall include, without
limitation, (i) interest and taxes; (ii) brokerage commissions and other
costs in connection with the purchase or sale of securities and other
investment instruments; (iii) fees and expenses of the Trust's Trustees
other than those who are "interested persons" of the Trust, the Sub-Advisor
or the Advisor; (iv) legal and audit expenses; (v) custodian, registrar and
transfer agent fees and expenses; (vi) fees and expenses related to the
registration and qualification of the Trust and the Portfolio's shares for
distribution under state and federal securities laws; (vii) expenses of
printing and mailing reports and notices and proxy material to shareholders
of the Portfolio; (viii) all other expenses incidental to holding meetings
of the Portfolio's shareholders, including proxy solicitations therefore;
(ix) a pro rata share, based on relative net assets of the Portfolio and
other registered investment companies having Advisory and Service or
Management Contracts with the Advisor, of 50% of insurance premiums for
fidelity and other coverage; (x) its proportionate share of association
membership dues; (xi) expenses of typesetting for printing Prospectuses and
Statements of Additional Information and supplements thereto; (xii)
expenses of printing and mailing Prospectuses and Statements of Additional
Information and supplements thereto sent to existing shareholders; and
(xiii) such non-recurring or extraordinary expenses as may arise, including
those relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to indemnify
the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers, and
shareholders of the Trust are or may be or become interested in the Advisor
or the Sub-Advisor as directors, officers or otherwise and that directors,
officers and stockholders of the Advisor or the Sub-Advisor are or may be
or become similarly interested in the Trust, and that the Advisor or the
Sub-Advisor may be or become interested in the Trust as a shareholder or
otherwise.
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in other
activities, provided, however, that such other services and activities do
not, during the term of this Agreement, interfere, in a material manner,
with the Sub-Advisor's ability to meet all of its obligations hereunder.
The Sub-Advisor shall for all purposes be an independent contractor and not
an agent or employee of the Advisor or the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties hereunder
on the part of the Sub-Advisor, the Sub-Advisor shall not be subject to
liability to the Advisor, the Trust or to any shareholder of the Portfolio
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the purchase,
holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of this
paragraph 9, this Agreement shall continue in force until July 31, 1997 and
indefinitely thereafter, but only so long as the continuance after such
period shall be specifically approved at least annually by vote of the
Trust's Board of Trustees or by vote of a majority of the outstanding
voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor, the
Sub-Advisor and the Portfolio, such consent on the part of the Portfolio to
be authorized by vote of a majority of the outstanding voting securities of
the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of this
paragraph 9, the terms of any continuance or modification of this Agreement
must have been approved by the vote of a majority of those Trustees of the
Trust who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any time
on sixty (60) days' prior written notice to the other parties, terminate
this Agreement, without payment of any penalty, by action of its Board of
Trustees or Directors, or with respect to the Portfolio by vote of a
majority of its outstanding voting securities. This Agreement shall
terminate automatically in the event of its assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly put on
notice of the limitation of shareholder liability as set forth in the
Declaration of Trust or other organizational document of the Trust and
agrees that any obligations of the Trust or the Portfolio arising in
connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-Advisor shall not seek satisfaction
of any such obligation from the shareholders or any shareholder of the
Portfolio. Nor shall the Sub-Advisor seek satisfaction of any such
obligation from the Trustees or any individual Trustee.
11. Governing Law: This Agreement shall be governed by, and construed
in accordance with, the laws of the Commonwealth of Massachusetts, without
giving effect to the choice of laws provisions thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons,"
when used herein, shall have the respective meanings specified in the 1940
Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as of
the date written above.
[SIGNATURE LINES OMITTED.]
Exhibit 5(i)
FORM OF
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
AND
FIDELITY SELECT PORTFOLIOS ON BEHALF OF NATURAL RESOURCES PORTFOLIO
AGREEMENT made this ___th day of _________, 1996, by and between Fidelity
Management & Research Company, a Massachusetts corporation with principal
offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called
the "Advisor"); Fidelity Management & Research (Far East) Inc. (hereinafter
called the "Sub-Advisor"); and Fidelity Select Portfolios, a Massachusetts
business trust which may issue one or more series of shares of beneficial
interest (hereinafter called the "Trust") on behalf of Natural Resources
Portfolio (hereinafter called the "Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management Contract
on behalf of the Portfolio, pursuant to which the Advisor is to act as
investment manager of the Portfolio; and
WHEREAS the Sub-Advisor and its subsidiaries and other affiliated persons
have personnel in various locations throughout the world and have been
formed in part for the purpose of researching and compiling information and
recommendations with respect to the economies of various countries, and
securities of issuers located in such countries, and providing investment
advisory services in connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the Trust, the Advisor and the Sub-Advisor agree as
follows:
1. Duties: The Advisor may, in its discretion, appoint the Sub-Advisor
to perform one or more of the following services with respect to all or a
portion of the investments of the Portfolio. The services and the portion
of the investments of the Portfolio to be advised or managed by the
Sub-Advisor shall be as agreed upon from time to time by the Advisor and
the Sub-Advisor. The Sub-Advisor shall pay the salaries and fees of all
personnel of the Sub-Advisor performing services for the Portfolio relating
to research, statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the Advisor, the
Sub-Advisor shall provide investment advice to the Portfolio and the
Advisor with respect to all or a portion of the investments of the
Portfolio, and in connection with such advice shall furnish the Portfolio
and the Advisor such factual information, research reports and investment
recommendations as the Advisor may reasonably require. Such information
may include written and oral reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the Advisor,
the Sub-Advisor shall, subject to the supervision of the Advisor, manage
all or a portion of the investments of the Portfolio in accordance with the
investment objective, policies and limitations provided in the Portfolio's
Prospectus or other governing instruments, as amended from time to time,
the Investment Company Act of 1940 (the "1940 Act") and rules thereunder,
