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FIDELITY WANTS YOU TO KNOW...
YOUR PROXY VOTE IS IMPORTANT!
As a fund shareholder of the Fidelity Select Portfolios(registered
trademark), you have the right to vote your shares. Read Fidelity's
Q&A to learn more about the important proposals for these funds, and
how the proxy process works.
Q&A
QUESTIONS AND ANSWERS ABOUT FIDELITY'S
SELECT PORTFOLIOS(registered trademark) PROXY SOLICITATION
BELOW IS A BRIEF OVERVIEW OF ALL OF THE PROPOSALS FOUND IN THE PROXY
STATEMENT THAT ARE TO BE VOTED ON AT THE SPECIAL MEETING OF
SHAREHOLDERS. IF YOU HAVE ANY QUESTIONS REGARDING THE PROPOSALS,
PLEASE CALL US AT 800-544-8888. WE APPRECIATE YOU PLACING YOUR TRUST
IN FIDELITY AND LOOK FORWARD TO HELPING YOU ACHIEVE YOUR FINANCIAL
GOALS.
WHAT IS A PROXY?
The proxy card facilitates voting on important proposals for your
fund. By signing the proxy card, you authorize a proxy agent to vote
your shares at the shareholder meeting. Your ballot will be cast
exactly as specified on your proxy card. By mailing in your proxy
card, you can ensure that your vote is counted without having to
attend the shareholder meeting. Your proxy card may be revoked at any
time prior to its use by written notification received by the trust,
by the execution of a later-dated proxy card, or by attending the
meeting and voting in person.
THE PROXY STATEMENT SAYS THAT THE BOARD OF TRUSTEES HAS APPROVED THESE
PROPOSALS. WHAT ROLE DOES THE BOARD PLAY? (PROPOSAL 1)
The Trustees oversee the investment policies of the fund. Members of
the Board are fiduciaries and have an obligation to serve the best
interests of shareholders, including approving policy changes such as
those proposed for your fund(s). In addition, the Trustees review
fund performance, oversee fund activities, and review contractual
arrangements with companies that provide services to the funds.
WHAT IS THE ROLE OF THE INDEPENDENT ACCOUNTANTS? (PROPOSAL 2)
The independent accountants examine annual financial statements for
the funds and provide other audit and tax-related services. They also
sign or certify any financial statements of the fundS that are
required by law to be independently certified and filed with the
Securities and Exchange Commission (SEC).
WHY ARE THE FUNDS PROPOSING TO ADOPT AN AMENDED AND RESTATED
DECLARATION OF TRUST? (PROPOSAL 3)
The new Declaration of Trust is a more modern form of trust instrument
for a Massachusetts business trust. It gives the Trustees more
flexibility, and, subject to the applicable requirements of federal
and state law, broader authority to act. This increased flexibility
may allow the Trustees to react more quickly to changes in competitive
and regulatory conditions. Adoption of the new Declaration of Trust
will not alter the Trustees' existing fiduciary obligations to act in
the best interests of the funds' shareholders. Before utilizing any
new flexibility that the new Declaration of Trust may afford, the
Trustees must first consider the shareholders' interests and act in
accordance with such interests. The new Declaration of Trust amends
the current Declaration of Trust in a number of significant ways.
Please review the proxy statement for specific details.
WHY ARE THE EQUITY FUNDS (EXCEPT CYCLICAL INDUSTRIES PORTFOLIO,
NATURAL RESOURCES PORTFOLIO, AND BUSINESS SERVICES AND OUTSOURCING
PORTFOLIO) AND THE MONEY MARKET FUND PROPOSING TO ADOPT AMENDED
MANAGEMENT CONTRACTS? (PROPOSALS 4 AND 5)
The amended management contracts principally modify the current
contracts to provide for lower management fees to be paid to Fidelity
Management & Research Company (FMR) when FMR's assets under management
exceed certain levels. The amended management contracts will result
in management fees that are the same as or lower than the fees payable
under the present contracts. Please refer to the Proxy Statement for
specific details of the amended management contracts.
