-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, BZBNko2JmfA3A5Px6BcpMZ92jy3K9DAUU6sCEyciFMQXo2IpgC1tAXj3NvITY4jn t0ex9UOF29zIcnZMe/eQQg== 0000320351-94-000042.txt : 19940825 0000320351-94-000042.hdr.sgml : 19940825 ACCESSION NUMBER: 0000320351-94-000042 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 73 FILED AS OF DATE: 19940429 EFFECTIVENESS DATE: 19940430 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIDELITY SELECT PORTFOLIOS CENTRAL INDEX KEY: 0000320351 STANDARD INDUSTRIAL CLASSIFICATION: 0000 IRS NUMBER: 042732797 STATE OF INCORPORATION: MA FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 002-69972 FILM NUMBER: 94525192 BUSINESS ADDRESS: STREET 1: 82 DEVONSHIRE ST CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6174391263 MAIL ADDRESS: STREET 1: 82 DEVONSHIRE STREET STREET 2: MAIL ZONE ZZ2 CITY: BOSTON STATE: MA ZIP: 02109 485BPOS 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-1A REGISTRATION STATEMENT (NO. 2-69972) UNDER THE SECURITIES ACT OF 1933 [ ] Pre-Effective Amendment No. [ ] Post-Effective Amendment No. 48 [x] and REGISTRATION STATEMENT 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, MA 02109 (Address Of Principal Executive Offices) Registrant's Telephone Number (617) 570-7000 Arthur S. Loring, Secretary 82 Devonshire Street Boston, MA 02109 (Name and Address of Agent for Service) It is proposed that this filing will become effective: ( ) Immediately upon filing pursuant to paragraph (b) of Rule 485 (x) On April 30, 1994 pursuant to paragraph (b) of Rule 485 ( ) 60 days after filing pursuant to paragraph (a) of Rule 485 ( ) On ( ) pursuant to paragraph (a) of Rule 485 Registrant has filed a declaration pursuant to Rule 24f-2 under the Investment Company Act of 1940 and intends to file the Notice required by such Rule on or before April 30, 1994. FIDELITY SELECT PORTFOLIOS CROSS REFERENCE SHEET FORM N-1A ITEM NUMBER PROSPECTUS SECTION
1................................... Cover Page ... 2a.................................. Expenses .. b, Contents; The Funds at a Glance; Who May Want to c................................ Invest 3a.................................. Financial Highlights .. * b................................... . Performance c.................................... Performance d................................... . 4a Charter i................................. The Funds at a Glance; Investment Principles and ii............................... Risks Investment Principles and Risks b................................... . Who May Want to Invest; Investment Principles c.................................... 5a.................................. Charter .. b Cover Page; The Funds at a Glance; Charter; Doing i................................. Business with Fidelity Charter ii................................ Expenses; Breakdown of Expenses iii................................ c............................. Charter d............................. Charter; Breakdown of Expenses Cover Page; Charter e.................................... Expenses f.................................... Charter g(i)................................ * g(ii)............................... 5A............................... Performance 6a Charter i................................. How to Buy Shares; How to Sell Shares; Transaction ii................................ Details; Exchange Restrictions Charter iii............................... * b................................... . Transaction Details; Exchange Restrictions c.................................... * d................................... . Doing Business with Fidelity; How to Buy Shares; e.................................... How to Sell Shares; Investor Services f,g................................. Dividends, Capital Gains, and Taxes .. 7a.................................. Cover Page; Charter .. Expenses; How to Buy Shares; Transaction Details b................................... . Sales Charge Reductions and Waivers c.................................... How to Buy Shares d................................... . e, * f................................ 8................................... How to Sell Shares; Investor Services; Transaction ... Details; Exchange Restrictions 9................................... * ...
* Not Applicable FIDELITY SELECT PORTFOLIOS CROSS REFERENCE SHEET (continued) FORM N-1A ITEM NUMBER STATEMENT OF ADDITIONAL INFORMATION SECTION
10.................................. Cover Page .. 11.................................. Cover Page .. 12.................................. Description of the Trust .. 13a - Investment Policies and Limitations c............................ Portfolio Transactions d.................................. 14a - Trustees and Officers c............................ 15a, .............................. * b, Trustees and Officers c.............................. 16a FMR, Portfolio Transactions i................................ Trustees and Officers ii.............................. Management Contracts iii............................. Management Contracts b................................. c, Contracts with Companies Affiliated with FMR d............................. e - * g........................... Description of the Trust h................................. Contracts with Companies Affiliated with FMR i................................. 17a - Portfolio Transactions c............................ * d,e............................... 18a................................ Description of the Trust .. * b................................. 19a................................ Additional Purchase and Redemption Information .. Additional Purchase and Redemption Information; b.................................. Valuation of Portfolio Securities * c.................................. 20.................................. Distributions and Taxes .. 21a, Contracts with Companies Affiliated with FMR b.............................. * c................................. 22.................................. Performance .. 23.................................. Financial Statements ..
* Not Applicable [TEXT] (2_FIDELITY_LOGOS)FIDELITY SELECT PORTFOLIOS(REGISTERED TRADEMARK) AIR TRANSPORTATION AMERICAN GOLD AUTOMOTIVE BIOTECHNOLOGY BROKERAGE AND INVESTMENT MANAGEMENT CHEMICALS COMPUTERS CONSTRUCTION AND HOUSING CONSUMER PRODUCTS DEFENSE AND AEROSPACE DEVELOPING COMMUNICATIONS ELECTRONICS ENERGY ENERGY SERVICE ENVIRONMENTAL SERVICES FINANCIAL SERVICES FOOD AND AGRICULTURE HEALTH CARE HOME FINANCE INDUSTRIAL EQUIPMENT INDUSTRIAL MATERIALS INSURANCE LEISURE MEDICAL DELIVERY MONEY MARKET MULTIMEDIA NATURAL GAS PAPER AND FOREST PRODUCTS PRECIOUS METALS AND MINERALS REGIONAL BANKS RETAILING SOFTWARE AND COMPUTER SERVICES TECHNOLOGY TELECOMMUNICATIONS TRANSPORTATION UTILITIES ANNUAL REPORT AND PROSPECTUS FEBRUARY 28, 1994 CONTENTS
PERFORMANCE OVERVIEW AND MARKET RECAP FUND UPDATES* CONSUMER SECTOR CONSUMER PRODUCTS FOOD AND AGRICULTURE LEISURE MULTIMEDIA (FORMERLY BROADCAST AND MEDIA) RETAILING CYCLICALS SECTOR AIR TRANSPORTATION AUTOMOTIVE CHEMICALS CONSTRUCTION AND HOUSING ENVIRONMENTAL SERVICES INDUSTRIAL EQUIPMENT INDUSTRIAL MATERIALS PAPER AND FOREST PRODUCTS TRANSPORTATION ENERGY, UTILITIES AND AMERICAN GOLD NATURAL RESOURCES SECTOR ENERGY ENERGY SERVICE NATURAL GAS PRECIOUS METALS AND MINERALS UTILITIES FINANCIAL SERVICES SECTOR BROKERAGE AND INVESTMENT MANAGEMENT FINANCIAL SERVICES HOME FINANCE INSURANCE REGIONAL BANKS HEALTH CARE SECTOR BIOTECHNOLOGY HEALTH CARE MEDICAL DELIVERY TECHNOLOGY SECTOR COMPUTERS DEFENSE AND AEROSPACE DEVELOPING COMMUNICATIONS ELECTRONICS SOFTWARE AND COMPUTER SERVICES TECHNOLOGY TELECOMMUNICATIONS MONEY MARKET NOTES TO FINANCIAL STATEMENTS FOOTNOTES TO THE FINANCIAL STATEMENTS REPORT OF INDEPENDENT ACCOUNTANTS THE AUDITOR'S OPINION DIVIDEND DISTRIBUTIONS STATISTICAL ROUNDUP FIDELITY SELECT PORTFOLIOS PROSPECTUS P-1 * FUND UPDATES FOR EACH SELECT PORTFOLIO INCLUDE: PERFORMANCE AND INVESTMENT SUMMARY, MANAGER'S OVERVIEW, INVESTMENTS, AND FINANCIAL STATEMENTS.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE FUNDS. THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUNDS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK AND FUND SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED BY THE FDIC. PERFORMANCE OVERVIEW AND MARKET RECAP DEAR SHAREHOLDER: Despite a downturn in February, the last 12 months provided attractive returns for U.S. stock investors, and Select fund investors in particular. The Standard & Poor's 500 Composite Stock Price Index had a total return of 8.33% for the year ended February 28, 1994, slightly below the market's long-term annual average return. Most of the Select funds - 29 out of 35 - outperformed the S&P 500. However, two - Insurance (down 1.24%) and Natural Gas (down 3.84%) - had negative returns during the period. Low inflation, low interest rates and a strengthening economy boosted U.S. stocks from March 1993 through January 1994. The Dow Jones Industrial Average - an index of 30 blue-chip stocks - broke the 3900 barrier for the first time on January 21, before finishing the month at 3978. Then on February 4, the Federal Reserve Board pushed up the federal funds rate - the rate banks charge each other for overnight loans - from 3.00% to 3.25%, which had the effect of raising most interest rates. Fear that inflation concerns would lead the Fed to hike rates further caused the stock market to stumble in February, and the S&P 500 lost 2.72% for the month. Despite that late-period slide, strong performance from cyclical stocks - whose prices tend to rise and fall in step with the economy - helped drive the Dow to a 16.88% total return for the year ended February 28. The NASDAQ Composite Index, which tracks over-the-counter securities, was up 18.15%. TECHNOLOGY stocks were among the market's best performers over the past year. Many technologies - from cellular communication to computers - became more affordable, and consumers embraced new products and services. Related Select funds reflected the sector's strong gains: Computers, Defense and Aerospace, Developing Communications, Electronics, Software and Computer Services, and Technology all were up at least 30% for the year, and Telecommunications gained over 21%. As the U.S. economy picked up steam, CYCLICALS made strong gains. After often painful restructuring, U.S. manufacturers were well positioned once demand for their goods began to rise, and they quickly found themselves better able to compete globally. Industrial Equipment, Chemicals, Industrial Materials, and Paper and Forest Products all rose at least 22%. In addition, higher demand and effective cost-cutting benefited companies in the Automotive, Air Transportation, and Transportation funds, which were all up over 27%. A surge in home buying nationwide fueled Construction and Housing's equally strong performance. Environmental Services continued to suffer from an oversupply of environmental companies in the marketplace, and lagged the rest of the group. Many HEALTH-CARE stocks performed well considering the uncertainty surrounding President Clinton's reform plan. Over the past year, many health-care firms began to form alliances, and prepared to do business under a new set of rules. Medical Delivery returned over 40%, Biotechnology, 22% and Health Care, 20%. The stocks of many traditional CONSUMER PRODUCTS companies stalled over the past year. Low inflation prevented many food companies, in particular, from raising prices, which slowed Food and Agriculture. However, Consumer Products returned over 28%, largely by avoiding the large non-durable names, and instead focusing on smaller consumer products companies and on stocks tied to the explosion of communications technology. Many of these companies produce and distribute new entertainment programming, which falls under the broad category of consumer products. But they also helped boost the strong returns of Multimedia and Leisure. Retailing, meanwhile, was hurt by a consumer shift toward durable goods like homes and autos. Still, the fund returned over 15%. Although its overall performance placed it fifth out of the six groups, ENERGY, UTILITIES AND NATURAL RESOURCES contained a couple of star performers. Precious Metals and Minerals (up over 70%) and American Gold (up over 60%) benefited from an increased demand worldwide, and led all Select funds. But falling crude oil prices hurt Energy, Energy Services, and Natural Gas. Utilities had a strong first half of 1993 as investors sought refuge from falling interest rates in high-yielding utilities stocks, but performance later suffered when rates began to rise. The strong performance of the stock and bond markets through most of the year boosted the earnings of Brokerage and Investment Management companies, and the fund finished the year well ahead of the rest of the FINANCIAL SERVICES group. Falling interest rates helped the profit margins of companies in the Home Finance, Financial Services, and Regional Banks funds through much of 1993. However, all three funds slowed after rates leveled out, and then began to rise. Finally, the inability of insurers to raise premiums continued to plague Insurance. Given the strength of corporate earnings projections over the next six months, the outlook for many Select funds may appear promising. However, the valuation - stock prices relative to earnings - of the U.S. stock market was at a 20-year high at the end of February, which is reason for caution. Stock prices did fall in March, after the period ended, and the market could be volatile in the coming months. But regardless of whether this recent slide turns out to be a short-term correction or the start of a longer market downturn, a long-term approach to stock investing can help you weather the peaks and valleys. Finally, you'll notice some changes in this year's report. The portfolio manager interviews have been expanded, and we've added a "Fund Facts" box that contains added information about each fund and its manager. You'll also find a graph that illustrates how a hypothetical $10,000 investment would have performed over the life of each fund, compared to the performance of the S&P 500. We hope what follows will help you better evaluate your investments. Thank you for your continued interest in Fidelity Select Portfolios. Sincerely, Richard A. Spillane, Jr. Select Group Leader CUMULATIVE TOTAL RETURNS* FOR THE YEAR ENDED FEBRUARY 28, 1994 Row: 1, Col: 1, Value: 70.58 Row: 2, Col: 1, Value: 60.14 Row: 3, Col: 1, Value: 46.24 Row: 4, Col: 1, Value: 45.06 Row: 5, Col: 1, Value: 40.25 Row: 6, Col: 1, Value: 40.07 Row: 7, Col: 1, Value: 37.14 Row: 8, Col: 1, Value: 35.87 Row: 9, Col: 1, Value: 35.62 Row: 10, Col: 1, Value: 34.86 Row: 11, Col: 1, Value: 33.19 Row: 12, Col: 1, Value: 32.04 Row: 13, Col: 1, Value: 30.45 Row: 14, Col: 1, Value: 30.24 Row: 15, Col: 1, Value: 28.43 Row: 16, Col: 1, Value: 27.94 Row: 17, Col: 1, Value: 27.47 Row: 18, Col: 1, Value: 27.45 Row: 19, Col: 1, Value: 24.66 Row: 20, Col: 1, Value: 23.63 Row: 21, Col: 1, Value: 22.17 Row: 22, Col: 1, Value: 22.03 Row: 23, Col: 1, Value: 21.9 Row: 24, Col: 1, Value: 20.57 Row: 25, Col: 1, Value: 19.61 Row: 26, Col: 1, Value: 15.61 Row: 27, Col: 1, Value: 11.69 Row: 28, Col: 1, Value: 10.85 Row: 29, Col: 1, Value: 9.69 Row: 30, Col: 1, Value: 6.46 Row: 31, Col: 1, Value: 6.359999999999999 Row: 32, Col: 1, Value: 5.02 Row: 33, Col: 1, Value: 2.53 Row: 34, Col: 1, Value: -1.24 Row: 35, Col: 1, Value: -3.84 Row: 36, Col: 1, Value: 8.33 Precious Metals and Minerals 70.58%American Gold 60.14%Electronics 46.24%Computers 45.06%Medical Delivery 40.25%Industrial Equipment 40.07%Leisure 37.14%Brokerage and Investment Management 35.87%Technology 35.62%Multimedia (formerly Broadcast and Media) 34.86%Software and Computer Services 33.19%Defense and Aerospace 32.04%Automotive 30.45%Developing Communications 30.24%Consumer Products 28.43%Air Transportation 27.94%Transportation 27.47%Construction and Housing 27.45%Industrial Materials 24.66%Chemicals 23.63%Biotechnology 22.17%Paper and Forest Products 22.03%Telecommunications 21.90%Health Care 20.57%Home Finance 19.61%Retailing 15.61%Food and Agriculture 11.69%Financial Services 10.85%Energy 9.69%Regional Banks 6.46%Energy Service 6.36%Environmental Services 5.02%Utilities 2.53%Insurance - -1.24%**Natural Gas -3.84%S&P 500 8.33%Percentage of Cumulative Returns CONSUMER PRODUCTS PORTFOLIO PERFORMANCE AND INVESTMENT SUMMARY PERFORMANCE There are several ways to evaluate a fund's historical performance: total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 LIFE OF FEBRUARY 28, 1994 YEAR FUND CONSUMER PRODUCTS 28.43% 83.39% CONSUMER PRODUCTS (INCL. 3% SALES CHARGE) 24.58% 77.89% S&P 500 8.33% 46.34% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year or since the fund started on June 29, 1990. You can compare these figures to the performance of the S&P 500 - a common proxy for the U.S. stock market. This benchmark includes reinvested dividends and capital gains, if any. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 LIFE OF FEBRUARY 28, 1994 YEAR FUND CONSUMER PRODUCTS 28.43% 17.95% CONSUMER PRODUCTS (INCL. 3% SALES CHARGE) 24.58% 16.97% S&P 500 8.33% 10.92% AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of growth in the long run and volatility in the short run. Unlike the broader market, however, some sectors may not have a history of growth in the long run. And, as with all stock funds, the share price and return of a fund that invests in a sector will vary. That means if you sell your shares during a sector downturn, you might lose money. But if you can identify a sector that is about to experience rapid growth you may have the potential for above-average gains. (checkmark) $10,000 OVER LIFE OF FUND Consumer Prod S&P 500 06/29/90 9700.00 10000.00 06/30/90 9700.00 10012.31 07/31/90 9670.90 9980.27 08/31/90 8943.40 9078.05 09/30/90 8439.00 8635.95 10/31/90 8749.40 8598.82 11/30/90 9234.40 9154.30 12/31/90 9593.72 9409.71 01/31/91 9808.43 9819.97 02/28/91 10569.68 10522.10 03/31/91 11077.18 10776.73 04/30/91 10950.30 10802.60 05/31/91 11477.32 11269.27 06/30/91 10911.27 10753.14 07/31/91 11623.72 11254.23 08/31/91 12101.94 11520.96 09/30/91 11994.59 11328.56 10/31/91 12375.21 11480.36 11/30/91 11857.95 11017.70 12/31/91 13290.06 12278.13 01/31/92 13379.45 12049.75 02/29/92 13836.36 12206.40 03/31/92 13677.44 11968.38 04/30/92 13717.17 12320.25 05/31/92 13627.77 12380.62 06/30/92 13015.68 12196.14 07/31/92 13388.15 12694.97 08/31/92 13253.65 12434.72 09/30/92 13377.80 12581.45 10/31/92 13595.08 12625.48 11/30/92 14246.90 13056.01 12/31/92 14427.77 13216.60 01/31/93 14331.66 13327.62 02/28/93 13851.09 13508.88 03/31/93 14662.72 13793.92 04/30/93 14566.61 13460.10 05/31/93 15719.97 13820.83 06/30/93 15730.65 13860.91 07/31/93 15880.16 13805.47 08/31/93 16916.06 14328.70 09/30/93 17289.84 14218.37 10/31/93 17823.80 14512.69 11/30/93 17428.67 14374.82 12/31/93 17987.72 14548.75 01/31/94 17835.98 15043.41 02/28/94 17789.29 14634.23 Let's say you invested $10,000 in Fidelity Select Consumer Products Portfolio on June 29, 1990, when the fund started, and paid a 3% sales charge. By February 28, 1994, your investment would have grown to $17,789 - a 77.89% increase. That compares to $10,000 invested in the S&P 500, which would have grown to $14,634 over the same period - a 46.34% increase. INVESTMENT SUMMARY TOP TEN STOCKS AS OF FEBRUARY 28, 1994 % OF FUND'S INVESTMENTS Premark International, Inc. 8.5 Dial Corp. (The) 5.3 Clear Channel Communications, Inc. 3.6 Standex International Corp. 3.5 Syratech Corp. 3.3 Stanhome, Inc. 3.0 Ford Motor Co. 2.7 Federated Department Stores, Inc. 2.6 Telefonos de Mexico SA sponsored ADR Class L 2.4 Fedders USA, Inc. 2.4 TOP INDUSTRIES AS OF FEBRUARY 28, 1994 Row: 1, Col: 1, Value: 68.90000000000001 Row: 1, Col: 2, Value: 3.3 Row: 1, Col: 3, Value: 4.2 Row: 1, Col: 4, Value: 4.4 Row: 1, Col: 5, Value: 8.5 Row: 1, Col: 6, Value: 10.7 Conglomerates 10.7% Fabricated Rubber Products 8.5% Hotels, Motels & Tourist Courts 4.4% Appliances 4.2% Cutlery, Hand Tools, Hardware 3.3% All Others 68.9%* * INCLUDES SHORT-TERM INVESTMENTS CONSUMER PRODUCTS PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW Mary English, Portfolio Manager of Fidelity Select Consumer Products Portfolio Q. MARY, HOW DID THE FUND DO? A. Quite well. Total return was 28.43% for the 12 months ended February 28, 1994. That beat the S&P 500, which returned 8.33% during the same period. Q. WHY DID THE FUND DO SO MUCH BETTER THAN THE S&P? A. I just recently took over the fund, but the previous manager did well by being very creative. First, the fund avoided the bigger, traditional consumer products companies, which were among the market laggards in 1993. Staying away from the familiar tobacco, food and beverage stocks helped the fund's performance. Second, the fund dodged retail stocks - again, among the market's worst performers - and drug companies, which languished amid doubts about the direction of health-care reform. Instead, the fund was made up of an eclectic group of consumer products companies. Q. DID ANY THEMES EMERGE? A. Several of the fund's best performers were companies that provide household products. They had in common attractive stock prices relative to other measures like cash flow and earnings, and excellent growth potential. Fabricated rubber manufacturer Premark - the fund's top investment at the end of February - has experienced surging sales of its Tupperware products, especially overseas. At Stanhome, which manufactures a wide variety of household items, orders have risen over the past six months, and so has the stock. Standex International, a conglomerate, produces a wide array of goods ranging from grocery freezer cases to self-cleaning portable kitchen hoods for restaurants. Finally, Syratech, a cutlery company, saw stronger sales of its giftware lines and seasonal products during the Christmas season. All of these stocks were up at least 25% from the end of August through the end of February. Q. WHERE ELSE WERE THERE OPPORTUNITIES? A. The fund benefited from investor speculation about the roles companies will play in the building of the information superhighway, which will combine the technologies of computers, telephones and televisions. General Instrument - a supplier of cable television and communications equipment - was a strong performer. Motorola's advancements in wireless communications and strong semiconductor sales helped boost its stock price. In addition, Clear Channel Communications - which owns radio stations nationwide - helped the fund. The company recently shed some of its less profitable properties in favor of stations in larger markets, which could increase revenues. Q. THE IMPROVING ECONOMY HELPED MANY TRADITIONAL CYCLICAL STOCKS - THOSE THAT RISE AND FALL WITH ECONOMIC CYCLES - IN 1993. DID THE FUND BENEFIT? A. Yes. As companies that manufacture consumer non-durables struggled, demand for consumer durable goods shot up. For example, the nationwide housing boom fueled an increase in appliance sales. Fedders - a room air-conditioner manufacturer - was among the fund's top 10 investments on February 28. The company's stock rose on anticipation of increasing orders heading into summer. Also, Ford - the fund's seventh largest investment - benefited from a cyclical increase in domestic auto sales. Q. BUT EACH OF THE BIG THREE AUTO MAKERS HAVE DONE WELL . . . A. They have. In hindsight, the fund could have performed even better by investing in Chrysler and General Motors, in addition to Ford. I'd like to take advantage of the growth potential in auto stocks, but I think we may already be late in the game. Q. WHAT'S YOUR VIEW OF THE NEXT SEVERAL MONTHS, AND HOW ARE YOU PLANNING TO POSITION THE FUND? A. A shift of consumer spending from durables back to some non-durables may be beginning. The fund is already invested in Federated Department Stores, and I'm looking to add selectively to the fund's retail, apparel and textile stake. In addition, if inflation shows signs of returning, I may get back into food and beverage companies, which may gain the power to raise prices without losing revenues. Also, I have my eye on drug companies. Uncertainty over health-care reform continues to dog them, but out of uncertainty may come opportunities. FUND FACTS START DATE: June 29, 1990 SIZE: as of February 28, 1994, over $8 million MANAGER: Mary English, since February 1994; manager, Fidelity Select Retailing Portfolio, June 1993-January 1994; equity analyst, specialty retail and advertising industries, 1991-1993; joined Fidelity in 1991 (checkmark) CONSUMER PRODUCTS PORTFOLIO INVESTMENTS FEBRUARY 28, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 88.8% SHARES VALUE (NOTE 1) APPAREL STORES - 1.2% GENERAL APPAREL STORES - 1.0% Edison Brothers Stores, Inc. 2,800 $ 81,895 28087510 SHOE STORES - 0.2% United States Shoe Corp. 1,000 13,875 91260510 TOTAL APPAREL STORES 95,770 AUTOS, TIRES, & ACCESSORIES - 3.5% MOTOR VEHICLES SUPPLIES & NEW PARTS - 0.8% Custom Chrome, Inc. (a) 3,000 65,250 23190510 MOTOR VEHICLES & CAR BODIES - 2.7% Ford Motor Co. 3,600 223,650 34537010 TOTAL AUTOS, TIRES, & ACCESSORIES 288,900 BROADCASTING - 4.7% CABLE TV OPERATORS - 1.1% Comcast Corp. Class A 1,000 20,375 20030010 Comcast Corp. Class A (Special) 500 10,125 20030020 Liberty Media Corp. Class A (a) 2,800 64,050 53071530 94,550 RADIO BROADCASTING - 3.6% Clear Channel Communications, Inc. (a) 7,375 295,922 18450210 TOTAL BROADCASTING 390,472 CELLULAR - 1.1% CELLULAR & COMMUNICATION SERVICES - 1.1% Rogers Cantel Mobile Communications, Inc. Class B (non-vtg.) (a) 3,300 92,618 77510210 COMMUNICATIONS EQUIPMENT - 1.2% TELEPHONE INTERCONNECT SYSTEMS - 1.2% General Instrument Corp. (a) 2,000 94,750 37012110 CONGLOMERATES - 10.7% Dial Corp. (The) 9,900 440,550 25247010 Lancaster Colony Corp. 2,000 89,000 51384710 Mark IV Industries, Inc. 3,475 67,328 57038710 Standex International Corp. 10,000 286,250 85423110 883,128 CONSUMER DURABLES - 5.0% CUTLERY, HAND TOOLS, HARDWARE - 3.3% Syratech Corp. (a) 14,900 271,925 87182410 GLASS, PRESSED OR BLOWN - 1.1% Libbey, Inc. 5,100 93,713 52989810 POTTERY - 0.6% Waterford Wedgewood (IR) unit 65,800 44,230 94151395 TOTAL CONSUMER DURABLES 409,868 CONSUMER ELECTRONICS - 5.1% APPLIANCES - 4.2% Fedders USA, Inc. (a) 28,100 196,700 31313510 Newell Co. 3,700 148,925 65119210 Toro Co. 100 2,838 89109210 348,463 WATCHES & CLOCKS - 0.9% Fossil, Inc. 4,800 74,400 34988210 TOTAL CONSUMER ELECTRONICS 422,863 SHARES VALUE (NOTE 1) ELECTRICAL EQUIPMENT - 2.5% ELECTRICAL EQUIPMENT - WHOLESALE - 0.9% Duracell International, Inc. 1,700 $ 70,763 26633L10 TV & RADIO COMMUNICATION EQUIPMENT -1.6% Scientific-Atlanta, Inc. 5,000 135,000 80865510 TOTAL ELECTRICAL EQUIPMENT 205,763 ELECTRONICS - 0.9% SEMICONDUCTORS - 0.9% Motorola, Inc. 700 71,488 62007610 ENTERTAINMENT - 1.7% CRUISES - 1.7% Carnival Cruise Lines, Inc. Class A 2,700 130,613 14365810 Royal Caribbean Cruises Ltd. 400 10,950 78015392 141,563 FOODS - 0.6% MEAT & FISH - 0.6% IBP, Inc. 2,000 48,250 44922310 GENERAL MERCHANDISE STORES - 4.2% DEPARTMENT STORES - 2.6% Federated Department Stores, Inc. (a) 9,100 218,400 31410J10 VARIETY STORES - 1.6% Mac Frugals Bargains C/O, Inc. (a) 8,000 131,000 55415210 TOTAL GENERAL MERCHANDISE STORES 349,400 HOME FURNISHINGS - 1.5% FURNITURE - 1.2% Rowe Furniture Corp. 6,450 102,394 77952810 WOOD HOUSEHOLD FURNITURE - 0.3% O'Sullivan Industries Holdings (a) 1,000 22,625 68860910 TOTAL HOME FURNISHINGS 125,019 HOUSEHOLD PRODUCTS - 16.8% COSMETICS - 2.8% CCA Industries, Inc. (a) 21,800 177,125 12486710 DEP Corp. Class A (a) 10,000 52,500 23320220 229,625 FABRICATED RUBBER PRODUCTS - 8.5% Premark International, Inc. 8,700 700,350 74045910 MANUFACTURED PRODUCTS - 2.5% Paragon Trade Brands, Inc. (a) 5,000 166,875 69912K10 Windmere Corp. (a) 5,000 40,625 97341110 207,500 SOAPS & DETERGENTS - 3.0% Stanhome, Inc. 7,000 250,250 85442510 TOTAL HOUSEHOLD PRODUCTS 1,387,725 LEASING & RENTAL - 0.9% EQUIPMENT RENTAL & LEASING, NEC - 0.9% Aaron Rents, Inc. Class B 5,000 71,250 00253520 LEISURE DURABLES & TOYS - 1.6% LEISURE DURABLES - 1.1% ARCTCO, Inc. 2,000 51,500 03966510 Outboard Marine Corp. 1,700 42,500 69002010 94,000 TOYS & GAMES - 0.5% SLM International, Inc. (a) 2,000 40,000 78441410 TOTAL LEISURE DURABLES & TOYS 134,000 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) LODGING & GAMING - 5.8% HOTELS, MOTELS, & TOURIST COURTS - 4.4% Mirage Resorts, Inc. (a) 7,750 $ 195,688 60462E10 Showboat, Inc. 4,700 83,425 82539010 Station Casinos, Inc. 4,000 85,000 85768910 364,113 RACING & GAMING - 1.4% WMS Industries, Inc. (a) 4,400 113,850 92929710 TOTAL LODGING & GAMING 477,963 PRINTING - 1.2% COMMERCIAL PRINTING, NEC - 1.2% Devon Group, Inc. 5,000 97,500 25180110 PUBLISHING - 5.0% BOOK PUBLISHING & PRINTING - 2.2% Harcourt General, Inc. 5,200 181,350 41163G10 GENERAL PUBLISHING - 1.1% Score Board, Inc. (a) 6,000 89,250 80917320 NEWSPAPERS - 1.7% Scripps (E.W.) Co. Class A 5,000 140,625 81103910 TOTAL PUBLISHING 411,225 RAILROADS - 1.4% Santa Fe Pacific Corp. 5,000 113,750 80218310 REAL ESTATE - 0.0% SUBDIVIDED REAL ESTATE DEVELOPMENT - 0.0% Koll Real Estate Group, Inc. (a) 9,700 3,941 50043410 RESTAURANTS - 0.7% Quantum Restaurant Group, Inc. (a) 6,100 59,475 74763T10 RETAIL & WHOLESALE, MISCELLANEOUS - 4.3% MAIL ORDER - 1.4% Lillian Vernon Corp. 6,500 112,938 53243010 MISCELLANEOUS NONDURABLE GOODS - WHOLESALE - 0.5% Amway Asia Pacific Ltd. (a) 1,000 44,250 03299H22 MUSIC, TV, & ELECTRONIC STORES - 0.6% Futures Shops Ltd. 2,600 45,276 36091310 RETAIL, GENERAL - 1.8% CML Group, Inc. 5,000 106,250 12582010 Little Switzerland, Inc. (a) 5,400 45,900 53752810 152,150 TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 354,614 SERVICES - 2.8% BUSINESS SERVICES - 1.7% Catalina Marketing Corp. (a) 2,700 140,063 14886710 GENERAL SERVICES - 1.1% Supercuts, Inc. (a) 5,700 91,200 86805710 TOTAL SERVICES 231,263 TELEPHONE SERVICES - 2.4% Telefonos de Mexico SA sponsored ADR representing shares Ord. Class L 3,000 201,375 87940378 TOBACCO - 2.0% TOBACCO MANUFACTURERS - 2.0% Philip Morris Companies, Inc. 3,000 168,000 71815410 TOTAL COMMON STOCKS (Cost $6,387,981) 7,331,933 REPURCHASE AGREEMENTS - 11.2% MATURITY VALUE (NOTE 1) AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account, at 3.47% dated 2/28/94 due 3/1/94 $ 925,089 $ 925,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $7,312,981) $ 8,256,933 LEGEND (a) Non-income producing OTHER INFORMATION CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1, 1993, the fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of February 28, 1993 have been restated to reflect an increase in paid in capital of $18,091, a decrease in undistributed net investment loss of $73,059 and a decrease in accumulated net realized gain on investments of $91,150. Purchases and sales of securities, other than short-term securities, aggregated $13,472,614 and $14,014,758, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $10,852 for the period (see Note 4 of Notes to Financial Statements). The maximum loan and average daily loan balances during the periods for which loans were outstanding amounted to $1,263,000 and $916,300, respectively. The weighted average interest rate paid was 3.7% (see Note 7 of Notes to Financial Statements). INCOME TAX INFORMATION At February 28, 1994, the aggregate cost of investment securities for income tax purposes was $7,313,632. Net unrealized appreciation aggregated $943,301, of which $1,121,126 related to appreciated investment securities and $177,825 related to depreciated investment securities. The fund hereby designates $165,000 as a capital gain dividend for the purpose of the dividend paid deduction. CONSUMER PRODUCTS PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $925,000) (cost $7,312,981) (Notes 1 $ 8,256,933 and 2) - See accompanying schedule Cash 228 Receivable for investments sold 278,152 Receivable for fund shares sold 46,233 Dividends receivable 5,405 Redemption fees receivable (Note 1) 37 Receivable from investment adviser for expense reductions (Note 8) 3,146 TOTAL ASSETS 8,590,134 LIABILITIES Payable for investments purchased $ 117,295 Payable for fund shares redeemed 76,351 Accrued management fee 4,477 Other payables and accrued expenses 18,039 TOTAL LIABILITIES 216,162 NET ASSETS $ 8,373,972 Net Assets consist of (Note 1): Paid in capital $ 7,053,121 Undistributed net investment income 70 Accumulated undistributed net realized gain (loss) on investments 376,829 Net unrealized appreciation (depreciation) on investment securities 943,952 NET ASSETS, for 549,612 shares outstanding $ 8,373,972 NET ASSET VALUE and redemption price per share ($8,373,972 (divided by) 549,612 shares) $15.24 Maximum offering price per share (100/97 of $15.24) $15.71
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994 INVESTMENT INCOME $ 70,117 Dividends Interest 32,557 TOTAL INCOME 102,674 EXPENSES Management fee (Note 4) $ 56,196 Transfer agent (Note 4) 121,453 Fees Redemption fees (Note 1) (13,271 ) Accounting fees and expenses 45,448 (Note 4) Non-interested trustees' compensation 63 Custodian fees and expenses 10,746 Registration fees 8,519 Audit 4,342 Legal 95 Interest (Note 7) 933 Reports to shareholders 1,252 Total expenses before reductions 235,776 Expense reductions (Note 8) (13,001 222,775 ) NET INVESTMENT INCOME (LOSS) (120,101 ) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 1,327,222 Net realized gain (loss) on investment securities Change in net unrealized appreciation (depreciation) on investment securities 607,019 NET GAIN (LOSS) 1,934,241 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 1,814,140 OTHER INFORMATION $19,410 Sales charges paid to FDC (Note 4) Deferred sales charges withheld $748 by FDC (Note 4) Exchange fees withheld by FSC $11,543 (Note 4)
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS FEBRUARY 28, ENDED 1994 FEBRUARY 28, 1993 Operations $ (120,101 $ (49,464 Net investment income (loss) ) ) Net realized gain (loss) on investments 1,327,222 293,358 Change in net unrealized appreciation (depreciation) on investments 607,019 (194,656 ) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 1,814,140 49,238 Distributions to shareholders from net realized gains (829,580 (557,742 ) ) Share transactions 15,679,102 5,568,122 Net proceeds from sales of shares Reinvestment of distributions 814,217 537,409 Cost of shares redeemed (16,130,050 (6,153,451 ) ) Paid in capital portion of redemption fees (Note 1) 20,663 8,906 Net increase (decrease) in net assets resulting from share transactions 383,932 (39,014 ) TOTAL INCREASE (DECREASE) IN NET ASSETS 1,368,492 (547,518 ) NET ASSETS Beginning of period 7,005,480 7,552,998 End of period (including undistributed net investment income (loss) of $70 and $(73,059), respectively)$ 8,373,972 $ 7,005,480 OTHER INFORMATION Shares Sold 1,044,542 420,803 Issued in reinvestment of distributions 54,101 40,868 Redeemed (1,089,262 (468,323 ) ) Net increase (decrease) 9,381 (6,652)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEAR ENDED TEN MONTHS YEAR ENDED JUNE 29, 1990 FEBRUARY 28, ENDED APRIL 30, (COMMENCEMEN FEBRUARY 28, T OT OPERATIONS) TO APRIL 30, SELECTED PER-SHARE DATAC 1994 1993 1992 1991 Net asset value, beginning of period $ 12.97 $ 13.81 $ 11.22 $ 10.00 Income from Investment Operations Net investment income (loss) (.20) (.09) (.07) .05F Net realized and unrealized gain (loss) on investments 3.84 .20 2.86 1.18 Total from investment operations 3.64 .11 2.79 1.23 Less Distributions From net investment income - - - (.06) From net realized gain (1.40) (.97) (.22) - Total distributions (1.40) (.97) (.22) (.06) Redemption fees added to paid in capital .03 .02 .02 .05 Net asset value, end of period $ 15.24 $ 12.97 $ 13.81 $ 11.22 TOTAL RETURND, E 28.43% .98% 25.27% 12.89% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 8,374 $ 7,005 $ 7,553 $ 1,877 Ratio of expenses to average net assetsB 2.48% 2.47%A 2.48% 2.43%A Ratio of expenses to average net assets before expense reductionsB 2.62% 3.17%A 2.83% 3.11%A Ratio of net investment income (loss) to average net assets (1.34)% (.80)% (.56)% .62%A A Portfolio turnover rate 169% 215%A 140% 108%A
1 ANNUALIZED 2 SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS. 3 NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH PERIOD. 4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 5 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. 6 INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO $.02 PER SHARE. FOOD AND AGRICULTURE PORTFOLIO PERFORMANCE AND INVESTMENT SUMMARY PERFORMANCE There are several ways to evaluate a fund's historical performance: total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND FOOD AND AGRICULTURE 11.69% 132.94% 362.24% FOOD AND AGRICULTURE (INCL. 3% SALES CHARGE) 8.34% 125.95% 348.38% S&P 500 8.33% 89.60% 222.99% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years, or since the fund started on July 29, 1985. You can compare these figures to the performance of the S&P 500 - a common proxy for the U.S. stock market. This benchmark includes reinvested dividends and capital gains, if any. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND FOOD AND AGRICULTURE 11.69% 18.43% 19.50% FOOD AND AGRICULTURE (INCL. 3% SALES CHARGE) 8.34% 17.71% 19.07% S&P 500 8.33% 13.65% 14.62% AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of growth in the long run and volatility in the short run. Unlike the broader market, however, some sectors may not have a history of growth in the long run. And, as with all stock funds, the share price and return of a fund that invests in a sector will vary. That means if you sell your shares during a sector downturn, you might lose money. But if you can identify a sector that is about to experience rapid growth you may have the potential for above-average gains. (checkmark) $10,000 OVER LIFE OF FUND 07/29/85 9700.00 10000.00 07/31/85 9583.60 9926.31 08/31/85 9651.50 9841.93 09/30/85 9467.20 9533.88 10/31/85 10194.70 9974.35 11/30/85 10864.00 10658.59 12/31/85 11164.70 11174.46 01/31/86 11116.20 11237.04 02/28/86 12328.70 12077.57 03/31/86 13143.50 12751.50 04/30/86 13628.50 12607.41 05/31/86 14152.30 13278.12 06/30/86 14947.70 13502.52 07/31/86 14103.80 12747.73 08/31/86 14782.80 13693.61 09/30/86 13589.70 12561.15 10/31/86 13890.40 13285.93 11/30/86 14055.30 13608.78 12/31/86 13677.00 13261.75 01/31/87 15345.40 15048.11 02/28/87 16538.50 15642.51 03/31/87 17042.90 16094.58 04/30/87 16984.70 15951.34 05/31/87 16878.00 16090.11 06/30/87 17857.70 16902.66 07/31/87 18507.60 17759.63 08/31/87 19157.50 18422.06 09/30/87 18963.50 18018.62 10/31/87 14685.80 14137.41 11/30/87 14035.90 12972.49 12/31/87 14704.52 13959.69 01/31/88 15279.78 14547.40 02/29/88 16036.71 15225.31 03/31/88 16147.72 14754.84 04/30/88 16198.18 14918.62 05/31/88 16319.29 15048.41 06/30/88 16985.38 15739.14 07/31/88 17106.49 15679.33 08/31/88 17096.40 15146.23 09/30/88 17782.68 15791.46 10/31/88 18610.25 16230.46 11/30/88 18176.28 15998.37 12/31/88 18641.56 16278.34 01/31/89 19602.99 17469.91 02/28/89 19248.78 17034.91 03/31/89 19977.44 17431.83 04/30/89 21009.70 18336.54 05/31/89 22305.10 19079.17 06/30/89 22743.36 18970.42 07/31/89 24912.86 20683.44 08/31/89 24528.79 21088.84 09/30/89 24632.59 21002.38 10/31/89 24383.46 20515.12 11/30/89 25307.31 20933.63 12/31/89 25887.05 21436.04 01/31/90 24086.41 19997.68 02/28/90 24430.98 20255.65 03/31/90 25486.91 20792.42 04/30/90 25386.88 20272.61 05/31/90 27598.78 22249.19 06/30/90 28494.03 22097.90 07/31/90 28482.80 22027.18 08/31/90 26404.99 20035.93 09/30/90 25562.64 19060.18 10/31/90 26169.13 18978.22 11/30/90 27247.35 20204.21 12/31/90 28301.55 20767.91 01/31/91 29113.81 21673.39 02/28/91 31306.92 23223.04 03/31/91 32838.62 23785.03 04/30/91 32339.65 23842.12 05/31/91 33523.24 24872.10 06/30/91 32142.04 23732.96 07/31/91 33487.19 24838.91 08/31/91 34820.54 25427.59 09/30/91 34206.97 25002.95 10/31/91 34218.77 25337.99 11/30/91 33982.78 24316.87 12/31/91 37949.44 27098.72 01/31/92 37383.77 26594.68 02/29/92 37174.71 26940.42 03/31/92 36350.79 26415.08 04/30/92 35932.69 27191.68 05/31/92 36252.42 27324.92 06/30/92 35856.03 26917.78 07/31/92 37240.98 28018.72 08/31/92 37075.80 27444.33 09/30/92 37698.39 27768.18 10/31/92 38104.98 27865.36 11/30/92 39566.15 28815.57 12/31/92 40236.27 29170.00 01/31/93 40249.28 29415.03 02/28/93 40145.20 29815.08 03/31/93 41237.95 30444.17 04/30/93 39636.74 29707.43 05/31/93 40884.72 30503.58 06/30/93 40477.77 30592.05 07/31/93 39975.87 30469.68 08/31/93 41888.52 31624.48 09/30/93 41752.87 31380.97 10/31/93 43326.41 32030.56 11/30/93 42824.50 31726.27 12/31/93 43784.06 32110.15 01/31/94 45108.26 33201.90 02/28/94 44837.72 32298.81 Let's say you invested $10,000 in Fidelity Select Food and Agriculture Portfolio on July 29, 1985, when the fund started, and paid a 3% sales charge. By February 28, 1994, your investment would have grown to $44,838 - a 348.38% increase. That compares to $10,000 invested in the S&P 500, which would have grown to $32,299 over the same period - a 222.99% increase. INVESTMENT SUMMARY TOP TEN STOCKS AS OF FEBRUARY 28, 1994 % OF FUND'S INVESTMENTS Ralston Purina Co. 10.1 Dr. Pepper/Seven-Up Companies, Inc. 4.8 Dole Food, Inc. 4.3 Tyson Foods, Inc. 3.6 McDonald's Corp. 2.9 Dean Foods, Inc. 2.9 Pioneer Hi-Bred International, Inc. 2.7 IBP, Inc. 2.4 CPC International, Inc. 2.2 ConAgra, Inc. 2.0 TOP INDUSTRIES AS OF FEBRUARY 28, 1994 Row: 1, Col: 1, Value: 39.4 Row: 1, Col: 2, Value: 6.4 Row: 1, Col: 3, Value: 12.5 Row: 1, Col: 4, Value: 12.5 Row: 1, Col: 5, Value: 13.5 Row: 1, Col: 6, Value: 15.7 Food 15.7% Meat & Fish 13.5% Soft Drinks 12.5% Grain Mill Products 12.5% Retail Grocery 6.4% All Others 39.4%* * INCLUDES SHORT-TERM INVESTMENTS FOOD AND AGRICULTURE PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW William Mankivsky, Portfolio Manager of Fidelity Select Food and Agriculture Portfolio Q. BILL, HOW DID THE FUND DO? A. For the year ended February 28, 1994, the fund had a total return of 11.69%. That beat the S&P 500, which returned 8.33% during the same period. Q. WHAT HELPED THE FUND? A. Partly the fact that we avoided packaged foods, which didn't fare very well over the past 12 months. During most of the 1980s, those companies' earnings were driven by their ability to increase product prices. But now that's changed, and the companies may not be able to raise prices further. Packaged food companies suffered as supermarkets resisted price increases, and consumers turned to cheaper private-label foods. So I looked instead for companies with products that appear to be on the brink of better pricing, and as a result, had room to profit from price increases. Q. WHAT COMPANIES WERE ATTRACTIVE? A. Dole Food - which gets a significant portion of its revenues from bananas - is one example. Bananas are currently at the bottom of their price cycle, and the company has a fair amount of room to improve profits if banana prices rise. Unfortunately, banana prices didn't recover as quickly as I thought they would, and the stock was somewhat of a disappointment. But I'm still optimistic that they have growth potential so lately I've also been adding to the fund's investments in Chiquita Brands. Dean Foods - which gets a majority of its profits from canned vegetables - is another example of a company that could raise prices. Bumper crops in the early 1990s had depressed vegetable prices. But last year's floods may mean a decrease in the vegetable supply, which could help boost their prices this year. Q. IS THE PRICING CYCLE THE THREAD THAT RUNS THROUGH ALL YOUR TOP INVESTMENTS? A. Not necessarily. Ralston Purina Co. - the fund's largest investment at the end of the period - was attractive in part because the company is taking demonstrable steps to cut costs. The company also owns Eveready Batteries, a soy protein business, and a private-label cereal division, in addition to its core pet food business. What's more, I think the company's stock is inexpensive compared to its value. Dr. Pepper/Seven-Up Companies Inc. is re-entering the New York market, which may boost revenues, and it has a strong cash flow. I also have investments in Tyson Foods Inc., the nation's largest poultry company, because of its recent strong growth and its potential for growth to continue. Q. ONE OF YOUR TOP INVESTMENTS SIX MONTHS AGO WAS DEERE. WHY HAVE YOU ELIMINATED IT NOW? A. Deere was one of the fund's strongest performers throughout the period. But I asked myself "How much higher can it go?" I thought the stock was at a relatively high price, and I started to worry that any bad news could send it tumbling. So I pared back the fund's stake in the company. But there are others in the agriculture sector - like commodity processors - I have continued to hold. The Midwest floods could have a major effect on corn prices. If we see anything short of a bumper corn crop in 1994, corn inventories could be drawn down. If that happens, a seed company like Pioneer Hi-Bred International, Inc. could benefit from a higher demand for seed. Q. DO YOU SEE ANY SIGNIFICANT CHANGES IN YOUR STRATEGY OVER THE NEXT SIX MONTHS? A. Not really. I think the prospects for the fund may be better than they were six months ago. I'll probably continue to avoid the packaged food group since prices of those stocks seem high relative to their value. Commodity processors, on the other hand, have been out of investors' favor for some time and I think expectations for improvement are low. But if the demand for products outpaces supply, investors' interest could come back and that could help stocks in the group. Finally, I'll continue to look for situations where product prices are low, with a reasonable chance for improvement. FUND FACTS START DATE: July 29, 1985 SIZE: as of February 28, 1994, over $95 million MANAGER: William Mankivsky, since April 1993; manager, Fidelity Select Energy Service Portfolio, since January 1992; equity analyst, energy service since 1991; medical device industries, in 1992; joined Fidelity in 1991 (checkmark) FOOD AND AGRICULTURE PORTFOLIO INVESTMENTS FEBRUARY 28, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 93.2% SHARES VALUE (NOTE 1) AGRICULTURE - 4.1% CROPS - 4.1% DEKALB Genetics Corp. Class B 37,000 $ 1,295,000 24487820 Pioneer Hi-Bred International, Inc. 71,100 2,612,925 72368610 3,907,925 BEVERAGES - 18.8% DISTILLED BEVERAGES - 1.7% Seagram Co. Ltd. 28,600 818,581 81185010 Universal Foods Corp. 23,894 791,489 91353810 1,610,070 MALT BEVERAGE - 4.6% Comp Cervecerias Unidas SA ADR 58,000 1,587,750 20442910 Fomento Economico Mexicano SA de CV Class B 56,000 352,201 34441892 Greenalls Group PLC 50,000 334,687 39499193 Guinness PLC Ord. 90,000 702,733 40203310 Quilmes Industries SA 39,000 897,000 74899692 Whitbread Class A 65,000 545,678 96341499 4,420,049 SOFT DRINKS - 12.5% Coca-Cola Beverages Canada 80,000 333,457 19108T10 Coca-Cola Bottling Co. Consolidated 32,300 1,057,825 19109810 Coca-Cola Enterprises, Inc. 36,000 639,000 19121910 Coca-Cola Femsa SA de CV sponsored ADR (a) 38,000 1,206,500 19124110 Dr. Pepper/Seven-Up Companies, Inc. (a) 189,100 4,632,950 25613130 Grupo Embotallador Mexico SA de CV Class B ADS (b) 35,000 1,176,875 40048J10 Panamerican Beverages, Inc. Class A 32,300 1,292,000 69829W10 PepsiCo, Inc. 35,565 1,391,481 71344810 Serm Suk Co. Ltd. 20,000 325,434 81799999 12,055,522 TOTAL BEVERAGES 18,085,641 CHEMICALS & PLASTICS - 0.4% AGRICULTURAL CHEMICALS - 0.4% Potash Corp. of Saskatchewan 15,000 387,643 73755L10 CONGLOMERATES - 0.7% Whitman Corp. 41,700 667,200 96647K10 DRUGS & PHARMACEUTICALS - 0.2% DRUGS - 0.2% Bristol-Myers Squibb Co. 4,000 221,000 11012210 FOODS - 54.8% BAKERY PRODUCTS - 2.3% Flowers Industries, Inc. 41,300 748,563 34349610 Grupo Industries Bimbo Series A Ord. (a) 82,200 790,981 60899995 Ralston Continental Baking Group 94,000 681,500 75126210 2,221,044 CANDY - 1.3% Hershey Foods Corp. 26,000 1,332,500 42786610 DAIRY - 2.9% Dean Foods Co. 88,600 2,790,900 24236110 FOOD - 15.7% CPC International, Inc. 42,500 2,082,500 12614910 Campbell Soup Co. 25,000 1,050,000 13442910 Chiquita Brands International, Inc. 40,800 719,100 17003210 Dole Food, Inc. 122,500 4,103,750 25660510 General Mills, Inc. 3,000 167,250 37033410 Hazlewood Foods Ord. 195,000 457,790 42199292 Heinz (H.J.) Co. 22,000 717,750 42307410 SHARES VALUE (NOTE 1) Hillsdown Holdings PLC 96,734 $ 249,375 43258610 Michael Foods, Inc. 75,500 792,750 59407410 Nestle SA (Reg.) 1,780 1,601,220 64106992 Perkins Foods PLC 400,000 433,868 71499492 Pet, Inc. 90,000 1,766,250 71582510 Sylvan Foods Holdings, Inc. (a) 101,900 980,788 87137110 15,122,391 GENERAL FOOD PREPARATIONS - 2.9% Herdez SA de CV Class B (a) 848,846 1,051,712 42799F23 McCormick & Co., Inc. (non-vtg.) 53,000 1,139,500 57978020 SYSCO Corp. 21,000 569,625 87182910 2,760,837 GRAIN MILL PRODUCTS - 12.5% Archer-Daniels-Midland Co. 72,754 1,864,321 03948310 International Multifoods Corp. 25,000 434,375 46004310 Quaker Oats Co. 513 32,576 74740210 Ralston Purina Co. 222,500 9,678,750 75127730 12,010,022 MEAT & FISH - 13.5% ConAgra, Inc. 70,200 1,921,725 20588710 Doskocil Companies, Inc. (a) 79,100 860,213 25848630 GoodMark Foods, Inc. 105,600 1,848,000 38238710 Hormel (George A) & Co. 40,700 864,875 44045210 Hudson Foods, Inc. Class A 44,600 624,400 44378210 IBP, Inc. 97,700 2,357,013 44922310 Pilgrims Pride Corp. 82,900 715,013 72146710 Sanderson Farms, Inc. 25,200 409,500 80001310 Tyson Foods, Inc. 160,000 3,440,000 90249410 13,040,739 PACKAGED & FROZEN FOODS - 1.8% Dreyer's Grand Ice Cream, Inc. 38,000 902,500 26187810 Eskimo Pie Corp. 31,600 624,100 29644310 J&J Snack Foods Corp. (a) 9,500 181,688 46603210 1,708,288 SUGAR & CANDIES - 1.9% Tate & Lyle PLC 27,574 174,945 87657010 Tootsie Roll Industries, Inc. 22,769 1,627,984 89051610 1,802,929 TOTAL FOODS 52,789,650 GROCERY STORES - 6.4% RETAIL GROCERY - 6.4% Albertson's, Inc. 39,000 1,126,125 01310410 American Stores Co. 23,300 1,112,575 03009610 Giant Food, Inc. Class A 50,500 1,313,000 37447810 Hannaford Brothers Co. 38,400 940,800 41055010 Safeway, Inc. (a) 22,000 544,500 78651420 Stop & Shop Companies, Inc. (a) 43,500 1,087,500 86209910 6,124,500 RESTAURANTS - 5.5% ARK Restaurants Corp. (a) 46,700 467,000 04071210 Brinker International, Inc. 15,300 692,325 10964110 Ground Round Restaurants, Inc. (a) 75,900 488,606 39942710 IHOP Corp. (a) 27,500 818,125 44962310 McDonald's Corp. 46,100 2,794,813 58013510 5,260,869 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) TOBACCO - 2.3% CIGARETTES - 0.6% RJR Nabisco Holdings Corp. (a) 79,700 $ 547,939 74960K10 TOBACCO MANUFACTURERS - 1.7% Philip Morris Companies, Inc. 30,000 1,680,000 71815410 TOTAL TOBACCO 2,227,939 TOTAL COMMON STOCKS (Cost $81,079,480) 89,672,367 REPURCHASE AGREEMENTS - 6.8% MATURITY VALUE (NOTE 1) AMOUNT Investments in repurchase agreements, (U.S. Treasury obligations), in a joint trading account, at 3.47% dated 2/28/94 due 3/1/94 $ 6,574,634 6,574,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $87,653,480) $ 96,246,367 (a) Non-income producing (a) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of this security amounted to $1,176,875 or 1.2% of net assets. OTHER INFORMATION CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1, 1993, the fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of February 28, 1993 have been reclassified to reflect an increase in paid in capital of $9,784,974, a decrease in undistributed net investment income of $126,000 and a decrease in accumulated net realized gain on investments of $9,658,974. Purchases and sales of securities, other than short-term securities, aggregated $90,646,827 and $114,201,862, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $61,212 for the period (see Note 4 of Notes to Financial Statements). Distribution of investments by country, as a percentage of total value of investment in securities, is as follows: United States 84.5% Mexico 4.8 United Kingdom 3.1 Switzerland 1.7 Chile 1.7 Canada 1.6 Panama 1.4 Others (individually less than 1%) 1.2 TOTAL 100.0% INCOME TAX INFORMATION At February 28, 1994, the aggregate cost of investment securities for income tax purposes was $87,979,766. Net unrealized appreciation aggregated $8,266,601, of which $10,655,278 related to appreciated investment securities and $2,388,677 related to depreciated investment securities. The fund hereby designates $2,355,000 as a capital gain dividend for the purpose of the dividend paid deduction. FOOD AND AGRICULTURE PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $6,574,000) (cost $87,653,480) (Notes 1 $ 96,246,367 and 2) - See accompanying schedule Cash 105 Receivable for investments sold 1,031,786 Receivable for fund shares sold 440,288 Dividends receivable 167,909 Redemption fees receivable (Note 1) 233 Other receivables 2,706 TOTAL ASSETS 97,889,394 LIABILITIES Payable for investments purchased $ 592,224 Payable for fund shares redeemed 2,101,890 Accrued management fee 50,515 Other payables and accrued expenses 134,425 TOTAL LIABILITIES 2,879,054 NET ASSETS $ 95,010,340 Net Assets consist of (Note 1): Paid in capital $ 82,207,907 Undistributed net investment 946 income Accumulated undistributed net realized gain (loss) on investments 4,208,600 Net unrealized appreciation (depreciation) on investment securities 8,592,887 NET ASSETS, for 3,017,576 shares outstanding $ 95,010,340 NET ASSET VALUE and redemption price per share ($95,010,340 (divided by) 3,017,576 shares) $31.49 Maximum offering price per share (100/97 of $31.49) $32.46
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994 INVESTMENT INCOME $ 1,625,560 Dividends Interest (including security lending fees of $5,633) (Note 6) 494,083 TOTAL INCOME 2,119,643 EXPENSES Management fee (Note 4) $ 687,792 Transfer agent (Note 4) 1,036,351 Fees Redemption fees (Note 1) (121,107) Accounting and security lending fees (Note 4) 111,592 Non-interested trustees' compensation 775 Custodian fees and expenses 26,390 Registration fees 33,892 Audit 18,086 Legal 1,092 Reports to shareholders 23,107 Miscellaneous 1,466 Total expenses before reductions 1,819,436 Expense reductions (Note 8) (14,243) 1,805,193 NET INVESTMENT INCOME 314,450 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 12,506,767 Net realized gain (loss) on investment securities Change in net unrealized appreciation (depreciation) on investment securities (1,004,065 ) NET GAIN (LOSS) 11,502,702 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 11,817,152 OTHER INFORMATION $401,721 Sales charges paid to FDC (Note 4) Deferred sales charges withheld $26,901 by FDC (Note 4) Exchange fees withheld by FSC $104,895 (Note 4)
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS FEBRUARY 28, ENDED 1994 FEBRUARY 28, 1993 Operations $ 314,450 $ 187,262 Net investment income Net realized gain (loss) on investments 12,506,767 7,108,935 Change in net unrealized appreciation (depreciation) on investments (1,004,065 4,668,192 ) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 11,817,152 11,964,389 Distributions to shareholders (310,254 (369,385 From net investment income ) ) From net realized gain (12,323,186 (5,733,801 ) ) TOTAL DISTRIBUTIONS (12,633,440 (6,103,186 ) ) Share transactions 124,680,275 36,200,000 Net proceeds from sales of shares Reinvestment of distributions 12,440,857 5,891,427 Cost of shares redeemed (149,706,361 (48,509,438 ) ) Paid in capital portion of redemption fees (Note 1) 34,844 12,269 Net increase (decrease) in net assets resulting from share transactions (12,550,385 (6,405,742 ) ) TOTAL INCREASE (DECREASE) IN NET ASSETS (13,366,673 (544,539 ) ) NET ASSETS Beginning of period 108,377,013 108,921,552 End of period (including undistributed of net investment income of $946 and $126,265, respectively)$ 95,010,340 $ 108,377,013 OTHER INFORMATION Shares Sold 3,975,362 1,224,392 Issued in reinvestment of distributions 414,802 201,093 Redeemed (4,884,544 (1,640,560 ) ) Net increase (decrease) (494,380 (215,075 ) )
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30, FEBRUARY 28, ENDED FEBRUARY 28, SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990 Net asset value, beginning of period $ 30.86 $ 29.22 $ 27.87 $ 22.84 $ 20.76 Income from Investment Operations Net investment income .09 .05 .13 .21 .19 Net realized and unrealized gain (loss) on investments 3.29 3.26 2.89 5.78 4.07 Total from investment operations 3.38 3.31 3.02 5.99 4.26 Less Distributions From net investment income (.06) (.10) (.11) (.27) (.04) From net realized gain (2.70) (1.57) (1.59) (.79) (2.17) Total distributions (2.76) (1.67) (1.70) (1.06) (2.21) Redemption fees added to paid in capital .01 - .03 .10 .03 Net asset value, end of period $ 31.49 $ 30.86 $ 29.22 $ 27.87 $ 22.84 TOTAL RETURND, E 11.69% 11.72% 11.11% 27.39% 20.83% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 95,010 $ 108,377 $ 108,922 $ 64,490 $ 25,965 Ratio of expenses to average net assetsB 1.64% 1.67% 1.83% 2.22% 2.53% A Ratio of expenses to average net assets before expense 1.65% 1.67% 1.83% 2.22% 2.58% reductionsB A Ratio of net investment income to average net assets .29% .21% .46% .85% .82% A Portfolio turnover rate 96% 515% 63% 124% 267% A
1 ANNUALIZED 2 SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS. 3 NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH PERIOD. 4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 5 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. LEISURE PORTFOLIO PERFORMANCE AND INVESTMENT SUMMARY PERFORMANCE There are several ways to evaluate a fund's historical performance: total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND LEISURE 37.14% 106.24% 503.97% LEISURE (INCL. 3% SALES CHARGE) 33.03% 100.06% 485.85% S&P 500 8.33% 89.60% 311.87% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years, or since the fund started on May 8, 1984. You can compare these figures to the performance of the S&P 500 - a common proxy for the U.S. stock market. This benchmark includes reinvested dividends and capital gains, if any. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND LEISURE 37.14% 15.58% 20.10% LEISURE (INCL. 3% SALES CHARGE) 33.03% 14.88% 19.73% S&P 500 8.33% 13.65% 15.51% AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of growth in the long run and volatility in the short run. Unlike the broader market, however, some sectors may not have a history of growth in the long run. And, as with all stock funds, the share price and return of a fund that invests in a sector will vary. That means if you sell your shares during a sector downturn, you might lose money. But if you can identify a sector that is about to experience rapid growth you may have the potential for above-average gains. (checkmark) $10,000 OVER LIFE OF FUND 05/08/84 9700.00 10000.00 05/31/84 9079.20 9471.39 06/30/84 9486.60 9676.92 07/31/84 9418.70 9556.92 08/31/84 10611.80 10612.96 09/30/84 10485.70 10615.09 10/31/84 10640.90 10656.49 11/30/84 10476.00 10537.13 12/31/84 11028.90 10815.31 01/31/85 12551.80 11657.83 02/28/85 13201.70 11801.22 03/31/85 13686.70 11809.48 04/30/85 13531.50 11798.85 05/31/85 14326.90 12480.82 06/30/85 15166.47 12676.77 07/31/85 15088.74 12657.76 08/31/85 15428.80 12550.17 09/30/85 14369.77 12157.35 10/31/85 15137.32 12719.02 11/30/85 16410.10 13591.54 12/31/85 17255.38 14249.37 01/31/86 17848.05 14329.17 02/28/86 19703.78 15400.99 03/31/86 21258.32 16260.36 04/30/86 21899.57 16076.62 05/31/86 23327.80 16931.90 06/30/86 23871.89 17218.05 07/31/86 21587.03 16255.56 08/31/86 22297.83 17461.72 09/30/86 20126.47 16017.64 10/31/86 21158.60 16941.85 11/30/86 20895.70 17353.54 12/31/86 19970.68 16911.03 01/31/87 22073.88 19188.94 02/28/87 24449.72 19946.90 03/31/87 24741.83 20523.37 04/30/87 24177.08 20340.71 05/31/87 25170.26 20517.68 06/30/87 26251.07 21553.82 07/31/87 28188.74 22646.60 08/31/87 28772.97 23491.32 09/30/87 28149.80 22976.86 10/31/87 20116.73 18027.64 11/30/87 18714.60 16542.16 12/31/87 21108.28 17801.02 01/31/88 21433.19 18550.45 02/29/88 23306.83 19414.90 03/31/88 24086.61 18814.98 04/30/88 24238.24 19023.82 05/31/88 23610.08 19189.33 06/30/88 25187.03 20070.12 07/31/88 25396.46 19993.85 08/31/88 24404.41 19314.06 09/30/88 26101.92 20136.84 10/31/88 26101.92 20696.65 11/30/88 25098.85 20400.68 12/31/88 26597.94 20757.70 01/31/89 28868.63 22277.16 02/28/89 28405.68 21722.46 03/31/89 29739.43 22228.59 04/30/89 31425.92 23382.25 05/31/89 32991.15 24329.24 06/30/89 33303.97 24190.56 07/31/89 36098.78 26374.97 08/31/89 36388.29 26891.92 09/30/89 36622.12 26781.66 10/31/89 33983.19 26160.32 11/30/89 34384.04 26693.99 12/31/89 34898.58 27334.65 01/31/90 30666.30 25500.50 02/28/90 30394.39 25829.45 03/31/90 30630.83 26513.93 04/30/90 29436.81 25851.08 05/31/90 31872.14 28371.57 06/30/90 31505.66 28178.64 07/31/90 30418.03 28088.47 08/31/90 26906.90 25549.27 09/30/90 24353.34 24305.02 10/31/90 24069.61 24200.51 11/30/90 25984.78 25763.86 12/31/90 27121.25 26482.67 01/31/91 28637.94 27637.32 02/28/91 30835.35 29613.39 03/31/91 31348.87 30330.03 04/30/91 31432.47 30402.82 05/31/91 32519.23 31716.22 06/30/91 30692.04 30263.62 07/31/91 32160.95 31673.91 08/31/91 32495.34 32424.58 09/30/91 33331.31 31883.09 10/31/91 34334.48 32310.32 11/30/91 32686.42 31008.21 12/31/91 36054.19 34555.55 01/31/92 36866.27 33912.82 02/29/92 38156.05 34353.69 03/31/92 37379.80 33683.79 04/30/92 37797.78 34674.09 05/31/92 38024.69 34844.00 06/30/92 37439.51 34324.82 07/31/92 37618.64 35728.71 08/31/92 37081.23 34996.27 09/30/92 37809.72 35409.22 10/31/92 38096.34 35533.16 11/30/92 40687.85 36744.84 12/31/92 41905.97 37196.80 01/31/93 42944.97 37509.25 02/28/93 42718.06 38019.38 03/31/93 44939.35 38821.59 04/30/93 43926.57 37882.10 05/31/93 47081.93 38897.34 06/30/93 48349.05 39010.15 07/31/93 49641.00 38854.11 08/31/93 53057.24 40326.68 09/30/93 55703.27 40016.16 10/31/93 58784.09 40844.50 11/30/93 56597.70 40456.47 12/31/93 58481.32 40946.00 01/31/94 59089.15 42338.16 02/28/94 58584.78 41186.56 Let's say you invested $10,000 in Fidelity Select Leisure Portfolio on May 8, 1984, when the fund started, and paid a 3% sales charge. By February 28, 1994, your investment would have grown to $58,585 - a 485.85% increase. That compares to $10,000 invested in the S&P 500, which would have grown to $41,187 over the same period - a 311.87% increase. INVESTMENT SUMMARY TOP TEN STOCKS AS OF FEBRUARY 28, 1994 % OF FUND'S INVESTMENTS Capital Cities/ABC, Inc. 3.7 Clear Channel Communications, Inc. 2.5 La Quinta Motor Inns, Inc. 2.2 Canadaigua Wine Co. Class A 2.1 Mesa Airlines, Inc. 2.0 Disney (Walt) Co. 1.9 Sierra On-Line, Inc. 1.7 Cedar Fair LP (depositary units) 1.7 Blockbuster Entertainment Corp. 1.6 Tele-Communications, Inc. Class A 1.6 TOP INDUSTRIES AS OF FEBRUARY 28, 1994 Row: 1, Col: 1, Value: 59.4 Row: 1, Col: 2, Value: 4.8 Row: 1, Col: 3, Value: 7.5 Row: 1, Col: 4, Value: 7.8 Row: 1, Col: 5, Value: 9.6 Row: 1, Col: 6, Value: 10.9 Television Broadcasting 10.9% Cable TV Operators 9.6% Radio Broadcasting 7.8% Hotels, Motels, & Tourist Centers 7.5% Air Transport, Major National 4.8% All Others 59.4%* * INCLUDES SHORT-TERM INVESTMENTS LEISURE PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW Deborah Wheeler, Portfolio Manager of Fidelity Select Leisure Portfolio Q. DEBORAH, HOW DID THE FUND PERFORM? A. Very well. For the year ended February 28, 1994, the fund had a total return of 37.14%. This was significantly higher than the S&P 500, which returned 8.33% for the same period. Q. WHAT WAS BEHIND THESE RESULTS? A. The fund was invested in certain consumer industries that I expected to perform well. These industries had an excellent year - most of them were up at least 30%. Standout industries included cable, cellular, entertainment, hotels, radio, television, and gaming. Within these groups, several companies performed particularly well, including LaQuinta Motor Inns and Clear Channel Communications. In addition, the fund's performance was enhanced by takeover offers for McCaw, New Line Cinema, Affiliated Publications, McLean Hunter, Liberty Media, Tele-Communications and Paramount. Q. DID YOU SHIFT YOUR INDUSTRY FOCUS DURING THE LAST SIX MONTHS? A. Yes. I increased investments in several industries, most notably advertising and broadcasting. Ad agencies such as Omnicom have experienced a pickup in U.S. revenue growth in the past six months as the economy has recovered and companies have increased their ad budgets. This trend in turn helped the television and radio broadcast industries by pushing up prices for media time. Capital Cities/ ABC was the fund's largest position at the end of February, and it seems well positioned in both television and radio to benefit if this trend continues in 1994. I also moved a portion of the fund's investment in regional airlines to major airlines, such as American Airlines. This company is restructuring its labor agreements and route schedules to lower costs. Internally generated cost savings, along with lower oil prices, should improve earnings in 1994. I held onto Mesa Airlines, a regional airline investment, because it could benefit from internal route expansion as well as from acquisitions. Q. WHAT SPECIFIC COMPANIES DID YOU LIKE? A. In addition to Capital Cities/ABC, I liked La Quinta Motor Inns and Clear Channel Communications. La Quinta is in the middle of a chain-wide remodeling designed to improve occupancy and room rates. The outlook for the hotel industry is favorable since demand for hotel rooms should grow faster than supply for several years. Clear Channel is another potential beneficiary of improving television and radio advertising prices. Q. YOU HAVE ABOUT 14% OF THE FUND IN INVESTMENTS OVERSEAS. WHERE IS IT INVESTED? A. Most of it is invested in Latin American soft drink bottlers, Latin American television and radio companies, and Asian television companies. These companies could experience rapid earnings growth over the next five years due to growing disposable income and demand for consumer products in these regions. Q. IN HINDSIGHT, DO YOU HAVE ANY REGRETS ABOUT YOUR INVESTMENT DECISIONS? A. Yes. The fund's performance would have been stronger if it had invested even more in Paramount in the first half of the period. Viacom offered a significant premium for Paramount, which drove the stock up sharply. Q. HOW DO YOU THINK THE FUND WILL PERFORM MOVING FORWARD? A. While I'm comfortable with how the fund is invested, it will be difficult to outperform last year's strong results. However, the industries in which the fund is invested seem to have a positive long-term outlook because world demand for leisure products and services could continue to rise. FUND FACTS START DATE: May 8, 1984 SIZE: as of February 28, 1994, over $105 million MANAGER: Deborah Wheeler, since August 1992; manager, Fidelity Select Food and Agriculture Portfolio, September 1991-April 1993; Fidelity Select Housing Portfolio, September 1986-December 1988; Fidelity Select Retailing Portfolio, January 1989-August 1991; joined Fidelity in 1986 (checkmark) LEISURE PORTFOLIO INVESTMENTS FEBRUARY 28, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 93.8% SHARES VALUE (NOTE 1) ADVERTISING - 3.1% ADVERTISING - 0.1% Regal Communication Corp. (a) 55,700 $ 109,690 75875630 ADVERTISING AGENCIES - 3.0% Foote Cone & Belding Communications, Inc. 36,200 1,678,775 34487210 Interpublic Group of Companies, Inc. 500 16,375 46069010 Omnicom Group, Inc. 29,100 1,422,263 68191910 3,117,413 TOTAL ADVERTISING 3,227,103 AIR TRANSPORTATION - 5.6% AIR TRANSPORT, MAJOR NATIONAL - 4.8% AMR Corp. (a) 18,000 1,138,500 00176510 Delta Air Lines, Inc. 18,800 932,950 24736110 Mesa Airlines, Inc. (a) 105,100 2,088,863 59048110 Southwest Airlines Co. 10,700 365,138 84474110 UAL Corp. (a) 4,200 563,850 90254910 5,089,301 AIR TRANSPORTATION, REGIONAL - 0.8% Comair Holdings, Inc. 34,200 786,600 19978910 TOTAL AIR TRANSPORTATION 5,875,901 BEVERAGES - 8.2% DISTILLED BEVERAGES - 2.1% Canadaigua Wine Co. Class A (a) 80,800 2,222,000 13721920 Seagram Co. Ltd. 100 2,862 81185010 2,224,862 MALT BEVERAGE - 1.7% Anheuser-Busch Companies, Inc. 12,000 594,000 03522910 Comp Cervecerias Unidas SA ADR 37,500 1,026,563 20442910 Coors (Adolph) Co. Class B 1,000 18,625 21701610 Grupo Modelo Class C Ord. (a) 6,800 149,686 40099M22 1,788,874 SOFT DRINKS - 4.4% Buenos Aires Embotelladora sponsored ADR 5,000 202,500 11942420 COTT Corp. 14,000 392,923 22163N10 Celestial Seasonings, Inc. (a) 200 5,750 15101610 Coca-Cola Company (The) 1,000 42,625 19121610 Coca-Cola Enterprises, Inc. 400 7,100 19121910 Dr. Pepper/Seven-Up Companies, Inc. (a) 60,900 1,492,050 25613130 Emvasa Del Valle de Enah Ord. (a) 280,000 1,496,855 29299E22 PepsiCo, Inc. 21,441 838,879 71344810 Snapple Beverage Corp. (a) 7,000 203,000 83303710 4,681,682 TOTAL BEVERAGES 8,695,418 BROADCASTING - 27.9% CABLE TV OPERATORS - 9.1% ACS Enterprises, Inc. (a) 8,000 128,000 00087230 BET Holdings, Inc. Class A (a) 64,900 1,298,000 08658510 CAI Wireless Systems, Inc. 10,500 126,000 12476P10 Cablemaxx, Inc. 46,300 497,725 12685910 Gaylord Entertainment Co. Class A 10,400 282,100 36790110 Interactive Network, Inc. (a) 100 813 45837P10 International Family Entertainment Class B (a) 15,100 292,563 45950M10 Liberty Media Corp. Class A (a) 24,000 549,000 53071530 NTN Communications, Inc. (a) 85,000 680,000 62941030 Peoples Choice TV Corp. (a) 21,100 659,375 71084710 SHARES VALUE (NOTE 1) Preferred Entertainment, Inc. (a) 1,000 $ 19,750 74036T10 QVC Network, Inc. (a) 500 23,000 74726210 SPI Holding, Inc. Class B (a) 1,000 6,375 78462G40 Tele-Communications, Inc. Class A (a) 71,500 1,689,188 87924010 Time Warner, Inc. 39,890 1,520,806 88731510 Turner Broadcasting System, Inc. Class B 1,100 25,025 90026250 United International Holdings, Inc. Class A (a) 23,500 775,500 91073410 Valuevision International, Inc. 5,000 45,625 92047K10 Viacom, Inc. (non-vtg.) (a) 30,000 866,250 92552430 Video Jukebox Network, Inc. (a) 64,500 193,500 92656G10 9,678,595 COMMUNICATIONS SERVICES, NEC - 0.1% International Cabletel, Inc. 2,000 40,000 45921610 Lodgenet Entertainment Corp. (a) 5,000 72,500 54021110 112,500 RADIO BROADCASTING - 7.8% Broadcasting Partners, Inc. Class A (a) 35,300 476,550 11131910 Clear Channel Communications, Inc. (a) 65,125 2,613,141 18450210 EZ Communications, Inc. 63,500 857,250 26928810 Emmis Broadcasting Corp. Class A 20,000 320,000 29152510 Evergreen Media Corp. Class A (a) 45,000 731,250 30024810 Grupo Radio Centro SA de CV sponsored ADR (a) 35,000 953,750 40049C10 Infinity Broadcasting Corp. (a) 48,900 1,564,800 45662610 International Cablecasting Technologies, Inc. (a) 137,100 454,144 45921L10 SFX Broadcasting, Inc. 600 8,550 78417410 Saga Communications, Inc. Class A (a) 15,700 237,463 78659810 8,216,898 TELEVISION BROADCASTING - 10.9% CBS, Inc. 3,338 1,025,601 12484510 Capital Cities/ABC, Inc. 5,900 3,924,238 13985910 Chris-Craft Industries, Inc. 1,000 37,125 17052010 Groupo Televisa GDS (a) 20,000 1,287,500 40049J20 Home Shopping Network, Inc. (a) 96,300 1,275,975 43735110 Jacor Communications, Inc. Class A 9,400 159,800 46985840 Multimedia, Inc. (a) 3,800 118,750 62545K10 Renaissance Communications Corp. 36,500 766,500 75966110 Scandinavian Broadcasting Corp. (a) 53,100 1,460,250 80699E92 Silver King Communications, Inc. (a) 67,700 660,075 82774010 Television Broadcast Ltd. Ord. (a) 240,000 851,009 87953110 Westwood One, Inc. (a) 2,700 21,938 96181510 11,588,761 TOTAL BROADCASTING 29,596,754 CELLULAR - 3.1% CELLULAR & COMMUNICATION SERVICES - 3.1% Cellular Communications, Inc. Red. Class P (a) 19,000 943,540 15091793 Nextel Communications, Inc. Class A (a) 1,100 48,675 65332V10 Pactel Corp. (a) 33,300 786,713 69525210 Rogers Communications, Inc. Class B (a) 92,000 1,491,293 77510920 3,270,221 COMMUNICATIONS EQUIPMENT - 0.6% TELEPHONE EQUIPMENT - 0.6% DSC Communications Corp. (a) 12,300 668,813 23331110 COMPUTER SERVICES & SOFTWARE - 2.3% ELECTRONIC INFORMATION RETRIEVAL - 0.6% CUC International, Inc. (a) 20,358 610,740 12654510 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) COMPUTER SERVICES & SOFTWARE - CONTINUED PREPACKAGED COMPUTER SOFTWARE - 1.7% Electronic Arts (a) 1,000 $ 26,000 28551210 Sierra On-Line, Inc. (a) 60,500 1,815,000 82640910 1,841,000 TOTAL COMPUTER SERVICES & SOFTWARE 2,451,740 CONGLOMERATES - 0.1% Whitman Corp. 6,300 100,800 96647K10 CONSUMER ELECTRONICS - 1.0% RADIOS, TELEVISIONS, STEREOS - 0.8% Harman International Industries, Inc. (a) 27,300 890,663 41308610 3DO Co. (a) 100 2,450 88553W10 893,113 WATCHES & CLOCKS - 0.2% Fossil, Inc. 11,800 182,900 34988210 TOTAL CONSUMER ELECTRONICS 1,076,013 DRUGS & PHARMACEUTICALS - 0.5% BIOTECHNOLOGY - 0.5% Idex Corp. (a) 17,000 522,750 45168D10 ELECTRIC UTILITY - 0.6% ELECTRIC POWER - 0.6% Meralco 'B' (a) 43,520 671,653 58799A92 ELECTRICAL EQUIPMENT - 1.8% ELECTRICAL EQUIPMENT - WHOLESALE - 0.5% Antec Corp. (a) 26,000 559,000 03664P10 ELECTRICAL MACHINERY - 0.7% Philips NV (a) 31,900 789,525 71833750 TV & RADIO COMMUNICATION EQUIPMENT - 0.6% California Amplifier, Inc. (a) 93,300 606,450 12990010 TOTAL ELECTRICAL EQUIPMENT 1,954,975 ENTERTAINMENT - 10.7% AMUSEMENT - 0.7% Iwerks Entertainment, Inc. (a) 15,200 349,600 46591610 Mountasia Entertainment International 36,000 369,000 62454710 718,600 CRUISES - 0.1% Carnival Cruise Lines, Inc. Class A 1,500 72,563 14365810 MOTION PICTURE PRODUCTION - 3.1% King World Productions, Inc. 33,000 1,229,250 49566710 RHI Entertainment, Inc. (a) 62,200 1,624,975 74955910 Samuel Goldwyn Company (a) 10,500 114,188 38157530 Spelling Entertainment Group, Inc. 30,000 333,750 84780710 3,302,163 MOVIE THEATERS - 1.6% Carmike Cinemas, Inc. Class A (a) 3,500 59,938 14343610 GC Cos., Inc. (a) 17,800 634,125 36155Q10 Regal Cinemas, Inc. 40,400 1,060,500 75875410 1,754,563 RECORDS & CDS - 0.5% PolyGram NV ADR 13,200 532,950 73173310 RECREATIONAL SERVICES - 4.7% Cedar Fair LP (depositary units) 55,100 1,811,413 15018510 Discovery Zone, Inc. (a) 50,600 834,900 25468B10 Disney (Walt) Co. 42,000 2,021,250 25468710 Players International, Inc. 13,000 320,125 72790310 4,987,688 TOTAL ENTERTAINMENT 11,368,527 SHARES VALUE (NOTE 1) GENERAL MERCHANDISE STORES - 0.4% DEPARTMENT STORES - 0.4% Penney (J.C.) Co., Inc. 8,100 $ 443,475 70816010 HOME FURNISHINGS - 0.4% FURNITURE - 0.4% Leggett & Platt, Inc. 9,000 407,250 52466010 HOUSEHOLD PRODUCTS - 0.0% MANUFACTURED PRODUCTS - 0.0% Windmere Corp. (warrants) (a) 845 739 97341193 LEASING & RENTAL - 1.6% VIDEO TAPE RENTAL - 1.6% Blockbuster Entertainment Corp. 65,500 1,727,563 09367610 LEISURE DURABLES & TOYS - 3.8% LEISURE DURABLES - 2.0% Brunswick Corp. 52,500 1,115,625 11704310 Outboard Marine Corp. 42,000 1,050,000 69002010 2,165,625 MOTORCYCLES - 0.5% Harley Davidson, Inc. 9,800 480,200 41282210 TOYS & GAMES - 1.3% Hasbro, Inc. 5,000 176,250 41805610 Mattel, Inc. 47,500 1,240,938 57708110 1,417,188 TOTAL LEISURE DURABLES & TOYS 4,063,013 LODGING & GAMING - 10.9% HOTELS, MOTELS, & TOURIST CENTERS - 7.5% Accor Asia Pacific Ltd. (AAPC) 400,000 342,552 00499N22 Caesars World, Inc. (a) 10,567 603,640 12769510 Circus Circus Enterprises, Inc. (a) 1,000 37,250 17290910 Club Med, Inc. 1,700 42,288 18947010 Four Seasons Hotels, Inc. 3,000 29,455 35100E10 Hospitality Franchise Systems, Inc. (a) 13,800 814,200 44091210 Kersaf Investments Ltd. 4,800 42,271 49299E22 La Quinta Motor Inns, Inc. 59,150 2,299,456 50419510 Marriott International, Inc. 27,600 807,300 57190010 Mirage Resorts, Inc. (a) 58,000 1,464,500 60462E10 Promus Companies, Inc. (a) 15,950 785,538 74342A10 Red Lion Inns LP 26,600 731,500 75670210 7,999,950 LODGING PLACES, OTHER THAN HOTEL, MOTEL - 0.5% Sholodge, Inc. 17,500 507,500 82503410 RACING & GAMING - 2.9% Boomtown, Inc. 20,000 355,000 09858810 Boyd Gaming Corp. (a) 31,000 542,500 10330410 International Game Technology 53,400 1,515,225 45990210 President Riverboat Casinos, Inc. (a) 37,000 619,750 74084810 WMS Industries, Inc. (a) 1,000 25,875 92929710 3,058,350 TOTAL LODGING & GAMING 11,565,800 PUBLISHING - 5.0% BOOK PUBLISHING & PRINTING - 0.8% Houghton Mifflin Co. 16,800 804,300 44156010 NEWSPAPERS - 4.2% Belo (A.H.) Corp. Class A 20,400 1,065,900 08055510 Central Newspapers, Inc. Class A 23,600 657,850 15464710 New York Times Co. (The) Class A 30,000 840,000 65011110 News Corp. Ltd. ADR 3,500 202,563 65248770 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) PUBLISHING - CONTINUED NEWSPAPERS - CONTINUED Scripps (E.W.) Co. Class A 37,700 $ 1,060,313 81103910 Times Mirror Co., Series A 18,000 618,750 88736010 4,445,376 TOTAL PUBLISHING 5,249,676 RESTAURANTS - 2.2% ARK Restaurants Corp. (a) 18,900 189,000 04071210 Back Bay Restaurant Group, Inc. (a) 1,000 20,000 05635V10 El Chico Restaurants, Inc. (a) 37,500 576,563 28287910 IHOP Corp. (a) 24,100 716,975 44962310 McDonald's Corp. 12,000 727,500 58013510 Uno Restaurant Corp. (a) 13,600 122,400 91490010 2,352,438 RETAIL & WHOLESALE, MISCELLANEOUS - 0.9% HOBBY, TOY, & GAME SHOPS - 0.6% Toys "R" Us, Inc. (a) 15,200 554,800 89233510 MUSIC, T, & ELECT. STORES - 0.3% Futures Shops Ltd. 19,000 330,863 36091310 RETAIL, GENERAL - 0.0% Body Shop International PLC (a) 8,000 28,112 09679992 TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 913,775 SERVICES - 0.8% GENERAL SERVICES - 0.8% Children's Discovery Center `A' 66,500 831,250 16875720 TELEPHONE SERVICES - 2.3% Philippine Long Distance Telephone Co. 8,000 573,000 71825210 Southwestern Bell Corp. 13,200 516,450 84533310 Telebras PN (Pfd. Reg.) 9,450,000 446,323 95499792 Telesp PN (Pfd. Reg.) 1,840,000 866,235 87999B93 2,402,008 TOTAL COMMON STOCKS (Cost $90,189,528) 99,437,655 CORPORATE BONDS - 0.5% PRINCIPAL AMOUNT CONVERTIBLE BONDS - 0.0% CREDIT & OTHER FINANCE - 0.0% FINANCIAL SERVICES - 0.0% Benpress Holdings Corp. 4.20%, 12/31/49 (b) $ 12 41,482 082300AA NONCONVERTIBLE BONDS - 0.5% BROADCASTING - 0.5% CABLE TV OPERATORS - 0.5% Time Warner, Inc. Reset Note 11%, 8/15/02 (c) 577,000 527,955 887315AG TOTAL CORPORATE BONDS (Cost $534,480) 569,437 REPURCHASE AGREEMENTS - 5.7% MATURITY VALUE (NOTE 1) AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account, at 3.47% dated 2/28/94 due 3/1/94 $ 6,003,579 $ 6,003,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $96,727,008) $ 106,010,092 LEGEND (a) Non-income producing (a) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of this security amounted to $41,482 or 0.0% of net assets. (a) Debt obligation initially issued in zero coupon form which converts to coupon form at a specified rate and date. OTHER INFORMATION CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1, 1993, the fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of February 28, 1993 have been reclassified to reflect an increase in paid in capital of $64,961,336, a decrease in undistributed net investment income of $197,028 and a decrease in accumulated net realized gain on investments of $64,764,308. Purchases and sales of securities, other than short-term securities, aggregated $172,848,503 and $139,762,869, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $89,656 for the period (see Note 4 of Notes to Financial Statements). The maximum loan and average daily loan balances during the periods for which loans were outstanding amounted to $10,699,000 and $3,847,000, respectively. The weighted average interest rate paid was 3.6% (see Note 7 of Notes to Financial Statements). Distribution of investments by country, as a percentage of total value of investment in securities, is as follows: United States 86.6% Mexico 3.7 Canada 2.1 Luxembourg 1.4 Netherland 1.2 Brazil 1.2 Phillipines 1.2 Chile 1.0 Others (individually less than 1%) 1.6 TOTAL 100.0% INCOME TAX INFORMATION At February 28, 1994, the aggregate cost of investment securities for income tax purposes was $96,865,219. Net unrealized appreciation aggregated $9,144,873, of which $13,385,329 related to appreciated investment securities and $4,240,456 related to depreciated investment securities. The fund hereby designates $5,723,000 as a capital gain dividend for the purpose of the dividend paid deduction. LEISURE PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $6,003,000) (cost $96,727,008) $ 106,010,092 (Notes 1 and 2) - See accompanying schedule Cash 511 Receivable for investments sold 1,663,494 Receivable for fund shares sold 1,133,933 Dividends receivable 39,888 Redemption fees receivable (Note 1) 187 Other receivables 66,079 TOTAL ASSETS 108,914,184 LIABILITIES Payable for investments purchased $ 1,817,476 Payable for fund shares redeemed 1,112,300 Accrued management fee 55,330 Other payables and accrued expenses 96,008 TOTAL LIABILITIES 3,081,114 NET ASSETS $ 105,833,070 Net Assets consist of (Note 1): Paid in capital $ 82,166,220 Undistributed net investment income 167,185 Accumulated undistributed net realized gain (loss) on investments 14,216,581 Net unrealized appreciation (depreciation) on investment securities 9,283,084 NET ASSETS, for 2,336,027 shares outstanding $ 105,833,070 NET ASSET VALUE and redemption price per share ($105,833,070 (divided by) 2,336,027 shares) $45.30 Maximum offering price per share (100/97 of $45.30) $46.70
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994 INVESTMENT INCOME $ 514,043 Dividends Interest 230,710 TOTAL INCOME 744,753 EXPENSES Management fee (Note 4) $ 553,372 Transfer agent (Note 4) 681,395 Fees Redemption fees (Note 1) (69,039 ) Accounting fees and expenses 89,132 (Note 4) Non-interested trustees' compensation 558 Custodian fees and expenses 35,328 Registration fees 36,199 Audit 12,913 Legal 626 Interest (Note 7) 4,611 Reports to shareholders 16,216 Miscellaneous 927 Total expenses before reductions 1,362,238 Expense reductions (Note 8) (13,895 1,348,343 ) NET INVESTMENT INCOME (LOSS) (603,590 ) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 19,779,082 Net realized gain (loss) on investment securities Change in net unrealized appreciation (depreciation) on investment securities 3,359,954 NET GAIN (LOSS) 23,139,036 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 22,535,446 OTHER INFORMATION $692,826 Sales charges paid to FDC (Note 4) Deferred sales charges withheld $24,970 by FDC (Note 4) Exchange fees withheld by FSC $56,078 (Note 4)
STATEMENT OF CHANGES IN NET ASSETS INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS FEBRUARY 28, ENDED 1994 FEBRUARY 28, 1993
Operations $ (603,590 $ (129,194 Net investment income (loss) ) ) Net realized gain (loss) on investments 19,779,082 3,523,074 Change in net unrealized appreciation (depreciation) on investments 3,359,954 1,289,576 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 22,535,446 4,683,456 Distributions to shareholders from net realized gains (6,700,464 - ) Share transactions 171,635,469 16,046,829 Net proceeds from sales of shares Reinvestment of distributions 6,615,913 - Cost of shares redeemed (133,273,761 (15,983,245 ) ) Paid in capital portion of redemption fees (Note 1) 196,293 26,001 Net increase (decrease) in net assets resulting from share transactions 45,173,914 89,585 TOTAL INCREASE (DECREASE) IN NET ASSETS 61,008,896 4,773,041 NET ASSETS Beginning of period 44,824,174 40,051,133 End of period (including undistributed net investment income of $167,185 and $197,028, respectively)$ 105,833,070 $ 44,824,174 OTHER INFORMATION Shares Sold 3,957,420 469,311 Issued in reinvestment of distributions 158,780 - Redeemed (3,033,266 (481,775 ) ) Net increase (decrease) 1,082,934 (12,464)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30, FEBRUARY 28, ENDED FEBRUARY 28, SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990 Net asset value, beginning of period $ 35.77 $ 31.65 $ 26.32 $ 24.90 $ 28.51 Income from Investment Operations Net investment income (loss) (.29) (.11) (.08) .08 .26F Net realized and unrealized gain (loss) on investments 12.98 4.21 5.40 1.55 (1.81) Total from investment operations 12.69 4.10 5.32 1.63 (1.55) Less Distributions From net investment income - - - (.23) (.07) From net realized gain (3.26) - - - (2.03) Total distributions (3.26) - - (.23) (2.10) Redemption fees added to paid in capital .10 .02 .01 .02 .04 Net asset value, end of period $ 45.30 $ 35.77 $ 31.65 $ 26.32 $ 24.90 TOTAL RETURND, E 37.14% 13.02% 20.25% 6.78% (6.33)% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 105,833 $ 44,824 $ 40,051 $ 40,727 $ 49,609 Ratio of expenses to average net assetsB 1.53% 1.90%A 2.21% 2.27% 1.96% Ratio of expenses to average net assets before expense 1.55% 1.90%A 2.21% 2.27% 1.96% reductionsB Ratio of net investment income (loss) to average net assets(.69)% (.39)% (.28)% .34% .86% A Portfolio turnover rate 170% 109%A 45% 75% 124%
1 ANNUALIZED 2 SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS. 3 NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH PERIOD. 4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 5 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. 6 INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO $.16 PER SHARE. MULTIMEDIA PORTFOLIO (FORMERLY BROADCAST AND MEDIA PORTFOLIO) PERFORMANCE AND INVESTMENT SUMMARY PERFORMANCE There are several ways to evaluate a fund's historical performance: total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND MULTIMEDIA 34.86% 102.62% 236.78% MULTIMEDIA (INCL. 3% SALES CHARGE) 30.82% 96.55% 226.68% S&P 500 8.33% 89.60% 140.42% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years, or since the fund started on June 30, 1986. You can compare these figures to the performance of the S&P 500 - a common proxy for the U.S. stock market. This benchmark includes reinvested dividends and capital gains, if any. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND MULTIMEDIA 34.86% 15.17% 17.14% MULTIMEDIA (INCL. 3% SALES CHARGE) 30.82% 14.47% 16.68% S&P 500 8.33% 13.65% 12.10% AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of growth in the long run and volatility in the short run. Unlike the broader market, however, some sectors may not have a history of growth in the long run. And, as with all stock funds, the share price and return of a fund that invests in a sector will vary. That means if you sell your shares during a sector downturn, you might lose money. But if you can identify a sector that is about to experience rapid growth you may have the potential for above-average gains. (checkmark) $10,000 OVER LIFE OF FUND Select Broadcast&Media S&P 500 06/30/86 9700.00 10000.00 07/31/86 9253.80 9488.77 08/31/86 9777.60 10192.84 09/30/86 9263.50 9349.89 10/31/86 9700.00 9889.38 11/30/86 9777.60 10129.69 12/31/86 9486.60 9871.39 01/31/87 10621.50 11201.06 02/28/87 11911.60 11643.50 03/31/87 11872.80 11980.00 04/30/87 11688.50 11873.38 05/31/87 12231.70 11976.68 06/30/87 12745.80 12581.50 07/31/87 13725.50 13219.38 08/31/87 13715.80 13712.46 09/30/87 13386.00 13412.16 10/31/87 10660.30 10523.18 11/30/87 9923.10 9656.07 12/31/87 11377.71 10390.90 01/31/88 11566.11 10828.35 02/29/88 12340.68 11332.96 03/31/88 12874.50 10982.77 04/30/88 13031.50 11104.68 05/31/88 12811.69 11201.29 06/30/88 13254.21 11715.43 07/31/88 13232.55 11670.91 08/31/88 12734.43 11274.10 09/30/88 13535.75 11754.37 10/31/88 13687.35 12081.14 11/30/88 13579.06 11908.38 12/31/88 14432.32 12116.78 01/31/89 16155.75 13003.73 02/28/89 16122.39 12679.94 03/31/89 16878.48 12975.38 04/30/89 18012.60 13648.80 05/31/89 18879.88 14201.58 06/30/89 19266.46 14120.63 07/31/89 20732.14 15395.72 08/31/89 20709.77 15697.48 09/30/89 20385.30 15633.12 10/31/89 19009.13 15270.43 11/30/89 19121.01 15581.95 12/31/89 19129.11 15955.91 01/31/90 16589.03 14885.27 02/28/90 16170.05 15077.29 03/31/90 16012.93 15476.84 04/30/90 15253.53 15089.92 05/31/90 16706.87 16561.19 06/30/90 16562.85 16448.57 07/31/90 15646.33 16395.93 08/31/90 13616.89 14913.74 09/30/90 12451.60 14187.44 10/31/90 11914.78 14126.44 11/30/90 13145.53 15039.00 12/31/90 14114.43 15458.59 01/31/91 14873.83 16132.59 02/28/91 15973.66 17286.07 03/31/91 16405.73 17704.39 04/30/91 16968.74 17746.88 05/31/91 17060.39 18513.55 06/30/91 15711.79 17665.63 07/31/91 16300.98 18488.84 08/31/91 16811.62 18927.03 09/30/91 17832.88 18610.95 10/31/91 18736.31 18860.33 11/30/91 17453.18 18100.26 12/31/91 19456.44 20170.93 01/31/92 19967.07 19795.75 02/29/92 21079.99 20053.10 03/31/92 20543.17 19662.06 04/30/92 20857.40 20240.13 05/31/92 21171.64 20339.30 06/30/92 21250.20 20036.25 07/31/92 21302.57 20855.73 08/31/92 21014.52 20428.19 09/30/92 20883.59 20669.24 10/31/92 21224.01 20741.58 11/30/92 22769.01 21448.87 12/31/92 23639.19 21712.69 01/31/93 24116.75 21895.08 02/28/93 24222.88 22192.85 03/31/93 25177.99 22661.12 04/30/93 24526.89 22112.72 05/31/93 26198.87 22705.34 06/30/93 27021.37 22771.19 07/31/93 28032.65 22680.10 08/31/93 30419.27 23539.68 09/30/93 31147.39 23358.43 10/31/93 33480.08 23841.94 11/30/93 31295.15 23615.45 12/31/93 32626.92 23901.19 01/31/94 33092.24 24713.83 02/28/94 32667.98 24041.62 Let's say you invested $10,000 in Fidelity Select Multimedia Portfolio on June 30, 1986, when the fund started, and paid a 3% sales charge. By February 28, 1994, your investment would have grown to $32,668 - a 226.68% increase. That compares to $10,000 invested in the S&P 500, which would have grown to $24,042 over the same period - a 140.42% increase. INVESTMENT SUMMARY TOP TEN STOCKS AS OF FEBRUARY 28, 1994 % OF FUND'S INVESTMENTS Houghton Mifflin Co. 9.4 Rogers Communications, Inc. Class B 5.8 Times Mirror Co., Series A 5.7 Itel Corp. 5.4 Meredith Corp. 4.8 Tele-Communications, Inc. Class A 4.7 Reader's Digest Association, Inc. (The) Class A (non-vtg.) 4.4 Gannett Co., Inc. 4.1 Capital Cities/ABC, Inc. 3.6 Disney (Walt) Co. 2.8 TOP INDUSTRIES AS OF FEBRUARY 28, 1994 Row: 1, Col: 1, Value: 39.1 Row: 1, Col: 2, Value: 6.5 Row: 1, Col: 3, Value: 7.9 Row: 1, Col: 4, Value: 13.7 Row: 1, Col: 5, Value: 15.2 Row: 1, Col: 6, Value: 17.6 Newspapers 17.6% Cable TV Operators 15.2% Book Publishing & Printing 13.7% Cellular & Communication Services 7.9% Television Broadcasting 6.5% All Others 39.1%* * INCLUDES SHORT-TERM INVESTMENTS MULTIMEDIA PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW Steve DuFour, Portfolio Manager of Fidelity Select Multimedia Portfolio Q. STEVE, HOW DID THE FUND PERFORM? A. Very well. For the year ended February 28, 1994, the fund had a total return of 34.86%, beating the S&P 500, which had a total return of 8.33%. Q. WHAT WAS BEHIND THESE RESULTS? A. Most of the fund's gains occurred in the first half of the period. During this time, investors pushed up the prices of many of the fund's investments as they rushed to take part in the telecommunications revolution. This revolution promised to provide multimedia technology to the home by combining telephone, television, and computer services. Telecommunication equipment companies that were on the cutting edge of this technology, such as General Instrument, performed extremely well. In fact, this stock doubled between February and October of 1993. The fund also benefited from its stake in companies that were takeover targets, such as McCaw, Paramount, Tele-Communications, and MacLean Hunter. This growth ended in late October when the telecommunication market peaked, and many investors sold their stocks. Q. HOW HAS THE FUND DONE SINCE OCTOBER? A. It has underperformed the S&P 500 since then. However, the fund's entertainment and broadcasting stocks turned in solid results. Disney was one example of a good buy. Rogers Communications, a Canadian cable, cellular, and long distance company, also was one of my favorite companies. That's because the Canadian regulatory environment looked more favorable than the environment in the United States with regard to cable TV. In addition, over the last six months I shifted more of the fund's assets into newspaper, magazine, and publishing stocks. Q. WHY DID THESE STOCKS LOOK GOOD? A. As the U.S. economy picked up, companies spent more money on advertising. This is exactly what happened at Meredith Publishing, which owns BETTER HOMES AND GARDENS and LADIES HOME JOURNAL. Times Mirror, which owns THE LOS ANGELES TIMES, and Gannett, one of the country's largest newspaper companies, both benefited from higher revenues from retailers and classified advertisers. I focused on publishing because these stocks could be strong performers over the next few years. I think the fund's top stock, Houghton Mifflin, will benefit for two reasons: an increasing focus on upgrading the U.S. educational systems and an increasing demand for textbooks because a growing number of children (the "baby boomlets") are starting elementary school. This stock is also well positioned for 1995, when states such as California and Florida are scheduled to purchase textbooks. Q. WHY DID THE FUND'S NAME CHANGE FROM "BROADCAST AND MEDIA" TO "MULTIMEDIA"? A. The name "Broadcast and Media" no longer accurately described the fund's investments. For example, the word "broadcast" does not reflect the fund's investments in satellite, cable, wireless, and publishing companies. We think "Multimedia" more accurately reflects the fund's investments today. Q. IN HINDSIGHT, DO YOU REGRET ANY OF YOUR INVESTMENT DECISIONS? A. Sure. Like most managers of communications funds, I wish I'd lightened up on telecommunications stocks before they fell last October. Q. WHAT DO YOU THINK SHAREHOLDERS CAN EXPECT OVER THE NEXT YEAR? A. I think the outlook for the fund may be very favorable over the next 12 months. However, I should caution shareholders that the fund might experience some volatility during this period. FUND FACTS START DATE: June 30, 1986 SIZE: as of February 28, 1994, over $49 million MANAGER: Stephen DuFour, since July 1993; equity analyst, media, 1992-1993; joined Fidelity in 1992 (checkmark) MULTIMEDIA PORTFOLIO INVESTMENTS FEBRUARY 28, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 95.0% SHARES VALUE (NOTE 1) ADVERTISING - 1.2% ADVERTISING AGENCIES - 1.2% ADVO-Systems, Inc. 30,000 $ 600,000 00758510 BROADCASTING - 23.8% CABLE TV OPERATORS - 15.2% ACS Enterprises, Inc. (a) 12,000 192,000 00087230 American Telecasting, Inc. (a) 5,800 143,550 03015110 Cablemaxx, Inc. 4,000 43,000 12685910 Comcast Corp. Class A (Special) 64,500 1,306,125 20030020 CAI Wireless Systems, Inc. 500 6,000 12476P10 Liberty Media Corp. Class A (a) 26,400 603,900 53071530 Peoples Choice TV Corp. (a) 20,000 625,000 71084710 Preferred Entertainment, Inc. (a) 2,000 39,500 74036T10 Tele-Communications, Inc. Class A (a) 98,000 2,315,250 87924010 Time Warner, Inc. 15,056 574,010 88731510 Turner Broadcasting System, Inc. Class B 10,000 227,500 90026250 United International Holdings, Inc. Class A (a) 1,500 49,500 91073410 Viacom, Inc. (non-vtg.) (a) 47,000 1,357,125 92552430 7,482,460 COMMUNICATIONS SERVICES, NEC - 1.2% International Cabletel, Inc. 30,600 612,000 45921610 RADIO BROADCASTING - 0.9% Clear Channel Communications, Inc. (a) 2,750 110,344 18450210 International Cablecasting Technologies, Inc. (a) 97,900 324,294 45921L10 434,638 TELEVISION BROADCASTING - 6.5% CBS, Inc. 1,200 368,700 12484510 Capital Cities/ABC, Inc. 2,650 1,762,581 13985910 Heritage Media Corp. Class A (a) 11,400 213,750 42724120 Renaissance Communications Corp. 1,500 31,500 75966110 Scandinavian Broadcasting Corp. (a) 29,000 797,500 80699E92 3,174,031 TOTAL BROADCASTING 11,703,129 CELLULAR - 7.9% CELLULAR & COMMUNICATION SERVICES - 7.9% Rogers Communications, Inc. Class B (a) 174,700 2,831,836 77510920 Vodafone Group PLC sponsored ADR 11,800 1,066,425 92857T10 3,898,261 COMMUNICATIONS EQUIPMENT - 3.0% TELEPHONE EQUIPMENT - 2.0% DSC Communications Corp. (a) 15,000 815,625 23331110 Nokia AB free shares 2,900 167,851 65599992 983,476 TELEPHONE INTERCONNECT SYSTEMS - 1.0% General Instrument Corp. (a) 10,000 473,750 37012110 TOTAL COMMUNICATIONS EQUIPMENT 1,457,226 ELECTRICAL EQUIPMENT - 11.1% ELECTRICAL EQUIPMENT - WHOLESALE - 5.4% Itel Corp. (a) 95,200 2,653,700 46564210 ELECTRICAL MACHINERY - 1.1% Philips NV (a) 22,000 544,500 71833750 TV & RADIO COMMUNICATION EQUIPMENT - 4.6% California Amplifier, Inc. (a) 150,000 975,000 12990010 Scientific-Atlanta, Inc. 48,300 1,304,100 80865510 2,279,100 TOTAL ELECTRICAL EQUIPMENT 5,477,300 SHARES VALUE (NOTE 1) ELECTRONICS - 2.1% SEMICONDUCTORS - 2.1% Motorola, Inc. 10,000 $ 1,021,250 62007610 ENTERTAINMENT - 2.8% RECREATIONAL SERVICES - 2.8% Disney (Walt) Co. 28,300 1,361,937 25468710 MEDICAL FACILITIES MANAGEMENT - 1.1% HEALTH SERVICES - 1.1% Lambert Communications 150,000 525,000 51328G10 PUBLISHING - 38.6% BOOK PUBLISHING & PRINTING - 13.7% Houghton Mifflin Co. 96,400 4,615,150 44156010 Reader's Digest Association, Inc. (The) Class A (non-vtg.) 50,000 2,150,000 75526710 6,765,150 GREETING CARDS - 2.3% American Greetings Corp. Class A 40,200 1,120,575 02637510 NEWSPAPERS - 17.6% Belo (A.H.) Corp. Class A 25,400 1,327,150 08055510 Gannett Co., Inc. 36,900 1,992,600 36473010 Pulitzer Publishing Co. 35,500 1,246,938 74577110 Scripps (E.W.) Co. Class A 46,000 1,293,750 81103910 Times Mirror Co., Series A 81,000 2,784,375 88736010 8,644,813 PERIODICALS - 5.0% Enquirer/Star Group, Inc. Class A 6,700 118,925 29355410 Meredith Corp. 53,000 2,345,250 58943310 2,464,175 TOTAL PUBLISHING 18,994,713 SERVICES - 2.0% BUSINESS SERVICES - 2.0% Catalina Marketing Corp. (a) 18,900 980,438 14886710 TELEPHONE SERVICES - 1.4% ABL CDA, Inc. 12,800 52,167 00095110 Cable & Wireless PLC ADR 30,000 637,500 12683020 689,667 TOTAL COMMON STOCKS (Cost $44,591,557) 46,708,921 CONVERTIBLE PREFERRED STOCKS - 0.6% COMMUNICATIONS EQUIPMENT - 0.5% TELEPHONE EQUIPMENT - 0.5% Nokia AB 4,800 269,141 65599910 CREDIT & OTHER FINANCE - 0.1% FINANCIAL SERVICES - 0.1% Benpress Holdings Corp. 4.2% (b) 9 31,111 082300AA TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $165,935) 300,252 REPURCHASE AGREEMENTS - 4.4% MATURITY VALUE (NOTE 1) AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account, at 3.47% dated 2/28/94 due 3/1/94 $2,172,209 $ 2,172,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $46,929,492) $ 49,181,173 LEGEND (a) Non-income producing (a) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $31,111 or .1% of net assets. OTHER INFORMATION CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1, 1993, the fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of February 28, 1993 have been reclassified to reflect an increase in paid in capital of $10,753,788, a decrease in undistributed net investment loss of $464,982 and a decrease in accumulated net realized gain on investments of $11,218,770. Purchases and sales of securities, other than short-term securities, aggregated $200,835,908 and $179,543,185, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $80,739 for the period (see Note 4 of Notes to Financial Statements). The maximum loan and average daily loan balances during the periods for which loans were outstanding amounted to $25,401,000 and $17,822,000, respectively. The weighted average interest rate paid was 3.7% (see Note 7 of Notes to Financial Statements). Distribution of investments by country, as a percentage of total value of investment in securities, is as follows: United States 86.9% Canada 5.9 United Kingdom 3.5 Luxembourg 1.6 Netherlands 1.1 Others (individually less than 1%) 1.0 TOTAL 100.0% INCOME TAX INFORMATION At February 28, 1994, the aggregate cost of investment securities for income tax purposes was $47,290,703. Net unrealized appreciation aggregated $1,890,470, of which $3,837,954 related to appreciated investment securities and $1,947,484 related to depreciated investment securities. The fund hereby designates $2,278,000 as a capital gain dividend for the purpose of the dividend paid deduction. MULTIMEDIA PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $2,172,000) (cost $46,929,492) (Notes 1 $ 49,181,173 and 2) - See accompanying schedule Cash 665 Receivable for investments sold 2,521,012 Receivable for fund shares sold 550,629 Dividends receivable 65,425 Redemption fees receivable (Note 1) 204 Other receivables 2,347 TOTAL ASSETS 52,321,455 LIABILITIES Payable for investments purchased $ 1,616,102 Payable for fund shares redeemed 1,434,468 Accrued management fee 26,611 Other payables and accrued expenses 67,672 TOTAL LIABILITIES 3,144,853 NET ASSETS $ 49,176,602 Net Assets consist of (Note 1): Paid in capital $ 37,258,685 Undistributed net investment income 3,010 Accumulated undistributed net realized gain (loss) on investments 9,663,226 Net unrealized appreciation (depreciation) on investment securities 2,251,681 NET ASSETS, for 2,060,263 shares outstanding $ 49,176,602 NET ASSET VALUE and redemption price per share ($49,176,602 (divided by) 2,060,263 shares) $23.87 Maximum offering price per share (100/97 of $23.87) $24.61
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994 INVESTMENT INCOME $ 562,296 Dividends Interest 197,775 TOTAL INCOME 760,071 EXPENSES Management fee (Note 4) $ 394,337 Transfer agent (Note 4) 558,382 Fees Redemption fees (Note 1) (114,833 ) Accounting fees and expenses 72,219 (Note 4) Non-interested trustees' compensation 391 Custodian fees and expenses 24,178 Registration fees 73,633 Audit 11,596 Legal 344 Interest (Note 7) 5,510 Reports to shareholders 15,798 Miscellaneous 532 Total expenses before reductions 1,042,087 Expense reductions (Note 8) (18,779 1,023,308 ) NET INVESTMENT INCOME (LOSS) (263,237 ) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 10,978,209 Net realized gain (loss) on investment securities Change in net unrealized appreciation (depreciation) on investment securities 135,110 NET GAIN (LOSS) 11,113,319 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 10,850,082 OTHER INFORMATION $1,066,189 Sales charges paid to FDC (Note 4) Deferred sales charges withheld $9,363 by FDC (Note 4) Exchange fees withheld by FSC $99,030 (Note 4)
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS FEBRUARY 28, ENDED 1994 FEBRUARY 28, 1993 Operations $ (263,237 $ (60,307 Net investment income (loss) ) ) Net realized gain (loss) on investments 10,978,209 924,937 Change in net unrealized appreciation (depreciation) on investments 135,110 1,187,977 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 10,850,082 2,052,607 Distributions to shareholders from net realized gains (1,336,869 (189,652 ) ) Share transactions 242,015,079 18,465,518 Net proceeds from sales of shares Reinvestment of distributions 1,323,568 187,996 Cost of shares redeemed (220,542,573 (12,276,588 ) ) Paid in capital portion of redemption fees (Note 1) 219,824 14,518 Net increase (decrease) in net assets resulting from share transactions 23,015,898 6,391,444 TOTAL INCREASE (DECREASE) IN NET ASSETS 32,529,111 8,254,399 NET ASSETS Beginning of period 16,647,491 8,393,092 End of period (including undistributed net investment income (loss) of $3,010 and $(464,982), respectively) $ 49,176,602 $ 16,647,491 OTHER INFORMATION Shares Sold 10,652,395 1,105,096 Issued in reinvestment of distributions 60,047 10,761 Redeemed (9,563,667 (731,293 ) ) Net increase (decrease) 1,148,775 384,564
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30, FEBRUARY 28, ENDED FEBRUARY 28, SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990 Net asset value, beginning of period $ 18.26 $ 15.93 $ 12.96 $ 11.65 $ 16.20 Income from Investment Operations Net investment income (loss) (.10) (.07) (.17) (.05) (.02)F Net realized and unrealized gain (loss) on investments 6.28 2.61 3.08 1.29 (1.96) Total from investment operations 6.18 2.54 2.91 1.24 (1.98) Less Distributions From net investment income - - - - - From net realized gain (.65) (.23) - - (2.57) Total distributions (.65) (.23) - - (2.57) Redemption fees added to paid in capital .08 .02 .06 .07 - Net asset value, end of period $ 23.87 $ 18.26 $ 15.93 $ 12.96 $ 11.65 TOTAL RETURND, E 34.86% 16.14% 22.92% 11.24% (15.32)% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 49,177 $ 16,647 $ 8,393 $ 5,177 $ 7,400 Ratio of expenses to average net assetsB 1.63% 2.49%A 2.49% 2.53% 2.51% Ratio of expenses to average net assets before expense 1.66% 2.54%A 2.78% 2.77% 2.51% reductionsB Ratio of net investment income (loss) to average net assets(.42)% (.52)% (1.22)% (.43)% (.14)% A Portfolio turnover rate 340% 70%A 111% 150% 75%
1 ANNUALIZED 2 SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS. 3 NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH PERIOD. 4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 5 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. 6 INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO $.05 PER SHARE. RETAILING PORTFOLIO PERFORMANCE AND INVESTMENT SUMMARY PERFORMANCE There are several ways to evaluate a fund's historical performance: total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND RETAILING 15.61% 173.13% 306.60% RETAILING (INCL. 3% SALES CHARGE) 12.14% 164.94% 294.40% S&P 500 8.33% 89.60% 191.37% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years, or since the fund started on December 16, 1985. You can compare these figures to the performance of the S&P 500 - a common proxy for the U.S. stock market. This benchmark includes reinvested dividends and capital gains, if any. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND RETAILING 15.61% 22.26% 18.63% RETAILING (INCL. 3% SALES CHARGE) 12.14% 21.51% 18.19% S&P 500 8.33% 13.65% 13.91% AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of growth in the long run and volatility in the short run. Unlike the broader market, however, some sectors may not have a history of growth in the long run. And, as with all stock funds, the share price and return of a fund that invests in a sector will vary. That means if you sell your shares during a sector downturn, you might lose money. But if you can identify a sector that is about to experience rapid growth you may have the potential for above-average gains. (checkmark) $10,000 OVER LIFE OF FUND Select Retailing (046) S&P 500 12/16/85 9700.00 10000.00 12/31/85 9506.00 10080.42 01/31/86 9583.60 10136.87 02/28/86 10252.90 10895.11 03/31/86 11174.40 11503.06 04/30/86 11378.10 11373.07 05/31/86 12668.20 11978.12 06/30/86 12978.60 12180.55 07/31/86 11271.40 11499.66 08/31/86 11271.40 12352.93 09/30/86 10446.90 11331.35 10/31/86 11368.40 11985.16 11/30/86 11678.80 12276.40 12/31/86 10854.30 11963.36 01/31/87 11756.40 13574.82 02/28/87 13124.10 14111.03 03/31/87 13521.80 14518.83 04/30/87 13104.70 14389.62 05/31/87 13337.50 14514.81 06/30/87 14065.00 15247.80 07/31/87 14773.10 16020.87 08/31/87 15102.90 16618.45 09/30/87 14026.20 16254.50 10/31/87 9835.80 12753.28 11/30/87 9156.80 11702.41 12/31/87 10055.28 12592.97 01/31/88 10690.46 13123.13 02/29/88 11928.53 13734.67 03/31/88 12079.25 13310.27 04/30/88 12456.05 13458.01 05/31/88 12100.78 13575.09 06/30/88 13166.60 14198.19 07/31/88 13048.17 14144.24 08/31/88 13015.88 13663.33 09/30/88 13780.25 14245.39 10/31/88 14070.93 14641.41 11/30/88 13877.14 14432.04 12/31/88 13947.19 14684.60 01/31/89 14636.89 15759.52 02/28/89 14439.83 15367.10 03/31/89 15129.53 15725.16 04/30/89 15983.44 16541.29 05/31/89 17089.14 17211.21 06/30/89 16784.91 17113.11 07/31/89 18138.53 18658.42 08/31/89 19018.38 19024.13 09/30/89 18973.26 18946.13 10/31/89 18059.57 18506.58 11/30/89 18172.37 18884.12 12/31/89 18065.93 19337.33 01/31/90 16654.94 18039.80 02/28/90 17235.16 18272.51 03/31/90 18646.15 18756.73 04/30/90 18382.41 18287.82 05/31/90 20835.16 20070.88 06/30/90 20571.42 19934.40 07/31/90 19727.47 19870.61 08/31/90 16892.30 18074.30 09/30/90 15006.59 17194.08 10/31/90 14307.69 17120.15 11/30/90 16259.34 18226.11 12/31/90 17157.07 18734.62 01/31/91 18822.55 19551.45 02/28/91 20567.33 20949.38 03/31/91 22708.66 21456.35 04/30/91 23025.90 21507.85 05/31/91 24942.52 22436.99 06/30/91 24149.43 21409.37 07/31/91 25695.95 22407.05 08/31/91 27057.41 22938.10 09/30/91 26766.61 22555.03 10/31/91 26264.32 22857.27 11/30/91 25762.04 21936.12 12/31/91 28846.72 24445.61 01/31/92 30446.30 23990.92 02/29/92 31910.33 24302.81 03/31/92 31273.21 23828.90 04/30/92 29998.96 24529.47 05/31/92 30622.53 24649.67 06/30/92 29193.11 24282.39 07/31/92 30491.83 25275.53 08/31/92 29800.12 24757.39 09/30/92 30689.47 25049.52 10/31/92 32792.84 25137.20 11/30/92 35277.36 25994.38 12/31/92 35215.02 26314.11 01/31/93 35457.98 26535.14 02/28/93 34114.55 26896.02 03/31/93 36744.24 27463.53 04/30/93 34635.21 26798.91 05/31/93 36553.70 27517.12 06/30/93 35675.00 27596.92 07/31/93 35850.74 27486.53 08/31/93 37490.97 28528.27 09/30/93 38633.27 28308.61 10/31/93 39233.71 28894.59 11/30/93 39614.48 28620.10 12/31/93 39804.09 28966.40 01/31/94 38030.79 29951.26 02/28/94 39439.93 29136.58 Let's say you invested $10,000 in Fidelity Select Retailing Portfolio on December 16, 1985, when the fund started, and paid a 3% sales charge. By February 28, 1994, your investment would have grown to $39,440 - a 294.40% increase. That compares to $10,000 invested in the S&P 500, which would have grown to $29,137 over the same period - a 191.37% increase. INVESTMENT SUMMARY TOP TEN STOCKS AS OF FEBRUARY 28, 1994 % OF FUND'S INVESTMENTS Lowe's Companies, Inc. 7.8 Gap, Inc. 5.1 Penney (J.C.) Co., Inc. 4.4 Burlington Coat Factory Warehouse Corp. 3.8 Dayton Hudson Corp. 3.1 May Department Stores Co. (The) 3.0 Federated Department Stores, Inc. 2.9 AnnTaylor Stores Corp. 2.4 Dillard Department Stores, Inc. Class A 2.4 Brookstone, Inc. 1.8 TOP INDUSTRIES AS OF FEBRUARY 28, 1994 Row: 1, Col: 1, Value: 48.1 Row: 1, Col: 2, Value: 4.9 Row: 1, Col: 3, Value: 5.0 Row: 1, Col: 4, Value: 10.0 Row: 1, Col: 5, Value: 15.0 Row: 1, Col: 6, Value: 17.0 Department Stores 17.0% General Apparel Stores 15.0% Lumber & Building Materials - Retail 10.0% Women's Clothing Stores 5.0% General Merchandise Stores 4.9% All Others 48.1%* * INCLUDES SHORT-TERM INVESTMENTS RETAILING PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW Jeff Feinberg, Portfolio Manager of Fidelity Select Retailing Portfolio Q. JEFF, HOW DID THE FUND DO? A. The fund performed well during a tough year for the retail industry. Total return was 15.61% for the 12 months ended February 28, 1994, compared to 8.33% for the S&P 500 during the same period. Q. HOW DID THE FUND MANAGE TO BEAT THE S&P? A. In 1993, a strengthening economy and falling interest rates led people away from "soft" consumer non-durable products like apparel, and toward "harder" goods like new homes, appliances and autos. I began managing the fund on February 1, but the previous manager did well by avoiding specialty apparel retailers - which were among the market laggards - and instead emphasizing the stocks of growing grocery store chains like Safeway and Stop & Shop. Some of these stocks got expensive in the fall, and the fund's stake was reduced. In addition, the fund had a sizable stake in department stores, many of which were reinventing themselves. Q. WHAT DO YOU MEAN, "REINVENTING THEMSELVES?" A. Last year, the successful department store chains realized that the best way to improve performance was through store renovations, lower prices and stringent cost control. Large-scale expansion was out of the question; there are already too many stores serving too few people. So the only way to improve profits was to become more efficient while, at the same time, increasing volume at existing stores. Q. WHAT ARE SOME EXAMPLES? A. Sears is one. Over the last couple of years, the company struggled to bring its expenses in line and modernize its stores. Through it all, Sears never lost its customer goodwill; people wanted to shop at a store they trusted, and wanted Sears to succeed. Sears helped the fund last year, as did JC Penney, the fund's third largest investment on February 28. Penney's has cut costs, has been well managed, and has benefited from a successful line of private-label merchandise. In addition, Dayton Hudson offers the stability of big department stores like Marshall Fields, but also owns Target, a well-run chain of discount stores. The stock's low price compared to other measures like sales and cash flow makes it appear attractive going forward. The May and Federated Department store chains have also succeeded in streamlining their operations. The performance of the latter three stocks was essentially flat over the past six months, which was perhaps the fund's biggest disappointment. However, I think there's a pent-up consumer demand for apparel and other small household items, and cost cutting has left these companies well-positioned to benefit. All three were among the fund's top ten investments at the end of February. Q. LOWE'S WAS THE FUND'S LARGEST INVESTMENT OVER THE LAST SIX MONTHS. WHAT MAKES THE COMPANY SO ATTRACTIVE? A. Lowe's was an exciting growth story in a year when there weren't many. The company is opening home improvement stores, mainly in the Southeastern United States. Lowe's is using the "big box" format made famous by chains like Home Depot - large, single-destination stores that offer a large assortment of products at value prices. It's what consumers seem to want, and it gives the retailer buying power with vendors. The price of Lowe's stock was up over 50% in the last six months, and I like the company's business prospects going forward. Q. YOU MENTIONED THE FUND DID WELL BY SIDESTEPPING SPECIALTY APPAREL STORES, BUT THE GAP AND ANNTAYLOR WERE AMONG ITS TOP TEN INVESTMENTS AT THE END OF FEBRUARY. WHY? A. After last year's weak clothing sales, I believe consumers are ready to begin replacing worn-out wardrobes. Lately, I've begun emphasizing specialty retailers that I feel have the right fashions and excellent value for the price. The Gap and AnnTaylor are two of the companies that fit those requirements, and I'll be searching for more. Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS? A. The retail environment remains very competitive, with supply still exceeding demand. As a result, certain retailers have to slash prices to clear their inventories, which hurts profit margins. That said, I'm optimistic about finding the selected retailers who have the right fashions and offer consumers value for their money. In addition, I'll be looking for companies that I think can turn their businesses around, while keeping an eye out for upstart, fast-growing retail chains like Lowe's. FUND FACTS START DATE: December 16, 1985 SIZE: as of February 28, 1994, over $52 million MANAGER: Jeff Feinberg, since February 1994; equity analyst, footwear and specialty retail industries, 1992-1994; joined Fidelity in 1992 (checkmark) RETAILING PORTFOLIO INVESTMENTS FEBRUARY 28, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 88.6% SHARES VALUE (NOTE 1) APPAREL STORES - 20.6% GENERAL APPAREL STORES - 15.0% Burlington Coat Factory Warehouse Corp. (a) 55,300 $ 1,527,662 12157910 Designs, Inc. (a) 34,950 537,356 25057L10 Edison Brothers Stores, Inc. 400 11,700 28087510 Filene's Basement Corp. (a) 6,700 62,813 31686610 Gap, Inc. 45,000 2,036,250 36476010 Goody's Family Clothing (a) 32,200 539,350 38258810 Limited, Inc. (The) 20,000 390,000 53271610 MacIntosh Confectionary Works (a) 10,000 335,563 58199292 S&K Famous Brands, Inc. (a) 13,300 187,863 78377410 TJX Companies, Inc. 15,000 403,125 87254010 6,031,682 MISCELLANEOUS APPAREL, ACCESSORIES - 0.6% Urban Outfitters, Inc. (a) 10,000 261,250 91704710 WOMEN'S CLOTHING STORES - 5.0% AnnTaylor Stores Corp. (a) 35,400 982,350 03611510 Cato Corp. Class A 34,800 635,100 14920510 One Price Clothing Stores, Inc. (a) 15,000 319,999 68241110 Talbots, Inc. 2,000 60,750 87416110 1,998,199 TOTAL APPAREL STORES 8,291,131 AUTOS, TIRES, & ACCESSORIES - 2.0% AUTO DEALERS, GAS STATIONS - RETAIL - 0.6% Uni Marts, Inc. 40,000 250,000 90457130 AUTO PARTS - RETAIL - 1.4% Autozone, Inc. (a) 10,000 565,000 05333210 TOTAL AUTOS, TIRES, & ACCESSORIES 815,000 BROADCASTING - 0.5% TELEVISION BROADCASTING - 0.5% Home Shopping Network, Inc. (a) 15,000 198,750 43735110 COMPUTER SERVICES & SOFTWARE - 1.3% ELECTRONIC INFORMATION RETRIEVAL - 1.3% CUC International, Inc. (a) 17,500 525,000 12654510 CONSUMER ELECTRONICS - 1.0% WATCHES & CLOCKS - 1.0% Fossil, Inc. 25,000 387,500 34988210 DRUG STORES - 1.7% Long Drug Stores, Inc. 11,000 435,875 54316210 Revco (D.S.), Inc. (a) 15,000 230,625 76133910 666,500 ELECTRICAL EQUIPMENT - 0.6% WIRING & LIGHTING - 0.6% Catalina Lighting, Inc. (a) 22,300 239,725 14886510 GENERAL MERCHANDISE STORES - 24.9% DEPARTMENT STORES - 17.0% Dillard Department Stores, Inc. Class A 26,600 947,625 25406310 Federated Department Stores, Inc. (a) 48,700 1,168,800 31410J10 Gottschalks, Inc. (a) 45,500 398,125 38348510 May Department Stores Co. (The) 27,600 1,207,500 57777810 Meyer (Fred), Inc. (a) 5,000 197,475 59309810 Penney (J.C.) Co., Inc. 32,300 1,768,425 70816010 Proffitts, Inc. (a) 14,000 248,500 74292510 Stein Mart, Inc. (a) 38,600 685,150 85837510 Younkers, Inc. (a) 12,400 221,650 98776710 6,843,250 SHARES VALUE (NOTE 1) GENERAL MERCHANDISE STORES - 4.9% Dayton Hudson Corp. 17,500 $ 1,251,250 23975310 Dollar General Corp. 8,000 216,000 25666910 Lechters, Inc. (a) 35,000 490,000 52323810 1,957,250 VARIETY STORES - 3.0% Consolidated Stores Corp. (a) 15,000 292,500 21014910 Freds, Inc. Class A 11,700 169,650 35610810 Mac Frugals Bargains C/O, Inc. (a) 20,000 327,500 55415210 Michaels Stores, Inc. (a) 10,000 412,500 59408710 1,202,150 TOTAL GENERAL MERCHANDISE STORES 10,002,650 GROCERY STORES - 2.4% GROCERY - RETAIL - 2.4% American Stores Co. 8,600 410,650 03009610 Safeway, Inc. (a) 23,000 569,250 78651420 979,900 HOME FURNISHINGS - 2.5% FURNITURE STORES - 2.5% Haverty Furniture Companies, Inc. 28,000 511,000 41959610 Rhodes, Inc. (a) 26,000 500,500 76235P10 1,011,500 LEASING & RENTAL - 0.8% VIDEO TAPE RENTAL - 0.8% Hollywood Entertainment Corp. (a) 16,000 324,000 43614110 LEISURE DURABLES & TOYS - 0.5% SPORTING & ATHLETIC GOODS - 0.5% Leslie's Poolmart (a) 20,000 220,000 52706910 REAL ESTATE INVESTMENT TRUSTS - 1.4% Tanger Factory Outlet Centers, Inc. 17,000 575,875 87546510 RETAIL & WHOLESALE, MISCELLANEOUS - 24.6% BUILDING MATERIALS - RETAIL - 1.3% BMC West Corp. (a) 14,700 503,475 05592610 HOBBY, TOY, & GAME SHOPS - 1.8% Brookstone, Inc. (a) 49,000 735,000 11453710 LUMBER & BUILDING MATERIALS - RETAIL - 10.0% Hechinger Co. Class A 31,400 423,900 42266020 Lowe's Companies, Inc. 47,700 3,154,163 54866110 Payless Cashways, Inc. (a) 23,100 444,675 70437830 4,022,738 MAIL ORDER - 2.2% Blair Co. 2,000 86,250 09282810 Damark International, Inc. Class A 12,000 354,000 23569110 Micro Wharehouse, Inc. (a) 6,000 270,000 59501B10 Spiegel, Inc. Class A 9,200 193,200 84845710 903,450 MUSIC, TV, & ELECTRIC STORES - 3.2% Best Buy Co., Inc. (a) 10,000 552,500 08651610 Musicland Stores Corp. (a) 5,700 109,725 62758B10 Rex Stores Corp. (a) 30,000 615,000 76162410 1,277,225 RECORD & TAPE STORES - 0.5% Spec's Music, Inc. (a) 27,000 202,500 84752110 RETAIL, GENERAL - 3.9% Bed Bath & Beyond, Inc. (a) 4,600 125,350 07589610 Crown Books Corp. (a) 27,400 561,700 22821010 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) RETAIL & WHOLESALE, MISCELLANEOUS - CONTINUED RETAIL, GENERAL - CONTINUED Little Switzerland, Inc. (a) 19,800 $ 168,300 53752810 Sotheby's Holdings, Inc. Class A 12,500 204,688 83589810 Sunglass Hut International, Inc. (a) 11,000 387,750 86736F10 Tuesday Morning Corp. (a) 22,700 130,525 89903510 1,578,313 SEWING STORES - 0.6% Fabri-Centers of America, Inc. (a) 15,000 247,500 30284610 SPORTING GOODS & BIKES STORES - 1.1% Forzani Group Ltd. A 59,700 442,386 34990710 TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 9,912,587 SERVICES - 0.5% GENERAL SERVICES - 0.5% Regis Corporation (a) 15,000 195,000 75893210 TEXTILES & APPAREL - 3.3% FOOTWEAR - 2.9% NIKE, Inc. Class B 13,800 714,150 65410610 Nine West Group, Inc. (a) 14,000 458,500 65440D10 1,172,650 MEN'S & BOYS' CLOTHING - 0.4% Nautica Enterprises, Inc. (a) 5,750 143,750 63908910 TOTAL TEXTILES & APPAREL 1,316,400 TOTAL COMMON STOCKS (Cost $32,337,166) 35,661,518 REPURCHASE AGREEMENTS - 11.4% MATURITY VALUE (NOTE 1) AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account, at 3.47% dated 2/28/94 due 3/1/94 $ 4,603,444 4,603,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $36,940,166) $ 40,264,518 LEGEND (a) Non-income producing OTHER INFORMATION CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1, 1993, the fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of February 28, 1993 have been reclassified to reflect an increase in paid in capital of $4,398,779, a decrease in undistributed net investment loss of $203,898 and a decrease in accumulated net realized gain on investments of $4,602,677. Purchases and sales of securities, other than short-term securities, aggregated $83,876,946 and $131,691,675, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $78,686 for the period (see Note 4 of Notes to Financial Statements). The maximum loan and average daily loan balances during the periods for which loans were outstanding amounted to $2,933,000 and $1,492,438, respectively. The weighted average interest rate paid was 3.6% (see Note 7 of Notes to Financial Statements). INCOME TAX INFORMATION At February 28, 1994, the aggregate cost of investment securities for income tax purposes was $37,086,592. Net unrealized appreciation aggregated $3,177,926, of which $4,240,287 related to appreciated investment securities and $1,062,361 related to depreciated investment securities. The fund hereby designates $1,437,000 as a capital gain dividend for the purpose of the dividend paid deduction. RETAILING PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $4,603,000) (cost $36,940,166) $ 40,264,518 (Notes 1 and 2) - See accompanying schedule Cash 469 Receivable for investments sold 4,846,641 Receivable for fund shares sold 11,992,157 Dividends receivable 27,077 Redemption fees receivable (Note 1) 212 Other receivables 7,576 TOTAL ASSETS 57,138,650 LIABILITIES Payable for investments purchased $ 3,829,207 Payable for fund shares redeemed 415,861 Accrued management fee 20,203 Other payables and accrued expenses 83,247 TOTAL LIABILITIES 4,348,518 NET ASSETS $ 52,790,132 Net Assets consist of (Note 1): Paid in capital $ 47,039,781 Accumulated undistributed net realized gain (loss) on investments 2,425,999 Net unrealized appreciation (depreciation) on investment securities 3,324,352 NET ASSETS, for 2,119,039 shares outstanding $ 52,790,132 NET ASSET VALUE and redemption price per share ($52,790,132 (divided by) 2,119,039 shares) $24.91 Maximum offering price per share (100/97 of $24.91) $25.68
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994 INVESTMENT INCOME $ 442,770 Dividends Interest (including security lending fees of $9,246) (Note 6) 111,831 TOTAL INCOME 554,601 EXPENSES Management fee (Note 4) $ 359,512 Transfer agent (Note 4) 652,193 Fees Redemption fees (Note 1) (71,262 ) Accounting and security lending fees (Note 4) 59,935 Non-interested trustees' compensation 442 Custodian fees and expenses 17,886 Registration fees 29,803 Audit 8,748 Legal 730 Interest (Note 7) 2,399 Reports to shareholders 8,837 Miscellaneous 1,005 Total expenses before reductions 1,070,228 Expense reductions (Note 8) (15,635 1,054,593 ) NET INVESTMENT INCOME (LOSS) (499,992 ) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 8,382,130 Net realized gain (loss) on investment securities Change in net unrealized appreciation (depreciation) on investment securities (727,175 ) NET GAIN (LOSS) 7,654,955 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 7,154,963 OTHER INFORMATION $377,946 Sales charges paid to FDC (Note 4) Deferred sales charges withheld $8,793 by FDC (Note 4) Exchange fees withheld by FSC $60,608 (Note 4)
STATEMENT OF CHANGES IN NET ASSETS INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS FEBRUARY 28, ENDED 1994 FEBRUARY 28, 1993
Operations $ (499,992 $ (229,179 Net investment income (loss) ) ) Net realized gain (loss) on investments 8,382,130 4,623,553 Change in net unrealized appreciation (depreciation) on investments (727,175 3,101,658 ) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 7,154,963 7,496,032 Distributions to shareholders from net realized gains (7,142,724 (3,211,103 ) ) Share transactions 83,392,727 125,569,711 Net proceeds from sales of shares Reinvestment of distributions 7,020,042 3,169,642 Cost of shares redeemed (112,598,899 (106,752,913 ) ) Paid in capital portion of redemption fees (Note 1) 86,108 165,256 Net increase (decrease) in net assets resulting from share transactions (22,100,022 22,151,696 ) TOTAL INCREASE (DECREASE) IN NET ASSETS (22,087,783 26,436,625 ) NET ASSETS Beginning of period 74,877,915 48,441,290 End of period (including accumulated net investment loss of $0 and $203,898, respectively) $ 52,790,132 $ 74,877,915 OTHER INFORMATION Shares Sold 3,246,217 5,367,039 Issued in reinvestment of distributions 282,598 142,983 Redeemed (4,546,561 (4,562,347 ) ) Net increase (decrease) (1,017,746) 947,675
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30, FEBRUARY 28, ENDED FEBRUARY 28, SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990 Net asset value, beginning of period $ 23.87 $ 22.13 $ 17.42 $ 13.94 $ 14.60 Income from Investment Operations Net investment income (loss) (.22) (.08) (.03) (.05) .32F Net realized and unrealized gain (loss) on investments 3.85 2.93 5.09 3.43 1.72 Total from investment operations 3.63 2.85 5.06 3.38 2.04 Less Distributions From net investment income - - - - (.16) From net realized gain (2.63) (1.17) (.50) (.03) (2.57) Total distributions (2.63) (1.17) (.50) (.03) (2.73) Redemption fees added to paid in capital .04 .06 .15 .13 .03 Net asset value, end of period $ 24.91 $ 23.87 $ 22.13 $ 17.42 $ 13.94 TOTAL RETURND, E 15.61% 13.72% 30.28% 25.26% 15.01% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 52,790 $ 74,878 $ 48,441 $ 18,069 $ 8,451 Ratio of expenses to average net assetsB 1.83% 1.77%A 1.87% 2.54% 2.50% Ratio of expenses to average net assets before expense 1.86% 1.77%A 1.87% 2.87% 3.18% reductionsB Ratio of net investment income (loss) to average net assets(.87)% (.44)% (.13)% (.34)% 2.13% A Portfolio turnover rate 154% 171%A 205% 115% 212%
1 ANNUALIZED 2 SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS. 3 NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH PERIOD. 4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 5 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. 6 INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO $.29 PER SHARE. AIR TRANSPORTATION PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $899,000) (cost $12,142,091) (Notes $ 12,772,088 1 and 2) - See accompanying schedule Cash 315 Receivable for fund shares sold 86,663 Dividends receivable 10,633 Redemption fees receivable (Note 1) 1,200 Other receivables 225 TOTAL ASSETS 12,871,124 LIABILITIES Payable for investments purchased $ 169,175 Payable for fund shares redeemed 1,638,436 Accrued management fee 7,006 Other payables and accrued expenses 21,765 TOTAL LIABILITIES 1,836,382 NET ASSETS $ 11,034,742 Net Assets consist of (Note 1): Paid in capital $ 8,169,959 Accumulated undistributed net realized gain (loss) on investments 2,234,786 Net unrealized appreciation (depreciation) on investment securities 629,997 NET ASSETS, for 644,638 shares outstanding $ 11,034,742 NET ASSET VALUE and redemption price per share ($11,034,742 (divided by) 644,638 shares) $17.12 Maximum offering price per share (100/97 of $17.12) $17.65
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994 INVESTMENT INCOME $ 160,705 Dividends Interest 51,873 TOTAL INCOME 212,578 EXPENSES Management fee (Note 4) $ 111,986 Transfer agent (Note 4) 249,148 Fees Redemption fees (Note 1) (43,919 ) Accounting fees and expenses 45,503 (Note 4) Non-interested trustees' compensation 136 Custodian fees and expenses 14,168 Registration fees 24,129 Audit 7,032 Legal 152 Interest (Note 7) 1,822 Reports to shareholders 4,447 Total expenses before reductions 414,604 Expense reductions (Note 8) (3,692 410,912 ) NET INVESTMENT INCOME (LOSS) (198,334 ) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 2,844,048 Net realized gain (loss) on investment securities Change in net unrealized appreciation (depreciation) on investment securities 638,748 NET GAIN (LOSS) 3,482,796 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 3,284,462 OTHER INFORMATION $194,234 Sales charges paid to FDC (Note 4) Deferred sales charges withheld $5,217 by FDC (Note 4) Exchange fees withheld by FSC $37,545 (Note 4)
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS FEBRUARY 28, ENDED 1994 FEBRUARY 28, 1993 Operations $ (198,334 $ (84,059 Net investment income (loss) ) ) Net realized gain (loss) on investments 2,844,048 93,062 Change in net unrealized appreciation (depreciation) on investments 638,748 987,122 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 3,284,462 996,125 Distributions to shareholders (252,463 (237,416 From net realized gain ) ) In excess of net realized gain (52,807 - ) Total distributions (305,270 (237,416 ) ) Share transactions 74,183,528 31,507,804 Net proceeds from sales of shares Reinvestment of distributions 292,761 232,908 Cost of shares redeemed (78,501,131 (27,674,500 ) ) Paid in capital portion of redemption fees (Note 1) 212,184 71,805 Net increase (decrease) in net assets resulting from share transactions (3,812,658 4,138,017 ) TOTAL INCREASE (DECREASE) IN NET ASSETS (833,466 4,896,726 ) NET ASSETS Beginning of period 11,868,208 6,971,482 End of period (including accumulated net investment loss of $0 and $211,291, respectively) $ 11,034,742 $ 11,868,208 OTHER INFORMATION Shares Sold 4,831,385 2,505,094 Issued in reinvestment of distributions 17,788 18,435 Redeemed (5,077,239 (2,202,430 ) ) Net increase (decrease) (228,066) 321,099
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30, FEBRUARY 28, ENDED FEBRUARY 28, SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990 Net asset value, beginning of period $ 13.60 $ 12.64 $ 11.53 $ 11.05 $ 11.77 Income from Investment Operations Net investment income (loss) (.18) (.09)F (.13) (.04) - Net realized and unrealized gain (loss) on investments 3.78 1.33 1.40 .38 (.16) Total from investment operations 3.60 1.24 1.27 .34 (.16) Less Distributions From net realized gain (.22) (.36) (.25) - (.57) In excess of net realized gain (.05) - - - - Total distributions (.27) (.36) (.25) - (.57) Redemption fees added to paid in capital .19 .08 .09 .14 .01 Net asset value, end of period $ 17.12 $ 13.60 $ 12.64 $ 11.53 $ 11.05 TOTAL RETURND, E 27.94% 10.69% 11.90% 4.34% (1.54)% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 11,035 $ 11,868 $ 6,971 $ 4,372 $ 4,688 Ratio of expenses to average net assetsB 2.31% 2.48%A 2.51% 2.48% 2.55% Ratio of expenses to average net assets before expense 2.33% 2.64%A 3.06% 3.03% 3.61% reductionsB Ratio of net investment income (loss) to average net assets(1.11)% (.90)% (1.04)% (.34)% (.03)% A Portfolio turnover rate 171% 96%A 261% 106% 143%
1 ANNUALIZED 2 SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS. 3 NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH PERIOD. 4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 5 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. 6 INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO $.01 PER SHARE. AIR TRANSPORTATION PORTFOLIO PERFORMANCE AND INVESTMENT SUMMARY PERFORMANCE There are several ways to evaluate a fund's historical performance: total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND AIR TRANSPORTATION 27.94% 77.75% 119.14% AIR TRANSPORTATION (INCL. 3% SALES CHARGE) 24.10% 72.42% 112.56% S&P 500 8.33% 89.60% 191.37% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years, or since the fund started on December 16, 1985. You can compare these figures to the performance of the S&P 500 - a common proxy for the U.S. stock market. This benchmark includes reinvested dividends and capital gains, if any. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND AIR TRANSPORTATION 27.94% 12.19% 10.03% AIR TRANSPORTATION (INCL. 3% SALES CHARGE) 24.10% 11.51% 9.62% S&P 500 8.33% 13.65% 13.91% AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of growth in the long run and volatility in the short run. Unlike the broader market, however, some sectors may not have a history of growth in the long run. And, as with all stock funds, the share price and return of a fund that invests in a sector will vary. That means if you sell your shares during a sector downturn, you might lose money. But if you can identify a sector that is about to experience rapid growth you may have the potential for above-average gains. (checkmark) $10,000 OVER LIFE OF FUND Select Air Transport S&P 500 12/16/85 9700.00 10000.00 12/31/85 9215.00 10080.42 01/31/86 9961.90 10136.87 02/28/86 10553.60 10895.11 03/31/86 10573.00 11503.06 04/30/86 10388.70 11373.07 05/31/86 10408.10 11978.12 06/30/86 9826.10 12180.55 07/31/86 9234.40 11499.66 08/31/86 9486.60 12352.93 09/30/86 9680.60 11331.35 10/31/86 10194.70 11985.16 11/30/86 10320.80 12276.40 12/31/86 10485.70 11963.36 01/31/87 11426.60 13574.82 02/28/87 11911.60 14111.03 03/31/87 11504.20 14518.83 04/30/87 11513.90 14389.62 05/31/87 12202.60 14514.81 06/30/87 12357.80 15247.80 07/31/87 12629.40 16020.87 08/31/87 12736.10 16618.45 09/30/87 12270.50 16254.50 10/31/87 8565.10 12753.28 11/30/87 7983.10 11702.41 12/31/87 8319.92 12592.97 01/31/88 8552.87 13123.13 02/29/88 9262.84 13734.67 03/31/88 9662.19 13310.27 04/30/88 9551.26 13458.01 05/31/88 9407.05 13575.09 06/30/88 10616.21 14198.19 07/31/88 10305.60 14144.24 08/31/88 9728.75 13663.33 09/30/88 10372.16 14245.39 10/31/88 10571.84 14641.41 11/30/88 10327.79 14432.04 12/31/88 10738.24 14684.60 01/31/89 11736.63 15759.52 02/28/89 11958.49 15367.10 03/31/89 12557.53 15725.16 04/30/89 13056.72 16541.29 05/31/89 13389.52 17211.21 06/30/89 13322.59 17113.11 07/31/89 14260.64 18658.42 08/31/89 15343.87 19024.13 09/30/89 14740.84 18946.13 10/31/89 13579.44 18506.58 11/30/89 13445.43 18884.12 12/31/89 13565.93 19337.33 01/31/90 12169.78 18039.80 02/28/90 12681.70 18272.51 03/31/90 13344.87 18756.73 04/30/90 12856.22 18287.82 05/31/90 13752.09 20070.88 06/30/90 13786.99 19934.40 07/31/90 13368.14 19870.61 08/31/90 11250.65 18074.30 09/30/90 10122.09 17194.08 10/31/90 10657.28 17120.15 11/30/90 10494.40 18226.11 12/31/90 11099.40 18734.62 01/31/91 12414.11 19551.45 02/28/91 13810.26 20949.38 03/31/91 13752.09 21456.35 04/30/91 13414.68 21507.85 05/31/91 14205.83 22436.99 06/30/91 13906.29 21409.37 07/31/91 14333.81 22407.05 08/31/91 14155.68 22938.10 09/30/91 13680.66 22555.03 10/31/91 14345.69 22857.27 11/30/91 13704.41 21936.12 12/31/91 15212.61 24445.61 01/31/92 16091.40 23990.92 02/29/92 16815.81 24302.81 03/31/92 15830.13 23828.90 04/30/92 15010.72 24529.47 05/31/92 15212.61 24649.67 06/30/92 14718.62 24282.39 07/31/92 14634.03 25275.53 08/31/92 14017.73 24757.39 09/30/92 14476.93 25049.52 10/31/92 14996.55 25137.20 11/30/92 15359.08 25994.38 12/31/92 16211.75 26314.11 01/31/93 16358.35 26535.14 02/28/93 16614.90 26896.02 03/31/93 18447.43 27463.53 04/30/93 18655.96 26798.91 05/31/93 19721.66 27517.12 06/30/93 18251.73 27596.92 07/31/93 18876.45 27486.53 08/31/93 20003.40 28528.27 09/30/93 19599.17 28308.61 10/31/93 20726.12 28894.59 11/30/93 20775.12 28620.10 12/31/93 21219.10 28966.40 01/31/94 22038.56 29951.26 02/28/94 21256.35 29136.58 Let's say you invested $10,000 in Fidelity Select Air Transportation Portfolio on December 16, 1985, when the fund started, and paid a 3% sales charge. By February 28, 1994, your investment would have grown to $21,256 - a 112.56% increase. That compares to $10,000 invested in the S&P 500, which would have grown to $29,137 over the same period - a 191.37% increase. INVESTMENT SUMMARY TOP TEN STOCKS AS OF FEBRUARY 28, 1994 % OF FUND'S INVESTMENTS Mesa Airlines, Inc. 7.8 AMR Corp. 6.3 Comair Holdings, Inc. 5.8 UAL Corp. 5.2 Airborne Freight Corp. 5.0 Delta Air Lines, Inc. 4.3 Southwest Airlines Co. 4.1 Atlantic Southeast Airlines, Inc. 4.0 SkyWest, Inc. 3.9 Allied-Signal, Inc. 3.8 TOP INDUSTRIES AS OF FEBRUARY 28, 1994 Row: 1, Col: 1, Value: 18.4 Row: 1, Col: 2, Value: 3.4 Row: 1, Col: 3, Value: 7.1 Row: 1, Col: 4, Value: 7.7 Row: 1, Col: 5, Value: 16.1 Row: 1, Col: 6, Value: 47.3 Air Transportation, Major National 47.3% Air Transportation, Regional 16.1% Air Courier Services 7.7% Conglomerates 7.1% Oil & Gas Exploration 3.4% All Others 18.4%* * INCLUDES SHORT-TERM INVESTMENTS AIR TRANSPORTATION PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW Brenda Reed, Portfolio Manager of Fidelity Select Air Transportation Portfolio Q. BRENDA, HOW DID THE FUND DO? A. Very well. The fund had a total return of 27.94% for the 12 months ended February 28, 1994. That beat the total return of the S&P 500, which was 8.33% during the same period. Q. WHAT WAS BEHIND THE FUND'S ROBUST PERFORMANCE? A. In short, the strengthening economy. Over the past year, investors gravitated away from slumping health care and consumer non-durable stocks in favor of cyclicals - stocks whose prices tend to move with changes in the economy. Because air transportation companies are economically sensitive, many benefited a great deal from this past year's recovery. Q. DID THE MAJOR U.S. AIRLINES LEAD THE WAY? A. Not really. Six months ago, the pieces were all in place. Economic growth meant more people were flying, which boosted demand. In addition, the airlines seriously began cutting costs. One of the ways they were doing that was by dropping unprofitable, shorter routes which, in effect, reduced the supply of flights. Because of these and other factors, the stocks of United and American performed pretty well through the end of the year. But there was one nagging problem. Q. WHAT WAS THAT? A. Too much competition from low-cost carriers like America West, Continental "Lite" and Southwest Airlines. These companies offer no-frills flights at cheap prices. That forces the major airlines to slash ticket prices, which hurts their profitability. Southwest was among the fund's top ten investments over the past 12 months, and helped performance. My concern about the major airlines' ability to maintain or raise prices successfully led me to reduce the fund's stake over the last few months. Instead, I turned to the industry's big growth story during the period: the regional airlines. Q. WHY WERE THE REGIONALS SO ATTRACTIVE? A. As the major airlines abandoned secondary routes, they entered into partnership agreements with regional airlines to pick up the slack. In some cases, the regionals have even flown their planes under a major's banner. For example, during a short connecting flight from Salt Lake City to Sun Valley, you might be sitting on a plane that has a Delta logo on the side, but really belongs to SkyWest Airlines. It's a win-win situation: the majors cut costs, and the regionals pick up new business. SkyWest, and to a lesser extent Atlantic Southeast, boosted the fund's performance over the last six months. Two more regional airlines, Mesa - the fund's largest investment on February 28 - and Comair, have solid growth potential and attractive stock prices relative to other measures like earnings. Q. WHERE ELSE DID YOU FIND THE WINNERS? A. Air freight companies - roughly 10% of the fund's investments over the last six months - have helped a lot. From the end of August through the end of February, Airborne Freight's stock rose 59% and Federal Express' stock was up 25%. The improving economy meant these companies were able to sustain the prices they charged per pound. Plus, both companies have effectively cut costs. Q. DO YOU HAVE ANY REGRETS ABOUT THE YEAR? A. Sure. I wish I had maintained my original investment in British Airways and KLM Airlines (an Amsterdam-based carrier) in the second half of the year. Both stocks performed very well through last summer, but I felt they were getting expensive so I reduced the fund's stake. As it turned out, European cyclical stocks experienced tremendous growth last year, and investors kept pushing up the prices of British Airways and KLM. Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS? A. The prices of many air transportation stocks have risen substantially over past year, and I think it'll be a stock picker's market going forward. However, there are reasons for optimism. If the U.S. economy can continue its steady growth, more people could be flying. In addition, I'm hoping fuel prices remain low, which would only help the airlines' cost cutting efforts. In the United States, I expect to continue to focus on the regional airlines; they're currently experiencing the best earnings growth. Also, I'll look for more opportunities to invest in growing airlines overseas. FUND FACTS START DATE: December 16, 1985 SIZE: as of February 28, 1994, over $11 million MANAGER: Brenda Reed, since December 1992; assistant, Fidelity Fund, since 1993; equity analyst, regional airline and air freight industries, since 1993; office automation, since 1993; major and national airlines, since 1992; apparel and textile industries, 1992-1993; joined Fidelity in 1992 (checkmark) AIR TRANSPORTATION PORTFOLIO INVESTMENTS FEBRUARY 28, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 93.0% SHARES VALUE (NOTE 1) AEROSPACE & DEFENSE - 5.1% AIRCRAFT - 2.4% Boeing Co. 6,500 $ 303,875 09702310 AIRCRAFT EQUIPMENT - 2.7% Aviall, Inc. (a) 20,075 348,803 05366B10 TOTAL AEROSPACE & DEFENSE 652,678 AIR TRANSPORTATION - 63.4% AIR TRANSPORTATION, MAJOR NATIONAL - 47.3% AMR Corp. (a) 12,800 809,615 00176510 Aerovias De Mexico SA de CV sponsored ADR representing B shares (a)(b) 35,400 278,775 00806510 Air Canada, Inc. (a) 49,200 246,091 00891110 AirTran Corp. 10,600 111,300 00949910 British Airways PLC ADR 6,100 409,463 11041930 Cathay Pacific Airways Ltd. 205,400 326,948 14890610 Delta Air Lines, Inc. 11,000 545,875 24736110 Great Lakes Aviation (a) 19,000 235,125 39054K10 KLM Royal Dutch Airlines (a) 12,300 315,187 48251610 Mesa Airlines, Inc. (a) 50,000 993,750 59048110 Singapore International Airlines 43,900 313,611 82868910 Southwest Airlines Co. 15,300 522,112 84474110 Tower Air, Inc. 18,000 272,250 89169710 UAL Corp. (a) 4,936 662,658 90254910 6,042,760 AIR TRANSPORTATION, REGIONAL - 16.1% Amtran, Inc. 27,500 295,625 03234G10 Atlantic Southeast Airlines, Inc. 15,600 514,800 04886910 Comair Holdings, Inc. 32,250 741,750 19978910 SkyWest, Inc. 15,050 500,413 83087910 2,052,588 TOTAL AIR TRANSPORTATION 8,095,348 CONGLOMERATES - 7.1% Allied-Signal, Inc. 6,400 488,800 01951210 Textron, Inc. 7,300 423,400 88320310 912,200 ENTERTAINMENT - 3.1% RECREATIONAL SERVICES - 3.1% Airtour PLC 50,000 401,179 00979999 OIL & GAS - 3.4% OIL & GAS EXPLORATION - 3.4% British Petroleum PLC ADR 6,600 429,825 11088940 TRUCKING & FREIGHT - 10.9% AIR COURIER SERVICES - 7.7% Airborne Freight Corp. 17,000 633,250 00926610 Federal Express Corp. (a) 4,700 351,913 31330910 985,163 FREIGHT FORWARDING - 1.2% Harper Group 9,000 148,500 41345910 TRUCKING, LOCAL & LONG DISTANCE - 2.0% Heartland Express Inc. (a) 7,041 248,195 42234710 TOTAL TRUCKING & FREIGHT 1,381,858 TOTAL COMMON STOCKS (Cost $11,243,091) 11,873,088 REPURCHASE AGREEMENTS - 7.0% MATURITY VALUE (NOTE 1) AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account, at 3.47% dated 2/28/94 due 3/1/94 $899,087 $ 899,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $12,142,091) $ 12,772,088 LEGEND (a) Non-income producing (a) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $278,775 or 2.5% of net assets. OTHER INFORMATION CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1, 1993, the fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of February 28, 1993 have been reclassified to reflect an increase in paid in capital of $4,287,702, a decrease in undistributed net investment loss of $211,291 and a decrease in accumulated net realized gain on investments of $4,498,993. Purchases and sales of securities, other than short-term securities, aggregated $27,757,393 and $30,914,729, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $15,992 for the period (see Note 4 of Notes to Financial Statements). The maximum loan and average daily loan balances during the periods for which loans were outstanding amounted to $1,773,000 and $944,556, respectively. The weighted average interest rate paid was 3.9% (see Note 7 of Notes to Financial Statements). Distribution of investments by country, as a percentage of total value of investment in securities, is as follows: United States 78.6% United Kingdom 9.7 Hong Kong 2.6 Netherlands 2.5 Singapore 2.5 Mexico 2.2 Canada 1.9 TOTAL 100.0% INCOME TAX INFORMATION At February 28, 1994, the aggregate cost of investment securities for income tax purposes was $12,187,907. Net unrealized appreciation aggregated $584,181, of which $1,269,018 related to appreciated investment securities and $684,837 related to depreciated investment securities. AUTOMOTIVE PORTFOLIO PERFORMANCE AND INVESTMENT SUMMARY PERFORMANCE There are several ways to evaluate a fund's historical performance: total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND AUTOMOTIVE 30.45% 152.63% 222.14% AUTOMOTIVE (INCL. 3% SALES CHARGE) 26.54% 145.05% 212.47% S&P 500 8.33% 89.60% 140.42% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years, or since the fund started on June 30, 1986. You can compare these figures to the performance of the S&P 500 - a common proxy for the U.S. stock market. This benchmark includes reinvested dividends and capital gains, if any. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND AUTOMOTIVE 30.45% 20.36% 16.47% AUTOMOTIVE (INCL. 3% SALES CHARGE) 26.54% 19.63% 16.01% S&P 500 8.33% 13.65% 12.10% AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of growth in the long run and volatility in the short run. Unlike the broader market, however, some sectors may not have a history of growth in the long run. And, as with all stock funds, the share price and return of a fund that invests in a sector will vary. That means if you sell your shares during a sector downturn, you might lose money. But if you can identify a sector that is about to experience rapid growth you may have the potential for above-average gains. (checkmark) $10,000 OVER LIFE OF FUND Select Auto S&P 500 06/30/86 9700.00 10000.00 07/31/86 9176.20 9488.77 08/31/86 9603.00 10192.84 09/30/86 8943.40 9349.89 10/31/86 9399.30 9889.38 11/30/86 9506.00 10129.69 12/31/86 9341.10 9871.39 01/31/87 10747.60 11201.06 02/28/87 11707.90 11643.50 03/31/87 12028.00 11980.00 04/30/87 12202.60 11873.38 05/31/87 12183.20 11976.68 06/30/87 12367.50 12581.50 07/31/87 13230.80 13219.38 08/31/87 13744.90 13712.46 09/30/87 13541.20 13412.16 10/31/87 9476.90 10523.18 11/30/87 9098.60 9656.07 12/31/87 9952.20 10390.90 01/31/88 10402.71 10828.35 02/29/88 11068.24 11332.96 03/31/88 11866.87 10982.77 04/30/88 12071.65 11104.68 05/31/88 12030.70 11201.29 06/30/88 12726.94 11715.43 07/31/88 12583.60 11670.91 08/31/88 11999.98 11274.10 09/30/88 12051.17 11754.37 10/31/88 11959.02 12081.14 11/30/88 11703.05 11908.38 12/31/88 11948.78 12116.78 01/31/89 12501.68 13003.73 02/28/89 12368.58 12679.94 03/31/89 12604.07 12975.38 04/30/89 13167.21 13648.80 05/31/89 13361.75 14201.58 06/30/89 13126.26 14120.63 07/31/89 13587.01 15395.72 08/31/89 13720.11 15697.48 09/30/89 13402.71 15633.12 10/31/89 12286.67 15270.43 11/30/89 12399.30 15581.95 12/31/89 12438.82 15955.91 01/31/90 12110.37 14885.27 02/28/90 12470.61 15077.29 03/31/90 12936.80 15476.84 04/30/90 12894.42 15089.92 05/31/90 13625.49 16561.19 06/30/90 13869.48 16448.57 07/31/90 13912.46 16395.93 08/31/90 11914.22 14913.74 09/30/90 10775.44 14187.44 10/31/90 10560.58 14126.44 11/30/90 11183.68 15039.00 12/31/90 11602.67 15458.59 01/31/91 12258.00 16132.59 02/28/91 13257.12 17286.07 03/31/91 13364.55 17704.39 04/30/91 13514.96 17746.88 05/31/91 14600.02 18513.55 06/30/91 14567.79 17665.63 07/31/91 15169.41 18488.84 08/31/91 15663.60 18927.03 09/30/91 15201.64 18610.95 10/31/91 15599.14 18860.33 11/30/91 14825.63 18100.26 12/31/91 15933.39 20170.93 01/31/92 17654.69 19795.75 02/29/92 19432.62 20053.10 03/31/92 19851.62 19662.06 04/30/92 21119.95 20240.13 05/31/92 21108.63 20339.30 06/30/92 20983.03 20036.25 07/31/92 21175.85 20855.73 08/31/92 19860.16 20428.19 09/30/92 19531.23 20669.24 10/31/92 20347.87 20741.58 11/30/92 21334.64 21448.87 12/31/92 22564.00 21712.69 01/31/93 23605.95 21895.08 02/28/93 23953.27 22192.85 03/31/93 25238.34 22661.12 04/30/93 25092.52 22112.72 05/31/93 26620.51 22705.34 06/30/93 27086.07 22771.19 07/31/93 27396.45 22680.10 08/31/93 28351.44 23539.68 09/30/93 28649.88 23358.43 10/31/93 29258.69 23841.94 11/30/93 29258.69 23615.45 12/31/93 30548.18 23901.19 01/31/94 32289.58 24713.83 02/28/94 31247.19 24041.62 Let's say you invested $10,000 in Select Automotive Portfolio on June 30, 1986, when the fund started, and paid a 3% sales charge. By February 28, 1994, your investment would have grown to $31,247 - a 212.47% increase. That compares to $10,000 invested in the S&P 500, which would have grown to $24,042 over the same period - a 140.42% increase. INVESTMENT SUMMARY TOP TEN STOCKS AS OF FEBRUARY 28, 1994 % OF FUND'S INVESTMENTS Chrysler Corp. 10.7 General Motors Corp. 8.4 General Electric Co. 8.2 Ford Motor Co. 7.6 Goodyear Tire & Rubber Co. 6.6 Magna International, Inc. Class A 4.7 Smith (A.O.) Corp. 4.5 Federal-Mogul Corp. 3.5 Bandag, Inc. 2.6 Snap-On Tools Corp. 2.5 TOP INDUSTRIES AS OF FEBRUARY 28, 1994 Durables 80.8% Industrial Machinery & Equment 8.4% Motor Vehicles & Car Bodies 31.6% Autos & Truck Parts 29.5% Tire & Inner Tubes 11.4% Electric Machinery 8.2% Auto Parts - Retail 3.6% All Others 15.7%* Row: 1, Col: 1, Value: 15.7 Row: 1, Col: 2, Value: 3.6 Row: 1, Col: 3, Value: 8.199999999999999 Row: 1, Col: 4, Value: 11.4 Row: 1, Col: 5, Value: 29.5 Row: 1, Col: 6, Value: 31.6 * INCLUDES SHORT-TERM INVESTMENTS AUTOMOTIVE PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW Richard Patton, Portfolio Manager of Fidelity Select Automotive Portfolio Q. RICHARD, HOW DID THE FUND DO? A. Very well. With a total return of 30.45% for the 12 months ended February 28, 1994, it topped the 8.33% return of the S&P 500. Q. WHAT WAS THE STORY BEHIND THE FUND'S STRONG RETURNS? A. U.S. auto makers and their suppliers tend to do well when the economy improves, and that was certainly the case over the last 12 months. But there's more to it. Consumers became more confident, and with consumer debt at its lowest level in years, they could afford to buy. Also, there was pent up demand; not surprising, when you consider that the average car in the United States is eight years old. Finally, the dollar weakened against the Japanese yen. That gave U.S. manufacturers the power to raise prices and made Japanese auto makers less competitive. Q. LET'S BEGIN WITH THE BIG THREE. DID YOU HAVE A PREFERENCE AMONG THEM? A. Chrysler, General Motors and Ford - three of the fund's top five stocks at the end of the period - all turned in strong performances over the last six months. But I placed the fund's largest bet on Chrysler, which benefited from all of the trends I listed earlier. Plus, it had the freshest product line; Chrysler's new car and truck models arrived just as sales began to explode. General Motors, on the other hand, will be hitting a new product cycle soon, which is the main reason I invested the fund more heavily in GM than in Ford. In addition, expectations seem lower for GM, because it has trailed the others in restructuring and has a huge pension liability. It only takes a little positive news, it seems, to make investors like GM more and more. Q. OVER THE LAST SIX MONTHS, ABOUT HALF THE FUND WAS INVESTED IN COMPANIES THAT SUPPLY AUTO AND TRUCK PARTS. WHERE DID YOU FIND THE WINNERS? A. Consider this: auto manufacturing was up nearly 20% during that period, and the increase in truck manufacturing by the Big Three was double that of autos. That hiked the demand for parts, which helped companies like A.O. Smith. Smith builds frames for light trucks, and its stock has been a steady performer. Magna and Mascotech were two more examples of parts companies that did well. Finally, several after market suppliers - which also fall under the heading of auto and truck parts - boosted the fund's performance. Q. WHAT ARE "AFTER MARKET SUPPLIERS?" A. Companies that manufacture and distribute parts to auto repair shops. Federal-Mogul, for instance, used to supply the Big Three with parts, but recently turned to the after market with great success. It now provides mechanics with critical engine parts. You'll probably only need these parts once every few years, but your car won't run without them. In addition, I'm looking for improved performance from Snap-On Tools, which franchises dealerships that sell tools to mechanics. I've read that the average mechanic owns $30,000 worth of tools, so you can see the potential in this business. Snap-On has had court battles with dealers over franchise arrangements in the past, but I think the company may have corrected the bulk of those problems. Q. IT SOUNDS LIKE ALL YOUR INVESTMENTS WERE WINNERS . . . A. Not quite. Goodyear - the fund's fifth largest investment at the end of February - was a disappointment. Although the company benefited from stronger auto demand, earnings weren't as strong as investors had hoped. But I still like Goodyear's business prospects, and plan to give the stock time to come around. Ironically, another disappointment had a lot to do with the fund's success. The fund more than doubled in size over the past six months, and it was difficult to put all of that new cash to work quickly. My relatively large cash position was a bit of a drag on performance. Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS? A. I think this auto cycle still has some legs, so I feel pretty good about the next several months. That said, many auto sector stocks are getting expensive, and investors are increasingly wondering when the cycle will slow. I'd like to gradually reduce the fund's investment in businesses directly tied to U.S. auto production to help limit the downside should a correction occur. I may do that by searching out attractive stocks of auto makers and suppliers in Europe and Japan. FUND FACTS START DATE: June 30, 1986 SIZE: as of February 28, 1994, over $228 million MANAGER: Richard Patton, since July 1993; equity analyst, specialty chemicals, 1992-1993; joined Fidelity in 1992 (checkmark) AUTOMOTIVE PORTFOLIO INVESTMENTS FEBRUARY 28, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 89.1% SHARES VALUE (NOTE 1) AUTOS, TIRES, & ACCESSORIES - 78.5% AUTO & TRUCK PARTS - 29.5% Allen Group, Inc. (The) 30,400 $ 467,400 01763410 Automotive Industries Holding, Inc. (a) 104,000 3,432,000 05329E10 Dana Corp. 35,200 1,953,600 23581110 Danaher Corp. 47,500 1,739,688 23585110 Donnelly Corp. Class A 64,700 1,002,850 25787010 Echlin, Inc. 147,900 4,418,513 27874910 Excel Industries, Inc. 57,700 1,024,175 30065710 Federal-Mogul Corp. 237,200 8,272,350 31354910 Hayes Wheels International, Inc. 57,000 1,816,875 42080410 Intermet Corp. 30,000 300,000 45881K10 Johnson Controls, Inc. 29,400 1,738,275 47836610 Magna International, Inc. Class A 229,300 11,214,375 55922240 Mascotech, Inc. 173,200 4,156,800 57467010 Modine Manufacturing Co. 32,750 892,438 60782810 Purolator Products Co. 100,000 1,650,000 74638110 Simpson Industries, Inc. 56,050 1,233,100 82906010 Smith (A.O.) Corp. Class B 289,200 10,628,100 83186520 Snap-on Tools Corp. 138,000 6,037,500 83303410 Standard Motor Products, Inc. 51,800 1,133,125 85366610 Standard Products Co. 72,587 2,667,572 85383610 Stant Corp. 12,000 205,500 85472710 Superior Industries International, Inc 40,040 1,626,625 86816810 TRW, Inc. 37,000 2,705,625 87264910 70,316,486 AUTO PARTS - RETAIL - 3.6% Autozone, Inc. (a) 69,000 3,898,500 05333210 Discount Auto Parts, Inc. (a) 33,200 817,550 25464210 Hi-Lo Automotive, Inc. (a) 6,400 72,000 42839D10 Monro Muffler Brake, Inc. (a) 209,200 3,870,200 61023610 8,658,250 AUTOS & OTHER MOTOR VEHICLES - 2.4% Genuine Parts Company 153,200 5,821,600 37246010 MOTOR VEHICLES & CAR BODIES - 31.6% Chrysler Corp. 451,500 25,622,625 17119610 Fiat Spa 700,000 1,969,786 31562110 Ford Motor Co. 290,000 18,016,250 34537010 General Motors Corp. 345,000 20,096,250 37044210 General Motors Corp. Class H 30,000 1,080,000 37044250 Honda Motor Co. Ltd. 67,000 1,121,098 43812810 Nissan Motor Co. Ltd. Ord. 259,000 2,112,417 65474491 Suzuki Motor Corp. 159,000 2,052,397 86958592 Toyota Motor Corporation 57,000 1,100,923 89399999 Volkswagen AG 8,000 2,065,546 92866210 75,237,292 TIRES & INNER TUBES - 11.4% Bandag, Inc. 107,600 6,334,950 05981510 Continental Gummi-Werke AG (a) 3,500 543,848 21199010 Cooper Tire & Rubber Co. 166,600 4,498,200 21683110 Goodyear Tire & Rubber Co. 348,000 15,747,000 38255010 27,123,998 TOTAL AUTOS, TIRES, & ACCESSORIES 187,157,626 BUILDING MATERIALS - 0.4% PAINT & VARNISH - 0.4% Sherwin-Williams Co. 30,000 1,057,500 82434810 CHEMICALS & PLASTICS - 1.3% ADHESIVES & SEALANTS - 0.6% Ferro Corp. 40,000 1,395,000 31540510 Nalco Chemical Co. 1,700 61,200 62985310 1,456,200 SHARES VALUE (NOTE 1) INDUSTRIAL GASES - 0.5% Airgas, Inc. (a) 55,200 $ 1,207,500 00936310 PLASTICS, NEC - 0.2% Bailey Corp. (a) 32,000 416,000 05677130 TOTAL CHEMICALS & PLASTICS 3,079,700 ELECTRICAL EQUIPMENT - 8.2% ELECTRICAL MACHINERY - 8.2% General Electric Co. 185,000 19,494,375 36960410 HOUSEHOLD PRODUCTS - 0.7% MANUFACTURED PRODUCTS - 0.7% First Brands Corp. 44,400 1,592,850 31935610 TOTAL COMMON STOCKS (Cost $181,071,969) 212,382,051 REPURCHASE AGREEMENTS - 10.9% MATURITY VALUE (NOTE 1) AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account, at 3.47% dated 2/28/94 due 3/1/94 $26,034,509 26,032,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $207,103,969) $ 238,414,051 LEGEND (a) Non-income producing OTHER INFORMATION CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1, 1993, the fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of February 28, 1993 have been reclassified to reflect an increase in paid in capital of $899,674, a decrease in undistributed net investment income of $143,621 and a decrease in accumulated net realized gain on investments of $756,053. Purchases and sales of securities, other than short-term securities, aggregated $148,982,188 and $78,673,098, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $47,865 for the period (see Note 4 of Notes to Financial Statements). The maximum loan and average daily loan balances during the periods for which loans were outstanding amounted to $13,315,000 and $2,522,708, respectively. The weighted average interest rate paid was 3.7% (see Note 7 of Notes to Financial Statements). INCOME TAX INFORMATION At February 28, 1994, the aggregate cost of investment securities for income tax purposes was $207,144,985. Net unrealized appreciation aggregated $31,269,066, of which $32,538,380 related to appreciated investment securities and $1,269,314 related to depreciated investment securities. The fund hereby designates $3,732,000 as a capital gain dividend for the purpose of the dividend paid deduction. AUTOMOTIVE PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $26,032,000) (cost $207,103,969) $ 238,414,051 (Notes 1 and 2) - See accompanying schedule Cash 782 Receivable for investments sold 143,445 Receivable for fund shares sold 2,373,944 Dividends receivable 394,418 Redemption fees receivable (Note 1) 2,506 TOTAL ASSETS 241,329,146 LIABILITIES Payable for investments purchased $ 4,157,254 Payable for fund shares redeemed 8,166,872 Accrued management fee 124,712 Other payables and accrued expenses 182,057 TOTAL LIABILITIES 12,630,895 NET ASSETS $ 228,698,251 Net Assets consist of (Note 1): Paid in capital $ 192,239,592 Undistributed net investment income 230,333 Accumulated undistributed net realized gain (loss) on investments 4,918,244 Net unrealized appreciation (depreciation) on investment securities 31,310,082 NET ASSETS, for 8,975,389 shares outstanding $ 228,698,251 NET ASSET VALUE and redemption price per share ($228,698,251 (divided by) 8,975,389 shares) $25.48 Maximum offering price per share (100/97 of $25.48) $26.27