as amended from time to time, and such other limitations as the Trust or
Advisor may impose with respect to the Portfolio by notice to the
Sub-Advisor. With respect to the portion of the investments of the
Portfolio under its management, the Sub-Advisor is authorized to make
investment decisions on behalf of the Portfolio with regard to any stock,
bond, other security or investment instrument, and to place orders for the
purchase and sale of such securities through such broker-dealers as the
Sub-Advisor may select. The Sub-Advisor may also be authorized, but only
to the extent such duties are delegated in writing by the Advisor, to
provide additional investment management services to the Portfolio,
including but not limited to services such as managing foreign currency
investments, purchasing and selling or writing futures and options
contracts, borrowing money, or lending securities on behalf of the
Portfolio. All investment management and any other activities of the
Sub-Advisor shall at all times be subject to the control and direction of
the Advisor and the Trust's Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or all
of the services contemplated by this Agreement directly or through such of
its subsidiaries or other affiliated persons as the Sub-Advisor shall
determine; provided, however, that performance of such services through
such subsidiaries or other affiliated persons shall have been approved by
the Trust to the extent required pursuant to the 1940 Act and rules
thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees or
the Advisor may reasonably request from time to time, or as the Sub-Advisor
may deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor shall
place all orders for the purchase and sale of portfolio securities for the
Portfolio's account with brokers or dealers selected by the Sub-Advisor,
which may include brokers or dealers affiliated with the Advisor or
Sub-Advisor. The Sub-Advisor shall use its best efforts to seek to execute
portfolio transactions at prices which are advantageous to the Portfolio
and at commission rates which are reasonable in relation to the benefits
received. In selecting brokers or dealers qualified to execute a
particular transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of l934) to the Portfolio and/or to
the other accounts over which the Sub-Advisor or Advisor exercise
investment discretion. The Sub-Advisor is authorized to pay a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Sub-Advisor determines in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular transaction
or the overall responsibilities which the Sub-Advisor has with respect to
accounts over which it exercises investment discretion. The Trustees of
the Trust shall periodically review the commissions paid by the Portfolio
to determine if the commissions paid over representative periods of time
were reasonable in relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under subparagraph (a)
of paragraph 1 of this Agreement, the Advisor agrees to pay the Sub-Advisor
a monthly Sub-Advisory Fee. The Sub-Advisory Fee shall be equal to 105% of
the Sub-Advisor's costs incurred in connection with rendering the services
referred to in subparagraph (a) of paragraph 1 of this Agreement. The
Sub-Advisory Fee shall not be reduced to reflect expense reimbursements or
fee waivers by the Advisor, if any, in effect from time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Investment Management Fee. The Investment Management
Fee shall be equal to: (i) 50% of the monthly management fee rate
(including performance adjustments, if any) that the Portfolio is obligated
to pay the Advisor under its Management Contract with the Advisor,
multiplied by: (ii) the fraction equal to the net assets of the Portfolio
as to which the Sub-Advisor shall have provided investment management
services divided by the net assets of the Portfolio for that month. If in
any fiscal year the aggregate expenses of the Portfolio exceed any
applicable expense limitation imposed by any state or federal securities
laws or regulations, and the Advisor waives all or a portion of its
management fee or reimburses the Portfolio for expenses to the extent
required to satisfy such limitation, the Investment Management Fee paid to
the Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements and
the Advisor subsequently recovers all or any portion of such waivers and
reimbursements, then the Sub-Advisor shall be entitled to receive from the
Advisor a proportionate share of the amount recovered. To the extent that
waivers and reimbursements by the Advisor required by such limitations are
in excess of the Advisor's management fee, the Investment Management Fee
paid to the Sub-Advisor will be reduced to zero for that month, but in no
event shall the Sub-Advisor be required to reimburse the Advisor for all or
a portion of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1 for
the same portion of the investments of the Portfolio for the same period,
the fees paid to the Sub-Advisor with respect to such investments shall be
calculated exclusively under subparagraph (b) of this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the Sub-Advisor
hereunder or by the Advisor under the Management Contract with the
Portfolio, which expenses payable by the Portfolio shall include, without
limitation, (i) interest and taxes; (ii) brokerage commissions and other
costs in connection with the purchase or sale of securities and other
investment instruments; (iii) fees and expenses of the Trust's Trustees
other than those who are "interested persons" of the Trust, the Sub-Advisor
or the Advisor; (iv) legal and audit expenses; (v) custodian, registrar and
transfer agent fees and expenses; (vi) fees and expenses related to the
registration and qualification of the Trust and the Portfolio's shares for
distribution under state and federal securities laws; (vii) expenses of
printing and mailing reports and notices and proxy material to shareholders
of the Portfolio; (viii) all other expenses incidental to holding meetings
of the Portfolio's shareholders, including proxy solicitations therefore;
(ix) a pro rata share, based on relative net assets of the Portfolio and
other registered investment companies having Advisory and Service or
Management Contracts with the Advisor, of 50% of insurance premiums for
fidelity and other coverage; (x) its proportionate share of association
membership dues; (xi) expenses of typesetting for printing Prospectuses and
Statements of Additional Information and supplements thereto; (xii)
expenses of printing and mailing Prospectuses and Statements of Additional
Information and supplements thereto sent to existing shareholders; and
(xiii) such non-recurring or extraordinary expenses as may arise, including
those relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to indemnify
the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers, and
shareholders of the Trust are or may be or become interested in the Advisor
or the Sub-Advisor as directors, officers or otherwise and that directors,
officers and stockholders of the Advisor or the Sub-Advisor are or may be
or become similarly interested in the Trust, and that the Advisor or the
Sub-Advisor may be or become interested in the Trust as a shareholder or
otherwise.
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in other
activities, provided, however, that such other services and activities do
not, during the term of this Agreement, interfere, in a material manner,
with the Sub-Advisor's ability to meet all of its obligations hereunder.