WHAT IS A SUB-ADVISORY AGREEMENT, AND HOW DOES IT AFFECT AMERICAN GOLD
PORTFOLIO? (PROPOSALS 6 AND 7)
The sub-advisory agreements would allow FMR to receive investment
advice and research services from FMR U.K. and FMR Far East. FMR
U.K., with its principal office in London, England, and FMR Far East,
with its principal office in Tokyo, Japan are wholly owned
subsidiaries of FMR. The agreements would also permit FMR to grant
FMR U.K. and/or FMR Far East investment management authority if FMR
believes it would be beneficial to the fund and its shareholders.
The sub-advisory agreements would allow FMR increased access to more
specialized investment expertise in foreign markets. The proposed
agreements would not increase the fees paid to FMR by the fund.
WHAT IS THE BENEFIT OF MAKING THE FUNDAMENTAL 80% INVESTMENT POLICY
FOR MONEY MARKET PORTFOLIO AND EACH OF THE EQUITY FUNDS (EXCEPT
AMERICAN GOLD PORTFOLIO, CYCLICAL INDUSTRIES PORTFOLIO, NATURAL
RESOURCES PORTFOLIO, AND BUSINESS SERVICES AND OUTSOURCING PORTFOLIO)
NON-FUNDAMENTAL? (PROPOSAL 8A)
With certain exceptions, each of the equity funds currently has a
fundamental policy (cannot be changed without shareholder approval)
that requires it to normally invest at least 80%, and in no event less
than 25%, of its assets in securities of companies "principally
engaged in" the business activities identified for that fund.
The SEC has recently proposed a new rule governing the use of mutual
fund names (Name Test Rule), which, upon its adoption, may affect the
fundamental policies described above. The Trustees propose that each
fund's existing 80% fundamental policy be made non-fundamental (future
changes to the policies would only require approval by the Board of
Trustees, not shareholders). Thus, when the SEC adopts a definitive
Name Test Rule, the Trustees will have the flexibility to modify the
fund's policies to conform to the new rule without the delay and
expense of a shareholder meeting. Other than making the funds' 80%
policies non-fundamental, the Trustees do not propose to otherwise
modify these policies.
The Trustees anticipate that approval of the proposal will have no
material impact on the funds or their operations.
WHAT IS THE BENEFIT OF MAKING THE FUNDAMENTAL 80% INVESTMENT POLICY
FOR AMERICAN GOLD PORTFOLIO NON-FUNDAMENTAL AND CHANGING THE POLICY?
(PROPOSAL 9A)
The fund's current fundamental 80% policy states: "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 Board of Trustees
recommends that the shareholders of the fund approve making this
fundamental 80% policy non-fundamental. If shareholders approve the
proposal, the Trustees intend to modify the fund's 80% policy to no
longer include the words "North, Central, and South American," thereby
allowing the fund greater flexibility to invest globally rather than
focusing on issuers located in the Americas. THIS SHIFT TO A GLOBAL
STRATEGY WILL ALLOW THE FUND TO GREATER DIVERSIFY ITS INVESTMENTS.
WHAT IS THE BENEFIT OF MAKING THE FUNDAMENTAL 50% "PRINCIPALLY ENGAGED
IN" POLICY FOR EACH OF THE EQUITY FUNDS (EXCEPT CYCLICAL INDUSTRIES
PORTFOLIO, NATURAL RESOURCES PORTFOLIO, AND BUSINESS SERVICES AND
OUTSOURCING PORTFOLIO) NON-FUNDAMENTAL AND CHANGING THE POLICY?
(PROPOSALS 8B AND 9B)
Under the existing fundamental policy, a company is considered to be
"principally engaged in" a particular business activity if at least
50% of its assets, gross income or net profits are committed to, or
derived from, that activity. Under the proposed non-fundamental
policy, a company is considered to be "principally engaged in" a
business activity if (i) at least 50% of its assets, income, sales or
profits are committed to, or derived from the business activity or;
(ii) a third party has given the company an industry or sector
classification consistent with the designated business activity.