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994 INVESTMENT INCOME $ 2,067,003 Dividends Interest 483,770 TOTAL INCOME 2,550,773 EXPENSES Management fee (Note 4) $ 842,489 Transfer agent (Note 4) 1,290,911 Fees Redemption fees (Note 1) (112,849 ) Accounting fees and expenses 135,527 (Note 4) Non-interested trustees' compensation 939 Custodian fees and expenses 16,649 Registration fees 43,320 Audit 15,035 Legal 1,083 Interest (Note 7) 6,284 Reports to shareholders 19,684 Miscellaneous 1,493 Total expenses before reductions 2,260,565 Expense reductions (Note 8) (9,794 2,250,771 ) NET INVESTMENT INCOME 300,002 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 9,992,964 Net realized gain (loss) on investment securities Change in net unrealized appreciation (depreciation) on investment securities 22,125,239 NET GAIN (LOSS) 32,118,203 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 32,418,205 OTHER INFORMATION $1,317,313 Sales charges paid to FDC (Note 4) Deferred sales charges withheld $9,672 by FDC (Note 4) Exchange fees withheld by FSC $98,835 (Note 4)
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS FEBRUARY 28, ENDED 1994 FEBRUARY 28, 1993 Operations $ 300,002 $ 638,003 Net investment income Net realized gain (loss) on investments 9,992,964 7,998,567 Change in net unrealized appreciation (depreciation) on investments 22,125,239 (137,565 ) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 32,418,205 8,499,005 Distributions to shareholders (277,866 (233,255 From net investment income ) ) From net realized gain (8,000,284 (1,283,605 ) ) TOTAL DISTRIBUTIONS (8,278,150 (1,516,860 ) ) Share transactions 296,617,520 251,798,700 Net proceeds from sales of shares Reinvestment of distributions 8,140,832 1,495,074 Cost of shares redeemed (210,814,302 (328,696,276 ) ) Paid in capital portion of redemption fees (Note 1) 254,484 335,379 Net increase (decrease) in net assets resulting from share transactions 94,198,534 (75,067,123 ) TOTAL INCREASE (DECREASE) IN NET ASSETS 118,338,589 (68,084,978 ) NET ASSETS Beginning of period 110,359,662 178,444,640 End of period (including undistributed net investment income of $230,333 and $584,442, respectively)$ 228,698,251 $ 110,359,662 OTHER INFORMATION Shares Sold 12,377,664 13,056,135 Issued in reinvestment of distributions 357,869 79,310 Redeemed (9,094,036 (17,370,301 ) ) Net increase (decrease) 3,641,497 (4,234,856)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30, FEBRUARY 28, ENDED FEBRUARY 28, SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990 Net asset value, beginning of period $ 20.69 $ 18.65 $ 12.58 $ 12.17 $ 12.86 Income from Investment Operations Net investment income .05 .13 .06 .25 .23 Net realized and unrealized gain (loss) on investments 6.00 2.26 6.55 .29 (.52) Total from investment operations 6.05 2.39 6.61 .54 (.29) Less Distributions From net investment income (.05) (.06) - (.18) (.41) From net realized gain (1.26) (.36) (.70) - - Total distributions (1.31) (.42) (.70) (.18) (.41) Redemption fees added to paid in capital .05 .07 .16 .05 .01 Net asset value, end of period $ 25.48 $ 20.69 $ 18.65 $ 12.58 $ 12.17 TOTAL RETURND, E 30.45% 13.42% 56.27% 4.81% (2.07)% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 228,698 $ 110,360 $ 178,445 $ 974 $ 1,213 Ratio of expenses to average net assetsB 1.68% 1.57%A 2.48% 2.25% 2.42% Ratio of expenses to average net assets before expense 1.69% 1.57%A 2.48% 2.85% 3.85% reductionsB Ratio of net investment income to average net assets .22% .72%A .36% 2.06% 1.84% Portfolio turnover rate 64% 140%A 29% 219% 121%
1 ANNUALIZED 2 SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS. 3 NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH PERIOD. 4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 5 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. CHEMICALS PORTFOLIO PERFORMANCE AND INVESTMENT SUMMARY PERFORMANCE There are several ways to evaluate a fund's historical performance: total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND CHEMICALS 23.63% 95.62% 349.99% CHEMICALS (INCL. 3% SALES CHARGE) 19.92% 89.75% 336.49% S&P 500 8.33% 89.60% 222.99% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years, or since the fund started on July 29, 1985. You can compare these figures to the performance of the S&P 500 - a common proxy for the U.S. stock market. This benchmark includes reinvested dividends and capital gains, if any. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND CHEMICALS 23.63% 14.36% 19.12% CHEMICALS (INCL. 3% SALES CHARGE) 19.92% 13.67% 18.70% S&P 500 8.33% 13.65% 14.62% AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of growth in the long run and volatility in the short run. Unlike the broader market, however, some sectors may not have a history of growth in the long run. And, as with all stock funds, the share price and return of a fund that invests in a sector will vary. That means if you sell your shares during a sector downturn, you might lose money. But if you can identify a sector that is about to experience rapid growth you may have the potential for above-average gains. (checkmark) $10,000 OVER LIFE OF FUND Select Chemicals S&P 500 07/29/85 9700.00 10000.00 07/31/85 9641.80 9926.31 08/31/85 9981.30 9841.93 09/30/85 9991.00 9533.88 10/31/85 10631.20 9974.35 11/30/85 11300.50 10658.59 12/31/85 12018.30 11174.46 01/31/86 12532.40 11237.04 02/28/86 13977.70 12077.57 03/31/86 14724.60 12751.50 04/30/86 14782.80 12607.41 05/31/86 15199.90 13278.12 06/30/86 15568.50 13502.52 07/31/86 14549.20 12747.73 08/31/86 15630.16 13693.61 09/30/86 14393.38 12561.15 10/31/86 15269.84 13285.93 11/30/86 15532.78 13608.78 12/31/86 15250.37 13261.75 01/31/87 17285.70 15048.11 02/28/87 18892.53 15642.51 03/31/87 19467.10 16094.58 04/30/87 19895.59 15951.34 05/31/87 19632.65 16090.11 06/30/87 20733.10 16902.66 07/31/87 22086.74 17759.63 08/31/87 22895.03 18422.06 09/30/87 23304.04 18018.62 10/31/87 16214.47 14137.41 11/30/87 15669.12 12972.49 12/31/87 17511.02 13959.69 01/31/88 17081.54 14547.40 02/29/88 18975.15 15225.31 03/31/88 19941.48 14754.84 04/30/88 20175.74 14918.62 05/31/88 19414.39 15048.41 06/30/88 21981.50 15739.14 07/31/88 21317.76 15679.33 08/31/88 20390.48 15146.23 09/30/88 20644.26 15791.46 10/31/88 20966.37 16230.46 11/30/88 20263.59 15998.37 12/31/88 21181.11 16278.34 01/31/89 22596.44 17469.91 02/28/89 22313.37 17034.91 03/31/89 22557.39 17431.83 04/30/89 23201.61 18336.54 05/31/89 23738.46 19079.17 06/30/89 23455.03 18970.42 07/31/89 24949.67 20683.44 08/31/89 26092.63 21088.84 09/30/89 25164.58 21002.38 10/31/89 23386.65 20515.12 11/30/89 23884.86 20933.63 12/31/89 24847.83 21436.04 01/31/90 23077.40 19997.68 02/28/90 23231.80 20255.65 03/31/90 23921.44 20792.42 04/30/90 23365.61 20272.61 05/31/90 25403.67 22249.19 06/30/90 25611.02 22097.90 07/31/90 25695.76 22027.18 08/31/90 22264.01 20035.93 09/30/90 21162.46 19060.18 10/31/90 21406.07 18978.22 11/30/90 22835.96 20204.21 12/31/90 23821.00 20767.91 01/31/91 25420.37 21673.39 02/28/91 27369.26 23223.04 03/31/91 28025.96 23785.03 04/30/91 27803.53 23842.12 05/31/91 29731.24 24872.10 06/30/91 28923.24 23732.96 07/31/91 30317.26 24838.91 08/31/91 30913.18 25427.59 09/30/91 30679.07 25002.95 10/31/91 31168.57 25337.99 11/30/91 29614.93 24316.87 12/31/91 33030.62 27098.72 01/31/92 33664.98 26594.68 02/29/92 34879.02 26940.42 03/31/92 34627.46 26415.08 04/30/92 35885.25 27191.68 05/31/92 35677.44 27324.92 06/30/92 34619.91 26917.78 07/31/92 35712.32 28018.72 08/31/92 34492.08 27444.33 09/30/92 34526.94 27768.18 10/31/92 34178.30 27865.36 11/30/92 35212.60 28815.57 12/31/92 35971.89 29170.00 01/31/93 35934.88 29415.03 02/28/93 35305.75 29815.08 03/31/93 36144.60 30444.17 04/30/93 36815.01 29707.43 05/31/93 37372.43 30503.58 06/30/93 36434.95 30592.05 07/31/93 36992.37 30469.68 08/31/93 38803.98 31624.48 09/30/93 37575.13 31380.97 10/31/93 38994.01 32030.56 11/30/93 39285.39 31726.27 12/31/93 40560.85 32110.15 01/31/94 43718.04 33201.90 02/28/94 43649.10 32298.81 Let's say you invested $10,000 in Fidelity Select Chemicals Portfolio on July 29, 1985, when the fund started, and paid a 3% sales charge. By February 28, 1994, your investment would have grown to $43,649 - a 336.49% increase. That compares to $10,000 invested in the S&P 500, which would have grown to $32,299 over the same period - a 222.99% increase. INVESTMENT SUMMARY TOP TEN STOCKS AS OF FEBRUARY 28, 1994 % OF FUND'S INVESTMENTS Akzo N V sponsored ADR 5.9 Union Carbide Corp. 5.9 Grace (W.R.) & Co. 5.0 Lubrizoil Corp. 4.8 Raychem Corp. 3.8 GEON 3.7 Eastman Chemical Co. 3.6 Imperial Chemical Industries ADR 3.6 Nalco Chemical Co. 3.0 Hanna (M.A.) Co. 2.8 TOP INDUSTRIES AS OF FEBRUARY 28, 1994 Row: 1, Col: 1, Value: 27.8 Row: 1, Col: 2, Value: 4.6 Row: 1, Col: 3, Value: 4.8 Row: 1, Col: 4, Value: 4.9 Row: 1, Col: 5, Value: 5.9 Row: 1, Col: 6, Value: 52.0 Chemicals 52.0% Plastics, Resins & Elastomers 5.9% Plastics & Synthetic Resins 4.9% Organic Chemicals 4.8% Agricultural Chemicals 4.6% All Others 27.8%* * INCLUDES SHORT-TERM INVESTMENTS CHEMICALS PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW Steve Wymer, Portfolio Manager of Fidelity Select Chemicals Portfolio Q. STEVE, HOW DID THE FUND PERFORM? A. Very well. For the year ended February 28, 1994, it had a total return of 23.63%, well above the S&P 500's total return of 8.33%. Q. WHAT WAS BEHIND THE FUND'S STRONG PERFORMANCE? A. A stronger than expected economic upturn. In general, when the economy improves, chemical stocks pick up, since the demand for chemical products is tied to almost all areas of the economy. As the U.S. and European economies improved, investors shifted into chemical stocks and pushed stock prices higher. Q. DID YOUR STRATEGY CHANGE OVER THE LAST SIX MONTHS? A. I moved some of the fund's investments out of diversified chemical companies into commodity and selected specialty chemical companies. Commodity companies produce various chemical products, such as polyethylene, which is used to make trash bags. Over the last six months, these companies have begun performing well as worldwide demand and prices for chemical products have increased. Specialty chemical companies looked good because they had underperformed the market over the past two years and were selling at attractive prices. Q. WHAT COMMODITY CHEMICAL COMPANIES DID YOU BUY? A. Union Carbide is a good example. This company produces polyethylene and ethylene glycol, used for polyester fiber and antifreeze. It also has a specialty chemical unit and a solvents and coatings unit. Since breaking off from its industrial gas business, Praxair, in the summer of 1992, Union Carbide has been a solid performer. Over the past year, it cut costs further than most people expected and improved profitability even when commodities were not performing well. Now, with commodities looking to pick up, it could be well positioned to improve its earnings. Another company was GEON, a spin-off of B.F. Goodrich. GEON focuses on polyvinylchloride (PVC), which is used to make vinyl siding and pipes and could be one of the first commodities to do well. Q. WHAT ABOUT SPECIALTY COMPANIES? A. Lubrizoil, a petroleum additives company, is a recent addition. The company raised prices and reduced its investment in non-core areas, such as health care. Lubrizoil plans to use proceeds from these divestments to buy back its own stock. Nalco, which makes water treatment chemicals, is also well positioned to grow over the next year. Q. YOU HAVE 13.4% OF THE FUND OVERSEAS. WHERE DID YOU INVEST? A. My largest investment was the Dutch chemical company, Akzo, which sells products ranging from paint to pharmaceuticals. It was attractive because it had closed and sold low-earning fiber divisions and focused on the more profitable coatings and specialty chemical divisions. My second largest foreign stake was in Imperial Chemical Industries (ICI), a diversified chemical company based out of the U.K. Last June, it split apart its diversified chemical business from its pharmaceutical and agricultural businesses. Since then, the chemical business has taken steps to enhance productivity and increase returns. Q. AS YOU LOOK BACK OVER THE LAST YEAR, ANY REGRETS? A. Yes. I wish I'd taken advantage of some short-term trading opportunities. For example, I wish I'd owned more Dow stock between November and January, when it grew 23%. Q. HOW DO YOU THINK THE FUND WILL PERFORM IN 1994? A. It depends on supply and demand. If the economy continues to improve, that will help out the demand side. If companies continue to focus their efforts on restructuring and cost cutting, as opposed to expansion, that will help out the supply side. Right now, the situation seems encouraging. However, the supply and demand balance could worsen if the economy drops or companies start adding production capacity. FUND FACTS START DATE: July 29, 1985 SIZE: as of February 28, 1994, over $62 million MANAGER: Steven Wymer, since January 1993; assistant, Magellan Fund, since April 1992; manager, Fidelity Select Automotive Portfolio, 1990-1993; assistant, Fidelity Growth & Income Portfolio, 1990-1992; joined Fidelity in 1989 (checkmark) CHEMICALS PORTFOLIO INVESTMENTS FEBRUARY 28, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 88.4% SHARES VALUE (NOTE 1) BASIC INDUSTRIES - 0.8% Albermarle Corp. (c) 41,800 $ 553,850 01265310 BUILDING MATERIALS - 0.9% PAINT & VARNISH - 0.6% Dexter Corp. 13,200 336,600 25216510 Sherwin-Williams Co. 2,000 70,500 82434810 407,100 PAVING, ROOFING & SIDING - 0.3% Carlisle Companies, Inc. 5,200 172,250 14233910 TOTAL BUILDING MATERIALS 579,350 CHEMICALS & PLASTICS - 80.9% ADHESIVES & SEALANTS - 4.3% Ferro Corp. 7,700 268,538 31540510 Fuller (H.B.) Co. 2,700 97,875 35969410 Furon Co. 2,000 34,500 36110610 Loctite Corp. 11,000 459,250 54013710 Nalco Chemical Co. 55,700 2,005,200 62985310 2,865,363 AGRICULTURAL CHEMICALS - 4.6% FMC Corp. (a) 9,100 444,763 30249130 IMC Fertilizer Group, Inc. (a) 20,000 915,000 44966910 Indo Gulf Fertilizer and Chemical GDR (b) 1,000 4,200 45577P10 OM Group, Inc. (a) 47,500 1,098,438 67087210 Terra Industries, Inc. (a) 20,000 167,500 88091510 Vigoro Corp. 12,000 390,000 92675410 3,019,901 CHEMICALS - 52.0% Akzo NV: Ord. 2,200 245,505 01019910 sponsored ADR 70,000 3,893,750 01019930 Avery Dennison Corp. 13,300 415,625 05361110 Betz Laboratories, Inc. 1,000 50,625 08777910 Crompton & Knowles Corp. 6,000 138,750 22711110 Cytec Industries, Inc. (a) 114,671 1,763,067 23282010 Dow Chemical Co. 11,000 699,875 26054310 du Pont (E.I.) de Nemours & Co. 35,400 1,889,475 26353410 Engelhard Corp. 13,600 374,000 29284510 Ethyl Corp. 92,000 1,690,500 29765910 Georgia Gulf Corp. (a) 38,000 1,083,000 37320020 Goodrich (B.F.) Company 19,800 811,800 38238810 Grace (W.R.) & Co. 74,000 3,311,500 38388310 Great Lakes Chemical Corp. 13,800 1,079,850 39056810 Hercules, Inc. 5,800 667,725 42705610 Imperial Chemical Industries: Ord. 30,000 339,220 45270440 PLC ADR 51,700 2,358,813 45270450 Lawter International, Inc. 8,988 105,609 52078610 Lyondell Petrochemical Co. 81,700 1,848,463 55207810 Monsanto Co. 16,200 1,241,325 61166210 Morton International, Inc. 500 52,188 61933110 NOVA Corp. of Alberta Class A 40,000 281,586 66977110 Olin Corp. 22,900 1,124,963 68066520 PPG Industries, Inc. 6,000 460,500 69350610 Quaker Chemical Corp. 4,100 68,675 74731610 Raychem Corp. 68,000 2,550,000 75460310 Reliance Industries GDS (b) 17,000 378,250 75947093 Rohm & Haas Co. 15,000 856,875 77537110 Sterling Chemical, Inc. 50,000 300,000 85890310 Union Carbide Corp. 164,700 3,932,213 90558110 Witco Corp. 16,000 542,000 97738510 34,555,727 SHARES VALUE (NOTE 1) CHEMICALS, GENERAL - 0.3% Sybron Chemical Industry Corp. (a) 7,200 $ 174,600 87090310 INDUSTRIAL GASES - 0.7% Air Products & Chemicals, Inc. 10,000 476,250 00915810 ORGANIC CHEMICALS - 4.8% Lubrizol Corp. 85,000 3,198,125 54927110 PLASTICS & SYNTHETIC RESINS - 4.9% AEP Industries, Inc. 25,350 456,300 00103110 ARCO Chemical Co. 3,100 150,350 00192010 GEON 91,800 2,478,600 37246W10 Schulman (A.), Inc. 5,250 179,813 80819410 Wellman, Inc. 1,000 21,000 94970210 3,286,063 PLASTICS - 3.4% Carlisle Plastics, Inc. Class A (a) 27,700 218,138 14252210 Hanna (M.A.) Co. 53,100 1,891,680 41052210 Sealed Air Corp. (a) 2,300 67,563 81211510 2,177,381 PLASTICS, RESINS & ELASTOMERS - 5.9% Borden Chemical & Plastics Ltd. 20,000 237,500 09954120 Eastman Chemical Co. 58,050 2,423,588 27743210 Praxair, Inc. 68,253 1,279,744 74005P10 3,940,832 TOTAL CHEMICALS & PLASTICS 53,694,242 CONGLOMERATES - 0.4% Canadian Pacific Ltd. Ord. 15,000 261,208 13644030 DRUGS & PHARMACEUTICALS - 1.0% DRUGS - 1.0% American Cyanamid Co. 4,000 177,500 02532110 IMCERA Group, Inc. 6,800 252,450 45245410 Rhone Poulenc SA Class A 10,000 244,517 76242695 674,467 FOODS - 0.5% Montedison S.P.A. ADR 50,000 343,750 61237630 HOUSEHOLD PRODUCTS - 0.3% MANUFACTURED PRODUCTS - 0.3% First Brands Corp. 4,800 172,200 31935610 OIL & GAS - 2.2% CRUDE PETROLEUM & GAS - 1.3% Burlington Resources, Inc. 10,100 434,300 12201410 Occidental Petroleum Corp. 23,000 416,875 67459910 851,175 GENERAL PETROLEUM PRODUCTS - 0.5% Shangai Petrochem Class H ADR 10,000 340,000 81942410 OIL & GAS EXPLORATION - 0.4% Unocal Corp. 10,300 283,250 91528910 TOTAL OIL & GAS 1,474,425 PHOTOGRAPHIC EQUIPMENT - 0.2% Eastman Kodak Co. 3,000 129,000 27746110 POLLUTION CONTROL - 0.0% POLLUTION EQUIPMENT & DESIGN - 0.0% Harding Associates, Inc. (a) 3,500 32,375 41226410 RETAIL & WHOLESALE, MISCELLANEOUS - 0.1% MISCELLANEOUS NONDURABLE GOODS - WHOLESALE - 0.1% Amway Asia Pacific Ltd. (a) 2,000 88,500 03299H22 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) TEXTILES & APPAREL - 1.1% CARPETS & RUGS - 0.7% Image Industries, Inc. (a) 45,000 $ 444,375 45244B10 SILK MILLS - 0.3% Worldtex Corp. (a) 34,000 187,000 98190710 TEXTILE MILL PRODUCTS - 0.1% Unifi, Inc. 2,100 49,088 90467710 TOTAL TEXTILES & APPAREL 680,463 TOTAL COMMON STOCKS (Cost $54,759,274) 58,683,830 NONCONVERTIBLE BONDS - 0.0% PRINCIPAL AMOUNT CHEMICALS & PLASTICS - 0.0% PLASTICS - 0.0% Interpak Holdings, Inc., 12%, 12/31/96 (Cost $20,180) $25,218 20,174 460584AA REPURCHASE AGREEMENTS - 11.6% MATURITY VALUE (NOTE 1) AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account, at 3.47% dated 2/28/94 due 3/1/94 $7,701,742 7,701,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $62,480,454) $ 66,405,004 LEGEND (a) Non-income producing (b) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $378,250 or 0.6% of net assets. (c) Security purchased on a delayed delivery basis (see Note 2 of Notes to Financial Statements). OTHER INFORMATION CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1, 1993, the fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of February 28, 1993 have been reclassified to reflect an increase in paid in capital of $29,813,945, a decrease in undistributed net investment income of $4,255,331 and a decrease in accumulated net realized gain on investments of $25,558,614. Purchases and sales of securities, other than short-term securities, aggregated $49,070,182 and $22,402,918, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $27,722 for the period (see Note 4 of Notes to Financial Statements). Distribution of investments by country, as a percentage of total value of investment in securities, is as follows: United States 86.6% Netherlands 6.7 United Kingdom 4.3 Others (individually less than 1%) 2.4 TOTAL 100.0% INCOME TAX INFORMATION At February 28, 1994, the aggregate cost of investment securities for income tax purposes was $62,570,868. Net unrealized appreciation aggregated $3,834,136, of which $4,655,385 related to appreciated investment securities and $821,249 related to depreciated investment securities. The fund hereby designates $680,000 as a capital gain dividend for the purpose of the dividend paid deduction. CHEMICALS PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $7,701,000) (cost $62,480,454) $ 66,405,004 (Notes 1 and 2) - See accompanying schedule Cash 4,984 Receivable for investments sold 369,308 Receivable for fund shares sold 4,576,868 Dividends receivable 135,654 Interest receivable 504 Redemption fees receivable (Note 1) 13,509 Other receivables 10,278 TOTAL ASSETS 71,516,109 LIABILITIES Payable for investments purchased $ 4,545,985 Regular delivery Delayed delivery (Note 2) 560,779 Payable for fund shares redeemed 4,124,974 Accrued management fee 25,766 Other payables and accrued expenses 41,445 TOTAL LIABILITIES 9,298,949 NET ASSETS $ 62,217,160 Net Assets consist of (Note 1): Paid in capital $ 57,291,415 Undistributed net investment income 96,969 Accumulated undistributed net realized gain (loss) on investments 904,226 Net unrealized appreciation (depreciation) on investment securities 3,924,550 NET ASSETS, for 1,965,175 shares outstanding $ 62,217,160 NET ASSET VALUE and redemption price per share ($62,217,160 (divided by) 1,965,175 shares) $31.66 Maximum offering price per share (100/97 of $31.66) $32.64
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994 INVESTMENT INCOME $ 733,402 Dividends Interest (including security lending fees of $1,690) (Note 6) 59,287 TOTAL INCOME 792,689 EXPENSES Management fee (Note 4) $ 172,586 Transfer agent (Note 4) 300,053 Fees Redemption fees (Note 1) (23,853 ) Accounting and security lending fees (Note 4) 46,188 Non-interested trustees' compensation 187 Custodian fees and expenses 12,417 Registration fees 13,361 Audit 766 Legal 286 Reports to shareholders 7,161 Miscellaneous 405 Total expenses before reductions 529,557 Expense reductions (Note 8) (2,470 527,087 ) NET INVESTMENT INCOME 265,602 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 2,851,580 Net realized gain (loss) on investment securities Change in net unrealized appreciation (depreciation) on investment securities 2,343,419 NET GAIN (LOSS) 5,194,999 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 5,460,601 OTHER INFORMATION $192,261 Sales charges paid to FDC (Note 4) Deferred sales charges withheld $15,021 by FDC (Note 4) Exchange fees withheld by FSC $20,265 (Note 4)
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS FEBRUARY 28, ENDED 1994 FEBRUARY 28, 1993 Operations $ 265,602 $ 352,037 Net investment income Net realized gain (loss) on investments 2,851,580 2,861,673 Change in net unrealized appreciation (depreciation) on investments 2,343,419 (4,089,633 ) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 5,460,601 (875,923 ) Distributions to shareholders (189,427 (358,547 From net investment income ) ) From net realized gain (2,552,992 (3,962,530 ) ) TOTAL DISTRIBUTIONS (2,742,419 (4,321,077 ) ) Share transactions 59,344,504 18,786,960 Net proceeds from sales of shares Reinvestment of distributions 2,653,509 4,236,204 Cost of shares redeemed (31,346,756 (28,622,632 ) ) Paid in capital portion of redemption fees (Note 1) 51,531 26,570 Net increase (decrease) in net assets resulting from share transactions 30,702,788 (5,572,898 ) TOTAL INCREASE (DECREASE) IN NET ASSETS 33,420,970 (10,769,898 ) NET ASSETS Beginning of period 28,796,190 39,566,088 End of period (including undistributed net investment income of $96,969 and $4,291,819, respectively)$ 62,217,160 $ 28,796,190 OTHER INFORMATION Shares Sold 1,911,622 617,345 Issued in reinvestment of distributions 93,252 143,092 Redeemed (1,045,994 (960,200 ) ) Net increase (decrease) 958,880 (199,763)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30, FEBRUARY 28, ENDED FEBRUARY 28, SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990 Net asset value, beginning of period $ 28.62 $ 32.81 $ 26.25 $ 22.70 $ 23.77 Income from Investment Operations Net investment income .29 .30 .12 .28 .41 Net realized and unrealized gain (loss) on investments 5.97 (.84) 7.27 3.94 (.21) Total from investment operations 6.26 (.54) 7.39 4.22 .20 Less Distributions From net investment income (.23) (.31) (.18) (.10) (.16) From net realized gain (3.05) (3.36) (.71) (.60) (1.13) Total distributions (3.28) (3.67) (.89) (.70) (1.29) Redemption fees added to paid in capital .06 .02 .06 .03 .02 Net asset value, end of period $ 31.66 $ 28.62 $ 32.81 $ 26.25 $ 22.70 TOTAL RETURND, E 23.63% (1.61)% 29.07% 18.99% .71% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 62,217 $ 28,796 $ 39,566 $ 20,396 $ 21,150 Ratio of expenses to average net assetsB 1.93% 1.89%A 2.16% 2.50% 2.37% Ratio of expenses to average net assets before expense 1.93% 1.89%A 2.16% 2.52% 2.37% reductionsB Ratio of net investment income to average net assets .97% 1.21%A .40% 1.21% 1.65% Portfolio turnover rate 81% 214%A 87% 87% 99%
1 ANNUALIZED 2 SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS. 3 NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH PERIOD. 4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 5 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. CONSTRUCTION AND HOUSING PORTFOLIO PERFORMANCE AND INVESTMENT SUMMARY PERFORMANCE There are several ways to evaluate a fund's historical performance: total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND CONSTRUCTION AND HOUSING 27.45% 127.96% 190.88% CONSTRUCTION AND HOUSING (INCL. 3% SALES CHARGE) 23.63% 121.12% 182.15% S&P 500 8.33% 89.60% 156.18% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years, or since the fund started on September 29, 1986. You can compare these figures to the performance of the S&P 500 - a common proxy for the U.S. stock market. This benchmark includes reinvested dividends and capital gains, if any. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND CONSTRUCTION AND HOUSING 27.45% 17.92% 15.47% CONSTRUCTION AND HOUSING (INCL. 3% SALES CHARGE) 23.63% 17.20% 14.99% S&P 500 8.33% 13.65% 13.51% AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of growth in the long run and volatility in the short run. Unlike the broader market, however, some sectors may not have a history of growth in the long run. And, as with all stock funds, the share price and return of a fund that invests in a sector will vary. That means if you sell your shares during a sector downturn, you might lose money. But if you can identify a sector that is about to experience rapid growth you may have the potential for above-average gains. (checkmark) $10,000 OVER LIFE OF FUND Select Construct & Hsg S&P 500 09/29/86 9700.00 10000.00 09/30/86 9709.70 9962.80 10/31/86 10262.60 10537.66 11/30/86 10369.30 10793.72 12/31/86 10437.20 10518.48 01/31/87 12192.90 11935.32 02/28/87 13483.00 12406.77 03/31/87 14307.50 12765.32 04/30/87 13327.80 12651.71 05/31/87 12949.50 12761.78 06/30/87 12804.00 13406.25 07/31/87 13599.40 14085.95 08/31/87 13890.40 14611.35 09/30/87 12823.40 14291.37 10/31/87 8749.40 11213.00 11/30/87 8109.20 10289.05 12/31/87 9141.25 11072.05 01/31/88 9466.31 11538.18 02/29/88 10352.85 12075.86 03/31/88 10766.57 11702.72 04/30/88 11081.79 11832.62 05/31/88 11012.84 11935.56 06/30/88 11662.97 12483.41 07/31/88 11544.76 12435.97 08/31/88 10953.73 12013.15 09/30/88 11288.65 12524.91 10/31/88 11367.45 12873.10 11/30/88 11229.55 12689.01 12/31/88 11809.47 12911.07 01/31/89 12529.18 13856.16 02/28/89 12377.13 13511.14 03/31/89 12691.37 13825.95 04/30/89 13188.08 14543.52 05/31/89 13654.38 15132.53 06/30/89 13645.75 15046.28 07/31/89 14199.40 16404.95 08/31/89 14438.23 16726.49 09/30/89 14698.77 16657.91 10/31/89 13873.73 16271.45 11/30/89 14079.99 16603.39 12/31/89 13769.50 17001.87 01/31/90 12900.94 15861.04 02/28/90 13167.30 16065.65 03/31/90 13908.47 16491.39 04/30/90 13503.14 16079.11 05/31/90 14753.86 17646.82 06/30/90 14487.50 17526.82 07/31/90 13731.86 17470.73 08/31/90 11986.06 15891.38 09/30/90 10748.37 15117.47 10/31/90 10370.55 15052.46 11/30/90 11373.73 16024.85 12/31/90 12442.06 16471.95 01/31/91 13536.43 17190.12 02/28/91 14722.01 18419.22 03/31/91 15086.81 18864.96 04/30/91 15321.32 18910.24 05/31/91 16845.63 19727.16 06/30/91 15985.76 18823.66 07/31/91 16402.67 19700.84 08/31/91 17080.14 20167.75 09/30/91 16702.32 19830.95 10/31/91 16415.70 20096.68 11/30/91 15594.91 19286.79 12/31/91 17582.47 21493.19 01/31/92 18889.56 21093.42 02/29/92 19198.76 21367.64 03/31/92 19184.71 20950.97 04/30/92 19451.75 21566.92 05/31/92 20070.15 21672.60 06/30/92 18636.06 21349.68 07/31/92 18973.62 22222.88 08/31/92 18326.63 21767.31 09/30/92 18565.73 22024.17 10/31/92 19212.72 22101.25 11/30/92 20323.85 22854.91 12/31/92 20872.39 23136.02 01/31/93 21744.41 23330.36 02/28/93 22138.23 23647.66 03/31/93 22658.63 24146.62 04/30/93 22123.97 23562.27 05/31/93 22363.22 24193.74 06/30/93 22630.62 24263.90 07/31/93 23404.68 24166.85 08/31/93 24375.77 25082.77 09/30/93 25163.90 24889.63 10/31/93 26078.70 25404.85 11/30/93 25670.56 25163.50 12/31/93 27887.76 25467.98 01/31/94 28798.84 26333.89 02/28/94 28215.18 25617.61 Let's say you invested $10,000 in Fidelity Select Construction and Housing Portfolio on September 29, 1986, when the fund started, and paid a 3% sales charge. By February 28, 1994, your investment would have grown to $28,215 - a 182.15% increase. That compares to $10,000 invested in the S&P 500, which would have grown to $25,618 over the same period - a 156.18% increase. INVESTMENT SUMMARY TOP TEN STOCKS AS OF FEBRUARY 28, 1994 % OF FUND'S INVESTMENTS General Electric Co. 8.5 Medusa Corp. 5.1 Lowe's Companies, Inc. 4.9 Federal National Mortgage Association 4.8 Federal Home Loan Mortgage Corporation 4.6 Armstrong World Industries, Inc. 3.3 Pulte Corp. 3.2 Lafarge Corp. 3.1 Centex Corp. 2.9 Leggett & Platt, Inc. 2.3 TOP INDUSTRIES AS OF FEBRUARY 28, 1994 Row: 1, Col: 1, Value: 54.3 Row: 1, Col: 2, Value: 5.8 Row: 1, Col: 3, Value: 8.5 Row: 1, Col: 4, Value: 9.300000000000001 Row: 1, Col: 5, Value: 9.300000000000001 Row: 1, Col: 6, Value: 12.8 Cement 12.8% Federal & Federally Sponsored Credit Agencies 9.3% Operative Builders 9.3% Electrical Machinery 8.5% Furniture 5.8% All Others 54.3%* * INCLUDES SHORT-TERM INVESTMENTS CONSTRUCTION AND HOUSING PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW Katherine Collins, Portfolio Manager of Fidelity Select Construction and Housing Portfolio Q. KATHERINE, HOW DID THE FUND PERFORM? A. Quite well. The fund's total return for the year ended February 28, 1994 was 27.45%. This was substantially higher than the S& P 500, which had a return of 8.33% for the same period. Q. WHAT'S BEHIND THESE NUMBERS? A. The housing market had a strong year. In general, interest rates stayed low and consumer confidence improved. As a result, there was an increased demand for houses, especially single family homes. Also, I heavily weighted the fund - almost 13% - in cement stocks. Cement factories were at 90% of their production capacity, allowing cement companies to raise their prices over the inflation level for the first time in a decade. One of my top stocks was the Midwestern cement company, Medusa. This company benefited from the tight supply of cement in the Midwest and Great Lakes region. Lafarge, a cement and concrete company, also turned in good results because it increased prices and cut operating costs. Q. WHAT INDUSTRIES BENEFITED FROM THE UPSWING IN THE HOUSING MARKET? A. Home builders performed especially well. For example, Pulte, a national home builder, was up over 50% for the year ended February 28, 1994. I was also pleased with Centex, a diversified home-building company that produces materials such as cement and gypsum. It also profited from improved pricing. A company that benefited from extensive internal restructuring as well as the upturn in the market was Armstrong, which makes floors, ceilings, and industrial products. It cut its costs significantly over the past few years. So, when sales picked up this year, its profits increased dramatically. In fact, its stock price almost doubled. Q. WHAT'S THE STORY BEHIND YOUR TOP STOCK, GENERAL ELECTRIC? A. GE, which makes a variety of products, including home appliances, was attractive for several reasons. First, it had a huge cash supply on hand, which the company could use to make some interesting acquisitions. It also owns Kidder Peabody, which was up about 20% in the past year. Most importantly, I was pleased with changes GE made to its culture that resulted in increased employee commitment and strong earnings improvement despite a difficult economic environment. Q. IN FEBRUARY, THE FEDERAL RESERVE INCREASED SHORT-TERM INTEREST RATES. HAS THAT AFFECTED THE FUND'S PERFORMANCE? A. Yes. The fund was down about 2% after the Fed's decision. However, after that it leveled off and slightly outperformed the S&P 500. Rising interest rates increase concerns about the affordability of housing, as well as concerns about the profitability of some companies' mortgage banking operations. Home builders were the hardest hit. For example, during the month of February, Pulte was down 18% and Centex dropped 26%. Q. DO YOU HAVE ANY REGRETS ABOUT YOUR INVESTMENT DECISIONS? A. Not any major ones. However, I wish I'd invested more heavily in companies like Armstrong - up 87% this year. I also wish I'd bought more stock in Shaw Industries, the largest U.S. carpet producer. It had a volatile year, but from its low point to its high point, it grew about 65%. Q. HOW DO YOU THINK THE SECTOR AND THE FUND LOOK GOING FORWARD? A. As we discussed, the overall housing environment looks good, and I expect the demand for housing could continue to rise in 1994. This should be helped by an increase in construction of multifamily housing, like apartment buildings, which have been depressed. Plus, it looks like the commercial sector might pick up, something that was unthinkable several years ago. In terms of the fund, I believe my top 10 stocks are well positioned to take advantage of the construction market if it continues to improve. Going forward, I'm keeping my eye on furniture and appliance companies, such as the furniture company Leggett & Platt, which could continue to benefit from a strong new housing market. In addition, they're likely to be buoyed by last year's refinancings, which provided cash savings to homeowners. FUND FACTS START DATE: September 29, 1986 SIZE: as of February 28, 1994, over $80 million MANAGER: Katherine Collins, since June 1992; equity analyst, home-building and construction industries, 1990-1992; joined Fidelity in 1990 (checkmark) CONSTRUCTION AND HOUSING PORTFOLIO INVESTMENTS FEBRUARY 28, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 82.5% SHARES VALUE (NOTE 1) BUILDING MATERIALS - 20.5% CEMENT - 12.8% Cemex SA, Series B 10,000 $ 295,588 15299293 Florida Rock Industries, Inc. 28,200 920,025 34114010 Lafarge Corp. 109,100 2,632,038 50586210 Medusa Corp. 138,900 4,305,900 58507230 St. Lawrence Cement, Inc. Class A (a) 52,700 429,567 79106010 Southdown, Inc. (a) 14,000 409,500 84129710 Texas Industries, Inc. 48,100 1,725,588 88249110 Vulcan Materials Co. 2,900 141,738 92916010 10,859,944 CONCRETE, GYPSUM, PLASTER - 0.6% Devcon International Corp. (a) 11,400 82,650 25158810 USG Corp. (a) 13,600 413,100 90329340 495,750 FLOOR COVERINGS - 3.3% Armstrong World Industries, Inc. 52,300 2,830,738 04247610 PAINT & VARNISH - 1.2% Sherwin-Williams Co. 29,700 1,046,925 82434810 PAVING, ROOFING & SIDING - 1.3% AMRE, Inc. 1,700 6,588 03215310 Bird Corp. 22,600 226,000 09076310 Carlisle Companies, Inc. 18,000 596,250 14233910 Jannock Ltd. 5,700 88,172 47088880 Ply-Gem Industries, Inc. 7,300 179,763 72941610 1,096,773 PLUMBING SUPPLIES - WHOLESALE - 1.3% Masco Corp. 30,700 1,078,338 57459910 TOTAL BUILDING MATERIALS 17,408,468 CHEMICALS & PLASTICS - 0.4% CHEMICALS - 0.4% PPG Industries, Inc. 3,900 299,325 69350610 COMPUTERS & OFFICE EQUIPMENT - 0.1% COMPUTER PERIPHERALS - 0.1% Cherry Corp. (a) 5,000 121,250 16454110 CONSTRUCTION - 10.9% GENERAL BUILDING - 0.9% Schuler Homes, Inc. (a) 18,600 483,600 80818810 Toll Brothers, Inc. (a) 20,000 300,000 88947810 783,600 MOBILE HOMES - 0.7% Clayton Homes, Inc. (a) 21,650 503,363 18419010 Oakwood Homes Corp. 2,000 49,000 67409810 Redman Industries (a) 2,000 40,500 75764210 592,863 OPERATIVE BUILDERS - 9.3% Centex Corp. 66,500 2,477,125 15231210 Continental Homes Holding Corp. 29,900 639,113 21148C10 Engle Homes, Inc. 16,100 261,625 29289610 Inco Homes (a) 10,000 72,500 45325710 Lennar Corp. 26,300 897,488 52605710 Pulte Corp. 79,300 2,686,288 74586710 Standard Pacific Corp. 49,000 526,750 85375C10 Sundance Homes, Inc. (a) 20,000 250,000 86724Q10 Washington Homes, Inc. 8,500 72,250 93886410 7,883,139 TOTAL CONSTRUCTION 9,259,602 SHARES VALUE (NOTE 1) CONSUMER ELECTRONICS - 0.7% APPLIANCES - 0.7% Fedders USA, Inc. (a) 40,000 $ 280,000 31313510 Stanley Works 7,300 313,900 85461610 593,900 ELECTRICAL EQUIPMENT - 10.0% ELECTRICAL EQUIPMENT - WHOLESALE - 0.8% Hughes Supply, Inc. 24,800 663,400 44448210 ELECTRICAL MACHINERY - 8.5% General Electric Co. 68,500 7,218,188 36960410 ELECTRICAL TRANSMISSION EQUIPMENT - 0.7% MagneTek, Inc. (a) 40,000 610,000 55942410 TOTAL ELECTRICAL EQUIPMENT 8,491,588 ENGINEERING - 2.5% ARCHITECTS & ENGINEERS - 0.6% Fluor Corp. 11,400 505,875 34386110 SPECIAL CONTRACTORS - 1.9% CBI Industries, Inc. 16,400 551,450 12480010 Foster Wheeler Corp. 25,000 1,046,875 35024410 1,598,325 TOTAL ENGINEERING 2,104,200 FEDERAL SPONSORED CREDIT - 9.3% FEDERAL & FEDERALLY SPONSORED CREDIT AGENCIES - 9.3% Federal Home Loan Mortgage Corporation 69,600 3,880,200 31340030 Federal National Mortgage Association 48,700 4,048,188 31358610 7,928,388 HOME FURNISHINGS - 10.3% FURNITURE - 5.8% Bassett Furniture Industries, Inc. 10,062 299,345 07020310 Bush Industries, Inc. Class A 3,550 93,188 12316410 LADD Furniture, Inc. 91,500 915,000 50573910 La-Z Boy Chair Co. 5,000 178,750 50533610 Leggett & Platt, Inc. 43,800 1,981,950 52466010 Loewenstein Furniture Group, Inc. (a) 1,000 11,625 54042210 Rowe Furniture Corp. 60,150 954,881 77952810 Stanley Furniture (a) 32,000 464,000 85430520 4,898,739 FURNITURE STORES - 3.4% Bombay Company, Inc. (The) (a) 12,450 342,375 09792410 Ethan Allen Interiors, Inc. (a) 27,000 745,875 29760210 Haverty Furniture Companies, Inc. 31,550 575,788 41959610 Heilig-Meyers Co. 27,500 907,500 42289310 Rhodes, Inc. (a) 20,000 385,000 76235P10 2,956,538 NON-WOOD OFFICE FURNITURE - 1.1% Falcon Products, Inc. (a) 17,500 188,125 30607510 Miller (Herman), Inc. 21,900 733,650 60054410 921,775 TOTAL HOME FURNISHINGS 8,777,052 INDUSTRIAL MACHINERY & EQUIPMENT - 2.1% CONSTRUCTION EQUIPMENT - 1.9% Caterpillar, Inc. 14,500 1,571,438 14912310 PUMPING EQUIPMENT - 0.2% Amtrol, Inc. 10,000 210,000 03234A10 TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 1,781,438 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) IRON & STEEL - 1.2% IRON & STEEL BLAST FURNITURE, MILLS - 1.2% Allegheny Ludlum Industries, Inc. 30,000 $ 596,250 01690010 Birmingham Steel Corp. 6,200 182,900 09125010 Oregon Steel Mills, Inc. 9,800 249,900 68607910 1,029,050 LEISURE DURABLES & TOYS - 1.6% LEISURE DURABLES - 1.0% Champion Enterprises, Inc. (a) 37,200 827,700 15849610 MOTOR HOMES - 0.2% Fleetwood Enterprises, Inc. 10,000 223,750 33909910 SPORTING & ATHLETIC GOODS - 0.4% Coleman, Inc. (a) 12,600 341,775 19355910 TOTAL LEISURE DURABLES & TOYS 1,393,225 METALS & MINING - 0.2% METAL ORES - 0.2% Wolverine Tube, Inc. (a) 8,500 189,125 97809310 PAPER & FOREST PRODUCTS - 0.4% PAPER - 0.4% Champion International Corp. 10,000 315,000 15852510 REAL ESTATE - 1.1% SUBDIVIDED REAL ESTATE DEVELOPMENT - 1.1% Hovnanian Enterprises, Inc. Class A (a) 11,000 143,000 44248720 Newhall Land & Farming Co. (CA) 51,400 777,425 65142610 920,425 RETAIL & WHOLESALE, MISCELLANEOUS - 7.1% BUILDING MATERIALS - RETAIL - 2.1% Home Depot, Inc. (The) 43,266 1,800,947 43707610 LUMBER & BUILDING MATERIALS - RETAIL - 5.0% Lowe's Companies, Inc. 63,600 4,205,550 54866110 TOTAL RETAIL & WHOLESALE, MISC. 6,006,497 TEXTILES & APPAREL - 4.1% CARPETS & RUGS - 3.3% Interface, Inc. Class A 39,400 625,475 45866510 Mohawk Industries, Inc. (a) 45,206 1,231,864 60819010 Shaw Industries, Inc. 48,800 915,000 82028610 2,772,339 FOOTWEAR - 0.4% Justin Industries, Inc. 24,900 361,050 48217110 TEXTILE MILL PRODUCTS - 0.4% Unifi, Inc. 16,600 388,025 90467710 TOTAL TEXTILES & APPAREL 3,521,414 TOTAL COMMON STOCKS (Cost $59,291,046) 70,139,947 PREFERRED STOCKS - 0.4% CONVERTIBLE PREFERRED STOCKS - 0.0% BUILDING MATERIALS - 0.0% PAVING, ROOFING & SIDING - 0.0% Bird Corp. $1.85 1,200 21,150 09076330 SHARES VALUE (NOTE 1) NONCONVERTIBLE PREFERRED STOCKS - 0.4% BUILDING MATERIALS - 0.4% CEMENT - 0.4% Unicem Di Risp 80,000 $ 312,322 91199792 TOTAL PREFERRED STOCKS (Cost $280,118) 333,472 REPURCHASE AGREEMENTS - 17.1% MATURITY VALUE (NOTE 1) AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account, at 3.47% dated 2/28/94 due 3/1/94 $14,534,401 $ 14,533,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $74,104,164) $ 85,006,419 LEGEND (a) Non-income producing OTHER INFORMATION CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1, 1993, the fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of February 28, 1993 have been reclassified to reflect an increase in paid in capital of $1,160,262, an increase in undistributed net investment income of $21,031 and a decrease in accumulated net realized gain on investments of $1,181,293. Purchases and sales of securities, other than short-term securities, aggregated $52,217,739 and $12,438,943, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $21,215 for the period (see Note 4 of Notes to Financial Statements). INCOME TAX INFORMATION At February 28, 1994, the aggregate cost of investment securities for income tax purposes was $74,113,734. Net unrealized appreciation aggregated $10,892,685, of which $12,388,214 related to appreciated investment securities and $1,495,529 related to depreciated investment securities. The fund hereby designates $329,000 as a capital gain dividend for the purpose of the dividend paid deduction. CONSTRUCTION AND HOUSING PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $14,533,000) (cost $74,104,164) $ 85,006,419 (Notes 1 and 2) - See accompanying schedule Cash 362 Receivable for fund shares sold 1,122,386 Dividends receivable 67,895 Redemption fees receivable (Note 1) 856 TOTAL ASSETS 86,197,918 LIABILITIES Payable for fund shares redeemed $ 5,081,627 Accrued management fee 46,395 Other payables and accrued expenses 70,753 TOTAL LIABILITIES 5,198,775 NET ASSETS $ 80,999,143 Net Assets consist of (Note 1): Paid in capital $ 69,457,310 Undistributed net investment income 12,162 Accumulated undistributed net realized gain (loss) on investments 627,416 Net unrealized appreciation (depreciation) on investment securities 10,902,255 NET ASSETS, for 4,086,603 shares outstanding $ 80,999,143 NET ASSET VALUE and redemption price per share ($80,999,143 (divided by) 4,086,603 shares) $19.82 Maximum offering price per share (100/97 of $19.82) $20.43
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994 INVESTMENT INCOME $ 466,457 Dividends Interest 245,385 TOTAL INCOME 711,842 EXPENSES Management fee (Note 4) $ 266,225 Transfer agent (Note 4) 374,727 Fees Redemption fees (Note 1) (40,431 ) Accounting fees and expenses 52,429 (Note 4) Non-interested trustees' compensation 253 Custodian fees and expenses 13,746 Registration fees 24,859 Audit 3,008 Legal 309 Reports to shareholders 6,013 Miscellaneous 571 Total expenses before reductions 701,709 Expense reductions (Note 8) (1,748 699,961 ) NET INVESTMENT INCOME 11,881 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 1,149,357 Net realized gain (loss) on investment securities Change in net unrealized appreciation (depreciation) on investment securities 7,883,107 NET GAIN (LOSS) 9,032,464 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 9,044,345 OTHER INFORMATION $550,583 Sales charges paid to FDC (Note 4) Deferred sales charges withheld $3,922 by FDC (Note 4) Exchange fees withheld by FSC $33,368 (Note 4)
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS FEBRUARY 28, ENDED 1994 FEBRUARY 28, 1993 Operations $ 11,881 $ 37,290 Net investment income Net realized gain (loss) on investments 1,149,357 151,713 Change in net unrealized appreciation (depreciation) on investments 7,883,107 2,252,597 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 9,044,345 2,441,600 Distributions to shareholders from net realized gains (529,457 (18,518 ) ) Share transactions 103,244,564 30,616,107 Net proceeds from sales of shares Reinvestment of distributions 523,498 18,207 Cost of shares redeemed (62,476,673 (28,668,964 ) ) Paid in capital portion of redemption fees (Note 1) 81,997 35,913 Net increase (decrease) in net assets resulting from share transactions 41,373,386 2,001,263 TOTAL INCREASE (DECREASE) IN NET ASSETS 49,888,274 4,424,345 NET ASSETS Beginning of period 31,110,869 26,686,524 End of period (including undistributed net investment income of $12,162 and $16,260, respectively) $ 80,999,143 $ 31,110,869 OTHER INFORMATION Shares Sold 5,578,570 2,129,257 Issued in reinvestment of distributions 28,856 1,324 Redeemed (3,497,427 (2,082,580 ) ) Net increase (decrease) 2,109,999 48,001
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30, FEBRUARY 28, ENDED FEBRUARY 28, SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990 Net asset value, beginning of period $ 15.74 $ 13.84 $ 11.76 $ 11.66 $ 13.01 Income from Investment Operations Net investment income (loss) .01 .02 (.06) .01 - Net realized and unrealized gain (loss) on investments 4.26 1.87 2.93 1.45 .34 Total from investment operations 4.27 1.89 2.87 1.46 .34 Less Distributions From net investment income - - - (.16) (.08) From net realized gain (.22) (.01) (.88) (1.27) (1.62) Total distributions (.22) (.01) (.88) (1.43) (1.70) Redemption fees added to paid in capital .03 .02 .09 .07 .01 Net asset value, end of period $ 19.82 $ 15.74 $ 13.84 $ 11.76 $ 11.66 TOTAL RETURND, E 27.45% 13.81% 26.96% 13.46% 2.39% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 80,999 $ 31,111 $ 26,687 $ 4,070 $ 1,217 Ratio of expenses to average net assetsB 1.66% 2.02%A 2.50% 2.48% 2.41% Ratio of expenses to average net assets before expense 1.67% 2.02%A 3.10% 3.48% 3.30% reductionsB Ratio of net investment income (loss) to average net assets.03% .20%A (.49)% .08% (.03)% Portfolio turnover rate 35% 60%A 183% 137% 185%
1 ANNUALIZED 2 SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS. 3 NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH PERIOD. 4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 5 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. ENVIRONMENTAL SERVICES PORTFOLIO PERFORMANCE AND INVESTMENT SUMMARY PERFORMANCE There are several ways to evaluate a fund's historical performance: total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 LIFE OF FEBRUARY 28, 1994 YEAR FUND ENVIRONMENTAL SERVICES 5.02% 28.47% ENVIRONMENTAL SERVICES (INCL. 3% SALES CHARGE) 1.87% 24.62% S&P 500 8.33% 66.19% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, or since the fund started on June 29, 1989. You can compare these figures to the performance of the S&P 500 - a common proxy for the U.S. stock market. This benchmark includes reinvested dividends and capital gains, if any. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 LIFE OF FEBRUARY 28, 1994 YEAR FUND ENVIRONMENTAL SERVICES 5.02% 5.51% ENVIRONMENTAL SERVICES (INCL. 3% SALES CHARGE) 1.87% 4.82% S&P 500 8.33% 11.48% AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of growth in the long run and volatility in the short run. Unlike the broader market, however, some sectors may not have a history of growth in the long run. And, as with all stock funds, the share price and return of a fund that invests in a sector will vary. That means if you sell your shares during a sector downturn, you might lose money. But if you can identify a sector that is about to experience rapid growth you may have the potential for above-average gains. (checkmark) $10,000 OVER LIFE OF FUND 06/29/89 9700.00 10000.00 06/30/89 9573.90 9761.13 07/31/89 10485.70 10642.57 08/31/89 10621.50 10851.16 09/30/89 11193.80 10806.67 10/31/89 10941.60 10555.96 11/30/89 11009.50 10771.30 12/31/89 11368.64 11029.81 01/31/90 10358.96 10289.71 02/28/90 10562.83 10422.44 03/31/90 11019.13 10698.64 04/30/90 11077.38 10431.17 05/31/90 12106.48 11448.21 06/30/90 12485.11 11370.37 07/31/90 12407.45 11333.98 08/31/90 10863.80 10309.39 09/30/90 10281.29 9807.32 10/31/90 10135.66 9765.15 11/30/90 10485.17 10395.98 12/31/90 11087.09 10686.03 01/31/91 12057.94 11151.94 02/28/91 12611.33 11949.30 03/31/91 12611.33 12238.47 04/30/91 12572.49 12267.85 05/31/91 12601.62 12797.82 06/30/91 11650.19 12211.68 07/31/91 12019.11 12780.74 08/31/91 12232.69 13083.64 09/30/91 11941.44 12865.15 10/31/91 11494.85 13037.54 11/30/91 10863.80 12512.13 12/31/91 11936.55 13943.51 01/31/92 13005.20 13684.17 02/29/92 13146.34 13862.06 03/31/92 11835.74 13591.75 04/30/92 11482.88 13991.35 05/31/92 11190.52 14059.90 06/30/92 10592.18 13850.41 07/31/92 10665.30 14416.89 08/31/92 10445.94 14121.35 09/30/92 10571.29 14287.98 10/31/92 11072.70 14337.99 11/30/92 11762.13 14826.91 12/31/92 11772.57 15009.28 01/31/93 12002.38 15135.36 02/28/93 11866.59 15341.20 03/31/93 11574.10 15664.90 04/30/93 11333.84 15285.81 05/31/93 11584.55 15695.47 06/30/93 11438.30 15740.99 07/31/93 10957.79 15678.02 08/31/93 11542.76 16272.22 09/30/93 11553.21 16146.93 10/31/93 11877.03 16481.17 11/30/93 11354.74 16324.60 12/31/93 11699.45 16522.12 01/31/94 12691.82 17083.88 02/28/94 12462.01 16619.19 Let's say you invested $10,000 in Fidelity Select Environmental Services Portfolio on June 29, 1989, when the fund started, and paid a 3% sales charge. By February 28, 1994, your investment would have grown to $12,462 - a 24.62% increase. That compares to $10,000 invested in the S&P 500, which would have grown to $16,619 over the same period - a 66.19% increase. INVESTMENT SUMMARY TOP TEN STOCKS AS OF FEBRUARY 28, 1994 % OF FUND'S INVESTMENTS Thermedics, Inc. 6.1 Thermo Electron Corp. 5.4 Attwoods PLC ADR 4.8 TETRA Technologies, Inc. 3.9 United Waste Systems, Inc. 3.8 Heidemij NV 3.7 OHM Corp. 3.4 Thermo Instrument Systems, Inc. 3.3 EA Engineering Science & Technology, Inc. 2.3 American Ecology Corp. 2.3 TOP INDUSTRIES AS OF FEBRUARY 28, 1994 Row: 1, Col: 1, Value: 49.4 Row: 1, Col: 2, Value: 6.1 Row: 1, Col: 3, Value: 6.1 Row: 1, Col: 4, Value: 9.9 Row: 1, Col: 5, Value: 13.4 Row: 1, Col: 6, Value: 15.1 Pollution Equipment & Design 15.1% Refuse Systems 13.4% Hazardous Waste Management 9.9% Medical Technology 6.1% Business Consulting Services 6.1% All Others 49.4%* * INCLUDES SHORT-TERM INVESTMENTS ENVIRONMENTAL SERVICES PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW Philip Barton, Portfolio Manager of Fidelity Select Environmental Services Portfolio Q. PIP, HOW DID THE FUND PERFORM? A. Quite well, considering the terrible performance of the industry during 1993. For the year ended February 28, 1994, the fund had a total return of 5.02%, underperforming the S&P 500, which had a total return of 8.33%. Q. WHY DID THE FUND'S PERFORMANCE LAG THE INDEX? A. The S&P Pollution Control index, which measures environmental services stocks, was the worst performing of all the S&P indexes, down 30.2%. That means that the whole sector had a tough year. The fund's return was especially weak for the first six months of the year. Q. YOU TOOK OVER AS FUND MANAGER IN AUGUST. HAVE YOU CHANGED THE FUND'S STRATEGY? A. Yes, dramatically. I dropped WMX, the dominant integrated waste management company, from the fund. Before August, WMX and its publicly traded divisions made up 17% of the fund's portfolio. I sold it because I saw a number of potential problems resulting from poor management. This turned out to be a good move. WMX's price dropped by 31% between August, when I sold it, and the end of this period. Instead, I focused on traditional companies with high growth potential and what I call "new age"companies. Since I've made these changes, the fund has beaten the S&P 500 every month through the end of February. Q. WHAT DO YOU MEAN BY "NEW AGE" COMPANIES? A. New age companies develop advanced technologies and instruments to solve long-standing environmental issues. They also look for solutions to newer environmental problems, such as noise pollution. For example, my number one investment is Thermedics, a company that produces quality control products for food producers and beverage bottlers. This company uses modern technology to check for contamination in carbonated beverages. Since the benzene contamination incident nearly destroyed Perrier, bottlers are increasingly concerned about protecting their reputation for quality and purity. This is especially important in the third world, where soda bottles are often reused, sometimes to transport gasoline. The fund's second largest investment is Thermo Electron, an innovative energy, environmental, and medical company that has turned in a great performance this year. Q. WHAT MORE TRADITIONAL COMPANIES DO YOU HAVE A STAKE IN? A. I like environmental remediation, consulting, and engineering firms, and secondary market waste collection companies, smaller companies that work within a specific region or regions. United Waste Systems, a secondary waste collection company that does business primarily in Michigan's Upper Peninsula, was a good performer for the fund. I bought this company when its stock fell in November. Since then, United Waste's price has increased by 40%. Another attractive traditional company was OHM, which disposes of hazardous waste. When business slowed over the last few years, it sold off its non-essential holdings, such as testing labs it rarely used. This increased the company's profitability. The company also has a $1.6 billion backlog of awards to clean Department of Defense and Department of Energy facilities. This will be an extremely attractive contract because many of the facilities haven't complied with Environmental Protection Agency (EPA) requirements, and the cost to rid these bases of toxic waste will be high. Q. YOUR FOREIGN INVESTMENTS MAKE UP ABOUT 15% OF THE FUND. WHERE ARE YOU INVESTING? A. My largest foreign investment was in Attwoods PLC, a waste collection company in the U.K. Last year, Attwoods dropped a poorly performing recycling business it owned, and it's now much better positioned to increase its operating income going forward. Another reason the company looked good is that, after a failed merger with Laidlaw, it may be ripe for a takeover by another company. Q. WHAT'S YOUR OUTLOOK FOR THE FUND GOING FORWARD? A. I'm generally optimistic. I believe the companies I've invested in have growth potential and will continue to receive broader investor attention. In addition, some of them may benefit from mergers due to industry consolidation. Since the sector is out of favor with investors and stocks are priced low right now, I think there might be a real opportunity for price appreciation over the next few years. FUND FACTS START DATE: June 29, 1989 SIZE: as of February 28, 1994, over $65 million MANAGER: Philip Barton, since August; manager, Fidelity Select Developing Communications Portfolio, since January 1993; Senior European technology analyst, Fidelity International, London, 1989-1993; joined Fidelity in 1986 (checkmark) ENVIRONMENTAL SERVICES PORTFOLIO INVESTMENTS FEBRUARY 28, 1994 COMMON STOCKS - 98.0% SHARES VALUE (NOTE 1) AUTOS, TIRES, & ACCESSORIES - 2.4% AUTO & TRUCK PARTS - 2.4% Air Sensors, Inc. (a) 69,300 $ 961,538 00918720 Air Sensors, Inc. (warrants) (a) 195,000 609,369 00918711 1,570,907 BUILDING MATERIALS - 2.9% AIRCONDITIONING EQUIPMENT - 0.3% Thermo Power Corp. (a) 21,500 188,125 88358910 FURNACES - 2.6% Thermo Process Systems, Inc. (a) 60,800 539,600 88359010 Thermo Remediation 81,000 1,164,375 88359210 1,703,975 TOTAL BUILDING MATERIALS 1,892,100 CHEMICALS & PLASTICS - 1.8% PLASTICS, NEC - 1.8% ESSEF Industries Inc. (a) 69,500 1,207,563 26914510 COMPUTER SERVICES & SOFTWARE - 2.5% CAD/CAM/CAE - 1.4% Electrocom Automation, Inc. (a) 113,600 908,800 28529410 PREPACKAGED COMPUTER SOFTWARE - 1.1% Micro Focus Group, PLC ADR (a) 20,000 302,500 59483630 Triconex Corp. (a) 27,000 425,250 89611610 727,750 TOTAL COMPUTER SERVICES & SOFTWARE 1,636,550 COMPUTERS & OFFICE EQUIPMENT - 0.2% COMPUTER PERIPHERALS - 0.2% Identix, Inc. (a) 30,500 106,750 45190610 DEFENSE ELECTRONICS - 0.7% Graseby PLC Ord. 165,000 456,007 40099A92 DRUGS & PHARMACEUTICALS - 1.8% COMMERCIAL LABORATORY RESEARCH - 1.8% Catalytica, Inc. (a) 117,600 793,800 14888510 Zenon Environmental, Inc. 44,000 407,558 98942B10 1,201,358 ELECTRICAL EQUIPMENT - 0.8% TV & RADIO COMMUNICATION EQUIPMENT - 0.8% California Amplifier, Inc. (a) 84,300 547,950 12990010 ELECTRONIC INSTRUMENTS - 6.8% INDUSTRIAL MEASUREMENT INSTRUMENTS - 1.7% Industrial Scientific Corp. 21,000 577,500 45631G10 TSI, Inc. 44,000 561,000 87287610 1,138,500 LABORATORY & RESEARCH EQUIPMENT - 2.8% Fisher Scientific International, Inc. 33,200 1,178,600 33803210 Microfluidics International Corp 125,000 710,938 59507310 1,889,538 LABORATORY ANALYTICAL INSTRUMENTS - 0.0% Hach Co. 1,400 26,950 40450410 MEASURING INSTRUMENTS - 2.3% Liberty Technologies, Inc. 171,900 1,504,125 53128110 TOTAL ELECTRONIC INSTRUMENTS 4,559,113 SHARES VALUE (NOTE 1) ELECTRONICS - 1.5% SEMICONDUCTORS - 1.5% Geotek Industries, Inc. (a) 80,800 $ 979,700 37365410 ENERGY SERVICES - 0.8% OIL & GAS SERVICES - 0.8% Serv-Tech, Inc. (a) 53,500 521,625 81753910 ENGINEERING - 3.2% ARCHITECTS & ENGINEERS - 2.3% EA Engineering Science & Technology, Inc. (a) 91,000 1,547,000 26791110 WATER & SEWER PIPES - 0.9% UTILX Corporation (a) 87,500 601,563 91803110 TOTAL ENGINEERING 2,148,563 GAS - 2.2% GAS TRANSMISSION - 1.4% Enron Corp. 6,100 194,438 29356110 Tejas Power Corp. (a) 62,600 704,250 87907910 898,688 GAS TRANSMISSION & DISTRIBUTION - 0.8% ENSERCH Corp. 15,000 232,500 29356710 Questar Corp. 9,700 298,275 74835610 530,775 TOTAL GAS 1,429,463 INDEPENDENT POWER - 6.0% STEAM SUPPLY - 6.0% California Energy Co., Inc. (a) 20,000 365,000 13019010 Thermo Electron Corp. 87,250 3,599,063 88355610 3,964,063 INDUSTRIAL MACHINERY & EQUIPMENT - 2.1% MEASURING & DISPENSING PUMPS - 0.6% Total Containment, Inc. 40,000 410,000 89149T10 SERVICE INDUSTRY MACHINERY, NEC - 1.5% Trojan Technologies (a) 111,400 1,021,545 89692410 TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 1,431,545 MEDICAL EQUIPMENT & SUPPLIES - 8.0% MEDICAL SUPPLIES & APPLIANCES - 1.9% Steris Corporation (a) 45,000 1,248,750 85915210 MEDICAL TECHNOLOGY - 6.1% Thermedics, Inc. (a) 313,300 4,033,738 88390110 TOTAL MEDICAL EQUIPMENT & SUPPLIES 5,282,488 MEDICAL FACILITIES MANAGEMENT - 1.3% MEDICAL LABORATORIES - 1.3% Huntingdon International Holdings PLC ADR 135,300 862,538 44589120 METALS & MINING - 0.6% SECONDARY NONFERROUS SMELTING - 0.6% IMCO Recycling, Inc. (a) 25,100 363,950 44968110 OIL & GAS - 0.9% CRUDE PETROLEUM & GAS - 0.9% Apache Corp. 10,000 250,000 03741110 Unimar Co., Indonesian Participating Certificate 37,100 329,263 90478810 579,263 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) PACKAGING & CONTAINERS - 0.1% METAL CANS & SHIPPING CONTAINERS - 0.1% Air Packaging Technologies, Inc 150,300 $ 94,668 00891310 POLLUTION CONTROL - 40.2% HAZARDOUS WASTE MANAGEMENT - 9.9% American Ecology Corp. 127,600 1,531,200 02553310 GNI Group, Inc. (a) 177,500 1,153,750 36202210 NSC Corp. 100,000 425,000 62938T10 OHM Corp. 142,400 2,278,400 67083910 TRC Companies, Inc. (a) 101,900 1,133,638 87262510 6,521,988 POLLUTION EQUIPMENT & DESIGN - 15.1% Canonie Environmental Services Corp. 81,700 377,863 13801210 Dames & Moore, Inc. 29,200 587,650 23571310 EMCON Associates (a) 52,600 466,825 29084310 Envirosource, Inc. (a) 212,600 823,825 29409K10 GZA GeoEnvironmental Technologies, Inc. (a) 76,100 437,575 36238610 Harding Associates Inc. (a) 89,300 826,025 41226410 MFRI Inc. (a) 100,000 762,500 55272110 Sevenson Environmental Services, Inc. 5,000 90,000 81806310 TETRA Technologies, Inc. (a) 338,000 2,577,250 88162F10 Thermo Instrument Systems, Inc. (a) 67,350 2,163,619 88355910 Versar, Inc. (a) 32,000 102,000 92529710 Weston (Roy F.), Inc. Class A (a) 97,700 757,175 96113710 9,972,307 REFUSE SYSTEMS - 13.2% Attwoods PLC ADR 263,600 3,196,150 04987020 International Recovery Corp. (a) 35,300 507,438 46024210 Sanifill, Inc. (a) 49,500 1,175,625 80101810 Security Environmental Systems, Inc. (a) 15,000 75,000 81421T30 United Waste Systems, Inc. (a) 128,500 2,505,750 91317410 Western Waste Industries, Inc. (a) 77,600 1,261,000 95988010 8,720,963 SANITARY SERVICES - 2.0% USA Waste Services, Inc. (a) 104,300 1,368,938 90291710 TOTAL POLLUTION CONTROL 26,584,196 SERVICES - 11.2% BUSINESS CONSULTING SERVICES - 6.1% Centex Telemanagement, Inc. (a) 120,000 600,000 15231510 Earth Technology Corp. (USA) (a) 71,900 943,688 27031510 Heidemij NV (a) 200,500 2,456,125 42099522 3,999,813 BUSINESS SERVICES - 2.6% Marcum Natural Gas Services, Inc. 68,100 476,700 56632310 Vectra Technologies (a) 139,500 1,255,500 92239910 1,732,200 LINEN SUPPLY - 2.2% G&K Services Inc. Class A 97,650 1,464,750 36126810 PERSONNEL SUPPLY SERVICES - 0.1% Nuclear Support Services, Inc. (a) 15,000 82,500 67030910 SPECIAL WAREHOUSING & STORAGE, NEC - 0.2% Astrotech International Corp. (a) 46,400 145,000 04648710 TOTAL SERVICES 7,424,263 TOTAL COMMON STOCKS (Cost $61,993,505) 64,844,623 CONVERTIBLE PREFERRED STOCKS - 0.5% SHARES VALUE (NOTE 1) DRUGS & PHARMACEUTICALS - 0.5% BIOTECHNOLOGY - 0.5% DNA Plant Technology Corp. $2.25 exchangeable (a) (Cost $302,505) 11,000 $ 299,750 23323630 CONVERTIBLE BONDS - 0.2% PRINCIPAL AMOUNT POLLUTION CONTROL - 0.2% REFUSE SYSTEMS - 0.2% Sanifill, Inc. 7 1/2%, 6/1/06 (Cost $100,505) $100,000 103,250 801018AA REPURCHASE AGREEMENTS - 1.3% MATURITY VALUE (NOTE 1) AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account, at 3.47% dated 2/28/94 due 3/1/94 $827,080 827,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $63,223,515) $ 66,074,623 LEGEND (a) Non-income producing OTHER INFORMATION CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1, 1993, the fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of February 28, 1993 have been reclassified to reflect an increase in paid in capital of $492,349, a decrease in undistributed net investment loss of $1,280,096 and an increase in accumulated net realized loss on investments of $1,772,445. Purchases and sales of securities, other than short-term securities, aggregated $105,614,637 and $102,839,401, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $84,034 for the period (see Note 4 of Notes to Financial Statements). The maximum loan and average daily loan balances during the periods for which loans were outstanding amounted to $2,951,000 and $1,817,500, respectively. The weighted average interest rate paid was 3.6% (see Note 7 of Notes to Financial Statements). Distribution of investments by country, as a percentage of total value of investment in securities, is as follows: United States 84.8% United Kingdom 9.2 Netherlands 3.7 Canada 2.3 TOTAL 100.0% INCOME TAX INFORMATION At February 28, 1994, the aggregate cost of investment securities for income tax purposes was $63,475,313. Net unrealized appreciation aggregated $2,599,310, of which $6,051,468 related to appreciated investment securities and $3,452,158 related to depreciated investment securities. At February 28, 1994, the fund had a capital loss carryforward of approximately $289,000 which will expire on February 28, 2001. ENVIRONMENTAL SERVICES PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $827,000) (cost $63,223,515) (Notes $ 66,074,623 1 and 2) - See accompanying schedule Cash 697 Receivable for investments sold 1,860,210 Receivable for fund shares sold 622,325 Dividends receivable 38,381 Interest receivable 1,854 Redemption fees receivable (Note 1) 529 Other receivables 29,257 TOTAL ASSETS 68,627,876 LIABILITIES Payable for investments purchased $ 918,560 Payable for fund shares redeemed 1,651,503 Accrued management fee 34,651 Other payables and accrued expenses 67,379 TOTAL LIABILITIES 2,672,093 NET ASSETS $ 65,955,783 Net Assets consist of (Note 1): Paid in capital $ 63,607,736 Accumulated undistributed net realized gain (loss) on investments (503,061 ) Net unrealized appreciation (depreciation) on investment securities 2,851,108 NET ASSETS, for 5,527,301 shares outstanding $ 65,955,783 NET ASSET VALUE and redemption price per share ($65,955,783 (divided by) 5,527,301 shares) $11.93 Maximum offering price per share (100/97 of $11.93) $12.30
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994 INVESTMENT INCOME $ 457,429 Dividends Interest 116,876 TOTAL INCOME 574,305 EXPENSES Management fee (Note 4) $ 354,982 Transfer agent (Note 4) 758,516 Fees Redemption fees (66,390 ) Accounting fees and expenses 57,311 (Note 4) Non-interested trustees' compensation 408 Custodian fees and expenses 15,931 Registration fees 24,610 Audit 6,114 Legal 615 Interest (Note 7) 364 Reports to shareholders 18,379 Miscellaneous 870 Total expenses before reductions 1,171,710 Expense reductions (Note 8) (21,649 1,150,061 ) NET INVESTMENT INCOME (LOSS) (575,756 ) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 1,694,174 Net realized gain (loss) on investment securities Change in net unrealized appreciation (depreciation) on investment securities 1,070,736 NET GAIN (LOSS) 2,764,910 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 2,189,154 OTHER INFORMATION $373,455 Sales charges paid to FDC (Note 4) Deferred sales charges withheld $70,630 by FDC (Note 4) Exchange fees withheld by FSC $51,563 (Note 4)
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS FEBRUARY 28, ENDED 1994 FEBRUARY 28, 1993 Operations $ (575,756 $ (365,176 Net investment income (loss) ) ) Net realized gain (loss) on investments 1,694,174 (726,250 ) Change in net unrealized appreciation (depreciation) on investments 1,070,736 3,425,443 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 2,189,154 2,334,017 Distributions to shareholders from net realized gains - (2,168,222 ) Share transactions 46,687,197 30,459,906 Net proceeds from sales of shares Reinvestment of distributions - 2,143,441 Cost of shares redeemed (48,886,268 (32,015,265 ) ) Paid in capital portion of redemption fees (Note 1) 53,169 27,062 Net increase (decrease) in net assets resulting from share transactions (2,145,902 615,144 ) TOTAL INCREASE (DECREASE) IN NET ASSETS 43,252 780,939 NET ASSETS Beginning of period 65,912,531 65,131,592 End of period (including accumulated net investment loss of $0 and $1,280,096, respectively) $ 65,955,783 $ 65,912,531 OTHER INFORMATION Shares Sold 4,126,128 2,820,987 Issued in reinvestment of distributions - 198,650 Redeemed (4,401,687 (2,936,705 ) ) Net increase (decrease) (275,559) 82,932
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30, JUNE 29, 1989 FEBRUARY 28, ENDED (COMMENCEMEN FEBRUARY 28, T OF OPERATIONS) TO APRIL 30, SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990 Net asset value, beginning of period $ 11.36 $ 11.39 $ 12.95 $ 11.41 $ 10.00 Income from Investment Operations Net investment income (loss) (.11) (.06) (.09) (.04) .02 Net realized and unrealized gain (loss) on investments .67 .42 (1.06) 1.55 1.38 Total from investment operations .56 .36 (1.15) 1.51 1.40 Less Distributions From net investment income - - - - - (.01) From net realized gain - - (.39) (.42) - - Total distributions - - (.39) (.42) - (.01) Redemption fees added to paid in capital .01 - .01 .03 .02 Net asset value, end of period $ 11.93 $ 11.36 $ 11.39 $ 12.95 $ 11.41 TOTAL RETURND, E 5.02% 3.34% (8.67)% 13.50% 14.20% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 65,956 $ 65,913 $ 65,132 $ 100,263 $ 101,736 Ratio of expenses to average net assetsB 2.03% 1.99%A 2.03% 2.03% 2.25%A Ratio of expenses to average net assets before expense 2.07% 1.99%A 2.03% 2.03% 2.25%A reductionsB Ratio of net investment income (loss) to average net assets (1.02)% (.70)% (.74)% (.30)% .16%A A Portfolio turnover rate 191% 176%A 130% 122% 72%A
1 ANNUALIZED 2 SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS. 3 NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH PERIOD. 4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 5 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. INDUSTRIAL EQUIPMENT PORTFOLIO PERFORMANCE AND INVESTMENT SUMMARY PERFORMANCE There are several ways to evaluate a fund's historical performance: total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND INDUSTRIAL EQUIPMENT 40.07% 110.78% 119.78% INDUSTRIAL EQUIPMENT (INCL. 3% SALES CHARGE) 35.87% 104.46% 113.19% S&P 500 8.33% 89.60% 156.18% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years, or since the fund started on September 29, 1986. You can compare these figures to the performance of the S&P 500 - a common proxy for the U.S. stock market. This benchmark includes reinvested dividends and capital gains, if any. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND INDUSTRIAL EQUIPMENT 40.07% 16.08% 11.19% INDUSTRIAL EQUIPMENT (INCL. 3% SALES CHARGE) 35.87% 15.38% 10.73% S&P 500 8.33% 13.65% 13.51% AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of growth in the long run and volatility in the short run. Unlike the broader market, however, some sectors may not have a history of growth in the long run. And, as with all stock funds, the share price and return of a fund that invests in a sector will vary. That means if you sell your shares during a sector downturn, you might lose money. But if you can identify a sector that is about to experience rapid growth you may have the potential for above-average gains. (checkmark) $10,000 OVER LIFE OF FUND 09/29/86 9700.00 10000.00 09/30/86 9729.10 9962.80 10/31/86 10039.50 10537.66 11/30/86 10291.70 10793.72 12/31/86 10311.10 10518.48 01/31/87 11804.90 11935.32 02/28/87 12804.00 12406.77 03/31/87 12580.90 12765.32 04/30/87 12367.50 12651.71 05/31/87 12357.80 12761.78 06/30/87 12707.00 13406.25 07/31/87 13483.00 14085.95 08/31/87 14084.40 14611.35 09/30/87 14414.20 14291.37 10/31/87 8759.10 11213.00 11/30/87 8361.40 10289.05 12/31/87 9357.40 11072.05 01/31/88 9188.17 11538.18 02/29/88 10024.37 12075.86 03/31/88 10173.69 11702.72 04/30/88 10472.33 11832.62 05/31/88 10412.60 11935.56 06/30/88 11149.25 12483.41 07/31/88 10561.92 12435.97 08/31/88 9606.27 12013.15 09/30/88 9785.45 12524.91 10/31/88 9626.18 12873.10 11/30/88 9317.58 12689.01 12/31/88 9815.32 12911.07 01/31/89 10532.05 13856.16 02/28/89 10113.96 13511.14 03/31/89 10263.28 13825.95 04/30/89 10999.92 14543.52 05/31/89 11597.21 15132.53 06/30/89 11099.47 15046.28 07/31/89 11806.25 16404.95 08/31/89 12025.26 16726.49 09/30/89 11856.03 16657.91 10/31/89 11069.61 16271.45 11/30/89 11378.20 16603.39 12/31/89 11577.30 17001.87 01/31/90 11189.06 15861.04 02/28/90 11756.48 16065.65 03/31/90 12453.31 16491.39 04/30/90 12353.76 16079.11 05/31/90 13498.55 17646.82 06/30/90 13258.63 17526.82 07/31/90 13008.09 17470.73 08/31/90 10863.46 15891.38 09/30/90 9390.28 15117.47 10/31/90 9139.74 15052.46 11/30/90 9440.39 16024.85 12/31/90 9781.12 16471.95 01/31/91 10823.37 17190.12 02/28/91 11845.58 18419.22 03/31/91 11745.36 18864.96 04/30/91 11625.11 18910.24 05/31/91 12116.17 19727.16 06/30/91 11725.02 18823.66 07/31/91 11825.32 19700.84 08/31/91 12005.86 20167.75 09/30/91 12286.70 19830.95 10/31/91 12216.49 20096.68 11/30/91 11634.75 19286.79 12/31/91 12406.42 21493.19 01/31/92 13519.56 21093.42 02/29/92 14480.90 21367.64 03/31/92 14055.89 20950.97 04/30/92 14055.89 21566.92 05/31/92 14167.20 21672.60 06/30/92 13296.93 21349.68 07/31/92 13418.36 22222.88 08/31/92 12720.12 21767.31 09/30/92 12983.23 22024.17 10/31/92 12932.63 22101.25 11/30/92 13549.91 22854.91 12/31/92 13813.02 23136.02 01/31/93 14460.66 23330.36 02/28/93 15219.62 23647.66 03/31/93 15492.84 24146.62 04/30/93 16201.67 23562.27 05/31/93 17011.75 24193.74 06/30/93 17234.53 24263.90 07/31/93 17477.55 24166.85 08/31/93 18672.42 25082.77 09/30/93 18459.78 24889.63 10/31/93 19077.47 25404.85 11/30/93 19057.21 25163.50 12/31/93 19798.05 25467.98 01/31/94 20728.99 26333.89 02/28/94 21318.59 25617.61 Let's say you invested $10,000 in Fidelity Select Industrial Equipment Portfolio on September 29, 1986, when the fund started, and paid a 3% sales charge. By February 28, 1994, your investment would have grown to $21,319 - a 113.19% increase. That compares to $10,000 invested in the S&P 500, which would have grown to $25,618 over the same period - a 156.18% increase. INVESTMENT SUMMARY TOP TEN STOCKS AS OF FEBRUARY 28, 1994 % OF FUND'S INVESTMENTS Caterpillar, Inc. 10.8 Digital Equipment Corp. 6.7 International Business Machines Corp. 6.1 NACCO Industries, Inc. Class A 5.4 TRINOVA Corp. 5.2 Trinity Industries, Inc. 5.0 Joy Technologies, Inc. Class A 5.0 Finning Ltd. 4.3 BWIP Holdings, Inc. Class A 3.7 Compaq Computer Corp. 3.4 TOP INDUSTRIES AS OF FEBRUARY 28, 1994 Row: 1, Col: 1, Value: 47.2 Row: 1, Col: 2, Value: 6.1 Row: 1, Col: 3, Value: 7.5 Row: 1, Col: 4, Value: 10.2 Row: 1, Col: 5, Value: 13.4 Row: 1, Col: 6, Value: 15.6 Construction Equipment 15.6% General Industrial Machinery 13.4% Mini & Micro Computers 10.2% Pumping Equipment 7.5% Mainframe Computers 6.1% All Others 47.2%* * INCLUDES SHORT-TERM INVESTMENTS INDUSTRIAL EQUIPMENT PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW Albert Ruback, Portfolio Manager of Fidelity Select Industrial Equipment Portfolio Q. ALBERT, HOW DID THE FUND DO? A. For the year ended February 28, 1994, the fund returned 40.07%. That beat the S&P 500, which returned 8.33% for the same period. Q. WAS IT A STRAIGHT ONE-WAY RIDE UP? A. It usually isn't and it wasn't during the past year either. In the first half the fund enjoyed strong returns as new equipment demand, reduced product inventories and cost-cutting boosted earnings for many agricultural and construction equipment firms. But by late last year, many of these companies' stock prices had gotten ahead of themselves, and it became more difficult to find good values. In the beginning of 1994, investors lost faith in the group's ability to maintain earnings growth, and there was a sell-off. At that point, both the sector and the fund dropped. Q. WERE THERE ANY STOCKS THAT DID PARTICULARLY WELL THROUGHOUT THE ENTIRE PERIOD? A. Construction equipment manufacturer Caterpillar, the fund's largest investment making up 10.8% on February 28, 1994, withstood most of the sector's ups and downs. That's in part because the company posted significantly higher profits without huge gains in revenues. It did that by maintaining relatively low costs. Despite its recent strong gains, I think Caterpillar has the potential to move higher. About half of the company's sales comes from abroad, and it has recently been helped by orders from the relatively untapped markets of the former Soviet Union and China. Finning, one of the fund's top investments, also did well as the demand for earth-moving equipment improved both in Canada and Britain. Q. WHAT ABOUT THE AGRICULTURAL EQUIPMENT COMPANIES? A. They, too, did well for a good part of the period and the fund enjoyed strong gains from its investments in companies like Deere and Tenneco. But recently I pared back the fund's stake in some of these companies because I thought their stock prices were beginning to reflect peak levels of production. I used some of the proceeds to buy stocks in other industries that seemed more attractively priced. Q. WHAT ARE SOME EXAMPLES? A. I focused on companies that could be helped by a U.S. economic recovery like Joy Technologies, a manufacturer of coal mining machinery and NACCO, a lift truck company. Both of these companies could benefit if global economic recovery translates into stronger-than-expected sales of their products. Q. SOME OF THE FUND'S TOP INVESTMENTS WERE COMPUTER AND RELATED COMPANIES. WHAT'S THE ATTRACTION THERE? A. Companies like Digital Equipment, IBM and Compaq Computer were attractive because I thought they, too, could be helped by a stronger U.S. economy. Much of American business is investing in technology as a means of improving productivity. That trend helped fuel growth for some computer-related companies. What's more, many technology companies are aggressively cutting costs, which in turn seems to have helped their profitability. However, some of these companies didn't improve as quickly as I thought they would and proved to be disappointing. Q. WERE THERE OTHER DISAPPOINTMENTS? A. The flow of money into the fund was uneven, and at times I had more cash in the fund than I would have liked. At the end of the period, about 17% of the fund was in cash. If the amount of money coming into the fund had been slower, and the fund's cash level was down to under 10% of investments, the fund may have done better. Q. AFTER COMING OFF SUCH A STRONG YEAR, WHAT'S AHEAD FOR THE SECTOR AND THE FUND IN 1994? A. I think it will be more difficult for both the sector and the fund to enjoy the same substantial gains we saw in 1993. Lately it's been harder to find companies that seem to be a good value. But I'll continue to focus on finding companies that are inexpensive relative to their value, and could benefit from continued cost-cutting and increased overseas sales. FUND FACTS START DATE: September 29, 1986 SIZE: as of February 28, 1994, over $206 million MANAGER: Albert Ruback, since September 1991; joined Fidelity in 1991 (checkmark) INDUSTRIAL EQUIPMENT PORTFOLIO INVESTMENTS FEBRUARY 28, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 83.4% SHARES VALUE (NOTE 1) AUTOS, TIRES, & ACCESSORIES - 8.0% AUTO & TRUCK PARTS - 2.5% Titan Wheel International, Inc. (a) 161,200 $ 4,755,395 88832810 INDUSTRIAL TRUCKS - 5.5% NACCO Industries, Inc. Class A 177,600 10,189,800 62957910 Raymond Corp. (The) (a) 10,300 182,825 75468810 10,372,625 TRUCK & BUS BODIES - 0.0% Grupo Dina (Consorcio G) ADR (a) 100 1,825 21030610 TOTAL AUTOS, TIRES, & ACCESSORIES 15,129,845 BUILDING MATERIALS - 1.7% AIRCONDITIONING EQUIPMENT - 1.7% Tecumseh Products Co. Class A 60,500 3,100,625 87889520 COMPUTERS & OFFICE EQUIPMENT - 16.3% MAINFRAME COMPUTERS - 6.1% International Business Machines Corp. 216,600 11,452,725 45920010 MINI & MICRO COMPUTERS - 10.2% Apple Computer, Inc. 10,000 365,000 03783310 Compaq Computer Corp. (a) 63,900 6,310,125 20449310 Digital Equipment Corp. (a) 428,900 12,491,713 25384910 19,166,838 TOTAL COMPUTERS & OFFICE EQUIPMENT 30,619,563 ELECTRICAL EQUIPMENT - 0.6% FLUID METERS - 0.6% Roper Industries, Inc. 38,000 1,102,000 77669610 ELECTRONICS - 1.6% ELECTRONIC PARTS - WHOLESALE - 0.1% Pioneer-Standard Electronics, Inc. 10,000 257,500 72387710 SEMICONDUCTORS - 1.5% Intel Corp. 40,000 2,749,120 45814010 TOTAL ELECTRONICS 3,006,620 ENERGY SERVICES - 0.2% OIL & GAS SERVICES - 0.2% Dresser Industries, Inc. 20,000 455,000 26159710 INDUSTRIAL MACHINERY & EQUIPMENT - 49.0% BALL & ROLLER BEARINGS - 1.9% Bearings, Inc. 106,900 3,487,613 07400520 SKF AB sponsored ADR (a) 5,000 94,375 78437540 3,581,988 CONSTRUCTION EQUIPMENT - 15.6% Astec Industries, Inc. (a) 19,400 354,050 04622410 Caterpillar, Inc. 187,500 20,320,313 14912310 Finning Ltd. 510,500 8,085,912 31807140 Rexworks, Inc. (b) 97,500 548,438 76190310 29,308,713 ENGINES & TURBINES - 0.5% Briggs & Stratton Corp. 11,700 997,425 10904310 FARM MACHINERY & EQUIPMENT - 3.0% AGCO Corp. 19,900 825,850 00108410 Allied Products Corp. (a) 110,700 1,618,988 01941110 Deere & Co. 16,000 1,352,029 24419910 Lindsay Manufacturing Co. 2,000 65,000 53555510 Tenneco, Inc. 24,900 1,388,175 88037010 Valmont Industries, Inc. 25,000 456,250 92025310 5,706,292 SHARES VALUE (NOTE 1) GENERAL INDUSTRIAL MACHINERY - 13.4% Cascade Corp. 4,600 $ 94,300 14719510 Gorman Rupp Co. 3,000 82,875 38308210 Harnischfeger Industries, Inc. 233,600 5,898,400 41334510 Manitowoc Co., Inc. 32,700 976,913 56357110 Park-Ohio Industries, Inc. (a) 234,200 3,835,025 70067710 TRINOVA Corp. 260,600 9,805,075 89667810 Watts Industries, Inc. Class A 78,900 4,497,300 94274910 25,189,888 MACHINE TOOLS, METAL CUTTING - 1.1% Brown & Sharpe Manufacturing Co. Class A (a) 6,100 44,225 11522310 Cincinnati Milacron, Inc. 85,500 2,041,313 17217210 2,085,538 METAL WORKING MACHINERY - 0.9% Acme-Cleveland Corp. 169,000 1,584,375 00462610 MINING & HANDLING EQUIPMENT - 5.0% Joy Technologies, Inc. Class A (a) 692,199 9,344,687 48120610 PRINTING TRADES MACHINERY - 0.1% Stevens Graphics, Inc. Class A (a) 16,200 109,350 86024C20 PUMPING EQUIPMENT - 7.5% Amtrol, Inc. 32,500 682,500 03234A10 BWIP Holdings, Inc. Class A 346,000 7,006,500 05604410 Duriron Company, Inc. 4,900 127,400 26684910 Goulds Pumps, Inc. 233,200 6,150,650 38355010 IDEX Corp. (a) 1,200 44,700 45167R10 14,011,750 TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 91,920,006 IRON & STEEL - 0.1% IRON & STEEL BLAST FURNACES, MILLS - 0.1% UNR Industries, Inc. 40,000 250,000 90318510 METALS & MINING - 0.5% NON-METALLIC MINERAL MINING - 0.5% American Colloid Co. 49,800 846,600 02516810 RAILROADS - 5.4% RAILROAD EQUIPMENT - 5.4% Johnstown America Industries, Inc. (a) 27,900 774,225 47947710 Trinity Industries, Inc. 210,550 9,343,156 89652210 10,117,381 RETAIL & WHOLESALE, MISCELLANEOUS - 0.0% RETAIL, GENERAL - 0.0% CML Group, Inc. 2,550 54,188 12582010 TOTAL COMMON STOCKS (Cost $142,686,605) 156,601,828 REPURCHASE AGREEMENTS - 16.6% MATURITY VALUE (NOTE 1) AMOUNT Investments in repurchase agreements, (U.S. Treasury obligations), in a joint trading account, at 3.47% dated 2/28/94 due 3/1/94 $ 31,174,005 31,171,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $173,857,605) $ 187,772,828 LEGEND (a) Non-income producing (a) A company in which the fund has ownership of at least 5% of the voting securities is an affiliated company. A summary of the transactions during the period in which the issuers were affiliates is as follows: PURCHASES SALES DIVIDEND MARKET AFFILIATE COST COST INCOME VALUE Rexworks, Inc. $ 45,000 $ 28,125 $ - $ 548,438 OTHER INFORMATION CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1, 1993, the fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of February 28, 1993 have been reclassified to reflect an increase in paid in capital of $4,361,142, a decrease in undistributed net investment loss of $79,974 and an increase in accumulated net realized loss on investments of $4,441,116. Purchases and sales of securities, other than short-term securities, aggregated $179,127,105 and $53,192,950, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $60,492 for the period (see Note 4 of Notes to Financial Statements). The maximum loan and average daily loan balances during the periods for which loans were outstanding amounted to $1,736,000 and $1,736,000, respectively. The weighted average interest rate paid was 3.8% (see Note 7 of Notes to Financial Statements). INCOME TAX INFORMATION At February 28, 1994, the aggregate cost of investment securities for income tax purposes was $173,883,615. Net unrealized appreciation aggregated $13,889,213, of which $15,176,944 related to appreciated investment securities and $1,287,731 related to depreciated investment securities. On October 26, 1990, the fund acquired substantially all of the assets of Automation and Machinery Portfolio in a tax-free exchange for shares of Industrial Technology Portfolio. Automation and Machinery Portfolio has a capital loss carryover of approximately $106,000 available to offset future capital gains in Industrial Technology Portfolio, to the extent provided by regulations. INDUSTRIAL EQUIPMENT PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $31,171,000) (cost $173,857,605) $ 187,772,828 (Notes 1 and 2) - See accompanying schedule Cash 889 Receivable for investments sold 32,901 Receivable for fund shares sold 73,616,467 Dividends receivable 148,557 Redemption fees receivable (Note 1) 334 TOTAL ASSETS 261,571,976 LIABILITIES Payable for investments purchased $ 53,921,303 Payable for fund shares redeemed 1,485,540 Accrued management fee 62,227 Other payables and accrued expenses 90,562 TOTAL LIABILITIES 55,559,632 NET ASSETS $ 206,012,344 Net Assets consist of (Note 1): Paid in capital $ 190,332,309 Undistributed net investment income 3,928 Accumulated undistributed net realized gain (loss) on investments 1,760,884 Net unrealized appreciation (depreciation) on investment securities 13,915,223 NET ASSETS, for 9,997,636 shares outstanding $ 206,012,344 NET ASSET VALUE and redemption price per share ($206,012,344 (divided by) 9,997,636 shares) $20.61 Maximum offering price per share (100/97 of $20.61) $21.25
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994 INVESTMENT INCOME $ 720,332 Dividends Interest 264,873 TOTAL INCOME 985,205 EXPENSES Management fee (Note 4) $ 368,162 Transfer agent (Note 4) 531,744 Fees Redemption fees (Note 1) (48,959 ) Accounting fees and expenses 67,846 (Note 4) Non-interested trustees' compensation 315 Custodian fees and expenses 14,496 Registration fees 33,941 Audit 7,576 Legal 305 Interest (Note 7) 181 Reports to shareholders 10,387 Miscellaneous 325 Total expenses before reductions 986,319 Expense reductions (Note 8) (6,992 979,327 ) NET INVESTMENT INCOME 5,878 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 6,549,137 Net realized gain (loss) on investment securities (including realized gain (loss) of $(4,375) on sales of affiliated issuers) Change in net unrealized appreciation (depreciation) on investment securities 13,055,339 NET GAIN (LOSS) 19,604,476 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 19,610,354 OTHER INFORMATION $1,055,685 Sales charges paid to FDC (Note 4) Deferred sales charges withheld $4,828 by FDC (Note 4) Exchange fees withheld by FSC $41,760 (Note 4)
STATEMENT OF CHANGES IN NET ASSETS INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS FEBRUARY 28, ENDED 1994 FEBRUARY 28, 1993
Operations $ 5,878 $ 7,438 Net investment income Net realized gain (loss) on investments 6,549,137 (263,782 ) Change in net unrealized appreciation (depreciation) on investments 13,055,339 630,456 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 19,610,354 374,112 Distributions to shareholders (9,388 - From net investment income ) From net realized gain (1,748,414 - ) TOTAL DISTRIBUTIONS (1,757,802 - ) Share transactions 267,189,015 17,737,753 Net proceeds from sales of shares Reinvestment of distributions 1,738,476 - Cost of shares redeemed (95,571,492 (11,058,859 ) ) Paid in capital portion of redemption fees (Note 1) 202,432 19,767 Net increase (decrease) in net assets resulting from share transactions 173,558,431 6,698,661 TOTAL INCREASE (DECREASE) IN NET ASSETS 191,410,983 7,072,773 NET ASSETS Beginning of period 14,601,361 7,528,588 End of period (including undistributed net investment income (loss) of $3,928 and $(72,535), respectively) $ 206,012,344 $ 14,601,361 OTHER INFORMATION Shares Sold 14,282,723 1,248,814 Issued in reinvestment of distributions 93,575 - Redeemed (5,349,531 (819,990 ) ) Net increase (decrease) 9,026,767 428,824
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30, FEBRUARY 28, ENDED FEBRUARY 28, SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990 Net asset value, beginning of period $ 15.04 $ 13.89 $ 11.60 $ 12.41 $ 11.05 Income from Investment Operations Net investment income (loss) - .02 (.07) .01 .13F Net realized and unrealized gain (loss) on investments 5.92 1.09 2.39 (.80) 1.19 Total from investment operations 5.92 1.11 2.32 (.79) 1.32 Less Distributions From net investment income (.01) - - - - In excess of net investment income - - (.11) (.09) - From net realized gain (.40) - - - - Total distributions (.41) - (.11) (.09) - Redemption fees added to paid in capital .06 .04 .08 .07 .04 Net asset value, end of period $ 20.61 $ 15.04 $ 13.89 $ 11.60 $ 12.41 TOTAL RETURND, E 40.07% 8.28% 20.91% (5.90)% 12.31% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 206,012 $ 14,601 $ 7,529 $ 1,949 $ 3,240 Ratio of expenses to average net assetsB 1.68% 2.49%A 2.49% 2.52% 2.59% Ratio of expenses to average net assets before expense 1.69% 3.40%A 2.86% 2.99% 3.86% reductionsB Ratio of net investment income (loss) to average net assets.01% .15%A (.57)% .09% 1.06% Portfolio turnover rate 95% 407%A 167% 43% 132%
1 ANNUALIZED 2 SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS. 3 NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH PERIOD. 4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 5 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. 6 INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO $.11 PER SHARE. INDUSTRIAL MATERIALS PORTFOLIO PERFORMANCE AND INVESTMENT SUMMARY PERFORMANCE There are several ways to evaluate a fund's historical performance: total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND INDUSTRIAL MATERIALS 24.66% 67.26% 129.42% INDUSTRIAL MATERIALS (INCL. 3% SALES CHARGE) 20.92% 62.24% 122.54% S&P 500 8.33% 89.60% 156.18% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years, or since the fund started on September 29, 1986. You can compare these figures to the performance of the S&P 500 - a common proxy for the U.S. stock market. This benchmark includes reinvested dividends and capital gains, if any. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND INDUSTRIAL MATERIALS 24.66% 10.83% 11.83% INDUSTRIAL MATERIALS (INCL. 3% SALES CHARGE) 20.92% 10.16% 11.38% S&P 500 8.33% 13.65% 13.51% AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of growth in the long run and volatility in the short run. Unlike the broader market, however, some sectors may not have a history of growth in the long run. And, as with all stock funds, the share price and return of a fund that invests in a sector will vary. That means if you sell your shares during a sector downturn, you might lose money. But if you can identify a sector that is about to experience rapid growth you may have the potential for above-average gains. (checkmark) $10,000 OVER LIFE OF FUND 09/29/86 9700.00 10000.00 09/30/86 9729.10 9962.80 10/31/86 10262.60 10537.66 11/30/86 10621.50 10793.72 12/31/86 10233.50 10518.48 01/31/87 12008.60 11935.32 02/28/87 13017.40 12406.77 03/31/87 13958.30 12765.32 04/30/87 14123.20 12651.71 05/31/87 13764.30 12761.78 06/30/87 14482.10 13406.25 07/31/87 15820.70 14085.95 08/31/87 16363.90 14611.35 09/30/87 16606.40 14291.37 10/31/87 10301.40 11213.00 11/30/87 10252.90 10289.05 12/31/87 11834.99 11072.05 01/31/88 11222.33 11538.18 02/29/88 12544.90 12075.86 03/31/88 12768.56 11702.72 04/30/88 12788.01 11832.62 05/31/88 12476.82 11935.56 06/30/88 13838.28 12483.41 07/31/88 13322.87 12435.97 08/31/88 12603.24 12013.15 09/30/88 12710.22 12524.91 10/31/88 12476.82 12873.10 11/30/88 12360.13 12689.01 12/31/88 13117.43 12911.07 01/31/89 13908.23 13856.16 02/28/89 13305.25 13511.14 03/31/89 13166.86 13825.95 04/30/89 13572.14 14543.52 05/31/89 13750.07 15132.53 06/30/89 12949.39 15046.28 07/31/89 14115.82 16404.95 08/31/89 15242.71 16726.49 09/30/89 14313.52 16657.91 10/31/89 13137.20 16271.45 11/30/89 13325.02 16603.39 12/31/89 13700.65 17001.87 01/31/90 12652.84 15861.04 02/28/90 12870.31 16065.65 03/31/90 13245.94 16491.39 04/30/90 12287.09 16079.11 05/31/90 13028.47 17646.82 06/30/90 12890.20 17526.82 07/31/90 12738.07 17470.73 08/31/90 11267.51 15891.38 09/30/90 10466.31 15117.47 10/31/90 10344.61 15052.46 11/30/90 10892.27 16024.85 12/31/90 11348.65 16471.95 01/31/91 11754.32 17190.12 02/28/91 12616.37 18419.22 03/31/91 12788.78 18864.96 04/30/91 12809.06 18910.24 05/31/91 13904.38 19727.16 06/30/91 13752.20 18823.66 07/31/91 14302.29 19700.84 08/31/91 14638.45 20167.75 09/30/91 14444.90 19830.95 10/31/91 15066.30 20096.68 11/30/91 13864.25 19286.79 12/31/91 15412.65 21493.19 01/31/92 16084.98 21093.42 02/29/92 16869.36 21367.64 03/31/92 16573.95 20950.97 04/30/92 17439.83 21566.92 05/31/92 17643.56 21672.60 06/30/92 17215.31 21349.68 07/31/92 17602.63 22222.88 08/31/92 16491.63 21767.31 09/30/92 16267.40 22024.17 10/31/92 16450.86 22101.25 11/30/92 17062.42 22854.91 12/31/92 17319.00 23136.02 01/31/93 17687.49 23330.36 02/28/93 17851.27 23647.66 03/31/93 18148.11 24146.62 04/30/93 17881.97 23562.27 05/31/93 18618.95 24193.74 06/30/93 18669.80 24263.90 07/31/93 18926.54 24166.85 08/31/93 19419.47 25082.77 09/30/93 18813.58 24889.63 10/31/93 19922.67 25404.85 11/30/93 20189.68 25163.50 12/31/93 21021.50 25467.98 01/31/94 22726.22 26333.89 02/28/94 22253.83 25617.61 Let's say you invested $10,000 in Fidelity Select Industrial Materials Portfolio on September 29, 1986, when the fund started, and paid a 3% sales charge. By February 28, 1994, your investment would have grown to $22,254 - a 122.54% increase. That compares to $10,000 invested in the S&P 500, which would have grown to $25,618 over the same period - a 156.18% increase. INVESTMENT SUMMARY TOP TEN STOCKS AS OF FEBRUARY 28, 1994 % OF FUND'S INVESTMENTS British Petroleum PLC ADR 7.8 PPG Industries, Inc. 5.9 CSX Corp. 4.7 Temple-Inland, Inc. 3.9 Imperial Chemical Industries PLC ADR 3.4 Amerada Hess Corp. 3.4 du Pont (E.I.) de Nemours & Co. 3.3 Georgia Gulf Corp. 3.2 Dow Chemical Co. 3.1 Monsanto Co. 3.1 TOP INDUSTRIES AS OF FEBRUARY 28, 1994 Row: 1, Col: 1, Value: 44.5 Row: 1, Col: 2, Value: 3.0 Row: 1, Col: 3, Value: 5.9 Row: 1, Col: 4, Value: 7.4 Row: 1, Col: 5, Value: 11.3 Row: 1, Col: 6, Value: 27.9 Chemicals 27.9% Oil & Gas Exploration 11.3% Railroads 7.4% Paper 5.9% Conglomerates 3.0% All Others 44.5%* * INCLUDES SHORT-TERM INVESTMENTS INDUSTRIAL MATERIALS PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW Louis Salemy, Portfolio Manager of Fidelity Select Industrial Materials Portfolio Q. LOUIS, HOW DID THE FUND DO? A. It was a good year for both the sector and the fund. For the year ended February 28, 1994, the fund returned 24.66%. That outpaced the S&P 500, which returned 8.33% for the same period. Q. HOW DO YOU ACCOUNT FOR THE FUND'S STRONG PERFORMANCE? A. Most industrial materials stocks are cyclical, meaning they tend to do well during periods of economic recovery - which is exactly what happened over the past 12 months. With the economy heating up, stock prices in this group rose from low levels. Among the fund's strongest performers were railroads, which could enjoy stronger revenues as more raw materials and goods are shipped over the next year. At the same time, many rails aggressively cut costs, which added to their profitability. Railroad stocks, like CSX, accounted for 7.4% of the fund's investments at the end of February. Q. DID ANY OTHER INDUSTRIES PERFORM AS WELL? A. For part of the period, steel companies did well. Late last year, I had as much as one-quarter of the fund in steel stocks; by January, their prices had skyrocketed. In February, I thought the business prospects for steel companies started to look weak, so I sold most of the fund's steel investments and used the proceeds to buy more chemical companies like Dow Chemical, DuPont and Imperial Chemicals - which were about 10% of the fund's investments on February 28. Right now, there is an overcapacity of chemical production in Europe, meaning production is outpacing demand. As production capacity is reduced and the economy there recovers, chemical prices could rise, helping the producers. Q. RECENTLY THERE WAS A CORRECTION IN MANY CYCLICAL STOCKS. DID THAT AFFECT YOUR STRATEGY? A. Yes, it forced me to raise the amount of cash in the fund up to 32% at the end of February. That's mainly because I was having difficulty, even before the correction, finding stocks that seemed reasonably priced. Even so, the fund had a strong year. In hindsight, the fund might have done even better if I had kept it fully invested. Q. ARE YOU FINDING STOCKS THAT NOW SEEM MORE APPEALING FROM A PRICE STANDPOINT? A. Some. The liner board industry is currently experiencing the best of both worlds, since inventories are falling and shipments are rising. Many liner board companies, like Stone Container, have already started to see improved profits from this favorable supply and demand situation. I've also recently added to the fund's stake in oils. Oil prices are extremely low right now, and the stocks are out of favor with investors. An increase in demand, or a decrease in supply, could send oil stocks higher. There's been a depletion of the world's oil supply lately, and an economic recovery in Europe could mean increased demand at a time when supply is low. If that happens, companies like British Petroleum, the fund's largest investment at the end of February, could benefit. Q. INDUSTRIAL MATERIALS STOCKS HAVE RISEN SHARPLY OVER THE PAST YEAR. ISN'T THE GAME ALMOST OVER? A. For some companies it might be, while for others it's just beginning. There's probably room for these stocks as a whole to rise, but the potential gains will most likely be smaller and more selective. My view of the U.S. economy is that it could slow from the fourth quarter, but continue to expand at a more modest pace. A European recovery, on the other hand, probably won't start to pick up steam until 1995. I'll focus on opportunities that can benefit from further improvements both here and in Europe. FUND FACTS START DATE: September 29, 1986 SIZE: as of February 28, 1994, over $155 million MANAGER: Louis Salemy, since August 1992; manager, Fidelity Select Medical Delivery Portfolio, since April 1993; joined Fidelity in 1992 (checkmark) INDUSTRIAL MATERIALS PORTFOLIO INVESTMENTS FEBRUARY 28, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 67.9% SHARES VALUE (NOTE 1) AIR TRANSPORTATION - 2.7% AIR TRANSPORT, MAJOR NATIONAL - 2.7% AMR Corp. (a) 70,000 $ 4,427,500 00176510 CHEMICALS & PLASTICS - 28.9% CHEMICALS - 27.9% Akzo N V sponsored ADR 30,000 1,668,750 01019930 du Pont (E.I.) de Nemours & Co. 100,000 5,337,500 26353410 Dow Chemical Co. 80,000 5,090,000 26054310 Georgia Gulf Corp. (a) 183,200 5,221,200 37320020 Grace (W.R.) & Co. 56,600 2,532,850 38388310 Imperial Chemical Industries PLC ADR 122,800 5,602,750 45270450 Monsanto Co. 65,000 4,980,625 61166210 PPG Industries, Inc. 125,000 9,593,750 69350610 Rohm & Haas Co. 25,000 1,428,125 77537110 Union Carbide Corp. 173,200 4,135,151 90558110 45,590,701 PLASTICS & SYNTHETIC RESINS - 1.0% ARCO Chemical Co. 1,100 53,350 00192010 GEON 58,600 1,582,200 37246W10 1,635,550 TOTAL CHEMICALS & PLASTICS 47,226,251 CONGLOMERATES - 3.0% Litton Industries, Inc. (a) 60,000 4,012,500 53802110 Textron, Inc. 15,000 870,000 88320310 4,882,500 INDUSTRIAL MACHINERY & EQUIPMENT - 2.9% CONSTRUCTION EQUIPMENT - 2.7% Caterpillar, Inc. 40,000 4,335,000 14912310 FARM MACHINERY & EQUIPMENT - 0.2% Kverneland Gruppen AS 34,300 320,248 50599692 TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 4,655,248 IRON & STEEL - 2.7% IRON & STEEL BLAST FURN, MILLS - 2.7% Nucor Corp. 75,000 4,340,625 67034610 METALS & MINING - 0.0% PRIME NONFERROUS SMELTING - 0.0% Alcan Aluminium Ltd. 75 1,778 01371610 OIL & GAS - 11.8% CRUDE PETROLEUM & GAS - 0.5% Burlington Resources, Inc. 20,000 860,000 12201410 OIL & GAS EXPLORATION - 11.3% Amerada Hess Corp. 120,000 5,565,000 02355110 British Petroleum PLC ADR 196,200 12,777,525 11088940 18,342,525 TOTAL OIL & GAS 19,202,525 PAPER & FOREST PRODUCTS - 7.6% PAPER - 5.9% Abitibi-Price Inc. 12,000 151,167 00368010 Stone Container Corp. (a) 190,000 3,016,250 86158910 Temple-Inland, Inc. 124,500 6,380,625 87986810 9,548,042 PAPER MILLS - 1.7% Bowater, Inc. 121,200 2,817,900 10218310 TOTAL PAPER & FOREST PRODUCTS 12,365,942 SHARES VALUE (NOTE 1) PRECIOUS METALS - 0.9% GOLD ORES - 0.9% Hecla Mining Co. (a) 125,000 $ 1,546,875 42270410 RAILROADS - 7.4% CSX Corp. 87,800 7,726,400 12640810 Conrail, Inc. 70,000 4,348,750 20836810 12,075,150 TOTAL COMMON STOCKS (Cost $110,603,720) 110,724,394 REPURCHASE AGREEMENTS - 32.1% MATURITY VALUE (NOTE 1) AMOUNT Investments in repurchase agreements, (U.S. Treasury obligations), in a joint trading account, at 3.47% dated 2/28/94 due 3/1/94 $ 52,236,034 52,231,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $162,834,720) $ 162,955,394 LEGEND (a) Non-income producing OTHER INFORMATION CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1, 1993, the fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of February 28, 1993 have been reclassified to reflect a decrease in paid in capital of $261,217, a decrease in accumulated net investment loss of $233,906 and a decrease in accumulated net realized loss on investments of $27,311. Purchases and sales of securities, other than short-term securities, aggregated $137,177,303 and $55,557,878, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $33,380 for the period (see Note 4 of Notes to Financial Statements). At the period end, the value of securities loaned and the value of collateral amounted to $9,484,725 and $9,649,200, respectively (see Note 6 of Notes to Financial Statements). Distribution of investments by country, as a percentage of total value of investment in securities, is as follows: United States 87.4% United Kingdom 11.3 Netherlands 1.0 Others (individually less than 1%) 0.3 TOTAL 100.0% INCOME TAX INFORMATION At February 28, 1994, the aggregate cost of investment securities for income tax purposes was $162,834,720. Net unrealized appreciation aggregated $120,674, of which $2,926,216 related to appreciated investment securities and $2,805,542 related to depreciated investment securities. At February 28, 1994, the fund had a capital loss carryforward of approximately $11,257,000 of which $1,664,000, $8,694,000, $141,000 and $758,000 will expire on February 28, 1996, 1997, 1998 and 1999, respectively. INDUSTRIAL MATERIALS PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $52,231,000) (cost $162,834,720) $ 162,955,394 (Notes 1 and 2) - See accompanying schedule Cash 970 Receivable for investments sold 762,271 Receivable for fund shares sold 8,975,027 Dividends receivable 373,473 Redemption fees receivable (Note 1) 8,447 Other receivables 631 TOTAL ASSETS 173,076,213 LIABILITIES Payable for investments purchased $ 572,418 Payable for fund shares redeemed 6,948,848 Accrued management fee 72,541 Other payables and accrued expenses 112,583 Collateral on securities loaned, at value (Note 6) 9,649,200 TOTAL LIABILITIES 17,355,590 NET ASSETS $ 155,720,623 Net Assets consist of (Note 1): Paid in capital $ 166,645,377 Undistributed net investment income 246,597 Accumulated undistributed net realized gain (loss) on investments (11,292,025 ) Net unrealized appreciation (depreciation) on investment securities 120,674 NET ASSETS, for 7,184,804 shares outstanding $ 155,720,623 NET ASSET VALUE and redemption price per share ($155,720,623 (divided by) 7,184,804 shares) $21.67 Maximum offering price per share (100/97 of $21.67) $22.34
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994 INVESTMENT INCOME $ 700,566 Dividends Interest (including security lending fees of $1,284) (Note 6) 256,355 TOTAL INCOME 956,921 EXPENSES Management fee (Note 4) $ 217,293 Transfer agent (Note 4) 425,367 Fees Redemption fees (Note 1) (33,857 ) Accounting and security lending fees (Note 4) 55,728 Non-interested trustees' compensation 173 Custodian fees and expenses 13,621 Registration fees 20,706 Audit 6,572 Legal 229 Reports to shareholders 4,972 Total expenses before reductions 710,804 Expense reductions (Note 8) (6,562 704,242 ) NET INVESTMENT INCOME 252,679 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 5,537,215 Net realized gain (loss) on investment securities Change in net unrealized appreciation (depreciation) on investment securities 584,391 NET GAIN (LOSS) 6,121,606 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 6,374,285 OTHER INFORMATION $878,092 Sales charges paid to FDC (Note 4) Deferred sales charges withheld $5,148 by FDC (Note 4) Exchange fees withheld by FSC $56,700 (Note 4)
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS FEBRUARY 28, ENDED 1994 FEBRUARY 28, 1993 Operations $ 252,679 $ 177,803 Net investment income Net realized gain (loss) on investments 5,537,215 355,428 Change in net unrealized appreciation (depreciation) on investments 584,391 (1,437,314 ) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 6,374,285 (904,083 ) Distributions to shareholders from net investment income (63,962 (130,384 ) ) Share transactions 184,699,746 54,448,279 Net proceeds from sales of shares Reinvestment of distributions 62,757 128,401 Cost of shares redeemed (60,508,680 (50,819,188 ) ) Paid in capital portion of redemption fees (Note 1) 115,446 134,001 Net increase (decrease) in net assets resulting from share transactions 124,369,269 3,891,493 TOTAL INCREASE (DECREASE) IN NET ASSETS 130,679,592 2,857,026 NET ASSETS Beginning of period 25,041,031 22,184,005 End of period (including undistributed net investment income (loss) of $246,597 and $(168,549), $ 155,720,623 $ 25,041,031 respectively) OTHER INFORMATION Shares Sold 8,798,809 3,148,060 Issued in reinvestment of distributions 3,433 7,711 Redeemed (3,053,659 (3,015,310 ) ) Net increase (decrease) 5,748,583 140,461
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30, FEBRUARY 28, ENDED FEBRUARY 28, SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990 Net asset value, beginning of period $ 17.44 $ 17.12 $ 12.63 $ 12.43 $ 13.73 Income from Investment Operations Net investment income .15 .12 .04 .15 .17 Net realized and unrealized gain (loss) on investments 4.07 .19F 4.32 .37 (1.50) Total from investment operations 4.22 .31 4.36 .52 (1.33) Less Distributions From net investment income (.06) (.08) - - - In excess of investment income - - (.06) (.34) - From net realized gain - - - - - Total distributions (.06) (.08) (.06) (.34) - Redemption fees added to paid in capital .07 .09 .19 .02 .03 Net asset value, end of period $ 21.67 $ 17.44 $ 17.12 $ 12.63 $ 12.43 TOTAL RETURND, E 24.66% 2.36% 36.15% 4.25% (9.47)% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 155,721 $ 25,041 $ 22,184 $ 2,689 $ 3,140 Ratio of expenses to average net assetsB 2.08% 2.02%A 2.47% 2.49% 2.59% Ratio of expenses to average net assets before expense 2.10% 2.02%A 2.81% 2.67% 3.81% reductionsB Ratio of net investment income to average net assets .75% .86%A .25% 1.30% 1.22% Portfolio turnover rate 185% 273%A 222% 148% 250%
1 ANNUALIZED 2 SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS. 3 NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH PERIOD. 4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 5 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. 6 THE AMOUNT SHOWN FOR A SHARE OUTSTANDING THROUGHOUT THAT PERIOD DOES NOT ACCORD WITH THE AGGREGATE NET LOSSES ON INVESTMENTS FOR THAT PERIOD BECAUSE OF THE TIMING OF SALES AND REPURCHASES OF THE FUND SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF THE INVESTMENTS OF THE FUND. PAPER AND FOREST PRODUCTS PORTFOLIO PERFORMANCE AND INVESTMENT SUMMARY PERFORMANCE There are several ways to evaluate a fund's historical performance: total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND PAPER AND FOREST PRODUCTS 22.03% 75.03% 128.86% PAPER AND FOREST PRODUCTS (INCL. 3% SALES CHARGE) 18.37% 69.78% 121.99% S&P 500 8.33% 89.60% 140.42% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years, or since the fund started on June 30, 1986. You can compare these figures to the performance of the S&P 500 - a common proxy for the U.S. stock market. This benchmark includes reinvested dividends and capital gains, if any. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND PAPER AND FOREST PRODUCTS 22.03% 11.85% 11.39% PAPER AND FOREST PRODUCTS (INCL. 3% SALES CHARGE) 18.37% 11.17% 10.95% S&P 500 8.33% 13.65% 12.11% AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of growth in the long run and volatility in the short run. Unlike the broader market, however, some sectors may not have a history of growth in the long run. And, as with all stock funds, the share price and return of a fund that invests in a sector will vary. That means if you sell your shares during a sector downturn, you might lose money. But if you can identify a sector that is about to experience rapid growth you may have the potential for above-average gains. (checkmark) $10,000 OVER LIFE OF FUND Select Paper & Forest (506) S&P 500 06/30/86 9700.00 10000.00 07/31/86 9515.70 9488.77 08/31/86 10689.40 10192.84 09/30/86 10573.00 9349.89 10/31/86 11358.70 9889.38 11/30/86 11834.00 10129.69 12/31/86 11659.40 9871.39 01/31/87 14714.90 11201.06 02/28/87 15190.20 11643.50 03/31/87 16354.20 11980.00 04/30/87 15384.20 11873.38 05/31/87 14501.50 11976.68 06/30/87 15141.70 12581.50 07/31/87 15326.00 13219.38 08/31/87 16441.50 13712.46 09/30/87 15946.80 13412.16 10/31/87 11213.20 10523.18 11/30/87 10825.20 9656.07 12/31/87 12118.45 10390.90 01/31/88 11629.03 10828.35 02/29/88 12724.90 11332.96 03/31/88 12320.60 10982.77 04/30/88 12458.91 11104.68 05/31/88 12320.60 11201.29 06/30/88 13597.34 11715.43 07/31/88 12990.89 11670.91 08/31/88 12352.52 11274.10 09/30/88 12597.23 11754.37 10/31/88 12320.60 12081.14 11/30/88 12054.61 11908.38 12/31/88 12938.95 12116.78 01/31/89 13066.95 13003.73 02/28/89 12682.94 12679.94 03/31/89 12693.61 12975.38 04/30/89 13152.29 13648.80 05/31/89 13386.96 14201.58 06/30/89 12533.61 14120.63 07/31/89 13738.97 15395.72 08/31/89 14720.32 15697.48 09/30/89 13909.64 15633.12 10/31/89 13280.29 15270.43 11/30/89 13184.29 15581.95 12/31/89 13466.65 15955.91 01/31/90 12235.54 14885.27 02/28/90 12354.33 15077.29 03/31/90 12699.91 15476.84 04/30/90 11879.16 15089.92 05/31/90 12667.51 16561.19 06/30/90 12365.13 16448.57 07/31/90 12548.72 16395.93 08/31/90 11047.62 14913.74 09/30/90 9978.50 14187.44 10/31/90 9665.32 14126.44 11/30/90 10637.25 15039.00 12/31/90 11432.17 15458.59 01/31/91 12376.61 16132.59 02/28/91 12969.64 17286.07 03/31/91 13233.20 17704.39 04/30/91 13881.13 17746.88 05/31/91 15473.51 18513.55 06/30/91 15078.16 17665.63 07/31/91 15089.14 18488.84 08/31/91 15166.02 18927.03 09/30/91 14583.98 18610.95 10/31/91 15133.07 18860.33 11/30/91 13979.97 18100.26 12/31/91 15406.60 20170.93 01/31/92 16823.55 19795.75 02/29/92 16902.27 20053.10 03/31/92 17014.73 19662.06 04/30/92 17284.63 20240.13 05/31/92 16801.06 20339.30 06/30/92 16689.45 20036.25 07/31/92 16565.49 20855.73 08/31/92 15900.62 20428.19 09/30/92 15731.58 20669.24 10/31/92 16497.87 20741.58 11/30/92 17106.40 21448.87 12/31/92 17263.87 21712.69 01/31/93 17795.58 21895.08 02/28/93 18191.55 22192.85 03/31/93 18168.92 22661.12 04/30/93 18995.41 22112.72 05/31/93 19052.01 22705.34 06/30/93 18644.48 22771.19 07/31/93 18452.04 22680.10 08/31/93 18950.13 23539.68 09/30/93 18044.51 23358.43 10/31/93 18746.37 23841.94 11/30/93 19912.35 23615.45 12/31/93 20467.05 23901.19 01/31/94 22844.30 24713.83 02/28/94 22199.05 24041.62 Let's say you invested $10,000 in Fidelity Select Paper and Forest Products Portfolio on June 30, 1986, when the fund started, and paid a 3% sales charge. By February 28, 1994, your investment would have grown to $22,199 - a 121.99% increase. That compares to $10,000 invested in the S&P 500, which would have grown to $24,402 over the same period - a 140.42% increase. INVESTMENT SUMMARY TOP TEN STOCKS AS OF FEBRUARY 28, 1994 % OF FUND'S INVESTMENTS Stone Container Corp. 6.3 Temple-Inland, Inc. 4.9 Weyerhaeuser Co. 4.2 Willamette Industries, Inc. 4.2 Stora Kopparbergs B Free shares 3.8 International Paper Co. 3.7 Alco Standard Corp. 3.3 Wausau Paper Mills Co. 3.0 Georgia Pacific Corp. 2.9 Union Camp Corp. 2.5 TOP INDUSTRIES AS OF FEBRUARY 28, 1994 Row: 1, Col: 1, Value: 19.7 Row: 1, Col: 2, Value: 3.3 Row: 1, Col: 3, Value: 3.8 Row: 1, Col: 4, Value: 5.0 Row: 1, Col: 5, Value: 6.9 Row: 1, Col: 6, Value: 61.3 Paper 61.3% Paper Mills 6.9% Lumber & Wood 5.0% Forestry 3.8% Services for Print Industry 3.3% All Others 19.7%* * INCLUDES SHORT-TERM INVESTMENTS PAPER AND FOREST PRODUCTS PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW Scott Offen, Portfolio Manager of Fidelity Select Paper and Forest Products Portfolio Q. SCOTT, HOW DID THE FUND PERFORM? A. It had a good year. The fund's total return for the year ended February 28, 1994 was 22.03%. This was well above the S&P 500, which had a total annual return of 8.33%. Q. WHAT WAS BEHIND THESE SOLID RESULTS? A. The fund performed well for three reasons. First, paper stocks rebounded in the fourth quarter, after hitting their lowest price for the year in October. During this period, the fund's paper stocks climbed between 10% and 50%, resulting in strong gains. I should note that cyclical stocks, like paper, often do well between November and April, when investors' economic outlook is brighter. Cyclical stocks are stocks that tend to increase in value as the economy improves or decrease in value when the economy performs poorly. The second reason the fund performed well is that I had about 5% invested in gypsum stocks, such as National Gypsum. These companies were up 40% to 50% over the past year as demand for this building material increased. Finally, the fund performed well because its foreign investments turned in some good results. Q. AT THE END OF FEBRUARY, YOU HAD 25% OF THE FUND OVERSEAS. WHAT FOREIGN STOCKS DID YOU OWN? A. Most of my international investments were in Scandinavian paper companies. I had large stakes in Repola and Metsa Serla, Finnish coated-paper companies that rely heavily on exports to the United States. Coated paper is used for magazines, catalogues, and company annual reports. These companies were profitable partly because the Finnish government devalued its currency, making it worth less than the currencies of other countries. As a result of this devaluation, the company's exports became less expensive in other countries and thus more competitive. The fund's Finnish paper companies also did well because they dramatically cut their labor costs and their number of employees. As a result, they decreased their cost for raw materials, like fiber. Swedish companies, such as Stora Kopparbergs, also performed well. Like Finnish companies, Swedish companies benefited from a devalued currency and lower costs for labor and raw materials. Q. YOU MENTIONED COATED PAPER. HOW MANY DIFFERENT TYPES OF PAPER ARE THERE? A. As I look at it, there are six major grades of paper: lumber, liner board, newsprint, pulp, coated paper, and uncoated white paper. In the past, all the grades of paper usually increased or decreased in price at the same time. However, over the past year, some grades dramatically outperformed others. I thought Lumber looked the best because it was the biggest beneficiary of the upswing in the housing market in the late fall. Weyerhaeuser, the largest private owner of forest land in the United States, had a great year. Another grade that looked good was liner board, used for building walls and constructing corrugated boxes. My top stock, Stone Container, which focused almost exclusively on liner board, was a standout. Temple-Inland, a company that was big in lumber and liner board, also performed well. Q. WHAT ABOUT THE OTHER GRADES OF PAPER? A. In 1994, the newsprint industry started to pick up, and I think it looks pretty good going forward. Demand for newsprint could grow slowly, and we may see some decline in capacity, which could raise prices. The wild card is increased capacity in Eastern Europe, Latin America, and Asia. If capacity increases in these overseas markets, newsprint prices may not increase. Another grade of paper, pulp, did well the first two months of 1994, but I don't expect any dramatic increases or decreases going forward. In the United States, coated and uncoated white paper had a tough year because cheap imports flooded the market. Q. SINCE YOU TOOK OVER THE FUND IN OCTOBER, HAVE YOU CHANGED ITS STRATEGY? WHAT ABOUT YOUR OUTLOOK? A. I don't think there's been any notable shift in strategy. As for the sector's outlook, I think it's a mixed bag. As I noted earlier, we're beginning to see some grades of paper do very well. However, since paper stocks are cyclicals, I think the real deciding factor is how well the economy performs over the next 12 months. FUND FACTS START DATE: June 30, 1986 SIZE: as of February 28, 1994, over $66 million MANAGER: Scott Offen, since October 1993; manager, Fidelity Select Life Insurance Portfolio, 1990-1993; equity analyst, insurance and financial industries, 1988-1990; joined Fidelity in 1985 (checkmark) PAPER AND FOREST PRODUCTS PORTFOLIO INVESTMENTS FEBRUARY 28, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 91.0% SHARES VALUE (NOTE 1) BUILDING MATERIALS - 2.5% CONCRETE, GYPSUM, PLASTER - 2.5% National Gypsum Co. (b) 8,700 $ 366,483 63631710 Republic Gypsum Co. 28,600 414,700 76047310 USG Corp. (b) 35,200 1,069,200 90329340 1,850,383 PACKAGING & CONTAINERS - 4.1% FIBER CANS, TUBES & DRUMS - 1.3% Sonoco Products Co. 38,600 974,650 83549510 PAPER CONTAINERS - 2.8% Gaylord Container Corp.: Class A (b) 257,600 1,449,000 36814510 (warrants) (b) 100,000 437,500 36814511 NCB AB A Free shares (b) 600,000 176,862 63099F22 2,063,362 TOTAL PACKAGING & CONTAINERS 3,038,012 PAPER & FOREST PRODUCTS - 80.7% CONVERTED PAPER & PAPERBOARD - 1.2% Caraustar Industries, Inc. 48,000 900,000 14090910 FORESTRY - 3.8% Stora Kopparbergs B Free shares 50,000 2,778,335 86210998 LOGGING - 1.3% Timberwest Forest Ltd. 85,700 984,328 88690810 LUMBER & WOOD - 5.0% Fibreboard Corp. (b) 1,300 49,075 31571210 Louisiana-Pacific Corp. 39,400 1,694,200 54634710 Pope & Talbot, Inc. 58,700 1,768,338 73282710 West Fraser Timer Ltd. (b) 5,100 157,781 95284510 3,669,394 PAPER - 61.2% Abitibi-Price, Inc. 68,700 865,432 00368010 Abitibi Price, Inc. installment receipts (c) 1,200 6,891 00368070 Arjo Wiggins Appleton PLC 34,900 152,198 04199592 Canadian Pacific Forest Products Ltd. (b) 20,000 314,931 13642N10 Champion International Corp. 52,200 1,644,300 15852510 Chesapeake Corp. 3,900 96,038 16515910 Consolidated Papers, Inc. 14,000 635,250 20975910 Domtar, Inc. (b) 114,800 701,816 25756110 Donohue, Inc. (vtg.) 5,700 110,874 25804140 Enso Gutzeit OY R Free shares 40,000 308,210 29357810 Federal Paper Board Co., Inc. 43,700 1,168,975 31369310 Georgia-Pacific Corp. 29,200 2,080,500 37329810 Glatfelter (P.H.) Co. 27,500 460,625 37731610 International Paper Co. 38,000 2,759,750 46014610 James River Corp. of Virginia 27,300 522,113 47034910 KNP BT NV Koninklijke 60,000 1,436,337 50099193 Kimberly-Clark Corp. 26,600 1,469,650 49436810 Longview Fibre Co. 26,800 525,950 54321310 MacMillan Bloedel Ltd. 14,800 256,354 55478320 Mead Corp. 22,300 981,200 58283410 Metsa Serla B 23,000 969,306 59299992 Mo Och Domsjoe AB (Modo): A 711 27,468 61399794 B 20,789 792,717 61399792 Mosinee Paper Corp. 3,000 93,000 61960010 Norske Skogindustrier AS 70,000 1,733,376 66499593 Pentair, Inc. 25,300 910,800 70963110 Potlatch Corp. 900 41,850 73762810 Repap Enterprises, Inc. 85,700 333,401 76026M10 Repola OY 84,800 1,717,872 75999A92 Scott Paper Co. 31,000 1,406,625 80987710 SHARES VALUE (NOTE 1) Smurfit (Jeff) Group PLC 205,900 $ 1,009,592 84699793 Stone Container Corp. (b) 294,800 4,679,950 86158910 Svenska Cellulosa Aktiebolaget SCA Ord. B Free shares 25,000 451,558 86958730 Temple-Inland, Inc. 70,000 3,587,500 87986810 Union Camp Corp. 38,900 1,872,063 90553010 Wausau Paper Mills Co. 75,400 2,205,450 94331710 Westvaco Corp. 18,200 627,900 96154810 Weyerhaeuser Co. 65,000 3,087,500 96216610 Willamette Industries, Inc. 53,500 3,076,250 96913310 45,121,572 PAPER MILLS - 6.9% Aracruz Celulose SA ADR (b) 42,800 658,050 03849610 Boise Cascade Corp. 68,400 1,778,400 09738310 Bowater, Inc. 57,900 1,346,175 10218310 Cascades, Inc. 150,300 863,153 14690010 Stone Consolidated Corp. (b) 34,400 458,836 86158K10 5,104,614 SAWMILLS - 1.3% Riverside Forest Products 42,800 935,606 76890410 TOTAL PAPER & FOREST PRODUCTS 59,493,849 PRINTING - 3.3% SERVICES FOR PRINT INDUSTRY - 3.3% Alco Standard Corp. 42,900 2,397,038 01378810 PUBLISHING - 0.2% PERIODICALS - 0.2% Wolters Kluwer NV 2,600 161,855 49874710 TEXTILES & APPAREL - 0.2% COATED FABRICS, NOT RUBBERIZED - 0.2% Tufco Technologies, Inc. 20,000 180,000 89904010 TOTAL COMMON STOCKS (Cost $64,099,036) 67,121,137 CONVERTIBLE BONDS - 0.1% PRINCIPAL AMOUNT PAPER & FOREST PRODUCTS - 0.1% PAPER - 0.1% Canadian Pacific Forest Products Ltd. 7 1/2%, 2/8/04 (Cost $42,470) CAD 55,700 51,180 13642NAE REPURCHASE AGREEMENTS - 8.9% MATURITY VALUE (NOTE 1) AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account, at 3.47% dated 2/28/94 due 3/1/94 $ 6,535,630 6,535,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $70,676,506) $ 73,707,317 CURRENCY ABBREVIATIONS CAD - Canadian dollar LEGEND (a) Principal amount is stated in United States dollars unless otherwise noted. (a) Non-income producing (a) Market value reflects the payment of the first installment. Additional equal payments of $6,000 are payable in January and October of 1995. OTHER INFORMATION CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1, 1993, the fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of February 28, 1993 have been restated to reflect an increase in paid in capital of $20,720,289, a decrease in undistributed net investment income of $709,366 and a decrease in accumulated net realized gain on investments of $20,010,923. Purchases and sales of securities, other than short-term securities, aggregated $87,988,288 and $47,095,105, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $47,840 for the period (see Note 4 of Notes to Financial Statements). The maximum loan and average daily loan balances during the periods for which loans were outstanding amounted to $8,945,000 and $8,945,000, respectively. The weighted average interest rate paid was 3.6% (see Note 7 of Notes to Financial Statements). Distribution of investments by country, as a percentage of total value of investment in securities, is as follows: United States 74.7% Canada 8.3 Sweden 5.8 Finland 4.1 Norway 2.4 Netherlands 2.2 Ireland 1.4 Others (individually less than 1%) 1.1 TOTAL 100.0% INCOME TAX INFORMATION At February 28, 1994, the aggregate cost of investment securities for income tax purposes was $70,852,105. Net unrealized appreciation aggregated $2,855,212, of which $4,239,880 related to appreciated investment securities and $1,384,668 related to depreciated investment securities. The fund hereby designates $61,000 as a capital gain dividend for the purpose of the dividend paid deduction. PAPER AND FOREST PRODUCTS PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $6,535,000) (cost $70,676,506) $ 73,707,317 (Notes 1 and 2) - See accompanying schedule Cash 96 Receivable for investments sold 8,296,080 Receivable for fund shares sold 1,236,283 Dividends receivable 174,488 Interest receivable 160 Redemption fees receivable (Note 1) 2,508 Other receivables 180,305 TOTAL ASSETS 83,597,237 LIABILITIES Payable for investments purchased $ 1,036,138 Payable for fund shares redeemed 15,529,183 Accrued management fee 45,019 Other payables and accrued expenses 79,152 TOTAL LIABILITIES 16,689,492 NET ASSETS $ 66,907,745 Net Assets consist of (Note 1): Paid in capital $ 63,475,015 Accumulated net investment loss (1,289 ) Accumulated undistributed net realized gain (loss) on investments 403,208 Net unrealized appreciation (depreciation) on investment securities 3,030,811 NET ASSETS, for 3,412,516 shares outstanding $ 66,907,745 NET ASSET VALUE and redemption price per share ($66,907,745 (divided by) 3,412,516 shares) $19.61 Maximum offering price per share (100/97 of $19.61) $20.22
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994 INVESTMENT INCOME $ 416,732 Dividends Interest 120,829 TOTAL INCOME 537,561 EXPENSES Management fee (Note 4) $ 171,761 Transfer agent (Note 4) 330,132 Fees Redemption fees (Note 1) (49,942 ) Accounting fees and expenses 50,532 (Note 4) Non-interested trustees' compensation 110 Custodian fees and expenses 17,813 Registration fees 30,769 Audit 7,585 Legal 205 Interest (Note 7) 885 Reports to shareholders 3,061 Total expenses before reductions 562,911 Expense reductions (Note 8) (5,048 557,863 ) NET INVESTMENT INCOME (LOSS) (20,302 ) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 2,597,166 Net realized gain (loss) on investment securities Change in net unrealized appreciation (depreciation) on investment securities 2,559,400 NET GAIN (LOSS) 5,156,566 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 5,136,264 OTHER INFORMATION $414,022 Sales charges paid to FDC (Note 4) Deferred sales charges withheld $7,297 by FDC (Note 4) Exchange fees withheld by FSC $44,348 (Note 4)
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS FEBRUARY 28, ENDED 1994 FEBRUARY 28, 1993 Operations $ (20,302 $ 70,955 Net investment income (loss) ) Net realized gain (loss) on investments 2,597,166 (490,669 ) Change in net unrealized appreciation (depreciation) on investments 2,559,400 (53,245 ) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 5,136,264 (472,959 ) Distributions to shareholders from net investment income (10,601 (105,310 ) ) Share transactions 149,638,420 36,795,839 Net proceeds from sales of shares Reinvestment of distributions 10,249 103,298 Cost of shares redeemed (113,224,182 (40,282,751 ) ) Paid in capital portion of redemption fees (Note 1) 259,283 103,496 Net increase (decrease) in net assets resulting from share transactions 36,683,770 (3,280,118 ) TOTAL INCREASE (DECREASE) IN NET ASSETS 41,809,433 (3,858,387 ) NET ASSETS Beginning of period 25,098,312 28,956,699 End of period (including accumulated net investment income (loss) of $(1,289) and $713,690, respectively) $ 66,907,745 $ 25,098,312 OTHER INFORMATION Shares Sold 8,097,781 2,360,295 Issued in reinvestment of distributions 645 6,892 Redeemed (6,246,980 (2,689,497 ) ) Net increase (decrease) 1,851,446 (322,310)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30, FEBRUARY 28, ENDED FEBRUARY 28, SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990 Net asset value, beginning of period $ 16.08 $ 15.37 $ 12.64 $ 11.00 $ 12.33 Income from Investment Operations Net investment income (loss) (.01) .06 .13 .19 .11 Net realized and unrealized gain (loss) on investments 3.38 .65F 2.64 1.56 (1.31) Total from investment operations 3.37 .71 2.77 1.75 (1.20) Less Distributions From net investment income (.01) (.09) (.30) (.17) (.15) From net realized gain - - - - - Total distributions (.01) (.09) (.30) (.17) (.15) Redemption fees added to paid in capital .17 .09 .26 .06 .02 Net asset value, end of period $ 19.61 $ 16.08 $ 15.37 $ 12.64 $ 11.00 TOTAL RETURND, E 22.03% 5.25% 24.52% 16.85% (9.68)% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 66,908 $ 25,098 $ 28,957 $ 12,579 $ 5,289 Ratio of expenses to average net assetsB 2.07% 2.21%A 2.05% 2.49% 2.57% Ratio of expenses to average net assets before expense 2.08% 2.21%A 2.05% 2.72% 3.28% reductionsB Ratio of net investment income (loss) to average net assets (.08)% .49%A .92% 1.73% .92% Portfolio turnover rate 176% 222%A 421% 171% 221%
1 ANNUALIZED 2 SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS. 3 NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH PERIOD. 4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 5 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. 6 THE AMOUNT SHOWN FOR THE PERIOD ENDED FEBRUARY 28, 1993 FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD DOES NOT ACCORD WITH THE AGGREGATE NET GAIN (LOSS) ON INVESTMENTS FOR THE PERIOD BECAUSE OF THE TIMING OF SALES AND REPURCHASES OF THE FUND SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF THE INVESTMENTS OF THE FUND. TRANSPORTATION PORTFOLIO PERFORMANCE AND INVESTMENT SUMMARY PERFORMANCE There are several ways to evaluate a fund's historical performance: total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND TRANSPORTATION 27.47% 136.51% 206.84% TRANSPORTATION (INCL. 3% SALES CHARGE) 23.65% 129.42% 197.64% S&P 500 8.33% 89.60% 156.18% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years, or since the fund started on September 29, 1986. You can compare these figures to the performance of the S&P 500 - a common proxy for the U.S. stock market. This benchmark includes reinvested dividends and capital gains, if any. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND TRANSPORTATION 27.47% 18.79% 16.30% TRANSPORTATION (INCL. 3% SALES CHARGE) 23.65% 18.07% 15.82% S&P 500 8.33% 13.65% 13.51% AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of growth in the long run and volatility in the short run. Unlike the broader market, however, some sectors may not have a history of growth in the long run. And, as with all stock funds, the share price and return of a fund that invests in a sector will vary. That means if you sell your shares during a sector downturn, you might lose money. But if you can identify a sector that is about to experience rapid growth you may have the potential for above-average gains. (checkmark) $10,000 OVER LIFE OF FUND Select Transportation (512) S&P 500 09/29/86 9700.00 10000.00 09/30/86 9748.50 9962.80 10/31/86 10039.50 10537.66 11/30/86 10204.40 10793.72 12/31/86 10039.50 10518.48 01/31/87 10737.90 11935.32 02/28/87 11397.50 12406.77 03/31/87 11397.50 12765.32 04/30/87 11475.10 12651.71 05/31/87 11649.70 12761.78 06/30/87 11998.90 13406.25 07/31/87 12474.20 14085.95 08/31/87 12474.20 14611.35 09/30/87 11795.20 14291.37 10/31/87 7992.80 11213.00 11/30/87 7527.20 10289.05 12/31/87 8284.50 11072.05 01/31/88 8698.73 11538.18 02/29/88 9418.69 12075.86 03/31/88 9704.70 11702.72 04/30/88 9734.29 11832.62 05/31/88 9675.11 11935.56 06/30/88 10661.36 12483.41 07/31/88 10523.29 12435.97 08/31/88 10030.16 12013.15 09/30/88 10690.95 12524.91 10/31/88 11036.14 12873.10 11/30/88 11134.76 12689.01 12/31/88 11470.09 12911.07 01/31/89 12456.34 13856.16 02/28/89 12584.55 13511.14 03/31/89 12969.19 13825.95 04/30/89 13403.14 14543.52 05/31/89 13975.16 15132.53 06/30/89 13889.01 15046.28 07/31/89 14730.77 16404.95 08/31/89 15688.27 16726.49 09/30/89 15383.13 16657.91 10/31/89 14404.59 16271.45 11/30/89 14530.85 16603.39 12/31/89 14737.71 17001.87 01/31/90 13812.21 15861.04 02/28/90 14456.54 16065.65 03/31/90 14890.01 16491.39 04/30/90 14327.68 16079.11 05/31/90 14854.86 17646.82 06/30/90 14691.34 17526.82 07/31/90 14642.53 17470.73 08/31/90 12494.96 15891.38 09/30/90 10884.28 15117.47 10/31/90 10713.45 15052.46 11/30/90 11152.73 16024.85 12/31/90 11555.40 16471.95 01/31/91 12543.77 17190.12 02/28/91 13763.98 18419.22 03/31/91 13776.18 18864.96 04/30/91 13739.58 18910.24 05/31/91 14825.56 19727.16 06/30/91 14702.47 18823.66 07/31/91 15596.13 19700.84 08/31/91 15877.69 20167.75 09/30/91 15583.89 19830.95 10/31/91 16734.62 20096.68 11/30/91 15694.06 19286.79 12/31/91 17811.91 21493.19 01/31/92 17971.05 21093.42 02/29/92 18938.16 21367.64 03/31/92 18485.21 20950.97 04/30/92 18962.64 21566.92 05/31/92 19354.38 21672.60 06/30/92 18521.93 21349.68 07/31/92 18791.26 22222.88 08/31/92 18228.13 21767.31 09/30/92 18950.40 22024.17 10/31/92 19758.36 22101.25 11/30/92 21190.66 22854.91 12/31/92 22049.81 23136.02 01/31/93 23037.30 23330.36 02/28/93 23349.79 23647.66 03/31/93 24912.28 24146.62 04/30/93 24850.18 23562.27 05/31/93 25778.45 24193.74 06/30/93 25853.72 24263.90 07/31/93 25853.72 24166.85 08/31/93 26330.40 25082.77 09/30/93 26393.12 24889.63 10/31/93 26945.07 25404.85 11/30/93 27095.60 25163.50 12/31/93 28513.96 25467.98 01/31/94 29763.85 26333.89 02/28/94 29763.85 25617.61 Let's say you invested $10,000 in Fidelity Select Transportation Portfolio on September 29, 1986 when the fund started and paid a 3% sales charge. By February 28, 1994, your investment would have grown to $29,764 - a 197.64% increase. That compares to $10,000 invested in the S&P 500, which would have grown to $25,618 over the same period - a 156.18% increase. INVESTMENT SUMMARY TOP TEN STOCKS AS OF FEBRUARY 28, 1994 % OF FUND'S INVESTMENTS CSX Corp. 4.5 Santa Fe Pacific Corp. 3.6 Smith (A.O.) Corp. Class B 3.5 Swift Transportation Co., Inc. 3.1 TNT Freightways Corp. 2.9 Landstar System, Inc. 2.9 Burlington Northern, Inc. 2.8 Illinois Central Corp., Series A 2.7 Wisconsin Central Transportation Corp. 2.6 Mesa Airlines, Inc. 2.6 TOP INDUSTRIES AS OF FEBRUARY 28, 1994 Row: 1, Col: 1, Value: 46.2 Row: 1, Col: 2, Value: 5.7 Row: 1, Col: 3, Value: 5.8 Row: 1, Col: 4, Value: 6.7 Row: 1, Col: 5, Value: 14.8 Row: 1, Col: 6, Value: 20.8 Railroads 20.8% Trucking, Local & Long Distance 14.8% Trucking, Long Distance 6.7% Air Transport, Major National 5.8% Auto & Truck Parts 5.7% All Others 46.2%* * INCLUDES SHORT-TERM INVESTMENTS TRANSPORTATION PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW Beso Sikharulidze, Portfolio Manager of Fidelity Select Transportation Portfolio Q. BESO, HOW DID THE FUND PERFORM? A. The fund had a strong year. Its total return for the 12 months ended February 28, 1994 was 27.47%. The S&P 500 returned 8.33% during the same period. Q. WHY DID THE FUND DO SO WELL, COMPARED TO THE S&P? A. Broadly speaking, the strengthening economy jump started many transportation stocks, which tend to rise and fall with economic cycles. The fund kept about a 30% stake in railroad stocks over the past six months, which boosted performance. Railroad companies benefited from the improving economy, but the bigger story was their effective cost cutting, which improved profitability. Q. ANY EXAMPLES? A. The stocks of Burlington Northern, CSX, Illinois Central, and Santa Fe Pacific were up between 10 and 20% from the end of August through the end of February. Even if rail demand dips a bit in the next six months, trimmed expenses could lead to fatter profits. That's why all four of these stocks were still among the fund's top ten investments on February 28. Q. DIDN'T THE IMPROVING ECONOMY HELP THE AIRLINES AS WELL? A. Not as much as you might think. The supply and demand story looks positive: people are flying more often, which has increased demand, and the major airlines have reduced the supply by abandoning their less profitable routes. The problem is, the big airlines are still weighted down so heavily on the cost side that it may take a while to see the benefits. That's why I've reduced the fund's investment in the major carriers, focusing instead on regional airlines. Q. WHAT MAKES THE REGIONALS SO ATTRACTIVE? A. Because it's no longer cost-effective for the major airlines to handle all of the shorter routes, the regional airlines are filling the need. That has meant solid growth for these companies. In addition, the regionals operate with much lower expenses than the majors. Comair and Mesa were the fund's two largest regional airline investments on February 28. Unfortunately, Comair has been a disappointment so far. Fears that Continental would compete directly with Comair for regional business drove down the price of the stock. But I think investors overreacted, and I like Comair's prospects going forward. Mesa Airlines' stock also has been flat over the past few months, but the company is launching new routes and acquiring some profitable side businesses. Q. THE BIG THREE AUTO MAKERS HAVE BEEN BIG PERFORMERS ON WALL STREET, YET NONE APPEARS IN THE FUND'S TOP TEN INVESTMENTS. WHY? A. Surging consumer demand and effective cost cutting boosted profits and stock performance at Chrysler, Ford and General Motors. However, I had reservations about increasing the fund's limited investment in auto stocks when I began managing the fund in November. Prices had already risen substantially during the year, and I wondered how much gas these stocks had left. I did some investing in Chrysler and Ford, which performed well. But in hindsight, not participating more heavily in the run-up in auto stocks was my biggest disappointment over the last 12 months. The fund did, however, take advantage of increasing auto sales by investing in parts suppliers. For example, A.O. Smith's stock rose 40% over the last six months. Q. DID YOU MAKE ANY OTHER CHANGES TO THE FUND? A. I increased its stake in trucking companies, specifically truckload carriers that regularly haul loads of 10,000 pounds or more. This industry is consolidating: the big companies appear to be getting stronger, and many of the weak ones are going out of business. Stocks like Swift and Werner have already helped the fund; both were sizable investments at the end of February. Q. CAN THE FUND KEEP UP THIS PACE? A. I think it'll be more difficult in the next six months. Many of 1993's top performing transportation stocks - I'm thinking specifically of the railroads - are getting expensive. I probably won't increase my investment in these companies, but I don't plan to sell them just yet either. Going forward, I'll have an eye out for new opportunities, perhaps overseas. I recently invested in Fiat and BMW, which could benefit from an economic recovery in Europe. I'm also watching shipping companies very closely. If I see demand improve for their services, it might be time to invest. FUND FACTS START DATE: September 29, 1986 SIZE: as of February 28, 1994, over $13 million MANAGER: Beso Sikharulidze, since November 1993; equity analyst, equipment manufacturing and shipping industries, since 1993; appliances and trucking, since 1992; joined Fidelity in 1992 (checkmark) TRANSPORTATION PORTFOLIO INVESTMENTS FEBRUARY 28, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 93.0% SHARES VALUE (NOTE 1) AEROSPACE & DEFENSE - 0.6% AIRCRAFT EQUIPMENT - 0.6% Aviall, Inc. (a) 4,750 $ 82,531 05366B10 AIR TRANSPORTATION - 9.1% AIR TRANSPORT, MAJOR NATIONAL - 5.8% AMR Corp. (a) 4,000 253,000 00176510 Great Lakes Aviation (a) 2,000 24,750 39054K10 Mesa Airlines, Inc. (a) 17,000 337,820 59048110 Southwest Airlines Co. 4,200 143,325 84474110 758,895 AIR TRANSPORTATION, REGIONAL - 3.3% Comair Holdings, Inc. 10,700 246,100 19978910 SkyWest, Inc. 6,000 199,500 83087910 445,600 TOTAL AIR TRANSPORTATION 1,204,495 AUTOS, TIRES, & ACCESSORIES - 13.9% AUTO & TRUCK PARTS - 5.7% Echlin, Inc. 3,000 89,625 27874910 Pirelli Tyre Holdings NV Ord. (a) 12,300 104,793 72499092 Smith (A.O.) Corp. Class B 12,600 463,050 83186520 Snap-on Tools Corp. 2,000 87,500 83303410 744,968 MOTOR VEHICLE SUPPLIES & NEW PARTS - 1.2% Custom Chrome, Inc. (a) 2,000 43,500 23190510 European Motor Holdings PLC 50,000 111,439 29899C22 154,939 MOTOR VEHICLES & CAR BODIES - 3.8% BMW (a) 200 97,527 05528310 Fiat Spa 45,000 126,629 31562110 Nissan Motor Co. Ltd. Ord. 23,000 187,589 65474491 Pininfarina Spa 12,400 90,355 72399392 502,100 TIRES & INNER TUBES - 3.2% Bandag, Inc. 2,000 117,750 05981510 Continental Gummi-Werke AG (a) 1,400 217,540 21199010 Goodyear Tire & Rubber Co. 2,000 90,500 38255010 425,790 TOTAL AUTOS, TIRES, & ACCESSORIES 1,827,797 BUILDING MATERIALS - 1.4% PAINT & VARNISH - 1.4% Chugoku Marine Paints Ord. 30,000 183,009 17199392 CHEMICALS & PLASTICS - 0.9% CHEMICALS - 0.9% Goodrich (B.F.) Company 3,000 123,000 38238810 CONGLOMERATES - 2.0% Canadian Pacific Ltd. Ord. 14,900 259,467 13644030 ELECTRONICS - 0.6% ELECTRONIC PARTS - WHOLESALE - 0.6% Airport Systems International, Inc. (a) 9,000 83,250 00949N10 ENGINEERING - 1.1% ELECTRICAL WORK - 1.1% Nippondenso Co. Ltd. 8,000 142,277 65463710 ENTERTAINMENT - 0.4% CRUISES - 0.4% Carnival Cruise Lines, Inc. Class A 1,000 48,375 14365810 SHARES VALUE (NOTE 1) HOME FURNISHINGS - 1.0% PUBLIC BUILDING & RELATED FURNITURE - 1.0% Dapta-Mallinjoud SA 3,630 $ 130,382 23799H22 INDUSTRIAL MACHINERY & EQUIPMENT - 1.9% CONSTRUCTION EQUIPMENT - 1.9% Astec Industries, Inc. (a) 8,000 146,000 04622410 JLG Industries, Inc. 4,000 106,000 46621010 252,000 IRON & STEEL - 0.7% IRON & STEEL FOUNDRIES - 0.7% Steel of West Virginia, Inc. (a) 7,900 98,750 85815410 LEASING & RENTAL - 3.4% AUTO REPAIR SERVICES & GARAGES - 0.6% PHH Corp. 2,000 78,000 69332010 EQUIPMENT RENTAL & LEASING, NEC - 2.8% GATX Corp. 1,400 57,925 36144810 Interpool, Inc. (a) 4,000 79,500 46062R10 Ryder Systems, Inc. 8,600 231,125 78354910 368,550 TOTAL LEASING & RENTAL 446,550 LEISURE DURABLES & TOYS - 0.8% LEISURE DURABLES - 0.8% Champion Enterprises, Inc. (a) 4,700 104,575 15849610 LODGING & GAMING - 0.9% HOTELS, MOTELS, & TOURIST COURTS - 0.9% Showboat, Inc. 7,000 124,250 82539010 OIL & GAS - 1.1% OIL & GAS EXPLORATION - 1.1% Amerada Hess Corp. 3,000 139,125 02355110 RAILROADS - 20.8% RAILROAD EQUIPMENT - 1.3% Trinity Industries, Inc. 3,750 166,406 89652210 RAILROADS - 19.5% Burlington Northern, Inc. 5,900 370,963 12189710 CSX Corp. 6,700 589,600 12640810 Chicago & North Western Holdings Corp. (a) 9,700 266,750 16715510 Conrail, Inc. 2,800 173,950 20836810 Illinois Central Corp., Series A 10,100 361,075 45184110 Santa Fe Pacific Corp. 20,934 476,249 80218310 Wisconsin Central Transportation Corp. (a) 4,700 338,400 97659210 2,576,987 TOTAL RAILROADS 2,743,393 SHIP BUILDING & REPAIR - 0.8% SHIP BUILDING & REPAIRING - 0.8% Hitachi Zosen Singapore Ltd. (a) 82,000 99,014 43399A22 SHIPPING - 3.9% SHIPPING - 3.9% Kirby Corp. (a) 4,800 104,400 49726610 Ned Lloyd (a) 7,800 297,209 63983210 Smedvig Tankship Ltd. (a) 12,600 109,118 83169E92 510,727 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) TRUCKING & FREIGHT - 27.7% AIR COURIER SERVICES - 1.7% Airborne Freight Corp. 6,000 $ 223,500 00926610 FREIGHT FORWARDING - 4.5% Air Express International Corp. 6,800 140,250 00910410 Expeditors International of Washington, Inc. 6,000 114,000 30213010 Fritz Companies, Inc. (a) 3,000 90,000 35884610 Intertrans Corp. 8,000 121,000 46113710 TNT Ltd. (a) 81,000 130,063 93599292 595,313 TRUCKING, LOCAL & LONG DISTANCE - 14.8% Carolina Freight Corp. 28,000 301,000 14389810 Landstar System, Inc. 16,000 376,000 51509810 Matlack Systems, Inc. (a) 5,000 73,750 57690110 Roadway Services, Inc. 3,100 217,775 76974810 Swift Transportation Co., Inc. (a) 15,900 411,413 87075610 Werner Enterprises, Inc. 10,700 310,300 95075510 XTRA Corp. 6,000 265,500 98413810 1,955,738 TRUCKING, LONG DISTANCE - 6.7% Arkansas Best Corp. 18,600 253,425 04079010 Arnold Industries, Inc. 4,000 84,000 04259510 Celadon Group, Inc. (a) 2,000 31,500 15083810 TNT Freightways Corp. 13,100 376,625 87259J10 Trimac Ltd. 10,900 138,320 89620810 883,870 TOTAL TRUCKING & FREIGHT 3,658,421 TOTAL COMMON STOCKS (Cost $10,154,410) 12,261,388 PREFERRED STOCKS - 0.8% AUTOS, TIRES, & ACCESSORIES - 0.8% MOTOR VEHICLES & CAR BODIES - 0.8% Porsche AG (non-vtg.) (a) (Cost $102,363) 200 102,104 73380110 REPURCHASE AGREEMENTS - 6.2% MATURITY VALUE (NOTE 1) AMOUNT Investments in repurchase agreements, (U.S. Treasury obligations), in a joint trading account, at 3.47% dated 2/28/94 due 3/1/94 $ 825,080 825,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $11,081,773) $ 13,188,492 LEGEND (a) Non-income producing OTHER INFORMATION CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1, 1993, the fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of February 28, 1993 have been restated to reflect an increase in paid in capital of $756,841, a decrease in accumulated net investment loss of $57,304 and a decrease in accumulated net realized gain on investments of $814,145. Purchases and sales of securities, other than short-term securities, aggregated $12,237,884 and $11,059,303, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $9,066 for the period (see Note 4 of Notes to Financial Statements). Distribution of investments by country, as a percentage of total value of investment in securities, is as follows: United States 81.3% Japan 3.8 Germany 3.1 Netherlands 3.0 Canada 2.9 Italy 1.6 France 1.0 Australia 1.0 Others (individually less than 1%) 2.3 TOTAL 100.0% INCOME TAX INFORMATION At February 28, 1994, the aggregate cost of investment securities for income tax purposes was $11,081,773. Net unrealized appreciation aggregated $2,106,719, of which $2,236,451 related to appreciated investment securities and $129,732 related to depreciated investment securities. The fund hereby designates $299,000 as a capital gain dividend for the purpose of the dividend paid deduction. TRANSPORTATION PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $825,000) (cost $11,081,773) (Notes 1 $ 13,188,492 and 2) - See accompanying schedule Cash 11 Receivable for investments sold 1,117,088 Receivable for fund shares sold 392,253 Dividends receivable 11,375 Redemption fees receivable (Note 1) 3,008 TOTAL ASSETS 14,712,227 LIABILITIES Payable for investments purchased $ 668,080 Payable for fund shares redeemed 935,891 Accrued management fee 6,961 Other payables and accrued expenses 24,502 TOTAL LIABILITIES 1,635,434 NET ASSETS $ 13,076,793 Net Assets consist of (Note 1): Paid in capital $ 10,426,320 Accumulated undistributed net realized gain (loss) on investments 543,754 Net unrealized appreciation (depreciation) on investment securities 2,106,719 NET ASSETS, for 603,367 shares outstanding $ 13,076,793 NET ASSET VALUE and redemption price per share ($13,076,793 (divided by) 603,367 shares) $21.67 Maximum offering price per share (100/97 of $21.67) $22.34