The Sub-Advisor shall for all purposes be an independent contractor and not
an agent or employee of the Advisor or the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties hereunder
on the part of the Sub-Advisor, the Sub-Advisor shall not be subject to
liability to the Advisor, the Trust or to any shareholder of the Portfolio
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the purchase,
holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of this
paragraph 9, this Agreement shall continue in force until July 31, 1997
and indefinitely thereafter, but only so long as the continuance after such
period shall be specifically approved at least annually by vote of the
Trust's Board of Trustees or by vote of a majority of the outstanding
voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor, the
Sub-Advisor and the Portfolio, such consent on the part of the Portfolio to
be authorized by vote of a majority of the outstanding voting securities of
the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of this
paragraph 9, the terms of any continuance or modification of this Agreement
must have been approved by the vote of a majority of those Trustees of the
Trust who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any time
on sixty (60) days' prior written notice to the other parties, terminate
this Agreement, without payment of any penalty, by action of its Board of
Trustees or Directors, or with respect to the Portfolio by vote of a
majority of its outstanding voting securities. This Agreement shall
terminate automatically in the event of its assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly put on
notice of the limitation of shareholder liability as set forth in the
Declaration of Trust or other organizational document of the Trust and
agrees that any obligations of the Trust or the Portfolio arising in
connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-Advisor shall not seek satisfaction
of any such obligation from the shareholders or any shareholder of the
Portfolio. Nor shall the Sub-Advisor seek satisfaction of any such
obligation from the Trustees or any individual Trustee.
11. Governing Law: This Agreement shall be governed by, and construed
in accordance with, the laws of the Commonwealth of Massachusetts, without
giving effect to the choice of laws provisions thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons,"
when used herein, shall have the respective meanings specified in the 1940
Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as of
the date written above.
[SIGNATURE LINES OMITTED.]
Exhibit 6(i)
FORM OF
GENERAL DISTRIBUTION AGREEMENT
between
FIDELITY SELECT PORTFOLIOS
and
FIDELITY DISTRIBUTORS CORPORATION
Agreement made this ___th day of _________, 1996, between Fidelity Select
Portfolios, a Massachusetts business trust having its principal place of
business in Boston, Massachusetts and which may issue one or more series of
beneficial interest ("Issuer"), with respect to shares of Cyclical
Industries Portfolio, a series of the Issuer, and Fidelity Distributors
Corporation, a Massachusetts corporation having its principal place of
business in Boston, Massachusetts ("Distributors").
In consideration of the mutual promises and undertakings herein contained,
the parties agree as follows:
1. Sale of Shares - The Issuer grants to Distributors the right to sell
shares on behalf of the Issuer during the term of this Agreement and
subject to the registration requirements of the Securities Act of 1933, as
amended ("1933 Act"), and of the laws governing the sale of securities in
the various states ("Blue Sky Laws") under the following terms and
conditions: Distributors (i) shall have the right to sell, as agent on
behalf of the Issuer, shares authorized for issue and registered under the
1933 Act, and (ii) may sell shares under offers of exchange, if available,
between and among the funds advised by Fidelity Management & Research
Company ("FMR").
2. Sale of Shares by the Issuer - The rights granted to Distributors shall
be nonexclusive in that the Issuer reserves the right to sell its shares to
investors on applications received and accepted by the Issuer. Further,
the Issuer reserves the right to issue shares in connection with the merger
or consolidation, or acquisition by the Issuer through purchase or
otherwise, with any other investment company, trust, or personal holding
company.
3. Shares Covered by this Agreement - This Agreement shall apply to
unissued shares of the Issuer, shares of the Issuer held in its treasury in
the event that in the discretion of the Issuer treasury shares shall be
sold, and shares of the Issuer repurchased for resale.
4. Public Offering Price - Except as otherwise noted in the Issuer's
current Prospectus and/or Statement of Additional Information, all shares
sold to investors by Distributors or the Issuer will be sold at the public
offering price. The public offering price for all accepted subscriptions
will be the net asset value per share, as determined in the manner
described in the Issuer's current Prospectus and/or Statement of Additional
Information, plus a sales charge (if any) described in the Issuer's current
Prospectus and/or Statement of Additional Information. The Issuer shall in
all cases receive the net asset value per share on all sales. If a sales
charge is in effect, Distributors shall have the right subject to such
rules or regulations of the Securities and Exchange Commission as may then
be in effect pursuant to Section 22 of the Investment Company Act of 1940
to pay a portion of the sales charge to dealers who have sold shares of the
Issuer. If a fee in connection with shareholder redemptions is in effect,
the Issuer shall collect the fee on behalf of Distributors and, unless
otherwise agreed upon by the Issuer and Distributors, Distributors shall be
entitled to receive all of such fees.
5. Suspension of Sales - If and whenever the determination of net asset
value is suspended and until such suspension is terminated, no further
orders for shares shall be processed by Distributors except such
unconditional orders as may have been placed with Distributors before it
had knowledge of the suspension. In addition, the Issuer reserves the
right to suspend sales and Distributors' authority to process orders for
shares on behalf of the Issuer if, in the judgment of the Issuer, it is in
the best interests of the Issuer to do so. Suspension will continue for
such period as may be determined by the Issuer.
6. Solicitation of Sales - In consideration of these rights granted to
Distributors, Distributors agrees to use all reasonable efforts, consistent
with its other business, to secure purchasers for shares of the Issuer.
This shall not prevent Distributors from entering into like arrangements
(including arrangements involving the payment of underwriting commissions)
with other issuers. This does not obligate Distributors to register as a
broker or dealer under the Blue Sky Laws of any jurisdiction in which it is
not now registered or to maintain its registration in any jurisdiction in
which it is now registered. If a sales charge is in effect, Distributors
shall have the right to enter into sales agreements with dealers of its
choice for the sale of shares of the Issuer to the public at the public
offering price only and fix in such agreements the portion of the sales
charge which may be retained by dealers, provided that the Issuer shall
approve the form of the dealer agreement and the dealer discounts set forth
therein and shall evidence such approval by filing said form of dealer
agreement and amendments thereto as an exhibit to its currently effective
Registration Statement under the 1933 Act.