Approval of the proposal will give the Trustees the flexibility to
conform each fund's existing 50% "principally engaged in" policy to
the requirements of the definitive SEC Name Test Rule without the
costs and delays associated with a shareholder meeting. In addition,
by adding the second test and allowing a fund to use a variety of
third party sources for making "principally engaged in"
determinations, the proposed policy will allow the fund greater access
to companies commonly considered to be in industries consistent with
the fund's designated business activities.
WHY ARE BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO AND FINANCIAL
SERVICES PORTFOLIO PROPOSING TO MAKE THE FUNDAMENTAL 15% PRINCIPALLY
ENGAGED POLICY NON-FUNDAMENTAL? (PROPOSAL 10)
Currently, both funds have a fundamental policy stating that an issuer
that derives more than 15% of revenues or profits from brokerage or
investment activities is considered to be "principally engaged in" the
business activities identified for those funds. When the SEC adopts
the definitive version of the Name Test Rule, each fund may have to
modify this policy to comply with the adopted rule.
The Trustees propose that each fund's policy be made non-fundamental
in advance of the final rule's adoption. Thus, when the SEC adopts a
definitive Name Test Rule, the Trustees will have the flexibility to
modify the policies to comply with the rule without the delay and
expense of a shareholder meeting.
WHAT IS THE BENEFIT OF AMENDING THE FUNDAMENTAL INVESTMENT LIMITATION
CONCERNING DIVERSIFICATION FOR FINANCIAL SERVICES PORTFOLIO, HOME
FINANCE PORTFOLIO, REGIONAL BANKS PORTFOLIO, AND MONEY MARKET
PORTFOLIO? (PROPOSAL 11)
This proposal would permit the funds, subject to the requirements of
the Investment Company Act of 1940, to invest without limit in the
securities of other investment companies. As a result of an exemption
granted by the SEC, the funds may invest up to 25% of its total assets
in non-publicly offered money market and short-term bond funds (the
Central Funds) managed by FMR or an affiliate of FMR. FMR anticipates
that the Central Funds will benefit each fund by enhancing the
efficiency of cash management and by providing increased short-term
investment opportunities.
In addition, for Financial Services Portfolio, Home Finance Portfolio,
and Regional Banks Portfolio, the amended fundamental investment
limitation concerning diversification would allow each fund, with
respect to 25% of its total assets, to hold more than 10% of the
voting securities of any issuer. FMR does not currently expect that
approval of this proposal will materially affect the way in which each
fund is managed with regard to a fund's holding more than 10% of the
voting securities of an issuer.
HAS THE FUNDS' BOARD OF TRUSTEES APPROVED THE PROPOSALS?
Yes. The Board of Trustees of the funds has unanimously approved all
of the proposals and recommends that you vote to approve each one.
HOW MANY VOTES AM I ENTITLED TO CAST?
As a shareholder, you are entitled to one vote for each dollar of net
asset value you own of a fund on the record date. The record date is
March 16, 1998.
HOW DO I VOTE MY SHARES?
You can vote your shares by completing and signing the proxy card, and
mailing it in the enclosed postage paid envelope. If you need any
assistance, or have any questions regarding the proposals or how to
vote your shares, please call us at 800-544-8888.
HOW DO I SIGN THE PROXY CARD?
INDIVIDUAL ACCOUNTS Shareholders should sign exactly as their names
appear on the account registration shown on the proxy card.
JOINT ACCOUNTS Either owner may sign, but the name of the person
signing should conform exactly to a name shown in the registration.
ALL OTHER ACCOUNTS The person signing must indicate his or her
capacity. For example, a trustee for a trust or other entity should
sign, "Ann B. Collins, Trustee."