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994 INVESTMENT INCOME $ 118,700 Dividends Interest 31,397 TOTAL INCOME 150,097 EXPENSES Management fee (Note 4) $ 66,064 Transfer agent (Note 4) 126,388 Fees Redemption fees (Note 1) (14,991 ) Accounting fees and expenses 45,464 (Note 4) Non-interested trustees' compensation 75 Custodian fees and expenses 11,400 Registration fees 11,253 Audit 3,878 Legal 91 Reports to shareholders 2,569 Total expenses before reductions 252,191 Expense reductions (Note 8) (1,347 250,844 ) NET INVESTMENT INCOME (LOSS) (100,747 ) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 1,441,309 Net realized gain (loss) on investment securities Change in net unrealized appreciation (depreciation) on investment securities 1,066,611 NET GAIN (LOSS) 2,507,920 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 2,407,173 OTHER INFORMATION $153,950 Sales charges paid to FDC (Note 4) Deferred sales charges withheld $935 by FDC (Note 4) Exchange fees withheld by FSC $12,585 (Note 4)
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS FEBRUARY 28, ENDED 1994 FEBRUARY 28, 1993 Operations $ (100,747 $ (19,234 Net investment income (loss) ) ) Net realized gain (loss) on investments 1,441,309 172,466 Change in net unrealized appreciation (depreciation) on investments 1,066,611 824,934 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 2,407,173 978,166 Distributions to shareholders from net realized gains (827,694 (85,058 ) ) Share transactions 25,059,536 16,011,990 Net proceeds from sales of shares Reinvestment of distribution 796,335 84,011 Cost of shares redeemed (25,177,172 (9,226,420 ) ) Paid in capital portion of redemption fees (Note 1) 39,052 18,745 Net increase (decrease) in net assets resulting from share transactions 717,751 6,888,326 TOTAL INCREASE (DECREASE) IN NET ASSETS 2,297,230 7,781,434 NET ASSETS Beginning of period 10,779,563 2,998,129 End of period (including accumulated net investment loss of $0 and $57,304, respectively) $ 13,076,793 $ 10,779,563 OTHER INFORMATION Shares Sold 1,225,390 922,573 Issued in reinvestment of distributions 40,016 4,919 Redeemed (1,239,184 (543,866 ) ) Net increase (decrease) 26,222 383,626
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30, FEBRUARY 28, ENDED FEBRUARY 28, SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990 Net asset value, beginning of period $ 18.68 $ 15.49 $ 11.26 $ 12.23 $ 13.59 Income from Investment Operations Net investment income (loss) (.20) (.07) (.05) .06 (.03) Net realized and unrealized gain (loss) on investments 5.07 3.55 4.18 (.57) .96 Total from investment operations 4.87 3.48 4.13 (.51) .93 Less Distributions From net investment income - - - - - In excess of net investment income - - (.04) - - From net realized gain (1.96) (.36) - (.50) (2.32) Total distributions (1.96) (.36) (.04) (.50) (2.32) Redemption fees added to paid in capital .08 .07 .14 .04 .03 Net asset value, end of period $ 21.67 $ 18.68 $ 15.49 $ 11.26 $ 12.23 TOTAL RETURND, E 27.47% 23.14% 38.01% (4.10)% 6.90% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 13,077 $ 10,780 $ 2,998 $ 770 $ 1,630 Ratio of expenses to average net assetsB 2.39% 2.48%A 2.43% 2.39% 2.50% Ratio of expenses to average net assets before expense 2.40% 4.20%A 3.13% 2.89% 3.92% reductionsB Ratio of net investment income (loss) to average net assets(.96)% (.53)% (.34)% .52% (.20)% A Portfolio turnover rate 115% 116%A 423% 187% 156%
1 ANNUALIZED 2 SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS. 3 NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH PERIOD. 4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 5 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. [TEXT] BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO PERFORMANCE AND INVESTMENT SUMMARY PERFORMANCE There are several ways to evaluate a fund's historical performance: total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND BROKERAGE AND INVESTMENT MANAGEMENT 35.87% 140.37% 141.38% BROKERAGE AND INVESTMENT MANAGEMENT (INCL. 3% SALES CHARGE) 31.80% 133.16% 134.14% S&P 500 8.33% 89.60% 222.99% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years, or since the fund started on July 29, 1985. You can compare these figures to the performance of the S&P 500 - a common proxy for the U.S. stock market. This benchmark includes reinvested dividends and capital gains, if any. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND BROKERAGE AND INVESTMENT MANAGEMENT 35.87% 19.17% 10.80% BROKERAGE AND INVESTMENT MANAGEMENT (INCL. 3% SALES CHARGE) 31.80% 18.45% 10.40% S&P 500 8.33% 13.65% 14.62% AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of growth in the long run and volatility in the short run. Unlike the broader market, however, some sectors may not have a history of growth in the long run. And, as with all stock funds, the share price and return of a fund that invests in a sector will vary. That means if you sell your shares during a sector downturn, you might lose money. But if you can identify a sector that is about to experience rapid growth you may have the potential for above-average gains. (checkmark) $10,000 OVER LIFE OF FUND Select Brokerage S&P 500 07/29/85 9700.00 10000.00 07/31/85 9564.20 9926.31 08/31/85 9263.50 9841.93 09/30/85 8671.80 9533.88 10/31/85 9418.70 9974.35 11/30/85 10340.20 10658.59 12/31/85 10757.30 11174.46 01/31/86 11989.20 11237.04 02/28/86 12852.50 12077.57 03/31/86 13192.00 12751.50 04/30/86 13075.60 12607.41 05/31/86 13211.40 13278.12 06/30/86 13201.70 13502.52 07/31/86 12002.55 12747.73 08/31/86 13072.47 13693.61 09/30/86 11545.40 12561.15 10/31/86 12809.85 13285.93 11/30/86 12177.63 13608.78 12/31/86 11788.57 13261.75 01/31/87 13996.49 15048.11 02/28/87 14317.47 15642.51 03/31/87 14259.11 16094.58 04/30/87 12702.86 15951.34 05/31/87 12138.72 16090.11 06/30/87 12119.27 16902.66 07/31/87 12148.45 17759.63 08/31/87 12537.51 18422.06 09/30/87 12109.54 18018.62 10/31/87 7654.79 14137.41 11/30/87 7080.92 12972.49 12/31/87 7444.51 13959.69 01/31/88 7977.92 14547.40 02/29/88 8360.58 15225.31 03/31/88 8140.26 14754.84 04/30/88 8279.41 14918.62 05/31/88 7966.32 15048.41 06/30/88 8812.88 15739.14 07/31/88 8743.21 15679.33 08/31/88 8685.16 15146.23 09/30/88 8905.77 15791.46 10/31/88 8940.60 16230.46 11/30/88 8743.21 15998.37 12/31/88 8825.36 16278.34 01/31/89 9975.47 17469.91 02/28/89 9740.76 17034.91 03/31/89 9752.49 17431.83 04/30/89 9846.38 18336.54 05/31/89 10491.85 19079.17 06/30/89 10196.87 18970.42 07/31/89 11424.27 20683.44 08/31/89 11707.51 21088.84 09/30/89 11341.65 21002.38 10/31/89 10421.10 20515.12 11/30/89 10314.89 20933.63 12/31/89 10066.13 21436.04 01/31/90 9623.79 19997.68 02/28/90 9946.58 20255.65 03/31/90 10221.54 20792.42 04/30/90 9528.15 20272.61 05/31/90 10436.73 22249.19 06/30/90 10424.49 22097.90 07/31/90 10053.46 22027.18 08/31/90 8689.07 20035.93 09/30/90 7947.02 19060.18 10/31/90 7456.32 18978.22 11/30/90 7947.02 20204.21 12/31/90 8437.73 20767.91 01/31/91 9139.86 21673.39 02/28/91 10047.80 23223.04 03/31/91 11076.79 23785.03 04/30/91 11234.16 23842.12 05/31/91 11827.35 24872.10 06/30/91 11039.82 23732.96 07/31/91 11888.10 24838.91 08/31/91 12154.71 25427.59 09/30/91 12784.86 25002.95 10/31/91 13633.14 25337.99 11/30/91 12881.81 24316.87 12/31/91 15378.19 27098.72 01/31/92 15596.32 26594.68 02/29/92 15499.37 26940.42 03/31/92 15087.35 26415.08 04/30/92 13911.87 27191.68 05/31/92 13875.51 27324.92 06/30/92 13548.32 26917.78 07/31/92 14311.77 28018.72 08/31/92 13899.75 27444.33 09/30/92 13802.80 27768.18 10/31/92 14420.84 27865.36 11/30/92 15717.50 28815.57 12/31/92 16165.88 29170.00 01/31/93 17123.23 29415.03 02/28/93 17232.29 29815.08 03/31/93 18613.79 30444.17 04/30/93 18553.16 29707.43 05/31/93 19159.48 30503.58 06/30/93 20068.94 30592.05 07/31/93 20735.89 30469.68 08/31/93 22372.93 31624.48 09/30/93 22785.22 31380.97 10/31/93 22045.52 32030.56 11/30/93 21439.21 31726.27 12/31/93 24139.71 32110.15 01/31/94 24627.78 33201.90 02/28/94 23414.20 32298.81 Let's say you invested $10,000 in Fidelity Select Brokerage and Investment Management Portfolio on July 29, 1985, when the fund started, and paid a 3% sales charge. By February 28, 1994, your investment would have grown to $23,414 - a 134.14% increase. That compares to $10,000 invested in the S&P 500, which would have grown to $32,299 over the same period - a 222.99% increase. INVESTMENT SUMMARY TOP TEN STOCKS AS OF FEBRUARY 28, 1994 % OF FUND'S INVESTMENTS Nomura Securities Co. Ltd. 7.9 Yamaichi Securities 7.7 Daiwa Securities 6.7 Nikko Securities 6.5 Warburg (SG) Group PLC Ord. 6.3 Peregrine Investments Holdings 6.0 Invesco Mim PLC 5.7 Midland Walwyn Inc. 5.3 Sun Hung Kai Properties 5.2 Mackenzie Financial Corporation 5.2 TOP INDUSTRIES AS OF FEBRUARY 28, 1994 Row: 1, Col: 1, Value: 4.3 Row: 1, Col: 2, Value: 1.7 Row: 1, Col: 3, Value: 5.9 Row: 1, Col: 4, Value: 11.4 Row: 1, Col: 5, Value: 18.2 Row: 1, Col: 6, Value: 58.5 Security & Commodity Brokers 58.5% Investment Managers 18.2% Financial Services 11.4% Management & Investment Offices 5.9% International Banks 1.7% All Others 4.3%* * INCLUDES SHORT-TERM INVESTMENTS BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW Arieh Coll, Portfolio Manager of Fidelity Select Brokerage and Investment Management Portfolio Q. ARIEH, HOW HAS THE FUND PERFORMED? A. For the year ended February 28, 1994, the fund had a total return of 35.87%. That beat the S&P 500, which returned 8.33% for the same period. Q. WHY DID THE FUND DO SO WELL? A. For much of the period, the fund was invested primarily in U.S. brokers, which were operating in a nearly ideal environment for that group. Falling interest rates encouraged investors to put more money into stocks, bonds and other long-term financial products, and trading volume soared. Low interest rates and high stock prices led to a boom in the new issuance of corporate securities. At that time, the fund's emphasis on U.S. brokers helped its performance. But in October, I started to pare back the fund's stake in some of the names that had been strong performers. Q. WHAT CHANGED? A. At that point I felt that the group's earnings could decline in 1994, and that U.S. brokerage stock prices were fairly valued. I also believed U.S. brokers wouldn't see much, if any, growth in commission revenues and at the same time their expenses might rise. When revenues drop and expenses rise, it's difficult for a company to have higher earnings. What's more, periods of higher interest rates historically tend to hurt brokers. Q. SO WHERE HAVE YOU TURNED INSTEAD? A. Mostly to Japan and Canada. The Japanese stock market peaked in 1989-1990. Profits for brokers have been down about 90% since then, and stock prices were shellshocked and appeared inexpensive. What's more, I have compared the Japanese situation in 1992-1993 to that of the United States in 1990. There are three similarities: first, a stock market recovering after a slump; second, depressed trading volume; third, minimal profits for brokerage firms. To me, that looks like the stock market could pick up and it may signal that Japan could be close to coming out of its recession. So far, the Japanese market has done well in 1994, trading volume has increased, and so have broker revenues. That, in turn, helped Japanese brokers, including some of the fund's largest investments, such as Nomura, Nikko and Daiwa. Q. WHAT'S THE STORY WITH CANADIAN BROKERS? A. Canada is a faster-growth version of the U.S. mutual fund story. Mutual funds there have a low rate of penetration, far less than in the United States. The Canadian mutual fund industry has shown impressive growth over the past five years. Some of the fund's largest investments - Midland Walwyn, Mackenzie Financial and Trimark Financial - are examples of companies that could benefit from further growth in this industry. Q. LOOKING BACK, IS THERE ANYTHING YOU REGRET? A. I overstayed my welcome in Southeast Asian stocks. I had invested the fund in a number of brokers in Hong Kong, Malaysia and Singapore. They did very well in December 1993, but gave back some of their gains in early 1994. Knowing what I know now, I wish I had pared back the fund's stake in them earlier. The fund continues to own some of the Hong Kong brokers, like Peregrine Investments and Sun Hung Kai. Hong Kong has a rapidly-growing economy, which benefits from its proximity to China. Also, trading volume could continue to increase if more money flows into that market. Q. WHAT'S YOUR STRATEGY FOR THE NEXT SIX MONTHS? A. I'll probably continue to keep a significant amount of the fund invested overseas for the time being. Until U.S. brokerage stocks come down significantly, I'll probably avoid the group. We had a 20% correction in the U.S. brokerage group from October 1993 through the end of February. But I think the stocks are still unattractive and I think the companies could see a decline in earnings in 1994. FUND FACTS START DATE: July 29, 1985 SIZE: as of February 28, 1994, over $59 million MANAGER: Arieh Coll, since December 1993; manager, Fidelity Select Technology Portfolio, since July 1992; Fidelity Select Software and Computer Services Portfolio, since October 1991; joined Fidelity in1989 (checkmark) BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO INVESTMENTS FEBRUARY 28, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 95.0% SHARES VALUE (NOTE 1) BANKS - 1.7% INTERNATIONAL BANKS - 1.7% Finance One Public Co. 65,000 $ 996,050 31799E93 National Bank of Greece 200 10,616 63499622 Union Financiere de France BQ 100 14,643 90699992 1,021,309 CREDIT & OTHER FINANCE - 17.7% BUSINESS CREDIT - 0.4% Dhana Siam Finance & Securities 12,000 219,905 24299593 FINANCIAL SERVICES - 11.4% Finansbank (a) 16,000 2,348 31799K22 Kay Hian James Capel Holdings 697,000 1,295,472 48699B22 Marleau Lemire, Inc. 532,300 1,676,378 57090310 McIntosh Securities Ltd. 942,800 955,415 58199522 Perpetual PLC 50,000 814,246 71499822 Rashid Hussain BHD 231,000 673,310 75399492 TA Enterprise BHD 268,000 1,513,182 94899892 6,930,351 MANAGEMENT & INVESTMENT OFFICES - 5.9% Govett & Co. Ltd. 216,900 1,380,974 38399992 Trimark Financial Corp. (a) 76,800 2,205,261 89621H10 3,586,235 TOTAL CREDIT & OTHER FINANCE 10,736,491 SECURITIES INDUSTRY - 75.6% INVESTMENT MANAGERS - 18.2% Invesco Mim PLC (a) 1,095,000 3,432,974 46199C92 Mackenzie Financial Corporation 375,400 3,129,492 55453110 Mutual Fund Co. Ltd. (a) 40,000 862,559 65499B22 Peregrine Investments Holdings 1,685,000 3,619,768 71399492 11,044,793 SECURITY & COMMODITY BROKERS - 57.0% Asia Securities Trading Co. 134,000 529,226 04599D23 Daiwa Securities 238,000 4,096,189 23499010 First Marathon Inc. Class A (non vtg.) 69,100 998,481 32076L20 GK Goh Holdings Ltd. (a) 563,000 889,810 36199B22 Guoco Group Ltd. 1,000 4,529 40299692 Jefferies Group, Inc. 21,100 664,650 47231810 Kim Eng Holdings Ltd. 496,000 965,786 49499D92 Kim Eng Holdings Ltd. (warrants ) (a) 303,800 318,820 49499D94 Kokusai Securities 66,000 1,249,510 50299092 McDonald & Co. Investments, Inc. 44,200 701,675 58004710 Midland Walwyn Inc. (a) 315,900 3,218,692 59780110 Nikko Securities 297,000 3,947,317 65399010 Nomura Securities Co. Ltd. 210,000 4,778,883 65536130 Phatra Thanakit 1,000 30,964 71799593 Securities One Ltd. 23,000 548,657 81399692 Sun Hung Kai Properties 4,746,000 3,163,067 86690810 Warburg (SG) Group PLC Ord. 285,000 3,811,205 81799099 Yamaichi Securities 547,000 4,701,946 98499210 34,619,407 SECURITY BROKERS & DEALERS - 0.4% 20/20 Financial Corp. 23,100 248,203 90136T10 TOTAL SECURITIES INDUSTRY 45,912,403 TOTAL COMMON STOCKS (Cost $50,573,339) 57,670,203 NONCONVERTIBLE PREFERRED STOCKS - 1.2% SHARES VALUE (NOTE 1) SECURITIES INDUSTRY - 1.2% SECURITY & COMMODITY BROKERS - 1.2% AGF Management Ltd. Class A (a) (Cost $809,023) 52,900 $ 759,494 00109210 NONCONVERTIBLE BONDS - 0.3% PRINCIPAL AMOUNT SECURITIES INDUSTRY - 0.3% SECURITY & COMMODITY BROKERS - 0.3% Kim Eng Holdings Ltd. 3 1/2%, 12/27/97 (Cost $188,864) $303,800 $ 176,695 49499DAA REPURCHASE AGREEMENTS - 3.5% MATURITY AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account, at 3.47% dated 2/28/94 due 3/1/94 $2,151,207 2,151,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $53,722,226) $ 60,757,392 LEGEND 1. Non-income producing OTHER INFORMATION CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1, 1993, the fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of February 28, 1993 have been reclassified to reflect an increase in paid in capital of $10,852,935, a decrease in undistributed net investment income of $399,839 and a decrease in accumulated net realized gain on investments of $10,453,096. Purchases and sales of securities, other than short-term securities, aggregated $194,106,502 and $172,745,490, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $96,223 for the period (see Note 4 of Notes to Financial Statements). The maximum loan and average daily loan balances during the periods for which loans were outstanding amounted to $12,531,000 and $4,342,143, respectively. The weighted average interest rate paid was 3.7% (see Note 7 of Notes to Financial Statements). Distribution of investments by country, as a percentage of total value of investment in securities, is as follows: Japan 30.9% Canada 20.1 United Kingdom 17.1 Hong Kong 11.2 Singapore 6.0 Thailand 5.3 United States 4.2 Malaysia 3.6 Australia 1.6 TOTAL 100.0% INCOME TAX INFORMATION At February 28, 1994, the aggregate cost of investment securities for income tax purposes was $53,812,398. Net unrealized appreciation aggregated $6,944,994, of which $8,959,410 related to appreciated investment securities and $2,014,416 related to depreciated investment securities. The fund hereby designates $2,911,000 as a capital gain dividend for the purpose of the dividend paid deduction. The fund intends to elect to defer to its fiscal year ending February 28, 1995 $462,000 of losses recognized during the period November 1, 1993 to February 28, 1994. BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $2,151,000) (cost $53,722,226) $ 60,757,392 (Notes 1 and 2) - See accompanying schedule Cash 884 Receivable for investments sold 935,811 Receivable for fund shares sold 1,565,714 Dividends receivable 76,589 Interest receivable 486 Redemption fees receivable (Note 1) 798 Other receivables 71,076 TOTAL ASSETS 63,408,750 LIABILITIES Payable for fund shares redeemed $ 3,428,943 Accrued management fee 34,366 Other payables and accrued expenses 135,603 TOTAL LIABILITIES 3,598,912 NET ASSETS $ 59,809,838 Net Assets consist of (Note 1): Paid in capital $ 50,139,294 Accumulated net investment loss (95,197 ) Accumulated undistributed net realized gain (loss) on investments 2,730,575 Net unrealized appreciation (depreciation) on investment securities 7,035,166 NET ASSETS, for 3,369,472 shares outstanding $ 59,809,838 NET ASSET VALUE and redemption price per share ($59,809,838 (divided by) 3,369,472 shares) $17.75 Maximum offering price per share (100/97 of $17.75) $18.30
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994 INVESTMENT INCOME $ 837,789 Dividends Interest 294,112 TOTAL INCOME 1,131,901 EXPENSES Management fee (Note 4) $ 434,585 Transfer agent (Note 4) 744,934 Fees Redemption fees (Note 1) (109,484 ) Accounting fees and expenses 74,109 (Note 4) Non-interested trustees' compensation 442 Custodian fees and expenses 31,913 Registration fees 41,896 Audit 3,682 Legal 477 Interest (Note 7) 6,266 Reports to shareholders 10,779 Miscellaneous 477 Total expenses before reductions 1,240,076 Expense reductions (Note 8) (12,979 1,227,097 ) NET INVESTMENT INCOME (LOSS) (95,196 ) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 9,170,168 Net realized gain (loss) on investment securities Change in net unrealized appreciation (depreciation) on investment securities 5,304,530 NET GAIN (LOSS) 14,474,698 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 14,379,502 OTHER INFORMATION $866,722 Sales charges paid to FDC (Note 4) Deferred sales charges withheld $5,944 by FDC (Note 4) Exchange fees withheld by FSC $93,203 (Note 4)
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS FEBRUARY 28, ENDED 1994 FEBRUARY 28, 1993 Operations $ (95,196 $ 3,536 Net investment income (loss) ) Net realized gain (loss) on investments 9,170,168 (1,185,727 ) Change in net unrealized appreciation (depreciation) on investments 5,304,530 4,169,487 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 14,379,502 2,987,296 Distributions to shareholders (3,536 - From net investment income ) From net realized gain (5,264,467 - ) TOTAL DISTRIBUTIONS (5,268,003 - ) Share transactions 254,155,679 51,765,156 Net proceeds from sales of shares Reinvestment of distributions 5,046,669 - Cost of shares redeemed (233,513,002 (48,113,103 ) ) Paid in capital portion of redemption fees (Note 1) 322,223 132,746 Net increase (decrease) in net assets resulting from share transactions 26,011,569 3,784,799 TOTAL INCREASE (DECREASE) IN NET ASSETS 35,123,068 6,772,095 NET ASSETS Beginning of period 24,686,770 17,914,675 End of period (including accumulated net investment income (loss) of $(95,197) and $403,376, respectively) $ 59,809,838 $ 24,686,770 OTHER INFORMATION Shares Sold 14,759,782 4,018,432 Issued in reinvestment of distributions 301,596 - Redeemed (13,428,141 (3,843,030 ) ) Net increase (decrease) 1,633,237 175,402
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30, FEBRUARY 28, ENDED FEBRUARY 28, SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990 Net asset value, beginning of period $ 14.22 $ 11.48 $ 9.28 $ 7.97 $ 8.39 Income from Investment Operations Net investment income (loss) (.02) - .02 .08 .08 Net realized and unrealized gain (loss) on investments 4.95 2.65 1.96 1.15 (.35) Total from investment operations 4.93 2.65 1.98 1.23 (.27) Less Distributions From net investment income (.01) - (.01) (.09) (.16) From net realized gain (1.47) - - - - Total distributions (1.48) - (.01) (.09) (.16) Redemption fees added to paid in capital .08 .09 .23 .17 .01 Net asset value, end of period $ 17.75 $ 14.22 $ 11.48 $ 9.28 $ 7.97 TOTAL RETURND, E 35.87% 23.87% 23.84% 17.90% (3.23)% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 59,810 $ 24,687 $ 17,915 $ 11,285 $ 2,298 Ratio of expenses to average net assetsB 1.77% 2.21%A 2.17% 2.50% 2.50% Ratio of expenses to average net assets before expense 1.79% 2.21%A 2.17% 2.91% 3.16% reductionsB Ratio of net investment income (loss) to average net assets (.14)% .02%A .16% .94% .91% Portfolio turnover rate 295% 111%A 254% 62% 142%
1 ANNUALIZED 2 SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS. 3 NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH PERIOD. 4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 5 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. FINANCIAL SERVICES PORTFOLIO PERFORMANCE AND INVESTMENT SUMMARY PERFORMANCE There are several ways to evaluate a fund's historical performance: total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 PAST 10 FEBRUARY 28, 1994 YEAR YEARS YEARS FINANCIAL SERVICES 10.85% 140.41% 362.83% FINANCIAL SERVICES (INCL. 3% SALES CHARGE) 7.53% 133.20% 348.95% S&P 500 8.33% 89.60% 321.84% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years, or ten years. You can compare these figures to the performance of the S&P 500 - a common proxy for the U.S. stock market. This benchmark includes reinvested dividends and capital gains, if any. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 PAST 10 FEBRUARY 28, 1994 YEAR YEARS YEARS FINANCIAL SERVICES 10.85% 19.18% 16.56% FINANCIAL SERVICES (INCL. 3% SALES CHARGE) 7.53% 18.45% 16.20% S&P 500 8.33% 13.65% 15.48% AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of growth in the long run and volatility in the short run. Unlike the broader market, however, some sectors may not have a history of growth in the long run. And, as with all stock funds, the share price and return of a fund that invests in a sector will vary. That means if you sell your shares during a sector downturn, you might lose money. But if you can identify a sector that is about to experience rapid growth you may have the potential for above-average gains. (checkmark) $10,000 OVER TEN YEARS 02/29/84 10000.00 10000.00 03/31/84 9746.74 10173.00 04/30/84 9717.52 10269.64 05/31/84 9086.44 9700.71 06/30/84 9355.08 9911.21 07/31/84 9425.56 9788.31 08/31/84 10206.61 10869.92 09/30/84 10588.33 10872.09 10/31/84 10940.69 10914.50 11/30/84 11310.67 10792.25 12/31/84 11721.75 11077.17 01/31/85 12702.48 11940.08 02/28/85 12843.42 12086.94 03/31/85 12755.33 12095.40 04/30/85 13370.19 12084.52 05/31/85 14111.91 12783.00 06/30/85 14683.84 12983.70 07/31/85 14660.07 12964.22 08/31/85 14767.04 12854.02 09/30/85 14131.19 12451.69 10/31/85 15058.22 13026.96 11/30/85 15949.59 13920.61 12/31/85 16555.72 14594.37 01/31/86 17536.23 14676.10 02/28/86 19354.62 15773.87 03/31/86 20608.49 16654.05 04/30/86 20418.33 16465.86 05/31/86 21256.22 17341.84 06/30/86 21880.17 17634.92 07/31/86 20314.76 16649.13 08/31/86 21599.89 17884.49 09/30/86 19289.07 16405.45 10/31/86 19717.45 17352.04 11/30/86 19524.37 17773.70 12/31/86 19041.69 17320.47 01/31/87 20381.13 19653.53 02/28/87 21732.63 20429.85 03/31/87 20906.04 21020.27 04/30/87 19590.74 20833.19 05/31/87 19451.97 21014.44 06/30/87 20169.96 22075.67 07/31/87 20405.26 23194.90 08/31/87 21587.83 24060.07 09/30/87 20821.57 23533.16 10/31/87 16109.42 18464.12 11/30/87 15125.96 16942.67 12/31/87 15892.34 18232.01 01/31/88 17088.96 18999.58 02/29/88 17658.16 19884.96 03/31/88 17354.15 19270.51 04/30/88 17050.15 19484.42 05/31/88 17218.32 19653.93 06/30/88 18279.10 20556.05 07/31/88 18156.21 20477.93 08/31/88 18104.46 19781.68 09/30/88 18854.77 20624.38 10/31/88 18906.52 21197.74 11/30/88 18123.87 20894.61 12/31/88 17801.70 21260.27 01/31/89 18714.09 22816.52 02/28/89 18674.14 22248.39 03/31/89 20039.40 22766.78 04/30/89 20405.69 23948.37 05/31/89 21684.37 24918.28 06/30/89 21533.29 24776.25 07/31/89 23256.75 27013.54 08/31/89 23913.95 27543.01 09/30/89 24410.20 27430.08 10/31/89 22083.19 26793.70 11/30/89 21781.41 27340.30 12/31/89 21244.97 27996.46 01/31/90 19451.43 26117.90 02/28/90 20155.31 26454.82 03/31/90 19843.98 27155.87 04/30/90 19140.10 26476.98 05/31/90 20825.35 29058.48 06/30/90 20243.30 28860.88 07/31/90 18943.83 28768.53 08/31/90 16676.52 26167.85 09/30/90 14192.64 24893.48 10/31/90 12954.09 24786.44 11/30/90 14781.46 26387.64 12/31/90 16076.09 27123.86 01/31/91 17536.92 28306.46 02/28/91 19551.63 30330.37 03/31/91 20486.28 31064.36 04/30/91 21150.93 31138.92 05/31/91 22771.00 32484.12 06/30/91 20922.45 30996.35 07/31/91 22577.14 32440.78 08/31/91 24072.59 33209.62 09/30/91 23927.20 32655.02 10/31/91 24453.38 33092.60 11/30/91 22639.45 31758.97 12/31/91 25983.52 35392.19 01/31/92 27277.79 34733.90 02/29/92 29236.70 35185.44 03/31/92 28579.07 34499.32 04/30/92 29677.46 35513.60 05/31/92 30950.75 35687.62 06/30/92 31662.91 35155.87 07/31/92 32568.38 36593.75 08/31/92 30700.40 35843.58 09/30/92 31655.78 36266.53 10/31/92 32910.60 36393.47 11/30/92 35384.60 37634.48 12/31/92 37109.68 38097.39 01/31/93 39450.41 38417.40 02/28/93 40499.17 38939.88 03/31/93 42619.51 39761.51 04/30/93 40579.20 38799.28 05/31/93 40594.59 39839.10 06/30/93 42110.06 39954.64 07/31/93 43240.89 39794.82 08/31/93 44587.12 41303.04 09/30/93 45617.95 40985.01 10/31/93 44394.80 41833.40 11/30/93 42417.77 41435.98 12/31/93 43624.06 41937.36 01/31/94 46585.48 43363.23 02/28/94 44894.49 42183.75 Let's say you invested $10,000 in Fidelity Select Financial Services Portfolio on February 29, 1984 and paid a 3% sales charge. By February 28, 1994, your investment would have grown to $44,895 - a 348.95% increase. That compares to $10,000 invested in the S&P 500, which would have grown to $42,184 over the same period - a 321.84% increase. INVESTMENT SUMMARY TOP TEN STOCKS AS OF FEBRUARY 28, 1994 % OF FUND'S INVESTMENTS Citicorp 10.0 Bank of New York Co., Inc. 9.8 First Chicago Corp. 4.4 Federal Home Loan Mortgage Corporation 3.6 Lend Lease Corp. Ltd. 3.4 Federal National Mortgage Association 3.1 State Street Boston Corp. 3.1 Dean Witter Discover & Co. 2.8 Household International, Inc. 2.8 Argentaria Corp. Bancaria de Esp 2.8 TOP INDUSTRIES AS OF FEBRUARY 28, 1994 Row: 1, Col: 1, Value: 26.8 Row: 1, Col: 2, Value: 5.6 Row: 1, Col: 3, Value: 6.0 Row: 1, Col: 4, Value: 6.7 Row: 1, Col: 5, Value: 23.4 Row: 1, Col: 6, Value: 31.5 National Commercial Banks 31.5% State Banks Federal Reserve 23.4% Federal & Federally Sponsored Credit Agencies 6.7% Financial Services 6.0% Property-Casualty & Reinsurance 5.6% All Others 26.8% FINANCIAL SERVICES PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW Stephen Binder, Portfolio Manager of Fidelity Select Financial Services Portfolio Q. STEVE, HOW DID THE FUND PERFORM? A. The total return for the year ended February 28, 1994 was 10.85%. That beat the S&P 500, which returned 8.33% for the same period. Most of the growth occurred during the first six months of the fund's fiscal year. Since then, gains and losses, while occasionally sharp, have tended to cancel each other out. Q. WHAT WAS THE DIFFERENCE IN THE SECOND HALF OF THE YEAR? A. Interest rates were obviously a big factor. Banks and thrifts, 61.4% of the fund, have profited in recent years from the wide spread between the federal funds rate, or what banks charge each other for overnight loans, and the prime rate, the benchmark for loans. The wider the spread, the less banks have to pay for funds and the more they can earn making loans. The spread stayed wide by historical standards until October, when interest rates bottomed. Then, the Federal Reserve raised short-term rates in February and the spread narrowed further. The perception, at least, is that bank profit margins will suffer as a result. And that puts downward pressure on their stocks. It was a big reason the fund fell back 3.63% in the final month of the fiscal year. Q. ARE YOU SUGGESTING THAT REALITY MAY DIFFER FROM PERCEPTION? A. It can, depending on the bank and what else it has going for it. Domestic loan growth is critical, but it's not the only factor. Citicorp, for example, can point to revenue growth overseas in emerging markets and a strong commitment to cutting costs at home. It was up nearly 20% in January alone, before sliding back somewhat in February. Bank of New York, on the other hand, has found ways to increase its fee income from securities processing and trust-related services. It also has a growing low-price credit card business. Together, these two stocks accounted for almost one-fifth of the fund's total investments at the end of February. Q. SIX MONTHS AGO, THE FUND WAS MOVING INCREASINGLY INTO FOREIGN STOCKS. IS THAT TREND STILL EVIDENT? A. No, foreign stocks were a specialty of the previous fund manager. Since I took over in November, I've been slowly weeding out some of the unfamiliar foreign names and replacing them with stocks I follow more closely: regional banks like State Street Boston, Signet and Crestar Financial; and a handful of smaller thrifts like Collective BanCorp, Astoria Financial and Lakeview Savings Bank. The savings and loans have been cheaper on the whole than banks, and they keep getting taken over. You may as well be where lightning strikes. Q. WHY DOES THE FUND HAVE SUCH A LARGE STAKE IN MORTGAGE AGENCY STOCKS? A. Both the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association have been steady double-digit growers, and yet they looked cheap compared to most other financial stocks. Moreover, as mortgage refinancings subside, they won't have to worry so much about losing fees derived from servicing existing mortgages. That makes them potentially more attractive, not less, as long as interest rates continue rising only gradually in the months ahead. Q. YOU'VE BEEN AVOIDING INSURANCE STOCKS LATELY. WHY? A. Insurance companies, particularly the property and casualty ones, are loaded with capital. That's despite recent disasters like Hurricane Andrew and the Los Angeles earthquake. Whenever there's too much capital chasing too few deals, pricing suffers, and that's pretty much the story throughout the industry. Until pricing improves - and I see no evidence of that happening soon - I'll continue to deemphasize insurance stocks. Q. WHAT'S AHEAD FOR THE FUND? A. I'm guardedly optimistic, despite the upward trend in interest rates. Most financial institutions are in better shape today than they've been for some time, with ample capital reserves, fewer bad loans, and better control over costs. And since many of the stocks were jolted by the uptick in rates, they look cheap again by historical standards. The question is, can they deliver projected earnings? That will depend in large part on loan growth, which probably needs to be in the double-digit range to offset the effect of narrower spreads. FUND FACTS START DATE: December 10, 1981 SIZE: as of February 28, 1994, over $116 million MANAGER: Stephen Binder, since May 1990; manager, Fidelity Select Defense and Aerospace Portfolio, since October 1992; Fidelity Select Regional Banks Portfolio, since May 1990; joined Fidelity in 1989 (checkmark) FINANCIAL SERVICES PORTFOLIO INVESTMENTS FEBRUARY 28, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 99.9% SHARES VALUE (NOTE 1) BANKS - 55.5% INTERNATIONAL BANKS - 0.6% Bank of Ireland U.S. Holdings, Inc. 170,800 $ 680,140 06278793 NATIONAL COMMERCIAL BANKS - 31.5% Citicorp (a) 279,300 11,590,950 17303410 First Chicago Corp. 105,003 5,132,022 31945510 First Interstate Bancorp 48,000 3,210,000 32054810 Grupo Financiero Bancomer SA de CV sponsored ADR, Series C (b) 9,000 321,750 40048610 Huntington Bancshares, Inc. 90,000 2,036,250 44615010 Imperial Bancorp (a) 51,100 753,725 45255610 KeyCorp. 36,900 1,402,200 49326310 Mellon Bank Corp. 19,456 1,079,808 58550910 Mercantile Bancorporation, Inc. 15,200 708,700 58734210 Midlantic Corp. (a) 84,500 2,344,875 59780E10 NationsBank Corp. 28,300 1,383,162 63858510 Norwest Corp. 20,000 470,000 66938010 Silicon Valley Bancshares (a) 49,600 465,000 82706410 Svenska Handelsbanken 90,000 1,422,408 86959991 West One Bancorp 64,700 1,722,638 95482810 Zions Bancorporation 64,400 2,479,400 98970110 36,522,888 STATE BANKS FEDERAL RESERVE - 23.4% Bank of New York Co., Inc. 209,067 11,368,018 06405710 Bank of New York Co., Inc. (warrants) (a) 75,000 703,125 06405711 Chemical Banking Corp. 50,000 1,862,500 16372210 Compass Bancshares, Inc. 69,500 1,633,250 20449H10 Crestar Financial Corp. 60,437 2,644,119 22609110 First Empire State Corp. 8,000 1,086,000 32007610 Pacific Western Bancshares, Inc. (a) 103,200 980,400 69507210 Signet Banking Corp. (a) 84,015 3,066,547 82668110 State Street Boston Corp. 96,100 3,579,725 85747310 TR Financial Corp. (a) 24,700 299,488 87263010 27,223,172 TOTAL BANKS 64,426,200 CREDIT & OTHER FINANCE - 9.3% FINANCIAL SERVICES - 5.9% Argentaria Corp. Bancaria de Esp 70,200 3,251,634 21991392 Corporacion Bancaria de Espana SA sponsored ADR 4,000 93,000 21991310 Dean Witter Discover & Co. 89,300 3,214,800 24240V10 GFC Financial Corp. 10,200 298,350 36160910 6,857,784 PERSONAL CREDIT INSTITUTIONS - 3.4% Beneficial Corp. 17,800 671,950 08172110 Household International, Inc. 94,897 3,285,809 44181510 3,957,759 TOTAL CREDIT & OTHER FINANCE 10,815,543 FEDERAL SPONSORED CREDIT - 6.7% FEDERAL & FEDERALLY SPONSORED CREDIT AGENCIES - 6.7% Federal Home Loan Mortgage Corporation 75,600 4,214,700 31340030 Federal National Mortgage Association 43,500 3,615,937 31358610 7,830,637 SHARES VALUE (NOTE 1) INSURANCE - 13.0% INSURANCE BROKERS & SERVICES - 0.7% Heath (CE) International Holdings 146,400 $ 852,711 42299892 LIFE INSURANCE - 4.0% Capital Holding Corp. 56,100 1,935,450 14018610 UNUM Corp. 50,000 2,687,500 90319210 4,622,950 MULTI-LINE INSURANCE - 2.7% FAI Insurance Ltd. Ord. (a) 3,664,900 3,138,547 30239330 PROPERTY-CASUALTY & REINSURANCE - 5.6% Allstate Corp. 70,000 1,820,000 02000210 Skandia International Holding Co. AB ADR 100,000 2,169,986 83055510 Travelers, Inc. (The) 35,733 1,331,054 89419010 USF&G Corp. 60,300 859,275 90329010 Zenith National Insurance Corp. 12,600 289,800 98939010 6,470,115 TOTAL INSURANCE 15,084,323 REAL ESTATE INVESTMENT TRUSTS - 5.1% Developers Diversified Realty 65,000 1,974,375 25159110 Lend Lease Corp. Ltd. 319,300 3,974,027 52599292 5,948,402 SAVINGS & LOANS - 5.9% SAVINGS BANKS & SAVINGS & LOANS - 3.5% Astoria Financial Corp. (a) 15,000 442,500 04626510 Bay View Capital, Inc. 5,600 116,200 07262L10 Collective Bancorp, Inc. 26,000 484,250 19390110 Golden West Financial Corp. 60,000 2,482,500 38131710 Standard Federal Bank 19,300 540,400 85338910 4,065,850 SAVINGS BANKS, FEDERAL CHARTER - 1.9% Ahmanson (H.F.) & Co. 110,600 1,949,325 00867710 Haven Bancorp, Inc. (a) 17,600 211,200 41935210 2,160,525 SAVINGS BANKS, NO FEDERAL CHARTER - 0.5% Bankatlantic Federal Savings Bank 21,700 292,950 06590310 Lakeview Savings Bank 24,300 315,900 51234610 608,850 TOTAL SAVINGS & LOANS 6,835,225 SECURITIES INDUSTRY - 4.4% INVESTMENT MANAGERS - 1.4% Invesco Mim PLC (a) 320,000 1,003,245 46199C92 Mackenzie Financial Corporation 70,000 583,549 55453110 1,586,794 SECURITY & COMMODITY BROKERS - 1.8% Midland Walwyn Inc. (a) 37,200 379,029 59780110 Salomon, Inc. 35,400 1,761,150 79549B10 2,140,179 SECURITY BROKERS & DEALERS - 1.2% Paine Webber Group, Inc. 52,500 1,404,375 69562910 TOTAL SECURITIES INDUSTRY 5,131,348 TOTAL COMMON STOCKS (Cost $104,089,400) 116,071,678 CONVERTIBLE BONDS - 0.1% PRINCIPAL AMOUNT CREDIT & OTHER FINANCE - 0.1% FINANCIAL SERVICES - 0.1% Lend Lease Finance International Ltd. gtd. 4 3/4%, 6/1/03 (b) (Cost $100,000) $ 100,000 $ 118,500 526025AA TOTAL INVESTMENT IN SECURITIES - 100% (Cost $104,189,400) $ 116,190,178 LEGEND 1. Non-income producing 2. Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $440,250 or 0.4% of net assets. OTHER INFORMATION CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1, 1993, the fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of February 28, 1993 have been reclassified to reflect an increase in paid in capital of $74,143,155, a decrease in undistributed net investment income of $7,125,591 and a decrease in accumulated net realized gain on investments of $67,017,564. Purchases and sales of securities, other than short-term securities, aggregated $147,511,233 and $246,203,193, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $67,939 for the period (see Note 4 of Notes to Financial Statements). The maximum loan and average daily loan balances during the periods for which loans were outstanding amounted to $10,317,000 and $3,288,183, respectively. The weighted average interest rate paid was 3.7% (see Note 7 of Notes to Financial Statements). Distribution of investments by country, as a percentage of total value of investment in securities, is as follows: United States 83.3% Australia 6.4 Sweden 3.1 Spain 2.9 United Kingdom 1.6 France 1.0 Others (individually less than 1%) 1.7 TOTAL 100.0% INCOME TAX INFORMATION At February 28, 1994, the aggregate cost of investment securities for income tax purposes was $104,190,008. Net unrealized appreciation aggregated $12,000,170, of which $14,401,670 related to appreciated investment securities and $2,401,500 related to depreciated investment securities. The fund hereby designates $14,691,000 as a capital gain dividend for the purpose of the dividend paid deduction. FINANCIAL SERVICES PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994 ASSETS Investment in securities, at value (cost $104,189,400) (Notes 1 and 2) - See accompanying schedule $ 116,190,178 Cash 980 Receivable for investments sold 4,273,638 Receivable for fund shares sold 320,407 Dividends receivable 176,910 Interest receivable 1,174 Redemption fees receivable (Note 1) 448 Other receivables 12,264 TOTAL ASSETS 120,975,999 LIABILITIES Payable for investments purchased $ 71,036 Payable for fund shares redeemed 1,942,107 Accrued management fee 64,751 Notes payable 2,561,000 Other payables and accrued expenses 141,733 TOTAL LIABILITIES 4,780,627 NET ASSETS $ 116,195,372 Net Assets consist of (Note 1): Paid in capital $ 88,744,872 Undistributed net investment income 450,603 Accumulated undistributed net realized gain (loss) on investments 14,999,119 Net unrealized appreciation (depreciation) on investment securities 12,000,778 NET ASSETS, for 2,267,572 shares outstanding $ 116,195,372 NET ASSET VALUE and redemption price per share ($116,195,372 (divided by) 2,267,572 shares) $51.24 Maximum offering price per share (100/97 of $51.24) $52.82
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994 INVESTMENT INCOME $ 3,338,481 Dividends Interest (including security lending fees of $2,973) (Note 6) 308,628 TOTAL INCOME 3,647,109 EXPENSES Management fee (Note 4) $ 1,053,341 Transfer agent (Note 4) 1,550,290 Fees Redemption fees (Note 1) (187,963 ) Accounting and security lending fees (Note 4) 169,723 Non-interested trustees' compensation 1,267 Custodian fees and expenses 43,967 Registration fees 64,199 Audit 20,240 Legal 1,749 Interest (Notes 5 and 7) 23,539 Reports to shareholders 26,518 Miscellaneous 2,379 Total expenses before reductions 2,769,249 Expense reductions (Note 8) (21,297 2,747,952 ) NET INVESTMENT INCOME 899,157 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 30,258,224 Net realized gain (loss) on investment securities Change in net unrealized appreciation (depreciation) on investment securities (19,675,121 ) NET GAIN (LOSS) 10,583,103 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 11,482,260 OTHER INFORMATION $1,313,086 Sales charges paid to FDC (Note 4) Deferred sales charges withheld $50,399 by FDC (Note 4) Exchange fees withheld by FSC $157,823 (Note 4)
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS FEBRUARY 28, ENDED 1994 FEBRUARY 28, 1993 Operations $ 899,157 $ 856,271 Net investment income Net realized gain (loss) on investments 30,258,224 13,054,305 Change in net unrealized appreciation (depreciation) on investments (19,675,121 21,774,498 ) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 11,482,260 35,685,074 Distributions to shareholders (452,372 (1,128,586 From net investment income ) ) From net realized gain (18,241,269 (7,501,140 ) ) TOTAL DISTRIBUTIONS (18,693,641 (8,629,726 ) ) Share transactions 237,223,869 251,884,404 Net proceeds from sales of shares Reinvestment of distributions 18,154,544 8,508,770 Cost of shares redeemed (347,083,133 (164,884,135 ) ) Paid in capital portion of redemption fees (Note 1) 499,434 347,673 Net increase (decrease) in net assets resulting from share transactions (91,205,286 95,856,712 ) TOTAL INCREASE (DECREASE) IN NET ASSETS (98,416,667 122,912,060 ) NET ASSETS Beginning of period 214,612,039 91,699,979 End of period (including undistributed net investment income of $450,603 and $7,125,591, respectively) $ 116,195,372 $ 214,612,039 OTHER INFORMATION Shares Sold 4,310,339 5,234,307 Issued in reinvestment of distributions 361,878 186,274 Redeemed (6,431,527 (3,555,617 ) ) Net increase (decrease) (1,759,310) 1,864,964
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30, FEBRUARY 28, ENDED FEBRUARY 28, SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990 Net asset value, beginning of period $ 53.29 $ 42.42 $ 30.55 $ 28.28 $ 30.64 Income from Investment Operations Net investment income .29 .33 .54 .58 .66 Net realized and unrealized gain (loss) on investments 5.02 14.30 11.35 1.67 (2.53) Total from investment operations 5.31 14.63 11.89 2.25 (1.87) Less Distributions From net investment income (.20) (.51) (.35) (.52) (.33) From net realized gain (7.32) (3.38) - - (.19) Total distributions (7.52) (3.89) (.35) (.52) (.52) Redemption fees added to paid in capital .16 .13 .33 .54 .03 Net asset value, end of period $ 51.24 $ 53.29 $ 42.42 $ 30.55 $ 28.28 TOTAL RETURND,E 10.85% 36.46% 40.31% 10.51% (6.20)% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 116,195 $ 214,612 $ 91,700 $ 35,962 $ 21,087 Ratio of expenses to average net assetsB 1.63% 1.54%A 1.85% 2.49% 2.22% Ratio of expenses to average net assets before expense 1.64% 1.54%A 1.85% 2.49% 2.22% reductionsB Ratio of net investment income to average net assets .53% .86%A 1.49% 2.22% 2.03% Portfolio turnover rate 93% 100%A 164% 237% 308%
1 ANNUALIZED 2 SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS. 3 NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH PERIOD. 4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 5 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. HOME FINANCE PORTFOLIO PERFORMANCE AND INVESTMENT SUMMARY PERFORMANCE There are several ways to evaluate a fund's historical performance: total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND HOME FINANCE 19.61% 183.94% 341.82% HOME FINANCE (INCL. 3% SALES CHARGE) 16.02% 175.43% 328.57% S&P 500 8.33% 89.60% 191.37% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years, or since the fund started on December 16, 1985. You can compare these figures to the performance of the S&P 500 - a common proxy for the U.S. stock market. This benchmark includes reinvested dividends and capital gains, if any. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND HOME FINANCE 19.61% 23.21% 19.83% HOME FINANCE (INCL. 3% SALES CHARGE) 16.02% 22.46% 19.39% S&P 500 8.33% 13.65% 13.91% AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of growth in the long run and volatility in the short run. Unlike the broader market, however, some sectors may not have a history of growth in the long run. And, as with all stock funds, the share price and return of a fund that invests in a sector will vary. That means if you sell your shares during a sector downturn, you might lose money. But if you can identify a sector that is about to experience rapid growth you may have the potential for above-average gains. (checkmark) $10,000 OVER LIFE OF FUND 12/16/85 9700.00 10000.00 12/31/85 9884.30 10080.42 01/31/86 10660.30 10136.87 02/28/86 11475.10 10895.11 03/31/86 12018.30 11503.06 04/30/86 11649.70 11373.07 05/31/86 12299.60 11978.12 06/30/86 12241.40 12180.55 07/31/86 11824.30 11499.66 08/31/86 12901.00 12352.93 09/30/86 11222.90 11331.35 10/31/86 11106.50 11985.16 11/30/86 10737.90 12276.40 12/31/86 10640.90 11963.36 01/31/87 11387.80 13574.82 02/28/87 12590.60 14111.03 03/31/87 11950.40 14518.83 04/30/87 10961.00 14389.62 05/31/87 10815.50 14514.81 06/30/87 11164.70 15247.80 07/31/87 11271.40 16020.87 08/31/87 12086.20 16618.45 09/30/87 12086.20 16254.50 10/31/87 9816.40 12753.28 11/30/87 9127.70 11702.41 12/31/87 9347.08 12592.97 01/31/88 10066.09 13123.13 02/29/88 10056.24 13734.67 03/31/88 9819.85 13310.27 04/30/88 9750.91 13458.01 05/31/88 10016.84 13575.09 06/30/88 10469.91 14198.19 07/31/88 10519.16 14144.24 08/31/88 10627.50 13663.33 09/30/88 10991.93 14245.39 10/31/88 10942.68 14641.41 11/30/88 10706.30 14432.04 12/31/88 10973.61 14684.60 01/31/89 11807.80 15759.52 02/28/89 11887.25 15367.10 03/31/89 12165.32 15725.16 04/30/89 12562.55 16541.29 05/31/89 12632.07 17211.21 06/30/89 12910.01 17113.11 07/31/89 13994.13 18658.42 08/31/89 14421.81 19024.13 09/30/89 14620.74 18946.13 10/31/89 15098.15 18506.58 11/30/89 15505.94 18884.12 12/31/89 15125.06 19337.33 01/31/90 13841.23 18039.80 02/28/90 14232.40 18272.51 03/31/90 14162.19 18756.73 04/30/90 13670.72 18287.82 05/31/90 14924.46 20070.88 06/30/90 14964.58 19934.40 07/31/90 14743.92 19870.61 08/31/90 13209.35 18074.30 09/30/90 12065.94 17194.08 10/31/90 11584.51 17120.15 11/30/90 13119.08 18226.11 12/31/90 13640.63 18734.62 01/31/91 14372.81 19551.45 02/28/91 15827.15 20949.38 03/31/91 16870.25 21456.35 04/30/91 16779.99 21507.85 05/31/91 17201.24 22436.99 06/30/91 16131.96 21409.37 07/31/91 16730.94 22407.05 08/31/91 16629.42 22938.10 09/30/91 16791.86 22555.03 10/31/91 17299.47 22857.27 11/30/91 17147.19 21936.12 12/31/91 18644.07 24445.61 01/31/92 18623.69 23990.92 02/29/92 19122.91 24302.81 03/31/92 18847.83 23828.90 04/30/92 18368.99 24529.47 05/31/92 18613.51 24649.67 06/30/92 19002.92 24282.39 07/31/92 20079.60 25275.53 08/31/92 19491.31 24757.39 09/30/92 20523.60 25049.52 10/31/92 21400.48 25137.20 11/30/92 22133.07 25994.38 12/31/92 22839.21 26314.11 01/31/93 23794.12 26535.14 02/28/93 24243.49 26896.02 03/31/93 25524.19 27463.53 04/30/93 24916.84 26798.91 05/31/93 24275.06 27517.12 06/30/93 24534.02 27596.92 07/31/93 25389.73 27486.53 08/31/93 26684.55 28528.27 09/30/93 26774.63 28308.61 10/31/93 25997.73 28894.59 11/30/93 24410.17 28620.10 12/31/93 24706.65 28966.40 01/31/94 25039.69 29951.26 02/28/94 23941.89 29136.58 Let's say you invested $10,000 in Fidelity Select Home Finance Portfolio on December 16, 1985, when the fund started, and paid a 3% sales charge. By February 28, 1994, your investment would have grown to $42,857 - a 328.57% increase. That compares to $10,000 invested in the S&P 500, which would have grown to $29,137 over the same period - a 191.37% increase. INVESTMENT SUMMARY TOP TEN STOCKS AS OF FEBRUARY 28, 1994 % OF FUND'S INVESTMENTS Crossland Federal Savings Bank (Brooklyn, NY) 5.5 Citicorp 5.2 FirstFed Michigan Corp. 3.7 North Side Savings Bank (Bronx, NY) 3.4 Coast Savings Financial, Inc. 3.1 Fidelity FSB (Garden City, NY) 2.9 Ahmanson (H.F.) & Co. 2.7 Standard Federal Bank 2.3 Dime Savings Bank of New York, FSB 2.2 Bay View Capital, Inc. 2.2 TOP INDUSTRIES AS OF FEBRUARY 28, 1994 Row: 1, Col: 1, Value: 30.1 Row: 1, Col: 2, Value: 3.4 Row: 1, Col: 3, Value: 4.8 Row: 1, Col: 4, Value: 10.1 Row: 1, Col: 5, Value: 21.9 Row: 1, Col: 6, Value: 29.7 Savings Banks & Savings & Loans 29.7% Savings Banks, Federal Charter 21.9% National Commercial Banks 10.1% Savings Banks, no Federal Charter 4.8% State Banks Federal Reserve 3.4% All Others 30.1%* * INCLUDES SHORT-TERM INVESTMENTS HOME FINANCE PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW David Ellison, Portfolio Manager of Fidelity Select Home Finance Portfolio Q. DAVID, HOW DID THE FUND DO? A. Quite well. For the year ended February 28, 1994, the fund returned 19.61%. That outpaced the S&P 500, which returned 8.33% for the same period. Q. WHAT'S THE STORY BEHIND THOSE NUMBERS? A. Over the past year, it was nearly the best of all possible worlds for home finance companies. First, there was an industry-wide decline in problem loans. Second, there was a fairly large and stable interest rate spread in the difference in the companies' costs of gathering money and the rates at which they lend. Finally, there was a feeling that takeover activity in this sector would heat up. As it turned out, there was only modest activity, but the takeover sentiment was enough to send the stock prices higher. Those factors translated into the third year of increased earnings for home finance companies. Plus the fund invested in some of the top performers in the sector. Q. WHAT ARE SOME EXAMPLES? A. I focused the fund on savings and loans - 56.4% of the fund's total investments at the end of February - that were selling at cheap prices compared to their worth, but had attractive earnings growth potential. One strong performer was New York-based Crossland Savings. The company was attractively priced, its troubled loans continued to decline, and there was a strong management team in place. A number of special situations also helped performance. FirstFed Michigan, the fund's third largest investment at the end of the period, benefited when a large amount of its high-cost debt matured, and was refinanced at a lower cost. Q. SOME OF THE FUND'S LARGEST INVESTMENTS WERE BANKS. WHAT WAS ATTRACTIVE ABOUT THEM? A. Many banks - which were 13.5% of the fund's investments on February 28 - benefited from the interest rate spread. Citicorp - the fund's second-largest investment at the end of the period - was also helped by a reduction in problem loans. Six months ago, Citicorp's stock price was $33; by the end of February it had risen to $41.50. Q. DID ALL OF THE FUND'S INVESTMENTS BENEFIT FROM THESE TRENDS? A. No - there are always some laggards. In this case, California thrifts didn't do as well as I'd expected. The turnaround in the state's economy was slower than I anticipated, and earnings were disappointing. Recently, I've started to pare back the fund's investments in some of those thrifts. In addition, the fund may have done better if it had been fully invested. But when the Federal Reserve raised interest rates in February, I thought it prudent to keep a higher than usual amount in cash, until the uncertainty settled out. What's more, it has become more difficult to find stocks I like at attractive prices. Q. NOW THAT INTEREST RATES HAVE RISEN, WHAT'S AHEAD FOR HOME FINANCE COMPANIES? A. If interest rates continue to rise, banks, savings and loans and thrifts could have the wind in their faces, rather than at their backs as they have over the past year. Rising rates will mean that interest spreads will start to shrink, so companies will have to find other ways to improve earnings. One way is to cut costs. Another is to increase the amount of loans given. If the economy improves, demand for homes, cars, boats and other consumer goods could increase, which could in turn push up loan demand. Q. SO WHAT'S AHEAD FOR THE FUND? A. Given that this is a cyclical industry coming off three very strong years, I think it's more realistic to expect lower returns over the next several months. Over the long-term - maybe by 1995 - I think prospects are brighter. I believe that we'll see more savers in the next ten years than we saw in the previous ten. That means there would be more money flowing into savings and investments. In turn, that could translate into a good supply of money to lend and keep the home finance companies' efforts to increase loans on track. FUND FACTS START DATE: December 16, 1985 SIZE: as of February 28, 1994, over $155 million MANAGER: David Ellison, since December 1985; manager, Fidelity Select Financial Services Portfolio, 1985-1987; Fidelity Select Brokerage and Investment Management Porfolio, 1987- 1990; joined Fidelity in 1985 (checkmark) HOME FINANCE PORTFOLIO INVESTMENTS FEBRUARY 28, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 76.2% SHARES VALUE (NOTE 1) BANKS - 13.5% NATIONAL COMMERCIAL BANKS - 10.1% Banc One Corp. 27,000 $ 918,000 05943810 Bank of Boston Corp. 20,529 479,865 06071610 Citicorp (a) 265,000 10,997,500 17303410 Fidelity FSB (Garden City, NY) (b) 365,100 6,115,425 31633610 Peoples Heritage Financial Group, Inc. (a) 288,825 3,068,766 71114710 21,579,556 STATE BANKS FEDERAL RESERVE - 3.4% Chemical Banking Corp. 60,000 2,235,000 16372210 Guardian Bancorp (a) 35,000 67,813 40132110 Independent Bank Corp. (MA) (a) 176,200 836,950 45383610 Letchworth Independent Bancshares (a) 20,000 435,000 52725110 Letchworth Independent Bancshares (warrants) (a) 20,000 60,000 52725111 T R Financial Corp. (a) 290,400 3,521,100 87263010 7,155,863 TOTAL BANKS 28,735,419 COMPUTER SERVICES & SOFTWARE - 0.0% CAD/CAM/CAE - 0.0% General Automation, Inc. (a) 5,300 4,306 36903210 CONSTRUCTION - 1.6% OPERATIVE BUILDERS - 1.6% Inco Homes (a) 52,500 380,625 45325710 Standard Pacific Corp. 230,000 2,472,500 85375C10 UDC Homes, Inc. 58,800 492,450 90264610 3,345,575 FEDERAL SPONSORED CREDIT - 1.7% FEDERAL & FEDERALLY SPONSORED CREDIT AGENCIES - 1.7% Federal Home Loan Mortgage Corporation 33,300 1,856,475 31340030 Federal National Mortgage Association 20,000 1,662,500 31358610 3,518,975 INSURANCE - 1.0% INSURANCE BROKERS & SERVICES - 1.0% Stewart Information Services Corp. 64,500 2,064,000 86037210 REAL ESTATE - 0.7% SUBDIVIDED REAL ESTATE DEVELOPMENT - 0.7% Castle & Cooke Homes, Inc. 57,900 788,887 14842610 Hovnanian Enterprises, Inc. Class A (a) 8,600 111,800 44248720 Newhall Land & Farming Co. (CA) 37,500 567,188 65142610 1,467,875 REAL ESTATE INVESTMENT TRUSTS - 0.8% Banyan Strategic Land Trust (SBI) 35,400 168,150 06683M10 RFS Hotel Investors, Inc. 90,000 1,575,000 74955J10 1,743,150 SAVINGS & LOANS - 56.4% SAVINGS BANKS & SAVINGS & LOANS - 29.7% Andover Bancorp, Inc. (Del.) (b) 208,300 3,723,362 03425810 Astoria Financial Corp. (a) 75,000 2,212,500 04626510 Bay View Capital, Inc. 225,400 4,677,050 07262L10 Charter One Financial Corp. 217,600 4,052,800 16090310 Coast Savings Financial, Inc. (a) 444,700 6,559,325 19039M10 Collective Bancorp, Inc. 139,000 2,588,875 19390110 Crestmont Financial Corp. (a) 39,300 795,825 22621710 Eastern Bancorp (b) 131,700 2,173,050 27626910 First Essex Bancorp Inc. 225,000 1,631,250 32010310 FirstFed Financial Corp. (a) 47,500 730,313 33790710 SHARES VALUE (NOTE 1) FirstFed Michigan Corp. 358,250 $ 7,926,281 33761R10 Golden West Financial Corp. 70,000 2,896,250 38131710 Great Western Financial Corp. 30,474 521,867 39144210 Grove Bank For Savings (Brighton, MA) 33,800 557,700 39948110 Lawrence Savings Bank 35,000 118,125 52034110 Massbank for Savings 26,500 954,000 57615210 Metropolitan Bancorp 66,000 940,500 59175310 NFS Financial Corp. 70,800 1,150,500 62910410 North Side Savings Bank (Bronx, NY) (a)(b) 374,470 7,208,548 66248810 Pamrapo Bancorp, Inc. (b) 117,900 3,301,200 69773810 Progressive Bancorporation Inc. 9,300 172,050 74331310 SFFed Corp. 6,000 112,500 78413210 Standard Federal Bank 174,600 4,888,800 85338910 TCF Financial Corporation 7,500 240,000 87227510 Webster Financial Corp. (Waterbury, CT) 141,450 2,970,450 94789010 63,103,121 SAVINGS BANKS, FEDERAL CHARTER - 21.9% Ahmanson (H.F.) & Co. 328,800 5,795,100 00867710 Ameribanc Investors Group (SBI) (a) 1,055,000 1,582,500 02362210 Anchor Bancorp Inc. (a) 274,400 3,361,400 03283710 CenFed Financial Corp. (b) 254,250 4,512,937 15131U10 Coral Gables Fedcorp, Inc. 10,000 181,250 21777510 Crossland Federal Savings Bank (Brooklyn, NY) (a) 350,000 11,637,500 22764B10 D&N Financial Corp. (a)(b) 355,000 2,706,875 23286410 Dime Savings Bank of New York, FSB (a) 571,640 4,716,030 25432R10 First Palm Beach Bancorp, Inc. (a) 80,000 1,200,000 33589B10 Hamilton Bancorp, Inc. (a) 127,795 2,651,746 40700810 Haven Bancorp, Inc. (a) 175,800 2,109,600 41935210 Main Street Community Bancorp (a) 40,000 505,000 56035010 Metropolitan Financial Corp. 45,000 714,375 59190810 Palfed, Inc. (a) 60,000 420,000 69637010 Peterborough Savings Bank (b) 87,404 874,040 71603K10 Roosevelt Financial Group, Inc. 67,000 3,048,500 77649310 Sunrise Bancorp 23,500 376,000 86768H10 Westerfed Financial Corp. (a) 20,000 265,000 95755010 46,657,853 SAVINGS BANKS, NO FEDERAL CHARTER - 4.8% Bankatlantic Federal Savings Bank 87,300 1,178,550 06590310 Dime Financial Corp. (a) 162,500 1,096,875 25432H10 Farmers & Mechanics Bank 17,100 205,200 30775910 GP Financial Corp. (a) 77,300 1,555,663 36193510 Great Bay Bancshares, Inc. 40,000 520,000 39013810 Lakeview Savings Bank 78,600 1,021,800 51234610 People Bank (Bridgeport, CT) 158,200 1,759,975 71019810 Somerset Savings Bank 765,000 1,147,500 83506120 Sterling Financial Corp. (a) 125,000 1,687,500 85931910 10,173,063 TOTAL SAVINGS & LOANS 119,934,037 SECURITIES INDUSTRY - 0.5% INVESTMENT MANAGERS - 0.5% Hyperion 1999 Term Trust, Inc. 165,000 1,155,000 44891310 TOTAL COMMON STOCKS (Cost $143,349,525) 161,968,337 REPURCHASE AGREEMENTS - 23.8% MATURITY AMOUNT Investments in repurchase agreements, (U.S. Treasury obligations), in a joint trading account, at 3.47% dated 2/28/94 due 3/1/94 $ 50,610,878 $ 50,606,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $193,955,525) $ 212,574,337 LEGEND 1. Non-income producing 2. A company in which the fund has ownership of at least 5% of the voting securities is an affiliated company. A summary of the transactions during the period in which the issuers were affiliates is as follows: PURCHASES SALES DIVIDEND MARKET AFFILIATE COST COST INCOME VALUE Andover Bancorp, Inc. $ - $ - $ - $ 3,723,362 CenFed Financial Corp. 507,813 36,667 37,888 4,512,937 Central Co-operative Bank of Somerville (MA) (a) - 357,428 - - Central Pennsylvania Financial Corp. 257,050 780,450 53,977 - Community Bankshares, Inc. (NH) 52,500 306,250 - - D&N Financial Corp. (a) 1,689,500 1,094,721 - 2,706,875 Dime Financial Corp. (a) 515,000 713,438 - - Eastern Bancorp, Inc. 511,225 456,403 9,669 2,173,050 Family Bancorp, Inc. (a) - 824,350 - - Fidelity FSB (Garden City, NY) 1,183,005 - - 6,115,425 Great Bay Bankshares, Inc. 914,063 1,196,976 27,218 - Grove Bank for Savings, (Brighton, MA) 207,500 577,500 40,188 - Lexington Savings Bank (MA) 163,750 619,793 52,290 - Medford Savings Bank (MA) - 690,625 27,750 - MidConn Bank 133,250 261,775 - - North Side Savings Bank (Bronx, NY) (a) 2,985,755 70,542 - 7,208,548 Norwich Financial Corp. (a) - 430,750 - - Pamrapo Bancorp, Inc. 435,000 638,951 79,628 3,301,200 Peterborough Savings Bank 431,825 259,767 - 874,040 Quincy Savings Bank (a) - 149,625 - - Regional Bancorp, Inc. 1,093,475 657,552 - - Sandwich Co-operative Bank - 96,550 - - Somerset Savings Bank - 301,875 - - Village Financial Services Ltd. - 564,800 - - TOTALS $ 11,080,711 $ 11,086,788 $ 328,608 $ 30,615,437 OTHER INFORMATION CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1, 1993, the fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of February 28, 1993 have been reclassified to reflect an increase in paid in capital of $5,728,746, a decrease in undistributed net investment income of $154,576 and a decrease in accumulated net realized gain on investments of $5,574,170. Purchases and sales of securities, other than short-term securities, aggregated $184,019,050 and $316,305,013, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $145,280 for the period (see Note 4 of Notes to Financial Statements). The maximum loan and average daily loan balances during the periods for which loans were outstanding amounted to $11,576,000 and $4,157,382, respectively. The weighted average interest rate paid was 3.7% (see Note 7 of Notes to Financial Statements). INCOME TAX INFORMATION At February 28, 1994, the aggregate cost of investment securities for income tax purposes was $194,101,616. Net unrealized appreciation aggregated $18,472,721, of which $22,658,062 related to appreciated investment securities and $4,185,341 related to depreciated investment securities. The fund hereby designates $21,775,000 as a capital gain dividend for the purpose of the dividend paid deduction. HOME FINANCE PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $50,606,000) (cost $193,955,525) $ 212,574,337 (Notes 1 and 2) - See accompanying schedule Receivable for investments sold 11,006,802 Receivable for fund shares sold 970,769 Dividends receivable 242,546 Redemption fees receivable (Note 1) 41,709 Other receivables 131,775 TOTAL ASSETS 224,967,938 LIABILITIES Payable to custodian bank $ 3,626 Payable for investments purchased 3,160,014 Payable for fund shares redeemed 65,933,038 Accrued management fee 118,969 Other payables and accrued expenses 189,014 TOTAL LIABILITIES 69,404,661 NET ASSETS $ 155,563,277 Net Assets consist of (Note 1): Paid in capital $ 97,515,705 Undistributed net investment income 213,666 Accumulated undistributed net realized gain (loss) on investments 39,215,094 Net unrealized appreciation (depreciation) on investment securities 18,618,812 NET ASSETS, for 6,214,578 shares outstanding $ 155,563,277 NET ASSET VALUE and redemption price per share ($155,563,277 (divided by) 6,214,578 shares) $25.03 Maximum offering price per share (100/97 of $25.03) $25.80
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994 INVESTMENT INCOME $ 2,859,680 Dividends (inclulding $328,608 received from affiliated issuers) Interest 925,720 TOTAL INCOME 3,785,400 EXPENSES Management fee (Note 4) $ 1,403,951 Transfer agent (Note 4) 2,042,535 Fees Redemption fees (Note 1) (352,584 ) Accounting fees and expenses 225,185 (Note 4) Non-interested trustees' compensation 1,687 Custodian fees and expenses 30,577 Registration fees 114,291 Audit 24,911 Legal 2,241 Interest (Note 7) 23,605 Reports to shareholders 26,701 Miscellaneous 6,567 Total expenses before reductions 3,549,667 Expense reductions (Note 8) (10,686 3,538,981 ) NET INVESTMENT INCOME 246,419 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 47,403,270 Net realized gain (loss) on investment securities (including realized gain (loss) of $6,137,787 on sales of investments in affiliated issuers) Change in net unrealized appreciation (depreciation) on investment securities (23,478,057 ) NET GAIN (LOSS) 23,925,213 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 24,171,632 OTHER INFORMATION $2,256,099 Sales charges paid to FDC (Note 4) Deferred sales charges withheld $27,550 by FDC (Note 4) Exchange fees withheld by FSC $306,060 (Note 4)
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS FEBRUARY 28, ENDED 1994 FEBRUARY 28, 1993 Operations $ 246,419 $ 702,773 Net investment income Net realized gain (loss) on investments 47,403,270 7,416,659 Change in net unrealized appreciation (depreciation) on investments (23,478,057 38,750,533 ) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 24,171,632 46,869,965 Distributions to shareholders (144,027 (66,486 From net investment income ) ) From net realized gain (9,550,960 (1,912,821 ) ) TOTAL DISTRIBUTIONS (9,694,987 (1,979,307 ) ) Share transactions 480,076,731 662,426,482 Net proceeds from sales of shares Reinvestment of distributions 9,482,227 1,953,201 Cost of shares redeemed (687,125,356 (422,766,634 ) ) Paid in capital portion of redemption fees (Note 1) 750,443 1,494,043 Net increase (decrease) in net assets resulting from share transactions (196,815,955 243,107,092 ) TOTAL INCREASE (DECREASE) IN NET ASSETS (182,339,310 287,997,750 ) NET ASSETS Beginning of period 337,902,587 49,904,837 End of period (including undistributed net investment income of $213,666 and $790,863, respectively)$ 155,563,277 $ 337,902,587 OTHER INFORMATION Shares Sold 19,770,402 34,847,456 Issued in reinvestment of distributions 403,141 103,783 Redeemed (29,193,857 (22,960,723 ) ) Net increase (decrease) (9,020,314) 11,990,516
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30, FEBRUARY 28, ENDED FEBRUARY 28, SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990 Net asset value, beginning of period $ 22.18 $ 15.38 $ 10.84 $ 8.98 $ 10.88 Income from Investment Operations Net investment income (loss) .03 .09 .05 .16 .09 Net realized and unrealized gain (loss) on investments 4.15 6.80 4.40 1.69 (1.47) Total from investment operations 4.18 6.89 4.45 1.85 (1.38) Less Distributions From net investment income (.01) (.01) (.14) (.14) (.04) From net realized gain (1.40) (.28) - - (.49) Total distributions (1.41) (.29) (.14) (.14) (.53) Redemption fees added to paid in capital .08 .20 .23 .15 .01 Net asset value, end of period $ 25.03 $ 22.18 $ 15.38 $ 10.84 $ 8.98 TOTAL RETURND, E 19.61% 46.43% 43.62% 22.88% (13.04)% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 155,563 $ 337,903 $ 49,405 $ 8,782 $ 5,432 Ratio of expenses to average net assetsB 1.58% 1.55%A 2.08% 2.50% 2.53% Ratio of expenses to average net assets before expense 1.58% 1.55%A 2.08% 2.82% 2.92% reductionsB Ratio of net investment income to average net assets .11% .61%A .40% 1.78% .83% Portfolio turnover rate 95% 61%A 134% 159% 282%
1 ANNUALIZED 2 SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS. 3 NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH PERIOD. 4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 5 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. INSURANCE PORTFOLIO PERFORMANCE AND INVESTMENT SUMMARY PERFORMANCE There are several ways to evaluate a fund's historical performance: total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND INSURANCE -1.24% 101.41% 146.82% INSURANCE (INCL. 3% SALES CHARGE) -4.21% 95.37% 139.42% S&P 500 8.33% 89.60% 191.37% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years, or since the fund started on December 16, 1985. You can compare these figures to the performance of the S&P 500 - a common proxy for the U.S. stock market. This benchmark includes reinvested dividends and capital gains, if any. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND INSURANCE -1.24% 15.03% 11.63% INSURANCE (INCL. 3% SALES CHARGE) -4.21% 14.33% 11.22% S&P 500 8.33% 13.65% 13.91% AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of growth in the long run and volatility in the short run. Unlike the broader market, however, some sectors may not have a history of growth in the long run. And, as with all stock funds, the share price and return of a fund that invests in a sector will vary. That means if you sell your shares during a sector downturn, you might lose money. But if you can identify a sector that is about to experience rapid growth you may have the potential for above-average gains. (checkmark) $10,000 OVER LIFE OF FUND $29,137 $23,942 '94 Let's say you invested $10,000 in Fidelity Select Insurance Portfolio on December 16, 1985, when the fund started, and paid a 3% sales charge. By February 28, 1994, your investment would have grown to $23,942 - a 139.42% increase. That compares to $10,000 invested in the S&P 500, which would have grown to $29,137 over the same period - a 191.37% increase. INVESTMENT SUMMARY TOP TEN STOCKS AS OF FEBRUARY 28, 1994 % OF FUND'S INVESTMENTS Aetna Life & Casualty Co. 7.9 General Re Corp. 7.5 St. Paul Companies, Inc. (The) 7.2 Allied Group, Inc. 7.0 Allstate Corp. 6.4 Berkley (W.R.) Corp. 5.9 ACE Ltd. 5.3 CIGNA Corp. 4.3 Gryphon Holdings, Inc. 4.0 Travelers, Inc. (The) 3.7 TOP INDUSTRIES AS OF FEBRUARY 28, 1994 Row: 1, Col: 1, Value: 3.1 Row: 1, Col: 2, Value: 1.4 Row: 1, Col: 3, Value: 4.3 Row: 1, Col: 4, Value: 4.8 Row: 1, Col: 5, Value: 15.0 Row: 1, Col: 6, Value: 71.40000000000001 Property-Casualty & Reinsurance 71.4% Multi-Line Insurance 15.0% Insurance Carriers 4.8% Life Insurance 4.3% Holding Company Offices, NEC 1.4% All Others 3.1%* * INCLUDES SHORT-TERM INVESTMENTS INSURANCE PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW Robert Chow, Portfolio Manager of Fidelity Select Insurance Portfolio Q. HOW DID THE FUND DO, BOB? A. For the year ended February 28, 1994, the fund had a total return of - -1.24%. That lagged the S&P 500, which returned 8.33% for the same period. Q. WHAT ACCOUNTS FOR THE NEGATIVE PERFORMANCE? A. Insurance stocks had a tough year, and so did the fund. In early 1993, the group had risen to very high levels. At that time, many investors assumed that the losses stemming from 1992's Hurricane Andrew would allow the insurance companies to finally raise premium prices. They also expected falling interest rates to help the insurance companies' investment pools, made up primarily of bonds. That's because historically when interest rates fall, bond prices rise. But by the fall of 1993, there was a realization that insurance premiums would stay at their current levels. In addition, interest rates had begun to rise. So insurance stocks started to fall, and have continued to since. Q. HOW DID THESE FACTORS AFFECT YOUR STRATEGY? A. Unfortunately, there was little I could do to protect the fund from the decline. By late summer, I had anticipated that the insurance group would eventually fall, so I focused on stocks that hadn't been bid up to extremely high levels. That was because I felt that once they did fall, the more reasonably-priced stocks would fall less. But even that strategy couldn't insulate the fund from a broad-based downdraft in the industry. Many insurance stocks had fallen to half their summer peak, and the stocks hit the least were off by about 20%. Q. WASN'T KEEPING PART OF THE FUND IN CASH AN OPTION? A. Yes, but not one I was willing to use. While it was tempting not to invest and just hold some of the fund in cash, in my view that's too big of a timing risk. Huge losses stemming from a natural disaster might mean that the insurance industry could finally pass higher premiums on to their customers. But, obviously, there's no way to predict when that might occur. Q. WHAT WERE SOME EXAMPLES OF THE STOCKS YOU CHOSE? A. I mainly focused on property and casualty insurers, since I felt that stock prices of many life insurers were too high. Aetna - the fund's largest investment at the end of February - is going through a restructuring now, which should help earnings in the future. General Re's stock price is down to historically low levels, and could be helped by an increase in its European operation. Allied Group, a small midwestern insurer, was also attractive because its stock was selling at a low price relative to earnings, and it looked like a good value. I also invested in St. Paul Companies. Although its main business is medical malpractice, it has a 74% interest in John Nuveen, a financial services firm. While I still mostly favor these companies, they all suffered in the second half of the period. Q. DO YOU SEE A TURNAROUND FOR THE GROUP? A. Because they're at such low levels, I expect insurance stocks to do a little better over the next six months. But over the long term, I'm still not that optimistic yet. The industry suffers from over-capacity - too many insurers providing services to too few individuals and businesses. It's going to be very difficult for insurers over the next couple of years. Q. WHAT WOULD HAVE TO OCCUR FOR YOU TO BECOME MORE POSITIVE ON INSURANCE STOCKS? A. To turn the corner, insurers need to be able to raise premium prices. But unless we see a huge loss coming from their bond investments, or losses stemming from payouts on natural disasters, there's probably little room for insurance premiums to rise. There's such a large capacity of insurers that even fairly large losses to the industry can't be passed on in the form of higher premium prices. For instance, the recent Los Angeles earthquake, which is expected to cost the insurance industry $4 or $5 billion, wasn't a large enough loss to boost premiums. My estimation is that the industry would have to experience a loss in the $50 billion range for the group to turn. Until that happens, I'll continue to focus on finding companies that are selling at low prices relative to earnings, making them good values. FUND FACTS START DATE: December 16, 1985 SIZE: as of February 28, 1994, over $18 million MANAGER: Robert Chow, since June 1993; manager, Fidelity Select Paper and Forest Products, 1990-1993; Fidelity Select Computers, May 1991-June 1992; Fidelity Select Technology Portfolio, June 1991-June 1992; assistant, Fidelity Equity Income, since December 1993; Fidelity Growth & Income, June 1992-January 1993; equity analyst, financial services industry, February 1994 to present; joined Fidelity in 1989 (checkmark) INSURANCE PORTFOLIO INVESTMENTS FEBRUARY 28, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 97.1% SHARES VALUE (NOTE 1) CREDIT & OTHER FINANCE - 1.5% HOLDING COMPANY OFFICES, NEC - 1.4% Partner Re Holdings (a) 1,000 $ 20,625 70299522 Sphere Drake Holdings Ltd. 15,000 240,000 85099222 260,625 MORTGAGE BANKERS - 0.1% Triad Guaranty, Inc. (a) 1,000 16,625 89592510 TOTAL CREDIT & OTHER FINANCE 277,250 INSURANCE - 95.6% INSURANCE BROKERS & SERVICES - 0.1% Hilb, Rogal & Hamilton Co. 1,000 11,500 43129410 INSURANCE CARRIERS - 4.8% AFLAC, Inc. 13,000 385,125 00105510 Blanch (E.W.) Holdings, Inc. 500 8,375 09321010 Capital Guaranty Corp. (a) 15,000 273,750 14018K10 MBIA, Inc. 3,000 181,500 55262C10 MGIC Investment Corp. 1,000 31,000 55284810 879,750 LIFE INSURANCE - 4.3% American General Corp. 1,000 26,875 02635110 Aon Corp. 1,000 49,875 03738910 Capital Holding Corp. 10,000 345,000 14018610 Torchmark Corp. 1,000 43,000 89102710 UNUM Corp. 5,000 268,750 90319210 USLIFE Corp. 1,000 39,000 91731810 772,500 MULTI-LINE INSURANCE - 15.0% Aetna Life & Casualty Co. 24,000 1,440,000 00814010 CIGNA Corp. 12,000 786,000 12550910 Lincoln National Corp. 10,000 407,500 53418710 Reliance Group Holdings, Inc. (warrants) (a) 4,035 8,534 75946411 US Facilities Corp. (a) 10,000 95,000 91182210 2,737,034 PROPERTY-CASUALTY & REINSURANCE - 71.4% ACE Ltd. 35,000 966,875 00499G92 Allied Group, Inc. 50,000 1,275,000 01922010 Allmerica Property & Casualty Insurance Co. 20,000 372,500 01975T10 Allstate Corp. 45,000 1,170,000 02000210 Berkley (W.R.) Corp. 30,000 1,072,500 08442310 Capital RE Corp. 1,000 20,000 14043210 Capsure Holdings Corp. (a) 11,000 154,000 14067310 Chubb Corp. (The) 7,000 515,375 17123210 Cincinnati Financial Corporation 1,000 54,500 17206210 Citizens Corp. 1,000 19,000 17453310 Commerce Group, Inc. 15,000 247,500 20064110 Continental Corp. 11,000 277,750 21132710 Exel Ltd. 1,000 43,125 30161610 Fremont General Corp. 1,000 24,375 35728810 General Re Corp. 13,000 1,373,125 37056310 Gryphon Holdings, Inc. (a) 50,000 737,500 40051510 Harleysville Group Inc. 1,000 27,000 41282410 Home State Holdings, Inc. 2,000 35,500 43736810 Horace Mann Educators Corp. 1,000 23,875 44032710 Loews Corp. 1,000 95,000 54042410 Mercury General Corp. 1,000 28,875 58940010 Mid Ocean Ltd. (a) 10,000 260,000 59599D23 Mutual Assurance, Inc. (a) 9,000 204,750 62823T10 SHARES VALUE (NOTE 1) NAC Re Corp. 13,100 $ 389,725 62890710 National Re Corp. 1,000 28,625 63734020 Old Republic International Corp. 14,000 332,500 68022310 Orion Capital Corp. 1,000 32,500 68626810 Phoenix Re Corp. 1,000 25,000 71912310 Progressive Corp. (Ohio) 1,000 33,750 74331510 Re Capital Corp. 20,000 285,000 75490410 SAFECO Corp. 5,000 286,875 78642910 Selective Insurance Group, Inc. 10,000 292,500 81630010 St. Paul Companies, Inc. (The) 15,700 1,305,063 79286010 Travelers, Inc. (The) 18,000 670,500 89419010 Trenwick Group, Inc. 8,500 282,625 89529010 USF&G Corp. 1,000 14,250 90329010 20th Century Industries 1,000 26,000 90127220 13,003,038 TOTAL INSURANCE 17,403,822 TOTAL COMMON STOCKS (Cost $18,068,418) 17,681,072 CONVERTIBLE PREFERRED STOCKS - 0.3% INSURANCE - 0.3% LIFE INSURANCE - 0.3% Conseco, Inc., Series D, $3.25 (Cost $50,005) 1,000 54,500 20846430 REPURCHASE AGREEMENTS - 2.6% MATURITY AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account, at 3.47% dated 2/28/94 due 3/1/94 $ 478,046 478,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $18,596,423) $ 18,213,572 LEGEND 1. Non-income producing OTHER INFORMATION CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1, 1993, the fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of February 28, 1993 have been restated to reflect a decrease in paid in capital of $136,123, a decrease in accumulated net investment loss of $31,925 and an increase in accumulated net realized gain on investments of $104,198. Purchases and sales of securities, other than short-term securities, aggregated $20,804,072 and $28,064,387, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $18,400 for the period (see Note 4 of Notes to Financial Statements). The maximum loan and average daily loan balances during the periods for which loans were outstanding amounted to $1,493,000 and $1,149,600, respectively. The weighted average interest rate paid was 3.8% (see Note 7 of Notes to Financial Statements). INCOME TAX INFORMATION At February 28, 1994, the aggregate cost of investment securities for income tax purposes was $18,597,622. Net unrealized depreciation aggregated $384,050, of which $692,636 related to appreciated investment securities and $1,076,686 related to depreciated investment securities. The fund hereby designates $451,000 as a capital gain dividend for the purpose of the dividend paid deduction. On October 26, 1990, the fund acquired substantially all of the assets of Life Insurance Portfolio in a tax-free exchange for shares of Insurance Portfolio; Life Insurance Portfolio has a capital loss carryover of approximately $101,000 is currently available to offset future realized capital gains in Insurance Portfolio, to the extent provided by regulations. INSURANCE PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $478,000) (cost $18,596,423) (Notes $ 18,213,572 1 and 2) - See accompanying schedule Cash 17 Receivable for fund shares sold 358,257 Dividends receivable 13,258 Redemption fees receivable (Note 1) 67 Other receivables 2,749 TOTAL ASSETS 18,587,920 LIABILITIES Payable for fund shares redeemed $ 137,029 Accrued management fee 9,579 Other payables and accrued expenses 22,585 TOTAL LIABILITIES 169,193 NET ASSETS $ 18,418,727 Net Assets consist of (Note 1): Paid in capital $ 17,906,677 Accumulated undistributed net realized gain (loss) on investments 894,901 Net unrealized appreciation (depreciation) on investment securities (382,851 ) NET ASSETS, for 949,145 shares outstanding $ 18,418,727 NET ASSET VALUE and redemption price per share ($18,418,727 (divided by) 949,145 shares) $19.41 Maximum offering price per share (100/97 of $19.41) $20.01
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994 INVESTMENT INCOME $ 361,462 Dividends Interest 64,820 TOTAL INCOME 426,282 EXPENSES Management fee (Note 4) $ 140,010 Transfer agent (Note 4) 231,450 Fees Redemption fees (Note 1) (27,638 ) Accounting fees and expenses 45,505 (Note 4) Non-interested trustees' compensation 170 Custodian fees and expenses 12,842 Registration fees 20,817 Audit 6,005 Legal 239 Interest (Note 7) 1,209 Reports to shareholders 2,563 Total expenses before reductions 433,172 Expense reductions (Note 8) (1,985 431,187 ) NET INVESTMENT INCOME (LOSS) (4,905 ) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 2,620,140 Net realized gain (loss) on investment securities Change in net unrealized appreciation (depreciation) on investment securities (2,713,783 ) NET GAIN (LOSS) (93,643 ) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (98,548 ) OTHER INFORMATION $228,651 Sales charges paid to FDC (Note 4) Deferred sales charges withheld $1,677 by FDC (Note 4) Exchange fees withheld by FSC $22,440 (Note 4)
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS FEBRUARY 28, ENDED 1994 FEBRUARY 28, 1993 Operations $ (4,905 $ (26,582 Net investment income (loss) ) ) Net realized gain (loss) on investments 2,620,140 629,240 Change in net unrealized appreciation (depreciation) on investments (2,713,783 2,149,155 ) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (98,548 2,751,813 ) Distributions to shareholders (8,586 (4,247 From net investment income ) ) From net realized gain (1,719,115 (475,698 ) ) TOTAL DISTRIBUTIONS (1,727,701 (479,945 ) ) Share transactions 31,795,113 62,793,619 Net proceeds from sales of shares Reinvestment of distributions 1,707,519 471,898 Cost of shares redeemed (39,665,244 (41,876,384 ) ) Paid in capital portion of redemption fees (Note 1) 40,196 133,144 Net increase (decrease) in net assets resulting from share transactions (6,122,416 21,522,277 ) TOTAL INCREASE (DECREASE) IN NET ASSETS (7,948,665 23,794,145 ) NET ASSETS Beginning of period 26,367,392 2,573,247 End of period (including accumulated net investment loss of $0 and $31,925, respectively) $ 18,418,727 $ 26,367,392 OTHER INFORMATION Shares Sold 1,431,358 3,176,231 Issued in reinvestment of distributions 84,550 25,719 Redeemed (1,788,708 (2,122,731 ) ) Net increase (decrease) (272,800) 1,079,219
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30, FEBRUARY 28, ENDED FEBRUARY 28, SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990 Net asset value, beginning of period $ 21.58 $ 18.03 $ 16.73 $ 13.63 $ 12.65 Income from Investment Operations Net investment income (loss) - (.04) .04 .23 .17 Net realized and unrealized gain (loss) on investments (.24) 5.12 1.48 2.83 .93 Total from investment operations (.24) 5.08 1.52 3.06 1.10 Less Distributions From net investment income (.01) - (.26) - (.15) In excess of net investment income - (.03) - - - From net realized gain (1.96) (1.71) - - - Total distributions (1.97) (1.74) (.26) - (.15) Redemption fees added to paid in capital .04 .21 .04 .04 .03 Net asset value, end of period $ 19.41 $ 21.58 $ 18.03 $ 16.73 $ 13.63 TOTAL RETURND, E (1.24)% 31.98% 9.47% 22.74% 8.82% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 18,419 $ 26,367 $ 2,573 $ 2,176 $ 2,240 Ratio of expenses to average net assetsB 1.93% 2.49%A 2.47% 2.49% 2.50% Ratio of expenses to average net assets before expense 1.93% 2.52%A 2.71% 2.73% 2.97% reductionsB Ratio of net investment income (loss) to average net assets(.02)% (.26)% .22% 1.58% 1.15% A Portfolio turnover rate 101% 81%A 112% 98% 158%
1 ANNUALIZED 2 SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS. 3 NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH PERIOD. 4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 5 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. REGIONAL BANKS PORTFOLIO PERFORMANCE AND INVESTMENT SUMMARY PERFORMANCE There are several ways to evaluate a fund's historical performance: total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND REGIONAL BANKS 6.46% 162.10% 194.44% REGIONAL BANKS (INCL. 3% SALES CHARGE) 3.27% 154.23% 185.61% S&P 500 8.33% 89.60% 140.42% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years, or since the fund started on June 30, 1986. You can compare these figures to the performance of the S&P 500 - a common proxy for the U.S. stock market. This benchmark includes reinvested dividends and capital gains, if any. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND REGIONAL BANKS 6.46% 21.25% 15.11% REGIONAL BANKS (INCL. 3% SALES CHARGE) 3.27% 20.52% 14.65% S&P 500 8.33% 13.65% 12.11% AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of growth in the long run and volatility in the short run. Unlike the broader market, however, some sectors may not have a history of growth in the long run. And, as with all stock funds, the share price and return of a fund that invests in a sector will vary. That means if you sell your shares during a sector downturn, you might lose money. But if you can identify a sector that is about to experience rapid growth you may have the potential for above-average gains. (checkmark) $10,000 OVER LIFE OF FUND Select Regional Banks (507) S&P 500 06/30/86 9700.00 10000.00 07/31/86 9040.40 9488.77 08/31/86 9379.90 10192.84 09/30/86 8361.40 9349.89 10/31/86 8574.80 9889.38 11/30/86 8545.70 10129.69 12/31/86 8283.80 9871.39 01/31/87 8894.90 11201.06 02/28/87 9486.60 11643.50 03/31/87 9506.00 11980.00 04/30/87 8933.70 11873.38 05/31/87 8982.20 11976.68 06/30/87 9302.30 12581.50 07/31/87 9302.30 13219.38 08/31/87 9729.10 13712.46 09/30/87 9476.90 13412.16 10/31/87 7924.90 10523.18 11/30/87 7672.70 9656.07 12/31/87 8031.30 10390.90 01/31/88 8599.98 10828.35 02/29/88 8819.46 11332.96 03/31/88 9019.00 10982.77 04/30/88 8919.23 11104.68 05/31/88 9078.86 11201.29 06/30/88 9717.37 11715.43 07/31/88 9767.26 11670.91 08/31/88 9637.56 11274.10 09/30/88 10006.70 11754.37 10/31/88 10126.42 12081.14 11/30/88 9877.00 11908.38 12/31/88 10095.78 12116.78 01/31/89 10736.79 13003.73 02/28/89 10897.04 12679.94 03/31/89 11794.44 12975.38 04/30/89 12104.26 13648.80 05/31/89 13033.71 14201.58 06/30/89 12816.92 14120.63 07/31/89 13957.64 15395.72 08/31/89 14302.01 15697.48 09/30/89 14420.38 15633.12 10/31/89 13085.96 15270.43 11/30/89 13064.44 15581.95 12/31/89 12785.92 15955.91 01/31/90 11633.94 14885.27 02/28/90 12112.98 15077.29 03/31/90 11816.43 15476.84 04/30/90 11143.49 15089.92 05/31/90 11919.08 16561.19 06/30/90 11451.44 16448.57 07/31/90 10755.69 16395.93 08/31/90 9751.98 14913.74 09/30/90 8565.77 14187.44 10/31/90 8314.84 14126.44 11/30/90 9421.21 15039.00 12/31/90 10143.17 15458.59 01/31/91 10816.29 16132.59 02/28/91 11733.12 17286.07 03/31/91 12394.63 17704.39 04/30/91 13230.22 17746.88 05/31/91 14089.03 18513.55 06/30/91 13253.44 17665.63 07/31/91 14355.95 18488.84 08/31/91 15388.84 18927.03 09/30/91 15087.10 18610.95 10/31/91 15713.79 18860.33 11/30/91 14994.25 18100.26 12/31/91 16816.66 20170.93 01/31/92 17868.47 19795.75 02/29/92 19311.64 20053.10 03/31/92 19042.58 19662.06 04/30/92 20155.53 20240.13 05/31/92 21011.66 20339.30 06/30/92 21221.30 20036.25 07/31/92 21245.92 20855.73 08/31/92 20113.46 20428.19 09/30/92 21048.97 20669.24 10/31/92 21947.55 20741.58 11/30/92 23744.72 21448.87 12/31/92 24976.51 21712.69 01/31/93 26017.20 21895.08 02/28/93 26826.62 22192.85 03/31/93 27970.10 22661.12 04/30/93 26530.18 22112.72 05/31/93 26270.84 22705.34 06/30/93 27736.09 22771.19 07/31/93 27813.89 22680.10 08/31/93 28202.90 23539.68 09/30/93 29175.41 23358.43 10/31/93 27606.42 23841.94 11/30/93 26737.64 23615.45 12/31/93 27767.00 23901.19 01/31/94 29386.35 24713.83 02/28/94 28560.80 24041.62 Let's say you invested $10,000 in Fidelity Select Regional Banks Portfolio on June 30, 1986, when the fund started, and paid a 3% sales charge. By February 28, 1994, your investment would have grown to $28,561 - a 185.61% increase. That compares to $10,000 invested in the S&P 500, which would have grown to $24,042 over the same period - a 140.42% increase. INVESTMENT SUMMARY TOP TEN STOCKS AS OF FEBRUARY 28, 1994 % OF FUND'S INVESTMENTS Citicorp 10.2 Bank of New York Co., Inc. 8.1 Signet Banking Corp. 6.9 Bank of Boston Corp. 6.3 NationsBank Corp. 4.7 Banc One Corp. 4.6 First Chicago Corp. 3.7 State Street Boston Corp. 3.7 Boatmen's Bancshares, Inc. 3.7 Crestar Financial Corp. 3.6 TOP REGIONS AS OF FEBRUARY 28, 1994 Row: 1, Col: 1, Value: 17.8 Row: 1, Col: 2, Value: 9.199999999999999 Row: 1, Col: 3, Value: 10.4 Row: 1, Col: 4, Value: 14.6 Row: 1, Col: 5, Value: 22.7 Row: 1, Col: 6, Value: 25.3 Northeast 25.3% Midwest 22.7% Mid-Atlantic 14.6% Multi-Regional 10.4% West 9.2% All Others 17.8% REGIONAL BANKS PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW Stephen Binder, Portfolio Manager of Fidelity Select Regional Banks Portfolio Q. STEVE, HOW DID THE FUND PERFORM? A. The total return for the year ended February 28, 1994 was 6.46%. That lagged the S&P 500, which returned 8.33% for the same period. Like the financial services fund, which I also manage, this fund surrendered much of the modest gain it had achieved during the last six months after long-term interest rates rose in October and the Federal Reserve raised short-term interest rates on February 4. Q. HOW DO RISING INTEREST RATES AFFECT BANK STOCKS? A. Rising interest rates can be hard on all stocks but bank stocks are especially vulnerable, at least in the short run. That's because rate increases often lead to a narrower spread between how much banks pay depositors for the use of their money and how much they earn when they turn around and lend that money to others. The spread widened in 1991 and 1992, and stayed wide in 1993, but lately it has begun to narrow. When that happens, you look for banks that can offset the effect of a narrower spread with growth in other areas. Q. WHAT BANKS HAVE YOU FOUND THAT FIT THAT DESCRIPTION? A. Both of the fund's two largest investments are good examples: Citicorp, because of its growth in emerging markets, its success in cutting costs, and its improving credit quality; and Bank of New York, for its strength in providing services that generate fees and its expanding credit card division. But I'd also mention NationsBank, which wasn't among the fund's top-ten holdings six months ago but had risen to number five by the end of February. NationsBank has aggressively expanded its loan portfolio and purchased profitable non-bank businesses, including a corporate finance operation from US West, a consumer finance operation from Chrysler, and CRT, a trading company. Q. WHAT ABOUT THE OTHER NEWCOMERS TO THE TOP OF THE LIST: BANC ONE AND STATE STREET BOSTON? A. Banc One has been trading at historic lows compared to the broader market and to other bank stocks. Yet it remains a strong company capable of double-digit loan growth, so I took the opportunity to increase the fund's stake in that company. The start of State Street Boston, a leading securities custodian and processor, faltered as expenses grew faster than revenues. I took that as a buying opportunity because I expected to see improvement in State Street's expense ratio sometime during the next year or two, leading in turn to accelerated earnings growth. Q. ANY INTEREST YET IN THE HARD-HIT CALIFORNIA BANKS? A. Not on my part. I see little hope for revenue growth in California, which is why the fund has avoided regional giants BankAmerica and Wells Fargo. I invested in First Interstate, whose stock has risen thanks to aggressive cost-cutting and takeover speculation; but half of their business is outside California. The only regional story I've been playing lately is the mountain states, with West One, First Security and Zions. All are logical takeover candidates, and have been for some time. Meanwhile, they've been posting strong loan growth, thanks to their dominance in the fastest-growing region of the country. That makes them worth owning in their own right. Q. WHAT'S YOUR OUTLOOK FOR THE FUND? A. I'm somewhat optimistic. There's little question that if interest rates continue to rise sharply, bank stocks will suffer. On the other hand, if rates rise gradually, that's not necessarily such a bad thing. Historically, bank stocks have done reasonably well during the early stages of those periods when interest rates were rising - by making up for rising rates with accelerating loan growth. After all, part of what causes interest rates to rise in the first place is an improving economy, which can mean an increased demand for loans. In any case, banks with expanding loan portfolios, rising fee income and good cost control are likely to be less susceptible to interest-rate shocks than their competitors. It's those banks I'll continue to emphasize. FUND FACTS START DATE: June 30, 1986 SIZE: as of February 28, 1994, over $97 million MANAGER: Stephen Binder, since May 1990; manager, Fidelity Select Defense and Aerospace Portfolio, since October 1992; Fidelity Select Financial Services, since May 1990; joined Fidelity in 1989 (checkmark) REGIONAL BANKS PORTFOLIO INVESTMENTS FEBRUARY 28, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 100.0% SHARES VALUE (NOTE 1) BANKS - 98.8% MID-ATLANTIC - 14.6% Commerce Bank, Virginia Beach 12,962 $ 353,215 20056M10 Crestar Financial Corp. 78,779 3,446,581 22609110 HUBCO, Inc. 36,220 824,005 40438210 Integra Financial Corp. 24,080 1,086,610 45810410 Mellon Bank Corp. 18,472 1,025,192 58550910 PNC Financial Corp. 18,000 497,250 69347510 Pamrapo Bancorp, Inc. 7,000 196,000 69773810 Signet Banking Corp. 180,692 6,595,258 82668110 14,024,111 MIDWEST - 22.7% Boatmen's Bancshares, Inc. 124,700 3,553,950 09665010 First Bank System, Inc. 98,201 3,240,633 31927910 First Chicago Corp. 73,500 3,592,313 31945510 Firstier, Inc. 10,000 450,000 33790310 Huntington Bancshares, Inc. 110,709 2,504,791 44615010 Mercantile Bancorporation, Inc. 28,800 1,342,800 58734210 National City Corp. 87,109 2,221,280 63540510 Norwest Corp. 146,496 3,442,656 66938010 Standard Federal Bank 37,400 1,047,200 85338910 Suburban Bancorp Class A 9,500 403,750 86434620 21,799,373 NORTHEAST - 25.3% Bank of Boston Corp. 260,339 6,085,425 06071610 Bank of New York Co., Inc. 143,112 7,781,715 06405710 Banknorth Group, Inc. (Del.) 26,500 523,375 06646L10 BayBanks, Inc. 27,300 1,508,325 07272310 First Empire State Corp. 4,800 651,600 32007610 Independent Bank Corp. (Mass.) (a) 8,500 40,375 45383610 NBB Bancorp Inc. 2,000 75,000 62872P10 North Fork Bancorporation, Inc. (a) 22,800 310,650 65942410 North Side Savings Bank (Bronx NY) (a) 5,460 105,105 66248810 Shawmut National Corp. 157,000 3,336,250 82048410 State Street Boston Corp. 96,000 3,576,000 85747310 Webster Financial Corp. (Waterbury Conn.) 17,350 364,350 94789010 24,358,170 SOUTHEAST - 4.2% BanPonce Corp. 54,801 1,781,164 06670410 Compass Bancshares, Inc. 50,600 1,189,100 20449H10 Deposit Guaranty Corp. 8,600 230,050 24955510 Grenda Sunburst System Corp. 4,500 104,625 39769910 Union Planters Corp. 15,769 378,456 90806810 Whitney Holding Corp. 16,800 378,000 96661210 4,061,395 SOUTHWEST - 1.0% Liberty Bancorporation, Inc. 34,200 923,400 53017510 WEST - 9.2% CenFed Financial Corp. 23,950 425,113 15131U10 First Interstate Bancorp 20,000 1,337,500 32054810 First Security Corp. 67,105 1,946,045 33629410 Silicon Valley Bancshares (a) 64,700 606,563 82706410 West One Bancorp 70,300 1,871,738 95482810 Westamerica Bancorp 9,900 268,538 95709010 Zions Bancorporation 62,300 2,398,550 98970110 8,854,047 SHARES VALUE (NOTE 1) MONEY CENTER - 11.4% Chemical Banking Corp. 30,000 $ 1,117,500 16372210 Citicorp (a) 236,800 9,827,200 17303410 10,944,700 MULTI-REGIONAL - 10.4% Banc One Corp. 129,140 4,390,760 05943810 KeyCorp. 28,650 1,088,700 49326310 NationsBank Corp. 92,653 4,528,415 63858510 10,007,875 TOTAL BANKS 94,973,071 CREDIT & OTHER FINANCE - 1.2% MORTGAGE BANKERS - 0.2% Green Tree Acceptance, Inc. 5,000 230,000 39350510 PERSONAL CREDIT INSTITUTIONS - 1.0% Household International, Inc. 28,512 987,228 44181510 TOTAL CREDIT & OTHER FINANCE 1,217,228 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $88,581,397) $ 96,190,299 LEGEND 1. Non-income producing OTHER INFORMATION CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1, 1993, the fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of February 28, 1993 have been restated to reflect an increase in paid in capital of $5,438,813, a decrease in undistributed net investment income of $656,067 and a decrease in accumulated net realized gain on investments of $4,782,746. Purchases and sales of securities, other than short-term securities, aggregated $139,268,223 and $308,044,405, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $81,725 for the period (see Note 4 of Notes to Financial Statements). The maximum loan and average daily loan balances during the periods for which loans were outstanding amounted to $13,810,000 and $4,001,063, respectively. The weighted average interest rate paid was 3.7% (see Note 7 of Notes to Financial Statements). INCOME TAX INFORMATION At February 28, 1994, the aggregate cost of investment securities for income tax purposes was $88,642,202. Net unrealized appreciation aggregated $7,548,097, of which $9,407,088 related to appreciated investment securities and $1,858,991 related to depreciated investment securities. The fund hereby designates $26,837,000 as a capital gain dividend for the purpose of the dividend paid deduction. REGIONAL BANKS PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994 ASSETS Investment in securities, at value (cost $88,581,397) (Notes 1 and 2) - See accompanying schedule $ 96,190,299 Cash 244 Receivable for investments sold 4,731,338 Receivable for fund shares sold 1,858,876 Dividends receivable 240,146 Redemption fees receivable (Note 1) 476 Other receivables 1,677 TOTAL ASSETS 103,023,056 LIABILITIES Payable for investments purchased $ 1,460,244 Payable for fund shares redeemed 2,456,028 Accrued management fee 52,533 Notes payable 1,523,000 Other payables and accrued expenses 102,386 TOTAL LIABILITIES 5,594,191 NET ASSETS $ 97,428,865 Net Assets consist of (Note 1): Paid in capital $ 61,625,399 Undistributed net investment income 1,064,151 Accumulated undistributed net realized gain (loss) on investments 27,130,413 Net unrealized appreciation (depreciation) on investment securities 7,608,902 NET ASSETS, for 5,414,943 shares outstanding $ 97,428,865 NET ASSET VALUE and redemption price per share ($97,428,865 (divided by) 5,414,943 shares) $17.99 Maximum offering price per share (100/97 of $17.99) $18.55
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994 INVESTMENT INCOME $ 4,582,311 Dividends Interest 418,808 TOTAL INCOME 5,001,119 EXPENSES Management fee (Note 4) $ 1,251,566 Transfer agent (Note 4) 1,912,770 Fees Redemption fees (Note 1) (306,165 ) Accounting fees and expenses 200,635 (Note 4) Non-interested trustees' compensation 1,611 Custodian fees and expenses 20,334 Registration fees 66,492 Audit 30,053 Legal 2,361 Interest (Notes 5 and 7) 47,641 Reports to shareholders 29,633 Miscellaneous 3,530 Total expenses before reductions 3,260,461 Expense reductions (Note 8) (34,824 3,225,637 ) NET INVESTMENT INCOME 1,775,482 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 47,667,500 Net realized gain (loss) on investment securities Change in net unrealized appreciation (depreciation) on investment securities (45,382,083 ) NET GAIN (LOSS) 2,285,417 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 4,060,899 OTHER INFORMATION $1,693,121 Sales charges paid to FDC (Note 4) Deferred sales charges withheld $34,490 by FDC (Note 4) Exchange fees withheld by FSC $260,190 (Note 4)
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS FEBRUARY 28, ENDED 1994 FEBRUARY 28, 1993 Operations $ 1,775,482 $ 1,703,705 Net investment income Net realized gain (loss) on investments 47,667,500 15,783,618 Change in net unrealized appreciation (depreciation) on investments (45,382,083 38,108,263 ) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 4,060,899 55,595,586 Distributions to shareholders (1,037,780 (1,100,824 From net investment income ) ) From net realized gain (23,400,595 (8,039,514 ) ) TOTAL DISTRIBUTIONS (24,438,375 (9,140,338 ) ) Share transactions 278,064,736 438,631,499 Net proceeds from sales of shares Reinvestment of distributions 23,731,357 8,952,700 Cost of shares redeemed (500,062,192 (335,884,574 ) ) Paid in capital portion of redemption fees (Note 1) 552,081 795,774 Net increase (decrease) in net assets resulting from share transactions (197,714,018 112,495,399 ) TOTAL INCREASE (DECREASE) IN NET ASSETS (218,091,494 158,950,647 ) NET ASSETS Beginning of period 315,520,359 156,569,712 End of period (including undistributed net investment income of $1,064,151 and $1,465,712, respectively) $ 97,428,865 $ 315,520,359 OTHER INFORMATION Shares Sold 13,266,789 24,186,813 Issued in reinvestment of distributions 1,338,190 489,280 Redeemed (24,299,694 (19,065,368 ) ) Net increase (decrease) (9,694,715) 5,610,725
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30, FEBRUARY 28, ENDED FEBRUARY 28, SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990 Net asset value, beginning of period $ 20.88 $ 16.48 $ 11.40 $ 9.77 $ 11.33 Income from Investment Operations Net investment income .19 .16 .25 .22 .21 Net realized and unrealized gain (loss) on investments .93 5.09 5.37 1.41 (1.03) Total from investment operations 1.12 5.25 5.62 1.63 (.82) Less Distributions From net investment income (.15) (.11) (.15) (.15) (.11) From net realized gain (3.92) (.81) (.53) - (.65) Total distributions (4.07) (.92) (.68) (.15) (.76) Redemption fees added to paid in capital .06 .07 .14 .15 .02 Net asset value, end of period $ 17.99 $ 20.88 $ 16.48 $ 11.40 $ 9.77 TOTAL RETURND, E 6.46% 33.10% 52.34% 18.73% (7.94)% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 97,429 $ 315,520 $ 156,570 $ 24,212 $ 5,410 Ratio of expenses to average net assetsB 1.60% 1.49%A 1.77% 2.51% 2.55% Ratio of expenses to average net assets before expense 1.62% 1.49%A 1.77% 2.94% 2.72% reductionsB Ratio of net investment income to average net assets .88% 1.06%A 1.80% 2.34% 1.74% Portfolio turnover rate 74% 63%A 89% 110% 411%
1 ANNUALIZED 2 SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS. 3 NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH PERIOD. 4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 5 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. AMERICAN GOLD PORTFOLIO PERFORMANCE AND INVESTMENT SUMMARY PERFORMANCE There are several ways to evaluate a fund's historical performance: total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND AMERICAN GOLD 60.14% 44.88% 129.94% AMERICAN GOLD (INCL. 3% SALES CHARGE) 55.34% 40.54% 123.04% S&P 500 8.33% 89.60% 191.37% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years, or since the fund started on December 16, 1985. You can compare these figures to the performance of the S&P 500 - a common proxy for the U.S. stock market. This benchmark includes reinvested dividends and capital gains, if any. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND AMERICAN GOLD 60.14% 7.70% 10.67% AMERICAN GOLD (INCL. 3% SALES CHARGE) 55.34% 7.04% 10.26% S&P 500 8.33% 13.65% 13.91% AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of growth in the long run and volatility in the short run. Unlike the broader market, however, some sectors may not have a history of growth in the long run. And, as with all stock funds, the share price and return of a fund that invests in a sector will vary. That means if you sell your shares during a sector downturn, you might lose money. But if you can identify a sector that is about to experience rapid growth you may have the potential for above-average gains. (checkmark) $10,000 OVER LIFE OF FUND Select Am Gold S&P500 12/16/85 9700.00 10000.00 12/31/85 9719.40 10080.42 01/31/86 10097.70 10136.87 02/28/86 9622.40 10895.11 03/31/86 10010.40 11503.06 04/30/86 9806.70 11373.07 05/31/86 9855.20 11978.12 06/30/86 9874.60 12180.55 07/31/86 9826.10 11499.66 08/31/86 10941.60 12352.93 09/30/86 11475.10 11331.35 10/31/86 11310.20 11985.16 11/30/86 11494.50 12276.40 12/31/86 11475.10 11963.36 01/31/87 13221.10 13574.82 02/28/87 14588.80 14111.03 03/31/87 16975.00 14518.83 04/30/87 18032.30 14389.62 05/31/87 17072.00 14514.81 06/30/87 16538.50 15247.80 07/31/87 19739.50 16020.87 08/31/87 19409.70 16618.45 09/30/87 20234.20 16254.50 10/31/87 14326.90 12753.28 11/30/87 16616.10 11702.41 12/31/87 16122.98 12592.97 01/31/88 13701.58 13123.13 02/29/88 14065.78 13734.67 03/31/88 15473.34 13310.27 04/30/88 15571.77 13458.01 05/31/88 15473.34 13575.09 06/30/88 15778.47 14198.19 07/31/88 15739.10 14144.24 08/31/88 14813.85 13663.33 09/30/88 14174.05 14245.39 10/31/88 14321.70 14641.41 11/30/88 14518.56 14432.04 12/31/88 14114.99 14684.60 01/31/89 14626.83 15759.52 02/28/89 15394.59 15367.10 03/31/89 14853.22 15725.16 04/30/89 14134.68 16541.29 05/31/89 13622.84 17211.21 06/30/89 14390.60 17113.11 07/31/89 14538.24 18658.42 08/31/89 15276.48 19024.13 09/30/89 15365.06 18946.13 10/31/89 15522.55 18506.58 11/30/89 17501.01 18884.12 12/31/89 17225.41 19337.33 01/31/90 17983.33 18039.80 02/28/90 17481.33 18272.51 03/31/90 16802.15 18756.73 04/30/90 14981.18 18287.82 05/31/90 16300.16 20070.88 06/30/90 15256.79 19934.40 07/31/90 16319.84 19870.61 08/31/90 16024.55 18074.30 09/30/90 16014.71 17194.08 10/31/90 13386.60 17120.15 11/30/90 13219.27 18226.11 12/31/90 14262.64 18734.62 01/31/91 12284.18 19551.45 02/28/91 13396.45 20949.38 03/31/91 13347.23 21456.35 04/30/91 12874.76 21507.85 05/31/91 13317.70 22436.99 06/30/91 14213.42 21409.37 07/31/91 14055.93 22407.05 08/31/91 12914.13 22938.10 09/30/91 12697.59 22555.03 10/31/91 13672.05 22857.27 11/30/91 13642.52 21936.12 12/31/91 13386.60 24445.61 01/31/92 13711.42 23990.92 02/29/92 13288.17 24302.81 03/31/92 12382.61 23828.90 04/30/92 11752.65 24529.47 05/31/92 12589.31 24649.67 06/30/92 13406.29 24282.39 07/31/92 14252.79 25275.53 08/31/92 13987.03 24757.39 09/30/92 13908.29 25049.52 10/31/92 13494.88 25137.20 11/30/92 12353.08 25994.38 12/31/92 12973.19 26314.11 01/31/93 12727.12 26535.14 02/28/93 13927.97 26896.02 03/31/93 15493.02 27463.53 04/30/93 17451.80 26798.91 05/31/93 19390.89 27517.12 06/30/93 20522.84 27596.92 07/31/93 22156.80 27486.53 08/31/93 20995.31 28528.27 09/30/93 18770.77 28308.61 10/31/93 21576.05 28894.59 11/30/93 21595.74 28620.10 12/31/93 23180.48 28966.40 01/31/94 23190.32 29951.26 02/28/94 22304.44 29136.58 Let's say you invested $10,000 in Fidelity Select American Gold Portfolio on December 16, 1985, when the fund started, and paid a 3% sales charge. By February 28, 1994, your investment would have grown to $22,304 - a 123.04% increase. That compares to $10,000 invested in the S&P 500, which would have grown to $29,137 over the same period - a 191.37% increase. INVESTMENT SUMMARY TOP TEN STOCKS AS OF FEBRUARY 28, 1994 % OF FUND'S INVESTMENTS American Barrick Resources Corp. 11.5 Homestake Mining Co. 5.7 Placer Dome, Inc. 5.7 Cambior, Inc. 5.3 Euro-Nevada Mining Corp. 5.0 Newmont Mining Corp. 4.7 Franco Nevada Mining Corp. 4.1 Santa Fe Pacific Corp. 4.0 Agnico Eagle Mines Ltd. 3.6 Battle Mountain Gold Co. 3.3 TOP INDUSTRIES AS OF FEBRUARY 28, 1994 Gold Ores 63.1% Gold & Silver Ores 12.1% Railroads 4.0% Metal Ores 1.4% All Others 19.4%* Row: 1, Col: 1, Value: 19.4 Row: 1, Col: 2, Value: 1.4 Row: 1, Col: 3, Value: 4.0 Row: 1, Col: 4, Value: 12.1 Row: 1, Col: 5, Value: 63.1 * INCLUDES SHORT-TERM INVESTMENTS AMERICAN GOLD PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW Malcolm MacNaught, Portfolio Manager of Fidelity Select American Gold Portfolio Q. MALCOLM, HOW DID THE FUND PERFORM? A. Very well. The fund's total return for the year ended February 28, 1994 was 60.14%. This was significantly higher than the S&P 500's return of 8.33% for the same period. Q. WHAT WAS BEHIND THESE STRONG RESULTS? A. The fund turned in an unusually good performance in the first half of the year largely because of the upturn in the U.S. and world economies. At home, the improving U.S. economy and a corresponding higher demand for gold helped the fund. On the international front, the increased demand for gold from China and Southeast Asia boosted prices. The sector also benefited from improving economic conditions in India, which drove up that country's demand for gold. Another reason the fund performed well was that I chose a variety of stocks from large and small mining companies that outperformed their competition. In the second half of the year, the fund lost ground. The downturn began in August, when commodity and hedge funds began selling gold bullion, sending prices of gold mining company stocks tumbling between 10% and 20%. This drop happened because stocks of gold mining companies are typically more volatile than bullion. Q. YOU SAID YOU INVESTED IN A VARIETY OF LARGE AND SMALL MINING CONCERNS. WHAT COMPANIES CAUGHT YOUR ATTENTION? A. Two different types of companies interested me. I looked for established companies that were growing, like American Barrick, my top stock at the end of the period. This company, which has exploration prospects in Nevada and South America, appears to have excellent production potential for the next three years. Its gold production could exceed two million ounces by 1996. Last year, Placer Dome, another large company, embarked on a successful exploration to increase its reserves. Newmont Mining, based in Colorado, is another established company that has continued to grow. This past year it found new gold and copper mines in the Philippines. It also has prospects in Russia and Peru. I think this company could be a top performer going forward. I also was attracted to young companies that have found a significant new ore body. A good example was Kinross Gold, which may have located a large gold vein in Ontario. Q. DO YOU CONSIDER ANY OTHER FACTORS? A. Definitely. I look for good management. I've seen too many promising companies fail because of poor management. Homestake Mining is a great example of a changed company. It has significantly improved its operating management and has cut production costs over the past year. This company could be an excellent performer going forward if the price of gold increases. Q. WHERE ARE MOST OF YOUR NEW PURCHASES COMING FROM NOW? A. South America. There's a tremendous opportunity to find undiscovered ore bodies in Chili, Peru, Venezuela, and Guinea. These countries have become more politically stable, and they've introduced advantageous mining laws for foreign investors. I should note that this gives South America an advantage over the United States and Canada because both countries have quite restrictive environmental mining laws. Plus, the U.S. government wants to impose an 8% royalty on mining revenues in addition to income taxes. Q. WHAT CAN SHAREHOLDERS EXPECT GOING FORWARD? A. I believe the price of gold could be higher a year from now than it is today. That's because worldwide supply and demand are almost in balance, and the demand for jewelry should increase. In 1993, the demand for jewelry fell one or two percentage points because of economic problems in Western Europe and Japan. If Europe's economy improves, like I think it will, jewelry sales should grow no matter what happens in Japan. That said, I would like to remind shareholders that gold stocks are extremely volatile, and world economic and political conditions can alter expectations dramatically. FUND FACTS START DATE: December 16, 1985 SIZE: as of February 28, 1994, over $347 million MANAGER: Malcolm MacNaught, since December 1985; manager, Precious Metals and Minerals, since July 1981; Advisor Global Natural Resources, since November 1988; joined Fidelity in 1968 (checkmark) AMERICAN GOLD PORTFOLIO INVESTMENTS FEBRUARY 28, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 81.8% SHARES VALUE (NOTE 1) CANADA - 64.0% CREDIT & OTHER FINANCE - 0.3% HOLDING COMPANY OFFICES - 0.3% Bolivar Goldfields Ltd. 260,000 $ 1,011,486 09760Q10 METALS & MINING - 1.5% MINING - 0.5% Cominco Resources International Ltd. (a) 662,900 1,129,804 20044D10 Southernera Resources Ltd. (a) 153,900 712,764 84390110 1,842,568 METAL MINING SERVICES - 0.1% Tombstone Exploration (Spec Wts.) (a) 200,000 472,471 88990492 MISCELLANEOUS NONMETAL MINERALS - 0.9% Dai Metal Minerals Ltd. (a) 60,600 2,952,538 25243K10 TOTAL METALS & MINING 5,267,577 OIL & GAS - 0.1% PETROLEUM REFINERS - 0.1% Horsham Corp. 22,000 301,593 44090710 PRECIOUS METALS - 62.1% GOLD ORES - 62.1% Agnico Eagle Mines Ltd. 1,040,000 12,426,825 00847410 American Barrick Resources Corp. 1,600,000 40,163,023 02451E10 Aurizon Mines Ltd. 259,500 153,835 05155P10 Bema Gold Corp. (a) 330,000 660,245 08135F10 Breakwater Resources Ltd. (a) 474,500 58,016 10690210 Cambior, Inc. 1,173,600 18,480,178 13201L10 Campbell Resources, Inc. (a) 1,320,000 792,293 13442292 Canarc Resources Corp. 520,000 1,656,910 13722D10 Cathedral Gold Corp. (a) 32,400 91,234 14890710 Crystallex International Corp. 84,100 451,815 22942F10 Echo Bay Mines Ltd. 400,000 5,150,056 27875110 Euro-Nevada Mining Corp. 550,000 17,525,009 29870P10 Exall Resource Ltd. 100,000 100,778 30090010 Franco Nevada Mining Corp. 240,000 14,316,413 35186010 Golden Knight Resources, Inc. 386,200 2,790,256 38109010 Golden Star Resources, Ltd. Canada (a) 740,000 11,172,657 38119T10 Hemlo Gold Mines Inc. 780,000 7,297,147 42366F10 Kinross Gold Corp. (a) 565,000 1,779,363 49690210 Lac Minerals Ltd. 979,700 8,348,685 50545810 MILL City Gold 200,000 299,370 59990020 Newmont Mining Corp. 304,000 16,492,000 65163910 Orvana Minerals Corp. (a) 800,000 3,482,770 68759M10 Orvana Minerals Corp. (warrants) (a) 50,000 206,780 68759M92 Pegasus Gold, Inc. 490,000 9,531,308 70556K10 Placer Dome, Inc. 820,000 19,824,009 72590610 Prime Equities, Inc. (a) 55,883 132,512 74155692 Prime Resources Group, Inc. (a) 1,350,000 10,003,705 74157L10 Rayrock Yellowknife Resources, Inc. (a) 200,000 2,667,655 75509N10 Royal Oaks Mines, Inc. (warrant) (a) 100,000 118,562 78051D12 Sudbury Contact Mines, Ltd. 200,000 889,218 86462610 Viceroy Resources Corp. (a) 618,100 4,694,720 92564C10 Wharf Resources Ltd. 550,000 4,992,590 96226010 216,749,937 TOTAL CANADA 223,330,593 UNITED KINGDOM - 0.1% RETAIL & WHOLESALE, MISCELLANEOUS - 0.1% RETAIL, GENERAL - 0.1% Signet Group PLC (a) 850,000 448,355 82999F22 SHARES VALUE (NOTE 1) UNITED STATES - 17.7% METALS & MINING - 1.4% METAL ORES - 1.4% Freeport-McMoran Copper Co. Class A 200,000 $ 5,050,000 35671D10 PRECIOUS METALS - 12.1% GOLD & SILVER ORES - 12.1% Amax Gold, Inc. 612,500 3,981,250 02312010 Battle Mountain Gold Co. 1,000,000 11,375,000 07159310 Canyon Resources Corp. (a) 820,100 3,177,888 13886910 Coeur d'Alene Mines Corp. 181,700 3,565,863 19210810 Homestake Mining Co. 936,400 19,898,500 43761410 MK Gold Co. (a) 50,000 309,375 55305P10 42,307,876 RAILROADS - 4.0% Santa Fe Pacific Corp. 608,000 13,832,000 80218310 SERVICES - 0.2% JEWELRY, PRECIOUS METAL - 0.2% Oroamerica, Inc. 50,000 762,500 68702710 TOTAL UNITED STATES 61,952,376 TOTAL COMMON STOCKS (Cost $207,092,761) 285,731,324 CONVERTIBLE PREFERRED STOCKS - 1.0% UNITED STATES - 1.0% PRECIOUS METALS - 1.0% GOLD ORES - 1.0% Newmont Mining Corp. depositary shares representing 1/2 $1.375 (b) (Cost $3,355,639) 53,000 3,445,000 65163930 OTHER SECURITIES - 2.6% PRINCIPAL AMOUNT UNITED STATES - 2.6% INDEXED SECURITIES - 2.6% Goldman Sachs Group, LP note 3.1273%, 3/28/94 (indexed to silver price) (Cost $8,400,000) $8,400,000 8,975,400 38142T9Y BULLION - 3.6% TROY OUNCES Gold Bullion (a) (Cost $12,302,849) 32,974 12,566,534 68999410 REPURCHASE AGREEMENTS - 11.0% MATURITY AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account, at 3.47% dated 2/28/94 due 3/1/94 $ 38,213,683 $ 38,210,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $269,361,249) $ 348,928,258 LEGEND 1. Non-income producing 2. Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $3,445,000 or 1.0% of net assets. OTHER INFORMATION CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1, 1993, the fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of February 28, 1993 have been reclassified to reflect an increase in paid in capital of $16,282,118, a decrease in undistributed net investment loss of $3,782,513 and an increase in accumulated net realized loss on investments of $20,064,631. Purchases and sales of securities, other than short-term securities, aggregated $140,616,874 and $107,607,735, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $59,125 for the period (see Note 4 of Notes to Financial Statements). The maximum loan and average daily loan balances during the periods for which loans were outstanding amounted to $5,482,000 and $2,316,000, respectively. The weighted average interest rate paid was 3.8% (see Note 7 of Notes to Financial Statements). INCOME TAX INFORMATION At February 28, 1994, the aggregate cost of investment securities for income tax purposes was $271,131,319. Net unrealized appreciation aggregated $77,796,939, of which $96,373,305 related to appreciated investment securities and $18,576,366 related to depreciated investment securities. At February 28, 1994, the fund has a capital loss carryforward of approximately $38,864,000 of which $13,677,000, $2,503,000, $1,152,000, $13,193,000 and $8,339,000 will expire on February 28, 1997, 1998, 1999, 2000 and 2001, respectively. AMERICAN GOLD PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $38,210,000) (cost $269,361,249)$ 348,928,258 (Notes 1 and 2) - See accompanying schedule Cash 996 Receivable for investments sold 413,832 Receivable for fund shares sold 10,758,471 Dividends receivable 126,760 Interest receivable 48,890 Redemption fees receivable 527 (Note 1) Other receivables 16,098 TOTAL ASSETS 360,293,832 LIABILITIES Payable for investments purchased $ 4,689,430 Payable for fund shares redeemed 7,764,004 Accrued management fee 180,207 Other payables and accrued expenses 253,747 TOTAL LIABILITIES 12,887,388 NET ASSETS $ 347,406,444 Net Assets consist of (Note 1): Paid in capital $ 308,559,856 Accumulated net investment loss (102,615 ) Accumulated undistributed net realized gain (loss) on investments (40,617,806 ) Net unrealized appreciation (depreciation) on investment securities 79,567,009 NET ASSETS, for 15,332,802 shares outstanding $ 347,406,444 NET ASSET VALUE and redemption price per share ($347,406,444 (divided by) 15,332,802 shares) $22.66 Maximum offering price per share (100/97 of $22.66) $23.36
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994 INVESTMENT INCOME $ 1,711,227 Dividends Interest 1,364,517 TOTAL INCOME 3,075,744 EXPENSES Management fee (Note 4) $ 1,968,132 Transfer agent (Note 4) 2,466,796 Fees Redemption fees (Note 1) (340,522 ) Accounting fees and expenses (Note 4) 316,381 Non-interested trustees' compensation 2,057 Custodian fees and expenses 57,814 Registration fees 131,911 Audit 48,896 Legal 2,365 Interest (Note 7) 1,457 Reports to shareholders 29,774 Miscellaneous 3,595 Total expenses before reductions 4,688,656 Expense reductions (Note 8) (5,580 4,683,076 ) NET INVESTMENT INCOME (LOSS) (1,607,332 ) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 5,091,181 Net realized gain (loss) on investment securities (including realized gain of $327,518 on sales of investment in precious metals) Change in net unrealized appreciation (depreciation) on investment securities 102,337,003 NET GAIN (LOSS) 107,428,184 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 105,820,852 OTHER INFORMATION $3,246,632 Sales charges paid to FDC (Note 4) Deferred sales charges withheld $124,747 by FDC (Note 4) Exchange fees withheld by FSC $282,405 (Note 4)
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED TEN MONTHS FEBRUARY 28, ENDED 1994 FEBRUARY 28, 1993 INCREASE (DECREASE) IN NET ASSETS Operations $ (1,607,332 $ (580,346 Net investment income (loss) ) ) Net realized gain (loss) on investments 5,091,181 (3,276,498 ) Change in net unrealized appreciation (depreciation) on investments 102,337,003 26,766,898 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 105,820,852 22,910,054 Share transactions 927,864,527 314,614,089 Net proceeds from sales of shares Cost of shares redeemed (857,107,198 (301,135,985 ) ) Paid in capital portion of redemption fees (Note 1) 2,794,982 1,237,751 Net increase (decrease) in net assets resulting from share transactions 73,552,311 14,715,855 TOTAL INCREASE (DECREASE) IN NET ASSETS 179,373,163 37,625,909 NET ASSETS Beginning of period 168,033,281 130,407,372 End of period (including accumulated net investment loss of $102,615 and $3,782,513, respectively)$ 347,406,444 $ 168,033,281 OTHER INFORMATION Shares Sold 46,202,228 22,966,740 Redeemed (42,741,926 (22,013,035 ) ) Net increase (decrease) 3,460,302 953,705
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30, FEBRUARY 28, ENDED FEBRUARY 28, SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990
Net asset value, beginning of period $ 14.15 $ 11.94 $ 13.08 $ 15.22 $ 14.36 Income from Investment Operations Net investment income (loss) (.11) (.05) (.06) (.04) (.06) Net realized and unrealized gain (loss) on investments 8.44 2.16 (1.17) (2.23) .85 Total from investment operations 8.33 2.11 (1.23) (2.27) .79 Less Distributions From net investment income - - - - - From net realized gain - - - - - Total distributions - - - - - Redemption fees added to paid in capital .18 .10 .09 .13 .07 Net asset value, end of period $ 22.66 $ 14.15 $ 11.94 $ 13.08 $ 15.22 TOTAL RETURND,E 60.14% 18.51% (8.72)% (14.06)% 5.99% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 347,406 $ 168,033 $ 130,407 $ 164,137 $ 195,322 Ratio of expenses to average net assetsB 1.49% 1.59% 1.75% 1.75% 1.85% A Ratio of expenses to average net assets before expense 1.50% 1.59% 1.75% 1.75% 1.85% reductionsB A Ratio of net investment income (loss) to average net assets (.51)% (.44)% (.47)% (.29)% (.38)% A Portfolio turnover rate 39% 30% 40% 38% 68% A
1 ANNUALIZED 2 SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS. 3 NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH PERIOD. 4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 5 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. ENERGY PORTFOLIO PERFORMANCE AND INVESTMENT SUMMARY PERFORMANCE There are several ways to evaluate a fund's historical performance: total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 PAST 10 FEBRUARY 28, 1994 YEAR YEARS YEARS ENERGY 9.69% 52.65% 127.02% ENERGY (INCL. 3% SALES CHARGE) 6.40% 48.07% 120.21% S&P 500 8.33% 89.60% 321.84% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years, or ten years. You can compare these figures to the performance of the S&P 500 - a common proxy for the U.S. stock market. This benchmark includes reinvested dividends and capital gains, if any. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 PAST 10 FEBRUARY 28, 1994 YEAR YEARS YEARS ENERGY 9.69% 8.83% 8.54% ENERGY (INCL. 3% SALES CHARGE) 6.40% 8.17% 8.21% S&P 500 8.33% 13.65% 15.48% AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of growth in the long run and volatility in the short run. Unlike the broader market, however, some sectors may not have a history of growth in the long run. And, as with all stock funds, the share price and return of a fund that invests in a sector will vary. That means if you sell your shares during a sector downturn, you might lose money. But if you can identify a sector that is about to experience rapid growth you may have the potential for above-average gains. (checkmark) $10,000 OVER TEN YEARS 02/29/84 9700.00 10000.00 03/31/84 9979.90 10173.00 04/30/84 10182.59 10269.64 05/31/84 9680.70 9700.71 06/30/84 9487.02 9911.21 07/31/84 8880.63 9788.31 08/31/84 10259.67 10869.92 09/30/84 10406.38 10872.09 10/31/84 9741.31 10914.50 11/30/84 9623.94 10792.25 12/31/84 9614.16 11077.17 01/31/85 10230.33 11940.08 02/28/85 10807.38 12086.94 03/31/85 11227.93 12095.40 04/30/85 11384.42 12084.52 05/31/85 11227.93 12783.00 06/30/85 10784.62 12983.70 07/31/85 10898.80 12964.22 08/31/85 11293.23 12854.02 09/30/85 10940.32 12451.69 10/31/85 11594.25 13026.96 11/30/85 11781.08 13920.61 12/31/85 11345.13 14594.37 01/31/86 10566.65 14676.10 02/28/86 10327.91 15773.87 03/31/86 10276.01 16654.05 04/30/86 10296.77 16465.86 05/31/86 10774.24 17341.84 06/30/86 10805.38 17634.92 07/31/86 10130.69 16649.13 08/31/86 11469.69 17884.49 09/30/86 11345.13 16405.45 10/31/86 11646.15 17352.04 11/30/86 11884.88 17773.70 12/31/86 11967.92 17320.47 01/31/87 13234.26 19653.53 02/28/87 13493.75 20429.85 03/31/87 14614.77 21020.27 04/30/87 14199.58 20833.19 05/31/87 14697.81 21014.44 06/30/87 15206.42 22075.67 07/31/87 15995.29 23194.90 08/31/87 15901.87 24060.07 09/30/87 15559.34 23533.16 10/31/87 11448.93 18464.12 11/30/87 10971.46 16942.67 12/31/87 11752.53 18232.01 01/31/88 12190.18 18999.58 02/29/88 12627.83 19884.96 03/31/88 13524.48 19270.51 04/30/88 14036.85 19484.42 05/31/88 13524.48 19653.93 06/30/88 13673.92 20556.05 07/31/88 13759.31 20477.93 08/31/88 13236.27 19781.68 09/30/88 13086.83 20624.38 10/31/88 13204.25 21197.74 11/30/88 13236.27 20894.61 12/31/88 13626.13 21260.27 01/31/89 14655.76 22816.52 02/28/89 14425.73 22248.39 03/31/89 15258.20 22766.78 04/30/89 15773.01 23948.37 05/31/89 15959.22 24918.28 06/30/89 16287.82 24776.25 07/31/89 16966.94 27013.54 08/31/89 17339.36 27543.01 09/30/89 17613.20 27430.08 10/31/89 17492.71 26793.70 11/30/89 18149.92 27340.30 12/31/89 19461.58 27996.46 01/31/90 18592.66 26117.90 02/28/90 19171.94 26454.82 03/31/90 19183.08 27155.87 04/30/90 18536.96 26476.98 05/31/90 19662.10 29058.48 06/30/90 19198.70 28860.88 07/31/90 20506.35 28768.53 08/31/90 20874.87 26167.85 09/30/90 20815.43 24893.48 10/31/90 19745.54 24786.44 11/30/90 19531.56 26387.64 12/31/90 18587.30 27123.86 01/31/91 17383.36 28306.46 02/28/91 19004.99 30330.37 03/31/91 18747.00 31064.36 04/30/91 18955.85 31138.92 05/31/91 19066.41 32484.12 06/30/91 18216.99 30996.35 07/31/91 19152.46 32440.78 08/31/91 19521.73 33209.62 09/30/91 19324.78 32655.02 10/31/91 19903.30 33092.60 11/30/91 18426.24 31758.97 12/31/91 18593.84 35392.19 01/31/92 17598.85 34733.90 02/29/92 17623.72 35185.44 03/31/92 17113.79 34499.32 04/30/92 18282.90 35513.60 05/31/92 19153.52 35687.62 06/30/92 18205.73 35155.87 07/31/92 18692.05 36593.75 08/31/92 19028.73 35843.58 09/30/92 19140.96 36266.53 10/31/92 18317.96 36393.47 11/30/92 17893.99 37634.48 12/31/92 18149.73 38097.39 01/31/93 18834.14 38417.40 02/28/93 20076.23 38939.88 03/31/93 21102.86 39761.51 04/30/93 21508.79 38799.28 05/31/93 22155.58 39839.10 06/30/93 22447.26 39954.64 07/31/93 22282.40 39794.82 08/31/93 24045.20 41303.04 09/30/93 23905.70 40985.01 10/31/93 23563.29 41833.40 11/30/93 20709.82 41435.98 12/31/93 21626.22 41937.36 01/31/94 22784.53 43363.23 02/28/94 22021.10 42183.75 Let's say you invested $10,000 in Fidelity Select Energy Portfolio on February 29, 1984 and paid a 3% sales charge. By February 28, 1994, your investment would have grown to $22,021 - a 120.21% increase. That compares to $10,000 invested in the S&P 500, which would have grown to $42,184 over the same period - a 321.84% increase. INVESTMENT SUMMARY TOP TEN STOCKS AS OF FEBRUARY 28, 1994 % OF FUND'S INVESTMENTS British Petroleum PLC ADR 7.5 Chevron Corp. 6.1 Mobil Corp. 5.6 Unocal Corp. 5.3 Exxon Corp. 5.0 Royal Dutch Petroleum Co. 4.8 Shell Transport & Trading PLC 3.7 Amoco Corp. 3.7 Canadian Natural Resources Ltd. 3.4 Apache Corp. 3.3 TOP INDUSTRIES AS OF FEBRUARY 28, 1994 Row: 1, Col: 1, Value: 16.9 Row: 1, Col: 2, Value: 3.5 Row: 1, Col: 3, Value: 3.7 Row: 1, Col: 4, Value: 5.9 Row: 1, Col: 5, Value: 23.9 Row: 1, Col: 6, Value: 46.1 Oil & Gas Exploration 46.1% Crude Petroleum & Gas 23.9% Petroleum Refiners 5.9% Holding Company Offices 3.7% Oil & Gas Services 3.5% All Others 16.9%* * INCLUDES SHORT-TERM INVESTMENTS ENERGY PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW Robert Bertelson, Portfolio Manager of Fidelity Select Energy Portfolio Q. BOB, HOW HAS THE FUND PERFORMED? A. For the year ended February 28, 1994, the fund had a total return of 9.69%. That beat the S&P 500, which returned 8.33% for the same period. Q. WHAT DROVE THE ENERGY SECTOR AND THE FUND? A. Energy stocks are sensitive to oil and natural gas prices, and so the sector and the fund have performed relative to the prices of those commodities. During the first six months of the period, the fund benefited from investments in natural gas stocks, which rose sharply on tighter supply and increased demand. During that period, the fund's biggest gains came from independent U.S. and Canadian gas producers such as Apache Corp., and integrated companies with strong natural gas holdings. The fund also profited from owning stocks in major oil companies, such as British Petroleum and Chevron, whose share prices were boosted by cost- cutting programs and restructuring. Q. WHAT HAPPENED IN THE SECOND HALF OF THE PERIOD? A. By the Fall, some natural gas stocks had gotten a little ahead of themselves and their prices became very expensive. In November, OPEC failed to reach an agreement that would control the supply of oil, so the price of oil and oil stocks fell. What's more, the price of natural gas, which tends to move with the price of oil, also fell and that hurt the fund's natural gas investments. But by mid-December, after the market had digested the OPEC decision, oil prices crept up and natural gas prices rocketed higher. I believe that both oil and natural gas prices could continue to rise. Q. SO DID THAT MEAN A CHANGE IN YOUR STRATEGY? A. A slight modification. The fund continued to have core holdings in the natural gas companies I've already mentioned. I also continued to hold companies like British Petroleum, the fund's largest investment. The company's earnings are less sensitive to low oil prices than other oil companies and it should continue to benefit from its cost-cutting programs. Chevron and Exxon, too, are less sensitive to oil prices and could continue to benefit from restructuring. Q. WHAT IS YOUR OUTLOOK FOR OIL? A. Over the past several years, the price of crude oil has been driven down by an increase in supply. Last year that heavy supply was driven by Kuwait's re-entrance into the OPEC production pool, increased exports from the former Soviet Union, and increased production coming from the North Sea. If any of those producers cut back, it could help prices. Plus, I don't think there will be any increase in oil production during 1994. One exception could be Iraq if the United Nations lifts export sanctions against that country, but I don't think that's very likely at this point. From the demand side, a continued global economic recovery could help boost prices. The U.S. recovery is well under way and oil consumption has been growing at a healthy 2% annually. In some emerging markets, consumption is growing at about 4% per year. Economic improvements in Japan and Europe could further help oil prices. Q. WHAT'S YOUR OUTLOOK FOR NATURAL GAS PRICES? A. I believe that the recent harsh winter could help prices. Inventories have been drawn down to very low levels. During the summer, the inventories will most likely be built back up, which could help demand for natural gas. That increased demand should result in higher natural gas prices over the course of the year. Q. SO HOW ARE YOU PLANNING TO POSITION THE FUND? A. For the near term, I'll probably continue the same course. I'm starting to look closely at energy service companies that could benefit from increased drilling activity. If drilling activity does start to improve, I'd probably build up the fund's stake in companies which could benefit from that trend. FUND FACTS START DATE: July 14, 1981 SIZE: as of February 28, 1994, over $145 million MANAGER: Robert Bertelson, since January 1992; equity analyst, integrated oils, since December 1991; refiners, since 1992; joined Fidelity in 1991 (checkmark) ENERGY PORTFOLIO INVESTMENTS FEBRUARY 28, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 85.0% SHARES VALUE (NOTE 1) CREDIT & OTHER FINANCE - 3.7% HOLDING COMPANY OFFICES - 3.7% Shell Transport & Trading PLC 90,700 $ 5,759,450 82270360 ENERGY SERVICES - 4.2% DRILLING - 0.7% Dual Drilling Co. (a) 40,000 445,000 26356410 Global Marine, Inc. (a) 160,000 640,000 37935240 1,085,000 OIL & GAS SERVICES - 3.5% BJ Services Co. (a) 14,400 277,200 05548210 Halliburton Co. 140,000 4,392,500 40621610 Weatherford International, Inc. (a) 16,700 175,350 94707610 Western Co. of North America (a) 40,000 560,000 95804340 5,405,050 TOTAL ENERGY SERVICES 6,490,050 OIL & GAS - 76.7% CRUDE PETROLEUM & GAS - 23.9% Anadarko Petroleum Corp. 75,000 3,337,500 03251110 Apache Corp. 205,800 5,145,000 03741110 Basin Exploration, Inc. (a) 80,500 966,000 07010710 Benton Oil & Gas Co. (a) 32,300 178,659 08328810 Blue Dolphin Energy Corp. 100,000 56,250 09539510 British Borneo Petroleum 245,900 814,777 11099D22 Burlington Resources, Inc. 109,600 4,712,800 12201410 Coho Resources, Inc. 50,000 200,000 19248110 DEKALB Energy Corp. Class B (a) 49,000 722,750 24487410 Encal Energy Ltd. (a) 50,000 105,594 29250D10 Excel Energy, Inc. (a) 30,000 119,489 30065410 Gulf Canada Corp. 50,000 170,433 40218L30 Intensity Resources Ltd. (a) 146,100 279,317 45816E10 Inverness Petroleum Ltd. (a) 14,000 103,742 46190810 Louis Dreyfus Natural Gas Corp. (a) 53,300 1,199,250 54601110 Morrison Petroleums Ltd. 125,800 862,282 61847310 Newfield Exploration Co. (a) 120,500 2,635,938 65129010 Noble Affiliates, Inc. 20,000 515,000 65489410 Nuevo Energy Corporation (a) 26,200 550,200 67050910 Pancanadian Petroleum Ltd. 10,000 280,659 69890020 Paramount Resources Ltd. (a) 31,000 459,429 69932010 Parker & Parsley Petroleum Co. 74,800 1,683,000 70101810 Petromet Resources Ltd. Ord. (a) 25,000 138,940 71673110 Pinnacle Resources Ltd. 10,000 150,056 72348R10 Pogo Producing Co. (a) 20,000 370,000 73044810 Renaissance Energy Ltd. (a) 102,908 2,097,051 75966610 Rio Alto Exploration Ltd. 317,500 2,088,042 76689210 Sceptre Resources Ltd. (a) 57,500 591,191 80621470 Tide West Oil Co. 11,700 143,325 88635540 Total SA sponsored ADR 151,300 4,236,400 89151E10 Ulster Petroleums Ltd. (a) 168,900 494,372 90384010 United Meridian Corp. (a) 20,000 310,000 91086510 Vintage Petroleum, Inc. 68,800 1,315,800 92746010 37,033,246 OIL & GAS EXPLORATION - 46.1% Amerada Hess Corp. 67,400 3,125,675 02355110 Amoco Corp. 110,000 5,747,500 03190510 British Petroleum PLC ADR 178,700 11,637,838 11088940 Canadian Natural Resources Ltd. (a) 385,200 5,280,622 13638510 Chevron Corp. 110,000 9,542,500 16675110 Exxon Corp. 120,000 7,785,000 30229010 Kerr-McGee Corp. 43,600 1,956,550 49238610 Louisiana Land & Exploration Co. 32,500 1,210,625 54626810 Mobil Corp. 110,000 8,648,750 60705910 SHARES VALUE (NOTE 1) Phillips Petroleum Co. 38,900 $ 1,055,163 71850710 Royal Dutch Petroleum Co. 70,000 7,481,250 78025770 Unocal Corp. 298,400 8,206,000 91528910 71,677,473 OIL FIELD EQUIPMENT - 0.8% Camco International, Inc. 70,300 1,212,675 13263210 PETROLEUM REFINERS - 5.9% Ashland Oil, Inc. 40,000 1,640,000 04454010 Diamond Shamrock, Inc. 62,000 1,798,000 25274710 Repsol SA Ord. (a) 80,000 2,619,749 76026T10 Shell Canada Ltd. Class A 50,000 1,426,454 82256710 Tesoro Petroleum Corp. (a) 20,000 200,000 88160910 Tosco Corp. 44,900 1,504,150 89149030 9,188,353 TOTAL OIL & GAS 119,111,747 SERVICES - 0.4% Pittston Co. Minerals Group 24,600 590,400 72570120 TOTAL COMMON STOCKS (Cost $125,506,722) 131,951,647 PREFERRED STOCKS - 0.0% OIL & GAS - 0.0% CRUDE PETROLEUM & GAS - 0.0% Gulf Canada Resources Ltd. Series 1, adj. rate (a) (Cost $27,709) 11,000 32,313 40218L40 REPURCHASE AGREEMENTS - 15.0% MATURITY AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account, at 3.47% dated 2/28/94 due 3/1/94 $23,265,242 23,263,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $148,797,431) $ 155,246,960 LEGEND 1. Non-income producing OTHER INFORMATION CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1, 1993, the fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of February 28, 1993 have been reclassified to reflect an increase in paid in capital of $30,318,422, a decrease in undistributed net investment income of $10,003,482 and a decrease in accumulated net realized gain on investments of $20,314,940. Purchases and sales of securities, other than short-term securities, aggregated $175,105,313 and $201,310,162, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $157,374 for the period (see Note 4 of Notes to Financial Statements). The maximum loan and average daily loan balances during the periods for which loans were outstanding amounted to $2,676,000 and $1,258,500, respectively. The weighted average interest rate paid was 3.7% (see Note 7 of Notes to Financial Statements). At the period end, the value of securities loaned and the value of collateral amounted to $8,998,163 and $9,154,200, respectively. (see Note 6 of Notes to Financial Statements). Distribution of investments by country, as a percentage of total value of investment in securities, is as follows: United States 67.6% United Kingdom 12.5 Canada 10.1 Netherlands 5.1 France 2.9 Spain 1.8 TOTAL 100.0% INCOME TAX INFORMATION At February 28, 1994, the aggregate cost of investment securities for income tax purposes was $149,094,169. Net unrealized appreciation aggregated $6,152,791, of which $10,178,080 related to appreciated investment securities and $4,025,289 related to depreciated investment securities. The fund hereby designates $5,330,000 as a capital gain dividend for the purpose of the dividend paid deduction. ENERGY PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $23,263,000) (cost $148,797,431) $ 155,246,960 (Notes 1 and 2) - See accompanying schedule Cash 563 Receivable for investments sold 267,764 Receivable for fund shares sold 1,608,317 Dividends receivable 495,727 Redemption fees receivable (Note 1) 1,832 Other receivables 500 TOTAL ASSETS 157,621,663 LIABILITIES Payable for investments purchased $ 41,000 Payable for fund shares redeemed 2,772,727 Accrued management fee 73,011 Other payables and accrued expenses 90,749 Collateral on securities loaned, at value (Note 6) 9,154,200 TOTAL LIABILITIES 12,131,687 NET ASSETS $ 145,489,976 Net Assets consist of (Note 1): Paid in capital $ 131,573,923 Undistributed net investment income 354,166 Accumulated undistributed net realized gain (loss) on investments 7,112,358 Net unrealized appreciation (depreciation) on investment securities 6,449,529 NET ASSETS, for 8,694,149 shares outstanding $ 145,489,976 NET ASSET VALUE and redemption price per share ($145,489,976 (divided by) 8,694,149 shares) $16.73 Maximum offering price per share (100/97 of $16.73) $17.25
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994 INVESTMENT INCOME $ 2,064,040 Dividends Interest (including security lending fees of $2,387) (Note 6) 495,079 TOTAL INCOME 2,559,119 EXPENSES Management fee (Note 4) $ 790,258 Transfer agent (Note 4) 1,239,670 Fees Redemption fees (Note 1) (185,135 ) Accounting and security lending fees (Note 4) 115,301 Non-interested trustees' compensation 868 Custodian fees and expenses 34,778 Registration fees 65,849 Audit 11,834 Legal 4,801 Interest (Note 7) 1,580 Reports to shareholders 19,898 Miscellaneous 1,748 Total expenses before reductions 2,101,450 Expense reductions (Note 8) (10,026 2,091,424 ) NET INVESTMENT INCOME 467,695 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 11,660,936 Net realized gain (loss) on investment securities Change in net unrealized appreciation (depreciation) on investment securities 35,273 NET GAIN (LOSS) 11,696,209 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 12,163,904 OTHER INFORMATION $961,537 Sales charges paid to FDC (Note 4) Deferred sales charges withheld $42,214 by FDC (Note 4) Exchange fees withheld by FSC $163,388 (Note 4)
STATEMENT OF CHANGES IN NET ASSETS INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS FEBRUARY 28, ENDED 1994 FEBRUARY 28, 1993
Operations $ 467,695 $ 1,223,309 Net investment income Net realized gain (loss) on investments 11,660,936 1,974,355 Change in net unrealized appreciation (depreciation) on investments 35,273 4,409,759 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 12,163,904 7,607,423 Distributions to shareholders (210,175 (1,320,569 From net investment income ) ) From net realized gain (2,444,037 - ) TOTAL DISTRIBUTIONS (2,654,212 (1,320,569 ) ) Share transactions 307,692,300 154,045,187 Net proceeds from sales of shares Reinvestment of distributions 2,596,445 1,286,868 Cost of shares redeemed (353,996,623 (59,918,201 ) ) Paid in capital portion of redemption fees (Note 1) 555,239 98,164 Net increase (decrease) in net assets resulting from share transactions (43,152,639 95,512,018 ) TOTAL INCREASE (DECREASE) IN NET ASSETS (33,642,947 101,798,872 ) NET ASSETS Beginning of period 179,132,923 77,334,051 End of period (including undistributed net investment income of $354,166 and $10,107,273, respectively) $ 145,489,976 $ 179,132,923 OTHER INFORMATION Shares Sold 17,743,944 10,002,231 Issued in reinvestment of distributions 166,316 90,362 Redeemed (20,523,434 (4,046,459 ) ) Net increase (decrease) (2,613,174) 6,046,134