7. Authorized Representations - Distributors is not authorized by the
Issuer to give any information or to make any representations other than
those contained in the appropriate registration statements or Prospectuses
and Statements of Additional Information filed with the Securities and
Exchange Commission under the 1933 Act (as these registration statements,
Prospectuses and Statements of Additional Information may be amended from
time to time), or contained in shareholder reports or other material that
may be prepared by or on behalf of the Issuer for Distributors' use. This
shall not be construed to prevent Distributors from preparing and
distributing sales literature or other material as it may deem appropriate.
8. Portfolio Securities - Portfolio securities of the Issuer may be bought
or sold by or through Distributors, and Distributors may participate
directly or indirectly in brokerage commissions or "spreads" for
transactions in portfolio securities of the Issuer.
9. Registration of Shares - The Issuer agrees that it will take all action
necessary to register shares under the 1933 Act (subject to the necessary
approval of its shareholders) so that there will be available for sale the
number of shares Distributors may reasonably be expected to sell. The
Issuer shall make available to Distributors such number of copies of its
currently effective Prospectus and Statement of Additional Information as
Distributors may reasonably request. The Issuer shall furnish to
Distributors copies of all information, financial statements and other
papers which Distributors may reasonably request for use in connection with
the distribution of shares of the Issuer.
10. Expenses - The Issuer shall pay all fees and expenses (a) in connection
with the preparation, setting in type and filing of any registration
statement, Prospectus and Statement of Additional Information under the
1933 Act and amendments for the issue of its shares, (b) in connection with
the registration and qualification of shares for sale in the various states
in which the Board of Trustees of the Issuer shall determine it advisable
to qualify such shares for sale (including registering the Issuer as a
broker or dealer or any officer of the Issuer as agent or salesman in any
state), (c) of preparing, setting in type, printing and mailing any report
or other communication to shareholders of the Issuer in their capacity as
such, and (d) of preparing, setting in type, printing and mailing
Prospectuses, Statements of Additional Information and any supplements
thereto sent to existing shareholders.
It is recognized by the Issuer that FMR may make payment to Distributors
with respect to any expenses incurred in the distribution of shares of the
Issuer, such payments payable from the past profits or other resources of
FMR including management fees paid to it by the Issuer.
11. Indemnification - The Issuer agrees to indemnify and hold harmless
Distributors and each of its directors and officers and each person, if
any, who controls Distributors within the meaning of Section 15 of the 1933
Act against any loss, liability, claim, damages or expense (including the
reasonable cost of investigating or defending any alleged loss, liability,
claim, damages, or expense and reasonable counsel fees incurred in
connection therewith) arising by reason of any person acquiring any shares,
based upon the ground that the registration statement, Prospectus,
Statement of Additional Information, shareholder reports or other
information filed or made public by the Issuer (as from time to time
amended) included an untrue statement of a material fact or omitted to
state a material fact required to be stated or necessary in order to make
the statements not misleading under the 1933 Act, or any other statute or
the common law. However, the Issuer does not agree to indemnify
Distributors or hold it harmless to the extent that the statement or
omission was made in reliance upon, and in conformity with, information
furnished to the Issuer by or on behalf of Distributors. In no case (i) is
the indemnity of the Issuer in favor of Distributors or any person
indemnified to be deemed to protect Distributors or any person against any
liability to the Issuer or its security holders to which Distributors or
such person would otherwise be subject by reason of wilful misfeasance, bad
faith or gross negligence in the performance of its duties or by reason of
its reckless disregard of its obligations and duties under this Agreement,
or (ii) is the Issuer to be liable under its indemnity agreement contained
in this paragraph with respect to any claim made against Distributors or
any person indemnified unless Distributors or person, as the case may be,
shall have notified the Issuer in writing of the claim within a reasonable
time after the summons or other first written notification giving
information of the nature of the claim shall have been served upon
Distributors or any such person (or after Distributors or such person shall
have received notice of service on any designated agent). However, failure
to notify the Issuer of any claim shall not relieve the Issuer from any
liability which it may have to Distributors or any person against whom such
action is brought otherwise than on account of its indemnity agreement
contained in this paragraph. The Issuer shall be entitled to participate
at its own expense in the defense, or, if it so elects, to assume the
defense of any suit brought to enforce any claims, but if the Issuer elects
to assume the defense, the defense shall be conducted by counsel chosen by
it and satisfactory to Distributors or person or persons, defendant or
defendants in the suit. In the event the Issuer elects to assume the
defense of any suit and retain counsel, Distributors, officers or directors
or controlling person or persons, defendant or defendants in the suit,
shall bear the fees and expenses of any additional counsel retained by
them. If the Issuer does not elect to assume the defense of any suit, it
will reimburse Distributors, officers or directors or controlling person or
persons, defendant or defendants in the suit, for the reasonable fees and
expenses of any counsel retained by them. The Issuer agrees to notify
Distributors promptly of the commencement of any litigation or proceedings
against it or any of its officers or trustees in connection with the
issuance or sale of any of the shares.