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30, FEBRUARY 28, ENDED FEBRUARY 28, SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990 Net asset value, beginning of period $ 15.84 $ 14.70 $ 15.43 $ 16.64 $ 14.40 Income from Investment Operations Net investment income .06 .23 .17 .16 .27 Net realized and unrealized gain (loss) on investments 1.35 1.16 (.75) .15 2.23 Total from investment operations 1.41 1.39 (.58) .31 2.50 Less Distributions From net investment income (.03) (.27) (.16) (.15) (.07) From net realized gain (.57) - (.02) (1.43) (.22) Total distributions (.60) (.27) (.18) (1.58) (.29) Redemption fees added to paid in capital .08 .02 .03 .06 .03 Net asset value, end of period $ 16.73 $ 15.84 $ 14.70 $ 15.43 $ 16.64 TOTAL RETURND, E 9.69% 9.81% (3.55)% 2.26% 17.52% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 145,490 $ 179,133 $ 77,334 $ 92,611 $ 83,912 Ratio of expenses to average net assetsB 1.66% 1.71% 1.78% 1.79% 1.94% A Ratio of expenses to average net assets before expense 1.67% 1.71% 1.78% 1.79% 1.94% reductionsB A Ratio of net investment income to average net assets .37% 1.88% 1.16% .99% 1.69% A Portfolio turnover rate 157% 72% 81% 61% 74% A
1 ANNUALIZED 2 SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS. 3 NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH PERIOD. 4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 5 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. ENERGY SERVICE PORTFOLIO PERFORMANCE AND INVESTMENT SUMMARY PERFORMANCE There are several ways to evaluate a fund's historical performance: total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND ENERGY SERVICE 6.36% 45.35% 17.30% ENERGY SERVICE (INCL. 3% SALES CHARGE) 3.17% 40.99% 13.78% S&P 500 8.33% 89.60% 191.37% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years, or since the fund started on December 16, 1985. You can compare these figures to the performance of the S&P 500 - a common proxy for the U.S. stock market. This benchmark includes reinvested dividends and capital gains, if any. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND ENERGY SERVICE 6.36% 7.77% 1.96% ENERGY SERVICE (INCL. 3% SALES CHARGE) 3.17% 7.11% 1.58% S&P 500 8.33% 13.65% 13.91% AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of growth in the long run and volatility in the short run. Unlike the broader market, however, some sectors may not have a history of growth in the long run. And, as with all stock funds, the share price and return of a fund that invests in a sector will vary. That means if you sell your shares during a sector downturn, you might lose money. But if you can identify a sector that is about to experience rapid growth you may have the potential for above average gains. (checkmark) $10,000 OVER LIFE OF FUND 12/16/85 9700.00 10000.00 12/31/85 9855.20 10080.42 01/31/86 9118.00 10136.87 02/28/86 8739.70 10895.11 03/31/86 8671.80 11503.06 04/30/86 8555.40 11373.07 05/31/86 9050.10 11978.12 06/30/86 8885.20 12180.55 07/31/86 7614.50 11499.66 08/31/86 8371.10 12352.93 09/30/86 8235.30 11331.35 10/31/86 7944.30 11985.16 11/30/86 8215.90 12276.40 12/31/86 8303.20 11963.36 01/31/87 9234.40 13574.82 02/28/87 9622.40 14111.03 03/31/87 10534.20 14518.83 04/30/87 10534.20 14389.62 05/31/87 11349.00 14514.81 06/30/87 12464.50 15247.80 07/31/87 13279.30 16020.87 08/31/87 12270.50 16618.45 09/30/87 11872.80 16254.50 10/31/87 7633.90 12753.28 11/30/87 6799.70 11702.41 12/31/87 7323.50 12592.97 01/31/88 7614.50 13123.13 02/29/88 8283.80 13734.67 03/31/88 8768.80 13310.27 04/30/88 8943.40 13458.01 05/31/88 8332.30 13575.09 06/30/88 7857.00 14198.19 07/31/88 7730.90 14144.24 08/31/88 7876.40 13663.33 09/30/88 7536.90 14245.39 10/31/88 7284.70 14641.41 11/30/88 6974.30 14432.04 12/31/88 7294.40 14684.60 01/31/89 7740.60 15759.52 02/28/89 7827.90 15367.10 03/31/89 8322.60 15725.16 04/30/89 8720.30 16541.29 05/31/89 8875.50 17211.21 06/30/89 9166.50 17113.11 07/31/89 9680.60 18658.42 08/31/89 10136.50 19024.13 09/30/89 9991.00 18946.13 10/31/89 9496.30 18506.58 11/30/89 10311.10 18884.12 12/31/89 11630.30 19337.33 01/31/90 10883.40 18039.80 02/28/90 11911.60 18272.51 03/31/90 12483.90 18756.73 04/30/90 11824.30 18287.82 05/31/90 13812.80 20070.88 06/30/90 13104.70 19934.40 07/31/90 14336.60 19870.61 08/31/90 14084.40 18074.30 09/30/90 13812.80 17194.08 10/31/90 12076.50 17120.15 11/30/90 12260.80 18226.11 12/31/90 11834.40 18734.62 01/31/91 11300.01 19551.45 02/28/91 13116.95 20949.38 03/31/91 12096.74 21456.35 04/30/91 12155.04 21507.85 05/31/91 12475.68 22436.99 06/30/91 10843.35 21409.37 07/31/91 11659.51 22407.05 08/31/91 11533.20 22938.10 09/30/91 10474.13 22555.03 10/31/91 10629.59 22857.27 11/30/91 9356.76 21936.12 12/31/91 9055.55 24445.61 01/31/92 8929.24 23990.92 02/29/92 9113.85 24302.81 03/31/92 8462.86 23828.90 04/30/92 9162.43 24529.47 05/31/92 9891.15 24649.67 06/30/92 9317.89 24282.39 07/31/92 9706.54 25275.53 08/31/92 10202.07 24757.39 09/30/92 10512.99 25049.52 10/31/92 9968.88 25137.20 11/30/92 9764.84 25994.38 12/31/92 9366.47 26314.11 01/31/93 9735.69 26535.14 02/28/93 10697.60 26896.02 03/31/93 11542.92 27463.53 04/30/93 12165.15 26798.91 05/31/93 12729.16 27517.12 06/30/93 12661.09 27596.92 07/31/93 12836.13 27486.53 08/31/93 13283.45 28528.27 09/30/93 12894.47 28308.61 10/31/93 12709.71 28894.59 11/30/93 11367.75 28620.10 12/31/93 11329.36 28966.40 01/31/94 11436.70 29951.26 02/28/94 11378.15 29136.58 Let's say you invested $10,000 in Fidelity Select Energy Service Portfolio on December 16, 1985, when the fund started, and paid a 3% sales charge. By February 28, 1994, your investment would have grown to $11,378 - a 13.78% increase. That compares to $10,000 invested in the S&P 500, which would have grown to $29,137 over the same period - a 191.37% increase. INVESTMENT CHANGES TOP TEN STOCKS AS OF FEBRUARY 28, 1994 % OF FUND'S INVESTMENTS Halliburton Co. 9.6 BJ Services Co. 7.3 Schlumberger Ltd. 7.3 ICO, Inc. 6.2 Tuboscope Vetco Corp. 5.5 Weatherford International, Inc. 5.4 Wheatley TXT Corp. 5.3 Camco International, Inc. 4.3 Western Co. of North America 4.2 Enterra Corp. 3.9 TOP INDUSTRIES AS OF FEBRUARY 28, 1994 Row: 1, Col: 1, Value: 2.1 Row: 1, Col: 2, Value: 1.6 Row: 1, Col: 3, Value: 4.3 Row: 1, Col: 4, Value: 6.2 Row: 1, Col: 5, Value: 16.8 Row: 1, Col: 6, Value: 69.0 Oil & Gas Services 69.0% Drilling 16.8% Fabricated Metal Products 6.2% Oil Field Equipment 4.3% Transportation Services 1.6% All Others 2.1% ENERGY SERVICE PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW William Mankivsky, Portfolio Manager of Fidelity Select Energy Service Portfolio Q. BILL, HOW DID THE FUND DO? A. For the 12 months ended February 28, 1994, the fund had a total return of 6.36%. That lagged the S&P 500's return of 8.33% for the same period. Q. WHY DID THE FUND FALL BEHIND? A. Throughout most of the period, the fund benefited from its investment in companies that profited from higher natural gas prices, which rose sharply on strong demand and weak supply. But late last fall, investors dumped these stocks after they had reached very high levels. What's more, oil prices - which tend to set the direction for natural gas prices - fell sharply in November. Those events hurt the fund's natural gas and oil-related stocks. Plus, the fund's assets fluctuated wildly during the year, as energy services companies moved in and out of investors' favor. At times, that meant that I had to sell some of the fund's investments when they were falling in order to meet the fund's redemptions. Q. SINCE THE NOVEMBER CORRECTION, WHAT HAS YOUR STRATEGY BEEN? A. The price of natural gas has rebounded some since the first of the year, so I've focused on companies that could benefit from that recovery. I've also slowly increased the fund's investments in companies that could be helped by rising worldwide oil prices, which haven't yet materialized. If prices of these commodities rise, exploration and production may become more profitable. Q. WHAT'S CAUSING NATURAL GAS PRICES TO REBOUND? A. Over the last decade there was a fairly large build-up of natural gas inventory. That build-up depressed natural gas prices until about two years ago. But as inventory began to be depleted in 1993, natural gas prices rose. Despite the drop-off last fall, I think they could continue to recover as inventories stay low. Q. WHAT OIL-RELATED COMPANIES DID YOU FAVOR? A. I focused on companies that had more of their revenues coming from abroad, since oil is the most widely-used fuel across the world. In the fourth quarter of 1993, oil prices dropped from about $18 a barrel to about $14. Since then, investors have anticipated that oil prices won't recover quickly, and that fear seems to be already factored into stock prices. To me that means that any whiff of positive news might boost oil prices. That's why I've favored companies like Schlumberger - one of the fund's top five holdings at the end of the period - because it's inexpensive relative to its competitors and generates roughly 80% of its oil field profits from overseas. I also invested in Halliburton - the fund's largest investment at the end of February. The company gets a considerable share of its profits from pressure pumping, which helps wring more oil and gas out of existing wells. Q. WHAT EFFECT WOULD RISING OIL PRICES HAVE ON PRODUCTION? A. When commodity prices start to rise, the first thing well operators are likely to do is improve the production from their existing wells. The next thing is drill new wells. The fund holds BJ Services, which is a leader in providing equipment and services that both stimulate old wells and help cement new ones. It's a well managed company with significant businesses in the U.S. and abroad. The fund also invested in ICO, which inspects pipes used to drill wells, and produces a protective pipe coating which makes those pipes stronger. Both these companies could benefit if commodity prices start to rise. Q. WERE THERE ANY DISAPPOINTMENTS? A. Tuboscope, which provides products and services similar to ICO's, didn't fare as well as I'd hoped. A proposed acquisition of the company fell apart late last year, and its stock price dropped to about half of its 1993 high. The fund still holds the company's stock because it's well-managed and has good cash flow. Q. WHAT'S ON THE HORIZON FOR ENERGY SERVICE STOCKS? A. While I can't say for certain what the price of natural gas or oil will be over the next six months, I see a couple of positive signs for the stocks. I think that the demand for natural gas may slightly outpace the supply, which would help prices. I also believe the worst case for oil prices has already been factored into stock prices, and that there probably won't be a drop-off in international drilling activity. And since these stocks have been beaten down recently, a rise in oil or gas prices could translate to improved earnings for energy service companies. FUND FACTS START DATE: December 16, 1985 SIZE: as of February 28, 1994, over $40 million MANAGER: William Mankivsky, since January 1992; manager, Fidelity Select Food and Agriculture Portfolio, since April 1993; equity analyst, energy service, since 1992 and medical device industries, in 1992; joined Fidelity in 1991 (checkmark) ENERGY SERVICE PORTFOLIO INVESTMENTS FEBRUARY 28, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 93.5% SHARES VALUE (NOTE 1) AIR TRANSPORTATION - 1.6% TRANSPORTATION SERVICES - 1.6% Helikopter Services 42,750 $ 647,885 42499192 BUILDING MATERIALS - 1.0% FABRICATED PIPE & FITTINGS - 1.0% Coflexip sponsored ADR 24,000 429,000 19238410 ENERGY SERVICES - 79.3% DRILLING - 16.2% Arethusa Offshore Ltd. (a) 24,000 258,000 03999792 Atwood Oceanics, Inc. (a) 104,600 1,399,025 05009510 Chiles Offshore Corp. (a) 131,400 706,275 16888710 Cliffs Drilling Co. (a) 56,200 674,400 18682C10 Dual Drilling Co. (a) 43,000 478,375 26356410 Energy Service, Inc. (a) 90,000 309,375 29271910 Global Marine, Inc. (a) 192,600 770,400 37935240 Marine Drilling Cos., Inc. par $0.01 (a) 125,100 719,325 56824020 Nabors Industries, Inc. (a) 15,000 99,375 62956810 Noble Drilling Corp. (a) 129,000 1,048,125 65504210 Tucker Drilling Co., Inc. (a) 23,000 123,625 89865210 6,586,300 OIL & GAS SERVICES - 63.1% BJ Services Co. (a) 153,831 2,961,247 05548210 Dreco Energy Services Ltd. Class A (a) 19,900 201,487 26152820 Enterra Corp. (a) 81,600 1,581,000 29380510 Geophysique 8,000 813,676 38265091 Gulfmark International, Inc. (a) 23,500 311,375 40262810 H & H Oil Tool Co., Inc. (a) 110,000 522,500 40404010 Halliburton Co. 124,000 3,890,500 40621610 Nowsco Well Service Ltd. 34,200 500,519 67012210 Offshore Logistics, Inc. (a) 13,200 189,750 67625510 Offshore Pipelines, Inc. 13,200 242,550 67626910 Petroleum Helicopters, Inc. (a) 28,000 294,000 71660410 Petroleum Helicopters, Inc. (non-vtg.) (a) 9,600 100,800 71660420 Schlumberger Ltd. 51,900 2,951,812 80685710 Service Fracturing Co. (a)(b) 360,900 1,263,150 81790810 Smith International, Inc. (a) 126,478 1,280,590 83211010 Tidewater, Inc. 12,400 275,900 88642310 Tuboscope Vetco Corp. (a) 367,820 2,252,898 89860010 Weatherford International, Inc. (a) 207,900 2,182,950 94707610 Western Co. of North America (a) 121,000 1,694,000 95804340 Wheatley TXT Corp. 191,500 2,154,375 96271810 25,665,079 TOTAL ENERGY SERVICES 32,251,379 IRON & STEEL - 6.2% FABRICATED METAL PRODUCTS - 6.2% ICO, Inc. (a) 306,700 2,530,275 44929420 OIL & GAS - 5.4% CRUDE PETROLEUM & GAS - 1.1% Unit Corp. unit (3 common & 1 warrant) (a) 50,700 430,950 90921820 OIL FIELD EQUIPMENT - 4.3% Camco International, Inc. 100,600 1,735,350 13263210 TOTAL OIL & GAS 2,166,300 TOTAL COMMON STOCKS (Cost $39,673,567) 38,024,839 CONVERTIBLE PREFERRED STOCKS - 3.5% SHARES VALUE (NOTE 1) ENERGY SERVICES - 3.5% DRILLING - 0.6% Energy Service, Inc. $1.50 8,600 $ 228,975 29271930 OIL & GAS SERVICES - 2.9% Offshore Pipeline 26,500 1,172,625 67626920 TOTAL ENERGY SERVICES 1,401,600 TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $1,145,047) 1,401,600 NONCONVERTIBLE BONDS - 3.0% PRINCIPAL AMOUNT ENERGY SERVICES - 3.0% OIL & GAS SERVICES - 3.0% Tuboscope Vetco International, Inc. gtd. 10 3/4%, 4/15/03 (Cost $1,200,000) $ 1,200,000 1,236,000 898602AA TOTAL INVESTMENT IN SECURITIES - 100% (Cost $42,018,614) $ 40,662,439 LEGEND 1. Non-income producing 2. A company in which the fund has ownership of at least 5% of the voting securities is an affiliated company. A summary of the transactions during the period in which the issuers were affiliates is as follows: PURCHASES SALES DIVIDEND MARKET AFFILIATE COST COST INCOME VALUE Service Fracturing Co. (a) $ 525,506 $ 204,475 $ - $ 1,263,150 OTHER INFORMATION CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1, 1993, the fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of February 28, 1993 have been reclassified to reflect an increase in paid in capital of $4,936,341, a decrease in undistributed net investment loss of $1,686,758 and a decrease in accumulated net realized loss on investments of $6,623,099. Purchases and sales of securities, other than short-term securities, aggregated $111,824,655 and $152,222,235, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $154,629 for the period (see Note 4 of Notes to Financial Statements). At the period end, the value of securities loaned and the value of collateral amounted to $1,048,125 and $1,163,700, respectively (see Note 6 of Notes to Financial Statements). The maximum loan and average daily loan balances during the periods for which loans were outstanding amounted to $13,078,000 and $3,019,744, respectively. The weighted average interest rate paid was 3.6% (see Note 7 of Notes to Financial Statements). Distribution of investments by country, as a percentage of total value of investment in securities, is as follows: United States 85.7% Netherlands 7.3 France 3.1 Norway 2.2 Canada 1.7 TOTAL 100.0% INCOME TAX INFORMATION At February 28, 1994, the aggregate cost of investment securities for income tax purposes was $43,113,367. Net unrealized depreciation aggregated $2,450,928, of which $2,091,040 related to appreciated investment securities and $4,541,968 related to depreciated investment securities. ENERGY SERVICE PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994 ASSETS Investment in securities, at value (cost $42,018,614) (Notes 1 and 2) - See accompanying schedule $ 40,662,439 Receivable for investments sold 2,180,927 Receivable for fund shares sold 729,188 Dividends receivable 59,912 Interest receivable 48,375 Redemption fees receivable (Note 1) 919 TOTAL ASSETS 43,681,760 LIABILITIES Payable to custodian bank $ 358,633 Payable for fund shares redeemed 1,224,702 Accrued management fee 22,063 Other payables and accrued expenses 55,834 Collateral on securities loaned, at value (Note 6) 1,163,700 TOTAL LIABILITIES 2,824,932 NET ASSETS $ 40,856,828 Net Assets consist of (Note 1): Paid in capital $ 42,225,413 Undistributed net investment income 44,725 Accumulated undistributed net realized gain (loss) on investments (57,135 ) Net unrealized appreciation (depreciation) on investment securities (1,356,175 ) NET ASSETS, for 3,505,172 shares outstanding $ 40,856,828 NET ASSET VALUE and redemption price per share ($40,856,828 (divided by) 3,505,172 shares) $11.66 Maximum offering price per share (100/97 of $11.66) $12.02
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994 INVESTMENT INCOME $ 1,077,841 Dividends Interest (including security lending fees of $895) (Note 6) 686,793 TOTAL INCOME 1,764,634 EXPENSES Management fee (Note 4) $ 588,460 Transfer agent (Note 4) 920,773 Fees Redemption fees (Note 1) (165,409 ) Accounting and security lending fees (Note 4) 95,263 Non-interested trustees' compensation 695 Custodian fees and expenses 25,801 Registration fees 65,446 Audit 6,412 Legal 912 Interest (Note 7) 13,122 Reports to shareholders 7,681 Miscellaneous 1,377 Total expenses before reductions 1,560,533 Expense reductions (Note 8) (10,792 1,549,741 ) NET INVESTMENT INCOME 214,893 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 17,604,019 Net realized gain (loss) on investment securities (including realized gain (loss) of $211,250 on sales of investments in affiliated issuers) Change in net unrealized appreciation (depreciation) on investment securities (4,993,642 ) NET GAIN (LOSS) 12,610,377 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 12,825,270 OTHER INFORMATION $861,986 Sales charges paid to FDC (Note 4) Deferred sales charges withheld $22,626 by FDC (Note 4) Exchange fees withheld by FSC $143,145 (Note 4)
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED TEN MONTHS FEBRUARY 28, ENDED 1994 FEBRUARY 28, 1993 INCREASE (DECREASE) IN NET ASSETS Operations $ 214,893 $ 55,841 Net investment income Net realized gain (loss) on investments 17,604,019 751,971 Change in net unrealized appreciation (depreciation) on investments (4,993,642 6,208,748 ) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 12,825,270 7,016,560 Distributions to shareholders from net investment income (269,046 - ) Share transactions 359,408,419 211,905,434 Net proceeds from sales of shares Reinvestment of distributions 265,568 - Cost of shares redeemed (417,772,180 (175,545,993 ) ) Paid in capital portion of redemption fees (Note 1) 1,164,835 536,363 Net increase (decrease) in net assets resulting from share transactions (56,933,358 36,895,804 ) TOTAL INCREASE (DECREASE) IN NET ASSETS (44,377,134 43,912,364 ) NET ASSETS Beginning of period 85,233,962 41,321,598 End of period (including undistributed net investment income (loss) of $44,725 and $(1,629,894), $ 40,856,828 $ 85,233,962 respectively) OTHER INFORMATION Shares Sold 29,627,725 20,799,247 Issued in reinvestment of distributions 22,698 - Redeemed (33,889,248 (17,438,325 ) ) Net increase (decrease) (4,238,825 3,360,922 )
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30, FEBRUARY 28, ENDED FEBRUARY 28, SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990 Net asset value, beginning of period $ 11.01 $ 9.43 $ 12.51 $ 12.19 $ 8.99 Income from Investment Operations Net investment income (loss) .03 .01 (.12) - (.05) Net realized and unrealized gain (loss) on investments .51 1.47 (3.11) .15 3.17 Total from investment operations .54 1.48 (3.23) .15 3.12 Less Distributions From net investment income (.05) - - (.02) - Redemption fees added to paid in capital .16 .10 .15 .19 .08 Net asset value, end of period $ 11.66 $ 11.01 $ 9.43 $ 12.51 $ 12.19 TOTAL RETURND,E 6.36% 16.76% (24.62)% 2.80% 35.60% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 40,857 $ 85,234 $ 41,322 $ 73,398 $ 61,821 Ratio of expenses to average net assetsB 1.65% 1.76% 2.07% 1.82% 2.29% A Ratio of expenses to average net assets before expense 1.66% 1.76% 2.07% 1.82% 2.29% reductionsB A Ratio of net investment income to average net assets .23% .13% (1.13)% (.02)% (.42)% A Portfolio turnover rate 137% 236% 89% 62% 128% A
1 ANNUALIZED 2 SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS. 3 NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH PERIOD. 4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 5 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. NATURAL GAS PORTFOLIO PERFORMANCE AND INVESTMENT SUMMARY PERFORMANCE There are several ways to evaluate a fund's historical performance: total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). CUMULATIVE TOTAL RETURNS PERIOD ENDED LIFE OF FEBRUARY 28, 1994 FUND NATURAL GAS -3.84% NATURAL GAS (INCL. 3% SALES CHARGE) -6.72% S&P 500 7.57% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, since the fund started on April 21, 1993. You can compare these figures to the performance of the S&P 500 - a common proxy for the U.S. stock market. This benchmark includes reinvested dividends and capital gains, if any. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of growth in the long run and volatility in the short run. Unlike the broader market, however, some sectors may not have a history of growth in the long run. And, as with all stock funds, the share price and return of a fund that invests in a sector will vary. That means if you sell your shares during a sector downturn, you might lose money. But if you can identify a sector that is about to experience rapid growth you may have the potential for above-average gains. (checkmark) $10,000 OVER LIFE OF FUND Natural Gas (513) S&P 500 04/21/93 9700.00 10000.00 04/30/93 9515.70 9893.80 05/31/93 9670.90 10158.96 06/30/93 9952.20 10188.42 07/31/93 9913.40 10147.66 08/31/93 10767.00 10532.26 09/30/93 10582.70 10451.16 10/31/93 10010.40 10667.50 11/30/93 9156.80 10566.16 12/31/93 9209.91 10694.01 01/31/94 9672.38 11057.61 02/28/94 9327.99 10756.84 Let's say you invested $10,000 in Fidelity Select Natural Gas Portfolio on April 21, 1993, when the fund started, and paid a 3% sales charge. By February 28, 1994, your investment would be valued at $9,328 - a 6.72% decrease. That compares to $10,000 invested in the S&P 500, which would have grown to $10,757 over the same period - a 7.57% increase. INVESTMENT SUMMARY TOP TEN STOCKS AS OF FEBRUARY 28, 1994 % OF FUND'S INVESTMENTS Burlington Resources, Inc. 8.8 Anadarko Petroleum Corp. 7.7 Cabot Oil & Gas Corp. Class A 5.4 Enron Oil & Gas Co. 5.3 Columbia Gas System, Inc. (The) 4.9 Halliburton Co. 3.8 Apache Corp. 3.6 ENSERCH Corp. 3.1 Enron Corp. 3.1 Sonat, Inc. 2.8 TOP INDUSTRIES AS OF FEBRUARY 28, 1994 Row: 1, Col: 1, Value: 13.4 Row: 1, Col: 2, Value: 3.6 Row: 1, Col: 3, Value: 4.0 Row: 1, Col: 4, Value: 6.9 Row: 1, Col: 5, Value: 15.2 Row: 1, Col: 6, Value: 15.5 Row: 1, Col: 7, Value: 41.4 Crude Petroleum & Gas 41.4% Gas Transmission & Distribution 15.5% Gas Transmission 15.2% Gas Distribution 6.9% Oil & Gas Services 4.0% Oil & Gas Exploration 3.6% All Others 13.4%* * INCLUDES SHORT-TERM INVESTMENTS NATURAL GAS PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW Michael Tempero, Portfolio Manager of Fidelity Select Natural Gas Portfolio Q. MIKE, HOW DID THE FUND DO? A. From the fund's commencement of operations on April 21, 1993 through February 28, 1994, it returned -3.84%. That lagged the S&P 500, which returned 7.57% for the same period. Q. EVEN THOUGH YOU'VE ONLY MANAGED THE FUND SINCE FEBRUARY 1, CAN YOU TELL US WHAT HAPPENED SINCE LAST APRIL? A. Basically, the fund began operations in April of 1993, when natural gas prices were at their peak. Since then, the fund has been swimming upstream against falling natural gas prices. What's more, the fourth quarter is historically very hard on natural gas stocks, and 1993 was no exception. There was an inventory build-up between March and November - in preparation for winter - which increased demand for natural gas and drove stock prices higher. Then, before it was certain how severe the winter weather would actually be, the stocks were in a dead period. Storage was full and there was ample supply. At that point, natural gas prices fell and so did stock prices. Q. SO WHEN IT BECAME APPARENT THAT LAST WINTER WAS GOING TO BE HARSH, DID PRICES MOVE HIGHER? A. Yes, and I expect the effects of a colder-than-normal winter might continue to drive prices higher through the rest of 1994. Storage levels are quite low on a historical basis, drawn down by higher-than-expected heating needs. That should only magnify some of the trends that have already been helping natural gas prices. First, a decade-long decline in drilling has kept supply very low. Second, the industry has benefited from federal policies designed to promote gas as a clean, abundant, domestic alternative to foreign oil. The combination of lower supply and higher demand could bode well for natural gas prices. Q. WHAT KINDS OF COMPANIES DID YOU FOCUS ON? A. I focused on exploration and production (E&P) like Burlington Resources - which produces both oil and gas. The company is expected to have healthy growth in production and also a large drilling inventory. That means it has a lot of land it can drill on currently, before it's forced to go out and buy additional land to raise production levels. Despite the decline in oil prices, the company should continue to do well. Q. WHAT OTHER COMPANIES ARE ATTRACTIVE? A. Cabot, an Appalachian producer, is expected to have relatively higher levels of oil and gas production in 1994. Enron, whose production growth over the past few years has been strong, has also been helped by aggressive cost-cutting efforts. Plus, Enron is turning to new locations - namely Trinidad and India - to increase production growth. Anadarko Petroleum is the only company drilling for oil in the Gulf of Mexico under layers of salt. That technique is one that none of Anadarko's competitors has yet mastered. Apache, on the other hand, has been extremely successful in buying old properties and making them pay off in terms of production. Q. WHAT'S YOUR OUTLOOK FOR NATURAL GAS PRICES? A. I'm fairly optimistic. Storage inventory has been drawn down to very low levels. Companies will need to re-build that inventory this summer. Demand, on the other hand, has been increasing 3 to 5% over the past several years, and it looks like that trend may continue. I also think oil prices could turn around this summer and begin to rise. If you believe, as I do, that low oil prices have held back natural gas prices, a recovery in oil prices could ultimately benefit natural gas prices. FUND FACTS START DATE: April 21, 1993 SIZE: as of February 28, 1994, over $63 million MANAGER: Michael Tempero, since February 1994; joined Fidelity in 1993 (checkmark) NATURAL GAS PORTFOLIO INVESTMENTS FEBRUARY 28, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 89.6% SHARES VALUE (NOTE 1) ELECTRIC UTILITY - 0.5% ELECTRIC & OTHER SERVICES - 0.4% LG&E Energy Corp. 8,225 $ 296,100 50191710 ELECTRIC POWER - 0.1% Sithe Energies, Inc. (a) 3,500 49,000 82990410 TOTAL ELECTRIC UTILITY 345,100 ENERGY SERVICES - 4.0% OIL & GAS SERVICES - 4.0% BJ Services Co. (a) 2,186 42,081 05548210 Baker Hughes, Inc. 400 7,600 05722410 Enterra Corp. (a) 2,658 51,499 29380510 Halliburton Co. 77,375 2,427,641 40621610 Weatherford International, Inc. (a) 880 9,240 94707610 2,538,061 GAS - 38.4% GAS & OTHER SERVICES - 0.8% UGI Corporation 21,290 489,670 90268110 GAS DISTRIBUTION - 6.9% MCN Corp. 37,910 1,459,535 55267J10 Northwest Natural Gas Co. 4,820 172,315 66765510 NICOR, Inc. 23,740 640,980 65408610 Pacific Enterprises 54,443 1,156,914 69423210 Peoples Energy Corp. 24,100 719,988 71103010 WICOR, Inc. 8,320 251,680 92925310 4,401,412 GAS TRANSMISSION - 15.2% Associated Nature Gas Corp. 29,420 963,505 04574410 Coastal Corp. (The) 14,235 448,403 19044110 Enron Corp. 63,110 2,011,631 29356110 ONEOK, Inc. 30,925 560,516 68267810 Panhandle Eastern Corp. 63,387 1,386,591 69846210 Sonat, Inc. 59,926 1,820,252 83541510 Tejas Power Corp. (a) 1,000 11,250 87907910 TransCanada PipeLines Ltd. 86,732 1,277,361 89352610 Williams Companies, Inc. 51,152 1,259,618 96945710 9,739,127 GAS TRANSMISSION & DISTRIBUTION - 15.5% Columbia Gas System, Inc. (The) (a) 111,095 3,152,321 19764810 Consolidated Natural Gas Co. 22,028 966,479 20961510 ENSERCH Corp. 130,000 2,015,000 29356710 El Paso Natural Gas Co. 19,980 771,728 28369587 Equitable Resources, Inc. 34,099 1,231,826 29454910 Questar Corp. 37,140 1,142,055 74835610 Tejas Gas Corp. 11,250 634,219 87907510 9,913,628 TOTAL GAS 24,543,837 INDEPENDENT POWER - 0.2% STEAM SUPPLY - 0.2% Magma Power Co. 3,500 110,688 55919410 OIL & GAS - 46.5% CRUDE PETROLEUM & GAS - 41.4% Anadarko Petroleum Corp. 111,175 4,947,288 03251110 Apache Corp. 92,225 2,305,625 03741110 Burlington Resources, Inc. 131,457 5,652,651 12201410 Cabot Oil & Gas Corp. Class A 160,167 3,463,611 12709710 Enron Oil & Gas Co. 78,800 3,388,400 29356210 Inverness Petroleum Ltd. (a) 72,000 533,531 46190810 Louis Dreyfus Natural Gas Corp. (a) 19,000 427,500 54601110 Maxus Energy Corp. (a) 19,500 92,625 57773010 SHARES VALUE (NOTE 1) Noble Affiliates, Inc. 32,550 $ 838,163 65489410 Northstar Energy Corp. (a) 25,900 482,206 66703R10 Nuevo Energy Corporation (a) 4,015 84,315 67050910 Oryx Energy Co. 51,900 934,200 68763F10 Paramount Resources Ltd. (a) 40,100 594,294 69932010 Petromet Resources Ltd. Ord. (a) 72,000 400,148 71673110 Pinnacle Resources Ltd. 48,900 733,772 72348R10 Renaissance Energy Ltd. (a) 14,500 295,480 75966610 Rio Alto Exploration Ltd. (a) 77,400 509,022 76689210 Summit Resources Ltd. 91,000 573,175 86624610 Tarragon Oil & Gas Ltd. (a) 5,300 60,874 87629E20 Tide West Oil Co. 17,000 208,250 88635540 26,525,130 NATURAL GAS LIQUIDS - 1.4% Western Gas Resources, Inc. 30,135 885,216 95825910 OIL & GAS EXPLORATION - 3.6% Anderson Exploration Ltd. (a) 24,900 595,054 03390110 Canadian Natural Resources Ltd. (a) 17,800 244,016 13638510 Chauvco Resources Ltd. Class A 111,900 1,419,994 16260010 Forcenergy AB 'B' Free shares 1,300 12,963 56099F22 2,272,027 PETROLEUM REFINERS - 0.1% Murphy Oil Corp. 2,200 87,450 62671710 TOTAL OIL & GAS 29,769,823 TOTAL COMMON STOCKS (Cost $62,218,635) 57,307,509 REPURCHASE AGREEMENTS - 10.4% MATURITY AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account, at 3.47% dated 2/28/94 due 3/1/94 $6,671,643 6,671,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $68,889,635) $ 63,978,509 LEGEND 1. Non-income producing OTHER INFORMATION Purchases and sales of securities, other than short-term securities, aggregated $77,530,257 and $15,701,918, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $33,752 for the period (see Note 4 of Notes to Financial Statements). The maximum loan and average daily loan balances during the periods for which loans were outstanding amounted to $1,202,000. The weighted average interest rate paid was 3.6% (see Note 7 of Notes to Financial Statements). Distribution of investments by country, as a percentage of total value of investment in securities, is as follows: United States 87.8% Canada 12.2 TOTAL 100.0% INCOME TAX INFORMATION At February 28, 1994, the aggregate cost of investment securities for income tax purposes was $69,042,045. Net unrealized depreciation aggregated $5,063,536, of which $1,088,599 related to appreciated investment securities and $6,152,135 related to depreciated investment securities. The fund has elected to defer to its fiscal year ending February 28, 1995 $356,000 of losses recognized during the period November 1, 1993 to February 29, 1994. NATURAL GAS PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $6,671,000) (cost $68,889,635) $ 63,978,509 (Notes 1 and 2) - See accompanying schedule Cash 618 Receivable for investments sold 1,698,760 Receivable for fund shares sold 587,952 Dividends receivable 104,931 Redemption fees receivable (Note 1) 390 TOTAL ASSETS 66,371,160 LIABILITIES Payable for investments purchased $ 1,075,109 Payable for fund shares redeemed 2,121,792 Accrued management fee 34,945 Other payables and accrued expenses 66,419 TOTAL LIABILITIES 3,298,265 NET ASSETS $ 63,072,895 Net Assets consist of (Note 1): Paid in capital $ 68,213,252 Undistributed net investment income 66,827 Accumulated undistributed net realized gain (loss) on investments (296,058 ) Net unrealized appreciation (depreciation) on investment securities (4,911,126 ) NET ASSETS, for 6,653,849 shares outstanding $ 63,072,895 NET ASSET VALUE and redemption price per share ($63,072,895 (divided by) 6,653,849 shares) $9.48 Maximum offering price per share (100/97 of $9.48) $9.77
STATEMENT OF OPERATIONS
APRIL 21, 1993 (COMMENCEMENT OF OPERATIONS) TO FEBRUARY 28, 1994 INVESTMENT INCOME $ 686,681 Dividends Interest 123,115 TOTAL INCOME 809,796 EXPENSES Management fee (Note 4) $ 243,289 Transfer agent (Note 4) 415,191 Fees Redemption fees (Note 1) (52,768 ) Accounting fees and expenses 46,258 (Note 4) Non-interested trustees' compensation 197 Custodian fees and expenses 20,984 Registration fees 52,690 Audit 9,747 Legal 192 Interest (Note 7) 121 Reports to shareholders 9,569 Miscellaneous 328 Total expenses before reductions 745,798 Expense reductions (Note 8) (2,943 742,855 ) NET INVESTMENT INCOME 66,941 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 390,296 Net realized gain (loss) on investment securities Change in net unrealized appreciation (depreciation) on investment securities (4,911,126 ) NET GAIN (LOSS) (4,520,830 ) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (4,453,889 ) OTHER INFORMATION $1,039,836 Sales charges paid to FDC (Note 4) Deferred sales charges withheld $2,886 by FDC (Note 4) Exchange fees withheld by FSC $45,180 (Note 4)
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS APRIL 21, 1993 (COMMENCEMENT OF OPERATIONS) TO FEBRUARY 28, 1994 Operations $ 66,941 Net investment income Net realized gain (loss) on investments 390,296 Change in net unrealized appreciation (depreciation) on investments (4,911,126) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (4,453,889) Distributions to shareholders: (390,296) From net realized gains In excess of net realized gain (296,172) Total distributions (686,468) Share transactions 154,654,614 Net proceeds from sales of shares Reinvestment of distributions 673,872 Cost of shares redeemed (87,329,043) Paid in capital portion of redemption fees (Note 1) 213,809 Net increase (decrease) in net assets resulting from share transactions 68,213,252 TOTAL INCREASE (DECREASE) IN NET ASSETS 63,072,895 NET ASSETS Beginning of period - End of period (including undistributed net investment income of $66,827) $ 63,072,895 OTHER INFORMATION Shares Sold 15,170,940 Issued in reinvestment of distributions 74,626 Redeemed (8,591,717) Net increase (decrease) 6,653,849
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
SELECTED PER-SHARE DATAC APRIL 21, 1993 (COMMENCEMENT OT OPERATIONS) TO FEBRUARY 28, 1994 Net asset value, beginning of period $ 10.00 Income from Investment Operations Net investment income .02 Net realized and unrealized gain (loss) on investments (.46) Total from investment operations (.44) Less Distributions From net realized gain (.07) In excess of net realized gain (.06) Total distributions (.13) Redemption fees added to paid in capital .05 Net asset value, end of period $ 9.48 TOTAL RETURND, E (3.84)% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 63,073 Ratio of expenses to average net assetsB 1.93%A Ratio of expenses to average net assets before expense reductionsB 1.94%A Ratio of net investment income to average net assets .17%A Portfolio turnover rate 44%A
1 ANNUALIZED 2 SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS. 3 NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH PERIOD. 4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 5 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. PRECIOUS METALS AND MINERALS PORTFOLIO PERFORMANCE AND INVESTMENT SUMMARY PERFORMANCE There are several ways to evaluate a fund's historical performance: total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 PAST 10 FEBRUARY 28, 1994 YEAR YEARS YEARS PRECIOUS METALS AND MINERALS 70.58% 49.34% 28.66% PRECIOUS METALS AND MINERALS (INCL. 3% SALES CHARGE) 65.47% 44.86% 24.80% S&P 500 8.33% 89.60% 321.84% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years, or ten years. You can compare these figures to the performance of the S&P 500 - a common proxy for the U.S. stock market. This benchmark includes reinvested dividends and capital gains, if any. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 PAST 10 FEBRUARY 28, 1994 YEAR YEARS YEARS PRECIOUS METALS AND MINERALS 70.58% 8.35% 2.55% PRECIOUS METALS AND MINERALS (INCL. 3% SALES CHARGE) 65.47% 7.69% 2.24% S&P 500 8.33% 13.65% 15.48% AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of growth in the long run and volatility in the short run. Unlike the broader market, however, some sectors may not have a history of growth in the long run. And, as with all stock funds, the share price and return of a fund that invests in a sector will vary. That means if you sell your shares during a sector downturn, you might lose money. But if you can identify a sector that is about to experience rapid growth you may have the potential for above-average gains. (checkmark) $10,000 OVER TEN YEARS Select Precious Metals (061) S&P 500 02/29/84 9700.00 10000.00 03/31/84 9455.46 10173.00 04/30/84 9311.25 10269.64 05/31/84 9116.87 9700.71 06/30/84 8530.61 9911.21 07/31/84 6723.01 9788.31 08/31/84 7820.25 10869.92 09/30/84 7477.76 10872.09 10/31/84 6811.80 10914.50 11/30/84 7147.95 10792.25 12/31/84 6247.32 11077.17 01/31/85 6348.80 11940.08 02/28/85 6044.36 12086.94 03/31/85 7300.17 12095.40 04/30/85 7084.53 12084.52 05/31/85 6995.73 12783.00 06/30/85 6750.93 12983.70 07/31/85 6211.38 12964.22 08/31/85 6073.20 12854.02 09/30/85 5869.23 12451.69 10/31/85 5342.84 13026.96 11/30/85 5961.34 13920.61 12/31/85 5586.29 14594.37 01/31/86 6770.67 14676.10 02/28/86 6856.20 15773.87 03/31/86 6435.09 16654.05 04/30/86 6099.52 16465.86 05/31/86 5481.02 17341.84 06/30/86 5592.87 17634.92 07/31/86 5520.05 16649.13 08/31/86 6572.12 17884.49 09/30/86 7431.09 16405.45 10/31/86 6778.54 17352.04 11/30/86 7477.70 17773.70 12/31/86 7424.43 17320.47 01/31/87 8316.69 19653.53 02/28/87 8902.66 20429.85 03/31/87 11446.27 21020.27 04/30/87 12238.65 20833.19 05/31/87 11146.63 21014.44 06/30/87 10986.82 22075.67 07/31/87 13224.14 23194.90 08/31/87 12877.89 24060.07 09/30/87 13277.41 23533.16 10/31/87 9615.13 18464.12 11/30/87 10827.01 16942.67 12/31/87 10209.19 18232.01 01/31/88 8415.50 18999.58 02/29/88 8428.99 19884.96 03/31/88 9130.28 19270.51 04/30/88 8826.84 19484.42 05/31/88 8874.04 19653.93 06/30/88 8550.36 20556.05 07/31/88 8604.31 20477.93 08/31/88 8091.83 19781.68 09/30/88 7545.63 20624.38 10/31/88 7822.10 21197.74 11/30/88 8112.06 20894.61 12/31/88 7773.29 21260.27 01/31/89 8096.59 22816.52 02/28/89 8356.64 22248.39 03/31/89 8356.64 22766.78 04/30/89 7977.11 23948.37 05/31/89 7597.58 24918.28 06/30/89 8194.99 24776.25 07/31/89 8419.89 27013.54 08/31/89 8588.57 27543.01 09/30/89 8890.79 27430.08 10/31/89 8883.76 26793.70 11/30/89 10015.31 27340.30 12/31/89 10273.38 27996.46 01/31/90 11091.55 26117.90 02/28/90 10138.21 26454.82 03/31/90 9697.10 27155.87 04/30/90 8701.07 26476.98 05/31/90 9199.09 29058.48 06/30/90 8530.32 28860.88 07/31/90 9049.68 28768.53 08/31/90 9142.17 26167.85 09/30/90 8935.85 24893.48 10/31/90 7932.70 24786.44 11/30/90 7790.41 26387.64 12/31/90 8108.41 27123.86 01/31/91 7228.32 28306.46 02/28/91 7877.57 30330.37 03/31/91 7726.08 31064.36 04/30/91 7704.43 31138.92 05/31/91 8137.27 32484.12 06/30/91 8671.10 30996.35 07/31/91 8671.10 32440.78 08/31/91 7762.15 33209.62 09/30/91 7920.85 32655.02 10/31/91 8454.68 33092.60 11/30/91 8721.59 31758.97 12/31/91 8233.08 35392.19 01/31/92 8407.79 34733.90 02/29/92 7971.02 35185.44 03/31/92 7658.00 34499.32 04/30/92 7206.68 35513.60 05/31/92 7679.84 35687.62 06/30/92 7723.17 35155.87 07/31/92 7825.27 36593.75 08/31/92 7475.21 35843.58 09/30/92 7168.91 36266.53 10/31/92 6709.46 36393.47 11/30/92 6315.64 37634.48 12/31/92 6432.84 38097.39 01/31/93 6588.65 38417.40 02/28/93 7315.77 38939.88 03/31/93 8310.01 39761.51 04/30/93 9652.96 38799.28 05/31/93 10929.14 39839.10 06/30/93 11107.22 39954.64 07/31/93 12554.05 39794.82 08/31/93 11292.71 41303.04 09/30/93 10402.35 40985.01 10/31/93 11878.86 41833.40 11/30/93 11856.60 41435.98 12/31/93 13613.44 41937.36 01/31/94 13050.28 43363.23 02/28/94 12479.61 42183.75 Let's say you invested $10,000 in Fidelity Select Precious Metals and Minerals Portfolio on February 29, 1984 and paid a 3% sales charge. By February 28, 1994, your investment would have grown to $12,480 - a 24.80% increase. That compares to $10,000 invested in the S&P 500, which would have grown to $42,184 over the same period - a 321.84% increase. INVESTMENT SUMMARY TOP TEN STOCKS AS OF FEBRUARY 28, 1994 % OF FUND'S INVESTMENTS American Barrick Resources Corp. 8.7 Vaal Reefs Exploration & Mining Co. Ltd. ADR 4.8 Free State Consolidated Gold Mines Ltd. ADR 4.3 Western Deep Levels Ltd. ADR 4.2 Anglo American Corp. of South Africa Ltd. ADR 4.1 Kloof Gold Mining Ltd. ADR 2.8 Plutonic Resources Ltd. 2.8 Poseidon Gold Ltd. 2.5 Anglo American Gold Investments Co. Ltd. ADR 2.5 Driefontein Consolidated Ltd. ADR 2.5 TOP INDUSTRIES AS OF FEBRUARY 28, 1994 Row: 1, Col: 1, Value: 29.8 Row: 1, Col: 2, Value: 3.2 Row: 1, Col: 3, Value: 30.2 Row: 1, Col: 4, Value: 22.3 Row: 1, Col: 5, Value: 14.5 Gold & Silver Ores (South Africa) 28.6% Gold Ores (Canada) 23.9% Gold & Silver Ores (Australia) 13.2% Gold Ores (U.S.) 4.6% All Others 29.7%* * INCLUDES SHORT-TERM INVESTMENTS PRECIOUS METALS AND MINERALS PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW Malcolm MacNaught, Portfolio Manager of Fidelity Select Precious Metals and Minerals Portfolio Q. MALCOLM, HOW DID THE FUND PERFORM? A. It had an excellent year. The fund's total return for the year ended February 28, 1994 was 70.58%, dramatically higher than the S&P 500's return of 8.33% for the same period. Q. WHY DID THE FUND TURN IN THESE OUTSTANDING RESULTS? A. The fund benefited from its heavy weighting in volatile South African and Australian gold shares during the first half of the year. This market was driven by higher gold prices and improving social and economic situations in South Africa and Australia. Demand from China and Southeast Asia also boosted the price of gold, as did improving economic conditions in India, which increased that country's gold demand. Another influence was turmoil in Turkey, where the people were trying to protect themselves from rampant inflation by buying gold. Q. HOW DID YOUR STOCK SELECTION AFFECT THE FUND'S PERFORMANCE? A. I focused on two different types of gold stocks. I liked established, growing companies, such as a South African mining concern, Vaal Reefs Exploration and Mining, and two Australian companies, Poseidon Gold and Plutonic Resources. I also was attracted to young companies that have found a significant new source of precious metals. A good example is Delta Gold, a well-managed Australian company with growth prospects in Australia and Zimbabwe. Smaller companies can be more volatile than established ones, but they also can produce excellent returns when things go well. Q. OVER THE LAST SIX MONTHS, THE FUND TURNED IN WEAKER PERFORMANCE. WHAT HAPPENED? A. Probably the biggest reason was the decline in the price of gold. Commodity funds and hedge funds were quick to drop their gold investments as soon as prices started falling in August. As a result, gold prices tumbled between 10% and 20%. Asian buyers, who are very price conscious, stopped buying gold around the same time. The South African stock index also experienced some weakness in anticipation of April's national elections. And in Australia, gold prices saw a much-needed correction after the gold index had climbed by as much as 140%. Prices picked up a bit after Christmas and following Ramadan, a Muslim holiday in February, reflecting better jewelry sales. Q. WE'VE TALKED ABOUT THE STRONG PERFORMANCE OF SOUTH AFRICAN AND AUSTRALIAN STOCKS. WHY WAS YOUR TOP STOCK A CANADIAN COMPANY? A. American Barrick, a mining company with exploration prospects in Nevada and South America, appears to have excellent production potential over the next three years. Fourth quarter gold sales and earnings were a bit below expectations, but the first quarter of 1994 should be very good, and I expect it will be an excellent long-term performer. Q. WHAT'S YOUR OUTLOOK FOR THE FUND GOING FORWARD? A. I believe the price of gold could be higher a year from now than it is today. That's because worldwide supply and demand are almost in balance and the demand for jewelry should increase about 4% to 6%. In 1993, the demand for jewelry fell one or two percentage points because of economic problems in Western Europe and Japan. If Europe's economy improves, like I expect it to, jewelry sales should grow no matter what happens in Japan. That said, I would like to remind shareholders that the fund had an unusually good year. In general, gold stocks are extremely volatile, and world economic and political circumstances can alter expectations dramatically. FUND FACTS START DATE: July 14, 1981 SIZE: as of February 28, 1994, over $409 million MANAGER: Malcolm MacNaught, since July 1981; manager, American Gold Portfolio, since December 1985; Advisor Global Natural Resources, since November 1988; joined Fidelity in 1968 (checkmark) PRECIOUS METALS AND MINERALS PORTFOLIO INVESTMENTS FEBRUARY 28, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 90.7% SHARES VALUE (NOTE 1) AUSTRALIA - 13.5% METALS & MINING - 0.3% METAL MINING - 0.3% Orion Resources N.L. (a) 250,000 $ 385,370 68699E22 Samantha Gold N.L. 200,000 927,744 93599C22 1,313,114 PRECIOUS METALS - 13.2% GOLD & SILVER ORES - 7.0% Macraes Mining Co. Ltd. 850,000 1,759,151 55599222 Niugini Mining (a) 100,000 417,485 65410810 North Flindes (a) 850,000 6,551,307 65940091 Plutonic Resources Ltd. 1,960,000 11,329,917 72999192 Sons of Gwalia 80,000 528,101 83568810 Zapopan N.L. 3,624,500 7,501,201 98999293 28,087,162 GOLD ORES - 6.2% Asarco Australia Ltd. 900,000 1,181,808 04341799 Delta Gold (a) 578,000 1,567,461 24763810 Gold Mines Kalgoorlie (a) 4,256,948 4,222,765 38065310 Great Central Mines N.L. (a) 515,000 3,491,535 39029092 Great Central Mines N.L. ADR (a) 115,000 805,000 39029010 Homestake Gold of Australia 63,600 78,521 43761399 Mount Burgess Gold Mining Co. (a) 350,000 197,323 62499922 Newcrest Mining Ltd. (a) 293,200 1,270,101 65163810 Poseidon Gold Ltd. 4,355,223 10,256,768 36899192 St. Barbara Mines Ltd. (a) 1,464,100 1,838,939 79999H22 24,910,221 TOTAL PRECIOUS METALS 52,997,383 TOTAL AUSTRALIA 54,310,497 CANADA - 24.1% CREDIT & OTHER FINANCE - 0.2% HOLDING COMPANY OFFICES, NEC - 0.2% Bolivar Goldfields Ltd. 200,800 781,178 09760Q10 PRECIOUS METALS - 23.9% GOLD ORES - 23.9% Agnico Eagle Mines Ltd. 760,000 9,081,141 00847410 American Barrick Resources Corp. 1,390,000 34,891,627 02451E10 Breakwater Resources Ltd. (a) 387,600 47,392 10690210 Cambior, Inc. 400,000 6,298,628 13201L10 Crown Resources Corp. 144,700 949,594 22856910 Euro-Nevada Mining Corp. 310,000 9,877,731 29870P10 Franco Nevada Mining Corp. 166,000 9,902,186 35186010 Golden Star Resources Ltd. (a) 180,000 2,717,672 38119T10 Hemlo Gold Mines, Inc. 301,400 2,819,693 42366F10 Lac Minerals Ltd. 650,000 5,539,085 50545810 Orvana Minerals Corp. (warrants) (a) 100,000 413,561 68759M92 Pegasus Gold, Inc. 140,000 2,723,231 70556K10 Placer Dome, Inc. 185,000 4,472,490 72590610 Prime Resources Group, Inc. (a) 866,956 6,424,274 74157L10 96,158,305 TOTAL CANADA 96,939,483 SHARES VALUE (NOTE 1) SOUTH AFRICA - 47.1% CLOSED END INVESTMENT COMPANY - 7.0% REG'D INVESTMENT COMPANIES - 7.0% Free State Consolidated Gold Mines Ltd. ADR 1,203,600 $ 17,151,300 35614220 Genbel Investments Ltd. Ord. 793,600 1,128,301 36867310 Orange Free State Investments Ltd.: ADR 256,400 9,166,300 68486520 Ord. 20,000 721,485 68486510 28,167,386 CREDIT & OTHER FINANCE - 6.9% HOLDING COMPANY OFFICES, NEC - 0.8% Anglovaal Ltd. 2,400 58,568 03599722 Beatrix Mines Ltd. ADR 401,300 1,856,013 07419020 Gencor Ltd. (Reg.) (a) 650,000 1,186,204 36868193 3,100,785 MISCELLANEOUS NONMETAL MINERALS - 2.3% De Beers Consolidated Mines Ltd. ADR 420,000 9,292,500 24025330 MISCELLANEOUS METAL ORES, NEC - 3.8% Impala Platinum Holdings Ltd.: ADR 434,900 5,653,700 45255320 Ord. 83,000 1,074,377 45255310 Rustenberg Platinum Holding Ltd. ADR 500,000 8,750,000 78307820 15,478,077 TOTAL CREDIT & OTHER FINANCE 27,871,362 PRECIOUS METALS - 28.6% GOLD & SILVER ORES - 2.5% Eastvaal Gold Holdings Ltd. (a) 1,300,000 2,027,584 27799322 Southvaal Holdings Ltd. ADR 296,000 7,844,000 84473820 9,871,584 GOLD ORES - 26.1% Anglo American Corp. of South Africa Ltd.: ADR 393,100 16,411,925 03486130 (Reg.) (a) 10,100 422,217 03486110 Buffelsfontein Gold Mining Co. Ltd. ADR 300,300 3,190,688 11987120 Deelkraal Gold Mining Ltd. ADR 767,000 1,073,800 24368020 Driefontein Consolidated Ltd. ADR 853,800 10,138,875 26202640 East Rand Proprietary Mines 500,000 716,180 27467710 Harmony Gold Mining Co. Ltd. ADR (a) 220,000 1,237,500 41321620 Hartebeestfontein Gold Mining Co. Ltd. ADR 1,462,100 7,493,263 41619840 Kloof Gold Mining Ltd. ADR 1,125,100 11,391,638 49874650 Randfontein Estates Gold Mining Co. Ltd. ADR 919,000 7,696,625 75233640 Unisel Gold Mines Ltd. 956,500 1,243,450 90917020 Vaal Reefs Exploration & Mining Co. Ltd. ADR 2,127,900 19,151,100 91850640 Western Areas Gold Mining Ltd. ADR 566,500 4,673,625 95765420 Western Deep Levels Ltd.: ADR 419,000 17,074,250 95807720 Ord. 5,000 202,652 95807710 Winkelhaak Mines Ltd. ADR 280,700 2,807,000 97420420 104,924,788 TOTAL PRECIOUS METALS 114,796,372 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) SOUTH AFRICA - CONTINUED SECURITIES INDUSTRY - 4.6% INVESTMENT MANAGERS - 4.6% Anglo American Gold Investment Co. Ltd. ADR 1,250,000 $ 10,234,375 03487050 Gold Fields Property Co. Ltd. ADR 385,000 7,700,000 38059740 Middle Witwatersrand West Area 180,000 425,889 59603410 18,360,264 TOTAL SOUTH AFRICA 189,195,384 UNITED KINGDOM - 0.1% RETAIL & WHOLESALE, MISCELLANEOUS - 0.1% RETAIL, GENERAL - 0.1% Signet Group PLC (a) 800,000 421,984 82999F22 UNITED STATES - 5.9% PRECIOUS METALS - 4.2% GOLD ORES - 4.2% Amax Gold, Inc. 287,500 1,868,750 02312010 Homestake Mining Co. 449,700 9,556,125 43761410 Newmont Mining Corp. 100,000 5,425,000 65163910 16,849,875 RAILROADS - 1.7% RAILROADS - 1.7% Santa Fe Pacific Corp. 294,800 6,706,700 80218310 TOTAL UNITED STATES 23,556,575 TOTAL COMMON STOCKS (Cost $292,773,886) 364,423,923 NONCONVERTIBLE PREFERRED STOCKS - 0.4% UNITED STATES - 0.4% PRECIOUS METALS - 0.4% GOLD ORES - 0.4% Newmont Mining Corp. depositary shares representing 1/2 preferred $1.375 (b) (Cost $1,613,122) 23,800 1,547,000 65163930 OTHER SECURITIES - 0.4% PRINCIPAL AMOUNT UNITED STATES - 0.4% INDEXED SECURITIES - 0.4% Goldman Sachs Group, LP notes 3.1273%, 3/28/94 (indexed to silver price) (Cost $1,600,005) $ 1,600,000 1,709,600 38142T9Y BULLION - 0.0% TROY OUNCES Gold Bullion (a) (Cost $3,468) 9 $ 3,437 68999410 REPURCHASE AGREEMENTS - 8.5% MATURITY AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account, at 3.47% dated 2/28/94 due 3/1/94 $ 34,069,284 $ 34,066,000 TOTAL INVESTMENT IN SECURITES - 100% (Cost $330,056,481) $ 401,749,960 LEGEND 1. Non-income producing 2. Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $1,547,000 or 0.4% of net assets. OTHER INFORMATION CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1, 1993, the fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of February 28, 1993 have been restated to reflect an increase in paid in capital of $2,542,641, a decrease in undistributed net investment income of $19,448,225 and a decrease in accumulated net realized loss on investments of $16,905,584. Purchases and sales of securities, other than short-term securities, aggregated $346,823,341 and $242,573,923, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $78,769 for the period (see Note 4 of Notes to Financial Statements). The maximum loan and average daily loan balances during the periods for which loans were outstanding amounted to $7,803,000 and $6,252,500, respectively. The weighted average interest rate paid was 3.6% (see Note 7 of Notes to Financial Statements). INCOME TAX INFORMATION At February 28, 1994, the aggregate cost of investment securities for income tax purposes was $330,879,856. Net unrealized appreciation aggregated $70,870,104, of which $98,042,314 related to appreciated investment securities and $27,172,210 related to depreciated investment securities. At February 28, 1994, the fund had a capital loss carryforward of approximately $69,642,000 of which $41,690,000, $6,357,000, $2,070,000, $8,843,000 and $10,682,000 will expire on February 28, 1997, 1998, 1999, 2000 and 2001, respectively. PRECIOUS METALS AND MINERALS PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $34,066,000) (cost $330,056,481) $ 401,749,960 (Notes 1 and 2) - See accompanying schedule Cash 884 Receivable for investments sold 898,450 Receivable for fund shares sold 23,208,768 Dividends receivable 1,310,885 Interest receivable 9,312 Redemption fees receivable (Note 1) 1,599 TOTAL ASSETS 427,179,858 LIABILITIES Payable for fund shares redeemed $ 17,387,594 Accrued management fee 216,565 Other payables and accrued expenses 363,226 TOTAL LIABILITIES 17,967,385 NET ASSETS $ 409,212,473 Net Assets consist of (Note 1): Paid in capital $ 408,885,783 Accumulated net investment loss (449,228 ) Accumulated undistributed net realized gain (loss) on investments (70,917,561 ) Net unrealized appreciation (depreciation) on investment securities 71,693,479 NET ASSETS, for 24,623,877 shares outstanding $ 409,212,473 NET ASSET VALUE and redemption price per share ($409,212,473 (divided by) 24,623,877 shares) $16.62 Maximum offering price per share (100/97 of $16.62) $17.13
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994 INVESTMENT INCOME $ 9,473,324 Dividends Interest (including security lending fees of $2,476) (Note 6) 1,592,962 TOTAL INCOME 11,066,286 EXPENSES Management fee (Note 4) $ 2,378,390 Transfer agent (Note 4) 3,158,227 Fees Redemption fees (Note 1) (486,660 ) Accounting and security lending fees (Note 4) 381,783 Non-interested trustees' compensation 2,415 Custodian fees and expenses 105,443 Registration fees 201,682 Audit 57,530 Legal 2,530 Interest (Note 7) 1,266 Reports to shareholders 56,692 Miscellaneous 3,959 Total expenses before reductions 5,863,257 Expense reductions (Note 8) (4,922 5,858,335 ) NET INVESTMENT INCOME 5,207,951 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 18,030,231 Net realized gain (loss) on investment securities (including realized gain of $502,854 on sales of investments in precious metals) Change in net unrealized appreciation (depreciation) on investment securities 112,846,238 NET GAIN (LOSS) 130,876,469 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 136,084,420 OTHER INFORMATION $4,693,581 Sales charges paid to FDC (Note 4) Deferred sales charges withheld $125,117 by FDC (Note 4) Exchange fees withheld by FSC $401,828 (Note 4)
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS FEBRUARY 28, ENDED 1994 FEBRUARY 28, 1993 Operations $ 5,207,951 $ 1,182,389 Net investment income Net realized gain (loss) on investments 18,030,231 (7,077,957 ) Change in net unrealized appreciation (depreciation) on investments 112,846,238 7,276,087 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 136,084,420 1,380,519 Distributions to shareholders (5,127,603) (2,313,988 From net investment income ) In excess of net investment income (551,255) - Total distributions (5,678,858) (2,313,988 ) Share transactions 1,777,546,533 207,366,366 Net proceeds from sales of shares Reinvestment of distributions 5,586,071 2,260,600 Cost of shares redeemed (1,649,222,991) (201,988,826 ) Paid in capital portion of redemption fees (Note 1) 6,974,855 1,216,068 Net increase (decrease) in net assets resulting from share transactions 140,884,468 8,854,208 TOTAL INCREASE (DECREASE) IN NET ASSETS 271,290,030 7,920,739 NET ASSETS Beginning of period 137,922,443 130,001,704 End of period (including accumulated net investment income (loss) of $(449,228) and $19,448,225,$ 409,212,473 $ 137,922,443 respectively) OTHER INFORMATION Shares Sold 119,380,060 21,004,885 Issued in reinvestment of distributions 319,586 255,184 Redeemed (109,070,745) (20,398,310 ) Net increase (decrease) 10,628,901 861,759
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30, FEBRUARY 28, ENDED FEBRUARY 28, SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990 Net asset value, beginning of period $ 9.86 $ 9.90 $ 10.68 $ 12.23 $ 11.35 Income from Investment Operations Net investment income .21 .09 .10 .18 .13 Net realized and unrealized gain (loss) on investments6.48 (.05) (.91) (1.71) .84 Total from investment operations 6.69 .04 (.81) (1.53) .97 Less Distributions From net investment income (.19) (.17) (.10) (.15) (.18) In excess of net investment income (.02) - - - - From net realized gain - - - - - Total distributions (.21) (.17) (.10) (.15) (.18) Redemption fees added to paid in capital .28 .09 .13 .13 .09 Net asset value, end of period $ 16.62 $ 9.86 $ 9.90 $ 10.68 $ 12.23 TOTAL RETURND, E 70.58% 1.51% (6.46)% (11.45)% 9.08% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 409,212 $ 137,922 $ 130,002 $ 155,367 $ 192,551 Ratio of expenses to average net assetsB 1.55% 1.73% 1.81% 1.79% 1.93% A Ratio of expenses to average net assets before expense 1.55% 1.73% 1.81% 1.79% 1.93% reductionsB A Ratio of net investment income to average net assets 1.38% 1.12% .92% 1.52% 1.01% A Portfolio turnover rate 73% 36% 44% 41% 98% A
1 ANNUALIZED 2 SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS. 3 NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH PERIOD. 4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 5 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. UTILITIES PORTFOLIO PERFORMANCE AND INVESTMENT SUMMARY PERFORMANCE There are several ways to evaluate a fund's historical performance: total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 PAST 10 FEBRUARY 28, 1994 YEAR YEARS YEARS UTILITIES 2.53% 97.16% 344.02% UTILITIES (INCL. 3% SALES CHARGE) -0.54% 91.24% 330.70% S&P 500 8.33% 89.60% 321.84% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years, or ten years. You can compare these figures to the performance of the S&P 500 - a common proxy for the U.S. stock market. This benchmark includes reinvested dividends and capital gains, if any. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 PAST 10 FEBRUARY 28, 1994 YEAR YEARS YEARS UTILITIES 2.53% 14.54% 16.08% UTILITIES (INCL. 3% SALES CHARGE) -0.54% 13.85% 15.72% S&P 500 8.33% 13.65% 15.48% AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of growth in the long run and volatility in the short run. Unlike the broader market, however, some sectors may not have a history of growth in the long run. And, as with all stock funds, the share price and return of a fund that invests in a sector will vary. That means if you sell your shares during a sector downturn, you might lose money. But if you can identify a sector that is about to experience rapid growth you may have the potential for above-average gains. (checkmark) $10,000 OVER TEN YEARS Select Utilities (065) S&P 500 02/29/84 9700.00 10000.00 03/31/84 9727.68 10173.00 04/30/84 9893.73 10269.64 05/31/84 9734.60 9700.71 06/30/84 9942.15 9911.21 07/31/84 10124.58 9788.31 08/31/84 10713.95 10869.92 09/30/84 11155.98 10872.09 10/31/84 11513.81 10914.50 11/30/84 11745.35 10792.25 12/31/84 12159.32 11077.17 01/31/85 12404.89 11940.08 02/28/85 12524.17 12086.94 03/31/85 13232.82 12095.40 04/30/85 13520.49 12084.52 05/31/85 14271.24 12783.00 06/30/85 14651.44 12983.70 07/31/85 13811.14 12964.22 08/31/85 14206.15 12854.02 09/30/85 13566.95 12451.69 10/31/85 14500.62 13026.96 11/30/85 15103.91 13920.61 12/31/85 16016.04 14594.37 01/31/86 16461.33 14676.10 02/28/86 17624.82 15773.87 03/31/86 18213.75 16654.05 04/30/86 17854.65 16465.86 05/31/86 18594.41 17341.84 06/30/86 19671.72 17634.92 07/31/86 20550.35 16649.13 08/31/86 21910.67 17884.49 09/30/86 19488.28 16405.45 10/31/86 20397.59 17352.04 11/30/86 20579.45 17773.70 12/31/86 19866.55 17320.47 01/31/87 21474.21 19653.53 02/28/87 20717.66 20429.85 03/31/87 20303.02 21020.27 04/30/87 19139.10 20833.19 05/31/87 18833.58 21014.44 06/30/87 19502.83 22075.67 07/31/87 19233.67 23194.90 08/31/87 19837.45 24060.07 09/30/87 19677.41 23533.16 10/31/87 18491.68 18464.12 11/30/87 17873.35 16942.67 12/31/87 18027.71 18232.01 01/31/88 19585.66 18999.58 02/29/88 19432.16 19884.96 03/31/88 18879.59 19270.51 04/30/88 18933.31 19484.42 05/31/88 19524.26 19653.93 06/30/88 20038.46 20556.05 07/31/88 19974.86 20477.93 08/31/88 19943.28 19781.68 09/30/88 20638.05 20624.38 10/31/88 21072.29 21197.74 11/30/88 21032.81 20894.61 12/31/88 20994.38 21260.27 01/31/89 21983.31 22816.52 02/28/89 21845.51 22248.39 03/31/89 22218.38 22766.78 04/30/89 23361.32 23948.37 05/31/89 24471.83 24918.28 06/30/89 25089.94 24776.25 07/31/89 26463.94 27013.54 08/31/89 26580.52 27543.01 09/30/89 26963.57 27430.08 10/31/89 26838.66 26793.70 11/30/89 27721.35 27340.30 12/31/89 29186.94 27996.46 01/31/90 27746.33 26117.90 02/28/90 27696.37 26454.82 03/31/90 27546.48 27155.87 04/30/90 26397.32 26476.98 05/31/90 27771.31 29058.48 06/30/90 28100.39 28860.88 07/31/90 28331.08 28768.53 08/31/90 26776.11 26167.85 09/30/90 26844.46 24893.48 10/31/90 28220.01 24786.44 11/30/90 28963.31 26387.64 12/31/90 29348.78 27123.86 01/31/91 29219.38 28306.46 02/28/91 30478.91 30330.37 03/31/91 30823.99 31064.36 04/30/91 30685.95 31138.92 05/31/91 30694.58 32484.12 06/30/91 30322.25 30996.35 07/31/91 31309.07 32440.78 08/31/91 32026.76 33209.62 09/30/91 33013.57 32655.02 10/31/91 33471.10 33092.60 11/30/91 33856.86 31758.97 12/31/91 35520.27 35392.19 01/31/92 34426.91 34733.90 02/29/92 34174.59 35185.44 03/31/92 33819.48 34499.32 04/30/92 34744.64 35513.60 05/31/92 35417.47 35687.62 06/30/92 35827.20 35155.87 07/31/92 37732.18 36593.75 08/31/92 37712.84 35843.58 09/30/92 37915.91 36266.53 10/31/92 37906.24 36393.47 11/30/92 38167.33 37634.48 12/31/92 39282.71 38097.39 01/31/93 39950.92 38417.40 02/28/93 42006.18 38939.88 03/31/93 43140.11 39761.51 04/30/93 42904.35 38799.28 05/31/93 42996.38 39839.10 06/30/93 44642.61 39954.64 07/31/93 45153.86 39794.82 08/31/93 47117.08 41303.04 09/30/93 47117.08 40985.01 10/31/93 46636.50 41833.40 11/30/93 44356.31 41435.98 12/31/93 44210.62 41937.36 01/31/94 45116.47 43363.23 02/28/94 43069.50 42183.75 Let's say you invested $10,000 in Fidelity Select Utilities Portfolio on February 29, 1984 and paid a 3% sales charge. By February 28, 1994, your investment would have grown to $43,070 - a 330.70% increase. That compares to $10,000 invested in the S&P 500, which would have grown to $42,184 over the same period - a 321.84% increase. INVESTMENT SUMMARY TOP TEN STOCKS AS OF FEBRUARY 28, 1994 % OF FUND'S INVESTMENTS Ameritech Corp. 5.3 Pacific Telesis Group 5.1 Southwestern Bell Corp. 4.8 BellSouth Corp. 4.8 U.S. West, Inc. 4.4 Bell Atlantic Corp. 4.0 NYNEX Corp. 3.6 Enron Corp. 3.5 Entergy Corp. 2.8 MCN Corp. 2.4 TOP INDUSTRIES AS OF FEBRUARY 28, 1994 Row: 1, Col: 1, Value: 11.3 Row: 1, Col: 2, Value: 7.2 Row: 1, Col: 3, Value: 10.7 Row: 1, Col: 4, Value: 12.2 Row: 1, Col: 5, Value: 22.1 Row: 1, Col: 6, Value: 36.5 Telephone Services 36.5% Electric Power 22.1% Electric & Other Services 12.2% Gas Transmission 10.7% Gas Transmission & Distribution 7.2% All Others 11.3%* * INCLUDES SHORT-TERM INVESTMENTS UTILITIES PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW John Muresianu, Portfolio Manager of Fidelity Select Utilities Portfolio Q. JOHN, HOW HAS THE FUND PERFORMED? A. For the year ended February 28, 1994, the fund had a total return of 2.53%. That lagged the S&P 500, which returned 8.33% for the same period. Q. WHAT DROVE THE SECTOR'S - AND THE FUND'S - PERFORMANCE? A. The first half of the period was good for gas, electric and telephone utility stocks. As interest rates fell, investors looked to utility stocks to boost their income. Moreover, utility companies generally carry a lot of debt, so their interest expense declines significantly as rates fall. That in turn boosts their earnings potential. But in the second half of the period all utility groups fell as interest rates turned up. That was particularly true in February of this year, when the Federal Reserve raised rates a quarter of a percentage point, and at that point the fund gave back much of its previous gains. Q. SINCE THAT REVERSAL IN THE DIRECTION OF INTEREST RATES HAVE YOU CHANGED YOUR STRATEGY? A. Not really, because I don't build the fund around where I think interest rates will go. Rather, I try to invest in stocks that offer the best potential for higher revenue and earnings growth. For that reason, I continued to focus on telephone utilities and gas, and de-emphasized electric utilities. The electric companies are just beginning the process of deregulation, which adds a greater degree of unpredictability to their earnings prospects. Q. WHY DO YOU FAVOR TELEPHONE UTILITIES? A. Mainly because of their superior earnings growth potential. Higher earnings are driven by a combination of modest revenue growth and expense control. On the revenue side, access lines have grown 2 to 4% a year, with call volumes up 5 to 8% annually. The companies have also profited from adding new services, such as call waiting, at little additional cost. Plus, cellular subscribers have been growing at 30 to 50% per year. On the cost side, headcount is being reduced. The prices of key components of capital spending budgets, such as fiber, have come down. Finally, many of these companies generate substantial cash flow, even after dividends and capital spending. Q. LET'S MOVE TO GAS UTILITIES. WHAT WAS THE STORY THERE? A. Gas utilities as a group did better than electric utilities during the first half of the period because they benefited not only from a decline in interest rates but also from a tighter supply/demand balance for natural gas. Also, they generally held up better than telephones in February of this year. But their decline - when interest rates rose last - was made more severe by a sharp drop in natural gas prices. But despite that drop, I'm optimistic. On the demand side, federal policy is promoting the use of this clean, abundant domestic fuel. On the supply side, drilling had declined to historic lows in 1992, reducing supply and pushing up prices. With the recent hard winter, inventories have been drawn down further. The fund's investments in natural gas include Enron, which I think is one of the best-managed companies in the group and has a consistent record of earnings growth, and Sonat, which has had substantial gas reserves and has benefited from the rise in natural gas prices. Q. DID YOU INVEST IN ANY GAS COMPANIES THAT DIDN'T DO AS WELL? A. ENSERCH didn't do as well as I had expected. And there were disappointments in the other groups - like NYNEX in the telephones and Commonwealth Edison in the electrics. In each instance, however, the stocks were very cheap, turnaround stories which should do well over the long term. Q. WHAT'S THE OUTLOOK FOR UTILITIES FROM HERE? A. With U.S. stock prices near historic highs, a general stock market correction is a significant risk. During such a correction, utilities could possibly outperform the market because of their high yield potential - unless inflation was accelerating dramatically, which I don't think will happen soon. However, if interest rates rise during a correction, utility stocks would probably decline, though they may still do well relative to other sectors. If, on the other hand, the stock market and interest rates both rise, utilities would most likely lag the market. And finally, if interest rates decline, the stocks should do well in both absolute and relative terms. FUND FACTS START DATE: December 10, 1981 SIZE: as of February 28, 1994, over $250 million MANAGER: John Muresianu, since December 1992; manager, Fidelity Select Natural Gas Portfolio, April 1993 to February 1994; Fidelity International Fund, 1987-1989, Fidelity Utilities Income Fund, December 1992 to present; senior analyst, joined Fidelity in 1986 (checkmark) UTILITIES PORTFOLIO INVESTMENTS FEBRUARY 28, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 97.1% SHARES VALUE (NOTE 1) COMPUTERS & OFFICE EQUIPMENT - 0.0% ELECTRONIC COMPUTERS - 0.0% Itron, Inc. (a) 1,100 $ 19,800 46574110 ELECTRIC UTILITY - 33.2% ELECTRIC & OTHER SERVICES - 11.5% CIPSCO, Inc. 4,500 127,675 12553910 CMS Energy Corp. 158,300 3,621,113 12589610 Cincinnati Gas & Electric Co. 39,600 970,200 17207010 DPL, Inc. 139,200 2,766,600 23329310 Hidro Cantabrico 33,050 1,157,047 42899999 IES Industries, Inc. 21,900 626,901 44949M10 Illinois Power Co. 163,100 3,506,650 45209210 LG&E Energy Corp. 9,900 356,400 50191710 Long Island Lighting Co. 18,000 416,250 54267110 Montana Power Co. 73,300 1,740,875 61208510 NIPSCO Industries, Inc. 117,100 3,542,275 62914010 New York State Electric & Gas Corp. 300 8,175 64984010 Niagara Mohawk Power Corp. 147,300 2,761,875 65352210 Pacific Gas & Electric Co. 19,200 607,200 69430810 Peco Energy Co. 92,600 2,488,625 69330410 Public Service Co. of Colorado 17,236 514,926 74444810 Public Service Co. of New Mexico (a) 125,500 1,694,250 74449910 Public Service Enterprise Group, Inc. 29,900 908,213 74457310 Rochester Gas & Electric Corp. 21,200 516,750 77136710 Sierra Pacific Resources 12,400 237,150 82642510 Utilicorp United, Inc. 7,610 222,593 91800510 28,791,743 ELECTRIC POWER - 21.7% AES Corp. 244,902 5,632,746 00130H10 American Electric Power Co., Inc. 41,800 1,384,625 02553710 Boston Edison Co. 56,700 1,530,900 10059910 Centerior Energy Corp. 48,700 578,313 15188310 Central & South West Corp. 49,200 1,346,850 15235710 Central Louisiana Electric Co., Inc. 66,106 1,503,912 15389760 Commonwealth Edison Co. 59,100 1,580,925 20279510 Consolidated Electric Power Asia Ltd. sponsored ADR (c) 12,900 156,413 20855210 DQE, Inc. 100,300 3,184,525 23329J10 Detroit Edison Company 34,500 970,313 25084710 EUA Power Corp. (interest certificates) (a) 800 800 26926020 Eastern Utilities Associates 112,143 2,859,647 27717310 El Paso Electric Co. (a) 76,900 211,475 28367710 Empresa Nacional De Electricidad SA sponsored ADR 44,300 2,342,363 29244720 Entergy Corp. 211,014 7,016,216 29364G10 General Public Utilities Corp. 64,600 1,849,175 37055010 Hawaiian Electric Industries, Inc. 4,200 139,125 41987010 Houston Industries, Inc. 84,400 3,407,650 44216110 IPALCO Enterprises, Inc. 800 26,100 46261310 Kansas City Power & Light Co. 1,300 28,275 48513410 Maine Public Service Co. 44,200 1,187,875 56048310 National Power PLC (c) 198,500 1,452,585 63719496 New England Electric Systems 27,800 993,850 64400110 Northeast Utilities 53,000 1,238,875 66439710 Nova Scotia Power, Inc. 49,700 478,770 66981610 Ohio Edison Co. 26,500 543,250 67734710 PSI Resources, Inc. 91,600 2,198,400 69363210 Pinnacle West Capital Corp. 170,200 3,638,025 72348410 Portland General Corp. 47,100 871,350 73650610 SCEcorp 28,200 507,600 78388210 Sithe Energies, Inc. (a) 27,200 380,800 82990410 Southern Co. 108,200 2,231,625 84258710 TECO Energy, Inc. 16,900 344,338 87237510 Texas Utilities Co. 37,998 1,467,660 88284810 SHARES VALUE (NOTE 1) Union Electric Co. 9,800 $ 362,600 90654810 United Illuminating Co. 22,500 812,813 91063710 54,460,764 TOTAL ELECTRIC UTILITY 83,252,507 GAS - 26.6% GAS & OTHER SERVICES - 1.5% MDU Resources Group, Inc. 66,600 1,998,000 55269010 UGI Corporation 52,347 1,203,981 90268110 Western Resources, Inc. 15,000 455,625 95942510 3,657,606 GAS DISTRIBUTION - 7.2% Energen Corp. 43,500 935,250 29265N10 MCN Corp. 158,900 6,117,650 55267J10 NICOR, Inc. 37,100 1,001,700 65408610 NUI Corp. 27,100 741,863 62943010 National Fuel Gas Co. 46,800 1,444,950 63618010 New Jersey Resources Corp. 18,400 478,400 64602510 Pacific Enterprises 277,800 5,903,250 69423210 Peoples Energy Corp. 21,300 636,338 71103010 WICOR, Inc. 24,700 747,175 92925310 18,006,576 GAS TRANSMISSION - 10.7% Arkla, Inc. 88,900 711,200 04123710 Coastal Corp. (The) 39,700 1,250,550 19044110 Enron Corp. 271,600 8,657,250 29356110 ONEOK, Inc. 58,600 1,062,125 68267810 Panhandle Eastern Corp. 85,000 1,859,375 69846210 Sonat, Inc. 200,800 6,099,300 83541510 Tejas Power Corp. (a) 4,500 50,625 87907910 Transco Energy Co. 13,400 207,700 89353210 TransCanada PipeLines Ltd. 66,300 976,445 89352610 Williams Companies, Inc. 236,000 5,811,500 96945710 26,686,070 GAS TRANSMISSION & DISTRIBUTION - 7.2% Columbia Gas System, Inc. (The) (a) 129,900 3,685,913 19764810 Consolidated Natural Gas Co. 29,400 1,289,925 20961510 ENSERCH Corp. 87,400 1,354,700 29356710 El Paso Natural Gas Co. 23,600 911,550 28369587 Equitable Resources, Inc. 28,150 1,016,919 29454910 Questar Corp. 142,300 4,375,725 74835610 Tejas Gas Corp. (Del.) (a) 10,300 580,663 87907510 Westcoat Energy, Inc. 218,700 3,950,214 95751D10 Yankee Energy System, Inc. 36,600 915,000 98477910 18,080,609 TOTAL GAS 66,430,861 INDEPENDENT POWER - 0.4% STEAM SUPPLY - 0.4% Bonneville Pacific Corp. (a) 11,300 56 09890410 Magma Power Co. (a) 28,700 907,638 55919410 907,694 METALS & MINING - 0.2% METAL ORES - 0.2% Cameco, Inc. 32,500 617,127 13321L10 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) OIL & GAS - 0.2% CRUDE PETROLEUM & GAS - 0.2% Nuevo Energy Corporation (a) 1,400 $ 29,400 67050910 Occidental Petroleum Corp. 26,500 480,313 67459910 509,713 TELEPHONE SERVICES - 36.5% ALLTEL Corp. 33,600 915,600 02003910 American Telephone & Telegraph Co. 3,500 183,750 03017710 Ameritech Corp. 329,000 13,201,125 03095410 BCE, Inc. 18,248 660,890 05534B10 Bell Atlantic Corp. 182,000 9,964,500 07785310 BellSouth Corp. 214,200 11,941,650 07986010 British Telecommunications PLC ADR 23,200 1,516,700 11102140 Cincinnati Bell, Inc. 23,200 382,800 17187010 GTE Corp. 154,500 5,040,563 36232010 MCI Communications Corp. 66,300 1,814,963 55267310 NYNEX Corp. 244,900 9,122,525 67076810 Pacific Telesis Group 233,600 12,731,200 69489010 Southwestern Bell Corp. 307,400 12,027,025 84533310 Sprint Corporation 5,100 189,338 85206110 Telephone & Data Systems, Inc. 18,247 827,958 87943310 U.S. West, Inc. 265,659 10,892,019 91288910 91,412,606 TOTAL COMMON STOCKS (Cost $235,299,007) 243,150,308 PREFERRED STOCKS - 0.7% ELECTRIC UTILITY - 0.7% ELECTRIC & OTHER SERVICES - 0.7% Long Island Lighting Co. $7.95 (Cost $1,595,005) 63,800 1,626,900 54267177 NONCONVERTIBLE BONDS - 0.4% PRINCIPAL AMOUNT ELECTRIC UTILITY - 0.4% ELECTRIC POWER - 0.4% EUA Power Corp. secured, pay-in-kind: 17 1/2%, 5/15/93 (b) $ 800,000 104,000 269260AC 17 1/2%, 11/15/92 (b)(c) 442,800 57,564 269260AB Northern Indiana Public Service Co., 1st mtg 8 1/4%, 7/15/03 845,000 871,950 665262AR TOTAL NONCONVERTIBLE BONDS (Cost $1,718,049) 1,033,514 REPURCHASE AGREEMENTS - 1.8% MATURITY AMOUNT Investments in repurchase agreements, (U.S. Treasury obligations), in a joint trading account, at 3.47% dated 2/28/94 due 3/1/94 $ 4,570,440 4,570,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $243,182,061) $ 250,380,722 LEGEND 1. Non-income producing 2. Non-income producing - issuer filed for protection under the Federal Bankruptcy Code or is in default of interest payment. 3. Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $1,666,562 or 0.7% of net assets. OTHER INFORMATION CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1, 1993, the fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of February 28, 1993 have been reclassified to reflect an increase in paid in capital of $45,368,784, a decrease in undistributed net investment income of $20,656,342 and a decrease in accumulated net realized gain on investments of $24,712,442. Purchases and sales of securities, other than short-term securities, aggregated $179,667,186 and $208,526,586, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $137,624 for the period (see Note 4 of Notes to Financial Statements). The maximum loan and average daily loan balances during the periods for which loans were outstanding amounted to $2,205,000 and $1,317,750, respectively. The weighted average interest rate paid was 3.7% (see Note 7 of Notes to Financial Statements). INCOME TAX INFORMATION At February 28, 1994, the aggregate cost of investment securities for income tax purposes was $242,856,965. Net unrealized appreciation aggregated $7,523,757, of which $21,884,088 related to appreciated investment securities and $14,360,331 related to depreciated investment securities. The fund hereby designates $15,693,000 as a capital gain dividend for the purpose of the dividend paid deduction. On February 25, 1994, the fund acquired substantially all of the assets of Electric Utilities Portfolio in a tax-free exchange for shares of Utilities Portfolio. Electric Utilities Portfolio had net unrealized appreciation of $1,838,111 (see Note 9 of Notes to Financial Statements). UTILITIES PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $4,570,000) (cost $243,182,061) $ 250,380,722 (Notes 1 and 2) - See accompanying schedule Cash 51,946 Receivable for investments sold 2,448,338 Receivable for fund shares sold 425,772 Dividends receivable 918,637 Interest receivable 8,582 Redemption fees receivable (Note 1) 730 Other receivables 647 TOTAL ASSETS 254,235,374 LIABILITIES Payable for investments purchased $ 87,514 Payable for fund shares redeemed 3,316,108 Accrued management fee 125,973 Other payables and accrued expenses 183,504 TOTAL LIABILITIES 3,713,099 NET ASSETS $ 250,522,275 Net Assets consist of (Note 1): Paid in capital $ 222,860,730 Undistributed net investment income 3,613,887 Accumulated undistributed net realized gain (loss) on investments 16,848,997 Net unrealized appreciation (depreciation) on investment securities 7,198,661 NET ASSETS, for 6,842,654 shares outstanding $ 250,522,275 NET ASSET VALUE and redemption price per share ($250,522,275 (divided by) 6,842,654 shares) $36.61 Maximum offering price per share (100/97 of $36.61) $37.74
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994 INVESTMENT INCOME $ 12,689,617 Dividends Interest (including security lending fees of $1,645) (Note 6) 1,183,815 TOTAL INCOME 13,873,432 EXPENSES Management fee (Note 4) $ 1,945,321 Transfer agent (Note 4) 1,970,501 Fees Redemption fees (Note 1) (196,999 ) Accounting and security lending fees (Note 4) 312,148 Non-interested trustees' compensation 2,213 Custodian fees and expenses 32,017 Registration fees 47,882 Audit 51,005 Legal 2,943 Interest (Note 7) 537 Reports to shareholders 41,217 Miscellaneous 4,418 Total expenses before reductions 4,213,203 Expense reductions (Note 8) (15,302 4,197,901 ) NET INVESTMENT INCOME 9,675,531 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 46,918,583 Net realized gain (loss) on investment securities Change in net unrealized appreciation (depreciation) on investment securities (44,694,870 ) NET GAIN (LOSS) 2,223,713 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 11,899,244 OTHER INFORMATION $1,890,168 Sales charges paid to FDC (Note 4) Deferred sales charges withheld $109,099 by FDC (Note 4) Exchange fees withheld by FSC $163,043 (Note 4)
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS ENDED FEBRUARY 28, 1994 FEBRUARY 28, 1993 Operations $ 9,675,531 $ 7,505,882 Net investment income Net realized gain (loss) on investments 46,918,583 9,381,721 Change in net unrealized appreciation (depreciation) on investments (44,694,870) 29,611,696 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 11,899,244 46,499,299 Distributions to shareholders (7,450,649) (7,793,357) From net investment income From net realized gain (32,195,614) (9,926,828) TOTAL DISTRIBUTIONS (39,646,263) (17,720,185) Share transactions 246,579,723 144,930,165 Net proceeds from sales of shares Net asset value of shares issued in exchange for the net assets of Electric Utilities Portfolio (Note 9) 16,679,364 - Reinvestment of distributions 38,572,943 17,242,207 Cost of shares redeemed (314,447,184) (107,157,064) Paid in capital portion of redemption fees (Note 1) 166,488 51,525 Net increase (decrease) in net assets resulting from share transactions (12,448,666) 55,066,833 TOTAL INCREASE (DECREASE) IN NET ASSETS (40,195,685) 83,845,947 NET ASSETS Beginning of period 290,717,960 206,872,013 End of period (including undistributed net investment income of $3,613,887 and $23,592,222,$ 250,522,275 $ 290,717,960 respectively) OTHER INFORMATION Shares Sold 5,763,803 3,750,788 Issued in exchange for the net assets of Electric Utilities Portfolio (Note 9) 458,728 - Issued in reinvestment of distributions 1,019,080 465,066 Redeemed (7,406,487) (2,771,946) Net increase (decrease) (164,876) 1,443,908
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30, FEBRUARY 28, ENDED FEBRUARY 28, SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990 Net asset value, beginning of period $ 41.49 $ 37.18 $ 35.57 $ 31.70 $ 28.82 Income from Investment Operations Net investment income 1.33 1.19 1.66 1.59 1.27 Net realized and unrealized gain (loss) on investments(.16)F 6.14 2.82 3.41 2.40 Total from investment operations 1.17 7.33 4.48 5.00 3.67 Less Distributions From net investment income (1.13) (1.33) (1.69) (.60) (.81) From net realized gain (4.94) (1.70) (1.19) (.58) - Total distributions (6.07) (3.03) (2.88) (1.18) (.81) Redemption fees added to paid in capital .02 .01 .01 .05 .02 Net asset value, end of period $ 36.61 $ 41.49 $ 37.18 $ 35.57 $ 31.70 TOTAL RETURND, E 2.53% 20.90% 13.23% 16.25% 13.00% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 250,522 $ 290,718 $ 206,872 $ 197,409 $ 124,931 Ratio of expenses to average net assetsB 1.35% 1.42%A 1.51% 1.65% 1.67% Ratio of expenses to average net assets before expense 1.36% 1.42%A 1.51% 1.65% 1.67% reductionsB Ratio of net investment income to average net assets 3.11% 3.71%A 4.58% 4.75% 3.93% Portfolio turnover rate 61% 34%A 45% 45% 75%
1 ANNUALIZED 2 SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS. 3 NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH PERIOD. 4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 5 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. 6 THE AMOUNT SHOWN FOR A SHARE OUTSTANDING THROUGHOUT THAT PERIOD DOES NOT ACCORD WITH THE AGGREGATE NET GAINS ON INVESTMENTS FOR THAT PERIOD BECAUSE OF THE TIMING OF SALES AND REPURCHASES OF THE FUND SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF THE INVESTMENTS OF THE FUND. [TEXT] BIOTECHNOLOGY PORTFOLIO PERFORMANCE AND INVESTMENT SUMMARY PERFORMANCE There are several ways to evaluate a fund's historical performance: total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND BIOTECHNOLOGY 22.17% 239.49% 275.23% BIOTECHNOLOGY (INCL. 3% SALES CHARGE) 18.50% 229.30% 263.97% S&P 500 8.33% 89.60% 191.37% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years, or since the fund started on December 16, 1985. You can compare these figures to the performance of the S&P 500 - a common proxy for the U.S. stock market. This benchmark includes reinvested dividends and capital gains, if any. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND BIOTECHNOLOGY 22.17% 27.69% 17.47% BIOTECHNOLOGY (INCL. 3% SALES CHARGE) 18.50% 26.92% 17.04% S&P 500 8.33% 13.65% 13.91% AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of growth in the long run and volatility in the short run. Unlike the broader market, however, some sectors may not have a history of growth in the long run. And, as with all stock funds, the share price and return of a fund that invests in a sector will vary. That means if you sell your shares during a sector downturn, you might lose money. But if you can identify a sector that is about to experience rapid growth you may have the potential for above-average gains. (checkmark) $10,000 OVER LIFE OF FUND Select Biotech S&P500 12/16/85 9700.00 10000.00 12/31/85 9700.00 10080.42 01/31/86 10175.30 10136.87 02/28/86 10417.80 10895.11 03/31/86 12192.90 11503.06 04/30/86 12377.20 11373.07 05/31/86 12988.30 11978.12 06/30/86 13715.80 12180.55 07/31/86 11863.10 11499.66 08/31/86 12328.70 12352.93 09/30/86 10214.10 11331.35 10/31/86 10970.70 11985.16 11/30/86 10728.20 12276.40 12/31/86 10039.50 11963.36 01/31/87 11378.10 13574.82 02/28/87 13715.80 14111.03 03/31/87 13657.60 14518.83 04/30/87 13483.00 14389.62 05/31/87 13424.80 14514.81 06/30/87 13327.80 15247.80 07/31/87 13347.20 16020.87 08/31/87 13890.40 16618.45 09/30/87 13686.70 16254.50 10/31/87 9476.90 12753.28 11/30/87 8555.40 11702.41 12/31/87 9701.08 12592.97 01/31/88 10191.13 13123.13 02/29/88 10571.17 13734.67 03/31/88 10501.17 13310.27 04/30/88 10311.14 13458.01 05/31/88 10111.12 13575.09 06/30/88 10451.16 14198.19 07/31/88 10441.16 14144.24 08/31/88 10151.13 13663.33 09/30/88 10361.15 14245.39 10/31/88 10251.14 14641.41 11/30/88 9771.08 14432.04 12/31/88 10101.12 14684.60 01/31/89 10801.20 15759.52 02/28/89 10721.19 15367.10 03/31/89 11511.28 15725.16 04/30/89 11901.32 16541.29 05/31/89 12441.38 17211.21 06/30/89 12121.35 17113.11 07/31/89 13241.47 18658.42 08/31/89 13741.53 19024.13 09/30/89 14321.59 18946.13 10/31/89 14371.60 18506.58 11/30/89 14821.65 18884.12 12/31/89 14538.80 19337.33 01/31/90 13450.93 18039.80 02/28/90 14721.80 18272.51 03/31/90 15341.99 18756.73 04/30/90 15535.16 18287.82 05/31/90 17721.06 20070.88 06/30/90 18958.59 19934.40 07/31/90 19009.99 19870.61 08/31/90 18423.96 18074.30 09/30/90 18012.71 17194.08 10/31/90 18166.93 17120.15 11/30/90 20367.12 18226.11 12/31/90 20986.43 18734.62 01/31/91 23396.61 19551.45 02/28/91 26711.92 20949.38 03/31/91 29469.41 21456.35 04/30/91 28185.39 21507.85 05/31/91 29974.60 22436.99 06/30/91 28383.14 21409.37 07/31/91 30938.29 22407.05 08/31/91 33106.29 22938.10 09/30/91 34820.78 22555.03 10/31/91 38249.77 22857.27 11/30/91 35694.62 21936.12 12/31/91 41772.50 24445.61 01/31/92 40935.22 23990.92 02/29/92 37792.53 24302.81 03/31/92 34925.11 23828.90 04/30/92 31667.73 24529.47 05/31/92 33938.72 24649.67 06/30/92 33343.04 24282.39 07/31/92 35086.05 25275.53 08/31/92 32891.61 24757.39 09/30/92 32778.75 25049.52 10/31/92 34383.83 25137.20 11/30/92 37769.55 25994.38 12/31/92 37451.88 26314.11 01/31/93 35527.21 26535.14 02/28/93 29792.77 26896.02 03/31/93 30240.98 27463.53 04/30/93 31018.75 26798.91 05/31/93 33022.51 27517.12 06/30/93 33220.25 27596.92 07/31/93 32126.09 27486.53 08/31/93 33338.90 28528.27 09/30/93 34709.89 28308.61 10/31/93 37293.69 28894.59 11/30/93 37003.67 28620.10 12/31/93 37715.53 28966.40 01/31/94 39007.43 29951.26 02/28/94 36397.27 29136.58 Let's say you invested $10,000 in Fidelity Select Biotechnology Portfolio on December 16, 1985, when the fund started, and paid a 3% sales charge. By February 28, 1994, your investment would have grown to $36,397 - a 263.97% increase. That compares to $10,000 invested in the S&P 500, which would have grown to $29,137 over the same period - a 191.37% increase. INVESTMENT SUMMARY TOP TEN STOCKS AS OF FEBRUARY 28, 1994 % OF FUND'S INVESTMENTS Genentech, Inc. 7.3 Amgen, Inc. 4.6 Schering-Plough Corp. 4.4 Roche Holdings Division (rights certificates) 3.7 Biogen, Inc. 3.2 Genetics Institute, Inc. (depositary shares) 3.2 Cellpro, Inc. 2.9 COR Therapeutics, Inc. 2.6 Liposome Technologies, Inc. 2.2 Elan PLC ADR 2.1 TOP INDUSTRIES AS OF FEBRUARY 28, 1994 Row: 1, Col: 1, Value: 17.2 Row: 1, Col: 2, Value: 1.3 Row: 1, Col: 3, Value: 1.5 Row: 1, Col: 4, Value: 2.6 Row: 1, Col: 5, Value: 22.6 Row: 1, Col: 6, Value: 54.8 Biotechnology 54.8% Drugs 22.6% Pharmaceutical Preparations 2.6% Hospitals 1.5% Medical Technology 1.3% All Others 17.2%* * INCLUDES SHORT-TERM INVESTMENTS BIOTECHNOLOGY PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW Karen Firestone, Portfolio Manager of Fidelity Select Biotechnology Portfolio Q. KAREN, HOW DID THE FUND PERFORM? A. The fund had a total return of 22.17% for the 12 months ended February 28. That topped the S&P 500, which returned 8.33% during the same period. Q. WHAT FACTORS INFLUENCED PERFORMANCE? A. Often the biotechnology group will rise and fall on the fortunes of one company that emerges at any given time as the sector leader. Over the past year, that company was Chiron, one of the fund's top 10 investments for most of that time. The stock went on an uphill ride starting last spring, after the company won FDA approval for Betaseron, a new treatment for multiple sclerosis. Investors began to feel good again about the prospects of biotech stocks, and Chiron's success fueled a moderate sector rally in the second half of 1993. However, by mid-January 1994 investors began to question whether biotech stock prices were inflated. Once they decided the answer was yes, they began taking profits. I reduced the fund's investment in Chiron for the same reason. To illustrate, the price of a share of Chiron went from $48.25 at the end of March to $84.00 at the end of December, before falling to $77.50 by February 28. Most stocks in the sector followed the same pattern. Q. WHAT ELSE DROVE PERFORMANCE? A. Focusing on established biotech companies, which usually aren't as volatile as many of the smaller names. These are often companies that have products on the market generating solid earnings, as well as new products in the pipeline. For example, Biogen has a strong base of business in its hepatitis vaccine and therapy treatment. Plus, investors got excited about promising drugs in development to prevent cardiovascular clotting and treat multiple sclerosis. Biogen's stock price made solid gains from the end of August through the end of January, but I eventually cut back because I thought the stock had gotten expensive. Amgen wasn't quite as strong a performer, but it had the most revenue and best profit margins in the industry. Amgen's growth has slowed in recent years, but I like the stock's low valuation - its price compared to other measures like earnings. Q. DOES THAT MEAN YOU STAYED AWAY FROM THE SMALLER, LESSER-KNOWN BIOTECH NAMES? A. Not entirely. I did have some success with companies that have promising products under development. Cellpro is testing a blood-cell separation drug that could allow doctors to administer chemotherapy to cancer patients more quickly, presumably enhancing chances for survival. Protein Design Labs stock shot up in the second half of '93 after a larger pharmaceutical name made a big investment in the company. It's a move that often helps confirm the worth of the smaller company's stock in the eyes of investors. Q. YOU'VE ALREADY MENTIONED THAT THE SECTOR BEGAN A CORRECTION IN JANUARY. WERE THERE INDIVIDUAL DISAPPOINTMENTS? A. Sure. Gilead Sciences looked like a leader in AIDS research and anti-viral drug development last year. However, concrete results were slow in coming, and didn't justify the hopes investors had built into the company's stock price. Gilead was one of the fund's 10 largest investments six months ago, but I cut back as its stock price began to fall. In addition, the performance of drug companies like Schering-Plough and Pfizer was flat over the last six months. Investors continued to worry that these companies would lose the ability to raise prices because of health-care reform. Q. HAS THE RECENT CORRECTION INFLUENCED YOUR OUTLOOK FOR THE NEXT SIX MONTHS? A. Somewhat. I think investor fears about health-care reform are already priced into most biotech stocks, but this latest correction may still have some legs. I don't see one company taking the lead in pulling the sector back up the way Chiron did last year. Over the next six months, it doesn't appear as if any of the biotech companies will either produce very strong earnings, gain approval for a new product, or form an alliance with a major corporation - all examples of what often triggers sector rallies. For these reasons, I'll probably stay focused on bigger names like Genentech - the fund's largest investment on February 28. The company's products are diverse, and it has a big research pipeline. I think this type of company is best equipped to weather downturns in the market, but still has good growth potential should the sector turn around. FUND FACTS START DATE: December 16, 1985 SIZE: As of February 28, 1994, over $481 million MANAGER: Karen Firestone, since August 1992; manager, Fidelity Select Air Transportation Portfolio, September 1987-November 1992; Fidelity Select Leisure Portfolio, April 1989- August 1992; joined Fidelity in 1983 (checkmark) BIOTECHNOLOGY PORTFOLIO INVESTMENTS FEBRUARY 28, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 89.2% SHARES VALUE (NOTE 1) AGRICULTURE - 0.1% CROPS - 0.1% DEKALB Genetics Corp. Class B 17,400 $ 609,000 24487820 CELLULAR - 0.1% CELLULAR & COMMUNICATION SERVICES - 0.1% Millicom International Cellular SA (a) 25,748 627,608 60081492 COMPUTER SERVICES & SOFTWARE - 0.2% COMPUTER SERVICES - 0.2% Cerner Corp. (a) 24,400 1,152,900 15678210 DRUGS & PHARMACEUTICALS - 81.8% BIOTECHNOLOGY - 54.8% ASN (warrants) (a) 5,000 1 04599F22 Advanced Tissue Sciences Corp. Class A 221,000 1,850,867 00755F10 Alkermes, Inc. (c) 673,500 4,967,063 01642T10 Alpha 1 Biomedicals, Inc. (a) 83,200 1,144,000 02091010 Amgen, Inc. (a) 531,800 22,202,650 03116210 Aprogenex, Inc. (a) 100,000 1,100,000 03833310 Athena Neurosciences, Inc. 320,300 2,922,738 04685410 Biogen, Inc. (a) 359,700 15,781,838 09059710 COR Therapeutics, Inc. (a)(c) 952,500 12,858,750 21775310 Calgene, Inc. (a) 185,000 2,428,125 12959810 Cambridge Neuroscience, Inc. 93,900 727,725 13242610 Cell Genesys, Inc. (a) 290,300 5,297,975 15092110 Cellcor, Inc. 150,000 131,250 15115510 Cellpro, Inc. (a) 501,200 14,346,850 15115610 Celtrix Laboratories, Inc. (a) 511,400 3,579,800 15118610 Cephalon, Inc. (a) 490,800 7,914,150 15670810 Chiron Corp. (a) 117,730 9,124,075 17004010 Collagen Corp. (a) 40,300 957,125 19419410 Corvas International, Inc. 69,000 284,625 22100510 Creative Biomolecules, Inc. (a) 488,400 4,884,000 22527010 Curative Technologies, Inc. (a) 100,000 500,000 23126410 Cygnus Therapeutics Systems (a) 87,000 1,011,375 23256410 Cytotheraputics, Inc. (a) 415,100 4,099,113 23292310 DynaGen, Inc. 87,000 152,250 26791710 DynaGen, Inc. (warrants) (a) 40,000 35,000 26791712 Emisphere Technologies, Inc. 341,500 2,646,625 29134510 Genentech, Inc. (a) 730,800 35,717,850 36871020 Genetics Institute, Inc. (depositary shares) (a) 345,280 15,623,920 37185530 Genetics Institute, Inc. (warrants) (a) 40,000 710,000 37185511 Genzyme Corp. (a) 49,000 1,396,500 37291710 Gilead Sciences, Inc. 291,000 3,492,000 37555810 Glycomed, Inc. (a) 539,500 3,641,625 38000210 ICOS Corporation (a) 30,000 165,000 44929510 Idexx Corp. (a) 120,000 3,690,000 45168D10 Imclone Systems, Inc. (a) 300,000 1,500,000 45245W10 Immulogic Pharmaceutical Corp. (a) 451,800 6,042,825 45252R10 Immunogen, Inc. 114,000 783,750 45253H10 Insite Vision, Inc. (a)(c) 629,700 5,982,150 45766010 Interneuron Pharmaceuticals, Inc. (a) 35,000 367,500 46057310 Life Medical Sciences, Inc. 105,000 866,250 53215M10 Life Medical Sciences, Inc. (warrants) (a) 50,000 118,750 53215M11 Liposome Technology, Inc. (a)(c) 1,080,000 10,530,000 53631110 Magainin Pharmaceuticals, Inc. (a) 275,700 3,963,188 55903610 Molecular Biosystems, Inc. (a) 188,500 3,487,250 60851310 Mycogen Corp. (a) 20,300 223,300 62845210 Neurogen Corp. (a)(c) 467,800 3,391,550 64124E10 ONCOR, Inc. 572,600 4,294,500 68231110 Oncogene Science, Inc. (a) 132,000 478,500 68230510 Perspective Biosystems, Inc. (a) 344,600 9,648,800 71527110 Protein Design Labs, Inc. (a) 369,400 9,512,050 74369L10 Protein Polymer Technologies, Inc. (a) 50,000 20,313 74369710 SHARES VALUE (NOTE 1) Protein Polymer Technologies, Inc. (warrants) (a) 40,000 $ 5,000 74369711 Quidel Corp. (a) 570,800 3,139,400 74838J10 Repligen Corp. (a) 410,200 2,615,025 75991610 Ribi ImmunoChem Research, Inc. (a) 241,700 2,024,238 76255310 SciGenics, Inc. 77,000 1,328,250 80890410 Sepracor, Inc. 151,400 1,305,825 81731510 Seragen, Inc. 251,200 1,601,400 81747410 Somatix Therapy Corp. (a) 386,900 2,950,113 83444710 Telios Pharmaceuticals, Inc. 355,000 1,641,875 87960N10 Vestar, Inc. 10,000 80,000 92545410 Viagene, Inc. 50,000 462,500 92552T10 Vical, Inc. 278,900 3,346,800 92560210 267,095,967 COMMERCIAL LABORATORY RESEARCH - 1.2% Cantab Pharmaceutical sponsored ADR (a) 25,000 162,500 13808410 Medarex, Inc. (a) (b) 175,000 1,093,750 58391692 Medarex, Inc. (a) 30,000 187,500 58391610 Medarex, Inc. (warrants) (a) 175,000 328,125 58391611 Scios Nova, Inc. (a) 480,203 4,141,751 80890510 5,913,626 DRUGS - 22.6% A.L. Laboratories, Inc. Class A 31,700 483,425 00162910 Allergan, Inc. 399,100 9,378,850 01849010 Argus Pharmaceuticals, Inc. (a) 105,000 630,000 04027210 Astra AB B Free shares 125,000 2,790,879 04632299 Biocraft Laboratories, Inc. 40,500 718,875 09058710 Carter-Wallace, Inc. 49,700 1,025,063 14628510 Cortech, Inc. 324,000 4,293,000 22051J10 Elan PLC ADR (a) 256,815 10,240,498 28413120 Elan PLC (warrants) (a) 76,575 1,885,659 28413112 Elan PLC (Therapeutic Systems, Inc. common &1 ADR warrant) (a) 35,539 1,119,479 28413140 Glaxo Holdings PLC sponsored ADR 120,000 2,460,000 37732730 Lynx Therapeutics, Inc. 79,035 15,807 55181210 Matrix Pharmaceutical, Inc. 146,000 1,825,000 57684410 Mylan Laboratories, Inc. 227,100 5,336,850 62853010 Novo Industries A/S ADR 4,000 418,000 67010020 Pfizer, Inc. 105,900 6,142,200 71708110 Roche Holdings Division (rights certificates) 3,700 18,159,509 77157092 Schering-Plough Corp. 359,900 21,504,025 80660510 Schering-Plough Corp. (a) (d) 6,300 64,197 80660540 Teva Pharmaceutical Industries Ltd. ADR 300,400 10,025,850 88162420 Vertex Pharmaceuticals, Inc. (a) 50,000 850,000 92532F10 Warner-Lambert Co. 152,000 9,671,000 93448810 Watson Pharmaceuticals, Inc. (a) 50,000 987,500 94268310 110,025,666 IN VITRO, IN VIVO DIAGNOSTIC SUBSTANCE - 0.1% Igen, Inc. 53,900 579,425 44953610 MEDICINAL CHEMICALS - 0.5% Martek Biosciences 200,000 2,200,000 57290110 PHARMACEUTICAL PREPARATIONS - 2.6% Affymax NV (a) 110,000 1,980,000 00826710 Alpha-Beta Technology, Inc. 200,300 5,057,575 02071K10 Cocensys, Inc. (a) 206,000 1,081,500 19126310 Ligand Pharmaceuticals, Inc. 110,500 1,353,625 53220K10 T Cell Sciences, Inc. 394,100 2,118,288 87234210 Neurobiological Technologies, Inc. 79,200 693,000 64124W10 Theratech, Inc. (a) 30,000 427,500 88338310 12,711,488 TOTAL DRUGS & PHARMACEUTICALS 398,526,172 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) ELECTRONIC INSTRUMENTS - 0.5% MEASURING INSTRUMENTS - 0.5% Perkin-Elmer Corp. 70,481 $ 2,651,848 71404110 INDUSTRIAL MACHINERY & EQUIPMENT - 0.3% SPECIAL INDUSTRIAL MACHINERY, NEC - 0.3% Perspective Technologies Corp. (a) 50,000 1,412,500 71527520 MEDICAL EQUIPMENT & SUPPLIES - 2.1% MEDICAL SUPPLIES & APPLIANCES - 0.8% Abaxis, Inc. (a) 98,000 539,000 00256710 Boston Scientific Corp. (a) 166,400 2,600,000 10113710 Hycor Biomedical, Inc. (a) 42,500 217,813 44862310 Johnson & Johnson 10,000 401,250 47816010 3,758,063 MEDICAL TECHNOLOGY - 1.3% Medical Marketing Group, Inc. (a) 34,500 927,188 58494310 St. Jude Medical, Inc. 54,500 1,553,250 79084910 SciMed Life Systems, Inc. (a) 40,900 1,451,950 80861410 Target Therapeutics, Inc. (a) 78,100 1,835,350 87591910 Techne Corp. 40,800 418,200 87837710 6,185,938 TOTAL MEDICAL EQUIPMENT & SUPPLIES 9,944,001 MEDICAL FACILITIES MANAGEMENT - 3.4% HEALTH SERVICES - 0.1% Healthwise America, Inc. (a) 15,300 420,750 42221L10 Vitalink Pharmacy Services, Inc. (a) 12,200 155,550 92846E10 576,300 HOSPITALS - 1.5% Columbia/HCA Healthcare Corp. 21,000 903,000 19767710 NovaCare, Inc. (a) 343,670 6,186,060 66993010 7,089,060 HMO'S & OUTPATIENT CARE - 1.2% U.S. Healthcare, Inc. 90,800 5,765,800 91191010 MEDICAL LABORATORIES - 0.1% Health Images, Inc. 96,600 458,850 42217810 MEDICAL SERVICES - 0.5% Surgical Care Affiliates, Inc. 153,000 2,639,250 86881810 TOTAL MEDICAL FACILITIES MANAGEMENT 16,529,260 SERVICES - 0.7% BUSINESS SERVICES - 0.0% Advacare, Inc. 100,000 175,000 00738B10 COMMERCIAL TESTING LABS - 0.7% IG Laboratories, Inc. 436,000 3,161,000 44958310 TOTAL SERVICES 3,336,000 TOTAL COMMON STOCKS (Cost $408,490,599) 434,789,289 NONCONVERTIBLE PREFERRED STOCKS - 0.0% DRUGS & PHARMACEUTICALS - 0.0% DRUGS - 0.0% Lynx Therapeutics, Inc. Series A (Cost $114,965) 114,960 114,960 55181220 REPURCHASE AGREEMENTS - 10.8% MATURITY VALUE (NOTE 1) AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account, at 3.47% dated 2/28/94 due 3/1/94 $ 52,332,044 $ 52,327,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $460,932,564) $ 487,231,249 LEGEND 1. Non-income producing 2. Restricted securities - investment in securities not registered under the Securities Act of 1933 (see Note 2 of Notes to Financial Statements). Additional information on each holding is as follows: ACQUISITION ACQUISITION SECURITY DATE COST Mederax, Inc. 12/18/92 $ 853,125 3. A company in which the fund has ownership of at least 5% of the voting securities is an affiliated company. A summary of the transactions during the period in which the issuers were affiliates is as follows: PURCHASES SALES DIVIDEND MARKET AFFILIATE COST COST INCOME VALUE Alkermes, Inc. - $ 1,604,980 - $ 4,967,063 Alpha 1 Biomedicals, Inc. (a) - - - - Applied Immune Sciences, Inc. - 2,610,683 - - COR Therapeuitcs, Inc. (a) $ 750,000 50,625 - 12,858,750 Cellpro, Inc. (a) 46,963 183,700 - - Celtrix Laboratories, Inc. (a) - 312,825 - - Emisphere Technologies, Inc. 337,500 1,000,550 - - Glycomed, Inc. (a) - 891,750 - - Insite Vision, Inc. (a) 1,587,813 - - 5,982,150 Liposome Technologies, Inc. (a) 2,021,165 3,190,500 - 10,530,000 Neurogen Corp. (a) - - - 3,391,550 TOTALS $ 4,743,441 $ 9,845,613 - $ 37,729,513 4. Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $64,197 or 0.0% of net assets. OTHER INFORMATION CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1, 1993, the fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of February 28, 1993 have been reclassified to reflect an increase in paid in capital of $74,326,546, a decrease in undistributed net investment loss of $6,072,705 and a decrease in accumulated net realized gain on investments of $80,399,251. Purchases and sales of securities, other than short-term securities, aggregated $240,824,980 and $355,165,920, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $42,992 for the period (see Note 4 of Notes to Financial Statements). At the period end, the value of securities loaned and the value of collateral amounted to $2,430,000 and $2,520,000, respectively (see Note 6 of Notes to Financial Statements). Distribution of investments by country, as a percentage of total value of investment in securities, is as follows: United States 89.8% Switzerland 3.7 Ireland 2.7 Israel 2.1 Others (individually less than 1%) 1.7 TOTAL 100.0% INCOME TAX INFORMATION At February 28, 1994, the aggregate cost of investment securities for income tax purposes was $463,745,996. Net unrealized appreciation aggregated $23,485,253, of which $76,491,505 related to appreciated investment securities and $53,006,252 related to depreciated investment securities. At February 28, 1994, the fund had a capital loss carryforward of approximately $10,841,000 which will expire on February 28, 2002. BIOTECHNOLOGY PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $52,327,000) (cost $460,932,564) $ 487,231,249 (Notes 1 and 2) - See accompanying schedule Cash 356 Receivable for investments sold 8,858,925 Receivable for fund shares sold 1,352,951 Dividends receivable 405,109 Redemption fees receivable (Note 1) 334 Other receivables 30,217 TOTAL ASSETS 497,879,141 LIABILITIES Payable for investments purchased $ 7,921,150 Payable for fund shares redeemed 5,583,162 Accrued management fee 263,856 Other payables and accrued expenses 444,755 Collateral on securities loaned, at value (Note 6) 2,520,000 TOTAL LIABILITIES 16,732,923 NET ASSETS $ 481,146,218 Net Assets consist of (Note 1): Paid in capital $ 472,352,313 Accumulated net investment loss (3,787,602 ) Accumulated undistributed net realized gain (loss) on investments (13,717,178 ) Net unrealized appreciation (depreciation) on investment securities 26,298,685 NET ASSETS, for 17,425,319 shares outstanding $ 481,146,218 NET ASSET VALUE and redemption price per share ($481,146,218 (divided by) 17,425,319 shares) $27.61 Maximum offering price per share (100/97 of $27.61) $28.46
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994 INVESTMENT INCOME $ 2,388,783 Dividends Interest (including security lending fees of $58,348) (Note 6) 2,690,317 TOTAL INCOME 5,079,100 EXPENSES Management fee (Note 4) $ 3,444,469 Transfer agent (Note 4) 4,957,823 Fees Redemption fees (Note 1) (409,513 ) Accounting and security lending fees (Note 4) 537,640 Non-interested trustees' compensation 3,983 Custodian fees and expenses 54,058 Registration fees 58,074 Audit 105,625 Legal 6,046 Reports to shareholders 85,223 Miscellaneous 28,692 Total expenses before reductions 8,872,120 Expense reductions (Note 8) (5,419 8,866,701 ) NET INVESTMENT INCOME (LOSS) (3,787,601 ) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) (8,338,254 Net realized gain loss on investment securities (including realized loss of $3,143,188 on sales of investment ) in affiliated issuers) Change in net unrealized appreciation (depreciation) on investment securities 118,233,161 NET GAIN (LOSS) 109,894,907 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 106,107,306 OTHER INFORMATION $2,082,038 Sales charges paid to FDC (Note 4) Deferred sales charges withheld $81,524 by FDC (Note 4) Exchange fees withheld by FSC $313,350 (Note 4)
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED TEN MONTHS FEBRUARY 28, ENDED 1994 FEBRUARY 28, 1993 INCREASE (DECREASE) IN NET ASSETS Operations $ (3,787,601 $ (2,304,437 Net investment income (loss) ) ) Net realized gain (loss) on investments (8,338,254 45,854,032 ) Change in net unrealized appreciation (depreciation) on investments 118,233,161 (60,353,824 ) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 106,107,306 (16,804,229 ) Distributions to shareholders from net realized gains - (103,984,016 ) Share transactions 439,265,841 571,192,197 Net proceeds from sales of shares Reinvestment of distributions - 102,424,611 Cost of shares redeemed (573,106,933 (726,104,937 ) ) Paid in capital portion of redemption fees (Note 1) 886,916 1,392,013 Net increase (decrease) in net assets resulting from share transactions (132,954,176 (51,096,116 ) ) TOTAL INCREASE (DECREASE) IN NET ASSETS (26,846,870 (171,884,361 ) ) NET ASSETS Beginning of period 507,993,088 679,877,449 End of period (including accumulated net investment loss of $3,787,602 and $6,072,705, respectively)$ 481,146,218 $ 507,993,088 OTHER INFORMATION Shares Sold 16,958,709 20,791,723 Issued in reinvestment of distributions - 3,798,543 Redeemed (22,006,765 (26,743,160 ) ) Net increase (decrease) (5,048,056) (2,152,894)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30, FEBRUARY 28, ENDED FEBRUARY 28, SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990 Net asset value, beginning of period $ 22.60 $ 27.61 $ 26.78 $ 15.28 $ 11.90 Income from Investment Operations Net investment income (loss) (.18) (.08) (.11) .05F (.04)G Net realized and unrealized gain (loss) on investments 5.15 (1.09) 3.36 11.80 3.60 Total from investment operations 4.97 (1.17) 3.25 11.85 3.56 Less Distributions In excess of net investment income - - (.02) - - From net realized gain - (3.89) (2.52) (.67) (.24) Total distributions - (3.89) (2.54) (.67) (.24) Redemption fees added to paid in capital .04 .05 .12 .32 .06 Net asset value, end of period $ 27.61 $ 22.60 $ 27.61 $ 26.78 $ 15.28 TOTAL RETURND, E 22.17% (5.92)% 12.36% 81.43% 30.53% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 481,146 $ 507,993 $ 679,877 $ 482,271 $ 70,994 Ratio of expenses to average net assetsB 1.61% 1.50% 1.50% 1.63% 2.07% A Ratio of expenses to average net assets before expense 1.62% 1.50% 1.50% 1.63% 2.07% reductionsB A Ratio of net investment income (loss) to average net assets (.69)% (.37)% (.34)% .24% (.31)% A Portfolio turnover rate 51% 79% 160% 166% 290% A
1 ANNUALIZED 2 SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS. 3 NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH PERIOD. 4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 5 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. 6 INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO $.02 PER SHARE. 7 INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO $.05 PER SHARE. HEALTH CARE PORTFOLIO PERFORMANCE AND INVESTMENT SUMMARY PERFORMANCE There are several ways to evaluate a fund's historical performance: total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 PAST 10 FEBRUARY 28, 1994 YEAR YEARS YEARS HEALTH CARE 20.57% 160.75% 518.97% HEALTH CARE (INCL. 3% SALES CHARGE) 16.95% 152.92% 500.40% S&P 500 8.33% 89.60% 321.84% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years, or ten years. You can compare these figures to the performance of the S&P 500 - a common proxy for the U.S. stock market. This benchmark includes reinvested dividends and capital gains, if any. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 PAST 10 FEBRUARY 28, 1994 YEAR YEARS YEARS HEALTH CARE 20.57% 21.13% 20.00% HEALTH CARE (INCL. 3% SALES CHARGE) 16.95% 20.39% 19.63% S&P 500 8.33% 13.65% 15.48% AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of growth in the long run and volatility in the short run. Unlike the broader market, however, some sectors may not have a history of growth in the long run. And, as with all stock funds, the share price and return of a fund that invests in a sector will vary. That means if you sell your shares during a sector downturn, you might lose money. But if you can identify a sector that is about to experience rapid growth you may have the potential for above-average gains. (checkmark) $10,000 OVER TEN YEARS 02/29/84 9699.99 10000.00 03/31/84 9852.32 10173.00 04/30/84 9858.41 10269.64 05/31/84 9364.88 9700.71 06/30/84 9809.66 9911.21 07/31/84 9400.16 9788.31 08/31/84 10714.23 10869.92 09/30/84 10555.32 10872.09 10/31/84 10524.76 10914.50 11/30/84 10139.71 10792.25 12/31/84 10426.97 11077.17 01/31/85 11716.59 11940.08 02/28/85 12529.48 12086.94 03/31/85 12816.74 12095.40 04/30/85 13342.37 12084.52 05/31/85 14986.48 12783.00 06/30/85 15320.00 12983.70 07/31/85 15460.83 12964.22 08/31/85 15105.69 12854.02 09/30/85 13887.19 12451.69 10/31/85 14799.53 13026.96 11/30/85 16189.48 13920.61 12/31/85 16624.22 14594.37 01/31/86 16734.43 14676.10 02/28/86 17916.19 15773.87 03/31/86 20310.32 16654.05 04/30/86 20555.25 16465.86 05/31/86 21828.85 17341.84 06/30/86 23292.27 17634.92 07/31/86 21626.71 16649.13 08/31/86 22424.72 17884.49 09/30/86 19362.59 16405.45 10/31/86 21051.40 17352.04 11/30/86 20742.09 17773.70 12/31/86 20278.13 17320.47 01/31/87 23303.15 19653.53 02/28/87 26761.20 20429.85 03/31/87 26600.36 21020.27 04/30/87 25969.37 20833.19 05/31/87 26223.01 21014.44 06/30/87 26847.80 22075.67 07/31/87 27874.70 23194.90 08/31/87 28697.46 24060.07 09/30/87 28159.26 23533.16 10/31/87 20729.72 18464.12 11/30/87 18719.23 16942.67 12/31/87 20148.64 18232.01 01/31/88 21646.09 18999.58 02/29/88 22296.05 19884.96 03/31/88 21741.67 19270.51 04/30/88 21403.95 19484.42 05/31/88 21346.60 19653.93 06/30/88 21907.35 20556.05 07/31/88 21875.49 20477.93 08/31/88 21282.88 19781.68 09/30/88 21996.56 20624.38 10/31/88 22270.56 21197.74 11/30/88 21620.60 20894.61 12/31/88 21927.50 21260.27 01/31/89 23475.85 22816.52 02/28/89 23026.12 22248.39 03/31/89 24240.39 22766.78 04/30/89 25563.88 23948.37 05/31/89 26360.54 24918.28 06/30/89 25766.36 24776.25 07/31/89 28957.97 27013.54 08/31/89 29658.56 27543.01 09/30/89 29872.64 27430.08 10/31/89 29652.08 26793.70 11/30/89 30930.02 27340.30 12/31/89 31244.17 27996.46 01/31/90 29451.47 26117.90 02/28/90 29142.84 26454.82 03/31/90 30305.14 27155.87 04/30/90 30305.14 26476.98 05/31/90 34474.97 29058.48 06/30/90 35649.64 28860.88 07/31/90 36141.83 28768.53 08/31/90 34521.70 26167.85 09/30/90 33482.63 24893.48 10/31/90 34248.26 24786.44 11/30/90 37891.84 26387.64 12/31/90 38841.65 27123.86 01/31/91 42675.96 28306.46 02/28/91 47947.23 30330.37 03/31/91 52221.42 31064.36 04/30/91 51312.33 31138.92 05/31/91 54098.25 32484.12 06/30/91 51658.86 30996.35 07/31/91 56229.89 32440.78 08/31/91 59039.82 33209.62 09/30/91 60229.53 32655.02 10/31/91 64197.87 33092.60 11/30/91 60691.33 31758.97 12/31/91 71349.24 35392.19 01/31/92 69008.29 34733.90 02/29/92 65994.94 35185.44 03/31/92 61968.83 34499.32 04/30/92 58457.40 35513.60 05/31/92 59661.08 35687.62 06/30/92 57361.54 35155.87 07/31/92 60812.19 36593.75 08/31/92 59172.01 35843.58 09/30/92 55076.04 36266.53 10/31/92 56770.00 36393.47 11/30/92 59880.07 37634.48 12/31/92 58910.10 38097.39 01/31/93 55746.25 38417.40 02/28/93 49797.46 38939.88 03/31/93 51170.99 39761.51 04/30/93 51152.04 38799.28 05/31/93 53198.12 39839.10 06/30/93 53008.67 39954.64 07/31/93 51284.66 39794.82 08/31/93 53112.87 41303.04 09/30/93 54770.57 40985.01 10/31/93 58843.79 41833.40 11/30/93 58644.87 41435.98 12/31/93 60333.77 41937.36 01/31/94 61528.69 43363.23 02/28/94 60039.79 42183.75 Let's say you invested $10,000 in Fidelity Select Health Care Portfolio on February 29, 1984 and paid a 3% sales charge. By February 28, 1994, your investment would have grown to $60,040 - a 500.40% increase. That compares to $10,000 invested in the S&P 500, which would have grown to $42,184 over the same period - a 321.84% increase. INVESTMENT SUMMARY TOP TEN STOCKS AS OF FEBRUARY 28, 1994 % OF FUND'S INVESTMENTS Warner-Lambert Co. 9.6 Schering-Plough Corp. 7.8 Pfizer, Inc. 7.5 IMCERA Group, Inc. 5.7 U.S. Healthcare, Inc. 5.6 Johnson & Johnson 5.0 Allergan, Inc. 4.0 McKesson Corp. 3.7 Cardinal Health, Inc. 3.4 Bergen Brunswig Corp. Class A 3.2 TOP INDUSTRIES AS OF FEBRUARY 28, 1994 Row: 1, Col: 1, Value: 23.9 Row: 1, Col: 2, Value: 5.7 Row: 1, Col: 3, Value: 5.8 Row: 1, Col: 4, Value: 8.6 Row: 1, Col: 5, Value: 11.9 Row: 1, Col: 6, Value: 44.1 Drugs 44.1% Drug Distributors - Wholesale 11.9% Medical Supplies & Appliances 8.6% Medical Technology 5.8% HMOs & Outpatient Care 5.7% All Others 23.9%* * INCLUDES SHORT-TERM INVESTMENTS HEALTH CARE PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW Charles Mangum, Portfolio Manager of Fidelity Select Health Care Portfolio Q. CHARLES, HOW DID THE FUND PERFORM? A. Quite well. The fund's total return for the year ended February 28, 1994 was 20.57%. This was more than double the 8.33% return of the S&P 500. Q. GIVEN THE CONCERNS AROUND HEALTH-CARE REFORM, HOW DID THE FUND END UP OUTPERFORMING THE S&P 500? A. In part, it was the sector itself that performed well. Over the past year, the sector received a psychological boost as fears about health-care reform subsided. February of 1993 marked the psychological bottom, and since then the stocks have made a significant recovery. During this fall, many investors shifted their focus from companies they expected to survive reform to companies that promised innovation and growth. Q. IN LIGHT OF THIS SHIFT, DID YOU CHANGE YOUR STRATEGY? A. Yes. Over the past six months, I increased my stake in two fast growing areas- biotechnology and health maintenance organizations, or HMOs. Both helped the fund's performance dramatically. In particular, biotechnology stocks did well as demand for innovative products increased. The expected success of Chiron's Betaseron, a promising new treatment for multiple sclerosis, propelled the company's stock from about $48 at the end of March to $84 at the end of December. Biogen was another winner. Its licensed products for the prevention and treatment of hepatitis helped push its stock up dramatically. In the late fall I sold both Chiron and Biogen at a profit. Some HMOs also looked good as low-cost providers that would benefit from any reasonable plan passed by Congress. The fund had investments in U.S. Healthcare, a Northeastern HMO that has done an excellent job holding down costs while increasing its membership. Q. YOU SAID THE SECTOR IS BECOMING INCREASINGLY DESENSITIZED TO HEALTH-CARE REFORM. WHAT'S BEHIND THIS TREND? A. The news out of Washington changes every day, and I think investors are taking it less seriously. In addition, the public seems to be losing interest in health-care reform and focusing instead on issues like crime and welfare. I think this trend away from health-care reform will become more pronounced as the economy picks up and people feel more secure in their jobs. In my opinion, President Clinton's proposed reform will face strong opposition because people will decide that any form of price control is detrimental to quality care and that mandatory coverage is too burdensome for government and business. I believe that reform will be incremental over the next few years. Q. PHARMACEUTICAL COMPANIES HAD A TOUGH TIME OVER THE LAST YEAR. WHY DO YOU HAVE THREE DRUG COMPANIES IN YOUR TOP 10 STOCKS? A. Many drug companies had a difficult year, largely because health-care reform targeted them as expensive providers. In addition, the industry experienced some fundamental problems in Italy and Germany, where pharmaceutical spending was down 15% to 20%. My top three stocks, Warner-Lambert, Schering-Plough, and Pfizer all had a mixed year. However, Schering-Plough had a better year than the other two stocks. Its earnings per share were up about 18% after the introduction of Claritin, a new allergy medication. I'm keeping a significant stake in pharmaceutical drugs because I think they have strong potential going forward. Q. DO YOU REGRET ANY OF THE FUND DECISIONS YOU'VE MADE OVER THE LAST YEAR? A. Yes. I wish I'd owned fewer drug stocks and more HMOs in the last six months when HMOs performed well. However, when I consider my decision to stay with pharmaceutical drugs for the coming 12 months, I come to the same conclusion. HMOs are extremely expensive, and the market's growth expectations are unrealistic. Pharmaceuticals are exactly the opposite. Their expectations are at rock bottom and a number of positive changes are taking place in the industry. Q. HOW DOES THE FUND LOOK GOING FORWARD? A. Although the market is still volatile, I think the fund's performance may be more consistent over the next year than it was over the past year. This is mostly because I believe investors will be less influenced by health-care reform. I also expect that the fund could profit from its investments in pharmaceuticals. When I look at both of these factors, I'm increasingly optimistic. FUND FACTS START DATE: July 14, 1981 SIZE: as of February 28, 1994, over $522 million MANAGER: Charles Mangum, since March 1992; manager, Fidelity Select Medical Delivery Portfolio, 1991-1993; joined Fidelity in 1990 (checkmark) HEALTH CARE PORTFOLIO INVESTMENTS FEBRUARY 28, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 91.5% SHARES VALUE (NOTE 1) DRUGS & PHARMACEUTICALS - 47.9% BIOTECHNOLOGY - 3.3% Alkermes, Inc. 93,900 $ 692,510 01642T10 Amgen, Inc. (a) 310,000 12,942,500 03116210 Biogen, Inc. (a) 4,600 201,825 09059710 COR Therapeutics, Inc. (a) 30,500 411,750 21775310 Centocor, Inc. (a) 83,300 895,475 15234210 Cephalon, Inc. (a) 42,800 690,150 15670810 Immune Response Corp. (a) 1,800 20,700 45252T10 Magainin Pharmaceuticals, Inc. (a) 53,400 767,625 55903610 Synergen, Inc. (a) 50,000 600,000 87159410 17,222,535 DRUGS - 44.1% Allergan, Inc. 881,800 20,722,300 01849010 American Cyanamid Co. 224,500 9,962,188 02532110 Carter-Wallace, Inc. 95,700 1,973,813 14628510 Cortech, Inc. 12,500 165,625 22051J10 Elan PLC: ADR (a) 393,350 15,684,831 28413120 Unit (Common & 1 ADR warrant) (a) 56,806 1,789,389 28413140 Forest Laboratories, Inc. (a) 239,800 12,019,975 34583810 IMCERA Group, Inc. 801,600 29,759,400 45245410 IVAX Corp. 230,000 8,078,750 46582310 Pfizer, Inc. 672,500 39,005,000 71708110 Schering-Plough Corp. 676,700 40,432,825 80660510 Vertex Pharmaceuticals, Inc. (a) 3,900 66,300 92532F10 Warner-Lambert Co. 784,600 49,920,175 93448810 229,580,571 IN VITRO, IN VIVO DIAGNOSTIC SUBSTANCE - 0.2% Igen, Inc. 114,000 1,225,500 44953610 PHARMACEUTICAL PREPARATIONS - 0.3% Ligand Pharmaceuticals, Inc. 35,000 428,750 53220K10 Shaman Pharmaceuticals (a) 79,000 869,000 81931910 1,297,750 TOTAL DRUGS & PHARMACEUTICALS 249,326,356 HOUSEHOLD PRODUCTS - 0.4% FABRICATED RUBBER PRODUCTS - 0.4% Safeskin Corp. 131,200 2,263,200 78645410 MEDICAL EQUIPMENT & SUPPLIES - 28.2% DENTAL EQUIPMENT - 0.4% Sybron Corp. (a) 67,600 2,154,750 87114F10 DRUG DISTRIBUTORS - WHOLESALE - 11.9% Bergen Brunswig Corp. Class A 843,600 16,661,100 08373910 Cardinal Health, Inc. 366,193 17,668,812 14149Y10 FoxMeyer Corp. 154,700 2,088,450 35165410 McKesson Corp. 297,700 19,052,800 58155610 Owens & Minor, Inc. 255,200 6,635,200 69073010 62,106,362 MEDICAL SUPPLIES & APPLIANCES - 8.6% Baxter International, Inc. 102,200 2,325,050 07181310 Becton, Dickinson & Co. 161,600 6,342,800 07588710 Boston Scientific Corp. (a) 108,600 1,696,875 10113710 Johnson & Johnson 643,100 25,804,388 47816010 Kendall International, Inc. (a) 154,100 6,857,450 48875110 Sofamor/Danek Group, Inc. (a) 52,800 1,478,400 83400510 44,504,963 MEDICAL TECHNOLOGY - 5.4% Applied Bioscience International, Inc. (a) 15,000 80,625 03791710 Cordis Corp. (a) 23,600 1,091,500 21852510 Datascope Corp. (a) 43,800 700,800 23811310 SHARES VALUE (NOTE 1) Haemonetics Corp. (a) 110,000 $ 2,447,500 40502410 Medtronic, Inc. 164,700 13,134,825 58505510 Mentor Corp. 274,900 4,260,950 58718810 SciMed Life Systems, Inc. (a) 5,400 191,700 80861410 Spacelabs Medical, Inc. (a) 19,100 487,050 84624710 St. Jude Medical, Inc. 160,000 4,560,000 79084910 Utah Medical Products, Inc. 134,300 1,040,825 91748810 27,995,775 OPHTHALMIC GOODS - 1.8% Bausch & Lomb, Inc. 183,900 9,240,975 07170710 X-RAY ELECTRO-MED APPARATUS - 0.1% Fischer Imaging Corp. 86,000 526,750 33771910 TOTAL MEDICAL EQUIPMENT & SUPPLIES 146,529,575 MEDICAL FACILITIES MANAGEMENT - 15.0% HEALTH SERVICES - 0.0% Healthwise America, Inc. (a) 2,640 72,600 42221L10 HOME HEALTH CARE AGENCIES - 2.7% Abbey Healthcare Group, Inc. (a) 76,630 1,877,435 00278610 Curaflex Health Services, Inc. (a) 84,400 411,450 23126310 Healthinfusion, Inc. (a) 73,300 458,125 42221C10 Homedco Group, Inc. (a) 162,000 5,751,000 43739A10 Medisys, Inc. 110,000 343,750 58494410 Vivra, Inc. (a) 219,700 5,327,725 92855M10 14,169,485 HOSPITALS - 4.2% Columbia/HCA Healthcare Corp. 1,705 73,315 19767710 HEALTHSOUTH Rehabilitation Corp. (a) 486,550 14,353,225 42192410 Health Management Associates, Inc. Class A (a) 26,100 871,088 42193310 Summit Health Ltd. 135,800 1,247,663 86606410 Vencor, Inc. (a) 156,100 5,307,400 92260210 21,852,691 HOSPITALS, GENERAL MEDICAL - 0.2% Ornda Healthcorp (a) 66,800 1,252,500 68685710 HMOS & OUTPATIENT CARE - 5.7% U.S. Healthcare, Inc. 462,500 29,368,750 91191010 MEDICAL LABORATORIES - 0.0% National Health Laboratories, Inc. 11,500 152,375 63633F10 MEDICAL SERVICES - 1.2% Lincare Holdings, Inc. (a) 231,588 5,847,597 53279110 Surgical Care Affiliates, Inc. 11,800 203,550 86881810 6,051,147 NURSING CARE & NURSING HOMES - 0.8% Integrated Health Services, Inc. (a) 120,300 4,015,013 45812C10 SPECIALTY OUTPATIENT CLINICS - 0.2% American Healthcorp, Inc. (a) 45,550 694,638 02649V10 Coastal Healthcare Group, Inc. (a) 5,000 181,250 19046510 875,888 TOTAL MEDICAL FACILITIES MANAGEMENT 77,810,449 TOTAL COMMON STOCKS (Cost $461,153,055) 475,929,580 CONVERTIBLE BONDS - 0.9% PRINCIPAL VALUE (NOTE 1) AMOUNT MEDICAL EQUIPMENT & SUPPLIES - 0.4% MEDICAL TECHNOLOGY - 0.4% Advanced Medical, Inc. 7 1/4%, 1/15/02 $ 4,180,000 $ 2,069,100 00754CAA MEDICAL FACILITIES MANAGEMENT - 0.5% HOME HEALTH CARE AGENCIES - 0.0% Abbey Healthcare Group, Inc. 6 1/2%, 12/1/02 (b) 65,000 77,675 002786AA NURSING CARE & NURSING HOMES - 0.5% Greenery Rehabilitation Group, Inc. 6 1/2%, 6/15/11 3,250,000 2,502,500 394797AA TOTAL MEDICAL FACILITIES MANAGEMENT 2,580,175 TOTAL CONVERTIBLE BONDS (Cost $3,909,895) 4,649,275 REPURCHASE AGREEMENTS - 7.6% MATURITY VALUE (NOTE 1) AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account, at 3.47% dated 2/28/94 due 3/1/94 $ 39,651,822 39,648,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $504,710,950) $ 520,226,855 LEGEND 1. Non-income producing 2. Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of this security amounted to $77,675 or 0.0% of net assets. OTHER INFORMATION CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1, 1993, the fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of February 28, 1993 have been reclassified to reflect an increase in paid in capital of $175,972,829, a decrease in undistributed net investment income of $4,958,402 and a decrease in accumulated net realized gain on investments of $171,014,427. Purchases and sales of securities, other than short-term securities, aggregated $1,075,375,355 and $1,208,758,948 respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $342,394 for the period (see Note 4 of Notes to Financial Statements). At the period end, the value of securities loaned and the value of collateral amounted to $15,469,000 and $15,896,700, respectively (see Note 6 of Notes to Financial Statements). INCOME TAX INFORMATION At February 28, 1994, the aggregate cost of investment securities for income tax purposes was $508,083,012. Net unrealized appreciation aggregated $12,143,843, of which $33,184,087 related to appreciated investment securities and $21,040,244 related to depreciated investment securities. At February 28, 1994, the fund had a capital loss carryforward of approximately $529,000 which will expire on February 28, 2002. The fund intends to elect to defer to its fiscal year ending February 28, 1995 $6,543,000 of losses recognized during the period November 1, 1993 to February 28, 1994. HEALTH CARE PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $39,648,000) (cost $504,710,950) $ 520,226,855 (Notes 1 and 2) - See accompanying schedule Cash 23 Receivable for investments sold 33,013,712 Receivable for fund shares sold 453,023 Dividends receivable 1,696,386 Interest receivable 82,088 Redemption fees receivable (Note 1) 448 Other receivables 164,103 TOTAL ASSETS 555,636,638 LIABILITIES Payable for investments purchased $ 10,412,266 Payable for fund shares redeemed 4,037,650 Accrued management fee 281,699 Other payables and accrued expenses 2,118,759 Collateral on securities loaned, at value (Note 6) 15,896,700 TOTAL LIABILITIES 32,747,074 NET ASSETS $ 522,889,564 Net Assets consist of (Note 1): Paid in capital $ 516,909,124 Undistributed net investment income 820,040 Accumulated undistributed net realized gain (loss) on investments (10,355,505 ) Net unrealized appreciation (depreciation) on investment securities 15,515,905 NET ASSETS, for 8,259,742 shares outstanding $ 522,889,564 NET ASSET VALUE and redemption price per share ($522,889,564 (divided by) 8,259,742 shares) $63.31 Maximum offering price per share (100/97 of $63.31) $65.27
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994 INVESTMENT INCOME $ 7,956,141 Dividends Interest (including security lending fees of $83,391) (Note 6) 2,082,797 TOTAL INCOME 10,038,938 EXPENSES Management fee (Note 4) $ 3,460,974 Transfer agent (Note 4) 4,740,085 Fees Redemption fees (Note 1) (321,857 ) Accounting and security lending fees (Note 4) 543,706 Non-interested trustees' compensation 4,010 Custodian fees and expenses 51,189 Registration fees 57,704 Audit 106,105 Legal 6,058 Reports to shareholders 108,538 Miscellaneous 18,736 Total expenses before reductions 8,775,248 Expense reductions (Note 8) (187,747 8,587,501 ) NET INVESTMENT INCOME 1,451,437 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) (3,984,876 Net realized gain (loss) on investment securities ) Change in net unrealized appreciation (depreciation) on investment securities 103,530,466 NET GAIN (LOSS) 99,545,590 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 100,997,027 OTHER INFORMATION $1,328,141 Sales charges paid to FDC (Note 4) Deferred sales charges withheld $187,745 by FDC (Note 4) Exchange fees withheld by FSC $234,923 (Note 4)
STATEMENT OF CHANGES IN NET ASSETS INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS FEBRUARY 28, ENDED 1994 FEBRUARY 28, 1993
Operations $ 1,451,437 $ 1,552,778 Net investment income Net realized gain (loss) on investments (3,984,876 32,603,514 ) Change in net unrealized appreciation (depreciation) on investments 103,530,466 (137,590,291 ) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 100,997,027 (103,433,999 ) Distributions to shareholders (631,397 (1,898,493 From net investment income ) ) From net realized gain - (100,363,617 ) TOTAL DISTRIBUTIONS (631,397 (102,262,110 ) ) Share transactions 255,996,151 237,965,905 Net proceeds from sales of shares Reinvestment of distributions 614,017 100,014,699 Cost of shares redeemed (370,922,213 (435,137,216 ) ) Paid in capital portion of redemption fees (Note 1) 469,371 404,969 Net increase (decrease) in net assets resulting from share transactions (113,842,674 (96,751,643 ) ) TOTAL INCREASE (DECREASE) IN NET ASSETS (13,477,044 (302,447,752 ) ) NET ASSETS Beginning of period 536,366,608 838,814,360 End of period (including undistributed net investment income of $820,040 and $4,958,402, respectively) $ 522,889,564 $ 536,366,608 OTHER INFORMATION Shares Sold 4,521,405 3,692,984 Issued in reinvestment of distributions 10,053 1,575,456 Redeemed (6,474,354 (6,977,952 ) ) Net increase (decrease) (1,942,896) (1,709,512)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30, FEBRUARY 28, ENDED FEBRUARY 28, SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990 Net asset value, beginning of period $ 52.57 $ 70.42 $ 69.99 $ 46.15 $ 39.79 Income from Investment Operations Net investment income (loss) .15 .13 (.02) .73F .72 Net realized and unrealized gain (loss) on investments 10.61 (9.34) 9.47 28.70 6.56 Total from investment operations 10.76 (9.21) 9.45 29.43 7.28 Less Distributions From net investment income (.07) (.16) (.34) (.20) (.13) From net realized gain - (8.51) (8.81) (5.67) (.84) Total distributions (.07) (8.67) (9.15) (5.87) (.97) Redemption fees added to paid in capital .05 .03 .13 .28 .05 Net asset value, end of period $ 63.31 $ 52.57 $ 70.42 $ 69.99 $ 46.15 TOTAL RETURND, E 20.57% (14.81)% 13.92% 69.32% 18.55% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 522,890 $ 536,367 $ 838,814 $ 624,018 $ 217,522 Ratio of expenses to average net assetsB 1.55% 1.46%A 1.44% 1.53% 1.74% Ratio of expenses to average net assets before expense 1.59% 1.46%A 1.44% 1.53% 1.74% reductionsB Ratio of net investment income (loss) to average net assets .26% .24%A (.02)% 1.28% 1.61% Portfolio turnover rate 213% 112%A 154% 159% 126%
1 ANNUALIZED 2 SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS. 3 NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH PERIOD. 4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 5 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. 6 INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO $.55 PER SHARE. MEDICAL DELIVERY PORTFOLIO PERFORMANCE AND INVESTMENT SUMMARY PERFORMANCE There are several ways to evaluate a fund's historical performance: total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND MEDICAL DELIVERY 40.25% 185.42% 164.92% MEDICAL DELIVERY (INCL. 3% SALES CHARGE) 36.04% 176.85% 156.97% S&P 500 8.33% 89.60% 140.42% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years, or since the fund started on June 30, 1986. You can compare these figures to the performance of the S&P 500 - a common proxy for the U.S. stock market. This benchmark includes reinvested dividends and capital gains, if any. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND MEDICAL DELIVERY 40.25% 23.34% 13.54% MEDICAL DELIVERY (INCL. 3% SALES CHARGE) 36.04% 22.59% 13.09% S&P 500 8.33% 13.65% 12.11% AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of growth in the long run and volatility in the short run. Unlike the broader market, however, some sectors may not have a history of growth in the long run. And, as with all stock funds, the share price and return of a fund that invests in a sector will vary. That means if you sell your shares during a sector downturn, you might lose money. But if you can identify a sector that is about to experience rapid growth you may have the potential for above average-gains. (checkmark) $10,000 OVER LIFE OF FUND Select Medical Delivery (505) S&P 500 06/30/86 9700.00 10000.00 07/31/86 9011.30 9488.77 08/31/86 9108.30 10192.84 09/30/86 8380.80 9349.89 10/31/86 9040.40 9889.38 11/30/86 8506.90 10129.69 12/31/86 7944.30 9871.39 01/31/87 8342.00 11201.06 02/28/87 8953.10 11643.50 03/31/87 9379.90 11980.00 04/30/87 8409.90 11873.38 05/31/87 8671.80 11976.68 06/30/87 9263.50 12581.50 07/31/87 9661.20 13219.38 08/31/87 9438.10 13712.46 09/30/87 9292.60 13412.16 10/31/87 6644.50 10523.18 11/30/87 6246.80 9656.07 12/31/87 6984.29 10390.90 01/31/88 7025.49 10828.35 02/29/88 7386.04 11332.96 03/31/88 7581.76 10982.77 04/30/88 7643.57 11104.68 05/31/88 7519.96 11201.29 06/30/88 7756.89 11715.43 07/31/88 7674.48 11670.91 08/31/88 7458.15 11274.10 09/30/88 7880.50 11754.37 10/31/88 8086.53 12081.14 11/30/88 7829.00 11908.38 12/31/88 8086.53 12116.78 01/31/89 8684.00 13003.73 02/28/89 9003.34 12679.94 03/31/89 9497.81 12975.38 04/30/89 10146.79 13648.80 05/31/89 10672.16 14201.58 06/30/89 10548.09 14120.63 07/31/89 11745.33 15395.72 08/31/89 12292.35 15697.48 09/30/89 12632.94 15633.12 10/31/89 12209.78 15270.43 11/30/89 12777.44 15581.95 12/31/89 12778.17 15955.91 01/31/90 10896.86 14885.27 02/28/90 11171.65 15077.29 03/31/90 11689.55 15476.84 04/30/90 11805.81 15089.92 05/31/90 13475.74 16561.19 06/30/90 14120.46 16448.57 07/31/90 14173.31 16395.93 08/31/90 13042.41 14913.74 09/30/90 12175.73 14187.44 10/31/90 12027.76 14126.44 11/30/90 13697.70 15039.00 12/31/90 14856.15 15458.59 01/31/91 17250.55 16132.59 02/28/91 18317.15 17286.07 03/31/91 21038.06 17704.39 04/30/91 20406.81 17746.88 05/31/91 22093.77 18513.55 06/30/91 20232.49 17665.63 07/31/91 22262.54 18488.84 08/31/91 22523.38 18927.03 09/30/91 22727.52 18610.95 10/31/91 23226.53 18860.33 11/30/91 22580.09 18100.26 12/31/91 26417.99 20170.93 01/31/92 26441.20 19795.75 02/29/92 25419.77 20053.10 03/31/92 23736.72 19662.06 04/30/92 22796.54 20240.13 05/31/92 22564.40 20339.30 06/30/92 21376.21 20036.25 07/31/92 22592.64 20855.73 08/31/92 22567.30 20428.19 09/30/92 19919.03 20669.24 10/31/92 20907.38 20741.58 11/30/92 22960.11 21448.87 12/31/92 22934.76 21712.69 01/31/93 21769.02 21895.08 02/28/93 18322.47 22192.85 03/31/93 18727.94 22661.12 04/30/93 18499.86 22112.72 05/31/93 19070.07 22705.34 06/30/93 19260.13 22771.19 07/31/93 19741.64 22680.10 08/31/93 19678.28 23539.68 09/30/93 21300.19 23358.43 10/31/93 22301.21 23841.94 11/30/93 22668.67 23615.45 12/31/93 24201.88 23901.19 01/31/94 25557.69 24713.83 02/28/94 25697.07 24041.62 Let's say you invested $10,000 in Fidelity Select Medical Delivery Portfolio on June 30, 1986, when the fund started, and paid a 3% sales charge. By February 28, 1994, your investment would have grown to $25,697 - a 156.97% increase. That compares to $10,000 invested in the S&P 500, which would have grown to $24,042 over the same period - a 140.42% increase. INVESTMENT SUMMARY TOP TEN STOCKS AS OF FEBRUARY 28, 1994 % OF FUND'S INVESTMENTS Columbia/HCA Healthcare Corp. 10.0 U.S. Healthcare, Inc. 9.2 United Healthcare Corp. 9.1 Health Management Associates, Inc. Class A 8.4 Lincare Holdings, Inc. 4.9 Medtonic, Inc. 4.2 Lilly (Eli) & Co. 3.6 Multicare Companies, Inc. 2.5 Allergan, Inc. 2.3 Elan PLC ADR 2.2 TOP INDUSTRIES AS OF FEBRUARY 28, 1994 Row: 1, Col: 1, Value: 41.5 Row: 1, Col: 2, Value: 4.2 Row: 1, Col: 3, Value: 4.9 Row: 1, Col: 4, Value: 10.9 Row: 1, Col: 5, Value: 18.3 Row: 1, Col: 6, Value: 20.2 Hospitals 20.2% HMOs & Outpatient Care 18.3% Drugs 10.9% Medical Services 4.9% Medical Technology 4.2% All Others 41.5%* * INCLUDES SHORT-TERM INVESTMENTS MEDICAL DELIVERY PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW Louis Salemy, Portfolio Manager of Fidelity Select Medical Delivery Portfolio Q. LOUIS, HOW DID THE FUND DO? A. Very well. It had a total return of 40.25% for the year ended February 28, 1994. This was dramatically above the S&P 500's 8.33% return. Q. WHY DID THE FUND TURN IN SUCH STRONG PERFORMANCE, ESPECIALLY OVER THE LAST SIX MONTHS? A. There were two reasons. First, after a series of ups and downs in the market during the year, investors became less nervous about health-care reform. Since September, support for President Clinton's plan has weakened, and the market has become more resilient to speculation about reform. As a result, investors have switched their focus from companies they thought would survive health-care reform to innovative companies with strong prospects. Q. AND THE SECOND REASON? A. The fund benefited from an increased number of mergers and acquisitions in the health-care industry. For example, this February, two companies in the fund's top 10 holdings merged: Columbia bought HCA (Hospital Corp. of America) at a high premium. I sold the fund's HCA stock at a 60% profit, and held on to Columbia, which was much more profitable than I expected it to be in the fourth quarter. With the acquisition of HCA, Columbia became one of the largest hospital companies in the country. It also looks good going forward. Since December of 1993, its share price has increased from $30 to $44. Q. HAVE YOU CHANGED THE FUND'S INVESTMENT STRATEGY OVER THE PAST YEAR? A. Yes. I've made two significant changes. First, the fund owned larger stakes in the top 10 stocks than the fund has held in the past. In fact, the top six stocks account for nearly 50% of the fund's investments. The other major change I've made is to drop most of the fund's alternative site delivery companies - companies that offer specific services, such as inpatient mental health care, physical rehabilitation, and home infusion, at sites away from hospitals. These companies accounted for about 30% of the fund before I took it over in April. Because they could offer services less expensively than many hospitals, they were favored by insurance companies, especially during the late 1980s. However, in 1991, alternative site companies added so much capacity for patients that they exceeded demand for their services. At the same time, hospitals changed the way they charged for services, which made them more competitive. As a result, the alternative site industry has shown disappointing earnings. Right now, the only notable alternative site company in the fund is Lincare, which provides respiratory therapy at home. It has a jump on its competitors because of its large customer base and ability to provide services at a low cost. Q. WHAT DID YOU BUY INSTEAD? A. Mainly HMOs. I believe that HMOs with a dominant local market position have high growth potential. That's because these companies will be able to offer a package of benefits at a competitive price, which should drive membership and earnings growth. My biggest investments were U.S. Healthcare, an HMO in the Northeast, and United Healthcare, an HMO with offices throughout the country. Over the past year, United Healthcare has been actively acquiring other HMOs and improving its operations. Q. IN HINDSIGHT, DO YOU REGRET ANY OF YOUR DECISIONS? A. Sure. I wish I'd bought some of the high-performing stocks the fund didn't own, like Humana HMO. This company turned in a great performance in 1993, mostly because it cut costs dramatically - much more than I thought it could. Q. WHAT DO YOU THINK SHAREHOLDERS CAN EXPECT GOING FORWARD? A. I'm reasonably optimistic about the fund. Each of the companies the fund owns has a unique service or product. If my earnings estimates are correct, the fund has good potential for 1994. FUND FACTS START DATE: June 30, 1986 SIZE: as of February 28, 1994, over $188 million MANAGER: Louis Salemy, since April 1993; manager, Fidelity Select Industrial Materials Portfolio, since August 1992; joined Fidelity in 1992 (checkmark) MEDICAL DELIVERY PORTFOLIO INVESTMENTS FEBRUARY 28, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 71.9% SHARES VALUE (NOTE 1) CHEMICALS & PLASTICS - 0.5% CHEMICALS - 0.5% Grace (W.R.) & Co. 21,100 $ 944,225 38388310 DRUGS & PHARMACEUTICALS - 10.9% DRUGS - 10.9% Allergan, Inc. 195,600 4,596,600 01849010 Bristol-Myers Squibb Co. 75,000 4,143,750 11012210 Elan PLC Therapeutic Systems, Inc. unit (Common & 1 ADR ) (a) 4,337 136,616 28413140 Elan PLC ADR (a) 110,800 4,418,150 28413120 Lilly (Eli) & Co. 130,000 7,166,250 53245710 Mylan Laboratories, Inc. 400 9,400 62853010 Upjohn Co. 50,000 1,450,000 91530210 21,920,766 ELECTRICAL EQUIPMENT - 1.8% ELECTRICAL MACHINERY - 1.8% General Electric Co. 34,000 3,582,750 36960410 LODGING & GAMING - 1.8% HOTELS, MOTELS, & TOURIST COURTS - 0.5% Promus Companies, Inc. (a) 21,300 1,049,025 74342A10 RACING & GAMING - 1.3% Boyd Gaming Corp. (a) 50,000 875,000 10330410 International Game Technology 25,000 709,375 45990210 President Riverboat Casinos, Inc. (a) 55,500 929,625 74084810 2,514,000 TOTAL LODGING & GAMING 3,563,025 MEDICAL EQUIPMENT & SUPPLIES - 9.1% DRUG DISTRIBUTORS - WHOLESALE - 2.5% Bergen Brunswig Corp. Class A 75,300 1,487,175 08373910 Cardinal Health, Inc. 44,900 2,166,425 14149Y10 Owens & Minor, Inc. 50,100 1,302,600 69073010 4,956,200 MEDICAL SUPPLIES & APPLIANCES - 2.4% Baxter International, Inc. 150,000 3,412,500 07181310 Hillenbrand Industries, Inc. 16,300 674,413 43157310 Johnson & Johnson 20,000 802,500 47816010 4,889,413 MEDICAL TECHNOLOGY - 4.2% Ballard Medical Products 2,700 37,125 05856610 Medtronic, Inc. 105,800 8,437,550 58505510 Ventritex, Inc. (a) 1,900 53,200 92281410 8,527,875 TOTAL MEDICAL EQUIPMENT & SUPPLIES 18,373,488 MEDICAL FACILITIES MANAGEMENT - 47.8% HEALTH SERVICES - 0.3% Vitalink Pharmacy Services, Inc. (a) 46,900 597,975 92846E10 HOME HEALTH CARE AGENCIES - 0.2% Homedco Group, Inc. (a) 13,800 489,900 43739A10 HOSPITALS - 20.2% Columbia/HCA Healthcare Corp. 468,582 20,149,026 19767710 HEALTHSOUTH Rehabilitation Co. (a) 97,900 2,888,050 42192410 Health Management Associates, Inc. Class A (a) 503,575 16,806,816 42193310 Universal Health Services, Inc. Class B (a) 26,400 656,700 91390310 40,500,592 HOSPITALS, GENERAL MEDICAL - 0.7% Ornda Healthcorp (a) 86,700 1,625,625 68685710 SHARES VALUE (NOTE 1) HMOS & OUTPATIENT CARE - 18.3% U.S. Healthcare, Inc. 290,800 $ 18,465,800 91191010 United HealthCare Corp. 220,200 18,194,024 91058110 36,659,824 MEDICAL SERVICES - 4.9% Lincare Holdings, Inc. (a) 386,700 9,764,175 53279110 NURSING CARE & NURSING HOMES - 0.7% Health Care & Retirement Corp. (a) 53,800 1,398,800 42193710 SKILLED NURSING CARE FACILITIES - 2.5% Multicare Companies, Inc. (a) 264,000 4,950,000 62543V10 TOTAL MEDICAL FACILITIES MANAGEMENT 95,986,891 TOTAL COMMON STOCKS (Cost $118,626,594) 144,371,145 REPURCHASE AGREEMENTS - 28.1% MATURITY VALUE (NOTE 1) AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account, at 3.47% dated 2/28/94 due 3/1/94 $56,325,429 56,320,000 TOTAL INVESTMENT IN SECURITIES - 100.0% (Cost $174,946,594) $ 200,691,145 LEGEND 3. Non-income producing OTHER INFORMATION CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1, 1993, the fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of February 28, 1993 have been reclassified to reflect an increase in paid in capital of $19,878,373, a decrease in undistributed net investment loss of $1,691,792 and a decrease in accumulated net realized gain on investments of $21,570,165. Purchases and sales of securities, other than short-term securities, aggregated $184,954,212 and $140,931,022, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $71,221 for the period (see Note 4 of Notes to Financial Statements). At the period end, the value of securities loaned and the value of collateral amounted to $2,326,600 and $2,362,700, respectively (see Note 6 of Notes to Financial Statements). INCOME TAX INFORMATION At February 28, 1994, the aggregate cost of investment securities for income tax purposes was $175,170,766. Net unrealized appreciation aggregated $25,520,379, of which $27,509,658 related to appreciated investment securities and $1,989,279 related to depreciated investment securities. At February 28, 1994, the fund had a capital loss carryforward of approximately $12,438,000 of which $1,480,000 and $10,958,000 will expire on February 28, 2001 and 2002, respectively. MEDICAL DELIVERY PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $56,320,000) (cost $174,946,594) $ 200,691,145 (Notes 1 and 2) - See accompanying schedule Cash 25,358 Receivable for investments sold 776,450 Receivable for fund shares sold 5,959,263 Dividends receivable 123,181 Redemption fees receivable (Note 1) 4,272 Other receivables 112,222 TOTAL ASSETS 207,691,891 LIABILITIES Payable for investments purchased $ 655,293 Payable for fund shares redeemed 15,800,441 Accrued management fee 97,269 Other payables and accrued expenses 223,561 Collateral on securities loaned, at value (Note 6) 2,362,700 TOTAL LIABILITIES 19,139,264 NET ASSETS $ 188,552,627 Net Assets consist of (Note 1): Paid in capital $ 175,430,958 Accumulated undistributed net realized gain (loss) on investments (12,622,882 ) Net unrealized appreciation (depreciation) on investment securities 25,744,551 NET ASSETS, for 9,295,929 shares outstanding $ 188,552,627 NET ASSET VALUE and redemption price per share ($188,552,627 (divided by) 9,295,929 shares) $20.28 Maximum offering price per share (100/97 of $20.28) $20.91
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994 INVESTMENT INCOME $ 529,092 Dividends Interest (including security lending fees of $34,005) (Note 6) 756,237 TOTAL INCOME 1,285,329 EXPENSES Management fee (Note 4) $ 667,707 Transfer agent (Note 4) 1,154,295 Fees Redemption fees (Note 1) (110,989 ) Accounting and security lending fees (Note 4) 111,491 Non-interested trustees' compensation 681 Custodian fees and expenses 16,785 Registration fees 41,744 Audit 16,139 Legal 1,103 Reports to shareholders 26,397 Miscellaneous 1,574 Total expenses before reductions 1,926,927 Expense reductions (Note 8) (35,350 1,891,577 ) NET INVESTMENT INCOME (LOSS) (606,248 ) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) (9,573,815 Net realized gain (loss) on investment securities ) Change in net unrealized appreciation (depreciation) on investment securities 46,689,562 NET GAIN (LOSS) 37,115,747 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 36,509,499 OTHER INFORMATION $734,682 Sales charges paid to FDC (Note 4) Deferred sales charges withheld $15,852 by FDC (Note 4) Exchange fees withheld by FSC $89,265 (Note 4)
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS FEBRUARY 28, ENDED 1994 FEBRUARY 28, 1993 Operations $ (606,248 $ (930,627 Net investment income (loss) ) ) Net realized gain (loss) on investments (9,573,815 (3,067,496 ) ) Change in net unrealized appreciation (depreciation) on investments 46,689,562 (20,540,446 ) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 36,509,499 (24,538,569 ) Distributions to shareholders from net realized gains - (9,395,175 ) Share transactions 293,157,307 212,205,693 Net proceeds from sales of shares Reinvestment of distributions - 9,212,168 Cost of shares redeemed (213,446,953 (245,468,808 ) ) Paid in capital portion of redemption fees (Note 1) 523,366 433,027 Net increase (decrease) in net assets resulting from share transactions 80,233,720 (23,617,920 ) TOTAL INCREASE (DECREASE) IN NET ASSETS 116,743,219 (57,551,664 ) NET ASSETS Beginning of period 71,809,408 129,361,072 End of period (including accumulated net investment loss of $0 and $1,691,792, respectively) $ 188,552,627 $ 71,809,408 OTHER INFORMATION Shares Sold 17,052,395 12,114,797 Issued in reinvestment of distributions - 544,776 Redeemed (12,723,955 (14,278,178 ) ) Net increase (decrease) 4,328,440 (1,618,605)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30, FEBRUARY 28, ENDED FEBRUARY 28, SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990 Net asset value, beginning of period $ 14.46 $ 19.64 $ 18.75 $ 11.17 $ 9.85 Income from Investment Operations Net investment income (loss) (.10) (.13) (.15) (.01) .16 Net realized and unrealized gain (loss) on investments 5.84 (3.56) 2.16 7.76 1.43 Total from investment operations 5.74 (3.69) 2.01 7.75 1.59 Less Distributions From net investment income - - - - (.05) From net realized gain - (1.55) (1.24) (.39) (.26) Total distributions - (1.55) (1.24) (.39) (.31) Redemption fees added to paid in capital .08 .06 .12 .22 .04 Net asset value, end of period $ 20.28 $ 14.46 $ 19.64 $ 18.75 $ 11.17 TOTAL RETURND, E 40.25% (19.63)% 11.71% 72.85% 16.35% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 188,553 $ 71,809 $ 129,361 $ 131,622 $ 23,559 Ratio of expenses to average net assetsB 1.79% 1.77% 1.69% 1.94% 2.16% A Ratio of expenses to average net assets before expense 1.82% 1.77% 1.69% 1.94% 2.16% reductionsB A Ratio of net investment income (loss) to average net assets (.57)% (.89)% (.71)% (.07)% 1.43% A Portfolio turnover rate 164% 155% 181% 165% 253% A
1 ANNUALIZED 2 SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS. 3 NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH PERIOD. 4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 5 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. COMPUTERS PORTFOLIO PERFORMANCE AND INVESTMENT SUMMARY PERFORMANCE There are several ways to evaluate a fund's historical performance: total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND COMPUTERS 45.06% 177.39% 214.29% COMPUTERS (INCL. 3% SALES CHARGE) 40.70% 169.07% 204.87% S&P 500 8.33% 89.60% 222.99% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years, or since the fund started on July 29, 1985. You can compare these figures to the performance of the S&P 500 - a common proxy for the U.S. stock market. This benchmark includes reinvested dividends and capital gains, if any. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND COMPUTERS 45.06% 22.64% 14.25% COMPUTERS (INCL. 3% SALES CHARGE) 40.70% 21.89% 13.85% S&P 500 8.33% 13.65% 14.62% AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of growth in the long run and volatility in the short run. Unlike the broader market, however, some sectors may not have a history of growth in the long run. And, as with all stock funds, the share price and return of a fund that invests in a sector will vary. That means if you sell your shares during a sector downturn, you might lose money. But if you can identify a sector that is about to experience rapid growth you may have the potential for above-average gains. (checkmark) $10,000 OVER LIFE OF FUND Select Computer S&P 500 07/29/85 9700.00 10000.00 07/31/85 9515.70 9926.31 08/31/85 9312.00 9841.93 09/30/85 8904.60 9533.88 10/31/85 9438.10 9974.35 11/30/85 10476.00 10658.59 12/31/85 11019.20 11174.46 01/31/86 11145.30 11237.04 02/28/86 11727.30 12077.57 03/31/86 11727.30 12751.50 04/30/86 12901.00 12607.41 05/31/86 13405.40 13278.12 06/30/86 12513.00 13502.52 07/31/86 10571.75 12747.73 08/31/86 11603.62 13693.61 09/30/86 10708.04 12561.15 10/31/86 11759.37 13285.93 11/30/86 11837.25 13608.78 12/31/86 11885.92 13261.75 01/31/87 14251.43 15048.11 02/28/87 15672.67 15642.51 03/31/87 15779.75 16094.58 04/30/87 16159.40 15951.34 05/31/87 16091.26 16090.11 06/30/87 15760.29 16902.66 07/31/87 16023.12 17759.63 08/31/87 17123.13 18422.06 09/30/87 17269.14 18018.62 10/31/87 11175.30 14137.41 11/30/87 9666.44 12972.49 12/31/87 11131.17 13959.69 01/31/88 10549.01 14547.40 02/29/88 11502.54 15225.31 03/31/88 11321.87 14754.84 04/30/88 11904.02 14918.62 05/31/88 11552.73 15048.41 06/30/88 12646.77 15739.14 07/31/88 11693.24 15679.33 08/31/88 10579.12 15146.23 09/30/88 10860.16 15791.46 10/31/88 9986.93 16230.46 11/30/88 9926.71 15998.37 12/31/88 10569.09 16278.34 01/31/89 11191.39 17469.91 02/28/89 10990.65 17034.91 03/31/89 10468.72 17431.83 04/30/89 11643.06 18336.54 05/31/89 12676.88 19079.17 06/30/89 11171.31 18970.42 07/31/89 11372.06 20683.44 08/31/89 11542.69 21088.84 09/30/89 11813.69 21002.38 10/31/89 11422.24 20515.12 11/30/89 11171.31 20933.63 12/31/89 11291.76 21436.04 01/31/90 11191.39 19997.68 02/28/90 12205.14 20255.65 03/31/90 13078.37 20792.42 04/30/90 12727.07 20272.61 05/31/90 14383.19 22249.19 06/30/90 14644.16 22097.90 07/31/90 13600.30 22027.18 08/31/90 11442.32 20035.93 09/30/90 10689.53 19060.18 10/31/90 11091.02 18978.22 11/30/90 12917.77 20204.21 12/31/90 13370.20 20767.91 01/31/91 15649.21 21673.39 02/28/91 16662.11 23223.04 03/31/91 17978.87 23785.03 04/30/91 16814.04 23842.12 05/31/91 17664.87 24872.10 06/30/91 15259.51 23732.96 07/31/91 16792.77 24838.91 08/31/91 17835.80 25427.59 09/30/91 16897.07 25002.95 10/31/91 16563.30 25337.99 11/30/91 15426.40 24316.87 12/31/91 17481.17 27098.72 01/31/92 19306.47 26594.68 02/29/92 20631.11 26940.42 03/31/92 19003.99 26415.08 04/30/92 18388.60 27191.68 05/31/92 18618.07 27324.92 06/30/92 16824.06 26917.78 07/31/92 17648.05 28018.72 08/31/92 16636.31 27444.33 09/30/92 17460.31 27768.18 10/31/92 18837.10 27865.36 11/30/92 20005.30 28815.57 12/31/92 21319.51 29170.00 01/31/93 22560.72 29415.03 02/28/93 21017.03 29815.08 03/31/93 21434.25 30444.17 04/30/93 20825.49 29707.43 05/31/93 23265.47 30503.58 06/30/93 22334.43 30592.05 07/31/93 23265.47 30469.68 08/31/93 24645.99 31624.48 09/30/93 25341.60 31380.97 10/31/93 25341.60 32030.56 11/30/93 26422.47 31726.27 12/31/93 27474.01 32110.15 01/31/94 29245.43 33201.90 02/28/94 30486.56 32298.81 Let's say you invested $10,000 in Fidelity Select Computers Portfolio on July 29, 1985, when the fund started, and paid a 3% sales charge. By February 28, 1994, your investment would have grown to $30,487 - a 204.87% increase. That compares to $10,000 invested in the S&P 500, which would have grown to $32,299 over the same period - a 222.99% increase. INVESTMENT SUMMARY TOP TEN STOCKS AS OF FEBRUARY 28, 1994 % OF FUND'S INVESTMENTS Intel Corp. 6.5 Compaq Computer Corp. 5.9 International Business Machines Corp. 5.0 Micron Technology, Inc. 4.7 Advanced Micro Devices, Inc. 4.5 Texas Instruments, Inc. 4.1 Hewlett Packard Co. 3.8 Sun Microsystems, Inc. 3.7 Samsung Electronics, Ltd. GDS 3.2 Intelligent Electronics, Inc. 2.1 TOP INDUSTRIES AS OF FEBRUARY 28, 1994 Row: 1, Col: 1, Value: 1.3 Row: 1, Col: 2, Value: 2.1 Row: 1, Col: 3, Value: 3.5 Row: 1, Col: 4, Value: 10.9 Row: 1, Col: 5, Value: 25.0 Row: 1, Col: 6, Value: 32.8 Semiconductors 28.3% Mini & Micro Computers 9.6% Mainframe Computers 6.4% Computer & Software Stores 5.6% Computer Equipment - Wholesale 5.5% All Others 44.6%* * INCLUDES SHORT-TERM INVESTMENTS COMPUTERS PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW Harry Lange, Portfolio Manager of Fidelity Select Computers Portfolio Q. HARRY, HOW DID THE FUND PERFORM? A. Very well. The fund had a total return of 45.06% for the 12 months ended February 28, 1994. That easily outdistanced the S&P 500, which returned 8.33% during the same period. Q. WHAT WAS BEHIND THE FUND'S SUCCESS? A. A broad answer is the continuing boom in personal computers. The PC market and related industries picked up in 1993 for several reasons: corporations upgraded their systems more quickly, demand increased among home users, and international markets - especially the Far East - were strong. However, I can also attribute a fair amount of the fund's performance to successful trading. I bought stocks like Apple, Dell and Digital Equipment when valuations (prices compared to other measures like earnings) were low and sold them after the stocks had risen. The exception was Compaq. It was the fund's largest investment over most of the last six months and was a star performer throughout. Q. WHAT MADE COMPAQ SO ATTRACTIVE? A. I'll try to limit the superlatives, but it's not easy. Compaq now claims an 11% share of the world PC market, up from 7% a year ago. The company is big enough to produce its computers at low cost, but agile enough to respond to a rapidly changing market. Compaq's stock price has nearly doubled over the last six months, but amazingly its price-to-earnings ratio hasn't changed much because earnings estimates have risen just as rapidly. The company's relatively low stock valuation, combined with its growth potential, make me optimistic about Compaq's future. Q. WHAT OTHER COMPANIES BENEFITED FROM THE INCREASED DEMAND FOR PCS AND RELATED PRODUCTS? A. Computer and software stores and computer equipment wholesalers. For example, Micro-Age has done very well providing equipment to firms that specialize in system installation for small businesses. Merisel is a wholesaler that distributes software and networking products, as well as computers. Lately, I've decreased the fund's investment in both groups; I felt the stocks had gotten expensive. Q. WHERE DID YOU TURN? A. To semiconductors. The stocks of chip makers suffered a technical correction last fall, which provided a buying opportunity. On February 28, 28.3% of the fund was invested in semiconductor stocks, up from 13.4% six months ago. I like this sector because I see no letup in the demand for semiconductors. My largest bet is Intel, which is putting out its new microprocessor, the Pentium, this year. Intel stands alone with this technology, and I believe it could gain greater market share. Texas Instruments, Advanced Micro Devices and Samsung are other chipmakers that may benefit from a solid market for semiconductors. Q. DESPITE THE FUND'S EXCELLENT RETURNS, THERE MUST HAVE BEEN AT LEAST A FEW DISAPPOINTMENTS ALONG THE WAY . . . A. There were. Sun Microsystems - which produces computer workstations - changed its operating system last year and had some trouble making the transition. Despite the stock's flat performance so far, I'll probably stick with it because I think demand for workstations is still there. Also, a small investment in a few Japanese electronics companies hurt the fund's performance. The Japanese stock market corrected sharply in the fall, and I didn't get the fund out in time. Q. CAN THE FUND CONTINUE TO PERFORM AT THIS PACE? A. That's a tricky question. Certainly the underlying story of this sector seems solid. I don't see a slowdown in the personal computer market, which helps all the industries surrounding it. But there's always the risk of a correction, which can be quick and sharp. When a sector has done so well, investors look for any small reason to sell, even if common logic disagrees. I'll most likely use any correction as an opportunity to add to my top investments, because I believe the business prospects of these companies are very compelling. FUND FACTS START DATE: July 29, 1985 SIZE: as of February 28, 1994, over $120 million MANAGER: Harry Lange, since June 1992; manager, Fidelity Select Electronics Portfolio, since January 1994; Fidelity Select Technology Portfolio, since November 1993; manager, Fidelity Select Capital Goods and Automation Machinery Portfolios, 1988; joined Fidelity in 1987 (checkmark) COMPUTERS PORTFOLIO INVESTMENTS FEBRUARY 28, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 86.2% SHARES VALUE (NOTE 1) COMMUNICATIONS EQUIPMENT - 2.3% DATACOMMUNICATIONS EQUIPMENT - 1.7% Cisco Systems, Inc. (a) 5,000 $ 368,750 17275R10 3Com Corp. (a) 20,000 1,212,500 88553510 1,581,250 TELEPHONE EQUIPMENT - 0.6% Natural Microsystems 33,000 420,750 63888210 Perceptron, Inc. 15,000 206,250 71361F10 Zoom Telephonics, Inc. 2,900 34,075 98976E10 661,075 TOTAL COMMUNICATIONS EQUIPMENT 2,242,325 COMPUTER SERVICES & SOFTWARE - 12.4% COMPUTER & SOFTWARE STORES - 5.6% Inacom Corp. (a) 75,000 1,312,500 45323G10 Intelligent Electronics, Inc. 83,800 2,042,625 45815710 Micro-Age, Inc. (a) 72,600 1,923,900 59492810 5,279,025 CAD/CAM/CAE - 3.9% Computervision Corporation 52,000 214,500 20557T10 ECI Telecom Ltd. 30,000 735,000 26825810 Integrated Silicon Systems, Inc. 500 10,750 45812Q10 Landmark Graphics Corp. (a) 20,000 580,000 51491310 PDA Engineering (a) 24,100 114,475 69326810 Structural Dynamics Research Corp. (a) 83,000 1,234,625 86355510 Synopsys, Inc. (a) 6,000 269,250 87160710 Tecnomatix Technologies (a) 7,500 72,188 91299A92 Viewlogic Systems, Inc. (a) 19,000 532,000 92672110 3,762,788 DATA PROCESSING - 0.2% Ceridian Corp. (a) 10,000 227,500 15677T10 PREPACKAGED COMPUTER SOFTWARE - 2.7% Fuji Software, Inc. 13,000 175,264 36599392 Informix Corp. (a) 15,000 352,500 45677910 Novell, Inc. (a) 80,000 2,040,000 67000610 2,567,764 TOTAL COMPUTER SERVICES & SOFTWARE 11,837,077 COMPUTERS & OFFICE EQUIPMENT - 38.3% COMPUTER EQUIPMENT - 0.4% Syquest Technology, Inc. (a) 35,200 338,800 87166010 COMPUTER EQUIPMENT - WHOLESALE - 5.5% GBC Technologies, Inc. 72,000 1,008,000 36149F10 Gates/FA Distributing, Inc. (a) 33,000 709,500 36740830 Merisel, Inc. (a) 86,300 1,812,300 58984910 Tech Data Corp. (a) 45,600 1,721,400 87823710 5,251,200 COMPUTER PERIPHERALS - 3.4% Komag, Inc. (a) 30,000 750,000 50045310 Liuski International, Inc. (a) 20,000 235,000 53802910 Media Vision Technology, Inc. 25,000 775,000 58445H10 Microtouch Systems, Inc. (a) 2,000 29,000 59514510 Radius, Inc. (a) 121,700 867,113 75047010 Western Digital Corp. (a) 42,400 641,300 95810210 3,297,413 COMPUTER RENTAL & LEASING - 0.2% Comdisco, Inc. 7,900 165,900 20033610 SHARES VALUE (NOTE 1) COMPUTER STORAGE DEVICES - 2.5% Exabyte (a) 20,900 $ 381,425 30061510 Hutchinson Technology, Inc. (a) 19,600 715,400 44840710 Micropolis Corp. (a) 37,200 190,650 59490710 Quantum Corp. (a) 1,200 20,250 74790610 Seagate Technology (a) 25,200 645,750 81180410 Sunward Technologies, Inc. (a) 46,000 414,000 86792720 2,367,475 COMPUTERS & OFFICE EQUIPMENT - 5.5% Canon, Inc. 35,000 572,262 13780199 Diebold, Inc. 18,450 680,344 25365110 Hewlett-Packard Co. 39,700 3,597,813 42823610 Nippon Data Kiki Co, Ltd. 18,000 397,571 68299792 5,247,990 ELECTRONIC COMPUTERS - 0.6% Tricord Systems, Inc. (a) 30,000 615,000 89612110 GRAPHICS WORKSTATIONS - 4.1% Silicon Graphics, Inc. (a) 18,800 448,850 82705610 Sun Microsystems, Inc. (a) 129,300 3,507,263 86681010 3,956,113 MAINFRAME COMPUTERS - 6.4% Amdahl Corp. 224,000 1,316,000 02390510 International Business Machines Corp. 90,900 4,806,338 45920010 6,122,338 MINI & MICRO COMPUTERS - 9.6% AST Research, Inc. (a) 10,000 315,000 00190710 Apple Computer, Inc. 48,000 1,752,000 03783310 Compaq Computer Corp. (a) 56,700 5,599,125 20449310 Concurrent Computer Corp. (a) 23,200 31,900 20671020 Digital Equipment Corp. (a) 30,000 873,750 25384910 Sequent Computer Systems, Inc. (a) 40,000 585,000 81733810 9,156,775 PENS, PENCILS, OFFICE SUPPLIES - 0.1% International Imaging Materials, Inc. 6,000 102,000 45968C10 TOTAL COMPUTERS & OFFICE EQUIPMENT 36,621,004 CONSUMER ELECTRONICS - 0.4% RADIOS, TELEVISIONS, STEREOS - 0.4% Odetics, Inc. Class A (a) 32,000 352,000 67606520 ELECTRICAL EQUIPMENT - 0.2% TV & RADIO COMMUNICATION EQUIPMENT - 0.1% Avid Technology Inc. (a) 3,000 70,500 05367P10 WIRING & LIGHTING - 0.1% Oak Industries, Inc. (a) 4,200 79,270 67140050 TOTAL ELECTRICAL EQUIPMENT 149,770 ELECTRONIC INSTRUMENTS - 3.9% ELECTRONIC EQUIPMENT - 3.9% ASECO Corp. (a) 5,400 40,500 04365910 Credence Systems Corp. (a) 10,000 272,500 22530210 GenRad, Inc. (a) 41,500 243,813 37244710 LTX Corp. 10,000 41,250 50239210 Megatest Corp. (a) 101,600 1,905,000 58495810 Micro Component Technology, Inc. 200 3,100 59479Q10 Teradyne, Inc. (a) 42,800 1,235,850 88077010 3,742,013 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) ELECTRONICS - 28.3% SEMICONDUCTORS - 28.3% Advanced Micro Devices, Inc. (a) 201,100 $ 4,323,650 00790310 Austria MiKro Systems International (a)(b) 10,000 492,508 05299B22 IMP, Inc. (a) 180,000 326,250 44969310 Integrated Device Technology, Inc. (a) 7,900 205,400 45811810 Intel Corp. 90,500 6,233,188 45814010 LSI Logic Corp. (a) 102,100 1,952,663 50216110 Micron Technology, Inc. 64,100 4,543,088 59511210 National Semiconductor Corp. (a) 60,000 1,305,000 63764010 Samsung Electronics Co. Ltd. (b): GDR (a) 2,831 117,232 79605060 GDS 51,000 2,983,500 79605020 Supertex, Inc. 20,000 67,500 86853210 Texas Instruments, Inc. 48,100 3,884,075 88250810 VLSI Technology, Inc. (a) 50,000 675,000 91827010 27,109,054 INDUSTRIAL MACHINERY & EQUIPMENT - 0.0% SPECIAL INDUSTRIAL MACHINERY - 0.0% Asyst Technologies, Inc. 1,000 18,250 04648X10 LEASING & RENTAL - 0.1% EQUIP RENTAL & LEASING - 0.1% Leasing Solutions, Inc. (a) 14,000 134,750 52211310 MEDICAL EQUIPMENT & SUPPLIES - 0.3% MEDICAL SUPPLIES & APPLIANCES - 0.3% Steris Corporation (a) 10,000 277,500 85915210 TOTAL COMMON STOCKS (Cost $66,926,183) 82,483,743 OTHER SECURITIES - 0.5% PRINCIPAL AMOUNT INDEXED SECURITIES - 0.5% Hewlett Packard Finance Co. 0%, 4/25/95 (indexed to the price of Hewlett Packard common stock) (b) (Cost $424,005) $400,000 446,000 4282399A REPURCHASE AGREEMENT - 13.3% MATURITY VALUE (NOTE 1) AMOUNT Investments in repurchase agreements, (U.S. Treasury obligations), in a joint trading account, at 3.47% dated 2/28/94 due 3/1/94 $ 12,752,229 12,751,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $80,101,188) $ 95,680,743 LEGEND 1. Non-income producing 2. Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $4,039,240 or 3.4% of net assets. OTHER INFORMATION CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1, 1993, the fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of February 28, 1993 have been reclassified to reflect an increase in paid in capital of $9,923,134, a decrease in undistributed net investment loss of $800,930 and a decrease in accumulated net realized gain on investments of $10,724,064. Purchases and sales of securities, other than short-term securities, aggregated $77,616,646 and $57,928,832, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $45,787 for the period (see Note 4 of Notes to Financial Statements). The maximum loan and average daily loan balances during the periods for which loans were outstanding amounted to $3,561,000 and $2,381,789, respectively. The weighted average interest rate paid was 3.8% (see Note 7 of Notes to Financial Statements). INCOME TAX INFORMATION At February 28, 1994, the aggregate cost of investment securities for income tax purposes was $80,381,627. Net unrealized appreciation aggregated $15,299,116, of which $16,587,393 related to appreciated investment securities and $1,288,277 related to depreciated investment securities. The fund hereby designates $1,031,000 as a capital gain dividend for the purpose of the dividend paid deduction. COMPUTERS PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $12,751,000) (cost $80,101,188) $ 95,680,743 (Notes 1 and 2) - See accompanying schedule Cash 159 Receivable for fund shares sold 29,220,009 Dividends receivable 39,530 Redemption fees receivable (Note 1) 1,119 Other receivables 26,054 TOTAL ASSETS 124,967,614 LIABILITIES Payable for investments purchased $ 1,324,523 Payable for fund shares redeemed 3,100,427 Accrued management fee 44,504 Other payables and accrued expenses 63,586 TOTAL LIABILITIES 4,533,040 NET ASSETS $ 120,434,574 Net Assets consist of (Note 1): Paid in capital $ 103,336,133 Accumulated net investment loss (10,697 ) Accumulated undistributed net realized gain (loss) on investments 1,529,583 Net unrealized appreciation (depreciation) on investment securities 15,579,555 NET ASSETS, for 4,456,427 shares outstanding $ 120,434,574 NET ASSET VALUE and redemption price per share ($120,434,574 (divided by) 4,456,427 shares) $27.02 Maximum offering price per share (100/97 of $27.02) $27.86
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994 INVESTMENT INCOME $ 138,282 Dividends Special dividend from Intelligent Electronics, Inc. 133,000 Interest 130,112 TOTAL INCOME 401,394 EXPENSES Management fee (Note 4) $ 260,092 Transfer agent (Note 4) 464,030 Fees Redemption fees (Note 1) (55,710 ) Accounting fees and expenses 52,178 (Note 4) Non-interested trustees' compensation 283 Custodian fees and expenses 10,324 Registration fees 33,192 Audit 5,535 Legal 406 Interest (Note 7) 4,775 Reports to shareholders 7,426 Miscellaneous 552 Total expenses before reductions 783,083 Expense reductions (Note 8) (4,629 778,454 ) NET INVESTMENT INCOME (LOSS) (377,060 ) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 5,305,912 Net realized gain (loss) on investment securities Change in net unrealized appreciation (depreciation) on investment securities 11,882,729 NET GAIN (LOSS) 17,188,641 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 16,811,581 OTHER INFORMATION $394,106 Sales charges paid to FDC (Note 4) Deferred sales charges withheld $7,292 by FDC (Note 4) Exchange fees withheld by FSC $45,938 (Note 4)
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS FEBRUARY 28, ENDED 1994 FEBRUARY 28, 1993 Operations $ (377,060 $ (310,705 Net investment income (loss) ) ) Net realized gain (loss) on investments 5,305,912 1,620,786 Change in net unrealized appreciation (depreciation) on investments 11,882,729 3,739,800 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 16,811,581 5,049,881 Distributions to shareholders from net realized gains (3,924,122 - ) Share transactions 184,130,331 162,012,620 Net proceeds from sales of shares Reinvestment of distributions 3,842,739 - Cost of shares redeemed (128,419,730 (152,760,836 ) ) Paid in capital portion of redemption fees (Note 1) 398,209 483,699 Net increase (decrease) in net assets resulting from share transactions 59,951,549 9,735,483 TOTAL INCREASE (DECREASE) IN NET ASSETS 72,839,008 14,785,364 NET ASSETS Beginning of period 47,595,566 32,810,202 End of period (including accumulated net investment loss of $10,697 and $800,930, respectively) $ 120,434,574 $ 47,595,566 OTHER INFORMATION Shares Sold 7,631,888 8,584,924 Issued in reinvestment of distributions 169,028 - Redeemed (5,706,315 (8,084,655 ) ) Net increase (decrease) 2,094,601 500,269
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30, FEBRUARY 28, ENDED FEBRUARY 28, SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990 Net asset value, beginning of period $ 20.15 $ 17.63 $ 16.60 $ 12.68 $ 11.60 Income from Investment Operations Net investment income (loss) (.21)H (.15) (.03)G .42F (.11) Net realized and unrealized gain (loss) on investments 8.66 2.44 1.18 3.21 .98 Total from investment operations 8.45 2.29 1.15 3.63 .87 Less Distributions From net investment income - - - (.12) - In excess of net investment income - - (.27) - - From net realized gain (1.80) - (.22) - - Total distributions (1.80) - (.49) (.12) - Redemption fees added to paid in capital .22 .23 .37 .41 .21 Net asset value, end of period $ 27.02 $ 20.15 $ 17.63 $ 16.60 $ 12.68 TOTAL RETURND, E 45.06% 14.29% 9.36% 32.11% 9.31% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 120,435 $ 47,596 $ 32,810 $ 29,455 $ 27,561 Ratio of expenses to average net assetsB 1.89% 1.81%A 2.17% 2.26% 2.64% Ratio of expenses to average net assets before expense 1.90% 1.81%A 2.17% 2.26% 3.82% reductionsB Ratio of net investment income (loss) to average net assets (.91)% (.98)% (.18)% 2.94% (.94)% A Portfolio turnover rate 145% 254%A 568% 695% 596%
1 ANNUALIZED 2 SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS. 3 NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH PERIOD. 4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 5 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. 6 INVESTMENT INCOME PER SHARE INCLUDES 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. 7 INVESTMENT INCOME PER SHARE INCLUDES $.22 PER SHARE RELATING TO A NONRECURRING INITIATIVE TO INVEST IN DIVIDEND INCOME PRODUCING SECURITIES WHICH WAS IN EFFECT FOR A PORTION OF 1992. 8 INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND FROM INTELLEGENT ELECTRONICS WHICH AMOUNTED TO $.07 PER SHARE. DEFENSE AND AEROSPACE PORTFOLIO PERFORMANCE AND INVESTMENT SUMMARY PERFORMANCE There are several ways to evaluate a fund's historical performance: total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND DEFENSE AND AEROSPACE 32.04% 71.84% 115.45% DEFENSE AND AEROSPACE (INCL. 3% SALES CHARGE) 28.08% 66.68% 108.99% S&P 500 8.33% 89.60% 311.87% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years, or since the fund started on May 8, 1984. You can compare these figures to the performance of the S&P 500 - a common proxy for the U.S. stock market. This benchmark includes reinvested dividends and capital gains, if any. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND DEFENSE AND AEROSPACE 32.04% 11.44% 8.13% DEFENSE AND AEROSPACE (INCL. 3% SALES CHARGE) 28.08% 10.76% 7.80% S&P 500 8.33% 13.65% 15.51% AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of growth in the long run and volatility in the short run. Unlike the broader market, however, some sectors may not have a history of growth in the long run. And, as with all stock funds, the share price and return of a fund that invests in a sector will vary. That means if you sell your shares during a sector downturn, you might lose money. But if you can identify a sector that is about to experience rapid growth you may have the potential for above-average gains. (checkmark) $10,000 OVER LIFE OF FUND Select Defense S&P 500 05/08/84 9700.00 10000.00 05/31/84 9263.50 9471.39 06/30/84 10117.10 9676.92 07/31/84 10223.80 9556.92 08/31/84 11455.70 10612.96 09/30/84 11106.50 10615.09 10/31/84 11261.70 10656.49 11/30/84 10699.10 10537.13 12/31/84 11067.70 10815.31 01/31/85 12522.70 11657.83 02/28/85 12959.20 11801.22 03/31/85 12590.60 11809.48 04/30/85 12134.70 11798.85 05/31/85 12425.70 12480.82 06/30/85 12952.67 12676.77 07/31/85 13324.14 12657.76 08/31/85 13285.04 12550.17 09/30/85 12512.77 12157.35 10/31/85 12737.61 12719.02 11/30/85 13421.90 13591.54 12/31/85 13988.88 14249.37 01/31/86 13812.92 14329.17 02/28/86 14565.64 15400.99 03/31/86 15396.57 16260.36 04/30/86 15513.88 16076.62 05/31/86 15895.13 16931.90 06/30/86 16227.50 17218.05 07/31/86 15218.42 16255.56 08/31/86 16001.65 17461.72 09/30/86 14712.79 16017.64 10/31/86 14911.08 16941.85 11/30/86 15386.96 17353.54 12/31/86 14663.22 16911.03 01/31/87 15942.16 19188.94 02/28/87 16953.42 19946.90 03/31/87 16636.16 20523.37 04/30/87 15912.42 20340.71 05/31/87 15694.31 20517.68 06/30/87 15545.59 21553.82 07/31/87 15961.99 22646.60 08/31/87 15793.45 23491.32 09/30/87 15476.19 22976.86 10/31/87 11530.31 18027.64 11/30/87 10935.45 16542.16 12/31/87 11261.56 17801.02 01/31/88 11986.11 18550.45 02/29/88 12700.31 19414.90 03/31/88 12669.26 18814.98 04/30/88 12586.45 19023.82 05/31/88 12110.32 19189.33 06/30/88 12607.15 20070.12 07/31/88 12358.74 19993.85 08/31/88 12058.57 19314.06 09/30/88 12420.84 20136.84 10/31/88 12400.14 20696.65 11/30/88 11851.55 20400.68 12/31/88 11748.04 20757.70 01/31/89 12213.83 22277.16 02/28/89 12162.07 21722.46 03/31/89 12410.49 22228.59 04/30/89 12855.57 23382.25 05/31/89 13083.28 24329.24 06/30/89 12928.02 24190.56 07/31/89 13766.43 26374.97 08/31/89 14118.35 26891.92 09/30/89 13859.59 26781.66 10/31/89 13072.93 26160.32 11/30/89 12576.10 26693.99 12/31/89 12783.11 27334.65 01/31/90 12058.57 25500.50 02/28/90 12099.97 25829.45 03/31/90 12845.22 26513.93 04/30/90 12317.33 25851.08 05/31/90 13228.19 28371.57 06/30/90 13237.71 28178.64 07/31/90 12706.53 28088.47 08/31/90 11592.11 25549.27 09/30/90 11217.16 24305.02 10/31/90 11071.35 24200.51 11/30/90 11665.01 25763.86 12/31/90 12197.13 26482.67 01/31/91 13273.66 27637.32 02/28/91 13534.95 29613.39 03/31/91 14580.12 30330.03 04/30/91 14339.73 30402.82 05/31/91 15008.64 31716.22 06/30/91 14253.51 30263.62 07/31/91 14872.78 31673.91 08/31/91 14715.34 32424.58 09/30/91 14368.97 31883.09 10/31/91 15061.70 32310.32 11/30/91 14379.47 31008.21 12/31/91 15481.54 34555.55 01/31/92 15429.06 33912.82 02/29/92 15670.47 34353.69 03/31/92 15355.59 33683.79 04/30/92 15082.69 34674.09 05/31/92 14326.99 34844.00 06/30/92 13655.24 34324.82 07/31/92 14180.04 35728.71 08/31/92 13907.15 34996.27 09/30/92 14106.57 35409.22 10/31/92 14222.03 35533.16 11/30/92 14715.34 36744.84 12/31/92 15481.54 37196.80 01/31/93 15943.36 37509.25 02/28/93 15827.91 38019.38 03/31/93 16667.58 38821.59 04/30/93 16720.06 37882.10 05/31/93 17234.37 38897.34 06/30/93 17958.59 39010.15 07/31/93 18693.30 38854.11 08/31/93 18661.82 40326.68 09/30/93 19144.63 40016.16 10/31/93 19910.84 40844.50 11/30/93 19323.06 40456.47 12/31/93 19949.18 40946.00 01/31/94 20899.14 42338.16 02/28/94 20899.14 41186.56 Let's say you invested $10,000 in Fidelity Select Defense and Aerospace Portfolio on May 8, 1984, when the fund started, and paid a 3% sales charge. By February 28, 1994, your investment would have grown to $20,899 - a 108.99% increase. That compares to $10,000 invested in the S&P 500, which would have grown to $41,187 over the same period - a 311.87% increase. INVESTMENT SUMMARY TOP TEN STOCKS AS OF FEBRUARY 28, 1994 % OF FUND'S INVESTMENTS McDonnell Douglas Corp. 8.0 United Technologies Corp. 5.7 Harris Corp. 5.0 General Motors Corp. Class H 4.9 Loral Corp. 4.8 Watkins-Johnson Co. 4.3 TRW, Inc. 3.9 Textron, Inc. 3.4 Martin Marietta Corp. 2.5 General Electric Co. 2.4 TOP INDUSTRIES AS OF FEBRUARY 28, 1994 Row: 1, Col: 1, Value: 45.5 Row: 1, Col: 2, Value: 4.2 Row: 1, Col: 3, Value: 4.9 Row: 1, Col: 4, Value: 7.2 Row: 1, Col: 5, Value: 9.0 Row: 1, Col: 6, Value: 11.8 Row: 1, Col: 7, Value: 17.4 Conglomerates 17.4% Defense Electronics 11.8% Aircraft 9.0% Missiles & Space Vehicles 7.2% Motor Vehicles & Car Bodies 4.9% Air Transport, Major National 4.2% All Others 45.5% * INCLUDES SHORT-TERM INVESTMENTS DEFENSE AND AEROSPACE PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW Stephen Binder, Portfolio Manager of Fidelity Select Defense and Aerospace Portfolio Q. STEVE, HOW DID THE FUND PERFORM? A. The total return for the year ended February 28, 1994 was 32.04%. That beat the S&P 500, which returned 8.33% for the same period. The big story this past year has been the shift in the fund's focus - away from pure defense contractors and toward large industrial conglomerates with defense components. Q. CAN YOU EXPAND ON THAT? A. Last spring, military contractors like Loral, Martin Marietta, Raytheon, Grumman and Northrop still dominated the fund. Defense stocks had soared during the Gulf War but since then had underperformed the broader market due to reduced federal spending and a gloomy outlook for revenues. But by then they were already busy cleaning up their balance sheets - reducing payrolls, slashing capital spending, accumulating cash and paying down debt. Part of that industry-wide restructuring involved consolidation. Martin Marietta's acquisition of General Electric's aerospace division and Lockheed's purchase of General Dynamic's fighter aircraft division were the two important deals. The upshot was a surge of investor interest that lifted defense stocks across the board, and drove the fund's performance in the first half of the year. Q. YOU'VE SINCE SOLD THE DEFENSE STOCKS? A. Sold or cut back, with the exception of McDonnell Douglas, the fund's largest investment at the end of February. McDonnell Douglas was among the last of the big defense contractors to go through the restructuring process. And as earnings exploded last year, the stock nearly doubled. I still own it because of McDonnell Douglas's success selling jet fighters overseas, which bodes well for maintaining revenues. Q. CAN EXPORTS MAKE UP FOR REDUCED DOMESTIC SALES? A. Not for the industry as a whole; the domestic market is just too big to be offset by the foreign market. That's not to say exports aren't vitally important to individual companies. For example, China's growing power and North Korea's emergence as a regional troublemaker in the Far East have raised fears among the so-called Asian Tigers - countries like Malaysia and Taiwan. That could prove to be a fertile opportunity, particularly for fighter-aircraft makers McDonnell Douglas and Lockheed. Q. BUT OTHERWISE THE FUND HAS SHIFTED AWAY FROM PURE DEFENSE PLAYS RECENTLY? A. That's right. By the end of February, a good two-thirds of the fund's investments were conglomerates. As a group, they're especially sensitive to broad movements in the economy, and so have prospered as the economic recovery has begun to take hold. These are names like Watkins-Johnson, which makes semiconductors; Thiokol, whose products include rocket engines and fasteners, and which is a restructuring story; Harris Corp., another semiconductor play; United Technologies, a conglomerate with exposure to defense and aerospace through its Pratt & Whitney engine subsidiary; and TRW, which has a sizable defense component but also makes air bags and so stands to benefit from increased auto sales. Q. WHAT MAKES THE CONGLOMERATES SO ATTRACTIVE RIGHT NOW? A. For one, they're cyclicals, which means they tend to move in tandem with the economy. You want to own them during times like these, when the economy seems to be improving. But beyond that, there's an ongoing restructuring theme here, too, as there is in the defense industry. Many of these companies are eliminating non-core operations, trying to raise returns on their remaining businesses and generally improving their balance sheets. Who knows how far they could go in a decent economy? Especially if and when Europe recovers, which could be a 1995 story. Q. WHAT'S THE OUTLOOK FOR THE FUND? A. Most of the stocks in the fund have had big runs lately, which suggests there may not be as much room for continued price gains in 1994. On the other hand, while revenue growth opportunities in the defense industry are limited, cash flow is strong and the earnings outlook remains positive. Loral, for example, with its recent acquisition of IBM's Federal Systems, may well have locked in 20% earnings growth for the next couple of years. As for the conglomerates, I think it's reasonable to expect earnings for the group to have the potential to grow at a faster pace than the rest of the market, and for the stocks to perform accordingly. FUND FACTS START DATE: May 8, 1984 SIZE: as of February 28, 1994, over $11 million MANAGER: Stephen Binder, since October 1992; manager, Fidelty Select Regional Banks Portfolio, since February 1989; Fidelity Select Financial Services, since May 1990; joined Fidelity in 1989 (checkmark) DEFENSE AND AEROSPACE PORTFOLIO INVESTMENTS FEBRUARY 28, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 68.9% SHARES VALUE (NOTE 1) AEROSPACE & DEFENSE - 21.4% AIRCRAFT - 9.0% Grumman Corp. 2,400 $ 90,000 40018110 McDonnell Douglas Corp. 8,800 1,049,400 58016910 Northrop Corp. 1,000 39,875 66680710 1,179,275 AIRCRAFT & PARTS - 0.5% Sundstrand Corp. 1,500 67,688 86732310 AIRCRAFT EQUIPMENT - 2.7% Aviall, Inc. (a) 7,900 137,263 05366B10 BE Aerospace, Inc. (a) 5,300 60,950 07330210 Transtechnology Corp. 10,700 159,163 89388910 357,376 MISSILES & SPACE VEHICLES - 7.2% Lockheed Corp. 2,000 131,250 53982110 Martin Marietta Corp. 7,200 331,200 57290010 Orbital Sciences Corporation 3,000 50,250 68556410 Rockwell International Corp. 4,500 187,313 77434710 Thiokol Corp. 9,000 249,750 88410310 949,763 ORDNANCE - 0.4% Alliant Techsystems, Inc. (a) 2,000 54,500 01880410 TRAINING EQUIPMENT & SIMULATORS - 1.6% Flightsafety International, Inc. 5,000 210,625 33942310 TOTAL AEROSPACE & DEFENSE 2,819,227 AIR TRANSPORTATION - 4.2% AIR TRANSPORT, MAJOR NATIONAL - 4.2% AMR Corp. (a) 4,500 284,625 00176510 Continental Airlines, Inc. (a) 12,000 268,500 21079530 553,125 AUTOS, TIRES, & ACCESSORIES - 8.8% AUTO & TRUCK PARTS - 3.9% TRW, Inc. 7,000 511,875 87264910 MOTOR VEHICLES & CAR BODIES - 4.9% General Motors Corp. Class H 17,700 637,200 37044250 TOTAL AUTOS, TIRES, & ACCESSORIES 1,149,075 COMPUTERS & OFFICE EQUIPMENT - 1.4% COMPUTER PERIPHERALS - 1.4% Miltope Group, Inc. (a) 41,000 179,375 60219110 CONGLOMERATES - 17.4% Allied-Signal, Inc. 4,000 305,500 01951210 Harris Corp. 13,000 661,375 41387510 Sequa Corp. Class A 3,500 127,313 81732010 Textron, Inc. 7,600 440,800 88320310 United Technologies Corp. 11,050 751,400 91301710 2,286,388 DEFENSE ELECTRONICS - 11.8% E-Systems, Inc. 1,500 68,250 26915730 Loral Corp. 16,200 625,725 54385910 Raytheon Co. 4,300 266,600 75511110 Tracor, Inc. 2,000 19,500 89234920 Watkins-Johnson Co. 25,000 568,750 94248610 1,548,825 SHARES VALUE (NOTE 1) ELECTRICAL EQUIPMENT - 2.4% ELECTRICAL MACHINERY - 2.4% General Electric Co. 3,000 $ 316,123 36960410 ENERGY SERVICES - 0.1% OIL & GAS SERVICES - 0.1% Petroleum Helicopters, Inc. (a) 500 5,250 71660410 Petroleum Helicopters, Inc. (non-vtg.) (a) 400 4,200 71660420 9,450 SHIP BUILDING & REPAIR - 1.4% SHIP BUILDERS - 1.4% General Dynamics Corp. 2,000 186,500 36955010 TOTAL COMMON STOCKS (Cost $8,726,833) 9,048,088 CONVERTIBLE BONDS - 0.2% PRINCIPAL VALUE (NOTE 1) AMOUNT AEROSPACE & DEFENSE - 0.2% MISSILES & SPACE VEHICLES - 0.2% Orbital Sciences Corp. 6 3/4%, 3/1/03 (Cost $18,000) $18,000 23,940 685564AA REPURCHASE AGREEMENTS - 30.9% MATURITY VALUE (NOTE 1) AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account, at 3.47% dated 2/28/94 due 3/1/94 $4,060,391 4,060,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $12,804,833) $ 13,132,028 LEGEND 3. Non-income producing OTHER INFORMATION CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1, 1993, the fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of February 28, 1993 have been reclassified to reflect an increase in paid in capital of $2,737,125, a decrease in undistributed net investment loss of $5,451 and a decrease in accumulated net realized gain on investments of $2,742,576. Purchases and sales of securities, other than short-term securities, aggregated $19,454,896 and $12,708,670, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $7,073 for the period (see Note 4 of Notes to Financial Statements). The maximum loan and average daily loan balances during the periods for which loans were outstanding amounted to $3,609,000 and $1,919,545, respectively. The weighted average interest rate paid was 3.6% (see Note 7 of Notes to Financial Statements). INCOME TAX INFORMATION At February 28, 1994, the aggregate cost of investment securities for income tax purposes was $12,810,520. Net unrealized appreciation aggregated $321,508, of which $429,932 related to appreciated investment securities and $108,424 related to depreciated investment securities. The fund hereby designates $151,000 as a capital gain dividend for the purpose of the dividend paid deduction. DEFENSE AND AEROSPACE PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $4,060,000) (cost $12,804,833) $ 13,132,028 (Notes 1 and 2) - See accompanying schedule Cash 497 Receivable for fund shares sold 2,694,840 Dividends receivable 12,541 Interest receivable 604 Redemption fees receivable (Note 1) 195 Other receivables 1,871 Receivable from investment adviser for expense reductions (Note 8) 6,786 TOTAL ASSETS 15,849,362 LIABILITIES Payable for investments purchased $ 4,270,027 Payable for fund shares redeemed 421,409 Accrued management fee 3,375 Other payables and accrued expenses 18,654 TOTAL LIABILITIES 4,713,465 NET ASSETS $ 11,135,897 Net Assets consist of (Note 1): Paid in capital $ 10,442,394 Undistributed net investment income 2,925 Accumulated undistributed net realized gain (loss) on investments 363,383 Net unrealized appreciation (depreciation) on investment securities 327,195 NET ASSETS, for 581,924 shares outstanding $ 11,135,897 NET ASSET VALUE and redemption price per share ($11,135,896 (divided by) 581,924 shares) $19.14 Maximum offering price per share (100/97 of $19.14) $19.73
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994 INVESTMENT INCOME $ 107,275 Dividends Interest 28,583 TOTAL INCOME 135,858 EXPENSES Management fee (Note 4) $ 29,101 Transfer agent (Note 4) 70,376 Fees Redemption fees (Note 1) (10,019 ) Accounting fees and expenses 45,439 (Note 4) Non-interested trustees' compensation 29 Custodian fees and expenses 12,461 Registration fees 11,551 Audit 3,613 Interest (Note 7) 2,147 Reports to shareholders 1,525 Total expenses before reductions 166,223 Expense reductions (Note 8) (48,710 117,513 ) NET INVESTMENT INCOME 18,345 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 629,513 Net realized gain (loss) on investment securities Change in net unrealized appreciation (depreciation) on investment securities 236,253 NET GAIN (LOSS) 865,766 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 884,111 OTHER INFORMATION $68,555 Sales charges paid to FDC (Note 4) Deferred sales charges withheld $877 by FDC (Note 4) Exchange fees withheld by FSC $10,358 (Note 4)
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS FEBRUARY 28, ENDED 1994 FEBRUARY 28, 1993 Operations $ 18,345 $ (1,461 Net investment income (loss) ) Net realized gain (loss) on investments 629,513 6,237 Change in net unrealized appreciation (depreciation) on investments 236,253 44,329 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 884,111 49,105 Distributions to shareholders (15,420 - From net investment income ) From net realized gain (95,604 - ) TOTAL DISTRIBUTIONS (111,024 - ) Share transactions 29,885,117 1,806,013 Net proceeds from sales of shares Reinvestment of distributions 109,302 - Cost of shares redeemed (21,129,974 (1,676,387 ) ) Paid in capital portion of redemption fees (Note 1) 35,674 3,741 Net increase (decrease) in net assets resulting from share transactions 8,900,119 133,367 TOTAL INCREASE (DECREASE) IN NET ASSETS 9,673,206 182,472 NET ASSETS Beginning of period 1,462,691 1,280,219 End of period (including undistributed net investment income (loss) of 2,925 and $(5,451), respectively) $ 11,135,897 $ 1,462,691 OTHER INFORMATION Shares Sold 1,666,363 124,001 Issued in reinvestment of distributions 6,120 - Redeemed (1,187,524 (116,146 ) ) Net increase (decrease) 484,959 7,855
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30, FEBRUARY 28, ENDED FEBRUARY 28, SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990 Net asset value, beginning of period $ 15.08 $ 14.37 $ 13.72 $ 11.90 $ 12.42 Income from Investment Operations Net investment income (loss) .07 (.02) (.01) .10 .04 Net realized and unrealized gain (loss) on investments 4.57 .69 .67 1.72 (.56) Total from investment operations 4.64 .67 .66 1.82 (.52) Less Distributions From net investment income (.10) - (.04) (.12) - In excess of net investment income - - (.02) - - From net realized gain (.62) - - - - Total distributions (.72) - (.06) (.12) - Redemption fees added to paid in capital .14 .04 .05 .12 - Net asset value, end of period $ 19.14 $ 15.08 $ 14.37 $ 13.72 $ 11.90 TOTAL RETURND, E 32.04% 4.94% 5.18% 16.42% (4.19)% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 11,136 $ 1,463 $ 1,280 $ 3,070 $ 1,599 Ratio of expenses to average net assetsB 2.53% 2.48%A 2.46% 2.49% 2.43% Ratio of expenses to average net assets before expense 3.58% 9.63%A 2.72% 3.11% 3.26% reductionsB Ratio of net investment income (loss) to average net assets .40% (.14)% (.10)% .78% .34% A Portfolio turnover rate 324% 87%A 32% 162% 96%
1 ANNUALIZED 2 SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS. 3 NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH PERIOD. 4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 5 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. DEVELOPING COMMUNICATIONS PORTFOLIO PERFORMANCE AND INVESTMENT SUMMARY PERFORMANCE There are several ways to evaluate a fund's historical performance: total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 LIFE OF FEBRUARY 28, 1994 YEAR FUND DEVELOPING COMMUNICATIONS 30.24% 129.88% DEVELOPING COMMUNICATIONS (INCL. 3% SALES CHARGE) 26.33% 122.99% S&P 500 8.33% 46.34% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, or since the fund started on June 29, 1990. You can compare these figures to the performance of the S&P 500 - a common proxy for the U.S. stock market. This benchmark includes reinvested dividends and capital gains, if any. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 LIFE OF FEBRUARY 28, 1994 YEAR FUND DEVELOPING COMMUNICATIONS 30.24% 25.43% DEVELOPING COMMUNICATIONS (INCL. 3% SALES CHARGE) 26.33% 24.39% S&P 500 8.33% 10.92% AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of growth in the long run and volatility in the short run. Unlike the broader market, however, some sectors may not have a history of growth in the long run. And, as with all stock funds, the share price and return of a fund that invests in a sector will vary. That means if you sell your shares during a sector downturn, you might lose money. But if you can identify a sector that is about to experience rapid growth you may have the potential for above-average gains. (checkmark) $10,000 OVER LIFE OF FUND Developing Comm S&P500 06/29/90 9700.00 10000.00 06/30/90 9700.00 10012.31 07/31/90 8953.10 9980.27 08/31/90 7866.70 9078.05 09/30/90 6751.20 8635.95 10/31/90 7081.00 8598.82 11/30/90 8235.30 9154.30 12/31/90 8759.10 9409.71 01/31/91 10146.20 9819.97 02/28/91 10776.70 10522.10 03/31/91 11494.50 10776.73 04/30/91 11591.50 10802.60 05/31/91 11766.10 11269.27 06/30/91 10841.06 10753.14 07/31/91 11963.62 11254.23 08/31/91 12670.42 11520.96 09/30/91 12815.94 11328.56 10/31/91 13564.31 11480.36 11/30/91 12888.70 11017.70 12/31/91 14135.99 12278.13 01/31/92 14510.18 12049.75 02/29/92 14998.70 12206.40 03/31/92 14260.72 11968.38 04/30/92 14073.62 12320.25 05/31/92 14011.26 12380.62 06/30/92 13512.34 12196.14 07/31/92 14104.81 12694.97 08/31/92 13574.71 12434.72 09/30/92 14032.05 12581.45 10/31/92 14655.70 12625.48 11/30/92 15986.14 13056.01 12/31/92 16569.33 13216.60 01/31/93 17017.15 13327.62 02/28/93 17121.29 13508.88 03/31/93 17735.74 13793.92 04/30/93 17206.92 13460.10 05/31/93 18365.82 13820.83 06/30/93 19160.49 13860.91 07/31/93 19535.76 13805.47 08/31/93 21323.77 14328.70 09/30/93 21621.78 14218.37 10/31/93 22372.30 14512.69 11/30/93 20672.58 14374.82 12/31/93 21833.49 14548.75 01/31/94 22673.24 15043.41 02/28/94 22298.76 14634.23 Let's say you invested $10,000 in Fidelity Select Developing Communications Portfolio on June 29, 1990, when the fund started, and paid a 3% sales charge. By February 28, 1994, your investment would have grown to $22,299 - a 122.99% increase. That compares to $10,000 invested in the S&P 500, which would have grown to $14,634 over the same period - a 46.34% increase. INVESTMENT SUMMARY TOP TEN STOCKS AS OF FEBRUARY 28, 1994 % OF FUND'S INVESTMENTS DSC Communications Corp. 9.5 Motorola, Inc. 4.5 Glenayre Technologies, Inc. 4.1 Tellabs, Inc. 3.3 Cisco Systems, Inc. 3.2 Telephone & Data Systems, Inc. 2.7 Cabletron Systems, Inc. 2.7 Oracle Systems Corp. 2.6 IDB Communications Group, Inc. 2.5 Intel Corp. 2.5 TOP INDUSTRIES AS OF FEBRUARY 28, 1994 Row: 1, Col: 1, Value: 38.6 Row: 1, Col: 2, Value: 8.1 Row: 1, Col: 3, Value: 10.2 Row: 1, Col: 4, Value: 12.3 Row: 1, Col: 5, Value: 13.1 Row: 1, Col: 6, Value: 17.6 Telephone Equipment 17.6% Telephone Services 13.1% Datacommunications Equipment 12.4% Cellular & Communications Services 10.2% Prepackaged Computer Software 8.1% All Others 38.6%* * INCLUDES SHORT-TERM INVESTMENTS DEVELOPING COMMUNICATIONS PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW Paul Antico, Portfolio Manager of Fidelity Select Developing Communications Portfolio Q. PAUL, HOW DID THE FUND PERFORM? A. Quite well. The fund had a total return of 30.24% for the year ended February 28, 1994, compared to the S&P 500, which was up 8.33% for the year. Q. WHY DID THE FUND COME OUT SO FAR AHEAD? A. There were two reasons. Until this fall, many people invested heavily in telecommunication stocks to take advantage of the information superhighway they'd been reading about in the media. The information superhighway promised to provide American homes with multimedia technology that combined telephone, television, and computer services. The increased interest in these stocks drove prices way up. However, in October, the market began to correct itself when investors realized that this multimedia product wouldn't become a reality for at least a couple years. As a result, the fund's six-month total return ending February 28 fell to 4.57%. Q. WHAT WAS THE OTHER REASON FOR THE FUND'S STRONG ANNUAL PERFORMANCE? A. The fund took advantage of what I call the broadband revolution. A broadband network is made up of fiber optic lines that can hold more than 2,000 times the volume of a regular copper telephone line. I call it a revolution because it's a major change in the design of the public telecommunication network. This network allows telephone companies to send a large number of calls on one line, which cuts costs. It also lets them transmit high-speed data for large businesses, increasing current revenues. Many telephone equipment companies involved in the broadband network are profitable right now, and they could be critical players when multimedia products become a reality in about five years. My largest stock, DSC Communications, makes several products for the broadband network. One example is Lightspan, a product that sends fiber optic signals over telephone lines. Since July of 1992, DSC's stock was up more than 900%, and it could continue to perform well as this industry grows. Tellabs, which makes similar products, was also a notable performer, as was Newbridge Networks. Q. YOU TOOK OVER THE FUND IN DECEMBER. HAVE YOU CHANGED ITS STRATEGY? A. Yes. I've focused more on equipment suppliers than the fund has in the past. I think these companies have the potential to be winners because they provide products that both telephone and cable companies need, such as broadband equipment, wireless communication equipment, and data communication equipment. I think Motorola is a good example of an outstanding equipment company - it provides several products that may be crucial to today's and tomorrow's telecommunications industry. I also reduced the number of computer stocks in the fund because computers are not my area of expertise. Q. HAVE YOU MADE ANY OTHER NOTABLE CHANGES? A. I moved away from land-line phone services, such as AT&T, into cellular services. In fact, cellular stocks now make up more than 10% of the fund. Over the past year, the fund had a heavy stake in Telephone and Data Systems, the company that owns U.S. Cellular. I believe that U.S. Cellular, like other cellular companies, may have the potential to expand its market penetration and grow. Q. WHAT ELSE CAUGHT YOUR INTEREST? A. NTN Communications, a small multimedia company. NTN makes an interactive game called QB1 that's sold to bars. QB1 lets patrons guess on the next play in a televised sporting event, like a football game. I like it because it's an interactive product that's used right now. And, if the government allows off-track betting or other interactive gaming at home in the future, this product could have tremendous potential. Q. WHAT CAN SHAREHOLDERS EXPECT GOING FORWARD? A. I think the fund will probably be more stable than it was over the past year. While the market for telecommunication stocks may continue to be somewhat volatile over the coming months, I've invested the fund in companies that are turning in results now. As a result, I believe the fund's long-term strategy is sound. FUND FACTS START DATE: June 29, 1990 SIZE: as of February 28, 1994, over $222 million MANAGER: Paul Antico, since December 1993; equity analyst, telecommunications equipment, since 1993, restaurant industry, 1992-1993, and wireless communications, since 1993; assistant, Fidelity Balanced Fund and Fidelity Equity Income II Fund, 1991-1992; joined Fidelity in 1991 (checkmark) DEVELOPING COMMUNICATIONS PORTFOLIO INVESTMENTS FEBRUARY 28, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 96.8% SHARES VALUE (NOTE 1) APPLIANCE STORES - 0.7% ELECTRIC APPLIANCES - WHOLESALE - 0.7% Cellstar Corp. (a) 88,000 $ 1,606,000 15092510 BROADCASTING - 3.2% CABLE TV OPERATORS - 3.0% ACS Enterprises, Inc. (a) 50,000 800,000 00087230 CAI Wireless Systems, Inc. 1,500 18,000 12476P10 NTN Communications, Inc. (a) 498,899 3,991,192 62941030 Peoples Choice TV Corp. (a) 54,000 1,687,500 71084710 6,496,692 RADIO BROADCASTING - 0.2% International Cablecasting Technologies, Inc. (a) 131,000 433,938 45921L10 TOTAL BROADCASTING 6,930,630 CELLULAR - 10.2% CELLULAR & COMMUNICATION SERVICES - 10.2% Arch Communications Group, Inc. 159,500 2,352,625 03938110 Call-Net Enterprises, Inc. (a) 122,500 1,134,680 13091010 Cellular Communications, Inc. (redeemable) (a): Series A 20,500 989,125 15091710 Class P 19,550 970,853 15091793 Cellular, Inc. (a) 62,000 1,216,750 15116310 Centennial Cellular Corp. Class A 34,600 700,650 15133V10 IDB Communications Group, Inc. 305,450 5,498,100 44935510 Netas SA Class B (a) 440,000 645,766 64199522 Nextel Communications, Inc. Class A (a) 20,000 880,000 65332V10 Premier Page Co. (a) 215,000 1,908,125 74058E10 Rogers Cantel Mobile Communications, Inc. Class B (non-vtg.) (a) 158,800 4,456,873 77510210 Vodafone Group PLC sponsored ADR 14,900 1,346,588 92857T10 22,100,135 COMMUNICATIONS EQUIPMENT - 30.0% DATACOMMUNICATIONS EQUIPMENT - 12.4% Cabletron Systems, Inc. (a) 46,500 5,812,500 12692010 Cisco Systems, Inc. (a) 93,200 6,873,500 17275R10 Digital Link Corp. 1,000 17,000 25385610 Digital Microwave Corp. (a) 85,600 1,498,000 25385910 Digital Sound Corporation (a) 160,000 340,000 25391110 General DataComm Industries, Inc. (a) 67,800 1,067,850 36948710 MB Communications, Inc. 95,000 1,733,750 55262M10 Network General Corp. (a) 100,000 2,075,000 64121010 3Com Corp. (a) 30,000 1,818,750 88553510 Wellfleet Communications, Inc. (a) 39,200 3,116,400 94949710 Xircom, Inc. (a) 99,400 2,509,850 98392210 26,862,600 TELEPHONE EQUIPMENT - 17.6% ADC Telecommunications, Inc. (a) 11,700 441,675 00088610 DSC Communications Corp. (a) 377,500 20,526,563 23331110 Intelcom Group, Inc. (a) 120,000 2,445,000 45814F10 Inter-Tel, Inc. (a) 84,000 892,500 45837210 Newbridge Networks Corp. (a) 52,600 3,004,775 65090110 Nokia AB free shares 47,700 2,760,866 65599992 Tellabs, Inc. (a) 135,000 7,188,750 87966410 VMX, Inc. (a) 150,000 806,250 91827610 38,066,379 TOTAL COMMUNICATIONS EQUIPMENT 64,928,979 SHARES VALUE (NOTE 1) COMPUTER SERVICES & SOFTWARE - 11.6% COMPUTER SERVICES - 2.1% Equifax Inc. 37,500 $ 881,250 29442910 Shinawatra Computer & Communications Co. (a) 74,000 1,823,697 94799193 SunGard Data Systems, Inc. (a) 45,000 1,743,750 86736310 4,448,697 CAD/CAM/CAE - 1.4% Crosscommunications Corp. (a) 36,500 793,875 22757K10 Electronic Information Systems, Inc. 174,000 2,283,750 28573810 3,077,625 PREPACKAGED COMPUTER SOFTWARE - 8.1% Cheyenne Software, Inc. (a) 110,000 4,427,500 16688810 Informix Corp. (a) 45,000 1,057,500 45677910 Lotus Development Corp. (a) 57,000 3,961,500 54570010 Manugistics Group, Inc. (a) 140,000 2,065,000 56501110 Media Logic, Inc. (a) 131,900 527,600 58441B10 Oracle Systems Corp. (a) 170,600 5,629,800 68389X10 17,668,900 TOTAL COMPUTER SERVICES & SOFTWARE 25,195,222 COMPUTERS & OFFICE EQUIPMENT - 1.9% COMPUTER STORAGE DEVICES - 1.4% ADAPTEC, Inc. (a) 140,000 3,045,000 00651F10 MAINFRAME COMPUTERS - 0.5% International Business Machines Corp. 20,000 1,057,500 45920010 TOTAL COMPUTERS & OFFICE EQUIPMENT 4,102,500 ELECTRICAL EQUIPMENT - 2.4% ELECTRICAL EQUIPMENT - WHOLESALE - 1.3% Itel Corp. (a) 101,500 2,829,313 46564210 TV & RADIO COMMUNICATION EQUIPMENT - 1.1% Scientific-Atlanta, Inc. 88,200 2,381,400 80865510 TOTAL ELECTRICAL EQUIPMENT 5,210,713 ELECTRONIC INSTRUMENTS - 3.4% SEMI-CONDUCTOR CAPITAL EQUIPMENT - 3.4% Applied Materials, Inc. (a) 71,900 3,415,250 03822210 KLA Instruments Corp. (a) 100,000 3,925,000 48248010 7,340,250 ELECTRONICS - 15.0% ELECTRONIC PARTS - WHOLESALE - 2.5% ARC International Corp. (a) 392,200 1,446,238 00190510 Audiovox Corp. Class A (a) 98,100 1,508,288 05075710 Marshall Industries (a) 51,000 1,377,000 57239310 Sterling Electronics Corp. (a) 95,100 1,081,763 85928110 5,413,289 ELECTRONICS & ELECTRIC COMPONENTS - 2.2% Benefon Oy (a) 3,200 723,497 08199822 Sanmina Corp.(a) 149,800 3,969,700 80090710 4,693,197 SEMICONDUCTORS - 10.3% Geotek Industries, Inc. (a) 80,600 977,275 37365410 Intel Corp. 78,100 5,379,138 45814010 LSI Logic Corp. (a) 103,900 1,987,088 50216110 Maxim Integrated Products, Inc. (a) 39,400 2,078,350 57772K10 Motorola, Inc. 95,400 9,742,725 62007610 National Semiconductor Corp. (a) 100,000 2,175,000 63764010 22,339,576 TOTAL ELECTRONICS 32,446,062 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) ENGINEERING - 4.1% WATER & SEWER PIPES - 4.1% Glenayre Technologies, Inc. 237,500 $ 8,965,625 37789910 HOME FURNISHINGS - 0.5% FURNITURE - 0.5% Rowe Furniture Corp. 71,100 1,128,713 77952810 RESTAURANTS - 1.3% McDonald's Corp. 45,000 2,728,125 58013510 SERVICES - 0.2% PERSONAL SERVICES - 0.2% Value-Added Communications, Inc. 75,000 365,625 92038310 TELEPHONE SERVICES - 12.3% ABL CDA, Inc. 138,400 564,060 00095110 ALC Communications Corp. (a) 75,000 2,484,375 00157530 Ameritech Corp. 40,000 1,605,000 03095410 Cable & Wireless PLC ADR 80,000 1,700,000 12683020 Comsat Corp., Series 1 25,700 687,475 20564D10 GTE Corp. 40,000 1,305,000 36232010 LDDS Communications, Inc. (a) 57,626 1,563,105 50182L10 MCI Communications Corp. 20,000 547,500 55267310 Pacific Telesis Group 20,000 1,090,000 69489010 Southwestern Bell Corp. 60,000 2,347,500 84533310 Sprint Corporation 40,200 1,492,425 85206110 Telebras PN (Pfd. Reg.) 45,000,000 2,125,564 95499792 Telecom Argentina Stet France 98,700 631,838 90899992 Telefonica Argentina Class B 80,000 608,152 87999D92 Telefonos de Mexico SA sponsored ADR representing shares Ord. Class L 30,000 2,013,750 87940378 Telephone & Data Systems, Inc. 128,411 5,826,649 87943310 26,592,393 TOTAL COMMON STOCKS (Cost $193,787,151) 209,640,972 PREFERRED STOCKS - 0.8% TELEPHONE SERVICES - 0.8% Stet Societa Finanziaria Telefonica Spa (Cost $1,474,477) 750,000 1,671,502 85982592 REPURCHASE AGREEMENTS - 2.4% MATURITY VALUE (NOTE 1) AMOUNT Investments in repurchase agreements, (U.S. Treasury obligations), in a joint trading account, at 3.47% dated 2/28/94 due 3/1/94 $ 5,194,501 5,194,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $200,455,628) $ 216,506,474 LEGEND 1. Non-income producing OTHER INFORMATION CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1, 1993, the fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of February 28, 1993 have been reclassified to reflect an increase in paid in capital of $709,857, a decrease in accumulated net investment loss of $394,017 and a decrease in accumulated net realized gain on investments of $1,103,874. Purchases and sales of securities, other than short-term securities, aggregated $566,725,350 and $463,490,116, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $168,725 for the period (see Note 4 of Notes to Financial Statements). Distribution of investments by country, as a percentage of total value of investment in securities, is as follows: United States 88.4% Canada 4.2 Finland 1.6 United Kingdom 1.4 Brazil 1.0 Others (individually less than 1%) 3.4 TOTAL 100.0% INCOME TAX INFORMATION At February 28, 1994, the aggregate cost of investment securities for income tax purposes was $201,294,460. Net unrealized appreciation aggregated $15,212,014, of which $22,324,973 related to appreciated investment securities and $7,112,959 related to depreciated investment securities. The fund hereby designates $5,729,000 as a capital gain dividend for the purpose of the dividend paid deduction. DEVELOPING COMMUNICATIONS PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $5,194,000) (cost $200,455,628) $ 216,506,474 (Notes 1 and 2) - See accompanying schedule Cash 23 Receivable for investments sold 16,394,291 Receivable for fund shares sold 2,661,401 Dividends receivable 79,484 Redemption fees receivable (Note 1) 715 TOTAL ASSETS 235,642,388 LIABILITIES Payable for investments purchased $ 9,759,790 Payable for fund shares redeemed 3,433,341 Accrued management fee 117,383 Other payables and accrued expenses 222,654 TOTAL LIABILITIES 13,533,168 NET ASSETS $ 222,109,220 Net Assets consist of (Note 1): Paid in capital $ 187,055,623 Accumulated net investment loss (276 ) Accumulated undistributed net realized gain (loss) on investments 19,003,027 Net unrealized appreciation (depreciation) on investment securities 16,050,846 NET ASSETS, for 11,305,666 shares outstanding $ 222,109,220 NET ASSET VALUE and redemption price per share ($222,109,220 (divided by) 11,305,666 shares) $19.65 Maximum offering price per share (100/97 of $19.65) $20.26
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994 INVESTMENT INCOME $ 749,145 Dividends Interest 454,404 TOTAL INCOME 1,203,549 EXPENSES Management fee (Note 4) $ 1,112,057 Transfer agent (Note 4) 1,415,165 Fees Redemption fees (Note 1) (133,064 ) Accounting fees and expenses 178,709 (Note 4) Non-interested trustees' compensation 1,102 Custodian fees and expenses 76,366 Registration fees 54,932 Audit 25,825 Legal 1,206 Reports to shareholders 35,045 Miscellaneous 1,342 Total expenses before reductions 2,768,685 Expense reductions (Note 8) (13,010 2,755,675 ) NET INVESTMENT INCOME (LOSS) (1,552,126 ) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) Net realized gain (loss) on: Investment securities 27,821,155 Foreign currency contracts (34,871 27,786,284 ) Change in net unrealized appreciation (depreciation) on investment securities 9,550,677 NET GAIN (LOSS) 37,336,961 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 35,784,835 OTHER INFORMATION $3,151,721 Sales charges paid to FDC (Note 4) Deferred sales charges withheld $15,156 by FDC (Note 4) Exchange fees withheld by FSC $108,930 (Note 4)
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS FEBRUARY 28, ENDED 1994 FEBRUARY 28, 1993 Operations $ (1,552,126 $ (249,204 Net investment income (loss) ) ) Net realized gain (loss) on investments 27,786,284 5,918,413 Change in net unrealized appreciation (depreciation) on investments 9,550,677 5,239,635 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 35,784,835 10,908,844 Distributions to shareholders from net realized gains (12,078,883 (121,166 ) ) Share transactions 326,209,686 70,309,785 Net proceeds from sales of shares Reinvestment of distributions 11,939,467 119,925 Cost of shares redeemed (223,354,110 (37,153,609 ) ) Paid in capital portion of redemption fees (Note 1) 225,044 58,225 Net increase (decrease) in net assets resulting from share transactions 115,020,087 33,334,326 TOTAL INCREASE (DECREASE) IN NET ASSETS 138,726,039 44,122,004 NET ASSETS Beginning of period 83,383,181 39,261,177 End of period (including accumulated net investment loss of $276 and $394,017, respectively) $ 222,109,220 $ 83,383,181 OTHER INFORMATION Shares Sold 17,423,530 4,631,656 Issued in reinvestment of distributions 685,710 7,808 Redeemed (11,874,788 (2,468,729 ) ) Net increase (decrease) 6,234,452 2,170,735
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEAR ENDED TEN MONTHS YEAR ENDED JUNE 29, 1990 FEBRUARY 28, ENDED APRIL 30, (COMMENCEMEN FEBRUARY 28, T OT OPERATIONS) TO APRIL 30, SELECTED PER-SHARE DATAC 1994 1993 1992 1991 Net asset value, beginning of period $ 16.44 $ 13.54 $ 11.95 $ 10.00 Income from Investment Operations Net investment income (loss) (.16) (.07) (.08)F (.10) Net realized and unrealized gain (loss) on investments 4.82 2.98 2.42 1.86 Total from investment operations 4.66 2.91 2.34 1.76 Less Distributions From net realized gain (1.47) (.03) (.79) - Redemption fees added to paid in capital .02 .02 .04 .19 Net asset value, end of period $ 19.65 $ 16.44 $ 13.54 $ 11.95 TOTAL RETURND, E 30.24% 21.66% 21.41% 19.50% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 222,109 $ 83,383 $ 39,261 $ 7,745 Ratio of expenses to average net assetsB 1.56% 1.88%A 2.50% 2.50%A Ratio of expenses to average net assets before expense reductionsB 1.56% 1.88%A 2.50% 3.29%A Ratio of net investment income (loss) to average net assets (.88)% (.59)% (.61)% (1.23)% A A Portfolio turnover rate 280% 77%A 25% 469%A
1 ANNUALIZED 2 SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS. 3 NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH PERIOD. 4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 5 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. 6 INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO $.06 PER SHARE. ELECTRONICS PORTFOLIO PERFORMANCE AND INVESTMENT SUMMARY PERFORMANCE There are several ways to evaluate a fund's historical performance: total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND ELECTRONICS 46.24% 205.69% 109.09% ELECTRONICS (INCL. 3% SALES CHARGE) 41.85% 196.52% 102.82% S&P 500 8.33% 89.60% 222.99% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years, or since the fund started on July 29, 1985. You can compare these figures to the performance of the S&P 500 - a common proxy for the U.S. stock market. This benchmark includes reinvested dividends and capital gains, if any. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND ELECTRONICS 46.24% 25.04% 8.96% ELECTRONICS (INCL. 3% SALES CHARGE) 41.85% 24.28% 8.58% S&P 500 8.33% 13.65% 14.62% AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of growth in the long run and volatility in the short run. Unlike the broader market, however, some sectors may not have a history of growth in the long run. And, as with all stock funds, the share price and return of a fund that invests in a sector will vary. That means if you sell your shares during a sector downturn, you might lose money. But if you can identify a sector that is about to experience rapid growth you may have the potential for above-average gains. (checkmark) $10,000 OVER LIFE OF FUND 07/29/85 9700.00 10000.00 07/31/85 9544.80 9926.31 08/31/85 10126.80 9841.93 09/30/85 9030.70 9533.88 10/31/85 8982.20 9974.35 11/30/85 10078.30 10658.59 12/31/85 10776.70 11174.46 01/31/86 10883.40 11237.04 02/28/86 11096.80 12077.57 03/31/86 10883.40 12751.50 04/30/86 11775.80 12607.41 05/31/86 10854.30 13278.12 06/30/86 9797.00 13502.52 07/31/86 8623.30 12747.73 08/31/86 9360.50 13693.61 09/30/86 8322.60 12561.15 10/31/86 8351.70 13285.93 11/30/86 8351.70 13608.78 12/31/86 8206.20 13261.75 01/31/87 9564.20 15048.11 02/28/87 10330.50 15642.51 03/31/87 10165.60 16094.58 04/30/87 10466.30 15951.34 05/31/87 10252.90 16090.11 06/30/87 10029.80 16902.66 07/31/87 10340.20 17759.63 08/31/87 11087.10 18422.06 09/30/87 11077.40 18018.62 10/31/87 7313.80 14137.41 11/30/87 6169.20 12972.49 12/31/87 7100.40 13959.69 01/31/88 6693.00 14547.40 02/29/88 7401.10 15225.31 03/31/88 7294.40 14754.84 04/30/88 7624.20 14918.62 05/31/88 7362.30 15048.41 06/30/88 8080.10 15739.14 07/31/88 7585.40 15679.33 08/31/88 6828.80 15146.23 09/30/88 6935.50 15791.46 10/31/88 6431.10 16230.46 11/30/88 6111.00 15998.37 12/31/88 6499.00 16278.34 01/31/89 6731.80 17469.91 02/28/89 6634.80 17034.91 03/31/89 6586.30 17431.83 04/30/89 7100.40 18336.54 05/31/89 7779.40 19079.17 06/30/89 7013.10 18970.42 07/31/89 7090.70 20683.44 08/31/89 7333.20 21088.84 09/30/89 7536.90 21002.38 10/31/89 7197.40 20515.12 11/30/89 7216.80 20933.63 12/31/89 7517.50 21436.04 01/31/90 7769.70 19997.68 02/28/90 8390.50 20255.65 03/31/90 8797.90 20792.42 04/30/90 8836.70 20272.61 05/31/90 10136.50 22249.19 06/30/90 10291.70 22097.90 07/31/90 9806.70 22027.18 08/31/90 8274.10 20035.93 09/30/90 7022.80 19060.18 10/31/90 6770.60 18978.22 11/30/90 7469.00 20204.21 12/31/90 7954.10 20767.91 01/31/91 9061.26 21673.39 02/28/91 9857.64 23223.04 03/31/91 10382.09 23785.03 04/30/91 10440.36 23842.12 05/31/91 10780.28 24872.10 06/30/91 9469.16 23732.96 07/31/91 10119.86 24838.91 08/31/91 10537.48 25427.59 09/30/91 9731.38 25002.95 10/31/91 10207.27 25337.99 11/30/91 9585.70 24316.87 12/31/91 10760.85 27098.72 01/31/92 12033.12 26594.68 02/29/92 12693.53 26940.42 03/31/92 11693.20 26415.08 04/30/92 11469.82 27191.68 05/31/92 11489.25 27324.92 06/30/92 10654.02 26917.78 07/31/92 11217.31 28018.72 08/31/92 11333.86 27444.33 09/30/92 11741.76 27768.18 10/31/92 12625.55 27865.36 11/30/92 13451.06 28815.57 12/31/92 13713.29 29170.00 01/31/93 14179.46 29415.03 02/28/93 13868.68 29815.08 03/31/93 14354.28 30444.17 04/30/93 14101.26 29707.43 05/31/93 15516.26 30503.58 06/30/93 15799.26 30592.05 07/31/93 16248.16 30469.68 08/31/93 17643.65 31624.48 09/30/93 17936.41 31380.97 10/31/93 17594.86 32030.56 11/30/93 17458.24 31726.27 12/31/93 18112.48 32110.15 01/31/94 19363.60 33201.90 02/28/94 20281.85 32298.81 Let's say you invested $10,000 in Fidelity Select Electronics Portfolio on July 29, 1985, when the fund started, and paid a 3% sales charge. By February 28, 1994, your investment would have grown to $20,282 - a 102.82% increase. That compares to $10,000 invested in the S&P 500, which would have grown to $32,299 over the same period - a 222.99% increase. INVESTMENT SUMMARY TOP TEN STOCKS AS OF FEBRUARY 28, 1994 % OF FUND'S INVESTMENTS Intel Corp. 7.7 Texas Instruments, Inc. 5.9 Advanced Micro Devices, Inc. 5.4 Micron Technology, Inc. 5.4 Compaq Computer Corp. 5.0 Motorola, Inc. 3.3 Sony Corp. ADR 2.5 Murata Manufacturing Co. Ord. 2.3 Maxim Integrated Products, Inc. 2.2 IBM Corporation 2.1 TOP INDUSTRIES AS OF FEBRUARY 28, 1994 Row: 1, Col: 1, Value: 43.9 Row: 1, Col: 2, Value: 2.8 Row: 1, Col: 3, Value: 3.7 Row: 1, Col: 4, Value: 6.0 Row: 1, Col: 5, Value: 6.5 Row: 1, Col: 6, Value: 37.2 Semiconductors 37.2% Computer Storage Devices 6.4% Mini & Micro Computers 6.0% Semi-Conductor Capital Equipment 3.7% Electrical Equipment 2.8% All Others 43.9%* * INCLUDES SHORT-TERM INVESTMENTS ELECTRONICS PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW Harry Lange, Portfolio Manager of Fidelity Select Electronics Portfolio Q. HARRY, HOW DID THE FUND DO? A. The fund had a solid year. For the 12 months ended February 28, 1994, it had a total return of 46.24%. That easily topped the S&P 500, which returned 8.33% during the same period. Q. WHAT DROVE THIS STRONG PERFORMANCE? A. In a word, semiconductors. The fund did well to the extent that it focused on electronics companies that were directly tied to the explosion in the sales of personal computers. Most of us know the PC story by now: price wars helped to make them affordable to the masses. And as PC cycles go, so go companies that manufacture the computer's "brains" - the semiconductors. More than half of all chips made are used in personal computers, and every new generation of computers requires greater memory capacity, i.e. more chips. But sidestepping the sector losers over the past year was almost as important as picking the winners. I avoided companies that manufacture electronic instruments or equipment used for national defense. This group is heavily dependent upon military spending by the government, which just wasn't there. Q. LET'S GO BACK TO THE WINNERS. WASN'T THERE A CORRECTION IN SEMICONDUCTOR STOCKS LAST FALL? A. Yes there was. The semiconductor market has a history of volatility. After performing very well during the first six months of 1993, the stocks of many chip makers had very high valuations (prices compared to other measures like earnings). Investors took profits in the fall, which allowed me to add to the fund's semiconductor investments. Even though stock prices had dropped, I still believed in the underlying story: the demand for chips was still increasing. Since then the stocks of semiconductor manufacturers like Advanced Micro Devices, Micron Technology, and Texas Instruments have risen steadily. All were among the fund's top 10 investments at the end of February. Motorola's stock performed strongly, due in part to its semiconductor business, but the company is also a big player in the move toward wireless communications. The one chip maker that hasn't yet come along for the ride is Intel, the fund's largest investment on February 28. Q. IF INTEL'S PERFORMANCE HAS BEEN FLAT LATELY, WHY ARE YOU STICKING WITH IT? A. The company is issuing a new line of microprocessors this year that signals the turnover of another generation of personal computers. Intel stands alone with this technology. If it clicks, I believe the company could see increased earnings and market share. Q. BESIDES INTEL, DID THE FUND HAVE ANY OTHER LAGGARDS OVER THE PAST YEAR? A. Some companies that design and market computer software were disappointments. I'm thinking specifically of Borland International, and to a lesser extent, Microsoft. Borland had sluggish earnings, and the company lost market share. Microsoft's earnings came in pretty much on target, but in 1993 that wasn't good enough. That's because the earnings of so many other companies in the computer industry exceeded expectations. Q. HAS THE FUND'S LARGE CASH POSITION - 25% ON FEBRUARY 28 - HURT PERFORMANCE? A. Not yet. The fund surged in the first two months of 1994, and investors have recently poured in a lot of new money. I'm working hard to invest that money before it becomes a drag on performance. My goal is to quickly get the fund's cash stake below 10%. Q. CAN THE FUND KEEP UP THE STRONG PACE? A. Well, I see no letup in the demand for personal computers, which bodes well for semiconductor demand. On the supply side, U.S. chip makers are regaining market leadership; their Japanese counterparts aren't adding production capacity due to the recession there. While all of this sounds good, shareholders need to realize that my aggressive focus on semiconductors could make the fund very volatile in the short run. Even if the underlying story remains positive, these stocks can correct more sharply than most in a market downturn. If investors are comfortable with that level of risk, I believe they could be rewarded in time. FUND FACTS START DATE: July 29, 1985 SIZE: as of February 28, 1994, over $110 million MANAGER: Harry Lange, since January 1994; manager, Fidelity Select Technology Portfolio, since November 1993; Fidelity Select Computers Portfolio, since June 1992; manager, Fidelity Select Capital Goods and Automation Machinery Portfolios, 1988; joined Fidelity in 1987 (checkmark) ELECTRONICS PORTFOLIO INVESTMENTS FEBRUARY 28, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 72.6% SHARES VALUE (NOTE 1) AEROSPACE & DEFENSE - 0.8% MISSILES & SPACE VEHICLES - 0.8% Orbital Sciences Corporation 41,700 $ 698,472 68556410 COMMUNICATIONS EQUIPMENT - 2.0% DATACOMMUNICATIONS EQUIPMENT - 0.6% Cabletron Systems, Inc. (a) 3,900 487,500 12692010 TELEPHONE EQUIPMENT - 1.4% ADC Telecommunications, Inc. (a) 20,600 777,650 00088610 National Microsystems Corp. 32,000 408,000 63888210 1,185,650 TOTAL COMMUNICATIONS EQUIPMENT 1,673,150 COMPUTER SERVICES & SOFTWARE - 4.3% CAD/CAM/CAE - 0.4% ECI Telecom Ltd. 12,200 298,900 26825810 Integrated Silicon Systems, Inc. 500 10,750 45812Q10 309,650 COMPUTER & SOFTWARE STORES - 1.4% Inacom Corp. (a) 30,000 525,000 45323G10 Intelligent Electronics, Inc. 5,800 141,375 45815710 MicroAge, Inc. (a) 18,450 488,925 59492810 1,155,300 PREPACKAGED COMPUTER SOFTWARE - 2.5% Informix Corp. (a) 12,400 291,400 45677910 Media Logic, Inc. (a) 22,200 88,800 58441B10 Microsoft Corp. (a) 21,000 1,732,500 59491810 2,112,700 TOTAL COMPUTER SERVICES & SOFTWARE 3,577,650 COMPUTERS & OFFICE EQUIPMENT - 15.0% COMPUTER EQUIPMENT - WHOLESALE - 0.7% Merisel, Inc. (a) 27,700 581,700 58984910 COMPUTER PERIPHERALS - 1.1% Media Vision Technology, Inc. 25,000 775,000 58445H10 Western Digital Corp. (a) 11,000 166,375 95810210 941,375 COMPUTER STORAGE DEVICES - 4.2% ADAPTEC, Inc. (a) 61,800 1,344,150 00651F10 Exabyte (a) 44,700 815,775 30061510 Hutchinson Technology, Inc. (a) 17,800 649,700 44840710 Quantum Corp. (a) 12,300 207,563 74790610 Seagate Technology (a) 18,600 476,625 81180410 3,493,813 GRAPHICS WORKSTATIONS - 0.9% Silicon Graphics, Inc. (a) 30,200 721,025 82705610 MAINFRAME COMPUTERS - 2.1% International Business Machines Corp. 33,000 1,744,875 45920010 MINI & MICRO COMPUTERS - 6.0% Compaq Computer Corp. (a) 42,500 4,196,875 20449310 Digital Equipment Corp. (a) 30,000 873,750 25384910 5,070,625 TOTAL COMPUTERS & OFFICE EQUIPMENT 12,553,413 CONSUMER ELECTRONICS - 2.5% RADIOS, TELEVISIONS, STEREOS - 2.5% Sony Corp. 34,700 2,134,050 83569930 SHARES VALUE (NOTE 1) DEFENSE ELECTRONICS - 1.2% DEFENSE ELECTRONICS - 1.2% General Motors Corp. Class H 14,100 $ 507,600 37044250 Watkins-Johnson Co. 20,900 475,475 94248610 983,075 ELECTRICAL EQUIPMENT - 2.8% Murata Manufacturing Co. 41,000 1,901,324 62699110 Philips NV (a) 16,600 410,850 71833750 2,312,174 ELECTRONIC INSTRUMENTS - 3.8% ELECTRONIC EQUIPMENT - 0.1% ASECO Corp. (a) 15,000 112,500 04365910 SEMI-CONDUCTOR CAPITAL EQUIPMENT - 3.7% Applied Materials, Inc. (a) 30,000 1,425,000 03822210 KLA Instruments Corp. (a) 36,000 1,413,000 48248010 Silicon Valley Group, Inc. (a) 22,900 254,763 82706610 3,092,763 TOTAL ELECTRONIC INSTRUMENTS 3,205,263 ELECTRONICS - 39.7% ELECTRONIC PARTS - WHOLESALE - 1.7% Kent Electronics Corp. 12,300 378,225 49055310 Marshall Industries (a) 12,000 648,000 57239310 Wyle Laboratories 19,500 399,750 98305110 1,425,975 ELECTRONICS & ELECTRONIC COMPONENTS - 1.4% Hitachi Ltd. ADR 12,300 1,136,213 43357850 SEMICONDUCTORS - 36.6% Advanced Micro Devices, Inc. (a) 211,000 4,536,500 00790310 Analog Devices, Inc. (a) 10,000 277,500 03265410 Dallas Semiconductor Corp. (a) 25,200 456,750 23520410 Exar Corp. (a) 28,900 758,625 30064510 Integrated Device Technology, Inc. (a) 19,200 499,200 45811810 Intel Corp. 93,900 6,467,363 45814010 LSI Logic Corp. (a) 30,000 573,750 50216110 Maxim Integrated Products, Inc. (a) 35,500 1,872,625 57772K10 Micron Technology, Inc. 63,700 4,514,738 59511210 Motorola, Inc. 27,300 2,788,013 62007610 National Semiconductor Corp. (a) 79,800 1,735,650 63764010 Opti, Inc. (a) 30,000 472,500 68396010 Samsung Electronics Co. Ltd. (b): GDR (a) 621 25,716 79605060 GDS 12,300 719,550 79605020 Texas Instruments, Inc. 61,700 4,982,275 88250810 30,680,755 TOTAL ELECTRONICS 33,242,943 INDUSTRIAL MACHINERY & EQUIPMENT - 0.4% SPECIAL INDUSTRIAL MACHINERY - 0.4% Asyst Technologies, Inc. 20,000 365,000 04648X10 LEASING & RENTAL - 0.1% EQUIPMENT RENTAL & LEASING, NEC - 0.1% Leasing Solutions, Inc. (a) 11,000 105,875 52211310 TOTAL COMMON STOCKS (Cost $49,193,659) 60,851,065 PREFERRED CONVERTIBLE STOCKS - 0.6% SHARES VALUE (NOTE 1) ELECTRONICS - 0.6% SEMICONDUCTORS - 0.6% Advanced Micro Devices, Inc. $3.00 (Cost $506,255) 10,000 $ 505,000 00790330 CONVERTIBLE BONDS - 2.2% PRINCIPAL VALUE (NOTE 1) AMOUNT COMPUTERS & OFFICE EQUIPMENT - 2.2% COMPUTER STORAGE DEVICES - 2.2% Maxtor Corporation 5 3/4%, 3/1/12 (Cost $1,950,005) $ 3,000,000 1,890,000 577729AA REPURCHASE AGREEMENTS - 24.6% MATURITY VALUE (NOTE 1) AMOUNT Investments in repurchase agreements, (U.S. Treasury obligations), in a joint trading account, at 3.47% dated 2/28/94 due 3/1/94 $ 20,607,986 20,606,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $72,255,919) $ 83,852,065 LEGEND 1. Non-income producing 2. Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $745,266 or 0.7% of net assets. OTHER INFORMATION CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1, 1993, the fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of February 28, 1993 have been restated to reflect an increase in paid in capital of $499,365, a decrease in accumulated net investment loss of $803,731 and a decrease in accumulated net realized gain on investments of $1,303,096. Purchases and sales of securities, other than short-term securities, aggregated $74,437,895 and $74,139,089, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $35,182 for the period (see Note 4 of Notes to Financial Statements). The maximum loan and average daily loan balances during the periods for which loans were outstanding amounted to $3,089,000 and $1,799,500, respectively. The weighted average interest rate paid was 3.6% (see Note 7 of Notes to Financial Statements). INCOME TAX INFORMATION At February 28, 1994, the aggregate cost of investment securities for income tax purposes was $72,484,827. Net unrealized appreciation aggregated $11,367,238, of which $12,179,159 related to appreciated investment securities and $811,921 related to depreciated investment securities. The fund hereby designates $3,913,000 as a capital gain dividend for the purpose of the dividend paid deduction. ELECTRONICS PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $20,606,000) (cost $72,255,919) $ 83,852,065 (Notes 1 and 2) - See accompanying schedule Cash 357 Receivable for fund shares sold 29,574,887 Dividends receivable 20,589 Interest receivable 85,771 Redemption fees receivable (Note 1) 250 Other receivables 12,857 TOTAL ASSETS 113,546,776 LIABILITIES Payable for investments purchased $ 1,343,352 Payable for fund shares redeemed 1,123,007 Accrued management fee 33,498 Other payables and accrued expenses 53,439 TOTAL LIABILITIES 2,553,296 NET ASSETS $ 110,993,480 Net Assets consist of (Note 1): Paid in capital $ 96,096,762 Accumulated undistributed net realized gain (loss) on investments 3,300,572 Net unrealized appreciation (depreciation) on investment securities 11,596,146 NET ASSETS, for 6,282,777 shares outstanding $ 110,993,480 NET ASSET VALUE and redemption price per share ($110,993,480 (divided by) 6,282,777 shares) $17.67 Maximum offering price per share (100/97 of $17.67) $18.22
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994 INVESTMENT INCOME $ 229,581 Dividends Interest (including security lending fees of $1,141) (Note 6) 392,272 TOTAL INCOME 621,853 EXPENSES Management fee (Note 4) $ 340,672 Transfer agent (Note 4) 517,315 Fees Redemption fees (Note 1) (77,441 ) Accounting and security lending fees (Note 4) 56,600 Non-interested trustees' compensation 381 Custodian fees and expenses 13,396 Registration fees 41,586 Audit 4,917 Legal 553 Interest (Note 7) 2,132 Reports to shareholders 9,293 Miscellaneous 726 Total expenses before reductions 910,130 Expense reductions (Note 8) (4,331 905,799 ) NET INVESTMENT INCOME (LOSS) (283,946 ) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 10,940,991 Net realized gain (loss) on investment securities Change in net unrealized appreciation (depreciation) on investment securities 7,342,630 NET GAIN (LOSS) 18,283,621 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 17,999,675 OTHER INFORMATION $577,919 Sales charges paid to FDC (Note 4) Deferred sales charges withheld $6,868 by FDC (Note 4) Exchange fees withheld by FSC $66,285 (Note 4)
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS FEBRUARY 28, ENDED 1994 FEBRUARY 28, 1993 Operations $ (283,946 $ (194,758 Net investment income (loss) ) ) Net realized gain (loss) on investments 10,940,991 2,247,326 Change in net unrealized appreciation (depreciation) on investments 7,342,630 6,163,563 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 17,999,675 8,216,131 Distributions to shareholders from net realized gains (6,751,718 - ) Share transactions 234,477,570 214,834,141 Net proceeds from sales of shares Reinvestment of distributions 6,551,694 - Cost of shares redeemed (189,780,938 (209,950,220 ) ) Paid in capital portion of redemption fees (Note 1) 469,729 705,774 Net increase (decrease) in net assets resulting from share transactions 51,718,055 5,589,695 TOTAL INCREASE (DECREASE) IN NET ASSETS 62,966,012 13,805,826 NET ASSETS Beginning of period 48,027,468 34,221,642 End of period (including accumulated net investment loss of $0 and $803,731, respectively) $ 110,993,480 $ 48,027,468 OTHER INFORMATION Shares Sold 13,902,581 16,634,247 Issued in reinvestment of distributions 431,270 - Redeemed (11,413,385 (16,169,840 ) ) Net increase (decrease) 2,920,466 464,407
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30, FEBRUARY 28, ENDED FEBRUARY 28, SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990 Net asset value, beginning of period $ 14.28 $ 11.81 $ 10.75 $ 9.11 $ 7.32 Income from Investment Operations Net investment income (loss) (.09) (.05) (.12) (.04) - Net realized and unrealized gain (loss) on investments 6.09 2.33 1.00 1.53 1.62 Total from investment operations 6.00 2.28 .88 1.49 1.62 Less Distributions From net investment income - - - (.01) - From net realized gain (2.75) - - - - Total distributions (2.75) - - (.01) - Redemption fees added to paid in capital .14 .19 .18 .16 .17 Net asset value, end of period $ 17.67 $ 14.28 $ 11.81 $ 10.75 $ 9.11 TOTAL RETURND, E 46.24% 20.91% 9.86% 18.15% 24.45% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 110,993 $ 48,027 $ 34,222 $ 18,178 $ 26,141 Ratio of expenses to average net assetsB 1.67% 1.69%A 2.16% 2.26% 2.57% Ratio of expenses to average net assets before expense 1.67% 1.69%A 2.16% 2.26% 3.47% reductionsB Ratio of net investment income (loss) to average net assets (.52)% (.50)% (1.07)% (.45)% (.02)% A Portfolio turnover rate 163% 293%A 299% 268% 378%
1 ANNUALIZED 2 SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS. 3 NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH PERIOD. 4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 5 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. SOFTWARE AND COMPUTER SERVICES PORTFOLIO PERFORMANCE AND INVESTMENT SUMMARY PERFORMANCE There are several ways to evaluate a fund's historical performance: total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND SOFTWARE AND COMPUTER SERVICES 33.19% 202.90% 369.41% SOFTWARE AND COMPUTER SERVICES (INCL. 3% SALES CHARGE) 29.19% 193.82% 355.33% S&P 500 8.33% 89.60% 222.99% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years, or since the fund started on July 29, 1985. You can compare these figures to the performance of the S&P 500 - a common proxy for the U.S. stock market. This benchmark includes reinvested dividends and capital gains, if any. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND SOFTWARE AND COMPUTER SERVICES 33.19% 24.81% 19.71% SOFTWARE AND COMPUTER SERVICES (INCL. 3% SALES CHARGE) 29.19% 24.06% 19.29% S&P 500 8.33% 13.65% 14.62% AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of growth in the long run and volatility in the short run. Unlike the broader market, however, some sectors may not have a history of growth in the long run. And, as with all stock funds, the share price and return of a fund that invests in a sector will vary. That means if you sell your shares during a sector downturn, you might lose money. But if you can identify a sector that is about to experience rapid growth you may have the potential for above-average gains. (checkmark) $10,000 OVER LIFE OF FUND Select Software (028) S&P 500 07/29/85 9700.00 10000.00 07/31/85 9622.40 9926.31 08/31/85 9515.70 9841.93 09/30/85 8933.70 9533.88 10/31/85 9215.00 9974.35 11/30/85 10282.00 10658.59 12/31/85 10776.70 11174.46 01/31/86 11019.20 11237.04 02/28/86 11775.80 12077.57 03/31/86 11853.40 12751.50 04/30/86 12959.20 12607.41 05/31/86 13483.00 13278.12 06/30/86 13143.50 13502.52 07/31/86 11232.60 12747.73 08/31/86 12163.80 13693.61 09/30/86 11232.60 12561.15 10/31/86 12280.20 13285.93 11/30/86 12551.80 13608.78 12/31/86 12270.50 13261.75 01/31/87 14879.80 15048.11 02/28/87 16276.60 15642.51 03/31/87 16548.20 16094.58 04/30/87 16829.50 15951.34 05/31/87 16907.10 16090.11 06/30/87 16315.40 16902.66 07/31/87 16266.90 17759.63 08/31/87 17411.50 18422.06 09/30/87 17595.80 18018.62 10/31/87 12939.80 14137.41 11/30/87 11707.90 12972.49 12/31/87 13428.92 13959.69 01/31/88 13040.86 14547.40 02/29/88 14113.14 15225.31 03/31/88 14235.68 14754.84 04/30/88 14664.59 14918.62 05/31/88 14266.32 15048.41 06/30/88 15389.65 15739.14 07/31/88 14623.74 15679.33 08/31/88 13612.74 15146.23 09/30/88 14490.98 15791.46 10/31/88 13725.08 16230.46 11/30/88 13520.83 15998.37 12/31/88 14644.17 16278.34 01/31/89 15736.86 17469.91 02/28/89 15032.23 17034.91 03/31/89 14664.59 17431.83 04/30/89 16084.07 18336.54 05/31/89 16666.16 19079.17 06/30/89 15015.60 18970.42 07/31/89 14572.41 20683.44 08/31/89 15237.19 21088.84 09/30/89 15543.20 21002.38 10/31/89 15870.31 20515.12 11/30/89 16334.60 20933.63 12/31/89 16408.68 21436.04 01/31/90 15825.35 19997.68 02/28/90 16235.84 20255.65 03/31/90 16883.98 20792.42 04/30/90 16829.97 20272.61 05/31/90 18947.22 22249.19 06/30/90 19390.11 22097.90 07/31/90 17618.53 22027.18 08/31/90 15155.61 20035.93 09/30/90 13416.44 19060.18 10/31/90 13686.50 18978.22 11/30/90 15447.27 20204.21 12/31/90 16549.11 20767.91 01/31/91 18979.62 21673.39 02/28/91 20362.32 23223.04 03/31/91 21518.16 23785.03 04/30/91 21356.13 23842.12 05/31/91 21745.01 24872.10 06/30/91 20151.25 23732.96 07/31/91 21389.13 24838.91 08/31/91 23126.93 25427.59 09/30/91 22365.15 25002.95 10/31/91 23484.01 25337.99 11/30/91 20913.03 24316.87 12/31/91 24136.01 27098.72 01/31/92 28010.15 26594.68 02/29/92 28851.81 26940.42 03/31/92 27465.54 26415.08 04/30/92 26772.40 27191.68 05/31/92 27193.24 27324.92 06/30/92 25720.32 26917.78 07/31/92 27539.80 28018.72 08/31/92 25485.15 27444.33 09/30/92 27329.39 27768.18 10/31/92 29532.57 27865.36 11/30/92 32107.08 28815.57 12/31/92 32713.57 29170.00 01/31/93 34396.91 29415.03 02/28/93 34186.49 29815.08 03/31/93 34916.76 30444.17 04/30/93 34329.13 29707.43 05/31/93 38200.94 30503.58 06/30/93 40171.79 30592.05 07/31/93 38955.74 30469.68 08/31/93 41583.54 31624.48 09/30/93 42422.20 31380.97 10/31/93 42324.35 32030.56 11/30/93 41276.03 31726.27 12/31/93 43421.00 32110.15 01/31/94 44934.04 33201.90 02/28/94 45532.95 32298.81 Let's say you invested $10,000 in Fidelity Select Software and Computer Services Portfolio on July 29, 1985, when the fund started, and paid a 3% sales charge. By February 28, 1994, your investment would have grown to $45,533 - a 355.33% increase. That compares to $10,000 invested in the S&P 500, which would have grown to $32,299 over the same period - a 222.99% increase. INVESTMENT SUMMARY TOP TEN STOCKS AS OF FEBRUARY 28, 1994 % OF FUND'S INVESTMENTS Cisco Systems, Inc. 9.4 Cheyenne Software, Inc. 9.1 Cabletron Systems, Inc. 7.4 DSC Communications Corp. 6.8 Wellfleet Communications, Inc. 5.5 Crosscommunications Corp. 4.1 Netframe Systems, Inc. 3.4 3Com Corp. 3.4 Informix Corp. 2.9 Electronics for Imaging Incorporated 2.9 TOP INDUSTRIES AS OF FEBRUARY 28, 1994 Row: 1, Col: 1, Value: 30.1 Row: 1, Col: 2, Value: 4.4 Row: 1, Col: 3, Value: 4.4 Row: 1, Col: 4, Value: 5.5 Row: 1, Col: 5, Value: 26.6 Row: 1, Col: 6, Value: 29.0 Datacommunications Equipment 29.0% Prepackaged Computer Software 26.6% Semiconductors 5.5% CAD/CAM/CAE 4.4% Computer Peripherals 4.4% All Others 30.1%* * INCLUDES SHORT-TERM INVESTMENTS SOFTWARE AND COMPUTER SERVICES PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW Arieh Coll, Portfolio Manager of Fidelity Select Software and Computer Services Portfolio Q. ARIEH, HOW HAS THE FUND PERFORMED? A. For the year ended February 28, 1994, the fund had a total return of 33.19%. That beat the S&P 500, which returned 8.33% for the same period. Q. WHAT HELPED THE FUND COME OUT AHEAD? A. Avoiding losses was one factor. In the early spring of 1993, the fund was invested very defensively and did well when technology stocks fell back. Investing defensively meant buying some foreign stocks as well as domestic stocks that had already come down and were therefore less likely to deteriorate further. In the summer, there was a second, more mild correction for the sector, which I had anticipated. Building up the fund's cash level and investing defensively before that correction again helped insulate the fund from the downturn. Q. WHAT WAS THE OTHER FACTOR? A. After each of those two corrections, I focused on buying the stocks of companies I thought were fast growing. The computer networker Cisco Systems, for example, was one of the fund's top performers. I was able to buy it at a relatively inexpensive price after both corrections. I also found opportunities among otherwise solid stocks that suffered sharp, temporary setbacks. Informix, a database company, was an example of a company that fell last spring on false rumors, a common occurrence in the technology sector. Q. WHY HAVE YOU AVOIDED MANY OF THE MAINFRAME COMPANIES? A. Because there's a secular move away from mainframes to a world where personal computers are networked with one another. Building the infrastructure needed to network requires all sorts of technology - routers, hubs, adapter cards. I've focused on companies like Cabletron Systems, 3Com and Wellfleet that sell this type of equipment. The move to networks is the predominant theme for the fund, and several of its best-performing stocks came from this area. Q. HAVE YOU BOUGHT MANY FOREIGN COMPANIES WHICH COULD BENEFIT FROM THE MOVE AWAY FROM MAINFRAMES? A. U.S. companies dominate the field and there really aren't that many overseas investments of this type. One exception is the Canadian-based SHL Systemhouse, which essentially is a systems integrator/consulting firm. SHL helps companies that rely on mainframes transition to a network-based architecture. Q. LOOKING BACK, IS THERE ANYTHING YOU REGRET? A. Sure, I made some mistakes. Synoptics was one disappointment. The company is a leader in the intelligent hub market - which means they're a central point of control to manage local area networks (LANs). I over-estimated its revenue growth since backlogged orders proved to be a poor indicator of the health of the company's business. Much of the backlog was based on double- ordering from customers, a common practice with technology products. Distributors were afraid they wouldn't get the amount of product they needed on a timely basis, so they double-ordered in the hopes they'd get the minimum. Once the company was able to meet orders, the backlog disappeared, earnings estimates fell, and the stock dropped. I eliminated the stock from the fund in the spring. Q. IN YOUR VIEW, WILL THE TECHNOLOGY SECTOR CONTINUE TO BE VOLATILE? A. Most likely. There are a lot of speculative investors in technology stocks, and that causes the sector to go through some psychological traumas from time to time. The sector historically has had one very large correction during the year. In 1993, it happened in early spring, but this year I believe it will be fairly clear sailing until the summer. If I do anticipate a correction, I'd probably raise the fund's cash level somewhat and get more defensive, much as I have in previous corrections. And I would use a downturn as an opportunity to buy some of the growing companies I like at less expensive prices. But it's important to remember that technology has been one of the fastest growing industries in the world, and its long-term prospects - despite some temporary setbacks - seem to be strong. FUND FACTS START DATE: July 29, 1985 SIZE: as of February 28, 1994, over $178 million MANAGER: Arieh Coll, since October 1991; manager, Fidelity Select Technology Portfolio, since July 1992; joined Fidelity in 1989 (checkmark) SOFTWARE AND COMPUTER SERVICES PORTFOLIO INVESTMENTS FEBRUARY 28, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 97.5% SHARES VALUE (NOTE 1) APPLIANCE STORES - 2.1% ELECTRIC APPLIANCES - WHOLESALE - 2.1% Cellstar Corp. (a) 202,000 $ 3,686,490 15092510 COMMUNICATIONS EQUIPMENT - 36.9% DATACOMMUNICATIONS EQUIPMENT - 29.0% Cabletron Systems, Inc. (a) 105,800 13,225,000 12692010 Cisco Systems, Inc. (a) 226,400 16,697,000 17275R10 Digital Microwave Corp. (a) 50,000 875,000 25385910 Network General Corp. (a) 149,100 3,093,825 64121010 Wellfleet Communications, Inc. (a) 123,700 9,834,150 94949710 Xircom, Inc. (a) 75,000 1,893,750 98392210 3Com Corp. (a) 100,000 6,062,500 88553510 51,681,225 TELEPHONE EQUIPMENT - 7.9% DSC Communications Corp. (a) 222,100 12,076,688 23331110 Inter-Tel, Inc. 184,700 1,962,438 45837210 Global Village Communications 1,000 12,000 37935Q10 14,051,126 TOTAL COMMUNICATIONS EQUIPMENT 65,732,351 COMPUTER SERVICES & SOFTWARE - 34.2% CAD/CAM/CAE - 4.4% Alantec Corp. 400 7,400 01163010 Crosscommunications Corp. (a) 337,700 7,344,975 22757K10 State of The Art, Inc. (a) 80,000 560,000 85730710 7,912,375 COMPUTER RELATED SERVICES, NEC - 0.2% Xpedite Systems, Inc. 22,100 374,275 98392910 COMPUTER SERVICES - 3.0% Bisys Group, Inc. (The) (a) 50,000 937,500 05547210 Medic Computer Systems, Inc. 30,000 517,500 58447210 SHL Systemhouse, Inc. (a) 446,000 3,177,750 78424R10 Warner Insurance Services, Inc. 157,525 708,863 93446710 5,341,613 PREPACKAGED COMPUTER SOFTWARE - 26.6% Banyan Systems, Inc. (a) 95,000 1,401,250 06690810 Brock Control Systems, Inc. (a) 80,000 1,620,000 11162610 Cheyenne Software, Inc. (a) 402,900 16,216,725 16688810 Data Systems & Software (a) 55,000 536,250 23788710 EICON Technology Corp. (a) 224,000 2,282,327 28248F10 Electronics for Imaging Incorporated (a) 335,600 5,117,900 28608210 Hummingbird Communications Ltd. (a) 58,600 879,326 44544R10 Informix Corp. (a) 219,200 5,151,200 45677910 MDL Information Systems, Inc. (a) 30,000 232,500 55267R10 Manugistics Group, Inc. (a) 55,000 811,250 56501110 MathSoft, Inc. (a) 40,000 255,000 57679810 Microsoft Corp. (a) 40,000 3,300,000 59491810 Midisoft Corp. (a) 30,000 405,000 59741310 Modatech Systems, Inc. (a) 250,000 1,171,875 60750D10 Platinum Technology, Inc. (a) 35,000 490,000 72764T10 Sanctuary Woods Multimedia Corp. 53,300 222,166 79971E10 Santa Cruz Operation, Inc. (a) 95,000 581,875 80183310 Softimage, Inc. (a) 35,000 761,250 83396110 Sterling Software, Inc. (a) 72,000 2,466,000 85954710 Wall Data, Inc. (a) 70,000 3,517,500 93204510 47,419,394 TOTAL COMPUTER SERVICES & SOFTWARE 61,047,657 SHARES VALUE (NOTE 1) COMPUTERS & OFFICE EQUIPMENT - 11.1% COMPUTER EQUIPMENT - WHOLESALE - 0.2% Kenfil, Inc. (a) 185,000 $ 393,125 48888310 COMPUTER PERIPHERALS - 4.4% Asante Technologies, Inc. (a) 135,000 1,670,625 04341210 Creative Technologies Corp. (a) 143,100 5,080,050 22599992 Media Vision Technology, Inc. 34,700 1,075,700 58445H10 7,826,375 COMPUTER STORAGE DEVICES - 0.8% Xylogics, Inc. (a) 73,900 1,348,675 98415210 COMPUTERS & OFFICE EQUIPMENT - 3.4% Netframe Systems, Inc. (a) 377,700 6,137,625 64110610 ELECTRONIC COMPUTERS - 1.4% Auspex Systems, Inc. (a) 50,000 325,000 05211610 SynOptics Communications, Inc. (a) 86,700 2,232,525 87160910 2,557,525 PENS, PENCILS, OFFICE SUPPLIES - 0.9% International Imaging Materials, Inc. (a) 97,200 1,652,400 45968C10 TOTAL COMPUTERS & OFFICE EQUIPMENT 19,915,725 ELECTRICAL EQUIPMENT - 1.6% ELECTRICAL EQUIPMENT - WHOLESALE - 0.9% Itel Corp. (a) 60,000 1,672,500 46564210 TV & RADIO COMMUNICATION EQUIPMENT - 0.7% Avid Technology, Inc. (a) 49,000 1,151,500 05367P10 TOTAL ELECTRICAL EQUIPMENT 2,824,000 ELECTRONIC INSTRUMENTS - 2.1% SEMICONDUCTOR CAPITAL EQUIPMENT - 2.1% Applied Materials, Inc. (a) 80,000 3,800,000 03822210 ELECTRONICS - 5.8% ELECTRONIC PARTS - WHOLESALE - 0.3% ARC International Corp. (a) 133,500 492,281 00190510 SEMICONDUCTORS - 5.5% Intel Corp. (a) 61,500 4,235,813 45814010 Intel Corp. (warrants) (a) 201,600 3,477,600 45814014 Motorola, Inc. 20,000 2,042,500 62007610 9,755,913 TOTAL ELECTRONICS 10,248,194 ENGINEERING - 0.0% ARCHITECTS & ENGINEERS - 0.0% DSP Group (a) 200 3,100 23332B10 INDUSTRIAL MACHINERY & EQUIPMENT - 0.4% SPECIAL INDUSTRIAL MACHINERY, NEC - 0.4% ATS Automation Tooling Systems, Inc. 94,000 766,210 00194010 INSURANCE - 0.5% LIFE INSURANCE - 0.5% GMIS, Inc. (a) 70,000 857,500 36189710 MEDICAL EQUIPMENT & SUPPLIES - 0.2% MEDICAL SUPPLIES & APPLIANCES - 0.2% Steris Corporation (a) 13,100 363,525 85915210 SECURITIES INDUSTRY - 2.4% INVESTMENT MANAGERS - 1.0% Peregrine Investments Holdings 829,000 1,780,883 71399492 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) SECURITIES INDUSTRY - CONTINUED SECURITY & COMMODITY BROKERS - 1.4% Kim Eng Holdings Ltd. 453,000 $ 882,059 49499D92 Kim Eng Holdings Ltd. (warrants) (a) 90,600 95,079 49499D94 Sun Hung Kai Properties Ltd. 2,323,000 1,548,210 86690810 2,525,348 TOTAL SECURITIES INDUSTRY 4,306,231 TELEPHONE SERVICES - 0.2% ABL, Inc. 71,100 289,774 00095110 TOTAL COMMON STOCKS (Cost $158,619,791) 173,840,757 NONCONVERTIBLE BONDS - 0.0% PRINCIPAL VALUE (NOTE 1) AMOUNT SECURITIES INDUSTRY - 0.0% SECURITY & COMMODITY BROKERS - 0.0% Kim Eng Holdings Ltd. 3 1/2%, 12/27/97 (Cost $56,327) SGD 90,600 $ 52,694 49499DAA REPURCHASE AGREEMENTS - 2.5% MATURITY VALUE (NOTE 1) AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account, at 3.47% dated 2/28/94 due 3/1/94 $ 4,417,426 4,417,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $163,093,118) $ 178,310,451 CURRENCY ABBREVIATIONS: SGD - Singapore dollar LEGEND 1. Non-income producing 2. Principal amount is stated in United States dollars unless otherwise noted. OTHER INFORMATION CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1, 1993, the fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of February 28, 1993 have been restated to reflect an increase in paid in capital of $13,841,831, a decrease in accumulated net investment loss of $1,682,130 and a decrease in accumulated net realized gain on investments of $15,523,961. Purchases and sales of securities, other than short-term securities, aggregated $604,996,895 and $618,326,233, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $136,866 for the period (see Note 4 of Notes to Financial Statements). At the period end, the value of securities loaned and the value of collateral amounted to $2,693,550 and $2,764,000, respectively (see Note 6 of Notes to Financial Statements). The maximum loan and average daily loan balances during the periods for which loans were outstanding amounted to $7,894,000 and $3,213,792, respectively. The weighted average interest rate paid was 3.7% (see Note 7 of Notes to Financial Statements). Distribution of investments by country, as a percentage of total value of investment in securities, is as follows: United States 88.4% Canada 5.4 Singapore 3.4 Hong Kong 1.9 Others (individually less than 1%) 0.9 TOTAL 100.0% INCOME TAX INFORMATION At February 28, 1994, the aggregate cost of investment securities for income tax purposes was $164,188,229. Net unrealized appreciation aggregated $14,122,222, of which $20,811,704 related to appreciated investment securities and $6,689,482 related to depreciated investment securities. The fund hereby designates $1,410,000 as a capital gain dividend for the purpose of the dividend paid deduction. SOFTWARE AND COMPUTER SERVICES PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $4,417,000) (cost $163,093,118) $ 178,310,451 (Notes 1 and 2) - See accompanying schedule Cash 693 Receivable for investments sold 14,203,242 Receivable for fund shares sold 5,440,417 Dividends receivable 19,996 Interest receivable 145 Redemption fees receivable (Note 1) 994 Other receivables 47,464 TOTAL ASSETS 198,023,402 LIABILITIES Payable for investments purchased $ 13,308,377 Payable for fund shares redeemed 3,094,175 Accrued management fee 88,999 Other payables and accrued expenses 734,026 Collateral on securities loaned, at value (Note 6) 2,764,000 TOTAL LIABILITIES 19,989,577 NET ASSETS $ 178,033,825 Net Assets consist of (Note 1): Paid in capital $ 148,168,536 Accumulated undistributed net realized gain (loss) on investments 14,647,956 Net unrealized appreciation (depreciation) on investment securities 15,217,333 NET ASSETS, for 6,161,650 shares outstanding $ 178,033,825 NET ASSET VALUE and redemption price per share ($178,033,825 (divided by) 6,161,650 shares) $28.89 Maximum offering price per share (100/97 of $28.89) $29.78
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994 INVESTMENT INCOME $ 298,461 Dividends Interest (including security lending fees of $47,901) (Note 6) 349,659 TOTAL INCOME 648,120 EXPENSES Management fee (Note 4) $ 1,077,770 Transfer agent (Note 4) 1,469,576 Fees Redemption fees (Note 1) (188,207 ) Accounting and security lending fees (Note 4) 180,104 Non-interested trustees' compensation 1,225 Custodian fees and expenses 42,894 Registration fees 58,442 Audit 28,109 Legal 1,710 Interest (Note 7) 7,864 Reports to shareholders 26,638 Miscellaneous 2,467 Total expenses before reductions 2,708,592 Expense reductions (Note 8) (11,008 2,697,584 ) NET INVESTMENT INCOME (LOSS) (2,049,464 ) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 35,000,477 Net realized gain (loss) on investment securities Change in net unrealized appreciation (depreciation) on investment securities 10,379,359 NET GAIN (LOSS) 45,379,836 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 43,330,372 OTHER INFORMATION $1,796,117 Sales charges paid to FDC (Note 4) Deferred sales charges withheld $18,078 by FDC (Note 4) Exchange fees withheld by FSC $157,755 (Note 4)
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS FEBRUARY 28, ENDED 1994 FEBRUARY 28, 1993 Operations $ (2,049,464 $ (348,037 Net investment income (loss) ) ) Net realized gain (loss) on investments 35,000,477 23,171,878 Change in net unrealized appreciation (depreciation) on investments 10,379,359 7,473,848 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 43,330,372 30,297,689 Distributions to shareholders from net realized gains (32,503,084 - ) Share transactions 412,354,230 400,316,696 Net proceeds from sales of shares Reinvestment of distributions 32,019,820 - Cost of shares redeemed (429,424,876 (369,831,627 ) ) Paid in capital portion of redemption fees (Note 1) 1,045,419 858,352 Net increase (decrease) in net assets resulting from share transactions 15,994,593 31,343,421 TOTAL INCREASE (DECREASE) IN NET ASSETS 26,821,881 61,641,110 NET ASSETS Beginning of period 151,211,944 89,570,834 End of period (including undistributed net investment loss of $0 and $1,682,130, respectively) $ 178,033,825 $ 151,211,944 OTHER INFORMATION Shares Sold 14,575,603 16,271,040 Issued in reinvestment of distributions 1,265,940 - Redeemed (15,154,744 (14,936,285 ) ) Net increase (decrease) 686,799 1,334,755
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30, FEBRUARY 28, ENDED FEBRUARY 28, SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990 Net asset value, beginning of period $ 27.62 $ 21.63 $ 19.77 $ 15.58 $ 15.75 Income from Investment Operations Net investment income (loss) (.34) (.07)F (.28) (.14)G (.20) Net realized and unrealized gain (loss) on investments 7.92 5.88 4.37 4.06 .82 Total from investment operations 7.58 5.81 4.09 3.92 .62 Less Distributions From net realized gain (6.48) - (2.50) - (.86) Redemption fees added to paid in capital .17 .18 .27 .27 .07 Net asset value, end of period $ 28.89 $ 27.62 $ 21.63 $ 19.77 $ 15.58 TOTAL RETURND, E 33.19% 27.69% 25.36% 26.89% 4.64% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 178,034 $ 151,212 $ 89,571 $ 17,290 $ 10,539 Ratio of expenses to average net assetsB 1.57% 1.64%A 1.98% 2.50% 2.56% Ratio of expenses to average net assets before expense 1.57% 1.64%A 1.98% 2.82% 3.39% reductionsB Ratio of net investment income (loss) to average net assets(1.19)% (.37)%A (1.30)% (.84)% (1.30)% Portfolio turnover rate 376% 402%A 348% 326% 284%
1 ANNUALIZED 2 SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS. 3 NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH PERIOD. 4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 5 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. 6 INVESTMENT INCOME PER SHARE REFLECTS DIVIDENDS RECEIVED IN ARREARS FROM UNISYS CORP. $3.75 SERIES A, WHICH AMOUNTED TO $.03 PER SHARE. 7 INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO $.02 PER SHARE. TECHNOLOGY PORTFOLIO PERFORMANCE AND INVESTMENT SUMMARY PERFORMANCE There are several ways to evaluate a fund's historical performance: total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 PAST 10 FEBRUARY 28, 1994 YEAR YEARS YEARS TECHNOLOGY 35.62% 195.34% 166.48% TECHNOLOGY (INCL. 3% SALES CHARGE) 31.55% 186.48% 158.49% S&P 500 8.33% 89.60% 321.84% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years, or ten years. You can compare these figures to the performance of the S&P 500 - a common proxy for the U.S. stock market. This benchmark includes reinvested dividends and capital gains, if any. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 PAST 10 FEBRUARY 28, 1994 YEAR YEARS YEARS TECHNOLOGY 35.62% 24.18% 10.30% TECHNOLOGY (INCL. 3% SALES CHARGE) 31.55% 23.43% 9.96% S&P 500 8.33% 13.65% 15.48% AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of growth in the long run and volatility in the short run. Unlike the broader market, however, some sectors may not have a history of growth in the long run. And, as with all stock funds, the share price and return of a fund that invests in a sector will vary. That means if you sell your shares during a sector downturn, you might lose money. But if you can identify a sector that is about to experience rapid growth you may have the potential for above-average gains. (checkmark) $10,000 OVER TEN YEARS Select Retailing (046) S&P 500 12/16/85 9700.00 10000.00 12/31/85 9506.00 10080.42 01/31/86 9583.60 10136.87 02/28/86 10252.90 10895.11 03/31/86 11174.40 11503.06 04/30/86 11378.10 11373.07 05/31/86 12668.20 11978.12 06/30/86 12978.60 12180.55 07/31/86 11271.40 11499.66 08/31/86 11271.40 12352.93 09/30/86 10446.90 11331.35 10/31/86 11368.40 11985.16 11/30/86 11678.80 12276.40 12/31/86 10854.30 11963.36 01/31/87 11756.40 13574.82 02/28/87 13124.10 14111.03 03/31/87 13521.80 14518.83 04/30/87 13104.70 14389.62 05/31/87 13337.50 14514.81 06/30/87 14065.00 15247.80 07/31/87 14773.10 16020.87 08/31/87 15102.90 16618.45 09/30/87 14026.20 16254.50 10/31/87 9835.80 12753.28 11/30/87 9156.80 11702.41 12/31/87 10055.28 12592.97 01/31/88 10690.46 13123.13 02/29/88 11928.53 13734.67 03/31/88 12079.25 13310.27 04/30/88 12456.05 13458.01 05/31/88 12100.78 13575.09 06/30/88 13166.60 14198.19 07/31/88 13048.17 14144.24 08/31/88 13015.88 13663.33 09/30/88 13780.25 14245.39 10/31/88 14070.93 14641.41 11/30/88 13877.14 14432.04 12/31/88 13947.19 14684.60 01/31/89 14636.89 15759.52 02/28/89 14439.83 15367.10 03/31/89 15129.53 15725.16 04/30/89 15983.44 16541.29 05/31/89 17089.14 17211.21 06/30/89 16784.91 17113.11 07/31/89 18138.53 18658.42 08/31/89 19018.38 19024.13 09/30/89 18973.26 18946.13 10/31/89 18059.57 18506.58 11/30/89 18172.37 18884.12 12/31/89 18065.93 19337.33 01/31/90 16654.94 18039.80 02/28/90 17235.16 18272.51 03/31/90 18646.15 18756.73 04/30/90 18382.41 18287.82 05/31/90 20835.16 20070.88 06/30/90 20571.42 19934.40 07/31/90 19727.47 19870.61 08/31/90 16892.30 18074.30 09/30/90 15006.59 17194.08 10/31/90 14307.69 17120.15 11/30/90 16259.34 18226.11 12/31/90 17157.07 18734.62 01/31/91 18822.55 19551.45 02/28/91 20567.33 20949.38 03/31/91 22708.66 21456.35 04/30/91 23025.90 21507.85 05/31/91 24942.52 22436.99 06/30/91 24149.43 21409.37 07/31/91 25695.95 22407.05 08/31/91 27057.41 22938.10 09/30/91 26766.61 22555.03 10/31/91 26264.32 22857.27 11/30/91 25762.04 21936.12 12/31/91 28846.72 24445.61 01/31/92 30446.30 23990.92 02/29/92 31910.33 24302.81 03/31/92 31273.21 23828.90 04/30/92 29998.96 24529.47 05/31/92 30622.53 24649.67 06/30/92 29193.11 24282.39 07/31/92 30491.83 25275.53 08/31/92 29800.12 24757.39 09/30/92 30689.47 25049.52 10/31/92 32792.84 25137.20 11/30/92 35277.36 25994.38 12/31/92 35215.02 26314.11 01/31/93 35457.98 26535.14 02/28/93 34114.55 26896.02 03/31/93 36744.24 27463.53 04/30/93 34635.21 26798.91 05/31/93 36553.70 27517.12 06/30/93 35675.00 27596.92 07/31/93 35850.74 27486.53 08/31/93 37490.97 28528.27 09/30/93 38633.27 28308.61 10/31/93 39233.71 28894.59 11/30/93 39614.48 28620.10 12/31/93 39804.09 28966.40 01/31/94 38030.79 29951.26 02/28/94 39439.93 29136.58 Let's say you invested $10,000 in Fidelity Select Technology Portfolio on February 29, 1984, and paid a 3% sales charge. By February 28, 1994, your investment would have grown to $25,849 - a 158.49% increase. That compares to $10,000 invested in the S&P 500, which would have grown to $42,184 over the same period - a 321.84% increase. INVESTMENT SUMMARY TOP TEN STOCKS AS OF FEBRUARY 28, 1994 % OF FUND'S INVESTMENTS Compaq Computer Corp. 6.8 International Business Machines Corp. 6.7 Intel Corp. 6.2 Texas Instruments, Inc. 5.6 Lotus Development Corp. 4.4 Cisco Systems, Inc. 4.0 Oracle Systems Corp. 3.9 Advanced Micro Devices, Inc. 3.7 Informix Corp. 3.7 Cabletron Systems, Inc. 3.6 TOP INDUSTRIES AS OF FEBRUARY 28, 1994 Row: 1, Col: 1, Value: 32.3 Row: 1, Col: 2, Value: 7.4 Row: 1, Col: 3, Value: 7.9 Row: 1, Col: 4, Value: 11.2 Row: 1, Col: 5, Value: 20.6 Row: 1, Col: 6, Value: 20.6 Prepackaged Computer Software 20.6% Semiconductors 20.6% Datacommunications Equipment 11.2% Mainframe Computers 7.9% Mini & Micro Computers 7.4% All Others 32.3%* * INCLUDES SHORT-TERM INVESTMENTS TECHNOLOGY PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW Harry Lange, Portfolio Manager of Fidelity Select Technology Portfolio Q. HARRY, HOW DID THE FUND PERFORM? A. The fund had a total return of 35.62% for the 12 months ended February 28, 1994. That easily outdistanced the S&P 500, which returned 8.33% during the same period. Q. WHAT ACCOUNTED FOR THE STRONG NUMBERS? A. Technology stocks of many types fell under the Wall Street spotlight this past year, and they didn't disappoint. Speculation surrounding the roles technology companies would play in the building of the information superhighway pushed up stock prices. In addition, the enormous growth of personal computers triggered gains in the stocks of computer-related industries. The fund did well by focusing on datacommunications companies, especially those that manufacture computer networking equipment. Q. WHAT'S THE STORY BEHIND THE NETWORKING COMPANIES? A. Not only are PCs exploding in the workplace, but a bigger portion of them are being tied together through local area networks, or LANs. The companies that sell the building blocks for these networks - hubs, routers and the like - experienced tremendous growth last year. Datacommunications companies like Cisco and Cabletron - both among the fund's top 10 investments at the end of February - helped the fund in 1993. In addition, when businesses set up these networks, they need software. Database software companies like Oracle and Informix were there to fill the need. In late fall, I cut back a bit on the fund's investment in these networking and software stocks. I still believed strongly in their business prospects, but their stock prices compared to other measures like earnings had gotten high enough to make me a bit nervous. Q. WHERE DID YOU TURN YOUR ATTENTION? A. I worked to broaden the fund's investments to take better advantage of the boom in PCs. I added computer manufacturers Compaq and IBM - the fund's top two names on February 28 - as well as several semiconductor companies. IBM was a classic American business turnaround story. The company's technology has always been solid, but now new management appears serious about cutting costs. The stock rose steadily through the fall. Although it has stalled a bit in 1994, I still feel good about the company's comeback. Meanwhile, I can't say enough good things about Compaq. The company has emerged as the leading low-cost PC producer, and has increased its market share by 50% over the past year. The stock has risen dramatically, and I think there's potential for more solid growth in '94. Q. WHAT ABOUT SEMICONDUCTORS? A. The increased demand for PCs, and the need for computers with better memory capacity, have done wonders for the semiconductor industry. This year, Intel is issuing its new state-of-the-art microprocessor, the Pentium, which I think could set the company apart from its competition. Texas Instruments and Advanced Micro Devices are two more companies that should benefit from the need for more semiconductors. Q. DID ANY INVESTMENTS NOT GO YOUR WAY? A. Sure. Although it helped to avoid health-care stocks for most of the year, I consider many of them to be suitable investments for the fund. Pharmaceutical companies, in particular, benefit significantly from technological advances and improvements. By late fall, I felt many of the drug companies had been beaten up so badly they were primed for a rebound. So I invested about 10% of the fund in drug firms like Pfizer, Warner-Lambert and Schering-Plough. However, my timing was poor. Fears that these companies would lose the ability to raise prices under health-care reform continued to keep investors away. I had sold most of the fund's health-care investment by the end of January. Q. WHAT ARE YOUR EXPECTATIONS FOR THE NEXT SIX MONTHS? A. The PC market is the key to performance for many stocks in the fund. That said, I see no signs of a slowdown in the demand for PCs and related equipment, which makes me optimistic about the next several months. Taken separately, computer manufacturers, networkers, software producers, and semiconductor manufacturers are very volatile groups. By diversifying the fund into all of these areas, I hope to limit downside potential should there be a market correction. FUND FACTS START DATE: July 14, 1981 SIZE: as of February 28, 1994, over $202 million MANAGER: Harry Lange, since November 1993; manager, Fidelity Select Electronics Portfolio, since January 1994; Fidelity Select Computers Portfolio, since June 1992; manager, Fidelity Select Capital Goods and Automation Machinery Portfolios, 1988; joined Fidelity in 1987 (checkmark) TECHNOLOGY PORTFOLIO INVESTMENTS FEBRUARY 28, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 93.8% SHARES VALUE (NOTE 1) AEROSPACE & DEFENSE - 0.5% AIRCRAFT & PARTS - 0.5% Hong Kong Aircraft & Engineering Co. (a) 150,000 $ 897,790 43899410 BROADCASTING - 0.9% CABLE TV OPERATORS - 0.0% NTN Communications, Inc. (a) 3,800 30,400 62941030 TELEVISION BROADCASTING - 0.9% Scandinavian Broadcasting Corp. (a) 60,000 1,650,000 80699E92 TOTAL BROADCASTING 1,680,400 CELLULAR - 0.1% CELLULAR & COMMUNICATION SERVICES - 0.1% Advanced Information Services 2,500 87,678 00799793 COMMUNICATIONS EQUIPMENT - 13.0% DATACOMMUNICATIONS EQUIPMENT - 11.2% Cabletron Systems, Inc. (a) 53,700 6,712,500 12692010 Cisco Systems, Inc. (a) 101,200 7,463,500 17275R10 Network General Corp. (a) 187,500 3,890,625 64121010 3Com Corp. (a) 50,000 3,031,250 88553510 21,097,875 TELEPHONE EQUIPMENT - 1.8% Ericsson (L.M.) Telephone Co. Class B ADR 20,000 880,000 29482140 Newbridge Networks Corp. (a) 41,000 2,342,125 65090110 Teledata Communications Ltd. (a) 7,300 105,850 93799992 Zoom Telephonics, Inc. 7,100 83,425 98976E10 3,411,400 TOTAL COMMUNICATIONS EQUIPMENT 24,509,275 COMPUTER SERVICES & SOFTWARE - 21.8% COMPUTER & SOFTWARE STORES - 0.7% Inacom Corp. (a) 67,300 1,177,750 45323G10 Software Spectrum, Inc. (a) 8,000 134,000 83396010 1,311,750 CUSTOM COMPUTER PROGRAMMING SERVICES - 0.2% Progress Software Corp. (a) 7,900 319,950 74331210 CAD/CAM/CAE - 0.3% Chipcom Corp. (a) 6,200 322,400 16961710 Structural Dynamics Research Corp. (a) 20,000 297,500 86355510 619,900 ELECTRONIC INFORMATION RETRIEVAL - 0.0% Quickresponse Services, Inc. (a) 1,500 33,750 74837W10 PREPACKAGED COMPUTER SOFTWARE - 20.6% Brock Control Systems, Inc. (a) 82,400 1,668,600 11162610 Cheyenne Software, Inc. (a) 7,500 301,875 16688810 Corel Systems Corp. (a) 105,800 2,116,784 21868Q10 EICON Technology Corp. (a) 21,000 213,968 28248F10 Fourth Dimension Software (a) 38,000 446,500 35199792 Fourth Shift Corp. 54,000 540,000 35112810 Informix Corp. (a) 294,800 6,927,800 45677910 Lotus Development Corp. (a) 120,000 8,340,000 54570010 MDL Information Systems, Inc. (a) 16,000 124,000 55267R10 Media Logic, Inc. (a) 65,000 260,000 58441B10 Microsoft Corp. (a) 30,000 2,475,000 59491810 Midisoft Corp. (a) 40,000 540,000 59741310 Oracle Systems Corp. (a) 223,800 7,385,400 68389X10 SHARES VALUE (NOTE 1) Sybase, Inc. (a) 60,000 $ 2,707,500 87113010 Systems Software Associates, Inc. (a) 107,900 1,807,325 87183910 VMark Software, Inc. (a) 3,700 56,425 92856110 Wall Data, Inc. (a) 58,200 2,924,550 93204510 38,835,727 TOTAL COMPUTER SERVICES & SOFTWARE 41,121,077 COMPUTERS & OFFICE EQUIPMENT - 26.4% COMPUTER EQUIPMENT - 0.5% Syquest Technology, Inc. (a) 90,000 866,250 87166010 COMPUTER EQUIPMENT - WHOLESALE - 0.7% GBC Technologies, Inc. 83,800 1,173,200 36149F10 Kenfil, Inc. (a) 56,300 119,638 48888310 1,292,838 COMPUTER PERIPHERALS - 1.9% Komag, Inc. (a) 8,400 210,000 50045310 Media Vision Technology, Inc. 86,900 2,693,900 58445H10 Microtouch Systems, Inc. (a) 16,000 232,000 59514510 Radius, Inc. (a) 58,300 415,388 75047010 Western Digital Corp. (a) 6,000 90,750 95810210 3,642,038 COMPUTER RENTAL & LEASING - 0.0% Comdisco, Inc. 3,300 69,300 20033610 COMPUTER STORAGE DEVICES - 0.9% Pinnacle Micro, Inc. (a) 84,500 1,563,250 72346910 Quantum Corp. (a) 2,300 38,813 74790610 1,602,063 COMPUTERS & OFFICE EQUIPMENT - 2.6% Hewlett-Packard Co. 42,800 3,878,750 42823610 Netframe Systems, Inc. (a) 59,600 968,500 64110610 4,847,250 ELECTRONIC COMPUTERS - 1.2% SynOptics Communications, Inc. (a) 35,100 903,825 87160910 TSL Holding, Inc. 10,864 326 87291810 Tricord Systems, Inc. (a) 70,500 1,445,250 89612110 2,349,401 GRAPHICS WORKSTATIONS - 1.5% Sun Microsystems, Inc. (a) 103,900 2,818,288 86681010 MAINFRAME COMPUTERS - 7.9% Amdahl Corp. 381,600 2,241,900 02390510 International Business Machines Corp. 240,000 12,690,000 45920010 14,931,900 MINI & MICRO COMPUTERS - 7.4% Compaq Computer Corp. (a) 130,000 12,837,748 20449310 Digital Equipment Corp. (a) 40,000 1,165,000 25384910 14,002,748 PENS, PENCILS, OFFICE SUPPLIES - 1.8% International Imaging Materials, Inc. (a) 199,700 3,394,900 45968C10 TOTAL COMPUTERS & OFFICE EQUIPMENT 49,816,976 CONSUMER ELECTRONICS - 0.4% RADIOS, TELEVISIONS, STEREOS - 0.4% Odetics, Inc. Class A (a) 66,000 726,000 67606520 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) DEFENSE ELECTRONICS - 0.0% Stanford Telecommunications, Inc. (a) 200 $ 4,150 85440210 DRUGS & PHARMACEUTICALS - 1.0% BIOTECHNOLOGY - 0.8% Applied Immune Sciences, Inc. (a) 1,100 13,475 03820F10 Biogen, Inc. (a) 11,600 508,950 09059710 Genentech, Inc. (redeemable) (a) 20,000 977,500 36871020 1,499,925 DRUGS - 0.2% IMCERA Group, Inc. 11,900 441,788 45245410 Watson Pharmaceuticals, Inc. (a) 400 7,900 94268310 449,688 TOTAL DRUGS & PHARMACEUTICALS 1,949,613 ELECTRICAL EQUIPMENT - 0.5% ELECTRICAL EQUIPMENT, NEC - 0.1% IEC Electronics Corp. (a) 5,000 90,000 44949L10 TV & RADIO COMMUNICATION EQUIPMENT - 0.1% Avid Technology Inc. (a) 12,000 282,000 05367P10 WIRING & LIGHTING - 0.3% Oak Industries, Inc. (a) 27,800 524,726 67140050 TOTAL ELECTRICAL EQUIPMENT 896,726 ELECTRONIC INSTRUMENTS - 3.3% ELECTRONIC EQUIPMENT - 2.8% Credence Systems Corp. (a) 50,000 1,362,500 22530210 GenRad, Inc. (a) 41,500 243,813 37244710 Megatest Corp. (a) 15,800 296,250 58495810 Micro Component Technology, Inc. 600 9,300 59479Q10 Tektronix, Inc. 50,000 1,331,250 87913110 Teradyne, Inc. (a) 70,000 2,021,250 88077010 5,264,363 SEMI-CONDUCTOR CAPITAL EQUIPMENT - 0.5% Applied Materials, Inc. (a) 20,000 950,000 03822210 TOTAL ELECTRONIC INSTRUMENTS 6,214,363 ELECTRONICS - 20.8% ELECTRONICS & ELECTRONIC COMPONENTS - 0.2% GTI Corp. (a) 20,000 410,000 36236010 SEMICONDUCTORS - 20.6% Advanced Micro Devices, Inc. (a) 326,700 7,024,050 00790310 Geotek Industries, Inc. (a) 29,000 351,625 37365410 Intel Corp. 169,000 11,639,875 45814010 LSI Logic Corp. (a) 98,500 1,883,813 50216110 Micron Technology, Inc. 49,300 3,494,138 59511210 National Semiconductor Corp. (a) 20,000 435,000 63764010 Samsung Electronics Co. Ltd. 59,300 3,469,050 79605020 Texas Instruments, Inc. 131,200 10,594,400 88250810 38,891,951 TOTAL ELECTRONICS 39,301,951 LODGING & GAMING - 1.3% RACING & GAMING - 1.3% Video Lottery Technologies, Inc. (a) 120,700 2,444,175 92656M10 MEDICAL EQUIPMENT & SUPPLIES - 0.5% MEDICAL SUPPLIES & APPLIANCES - 0.1% Healthdyne, Inc. (a) 25,000 175,000 42220310 Medical Technology Systems, Inc. (a) 9,800 78,400 58462R50 253,400 SHARES VALUE (NOTE 1) MEDICAL TECHNOLOGY - 0.4% Medtronic, Inc. 10,000 $ 797,500 58505510 TOTAL MEDICAL EQUIPMENT & SUPPLIES 1,050,900 MEDICAL FACILITIES MANAGEMENT - 0.6% HOME HEALTH CARE AGENCIES - 0.2% Abbey Healthcare Group, Inc. (a) 375 9,188 00278610 Homedco Group, Inc. (a) 5,900 209,450 43739A10 Medical Care America, Inc. (a) 7,600 187,150 58450C10 405,788 HOSPITALS - 0.3% Columbia/HCA Healthcare Corp. 2,300 98,900 19767710 Health Management Associates, Inc. Class A (a) 13,050 435,544 42193310 534,444 HOSPITALS, GENERAL MEDICAL - 0.1% Charter Medical Corp. (a) 5,000 116,875 16124170 TOTAL MEDICAL FACILITIES MANAGEMENT 1,057,107 RETAIL & WHOLESALE, MISCELLANEOUS - 1.0% MAIL ORDER - 1.0% Micro Warehouse, Inc. (a) 43,700 1,966,500 59501B10 SERVICES - 0.0% JEWELRY, SILVERWARE, & PLATED WARE - 0.0% Aurora Electronics (a) 7,000 56,875 05162910 TELEPHONE SERVICES - 1.7% MFS Communications, Inc. (a) 3,300 107,250 55272T10 Southwestern Bell Corp. 10,000 391,250 84533310 Telebras "PN" 53,000,000 2,503,190 95499792 US Long Distance Corp. (a) 12,500 132,813 91191220 3,134,503 TOTAL COMMON STOCKS (Cost $144,041,163) 176,916,059 NONCONVERTIBLE PREFERRED STOCKS - 2.9% TELEPHONE SERVICES - 2.9% Stet Societa Finanziaria Telefonica Spa (Cost $3,329,218) 2,435,100 5,427,041 85982592 CONVERTIBLE BONDS - 0.4% PRINCIPAL VALUE (NOTE 1) AMOUNT COMPUTER SERVICES & SOFTWARE - 0.0% PREPACKAGED COMPUTER SOFTWARE - 0.0% Sterling Software, Inc. 5 3/4%, 2/1/03 $ 62,000 78,740 859547AD COMPUTERS & OFFICE EQUIPMENT - 0.4% Data General Corp. 7 3/4%, 6/1/01 770,000 718,025 237688AD TOTAL CONVERTIBLE BONDS (Cost $710,204) 796,765 REPURCHASE AGREEMENTS - 2.9% MATURITY VALUE (NOTE 1) AMOUNT Investments in repurchase agreements (U.S. Treasury obligations), in a joint trading account, at 3.47% dated 2/28/94 due 3/1/94 $ 5,394,520 $ 5,394,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $153,474,585) $ 188,533,865 LEGEND 1. Non-income producing OTHER INFORMATION CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1, 1993, the fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of February 28, 1993 have been reclassified to reflect a decrease in paid in capital of $50,851,723, a decrease in accumulated net investment loss of $4,483,576 and a decrease in accumulated net realized loss on investments of $46,368,147. Purchases and sales of securities, other than short-term securities, aggregated $366,833,149 and $326,571,291, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $93,434 for the period (see Note 4 of Notes to Financial Statements). The maximum loan and average daily loan balances during the periods for which loans were outstanding amounted to $9,217,000 and $3,030,867, respectively. The weighted average interest rate paid was 3.8% (see Note 7 of Notes to Financial Statements). Distribution of investments by country, as a percentage of total value of investment in securities, is as follows: United States 89.3% Italy 2.9 Canada 2.5 Korea 1.8 Brazil 1.3 Others (individually less than 1%) 2.2 TOTAL 100.0% INCOME TAX INFORMATION At February 28, 1994, the aggregate cost of investment securities for income tax purposes was $153,690,083. Net unrealized appreciation aggregated $34,843,782, of which $38,342,131 related to appreciated investment securities and $3,498,349 related to depreciated investment securities. The fund hereby designates $7,397,000 as a capital gain dividend for the purpose of the dividend paid deduction. TECHNOLOGY PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $5,394,000) (cost $153,474,585) $ 188,533,865 (Notes 1 and 2) - See accompanying schedule Cash 915 Receivable for investments sold 708,284 Receivable for fund shares sold 16,704,089 Dividends receivable 210,369 Interest receivable 15,040 Redemption fees receivable (Note 1) 595 Other receivables 227,005 TOTAL ASSETS 206,400,162 LIABILITIES Payable for fund shares redeemed $ 3,649,961 Accrued management fee 105,955 Other payables and accrued expenses 169,587 TOTAL LIABILITIES 3,925,503 NET ASSETS $ 202,474,659 Net Assets consist of (Note 1): Paid in capital $ 149,586,455 Accumulated undistributed net realized gain (loss) on investments 17,828,924 Net unrealized appreciation (depreciation) on investment securities 35,059,280 NET ASSETS, for 4,840,060 shares outstanding $ 202,474,659 NET ASSET VALUE and redemption price per share ($202,474,659 (divided by) 4,840,060 shares) $41.83 Maximum offering price per share (100/97 of $41.83) $43.12
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994 INVESTMENT INCOME $ 143,691 Dividends received in arrears from Unisys Corp. $3.75 Series A Other dividends 924,956 $ 1,068,647 Interest 381,969 TOTAL INCOME 1,450,616 EXPENSES Management fee (Note 4) $ 1,025,784 Transfer agent (Note 4) 1,330,867 Fees Redemption fees (Note 1) (147,719 ) Accounting fees and expenses 164,841 (Note 4) Non-interested trustees' compensation 1,105 Custodian fees and expenses 39,761 Registration fees 45,491 Audit 22,809 Legal 1,474 Interest (Notes 5 and 7) 11,972 Reports to shareholders 26,729 Miscellaneous 2,116 Total expenses before reductions 2,525,230 Expense reductions (Note 8) (12,928 2,512,302 ) NET INVESTMENT INCOME (LOSS) (1,061,686 ) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 20,812,741 Net realized gain (loss) on investment securities Change in net unrealized appreciation (depreciation) on investment securities 26,720,283 NET GAIN (LOSS) 47,533,024 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 46,471,338 OTHER INFORMATION $801,665 Sales charges paid to FDC (Note 4) Deferred sales charges withheld $39,741 by FDC (Note 4) Exchange fees withheld by FSC $126,473 (Note 4)
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS FEBRUARY 28, ENDED 1994 FEBRUARY 28, 1993 Operations $ (1,061,686 $ 496,979 Net investment income (loss) ) Net realized gain (loss) on investments 20,812,741 11,972,913 Change in net unrealized appreciation (depreciation) on investments 26,720,283 5,571,870 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 46,471,338 18,041,762 Distributions to shareholders (436,840 - From net investment income ) From net realized gain (13,053,941 (8,872,686 ) ) TOTAL DISTRIBUTIONS (13,490,781 (8,872,686 ) ) Share transactions 372,847,019 150,298,713 Net proceeds from sales of shares Reinvestment of distributions 13,219,760 8,704,213 Cost of shares redeemed (350,325,262 (141,893,474 ) ) Paid in capital portion of redemption fees (Note 1) 1,063,853 456,675 Net increase (decrease) in net assets resulting from share transactions 36,805,370 17,566,127 TOTAL INCREASE (DECREASE) IN NET ASSETS 69,785,927 26,735,203 NET ASSETS Beginning of period 132,688,732 105,953,529 End of period (including accumulated net investment loss of $0 and $3,981,456, respectively) $ 202,474,659 $ 132,688,732 OTHER INFORMATION Shares Sold 10,038,649 4,802,048 Issued in reinvestment of distributions 415,252 289,369 Redeemed (9,446,149 (4,525,453 ) ) Net increase (decrease) 1,007,752 565,964
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30, FEBRUARY 28, ENDED FEBRUARY 28, SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990 Net asset value, beginning of period $ 34.62 $ 32.44 $ 27.06 $ 20.08 $ 18.37 Income from Investment Operations Net investment income (loss) (.24)F .13G (.26) .14H (.15) Net realized and unrealized gain (loss) on investments 11.04 4.68 5.56 6.46 1.75 Total from investment operations 10.80 4.81 5.30 6.60 1.60 Less Distributions From net investment income (.13) - - - - In excess of net investment income - - (.16) - - From net realized gain (3.70) (2.75) - - - Total distributions (3.83) (2.75) (.16) - - Redemption fees added to paid in capital .24 .12 .24 .38 .11 Net asset value, end of period $ 41.83 $ 34.62 $ 32.44 $ 27.06 $ 20.08 TOTAL RETURND, E 35.62% 16.48% 20.57% 34.76% 9.31% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 202,475 $ 132,689 $ 105,954 $ 117,055 $ 78,535 Ratio of expenses to average net assetsB 1.54% 1.64%A 1.72% 1.83% 2.09% Ratio of expenses to average net assets before expense 1.55% 1.64%A 1.72% 1.83% 2.09% reductionsB Ratio of net investment income (loss) to average net assets (.65)% .52%A (.84)% .61% (.76)% Portfolio turnover rate 213% 259%A 353% 442% 327%
1 ANNUALIZED 2 SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS. 3 NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH PERIOD. 4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 5 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. 6 INVESTMENT INCOME (LOSS) PER SHARE REFLECTS DIVIDENDS RECEIVED IN ARREARS FROM UNISYS CORP. $3.75 SERIES A WHICH AMOUNTED TO $.03 PER SHARE. 7 INVESTMENT INCOME (LOSS) PER SHARE REFLECTS DIVIDENDS RECEIVED IN ARREARS WHICH AMOUNTED TO $.10 PER SHARE. 8 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. TELECOMMUNICATIONS PORTFOLIO PERFORMANCE AND INVESTMENT SUMMARY PERFORMANCE There are several ways to evaluate a fund's historical performance: total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (income) and capital gains (the profits the fund earns when it sells stocks that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND TELECOMMUNICATIONS 21.90% 124.81% 373.41% TELECOMMUNICATIONS (INCL. 3% SALES CHARGE) 18.24% 118.06% 359.20% S&P 500 8.33% 89.60% 222.99% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, five years, or since the fund started on July 29, 1985. You can compare these figures to the performance of the S&P 500 - a common proxy for the U.S. stock market. This benchmark includes reinvested dividends and capital gains, if any. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND TELECOMMUNICATIONS 21.90% 17.59% 19.83% TELECOMMUNICATIONS (INCL. 3% SALES CHARGE) 18.24% 16.87% 19.40% S&P 500 8.33% 13.65% 14.62% AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of growth in the long run and volatility in the short run. Unlike the broader market, however, some sectors may not have a history of growth in the long run. And, as with all stock funds, the share price and return of a fund that invests in a sector will vary. That means if you sell your shares during a sector downturn, you might lose money. But if you can identify a sector that is about to experience rapid growth you may have the potential for above-average gains. (checkmark) $10,000 OVER LIFE OF FUND Select Telecommunications (096) S&P 500 07/29/85 9700.00 10000.00 07/31/85 9612.70 9926.31 08/31/85 9641.80 9841.93 09/30/85 9263.50 9533.88 10/31/85 9612.70 9974.35 11/30/85 10020.10 10658.59 12/31/85 10670.00 11174.46 01/31/86 10893.10 11237.04 02/28/86 11649.70 12077.57 03/31/86 11892.20 12751.50 04/30/86 12348.10 12607.41 05/31/86 12658.50 13278.12 06/30/86 12716.70 13502.52 07/31/86 12095.90 12747.73 08/31/86 12920.40 13693.61 09/30/86 12125.00 12561.15 10/31/86 12745.80 13285.93 11/30/86 12968.90 13608.78 12/31/86 12784.60 13261.75 01/31/87 14394.80 15048.11 02/28/87 15607.30 15642.51 03/31/87 15413.30 16094.58 04/30/87 15180.50 15951.34 05/31/87 15762.50 16090.11 06/30/87 16363.90 16902.66 07/31/87 16878.00 17759.63 08/31/87 17673.40 18422.06 09/30/87 18032.30 18018.62 10/31/87 14860.40 14137.41 11/30/87 13841.90 12972.49 12/31/87 14729.67 13959.69 01/31/88 15417.32 14547.40 02/29/88 15875.76 15225.31 03/31/88 15945.52 14754.84 04/30/88 16463.75 14918.62 05/31/88 16673.03 15048.41 06/30/88 17540.07 15739.14 07/31/88 17290.92 15679.33 08/31/88 16653.10 15146.23 09/30/88 17679.60 15791.46 10/31/88 18038.37 16230.46 11/30/88 18197.82 15998.37 12/31/88 18818.97 16278.34 01/31/89 20346.19 17469.91 02/28/89 20426.57 17034.91 03/31/89 21260.51 17431.83 04/30/89 22868.11 18336.54 05/31/89 24556.09 19079.17 06/30/89 23956.18 18970.42 07/31/89 25774.87 20683.44 08/31/89 26391.20 21088.84 09/30/89 27361.17 21002.38 10/31/89 26391.20 20515.12 11/30/89 27058.06 20933.63 12/31/89 28394.36 21436.04 01/31/90 25315.08 19997.68 02/28/90 25220.81 20255.65 03/31/90 25807.34 20792.42 04/30/90 24288.65 20272.61 05/31/90 26844.25 22249.19 06/30/90 26310.09 22097.90 07/31/90 25105.60 22027.18 08/31/90 22183.42 20035.93 09/30/90 20748.52 19060.18 10/31/90 21471.21 18978.22 11/30/90 22696.64 20204.21 12/31/90 23738.66 20767.91 01/31/91 24582.28 21673.39 02/28/91 25404.53 23223.04 03/31/91 26120.00 23785.03 04/30/91 26675.29 23842.12 05/31/91 26952.94 24872.10 06/30/91 25831.68 23732.96 07/31/91 27294.65 24838.91 08/31/91 28106.23 25427.59 09/30/91 28469.31 25002.95 10/31/91 29590.57 25337.99 11/30/91 28458.63 24316.87 12/31/91 31062.45 27098.72 01/31/92 31105.61 26594.68 02/29/92 31494.03 26940.42 03/31/92 30382.73 26415.08 04/30/92 31526.39 27191.68 05/31/92 31159.56 27324.92 06/30/92 30435.91 26917.78 07/31/92 32069.11 28018.72 08/31/92 31690.56 27444.33 09/30/92 32307.06 27768.18 10/31/92 32631.54 27865.36 11/30/92 34329.63 28815.57 12/31/92 35820.62 29170.00 01/31/93 35710.44 29415.03 02/28/93 37671.70 29815.08 03/31/93 39214.27 30444.17 04/30/93 39297.02 29707.43 05/31/93 40878.84 30503.58 06/30/93 42641.44 30592.05 07/31/93 43884.31 30469.68 08/31/93 47194.84 31624.48 09/30/93 47872.76 31380.97 10/31/93 49251.21 32030.56 11/30/93 45217.56 31726.27 12/31/93 46464.95 32110.15 01/31/94 47405.63 33201.90 02/28/94 45920.00 32298.81 Let's say you invested $10,000 in Fidelity Select Telecommunications Portfolio on July 29, 1985, when the fund started, and paid a 3% sales charge. By February 28, 1994, your investment would have grown to $45,920 - a 359.20% increase. That compares to $10,000 invested in the S&P 500, which would have grown to $32,299 over the same period - a 222.99% increase. INVESTMENT SUMMARY TOP TEN STOCKS AS OF FEBRUARY 28, 1994 % OF FUND'S INVESTMENTS Southwestern Bell Corp. 5.8 Ameritech Corp. 5.5 BellSouth Corp. 5.0 Sprint Corporation 4.9 Motorola, Inc. 4.4 Rogers Communication, Inc. Class B 4.4 Telephone & Data Systems, Inc. 4.1 Pacific Telesis Group 3.3 Telefonos de Mexico SA sponsored ADR 3.1 Vodafone Group PLC sponsored ADR 3.0 TOP INDUSTRIES AS OF FEBRUARY 28, 1994 Row: 1, Col: 1, Value: 19.5 Row: 1, Col: 2, Value: 3.4 Row: 1, Col: 3, Value: 4.3 Row: 1, Col: 4, Value: 5.8 Row: 1, Col: 5, Value: 13.5 Row: 1, Col: 6, Value: 53.5 Telephone Services 52.5% Cellular & Communication Services 13.5% Semiconductors 5.8% Cable TV Operators 4.3% Telephone Equipment 3.4% All Others 20.5%* * INCLUDES SHORT-TERM INVESTMENTS TELECOMMUNICATIONS PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW Fergus Shiel, Portfolio Manager of Fidelity Select Telecommunications Portfolio Q. FERGUS, HOW DID THE FUND PERFORM? A. Quite well. For the year ending February 28, 1994, the fund had a total return of 21.90%. This was more than double the 8.33% return of the S&P 500. Q. WHILE THE FUND HAD A SOLID YEAR OVERALL, ITS PERFORMANCE FELL DRAMATICALLY IN THE PAST SIX MONTHS. WHAT HAPPENED? A. Telecommunications stocks corrected this fall, after hitting their peak near the end of October. Up until this time, investors, spurred on by media coverage of the information superhighway, were pouring money into telecommunication stocks. The information superhighway promised to provide Americans with multimedia technology at home by combining telephone, television, and computer services. The market corrected because many investors realized that the technology and capital needed for this kind of multimedia product were at least several years away. Q. HAVE YOU CHANGED YOUR INVESTMENT STRATEGY IN LIGHT OF THIS MARKET CORRECTION? A. Not really. I've been leery of "hyped" stocks that promised rewards from future technology all year. While I did own some speculative stocks, I took a more conservative path. I invested in companies that were positioned to take advantage of upcoming technological changes but also focused on making money now. For instance, I invested in Motorola, which makes several products crucial to today's cellular industry. Cellular subscribers grew about 40% in the U.S. this year, and more overseas. Motorola is well positioned for future technological changes in a market that could grow even more dramatically over the next year. Q. A LARGE PART OF THE FUND'S INVESTMENT IS IN REGIONAL BELL OPERATING COMPANIES, OR RBOCS. WHY DO THESE STOCKS CONTINUE TO LOOK GOOD? A. I like RBOCs because they potentially offer growth plus dividends. In fact, three of the fund's top stocks are RBOCs - Southwestern Bell, Ameritech, and BellSouth. Each of these companies grew over 10% last year and paid dividends of about 5%. Over the next year, I expect they could to continue to expand their number of telephone lines and cut costs. I should note that the fund has fewer investments in RBOCs than it did a year ago. That's because many of them are acquiring companies that could slow their earnings growth. Q. RIGHT NOW YOU HAVE ABOUT 26% OF THE FUND IN FOREIGN STOCKS. WHERE ARE YOU INVESTING? A. Mostly in Canada and developing countries. Canadian cable companies, like Rogers Communication - a cable, cellular, and long-distance company - have had a great year. In the past, the Canadian government strictly regulated cable companies, but over the last few years they've relaxed restrictions. Now, Canadian cable companies can offer a broader range of services and charge for them. As a result, they have been seeing solid profits. I also have a sizable investment in Telefonos de Mexico and in two Argentinian telephone companies, Telephonica Argentina and Telecom Argentina. Phone companies in developing countries like these are adding telephone lines much faster than companies in developed areas such as the United States or Europe. In addition, since there are fewer existing phone lines, each line typically generates high revenues. This further boosts earnings for these phone companies. Q. WHERE DO YOU SEE THE SECTOR AND THE FUND HEADING OVER THE NEXT YEAR? A. I think the telecommunications industry may be positioned to do well. As a result of technological advancements in the industry, the cost of phone service is down, but usage is up. In general, the amount of money companies make from higher usage can strongly outweigh the effects of price drops. The wild card in this situation is regulation. As long as the government doesn't regulate the telecommunications industry, I think it can thrive. Prices could stay low because of competition, and people would invest more money, resulting in a win-win situation for both telecommunications companies and consumers. However, if government regulations increase, it could negatively affect telecommunications stocks. FUND FACTS START DATE: July 29, 1985 SIZE: as of February 28, 1994, over $371 million MANAGER: Fergus Shiel, since June 1992; manager, Fidelity Select Broadcast and Media Portfolio, February 1993-June 1993; Select Consumer Products 1990-1992; joined Fidelity in 1989 (checkmark) TELECOMMUNICATIONS PORTFOLIO INVESTMENTS FEBRUARY 28, 1994 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 87.2% SHARES VALUE (NOTE 1) ADVERTISING - 0.5% ADVERTISING AGENCIES - 0.5% ADVO-Systems, Inc. 96,800 $ 1,936,000 00758510 BROADCASTING - 6.8% CABLE TV OPERATORS - 4.3% Gaylord Entertainment Co. Class A 95,100 2,579,588 36790110 International Family Entertainment Class B (a) 41,000 794,375 45950M10 Liberty Media Corp. Class A (a) 40,000 915,000 53071530 Time Warner, Inc. 197 8,280 88731510 Viacom, Inc. (a) 151,000 4,945,250 92552410 Viacom, Inc. (non-vtg.) (a) 235,100 6,788,513 92552430 16,031,006 TELEVISION BROADCASTING - 2.5% Grupo Televisa GDS (b) 140,000 9,012,500 40049J20 TOTAL BROADCASTING 25,043,506 CELLULAR - 13.5% CELLULAR & COMMUNICATION SERVICES - 13.5% Call-Net Enterprises Class B (a)(b) 20,000 187,106 13091030 Cellular Communications, Inc. (a): Class P 51,100 2,537,626 15091793 Series A 13,000 627,250 15091710 Cencall Communications Corp. (a) 50,000 1,350,000 15129710 Century Telephone Enterprises, Inc. 180,887 4,703,062 15668610 Dial Page, Inc. 4,000 201,000 25247P10 IDB Communications Group, Inc. 348,100 6,265,800 44935510 LIN Broadcasting Corp. (a) 23,400 2,614,950 53276310 Nextel Communications, Inc. Class A (a) 25,000 1,040,625 65332V10 Pactel Corp. (a) 11,000 259,875 69525210 Rogers Cantel Mobile Communications, Inc. Class B (non-vtg.) (a) 100,600 2,823,435 77510210 Rogers Communications, Inc. Class B (a) 998,500 16,185,395 77510920 Vodafone Group PLC sponsored ADR 123,200 11,134,200 92857T10 49,930,324 COMMUNICATIONS EQUIPMENT - 2.4% DATACOMMUNICATIONS EQUIPMENT - 0.0% Digital Microwave Corp. (a) 4,400 77,000 25385910 TELEPHONE EQUIPMENT - 2.4% ADC Telecommunications, Inc. (a) 8,300 313,325 00088610 Communications Systems, Inc. 82,000 1,045,500 20390010 DSC Communications Corp. (a) 100,300 5,453,813 23331110 Inter-Tel, Inc. (a) 6,500 69,063 45837210 InterVoice, Inc. (a) 10,000 112,500 46114210 Nokia AB Free shares 30,100 1,742,182 65599992 8,736,383 TOTAL COMMUNICATIONS EQUIPMENT 8,813,383 COMPUTER SERVICES & SOFTWARE - 0.7% CAD/CAM/CAE - 0.5% ECI Telecom Ltd. 30,000 735,000 Electronic Information Systems, Inc. 90,500 1,187,813 26825810 1,922,813 DATA PROCESSING - 0.2% Automatic Data Processing, Inc. 10,000 512,630 05301510 Ceridian Corp. (a) 10,000 226,060 15677T10 738,690 TOTAL COMPUTER SERVICES & SOFTWARE 2,661,503 SHARES VALUE (NOTE 1) COMPUTERS & OFFICE EQUIPMENT - 0.4% COMPUTER PERIPHERALS - 0.4% Norand Corp. (a) 45,000 $ 1,406,250 65542110 CONGLOMERATES - 0.5% Mark IV Industries, Inc. 101,000 1,956,875 57038710 ELECTRICAL EQUIPMENT - 1.9% ELECTRICAL EQUIPMENT - WHOLESALE - 0.3% Antec Corp. (a) 35,900 771,850 03664P10 Itel Corp. (a) 9,200 256,450 46564210 1,028,300 ELECTRICAL MACHINERY - 1.3% Philips Electronics (a) 101,100 2,499,493 71833799 Philips NV (a) 86,300 2,135,925 71833750 4,635,418 TV & RADIO COMMUNICATION EQUIPMENT - 0.3% Radiation Systems, Inc. 57,500 1,013,438 75031010 Scientific-Atlanta, Inc. 8,000 216,000 80865510 1,229,438 TOTAL ELECTRICAL EQUIPMENT 6,893,156 ELECTRONICS - 6.5% ELECTRONIC PARTS - WHOLESALE - 0.7% Marshall Industries (a) 45,000 2,430,000 57239310 SEMICONDUCTORS - 5.8% Intel Corp. 40,000 2,755,000 45814010 Motorola, Inc. 160,000 16,340,000 62007610 Texas Instruments, Inc. 30,100 2,430,575 88250810 21,525,575 TOTAL ELECTRONICS 23,955,575 ENGINEERING - 0.9% WATER & SEWER PIPES - 0.9% Glenayre Technologies, Inc. 89,300 3,371,075 37789910 LEASING & RENTAL - 0.5% VIDEO TAPE RENTAL - 0.5% Blockbuster Entertainment Corp. 71,600 1,888,450 09367610 MEDICAL FACILITIES MANAGEMENT - 0.2% HEALTH SERVICES - 0.2% Lambert Communications 200,000 700,000 51328G10 PRINTING - 0.8% MANIFOLD BUSINESS FORMS - 0.8% Reynolds & Reynolds Co. Class A 62,200 2,993,375 76169510 PUBLISHING - 1.4% BOOK PUBLISHING & PRINTING - 1.1% Houghton Mifflin Co. 86,700 4,150,763 44156010 NEWSPAPERS - 0.3% Times Mirror Co., Series A 37,400 1,285,625 88736010 TOTAL PUBLISHING 5,436,388 TELEPHONE SERVICES - 50.2% ALC Communications Corp. (a) 270,000 8,943,750 00157530 ALLTEL Corp. 1,300 35,425 02003910 Ameritech Corp. 509,200 20,431,650 03095410 BellSouth Corp. 329,600 18,375,200 07986010 British Telecommunications PLC ADR 10,000 653,750 11102140 Cincinnati Bell, Inc. 40,000 660,000 17187010 Comsat Corp., Series 1 213,900 5,721,825 20564D10 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) TELEPHONE SERVICES - CONTINUED DDI Corp. Ord. 32 $ 2,665,009 23399J22 GTE Corp. 77,773 2,537,344 36232010 LCI International, Inc. 134,600 4,912,900 50181310 LDDS Communications, Inc. (a) 162,470 4,406,999 50182L10 MFS Communications, Inc. (a) 40,000 1,300,000 55272T10 Nippon Telegraph & Telephone Ord. (a) 442 4,124,798 65462492 Pacific Telesis Group 222,900 12,148,050 69489010 Rochester Telephone Corp. 45,100 1,961,850 77175810 Southern New England Telecommunications Corp. 28,400 898,150 84348510 Southwestern Bell Corp. 548,300 21,452,238 84533310 Sprint Corporation 490,400 18,206,100 85206110 Telebras PN (Pfd. Reg.) 160,700,000 7,589,861 95499792 Telecom Argentina Stet France Class B 945,200 6,050,792 90899992 Telefonica Argentina Class B 643,500 4,891,823 87999D92 Telefonica de Espana SA sponsored ADR 40,000 1,585,000 87938220 Telefonos de Mexico SA sponsored ADR representing shares Ord. Class L 170,000 11,411,250 87940378 Telephone & Data Systems, Inc. 335,946 15,243,550 87943310 U.S. West, Inc. 236,700 9,704,700 91288910 185,912,014 TOTAL COMMON STOCKS (Cost $326,531,850) 322,897,874 PREFERRED STOCKS - 3.3% CONVERTIBLE PREFERRED STOCKS - 0.1% TELEPHONE SERVICES - 0.1% LCI International (a) 10,000 277,500 50181320 NONCONVERTIBLE PREFERRED STOCKS - 3.2% COMMUNICATIONS EQUIPMENT - 1.0% TELEPHONE EQUIPMENT - 1.0% Nokia 66,100 3,706,296 65599910 TELEPHONE SERVICES - 2.2%. Stet Societa Finanziaria Telefonica Spa 3,745,200 8,346,815 85982592 TOTAL NONCONVERTIBLE PREFERRED STOCKS 12,053,111 TOTAL PREFERRED STOCKS (Cost $10,351,906) 12,330,611 CONVERTIBLE BONDS - 0.2% PRINCIPAL VALUE (NOTE 1) AMOUNT COMMUNICATIONS EQUIPMENT - 0.2% TELEPHONE EQUIPMENT - 0.2% Ericsson (L.M.) Telephone Co. 4 1/4%, 6/30/00 (Cost $480,447) $ 345,700 577,319 294821AA REPURCHASE AGREEMENTS - 9.3% MATURITY VALUE (NOTE 1) AMOUNT Investments in repurchase agreements, (U.S. Treasury obligations), in a joint trading account, at 3.47% dated 2/28/94 due 3/1/94 $ 34,561,331 $ 34,558,000 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $371,922,203) $ 370,363,804 LEGEND 1. Non-income producing 2. Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $9,199,606 or 2.5% of net assets. OTHER INFORMATION CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1, 1993, the fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of February 28, 1993 have been restated to reflect an increase in paid in capital of $27,655,078, a decrease in undistributed net investment income of $2,334,320 and a decrease in accumulated net realized gain on investments of $25,320,758. Purchases and sales of securities, other than short-term securities, aggregated $949,256,011 and $783,432,752, respectively. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of Fidelity Management & Research Company. The commissions paid to these affiliated firms were $326,700 for the period (see Note 4 of Notes to Financial Statements). At the period end, the value of securities loaned and the value of collateral amounted to $11,733,763 and $11,179,700, respectively (see Note 6 of Notes to Financial Statements). The maximum loan and average daily loan balances during the periods for which loans were outstanding amounted to $51,745,000 and $36,417,000, respectively. The weighted average interest rate paid was 3.6% (see Note 7 of Notes to Financial Statements). Distribution of investments by country, as a percentage of total value of investment in securities, is as follows: United States 74.4% Mexico 5.5 Canada 5.2 United Kingdom 3.2 Argentina 2.9 Italy 2.2 Brazil 2.0 Finland 1.5 Netherlands 1.2 Japan 1.1 Others (individually less than 1%) 0.8 TOTAL 100.0% INCOME TAX INFORMATION At February 28, 1994, the aggregate cost of investment securities for income tax purposes was $372,868,420. Net unrealized depreciation aggregated $2,504,616, of which $18,143,193 related to appreciated investment securities and $20,647,809 related to depreciated investment securities. The fund hereby designates $14,448,000 as a capital gain dividend for the purpose of the dividend paid deduction. TELECOMMUNICATIONS PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $34,558,000) (cost $371,922,203) $ 370,363,804 (Notes 1 and 2) - See accompanying schedule Cash 404 Receivable for investments sold 25,523,148 Receivable for fund shares sold 2,998,714 Dividends receivable 316,028 Interest receivable 9,795 Redemption fees receivable (Note 1) 1,416 Other receivables 4,553,130 TOTAL ASSETS 403,766,439 LIABILITIES Payable for investments purchased $ 13,491,073 Payable for fund shares redeemed 7,193,132 Accrued management fee 199,750 Other payables and accrued expenses 677,606 Collateral on securities loaned, at value (Note 6) 11,179,700 TOTAL LIABILITIES 32,741,261 NET ASSETS $ 371,025,178 Net Assets consist of (Note 1): Paid in capital $ 337,374,817 Undistributed net investment income 1,033,664 Accumulated undistributed net realized gain (loss) on investments 34,175,096 Net unrealized appreciation (depreciation) on investment securities (1,558,399 ) NET ASSETS, for 9,999,591 shares outstanding $ 371,025,178 NET ASSET VALUE and redemption price per share ($371,025,178 (divided by) 9,999,591 shares) $37.10 Maximum offering price per share (100/97 of $37.10) $38.25