Distributors also covenants and agrees that it will indemnify and hold
harmless the Issuer and each of its Board members and officers and each
person, if any, who controls the Issuer within the meaning of Section 15 of
the 1933 Act, against any loss, liability, damages, claim or expense
(including the reasonable cost of investigating or defending any alleged
loss, liability, damages, claim or expense and reasonable counsel fees
incurred in connection therewith) arising by reason of any person acquiring
any shares, based upon the 1933 Act or any other statute or common law,
alleging any wrongful act of Distributors or any of its employees or
alleging that the registration statement, Prospectus, Statement of
Additional Information, shareholder reports or other information filed or
made public by the Issuer (as from time to time amended) included an untrue
statement of a material fact or omitted to state a material fact required
to be stated or necessary in order to make the statements not misleading,
insofar as the statement or omission was made in reliance upon, and in
conformity with information furnished to the Issuer by or on behalf of
Distributors. In no case (i) is the indemnity of Distributors in favor of
the Issuer or any person indemnified to be deemed to protect the Issuer or
any person against any liability to which the Issuer or such person would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement, or (ii) is
Distributors to be liable under its indemnity agreement contained in this
paragraph with respect to any claim made against the Issuer or any person
indemnified unless the Issuer or person, as the case may be, shall have
notified Distributors in writing of the claim within a reasonable time
after the summons or other first written notification giving information of
the nature of the claim shall have been served upon the Issuer or any such
person (or after the Issuer or such person shall have received notice of
service on any designated agent). However, failure to notify Distributors
of any claim shall not relieve Distributors from any liability which it may
have to the Issuer or any person against whom the action is brought
otherwise than on account of its indemnity agreement contained in this
paragraph. In the case of any notice to Distributors, it shall be entitled
to participate, at its own expense, in the defense or, if it so elects, to
assume the defense of any suit brought to enforce the claim, but if
Distributors elects to assume the defense, the defense shall be conducted
by counsel chosen by it and satisfactory to the Issuer, to its officers and
Board and to any controlling person or persons, defendant or defendants in
the suit. In the event that Distributors elects to assume the defense of
any suit and retain counsel, the Issuer or controlling persons, defendant
or defendants in the suit, shall bear the fees and expense of any
additional counsel retained by them. If Distributors does not elect to
assume the defense of any suit, it will reimburse the Issuer, officers and
Board or controlling person or persons, defendant or defendants in the
suit, for the reasonable fees and expenses of any counsel retained by them.
Distributors agrees to notify the Issuer promptly of the commencement of
any litigation or proceedings against it in connection with the issue and
sale of any of the shares.
12. Effective Date - This agreement shall be effective upon its execution,
and unless terminated as provided, shall continue in force until January
31, 1997 and thereafter from year to year, provided continuance is approved
annually by the vote of a majority of the Board members of the Issuer, and
by the vote of those Board members of the Issuer who are not "interested
persons" of the Issuer and, if a plan under Rule 12b-1 under the Investment
Company Act of 1940 is in effect, by the vote of those Board members of the
Issuer who are not "interested persons" of the Issuer and who are not
parties to the Distribution and Service Plan or this Agreement and have no
financial interest in the operation of the Distribution and Service Plan or
in any agreements related to the Distribution and Service Plan, cast in
person at a meeting called for the purpose of voting on the approval. This
Agreement shall automatically terminate in the event of its assignment. As
used in this paragraph, the terms "assignment" and "interested persons"
shall have the respective meanings specified in the Investment Company Act
of 1940 as now in effect or as hereafter amended. In addition to
termination by failure to approve continuance or by assignment, this
Agreement may at any time be terminated by either party upon not less than
sixty days' prior written notice to the other party.
13. Notice - Any notice required or permitted to be given by either party
to the other shall be deemed sufficient if sent by registered or certified
mail, postage prepaid, addressed by the party giving notice to the other
party at the last address furnished by the other party to the party giving
notice: if to the Issuer, at 82 Devonshire Street, Boston, Massachusetts,
and if to Distributors, at 82 Devonshire Street, Boston, Massachusetts.
14. Limitation of Liability - Distributors is expressly put on notice of
the limitation of shareholder liability as set forth in the Declaration of
Trust or other organizational document of the Issuer and agrees that the
obligations assumed by the Issuer under this contract shall be limited in
all cases to the Issuer and its assets. Distributors shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Issuer. Nor shall Distributors seek satisfaction of any
such obligation from the Trustees or any individual Trustee of the Issuer.
Distributors understands that the rights and obligations of each series of
shares of the Issuer under the Issuer's Declaration of Trust or other
organizational document are separate and distinct from those of any and all
other series.
15. This agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts, without giving effect to the
choice of laws provisions thereof.
IN WITNESS WHEREOF, the Issuer has executed this instrument in its name
and behalf, and its seal affixed, by one of its officers duly authorized,
and Distributors has executed this instrument in its name and behalf by one
of its officers duly authorized, as of the day and year first above
written.
[SIGNATURE LINES OMITTED.]
Exhibit 6(j)
FORM OF
GENERAL DISTRIBUTION AGREEMENT
between
FIDELITY SELECT PORTFOLIOS
and
FIDELITY DISTRIBUTORS CORPORATION
Agreement made this ___th day of _________, 1996, between Fidelity Select
Portfolios, a Massachusetts business trust having its principal place of
business in Boston, Massachusetts and which may issue one or more series of
beneficial interest ("Issuer"), with respect to shares of Natural Resources
Portfolio, a series of the Issuer, and Fidelity Distributors Corporation, a
Massachusetts corporation having its principal place of business in Boston,
Massachusetts ("Distributors").
In consideration of the mutual promises and undertakings herein contained,
the parties agree as follows:
1. Sale of Shares - The Issuer grants to Distributors the right to sell
shares on behalf of the Issuer during the term of this Agreement and
subject to the registration requirements of the Securities Act of 1933, as
amended ("1933 Act"), and of the laws governing the sale of securities in
the various states ("Blue Sky Laws") under the following terms and
conditions: Distributors (i) shall have the right to sell, as agent on
behalf of the Issuer, shares authorized for issue and registered under the
1933 Act, and (ii) may sell shares under offers of exchange, if available,
between and among the funds advised by Fidelity Management & Research
Company ("FMR").
2. Sale of Shares by the Issuer - The rights granted to Distributors shall
be nonexclusive in that the Issuer reserves the right to sell its shares to
investors on applications received and accepted by the Issuer. Further,
the Issuer reserves the right to issue shares in connection with the merger
or consolidation, or acquisition by the Issuer through purchase or
otherwise, with any other investment company, trust, or personal holding
company.
3. Shares Covered by this Agreement - This Agreement shall apply to
unissued shares of the Issuer, shares of the Issuer held in its treasury in
the event that in the discretion of the Issuer treasury shares shall be
sold, and shares of the Issuer repurchased for resale.