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994 INVESTMENT INCOME $ 6,817,001 Dividends Interest (including security lending fees of $21,143) (Note 6) 849,995 TOTAL INCOME 7,666,996 EXPENSES Management fee (Note 4) $ 2,219,724 Transfer agent (Note 4) 2,848,274 Fees Redemption fees (Note 1) (342,354 ) Accounting and security lending fees (Note 4) 355,887 Non-interested trustees' compensation 2,220 Custodian fees and expenses 113,442 Registration fees 109,848 Audit 48,771 Legal 2,517 Interest (Note 7) 10,838 Reports to shareholders 61,864 Miscellaneous 2,751 Total expenses before reductions 5,433,782 Expense reductions (Note 8) (41,286 5,392,496 ) NET INVESTMENT INCOME 2,274,500 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 68,364,890 Net realized gain (loss) on investment securities Change in net unrealized appreciation (depreciation) on investment securities (16,004,271 ) NET GAIN (LOSS) 52,360,619 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 54,635,119 OTHER INFORMATION $6,400,493 Sales charges paid to FDC (Note 4) Deferred sales charges withheld $41,417 by FDC (Note 4) Exchange fees withheld by FSC $292,778 (Note 4)
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED TEN MONTHS FEBRUARY 28, ENDED 1994 FEBRUARY 28, 1993 Operations $ 2,274,500 $ 914,573 Net investment income Net realized gain (loss) on investments 68,364,890 11,667,033 Change in net unrealized appreciation (depreciation) on investments (16,004,271 4,830,788 ) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 54,635,119 17,412,394 Distributions to shareholders (1,564,699 (516,255 From net investment income ) ) From net realized gain (37,644,735 (1,452,335 ) ) TOTAL DISTRIBUTIONS (39,209,434 (1,968,590 ) ) Share transactions 778,655,072 147,602,753 Net proceeds from sales of shares Reinvestment of distributions 38,499,190 1,929,056 Cost of shares redeemed (596,254,864 (109,331,842 ) ) Paid in capital portion of redemption fees (Note 1) 361,815 161,883 Net increase (decrease) in net assets resulting from share transactions 221,261,213 40,361,850 TOTAL INCREASE (DECREASE) IN NET ASSETS 236,686,898 55,805,654 NET ASSETS Beginning of period 134,338,280 78,532,626 End of period (including undistributed net investment income of $1,033,664 and $2,911,193, respectively) $ 371,025,178 $ 134,338,280 OTHER INFORMATION Shares Sold 19,999,193 4,784,069 Issued in reinvestment of distributions 1,056,452 61,818 Redeemed (14,984,685 (3,605,042 ) ) Net increase (decrease) 6,070,960 1,240,845
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30, FEBRUARY 28, ENDED FEBRUARY 28, SELECTED PER-SHARE DATAC 1994 1993 1992 1991 1990 Net asset value, beginning of period $ 34.19 $ 29.22 $ 24.98 $ 23.19 $ 22.76 Income from Investment Operations Net investment income .25 .29 .36 .31 .46 Net realized and unrealized gain (loss) on investments 7.00 5.29 4.13 1.86 1.02 Total from investment operations 7.25 5.58 4.49 2.17 1.48 Less Distributions From net investment income (.20) (.18) (.28) (.43) (.12) From net realized gain (4.18) (.48) - - (.98) Total distributions (4.38) (.66) (.28) (.43) (1.10) Redemption fees added to paid in capital .04 .05 .03 .05 .05 Net asset value, end of period $ 37.10 $ 34.19 $ 29.22 $ 24.98 $ 23.19 TOTAL RETURND, E 21.90% 19.49% 18.19% 9.83% 6.21% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 371,025 $ 134,338 $ 78,533 $ 55,162 $ 77,019 Ratio of expenses to average net assetsB 1.53% 1.74%A 1.90% 1.97% 1.85% Ratio of expenses to average net assets before expense 1.54% 1.74%A 1.90% 1.97% 1.85% reductionsB Ratio of net investment income to average net assets .64% 1.16%A 1.32% 1.35% 1.83% Portfolio turnover rate 241% 115%A 20% 262% 341%
1 ANNUALIZED 2 SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS. 3 NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING EACH PERIOD. 4 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 5 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. [TEXT] MONEY MARKET PORTFOLIO PERFORMANCE PERFORMANCE To measure a money market fund's performance, you can look at either total return or yield. Total return reflects both the change in a fund's share price over a given period, and reinvestment of its dividends (or income). Yield measures the income paid by a fund. Since a money market fund tries to maintain a $1 share price, yield is an important measure of performance. CUMULATIVE TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND MONEY MARKET 2.62% 30.84% 64.53% MONEY MARKET (INCL. 3% SALES CHARGE) -0.46% 26.92% 59.59% Average All Taxable Money Market Fund 2.69% 30.56% 63.67% Consumer Price Index 2.52% 20.64% 35.83% CUMULATIVE TOTAL RETURNS reflect actual performance over a specific period. In this case, past one year, five years, or since the fund started on August 30, 1985. For example, if you invested $1,000 in a fund that had a 5% return over the past year, you would end up with $1,050. Comparing the fund's performance to the consumer price index helps show how your investment did compared to inflation. To measure how the fund stacked up against its peers, you can compare its return to the average taxable money market fund's total return. This average currently reflects the performance of 644 money market funds tracked by IBC/Donoghue's MONEY FUND REPORT.(Registered trademark) (The periods covered by the CPI numbers are the closest available match to those covered by the fund.) AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED PAST 1 PAST 5 LIFE OF FEBRUARY 28, 1994 YEAR YEARS FUND MONEY MARKET 2.62% 5.52% 6.03% MONEY MARKET (INCL. 3% SALES CHARGE) -0.46% 4.88% 5.65% Average All Taxable Money Market Fund 2.69% 5.48% 6.44% Consumer Price Index 2.52% 3.82% 3.67% AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had achieved that return by performing at a constant rate each year. YIELD Row: 1, Col: 1, Value: 2.28 Row: 1, Col: 2, Value: 2.71 Row: 1, Col: 3, Value: 2.63 Row: 2, Col: 1, Value: 2.79 Row: 2, Col: 2, Value: 2.62 Row: 2, Col: 3, Value: 2.48 Row: 3, Col: 1, Value: 2.53 Row: 3, Col: 2, Value: 2.64 Row: 3, Col: 3, Value: 2.42 Row: 4, Col: 1, Value: 2.37 Row: 4, Col: 2, Value: 2.69 Row: 4, Col: 3, Value: 2.35 Row: 5, Col: 1, Value: 2.45 Row: 5, Col: 2, Value: 2.79 Row: 5, Col: 3, Value: 2.3 4% - 3% - 2% - 1% - 0% Money Market Average All Taxable Money Market Fund MMDA 2/28/93 5/31/93 8/31/93 11/30/93 2/28/94 Money Market 2.88% 2.79% 2.53% 2.37% 2.45% Average All Taxable Money Market Fund 2.71% 2.62% 2.64% 2.69% 2.79% MMDA 2.63% 2.48% 2.42% 2.35% 2.30% YIELD refers to the income paid by the fund over a given period. Yields for money market funds are usually for seven-day periods, expressed as annual percentage rates. A yield that assumes income earned is reinvested or compounded is called an effective yield. The chart above shows the fund's current seven-day yield at quarterly intervals over the past year. This is compared to similar yields for the average all taxable money market fund and the average bank money market deposit account (MMDA). Figures for the average taxable money market fund are from the IBC/Donoghue's MONEY FUND REPORT.(Registered trademark) The MMDA average is supplied by BANK RATE MONITOR.(double dagger) COMPARING PERFORMANCE There are some important differences between a bank money market deposit account (MMDA) and a money market fund. First, the U.S. government neither insures nor guarantees a money market fund. In fact, there is no assurance that a money fund will maintain a $1 share price. Second, a money market fund returns to its shareholders income earned by the fund's investments after expenses. This is in contrast to banks, which set their MMDA rates periodically based on current interest rates, competitors' rates, and internal criteria. (checkmark) MONEY MARKET PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW John Todd, Portfolio Manager of Fidelity Select Money Market Portfolio Q. JOHN, HOW HAVE SHORT-TERM INTEREST RATES BEHAVED WITHIN THE PAST SIX MONTHS? A. Short-term rates moved within a narrow range from the end of August through the end of October. During this time, the Federal Reserve felt comfortable maintaining a steady monetary policy. The federal funds rate - the rate banks charge each other for overnight loans - remained at or near 3%, where it had been since September 1992. Through September and into October, market interest rates generally fell. I kept the fund's average maturity on the long side - 70 to 80 days - because I'd been locking in higher yields while they were still available. Then in November, two factors caused me to shorten the fund's average maturity. First, stronger economic data were causing forecasts of fourth quarter growth to be revised upward. Scaling back the average maturity provided me greater flexibility to respond to future rate changes. Second, year-end pressures were inching up yields. As often happens in December, issuers are forced to offer more attractive yields on debt instruments with maturities that extend into the new year. Shortening the fund's average maturity to 64 days by the end of November allowed me to take advantage of this buying opportunity. Q. YOU THEN ROLLED BACK THE AVERAGE MATURITY TO 55 DAYS BY THE END OF JANUARY. WHY? A. I felt that the economy had more momentum than many people thought, and that inflation fears would soon play more of a role in the short-term market. The fourth quarter economic numbers turned out to be strong. In addition, Federal Reserve Chairman Alan Greenspan implied again in public testimony that a rise in short-term rates was inevitable. All of this caused me to shorten the fund's average maturity through January. Then on February 4, the Fed raised the fed funds rate a quarter of a point to 3.25%, the first hike in short-term interest rates in five years. Q. WHAT DID THE FED'S TIGHTENING OF MONETARY POLICY MEAN TO THE FUND? A. Because I had shortened the average maturity through January, the fund was pretty well prepared. My neutral stance allowed me to capture some of the higher-yielding instruments that came to market after the rate increase. That caused the average maturity to extend to 64 days by the end of February. Q. GIVEN THOSE CONDITIONS, HOW DID THE FUND PERFORM? A. Despite February's rate hike, the fund's seven-day yield was 2.45% on February 28, 1994. That's down slightly from a year ago, when the yield was 2.88%. The similarity of these numbers reflects a year of mostly stable interest rates. The fund's total return for the 12 months ended February 28 was 2.62%. The average total return for all taxable money funds tracked by IBC/Donoghue was 2.69% during the same period. Q. HOW DO YOU SEE THE NEXT SIX MONTHS SHAPING UP? A. Since inflation doesn't appear to be a serious threat, I don't expect the Fed to raise interest rates quickly and sharply. Instead, I anticipate a policy of measured, gradual moves to push rates in an upward direction. I plan to keep the fund's average maturity in the 55 to 70 day range. That will give me the flexibility to respond to rising rates, while allowing me to capture a portion of the higher yields available from issues with longer maturities. In addition, the fund had a 15.9% stake in variable and floating rate securities at the end of February. I'll probably keep the fund at about that level, or higher, based on the availability of attractively priced issues. Q. HOW DO VARIABLE RATE INSTRUMENTS WORK? A. Variable and floating rate instruments generally have longer stated maturities. That requires a longer-term commitment to the issuer, which results in a somewhat higher yield for the buyer. The advantage comes in the form of stated, periodic interest rate resets. The frequency of these resets can be negotiated - for example, they often happen weekly, monthly or quarterly. When rates are rising, the fund can obtain a higher stated interest rate on these issues at their reset intervals. FUND FACTS START DATE: August 30, 1985 SIZE: as of February 28, 1994, over $518 million MANAGER: John Todd, since January 1991; manager, Fidelity Spartan Money Market Fund, since 1989; Daily Money Fund and Fidelity Institutional Cash Portfolios: Money Market, since 1992; joined Fidelity in 1981 (checkmark) MONEY MARKET PORTFOLIO INVESTMENTS FEBRUARY 28, 1994 Showing Percentage of Total Value of Investment in Securities BANKERS' ACCEPTANCES - 3.9% ANNUALIZED YIELD DUE AT TIME OF PRINCIPAL VALUE DATE PURCHASE AMOUNT (NOTE 1) DOMESTIC BANKERS' ACCEPTANCES - 0.4% CORESTATES BANK OF DELAWARE, N.A. 3/30/94 3.41% $ 2,000,000 $ 1,994,571 2186989C NEW YORK BRANCH, YANKEE DOLLAR, FOREIGN BANKS - 3.5% SAKURA BANK, LTD. 3/1/94 3.42 6,000,000 6,000,000 793999KK 3/11/94 3.43 5,200,000 5,195,060 793999KL 4/12/94 3.52 7,900,000 7,867,742 793999KN 19,062,802 TOTAL BANKERS' ACCEPTANCES 21,057,373 CERTIFICATES OF DEPOSIT - 22.3% DOMESTIC CERTIFICATES OF DEPOSIT - 0.6% HUNTINGTON NATIONAL BANK 3/1/94 3.68 3,000,000 2,993,419 4464389H NEW YORK BRANCH, YANKEE DOLLAR, FOREIGN BANKS - 20.8% CANADIAN IMPERIAL BANK OF COMMERCE 4/6/94 3.27 20,000,000 20,000,000 136990ED CREDIT LYONNAIS 3/31/94 3.42 11,000,000 10,998,553 227993NN CREDIT SUISSE 6/1/94 3.31 7,000,000 7,005,564 225991BS GENERALE BANK 6/3/94 3.25 20,000,000 20,000,517 371995CA KINGDOM OF SWEDEN 3/23/94 3.08 21,000,000 21,000,000 998999AV SAKURA BANK, LTD. 3/28/94 3.50 5,000,000 5,000,000 793999KU SOCIETE GENERALE 4/18/94 3.41 10,000,000 9,999,542 833991SR 4/25/94 3.43 15,000,000 15,000,000 833991SK SWEDISH NATIONAL HOUSING FINANCE CORP. 5/23/94 3.65 4,000,000 4,000,000 956995AM 113,004,176 LONDON BRANCH, EURODOLLAR, FOREIGN BANKS - 0.9% ABN-AMRO BANK 4/7/94 3.37 5,000,000 5,000,203 032993KQ TOTAL CERTIFICATES OF DEPOSIT 120,997,798 COMMERCIAL PAPER - 48.9% ABN-AMRO NORTH AMERICA, N.V. 6/3/94 3.54 10,000,000 9,908,611 03299BAL ABBEY NATIONAL PLC, UK 4/4/94 3.45 5,000,000 4,983,803 007994GQ 4/4/94 3.47 1,000,000 996,742 007994GR ASSOCIATES CORPORATION OF NORTH AMERICA 3/15/94 3.43 15,000,000 14,980,050 045992UL BANC ONE CORP. 4/14/94 3.47 15,000,000 14,936,750 059995BE COMMERZBANK U.S. FINANCE, INC. 7/15/94 3.60 8,650,000 8,533,994 202995AR CORPORATE ASSET FUNDING COMPANY, INC. 3/10/94 3.38 5,000,000 4,995,788 1769922W ANNUALIZED YIELD DUE AT TIME OF PRINCIPAL VALUE DATE PURCHASE AMOUNT (NOTE 1) DEN DANSKE CORPORATION, INC. 4/8/94 3.47% $ 25,000,000 $ 24,908,958 250998ED DRESDNER U.S. FINANCE INC. 5/19/94 3.43 10,000,000 9,926,047 261998AC FORD MOTOR CREDIT PLC 4/6/94 3.28 5,000,000 4,983,750 34599DAE GTE CORPORATION 3/7/94 3.44 1,000,000 999,428 362991CP GENERAL ELECTRIC CAPITAL CORPORATION 3/30/94 3.39 10,000,000 9,973,014 369998KW GENERAL MOTORS ACCEPTANCE CORPORATION 3/30/94 3.51 7,000,000 6,980,264 638998PK 5/31/94 3.75 15,000,000 14,858,950 638998PR GOLDMAN SACHS GROUP, L.P. (THE) 3/7/94 3.30 10,000,000 9,994,583 696992HG HYPO U.S. FINANCE 4/14/94 3.38 10,000,000 9,959,178 07299DAB HANSON FINANCE 3/4/94 3.38 15,000,000 14,995,788 41199AAQ J.P. MORGAN & CO. 3/1/94 3.50 5,000,000 5,000,000 61799HBH MCI COMMUNICATIONS CORP. 3/1/94 3.45 10,000,000 10,000,000 5526739V MERRILL LYNCH & CO., INC. 3/30/94 3.41 4,606,000 4,593,385 59099A9K MORGAN STANLEY GROUP, INC. 4/26/94 3.60 20,000,000 19,888,622 61799EJY NEW CENTER ASSET TRUST 3/7/94 3.41 10,000,000 9,994,367 643995AS 3/21/94 3.41 5,000,000 4,990,611 643995AX NEW SOUTH WALES TREASURY CORP. 8/30/94 3.83 5,000,000 4,903,186 PHH CORPORATION 3/11/94 3.38 4,900,000 4,895,413 699990XK PARIBAS FINANCE, INC. 5/2/94 3.50 5,000,000 4,970,076 719993AE PRINCIPAL MUTUAL LIFE INSURANCE COMPANY 3/11/94 3.38 5,000,000 4,995,319 742992JS RABOBANK U.S.A. FINANCIAL CORPORATION 6/23/94 3.54 5,936,000 5,870,209 749995AD REPUBLIC NEW YORK CORP. 4/4/94 3.44 5,000,000 4,983,850 7607199J SEARS ROEBUCK ACCEPTANCE CORP. 3/14/94 3.51 1,000,000 998,736 81299ECJ WEYERHAEUSER COMPANY 3/8/94 3.38 5,000,000 4,996,724 962993BW WHIRLPOOL FINANCIAL CORPORATION 3/22/94 3.46 7,650,000 7,634,604 963999AG TOTAL COMMERCIAL PAPER 265,630,800 FEDERAL AGENCIES - 5.6% ANNUALIZED YIELD DUE AT TIME OF PRINCIPAL VALUE DATE PURCHASE AMOUNT (NOTE 1) FEDERAL FARM CREDIT BANK - AGENCY COUPONS - 0.8% 3/10/98 5.05%(a) $ 4,350,000 $ 4,352,135 313993NH FEDERAL FARM CREDIT BANK - DISCOUNT NOTES - 1.2% 5/3/94 3.42 6,535,000 6,496,117 313993NJ FEDERAL HOME LOAN BANK - DISCOUNT NOTES - 1.8% 6/16/94 3.37 10,000,000 9,997,648 567995GP FEDERAL HOME LOAN MORTGAGE CORP. - DISCOUNT NOTES - 0.5% 9/29/94 3.32 2,900,000 2,844,497 355993PU FEDERAL NATIONAL MORTGAGE ASSOC. - DISCOUNT NOTES - 1.3% 7/6/94 3.47 7,000,000 6,916,039 9931164R TOTAL FEDERAL AGENCIES 30,606,436 MEDIUM-TERM NOTES (A) - 8.5% ABBEY NATIONAL PLC, UK 6/24/94 3.49 5,000,000 5,000,000 007994GK ABBEY NATIONAL TREASURY SERVICE 9/30/94 3.36 15,000,000 15,000,000 010998AJ GENERAL MOTORS ACCEPTANCE CORPORATION 5/7/94 3.49 5,000,000 5,000,000 638998PF GOLDMAN SACHS GROUP, L.P. (THE) (B) 6/16/94 3.47 4,000,000 4,000,000 696992KB 9/1/94 3.47 4,000,000 4,000,000 696992KB NORTHERN TRUST COMPANY 8/1/94 3.85 5,250,000 5,363,939 6658579B NORWEST CORPORATION 3/15/94 3.37 8,000,000 8,000,000 66899CBK TOTAL MEDIUM-TERM NOTES 46,363,939 SHORT-TERM NOTES (A) - 7.4% J.P. MORGAN SECURITIES 3/1/94 3.75 10,000,000 10,000,000 616998EC 3/1/94 3.77 5,000,000 5,000,000 616998AW MORGAN STANLEY GROUP, INC. 3/1/94 3.70 5,000,000 5,000,000 61799EJQ SMM TRUST COMPANY (1993-F) (C) 5/15/94 3.61 20,000,000 20,000,000 7845689T TOTAL SHORT-TERM NOTES 40,000,000 MUNICIPAL SECURITIES - 0.9% LOS ANGELES COUNTY CALIFORNIA TRANSPORTATION COMMISSION 4/11/94 3.45 4,600,000 4,600,000 616998EC REPURCHASE AGREEMENTS - 2.5% MATURITY VALUE AMOUNT (NOTE 1) In a joint trading account (U.S. Treasury Obligations) dated 2/28/94, due 3/1/94 At 3.47% $ 8,001 $ 8,000 99799MXK At 3.50% 874,085 874,000 99799MXL At 3.51% 12,933,261 12,932,000 99799MXJ TOTAL REPURCHASE AGREEMENTS 13,814,000 TOTAL INVESTMENTS - 100% $ 543,070,346 TOTAL COST FOR INCOME TAX PURPOSES - $543,070,346 LEGEND 1. The coupon rate shown on floating or adjustable rate securities represents the rate at period end. 2. Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $8,000,000 or 1.5% of net assets. 3. Restricted securities - Investment in securities not registered under the Securities Act of 1933 (see Note 2 of Notes to Financial Statements). Additional information on each holding is as follows: ACQUISITION ACQUISITION SECURITY DATE COST SMM Trust Company (1993-F) 11/12/93 $ 20,000,000 OTHER INFORMATION CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1, 1993, the fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of February 28, 1993 have been reclassified to reflect an increase in paid in capital and an increase in accumulated net realized loss of $5,258. INCOME TAX INFORMATION At February 28, 1994, the fund had a capital loss carryforward of approximately $65,000 of which $2,000, $31,000, $5,000 $21,000 and $6,000 will expire on February 28, 1996, 1997, 1998, 2000 and 2002, respectively. MONEY MARKET PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994 ASSETS Investment in securities, at value (including repurchase agreements of $13,814,000) (Notes 1 and 2) - See $ 543,070,346 accompanying schedule Share transactions in process 115,909,654 Interest receivable 1,493,886 TOTAL ASSETS 660,473,886 LIABILITIES Payable for investments purchased $ 4,903,186 Share transactions in process 136,608,587 Dividends payable 33,703 Accrued management fee 51,364 Other payables and accrued expenses 220,178 TOTAL LIABILITIES 141,817,018 NET ASSETS $ 518,656,868 Net Assets consist of (Note 1): Paid in capital $ 518,721,537 Accumulated net realized gain (loss) on investments (64,669 ) NET ASSETS, for 518,716,279 shares outstanding $ 518,656,868 NET ASSET VALUE, offering price and redemption price per share ($518,656,868 (divided by) 518,716,279 shares) $1.00 Maximum offering price per share (100/97 of $1.00) $1.03
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994 INTEREST INCOME $ 15,290,233 EXPENSES Management fee (Note 4) $ 609,866 Transfer agent fees (Note 4) 2,285,303 Accounting fees and expenses 81,066 (Note 4) Non-interested trustees' compensation 6,055 Custodian fees and expenses 28,673 Registration fees 186,049 Audit 61,635 Legal 4,275 Shareholder Reports 46,916 Miscellaneous 6,350 TOTAL EXPENSES 3,316,188 NET INTEREST INCOME 11,974,045 NET REALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) (5,966 ) NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 11,968,079 OTHER INFORMATION $3,315,583 Sales charges paid to FDC (Note 4) Deferred sales charges withheld $352,738 by FDC (Note 4)
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED TEN MONTHS FEBRUARY 28, ENDED 1994 FEBRUARY 28, 1993 INCREASE (DECREASE) IN NET ASSETS Operations $ 11,974,045 $ 12,692,694 Net interest income Net realized gain (loss) on investments (5,966) 4,670 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 11,968,079 12,697,364 Dividends to shareholders from net interest income (11,974,045) (12,692,694) Share transactions at net asset value of $1.00 per share 4,535,732,020 2,600,580,695 Proceeds from sales of shares Reinvestment of dividends from net interest income 10,826,362 11,783,587 Cost of shares redeemed (4,459,028,175) (2,723,856,195) Net increase (decrease) in net assets and shares resulting from share transactions 87,530,207 (111,491,913) TOTAL INCREASE (DECREASE) IN NET ASSETS 87,524,241 (111,487,243) NET ASSETS Beginning of period 431,132,627 542,619,870 End of period $ 518,656,868 $ 431,132,627
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
YEAR ENDED TEN MONTHS YEARS ENDED APRIL 30, FEBRUARY 28, ENDED FEBRUARY 28, SELECTED PER-SHARE DATA 1994 1993 1992 1991 1990 Net asset value, beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 Income from Investment Operations .026 .026 .048 .073 .081 Net interest income Less Distributions (.026) (.026) (.048) (.073) (.081) From net interest income Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 TOTAL RETURN(dagger) 2.62% 2.63% 4.93% 7.50% 8.45% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 518,657 $ 431,133 $ 542,620 $ 608,394 $ 643,272 Ratio of expenses to average net assets .72% .56%* .64% .73% .83% Ratio of net interest income to average net assets 2.59% 3.09%* 4.84% 7.20% 8.13% * ANNUALIZED. (dagger) THE TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
NOTES TO FINANCIAL STATEMENTS For the period ended February 28, 1994 1. SIGNIFICANT ACCOUNTING POLICIES. Fidelity Select Portfolios (the trust) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The trust has thirty-five equity funds (the fund or the funds) which invest primarily in securities of companies whose principal business activities fall within specific industries, and a money market fund which invests in high quality money market instruments. Each fund is authorized to issue an unlimited number of shares. The American Gold Portfolio and the Precious Metals and Minerals Portfolio may also invest in certain precious metals. The following summarizes the significant accounting policies of the funds: SECURITY VALUATION: EQUITY FUNDS. Securities for which exchange quotations are readily available are valued at the last sale price, or if no sale price, at the closing bid price. Securities (including restricted securities) for which exchange quotations are not readily available (and in certain cases debt securities which trade on an exchange), are valued primarily using dealer-supplied valuations or at their fair value as determined in good faith following consistently applied procedures under the general supervision of the Board of Trustees. Short-term securities maturing within sixty days are valued at amortized cost or original cost plus accrued interest, both of which approximate current value. Direct investments in precious metals in the form of bullion are valued at the most recent bid price quoted by a major bank on the New York Commodities Exchange. MONEY MARKET FUND. As permitted under Rule 2a-7 of the 1940 Act, and certain conditions therein, securities are valued initially at cost and thereafter assume a constant amortization to maturity of any discount or premium. FOREIGN CURRENCY TRANSLATION. The accounting records of each fund are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the current exchange rate. Purchases and sales of securities, income receipts and expense payments are translated into U.S. dollars at the exchange rate on the dates of the transactions. It is not practical to identify the portion of each amount shown in each fund's Statement of Operations under the caption "Realized and Unrealized Gain (Loss) on Investments" that arises from changes in foreign currency exchange rates. Investment income includes net realized and unrealized currency gains and losses recognized between accrual and payment dates. INCOME TAXES. As a qualified regulated investment company under Subchapter M of the Internal Revenue Code, each fund is not subject to income taxes to the extent that it distributes all of its taxable income for the fiscal year. The schedules of investments include information regarding income taxes under the caption "Income Tax Information." INVESTMENT INCOME: EQUITY FUNDS. Dividend income is recorded on the ex-dividend date, except certain dividends from foreign securities where the ex-dividend date may have passed, are recorded as soon as the funds are informed of the ex-dividend date. Interest income, which includes accretion of original issue discount, is accrued as earned. Dividend and interest income is recorded net of foreign taxes where recovery of such taxes is not assured. MONEY MARKET FUND. Interest income, which includes amortization of premium and accretion of discount, is accrued as earned. EXPENSES. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned between the funds in the trust. DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid monthly from net interest income for the money market fund. Distributions are recorded on the ex-dividend date, for all other funds. Income and capital gain distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These differences are primarily due to differing treatments for partnerships, non-taxable dividends, net operating losses, expiring capital loss carryforwards and losses deferred due to wash sales and excise tax regulations. The funds also utilized earnings and profits distributed to shareholders on redemption of shares as a part of the dividends paid deduction for income tax purposes. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications to paid in capital. REDEMPTION FEES. Shares redeemed (including exchanges) from an equity fund are subject to redemption fees. Shares held less than 30 days are subject to a short-term redemption fee equal to .75% of the net asset value of shares redeemed. Shares held 30 days or more are subject to a long-term redemption fee equal to the lesser of $7.50 or .75% of the net asset value of shares redeemed. The long-term redemption fee and the first $7.50 of the short-term redemption fee are accounted for as a reduction of transfer agent expenses. This portion of the redemption fee is used to offset the transaction costs and other expenses that short-term trading imposes on each fund and its shareholders. The remainder of the short-term redemption fee is accounted for as an addition to paid in capital. SECURITY TRANSACTIONS. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. 1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1, 1993, the funds adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the funds changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. The effect of the change in classification is shown under the caption "Other Information" on each fund's schedule of investments. 2. OPERATING POLICIES. FORWARD FOREIGN CURRENCY CONTRACTS. The equity funds may enter into forward foreign currency contracts. These contracts involve market risk in excess of the amount reflected in each fund's Statement of Assets and Liabilities. The face or contract amount in U.S. dollars reflects the total exposure each fund has in that particular currency contract. The U.S. dollar value of forward foreign currency contracts is determined using forward currency exchange rates supplied by a quotation service. Losses may arise due to changes in the value of the foreign currency or if the counterparty does not perform under the contract. Purchases and sales of forward foreign currency contracts having the same settlement date and broker are offset and presented net on the Statement of Assets and Liabilities. Gain (loss) on the purchase or sale of forward foreign currency contracts having the same settlement date and broker is recognized on the date of offset, otherwise gain (loss) is recognized on settlement date. REPURCHASE AGREEMENTS. The funds, through their custodian, receive delivery of the underlying securities, whose market value is required to be at least 102% of the resale price at the time of purchase. The funds' investment adviser, Fidelity Management & Research Company (FMR), is responsible for determining that the value of these underlying securities remains at least equal to the resale price. JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (SEC), the funds, along with other registered investment companies having management contracts with FMR, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Federal Agency obligations. INTERFUND LENDING PROGRAM. Pursuant to an Exemptive Order issued by the SEC, the funds, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating funds. DELAYED DELIVERY TRANSACTIONS. Each fund may purchase or sell securities on a when-issued or forward commitment basis. Payment and delivery may take place a month or more after the date of the transaction. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. Each fund identifies securities as segregated in its custodial records with a value at least equal to the amount of the purchase commitment. INDEXED SECURITIES. The funds may invest in indexed securities whose value is linked either directly or inversely to changes in foreign currencies, interest rates, commodities, indices, or other reference instruments. Indexed securities may be more volatile than the reference instrument itself, but any loss is limited to the amount of the original investment. RESTRICTED SECURITIES. The Biotechnology Portfolio and Money Market Portfolio are permitted to invest in privately placed restricted securities. These securities may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. At the end of the period, restricted securities (excluding 144A issues) amounted to $1,093,750 and $20,000,000 or 0.2% and 3.9% of the net assets of the Biotechnology Portfolio and Money Market Portfolio, respectively. 3. JOINT TRADING ACCOUNT. At the end of the period, the following funds had 20% or more of their total investments in repurchase agreements through a joint trading account. These repurchase agreements were with entities whose creditworthiness has been reviewed and found satisfactory by FMR. The repurchase agreements were dated February 28, 1994 and due March 1, 1994. The maturity values of the joint trading account investments were $4,060,391 for Defense and Aerospace Portfolio, $20,607,986 for Electronics Portfolio, $52,236,034 for Industrial Materials Portfolio, $56,325,429 for Medical Delivery Portfolio, and $50,610,878 for Home Finance Portfolio, all at 3.47%. The investments in repurchase agreements through the joint trading account are summarized as follows: SUMMARY OF JOINT TRADING Number of dealers or banks 24 Maximum amount with one dealer or bank 12.7% Aggregate principal amount of agreements $18,432,895,000 Aggregate maturity amount of agreements $18,434,670,665 Aggregate market value of collateral $18,922,724,282 Coupon rates of collateral 3% to 15.75% Maturity dates of collateral 3/10/94 to 8/15/23 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES. MANAGEMENT FEE. As each fund's investment adviser, FMR receives a monthly fee. For each equity fund, the monthly fee is calculated on the basis of a group fee rate plus a fixed individual fund fee rate applied to the average net assets of each fund. The group fee rate is the weighted average of a series of rates ranging from .30% to .52% and is based on the monthly average net assets of all the mutual funds advised by FMR. The annual individual fund fee rate is .30%. For the period, the management fee was equivalent to an annual rate of .63% of average net assets for each equity funds. On December 12, 1991, the Board of Trustees approved a new group fee rate schedule with rates ranging from .30% to .52%. Effective January 1, 1992, FMR voluntarily agreed to implement the new group fee rate schedule as it resulted in the same or a lower management fee. On February 17, 1993, the shareholders of Home Finance Portfolio approved an amended management contract containing revised group fee rate schedule. Natural Gas Portfolio commenced operations on April 21, 1993 and has a management contract which includes that revised group fee rate schedule. Effective November 1, 1993 FMR has voluntarily agreed to implement a new group fee rate schedule with rates ranging from .2850% to .5200%. New management contracts with this revised group fee rate schedule for the equity funds were approved by shareholders on February 16, 1994. For the money market fund, FMR receives a monthly fee that is computed daily at an annual rate of 4% of that portion of gross income that represents a gross yield of 5% or less and an annual rate of 6% of that portion of gross income that represents a gross yield in excess of 5%. For this purpose, gross income excludes realized gains and losses, if any. The amount of the monthly management fee paid by the money market fund is limited to a maximum annualized rate of .50% of the money market fund's average net assets. For the period, the management fee was equivalent to an annual rate of .13% of average net assets. On February 16, 1994, the shareholders of the money market fund voted to approve a proposal to amend the management contract. The new management fee will be composed of a basic fund fee rate of .03% of the fund's average net assets, plus a fixed income group fee that varies depending on FMR's total assets under management, and an income based fee. The income based fee is added only when the fund's yield exceeds 5%. At that time the fee would equal 6% of that portion of the fund's gross income that represents a gross yield of more than 5% per year. The maximum income-based component is 0.24% (annualized) of average net assets. SUB-ADVISER FEE. As the money market fund's investment sub- adviser, FMR Texas Inc., a wholly owned subsidiary of FMR, receives a fee from FMR of 50% of the management fee payable to FMR. The fee is paid prior to any voluntary expense reimbursements which may be in effect, and after reducing the fee for any payments by FMR pursuant to the fund's Distribution and Service Plan. SALES LOAD. Fidelity Distributors Corporation (FDC), an affiliate of FMR, is the general distributor of each fund. FDC is paid a 3% sales charge on sales of shares of each fund. Prior to October 12, 1990, FDC was paid a 2% sales charge and a 1% deferred sales charge. Shares purchased before October 12, 1990 are subject to the deferred sales charge upon redemption or exchange to any other Fidelity fund (other than Select funds). The amounts received by FDC for sales charges and deferred sales charges are shown under the caption "Other Information" on each fund's Statement of Operations. TRANSFER AGENT FEE. Fidelity Service Co. (FSC), an affiliate of FMR, is the funds' transfer, dividend disbursing and shareholder servicing agent. FSC receives fees based on the type, size, number of accounts and the number of transactions made by shareholders. FSC pays for typesetting, printing and mailing of all shareholder reports, except proxy statements. ACCOUNTING AND SECURITY LENDING FEES. FSC maintains the funds' accounting records and administers their security lending program. The security lending fee is based on the number and duration of lending transactions. The accounting fee is based on the level of average net assets for the month plus out-of-pocket expenses. EXCHANGE FEES. FSC charges an exchange fee of $7.50 to cover administrative costs associated with exchanges out of an equity fund to any other Fidelity Select fund or to any other Fidelity fund. The exchange fees retained by FSC are shown under the caption "Other Information" on each fund's Statement of Operations. BROKERAGE COMMISSIONS. Each equity fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of FMR. The commissions paid to these affiliated firms are shown under the caption "Other Information" on each fund's schedule of investments. 5. INTERFUND LENDING PROGRAM. Certain funds participated in the interfund lending program as a borrower. The maximum loan, average daily loan balances and the weighted average interest rates, during the periods for which loans were outstanding are as follows: AVERAGE WEIGHTED MAXIMUM DAILY AVERAGE LOAN LOAN BALANCE INTEREST RATE Financial Services Portfolio $18,120,000 $ 5,321,125 3.4% Regional Banks Portfolio $15,419,000 $11,209,500 3.6% Technology Portfolio $24,687,000 $24,687,000 3.6% Interest expense includes $3,989, $2,236 and $2,481 paid under the interfund lending program for Financial Services Portfolio, Regional Banks Portfolio and Technology Portfolio, respectively. 6. SECURITY LENDING. Certain equity funds loaned securities to certain brokers who paid the fund negotiated lenders' fees. These fees are included in interest income. Each fund receives U.S. Treasury obligations and/or cash as collateral against the loaned securities, in an amount at least equal to 102% of the market value of the loaned securities at the inception of each loan. This collateral must be maintained at not less than 100% of the market value of the loaned securities during the period of the loan. At the period end, the value of the securities loaned and the value of collateral held are shown under the caption "Other Information" on each fund's schedule of investments. 7. BANK BORROWINGS. Each fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. The fund has established borrowing arrangements with certain banks. Under the most restrictive arrangement, each fund must pledge to the bank securities having a market value in excess of 220% of the total bank borrowings. The interest rate on the borrowings is the bank's base rate, as revised from time to time. At the period end, the maximum loan and average daily loan balances during the periods for which loans were outstanding are shown under the caption "Other Information" on each fund's schedule of investments. 8. EXPENSE REDUCTIONS. FMR voluntarily limits expenses, excluding interest, taxes, brokerage commissions and extraordinary expenses of each fund to 2.5% of average net assets. In addition, FMR has agreed to reimburse each fund in accordance with a state expense limitation if, and to the extent that the total operating expenses of each fund, excluding interest, taxes, brokerage commissions and extraordinary expenses, are in excess of specified percentages of the average net assets of the fund for its fiscal year. Therefore, the lowest limitation applicable to the fund is either 2.5% of average net assets or 2.5% of the first $30 million of average net assets, 2% of the next $70 million and 1.5% of the excess. FMR retains the ability to be repaid by a fund for these expense reimbursements in the amount that the expenses fall below the limit prior to the end of the fiscal year. The reimbursement amounted to $48,710 and $13,001 for Defense and Aerospace Portfolio and Consumer Products Portfolio, respectively. FMR directed certain portfolio trades to brokers who paid a portion of the funds' expenses. The amount of reduction of expenses for each fund (excluding Defense and Aerospace Portfolio and Consumer Products Portfolio) is shown on each fund's Statement of Operations. For the period, the aggregate reductions totalled $568,892. 9. MERGERS. Pursuant to an Agreement and Plan of Reorganization approved by the shareholders of Electric Utilities Portfolio at a meeting held on February 16, 1994, Utilities Portfolio acquired substantially all of the assets of the Electric Utilities Portfolio on February 25, 1994. The acquisition was accomplished by a tax-free exchange of assets of Electric Utilities Portfolio in exchange for 458,728 shares of Utilities Portfolio (valued at $36.36 per share). Electric Utilities Portfolio's net assets at that date (valued at $16,679,364, including $1,838,111 of unrealized appreciation were combined with those of Utilities Portfolio. The aggregate net assets of Utilities Portfolio and Electric Utilities Portfolio immediately before the acquisition were $233,107,469 and $16,679,364, respectively. REPORT OF INDEPENDENT ACCOUNTANTS To the Trustees and the Shareholders of Fidelity Select Portfolios: In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments (except for Moody's and Standard & Poor's ratings), and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of each of the thirty-six funds constituting Fidelity Select Portfolios at February 28, 1994, the results of their operations, the changes in their net assets and the financial highlights for the periods indicated in conformity with generally accepted accounting principles. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of Fidelity Select Portfolios' management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities owned at February 28, 1994 by correspondence with the custodian and brokers and the application of alternative auditing procedures where confirmations from brokers were not received, provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE Boston, Massachusetts April 15, 1994 TO THE SHAREHOLDERS The Board of Trustees of Fidelity Select Portfolios voted to pay on each fund's pay date, to shareholders of record at the opening of business on each fund's respective record date, a distribution derived from capital gains realized from the sale of portfolio securities, and a dividend derived from net investment income, for each of the following funds: AMOUNTS PER SHARE RECORD & FUND EX-DATE PAY DATE DIVIDENDS CAPITAL GAINS TOTAL REINVESTMENT PRICE Air Transportation 4/15/94 4/18/94 $- $.94 $.94 $14.85 Automotive 4/8/94 4/11/94 - .27 .27 23.99 Chemicals 4/8/94 4/11/94 .01 .20 .21 31.22 Construction and Housing 4/8/94 4/11/94 - .10 .10 18.94 Consumer Products 4/15/94 4/18/94 - .08 .08 13.94 Defense and Aerospace 4/15/94 4/18/94 - .27 .27 18.22 Developing Communications 4/8/94 4/11/94 - 1.29 1.29 17.56 Energy 4/8/94 4/11/94 .01 .11 .12 16.19 Energy Service 4/15/94 4/18/94 .01 .32 .33 10.25 Financial Services 4/15/94 4/18/94 .02 .37 .39 50.77 Food and Agriculture 4/8/94 4/11/94 - .79 .79 29.10 Health Care 4/8/94 4/11/94 .11 - .11 59.20 Home Finance 4/15/94 4/18/94 - 1.17 1.17 23.92 Industrial Equipment 4/8/94 4/11/94 - .17 .17 19.75 Industrial Materials 4/15/94 4/18/94 .05 - .05 21.60 Leisure 4/8/94 4/11/94 - 3.93 3.93 38.98 Multimedia (formerly Broadcast and Media) 4/15/94 4/18/94 - 2.51 2.51 19.38 Paper and Forest Products 4/15/94 4/18/94 - .35 .35 17.14 Precious Metals and Minerals 4/15/94 4/18/94 .01 - .01 15.42 Regional Banks 4/15/94 4/18/94 .01 .21 .22 18.63 Software and Computer Services 4/15/94 4/18/94 - .33 .33 24.58 Technology 4/15/94 4/18/94 - 1.50 1.50 36.93 Telecommunications 4/8/94 4/11/94 .03 .78 .81 35.26 Transportation 4/15/94 4/18/94 - .33 .33 20.89 Utilities 4/8/94 4/11/94 .12 .60 .72 34.36 FEDERAL TAX STATUS Dividend and capital gain distributions will be taxable regardless of whether you take them in cash or in additional shares. You will be notified at a later date as to the tax treatment of these distributions and dividends. Since each fund's distribution and dividend are reportable for tax purposes, the receipt of additional shares does not affect the basic cost of the original shares owned. For federal tax purposes, these additional shares are treated as though you purchased them at the net asset value applicable to these shares at the 10:00 A.M. opening price on each fund's ex-date. (See Reinvestment Price above.) NOTE: IF YOUR ACCOUNT IS A FIDELITY PROTOTYPE RETIREMENT PLAN SUCH AS AN INDIVIDUAL RETIREMENT ACCOUNT (IRA), A KEOGH PLAN, A 403(B), OR A QUALIFIED PENSION OR PROFIT SHARING PLAN, THE ABOVE DATA IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND IS NOT REPORTABLE FOR TAX PURPOSES IN 1994. STATISTICAL ROUNDUP: FIDELITY SELECT PORTFOLIOS<UNDEF> LEGEND TOTAL RETURNS include change in share price and reinvestment of dividends and capital gains. CUMULATIVE TOTAL RETURNS do not reflect Select's 3% sales charge. However, each Fund Update includes load-adjusted cumulative total returns. AVERAGE ANNUAL RETURNS are load-adjusted. Average Annual Returns assume a steady compounded rate of return and are not year-by-year results, which fluctuated over the periods shown. LIFE OF FUND figures are from commencement of operations to February 28, 1994. Figures for the S&P 500(Registered trademark), an unmanaged index of common stock prices, include reinvestment of dividends. S&P 500 is registered trademark of Standard & Poor's Corporation. If the advisor had not reimbursed certain expenses for some of the funds during the periods shown, those funds' returns would have been lower. Consumer Products and Defense and Aerospace received reimbursement for the year ended February 28, 1994. Expense reimbursements may be revised at any time, at which time the fund's return will decline. All performance numbers are historical; each equity fund's share price and return will vary and shareholders may have a gain or loss when they sell their shares. DISTRIBUTIONS The fiscal year end for Fidelity Select Portfolios recently changed from April to February. Consequently, in 1993 distribution dates changed from June and December to April and December. VOLATILITY Volatility measures the variability of a return from its mean, in terms of STANDARD DEVIATIONS. (Standard deviation measures the variation from the mean for a series of numbers.) Measures of volatility are based on historical performance and seek to compare each fund's relative share price fluctuations or total returns compared to the S&P 500. (Volatility measures are not calculated for funds which are less than three years old.) Volatility measures are given to investors to assist in determining the historical risk versus return relationship between the fund and a benchmark index. THE CALCULATIONS ARE NOT MEANT TO PREDICT PERFORMANCE and may change quickly as fund composition and company fundamentals change. A fund's RELATIVE VOLATILITY is a ratio that compares the fund's volatility to the volatility of a benchmark index, such as the S&P 500. By definition, the S&P 500 has a relative volatility of 1.0. A fund with a relative volatility greater than 1.0 has had returns that have been more variable than those returns of the benchmark index, while a fund with a relative volatility less than 1.0 would have had less volatility than the benchmark index. MEDIAN PRICE/SALES This figure represents the median price-to-sales ratio for all the stocks in a fund on a given date. A stock's price-to-sales ratio compares the company's market value with its total revenue. The ratio is calculated by dividing the stock price by the most recent 12 months' revenues per share. All price-to-sales ratios are from company 10Q filings. Excluded from the median price/sales calculations are foreign companies without ADRs (American Depository Receipts), IPOs (Initial Public Offerings) and certain financial companies. As a result, figures are not available for Home Finance and Precious Metals and Minerals. MEDIAN PRICE/BOOK This figure represents the median price-to-book ratio of all the stocks in a fund on a given date. A stock's price-to-book ratio compares the company's market value with its book value or net asset value. The ratio is calculated by dividing the stock price by the book value per share. All price-to-book ratios are from company 10Q filings. Excluded from the median price/book calculations are foreign companies without ADRs and certain financial companies. STATISTICAL ROUNDUP(DAGGER) (UNAUDITED) CUMULATIVE TOTAL RETURNS AVERAGE ANNUAL RETURNS OPENING CLOSING FOR PERIODS ENDED 2/28/94 FOR PERIODS ENDED 2/28/94 NAV NAV YTD 1 YEAR LIFE OF FUND 1 YEAR 5 YEARS LIFE OF FUND 3/1/93 2/28/94 Air Transportation (12/16/85) 0.18% 27.94% 119.14% 24.10% 11.51% 9.62% $013.60 $17.12 American Gold (12/16/85) -3.78 60.14 129.94 55.34 7.04 10.26 14.15 22.66 Automotive (6/30/86) 2.29 30.45 222.14 26.54 19.63 16.01 20.69 25.48 Biotechnology (12/16/85) -3.50 22.17 275.23 18.50 26.92 17.04 22.60 27.61 Brokerage and Investment Mgmt. (7/29/85) -3.01 35.87 141.38 31.80 18.45 10.40 14.22 17.75 Chemicals (7/29/85) 7.61 23.63 349.99 19.92 13.67 18.70 28.62 31.66 Computers (7/29/85) 10.97 45.06 214.29 40.70 21.89 13.85 20.15 27.02 Construction and Housing (9/29/86) 1.17 27.45 190.88 23.63 17.20 14.99 15.74 19.82 Consumer Products (6/29/90) -1.10 28.43 83.39 24.58 - 16.97 12.97 15.24 Defense and Aerospace (5/8/84) 4.76 32.04 115.45 28.08 10.76 7.80 15.08 19.14 Developing Communications (6/29/90) 2.13 30.24 129.88 26.33 - 24.39 16.44 19.65 Electronics (7/29/85) 11.98 46.24 109.09 41.85 24.28 8.58 14.28 17.67 Energy* (7/14/81) 1.83 9.69 128.16 6.40 8.17 6.49 15.84 16.73 Energy Service (12/16/85) 0.43 6.36 17.30 3.17 7.11 1.58 11.01 11.66 Environmental Services (6/29/89) 6.52 5.02 28.47 1.87 - 4.82 11.36 11.93 Financial Services* (12/10/81) 2.91 10.85 670.49 7.53 18.45 17.88 53.29 51.24 Food and Agriculture (7/29/85) 2.41 11.69 362.24 8.34 17.71 19.07 30.86 31.49 Health Care* (7/14/81) -0.49 20.57 893.96 16.95 20.39 19.64 52.57 63.31 Home Finance (12/16/85) 2.41 19.61 341.82 16.02 22.46 19.39 22.18 25.03 Industrial Equipment (9/29/86) 7.68 40.07 119.78 35.87 15.38 10.73 15.04 20.61 Industrial Materials (9/29/86) 5.86 24.66 129.42 20.92 10.16 11.38 17.44 21.67 Insurance (12/16/85) -3.10 -1.24 146.82 -4.21 14.33 11.22 21.58 19.41 Leisure (5/8/84) 0.18 37.14 503.97 33.03 14.88 19.73 35.77 45.30 Medical Delivery (6/30/86) 6.18 40.25 164.92 36.04 22.59 13.09 14.46 20.28 Multimedia** (6/30/86) 0.13 34.86 236.78 30.82 14.47 16.68 18.26 23.87 Natural Gas (dagger)(dagger) (4/21/93) 1.28 - -3.84 - - - 10.00 9.48 Paper and Forest Products (6/30/86) 8.46 22.03 128.86 18.37 11.17 10.95 16.08 19.61 Precious Metals and Minerals* (7/14/81) -8.33 70.58 99.98 65.47 7.69 5.38 9.86 16.62 Regional Banks (6/30/86) 2.86 6.46 194.44 3.27 20.52 14.65 20.88 17.99 Retailing (12/16/85) -0.91 15.61 306.60 12.14 21.51 18.19 23.87 24.91 Software and Computer Services (7/29/85) 4.86 33.19 369.41 29.19 24.06 19.29 27.62 28.89 Technology* (7/14/81) 8.00 35.62 465.27 31.55 23.43 14.41 34.62 41.83 Telecommunications (7/29/85) -1.17 21.90 373.41 18.24 16.87 19.40 34.19 37.10 Transportation (9/29/86) 4.38 27.47 206.84 23.65 18.07 15.82 18.68 21.67 Utilities* (12/10/81) -2.58 2.53 523.79 -0.54 13.85 15.86 41.49 36.61 S&P 500 0.59 8.33 - 8.33 13.65 - 443.38 467.14 * Ten-year Average Annual Total Returns for the period ended 2/28/94 for these funds were as follows: Energy = 8.21%; Financial Services = 16.20%; Health Care = 19.63%; Precious Metals and Minerals = 2.24%; Technology = 9.96%; Utilities = 15.72%. (dagger) See "Legend" on page for explanation of information on this table. (dagger)(dagger) Natural Gas data is from 4/21/93 (commencement of operations). ** Formerly Broadcast and Media HIGH LOW TOTAL NET ASSETS DISTRIBUTIONS MEDIAN MEDIAN NAV NAV $MM 1/1/93-12/31/93 PRICE/SALES PRICE/BOOK FOR 12 MONTHS ENDED 2/28/94 2/28/93 2/28/94 CAP GAINS DIVS RELATIVE VOLATILITY AS OF 2/28/94 $017.85 $013.60 $011.9 $011.0 $0.27 $$- 1.52 0.6 2.2 25.13 14.10 168.0 347.4 - - 2.18 4.4 2.3 26.52 20.62 110.4 228.7 1.26 .05 1.30 0.9 3.0 29.59 21.38 508.0 481.1 - - 2.34 18.1 3.4 19.12 14.14 24.7 59.8 1.47 .01 1.92 0.6 1.3 32.06 28.20 28.8 62.2 3.05 .23 1.14 0.9 2.6 27.02 18.97 47.6 120.4 1.80 - 2.23 1.1 2.9 20.46 15.50 31.1 81.0 .22 - 1.39 0.8 2.5 16.75 12.91 7.0 8.4 1.40 - 1.24 0.9 3.4 19.41 15.07 1.5 11.1 .62 .10 1.20 0.6 2.1 20.53 15.35 83.4 222.1 1.47 - 1.57 1.5 4.2 18.82 13.98 48.0 111.0 2.75 - 1.88 1.1 2.8 19.13 15.41 179.1 145.5 .57 .03 1.45 1.0 2.1 13.89 11.01 85.2 40.9 - .05 1.99 1.2 1.3 12.19 10.49 65.9 66.0 - - 1.50 1.3 2.4 60.83 48.62 214.6 116.2 7.32 .20 1.63 1.0 1.3 32.12 28.74 108.4 95.0 2.68 .08 1.03 0.6 2.7 65.20 50.30 536.4 522.9 - .07 1.91 2.4 3.3 26.84 20.58 337.9 155.6 1.40 .01 1.74 - 0.9 20.61 14.89 14.6 206.0 .40 .01 1.20 0.8 2.7 22.28 17.20 25.0 155.7 - .06 1.30 1.1 2.9 24.08 19.41 26.4 18.4 1.96 .01 1.19 1.1 1.4 47.64 34.90 44.8 105.8 3.26 - 1.16 1.7 3.7 20.39 13.45 71.8 188.6 - - 2.27 1.9 4.2 25.04 17.99 16.6 49.2 .65 - 1.40 1.2 4.2 11.14 8.94 - 63.1 .13 - - 1.3 2.2 20.22 15.69 25.1 66.9 - .01 1.50 0.8 1.9 18.93 9.82 137.9 409.2 - .21 2.53 - 2.0 22.90 17.34 315.5 97.4 3.92 .15 1.57 1.5 1.5 27.38 23.53 74.9 52.8 2.63 - 1.54 0.7 2.9 30.88 24.01 151.2 178.0 6.48 - 2.05 2.1 3.2 41.83 30.77 132.7 202.5 3.70 .13 1.79 1.6 3.4 44.67 34.05 134.3 371.0 4.18 .20 1.20 2.0 3.8 21.90 18.64 10.8 13.1 1.96 - 1.30 0.9 2.9 46.60 36.21 290.7 250.5 4.94 1.13 0.81 1.1 1.6 482.00 433.54 - - - - 1.00 1.0 2.8 [TEXT] 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. A Statement of Additional Information dated April 30, 1994 has been filed with the Securities and Exchange Commission, and is incorporated herein by reference (is legally considered a part of this prospectus). The Statement of Additional Information is available free upon request by calling 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 DEPOSIT O RY INSTITUTION . SHARES ARE NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING POSSIBLE LOSS OF PRINCIPAL. LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. SEL-pro-494 Each stock fund seeks to increase the value of your investment over the long-term by investing mainly in equity securities of companies within a particular industry. The money market fund seeks high current income while maintaining a stable $1.00 share price . FIDELITY SELECT PORTFOLIOS(REGISTERED TRADEMARK) AIR TRANSPORTATION PORTFOLIO AMERICAN GOLD PORTFOLIO AUTOMOTIVE PORTFOLIO BIOTECHNOLOGY PORTFOLIO BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO CHEMICALS PORTFOLIO COMPUTERS PORTFOLIO CONSTRUCTION AND HOUSING PORTFOLIO CONSUMER PRODUCTS PORTFOLIO DEFENSE AND AEROSPACE PORTFOLIO DEVELOPING COMMUNICATIONS PORTFOLIO ELECTRONICS PORTFOLIO ENERGY PORTFOLIO ENERGY SERVICE PORTFOLIO ENVIRONMENTAL SERVICES PORTFOLIO FINANCIAL SERVICES PORTFOLIO FOOD AND AGRICULTURE PORTFOLIO HEALTH CARE PORTFOLIO HOME FINANCE PORTFOLIO INDUSTRIAL EQUIPMENT PORTFOLIO INDUSTRIAL MATERIALS PORTFOLIO INSURANCE PORTFOLIO LEISURE PORTFOLIO MEDICAL DELIVERY PORTFOLIO MULTIMEDIA PORTFOLIO NATURAL GAS PORTFOLIO PAPER AND FOREST PRODUCTS PORTFOLIO PRECIOUS METALS AND MINERALS PORTFOLIO REGIONAL BANKS PORTFOLIO RETAILING PORTFOLIO SOFTWARE AND COMPUTER SERVICES PORTFOLIO TECHNOLOGY PORTFOLIO TELECOMMUNICATIONS PORTFOLIO TRANSPORTATION PORTFOLIO UTILITIES PORTFOLIO MONEY MARKET PORTFOLIO PROSPECTUS APRIL 30 , 1994(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON, MA 02109 CONTENTS
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 of 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
<r>KEY FACTS</r> THE FUNDS AT A GLANCE STOCK FUNDS' GOAL: Capital appreciation (increase in the value of a fund's shares). As with any mutual fund, there is no assurance that a fund will achieve its goal. MANAGEMENT: Fidelity Management & Research Company (FMR) is the management arm of Fidelity Investments, which was established in 1946 and is now America's largest mutual fund manager. Foreign affiliates of FMR help choose investments for some of the funds. FMR Texas Inc. (FTX), a subsidiary of FMR, chooses investments for the money market fund. AIR TRANSPORTATION STRATEGY: Invests mainly in equity securities of companies engaged in the regional, national, and international movement of passengers, mail, and freight via aircraft. SIZE: As of February 28, 1994, the fund had over $ 11 million in assets. AMERICAN GOLD STRATEGY: Invests mainly in equity securities of companies engaged in exploration, mining, processing, or dealing in gold, or, to a lesser degree, in silver, platinum, diamonds, or other precious metals and minerals, and may also invest directly in gold. SIZE: As of February 28, 1994, the fund had over $ 347 million in assets. AUTOMOTIVE STRATEGY: Invests mainly in equity securities of companies engaged in the manufacture, marketing, or sale of automobiles, trucks, specialty vehicles, parts, tires, and related services. SIZE: As of February 28, 1994, the fund had over $ 228 million in assets. BIOTECHNOLOGY STRATEGY: Invests mainly in equity securities of companies engaged in the research, development, scale up, and manufacture of various biotechnological products, services, and processes. SIZE: As of February 28, 1994, the fund had over $ 481 million in assets. BROKERAGE AND INVESTMENT MANAGEMENT STRATEGY: Invests mainly in equity securities of companies engaged in stock brokerage, commodity brokerage, investment banking, tax-advantaged investment or investment sales, investment management, or related investment advisory services. SIZE: As of February 28, 1994, the fund had over $ 59 million in assets. CHEMICALS STRATEGY: Invests mainly in equity securities of companies engaged in the research, development, manufacture , or marketing of products or services related to the chemical process industries. SIZE: As of February 28, 1994, the fund had over $ 62 million in assets. COMPUTERS STRATEGY: Invests mainly in equity securities of companies engaged in research, design, development, manufacture, or distribution of products, processes, or services that relate to currently available or experimental hardware technology within the computer industry. SIZE: As of February 28, 1994, the fund had over $ 120 million in assets. CONSTRUCTION AND HOUSING STRATEGY: Invests mainly in equity securities of companies engaged in the design and construction of residential, commercial, industrial, and public works facilities, as well as companies engaged in the manufacture, supply, distribution, or sale of products or services to these construction industries. SIZE: As of February 28, 1994, the fund had over $ 80 million in assets. CONSUMER PRODUCTS STRATEGY: Invests mainly in equity securities of companies engaged in the manufacture and distribution of goods to consumers, both domestically and internationally. SIZE: As of February 28, 1994, the fund had over $ 8 million in assets. DEFENSE AND AEROSPACE STRATEGY: Invests mainly in equity securities of companies engaged in the research, manufacture, or sale of products or services related to the defense or aerospace industries. SIZE: As of February 28, 1994, the fund had over $ 11 million in assets. DEVELOPING COMMUNICATIONS STRATEGY: Invests mainly in equity securities of companies engaged in the development, manufacture, or sale of emerging communications services or equipment. SIZE: As of February 28, 1994, the fund had over $ 222 million in assets. ELECTRONICS STRATEGY: Invests mainly in equity securities of companies engaged in the design, manufacture, or sale of electronic components , equipment vendors to electronic component manufacturers, electronic component distributors, and electronic instruments and electronics systems vendors. SIZE: As of February 28, 1994, the fund had over $ 110 million in assets. ENERGY STRATEGY: Invests mainly in equity securities of companies in the energy field, including the conventional areas of oil, gas, electricity, and coal, and newer sources of energy such as nuclear, geothermal, oil shale, and solar power. SIZE: As of February 28, 1994, the fund had over $ 145 million in assets. ENERGY SERVICE STRATEGY: Invests mainly in equity securities of companies in the energy service field, including those that provide services and equipment to the conventional areas of oil, gas, electricity, and coal, and newer sources of energy such as nuclear, geothermal, oil shale , and solar power. SIZE: As of February 28, 1994, the fund had over $ 40 million in assets. ENVIRONMENTAL SERVICES STRATEGY: Invests mainly in equity securities of companies engaged in the research, development, manufacture, or distribution of products, processes, or services related to waste management or pollution control. SIZE: As of February 28, 1994, the fund had over $ 65 million in assets. FINANCIAL SERVICES STRATEGY: Invests mainly in equity securities of companies providing financial services to consumers and industry. SIZE: As of February 28, 1994, the fund had over $ 116 million in assets. FOOD AND AGRICULTURE STRATEGY: Invests mainly in equity securities of companies engaged in the manufacture, sale, or distribution of food and beverage products, agricultural products, and products related to the development of new food technologies. SIZE: As of February 28, 1994, the fund had over $ 95 million in assets. HEALTH CARE STRATEGY: Invests mainly in equity securities of companies engaged in the design, manufacture, or sale of products or services used for , or in connection with , health care or medicine. SIZE: As of February 28, 1994, the fund had over $ 522 million in assets. HOME FINANCE STRATEGY: Invests mainly in equity securities of companies engaged in investing in real estate, usually through mortgages and other consumer-related loans. SIZE: As of February 28, 1994, the fund had over $ 155 million in assets. INDUSTRIAL EQUIPMENT STRATEGY: Invests mainly in equity securities of companies engaged in the manufacture, distribution, or service of products and equipment for the industrial sector, including integrated producers of capital equipment, parts suppliers , and subcontractors. SIZE: As of February 28, 1994, the fund had over $ 206 million in assets. INDUSTRIAL MATERIALS STRATEGY: Invests mainly in equity securities of companies engaged in the manufacture, mining, processing, or distribution of raw materials and intermediate goods used in the industrial sector. SIZE: As of February 28, 1994, the fund had over $ 155 million in assets. INSURANCE STRATEGY: Invests mainly in equity securities of companies engaged in underwriting, reinsuring, selling, distributing, or placing of property and casualty, life, or health insurance. SIZE: As of February 28, 1994, the fund had over $ 18 million in assets. LEISURE STRATEGY: Invests mainly in equity securities of companies engaged in the design, production, or distribution of goods or services in the leisure industries. SIZE: As of February 28, 1994, the fund had over $ 105 million in assets. MEDICAL DELIVERY STRATEGY: Invests mainly in equity securities of companies engaged in the ownership or management of hospitals, nursing homes, health maintenance organizations, and other companies specializing in the delivery of health care services. SIZE: As of February 28, 1994, the fund had over $ 188 million in assets. MULTIMEDIA (FORMERLY BROADCAST AND MEDIA) STRATEGY: Invests mainly in equity securities of companies engaged in the development, production, sale, and distribution of goods or services used in the broadcast and media industries. SIZE: As of February 28, 1994, the fund had over $ 49 million in assets. NATURAL GAS STRATEGY: Invests mainly in equity securities of companies engaged in the production, transmission, and distribution of natural gas, and involved in the exploration of potential natural gas sources, as well as those companies that provide services and equipment to natural gas producers, refineries, cogeneration facilities, converters, and distributors. SIZE: As of February 28, 1994, the fund had over $ 63 million in assets. PAPER AND FOREST PRODUCTS STRATEGY: Invests mainly in equity securities of companies engaged in the manufacture, research, sale, or distribution of paper products, packaging products, building materials, and other products related to the paper and forest products industry. SIZE: As of February 28, 1994, the fund had over $ 66 million in assets. PRECIOUS METALS AND MINERALS STRATEGY: Invests mainly in equity securities of companies engaged in exploration, mining, processing, or dealing in gold, silver, platinum, diamonds, or other precious metals and minerals, and may also invest directly in precious metals. SIZE: As of February 28, 1994, the fund had over $ 409 million in assets. REGIONAL BANKS STRATEGY: Invests mainly in equity securities of companies engaged in accepting deposits and making commercial and principally non-mortgage consumer loans. SIZE: As of February 28, 1994, the fund had over $ 97 million in assets. RETAILING STRATEGY: Invests mainly in equity securities of companies engaged in merchandising finished goods and services primarily to individual consumers. SIZE: As of February 28, 1994, the fund had over $ 52 million in assets. SOFTWARE AND COMPUTER SERVICES STRATEGY: Invests mainly in equity securities of companies engaged in research, design, production, or distribution of products or processes that relate to software or information-based services. SIZE: As of February 28, 1994, the fund had over $ 178 million in assets. TECHNOLOGY STRATEGY: Invests mainly in equity securities of companies which FMR believes have, or will develop, products, processes, or services that will provide or will benefit significantly from technological advances and improvements. SIZE: As of February 28, 1994, the fund had over $ 202 million in assets. TELECOMMUNICATIONS STRATEGY: Invests mainly in equity securities of companies engaged in the development, manufacture, or sale of communications services or communications equipment. SIZE: As of February 28, 1994, the fund had over $ 371 million in assets. TRANSPORTATION STRATEGY: Invests mainly in equity securities of companies engaged in providing transportation services or companies engaged in the design, manufacture, distribution, or sale of transportation equipment. SIZE: As of February 28, 1994, the fund had over $ 13 million in assets. UTILITIES STRATEGY: Invests mainly in equity securities of companies in the public utilities industry and companies deriving a majority of their revenues from their public utility operations. SIZE: As of February 28, 1994, the fund had over $ 250 million in assets. MONEY MARKET GOAL: Income while maintaining a stable share price. STRATEGY: Invests in high-quality, short-term instruments of all types. SIZE: As of February 28, 1994, the fund had over $ 518 million in assets. WHO MAY WANT TO INVEST The stock funds may be appropriate for investors who want to pursue growth aggressively by concentrating their investment on domestic and foreign securities within an industry or group of industries. The funds are designed for those who are interested in actively monitoring the progress of, and can accept the risks of, industry-focused investing. Because the funds are so narrowly focused, changes in a particular industry can have a substantial impact on a fund's share price. Also, because most of the funds are non-diversified, changes in the value of one company's securities can significantly affect a fund's performance. The money market fund may be appropriate for investors who would like to earn income at current money market rates while preserving the value of their investment. The fund is managed to keep its share price stable at $1.00. The money market fund is designed for use in connection with exchanges between the stock funds. Since this money market fund is sold with a sales charge, it is not recommended that you invest in the money market fund unless you intend to use it for that purpose. By themselves, these funds do not constitute a balanced investment plan. The value of the stock funds' investments will vary from day to day, generally reflecting changes in market and industry conditions, interest rates, and other political and economic news. When you sell your stock fund shares, they may be worth more or less than what you paid for them. The rate of income for the money market fund will vary from day to day generally reflecting short-term interest rates. EXPENSES SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell shares of a fund. See pages P-50 to P-56 for an explanation of how and when these charges apply. Lower sales charges may be available for accounts over $250,000. Maximum sales charge on purchases (as a % of offering price) 3.00% Maximum sales charge on reinvested dividends None Deferred sales charge on redemptions None Exchange fee (stock funds only) $7.50 Maximum r edemption fees (stock funds only) on shares held 29 days or less (as a % of redemption amount) 0.75% on shares held 30 days or more $7.50 ANNUAL FUND OPERATING EXPENSES are paid out of each fund's assets. Each fund pays management fees to FMR. Each fund also incurs other expenses for services such as maintaining shareholder statements and financial reports. Expenses are factored into each fund's share price or dividends and are not charged directly to shareholder accounts (see page P-46 ). The operating expenses are projections based on historical expenses, and are calculated as a percentage of average net assets. A portion of the brokerage commissions that some of the funds paid was used to reduce fund expenses. Without this reduction, the total fund operating expenses for the funds would have been higher. EXAMPLES. Let's say, hypothetically, that each fund's annual return is 5% and that its operating expenses are exactly as described. For every $1,000 you invested, the examples show how much you would have paid in total expenses if you closed your account after the number of years indicated. The examples illustrate the effect of expenses, but are not meant to suggest actual or expected costs or returns, all of which may vary. Operating expenses Examples
AIR TRANSPORTATION Management fee 0.63 After 1 year $53 % 12b-1 fee None After 3 years $100 Other expenses 1.68 After 5 years $150 % Total fund operating 2.31 After 10 $287 expenses %A years AMERICAN GOLD Management fee 0.63 After 1 year $45 % 12b-1 fee None After 3 years $76 Other expenses 0.86 After 5 years $109 % Total fund operating 1.49 After 10 $203 expenses %A years AUTOMOTIVE Management fee 0.63 After 1 year $47 % 12b-1 fee None After 3 years $81 Other expenses 1.05 After 5 years $119 % Total fund operating 1.68 After 10 $223 expenses %A years BIOTECHNOLOGY Management fee 0.63 After 1 year $46 % 12b-1 fee None After 3 years $79 Other expenses 0.98 After 5 years $115 % Total fund operating 1.61 After 10 $215 expenses %A years BROKERAGE AND INVESTMENT MANAGEMENT Management fee 0.63 After 1 year $47 % 12b-1 fee None After 3 years $84 Other expenses 1.14 After 5 years $123 % Total fund operating 1.77 After 10 $232 expenses %A years
A A PORTION OF THE BROKERAGE COMMISSIONS THAT THE FUNDS PAID WAS USED TO REDUCE FUND EXPENSES. WITHOUT THIS REDUCTION, THE TOTAL FUND OPERATING EXPENSES FOR THE RESPECTIVE FUNDS WOULD HAVE BEEN: AIR TRANSPORTATION, 2.33%; AMERICAN GOLD, 1.50%; AUTOMOTIVE, 1.69%; BIOTECHNOLOGY, 1.62%; AND BROKERAGE AND INVESTMENT MANAGEMENT, 1.79%. Operating expenses Examples
CHEMICALS Management fee 0.63 After 1 year $49 % 12b-1 fee None After 3 years $89 Other expenses 1.30 After 5 years $131 % Total fund operating 1.93 After 10 $249 expenses % years COMPUTERS Management fee 0.63 After 1 year $49 % 12b-1 fee None After 3 years $88 Other expenses 1.26 After 5 years $129 % Total fund operating 1.89 After 10 $245 expenses %A years CONSTRUCTION AND HOUSING Management fee 0.63 After 1 year $46 % 12b-1 fee None After 3 years $81 Other expenses 1.03 After 5 years $118 % Total fund operating 1.66 After 10 $221 expenses %A years CONSUMER PRODUCTS Management fee (after 0.49 After 1 year $54 reimbursement) %B 12b-1 fee None After 3 years $105 Other expenses 1.99 After 5 years $158 % Total fund operating 2.48 After 10 $303 expenses % years DEFENSE AND AEROSPACE Management fee (after 0.00 After 1 year $55 reimbursement) %B 12b-1 fee None After 3 years $106 Other expenses 2.53 After 5 years $161 % Total fund operating 2.53 After 10 $308 expenses % years DEVELOPING COMMUNICATIONS Management fee 0.63 After 1 year $45 % 12b-1 fee None After 3 years $78 Other expenses 0.93 After 5 years $112 % Total fund operating 1.56 After 10 $210 expenses % years ELECTRONICS Management fee 0.63 After 1 year $46 % 12b-1 fee None After 3 years $81 Other expenses 1.04 After 5 years $118 % Total fund operating 1.67 After 10 $222 expenses % years ENERGY Management fee 0.63 After 1 year $46 % 12b-1 fee None After 3 years $81 Other expenses 1.03 After 5 years $118 % Total fund operating 1.66 After 10 $221 expenses %A years
Operating expenses Examples
ENERGY SERVICE Management fee 0.63 After 1 year $46 % 12b-1 fee None After 3 years $80 Other expenses 1.02 After 5 years $117 % Total fund operating 1.65 After 10 $220 expenses %A years ENVIRONMENTAL SERVICES Management fee 0.63 After 1 year $50 % 12b-1 fee None After 3 years $92 Other expenses 1.40 After 5 years $136 % Total fund operating 2.03 After 10 $259 expenses %A years FINANCIAL SERVICES Management fee 0.62 After 1 year $46 % 12b-1 fee None After 3 years $80 Other expenses 1.01 After 5 years $116 % Total fund operating 1.63 After 10 $217 expenses %A years FOOD AND AGRICULTURE Management fee 0.62 After 1 year $46 % 12b-1 fee None After 3 years $80 Other expenses 1.02 After 5 years $116 % Total fund operating 1.64 After 10 $219 expenses %A years HEALTH CARE Management fee 0.63 After 1 year $45 % 12b-1 fee None After 3 years $77 Other expenses 0.92 After 5 years $112 % Total fund operating 1.55 After 10 $209 expenses %A years HOME FINANCE Management fee 0.63 After 1 year $46 % 12b-1 fee None After 3 years $78 Other expenses 0.95 After 5 years $113 % Total fund operating 1.58 After 10 $212 expenses % years INDUSTRIAL EQUIPMENT Management fee 0.63 After 1 year $47 % 12b-1 fee None After 3 years $81 Other expenses 1.05 After 5 years $119 % Total fund operating 1.68 After 10 $223 expenses %A years INDUSTRIAL MATERIALS Management fee 0.64 After 1 year $50 % 12b-1 fee None After 3 years $93 Other expenses 1.44 After 5 years $139 % Total fund operating 2.08 After 10 $264 expenses %A years
A A PORTION OF THE BROKERAGE COMMISSIONS THAT THE FUNDS PAID WAS USED TO REDUCE FUND EXPENSES. WITHOUT THIS REDUCTION, THE TOTAL FUND OPERATING EXPENSES FOR THE RESPECTIVE FUNDS WOULD HAVE BEEN: COMPUTERS, 1.90%; CONSTRUCTION AND HOUSING, 1.67%; ENERGY, 1.67%; ENERGY SERVICE, 1.66%; ENVIRONMENTAL SERVICES, 2.07%; FINANCIAL SERVICES, 1.64%; FOOD AND AGRICULTURE, 1.65%; HEALTH CARE, 1.59%; INDUSTRIAL EQUIPMENT, 1.69%; AND INDUSTRIAL MATERIALS, 2.10%. B FMR REDUCED OR REIMBURSED THESE MANAGEMENT FEES OR OTHER EXPENSES AS A RESULT OF EITHER A VOLUNTARY EXPENSE REIMBURSEMENT OR A STATE REGULATION. EXPENSES ELIGIBLE FOR REDUCTION OR REIMBURSEMENT DO NOT INCLUDE INTEREST, TAXES, BROKERAGE COMMISSIONS, OR EXTRAORDINARY EXPENSES. IF NOT FOR THE REDUCTION OR REIMBURSEMENT, THE FUNDS' MANAGEMENT FEES, OTHER EXPENSES, AND TOTAL OPERATING EXPENSES, RESPECTIVELY, WOULD BE: CONSUMER PRODUCTS, .63%, 1.99%, AND 2.62%; DEFENSE AND AEROSPACE, .63%, 2.95%, AND 3.58%. Operating expenses Examples
INSURANCE Management fee 0.63 After 1 year $49 % 12b-1 fee None After 3 years $89 Other expenses 1.30 After 5 years $131 % Total fund operating 1.93 After 10 $249 expenses % years LEISURE Management fee 0.63 After 1 year $45 % 12b-1 fee None After 3 years $77 Other expenses 0.90 After 5 years $111 % Total fund operating 1.53 After 10 $207 expenses %A years MEDICAL DELIVERY Management fee 0.63 After 1 year $48 % 12b-1 fee None After 3 years $85 Other expenses 1.16 After 5 years $124 % Total fund operating 1.79 After 10 $234 expenses %A years MULTIMEDIA Management fee 0.63 After 1 year $46 % 12b-1 fee None After 3 years $80 Other expenses 1.00 After 5 years $116 % Total fund operating 1.63 After 10 $217 expenses %A years NATURAL GAS Management fee 0.63 After 1 year $49 %C 12b-1 fee None After 3 years $89 Other expenses 1.30 After 5 years $131 %C Total fund operating 1.93% After 10 $249 expenses A,C years PAPER AND FOREST PRODUCTS Management fee 0.64 After 1 year $50 % 12b-1 fee None After 3 years $93 Other expenses 1.43 After 5 years $138 % Total fund operating 2.07 After 10 $263 expenses % years PRECIOUS METALS AND MINERALS Management fee 0.63 After 1 year $45 % 12b-1 fee None After 3 years $77 Other expenses 0.92 After 5 years $112 % Total fund operating 1.55 After 10 $209 expenses % years REGIONAL BANKS Management fee 0.62 After 1 year $46 % 12b-1 fee None After 3 years $79 Other expenses 0.98 After 5 years $114 % Total fund operating 1.60 After 10 $214 expenses %A years
Operating expenses Examples
RETAILING Management fee 0.62 After 1 year $48 % 12b-1 fee None After 3 years $86 Other expenses 1.21 After 5 years $126 % Total fund operating 1.83 After 10 $238 expenses %A years SOFTWARE AND COMPUTER SERVICES Management fee 0.63 After 1 year $45 % 12b-1 fee None After 3 years $78 Other expenses 0.94 After 5 years $113 % Total fund operating 1.57 After 10 $211 expenses % years TECHNOLOGY Management fee 0.63 After 1 year $45 % 12b-1 fee None After 3 years $77 Other expenses 0.91 After 5 years $111 % Total fund operating 1.54 After 10 $208 expenses %A years TELECOMMUNICATIONS Management fee 0.63 After 1 year $45 % 12b-1 fee None After 3 years $77 Other expenses 0.90 After 5 years $111 % Total fund operating 1.53 After 10 $207 expenses %A years TRANSPORTATION Management fee 0.63 After 1 year $53 % 12b-1 fee None After 3 years $102 Other expenses 1.76 After 5 years $154 % Total fund operating 2.39 After 10 $294 expenses %A years UTILITIES Management fee 0.63 After 1 year $43 % 12b-1 fee None After 3 years $71 Other expenses 0.72 After 5 years $102 % Total fund operating 1.35 After 10 $188 expenses %A years MONEY MARKET Management fee 0.19 After 1 year $38 % 12b-1 fee None After 3 years $54 Other expenses 0.59 After 5 years $72 % Total fund operating 0.78 After 10 $124 expenses % years
A A PORTION OF THE BROKERAGE COMMISSIONS THAT THE FUNDS PAID WAS USED TO REDUCE FUND EXPENSES. WITHOUT THIS REDUCTION, THE TOTAL FUND OPERATING EXPENSES FOR THE RESPECTIVE FUNDS WOULD HAVE BEEN: LEISURE, 1.55%; MEDICAL DELIVERY, 1.82%; MULTIMEDIA, 1.66%; NATURAL GAS, 1.94% (ANNUALIZED); PAPER AND FOREST PRODUCTS, 2.08%; REGIONAL BANKS, 1.62%; RETAILING, 1.86%; TECHNOLOGY, 1.55%; TELECOMMUNICATIONS, 1.54%; TRANSPORTATION, 2.40%; AND UTILITIES, 1.36%. C ANNUALIZED FINANCIAL HIGHLIGHTS. The charts that follow provide financial histories for all the funds. This information has been audited by Price Waterhouse, independent accountants. Their unqualified report is included in the funds' Annual Report. The Annual Report is incorporated by reference into (is legally a part of) the Statement of Additional Information. AIR TRANSPORTATION
Selected Per-Share Data and Ratios F 1986B 1987 D 1988 D 1989 D 1990 D 1991 D 1992 D 1993C 1994 Years ended February 28 Net asset value, beginning of period $ 10.00 $ 10.71 $ 11.87 $ 8.61 $ 11.77 $ 11.05 $ 11.53 $ 12.64 $ 13.60 Income from Investment Operations Net investment income (loss) (.05) .07 (.08) (.02) -- (.04) (.13) (.09)I (.18) Net realized and unrealized gain (loss) .76 1.09 (2.12) 3.18 (.16) .38 1.40 1.33 3.7 8 on investments Total from investment operations .71 1.16 (2.20) 3.16 (.16) .34 1.27 1.24 3. 60 Less Distributions From net investment income - -- -- (.02) -- -- -- -- -- -- From net realized gain - -- -- (1.04) -- (.57) -- (.25) (.36) (.2 2 ) In excess of net realized gain -- -- -- -- -- -- -- -- (.05) Total distributions - -- -- (1.06) -- (.57) -- (.25) (.36) (.2 7 ) Redemption fees added to paid in capital - -- -- -- -- .01 .14 .09 .08 .19 Net asset value, end of period $ 10.71 $ 11.87 $ 8.61 $ 11.77 $ 11.05 $ 11.53 $ 12.64 $ 13.60 $ 17.12 Total return G,H 7.10% 10.83 (17.05) 36.70% (1.54) 4.34 11.90 10.69% 27. 94 % % % % % % Net assets, end of period (000 omitted) $ 960 $ 4,897 $ 2,728 $ 11,614 $ 4,688 $ 4,372 $ 6,971 $ 11,868 $ 11,035 Ratio of expenses to average net assets 1.92% 1.58 2.62% 2.52% 2.55% 2.48 2.51 2.48% 2.31% E A % % % A J Ratio of expenses to average net assets - - - - - 6.69% 6.02% 3.61% 3.03 3.06 2.64% 2.33% before expense reductions E % % A J Ratio of net investment income to (.60) .36 (.75) (.18) (.03) (.34) (1.04) (.90) (1.11) average net assets %A % % % % % % %A % Portfolio turnover rate 1,125% 611 340% 115% 143% 106 261 96% 171% A % % % A
AMERICAN GOLD
Selected Per-Share Data and Ratios F 1986B 1987 D 1988 D 1989 D 1990 D 1991 D 1992 D 1993C 1994 Years ended February 28 Net asset value, beginning of period $ 10.00 $ 10.11 $ 18.59 $ 15.82 $ 14.36 $ 15.22 $ 13.08 $ 11.94 $ 14.15 Income from Investment Operations Net investment income (loss) .03 .10 .01 (.09) (.06) (.04) (.06) (.05) (.11) Net realized and unrealized gain (loss) .08 8.38 (2.54) (1.37) .85 (2.23) (1.17) 2.16 8.44 on investments Total from investment operations .11 8.48 (2.53) (1.46) .79 (2.27) (1.23) 2.11 8.33 Less Distributions From net investment income - -- -- (.06) -- -- -- -- -- -- From net realized gain - -- -- (.18) -- -- -- -- -- -- Total distributions - -- -- (.24) -- -- -- -- -- -- Redemption fees added to paid in - -- -- -- -- .07 .13 .09 .10 .18 capital Net asset value, end of period $ 10.11 $ 18.59 $ 15.82 $ 14.36 $ 15.22 $ 13.08 $ 11.94 $ 14.15 $ 22.66 Total return G,H 1.10% 83.88 (13.65) (9.23) 5.99 (14.06) (8.72) 18.51% 60.14% % % % % % % Net assets, end of period (000 omitted) $ 5,360 $ 435,51 $ 206,31 $ 175,05 $ 195,32 $ 164,13 $ 130,40 $ 168,033 $ 347,40 0 3 9 2 7 7 6 Ratio of expenses to average net assets 1.50% 1.21 2.33 2.03% 1.85 1.75 1.75 1.59%A 1.49% E A % % % % % J Ratio of expenses to average net assets - -- -- 2.33 2.03% 1.85 1.75 1.75 1.59%A 1.50% before expense reductions E % % % % J Ratio of net investment income to .81% 1.13 .06 (.61) (.38) (.29) (.47) (.44)% (.51) average net assets A % % % % % % A % Portfolio turnover rate 52% 78 89 56% 68 38 40 30%A 39% A % % % % %
A ANNUALIZED B FROM DECEMBER 16, 1985 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1986 C FOR THE TEN MONTHS ENDED FEBRUARY 28, 1993 D FOR THE YEAR ENDED APRIL 30 E EFFECTIVE MAY 1, 1987, FMR VOLUNTARILY AGREED TO LIMIT THE EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS AND EXTRAORDINARY EXPENSES) TO 2.5% OF AVERAGE NET ASSETS. IN ADDITION, FMR HAS AGREED TO REIMBURSE THE FUND IN ACCORDANCE WITH A STATE EXPENSE LIMITATION. 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 $.01 PER SHARE. J FMR HAS DIRECTED CERTAIN PORTFOLIO TRADES TO BROKERS WHO PAID A PORTION OF THE FUND'S EXPENSES. AUTOMOTIVE
Selected Per-Share Data and Ratios G 1987B 1988 E 1989 E 1990 E 1991 E 1992 E 1993D 1994 Years ended February 28 Net asset value, beginning of period $ 10.00 $ 12.58 $ 11.79 $ 12.86 $ 12.17 $ 12.58 $ 18.65 $ 20.69 Income from Investment Operations Net investment income .16 .11 .15 .23 .25 .06 .13 .05 Net realized and unrealized gain (loss) on 2.42 (.40) .92 (.52) .29 6.55 2.26 6.0 0 investments Total from investment operations 2.58 (.29) 1.07 (.29) .54 6.61 2.39 6. 05 Less Distributions From net investment income - -- (.04) -- (.41) (.18) -- (.06) (.05) From net realized gain - -- (.46) -- -- -- (.70) (.36) (1.26) Total distributions - -- (.50) -- (.41) (.18) (.70) (.42) (1.31) Redemption fees added to paid in capital - -- -- -- .01 .05 .16 .07 .05 Net asset value, end of period $ 12.58 $ 11.79 $ 12.86 $ 12.17 $ 12.58 $ 18.65 $ 20.69 $ 25.48 Total return H,I 25.80% (1.07) 9.08% (2.07) 4.81% 56.27% 13.42% 30.45% % % Net assets, end of period (000 omitted) $ 5,390 $ 8,218 $ 1,428 $ 1,213 $ 974 $ 178,44 $ 110,36 $ 228,69 5 0 8 Ratio of expenses to average net assets F 1.63% 2.49% 2.63% 2.42% 2.25% 2.48% 1.57% 1.68% A A L Ratio of expenses to average net assets before - -- 6.40% 6.30% 3.85% 2.85% 2.48% 1.57% 1.69% expense reductions F A L Ratio of net investment income to average net 1.90% .91% 1.22% 1.84% 2.06% .36% .72% .22% assets A A Portfolio turnover rate 284% 311% 149% 121% 219% 29% 140% 64% A A
BIOTECHNOLOGY
Selected Per-Share Data and Ratios G 1986C 1987 E 1988 E 1989 E 1990 E 1991 E 1992 E 1993D 1994 Years ended February 28 Net asset value, beginning of period $ 10.00 $ 12.76 $ 13.90 $ 10.31 $ 11.90 $ 15.28 $ 26.78 $ 27.61 $ 22.60 Income from Investment Operations Net investment income (loss) .04 (.06) (.15) (.04) (.04)J .05K (.11) (.08) (.18) Net realized and unrealized gain 2.72 1.20 (3.16) 1.63 3.60 11.80 3.36 (1.09) 5.15 (loss) on investments Total from investment operations 2.76 1.14 (3.31) 1.59 3.56 11.85 3.25 (1.17) 4.97 Less Distributions In excess of net investment income - -- -- -- -- -- -- (.02) -- -- From net realized gain - -- -- (.28) -- (.24) (.67) (2.52) (3.89) -- Total distributions - -- -- (.28) -- (.24) (.67) (2.54) (3.89) -- Redemption fees added to paid in - -- -- -- -- .06 .32 .12 .05 .04 capital Net asset value, end of period $ 12.76 $ 13.90 $ 10.31 $ 11.90 $ 15.28 $ 26.78 $ 27.61 $ 22.60 $ 27.61 Total return H,I 27.60% 8.93% (23.52) 15.42% 30.53% 81.43% 12.36% (5.92) 22.17% % % Net assets, end of period (000 $ 39,655 $ 75,093 $ 47,557 $ 46,946 $ 70,994 $ 482,27 $ 679,87 $ 507,99 $ 481,14 omitted) 1 7 3 6 Ratio of expenses to average net 1.41% 1.38% 2.51% 2.21% 2.07% 1.63% 1.50% 1.50% 1.61% assets F A A L Ratio of expenses to average net -- -- 2.91% 2.21% 2.07% 1.63% 1.50% 1.50% 1.6 2 % assets A L before expense reductions F Ratio of net investment income to .74% (.41) (1.31) (.43) (.31) .24% (.34) (.37) (.69) average net assets A % % % % % %A % Portfolio turnover rate 937% 431% 205% 80% 290% 166% 160% 79% 51% A A
A ANNUALIZED B FROM JUNE 30, 1986 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1987 C FROM DECEMBER 16, 1985 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1986 D FOR THE TEN MONTHS ENDED FEBRUARY 28, 1993 E FOR THE YEAR ENDED APRIL 30 F EFFECTIVE MAY 1, 1987, FMR VOLUNTARILY AGREED TO LIMIT THE EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS AND EXTRAORDINARY EXPENSES) TO 2.5% OF AVERAGE NET ASSETS. IN ADDITION, FMR HAS AGREED TO REIMBURSE THE FUND IN ACCORDANCE WITH A STATE EXPENSE LIMITATION. 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 FUND S 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 FMR HAS DIRECTED CERTAIN PORTFOLIO TRADES TO BROKERS WHO PAID A PORTION OF THE FUND'S EXPENSES. BROKERAGE AND INVESTMENT MANAGEMENT
Selected Per-Share Data and Ratios F Years ended February 28 1986B 1987 D 1988 D 1989 D 1990 D 1991 D 1992 D 1993C 1994 Net asset value, beginning of period $ 10.00 $ 13.480 $ 13.06 $ 7.14 $ 8.39 $ 7.97 $ 9.28 $ 11.48 $ 14.22 Income from Investment Operations Net investment income (loss) .52 .192 .01 .09 .08 .08 .02 -- (.02) Net realized and unrealized gain (loss) 2.96 (.577) (4.75) 1.25 (.35) 1.15 1.96 2.65 4.95 on investments Total from investment operations 3.48 (.385) (4.74) 1.34 (.27) 1.23 1.98 2.65 4.93 Less Distributions From net investment income - -- (.015) (.03) (.09) (.16) (.09) (.01) -- (.01) From net realized gain - -- (.02 0 ) (1.15) -- -- -- -- -- (1.47) Total distributions -- (.035) (1.18) (.09) (.16) (.09) (.01) -- (1.48) Redemption fees added to paid in capital -- -- -- -- .01 .17 .23 .09 .08 Net asset value, end of period $ 13.48 $ 13.060 $ 7.14 $ 8.39 $ 7.97 $ 9.28 $ 11.48 $ 14.22 $ 17.75 Total return G,H 34.80% (2.85) (34.82) 18.93 (3.23) 17.90% 23.84% 23.87% 35.87% % % % % Net assets, end of period (000 omitted) $ 42,112 $ 13,819 $ 4,254 $ 4,340 $ 2,298 $ 11,285 $ 17,915 $ 24,687 $ 59,810 Ratio of expenses to average net assets E 1.52% 1.67 2.58% 2.54 2.50% 2.50% 2.17% 2.21% 1.77% A % % A I Ratio of expenses to average net assets - -- -- 5.92% 6.21 3.16% 2.91% 2.17% 2.21% 1.79% before expense reductions E % A I Ratio of net investment income to average 1.39% .69 .09% 1.18 .91% .94% .16% .02% (.14) net assets A % % A % Portfolio turnover rate 347% 603 447% 185 142% 62% 254% 111% 295% A % % A
CHEMICALS
Selected Per-Share Data and Ratios F Years ended February 28 1986B 1987 D 1988 D 1989 D 1990 D 1991 D 1992 D 1993C 1994 Net asset value, beginning of period $ 10.00 $ 15.24 $ 20.43 $ 20.67 $ 23.77 $ 22.70 $ 26.25 $ 32.81 $ 28.62 Income from Investment Operations Net investment income .16 .23 .33 .28 .41 .28 .12 .30 .29 Net realized and unrealized gain 5.08 5.02 (.05) 2.82 (.21) 3.94 7.27 (.84) 5.97 (loss) on investments Total from investment operations 5.24 5.25 .28 3.10 .20 4.22 7.39 (.54) 6.26 Less Distributions From net investment income -- -- -- -- (.16) (.10) (.18) (.31) (. 23 ) From net realized gain - -- (.06) (.04) -- (1.13) (.60) (.71) (3.36) ( 3.05 ) Total distributions - -- (.06) (.04) -- (1.29) (.70) (.89) (3.67) ( 3.28 ) Redemption fees added to paid in - -- -- -- -- .02 .03 .06 .02 .06 capital Net asset value, end of period $ 15.24 $ 20.43 $ 20.67 $ 23.77 $ 22.70 $ 26.25 $ 32.81 $ 28.62 $ 31.66 Total return G,H 52.40% 34.59% 1.41% 15.00% .71% 18.99% 29.07% (1.61) 23. 63 % % Net assets, end of period (000 $ 45,014 $ 86,066 $ 118,94 $ 44,914 $ 21,150 $ 20,396 $ 39,566 $ 28,796 $ 62,217 omitted) 2 Ratio of expenses to average net 1.50% 1.52% 1.93% 2.24% 2.37% 2.50% 2.16% 1.89% 1.93% assets E A A Ratio of expenses to average net - -- -- 1.93% 2.24% 2.37% 2.52% 2.16% 1.89% 1.93% assets A before expense reductions E Ratio of net investment income to 1.24% 1.03% 1.61% 1.27% 1.65% 1.21% .40% 1.21% .97% average net assets A A Portfolio turnover rate 125% 170% 179% 117% 99% 87% 87% 214% 81% A A
A ANNUALIZED B FROM JULY 29, 1985 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1986 C FOR THE TEN MONTHS ENDED FEBRUARY 28, 1993 D FOR THE YEAR ENDED APRIL 30 E EFFECTIVE MAY 1, 1987, FMR VOLUNTARILY AGREED TO LIMIT THE EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS AND EXTRAORDINARY EXPENSES) TO 2.5% OF AVERAGE NET ASSETS. IN ADDITION, FMR HAS AGREED TO REIMBURSE THE FUND IN ACCORDANCE WITH A STATE EXPENSE LIMITATION. 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 FMR HAS DIRECTED CERTAIN PORTFOLIO TRADES TO BROKERS WHO PAID A PORTION OF THE FUND'S EXPENSES. COMPUTERS
Selected Per-Share Data and Ratios G 1986B 1987 E 1988 E 1989 E 1990 E 1991 E 1992 E 1993D 1994 Years ended February 28 Net asset value, beginning of period $ 10.00 $ 13.30 $ 16.60 $ 11.86 $ 11.60 $ 12.68 $ 16.60 $ 17.63 $ 20.15 Income from Investment Operations Net investment income (loss) .03 .03 (.11) (.13) (.11) .42J (.03)K (.15) (.21)L Net realized and unrealized gain 3.27 3.31 (4.29) (.13) .98 3.21 1.18 2.44 8.66 (loss) on investments Total from investment operations 3.30 3.34 (4.40) (.26) .87 3.63 1.15 2.29 8.45 Less Distributions From net investment income - -- -- (.01) -- -- (.12) -- -- -- In excess of net investment income -- -- -- -- -- -- (.27) -- -- From net realized gain -- (.04) (.33) -- -- -- (.22) -- (1.80) Total distributions - -- (.04) (.34) -- -- (.12) (.49) -- (1.80) Redemption fees added to paid in - -- -- -- -- .21 .41 .37 .23 .22 capital Net asset value, end of period $ 13.30 $ 16.60 $ 11.86 $ 11.60 $ 12.68 $ 16.60 $ 17.63 $ 20.15 $ 27.02 Total return H,I 33.00% 25.26% (26.33) (2.19) 9.31% 32.11% 9.36% 14.29% 45. 06 % % % Net assets, end of period (000 $ 24,659 $ 118,91 $ 23,110 $ 15,730 $ 27,561 $ 29,455 $ 32,810 $ 47,596 $ 120,43 omitted) 0 5 Ratio of expenses to average net 1.68% 1.58% 2.62% 2.56% 2.64% 2.26% 2.17% 1.81% 1.89% assets F A A M Ratio of expenses to average net -- -- 3.95% 5.26% 3.82% 2.26% 2.17% 1.81% 1.90% assets A M before expense reductions F Ratio of net investment income to (.05) .32% (.75) (1.18) (.94) 2.94% (.18) (.98) (.91) average net assets %A % % % % %A % Portfolio turnover rate 269% 259% 284% 466% 596% 695% 568% 254% 145% A A
CONSTRUCTION AND HOUSING
Selected Per-Share Data and Ratios G 1987C 1988 E 1989 E 1990 E 1991 E 1992 E 1993D 1994 Years ended February 28 Net asset value, beginning of period $ 10.00 $ 13.74 $ 11.25 $ 13.01 $ 11.66 $ 11.76 $ 13.84 $ 15.74 Income from Investment Operations Net investment income (loss) .06 (.05) .14 -- .01 (.06) .02 .01 Net realized and unrealized gain (loss) on 3.68 (2.31) 1.95 .34 1.45 2.93 1.87 4.2 6 investments Total from investment operations 3.74 (2.36) 2.09 .34 1.46 2.87 1.89 4.2 7 Less Distributions From net investment income - -- -- (.06) (.08) (.16) -- -- -- From net realized gain - -- (.13) (.27) (1.62) (1.27) (.88) (.01) (. 22 ) Total distributions - -- (.13) (.33) (1.70) (1.43) (.88) (.01) (.2 2 ) Redemption fees added to paid in capital -- -- -- .01 .07 .09 .02 .03 Net asset value, end of period $ 13.74 $ 11.25 $ 13.01 $ 11.66 $ 11.76 $ 13.84 $ 15.74 $ 19.82 Total return H,I 37.40% (16.85) 19.01% 2.39% 13.46% 26.96% 13.81% 27.45% % Net assets, end of period (000 omitted) $ 6,387 $ 3,112 $ 1,335 $ 1,217 $ 4,070 $ 26,687 $ 31,111 $ 80,999 Ratio of expenses to average net assets F 1.46% 2.70% 2.56% 2.41% 2.48% 2.50% 2.02% 1.66% A A M Ratio of expenses to average net assets before - -- 9.90% 8.08% 3.30% 3.48% 3.10% 2.02% 1.67% expense reductions F A M Ratio of net investment income to average net .57% (.41) 1.16% (.03) .08% (.49) .20% .03% assets A % % % A Portfolio turnover rate 590% 330% 225% 185% 137% 183% 60% 35% A A
A ANNUALIZED B FROM JULY 29, 1985 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1986 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 EFFECTIVE MAY 1, 1987, FMR VOLUNTARILY AGREED TO LIMIT THE EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS AND EXTRAORDINARY EXPENSES) TO 2.5% OF AVERAGE NET ASSETS. IN ADDITION, FMR HAS AGREED TO REIMBURSE THE FUND IN ACCORDANCE WITH A STATE EXPENSE LIMITATION. 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 FUND S 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 FROM INTELLIGENT ELECTRONICS, INC. WHICH AMOUNTED TO $.07 PER SHARE. M FMR HAS DIRECTED CERTAIN PORTFOLIO TRADES TO BROKERS WHO PAID A PORTION OF THE FUND'S EXPENSES. CONSUMER PRODUCTS
Selected Per-Share Data and Ratios 1991B 1992 E 1993D 1994 Years ended February 28 Net asset value, beginning of period $ 10.00 $ 11.22 $ 13.81 $ 12.97 Income from Investment Operations Net investment income (loss) .05J (.07) (.09) (.20) Net realized and unrealized gain (loss) on investments 1.18 2.86 .20 3.84 Total from investment operations 1.23 2.79 .11 3.64 Less Distributions From net investment income (.06) -- -- -- From net realized gain -- (.22) (.97) (1.40) Total distributions (.06) (.22) (.97) (1.40) Redemption fees added to paid in capital .05 .02 .02 .03 Net asset value, end of period $ 11.22 $ 13.81 $ 12.97 $ 15.24 Total return H,I 12.89% 25.27% .98% 28.43% Net assets, end of period (000 omitted) $ 1,877 $ 7,553 $ 7,005 $ 8,374 Ratio of expenses to average net assets F 2.43% 2.48% 2.47% 2.48% A A Ratio of expenses to average net assets before expense reductions F 3.11% 2.83% 3.17% 2.62% A A Ratio of net investment income to average net assets .62% (.56)% (.80)% (1.34)% A A Portfolio turnover rate 108% 140% 215% 169% A A
DEFENSE AND AEROSPACE
Selected Per-Share Data and 1985C 1986 E 1987 E 1988 E 1989 E 1990 E 1991 E 1992 E 1993D 1994 Ratios G Years ended February 28 Net asset value, beginning of $ 10.00 $ 12.51 $ 15.87 $ 16.05 $ 12.16 $ 12.42 $ 11.90 $ 13.72 $ 14.37 $ 15.08 period 0 Income from Investment Operations Net investment income (loss) .21 .08 .045 (.12) (.05) .04 .10 (.01) (.02) .07 Net realized and unrealized gain 2.30 3.38 .360 (3.31) .31 (.56) 1.72 .67 .69 4.57 (loss) on investments Total from investment operations 2.51 3.46 .405 (3.43) .26 (.52) 1.82 .66 .67 4.64 Less Distributions From net investment income - -- (.10) (.025) -- -- -- (.12) (.04) -- (.10) In excess of net investment - -- -- -- -- -- -- -- (.02) -- -- income From net realized gain - -- -- (.200) (.46) -- -- -- -- -- (.62) Total distributions - -- (.10) (.225) (.46) -- -- (.12) (.06) -- (.72) Redemption fees added to paid in - -- -- -- -- -- -- .12 .05 .04 .14 capital Net asset value, end of period $ 12.51 $ 15.87 $ 16.05 $ 12.16 $ 12.42 $ 11.90 $ 13.72 $ 14.37 $ 15.08 $ 19.14 0 Total return H,I 25.10% 27.85 2.57 (20.90) 2.14% (4.19) 16.42 5.18% 4.94% 32.04 % % % % % % Net assets, end of period (000 $ 10,376 $ 11,02 $ 4,582 $ 2,439 $ 1,759 $ 1,599 $ 3,070 $ 1,280 $ 1,463 $ 11,136 omitted) 4 Ratio of expenses to average net 1.50% 1.60 1.54 2.33 2.53% 2.43% 2.49 2.46% 2.48% 2.53 assets F A % % % % A % Ratio of expenses to average net - -- -- -- 8.01 9.21% 3.26% 3.11 2.72% 9.63% 3.58 assets % % A % before expense reductions F Ratio of net investment income to 1.13% .33 .16 (.91) (.39) .34% .78 (.10) (.14)% .40 average net assets A % % % % % % A % Portfolio turnover rate 271% 280 264 162 62% 96% 162 32% 87% 324 A % % % % A %
A ANNUALIZED B FROM JUNE 29, 1990 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1991 C FROM MAY 8, 1984 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1985 D FOR THE TEN MONTHS ENDED FEBRUARY 28, 1993 E FOR THE YEAR ENDED APRIL 30 F EFFECTIVE MAY 1, 1987, FMR VOLUNTARILY AGREED TO LIMIT THE EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS AND EXTRAORDINARY EXPENSES) TO 2.5% OF AVERAGE NET ASSETS. IN ADDITION, FMR HAS AGREED TO REIMBURSE THE FUND IN ACCORDANCE WITH A STATE EXPENSE LIMITATION. 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 $.02 PER SHARE. DEVELOPING COMMUNICATIONS
Selected Per-Share Data and Ratios G Years ended February 28 1991B 1992 E 1993D 1994 Net asset value, beginning of period $ 10.00 $ 11.95 $ 13.54 $ 16.44 Income from Investment Operations Net investment income (loss) (.10) (.08)K (.07) (.16) Net realized and unrealized gain (loss) on investments 1.86 2.42 2.98 4.82 Total from investment operations 1.76 2.34 2.91 4.66 Less Distributions From net realized gain -- (.79) (.03) (1.47) Redemption fees added to paid in capital .19 .04 .02 .02 Net asset value, end of period $ 11.95 $ 13.54 $ 16.44 $ 19.65 Total return H,I 19.50% 21.41% 21.66% 30.24% Net assets, end of period (000 omitted) $ 7,745 $ 39,261 $ 83,383 $ 222,109 Ratio of expenses to average net assets F 2.50%A 2.50% 1.88%A 1.56% Ratio of expenses to average net assets before expense reductions F 3.29%A 2.50% 1.88%A 1.56% Ratio of net investment income to average net assets (1.23)% (.61)% (.59)% (.88)% A A Portfolio turnover rate 469%A 25% 77%A 280%
ELECTRONICS
Selected Per-Share Data and Ratios G Years ended February 28 1986C 1987 E 1988 E 1989 E 1990 E 1991 E 1992 E 1993D 1994 Net asset value, beginning of period $ 10.00 $ 12.14 $ 10.79 $ 7.86 $ 7.32 $ 9.11 $ 10.75 $ 11.81 $ 14.28 Income from Investment Operations Net investment income (loss) .18 (.02)J (.09) (.11) -- (.04) (.12) (.05) (.09) Net realized and unrealized gain 1.96 (1.33) (2.84) (.43) 1.62 1.53 1.00 2.33 6.09 (loss) on investments Total from investment operations 2.14 (1.35) (2.93) (.54) 1.62 1.49 .88 2.28 6.00 Less Distributions From net investment income - -- -- -- -- -- (.01) -- -- -- From net realized gain -- -- -- -- -- -- -- -- (2.75) Total distributions - -- -- -- -- -- (.01) -- -- (2.75) Redemption fees added to paid in - -- -- -- -- .17 .16 .18 .19 .14 capital Net asset value, end of period $ 12.14 $ 10.79 $ 7.86 $ 7.32 $ 9.11 $ 10.75 $ 11.81 $ 14.28 $ 17.67 Total return H,I 21.40% (11.12) (27.15) (6.87) 24.45% 18.15% 9.86% 20.91% 46.24% % % % Net assets, end of period (000 $ 10,750 $ 16,626 $ 12,963 $ 8,667 $ 26,141 $ 18,178 $ 34,222 $ 48,027 $ 110,99 omitted) 3 Ratio of expenses to average net 1.77% 1.61% 2.54% 2.79% 2.57% 2.26% 2.16% 1.69% 1.67% assets F A A Ratio of expenses to average net - -- -- 5.16% 7.69% 3.47% 2.26% 2.16% 1.69% 1.67% assets A before expense reductions F Ratio of net investment income to .85% .05% (1.02) (1.51) (.02) (.45) (1.07) (.50) (.52) average net assets A % % % % % %A % Portfolio turnover rate 326% 511% 686% 697% 378% 268% 299% 293% 163% A A
A ANNUALIZED B FROM JUNE 29, 1990 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1991 C FROM JULY 29, 1985 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1986 D FOR THE TEN MONTHS ENDED FEBRUARY 28, 1993 E FOR THE YEAR ENDED APRIL 30 F EFFECTIVE MAY 1, 1987, FMR VOLUNTARILY AGREED TO LIMIT THE EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS AND EXTRAORDINARY EXPENSES) TO 2.5% OF AVERAGE NET ASSETS. IN ADDITION, FMR HAS AGREED TO REIMBURSE THE FUND IN ACCORDANCE WITH A STATE EXPENSE LIMITATION 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. ENERGY
Selected Per-Share Data and Ratios F Years ended February 28 1985 D 1986 D 1987 D 1988 D 1989 D 1990 D 1991 D 1992 D 1993C 1994 Net asset value, beginning of $ 10.55 $ 11.64 $ 9.92 $ 13.68 $ 13.15 $ 14.40 $ 16.64 $ 15.43 $ 14.70 $ 15.84 period Income from Investment Operations Net investment income .44 .61 .43 .24 .32 .27 .16 .17 .23 .06 Net realized and unrealized gain .78 (1.70) 3.33 (.47) 1.25 2.23 .15 (.75) 1.16 1.35 (loss) on investments Total from investment operations 1.22 (1.09) 3.76 (.23) 1.57 2.50 .31 (.58) 1.39 1.41 Less Distributions From net investment income (.13) (.63) -- (.03) (.32) (.07) (.15) (.16) (.27) (.03) From net realized gain -- -- -- (.27) -- (.22) (1.43) (.02) -- (.57) Total distributions (.13) (.63) -- (.30) (.32) (.29) (1.58) (.18) (.27) (.60) Redemption fees added to paid in -- -- -- -- -- .03 .06 .03 .02 .08 capital Net asset value, end of period $ 11.64 $ 9.92 $ 13.68 $ 13.15 $ 14.40 $ 16.64 $ 15.43 $ 14.70 $ 15.84 $ 16.73 Total return G,H 11.80 (9.55) 37.90 (1.15) 12.37 17.52 2.26 (3.55) 9.81 9.69 % % % % % % % % % % Net assets, end of period (000 $ 52,155 $ 33,516 $ 104,67 $ 109,42 $ 80,225 $ 83,912 $ 92,611 $ 77,334 $ 179,13 $ 145,49 omitted) 1 9 3 0 Ratio of expenses to average net 1.35 1.54 1.50 2.09 1.77 1.94 1.79 1.78 1.71 1.66 assets E % % % % % % % % %A % I Ratio of expenses to average net -- -- -- 2.09 1.77 1.94 1.79 1.78 1.71 1.67 assets before expense reductions % % % % % %A % I E Ratio of net investment income to 4.33 5.11 3.31 1.72 2.48 1.69 .99 1.16 1.88 .37 average net assets % % % % % % % % %A % Portfolio turnover rate 163 167 226 183 168 74 61 81 72 157 % % % % % % % % %A %
ENERGY SERVICE
Selected Per-Share Data and Ratios F Years ended February 28 1986B 1987 D 1988 D 1989 D 1990 D 1991 D 1992 D 1993C 1994 Net asset value, beginning of period $ 10.00 $ 8.82 $ 10.86 $ 9.22 $ 8.99 $ 12.19 $ 12.51 $ 9.43 $ 11.01 Income from Investment Operations Net investment income (loss) .10 .12 (.12) (.04) (.05) -- (.12) .01 .03 Net realized and unrealized gain (loss) (1.28) 1.92 (1.52) (.19) 3.17 .15 (3.11) 1.47 .51 on investments Total from investment operations (1.18) 2.04 (1.64) (.23) 3.12 .15 (3.23) 1.48 .54 Less Distributions From net investment income - -- -- -- -- -- (.02) -- -- (.05) Redemption fees added to paid in - -- -- -- -- .08 .19 .15 .10 .16 capital Net asset value, end of period $ 8.82 $ 10.86 $ 9.22 $ 8.99 $ 12.19 $ 12.51 $ 9.43 $ 11.01 $ 11.66 Total return G,H (11.80) 23.13% (15.10) (2.49) 35.60% 2.80% (24.62) 16.76% 6.36% % % % % Net assets, end of period (000 omitted) $ 623 $ 19,375 $ 33,089 $ 44,003 $ 61,821 $ 73,398 $ 41,322 $ 85,234 $ 40,857 Ratio of expenses to average net assets 1.51% 1.49% 2.71% 2.53% 2.29% 1.82% 2.07% 1.76% 1.65% E A A I Ratio of expenses to average net assets -- -- 3.10% 3.45% 2.29% 1.82% 2.07% 1.76% 1.66% before expense reductions E A I Ratio of net investment income to 2.57% 1.03% (1.06) (.45) (.42) (.02) (1.13) .13% .23% average net assets A % % % % % A Portfolio turnover rate 54% 575% 461% 78% 128% 62% 89% 236% 137% A A
A ANNUALIZED B FROM DECEMBER 16, 1985 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1986 C FOR THE TEN MONTHS ENDED FEBRUARY 28, 1993 D FOR THE YEAR ENDED APRIL 30 E EFFECTIVE MAY 1, 1987, FMR VOLUNTARILY AGREED TO LIMIT THE EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS AND EXTRAORDINARY EXPENSES) TO 2.5% OF AVERAGE NET ASSETS. IN ADDITION, FMR HAS AGREED TO REIMBURSE THE FUND IN ACCORDANCE WITH A STATE EXPENSE LIMITATION. 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 FMR HAS DIRECTED CERTAIN PORTFOLIO TRADES TO BROKERS WHO PAID A PORTION OF THE FUND'S EXPENSES. ENVIRONMENTAL SERVICES
Selected Per-Share Data and Ratios F Years ended February 28 1990B 1991 D 1992 D 1993C 1994 Net asset value, beginning of period $ 10.00 $ 11.41 $ 12.95 $ 11.39 $ 11.36 Income from Investment Operations Net investment income (loss) .02 (.04) (.09) (.06) (.11) Net realized and unrealized gain (loss) on investments 1.38 1.55 (1.06) .42 .67 Total from investment operations 1.40 1.51 (1.15) .36 .56 Less Distributions From net investment income (.01) -- -- -- -- From net realized gain -- -- (.42) (.39) -- Total distributions (.01) -- (.42) (.39) -- Redemption fees added to paid in capital .02 .03 .01 -- .01 Net asset value, end of period $ 11.41 $ 12.95 $ 11.39 $ 11.36 $ 11.93 Total return G,H 14.20 13.50 (8.67) 3.34% 5.02 % % % % Net assets, end of period (000 omitted) $ 101,73 $ 100,26 $ 65,132 $ 65,913 $ 65,956 6 3 Ratio of expenses to average net assets E 2.25 2.03 2.03 1.99% 2.03 %A % % A % I Ratio of expenses to average net assets before expense reductions E 2.25 2.03 2.03 1.99% 2.07 %A % % A % I Ratio of net investment income to average net assets .16 (.30) (.74) (.70) (1.02) %A % % %A % Portfolio turnover rate 72 122 130 176% 191 %A % % A %
FINANCIAL SERVICES
Selected Per-Share Data and Ratios F Years ended February 28 1985 D 1986 D 1987 D 1988 D 1989 D 1990 D 1991 D 1992 D 1993C 1994 Net asset value, beginning of $ 16.63 $ 22.77 $ 34.360 $ 32.47 $ 26.36 $ 30.64 $ 28.28 $ 30.55 $ 42.42 $ 53.29 period Income from Investment Operations Net investment income .76 .85 .557 .48 1.00 .66 .58 .54 .33 .29 Net realized and unrealized gain 5.46 11.03 (1.912) (4.93) 4.09 (2.53) 1.67 11.35 14.30 5.02 (loss) on investments Total from investment operations 6.22 11.88 (1.355) (4.45) 5.09 (1.87) 2.25 11.89 14.63 5.31 Less Distributions From net investment income (.08) (.29) (.205) (.12) (.81) (.33) (.52) (.35) (.51) (.20) From net realized gain - -- -- (.330) (1.54) -- (.19) -- -- (3.38) (7.32) Total distributions (.08) (.29) (.535) (1.66) (.81) (.52) (.52) (.35) (3.89) (7.52) Redemption fees added to paid in - -- -- -- -- -- .03 .54 .33 .13 .16 capital Net asset value, end of period $ 22.77 $ 34.36 $ 32.470 $ 26.36 $ 30.64 $ 28.28 $ 30.55 $ 42.42 $ 53.29 $ 51.24 Total return G,H 37.59 52.72 (4.05) (12.97) 19.68 (6.20) 10.51 40.31 36.46 10.85 % % % % % % % % % % Net assets, end of period (000 $ 68,543 $ 234,26 $ 56,472 $ 28,371 $ 32,647 $ 21,087 $ 35,962 $ 91,700 $ 214,61 $ 116,19 omitted) 8 2 5 Ratio of expenses to average net 1.50 1.26 1.57 2.47 1.07 2.22 2.49 1.85 1.54 1.63 assets E % % % % % % % % %A % I Ratio of expenses to average net - -- -- -- 2.47 1.07 2.22 2.49 1.85 1.54 1.64 assets % % % % % %A % I before expense reductions E Ratio of net investment income to 4.17 3.05 1.65 1.58 3.53 2.03 2.22 1.49 .86 .53 average net assets % % % % % % % % %A % Portfolio turnover rate 170 136 40 81 186 308 237 164 100 93 % % % % % % % % %A %
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 EFFECTIVE MAY 1, 1987, FMR VOLUNTARILY AGREED TO LIMIT THE EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS AND EXTRAORDINARY EXPENSES) TO 2.5% OF AVERAGE NET ASSETS. IN ADDITION, FMR HAS AGREED TO REIMBURSE THE FUND IN ACCORDANCE WITH A STATE EXPENSE LIMITATION. 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 FMR HAS DIRECTED CERTAIN PORTFOLIO TRADES TO BROKERS WHO PAID A PORTION OF THE FUND'S EXPENSES. FOOD AND AGRICULTURE
Selected Per-Share Data and Ratios F 1986B 1987 D 1988 D 1989 D 1990 D 1991 D 1992 D 1993C 1994 Years ended February 28 Net asset value, beginning of period $ 10.00 $ 14.05 $ 17.51 $ 16.05 $ 20.76 $ 22.84 $ 27.87 $ 29.22 $ 30.86 Income from Investment Operations Net investment income (loss) .19 .10 (.01) .09 .19 .21 .13 .05 .09 Net realized and unrealized gain 3.86 3.36 (.87) 4.67 4.07 5.78 2.89 3.26 3.29 (loss) on investments Total from investment operations 4.05 3.46 (.88) 4.76 4.26 5.99 3.02 3.31 3.38 Less Distributions From net investment income - -- -- (.03) (.05) (.04) (.27) (.11) (.10) (.06) From net realized gain - -- -- (.55) -- (2.17) (.79) (1.59) (1.57) (2.70) Total distributions - -- -- (.58) (.05) (2.21) (1.06) (1.70) (1.67) (2.76) Redemption fees added to paid in - -- -- -- -- .03 .10 .03 -- .01 capital Net asset value, end of period $ 14.05 $ 17.51 $ 16.05 $ 20.76 $ 22.84 $ 27.87 $ 29.22 $ 30.86 $ 31.49 Total return G,H 40.50% 24.63% (4.63) 29.70% 20.83% 27.39% 11.11% 11.72% 11.6 9 % % Net assets, end of period (000 $ 9,213 $ 11,244 $ 9,298 $ 15,536 $ 25,965 $ 64,490 $ 108,92 $ 108,37 $ 95,010 omitted) 2 7 Ratio of expenses to average net 1.75% 1.67% 2.45% 2.50% 2.53% 2.22% 1.83% 1.67% 1.64% assets E A A K Ratio of expenses to average net - -- -- 4.21% 3.39% 2.58% 2.22% 1.83% 1.67% 1.65% assets A K before expense reductions E Ratio of net investment income to 1.70% .71% (.04) .48% .82% .85% .46% .21% .29% average net assets A % A Portfolio turnover rate 576% 608% 215% 248% 267% 124% 63% 515% 96% A A
HEALTH CARE
Selected Per-Share Data and 1985 D 1986 D 1987 D 1988 D 1989 D 1990 D 1991 D 1992 D 1993C 1994 Ratios F Years ended February 28 Net asset value, beginning of $ 16.18 $ 21.83 $ 33.57 $ 41.98 $ 33.59 $ 39.79 $ 46.15 $ 69.99 $ 70.42 $ 52.57 period 0 Income from Investment Operations Net investment income (loss) .07 .121 (.04)I .02 .33 .72 .73J (.02) .13 .15 Net realized and unrealized gain 5.63 11.664 8.81 (7.49) 6.15 6.56 28.70 9.47 (9.34) 10.61 (loss) on investments Total from investment operations 5.70 11.785 8.77 (7.47) 6.48 7.28 29.43 9.45 (9.21) 10.76 Less Distributions From net investment income (.05) (.045) -- -- (.28) (.13) (.20) (.34) (.16) (.07) From net realized gain - -- -- (.36) (.92) -- (.84) (5.67) (8.81) (8.51) -- Total distributions (.05) (.045) (.36) (.92) (.28) (.97) (5.87) (9.15) (8.67) (.07) Redemption fees added to paid in - -- -- -- -- -- .05 .28 .13 .03 .05 capital Net asset value, end of period $ 21.83 $ 33.57 $ 41.98 $ 33.59 $ 39.79 $ 46.15 $ 69.99 $ 70.42 $ 52.57 $ 63.31 0 Total return G,H 35.34 54.06 26.34% (17.58) 19.44 18.55 69.32 13.92% (14.81) 20.57 % % % % % % % % Net assets, end of period (000 $ 145,5 $ 251,8 $ 341,63 $ 208,04 $ 210,70 $ 217,52 $ 624,01 $ 838,81 $ 536,36 $ 522,89 omitted) 20 87 3 8 0 2 8 4 7 0 Ratio of expenses to average net 1.26 1.29 1.39% 1.64% 1.41 1.74 1.53 1.44% 1.46 1.55 assets E % % % % % %A % K Ratio of expenses to average net - -- -- -- 1.64% 1.41 1.74 1.53 1.44% 1.46 1.59 assets % % % %A % K before expense reductions E Ratio of net investment income to .56 .53 (.01) .06% .95 1.61 1.28 (.02) .24 .26 average net assets % % % % % % % %A % Portfolio turnover rate 159 217 213% 122% 114 126 159 154% 112 213 % % % % % %A %
A ANNUALIZED B FROM JULY 29, 1985 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1986 C FOR THE TEN MONTHS ENDED FEBRUARY 28, 1993 D FOR THE YEAR ENDED APRIL 30 E EFFECTIVE MAY 1, 1987, FMR VOLUNTARILY AGREED TO LIMIT THE EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS AND EXTRAORDINARY EXPENSES) TO 2.5% OF AVERAGE NET ASSETS. IN ADDITION, FMR HAS AGREED TO REIMBURSE THE FUND IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.. 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 FMR HAS DIRECTED CERTAIN PORTFOLIO TRADES TO BROKERS WHO PAID A PORTION OF THE FUND'S EXPENSES. HOME FINANCE
Selected Per-Share Data and Ratios G 1986B 1987 E 1988 E 1989 E 1990 E 1991 E 1992 E 1993D 1994 Years ended February 28 Net asset value, beginning of period $ 10.00 $ 13.32 $ 14.44 $ 8.57 $ 10.88 $ 8.98 $ 10.84 $ 15.38 $ 22.18 Income from Investment Operations Net investment income (loss) .03 (.01) .02 .11 .09 .16 .05 .09 .03 Net realized and unrealized gain 3.29 1.13 (2.39) 2.33 (1.47) 1.69 4.40 6.80 4.15 (loss) on investments Total from investment operations 3.32 1.12 (2.37) 2.44 (1.38) 1.85 4.45 6.89 4.18 Less Distributions From net investment income - -- -- -- (.13) (.04) (.14) (.14) (.01) (.01) From net realized gain - -- -- (3.50) -- (.49) -- -- (.28) (1.40) Total distributions - -- -- (3.50) (.13) (.53) (.14) (.14) (.29) (1.41) Redemption fees added to paid in - -- -- -- -- .01 .15 .23 .20 .08 capital Net asset value, end of period $ 13.32 $ 14.44 $ 8.57 $ 10.88 $ 8.98 $ 10.84 $ 15.38 $ 22.18 $ 25.03 Total return H,I 33.20% 8.41% (11.60) 28.76% (13.04) 22.88% 43.62% 46.43% 19.61% % % Net assets, end of period (000 $ 36,792 $ 24,656 $ 6,387 $ 5,557 $ 5,432 $ 8,782 $ 49,405 $ 337,90 $ 155,56 omitted) 3 3 Ratio of expenses to average net 1.54% 1.53% 2.57% 2.56% 2.53% 2.50% 2.08% 1.55% 1.58% assets F A A Ratio of expenses to average net - -- -- 4.04% 5.12% 2.92% 2.82% 2.08% 1.55% 1.58% assets A before expense reductions F Ratio of net investment income to 5.76% (.05) .17% 1.13% .83% 1.78% .40% .61% .11% average net assets A % A Portfolio turnover rate 312% 335% 456% 216% 282% 159% 134% 61% 95% A A
INDUSTRIAL EQUIPMENT
Selected Per-Share Data and Ratios G 1987C 1988 E 1989 E 1990 E 1991 E 1992 E 1993D 1994 Years ended February 28 Net asset value, beginning of period $ 10.00 $ 12.75 $ 10.52 $ 11.05 $ 12.41 $ 11.60 $ 13.89 $ 15.04 Income from Investment Operations Net investment income (loss) .07 (.04) (.07) .13J .01 (.07) .02 -- Net realized and unrealized gain (loss) on 2.68 (1.96) .60 1.19 (.80) 2.39 1.09 5.92 investments Total from investment operations 2.75 (2.00) .53 1.32 (.79) 2.32 1.11 5.92 Less Distributions From net investment income - -- -- -- -- -- -- -- (.01) In excess of net investment income - -- -- -- -- (.09) (.11) -- -- From net realized gain - -- (.23) -- -- -- -- -- (.40) Total distributions - -- (.23) -- -- (.09) (.11) -- (.41) Redemption fees added to paid in capital - -- -- -- .04 .07 .08 .04 .06 Net asset value, end of period $ 12.75 $ 10.52 $ 11.05 $ 12.41 $ 11.60 $ 13.89 $ 15.04 $ 20.61 Total return H,I 27.50% (15.32) 5.04% 12.31% (5.90) 20.91% 8.28% 40. 07 % % % Net assets, end of period (000 omitted) $ 2,355 $ 5,607 $ 2,965 $ 3,240 $ 1,949 $ 7,529 $ 14,601 $ 206,0 1 2 Ratio of expenses to average net assets F 1.70% 2.65% 2.58% 2.59% 2.52% 2.49% 2.49% 1.68% A A K Ratio of expenses to average net assets before - -- 5.78% 6.14% 3.86% 2.99% 2.86% 3.40% 1.69% expense reductions F A K Ratio of net investment income to average net .38% (.37) (.66) 1.06% .09% (.57) .15% .01% assets A % % % A Portfolio turnover rate 514% 407% 164% 132% 43% 167% 407% 95% A A
A ANNUALIZED B FROM DECEMBER 16, 1985 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1986 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 EFFECTIVE MAY 1, 1987, FMR VOLUNTARILY AGREED TO LIMIT THE EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS AND EXTRAORDINARY EXPENSES) TO 2.5% OF AVERAGE NET ASSETS. IN ADDITION, FMR HAS AGREED TO REIMBURSE THE FUND IN ACCORDANCE WITH A STATE EXPENSE LIMITATION. 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 $.11 PER SHARE. K FMR HAS DIRECTED CERTAIN PORTFOLIO TRADES TO BROKERS WHO PAID A PORTION OF THE FUND'S EXPENSES. INDUSTRIAL MATERIALS
Selected Per-Share Data and Ratios G 1987B 1988 E 1989 E 1990 E 1991 E 1992 E 1993D 1994 Years ended February 28 Net asset value, beginning of period $ 10.00 $ 14.56 $ 13.15 $ 13.73 $ 12.43 $ 12.63 $ 17.12 $ 17.44 Income from Investment Operations Net investment income (loss) .04 .06 (.07) .17 .15 .04 .12 .15 Net realized and unrealized gain (loss) on 4.52 (1.44) .86 (1.50) .37 4.32 .19 J 4.07 investments Total from investment operations 4.56 (1.38) .79 (1.33) .52 4.36 .31 4.22 Less Distributions From net investment income -- (.02) (.21) -- -- -- (.08) (.06) In excess of net investment income -- -- -- -- (.34) (.06) -- -- From net realized gain - -- (.01) -- -- -- -- -- -- Total distributions - -- (.03) (.21) -- (.34) (.06) (.08) (.06) Redemption fees added to paid in capital - -- -- -- .03 .02 .19 .09 .07 Net asset value, end of period $ 14.56 $ 13.15 $ 13.73 $ 12.43 $ 12.63 $ 17.12 $ 17.44 $ 21.67 Total return H,I 45.60% (9.45) 6.13% (9.47) 4.25% 36.15% 2.36% 24.66% % % Net assets, end of period (000 omitted) $ 27,976 $ 42,751 $ 8,571 $ 3,140 $ 2,689 $ 22,184 $ 25,041 $ 155,72 1 Ratio of expenses to average net assets F 1.56% 2.43% 2.68% 2.59% 2.49% 2.47% 2.02% 2.08% A A K Ratio of expenses to average net assets before - -- 2.43% 4.18% 3.81% 2.67% 2.81% 2.02% 2.10% expense reductions F A K Ratio of net investment income to average net .15% .53% (.54) 1.22% 1.30% .25% .86% .75% assets A % A Portfolio turnover rate 414% 455% 289% 250% 148% 222% 273% 185% A A
INSURANCE
Selected Per-Share Data and Ratios G 1986C 1987 E 1988 E 1989 E 1990 E 1991 E 1992 E 1993D 1994 Years ended February 28 Net asset value, beginning of period $ 10.00 $ 12.01 $ 11.30 $ 9.90 $ 12.65 $ 13.63 $ 16.73 $ 18.03 $ 21.58 Income from Investment Operations Net investment income (loss) .04 .05 .03 .11 .17 .23 .04 (.04) -- Net realized and unrealized gain (loss) 1.97 (.76) (1.29) 2.73 .93 2.83 1.48 5.12 (.24) on investments Total from investment operations 2.01 (.71) (1.26) 2.84 1.10 3.06 1.52 5.08 (.24) Less Distributions From net investment income - -- -- (.14) (.09) (.15) -- (.26) -- (.01) In excess of net investment income -- -- -- -- -- -- -- (.03) -- From net realized gain - -- -- -- -- -- -- -- (1.71) (1.96) Total distributions - -- -- (.14) (.09) (.15) -- (.26) (1.74) (1.97) Redemption fees added to paid in capital - -- -- -- -- .03 .04 .04 .21 .04 Net asset value, end of period $ 12.01 $ 11.30 $ 9.90 $ 12.65 $ 13.63 $ 16.73 $ 18.03 $ 21.58 $ 19.41 Total return H,I 20.10% (5.91) (11.04) 28.83 8.82 22.74 9.47% 31.98% (1.24) % % % % % % Net assets, end of period (000 omitted) $ 5,776 $ 7,573 $ 3,515 $ 3,160 $ 2,240 $ 2,176 $ 2,573 $ 26,367 $ 18,419 Ratio of expenses to average net assets F 1.51% 1.63% 2.48% 2.53 2.50 2.49 2.47% 2.49% 1.93% A % % % A Ratio of expenses to average net assets - -- -- 5.47% 4.90 2.97 2.73 2.71% 2.52% 1.93% before expense reductions F % % % A Ratio of net investment income to average 1.34% .53% .28% .98 1.15 1.58 .22% (.26) (.02) net assets A % % % %A % Portfolio turnover rate 299% 718% 174% 95 158 98 112% 81% 101% A % % % A
A ANNUALIZED B FROM SEPTEMBER 29, 1986 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1987 C FROM DECEMBER 16, 1985 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1986 D FOR THE TEN MONTHS ENDED FEBRUARY 28, 1993 E FOR THE YEAR ENDED APRIL 30 F EFFECTIVE MAY 1, 1987, FMR VOLUNTARILY AGREED TO LIMIT THE EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS AND EXTRAORDINARY EXPENSES) TO 2.5% OF AVERAGE NET ASSETS. IN ADDITION, FMR HAS AGREED TO REIMBURSE THE FUND IN ACCORDANCE WITH A STATE EXPENSE LIMITATION. 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 THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE AGGREGATE NET 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 HAS DIRECTED CERTAIN PORTFOLIO TRADES TO BROKERS WHO PAID A PORTION OF THE FUND'S EXPENSES. LEISURE
Selected Per-Share Data and 1985B 1986 E 1987 E 1988 E 1989 E 1990 E 1991 E 1992 E 1993D 1994 Ratios G Years ended February 28 Net asset value, beginning of $ 10.00 $ 13.95 $ 22.54 $ 24.83 $ 22.38 $ 28.51 $ 24.90 $ 26.32 $ 31.65 $ 35.77 period 0 Income from Investment Operations Net investment income (loss) .17 .0 47 (.09) (.03) .12 .26J .08 (.08) (.11) (.29) Net realized and unrealized gain 3.78 8.5 68 2.43 (.39) 6.41 (1.81) 1.55 5.40 4.21 12.98 (loss) on investments Total from investment operations 3.95 8.6 15 2.34 (.42) 6.53 (1.55) 1.63 5.32 4.10 12.69 Less Distributions From net investment income -- (.0 25 ) (.01) -- -- (.07) (.23) -- -- -- From net realized gain - -- -- (.04) (2.03) (.40) (2.03) -- -- -- (3.26) Total distributions - -- (.0 25 ) (.05) (2.03) (.40) (2.10) (.23) -- -- (3.26) Redemption fees added to paid in - -- -- -- -- -- .04 .02 .01 .02 .10 capital Net asset value, end of period $ 13.95 $ 22.54 $ 24.83 $ 22.38 $ 28.51 $ 24.90 $ 26.32 $ 31.65 $ 35.77 $ 45.30 0 Total return H,I 39.50 61.84 10.40 .25 29.65 (6.33) 6.78 20.25 13.02% 37.1 4 % % % % % % % % % Net assets, end of period (000 $ 27,427 $ 207,8 $ 72,274 $ 56,149 $ 91,36 $ 49,609 $ 40,72 $ 40,051 $ 44,824 $ 105,83 omitted) 40 7 7 3 Ratio of expenses to average net 1.50 1.41 1.55 1.96 1.73 1.96 2.27 2.21 1.90% 1.53 assets F %A % % % % % % % A % K Ratio of expenses to average net - -- -- -- 1.96 1.73 1.96 2.27 2.21 1.90% 1.55 assets % % % % % A % K before expense reductions F Ratio of net investment income to 1.16 .48 (.16) (.13) .50 .86 .34 (.28) (.39)% (.69) average net assets %A % % % % % % % A % Portfolio turnover rate 243 148 148 229 249 124 75 45 109% 170 %A % % % % % % % A %
MEDICAL DELIVERY
Selected Per-Share Data and Ratios G 1987C 1988 E 1989 E 1990 E 1991 E 1992 E 1993D 1994 Years ended February 28 Net asset value, beginning of period $ 10.00 $ 8.67 $ 7.42 $ 9.85 $ 11.17 $ 18.75 $ 19.64 $ 14.46 Income from Investment Operations Net investment income (loss) .07 (.05) .05 .16 (.01) (.15) (.13) (.10) Net realized and unrealized gain (loss) on (1.40) (.82) 2.38 1.43 7.76 2.16 (3.56) 5.84 investments Total from investment operations (1.33) (.87) 2.43 1.59 7.75 2.01 (3.69) 5.74 Less Distributions From net investment income - -- (.02) -- (.05) -- -- -- -- From net realized gain - -- (.36) -- (.26) (.39) (1.24) (1.55) -- Total distributions - -- (.38) -- (.31) (.39) (1.24) (1.55) -- Redemption fees added to paid in capital - -- -- -- .04 .22 .12 .06 .08 Net asset value, end of period $ 8.67 $ 7.42 $ 9.85 $ 11.17 $ 18.75 $ 19.64 $ 14.46 $ 20.28 Total return H,I (13.30)% (9.11)% 32.75% 16.35% 72.85% 11.71% (19.63)% 40.25% Net assets, end of period (000 omitted) $ 3,430 $ 3,639 $ 20,077 $ 23,559 $ 131,62 $ 129,36 $ 71,809 $ 188,55 2 1 3 Ratio of expenses to average net assets F 1.49% 2.48% 2.48% 2.16% 1.94% 1.69% 1.77% 1.79% A A K Ratio of expenses to average net assets - -- 6.38% 5.13% 2.16% 1.94% 1.69% 1.77% 1.82% before expense reductions F A K Ratio of net investment income to average .62% (.65)% .59% 1.43% (.07)% (.71)% (.89)% (.57)% net assets A A Portfolio turnover rate 221% 264% 92% 253% 165% 181% 155% 164% A A
A ANNUALIZED B FROM MAY 8, 1984 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1985 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 EFFECTIVE MAY 1, 1987, FMR VOLUNTARILY AGREED TO LIMIT THE EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS AND EXTRAORDINARY EXPENSES) TO 2.5% OF AVERAGE NET ASSETS. IN ADDITION, FMR HAS AGREED TO REIMBURSE THE FUND IN ACCORDANCE WITH A STATE EXPENSE LIMITATION. 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 $.16 PER SHARE. K FMR HAS DIRECTED CERTAIN PORTFOLIO TRADES TO BROKERS WHO PAID A PORTION OF THE FUND'S EXPENSES. MULTIMEDIA
Selected Per-Share Data and Ratios G Years ended February 28 1987B 1988 E 1989 E 1990 E 1991 E 1992 E 1993D 1994 Net asset value, beginning of period $ 10.00 $ 12.05 $ 12.45 $ 16.20 $ 11.65 $ 12.96 $ 15.93 $ 18.26 Income from Investment Operations Net investment income (loss) .03 (.06) (.14) (.02)J (.05) (.17) (.07) (.10) Net realized and unrealized gain (loss) on 2.02 1.25 4.64 (1.96) 1.29 3.08 2.61 6.2 8 investments Total from investment operations 2.05 1.19 4.50 (1.98) 1.24 2.91 2.54 6.1 8 Less Distributions From net investment income - -- (.01) -- - - -- -- -- -- From net realized gain - -- (.78) (.75) (2.57) -- -- (.23) (. 65 ) Total distributions -- (.79) (.75) (2.57) -- -- (.23) (.6 5 ) Redemption fees added to paid in capital - -- -- -- -- .07 .06 .02 .08 Net asset value, end of period $ 12.05 $ 12.45 $ 16.20 $ 11.65 $ 12.96 $ 15.93 $ 18.26 $ 23.87 Total return H,I 20.50% 11.49% 38.22% (15.32)% 11.24% 22.92% 16.14% 34.86% Net assets, end of period (000 omitted) $ 7,008 $ 17,356 $ 45,670 $ 7,400 $ 5,177 $ 8,393 $ 16,647 $ 49,177 Ratio of expenses to average net assets F 1.50% 2.48% 2.66% 2.51% 2.53% 2.49% 2.49% 1.63% A A K Ratio of expenses to average net assets - -- 3.32% 3.17% 2.51% 2.77% 2.78% 2.54% 1.66% before expense reductions F A K Ratio of net investment income to average .25% (.52)% (1.01)% (.14)% (.43)% (1.22)% (.52)% (.42)% net assets A A Portfolio turnover rate 224% 325% 437% 75% 150% 111% 70% 340% A A
NATURAL GAS
Selected Per-Share Data and Ratios G Year ended February 28 1994C Net asset value, beginning of period $ 10.00 Income from Investment Operations Net investment income .02 Net realized and unrealized gain (loss) on investments (.46) Total from investment operations (.44) Less Distributions From net realized gain (. 07 ) In excess of net realized gain (.06) Total distributions (.13) Redemption fees added to paid in capital .05 Net asset value, end of period $ 9.48 Total return H,I (3.84)% Net assets, end of period (000 omitted) $ 63,073 Ratio of expenses to average net assets F 1.93% A, K Ratio of expenses to average net assets before expense reductions F 1.94% A, K Ratio of net investment income to average net assets .17% A Portfolio turnover rate 44% A
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 EFFECTIVE MAY 1, 1987, FMR VOLUNTARILY AGREED TO LIMIT THE EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS AND EXTRAORDINARY EXPENSES) TO 2.5% OF AVERAGE NET ASSETS. IN ADDITION, FMR HAS AGREED TO REIMBURSE THE FUND IN ACCORDANCE WITH A STATE EXPENSE LIMITATION. 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 FUND S 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 FMR HAS DIRECTED CERTAIN PORTFOLIO TRADES TO BROKERS WHO PAID A PORTION OF THE FUND'S EXPENSES. PAPER AND FOREST PRODUCTS
Selected Per-Share Data and Ratios F 1987B 1988 D 1989 D 1990 D 1991 D 1992 D 1993C 1994 Years ended February 28 Net asset value, beginning of period $ 10.00 $ 15.86 $ 11.71 $ 12.33 $ 11.00 $ 12.64 $ 15.37 $ 16.08 Income from Investment Operations Net investment income (loss) .19 (.03) .01 .11 .19 .13 .06 (.01) Net realized and unrealized gain (loss) on 5.67 (3.04) .64 (1.31) 1.56 2.64 .65I 3.38 investments Total from investment operations 5.86 (3.07) .65 (1.20) 1.75 2.77 .71 3.37 Less Distributions From net investment income - -- (.04) (.03) (.15) (.17) (.30) (.09) (.01) From net realized gain - -- (1.04) -- -- -- -- -- -- Total distributions - -- (1.08) (.03) (.15) (.17) (.30) (.09) (.01) Redemption fees added to paid in capital - -- -- -- .02 .06 .26 .09 .17 Net asset value, end of period $ 15.86 $ 11.71 $ 12.33 $ 11.00 $ 12.64 $ 15.37 $ 16.08 $ 19.61 Total return G,H 58.60% (19.01) 5.57% (9.68) 16.85% 24.52% 5.25% 22.03% % % Net assets, end of period (000 omitted) $ 110,41 $ 15,426 $ 9,479 $ 5,289 $ 12,579 $ 28,957 $ 25,098 $ 66,908 8 Ratio of expenses to average net assets E 1.29% 2.52% 2.54% 2.57% 2.49% 2.05% 2.21% 2.07% A A J Ratio of expenses to average net assets before - -- 3.67% 4.34% 3.28% 2.72% 2.05% 2.21% 2.08% expense reductions E A J Ratio of net investment income to average net 1.61% (.20) .07% .92% 1.73% .92% .49% (.08) assets A % A % Portfolio turnover rate 466% 209% 154% 221% 171% 421% 222% 176% A A
PRECIOUS METALS AND MINERALS
Selected Per-Share Data and 1985 D 1986 D 1987 D 1988 D 1989 D 1990 D 1991 D 1992 D 1993C 1994 Ratios F Years ended February 28 Net asset value, beginning of $ 14.850 $ 11.17 $ 9.27 0 $ 18.38 $ 13.09 $ 11.35 $ 12.23 $ 10.68 $ 9.90 $ 9.86 period Income from Investment Operations Net investment income (loss) .445 .41 .321 .41 .26 .13 .18 .10 .09 .21 Net realized and unrealized gain (3.970) (1.92) 8.884 (5.51) (1.54) .84 (1.71) (.91) (.05) 6.48 (loss) on investments Total from investment operations (3.525) (1.51) 9.205 (5.10) (1.28) .97 (1.53) (.81) .04 6.69 Less Distributions From net investment income (.155) (.39) (.095) (.07) (.46) (.18) (.15) (.10) (.17) (. 19 ) In excess of net investment -- -- -- -- -- -- -- -- -- (.02) income From net realized gain - -- -- -- (.12) -- -- -- -- -- -- Total distributions (.155) (.39) (.095) (.19) (.46) (.18) (.15) (.10) (.17) (.21) Redemption fees added to paid in - -- -- -- -- -- .09 .13 .13 .09 .28 capital Net asset value, end of period $ 11.170 $ 9.27 $ 18.380 $ 13.09 $ 11.35 $ 12.23 $ 10.68 $ 9.90 $ 9.86 $ 16.62 Total return G,H (23.91) (13.90) 100.65 (27.88) (9.63) 9.08 (11.45) (6.46) 1.51 70.58 % % % % % % % % % % Net assets, end of period (000 $ 186,54 $ 116,07 $ 648,05 $ 242,81 $ 180,83 $ 192,55 $ 155,36 $ 130,00 $ 137,92 $ 409,21 omitted) 9 9 1 0 7 1 7 2 2 2 Ratio of expenses to average net 1.11 1.48 1.50 2.02 1.88 1.93 1.79 1.81 1.73 1.55 assets E % % % % % % % % %A % Ratio of expenses to average net - -- -- -- 2.02 1.88 1.93 1.79 1.81 1.73 1.55 assets % % % % % %A % before expense reductions E Ratio of net investment income to 3.65 4.16 3.44 2.42 2.18 1.01 1.52 .92 1.12 1.38 average net assets % % % % % % % % %A % Portfolio turnover rate 46 65 84 86 72 98 41 44 36 73 % % % % % % % % %A %
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 EFFECTIVE MAY 1, 1987, FMR VOLUNTARILY AGREED TO LIMIT THE EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS AND EXTRAORDINARY EXPENSES) TO 2.5% OF AVERAGE NET ASSETS. IN ADDITION, FMR HAS AGREED TO REIMBURSE THE FUND IN ACCORDANCE WITH A STATE EXPENSE LIMITATION. 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 FUND S 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 THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE AGGREGATE NET 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. J FMR HAS DIRECTED CERTAIN PORTFOLIO TRADES TO BROKERS WHO PAID A PORTION OF THE FUND'S EXPENSES. REGIONAL BANKS
Selected Per-Share Data and Ratios G Years ended February 28 1987B 1988 E 1989 E 1990 E 1991 E 1992 E 1993D 1994 Net asset value, beginning of period $ 10.00 $ 9.21 $ 8.94 $ 11.33 $ 9.77 $ 11.40 $ 16.48 $ 20.88 Income from Investment Operations Net investment income .17 .15 .22 .21 .22 .25 .16 .19 Net realized and unrealized gain (loss) on (.96) (.21) 2.84 (1.03) 1.41 5.37 5.09 .93 investments Total from investment operations (.79) (.06) 3.06 (.82) 1.63 5.62 5.25 1.12 Less Distributions From net investment income - -- (.06) (.20) (.11) (.15) (.15) (.11) (.15) From net realized gain -- (.15) (.47) (.65) -- (.53) (.81) (3.92) Total distributions -- (.21) (.67) (.76) (.15) (.68) (.92) (4.07) Redemption fees added to paid in capital - -- -- -- .02 .15 .14 .07 .06 Net asset value, end of period $ 9.21 $ 8.94 $ 11.33 $ 9.77 $ 11.40 $ 16.48 $ 20.88 $ 17.99 Total return H,I (7.90)% (.16)% 35.71% (7.94)% 18.73% 52.34% 33.10% 6.46% Net assets, end of period (000 omitted) $ 2,979 $ 9,087 $ 17,961 $ 5,410 $ 24,212 $ 156,57 $ 315,52 $ 97,429 0 0 Ratio of expenses to average net assets F 1.63% 2.48% 2.53% 2.55% 2.51% 1.77% 1.49% 1.60% A A K Ratio of expenses to average net assets - -- 5.49% 3.22% 2.72% 2.94% 1.77% 1.49% 1.62% before expense reductions F A K Ratio of net investment income to average 2.10% 1.61% 2.24% 1.74% 2.34% 1.80% 1.06% .88% net assets A A Portfolio turnover rate 227% 291% 352% 411% 110% 89% 63% 74% A A
RETAILING
Selected Per-Share Data and Ratios G Years ended February 28 1986C 1987 E 1988 E 1989 E 1990 E 1991 E 1992 E 1993D 1994 Net asset value, beginning of period $ 10.00 $ 11.73 $ 13.51 $ 11.57 $ 14.60 $ 13.94 $ 17.42 $ 22.13 $ 23.87 Income from Investment Operations Net investment income (loss) .04 .05 .02 .06 .32J (.05) (.03) (.08) (.22) Net realized and unrealized gain 1.69 1.73 (.97) 3.18 1.72 3.43 5.09 2.93 3.85 (loss) on investments Total from investment operations 1.73 1.78 (.95) 3.24 2.04 3.38 5.06 2.85 3.63 Less Distributions From net investment income - -- -- (.23) (.03) (.16) -- -- -- -- From net realized gain - -- -- (.76) (.18) (2.57) (.03) (.50) (1.17) (2.63) Total distributions - -- -- (.99) (.21) (2.73) (.03) (.50) (1.17) (2.63) Redemption fees added to paid in - -- -- -- -- .03 .13 .15 .06 .04 capital Net asset value, end of period $ 11.73 $ 13.51 $ 11.57 $ 14.60 $ 13.94 $ 17.42 $ 22.13 $ 23.87 $ 24.91 Total return H,I 17.30% 15.17% (4.95) 28.32% 15.01% 25.26% 30.28% 13.72% 15.6 1 % % Net assets, end of period (000 $ 3,269 $ 9,513 $ 15,103 $ 9,149 $ 8,451 $ 18,069 $ 48,441 $ 74,878 $ 52,790 omitted) Ratio of expenses to average net 1.67% 1.54% 2.47% 2.51% 2.50% 2.54% 1.87% 1.77% 1.83% assets F A A K Ratio of expenses to average net - -- -- 3.95% 4.32% 3.18% 2.87% 1.87% 1.77% 1.86% assets A K before expense reductions F Ratio of net investment income to .63% .39% .13% .48% 2.13% (.34) (.13) (.44) (.87) average net assets A % % % A % Portfolio turnover rate 812% 596% 294% 290% 212% 115% 205% 171% 154% A A
A ANNUALIZED B FROM JUNE 30, 1986 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1987 C FROM DECEMBER 16, 1985 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1986 D FOR THE TEN MONTHS ENDED FEBRUARY 28, 1993 E FOR THE YEAR ENDED APRIL 30 F EFFECTIVE MAY 1, 1987, FMR VOLUNTARILY AGREED TO LIMIT THE EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS AND EXTRAORDINARY EXPENSES) TO 2.5% OF AVERAGE NET ASSETS. IN ADDITION, FMR HAS AGREED TO REIMBURSE THE FUND IN ACCORDANCE WITH A STATE EXPENSE LIMITATION. 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 FUND S 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 FMR HAS DIRECTED CERTAIN PORTFOLIO TRADES TO BROKERS WHO PAID A PORTION OF THE FUND'S EXPENSES. SOFTWARE AND COMPUTER SERVICES
Selected Per-Share Data and Ratios F 1986B 1987 D 1988 D 1989 D 1990 D 1991 D 1992 D 1993C 1994 Years ended February 28 Net asset value, beginning of period $ 10.00 $ 13.36 $ 17.35 $ 14.36 $ 15.75 $ 15.58 $ 19.77 $ 21.63 $ 27.62 Income from Investment Operations Net investment income (loss) .01I .06I (.10) (.22) (.20) (.14)J (.28) (.07)K (.34) Net realized and unrealized gain (loss) 3.35 3.93 (2.21) 1.61 .82 4.06 4.37 5.88 7.92 on investments Total from investment operations 3.36 3.99 (2.31) 1.39 .62 3.92 4.09 5.81 7.58 Less Distributions From net realized gain - -- -- (.68) -- (.86) -- (2.50) -- (6.48) Redemption fees added to paid in - -- -- -- -- .07 .27 .27 .18 .17 capital Net asset value, end of period $ 13.36 $ 17.35 $ 14.36 $ 15.75 $ 15.58 $ 19.77 $ 21.63 $ 27.62 $ 28.89 Total return G,H 33.60% 29.87 (12.86) 9.68% 4.64% 26.89% 25.36% 27.69% 33.19% % % Net assets, end of period (000 omitted) $ 17,857 $ 103,37 $ 23,084 $ 14,046 $ 10,539 $ 17,290 $ 89,571 $ 151,21 $ 178,03 1 2 4 Ratio of expenses to average net assets 1.65% 1.51 2.51% 2.63% 2.56% 2.50% 1.98% 1.64% 1.57% E A % A Ratio of expenses to average net assets - -- -- 3.22% 3.99% 3.39% 2.82% 1.98% 1.64% 1.57% before expense reductions E A Ratio of net investment income to (.35) .08 (.61) (1.51) (1.30) (.84) (1.30) (.37) (1.19) average net assets %A % % % % % % %A % Portfolio turnover rate 193% 220 134% 434% 284% 326% 348% 402% 376% A % A
TECHNOLOGY
Selected Per-Share Data and Ratios F Years ended February 28 1985 D 1986 D 1987 D 1988 D 1989 D 1990 D 1991 D 1992 D 1993C 19 9 4 Net asset value, beginning of $ 21.08 $ 19.77 $ 24.93 $ 25.98 $ 18.22 $ 18.37 $ 20.08 $ 27.06 $ 32.44 $ 34.62 period Income from Investment Operations Net investment income (loss) .13 (.10) (.07) (.16) (.12) (.15) .14L (.26) .13M (.24)N Net realized and unrealized gain (1.44) 5.65 1.20 (6.80) .27 1.75 6.46 5.56 4.68 11.04 (loss) on investments Total from investment operations (1.31) 5.55 1.13 (6.96) .15 1.60 6.60 5.30 4.81 10.80 Less Distributions From net investment income - -- (.39) -- -- -- -- -- -- -- (.13) In excess of net investment -- -- -- -- -- -- -- (.16) -- -- income From net realized gain - -- -- (.08) (.80) -- -- -- -- (2.75) (3.70) Total distributions - -- (.39) (.08) (.80) -- -- -- (.16) (2.75) (3.83) Redemption fees added to paid in - -- -- -- -- -- .11 .38 .24 .12 .24 capital Net asset value, end of period $ 19.77 $ 24.93 $ 25.98 $ 18.22 $ 18.37 $ 20.08 $ 27.06 $ 32.44 $ 34.62 $ 41.83 Total return G,H (6.21) 28.70 4.61 (26.49) .82 9.31 34.76 20.57 16.48 35.62 % % % % % % % % % % Net assets, end of period (000 $ 565,95 $ 318,64 $ 296,47 $ 137,95 $ 105,60 $ 78,535 $ 117,05 $ 105,95 $ 132,68 $ 202,47 omitted) 5 4 9 6 4 5 4 9 5 Ratio of expenses to average net 1.04 1.26 1.44 1.76 1.86 2.09 1.83 1.72 1.64 1.54 assets E % % % % % % % % %A % O Ratio of expenses to average net - -- -- -- 1.76 1.86 2.09 1.83 1.72 1.64 1.55 assets % % % % % %A % O before expense reductions E Ratio of net investment income to 1.24 (.21) (.21) (.71) (.67) (.76) .61 (.84) .52 (.65) average net assets % % % % % % % % %A % Portfolio turnover rate 126 85 73 140 397 327 442 353 259 213 % % % % % % % % %A %
A ANNUALIZED B FROM JULY 29, 1985 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1986 C FOR THE TEN MONTHS ENDED FEBRUARY 28, 1993 D FOR THE YEAR ENDED APRIL 30 E EFFECTIVE MAY 1, 1987, FMR VOLUNTARILY AGREED TO LIMIT THE EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS AND EXTRAORDINARY EXPENSES) TO 2.5% OF AVERAGE NET ASSETS. IN ADDITION, FMR HAS AGREED TO REIMBURSE THE FUND IN ACCORDANCE WITH A STATE EXPENSE LIMITATION. 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 FUND S 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 INVESTMENT INCOME PER SHARE REFLECTS DIVIDENDS RECEIVED IN ARREARS WHICH AMOUNTED TO $.03 PER SHARE. 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 INVESTMENT INCOME PER SHARE REFLECTS DIVIDENDS RECEIVED IN ARREARS FROM UNISYS CORP. $3.75 SERIES A WHICH AMOUNTED TO $.03 PER SHARE. O FMR HAS DIRECTED CERTAIN PORTFOLIO TRADES TO BROKERS WHO PAID A PORTION OF THE FUND'S EXPENSES. TELECOMMUNICATIONS
Selected Per-Share Data and Ratios G Years ended February 28 1986B 1987 E 1988 E 1989 E 1990 E 1991 E 1992 E 1993D 1994 Net asset value, beginning of period $ 10.00 $ 12.73 $ 15.65 $ 16.52 $ 22.76 $ 23.19 $ 24.98 $ 29.22 $ 34.19 Income from Investment Operations Net investment income .29 .10 .27 .30 .46 .31 .36 .29 .25 Net realized and unrealized gain (loss) on 2.44 2.82 .98 6.09 1.02 1.86 4.13 5.29 7.00 investments Total from investment operations 2.73 2.92 1.25 6.39 1.48 2.17 4.49 5.58 7.25 Less Distributions From net investment income - -- -- (.02) (.12) (.12) (.43) (.28) (.18) (.20) From net realized gain - -- -- (.36) (.03) (.98) -- -- (.48) (4.18) Total distributions - -- -- (.38) (.15) (1.10) (.43) (.28) (.66) (4.38) Redemption fees added to paid in capital - -- -- -- -- .05 .05 .03 .05 .04 Net asset value, end of period $ 12.73 $ 15.65 $ 16.52 $ 22.76 $ 23.19 $ 24.98 $ 29.22 $ 34.19 $ 37.10 Total return H,I 27.30% 22.94 8.45 38.90 6.21 9.83 18.19 19.49% 21.90 % % % % % % % Net assets, end of period (000 omitted) $ 4,940 $ 11,415 $ 36,37 $ 116,01 $ 77,01 $ 55,16 $ 78,53 $ 134,33 $ 371,02 2 6 9 2 3 8 5 Ratio of expenses to average net assets F 1.51% 1.52 2.48 2.12 1.85 1.97 1.90 1.74% 1.53 A % % % % % % A %K Ratio of expenses to average net assets - -- -- 2.79 2.12 1.85 1.97 1.90 1.74% 1.54 before expense reductions F % % % % % A % K Ratio of net investment income to average 2.00% 1.12 1.64 1.63 1.83 1.35 1.32 1.16% .64 net assets A % % % % % % A % Portfolio turnover rate 237% 284 162 224 341 262 20 115 % 241 A % % % % % % A %
TRANSPORTATION
Selected Per-Share Data and Ratios G 1987C 1988 E 1989 E 1990 E 1991 E 1992 E 1993D 1994 Years ended February 28 Net asset value, beginning of period $ 10.00 $ 11.83 $ 9.87 $ 13.59 $ 12.23 $ 11.26 $ 15.49 $ 18.68 Income from Investment Operations Net investment income (loss) .01J (.06) (.04) (.03) .06 (.05) (.07) (.20) Net realized and unrealized gain (loss) on 1.82 (1.77) 3.76 .96 (.57) 4.18 3.55 5.07 investments Total from investment operations 1.83 (1.83) 3.72 .93 (.51) 4.13 3.48 4.87 Less Distributions In excess of net investment income - -- -- -- -- -- (.04) -- -- From net realized gain - -- (.13) -- (2.32) (.50) -- (.36) (1.96) Total distributions - -- (.13) -- (2.32) (.50) (.04) (.36) (1.96) Redemption fees added to paid in capital - -- -- -- .03 .04 .14 .07 .08 Net asset value, end of period $ 11.83 $ 9.87 $ 13.59 $ 12.23 $ 11.26 $ 15.49 $ 18.68 $ 21.67 Total return H,I 18.30% (15.17) 37.69% 6.90% (4.10) 38.01% 23.14% 27.47% % % Net assets, end of period (000 omitted) $ 1,747 $ 1,355 $ 3,998 $ 1,630 $ 770 $ 2,998 $ 10,780 $ 13,077 Ratio of expenses to average net assets F 1.60% 2.41% 2.50% 2.50% 2.39% 2.43% 2.48% 2.39% A A K Ratio of expenses to average net assets before - -- 9.59% 8.33% 3.92% 2.89% 3.13% 4.20% 2.40% expense reductions F A K Ratio of net investment income to average net .01% (.59) (.33) (.20) .52% (.34) (.53) (.96) assets A % % % % %A % Portfolio turnover rate 218% 255% 172% 156% 187% 423% 116% 115% A A
A ANNUALIZED B FROM JULY 29, 1985 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1986 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 EFFECTIVE MAY 1, 1987, FMR VOLUNTARILY AGREED TO LIMIT THE EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS AND EXTRAORDINARY EXPENSES) TO 2.5% OF AVERAGE NET ASSETS. IN ADDITION, FMR HAS AGREED TO REIMBURSE THE FUND IN ACCORDANCE WITH A STATE EXPENSE LIMITATION. 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 FMR HAS DIRECTED CERTAIN PORTFOLIO TRADES TO BROKERS WHO PAID A PORTION OF THE FUND'S EXPENSES. UTILITIES
Selected Per-Share Data and Ratios F Years ended February 28 1985 D 1986 D 1987 D 1988 D 1989 D 1990 D 1991 D 1992 D 1993 C 1994 Net asset value, beginning of period $ 14.30 $ 19.27 $ 24.86 $ 26.31 $ 24.67 $ 28.82 $ 31.70 $ 35.57 $ 37.18 $ 41.49 0 Income from Investment Operations Net investment income 1.18 2.06 1.33 5 1.21 1.39 1.27 1.59 1.66 1.19 1.33 Net realized and unrealized gain 3.99 4.01 .47 0 (1.56) 4.18 2.40 3.41 2.82 6.14 (.16) I (loss) on investments Total from investment operations 5.17 6.07 1.80 5 (.35) 5.57 3.67 5.00 4.48 7.33 1.17 Less Distributions From net investment income (.20) (.48) (.21 5 ) (.45) (1.42) (.81) (.60) (1.69) (1.33) (1.13) From net realized gain - -- -- (.14 0 ) (.84) -- -- (.58) (1.19) (1.70) (4.94) Total distributions (.20) (.48) (.35 5 ) (1.29) (1.42) (.81) (1.18) (2.88) (3.03) (6.07) Redemption fees added to paid in - -- -- -- -- -- .02 .05 .01 .01 .02 capital Net asset value, end of period $ 19.27 $ 24.86 $ 26.31 $ 24.67 $ 28.82 $ 31.70 $ 35.57 $ 37.18 $ 41.49 $ 36.61 0 Total return G,H 36.66 32.06 7.19 (1.08) 23.39 13.00 16.25 13.23 20.90% 2.53 % % % % % % % % % Net assets, end of period (000 $ 56,09 $ 86,04 $ 99,33 $ 85,008 $ 84,96 $ 124,9 $ 197,4 $ 206,8 $ 290,71 $ 250,52 omitted) 0 7 7 8 31 09 72 8 2 Ratio of expenses to average net 1.50 1.42 1.45 1.94% 1.21 1.67 1.65 1.51 1.42% 1.35 % assets E % % % % % % % A J Ratio of expenses to average net - - - - - - - 1.94% 1.21 1.67 1.65 1.51 1.42% 1.36 assets before expense reductions E % % % % A % J Ratio of net investment income to 7.14 6.31 4.88 4.71% 5.33 3.93 4.75 4.58 3.71% 3.11 average net assets % % % % % % % A % Portfolio turnover rate 52 96 161 143% 75 75 45 45 34% 61 % % % % % % % A %
MONEY MARKET
Selected Per-Share Data and Ratios Years ended February 1986B 1987 D 1988 D 1989 D 1990 D 1991 D 1992 D 1993C 1994 Net asset value, beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 Income from Investment Operations .049 .056 .062 .078 .081 .073 .048 .026 .026 Net interest income Dividends from net interest income (.049) (.056) (.062) (.078) (.081) (.073) (.048) (.026) (.026) Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 Total return G 5.05% 5.73 6.39% 8.07 8.45 7.50 4.93 2.63% 2.62 % % % % % % Net assets, end of period (000 omitted) $ 268,56 $ 629,0 $ 1,008,01 $ 724,4 $ 643,2 $ 608,3 $ 542,6 $ 431,13 $ 518,6 0 80 0 52 72 94 20 3 57 Ratio of expenses to average net assets 1.00% .76 .88% .76 .83 .73 .64 .56% .72 A % % % % % A % Ratio of net interest income to average net 6.93% 5.58 6.22% 7.74 8.13 7.20 4.84 3.09% 2.59 assets A % % % % % A %
A ANNUALIZED B FROM AUGUST 30, 1985 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1986 C FOR THE TEN MONTHS ENDED FEBRUARY 28, 1993 D FOR THE YEAR ENDED APRIL 30 E EFFECTIVE MAY 1, 1987, FMR VOLUNTARILY AGREED TO LIMIT THE EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS AND EXTRAORDINARY EXPENSES) TO 2.5% OF AVERAGE NET ASSETS. IN ADDITION, FMR HAS AGREED TO REIMBURSE THE FUND IN ACCORDANCE WITH A STATE EXPENSE LIMITATION. 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 FUND S 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 THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE AGGREGATE NET GAIN 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. J FMR HAS DIRECTED CERTAIN PORTFOLIO TRADES TO BROKERS WHO PAID A PORTION OF THE FUND'S EXPENSES. PERFORMANCE Mutual fund performance is commonly measured as TOTAL RETURN. The total returns in this section are based on historical fund results and do not reflect the effect of taxes. The tables on pages to show the funds' performance over past fiscal years compared to two measures: investment in a broad selection of stocks (S&P 500), and not investing at all (inflation, or CPI). Each fund's fiscal year runs from March 1 through February 28 .