4. Public Offering Price - Except as otherwise noted in the Issuer's
current Prospectus and/or Statement of Additional Information, all shares
sold to investors by Distributors or the Issuer will be sold at the public
offering price. The public offering price for all accepted subscriptions
will be the net asset value per share, as determined in the manner
described in the Issuer's current Prospectus and/or Statement of Additional
Information, plus a sales charge (if any) described in the Issuer's current
Prospectus and/or Statement of Additional Information. The Issuer shall in
all cases receive the net asset value per share on all sales. If a sales
charge is in effect, Distributors shall have the right subject to such
rules or regulations of the Securities and Exchange Commission as may then
be in effect pursuant to Section 22 of the Investment Company Act of 1940
to pay a portion of the sales charge to dealers who have sold shares of the
Issuer. If a fee in connection with shareholder redemptions is in effect,
the Issuer shall collect the fee on behalf of Distributors and, unless
otherwise agreed upon by the Issuer and Distributors, Distributors shall be
entitled to receive all of such fees.
5. Suspension of Sales - If and whenever the determination of net asset
value is suspended and until such suspension is terminated, no further
orders for shares shall be processed by Distributors except such
unconditional orders as may have been placed with Distributors before it
had knowledge of the suspension. In addition, the Issuer reserves the
right to suspend sales and Distributors' authority to process orders for
shares on behalf of the Issuer if, in the judgment of the Issuer, it is in
the best interests of the Issuer to do so. Suspension will continue for
such period as may be determined by the Issuer.
6. Solicitation of Sales - In consideration of these rights granted to
Distributors, Distributors agrees to use all reasonable efforts, consistent
with its other business, to secure purchasers for shares of the Issuer.
This shall not prevent Distributors from entering into like arrangements
(including arrangements involving the payment of underwriting commissions)
with other issuers. This does not obligate Distributors to register as a
broker or dealer under the Blue Sky Laws of any jurisdiction in which it is
not now registered or to maintain its registration in any jurisdiction in
which it is now registered. If a sales charge is in effect, Distributors
shall have the right to enter into sales agreements with dealers of its
choice for the sale of shares of the Issuer to the public at the public
offering price only and fix in such agreements the portion of the sales
charge which may be retained by dealers, provided that the Issuer shall
approve the form of the dealer agreement and the dealer discounts set forth
therein and shall evidence such approval by filing said form of dealer
agreement and amendments thereto as an exhibit to its currently effective
Registration Statement under the 1933 Act.
7. Authorized Representations - Distributors is not authorized by the
Issuer to give any information or to make any representations other than
those contained in the appropriate registration statements or Prospectuses
and Statements of Additional Information filed with the Securities and
Exchange Commission under the 1933 Act (as these registration statements,
Prospectuses and Statements of Additional Information may be amended from
time to time), or contained in shareholder reports or other material that
may be prepared by or on behalf of the Issuer for Distributors' use. This
shall not be construed to prevent Distributors from preparing and
distributing sales literature or other material as it may deem appropriate.
8. Portfolio Securities - Portfolio securities of the Issuer may be bought
or sold by or through Distributors, and Distributors may participate
directly or indirectly in brokerage commissions or "spreads" for
transactions in portfolio securities of the Issuer.
9. Registration of Shares - The Issuer agrees that it will take all action
necessary to register shares under the 1933 Act (subject to the necessary
approval of its shareholders) so that there will be available for sale the
number of shares Distributors may reasonably be expected to sell. The
Issuer shall make available to Distributors such number of copies of its
currently effective Prospectus and Statement of Additional Information as
Distributors may reasonably request. The Issuer shall furnish to
Distributors copies of all information, financial statements and other
papers which Distributors may reasonably request for use in connection with
the distribution of shares of the Issuer.
10. Expenses - The Issuer shall pay all fees and expenses (a) in connection
with the preparation, setting in type and filing of any registration
statement, Prospectus and Statement of Additional Information under the
1933 Act and amendments for the issue of its shares, (b) in connection with
the registration and qualification of shares for sale in the various states
in which the Board of Trustees of the Issuer shall determine it advisable
to qualify such shares for sale (including registering the Issuer as a
broker or dealer or any officer of the Issuer as agent or salesman in any
state), (c) of preparing, setting in type, printing and mailing any report
or other communication to shareholders of the Issuer in their capacity as
such, and (d) of preparing, setting in type, printing and mailing
Prospectuses, Statements of Additional Information and any supplements
thereto sent to existing shareholders.
It is recognized by the Issuer that FMR may make payment to Distributors
with respect to any expenses incurred in the distribution of shares of the
Issuer, such payments payable from the past profits or other resources of
FMR including management fees paid to it by the Issuer.