Fiscal periods ended February 28, 1994 Average Annual Total Return Cumulative Total Return
Past 1 year Past 5 years Life of fund Past 1 year Past 5 years Life of fund AIR TRANSPORTATION 27.94 % 12.19 % 10.03 % 27.94 % 77.75 % 119.14 % B B AIR TRANSPORTATION (LOAD ADJ.A) 24.10 % 11.51 % 9.62 %B 24.10 % 72.42 % 112.56 % B AMERICAN GOLD 60.14 % 7.70 % 10.67 % 60.14 % 44.88 % 129.94 % B B AMERICAN GOLD (LOAD ADJ.A) 55.34 % 7.04 % 10.26 % 55.34 % 40.54 % 123.04 % B B AUTOMOTIVE 30.45 % 20.36 % 16.47 % 30.45 % 152.63 222.14 % C % C AUTOMOTIVE (LOAD ADJ.A) 26.54 % 19.63 % 16.01 % 26.54 % 145.05 212.47 % C % C BIOTECHNOLOGY 22.17 % 27.69 % 17.47 % 22.17 % 239.49 275.23 % B % B BIOTECHNOLOGY (LOAD ADJ.A) 18.50 % 26.92 % 17.04 % 18.50 % 229.30 263.97 % B % B BROKERAGE AND INVESTMENT MANAGEMENT 35.87 % 19.17 % 10.80 % 35.87 % 140.37 141.38 % D % D BROKERAGE AND INVESTMENT MANAGEMENT 31.80 % 18.45 % 10.40 % 31.80 % 133.16 134.14 % (LOAD ADJ.A) D % D CHEMICALS 23.63 % 14.36 % 19.12 % 23.63 % 95.62 % 349.99 % D D CHEMICALS (LOAD ADJ.A) 19.92 % 13.67 % 18.70 % 19.92 % 89.75 % 336.49 % D D COMPUTERS 45.06 % 22.64 % 14.25 % 45.06 % 177.39 214.29 % D % D COMPUTERS (LOAD ADJ.A) 40.70 % 21.89 % 13.85 % 40.70 % 169.07 204.87 % D % D
CONSTRUCTION AND HOUSING 27.45 % 17.92 % 15.47 % 27.45 % 127.96 190.88 % E % E CONSTRUCTION AND HOUSING (LOAD ADJ.A) 23.63 % 17.20 % 14.99 % 23.63 % 121.12 182.15 % E % E CONSUMER PRODUCTS 28.43 % n/a 17.95 % 28.43 % n/a 83.39 %F F CONSUMER PRODUCTS (LOAD ADJ.A) 24.58 % n/a 16.97 % 24.58 % n/a 77.89 %F F DEFENSE AND AEROSPACE 32.04 % 11.44 % 8.13 %G 32.04 % 71.84 % 115.45 % G DEFENSE AND AEROSPACE (LOAD ADJ.A) 28.08 % 10.76 % 7.80 %G 28.08 % 66.68 % 108.99 % G DEVELOPING COMMUNICATIONS 30.24 % n/a 25.43 % 30.24 % n/a 129.88 % F F DEVELOPING COMMUNICATIONS (LOAD 26.33 % n/a 24.39 % 26.33 % n/a 122.99 % ADJ.A) F F S&P 500 8.33 % 13.65 % n/a 8.33 % 89.60 % n/a Consumer Price Index 2.52% 3.82% n/a 2.52 % 20.64 % n/a
Fiscal periods ended February 28, 1994 Average Annual Total Return Cumulative Total Return
Past 1 year Past 5 years Life of fund Past 1 year Past 5 years Life of fund
ELECTRONICS 46.24% 25.04% 8.96%D 46.24% 205.69 109.09% % D ELECTRONICS (LOAD ADJ.A) 41.85% 24.28% 8.58%D 41.85% 196.52 102.82% % D ENERGY 9.69% 8.83% 8.54%H 9.69% 52.65% 127.02% H ENERGY (LOAD ADJ.A) 6.40% 8.17% 8.21%H 6.40% 48.07% 120.21% H ENERGY SERVICE 6.36% 7.77% 1.96%B 6.36% 45.35% 17.30%B ENERGY SERVICE (LOAD ADJ.A) 3.17% 7.11% 1.58%B 3.17% 40.99% 13.78%B ENVIRONMENTAL SERVICES 5.02% n/a 5.51%K 5.02% n/a 28.47%K ENVIRONMENTAL SERVICES (LOAD ADJ.A) 1.87% n/a 4.82%K 1.87% n/a 24.62%K FINANCIAL SERVICES 10.85% 19.18% 16.56% 10.85% 140.41 362.83% H % H FINANCIAL SERVICES (LOAD ADJ.A) 7.53% 18.45% 16.20% 7.53% 133.20 348.95% H % H FOOD AND AGRICULTURE 11.69% 18.43% 19.50% 11.69% 132.94 362.24% D % D FOOD AND AGRICULTURE (LOAD ADJ.A) 8.34% 17.71% 19.07% 8.34% 125.95 348.38% D % D HEALTH CARE PORTFOLIO 20.57% 21.13% 20.00% 20.57% 160.75 518.97% H % H HEALTH CARE PORTFOLIO (LOAD ADJ.A) 16.95% 20.39% 19.63% 16.95% 152.92 500.40% H % H
HOME FINANCE PORTFOLIO 19.61% 23.21% 19.83% 19.61% 183.94 341.82% B % B HOME FINANCE PORTFOLIO (LOAD ADJ.A) 16.02% 22.46% 19.39% 16.02% 175.43 328.57% B % B INDUSTRIAL EQUIPMENT 40.07% 16.08% 11.19% 40.07% 110.78 119.78% E % E INDUSTRIAL EQUIPMENT (LOAD ADJ.A) 35.87% 15.38% 10.73% 35.87% 104.46 113.19% E % E INDUSTRIAL MATERIALS 24.66% 10.83% 11.83% 24.66% 67.26% 129.42% E E INDUSTRIAL MATERIALS (LOAD ADJ.A) 20.92% 10.16% 11.38% 20.92% 62.24% 122.54% E E INSURANCE -1.24% 15.03% 11.63% -1.24% 101.41 146.82% B % B INSURANCE (LOAD ADJ.A) -4.21% 14.33% 11.22% -4.21% 95.37% 139.42% B B LEISURE 37.14% 15.58% 20.10% 37.14% 106.24 503.97% G % G LEISURE (LOAD ADJ.A) 33.03% 14.88% 19.73% 33.03% 100.06 485.85% G % G MEDICAL DELIVERY 40.25% 23.34% 13.54% 40.25% 185.42 164.92% C % C MEDICAL DELIVERY (LOAD ADJ.A) 36.04% 22.59% 13.09% 36.04% 176.85 156.97% C % C MULTIMEDIA 34.86% 15.17% 17.14% 34.86% 102.62 236.78% C % C MULTIMEDIA (LOAD ADJ.A) 30.82% 14.47% 16.68% 30.82% 96.55% 226.68% C C NATURAL GAS n/a n/a -4.45%I n/a n/a -3.84%I NATURAL GAS (LOAD ADJ.A) n/a n/a -7.77%I n/a n/a -6.72%I S&P 500 8.33% 13.65% n/a 8.33% 89.60% n/a Consumer Price Index 2.52% 3.82% n/a 2.52% 20.64% n/a
Fiscal periods ended February 28, 1994 Average Annual Total Return Cumulative Total Return
Past 1 year Past 5 years Life of fund Past 1 year Past 5 years Life of fund
PAPER AND FOREST PRODUCTS 22.03 % 11.85 % 11.39 % 22.03 % 75.03 % 128.86 C %C PAPER AND FOREST PRODUCTS (LOAD ADJ.A) 18.37 % 11.17 % 10.95 % 18.37 % 69.78 % 121.99 C %C PRECIOUS METALS AND MINERALS 70.58 % 8.35 % 2.55 %H 70.58 % 49.34 % 28.66 % H PRECIOUS METALS AND MINERALS (LOAD 65.47 % 7.69 % 2.24 %H 65.47 % 44.86 % 24.80 % ADJ.A) H REGIONAL BANKS 6.46 % 21.25 % 15.11 % 6.46 % 162.10 194.44 C % %C REGIONAL BANKS (LOAD ADJ.A) 3.27 % 20.52 % 14.65 % 3.27 % 154.23 185.61 C % %C
RETAILING 15.61 % 22.26 % 18.63 % 15.61 % 173.13 306.60 B % %B RETAILING (LOAD ADJ.A) 12.14 % 21.51 % 18.19 % 12.14 % 164.94 294.40 B % %B SOFTWARE AND COMPUTER SERVICES 33.19 % 24.81 % 19.71 % 33.19 % 202.90 369.41 D % %D SOFTWARE AND COMPUTER SERVICES (LOAD 29.19 % 24.06 % 19.29 % 29.19 % 193.82 355.33 ADJ.A) D % %D TECHNOLOGY 35.62 % 24.18 % 10.30 % 35.62 % 195.34 166.48 H % %H TECHNOLOGY (LOAD ADJ.A) 31.55 % 23.43 % 9.96 %H 31.55 % 186.48 158.49 % %H TELECOMMUNICATIONS 21.90 % 17.59 % 19.83 % 21.90 % 124.81 373.41 D % %D TELECOMMUNICATIONS (LOAD ADJ.A) 18.24 % 16.87 % 19.40 % 18.24 % 118.06 359.20 D % %D TRANSPORTATION 27.47 % 18.79 % 16.30 % 27.47 % 136.51 206.84 E % %E TRANSPORTATION (LOAD ADJ.A) 23.65 % 18.07 % 15.82 % 23.65 % 129.42 197.64 E % %E UTILITIES 2.53 % 14.54 % 16.08 % 2.53 % 97.16 % 344.02 H %H UTILITIES (LOAD ADJ.A) -0.54 % 13.85 % 15.72 % -0.54 % 91.24 % 330.70 H %H MONEY MARKET 2.62 % 5.52 % 6.03 %J 2.62 % 30.84 % 64.53 % J MONEY MARKET (LOAD ADJ.A) -0.46 % 4.88 % 5.65 %J -0.46 % 26.92 % 59.59 % J S&P 500 8.33 % 13.65 % n/a 8.33 % 89.60 % n/a Consumer Price Index 2.52 % 3.82 % n/a 2.52 % 20.64 % n/a
A LOAD-ADJUSTED RETURNS INCLUDE THE EFFECT OF PAYING A FUND'S 3% SALES CHARGE. B FROM DECEMBER 16, 1985 C FROM JUNE 30, 1986 D FROM JULY 29, 1985 E FROM SEPTEMBER 29, 1986 F FROM JUNE 29, 1990 G FROM MAY 8,1984 H FOR TEN YEARS BEGINNING FEBRUARY 2 9 , 198 4 I FROM APRIL 21, 1993 J FROM AUGUST 30, 1985 K FROM JUNE 29, 1989 EXPLANATION OF TERMS TOTAL RETURN is the change in value of an investment in a fund over a given period, assuming reinvestment of any dividends and capital gains. A CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that, if achieved annually, would have produced the same cumulative total return if performance had been constant over the entire period. Average annual total returns smooth out variations in performance; they are not the same as actual year-by-year results. Average annual total returns covering periods of less than one year assume that performance will remain constant for the rest of the year. THE S&P 500(Registered trademark) is the Standard & Poor's 500 Composite Stock Price Index, a widely recognized, unmanaged index of common stock prices. The S&P 500 figures assume reinvestment of all dividends paid by stocks included in the index. They do not, however, include any allowance for the brokerage commissions or other fees you would pay if you actually invested in those stocks. THE CONSUMER PRICE INDEX is a widely recognized measure of inflation calculated by the U.S. government. YIELD, for the money market fund, refers to the income generated by an investment in a fund over a given period of time, expressed as an annual percentage rate. Yields are calculated according to a standard that is required for all money market funds. When a yield assumes that income earned is reinvested, it is called an EFFECTIVE YIELD. Other illustrations of fund performance may show moving averages over specific periods. The funds' recent strategies, performance, and holdings are detailed twice a year in fund 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. <r>THE FUNDS IN DETAIL</r> CHARTER THE FUNDS ARE MUTUAL FUNDS: investments that pool shareholders' money and invest it toward a specified goal. In technical terms, each stock fund (except Financial Services, Regional Banks, and Home Finance) is a non-diversified fund of Fidelity Select Portfolios, an open-end, management investment company. The money market fund and the remaining stock funds are diversified funds of the trust. The trust was organized as a Massachusetts business trust on November 20, 1980. EACH FUND MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These meetings may be called to elect or remove trustees, change fundamental policies, approve a management contract, or for other purposes. Shareholders not attending these meetings are encouraged to vote by proxy. Fidelity will mail proxy materials in advance, including a voting card and information about the proposals to be voted on. The number of votes you are entitled to is based on the dollar value of your investment. FMR AND ITS AFFILIATES The funds are managed by FMR, which chooses each fund's investments and handles their business affairs. Fidelity Management and Research (U.K.) Inc. (FMR U.K.) and Fidelity Management & Research (Far East) Inc. (FMR Far East) assist FMR with foreign investments. Paul Antico has been portfolio manager of Developing Communications since November 1993. Previously, he served as an analyst for the telecommunications equipment and restaurant industries. He also served as an assistant on Balanced and Equity-Income II. He joined Fidelity in 1991, after receiving a B.S. in economics from the Massachusetts Institute of Technology. Philip Barton has been portfolio manager of Environmental Services since October 1993. Previously, he managed Developing Communications and was senior European technology analyst at Fidelity International in London. Barton joined the company in 1986 as an analyst following first the banking industry and then software and computer services. He received his C.F.A. in 1988. Robert Bertelson has been portfolio manager of Energy since January 1992. He joined the company as an equity analyst in 1991. Before that, Bertelson was vice president and research analyst at Wellington Management Company. Stephen Binder has been portfolio manager of Financial Services since December 1993, Defense and Aerospace since October 1992, and Regional Banks since May 1990. He joined Fidelity in 1989 as an equity analyst, after receiving an M.B.A. in finance and accounting from the University of Chicago. Robert Chow has been portfolio manager of Insurance since June 1993. He has also served as manager of Computers, Paper and Forest Products and Technology and as an assistant on Growth & Income. Chow joined the company as a summer intern in 1989. Before that, he was a sub-project manager at TRW, an aerospace company. Chow received an M.B.A. in finance from the University of Chicago in 1990. Arieh Coll has been portfolio manager of Brokerage and Investment Management since November 1993 and Software and Computer Services since October 1991. Previously, he managed Technology . He joined Fidelity in 1989, after receiving an M.B.A. from Northwestern University. Katherine Collins has been portfolio manager of Construction and Housing since June 1992. She joined the company in July 1990 as an equity analyst following the home-building and construction industries. She received her B.A. from Wellesley College in economics and Japanese studies in 1990. Stephen DuFour has been portfolio manager of Multimedia (formerly Broadcast and Media) since July 1993. He joined Fidelity as a media analyst in 1992, after receiving an M.B.A. from the University of Chicago. Previously, he worked as a financial analyst at PaineWebber. In 1988, DuFour received a B.A. from the University of Notre Dame. David Ellison has been portfolio manager of Home Finance since December 1985. Previously, he managed Brokerage and Investment Management and Financial Services. He has also been a banking and finance analyst. Mary English has been portfolio manager of Consumer Products since February, 1994. Previously, she managed Retailing and was an equity analyst following the specialty retail and advertising industries. English joined Fidelity in 1991, after receiving her M.B.A. from the University of Virginia. Before that, she was a senior equity analyst and vice president at Furman, Selz, an institutional research firm. Jeff Feinberg has been portfolio manager of Retailing since February, 1994. Previously, he served as an analyst following the footware and specialty retail industries. Mr. Feinberg joined Fidelity in March 1992 while attending Harvard Business School. He received his M.B.A. from Harvard in 1993. Before that, Feinberg was a merger and acquisitions analyst at Wasserstein Perella & Co. David Felman has been portfolio manager of Telecommunications since April 1994. Felman joined the company in 1993 as an analyst following the specialty chemicals, engineering and construction, and the recreational vehicle and manufactured home industries. He received an M.A. in philosophy from Harvard, an M.B.A. from New York University, and a B.A. in philosophy from Columbia University. Karen Firestone has been portfolio manager of Biotechnology since August 1992. Previously, she managed Air Transportation, Multimedia, Leisure, and Transportation , Firestone joined the company in 1983. Harry Lange has been portfolio manager of Electronics since January 1994 , Technology since November 1993, and Computers since June 1992. Previously, he managed Automation and Machinery and Capital Goods . He joined the company in 1987. Malcolm MacNaught has been portfolio manager of American Gold since December 1985 and Precious Metals and Minerals since July 1981. He also manage s Advisor Global Natural Resources . Charles Mangum has been portfolio manager of Health Care since March 1992. Previously, he managed Medical Delivery . He received an M.B.A. from the University of Chicago in 1990. Before joining Fidelity in 1990, he worked as a financial analyst at Eppler, Guerin and Turner, a Dallas-based brokerage house. William Mankivsky has been portfolio manager of Food and Agriculture since April 1993 and Energy Service since January 1992. He joined Fidelity in 1991 as an equity analyst following the energy service and medical devices industries. He received an M.B.A. in finance and accounting from the University of Chicago in 1991. Before that, he was an analyst at the Prudential Property Company in Chicago. John Muresianu has been portfolio manager of Utilities and Utilities Income since December 1992. Previously, he managed Natural Gas and Electric Utilities and served as senior research analyst following natural gas pipelines, life insurance, service companies, Canadian stocks and foreign currencies. He has also been a pension fund manager with the company. Muresianu joined Fidelity in 1986. Scott Offen has been portfolio manager of Paper and Forest Products since November 1993. Previously, he manage Brokerage and Investment Management and Life Insurance . Offen joined the company in 1985 as an insurance and finance analyst. Richard Patton has been portfolio manager of Automotive since July 1993. He joined Fidelity as a specialty chemicals analyst in 1992, after receiving an M.B.A. from Harvard Business School. Previously, Patton was an associate with Breau Capital Management and president and founder of several businesses. Brenda Reed has been portfolio manager of Air Transportation since December 1992. She joined the company in 1992 as an equity analyst following the apparel and textile industries. Previously, she was an equity analyst at the Putnam Companies and vice president of New England Research and Management. Reed received an M.B.A. from Dartmouth College in 1992, and a B.S. in financial management from Boston University in 1989. Albert Ruback has been portfolio manager of Industrial Equipment since September 1991. He joined Fidelity in 1991, after receiving an M.B.A. from Harvard University in 1991. Previously, he was a research associate for Sanford C. Bernstein and Co. Louis Salemy has been portfolio manager of Medical Delivery since April 1993 and Industrial Materials since August 1992. He joined Fidelity in April 1992. Previously, he was a security analyst for Loomis, Sayles and Company. Salemy received an M.B.A. in finance from New York University in 1989. Beso Sikharulidze has been portfolio manager of Transportation since November 1993. He joined Fidelity as an equity analyst in 1992, after receiving an M.B.A. from Harvard Business School. From January to August 1990, he worked at Pioneer Hybrid, a multinational agricultural company based in Des Moines, Iowa. In 1988, he co-founded the Science and Engineering Development Center, an engineering and consulting firm in Soviet Georgia, where he served as chief operating officer. Mark Tempero has been portfolio manager of Natural Gas since February 1994. He joined Fidelity in May 1993 as an analyst following domestic oil and gas exploration and production as well as conglomerates. Tempero received his M.B.A. from the University of Chicago in 1993 and his masters in economics from the London School of Economics in 1992. Deborah Wheeler has been portfolio manager of Leisure since August 1992. Previously, Wheeler managed Food and Agriculture, Housing, and Retailing. She was also an assistant on Magellan. Wheeler joined Fidelity in 1986. Steven Wymer has been portfolio manager of Chemicals since January 1993. He is also an assistant on Magellan. Previously, he was portfolio manager of Automotive and an assistant on Growth & Income. Wymer joined the company in 1989, after receiving an M.B.A. from the University of Chicago. Fidelity Distributors Corporation ( FDC ) distributes and markets Fidelity's funds and services. Fidelity Service Co. (FSC) is the funds' transfer, shareholder service, and dividend-paying agent. FMR Corp. is the parent company of these organizations. Through ownership of voting common stock, Edward C. Johnson 3d (President and a trustee of the trust), Johnson family members, and various trusts for the benefit of the Johnson family form a controlling group with respect to FMR Corp. A broker-dealer may use a portion of the commissions paid by a fund to reduce custodian or transfer agent fees. FMR may use its broker-dealer affiliates and other firms that sell fund shares to carry out a fund's transactions, provided that the fund receives brokerage services and commission rates comparable to those of other broker-dealers. INVESTMENT PRINCIPLES AND RISKS The stock funds seek capital appreciation by investing primarily in equity securities, although they may invest in other types of instruments as well. American Gold and Precious Metals and Minerals Portfolios can also invest in precious metals. Each stock fund focuses its investments on a particular industry, normally investing most of its assets in securities of companies principally engaged in the business activities identified below. For most of the stock funds, an issuer is considered principally engaged in a business activity if at least 50% of its assets, gross income, or net profits are committed to, or derived from, that activity. For Brokerage and Investment Management and Financial Services Portfolios, an issuer is considered principally engaged if it derives more than 15% of revenues or profits from brokerage or investment management activities. The stock funds' strateg ies can lead to investments in small companies, which often involve more risk than larger companies. Securities of small companies, especially those that base their business on emerging products or concepts, may be volatile due to limited product lines, markets, or financial resources. The funds invest in domestic and foreign securities, including securities of emerging markets, which can be considered speculative and experience more volatility than those of the more developed nations. Non-diversified funds may have greater investments in a single issuer than diversified funds, so the performance of a single issuer can have a substantial impact on a fund's share price. Additionally, since the stock funds focus on specific industries, their prices may be more volatile than those of more broadly diversified investments. Each fund's performance is closely tied to its industry, as well as to the economy as a whole. Securities in an industry often react similarly to market conditions, and may move in unison. As a result, the narrower a fund's focus is, the more volatile its performance is likely to be. In many cases, the focus of a fund differs from another only slightly, so they may invest in many of the same securities. FMR may use various techniques to hedge a fund's risks, but there is no guarantee that these strategies will work as FMR intends. When you sell your shares in a stock fund, they may be worth more or less than what you paid for them. FMR normally invests each fund's assets according to its investment strategy. When FMR considers it appropriate for defensive purposes, however, each stock fund may temporarily invest substantially in investment-grade debt securities. AIR TRANSPORTATION PORTFOLIO invests primarily in companies engaged in the regional, national and international movement of passengers, mail, and freight via aircraft. Investments in this fund may include, for example, the airlines, air cargo providers, or companies that provide equipment or services to these companies. Airline profitability is substantially influenced by competition within the industry, domestic and foreign economies and government regulation, and the price of fuel. Additionally, the industry is still feeling the effects of deregulation. AMERICAN GOLD PORTFOLIO invests primarily in companies engaged in exploration, mining, processing, or dealing in gold, or, to a lesser degree, in silver, platinum, diamonds, or other precious metals and minerals. The fund focuses on North, Central, and South American companies engaged in gold-related activities. This focus may also include gold bullion or coins and securities indexed to the price of gold. The fund may also invest in securities of companies which themselves invest in companies engaged in these activities. The price of gold and other precious metal mining securities can face substantial short-term volatility caused by international monetary and political developments such as currency devaluations or revaluations, economic and social conditions within a country, or trade restrictions between countries. Since much of the world's gold reserves are located in South Africa, the social and economic conditions there can affect gold and gold-related companies located elsewhere. The price of gold bullion or coins is more affected by broad economic and political conditions. FMR does not currently intend to purchase gold if, as a result, more than 25% of the fund's total assets would be invested in gold and gold-indexed securities, and does not currently intend to purchase coins. Under current federal tax law, gains from selling gold may not exceed 10% of the fund's annual gross income. This tax requirement could cause the fund to hold or sell bullion or securities when it would not otherwise do so. AUTOMOTIVE PORTFOLIO invests primarily in companies engaged in the manufacture, marketing, or sale of automobiles, trucks, specialty vehicles, parts, tires, and related services . These companies may include, for example, automobile manufacturers, distributors, and parts providers. The fund may also invest in companies that provide services to automobile manufacturers, distributors, or consumers. The automotive industry is highly cyclical and companies in the industry may suffer periodic operating losses. While most of the major manufacturers are large, financially strong companies, some are smaller manufacturers that have a non-diversified product line or customer base. BIOTECHNOLOGY PORTFOLIO invests primarily in companies engaged in the research, development, scale up, and manufacture of various biotechnological products, services, and processes. This may include, for example, companies involved with new or experimental technologies such as genetic engineering. The fund may also invest in companies that manufacture, distribute, or benefit from biotechnological and biomedical products, processes, or services. FMR interprets the biotechnology sector broadly. For example, the fund may invest in companies involved in applications and developments in such areas as health care, pharmaceuticals, and agriculture. Biotechnology companies are affected by patent considerations, intense competition, rapid technological change and obsolescence, and regulatory requirements. In addition, many of these companies may not offer products yet and may have persistent losses or erratic revenue patterns. BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO invests primarily in companies engaged in stock brokerage, commodity brokerage, investment banking, tax-advantaged investment or investment sales, investment management, or related investment advisory services. The fund does not invest in securities of FMR or its affiliated companies. Under SEC regulations the fund may not invest more than 5% of its total assets in the securities of any company that derives more than 15% of its revenues from brokerage or investment management activities. Changes in regulations, brokerage commission structure, stock market activity, and the competitive environment, combined with the operating leverage inherent in companies in these industries, can produce erratic returns over time. CHEMICALS PORTFOLIO invests primarily in companies engaged in the research, development, manufacture, or marketing of products or services related to the chemical process industries. These products may include, for example, synthetic and natural materials, such as fertilizers, building materials, and plastics. The fund may also hold the securities of companies providing design, engineering, construction, and consulting services to companies engaged in chemical processing. Companies in the chemical processing field are subject to intense competition, product obsolescence and significant governmental regulation. As regulations are developed and enforced, such companies may be required to alter or cease production of a product, to pay fines, or to pay for cleaning up a disposal site. In addition, chemical companies face unique risks associated with handling hazardous products. COMPUTERS PORTFOLIO invests primarily in companies engaged in research, design, development, manufacture or distribution of products, processes, or services that relate to currently available or experimental hardware technology within the computer industry. The fund may invest in companies that provide products or services such as computer and office equipment wholesalers, software retailers, data processors, and designers of artificial intelligence. Competitive pressures and changing domestic and international demand may have a significant effect on the financial condition of companies in the computer industry. Companies in the industry spend heavily on research and development and are sensitive to the risk of product obsolescence. CONSTRUCTION AND HOUSING PORTFOLIO invests primarily in companies engaged in the design and construction of residential, commercial, industrial, and public works facilities, as well as companies engaged in the manufacture, supply, distribution, or sale of products or services to these construction industries. Examples of companies engaged in these activities include companies that produce basic building materials such as cement, supply home furnishings, or provide engineering or contracting services. The fund also may invest in companies involved in real estate development and construction financing such as home builders, architectural and design firms, and property managers, and in companies involved in the home improvement and maintenance industry. Companies in this industry are subject to a variety of factors such as government spending on housing subsidies, public works, and transportation facilities, as well as changes in interest rates, consumer confidence and spending, taxation, demographic patterns, the level of new and existing home sales, and other economic activity. CONSUMER PRODUCTS PORTFOLIO invests primarily in companies engaged in the manufacture and distribution of goods to consumers both domestically and internationally. This may include, for example, companies that manufacture or sell durable goods such as homes, cars, boats, major appliances, and personal computers. It may also include companies that manufacture or sell non-durable goods such as food or entertainment products, and companies that provide services such as lodging or childcare. The success of consumer product manufacturers and retailers is closely tied to the performance of the overall economy, interest rates, competition, and consumer confidence. Success depends heavily on disposable household income and consumer spending. Changes in demographics and consumer tastes can also affect the demand for, and success of, consumer products in the marketplace. DEFENSE AND AEROSPACE PORTFOLIO invests primarily in companies engaged in the research, manufacture, or sale of products or services related to the defense or aerospace industries . For example, the fund may invest in companies involved in defense electronics, aircraft or spacecraft production, missile design, data processing or computer-related services. The financial condition of companies in the industry and investor interest in these companies are heavily influenced by government defense and aerospace spending policies. Defense spending is currently under pressure from efforts to control the U.S. budget deficit. DEVELOPING COMMUNICATIONS PORTFOLIO invests primarily in companies engaged in the development, manufacture, or sale of emerging communications services or equipment. Emerging communications are those which derive from new technologies or new applications of existing technologies. Examples of the fund's investments may include companies involved in cellular communications, software development, video conferencing or data processing. The fund places less emphasis on traditional communications companies such as large long distance carriers. Products or services provided by this industry may be in the development stage and can face risks such as failure to obtain financing or regulatory approval, intense competition, product incompatibility, consumer preferences, and rapid obsolescence. ELECTRONICS PORTFOLIO invests primarily in companies engaged in the design, manufacture, or sale of electronic components (semiconductors, connectors, printed circuit boards, and other components); equipment vendors to electronic component manufacturers; electronic component distributors; and electronic instruments and electronic systems vendors. This may include companies involved in new technologies or specialty areas such as defense electronics, advanced design and manufacturing technologies, or lasers. Many of the products offered by companies engaged in the design, production, or distribution of electronic products are subject to risks of rapid obsolescence and intense competition. ENERGY PORTFOLIO invests primarily in companies in the energy field, including the conventional areas of oil, gas, electricity, and coal, and newer sources of energy such as nuclear, geothermal, oil shale, and solar power. This may include, for example, companies that produce, transmit, market, or measure energy, as well as companies involved in the exploration of new sources of energy. Securities of companies in the energy field are subject to changes in value and dividend yield which depend largely on the price and supply of energy fuels. Swift price and supply fluctuations may be caused by events relating to international politics, energy conservation, the success of exploration projects, and tax and other governmental regulatory policies. ENERGY SERVICE PORTFOLIO invests primarily in companies in the energy service field, including those that provide services and equipment to the conventional areas of oil, gas, electricity, and coal, and newer sources of energy such as nuclear, geothermal, oil shale, and solar power. Holdings may include companies providing services such as onshore or offshore drilling, or those involved in production and well maintenance, exploration technology, energy transport or equipment and plant design or construction. Energy service firms are affected by supply and demand both for their specific product or service, and for energy products in general. The price of oil and gas, exploration and production spending, governmental regulation, world events and economic conditions will likewise affect the performance of these companies. ENVIRONMENTAL SERVICES PORTFOLIO invests primarily in companies engaged in the research, development, manufacture, or distribution of products, processes, or services related to waste management or pollution control. The fund may invest in companies participating in pollution control through methods such as packaging, disposal, and sanitation, companies that are investigating new ways to protect the environment, and companies engaged in design, construction, or consulting. This industry can be impacted by legislation, government regulations, and enforcement policies. As regulations are developed and enforced, companies may be required to alter or cease production of a product or service. In addition, hazardous materials may be involved, and companies can face significant liability risk. FINANCIAL SERVICES PORTFOLIO invests primarily in companies providing financial services to consumers and industry. Examples of companies in the financial services field include commercial banks, savings and loan associations, brokerage companies, insurance companies, real estate and leasing companies, and companies that span across these segments. Under SEC regulations, the fund may not invest more than 5% of its total assets in the securities of any company that derives more than 15% of its revenues from brokerage or investment management activities. Financial services companies are subject to extensive governmental regulation which may limit both the amounts and types of loans and other financial commitments they can make, and the interest rates and fees they can charge. Profitability is largely dependent on the availability and cost of capital funds, and can fluctuate significantly when interest rates change. Credit losses resulting from financial difficulties of borrowers can negatively impact the industry. Insurance companies may be subject to severe price competition. FOOD AND AGRICULTURE PORTFOLIO invests primarily in companies engaged in the manufacture, sale, or distribution of food and beverage products, agricultural products, and products related to the development of new food technologies. This may include, for example, companies that sell products and services, such as, grocery stores, and restaurants, companies that manufacture and distribute products such as soft drinks, and companies engaged in the development of new technologies such as improved hybrid seeds. The success of the industry is closely tied to supply and demand, which may be affected by demographic and product trends, or stimulated by food fads, marketing campaigns, and environmental factors. In the U.S., the agricultural products industry is subject to regulation by numerous government agencies. HEALTH CARE PORTFOLIO invests primarily in companies engaged in the design, manufacture, or sale of products or services used for or in connection with health care or medicine. Companies in the health care field may include, for example, pharmaceutical companies, companies involved in research and development, companies involved in the operation of health care facilities, and other companies involved in the design, manufacture, or sale of related products or services. Many of these companies are subject to government regulation and approval of their products and services, which could have a significant effect on their price and availability. Furthermore, the types of products or services produced or provided by these companies may quickly become obsolete. The administration is currently examining the health care industry to determine whether government funds are spent appropriately, and to ensure that adequate health care is available to everyone. HOME FINANCE PORTFOLIO invests primarily in companies engaged in investing in real estate, usually through mortgages and other consumer-related loans. These companies may also offer discount brokerage services, insurance products, leasing services, and joint venture financing. This may include, for example, mortgage banking companies, real estate investment trusts, banks, and other depository institutions. The residential real estate finance industry has changed rapidly over the last decade and is expected to continue to change. Regulatory changes at federally insured institutions, in response to a high failure rate, have mandated higher capital ratios and more prudent underwriting. This reduced capacity has created growth opportunities for uninsured companies and secondary market products to fill unmet demand for home finance. Regulatory changes, interest rate movements, home mortgage demand, and residential delinquency trends will affect the industry. INDUSTRIAL EQUIPMENT PORTFOLIO invests primarily in companies engaged in the manufacture, distribution, or service of products and equipment for the industrial sector, including integrated producers of capital equipment (such as general industr ial machinery, farm equipment, and computers), parts suppliers, and subcontractors. This may include, for example, companies that manufacture products or service equipment for trucks , construction, or machine tools . The success of equipment manufacturing and distribution companies is closely tied to overall capital spending levels, which is influenced by an individual company's profitability, and broader issues such as interest rates and foreign competition. The industry may also be affected by economic cycles, technical progress, labor relations, and government regulations. INDUSTRIAL MATERIALS PORTFOLIO invests primarily in companies engaged in the manufacture, mining, processing, or distribution of raw materials and intermediate goods used in the industrial sector. These materials and goods may include, for example, chemicals, metals, and wood products. Investments may also include mining, processing, transportation, and distribution companies, including equipment suppliers and railroads. Many companies in this sector are significantly affected by the level and volatility of commodity prices, the exchange value of the dollar, import controls, and worldwide competition. At times, worldwide production of these materials has exceeded demand as a result of over-building or economic downturns, leading to poor investment returns or losses. Other risks may include liability for environmental damage, depletion of resources, and mandated expenditures for safety and pollution control. INSURANCE PORTFOLIO invests primarily in companies engaged in underwriting, reinsuring, selling, distributing, or placing of property and casualty, life, or health insurance. Examples of the fund's investments may include companies that provide a specific type of insurance, such as life or health insurance, those that offer a variety of insurance products and those that provide insurance services such as brokers and claims processors. Insurance company profits are affected by interest rate levels, general economic conditions, and price and marketing competition. Certain types of insurance may be impacted by events or trends such as natural catastrophes , mortality rates , or recessions . Companies may be exposed to material risks including shortage of cash reserves and the inability to collect from reinsurance carriers. Also, insurance companies are subject to extensive governmental regulation, and can be adversely affected by proposed or potential tax law changes. LEISURE PORTFOLIO invests primarily in companies engaged in the design, production, or distribution of goods or services in the leisure industries. The goods or services provided by companies in the fund may include, for example, television and radio broadcast, motion pictures, wireless communications , gaming casinos, theme parks , apparel, restaurants , and lodging. Securities of companies in the leisure industry may be considered speculative and generally exhibit greater volatility than the overall market. Many companies have unpredictable earnings, due in part to changing consumer tastes and intense competition. The industry has reacted strongly to technological developments and to the threat of government regulation. MEDICAL DELIVERY PORTFOLIO invests primarily in companies engaged in the ownership or management of hospitals, nursing homes, health maintenance organizations, and other companies specializing in the delivery of health care services. This may include, for example, companies that operate acute care, psychiatric, teaching, or specialized treatment hospitals, as well as home health care providers, medical equipment suppliers, and those that provide related services. Federal and state governments provide a substantial percentage of revenues to health care service providers via Medicare and Medicaid. These sources are subject to extensive governmental regulation and appropriations are a continued source of debate. The administration is currently examining the health care industry to determine whether government funds are spent appropriately, and to ensure that adequate health care is available to everyone. The demand for health care services should increase as the population ages. However, studies have shown the ability of health care providers to curtail unnecessary hospital stays and reduce costs. These changes could alter the health care industry, focusing it more on home care, and placing less emphasis on inpatient revenues as a source of profit. MULTIMEDIA PORTFOLIO invests primarily in companies engaged in the development, production, sale, and distribution of goods or services used in the broadcast and media industries. The fund's investments may include broadcasting companies, such as cable television providers, companies involved in emerging technologies such as cellular communications, or other companies involved in the ownership, operation or development of media products or services. Some of the companies in these industries are undergoing significant change because of federal deregulation of cable and broadcasting. As a result, competitive pressures are intense and the stocks are subject to increased price volatility. FMR abides by Federal Communications Commission rules governing the concentration of investment in AM, FM, or TV stations , limiting investment alternatives. NATURAL GAS PORTFOLIO invests primarily in companies engaged in the production, transmission, and distribution of natural gas, and involved in the exploration of potential natural gas sources, as well as those companies that provide services and equipment to natural gas producers, refineries, cogeneration facilities, converters, and distributors. This may include, for example, companies participating in gas research, exploration, or refining, companies working toward technological advances in the natural gas field, and other companies providing products or services to the industry. The companies in the natural gas field are subject to changes in price and supply of both conventional and alternative energy sources. Swift price and supply fluctuations may be caused by events relating to international politics, energy conservation, the success of energy source exploration projects, and tax and other regulatory policies of domestic and foreign governments. PAPER AND FOREST PRODUCTS PORTFOLIO invests primarily in companies engaged in the manufacture, research, sale, or distribution of paper products, packaging products, building materials (such as lumber and paneling products), and other products related to the paper and forest products industry. Examples of the fund's investments may include paper production companies, printers, and publishers. The success of these companies depends on the health of the economy, worldwide production capacity for the industry's products, and interest rate levels, which may affect product pricing, costs, and operating margins. These variables also affect the level of industry and consumer capital spending for paper and forest products. PRECIOUS METALS AND MINERALS PORTFOLIO invests primarily in companies engaged in exploration, mining, processing , or dealing in gold, silver, platinum, diamonds , or other precious metals and minerals. In addition to its investments in these securities, the fund's focus includes investments in precious metals such as gold, silver, and platinum, coins, and securities indexed to the price of gold or other precious metals. The fund may also invest in securities of companies which themselves invest in companies engaged in these activities. The price of precious metals is affected by broad economic and political conditions. For example, the price of gold and other precious metal mining securities can face substantial short-term volatility caused by international monetary and political developments such as currency devaluations or revaluations, economic and social conditions within a country, or trade restrictions between countries. Since much of the world's gold reserves are located in South Africa, the social and economic conditions there can affect gold and gold-related companies located elsewhere. The price of precious metals is more affected by broad economic and political conditions. FMR does not currently intend to purchase precious metals if, as a result, more than 25% of the fund's total assets would be invested in precious metals and securities indexed to the price of precious metals. Under current federal tax law, gains from selling precious metals may not exceed 10% of the fund's annual gross income. This tax requirement could cause the fund to hold or sell precious metals or securities when it would not otherwise do so. REGIONAL BANKS PORTFOLIO invests primarily in companies engaged in accepting deposits and making commercial and principally non-mortgage consumer loans. These companies concentrate their operations in a specific part of the country. This may include, for example, state chartered banks, savings and loan institutions, and banks that are members of the Federal Reserve System. The fund may own securities of U.S. institutions whose deposits are not insured by the federal government. As the services offered by banks expand, banks are becoming more exposed to well-established competitors. This exposure has also increased due to the erosion of historical distinctions between regional banks and other financial institutions. Increased competition may result from the broadening of regional and national interstate banking powers, which has already reduced the number of publicly traded regional banks. In addition, general economic conditions are important to regional banks which face exposure to credit losses, and dependence on interest rate activity. RETAILING PORTFOLIO invests primarily in companies engaged in merchandising finished goods and services primarily to individual consumers. This may include, for example, department stores, food retailers, warehouse membership clubs, mail order operations, or other companies involved in alternative selling methods. The success of retailing companies is closely tied to consumer spending, which is affected by general economic conditions and consumer confidence levels. The retailing industry is highly competitive, and a company's success is often tied to its ability to anticipate changing consumer tastes. SOFTWARE AND COMPUTER SERVICES PORTFOLIO invests primarily in companies engaged in research, design, production or distribution of products or processes that relate to software or information-based services. This may include, for example, companies that design products such as systems level software to run the basic functions of a computer, or applications software for one type of work, and consulting, communications, and related services. Competitive pressures may have a significant effect on the financial condition of companies in the software and computer services industries. For example, an increasing number of companies and new product offerings can lead to price cuts and slower selling cycles. TECHNOLOGY PORTFOLIO invests primarily in companies which FMR believes have, or will develop, products, processes, or services that will provide or will benefit significantly from technological advances and improvements. The description of the technology sector will be interpreted broadly by FMR and may include such products or services as inexpensive computing power such as personal computers, improved methods of communications such as satellite transmission, or labor saving machines or instruments such as computer-aided design equipment. The fund emphasizes those companies positioned to benefit from technological advances in areas such as semiconductors, minicomputers and peripheral equipment, scientific instruments, computer software, communications, and future automation trends in both office and factory settings. Competitive pressures may have a significant effect on the financial condition of companies in the technology industry. For example, if technology continues to advance at an accelerated rate, and the number of companies and product offerings continues to expand, these companies could become increasingly sensitive to short product cycles and aggressive pricing. TELECOMMUNICATIONS PORTFOLIO invests primarily in companies engaged in the development, manufacture, or sale of communications services or communications equipment. Companies in the telecommunications field may range from traditional local and long-distance telephone service or equipment providers, to companies involved in new technologies such as cellular telephone or paging services. Telephone operating companies are subject to both federal and state regulations governing rates of return and services that may be offered. Many companies represented in the fund are engaged in fierce competition for market share. Although telephone companies usually pay an above average dividend, the fund's investment decisions are primarily based on growth potential and not on income. TRANSPORTATION PORTFOLIO invests primarily in companies engaged in providing transportation services or companies engaged in the design, manufacture, distribution, or sale of transportation equipment. Transportation services may include, for example, companies involved in the movement of freight or people such as airlines, railroads, and bus companies, equipment manufacturers, parts suppliers, and companies involved in leasing, maintenance and related services. Transportation stocks are cyclical and have occasional sharp price movements which may result from changes in the economy, fuel prices, labor agreements, and insurance costs. The U.S. has been deregulating these industries, but it is uncertain whether this trend will continue and what its effect will be. UTILITIES PORTFOLIO invests primarily in companies in the public utilities industry and companies deriving a majority of their revenues from their public utility operations. This may include, for example, companies that manufacture, produce, sell, or transmit gas or electric energy, and those involved in telephone, satellite, and other communication fields. Public utility stocks have traditionally produced above-average dividend income, but the fund's investments are based on growth potential. The gas and electric public utilities industries may be subject to broad risks resulting from governmental regulation, financing difficulties, supply and demand of services or fuel, and special risks associated with energy and atmosphere conservation. The fund may not own more than 5% of the outstanding voting securities of more than one public utility company as defined by the Public Utility Holding Company Act of 1935. MONEY MARKET PORTFOLIO seeks to earn a high level of current income while maintaining a stable $1.00 share price by investing in high-quality, short-term money market instruments. As a result, your investment earns income at current money market rates, and when you sell your shares, they should be worth the same amount as when you bought them. Of course, there is no guarantee that the fund will maintain a stable $1.00 share price. The fund invests in U.S. dollar-denominated instruments of domestic and foreign issuers, including banks and other financial institutions, governments and their agencies and instrumentalities, and corporations. The fund stresses income, preservation of capital, and liquidity, and does not seek the higher yields or capital appreciation that more aggressive investments may provide. The fund's yield will vary from day to day, generally reflecting current short-term interest rates and other market conditions. The fund follows industry-standard guidelines on the quality and maturity of its investments, which are designed to help maintain a stable $1.00 share price. The fund will purchase only high-quality securities that FMR believes present minimal credit risks and will observe maturity restrictions on securities it buys. In general, securities with longer maturities are more vulnerable to price changes, although they may provide higher yields. It is possible that a major change in interest rates or a default on the fund's investments could cause its share price (and the value of your investment) to change. SECURITIES AND INVESTMENT PRACTICES The following pages contain more detailed information about types of instruments in which a fund may invest, and strategies FMR may employ in pursuit of a fund's investment objective. A summary of risks and restrictions associated with these instrument types and investment practices is included as well. Policies and limitations are considered at the time of purchase; the sale of instruments is not required in the event of a subsequent change in circumstances. FMR may not buy all of these instruments or use all of these techniques to the full extent permitted unless it believes that doing so will help the funds achieve their goals. As a shareholder, you will receive financial reports every six months detailing fund holdings and describing recent investment activities. 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. This ownership interest often gives a fund the right to vote on measures affecting the company's organization and operations. Although common stocks have a history of long-term growth in value, their prices tend to fluctuate in the short er term, particularly those of smaller companies. 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. Debt securities, loans, and other direct debt have varying degrees of quality and varying levels of sensitivity to changes in interest rates. Longer-term bonds are generally more sensitive to interest rate changes than short-term bonds. RESTRICTIONS: Each stock fund does not currently intend to invest more than 5% of its assets in lower-quality debt securities, sometimes called "junk bonds" (those rated below Baa by Moody's or BBB by S&P, and unrated securities judged by FMR to be of equivalent quality). FOREIGN SECURITIES and foreign currencies may involve additional risks. These include currency fluctuations, risks relating to political or economic conditions in the foreign country, and the potentially less stringent investor protection and disclosure standards of foreign markets. In addition to the political and economic factors that can affect foreign securities, a governmental issuer may be unwilling to repay principal and interest when due and may require that the conditions for payment be renegotiated. These factors could make foreign investments, especially those in developing countries, more volatile. 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. 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. ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by FMR, under the supervision of the Board of Trustees, to be illiquid, which means that they may be difficult to sell promptly at an acceptable price. The sale of other securities, including illiquid securities, may be subject to legal restrictions. Difficulty in selling securities may result in a loss or may be costly to a fund. RESTRICTIONS: A fund may not purchase a security if, as a result, more than 10% of its assets would be invested in illiquid securities. U.S. GOVERNMENT SECURITIES are high-quality debt securities issued or guaranteed by the U.S. Treasury or by an agency or instrumentality of the U.S. government. Not all U.S. government securities are backed by the full faith and credit of the United States. For example, securities issued by the Federal Farm Credit Bank or by the Federal National Mortgage Association are supported by the instrumentality's right to borrow money from the U.S. Treasury under certain circumstances. However, securities issued by the Financing Corporation are supported only by the credit of the entity that issued them. ASSET-BACKED SECURITIES may 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. OTHER MONEY MARKET INSTRUMENTS may include commercial paper, certificates of deposit, bankers' acceptances, time deposits, and corporate and other short-term obligations. These instruments may carry fixed or variable interest rates. STRIPPED SECURITIES are the separate income or principal components of a debt instrument. These involve risks that are similar to those of other debt securities, although they may be more volatile. WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS are trading practices in which payment and delivery for the securities take place at a future date. The market value of a security could change during this period, which could affect the market value of a fund's assets. 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. DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the risks of investing. This may include limiting the amount of money invested in any one issuer or, on a broader scale, in any one industry. A fund that is not diversified may be more sensitive to changes in the market value of a single issuer or industry. RESTRICTIONS: The stock funds (except Financial Services, Home Finance, and Regional Banks Portfolios) are considered non-diversified. Generally, to meet federal tax requirements at the close of each quarter, a stock fund does not invest more than 25% of its total assets in any one issuer and, with respect to 50% of total assets, does not invest more than 5% of its total assets in any one issuer. With respect to 75% of total assets, Financial Services Portfolio, Regional Banks Portfolio, and Home Finance Portfolio may not invest more than 5% of their total assets in any one issuer. The money market fund may not invest more than 5% of its total assets in the securities of any one issuer, except that it may invest up to 10% of its assets in the highest-quality securities of a single issuer for up to three days. Each stock fund normally invests at least 80%, but always at least 25%, of its assets in securities of companies principally engaged in the business activities identified for that fund. For Precious Metals and Minerals Portfolio, the fund normally invests at least 80% of its total assets in securities of companies principally engaged in the business activities identified for the fund, precious metals, and instruments whose value is linked to the price of precious metals. The money market fund may not invest more than 25% of its total assets in any one industry (other than the financial services industry; see below). These limitations do not apply to U.S. government securities. FINANCIAL SERVICES INDUSTRY. Companies in the financial services industry are subject to various risks related to that industry, such as government regulation, changes in interest rates, and exposure on loans, including loans to foreign borrowers. If a fund invests substantially in this industry, its performance may be affected by conditions affecting the industry. RESTRICTIONS: The money market fund will invest more than 25% of its total assets in the financial services industry. BORROWING. A fund may borrow from banks or from other funds advised by FMR, or through reverse repurchase agreements. If a stock fund borrows money, its share price may be subject to greater fluctuation until the borrowing is paid off. If the fund makes additional investments while borrowings are outstanding, this may be considered a form of leverage. RESTRICTIONS: A fund may borrow only for temporary or emergency purposes, but not in an amount exceeding 33% of its total assets. LENDING. Lending securities to broker-dealers and institutions, including FBSI, an affiliate of FMR, is a means of earning income. This practice could result in a loss or a delay in recovering a fund's securities. A fund may also lend money to other funds advised by FMR. RESTRICTIONS: Loans, in the aggregate, may not exceed 33% of a fund's total assets. FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS Some of the policies and restrictions discussed on the preceding pages are fundamental, that is, subject to change only by shareholder approval. The following paragraphs restate all those that are fundamental. All policies stated throughout this prospectus, other than those identified in the following paragraphs, can be changed without shareholder approval. AIR TRANSPORTATION PORTFOLIO invests primarily in companies engaged in the regional, national and international movement of passengers, mail, and freight via aircraft. AMERICAN GOLD PORTFOLIO invests primarily in companies engaged in exploration, mining, processing, or dealing in gold, or, to a lesser degree, in silver, platinum, diamonds, or other precious metals and minerals. Normally at least 80% of the fund's assets will be invested in securities of North, Central and South American companies engaged in gold-related activities, and in gold bullion or coins. The fund is authorized to invest up to 50% of its total assets in gold bullion or coins. AUTOMOTIVE PORTFOLIO invests primarily in companies engaged in the manufacture, marketing or sale of automobiles, trucks, specialty vehicles, parts, tires, and related services. BIOTECHNOLOGY PORTFOLIO invests primarily in companies engaged in the research, development, scale up and manufacture of various biotechnological products, services and processes. BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO invests primarily in companies engaged in stock brokerage, commodity brokerage, investment banking, tax-advantaged investment or investment sales, investment management, or related investment advisory services. A company is principally engaged in the industry if it derives more than 15% of revenues or profits from brokerage or investment management activities. CHEMICALS PORTFOLIO invests primarily in companies engaged in the research, development, manufacture or marketing of products or services related to the chemical process industries. COMPUTERS PORTFOLIO invests primarily in companies engaged in research, design, development, manufacture or distribution of products, processes or services that relate to currently available or experimental hardware technology within the computer industry. CONSTRUCTION AND HOUSING PORTFOLIO invests primarily in companies engaged in the design and construction of residential, commercial, industrial and public works facilities, as well as companies engaged in the manufacture, supply, distribution or sale of products or services to these construction industries. CONSUMER PRODUCTS PORTFOLIO invests primarily in companies engaged in the manufacture and distribution of goods to consumers both domestically and internationally. DEFENSE AND AEROSPACE PORTFOLIO invests primarily in companies engaged in the research, manufacture or sale of products or services related to the defense or aerospace industries. DEVELOPING COMMUNICATIONS PORTFOLIO invests primarily in companies engaged in the development, manufacture or sale of emerging communications services or equipment. ELECTRONICS PORTFOLIO invests primarily in companies engaged in the design, manufacture, or sale of electronic components (semiconductors, connectors, printed circuit boards and other components); equipment vendors to electronic component manufacturers; electronic component distributors; and electronic instruments and electronic systems vendors. ENERGY PORTFOLIO invests primarily in companies in the energy field, including the conventional areas of oil, gas, electricity and coal, and newer sources of energy such as nuclear, geothermal, oil shale and solar power. ENERGY SERVICE PORTFOLIO invests primarily in companies in the energy service field, including those that provide services and equipment to the conventional areas of oil, gas, electricity and coal, and newer sources of energy such as nuclear, geothermal, oil shale and solar power. ENVIRONMENTAL SERVICES PORTFOLIO invests primarily in companies engaged in the research, development, manufacture or distribution of products, processes or services related to waste management or pollution control. FINANCIAL SERVICES PORTFOLIO invests primarily in companies providing financial services to consumers and industry. A company is principally engaged in the industry if it derives more than 15% of revenues or profits from brokerage or investment management activities. FOOD AND AGRICULTURE PORTFOLIO invests primarily in companies engaged in the manufacture, sale or distribution of food and beverage products, agricultural products, and products related to the development of new food technologies. HEALTH CARE PORTFOLIO invests primarily in companies engaged in the design, manufacture, or sale of products or services used for or in connection with health care or medicine. HOME FINANCE PORTFOLIO invests primarily in companies engaged in investing in real estate, usually through mortgages and other consumer-related loans. INDUSTRIAL EQUIPMENT PORTFOLIO invests primarily in companies engaged in the manufacture, distribution or service of products and equipment for the industrial sector, including integrated producers of capital equipment (such as general industry machinery, farm equipment, and computers), parts suppliers and subcontractors. INDUSTRIAL MATERIALS PORTFOLIO invests primarily in companies engaged in the manufacture, mining, processing, or distribution of raw materials and intermediate goods used in the industrial sector. INSURANCE PORTFOLIO invests primarily in companies engaged in underwriting, reinsuring, selling, distributing, or placing of property and casualty, life, or health insurance. LEISURE PORTFOLIO invests primarily in companies engaged in the design, production, or distribution of goods or services in the leisure industries. MEDICAL DELIVERY PORTFOLIO invests primarily in companies engaged in the ownership or management of hospitals, nursing homes, health maintenance organizations, and other companies specializing in the delivery of health care services. MULTIMEDIA PORTFOLIO invests primarily in companies engaged in the development, production, sale and distribution of goods or services used in the broadcast and media industries. NATURAL GAS PORTFOLIO invests primarily in companies engaged in the production, transmission, and distribution of natural gas, and involved in the exploration of potential natural gas sources, as well as those companies that provide services and equipment to natural gas producers, refineries, cogeneration facilities, converters, and distributors. PAPER AND FOREST PRODUCTS PORTFOLIO invests primarily in companies engaged in the manufacture, research, sale, or distribution of paper products, packaging products, building materials (such as lumber and paneling products), and other products related to the paper and forest products industry. PRECIOUS METALS AND MINERALS PORTFOLIO invests primarily in companies engaged in exploration, mining, processing or dealing in gold, silver, platinum, diamonds or other precious metals and minerals. Under normal conditions, the fund will invest at least 80% of its total assets in (i) securities of companies principally engaged in exploration, mining, processing, or dealing in gold, silver, platinum, diamonds, or other precious metals and minerals, and (ii) precious metals. The fund is authorized to invest up to 50% of its total assets in precious metals. REGIONAL BANKS PORTFOLIO invests primarily in companies engaged in accepting deposits and making commercial and principally non-mortgage consumer loans. RETAILING PORTFOLIO invests primarily in companies engaged in merchandising finished goods and services primarily to individual consumers. SOFTWARE AND COMPUTER SERVICES PORTFOLIO invests primarily in companies engaged in research, design, production or distribution of products or processes that relate to software or information-based services. TECHNOLOGY PORTFOLIO invests primarily in companies which FMR believes have, or will develop, products, processes or services that will provide or will benefit significantly from technological advances and improvements. TELECOMMUNICATIONS PORTFOLIO invests primarily in companies engaged in the development, manufacture, or sale of communications services or communications equipment. TRANSPORTATION PORTFOLIO invests primarily in companies engaged in providing transportation services or companies engaged in the design, manufacture, distribution, or sale of transportation equipment. UTILITIES PORTFOLIO invests primarily in companies in the public utilities industry and companies deriving a majority of their revenues from their public utility operations. MONEY MARKET PORTFOLIO seeks to provide high current income, consistent with preservation of capital and liquidity, by investing in a broad range of high quality money market instruments. At all times, 80% or more of the fund's assets will be invested in money market instruments. The fund may not invest more than 25% of its total assets in any one industry, except that the fund will invest more than 25% of its total assets in the financial services industry. EACH STOCK FUND seeks capital appreciation. The funds seek to achieve this objective by investing primarily in equity securities, including common stocks and securities convertible into common stocks, and for American Gold Portfolio and Precious Metals and Minerals Portfolio, in certain precious metals. Normally, at least 80%, and in no event less than 25%, of a stock fund's assets will be invested in securities of companies principally engaged in the business activities identified for that fund (except Precious Metals and Minerals Portfolio). For the purposes of these policies, a company is considered to be "principally engaged" in a designated business activity (unless otherwise noted) if at least 50% of its assets, gross income, or net profits are committed to, or derived from, that activity. FMR does not place any emphasis on income when selecting securities for the stock funds, except when it believes that income may have a favorable effect on a security's market value. When FMR considers it appropriate for defensive purposes, each stock fund may temporarily invest substantially in investment-grade debt securities. EACH FUND may borrow only for temporary or emergency purposes or engage in reverse repurchase agreements, but not in an amount exceeding 33% of its total assets. Loans, in the aggregate, may not exceed 33% of total assets. BREAKDOWN OF EXPENSES Like all mutual funds, the funds pay expenses related to their daily operations. Expenses paid out of a fund's assets are reflected in its share price or dividends; they are neither billed directly to shareholders nor deducted from shareholder accounts. Each fund pays a MANAGEMENT FEE to FMR for managing its investments and business affairs. FMR in turn pays fees to affiliates who provide assistance with these services for the funds. Each fund also pays OTHER EXPENSES, which are explained at right. FMR may, from time to time, agree to reimburse the funds for management fees and other expenses above a specified limit. FMR retains the ability to be repaid by a fund if expenses fall below the specified limit prior to the end of the fiscal year. Reimbursement arrangements, which may be terminated at any time without notice, 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 1994, the group fee rate was .3223 %. The individual fund fee rate is .30% for the stock funds. The total management fee for each stock fund for fiscal 1994 is shown on the chart at right . THE MONEY MARKET FUND'S management fee is calculated by multiplying the sum of two components by the fund's average net assets and adding an income-based fee. One component, the group fee rate, is based on the average net assets of all the mutual funds advised by FMR. It cannot rise above .37% and it drops as total assets, under management increase. The other component, the individual fund fee rate, is .03%. The income-based fee is 6% of the fund's gross income in excess of a 5% yield and cannot rise above .24% of the fund's average net assets. For February, 1994, the group fee rate was .1604 %. The money market's total management fee for fiscal 1994 was .13 % under the old contract and would have been .19% had the new contract been in effect for fiscal 1994 . FMR HAS SUB-ADVISORY AGREEMENTS with FMR U.K. and FMR Far East on behalf of the stock funds (except American Gold Portfolio). These sub-advisers provide FMR with investment research and advice on companies based outside the United States. Under the sub-advisory agreements, FMR pays FMR U.K. and FMR Far East fees equal to 110% and 105%, respectively, of the costs of providing these services. The sub-advisers may also provide investment management services. In return, FMR pays FMR U.K. and FMR Far East 50% of its management fee rate with respect to a fund's investments that the sub-adviser manage 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 .07 % of the money market fund's average net assets for fiscal 1994. 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 transaction s and accounting functions. These services include processing shareholder transactions, valuing the funds' investments, and handling securities loans. In fiscal 1994 the funds paid FSC the fees outlined in the following table. The funds also pay other expenses, such as legal, audit, and custodian fees; proxy solicitation costs; and the compensation of trustees who are not affiliated with Fidelity. Each fund's turnover rate varies from year to year, depending on market conditions. These rates vary from year to year. High turnover rates increase transaction costs, and may increase taxable capital gains. Of course, FMR considers these effects when evaluating the anticipated benefits of short-term investing. The funds' portfolio turnover rates for fiscal 1994 are shown in the chart below. Management Fees to Turnover Fund fees FSC % Air Transportation 0.63% 1.41% 171% American Gold 0.63% 0.78% 39% Automotive 0.63% 0.98% 64% Biotechnology 0.63% 0.92% 51% Brokerage and Investment Management 0.63% 1.02% 295% Chemicals 0.63% 1.18% 81% Computers 0.63% 1.12% 145% Construction and Housing 0.63% 0.92% 35% Consumer Products 0.49%B 1.71% 169% Defense and Aerospace 0.00%B 2.28% 324% Developing Communications 0.63% 0.83% 280% Electronics 0.63% 0.91% 163% Energy 0.63% 0.93% 157% Energy Service 0.63% 0.91% 137% Environmental Services 0.63% 1.32% 191% Financial Services 0.62% 0.91% 93% Food and Agriculture 0.62% 0.93% 96% Health Care 0.63% 0.90% 213% Home Finance 0.63% 0.85% 95% Industrial Equipment 0.63% 0.95% 95% Industrial Materials 0.64% 1.32% 185% Insurance 0.63% 1.11% 101% Leisure 0.63% 0.80% 170% Medical Delivery 0.63% 1.09% 164% Multimedia 0.63% 0.82% 340% Natural Gas 0.63%A 1.06%A 44%A Paper and Forest Products 0.64% 1.22% 176% Precious Metals and Minerals 0.63% 0.81% 73% Regional Banks 0.62% 0.90% 74% Retailing 0.62% 1.11% 154% Software and Computer Services 0.63% 0.85% 376% Technology 0.63% 0.83% 213% Telecommunications 0.63% 0.81% 241% Transportation 0.63% 1.49% 115% Utilities 0.63% 0.67% 61% Money Market n/a 0.51% n/a A ANNUALIZED B AFTER REIMBURSEMENT [TEXT] YOUR ACCOUNT DOING BUSINESS WITH FIDELITY Fidelity Investments was established in 1946 to manage one of America's first mutual funds. Today, Fidelity is the largest mutual fund company in the country, and is known as an innovative provider of high-quality financial services to individuals and institutions. In addition to its mutual fund business, the company operates one of America's leading discount brokerage firms, Fidelity Brokerage Services, Inc. (FBSI). Fidelity is also a leader in providing tax-sheltered retirement plans for individuals investing on their own or through their employer. Fidelity is committed to providing investors with practical information to make investment decisions. Based in Boston, Fidelity provides customers with complete service 24 hours a day, 365 days a year, through a network of telephone service centers around the country. To reach Fidelity for general information, call these numbers: (bullet) For mutual funds, 1-800-544-8888 (bullet) For brokerage, 1-800-544-7272 If you would prefer to speak with a representative in person, Fidelity has over 78 walk-in Investor Centers across the country. TYPES OF ACCOUNTS You may set up an account directly in the funds or, if you own or intend to purchase individual securities as part of your total investment portfolio, you may consider investing in a fund through a Fidelity brokerage account. If you are investing through FBSI or another financial institution or investment professional, refer to its program materials for any special provisions regarding your investment in a fund. The different ways to set up (register) your account with Fidelity are listed at right. The account guidelines that follow may not apply to certain retirement accounts. If your employer offers a fund through a retirement program, contact your employer for more information. Otherwise, call Fidelity directly. WAYS TO SET UP YOUR ACCOUNT 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. If your spouse has earned income of less than $250 per year, you can invest an additional $250 per year in your spouse's name. 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, INSTITUTIONS, OR OTHER GROUPS Requires a special application. HOW TO BUY SHARES SHARE PRICE ONCE EACH HOUR OF EVERY BUSINESS DAY, TWO SHARE PRICES ARE CALCULATED FOR EACH FUND: the offering price and the net asset value (NAV). The offering price includes the sales charge, if any, which you pay when you buy shares, unless you qualify for a deduction or waiver as described on page . When you buy shares at the offering price, Fidelity deducts the amount of any sales charge and invests the rest at the NAV. Shares are purchased at the next share price calculated after your investment is received and accepted. Share price is normally calculated hourly, each business day, from 10 a.m. to 4 p.m. Eastern time. IF YOU ARE NEW TO FIDELITY, complete and sign an account application and mail it along with your check. You may also open your account in person or by wire as described at right. If there is no application accompanying this prospectus, call 1-800-544-8888. IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can: (bullet) Mail in an application with a check, or (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 specially marked 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 TO OPEN AN ACCOUNT $2,500 For Fidelity retirement accounts $500 TO ADD TO AN ACCOUNT $250 For Fidelity retirement accounts $250 Through automatic investment plans $100 MINIMUM BALANCE $1,000 For Fidelity retirement accounts $500 KEY INFORMATION (phone_graphic) Phone 1#800#544#7777 (bullet) To open an account, exchange from another Fidelity fund account with the same registration, including name, address, and taxpayer ID number. (bullet) 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_graphic) Mail (bullet) 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. (bullet) 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. (hand_graphic) In Person (bullet) To open an account, bring your application and check to a Fidelity Investor Center. Call 1-800-544-9797 for the center nearest you. (bullet) To add to an account, bring your check to a Fidelity Investor Center. Call 1-800-544-9797 for the center nearest you. (bullet) Orders will be executed at the next hourly price determined after your investment is accepted. (wire_graphic) Wire HOW TO SELL SHARES You can arrange to take money out of your fund account at any time by selling (redeeming) some or all of your shares. Your shares will be sold at the next share price calculated after your order is received and accepted. Share price is normally calculated hourly, each business day, from 10 a.m. to 4 p.m. Eastern time. Before the fund s' current 3% sales charge became effective the funds' shares were sold with a 2% sales charge and a 1% deferred sales charge. The deferred sales charge applies to redemptions of fund shares (including Select Cash Reserves) purchased prior to October 12, 1990, but does not apply to exchanges between Select funds, or if you qualify for a sales charge waiver. TO SELL SHARES IN A NON-RETIREMENT ACCOUNT, you may use any of the methods described on this page. TO SELL SHARES IN A FIDELITY RETIREMENT ACCOUNT, your request must be made in writing, except for exchanges to other Fidelity funds, which can be requested by phone or in writing. Call 1-800-544-6666 for a retirement distribution form. IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least $1,000 worth of shares in the account to keep it open ($500 for retirement accounts). TO SELL SHARES BY BANK WIRE OR FIDELITY MONEY LINE, you will need to sign up for these services in advance. CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to protect you and Fidelity from fraud. Your request must be made in writing and include a signature guarantee if any of the following situations apply: (bullet) You wish to redeem more than $100,000 worth of shares, (bullet) Your account registration has changed within the last 30 days, (bullet) The check is not being mailed to the address on your account (record address), (bullet) The check is not being made out to the account owner, or (bullet) The redemption proceeds are being transferred to a Fidelity account with a different registration. You should be able to obtain a signature guarantee from a bank, broker (including Fidelity Investor Centers), dealer, credit union (if authorized under state law), securities exchange or association, clearing agency, or savings association. A notary public cannot provide a signature guarantee. TO SELL SHARES IN WRITING, write a "letter of instruction" with your name, your fund's name, your fund account number, the dollar amount or number of shares to be redeemed, and any other applicable requirements. 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 (bullet) Maximum check request: $100,000. (bullet) For Money Line transfers to your bank account; minimum: $10; maximum: $100,000. ALL ACCOUNT TYPES (bullet) 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 TENANTS, SOLE PROPRIETORSHIPS, UGMA, UTMA (bullet) The letter of instruction must be signed by all persons required to sign for transactions, exactly as their names appear on the account. RETIREMENT ACCOUNTS (bullet) The account owner should complete a retirement distribution form. Call 1-800-544-6666 to request one. TRUSTS (bullet) 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. BUSINESSES OR ORGANIZATIONS (bullet) At least one person authorized by corporate resolution to act on the account must sign the letter. (bullet) Include a corporate resolution with corporate seal or a signature guarantee. EXECUTORS, ADMINISTRATORS, CONSERVATORS, GUARDIANS (bullet) Call 1-800-544-6666 for instructions. WIRE ALL ACCOUNT TYPES EXCEPT RETIREMENT (bullet) 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. (bullet) 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_GRAPHIC) TDD - SERVICE FOR THE DEAF AND HEARING-IMPAIRED: 1-800-544-0118 FIDELITY MONEY LINE(Registered trademark) enables you to transfer money by phone between your bank account and your fund account. Most transfers are complete d 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 FIDELITY AUTOMATIC ACCOUNT BUILDERSM TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY FUND MINIMUM FREQUENCY SETTING UP OR CHANGING $100 Monthly or (bullet) For a new account, quarterly complete the appropriate section on the fund application. (bullet) For existing accounts, call 1-800-544-6666 for an application. (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 (bullet) Not available for Select period stock funds. (bullet) Check the appropriate box on the fund application, or call 1-800-544-6666 for an authorization form. (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 Every pay (bullet) Check the appropriate period box on the fund application, or call 1-800-544-6666 for an authorization form. (bullet) Changes require a new authorization form. [TEXT] SHAREHOLDER AND ACCOUNT POLICIES DIVIDENDS, CAPITAL GAINS, AND TAXES Each stock fund distributes substantially all of its net investment income and capital gains to shareholders each year, normally in April and December. Income dividends for the money market fund are declared daily and paid monthly. DISTRIBUTION OPTIONS When you open an account, specify on your application how you want to receive your distributions. If the option you prefer is not listed on the application, call 1-800-544-6666 for instructions. Each 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 each dividend and capital gain distribution. 4. DIRECTED DIVIDENDS(Registered trademark) OPTION. Your dividend and capital gain distributions will be automatically invested in another identically registered Fidelity fund. Call 1-800-544-6666 for more information. FOR RETIREMENT ACCOUNTS, all distributions are automatically reinvested. When you are over 59 years old, you can receive distributions in cash. For the stock funds, distributions will be reinvested, or deducted from the share price, at 10:00 a.m. on the ex-dividend date. Shareholders of record at 4:00 p.m. on the business day before the ex-dividend will be entitled to receive the distribution. For the money market fund, dividends will be reinvested at 4:00 p.m. of the last day of the month. Cash distribution checks will be mailed within seven days. TAXES As with any investment, you should consider how your investment in the fund will be taxed. If your account is not a tax-deferred retirement account, you should be aware of the following tax implications: TAXES ON DISTRIBUTIONS. Distributions are subject to federal income tax, and may also be subject to state or local taxes. If you live outside the United States, your distributions could also be taxed by the country in which you reside. Your distributions are taxable when they are paid, whether you take them in cash or reinvest them in additional shares. However, distributions declared in December and paid in January are taxable as if they were paid on December 31. For federal tax purposes, each fund's income and short-term capital gain distributions are taxed as dividends; long-term capital gain distributions are taxed as long-term capital gains. Every January, Fidelity will send you and the IRS a statement showing the taxable distributions paid to you in the previous year. TAXES ON TRANSACTIONS. Your redemptions - including exchanges to other Fidelity funds - are subject to capital gains tax. A capital gain or loss is the difference between the cost of your shares and the price you receive when you sell them. UNDERSTANDING DISTRIBUTIONS As a fund shareholder, you are entitled to your share of the fund's net income and gains on its investments. The fund passes these earnings along to its investors as DISTRIBUTIONS. Each fund earns dividends from stocks and interest from bond, money market and other investments. These are passed along as DIVIDEND DISTRIBUTIONS. A fund realizes capital gains whenever it sells securities for a higher price than it paid for them. These are passed along as CAPITAL GAIN DISTRIBUTIONS. (checkmark) Whenever you sell shares of a fund, Fidelity will send you a confirmation statement showing how many shares you sold and at what price. You will also receive a consolidated transaction statement every January. However, it is up to you or your tax preparer to determine whether this sale resulted in a capital gain and, if so, the amount of tax to be paid. Be sure to keep your regular account statements; the information they contain will be essential in calculating the amount of your capital gains. "BUYING A DIVIDEND." If you buy shares just before a fund deducts a distribution from its share price, you will pay the full price for the shares and then receive a portion of the price back as a taxable distribution. There are some tax requirements that all funds must follow in order to avoid federal taxation. In its effort to adhere to these requirements, a fund may have to limit its investment activity in some types of instruments. TRANSACTION DETAILS THE FUNDS ARE OPEN FOR BUSINESS each day the New York Stock Exchange (NYSE) is open. Fidelity normally calculates each fund's net asset value and offering price, hourly, from 10:00 a.m. to 4:00 p.m. each business day of the NYSE. EACH FUND'S NAV is the value of a single share. The NAV is computed by adding up the value of the fund's investments, cash, and other assets, subtracting its liabilities, and then dividing the result by the number of shares outstanding. The stock funds' portfolio securities and other assets are valued primarily on the basis of market quotations or, if quotations are not readily available, by a method that the Board of Trustees believes accurately reflects fair value. 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. The money market fund values the securities it owns on the basis of amortized cost. This method minimizes the effect of changes in a security's market value and helps the fund to maintain a stable $1.00 share price. EACH FUND'S OFFERING PRICE (price to buy one share) is the fund's NAV plus a sales charge. The sales charge is 3% of the offering price, or 3.09% of the net amount invested. The REDEMPTION PRICE (price to sell one share) is the fund's NAV plus a redemption fee of $7.50 or of 1% of the value of your redemptions depending on how long your shares were held. Exchanges will also be charged an additional $7.50 fee. WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that your Social Security or taxpayer identification number is correct and that you are not subject to 31% backup withholding for failing to report income to the IRS. If you violate IRS regulations, the IRS can require a fund to withhold 31% of your taxable distributions and redemptions. YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Note that Fidelity will not be responsible for any losses resulting from unauthorized transactions if it follows reasonable procedures designed to verify the identify 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 are of a size that 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: (bullet) All of your purchases must be made in U.S. dollars and checks must be drawn on U.S. banks. (bullet) Fidelity does not accept cash. (bullet) When making a purchase with more than one check, each check must have a value of at least $50. (bullet) Each fund reserves the right to limit the number of checks processed at one time. (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. (bullet) If you do not specify a particular stock fund, your investment will be made in the money market fund until FSC receives instructions from you. TO AVOID THE COLLECTION PERIOD associated with check and Money Line purchases, consider buying shares by bank wire, U.S. Postal money order, U.S. Treasury check, Federal Reserve check, or Direct Deposit instead. YOU MAY BUY OR SELL SHARES OF THE FUNDS 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 service features or fees that this prospectus may not mention. Fidelity Brokerage Services, Inc. (FBSI) established a program permitting customers with Fidelity brokerage accounts to sell short shares of Select stock funds. FMR reserves the right to suspend the short selling program at any time in the future. CERTAIN FINANCIAL INSTITUTIONS that have entered into sales agreements with FDC may enter confirmed purchase orders on behalf of customers by phone, with payment to follow no later than the time when the fund is priced on the following business day. If payment is not received by that time, the financial institution could be held liable for resulting fees or losses. WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the next NAV calculated after your request is received and accepted. Please note the following: (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. (bullet) Fidelity Money Line redemptions generally will be credited to your bank account on the second or third business day after your phone call. (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. (bullet) Redemptions may be suspended or payment dates postponed on days 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. IF YOUR ACCOUNT BALANCE FALLS BELOW $1,000, you will be given 30 days' notice to reestablish the minimum balance. If you do not increase your balance, Fidelity reserves the right to close your account and send the proceeds to you. Your shares will be redeemed at the NAV on the day your account is closed. THE SELECT CASH RESERVES ACCOUNT no longer accepts new investments. If you have an investment in this account, you may leave it there, redeem your investment, or exchange your shares for shares of a Select fund or another Fidelity fund. The 1% deferred sales charge will apply to shares in the Select Cash Reserves Account redeemed or exchanged to another Fidelity fund, since these shares were available for purchase only when the 1% deferred sales charge was still in effect. If you redeem by check from Select Cash Reserves, and the amount of the check is greater than the value of your account, your check will be returned to you and you may be subject to extra charges. FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing historical account documents, that are beyond the normal scope of its services. FDC collects the proceeds from the funds' 3% sales charge and may pay a portion of them to securities dealers who have sold the fund's shares, or to others, including banks and other financial institutions (qualified recipients), under special arrangements in connection with FDC's sales activities. The sales charge paid to qualified recipients is 2.25% of the offering price. FDC may, at its own expense, provide promotional incentives to q ualified r ecipients 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: (bullet) The fund you are exchanging into must be registered for sale in your state. (bullet) You may only exchange between accounts that are registered in the same name, address, and taxpayer identification number. (bullet) Before exchanging into a fund, you should read its prospectus. (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. (bullet) Exchanges may have tax consequences for you. (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. (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. (bullet) Each fund also reserves the right to refuse exchange purchases by any person or group if, in FMR's judgment, the fund would be unable to invest the money effectively in accordance with its investment objective and policies, or would otherwise potentially be adversely affected. (bullet) Your exchanges may be restricted or refused if the funds receive or anticipate simultaneous orders affecting significant portions of the funds' assets. In particular, a pattern of exchanges that coincide with a "market timing" strategy may be disruptive to the funds. (bullet) Each exchange limit may be modified for accounts in certain institutional retirement plans to conform to plan exchange limits and Department of Labor regulations. See your plan materials for further information. (bullet) For cash management purposes, up to seven days may pass before exchange proceeds are paid from one Select fund to another, or to another Fidelity equity fund. Exchange proceeds are recorded in your shareholder account when the transaction occurs. Therefore, when you exchange from a stock fund to the money market fund, you will earn money market dividends immediately. When you exchange from the money market fund to a stock fund, you will not earn money market dividends during the seven-day period. This policy could increase the volatility of the money market fund's yield. Although the funds will attempt to give you prior notice whenever they are reasonably able to do so, they may impose these restrictions at any time. The funds reserve the right to terminate or modify the exchange privilege in the future. OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose administrative fees of up to $7.50 and redemption fees of up to 1.50% on exchanges. Check each fund's prospectus for details. SALES CHARGE REDUCTIONS AND WAIVERS REDUCTIONS. Each stock fund's sales charge may be reduced if you invest directly with Fidelity or through prototype or prototype-like retirement plans sponsored by FMR or FMR Corp. Purchases made with assistance or intervention from a financial intermediary are not eligible. The amount you invest, plus the value of your account, must fall within the ranges shown below. Call Fidelity to see if your purchase qualifies. Net amount Ranges Sales charge invested $0 - 249, 999 3% 3.09% $250,000 - 499,999 2% 2.04% $500,000 - 999,999 1% 1.01% $1,000,000 or more none none The sales charge for the stock funds and the money market fund will also be reduced by the percentage of any sales charge you previously paid on investments in other Fidelity funds (not including Fidelity's Foreign Currency Funds). Similarly, your shares carry credit for any sales charge you would have paid if the reductions in the table above had not been available. These sales charge credits only apply if you continuously owned Fidelity fund shares or a Fidelity brokerage core account, or participated in The CORPORATEplan for Retirement Program, and only to purchases made in one of the following ways: 1. By exchange from another Fidelity fund. 2. With proceeds of a transaction within a Fidelity brokerage core account, including any free credit balance, core money market fund, or margin availability, to the extent such proceeds were derived from redemption proceeds from another Fidelity fund. 3. With redemption proceeds from one of Fidelity's Foreign Currency Funds , if the Foreign Currency Fund shares were originally purchased with redemption proceeds from a Fidelity fund. 4. Through the Directed Dividends Option (see page ). 5. By participants in The CORPORATEplan for Retirement Program when shares are purchased through plan-qualified loan repayments, and for exchanges into and out of the Managed Income Portfolio. WAIVERS. The fund's sales charge will not apply: 1. If you buy shares as part of an employee benefit plan having more than 200 eligible employees or a minimum of $3 million in plan assets invested in Fidelity mutual funds. Plan sponsors are encouraged to notify Fidelity when they first satisfy either of these requirements. 2. To shares in a Fidelity Rollover IRA account purchased with the proceeds of a distribution from an employee benefit plan, provided that at the time of the distribution, the employer or its affiliate maintained a plan that both qualified for waiver (1) above and had at least some of its assets invested in Fidelity-managed products. 3. If you are a charitable organization (as defined in Section 501(c)(3) of the Internal Revenue Code) investing $100,000 or more. 4. If you purchase shares for a charitable remainder trust or life income pool established for the benefit of a charitable organization (as defined by Section 501(c)(3) of the Internal Revenue Code). 5. If you are an investor participating in the Fidelity Trust Portfolios program. 6. To shares purchased through Portfolio Advisory Services. 7. If you are a current or former trustee or officer of a Fidelity fund or a current or retired officer, director, or regular employee of FMR Corp. or its direct or indirect subsidiaries (a Fidelity Trustee or employee), the spouse of a Fidelity trustee or employee, a Fidelity trustee or employee acting as custodian for a minor child, or a person acting as trustee of a trust for the sole benefit of the minor child of a Fidelity trustee or employee. 8. If you are a bank trust officer, registered representative, or other employee of a qualified recipient, as defined on page . T hese 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. INVESTMENT ADVISER Fidelity Management & Research Company Boston, MA OFFICERS Edward C. Johnson 3d, PRESIDENT J. Gary Burkhead, SENIOR VICE PRESIDENT Richard A. Spillane, Jr., VICE PRESIDENT, EQUITY FUNDS Thomas D. Maher, ASSISTANT VICE PRESIDENT, MONEY MARKET FUND Gary L. French, TREASURER John H. Costello, ASSISTANT TREASURER Arthur S. Loring, SECRETARY Robert H. Morrison, MANAGER, SECURITY TRANSACTIONS BOARD OF TRUSTEES J. Gary Burkhead Ralph F. Cox * Phyllis Burke Davis * Richard J. Flynn * Edward C. Johnson 3d E. Bradley Jones * Donald J. Kirk Peter S. Lynch Marvin L. Mann * Edward H. Malone * Gerald C. McDonough * Thomas R. Williams * GENERAL DISTRIBUTOR Fidelity Distributors Corporation Boston, MA TRANSFER AND SHAREHOLDER SERVICING AGENT Fidelity Service Co. Boston, MA CUSTODIANS Brown Brothers Harriman & Co. Boston, MA and The Bank of New York New York, NY CORPORATE HEADQUARTERS 82 Devonshire Street Boston, MA 02109 1-800-544-8888 * INDEPENDENT TRUSTEES AUTOMATED LINES FOR QUICKEST SERVICE FIDELITY SELECT PORTFOLIOS CONSUMER SECTOR Consumer Products Food and Agriculture Leisure Multimedia Retailing CYCLICALS SECTOR Air Transportation Automotive Chemicals Construction and Housing Environmental Services Industrial Equipment Industrial Materials Paper and Forest Products Transportation ENERGY, UTILITIES & NATURAL RESOURCES SECTOR American Gold Energy Energy Service Natural Gas Precious Metals and Minerals Utilities FINANCIAL SERVICES SECTOR Brokerage and Investment Management Financial Services Home Finance Insurance Regional Banks HEALTH CARE SECTOR Biotechnology Health Care Medical Delivery TECHNOLOGY SECTOR Computers Defense and Aerospace Developing Communications Electronics Software and Computer Services Technology Telecommunications Money Market THE FIDELITY TELEPHONE CONNECTION MUTUAL FUND 24-HOUR SERVICE Account Balances 1-800-544-7544 Exchanges/Redemptions 1-800-544-7777 Mutual Fund Quotes 1-800-544-8544 Account Assistance 1-800-544-6666 Product Information 1-800-544-8888 Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.) TDD Service 1-800-544-0111 for the deaf and hearing impaired (9 a.m. - 9 p.m. Eastern time) FIDELITY INVESTMENTS P.O. Box 193 BOSTON, MA 02101 BULK RATE U.S. Postage PAID Fidelity Investments [TEXT] FIDELITY SELECT PORTFOLIOS STATEMENT OF ADDITIONAL INFORMATION APRIL 30 , 1994 This Statement is not a prospectus but should be read in conjunction with the funds' current Prospectus (dated April 30 , 1994). Please retain this document for future reference. The Annual Report for the fiscal period ended February 28, 1994 is incorporated herein by reference. To obtain an additional copy of the Prospectus or the Annual Report, please call Fidelity Distributors Corporation at 1-800-544-8888. TABLE OF CONTENTS PAGE Investment Policies and Limitations Portfolio Transactions Valuation of Portfolio Securities Performance Additional Purchase and Redemption Information Distributions and Taxes FMR Trustees and Officers Management Contracts Contracts With Companies Affiliated With FMR Description of the Trust Financial Statements INVESTMENT ADVISER Fidelity Management & Research Company (FMR) INVESTMENT SUB-ADVISERS Fidelity Management & Research (Far East) Inc. (FMR Far East) Fidelity Management & Research (U.K.) Inc. (FMR U.K.) FMR Texas Inc. (FTX) (Money Market Portfolio only) DISTRIBUTOR Fidelity Distributors Corporation (FDC) TRANSFER AGENT Fidelity Service Co. (FSC) SEL-ptB-494 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 are represented by cash, cash items, U.S. government securities, and other securities of issuers which represent, with respect to each issuer, no more than 5% of the value of the investment company's total assets and no more than 10% of the outstanding voting securities of such issuer. As a non-diversified investment company, the fund need not satisfy these conditions. However, the stock funds' fundamental investment limitations provide that a fund will not 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. It is anticipated that each of the stock funds, except the Financial Services, Regional Banks, and Home Finance Portfolios, will operate as "non-diversified," subject to the above conditions and any other conditions applicable to the entire trust. The Financial Services, Regional Banks, and Home Finance Portfolios will not purchase the securities of any issuer (other than obligations issued or guaranteed by the U.S. government or any of its agencies or instrumentalities) if, as a result, with respect to 75% of its total assets, more than 5% of a fund's total assets would be invested in the securities of that issuer, and each will operate as a diversified fund. The Money Market Portfolio also will operate as a diversified fund. Each fund intends to meet the diversification requirements necessary to qualify as a regulated investment company for purposes of the Internal Revenue Code. (See non-fundamental limit (i) on page and "Distributions and Taxes" beginning on page .) Each fund's fundamental investment policies and limitations cannot be changed without approval by a "majority of the outstanding voting securities" (as defined in the Investment Company Act of 1940) of that fund. However, with respect to the money market fund, except for the fundamental investment limitations set forth below, the investment policies and limitations described in this Statement of Additional Information are not fundamental and may be changed without shareholder approval. THE FOLLOWING ARE EACH STOCK FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH IN THEIR ENTIRETY. EACH STOCK FUND MAY NOT: (1) issue senior securities, except as permitted under the Investment Company Act of 1940; (2) borrow money, except that a fund may borrow money for temporary or emergency purposes (not for leveraging or investment) in an amount not exceeding 33 1/3% of its total assets (including the amount borrowed) less liabilities (other than borrowings). Any borrowings that come to exceed this amount will be reduced within three days ( not including Sundays and holidays) to the extent necessary to comply with the 33 1/3% limitation; (3) underwrite securities issued by others, except to the extent that a fund may be considered an underwriter within the meaning of the Securities Act of 1933 in the disposition of restricted securities; (4) purchase or sell the securities of any issuer, if, as a result of such purchase or sale, less than 25% of the assets of the fund would be invested in the securities of issuers principally engaged in the business activities having the specific characteristics denoted by the fund; (5) purchase or sell real estate unless acquired as a result of ownership of securities or other instruments (but this shall not prevent a fund from investing in securities or other instruments backed by real estate or securities of companies engaged in the real estate business); (6) purchase or sell physical commodities unless acquired as a result of ownership of securities or other instruments (but this shall not prevent a fund from purchasing or selling options and futures contracts or from investing in securities or other instruments backed by physical commodities). This limitation does not apply to the Precious Metals and Minerals Portfolio (see below) or to the American Gold Portfolio; (7) lend any security or make any other loan if, as a result, more than 33 1/3% of its total assets would be lent to other parties, but this limitation does not apply to purchases of debt securities or to repurchase agreements. IN ADDITION, A FUND MAY: (8) notwithstanding any other fundamental investment policy or limitation, invest all of its assets in the securities of a single open-end management investment company with substantially the same fundamental investment objectives, policies, and limitations as the fund. THE PRECIOUS METALS AND MINERALS PORTFOLIO MAY NOT: (1) purchase any precious metal if, as a result, more than 50% of its total assets would be invested in precious metals; or (2) purchase or sell physical commodities, provided that the fund may purchase and sell precious metals, and further provided that the fund may sell physical commodities acquired as a result of ownership of securities. The fund may not purchase or sell options, options on futures contracts, or futures contracts on physical commodities other than precious metals. THE 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 (2)). Each fund will not purchase any security while borrowings representing more than 5% of its total assets are outstanding. Each fund will not borrow from other funds advised by FMR or its affiliates if total outstanding borrowings immediately after such borrowing would exceed 15% of the fund's total assets. (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 invest in interests of real estate investment trusts that are not readily marketable, or to invest in interests 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) 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 gold 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 by lending money (up to 5% of its 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.) (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 the stock funds' limitations on futures and options transactions, see the section entitled "Limitations on Futures and Options Transactions" beginning on page . THE FOLLOWING ARE THE MONEY MARKET FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE MONEY MARKET FUND MAY NOT: (1) with respect to 75% of the fund's total assets, purchase the securities of any issuer (other than securities issued or guaranteed by the U.S. government or any of its agencies or instrumentalities) if, as a result, (a) more than 5% of the fund's total assets would be invested in the securities of that issuer, or (b) the fund would hold more than 10% of the outstanding voting securities of that issuer. (2) issue senior securities, except as permitted under the Investment Company Act of 1940; (3) borrow money, except that the fund may (i) borrow money for temporary or emergency purposes (not for leveraging or investment) and (ii) engage in reverse repurchase agreements for any purpose; provided that (i) and (ii) in combination do not exceed 33 1/3% of the fund's total assets (including the amount borrowed) less liabilities (other than borrowings). Any borrowings that come to exceed this amount will be reduced within three days (not including Sundays and holidays) to the extent necessary to comply with the 33 1/3% limitation; (4) underwrite securities issued by others, except to the extent that the fund may be considered an underwriter within the meaning of the Securities Act of 1933 in the disposition of restricted securities; (5) purchase the securities of any issuer (other than securities issued or guaranteed by the U.S. government or any of its agencies or instrumentalities) if, as a result, more than 25% of the fund's total assets would be invested in the securities of companies whose principal business activities are in the same industry, except that the fund will invest more than 25% of its total assets in the financial services industry; (6) purchase or sell real estate unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the fund from investing in securities or other instruments backed by real estate or securities of companies engaged in the real estate business); (7) purchase or sell physical commodities unless acquired as a result of ownership of securities or other instruments; (8) lend any security or make any other loan if, as a result, more than 33 1/3% of its total assets would be lent to other parties, but this limitation does not apply to purchases of debt securities or to repurchase agreements; (9) invest in companies for the purpose of exercising control or management. IN ADDITION, THE FUND MAY: (10) notwithstanding any other fundamental investment policy or limitation, invest all of its assets in the securities of a single open-end management investment company with substantially the same fundamental investment objectives, policies, and limitations as the fund. THE FOLLOWING ARE THE MONEY MARKET FUND'S NON-FUNDAMENTAL LIMITATIONS WHICH MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL. (i) The fund does not currently intend to purchase a security (other than a security issued or guaranteed by the U.S. government or any of its agencies or instrumentalities) if, as a result, more than 5% of its total assets would be invested in the securities of a single issuer; provided that the fund may invest up to 25% of its total assets in the first tier securities of a single issuer for up to three business days. (ii) The fund does not currently intend to sell securities short, unless it owns or has the right to obtain securities equivalent in kind and amount to the securities sold short, and provided that transactions in futures contracts and options are not deemed to constitute selling securities short. (iii) The fund does not currently intend to purchase securities on margin, except that the fund may obtain such short-term credits as are necessary for the clearance of transactions, and provided that margin payments in connection with futures contracts and options on futures contracts shall not constitute purchasing securities on margin. (iv) The fund may borrow money only (a) from a bank or from a registered investment company or portfolio for which FMR or an affiliate serves as investment adviser or (b) by engaging in reverse repurchase agreements with any party. The fund will not purchase any security while borrowings (excluding reverse repurchase agreements) representing more than 5% of its total assets are outstanding. The fund will not borrow from other funds advised by FMR or its affiliates if total outstanding borrowings immediately after such borrowing would exceed 15% of the fund's total assets. (v) The fund does not currently intend to purchase any security if, as a result, more than 10% of its net assets would be invested in securities that are deemed to be illiquid because they are subject to legal or contractual restrictions on resale or because they cannot be sold or disposed of in the ordinary course of business at approximately the prices at which they are valued. (vi) The fund does not currently intend to invest in securities of real estate investment trusts that are not readily marketable, or to invest in securities of real estate limited partnerships that are not listed on the New York Stock Exchange or the American Stock Exchange or traded on the NASDAQ National Market System. (vii) The fund does not currently intend to purchase physical commodities or purchase or sell futures contracts based on physical commodities. (viii) The fund does not currently intend to lend assets other than securities to other parties, except by lending money (up to 10% of the fund's net assets) to a registered investment company or portfolio for which FMR or an affiliate serves as investment adviser. (This limitation does not apply to purchases of debt securities or to repurchase agreements.) (ix) The fund does not currently intend to (a) purchase securities of other investment companies, except in the open market where no commission except the ordinary broker's commission is paid, or (b) purchase or retain securities issued by other open-end investment companies. Limitations (a) and (b) do not apply to securities received as dividends, through offers of exchange, or as a result of a reorganization, consolidation, or merger. (x) The fund does not currently intend to invest in oil, gas, or other mineral exploration or development programs or leases. (xii) The fund does not currently intend to purchase the securities of any issuer if those officers and Trustees of the trust and those officers and directors of FMR who individually own more than 1/2 of 1% of the securities of such issuer together own more than 5% of such issuer's securities. (xii) The fund does not currently intend to purchase or sell futures contracts or call options. This limitation does not apply to options attached to or acquired or traded together with their underlying securities and does not apply to securities that incorporate features similar to options or futures contracts. (xiii) The fund does not currently intend to invest all of its assets in the securities of a single open-end management investment company with substantially the same fundamental investment objective, policies, and limitations as the fund. BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO AND FINANCIAL SERVICES PORTFOLIO Rule 12d3-1 under the Investment Company Act of 1940, as amended, allows investment portfolios such as these funds to invest in companies engaged in securities-related activities subject to certain conditions. Purchases of securities of a company that derived 15% or less of gross revenues during its most recent fiscal year from securities-related activities (i.e., broker/dealer, underwriting, or investment advisory activities) are subject only to the same percentage limitations as would apply to any other security the funds may purchase. Each fund may purchase securities of an issuer that derived more than 15% of its gross revenues in its most recent fiscal year from securities-related activities, subject to the following conditions: a. the purchase cannot cause more than 5% of the fund's total assets to be invested in securities of that issuer; b. for an equity security, the purchase cannot result in the fund owning more than 5% of the issuer's outstanding securities in that class; c. for a debt security, the purchase cannot result in the fund owning more than 10% of the outstanding principal amount of the issuer's debt securities. In applying the gross revenue test, an issuer's own securities-related activities must be combined with its ratable share of securities-related revenues from enterprises in which it owns a 20% or greater voting or equity interest. All of the above percentage limitations, as well as the issuer's gross revenue test, are applicable at the time of purchase. With respect to warrants, rights, and convertible securities, a determination of compliance with the above limitations shall be made as though such warrant, right, or conversion privilege had been exercised. Neither fund will be required to divest its holdings of a particular issuer when circumstances subsequent to the purchase cause one of the above conditions to not be met. The funds are not permitted to acquire any security issued by FMR, FDC, or any affiliated company of these companies that is a securities-related business. The purchase of a general partnership interest in a securities-related business is prohibited. MULTIMEDIA PORTFOLIO The Federal Communications Commission (FCC) has certain rules which limit ownership of corporate broadcast licensees in an effort to assure that no one person or entity (including mutual funds) exercises an unacceptable degree of influence or control over broadcast facilities. Current FCC rules prohibit the fund, together with all other funds advised by FMR, from holding in the aggregate 10% of the voting stock of more than 18 AM, 18 FM, or 12 TV broadcast stations. If the officer or director of a broadcast licensee is a representative of the fund, that licensee must also be taken into account in determining whether the limitation on the number of stations has been exceeded. FCC rules also limit investment in multiple stations serving the same area. The attribution rules are not applicable to noncommercial educational FM and TV stations, or to TV stations that are primarily "satellite" operations. In addition, the rules do not restrict the ownership of a broadcast licensee if any other person holds more than 50% of the outstanding voting stock of the licensee. These limitations apply to the aggregate assets of Multimedia Portfolio and of all funds managed by FMR. AMERICAN GOLD PORTFOLIO AND PRECIOUS METALS AND MINERALS PORTFOLIO The American Gold Portfolio and the Precious Metals and Minerals Portfolio each have the authority to invest a portion of their assets in gold. The Precious Metals and Minerals Portfolio can invest in other precious metals, such as platinum, palladium, and silver. No more than 50% of the American Gold Portfolio's total assets may be invested in gold bullion or coins. No more than 50% of the Precious Metals and Minerals Portfolio's total assets may be invested in precious metals, including gold bullion or coins. FMR does not currently intend that either fund will hold gold coins, but the Trustees reserve the right of the Portfolios to do so in the future. Transactions in gold coins will be entered into only with prior approval by the Trustees, prior notice to current shareholders, and provided that disclosure regarding the nature of such investments is set forth in a subsequent Prospectus that is part of the Registration Statement declared effective by the Securities and Exchange Commission. In addition, the ability of the funds to hold gold coins may be restricted by the securities laws and/or regulations of states where the funds' shares are qualified for sale. The funds may also consider investments in securities indexed to the price of gold (both funds) or other precious metals (Precious Metals Portfolio only) as an alternative to direct investments in precious metals. The Precious Metals and Minerals Portfolio's gold-related investments will often contain securities of companies located in the Republic of South Africa, which is a principal producer of gold. Unsettled political and social conditions in South Africa and its neighboring countries, may from time to time pose certain risks to the Precious Metals and Minerals Portfolio's investments in South African issuers. These events could also have an impact on the American Gold Portfolio through their influence on the price of gold and related mining securities worldwide. FUND DESCRIPTIONS THE STOCK FUNDS INVEST PRIMARILY WITHIN THE INVESTMENT AREAS DESCRIBED BELOW. AIR TRANSPORTATION PORTFOLIO: COMPANIES ENGAGED IN THE REGIONAL, NATIONAL AND INTERNATIONAL MOVEMENT OF PASSENGERS, MAIL, AND FREIGHT VIA AIRCRAFT. Such companies include the major airlines, commuter airlines, air cargo and express delivery operators, air freight forwarders, aviation service firms, and manufacturers of aeronautical equipment. Airline deregulation has substantially diminished the government's role in the air transport industry while promoting an increased level of competition. However, regulations and policies of various domestic and foreign governments can still affect the profitability of individual carriers as well as the entire industry. In addition to regulations and competition, the air transport industry is also very sensitive to fuel price levels and the state of foreign and domestic economies. AMERICAN GOLD PORTFOLIO: COMPANIES ENGAGED IN EXPLORATION, MINING, PROCESSING, OR DEALING IN GOLD, OR, TO A LESSER DEGREE, IN SILVER, PLATINUM, DIAMONDS, OR OTHER PRECIOUS METALS AND MINERALS. FMR also may invest in securities of companies which themselves invest in companies engaged in these activities. Normally at least 80% of the fund's assets will be invested in securities of North, Central and South American companies engaged in gold-related activities, and in gold bullion or coins. The prices of gold and other precious metal mining securities have been subject to substantial fluctuations over short periods of time and may be affected by unpredictable international monetary and political developments such as currency devaluations or revaluations, economic and social conditions within a country, trade imbalances, or trade or currency restrictions between countries. Since much of the world's gold reserves are located in South Africa, the social upheaval and related economic difficulties there may, from time to time, influence the price of gold and the share values of precious metals mining companies located elsewhere. Investors should understand the special considerations and risks related to such an investment emphasis, and, accordingly, the potential effect on the fund's value. In addition to its investments in securities, the fund may invest a portion of its assets in gold bullion or coins. The price of gold is affected by broad economic and political conditions, but is less subject to local and company-specific factors than securities of individual companies. As a result, gold may be more or less volatile in price than securities of companies engaged in gold-related businesses. FMR intends to purchase only those forms of gold that are readily marketable and that can be stored in accordance with custody regulations applicable to mutual funds. The fund may incur higher custody and transaction costs for gold than for securities. The fund is authorized to invest up to 50% of its total assets in gold bullion or coins; however, as a non-fundamental policy (which can be changed without shareholder approval), FMR does not currently intend to purchase gold if, as a result, more than 25% of the fund's total assets would be invested in gold, and does not currently intend to purchase coins. As a further limit on gold investments, under current federal tax law, gains from selling gold may not exceed 10% of the fund's annual gross income. This tax requirement could cause the fund to hold or sell bullion or securities when it would not otherwise do so. The fund also may purchase securities whose redemption value is indexed to the price of gold, which are discussed in the Statement of Additional Information. Because the value of these securities is directly linked to the price of gold, they involve risks and pricing characteristics similar to direct investments in gold. FMR currently intends to treat such securities as gold investments for the purposes of the 25% and 50% limitations above and the 80% policy in the first paragraph of this section. AUTOMOTIVE PORTFOLIO: COMPANIES ENGAGED IN THE MANUFACTURE, MARKETING OR SALE OF AUTOMOBILES, TRUCKS, SPECIALTY VEHICLES, PARTS, TIRES, AND RELATED SERVICES. These companies include those involved with the manufacture and distribution of vehicles, vehicle parts and tires - either original equipment or for the aftermarket - and those which are involved in the retail sale of vehicles, parts or tires. In addition, the fund may invest in companies that provide automotive-related services to manufacturers, distributors or consumers. The automotive industry is highly cyclical and companies involved in this business may suffer periodic operating losses. While most of the major manufacturers are large, financially strong companies, many others are small and may be non-diversified in both product line and customer base. BIOTECHNOLOGY PORTFOLIO: COMPANIES ENGAGED IN THE RESEARCH, DEVELOPMENT, SCALE UP AND MANUFACTURE OF VARIOUS BIOTECHNOLOGICAL PRODUCTS, SERVICES AND PROCESSES. These include companies involved with new or experimental technologies such as genetic engineering, hybridoma and recombinant DNA techniques and monoclonal antibodies. The fund may also invest in companies that manufacture and/or distribute biotechnological and biomedical products, including devices and instruments, and in companies that provide or benefit significantly from scientific and technological advances in biotechnology. Some biotechnology companies may provide processes or services instead of, or in addition to, products. The description of the biotechnology sector will be interpreted broadly by FMR, and may include applications and developments in such areas as human health care (e.g., cancer, infectious disease, diagnostics and therapeutics); pharmaceuticals (e.g., new drug development and production); agricultural and veterinary applications (e.g., improved seed varieties, animal growth hormones); chemicals (e.g., enzymes, toxic waste treatment); medical/surgical (e.g., epidermal growth factor, in vivo imaging/therapeutics); and industry (e.g., biochips, fermentation, enhanced mineral recovery). Many of these companies may have losses and may not offer products until the late 1990's. These companies may have persistent losses during a new product's transition from development to production, and revenue patterns may be erratic. In addition, biotechnology companies are affected by patent considerations, intense competition, rapid technological change and obsolescence, and regulatory requirements of the U.S. Food and Drug Administration, the Environmental Protection Agency, state and local governments, and foreign regulatory authorities. Many of these companies are relatively small and their stock is thinly traded. BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO: COMPANIES ENGAGED IN STOCK BROKERAGE, COMMODITY BROKERAGE, INVESTMENT BANKING, TAX-ADVANTAGED INVESTMENT OR INVESTMENT SALES, INVESTMENT MANAGEMENT, OR RELATED INVESTMENT ADVISORY SERVICES. Holdings may include diversified companies with operations in the aforementioned areas, in addition to firms principally engaged in brokerage activities or investment management. The fund will not invest in securities of FMR or its affiliated companies. Changes in regulations, the brokerage commission structure, and the competitive environment, combined with the operating leverage inherent in companies in these industries, can produce erratic revenues and earnings over time. The performance of companies in this industry can be closely tied to the stock market and can suffer during market declines. Revenues often depend on overall market activity. Securities and Exchange Commission regulations provide that the fund may not invest more than 5% of its total assets in the securities of any one company that derives more than 15% of its revenues from brokerage or investment management activities. These companies, as well as those deriving more than 15% of profits from brokerage and investment management activities, will be considered to be "principally engaged" in this fund's specific business activity. CHEMICALS PORTFOLIO: COMPANIES ENGAGED IN THE RESEARCH, DEVELOPMENT, MANUFACTURE OR MARKETING OF PRODUCTS OR SERVICES RELATED TO THE CHEMICAL PROCESS INDUSTRIES. Such products may include synthetic and natural materials, such as basic and intermediate organic and inorganic chemicals, plastics, synthetic fibers, fertilizers, industrial gases, flavorings, fragrances, biological materials, catalysts, carriers, additives, and process aids. The fund may also hold the securities of companies providing design, engineering, construction, and consulting services to companies engaged in chemical processing. Companies in the chemical processing field are subject to regulation by various federal and state authorities, including the Environmental Protection Agency and its state agency counterparts. As regulations are developed and enforced, such companies may be required to alter or cease production of a product, to pay fines or to pay for cleaning up a disposal site, or to agree to restrictions on their operations. In addition, some of the materials and processes used by these companies involve hazardous components. There are risks associated with their production, handling and disposal. These risks are in addition to the more common risks of intense competition and product obsolescence. COMPUTERS PORTFOLIO: COMPANIES ENGAGED IN RESEARCH, DESIGN, DEVELOPMENT, MANUFACTURE OR DISTRIBUTION OF PRODUCTS, PROCESSES OR SERVICES THAT RELATE TO CURRENTLY AVAILABLE OR EXPERIMENTAL HARDWARE TECHNOLOGY WITHIN THE COMPUTER INDUSTRY. The fund may hold securities of companies that provide the following products or services: mainframes, minicomputers, microcomputers, peripherals, data or information processing, office or factory automation, robotics, artificial intelligence, computer aided design, medical technology, engineering and manufacturing, data communications and software. Competitive pressures may have a significant effect on the financial conditions of companies in the computer industry. For example, as product cycles shorten and manufacturing capacity increases, these companies could become increasingly subject to aggressive pricing, which hampers profitability. Fluctuating domestic and international demand also affect profitability. CONSTRUCTION AND HOUSING PORTFOLIO: COMPANIES ENGAGED IN THE DESIGN AND CONSTRUCTION OF RESIDENTIAL, COMMERCIAL, INDUSTRIAL AND PUBLIC WORKS FACILITIES, AS WELL AS COMPANIES ENGAGED IN THE MANUFACTURE, SUPPLY, DISTRIBUTION OR SALE OF PRODUCTS OR SERVICES TO THESE CONSTRUCTION INDUSTRIES. Examples of companies engaged in these activities include companies that provide engineering and contracting services, and companies that produce basic building materials such as cement, aggregates, gypsum, timber, wall coverings, and floor coverings. The fund also may invest in the securities of companies involved in real estate development and construction financing. Such companies could include homebuilders, architectural and design firms, and property managers. Additionally, the fund may invest in the securities of companies involved in the home improvement and maintenance industry, which would include building material retailers and distributors, household service firms, and those that supply such companies. The companies that the fund may invest in are subject to, among other factors, changes in government spending on public works and transportation facilities such as highways and airports, as well as changes in interest rates and levels of economic activity, government-sponsored housing subsidy programs, rate of housing turnover, taxation, demographic patterns, consumer spending, consumer confidence, and new and existing home sales. CONSUMER PRODUCTS PORTFOLIO: COMPANIES ENGAGED IN THE MANUFACTURE AND DISTRIBUTION OF GOODS TO CONSUMERS BOTH DOMESTICALLY AND INTERNATIONALLY. The fund may invest in companies that manufacture or sell durable products such as homes, cars, boats, furniture, major appliances, and personal computers. The fund will also invest in companies that manufacture, wholesale, or retail non-durable goods such as food, beverages, tobacco, health care products, household and personal care products, apparel, and entertainment products (books, magazines, TV, cable, movies, music). Consumer products and services such as lodging, child care, convenience stores, and car rentals may also be represented in the fund. The success of durable goods manufacturers and retailers is closely tied to the performance of the overall economy, interest rates, and consumer confidence. These segments are very competitive; success depends heavily on household disposable income and consumer spending. Consumer product and retailing concepts tend to rise and fall with changes in demographics and consumer tastes. DEFENSE AND AEROSPACE PORTFOLIO: COMPANIES ENGAGED IN THE RESEARCH, MANUFACTURE OR SALE OF PRODUCTS OR SERVICES RELATED TO THE DEFENSE OR AEROSPACE INDUSTRIES. The fund may hold securities of companies that provide the following products or services: air transport; data processing, or computer-related services; communications systems; research; development and manufacture of military weapons and transportation; general aviation equipment, missiles, space launch vehicles, and spacecraft; units for guidance, propulsion, and control of flight vehicles; equipment components and airborne and ground-based equipment essential to the testing, operation, and maintenance of flight vehicles. Companies involved in the defense and aerospace industries rely to a large extent on U.S. (and other) government demand for their products and services. The financial condition of such companies and investor interest in the stocks of these companies are heavily influenced by federal defense and aerospace spending policies. For example, defense spending is currently under pressure from efforts to control the U.S. budget deficit. DEVELOPING COMMUNICATIONS PORTFOLIO: COMPANIES ENGAGED IN THE DEVELOPMENT, MANUFACTURE OR SALE OF EMERGING COMMUNICATIONS SERVICES OR EQUIPMENT. The fund may invest in companies developing or offering services or products based on communications technologies such as cellular, paging, personal communications networks, special mobile radio, facsimile, fiber optic transmission, voice mail, video conferencing, microwave, satellite, local and wide area networking, and other transmission electronics. For purposes of characterizing the fund's investments, communications services or equipment may be deemed to be "emerging" if they derive from new technologies or new applications of existing technologies. The fund will focus on companies whose business is based on these emerging technologies, with less emphasis on traditional telephone utilities and large long distance carriers. The fund will attempt to exploit growth opportunities presented by new technologies and applications in the communications field. Many of these opportunities may be in the development stage and, as such, can pose large risks as well as potential rewards. Such risks might include failure to obtain (or delays in obtaining) adequate financing or necessary regulatory approvals, intense competition, product incompatibility, consumer preferences and rapid obsolescence. Securities of small companies that base their business on emerging technologies may be volatile due to limited product lines, markets, or financial resources. ELECTRONICS PORTFOLIO: COMPANIES ENGAGED IN THE DESIGN, MANUFACTURE, OR SALE OF ELECTRONIC COMPONENTS (SEMICONDUCTORS, CONNECTORS, PRINTED CIRCUIT BOARDS AND OTHER COMPONENTS); EQUIPMENT VENDORS TO ELECTRONIC COMPONENT MANUFACTURERS; ELECTRONIC COMPONENT DISTRIBUTORS; AND ELECTRONIC INSTRUMENTS AND ELECTRONIC SYSTEMS VENDORS. In addition, the fund may invest in companies in the fields of defense electronics, medical electronics, consumer electronics, advanced manufacturing technologies (computer-aided design and computer-aided manufacturing [CAD/CAM], computer-aided engineering, and robotics), lasers and electro-optics, and other new electronic technologies. Many of the products offered by companies engaged in the design, production or distribution of electronic products are subject to risks of rapid obsolescence. ENERGY PORTFOLIO: COMPANIES IN THE ENERGY FIELD, INCLUDING THE CONVENTIONAL AREAS OF OIL, GAS, ELECTRICITY AND COAL, AND NEWER SOURCES OF ENERGY SUCH AS NUCLEAR, GEOTHERMAL, OIL SHALE AND SOLAR POWER. The business activities of companies held in the Energy Portfolio may include: production, generation, transmission, marketing, control, or measurement of energy or energy fuels; providing component parts or services to companies engaged in the above activities; energy research or experimentation; and environmental activities related to the solution of energy problems, such as energy conservation and pollution control. Companies participating in new activities resulting from technological advances or research discoveries in the energy field will also be considered for this fund. The securities of companies in the energy field are subject to changes in value and dividend yield which depend, to a large extent, on the price and supply of energy fuels. Swift price and supply fluctuations may be caused by events relating to international politics, energy conservation, the success of exploration projects, and tax and other regulatory policies of various governments. ENERGY SERVICE PORTFOLIO: COMPANIES IN THE ENERGY SERVICE FIELD, INCLUDING THOSE THAT PROVIDE SERVICES AND EQUIPMENT TO THE CONVENTIONAL AREAS OF OIL, GAS, ELECTRICITY AND COAL, AND NEWER SOURCES OF ENERGY SUCH AS NUCLEAR, GEOTHERMAL, OIL SHALE AND SOLAR POWER. Holdings may include companies involved in providing services and equipment for drilling processes such as offshore and onshore drilling, drill bits, drilling rig equipment, drilling string equipment, drilling fluids, tool joints and wireline logging. Many energy service companies are engaged in production and well maintenance, providing such products and services as packers, perforating equipment, pressure pumping, downhole equipment, valves, pumps, compression equipment, and well completion equipment and service. Certain companies supply energy providers with exploration technology such as seismic data, geological and geophysical services, and interpretation of this data. Holdings may also include companies with a variety of products or services including pipeline construction, oil tool rental, underwater well services, helicopter services, geothermal plant design or construction, electric and nuclear plant design or construction, energy-related capital equipment, mining related equipment or services, and high technology companies serving the above industries. Energy service firms are affected by supply, demand and other normal competitive factors for their specific products or services. They are also affected by other unpredictable factors such as supply and demand for oil and gas, prices of oil and gas, exploration and production spending, governmental regulation, world events and economic conditions. ENVIRONMENTAL SERVICES PORTFOLIO: COMPANIES ENGAGED IN THE RESEARCH, DEVELOPMENT, MANUFACTURE OR DISTRIBUTION OF PRODUCTS, PROCESSES OR SERVICES RELATED TO WASTE MANAGEMENT OR POLLUTION CONTROL. Such products or services may include the transportation, treatment and disposal of both hazardous and solid wastes, including waste-to-energy and recycling; remedial project efforts, including groundwater and underground storage tank decontamination, asbestos cleanup and emergency cleanup response; and the detection, analysis, evaluation, and treatment of both existing and potential environmental problems including, among others, contaminated water, air pollution, and acid rain. The fund may also hold the securities of companies providing design, engineering, construction, and consulting services to companies engaged in waste management or pollution control. The environmental services industry has generally been positively influenced by legislation resulting in stricter government regulations and enforcement policies for both commercial and governmental generators of waste materials, as well as specific expenditures designated for remedial cleanup efforts. Companies in the environmental services field are also affected by regulation by various federal and state authorities, including the federal Environmental Protection Agency and its state agency counterparts. As regulations are developed and enforced, such companies may be required to alter or cease production of a product or service or to agree to restrictions on their operations. In addition, since the materials handled and processes involved include hazardous components, there is significant liability risk. There are also risks of intense competition within the environmental services industry. FINANCIAL SERVICES PORTFOLIO: COMPANIES PROVIDING FINANCIAL SERVICES TO CONSUMERS AND INDUSTRY. Companies in the financial services field include: commercial banks and savings and loan associations, consumer and industrial finance companies, securities brokerage companies, real estate-related companies, leasing companies, and a variety of firms in all segments of the insurance field such as multi-line, property and casualty, and life insurance. The financial services area is currently undergoing relatively rapid change as existing distinctions between financial service segments become less clear. For instance, recent business combinations have included insurance, finance, and securities brokerage under single ownership. Some primarily retail corporations have expanded into securities and insurance fields. Moreover, the federal laws generally separating commercial and investment banking are currently being studied by Congress. Banks, savings and loan associations, and finance companies are subject to extensive governmental regulation which may limit both the amounts and types of loans and other financial commitments they can make and the interest rates and fees they can charge. The profitability of these groups is largely dependent on the availability and cost of capital funds, and can fluctuate significantly when interest rates change. In addition, general economic conditions are important to the operations of these concerns, with exposure to credit losses resulting from possible financial difficulties of borrowers potentially having an adverse effect. Insurance companies are likewise subject to substantial governmental regulation, predominantly at the state level, and may be subject to severe price competition. Securities and Exchange Commission regulations provide that the fund may not invest more than 5% of its assets in the securities of any one company that derives more than 15% of its revenues from brokerage or investment management activities. These companies as well as those deriving more than 15% of profits from brokerage and investment management activities will be considered to be "principally engaged" in this fund's business activity. FOOD AND AGRICULTURE PORTFOLIO: COMPANIES ENGAGED IN THE MANUFACTURE, SALE OR DISTRIBUTION OF FOOD AND BEVERAGE PRODUCTS, AGRICULTURAL PRODUCTS, AND PRODUCTS RELATED TO THE DEVELOPMENT OF NEW FOOD TECHNOLOGIES. The goods and services provided or manufactured by companies in the fund may include: packaged food products such as cereals, pet foods and frozen foods; meat and poultry processing; the production of hybrid seeds; the wholesale and retail distribution and warehousing of food and food-related products, including restaurants; and the manufacture and distribution of health food and dietary products, fertilizer and agricultural machinery, wood products, tobacco, and tobacco leaf. In addition to the above, food technology companies engaged in and pioneering the development of new technologies to provide improved hybrid seeds, new and safer food storage, and new enzyme technologies may be purchased by the fund. The success of food and food-related products is closely tied to supply and demand, which may be strongly affected by demographic and product trends, stimulated by food fads, marketing campaigns, and environmental factors. In the U.S., the agricultural products industry is subject to regulation by numerous federal and municipal government agencies. HEALTH CARE PORTFOLIO: COMPANIES ENGAGED IN THE DESIGN, MANUFACTURE, OR SALE OF PRODUCTS OR SERVICES USED FOR OR IN CONNECTION WITH HEALTH CARE OR MEDICINE. Companies in the health care field include pharmaceutical companies; firms that design, manufacture, sell, or supply medical, dental, and optical products, hardware or services; companies involved in biotechnology, medical diagnostic, and biochemical research and development, as well as companies involved in the operation of health care facilities. Many of these companies are subject to government regulation of their products and services, a factor which could have a significant and possibly unfavorable effect on the price and availability of such products or services. Furthermore, the types of products or services produced or provided by these companies may become obsolete quickly. HOME FINANCE PORTFOLIO: COMPANIES ENGAGED IN INVESTING IN REAL ESTATE, USUALLY THROUGH MORTGAGES AND OTHER CONSUMER-RELATED LOANS. These companies may also offer discount brokerage services, insurance products, leasing services, and joint venture financing. Investments may include mortgage banking companies, government-sponsored enterprises, real estate investment trusts, consumer finance companies, and similar entities, as well as savings and loan associations, savings banks, building and loan associations, cooperative banks, commercial banks, and similar depository institutions. The fund may hold securities of U.S. depository institutions whose customer deposits are insured by the Savings Association Insurance Fund (SAIF) or the Bank Insurance Fund (BIF). The residential real estate finance industry has changed rapidly over the last decade. Regulatory changes at federally insured institutions, in response to a high failure rate, have mandated higher capital ratios and more prudent underwriting. This reduced capacity has created growth opportunities for uninsured companies and secondary market products to fill unmet demand for home finance. Continued change in the origination, packaging, selling, holding, and insuring of home finance products is expected going forward. The fund will be influenced by potential regulatory changes, interest rate movements, the level of home mortgage demand, and residential delinquency trends. INDUSTRIAL EQUIPMENT PORTFOLIO: COMPANIES ENGAGED IN THE MANUFACTURE, DISTRIBUTION OR SERVICE OF PRODUCTS AND EQUIPMENT FOR THE INDUSTRIAL SECTOR, INCLUDING INTEGRATED PRODUCERS OF CAPITAL EQUIPMENT (SUCH AS GENERAL INDUSTRY MACHINERY, FARM EQUIPMENT, AND COMPUTERS), PARTS SUPPLIERS AND SUBCONTRACTORS. The fund may invest in companies that manufacture products or service equipment for the food, clothing or sporting goods industries. The success of equipment manufacturing and distribution companies is closely tied to overall capital spending levels. Capital spending is influenced by the individual company's profitability, and broader issues such as interest rates and foreign competition, which are partly determined by currency exchange rates. Equipment manufacturing concerns may also be affected by economic cycles, technical obsolescence, labor relations difficulties and government regulations pertaining to products, production facilities, or production processes. INDUSTRIAL MATERIALS PORTFOLIO: COMPANIES ENGAGED IN THE MANUFACTURE, MINING, PROCESSING, OR DISTRIBUTION OF RAW MATERIALS AND INTERMEDIATE GOODS USED IN THE INDUSTRIAL SECTOR. The products handled by the companies held in the fund may include chemicals, timber, paper, copper, iron ore, nickel, steel, aluminum, textiles, cement, and gypsum. Investments may also be made in the securities of mining, processing, transportation, and distribution companies, including equipment suppliers and railroads. Many companies in this sector are significantly affected by the level and volatility of commodity prices, the exchange value of the dollar, import controls, and worldwide competition. At times, worldwide production of these materials has exceeded demand as a result of over-building or economic downturns. During these times, commodity price declines, and unit volume reductions have led to poor investment returns and losses. Other risks include liability for environmental damage, depletion of resources, and mandated expenditures for safety and pollution control. INSURANCE PORTFOLIO: COMPANIES ENGAGED IN UNDERWRITING, REINSURING, SELLING, DISTRIBUTING, OR PLACING OF PROPERTY AND CASUALTY, LIFE, OR HEALTH INSURANCE. The fund may invest in multi-line companies that provide property and casualty coverage, as well as life and health insurance. The fund may invest in insurance brokers, reciprocals, and claims processors. The fund may also invest in diversified financial companies with subsidiaries (including insurance brokers, reciprocals and claims processors) engaged in underwriting, reinsuring, selling, distributing or placing insurance with independent third parties. Insurance company profits are affected by interest rate levels, general economic conditions, and price and marketing competition. Property and casualty insurance profits may also be affected by weather catastrophes and other disasters. Life and health insurance profits may be affected by mortality and morbidity rates. Individual companies may be exposed to material risks including reserve inadequacy and the inability to collect from reinsurance carriers. Insurance companies are subject to extensive governmental regulation, including the imposition of maximum rate levels, which may not be adequate for some lines of business. Proposed or potential tax law changes may also adversely affect insurance companies' policy sales, tax obligations, and profitability. LEISURE PORTFOLIO: COMPANIES ENGAGED IN THE DESIGN, PRODUCTION, OR DISTRIBUTION OF GOODS OR SERVICES IN THE LEISURE INDUSTRIES. The goods or services provided by companies in the fund may include: television and radio broadcast or manufacture (including cable television); motion pictures and photography; recordings and musical instruments; publishing, including newspapers and magazines; sporting goods and camping and recreational equipment; and sports arenas. Other goods and services may include toys and games (including video and other electronic games), amusement and theme parks, travel-related services, hotels and motels, leisure apparel or footwear, fast food, beverages, restaurants, and gaming casinos. Securities of companies in the leisure industry may be considered speculative. Companies engaged in entertainment, gaming, broadcasting, cable television and cellular communications, for example, have unpredictable earnings, due in part to changing consumer tastes and intense competition. Securities of companies in the leisure industry generally exhibit greater volatility than the overall market. The market has been known to react strongly to technological developments and to the specter of government regulation in the leisure industry. MEDICAL DELIVERY PORTFOLIO: COMPANIES ENGAGED IN THE OWNERSHIP OR MANAGEMENT OF HOSPITALS, NURSING HOMES, HEALTH MAINTENANCE ORGANIZATIONS, AND OTHER COMPANIES SPECIALIZING IN THE DELIVERY OF HEALTH CARE SERVICES. Holdings may include companies that operate acute care, psychiatric, teaching, or specialized treatment hospitals; firms that provide outpatient surgical, outpatient rehabilitation, or other specialized care, home health care, drug and alcohol abuse treatment, and dental care; firms operating comprehensive health maintenance organizations and nursing homes for the elderly and disabled; and firms that provide related laboratory services. Federal and state governments provide a substantial percentage of revenues to health care service providers via Medicare and Medicaid. The future growth of this source of funds is subject to great uncertainty. Additionally, the complexion of the private payment system is changing. For example, insurance companies are beginning to offer long term health care insurance for nursing home patients to supplement or replace government benefits. Also, membership in health maintenance organizations or prepaid health plans is displacing individual payments for each service rendered by a hospital or physician. The demand for health care services will tend to increase as the population ages. However, review of patients' need for hospitalization by Medicare and health maintenance organizations has demonstrated the ability of health care providers to curtail unnecessary hospital stays and reduce costs. MULTIMEDIA PORTFOLIO (FORMERLY BROADCAST AND MEDIA PORTFOLIO): COMPANIES ENGAGED IN THE DEVELOPMENT, PRODUCTION, SALE AND DISTRIBUTION OF GOODS OR SERVICES USED IN THE BROADCAST AND MEDIA INDUSTRIES. Business activities of companies held in the fund may include: ownership, operation, or broadcast of free or pay television, radio or cable stations; publication and sale of newspapers, magazines, books or video products; and distribution of data-based information. The fund may also invest in companies involved in the development, syndication and transmission of the following products: television and movie programming, pay-per-view television, advertising, cellular communications, and emerging technology for the broadcast and media industries. Some of the companies in these industries are undergoing significant change because of federal deregulation of cable and broadcasting. As a result, competitive pressures are intense and the stocks are subject to increased price volatility. Current Federal Communications Commission rules prohibit the fund, together with all other funds advised by FMR, from holding in the aggregate 10% of the voting stock of more than 18 AM, 18 FM or 12 TV stations. This fund may purchase securities identical to those in the Leisure Portfolio, or securities of companies that are engaged in business activities similar to those of certain companies in the Leisure Portfolio. The Broadcast and Media Portfolio's narrower focus may make it a more volatile investment than the Leisure Portfolio. NATURAL GAS PORTFOLIO: COMPANIES ENGAGED IN THE PRODUCTION, TRANSMISSION, AND DISTRIBUTION OF NATURAL GAS, AND INVOLVED IN THE EXPLORATION OF POTENTIAL NATURAL GAS SOURCES, AS WELL AS THOSE COMPANIES THAT PROVIDE SERVICES AND EQUIPMENT TO NATURAL GAS PRODUCERS, REFINERIES, COGENERATION FACILITIES, CONVERTERS, AND DISTRIBUTORS. The business activities of companies held in the Natural Gas Portfolio may include: production, transmission, distribution, marketing, control, or measurement of natural gas; exploration of potential natural gas sources; providing component parts or services to companies engaged in the above activities; natural gas research or experimentation; and environmental activities related to the solution of energy problems, such as energy conservation or pollution control through the use of natural gas. Companies participating in new activities working toward technological advances in the natural gas field may also be considered for the fund. The companies in the natural gas field are subject to, among other factors, changes in price and supply of both conventional and alternative energy sources. Swift price and supply fluctuations may be caused by events relating to international politics, energy conservation, the success of energy source exploration projects, and tax and other regulatory policies of domestic and foreign governments. PAPER AND FOREST PRODUCTS PORTFOLIO: COMPANIES ENGAGED IN THE MANUFACTURE, RESEARCH, SALE, OR DISTRIBUTION OF PAPER PRODUCTS, PACKAGING PRODUCTS, BUILDING MATERIALS (SUCH AS LUMBER AND PANELING PRODUCTS), AND OTHER PRODUCTS RELATED TO THE PAPER AND FOREST PRODUCTS INDUSTRY. Holdings may include diversified companies with operations in the aforementioned activities. The success of these companies depends on, among other things, the health of the economy, worldwide production capacity and prevailing interest rate levels, which, in turn, may affect product pricing, costs and operating margins. These variables also affect the level of industry and consumer capital spending for paper and forest products. PRECIOUS METALS AND MINERALS PORTFOLIO: COMPANIES ENGAGED IN EXPLORATION, MINING, PROCESSING OR DEALING IN GOLD, SILVER, PLATINUM, DIAMONDS OR OTHER PRECIOUS METALS AND MINERALS. The fund may also invest in securities of companies which themselves invest in companies engaged in these activities. Under normal conditions, the fund will invest at least 80% of its total assets in (i) securities of companies principally engaged in exploration, mining, processing, or dealing in gold, silver, platinum, diamonds, or other precious metals and minerals, and (ii) precious metals. The fund's investments also may include securities whose redemption value is indexed to the price of gold or other precious metals. The value of the fund's investments may be affected by changes in the price of gold and other precious metals. Gold has been subject to substantial price fluctuations over short periods of time and may be affected by unpredictable international monetary and other governmental policies, such as currency devaluations or revaluations; economic and social conditions within a country; trade imbalances; or trade or currency restrictions between countries. Since much of the world's known gold reserves are located in South Africa, political and social conditions there may pose certain risks to the fund's investments. For instance, social upheaval and related economic difficulties in South Africa could cause a decrease in the share values of South African issuers. A number of institutions have adopted policies precluding investments in companies doing business in South Africa. Because companies involved in exploring, mining, processing, or dealing in precious metals or minerals are frequently located outside of the United States, all or a significant portion of this fund may be invested in securities of foreign issuers. Investors should understand the special considerations and risks related to such an investment emphasis. In addition to its investments in securities, the fund may invest a portion of its assets in precious metals, such as gold, silver, platinum, and palladium. The prices of precious metals are affected by broad economic and political conditions, but are less subject to local and company-specific factors than securities of individual companies. As a result, precious metals may be more or less volatile in price than securities of companies engaged in precious metals-related businesses. The fund may purchase precious metals in any form, including bullion and coins, provided that FMR intends to purchase only those forms of precious metals that are readily marketable and that can be stored in accordance with custody regulations applicable to mutual funds. The fund may incur higher custody and transaction costs for precious metals than for securities. Also, precious metals investments do not pay income. The fund is authorized to invest up to 50% of its total assets in precious metals; however, as a non-fundamental policy (which can be changed without shareholder approval), FMR does not currently intend to purchase precious metals if, as a result, more than 25% of the fund's total assets would be invested in precious metals. As a further limit on precious metals investments, under current federal tax law, gains from selling precious metals may not exceed 10% of the fund's annual gross income. This tax requirement could cause the fund to hold or sell precious metals or securities when it would not otherwise do so. Securities whose redemption value is indexed to the price of gold or other precious metals involve risks and pricing characteristics similar to direct precious metals investments. FMR currently intends to treat such securities as investments in precious metals for the purposes of the 25% and 50% limitations above and the 80% policy in the first paragraph of this section. REGIONAL BANKS PORTFOLIO: COMPANIES ENGAGED IN ACCEPTING DEPOSITS AND MAKING COMMERCIAL AND PRINCIPALLY NON-MORTGAGE CONSUMER LOANS. In addition, these companies may offer the following services: merchant banking, consumer and commercial finance, discount brokerage, leasing and insurance. These companies concentrate their operations within a specific part of the country rather than operating predominantly on a national or international scale. The fund may invest in securities of foreign institutions, although the majority of publicly-traded regional banks currently are organized in the United States. The fund may own, among others, securities of U.S. institutions whose customer deposits may or may not be insured by the federal government. Such U.S. institutions may include, but are not limited to, state chartered banks, savings and loan institutions, and banks that are members of the Federal Reserve System. Federal laws generally separating commercial and investment banking, as well as laws governing the capitalization and regulation of the savings and loan industry, are currently being reexamined by Congress. The services offered by banks may expand if legislation broadening bank powers is enacted. While providing diversification, expanded powers could expose banks to well-established competitors, particularly as the historical distinctions between regional banks and other financial institutions erode. Increased competition may also result from the broadening of regional and national interstate banking powers, which has already reduced the number of publicly traded regional banks. In addition, general economic conditions are important to regional banking concerns, with exposure to credit losses resulting from possible financial difficulties of borrowers potentially having an adverse effect. RETAILING PORTFOLIO: COMPANIES ENGAGED IN MERCHANDISING FINISHED GOODS AND SERVICES PRIMARILY TO INDIVIDUAL CONSUMERS. Companies in the fund may include: general merchandise retailers, department stores, food retailers, drug stores, and any specialty retailers selling a single category of merchandise such as apparel, toys, or consumer electronics products. Companies engaged in selling goods and services through alternative means such as direct telephone marketing, mail order, membership warehouse clubs, computer, or video based electronic systems may also be purchased by the fund. The success of retailing companies is closely tied to consumer spending which, in turn, is affected by general economic conditions and consumer confidence levels. The retailing industry is highly competitive; success is often tied to a company's ability to anticipate changing consumer tastes. SOFTWARE AND COMPUTER SERVICES PORTFOLIO: COMPANIES ENGAGED IN RESEARCH, DESIGN, PRODUCTION OR DISTRIBUTION OF PRODUCTS OR PROCESSES THAT RELATE TO SOFTWARE OR INFORMATION-BASED SERVICES. The fund may hold securities of companies that provide systems level software (designed to run the basic functions of a computer) or applications software (designed for one type of work) directed at either horizontal (general use) or vertical (certain industries or groups) markets, time-sharing services, information-based services, computer consulting or facilities management services, communications software, and data communications services. Competitive pressures may have a significant effect on the financial condition of companies in the software and computer services industries. For example, the increasing number of companies and product offerings in the vertical and horizontal markets may lead to aggressive pricing and slower selling cycles. TECHNOLOGY PORTFOLIO: COMPANIES WHICH FMR BELIEVES HAVE, OR WILL DEVELOP, PRODUCTS, PROCESSES OR SERVICES THAT WILL PROVIDE OR WILL BENEFIT SIGNIFICANTLY FROM TECHNOLOGICAL ADVANCES AND IMPROVEMENTS. The description of the technology sector will be interpreted broadly by FMR and may include such products or services as inexpensive computing power, such as personal computers; improved methods of communications, such as satellite transmission, or labor saving machines or instruments, such as computer-aided design equipment. The prime emphasis of the fund will be to identify those companies positioned to benefit from technological advances in areas such as semiconductors, minicomputers and peripheral equipment, scientific instruments, computer software, communications, and future automation trends in both office and factory settings. Competitive pressures may have a significant effect on the financial condition of companies in the technology industry. For example, if technology continues to advance at an accelerated rate, and the number of companies and product offerings continue to expand, these companies could become increasingly sensitive to short product cycles and aggressive pricing. TELECOMMUNICATIONS PORTFOLIO: COMPANIES ENGAGED IN THE DEVELOPMENT, MANUFACTURE, OR SALE OF COMMUNICATIONS SERVICES OR COMMUNICATIONS EQUIPMENT. Companies in the telecommunications field offer a variety of services and products, including local and long distance telephone service; cellular, paging, local and wide area product networks; satellite, microwave and cable television; and equipment used to provide these products and services. Long distance telephone companies may also have interests in new technologies, such as fiber optics and data transmission. Telephone operating companies are subject to both federal and state regulation affecting permitted rates of return and the kinds of services that may be offered. Telephone companies usually pay an above average dividend. However, the fund's investment decisions are based primarily upon capital appreciation potential rather than income considerations. Certain types of companies represented in the fund are engaged in fierce competition for a share of the market for their products. In recent years, these have been companies providing goods or services such as private and local area networks, or engaged in the sale of telephone set equipment. TRANSPORTATION PORTFOLIO: COMPANIES ENGAGED IN PROVIDING TRANSPORTATION SERVICES OR COMPANIES ENGAGED IN THE DESIGN, MANUFACTURE, DISTRIBUTION, OR SALE OF TRANSPORTATION EQUIPMENT. Transportation services include the movement of freight or people by airlines, railroads, ships, trucks, and bus companies. Other service companies include those providing auto, truck, container, rail car, and plane leasing and maintenance. Equipment manufacturers include makers of trucks, autos, planes, containers, rail cars, or any other mode of transportation and their related products. In addition, the fund may invest in companies that sell fuel saving devices to the transportation industry and those that sell insurance and software developed primarily for transportation companies. Risk factors that affect transportation stocks include the state of the economy, fuel prices, labor agreements, and insurance costs. Transportation stocks are cyclical and have occasional sharp price movements. The U.S. trend has been to deregulate these industries, which could have a favorable long-term effect, but future government decisions may adversely affect these companies. UTILITIES 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. QUALITY AND MATURITY. (money market fund) 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 a U.S. government security; 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 have received the highest rating (e.g., Standard & Poor's A-1 rating) from at least two rating services (or one, if only one has rated the security). Second tier securities have received ratings within the two highest categories (e.g., Standard & Poor's A-1 or A-2) from at least two rating services ( or one, if only one has rated the security), but do not qualify as first tier securities. If a security has been assigned different ratings by different ratings services, at least two rating services must have assigned the higher rating in order for FMR to determine eligibility on the basis of that higher rating. Based on procedures adopted by the Board of Trustees, FMR may determine that an unrated security is of equivalent quality to a rated first or second tier security. 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 must limit its investments to securities with remaining maturities of 397 days or less and must maintain a dollar-weighted average maturity of 90 days or less. AFFILIATED BANK TRANSACTIONS. A fund may engage in transactions with banks that are, or may be considered to be, "affiliated persons" of the fund under the Investment Company Act of 1940. These transactions may include repurchase agreements with custodian banks; short-term obligations of, and repurchase agreements with, the 50 largest U.S. banks (measured by deposits); municipal securities; U.S. government securities with affiliated financial institutions that are primary dealers in these securities; short-term currency transactions; and short-term borrowing. In accordance with exemptive orders issued by the Securities and Exchange Commission, the Board of Trustees has established and periodically reviews procedures applicable to transactions involving affiliated financial institutions. FUND'S 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 each 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 each fund and the risk of actual liability if the fund is involved in litigation. No guarantee can be made, however, that litigation against a fund will not be undertaken or liabilities incurred. ASSET-BACKED SECURITIES may include pools of mortgages, loans, receivables or other assets. Payment of principal and interest may be largely dependent upon the cash flows generated by the assets backing the securities, and, in certain cases, supported by letters of credit, surety bonds, or other credit enhancements. The value of asset-backed securities may also be affected by the creditworthiness of the servicing agent for the pool, the originator of the loans or receivables, or the financial institution(s) providing the credit support. 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 the funds' investments and, through reports from FMR, the Board monitors investments in illiquid instruments. In determining the liquidity of the funds' 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 a 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, and swap agreements to be illiquid. However, with respect to over-the-counter options the fund writes, all or a portion of the value of the underlying instrument may be illiquid depending on the assets held to cover the option and the nature and terms of any agreement the fund may have to close out the option before expiration. In the absence of market quotations, illiquid investments are, for the money market fund, valued for purposes of monitoring amortized cost valuation, or, for the stock funds, priced at fair value as determined in good faith by a committee appointed by the Board of Trustees. If through a change in values, net assets, or other circumstances, a fund were in a position where more than 10% of its net assets were invested in illiquid securities, it would seek to take appropriate steps to protect liquidity. RESTRICTED SECURITIES generally can be sold in privately negotiated transactions, pursuant to an exemption from registration under the Securities Act of 1933, or in a registered public offering. Where registration is required, a fund may be obligated to pay all or part of the registration expense and a considerable period may elapse between the time it decides to seek registration and the time the fund may be permitted to sell a security under an effective registration statement. If, during such a period, adverse market conditions were to develop, the 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. LOWER-RATED DEBT SECURITIES. The stock funds may purchase lower-rated debt securities (those rated Ba or lower by Moody's or BB or lower by Standard & Poor's Corporation) 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-rated debt securities may fluctuate more than those of higher-rated 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 future performance of the high-yield bond market, especially during periods of economic recession. In fact, from 1989 to 1991, the percentage of lower-rated securities that defaulted rose significantly above prior levels, although the default rate decreased in 1992. The market for lower-rated debt securities may be thinner and less active than that for higher-rated debt securities, which can adversely affect the prices at which the former are sold. If market quotations are not available, lower-rated 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-rated debt securities and the funds' ability to sell these securities. Since the risk of default is higher for lower-rated 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 its shareholders. VARIABLE- OR FLOATING-RATE INSTRUMENTS. The money market fund may invest in variable- or floating-rate instruments that ultimately mature in more than one year, if the fund acquires a right to sell the securities that meets certain requirements set forth in Rule 2a-7. Variable-rate instruments (including instruments subject to a demand feature) that mature in 397 days or less may be deemed to have maturities equal to the period remaining until the next readjustment of the interest rate. Other variable rate instruments with demand features may be deemed to have a maturity equal to the longer of the period remaining until the next readjustment of the interest rate or the period remaining until the principal amount can be recovered through demand. A floating rate instrument subject to a demand feature may be deemed to have a maturity equal to the period remaining until the principal amount can be recovered through demand. REPURCHASE AGREEMENTS. In a repurchase agreement, a fund purchases a security and simultaneously commits to resell that security to the seller at an agreed upon price on an agreed upon date within a number of days from the date of purchase. 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. A repurchase agreement involves the obligation of the seller to pay the agreed upon price, which obligation is in effect secured by the value (at least equal to the amount of the agreed upon resale price and marked to market daily) of the underlying security. A fund may engage in a repurchase agreement with respect to any security in which it is authorized to invest even if, with respect to the money market fund, the underlying security matures in more than 397 days. While it does not presently appear possible to eliminate all risks from these transactions (particularly the possibility of a decline in the market value of the underlying securities, as well as delays and costs to a fund in connection with bankruptcy proceedings); it is the funds' current policy to limit repurchase agreement transactions to those parties whose creditworthiness has been reviewed and found satisfactory by FMR. REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund sells a portfolio instrument to another party, such as a bank or broker-dealer, in return for cash and agrees to repurchase the instrument at a particular price and time. While a reverse repurchase agreement is outstanding, the fund will maintain appropriate liquid assets in a segregated custodial account to cover its obligation under the agreement. The funds 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. 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 (and more than seven days in the future). Typically, no interest accrues to the purchaser until the security is delivered. When purchasing securities on a delayed-delivery basis, the fund assumes the rights and risks of ownership, including the risk of price and yield fluctuations. Because the fund is not required to pay for securities until the delivery date, these risks are in addition to the risks associated with 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. INTERFUND BORROWING PROGRAM. Each fund has received permission from the SEC to lend money to and borrow money from other funds advised by FMR or its affiliates. Interfund loans and borrowings normally will extend overnight, but can have a maximum duration of seven days. Loans may be called on one day's notice. A fund will lend through the program only when the returns are higher than those available at the same time from other short-term instruments (such as repurchase agreements), and will borrow through the program only when the costs are equal to or lower than the cost of bank loans. 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. SECURITIES LENDING. The stock funds may lend securities to parties such as broker-dealers or institutional investors, including Fidelity Brokerage Services, Inc. (FBSI). FBSI is a member of the New York Stock Exchange and a subsidiary of FMR Corp. Securities lending allows the funds 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 the funds are authorized to invest. Investing this cash subjects that investment, as well as the security loaned, to market forces (i.e., capital appreciation or depreciation). FOREIGN INVESTMENTS. Foreign investments can involve significant risks in addition to the risks inherent in U.S. investments. The value of securities denominated in or indexed to foreign currencies, and of dividends and interest from such securities, can change significantly when foreign currencies strengthen or weaken relative to the U.S. dollar. Foreign securities markets generally have less trading volume and less liquidity than U.S. markets, and prices on some foreign markets can be highly volatile. Many foreign countries lack uniform accounting and disclosure standards comparable to those applicable to U.S. companies, and it may be more difficult to obtain reliable information regarding an issuer's financial condition and operations. In addition, the costs of foreign investing, including withholding taxes, brokerage commissions, and custodial costs, are generally higher than for U.S. investments. Foreign markets may offer less protection to investors than U.S. markets. Foreign issuers, brokers, and securities markets may be subject to less government supervision. Foreign security trading practices, including those involving the release of assets in advance of payment, may involve increased risks in the event of a failed trade or the insolvency of a broker-dealer, and may involve substantial delays. It may also be difficult to enforce legal rights in foreign countries. Investing abroad also involves different political and economic risks. Foreign investments may be affected by actions of foreign governments adverse to the interests of U.S. investors, including the possibility of expropriation or nationalization of assets, confiscatory taxation, restrictions on U.S. investment or on the ability to repatriate assets or convert currency into U.S. dollars, or other government intervention. There may be a greater possibility of default by foreign governments or foreign government-sponsored enterprises. Investments in foreign countries also involve a risk of local political, economic, or social instability, military action or unrest, or adverse diplomatic developments. There is no assurance that FMR will be able to anticipate these potential events or counter their effects. The considerations noted above generally are intensified for investments in developing countries. Developing countries may have relatively unstable governments, economies based on only a few industries, and securities markets that trade a small number of securities. The funds may invest in foreign securities that impose restrictions on transfer within the U.S. or to U.S. persons. Although securities subject to transfer restrictions may be marketable abroad, they may be less liquid than foreign securities of the same class that are not subject to such restrictions. American Depositary Receipts and European Depositary Receipts (ADRs and EDRs) are certificates evidencing ownership of shares of a foreign-based issuer held in trust by a bank or similar financial institution. Designed for use in U.S. and European securities markets, respectively, ADRs and EDRs are alternatives to the purchase of the underlying securities in their national markets and currencies. FOREIGN CURRENCY TRANSACTIONS. The funds may hold foreign currency deposits from time to time, and may convert dollars and foreign currencies in the foreign exchange markets. Currency conversion involves dealer spreads and other costs, although commissions usually are not charged. Currencies may be exchanged 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. Forward contracts generally are 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. The funds may use currency forward contracts to manage currency risks and to facilitate transactions in foreign securities. The following discussion summarizes the principal currency management strategies involving forward contracts that could be used by the funds. In connection with purchases and sales of securities denominated in foreign currencies, the funds may enter into currency forward contracts to fix a definite price for the purchase or sale in advance of the trade's settlement date. This technique is sometimes referred to as a "settlement hedge" or "transaction hedge." FMR expects to enter into settlement hedges in the normal course of managing the funds' foreign investments. The funds could 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. The 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. 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 forward currency contracts will depend on FMR's skill in analyzing and predicting currency values. Forward contracts 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 forward currency contracts will be advantageous to the funds or that it will hedge at an appropriate time. The policies described in this section are non-fundamental policies of the funds. 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 U.S. or abroad), foreign currency values, mortgage securities, corporate borrowing rates, or other factors such as security prices or inflation rates. Swap agreements can take many different forms and are known by a variety of names. The stock funds are not limited to any particular form of swap agreement if FMR determines it is consistent with a fund's investment objective and policies. In a typical cap or floor agreement, one party agrees to make payments only under specified circumstances, usually in return for payment of a fee by the other party. For example, the buyer of an interest rate cap obtains the right to receive payments to the extent that a specified interest rate exceeds an agreed upon level, while the seller of an interest rate floor is obligated to make payments to the extent that a specified interest rate falls below an agreed upon level. An interest rate collar combines elements of buying a cap and selling a floor. Swap agreements will tend to shift a fund's investment exposure from one type of investment to another. For example, if a fund agreed to exchange payments in dollars for payments in foreign currency, the swap agreement would tend to decrease the fund's exposure to U.S. interest rates and increase its exposure to foreign currency and interest rates. Caps and floors have an effect similar to buying or writing options. Depending on how they are used, swap agreements may increase or decrease the overall volatility of a fund's investments and its share price. The most significant factor in the performance of swap agreements is the change in the specific interest rate, currency, or other factors that determine the amounts of payments due to and from a fund. If a swap agreement calls for payments by a fund, the fund must be prepared to make such payments when due. In addition, if the counterparty's creditworthiness declined, the value of a swap agreement would be likely to decline, potentially resulting in losses. Each equity fund expects to be able to eliminate its exposure under swap agreements either by assignment or other disposition, or by entering into an offsetting swap agreement with the same party or a similarly creditworthy party. Each equity fund will maintain appropriate liquid assets in a segregated custodial account to cover its current obligations under swap agreements. If a fund enters into a swap agreement on a net basis, it will segregate assets with a daily value at least equal to the excess, if any, of the fund's accrued obligations under the swap agreement over the accrued amount the fund is entitled to receive under the agreement. If a fund enters into a swap agreement on other than a net basis, it will segregate assets with a value equal to the full amount of the fund's accrued obligations under the agreement. INDEXED SECURITIES. Each stock fund may purchase securities whose prices are indexed to the prices of other securities, securities indices, currencies, precious metals or other commodities, or other financial indicators. Indexed securities typically, but not always, are debt securities or deposits whose value at maturity or coupon rate is determined by reference to a specific instrument or statistic. Gold-indexed securities typically are short-term to intermediate-term debt securities whose maturity values or interest rates are determined by reference to the values of one or more specified foreign currencies, and may offer higher yields than U.S. dollar-denominated securities of equivalent issuers. Currency-indexed securities may be positively or negatively indexed; that is, their maturity value may increase when the specified currency value increases, resulting in a security that performs similarly to a foreign-denominated instrument, or their maturity value may decline when foreign currencies increase, resulting in a security whose price characteristics are similar to a put on the underlying currency. Currency-indexed securities may also have prices that depend on the values of a number of different foreign currencies relative to each other. The performance of indexed securities depends to a great extent on the performance of the security, currency, or other instrument to which they are indexed, and may also be influenced by interest rate changes in the U.S. and abroad. At the same time, indexed securities are subject to the credit risks associated with the issuer of the security, and their values may decline substantially if the issuer's creditworthiness deteriorates. Recent issuers of indexed securities have included banks, corporations, and certain U.S. government agencies. Indexed securities may be more volatile than the underlying instruments. The American Gold Portfolio and the Precious Metals and Minerals Portfolio may consider purchasing securities indexed to the price of gold as an alternative to direct investments in gold. The funds will only buy gold-indexed securities when they are satisfied with the creditworthiness of the issuers liable for payment. The securities generally will earn a nominal rate of interest while held by a fund, and may have maturities of one year or more. In addition, the securities may be subject to being put by a fund to the issuer, with payment to be received on no more than seven days' notice. The put feature would ensure the liquidity of the notes in the absence of an active secondary market. The Precious Metals and Minerals fund may consider investments in securities indexed to the price of platinum, silver, or other precious metals. SHORT SALES "AGAINST THE BOX". The money market fund may sell securities short when it owns or has the right to obtain securities equivalent in kind or amount to the securities sold short. Short sales could be used to protect the net asset value per share of the fund in anticipation of increase interest rates, without sacrificing the current yield of the securities sold short. If the money market fund or a stock fund enters into a short sale against the box, it will be required to set aside securities equivalent in kind and amount to the securities sold short (or securities convertible or exchangeable into such securities) and will be required to hold such securities while the short sale is outstanding. The fund will incur transaction costs, including interest expense, in connection with opening, maintaining, and closing short sales against the box. LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. Each stock 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 stock funds intend to comply with Rule 4.5 under the Commodity Exchange Act, which limits the extent to which the funds can commit assets to initial margin deposits and option premiums. In addition, each fund will not: (a) sell futures contracts, purchase put options, or write call options if, as a result, more than 25% of the fund's total assets would be hedged with futures and options under normal conditions; (b) purchase futures contracts or write put options if, as a result, the fund's total obligations upon settlement or exercise of purchased futures contracts and written put options would exceed 25% of its total assets; or (c) purchase call options if, as a result, the current value of option premiums for call options purchased by the fund would exceed 5% of the fund's total assets. These limitations do not apply to options attached to or acquired or traded together with their underlying securities, and do not apply to securities that incorporate features similar to options. The above limitations on the funds' investments in futures contracts and options, and the funds' policies regarding futures contracts and options discussed elsewhere in this Statement of Additional Information, are not fundamental policies and may be changed as regulatory agencies permit. FUTURES CONTRACTS. When a fund purchases a futures contract, it agrees to purchase a specified underlying instrument at a specified future date. When a fund sells a futures contract, it agrees to sell the underlying instrument at a specified future date. The price at which the purchase and sale will take place is fixed when a 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 500 Composite Stock Price Index (S&P 500). Futures can be held until their delivery dates, or can be closed out before then if a liquid secondary market is available. The value of a futures contract tends to increase and decrease in tandem with the value of its underlying instrument. Therefore, purchasing futures contracts will tend to increase a fund's exposure to positive and negative price fluctuations in the underlying instrument, much as if it had purchased the underlying instrument directly. When a fund sells a futures contract, by contrast, the value of its futures position will tend to move in a direction contrary to the market. Selling futures contracts, therefore, will tend to offset both positive and negative market price changes, much as if the underlying instrument had been sold. FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract is not required to deliver or pay for the underlying instrument unless the contract is held until the delivery date. However, both the purchaser and seller are required to deposit "initial margin" with a futures broker, known as a futures commission merchant (FCM), when the contract is entered into. Initial margin deposits are typically equal to a percentage of the contract's value. If the value of either party's position declines, that party will be required to make additional "variation margin" payments to settle the change in value on a daily basis. The party that has a gain may be entitled to receive all or a portion of this amount. Initial and variation margin payments do not constitute purchasing securities on margin for purposes of the funds' investment limitations. In the event of the bankruptcy of an FCM that holds margin on behalf of a fund, the fund may be entitled to return of margin owed to it only in proportion to the amount received by the FCM's other customers, potentially resulting in losses to the fund. PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, a fund obtains the right (but not the obligation) to sell the option's underlying instrument at a fixed strike price. In return for this right, the fund pays the current market price for the option (known as the option premium). Options have various types of underlying instruments, including specific securities, indices of securities prices, and futures contracts. A 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. The fund may also terminate a put option position by closing it out in the secondary market at its current price, if a liquid secondary market exists. The buyer of a typical put option can expect to realize a gain if security prices fall substantially. However, if the underlying instrument's price does not fall enough to offset the cost of purchasing the option, a put buyer can expect to suffer a loss (limited to the amount of the premium paid, plus related transaction costs). The features of call options are essentially the same as those of put options, except that the purchaser of a call option obtains the right to purchase, rather than sell, the underlying instrument at the option's strike price. A call buyer typically attempts to participate in potential price increases of the underlying instrument with risk limited to the cost of the option if security prices fall. At the same time, the buyer can expect to suffer a loss if security prices do not rise sufficiently to offset the cost of the option. WRITING PUT AND CALL OPTIONS. When a fund writes a put option, it takes the opposite side of the transaction from the option's purchaser. In return for receipt of the premium, the fund assumes the obligation to pay the strike price for the option's underlying instrument if the other party to the option chooses to exercise it. When writing an option on a futures contract the fund will be required to make margin payments to an FCM as described above for futures contracts. A fund may seek to terminate its position in a put option it writes before exercise by closing out the option in the secondary market at its current price. If the secondary market is not liquid for a put option the fund has written, however, the fund must continue to be prepared to pay the strike price while the option is outstanding, regardless of price changes, and must continue to set aside assets to cover its position. If security prices rise, a put writer would generally expect to profit, although its gain would be limited to the amount of the premium it received. If security prices remain the same over time, it is likely that the writer will also profit, because it should be able to close out the option at a lower price. If security prices fall, the put writer would expect to suffer a loss. This loss should be less than the loss from purchasing the underlying instrument directly, however, because the premium received for writing the option should mitigate the effects of the decline. Writing a call option obligates a fund to sell or deliver the option's underlying instrument, in return for the strike price, upon exercise of the option. The characteristics of writing call options are similar to those of writing put options, except that writing calls generally is a profitable strategy if prices remain the same or fall. Through receipt of the option premium, a call writer mitigates the effects of a price decline. At the same time, because a call writer must be prepared to deliver the underlying instrument in return for the strike price, even if its current value is greater, a call writer gives up some ability to participate in security price increases. COMBINED POSITIONS. A fund may purchase and write options in combination with each other, or in combination with futures or forward contracts, to adjust the risk and return characteristics of the overall position. For example, a fund may purchase a put option and write a call option on the same underlying instrument, in order to construct a combined position whose risk and return characteristics are similar to selling a futures contract. Another possible combined position would involve writing a call option at one strike price and buying a call option at a lower price, in order to reduce the risk of the written call option in the event of a substantial price increase. Because combined options positions involve multiple trades, they result in higher transaction costs and may be more difficult to open and close out. CORRELATION OF PRICE CHANGES. Because there are a limited number of types of exchange-traded options and futures contracts, it is likely that the standardized contracts available will not match a fund's current or anticipated investments exactly. Each fund may invest in options and futures contracts based on securities with different issuers, maturities, or other characteristics from the securities in which it typically invests which involves a risk that the options or futures position will not track the performance of the fund's other investments. Options and futures prices can also diverge from the prices of their underlying instruments, even if the underlying instruments match a fund's investments well. Options and futures prices are affected by such factors as current and anticipated short-term interest rates, changes in volatility of the underlying instrument, and the time remaining until expiration of the contract, which may not affect security prices the same way. Imperfect correlation may also result from differing levels of demand in the options and futures markets and the securities markets, from structural differences in how options and futures and securities are traded, or from imposition of daily price fluctuation limits or trading halts. A fund may purchase or sell options and futures contracts with a greater or lesser value than the securities it wishes to hedge or intends to purchase in order to attempt to compensate for differences in volatility between the contract and the securities, although this may not be successful in all cases. If price changes in a fund's options or futures positions are poorly correlated with its other investments, the positions may fail to produce anticipated gains or result in losses that are not offset by gains in other investments. 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, the fund's access to other assets held to cover its options or futures positions could also be impaired. OTC OPTIONS. Unlike exchange-traded options, which are standardized with respect to the underlying instrument, expiration date, contract size, and strike price, the terms of over-the-counter 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 a fund greater flexibility to tailor an option to its needs, OTC options generally involve greater credit risk than exchange-traded options, which are guaranteed by the clearing organization of the exchanges where they are traded. OPTIONS AND FUTURES RELATING TO FOREIGN CURRENCIES. Currency futures contracts are similar to forward currency exchange contracts, except that they are traded on exchanges (and have margin requirements) and are standardized as to contract size and delivery date. Most currency futures contracts call for payment or delivery in U.S. dollars. The underlying instrument of a currency option may be a foreign currency, which generally is purchased or delivered in exchange for U.S. dollars, or may be a futures contract. The purchaser of a currency call obtains the right to purchase the underlying currency, and the purchaser of a currency put obtains the right to sell the underlying currency. The uses and risks of currency options and futures are similar to options and futures relating to securities or indices, as discussed above. The funds may purchase and sell currency futures and may purchase and write currency options to increase or decrease their exposure to different foreign currencies. The funds 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 the funds' investments. A currency hedge, for example, should protect a Yen-denominated security from a decline in the Yen, but will not protect a fund against a price decline resulting from deterioration in the issuer's creditworthiness. Because the value of a fund's foreign-denominated investments changes in response to many factors other than exchange rates, it may not be possible to match the amount of currency options and futures to the value of the fund's investments exactly over time. ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. The funds will comply with guidelines established by the Securities and Exchange Commission with respect to coverage of options and futures strategies by mutual funds, and if the guidelines so require will set aside appropriate liquid assets in a segregated custodial account in the amount prescribed. Securities held in a segregated account cannot be sold while the futures or option strategy is outstanding, unless they are replaced with other suitable assets. As a result, there is a possibility that segregation of a large percentage of a fund's assets could impede portfolio management or the fund's ability to meet redemption requests or other current obligations. PORTFOLIO TRANSACTIONS All orders for the purchase or sale of portfolio securities are placed on behalf of the funds by FMR (either directly or, for the money market fund, through an affiliated sub-adviser) pursuant to authority contained in each fund's management contract. 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 the 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. Commissions for foreign investments traded on foreign exchanges will generally be higher than for U.S. investments and may not be subject to negotiation. Each fund may execute portfolio transactions with broker-dealers who provide research and execution services to the funds and other accounts over which FMR or its affiliates exercise investment discretion. Such services may include advice concerning the value of securities; the advisability of investing in, purchasing, or selling securities; the availability of securities or the purchasers or sellers of securities; furnishing analyses and reports concerning issuers, industries, securities, economic factors and trends, portfolio strategy, and performance of accounts; and effecting securities transactions and performing functions incidental thereto (such as clearance and settlement). The selection of such broker-dealers is generally made by FMR (to the extent possible consistent with execution considerations) in accordance with a ranking of broker-dealers determined periodically by FMR's investment staff based upon the quality of research and execution services provided. 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 a fund or its other clients, and conversely, such research provided by broker-dealers who have executed transaction orders on behalf of other FMR clients may be useful to FMR in carrying out its obligations to 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 a fund to pay such higher commissions, FMR must determine in good faith that such commissions are reasonable in relation to the value of the brokerage and research services provided by such executing broker-dealers, viewed in terms of a particular transaction or FMR's overall responsibilities to the fund and its other clients. In reaching this determination, FMR will not attempt to place a specific dollar value on the brokerage and research services provided, or to determine what portion of the compensation should be related to those services. FMR is authorized to use research services provided by and to place portfolio transactions with brokerage firms that have provided assistance in the distribution of shares of the funds or shares of other Fidelity funds to the extent permitted by law. FMR may use research services provided by and place agency transactions with Fidelity Brokerage Services, Inc. (FBSI) and Fidelity Brokerage Services, Ltd. (FBSL), subsidiaries of FMR Corp., if the commissions are fair, reasonable, and comparable to commissions charged by non-affiliated, qualified brokerage firms for similar services. Prior to September 4, 1992, FBSL operated under the name Fidelity Portfolio Services, Ltd. (FPSL) as a wholly owned subsidiary of Fidelity International Limited (FIL). Edward C. Johnson 3d is Chairman of FIL. Mr. Johnson 3d, Johnson family members, and various trusts for the benefit of the Johnson family , own directly or indirectly, more than 25% of the voting common stock of FIL. FMR may allocate transactions to broker-dealers who have entered into arrangements with FMR under which the broker-dealer allocates a portion of the commissions paid by the fund toward payment of the fund's expenses such as transfer agent fees of FSC 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, except if certain requirements are satisfied. Pursuant to such requirements, the Board of Trustees has authorized FBSI to execute fund portfolio transactions on national securities exchanges in accordance with approved procedures and applicable SEC rules. The Trustees periodically review FMR's performance of its responsibilities in connection with the placement of portfolio transactions on behalf of the funds and review the commissions paid by the funds over representative periods of time to determine if they are reasonable in relation to the benefits to the funds. The stock funds' annual portfolio turnover rates for the fiscal year ended February 28, 1994 and the fiscal period May 1, 1992 to February 28, 1993 are listed in the table on page 21 . 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. The brokerage commissions incurred by each stock fund for the fiscal year ended February 28, 1994, the 1993 fiscal period, and the fiscal year ended April 30, 1992 are also listed in the table on page 21 . The significantly higher or lower brokerage commissions paid by many of the funds from year to year are primarily a result of changing asset levels throughout the year. During fiscal 1994, the funds paid commissions to brokerage firms that provided research services, although the provision of such services was not necessarily a factor in the placement of all of this business with these firms. The percentage of brokerage commissions paid by each fund during fiscal 1994 to brokerage firms that provided research services is also listed in the table on page 21. % OF COMMISSIONS PAID TO BROKERAGE FIRMS PROVIDING PORTFOLIO TURNOVER RATE BROKERAGE COMMISSIONS RESEARCH SERVICES FISCAL FISCAL FISCAL FISCAL FISCAL FISCAL 1994 1993* 1994 1993 1992 1994
Air Transportation 171% 96% $ 65,372 $ $ 67,843 70.93% 44,823 American Gold 39 30 572,538 222,189 445,129 82.12 Automotive 64 140 206,497 237,775 180,328 58.14 Biotechnology 51 79 128,536 194,398 1,077,771 60.34 Brokerage a nd Investment Management 295 111 722,667 39,681 102,968 82.03 Chemicals 81 214 77,565 73,037 51,321 52.04 Computers 145 254 111,949 124,610 211,386 54.83 Construction a nd Housing 35 60 72,398 30,468 58,069 63.77 Consumer Products 169 215 26,503 9,272 14,091 45.68 Defense a nd Aerospace 324 87 23,698 2,632 63.04 501 Developing Communications 280 77 857,319 35,996 17,065 75.80 Electronics 163 293 66,371 53,635 122,511 36.90 Energy 157 72 407,705 225,088 240,443 53.90 Energy Service 137 236 427,988 252,703 212,947 55.56 Environmental Services 191 176 324,850 271,040 361,267 70.31 Financial Services 93 100 406,834 183,687 76.91 171,411 Food a nd Agriculture 96 515 199,987 87,850 124,197 60.67 Health Care 213 112 1,892,280 1,113,199 1,778,708 77.10 Home Finance 95 61 309,902 113,247 55,268 39.80 Industrial Equipment 95 407 210,288 8,169 20,214 62.95 Industrial Materials 185 273 207,708 77,224 57,399 81.03 Insurance 101 81 42,755 16,431 2,875 40.44 Leisure 170 109 311,929 41,547 49,783 62.44 Medical Delivery 164 155 369,409 308,801 362,067 73.27 Multimedia 340 70 329,560 4,868 11,569 68.62 Natural Gas 44* -- 131,215 -- -- 69.14 Paper and Forest Products 176 222 195,352 49,472 214,407 67.99 Precious Metal a nd Minerals 73 36 532,810 111,030 278,343 78.51 Regional Banks 74 63 372,619 159,549 134,811 69.80 Retailing 154 171 249,618 131,980 168,548 58.99 Software and Computer Services 376 402 540,163 270,455 21,892 69.31 Technology 213 259 293,550 437,708 62.61 192,404 Telecommunications 241 115 1,449,954 90,726 28,026 64.92 Transportation 115 116 24,997 5,219 28,039 55.50 Utilities 61 34 355,499 242,874 49.89 144,012
* Annualized ** Commenced operations April 21, 1993 The funds pay both commissions and spreads in connection with the placement of portfolio transactions; FBSI is paid on a commission basis. During fiscal 1994, the fiscal period ended February 28, 1993, and the fiscal year ended April 30, 1992, the stock funds paid brokerage commissions to FBSI, the amounts of which are listed in the table on page 23 entitled "Brokerage Commissions paid to FBSI." This table also lists the percentage of each fund's aggregate brokerage commissions paid to FBSI during the fiscal 1994 as well as the percentage of each fund's aggregate dollar amount of transactions executed through FBSI. The difference in the percentage of the brokerage commissions paid to and the percentage of the dollar amount of transactions effected through FBSI is a result of the low commission rates charged by FBSI. During the 1993 fiscal period and fiscal 1992, some stock funds also paid brokerage commissions to FBSL, the amounts of which are listed in the table entitled "Brokerage Commissions Paid to FBSL"on page 24. There were no fees paid to FBSL in fiscal 1994. The table also lists the percentage of each fund's aggregate brokerage commissions paid to FBSL during fiscal 1994, and the percentage of each fund's aggregate dollar amount of transactions executed through FBSL during the same period. The difference in the percentage of brokerage commissions paid to and the percentage of the dollar amount of transactions executed through FBSL is a result of the lower commission rates charged by FBSL. 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. The funds seek 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 the funds to seek such recapture. Although the Trustees and officers of the funds 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. Likewise, the investment decisions for each Select fund are made independently of those for the other Select funds. It sometimes happens that the same security is held in the portfolio of more than one of these funds or other Fidelity 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 a formula considered by the officers of the funds involved to be equitable to each fund. In some cases this system could have a detrimental effect on the price or value of the security as far as a fund is concerned. In other cases, however, the ability of a fund to participate in volume transactions will produce better executions and prices for the fund. It is the current opinion of the Trustees that the desirability of retaining FMR as investment adviser to the funds outweighs any disadvantages that may be said to exist from exposure to simultaneous transactions. BROKERAGE COMMISSIONS PAID TO FBSI
% OF BROKERAGE % OF AGGREGATE COMMISSIONS PAID COMMISSIONS DOLLAR AMOUNT OF PAID TRANSACTIONS EXECUTED TO FBSI TO FBSI THROUGH FBSI
FISCAL FISCAL FISCAL FISCAL FISCAL 1994 1993 1992 1994 1994
Air Transportation $ 15,992 $ 8,582 $ 4,223 24.46% 49.13% American Gold 59,125 18,310 29,559 10.33 16.68 Automotive 47,865 144,584 53,103 23.18 34.53 Biotechnology 42,992 111,543 254,319 33.45 36.05 Brokerage a nd Investment Management 96,223 15,956 27,337 13.31 33.74 Chemicals 27,722 54,712 16,436 35.74 48.61 Computers 45,787 92,069 70,291 40.90 60.37 Construction a nd Housing 21,215 21,890 21,116 29.30 45.12 Consumer Products 10,852 14,397 7,281 40.95 55.16 Defense a nd Aerospace 7,073 1,191 1,543 29.85 53.49 Developing Communications 168,725 8,888 2,936 19.68 33.65 Electronics 35,182 81,597 53,076 53.01 59.28 Energy 157,374 42,457 43,456 38.60 58.89 Energy Service 154,629 209,611 90,301 36.13 46.02 Environmental Services 84,034 89,654 48,631 25.87 35.76 Financial Services 67,939 104,207 72,930 16.70 27.16 Food a nd Agriculture 61,212 49,642 39,318 30.61 47.93 Health Care 342,394 292,180 478,294 18.09 25.56 Home Finance 145,280 100,744 23,189 46.88 53.46 Industrial Equipment 60,492 10,864 10,730 28.77 41.94 Industrial Materials 33,380 39,122 18,840 16.07 21.09 Insurance 18,400 7,778 1,131 43.04 57.65 Leisure 89,656 20,247 8,906 28.74 43.08 Medical Delivery 71,221 105,300 134,267 19.28 24.25 Multimedia 80,739 3,678 3,219 24.50 38.34 Natural Gas 33,752 -- -- 25.72 41.57 Paper a nd Forest Products 47,840 41,247 54,522 24.49 39.22 Precious Metals a nd Minerals 78,769 10,336 29,957 14.78 23.28 Regional Banks 81,725 85,117 52,554 21.93 32.14 Retailing 78,686 84,290 45,165 31.52 45.97 Software and Computer Services 136,866 126,315 53,042 25.34 48.78 Technology 93,434 121,695 167,987 31.83 51.64 Telecommunications 326,700 43,393 4,653 22.53 41.16 Transportation 9,066 5,310 8,818 36.27 62.23 Utilities 137,624 59,948 58,722 38.71 50.08
BROKERAGE COMMISSIONS PAID TO FBSL COMMISSIONS PAID TO FBSL FISCAL FISCAL FISCAL 1994 1993 1992 Biotechnology -- $ 2,861 Health Care $ 575 4,353 Leisure -- 1,658 Software and Computer Services 931 1,281 Utilities -- 3,483 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. 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. 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. 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 twofold 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 the 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 Investment Company Act of 1940. The fund must adhere to certain conditions under Rule 2a-7; these conditions are summarized in the Prospectus. The Board of Trustees oversees FMR's adherence to SEC rules concerning money market funds, and has established procedures designed to stabilize the fund's 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, yields and total returns, and the money market fund's yields and total returns, fluctuate in response to market conditions and other factors. When redeemed, the value of the stock funds' shares may be more or less than their original cost. 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 a fund's net asset value per share (NAV) over the period. Average annual returns are calculated by determining the growth or decline in value of a hypothetical historical investment in a fund over a stated period, and then calculating the annually compounded percentage rate that would have produced the same result if the rate of growth or decline in value had been constant over the period. For example, a cumulative return of 100% over ten years would produce an average annual return of 7.18%, which is the steady annual rate that would equal 100% growth on a compounded basis in ten years. While average annual returns are a convenient means of comparing investment alternatives, investors should realize that each fund's performance is not constant over time, but changes from year to year, and that average annual returns represent averaged figures as opposed to the actual year-to-year performance of each fund. In addition to average annual 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, and/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. An example of this type of illustration is given on pages 27 to 33 . Total returns may be quoted with or without taking the funds' 3% sales charge into account. Total returns generally will not include the effect of paying exchange or redemption fees or other charges for special transactions or services. Excluding fees or charges 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 stock 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 the fund and reflects all elements of its return. Unless otherwise indicated, the 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 25 , 1994, the 13-week and 39-week short-term moving averages for each stock fund were as follows: Air Transportation, 17.22 and 16.18 ; American Gold, 23.43 and 21.60 ; Automotive, 25.30 and 23.63 ; Biotechnology, 28.34 and 26.71 ; Brokerage and Investment Management, 17.63 and 16.61 ; Chemicals, 30.23 and 28.33 ; Computers, 24.95 and 22.58 ; Construction and Housing, 19.50 a nd 17.84 ; Consumer Products, 15.25 a nd 14.57 ; Defense and Aerospace, 18.56 and 17.59 ; Developing Communications, 19.28 and 18.49; Electronics, 16.19 and 15.20 ; Energy, 16.61 and 17.12 ; Energy Service, 11.60 and 12.59 ; Environmental Services, 11.46 and 11.11 ; Financial Services, 50.50 and 49.90 ; Food and Agriculture, 30.98 and 29.74 ; Health Care, 63.20 and 59.24 ; Home Finance, 24.66 and 23.37 ; Industrial Equipment, 19.48 and 18.14 ; Industrial Materials, 21.03 and 19.38 ; Insurance, 19.82 and 20.41 ; Leisure, 45.05 and 42.14 ; Medical Delivery, 19.38 and 17.21 ; Multimedia, 23.77 and 22.39 ; Natural Gas, 9.50 and 10.00; Paper and Forest Products, 19.00 and 17.34 ; Precious Metals, 17.38 and 15.73 ; Regional Banks, 17.64 and 17.48 ; Retailing, 24.45 and 23.88 ; Software and Computer Services, 27.63 and 26.41 ; Technology, 39.36 and 37.15 ; Telecommunications, 37.30 and 36.92 ; Transportation, 20.89 and 19.61 ; and Utilities, 37.38 and 38.24 , respectively. HISTORICAL RESULTS. The following table shows each fund's total returns for the periods ended February 28, 1994. The total returns quoted are based on a hypothetical $10,000 investment in each fund and include the effect of the funds' 3% sales charge, but do not include the effects of the stock funds' exchange or redemption fees. AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
One Five Ten Life of One Five Ten Life of Year Years Years Fund Year Years Years Fund
Air Transportation 24.10% 11.51% n/a 9.62% 24.10 72.42% n/a 112.56% % American Gold 55.34 7.04 n/a 10.26 55.34 40.54 n/a 123.04 Automotive 26.54 19.63 n/a 16.01 26.54 145.05 n/a 212.47 Biotechnology 18.50 26.92 n/a 17.04 18.50 229.30 n/a 263.97 Brokerage and Investment 31.80 18.45 n/a 10.40 31.80 133.16 n/a 134.14 Management Chemicals 19.92 13.67 n/a 18.70 19.92 89.75 n/a 336.49 Computers 40.70 21.89 n/a 13.85 40.70 169.07 n/a 204.87 Construction and Housing 23.63 17.20 n/a 14.99 23.63 121.12 n/a 182.15 Consumer Products 24.58 n/a n/a 16.97 24.58 n/a n/a 77.89 Defense and Aerospace 28.08 10.76 n/a 7.80 28.08 66.68 n/a 108.99 Developing Communications 26.33 n/a n/a 24.39 26.33 n/a n/a 122.99 Electronics 41.85 24.28 n/a 8.58 41.85 196.52 n/a 102.82 Energy 6.40 8.17 8.21 n/a 6.40 48.07 120.21% n/a % Energy Service 3.17 7.11 n/a 1.58 3.17 40.99 n/a 13.78 Environmental Services 1.87 n/a n/a 4.82 1.87 n/a n/a 24.62 Financial Services 7.53 18.45 16.20 n/a 7.53 133.20 348.95 n/a Food and Agriculture 8.34 17.71 n/a 19.07 8.34 125.95 n/a 348.38 Health Care 16.95 20.39 19.63 n/a 16.95 152.92 500.40 n/a Home Finance 16.02 22.46 n/a 19.39 16.02 175.43 n/a 328.57 Industrial Equipment 35.87 15.38 n/a 10.73 35.87 104.46 n/a 113.19 Industrial Materials 20.92 10.16 n/a 11.38 20.92 62.24 n/a 122.54 Insurance -4.21 14.33 n/a 11.22 -4.21 95.37 n/a 139.42 Leisure 33.03 14.88 n/a 19.73 33.03 100.06 n/a 485.85 Medical Delivery 36.04 22.59 n/a 13.09 36.04 176.85 n/a 156.97 Multimedia 30.82 14.47 n/a 16.68 30.82 96.55 n/a 226.68 Natural Gas n/a n/a n/a n/a n/a n/a n/a -6.72 Paper and Forest Products 18.37 11.17 n/a 10.95 18.37 69.78 n/a 121.99 Precious Metals and Minerals 65.47 7.69 2.24 5.38 65.47 44.86 24.80 93.98 Regional Banks 3.27 20.52 n/a 14.65 3.27 154.23 n/a 185.61 Retailing 12.14 21.51 n/a 18.19 12.14 164.94 n/a 294.40 Software and Computer Services 29.19 24.06 n/a 19.29 29.19 193.82 n/a 355.33 Technology 31.55 23.43 9.96 14.41 31.55 186.48 158.49 448.31 Telecommunications 18.24 16.87 n/a 19.40 18.24 118.06 n/a 359.20 Transportation 23.65 18.07 n/a 15.82 23.65 129.42 n/a 197.64 Utilities -0.54 13.85 15.72 15.86 -0.54 91.24 330.70 505.07 Money Market -0.46 4.88 n/a 5.65 -0.46 26.92 n/a 59.59
The table below shows the value of a hypothetical $10,000 investment invested in each equity fund from its commencement of operations, or February 2 9 , 1984 for funds in operation for ten years or more, through February 28, 1994, after deducting the funds' 3% sales charge and assuming all distributions were reinvested. The table compares each fund's return to the record of the Standard & Poor's 500 Composite Stock Price Index (S&P 500) and the cost of living (measured by the Consumer Price Index, or CPI) over the same period. 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. Each fund has the ability to invest in securities not included in the index, and its investment portfolio normally will not be similar in composition to the index. The S&P 500 is based on the prices of unmanaged groups of stocks and assumes reinvestment of dividends paid on those stocks. Unlike each fund's returns, its return does not include the effect of paying brokerage commissions and other costs of investing. S&P 500 is a registered trademark of Standard & Poor's Corporation. The figures below (rounded to the nearest dollar) represent the value of an investment in each fund before redemption, and do not take the stock funds' exchange or redemption fees into account. This was a period of widely fluctuating stock prices, and should not be considered representative of the dividend income or capital gain or loss that could be realized from investments in the funds today. FIDELITY SELECT PORTFOLIOS INDICES
VALUE OF VALUE OF VALUE OF FISCAL INITIAL REINVESTED REINVESTED PERIOD $10,000 CAPITAL GAIN DIVIDEND TOTAL COST FUND ENDED INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P OF LIVING * 500
ENERGY 2/28/85 $10,665 $ 0 $ 142 $10,807 $12,087 $10,352 2/28/86 9,603 0 724 10,328 15,774 10,674 2/28/87 12,547 0 946 13,494 20,430 10,898 2/29/88 11,418 314 896 12,628 19,885 11,328 2/28/89 12,711 349 1,365 14,426 22,248 11,875 2/28/90 16,611 700 1,861 19,172 26,455 12,500 2/28/91 14,931 2,240 1,834 19,005 30,330 13,164 2/29/92 13,677 2,074 1,873 17,624 35,185 13,535 2/28/93 15,288 2,318 2,469 20,076 38,940 13,975 2/28/94 16,147 3,225 2,648 22,021 42,184 14,326 FINANCIAL 2/28/85 $12,779 $ 0 $ 64 $12,843 $12,087 $10,352 SERVICES 2/28/86 19,032 0 323 19,335 15,774 10,674 2/28/87 21,048 202 483 21,733 20,430 10,898 2/29/88 15,952 1,254 452 17,658 19,885 11,328 2/28/89 16,385 1,288 1,001 18,674 22,248 11,875 2/28/90 17,402 1,489 1,265 20,155 26,455 12,500 2/28/91 16.502 1,412 1,638 19,552 30,330 13,164 2/29/92 24,419 2,090 2,728 29,237 35,185 13,535 2/28/93 31,139 5,460 3,900 40,499 38,940 13,975 2/28/94 29,941 11,043 3,910 44,894 42,184 14,326
HEALTH CARE 2/28/85 $12,491 $ 0 $ 39 $12,529 $12,087 $10,352 2/28/86 17,828 0 88 17,916 15,774 10,674 2/28/87 26,358 273 130 26,761 20,430 10,898 2/29/88 21,319 871 105 22,296 19,885 11,328 2/28/89 21,837 892 296 23,026 22,248 11,875 2/28/90 27,041 1,650 452 29,143 26,455 12,500 2/28/91 39,848 7,264 835 47,947 30,330 13,164 2/29/92 48,439 16,247 1,309 65,995 35,185 13,535 2/28/93 32,031 16,782 984 49,797 38,940 13,975 2/28/94 38,575 20,211 1,254 60,040 42,184 14,326 PRECIOUS METALS 2/28/85 $5,976 $ 0 $ 69 $6,044 $12,087 $10,352 AND MINERALS 2/28/86 6,534 0 323 6,856 15,774 10,674 2/28/87 8,383 0 519 8,903 20,430 10,848 2/29/88 7,838 67 525 8,429 19,885 11,328 2/28/89 7,455 63 838 8,357 22,248 11,875 2/28/90 8,935 76 1,127 10,138 26,455 12,500 2/28/91 6,847 58 972 7,878 30,330 13,164 2/29/92 6,866 58 1,047 7,971 35,185 13,535 2/28/93 6,182 53 1,081 7,316 38,940 13,975 2/28/94 10,421 89 1,970 12,480 42,184 14,326
*Cost of living as measured by the Consumer Price Index starting at the month-end closest to the initial investment date. FIDELITY SELECT PORTFOLIOS INDICES
VALUE OF VALUE OF VALUE OF FISCAL INITIAL REINVESTED REINVESTED PERIOD $10,000 CAPITAL GAIN DIVIDEND TOTAL COST FUND ENDED INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P OF LIVING* 500
TECHNOLOGY 2/28/85 $10,910 $ 0 $ 0 $10,910 $12,087 $10,352 2/28/86 11,054 0 228 11,282 15,774 10,674 2/28/87 12,502 49 258 12,809 20,430 10,898 2/29/88 8,285 442 171 8,898 19,885 11,328 2/28/89 8,149 435 168 8,752 22,248 11,875 2/28/90 9,382 500 193 10,076 26,455 12,500 2/28/91 12,306 656 254 13,216 30,330 13,164 2/29/92 16,701 891 448 18,039 35,185 13,535 2/28/93 16,168 2,459 433 19,060 38,940 13,975 2/28/94 19,535 5,693 620 25,849 42,184 14,326 UTILITIES 2/28/85 $ 12,350 $ 0 $ 174 $12,524 $12,087 $10,352 2/28/86 16,978 0 646 17,625 15,774 10,674 2/28/87 19,704 104 909 20,718 20,430 10,898 2/29/88 17,518 752 1,162 19,432 19,885 11,328 2/28/89 18,646 800 2,399 21,846 22,248 11,875 2/28/90 23,012 988 3,697 27,696 26,455 12,500 2/28/91 24,444 1,569 4,466 30,479 30,330 13,164 2/29/92 25,302 2,707 6,166 34,175 35,185 13,535 2/28/93 28,706 4,885 8,416 42,006 38,940 13,975
2/28/94 25,329 9,209 8,531 43,070 42,184 14,326 DEFENSE AND 2/28/85 (1) $12,959 $ 0 $ 0 $12,959 $11,801 $10,281 AEROSPACE 2/28/86 14,453 0 113 14,566 15,401 10,601 2/28/87 16,587 211 156 16,953 19,947 10,824 2/29/88 11,902 687 112 12,700 19,415 11,251 2/28/89 11,398 658 107 12,162 21,722 11,794 2/28/90 11,339 654 106 12,100 25,829 12,415 2/28/91 12,562 725 249 13,535 29,613 13,075 2/29/92 14,482 836 353 15,670 34,354 13,443 2/28/93 14,628 844 356 15,828 38,019 13,880 2/28/94 18,566 1,769 565 20,899 41,187 14,229
LEISURE 2/28/85(1) $13,202 $ 0 $ 0 $13,202 $11,801 $10,281 2/28/86 19,672 0 32 19,704 15,401 10,601 2/28/87 24,357 43 50 24,450 19,947 10,824 2/29/88 20,874 2,389 43 23,307 19,415 11,251 2/28/89 24,997 3,357 52 28,406 21,722 11,794 2/28/90 24,939 5,335 120 30,394 25,829 12,415 2/28/91 25,045 5,358 432 30,835 29,613 13,075 2/29/92 30,992 6,630 534 38,156 34,354 13,443 2/28/93 34,697 7,423 598 42,718 38,019 13,880 2/28/94 43,941 13,886 757 58,585 41,187 14,229
Initial $10,000 investment made on (1) May 8, 1984; (2) July 29, 1985; (3) December 16, 1985; (4) June 30, 1986; (5) September 29, 1986; (6) June 29, 1989; (7) June 29, 1990; or (8) April 21, 1993. *Cost of living as measured by the Consumer Price Index starting at the month-end closest to the initial investment date. FIDELITY SELECT PORTFOLIOS INDICES
VALUE OF VALUE OF VALUE OF FISCAL INITIAL REINVESTED REINVESTED PERIOD $10,000 CAPITAL GAIN DIVIDEND TOTAL COST FUND ENDED INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S& OF LIVING* P 500
BROKERAGE AND 2/28/86(2) $ 12,853 $ 0 $ 0 $12,853 $12,078 $10,139 INVESTMENT 2/28/87 14,278 22 17 14,317 15,643 10,353 MANAGEMENT 2/29/88 6,994 1,324 42 8,361 15,225 10,761 2/28/89 8,051 1,525 165 9,741 17,035 11,280 2/28/90 8,070 1,528 348 9,947 20,256 11,874 2/28/91 8,051 1,525 472 10,048 23,223 12,505 2/29/92 12,406 2,349 744 15,499 26,940 12,857 2/28/93 13,793 2,612 827 17,232 29,815 13,275 2/28/94 17,218 5,151 1,046 23,414 32,299 13,609 CHEMICALS 2/28/86(2) $ 13,978 $ 0 $ 0 $13,978 $12,078 $10,139
2/28/87 18,818 75 0 18,893 15,643 10,353 2/29/88 18,857 118 0 18,975 15,225 10,761 2/28/89 22,174 139 0 22,313 17,035 11,280 2/28/90 21,893 1,190 149 23,232 20,256 11,874 2/28/91 25,065 2,024 281 27,369 23,223 12,505 2/29/92 30,933 3,379 566 34,879 26,940 12,857 2/28/93 27,761 6,683 862 35,306 29,815 13,275 2/28/94 30,710 11,663 1,276 43,649 32,299 13,609
COMPUTERS 2/28/86(2) $ 11,727 $ 0 $ 0 $11,727 $12,078 $10,139
2/28/87 15,617 56 0 15,673 15,643 10,353 2/29/88 11,116 376 10 11,503 15,225 10,761 2/28/89 10,622 359 10 10,991 17,035 11,280 2/28/90 11,795 399 11 12,205 20,256 11,874 2/28/91 15,957 540 166 16,662 23,223 12,505 2/29/92 19,187 917 528 20,631 26,940 12,857 2/28/93 19,546 934 538 21,017 29,815 13,275 2/28/94 26,209 3,556 722 30,487 32,299 13,609 ELECTRONICS 2/28/86(2) $ 11,097 $ 0 $ 0 $11,097 $12,078 $10,139 2/28/87 10,331 0 0 10,331 15,643 10,353 2/29/88 7,401 0 0 7,401 15,225 10,761 2/28/89 6,635 0 0 6,635 17,035 11,280 2/28/90 8,391 0 0 8,391 20,256 11,874 2/28/91 9,846 0 12 9,858 23,223 12,505 2/29/92 12,678 0 16 12,694 26,940 12,857 2/28/93 13,852 0 17 13,869 29,815 13,275 2/28/94 17,140 3,121 21 20,282 32,299 13,609
FOOD AND 2/28/86 (2) $ 12,329 $ 0 $ 0 $12,329 $12,078 $10,139
AGRICULTURE 2/28/87 16,539 0 0 16,539 15,643 10,353 2/29/88 15,413 591 32 16,037 15,225 10,761 2/28/89 18,449 708 92 19,249 17,035 11,280 2/28/90 21,321 2,965 146 24,431 20,256 11,874 2/28/91 26,171 4,620 517 31,307 23,223 12,505 2/29/92 29,323 7,138 714 37,175 26,940 12,857 2/28/93 29,934 9,354 857 40,145 29,815 13,275 2/28/94 30,545 13,305 987 44,838 32,299 13,609
Initial $10,000 investment made on (1) May 8, 1984; (2) July 29, 1985; (3) December 16, 1985; (4) June 30, 1986; (5) September 29, 1986; (6) June 29, 1989; (7) June 29, 1990; or (8) April 21, 1993. * Cost of Living as measured by the Consumer Price Index starting at the month-end closest to the initial investment date. FIDELITY SELECT PORTFOLIOS INDICES
VALUE OF VALUE OF VALUE OF FISCAL INITIAL REINVESTED REINVESTED PERIOD $10,000 CAPITAL GAIN DIVIDEND TOTAL COST FUND ENDED INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P OF 500 LIVING*
SOFTWARE AND 2/28/86(2) $11,776 $ 0 $ 0 $11,776 $12,078 $10,139 COMPUTER SERVICES 2/28/87 16,277 0 0 16,277 15,643 10,353 2/29/88 13,405 708 0 14,113 15,225 10,761 2/28/89 14,278 754 0 15,032 17,035 11,280 2/28/90 14,579 1,657 0 16,236 20,256 11,874 2/28/91 18,285 2,078 0 20,362 23,223 12,505 2/29/92 22,611 6,241 0 28,852 26,940 12,857 2/28/93 26,791 7,395 0 34,186 29,815 13,275 2/28/94 28,023 17,510 0 45,533 32,299 13,609 TELECOMMUN ICATIONS 2/28/86(2) $11,650 $ 0 $ 0 $11,650 $12,078 $10,139 2/28/87 15,607 0 0 15,607 15,643 10,353 2/29/88 15,452 401 22 15,876 15,225 10,761 2/28/89 19,720 545 161 20,427 17,035 11,280 2/28/90 23,358 1,560 303 25,221 20,256 11,874 2/28/91 23,076 1,541 787 25,405 23,223 12,505 2/29/92 28,314 1,891 1,288 31,494 26,940 12,857 2/28/93 33,164 2,778 1,729 37,672 29,815 13,275 2/28/94 35,987 7,826 2,108 45,920 32,299 13,609 AIR TRANS PORTATION 2/28/86(3) $10,554 $ 0 $ 0 $10,554 $10,895 $10,000 2/28/87 11,912 0 0 11,912 14,111 10,210 2/29/88 8,100 1,141 22 9,263 13,735 10,613 2/28/89 10,457 1,474 28 11,959 15,367 11,125 2/28/90 10,573 2,080 29 12,682 18,273 11,711 2/28/91 11,514 2,265 31 13,810 20,949 12,333 2/29/92 13,735 3,043 37 16,816 24,303 12,681 2/28/93 13,192 3,387 36 16,615 26,896 13,092 2/28/94 16,606 4,605 45 21,256 29,137 13,422 AMERICAN GOLD 2/28/86(3) $ 9,622 $ 0 $ 0 $ 9,622 $10,895 $10,000 2/28/87 14,589 0 0 14,589 14,111 10,210 2/29/88 13,861 153 51 14,066 13,735 10,613 2/28/89 15,171 168 56 15,395 15,367 11,125 2/28/90 17,227 191 64 17,481 18,273 11,711 2/28/91 13,202 146 49 13,396 20,949 12,333 2/29/92 13,095 145 48 13,288 24,303 12,681 2/28/93 13,726 152 51 13,928 26,896 13,092 2/28/94 21,980 243 81 22,304 29,137 13,422 BIOTECHNOLOGY 2/28/86(3) $10,418 $ 0 $ 0 $10,418 $10,895 $10,000 2/28/87 13,716 0 0 13,716 14,111 10,210 2/29/88 10,253 318 0 10,571 13,735 10,613 2/28/89 10,398 323 0 10,721 15,367 11,125 2/28/90 14,046 676 0 14,722 18,273 11,711 2/28/91 24,619 2,093 0 26,712 20,949 12,333 2/29/92 31,962 5,805 26 37,793 24,303 12,681 2/28/93 21,922 7,853 18 29,793 26,896 13,092 2/28/94 26,782 9,593 22 36,397 29,137 13,422
Initial $10,000 investment made on (1) May 8, 1984; (2) July 29, 1985; (3) December 16, 1985; (4) June 30, 1986; (5) September 29, 1986; (6) June 29, 1989; (7) June 29, 1990; or (8) April 21, 1993. * Cost of Living as measured by the Consumer Price Index starting at the month-end closest to the initial investment date. FIDELITY SELECT PORTFOLIOS INDICES
VALUE OF VALUE OF VALUE OF FISCAL INITIAL REINVESTED REINVESTED PERIOD $10,000 CAPITAL DIVIDEND TOTAL COST GAIN FUND ENDED INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S& OF LIVING* P 500 ENERGY SERVICE 2/28/86(3) $ 8,740 $ 0 $ 0 $ 8,740 $10,895 $10,000 2/28/87 9,622 0 0 9,622 14,111 10,210 2/29/88 8,284 0 0 8,284 13,735 10,613 2/28/89 7,828 0 0 7,828 15,367 11,125 2/28/90 11,912 0 0 11,912 18,273 11,711 2/28/91 13,095 0 22 13,117 20,949 12,333 2/29/92 9,099 0 15 9,114 24,303 12,681 2/28/93 10,680 0 18 10,698 26,896 13,092 2/28/94 11,310 0 68 11,378 29,137 13,422 HOME FINANCE 2/28/86(3) $12,794 $ 0 $ 0 $12,794 $10,895 $10,000 2/28/87 15,782 0 0 15,782 14,111 10,210 2/29/88 8,410 4,117 0 12,527 13,735 10,613 2/28/89 9,991 4,891 212 15,093 15,367 11,125 2/28/90 8,905 5,024 245 14,173 18,273 11,711 2/28/91 9,719 5,483 545 15,748 20,949 12,333 2/29/92 14,860 8,384 1,129 24,373 24,303 12,681 2/28/93 21,515 12,662 1,653 35,830 26,896 13,092 2/28/94 24,279 16,694 1,883 42,857 29,137 13,422 INSURANCE 2/28/86(3) $11,475 $ 0 $ 0 $11,475 $10,895 $10,000 2/28/87 12,591 0 0 12,591 14,111 10,210 2/29/88 9,904 0 153 10,056 13,735 10,613 2/28/89 11,611 0 276 11,887 15,367 11,125 2/28/90 13,764 0 468 14,232 18,273 11,711 2/28/91 15,307 0 521 15,827 20,949 12,333 2/29/92 18,207 0 916 19,123 24,303 12,681 2/28/93 20,933 2,218 1,092 24,243 26,896 13,092 2/28/94 18,828 4,121 994 23,942 29,137 13,422 RETAILING 2/28/86(3) $10,253 $ 0 $ 0 $10,253 $10,895 $10,000 2/28/87 13,124 0 0 13,124 14,111 10,210 2/29/88 10,748 907 274 11,929 13,735 10,613 2/28/89 12,794 1,285 361 14,440 15,367 11,125 2/28/90 12,678 4,026 532 17,235 18,273 11,711 2/28/91 15,093 4,841 633 20,567 20,949 12,333 2/29/92 22,834 8,119 958 31,910 24,303 12,681 2/28/93 23,154 9,990 971 34,115 26,896 13,092 2/28/94 24,163 14,264 1,013 39,440 29,137 13,422 AUTOMOTIVE 2/28/87(4) $11,708 $ 0 $ 0 $11,708 $11,644 $10,192 2/29/88 10,486 536 47 11,068 11,333 10,594 2/28/89 11,718 599 52 12,369 12,680 11,105 2/28/90 11,417 584 470 12,471 15,077 11,6 90 2/28/91 11,970 612 676 13,257 17,286 12,311 2/29/92 16,645 1,848 939 19,433 20,053 12,658 2/28/93 20,069 2,677 1,207 23,953 22,193 13,068 2/28/94 24,716 4,976 1,556 31,247 24,042 13,397
Initial $10,000 investment made on (1) May 8, 1984; (2) July 29, 1985; (3) December 16, 1985; (4) June 30, 1986; (5) September 29, 1986; (6) June 29, 1989; (7) June 29, 1990; or (8) April 21, 1993. * Cost of Living as measured by the Consumer Price Index starting at the month-end closest to the initial investment date. FIDELITY SELECT PORTFOLIOS INDICES
VALUE OF VALUE OF VALUE OF FISCAL INITIAL REINVESTED REINVESTED PERIOD $10,000 CAPITAL DIVIDEND TOTAL COST GAIN FUND ENDED INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S& OF LIVING* P 500 MULTIMEDIA 2/28/87(4) $11,912 $ 0 $ 0 $11,912 $11,644 $10,192 2/29/88 11,436 893 11 12,341 11,333 10,594 2/28/89 14,065 2,043 14 16,122 12,680 11,105 2/28/90 11,980 4,179 12 16,170 15,077 11,6 90 2/28/91 11,834 4,128 12 15,974 17,286 12,311 2/29/92 15,617 5,447 16 21,080 20,053 12,658 2/28/93 17,712 6,493 18 24,223 22,193 13,068 2/28/94 23,154 9,491 23 32,668 24,042 13,397 MEDICAL 2/28/87(4) $ 8,953 $ 0 $ 0 $ 8,953 $11,644 $10,192 DELIVERY 2/29/88 6,955 408 23 7,386 11,333 10,594 2/28/89 8,478 498 28 9,003 12,680 11,105 2/28/90 10,253 837 81 11,172 15,077 11,689 2/28/91 16,325 1,862 130 18,317 17,286 12,311 2/29/92 21,243 4,008 169 25,420 20,053 12,658 2/28/93 14,026 4,185 111 18,322 22,193 13,068 2/28/94 19,672 5,869 156 25,697 24,042 13,397 PAPER AND FOREST 2/28/87(4) $15,190 $ 0 $ 0 $15,190 $11,644 $10,192 PRODUCTS 2/29/88 11,601 1,082 42 12,725 11,333 10,594 2/28/89 11,533 1,076 74 12,683 12,680 11,105 2/28/90 11,097 1,035 222 12,354 15,077 11,689 2/28/91 11,456 1,069 445 12,970 17,286 12,311 2/29/92 14,579 1,360 963 16,902 20,053 12,658 2/28/93 15,598 1,455 1,139 18,192 22,193 13,068 2/28/94 19,022 1,774 1,403 22,199 24,042 13,397 REGIONAL BANKS 2/28/87(4) $ 9,487 $ 0 $ 0 $ 9,487 $11,644 $10,192 2/29/88 8,575 175 70 8,819 11,333 10,594 2/28/89 9,894 707 296 10,897 12,680 11,105 2/28/90 10,301 1,392 419 12,113 15,077 11,689 2/28/91 9,807 1,325 601 11,733 17,286 12,311 2/29/92 15,316 2,839 1,156 19,312 20,053 12,658 2/28/93 20,254 4,889 1,684 26,827 22,193 13,068 2/28/94 17,450 9,462 1,648 28,561 24,042 13,397 CONSTRUCTION 2/28/87(5) $13,483 $ 0 $ 0 $13,483 $12,407 $10,127 AND HOUSING 2/29/88 10,195 158 0 10,353 12,076 10,526 2/28/89 11,844 470 64 12,377 13,511 11,034 2/28/90 11,029 2,007 132 13,167 16,066 11,615 2/28/91 10,961 3,447 314 14,722 18,419 12,232 2/29/92 13,250 5,569 380 19,199 21,368 12,577 2/28/93 15,268 6,433 437 22,138 23,648 12,985 2/28/94 19,225 8,439 551 28,215 25,618 13,312
Initial $10,000 investment made on (1) May 8, 1984; (2) July 29, 1985; (3) December 16, 1985; (4) June 30, 1986; (5) September 29, 1986; (6) June 29, 1989; (7) June 29, 1990; or (8) April 21, 1993. * Cost of Living as measured by the Consumer Price Index starting at the month-end closest to the initial investment date. FIDELITY SELECT PORTFOLIOS INDICES
VALUE OF VALUE OF VALUE OF FISCAL INITIAL REINVESTED REINVESTED PERIOD $10,000 CAPITAL GAIN DIVIDEND TOTAL COST FUND ENDED INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P OF LIVING* 500 INDUSTRIAL 2/28/87(5) $12,804 $ 0 $ 0 $12,804 $12,407 $10,127 EQUIPMENT 2/29/88 9,768 256 0 10,024 12,076 10,526 2/28/89 9,855 259 0 10,114 13,511 11,034 2/28/90 11,456 301 0 11,756 16,066 11,615 2/28/91 11,465 301 79 11,846 18,419 12,232 2/29/92 13,881 364 236 14,481 21,368 12,577 2/28/93 14,589 383 248 15,220 23,648 12,985 2/28/94 19,992 974 353 21,319 25,618 13,312
INDUSTRIAL 2/28/87(5) $13,017 $ 0 $ 0 $13,017 $12,407 $10,127 MATERIALS 2/29/88 12,513 11 21 12,545 12,076 10,526 2/28/89 13,056 11 238 13,305 13,511 11,034 2/28/90 12,629 11 230 12,870 16,066 11,615 2/28/91 12,067 10 539 12,616 18,419 12,232 2/29/92 16,063 14 793 16,869 21,368 12,577 2/28/93 16,917 25 909 17,851 23,648 12,985 2/28/94 21,020 31 1,202 22,253 25,618 13,312 TRANSPORTATION 2/28/87(5) $11,398 $ 0 $ 0 $11,398 $12,407 $10,127 2/29/88 9,264 155 0 9,419 12,076 10,526 2/28/89 12,377 207 0 12,585 13,511 11,034 2/28/90 11,970 2,487 0 14,457 16,066 11,615 2/28/91 10,942 2,822 0 13,764 18,419 12,232 2/29/92 15,006 3,871 61 18,938 21,368 12,577 2/28/93 18,120 5,156 74 23,350 23,648 12,985 2/28/94 21,020 8,658 86 29,764 25,618 13,312 ENVIRONMENTAL 2/28/90(6) $10,554 $ 0 $ 9 $10,563 $10,422 $10,314 SERVICES 2/28/91 12,600 0 11 12,611 11,949 10,862 2/29/92 12,649 486 11 13,146 13,862 11,168 2/28/93 11,019 838 10 11,867 15,341 11,531 2/28/94 11,572 880 10 12,462 16,619 11,821 CONSUMER 2/28/91(7) $10,505 $ 0 $ 65 $10,570 $10,522 $10,377 PRODUCTS 2/29/92 13,512 241 83 13,836 12,206 10,670 2/28/93 12,581 1,193 77 13,851 13,509 11,016 2/28/94 14,783 2,916 91 17,789 14,634 11,293 DEVELOPING 2/28/91(7) $10,777 $ 0 $ 0 $10,777 $10,522 $10,377 COMMUNICATIONS 2/29/92 13,997 1,002 0 14,999 12,206 10,670 2/28/93 15,947 1,174 0 17,121 13,509 11,016 2/28/94 19,061 3,238 0 22,299 14,634 11,293 NATURAL GAS 2/28/94(8) 9,196 132 0 9,328 10,757 10,188
Initial $10,000 investment made on (1) May 8, 1984; (2) July 29, 1985; (3) December 16, 1985; (4) June 30, 1986; (5) September 29, 1986; (6) June 29, 1989; (7) June 29, 1990; or (8) April 21, 1993. * Cost of Living as measured by the Consumer Price Index starting at the month-end closest to the initial investment date. Explanatory Notes: Investments in the funds are subject to a sales charge of 3% of the offering price (or 3.09% of the net amount invested). After deduction of the sales charge, the net amount invested in shares of each fund was $9,700. Values for each fund are based on changes in net asset value, including net investment income earned and net capital gains realized during each period by each fund. The table on the next page reflects the cost of the initial $10,000 investment in each of the stock funds, plus the aggregate cost of reinvested dividends and capital gain distributions, if any, from commencement of operations, or February 28, 1984 for funds in operation for ten years or more, through February 28, 1994. If no additional shares of these funds had been acquired through the reinvestment of distributions, the cash payments from these funds would have come to the amounts shown in column (A) for capital gain distributions, and the amounts shown in column (B) for income dividends. No adjustment has been made for a shareholder's income tax liability on dividends and capital gain distributions. (A) (B) CAPITAL GAIN INCOME FUND COST DISTRIBUTIONS DIVIDENDS Air Transportation $ 12,716 $ 2,415 $ 19 American Gold 10,233 175 58 Automotive 13,864 2,697 718 Biotechnology 18,555 7,372 19 Brokerage and Investment Management 13,389 2,561 393 Chemicals 21,289 8,682 951 Computers 12,899 2,386 320 Construction and Housing 15,358 4,268 291 Consumer Products 12,749 2,512 58 Defense and Aerospace 11,716 1,242 393 Developing Communications 12,361 2,221 0 Electronics 12,693 2,668 10 Energy 14,829 2,423 1,728 Energy Service 10,068 0 68 Environmental Services 10,811 786 10 Financial Services 21,543 7,456 1,996 Food and Agriculture 21,834 9,070 660 Health Care 30,047 15,299 777 Home Finance 17,551 5,500 456 Industrial Equipment 10,838 611 204 Industrial Materials 10,773 19 737 Insurance 14,648 3,560 660 Leisure 19,071 7,527 325 Medical Delivery 14,271 3,686 68 Multimedia 15,609 4,831 10 Natural Gas 10,126 126 0 Paper and Forest Products 11,865 1,009 766 Precious Metals and Minerals 11,429 75 1,241 Regional Banks 19,056 6,334 902 Retailing 20,384 7,605 407 Software and Computer Services 22,884 10,204 0 Technology 14,212 3,423 318 Telecommunications 18,016 5,849 1,310 Transportation 16,042 5,112 39 Utilities 26,048 6,497 5,760 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 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 money market fund may also calculate an effective yield by compounding the base period return over a one-year period. In addition to current yield, the fund may quote yields in advertising based on any historical seven-day period. 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. The fund's yield is calculated on the same basis as yields for other money market funds, as required by regulations. When comparing investment alternatives, investors should also note the quality and maturity of the portfolio securities of the 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. The money market fund may reference the growth and variety of money market mutual funds and the adviser's innovation and participation in the industry. 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 mutual fund performance indices prepared by Lipper. 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. Fidelity may provide information designed to help individuals understand their investment goals and explore various financial strategies. For example, Fidelity's FundMatchsm Program includes a workbook describing general principles of investing, such as asset allocation, diversification, risk tolerance, and goal setting; a questionnaire designed to help create a personal financial profile; and an action plan offering investment alternatives. Materials may also include discussions of Fidelity's three 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 funds may be compared in advertising to Certificates of Deposit (CDs) or other investments issued by banks. The funds differ from bank investments in several respects. The funds may offer greater liquidity or higher potential returns than CDs; but unlike CDs, the funds do not guarantee your principal or your return. 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 645 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; the effects of periodic investment plans and dollar cost averaging; saving for college; charitable giving; and the Fidelity credit card. In addition, Fidelity may quote financial or business publications and periodicals, including model portfolios or allocations, as they relate to fund management, investment philosophy, and investment techniques. Fidelity may also reprint, and use as advertising and sales literature, articles from Fidelity Focus, a quarterly magazine provided free of charge to Fidelity fund shareholders. A fund may present its fund number, Quotron(trademark) number, and CUSIP number, and discuss or quote its current portfolio manager. VOLATILITY. The stock funds may quote various measures of volatility and benchmark correlation in advertising. In addition, a fund 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. The stock funds may advertise examples of the effects of periodic investment plans, including the principle of dollar cost averaging. In such a program, an investor invests a fixed dollar amount in a fund at periodic intervals, thereby purchasing fewer shares when prices are high and more shares when prices are low. While such a strategy does not assure a profit or guard against loss in a declining market, the investor's average cost per share can be lower than if fixed numbers of shares are purchased at the same intervals. In evaluating such a plan, investors should consider their ability to continue purchasing shares during periods of low price levels. A fund may be available for purchase through retirement plans or other programs offering deferral of, or exemption from, income taxes, which may produce superior after-tax returns over time. For example, a $1,000 investment earning a taxable return of 10% annually would have an after-tax value of $1,949 after ten years, assuming tax was deducted from the return each year at a 31% rate. An equivalent tax-deferred investment would have an after-tax value of $2,100 after ten years, assuming tax was deducted at a 31% rate from the tax-deferred earnings at the end of the ten-year period. As of February 28, 1994, FMR managed over $144 billion in equity fund assets as defined and tracked by Lipper. This 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. ADDITIONAL PURCHASE AND REDEMPTION INFORMATION As provided for in Rule 22d-1 under the Investment Company Act of 1940, FDC exercises its right to waive the funds' 3% sales charge on shares acquired through reinvestment of dividends and capital gain distributions or in connection with a fund's merger with or acquisition of any investment company or trust. In addition, the funds' sales charge will not apply (1) if you buy shares as part of 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 plan 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) if you are a charitable organization (as defined in Section 501(c)(3) of the Internal Revenue Code) investing $100,000 or more; (5) 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); (6) if you are an investor participating in the Fidelity Trust Portfolios program (these investors must make initial investments of $100,000 or more in the Trust Portfolios and must, during the initial six-month period, reach and maintain an aggregate balance of at least $500,000 in all accounts and subaccounts purchased through the Trust Portfolios program); (7) to shares purchased through Portfolio Advisory Services; (8) if you are a current or former Trustee or officer of a Fidelity fund or a current or retired officer, director, or full-time 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) if you are 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 funds' shares under special arrangements in connection with FDC's sales activities. FDC has chosen to waive the fund's sales charge in these instances because of the efficiencies involved in sales of shares to these investors. The fund's sales charge may be reduced to reflect sales charges previously paid, or that would have been paid absent a reduction 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, 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). 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 1994: Washington's Birthday (observed), Good Friday, Memorial Day (observed), Independence Day, Labor Day, Thanksgiving Day, and Christmas Day (observed). Although FMR expects the same holiday schedule, with the addition of New Year's Day, to be observed in the future, the NYSE may modify its holiday schedule at any time. FSC normally determines each fund's NAV hourly, from 10:00 a.m. to 4:00 p.m., and the final determination of each fund's NAV will coincide with the close of business of the NYSE (normally 4:00 p.m. Eastern time); however, NAV calculations may cease earlier if trading on the NYSE is restricted or as permitted by the 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. Some foreign securities may not be traded during the funds' business hours. Since these securities are generally priced at their last determined price in their primary market, their price may not change during the funds' business day. 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) a fund suspends the redemption of the shares to be exchanged as permitted under the 1940 Act or the rules and regulations thereunder, or the fund to be acquired suspends the sale of its shares because it is unable to invest amounts effectively in accordance with its investment objective and policies. In the Prospectus, each fund has notified shareholders that it reserves the right at any time, without prior notice, to refuse exchange purchases by any person or group if, in FMR's judgment, the fund would be unable to invest effectively in accordance with its investment objective and policies, or would otherwise potentially be adversely affected. DISTRIBUTIONS AND TAXES DISTRIBUTIONS. If you request to have distributions mailed to you and the U.S. Postal Service cannot deliver your checks, or if your checks remain uncashed for six months, Fidelity may reinvest your distributions at the then-current NAV. All subsequent distributions will then be reinvested until you provide Fidelity with alternate instructions. DIVIDENDS. A portion of the stock funds' dividends may qualify for the dividends-received deduction available to corporate shareholders to the extent that the funds' income is derived from qualifying dividends. Because the funds 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 qualify for the deduction will generally be less than 100%. Each fund will notify corporate shareholders annually of the percentage of that fund's dividends that qualify for the dividends-received deduction. A portion of the funds' 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. The funds 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 the funds 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 the funds are taxable to shareholders as dividends, not as capital gains. Distributions from short-term capital gains do not qualify for the dividends-received deduction. FOREIGN TAXES. Foreign governments may withhold taxes on dividends and interest paid with respect to foreign securities typically at a rate between 10% and 35%. If, at the close of its fiscal year, more than 50% of a fund's total assets are invested in securities of foreign issuers, each fund will elect to pass through foreign taxes paid and thereby allow shareholders to take a credit or deduction on their individual tax returns. With the possible exception of the Precious Metals and Minerals Portfolio, FMR does not currently anticipate that the funds will qualify to pass foreign taxes paid through to shareholders. TAX STATUS OF THE FUNDS. Each fund has qualified and intends to continue to qualify 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, each fund intends to distribute substantially all of its net investment income and 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 a 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 the funds' investments in such instruments. Each fund is treated as a separate entity from the other portfolios of the fund for tax purposes. If a fund purchases shares in certain foreign investment entities, defined as passive foreign investment companies (PFIC's) 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 the fund with respect to deferred taxes arising from such distributions or gains. As of February 28, 1994 the funds had capital loss carryovers available to offset future capital gains, approximated as follows: Aggregate Capital Loss Amount that Expires on February 28, Fund Carryovers 1996 1997 1998 1999 2000 2001 2002
American $38,864,000 $13,677,000 $2,503,000 $ 1,152,000 $ 13,193,00 $ 8,339,000 Gold 0 Biotechnology 10,841,000 $10,841,000 Environmental 289,000 289,000 Services Health Care 529,000 529,000 Industrial 11,257,000 1,664,000 8,694,000 141,000 758,000 Materials Medical 12,438,000 1,480,000 10,958,000 Delivery Money Market 65,000 2,000 31,000 5,000 21,000 6,000 PreciousMetal 69,642,000 41,690,000 6,357,000 2,070,000 8,843,000 10,682,000 s and Minerals
Subsequent to the reorganization of certain funds of the trust on October 26, 1990, the Insurance and Industrial Equipment Portfolios acquired substantially all of the assets of the Life Insurance and Automation and Machinery Portfolios, respectively. The Life Insurance and Automation and Machinery Portfolios have capital loss carryovers of approximately $96,000 and $143,000, respectively, available to offset future realized capital gains in the Insurance and Industrial Equipment Portfolios, respectively, to the extent provided by regulations. To the extent that capital loss carryovers are used to offset any future capital gains, it is unlikely that the gains so offset will be distributed to shareholders since any such distributions may be taxable to shareholders as ordinary income. OTHER TAX INFORMATION. The information above is only a summary of some of the tax consequences generally affecting the funds and their 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 distributions received from the funds. Investors should consult their tax advisors to determine whether the funds are suitable for their particular tax situation. FMR FMR is a wholly owned subsidiary of FMR Corp., a parent company organized in 1972. 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 certain institutional customers; and Fidelity Investments Retail Marketing Company, which provides marketing services to various companies within the Fidelity organization. Several affiliates of FMR are also engaged in the investment advisory business. Fidelity Management Trust Company provides trustee, investment advisory, and administrative services to retirement plans and corporate employee benefit accounts. FMR U.K. and FMR Far East, both wholly owned subsidiaries of FMR formed in 1986, supply investment research information and may supply portfolio management services to FMR in connection with certain funds advised by FMR. Analysts employed by FMR, FMR U.K., and FMR Far East research and visit thousands of domestic and foreign companies each year. FTX, a wholly owned subsidiary of FMR formed in 1989, supplies portfolio management and research services in connection with certain money market funds advised by FMR. TRUSTEES AND OFFICERS The Trustees and executive officers of the trust are listed below. Except as indicated, each individual has held the office shown or other offices in the same company for the last five years. All persons named as Trustees also serve in similar capacities for other funds advised by FMR. Unless otherwise noted, the business address of each Trustee and officer is 82 Devonshire Street, Boston, Massachusetts 02109, which is also the address of FMR. Those Trustees who are "interested persons" (as defined in the Investment Company Act of 1940) by virtue of their affiliation with either the trust or FMR, are indicated by an asterisk (*). *EDWARD C. JOHNSON 3d, Trustee and President, is Chairman, Chief Executive Officer and a Director of FMR Corp.; a Director and Chairman of the Board and of the Executive Committee of FMR; Chairman and a Director of FMR Texas Inc. (1989), Fidelity Management & Research (U.K.) Inc., and Fidelity Management & Research (Far East) Inc. *J. GARY BURKHEAD, Trustee and Senior Vice President, is President of FMR; and President and a Director of FMR Texas Inc. (1989), Fidelity Management & Research (U.K.) Inc., and Fidelity Management & Research (Far East) Inc. RALPH F. COX, 200 Rivercrest Drive, Fort Worth, TX, Trustee (1991), is a consultant to Western Mining Corporation (1994). Prior to February 1994, he was President of Greenhill Petroleum Corporation (petroleum exploration and production, 1990). Until March 1990, Mr. Cox was President and Chief Operating Officer of Union Pacific Resources Company (exploration and production). He is a Director of Bonneville Pacific Corporation (independent power, 1989), Sanifill Corporation (non-hazardous waste, 1993), and CH2M Hill Companies (engineering). In addition, he served on the Board of Directors of the Norton Company (manufacturer of industrial devices, 1983-1990) and continues to serve on the Board of Directors of the Texas State Chamber of Commerce, and is a member of advisory boards of Texas A&M University and the University of Texas at Austin. PHYLLIS BURKE DAVIS, P.O. Box 264, Bridgehampton, NY, Trustee (1992). Prior to her retirement in September 1991, Mrs. Davis was the Senior Vice President of Corporate Affairs of Avon Products, Inc. She is currently a Director of BellSouth Corporation (telecommunications), Eaton Corporation (manufacturing, 1991), and the TJX Companies, Inc. (retail stores, 1990), and previously served as a Director of Hallmark Cards, Inc. (1985-1991) and Nabisco Brands, Inc. In addition, she serves as a Director of the New York City Chapter of the National Multiple Sclerosis Society, and is a member of the Advisory Council of the International Executive Service Corps. and the President's Advisory Council of The University of Vermont School of Business Administration. RICHARD J. FLYNN, 77 Fiske Hill, Sturbridge, MA, Trustee, is a financial consultant. Prior to September 1986, Mr. Flynn was Vice Chairman and a Director of the Norton Company (manufacturer of industrial devices). He is currently a Director of Mechanics Bank and a Trustee of College of the Holy Cross and Old Sturbridge Village, Inc. E. BRADLEY JONES, 3881-2 Lander Road, Chagrin Falls, OH, Trustee (1990). Prior to his retirement in 1984, Mr. Jones was Chairman and Chief Executive Officer of LTV Steel Company. Prior to May 1990, he was Director of National City Corporation (a bank holding company) and National City Bank of Cleveland. He is a Director of TRW Inc. (original equipment and replacement products), Cleveland-Cliffs Inc (mining), NACCO Industries, Inc. (mining and marketing), Consolidated Rail Corporation, Birmingham Steel Corporation (1988), Hyster-Yale Materials Handling, Inc. (1989), and RPM, Inc. (manufacturer of chemical products, 1990). In addition, he serves as a Trustee of First Union Real Estate Investments, Chairman of the Board of Trustees and a member of the Executive Committee of the Cleveland Clinic Foundation, a Trustee and a member of the Executive Committee of University School (Cleveland), and a Trustee of Cleveland Clinic Florida. DONALD J. KIRK, 680 Steamboat Road, Apartment #1-North, Greenwich, CT, Trustee, is a Professor at Columbia University Graduate School of Business and a financial consultant. Prior to 1987, he was Chairman of the Financial Accounting Standards Board. Mr. Kirk is a Director of General Re Corporation (reinsurance) and Valuation Research Corp. (appraisals and valuations, 1993). In addition, he serves as Vice Chairman of the Board of Directors of the National Arts Stabilization Fund and Vice Chairman of the Board of Trustees of the Greenwich Hospital Association. *PETER S. LYNCH, Trustee (1990) is Vice Chairman of FMR (1992). Prior to his retirement on May 31, 1990, he was a Director of FMR (1989) and Executive Vice President of FMR (a position he held until March 31, 1991); Vice President of Fidelity Magellan Fund and FMR Growth Group Leader; and Managing Director of FMR Corp. Mr. Lynch was also Vice President of Fidelity Investments Corporate Services (1991-1992). He is a Director of W.R. Grace & Co. (chemicals, 1989) and Morrison Knudsen Corporation (engineering and construction). In addition, he serves as a Trustee of Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield (1989) and Society for the Preservation of New England Antiquities, and as an Overseer of the Museum of Fine Arts of Boston (1990). GERALD C. McDONOUGH, 135 Aspenwood Drive, Cleveland, OH, Trustee (1989), is Chairman of G.M. Management Group (strategic advisory services). Prior to his retirement in July 1988, he was Chairman and Chief Executive Officer of Leaseway Transportation Corp. (physical distribution services). Mr. McDonough is a Director of ACME-Cleveland Corp. (metal working, telecommunications and electronic products), Brush-Wellman Inc. (metal refining), York International Corp. (air conditioning and refrigeration, 1989), Commercial Intertech Corp. (water treatment equipment, 1992), and Associated Estates Realty Corporation (a real estate investment trust, 1993). EDWARD H. MALONE, 5601 Turtle Bay Drive #2104, Naples, FL, Trustee. Prior to his retirement in 1985, Mr. Malone was Chairman, General Electric Investment Corporation and a Vice President of General Electric Company. He is a Director of Allegheny Power Systems, Inc. (electric utility), General Re Corporation (reinsurance) and Mattel Inc. (toy manufacturer). He is also a Trustee of Rensselaer Polytechnic Institute and of Corporate Property Investors and a member of the Advisory Boards of Butler Capital Corporation Funds and Warburg, Pincus Partnership Funds. MARVIN L. MANN, 55 Railroad Avenue, Greenwich, CT, Trustee (1993) is Chairman of the Board, President, and Chief Executive Officer of Lexmark International, Inc. (office machines, 1991). Prior to 1991, he held the positions of Vice President of International Business Machines Corporation ("IBM") and President and General Manager of various IBM divisions and subsidiaries. Mr. Mann is a Director of M.A. Hanna Company (chemicals, 1993) and Infomart (marketing services, 1991), a Trammell Crow Co. In addition, he serves as the Campaign Vice Chairman of the Tri-State United Way (1993) and is a member of the University of Alabama President's Cabinet (1990). THOMAS R. WILLIAMS, 21st Floor, 191 Peachtree Street, N.E., Atlanta, GA, Trustee, is President of The Wales Group, Inc. (management and financial advisory services). Prior to retiring in 1987, Mr. Williams served as Chairman of the Board of First Wachovia Corporation (bank holding company), and Chairman and Chief Executive Officer of The First National Bank of Atlanta and First Atlanta Corporation (bank holding company). He is currently a Director of BellSouth Corporation (telecommunications), ConAgra, Inc. (agricultural products), Fisher Business Systems, Inc. (computer software), Georgia Power Company (electric utility), Gerber Alley & Associates, Inc. (computer software), National Life Insurance Company of Vermont, American Software, Inc. (1989), and AppleSouth, Inc. (restaurants, 1992). GARY L. FRENCH, Treasurer (1991). Prior to becoming Treasurer of the Fidelity funds, Mr. French was Senior Vice President, Fund Accounting - Fidelity Accounting & Custody Services Co. (1991); Vice President, Fund Accounting - Fidelity Accounting & Custody Services Co. (1990); and Senior Vice President, Chief Financial and Operations Officer - Huntington Advisers, Inc. (1985-1990). ARTHUR S. LORING, Secretary, is Senior Vice President and General Counsel of FMR, Vice President - Legal of FMR Corp., and Vice President and Clerk of FDC. ROBERT H. MORRISON, Manager, Security Transactions, is an employee of FMR. THOMAS D. MAHER, Assistant Vice President of Select Money Market Portfolio (1990), is Assistant Vice President of Fidelity's money market funds and Vice President of FMR Texas Inc. (1990). RICHARD A. SPILLANE, Vice President of each equity fund ( 1989 ), is Vice President of FMR, and Director of Equity Research. Under a retirement program that became effective on November 1, 1989, Trustees, upon reaching age 72, become eligible to participate in a defined benefit retirement program under which they receive payments during their lifetime from the fund based on their basic trustee fees and length of service. Currently, Messrs. Robert L. Johnson, William R. Spaulding, Bertram H. Witham, and David L. Yunich participate in the program. Beneficial Ownership. As of February 28, 1994, the Trustees and officers of the trust owned, in the aggregate, less than 1% of the outstanding shares of each fund. Also as of that date, Resources Trust Co., Engelwood, CO, was known by the trust to own of record or beneficially approximately 7.7% of Software, 67.7% of Insurance, 24% of Leisure, 8.2% of Home Finance, 34.4% of Multimedia, 15.6% of Construction and Housing, and 12.6% of Developing Communications; Charles Schwab & Co., Inc./Mutual Fund Department, San Francisco, CA, was known by the trust to own of record or beneficially approximately 8.3% of Air Transportation, 5.1% of Energy, and 5.5% of Regional Banks; Bank Hapoalim, 1177 Avenue of the Americas, New York, NY, was known by the trust to own of record or beneficially approximately 8.1% of Financial Services and 19.2% of Brokerage and Investment Management; Jupiter & Co., P.O. Box 1537, Boston, MA, was known by the trust to own of record or beneficially approximately 6.7% of Chemicals; Amivest Corporation, 767 Fifth Avenue, New York, NY, was known by the trust to own of record or beneficially approximately 12% of Food and Agriculture; and AFCO Inc., P.O. Box 12467, San Diego, CA, was known by the trust to own of record or beneficially approximately 5.9% of Paper and Forest Products. MANAGEMENT CONTRACTS The trust employs FMR to furnish investment advisory and other services. There is a separate management contract with FMR with respect to each fund. Under its management contracts with the trust on behalf of 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 the funds with all necessary office facilities and personnel for servicing the funds' investments, and compensates all officers of the trust, all Trustees who are "interested persons" of the trust or FMR, and all personnel of the trust or FMR performing services relating to research, statistical, and investment activities. In addition, FMR or its affiliates, subject to the supervision of the Board of Trustees, provide the management and administrative services necessary for the operation of the funds. These services include providing facilities for maintaining the funds' organization; supervising relations with custodians, transfer and pricing agents, accountants, underwriters, and other persons dealing with the funds; preparing all general shareholder communications and conducting shareholder relations; maintaining the funds' records and the registration of the funds' shares under federal and state law; developing management and shareholder services for the funds; and furnishing reports, evaluations, and analyses on a variety of subjects to the Board of Trustees. In addition to the management fees 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. The funds pay for typesetting, printing, and mailing proxy material to shareholders, legal expenses, and the fees of the custodian, auditor, and non-interested Trustees. Although each fund's management contract provides that the funds will pay for typesetting, printing and mailing prospectuses, statements of additional information, notices, and reports to existing shareholders, the trust has entered into a revised transfer agent agreement with FSC, pursuant to which FSC bears the cost of providing these services to existing shareholders. Other expenses paid by the funds include interest, taxes, brokerage commissions, each fund's proportionate share of insurance premiums and Investment Company Institute dues, and the costs of registering shares under federal and state securities laws. The funds are also liable for such nonrecurring expenses as may arise, including costs of any litigation to which the funds may be a party, and any obligation they may have to indemnify the trust's officers and Trustees with respect to litigation. MONEY MARKET FUND. FMR is the money market fund's manager pursuant to a management contract dated March 1, 1994, which was approved by shareholders on February 16, 1994. For the services of FMR under the contract, the fund pays FMR a monthly management fee calculated by adding a basic fee, which consists of a group fee rate and an individual fund fee rate (.03%), to an income-based component of 6% of the fund's gross income in excess of a 5% yield, and multiplying the result by the fund's 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 on the left of the chart below. On the right, the effective fee rate schedule shows the results of cumulatively applying the annualized rates at varying asset levels. For example, the effective annual fee rate at $ 250.2 billion of group net assets - their approximate level for February 2 8 , 1994 - was .1604 %, which is the weighted average of the respective fee rates for each level of group net assets up to 250.2 billion. GROUP FEE RATE SCHEDULE* EFFECTIVE ANNUAL FEE RATES AVERAGE GROUP EFFECTIVE GROUP ANNUALIZED NET 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 174 - 228 .1400 228 - 282 .1375 282 - 336 .1350 Over 336 .1325 Based on the average net assets of funds advised by FMR for February 1994, the basic fee rate would be calculated as follows: GROUP FEE RATE INDIVIDUAL FUND FEE RATE BASIC FEE RATE .1604 % + .03% = .1904 % One twelfth (1/12) of the basic fee is applied to the fund's average net assets for the current month, giving a dollar amount which is the basic fee for that month. If the fund's gross yield is 5% or less, the basic fee is the total management fee. The income-based component of the proposed fee is added to the basic fee when the fund's yield is greater than 5%. The income-based fee 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%. Gross income for this purpose, includes interest accrued and/or discount earned (including both original issue discount and market discount) on portfolio obligations, less amortization of premium. Realized and unrealized gains and losses, if any, are not included in gross income. The fund's management contract with FMR prior to March 1, 1994 was dated May 1, 1987. For the services of FMR under the contract, the money market fund paid FMR a monthly management fee computed on the basis of the fund's gross income. To the extent that the fund's monthly gross income equalled an annualized yield of 5% or less, FMR received 4% of that amount of the fund's gross income. To the extent that the fund's monthly income exceeded an annualized yield of 5%, FMR received 6% of that excess. For this purpose, gross income includes interest accrued or discount earned (including both original issue and market discount), less amortization of premium. The amount of discount or premium on portfolio instruments is fixed at the time of purchase. Realized and unrealized gains and losses, if any, are not included in gross income. Pursuant to the terms of the contract, limitations were imposed on the compensation FMR could receive under the above formula. These limitations were based on the fund's average monthly net assets as follows: Annualized Rate On the first $1.5 billion .50% On the portion in excess of $1.5 to $3.0 billion .45% On the portion in excess of $3.0 billion to $4.5 billion .43% On the portion in excess of $4.5 billion to $6.0 billion .41% On the portion in excess of $6.0 billion .40% SUB-ADVISER. With respect to the money market fund, FMR has entered into a sub-advisory agreement with FMR Texas, dated March 1 , 1994 pursuant to which FMR Texas has primary responsibility for providing portfolio investment management services to the money market fund. The sub-advisory agreement provides that FMR will pay FTX fees equal to 50% of the management fee payable to FMR under its management contract with the fund. The fees paid to FTX are not reduced by any voluntary or mandatory expense reimbursements that may be in effect from time to time. During the year ended February 28, 1994, the fiscal period May 1, 1992 to February 28, 1993, and the fiscal year ended April 30, 1992, FMR paid FTX fees of $ 304,933 , $286,083, and $673,01 7 , respectively, with respect to the money market fund. STOCK FUNDS. FMR is each stock fund's manager pursuant to management contracts dated March 1, 1994 and approved by shareholders on February 16, 1994 . For the services of FMR under the contracts, the funds each pay FMR a monthly management fee composed of the sum of two elements: a group fee rate and an individual fund fee rate. The group fee rate is based on the monthly average net assets of all of the registered investment companies with which FMR has management contracts and is calculated on a cumulative basis pursuant to the graduated schedule shown on the left of the chart below. On the right, the effective annual fee rate shows the results of cumulatively applying the annualized rates to varying asset levels. For example, the effective annual group fee rate at $ 250.2 billion of group net assets - their approximate level for February 1994 - was .3223 %, which is the weighted average of the respective fee rates for each level of group net assets up to $250.2 billion. GROUP FEE RATE SCHEDULE* EFFECTIVE ANNUAL FEE RATES AVERAGE GROUP EFFECTIVE GROUP ANNUALIZED NET ANNUAL ASSETS RATE ASSETS FEE RATE 0 - $ 3 billion .520% $ 0.5 billion .5200% 3 - 6 .490 25 .4238 6 - 9 .460 50 .3823 9 - 12 .430 75 .3626 12 - 15 .400 100 .3512 15 - 18 .385 125 .3430 18 - 21 .370 150 .3371 21 - 24 .360 175 .3325 24 - 30 .350 200 .3284 30 - 36 .345 225 .3253 36 - 42 .340 250 .3223 42 - 48 .335 275 .3198 48 - 66 .325 300 .3175 66 - 84 .320 325 .3153 84 - 102 .315 350 .3133 102 - 138 .310 138 - 174 .305 174 - 228 .300 228 - 282 .295 282 - 336 .290 Over 336 .285 * The rates shown for average group assets in excess of $174 billion were adopted by FMR on a voluntary basis on November 1, 1993 pending shareholder approval of new management contracts reflecting the extended schedule. The extended schedule provides for lower management fees as total assets under management increase and was approved by shareholders on February 16, 1994. The schedule above (minus the breakpoints added November 1, 1993) was voluntarily adopted by FMR on January 1, 1992 pending shareholder approval of new management contracts reflecting the extended schedule. On February 17, 1993, shareholders of the Home Finance Portfolio approved an amended management contract which was effective March 1, 1993, containing the revised group fee rate schedule. Prior to January 1, 1992, the fund's group fee rate was based on a schedule with breakpoints ending at .310% for average group assets in excess of $102 billion. The individual fund fee rate is .30%. Based on the average net assets of funds advised by FMR for February 1994, the annual management fee rate would be calculated as follows: Group Fee Rate Individual Fund Fee Rate Management Fee Rate . 3223 % + .30% = . 6223 % One twelfth (1/12) of this annual management fee rate is then applied to each fund's average net assets for the current month, giving a dollar amount which is the fee for that month. FEES COLLECTED BY FMR. The table on page 44 provides information about the management fees payable to FMR under the management contracts in effect for the last three fiscal periods. The column entitled "Gross Management Fees" provides the dollar amount of management fees provided for under those contracts. The column entitled "Reimbursements" lists the sum of any fees and other expenses of the fund that FMR effectively assumed by reimbursing the funds for those expenses, as discussed below. Expense reimbursements represent reductions of FMR's revenues from the funds. The column entitled "Net Fees" represents the gross management fees payable to FMR, less the amount of fee and expense reimbursements by FMR during the period. REIMBURSEMENT OF EXPENSES. To comply with the California Code of Regulations, FMR will reimburse each fund if and to the extent that a fund's aggregate annual operating expenses exceed specified percentages of its average net assets. In connection with the expense limitation regulations, each fund has received an order which permits excluding from aggregate operating expenses a portion of its transfer and shareholder's servicing agent fees and out-of-pocket expenses. The applicable percentages are 2 1/2% of the first $30 million, 2% of the next $70 million, and 1 1/2% of average net assets in excess of $100 million. When calculating each fund's expenses for purposes of this regulation, a fund may exclude interest, taxes, brokerage commissions, and extraordinary expenses, as well as a portion of its custodian fees attributable to investments in foreign securities. In addition, the fund has agreed to a condition imposed by the State of California which requires certain funds, for purposes of the expense limitation regulations, to include in aggregate operating expenses all expenses incurred in connection with the acquisition, retention, and disposal of gold, including brokerage commissions. Also, FMR voluntarily limits expenses, excluding interest, taxes, brokerage commissions, and extraordinary expenses of each fund to 2 1/2% of average net assets. SUB-ADVISERS. On behalf of the stock funds, FMR has entered into sub-advisory agreements with FMR U.K. and FMR Far East. Pursuant to the sub-advisory agreements, FMR may receive investment advice and research services outside the United States from the sub-advisers. On behalf of the stock funds, FMR may also grant the sub-advisers investment management authority as well as the authority to buy and sell securities if FMR believes it would be beneficial to the funds. Currently, FMR U.K. and FMR Far East each focus on issuers in countries other than the United States such as those in Europe, Asia, and the Pacific Basin. FMR U.K. and FMR Far East are wholly owned subsidiaries of FMR. Under the sub-advisory agreements FMR pays the fees of FMR U.K. and FMR Far East. For providing non-discretionary investment advice and research services, the sub-advisers are compensated as follows: (bullet) FMR pays FMR U.K. and FMR Far East fees equal to 110% and 105%, respectively, of FMR U.K.'s and FMR Far East's costs incurred in connection with providing investment advice and research services. On behalf of the stock funds or providing discretionary investment management and executing portfolio transactions, the sub-advisers are compensated as follows: (bullet) 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. MANAGEMENT FEES 44 Fiscal 1994 Fiscal 1993 Fiscal 1992
Gross Reimbursements Gross Reimbursements Gross Reimbursements Management by Net Management by Net Management by Net Fees FMR Fees Fees FMR Fees Fees FMR Fees
Air Transportation $ 111,986 $ - $ 111,986 $ 59,743 $ 14,656 $ 45,087 $ 45,893 $ 57,520 $ -- American Gold 1,968,132 - 1,968,132 845,121 -- 845,121 1,044,883 -- 1,044,883 Automotive 842,489 - 842,489 567,565 -- 567,565 107,873 -- 107,873 Biotechnology 3,444,469 - 3,444,469 3,963,575 -- 3,963,575 4,999,395 -- 4,999,395 Brokerage and Investment Management 434,585 - 434,585 95,887 -- 95,887 116,514 -- 116,514 Chemicals 172,586 - 172,586 185,268 -- 185,268 171,330 -- 171,330 Computers 260,092 - 260,092 204,894 -- 204,894 178,574 -- 178,574 Construction and Housing 266,225 - 266,225 117,233 -- 117,233 20,946 91,040 -- Consumer Products 56,196 13,001 43,195 39,378 43,176 -- 26,792 76,900 -- Defense and Aerospace 29,101 48,710 6,864 76,661 -- 13,086 79,708 -- Developing Communications 1,112,057 - 1,112,057 273,728 -- 273,728 113,409 1,359 112,050 Electronics 340,672 - 340,672 250,377 -- 250,377 136,804 -- 136,804 Energy 790,258 - 790,258 416,288 -- 416,288 508,749 -- 508,749 Energy Service 588,460 - 588,460 275,342 -- 275,342 272,314 -- 272,314 Environmental Services 354,982 - 354,982 330,763 -- 330,763 523,226 -- 523,226 Financial Services 1,053,341 - 1,053,341 638,638 -- 638,638 337,114 -- 337,114 Food and Agriculture 687,792 - 687,792 576,530 -- 576,530 582,126 -- 582,126 Health Care 3,460,974 - 3,460,974 4,123,675 -- 4,123,675 5,569,078 -- 5,569,078 Home Finance 1,403,951 - 1,403,951 740,779 -- 740,779 17,259 89,441 -- Industrial Equipment 368,162 - 368,162 32,577 46,631 -- 49,283 90,575 -- Industrial Materials 217,293 - 217,293 131,822 -- 131,822 56,572 29,837 26,735 Insurance 140,010 - 140,010 66,292 3,264 63,028 243,819 -- 243,819 Leisure 553,372 - 553,372 209,257 -- 209,257 247,251 -- 247,251 Medical Delivery 667,707 - 667,707 664,439 -- 664,439 946,897 -- 946,897 Money Market 609,866 - 609,866 572,165 -- 572,165 1,346,034 -- 1,346,034 Multimedia 394,337 - 394,337 73,299 6,172 67,127 36,063 62,779 -- Natural Gas 243,289 - 243,289 -- -- -- -- -- -- Paper and Forest Products 171,761 - 171,761 92,798 -- 92,798 159,393 -- 159,393 Precious Metals and Minerals 2,378,390 - 2,378,390 674,744 -- 674,744 1,025,350 -- 1,025,350 Regional Banks 1,251,566 - 1,251,566 1,028,328 -- 1,028,328 298,441 -- 298,441 Retailing 359,512 - 359,512 334,719 -- 334,719 121,491 -- 121,491 Software and Computer Services 1,077,770 - 1,077,770 607,554 -- 607,554 266,322 -- 266,322 Technology 1,025,784 - 1,025,784 611,003 -- 611,003 709,494 -- 709,494 Telecommunications 2,219,724 - 2,219,724 504,083 -- 504,083 393,527 -- 393,527 Transportation 66,064 - 66,064 23,650 62,581 -- 19,507 89,539 -- Utilities 1,945,321 - 1,945,321 1,288,773 -- 1,288,773 1,405,035 -- 1,405,035
The table below shows the fees paid for providing investment advice and research services by FMR to FMR U.K. and FMR Far East with respect to certain of the funds for the fiscal year ended February 28, 1994, the fiscal period ended February 28, 1993 and the fiscal year ended April 30, 1992. No fees were paid with respect to funds omitted from this table. FEES PAID BY FMR TO FOREIGN SUB-ADVISERS FUND FEES PAID BY FMR TO FMR U.K. FEES PAID BY FMR TO FMR FAR EAST FISCAL 1994 FISCAL 1993 FISCAL 1992 FISCAL 1994 FISCAL 1993 FISCAL 1992
Air Transportation $ 537 $ 276 $ 495 $ 901 $ 454 $ 609 Automotive 443 736 18,488 722 924 20,741 Biotechnology 870 6,825 12,943 1,205 9,072 17,050 Brokerage and Investment 4,308 51 6,665 -- 64 -- Management Chemicals 624 456 752 1,065 579 987 Computers 950 255 -- 1,564 412 -- Construction and Housing 74 -- 1 118 -- 1 Consumer Products 76 102 55 126 152 86 Defense and Aerospace -- -- 2 -- -- 1 Developing Communications 5,519 374 230 9,352 596 324 Electronics 813 189 494 1,346 339 731 Energy 4,003 4,766 6,416 6,620 5,985 8,864 Energy Service 107 142 -- 149 491 -- Environmental Services 1,063 185 967 1,722 471 1,004 Financial Services 3,965 571 3,355 6,418 680 3,143 Food and Agriculture 2,440 6,561 3,995 4,052 6,915 5,234 Health Care 8,184 9,977 19,789 14,628 16,490 26,119 Industrial Equipment -- -- 28 -- -- 38 Industrial Materials 1,003 36 -- 1,368 69 -- Insurance 1,776 31 -- 3,405 70 -- Leisure 1,482 843 2,425 2,493 1,227 3,338 Medical Delivery 412 37 -- 701 132 -- Multimedia 1,263 75 602 2,180 112 527 Natural Gas 235 -- -- 286 -- -- Paper and Forest Products 1,060 88 4 1,545 108 4 Precious Metals and Minerals 36,622 8221 14,733 64,331 11,951 19,895 Regional Banks 57 188 -- 79 233 -- Retailing -- 101 221 -- 113 306 Software and Computer Services 3,912 3,236 2,688 7,125 5,037 3,238 Technology 4,764 2,998 5 7,869 4,190 12 Telecommunications 11,670 1,018 568 18,896 1,487 767 Transportation 93 45 12 138 82 17 Utilities 1,182 1,082 3,195 1,966 1,413 4,066
CONTRACTS WITH COMPANIES AFFILIATED WITH FMR FSC is transfer, dividend disbursing, and shareholders' servicing agent for the funds. Under the trust's contract with FSC, the stock funds pay an annual fee of $64.32 per basic retail account with a balance of $5,000 or more, $35.73 per basic retail account with a balance of less than $5,000 and a supplemental activity charge of $2.25 for standing order transactions and $6.11 for other monetary transactions. The money market fund pays an annual fee of $14.04 per basic retail account with a balance of $5,000 or more, $10.21 per basic retail account with a balance of less than $5,000 and a supplemental activity charge of $2.25 for standing order transactions and $6.11 for other monetary transactions. These fees and charges are subject to annual cost escalation based on postal rate changes and changes in wage and price levels as measured by the National Consumer Price Index for Urban Areas. With respect to institutional client master accounts, each fund pays FSC a per-account fee of $95, and monetary transaction charges of $20 or $17.50, depending on the nature of services provided. With respect to certain broker-dealer master accounts, the funds pay FSC a per-account fee of $30 and a charge of $6 for monetary transactions. Fees for certain institutional retirement plan accounts are based on the net assets of all such accounts in each fund. Under the contract, FSC pays out-of-pocket expenses associated with providing transfer agent services. In addition, FSC bears the expense of typesetting, printing, and mailing prospectuses, statements of additional information, and all other reports, notices, and statements to shareholders, with the exception of proxy statements. The table below shows the transfer agent fees paid to FSC for each fund for the fiscal year ended February 28, 1994, the fiscal period May 1, 1992 to February 28, 1993, and the fiscal year ended April 30, 1992 . If a portion of the fund's brokerage commissions had not resulted in payment of certain of these fees, the fund would have paid the transfer agent fees shown in the column on the far right. TRANSFER AGENT FEES FEES BEFORE BROKERAGE ARRANGEMENTS
FISCAL FISCAL FISCAL FISCAL 1994 1993 1992 1994
Air Transportation $ 245,456 $ 117,931 $ 110,792 $ 249,148 American Gold 2,461,216 1,086,255 1,536,749 2,466,796 Automotive 1,281,117 776,705 159,416 1,290,911 Biotechnology 4,952,404 5,041,968 6,286,150 4,957,823 Brokerage and Investment Management 731,955 168,092 212,155 744,934 Chemicals 297,583 305,400 321,595 300,053 Computers 459,401 318,208 365,299 464,030 Construction and Housing 372,979 183,446 129,029 374,727 Consumer Products 121,453 77,241 56,942 121,453 Defense and Aerospace 70,376 17,117 37,099 70,376 Developing Communications 1,402,155 440,744 229,577 1,415,165 Electronics 512,984 362,155 247,544 517,315 Energy 1,229,644 588,317 778,899 1,239,670 Energy Service 909,981 432,758 571,797 920,773 Environmental Services 736,867 640,648 1,081,939 758,516 Financial Services 1,528,993 751,881 543,660 1,550,290 Food and Agriculture 1,022,108 809,112 948,355 1,036,351 Health Care 4,552,338 4,978,972 6,339,307 4,740,085 Home Finance 2,031,849 848,854 179,087 2,042,535 Industrial Equipment 524,752 64,231 43,790 531,744 Industrial Materials 418,805 234,240 116,715 425,367 Insurance 229,465 121,497 36,047 231,450 Leisure 667,500 337,467 497,792 681,395 Medical Delivery 1,118,945 1,142,334 1,474,335 1,154,295 Money Market 2,285,303 1,476,509 1,869,920 2,285,303 Multimedia 539,603 141,067 81,381 558,382 Natural Gas 412,248 - - 415,191 Paper and Forest Products 325,084 162,052 295,185 330,132 Precious Metals and Minerals 3,153,305 1,003,502 1,604,326 3,158,227 Regional Banks 1,877,946 1,187,398 404,277 1,912,770 Retailing 636,558 522,518 381,749 652,193 Software and Computer Services 1,458,568 846,760 442,252 1,469,576 Technology 1,317,939 834,807 1,076,669 1,330,867 Telecommunications 2,806,988 762,528 686,869 2,848,274 Transportation 125,041 48,712 57,479 126,388 Utilities 1,955,199 1,335,888 1,695,320 1,970,501
The trust's contract with FSC also provides that FSC will perform the calculations necessary to determine each fund's net asset value per share and dividends, and maintain each fund's accounting records. Prior to July 1, 1991, the annual fee for these pricing and bookkeeping services was based on two schedules, one pertaining to each fund's average net assets, and one pertaining to the type and number of transactions each fund made. The fee rates in effect as of July 1, 1991 are based on each fund's average net assets, specifically, .10% for the first $500 million of average net assets and .05% for average net assets in excess of $500 million. The fee is limited to a minimum of $45,000 and a maximum of $750,000 per year. The table below shows the fees paid to FSC for pricing and bookkeeping services, including related out-of-pocket expenses for each fund for the 1994 fiscal period and fiscal 1993 and 1992. PRICING AND BOOKKEEPING FEES FISCAL FISCAL FISCAL 1994 1993 1992
Air Transportation $ 45,503 $ 37,638 $ 44,836 American Gold 316,381 135,825 152,898 Automotive 135,527 90,154 53,397 Biotechnology 537,640 541,731 588,902 Brokerage and Investment Management 74,109 37,712 45,643 Chemicals 46,188 37,786 45,696 Computers 52,178 41,740 46,388 Construction and Housing 52,429 37,822 48,196 Consumer Products 45,448 37,669 45,454 Defense and Aerospace 45,439 37,615 44,219 Developing Communications 178,709 46,374 44,346 Electronics 56,600 47,286 48,970 Energy 115,301 66,546 77,067 Energy Service 95,263 45,991 50,706 Environmental Services 57,311 52,744 78,539 Financial Services 169,723 104,535 61,679 Food and Agriculture 111,592 91,812 92,535 Health Care 543,706 553,099 620,889 Home Finance 225,185 117,281 46,083 Industrial Equipment 67,846 37,581 44,747 Industrial Materials 55,728 37,737 46,057 Insurance 45,505 37,521 44,529 Leisure 89,132 37,900 50,760 Medical Delivery 111,491 109,268 143,364 Money Market 81,066 70,831 96,341 Multimedia 72,219 37,725 45,369 Natural Gas 46,258 - - Paper and Forest Products 50,532 37,829 50,805 Precious Metals and Minerals 381,783 108,598 151,827 Regional Banks 200,635 165,687 58,483 Retailing 59,935 53,809 51,626 Software and Computer Services 180,104 99,153 64,998 Technology 164,841 97,062 110,871 Telecommunications 355,887 81,440 64,096 Transportation 45,464 37,639 46,165 Utilities 312,148 204,083 202,173
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 on the next page shows the securities lending fees paid to FSC for fiscal 1994 and the fiscal period ended February 28, 1993. For fiscal 1992 the fees for securities lending are included in the pricing and bookkeeping fees in the table above. SECURITIES LENDING FEES FISCAL 1994 FISCAL 1993 American Gold -- 2,777 Biotechnology 58,348 129,715 Chemicals 1,690 -- Electronics 1,141 399 Energy $ 2,387 $ 632 Energy Service 895 -- Financial Services 2,973 28,974 Food And Agriculture 5,633 -- Health Care 83,391 165,457 Industrial Materials 1,284 -- Medical Delivery 34,005 30,881 Precious Metals And Minerals 2,476 1,194 Regional Banks -- 23,970 Retailing 9,246 1,574 Software And Computer Services 47,901 13,661 Telecommunications 21,143 16,157 Utilities 1,645 528 From December 1, 1987 to November 15, 1989, the fund charged a $25 fee for exchanges among the Select funds (excluding exchanges out of the money market fund and the Select Cash Reserves Account). Out of this $25 exchange fee, $15 was retained by FSC and the remaining $10 was credited to the fund from which the exchange originated and used to offset the fund's transfer agent expenses. During the period May 1, 1989 to November 15, 1989 and the fiscal year ended April 30, 1989 aggregate exchange fees credited to the funds amounted to $792,990 and $1,708,984, respectively. The aggregate exchange fees retained by FSC during the fiscal period s ended February 28, 1994 and 1993 and the fiscal year ended April 30, 1992 amounted to $4,248,878, $2,069,471, and $2,009,728, respectively. Exchange fees retained by FSC or credited to the funds are not reflected in the table on page 46. 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. Each fund's distribution agreement calls for FDC to use all reasonable efforts, consistent with its other business, to secure purchasers for shares of each fund, which are continuously offered. Promotional and administrative expenses in connection with the offer and sale of shares are paid by FDC. For the fiscal period s ended February 28, 1994 and 1993 and for fiscal 1992, FDC collected, in the aggregate, $1,507,482, $1,331,160, and $2,651,710 , respectively, of deferred sales charges from the total value of shares redeemed by shareholders in all funds and from the Select Cash Reserves Account. Beginning on June 15, 1983, the funds' shares were sold subject to a 2% sales charge. On October 12, 1990, the fund's 2% sales charge was increased to 3% and the 1% deferred sales charge was eliminated. FDC received aggregate sales charge revenue for the fiscal period s ended February 28, 1994 and 1993 and for fiscal 1992 in amounts of $47,390,126, $22,273,836, and $37,889,250, respectively. DESCRIPTION OF THE TRUST TRUST ORGANIZATION. Fidelity Select Portfolios is an open-end management investment company organized as a Massachusetts business trust on November 20, 1980. Subsequent to the reorganization of certain funds of the trust on October 26, 1990, Automation and Machinery Portfolio, Life Insurance Portfolio, and Restaurant Industry Portfolio no longer exist. Also due to the reorganization, Capital Goods Portfolio was renamed "Industrial Technology Portfolio," and Property and Casualty Insurance Portfolio was renamed "Insurance Portfolio." Subsequent to an additional reorganization on February 25, 1994, Electric Utilities Portfolio no longer exists. On 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 cease 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 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 judgement 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 nay 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 per share 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. S hare s are fully paid and nonassessable, except as set forth under the heading "Shareholder and T rustee L iability" above. Shareholder 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 the fund may be terminated upon the sale of its assets to another open-end management investment company,or upon liquidation and distribution of its assets, if approved by vote of the holders of a majority of the trust or the fund, as determined by the current value of each shareholder's investment in the fund or trust. If not so terminated, the trust and the funds will continue indefinitely. Each fund may invest all of its assets in another investment company. CUSTODIAN. Brown Brothers Harriman & Co., 40 Water Street, Boston, Massachusetts, is custodian of the assets of the stock funds. The Bank of New York, 110 Washington Street, New York, New York is custodian of the assets of the money market fund. The custodian is responsible for the safekeeping of the fund's assets and the appointment of subcustodian banks and clearing agencies. The custodian takes no part in determining the investment policies of the funds or in deciding which securities are purchased or sold by the funds. The funds may, however, invest in obligations of the custodian and may purchase securities from or sell securities to the custodian. FMR, its officers and directors, its affiliated companies, and the trust's Trustees may from time to time have transactions with various banks, including banks serving as custodians for certain of the funds advised by FMR. The Boston branch of the stock funds' custodian leases its office space from an affiliate of FMR at a lease payment which, when entered into, was consistent with prevailing market rates. Transactions that have occurred to date include mortgages and personal and general business loans. In the judgment of FMR, the terms and conditions of those transactions were not influenced by existing or potential custodial or other fund relationships. AUDITOR. Price Waterhouse, 160 Federal Street, Boston, Massachusetts, serves as the trust's independent accountant. The auditor examines financial statements for the funds and provides other audit, tax, and related services. FINANCIAL STATEMENTS The funds' Annual Report for the fiscal year ended February 28, 1994 is a separate report supplied with this Statement of Additional Information and is incorporated herein by reference. PART C. OTHER INFORMATION Item 24. Financial Statements and Exhibits (a) Financial Statements: The funds' financial statements for the fiscal year March 1, 1993 to February 28, 1994 are incorporated by reference into the Statement of Additional Information and are filed herein with the Prospectus. (b) Exhibits: (1) (a) Amended and Restated Declaration of Trust, dated April 14, 1994, is filed herein as Exhibit 1(a). (2) Not applicable. (3) Not applicable. (4) Not applicable. (5) (a) Management Contracts between Registrant's Air Transportation, American Gold, Automotive, Biotechnology, Brokerage and Investment Management, Chemicals, Computers, Construction and Housing (formerly Housing), Consumer Products, Defense and Aerospace, Developing Communications, Electronics, Energy, Energy Service, Environmental Services, Financial Services, Food and Agriculture, Health Care, Home Finance (formerly Savings and Loan), Industrial Equipment (formerly Industrial Technology), Industrial Materials, Insurance (formerly Property and Casualty Insurance), Leisure, Medical Delivery, Multimedia (formerly Broadcast and Media), Natural Gas, Paper and Forest Products, Precious Metals and Minerals, Regional Banks, Retailing, Software and Computer Services, Technology, Telecommunications, Transportation,Utilities, and Money Market Portfolios and Fidelity Management & Research Company, each of which is dated March 1, 1994, are filed herein as Exhibit Nos. 5(a)(1-36). (b) Sub-Advisory Agreements between Fidelity Management & Research Company and Fidelity Management & Research (U.K.) Inc. and between Fidelity Management & Research Company and Fidelity Management & Research (Far East) Inc., respectively, with respect to Registrant's Air Transportation, Automotive, Biotechnology, Brokerage and Investment Management, Chemicals, Computers, Construction and Housing (formerly Housing), Consumer Products, Defense and Aerospace, Developing Communications, Electronics, Energy, Energy Service, Environmental Services, Financial Services, Food and Agriculture, Health Care, Home Finance (formerly Savings and Loan), Industrial Equipment (formerly Industrial Technology), Industrial Materials, Insurance (formerly Property and Casualty Insurance), Leisure, Medical Delivery, Multimedia (formerly Broadcast and Media), Natural Gas, Paper and Forest Products, Precious Metals and Minerals, Regional Banks, Retailing, Software and Computer Services, Technology, Telecommunications, Transportation, and Utilities Portfolios, each of which is dated March 1, 1994, are filed herein as Exhibit Nos. 5(b)(1-34). (c) Sub-Advisory Agreement between Fidelity Management & Research Company and FMR Texas Inc. with respect to the Money Market Portfolio, dated January 1, 1990, is incorporated herein by reference to Exhibit 5(g) to Post-Effective Amendment No. 34. (6) (a) Distribution Agreements between Registrant's Air Transportation, American Gold, Automotive, Biotechnology, Brokerage and Investment Management, Chemicals, Computers, Construction and Housing (formerly Housing), Defense and Aerospace, Electronics, Energy, Energy Service, Financial Services, Food and Agriculture, Health Care, Home Finance (formerly Savings and Loan), Industrial Materials, Industrial Equipment (formerly Industrial Technology), Insurance (formerly Property and Casualty Insurance), Leisure, Medical Delivery, Money Market, Multimedia (formerly Broadcast and Media), Paper and Forest Products, Precious Metals and Minerals, Regional Banks, Retailing, Software and Computer Services, Technology, Telecommunications, Transportation and Utilities Portfolios and Fidelity Distributors Corporation, each of which is dated April 1, 1987, are incorporated herein by reference to Exhibit Nos. 6(a) (1-36) to Post-Effective Amendment No. 23. (b) Amendment to Distribution Agreements between Air Transportation, American Gold, Automotive, Biotechnology, Brokerage and Investment Management, Chemicals, Computers, Construction and Housing (formerly Housing), Defense and Aerospace, Electronics, Energy, Energy Service, Financial Services, Food and Agriculture, Health Care, Home Finance (formerly Savings and Loan), Industrial Materials, Industrial Equipment (formerly Industrial Technology), Insurance (formerly Property and Casualty Insurance), Leisure, Medical Delivery, Money Market, Multimedia (formerly Broadcast and Media), Paper and Forest Products, Precious Metals and Minerals, Regional Banks, Retailing, Software and Computer Services, Technology, Telecommunications, Transportation and Utilities Portfolios and Fidelity Distributors Corporation, each of which is dated January 1, 1988, is incorporated herein by reference to Exhibit 6(b) to Post-Effective Amendment No. 25. (c) Distribution Agreement between Registrant's Environmental Services Portfolio and Fidelity Distributors Corporation, dated June 29, 1989, is incorporated herein by reference to Exhibit 6(c) to Post-Effective Amendment No. 34. (d) Distribution Agreement between Registrant's Consumer Products Portfolio and Fidelity Distributors Corporation, dated June 14, 1990 is incorporated herein by reference to Exhibit 6(d) to Post-Effective Amendment No. 36. (e) Distribution Agreement between Registrant's Developing Communications Portfolio and Fidelity Distributors Corporation, dated June 14, 1990 is incorporated herein by reference to Exhibit 6(e) to Post-Effective Amendment No. 36. (f) Distribution Agreement between Registrant's Natural Gas Portfolio and Fidelity Distributors Corporation, dated April 15, 1993 is incorporated herein by reference to Exhibit 6(f) to Post-Effective Amendment No. 46. (7) Retirement Plan for Non-Interested Person Trustees, Directors or General Partners, effective November 1, 1989, is incorporated herein by reference to Exhibit 7 to Post-Effective Amendment No. 42. (8) (a) Custodian Contract between Registrant and Brown Brothers Harriman & Co,. on behalf of the equity Portfolios, dated as of July 18, 1991, is incorporated herein by reference to Exhibit 8(a) to Post-Ef fective Amendment No. 41. (b) Custodian Contract between Registrant and Bank of New York, on behalf of Select Money Market Port folio, dated as of July 18, 1991, is incorporated herein by reference to Exhibit 8(b) to Post- Effective Amendment No. 41. (9) (a) Amended Service Agreement between FMR Corp., Fidelity Service Co. and Registrant, dated June 1, 1989, is incorporated herein by reference to Exhibit 9(a) to Post-Effective Amendment No. 32. (b) Schedule A (transfer agent, dividend and distribution disbursing agent, and shareholder servicing agent) to the Amended Agreement, dated June 1, 1989, with respect to the Registrant's equity Portfolios, is incorporated herein by reference to Exhibit 9(b) to Post-Effective Amendment No. 32. (c) Schedule A (transfer agent, dividend and distribution disbursing agent, and shareholder servicing agent) to the Amended Agreement, dated June 1, 1989, with respect to the Registrant's Money Market Portfolio, is incorporated herein by reference to Exhibit 9(c) to Post-Effective Amendment No. 32. (d) Schedule B (agent to perform portfolio pricing and bookkeeping) to the Amended Agreement, dated June 1, 1989, with respect to the Registrant's equity Portfolios, is incorporated herein by reference to Exhibit 9(d) to Post-Effective Amendment No. 32. (e) Schedule B (agent to perform portfolio pricing and bookkeeping) to the Amended Agreement, dated June 1, 1989, with respect to the Registrant's Money Market Portfolio, is incorporated herein by reference to Exhibit 9(e) to Post-Effective Amendment No. 32. (f) Schedule C (agent for securities lending transactions) to the Amended Agreement, dated June 1, 1989, with respect to the Registrant's equity Portfolios, is incorporated herein by reference to Exhibit 9(f) to Post-Effective Amendment No. 32. (g) Schedule C (agent for securities lending transactions) to the Amended Agreement, dated June 1, 1989, with respect to the Registrant's Money Market Portfolio, is incorporated herein by reference to Exhibit 9(g) to Post-Effective Amendment No. 32. (10) Not applicable. (11) Consent of Price Waterhouse 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) to Post-Effective Amendment No. 38. (b) Fidelity Defined Contribution Retirement Plan and Trust Agreement, as currently in effect, is incorporated herein by reference to Exhibit 14(b) to Post-Effective Amendment No. 38. (c) Fidelity Defined Benefit Pension Plan and Trust Agreement, as currently in effect, is incorporated herein by reference to Exhibit 14(c) to Post-Effective Amendment No. 38. (d) Fidelity Group Individual Retirement Account Custodial Agreement and Disclosure Statement, as currently in effect, is incorporated herein by reference to Exhibit 14(d) to Post-Effective Amendment No. 38. (e) Fidelity 403(b)(7) Custodial Account Agreement, as currently in effect, is incorporated herein by refer ence to Exhibit 14(e) to Post-Effective Amendment No. 39. (f) Fidelity Master Plan for Savings and Investments, as currently in effect, is incorporated herein by refer ence to Exhibit 14(f) to Post-Effective Amendment No. 39. (g) Fidelity 401(a) Prototype Plan for Tax-Exempt Employers, as currently in effect, is incorporated herein by reference to Exhibit 14(g) to Post-Effective Amendment No. 38. (15) Not applicable. (16) (a) A schedule for computation of performance quotations for each Portfolio then registered was filed as Exhibit 16 to Post-Effective Amendment No. 26. (b) A schedule for computation of performance quotations regarding adjusted net asset value for the equity Portfolios was filed as Exhibit 16(b) to Post-Effective Amendment No. 44. (c) Backup for the computation of a moving average (using Select American Gold Portfolio as an example) was filed as Exhibit 16 (c) to Post-Effective Amendment No. 45. Item 25. Persons Controlled by or under Common Control with Registrant The Board of Trustees of Registrant is the same as the Board of Trustees of other funds advised by FMR, each of which has Fidelity Management & Research Company as its investment adviser. In addition, the officers of these funds are substantially identical. Nonetheless, Registrant takes the position that it is not under common control with these other funds since the power residing in the respective boards and officers arises as the result of an official position with the respective funds. Item 26. Number of Holders of Securities March 31, 1994 Title of Class: Shares of Beneficial Interest Title of Class Number of Record Holders Air Transportation Portfolio 1,927 American Gold Portfolio 38,458 Automotive Portfolio 25,570 Biotechnology Portfolio 74,933 Brokerage and Investment Management Portfolio 10,528 Chemicals Portfolio 7,249 Computers Portfolio 14,823 Construction and Housing Portfolio 8,414 Consumer Products Portfolio 1,679 Defense and Aerospace Portfolio 1,741 Developing Communications Portfolio 30,512 Electronics Portfolio 20,961 Energy Portfolio 19,033 Energy Service Portfolio 7,468 Environmental Services Portfolio 13,248 Financial Services Portfolio 17,066 Food and Agriculture Portfolio 18,447 Health Care Portfolio 69,817 Home Finance Portfolio 22,808 Industrial Equipment Portfolio 23,400 Industrial Materials Portfolio 17,224 Insurance Portfolio 1,328 Leisure Portfolio 12,181 Medical Delivery Portfolio 18,913 Money Market Portfolio 37,786 Multimedia Portfolio 7,454 Natural Gas Portfolio 10,028 Paper and Forest Products Portfolio 8,011 Precious Metals and Minerals Portfolio 51,176 Regional Banks Portfolio 15,543 Retailing Portfolio 15,550 Software and Computer Services Portfolio 20,578 Technology Portfolio 29,270 Telecommunications Portfolio 54,276 Transportation Portfolio 2,241 Utilities Portfolio 28,859 Item 27. Indemnification Article XI, Section 2 of the Declaration of Trust sets forth the reasonable and fair means for determining whether indemnification shall be provided to any past or present Trustee or officer. It states that the Registrant shall indemnify any present or past Trustee or officer to the fullest extent permitted by law against liability and all expenses reasonably incurred by him in connection with any claim, action, suit or proceeding in which he is involved by virtue of his service as a trustee, an officer, or both. Additionally, amounts paid or incurred in settlement of such matters are covered by this indemnification. Indemnification will not be provided in certain circumstances, however. These include instances of willful misfeasance, bad faith, gross negligence, and reckless disregard of the duties involved in the conduct of the particular office involved. Item 28. Business and Other Connections of Investment Adviser (1) FIDELITY MANAGEMENT & RESEARCH COMPANY FMR serves as investment adviser to a number of other investment companies. The directors and officers of the Adviser have held, during the past two fiscal years, the following positions of a substantial nature.
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 of FMR (1992). David Breazzano Vice President of FMR (1993) and of a fund advised by FMR. Stephan Campbell Vice President of FMR (1993). Rufus C. Cushman, Jr. Vice President of FMR and of funds advised by FMR; Corporate Preferred Group Leader. Will Danoff Vice President of FMR (1993) and of a fund advised by FMR. Scott DeSano Vice President of FMR (1993). Penelope Dobkin Vice President of FMR and of a fund advised by FMR. Larry Domash Vice President of FMR (1993). George Domolky Vice President of FMR (1993) and of a fund advised by FMR. Charles F. Dornbush Senior Vice President of FMR; Chief Financial Officer of the Fidelity funds; Treasurer of FMR Texas Inc., Fidelity Management & Research (U.K.) Inc., and Fidelity Management & Research (Far East) Inc. Robert K. Duby Vice President of FMR. Margaret L. Eagle Vice President of FMR and of a fund advised by FMR. Kathryn L. Eklund Vice President of FMR. Richard B. Fentin Senior Vice President of FMR (1993) and of a fund advised by FMR. Daniel R. Frank Vice President of FMR and of funds advised by FMR. Gary L. French Vice President of FMR and Treasurer of the funds advised by FMR. Prior to assuming the position as Treasurer he was Senior Vice President, Fund Accounting - Fidelity Accounting & Custody Services Co. Michael S. Gray Vice President of FMR and of funds advised by FMR. Barry A. Greenfield Vice President of FMR and of a fund advised by FMR. William J. Hayes Senior Vice President of FMR; Income/Growth Group Leader and International Group Leader. Robert Haber Vice President of FMR and of funds advised by FMR. 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; and Director of Technical Research. Stephan Jonas Vice President of FMR (1993). David B. Jones Vice President of FMR (1993). Steven Kaye Vice President of FMR (1993) and of a fund advised by FMR. Frank Knox Vice President of FMR (1993). Robert A. Lawrence Senior Vice President of FMR (1993); and High Income Group 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. Robert H. Morrison Vice President of FMR and Director of Equity Trading. David Murphy Vice President of FMR and of funds advised by FMR. Jacques Perold Vice President of FMR. Brian Posner Vice President of FMR (1993) and of a fund advised by FMR. Anne Punzak Vice President of FMR and of funds advised by FMR. Richard A. Spillane Vice President of FMR and of funds advised by FMR; and Director of Equity Research. Robert E. Stansky Senior Vice President of FMR (1993) and of funds advised by FMR. Thomas Steffanci Senior Vice President of FMR (1993); and Fixed-Income Division Head. Gary L. Swayze Vice President of FMR and of funds advised by FMR; and Tax-Free Fixed-Income Group Leader. Donald Taylor Vice President of FMR (1993) and of funds advised by FMR. Beth F. Terrana Senior Vice President of FMR (1993) and of funds advised by FMR. Joel Tillinghast Vice President of FMR (1993) and of a fund advised by FMR. Robert Tucket Vice President of FMR (1993). George A. Vanderheiden Senior Vice President of FMR; Vice President of funds advised by FMR; and Growth Group Leader. Jeffrey Vinik Senior Vice President of FMR (1993) and of a fund advised by FMR. Guy E. Wickwire Vice President of FMR and of a fund advised by FMR. Arthur S. Loring Senior Vice President (1993), Clerk and General Counsel of FMR; Vice President, Legal of FMR Corp.; and Secretary of funds advised by FMR.
(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. Charles F. Dornbush Treasurer of FMR U.K.; Treasurer of Fidelity Management & Research (Far East) Inc.; Treasurer of FMR Texas Inc., Senior Vice President and Chief Financial Officer of the Fidelity funds. 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). Charles F. Dornbush Treasurer of FMR Far East; Treasurer of Fidelity Management & Research (U.K.) Inc.; Treasurer of FMR Texas Inc.; Senior Vice President and Chief Financial Officer of the Fidelity funds. 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; Money Market Group Leader. Leland Barron Vice President of FMR Texas and of funds advised by FMR. Thomas D. Maher Vice President of FMR Texas. Burnell R. Stehman Vice President of FMR Texas and of funds advised by FMR. John J. Todd Vice President of FMR Texas and of funds advised by FMR. Sarah H. Zenoble Vice President of FMR Texas and of funds advised by FMR. Charles F. Dornbush Treasurer of FMR Texas; Treasurer of Fidelity Management & Research (U.K.) Inc.; Treasurer of Fidelity Management & Research (Far East) Inc.; Senior Vice President and Chief Financial Officer of the Fidelity funds. 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 and the following other funds: CrestFunds, Inc. The Victory Funds ARK Funds (b) Name and Principal Positions and Offices Positions and Offices Business Address* With Underwriter With Registrant Edward C. Johnson 3d Director Trustee and President Nita B. Kincaid Director None W. Humphrey Bogart Director None Kurt A. Lange President and Treasurer None William L. Adair Senior Vice President None Thomas W. Littauer Senior Vice President None Arthur S. Loring Vice President and Clerk Secretary * 82 Devonshire Street, Boston, MA (c) Not applicable. Item 30. Location of Accounts and Records All accounts, books, and other documents required to be maintained by Section 31a of the 1940 Act and the Rules promulgated thereunder are maintained by Fidelity Management & Research Company or Fidelity Service Co., 82 Devonshire Street, Boston, MA 02109, or the funds' respective custodian The Bank of New York, 110 Washington Street, New York, N.Y. and Brown Brothers Harriman & Co., 40 Water Street, Boston, MA. Item 32. Undertakings (a)The Registrant undertakes for Natural Gas Portfolio: 1) to call a meeting of shareholders for the purpose of voting upon the question of removal of a trustee or trustees, when requested to do so by record holders of not less than 10% of its outstanding shares; and 2) to assist in communications with other shareholders pursuant to Section 16(c)(1) and (2), whenever shareholders meeting the qualifications set forth in Section 16(c) seek the opportunity to communicate with other shareholders with a view toward requesting a meeting. (b)The Registrant on behalf of Fidelity Select Portfolios undertakes, provided the information required for the stock funds by Item 5A is contained in the annual report, to furnish each person to whom a prospectus has been delivered, upon their request and without charge, a copy of the Registrants latest annual report to shareholders. SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for the effectiveness of this Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Post-Effective Amendment No. 48 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the Commonwealth of Boston, and state of Massachusetts, on the 29th day of April 1994. 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)
/s/Edward C. Johnson 3d(dagger) President and Trustee April 29, 1994 Edward C. Johnson 3d (Principal Executive Officer)
/s/Gary L. French Treasurer April 29, 1994 Gary L. French /s/J. Gary Burkhead Trustee April 29, 1994 J. Gary Burkhead /s/Ralph F. Cox * Trustee April 29, 1994 Ralph F. Cox /s/Phyllis Burke Davis * Trustee April 29, 1994 Phyllis Burke Davis /s/Richard J. Flynn * Trustee April 29, 1994 Richard J. Flynn /s/E. Bradley Jones * Trustee April 29, 1994 E. Bradley Jones /s/Donald J. Kirk * Trustee April 29, 1994 Donald J. Kirk /s/Peter S. Lynch * Trustee April 29, 1994 Peter S. Lynch /s/Edward H. Malone * Trustee April 29, 1994 Edward H. Malone /s/Marvin L. Mann_____* Trustee April 29, 1994 Marvin L. Mann /s/Gerald C. McDonough* Trustee April 29, 1994 Gerald C. McDonough /s/Thomas R. Williams * Trustee April 29, 1994 Thomas R. Williams (dagger) Signatures affixed by J. Gary Burkhead pursuant to a power of attorney dated October 20, 1993 and filed herewith. * Signature affixed by Robert C. Hacker pursuant to a power of attorney dated October 20, 1993 and filed herewith. POWER OF ATTORNEY I, the undersigned Director, Trustee or General Partner, as the case may be, of the following investment companies:
Fidelity Advisor Series I Fidelity Investment Trust Fidelity Advisor Series III Fidelity Mt. Vernon Street Trust Fidelity Advisor Series IV Fidelity School Street Trust Fidelity Advisor Series VI Fidelity Select Portfolios Fidelity Advisor Series VIII Fidelity Sterling Performance Portfolio, L.P. Fidelity Beacon Street Trust Fidelity Trend Fund Fidelity Capital Trust Fidelity Union Street Trust Fidelity Commonwealth Trust Fidelity U.S. Investments-Bond Fund, L.P. Fidelity Contrafund Fidelity U.S. Investments-Government Securities Fidelity Deutsche Mark Performance Fund, L.P. Portfolio, L.P. Fidelity Yen Performance Portfolio, L.P. Fidelity Devonshire Trust 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 Fidelity Institutional Trust
plus any other investment company for which Fidelity Management & Research Company acts as investment adviser and for which the undersigned individual serves as a Board Member (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. Xupolos, each of them singly, my true and lawful attorneys-in-fact, with full power of substitution, and with full power to each of them, to sign for me and in my name in the appropriate 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 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 my hand on the date set forth below. /s/Phyllis Burke Davis October 20, 1993 Phyllis Burke Davis POWER OF ATTORNEY I, the undersigned Director, Trustee or General Partner, as the case may be, of the following investment companies:
Fidelity Advisor Series I Fidelity Investment Trust Fidelity Advisor Series III Fidelity Special Situations Fund Fidelity Advisor Series IV Fidelity Sterling Performance Portfolio, L.P. Fidelity Advisor Series VI Fidelity Trend Fund Fidelity Advisor Series VII Fidelity U.S. Investments-Bond Fund, L.P. Fidelity Advisor Series VIII Fidelity U.S. Investments-Government Securities Fidelity Contrafund Fund, L.P. Fidelity Deutsche Mark Performance Fidelity Yen Performance Portfolio, L.P. Portfolio, L.P. Spartan U.S. Treasury Money Market Fidelity Fixed-Income Trust Fund Fidelity Government Securities Fund Variable Insurance Products Fund Fidelity Hastings Street Trust Variable Insurance Products Fund II Fidelity Institutional Trust
plus any other investment company for which Fidelity Management & Research Company acts as investment adviser and for which the undersigned individual serves as a Board Member (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. Xupolos, each of them singly, my true and lawful attorneys-in-fact, with full power of substitution, and with full power to each of them, to sign for me and in my name in the appropriate 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 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 my hand on the date set forth below. /s/Marvin L. Mann October 20, 1993 Marvin L. Mann POWER OF ATTORNEY I, the undersigned Director, Trustee or General Partner, as the case may be, of the following investment companies:
Fidelity Advisor Series I Fidelity Magellan Fund Fidelity Advisor Series III Fidelity Massachusetts Municipal Trust Fidelity Advisor Series IV Fidelity Money Market Trust Fidelity Advisor Series VI Fidelity Mt. Vernon Street Trust Fidelity Advisor Series VIII Fidelity New York Municipal Trust Fidelity California Municipal Trust Fidelity Puritan Trust Fidelity Capital Trust Fidelity School Street Trust 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 Deutsche Mark Performance Fidelity Union Street Trust Portfolio, L.P. Fidelity U.S. Investments-Bond Fund, L.P. Fidelity Devonshire Trust Fidelity U.S. Investments-Government Securities Fidelity Financial Trust Fund, L.P. Fidelity Fixed-Income Trust Fidelity Yen Performance Portfolio, L.P. Fidelity Government Securities Fund Spartan U.S. Treasury Money Market Fidelity Hastings Street Trust Fund Fidelity Income Fund Variable Insurance Products Fund Fidelity Institutional Trust Variable Insurance Products Fund II Fidelity Investment Trust
plus any other investment company for which Fidelity Management & Research Company acts as investment adviser and for which the undersigned individual serves as a Board Member (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. Xupolos, each of them singly, my true and lawful attorneys-in-fact, with full power of substitution, and with full power to each of them, to sign for me and in my name in the appropriate 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 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 my hand on the date set forth below. /s/Ralph F. Cox October 20, 1993 Ralph F. Cox POWER OF ATTORNEY I, the undersigned President and Director, Trustee or General Partner, as the case may be, of the following investment companies:
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 Money Market Trust Fidelity Advisor Series VI Fidelity Mt. Vernon Street Trust Fidelity Advisor Series VII Fidelity Municipal Trust Fidelity Advisor Series VIII Fidelity New York Municipal Trust Fidelity California Municipal Trust Fidelity Puritan Trust Fidelity Capital Trust Fidelity School Street Trust Fidelity Charles Street Trust Fidelity Securities Fund Fidelity Commonwealth Trust Fidelity Select Portfolios Fidelity Congress Street Fund Fidelity Sterling Performance Portfolio, L.P. Fidelity Contrafund Fidelity Summer Street Trust Fidelity Corporate Trust Fidelity Trend Fund Fidelity Court Street Trust Fidelity U.S. Investments-Bond Fund, L.P. Fidelity Destiny Portfolios 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 Fidelity Income Fund
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 October 20, 1993 Edward C. Johnson 3d POWER OF ATTORNEY We, the undersigned Directors, Trustees or General Partners, as the case may be, of the following investment companies:
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 Money Market Trust Fidelity Advisor Series VI Fidelity Mt. Vernon Street Trust Fidelity Advisor Series VII Fidelity Municipal Trust Fidelity Advisor Series VIII Fidelity New York Municipal Trust Fidelity California Municipal Trust Fidelity Puritan Trust Fidelity Capital Trust Fidelity School Street Trust Fidelity Charles Street Trust Fidelity Securities Fund Fidelity Commonwealth Trust Fidelity Select Portfolios Fidelity Congress Street Fund Fidelity Sterling Performance Portfolio, L.P. Fidelity Contrafund Fidelity Summer Street Trust Fidelity Corporate Trust Fidelity Trend Fund Fidelity Court Street Trust Fidelity U.S. Investments-Bond Fund, L.P. Fidelity Destiny Portfolios 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 Fidelity Income Fund
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. Xupolos, 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 twentieth day of October, 1993. /s/Edward C. Johnson 3d /s/Peter S. Lynch Edward C. Johnson 3d Peter S. Lynch /s/J. Gary Burkhead /s/Edward H. Malone J. Gary Burkhead 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 /s/Donald J. Kirk Donald J. Kirk EX-99.B1 2 EXHIBIT 1(A) AMENDED AND RESTATED DECLARATION OF TRUST Dated April 14, 1994 AMENDED AND RESTATED DECLARATION OF TRUST, made April 14, 1994 by each of the Trustees whose signature is affixed hereto (the "Trustees") WHEREAS, the Trustees desire to amend and restate this Declaration of Trust for the sole purpose of supplementing the Declaration to incorporate amendments duly adopted; and WHEREAS, this Trust was initially made on November 20, 1980 by Richard M. Reilly 3d, Caleb Loring and Frank Nesvet inorder to establish a trust fund for the investment and reinvestment of funds contributed thereto; NOW, THEREFORE, the Trustees declare that all money and property contributed to the trust fund hereunder shall be held and managed in Trust under this Amended and Restated Declaration of Trust as herein set forth below. ARTICLE I NAME AND DEFINITIONS NAME Section 1. This Trust shall be known as "Fidelity Select Portfolios." DEFINITIONS Section 2. Wherever used herein, unless otherwise required by the context or specifically provided: (a) The Terms "Affiliated Person," "Assignment," "Commission," "Interested Person," "Majority Shareholder Vote" (the 67% or 50% requirement of the third sentence of Section 2(a)(42) of the 1940 Act, whichever may be applicable) and "Principal Underwriter" shall have the meanings given them in the 1940 Act, as amended from time to time; (b) The "Trust" refers to Fidelity Select Portfolios and reference to the Trust, when applicable to one or more Series of the Trust, shall refer to any such Series; (c) "Net Asset Value" means the net asset value of each Series of the Trust determined in the manner provided in Article X, Section 3; (d) "Shareholder" means a record owner of Shares of the Trust; (e) The "Trustees" refer to the individual trustees in their capacity as trustees hereunder of the Trust and their successor or successors for the time being in office as such trustee or trustees; (f) "Shares" means the equal proportionate transferable units of interest into which the beneficial interest of the Trust or each Series shall be divided from time to time, including such class or classes of Shares as the Trustees may from time to time create and establish and including fractions of Shares as well as whole shares consistent with the requirements of Federal and/or state securities laws; (g) The "1940 Act" refers to the Investment Company Act of 1940, as amended from time to time; and (h) "Series" refers to series of Shares of the Trust established in accordance with the provisions of Article III. ARTICLE II PURPOSE OF TRUST The purpose of this Trust is to provide investors a continuous source of managed investment in securities. ARTICLE III BENEFICIAL INTEREST SHARES OF BENEFICIAL INTEREST Section 1. The beneficial interest in the Trust shall be divided into such transferable Shares of one or more separate and distinct Series or classes as the Trustees shall from time to time create and establish. The number of Shares is unlimited and each Share shall be without par value and shall be fully paid and nonassessable. The Trustees shall have full power and authority, in their sole discretion and without obtaining any prior authorization or vote of the Shareholders or any Series or class of Shareholders of the Trust, to create and establish (and to change in any manner) Shares or any classes thereof with such preferences, voting powers, rights and privileges as the Trustees may from time to time determine, to divide or combine the Shares or any Series or classes thereof into a greater or lesser number, to classify or reclassify any issued Shares or any Series or classes thereof into one or more Series or classes of Shares, to abolish any one or more Series or classes of Shares, and to take such other action with respect to the Shares as the Trustees may deem desirable. ESTABLISHMENT OF SERIES Section 2. The establishment of any Series shall be effective upon the adoption of a resolution by a majority of the then Trustees setting forth such establishment and designation and the relative rights and preferences of the Shares of such Series. At any time that there are no Shares outstanding of any particular Series previously established and designated, the Trustees may by a majority vote abolish that Series and the establishment and designation thereof. OWNERSHIP OF SHARES Section 3. The ownership of Shares shall be recorded in the books of the Trust. The Trustees may make such rules as they consider appropriate for the transfer of Shares and similar matters. The record books of the Trust shall be conclusive as to who are the holders of Shares and as to the number of Shares held from time to time by each Shareholder. INVESTMENT IN THE TRUST Section 4. The Trustees shall accept investments in the Trust from such persons and on such terms as they may from time to time authorize. Such investments may be in the form of cash or securities in which the appropriate Series is authorized to invest, valued as provided in Article X, Section 3. After the date of the initial contribution of capital, the number of Shares to represent the initial contribution may in the Trustees' discretion be considered as outstanding and the amount received by the Trustees on account of the contribution shall be treated as an asset of the Trust. Subsequent investments in the Trust shall be credited to each Shareholder's account in the form of full Shares at the Net Asset Value per Share next determined after the investment is received; provided, however, that the Trustees may, in their sole discretion, (a) impose a sales charge upon investments in the Trust and (b) issue fractional Shares. ASSETS AND LIABILITIES OF SERIES Section 5. All consideration received by the Trust for the issue or sale of Shares of a particular Series, together with all assets in which such consideration is invested or reinvested, all income, earnings, profits, and proceeds thereof, including any proceeds derived from the sale, exchange or liquidation of such assets, and any funds or payments derived from any reinvestment of such proceeds in whatever form the same may be, shall be referred to as "assets belonging to" that Series. In addition any assets, income, earnings, profits, and proceeds thereof, funds, or payments which are not readily identifiable as belonging to any particular Series, shall be allocated by the Trustees between and among one or more of the Series in such manner as they, in their sole discretion, deem fair and equitable. Each such allocation shall be conclusive and binding upon the Shareholders of all Series for all purposes, and shall be referred to as assets belonging to that Series. The assets belonging to a particular Series shall be so recorded upon the books of the Trust, and shall be held by the Trustees in Trust for the benefit of the holders of Shares of that Series. The assets belonging to each particular Series shall be charged with the liabilities of that Series and all expenses, costs, charges and reserves attributable to that Series. Any general liabilities, expenses, costs, charges or reserves of the Trust which are not readily identifiable as belonging to any particular Series shall be allocated and charged by the Trustees between or among any one or more of the Series in such manner as the Trustees in their sole discretion deem fair and equitable. Each such allocation shall be conclusive and binding upon the Shareholders of all Series for all purposes. Any creditor of any Series may look only to the assets of that Series to satisfy such creditor's debt. NO PREEMPTIVE RIGHTS Section 6. Shareholders shall have no preemptive or other right to subscribe to any additional Shares or other securities issued by the Trust or the Trustees. LIMITATION OF PERSONAL LIABILITY Section 7. The Trustees shall have no power to bind any Shareholder personally or to call upon Any shareholder for the payment of any sum of money or assessment whatsoever other than such as the Shareholder may at any time personally agree to pay by way of subscription for any Shares or otherwise. Every note, bond, contract or other undertaking issued by or on behalf of the Trust or the Trustees relating to the Trust shall include a recitation limiting the obligation represented thereby to the Trust and its assets (but the omission of such a recitation shall not operate to bind any Shareholder). ARTICLE IV THE TRUSTEES MANAGEMENT OF THE TRUST Section 1. The business and affairs of the Trust shall be managed by the Trustees, and they shall have all powers necessary and desirable to carry out that responsibility. ELECTION: INITIAL TRUSTEES Section 2. On a date fixed by the Trustees, the Shareholders shall elect not less than three Trustees. A trustee shall not be required to be a Shareholder of the Trust. The initial Trustees who shall serve until such election and until their successors are elected and qualified shall be Richard M. Reilly 3d, Caleb Loring, Jr. and Frank Nesvet and such other individuals as the Board of Trustees shall appoint pursuant to Section 4 of this Article IV. TERM OF OFFICE OF TRUSTEES Section 3. The Trustees shall hold office during the lifetime of this Trust, and until its termination as hereinafter provided; except (a) that any Trustee may resign his trust by written instrument signed by him and delivered to the other Trustees, which shall take effect upon such delivery or upon such later date as is specified therein; (b) that any Trustee may be removed at any time by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal, specifying the date when such removal shall become effective; (c) that any Trustee who requests in writing to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees, specifying the date of his retirement; and (d) a Trustee may be removed at any Special Meeting of the Trust by a vote of two-thirds of the outstanding Shares. RESIGNATION AND APPOINTMENT OF TRUSTEES Section 4. In case of the declination, death, resignation, retirement, removal, incapacity, or inability of any of the Trustees, or in case a vacancy shall, by reason of an increase in number, or for any other reason, exist, the remaining Trustees shall fill such vacancy by appointing such other person as they in their discretion shall see fit consistent with the limitations under the 1940 Act. Such appointment shall be evidenced by a written instrument signed by a majority of the Trustees in office or by recording in the records of the Trust, whereupon the appointment shall take effect. An appointment of a Trustee may be made by the Trustees then in office in anticipation of a vacancy to occur by reason of retirement, resignation or increase in number of Trustees effective at a later date, provided that said appointment shall become effective only at or after the effective date of said retirement, resignation or increase in number of Trustees. As soon as any Trustee so appointed shall have accepted this trust, the trust estate shall vest in the new Trustee or Trustees, together with the continuing Trustees, without any further act or conveyance, and he shall be deemed a Trustee hereunder. The power of appointment is subject to the provisions of Section 16(a) of the 1940 Act. TEMPORARY ABSENCE OF TRUSTEE Section 5. Any Trustee may, by power of attorney, delegate his power for a period not exceeding six months at any one time to any other Trustee or Trustees, provided that in no case shall less than two Trustees personally exercise the other powers hereunder except as herein otherwise expressly provided. NUMBER OF TRUSTEES Section 6. The number of Trustees, not less than three (3) nor more than twelve (12), serving hereunder at any time shall be determined by the Trustees themselves. Whenever a vacancy in the Board of Trustees shall occur, until such vacancy is filled, or while any Trustee is absent from the Commonwealth of Massachusetts or, if not a domiciliary of Massachusetts, is absent from his state of domicile, or is physically or mentally incapacitated by reason of disease or otherwise, the other Trustees shall have all the powers hereunder and the certificate of the other Trustees of such vacancy, absence or incapacity, shall be conclusive, provided, however, that no vacancy shall remain unfilled for a period longer than six calendar months. EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE Section 7. The death, declination, resignation, retirement, removal, incapacity, or inability of the Trustees, or any one of them, shall not operate to annul the Trust or to revoke any existing agency created pursuant to the terms of this Declaration of Trust. OWNERSHIP OF ASSETS OF THE TRUST Section 8. The assets of the Trust shall be held separate and apart from any assets now or hereafter held in any capacity other than as Trustee hereunder by the Trustees or any successor Trustees. All of the assets of the Trust shall at all times be considered as vested in the Trustees. No Shareholder shall be deemed to have a severable ownership in any individual asset of the Trust or any right of partition or possession thereof, but each Shareholder shall have a proportionate undivided beneficial interest in the Trust. ARTICLE V POWERS OF THE TRUSTEES POWERS Section 1. The Trustees in all instances shall act as principals, and are and shall be free from the control of the Shareholders. The Trustees shall have full power and authority to do any and all acts and to make and execute any and all contracts and instruments that they may consider necessary or appropriate in connection with the management of the Trust. The Trustees shall not in any way be bound or limited by present or future laws or customs in regard to trust investments, but shall have full authority and power to make any and all investments which they, in their uncontrolled discretion, shall deem proper to accomplish the purpose of this Trust. Subject to any applicable limitation in the Declaration of Trust or the Bylaws of the Trust, the Trustees shall have power and authority: (a) To invest and reinvest cash and other property, and to hold cash or other property uninvested, without in any event being bound or limited by any present or future law or custom in regard to investments by Trustees, and to sell, exchange, lend, pledge, mortgage, hypothecate, write options on and lease any or all of the assets of the Trust. (b) To adopt Bylaws not inconsistent with this Declaration of Trust providing for the conduct of the business of the Trust and to amend and repeal them to the extent that they do not reserve that right to the Shareholders. (c) To elect and remove such officers and appoint and terminate such agents as they consider appropriate. (d) To employ a bank or trust company as custodian of any assets of the Trust subject to any conditions set forth in this Declaration of Trust or in the Bylaws, if any. (e) To retain a transfer agent and Shareholder servicing agent, or both. (f) To provide for the distribution of interests of the Trust either through a principal underwriter in the manner hereinafter provided for or by the Trust itself, or both. (g) To set record dates in the manner hereinafter provided for. (h) To delegate such authority as they consider desirable to any officers of the Trust and to any agent, custodian or underwriter. (i) To sell or exchange any or all of the assets of the Trust, subject to the provisions of Article XII, Section 4(b) hereof. (j) To vote or give assent, or exercise any rights of ownership, with respect to stock or other securities or property; and to execute and deliver powers of attorney to such person or persons as the Trustees shall deem proper, granting to such person or persons such power and discretion with relation to securities or property as the Trustees shall deem proper. (k) To exercise powers and rights of subscription or otherwise which in any manner arise out of ownership of securities. (l) To hold any security or property in a form not indicating any trust, whether in bearer, unregistered or other negotiable form; or either in its own name or in the name of a custodian or a nominee or nominees, subject in either case to proper safeguards according to the usual practice of Massachusetts trust companies or investment companies. (m) To establish separate and distinct Series with separately defined investment objectives and policies and distinct investment purposes in accordance with the provisions of Article III. (n) To allocate assets, liabilities and expenses of the Trust to a particular Series or to apportion the same between or among two or more Series, provided that any liabilities or expenses incurred by a particular Series shall be payable solely out of the assets belonging to that Series as provided for in Article III. (o) To consent to or participate in any plan for the reorganization, consolidation or merger of any corporation or concern, any security of which is held in the Trust; to consent to any contract, lease, mortgage, purchase, or sale of property by such corporation or concern, and to pay calls or subscriptions with respect to any security held in the Trust. (p) To compromise, arbitrate, or otherwise adjust claims in favor of or against the Trust or any matter in controversy including, but not limited to, claims for taxes. (q) To make distributions of income and of capital gains to Shareholders in the manner hereinafter provided for. (r) To borrow money and to pledge, mortgage and hypothecate the assets of the Trust, subject to applicable requirements of the 1940 Act. (s) To establish, from time to time, a minimum total investment for Shareholders, and to require the redemption of the Shares of any Shareholders whose investment is less than such minimum upon giving notice to such Shareholder. (t) Notwithstanding any other provision hereof, to invest all of the assets of any Series in a single open-end investment company, including investment by means of transfer of such assets in exchange for an interest or interests in such investment company; No one dealing with the Trustees shall be under any obligation to make any inquiry concerning the authority of the Trustees, or to see to the application of any payments made or property transferred to the Trustees or upon their order. TRUSTEES AND OFFICERS AS SHAREHOLDERS Section 2. Any Trustee, officer or other agent of the Trust may acquire, own and dispose of Shares to the same extent as if he were not a Trustee, officer or agent; and the Trustees may issue and sell or cause to be issued and sold Shares to and buy such Shares from any such person of any firm or company in which he is interested, subject only to the general limitations herein contained as to the sale and purchase of such Shares; and all subject to any restrictions which may be contained in the Bylaws. ACTION BY THE TRUSTEES Section 3. The Trustees shall act by majority vote at a meeting duly called or by unanimous written consent without a meeting or by telephone consent provided a quorum of Trustees participate in any such telephonic meeting, unless the 1940 Act requires that a particular action be taken only at a meeting of the Trustees. At any meeting of the Trustees, a majority of the Trustees shall constitute a quorum. Meetings of the Trustees may be called orally or in writing by the Chairman of the Trustees or by any two other Trustees. Notice of the time, date and place of all meetings of the Trustees shall be given by the party calling the meeting to each Trustee by telephone or telegram sent to his home or business address at least twenty-four hours in advance of the meeting or by written notice mailed to his home or business address at least seventy-two hours in advance of the meeting. Notice need not be given to any Trustee who attends the meeting without objecting to the lack of notice or who executes a written waiver of notice with respect to the meeting. Subject to the requirements of the 1940 Act, the Trustees by majority vote may delegate to any one of their number their authority to approve particular matters or take particular actions on behalf of the Trust. CHAIRMAN OF THE TRUSTEES Section 4. The Trustees may appoint one of their number to be Chairman of the Board of Trustees. The Chairman shall preside at all meetings of the Trustees, shall be responsible for the execution of policies established by the Trustees and the administration of the Trust, and may be the chief executive, financial and accounting officer of the Trust. ARTICLE VI EXPENSES OF THE TRUST TRUSTEE REIMBURSEMENT Section 1. Subject to the provisions of Article III, Section 5, the Trustees shall be reimbursed from the Trust estate or the assets belonging to the appropriate Series for their expenses and disbursements, including, without limitation, fees and expenses of Trustees who are not Interested Persons of the Trust, interest expense, taxes, fees and commissions of every kind, expenses of pricing Trust portfolio securities, expenses of issue, repurchase and redemption of shares including expenses attributable to a program of periodic repurchases or redemptions, expenses of registering and qualifying the Trust and its Shares under Federal and State laws and regulations, charges of custodians, transfer agents, and registrars, expenses of preparing and setting up in type Prospectuses and Statements of Additional Information, expenses of printing and distributing Prospectuses sent to existing Shareholders, auditing and legal expenses, reports to Shareholders, expenses of meetings of Shareholders and proxy solicitations therefore, insurance expense, association membership dues and for such non-recurring items as may arise, including litigation to which the Trust is a party, and for all losses and liabilities by them incurred in administering the Trust, and for the payment of such expenses, disbursements, losses and liabilities the Trustees shall have a lien on the assets belonging to the appropriate Series prior to any rights or interests of the Shareholders thereto. This section shall not preclude the Trust from directly paying any of the aforementioned fees and expenses. ARTICLE VII INVESTMENT ADVISER, PRINCIPAL UNDERWRITER AND TRANSFER AGENT INVESTMENT ADVISER Section 1. Subject to a Majority Shareholder Vote, the Trustees may in their discretion from time to time enter into an investment advisory or management contract(s) with respect to the Trust or any Series thereof whereby the other party(ies) to such contract(s) shall undertake to furnish the Trustees such management, investment advisory, statistical and research facilities and services and such other facilities and services, if any, and all upon such terms and conditions, as the Trustees may in their discretion determine. Notwithstanding any provisions of this Declaration of Trust, the Trustees may authorize the investment adviser(s) (subject to such general or specific instructions as the Trustees may from time to time adopt) to effect purchases, sales or exchanges of portfolio securities and other investment instruments of the Trust on behalf of the Trustees or may authorize any officer, agent, or Trustee to effect such purchases, sales or exchanges pursuant to recommendations of the investment adviser (and all without further action by the Trustees). Any such purchases, sales and exchanges shall be deemed to have been authorized by all of the Trustees. The Trustees may, subject to applicable requirements of the 1940 Act, including those relating to Shareholder approval, authorize the investment adviser to employ one or more sub-advisers from time to time to perform such of the acts and services of the investment adviser, and upon such terms and conditions, as may be agreed upon between the investment adviser and sub-adviser. PRINCIPAL UNDERWRITER Section 2. The Trustees may in their discretion from time to time enter into (a) contract(s) providing for the sale of the Shares whereby the Trust may either agree to sell the Shares to the other party to the contract or appoint such other party its sales agent for such Shares. In either case, the contract shall be on such terms and conditions as may be prescribed in the Bylaws, if any, and such further terms and conditions as the Trustees may in their discretion determine not inconsistent with the provisions of this Article VII, or of the Bylaws, if any; and such contract may also provide for the repurchase or sale of Shares by such other party as principal or as agent of the Trust. TRANSFER AGENT Section 3. The Trustees may in their discretion from time to time enter into a transfer agency and Shareholder service contract whereby the other party shall undertake to furnish the Trustees with transfer agency and Shareholder services. The contract shall be on such terms and conditions as the Trustees may in their discretion determine not inconsistent with the provisions of this Declaration of Trust or of the Bylaws, if any. Such services may be provided by one or more entities. PARTIES TO CONTRACT Section 4. Any contract of the character described in Sections 1, 2 and 3 of this Article VII or in Article IX hereof may be entered into with any corporation, firm, partnership, trust or association, although one or more of the Trustees or officers of the Trust may be an officer, director, trustee, shareholder, or member of such other party to the contract, and no such contract shall be invalidated or rendered voidable by reason of the existence of any relationship, nor shall any person holding such relationship be liable merely by reason of such relationship for any loss or expense to the Trust under or by reason of said contract or accountable for any profit realized directly or indirectly therefrom, provided that the contract when entered into was reasonable and fair and not inconsistent with the provisions of this Article VII or the Bylaws, if any. The same person (including a firm, corporation, partnership, trust, or association) may be the other party to contracts entered into pursuant to Sections 1, 2 and 3 above or Article IX, and any individual may be financially interested or otherwise affiliated with persons who are parties to any or all of the contracts mentioned in this Section 4. PROVISIONS AND AMENDMENTS Section 5. Any contract entered into pursuant to Sections 1 and 2 of this Article VII shall be consistent with and subject to the requirements of Section 15 of the 1940 Act (including any amendments thereof or other applicable Act of Congress hereafter enacted) with respect to its continuance in effect, its termination, and the method of authorization and approval of such contract or renewal thereof, and no amendment to any contract, entered into pursuant to Section 1 shall be effective unless assented to by a Majority Shareholder Vote. ARTICLE VIII SHAREHOLDERS' VOTING POWERS AND MEETINGS VOTING POWERS Section 1. The Shareholders shall have power to vote (i) for the election of Trustees as provided in Article IV, Section 2, (ii) for the removal of Trustees as provided in Article IV, Section 3(d), (iii) with respect to any investment advisory or management contract as provided in Article VII, Sections 1 and 5, (iv) with respect to the amendment of this Declaration of Trust as provided in Article XII, Section 7, (v) to the same extent as the shareholders of a Massachusetts business corporation, as to whether or not a court action, proceeding or claim should be brought or maintained derivatively or as a class action on behalf of the Trust or the Shareholders, provided, however, that a Shareholder of a particular Series shall not be entitled to bring any derivative or class action on behalf of any other Series of the Trust, and (vi) with respect to such additional matters relating to the Trust as may be required or authorized by law, by this Declaration of Trust, or the Bylaws of the Trust, if any, or any registration of the Trust with the Securities and Exchange Commission (the "Commission") or any State, as the Trustees may consider desirable. On any matter submitted to a vote of the Shareholders, all shares shall be voted by individual Series, except (i) when required by the 1940 Act, Shares shall be voted in the aggregate and not by individual Series; and (ii) when the Trustees have determined that the matter affects only the interests of one or more Series, then only the Shareholders of such Series shall be entitled to vote thereon. A shareholder of each Series shall be entitled to vote for each dollar of net asset value (number of shares owned times net asset value per share) of such Series, on any matter on which such shareholder is entitled to vote and each fractional dollar amount shall be entitled to a proportionate fractional vote). There shall be no cumulative voting in the election of Trustees. Shares may be voted in person or by proxy. Until Shares are issued, the Trustees may exercise all rights of Shareholders and may take any action required or permitted by law, this Declaration of Trust or any Bylaws of the Trust to be taken by Shareholders. MEETINGS Section 2. The first Shareholders' meeting shall be held as specified in Section 2 of Article IV at the principal office of the Trust or such other place as the Trustees may designate. Special meetings of the Shareholders of any Series may be called by the Trustees and shall be called by the Trustees upon the written request of Shareholders owning at least one-tenth of the outstanding Shares entitled to vote. Whenever ten or more Shareholders meeting the qualifications set forth in Section 16(c) of the 1940 Act, as the same may be amended from time to time, seek the opportunity of furnishing materials to the other Shareholders with a view to obtaining signatures on such a request for a meeting, the Trustees shall comply with the provisions of said Section 16(c) with respect to providing such Shareholders access to the list of the Shareholders of record of the Trust or the mailing of such materials to such Shareholders of record. Shareholders shall be entitled to at least fifteen days' notice of any meeting. QUORUM AND REQUIRED VOTE Section 3. A majority of Shares entitled to vote in person or by proxy shall be a quorum for the transaction of business at a Shareholders' meeting, except that where any provision of law or of this Declaration of Trust permits or requires that holders of any Series shall vote as a Series then a majority of the aggregate number of Shares of that Series entitled to vote shall be necessary to constitute a quorum for the transaction of business by that Series. Any lesser number shall be sufficient for adjournments. Any adjourned session or sessions may be held, within a reasonable time after the date set for the original meeting, without the necessity of further notice. Except when a larger vote is required by any provision of this Declaration of Trust or the Bylaws, a majority of the Shares voted in person or by proxy shall decide any questions and a plurality shall elect a Trustee, provided that where any provision of law or of this Declaration of Trust permits or requires that the holders of any Series shall vote as a Series, then a majority of the Shares of that Series voted on the matter shall decide that matter insofar as that Series is concerned. ARTICLE IX CUSTODIAN APPOINTMENT AND DUTIES Section 1. The Trustees shall at all times employ a bank or trust company having capital, surplus and undivided profits of at least two million dollars ($2,000,000), or such other amount or such other entity as shall be allowed by the Commission or by the 1940 Act, as custodian with authority as its agent, but subject to such restrictions, limitations and other requirements, if any, as may be contained in the Bylaws of the Trust: (1) to hold the securities owned by the Trust and deliver the same upon written order or oral order, if confirmed in writing, or by such electro-mechanical or electronic devices as are agreed to by the Trust and the custodian, if such procedures have been authorized in writing by the Trust; (2) to receive and receipt for any moneys due to the Trust and deposit the same in its own banking department or elsewhere as the Trustees may direct; and (3) to disburse such funds upon orders or vouchers; and the Trust may also employ such custodian as its agent: (1) to keep the books and accounts of the Trust and furnish clerical and accounting services; and (2) to compute, if authorized to do so by the Trustees, the Net Asset Value of any Series in accordance with the provisions hereof; all upon such basis of compensation as may be agreed upon between the Trustees and the custodian. If so directed by a Majority Shareholder Vote, the custodian shall deliver and pay over all property of the Trust held by it as specified in such vote. The Trustees may also authorize the custodian to employ one or more sub-custodians from time to time to perform such of the acts and services of the custodian, and upon such terms and conditions, as may be agreed upon between the custodian and such sub-custodian and approved by the Trustees, provided that in every case such sub-custodian shall be a bank or trust company organized under the laws of the United States or one of the states thereof and having capital, surplus and undivided profits of at least two million dollars ($2,000,000) or such other person as may be permitted by the Commission, or otherwise in accordance with the 1940 Act as from time to time amended. CENTRAL CERTIFICATE SYSTEM Section 2. Subject to such rules, regulations and orders as the Commission may adopt, the Trustees may direct the custodian to deposit all or any part of the securities owned by the Trust in a system for the central handling of securities established by a national securities exchange or a national securities association registered with the Commission under the Securities Exchange Act of 1934, or such other person as may be permitted by the Commission, or otherwise in accordance with the 1940 Act as from time to time amended, pursuant to which system all securities of any particular class or series of any issuer deposited within the system are treated as fungible and may be transferred or pledged by bookkeeping entry without physical delivery of such securities, provided that all such deposits shall be subject to withdrawal only upon the order of the Trust. ARTICLE X DISTRIBUTIONS AND REDEMPTIONS DISTRIBUTIONS Section 1. (a) The Trustees may from time to time declare and pay dividends. The amount of such dividends and the payment of them shall be wholly in the discretion of the Trustees. (b) The Trustees shall have power, to the fullest extent permitted by the laws of Massachusetts, at any time to declare and cause to be paid dividends on Shares of a particular Series, from the assets belonging to that Series, which dividends, at the election of the Trustees, may be paid daily or otherwise pursuant to a standing resolution or resolutions adopted only once or with such frequency as the Trustees may determine, and may be payable in Shares of that Series at the election of each Shareholder of that Series. (c) Anything in this instrument to the contrary notwithstanding, the Trustees may at any time declare and distribute pro rata among the Shareholders of a particular Series as of the record date of that Series fixed as provided in Section 3 hereof a "stock dividend." REDEMPTIONS Section 2. In case any holder of record of Shares of a particular Series desires to dispose of his Shares, he may deposit at the office of the transfer agent or other authorized agent of that Series a written request or such other form of request as the Trustees may from time to time authorize, requesting that the Series purchase the Shares in accordance with this Section 2; and the Shareholder so requesting shall be entitled to require the Series to purchase, and the Series or the principal underwriter of the Series shall purchase his said Shares, but only at the Net Asset Value thereof (as described in Section 3 hereof). The Series shall make payment for any such Shares to be redeemed, as aforesaid, in cash or property from the assets of that Series and payment for such Shares shall be made by the Series or the principal underwriter of the Series to the Shareholder of record within seven (7) days after the date upon which the request is effective. DETERMINATION OF NET ASSET VALUE AND VALUATION OF PORTFOLIO ASSETS Section 3. The term "Net Asset Value" of any Series shall mean that amount by which the assets of that Series, exceed its liabilities, all as determined by or under the direction of the Trustees. Such value per Share shall be determined separately for each Series of Shares and shall be determined on such days and at such times as the Trustees may determine. Such determination shall be made with respect to securities for which market quotations are readily available, at the market value of such securities; and with respect to other securities and assets, at the fair value as determined in good faith by the Trustees, provided, however, that the Trustees, without Shareholder approval, may alter the method of appraising portfolio securities insofar as permitted under the 1940 Act and the rules, regulations and interpretations thereof promulgated or issued by the Commission or insofar as permitted by any Order of the Commission applicable to the Series. The Trustees may delegate any of its powers and duties under this Section 3 with respect to appraisal of assets and liabilities. At any time the Trustees may cause the value par Share last determined to be determined again in similar manner and may fix the time when such redetermined value shall become effective. SUSPENSION OF THE RIGHT OF REDEMPTION Section 4. The Trustees may declare a suspension of the right of redemption or postpone the date of payment as permitted under the 1940 Act. Such suspension shall take effect at such time as the Trustees shall specify but not later than the close of business on the business day next following the declaration of suspension, and thereafter there shall be no right of redemption or payment until the Trustees shall declare the suspension at an end. In the case of a suspension of the right of redemption, a Shareholder may either withdraw his request for redemption or receive payment based on the Net Asset Value per Share existing after the termination of the suspension. ARTICLE XI LIMITATION OF LIABILITY AND INDEMNIFICATION LIMITATION OF LIABILITY Section 1. Provided they have exercised reasonable care and have acted under the reasonable belief that their actions are in the best interest of the Trust, the Trustees shall not be responsible for or liable in any event for neglect or wrongdoing of them or any officer, agent, employee or investment adviser of the Trust, but nothing contained herein shall protect any Trustee against any liability to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office. INDEMNIFICATION Section 2. (a) Subject to the exceptions and limitations contained in Section (b) below: (i) every person who is, or has been, a Trustee or officer of the Trust (hereinafter referred to as "Covered Person") shall be indemnified by the appropriate Series to the fullest extent permitted by law against liability and against all expenses reasonably incurred or paid by him in connection with any claim, action, suit or proceeding in which he becomes involved as a party or otherwise by virtue of his being or having been a Trustee or officer and against amounts paid or incurred by him in the settlement thereof; (ii) the words "claim," "action," "suit," or "proceeding" shall apply to all claims, actions, suits or proceedings (civil, criminal or other, including appeals), actual or threatened while in office or thereafter, and the words "liability" and "expenses" shall include, without limitation, attorneys' fees, costs, judgments, amounts paid in settlement, fines, penalties and other liabilities. (b) No indemnification shall be provided hereunder to a Covered Person: (i) who shall have been adjudicated by a court or body before which the proceeding was brought (A) to be liable to the Trust or its Shareholders by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office or (B) not to have acted in good faith in the reasonable belief that his action was in the best interest of the Trust; or (ii) in the event of a settlement, unless there has been a determination that such Trustee or officer did not engage in willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office, (A) by the court or other body approving the settlement; (B) by at least a majority of those Trustees who are neither interested persons of the Trust nor are parties to the matter based upon a review of readily available facts (as opposed to a full trial-type inquiry); or (C) by written opinion of independent legal counsel based upon a review of readily available facts (as opposed to a full trial-type inquiry); provided, however, that any Shareholder may, by appropriate legal proceedings, challenge any such determination by the Trustees, or by independent counsel. (c) The rights of indemnification herein provided may be insured against by policies maintained by the Trust, shall be severable, shall not be exclusive of or affect any other rights to which any Covered Person may now or hereafter be entitled, shall continue as to a person who has ceased to be such Trustee or officer and shall inure to the benefit of the heirs, executors and administrators of such a person. Nothing contained herein shall affect any rights to indemnification to which Trust personnel, other than Trustees and officers, and other persons may be entitled by contract or otherwise under law. (d) Expenses in connection with the preparation and presentation of a defense to any claim, action, suit or proceeding of the character described in paragraph (a) of this Section 2 may be paid by the applicable Series from time to time prior to final disposition thereof upon receipt of an undertaking by or on behalf of such Covered Person that such amount will be paid over by him to the applicable Series if it is ultimately determined that he is not entitled to indemnification under this Section 2; provided, however, that either (a) such Covered Person shall have provided appropriate security for such undertaking, (b) the Trust is insured against losses arising out of any such advance payments or (c) either a majority of the Trustees who are neither interested persons of the Trust nor parties to the matter, or independent legal counsel in a written opinion, shall have determined, based upon a review of readily available facts (as opposed to a trial-type inquiry or full investigation), that there is reason to believe that such Covered Person will be found entitled to indemnification under this Section 2. SHAREHOLDERS Section 3. In case any Shareholder or former Shareholder of any Series of the Trust shall be held to be personally liable solely by reason of his being or having been a Shareholder and not because of his acts or omissions or for some other reason, the Shareholder or former Shareholder (or his heirs, executors, administrators or other legal representatives or in the case of a corporation or other entity, its corporate or other general successor) shall be entitled out of the assets belonging to the applicable Series to be held harmless from and indemnified against all loss and expense arising from such liability. The Series shall, upon request by the Shareholder, assume the defense of any claim made against the Shareholder for any act or obligation of the Series and satisfy any judgment thereon. ARTICLE XII MISCELLANEOUS TRUST NOT A PARTNERSHIP Section 1. It is hereby expressly declared that a trust and not a partnership is created hereby. No Trustee hereunder shall have any power to bind personally either the Trust's officers or any Shareholder. All persons extending credit to, contracting with or having any claim against the Trust or the Trustees shall look only to the assets of the appropriate Series for payment under such credit, contract or claim; and neither the Shareholders nor the Trustees, nor any of their agents, whether past, present or future, shall be personally liable therefor. Nothing in this Declaration of Trust shall protect a Trustee against any liability to which the Trustee would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of the office of Trustee hereunder. TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR SURETY Section 2. The exercise by the Trustees of their powers and discretions hereunder in good faith and with reasonable care under the circumstances then prevailing, shall be binding upon everyone interested. Subject to the provisions of Section 1 of this Article XII and to Article XI, the Trustees shall not be liable for errors of judgment or mistakes of fact or law. The Trustees may take advice of counsel or other experts with respect to the meaning and operation of this Declaration of Trust, and subject to the provisions of Section 1 of this Article XII and to Article XI, shall be under no liability for any act or omission in accordance with such advice or for failing to follow such advice. The Trustees shall not be required to give any bond as such, nor any surety if a bond is obtained. ESTABLISHMENT OF RECORD DATES Section 3. The Trustees may close the stock transfer books of the Trust for a period not exceeding sixty (60) days preceding the date of any meeting of Shareholders, or the date for the payment of any dividends, or the date for the allotment of rights, or the date when any change or conversion or exchange of Shares shall go into effect; or in lieu of closing the stock transfer books as aforesaid, the Trustees may fix in advance a date, not exceeding sixty (60) days preceding the date of any meeting of Shareholders, or the date for payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of Shares shall go into effect, as a record date for the determination of the Shareholders entitled to notice of, and to vote at, any such meeting, or entitled to receive payment of any such dividend, or to any such allotment of rights, or to exercise the rights in respect of any such change, conversion or exchange of Shares, and in such case such Shareholders and only such Shareholders as shall be Shareholders of record on the date so fixed shall be entitled to such notice of, and to vote at, such meeting, or to receive payment of such dividend, or to receive such allotment or rights, or to exercise such rights, as the case may be, notwithstanding any transfer of any Shares on the books of the Trust after any such record date fixed or aforesaid. TERMINATION OF TRUST Section 4. (a) This Trust shall continue without limitation of time but subject to the provisions of sub-section (b) of this Section 4. (b) Subject to a Majority Shareholder Vote of each Series affected by the matter or, if applicable, to a Majority Shareholder Vote of the Trust, the Trustees may (i) sell and convey the assets of the Trust or any affected Series to another trust, partnership, association or corporation organized under the laws of any state which is a diversified open-end management investment company as defined in the 1940 Act, for adequate consideration which may include the assumption of all outstanding obligations, taxes and other liabilities, accrued or contingent, of the Trust or any affected Series, and which may include shares of beneficial interest or stock of such trust, partnership, association or corporation; or (ii) at any time sell and convert into money all of the assets of the Trust or any affected Series. Upon making provision for the payment of all such liabilities in either (i) or (ii), by such assumption or otherwise, the Trustees shall distribute the remaining proceeds or assets (as the case may be) ratably among the holders of the Shares of the Trust or any affected Series then outstanding. (c) Upon completion of the distribution of the remaining proceeds or the remaining assets as provided in sub-section (b), the Trust or any affected Series shall terminate and the Trustees shall be discharged of any and all further liabilities and duties hereunder and the right, title and interest of all parties shall be cancelled and discharged. FILING OF COPIES, REFERENCES, AND HEADINGS Section 5. The original or a copy of this instrument and of each declaration of trust supplemental hereto shall be kept at the office of the Trust where it may be inspected by any Shareholder. A copy of this instrument and of each supplemental declaration of trust shall be filed by the Trustees with the Secretary of the Commonwealth of Massachusetts and the Boston City Clerk, as well as any other governmental office where such filing may from time to time be required. Anyone dealing with the Trust may rely on a certificate by an officer or Trustee of the Trust as to whether or not any such supplemental declarations of trust have been made and as to any matters in connection with the Trust hereunder, and with the same effect as if it were the original, may rely on a copy certified by an officer or Trustee of the Trust to be a copy of this instrument or of any such supplemental declaration of trust. In this instrument or in any such supplemental declaration of trust, references to this instrument and all expressions like "herein," "hereof" and "hereunder," shall be deemed to refer to this instrument as amended or affected by any such supplemental declaration of trust. Headings are placed herein for convenience of reference only and in case of any conflict, the text of this instrument, rather than the headings, shall control. This instrument may be executed in any number of counterparts each of which shall be deemed an original. APPLICABLE LAW Section 6. The trust set forth in this instrument is made in the Commonwealth of Massachusetts, and it is created under and is to be governed by and construed and administered according to the laws of said Commonwealth. The Trust shall be of the type commonly called a Massachusetts business trust, and without limiting the provisions hereof, the Trust may exercise all powers which are ordinarily exercised by such a trust. AMENDMENTS Section 7. If authorized by votes of the Trustees and a Majority Shareholder Vote, or by any larger vote which may be required by applicable law or this Declaration of Trust in any particular case, the Trustees shall amend or otherwise supplement this instrument, by making a declaration of trust supplemental hereto, which thereafter shall form a part hereof, except that an amendment which shall affect the Shareholders of one or more Series but not the Shareholders of all outstanding Series shall be authorized by vote of the Shareholders holding a majority of the Shares entitled to vote of each Series affected and no vote of Shareholders of a Series not affected shall be required. Amendments having the purpose of changing the name of the Trust or of supplying any omission, curing any ambiguity or curing, correcting or supplementing any defective or inconsistent provision contained herein shall not require authorization by Shareholder vote. Copies of the supplemental declaration of trust shall be filed as specified in Section 5 of this Article XII. FISCAL YEAR Section 8. The fiscal year of the Trust shall end on a specified date as set forth in the Bylaws, if any, provided, however, that the Trustees may, without Shareholder approval, change the fiscal year of the Trust. USE OF THE WORD "FIDELITY" Section 9. Fidelity Management & Research Company ("FMR") has consented to the use by any Series of the Trust of the identifying word "Fidelity" in the name of any Series of the Trust at some future date. Such consent is conditioned upon the employment of FMR as investment adviser of each Series of the Trust. As between the Trust and itself, FMR controls the use of the name of the Trust insofar as such name contains the identifying word "Fidelity." FMR may from time to time use the identifying word "Fidelity" in other connections and for other purposes, including, without limitation, in the names of other investment companies, corporations or businesses which it may manage, advise, sponsor or own or in which it may have a financial interest. FMR may require the Trust or any Series thereof to cease using the identifying word "Fidelity" in the name of the Trust or any Series thereof if the Trust or any Series thereof ceases to employ FMR or a subsidiary or affiliate thereof as investment adviser. IN WITNESS WHEREOF, the undersigned, being all of the Trustees of the Trust, have executed this instrument this 14th day of April, 1994. /s/Edward C. Johnson 3d /s/Donald S. 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/Gerald C. McDonough Ralph F. Cox Gerald C. McDonough /s/Phyllis Burke Davis /s/Edward H. Malone Phyllis Burke Davis Edward H. Malone /s/Richard J. Flynn /s/Marvin L. Mann Richard J. Flynn Marvin L. Mann /s/E. Bradley Jones /s/Thomas R. Williams E. Bradley Jones Thomas R. Williams THE COMMONWEALTH OF MASSACHUSETTS MICHAEL JOSEPH CONNOLLY SECRETARY OF THE COMMONWEALTH STATE HOUSE - BOSTON, MA CERTIFICATE OF FIDELITY SELECT PORTFOLIOS We, J. Gary Burkhead, Senior Vice President and Arthur S. Loring, Secretary of FIDELITY SELECT PORTFOLIOS 82 Devonshire Street Boston, MA 02109 do certify that, in accordance with ARTICLE XII, SECTION 7 of the Fidelity Select Portfolios Declaration of Trust, the Trustees of said Trust, on June 9, 1993 and the shareholders of said Trust on February 16, 1994 amended such Declaration of Trust and the Trustees further have restated such Declaration of Trust, incorporating all amendments to the Declaration of Trust duly adopted by the Trustees and Shareholders prior to the date of such restatement. The attached Amendment and Restatement is hereby filed in accordance with Chapter 182, Section 2 of the General Laws. IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereunto signed our names this 14th day of April, 1994. /s/J. Gary Burkhead /s/Arthur S. Loring J. Gary Burkhead Arthur S. Loring Senior Vice President Secretary EX-99.B9 3 Exhibit 5(a)(1) MANAGEMENT CONTRACT between FIDELITY SELECT PORTFOLIOS: AIR TRANSPORTATION PORTFOLIO and FIDELITY MANAGEMENT & RESEARCH COMPANY MODIFICATION made this 1st day of March 1994, 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 Air Transportation Portfolio (hereinafter called the "Portfolio"), and Fidelity Management & Research Company, a Massachusetts corporation (hereinafter called the "Adviser"). Required authorization and approval by shareholders and Trustees having been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby consent, pursuant to Paragraph 6 of the existing Management Contract dated January 1, 1990, to a modification of said Contract in the manner set forth below. The Modified Management Contract shall when executed by duly authorized officers of the Fund and the Adviser, take effect on the later of March 1, 1994 or the first day of the month following approval. 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: $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 174-228 .3000 228-282 .2950 282-336 .2900 Over 336 .2850 (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 other than those expressly stated to be payable by the Adviser hereunder, 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. 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, 1994 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. FIDELITY SELECT PORTFOLIOS on behalf of Air Transportation Portfolio By /s/J. Gary Burkhead Senior Vice President FIDELITY MANAGEMENT & RESEARCH COMPANY By /s/J. Gary Burkhead President EX-99.B9 4 Exhibit 5(a)(2) MANAGEMENT CONTRACT between FIDELITY SELECT PORTFOLIOS: AMERICAN GOLD PORTFOLIO and FIDELITY MANAGEMENT & RESEARCH COMPANY MODIFICATION made this 1st day of March 1994, 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 American Gold Portfolio (hereinafter called the "Portfolio"), and Fidelity Management & Research Company, a Massachusetts corporation (hereinafter called the "Adviser"). Required authorization and approval by shareholders and Trustees having been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby consent, pursuant to Paragraph 6 of the existing Management Contract dated January 1, 1990, to a modification of said Contract in the manner set forth below. The Modified Management Contract shall when executed by duly authorized officers of the Fund and the Adviser, take effect on the later of March 1, 1994 or the first day of the month following approval. 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: $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 174-228 .3000 228-282 .2950 282-336 .2900 Over 336 .2850 (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 other than those expressly stated to be payable by the Adviser hereunder, 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. 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, 1994 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. FIDELITY SELECT PORTFOLIOS on behalf of American Gold Portfolio By /s/J. Gary Burkhead Senior Vice President FIDELITY MANAGEMENT & RESEARCH COMPANY By /s/J. Gary Burkhead President EX-99.B9 5 Exhibit 5(a)(3) MANAGEMENT CONTRACT between FIDELITY SELECT PORTFOLIOS: AUTOMOTIVE PORTFOLIO and FIDELITY MANAGEMENT & RESEARCH COMPANY MODIFICATION made this 1st day of March 1994, 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 Automotive Portfolio (hereinafter called the "Portfolio"), and Fidelity Management & Research Company, a Massachusetts corporation (hereinafter called the "Adviser"). Required authorization and approval by shareholders and Trustees having been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby consent, pursuant to Paragraph 6 of the existing Management Contract dated January 1, 1990, to a modification of said Contract in the manner set forth below. The Modified Management Contract shall when executed by duly authorized officers of the Fund and the Adviser, take effect on the later of March 1, 1994 or the first day of the month following approval. 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: $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 174-228 .3000 228-282 .2950 282-336 .2900 Over 336 .2850 (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 other than those expressly stated to be payable by the Adviser hereunder, 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. 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, 1994 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. FIDELITY SELECT PORTFOLIOS on behalf of Automotive Portfolio By /s/J. Gary Burkhead Senior Vice President FIDELITY MANAGEMENT & RESEARCH COMPANY By /s/J. Gary Burkhead President EX-99.B9 6 Exhibit 5(a)(4) MANAGEMENT CONTRACT between FIDELITY SELECT PORTFOLIOS: BIOTECHNOLOGY PORTFOLIO and FIDELITY MANAGEMENT & RESEARCH COMPANY MODIFICATION made this 1st day of March 1994, 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 Biotechnology Portfolio (hereinafter called the "Portfolio"), and Fidelity Management & Research Company, a Massachusetts corporation (hereinafter called the "Adviser"). Required authorization and approval by shareholders and Trustees having been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby consent, pursuant to Paragraph 6 of the existing Management Contract dated January 1, 1990, to a modification of said Contract in the manner set forth below. The Modified Management Contract shall when executed by duly authorized officers of the Fund and the Adviser, take effect on the later of March 1, 1994 or the first day of the month following approval. 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: $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 174-228 .3000 228-282 .2950 282-336 .2900 Over 336 .2850 (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 other than those expressly stated to be payable by the Adviser hereunder, 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. 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, 1994 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. FIDELITY SELECT PORTFOLIOS on behalf of Biotechnology Portfolio By /s/J. Gary Burkhead Senior Vice President FIDELITY MANAGEMENT & RESEARCH COMPANY By /s/J. Gary Burkhead President EX-99.B9 7 Exhibit 5(a)(5) MANAGEMENT CONTRACT between FIDELITY SELECT PORTFOLIOS: BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO and FIDELITY MANAGEMENT & RESEARCH COMPANY MODIFICATION made this 1st day of March 1994, 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 Brokerage and Investment Management Portfolio (hereinafter called the "Portfolio"), and Fidelity Management & Research Company, a Massachusetts corporation (hereinafter called the "Adviser"). Required authorization and approval by shareholders and Trustees having been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby consent, pursuant to Paragraph 6 of the existing Management Contract dated January 1, 1990, to a modification of said Contract in the manner set forth below. The Modified Management Contract shall when executed by duly authorized officers of the Fund and the Adviser, take effect on the later of March 1, 1994 or the first day of the month following approval. 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: $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 174-228 .3000 228-282 .2950 282-336 .2900 Over 336 .2850 (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 other than those expressly stated to be payable by the Adviser hereunder, 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. 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, 1994 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. FIDELITY SELECT PORTFOLIOS on behalf of Brokerage and Investment Management Portfolio By /s/J. Gary Burkhead Senior Vice President FIDELITY MANAGEMENT & RESEARCH COMPANY By /s/J. Gary Burkhead President EX-99.B9 8 Exhibit 5(a)(6) MANAGEMENT CONTRACT between FIDELITY SELECT PORTFOLIOS: CHEMICALS PORTFOLIO and FIDELITY MANAGEMENT & RESEARCH COMPANY MODIFICATION made this 1st day of March 1994, 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 Chemicals Portfolio (hereinafter called the "Portfolio"), and Fidelity Management & Research Company, a Massachusetts corporation (hereinafter called the "Adviser"). Required authorization and approval by shareholders and Trustees having been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby consent, pursuant to Paragraph 6 of the existing Management Contract dated January 1, 1990, to a modification of said Contract in the manner set forth below. The Modified Management Contract shall when executed by duly authorized officers of the Fund and the Adviser, take effect on the later of March 1, 1994 or the first day of the month following approval. 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: $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 174-228 .3000 228-282 .2950 282-336 .2900 Over 336 .2850 (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 other than those expressly stated to be payable by the Adviser hereunder, 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. 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, 1994 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. FIDELITY SELECT PORTFOLIOS on behalf of Chemicals Portfolio By /s/J. Gary Burkhead Senior Vice President FIDELITY MANAGEMENT & RESEARCH COMPANY By /s/J. Gary Burkhead President EX-99.B9 9 Exhibit 5(a)(7) MANAGEMENT CONTRACT between FIDELITY SELECT PORTFOLIOS: COMPUTERS PORTFOLIO and FIDELITY MANAGEMENT & RESEARCH COMPANY MODIFICATION made this 1st day of March 1994, 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 Computers Portfolio (hereinafter called the "Portfolio"), and Fidelity Management & Research Company, a Massachusetts corporation (hereinafter called the "Adviser"). Required authorization and approval by shareholders and Trustees having been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby consent, pursuant to Paragraph 6 of the existing Management Contract dated January 1, 1990, to a modification of said Contract in the manner set forth below. The Modified Management Contract shall when executed by duly authorized officers of the Fund and the Adviser, take effect on the later of March 1, 1994 or the first day of the month following approval. 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: $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 174-228 .3000 228-282 .2950 282-336 .2900 Over 336 .2850 (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 other than those expressly stated to be payable by the Adviser hereunder, 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. 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, 1994 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. FIDELITY SELECT PORTFOLIOS on behalf of Computers Portfolio By /s/J. Gary Burkhead Senior Vice President FIDELITY MANAGEMENT & RESEARCH COMPANY By /s/J. Gary Burkhead President EX-99.B9 10 Exhibit 5(a)(8) MANAGEMENT CONTRACT between FIDELITY SELECT PORTFOLIOS: CONSTRUCTION AND HOUSING PORTFOLIO and FIDELITY MANAGEMENT & RESEARCH COMPANY MODIFICATION made this 1st day of March 1994, 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 Construction and Housing Portfolio (hereinafter called the "Portfolio"), and Fidelity Management & Research Company, a Massachusetts corporation (hereinafter called the "Adviser"). Required authorization and approval by shareholders and Trustees having been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby consent, pursuant to Paragraph 6 of the existing Management Contract dated January 1, 1990, to a modification of said Contract in the manner set forth below. The Modified Management Contract shall when executed by duly authorized officers of the Fund and the Adviser, take effect on the later of March 1, 1994 or the first day of the month following approval. 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: $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 174-228 .3000 228-282 .2950 282-336 .2900 Over 336 .2850 (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 other than those expressly stated to be payable by the Adviser hereunder, 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. 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, 1994 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. FIDELITY SELECT PORTFOLIOS on behalf of Construction and Housing Portfolio By /s/J. Gary Burkhead Senior Vice President FIDELITY MANAGEMENT & RESEARCH COMPANY By /s/J. Gary Burkhead President EX-99.B9 11 Exhibit 5(a)(9) MANAGEMENT CONTRACT between FIDELITY SELECT PORTFOLIOS: CONSUMER PRODUCTS PORTFOLIO and FIDELITY MANAGEMENT & RESEARCH COMPANY MODIFICATION made this 1st day of March 1994, 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 Consumer Products Portfolio (hereinafter called the "Portfolio"), and Fidelity Management & Research Company, a Massachusetts corporation (hereinafter called the "Adviser"). Required authorization and approval by shareholders and Trustees having been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby consent, pursuant to Paragraph 6 of the existing Management Contract dated June 14, 1990, to a modification of said Contract in the manner set forth below. The Modified Management Contract shall when executed by duly authorized officers of the Fund and the Adviser, take effect on the later of March 1, 1994 or the first day of the month following approval. 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: $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 174-228 .3000 228-282 .2950 282-336 .2900 Over 336 .2850 (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 other than those expressly stated to be payable by the Adviser hereunder, 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. 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, 1994 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. FIDELITY SELECT PORTFOLIOS on behalf of Consumer Products Portfolio By /s/J. Gary Burkhead Senior Vice President FIDELITY MANAGEMENT & RESEARCH COMPANY By /s/J. Gary Burkhead President EX-99.B9 12 Exhibit 5(a)(10) MANAGEMENT CONTRACT between FIDELITY SELECT PORTFOLIOS: DEFENSE AND AEROSPACE PORTFOLIO and FIDELITY MANAGEMENT & RESEARCH COMPANY MODIFICATION made this 1st day of March 1994, 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 Defense and Aerospace Portfolio (hereinafter called the "Portfolio"), and Fidelity Management & Research Company, a Massachusetts corporation (hereinafter called the "Adviser"). Required authorization and approval by shareholders and Trustees having been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby consent, pursuant to Paragraph 6 of the existing Management Contract dated January 1, 1990, to a modification of said Contract in the manner set forth below. The Modified Management Contract shall when executed by duly authorized officers of the Fund and the Adviser, take effect on the later of March 1, 1994 or the first day of the month following approval. 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: $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 174-228 .3000 228-282 .2950 282-336 .2900 Over 336 .2850 (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 other than those expressly stated to be payable by the Adviser hereunder, 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. 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, 1994 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. FIDELITY SELECT PORTFOLIOS on behalf of Defense and Aerospace Portfolio By /s/J. Gary Burkhead Senior Vice President FIDELITY MANAGEMENT & RESEARCH COMPANY By /s/J. Gary Burkhead President EX-99.B9 13 Exhibit 5(a)(11) MANAGEMENT CONTRACT between FIDELITY SELECT PORTFOLIOS: DEVELOPING COMMUNICATIONS PORTFOLIO and FIDELITY MANAGEMENT & RESEARCH COMPANY MODIFICATION made this 1st day of March 1994, 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 Developing Communications Portfolio (hereinafter called the "Portfolio"), and Fidelity Management & Research Company, a Massachusetts corporation (hereinafter called the "Adviser"). Required authorization and approval by shareholders and Trustees having been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby consent, pursuant to Paragraph 6 of the existing Management Contract dated June 14, 1990, to a modification of said Contract in the manner set forth below. The Modified Management Contract shall when executed by duly authorized officers of the Fund and the Adviser, take effect on the later of March 1, 1994 or the first day of the month following approval. 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: $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 174-228 .3000 228-282 .2950 282-336 .2900 Over 336 .2850 (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 other than those expressly stated to be payable by the Adviser hereunder, 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. 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, 1994 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. FIDELITY SELECT PORTFOLIOS on behalf of Developing Communications Portfolio By /s/J. Gary Burkhead Senior Vice President FIDELITY MANAGEMENT & RESEARCH COMPANY By /s/J. Gary Burkhead President EX-99.B9 14 Exhibit 5(a)(12) MANAGEMENT CONTRACT between FIDELITY SELECT PORTFOLIOS: ELECTRONICS PORTFOLIO and FIDELITY MANAGEMENT & RESEARCH COMPANY MODIFICATION made this 1st day of March 1994, 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 Electronics Portfolio (hereinafter called the "Portfolio"), and Fidelity Management & Research Company, a Massachusetts corporation (hereinafter called the "Adviser"). Required authorization and approval by shareholders and Trustees having been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby consent, pursuant to Paragraph 6 of the existing Management Contract dated January 1, 1990, to a modification of said Contract in the manner set forth below. The Modified Management Contract shall when executed by duly authorized officers of the Fund and the Adviser, take effect on the later of March 1, 1994 or the first day of the month following approval. 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: $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 174-228 .3000 228-282 .2950 282-336 .2900 Over 336 .2850 (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 other than those expressly stated to be payable by the Adviser hereunder, 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. 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, 1994 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. FIDELITY SELECT PORTFOLIOS on behalf of Electronics Portfolio By /s/J. Gary Burkhead Senior Vice President FIDELITY MANAGEMENT & RESEARCH COMPANY By /s/J. Gary Burkhead President EX-99.B9 15 Exhibit 5(a)(13) MANAGEMENT CONTRACT between FIDELITY SELECT PORTFOLIOS: ENERGY PORTFOLIO and FIDELITY MANAGEMENT & RESEARCH COMPANY MODIFICATION made this 1st day of March 1994, 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 Energy Portfolio (hereinafter called the "Portfolio"), and Fidelity Management & Research Company, a Massachusetts corporation (hereinafter called the "Adviser"). Required authorization and approval by shareholders and Trustees having been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby consent, pursuant to Paragraph 6 of the existing Management Contract dated January 1, 1990, to a modification of said Contract in the manner set forth below. The Modified Management Contract shall when executed by duly authorized officers of the Fund and the Adviser, take effect on the later of March 1, 1994 or the first day of the month following approval. 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: $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 174-228 .3000 228-282 .2950 282-336 .2900 Over 336 .2850 (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 other than those expressly stated to be payable by the Adviser hereunder, 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. 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, 1994 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. FIDELITY SELECT PORTFOLIOS on behalf of Energy Portfolio By /s/J. Gary Burkhead Senior Vice President FIDELITY MANAGEMENT & RESEARCH COMPANY By /s/J. Gary Burkhead President EX-99.B9 16 Exhibit 5(a)(14) MANAGEMENT CONTRACT between FIDELITY SELECT PORTFOLIOS: ENERGY SERVICE PORTFOLIO and FIDELITY MANAGEMENT & RESEARCH COMPANY MODIFICATION made this 1st day of March 1994, 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 Energy Service Portfolio (hereinafter called the "Portfolio"), and Fidelity Management & Research Company, a Massachusetts corporation (hereinafter called the "Adviser"). Required authorization and approval by shareholders and Trustees having been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby consent, pursuant to Paragraph 6 of the existing Management Contract dated January 1, 1990, to a modification of said Contract in the manner set forth below. The Modified Management Contract shall when executed by duly authorized officers of the Fund and the Adviser, take effect on the later of March 1, 1994 or the first day of the month following approval. 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: $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 174-228 .3000 228-282 .2950 282-336 .2900 Over 336 .2850 (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 other than those expressly stated to be payable by the Adviser hereunder, 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. 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, 1994 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. FIDELITY SELECT PORTFOLIOS on behalf of Energy Service Portfolio By /s/J. Gary Burkhead Senior Vice President FIDELITY MANAGEMENT & RESEARCH COMPANY By /s/J. Gary Burkhead President EX-99.B9 17 Exhibit 5(a)(15) MANAGEMENT CONTRACT between FIDELITY SELECT PORTFOLIOS: ENVIRONMENTAL SERVICES PORTFOLIO and FIDELITY MANAGEMENT & RESEARCH COMPANY MODIFICATION made this 1st day of March 1994, 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 Environmental Services Portfolio (hereinafter called the "Portfolio"), and Fidelity Management & Research Company, a Massachusetts corporation (hereinafter called the "Adviser"). Required authorization and approval by shareholders and Trustees having been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby consent, pursuant to Paragraph 6 of the existing Management Contract dated June 29, 1989, to a modification of said Contract in the manner set forth below. The Modified Management Contract shall when executed by duly authorized officers of the Fund and the Adviser, take effect on the later of March 1, 1994 or the first day of the month following approval. 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: $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 174-228 .3000 228-282 .2950 282-336 .2900 Over 336 .2850 (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 other than those expressly stated to be payable by the Adviser hereunder, 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. 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, 1994 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. FIDELITY SELECT PORTFOLIOS on behalf of Environmental Services Portfolio By /s/J. Gary Burkhead Senior Vice President FIDELITY MANAGEMENT & RESEARCH COMPANY By /s/J. Gary Burkhead President EX-99.B9 18 Exhibit 5(a)(16) MANAGEMENT CONTRACT between FIDELITY SELECT PORTFOLIOS: FINANCIAL SERVICES PORTFOLIO and FIDELITY MANAGEMENT & RESEARCH COMPANY MODIFICATION made this 1st day of March 1994, 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 Financial Services Portfolio (hereinafter called the "Portfolio"), and Fidelity Management & Research Company, a Massachusetts corporation (hereinafter called the "Adviser"). Required authorization and approval by shareholders and Trustees having been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby consent, pursuant to Paragraph 6 of the existing Management Contract dated January 1, 1990, to a modification of said Contract in the manner set forth below. The Modified Management Contract shall when executed by duly authorized officers of the Fund and the Adviser, take effect on the later of March 1, 1994 or the first day of the month following approval. 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: $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 174-228 .3000 228-282 .2950 282-336 .2900 Over 336 .2850 (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 other than those expressly stated to be payable by the Adviser hereunder, 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. 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, 1994 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. FIDELITY SELECT PORTFOLIOS on behalf of Financial Services Portfolio By /s/J. Gary Burkhead Senior Vice President FIDELITY MANAGEMENT & RESEARCH COMPANY By /s/J. Gary Burkhead President EX-99.B9 19 Exhibit 5(a)(20) MANAGEMENT CONTRACT between FIDELITY SELECT PORTFOLIOS: INDUSTRIAL EQUIPMENT PORTFOLIO and FIDELITY MANAGEMENT & RESEARCH COMPANY MODIFICATION made this 1st day of March 1994, 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 Industrial Equipment Portfolio (hereinafter called the "Portfolio"), and Fidelity Management & Research Company, a Massachusetts corporation (hereinafter called the "Adviser"). Required authorization and approval by shareholders and Trustees having been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby consent, pursuant to Paragraph 6 of the existing Management Contract dated January 1, 1990, to a modification of said Contract in the manner set forth below. The Modified Management Contract shall when executed by duly authorized officers of the Fund and the Adviser, take effect on the later of March 1, 1994 or the first day of the month following approval. 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: $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 174-228 .3000 228-282 .2950 282-336 .2900 Over 336 .2850 (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 other than those expressly stated to be payable by the Adviser hereunder, 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. 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, 1994 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. FIDELITY SELECT PORTFOLIOS on behalf of Industrial Equipment Portfolio By /s/J. Gary Burkhead Senior Vice President FIDELITY MANAGEMENT & RESEARCH COMPANY By /s/J. Gary Burkhead President EX-99.B9 20 Exhibit 5(a)(17) MANAGEMENT CONTRACT between FIDELITY SELECT PORTFOLIOS: FOOD AND AGRICULTURE PORTFOLIO and FIDELITY MANAGEMENT & RESEARCH COMPANY MODIFICATION made this 1st day of March 1994, 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 Food and Agriculture Portfolio (hereinafter called the "Portfolio"), and Fidelity Management & Research Company, a Massachusetts corporation (hereinafter called the "Adviser"). Required authorization and approval by shareholders and Trustees having been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby consent, pursuant to Paragraph 6 of the existing Management Contract dated January 1, 1990, to a modification of said Contract in the manner set forth below. The Modified Management Contract shall when executed by duly authorized officers of the Fund and the Adviser, take effect on the later of March 1, 1994 or the first day of the month following approval. 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: $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 174-228 .3000 228-282 .2950 282-336 .2900 Over 336 .2850 (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 other than those expressly stated to be payable by the Adviser hereunder, 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. 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, 1994 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. FIDELITY SELECT PORTFOLIOS on behalf of Food and Agriculture Portfolio By /s/J. Gary Burkhead Senior Vice President FIDELITY MANAGEMENT & RESEARCH COMPANY By /s/J. Gary Burkhead President EX-99.B9 21 Exhibit 5(a)(21) MANAGEMENT CONTRACT between FIDELITY SELECT PORTFOLIOS: INDUSTRIAL MATERIALS PORTFOLIO and FIDELITY MANAGEMENT & RESEARCH COMPANY MODIFICATION made this 1st day of March 1994, 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 Industrial Materials Portfolio (hereinafter called the "Portfolio"), and Fidelity Management & Research Company, a Massachusetts corporation (hereinafter called the "Adviser"). Required authorization and approval by shareholders and Trustees having been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby consent, pursuant to Paragraph 6 of the existing Management Contract dated January 1, 1990, to a modification of said Contract in the manner set forth below. The Modified Management Contract shall when executed by duly authorized officers of the Fund and the Adviser, take effect on the later of March 1, 1994 or the first day of the month following approval. 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: $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 174-228 .3000 228-282 .2950 282-336 .2900 Over 336 .2850 (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 other than those expressly stated to be payable by the Adviser hereunder, 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. 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, 1994 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. FIDELITY SELECT PORTFOLIOS on behalf of Industrial Materials Portfolio By /s/J. Gary Burkhead Senior Vice President FIDELITY MANAGEMENT & RESEARCH COMPANY By /s/J. Gary Burkhead President EX-99.B9 22 Exhibit 5(a)(18) MANAGEMENT CONTRACT between FIDELITY SELECT PORTFOLIOS: HEALTH CARE PORTFOLIO and FIDELITY MANAGEMENT & RESEARCH COMPANY MODIFICATION made this 1st day of March 1994, 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 Health Care Portfolio (hereinafter called the "Portfolio"), and Fidelity Management & Research Company, a Massachusetts corporation (hereinafter called the "Adviser"). Required authorization and approval by shareholders and Trustees having been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby consent, pursuant to Paragraph 6 of the existing Management Contract dated January 1, 1990, to a modification of said Contract in the manner set forth below. The Modified Management Contract shall when executed by duly authorized officers of the Fund and the Adviser, take effect on the later of March 1, 1994 or the first day of the month following approval. 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: $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 174-228 .3000 228-282 .2950 282-336 .2900 Over 336 .2850 (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 other than those expressly stated to be payable by the Adviser hereunder, 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. 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, 1994 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. FIDELITY SELECT PORTFOLIOS on behalf of Health Care Portfolio By /s/J. Gary Burkhead Senior Vice President FIDELITY MANAGEMENT & RESEARCH COMPANY By /s/J. Gary Burkhead President EX-99.B9 23 Exhibit 5(a)(19) MANAGEMENT CONTRACT between FIDELITY SELECT PORTFOLIOS: HOME FINANCE PORTFOLIO and FIDELITY MANAGEMENT & RESEARCH COMPANY MODIFICATION made this 1st day of March 1994, 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 Home Finance Portfolio (hereinafter called the "Portfolio"), and Fidelity Management & Research Company, a Massachusetts corporation (hereinafter called the "Adviser"). Required authorization and approval by shareholders and Trustees having been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby consent, pursuant to Paragraph 6 of the existing Management Contract dated March 1, 1993, to a modification of said Contract in the manner set forth below. The Modified Management Contract shall when executed by duly authorized officers of the Fund and the Adviser, take effect on the later of March 1, 1994 or the first day of the month following approval. 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: $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 174-228 .3000 228-282 .2950 282-336 .2900 Over 336 .2850 (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 other than those expressly stated to be payable by the Adviser hereunder, 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. 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, 1994 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. FIDELITY SELECT PORTFOLIOS on behalf of Home Finance Portfolio By /s/J. Gary Burkhead Senior Vice President FIDELITY MANAGEMENT & RESEARCH COMPANY By /s/J. Gary Burkhead President EX-99.B9 24 Exhibit 5(a)(22) MANAGEMENT CONTRACT between FIDELITY SELECT PORTFOLIOS: INSURANCE PORTFOLIO and FIDELITY MANAGEMENT & RESEARCH COMPANY MODIFICATION made this 1st day of March 1994, 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 Insurance Portfolio (hereinafter called the "Portfolio"), and Fidelity Management & Research Company, a Massachusetts corporation (hereinafter called the "Adviser"). Required authorization and approval by shareholders and Trustees having been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby consent, pursuant to Paragraph 6 of the existing Management Contract dated January 1, 1990, to a modification of said Contract in the manner set forth below. The Modified Management Contract shall when executed by duly authorized officers of the Fund and the Adviser, take effect on the later of March 1, 1994 or the first day of the month following approval. 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: $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 174-228 .3000 228-282 .2950 282-336 .2900 Over 336 .2850 (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 other than those expressly stated to be payable by the Adviser hereunder, 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. 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, 1994 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. FIDELITY SELECT PORTFOLIOS on behalf of Insurance Portfolio By /s/J. Gary Burkhead Senior Vice President FIDELITY MANAGEMENT & RESEARCH COMPANY By /s/J. Gary Burkhead President EX-99.B9 25 Exhibit 5(a)(23) MANAGEMENT CONTRACT between FIDELITY SELECT PORTFOLIOS: LEISURE PORTFOLIO and FIDELITY MANAGEMENT & RESEARCH COMPANY MODIFICATION made this 1st day of March 1994, 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 Leisure Portfolio (hereinafter called the "Portfolio"), and Fidelity Management & Research Company, a Massachusetts corporation (hereinafter called the "Adviser"). Required authorization and approval by shareholders and Trustees having been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby consent, pursuant to Paragraph 6 of the existing Management Contract dated January 1, 1990, to a modification of said Contract in the manner set forth below. The Modified Management Contract shall when executed by duly authorized officers of the Fund and the Adviser, take effect on the later of March 1, 1994 or the first day of the month following approval. 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: $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 174-228 .3000 228-282 .2950 282-336 .2900 Over 336 .2850 (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 other than those expressly stated to be payable by the Adviser hereunder, 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. 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, 1994 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. FIDELITY SELECT PORTFOLIOS on behalf of Leisure Portfolio By /s/J. Gary Burkhead Senior Vice President FIDELITY MANAGEMENT & RESEARCH COMPANY By /s/J. Gary Burkhead President EX-99.B9 26 Exhibit 5(a)(24) MANAGEMENT CONTRACT between FIDELITY SELECT PORTFOLIOS: MEDICAL DELIVERY PORTFOLIO and FIDELITY MANAGEMENT & RESEARCH COMPANY MODIFICATION made this 1st day of March 1994, 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 Medical Delivery Portfolio (hereinafter called the "Portfolio"), and Fidelity Management & Research Company, a Massachusetts corporation (hereinafter called the "Adviser"). Required authorization and approval by shareholders and Trustees having been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby consent, pursuant to Paragraph 6 of the existing Management Contract dated January 1, 1990, to a modification of said Contract in the manner set forth below. The Modified Management Contract shall when executed by duly authorized officers of the Fund and the Adviser, take effect on the later of March 1, 1994 or the first day of the month following approval. 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: $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 174-228 .3000 228-282 .2950 282-336 .2900 Over 336 .2850 (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 other than those expressly stated to be payable by the Adviser hereunder, 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. 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, 1994 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. FIDELITY SELECT PORTFOLIOS on behalf of Medical Delivery Portfolio By /s/J. Gary Burkhead Senior Vice President FIDELITY MANAGEMENT & RESEARCH COMPANY By /s/J. Gary Burkhead President EX-99.B9 27 Exhibit 5(a)(25) MANAGEMENT CONTRACT between FIDELITY SELECT PORTFOLIOS: BROADCAST AND MEDIA PORTFOLIO and FIDELITY MANAGEMENT & RESEARCH COMPANY MODIFICATION made this 1st day of March 1994, 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 Broadcast and Media Portfolio (hereinafter called the "Portfolio"), and Fidelity Management & Research Company, a Massachusetts corporation (hereinafter called the "Adviser"). Required authorization and approval by shareholders and Trustees having been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby consent, pursuant to Paragraph 6 of the existing Management Contract dated January 1, 1990, to a modification of said Contract in the manner set forth below. The Modified Management Contract shall when executed by duly authorized officers of the Fund and the Adviser, take effect on the later of March 1, 1994 or the first day of the month following approval. 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: $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 174-228 .3000 228-282 .2950 282-336 .2900 Over 336 .2850 (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 other than those expressly stated to be payable by the Adviser hereunder, 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. 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, 1994 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. FIDELITY SELECT PORTFOLIOS on behalf of Broadcast and Media Portfolio By /s/J. Gary Burkhead Senior Vice President FIDELITY MANAGEMENT & RESEARCH COMPANY By /s/J. Gary Burkhead President EX-99.B9 28 Exhibit 5(a)(26) MANAGEMENT CONTRACT between FIDELITY SELECT PORTFOLIOS: NATURAL GAS PORTFOLIO and FIDELITY MANAGEMENT & RESEARCH COMPANY MODIFICATION made this 1st day of March 1994, 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 Gas Portfolio (hereinafter called the "Portfolio"), and Fidelity Management & Research Company, a Massachusetts corporation (hereinafter called the "Adviser"). Required authorization and approval by shareholders and Trustees having been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby consent, pursuant to Paragraph 6 of the existing Management Contract dated April 15, 1993, to a modification of said Contract in the manner set forth below. The Modified Management Contract shall when executed by duly authorized officers of the Fund and the Adviser, take effect on the later of March 1, 1994 or the first day of the month following approval. 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: $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 174-228 .3000 228-282 .2950 282-336 .2900 Over 336 .2850 (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 other than those expressly stated to be payable by the Adviser hereunder, 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. 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, 1994 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. FIDELITY SELECT PORTFOLIOS on behalf of Natural Gas Portfolio By /s/J. Gary Burkhead Senior Vice President FIDELITY MANAGEMENT & RESEARCH COMPANY By /s/J. Gary Burkhead President EX-99.B9 29 Exhibit 5(a)(27) MANAGEMENT CONTRACT between FIDELITY SELECT PORTFOLIOS: PAPER AND FOREST PRODUCTS PORTFOLIO and FIDELITY MANAGEMENT & RESEARCH COMPANY MODIFICATION made this 1st day of March 1994, 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 Paper and Forest Products Portfolio (hereinafter called the "Portfolio"), and Fidelity Management & Research Company, a Massachusetts corporation (hereinafter called the "Adviser"). Required authorization and approval by shareholders and Trustees having been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby consent, pursuant to Paragraph 6 of the existing Management Contract dated January 1, 1990, to a modification of said Contract in the manner set forth below. The Modified Management Contract shall when executed by duly authorized officers of the Fund and the Adviser, take effect on the later of March 1, 1994 or the first day of the month following approval. 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: $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 174-228 .3000 228-282 .2950 282-336 .2900 Over 336 .2850 (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 other than those expressly stated to be payable by the Adviser hereunder, 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. 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, 1994 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. FIDELITY SELECT PORTFOLIOS on behalf of Paper and Forest Products Portfolio By /s/J. Gary Burkhead Senior Vice President FIDELITY MANAGEMENT & RESEARCH COMPANY By /s/J. Gary Burkhead President EX-99.B9 30 Exhibit 5(a)(28) MANAGEMENT CONTRACT between FIDELITY SELECT PORTFOLIOS: PRECIOUS METALS AND MINERALS PORTFOLIO and FIDELITY MANAGEMENT & RESEARCH COMPANY MODIFICATION made this 1st day of March 1994, 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 Precious Metals and Minerals Portfolio (hereinafter called the "Portfolio"), and Fidelity Management & Research Company, a Massachusetts corporation (hereinafter called the "Adviser"). Required authorization and approval by shareholders and Trustees having been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby consent, pursuant to Paragraph 6 of the existing Management Contract dated January 1, 1990, to a modification of said Contract in the manner set forth below. The Modified Management Contract shall when executed by duly authorized officers of the Fund and the Adviser, take effect on the later of March 1, 1994 or the first day of the month following approval. 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: $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 174-228 .3000 228-282 .2950 282-336 .2900 Over 336 .2850 (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 other than those expressly stated to be payable by the Adviser hereunder, 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. 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, 1994 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. FIDELITY SELECT PORTFOLIOS on behalf of Precious Metals and Minerals Portfolio By /s/J. Gary Burkhead Senior Vice President FIDELITY MANAGEMENT & RESEARCH COMPANY By /s/J. Gary Burkhead President EX-99.B9 31 Exhibit 5(a)(29) MANAGEMENT CONTRACT between FIDELITY SELECT PORTFOLIOS: REGIONAL BANKS PORTFOLIO and FIDELITY MANAGEMENT & RESEARCH COMPANY MODIFICATION made this 1st day of March 1994, 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 Regional Banks Portfolio (hereinafter called the "Portfolio"), and Fidelity Management & Research Company, a Massachusetts corporation (hereinafter called the "Adviser"). Required authorization and approval by shareholders and Trustees having been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby consent, pursuant to Paragraph 6 of the existing Management Contract dated January 1, 1990, to a modification of said Contract in the manner set forth below. The Modified Management Contract shall when executed by duly authorized officers of the Fund and the Adviser, take effect on the later of March 1, 1994 or the first day of the month following approval. 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: $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 174-228 .3000 228-282 .2950 282-336 .2900 Over 336 .2850 (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 other than those expressly stated to be payable by the Adviser hereunder, 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. 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, 1994 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. FIDELITY SELECT PORTFOLIOS on behalf of Regional Banks Portfolio By /s/J. Gary Burkhead Senior Vice President FIDELITY MANAGEMENT & RESEARCH COMPANY By /s/J. Gary Burkhead President EX-99.B9 32 Exhibit 5(a)(30) MANAGEMENT CONTRACT between FIDELITY SELECT PORTFOLIOS: RETAILING PORTFOLIO and FIDELITY MANAGEMENT & RESEARCH COMPANY MODIFICATION made this 1st day of March 1994, 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 Retailing Portfolio (hereinafter called the "Portfolio"), and Fidelity Management & Research Company, a Massachusetts corporation (hereinafter called the "Adviser"). Required authorization and approval by shareholders and Trustees having been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby consent, pursuant to Paragraph 6 of the existing Management Contract dated January 1, 1990, to a modification of said Contract in the manner set forth below. The Modified Management Contract shall when executed by duly authorized officers of the Fund and the Adviser, take effect on the later of March 1, 1994 or the first day of the month following approval. 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: $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 174-228 .3000 228-282 .2950 282-336 .2900 Over 336 .2850 (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 other than those expressly stated to be payable by the Adviser hereunder, 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. 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, 1994 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. FIDELITY SELECT PORTFOLIOS on behalf of Retailing Portfolio By /s/J. Gary Burkhead Senior Vice President FIDELITY MANAGEMENT & RESEARCH COMPANY By /s/J. Gary Burkhead President EX-99.B9 33 Exhibit 5(a)(31) MANAGEMENT CONTRACT between FIDELITY SELECT PORTFOLIOS: SOFTWARE AND COMPUTER SERVICES PORTFOLIO and FIDELITY MANAGEMENT & RESEARCH COMPANY MODIFICATION made this 1st day of March 1994, 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 Software and Computer Services Portfolio (hereinafter called the "Portfolio"), and Fidelity Management & Research Company, a Massachusetts corporation (hereinafter called the "Adviser"). Required authorization and approval by shareholders and Trustees having been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby consent, pursuant to Paragraph 6 of the existing Management Contract dated January 1, 1990, to a modification of said Contract in the manner set forth below. The Modified Management Contract shall when executed by duly authorized officers of the Fund and the Adviser, take effect on the later of March 1, 1994 or the first day of the month following approval. 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: $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 174-228 .3000 228-282 .2950 282-336 .2900 Over 336 .2850 (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 other than those expressly stated to be payable by the Adviser hereunder, 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. 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, 1994 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. FIDELITY SELECT PORTFOLIOS on behalf of Software and Computer Services Portfolio By /s/J. Gary Burkhead Senior Vice President FIDELITY MANAGEMENT & RESEARCH COMPANY By /s/J. Gary Burkhead President EX-99.B9 34 Exhibit 5(a)(32) MANAGEMENT CONTRACT between FIDELITY SELECT PORTFOLIOS: TECHNOLOGY PORTFOLIO and FIDELITY MANAGEMENT & RESEARCH COMPANY MODIFICATION made this 1st day of March 1994, 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 Technology Portfolio (hereinafter called the "Portfolio"), and Fidelity Management & Research Company, a Massachusetts corporation (hereinafter called the "Adviser"). Required authorization and approval by shareholders and Trustees having been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby consent, pursuant to Paragraph 6 of the existing Management Contract dated January 1, 1990, to a modification of said Contract in the manner set forth below. The Modified Management Contract shall when executed by duly authorized officers of the Fund and the Adviser, take effect on the later of March 1, 1994 or the first day of the month following approval. 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: $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 174-228 .3000 228-282 .2950 282-336 .2900 Over 336 .2850 (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 other than those expressly stated to be payable by the Adviser hereunder, 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. 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, 1994 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. FIDELITY SELECT PORTFOLIOS on behalf of Technology Portfolio By /s/J. Gary Burkhead Senior Vice President FIDELITY MANAGEMENT & RESEARCH COMPANY By /s/J. Gary Burkhead President EX-99.B9 35 Exhibit 5(a)(33) MANAGEMENT CONTRACT between FIDELITY SELECT PORTFOLIOS: TELECOMMUNICATIONS PORTFOLIO and FIDELITY MANAGEMENT & RESEARCH COMPANY MODIFICATION made this 1st day of March 1994, 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 Telecommunications Portfolio (hereinafter called the "Portfolio"), and Fidelity Management & Research Company, a Massachusetts corporation (hereinafter called the "Adviser"). Required authorization and approval by shareholders and Trustees having been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby consent, pursuant to Paragraph 6 of the existing Management Contract dated January 1, 1990, to a modification of said Contract in the manner set forth below. The Modified Management Contract shall when executed by duly authorized officers of the Fund and the Adviser, take effect on the later of March 1, 1994 or the first day of the month following approval. 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: $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 174-228 .3000 228-282 .2950 282-336 .2900 Over 336 .2850 (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 other than those expressly stated to be payable by the Adviser hereunder, 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. 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, 1994 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. FIDELITY SELECT PORTFOLIOS on behalf of Telecommunications Portfolio By /s/J. Gary Burkhead Senior Vice President FIDELITY MANAGEMENT & RESEARCH COMPANY By /s/J. Gary Burkhead President EX-99.B9 36 Exhibit 5(a)(34) MANAGEMENT CONTRACT between FIDELITY SELECT PORTFOLIOS: TRANSPORTATION PORTFOLIO and FIDELITY MANAGEMENT & RESEARCH COMPANY MODIFICATION made this 1st day of March 1994, 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 Transportation Portfolio (hereinafter called the "Portfolio"), and Fidelity Management & Research Company, a Massachusetts corporation (hereinafter called the "Adviser"). Required authorization and approval by shareholders and Trustees having been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby consent, pursuant to Paragraph 6 of the existing Management Contract dated January 1, 1990, to a modification of said Contract in the manner set forth below. The Modified Management Contract shall when executed by duly authorized officers of the Fund and the Adviser, take effect on the later of March 1, 1994 or the first day of the month following approval. 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: $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 174-228 .3000 228-282 .2950 282-336 .2900 Over 336 .2850 (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 other than those expressly stated to be payable by the Adviser hereunder, 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. 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, 1994 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. FIDELITY SELECT PORTFOLIOS on behalf of Transportation Portfolio By /s/J. Gary Burkhead Senior Vice President FIDELITY MANAGEMENT & RESEARCH COMPANY By /s/J. Gary Burkhead President EX-99.B9 37 Exhibit 5(a)(35) MANAGEMENT CONTRACT between FIDELITY SELECT PORTFOLIOS: UTILITIES PORTFOLIO and FIDELITY MANAGEMENT & RESEARCH COMPANY MODIFICATION made this 1st day of March 1994, 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 Utilities Portfolio (hereinafter called the "Portfolio"), and Fidelity Management & Research Company, a Massachusetts corporation (hereinafter called the "Adviser"). Required authorization and approval by shareholders and Trustees having been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby consent, pursuant to Paragraph 6 of the existing Management Contract dated January 1, 1990, to a modification of said Contract in the manner set forth below. The Modified Management Contract shall when executed by duly authorized officers of the Fund and the Adviser, take effect on the later of March 1, 1994 or the first day of the month following approval. 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: $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 174-228 .3000 228-282 .2950 282-336 .2900 Over 336 .2850 (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 other than those expressly stated to be payable by the Adviser hereunder, 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. 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, 1994 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. FIDELITY SELECT PORTFOLIOS on behalf of Utilities Portfolio By /s/J. Gary Burkhead Senior Vice President FIDELITY MANAGEMENT & RESEARCH COMPANY By /s/J. Gary Burkhead President EX-99.B9 38 Exhibit 5(a)(36) MANAGEMENT CONTRACT between FIDELITY SELECT PORTFOLIOS: MONEY MARKET PORTFOLIO and FIDELITY MANAGEMENT & RESEARCH COMPANY MODIFICATION made this 1st day of March 1994, 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 Money Market Portfolio (hereinafter called the "Portfolio"), and Fidelity Management & Research Company, a Massachusetts corporation (hereinafter called the "Adviser"). Required authorization and approval by shareholders and Trustees having been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby consent, pursuant to Paragraph 6 of the existing Management Contract dated May 1, 1987, to a modification of said Contract in the manner set forth below. The Modified Management Contract shall when executed by duly authorized officers of the Fund and the Adviser, take effect on the later of March 1, 1994 or the first day of the month following approval. 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 , an Individual Fund Fee, and an Income Component . (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 .3700% 3 - 6 .3400 6 - 9 .3100 9 - 12 .2800 12 - 15 .2500 15 - 18 .2200 18 - 21 .2000 21 - 24 .1900 24 - 30 .1800 30 - 36 .1750 36 - 42 .1700 42 - 48 .1650 48 - 66 .1600 66 - 84 .1550 84-120 .1500 120-174 .1450 174-228 .1400 228-282 .1375 282-336 .1350 Over 336 .1325 (b) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be .03%. One-twelfth of the Group Fee Rate (calculated as described above to the nearest millionth) and of the Individual Fund Fee Rate shall be applied to the average 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 to determine the Group Fee and the Individual Fee for such month. (c) The Income Component. The Adviser shall receive a monthly payment computed on the basis of the Portfolio's gross income. With respect to that amount of the Portfolio's monthly gross income which is in excess of that amount which is equivalent to an annualized yield of 5%, the Adviser shall receive 6% of the amount of such excess. 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 on portfolio obligations computed in accordance with generally accepted accounting practices. Annualized yield shall be determined by dividing the Portfolio's gross income for the month by average daily net assets of the Portfolio for the month and dividing the result by the number of days in the month over 365 days. (Gross Income for the Month) (divided by) (Days in the Month) (Average Daily Net Assets for the Month) (365 Days) Notwithstanding the foregoing , in no event shall the Adviser be entitled to receive an income component for any month that is in excess of an amount equal to 0.24% of the Portfolio's average net assets for such month. (d) 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 other than those expressly stated to be payable by the Adviser hereunder, 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. 6. (a) Subject to prior termination as provided in sub-paragraph (d) of this paragraph 6, this Contract shall continue in force until May 31, 1994 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. FIDELITY SELECT PORTFOLIOS on behalf of Money Market Portfolio By /s/J. Gary Burkhead Senior Vice President FIDELITY MANAGEMENT & RESEARCH COMPANY By /s/J. Gary Burkhead President EX-99.B5 39 FMR FAR EAST AND FMR UK Exhibit 5(b)(1) SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF AIR TRANSPORTATION PORTFOLIO AGREEMENT made this 1st day of March, 1994, by and between Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "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 Air Transportation 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 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF AIR TRANSPORTATION PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF AIR TRANSPORTATION PORTFOLIO AGREEMENT made this 1ST day of March, 1994, 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 Air Transportation 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. BY:/s/Charles F. Dornbush___________ Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY:/s/J. Gary Burkhead _________________________ J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF AIR TRANSPORTATION PORTFOLIO BY: /s/J. Gary Burkhead___________________________ J. Gary Burkhead Senior Vice President EX-99.B5 40 FMR UK AND FMR FAR EAST Exhibit 5(b)(2) SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF AUTOMOTIVE PORTFOLIO AGREEMENT made this 1st day of March, 1994, by and between Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "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 Automotive 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 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF AUTOMOTIVE PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF AUTOMOTIVE PORTFOLIO AGREEMENT made this 1ST day of March, 1994, 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 Automotive 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF AUTOMOTIVE PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President EX-99.B5 41 FMR UK AND FMR FAR EAST Exhibit 5(b)(3) SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF BIOTECHNOLOGY PORTFOLIO AGREEMENT made this 1st day of March, 1994, by and between Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "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 Biotechnology 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 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF BIOTECHNOLOGY PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF BIOTECHNOLOGY PORTFOLIO AGREEMENT made this 1ST day of March, 1994, 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 Biotechnology 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF BIOTECHNOLOGY PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President EX-99.B5 42 FMR UK AND FMR FAR EAST Exhibit 5(b)(4) SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO AGREEMENT made this 1st day of March, 1994, by and between Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "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 Brokerage and Investment Management 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 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO AGREEMENT made this 1ST day of March, 1994, 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 Brokerage and Investment Management 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President EX-99.B5 43 FMR UK AND FMR FAR EAST Exhibit 5(b)(5) SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF CHEMICALS PORTFOLIO AGREEMENT made this 1st day of March, 1994, by and between Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "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 Chemicals 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 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF CHEMICALS PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF CHEMICALS PORTFOLIO AGREEMENT made this 1ST day of March, 1994, 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 Chemicals 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF CHEMICALS PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President EX-99.B5 44 FMR UK AND FMR FAR EAST Exhibit 5(b)(6) SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF COMPUTERS PORTFOLIO AGREEMENT made this 1st day of March, 1994, by and between Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "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 Computers 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 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF COMPUTERS PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF COMPUTERS PORTFOLIO AGREEMENT made this 1ST day of March, 1994, 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 Computers 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF COMPUTERS PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President EX-99.B5 45 FMR UK AND FMR FAR EAST Exhibit 5(b)(7) SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF CONSTRUCTION AND HOUSING PORTFOLIO AGREEMENT made this 1st day of March, 1994, by and between Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "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 Construction and Housing 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 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF CONSTRUCTION AND HOUSING PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF CONSTRUCTION AND HOUSING PORTFOLIO AGREEMENT made this 1ST day of March, 1994, 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 Construction and Housing 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF CONSTRUCTION AND HOUSING PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President EX-99.B5 46 FMR UK AND FMR FAR EAST Exhibit 5(b)(8) SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF CONSUMER PRODUCTS PORTFOLIO AGREEMENT made this 1st day of March, 1994, by and between Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "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 Consumer Products 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 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF CONSUMER PRODUCTS PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF CONSUMER PRODUCTS PORTFOLIO AGREEMENT made this 1ST day of March, 1994, 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 Consumer Products 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF CONSUMER PRODUCTS PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President EX-99.B5 47 FMR UK AND FMR FAR EAST Exhibit 5(b)(9) SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF DEFENSE AND AEROSPACE PORTFOLIO AGREEMENT made this 1st day of March, 1994, by and between Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "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 Defense and Aerospace 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 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF DEFENSE AND AEROSPACE PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF DEFENSE AND AEROSPACE PORTFOLIO AGREEMENT made this 1ST day of March, 1994, 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 Defense and Aerospace 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF DEFENSE AND AEROSPACE PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President EX-99.B5 48 FMR UK AND FMR FAR EAST Exhibit 5(b)(10) SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF DEVELOPING COMMUNICATIONS PORTFOLIO AGREEMENT made this 1st day of March, 1994, by and between Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "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 Developing Communications 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 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF DEVELOPING COMMUNICATIONS PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF DEVELOPING COMMUNICATIONS PORTFOLIO AGREEMENT made this 1ST day of March, 1994, 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 Developing Communications 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF DEVELOPING COMMUNICATIONS PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President EX-99.B5 49 FMR UK AND FMR FAR EAST Exhibit 5(b)(11) SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF ELECTRONICS PORTFOLIO AGREEMENT made this 1st day of March, 1994, by and between Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "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 Electronics 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 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF ELECTRONICS PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF ELECTRONICS PORTFOLIO AGREEMENT made this 1ST day of March, 1994, 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 Electronics 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF ELECTRONICS PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President EX-99.B5 50 FMR UK AND FMR FAR EAST Exhibit 5(b)(12) SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF ENERGY PORTFOLIO AGREEMENT made this 1st day of March, 1994, by and between Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "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 Energy 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 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF ENERGY PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF ENERGY PORTFOLIO AGREEMENT made this 1ST day of March, 1994, 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 Energy 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF ENERGY PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President EX-99.B5 51 FMR UK AND FMR FAR EAST Exhibit 5(b)(13) SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF ENERGY SERVICE PORTFOLIO AGREEMENT made this 1st day of March, 1994, by and between Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "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 Energy Service 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 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF ENERGY SERVICE PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF ENERGY SERVICE PORTFOLIO AGREEMENT made this 1ST day of March, 1994, 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 Energy Service 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF ENERGY SERVICE PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President EX-99.B5 52 FMR FAR EAST AND FMR UK Exhibit 5(b)(14) SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF ENVIRONMENTAL SERVICES PORTFOLIO AGREEMENT made this 1st day of March, 1994, by and between Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "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 Environmental Services 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 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF ENVIRONMENTAL SERVICES PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF ENVIRONMENTAL SERVICES PORTFOLIO AGREEMENT made this 1ST day of March, 1994, 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 Environmental Services 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF ENVIRONMENTAL SERVICES PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President EX-99.B5 53 FMR UK AND FMR FAR EAST Exhibit 5(b)(15) SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF FINANCIAL SERVICES PORTFOLIO AGREEMENT made this 1st day of March, 1994, by and between Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "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 Financial Services 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 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF FINANCIAL SERVICES PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President Exhibit 5(c)(15) SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF FINANCIAL SERVICES PORTFOLIO AGREEMENT made this 1ST day of March, 1994, 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 Financial Services 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF FINANCIAL SERVICES PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President EX-99.B5 54 FMR UK AND FMR FAR EAST Exhibit 5(b)(16) SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF FOOD AND AGRICULTURE PORTFOLIO AGREEMENT made this 1st day of March, 1994, by and between Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "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 Food and Agriculture 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 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF FOOD AND AGRICULTURE PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF FOOD AND AGRICULTURE PORTFOLIO AGREEMENT made this 1ST day of March, 1994, 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 Food and Agriculture 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF FOOD AND AGRICULTURE PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President EX-99.B5 55 FMR UK AND FMR FAR EAST Exhibit 5(b)(17) SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF HEALTH CARE PORTFOLIO AGREEMENT made this 1st day of March, 1994, by and between Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "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 Health Care 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 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF HEALTH CARE PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF HEALTH CARE PORTFOLIO AGREEMENT made this 1ST day of March, 1994, 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 Health Care 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF HEALTH CARE PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President EX-99.B5 56 FMR UK AND FMR FAR EAST Exhibit 5(b)(18) SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF HOME FINANCE PORTFOLIO AGREEMENT made this 1st day of March, 1994, by and between Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "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 Home Finance 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 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF HOME FINANCE PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF HOME FINANCE PORTFOLIO AGREEMENT made this 1ST day of March, 1994, 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 Home Finance 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF HOME FINANCE PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President EX-99.B5 57 FMR UK AND FMR FAR EAST Exhibit 5(b)(19) SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF INDUSTRIAL EQUIPMENT PORTFOLIO AGREEMENT made this 1st day of March, 1994, by and between Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "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 Industrial Equipment 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 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF INDUSTRIAL EQUIPMENT PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF INDUSTRIAL EQUIPMENT PORTFOLIO AGREEMENT made this 1ST day of March, 1994, 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 Industrial Equipment 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF INDUSTRIAL EQUIPMENT PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President EX-99.B5 58 FMR FAR EAST AND FMR UK Exhibit 5(b)(20) SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF INDUSTRIAL MATERIALS PORTFOLIO AGREEMENT made this 1st day of March, 1994, by and between Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "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 Industrial Materials 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 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF INDUSTRIAL MATERIALS PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF INDUSTRIAL MATERIALS PORTFOLIO AGREEMENT made this 1ST day of March, 1994, 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 Industrial Materials 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF INDUSTRIAL MATERIALS PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President EX-99.B5 59 FMR UK AND FMR FAR EAST Exhibit 5(b)(21) SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF INSURANCE PORTFOLIO AGREEMENT made this 1st day of March, 1994, by and between Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "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 Insurance 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 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF INSURANCE PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF INSURANCE PORTFOLIO AGREEMENT made this 1ST day of March, 1994, 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 Insurance 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF INSURANCE PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President EX-99.B5 60 FMR UK AND FMR FAR EAST Exhibit 5(b)(22) SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF LEISURE PORTFOLIO AGREEMENT made this 1st day of March, 1994, by and between Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "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 Leisure 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 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF LEISURE PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF LEISURE PORTFOLIO AGREEMENT made this 1ST day of March, 1994, 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 Leisure 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF LEISURE PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President EX-99.B5 61 FMR UK AND FMR FAR EAST Exhibit 5(b)(23) SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF MEDICAL DELIVERY PORTFOLIO AGREEMENT made this 1st day of March, 1994, by and between Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "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 Medical Delivery 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 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF MEDICAL DELIVERY PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF MEDICAL DELIVERY PORTFOLIO AGREEMENT made this 1ST day of March, 1994, 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 Medical Delivery 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. BY: /s/ Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF MEDICAL DELIVERY PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President EX-99.B5 62 FMR UK AND FMR FAR EAST Exhibit 5(b)(24) SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF BROADCAST AND MEDIA PORTFOLIO AGREEMENT made this 1st day of March, 1994, by and between Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "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 Broadcast and Media 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 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF BROADCAST AND MEDIA PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF BROADCAST AND MEDIA PORTFOLIO AGREEMENT made this 1ST day of March, 1994, 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 Broadcast and Media 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF BROADCAST AND MEDIA PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President EX-99.B5 63 FMR UK AND FMR FAR EAST Exhibit 5(b)(25) SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF NATURAL GAS PORTFOLIO AGREEMENT made this 1st day of March, 1994, by and between Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "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 Gas 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 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF NATURAL GAS PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF NATURAL GAS PORTFOLIO AGREEMENT made this 1ST day of March, 1994, 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 Gas 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF NATURAL GAS PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President EX-99.B5 64 FMR UK AND FMR FAR EAST Exhibit 5(b)(26) SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF PAPER AND FOREST PRODUCTS PORTFOLIO AGREEMENT made this 1st day of March, 1994, by and between Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "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 Paper and Forest Products 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 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF PAPER AND FOREST PRODUCTS PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF PAPER AND FOREST PRODUCTS PORTFOLIO AGREEMENT made this 1ST day of March, 1994, 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 Paper and Forest Products 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF PAPER AND FOREST PRODUCTS PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President EX-99.B5 65 FMR UK AND FMR FAR EAST Exhibit 5(b)(27) SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF PRECIOUS METALS AND MINERALS PORTFOLIO AGREEMENT made this 1st day of March, 1994, by and between Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "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 Precious Metals and Minerals 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 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF PRECIOUS METALS AND MINERALS PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF PRECIOUS METALS AND MINERALS PORTFOLIO AGREEMENT made this 1ST day of March, 1994, 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 Precious Metals and Minerals 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF PRECIOUS METALS AND MINERALS PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President EX-99.B5 66 FMR UK AND FMR FAR EAST Exhibit 5(b)(28) SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF REGIONAL BANKS PORTFOLIO AGREEMENT made this 1st day of March, 1994, by and between Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "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 Regional Banks 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 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF REGIONAL BANKS PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF REGIONAL BANKS PORTFOLIO AGREEMENT made this 1ST day of March, 1994, 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 Regional Banks 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF REGIONAL BANKS PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President EX-99.B5 67 FMR UK AND FMR FAR EAST Exhibit 5(b)(29) SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF RETAILING PORTFOLIO AGREEMENT made this 1st day of March, 1994, by and between Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "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 Retailing 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 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF RETAILING PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF RETAILING PORTFOLIO AGREEMENT made this 1ST day of March, 1994, 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 Retailing 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF RETAILING PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President EX-99.B5 68 FMR UK AND FMR FAR EAST Exhibit 5(b)(30) SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF SOFTWARE AND COMPUTER SERVICES PORTFOLIO AGREEMENT made this 1st day of March, 1994, by and between Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "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 Software and Computer Services 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 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF SOFTWARE AND COMPUTER SERVICES PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF SOFTWARE AND COMPUTER SERVICES PORTFOLIO AGREEMENT made this 1ST day of March, 1994, 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 Software and Computer Services 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF SOFTWARE AND COMPUTER SERVICES PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President EX-99.B5 69 FMR UK AND FMR FAR EAST Exhibit 5(b)(31) SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF TECHNOLOGY PORTFOLIO AGREEMENT made this 1st day of March, 1994, by and between Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "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 Technology 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 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF TECHNOLOGY PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF TECHNOLOGY PORTFOLIO AGREEMENT made this 1ST day of March, 1994, 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 Technology 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF TECHNOLOGY PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President EX-99.B5 70 FMR UK AND FMR FAR EAST Exhibit 5(b)(32) SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF TELECOMMUNICATIONS PORTFOLIO AGREEMENT made this 1st day of March, 1994, by and between Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "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 Telecommunications 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 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF TELECOMMUNICATIONS PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF TELECOMMUNICATIONS PORTFOLIO AGREEMENT made this 1ST day of March, 1994, 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 Telecommunications 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF TELECOMMUNICATIONS PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President EX-99.B5 71 FMR UK AND FMR FAR EAST Exhibit 5(b)(33) SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF TRANSPORTATION PORTFOLIO AGREEMENT made this 1st day of March, 1994, by and between Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "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 Transportation 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 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF TRANSPORTATION PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF TRANSPORTATION PORTFOLIO AGREEMENT made this 1ST day of March, 1994, 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 Transportation 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF TRANSPORTATION PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President EX-99.B5 72 FMR UK AND FMR FAR EAST Exhibit 5(b)(34) SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF UTILITIES PORTFOLIO AGREEMENT made this 1st day of March, 1994, by and between Fidelity Management & Research Company, a Massachusetts corporation with principal offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the "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 Utilities 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 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF UTILITIES PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President SUB-ADVISORY AGREEMENT BETWEEN FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. AND FIDELITY SELECT PORTFOLIOS: ON BEHALF OF UTILITIES PORTFOLIO AGREEMENT made this 1ST day of March, 1994, 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 Utilities 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, 1994 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. FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. BY: /s/Charles F. Dornbush Charles F. Dornbush Treasurer FIDELITY MANAGEMENT & RESEARCH COMPANY BY: /s/J. Gary Burkhead J. Gary Burkhead President FIDELITY SELECT PORTFOLIOS ON BEHALF OF UTILITIES PORTFOLIO BY: /s/J. Gary Burkhead J. Gary Burkhead Senior Vice President EX-99.B11 73 Exhibit 11 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Prospectus and Statement of Additional Information constituting parts of this Post Effective Amendment No. 48 to the registration statement on Form N-1A (the "Registration Statement") of Fidelity Select Portfolios of our report dated April 15, 1994, relating to the financial statements and financial highlights appearing in the February 28, 1994 Annual Report to Shareholders of Fidelity Select Portfolios, which is incorporated by reference in such Registration Statement. We further consent to the references to us under the headings "Auditor" in the Statement of Additional Information and "Financial Highlights" in the Prospectus. /s/PRICE WATERHOUSE PRICE WATERHOUSE Boston, Massachusetts April 21, 1994 -----END PRIVACY-ENHANCED MESSAGE-----