11. Indemnification - The Issuer agrees to indemnify and hold harmless
Distributors and each of its directors and officers and each person, if
any, who controls Distributors within the meaning of Section 15 of the 1933
Act against any loss, liability, claim, damages or expense (including the
reasonable cost of investigating or defending any alleged loss, liability,
claim, damages, or expense and reasonable counsel fees incurred in
connection therewith) arising by reason of any person acquiring any shares,
based upon the ground that the registration statement, Prospectus,
Statement of Additional Information, shareholder reports or other
information filed or made public by the Issuer (as from time to time
amended) included an untrue statement of a material fact or omitted to
state a material fact required to be stated or necessary in order to make
the statements not misleading under the 1933 Act, or any other statute or
the common law. However, the Issuer does not agree to indemnify
Distributors or hold it harmless to the extent that the statement or
omission was made in reliance upon, and in conformity with, information
furnished to the Issuer by or on behalf of Distributors. In no case (i) is
the indemnity of the Issuer in favor of Distributors or any person
indemnified to be deemed to protect Distributors or any person against any
liability to the Issuer or its security holders to which Distributors or
such person would otherwise be subject by reason of wilful misfeasance, bad
faith or gross negligence in the performance of its duties or by reason of
its reckless disregard of its obligations and duties under this Agreement,
or (ii) is the Issuer to be liable under its indemnity agreement contained
in this paragraph with respect to any claim made against Distributors or
any person indemnified unless Distributors or person, as the case may be,
shall have notified the Issuer in writing of the claim within a reasonable
time after the summons or other first written notification giving
information of the nature of the claim shall have been served upon
Distributors or any such person (or after Distributors or such person shall
have received notice of service on any designated agent). However, failure
to notify the Issuer of any claim shall not relieve the Issuer from any
liability which it may have to Distributors or any person against whom such
action is brought otherwise than on account of its indemnity agreement
contained in this paragraph. The Issuer shall be entitled to participate
at its own expense in the defense, or, if it so elects, to assume the
defense of any suit brought to enforce any claims, but if the Issuer elects
to assume the defense, the defense shall be conducted by counsel chosen by
it and satisfactory to Distributors or person or persons, defendant or
defendants in the suit. In the event the Issuer elects to assume the
defense of any suit and retain counsel, Distributors, officers or directors
or controlling person or persons, defendant or defendants in the suit,
shall bear the fees and expenses of any additional counsel retained by
them. If the Issuer does not elect to assume the defense of any suit, it
will reimburse Distributors, officers or directors or controlling person or
persons, defendant or defendants in the suit, for the reasonable fees and
expenses of any counsel retained by them. The Issuer agrees to notify
Distributors promptly of the commencement of any litigation or proceedings
against it or any of its officers or trustees in connection with the
issuance or sale of any of the shares.
Distributors also covenants and agrees that it will indemnify and hold
harmless the Issuer and each of its Board members and officers and each
person, if any, who controls the Issuer within the meaning of Section 15 of
the 1933 Act, against any loss, liability, damages, claim or expense
(including the reasonable cost of investigating or defending any alleged
loss, liability, damages, claim or expense and reasonable counsel fees
incurred in connection therewith) arising by reason of any person acquiring
any shares, based upon the 1933 Act or any other statute or common law,
alleging any wrongful act of Distributors or any of its employees or
alleging that the registration statement, Prospectus, Statement of
Additional Information, shareholder reports or other information filed or
made public by the Issuer (as from time to time amended) included an untrue
statement of a material fact or omitted to state a material fact required
to be stated or necessary in order to make the statements not misleading,
insofar as the statement or omission was made in reliance upon, and in
conformity with information furnished to the Issuer by or on behalf of
Distributors. In no case (i) is the indemnity of Distributors in favor of
the Issuer or any person indemnified to be deemed to protect the Issuer or
any person against any liability to which the Issuer or such person would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement, or (ii) is
Distributors to be liable under its indemnity agreement contained in this
paragraph with respect to any claim made against the Issuer or any person
indemnified unless the Issuer or person, as the case may be, shall have
notified Distributors in writing of the claim within a reasonable time
after the summons or other first written notification giving information of
the nature of the claim shall have been served upon the Issuer or any such
person (or after the Issuer or such person shall have received notice of
service on any designated agent). However, failure to notify Distributors
of any claim shall not relieve Distributors from any liability which it may
have to the Issuer or any person against whom the action is brought
otherwise than on account of its indemnity agreement contained in this
paragraph. In the case of any notice to Distributors, it shall be entitled
to participate, at its own expense, in the defense or, if it so elects, to
assume the defense of any suit brought to enforce the claim, but if
Distributors elects to assume the defense, the defense shall be conducted
by counsel chosen by it and satisfactory to the Issuer, to its officers and
Board and to any controlling person or persons, defendant or defendants in
the suit. In the event that Distributors elects to assume the defense of
any suit and retain counsel, the Issuer or controlling persons, defendant
or defendants in the suit, shall bear the fees and expense of any
additional counsel retained by them. If Distributors does not elect to
assume the defense of any suit, it will reimburse the Issuer, officers and
Board or controlling person or persons, defendant or defendants in the
suit, for the reasonable fees and expenses of any counsel retained by them.
Distributors agrees to notify the Issuer promptly of the commencement of
any litigation or proceedings against it in connection with the issue and
sale of any of the shares.
12. Effective Date - This agreement shall be effective upon its execution,
and unless terminated as provided, shall continue in force until January
31, 1997 and thereafter from year to year, provided continuance is approved
annually by the vote of a majority of the Board members of the Issuer, and
by the vote of those Board members of the Issuer who are not "interested
persons" of the Issuer and, if a plan under Rule 12b-1 under the Investment
Company Act of 1940 is in effect, by the vote of those Board members of the
Issuer who are not "interested persons" of the Issuer and who are not
parties to the Distribution and Service Plan or this Agreement and have no
financial interest in the operation of the Distribution and Service Plan or
in any agreements related to the Distribution and Service Plan, cast in
person at a meeting called for the purpose of voting on the approval. This
Agreement shall automatically terminate in the event of its assignment. As
used in this paragraph, the terms "assignment" and "interested persons"
shall have the respective meanings specified in the Investment Company Act
of 1940 as now in effect or as hereafter amended. In addition to
termination by failure to approve continuance or by assignment, this
Agreement may at any time be terminated by either party upon not less than
sixty days' prior written notice to the other party.
13. Notice - Any notice required or permitted to be given by either party
to the other shall be deemed sufficient if sent by registered or certified
mail, postage prepaid, addressed by the party giving notice to the other
party at the last address furnished by the other party to the party giving
notice: if to the Issuer, at 82 Devonshire Street, Boston, Massachusetts,
and if to Distributors, at 82 Devonshire Street, Boston, Massachusetts.
14. Limitation of Liability - Distributors is expressly put on notice of
the limitation of shareholder liability as set forth in the Declaration of
Trust or other organizational document of the Issuer and agrees that the
obligations assumed by the Issuer under this contract shall be limited in
all cases to the Issuer and its assets. Distributors shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Issuer. Nor shall Distributors seek satisfaction of any
such obligation from the Trustees or any individual Trustee of the Issuer.
Distributors understands that the rights and obligations of each series of
shares of the Issuer under the Issuer's Declaration of Trust or other
organizational document are separate and distinct from those of any and all
other series.
15. This agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts, without giving effect to the
choice of laws provisions thereof.
IN WITNESS WHEREOF, the Issuer has executed this instrument in its name
and behalf, and its seal affixed, by one of its officers duly authorized,
and Distributors has executed this instrument in its name and behalf by one
of its officers duly authorized, as of the day and year first above
written.
[SIGNATURE LINES OMITTED.]
Exhibit 8(e)
APPENDIX "A"
TO
CUSTODIAN AGREEMENT
BETWEEN
The Bank of New York and each of the following Investment Companies
Dated as of May 16, 1996
The following is a list of the Funds and their respective Portfolios for
which the Custodian shall serve under a Custodian Agreement dated as of
December 1, 1994:
FUND Portfolio Effective as of:
Fidelity Advisor Annuity Fund Fidelity Advisor Annuity Government
Investment Fund December 1, 1994
Fidelity Advisor Annuity High Yield Fund December 1, 1994
Fidelity Advisor Annuity Money Market Fund September 14, 1995
Fidelity Advisor Series II Fidelity Advisor Government Investment Fund
December 1, 1994
Fidelity Advisor High Yield Fund December 1, 1994
Fidelity Advisor Short Fixed-Income Fund December 1, 1994
Fidelity Advisor IV Fidelity Advisor Limited Term Bond Fund December 1,
1994
Fidelity Institutional Short-Intermediate Government Portfolio December 1,
1994
Fidelity Real Estate High Income Fund December 1, 1994
Fidelity Advisor Series VIII Fidelity Advisor Strategic Income Fund
December 1, 1994
Fidelity Boston Street Trust Fidelity Target Timeline 1999 January 18,
1996
Fidelity Target Timeline 2001 January 18, 1996
Fidelity Target Timeline 2003 January 18, 1996
Fidelity Charles Street Trust Fidelity Short-Intermediate Government Fund
December 1, 1994
Spartan Short-Term Income Fund December 1, 1994
Spartan Investment-Grade Bond Fund December 1, 1994
Fidelity Commonwealth Trust Fidelity Intermediate Bond Fund December 1,
1994
Fidelity Covington Trust Fidelity Real Estate High Income Fund II May 16,
1996
Daily Money Fund Capital Reserves: Money Market Portfolio September 14,
1995
Capital Reserves: U.S. Government Portfolio September 14, 1995
Treasury only (f/k/a Fidelity U.S.
Treasury Income Portfolio) September 14, 1995
Money Market Portfolio September 14, 1995
U. S. Treasury Portfolio September 14, 1995
Fidelity Devonshire Trust Spartan Long-Term Government Bond Fund December
1, 1994
Spartan Adjustable Rate Government Fund December 1, 1994
Fidelity Fixed-Income Trust Fidelity Short-Term Bond Portfolio December 1,
1994
Fidelity Investment Grade Bond Fund December 1, 1994
Spartan Government Income Fund December 1, 1994
Spartan High Income Fund December 1, 1994
Spartan Short-Intermediate Government Fund December 1, 1994
Fidelity Government Securities Fund Fidelity Government Securities Fund
December 1, 1994
Fidelity Hereford Street Trust Spartan Money Market Fund December 1, 1994
Spartan U.S. Government Money Market Fund September 14, 1995
Spartan U.S. Treasury Money Market Fund September 14, 1995
Fidelity Income Fund Fidelity Ginnie Mae Portfolio December 1, 1994
Fidelity Mortgage Securities Portfolio December 1, 1994
Spartan Limited Maturity Government Fund December 1, 1994
Fidelity Institutional Cash Portfolios Domestic (f/k/a Domestic Money
Market Portfolio) September 14, 1995
Money Market (f/k/a Money Market Portfolio) September 14, 1995
Government (f/k/a U.S. Government Portfolio) September 14, 1995
Treasury II (f/k/a U.S. Treasury Portfolio II) September 14, 1995
Fidelity Institutional Investors Trust SLAM: Government Money Market
Portfolio September 14, 1995
Fidelity Institutional Trust Fidelity U.S. Bond Index Portfolio December 1,
1994
Fidelity Money Market Trust Domestic Money Market Portfolio September 14,
1995
Retirement Government Money Market Portfolio September 14, 1995
Retirement Money Market Portfolio September 14, 1995
Fidelity Phillips Street Trust Fidelity Cash Reserves December 1, 1994
Fidelity U.S. Government Reserves September 14, 1995
Fidelity School Street Trust Spartan Bond Strategist December 1, 1994
Fidelity Select Portfolios Money Market Portfolio December 1, 1994
Fidelity Summer Street Trust Fidelity Capital & Income Fund December 1,
1994
Fidelity Union Street Trust Spartan Ginnie Mae Fund December 1, 1994
Fidelity Union Street Trust II Fidelity Daily Income Trust December 1,
1994
Spartan World Money Market Fund December 1, 1994
Variable Insurance Products Fund High Income Portfolio December 1, 1994
Variable Insurance Products Fund II Investment Grade Bond Portfolio
December 1, 1994
Variable Insurance Products Fund Money Market Portfolio September 14,
1995
IN WITNESS WHEREOF, each of the parties hereto has caused this Appendix to
be executed in its name and behalf as of the day and year first set forth
opposite each such Portfolio.
Each of the Investment Companies The Bank of New York
listed on this Appendix "A", on behalf
of each of their respective Portfolios
By: /s/Kenneth A. Rathgeber By: /s/Stephen E. Grunston
Name: Kenneth A. Rathgeber Name: _Stephen E. Grunston
Title: Treasurer Title: Vice President
Exhibit 11
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the reference to our Firm under the heading "Auditor"
in the Statement of Additional Information which is incorporated by
reference in Post-Effective Amendment No. 55 to the Registration Statement
on Form N-1A of Fidelity Select Portfolios: Cyclical Industries Portfolio
and Natural Resources Portfolio.
/s/PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Boston, Massachusetts
August 12, 1996
